Endeavour Gold honestly prefers silverEndeavour Gold honestly prefers silver
By: Dorothy Kosich
Posted: '26-MAY-04 07:43' GMT © Mineweb 1997-2004
RENO, NV (Mineweb.com) -- After raising Cdn$9.9 million in private placement financing, Vancouver-based junior miner Endeavour Gold [EDR] Tuesday announced that it has signed formal purchase agreements to acquire the Santa Cruz silver mine and the Guanacevi Processing Plant in Durango Mexico.
The agreement gives Endeavour the option to acquire a 51% interest in the operating silver mine and plant by paying US$3 million (including $1 million paid upon signing the agreement) and spending $1 million on exploration by January 28, 2005. Endeavour can acquire the remaining 49% interest by paying an additional US$4 million by January 2008.
Last March, Endeavour engaged Canaccord Capital and Dundee Securities to act as agent in a brokered private placement. Endeavour also completed a non-brokered private placement for an additional Cdn$1.6 million. The net proceeds of both placements raised Cdn$9.9 million in financing, which is being used for the acquisition of the mine and plant.
A technical review by Watts, Griffis and McQuat (WGM) completed March 12, 2004, said the mine consist of 7 exploitation concessions totalling 406.38 hectares, six held by Grupo Peñoles and the other by CMG.
The town of Guanacevi in the Guanacevi mining district has a population of 3,000, modern amenities and experienced miners. The Guanacevi processing plant has a total installed grinding/flotation capacity of 800tpd and a cyanidation/leach capacity of 600 tpd, according to WGM, but is currently being operated at less than 10% of capacity. “The plant is clean and well operated with a trained staff of 71 personnel,” the report noted. “The processing plant, although underutilized, is in relatively good shape. Production can easily be quadrupled with minimum capital investment.”
Seven levels have been developed underground at the Santa Cruz, which is staffed by 40 mine personnel, producing 150 tonnes daily. Unfortunately, WGM was unable to audit the mineral resources and reserves as the mine because of the lack of supporting data available from its current operator. “WGM believes the Santa Cruz Mine to be an excellent exploration target and worthy of a detailed exploration program,” the consultants stressed.
“The mine is under-capitalized and under-explored,” said the report. “There is a need to re-establish geological and mine planning services in the mine.”
The mine workforce should be able to handle more production, noted WGM, but “the sustainability of the mining operation is dependent on the injection of capital for the exploration.” WGM suggested a phase one exploration program of US$1.2 million.
As of November 30, 2003, Endeavour reported a net loss of $84,162 dollars or negative one-cent per share. Cash on hand at the end of November 30, 2003, was $796,387. Among its assets are two gold and silver exploration properties in Mexico. Current liabilities as of November 30, 2003, included accounts payable and accrued liabilities were $51,162 while a loan payable was $28,383.
Bradford Cooke, Endeavour President and CEO, said in a news release, “This key acquisition represents Endeavour’s first step toward becoming one of the top primary silver producers in the world. …Our main goal is to find more high-grade silver ore to fill the plant. Although the mine is currently producing only 300,000/oz year silver, the plant has the existing capacity to produce up to 4 million oz/year silver and equivalents.”