Endeavour to place El Cubo on care and maintenance

Endeavour Silver will place its El Cubo mine in Mexico on care and maintenance due to weak prices.

The Guanajuato state silver-gold operation continues to lose money despite an expansion last year and three years of cost reductions, the company said.

Endeavour plans to mine accessible reserves at El Cubo, which will see production decline steadily through 2016 before the mine is placed on care and maintenance in Q4.

All-in sustaining costs (AISCs) fell to US$18.48/oz in Q3 from US$47.46/oz in the prior-year period, but still significantly above spot prices of around US$14/oz.

"We have had a great run at El Cubo from a technical point of view. It just isn't there at these metal prices," CEO Bradford Cooke told a conference call.

SEVERANCE, CARRYING VALUE

Endeavour expects to pay US$3mn in severance and care and maintenance costs of US$1-2mn in 2017.

The company also expects to report an impairment of the asset's carrying value based on the suspension and lower metal prices.

The mine will require at least 25% higher silver prices in order for the company to consider restarting operations, CFO Dan Dickson told the call.

OTHER MINES, PROJECT

Endeavour plans steady production at its Guanaceví and Bolañitos mines in Mexico, with throughput continuing at 1,200t/d and 850t/d respectively.

The company expects to produce 4.9-5.3Moz silver and 47,000-52,000oz gold in 2016, down from 7.18Moz and 59,990oz last year.

AISCs are scheduled to fall to US$12-13/oz silver, net of gold credits, compared to US$15.05/oz in 3Q15.

TERRONERA

The Terronera project in Jalisco state is expected to become a core producing asset in the coming 2-3 years, Cooke told the call.

The company plans to continue drilling at the project during 2016 with the aim of increasing resources, with a contingent budget of US$7mn for exploration, engineering and land acquisition. Endeavour is also actively considering M&A opportunities, the CEO added.

Pictured: Endeavour Silver CEO Bradford Cooke.