The president and COO of Endeavour Silver Corp. explains to David Hendricks how using modern exploration methods on old mine properties can uncover new, undiscovered veins.
Endeavour Silver Corp. was founded in Vancouver, British Columbia, in 2003 by Bradford Cooke, chairman and CEO, and Godfrey Walton, president and chief operating officer, as a small-cap silver mining company. “There was a previous shell company that we re-named Endeavour,” says Walton. “We decided to go to Mexico to look for mining opportunities because at the time it was the largest silver-producing country in the world; since then it’s been overtaken by Peru.”
Both partners are exploration geologists, and they looked at several projects and set their sights on Guanacevi, the first project they picked up in November 2003. “We managed to consummate a deal in May 2004, started drilling in June 2004, and were mining by December 2004,” says Walton, “and what we like about it—and the business model we’re using—is finding properties with fully permitted plants and mills that were short of cash for upgrading, expertise and resources. We were able to see the potential to increase those resources.”
They started drilling in June 2004, and by December they were driving a ramp and got into some ore in the first part of that drilling program. “It went very quickly,” says Walton, “and that’s the crux of our business plan. It has to be able to go from discovery to production rapidly. And we’ve done that in Guanacevi three times, in other deposits that we found there.”
A recent example is Porvenir Cuatro, which they acquired a year ago; they started drilling in July 2009 and in September 2010 were mining there. In early 2007 they went down to Guanajuato, looking for another opportunity, and Walton found one in the Bolanitos and Cebada mines. “We acquired them and started drilling,” he says. “We continued mining for a while and realized that there was a major safety issue with the shafts at the mines.” They shut it down from late 2007 to early 2008 but kept drilling, and once they’d upgraded the shafts to make them safer, they found a previously undiscovered vein, called the Lucero, which has become one of Endeavour’s major production sites.
“We were demonstrating that although these were old mines on an old property—in this case with a young plant—and people had been mining there for more than 500 years, you can still find new veins that don’t come to the surface,” says Walton. “That’s why they were never discovered. Bringing modern exploration expertise to older districts has really been the key to our success. As well, we bring North American standards of safety and an environmental approach to mining. We operate with the same care that we would take in the US. It is important to spend time on training our employees on safe ways to work that respect the environment. As a company, it’s critical to us that our workers are safe.”
Why go after silver? “We had been watching the gold and silver charts,” says Walton, “and gold took off in 2002, but silver was dragging along behind. What we were looking for was for silver to make a big pop, which it typically does when you look back through history. We watched the chart throughout 2003 and noticed that silver was staying down, but we knew that it was going to slingshot up very soon. There was no one else looking at silver at that time, and that’s why we decided to go into silver, as opposed to gold.”
He continues, “Today’s gold and silver prices mean that a lot of different mining properties around the world are economic, so some companies are pouring equipment and resources into mining lower-grade gold, because gold is currently so much higher priced. But silver is a small market with very few players, and most of it is a by-product of mining other minerals. Currently there are a few primary silver producers, and we’re one of the highest leveraged to silver.”
Endeavour’s focus right now is to continue growing its production organically, which it has done for six consecutive years. Then it will look for its third and fourth operations, and it is pursuing different opportunities and targets for finding those. “We may be able to find them within our own exploration portfolio,” says Walton, “but it will take time. However, if we could acquire one or two more properties, it should speed up the possibility of having a third or fourth operation within the next year. That’s our primary focus at the moment.”
Endeavour recently made a bid for Vancouver-based Cream Minerals Ltd., which has the Nuevo Milenio silver property in Mexico, the Casierra Diamond Properties in Sierra Leone, the Goldsmith gold property and the Kaslo silver property, both in British Columbia, and the Wine nickel-copper property in Manitoba. “We’ll see how our bid turns out over the next little while,” Walton says.
A significant part of Endeavour’s investor base is in the United States. They do regular investor trips in Canada, US and Europe; at present they have a tour in Toronto where they are talking to mining analysts, and later in the fall they’ll be in the US on a different tour. “We spend a lot of time on the road,” says Walton, “making sure that we can meet brokers, analysts and investors.”
Endeavour has kept things growing financially—in terms of production, reserves and resources—over the last several years, and it expects growth in all those areas over the next two years. At that point, it hopes to have both its current operations in Mexico up to their maximum potential. Then it will continue to find resources and reserves, and its financial performance will be tied to the global market for gold and silver.
“Over the past 18 months we’ve looked at expanding through acquisitions, whether through private or public opportunities; we’re always very curious. We bring a Canadian and American understanding of mining and exploration operations to these old Mexican mining properties, and it’s proving to be successful, especially in finding new veins. So we’re very optimistic,” Walton concludes. www.edrsilver.com
