Endeavour Silver Completes Terronera PEA; Prefeasibility Study In The Works
Endeavour Silver Completes Terronera PEA; Prefeasibility Study in the Works

Map and flag of Mexico. Source: Wikimedia Commons.

Endeavour Silver (TSX:EDR,NYSE:EXK) enjoyed a modest share price boost Tuesday following the release of a preliminary economic assessment (PEA) for its Terronera project, formerly known as San Sebastian. It ended the day up $2.58, or 3.61 percent, on the TSX and up $2.16, or 4.85 percent, on the NYSE.

The PEA is based on an October 2014 resource estimate that points to an indicated 2.94 million tonnes containing 19.9 million ounces of silver and 156,000 ounces of gold, with that material grading 211 g/t silver and 1.65 g/t gold. The inferred category consists of 1.21 million tonnes containing 8.5 million ounces of silver and 54,000 ounces of gold grading 218 g/t silver and 1.39 g/t gold.

Looking at numbers from the PEA, it calls for pre-production capex of $65.4 million and a construction period of 12 months. Once in production, Terronera should generate operating revenue of $542 million from the sale of an estimated 20.4 million ounces of silver and 138,500 ounces of gold. Endeavour will require a silver price of $18 per ounce and a gold price of $1,260 per ounce to hit that number — both metals are currently not trading at quite those levels.

Total opex should come in at $287 million, with mine-site cash operating costs estimated at $3.93 per ounce of silver, net of gold credits; that's based on total opex of $83 per tonne. Meanwhile, total sustaining capital is pegged at $75 million. Finally, the PEA points to an after-tax, base-case net present value of $48.6 million at a 5-percent discount and a base-case internal rate of return of 20 percent, also after tax. Terronera is estimated to have an after-tax, base-case payback period of 3.7 years.