At Bolanitos, the Cebada, Bolanitos, Lucero, Karina, Fernanda, Daniela and Lana veins are capable of providing up to 2,000 tpd of mine output at the present time so management is currently considering smelter contracts to sell Bolanitos concentrates in order to facilitate such a mine expansion in Q2, 2013. With new exploration targets in the La Luz, Plateros, La Joya and Puertocito veins, management is encouraged that Bolanitos continues to offer excellent potential for new discoveries in 2013.
At El Cubo, the reconstruction of the wholly owned plant is currently on time and budget for completion in Q2, 2013 and will operate initially at 1,200 tpd with a capacity of 1,600 tpd. The main bottleneck to higher production at El Cubo is a lack of larger reserve blocks; however, given Endeavour's exploration programs have just begun to test several old and new targets, management views El Cubo as having excellent potential for the discovery of new and larger ore-bodies.
The consolidated cash cost of production (net of by-product gold credits) is expected to increase to the $9-10 per oz range in 2013, largely due to rising production from the higher cost El Cubo mine and the lower grades being mined at Guanacevi. However, the El Cubo cash cost is expected to decline in 2013 due to rising operating efficiencies and the completion of capital projects.
Assuming US$30 per ounce of silver and US$1,650 per ounce of gold, Endeavour anticipates its mine operating (gross) profit margin will be around US$20-21 per oz in 2013. For every $100 increase in the price of gold, Endeavour's cash cost of production should drop by approximately $0.90-1.00 per oz of silver produced and the mine operating profit margin should climb by a similar amount.
In 2013, Endeavour will continue to focus on unfolding the full exploration potential of its project portfolio, especially at El Cubo where there are several attractive drill targets. Endeavour plans to spend $17.3 million on exploration at the three operating mines and five district scale exploration properties. A total of 78,500 metres of drilling in approximately 180-200 holes are budgeted to test approximately 24 exploration targets, in addition to all of the underground mine exploration drilling.
Every year, management aims to acquire new properties, explore them, make new discoveries and fast-track them to production. This year, the Company will continue to aggressively explore its property portfolio, focusing on the emerging new high-grade silver-gold discovery in the Terronera vein on the San Sebastian property in Jalisco State.
In addition, the Company will be drilling a bulk tonnage silver-gold target in Chile on the El Inca property optioned in 2012, high-grade vein and bulk tonnage targets on the Panuco property in Mexico, and multiple targets around the three operating mines in the Guanajuato and Guanacevi districts. Endeavour also plans to be opportunistic with regard to possible new exploration property acquisitions during this time of market distress for junior exploration companies.
A telephone conference call to discuss the results will be held at 10:00 am PDT (1:00 pm EDT) on Wednesday, March 13, 2013. To participate in the conference call, please dial the following:
- 1-800-319-4610 Canada and USA (Toll-free)- 604-638-5340 Vancouver Dial In- 1-604-638-5340 Outside of Canada & USA- No pass-code is necessary to participate in the conference call