Endeavour Silver Corp. has come up with an update on its silver-gold mining operations in Mexico. In the recent past, the organization proposed more initiatives to improve its financial and operating performance.
These include renting used mining equipment and leasing new mining equipment, changes to employee and contractor supervision, changes to mine-site management and contractors, and revision of the 2019 mine schedules for all four mines, especially Guanacevi.
The company has reduced the employee and contractor workforce by 18%, cut the cost of operation and administration, and postponed all optional expenditures.
The short-term aim of these steps is to turn the company around from producing losses in the first half of 2019 to producing free cash flow at existing metal prices in the third quarter.
The company observed that these actions are beginning to have a positive effect on the daily operating performance of the mining operations. But the company’s performance in Q2 of 2019 is not expected to differ from its performance in Q1 of 2019 as these initiatives take time to attain full traction. The company also earned significant one-time expenses like severance costs in Q2, 2019.
It is anticipated by the management that these actions will lead to the production of free cash flow in Q3 and Q4, 2019, with Second Half production expected to be more than First Half production and Second Half costs predicted to be considerably lower than First Half costs, based on a $1,275 per oz gold price, $15 per oz silver price, and 19:1 Mexican peso per US dollar exchange rate.
Our goal in implementing these actions is to make our mining operations more efficient so they can return to profitability quickly and permanently. Reducing the operating costs and work force combined with investing in new mining equipment and retraining are keys to making our mines more sustainable even at low metal prices. At Guanacevi, we stopped new mine development at the lower grade Santa Cruz and Porvenir Norte mines to focus on mining the remaining accessible reserves there. We also re-allocated employee and contractor resources to accelerate the development and production of the higher grade Milache and SCS orebodies. This should have a big impact on our operating and financial performance at Guanacevi.
Bradford Cooke, CEO, Endeavour Silver Corp.