Endeavour Silver (SSVRF) was first recommended early in 2021 and despite the challenges to the silver sector overall, the company has held up well versus most of its peers, notes Peter Krauth, a commodity sector specialist and editor of Silver Stock Investor.
I credit management skill, a diversified portfolio of producing mines, and a deep well of growth projects that are not too far from advancing towards production. What’s more, these projects have the potential to more than double production in the next few years. So let’s dig in.
Endeavour's Guanacevi mine in Mexico produces a mix of about 80% silver and 20% gold, and it’s the company’s production engine, which accounts for 71% of total silver equivalent output. This mine has a current expected production life of 7+ years. And yet, Guanacevi continues to show strong expansion potential. Ongoing exploration shows great results both above, below and surrounding existing and prior mining areas.
Mexico's Bolanitos is the company’s second producer. It contributes about 29% of production. Bolanitos is gold-heavy, with a mix of 80% gold and 20% silver by output value. The focus here is on developing new ore bodies from two areas with multiple drill targets.
Located in Jalisco State, Terronera is likely to become the next cornerstone asset and flagship. The Feasibility Study supports a high-grade silver-gold underground mine, producing as much as 3.3M payable silver ounces and 33K gold ounces annually over 12 years.
That’s 5.9M silver equivalent ounces, and will nearly double company production. In addition, there is plenty of discovery upside, as only 50% of the veins identified on the property have been drilled so far.
Pitarilla is the latest major acquisition from SSR Mining (SSRM) this year for about $70 million. SSR has already spent $140 million to advance this project. The historical resource is massive; in fact, it one of the world’s largest undeveloped silver projects.
Conceivably, the deposit has both open pit and underground optionality, and offers strong exploration potential along a prolific mineral belt. Pitarilla boasts excellent infrastructure with road access, connection to the power grid and water source, exploration and contractor camps, and access to utilities and a well-trained workforce.
There are even several key permits already in place. EDR will advance Pitarilla with $1.8M in 2022 on drilling and exploration to verify the historical resource and define a current one. In addition, the company will spend at least $10M over the next 5 years on exploration.
I think Endeavour is a great way to gain exposure to silver. It’s medium risk since it’s a producer, but one that’s going to significantly grow production in the next few years, while offering tremendous exploration upside across multiple projects.
It wouldn’t surprise me to see shares 50% higher within a year, especially since I view silver as extremely undervalued. As a result, I’d expect Endeavour shares to follow silver prices higher, with the outstanding price leverage they offer.
