-- Posted 28 January, 2004 | |
Endeavour Gold Corp. (EDR: TSX-V) announces that it has signed an option agreement to acquire up to a 100% interest in the producing Santa Cruz silver-gold mine and Guanacevi mineral processing plant in Durango, Mexico.
Terms of the agreement give Endeavour the option to pay US $3 million to the vendors and invest US $1 million in mine exploration and development within one year in order to earn a 51% interest in the mine and plant, and pay an additional US $4 million over an additional 3 years in order to earn a 100% interest in these operating assets.
The Guanacevi silver-gold district is a classic, low sulfidation, epithermal vein camp that ranks in the top 5 of historic silver districts in Mexico, having produced over 500 million oz in silver and silver equivalents over the past 400 years. The Santa Cruz vein is one of five main productive silver-gold veins at Guanacevi that have been traced for more than 6 km.
Endeavour views this transaction as a material acquisition for the following reasons:
1) A producing silver mine means near-term cash flow for Endeavour in a rising silver market. The mine and plant are currently producing 600,000 oz Ag and 3,000 oz Au per year from 150 tpd of sulfide ore grading 350 gpt Ag and 0.5 gpt Au plus 250 tpd of oxidized old tailings assaying 100 gpt Ag and 1.0 gpt Au, with by-products Pb and Zn.
2) The large, modern processing plant operating at less than 20% capacity means Endeavour has the opportunity to more than quadruple its production at minimal extra cost. The plant has a capacity of 800 tpd in the sulphide flotation circuit and 600 tpd in the oxide cyanidation circuit.
3) Both historic and recently drilled high silver grades averaging + 500 gpt Ag mean high profit margins can be expected. Three ore shoots have returned +500 gpt silver grades in diamond drilling and underground sampling but the vendors lacked the working capital to develop and mine these highly prospective mineralized zones. The current moderate silver grades reflect readily accessible ore being mined from the margins of old high-grade stopes.
4) Good vein widths ranging from 1m to 10m and averaging 3+m means potentially lower mining costs. In fact, three parallel veins over a 40m width can be found in portions of the mine.
5) Paved road access and good local infrastructure provide lower infrastructure costs. Endeavour will inherit an experienced workforce who live near the mine and all equipment needed for mining, milling and trucking of silver-gold concentrates to the Penoles smelter in Torreon.
6) An additional 230 hectares of mineral properties covering other veins in the Guanacevi district are included in the acquisition. These veins have never seen any modern exploration and represent attractive prospects for development.
“The acquisition of the Santa Cruz mine and Guanacevi plant gives Endeavour tremendous leverage to the silver market. Not only do we pick up a cash flowing, high grade mine, the opportunities for growth of ore reserves and silver production are substantial. At full capacity and if the grades are confirmed, we should be able to produce 4 million ounces of silver per annum”, stated Godfrey Walton, Vice-President.
The option agreement is subject to the approval of the Board of Directors of Endeavour (received), the approval of the Shareholders of the Santa Cruz mine and Guanacevi plant (received), a 90-day period of due diligence satisfactory to Endeavour and the approval of the TSX Venture Stock Exchange.
Endeavour will be hiring a Qualified Person to oversee the project and will prepare a 43-101 compliant report pending favourable completion of the due diligence.
Endeavour Gold Corp. (EDR: TSX-V) is a junior exploration company focused on acquiring a portfolio of attractive gold-silver prospects in Mexico and discovering new precious metal deposits. Canarc Resource Corp. holds a minority shareholding in the Company and manages the affairs of Endeavour.
On Behalf of the Board of Directors,
ENDEAVOUR GOLD CORP.
/s/ “Bradford J. Cooke”
Bradford J. Cooke
President and CEO
-- Posted 28 January, 2004 | |
