The silver market is very small, and it’s in a structural deficit – Endeavour Silver’s Dan Dickson

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[Music] with silver up nearly one third year to date it’s a good time to be a precious metal Miner I’m with Dan Dixon he is the CEO of endeavor silver Endeavor has two mines in operation and a third coming online this year the company plans to produce about 5.5 million silver ounces in 2024 Dan welcome to Kiko thank you thanks for having me must be a great time right now I see that gold has been hitting all-time highs Silver’s been making its great run I see that the company is nearly doubled this time year to date yeah I mean you try not get too high with with when things are moving well just like last year when not try to get too low it’s we’re trying to execute it’s great that silver hit $32 come off a little bit lately um but ultimately it proves well for operations helps our cash flow as we build our Teran a project thumbnail your operations what have you got going right now yeah I mean you touched on it uh we have our guanas and Balano assets that have been operating for quite a long time 18 years and 17 years respectively we’re going to produce about 9 million silver equivalent ounces for 2024 uh I call them mature assets meaning our cost profile is quite high with that but we’re in an extremely exciting time for endeavor we’re building our tanera asset that we’re going to commission later this year that’s effectively going to double our production and cut our cost profile in half so cash flows are expected to significantly increase for 25 which is always good can you go a little bit more into the financials right now what’s going to happen to your all in sustaining cost and everything else well for 2024 we get guide at 22 to $23 all in sustaining cost q1 we came in slightly below that from a cost per ton standpoint we’re right on line with budgets and plans uh really what happens for 2025 was we cut it in cost Teran air itself uh it will produce uh all the gold pays for the silver production so all sustaining costs is effectively Break Even uh at terranera so we go from $22 all- in sustaining cost for 2024 to kind of the 122 $13 range next year so it’ll be phenomenal our balance Sheet’s in good shape we pulled debt for the first time with regards to building terranera in this past or in this current quarter uh and by the end of the build we’ll have about $120 million of debt on our books which we’ve never had uh but again with the cash flows that will come from terranera we’ll easily be able to service that debt Teran is on track right now yeah uh when we announced Construction in April of 2023 we thought we’d be commissioning in Q4 of 2024 we still remain on track for Commission of this year so knock on wood the next six months goes as well it has for the last kind of 12 months and uh like I say we’ll be commissioning relatively quickly um I want to get a little bit more talking about Mexico but let’s just stick with the operations uh you have some exploration projects as well tell us a about Pia yeah I mean Pia is an asset that we picked up in 2022 I believe if we bought it for $70 million it’s one of the world’s largest undeveloped silver deposits so there’s 600 million ounces of silver to find there plus snc plus lead uh the our predecessor who we bought it off of SSR they put out a feasibility study on the asset as an open pit operation in 2012 uh I think at $25 silver price prior to that they put on an underground pre feasibility study out in 2009 and at $1 price so we’ve been advancing that project we’ve been underground at it we’re actually drilling some feeder systems as we speak we expect that to be complete by the end of the year and then we’ll look at scoping studies for 2025 and hopefully an economic study before 2025 is out because we want to move our development team from that Teran project into uh perthera and try to grow our goal is to be a senior silver producer uh so with Pia with terranera coming online we get to about 50 million silver equivalent ounces we think Pia can get get us into the 20 25 million ounce range uh so we have phenomenal growth coming in Endeavor in the next hopefully 3 4 years now and deor uh all of your operations are uh in Mexico you’re a Mexican specialist yeah we are a Mexican specialist we do have an asset up in Nevada it’s a gold asset we picked up about three years ago we just haven’t moved along just because of allocation of resources and we do have exploration properties in Chile um so we have currently two operating assets in Mexico our Teran a project development asset in the state of jisco Mexico pther is in the state of Durango uh we have another exploration asset that we really like called peral it’s just that pther has moved ahead of it just because of the scale and leverage that’s at pther uh Mexican elections are coming up pretty quickly right now impact on miners um impact on miners likely uh smaller impact than probably expected or people expect uh the marina part is currently in power which is Amo uh he’s a populist his predecessor is a lady by the name of Claudia shine bomb she’s well ahead in the polls the expectation is she will take office uh the change over will be in November I think uh with Claudia taking office I’m not sure how much changes from a rhetoric standpoint but she does have a history of being more Pro uh business um so hopefully that improves just because of the negative rhetoric coming from Amo he hasn’t changed taxes uh they tried to put through mining reforms those didn’t go through over this past uh two years um so like I say our expectation is kind of stay the course with Claudia getting in uh locally with uh your operations right now that are coming in how are community relations you know what we’ve always done a phenomenal job with community relations at guanas spe balanos uh we feel like you need a social license from your neighbors to be able to operate and prior to kind of the big movement in ESG we always took that extremely seriously and it becomes a fabric of our company and we took a lot of the principles we learned at wsp and Bonos we’ve always had a great track record to terranera and quite frankly at tanera we’ve had a great track record there we’ve been there since 2013 really working with the community and trying to communicate what’s happening at Teran from an expiration standpoint and then when we went into development and we’ll continue that as we go into operations things change but as I say we’ve always had a very good track record with our communities and good relationships I want to step back a bit and look at the general silver market right now how does silver Supply look right now uh well we’re in a structural deficit for the last 3 to four years um I think that’s uh that message has been getting out to the the masses more lately um it it it’s one of those Metals it’s a very small Market there’s not a lot of literature about it the industrial capacity or industrial uses for silver has exploded over the last kind of 5 10 years and uh industrial use of metal has gone from about 300 350 million ounces a year to about 500 550 million ounces and that’s uh the green ifications reduction of carbon using it in our electronics and there’s more and more Gadgets in your cars that require silver with regards to flat screens and then obviously from a solar standpoint or solar panel standpoint um big growth in that field we’ve seen Silver go from 80 million ounces to about 180 2 200 million ounces that’s expected to grow to 250 to 300 million ounces over the coming years so the the industrial component of uses for silver has grown immensely uh and Supply hasn’t kept up we’ve been relatively flat on Supply oh God for at least 10 to 15 years um so uh it that squeeze is coming and I I like I said I think uh people are starting to understand that deficit that we’re seeing does it make sense for endeavor silver to do some m&a there’s uh you know heck’s been doing some deals over the past two years you know what yeah I mean of course uh we’re always looking at growth opportunities I think m&a has to be done with a little bit of intelligence and it’s got to be a creative for us right now we’re very focused on delivering on Teran era when we come into commissioning at the end of this year we expect almost a rting in our share price so we’ll get some benefit into our Share value you always looking at things we have a corporate Development Group looking for assets we we’re looking for assets from an exploration standpoint development standpoint operating standpoint but it’s got to make sense it’s got to fit it’s got to fit with what we’re good at uh and we got to be able to add value as well so um like I say right now I think we’re really focused on Teran a and delivering that asset for commissioning at the end of this year uh and then we’d probably get a little bit more serious but again we have phenomenal growth built into our current pipeline already uh talking to uh people that are operating mine they say they have uh there’s three challenges that we be running them uh that’ll be finding people inflation issu issues and then also water issues is what I hear what is uh top concerns with you yeah the water issue I’ll probably touch on first Guana C and Teran will be producing a lot of water out there but Mexico in general has got a water issue and part of the mining reform is they passed to kind of deal with that and for a company our size we have a compliance group that handles it it was more compliance around it and I think that’s good for bonitos we’re in an area where we get droughts and I’d say every five six years we might have to bring in water uh from a used standpoint but our recycling of water is very high we recycle over 93% of our water um so it’s good from that standpoint um it’s always going to be a challenge on the other two points with regards to people I think in Mexico there’s a long history of mining there’s great miners in Mexico what Canadians and Americans brought into Mexico in the 90s was exploration expertise access to Capital um the expertise or or your Professionals in mining I think our grain there’s a gap there uh it it will become an advantage of a mining company that who has the proper training programs and ATT attract and retain talent and I don’t think that’s specific to mining I think that’s all industries that you get sometimes get these gaps when when things are a little bit more sparse in the space um again from our tanera standpoint we have a very season group building that mine a lot of experience but on the next mine and maybe that impacts us and it’s going to impact the industry and hopefully we do it as safely we can I think the first and foremost thing that happens with less experience is safety gets compromised just because guys are learning new things and uh as I say we try to do our best job of programs that we have in place to P kind of pass that down through the generations or different work groups and ages and um from our standpoint again it it it hasn’t been a big impact to us but we’re mindful of it uh last question on inflation uh one of those topics was uh you know a lot of people are speaking looking towards Q2 and then that’s when there’s going to see a real lift in margins uh with what we’re seeing with gold prices and then hopefully a containment on costs how are costs looking right right now yeah q1 as I said our costs came in slightly under from an all and sustaining sustaining standpoint our cost per tons were generally in line with what our budgets were inflation is a hard thing to manage obviously we still need the widgets that go into the operations and and we try to manage the best way we can and economies of scale help to offset that a little bit but we’re constrained at guanas and bnos with the resources we have there at Teran we’re going to ultimately be con constrained by the topography so we have a 2,000 ton per day operation uh we’re not looking to grow that operation we’re going to look to extend mind life there so right now we have a 10-year mind life ultimately we think we’re going to be there 15 20 25 years when it’s all said and done you’re always looking for efficiencies whether that’s for costs whether that’s for emissions or we’re working on that uh but it becomes kind of a uh diminishing returns on what you’re looking for and does it really change that story now we always try to tighten our belt when when prices have come up we’ve already had people come and ask for different alternatives to bring into the company and how disciplined can we be as a management team to prevent that creeping costs obviously margins have already expanded with a higher prices but it’s how do we keep contain costs as best we can not just for endeavor but the industry uh we’ll see wage growth we’ll see uh growth in wages on geologists Engineers W with just kind of the demand for those things and um it’ll be a challenge but that’s our job as management team to kind of work at those challenges uh lastly Dan uh Milestones over the next 12 months obviously terranera yeah terranera is the biggest milestone for us as I say it completely changes our company um the growth profile of going from 9 million to 15 million ounces of silver equiv production very significant for us but more importantly it’s our cash flow profile uh terranera is going to be one of the lowest cost producing Assets in the silver space we’re going to try to leverage that and bring pit three on behind it to try to get to what our goal is of being a senior silver producer Dan thanks for your time thank you my name is Michael McCrae with Kito mining [Music]

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  • @brettb9194 June 5, 2024 Reply

    Gimme a break it's a byproduct of copper, zinc, lead and gold mining in addition to pure silver plays.

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