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A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Endeavour Silver (NYSE: EXK; TSX: EDR) will raise $73 million via a bought-deal offering to help advance its Pitarrilla project in Mexico. The company intends to issue approximately 15.8 million shares priced at $4.60 each.
The stock opened Wednesday’s session at $4.58 apiece in New York on the announcement, down nearly 10% from its previous closing price. Its market capitalization was $1.1 billion.
This represents Endeavour’s first share offering since the $60 million at-the-market offering announced in December 2023. The proceeds of that were used for construction of the Terronera mine project that is nearing completion, as well as for the Pitarrilla project.
Located 160 km north of Durango City in northern Mexico, Pitarrilla is expected to form one of the key cornerstones of Endeavour’s long-term growth profile. It is considered one of the largest undeveloped silver projects in the world, containing an estimated 845 million oz. of silver-equivalent resources.
The Pitarrilla project was previously owned by SSR Mining (NASDAQ, TSX: SSRM; ASX: SSR), whose team conducted extensive drilling on the property from 2003 to 2012. This work culminated in two technical reports: a prefeasibility study in 2009 focusing on a high-grade underground mine scenario, and a feasibility study in 2012 that evaluated an open-pit concept.
In July 2022, Endeavour bought the project. In the same year, it published an initial resource estimate totalling 158.6 million indicated tonnes containing 491.6 million oz. of silver grading 96.4 grams per tonne, 1.1 billion lb. of lead grading 0.31% and 2.6 billion lb. of zinc grading 0.74% (693.9 million oz. AgEq grading 136 g/t).
The resource also contains 35.4 million inferred tonnes containing 99.4 million oz. silver grading of 87.2 g/t, 281 million lb. lead grading 0.36% and 661 million lb. zinc grading 0.85% (151.2 million oz. AgEq grading 132.7 g/t).
In the two years since acquiring the project, Endeavour’s team has relogged historic drill core to further understand the geology and mineralization controls of the deposit. Priority has been focused on identifying and defining numerous high-grade feeder structures that are interpreted to be the source of the silver, lead and zinc sulphide mineralization, and that extend through the high-grade manto, originally identified by SSR.
“The combined favorable grades, strike length, vertical extent and vein proximity, along with the manto’s size and continuity, make the deposit attractive for underground bulk mining,” chief operating officer Don Gray said in a news release earlier this year.
“Our exploration team’s careful attention while relogging the historic drill results provided an alternative geologic model. Not only are ongoing drilling and underground development work confirming this model, but they are also validating our original decision to acquire Pitarrilla.”
