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Endeavour Silver: Broad Mineralization, Broad Shoulders

Articles & Blogs - Silver Commentary

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Written by Brian Boutilier

I returned from Guanajuato Mexico a couple of weeks ago, thankful for the generous offer to tour the operations of Great Panther and Endeavour Silver. They were kind hosts and very approachable. Everyone from the CEO Brad Cooke, through the IR staff of Hugh Clarke and Lana McCray to VP of Exploration Barry Devlin, to the COO Godfrey Walton and several Mine Mangers were all quick to lean in, and add additional information throughout the day. They were all obviously proud of their accomplishments, and wanted me to learn as much as possible during our short visit.


Our tour with Endeavour Silver was on the second day. (We visited Great Panther Silver Operations on the first). We took another Van ride down that winding, dusty road from Guanajauto, to the main operations at Bolanitos. On the way, they pointed out where workers were housed, and the speed bumps they have built to slow down passing traffic near the new school. After another well timed caffeine infusion, the Mine Manager started the briefings on Guanajuato operations.


When briefing an audience, one often is reminded that it is the first and the last thing which is covered that will stick in their minds.  David Howe, VP Operations was the first to brief us.  It was a safety brief.  He spoke for over a half an hour on all the precautions that the workers were taking.  He went over the extensive 1 to 2 month training program for all the workers.  He pointed out that they have female equipment operators, because they generally are easier on equipment, and have a better safety record while using it.  They charted out how their safety record was from inception to date, and that reporting on near accidents was higher now.  The reason, he explained, was that workers were encouraged to report near misses, instead of covering up mistakes.  Actual accidents are very low, nil during some quarters.  They took a good deal of time, and frankly I recall thinking how odd it was that they were pushing this point. Being a veteran of hundreds of safety briefs,  I took the liberty of having another cup of joe during this time.  Gotta say, I like the local flavor: dark and rich, muddy like the slurry coming out of the ball mill, but I’m getting ahead of myself.


The next briefing was on mine and mill operations by COO David Howe, while CEO Brad Cook, offered color commentary. There was an easy exchange between the Senior Management.  The tone of the briefing was confident, upbeat.  They had added crushers, had achieved a critical 3/8" diameter ore before entering the ball mill. They had added a 1000 tpd ball mill to the circuit, creating an overall potential capacity of 1600 tpd. They are currently limited by crusher capacity, effectively limiting capacity to 1200 tpd.  The recapture rates were running around 88% overall. They were very proud of increasing overall silver equivalent production by 2x year over year since inception. They expect to exceed 4 million "Silver Equivalent" oz's this year. The cost of production is around 5$/oz, however with gold credits it is now running below (negative) -$3/oz.


The briefing continued, with reference to the Guanacevi operations in the North, and its ability to process concentrate, and pour dore bars.  There was time for an open discussion about operations going forward, and what they forecast. They mentioned the promising new properties in Chile. They understood these to be oxide rich, bulk tonnage low grade deposits. The type of deposits that lend themselves to heap leach cyanidization, which has low start-up costs, and is highly efficient at recapturing gold and silver inexpensively.


Management was clear, and consistent in saying they were on the look-out for new acquisitions. They are consistently seeking to increase mining and milling capacity. That got the room rumbling, as throats were clearing in prep for questions.  As was the norm, Bob Moriarty jumped in with the first salvo.  Why were they not taking advantage of Great Panthers excess capacity?  Why were they not “making hay while the sun shined,” while metal prices were high.  I couldn’t possibly quote him, will not try, for he had much to add to the conversation.  These comments and several other questions were met confidently, and with an even tone by Brad Cooke.  The respective boards  certainly had interacted and had/were investigating synergies.  In fact they speak often, and are on good terms with each other.  They made no direct mention of combining their companies.  I want to point out here, that the thought of consolidation was being circulated by the group, but not by management.



I asked about rate limiters for growth.  Mr. Cooke stated that labor wasn't an issue.  They could stand up another mine with as few as 15 more workers.  They would need to wait 6 months for another power line for the Bolanitos Mill to create any more crushing capacity. There wasn't much more capacity at Guanacevi for concentrate processing.  This was a rate limiter, so gaining any more milling capacity would simply exceed the ability to process the concentrate. He also mentioned the new property at Lomas Bayas, Chile. He was excited about the oxide base mineralization.


There is a significant need in the Guanajuato region (between several companies) to have the ability to process more concentrate locally. This would take time to organize and permitting could be complex. They were certainly looking into it.  This morning brief was like a saucepan running over.  Very interactive, but some of these points hadn’t been fully investigated at all levels.  We were running over time, and needed to get to the mining tour.


We transitioned to yet another personal safety brief, suited up into our mining kit, and then headed out via van to the nearby Lucero ramp entrance.  I mentioned in my previous article about Great Panther, that there were differences between these two companies. It struck me right away at the entrance to the Lucero Ramp. This is newer, refined and large. There was new stonework on the facade, and an impressive angelic-type statue overlighting the tunnel “to watch over the workers.” The large opening allows for access by 30-ton dump trucks. Ore removal to the nearby Bolanitos plant would be fast and easy - not deep, narrower tunnels limiting access to larger vehicle, as is the case with the Guanajuato Mine Complex of Great Panther.


We walked down the Lucero ramp, progressing down to the 200 - 300 meter levels. It was well-lit and there were large placards showing where you were. The rescue equipment was in plain sight, and easy to reach. We were reminded that they had won awards locally for their rescue ability.


The group progressed on foot deeper, and we made our way to the Daniella, and Karina Veins. The vein sizes visible were 5-9 meters thick, vertically oriented with quartz based ore with high grade sulphidization.  The veins were plain to see, even without the red paint marking the orebody boundries.


We noted that there wasn’t much bolting and caging overhead in places.  They explained that most of the ore was so stable, it required little reinforcement.   New working stopes near ore faces were reinforced, fear not.  We were informed that these veins didn't start at the surface, but usually began 75 meters below the overburden. They were at least 200 meters deep, over 4-500 meters on strike and open to on depth and strike. The grades shot up over 1kg per ton of silver in places, with some decent Au grades to boot.


After the mine tour, we visited the nearby Bolanitos Mill.  They took us step by step through the crushing circuits, and showed us how the ore was crushed several times, and was constantly being sorted via sifting through mesh.  The ore eventually was reduced to 3/8” diameter, before progressing to the (in parallel) balls mills. After crushing the ore to a fine powder, the ore (via slurry) moved into the floatation circuit.  These consist offive surface vats where reagents were added, causing the precipitation, then floatation via "surfactants" to the surface.  This bubbling brew crested the surface of the vats, and proceeded to a stage of water extraction.  Once dry the concentrate was spread out over a cement pad to air dry. Water content was as low as 8% when leaving for Guanacevi via truck.


In the Bolanitos Mill, the impression was one of abundance.  There is a veritable valley full of ore waiting to be processed.  There were at least two truckloads worth of concentrate waiting to be shipped to Guanacevi for further processing.  They have 1600 tpd potential capacity, but are currently running 1000-1200 tpd production with operations running smoothly.  I left feeling that they are lacking sufficient mill capacity vs. the output of their mining operations, however increases will have to wait on additional crushers, and this will have to wait for more electrical power.  And yet the feeling was one of abundance.


In the afternoon after lunch, Barry Devlin, briefed us on current surface exploration.  He was up on short notice, and had to gulp down the last spoonfuls of his dessert.  Poor Barry, getting the “just after lunch” briefing slot.  I could hear Rodney Dangerfield in my head saying “Surface guys, they get no respect,” eyes bulging, adjusting his tie.  He forged on, undeterred in spite of the sleepy post lunch group.  He delivered another smooth, interactive briefing.  One more polished leader in this organization, with decades of experience in his craft.  A few numbers: to date through Q3, 2011, there were 93 drill-holes done for 24,665 meters in Guanajauto, and 171 holes in Mexico overall for 43,386 meters total.  The exploration budget was $7.4 million.


The scope of the Guanajuato drilling was as follows. The Bolanitos targets were of three main areas: Bolanitos North, La Luz-Asuncion-Soledad, and the more southern Lucero-Karina-Daniel-La Joya Zones.  We found out later, that some of the names were the actual names of the workers on the exploration team.  Certainly a personal touch, and a source of pride for those workers in the company. He also mentioned exploration at the Cebada properties. He mentioned here the similar vein structures, as it was with Daniela and Karina.


Here let me take a moment to return to a topic from my  first "diary" entry: my tour of Great Panther's operations. Great Panther's San Ignacio Property is contiguous with the Cebada Property. If the mineralization remains consistent, I would expect that this property will also have large ramps, and easy access for larger vehicles. This should create access to the same low-cost ore for Great Panther in the near future as Endeavour is currently able to mine today. Now back to Endeavour.


Not to put too fine an edge on this: they are increasing strike length on all the major veins, and coming up with robust mineralization with economic grades.  Some of these grades exceed 1kg/ton Ag and often have good Au mineralization too. They will continue adding mine life, and we should expect an increase in the resource estimates for each of these zones.  One can look at their web site for more exploration detail.  What they kept emphasizing, was that these were relatively new, untouched areas, tucked away a regions that has been heavily mined for centuries.  The reason was that (previously) there was little to no surface indication of what lay beneath.  Technology improved recently, but these claims lay fallow in the hands of Fresnillo PLC.  And yes, Fresnillo isn’t thrilled that they let this one get away, from what we were told. I can still picture the smile on Mr Cooke's face when he said that.

We visited the core shack in the afternoon. We were given a list of current assays vs areas of exploration. We looked over the cores, and noted the high grade sulphidization that we had witnessed underground in Daniela and Karina. There are many assays pending, but to this untrained eye, they look like they are still intersecting paydirt.


The jist of what I sensed over the day or two I spent with Endeavour staff, is that they are proud of their company, and are quite happy with development. I know from serving for many different organizations that this isn't a fluke. There was never a sharp word or a condescending glance. They do not lead through fear, coercion or punishment. This is a group that has a climate set for caring, communication and mutual respect. Team building is evident at all levels. This is an extension of Brad Cooke, his vision and leadership style. He has gathered a top-notch team, and they are empowered to achieve in a creative way.


We finished our stay in Guanajauto with a fine dinner, complete with Lookout Ridge Wines brought in by Gordon Holmes. It is my understanding that Mr Holmes, Great Panther and Endeavour Silver all chipped-in to buy 300 wheelchairs for folks living in the community that were in need. I stated earlier, that I thought the half hour safety, and employee development part of the briefings were excessive. I was dead wrong. This wasn't excessive, it was exactly what is right about this organization. This kind of focus, and caring is what brings cohesiveness to the organization. The workers are the backbone of the company, and they are the engine that is driving year over year, safe growth for Endeavour Silver.


Disclosure: I have shares.  I was also fortunate enough to have expenses paid by Great Panther and Endeavour Silver.


Comments (3)Add Comment
Brian Boutilier
written by Brian Boutilier, November 08, 2011
We included a couple of pictures yesterday. If you haven't seem them already, perhaps take a look.
Brian Boutilier
written by Brian Boutilier, November 06, 2011
Most kind sir, I'm glad it gave you some insight into Endeavour's GuanaJauto ops.
written by Earl, November 06, 2011

A very "enjoyable and understandable" article. A "real" inside look at mining operation(s) and a good cup of coffee (I could almost taste and smell it).

" I was dead wrong. This wasn't excessive, it was exactly what is right about this organization."

That says a lot!!!

Thank You, for sharing the experience.


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