Endeavour Silver in US$40 million bought deal

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Endeavour Silver Corp. (EDR-TSX, EXK-NYSE) has announced details of a US$40 million bought deal financing. Proceeds will be used to pay part of the acquisition cost of the Pitarrilla project in Durango State, Mexico from SSR Mining Inc. [SSRM-TSX, NASDAQ, SSR-ASX]. Pitarrilla has been described as one of the world’s largest undeveloped silver projects.

Endeavour is a mid-tier precious metals mining company that operates two high-grade underground silver-gold mines in Mexico. They include the Guanacevi Mine in Durango and the Bolanitos Mine in Guanajuato. The company is also advancing the Terronera mine project towards a development decision, pending financing and final permits.

The company recently said it expects to produce 4.2-4.8 million ounces of silver and between 31,000 ounces and 35,000 ounces of gold this year. Silver equivalent production is forecast at between 6.7-7.6 million ounces at an 80.1 silver-gold ratio.

Endeavour is also exploring a portfolio of exploration and development projects in Mexico, Chile and the U.S.

In January, 2022, the company said it had stuck a deal to acquire the Pitarrilla project from SSR Mining for US$70 million and a 1.25% net smelter returns royalty. Pitarrilla is a large undeveloped silver, lead and zinc project located 160 kilometres north of Durango City in northern Mexico.

The payable amount consists of US$35 million in Endeavour shares and a further US$35 million in cash or in Endeavour shares at the election of SSR Mining.

The property covers 4,950 hectares across five concessions and has significant infrastructure in place with direct access to utilities. The company says a 2021 technical report details a feasibility study outlining a large, mainly open pit operation and a mineral resource estimate which has been updated by SSR.

The project is estimated to contain a measured and indicated resource (open pit and underground) of 525.3 million ounces of silver in 165 million tonnes grading 99.1 g/t.

On top of that is an open-pit inferred resource of 21.2 million ounces of silver in 8.52 million tonnes at an average grade of 77.4 g/t and underground inferred resources of 5.46 million ounces of silver in 1.23 million tonnes at a grade of 138.1 g/t.

On Wednesday, Endeavour said an underwriting syndicate has agreed to buy on a bought deal basis 8.08 million common shares of the company for US$4.95 per share, generating proceeds of US$40 million.

The underwriters have been granted a green shoe option to purchase up to an additional 15% of the common shares offered to cover overallotments, if any. That option will remain open for 30 days following the closing date, which is expected to be March 21, 2022.

The principal use of the proceeds is to fund the US$35 million cash consideration payable to SSR Mining.

On Wednesday, Endeavour shares eased 10.4% or 71 cents to $6.14 on volume of 644,480. The shares are currently trading in a 52-week range of $9.32 and $4.28.


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