Endeavour Signs Formal Agreements to Acquire Santa Cruz Silver Mine and Guanacevi Processing Plant in Durango, Mexico
Vancouver, British Columbia, Canada - Endeavour Gold Corp. (EDR : TSX-V) announces that it has now signed formal Purchase Agreements to acquire the Santa Cruz Silver Mine and Guanacevi Processing Plant in Durango, Mexico, subject to regulatory approval. The Company entered into an Initial Option Agreement with the vendors on January 28, 2004 that is now superseded by the formal agreements.
Terms of the agreements give Endeavour the option to acquire an initial 51% interest in the mine and plant by paying US $3 million (US $1 million already paid on signing) and spending US $1 million on exploration by January 28, 2005. Endeavour can acquire the remaining 49% interest in these operating assets by paying an additional US $4 million over the following three years to January 2008.
Bradford Cooke, President and C.E.O., commented, "This key acquisition represents Endeavour's first step toward becoming one of the top primary silver producers in the world. The exploration potential of the Guanacevi district is very good and our main goal is to find more high grade silver ore to fill the plant. Although the mine is currently producing only 300,000 oz/year silver, the plant has existing capacity to produce up to 4 million oz/year silver and equivalents."
Watts, Griffis, and McOuat ("WGM"), consulting geologists and engineers, were commissioned to prepare a technical review of the mine and plant as part of Endeavour's due diligence prior to closing. The following excerpts from their report dated March 12, 2004 describe the project:
"The Santa Cruz Mine property consists of 7 exploitation concessions totaling 406 hectares...and an additional 50 ha concession held by Minera Santa Cruz covering other veins, some 2 km to the north from the Santa Cruz Mine. The Guanacevi mining district can be reached from Durango City by a 320 km paved highway, requiring about a four and one-half hour drive.
Considerable mining experience is available in the Guanacevi mining district area. The town of Guanacevi has all modern amenities and a population of 3,000. The town, mine and plant are connected to the national land-based telephone...and a Federal Power 34 kV power line. The field office for the plant and mine operations is located at the plant site, and the head office is located in Durango City.
The CMG plant has an installed grinding/flotation capacity of 800 tpd and a cyanidation/leach capacity of 600 tpd but presently is being operated at less than 10% of its installed capacity. The plant is clean and well operated with a trained staff of 71 personnel. Underground development at the Santa Cruz Mine extends to a depth of 250 m from surface. Seven levels have been developed with one level connected to surface at both ends. A total of 37 mine personnel operate two 8-hour shifts per day, 6 days per week, producing approximately 150 tonnes of ore per day.
WGM was not able to audit the mineral resources/mineral reserves at the Santa Cruz mine...However, the review in March 1996 by the Consejo de Recursos Minerales of the Santa Cruz mine estimated that below Level 13, there was a resource of 211,000 t @ 1.5 g Au/t and 688 g Ag/t which compared very favourably with the Peñoles 1992 estimate of 229,000 t @ 1.2 g Au/t and 525 g Ag/t. While WGM could not review how these estimates were prepared, and since these mineral resources are below the water table, and knowing that Minera Santa Cruz was not able to mine below the water table, WGM believes there is a reasonably good chance that an inferred mineral resource is present of some 200,000 t at grades near 1.3 g Au/t and 600 g Ag/t.
WGM has concluded that:
The mine is under-capitalized and under-explored. There is an urgent need to increase the mineable resources by carrying out additional drilling and development work in the El Porvenir area, the central mine area...and the San Guillermo area.
There is a need to re-establish geological and mine planning services in the mine.
The mine workforce is skilled and experienced and should be able to handle higher production.
The sustainability of the mining operation is dependant on the injection of capital for exploration.
The processing plant, although under-utilized, is in relatively good shape. Production can easily be quadrupled with minimal capital investment (if exploration is successful)."
Endeavour is also pleased to announce that Bruce Bried, P.Eng. and Miguel A. Ordaz R., Ing. have agreed to oversee the mine and plant operations on behalf of Endeavour. Mr. Bried has a wealth of experience managing high grade, underground gold-silver mines, most recently as Mining Superintendent for Homestake Minerals, having managed their Snip, Eskay Creek and Lead mining operations prior to the Barrick take-over.
Ing. Ordaz is an experienced Mexican geologist who knows the Guanacevi district very well, having worked there for several years as the representative of the Fomento Minero, the mine investment arm of the Mexican government. The Fomento Minero built the initial Guanacevi processing plant in the 1970's to service all the small mines in the district and the current owners acquired and expanded the plant in 1992. Endeavour will now focus on expanding the mine.
Endeavour Gold Corp. (EDR : TSX-V) is a small-cap exploration and mining company focused on aggressively expanding its portfolio of high grade silver-gold properties, reserves and production in Mexico. Canarc Resource Corp. holds a minority shareholding in the company and helps manage the affairs of Endeavour.
On Behalf of the Board of Directors,
ENDEAVOUR GOLD CORP.
/s/ "Bradford J. Cooke"
Bradford J. Cooke
President and CEO
"WARNING: The company relies on litigation protection for forward-looking statements. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this News Release."