Endeavour Silver Reports Guanacevi Primary Ball Mill Trunnion Failure

Rhea-AI Summary

Endeavour Silver Corp (NYSE: EXK; TSX: EDR) has reported a significant operational setback at its Guanacevi mill. The trunnion on the primary ball mill has failed, leading to a suspension of material processing. The replacement could take up to 12 weeks. Management is exploring alternatives, including operating at a reduced capacity using smaller regrind mills with minor conveyor modifications. This unexpected downtime is expected to impact Q3 production and potentially affect the company's annual production and cost guidance. Endeavour is currently evaluating the situation and will provide an update once their assessment is complete.

Positive

• Management is exploring alternatives to maintain some production capacity during the downtime

Negative

• Primary ball mill trunnion failure at Guanacevi mill
• Material processing suspended at Guanacevi
• Replacement could take up to 12 weeks
• Q3 production will be impacted
• Annual production and cost guidance likely to be affected

Insights

Mining Operations Expert

The trunnion failure in Guanacevi's primary ball mill is a significant operational setback. Ball mills are important for ore processing and their malfunction can severely impact production. The estimated 12-week replacement timeline is concerning, as it suggests a complex repair process. This extended downtime will undoubtedly affect Q3 production figures and likely Q3 revenue.

The company's consideration of operating at reduced capacity using smaller regrind mills is a proactive approach. However, this alternative will likely result in lower throughput and potentially higher unit costs. Investors should closely monitor the upcoming assessment results, as they will provide important insights into the extent of production loss and financial impact.

Financial Analyst

This operational issue at Guanacevi will have material financial implications for Endeavour Silver. The company will likely face:

• Reduced revenue due to lower production volumes
• Increased costs for mill repair and potential temporary solutions
• Possible inventory write-downs if stockpiled ore deteriorates

Investors should anticipate downward revisions to the company's annual production and cost guidance. This event may also impact cash flow projections and potentially the company's balance sheet strength. The market's reaction to this news could be negative, potentially affecting the stock price in the short term.

Risk Management Specialist

This incident highlights operational risks in the mining sector, particularly the vulnerability to equipment failures. Key considerations include:

• Contingency planning: Endeavour's ability to quickly propose alternatives suggests some level of preparedness
• Maintenance protocols: Questions may arise about the adequacy of preventive maintenance procedures
• Supply chain resilience: The 12-week timeline for replacement parts underscores the importance of robust supply chains

Investors should assess Endeavour's risk mitigation strategies across its operations. This event may prompt a review of the company's operational redundancies and emergency response capabilities, potentially leading to increased focus on risk management in future operations and investor communications.

VANCOUVER, British Columbia, Aug. 12, 2024 (GLOBE NEWSWIRE) -- Endeavour Silver Corp. (“Endeavour” or the “Company”) (NYSE: EXK; TSX: EDR) reports the trunnion on the primary ball mill at the Guanacevi mill has failed and could take up to 12 weeks to replace. As a result, processing of material at the Guanacevi mill has been suspended. Management is assessing several alternatives including operating at a significantly reduced capacity with minor conveyor modification using smaller regrind mills until the primary ball mill is operational.

This downtime will impact Q3 production and is expected to impact annual production and cost guidance. Management is conducting an evaluation and analysis this week and will provide an update as soon as its assessment is complete.

About Endeavour Silver – Endeavour is a mid-tier precious metals company with a strong commitment to sustainable and responsible mining practices. With operations in Mexico and the development of the new cornerstone mine in Jalisco state, the company aims to contribute positively to the mining industry and the communities in which it operates. In addition, Endeavour has a portfolio of exploration projects in Mexico, Chile and the United States to facilitate its goal to become a premier senior silver producer. 

Contact Information
Allison Pettit, Director Investor Relations
Tel: (877) 685 - 9775
Email: apettit@edrsilver.com
Website: www.edrsilver.com

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Cautionary Note Regarding Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the United States private securities litigation reform act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward-looking statements and information herein include but are not limited to statements regarding the suspension of processing at Guanacevi, timing for completion of repairs at the Guanacevi mill, the availability and assessment of alternative processing methods, the impact on Q3 production and annual production and cost guidance, and Endeavour’s anticipated performance in 2024 including changes in mining operations and forecasts of production levels, anticipated production costs and all-in sustaining costs. The Company does not intend to and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.

Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, production levels, performance or achievements of Endeavour and its operations to be materially different from those expressed or implied by such statements. Such factors include but are not limited to the ability to complete repairs at the Guanacevi mill in a timely manner, the availability of alternative processing methods, changes in production and costs guidance; and satisfaction of conditions precedent to drawdown under the Debt Facility; as well as those factors described in the section “risk factors” contained in the Company’s most recent form 40F/Annual Information Form filed with the S.E.C. and Canadian securities regulatory authorities.

Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the ability to complete repairs at the Guanacevi mill in a timely manner, the availability of alternative processing methods, the continued operation of the Company’s mining operations, no material adverse change in the market price of commodities, forecasted mine economics as of 2024, mining operations will operate and the mining products will be completed in accordance with management’s expectations and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.

FAQ

What operational issue has Endeavour Silver (EXK) reported at its Guanacevi mill?

Endeavour Silver has reported a trunnion failure on the primary ball mill at its Guanacevi mill, leading to a suspension of material processing.

How long might it take Endeavour Silver (EXK) to replace the failed trunnion at Guanacevi?

The company estimates it could take up to 12 weeks to replace the failed trunnion on the primary ball mill at Guanacevi.

What alternatives is Endeavour Silver (EXK) considering during the Guanacevi mill downtime?

Endeavour Silver is considering operating at a significantly reduced capacity using smaller regrind mills with minor conveyor modifications until the primary ball mill is operational.

How will the Guanacevi mill issue affect Endeavour Silver's (EXK) production in 2024?

The issue is expected to impact Q3 production and could affect Endeavour Silver's annual production and cost guidance for 2024.