Endeavour Silver Corp. (EXK, Financial) dug up yet another series of encouraging results from drillings at Terronera in Mexico, but the market was not enthusiastic.
The stock fell 1.58% to $3.11 per share at the end of regular hours trading on Wednesday. But the share price is still above the 200, 100 and 50-SMA lines.
The current market valuation does not represent an immediate entry point for investors who want to enhance their holdings and take advantage of the positive results.
Investors, however, may want to take advantage of the stock appreciation that is expected to follow. Endeavor Silver has crossed subspaces that are characteristic of a high concentraton of silver and gold, as a result of its nine drilling holes in the project in the Mexican state of Jalisco.
The most promising results are at drill hole number TR11-4, which indicates a silver concentration of 618 grams per ton of mineral and a gold concentration of 3.2 grams per ton over a true width of 21.2 meters. The results that came from hole number TR11-4 also show that the mineralized zone remains open at depth.
The discovery has the potential to become another key asset in the portfolio of Endeavour Silver.
This outlook on Terronera is not corroborated by high silver and gold grades and good mineralization continuity, but rather by the existence of a real possibility to further expand inferred resources at depth.Â
The short-term catalyst to watch is the preparation of a revised resource estimate for Terronera, which should indicate up to one million tons of inferred mineral resources transferred to the higher category of measured and indicated resources. Compared to the category of inferred resources, the category of measured and indicated resources has a higher confidence level in reference to the estimation of tonnage, grade, mineral content and other characteristics of the ore bodies.
The revised resource estimate will not be the basis for the compilation of a pre-feasibility study because exploration activities will be completed in September. That is when the exploration team will drill the final 5,990 meters out of a total planned of 10,000 meters.
The company expects to release a pre-feasibility study in August.
However, if the updated resources estimate receives adequate promotion, it should trigger a stock appreciation.
A final decision on the development of the mine will follow the receipt of environmental permits from the Mexican government and the arrangement of an initial debt facility to finance the metal project.
(Disclosure: I have no positions in Endeavour Silver Corp.)
