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Endeavour Silver (EXK) Buys Pitarrilla, Boosts Portfolio

Endeavour Silver Corporation EXK announced that it has completed the acquisition of SSR Mining Inc.’s SSRM Pitarrilla Project. Located in Durango, Mexico, it is one of the largest undeveloped silver deposits in the world and adds to EXK’s growth pipeline in a mining-friendly jurisdiction, where the company already has extensive experience and expertise. This move marks a step forward in Endeavour Silver’s goal of becoming a premier senior silver producer.

Endeavour Silver purchased Pitarrilla by acquiring all the issued and outstanding shares of SSR Durango, from SSR Mining and Silver Standard Ventures Inc. for a total consideration of approximately $70 million. This comprises around $35 million in EXK’s common shares and $35 million in cash and a 1.25% net smelter returns royalty on Pitarrilla. SSR Mining now owns 4.52% of the issued and outstanding common shares of Endeavour Silver. Per the deal, EXK will have matching rights to purchase the net smelter returns royalty in case SSRM intends to sell it.

The Pitarrilla property consists of 4,950 hectares across five concessions and has significant infrastructure in place, with direct access to utilities. The buyout elevates Endeavour Silver’s portfolio as a leading mid-tier silver producer, with high-quality silver exposure and significant growth. The company has set forth to verify all historical data to prepare a current mineral resource estimate, drill high-priority exploration targets and define regional targets. Management has earmarked $1.8 million for the same.

EXK’s current growth pipeline includes the Terronera and Parral projects. Once a current resource is defined, Pitarrilla is expected to be substantially accretive on a silver-equivalent resource per share metric. While Terronera is the next project to be developed, the company stated that it might prioritize the Pitarrilla development over Parral, depending on the further drilling and analysis of economies of various scales and options for production.

Pitarrilla is a strategic fit for Endeavour Silver, which has a successful development, exploration and underground mining track record in the region. The project has been de-risked by SSR Mining, with several key exploration and mining permits obtained and collaboration agreements already in place with the local community. The geology at Pitarrilla is similar to Endeavour Silver’s underground mines — Guanacevi and Bolanitos — which is an advantage.

Per the Silver Institute, the global silver market realized growth in every demand category in 2021. The total global silver demand has peaked to the highest level since 2015, gaining 19% to 1.05 billion ounces last year. Gains are expected this year as well across all key demand components. Consequently, the global silver demand is expected to attain a record-high of 1.112 billion ounces. The increase will mainly be driven by record silver industrial fabrication, which is expected to be up 5% due to higher demand from both traditional and critical green technologies. Silver being a critical element to decarbonize the economy, its demand is expected to remain strong in the years to come. With the addition of Pitarrilla, Endeavour Silver will be able to capitalize on this demand in the years ahead.

Price Performance


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Shares of EXK have fallen 48.6% over the past year compared with the industry’s decline of 45.4%.

Zacks Rank & Stocks to Consider

Endeavour Silver currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Albemarle Corporation ALB and Cabot Corporation CBT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 112.4% upward in the past 60 days.

Albemarle's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20%. ALB has rallied roughly 17% in a year.

Cabot has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 6% upward in the past 60 days.

Cabot's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has risen around 9% in a year.


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Albemarle Corporation (ALB): Free Stock Analysis Report
 
Cabot Corporation (CBT): Free Stock Analysis Report
 
Endeavour Silver Corporation (EXK): Free Stock Analysis Report
 
Silver Standard Resources Inc. (SSRM): Free Stock Analysis Report
 
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