Endeavour Silver Corp. (EDR) Earnings Call Transcript & Summary

Well, I'm David Mandy, President of O&M Partners. I want to welcome everyone today to the Endeavour Silver Corp.'s Town Hall Webinar. Endeavor Silver trades on the TSX under the symbol, EDR, and they also have a New York Stock Exchange listing, EXK, again, on the NYSE under the symbol, EXK. For those of you who are new to this broadcast, O&M, that's become the link between the nondeal investing public and public companies. In past times, these groups, particularly in mining, kind of passed each other like ships in the night. But our digital road map has enabled us to keep pace with the tremendous changes in investor demographics. Not only during COVID, but just before COVID, even 6 years before, we watched a big shift in investing behaviors so -- and how investors receive information. We want this broadcast to answer all of your questions. Some questions can be easily answered by going to the question portal of GoToWebinar or by e-mailing us. For any questions that remain unanswered, we'll be sure to follow up in a timely manner after the call. But for those who dialed in on your phone, the only way you'll be able to hear our prerecorded introductory presentation is on your computer speakers. If that is not possible, you'll be able to hear the main presentation in about 15 minutes. So we hope you'll please stay tuned. But before we turn to our host, I'd like to introduce our special guest today, Peter Schiff. Peter is the President of Euro Pacific Capital. He -- Peter's internationally recognized economist that specializes in foreign equity, currency and, of course, the gold markets. Peter has made a name for himself not only as the President and Chief Global Strategist at Euro Pacific, but he frequently delivers lectures on major economic and investment conferences, as often quoted in the media from everywhere from the Wall Street Journal to Barron's and Businessweek. His broadcast credits include regular appearances at CNBC, Fox, MSNBC and also, of course, Wall Street Unspun. So on that note, I'd like to turn the call over to Peter.

All right. So welcome, everybody, to this event, and I appreciate the opportunity to speak with everybody. Now I've been a long-term shareholder of Endeavor, going way back, and I'm looking forward to much better days, not just for Endeavor, but for the whole sector, the mining sector, because I'm really looking forward to or forecasting the biggest rise in the price of precious metals, which would include gold and silver, really, that we've seen. And I think this is going to be the biggest bull market since the bull market of the 1970s. Now we had a pretty good bull market from around 2001 to 2011, where gold rose from the floor, the bottom of a 20-year bear market, where gold was under 300, and we saw a rise up to 1,900. But that really just ended the prior bear market, right? That bear market began in 1980 when gold was around 800, 850 in 1980 and then was still below 300 20 years later despite the fact that the price of everything else went up when you had 20 years of the CPI going up and stock prices going up, and you had this huge decline in both gold and silver. Remember, silver got to over $50 or about $50 [indiscernible]. We're trying to corner the market in 1980, and it was like $4 or so in 2000. So a spectacular silver bear market. So we got the relief rally. In fact, silver actually got all the way back up to $50 in 2011. But of course, $50 in 2011 didn't buy nearly as much as $50 did back in 1980. So adjusted for prices, it's a shadow of its former high. But nominally, we got back up there. But -- so we ended that bear market. We had this big rally. That rally peaked out in 2011, and the reason that we saw the peak was because the Federal Reserve was able to convince the world that it could do the impossible, right, that it could actually normalize interest rates after having kept them at 0 for many, many years, and it could shrink its balance sheet back down to normal after blowing it up to $4.5 trillion. Now I knew that, that was impossible. I was warning anybody who had listened back then that the Fed could not do what it claimed it was going to do, that it was all bark and no bite. It was a big bluff. And the Fed bluffed about raising rates for a long time before it finally nudged them up from 0 to 25 basis points. And it took a long time before they started to gradually shrink the balance sheet. But as I said from the beginning, I said that if the Fed ever tried to normalize interest rates, it would fail. If it ever took the first step on the journey of shrinking its balance sheet that the jury would never be -- the journey would not be completed, that the Fed would have to do an about-face. And I predicted that QE4 would be bigger than QE1, 2 and 3 combined. And I predicted that the Fed would be back at 0, and that's exactly where we are. The Fed reversed course on rates in the fall of 2018 when the market started to implode because rates have been moved up back to 2.5%. And that was too much for an overly indebted bubble economy to bear. See, that's the problem. When the Fed creates a phony recovery by levering everybody else with debt, they can't remove the debt. It's like you can't prop the economy up and then remove the prop, right? One of the jokes I used to tell back when I was doing conferences is I said, "The Fed isn't just promising to do a difficult trick like pulling a table cloth out from under the dishes and having the dishes stay on the table. What the Fed is saying it can do is pull the table out from under the cloth, and the cloth and the dishes are going to stay suspended in midair." It's impossible to do that trick. Well, it's impossible to get everybody all levered up and then raise rates. They can't afford it. And so the market started to implode and the Fed did exactly what I said they were going to do. They started cutting rates. They went back to QE. They didn't admit it was QE. They said it was not QE, but it was QE because it was a distinction without a difference. The repo market blew up, and so the Fed had to step in and print money and buy up that paper to keep interest rates artificially suppressed because the market rate was too high for everybody to afford because we have too much debt. But then when COVID came, then we went straight to 0. The Fed didn't pass go. It went right to 0 on interest rates, and QE4 is now already bigger than 1, 2 and 3 combined. And we're just getting started, right? This is QE infinity. The Fed is now saying it's not even thinking about raising interest rates. So there is no way anybody in the world is going to believe the Fed if it even tries to bluff that it's going to raise rates one day or that it's going to shrink its balance sheet. So that is what saved the dollar and put a short-term top on gold. Well, we've now built a huge bottom in gold over the last decade, and we're about to explode higher. And the dollar is about to get killed, not only against gold, but against all the other world's fiat currencies. And there's nothing that's going to stop it. Because unlike 1980, when that bull market stopped with $800 gold, interest rates were allowed to go to 20% to stop that. They can't even go to 2% now. We already proved that. 2% is too high. How are we going to go to 20%? So the Fed is never going to be able to allow rates to rise because of all the debt that it enabled everybody to accumulate by keeping them so low for so long. So fighting inflation is off the table. The Fed has to surrender to inflation. Inflation wins. It's a knockout. And it's the dollar that gets knocked out. The dollar was crashing back in the '70s. And I mean, Volcker saved it. But Powell or whoever replaces him, if we -- post Powell isn't even going to try. The dollar is what gets sacrificed to try to prop everything else up. The only way to prop up the stock market bubble, the real estate bubble, the bond bubble is to sacrifice the dollar, keep printing and printing and printing. And that attitude has never been more on display than it is right now with COVID-19 because the U.S. government has basically said, "Nobody has to work. Nobody has to go to the offices. Nobody has to actually earn a paycheck. We'll just send you the money." The Fed will just print up money and just replace everything that you're no longer earning, right? We don't have to work and produce. We'll just consume, and we'll just print money and give it to everybody, and you just stay at home and buy stuff. That's the economy we have now. And we're running $4 trillion deficits. The government is talking about cutting taxes as it's increasing government spending. And so what's actually happening is the government has decided that it's going to fund itself mostly through inflation. In fact, right now, if you look at how much money the government is spending, the federal government, the federal government is only collecting $0.40 out of every $1 expense. So $0.60 is coming from the Fed, right? 50% more money is being printed and spent than taxed and spent. And the problem is the public doesn't realize what this caused. They don't realize that inflation is a tax. So they just want more free government. Give us more and more. Everybody wants more free stuff. And so that's what the politicians are selling, this bill of goods. And the world is going to have to look at this situation and like, "We can't take this. No mas. We're out of here." We can't subsidize this. I mean we've already subsidized these debts to the extent that the U.S. national debt is, what, $27 trillion or whatever it is. We can't take it to $30 trillion or $40 trillion. The Fed's got a $7 trillion balance sheet. We can't let it go to $10 million or $20 trillion. I mean the world can't afford to underwrite this degree of profligacy. I mean they should have cut us off a long time ago. But they got trapped in the dynamic of throwing good money after bad and being afraid of the dollar crashing and them losing the value of the dollars they have. But in order to prevent the dollar from crashing, they have to keep on buying more. So in the end, they end up with a bigger loss because they have more dollars when the bottom drops out. So what's about to happen is the world is going to reject the dollar standard and go back to the gold standard. That's where we're headed. Gold beats all these fiat currencies hands down. And so gold was the reserve before the dollar, and it will be the reserve after the dollar. That's the only monetary system that works, right? It imposes discipline on governments, keeps them honest, prevents asset bubbles, and it facilitates trade because you have stability in exchange rates. So that's where we're going. So how do we get back to a gold standard from a dollar standard? Well, central banks need to buy a lot more gold. That's what's going to happen. And the price of gold is going to have to go a lot higher. That's it. You can't go back on a gold standard with $2,000 gold. Maybe $20,000 gold, but not $2,000 gold. Now you could go on a gold standard with $20,000 gold if you let the price of everything else go down by 90%, but that's probably not going to happen. I mean the political reality is to have that kind of deflation, it's just not going to happen. So rather than collapsing the price of everything else, they just let the price of gold go up, and that's what happens. So if you get all these central banks, they have very little gold, that now have to come in and buy gold, the price goes up. And now they don't have to buy as much because the price is higher. And now the value of their gold reserves goes up. But it's not just going to be central banks that are going to be buying gold. Gold is going to be bought by institutions, pension funds, endowments. Everybody is going to have an allocation to gold in their portfolios, 5%, 10%. It's going to be commonplace. Now when you have everybody in the investment world trying to have an allocation to gold mining stocks or silver mining stocks, even a small allocation, you're talking about all these whales coming into a tiny little pond of stocks. The prices are just going to go ballistic. So not only are the prices of the underlying commodity going to go way up, but the mining stocks, the premiums that they're going to trade at because the whole sector is going to be in demand. I mean one of these days, we are going to have a dot-com style bubble in the mining stocks. It's going to happen. We're not even close to that. We are still in the ground floor. We've just finished building this 10-year base, and we're getting ready for the next more powerful leg up in this market. And the great thing about the valuations, you look at these gold and silver stocks. Oh, look at Endeavor. What is Endeavor? $4, something like that. The vast majority of the mining companies are a fraction of where they were 10 years ago or 7 years ago. And so we're still in the infancy of this market because not only are these mining stocks not priced to reflect all of the gains that gold and silver are going to have in the future, they're not even priced to reflect the gains that they've already had in the past because speculators don't believe those gains are going to endure. They're expecting the prices to go down, and they've already priced those expectations in a lot of these stocks. So there's so many ways the crowd is going to get this wrong. And that's how you make a lot of money, betting against the crown. Well, the consensus today is that the central bankers know what they're doing, that they got the situation on their control, that the dollar is sound. They're completely wrong, right? This is a much bigger bubble than the dot-com bubble or the housing bubble. And I think betting against this bubble is going to be a lot more profitable than was betting against the housing bubble. But the best way to bet against this bubble is to bet on the gold and silver mining stocks. The real way to bet against this bubble is with gold and silver. And to make a bigger bet, you get into the mining stocks. And a lot of people say, "Don't fight the Fed." I agree. I'm betting on the Fed. That's why I'm buying gold and silver mining stocks. I'm betting the Fed is not going to do the right thing. It's going to continue to do the wrong thing. There is no precedent since Paul Volcker of the Fed ever doing anything right. Everything that's been done since Greenspan has been wrong. And I bet that trend is going to continue, right? And that's why I'm owning gold and silver and these mining stocks because I don't think they have the courage to do the right thing. And the longer they wait to do the right thing, the harder doing the right thing becomes because it's a bigger bubble, and the consequences are more severe when it pops. So I'm betting right there with the Fed. I know that they're going to keep printing money. Whenever the stock market drops, print money -- or lower interest rates, print money, lower rates, whatever. That's what they're going to do. And they're going to keep printing money until it has no value. And then what will? It's gold and silver. That's real money. And as I said, buy the stock. And by the way, in case anybody is interested, I am a broker. I do have a broker-dealer asset management company. If anybody's interested in buying some shares of Endeavour, happy to work that order for you. Actually, we trade all around the world. So we can get you into the Australian market, Canadian market. Any place there's a gold stock that we like, we can help you access it. So you can contact me at your Euro Pacific Capital. This -- I got the backdrop up here for my asset management company, Euro Pacific Asset Management. That's -- europacificfunds.com is the website for that. We trade with a lot of international clients through my asset management company. And so yes, if you do -- if you have a portfolio and you'd like somebody who knows mining and mining stocks, it's a very specialized industry. I've got Adrian Day. If you haven't heard of him, he's been in the industry for 30, 40 years, got the best track record in the business. And then, yes, follow me on social media. I'm doing a lot -- my podcast on shiftradio.com. If you're not familiar with me, you can also follow me on YouTube on The Schiff Report. And I'm on Twitter, Instagram, Facebook, Peter Schiff, so make sure to follow what I have to say. And I'm constantly talking about the financial news and the economy, and I'm giving out information that you're not going to get in the mainstream, either they don't know it. Or if they know it, they're too afraid to speak it.

Thank you, Peter. That was a wonderful, wonderful introduction. Now we'd like to turn to our host today, Bradford Cooke, who is the Chief Executive Officer of Endeavour Silver. Bradford has a deep background in mining. He was a professional geologist -- is a professional geologist, I should say, an entrepreneur, been over in the business over 40 years. He's -- has specialized in the formation management financing, the whole gamut of exploration and mining companies. He's been involved in acquisition. He's been involved in exploration development. He founded Endeavor Silver in 2003, and that was for the purpose of acquiring high-grade silver/gold projects in Mexico. Since then, the company has acquired, rebuilt and expanded 4 silver/gold mines in Mexico and made a discovery with the potential to become Endeavor's fifth mine. So on that note, I'm going to turn the call over to Mr. Bradford Cooke. Bradford, to you.

Well, fabulous, David. Thank you very much for that, and welcome, everybody, to this presentation on Endeavour Silver. Just a brief intro. I'm an exploration geologist. I've been in the mining industry for more than 40 years. And really, the concept behind a silver company like Endeavour started in the…

I'm sorry, Bradford. We're not seeing your presentation at the moment. We're actually looking at e-mail…

Let me share my screen.

So sorry about that.

No worries. Looking for the screen share.

You were showing -- it's just that you were not on your presentation. Let me give it back to you if you're sure your presentation is up.

I have my presentation on my screen now.

Okay. Here, let's try it again.

Okay.

There we go. Sorry about that.

Yes, I'll actually make it a full-screen mode. There you go.

Perfect.

So before I dive into the presentation, I just want to give people a flavor for how we started. And this cycle, as Peter Schiff mentioned, has been running really since 2000, 2001. In fact, gold, in terms of U.S. dollars, bottomed in March of 2001 at about $250 per ounce. And by late 2002, early 2003, gold broke through $300. So a massive 20% move, and yet silver was still flat on its back at $4.50. So that was really the time when I realized that it was a good opportunity to form a silver company. Anybody who's been through precious metal cycle knows that wherever gold goes, silver follows. And yet silver typically lags behind gold. In 2003, we were steering at such a lag. And that's why I founded Endeavour Silver. We chose Mexico because it's close to home, and it's grossly under-explored. We felt there was tremendous opportunities to build a silver company based on Mexican assets and got very fortunate. We, I think, toured a number of operations type projects in 2003. We were fortunate in November of '03 to walk through the gates of a fully built and permitted mine called Guanaceví that had closed for lack of ore. And yet when we did the mine and plant tour, we recognized that there was phenomenal exploration potential and virtually no effort to do exploration, especially drilling, to find virgin ore bodies hiding below surface. So that was really how Endeavour got its start. Anyway, without further ado, why don't we dive into the presentation, entitled Driving Organic Growth. Organic growth is probably the best way you can differentiate Endeavour Silver from our peer group in the silver mining business. I will be making some forward-looking statements today, so you are duly cautioned. Endeavor today is considered to be a mid-tier producer of silver and gold. We own and operate 3 high-grade underground mines in Mexico. We're just coming off the end of a 6-quarter operational turnaround to reduce our costs and boost our productivity. As I mentioned, we have the best organic growth profile in the sector. Every ore body we've developed, every mine we've put into production was on the back of a discovery made by our exploration group. So we do live and die by the drill bit, even though we're a mining company. We have historically pulled the trigger on opportunistic mergers and acquisitions, typically at the asset level, and we continue to scour the planet for opportunities today. And last but not least, amongst all the solar producers Endeavor is one of the very few that produces only silver and gold. We have no copper, lead/zinc or other metal production. And as a result, we have the best leverage, the best beta of our share price to the store price in the sector. So head office, in Vancouver, BC, all of the core assets currently located in Mexico and an exploration portfolio to be drilled in Chile. Currently, about 2,000 employees and contractors. And if I can do a quick tour of the assets here: our first mine, Guanaceví, is located in the Durango state; second mine, Bolañitos in Central Guanajuato state; our fourth mine -- El Cubo was our third mine, now closed; fourth mine, El Compas, is located in the Zacatecas state; and then we have this development pipeline next up with the Terronera discovery in Jalisco, followed by our Parral discovery in Chihuahua. Some recent highlights. Even with an abbreviated production profile due to a government-mandated shutdown due to COVID, we lost basically 2 months in our second quarter, in the first half, we were able to produce 1.5 million ounces of silver and 14,000 ounces of gold for about 2.5 million ounces of silver equivalents. Thanks to the operational turnaround that was launched 6 quarters ago, we've significantly improved financial performance in the first 2 quarters of this year. And in fact, in Q2, each mine generated positive free cash flow. The mines still have some upside to give. Guanaceví, even though an outperformed plant, is still -- I think got more tonnes, more grade, more recoveries to give. Bolañitos, which was slightly below plan in the second quarter, should be on plan and exceeding plan here in the second half of the year. And El Compas is trending a lot at plan. Moving to our exploration and development pipeline. I mentioned that the Terronera project was up next. We've taken some time the last couple of years doing economic studies on what we found at Terronera, currently about an 80-million-ounce combined reserve and resource, silver equivalents, of which I believe over 70 million ounces is in reserves. And the latest iteration was published about 6 weeks ago, giving us a net present value of $137 million at a gold price of around $1,400 gold and a silver price of around $16. That generates a 30% after tax internal rate of return and with a 2.7-year payback of the initial capital invested. Initial mine life's 10 years. We think it will be much longer with additional exploration, and the life of mine all-in sustaining costs are incredibly low, $2.10 per ounce of silver produced. And even today, after 13 years of operations in Bolañitos, we're still finding new high-grade veins. Even after 17 years of exploration at Guanaceví, we're still finding high-grade veins. Our revenue split this year is about 50-50, silver/gold. And as you can see from the pie chart, Guanaceví is our largest mine. So let's have a tour of the assets. First up is our Guanaceví mine purchased in 2004. This is the one that I visited in November of '03, fully built, fully permitted, shut down because of the Mexican owners who thought they've run them before. We begged to differ. We structured a $7 million purchase deal and got to work in May, June of '04, exploring the high-priority targets that we had selected. By July, we had announced our first high-grade new discovery, virgin ore body hiding below surface. And by September, we colored a decline to develop that discovery. In December of '04, we were in production. 6 months from signing the deal, to finding an ore body, to developing the ore body, to production and cash flow. We really had our eyes opened by that business model. It became the Endeavour model, which we've nicknamed fully built, permitted and closed. So the operational turnaround needs, I think, some explanation at Guanaceví. For many years, it was our main mine, and we were our lowest quartile cost producer. But in 2018, '19, we fell on hard times. Why? Well, we were still mining the original discoveries from 2004. And instead of being shallow, thick and rich, as they were historically, we were now 700 meters deep. We were into the low-grade portion of these veins, and the grades have fallen. So it was, unfortunately, not a formula for success with such low metal prices during the bear market. And we took operating losses in '18 and '19, largely because we had a plan to close these original lines and open up new mines on new discoveries that we've made in recent years, but were delayed by the permitting and, therefore, the mine development. I'm pleased to say, in January of this year, we completed the operational turnaround at Guanaceví. We turned off the old mines, the deep mines, and turned on 3 new high-grade lines that are much shallower. And that's shown on the chart here on Page 7, with rising tons from the mine to the plant. It's up to 1,050 tonnes per day in June, actually more than that now. And the grades rising to 412 grams per ton of silver equivalents in June. And the life of mine for the rest of the life here should be around that mark. So a wonderful turnaround from being our biggest money loser last year to our biggest moneymaker this year at Guanaceví. And so you can see it in the costs. Even with the 2-month shutdown in Q2, we were in the money on costs and still improving here in Q3. I think long term, we'd like to see the cash costs here about $5 and the all-in cost between $8 and $10, which is where we were historically. So let's move to our second line, Bolañitos in the famous district of Guanajuato. We acquired this mine in '07 and went on quite a run, making numerous high-grade discoveries in '08, '09 and 2010. And between 2009 and 2018, Bolañitos was actually our most profitable mine, generating over $200 million of free cash flow during that period. And yet, in 2019, it also fell on hard times due to exactly the same reasons as Guanaceví, staying too long in the original ore bodies, ending up trying to mine narrower lower grade, deeper ore in a bear market when we should have just closed them, which we did here in the last quarter, and focusing on 2 new discoveries, San Miguel and Melladito. So what does that operational turnaround look like? Again, the grades fell as low as 40 grams per tonne silver, 1.45 grams per tonne gold. And now we're seeing a significant lift in both silver and gold grids. We did some massive improvements at Bolañitos to turn that mine around. We revised the mine plan, acquired new equipment, accelerated the development of the new ore bodies, discovered more new ore bodies and basically improved the availabilities of the mine and the plant. In terms of tonnes per day, we bottomed at 778 tonnes per day at this time last year, and now we're cruising along at north 1,000 tonnes per day. So there's still more to give here. We have a 1,200-tonne plant and still in the final stages of development at San Miguel and Melladito. But nonetheless, we expect to break out into the black here in the third quarter at Bolañitos. Last but not least, our fourth line, El Compas, was acquired in 2016, came to production in March of 2019. And it's the south end of the famous Zacatecas district. We are tugging along at close to the plant capacity of 240 tonnes per day. And it's primarily a gold mine. It will never be our biggest moneymaker because it's so small, but it is, in fact, very profitable. If you look at the costs in Q2, negative $97 cash cost. That's because of the gold credit is basically almost the entire revenue, and the all-in sustaining costs at negative $48. So those are the 3 operating mines, and all of those are making good money, obviously, at current prices, with the costs still coming down. Let's move now to our development pipeline. First up is our fabulous Terronera discovery in Jalisco state. Terronera represents what should become our largest and lowest cost mine. It's truly our next core asset. It's a district scale opportunity, covering over 17,000 hectares. We've now mapped and sampled over 50 old mines. We've made 2 bona fide new discoveries, the Terronera discovery and the La Luz discovery. We stopped drilling 2 years ago when we got to more than 80 million ounces of combined reserves and resources. And we've been focusing on economic studies since that time. The most recent prefeasibility study was released about 6 weeks ago, indicating that we can produce 3 million ounces of silver and 33,000 ounces of gold here for at least 10 years. That's about 6 million ounces of silver equivalents at an 80:1 ratio. What makes Terronera special is that the ore bodies are shallower, thicker and richer than our other mines. And therefore, the economics are better. Pure and simple. Look at the cash costs. Basically, the cash costs in the latest economic study for the production of silver and [ half of ] the gold credit was 0. In other words, gold covers for all of the costs to run the mine. The silver is effectively free. Even on an all-in sustaining cost basis -- and let's define that. Cash cost is basically the cost to run the mine for a day, cash in, cash out. All-in sustaining costs includes life of mine capital investments, life of mine exploration expenditures, life of mine access and royalties and head office costs. And even on that all-in basis, we're estimating a very low $2 per ounce of silver produced for the cost of this mine. So it will be one of the lowest cost mines in the entire silver sector. We found it, and we're not proposing to build it. There are 3 cases here shown on this slide, and we published the base case with $16 silver and $1,400 gold. But take a look at the -- my screen here so we can look at the -- current case, the current spot prices, the net NPV almost triples to $350 million. The IRR doubles to 65%. Payback period shrinks to 1 year. And on an after-tax free cash flow basis, this mine will generate at current prices almost $60 million after-tax every year. So it's a phenomenal opportunity for the company. This graph shows the silver production, gold production and silver equivalent grades in the red dots. And we front-loaded the grades to speed the payback period of the mine. But even at the end of the mine, the grades would be in the top quartile of grades produced throughout the silver sector. As we go now to feasibility, today, we announced that we're moving to a final feasibility stage here. It will take about 9 months and $1.5 million to complete feasibility. So we're already on the doorstep of full feasibility. And even though the purpose of the feasibility study is a final derisking of the project, there are still significant upside opportunities we hope to capture in the feasibility study. We're currently staking more ground at Terronera's to expand our footprint. We've just restarted in 2 weeks ago the drilling to expand the resources at the site. We're now evaluating the potential to expand the proposed mine and plant. We're evaluating -- optimizing our mining methods through more geotechnical drilling to allow for additional low-cost, long-haul mining. We're actually looking at an automated underground rail haulage system that wouldn't require as much ventilation as typical diesel truck haulage and at a significant lower cost than truck haulage. We're evaluating electric equipment so that we can be as green as possible, and, again, to minimize the amount of ventilation required underground. So significant opportunities remain to be captured here at Terronera. Next steps, we just launched a feasibility study. We've been adding to our project development team, led by our Director of Project Development, Ernesto Lima. We're now entering into the engineering, procurement, construction and management process with contractor bidding and selection. We've just extended some permits so that we could get started on long lead items, such as mine and plant development, and we're evaluating other upside opportunities. So that's Terronera. And we wish to invest $100 million starting in about 18 months' time, 24 months' time. And we would see initial cash flow in early 2023 at Terronera. Our Parral discovery is intended to follow Terronera in the development pipeline, and it's got already a 40 million-ounce combined resource. We think the opportunity to expand that resource is significant. This is a historic operation producing 4 million ounces a year, closed in '90. And there were 4 historic mines on our current properties, Veta Colorada, San Patricio, La Palmilla, and Cometa. It will remain in advanced exploration and early-stage permitting for the next couple of years while we focus on Terronera, but Parral truly is going to become another core asset following Terronera. And last but not least, we have a portfolio of world-class prospects to drill in Chile. We assembled this portfolio during the harsh of the bear market when nobody else was doing what we were doing. And you can see from the photographs that these are massive alteration zones, measuring kilometers in each direction. That little red dot at the top photo was, yes, our truck, pickup truck. We're very excited to be in Chile. Why are we in Chile? Well, I get that question from a lot of shareholders. Very simply, we're going to produce about 6 million ounces of silver equivalents this year. And Terronera, when it comes on, will add another 6 million ounces of silver for an almost doubling of our production. Terronera historically had 4 million ounces. We conceptually want to bring it back at 4 million ounces. So from 6 million to 12 million to 16 million ounces, it's hard to grow the company after that. At 16 million ounces a year, adding 2 million, 3 million, 4 million ounces from new opportunities just doesn't do a whole lot for us. So the whole purpose of Chile, given that every mine we've built was based on our own exploration discovery, is to get into a new discovery of world-class potential. And we have 3 of them. Cerro Marquez, which is a bulk tonnage porphyry copper play. Because copper is not core to our business, we're currently shopping it with major copper producers to effectively partner in the project going forward. Paloma, which is a high sulfidation gold silver project in Northern Chile, and that's similar to the 4 million-ounce Solares Norte discovery. So it's a big target. And we'll start drilling it here in the fourth quarter. And then last but not least, Aida, which we hope to drill next year. It's a 200 million-ounce silver project. So all that adds up to a sector-leading organic growth strategy. We have some of the best cash flow leverage in the business, thanks to not only the rising metal prices, but our falling production costs. It's almost a perfect storm in our cash flow. We have some of the best leverage to growth in the business through our organic growth pipeline, with Terronera and Parral, and of course, 3 swings of the home run bat, trying to find a world-class discovery in Chile. Our cap structure is currently 155 million shares out, about a $650 million market cap. I showed you the spot case on Terronera. Almost 2/3 of our current market cap can be found in the net present value of Terronera alone. For a mid-cap company, we actually do tremendous volume. Today is a bit of an off day at about 2 million to 3 million shares per day. But within the last 3 months, we've averaged 7 million shares per day. That's almost $3 million of turnover daily. For a mid-cap company, that's pretty special. Listed on big boards in Toronto and New York. Working cap at the end of the quarter was $45 million; cash position, $30 million. Both of those have grown substantially here in the fourth quarter. Major shareholder, the VanEck, GDXJ Index Fund has a 6% position in the company, and the largest silver mining company in the world, Fresnillo plc, has a 2% toehold in the stock. 10 analysts cover the stock, and our sector-leading beta is 1.6x the silver price. So catalysts going forward? Well, obviously, finishing off this 6 quarter operational turnaround, which should be done here in the next month to continue reducing our costs; obviously, optimizing Terronera with the full feasibility study now finally underway; extending the mine lives through continued drilling around the 3 operating lines; and of course, going after a world-class discovery in Mexico -- or in Chile, rather. Last but not least, we're always accretive in terms of growing through M&A. And while we can never guarantee new acquisitions, we're certainly looking. So why invest in Endeavour? What you get with Endeavour is a mid-tier silver producer, who, through the development of our own organic growth profile, will become the next senior producer of silver in the space. We're run by an experienced management group who've been together for years. We have a strong balance sheet with no long-term debt, and we're a pure silver/gold play. So thank you very much, and let's open it up for Q&A.

Thanks, Bradford. Great presentation. Well done. We're going to start today with our questions. We're going to start with [ Doug Loud ]. [ Doug ], questions today?

I would just point out, Bradford, that you do have your e-mail on screen. You may want to minimize that or bring up your presentation.

Oh, okay. Didn't realize it was there. There you go. Great.

Maybe bring back -- yes, there you go, bring back up your -- perfect, your desktop or your presentation.

Perfect.

Sorry about that.

Thank you. Thank you. [ Doug ], you're with us?

Yes, I am. Hopefully, my mic is behaving today. Can you hear me, Brad?

Yes. Absolutely.

Okay. Good. There have been sort of changes in the Mexican government…

Sorry, [ Doug ]. Sorry, [ Doug ]. Brad -- Bradford, it's still -- your e-mail is still up.

Okay. I'm just going for the presentation now.

I see. I'm sorry.

That's why I clicked it off prematurely. Hang on a second.

I have taken back presenter just while you get that up…

That's fine just with you full screen now for Q&A.

Yes. We can just have just you on. Unless you need to reference your presentation, let me know, and then I'll give you back the screen…

No, I don't need it. Let's go full screen.

Perfect. So I think, [ Doug ], you're up.

Okay. Can you hear me, Brad? [ Doug Loud ] here.

Absolutely. I hear you, [ Doug ].

The Mexican government has been somewhat transitional over the last 4 or 5 years. And I was wondering, have you had issues with taxing authorities, government authorities, permitting issues, any of those kinds of things?

So we got whacked by the previous administration on the tax side. In 2013, the then government boosted taxes, primarily the EBITDA tax, which is very punitive, and the precious metals royalty. So that basically took Mexico from being a heavily preferred financial jurisdiction to simply being the same as Canada, Chile or Peru and not as good as the U.S.A. The current administration, even though they're a socialist administration and have clearly different agendas than mining, have pretty much left us alone. And they have been somewhat helpful when our mining group in Mexico has run into specific issues, whether they were community issues. And I'm not talking about Endeavour. I'm talking about my peer companies. The word, we, Endeavour, are very fortunate that our 3 mines are located in very historic areas, very peaceful areas. We haven't had any drug issues. We haven't had any labor issues. So we're very fortunate from that point of view. I like Mexico. I think it's still a desirable jurisdiction. It's got phenomenal discovery potential, even, what, 20-some-odd years after it opened up. But in terms of financial performance, it's not much different than Canada or Chile.

That was my other question. I'm fascinated by the Chilean projects having been there. Are those in the Atacama? Where are they in Chile?

Yes. They're in the Atacama, in the Far North. Aida is actually on the corner of Bolivia, Argentina and Chile, and Paloma's about 30 kilometers to the southwest of that. We're in the very young Miocene belt, which is the home to the largest historic gold projects and copper projects in Chile. And the Far North is relatively unexplored because of, let's call it, less infrastructure there. Even though Paloma's 3 kilometers off a paved highway and a natural gas pipeline and Aida's only about 20 kilometers off the same infrastructure, nobody -- no Chilean has explored up there. It's amazing.

I mean to say that it's infrastructure-challenged when you're in the Atacama to start with, where there hasn't been any rain for 50 years, is fascinating answer. I like that fact very much. That's very interesting because Chile could be really very exciting. Very interesting.

Thank you.

Thanks for your questions, [ Doug ]. All right, we're going to turn to [ George Betgardplace ], [ George ], question today for Bradford?