Endeavour gets US$120M Terronera loan
Endeavour Silver has executed a credit agreement for a senior secured debt facility for up to US$120 million for the construction of the underground mine and mill at the Terronera silver and gold project in Jalisco, Mexico.
The debt facility, secured through a first-ranking security interest over Terronera, is for an 8.5-year term, including a two-year grace period during construction, with interest charged at the US Secured Overnight Financing Rate (SOFR) + 4.5% per annum before completion and SOFR + 3.75% upon completion. Repayments will start in the December quarter of 2025.
A cash sweep will be applied to 35% of excess cash flow after debt service from completion onwards until $35 million of loan principal has been prepaid. Endeavour is also required to enter into a hedging program for 68,000oz of gold over the initial two operating years prior to the initial drawdown. There is no hedging requirement for silver production.
The company must also hedge foreign exchange to manage exposure to the Mexican Peso. This requires about 75% of the remaining capital expenditure incurred in Mexican Pesos to be hedged during construction and 50% of the projected Peso operating costs before completion. It will rise to 70% of the projected Peso operating costs.
Endeavour will also have to arrange project cost overrun funding in the form of cash, a letter of credit issued by a Canadian financial institution or a combination of both for up to $48 million.
ING Capital and Societe Generale arranged the loan.
Endeavour made a construction decision to build Terronera in April. It is due to produce 3.3Mozpa of silver and 33,000ozpa of gold for 12 years from reserves of 7.4Mt grading 377gpt silver equivalent containing 89.4Moz.
Shares in Endeavour Silver are trading at C$3.31, valuing the company at C$637 million.
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