children of an idle brain

The most interesting part about the Endeavour Silver (EDR.to) (EXK) news release today isn’t about Endeavour Silver

Today Endeavour Silver (EDR.to) (EXK) reports on what it’s found at its new purchase, ‘El Cubo’, bought from AuRico (AUQ) for $250m ($100m cash and $100m shares now, $50m down the line if all goes correctly). The NR is here so go look (I’m still working thru the long NR, plenty of detail to digest) but the thing that’s most interesting is the way El Cubo’s reserves and resources have been significantly chopped from the old AUQ assumptions.
Here’s the breakdown. According to AUQ before the deal, El Cubo stacked up like this:
Proven & Probable (P+P) Silver: 18.5m oz
Proven & Probable (P+P) Gold: 322,000 oz
Measured & Indicated (M+I) Silver: 8.3m oz
Measured & Indicated (M+I) Gold: 269,000 oz 
Inferred Silver: 26.7m oz
Inferred Gold: 548,000 oz
Total P+P+M+I+I Silver: 53.5m oz

Total P+P+M+I+I Gold: 1,139,000 oz

And now, EDR has numbers for the very same mine like this:
Proven & Probable (P+P) Silver: 7.04m oz
Proven & Probable (P+P) Gold: 112,100 oz
Measured & Indicated (M+I) Silver: 4.43m oz
Measured & Indicated (M+I) Gold: 76,500 oz 
Inferred Silver: 11.41m oz
Inferred Gold: 220,000 oz
Total P+P+M+I+I Silver: 22.88m oz

Total P+P+M+I+I Gold: 408,600oz

Thirty million ounces of silver and 700k of gold gone poof? Big differences, which reflect mainly EDR’s changed attitude towards El Cubo and how to mine it. They’re looking to make El Cubo a high grade vein underground operation, rather than mining it for bulk at lower grades. That’s fair enough, but it also means El Cubo is now moving into the unknown. But the real story here is the way in which AUQ’s reserves and resources numbers have been chopped to bits and you have to wonder how the numbers it produces at its other mines would stand up to a bit of scrutiny if this is the result at ElCubo.
Are you surprised to hear that Rene Marion and AUQ (ex-Scammon Gold) took a liberal and generous attitude towards its reserve count? Nah, me neither.

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