TORONTO (miningweekly.com) – Mexico-focused midtier precious metals producer Endeavour Silver has signed two contracts to sell its silver/gold concentrates and facilitate higher production in 2013 from its Bolanitos mine in Guanajuato state, Mexico.

The two contracts would allow Endeavour to sell its current concentrate inventory of 1 400 t by month-end and add about $20-million cash to working capital during the peak period of capital spending at El Cubo, also in Guanajuato state.

The company on Wednesday said the deals were commercially competitive with Endeavour's own costs to process the concentrates into saleable metals.

In 2012, Endeavour expanded the Bolanitos mine and plant by 60% to 1 600 t/d and since the fourth quarter, 2012, the Bolanitos mine output had actually been more than 1 700 t/d, well in excess of plant capacity.

The extra mine output was processed into silver/gold concentrates at the Las Torres plant, which is under lease next to Endeavour's El Cubo mine.

However, Endeavour did not have sufficient capacity at its two leach circuits at Guanacevi and El Cubo to process the extra Bolanitos concentrates into dore bars, resulting in it being stockpiled.

Endeavour said it was also arranging to sell 500 t/m of Bolanitos concentrates for a six-month period in order to allow the Guanacevi and El Cubo plants to conduct updated metallurgical reconciliations and balances for Guanacevi ores and El Cubo concentrates.

It would also provide an opportunity to optimise silver and gold recoveries at both plants.

The net effect of the concentrate sales should be the production of higher payable metals at a slightly higher cash cost per ounce, resulting in slightly higher cash flow, when compared with the lower payable metals at lower cash costs from processing the concentrates through Endeavour's leach circuits, the company said.

Endeavour said it expected to have “ample” leach-circuit capacity to process both Bolanitos and El Cubo concentrates when a metallurgical programme and the El Cubo plant reconstruction were finished during the second quarter.