Endeavour Silver unit finalizes $120 million secured debt facility

By Mary-Katherine Stinson

Lexington, Ky., Oct. 17 – Endeavour Silver Corp.’s wholly owned subsidiary Terronera Precious Metals, SA de CV executed a credit agreement for a previously announced senior secured debt facility for up to $120 million, according to a 6-K filing with the Securities and Exchange Commission

The facility will be used for construction of the underground mine and mill at the company’s Terronera Project in Mexico.

Cost overrun funding is required in the form of cash, letter of credit issued by a Canadian financial institution or a combination of both for up to $48 million.

ING Bank NV and Societe Generale acted as joint lead arrangers.

Key terms of the facility remain unchanged from terms as they were previously reported on April 18.

Specifically, the 8.5-year facility includes a two-year grace period during the construction phase of the project.

Borrowings bear interest at SOFR plus 450 basis points prior to construction completion and at SOFR plus 375 bps post-completion.

A cash sweep will be applied to 35% of excess cash flow after debt service from completion onwards until a $35 million prepayment of principal is reached.

Certain hedging arrangements are required including hedging up to 68,000 ounces of gold over the initial three operating years, but no hedging requirements apply to the silver production.

Prior to initial drawdown, Terronera is required to enter into a hedging program for managing exposure to the Mexican peso during construction. The program requires about 75% of the remaining capital expenditure incurred in pesos to be hedged. Additionally, prior to initial production, a hedging program requires that 50% of the projected operating costs incurred in pesos are hedged prior to completion.

Thereafter, the foreign exchange protection program for operations will rise to 70% of the projected operating costs incurred in pesos.

ING Capital LLC is the administrative agent and documentation agent.

Societe Generale is the technical agent and environmental and social agent.

Bank of New York Mellon is the offshore collateral agent.

Artemis Capital Advisors acted as the financial adviser to the company.

Terronera expects to draw down in 2024. Construction is expected to take 21 months, with initial production expected in the fourth quarter of 2024.

In April, it was reported that Endeavour’s board had approved the construction of an optimized Terronera Project scenario, with an initial capital expenditure cost of $230 million, partially offset by a decrease in sustaining capital to $88.3 million over the life of the mine.

Based in Vancouver, B.C., Endeavour is a silver exploration company.

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