DENVER (TheStreet ) -- Endeavour Silver(EXK) is working hard to drag itself up from junior status to a mid-tier mining company in order to entice big buyers.
Endeavour Silver has two large silver mines in production with total silver resources and reserves of 59 million ounces. The company also has a "gold sweetener" with more than 250,000 ounces of gold. The miner recently announced that third-quarter silver and gold production grew 20% and 28%, respectively, from the same period a year earlier.
Shares have rallied 18% year to date and trade at a forward price-to-earnings ratio of 14.77, a discount to the industry average. Despite the fact that the company is excelling in organic growth, CEO Bradford Cooke told me at the Denver Gold Forum that his long-term exit strategy is to be bought out.
Silver producers with a $1 billion plus market capitalization include Silver Standard Resources(SSRI_), Pan American Silver(PAAS_), Coeur D'Alene Mines(CDE_) and Hecla Mining(HL_), but Cooke says he is nowhere near ready to sell.
Organic growth seems to be your strategy right now, are you also looking to be bought?
Cooke: Our first strategy was to acquire fully built and permanent mines in Mexico that were put up for sale because they had run out of ore. We've executed that strategy twice now in the last five years.
Our first mine and our largest mine is the Guanacevi mine and again it was a fully built and permanent facility that had been put up for sale for lack of ore. We came in, negotiated a purchase price and immediately invested our time money and expertise to try to find new ore. Fortunately, we were successful very quickly and we were able to restart the mine within six months of signing the contract, so six months from discovery to production.
We duplicated that feat in 2007 almost an identical concept. We bought the Guanajuato mines ... It wasn't quite as fast from discovery to production because these mines needed a lot more work, rehabilitation work, in order to access old historic reserve areas. While we were doing that rehabilitation work, we got going on exploration.
In September of 2008 we made a discovery called the Lucera discovery by drilling. Two months later we had access to that ore body from underground and in January of 2009 we were pulling ore from it so that was actually four months from discovery to production. So that' s one aspect of our business model ... that's pure organic growth right.
