In these times of an uncertain US dollar value, many investors have been investigating base metals, either as a stock or a hard asset. This investigation, however, needs to understand that base metals are a commodity and, although tied to the US dollar as an investment option, are not exclusively tied to it. From a general standpoint, these base metal plays are as closely tied to supply and demand as the value of the US dollar. More product means lower price.
If one is to consider a mining, or any commodity stock, how quickly and how much that company can get to market at the highest price is the idea. Another, especially in the mining sector, is what is the political situation of the country being operated in? Generally, this is because a shut-down of operations will limit the ability to move ore and product. In the silver and gold marketplace there are several supply and demand issues to understand in a rapidly changing marketplace. They are, however, routes to solid profit if the right choices are made.
Endeavour Silver Corp., a mining exploration and development company, works to discover and exploit base metals primarily in Mexico. The company generally focuses its efforts on silver deposits but has found significant gold opportunities during exploration activities.
Endeavour Mining operates several sites as it goes about its exploration activities. It does, however, derive a large majority of its finished silver and gold production from three main sites. From these sites, the company has found Q3 2009 production of (in excess of) 200,000, 450,000 and 660,000 oz. of silver production and 1,100, 24,000 and 36,000 oz. of gold production. From a production standpoint for gold and silver, the company’s combined mine is perhaps the most productive and being worked 6 days per week.
In a general sense, the company appears to be operating at peak efficiency and has identified several solid new veins of silver and gold. It works underground as well as with some relatively shallow surface operations. In the third quarter 2009, the company demonstrated a lower cost structure to extract the ore and increase overall margins. As most mining company executives will agree, getting the ore out of the ground and to market as fast as possible is the key to profit. Endeavour Silver Corp. is following this model and seems to be doing it very well.
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