Endeavour Silver hikes Guanacevi reserves (March 29, 2006)

Vancouver – Junior silver producer Endeavour Silver (EDR-T, EDRGF-O) has significantly boosted reserves and resources at its Guanacevi mines operation in Durango State, Mexico.

The project now hosts proven and probable reserves of 183,875 tonnes grading 589 grams silver per tonne and 0.85 gram gold per tonne in zones 1, 2 and 3. There were no previously classified reserves at the deposit, which now contains almost 3.5 million oz. of silver (almost 3.8 million oz. silver equivalent with the gold factored in).

Inferred resources also saw a significant increase, up 178% to 755,476 tonnes averaging 439 grams silver and 0.9 gram gold in the Porvenir Mine, Porvenir Dos and Deep Santa Cruz zones, or about 12 million oz. of silver equivalent contained.

“Total silver reserves and resources now exceed 13 million oz at Guanacevi, good for a 6 year mine life assuming 100% conversion of resources to reserves. This updated mineral reserve and resource estimate is further evidence of the robust size and grade of silver mineralized zones in the Santa Cruz vein system,” reviewed Endeavour Silver chairman and CEO Bradford Cooke.

In 2005, its first year of operation under Endeavour, Guanacevi produced 948,323 direct oz. of silver in addition to 2,332 oz. of gold, to give a silver equivalent yield of 1,088,543 oz. The mine was previously operated by Industrias Peoles.

Endeavour optioned Guanacevi in mid-2004, fast tracking development of the North Porvenir zone. About US$4 million in capital investments were expended in 2005, with the project generating US$1.5 million in net operating cash-flow from gross revenues of US$6.5 million. The company holds a 51% interest in the operation and can acquire the remaining 49% for two payments totaling US$3 million by early 2008.

The company continues on its expansion initiative to boost the mining rate from 350-tonnes-per-day to the 600-tonne-per-day level. It has forecast 2006 silver production to double to about 2 million oz.; with cash operating costs of US$4.50 per oz. Endeavour has budgeted US$4.3 million in 2006 for the new development and exploration.

Endeavour has recently arranged a $22.5-million financing through a syndicate brokers, including Salman Partners, Canaccord Capital and Dundee Securities, to place 5 million special warrants at $4.50 apiece. The brokers retain an overallotment option to sell an additional 2 million of the special warrants, each of which entitles the holder to one common share plus one-half of a warrant with each full warrant exercisable at $5.25 for 18 months.

On the reserve and resource updates, shares of Endeavour Silver rallied to new highs around the $5.00-level. The company posts a $160-million market capitalization based on its 32.5 million shares outstanding.