Endeavour Silver and AuRico Gold Sign Definitive Agreement

Sun Apr 15, 2012 6:50pm EDT

* Reuters is not responsible for the content in this press release.

  VANCOUVER, BRITISH COLUMBIA, Apr 15 (MARKET WIRE) --
Endeavour Silver Corp. (TSX:EDR)(NYSE:EXK)(FRANKFURT:EJD) ("Endeavour")
and AuRico Gold Inc. (TSX:AUQ)(NYSE:AUQ) ("AuRico Gold") are pleased to
announce that they have entered into a definitive agreement whereby
Endeavour will acquire 100% interests in AuRico Gold's operating El Cubo
silver-gold mine in Guanajuato State, Mexico and the Guadalupe y Calvo
silver-gold exploration project in Chihuahua State, Mexico, for total
consideration of up to US$250 million.

    On Closing, Endeavour will pay AuRico Gold US$200 million, comprised of,
at Endeavour's election, up to US$100 million of the purchase price in
Endeavour common shares and the balance in cash. Post-Closing, AuRico
Gold will be entitled to receive up to an additional US$50 million in
cash payments from Endeavour upon the occurrence of certain events during
the three years following Closing.

    El Cubo is a producing silver-gold mine located in the southeast part of
the historic Guanajuato mining district in central Mexico, only 10
kilometers (km) from Endeavour's operating Guanajuato silver-gold mine in
the northwest part of the Guanajuato district (see attached map).

    Guadalupe y Calvo is an advanced silver-gold exploration project located
in the historic Guadalupe y Calvo mining district in Chihuahua State,
Mexico, approximately 300 km southwest of the city of Chihuahua. AuRico
Gold recently announced an updated resource estimate and preliminary
economic assessment envisioning a combined open pit and underground
silver-gold mining operation at Guadalupe y Calvo.

    The acquisition of the El Cubo mine is an excellent fit within
Endeavour's growth strategy of buying mines in historic mining districts
where management can create shareholder value by bringing its expertise
and capital to bear on expanding reserves and resources, improving mine
and mill operations and growing silver and gold production. El Cubo
complements Endeavour's Guanajuato mine and should provide operational
synergies going forward, as well as boosting Endeavour's silver
production to immediately move it into the mid-tier of primary silver
producers, with little or no equity dilution to shareholders.

    The acquisition of the Guadalupe y Calvo project also fits well with
Endeavour's growth strategy as it is located in an historic mining
district and has good exploration upside to increase silver-gold
resources and the potential to become Endeavour's fourth mine. Endeavour
plans to further explore Guadalupe y Calvo with additional drilling
before re-assessing its mining potential.

    For AuRico Gold, this announcement follows the recent signing of a
definitive agreement with respect to the divestiture of AuRico Gold's
Australian mines and is consistent with AuRico Gold's strategy of
focusing on its large, low cost, core assets. AuRico Gold is now
directing all of its attention to delivering value for shareholders from
its three operating mines, including Young-Davidson where first
production is imminent, and its development pipeline in Mexico and
Canada.

    Bradford Cooke, Chairman and CEO of Endeavour, commented, "El Cubo's
proximity and similarity to, and potential synergies with, our Guanajuato
mine, make El Cubo a logical and strategic acquisition for Endeavour that
will have an immediate and sizable impact on our production, reserves and
resources with minimal or no dilution to our shareholders. We hope to
replicate at El Cubo the same types of exploration and operational
successes that we have engineered at our Guanacevi and Guanajuato mines."

    Rene Marion, President and CEO of AuRico Gold, commented, "AuRico Gold is
pleased to have reached an agreement with Endeavour Silver on the El Cubo
and Guadalupe y Calvo properties. AuRico Gold views Endeavour as a
logical owner for these properties and are solid operators positioned to
deliver on the potential we see at both the El Cubo and Guadalupe y Calvo
properties. We look forward to participating in the future success of
these two assets through our potential ownership interest in Endeavour
and through the future receipt of the contingent payments."

    El Cubo Highlights


--  Producing silver-gold mine currently operating at 1,200 tpd with 965
    employees 
--  61 mineral concessions covering 8,144 hectares, including several mine
    adits, ramps and shafts and a 400 tpd leach plant, plus a lease until
    May 2013 on the adjacent Las Torres Mine, which includes a 2,000 tpd
    flotation plant owned by a subsidiary of Fresnillo plc 
--  Q1, 2012 production was 209,440 oz silver and 4,543 oz gold, or 459,305
    oz silver equivalent 
--  Proven and Probable Reserves (Dec 31, 2011) of 18.5 million oz silver
    and 322,000 oz gold  
--  Measured and Indicated Resources (Dec 31, 2011) of 8.3 million oz silver
    and 269,000 oz gold 
--  Inferred Resources (Dec 31, 2011) of 26.7 million oz silver and 548,000
    oz gold


    Guadalupe y Calvo Highlights


--  Advanced silver-gold exploration project 
--  9 mineral concessions covering 54,872 hectares, including several old
    mine adits and shafts 
--  Indicated Resources (Dec 31, 2011) of 7.6 million oz silver and 126,000
    oz gold 
--  Inferred Resources (Dec 31, 2011) of 4.4 million oz silver and 67,000 oz
    gold 
--  Preliminary economic assessment (Mar 5, 2012) evaluated the potential
    for a combined open pit and underground mine producing on average
    968,100 oz silver and 17,600 oz gold annually (1.9 million oz silver
    equivalent at a 55:1 gold: silver ratio) for the first 8 years of
    production 
--  After tax NPV at a 5% discount rate is US$93.4 million and the IRR is
    27.9% with an initial capital cost of US$85.9 million at a silver price
    of US$26.35/oz and a gold price of US$1,450/oz


    Endeavour Plans


--  Endeavour plans to complete a more detailed assessment of the El Cubo
    mine operations, mine plan, reserves and resources in order to develop
    its own long term growth plan and provide 2012 guidance on production,
    cash costs, capital and exploration programs and budgets after Closing 
--  Endeavour also plans to complete a more detailed assessment of the
    Guadalupe y Calvo resources and exploration targets in order to develop
    its own long term growth plan and provide 2012 guidance on exploration
    programs and budgets after Closing


    Transaction Rationale for Endeavour


--  Adds a third producing silver-gold mine to Endeavour's mine portfolio
    and launches Endeavour into the mid-tier of primary silver producers 
--  Adds an advanced gold-silver exploration project to Endeavour's
    exploration portfolio with the potential to become Endeavour's fourth
    mine 
--  Accretive to Endeavour on all financial measures 
--  Increases 2012 silver production by at least 12% to 4.8 million oz based
    on Q1, 2012 production and six months production. Revised production
    guidance will be provided post-Closing 
--  Increases proven and probable reserves by 110% to 35.3 million oz Ag and
    477% to 389,500 oz Au, measured and indicated resources by 41% to 55.0
    million oz Ag and 135% to 686,800 oz Au, and inferred resources by 88%
    to 66.1 million oz Ag and 331% to 800,800 oz Au 
--  Potential to reduce cash costs at El Cubo through operational synergies
    with the Guanjuato mine 
--  Substantially increases Endeavour's prospective mineral land-holdings
    and exploration potential in Mexico


    Transaction Rationale for AuRico Gold


--  Completes AuRico Gold's divestiture process of non-core mines and
    enables AuRico Gold to direct its full attention to its core portfolio
    of large, low cost gold mines, projects, and exploration portfolio 
--  Total proceeds of up to US$250 million including significant cash
    proceeds of a minimum of US$100 million on Closing 
--  Significant upside participation potential through AuRico Gold's
    potential shareholding in Endeavour of up to US$100 million 
--  Potential for further cash payments of up to US$50 million within three
    years of Closing


    Transaction Highlights


--  On Closing, Endeavour will pay AuRico Gold US$200 million, comprised of,
    at Endeavour's election, up to US$100 million of the purchase price in
    Endeavour common shares and the balance in cash Post-Closing, AuRico
    Gold will be entitled to receive up to an additional US$50 million in
    cash payments from Endeavour upon the occurrence of certain events
    during the three years following Closing, for total consideration of up
    to US$250 million 
--  Endeavour has sufficient cash on hand (current working capital
    approximately US$170 million) to meet the minimum cash requirements for
    Closing and is in the process of securing a bank line of credit which is
    expected to provide sufficient cash to meet the maximum cash
    requirements for Closing 
--  Closing of the transaction is subject to customary closing conditions
    including receipt of regulatory approvals 
--  The transaction is subject to a standard review by the competition and
    anti-trust commission of Mexico, with Closing anticipated within 45
    business days


    Advisors


--  Endeavour retained Koffman Kalef LLP as its legal advisor 
--  AuRico Gold retained Dundee Capital Markets to act as its financial
    advisor and Fasken Martineau DuMoulin LLP to act as its legal advisor


    Endeavour Conference Call

    An Endeavour telephone conference call to discuss the transaction will be
held at 10 am PDT (1 pm EDT) on Tuesday, April 17, 2012. To participate
in the telephone conference call, please dial the following:


--  1-800-319-4610 Canada and USA (Toll-free)
--  1-604-638-5340 Vancouver Dial In
--  1-604-638-5340 Outside of Canada & USA
--  No pass-code is necessary to participate in the conference call


    A replay of the conference call will be available by dialing
1-800-319-6413 in Canada & USA (Toll-free) or 1-604-638-9010 outside of
Canada & USA. The required pass-code is 4890 followed by the # sign.

    Qualified Person - Godfrey Walton, M.Sc., P. Geo., the President and COO
for Endeavour, is the Qualified Person who reviewed and approved the
contents of this news release.

    About Endeavour Silver Corp.

    Endeavour Silver is a premier mid-tier silver mining company focused on
the growth of its silver production, reserves and resources in Mexico.
Since start-up in 2004, Endeavour has posted seven consecutive years of
growing silver production, reserves and resources. The organic expansion
programs now underway at Endeavour's two (soon to be three) operating
silver mines in Mexico combined with its strategic acquisition and
exploration programs should facilitate Endeavour's goal to become the
next premier senior silver mining company.

    About AuRico Gold

    AuRico Gold is a leading Canadian gold producer with a diversified
portfolio of high quality mines and projects in North America. Following
the divestiture of the Australian assets and El Cubo, and the imminent
achievement of first production at Young-Davidson, the Company will be
focussed on 3 core operations including the Ocampo mine in Chihuahua
State and the El Chanate mine in Sonora State. The exciting
Young-Davidson gold mine in northern Ontario is expected to reach
commercial production by the third quarter of this year and ramp-up to
over 200,000 ounces of annual production by 2015. AuRico's strong project
pipeline includes several advanced development opportunities in Mexico
and British Columbia as well as a number of highly prospective
exploration properties. AuRico's head office is located in Toronto,
Ontario, Canada.

    Cautionary Note Regarding Forward-Looking Statements

    This news release contains "forward-looking statements" within the
meaning of the United States private securities litigation reform act of
1995 and "forward-looking information" within the meaning of applicable
Canadian securities legislation. Such forward-looking statements and
information herein include, but are not limited to, statements regarding
Endeavour's anticipated performance in 2012, including revenue, cash cost
and capital cost forecasts, silver and gold production, the anticipated
completion of the El Cubo and Guadalupe y Calvo acquisitions, timing and
expenditures to develop new silver mines and mineralized zones, silver
and gold grades and recoveries, cash costs per ounce, capital
expenditures and sustaining capital and the use of the Company's working
capital. The Company does not intend to, and does not assume any
obligation to update such forward-looking statements or information,
other than as required by applicable law.

    Forward-looking statements or information involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of Endeavour and its
operations to be materially different from those expressed or implied by
such statements. Such factors include, among others: fluctuations in the
prices of silver and gold, fluctuations in the currency markets
(particularly the Mexican peso, Canadian dollar and U.S. dollar);
fluctuations in the price of consumed commodities, changes in national
and local governments, legislation, taxation, controls, regulations and
political or economic developments in Canada and Mexico; operating or
technical difficulties in mineral exploration, development and mining
activities; risks and hazards of mineral exploration, development and
mining (including environmental hazards, industrial accidents, unusual or
unexpected geological conditions, pressures, cave-ins and flooding);
inadequate insurance, or inability to obtain insurance; availability of
and costs associated with mining inputs and labour; the speculative
nature of mineral exploration and development, reliability of calculation
of mineral reserves and resources and precious metal recoveries,
diminishing quantities or grades of mineral reserves as properties are
mined; the ability to complete the El Cubo and Guadalupe y Calvo
acquisitions and their successful integration,; risks in obtaining
necessary licenses and permits, global market events and conditions and
challenges to the Company's title to properties; as well as those factors
described in the section "risk factors" contained in the Company's most
recent form 40F/Annual Information Form filed with the S.E.C. and
Canadian securities regulatory authorities.

    Forward-looking statements are based on assumptions management believes
to be reasonable, including but not limited to: the continued operation
of the Company's mining operations, no material adverse change in the
market price of commodities, mining operations will operate and the
mining products will be completed in accordance with management's
expectations and achieve their stated production outcomes, and such other
assumptions and factors as set out herein.

    Although the Company has attempted to identify important factors that
could cause actual results to differ materially from those contained in
forward-looking statements or information, there may be other factors
that cause results to be materially different from those anticipated,
described, estimated, assessed or intended. There can be no assurance
that any forward-looking statements or information will prove to be
accurate as actual results and future events could differ materially from
those anticipated in such statements or information. Accordingly, readers
should not place undue reliance on forward-looking statements or
information.

Contacts:
Endeavour Silver Corp.
Hugh Clarke
Vice President, Corporate Communications
(604) 685-9775 or Toll free: 877-685-9775
(604) 685-9744 (FAX)
hugh@edrsilver.com
www.edrsilver.com
Contacts:
AuRico Gold Inc.
Scott Perry
Chief Financial Officer
(647) 260-8880

AuRico Gold Inc.
Anne Day
Director of Investor Relations
(647) 260-8880
www.auricogold.com

Copyright 2012, Market Wire, All rights reserved.

-0-
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.