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Endeavour Silver to acquire 5% of Max Resource, in all-share deal aimed at expanding Max’s CESAR copper-silver pr

March 2, 2022 ( Newswire) Max Resource Corp (TSXV:MXR; OTC:MXROF; Frankfurt:M1D2) came out with major news on Monday, Feb. 28, regarding an agreement to expand its flagship CESAR copper-silver property in northeastern Colombia.

The Vancouver-based company has executed a “binding Cooperation Term Sheet” with Endeavour Silver Corp. (TSX:EDR), a mid-tier silver producer and explorer focused on Mexico. Endeavour has agreed to assist Max in significantly expanding its land holdings at CESAR, by providing financial and technical capabilities to secure new mineral tenures in the Cesar copper-silver basin. These additional capabilities are required of Max by the National Mining Agency of Colombia, which along with the Colombian Ministry of Mines and Energy, governs all mining activities in the South American nation.

It’s important to note that Max does not dilute its land position through the agreement; it retains 100% ownership of the ground it already controls, and future mineral tenures.

Endeavour will receive a 0.5% net smelter returns (NSR) royalty on new mineral tenures acquired by Max, but not on Max’s existing ones.

The mid-tier has agreed to participate in a non-brokered private placement of up to 26,000,000 units of Max at Cdn$0.26 per unit, providing Endeavour with 5% of Max’s outstanding shares at the closing of the transaction.

The company also agreed to maintain its 5% ownership position, and to not sell any shares for at least two years.

Each unit consists of one Max common share and half of a warrant. The warrants are valid for two years from the date of issue @ an exercise price of $0.36/sh.

Max currently has 101.84 million outstanding shares; the private placement will add another 26M; 101.84M + 26M = 127.84M shares. Endeavour will have 5% or 6.39M shares of Max for an initial investment of $1.66M.

The arrangement, which is expected to take effect on or about March 15, 2022, is beneficial for both companies, as they indicated in the Feb. 28 news release.

“Max is privileged to have the strategic support of Endeavour Silver, whose expertise ranges from discoveries to production. We feel that the strategic involvement of Endeavour very much validates our efforts in Colombia to this point,” said Max’s CEO Brett Matich. “The ultimate goal of the cooperation agreement is for Max to consolidate its landholdings over the Cesar basin, which we believe may be the world’s largest undeveloped copper-silver district.”

Endeavour Silver’s CEO Dan Dickson stated, “Endeavour Silver, while being a significant producer, has itself a track record of making new discoveries. We can truly appreciate what Max Resource has achieved to this point. We are pleased to take an equity stake in Max and lend our strong balance sheet to support Max in securing more mineral tenures in this prime copper-silver district.”

CESAR copper-silver project

The deal comes at a pivotal point in time for Max Resource. After two-plus years of vigorously surface-sampling mineralized outcrops, Max is preparing to drill the property, considered prospective for hosting a world-class Cu-Ag resource.

The company now has access to a total of 19 mining concessions covering 186 km2, all located along the CESAR North 90-km copper-silver belt, extending for at least 45 km.

Discovery zones along the CESAR North 90 km copper-silver belt

The 19 mining concession contracts are more than any other company received in Colombia in 2021. Additional concessions are pending to add to this total.

For Max, this significant milestone forges the way for drill permitting at both the URU and ANM drill targets this year; URU is a new discovery that spans 48 km2 over a major structural corridor and remains open in all directions, while ANM is a 2020 discovery zone spanning 100 km2, with highlight grade values of 34.4% copper and 230 g/t silver.

“URU is to be the first significant drilling event on this previously unrecognized copper-silver belt, since the discovery of Cerrejon, the largest coal mine in South America and the reasons for much of the critical infrastructure in the Cesar basin,” Matich commented on the company’s upcoming drilling.

To assist the drill design and exploration at URU, the company is conducting a 290 km2 LiDAR survey over the five drill target zones spread along 15 km of strike. The goal is to determine high-probability drill targets within the URU zone and maximize the success of what would be the first drill campaign targeting copper-silver deposits in the Cesar basin.

Endeavour Silver

Endeavour Silver operates two underground silver-gold mines in Mexico – Guanacevi and Bolanitios – and it is advancing the Terronera mine project.

Located in the Durango historical silver district, Guanacevi in northern Mexico is Endeavour’s first and highest-grade silver mine. To date, the company has discovered a total of eight new orebodies along the 5 km length of the prolific Santa Cruz vein.

In 2019, Guanacevi completed an operational turnaround that materially improved mine profitability. The development of two new orebodies – Milache and Santa Cruz Sur (SCS) – together with the acquisition of the Ocampo concession mining rights covering the El Curso property, have provided sufficient ore to increase mine output and achieve plant capacity.

Currently, there are three orebodies being mined at Guanacevi: El Curso, Milache and Santa Cruz Sur.

In 2007 Endeavour opened its second mine, Bolanitos, located in Gaunajuato, the second largest historical silver mining district in Mexico. After discovering the first orebody in 2008, the company discovered 10 new orebodies, eight of which have been mined. Three years ago Endeavour completed an operational turnaround at Bolanitos to improve mine profitability. Remedial measures included: resequencing the mine plan to allow for better blending; fast tracking development to improve ore access; and purchasing, renting and leasing new equipment to reduce operating costs.

Between the two operations Endeavour Silver produced 8.3 million silver-equivalent ounces in 2021.

Terronera represents Endeavour’s next core asset. The property is located in San Sebastian del Oeste, a historical silver mining district in Jalisco State. Since acquiring Terronera in 2010, Endeavour has completed six independent technical reports, including a recent NI 43-101 feasibility study and over 105,000 meters of drilling.

The feasibility study supports a high-grade silver-gold underground mining operation, producing an average of 3.3 million oz of silver and 32,874 oz of gold per year over a 12-year mine life. A 1,700 tpd mine and plant will be built over two years, once a formal construction decision has been made.

Endeavour Silver has a current treasury of about $60 million, having recently acquired the Pitarrilla silver-lead-zinc project in Durango State for $70 million including a 1.25% NSR royalty.

CEO Dan Dickson says Pitarrilla is one of the world’s largest undeveloped silver projects and “accelerates our vision to become a premier senior silver producer.”


Endeavour Silver is clearly a successful company that Max has had the good fortune to hammer out an agreement with over its flagship CESAR copper-silver project in Colombia.

In our opinion, this is a good deal for both sides.

Max gets to control its own destiny by retaining 100% ownership of current and future mineral tenures. The agreement essentially allows Max to add it its already extensive land position (19 mining concessions covering 186 km2) without dilution. Note: it is extremely important to a future partner or acquirer, that they retain 100% ownership of the land.

Moreover, Max now has a deep-pocketed mid-tier miner (~$60M in EDR’s treasury and market capitalization nearing US1 billion), meaning nobody is going to come along and try to acquire Max on the cheap. Think of it as an insurance policy they didn’t have before.

The agreement gives Endeavour a 5% ownership in Max, with the ability to increase its share percentage going forward. The company has just paid $70 million to acquire 525 million ounces of silver resources (measured and indicated) at Pitarrilla, but there is plenty of time for Endeavour to rebuild its treasury and continue supporting Max.

It seems clear to us, that Endeavour wants early exposure to Max’s CESAR, what is potentially the largest undiscovered remaining copper-silver project in the world. They’re betting on the future because they see a huge opportunity, it’s not costing them a ton of money to do it, and they’re willing to lock up their shares for two years to become a dedicated partner.

Meanwhile Max is moving forward with a drill program expected to begin in the coming months, starting at the URU target. URU potentially represents a zone of major proportions when compared to the world-class Kupferschiefer and Central African Copper Belt deposits. This large-scale potential was confirmed in December when as many as five drill target zones over 15 km of strike, with widths of 5 to 25 meters over 500 vertical meters, were identified by the Max team.

Between drilling, baseline environmental permitting, the granting of additional (pending) mining concessions, geophysical studies (LiDAR and IP), and property expansion (new mineral tenures) through the agreement with Endeavour Silver, we are expecting a steady flow of news for Max shareholders and an exciting summer of field work.

Max Resource Corp.
Cdn$0.31 2022.02.28
Shares Outstanding 101.8m
Market cap Cdn$30.4m
MXR website

Richard (Rick) Mills
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