Vancouver-based Endeavour Silver (TSX:EDR) says its proven and probable reserves have dropped by 50% to 11.6 million ounces due to lower-than-anticipated precious metal prices, reports MINING.com.
Its gold reserves were reduced by 37%, compared with 2012.
When calculating its reserves at the end of 2013, Endeavour assumed a gold price of $1,320 per ounce and a silver price of $22 per ounce.
Measured and indicated resources were up in 2013 thanks to the company's brownfields exploration programs, which discovered new resources primarily at El Cubo and upgraded some inferred resources, according to the company.
While precious metals prices have suffered over the past 12 months, they've made some notable headway recently. Gold was trading at around $1,340 on February 25 and silver at just under $22.
Due to the low pricing environment, Endeavour decided to change its calculation method. Normally the company uses the three-year trailing averages of silver and gold prices for estimating reserves and resources. Under the old method, calculations would have been based on a price of $1,550 for gold and $30 for silver.
Management felt that these prices were "too aggressive in the short term."
Prices used for the resource estimates were 10% higher "to reflect management's belief " that prices will improve in the medium and long terms, Endeavour noted.
"Reserve and resource growth took a back seat to our operational and financial performance last year due to the sharply lower precious metal prices," said CEO Bradford Cooke. "We responded promptly to the lower metal prices by reducing all costs including our exploration and development budgets which clearly impacted our ability to replace reserves and expand resources."
The company has three operating silver mines in Mexico. The most significant hit to reserves came from the miner's second mine, Bolañitos, where both gold and silver reserves were cut by more than 60%.
Endeavour lost 6.6% on its share price February 25, trading at $6.06 per share.
