Endeavour taps CB market for US$300m
Riding a hot commodity cycle, Endeavour Silver secured US$300m from the sale of convertible bonds late on Monday, becoming the second silver miner to tap into surging commodity prices.
BMO Capital Markets was sole bookrunner on the sale of the six-year CB priced at a 0.25% coupon and a 32.5% conversion premium, the midpoints of the 0%–0.5% and 27.5%–32.5% terms marketed for one day on Monday.
After falling by 5.3% on Monday, Endeavour’s NYSE-listed shares shed another 1.7% on Tuesday to US$9.24. That selloff must be taken in the context of stock that traded at US$7.21 entering the week and was trading near a 52-week high prior to the CB launch.
“I think you’re seeing selling by fundamental investors,” said one CB banker. “The short position required to hedge was a fraction of the total amount of the CBs sold. There is a lot of investor interest in silver exposure specifically and precious metals more broadly. We saw generalist investor interest in addition to the typical convert investors.”
Endeavour is using the CB proceeds to fund development of a new mine in Durango State, Mexico. The silver miner had said it would spend US$16.6m to complete a feasibility on the Pitarilla mining project in Durango and an additional US$9.1m on capex, with hopes of completing the feasibility study by mid-2026.
Endeavour in October began commercial operations at its Terronera mine in Mexico that it expects to produce 1.4m ounces of silver and 29,200 ounce of gold over the next six months.
Endeavour had funded development of Terronera with borrowings on a US$135m secured debt facility on which it pays SOFR+375bp, or about 7.5%.
The new unsecured CB issue was marketed at a credit spread and vol of SOFR+400bp and 50, the former supported by the existing bank debt. The conversion price on the CBs is US$12.46.
The new funding comes as spot silver prices have soared to all-time highs above US$58 per ounce – Endeavour’s production costs are about US$30 per ounce. Surging prices for the white metal are being driven by industrial demand outstripping supply, as well as expectations of a Fed rate cut.
Canadian silver miner Vizsla Silver a week earlier raised US$250m from the sale of a 5.25-year CB issue priced at a 5% coupon and 25% conversion premium to its share price at the time.
On Wednesday, Canadian mid-major silver/gold miner First Majestic Silver raised US$300m from the sale of 5.1-year convertible bonds.