I can't issue a red alert, since only a copper stock would truly fit that bill. I could have gone with a silver alert, but somehow that just doesn't convey the sense of urgency I'm aiming for here.
Instead, I've opted for a Foolish opportunity alert to draw the attention of my fellow investors to one of the most glaring investment opportunities that I've perceived in a silver stock in quite some time. I have watched with fascination as the market punishes Endeavour Silver (EXK 3.47%) for tackling the ambitious task of reconstituting a thriving silver and gold mine at El Cubo from the wreckage of AuRico Gold's (NYSE: AUQ) badly mishandled operation of the mine.
The astonishing depth of the stock's retreat
At $9 per share, I could chalk up the market's chilly response to reasonable caution given the challenges inherent in the turnaround that Endeavour has undertaken at El Cubo. At $8 per share, the pullback still retained some context for me within a broad-based sell-off impacting all the miners of gold and silver in tandem. But here at the $7 mark, I'm digging in my heels to trumpet what I view as a phenomenal entry point into an expertly managed silver producer that has proven its capacity to successfully refurbish and expand ailing operations before.
In fact, Endeavour's flawless execution on the refurbishment and rapid expansion of its previously acquired assets in Mexico's Guanajuato state permitted me to pinpoint for my readers one of the silver industry's premier growth stories. Within eight months after I published this article, which was based on my timely interview with Endeavour CEO Bradford Cooke, Endeavour's stock nearly quadrupled! Since that time, I have visited Endeavour's Guanajuato-area operations on two separate occasions; with my most recent visit offering an insightful preview of early progress at El Cubo and the nearby mill complex.
An eight-year procession of growth marches on
Earlier this week, Endeavour Silver laid out the plan to deliver its ninth-consecutive year of production growth in 2013 with silver-equivalent output of between 7.3 million and 7.8 million ounces. Consolidated cash costs will climb a bit -- to the $9-$10 range per ounce of silver -- but that is entirely reasonable given the major overhaul under way at El Cubo. By the second half of the year, look for the cost structure at El Cubo to improve once the major capital projects are completed by mid-year.
Aside from the near-term production boost from El Cubo, Endeavour's shares hold the substantial longer-term promise for near-mine discoveries at each of the company's three operating mines. The market appears to have assessed little or no value, furthermore, to Endeavour's enticing portfolio of greenfield exploration projects: from the San Sebastian property in Jalisco state, to the company's under-explored assets in northern Chile.
Standing out amid a crowd of silver bargains
Amidst a painful pullback that's impacting most silver mining stocks across the board, Endeavour Silver is hardly alone in activating this Fool's bargain-hunting radar. I have added aggressively to my personal shareholdings in several of my top picks for silver in 2013, most notably: First Majestic Silver, Endeavour Silver, and Alexco Resource. Fortuna Silver Mines has come back into focus as well following a thorough thrashing of those shares.
But Endeavour Silver is a company I know particularly well. I've been a shareholder since 2007, I visited their operations two years in a row, and I have enormous respect for the caliber of senior management and their track record of solid growth execution. Accordingly, I consider the shares of Endeavour Silver near $7 apiece one of the clearest multibagger opportunities in the silver space today. Only one thing has changed since I shared my view that this ongoing turnaround at El Cubo will justify a $20 valuation: the potential for investment gain along the way has grown substantially greater. I have significantly increased my own position in the stock near current levels, and I urge investors to conduct their own due diligence before this gorgeous growth stock recaptures its interrupted upward momentum.
