JOHANNESBURG (miningweekly.com) – Owing to the dipping price of silver, dual-listed Canadian miner Endeavour Silver plans to reduce silver production this year by more than a quarter to achieve a substantially lower all-in sustaining cost (AISC) and to generate free cash flow.

In its 2016 production and cost guidance, published on Thursday, the world’s biggest silver producer reported that, while its Mexico-based Guanaceví and Bolañitos operations continued to be profitable at current metal prices, its El Cubo operation, also in Mexico, was losing money, despite the company’s successful efforts to expand the operation and reduce cash operating and AISC for three years in a row.

Subsequently, the company planned to mine the accessible reserves this year at El Cubo and had suspended investments on exploration and mine development there until metal prices improved, said Endeavour Silver CEO Bradford Cooke. “That means El Cubo will see a steady decline of production through this year until it goes on care and maintenance in the fourth quarter,” he added.

Endeavour Silver’s forecast AISC for the year – net of gold by-product credits and in accordance with the World Gold Council standard – was estimated to be between $12/oz and $13/oz, which is significantly lower than the 2015 AISC. Endeavour Silver attributed this to the lower Mexican peso/US dollar rate, as well as lower sustaining capital and exploration investments.

Consolidated cash cost of production, net of gold by-product credits, was expected to be between $8/oz and $9/oz, slightly higher than the company’s 2015 estimated cash cost, owing to the lower value of the gold credit.

Endeavour Silver projected that silver production this year would total between 4.9-million ounces and 5.3-million ounces, down by more than a quarter compared with 2015 output of 7.2-million ounces.

Meanwhile, Cooke highlighted that the company’s new Terronera silver-gold mine, in Jalisco state had “great upside potential”, adding that Endeavour Silver planned to aggressively explore and engineer this project “to significantly enhance economics at current metal prices”.

The price of silver had fallen more than 70% since hitting 2011 highs of nearly $50/oz. They stood at $14.24/oz on Thursday on the London Bullion Market Association's index.