The payment includes $7.5 million in cash, $5 million in VanGold stock and $2.5 million via an unsecured promissory note due and payable within 12 months from closing. VanGold also agreed to pay up to an additional $3 million in contingent payments based on the following events based on potential future producing and future increases in the gold price.

"This will be transformational. In six to eight months from now you won't recognise VanGold as it is today," VanGold Mining chair and CEO James Anderson told Mining Journal.

Anderson said the deal came about after the company looked for a nearby mill to process a 1,000-tonne bulk sample of stockpiled ore from the former mine, which was eventually processed at Endeavour's Bolanitos mill.

"We started talking with Endeavour and asked if we could use El Cubo to process stockpile that progressed into the idea of us purchasing it," said Anderson.

The 1,500 tonnes per day El Cubo mill is 8km by road from VanGold's El Pinguico silver-gold project and also includes two operating underground silver-gold mines and a flotation plant. Endeavour suspended operations there at the end of November 2019. The operation produced 4.6 million silver equivalent ounces in 2018.

VanGold intends to re-start the mill at about 750tpd using mineralised material from its surface and underground stockpiles at its El Pinguico project as a significant portion of its estimated throughput for the first 36 months of operation.

To finance the transaction, VanGold signed an indicative term sheet with a Swiss based metals trading firm to provide $7.5 million in the form of a gold and silver loan with a 16-month term secured against VanGold's assets and repayable by delivering fixed monthly ounces of gold and silver produced through the El Cubo mill at a discount to the prevailing spot price.

VanGold estimates the amount of gold and silver required to repay this loan facility will represent about 33% of the projected gold and silver to be recovered by VanGold from operations at the El Cubo mill during the 12-month repayment period of the loan.

"We are pleased to enter into this transaction to sell our El Cubo assets to VanGold. They are an ideal fit given the proximity of the Pinguico property to the El Cubo plant. We will become VanGold's largest shareholder and look forward to supporting the VanGold team as they advance the Pinguico and El Cubo assets through exploration and development to production," said Endeavour Silver CEO Bradford Cooke.

El Pinguico is an historic silver-gold where production stopped in 1913 due to the Mexican Revolution.

Shares in VanGold Mining are trading at C28c, valuing the company at $29 million.