SilverCrest beefs up Santa Elena

Three important bits of information came out of SilverCrest Mines’ (SVL-V, SVLC-X) latest drill results from its Santa Elena project in Mexico.

First, the company extended the El Cholugo zone. Next, it identified the El Cholugo Dos sub-parallel zone and cut bonanza grades of silver along the main mineralized trend.

The mineralized zone at El Cholugo was extended 50 to 200 metres by 100 metres, and is 5 to 10 metres thick. The zone remains open to the west and at depth. Highlights from El Cholugo included 7.3 metres grading 2.73 grams gold and 357.9 grams silver, including 1.2 metres grading 3.9 grams gold and 1,239.5 grams silver.

At the newly discovered El Cholugo Dos zone, the drill bit returned a highlight intercept of 1.5 metres grading 4.83 grams gold and 72.3 grams silver.

Highlights from the main mineralized trend included hole 117, which intercepted 1 metre grading 1.5 grams gold and 1,320 grams silver, and hole 119, which intercepted 1.9 metres grading 2.34 grams gold and 1,281.9 grams silver.

These results help lengthen the main mineralized trend another 300 metres beyond the current resource boundary.

Silvercrest reached commercial production at Santa Elena in July 2011, and the open-pit mine produced 2.37 million oz. silver equivalent in 2012. It’s expected to have life-of-mine cash costs of US$8 per oz. silver equivalent.

The company plans on expanding underground to complement a new mill on-site. The mill is expected to be up and running in early 2014. A prefeasibility study examining the underground expansion is due out during the first quarter of 2013.
Santa Elena sits 150 km northeast of Hermosillo in Sonora, Mexico, and has open-pit probable reserves of 3.5 million tonnes grading 1.96 grams gold and 87.3 grams silver for 21.69 million oz. silver equivalent.

The site also hosts underground indicated resources of 991,000 tonnes grading 1.83 grams gold and 109.1 grams silver, and underground inferred resources of 1.9 million tonnes grading 1.53 grams gold and 86.9 grams silver.

The company expects results from the next series of holes soon, and the new results will be followed by an updated resource and reserve estimate. A total of 111 of 114 planned holes have already been drilled, and its underground decline has gone beyond 1,200 metres.

The work is all part of Silvercrest’s expansion plan, which aims to double production at the mine by 2014.

Silvercrest is debt-free and had $44 million in cash at the end of 2012. In Toronto on Feb. 2 — the day the news was released — the company’s shares were off 4%, or 10¢ to $2.40, on 180,000 shares traded.