Junior silver producer SilverCrest Mines (SVL-V) has discovered a new high-grade gold and silver zone that lies below and is parallel to the main mineralized zone that is being mined at its Santa Elena open-pit operation in Sonora, Mexico, about 150 km northeast of Hermosillo.
The new zone called El Choluga was intercepted in four drill holes with highlights including hole SE-12-94, which returned 13.4 metres of 1.84 grams gold per tonne and 206.5 grams silver per tonne, including 1.0 metres grading 6.63 grams gold and 1,390 grams silver. The intercepts are about 200 metres beyond the boundary of the current resource estimate and the company says the zone’s minimum dimensions run 150 metres long, 100 metres high and 5-14 metres wide.
Assays from other holes released Jan. 7 include bonanza grades ranging from 1.1 metres grading 9.46 grams gold and 1,700 grams silver in hole SE-12-92 to 2.3 metres of 157.3 grams gold and 1,610.5 grams silver in hole SE-12-91.
“In an epithermal deposit such as Santa Elena Main Mineralized Zone one can always expect narrow widths of high grades but to encounter 15.6 metres grading 23.9 grams gold per tonne and 307.9 grams silver [hole SE-12-91] is truly remarkable,” president and chief executive J. Scott Drever said in prepared remarks.
So far the company has completed 87 holes of a planned 100-hole program that should be completed this month and SilverCrest expects to release revised resources and reserves some time in the first quarter of this year.
The main mineralized zone of the Santa Elena deposit is open along strike and depth.
SilverCrest has completed an underground decline to a depth of 1,050 metres that will allow it to access the underground portion of the ore deposit in the next several months, Drever noted.
Nicholas Campbell of Canaccord Genuity expects a pre-feasibility study for the company’s underground expansion will be completed in the first quarter and has a buy rating on the stock with a 12-month target of $5 per share. At presstime the junior was trading at $2.63 within a 52-week range of $1.55-$3.17. With about 103 million shares outstanding SilverCrest has a market capitalization of $279 million.
“Santa Elena is ramping up to produce an estimated average of 1.5 million ounces of silver-equivalent per year,” Campbell writes in a Jan. 8 research note to clients. “Through the development of an underground operation and facility at Santa Elena, the mine should ramp up to produce 4.6 million ounces of silver-equivalent by about 2014.”
The Santa Elena mine reached commercial production in July 2011. The high-grade open pit has an estimated mine life of six and a half years with life-of-mine costs of US$8 per oz. of silver equivalent.
In November, SilverCrest paid out the remaining balance of its 2009 gold hedge facility with Macquarie Bank, becoming a completely un-hedged gold and silver producer. The original hedge facility was made up of 55,000 ounces of gold sold forward at US$926.50 per ounce and deliveries into the hedge facility were scheduled to continue into 2014. The payout was financed with partial proceeds from the company’s $34.5 million bought deal financing, which closed in October.
© 1915 - 2013 The Northern Miner. All Rights Reserved.