VANCOUVER — SilverCrest Metals (TSXV: SIL; US-OTC SVCMF) is making rapid progress exploring its flagship Las Chispas silver-gold project, 180 km northeast of Hermosillo, Mexico.
The company has drilled more than 40,000 metres at the property over the last two years and intends to unveil a preliminary economic assessment by year-end.
SilverCrest’s confidence comes from its familiarity with intermediate-sulphidation, epithermal-style mineralization, which is typical of many underground mines in Mexico.
The company’s management took the Santa Elena project, located 25 km north of Las Chispas, from discovery to production in four years before First Majestic Silver (TSX: FR; NYSE: AG) bought it for $154 million in mid-2015.
Twin ore stockpiles at First Majestic’s Santa Elena mine in Sonora, Mexico. Credit: First Majestic.
“Las Chispas was effectively in its infancy when we started drilling in 2016,” CEO Eric Fier says during an interview. “It’s a historic district that was a material producer in the early 1900s, which was certainly attractive to us, but I don’t believe anyone really grasped the significance of the grade and discovery potential until last year. We’ve counted at least 19 veins at this stage, and it’s clear that number is going to grow.”
SilverCrest is wrapping up a 35,000-metre drill program that will underpin a maiden resource at Las Chispas to be calculated in February. It has reported 69 intercepts grading above 600 grams silver equivalent per tonne over the past two years.
The most prospective area for drilling is the Babicanora target, which includes the Babicanora Main, Babicanora Footwall, Granaditas, Amatista and La Victoria veins.
SilverCrest has drilled 600 metres of strike length at Babicanora with a near-surface mineralized height of 150 to 175 metres. The average true thickness and grade for 20 drill intercepts along the footprint is 3.6 metres at 2.73 grams gold and 263.5 grams silver.
“We’ve found a high-grade, intermediate-sulphidation system. There’s this perception in the market we’re focused around ‘old workings,’ but that’s not true. Over 80% of our upcoming resource will be on virgin ground,” Fier says.
“We’ll be focusing some of the newer veins as we move into the third phase of drilling. We can leverage our experience at Santa Elena, and there are a lot of these epithermal-style systems in Mexico that are comparable. We’ll get right into higher-level engineering studies by year end.”
The company continues to hit high grades during step-out drilling along the Babicanora vein, including 3.2 metres true thickness grading 26.95 grams gold and 1,494 grams silver in hole 17-43.
Meanwhile, SilverCrest’s surface drilling at the Las Chispas area uncovered the newly named, high-grade Giovanni vein near historic workings. The discovery was headlined by 2.3 metres of 3.57 grams gold and 577.8 grams silver in hole 17-37.
“We have a lot of experience to draw from in terms of metallurgy and cost assumptions for our economic studies,” Fier says. “So we can see the path forward based on our track record in the region. The main work will involve drilling out our resource base. I can look at the site and already have a good idea where I’d like to put the mill and surface infrastructure.”
In October, SilverCrest reported that Las Chispas is amenable to standard cyanidation processing, with average recoveries of 99% for gold and 87% for silver.
The company has permits to extract a 100,000-tonne bulk sample, which could be trucked to Santa Elena or Premier Gold Mines’ (TSX: PG; US-OTC: PIRGF) nearby Mercedes gold-silver mine.
SilverCrest closed a $10-million bought-deal private placement in December wherein it issued 9.57 million units at $1.05 each. The units consist of a share and a two-year warrant exercisable at $1.45.
The company has budgeted $5 million for work over the first half of 2018. Shares have traded in a 52-week range of $1.05 to $2.79 per share and last closed at $2.
SilverCrest has 54 million shares outstanding for a $108-million market capitalization.