Triple From Here? It is according to Jennings Capital who released this analyst report yesterday. GLTA
SILVERCREST MINES INC. 12-Month Target: C$6.50
(TSXV-SVL C$1.84) Risk Rating: ABOVE AVERAGE
UPDATING ESTIMATES FOR Q1 RESULTS;
STILL OUR TOP PICK
Last week, SilverCrest Mines Inc. released Q1 financial
results, reporting unadjusted EPS of US
.06 and operating
CFPS of US
.12. Adjusting for non-cash items, we
estimate adjusted EPS at US
.09, putting the results well
ahead of our expectations for US
.05 and US
.07,
respectively.
SVL pre-released operating results on April 19, reporting
both production and sales volumes from its flagship Santa
Elena heap-leach mine in Sonora State, Mexico. Further
details and cost data were provided with the financials, with
cash costs averaging US$7.00/oz silver-equivalent, roughly
in line with our expectations for US$6.60/oz.
Management also reiterated 2012 guidance for 33,000 oz
gold and 435,000 oz silver, at a cash cost of US$8.20/oz
silver-equivalent (assuming a gold to silver ratio of 55:1).
Accordingly, we do not expect subsequent quarters to show
similar beats, but still be strong.
On the development front, the Company has begun a deep
drilling program at Santa Elena, aimed at the projected
down-dip extension of the orebody and possibly doubling the
current underground resource. The proposed switch to a
milling operation and sequential development of the satellite
Cruz de Mayo silver deposit also remain on track.
The Phase II drill program at the standalone La Joya silvercopper-
gold project, in Durango State, also continues
apace. Recent results extended the zone to the northeast
and southwest, while infill drilling firmed up the Company’s
handle on the known zone (see our May 7, 2012 comment
for details). The more favourably viewed south-eastern
extension of the mineralized zone is the target of current
drilling. The entire program is scheduled for completion in
July, to be followed by a resource update by year-end.
SVL maintains a healthy balance sheet to carry out its
exploration and technical studies, having cash of
US$36 million and no debt at quarter-end. Working capital
stood at US$28.2 million.
We have tweaked our model for the Q1 results, mainly to
bring our cost projections for the remaining quarters more in
line with full-year guidance. Our unadjusted NAV is now
US$4.87/share, to which we continue to apply a 1.25x
multiple and then adjust for cash and options at par
(US
.47/share). SVL remains our TOP PICK, and we
continue to recommend purchase as a SPECULATIVE
BUY, with a 12-month target of C$6.50/share.