CD:SilverCrest Mines Inc. (SVL:TSX.V; SVLC:NYSE.MKT), despite the name, is a gold producer with a large silver credit. The Santa Elena mine produces about 550 Koz silver and about 30 Koz gold annually. At $1,700/oz, gold revenue totals $50M, while at $34/oz, silver revenue totals only $18M. In that light, Santa Elena is more accurately a gold mine with a silver credit.
The current process is heap leach, which works better on gold than it does with silver. That's why the gold recovery is 70% while the silver recovery is 30%. In the grand scheme, silver represents a quarter of the revenue stream.
TGR: Your report indicates SilverCrest just did a recent financing to retire its hedge book. Are there any other catalysts to move SilverCrest forward?
CD: SilverCrest has an exploration project called La Joya, which is low-grade bulk tonnage but on occasion it has pulled some higher-grade holes there. Another thing to watch for is the installation of a mill at Santa Elena. The original mine was built as a heap leach because the financing took place during the financial crisis and the company couldn't raise the money to build a mill. Now it is looking to build a mill. That will result in much higher silver recovery and better gold recovery. Production should increase from approximately 2 Moz silver equivalent (Ag eq) to around 4 Moz Ag eq. Remember when we are talking about those 2 Moz Ag eq, that's really slightly more than 0.5 Moz silver and then the other 1.5 Moz is gold as though it were silver.
Most of the catalysts are not really short term. However, a lot is planned for 2013 including ongoing work at La Joya, retiring the hedge book with the $30M it just raised and potentially doing a debt raise to fund the rest of the mill build out. By the end of 2013 SilverCrest should double its silver equivalent production