Update: SilverCrest Mines Commissions Its 3,000 TPD Mill At Santa Elena, July Production Tops Expectations

Aug.11.14 | About: SilverCrest Mines, (SVLC)


SilverCrest Mines announced that it has commissioned its 3,000 tpd mill at its Santa Elena Project.

This supports my April conviction that SilverCrest is a quality company that is capable of setting realistic goals and meeting them.

The stock is probably slightly over-valued now, but given management's history of execution we can see how this is warranted.

SilverCrest Mines (NYSEMKT:SVLC) just announced that it has finished commissioning its 3,000 tonne per day mill at its Santa Elena Project in Sonora, Mexico. This means that the project is running near its full capacity of 3,000 tonnes per day after a 3 month ramp-up period from May through July.

The company's July production figures also turned out to be better than expected. As I discussed recently production has been down as the company stopped mining above ground in order to get its underground mine into production. This transition meant that production has been well short of the 50,000+ ounces per year of gold equivalents that the company plans on producing. However July's figures--1,500 oz. of gold and 82,000 oz. of silver--beat expectations of 1,250 oz. of gold and 74,000 oz. of silver reflecting the pace at which the company is ramping up production.

Back in April I argued that investors should consider taking a position in SilverCrest given that it was fairly valued and given management's track record of execution. This turned out to be a good move as the stock has traded from $1.70/share to $2.10/share, although keep in mind that the overall sector has been strong during these last 15 weeks. As the company continues to meet and exceed milestones this thesis becomes stronger. With this in mind I continue to like SilverCrest Mines although investors should wait for a pullback after the nearly 25% run-up. An opportunity may be coming as the company is set to announce earnings on Wednesday. Long-term investors looking to take a position should be hoping that the weak production numbers and the loss that will almost certainly ensue will drive the stock lower.

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