SilverCrest Mines (CVE:SVL) (NYSE:SVLC) is to complete the Santa Elena mine expansion with the help of a three-year, US$40 million secured credit facility with the Bank of Nova Scotia, more commonly known as Scotiabank, the Vancouver-headquartered precious metals miner announced Friday.
SilverCrest plans to use the facility for general corporate purposes, and to complete the company's expansion at the 100 per cent owned flagship Santa Elena mine in Mexico, thus releasing operational cash flow for other corporate purposes.
Santa Elena is a high-grade, epithermal silver and gold producer, with an estimated life of mine cash cost of $8 per ounce of silver equivalent. SilverCrest anticipates that the 2,500 tonnes per day open pit heap leach facility at the mine should recover about 625,000 ounces of silver and 33,000 ounces of gold in the current calendar year.
The company plans to significantly increase metals production at the mine, both open pit and underground, by 2014 by way of a major expansion and construction of a 3000 tonne per day mill facility, currently underway.
The increase in metal production is expected to generate additional operating cash flow once the new plant is fully-operational in the first half of 2014, with the funds already earmarked to allow SilverCrest to continue funding capital and exploration projects from operating cash flow.
Exploration programs continue to turn up new discoveries at the flagship site. The company's program of exploration has also rapidly advanced the definition of a large polymetallic deposit at the La Joya property, also in Mexico, with stated resources nearing 200 million ounces of silver equivalent.
As recently as May, SilverCrest announced an updated reserve and resource estimate that in some cases doubled the estimates previously available for the Santa Elena property in Sonora, Mexico, extending the mine life for up to eight years.
The update saw probable reserves of gold increased by a factor of 50 per cent while probable reserves of silver increased by more than 100 per cent; gold indicated resources increased by 99 per cent while silver indicated resources increased by 127 per cent.
The updated probable reserves, a measure that covers underground, open pit and leach pad operations, are estimated at 8.2 million tonnes grading 74.9 grams of silver per tonne (gpt Ag) and 1.24 grams of gold per tonne (gpt Au) for 19.7 million contained ounces of silver and 327,430 contained ounces of gold.
"We are pleased to establish this relationship with an institution of the calibre of Scotiabank," said SilverCrest chairman and CEO J. Scott Drever in a company statement released with the announcement Friday.
"At current precious metals prices, we are confident that our financial situation will enable us to complete the major capital expenditures associated with the Santa Elena Expansion. This facility strengthens our overall financial position and will free up cash flow to enable us to pursue other corporate opportunities for growth."
Shares in SilverCrest closed on the TSX Venture Exchange at $1.75 per share the day before the announcement.
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