Vancouver-based SilverCrest Mines (CVE:SVL)(NYSE MKT:SVLC) produced a record amount of silver during the third quarter, the precious metals miner said Tuesday, prompting it to hike its silver output forecast for the year.
The junior producer saw silver output of 151,368 ounces for the latest three month period from its Santa Elena mine in Sonora, Mexico, up by 42 per cent from the same period last year.
The company cited improvements in recoveries for the higher-than-projected production.
"Based on our production to date we are increasing our annual silver production guidance from 435,000 ounces to 535,000 ounces. We are maintaining our annual gold production guidance of 33,500 ounces," said president J. Scott Drever in a statement.
"We expect another strong operating performance in the fourth quarter, which in conjunction with our significant operating profit margins should enhance our overall financial performance."
The company produced 18 per cent less gold in the quarter due to lower grades mined in the pit, at 7,184 ounces, but average overall ore tonnes crushed per day rose 10 per cent to 2,887 tonnes.
SilverCrest sold 57 per cent more silver, at 152,088 ounces, in the latest period, while gold sold also grew 4 per cent, to 7,923 ounces.
Silver equivalent ounces sold therefore improved 11 per cent, to 558,185 ounces, based on silver equivalent production of 519,587 ounces in the quarter.
The gold and silver miner said it delivered 5 per cent more ounces of silver to the pad than the third quarter of 2011, while it delivered 35 per cent less gold ounces.
The gold output in the quarter was consistent with SilverCrest's current mine plan, it said, with gold ounces placed on pads expected to increase in the fourth quarter as higher grade benches are developed in the pit.
Average silver grades remained consistent at 48.41 grams per tonne (g/t), the company said, while gold grades declined to 1.37 g/t.
The company said that during the period, its expansion plan progressed with the exploration-stage decline advancing to 740 metres, and as detailed engineering continues, with long-lead time mill equipment being ordered. A three year expansion plan is underway to double metals production at the mine.
Three drills are also working to continue exploration and development drilling to confirm reserves as well as test the deep extensions of the Santa Elena deposit.
SilverCrest noted that it had some challenges in the third quarter with regards to a small number of "dissident members" of the Bienes Comunales de Banamichi, Sonora community, which partially restriced access to the mine site for a period of 3 days to make demands for an increase in lease payments.
It said that government officials moved quickly to remove the dissidents and restore the company's legal access to its operations under an agreement signed in 2007. The company has also agreed to have discussions with the dissident members of the community "in order to maintain its harmonious relationship".
The Canadian precious metals producer's Santa Elena mine is located 150 km northeast of Hermosillo, near Banamichi. It has an estimated life-of-mine cash cost of US$8 per ounce of silver equivalent, and is expected to recover around 4.8 million ounces of silver and 179,000 ounces of gold over its 6 and a half year life of the open pit phase.
SilverCrest is also exploring the large polymetallic deposit at the La Joya property in Durango State, Mexico, where last month it unveiled drilling and surface sampling results that extended mineralization beyond the current resource and supported a large tonnage silver deposit model.
The company also recently announced a $30 million bought deal financing, from which the funds will be used to eliminate the remainder of its gold hedge commitments, and for working capital.