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Stonecap Keeps SilverCrest Mines At "Outperform" After "Strong" Q3 Earnings

Stonecap Securities has retained its "Outperform" rating on SilverCrest Mines (CVE:SLV) after the company posted "strong" third-quarter earnings.

It has a $3.85 target price on SilverCrest, which is a Canadian precious metals producer whose flagship property is the 100 per cent-owned Santa Elena Mine, located 150 km northeast of Hermosillo, near Banamichi in Sonora, Mexico.

"SilverCrest's Santa Elena mine has delivered another strong quarter of production and the company has increased its silver production guidance for 2012," Stonecap analyst Christos Doulis said in a note.

"SilverCrest remains on track with its plan to double annual production to approximately 4 million ounces Ag Eq at Santa Elena by 2014."

Stonecap said cash costs came in at $7.60 per silver equivalent ounce (Ag eq oz) beating both management's guidance of $8.20/oz and Stonecap's own estimate of $10/oz.

Management increased its 2012 silver production guidance to 535,000 ounces (from 435,000) and re-iterated its 2012 gold production guidance of 33,000 ounces. Stonecap is maintaining its estimates of 538,000 ounces silver and 33,000 ounces gold.

Cash and equivalents at quarter-end were $36.1 million. Subsequent to the quarter-end, SilverCrest raised net proceeds of approximately $32.6 million and settled its hedge book at a cost of around $23.3 million, so Stonecap estimates current cash at around $45 million.

"SilverCrest continues to build cash that will ultimately be used to help fund the expansion plant at Santa Elena," Stonecap's Doulis said.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.