Stonecap Securities analyst Christos Doulis kept his outperform rating and $3.90 price target on SilverCrest Mines (CVE:SVL) Wednesday, a day after the silver producer released drill results from its Santa Elena mine in Mexico - which the analyst says bode well for the upcoming updated resource and reserve estimates.
The headline hole, SE-13-119, intersected 25.8 metres grading 1.24 grams per tonne (g/t) gold and 187.6 g/t silver, including 1.9 metres of 2.34 g/t gold and 1,281.9 g/t silver.
The company said Tuesday 111 holes of a planned 114 holes were completed to expand the resource and upgrade resources to reserves at Santa Elena.
It also said that five holes intercepted the recently discovered El Cholugo zone - which lies below the Main Mineralized Zone currently being mined - including hole GT-12-09, which returned 7.3 metres grading 2.73 g/t gold and 357.9 g/t silver.
Another sub-parallel mineralized zone was also discovered below the El Cholugo zone, with the company naming it the El Cholugo Dos zone.
Three drills continue to turn on site, with a resource and reserve update expected in the first quarter, to be followed by a prefeasibility study for the mine's expansion plan.
A three year expansion plan is underway to double metals production at the mine.
"The additional drill results bode well for the updated resource and reserve estimates for Santa Elena and we continue to maintain that at current share prices, investors are getting the Santa Elena mine for a good price and are paying nothing for SilverCrest's La Joya project," concludes Doulis.
Indeed, SilverCrest is also advancing the definition of its large polymetallic deposit at its La Joya property in Mexico, where it late last month doubled the ounces in the resource.
The company produced 2.37 millon ounces of silver equivalent last year, and it is said to be on track to become a 5.0 millon plus producer within the next two years, with additional upside from the rapidly expanding La Joya project.
Shares of the silver miner closed at $2.50 on Tuesday - far below Stonecap's $3.90 target price, suggesting there is plenty of room for upside.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.