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SilverCrest Mines reports higher Q3 revenue, production from Santa Elena

SilverCrest Mines (CVE:SVL)(OTCQX:STVZF) reported Tuesday that revenue grew 76 percent sequentially in the third quarter, its second quarter of commmercial production from its Santa Elena Mine in Sonora, Mexico.

For the three month period that ended September 30, the precious metals producer reported revenue of $15.06 million, compared to $8.56 million in the prior quarter that ended June 30.

During the quarter, silver production was up 43 percent to 106,636 ounces and gold production was up 61 percent to 8,805 ounces compared to the second quarter, with a significant amount of silver and gold still in solution for processing and recovery, SilverCrest said.

Silver sales were 96,631 ounces at an average realized price of $37.44 in the third quarter, versus 70,325 ounces in the second quarter at an average realized price of $38.90 per ounce.

Ounces of gold delivered into the company's Macquarie Bank hedging facility were 6,102 ounces, at a price of $926.50 an ounce during the latest quarter. The company said revenue includes a non-cash amount of roughly $4.68 million, representing the difference between the market spot price at the date of delivery for gold and the hedge price of $926.50 an ounce settled in the quarter.

The company also recorded gold sales of $1.1 million related to the delivery of 1,525 gold ounces to Sandstorm Gold.
Cash operating cost per silver equivalent ounce sold fell to $7.27 an ounce from $8.27 in the previous quarter, lower than the Santa Elena life-of-mine budget projections.

Approximately 253,000 tonnes of ore were mined, crushed and delivered to the pad at the Santa Elena Mine in the latest quarter, with high grade ore of the Main zone now being mined to provide the bulk of ore to be mined for the remainder of the year.

Crusher throughput averaged 2,755 tonnes per day (tpd), above the design throughput capacity of 2,500 tpd, the company said.

"We are certainly pleased with the consistent progress being made at both the operational level at the Santa Elena Mine and the financial results of the company," said president J. Scott Drever.

"The steady increase in the overall operational statistics is now being reflected in our financial performance. We have accelerated our debt repayment and still have been able to maintain our strong cash position of $32.1 million.

"This and our substantial cash flow assures that we can proceed with our 3 year expansion plan to double production at Santa Elena and to implement the company's growth strategy for corporate growth which includes accelerated exploration of our exciting new La Joya discovery."

Indeed, the company said that comprehensive earnings before a $6.5 million loss on non-cash derivative instruments grew to $6.58 million from $4.30 million in the second quarter.

Under IFRS reporting standards, the company's derivative instruments are fair valued at the financial position date with the resulting gain or losses included in the operating results for the period. At September 30, SilverCrest's derivative instruments were calculated using a forward gold price of approximately $1,630 per ounce.

Cash flow from operations rose to $5.13 million, up from $3.11 million in the prior period.

During the quarter, the company also made a loan repayment of $3.3 million from Santa Elena production revenues, followed by another repayment recently, leaving SilverCrest with no remaining loan obligations for the fiscal year.

Looking forward, the company said that drilling at its Cruz de Mayo project, located near its Santa Elena Mine in Sonora, Mexico, is underway to reclassify and potentially expand current NI 43‐101 compliant resources. Results will be used to upgrade the current resource estimate and to prepare a Preliminary Feasibility Study (NYSE:PFS).

The junior miner is also working on a proposed decline at Santa Elena for underground development and expansion of resources. When completed, the phase one decline will allow initial production from the deposit that lies below the open pit limits.

SilverCrest anticipates that the 2,500 tonnes per day facility at the mine should recover approximately 4.8 million ounces of silver and 179,000 ounces of gold over the 6.5 year life of Santa Elena's open pit phase.

At its La Joya discovery, the company is currently compiling and validating historical and current data for developing an NI 43-101 compliant technical report - expected by year-end. A phase two drillling program of more than 10,000 metres is due to be completed by the middle of next year.