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How many early stage exploration projects become mines? How do they get there? How can investors know which of the thousands of mining projects out there will actually become a mine?
On this episode of inSITE Report, we’ll travel to Mexico to investigate these questions, and to look at one exploration company in particular—SilverCrest Mines stands out to us at Resource Intelligence as one of those rare companies who made it to production in a remarkably short time. SilverCrest invited us here to kick the tires on a few different projects, including the company’s Santa Elena Mine and expansion project and the Cruz de Mayo Project, located in Sonora, Mexico.
We’ll also travel to SilverCrest’s new project in Durango — the La Joya silver, copper and gold project, to find out what progress the company is making in repeating its past successes and moving toward mid-tier producer status.Santa Elena and the Expansion Plans
SilverCrest acquired its Santa Elena project in 2005. It took the company just 5 years of exploration to put the project into production. What you’re watching now is May 20, 2011, the official inauguration of the mine.
SilverCrest has a lot to celebrate: The company’s promise of growth continues to be actively realized. The company is on target to achieve production levels of 800K oz Ag and 30K oz gold on average per year.
Another promise for growth lies in the company’s expansion plan: SVL’ s May 2011 P.E.A. examined expanding the current mine plan by 52% to 100% with a new CCD mill. This would process additional ore from several deposits, including underground resources from Santa Elena, open pit resources from the nearby Cruz de Mayo deposit, retreated the leached heaps at Santa Elena and potential resources from an area known as Santa Elena North, one kilometre north of the existing deposit. All these sites are seeing ongoing exploration.
For shareholders, the potential upside is huge: The expansion plan is expected to increase the NPV for the project to between $130MM (at base case prices) and $491MM (at recent metal prices). And this recently proved something to celebrate with shareholders and local stakeholders.
As such, the governor of the state of Sonora and local dignitaries came to celebrate with SilverCrest, and to give their blessings to the mine.
Re-creating conditions for success in Durango
SilverCrest Mines acquired the La Joya project in Durango, Mexico in 2010 and within six months the company had completed the first 26 drill holes. The company is finding copper, silver and gold in significant quantities in structures, mantos and at the contact, which appears to be about 50 metres wide.
Importantly, there are several nearby operating underground mines near La Joya. The company has visited these, and, as Country Manager Salvador Aguayo explains, they have had the opportunity to learn potential ways to tackle La Joya; and also some ways they won’t want to approach the project. Now, with each new drill hole SilverCrest drills, the company has a clearer, more valuable picture of La Joya, thanks in part to the knowledge gained from nearby mines.
Summing up the Potential
Importantly, SilverCrest has a team of seasoned management and veteran metallurgists and geologists with countless years of experience in Mexico. Add to that the fact that La Joya is surrounded by operating mines and it’s clear why SilverCrest is upbeat about its chances for success.
With SilverCrest Mines we see a game plan for growth.
Santa Elena annual production is now on track for 2 million ounces of silver equivalent per year. At its peak, the Santa Elena expansion plan could more than double those figures.
If the company can achieve a similar timeline with La Joya — exploration to production in 5 years — its target of 100MM oz of silver equivalent could double the company’s production rate again.
SilverCrest is in commodities with excellent outlooks only. Importantly, Mexico is seeing a mining renaissance, particularly in Sonora and Durango where mine friendly communities are in surplus.
And perhaps most importantly, SilverCrest has had the taste of victory. Santa Elena has been an unqualfied success. Scott, Eric and the team want to replicate that success and the writing is on the wall: This is a hardworking, dedicated team that has proven their mettle when it comes to building mines.Thanks for watching and reading inSITE report. Check out the company’s profile at Resource Intelligence Analytics HERE.
Disclosure: No Positions