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Ted Ohashi of Investment Pitch interviews Scott Drever and David Morgan in May 2013.
Scott Drever speaks with SilverSeek.com at the World Resource Investment Conference in May 2013.
Recorded at the Subscriber Investment Summit, 2013.
Scott Drever, President of SilverCrest Mines(CVE:SVL), tells Proactive Investors that, as a low-cost producer, the company is in good shape to weather the storm until the markets turn. He also talks about expansion plans for Mexico’s Santa Elena mine as well as the new reserve and resource estimates at the site, which are due in early April.
With David Morgan, editor of the Morgan Report. Filmed at the 2013 World Resource Investment Conference.
Created: January 2013.
Created: June 2012.
Created: June 2012.
Created June 2012.
Created June 19, 2012
Created: July 2011
SilverCrest Mines’ Santa Elena silver and gold mine is located in Sonora, Mexico, 150 kilometres from the state capital, Hermosillo, and just 7 kilometres from the community of Banamichi. The property consists of six contiguous concessions with a total area of 3,159 hectares registered to the company’s wholly owned Mexican subsidiary, Nusantara de Mexico.
On September 9, 2010, SilverCrest poured its first bar of dore. Ramp-up production took place over the following nine months.
To convert the rock in the ground to mineable ore, SilverCrest drilled a total of 23,000 metres in 136 holes.
After 2010 mining operations, the open pit portion of the Santa Elena deposit has 11.7MM oz Ag and 279K oz Au contained in 4.8 million tonnes of ore. Santa Elena’s ore grades are considered high at 75.9 g/t Ag and 1.81 g/t Au in an epithermal deposit.
During Phase I of the mine life, operations at Santa Elena are expected to process 2,500 tpd with an average annual output of 800,000 ounces of silver and 30,000 ounces of gold.At recent metal prices that’s an undiscounted revenue stream of $76 million annually.
Bolstered by it’s successes to date, SilverCrest Mines is now advancing the Santa Elena Expansion Plan which will increase profit to the company through 2019.
The Expansion Plan will commence during Phase I and includes: Phase II: The underground resource at Santa Elena, Phase III: Ore from the Cruz de Mayo satellite deposit; and Phase IV: Substantial resources from retreated leached heaps.
Phase II would begin with the construction of a Conventional CCD Mill with a capacity of 3,500 tpd.
At the same time, the company would begin construction of a 1,216 metre decline ramp in late 2011.
Presently, the underground mine development will add an additional 2.8 million tonnes of ore with a grade of 88.6 g/t silver and 1.51 g/t gold. This would net the company an additional 8 million ounces of silver, plus 136,000 ounces of gold over a 6-year mine life.
The decline ramp would allow for further exploration of the underground portion of the Santa Elena deposit in 2012. Significant potential exists here to increase resources with further drilling.
Phase III mining at Santa Elena calls for the addition of ore from the Cruz de Mayo silver and gold satellite deposit. The property is approximately 35 km from the Santa Elena property, 180 km by paved road.
Conceptually, mining at Cruz would consist of a heap leach operation on site, and/or shipping of high grade ore to the Santa Elena mill.
The property consists of two contiguous concessions with a total area of 452 ha.
The silver and gold resource at Cruz de Mayo is based on 66 drill holes completed between 2008 and 2009. Drilling is ongoing in 2011.
Present resources on the project are as follows: 6,065,000 tonnes inferred grading 66.5 g/t plus 1,141,000 tonnes grading 64.15 g/t.
At a very conservative $14.75 per ounce silver, the conceptual Cruz de Mayo open pit mine will be a traditional load and haul operation, mining 795 kt of ore at grade of 93.5 g/t silver and 0.10 g/t gold. A total of 2.2 million tonnes will be mined over a three year mine life starting in 2013 and finishing in 2016.
SilverCrest would conceptually begin open pit mining at Cruz de Mayo in 2014.
Phase IV of the Santa Elena Expansion Plan will see the company return to the Leached Heaps at the open pit by 2019.
Metallurgical work completed to date shows excellent recovery rates for both gold and silver in this process, with re-processing returning 75.7% of the total silver and 93.5% of the gold. By re-processing the heaps at the mill, SilverCrest anticipates adding further low cost metal to its coffers.
As a final part of the ongoing exploration program, SilverCrest also envisions adding potential resources from Santa Elena North. This target is located just 1 km north of the existing Santa Elena open pit.
The initial drill plan for SEN consisted of approximately 22 drill holes testing to a depth of 100 metres.
With an initial footprint measuring at least 500 metres long by 20 metres wide, Santa Elena North remains open in all directions. Results from this drill program will be released in 2011.
SilverCrest Mine’s Santa Elena Expansion Plan is a plan for growth.
Once executed, the expansion plan will increase average annual production by a minimum of 52% at a mine throughput of 2,500 tpd. This would produce an average of 1.6 million ounces of silver, and 39,000 ounces of gold annually. The company is considering a throughput of 3,500 tpd for a 100% increase from current production values.
The economic value of the Santa Elena Expansion Plan will contribute tremendously to the company’s success. The company’s April 2011 Preliminary Economic Assessment, or PEA established a significantly increased net present value for the project at $491 million (at a 5% discount rate), up from $78MM for the Santa Elena open pit alone.
With the expansion plan, the company’s initial 6.5 year mine life increases to more than 10 years. Initial sales of our silver and gold have already begun to offset our operating costs, and will set the stage for early, free cash flow that will be utilized to implement SilverCrest Mines’ strategy for corporate growth.
Created: July 2010
Eric Fier (COO, SilverCrest Mines): Here we are back at Santa Elena, if you can remember back in 2008 we stood in the deposit area, which is over my right shoulder here, this is the Santa Elena main zone and the cliff, and at that time we had just completed our pre-feasibility study and we were discussing going into permitting, construction and production.Now we’ve completed the permits and as you can see we’ve started construction, we’re currently doing pre-stripping, here it is May 2010, and the cliff that you see in the background there, as its coming down we’ll be picking up more and more ore and it will be shipped to the crusher. If you can recall, we did a taping underground and there was an adit you can see in the base here, we went in there and we pointed out there was a large mineralized zone running approximately 5 grams per tonne gold and several ounces of silver. Our objective is to get this point as quick as possible in our short term mine plan, so that we can see revenues out on the leach pad as soon as possible.
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Scott Drever (President, SilverCrest Mines): Today we are at the mine site and we saw the crusher start up, we’ve seen pretty much everything completed and its been a wild and wonderful four and half years, from start to pretty much finish — we’ll be producing gold and silver later this year.
Cecile Munoz (VP, Sonoran Resources): At the head of Santa Elena you have individuals with not only extensive experience in mining, but it’s their approach. They have real dedication, real commitment to not only building a very successful mine, but a mine that is in balance and in harmony with the community and with the environment around them.
Eric Fier (COO, SilverCrest Mines): In keeping with our commitment to the community, I’d like to present this ambulance to the municipality of Banamichi, Thank you very much.
Cecile Munoz (VP, Sonoran Resources): Also, what makes it unique is that arguably we could say it’s a small project but the quality of the mine is very strong and the location is very advantageous, easy access to the mine and then when you look at the community of Banamichi you have some great infrastructure, some great people from which to draw upon.
Jada Soomer (Director of Communications, SilverCrest Mines): …And it was really an invigorating feeling to be part of a company that cares so much about the community that surrounds its mine. It’s going to be a wonderful experience coming back here as we move into production and getting to know more of the locals who’ve been very hospitable. Everyone wants to know what SilverCrest is doing, everyone is very excited about it. The feeling in the community is very contagious.
Eric Fier (COO, SilverCrest Mines): As we transition into production, which is a milestone for SilverCrest, we’ll be staffing the mine. The employment here will be approximately 90 to 100 people, 50 to 75% of that I’m targeting to be local, which is very attractive. There are well-trained people who will be doing training as we’re ramping up and going into production. The more local people you can get is a cost savings to the mine site and to the company and it’s also excellent for community relations.
Eric Fier (COO, SilverCrest Mines): [Speaking to staff at the mine kick-off meeting] Ok, lets get started. Thank you for everybody getting here safely today. We did have a little meeting last night in a kickoff and I want to do the same here this afternoon. This meeting to me is very important because it’s a transition from advanced construction going into production and these are just logical steps that we have to go through in a systematic way in order to get people out of the construction mode and more into the pattern of production.
Geoff Allard, P.E. (Allard Engineering Services): From an investor’s viewpoint, the Santa Elena mine has many good features. It’s in a very nice area, it’s accessible, it;s close to town, has enormous community support as far as I’ve seen. The infrastructure is good and it looks like there’s plenty of potential to expand the mine to the Cruz De Mayo property and recent drilling pointed out some other high grade zones that seem very attractive.
Eric Fier (COO, SilverCrest Mines): We’re at the Santa Elena crusher. This is a critical milestone that we’ve just passed today. We’ve tested the crusher and this material that you see in front of you here is running about minus three-eighths inch, it’ll go out on our leach pad, it’s running about a gram per tonne gold equivalent. Over the next six months you can see values going through the crusher three to five grams gold equivalent. This has tremendous potential and has a great cost benefit. We’ve been very efficient to this point.
Geoff Allard, P.E. (Allard Engineering Services): …So a mine like Santa Elena, which has a very simple, straightforward, understandable metallurgy is a quite a prize. The nicest thing about Santa Elena is that it has no contamination.
Eric Fier (COO, SilverCrest Mines): The revenues from the mine will be used for the expansion plan, for mergers and acquisitions and other projects that we’re currently looking at, in Mexico and worldwide. Currently the mine plan is to the extract approximately 300,000 ounces of gold and about 12 million ounces of silver in the current reserve. That expansion plan will look at approximately 1 million ounces gold equivalent recovered. That’s from the current reserve, the re-treatment of the leach pad, underground resources, which are at about 300,000 ounces gold equivalent, and bringing in Cruz de Mayo which is about 35 kms from here and is the satellite deposit. Currently in Cruz De Mayo we have about 15 million ounces of silver with a gold credit in resource.
Scott Drever (President, SilverCrest Mines): Yes, I’m really proud, not so much for myself but certainly for the people that have put their heart and soul into this project over the last four and half years. They were believers from the outset and you can see how we’ve progressed and how we went through some really tough times in the financial markets and the general stock market itself to get where we are now. It wasn’t easy, but these guys stuck with it and we did it.
Created: September 2011
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.
Created: September 2011
SilverCrest Mines La Joya silver, copper and gold project is situated in Durango, Mexico.
Lithology is key at Santa Elena. Numerous producing mines with similar lithology and mineralization are located nearby, including Grupo Mexico’s, San Martin Mine, Industrias Penoles,’ Sabinas Mine, Pan American Silver’s, La Colorada Mine and First Majestic Silver’s, La Parrilla Silver Mine. As such, the La Joya project has, as metallurgist Salvador Aguayo put it, “a great head start in understanding not only the metallurgy of the project and the things we want to do, but also the things we won’t do.”
Created July 2011
Transcript: SilverCrest COO Eric Fier explores the La Joya silver-copper project
Surrounded by World-Class Mines
“Part of SilverCrest’s philosophy is to develop economic, viable deposits that have great infrastructure in a great location. And that’s what La Joya has, for a start.
“We’re 75 kilometres south of the city of Durango, Mexico. We’re 10 kilometres off a highway, rail line and major power line. We’re also a two-hour drive from an international airport.
“La Joya is situated in a historic and currently very prolific mining district. Across the valley from us, approximately 25 kilometres, are the La Parrilla, San Martin and Sabinas mines. These are world-class deposits. Our attempt here for exploration is to look for the same type of geologic models as these producers, which are skarn models. The geochemistry is silver, copper, potential gold, and lead and zinc.”
At the La Joya warehouse, also known as the bodega, 220 metres of core samples from Hole 22 are kept in hundreds of core boxes. The mineralization exemplifies the lithology and stratigraphy of the La Joya deposit.
“As we walk down through the hole we see a sequence of skarns and marbles.”
At 50 metres intermittent, dense mineralization is visible with the naked eye.
“At 100 metres we start seeing more contact mineralization with the local intrusive, a quartz monzonite to a quartz feldspar porphyry. It’s great looking rock, as far as the contact mineralization goes.
“As we move down, we see some structures in the samples, which is another important part of the mineralization. There are three parts of mineralization at La Joya: vertical structures which can be up to 50 metres wide; intermittent, horizontal mantos or disseminated sulphide mineralization; or beneath everything a solid bed of contact mineralization, which here appears to be about 50 metres wide.
“The grade in this hole, typical for most of the holes we see at La Joya, can be anywhere from 30 to 100 metres wide. The average grades we’re seeing is 60 to 100 grams per tonne silver [1 oz/t = 34.2857 g/t]; 0.5% to 1% copper; and a gold credit of about 0.25 to 0.5 grams per tonne. We also get an increase with lead and zinc at depth, which could be up to 1% to 2%.”
Low Hanging Gems
“The meaning of La Joya is “The Gem.” There is one area I call the low hanging fruit area, but in this case the low hanging gem.
“Within a particular hillside there are multiple mineralized mantos and skarns. We’ve counted five, currently. These are low hanging gems, because it’s right at the surface.
“In the area you can see there are old underground workings and multiple adits going right into the mantos, or skarns. Cumulatively, these five zones are anywhere from 30 to 50-metres wide. It’s great, immediate value from the perspective of a low-cost open pit.
Underground at La Joya
On a hillside with showings of multiple historic workings, Eric Fier, analyzes a 2-metre-wide exposed structure at the entrance of a mine shaft.
“Samples from here ran at about two-kilograms silver and 12.5% copper. This is just a portion of a structure that runs 300-metres long and 50 metres wide at the surface. This makes for a great opportunity for exploration, and a great opportunity for a high-grade, near-surface potential open pit.”
At a second location, a skarn mineralization runs 20 metres along the wall.
“The grade for this wall is 250 grams per tonne silver and 2% copper. It’s important to note this location is only about five metres from the surface.”
In a cavernous underground working called the galleria, it’s estimated the resource was extracted at 342 grams per tonne silver and two to four per cent copper.
“These are the kinds of values we’re seeing in the drill results for our Phase I program,” said Fier. “It’s really making La Joya a very attractive project for exploration to move SilverCrest forward.”
Phase One Drilling
“Currently we’re drilling 25 holes, or approximately 5,000 metres. And we’re just completing that Phase I program. It will test one kilometre of the two kilometre strike length of the mineralized trend, which is anywhere from 100 to 300 metres wide.
“We’re still testing the thickness, but we’re seeing anything from five to 60 metres of very good mineralization, with intercepts of up to two kilograms silver, 12 to 15 per cent copper, and a gold credit.
“Now the big picture for La Joya is [conceptual target] 50-million ounces of silver plus copper. The copper is about the same value of the silver, so if you want to call it a silver equivalency, that would be 100-million ounces silver equivalent.
“Over the next few months we’re going to be creating a resource model from which we can plan a Phase II drill program to expand the resource. I don’t anticipate will be at the 50-million ounce silver target at that point, but we will have a percentage.
“This will give us a tool to help guide us create a much larger resource for our shareholders and potential shareholders.”
SilverCrest Mines and Santa Elena Oro Y Plata make safety and the environment a daily commitment in all aspects of operations. All newcomers to the mine are first shown this video to ensure their safety while visiting Santa Elena.
Created: January 2013.