SilverCrest updates Santa Elena transition timeline

Vancouver-based SilverCrest Mines (TSX: SVL, NYSE MKT: SVLC) expects to conclude mill commissioning at its Santa Elena silver-gold mine in Mexico in July and ramp up underground mining to 1,500t/d by year-end, COO Eric Fier said.

The Sonora state mine is currently transitioning from an open pit heap leach to an underground milling operation, with commissioning of the 3,000t/d capacity mill having begun on May 1 and expected to take three months or possibly less, Fier told the company's Q1 earnings call.

The ramp-up of underground mining from 500t/d in July by 1,500t/d by the end of the year is "doable," he added.

The transition is expected to result in lighter output and cash flow in Q2, but the company's 2014 production guidance of 3.3-3.6Moz silver equivalent is unchanged, with higher production expected in the second half of the year, Fier said.

All-in sustaining costs for the year are also expected to come in on target at US$11-12/oz silver equivalent.

Of that production, roughly 80% is expected to come from the mill and 20% from the leach pad, with all output expected to come from the mill in H2.

CREDIT FACILITY

In Q3 SilverCrest plans to review US$15mn in debt drawn from a revolving credit facility, which was aimed at reducing risk from volatile metals prices during the Santa Elena transition, Fier said.

The company may repay the debt or use it for exploration or a low-cost acquisition, he added. Evaluating and acquiring exploration properties close to Santa Elena is one of SilverCrest's priorities for 2014, according to its Q1 financial release.

The company halted open pit mining in April, about three months ahead of the original schedule, triggered by "operational constraints presented by the mine contractor," among other factors.

SilverCrest also has the La Joya silver-copper-gold project in Mexico's Durango state.