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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (31767)	1/26/2009 9:18:49 PM
From: LoneClone	Read Replies (1) \| Respond to of 193482

SilverCrest Will Be Bringing Its Santa Elena Silver-Gold Project Into Production Before The Year End By Charles Wyatt minesite.com Good news continues to flow from Scott Drever’s SilverCrest Mines, as the company moves ever closer to production at its high grade Santa Elena silver-gold mine. This 3,160 hectare project lies approximately 150 kilometres northeast of Hermosillo, the capital of Sonora state in Mexico. It can be easily accessed year round from paved highways. The mining centre of Cananea, 100 kms to the north, is the closest urban area of any size. Although there are no official records, historic production from both open-cut and underground mining has been estimated from the dumps and old workings at 100,000 tonnes at a grade of six-to-eight grammes per tonne gold and 70-to-100 grammes per tonne silver. A 138 metre shaft and underground workings still remain from the past workings at the site, as do several service buildings. So, plenty for the SilverCrest team to work with. Scott Drever has a three phase production plan for the mine. It starts with open cut mining and heap leaching, at a rate of 2,500 tonnes per day. This means that a total of 6.5 million tonnes of ore at an average grade of 1.614 grammes per tonne gold and 56.7 grammes per tonne silver will be mined from the deposit over a period of eight years. The second phase will involve the development of a conventional mill towards the end of the eight year period. This will treat the heaps left by the leaching as recovery will have been at rates of no more than 70 per cent. At the same time a decision will also be made as to whether to move to underground mining, bearing in mind costs and metal prices. The thinking behind this approach is that capital spending will be limited at each stage and revenue will be accelerated. Pre-production capital for the first stage is only US$20.3 million and cash costs are estimated at US$333 per ounce of gold equivalent, with annual production reckoned at 30,000 ounces of gold and 500,000 ounces of silver during the first phase. A quick look at the share price chart indicates that investors appreciate this phased approach, as the shares bottomed at C20 cents late in October and have since recovered somewhat to C43 cents. The present situation, according to Scott Drever, is that the long lead time equipment, such as the 3,500 tonnes per day three stage crusher, is now on order, as is the Merrill Crowe recovery plant. The Merrill Crowe process is often used for projects such as Santa Elena where high silver to gold ratios prevent the use of carbon as a recovery technique. Scott goes on to say that final engineering and a detailed construction schedule have also been completed, so all that now needs to be done is for the company to raise some more money and avoid any delays during construction. He is just working out the exact amount of money that he needs to raise. It may come in at less than expected, as the company had C$11 million in the bank last summer and subsequently secured a C$3 million finance facility in October from Macquarie Bank to fund the remainder of the feasibility studies. Macquarie is therefore sitting on first base when Scott is ready to discuss capex, which will be in the fairly near future. A strong card he will play in these discussions will be the payback time, which should be less than 15 months. Hopefully this will deter Macquarie from insisting on its usual hedging requirements. In the meantime SilverCrest has announced that a new resource estimate at Santa Elena has delivered a 150 per cent increase in the contained ounces of gold in the indicated category, from 76,300 ounces to 190,666 ounces. At the same time, indicated silver resources rose by 172 per cent to 11.8 million. Probable reserves remained the same, as they are confined to the limits of the pit design as defined in the pre-feasibility study last August. These reserves will be re-estimated for the final feasibility, based on all the latest data and the ultimate pit design. An estimate has also been made of underground resources, even though planning for that is some time off, using a gold price of US$850 per ounce and a silver price of US$12 per ounce, alongside a cut-off of 1.75 grammes per tonne equivalent and on the basis of a minimum width of two metres. The result was 73,235 ounces of gold in the indicated category underground, and 84,057 inferred ounces, while silver totalled 4.45 million indicated ounces and 5.28 million inferred. It is this forward thinking approach with its phased development that Scott Drever brings to the company. All of which means that Santa Elena should get into production by the end of the year. Funding is available for robust projects where it is clear that management is prepared to maintain a high profile and adapt to current conditions. All this is evident at SilverCrest, so progress should be watched carefully over the coming months.