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Wednesday, 10 October 2012
SilverCrest Mines announces $30 mln bought deal financing
SilverCrest Mines (CVE:SVL)(MKT:SVLC) Friday said it will raise $30 million through the sale of 11.8 million shares at $2.55 each to a syndicate of underwriters led by Dundee Securities and including Canaccord Genuity Corp.
Earlier this morning, SilverCrest had initially announced gross proceeds of $26 million from the deal but increased the amount to $30 million just hours after, an indication of investor appetite for the company.
The new funds will be used to eliminate the remainder of the company's gold hedge commitments and for general corporate purposes including working capital, SilverCrest said.
Closing of the offering is anticipated before October 30, subject to the approval of the TSX Venture Exchange.
SilverCrest is a Vancouver-headquartered precious metals producer. Its flagship property is the 100 per cent-owned Santa Elena Mine, which is located 150 km northeast of Hermosillo, near Banamichi in the Sonora State, Mexico.
The mine is a high-grade, epithermal gold and silver producer, with an estimated life of mine cash cost of US$8 per ounce of silver equivalent.
SilverCrest anticipates that the 2,500 tonnes per day facility should recover approximately 4,805,000 ounces of silver and 179,000 ounces of gold over the 6.5 year life of the open pit phase of the Santa Elena Mine. A three year expansion plan is underway to double metals production at the Santa Elena Mine and exploration programs are rapidly advancing the definition of a large polymetallic deposit at the La Joya property in Durango State.
Late last month, SilverCrest unveiled results from a further 15 drill holes at its La Joya property in Durango, Mexico, which the company says continue to support a large tonnage silver deposit model.
SilverCrest said that based on the current geologic model, drilling and sampling from the phase I and II programs, "it is reasonable that the recently discovered mineralized systems could potentially result in a 50 to 100 per cent increase in current inferred mineral resources."
Drilling and surface sampling at La Joya has now extended the main trend to roughly 2.5 kilometres, the silver miner said, with an average width of around 700 metres.
The update prompted capital markets firm Stonecap Securities to keep its "outperform" rating on the stock.
"SilverCrest provides investors with immediate and growing cash flow from its Santa Elena mine as well as exposure to the exciting potential bulk tonnage La Joya project," Stonecap mining analyst Christos Doulis said in a note.
"The expected resource update at La Joya in Q4 of this year could act as a significant catalyst for SilverCrest shares."
In August, SilverCrest posted a sharp increase in earnings for the second quarter as cash operating costs declined and revenues nearly doubled year-over-year.
For the quarter that ended June 30, comprehensive earnings amounted to $9.2 million, or 10 cents per share, way up from $0.8 million, or 1 cent per share, a year ago.
The increase was driven by higher silver and gold sales volumes, and a positive marked-to-market derivative impact, the company said, partially offset by lower realized precious metal prices and a higher tax expense.