Vancouver-based SilverCrest Mines (CVE:SVL)(NYSE MKT:SVLC)(AMEX:SVLC) says it has paid out the remaining balance of its gold hedge facility established with Macquarie Bank in June 2009 - making it a "completely unhedged" silver and gold producer.
"We are pleased to have been able to take advantage of the recent correction in the gold price to eliminate the outstanding gold hedge," said president J. Scott Drever.
"The early elimination of the gold hedge will substantially increase our cash flows from operations for 2013 and 2014 which in turn strengthens our balance sheet and increases our flexibility to pursue our corporate objectives for growth."
The payment was as a condition of finalizing the project loan facility for the construction of its Santa Elena mine in Mexico.
The original hedge facility was comprised of 55,000 ounces of gold sold forward at US$926.50 per ounce and deliveries into the hedge facility were scheduled to continue into 2014.
During 2010 and 2011, the company made scheduled deliveries of 26,000 ounces of gold into the hedge facility from gold production at the Santa Elena mine, leaving a balance of 29,000 ounces of gold, which SilverCrest has settled in cash for US$ 23.25 million.
The company said Wednesday this reflects an effective settlement price of US$ 1,728 per ounce of gold, inclusive of all transaction costs.
The payout of the hedge facility was financed with some proceeds from its recent C$34.5 million bought deal financing that closed at the end of October.
Vancouver-based SilverCrest Mines is a Canadian precious metals producer whose flagship property is the 100 per cent-owned Santa Elena Mine, which is located 150 km northeast of Hermosillo, near Banamichi in the State of Sonora, 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 around 4.8 million ounces of silver and 179,000 ounces of gold over the 6.5 year life of the open pit phase of the mine.
A three year expansion plan is underway to double metals production at the Santa Elena Mine and exploration programs are advancing the definition of a large polymetallic deposit at the La Joya property in Durango State.
Earlier this month, the company said it produced a record amount of silver during the third quarter, prompting it to hike its silver output forecast for the year.
The junior producer saw silver output of 151,368 ounces for the latest three month period from its Santa Elena mine, up by 42 per cent from the same period last year. The company cited improvements in recoveries for the higher-than-projected production.
"Based on our production to date we are increasing our annual silver production guidance from 435,000 ounces to 535,000 ounces. We are maintaining our annual gold production guidance of 33,500 ounces," said Drever in a statement in mid-October.
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