Monday, 24 December 2012

Stonecap Securities says investors are "paying nothing" for SilverCrest's La Joya property

Stonecap Securities analyst Christos Doulis took a closer look at SilverCrest Mines (CVE:SVL) Monday, after the company released drill results from its La Joya property in Durango, Mexico that extended mineralization beyond the current resource estimate. 
The silver miner released assay results from the final 15 drill holes in its phase II drilling campaign at La Joya on Friday. A resource update is expected in the coming weeks, to be followed by a preliminary economic assessment in 2013 that will evaluate a “starter pit” scenario at La Joya. 
Eight of the 15 holes tested the southern extension of the main mineralized trend, with the headline hole returning 80 metres at 78.8 grams per tonne (g/t) silver, 0.31 g/t gold and 0.5% copper. 
The remaining seven holes were focused on the Coloradito and Santo Nino targets. Hole LJ DD12-91 intersected 188.4 metres of 0.042% molybdenum, and 0.074% tungsten starting just 9.6 metres down hole. 
The company has now started phase III drilling at the property, which will be focused on continuing to expand the resource, with infill drilling on higher grade areas. 
"We continue to maintain that at current share prices, investors are getting the Santa Elena mine for a good price and are paying nothing for SilverCrest’s La Joya project," analyst Doulis notes. 
"An updated resource estimate for La Joya is expected in the coming weeks, which could be a significant catalyst for SilverCrest shares. A PFS [prefeasibility study] is also expected in Q1 for the expansion plan at Santa Elena."
Aside from the La Joya property, Silver Crest is in production from its Santa Elena mine in Mexico. A three year expansion plan is underway to double metals production at this mine, while exploration programs are advancing the definition of the large polymetallic deposit at the La Joya property.
The Vancouver-based company said last month that profit and revenues increased in its third quarter, with record silver production allowing it to raise its annual forecast for the year. 
Doulis maintained his "outperform" rating on SilverCrest, and $3.85 price target - up from the silver company's current trading price of around $2.43, which was up almost 4% on Monday morning.

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