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Friday, 22 March 2013
PI Financial says SilverCrest to continue growth trajectory
Investment firm PI Financial's analyst Philip Ker has reiterated his buy recommendation on SilverCrest Mines (CVE:SVL) (NYSE MKT: SVLC) following the silver miner's fourth quarter and full year results released last week.
The $4.00 target price that Ker also kept is a 60 percent premium to the $2.50 price the day the report was issued.
The Mexico-focused company reported cash flow from operations of $40.1 million or 44 cents per share, and net earnings of $30.5 million or 33 cents per share for the year that ended December 31, 2012.
"We are confident current and future production levels will continue their growth trajectory as the company begins mining from underground and achieving higher recovery levels from its new processing facility, which is expected to be commissioned later this year in Q4," said Ker in the report.
"This plant should allow SilverCrest to increase production levels by 50% for 2014."
The company's primary asset, Santa Elena, is expected to produce 2.4 million ounces of silver equivalent this year, at cash costs of $8.50 an ounce. The mine has a higher grade open pit that is currently being mined, and an underground resource that is being developed, remaining open with exploration upside.
SilverCrest said last week its plan for this year is to complete the contruction of a new 3,000 tonne per day mill facility on schedule for the first quarter of 2014. Its plan is to double production at Santa Elena.
The potential second leg of growth is the La Joya project in Mexico, where the company is rapidly advancing the delineation of a large polymetallic deposit, and which is now being derisked with an upcoming preliminary economic assessment.
"We look forward to another strong financial year in 2013, with an expected increase in silver production to 625,000 ounces, consistent gold production at 33,000 ounces and cash costs remaining steady at or below $8.50 per silver equivalent ounce," said the company's president J. Scott Drever in a statement.
SilverCrest currently trades at $2.58, and with 106 million shares outstanding, the company is capitalized at $273 million.