Vancouver-based SilverCrest Mines (CVE:SVL)(NYSE MKT:SVLC)(AMEX:SVLC) said Wednesday that profit and revenues increased in its third quarter, with record silver production allowing it to raise its annual forecast for the year.
For the three months that ended September 30, comprehensive earnings amounted to $2.2 million, or 3 cents per share, compared to $0.01 million, or breakeven per share, a year ago.
Earnings were boosted by higher silver sales, and an exchange gain on a stronger Canadian dollar, partially offset by a derivative impact as well as income and a deferred tax expense.
Cash flow from its Santa Elena operations in Mexico, a key metric in the industry, more than doubled to $10.2 million, or 11 cents per share, up from $5.03 million, or 6 cents per share, in the year-earlier period.
Revenues rose 11 per cent to $16.7 million.
The junior producer saw silver output of 151,368 ounces for the latest three month period from its Santa Elena mine in Sonora, Mexico, up by 42 per cent from the same period last year. The company cited improvements in recoveries for the higher-than-projected production.
SilverCrest sold 57 per cent more silver, at 152,088 ounces, in the latest period, while gold sold also grew 4 per cent, to 7,923 ounces.
Silver equivalent ounces sold therefore improved 11 per cent, to 558,185 ounces, based on silver equivalent production of 519,587 ounces in the quarter.
Cash operating cost per silver equivalent ounce sold increased 5 per cent to $7.60, still below its budget of $8.20, the company said.
"Our Santa Elena low cost, open pit heap leach mine operations continue to perform well, and generated cash flows of $10.2 million which will contribute to the financing of the Santa Elena Expansion plan and the development of our major polymetallic La Joya Project," said president J. Scott Drever.
"Record silver production in the third quarter has enabled us to increase annual silver production guidance from 435,000 ounces to 535,000 ounces. We are on track to meet our annual production guidance of 33,500 gold ounces."
The company produced 18 per cent less gold in the quarter due to lower grades mined in the pit, at 7,184 ounces. But this was consistent with SilverCrest's current mine plan, it said, with gold ounces placed on pads expected to increase in the fourth quarter as higher grade benches are developed in the pit.
Average silver grades remained consistent at 48.41 grams per tonne (g/t), the company said, while gold grades declined to 1.37 g/t.
The average realized price received was $32, compared to $37 in the year-earlier quarter. All silver production is unencumbered by hedging arrangements and sold at spot prices, the company said.
In fact, earlier this month, the precious metals producer also said it 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 going forward.
In the latest period, gold revenues include non-cash amounts of $630,666. The non cash amount represents the difference between the market spot price at the date of delivery for gold, at an average realized price of $1,613 per ounce, and the hedge price of $926.50 per ounce settled.
Just yesterday, the Vancouver-based company released results from its drill program at the Santa Elena mine, with the company noting the campaign has so far been successful in terms of the defined objectives.
Gold and silver values in the SERCP and SE series of holes ranged from 0.13 grams per tonne (g/t) to 8.6 g/t gold and 17.4 to 244.0 g/t silver. Mineralized intervals ranged from 6.0 to 52.0 metres.
The most significant intercepts were 52 metres grading 2.19 g/t gold and 95.5 g/t silver in hole SERCP-9V, and 16 metres grading 6.18 g/t gold and 103.4 g/t silver in hole SERCP-11A.
The company said the drill program thus far has been successful and will support resource confirmation, conversion to reserves, and inclusion in the upcoming prefeasibility study for the Santa Elena expansion project.
Three drills are now on site at Santa Elena to complete the program by the end of the year. Revised Santa Elena resources and reserves are expected along with the pre feasibility study in the first quarter of next year.
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.
At the end of the third quarter, the company had cash and equivalents of $37.9 million, while working capital increased 22 per cent to $21.4 million.