Stonecap Securities maintained its "outperform" rating and $3.85 price target on SilverCrest Mines after the precious metals producer posted more drill results from its Santa Elena Mine in Mexico on Tuesday.
"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," notes Stonecap analyst Christos Doulis.
"A revised PFS for the Santa Elena Expansion Project anticipated in Q1/13 should provide greater confidence in the expansion project and could act as a catalyst for the company’s shares."
The company said Tuesday 79 of a planned 100 holes have been completed so far to recategorize indicated and inferred resources to probable reserves, as well as to expand current underground resources.
So far, according to SilverCrest, the program has been successful and will help with resource confirmation and conversion, the results of which will be included in the upcoming prefeasibility study for the Santa Elena expansion project.
The most notable intercepts were 30.7 metres grading 1.61 g/t gold and 169.6 g/t silver in hole SE 12-54, and 16 metres at 2.15 g/t gold and 166.9 g/t silver in hole SERC-12-36.
Two step out holes of a 15 hole program to test for resource expansion were also completed, with assays still pending. These two holes did intercept mineralization roughly 100 to 150 metres beyond the boundary of existing resources, Doulis says.
He also notes that the Santa Elena deposit remains open along strike, at depth and to the east, with drilling continuing with three rigs on site.
An updated reserve and resource estimate for the mine is expected, along with the pre-feasibility study for the expansion plan, in the first quarter of 2013.
A three year expansion plan is underway to double metals production at the Santa Elena Mine, while exploration programs are advancing the definition of the large polymetallic deposit at the La Joya property in Durango State.
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.
Shares in SilverCrest were changing hands at around $2.49 per share on Wednesday, up almost 30 per cent so far this year.