SilverCrest Metals Inc. [SIL-TSXV; SVCMF-OTCQX] said Tuesday December 3 that it is raising $80 million from a bought deal offering of 11 million common shares priced at $7.28 per share.
The company said it intends to use the proceeds of the offering for the continued exploration and development of its Las Chispas Project in Sonora, Mexico.
Las Chispas is the third highest grade primary silver deposit in the world. According to a Preliminary Economic Assessment announced in May, 2019, it is expected to produce an average of 13.7 million ounces of silver equivalent annually during the first four years of operations at an all-in-sustaining cost of US$4.89/oz. The initial capital expenditure is forecast at US$100.5 million.
Those estimates assume a silver price of US$16.68/oz and a gold price of US$1,269/oz.
Proceeds of the bought deal offering could be higher than $80 million as the underwriters have been granted a greenshoe option allowing them to purchase up to an additional 15% of the shares offering within 30 days following the closing of the offering. The underwriting team is led by National Bank Financial Inc., Desjardins Capital Markets, and Scotiabank.
SilverCrest shares advanced on the financing news, rising 6% or 46 cents to $8.10 on volume of 1.09 million. The shares are currently trading in a 52-week range of $3.05 and $8.73.
The Las Chispas property is located approximately 180 km northeast of Hermosillo. It consists of 28 concessions totalling 1,400 hectares.
Between 1880 and 1930, several mines on the property are thought to have yielded approximately 100 million ounces of silver and 200,000 ounces of gold.
Mineralization occurs in 0.5 to 5-metre wide veins with adjacent stockwork and breccias trending northwest-southeast for one to 1.5 km. The company says 14 epithermal veins have previously been defined on the property, of which three have had notable production. The producing veins include Las Chispas, William Tell and Babicanora.
SilverCrest is the first company to successfully drill-test the historic Las Chispas Project, a move that resulted in numerous discoveries that are being evaluated for economic viability and potential production in the future.
SilverCrest said recent drilling has resulted in the discovery of a new high-grade zone called Area 118. It was named after the discovery hole LC19-118, which returned 8.6 metres grading 7,873 g/t silver equivalent.
The approximate high-grade footprint of Area 118 is 300 metres along strike by 125 metres in height, and includes two adjacent and intersecting veins, Las Chispas and Giovanni.
The weighted average (true width, uncut and undiluted grades) of the defined initial high-grade footprint in this zone is 1.6 metres, grading 16.54 g/t gold and 1,837.3 g/t silver, or 3,078 g/t silver equivalent. Despite a limited amount of exploration work done in Area 118 to date, these results outline the potential to delineate a new high-grade resource, the company has said.
“After prioritizing in-fill drilling for the better part of 2019, our team is excited to focus on resource expansion with the announcement of drill hole LC19-118,” said SilverCrest CEO Eric Fier.
There are currently 17 core drills operating at Las Chispas; 16 surface and one underground. This includes 12 rigs completing in-fill and known vein expansion holes in the Babiconara Area, and four rigs working on new vein targets in the Las Chispas Area.
In a press released on November 21, 2019, SilverCrest said 75 holes or 25,000 metres remain to be completed in 2019, of which 20 to 25 holes (6,000 metres) are earmarked for the Las Chispas Area veins. An updated resource estimate, potentially including Area 118, is expected in the second quarter of 2020, along with the results of the ongoing feasibility study for the project.