SilverCrest Metals Inc. [SIL-TSX, SVCMF-OTCQX] said Monday January 4 that it has secured a US$120 million financing facility that it will use to fund construction at its Las Chispas Project in Sonora, Mexico.
Concurrently, one of SilverCrest’s Mexican subsidiaries has entered into a fixed price US$76.5 million EPC (engineering, procurement, and construction) contract with Ausenco Engineering Canada Inc., and one of its affiliates, for construction of the Las Chispas process plant.
SilverCrest shares advanced on the news, rising almost 12% or $1.68 to $15.87 on volume of 291,311. The shares are trading in a 52-week range of $14.88 and $4.50.
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 an ounce. The initial capital expenditure is forecast at US$100.5 million.
Those estimates assume a silver price of US$16.68 an ounce and a gold price of US$1,269 an ounce.
While a feasibility study is still pending, finalization by Ausenco, with an announcement of results targeted for late January, 2021, SilverCrest is confident entering into the credit agreement and EPC contract based on the substantial feasibility information currently available.
On Monday, SilverCrest said the US$120 million credit facility does not require mandatory hedging, cash sweeps, offtakes, production linked payments or equity issuances as part of the structure and US$30 million of the facility has been drawn.
Subsequent drawdowns are available upon satisfaction of certain customary conditions. Drawdowns are not tied to any construction milestones.
The Las Chispas property is 180 km northeast of Hermosillo. 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.
SilverCrest is thought to be fully-financed for construction of Las Chispas, including plant, power line and underground development. The project is now fully permitted and commissioning of the process plant is targeted for Q2 2022. The production ramp-up is expected to start in Q3 2022.