TSX: SVL     NYSE MKT: SVLC       FSE: CW5       LOW: 1.47       HIGH: 1.50       VOLUME: 54425       LAST TRADE: 1.48       DATE: 2015-02-27
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Santa Elena Mine

Property Size: 3,160 ha (7,808.5 Acres)
Location: 150 kilometers northeast of Hermosillo, Sonora, Mexico.
Status: Commercial Underground Production – Anticipated production of approximately 4.0 million to 4.4 million ounces silver equivalent in 2015

History

Earliest records of work on the property are from the late 19th to early 20th century when an English company by the name of Consolidated Fields operated a mining operation at Santa Elena until the onset of the Mexican Revolution in 1910.

During the 1960’s, Industrias Peñoles S.A de C.V. drilled two or three holes on the property. During the early 1980’s, Tungsteno de Baviacora (Tungsteno) mined 45,000 tonnes grading 3.5 g/t gold and 60 g/t silver from an open cut at Santa Elena. Since 2003, Tungsteno has periodically surface mined high silica/low fluorine material from Santa Elena and shipped it to the Grupo Mexico smelter in El Tajo near Nacozari, approximately 60 km to the northeast.

In early 2004, Fronteer Development Group of Vancouver, B.C., completed an extensive surface and underground mapping and sampling program. A total of 145 channel samples (89 underground and 56 surfaces) were collected and analyzed. The property remained under control of Tungsteno. On December 8, 2005, SilverCrest, using its 100% owned subsidiary Nusantara, entered into an option agreement with Tungsteno to acquire a 100% interest in the Santa Elena property through staged option payments over 5 years. SilverCrest completed payments as per the terms of the agreement in August of 2009. SilverCrest has been extensively evaluating the property since 2005.

Geology & Mineralization

Santa Elena is located in the Basin and Range Province, which is part of the Sonora Desert subprovince. The region is near the Proterozoic rifted continental margin of the North American plate, which was the site of deposition of a thick sequence of shallow marine shelf carbonate and siliclastic rocks. Subduction of the Farallon Plate beneath the North American Plate during Jurassic time resulted in continental volcanism. In late Jurassic time, a northwest-trending rift basin formed which was the site of sedimentation and felsic and intermediate volcanism.

Locally, the primary rock types are early Tertiary andesite and rhyolite flows which exhibit propylitic to silicic alteration. The main mineralized zone is a cross-cutting structure trending approximately east-west and dipping about 45° to the south. Alteration is widespread and pervasive with significant silicification, kaolinization and chloritization. Gangue minerals consist of quartz, calcite, chlorite and fluorite.

The Santa Elena deposit is considered to be high calcium, low-sulfidation type with replacements, stockworks and hydrothermal breccias similar to other high level low-sulfidation deposits found in Mexico, Chile and Nevada and Arizona in the United States.

Reserves and Resources (April 2013)

Classification1 Tonnes Au gpt Ag gpt Au oz Ag oz
SANTA ELENA UNDERGROUND DILUTED AND RECOVERABLE RESERVES2
PROBABLE 3,920,510 1.57 108.1 198,170 13,624,640
SANTA ELENA OPEN PIT RESERVES3
PROBABLE 1,426,710 1.52 66.8 69,830 3,062,200
SANTA ELENA LEACH PAD RESERVES4
PROBABLE 2,844,530 0.65 33.3 59,420 3,048,200
TOTAL RESERVES 8,191,760 1.24 74.9 327,430 19,735,050
SANTA ELENA UNDERGROUND RESOURCES5
INDICATED 2,142,820 1.69 114.9 116,000 7,919,000
INFERRED 1,489,750 1.50 155.6 72,000 7,453,000

Note: All numbers are rounded. Underground and Leach Pad Reserves and Resources are based on 3 year historic metal price trends of US$28/oz silver, US$1450/oz gold and metallurgical recoveries of 92% Au and 67.5% Ag with a metal ratio of Ag:Au at 70:1 used for grade cutoff determination . All Mineral Resources and Reserves conform to NI 43-101, 43-101CP, and CIM definitions for Resources and Reserves. Inferred Resources have been estimated from geological evidence and limited sampling and must be treated with a lower level of confidence than Indicated Resources.
1 Open Pit and Leach Pad Probable Reserves were classified by SilverCrest.  Underground Reserves and Resources were classified by EBA, a Tetra Tech Company. 
2 Underground Probable Reserve is based on a cutoff grade of 1.47 gpt AuEq with an average 10% dilution and 90% mine recovery.  Average true thickness of the designed stopes is 13.4 metres.
3 Open Pit Reserve is based on a cutoff grade of 0.20 gpt AuEq in a constrained pit shell with applied capping of 8 gpt Au and 300 gpt Ag.
4 Leach Pad Reserve based on production and drill hole data for volumetrics and grade model using a cutoff grade of 0.5 gpt AuEq. No capping was applied.
5 Underground Resources are exclusive of Probable Reserves and based on 1 gpt AuEq grade shell, a cutoff grade of 1.4 gpt AuEq, and applied capping of 12 gpt Au and 600 gpt Ag.

Santa Elena Reserve Criteria

The Santa Elena Reserve estimates as stated above were completed using GEMS resource models for defining open pit, underground and leach pad Reserves along with criteria as presented in the following table.

Base Case Metal Prices1 All US$      
Gold $1,450.00      
Silver $28.00      
Mining Method Open Pit Open Pit Underground Leach Pad
Process Method Heap Leach CCD Mill CCD Mill CCD Mill
Mining Cost/T ore $2.42 $2.50 $21 to 482 $0.25 to 0.75
Mining Cost/T waste $1.52 $2.00 NA NA
Processing Cost/T3 $6.65 $20.50 $20.50 $18.50
General & Administration4 $3.30 $3.00 $3.00 $3.00
Metal Recoveries5        
Gold 63% 92% 92% 92%
Silver 40% 67.5% 67.5% 67.5%
Pit walls – North Wall overall angle 55.0 55.0 NA NA
Pit walls – South Wall overall angle 45.0 45.0 NA NA
Ramp Width (metres) 10 to 15 10 to 15 4.5 NA
Average Dilution 5% 5% 10%2 NA
Ave. Mining Recovery 95% 95% 90%2 100%

1 Based on 3 year historic metal price trends
2 Underground mining costs, dilution and mine recovery are based on stope type, either long hole (68% of design stopes) or cut and fill (32% of designed stopes) mining method.
3 Processing includes crushing, milling, site refining and dry stack tailings disposal.
4 Estimated based on current operations and may vary on an annual basis.
5 Recoveries for leach pad based on 2009 Metcon test work and recent Company production leach cycles for life of pad. During the period from 2010 through 2012 (solution ramp up), an average recovery of 57% Au and 30% Ag was achieved. Refer to Technical Report dated May 11, 2011 on SEDAR. Leach pad CCD mill recoveries are based on in-situ remaining ounces on the pad.

The Santa Elena Mine has good potential for additional Resources with the deposit open in most directions. Further infill and expansion drilling is recommended to potentially increase Resources and convert to Reserves.

Operations Update

Most of the focus at Santa Elena is currently on underground performance. The underground is currently averaging ore production of 1,000 tonnes per day with an expectation to achieve over 1,200 tonnes per day by Q1|2015.

The Company is currently mining its first stope (“Stope #1”) which contains approximately 40,000 ore tonnes. Stope #1 will be key to better understanding grade distribution and reconciliation, dilution, stope geotechnical constraints and mining costs. Work on stope #2 has also begun with slot cutting and production drilling.

The new CCD/MC processing facility is currently running at nameplate capacity of 3,000 tonnes per day. We continue to focus on increasing metallurgical recoveries to achieve our budget rates of 92% for gold and 70% for silver.

After receiving permission the Santa Elena pit has been temporarily reopened, which currently has an estimated 75,000 to 100,000 ore tonnes, grading 1.4 gpt Au and 88.0 gpt Ag. It will provide approximately six months of high grade low strip production (est. 1,000 tonnes per day) starting in January 2015.

2015 Exploration Program

Sonora, Mexico

As part of the Santa Elena organic growth plan, exploration drilling has started at the Durazno Target (Ermitano Concession) located approximately 7 kilometres southeast of the mine site. Current plan is to drill 6 to 7 core holes (est. 2,000 metres) to test outcropping, widespread epithermal mineralization in several identified areas. Results from this initial program will be reported as information becomes available.

In late 2014, the Company also signed a five year option agreement to acquire a 100% interest in the Cumobabi property. The Cumobabi property is in the general vicinity of the Santa Elena Mine and adjacent to the Ermitano project. This acquisition will significantly consolidate SilverCrest's land position in nearby areas of the Santa Elena Mine, and the Company now controls over 300 square kilometres of mineral rights, prospective for gold and silver resources.