In a Sept. 19 research note, analyst Jake Sekelsky reported SilverCrest Metals Inc.'s (SIL:TSX.V) updated resource estimate at Las Chispas "exceeds our expectations," and that ROTH raised its target price on the Buy-rated company to CA$5.50 per share from CA$4.50. The stock is trading at around CA$3.15 per share.
"We are particularly impressed with the growth in high-grade resources that we believe should have a strong impact on production early in the mine life," Sekelsky wrote.
The new Las Chispas resource estimate totals 86.7 million ounces (86.7 Moz) of silver equivalent (Ag eq), relayed Sekelsky, encompassing 4.3 million tons of gold and silver. This reflects a 38% increase over the size of the maiden resource, which was 62.8 Moz, and exceeds ROTH's estimate of 80 Moz.
The gold grade is 3.68 grams per ton (3.68 g/t) and the silver grade, 347 g/t silver. The grade together as Ag eq is 623 g/t. With the resource update, the high-grade portion of the resource grew 75% to 56.3 Moz from 32.2 Moz and was the catalyst for ROTH's target price increase on SilverCrest.
"Investors should remain focused on the high-grade portion of the resource," Sekelsky noted. "We are increasing our forecast for high-grade production at Las Chispas from the first two years of production to the first four years of production."
In addition, indicated Sekelsky, further upside exists at Las Chispas, where 22 identified veins "should support continued growth in the company's resource base." SilverCrest intends to continue drilling there, with six to eight rigs, through H2/18.
ROTH estimated these exploration efforts could lead to another 25% increase in silver equivalent ounces at Las Chispas, for about a 110 Moz total, Sekelsky pointed out. Such growth could support another resource update, then a positive preliminary economic assessment, both of which are expected in H1/19. Catalysts in the meantime will be additional drill results from the project.[NLINSERT]
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Disclosures from ROTH Capital Partners, SilverCrest Metals, Company Note, Sept. 19, 2018
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