In a Feb. 18 research note, ROTH Capital Partners analyst Jake Sekelsky reported that SilverCrest Metals Inc. (SIL:TSX.V; SILV:NYSE.American) discovered an expanse of new high-grade mineralization at its Las Chispas project in Mexico, which it calls Area 200.
Because of this successful recent exploration, ROTH increased its target price on the silver company to US$10 per share from US$7.75. Currently, the Canadian producer is trading at about US$7.75 per share.
Sekelsky reviewed Area 200's gold grades and potential impact on the feasibility study.
He noted that the discovery consists of the highest grade at Las Chispas to date. Drill results from Area 200 returned an average true width of 1.5 meters of 2,167 grams per ton (2,167 g/t) silver and 16.1 g/t gold, or 3,375 g/t silver equivalent. "Based on these figures, we believe Area 200 has the potential to host approximately 20 million high-grade silver equivalent ounces alone," Sekelsky commented.
The analyst highlighted that the addition of the Area 200 to the upcoming feasibility study could have at least two positive effects. It could boost the high-grade resources outlined in it. Area 200 material could be incorporated into the early years of the Las Chispas mine plan because the discovery is proximal to the Santa Rose decline. SilverCrest has 19 rigs drilling at Las Chispas to convert new ounces into reserves, such that they can be included in the feasibility study.
Accordingly, Sekelsky indicated, ROTH revised its model on Las Chispas. It extended the high-grade component to five years from four, lengthened its mine life estimate to 12 years from 10 and increased its life-of-mine average grade assumption to 916 g/t silver equivalent.
ROTH has a Buy rating on SilverCrest Metals.
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Disclosures from ROTH Capital Partners, SilverCrest Metals, Company Note, February 18, 2020
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Within the last twelve months, ROTH has received compensation for investment banking services from SilverCrest Metals.
ROTH makes a market in shares of SilverCrest Metals and as such, buys and sells from customers on a principal basis.
Shares of SilverCrest Metals may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
Within the last twelve months, ROTH has managed or co-managed a public offering for SilverCrest Metals.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
