back to homepage
SilverCrest Mining (SVL.L) - Macquarie Bank commits to SilverCrest
Comment by Objective Capital , Mar 05, 2008
Questions?
Contact our analyst
Macquarie Bank commits to SilverCrest
SilverCrest Mines Inc has accepted a commitment letter of offer from Macquarie Bank Ltd for a US$3.0m credit facility and a C$2.0m equity investment in the company. The latter investment will be part of a C$5.5m private placement to be completed by SilverCrest.
The credit facility will be used to fund a feasibility study at SilverCrest’s Santa Elena project in Mexico. The debt will bear interest at the US dollar LIBOR rate, plus 2.75 percent and will be repayable by May 29, 2009, or earlier, should SilverCrest arrange financing for development of the Santa Elena project. Macquarie will also receive 2,222,222 share purchase warrants, exercisable at C$1.35 over a three-year period, as partial consideration for provision of the credit facility.
A key component of the letter of offer gives Macquarie Bank an exclusive six-month mandate to provide a financing package for the project on commercial terms.
SilverCrest intends to complete a non-brokered private placement of five million shares, priced at C$1.10 per share. One share purchase warrant will accompany each two shares and will be exercisable at C$1.40 for an 18-month period. The company intends to use the proceeds of the private placement for exploration and development of Santa Elena and its other projects, for possible acquisitions and for general working capital.
Macquarie’s participation in the private placement is subject to successful completion of the credit facility. The proposed credit facility and private placement remain subject to approval by the TSX Venture Exchange.
Objective's view:
SilverCrest’s prefeasibility study at Santa Elena is nearly complete. Final feasibility and a production decision should follow later this year. We believe the offer of a credit facility and equity investment by Macquarie Bank provides further comfort that SilverCrest will be able to arrange suitable financing for construction and development of Santa Elena.
The company currently has two core drill rigs operating at Santa Elena and it plans to add a reverse circulation rig shortly. SilverCrest plans to drill 4,000 metres using the core rigs and up to 6,000 metre using the reverse circulation drill. The focus of the programme is on expansion of the resource to the east and at depth, as well as further testing of the Footwall Zone. As a result of the 2007 and 2008 drill programmes we expect the company will revise its resource and reserve estimate for the project this spring and thus provide further support to our valuation assumptions.
