SilverCrest Mines Obtains Development Financing

VANCOUVER, BC - SilverCrest Mines Inc. reported that it has entered into a letter of intent with Sandstorm Resources Ltd. whereby Sandstorm will provide US$12 million in development financing ("up front payment") by acquiring 20% of the future life of mine gold production from SilverCrest's Santa Elena project located in Mexico and, at SilverCrest's option, debt financing of up to $US6 million. The capital to bring the Santa Elena Project into production is estimated at US$20 million.
The Company entered into a letter of intent with Sandstorm pursuant to which Sandstorm has agreed to purchase 20% of the gold produced over the life of mine of the Santa Elena Project ("payable gold") for an upfront payment of US$12 million plus a further payment upon delivery of the gold equal to the lesser of (a) US$350 and (b) the then prevailing market price per ounce of gold. The payments will increase at 1% per annum commencing on the third anniversary of the date that the Santa Elena Project begins commercial production. The Company estimates that approximately 50,000 ounces of gold will be provided to Sandstorm over the life of the current open pit plan or approximately 6,250 ounces per year. The terms of the letter of intent do not affect the estimated 4.88 million ounces of silver recoverable over the life of the initial open pit heap leach operation.
J. Scott Drever, President stated; "We are obviously excited at the opportunity to be able to secure funding of this nature to finance the construction and development of our Santa Elena Project. The combination of the US$12 million upfront payment and the $6 million debenture will enable us to stay on track with our development schedule for initial metal production by the end of this year. More importantly, this arrangement will fund a major portion of the capital requirements for the project which will keep our equity requirements and hence our share dilution to a minimum. This financial structure will leave 100% of the silver production and 80% of our gold production unencumbered and provides us with considerable flexibility as to how we structure our total corporate financial requirements. With Santa Elena in production and with the cash flow that this project will produce, we will be well positioned to carry out our objectives for corporate growth."
The company’s address is 1311 Howe Street, Suite 405 Vancouver, BC V6Z 2P3, (604) 691-1730, fax: (604) 691-1761, email: [email protected].