TORONTO (miningweekly.com) – Vancouver-based precious metals producer SilverCrest Mines on Friday announced that it had secured a three-year $40-million secured corporate credit facility to be used to complete the Santa Elena mine expansion, in Sonora state, Mexico, and for general corporate purposes.

The credit limit available under the facility would reduce by $10-million each year, until the maturation date of July 11, 2016. This date could, however, be extended for another year by mutual agreement.

The expansion at Santa Elena included developing an underground mine and a new 3 000 t/d processing plant.

The facility was principally secured by a pledge of the company's equity interests in its subsidiaries, including Nusantara de Mexico and SilverCrest de Mexico and their assets.

Depending on the company's total indebtedness to the earnings before interest, tax, depreciation and amortisation ratio, the interest rate margin on the facility would, at the company's selection, range from either 3% to 4.25% over the London interbank borrowing rate, or 2% to 3.25% over Scotiabank's base rate in Canada.

The facility’s availability was still subject to customary conditions precedent and qualitative and quantitative covenants and the release of existing security held by Macquarie Bank. Until all security for the facility had been registered in Mexico, the amount available under the facility would be limited to $15-million.

As a result of the expected increase in metal production after the mine’s expansion, the Santa Elena mine was expected to generate further operating cash-flow once the new plant was fully operational in the first half of 2014. This increase in cash flow should enable the company to continue funding its capital and exploration projects, SilverCrest said.

SilverCrest produced 2.37-million silver-equivalent ounces in 2012.

The Santa Elena mine is a high-grade, epithermal gold and silver producer with an estimated life-of-mine (LoM) cash cost of $8/oz of silver equivalent.

SilverCrest expected the Santa Elena facility to recover about 4.8-million ounces of silver and 179 000 oz of gold over the six-and-a-half-year life of the openpit phase of the mine.

However, COO Eric Fier, in February, told Mining Weekly Online ongoing exploration to update the compliant resources of the Cruz de Mayo project, as part of the Santa Elena expansion project, would help to “reset” the LoM clock of the Santa Elena operation to more than ten years.