Pdac 2013 SilverCrest Mines-On Time and Under Budget
The information provided in this presentation is not intended to be a comprehensive review of all matters and developments concerning the Company. It should be read in conjunction withall other disclosure documents of the Company. The information contained herein is not a substitute for detailed investigation or analysis. No securities commission or regulatory authorityhas reviewed the accuracy or adequacy of the information presented.FORWARD-LOOKING STATEMENTSThis presentation contains “forward‐looking statements” within the meaning of Canadian securities legislation and the United States Securities Litigation Reform Act of 1995. Such forward‐lookingstatements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to itsbusiness and other matters that may occur in the future. These statements relate to analyses and other information that are based on expectations of future performance, including silver and goldproduction and planned work programs. Statements concerning reserves and mineral resource estimates may also constitute forward‐looking statements to the extent that they involve estimates of themineralization that will be encountered if the property is developed and, in the case of mineral reserves, such statements reflect the conclusion based on certain assumptions that the mineral deposit canbe economically exploited.Forward‐looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by theforward‐looking statements, including, without limitation: risks related to precious and base metal price fluctuations; risks related to fluctuations in the currency markets (particularly the Mexicanpeso, Canadian dollar and United States dollar); risks related to the inherently dangerous activity of mining, including conditions or events beyond our control, and operating or technical difficulties inmineral exploration, development and mining activities; uncertainty in the Company’s ability to raise financing and fund the exploration and development of its mineral properties; uncertainty as to actualcapital costs, operating costs, production and economic returns, and uncertainty that development activities will result in profitable mining operations; risks related to reserves and mineral resource figuresbeing estimates based on interpretations and assumptions which may result in less mineral production under actual conditions than is currently estimated and to diminishing quantities or grades ofmineral reserves as properties are mined; risks related to governmental regulations and obtaining necessary licenses and permits; risks related to the business being subject to environmental laws andregulations which may increase costs of doing business and restrict our operations; risks related to mineral properties being subject to prior unregistered agreements, transfers, or claims and other defectsin title; risks relating to inadequate insurance or inability to obtain insurance; risks related to potential litigation; risks related to the global economy; risks related to the Company’s status as a foreignprivate issuer in the United States; risks related to all of the Company’s properties being located in Mexico and El Salvador, including political, economic, social and regulatory instability; and risks related toofficers and directors becoming associated with other natural resource companies which may give rise to conflicts of interests.Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward‐lookingstatements. The Company’s forward‐looking statements are based on beliefs, expectations and opinions of management on the date the statements are made. For the reasons set forth above, investorsshould not place undue reliance on forward‐looking statements. he information contained herein is nota a substitute for detailed investigation or analysis. No securities commission or regulatory authorityhas reviewed the accuracy or adequacy of the information presented.All monetary figures are expressed in United States dollars unless otherwise specified.Under National Instrument (NI 43-101) Standards of Disclosure for Mineral Projects, the Qualified Person for this presentation is N. Eric Fier, CPG, P.Eng. and Chief Operating Officer for SilverCrest MinesInc., who has reviewed and approved its contents.Under National Instrument (NI 43-101) Standards of Disclosure for Mineral Projects, the Qualified Person for this presentation is N. Eric Fier, CPG, P.Eng. and Chief Operating Officer for SilverCrestMines Inc., who has reviewed and approved its contents. 2
SILVERCREST, A SUCCESS STORY; “EXPERIENCED EXECUTIVE OWNERSHIP” (Helps Protect Shareholders) “BOOTS ON THE GROUND” (Don’t Be Lazy) “DRILL TO KILL” (Don’t Waste Shareholders Time. Get Value ASAP or Move on)“NOT ALL OUNCES (OR POUNDS) ARE CREATED EQUAL” (Don’t Pass Up Valuable Opportunities Just For Volumes Sake)
Experienced Management Team J. Scott Drever, President (45 years experience) Strategic Planning, Mergers & Acquisitions. Management and operational experience with several production companies, includingFOUNDERS Placer Dome and Blackdome Mining. Barney Magnusson, CFO (35 years experience) Served as an Officer and Director of 6 mining (Dayton Mines, High River Gold Mines) companies that developed, constructed or operated 8 precious metals mines in North and South America. N. Eric Fier, CPG, P.Eng., COO (25 years experience) Operations, Project Evaluation & Management. Previously with Newmont Mining, Eldorado Gold, Pegasus Gold Corp. Involvement in construction and operations of 3 previous mines. Several major international discoveries. Brent McFarlane, VP Operations (25 years experience) Managed all phases of open pit and underground mining projects and instrumental in leading Mexican and Int’l projects through feasibility, construction, and production while working for Minefinders, Kappes Cassiday, TVI Pacific, Marston, and Pegasus Gold. Marcio Fonseca, P.Geo., VP Corporate Development (20 years experience) Served as Division Director at Macquarie Metals & Energy Capital with focus on equity and debt financing for the mining sector over the last 9 years. Prior to that, he held corporate positions in business development, project development, operations and exploration with Vale and Phelps Dodge in Latin America. Graham C. Thody, Director (30 years experience) Corp. finance and public company management. Director and President of UEX Corp., Chairman of the Board of Geologix. George W. Sanders, Director (30 years experience) Experience in mining and exploration finance. Previously with Canaccord Capital Corp., Richmont Mines Inc., Consolidated Cinola Mines Ltd., and Shore Gold Inc. Ross Glanville, Director (40 years experience) Experience in mining, exploration finance, valuations and fairness opinions. Director of Archon Minerals Limited, Clifton Star Resources Inc. and Starfield Resources Inc.
Company Overview Nine Months Ended 2012Growing Mexican Low Cost Silver & GoldProducer Revenue: $52.3 Million Cash Flow: $29.2 Million - $0.33 / share Earnings: $17.7 Million - $0.20 / share Santa Elena Mine, Est. Cash (Jan 30|13): $50 Million Operating Cash Cost: $7.16 / Ag Eq oz* Sonora Mexico 2012 Production: 2.37 Million oz Ag Eq* Resource Base Santa Elena Probable: 21.7 million oz AgEq* Cruz de Mayo Indicated: 9.2 million oz AgEq* La Joya Inferred: 222.6 million oz AgEq* La Joya Project Major Ag-Cu-Au Discovery & Growing * Silver Equivalency based on Ag:Au is 55:1 except for La Joya which is Ag:Au 50:1 and Ag:Cu 86:1
Underground Decline Portal Open PitWaste Dump Future Crushing Circuit Leach Pad Leach Pad Phase 1 Phase 2 Future CCD Circuit , 3000 tpd Merrill Crowe Plant 9
PROJECT SCHEDULE• Acquisition: 2005• Discovery: 2006• Studies: 2007 & 2008• Permitting: 2008 & 2009• Financing: 2009 – Heap Leach vs. Conventional Mill (minimize RISK)• Construction and Production: 2009 and 2010 – “On Time”• Commercial Production: 2011PROJECT COSTS (estimated US$)• Acquisition (2005 to 2009) = $ 4,000,000• Exploration and Studies (06 to 09) = $ 9,000,000• Construction (CAPEX) = $19,000,000 = under budget by $1,000,000• Total Costs from Inception = $32,000,000• Operating Earning to Sept. 31, ‘12 = $60,000,000 = payback in < 1 year “Simple, Systematic, & Aggressive Value to Stakeholders” 10
Unavailable Executive Management for onsite Critical Decision-Making. Lack of Ownership in Company or Project by Executive Management. Pressure by Executive Management to show robust economics from Consultants. Pressure for Consultants to show robust economics to keep their jobs and Project. Using the wrong or disinterested Construction Management team, shortage of qualified engineers. Bypass components of Detailed Engineering and Construction to “just get the mine into production to take advantage of metal prices and worry about fixing it later.” Lack of attention to Increasing Costs in the market. No onsite Cost Controls or Timely “Red Flags” to Executive Management. Underestimation of Owners Costs. Bad Timing in the Materials Market for Cost Inflation. Underestimation of Political and Social impacts. Complex (location, infrastructure, mine plan, metallurgy) Projects increase capital risk and potential cost overruns. Larger Projects have higher capital risk and attention to Details and Ownership. “Like a plane crash, its never just one reason for the catastrophe!” 11
Available experienced Executive Management for onsite Critical Decision-Making. Ownership in Company by Executive Management. Executive Management was conservative/realistic in its approach with Consultants. Used the right Construction Management team for the job with qualified people. Bypassed some minor components of Detailed Engineering and paid for fix later. Strict Cost Controls and continuous Executive Management reviews to red flag problems with immediate resolution. Conservative on Owners Costs. No upfront cost emphasis on Political and Social impacts, friendly location. Kept Santa Elena “simple and systematic” to decrease capital risk. Smaller Project, lower Capital Risk. 12
Your Personal Check List; Ownership in Company by Executive Management, onsite decision-making. Executive Management track record in being conservative/realistic in its approach. Experienced Construction Management team with incentives for performance, solid contract. Detailed Engineering consultants with good track record for project size. Strict Cost Controls policy and continuous Executive Management reviews. Know upfront costs on Political and Social impacts. Kept it simple and systematic to decrease capital risk. Consider starting out smaller and grow from cash flow – part of Santa Elena’s success (“SilverCrest Model”). Good Timing in Materials Costs decreases (low in the market). Remember “Not all ounces or pounds are created equal”. Santa Elena has higher net cash flow then many mines that are much larger. 13
Where is theExecutive Construction Manager Construction Who made Manager? this executive decision?