The Santa Elena Mine is operated by SilverCrest Mines Inc. (TSXV:SVL) and is located in northern Mexico approximately 150 kilometres northeast of Hermosillo in Sonora State. Santa Elena is an open pit heap leach operation that is expected to produce an average of 30,000 ounces of gold and 500,000 ounces of silver per year for a 10 year mine life. 2011 was SilverCrest's first full year of production and at Santa Elena and gold production totaled 26,969 ounces.
Santa Elena is classified as a high level, low sulphidation epithermal system and further exploration of the mine is focused on a single relatively wide vein with increasing grades as it plunges. A preliminary economic assessment has been completed and a preliminary feasibility study is underway for a potential concurrent underground mining and milling operation at Santa Elena.
Santa Elena Gold Stream
Sandstorm has a gold stream agreement to purchase 20% of the life of mine gold production from Santa Elena at a per ounce price of US$350. Sandstorm made an upfront payment of US$12 million in cash and 3.5 million common shares to acquire the stream in May 2009.
If SilverCrest decides to develop an underground mine, Sandstorm will have the right (but not the obligation) to purchase 20% of the payable gold from underground for an upfront payment that is equal to 20% of the upfront capital expenditures made by SilverCrest plus ongoing per ounce payments of US$450.