Silvercrest Mines Inc. Follow-Up #3

P. ZIHLMANN INVESTMENT · MANAGEMENT AG

Special Situations for SMART INVESTORS                              www.timeless-gold.com

                                                                                                Monthly Report December

SILVERCREST MINES INC. (VANCOUVER:SVL): FOLLOW-UP NO 3

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HIGH GRADE SILVER DEPOSITS IN HONDURAS, EL SALVADOR, GUATEMALA AND MEXICO

Business Summary

SilverCrest Mines Inc., is positioned as a "pure silver" exploration and development company, with a portfolio of high grade silver deposits located in Honduras, El Salvador, Guatemala and Mexico.

The company's longer term initiative is to acquire, develop and operate high-grade silver mines throughout North, Central and South America. Primary targets will be silver projects that require management and operating expertise as well as additional capital to achieve accelerated development and early production.

HONDURAS

El Ocoto

Indicated Resources* are estimated at 2.3 million tons grading 233 gpt silver, containing 16.9 million ounces of silver, based on a 34 gpt silver cut-off grade. Inferred Resources* are estimated at 0.3 million tons grading 307 gpt silver, containing 2.9 million ounces of silver.

Contained within the Indicated Resource is a high grade supergene zone estimated at 1 million tons grading 291 gpt silver, based on a 34 gpt silver cut-off grade that is considered potentially amenable to open-cut mining.

The deposit is an elliptical breccia pipe that measures 160 meters by 90 meters and is defined to a depth of 100 meters from surface. Silver grades improve upwardly, from approximately 30 gpt at depth to in excess of 400 gpt near surface. The pipe forms a topographic high, making it potentially amenable to low strip ratio, open pit extraction.

An initial work program of in-fill and resource expansion drilling is expected to confirm the higher grade surface, starter pit material, and provide information for metallurgical and engineering studies that will provide a further basis for a feasibility study.

The 384-hectare El Ocote concession has had prior work consisting of 1,000 meters of underground development, 400 channel and drill samples, 2 bulk samples and 41 drill holes totaling 5,100 meters.

The company believes that the El Ocote silver deposit can be developed to the advantage and benefit of the people of Honduras without any serious detriment to the environment. It continues to be prepared to work toward a social contract that will address the needs of all the stakeholders, but must be confident that the government of Honduras is prepared to respect the rule of law and support foreign investment in the development of the natural resources of Honduras before committing substantial amounts of its shareholders’ capital to that end.

Opoteca

Indicated Resources are estimated at 1.3 million tons grading 123 gpt silver and 0.17 gpt gold, containing 5.1 million ounces of silver, based on a 34 gpt silver cut off grade. Inferred Resources are estimated at 1.7 million tons grading 126 gpt silver and 0.10 gpt gold, containing 7.0 million ounces of silver.

This deposit is a manto-style, carbonate replacement deposit, with mineralization hosted in folded sediments and higher grade high angle faults. An oxidized horizon is measured as 800 meters long, 100 meters wide, with an average thickness of 15 meters, and is considered potentially amenable to open pit mining at a low strip ratio.

An initial work program of resource expansion drilling  should  advance  this  property  to the pre-feasibility stage.

There  appears  to be significant  potential  to expand current  resource, based on + 100 gpt soil  anomaly  and  various  rock  chip  recon samples.

La Pochota

La Pochota is a 400-hectare concession. Prior work included 800 meters of underground development, 100 underground and trench samples, 1,000 soil samples and 18 drill holes totaling 2,437 meters. The deposit is an epithermal vein system with existing but inaccessible underground workings.

Various previous operators’ and engineering reports show the vein ranging between 1 to 4 meters in width. The vein appears to strike along a dip slope for 600 meters and is measured down dip for 125 meters. The weighted average grade of 9 underground samples collected in 1975 by Mayoral & Associates in the Western workings was 332 g/t silver. The weighted average grade of 34 underground samples collected by the same company in 1975 in the Eastern workings averaged 514 g/t silver. The Eastern and Western workings are approximately 300 meters apart.

18 core holes were completed during 1996-1997 by Link Honduras within the mineralized area and over a strike length of approximately 600 meters. The drill results generally are of a lower grade than those of the underground sampling.

A drill program will be required to test the strike and depth extensions as well as to test several parallel structures.

Arena Blanca

Arena Blanca is an early stage exploration project with high grade potential. The mineralization occurs in a 5-to 6-meter-wide quartz vein/shear zone hosted in granodiorite.

Sample results from a 1967 United Nations report indicated grades of 1,945 gpt silver from a pit where the vein outcropped at surface, and 7,600 g/t silver from a 40-meter adit that intersected the vein down dip of the surface pit.

The adit is presently inaccessible and there are no sampling details. These values are historical in nature, have not been verified by the company’s QP and should not be relied upon. Sampling of dumps (see Section) outside the adit returned considerably lower values.

The 200-hectare Arena Blanca concession is located in the west-central part of Honduras approximately 200 kilometers north of Tegucigalpa and 10 kilometers south of the city of El Progresso in the Department of Yoro.

Prior work on the property consisted of limited trenching and sampling and 40 meters of underground development. A modest first phase drill program would test for mineralized continuity between the adit access and the hilltop. This deposit is a target for further exploration; however, it is conceptual in nature and there has been insufficient sampling or measurement of the deposit to define a mineral resource. It is uncertain whether further work will result in the definition of a mineral resource on the property.

EL SALVADOR

El Zapote Project

SilverCrest  has a 100% interest in 4,200 hectares located in northern El Salvador within the “Silver Triangle,” approximately 20 kilometers from the Concepción Concession in Guatemala and 40 kilometers from the El Ocote Project in Honduras.

Indicated resources are estimated at 2.29 million tons grading 163.4 g/t Ag, 0.13 g/t Au, 1.35% Zn, 0.36% Pb, and contain 12.0 million ounces of silver based on a 34 g/t silver cut-off grade. Inferred resources are estimated at 743,000 tons grading 95.8 g/t Ag, 0.12 g/t Au, 1.44% Zn, 0.37% Pb and contain 2.28 million ounces of silver.

The El Zapote resources are contained 77% in the main Cerro Colorado III deposit and 23% in the San Casimiro satellite deposit. Included in the Cerro Colorado III resource is a high‑grade zone of approximately one million tons, with an indicated resource, grading 209 g/t Ag that is potentially amenable to open cut mining. The deposit type is in a high angle epithermal system consisting of veining, breccia, shears and stockwork.

The deposits also contain a significant amount of zinc. The indicated resources contain 68 million pounds of zinc and the inferred resources contain 17.6 million pounds zinc. This additional value will be quantified during feasibility.

Work planned in 2004 includes resource definition drilling and a feasibility study with a resource target in excess of 20 million ounces of silver.

The El Zapote resource estimate was prepared by Tim Sadler-Brown, P.Geo., Independent Qualified Person and N. Eric Fier, CPG, P.Eng., Qualified Person and Chief Operating Officer (COO) of the company.

Mexico

Silver Angel Project

SilverCrest has a 100% interest in 10,300 hectares located in the northern Sierra Madre Range in the State of Sonora, Mexico.

The Silver Angel Concession contains an area of intense alteration that is approximately 8 kilometers long by 3 kilometers wide, with structural features that host seven past producing, high grade silver-gold mines.

An initial work program in early 2004 included a total of 121 soil samples, collected on a 100m spaced grid covering an area of approximately one kilometer square. A total of 95 surface rock chip samples was collected during surface mapping.  Approximately 600 meters of underground workings were surveyed, mapped and sampled. This program has defined specific locations for an initial drill program.   

The major structural features, with significant intersecting northwest and northeast trending fault systems, will provide the basis for more regional exploration within the concession and should provide additional priority areas within the broader zone of intense alteration.

The extensive nature of the alteration, the intensity of the quartz-limonite stockwork, the potential magnitude of the favorable host rock and the established presence of economic grade silver mineralization make the Silver Angel Concession a high priority on the company’s list of exploration projects.

Guatemala: Concepcion Concession

SilverCrest (SVL) has applied for mineral rights in over 15,000 hectares located in southern Guatemala within the “Silver Triangle,” approximately 20 kilometers from the EZ Concession and     20 kilometers from the El Ocote Project.

The favorable Tertiary volcanic package is present over a 5-kilometer-long trend with multiple veins and includes several past producing silver mines. Production by previous operators documented results of greater than 13,714 g/t silver (400 opt) as direct shipping ore from shallow underground workings. The deposit type is expected to occur in a high angle epithermal system consisting of veining, shears and stockwork.

The concession area contains a historical resource of 1.9 million tons grading 86 g/t (2.5 opt) silver, prepared by Compania Minas de Oriente S.A. in 1975. The above references are historical in nature, do not conform to the requirements of NI-43-101, have not been verified by the company’s qualified person, and should not be relied upon. The awarding of the Concepción application is still pending.

Recent News: SilverCrest Updates Status of Drill Programs

SilverCrest Mines Inc. has been pleased to announce the results of the initial 11 drill holes completed at the Silver Angel Prospect in Mexico and 3 drill holes at the Blackstone Project in Idaho. Drilling continues at the company’s 100%-owned El Zapote Project in El Slavador and an update on these results is expected to be announced in the near future. 

SILVER ANGEL PROSPECT, MEXICO

The Silver Angel Prospect is located within the Angel de Plata Concession near Arizpe, State of Sonora, Mexico, and is one of several areas identified within a large area of alteration and silver-gold mineralization (8 x 3 kilometers) that could host high grade silver deposits as well as have potential to host large tonnage, lower grade silver deposits.  Surface work over a limited area of approximately 100 hectares and sampling of existing underground workings completed by the company in early 2004 provided target areas to initially test both the high grade and larger tonnage models. Eleven reverse circulation holes, totaling 1,108 meters with an average depth of 100 meters, were drilled to test these initial targets. The most significant results of the drill program are presented in the following table.

Drill hole AP9 intersected 4.0 meters of 196 grams per ton (5.70 ounces per ton) silver and represents an intercept within the high-grade target identified previously by surface and underground sampling. Further drilling to define the extent of this zone will be carried out in work programs contemplated for 2005. 

Drill holes AP 1, 2, and 5 to 8 had numerous 2- to 4-meter intersections of 6 to 20 grams per ton silver and 0.1 to 1 grams per ton gold that confirm the presence of a low grade mineralized zone. This mineralization lies within the quartz stockwork zone which previous surface sampling returned values of 1 to 5 ounces per ton silver. Possible surficial, supergene enrichment may account for the difference between the drill results and surface sampling. The favorable geological unit that hosts this extensive low grade mineralization has been identified in other areas of the concession and will be explored to determine if an area of higher, potentially economic silver grades can be identified.

Surface sampling of another high-grade structure called El Pavo, located approximately 3 kilometers west of the Silver Angel prospect but still within the Angela de Plata Concession, returned the following channel sampling results;

Further work on El Pavo will consist of detailed mapping and sampling with a view to defining additional drill targets. The company is planning follow up work on Silver Angel including further drill testing of the defined high grade silver structure and follow up work on several other partially defined targets within the 10,500 hectare concession.

BLACKSTONE PROJECT, IDAHO

Three due diligence core holes (B04-1, -2 and -3), totaling 658 meters (2,159 feet), have been completed at the Blackstone Project near Mountain Home, Idaho. All holes intersected the company’s defined targets and showed a large altered and sheared zone as previously interpreted. The most significant results from drilling include several discontinuous, low-grade silver (5 to 20 grams per ton) and copper (100 to 700 ppm) intercepts.

Hole B04-1 was a near-twin hole of hole S-4, drilled by previous operators who reportedly intercepted 88 meters of 3.5 ounces per ton silver and 1.5% copper. The results of the company’s drilling and sample analysis did not confirm this intercept. This drill program satisfies the underlying conditions for a due diligence period that extends to April 15, 2005.  The company will review all available data prior to the expiry of the due diligence period to determine if further work is warranted. Drilling was completed by Boart-Longyear from Salt Lake City, Utah, and analysis of samples was completed by ALS-Chemex Labs in Elko, Nevada and North Vancouver, British Columbia.

Fundamental Considerations

With over 30 million ounces of silver in the ground (for 25 million shares outstanding), an enormous exploration potential in Honduras and the added potential in Mexico and Guatemala, SilverCrest is an emerging silver play which still offers entry at a relatively low level.

However : the respect for the rule of law and support of foreign investment in the development of the natural resources of Honduras is a key issue which has not yet been resolved.

The company believes that the El Ocote silver deposit, as with many other deposits throughout the world, can be developed to the advantage and benefit of the people of Honduras without any serious detriment to the environment. It continues to be prepared to work toward a social contract that will address the needs of all the stakeholders but it must be confident that the government of Honduras is prepared to respect the rule of law and support foreign investment in the development of the natural resources of Honduras before committing substantial amounts of its shareholders’ capital to that end. 

The company believes that DEFOMIN has acted outside its authority in a capricious and arbitrary manner and has deprived Maverick of any due legal process by failing to grant a right to a hearing or to allow the company to defend itself against the unilateral actions of this governmental authority.

The company intends to pursue all legal and political remedies available to it to protect the value of its shareholders’ assets.

The above risk element is, of course, well known and discounted in the share price. Therefore, any sign that the issue could find a solution would have a very beneficial effect on the share price.

Technical Considerations

The break-out from this multi-year base formation foretells that a bull market in silver has begun to unfold.