Silvercrest Mines Inc. (Vancouver:SVL) Follow-Up No 2

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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 under-ground 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 Pachota is a 400-hectare concession. Prior work included 800 meters of under ground development, 100 under ground 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 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 reported 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 Concepcion 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 were 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 makes 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 Concepcion application is still pending.

Recent News: SilverCrest Contests Purported Confiscation of El OCote Property

SilverCrest Mines Inc. has received an administrative resolution issued by La Dirección Executiva de Fomento a la Mineria (DEFOMIN) which purports to cancel the Metallic Mineral Concession "El Ingenio" granted in January 2003 by DEFOMIN to the company's Honduran wholly-owned subsidiary, Compania Minera Maverick S.A. de C.V.("Maverick"). DEFOMIN is the department of the government of Honduras responsible for the administration of the country's mineral resources. The principal reasons cited in the resolution for the purported cancellation of the rights granted under the Concession are that a) the Concession lies within the "Guisayote" biological reserve and b) the Company defaulted on its obligations with respect to the Concession by amending its work program without the prior authorization of DEFOMIN.

The company believes that the El Ocote silver deposit, as with many other deposits through 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 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. The company's Honduran legal counsel has filed the appropriate opposition to DEFOMIN's resolution refuting its administrative decision.

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 "Guisayote" biological reserve is a constitutionally protected area described in Decree 87/87 enacted by the National Congress of Honduras and consists of a "nucleus" within which very limited activities are permitted and a two kilometer "buffer" zone within which more extensive activities, including mining are permitted. There are also provisions in the Decree for grandfathering activities within both zones that existed prior to the establishment of the reserve. At the time of application, there was an issue as to whether a small portion (15.75 hectares) of the Concession might encroach upon the buffer zone and this portion was therefore removed from the company's application. Subsequent surveys confirmed that the Concession is outside both the nucleus and the buffer zone of the reserve area.

The application for the Concession was put through two rigorous examinations by the legal, title and technical departments of DEFOMIN before it was finally approved by the Secretary General of DEFOMIN and the final Concession contract signed by the Director of Mines. As recently as December 23, 2003, the Secretary General of DEFOMIN confirmed by a written statement of fact that the Concession was in good legal standing. The company firmly believes that the Concession is validly issued and that DEFOMIN has capitulated to pressure by externally-funded (including Canadian) Non Governmental Organizations (NGOs) that are opposed to most any development of the resources of Honduras.

The company's legal counsel advises that there is no legal requirement to seek authorization to amend its work program, if indeed any such amendment occurred. In fact, the company's work program has been on hold since November, 2003 as a result of a request from DEFOMIN pending completion of the Department's discussions with local governmental authorities regarding local permitting requirements and procedures and other intergovernmental department discussions. DEFOMIN strenuously resisted any suggestions by the company that it resume its work program when there was no apparent progress by DEFOMIN in resolving its problems.

The company believes that the El Ocote silver deposit, as with many other deposits through 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 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 esources of Honduras before committing substantial amounts of its shareholders capital to that end.

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 through 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 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.

Any positive development in the dispute about the Honduras concession and its validity would certainly have a very positive effect on the share price but also other encouraging news with regard to the properties in Guatemala, El Salvador and Mexico could deliver the spark.

Our recommendation: AVERAGE DOWN!

Peter Zihlmann


www.pzim.com

[email protected]

[email protected]

September 15, 2004

Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company's share price. Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.