The company said the mill would ramp up in stages from the current 450 tonnes per day to 750tpd.
"This new increased milling capacity will allow us to shortly achieve positive cash flow at the Veta Grande operations," COO Carlos Silva said.
The company was "challenged" by its working capital deficiency in 2017, as well as setbacks including a temporary mill suspension at Veta Grande and a delayed production start at its Rosario mine's Membrillo prospect.
Santacruz said management would now focus on new efficiencies, including a new underground tunnel system to connect the Veta Grande, San José, Armados and La Flor veins, which was expected to improve cash operating costs at the project.
The company produced 865,458 silver-equivalent ounces from its two Mexican silver mines in 2017, compared with 970,332oz AgEq the year before.
It arranged a short term loan of US$2.3 million from a private Bolivian company earlier this month which is repayable on July 1.
"The loan proceeds will be used to reduce our current trade payables balance which, together with the recent Carrizal services agreement, will assist to improve our mining operations at both Veta Grande and Rosario," president and CEO Arturo Prestamo said at the time.
It expects to receive $1.1 million a month under a services agreement with private silver miner Carrizal Mining SA struck on March 1, in return for services including mine development and geological consulting.
Shares in Santacruz, which were trading above C26c 12 months ago, rose 15% or C2c on Friday to 15c valuing it at $26.2 million.
