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Silvercorp Reports Adjusted Net Income of $11.5 Million, $0.06 per Share, and Cash Flow from Operations of $23.6 Million for Q3 Fiscal 2024

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Silvercorp Reports Adjusted Net Income of $11.5 Million, $0.06 per Share, and Cash Flow from Operations of $23.6 Million for Q3 Fiscal 2024

 

 

 

 

 

Silvercorp Metals Inc. (TSX:SVM) (NYSE American: SVM) reports its financial and operating results for the three months ended December 31, 2023. All amounts are expressed in US dollars, and figures may not add due to rounding.

 

HIGHLIGHTS FOR Q3 FISCAL 2024 

  • Mined 345,273 tonnes of ore, milled 312,500 tonnes of ore, and produced approximately 1,342 ounces of gold, 1.7 million ounces of silver, or approximately 1.8 million ounces of silver equivalent, plus 16.8 million pounds of lead and 7.4 million pounds of zinc;
  • Sold approximately 1,342 ounces of gold, 1.7 million ounces of silver, 16.2 million pounds of lead, and 7.3 million pounds of zinc, for revenue of $58.5 million;
  • Reported net income attributable to equity shareholders of $10.5 million, or $0.06 per share;
  • Realized adjusted earnings attributable to equity shareholders of $11.5 million, or $0.06 per share;
  • Generated cash flow from operating activities of $23.6 million;
  • Cash costs per ounce of silver, net of by-product credits, of negative $0.96;
  • All-in sustaining costs per ounce of silver, net of by-product credits, of $11.33;
  • Spent and capitalized $1.6 million on exploration drilling, $14.1 million on underground development, and $3.9 million on equipment and facilities, including $1.3 million on construction of the new tailings storage facility;
  • Entered into a Bid Implementation Deed (“BID”) with OreCorp Limited (ASX: ORR) (“OreCorp”) to launch an off-market takeover to acquire all OreCorp Shares not already owned by Silvercorp for A$0.19 cash plus 0.0967 common shares of Silvercorp per OreCorp Share; and
  • Strong balance sheet with $198.3 million in cash and cash equivalents and short-term investments. The Company holds a further equity investment portfolio in associates and other companies with a total market value of $139.5 million as at December 31, 2023.

 

 

CONSOLIDATED FINANCIAL RESULTS

 

Three months ended December 31, Nine months ended December 31,
2023 2022 Changes 2023 2022 Changes
Financial Results
Revenue (in thousands of $)  $                      58,508 $                     58,651 0 % $                    172,506 $          173,982 -1 %
Mine operating earnings (in thousands of $)  23,307 21,744 7 % 67,551 61,007 11 %
Net income (loss)  attributable to equity holders (in thousands of $)  10,510 11,916 -12 % 30,777 20,373 51 %
 Earnings (loss) per share – basic ($/share) 0.06 0.07 -14 % 0.17 0.12 42 %
Adjusted earnings attributable to equity holders (in thousands of $)  11,452 11,775 -3 % 35,498 32,056 11 %
Adjusted earning per share – basic ($/share) 0.06 0.07 -14 % 0.20 0.18 11 %
Net cash generated from operating activities (in thousands of $)  23,607 25,661 -8 % 81,332 79,901 2 %
Capitalized expenditures (in thousands of $)  19,635 15,484 27 % 50,609 48,366 5 %
Metals sold
 Gold (ounces)  1,342 1,100 22 % 5,352 3,400 57 %
 Silver (in thousands of ounces)  1,703 1,860 -8 % 5,096 5,564 -8 %
 Lead (in thousands of pounds)  16,248 19,273 -16 % 48,753 55,666 -12 %
 Zinc (in thousands of pounds)  7,320 7,119 3 % 18,818 19,987 -6 %
 Average Selling Price, Net of Value Added Tax and Smelter Charges 
Gold ($/ounce) 1,718 1,541 11 % 1,754 1,479 19 %
Silver ($/ounce) 20.14 17.17 17 % 19.74 16.91 17 %
Lead ($/pound) 0.87 0.85 2 % 0.86 0.87 -1 %
Zinc ($/pound) 0.82 0.96 -15 % 0.81 1.09 -26 %
 Financial Position as at  December 31, 2023 September 30, 2023 December 31, 2023 March 31, 2023
Cash and cash equivalents and short-term investments (in thousands of $)  198,295 189,091 5 % 198,295 203,323 -2 %
Working capital (in thousands of $)  159,555 154,330 3 % 159,555 177,808 -10 %

 

Revenue in Q3 Fiscal 2024 was $58.5 million, a slight decrease compared to $58.7 million in Q3 Fiscal 2023. The decrease is mainly due to the decrease in silver and lead sold and a lower zinc price, offset by the increase in the net realized selling prices for gold, silver, and lead.

 

Income from mine operations in Q3 Fiscal 2024 was $23.3 million, up 7% compared to $21.7 million in Q3 Fiscal 2023. Income from mine operations at the Ying Mining District was $21.5 million, compared to $19.0 million in Q3 Fiscal 2023. Income from mine operations at the GC Mine was $1.9 million, compared to income of $2.9 million in Q3 Fiscal 2023.

 

Net income attributable to equity shareholders of the Company in Q3 Fiscal 2024 was $10.5 million or $0.06 per share, compared to net income of $11.9 million or $0.07 per share in Q3 Fiscal 2023.

 

Compared to Q3 Fiscal 2023, the Company’s consolidated financial results in the current quarter were mainly impacted by i) increases of 11%, 17%, and 2%, respectively, in the realized selling prices for gold, silver, and lead, and a decrease of 15% in the realized selling price for zinc; ii) increases of 22% and 3%, respectively in gold and zinc sold and decreases of 8% and 16%, respectively, in silver and lead sold; iii) a decrease of 4% in per tonne production costs; iv) an improvement of $4.4 million in mark-to-market investments; and v) an increase of $5.0 million in the share of loss in associates.

 

Cash flow provided by operating activities in Q3 Fiscal 2024 was $23.6 million, down $2.1 million, compared to $25.7 million in Q3 Fiscal 2023. The Company ended the quarter with $198.3 million in cash, cash equivalents and short-term investments, up 5% compared to $189.1 million as at September 30, 2023.

 

Working capital as at December 31, 2023 was $159.6 million, up 3% compared to $154.3 million as at September 30, 2023.

 

CONSOLIDATED OPERATIONAL RESULTS

 

Three months ended December 31, Nine months ended December 31,
2023 2022 Changes 2023 2022 Changes
Ore Production (tonne)
Ore mined 345,273 296,050 17 % 921,958 887,135 4 %
Ore milled
Gold ore 12,726 100 % 36,419 100 %
Silver ore 299,774 303,442 -1 % 832,283 893,261 -7 %
312,500 303,442 3 % 868,702 893,261 -3 %
Metal Production
 Gold (ounces)  1,342 1,100 22 % 5,352 3,400 57 %
 Silver (in thousands of ounces)  1,684 1,853 -9 % 5,054 5,511 -8 %
    Silver equivalent (in thousands of ounces)  1,795 1,949 -8 % 5,520 5,802 -5 %
 Lead (in thousands of pounds)  16,763 20,059 -16 % 50,644 57,130 -11 %
 Zinc (in thousands of pounds)  7,404 6,974 6 % 18,826 19,886 -5 %
Cash Costs
Production costs per tonne of ore processed ($) 74.26 77.73 -4 % 77.57 82.25 -6 %
All-in sustaining costs per tonne of ore processed ($) 136.86 136.90 0 % 139.79 137.33 2 %
Cash costs per ounce of silver, net of by-product credits ($) (0.96) (1.15) 17 % (0.74) (0.68) -9 %
All-in sustaining costs per ounce of silver, net of by-product credits ($) 11.33 9.28 22 % 10.72 8.94 20 %

 

In Q3 Fiscal 2024, the Company mined 345,273 tonnes of ore, up 17% compared to 296,050 tonnes in Q3 Fiscal 2023. Ore milled in Q3 Fiscal 2024 was 312,500 tonnes, up 3% compared to 303,442 tonnes in Q3 Fiscal 2023. A total of 60,095 tonnes of ores were stockpiled at the Ying Mining District and will be processed in the fourth quarter during the Chinese New Year holiday.

 

In Q3 Fiscal 2024, the Company produced approximately 1,342 ounces of gold, 1.7 million ounces of silver, or approximately 1.8 million ounces of silver equivalent, plus 16.8 million pounds of lead and 7.4 million pounds of zinc, representing increases of 22% and 6%, respectively, in gold and zinc production, and decreases of 9% and 16%, respectively, in silver and lead production over Q3 Fiscal 2023. The decreases in silver and lead production were mainly due to i) lower head grades achieved due to mining sequences; ii) more ores stockpiled to be processed in the fourth quarter during the Chinese New Year holiday; and iii) 12,700 tonnes of gold ore with grades of 1.9 grams per tonne gold, 74 g/t silver, 1.0% lead and 0.1% zinc mined and processed, at the Ying Mining District.

 

In Q3 Fiscal 2024, the consolidated mining costs were $59.43 per tonne, down 5% compared to $62.69 per tonne in Q3 Fiscal 2023. The consolidated milling costs were $12.44 per tonne, down 1% compared to $12.56 per tonne in Q3 Fiscal 2023. Correspondingly, the consolidated production costs per tonne of ore processed were $74.26, down 4% compared to $77.73 in Q3 Fiscal 2023. The all-in sustaining production costs per tonne of ore processed in Q3 Fiscal 2024 were $136.89, a slight decrease compared to $136.90 in Q3 Fiscal 2023. The decrease was mainly attributed to higher ore production resulting in lower unit fixed costs allocation and an approximate 4% depreciation of the Chinese yuan against the US dollar over the same prior year period.

 

In Q3 Fiscal 2024, the consolidated cash costs per ounce of silver, net of by-product credits, were negative $0.96, compared to negative $1.15 in the prior year quarter. The consolidated all-in sustaining costs per ounce of silver, net of by-product credits, were $11.33 compared to $9.28 in Q3 Fiscal 2023. The increase was mainly due to i) a decrease of $2.5 million in by-product credits, offset by a decrease of $0.5 million in all-in sustaining costs; and ii) less silver sold resulting in higher unit costs per ounces of silver.

 

EXPLORATION AND DEVELOPMENT

 

 Capitalized Development and Expenditures   Expensed 
 Ramp Development   Exploration and Development Tunnels   Drilling   Equipment & Mill and TSF   Total   Mining Preparation Tunnels   Drilling 
 (Metres)   ($ Thousand)   (Metres)   ($ Thousand)   (Metres)   ($ Thousand)   ($ Thousand)   ($ Thousand)   (Metres)   (Metres) 
 Q3 Fiscal 2024 
Ying Mining District 3,986 $             2,651 23,834 $               9,612 39,085 $         1,338 3,679 $        17,280 10,010 24,693
GC Mine 81 108 3,747 1,688 10,912 250 218 2,264 2,145 12,327
Corporate and other 82 9 91
Consolidated 4,067 $             2,759 27,581 $             11,300 49,997 $         1,670 $               3,906 $        19,635 12,155 37,020
Q3 Fiscal 2023
Ying Mining District 1,776 $             1,294 15,527 $               6,549 27,066 $            895 3,250 $        11,988 7,933 25,270
GC Mine 3,642 1,133 4,444 204 1,951 3,288 1,786 12,470
Corporate and other 978 268 95 363
Consolidated 1,776 $             1,294 19,169 $               7,682 32,488 $         1,367 $               5,296 $        15,639 9,719 37,740

 

Total capital expenditures in Q3 Fiscal 2024 were $19.6 million, up 26% compared to $15.6 million in Q3 Fiscal 2023. The increase is mainly due to more tunneling development and exploration activities conducted in Q3 Fiscal 2024.

 

In Q3 Fiscal 2024, on a consolidated basis, a total of 87,017 metres or $2.4 million worth of diamond drilling were completed (Q3 Fiscal 2023 – 70,228 metres or $2.5 million), of which approximately 37,020 metres or $0.7 million worth of underground drilling were expensed as part of mining costs (Q3 Fiscal 2023 – 37,740 metres or $1.1 million) and approximately 49,997 metres or $1.6 million worth of drilling were capitalized (Q3 Fiscal 2023 – 32,448 metres or $1.4 million ). In addition, approximately 12,155 metres or $4.5 million worth of preparation tunnelling were completed and expensed as part of mining costs (Q3 Fiscal 2023 – 9,719 metres or $3.8 million), and approximately 31,648 metres or $14.1 million worth of tunnels, raises, ramps and declines were completed and capitalized (Q3 Fiscal 2023 – 20,945 metres or $9.0 million).

 

INDIVIDUAL MINE OPERATING PERFORMANCE 

 

The table below summarizes the operating results at the Ying Mining District for the past five quarters and for the nine months ended December 31, 2023 and 2022.

 

 

 

Ying Mining District Q3 F2024 Q2 F2024 Q1 F2024 Q4 F2023 Q3 F2023 Nine months ended December 31,
December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 2023 2022
Ore Production (tonne)
Ore mined 245,606 220,636 213,748 132,205 206,854 679,990 636,819
Ore milled
Gold ore 12,726 12,800 10,893 36,419
Silver ore 201,475 200,068 197,916 130,910 213,830 599,459 642,147
214,201 212,868 208,809 130,910 213,830 635,878 642,147
Head grades
Silver (grams/tonne) 235 235 254 255 262 241 262
Lead (%) 3.5 3.5 3.6 3.6 4.0 3.5 3.9
Zinc (%) 0.7 0.7 0.7 0.6 0.7 0.7 0.7
Recovery rates
Silver (%) 94.9 95.0 95.1 95.2 95.7 95.0 95.7
Lead (%) 94.8 95.0 95.5 95.3 95.4 95.1 95.0
Zinc (%) 71.4 71.1 69.6 68.3 66.4 70.7 62.3
Cash Costs
Cash production cost per tonne of ore processed ($) 84.01 102.42 88.66 95.23 93.04 84.33 92.35
All-in sustaining cost per tonne of ore processed ($) 143.80 170.69 141.21 127.89 156.07 140.20 141.66
Cash cost per ounce of Silver, net of by-product credits ($) (0.09) 1.37 0.24 1.86 0.28 (0.38) 0.78
All-in sustaining cost per ounce of silver, net of by-product credits ($) 8.99 11.33 7.66 6.82 8.60 8.04 7.71
Metal Production
 Gold ( ounces)  1,342 1,552 1,000 1,100 1,200 5,352 3,400
 Silver (in thousands of ounces)  1,511 1,597 997 1,674 1,657 4,665 5,083
 Lead (in thousands of pounds)  14,552 15,382 9,688 17,647 16,201 43,471 49,316
 Zinc (in thousands of pounds)  2,153 2,113 1,164 2,082 1,976 6,510 6,060

 

 

The table below summarizes the operating results at the GC Mine for the past five quarters and for the nine months ended December 31, 2023 and 2022.

 

GC Mine Q3 F2024 Q2 F2024 Q1 F2024 Q4 F2023 Q3 F2023 Nine months ended December 31,
December 31, 2023  September 30, 2023  June 30, 2023  March 31, 2023  December 31, 2022 2023 2022
Ore Production (tonne)
Ore mined 99,667 89,472 49,643 89,196 75,054 241,968 250,316
Ore milled 98,299 86,286 48,483 89,612 75,381 232,824 251,114
Head grades
Silver (grams/tonne) 68 80 88 75 72 72 73
Lead (%) 1.1 1.4 1.3 1.4 1.2 1.2 1.3
Zinc (%) 2.7 2.7 2.5 2.8 2.7 2.7 2.8
Recovery rates
Silver (%) 80.3 82.7 78.9 83.0 81.0 81.8 82.5
Lead (%) 90.9 90.7 90.9 90.3 88.5 90.7 89.6
Zinc (%) 90.1 90.4 89.3 90.1 89.6 90.2 90.1
Cash Costs
Cash production cost per tonne of ore processed ($) 50.38 67.34 52.35 59.84 57.92 58.50 56.51
All-in sustaining cost per tonne of ore processed ($) 76.84 84.79 88.26 78.31 81.68 86.93 83.02
Cash cost per ounce of Silver, net of by-product credits ($) (8.95) (3.10) (13.72) (12.13) (22.42) (4.69) (16.08)
All-in sustaining cost per ounce of silver, net of by-product credits ($) 8.01 5.93 5.02 (0.73) (7.48) 11.98 (0.71)
Metal Production
 Silver (in thousands of ounces)  173 183 109 179 141 431 481
 Lead (in thousands of pounds)  2,211 2,434 1,250 2,412 1,782 5,282 6,350
 Zinc (in thousands of pounds)  5,251 4,708 2,413 4,892 4,010 12,308 13,927

 

OPERATING OUTLOOK

 

The Company is currently refining the mine plan and expects to provide Fiscal 2025 guidance along with the release of Fiscal 2024 production results in April 2024.

 

In the fourth quarter of Fiscal 2024, the Company expects to process 215,000 to 240,000 tonnes of ore to produce approximately 1,200 to 1,300 ounces of gold, 1.1 to 1.3 million ounces of silver, 11.5 to 13.5 million pounds of lead, and 4.5 to 5.0 million pounds of zinc, representing production increases of 11% to 30% in ore, 20% to 30% in gold, 0% to 17% in silver, 5% to 20% in lead, and 26% to 40% in zinc compared to the production results in the same quarter last year.

 

About Silvercorp

 

Silvercorp is a Canadian mining company producing silver, gold, lead, and zinc with a long history of profitability and growth potential. The Company’s strategy is to create shareholder value by 1) focusing on generating free cashflow from long life mines; 2) organic growth through extensive drilling for discovery; 3) ongoing merger and acquisition efforts to unlock value; and 4) long term commitment to responsible mining and sound Environmental, Social, and Governance practices.

 

Posted February 9, 2024

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