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SILVERCORP REPORTS ADJUSTED NET INCOME OF $37.0 MILLION, $0.21 PER SHARE, AND CASH FLOW FROM OPERATION OF $85.6 MILLION FOR FISCAL 2023

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SILVERCORP REPORTS ADJUSTED NET INCOME OF $37.0 MILLION, $0.21 PER SHARE, AND CASH FLOW FROM OPERATION OF $85.6 MILLION FOR FISCAL 2023

 

 

 

 

 

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

 

HIGHLIGHTS FOR FISCAL 2023 

  • Mined 1,068,983 tonnes of ore, milled 1,072,654 tonnes of ore, and produced approximately 6.6 million ounces of silver, 4,400 ounces of gold, or approximately 7.0 million ounces of silver equivalent, plus 68.1 million pounds of lead, and 23.5 million pounds of zinc ;
  • Sold approximately 6.6 million ounces of silver, 4,400 ounces of gold, 65.7 million pounds of lead, and 23.4 million pounds of zinc, for revenue of $208.1 million;
  • Reported net income attributable to equity shareholders of $20.6 million, or $0.12 per share;
  • Realized adjusted earnings attributable to equity shareholders of $37.0 million, or $0.21 per share. The adjustments were made to remove impacts from non-recurring items, share-based compensation, foreign exchange gain/loss, impairment adjustments and reversals, gain/loss on equity investments, dilution gain/loss, and the share of associates’ operating results;
  • Generated cash flow from operating activities of $85.6 million;
  • Cash cost per ounce of silver, net of by-product credits, of negative $0.42;
  • All-in sustaining cost per ounce of silver, net of by-product credits, of $9.73;
  • Paid $4.4 million of dividends to the Company’s shareholders;
  • Spent $2.1 million to buy back 838,237 common shares of the Company under its Normal Course Issuer Bid;
  • Spent and capitalized $8.3 million on exploration drilling, $34.0 million on underground development and exploration tunneling, and $15.6 million on equipment and facilities, including $4.8 million on construction of the new mill and tailings storage facility; and
  • Strong balance sheet with $203.3 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 $141.9 million as at March 31, 2023.

 

HIGHLIGHTS FOR Q4 FISCAL 2023 

  • Mined 181,848 tonnes of ore, milled 179,393 tonnes of ore, and produced approximately 1.1 million ounces of silver, 1,000 ounces of gold, 10.9 million pounds of lead, and 3.6 million pounds of zinc;
  • Sold approximately 1.1 million ounces of silver, 1,000 ounces of gold, or 1.2 million ounces of silver equivalent, 10.0 million pounds of lead, and 3.5 million pounds of zinc, for revenue of $34.1 million;
  • Reported net income attributable to equity holders of $0.2 million, or $0.00 per share;
  • Realized adjusted earnings attributable to equity holders of $5.0 million, or $0.03 per share;
  • Cash costs per ounce of silver, net of by-product credits, of $0.92;
  • All-in sustaining costs per ounce of silver, net of by-product credits, of $13.85;
  • Generated cash flow from operating activities of $5.7 million; and,
  • Spent and capitalized $1.0 million on exploration drilling, $5.9 million on underground development and exploration tunneling, and $2.5 million on equipment and facilities.

 

CONSOLIDATED FINANCIAL RESULTS

 

Three months ended March 31, Year ended March 31,
2023 2022 Changes 2023 2022 Changes
Financial Results
Revenue (in thousands of $)  $              34,147 $                      41,590 -18 % $            208,129 $             217,923 -4 %
Mine operating earnings (in thousands of $)  9,776 13,709 -29 % 70,783 84,301 -16 %
Net income (loss)  attributable to equity holders (in thousands of $)  235 3,966 -94 % 20,608 30,634 -33 %
 Earnings (loss) per share – basic ($/share) 0.00 0.02 -95 % 0.12 0.17 -29 %
Adjusted earnings attributable to equity holders (in thousands of $)  4,971 9,496 -48 % 37,027 52,427 -29 %
Adjusted earning per share – basic ($/share) 0.03 0.05 -40 % 0.21 0.30 -30 %
Net cash generated from operating activities (in thousands of $)  5,742 11,406 -50 % 85,643 107,378 -20 %
Capitalized expenditures (in thousands of $)  9,457 9,960 -5 % 57,823 53,991 7 %
Metals sold
 Silver (in thousands of ounces)  1,073 1,173 -9 % 6,637 6,265 6 %
 Gold (in thousands of ounces)  1.0 0.5 100 % 4.4 3.4 29 %
 Lead (in thousands of pounds)  10,021 12,279 -18 % 65,687 63,563 3 %
 Zinc (in thousands of pounds)  3,451 4,340 -20 % 23,438 26,809 -13 %
 Average Selling Price, Net of Value Added Tax and Smelter Charges 
Silver ($/ounce) 18.18 19.38 -6 % 17.11 19.36 -12 %
Gold ($/ounce) 1,620 1,475 10 % 1,511 1,495 1 %
Lead ($/pound) 0.87 0.93 -6 % 0.87 0.90 -3 %
Zinc ($/pound) 0.89 1.22 -27 % 1.06 1.08 -2 %
 Financial Position as at  March 31, 2023 December 31, 2022 March 31, 2023 March 31, 2022
Cash and cash equivalents and short-term investments (in thousands of $)  203,323 210,261 -3 % 203,323 212,925 -5 %
Working capital (in thousands of $)  177,808 176,960 0 % 177,808 186,270 -5 %

  1. Fiscal 2023 Financial Results

 

Net income attributable to equity holders of the Company in Fiscal 2023 was $20.6 million or $0.12 per share, compared to net income of $30.6 million or $0.17 per share for the twelve months ended March 31, 2022 (“Fiscal 2022”).

 

In Fiscal 2023, the Company’s consolidated financial results were mainly impacted by i) increases of 6%, 29% and 3%, respectively, in silver, gold, and lead sold, and a decrease of 13% in zinc sold; ii) decreases of 12%, 3% and 2%, respectively, in the realized selling prices for silver, lead and zinc, and increases of 1%, in the realized selling prices for gold; iii) a foreign exchange gain of $4.8 million mainly arising from the appreciation of the US dollar against the Canadian dollar;  iv) a loss of $2.3 million on equity investments; v) an impairment charge of $20.2 million against the Las Yesca Project, and vi) an impairment charge of $2.9 million against a short-term investment in certain bonds.

 

Revenue in Fiscal 2023 was $208.1 million, down 4% compared to $217.9 million in Fiscal 2022. The decrease is mainly due to i) a decrease of $16.6 million arising from the decrease in the net realized selling prices for silver, lead, and zinc; ii) a decrease of $3.6 million arising from the decrease in zinc sold, offset by iii) an increase of $9.7 million arising from the increase in silver, gold and lead sold.

 

Income from mine operations in Fiscal 2023 was $70.8 million, down 16% compared to $84.3 million in Fiscal 2022. Income from mine operations at the Ying Mining District was $62.8 million, compared to $70.0 million in Fiscal 2022. Income from mine operations at the GC Mine was $8.4 million, compared to $14.8 million in Fiscal 2022.

 

Cash flow provided by operating activities in Fiscal 2023 was $85.6 million, down $21.7 million, compared to $107.4 million in Fiscal 2022.

 

The Company ended Fiscal 2023 with $203.3 million in cash, cash equivalents and short-term investments, down 5% or $9.6 million compared to $212.9 million as at March 31, 2022.

 

Working capital as at March 31, 2023 was $177.8 million, down 5% or $8.5 million compared to $186.3 million as at March 31, 2022.

 

  1. Q4 Fiscal 2023 Financial Results

 

Net income attributable to equity holders of the Company in Q4 Fiscal 2023 was $0.2 million or $0.00 per share, compared to net income of $4.0 million or $0.02 per share in the three months ended March 31, 2022.

 

In Q4 Fiscal 2023, the Company’s consolidated financial results were mainly impacted by i) decreases of 9%, 18% and 20%, respectively, in silver, lead and zinc sold, and an increase of 100% in gold sold; ii) decreases of 6%,  6% and 27%, respectively, in the realized selling prices for silver,  lead and zinc, and an increase of 10% in the net realized selling price for gold ; iii) a loss of $1.1 million on equity investments; and iv) an impairment charge of $1.9 million against a short-term investment in certain bonds.

 

Revenue in Q4 Fiscal 2023 was $34.1 million, down 18% compared to $41.6 million in Q4 Fiscal 2022. The decrease is mainly due to a decrease of $3.6 million arising from the decrease in the net realized selling prices for silver, lead and zinc, and a decrease of $4.6 million arising from the decrease in silver, lead and zinc sold. The following table summarizes the metals sold, net realized selling price and revenue achieved for each metal.

 

Income from mine operations in Q4 Fiscal 2023 was $9.8 million, down 29% compared to $13.7 million in Q4 Fiscal 2022. Income from mine operations at the Ying Mining District was $9.5 million, compared to $11.9 million in Q4 Fiscal 2022. Income from mine operations at the GC Mine was $0.4 million, compared to $2.0 million in Q4 Fiscal 2022.

 

Cash flow provided by operating activities in Q4 Fiscal 2023 was $5.7 million, down $5.7 million, compared to $11.4 million in Q4 Fiscal 2022.

 

CONSOLIDATED OPERATIONAL RESULTS

 

 

Three months ended March 31, Year ended March 31,
2023 2022 Changes 2023 2022 Changes
Ore Production (tonne)
Ore mined 181,848 180,505 1 % 1,068,983 996,280 7 %
Ore milled 179,393 182,670 -2 % 1,072,654 1,002,335 7 %
Metal Production
 Silver (in thousands of ounces)  1,106 1,146 -3 % 6,617 6,149 8 %
 Gold (in thousands of ounces)  1.0 0.5 100 % 4.4 3.4 29 %
 Lead (in thousands of pounds)  10,938 11,962 -9 % 68,068 64,431 6 %
 Zinc (in thousands of pounds)  3,577 4,101 -13 % 23,463 26,812 -12 %
Cash Costs
Production costs per tonne of ore processed ($) 92.85 92.78 0 % 84.03 84.85 -1 %
All-in sustaining costs per tonne of ore processed ($) 165.68 171.56 -3 % 142.08 141.54 0 %
Cash costs per ounce of silver, net of by-product credits ($) 0.92 (0.54) 270 % (0.42) (1.29) 67 %
All-in sustaining costs per ounce of silver, net of by-product credits ($) 13.85 12.60 10 % 9.73 8.77 11 %

  1. Fiscal 2023 Operational Results

 

In Fiscal 2023, the Company mined 1,068,983 tonnes of ore and milled 1,072,654 tonnes of ore, both up 7% compared to 996,280 tonnes of ore mined and 1,002,335 tonnes of ore milled in Fiscal 2022.

 

In Fiscal 2023, the Company produced approximately 6.6 million ounces of silver, 4,400 ounces of gold, 68.1 million pounds of lead, and 23.5 million pounds of zinc, representing increases of 8%, 29% and 6%, respectively, in silver, gold and lead production, and a decrease of 12% in zinc production over Fiscal 2022.

 

In Fiscal 2023, the consolidated production costs were $84.03 per tonne, down 1% compared to $84.85 in Fiscal 2022, while the all-in sustaining production costs per tonne of ore processed were $142.08, a slight increase compared to $141.54 in Fiscal 2022.

 

In Fiscal 2023, the consolidated cash costs per ounce of silver, net of by-product credits, were negative $0.42, compared to negative $1.29 in the prior year quarter. The increase was mainly due to a decrease of $2.1 million in by-product credits and an increase of $3.2 million in expensed production costs.

 

The consolidated all-in sustaining costs per ounce of silver, net of by-product credits, were $9.73 compared to $8.77 in Fiscal 2022. The increase was mainly due to i) the increase in the consolidated cash costs per ounce of silver as discussed above, ii) an increase of $7.7 million in sustaining capital expenditures offset by a decrease of $2.7 million in administrative expenses and mineral resources tax.

 

  1. Q4 Fiscal 2023 Operational Results

 

In Q4 Fiscal 2023, the Company mined 181,848 tonnes of ore, up 1% compared to 180,505 tonnes in Q4 Fiscal 2022. Ore milled in Q4 Fiscal 2023 was 179,393 tonnes, down 2% compared to 182,670 tonnes in Q4 Fiscal 2022.

 

In Q4 Fiscal 2023, the Company produced approximately 1.1 million ounces of silver, 1,000 ounces of gold, 10.9 million pounds of lead, and 3.6 million pounds of zinc, representing an increase of 100% in gold production, and decreases of 3%, 9% and 13%, respectively, in silver, lead and zinc production over Q4 Fiscal 2022.

 

In Q4 Fiscal 2023, the consolidated production costs were $92.85 per tonne, relatively the same compared to $92.78 per tonne in Q4 Fiscal 2022, and the all-in sustaining production costs per tonne of ore processed were $165.68, down 3% compared to $171.56 in Q4 Fiscal 2022.

 

In Q4 Fiscal 2023, the consolidated cash costs per ounce of silver, net of by-product credits, were $0.92, compared to negative $0.54 in the prior year quarter. The increase was mainly due to a decrease of $4.2 million in by-product credits offset by a decrease of $2.6 million in expensed production costs. The consolidated all-in sustaining costs per ounce of silver, net of by-product credits, were $13.85 compared to $12.60 in Q4 Fiscal 2022. The increase was mainly due to the increase in the consolidated cash costs per ounce of silver in the current quarter as discussed above.

 

EXPLORATION AND DEVELOPMENT

 

 Capitalized Development and Expenditures   Expensed  
 Ramp Development   Exploration and
Development Tunnels 
 Drilling   Equipment &
Mill and TSF 
 Total   Mining
Preparation 
 Drilling 
 (Metres)   ($ Thousand)   (Metres)   ($ Thousand)   (Metres)   ($ Thousand)   ($ Thousand)   ($ Thousand)   (Metres)   (Metres) 
 Fiscal 2023 
Ying Mining District 6,944 $           5,173 62,105 $         24,782 124,533 $      5,677 $       12,478 $       48,110 32,870 124,874
GC Mine 12,722 4,023 22,024 816 2,816 7,655 7,071 43,375
Corporate and other 8,485 1,783 275 2,058
Consolidated 6,944 $           5,173 74,827 $        28,805 155,042 $      8,276 $      15,569 $       57,823 39,941 168,249
Fiscal 2022
Ying Mining District 7,279 $           4,858 53,032 $         21,851 135,390 $    10,598 $         8,609 $       45,916 25,134 216,068
GC Mine 1,012 1,218 12,739 3,049 6,317 240 504 5,011 6,167 60,382
Corporate and other 7,971 2,612 452 3,064
Consolidated 8,291 $           6,076 65,771 $         24,900 149,678 $    13,450 $         9,565 $       53,991 31,301 276,450
 Changes (%) 
Ying Mining District -5 % 6 % 17 % 13 % -8 % -46 % 45 % 5 % 31 % -42 %
GC Mine -100 % -100 % 0 % 32 % 249 % 240 % 459 % 53 % 15 % -28 %
Corporate and other 6 % -32 % -39 % -33 %
Consolidated -16 % -15 % 14 % 16 % 4 % -38 % 63 % 7 % 28 % -39 %

 

In Fiscal 2023, on a consolidated basis, a total of 323,291 metres or $13.0 million worth of diamond drilling were completed (Fiscal 2022 – 426,128 metres or $20.7 million), of which approximately 168,249 metres or $4.7 million worth of diamond drilling were expensed as part of mining costs (Fiscal 2022– 276,450 metres or $7.2 million) and approximately 155,042 metres or $8.3 million worth of diamond drilling were capitalized (Fiscal 2022– 149,678 metres or $13.5 million). In addition, approximately 39,941 metres or $14.6 million worth of mining preparation tunnels were completed and expensed as part of mining costs (Fiscal 2022 – 31,301 metres or $11.6 million), and approximately 81,771 metres or $34.0 million worth of tunnels, raises, ramps and declines were completed and capitalized (Fiscal 2022 – 74,062 metres or $31.0 million).

 

In December 2022, the Company’s Kuanping Silver-Lead-Zinc-Gold Project (“Kuanping Project”) received a mining license (the “Kuanping Mining License”) from the Department of Natural Resources, Henan Province, China. The Kuanping Mining License covers 6.97 square kilometres and is good until March 13, 2029.

 

In Fiscal 2023, a total of 8,485 metres or $0.9 million worth of drilling were completed and capitalized at the Kuanping Project.

 

In Fiscal 2023, the Company spent $4.8 million on the construction of the tailing storage facility and the new mill, $35.1 million below the budgeted amount of $39.9 million. As of March 31, 2023, a total of 3,233 metres, or 64% of the designed drainage tunnels were completed and the site preparation for the new mill was also completed. The Company has received all governmental approvals to construct the TSF and the new mill. The Company still plans to complete the TSF in 2024 and is currently delaying the construction of the new mill by one year.

 

In addition, the Company spent approximately $2.0 million to upgrade most roads to concrete and upgrade certain environmental protection facilities at the Ying Mining District as part of our continued commitment to building green mines. The Company also spent approximately $1.0 million to construct an X-Ray Transmission Ore Sorting System to optimize the mine plan and improve processing head grades at the GC Mine. The XRT Ore Sorting System is currently in trial run.

 

INDIVIDUAL MINE OPERATING PERFORMANCE 

 

Ying Mining District Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Year ended March 31,
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 2023 2022
Ore Production (tonne)
Ore mined 132,205 206,854 215,927 214,038 130,612 769,024 681,398
Ore milled 130,910 213,830 216,262 212,055 131,731 773,057 684,293
Head grades
Silver (grams/tonne) 255 262 257 267 271 261 272
Lead (%) 3.6 4.0 3.7 3.9 3.9 3.8 3.9
Zinc (%) 0.6 0.7 0.7 0.7 0.8 0.7 0.8
Recovery rates
Silver (%) 95.2 95.7 95.5 95.7 95.2 95.6 95.1
Lead (%) 95.3 95.4 94.1 95.4 96.1 95.0 95.5
Zinc (%) 68.3 66.4 62.5 58.1 57.4 63.2 59.7
Cash Costs
Cash production cost per tonne of ore processed ($) 102.42 88.66 95.23 93.04 102.49 94.07 97.76
All-in sustaining cost per tonne of ore processed ($) 170.69 141.21 127.89 156.07 172.63 146.59 147.52
Cash cost per ounce of Silver, net of by-product credits ($) 1.37 0.24 1.86 0.28 1.21 0.88 0.96
All-in sustaining cost per ounce of silver, net of by-product credits ($) 11.33 7.66 6.82 8.60 10.76 8.29 7.93
Metal Production
 Silver (in thousands of ounces)  997 1,674 1,657 1,696 1,062 6,024 5,509
 Gold (in thousands of ounces)  1.0 1.1 1.2 1.1 0.5 4.4 3.4
 Lead (in thousands of pounds)  9,688 17,647 16,201 16,718 10,542 60,254 54,883
 Zinc (in thousands of pounds)  1,164 2,082 1,976 1,928 1,317 7,150 6,767

 

 

 

GC Mine Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Year ended March 31,
March 31, 2023  December 31, 2022  September 30, 2022  June 30, 2022  March 31, 2022 2023 2022
Ore Production (tonne)
Ore mined 49,643 89,196 75,054 86,066 49,893 299,959 314,882
Ore milled 48,483 89,612 75,381 86,121 50,939 299,597 318,042
Head grades
Silver (grams/tonne) 88 75 72 71 62 75 75
Lead (%) 1.3 1.4 1.2 1.4 1.4 1.3 1.5
Zinc (%) 2.5 2.8 2.7 2.9 2.8 2.8 3.2
Recovery rates
Silver (%) 78.9 83.0 81.0 83.4 82.4 81.9 83.8
Lead (%) 90.9 90.3 88.5 89.8 88.7 89.8 89.2
Zinc (%) 89.3 90.1 89.6 90.4 89.8 89.9 89.6
Cash Costs
Cash production cost per tonne of ore processed ($) 67.34 52.35 59.84 57.92 67.33 58.29 56.90
All-in sustaining cost per tonne of ore processed ($) 84.79 88.26 78.31 81.68 100.13 83.33 79.56
Cash cost per ounce of Silver, net of by-product credits ($) (3.10) (13.72) (12.13) (22.42) (16.59) (13.72) (20.91)
All-in sustaining cost per ounce of silver, net of by-product credits ($) 5.93 5.02 (0.73) (7.48) (0.39) 0.50 (8.07)
Metal Production
 Silver (in thousands of ounces)  109 179 141 164 84 593 640
 Lead (in thousands of pounds)  1,250 2,412 1,782 2,370 1,420 7,814 9,548
 Zinc (in thousands of pounds)  2,413 4,892 4,010 4,998 2,784 16,313 20,045

 

 

Mr. Guoliang Ma, P.Geo., Manager of Exploration and Resources of the Company, is the Qualified Person as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects  and has reviewed and given consent to the technical information contained in this news release.

 

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 ESG.

 

Posted May 26, 2023

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