Net income a net income a quarter; Gross margin Sales of $44.4 Inventories o increase of $
NEW WS RELEASE Trading Symbol: TSX: SVM NYSE AMERICAN: SVM
SIL EPORTS Q3 RESULTS: NET LVERCORP RE T INCOME OF $12.7 MILLIO ON, $0.08 PER R SHARE AND PR ROVIDES FISCA AL 2019 PROD DUCTION AND CASH COST TS GUIDANCE E
VANC COUVER, British Columbia –
- February 8, 2 2018 – Silverc corp Metals Inc. (“Silvercorp p” or the “Com mpany”)
(TSX:
: SVM) (NYSE American: SVM) reported its financial an nd operating r results for the e third quarter r ended Dece ember 31, 201
17. All amount ts are express sed in US Dolla ars.
THIR RD QUARTER HIGHLIGHTS
- Net income a eholders of $12.7 million, or $0.08 per share1, compared to attributable to
- equity share eholders of $13.1 million, or $0.08 per sh
net income a attributable to
- equity share hare in the pri ior year
quarter;
- Gross margin % in the prior year quarter;
n of 52% comp pared with 55%
- Sales of $44.4 ared to $47.8 million in the prior year qua 4 million, dow wn $3.4 million n or 7% compa arter;
- Inventories o of silver‐lead concentrate o of 6,234 tonn nes, valued at t approximate ely $16.0 mill lion, an increase of $4.5 million or r 39%, compar red to 4,666 t tonnes valued d at approxima ately $11.5 million in the prior year quarter;
- Silver, lead, a es silver, 15.8 million and zinc meta als sold amounted to appro oximately 1.5 million ounce pounds lead, and 6.4 millio on pounds zinc, compared t to 1.7 million ounces silver, , 19.5 million pounds lead, and 5.7 million pound ds zinc in the p prior year qua arter;
- Head grades were 315 grams per tonne (“g/t”) for silver, 4.5% for lead, and 1.0% % for zinc at t the Ying nd 0.8% for zinc in the prior year Mining Distri ict, compared d to 303 g/t f for silver, 4.8% % for lead an quarter;
- Total and cas ore2 of $74.16 sh mining cost ts per tonne o 6 and $56.11, respectively, compared to $67.12 and $47.52 in n the prior yea ar quarter;
- Cash cost per ounce of sil lver2, net of b by‐product cre edits, of nega ative $5.92, co ompared to n negative $5.48 in the p prior year quarter;
- All‐in sustaining cost per o ounce of silver2, net of by‐p product credit ts, of $3.16, c compared to $ $1.87 in the prior year quarter;
- Spent $1.8 m million to buyba ack 788,000 common share es of the Comp pany;
- Paid $1.7 million dividend t to equity shar reholders of th he Company;
- Invested $3.8 8 million to participate in a p private placem ment of New P Pacific Metals Corp.; and,
- Ended the qu uarter with $1 113.3 million i in cash and ca ash equivalent ts and short‐t term investme ents, an increase of $1 16.8 million or 17%, compared to $96.5 m million as at M March 31, 2017 7.
1 Earn hare nings per share refers to basic earnings per sh 2 Non econciliation n IFRS measure, please refer to section 10 of th he correspondin ng MD&A for re
FINANCIALS
Net income attributable to equity shareholders of the Company in Q3 Fiscal 2018 was $12.7 million or basic earnings per share of $0.08, compared to $13.1 million, or $0.08 per share in Q3 Fiscal 2017.
Sales in Q3 Fiscal 2018 were $44.4 million, down 7% compared to $47.8 million in the same quarter last year. Silver and gold sales represented $19.8 million and $0.6 million, respectively, while base metals represented $23.9 million of total sales, compared to silver, gold and base metals sales of $23.4 million, $0.7 million, and $23.7 million, respectively, in the prior year quarter.
The Company’s financial results in Q3 Fiscal 2018 were mainly impacted by the following: i) an increase of 8% and 37% in the realized selling prices for lead and zinc, compared to the prior year quarter, ii) a 3% decrease in the realized selling price for silver, iii) less metals sold as inventory built up; and iv) higher per tonne production costs.
As at December 31, 2017, silver‐lead concentrate inventories were 6,234 tonnes containing approximately 0.7 million ounces of silver and 6.9 million pounds of lead, an increase of 34% or 1,568 tonnes, compared to 4,666 tonnes silver‐lead concentrate inventories containing approximately 0.5 million ounces of silver and 5.4 million pounds of lead held as at December 31, 2016.
Cost of sales in Q3 Fiscal 2018 was $21.2 million, comparable to $21.5 million in Q3 Fiscal 2017. The cost of sales included $15.6 million (Q3 Fiscal 2017 ‐ $14.9 million) cash production costs, $1.3 million mineral resources tax (Q3 Fiscal 2017 ‐ $1.4 million), and $4.4 million (Q3 Fiscal 2017 ‐ $5.2 million) depreciation and amortization charges.
Gross profit margin in Q3 Fiscal 2018 was 52%, compared to 55% in Q3 Fiscal 2017. Ying Mining District’s gross margin was 55% compared to a 58% gross profit margin in the prior year quarter. GC Mine’s profit margin was 41% compared to a 39% gross profit margin in the prior year quarter.
General and administrative expenses in Q3 Fiscal 2018 and the nine months ended December 31, 2017 were $4.9 million and $14.0 million (Q3 Fiscal 2017 ‐ $4.0 million, nine months ended December 31, 2016 ‐ $12.5 million). The increase was mainly due to the resumption of activities at the XHP Project to review alternatives and activities carried at the BYP Mine to renew its mining license, resulting in additional office and administrative expenses and labour costs.
Income tax expenses in Q3 Fiscal 2018 were $4.3 million compared to $5.4 million in Q3 Fiscal 2017. The income tax expense recorded in Q3 Fiscal 2017 included current income tax expense of $3.7 million (Q3 Fiscal 2016 – $4.7 million) and deferred income tax expense of $0.6 million (Q3 Fiscal 2016 – $0.6 million).
Cash flows provided by operating activities in Q3 Fiscal 2018 were $27.5 million, compared to $28.3 million in the prior year quarter. Before changes in non‐cash operating working capital, cash flows provided by operating activities in Q3 Fiscal 2018 were $23.0 million, a decrease of $3.4 million or 13%, compared to $26.4 million in the prior year quarter.
For the nine months ended December 31, 2017, net income attributable to equity shareholders of the Company was $34.8 million or $0.21 per share, up 15% compared to $30.2 million or $0.18 per share in the same prior year period; sales were $131.6 million, up 2% from $129.4 million in the same prior year period; and cash flow from operating activities was $65.1 million, down 14% from $75.6 million in the same prior year period.
Working capital as at December 31, 2017 was $84.9 million, an increase of $14.2 million or 20%, compared to $70.7 million working capital as at March 31, 2017.
OPERATIONS AND DEVELOPMENT
(i) Q3 Fiscal 2018 vs. Q3 Fiscal 2017
On a consolidated basis, the Company mined 252,284 tonnes of ore in Q3 Fiscal 2018, comparable to 252,784 tonnes in Q3 Fiscal 2017. Ore milled were 256,037 tonnes, compared to 263,339 tonnes of ore milled in Q3 Fiscal 2017.
In Q3 Fiscal 2018, the Company sold approximately 1.5 million ounces of silver, 700 ounces of gold, 15.8 million pounds of lead, and 6.4 million pounds of zinc, compared to 1.7 million ounces of silver, 700 ounces of gold, 19.5 million pounds of lead, and 5.7 million pounds of zinc, respectively, in Q3 Fiscal 2017. Sales from lead and zinc accounted for 54% of the total sales and amounted to $23.8 million, an increase of $0.3 million, compared to $23.5 million in the prior year quarter.
The consolidated total mining costs and cash mining costs were $74.16 and $56.11 per tonne, compared to $67.12 and $47.52 per tonne, respectively, in Q3 Fiscal 2017. The increase in cash mining costs were mainly due to: i) a $0.9 million increase in raw material supply costs, ii) a $0.4 million increase in mining preparation costs resulting from more underground tunnelling expensed in the current quarter, and iii) a $0.5 million increase in mining labor costs due to additional bonus accrued as per the Company’s profit sharing plan in China.
The consolidated total milling costs and cash milling costs in Q3 Fiscal 2018 were $13.45 and $11.31 per tonne, compared to $12.40 and $10.32 per tonne, respectively, in Q3 Fiscal 2017. The increase in cash milling costs were mainly due to $0.2 million increase in raw material supply costs.
The consolidated total production costs and cash costs per ounce of silver, net of by‐product credits, were negative $3.04 and negative $5.92 compared to negative $2.50 and negative $5.48 respectively, in the prior year quarter. The overall decrease in cash cost per ounce of silver, net of by‐product credits, is mainly due to a 1% increase in by‐product credits, mainly arising from 8% and 37% increase in lead and zinc net realized selling prices.
The consolidated all‐in sustaining costs per ounce of silver, net of by‐product credits, is $3.16 compared to $1.87 in Q3 Fiscal 2017.
(ii) Nine months ended December 31, 2017 vs Nine months ended December 31, 2016
For the nine months ended December 31, 2017, approximately 4.7 million ounces of silver, 2,400 ounces of gold, 48.6 million pounds of lead, and 17.0 million pounds of zinc were sold compared to 5.2 million ounces of silver, 2,600 ounces of gold, 56.1 million of lead, and 16.8 million pounds of zinc sold in the same prior year period.
The consolidated total mining and cash mining costs were $71.07 and $53.17 per tonne, 6% and 16% increase compared to $66.79 and $45.92 per tonne in the same prior year period while the consolidated total milling costs and cash milling costs were $12.81 and $10.55, comparable to $12.86 and $10.62 per tonne in the same prior year period.
The consolidated cash production costs and all‐in sustaining costs per ounce of silver, net of by‐product credits, were negative $4.97 and $3.35 compared to negative $2.95 and $3.96, respectively, in the same prior year period.
1. Ying Mining District, Henan Province, China
| Operational results ‐ Ying Mining District Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 | Nine months ended December 31, 2017 2016 | |||
| Ore Mined (tonne) Ore Milled (tonne) | 166,619 167,543 | 173,294 160,408 112,755 171,303 173,946 164,959 108,051 182,259 294 304 298 303 4.3 4.6 4.8 4.8 0.8 0.8 0.8 0.8 95.6 95.8 96.6 95.1 96.2 96.3 95.6 96.7 50.7 45.8 46.2 47.5 1,472 1,324 1,255 1,555 0.8 0.9 0.7 0.7 15,279 13,765 13,520 17,269 2,269 755 1,033 1,210 59.67 54.78 49.99 55.21 81.20 76.67 53.50 80.53 8.50 8.07 10.43 9.09 10.45 10.10 13.60 11.03 71.85 66.93 64.34 68.22 (4.27) (2.97) (3.73) (4.60) 1.08 3.66 0.74 1.34 | 500,321 506,448 | 524,005 530,160 |
| Head Grades Silver (gram/tonne) Lead (%) Zinc (%) | 315 4.5 1.0 | 304 4.5 0.9 | 305 4.7 1.0 | |
| Recoveries Silver (%) Lead (%) Zinc (%) | 95.8 96.4 57.3 | 95.7 96.3 51.7 | 95.4 96.4 46.0 | |
| Metal Sales Silver (in thousands of ounces) Gold (in thousands of ounces) Lead (in thousands of pounds) Zinc (in thousands of pounds) | 1,322 0.7 13,487 2,006 | 4,118 2.4 42,531 5,030 | 4,675 2.6 49,898 4,815 | |
| Cash mining cost ($ per tonne) Total mining cost ($ per tonne) Cash milling cost ($ per tonne) Total milling cost ($ per tonne) | 66.71 90.12 9.84 11.87 | 60.45 82.72 8.80 10.80 | 52.18 78.46 9.31 11.35 | |
| Cash production cost ($ per tonne) Cash cost per ounce of silver ($) All‐in sustaining cost per ounce of silver ($) | 80.60 (4.53) 2.13 | 73.18 (4.03) 2.25 | 65.35 (2.50) 3.11 |
(i) Q3 Fiscal 2018 vs. Q3 Fiscal 2017
In Q3 Fiscal 2018, the total ore mined at the Ying Mining District was 166,619 tonnes, a decrease of 3% or 4,684 tonnes, compared to 171,303 tonnes mined in the prior year quarter. Correspondingly, ore milled in Q3 Fiscal 2018 decreased by 8% to 167,543 tonnes from 182,259 tonnes in the prior year quarter.
Head grades were 315 grams per ton (“g/t”) for silver, 4.5% for lead, and 1.0% for zinc, compared to 303 g/t for silver, 4.8% for lead and 0.8% for zinc in the prior year quarter. The Company continues to achieve improvements in dilution control using its “Enterprise Blog” to assist manage daily operations.
Metals sold were approximately 1.3 million ounces silver, 13.5 million pounds lead, and 2.0 million pounds zinc, compared to 1.6 million ounces silver, 17.3 million pounds lead, and 1.2 million pounds of zinc in the prior year quarter. The decrease of silver and lead sold was mainly due to silver‐lead concentrate inventory built up.
Silver‐lead concentrate inventories were 6,200 tonnes containing approximately 0.7 million ounces of silver and 6.8 million pounds of lead, an increase of 33% or 1,544 tonnes, compared to 4,656 tonnes silver‐lead concentrate inventories held as at December 31, 2016.
Total and cash mining costs per tonne at the Ying Mining District in Q3 Fiscal 2018 were $90.12 and $66.71 per tonne, respectively, compared to $80.53 and $55.21 per tonne in the prior year quarter. The increase in cash mining costs were mainly due to: i) a $0.9 million increase in raw material supply costs, and ii) a $0.4 million increase in mining labor costs due to additional bonus accrued as per the Company’s profit sharing plan in China.
Total and cash milling costs per tonne at the Ying Mining District in Q3 Fiscal 2018 were $11.87 and $9.84, compared to $11.03 and $9.09 in Q3 Fiscal 2017. The increase in cash milling costs was mainly due to a 15% increase in per tonne raw material supply costs.
Cash cost per ounce of silver, net of by‐product credits, in Q3 Fiscal 2018 at the Ying Mining District, was negative $4.53, comparable to negative $4.60 in the prior year quarter.
All in sustaining costs per ounce of silver, net of by‐product credits, in Q3 Fiscal 2018 at the Ying Mining District was $2.13 compared to $1.34 in the prior year quarter.
Approximately 25,109 m or $0.4 million of underground diamond drilling (Fiscal Q3 2017 – 36,756 m or $0.6 million) and 5,187 m or $1.6 million of preparation tunnelling (Fiscal Q3 2017 – 4,900 m or $1.4 million) were completed and expensed as mining preparation costs at the Ying Mining District. In addition, approximately 16,326 m or $6.0 million of horizontal tunnel, raises and declines (Q3 Fiscal 2017 – 17,823 m or $5.5 million) were completed and capitalized.
(ii) Nine months ended December 31, 2017 vs Nine months ended December 31, 2016
For the nine months ended December 31, 2017, a total of 500,321 tonnes of ore were mined and 506,448 tonnes milled at the Ying Mining District, down by 5% and 4%, compared to 524,005 tonnes mined and 530,160 tonnes milled in the same prior year period.
Average head grades were 304 g/t for silver, 4.5% for lead, and 0.9% for zinc compared to 305 g/t for silver, 4.7% for lead, and 1.0% for zinc, respectively, in the same prior year period.
Metals sold were approximately 4.1 million ounces of silver, 2,400 ounces of gold, 42.5 million pounds of lead, and 5.0 million pounds of zinc, compared to 4.7 million ounces of silver, 2,600 ounces of gold, 49.9 million pounds of lead, and 4.8 million pounds of zinc in prior year period.
The cash mining costs was $60.45 per tonne, an increase of 16% compared to $52.18 in the same prior year period. The increase was mainly due to more underground drilling and tunneling being expensed as mining preparation costs as well as the increase of raw material supply prices. The cash milling cost was $8.80 per tonne, a decrease of 5% compared to $9.31 in the same prior year period.
Cash cost per ounce of silver and all in sustaining costs per ounce of silver, net of by‐product credits, were negative $4.03 and $2.25 respectively, compared to negative $2.50 and $3.11 in the same prior year period.
Approximately 86,007 m or $1.7 million of underground diamond drilling (same prior year period – 71,794 m or $1.7 million) and 16,914 or $4.9 million of preparation tunnelling (same prior year period – 15,069 m or $4.2 million) were completed and expensed as mining preparation costs at the Ying Mining District. In addition, approximately 52,174 m or $16.2 million of horizontal tunnel, raises, and declines (same prior year period – 50,500 m or $15.2 million) were completed and capitalized.
2. GC Mine, Guangdong Province, China
| Operational results ‐ GC Mine | Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 | |
| Ore Mined (tonne) Ore Milled (tonne) | 85,665 88,494 | 65,812 64,865 40,224 81,481 63,648 65,944 39,929 81,080 |
| Head Grades Silver (gram/tonne) Lead (%) Zinc (%) | 97 1.4 2.8 | 102 98 91 89 1.4 1.6 1.3 1.4 2.8 2.7 2.6 2.8 |
| Recovery Rates Silver (%) Lead (%) Zinc (%) | 73.6 83.9 81.3 | 74.4 81.2 72.8 75.4 82.8 88.8 82.4 85.5 81.6 80.9 74.8 86.5 |
| Metal Sales Silver (in thousands of ounces) Lead (in thousands of pounds) Zinc (in thousands of pounds) | 196 2,263 4,399 | 155 189 53 179 1,656 2,147 818 2,214 3,311 4,244 455 4,478 |
| Cash mining cost ($ per tonne) Total mining cost ($ per tonne) Cash milling cost ($ per tonne) Total milling cost ($ per tonne) | 35.48 43.10 14.09 16.45 | 34.60 39.20 37.91 31.34 42.62 46.99 45.37 38.90 14.63 16.73 20.06 13.09 17.90 19.85 24.99 15.50 |
| Cash production cost ($ per tonne) Cash cost per ounce of silver ($) All‐in sustaining cost per ounce of silver ($) | 49.57 (15.34) (4.52) | 49.23 55.93 57.97 44.43 (13.56) (7.80) (1.72) (13.11) (3.77) (2.48) 14.55 (6.12) |
| Nine months ended December 31, 2017 2016 | |
| 216,341 218,086 | 220,522 220,767 |
| 99 1.5 2.8 | 94 1.5 2.9 |
| 76.1 85.2 81.2 | 76.2 86.3 86.3 |
| 540 6,066 11,954 | 511 6,237 11,991 |
| 36.33 44.12 14.60 17.46 | 31.04 39.05 13.76 16.47 |
| 50.93 (12.19) (3.59) | 44.80 (7.15) (1.29) |
(i) Q3 Fiscal 2018 vs. Q3 Fiscal 2017
In Q3 Fiscal 2018, the total ore mined at the GC Mine was 85,665 tonnes, an increase of 4,184 tonnes or 5%, compared to 81,481 tonnes mined in Q3 Fiscal 2017, while ore milled increased by 9% to 88,494 tonnes from 81,080 tonnes in the prior year quarter.
Head grades were 97 g/t for silver, 1.4% for lead, and 2.8% for zinc compared to 89 g/t for silver, 1.4% for lead, and 2.8% for zinc in the prior year quarter.
The GC Mine sold 196 thousand ounces of silver, 2.3 million pounds of lead, 4.4 million pounds of zinc, compared to 179 thousand ounces of silver, 2.2 million pounds of lead, and 4.5 million pounds of zinc sold in the prior year quarter.
Total and cash mining costs per tonne at the GC Mine in Q3 Fiscal 2018 were $43.10 and $35.48 per tonne, compared to $38.90 and $31.34 per tonne in Q3 Fiscal 2017. The increase in cash mining costs was mainly due to: i) a $0.2 million increase in mining preparation costs resulting from more underground drilling expensed in the current quarter, and ii) a $0.2 million increase in mining contractor fees.
Total and cash milling costs per tonne at the GC Mine in Q3 Fiscal 2018 were $16.45 and $14.09, compared to $15.50 and $13.09, respectively, in Q3 Fiscal 2017. The increase in milling costs was mainly due to a $0.2 million increase in raw material supply costs.
Correspondingly, the cash production costs per tonne of ore processed in Q3 Fiscal 2018 at the GC Mine increased to $49.57 from $44.43 in the prior year quarter.
Cash costs per ounce of silver, net of by‐product credits, at the GC Mine, was negative $15.34 compared to negative $13.11 in the prior year quarter. The improvement was mainly due to a $1.4 million or 23% increase in by‐product credits resulting from a 12% and 37% increase in net realized lead and zinc selling prices at the GC Mine.
All in sustaining costs per ounce of silver, net of by‐product credits, in Q3 Fiscal 2018 at the GC Mine was negative $4.52 compared to negative $6.12 in the prior year quarter.
Approximately 7,770 m or $0.4 million of underground diamond drilling (Q3 Fiscal 2017 – 3,935 m or $0.2 million) and 5,053 m or $1.2 million of tunnelling (Q3 Fiscal 2017 – 4,640 m or $1.3 million) were completed and expensed as mining preparation costs at the GC Mine. In addition, approximately 17 m or $0.1 million of horizontal tunnel, raises and declines (Q3 Fiscal 2017 – 554 m or $0.3 million) were completed and capitalized.
(ii) Nine months ended December 31, 2017 vs Nine months ended December 31, 2016
For the nine months ended December 31, 2017, a total of 216,341 tonnes of ore were mined and 218,086 tonnes were milled at the GC Mine compared to 220,522 tonnes mined and 220,767 tonnes milled in the same prior year period.
Average head grades were 99 g/t for silver, 1.5% for lead, and 2.8% for zinc compared to 94 g/t for silver, 1.5% for lead, and 2.9% for zinc, respectively, in the same prior year period.
Metals sold were 540 thousand ounces of silver, 6.1 million pounds of lead, and 12.0 million pounds of zinc, compared to 511 thousand ounces of silver, 6.2 million pounds of lead, and 12.0 million pounds of zinc in the same prior year period.
The cash mining costs at the GC Mine was $36.33 per tonne, an increase of 17% compared to $31.04 per tonne in the same prior year period. The increase in cash mining costs was mainly due to a $0.9 million increase in mining preparation costs as more underground drilling and tunnelling was expensed in the current period.
The cash milling costs was $14.60 per tonne, an increase of 6% compared to $13.76 in the same prior year period.
Cash costs per ounce of silver and all in sustaining costs per ounce of silver, net of by‐product credits, were negative $12.19 and negative $3.59 respectively, compared to negative $7.15 and $1.29 in the same prior year period. The improvement is mainly due to higher by‐product credits achieved arising from a 12% and 37% increase, respectively, in lead and zinc realized selling prices.
Approximately 18,253 m or $0.9 million of underground diamond drilling (same prior year period – 9,489 m or $0.6 million) and 14,285 m or $3.8 million of tunnelling (same prior year period – 11,976 m or $3.2 million) were completed and expensed as mining preparation costs at the GC Mine. In addition, approximately 280 m or $0.2 million of horizontal tunnel, raise, and declines (same prior year period – 1,685 m or $0.7 million) were completed and capitalized.
FISCAL 2019 PRODUCTION AND CASH COST GUIDANCE
| Ore processed | Silver | Lead | Zinc | ||
|---|---|---|---|---|---|
| (tonnes) | (g/t) | (%) | (%) | ||
| Ying Mining District | 630,000 | 285 | 4.3 | 0.9 | |
| GC Mine | 250,000 | 98 | 1.6 | 3.0 | |
| Silver | Lead | Zinc | Cash cost* | AISC* | |
| (Moz) | (Mlbs) | (Mlbs) | ($/t) | ($/t) | |
| Ying Mining District | 5.4 | 56.1 | 6.2 | 75.4 | 123.7 |
| GC Mine | 0.6 | 7.5 | 13.6 | 57.2 | 75.5 |
| Consolidated | 6.0 | 63.6 | 19.8 | 70.2 | 122.2 |
(*) Both AISC and cash cost are non‐IFRS measures. AISC refers to all‐in sustaining cost per tonne of ore processed. Cash cost refers to cash production costs per tonne of ore processed. Foreign exchange rates assumptions used are: US$1 = CAD$1.25, US$1 = RMB¥6.50.
In Fiscal 2019, the Company expects to process approximately 880,000 tonnes of ore, yielding 6.0 million ounces of silver, 63.6 million pounds of lead, and 19.8 million pounds of zinc. Fiscal 2019 production guidance represents an increase of approximately 4% in silver production, 1% in lead production, and 8% in zinc production compared to the prior year’s guidance released on February 2, 2017.
1. Ying Mining District, Henan Province, China
In Fiscal 2019, Ying Mining District plans to mine and process 630,000 tonnes of ore averaging 285 g/t silver, 4.3% lead, and 0.9% zinc with expected metal production of 5.4 million ounces of silver, 56.1 million pounds of lead, and 6.2 million pounds of zinc. Fiscal 2019 production guidance at the Ying Mining District represents an increase of approximately 4% in silver head grade and 2% in lead head grade compared to prior year’s guidance. Metal production is comparable to prior year’s guidance.
The cash production costs is expected to be $75.4 per tonne of ore, and the all‐in sustaining costs is estimated at $123.7 per tonne of ore processed.
Capital expenditures at the Ying Mining District in Fiscal 2019 are budgeted at $31.8 million, including $23.2 million for mine tunnelling and ramp development and $8.6 million for equipment and infrastructure.
2. GC Mine, Guangdong Province, China
In Fiscal 2019, GC Mine plans to mine and process 250,000 tonnes of ore averaging 98 g/t silver, 1.6% lead, and 3.0% zinc with expected metal production of 0.6 million ounces of silver, 7.5 million pounds of lead and 13.6 million pounds of zinc. Fiscal 2019 represents an increase of approximately 50% in silver production, 6% in lead production, and 11% in zinc production.
The cash production costs is expected to be $57.2 per tonne of ore, and the all‐in sustaining costs would be $57.2 per tonne of ore processed.
Capital expenditures at GC Mine in Fiscal 2019 are budgeted at $3.0 million, including $1.7 million for mine tunnelling and ramp development and $1.3 million for equipment and infrastructure.
Mr. JianZhao Yin, P.Geo., is the Qualified Person for Silvercorp under NI 43‐101 and has reviewed and given consent to the technical information contained in this news release.
| This earnings release should be read in conjunction with the Company's Management Discussion & | |||
|---|---|---|---|
| Analysis, Financial Statements and Notes to Financial Statements for the corresponding period, which have | |||
| been posted on SEDAR at | and are also available on the Company's website | ||
| at | www.silvercorp.ca | . |
About Silvercorp
Silvercorp is a low‐cost silver‐producing Canadian mining company with multiple mines in China. The Company's vision is to deliver shareholder value by focusing on the acquisition of under developed projects with resource potential and the ability to grow organically. For more information, please visit our website at www.silvercorp.ca.
For further information
Silvercorp Metals Inc.
Lorne Waldman Senior Vice President Phone: (604) 669‐9397 Toll Free 1(888) 224‐1881 Email: [email protected] Website: www.silvercorp.ca
CAUTIONARY DISCLAIMER ‐ FORWARD LOOKING STATEMENTS
Certain of the statements and information in this press release constitute “forward‐looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward‐looking information” within the meaning of applicable Canadian provincial securities laws. Any statements or information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategies”, “targets”, “goals”, “forecasts”, “objectives”, “budgets”, “schedules”, “potential” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward‐looking statements or information. Forward‐looking statements or information relate to, among other things: the price of silver and other metals; the accuracy of mineral resource and mineral reserve estimates at the Company’s material properties; the sufficiency of the Company’s capital to finance the Company’s operations; estimates of the Company’s revenues and capital expenditures; estimated production from the Company’s mines in the Ying Mining District; timing of receipt of permits and regulatory approvals; availability of funds from production to finance the Company’s operations; and access to and availability of funding for future construction, use of proceeds from any financing and development of the Company’s properties.
Forward‐looking statements or information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward‐looking statements or information, including, without limitation, risks relating to: fluctuating commodity prices; calculation of resources, reserves and mineralization and precious and base metal recovery; interpretations and assumptions of mineral resource and mineral reserve estimates; exploration and development programs; feasibility and engineering reports; permits and licences; title to properties; property interests; joint venture partners; acquisition of commercially mineable mineral rights; financing; recent market events and conditions; economic factors affecting the Company; timing, estimated amount, capital and operating expenditures and economic returns of future production; integration of future acquisitions into the Company’s existing operations; competition; operations and political conditions; regulatory environment in China and Canada; environmental risks; foreign exchange rate fluctuations; insurance; risks and hazards of mining operations; key personnel; conflicts of interest; dependence on management; internal control over financial reporting as per the requirements of the Sarbanes‐Oxley Act; and bringing actions and enforcing judgments under U.S. securities laws.
This list is not exhaustive of the factors that may affect any of the Company’s forward‐looking statements or information. Forward‐looking statements or information are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward‐looking statements or information due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in the Company’s Annual Information Form for the year ended March 31, 2017 under the heading “Risk Factors”. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward‐ looking statements or information.
The Company’s forward‐looking statements and information are based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward‐looking statements and information if circumstances or management’s assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward‐looking statements and information.
Consolidated Statements of Financial Position
As at December 31, As at March 31, 2017 2017
ASSETS Current Assets
Cash and cash equivalents $ 66,274 $ 73,003
| Short‐term investments | 46,986 | 23,466 |
| Trade and other receivables | 1,205 | 1,311 |
| Inventories | 13,631 | 8,710 |
| Due from a related party | 25 | 92 |
| Prepaids and deposits | 3,972 | 4,250 |
132,093 110,832
Non‐current Assets
| Long‐term prepaids and deposits | 962 | 959 |
| Reclamation deposits | 5,363 | 5,054 |
| Investment in an associate | 33,902 | 8,517 |
| Other investments | 6,800 | 1,207 |
| Plant and equipment | 68,814 | 65,201 |
| Mineral rights and properties | 223,935 | 206,200 |
TOTAL ASSETS $
471,869 $ 397,970
LIABILITIES AND EQUITY Current Liabilities
Accounts payable and accrued liabilities $ 34,799 $ 30,374 Deposits received 7,351 6,798 Income tax payable 5,037 2,985 47,187 40,157
Non‐current Liabilities
| Deferred income tax liabilities | 31,516 | 27,692 |
| Environmental rehabilitation | 13,215 | 12,186 |
| Total Liabilities | 91,918 | 80,035 |
Equity
| Share capital | 230,844 | 232,155 |
| Share option reserve | 14,343 | 13,325 |
| Reserves | 25,409 | 25,409 |
| Accumulated other comprehensive loss | (32,164) | (50,419) |
| Retained earnings | 74,089 | 42,651 |
| Total equity attributable to the equity holders of the Company | 312,521 | 263,121 |
| Non‐controlling interests | 67,430 | 54,814 |
| Total Equity | 379,951 | 317,935 |
TOTAL LIABILITIES AND EQUITY $
471,869 $ 397,970
Consolidated Statements of Income
(Unaudited ‐ Expressed in thousands of U.S. dollars, except for per share figures)
Three Months Ended December 31, Nine Months Ended December 31, 2017 2016 2017 2016
Sales $ 44,352 $ 47,838 $ 131,590 $ 129,407
Cost of sales
| Production costs | 15,553 | 14,921 | 45,839 | 42,863 |
| Mineral resource taxes | 1,255 | 1,361 | 3,683 | 2,802 |
| Depreciation and amortization | 4,378 | 5,178 | 13,291 | 15,861 |
| 21,186 | 21,460 | 62,813 | 61,526 | |
| Gross profit | 23,166 | 26,378 | 68,777 | 67,881 |
| General and administrative | 4,915 | 3,950 | 13,958 | 12,462 |
| Government fees and other taxes | 902 | 1,050 | 2,433 | 3,476 |
| Foreign exchange (gain) loss | (236) | (444) | 2,490 | (536) |
| Loss on disposal of plant and equipment | 148 | 392 | 324 | 457 |
| Gain on disposal of NSR | ‐ | ‐ | (4,320) | ‐ |
| Share of loss (income) in associate | 142 | 126 | 511 | (160) |
| Dilution gain on investment in associate | (822) | ‐ | (822) | ‐ |
Reclassification of other comprehensive loss upon ownership dilution of
| investment in associate | 18 | ‐ | 18 | ‐ |
| Impairment of plant and equipment and mineral rights and properties | ‐ | ‐ | ‐ | 181 |
| Other income | (1,560) | (201) | (1,867) | (324) |
| Income from operations | 19,659 | 21,505 | 56,052 | 52,325 |
| Finance income | 822 | 647 | 2,046 | 1,615 |
| Finance costs | (112) | (161) | (329) | (685) |
| Income before income taxes | 20,369 | 21,991 | 57,769 | 53,255 |
| Income tax expense | 4,302 | 5,353 | 13,586 | 14,091 |
| Net income | $16,067 $16,638 | $44,183 $39,164 |
Attributable to:
Equity holders of the Company $ 12,718 $ 13,115 $ 34,800 $ 30,167 Non‐controlling interests 3,349 3,523 9,383 8,997 $ 16,067 $ 16,638 $ 44,183 $ 39,164
Earnings per share attributable to the equity holders of the Company
Basic earnings per share $ 0.08 $ 0.08 $ 0.21 $ 0.18 Diluted earnings per share $ 0.07 $ 0.08 $ 0.20 $ 0.18 Weighted Average Number of Shares Outstanding ‐ Basic 168,077,624 167,192,640 168,003,035 167,048,582 Weighted Average Number of Shares Outstanding ‐ Diluted 169,782,024 171,284,390 169,992,421 171,115,860
Consolidated Statements of Cash Flow
Three Months Ended December 31, Nine Months Ended December 31, 2017 2016 2017 2016
Cash provided by Operating activities
Net income $ 16,067 $ 16,638 $ 44,183 $ 39,164 Add (deduct) items not affecting cash:
| Finance costs | 112 | 161 | 329 | 685 |
| Depreciation, amortization and depletion | 4,683 | 5,463 | 14,176 | 16,812 |
| Share of loss (income) in associate | 142 | 126 | 511 | (160) |
| Dilution gain on investment in associate | (822) | ‐ | (822) | ‐ |
Reclassification of other comprehensive loss upon ownership dilution of
| investment in associate | 18 | ‐ | 18 | ‐ |
| Gain on disposal of NSR | ‐ | ‐ | (4,320) | ‐ |
| Impairment of plant and equipment and mineral rights and properties | ‐ | ‐ | ‐ | 181 |
| Income tax expense | 4,302 | 5,353 | 13,586 | 14,091 |
| Finance income | (822) | (647) | (2,046) | (1,615) |
| Loss on disposal of plant and equipment | 148 | 392 | 324 | 457 |
| Share‐based compensation | 458 | 214 | 1,144 | 654 |
| Income taxes paid | (2,065) | (1,115) | (9,647) | (4,030) |
| Interest received | 822 | 647 | 2,046 | 1,615 |
| Interest paid | ‐ | (853) | ‐ | (954) |
| Changes in non‐cash operating working capital | 4,431 | 1,955 | 5,598 | 8,656 |
| Net cash provided by operating activities | 27,474 | 28,334 | 65,080 | 75,556 |
Investing activities
Mineral rights and properties Capital expenditures (5,705) (14,897) (16,638) (25,605) Plant and equipment Additions (1,724) (1,433) (4,455) (4,556) Proceeds on disposals ‐ 19 19 51 Other investments
| Acquisition | ‐ | (782) | ‐ | (782) |
| Proceeds on disposals | ‐ | ‐ | ‐ | 33 |
| Reclamation | (17) | (1,775) | (36) | (2,160) |
| Investment in associate | (3,836) | ‐ | (23,861) | ‐ |
| Net purchases of short‐term investments | 10,422 | (5,542) | (21,345) | (11,518) |
| Net cash used in investing activities | (860) | (24,410) | (66,316) | (44,537) |
Financing activities
Non‐controlling interests
| Distribution | ‐ | ‐ | (4,891) | (1,460) |
| Cash dividends distributed | (1,683) | (1,585) | (3,362) | (1,585) |
| Proceeds from issuance of common shares | 174 | 192 | 342 | 489 |
| Common shares repurchased as part of normal course issuer bid | (1,779) | ‐ | (1,779) | ‐ |
| Net cash used in financing activities | (3,288) | (1,393) | (9,690) | (2,556) |
| Effect of exchange rate changes on cash and cash equivalents | 1,579 | (2,041) | 4,197 | (3,452) |
| Increase (decrease) in cash and cash equivalents | 24,905 | 490 | (6,729) | 25,011 |
| Cash and cash equivalents, beginning of the period | 41,369 | 66,484 | 73,003 | 41,963 |
| Cash and cash equivalents, end of the period | $66,274 $66,974 | $66,274 $ |
66,974