Silvercorp Reports Q2 Fiscal 2017 Results: Net Income up 454%, Cash Flows from Operations of $27.0 Million on Record Silver Production

Trading Symbol: TSX: SVM

VANCOUVER, Nov. 3, 2016 /CNW/ - Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX: SVM) reported its financial and operating results for the second quarter ended September 30, 2016 ("Q2 Fiscal 2017").  All amounts are expressed in US Dollars.

SECOND QUARTER HIGHLIGHTS

  • Net income attributable to equity shareholders of $12.4 million, or $0.07 per share, up 454% compared with net earnings attributable to equity shareholders of $2.2 million or $0.01 per share in the prior year period;
  • Silver, lead and zinc sales up 44%, 51%, and 27%, respectively, from the prior year period, to approximately 1.8 million ounces silver, 19.9 million pounds lead, and 5.9 million pounds zinc;
  • Sales of $46.3 million, up 70% from the prior year period;
  • A 16%, 21%, and 22% increase in the head grades of silver, lead, and zinc;
  • Gross margin improved to 58% from 32% in the prior year period;
  • Cash flows from operations of $27.0 million, an increase of $22.4 million compared to $4.6 million in the prior year period;
  • Cash production cost per tonne1 of $55.84 compared with $70.49 in the prior year period;
  • Cash cost per ounce of silver1, net of by-product credits, of negative $3.05, compared to $1.52 in the prior year period;
  • All-in sustaining cost per ounce of silver1, net of by-product credits, of $3.16, compared to $12.40 in the prior year quarter; and
  • Ended the period with $92.1 million in cash and short term investments, an increase of $30.1 million compared to $62.0 million as at March 31, 2016.

_____________________________

1

Non-IFRS measure, see section 9 of the corresponding management's discussion and analysis for reconciliation

 

FINANCIALS

Net income attributable to the shareholders of the Company in Q2 Fiscal 2017 was $12.4 million, or $0.07 per share, up 454% compared to $2.2 million, or $0.01 per share in Q2 Fiscal 2016.

In the current quarter, the Company's financial results were mainly impacted by the following: i) improved head grades yielded higher silver, lead, zinc sales, up 44%, 51% and 27%, respectively; ii) a 14% decrease in total production costs per tonne of ore processed; and iii) the increase of metals prices, as the realized selling price for silver, lead, and zinc increased by 27%, 3% and 22%, respectively, compared to the same prior year quarter.

Sales in Q2 Fiscal 2017 were $46.3 million, up 70% compared to $27.2 million in Q2 Fiscal 2016.  Silver and gold sales represented $27.0 million and $1.1 million, respectively, while base metals represented $18.2 million of total sales in this quarter compared to silver, gold and base metals of $14.7 million, $0.5 million, and $12.0 million, respectively, in Q2 Fiscal 2016.

Cost of sales in Q2 Fiscal 2017 was $19.5 million compared to $18.4 million in Q2 Fiscal 2016.  The cost of sales included $13.8 million (Q2 Fiscal 2016 - $14.4 million) cash costs and $5.7 million (Q2 Fiscal 2016 - $4.0 million) depreciation, amortization and depletion charges. The decrease of cash cost of sales was mainly due to a 21% decrease in cash production costs per tonne of ore processed offset by an increase of metals sold.  The total per tonne ore production cost was $79.61 in Q2 Fiscal 2017, a decrease of 14%, from $92.19 in Q2 Fiscal 2016.

Gross profit margin in Q2 Fiscal 2017 was 58% compared to 32% in Q2 Fiscal 2016.  The improvement of gross profit margin was mainly due to: i) the improvement of head grades; ii) the decrease of per tonne ore production costs; and iii) the increase of metal prices. Ying Mining District's gross profit margin was 61% compared to a 35% gross profit margin in the same prior year quarter, while GC Mine's profit margin was 38% compared to a 18% gross profit margin in Q2 Fiscal 2016.

Cash flows provided by operating activities were $27.0 million or $0.16 per share in Q2 Fiscal 2017 compared to $4.6 million or $0.03 per share in Q2 Fiscal 2016.  Before changes in non-cash operating working capital, cash flows provided by operating activities were $24.9 million, an increase of $15.7 million, compared to $9.2 million in Q2 Fiscal 2016 as a result of the improvement of operating earnings.

For the six months ended September 30, 2016, net income attributable to the shareholders of the Company was $17.1 million, or $0.10 per share, up 276% compared to $4.5 million, or $0.03 per share in the same period prior year; sales were $81.6 million, up 37% from $59.4 million in the same prior year period; and cash flows provided by operating activities were $47.2 million or $0.28 per share compared to $18.0 million or $0.11 per share in the same prior year period.   Before changes in non-cash operating working capital, cash flows provided by operating activities for the six months ended September 30, 2016 were $40.5 million, an increase of $22.0 million or 119%, compared to $18.5 million in the same prior year period.

The Company ended the period with $92.1 million in cash and short term investments, an increase of $30.1 million or 48.5% compared to $62.0 million as at March 31, 2016.

OPERATIONS AND DEVELOPMENT

In Q2 Fiscal 2017, the Company sold approximately 1.8 million ounces of silver, 19.9 million pounds of lead, and 5.9 million pounds of zinc, up 44%, 51% and 27%, respectively, compared to 1.3 million ounces of silver, 13.2 million pounds of lead, and 4.6 million pounds of zinc in Q2 Fiscal 2016.  The increase of metals sold on a consolidated basis, was mainly due to: i) a 16%, 21%, and 22% increase in the head grades of silver, lead and zinc, resulting largely from the ongoing dilution control measures and operation management improvements; ii) a 4% increase of ore milled; and iii) an increase in silver-lead concentrate inventories of 1,798 tonnes to 2,228 tonnes in Q2 Fiscal 2016 at the Ying Mining District. As at the end of Q2 Fiscal 2017, Ying Mining District held 3,880 tonnes of silver-lead concentrate inventories, and the estimated metals contained in silver-lead concentrate were approximately 0.4 million ounces of silver and 4.5 million pounds of lead.    

For the six months ended September 30, 2016, on a consolidated basis, the Company sold approximately 3.5 million ounces of silver, 36.7 million pounds of lead, and 11.1 million pounds of zinc, up 31%, 33% and 23% compared to the same prior year period.

1. Ying Mining District, Henan Province, China

Operational results - Ying Mining District















Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016


Six Months ended
September 30,


 September 30, 2016 

 June 30, 2016 

 March 31, 2016 

 December 31, 2015 

 September 30, 2015 


2016

2015

Ore Mined (tonne)  

179,194

173,508

99,415

152,230

171,014


352,702

338,120

Ore Milled (tonne)  

180,154

167,747

99,203

151,035

176,936


347,901

337,213

Head Grades  










Silver (gram/tonne)

302

308

310

287

246


305

252


Lead (%)

4.9

4.4

4.0

4.1

3.8


4.7

3.7


Zinc (%)

1.1

1.1

0.9

0.8

0.7


1.1

0.8

Recoveries 










Silver (%)

95.5

95.7

95.0

95.4

94.8


95.6

94.7


Lead (%)

96.3

96.4

96.3

96.6

95.0


96.3

95.0


Zinc (%)

42.9

48.4

57.6

50.2

55.1


45.5

54.1

Metal Sales  










Silver (in thousands of ounce)

1,630

1,490

857

1,216

1,132


3,120

2,321


Gold (in thousands of ounce)

1.0

0.9

0.3

0.5

0.7


1.9

1.5


Lead (in thousands of pound)

17,768

14,861

7,379

12,107

11,529


32,629

23,456


Zinc (in thousands of pound)

1,785

1,820

999

1,168

1,459


3,605

2,831

Cash mining cost ($ per tonne)  

49.13

52.33

54.63

55.63

62.15


50.70

59.43

Total mining cost ($ per tonne)  

76.30

78.64

83.24

78.91

86.29


77.44

80.71

Cash milling cost ($ per tonne)  

8.85

10.07

13.70

11.67

11.55


9.44

12.23

Total milling cost ($ per tonne)  

10.86

12.25

17.38

14.15

13.70


11.53

14.51

Cash production cost ($ per tonne) 

61.79

66.27

71.90

71.29

77.95


63.98

75.81










Cash cost per ounce of silver ($) 

(2.68)

0.12

2.83

0.25

1.88


(1.34)

1.44

All-in sustaining cost per ounce of
silver ($) 

2.33

5.80

8.92

6.62

9.88


3.99

9.52


* Figures may not add due to rounding

In Q2 Fiscal 2017, the total ore mined at the Ying Mining District was 179,194 tonnes, an increase of 5% compared to total ore production of 171,014 tonnes in Q2 Fiscal 2016.  Silver, lead and zinc head grades improved by 23%, 28%, and 53%, respectively, to 302 grams per tonne ("g/t") for silver, 4.9% for lead, and 1.1% for zinc from 246 g/t for silver, 3.8% for lead, and 0.7% for zinc, respectively, in Q2 Fiscal 2016, resulting largely from the ongoing dilution control and operation management improvements.

In Q2 Fiscal 2017, the Ying Mining District sold approximately 1.6 million ounces of silver, 1,000 ounces of gold, 17.8 million pounds of lead, and 1.8 million pounds of zinc, up 44%, 43%, 54%, and 22% respectively, compared to 1.1 million ounces of silver, 700 ounces of gold, 11.5 million pounds of lead, and 1.5 million pounds of zinc in Q2 Fiscal 2016. The increase in metals sold is mainly due to: i) the improved head grades achieved and higher ore production in the quarter, and ii) an increase in  silver-lead concentrate inventories of 1,798 tonnes to 2,228 tonnes in the prior year quarter as the Company started intentionally to increase its concentrate inventories in reaction to the low metal prices in Q2 Fiscal 2016.

Total and cash mining costs per tonne in Q2 Fiscal 2017 were $76.30 and $49.13, respectively, compared to $86.29 and $62.15, respectively, in Q2 Fiscal 2016. The decrease in cash mining costs was mainly due to: i) a 22% decrease in contractor costs; ii) a 24% saving on raw material and maintenance costs; and offset by a 10% increase in labour costs.

Total ore milled at the Ying Mining District in Q2 Fiscal 2017 was 180,154 tonnes, an increase of 2% compared to 176,936 tonnes in Q2 Fiscal 2016. Cash milling costs in Q2 Fiscal 2017 were $8.85 compared to $11.55 in Q2 Fiscal 2016, and the decrease was mainly due to: i) a 7% reduction on utility costs; ii) a 6% decrease in raw material and maintenance costs; and iii) the exclusion of mineral resource tax from milling costs. Prior to June 30, 2016, mineral resource tax was levied at RMB¥13.0 per tonne of ore milled and included as part of milling costs. Effective July 1, 2016, mineral resource tax was changed to a levy based on a certain percentage of sales, and therefore such tax is excluded from milling costs but expensed directly and included in government fee and other taxes.   

Cash production cost per tonne of ore processed at the Ying Mining District in Fiscal Q2 2017 was $61.79, a decrease of 21% compared to $77.95 in Q2 Fiscal 2016 as a result of the decrease in both per tonne cash mining and milling cost.

Cash cost per ounce of silver, net of by-product credits, at the Ying Mining District, was negative $2.68 in Q2 Fiscal 2017 compared to $1.88 in Q2 Fiscal 2016. The decrease was mainly due to: i) lower per tonne cash production costs as discussed above; and ii) a 60% increase in by-product credits, arising from more lead and zinc sold and higher metal prices.

All in sustaining costs per ounce of silver, net of by-product credits, at the Ying Mining District in Q2 2017 was $2.33 per ounce of silver compared to $9.88 in Q2 Fiscal 2016. The decrease was mainly due to: i) lower per tonne cash production cost and the increase in by-product credits as discussed above; and ii) a $0.7 million decrease in sustaining capital expenditures.

For the six months ended September 30, 2016, the total ore mined at the Ying Mining District was 352,702 tonnes, up 4% compared to 338,120 tonnes in the same prior year period. Correspondingly, total ore milled was 347,901 tonnes, up 3% compared to 337,213 tonnes. Average head grades were 305 g/t for silver, 4.7% for lead, and 1.1% for zinc compared to 252 g/t for silver, 3.7% for lead, and 0.8% for zinc, respectively.

During the same time periods, the Ying Mining District sold approximately 3.1 million ounces of silver, 1,900 ounces of gold, 32.6 million pounds of lead, and 3.6 million pounds of zinc, compared to 2.3 million ounces of silver, 1,500 ounces of gold, 23.5 million pounds of lead, and 2.8 million pounds of zinc in prior year period.

For the six months ended September 30, 2016, the cash mining costs at the Ying Mining District was $50.70 per tonne, a decrease of 15% compared to $59.43 per tonne in the same prior year period. The cash milling cost was $9.44 per tonne, a decrease of 23% compared to $12.23 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, at the Ying Mining District, for the six months ended September 30, 2016, were negative $1.34 and $3.99 respectively, compared to $1.44 and $9.52 in the same prior year period.  

In Q2 Fiscal 2017, approximately 22,188 meters ("m") of underground diamond drilling (Q2 Fiscal 2016 – 22,846 m) and 5,333 m of preparation tunnelling (Q2 Fiscal 2016 – 6,507 m) were completed and expensed as mining preparation costs at the Ying Mining District. In addition, approximately 16,013 m of horizontal tunnel, raise, and declines (Q2 Fiscal 2016 – 17,271 m) were completed and capitalized. Total capitalized exploration and development expenditures in Q2 Fiscal 2017 for the Ying Mining District were $4.8 million compared to $5.7 million in Q2 Fiscal 2016.

For the six months ended September 30, 2016, approximately 35,038 m of underground diamond drilling (same prior year period – 39,212 m) and 10,169 m of preparation tunnelling (same prior year period – 12,563 m) were completed and expensed as mining preparation costs at the Ying Mining District. In addition, approximately 32,677 m of horizontal tunnel, raise, and declines (same prior year period – 35,790 m) were completed and capitalized. Total capitalized exploration and development expenditures for the six months ended September 30, 2016 for the Ying Mining District were $9.7 million compared to $11.8 million in same prior year period. The Company also paid $1.3 million to renew the mining permit for TLP and LM mine.

2.  GC Mine, Guangdong Province, China

Operational results - GC Mine

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016


Six Months ended
September 30,


September 30, 2016

June 30, 2016

March 31, 2016

December 31, 2015

September 30, 2015


2016

2015

Ore Mined (tonne)  

74,692

64,349

50,014

71,288

69,546


139,041

136,273

Ore Milled (tonne)  

76,100

63,587

50,124

71,593

68,465


139,687

135,145

Head Grades  










Silver (gram/tonne)

96

99

92

97

107


97

107


Lead (%)

1.6

1.5

2.0

1.9

1.4


1.5

1.4


Zinc (%)

2.8

2.9

2.7

2.6

2.8


2.9

2.8

Recovery Rates 










Silver (%)

76.2

76.8

79.1

80.2

77.0


76.5

77.5


Lead (%)

86.6

86.9

84.9

88.3

89.5


86.7

88.6


Zinc (%)

86.4

85.8

82.6

81.2

82.7


86.1

82.9

Metal Sales  










Silver (in thousands of ounce)

183

149

118

210

128


332

309


Lead (in thousands of pound)

2,163

1,860

1,970

3,021

1,632


4,023

4,052


Zinc (in thousands of pound)

4,106

3,407

2,576

3,525

3,172


7,513

6,201

Cash mining cost ($ per tonne)  

28.61

33.50

26.24

38.22

36.49


30.87

42.49

Total mining cost ($ per tonne)  

36.78

41.91

34.76

46.52

44.68


39.15

50.63

Cash milling cost ($ per tonne)  

12.94

15.60

16.99

15.16

15.81


14.15

15.67

Total milling cost ($ per tonne)  

15.57

18.81

20.67

17.30

18.05


17.05

17.94

Cash production cost ($ per tonne) 

41.55

49.10

43.23

53.38

52.30


45.02

58.16










Cash cost per ounce of silver ($) 

(6.39)

(0.28)

(2.24)

4.62

(1.69)


(3.65)

1.52

All-in sustaining cost per ounce of
silver ($) 

(1.49)

4.76

1.19

9.80

13.73


1.32

11.04










* Figures may not add due to rounding






 

In Q2 Fiscal 2017, the Company mined 74,692 tonnes of ore at the GC Mine, an increase of 7% compared to 69,546 tonnes in Q2 Fiscal 2016. Head grades were 96 g/t for silver, 1.6% for lead and 2.8% for zinc, compared to 107 g/t for silver, 1.4% for lead and 2.8% for zinc in Q2 Fiscal 2016. The total mining cost and cash mining cost were $36.78 and $28.61, respectively, compared to $44.68 and $36.49 in Q2 Fiscal 2016. The decrease of cash mining costs was mainly because approximately 24% of ore was by-product ore from exploration tunnelling or extracted from previously mined stopes for which direct mining costs were paid in prior periods and the only cost involved was to ship the ore to the mill.

Total ore milled at the GC Mine in Q2 Fiscal 2017 was 76,100 tonnes, an increase of 11% compared to 68,465 tonnes in Q2 Fiscal 2016. The cash milling cost per tonne was $12.94, compared to $15.81 in Q2 Fiscal 2016, with the decrease mainly due to the exclusion of mineral resource tax from milling costs as discussed above.

Correspondingly, cash production cost per tonne of ore processed at the GC Mine was $41.55, a decrease of 21% compared to $52.30 in Q2 Fiscal 2016 as a result of the decrease in both per tonne cash mining and milling cost.

In Q2 Fiscal 2017, the GC Mine sold approximately 0.2 million ounces of silver, 2.2 million pounds of lead, and 4.1 million pounds of zinc, up 43%, 33% and 29% respectively, compared to 0.1 million ounces of silver, 1.6 million pounds of lead, and 3.2 million pounds of zinc in Q2 Fiscal 2016. The increase of metals sold at GC Mine was mainly due to higher output achieved.

Cash cost per ounce of silver, net of by-product credits, at the GC Mine, was negative $6.39 in Q2 Fiscal 2017 compared to negative $1.69 in Q2 Fiscal 2016. The decrease was mainly due to i) lower per tonne cash production costs as discussed above; and, ii) a 38% increase in by-product credits.

All in sustaining costs per ounce of silver, net of by-product credits, at the GC Mine in Q2 2017 was negative $1.49, compared to $13.73 in Q2 Fiscal 2016. The decrease was mainly due to: i) lower per tonne cash production cost and the increase of by-product credits as discussion above: and, ii) a $1.0 million decrease in sustaining capital expenditures.

For the six months ended September 30, 2016, the total ore mined at the GC Mine was 139,041 tonnes, an increase of 2% compared to 136,273 tonnes in the same prior year period. Correspondingly, total ore milled was 139,687 tonnes, an increase of 3% compared to 135,145 milled in the same prior year period. Average head grades were 97 g/t for silver, 1.5% for lead, and 2.9% for zinc compared to 107 g/t for silver, 1.4% for lead, and 2.8% for zinc, respectively.

During the same time periods, the GC Mine sold approximately 0.3 million ounces of silver, 4.0 million pounds of lead, and 7.5 million pounds of zinc, compared to 0.3 million ounces of silver, 4.1 million pounds of lead, and 6.2 million pounds of zinc in the same prior year period.

For the six months ended September 30, 2016, the cash mining costs at the GC Mine was $30.87 per tonne, a decrease of 27% compared to $42.49 per tonne in the same prior year period. The cash milling cost was $14.15 per tonne, a decrease of 10% compared to $15.67 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, at the GC Mine, for the six months ended September 30, 2016, were negative $3.65 and $1.32 respectively, compared to $1.52 and $11.04 in the same prior year period.  

In Q2 Fiscal 2017, approximately 2,245 m of underground diamond drilling (Q2 Fiscal 2016 – 6,882 m) and 3,850 m of tunnelling (Q2 Fiscal 2016 – 3,082 m) were completed and expensed as mining preparation costs at the GC Mine. In addition, approximately 606 m of horizontal tunnel, raise, and declines (Q2 Fiscal 2016 – 530 m) were completed and capitalized. Total capitalized exploration and development expenditures in Q2 Fiscal 2017 for the GC Mine were $0.2 million compared to $0.3 million in Q2 Fiscal 2016.

For the six months ended September 30, 2016, approximately 5,554 m of underground diamond drilling (same prior year period – 14,298 m) and 7,336 m of tunnelling (same prior year period – 7,736 m) were completed and expensed as mining preparation costs at the GC Mine. In addition, approximately 1,188 m of horizontal tunnel, raise, and declines (same prior year period – 685 m) were completed and capitalized. Total capitalized exploration and development expenditures were $0.4 million compared to $0.5 million in the same prior year period.

The significant improvement in the head grades of silver, lead and zinc and improved cost structures since the December quarter of 2015 can be attributed in part to an internal "Enterprise Blog" system in the management of Mine Production and Safety Information which the Company implemented from August 2015.   

The "Enterprise Blog" is an internet social media system that makes the distribution and flow of the work related knowledge and information easy and transparent for parties at different locations. In the system, for example, each of the mining stopes, development faces, or equipment is assigned a "blog" name. Daily results of onsite inspection for these stopes or faces by responsible engineers are required to be "published" on their "blogs". The results are listed in a structured data formatted in a "check list table", containing information and supporting photos as required by the Company.   Related parties at different levels of the management team can access directly to the daily "blog" for each work place, for first hand information.  Meanwhile the "Enterprise Blog" system will also record if a management person has accessed the "blog" to read or comment on the daily results under his responsibility.

With the Enterprise Blog, information collection, distribution, retrieval, and monitoring has become transparent and immediate.  The information and knowledge collected by the frontline technicians or engineers freely flows throughout layers of the management structure.    The responsible management person has the pressure, incentive, and tools to make prompt and more accurate decisions that can be instantly delivered to responsible parties.  The benefits of the system are that team member collaboration becomes easy, KPI assessments are fair and timely, and each person is accountable for his work.

Alex Zhang, P.Geo., Vice President, Exploration, 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 www.sedar.com and are also available on the Company's website at www.silvercorp.ca. All figures are in United States dollars unless otherwise stated.

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.

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, 2016 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.

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited - Expressed in thousands of U.S. dollars)






As at September 30,


As at March 31,



2016



2016

ASSETS






Current Assets







Cash and cash equivalents

$

66,484


$

41,963


Short-term investments


25,659



19,999


Trade and other receivables


1,200



2,041


Inventories


10,045



8,857


Due from related parties


40



103


Income tax receivable


-



394


Prepaids and deposits


4,109



3,960



107,537



77,317







Non-current Assets







Long-term prepaids and deposits


1,426



1,856


Reclamation deposits


2,605



2,301


Investment in an associate


3,309



3,133


Other investments


391



287


Plant and equipment


68,720



71,045


Mineral rights and properties


210,686



216,080

TOTAL ASSETS

$

394,674


$

372,019







LIABILITIES AND EQUITY






Current Liabilities







Accounts payable and accrued liabilities                               

$

31,484


$

27,457


Bank loan


4,504



4,657


Mine right fee payable


3,927



3,970


Deposits received


7,590



5,849


Income tax payable


2,251



-


Due to related parties


-



179



49,756



42,112







Non-current Liabilities







Mine right fee payable


5,733



5,796


Deferred income tax liabilities


25,563



23,224


Environmental rehabilitation


14,064



14,328

Total Liabilities


95,116



85,460







Equity







Share capital


231,330



230,933


Share option reserve


12,968



12,628


Reserves


25,409



25,409


Accumulated other comprehensive loss


(43,216)



(35,994)


Retained earnings


17,614



562

Total equity attributable to the equity holders of the Company


244,105



233,538







Non-controlling interests


55,453



53,021

Total Equity


299,558



286,559







TOTAL LIABILITIES AND EQUITY

$

394,674


$

372,019







 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Income

(Unaudited - Expressed in thousands of U.S. dollars, except for per share figures)



Three Months Ended September 30,


Six Months Ended September 30,



2016


2015



2016


2015











Sales

$

46,298

$

27,213


$

81,569

$

59,433

Cost of sales


19,509


18,385



39,036


39,149

Gross profit


26,789


8,828



42,533


20,284











General and administrative


4,127


4,907



8,512


10,251

Government fees and other taxes


1,761


1,847



3,456


3,196

Foreign exchange gain


(215)


(1,984)



(92)


(1,397)

(Gain) loss on disposal of plant and equipment


(199)


(22)



65


(15)

Share of gain in associate


(269)


(179)



(286)


(101)

Impairment of plant and equipment and mineral rights and properties


-


-



181


-

Other income


(83)


(124)



(123)


(114)

Income from operations


21,667


4,383



30,820


8,464











Finance income


537


264



968


541

Finance costs


(260)


(139)



(524)


(471)

Income before income taxes


21,944


4,508



31,264


8,534











Income tax expense


5,938


1,529



8,738


1,784

Net income

$

16,006

$

2,979


$

22,526

$

6,750











Attributable to:










Equity holders of the Company

$

12,378

$

2,234


$

17,052

$

4,530

Non-controlling interests


3,628


745



5,474


2,220


$

16,006

$

2,979


$

22,526

$

6,750











Earnings per share attributable to the equity holders of the Company










Basic earnings per share

$

0.07

$

0.01


$

0.10

$

0.03

Diluted earnings per share

$

0.07

$

0.01


$

0.10

$

0.03

Weighted Average Number of Shares Outstanding - Basic


167,012,454


170,307,013



166,976,159


170,593,834

Weighted Average Number of Shares Outstanding - Diluted


171,540,139


170,307,013



171,043,667


170,593,834

 


SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Cash Flow

(Unaudited - Expressed in thousands of U.S. dollars)



Three Months Ended
September 30,


 Six Months Ended
September 30, 



2016


2015



2016


2015

Cash provided by










Operating activities











Net income

$

16,006

$

2,979


$

22,526

$

6,750


Add (deduct) items not affecting cash:












Finance costs


260


139



524


471



Depreciation, amortization and depletion


6,029


4,400



11,349


9,377



Share of gain in associate


(269)


(179)



(286)


(101)



Impairment of plant and equipment and mineral rights and properties


-


-



181


-



Income tax expense


5,938


1,529



8,738


1,784



Finance income


(537)


(264)



(968)


(541)



(Gain) loss on disposal of plant and equipment


(199)


(22)



65


(15)



Share-based compensation


197


343



440


508


Income taxes (paid) recovered


(3,006)


56



(2,915)


(303)


Interest received


537


264



968


541


Interest paid


(50)


-



(101)


-


Changes in non-cash operating working capital


2,134


(4,614)



6,701


(520)

Net cash provided by operating activities


27,040


4,631



47,222


17,951











Investing activities











Mineral rights and properties












Capital expenditures


(5,688)


(1,364)



(10,708)


(8,730)


Plant and equipment












Additions


(739)


(2,272)



(3,123)


(2,990)



Proceeds on disposals


15


25



32


30


Other investments












Proceeds on disposals


33


-



33


-


Reclamation deposit paid


-


-



(385)


(9)


Net (purchases) redemptions of short-term investments


(1,995)


5,658



(5,976)


5,707

Net cash (used in) provided by investing activities


(8,374)


2,047



(20,127)


(5,992)











Financing activities











Non-controlling interests












Distribution


(1,460)


-



(1,460)


-


Cash dividends distributed


-


(638)



-


(1,323)


Proceeds from issuance of common shares


82


-



297


-


Common shares repurchased as part of normal course issuer bid


-


(1,267)



-


(1,267)

Net cash used in financing activities


(1,378)


(1,905)



(1,163)


(2,590)











Effect of exchange rate changes on cash and cash equivalents


(406)


(2,990)



(1,411)


(2,332)











Increase in cash and cash equivalents


16,882


1,783



24,521


7,037











Cash and cash equivalents, beginning of the period


49,602


65,433



41,963


60,179











Cash and cash equivalents, end of the period

$

66,484

$

67,216


$

66,484

$

67,216

 

SILVERCORP METALS INC.

Mining Data

(Expressed in thousands of U.S. dollars, except for mining data figures)





 Three months ended September 30, 2016 




Ying Mining
District1

GC2

 Total 







 Production Data 





 Mine Data 






Ore Mined (tonne)  

179,194

74,692

253,886



Ore Milled (tonne) 

180,154

76,100

256,254








+

Mining cost per tonne of ore mined ($) 

76.30

36.78

64.67




Cash mining cost per tonne of ore mined ($)

49.13

28.61

43.09




Non cash mining cost per tonne of ore mined ($)

27.17

8.17

21.58








+

Unit shipping costs($) 

3.81

-

2.68








+

Milling cost per tonne of ore milled ($)  

10.86

15.57

12.26




Cash milling cost per tonne of ore milled ($)

8.85

12.94

10.07




Non cash milling cost per tonne of ore milled ($)

2.01

2.63

2.19








 + 

Average Production Cost 







Silver ($ per ounce)

5.96

6.95

6.27




Gold ($ per ounce)

424

-

458




Lead ($ per pound)

0.28

0.42

0.30




Zinc ($ per pound)

0.28

0.43

0.29




Other ($ per pound)

-

-

-








 + 

Total production cost per ounce of Silver, net of by-product credits ($) 

0.33

(1.97)

0.10


 + 

Total cash cost per ounce of Silver, net of by-product credits ($) 

(2.68)

(6.39)

(3.05)








 + 

All-in sustaining cost per ounce of Silver, net of by-product credits ($) 

2.33

(1.49)

3.16


 + 

All-in cost per ounce of Silver, net of by-product credits ($) 

2.82

(1.25)

3.62









Recovery Rates 







Silver (%)

95.5

76.2

93.2




Lead (%)

96.3

86.6

95.1




Zinc (%)

42.9

86.4

65.8









 Head Grades 







Silver (gram/tonne)

302

96

241




Lead (%)

4.9

1.6

3.9




Zinc (%)

1.1

2.8

1.6








 Concentrate in stock  






Lead concentrate (tonne)  

3,880

101

3,981



Zinc concentate (tonne) 

280

127

407







 Sales Data  





 Metal Sales  






 Silver (in thousands of ounces) 

1,630

183

1,813



 Gold (in thousands of ounces) 

1.0

-

1.0



 Lead (in thousands of pounds) 

17,768

2,163

19,931



 Zinc (in thousands of pounds) 

1,785

4,106

5,891



 Other (in thousands of pound) 

-

365

365








 Metal Sales  






 Silver (in thousands of $)  

24,923

2,051

26,974



 Gold (in thousands of $)   

1,087

-

1,087



 Lead (in thousands of $)  

12,684

1,459

14,143



 Zinc (in thousands of $)  

1,260

2,833

4,093



 Other (in thousands of $)  

-

1

1




39,954

6,344

46,298


 Average Selling Price, Net of Value Added Tax and Smelter Charges 






 Silver ($ per ounce)   

15.29

11.21

14.88



 Gold ($ per ounce)  

1,087

-

1,087



 Lead ($ per pound)  

0.71

0.67

0.71



 Zinc ($ per pound)  

0.71

0.69

0.69







 1 Ying Mining District includes mines: SGX, TLP, HPG,LM, BCG and HZG. 




 2 GC Silver recovery rate consists of 55.9% from lead concentrates and 20.3% from zinc concentrates.  



 2 GC Silver sold in zinc concentrates is subjected to higher smelter and refining charges which lower the net silver selling price.  

 + Non-IFRS measures, see section 9 of the corresponding management's decision and analysis for reconciliation. 





SILVERCORP METALS INC.

Mining Data

(Expressed in thousands of U.S. dollars, except for mining data figures)





Three months ended September 30, 2015




Ying Mining
District1

GC2

Total







Production Data





Mine Data






Ore Mined (tonne) 

171,014

69,546

240,560



Ore Milled (tonne)

176,936

68,465

245,401








+

Mining cost per tonne of ore mined ($)

86.29

44.68

74.26




Cash mining cost per tonne of ore mined ($)

62.15

36.49

54.73




Non cash mining cost per tonne of ore mined ($)

24.14

8.19

19.53








+

Unit shipping costs($)

4.25

-

3.02








+

Milling cost per tonne of ore milled ($) 

13.70

18.05

14.91




Cash milling cost per tonne of ore milled ($)

11.55

15.81

12.74




Non cash milling cost per tonne of ore milled ($)

2.15

2.24

2.17








+

Average Production Cost







Silver ($ per ounce)

7.77

7.40

7.89




Gold ($ per ounce)

502

654

523




Lead ($ per pound)

0.45

0.54

0.47




Zinc ($ per pound)

0.37

0.47

0.39




Other ($ per pound)

-

0.01

0.01








+

Total production cost per ounce of Silver, net of by-product credits ($)

4.86

2.99

4.67


+

Total cash cost per ounce of Silver, net of by-product credits ($)

1.88

(1.69)

1.52








+

All-in sustaining cost per ounce of Silver, net of by-product credits ($)

9.88

13.73

12.40


+

All-in cost per ounce of Silver, net of by-product credits ($)

12.06

14.80

14.47









Recovery Rates







Silver (%)

94.8

77.0

89.8




Lead (%)

95.0

89.5

93.5




Zinc (%)

55.1

82.7

62.8









Head Grades







Silver (gram/tonne)

246

107

207




Lead (%)

3.8

1.4

3.1




Zinc (%)

0.7

2.8

1.3








Concentrate in stock 






Lead concentrate (tonne) 

2,228

728

2,956



Zinc concentate (tonne)

260

456

716







Sales Data 





Metal Sales 






Silver (in thousands of ounces)

1,132

128

1,260



Gold (in thousands of ounces)

0.7

-

0.7



Lead (in thousands of pounds)

11,529

1,632

13,161



Zinc (in thousands of pounds)

1,459

3,172

4,631








Metal Sales 






Silver (in thousands of $) 

13,561

1,151

14,712



Gold (in thousands of $)  

506

13

519



Lead (in thousands of $) 

8,039

1,083

9,122



Zinc (in thousands of $) 

838

1,820

2,658



Other (in thousands of $) 

-

202

202




22,944

4,269

27,213


Average Selling Price, Net of Value Added Tax and Smelter Charges






Silver ($ per ounce)  

11.98

9.02

11.68



Gold ($ per ounce) 

773

797

774



Lead ($ per pound) 

0.71

0.66

0.69



Zinc ($ per pound) 

0.57

0.57

0.57







 1 Ying Mining District includes mines: SGX, TLP, HPG,LM, BCG and HZG. 




 2 GC Silver recovery rate consists of 55.3% from lead concentrates and 21.7% from zinc concentrates.  


 2 GC Silver sold in zinc concentrates is subjected to higher smelter and refining charges which lower the net silver selling price.  

 + Non-IFRS measures, see section 9 of the corresponding management's decision and analysis for reconciliation. 




SILVERCORP METALS INC.

Mining Data

(Expressed in thousands of U.S. dollars, except for mining data figures)





 Six months ended September 30, 2016 




Ying Mining
District1

GC2

 Total  







 Production Data 





 Mine Data 






Ore Mined (tonne)  

352,702

139,041

491,743



Ore Milled (tonne) 

347,901

139,687

487,588








 + 

Mining cost per tonne of ore mined ($) 

77.44

39.15

66.61




Cash mining cost per tonne of ore mined ($)

50.70

30.87

45.09




Non cash mining cost per tonne of ore mined ($)

26.74

8.28

21.52








 + 

Unit shipping costs($) 

3.84

-

2.75








 + 

Milling cost per tonne of ore milled ($)  

11.53

17.05

13.11




Cash milling cost per tonne of ore milled ($)

9.44

14.15

10.79




Non cash milling cost per tonne of ore milled ($)

2.09

2.90

2.32








 + 

Average Production Cost 







Silver ($ per ounce)

6.29

7.51

6.63




Gold ($ per ounce)

457

-

493




Lead ($ per pound)

0.30

0.45

0.32




Zinc ($ per pound)

0.28

0.45

0.30




Other ($ per pound)

-

0.01

0.01








 + 

Total production cost per ounce of Silver, net of by-product credits ($) 

1.59

0.98

1.53


 + 

Total cash cost per ounce of Silver, net of by-product credits ($) 

(1.34)

(3.65)

(1.57)








 + 

All-in sustaining cost per ounce of Silver, net of by-product credits ($) 

3.99

1.32

5.01


 + 

All-in cost per ounce of Silver, net of by-product credits ($) 

4.97

1.60

5.93









Recovery Rates 







Silver (%)

95.6

76.5

93.4




Lead (%)

96.3

86.7

95.2




Zinc (%)

45.5

86.1

66.6









Head Grades 







Silver (gram/tonne)

305

97

245




Lead (%)

4.7

1.5

3.8




Zinc (%)

1.1

2.9

1.6








 Concentrate in stock  






Lead concentrate (tonne)  

3,880

101

3,981



Zinc concentate (tonne) 

280

127

407







 Sales Data  





 Metal Sales  






Silver (in thousands of ounces) 

3,120

332

3,452



Gold (in thousands of ounces) 

1.9

-

1.9



Lead (in thousands of pounds) 

32,629

4,023

36,652



Zinc (in thousands of pounds) 

3,605

7,513

11,118



Other (in thousands of pounds) 

-

8,551

8,551








 Metal Sales  






Silver (in thousands of $)  

44,289

3,522

47,811



Gold (in thousands of $)   

1,959

-

1,959



Lead (in thousands of $)  

22,065

2,571

24,636



Zinc (in thousands of $)  

2,313

4,739

7,052



Other (in thousands of $)  

-

111

111




70,626

10,943

81,569


 Average Selling Price, Net of Value Added Tax and Smelter Charges 






Silver ($ per ounce)   

14.20

10.61

13.85



Gold ($ per ounce)  

1,031

-

1,031



Lead ($ per pound)  

0.68

0.64

0.67



Zinc ($ per pound)  

0.64

0.63

0.63







 1 Ying Mining District includes mines: SGX, TLP, HPG,LM, BCG and HZG. 




 2 GC Silver recovery rate consists of 55.8% from lead concentrates and 20.7% from zinc concentrates.  


 2 GC Silver sold in zinc concentrates is subjected to higher smelter and refining charges which lowers the net silver selling price.  

 + Non-IFRS measures, see section 9 of the corresponding management's decision and analysis for reconciliation. 





SILVERCORP METALS INC.

Mining Data

(Expressed in thousands of U.S. dollars, except for mining data figures)





Six months ended September 30, 2015




Ying Mining
District1

GC2

Total 







Production Data





Mine Data






Ore Mined (tonne) 

338,120

136,273

474,393



Ore Milled (tonne)

337,213

135,145

472,358








+

Mining cost per tonne of ore mined ($)

80.71

50.63

72.06




Cash mining cost per tonne of ore mined ($)

59.43

42.49

54.56




Non cash mining cost per tonne of ore mined ($)

21.28

8.14

17.50








+

Unit shipping costs($)

4.15

-

2.96








+

Milling cost per tonne of ore milled ($) 

14.51

17.94

15.49




Cash milling cost per tonne of ore milled ($)

12.23

15.67

13.21




Non cash milling cost per tonne of ore milled ($)

2.28

2.27

2.28








+

Average Production Cost







Silver ($ per ounce)

7.81

8.80

8.17




Gold ($ per ounce)

499

707

535




Lead ($ per pound)

0.44

0.61

0.47




Zinc ($ per pound)

0.39

0.55

0.41




Other ($ per pound)

-

0.01

0.01








+

Total production cost per ounce of Silver, net of by-product credits ($)

4.53

5.91

4.69


+

Total cash cost per ounce of Silver, net of by-product credits ($)

1.44

1.52

1.45








+

All-in sustaining cost per ounce of Silver, net of by-product credits ($)

9.52

11.04

11.65


+

All-in cost per ounce of Silver, net of by-product credits ($)

10.86

11.55

12.88









Recovery Rates







Silver (%)

94.7

77.5

89.8




Lead (%)

95.0

88.6

93.1




Zinc (%)

54.1

82.9

62.3









Head Grades







Silver (gram/tonne)

252

107

211




Lead (%)

3.7

1.4

3.0




Zinc (%)

0.8

2.8

1.3








Concentrate in stock 






Lead concentrate (tonne) 

2,228

728

2,956



Zinc concentate (tonne)

260

456

716







Sales Data 





Metal Sales 






Silver (in thousands of ounces)

2,321

309

2,630



Gold (in thousands of ounces)

1.5

-

1.5



Lead (in thousands of pounds)

23,456

4,052

27,508



Zinc (in thousands of pounds)

2,831

6,201

9,032



Other (in thousands of pound)

-

26,532

26,532








Metal Sales 






Silver (in thousands of $) 

29,523

3,107

32,630



Gold (in thousands of $)  

1,230

23

1,253



Lead (in thousands of $) 

16,691

2,812

19,503



Zinc (in thousands of $) 

1,775

3,896

5,671



Other (in thousands of $) 

-

376

376




49,219

10,214

59,433


Average Selling Price, Net of Value Added Tax and Smelter Charges






Silver ($ per ounce)  

12.72

10.06

12.41



Gold ($ per ounce) 

813

808

813



Lead ($ per pound) 

0.71

0.69

0.71



Zinc ($ per pound) 

0.63

0.63

0.63







1 Ying Mining District includes mines: SGX, TLP, HPG,LM, BCG and HZG.




2GC Silver recovery rate consists of 55.3% from lead concentrates and 22.2% from zinc concentrates. 


2GC Silver sold in zinc concentrates is subjected to higher smelter and refining charges which lower the net silver selling price. 

 + Non-IFRS measures, see section 9 of the corresponding management's decision and analysis for reconciliation. 







 

SOURCE Silvercorp Metals Inc

For further information: Silvercorp Metals Inc., Gordon Neal, Vice President, Corporate Development, Phone: (604) 669-9397, Toll Free 1(888) 224-1881, Email: investor@silvercorp.ca, Website: www.silvercorp.ca

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