Silvercorp Reports Financial and Operating Results for the Second Quarter of Fiscal 2013
VANCOUVER, BRITISH COLUMBIA -- (MARKET WIRE) -- 11/13/12 -- Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX:SVM)(NYSE:SVM) today reported its unaudited financial and operating results for the second quarter ended September 30, 2012 ("Q2 2013").
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.
SECOND QUARTER HIGHLIGHTS
-- Silver production of 1.3 million ounces;
-- Gold production of 2,481 ounces;
-- Sales of $45.2 million;
-- Net income of $9.5 million, or $0.06 per share;
-- Cash flow from operations of $23.9 million, or $0.14 per share;
-- Cash costs of negative $0.74 per ounce of silver at the Ying Mining
District;
-- Payment of $4.2 million, or CAD$0.025 per share, in quarterly dividends
to shareholders.
FINANCIALS
In Q2 2013, the Company recorded net income attributable to equity holders of the Company of $9.5 million or $0.06 per share, compared to $18.5 million or $0.11 per share, in the quarter ended September 30, 2011 ("Q2 2012"). The decrease compared to prior year was primarily due to lower sales and higher production costs as well as fluctuations in foreign currency.
In Q2 2013, the Company recorded sales of $45.2 million, compared to $62.1 million in Q2 2012. This decrease was due to a lower silver price, which was $30.50 per ounce in Q2 2013, a decrease of 24% compared to $40.13 per ounce in Q2 2012. During the quarter, the Company sold 1.3 million ounces of silver, comparable to the 1.4 million ounces of silver sold in Q2 2012.
Cost of sales in Q2 2013 was $16.4 million, an increase of 14%, compared to $14.4 million in Q2 2012. The cost of sales included cash costs of $13.7 million compared to $11.4 million in Q2 2012. The increase in cost of sales was due to more ore being mined and processed along with a higher production cost per tonne. In Q2 2013, ore production increased by 16% to 240,447 tonnes, while overall production costs increased by 8% to $80 per tonne from $74 per tonne in Q2 2012.
Gross profit margin in Q2 2013 was 64%, compared to 77% in Q2 2012.
Cash flow from operations in Q2 2013 was $23.9 million or $0.14 per share, compared to $35.2 million, or $0.20 per share, in Q2 2012.
Comparing this quarter to the first quarter Fiscal 2013, net income increased $3.4 million or 55%. This increase was attributable to a decrease in overall production costs from $85 per tonne in the prior quarter to $80 per tonne in Q2 2013. As such, the gross profit margin for this quarter improved to 64% compared to 57% in the previous quarter.
For the six months ended September 30, 2012, net income was $15.6 million or $0.09 per share compared to $44.1 million or $0.25 per share, in the same prior year period. During the same comparative periods, sales were $89.8 million compared to $131.8 million, cost of sales were $35.4 million compared to $28.5 million, which resulted in gross profit margins of 61% compared to 78%. Cash flow from operations was $43.2 million compared to $69.1 million over the same periods.
OPERATIONS
On a consolidated basis, in Q2 2013, the Company produced 1.3 million ounces of silver, 2,481 ounces of gold, 13.9 million pounds of lead and 3.5 million pounds of zinc, compared to 1.4 million ounces of silver, 2,516 ounces of gold, 16.5 million pounds of lead and 3.2 million pounds of zinc in Q2 2012.
Compared to production reported for the first quarter of Fiscal 2013, the Company produced an additional 117,000 ounces of silver in Q2 2013. This increase is attributable to a 15% increase in ore mined and processed during the quarter.
As at September 30, 2012, inventory of 480 tonnes of direct smelting ore and 100 tonnes of lead concentrate remains on hand at the Ying Mining District, which is approximately 55,000 ounces of silver produced but not sold.
For the six months ended September 30, 2012, on a consolidated basis, the Company produced 2.5 million ounces of silver, 5,134 ounces of gold, 27.6 million pounds of lead and 6.5 million pounds of zinc, compared to 3.0 million ounces of silver, 3,905 ounces of gold, 37.1 million pounds of lead and 7.3 million pounds of zinc, respectively, in the same prior year period.
1. Ying Mining District, Henan Province, China
In Q2 2013, the Company mined 205,811 tonnes of ore at the Ying Mining District, an increase of 13%, compared to 182,542 tonnes in Q2 2012. During the quarter, metal production totaled 1.3 million ounces of silver, 1,238 ounces of gold, 13.4 million pounds of lead and 3.4 million pounds of zinc, compared to 1.4 million ounces of silver, 903 ounces of gold, 16.5 million pounds of lead and 3.2 million pounds of zinc in Q2 2012. Compared with metal production in first quarter of Fiscal 2013, there has been a 9% increase in silver production attributable to a 9% increase in ore processed. Grades were 224 grams per tonne ("g/t") for silver, 3.4% for lead and 1.2% for zinc, compared to 271 g/t for silver, 4.6% for lead and 1.2% for zinc in the same quarter last year.
Compared to Q2 2012, production from HPG, TLP, and LM satellite mines in this quarter increased by 10% and represent 43% of total production at the Ying Mining District compared to 33% in the prior year. The reduction in production from the SGX mine was a result of mechanical problems with one of the shafts which impacted production for 20 days during the quarter. This shaft is fully operational again but as a result of this issue, the Ying Mining District realized lower overall grades in this quarter.
In Q2 2013, total and cash mining costs per tonne were $62.56 and $53.27 respectively compared to $57.23 and $45.74 respectively in Q2 2012. The increase in cash mining costs was due to the following: (i) an increase in labour costs for both the Company's employees as well as those of its mining contractors of approximately $3.80 per tonne, (ii) an increase in mining administration and preparation costs of $2.00 per tonne and (ii) the impact of US dollar depreciation versus the Chinese RMB of approximately $1.00 per tonne. Compared to the first quarter of Fiscal 2013, total and cash mining costs decreased by 9% and 4%, respectively.
For the six months ended September 30, 2012, the Company mined 386,829 tonnes of ore at the Ying Mining District, resulting in metal production of 2.5 million ounces of silver, 2,067 ounces of gold, 27.1 million pounds of lead and 6.4 million pounds of zinc, compared to 352,747 tonnes with metal production of 3.0 million ounces of silver, 1,703 ounces of gold, 37.1 million pounds of lead and 7.3 million pounds of zinc in the same prior year period. Grades were 226 g/t for silver, 3.5% for lead, and 1.2% for zinc compared to 287 g/t for silver, 5.0% for lead and 1.4% for zinc, over the same period.
In Q2 2013, a total of 203,170 tonnes of ore were milled, an increase of 13% compared to 180,164 tonnes in Q2 2012. The cash milling cost per tonne decreased to $12.12 from $13.48 in Q2 2012, attributable to the increased tonnage milled. For the six months ended September 30, 2012, a total of 389,625 tonnes of ore were milled compared to 355,091 tonnes in the same prior year period. Over the same period, cash milling cost per tonne were $13.10 compared to $12.78.
Total and cash costs per ounce of silver in Q2 2013 for the Ying Mining District were $1.05 and negative $0.74, compared to negative $2.74 and negative $4.55, respectively in Q2 2012. Compared with first quarter Fiscal 2013, total and cash costs per ounce of silver decreased $1.44 and $0.90 respectively, due to lower overall production costs in Q2 2013.
For the six months ended September 30, 2012, total and cash costs per ounce of silver were $1.75 and negative $0.31 compared to negative $3.75 and negative $5.39, respectively, in the same prior year period.
The operational results for the past five quarters at the Ying Mining District are summarized in the table below:
Quarterly opertional results - Ying Mining District
Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012
30-Sep-12 30-Jun-12 31-Mar-12 31-Dec-11 30-Sep-11
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Ore Mined (tonne)
Direct Smelting Ore
(tonne) 2,442 2,250 2,761 4,151 2,579
Stockpiled Ore (tonne) 203,369 178,768 132,986 169,926 179,963
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205,811 181,018 135,747 174,077 182,542
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Run of Mine Ore (tonne)
Direct Smelting Ore
(tonne) 2,442 2,250 2,761 4,151 2,579
Ore Milled (tonne) 200,728 184,205 133,848 171,243 177,586
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203,170 186,455 136,609 175,394 180,165
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Metal Sales
Silver (in thousands of
ounces) 1,277 1,223 1,082 1,542 1,396
Gold (in thousands of
ounces) 1.3 0.8 1.0 1 0.9
Lead (in thousands of
pounds) 13,403 13,713 14,668 20,551 16,520
Zinc (in thousands of
pounds) 3,412 2,974 2,637 3,525 3,236
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Head Grade of Run of Mine
Ore
Silver (gram/tonne) 224 227 275 296 271
Lead (%) 3.4 3.6 5.2 5.5 4.6
Zinc (%) 1.2 1.1 1.4 1.4 1.2
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Recovery Rate of Run of
Mine Ore
Silver (%) 92.7 91.7 93.2 93.3 92.9
Lead (%) 94.3 94 96.4 96.4 95.5
Zinc (%) 69.6 63 64.6 67.7 70.8
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Cash Mining Cost ($ per
tonne) 53.27 55.47 57.62 55.92 45.74
Total Mining Costs($ per
tonne) 62.56 69.02 73.52 70.23 57.23
Cash Milling Cost ($ per
tonne) 12.12 14.17 16.84 14.76 13.48
Total Milling Cost ($ per
tonne) 13.84 16.05 19.4 16.42 15.03
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Cash Cost per Ounce of
Silver ($) (0.74) 0.16 (4.22) (4.64) (4.55)
Total Production Cost per
Ounce of Silver ($) 1.05 2.49 (1.84) (2.67) (2.74)
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2. BYP Mine, Hunan Province, China
In Q2 2013, the Company mined 26,641 tonnes of ore at the BYP mine with gold head grade of 3.3 g/t compared to 24,754 tonnes with gold head grade of 3.3 g/t in Q2 2012. During the quarter, 1,212 ounces of gold was sold at a cash cost per ounce of gold of $361 compared to 1,613 ounces of gold sold at cash cost per ounce of gold of $276 in the same prior year period.
DEVELOPMENT AND EXPLORATION
1. Ying Mining District, Henan Province, China
SGX (Ying) Mine
As at the end of Q2 2013, the Company had completed a total of 1,407 metres ("m") of development work for a 5,200m ramp at the SGX mine, making construction of the ramp now 27% complete. The ramp is designed to follow the main S7-1 vein from the 450m elevation to the 150m elevation and then bottom at the zero metre elevation, where it will be connected to three existing vertical blind shafts. Silvercorp expects to complete construction of the ramp in calendar 2015 but as construction progresses the ramp is expected to increase production capacity at the SGX mine with effect from the second quarter of Fiscal 2014.
In Q2 2013, the Company also developed 7,300m of horizontal tunnels and completed 15,000m of underground drilling at the SGX mine.
To support the ongoing expansion work at SGX, the Company has also commenced construction of a new 5,000m2 facility which will include offices and dormitories.
LM Mine and LM Mine West
During the second quarter of Fiscal 2013 tunnel development on five mining levels at the LM mine continued and two new stopes along the 750m elevation commenced production which contributed to the increase in ore mined during the quarter.
At LM Mine West ("LM West"), the construction of Shaft 969 was completed during the quarter and preparation for tunnel development work is underway. It is expected that Shaft 969 will become operational during the third quarter of Fiscal 2013 and will start to produce ore during the third quarter of Fiscal 2014.
In addition, the Company completed a total of 1,084m of the development work of a 4,800m access ramp at LM West in Q2 2013. The access ramp has already been connected to existing tunnels at LM West and this has vastly improved the tunnels' ventilation and hauling capacity. It is expected that this new access ramp will contribute to an increase in production by first quarter of Fiscal 2014.
Once Shaft 969, the access ramp and all the mining levels are completed down to the 500m elevation at LM West in Fiscal 2015, the combined production capacity of the two mines is expected to be 300,000 tonnes of ore per year. In order to support the expected growth in operations at the LM Mine and LM West, the Company has commenced construction of a 3,000m2 facility which will include offices and a dormitory.
In Q2 2013, the Company also developed 5,000m of decline and horizontal tunnels and completed 12,500m of underground drilling at the LM Mine and LM West.
TLP Mine
In Q2 2013, the Company continued to ramp up production at the TLP mine while developing over 6,400m of horizontal tunnels for mining and underground drilling purpose. The Company also completed 9,700m of underground drilling during the quarter.
HPG Mine
In Q2 2013, the Company began construction of a 400m shaft in the HPG mine to support a future increase in ore production. The Company also developed over 3,200m of decline and horizontal tunnels and completed 4,300m of underground drilling.
Adoption of New Mining Method
At the Ying Mining District, the mining method has been comprised of 40% short-hole shrinkage and 60% resuing, with cut-off grades (before mining dilution) of 300 g/t silver-equivalent ("AgEq") at the SGX (Ying) mine, and 150 g/t AgEq at the HPG, LM and TLP mines. The resuing method is more selective and is used to mine narrow veins under 0.7m, while the shrinkage method is used to mine wider stopes ranging from 0.8m to 3m.
With effect from October 2012, and following a reduction in the cut-off grades for the Ying Mining District Resource as per the 2012 NI 43-101 Technical Report prepared by AMC Consultants, the Company has started to gradually increase the use of the shrinkage method for mining. As such the mining width has been increased and the cut-off grades have been lowered to 150 g/t AgEq at the SGX (Ying) mine, and 110 g/t AgEq at HPG, LM and TLP mines.
The implementation of the new mining method will take place over the next 12 months and the Company expects to gradually increase the use of the shrinkage method at the Ying Mining District from 40% to 80% and reduce the use of the resuing method from 60% to 20%.
The expected benefits of the change in mining method are:
-- Lower cash mining cost per tonne - the short-hole shrinkage method have
a cash mining cost of $32 per tonne compared to $75 per tonne for the
resuing method.
-- Less development work required - due to the increase in mining stope
width, less mine tunnel development work will be required to produce the
same amount of ore.
-- Higher tonnage produced - as less tunnelling is required, this is
expected to have a positive effect on hauling capacity and therefore
allow for an increase in production.
-- Increase in operational efficiency - reducing the number of stopes
required to produce the same amount of ore will result in a more focused
and efficient mining operation.
It should be noted that the impact to overall head grades for the Ying Mining District following the adoption of the new mining method is currently unknown.
2. GC Project, Guangdong Province, China
The Company continued to progress the development of the GC project.
As of September 30, 2012, 376m of the construction of the 618m main shaft was complete. The shaft is expected to reach its designed elevation of -370m in the first quarter of Fiscal 2015. The main access ramp is now 65% complete with a cumulative total of 1,447m of the 2,210m ramp having been developed as at the end of the quarter. In addition to the main access ramp, the Company has also been developing a 4,600m exploration ramp which will provide access to all known veins within a horizontal distance of 250m. As of September 30, 2012, 804m of the exploration ramp was completed.
As at the end of this quarter, all major equipment for the 1,600 t/d floatation mill, including the jaw crusher, cone crusher, ball mills and flotation cells, has been installed and is currently undergoing testing in anticipation of the commencement of production. Remaining work includes secondary concrete casting and installation of auxiliary power equipment. It is expected that the mill will be operational in third quarter of Fiscal 2013.
The construction of a 5.8 kilometre long, 110KV power line and a substation began in late July 2012. As of Q2 2013, the foundation work for 8 of the 13 power lines along with the substation's building framework has been completed. The power line and substation are expected to be operational by the end of third quarter of Fiscal 2013.
As of Q2 2013, the Company successfully completed and passed a health and safety review of engineering designs for the tailings storage facilities as reported in the previous quarter. Accordingly, the construction of the dry stacking tailings storage facility has resumed and is expected to be complete by the end of the third quarter of Fiscal 2013.
The construction of a lab, administrative offices and dormitory facilities were completed as of Q2 2013.
Assuming a positive final approval to commence operations at GC from the local authorities, the Company continues to expect to be able to commence initial production at GC in early 2013, processing ore stockpiles and maintains its production guidance of 170,000 ounces of silver and 2.7 million pounds of lead and zinc for Fiscal 2013.
In Q2 2013, the Company completed 7,500m of diamond drilling using five underground drill rigs currently on site at the GC project. During the quarter, exploration, mine development, mill and facility construction expenditures at the GC project were $7.3 million, with development expenditure of the project now totalling $40 million as of the end this quarter.
3. BYP Mine, Hunan Province, China
In Q2 2013, the Company released an update to the BYP mine NI 43-101 technical report, with indicated resources of 292,000 ounces of gold, 187 million pounds of lead and 408 million pounds of zinc.
As of Q2 2013, the Company had completed the excavation work for a 265m deep shaft that will facilitate the mining of the #3 gold mineralization body and the #5 zinc and lead ore body. The installation of shaft equipment and construction of the head frame is currently underway. In addition, the construction of a 1,500 t/d tailing-backfill facility is well underway and is expected to be completed in fourth quarter Fiscal 2013.
4. X mines ("XBG and XHP projects"), Henan Province, China
At the XHP and XBG projects, construction of a 286m incline shaft and a 225m incline shaft, respectively, are underway with completion expected in the first quarter of Fiscal 2014. During the quarter, approximately 1,400m of tunneling and 6,300m of diamond drilling were also completed at the X mines.
The X mines will continue to focus on the executions of an exploration program that will include surface and underground mapping and systematic sampling, surface and underground diamond drilling, with the intention of defining a NI 43-101 compliant mineral resource. Exploration and mine development at the X mines will be partially supported from cash flows generated from limited tunneling ore and existing ore stockpiles.
5. RZY Project, Qinghai Province, China
The RZY exploration permit is currently owned by the Qinghai Geological Survey Bureau, the non-controlling interest holder of Qinghai Found Mining Co. ("Qinghai Found"), an 82% owned-subsidiary of the Company. Pursuant to the joint-exploration agreement, Qinghai Found currently owns 67% of the mineral interest in the RZY project, and can acquire up to 82% interest by providing exploration funding of $4.8 million. Upon the completion of exploration funding, the exploration permit will be transferred to Qinghai Found. The Company expects to fund up to $32 million in exploration and capital expenditures for the RZY project.
In Q2 2013, the Company commenced its first diamond drilling program at the RZY project with five diamond drill holes and 833m of drilling completed.
6. Silvertip Project, British Columbia, Canada
The Company is in the process of preparing a Small Mine Permit application to be submitted to the British Columbia Ministry of Energy and Mines. A Small Mine Permit will allow a 75,000 tonnes per year mining operation.
Myles Gao, P.Geo., President of Silvercorp, is a Qualified Person for Silvercorp under NI 43-101 and has reviewed and given consent to the technical information contained in this News Release.
CONFERENCE CALL AND WEBCAST INFORMATION
An investor conference call will be held on Wednesday, November 14, 2012 at 8 a.m. Pacific Time (11 a.m. Eastern Time) to discuss the results. Participants may join the call by dialing 1-877-240-9772 toll-free or 1-416-340-8527 for calls outside Canada and the U.S.
A live webcast of the conference call, together with supporting presentation slides will be available on the home page of the Company's website, www.silvercorp.ca. The webcast will be archived and available on the Company's website for up to one year.
An audio replay will be available until November 21, 2012 by calling 1-800-408-3053 toll free or 1-905-694-9451 for calls outside Canada and the U.S. and entering pass code 5953693.
About Silvercorp
Silvercorp is a low-cost silver-producing Canadian mining company with multiple mines in China which has paid a cash dividend since 2007. The Company is currently developing the GC project in southern China which it expects will become its next operating mine in early 2013. The Company's vision is to deliver shareholder value by focusing on the acquisition of small-scale projects with resource potential and self-fund the growth of those assets. 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 Camp; 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; First Nations title claims and rights; 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, 2012 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.
Unaudited Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
September March 31,
30, 2012 2012
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ASSETS
Current Assets
Cash and cash equivalents $ 89,334 $ 109,960
Short-term investments 47,236 44,551
Accounts receivable 3,197 12,904
Inventories 7,665 7,006
Due from related parties 369 679
Prepaids and deposits 5,640 5,210
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153,441 180,310
Non-current Assets
Long term prepaids and deposits 5,786 6,015
Investment in an associate 16,534 15,872
Other investments 42,300 45,757
Plant and equipment 80,992 68,788
Mineral rights and properties 288,123 258,521
Deferred income tax assets - 171
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TOTAL ASSETS $ 587,176 $ 575,434
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LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 26,738 $ 23,590
Deposits received 7,255 7,268
Dividends payable 4,339 4,271
Income tax payable 3,141 5,082
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41,473 40,211
Non-current Liabilities
Deferred income tax liabilities 22,509 19,991
Environmental rehabilitation 4,467 4,400
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Total Liabilities 68,449 64,602
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Equity
Share capital 232,843 232,678
Contributed surplus 7,108 5,552
Reserves 24,717 24,717
Accumulated other comprehensive income 24,198 25,285
Retained earnings 152,715 145,580
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Total equity attributable to the equity holders of
the Company 441,581 433,812
Non-controlling interests 77,146 77,020
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Total Equity 518,727 510,832
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TOTAL LIABILITIES AND EQUITY $ 587,176 $ 575,434
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SILVERCORP METALS INC.
Unaudited Consolidated Statements of Income
(Expressed in thousands of U.S. dollars, except for per share figures)
Three Months Ended Six Months Ended
September 30, September 30,
--------------------------------------------------------
2012 2011 2012 2011
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Sales $ 45,209 $ 62,055 $ 89,758 $ 131,774
Cost of sales 16,446 14,435 35,440 28,494
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Gross profit 28,763 47,620 54,318 103,280
General and
administrative 6,191 7,456 13,037 12,401
General exploration
and property
investigation 887 1,209 1,853 3,001
Other taxes 842 1,039 1,648 2,177
Foreign exchange
loss (gain) 1,142 (1,284) 365 (760)
Loss on disposal of
plant and equipment 5 171 25 253
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Income from
operations 19,696 39,029 37,390 86,208
Share of gain (loss)
in an associate (182) 116 (189) 92
Write down of
inventories (348) - (348) -
Gain (loss) on
investments 693 (670) (593) (1,829)
Other income 93 126 168 301
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Income before
finance items and
income taxes 19,952 38,601 36,428 84,772
Finance income 851 1,110 1,842 1,780
Finance costs (23) (23) (45) (46)
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Income before income
taxes 20,780 39,688 38,225 86,506
Income tax expense 7,277 13,786 15,204 26,360
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Net income $ 13,503 $ 25,902 $ 23,021 $ 60,146
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Attributable to:
Equity holders of
the Company $ 9,500 $ 18,471 $ 15,614 $ 44,113
Non-controlling
interests 4,003 7,431 7,407 16,033
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$ 13,503 $ 25,902 $ 23,021 $ 60,146
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Earnings per share attributable
to the equity holders of the
Company
Basic earnings per
share $ 0.06 $ 0.11 $ 0.09 $ 0.25
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Diluted earnings per
share $ 0.06 $ 0.11 $ 0.09 $ 0.25
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Weighted Average
Number of Shares
Outstanding - Basic 170,719,933 173,664,959 170,706,702 174,343,192
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Weighted Average
Number of Shares
Outstanding -
Diluted 171,062,715 174,282,790 171,072,838 175,122,557
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SILVERCORP METALS INC.
Unaudited Consolidated Statements of Cash Flow
(Expressed in thousands of U.S. dollars)
Three Months Ended Six Months Ended
September 30, September 30,
----------------------------------------
2012 2011 2012 2011
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Cash provided by
Operating activities
Net income $ 13,503 $ 25,902 $ 23,021 $ 60,146
Add (deduct) items not affecting
cash:
Accretion of environmental
rehabilitation 23 23 45 46
Depreciation, amortization and
depletion 3,114 3,294 7,190 5,881
Share of loss (gain) in an
associate 182 (116) 189 (92)
Write down of inventories 348 - 348 -
Deferred income tax expense 129 4,379 3,113 5,507
Loss (gain) on investments (693) 670 593 1,829
Loss on disposal of plant and
equipment 5 171 25 253
Stock-based compensation 872 841 1,608 1,619
Changes in non-cash operating
working capital 6,434 15 7,037 (6,075)
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Net cash provided by operating
activities 23,917 35,179 43,169 69,114
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Investing activities
Mineral rights and properties
Capital expenditures (14,097) (7,326) (26,413) (13,701)
Plant and equipment
Additions (5,328) (6,018) (13,485) (10,150)
Investments
Acquisition (80) - (595) (1,020)
Net purchases of short-term
investments 12,457 12,813 (2,355) 7,820
Acquisition of Zhongxing/Chuanxin
(net of cash acquired, $20) - (3,403) - (3,403)
Prepayments to acquire mineral
property, plant and equipment (2,629) (19,989) (4,100) (21,095)
----------------------------------------------------------------------------
Net cash used in investing
activities (9,677) (23,923) (46,948) (41,549)
----------------------------------------------------------------------------
Financing activities
Net repayment from (advance to)
related parties 253 (11,113) 310 (12,290)
Non-controlling interests
Contribution - 578 - 5,158
Distribution (7,388) - (7,388) -
Cash dividends distributed (4,220) (3,705) (8,525) (7,305)
Share capital
Proceeds from issuance of common
shares 19 61 113 951
Normal course issuer bid - (35,380) - (35,380)
----------------------------------------------------------------------------
Net cash used in financing
activities (11,336) (49,559) (15,490) (48,866)
----------------------------------------------------------------------------
Effect of exchange rate changes on
cash and cash equivalents 2,775 (3,330) (1,357) (1,880)
----------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents 5,679 (41,633) (20,626) (23,181)
Cash and cash equivalents, beginning
of the period 83,655 165,676 109,960 147,224
----------------------------------------------------------------------------
Cash and cash equivalents, end of
the period $ 89,334 $124,043 $ 89,334 $124,043
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SILVERCORP METALS INC.
Mining Data
(Expressed in thousands of U.S. dollars, except for mining data figures)
Three months ended
September 30, 2012
--------------------------------------
Ying
Mining
District
(1) X Mines(2) BYP Total
----------------------------------------------------------------------------
Production Data
Mine Data
Ore Mined (tonne)
Direct Smelting Ore (tonne) 2,442 - - 2,442
Stockpiled Ore (tonne) 203,369 7,995 (i) 26,641 238,005
-------- ----------------------------
205,811 7,995 26,641 240,447
-------- ----------------------------
Run of Mine Ore (tonne)
Direct Smelting Ore (tonne) 2,442 - - 2,442
Ore Milled (tonne) 200,728 27,473 18,564 246,765
-------- ----------------------------
203,170 27,473 18,564 249,207
-------- ----------------------------
Mining cost per tonne of ore mined
($) 62.56 - 61.24 62.41
Cash mining cost per tonne of
ore mined ($) 53.27 - 25.71 50.11
Non cash mining cost per tonne
of ore mined ($) 9.29 - 35.54 12.30
Unit shipping costs ($) 3.73 - - 3.30
Milling cost per tonne of ore
milled ($) 13.84 - 17.03 14.11
Cash milling cost per tonne of
ore milled ($) 12.12 - 15.50 12.40
Non cash milling cost per tonne
of ore milled ($) 1.72 - 1.53 1.70
Average Production Cost
Silver ($ per ounce) 8.21 - - 8.21
Gold ($ per ounce) 366 - 769 404
Lead ($ per pound) 0.28 - - 0.28
Zinc ($ per pound) 0.22 - - 0.22
Total production cost per ounce of
Silver ($) 1.05 - 1.05
Total cash cost per ounce of
Silver ($) (0.74) - (0.74)
Total production cost per ounce of
Gold ($) 769 769
Total cash cost per ounce of Gold
($) 361 361
Total Recovery of the Run of Mine
Ore
Silver (%) 92.7 - 92.7
Gold (%) 94.1 94.1
Lead (%) 94.3 - 94.3
Zinc (%) 69.6 - - 69.6
Head Grades of Run of Mine Ore
Silver (gram/tonne) 224 - 224
Gold (gram/tonne) 3.3 3.3
Lead (%) 3.4 - 3.4
Zinc (%) 1.2 - - 1.2
Sales Data
Metal Sales
Silver (in thousands of ounces) 1,277 9 (i) - 1,286
Gold (in thousands of ounces) 1.3 - 1.2 2.5
Lead (in thousands of pounds) 13,403 494 (i) - 13,897
Zinc (in thousands of pounds) 3,412 111 (i) - 3,523
Metal Sales
Silver (in thousands of $) 29,561 - - 29,561
Gold (in thousands of $) 1,275 - 1,480 2,755
Lead (in thousands of $) 10,749 - - 10,749
Zinc (in thousands of $) 2,144 - - 2,144
-------- ----------------------------
43,729 - 1,480 45,209
-------- ----------------------------
Average Selling Price,Net of Value Added Tax
and Smelter Charges
Silver ($ per ounce) 23.15 - - 23.15
Gold ($ per ounce) 1,030 - 1,220 1,111
Lead ($ per pound) 0.80 - - 0.80
Zinc ($ per pound) 0.63 - - 0.63
(1) Ying Mining District includes mines: SGX (Ying), TLP, HPG&LM.
(2) X Mines includes the XBG project and XHP project.
(i) Represents development tunnelling ore at XHP Project.
Three months ended
September 30, 2011
----------------------------------
Ying
Mining
District X
(1) Mines(2) BYP Total
----------------------------------------------------------------------------
Production Data
Mine Data
Ore Mined (tonne)
Direct Smelting Ore (tonne) 2,579 - - 2,579
Stockpiled Ore (tonne) 179,963 - 24,754 204,717
----------------------------------
182,542 - 24,754 207,296
----------------------------------
Run of Mine Ore (tonne)
Direct Smelting Ore (tonne) 2,579 - - 2,579
Ore Milled (tonne) 177,585 - 19,813 197,398
----------------------------------
180,164 - 19,813 199,977
----------------------------------
Mining cost per tonne of ore mined ($) 57.23 - 44.11 55.66
Cash mining cost per tonne of ore
mined ($) 45.74 - 16.95 42.30
Non cash mining cost per tonne of
ore mined ($) 11.49 - 27.16 13.36
Unit shipping costs ($) 3.78 - - 3.33
Milling cost per tonne of ore milled
($) 15.03 - 12.53 14.78
Cash milling cost per tonne of ore
milled ($) 13.48 - 11.87 13.32
Non cash milling cost per tonne of
ore milled ($) 1.54 - 0.66 1.45
Average Production Cost
Silver ($ per ounce) 7.09 - - 7.09
Gold ($ per ounce) 270 - 599 305
Lead ($ per pound) 0.20 - - 0.20
Zinc ($ per pound) 0.15 - - 0.15
Total production cost per ounce of
Silver ($) (2.74) - (2.74)
Total cash cost per ounce of Silver
($) (4.55) - (4.55)
Total production cost per ounce of
Gold ($) 599 599
Total cash cost per ounce of Gold ($) 276 276
Total Recovery of the Run of Mine Ore
Silver (%) 92.1 - 92.1
Gold (%) - 89.1 89.1
Lead (%) 94.7 - 94.7
Zinc (%) 75.1 - - 75.1
Head Grades of Run of Mine Ore
Silver (gram/tonne) 271 - 271
Gold (gram/tonne) - 3.3 3.3
Lead (%) 4.6 - 4.6
Zinc (%) 1.2 - - 1.2
Sales Data
Metal Sales
Silver (in thousands of ounces) 1,396 - - 1,396
Gold (in thousands of ounces) 0.9 - 1.6 2.5
Lead (in thousands of pounds) 16,520 - - 16,520
Zinc (in thousands of pounds) 3,236 - - 3,236
Metal Sales
Silver (in thousands of $) 42,535 - - 42,535
Gold (in thousands of $) 1,081 - 2,220 3,301
Lead (in thousands of $) 14,145 - - 14,145
Zinc (in thousands of $) 2,074 - - 2,074
----------------------------------
59,835 - 2,220 62,055
----------------------------------
Average Selling Price,Net of Value Added Tax and
Smelter Charges
Silver ($ per ounce) 30.48 - - 30.48
Gold ($ per ounce) 1,198 - 1,376 1,313
Lead ($ per pound) 0.86 - - 0.86
Zinc ($ per pound) 0.64 - - 0.64
(1) Ying Mining District includes mines: SGX (Ying), TLP, HPG&LM.
(2) X Mines includes the XBG project and XHP project.
Six months ended
September 30, 2012
--------------------------------------
Ying
Mining
District
(1) X Mines(2) BYP Total
----------------------------------------------------------------------------
Production Data
Mine Data
Ore Mined (tonne)
Direct Smelting Ore (tonne) 4,693 - - 4,693
Stockpiled Ore (tonne) 382,136 10,377 (i) 54,201 446,714
--------------------------------------
386,829 10,377 54,201 451,407
--------------------------------------
Run of Mine Ore (tonne)
Direct Smelting Ore (tonne) 4,693 - - 4,693
Ore Milled (tonne) 384,932 31,084 45,163 461,179
--------------------------------------
389,625 31,084 45,163 465,872
--------------------------------------
Mining cost per tonne of ore mined
($) 65.58 - 54.38 64.20
Cash mining cost per tonne of
ore mined ($) 54.30 - 23.30 50.49
Non cash mining cost per tonne
of ore mined ($) 11.28 - 31.08 13.71
Unit shipping costs ($) 3.79 - - 3.32
Milling cost per tonne of ore
milled ($) 14.90 - 15.61 14.97
Cash milling cost per tonne of
ore milled ($) 13.10 - 14.36 13.23
Non cash milling cost per tonne
of ore milled ($) 1.79 - 1.25 1.74
Average Production Cost
Silver ($ per ounce) 8.77 - - 8.77
Gold ($ per ounce) 434 - 932 469
Lead ($ per pound) 0.31 - - 0.31
Zinc ($ per pound) 0.24 - - 0.24
-
Total production cost per ounce of
Silver ($) 1.75 - 1.75
Total cash cost per ounce of
Silver ($) (0.31) - (0.31)
Total production cost per ounce of
Gold ($) 932 932
Total cash cost per ounce of Gold
($) 488 488
Total Recovery of the Run of Mine
Ore
Silver (%) 92.2 - 92.2
Gold (%) - - 91.7 91.7
Lead (%) 94.1 - 94.1
Zinc (%) 66.5 - - 66.5
Head Grades of Run of Mine Ore
Silver (gram/tonne) 226 - 226
Gold (gram/tonne) - - 2.8 2.8
Lead (%) 3.5 - 3.5
Zinc (%) 1.2 - - 1.2
Sales Data
Metal Sales
Silver (in thousands of ounces) 2,500 10 (i) - 2,510
Gold (in thousands of ounces) 2.1 0.1 (i) 2.9 5.1
Lead (in thousands of pounds) 27,116 525 (i) - 27,641
Zinc (in thousands of pounds) 6,386 111 (i) - 6,497
Metal Sales
Silver (in thousands of $) 57,690 - - 57,690
Gold (in thousands of $) 2,362 - 3,732 6,094
Lead (in thousands of $) 21,932 - - 21,932
Zinc (in thousands of $) 4,042 - - 4,042
--------------------------------------
86,026 - 3,732 89,758
--------------------------------------
Average Selling Price,Net of Value Added Tax
and Smelter Charges
Silver ($ per ounce) 23.07 - - 23.07
Gold ($ per ounce) 1,142 - 1,271 1,187
Lead ($ per pound) 0.81 - - 0.81
Zinc ($ per pound) 0.63 - - 0.63
(1) Ying Mining District includes mines: SGX (Ying), TLP, HPG&LM.
(2) X Mines includes the XBG project and XHP project.
(i) Represents development tunnelling ore at XHP Project.
Six months ended
September 30, 2011
----------------------------------
Ying
Mining
District X
(1) Mines(2) BYP Total
----------------------------------------------------------------------------
Production Data
Mine Data
Ore Mined (tonne)
Direct Smelting Ore (tonne) 5,686 - - 5,686
Stockpiled Ore(tonne) 347,061 - 33,667 380,728
----------------------------------
352,747 - 33,667 386,414
----------------------------------
Run of Mine Ore (tonne)
Direct Smelting Ore(tonne) 5,687 - - 5,687
Ore Milled(tonne) 349,404 - 27,777 377,181
----------------------------------
355,091 - 27,777 382,868
----------------------------------
Mining cost per tonne of ore mined ($) 58.57 - 32.71 56.32
Cash mining cost per tonne of ore
mined ($) 47.15 - 12.46 44.13
Non cash mining cost per tonne of
ore mined ($) 11.42 - 20.25 12.19
Unit shipping costs ($) 3.80 - - 3.47
Milling cost per tonne of ore milled
($) 14.33 - 15.05 14.38
Cash milling cost per tonne of ore
milled ($) 12.78 - 14.35 12.89
Non cash milling cost per tonne of
ore milled ($) 1.55 - 0.70 1.49
Average Production Cost
Silver($ per ounce) 6.53 - - 6.53
Gold ($ per ounce) 257 - 513 268
Lead($ per pound) 0.19 - - 0.19
Zinc ($ per pound) 0.13 - - 0.13
Total production cost per ounce of
Silver ($) (3.75) - (3.75)
Total cash cost per ounce of Silver
($) (5.39) - (5.39)
Total production cost per ounce of
Gold ($) 513 513
Total cash cost per ounce of Gold ($) 276 276
Total Recovery of the Run of Mine Ore
Silver (%) 91.7 - 91.7
Gold (%) - 86.7 86.7
Lead (%) 94.7 - 94.7
Zinc(%) 73.9 - - 73.9
Head Grades of Run of Mine Ore
Silver(gram/tonne) 287 - 287
Gold(gram/tonne) - 2.9 2.9
Lead (%) 5.0 - 5.0
Zinc (%) 1.4 - - 1.4
Sales Data
Metal Sales
Silver (in thousands of ounces) 2,988 - - 2,988
Gold(in thousands of ounces) 1.7 - 2.2 3.9
Lead(in thousands of pounds) 37,142 - - 37,142
Zinc(in thousands of pounds) 7,339 - - 7,339
Metal Sales
Silver (in thousands of $) 90,291 - - 90,291
Gold (in thousands of $) 1,923 - 2,909 4,832
Lead (in thousands of $) 32,081 - - 32,081
Zinc(in thousands of $) 4,570 - - 4,570
----------------------------------
128,865 - 2,909 131,774
----------------------------------
Average Selling Price,Net of Value Added Tax and
Smelter Charges
Silver($ per ounce) 30.22 - 30.22
Gold ($ per ounce) 1,130 - 1,321 1,237
Lead($ per pound) 0.86 - 0.86
Zinc ($ per pound) 0.62 - - 0.62
(1) Ying Mining District includes mines: SGX (Ying), TLP, HPG&LM.
( 2 ) X Mines includes the XBG project and XHP project.
Contacts:
Silvercorp Metals Inc.
Jonathan Hackshaw
Director, Investor Relations
(604) 669-9397 or Toll Free 1 (888) 224-1881
(604) 669-9387 (FAX)
investor@silvercorp.ca
www.silvercorp.ca
Source: Silvercorp Metals Inc.
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