Silvercorp Metals Inc. Price & Performance (SVM)

Thank you, Chloe. On behalf of Silvercorp, I'd like to welcome everyone to the call this morning or afternoon, wherever you may be. Today, we'll discuss our third quarter fiscal twenty twenty five financial results, which were released on Tuesday after the market closed. A copy of the news release, our MD and A and the financial statements are available on our website and on SEDAR Plus. Before we jump into the call, note that certain statements on today's call will contain forward looking information within the meaning of securities laws. And please review the cautionary statements in our news release as well as the risk factors described in our most recent regulatory filings. And now to jump in and recap our financial results. Fiscal Q3 was our strongest quarter ever, and this was highlighted by record revenue of $84,000,000 which was up 43% from the quarter last year, record operating cash flow of $45,000,000 which is up 90% and record silver production of 1,900,000 ounces, which is up 16%. This growth was driven by a strong performance from our flagship Ying mine, which also successfully completed a mill expansion in early December and will be increasing production capacity from 2,500 to 4,000 tons per day.

In addition, a robust commodity market led to improved realized metals prices compared to the same period last year. And in particular, the realized gold and silver price rose by 35%. The zinc price rose by 49 and lead by 8%. Silver remains our most important metal and contributed 63% of our net realized Q3 revenue this year, and that compared to 59% of revenue in last year's fiscal Q3. The results again reinforce why Silver Corp. Remains a compelling investment. We are a growing and profitable silver producer that provides investors with leverage to higher metals prices. Moving down the income statement. Attributable net income for the quarter was $26,000,000 or $0.12 per share, more than double the $11,000,000 or 0.06 a share that was reported in the same period last year. On an adjusted basis, removing the impact of noncash and onetime items, our net income for the quarter was $22,000,000 or $0.1 per share compared to $11,000,000 or $0.06 in the comparative quarter. The increase in our bottom line primarily reflects the higher metals prices as well as higher volumes of gold, silver and lead sold, which increased 40%, fifteen % and five % respectively year over year.

And these increases were partially offset by a 10% decrease in zinc sold, a $2,000,000 increase in admin expenses and a onetime $12,000,000 government payment related to the renewal of our mining license at the SGX mine. Looking at cash flow from operating activities, our mines generated 45,000,000 this past quarter. This is up 90% year over year, driven by higher metal prices, increased sales and $10,000,000 inflow from changes in non cap working capital. And that's compared to a $135,000 outflow for the changes of noncash working capital last year. Even after adjusting for noncash working capital changes, our cash flow still grew by 47% year over year. During the quarter, we invested $25,000,000 in our mines and projects. This is up 29% from last year and is largely due to increased underground development and completion of the new tailing storage facility and the mill expansion projects at the Ying mine as well as ongoing spending at El Domo and Condor projects in Ecuador. Additionally, we repaid Wheaton Precious Metals thirteen point two five million dollars that had been drawn as an early deposit for the El Domo project, paid $2,700,000 in dividends and repurchased close to $1,000,000 worth of our shares under the current NCIB program.

We ended 2024 with a healthy cash balance of $355,000,000 which includes $143,000,000 in net proceeds from our convertible notes offering, which we completed last November. This cash position does not include our investments in our associates and other companies, which had a total market value of $69,000,000 as of December 31, and this value is up slightly to $73,000,000 dollars as of today. Turning to our operating results. As we reported in January, Ying delivered record performance in Q3, which drove an 1116% increase year over year in the company's total ore mined and milled. As a result, our production of silver, gold and lead increased by 16%, fifty three % and five % respectively in Q3. Zinc production decreased by 10% compared to last year due to lower head grades. Year to date, we have produced 5,300,000 ounces of silver, 4,400 ounces of gold, 46,000,000 pounds of lead and 19,000,000 pounds of zinc. Zinc. With the successful expansion of our mill number two and a 145,000 ton ore stockpile, we kept the plant running at Ying during Chinese New Year and we remain confident in achieving our silver guidance of between 6,700,000 to 7,200,000 ounces for fiscal twenty twenty five.

On the unit cost front, production costs averaged $78 per tonne in Q3, '5 percent higher than last year due to more underground development and grade control drilling completed and expensed as part of the mining cost. Year to date production costs averaged $80 per tonne, which was in line with our annual cost guidance of between $77 and $80 per tonne. Our cash cost per ounce of silver netobi products was negative $1.88 in Q3, lower than the negative $0.96 in the prior year quarter, which reflected a $6,000,000 increase in by product credits, which offset the impact of higher production costs. And our all in sustaining production costs increased by 10% year over year to $150 per tonne in Q3, driven by a 5% increase in unit production costs and a 3% increase in sustaining capital expenditures. However, year to date, all in sustaining production costs of $146 per tonne is in line with our annual guidance of between $144 to $152 per tonne. Our all in sustaining cost per ounce of silver net of byproduct credits was $12.75 a 13% increase year over year, reflecting increases in G and A, some sustaining capital plus some government payments totaling $6,000,000 Turning to our growth projects.

As mentioned earlier, we commissioned the Mill No. 2 capacity expansion and Phase one of our third tailing storage facility at Ying Last December. Both were completed on time and under budget. With these upgrades, we are well positioned for sustained production growth in the coming years as we continue to increase mechanization at our underground mines. Additionally, we secured all necessary permits and licenses for the Kuanping satellite project, which is now ready for construction. Recall, as part of our fiscal twenty twenty five budget, we've allocated $1,000,000 for development at Kuanping. We are leveraging our mine billing expertise in Ecuador as we advance construction of the Aldomo copper gold project. Since acquiring the project last July, we have strengthened our in country technical and management team. We've optimized the site layout, project infrastructure designs and our open pit production plan and commenced detailed engineering for the process plant, while conducting some additional metallurgical testing to potentially improve gold recovery in our copper concentrate. Additionally, we signed a power line contract with the Ecuadorian state utility, Cinel, and we finalized the project's materials balance. And for everyone, this is basically an earthmoving schedule and it really speaks to exactly what get moves when to where and from the open pit.

We've also adopted a unit cost method for contractor bidding, ensuring we pay only on a per ton of material move basis going forward. Based on this approach, we awarded the first civil contract to CRCC14, a seasoned operator in country with over a decade of experience building large infrastructure and mining projects in Ecuador. CRCC is now mobilized to build the temporary camp, initial phase of the tailings facility, the waste dump and other important infrastructure. The remaining two civil contracts for pit stripping and mining as well as for process plant construction are set to be awarded in the coming months, keeping us on track for initial production targeted in the second half of twenty twenty six. We look to provide guidance on our capital budget for fiscal twenty twenty six along with our production targets in April. At the early stage Condor project, our focus has been on completing a resource review to assess future development plans for what would be a high grade underground gold mine, and we continue to develop an exploration plan as we further our understanding of the project. We're committed to working closely with the government of Ecuador, local communities and our in country partners, Solidar Resources.

Our focus on responsible and sustainable development aims to create lasting benefits for both the local communities and the country. And with that, operator, I would like to open the call for questions.

Thank you, sir. Our first question comes from the line of Dalton Barretto from Canaccord Antimolist. Your line is open.

Thanks, operator. Good morning, guys. I'm going to start with sort of a housekeeping question here. My understanding is that you guys aren't exposed at all to a lot of this tariff talk that's happening. I just want to confirm that that's the case and how you are fielding questions from investors around it? Thank you.

Yes. Hi, Dalton, and thanks. Yes, question is definitely coming up on that front. But yes, as you know, we sell all our concentrates to smelters in country. And that's really not that different from, say, or Peruvian miner that's producing concentrates that obviously has to ship them to a smelter. But obviously, there is advantages to us being a domestic producer. And really, once the metals leave our mine site in concentrate form and we've been paid for them, we really have no further exposure and we're not exporting anything from China. Obviously, I sometimes joke the only thing we export is cash in the form of dividends. So we're not bringing anything out of the country to bring into The U. S. But obviously, Dalton, you're now, you're now, you follow the sector and the world markets. So if the tariffs were to impact global economic activity in some way and that somehow led to an impact on global metals prices, we'd be affected indirectly like any other miner that would be in your coverage universe.

Got it. Thank you for that. And then just as a follow-up on El Domo, is it I mean, are you planning to put out some sort of an overall game plan going forward with this April update? How comprehensive is it going to be?

Yes, we are. And what we'll do, if we have the benefit of some more contracts being signed, then we'll have some fixed numbers in terms of being able to report on actuals. But what we'll be putting together is a budget, which is our best estimate of both the total construction as well as the budget for this current fiscal year. So I have to wait just a little bit longer, but we will have numbers to provide that update. It just seemed a bit premature to put them out now while we're in the midst of finalizing some very important details regarding the construction. But we continue to see the opportunity to cut back on that initial capital, which in the feasibility study had been $248,000,000 And there's nothing that we're seeing now that causes us to change our view.

Okay. So that's fine on the CapEx. But just in terms of a mine plan because I know you guys are looking at pretty much everything, are you going to put an updated mine plan as well?

The mine plan isn't really expected to change once we get into production that much. So it's more just related to pre stripping and some of the scheduling upfront, but we don't see a huge impact on the actual mine plan once we're into mining. So the production numbers that you'd be using from the feasibility study are still the best to use going forward.

Got it. Thank you. And if I can just squeeze one last one. And is Salazar still committed to their stake? Or is there an opportunity for you to consolidate that as well?

Can't comment on that. You'll have to ask them. But obviously, we're very happy having a local partner in country. And our relationship with Salazar is very good.

Our next question comes from the line of Joseph Ricor from Roth Capital Partners. Your line is open.

So I guess first thing, part of modeling you guys assets is the difference in pricing that you guys get for individual commodities being Chinese based rather than the rest of the world. As you look at El Domo and the concentrates you'll produce there and the sales you'll have, should we be more modeling like an LME pricing basis or an SME pricing basis?

Yes. No, no. An LME and a more typical pricing structure would be appropriate. We've got in place an offtake agreement that was entered into by Adventist with the concentrate traders and this is based on sort of market terms and conditions at the times of delivery. So if you used Western based LME pricing as a more typical concentrate pricing model, that would be appropriate.

Okay. That's helpful. And then another intention is to keep the mill running through the Chinese New Year this year. Do you have kind of a rough estimate of how much extra tonnage you're going to get? I know you guys have stockpiled, but how much of that you're going to process during this extra milling time?

Our view, I mean, obviously, we're through Chinese New Year now, but we're still milling stockpile ores and we will be doing that. I think our current estimate is that we will end the quarter with a more typical ore inventory that we would have carried in the past. So not the 145,000 tonnes, but I think in the past, we've had somewhere in the range of sort of the 15,000 tonne type numbers or whatever that we've carried. So I think you can model that we will have run through the bulk of the ore stockpile to the March.

Right. And adjusting that 15 to the fact that the mill is a little larger, that number might be a little larger.

Yes, yes. I mean, we haven't sort of hit steady state yet. And just obviously, as we're ramping up production on the mine, and we have been, and that's obviously why we were able to build that stockpile. As we're ramping up, there will be periods of time where something will get a point where we're running at a higher rate from the mine and obviously the mill now is in a position to ramp up to match that.

Okay. Thanks and congrats on a good quarter.

Thanks, Joe.

This concludes the question and answer session. I would like to turn the conference back over to Mr. Schafer for any closing remarks.

Okay. Well, that's great. I'd like to thank everyone for tuning in today. And as always, if anyone has any further questions, please call or email us, and we look forward to hearing from you and continuing the conversation. Thanks, everyone, and have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a wonderful day.