Silvercorp Reports Financial and Operating Results for the Second Quarter of Fiscal 2013

Marketwired

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov 13, 2012) - Silvercorp Metals Inc. ("Silvercorp" or the "Company") (SVM.TO)(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  
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  
  205,811   181,018 135,747   174,077   182,542  
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  
  203,170   186,455 136,609   175,394   180,165  
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  
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  
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  
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  
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 )

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 30, 2012 March 31, 2012
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
    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
TOTAL ASSETS $ 587,176 $ 575,434
         
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
    41,473   40,211
         
Non-current Liabilities        
  Deferred income tax liabilities   22,509   19,991
  Environmental rehabilitation   4,467   4,400
Total Liabilities   68,449   64,602
         
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
Total equity attributable to the equity holders of the Company   441,581   433,812
         
Non-controlling interests   77,146   77,020
Total Equity   518,727   510,832
         
TOTAL LIABILITIES AND EQUITY $ 587,176 $ 575,434
 
 
SILVERCORP METALS INC.
Unaudited Consolidated Statements of Income
(Expressed in thousands of U.S. dollars, except for per share figures)
 
  Three Months Ended
September 30,
  Six Months Ended
September 30,
 
  2012   2011   2012   2011  
                         
Sales $ 45,209   $ 62,055   $ 89,758   $ 131,774  
Cost of sales   16,446     14,435     35,440     28,494  
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  
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  
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 )
Income before income taxes   20,780     39,688     38,225     86,506  
                         
Income tax expense   7,277     13,786     15,204     26,360  
Net income $ 13,503   $ 25,902   $ 23,021   $ 60,146  
                         
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  
  $ 13,503   $ 25,902   $ 23,021   $ 60,146  
                         
Earnings per share attributable to the equity holders of the Company                                  
Basic earnings per share $ 0.06   $ 0.11   $ 0.09   $ 0.25  
Diluted earnings per share $ 0.06   $ 0.11   $ 0.09   $ 0.25  
Weighted Average Number of Shares Outstanding - Basic   170,719,933     173,664,959     170,706,702     174,343,192  
Weighted Average Number of Shares Outstanding - Diluted   171,062,715     174,282,790     171,072,838     175,122,557  
 
 
SILVERCORP METALS INC.
Unaudited Consolidated Statements of Cash Flow
(Expressed in thousands of U.S. dollars)
 
  Three Months Ended
September 30,
  Six Months Ended
September 30,
 
  2012   2011   2012   2011  
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 )
Net cash provided by operating activities   23,917     35,179     43,169     69,114  
                         
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 District1   X Mines2 BYP Total  
               
Production Data              
  Mine Data              
    Ore Mined (tonne)              
      Direct Smelting Ore (tonne) 2,442   -   - 2,442  
      Stockpiled Ore (tonne) 203,369   7,995 * 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 * - 1,286  
    Gold (in thousands of ounces) 1.3   -   1.2 2.5  
    Lead (in thousands of pounds) 13,403   494 * - 13,897  
    Zinc (in thousands of pounds) 3,412   111 * - 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.
* Represents development tunnelling ore at XHP Project.
 
 
  Three months ended
September 30, 2011
 
  Ying Mining District1   X Mines2 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 District1   X Mines2 BYP Total  
               
Production Data              
  Mine Data              
    Ore Mined (tonne)              
      Direct Smelting Ore (tonne) 4,693   -   - 4,693  
      Stockpiled Ore (tonne) 382,136   10,377 * 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 * - 2,510  
    Gold (in thousands of ounces) 2.1   0.1 * 2.9 5.1  
    Lead (in thousands of pounds) 27,116   525 * - 27,641  
    Zinc (in thousands of pounds) 6,386   111 * - 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.
* Represents development tunnelling ore at XHP Project.
 
 
  Six months ended
September 30, 2011
 
  Ying Mining District1   X Mines2 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.
Contact:
Silvercorp Metals Inc.
Jonathan Hackshaw
Director, Investor Relations
(604) 669-9397 or Toll Free 1 (888) 224-1881
(604) 669-9387
investor@silvercorp.ca
www.silvercorp.ca

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