2009-11-09 22:57:02 -
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/09/09 -- Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX: SVM)(NYSE Amex: SVM) reports its unaudited financial and operating results for the second quarter ended September 30, 2009. The financial results are expressed in thousands of US dollars (US$) unless stated otherwise.
SECOND QUARTER HIGHLIGHTS
During the quarter ended September 30, 2009 ("Q2 2010"), financial highlights included:
- Net earnings of $8.9 million, 83% higher compared to $4.9 million in the same quarter last year;
- Earnings per share of $0.06, double the earnings per share of $0.03 in the same quarter last year;
- Production of 1.2 million ounces of silver and 15.2 million pounds of lead, representing 35% and 43% increases, respectively, compared to 0.8 million ounces of silver and 10.7 million pounds of lead produced in the same quarter last year;
- Total production cost of negative $5.61 per ounce of silver and cash cost of negative $6.33 per ounce of silver, net credit of other metals, making Silvercorp an industry leading low-cost silver producer;
- Generated $15.9 million cash from operating activities or $0.10 per share; and,
- Total cash, cash equivalents and short term investments increased to $79.0 million.
FINANCIALS
Silvercorp produced 35% more silver and 43% more lead in this quarter, compared to the same quarter last year. Sales revenue for this quarter was $25.1 million compared to $20.1 million in the same quarter last year. Due to the increase in silver and lead production, a 25% increase in sales was achieved despite lower silver and lead prices compared to a year ago.
During the six months ended September 30, 2009, sales revenue was $47.7 million, representing a $3.3 million or 6% reduction compared to the six months ended September 30, 2008. The quantity of silver and lead sold during this period was 13% and 25% higher, respectively, than a year ago; however, this did not fully offset the impact of lower metal prices which were down 16% for silver and 28% for lead compared to the same period last year.
Cost of sales for the quarter was $5.2 million, representing a 33% decrease compared to the same quarter last year. During the six months ended September 30, 2009, cost of sales was $10.1 million, down 35% compared to a year ago. The cost reduction is a reflection of improved operational and cost control, and also due to the low mine production in TLP, LM and HPG mines.
Gross profit margin this quarter improved to 76% from 51% in the same quarter last year. The consolidated net income for this quarter was $8.9 million or $0.06 per share, representing an increase of 83% compared to $4.9 million or $0.03 per share in the same quarter last year.
For the six months ended September 30, 2009 and 2008, gross profit margin was 75% and 62%, respectively. Net income for the six months ended September 30, 2009 and 2008 were $16.4 million or $0.10 per share and $16.5 million or $0.11 per share, respectively.
Cash and cash equivalents plus short-term investments increased by $13.6 million to $79.0 million since March 31, 2009 ($65.4 million). The 21% increase is mainly due to $26.3 million cash generated by operating activities, offset by $8.5 million of capital expenditures and $5.5 million of cash dividend payments.
OPERATIONS
Silvercorp mined 102,461 tonnes of ore during the second quarter, 22,073 tonnes less than the same quarter last year, as operations at the TLP, LM and HPG mines were still in the ramping up stage.
During the quarter, production was primarily from the Company's flagship Ying Mine where 83,263 tonnes of ore was mined, 13% higher than the same quarter last year. Silver head grades at the Ying Mine improved to 453 g/t from 331 g/t in the prior year period. However, silver head grade decreased from 488 g/t last quarter, as mining was at a broken zone, causing higher dilution during the quarter.
Cash cost per ounce of silver for the second quarter improved to negative $6.24, compared with negative $5.14 per ounce of silver in the same quarter last year. This is also an improvement from the prior quarter cash cost of negative $5.00 per ounce. The improvement in cash cost per ounce of silver was mainly driven by higher realized by-products prices.
The operating results for the past five quarters at the Ying Mine are summarized as follows:
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Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009
30-Sep-09 30-Jun-09 31-Mar-09 31-Dec-08 30-Sep-08
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Ores Mined (tonne)
Direct Smelting
Ores (tonne) 3,550 3,773 2,610 3,114 2,387
Ores to be milled
(tonne) 79,713 82,475 55,232 77,968 71,456
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83,263 86,248 57,842 81,082 73,843
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Run of Mine Ores
(tonne)
Direct Smelting
Ores (tonne) 3,550 3,773 2,726 3,114 2,387
Ores Milled (tonne) 80,657 77,330 60,167 70,854 69,493
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84,207 81,103 62,893 73,968 71,880
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Head Grades of Run of
Mine Ores
Silver (gram/tonne) 452.5 488.1 486.7 420.2 331.2
Lead (%) 8.1 9.1 9.1 7.7 6.0
Zinc (%) 3.0 3.1 3.1 2.6 2.5
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Recovery Rate of the
Run of Mine Ores
Silver (%) 92.8 93.3 93.1 92.9 91.3
Lead (%) 96.6 96.5 97.2 96.7 95.6
Zinc (%) 71.2 76.3 69.4 78.1 68.2
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Cash Mining cost
($ per tonne) 46.16 42.27 45.44 45.10 55.71
Total Mining cost
($ per tonne) 54.71 52.70 58.71 61.60 72.86
Cash Milling cost
($ per tonne) 9.19 10.84 10.57 10.32 11.24
Total Milling cost
($ per tonne) 10.16 11.74 11.76 11.24 12.24
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Production Cost per
Ounce of Silver,
adjusted for
by-product credits (5.51) (4.19) (3.24) 0.18 (3.44)
Cash Cost per Ounce
of Silver,
adjusted for
by-product credits (6.24) (5.00) (3.62) (1.39) (5.14)
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NSR PRICES
The Net Smelter Return (NSR) prices (net of 17% value added tax) for the past five quarters are as follows:
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For the quarters ended
September June March December September
30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
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Silver (US$/oz) 10.99 9.89 8.68 7.34 11.99
Gold (US$/oz) 627 573 648 449 618
Lead (US$/lb) 0.67 0.56 0.52 0.41 0.81
Zinc (US$/lb) 0.53 0.46 0.37 0.28 0.41
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Compared to the quarter ended June 30, 2009, the NSR prices for silver, lead and zinc all increased as a result of improved quoted metal prices and reduced smelter charges. NSR prices of silver and lead was approximately 85% of quoted Shanghai metal prices, excluding the 17% value added tax.
OUTLOOK
For the remainder of fiscal year 2010, the Company's production outlook is 204,000 tonnes, of which 160,000 tonnes will be mined from the Ying mine and 44,000 tonnes will come from the HPG, TLP and LM mines combined. This will bring total production for the entire fiscal year to 410,000 tonnes, in-line with the Company's annual production forecast.
At the Ying Mine, the Company produced 2.2 million ounces of silver, 29 million pounds of lead and 7 million pounds of zinc for the six months ended September 30, 2009. As the actual metal production exceeded our forecasts for the first half of fiscal year 2010, the Company is revising its annual production forecast for the Ying Mine to 4.5 million ounces of silver, 58 million pounds of lead and 14 million pounds of zinc.
The Company will continue to focus on mine development at the TLP, LM and HPG mines, where development activities were partially resumed in May 2009. Through the extraction of by-product ores during mine development from these three mines, the Company expects an additional 0.2 million to 0.5 million ounces of silver to be produced from these mines for the remainder of the year, bringing consolidated silver production for the entire fiscal year to 4.7 million to 5.0 million ounces.
For the second half of fiscal 2010, capital expenditures are budgeted at $8 million, of which $5 million will be used for exploration drilling and development at the Ying mine and $3 million for exploration drilling and mine development at the TLP, LM and HPG mines. The Company is also carrying out a regional IP geophysics program at the Ying Mining Camp with the aim of defining drill targets outside the current mining areas.
At the GC project in Guangdong Province, China, the Company is currently focusing on permitting and design for mine and mill construction. For the second half of fiscal year 2010, the Company has budgeted approximately $3 million for the GC project.
Silvercorp continues to pursue future growth opportunities by carrying out an aggressive exploration program within the existing exploration and mining permit areas and seeking out acquisitions projects in China and other jurisdictions.
CONFERENCE CALL AND WEBCAST INFORMATION
A conference call and live audio webcast to discuss these results is scheduled as follows:
Date: Tuesday, November 10, 2009
Time: 9:00 am PT (12:00 noon ET)
Dial-In Number: 1-612-288-0329
Live audio webcast: www.silvercorp.ca :
(click on the link on the home page)
Playback webcast can be accessed at: www.silvercorp.ca :
About Silvercorp Metals Inc.
Silvercorp Metals Inc., China's largest primary silver producer, is engaged in the acquisition, exploration and development of silver related mineral properties located in the People's Republic of China ("China"). Silvercorp Metals Inc. is operating and developing four Silver-Lead-Zinc mines at the highly profitable Ying Mining Camp, Henan Province, China. Silvercorp is also applying for a mining permit at its 95% owned GC & SMT property to profitably mine and produce silver, lead and zinc in Guangdong Province, China. The Company's common shares are included as a component of the S&P/TSX Composite and the S&P/TSX Global Mining Indexes.
CAUTIONARY DISCLAIMER - FORWARD LOOKING STATEMENTS
Statements in this press release other than purely historical factual information, including statements relating to mineral resources and reserves, or the Company's future plans and objectives, or expected production levels, exploration, head grades, recovery rates, cash flows, acquisitions, and capital expenditures constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in mineral exploration, development, and mining. Production projections are based not on mineral reserves but on mineral resources which do not have demonstrated economic viability. There can be no assurance that such forward-looking statements, including those in the outlook section, will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on such statements. Except in accordance with applicable securities laws, the Company expressly disclaims any obligation to update any forward-looking statements or forward-looking statements that are incorporated by reference herein.
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Contacts:
Silvercorp Metals Inc.
Rui Feng
Chairman & CEO
(604) 669-9397 or Toll Free: 1 (888) 224-1881
Silvercorp Metals Inc.
Lorne Waldman
Corporate Secretary
(604) 669-9397 or Toll Free: 1 (888) 224-1881
(604) 669-9387 (FAX)
info@silvercorp.ca :
www.silvercorp.ca :
