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Silvercorp Metals, the China-focused miner, reports 52% increase in net income in second quarter

The firm produces metals from the Ying project in the Henan Province and also the GC mine in the Guangdong province

Silvercorp Metals Inc -
In the three months to end September, the miner produced and sold 1.9 million ounces of silver, 1,100 ounces of gold, 19.1 million pounds of lead, and 6.7 million pounds of zinc

China-focused miner Silvercorp Metals Inc (NSYEAMERICAN:SVM) (TSX:SVM) reported a 52% increase in net income for its second quarter and said it expected production to beat its guidance for the year as a whole. 

The firm produces metals from its flagship Ying district project in the Henan Province - which has six underground mines with four mining permits - and also the GC mine in the Guangdong province, where output began five years ago.

In the three months to end September, the miner produced and sold 1.9 million ounces of silver, 1,100 ounces of gold, 19.1 million pounds of lead, and 6.7 million pounds of zinc.

READ: Silvercorp Metals finds more mineralization at flagship SGX mine project in China after drilling and exploration

That compares to 1.9 million ounces of silver, 1,000 ounces of gold, 19.4 million pounds of lead, and 4.9 million pounds of zinc in the same three months last year.

Revenue came in at US$49.9 million, up 4% on the US$48 million seen last year. The net income attributable to shareholders was US$12.2 million, or US$0.07 per share, up 52% compared to US$8.0 million, or $0.05 per share in the prior year quarter.

The all-in sustaining cost per ounce of silver, net of by-product credits,  came in at US$4.15 per ounce, which was up 63% compared to last year.

The miner ended its fiscal 2Q in rude financial health with US$135.2 million in cash and equivalents and short-term investments, up 17%, on the US$115.3 million seen at the end of March this year. Working capital as at September 30 was US$125 million, up 29% on the US$97 million seen at March 31.

It also ended the quarter with inventories of 4,176 tonnes of silver-lead concentrate and 586 tonnes of zinc concentrate, up 28% and 59% respectively.

Looking ahead, Silvercorp said it expects its consolidated production for fiscal 2020 (to end March next year) will "exceed" annual guidance and that production costs will be "within budget".

Soft demand

Due to soft demand for lead battery arising from weak automobile market and the winter season environmental control measures in China, smelters are reducing their purchases of silver-lead concentrates and increasing smelter charges from last quarter’s RMB2,200 per tonne lead to RMB2,700 per tonne lead metal currently, the firm noted.

Accordingly, Silvercorp told investors that it planned to build up its silver-lead concentrate inventories over the next two quarters for a better price.

Silvercorp shares in New York added 1.20% to US$4.21 each. In Toronto they added 1.5% to C$5.65.

---Updates for share price--

Contact the author at [email protected]

Quick facts: Silvercorp Metals Inc

Price: 6.07 CAD

TSX:SVM
Market: TSX
Market Cap: $1.02 billion
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