Erdene Resource Development Corporation press release
Silvercorp Reports Q2 Fiscal 2017 Results: Net Income up 454%, Cash Flows from Operations of $27.0 Million on Record Silver Production
TSX - Toronto Stock Exchange · Gold · Silver · Lead · Zinc · Molybdenum · Antimony · Copper · Canada
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Canada NewsWire
VANCOUVER, Nov. 3, 2016
Trading Symbol:TSX: SVM
VANCOUVER, Nov. 3, 2016/CNW/ - Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX: SVM) reported its financial and operating results for the second quarter ended September 30, 2016("Q2 Fiscal 2017"). All amounts are expressed in US Dollars.
SECOND QUARTER HIGHLIGHTS
Net income attributable to equity shareholders of $12.4 million, or $0.07per share, up 454% compared with net earnings attributable to equity shareholders of $2.2 millionor $0.01per share in the prior year period; Silver, lead and zinc sales up 44%, 51%, and 27%, respectively, from the prior year period, to approximately 1.8 million ounces silver, 19.9 million pounds lead, and 5.9 million pounds zinc; Sales of $46.3 million, up 70% from the prior year period; A 16%, 21%, and 22% increase in the head grades of silver, lead, and zinc; Gross margin improved to 58% from 32% in the prior year period; Cash flows from operations of $27.0 million, an increase of $22.4 millioncompared to $4.6 millionin the prior year period; Cash production cost per tonne1of $55.84compared with $70.49in the prior year period; Cash cost per ounce of silver1, net of by-product credits, of negative $3.05, compared to $1.52in the prior year period; All-in sustaining cost per ounce of silver1, net of by-product credits, of $3.16, compared to $12.40in the prior year quarter; and Ended the period with $92.1 millionin cash and short term investments, an increase of $30.1 millioncompared to $62.0 millionas at March 31, 2016.
| _ | | | 1 | Non-IFRS measure, see section 9 of the corresponding management's discussion and analysis for reconciliation |
FINANCIALS
Net income attributable to the shareholders of the Company in Q2 Fiscal 2017 was $12.4 million, or $0.07per share, up 454% compared to $2.2 million, or $0.01per share in Q2 Fiscal 2016.
In the current quarter, the Company's financial results were mainly impacted by the following: i) improved head grades yielded higher silver, lead, zinc sales, up 44%, 51% and 27%, respectively; ii) a 14% decrease in total production costs per tonne of ore processed; and iii) the increase of metals prices, as the realized selling price for silver, lead, and zinc increased by 27%, 3% and 22%, respectively, compared to the same prior year quarter.
Sales in Q2 Fiscal 2017 were $46.3 million, up 70% compared to $27.2 millionin Q2 Fiscal 2016. Silver and gold sales represented $27.0 millionand $1.1 million, respectively, while base metals represented $18.2 million of total sales in this quarter compared to silver, gold and base metals of $14.7 million, $0.5 million, and $12.0 million, respectively, in Q2 Fiscal 2016.
Cost of sales in Q2 Fiscal 2017 was $19.5 millioncompared to $18.4 millionin Q2 Fiscal 2016. The cost of sales included $13.8 million(Q2 Fiscal 2016 - $14.4 million) cash costs and $5.7 million(Q2 Fiscal 2016 - $4.0 million) depreciation, amortization and depletion charges. The decrease of cash cost of sales was mainly due to a 21% decrease in cash production costs per tonne of ore processed offset by an increase of metals sold. The total per tonne ore production cost was $79.61in Q2 Fiscal 2017, a decrease of 14%, from $92.19in Q2 Fiscal 2016.
Gross profit margin in Q2 Fiscal 2017 was 58% compared to 32% in Q2 Fiscal 2016. The improvement of gross profit margin was mainly due to: i) the improvement of head grades; ii) the decrease of per tonne ore production costs; and iii) the increase of metal prices. Ying Mining District's gross profit margin was 61% compared to a 35% gross profit margin in the same prior year quarter, while GC Mine's profit margin was 38% compared to a 18% gross profit margin in Q2 Fiscal 2016.
Cash flows provided by operating activities were $27.0 millionor $0.16per share in Q2 Fiscal 2017 compared to $4.6 millionor $0.03per share in Q2 Fiscal 2016. Before changes in non-cash operating working capital, cash flows provided by operating activities were $24.9 million, an increase of $15.7 million, compared to $9.2 millionin Q2 Fiscal 2016 as a result of the improvement of operating earnings.
For the six months ended September 30, 2016, net income attributable to the shareholders of the Company was $17.1 million, or $0.10per share, up 276% compared to $4.5 million, or $0.03per share in the same period prior year; sales were $81.6 million, up 37% from $59.4 millionin the same prior year period; and cash flows provided by operating activities were $47.2 millionor $0.28per share compared to $18.0 millionor $0.11per share in the same prior year period. Before changes in non-cash operating working capital, cash flows provided by operating activities for the six months ended September 30, 2016were $40.5 million, an increase of $22.0 millionor 119%, compared to $18.5 millionin the same prior year period.
The Company ended the period with $92.1 millionin cash and short term investments, an increase of $30.1 millionor 48.5% compared to $62.0 millionas at March 31, 2016.
OPERATIONS AND DEVELOPMENT
In Q2 Fiscal 2017, the Company sold approximately 1.8 million ounces of silver, 19.9 million pounds of lead, and 5.9 million pounds of zinc, up 44%, 51% and 27%, respectively, compared to 1.3 million ounces of silver, 13.2 million pounds of lead, and 4.6 million pounds of zinc in Q2 Fiscal 2016. The increase of metals sold on a consolidated basis, was mainly due to: i) a 16%, 21%, and 22% increase in the head grades of silver, lead and zinc, resulting largely from the ongoing dilution control measures and operation management improvements; ii) a 4% increase of ore milled; and iii) an increase in silver-lead concentrate inventories of 1,798 tonnes to 2,228 tonnes in Q2 Fiscal 2016 at the Ying Mining District. As at the end of Q2 Fiscal 2017, Ying Mining District held 3,880 tonnes of silver-lead concentrate inventories, and the estimated metals contained in silver-lead concentrate were approximately 0.4 million ounces of silver and 4.5 million pounds of lead.
For the six months ended September 30, 2016, on a consolidated basis, the Company sold approximately 3.5 million ounces of silver, 36.7 million pounds of lead, and 11.1 million pounds of zinc, up 31%, 33% and 23% compared to the same prior year period.
1. Ying Mining District, Henan Province, China
| Operational results - Ying Mining District | | | | | | | | | | | | | | | | | | | | | | | Q2 2017 | Q1 2017 | Q4 2016 | Q3 2016 | Q2 2016 | | Six Months ended September 30, | | | | | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | | 2016 | 2015 | | | Ore Mined (tonne) | 179,194 | 173,508 | 99,415 | 152,230 | 171,014 | | 352,702 | 338,120 | | | Ore Milled (tonne) | 180,154 | 167,747 | 99,203 | 151,035 | 176,936 | | 347,901 | 337,213 | | | Head Grades | | | | | | | | | | | | Silver (gram/tonne) | 302 | 308 | 310 | 287 | 246 | | 305 | 252 | | | Lead (%) | 4.9 | 4.4 | 4.0 | 4.1 | 3.8 | | 4.7 | 3.7 | | | Zinc (%) | 1.1 | 1.1 | 0.9 | 0.8 | 0.7 | | 1.1 | 0.8 | | Recoveries | | | | | | | | | | | | Silver (%) | 95.5 | 95.7 | 95.0 | 95.4 | 94.8 | | 95.6 | 94.7 | | | Lead (%) | 96.3 | 96.4 | 96.3 | 96.6 | 95.0 | | 96.3 | 95.0 | | | Zinc (%) | 42.9 | 48.4 | 57.6 | 50.2 | 55.1 | | 45.5 | 54.1 | | Metal Sales | | | | | | | | | | | | Silver (in thousands of ounce) | 1,630 | 1,490 | 857 | 1,216 | 1,132 | | 3,120 | 2,321 | | | Gold (in thousands of ounce) | 1.0 | 0.9 | 0.3 | 0.5 | 0.7 | | 1.9 | 1.5 | | | Lead (in thousands of pound) | 17,768 | 14,861 | 7,379 | 12,107 | 11,529 | | 32,629 | 23,456 | | | Zinc (in thousands of pound) | 1,785 | 1,820 | 999 | 1,168 | 1,459 | | 3,605 | 2,831 | | Cash mining cost ($ per tonne) | 49.13 | 52.33 | 54.63 | 55.63 | 62.15 | | 50.70 | 59.43 | | | Total mining cost ($ per tonne) | 76.30 | 78.64 | 83.24 | 78.91 | 86.29 | | 77.44 | 80.71 | | | Cash milling cost ($ per tonne) | 8.85 | 10.07 | 13.70 | 11.67 | 11.55 | | 9.44 | 12.23 | | | Total milling cost ($ per tonne) | 10.86 | 12.25 | 17.38 | 14.15 | 13.70 | | 11.53 | 14.51 | | | Cash production cost ($ per tonne) | 61.79 | 66.27 | 71.90 | 71.29 | 77.95 | | 63.98 | 75.81 | | | | | | | | | | | | | | Cash cost per ounce of silver ($) | (2.68) | 0.12 | 2.83 | 0.25 | 1.88 | | (1.34) | 1.44 | | | All-in sustaining cost per ounce of silver ($) | 2.33 | 5.80 | 8.92 | 6.62 | 9.88 | | 3.99 | 9.52 | | | | | | | | | | | | | | * Figures may not add due to rounding | | | | | | | | | |
In Q2 Fiscal 2017, the total ore mined at the Ying Mining District was 179,194 tonnes, an increase of 5% compared to total ore production of 171,014 tonnes in Q2 Fiscal 2016. Silver, lead and zinc head grades improved by 23%, 28%, and 53%, respectively, to 302 grams per tonne ("g/t") for silver, 4.9% for lead, and 1.1% for zinc from 246 g/t for silver, 3.8% for lead, and 0.7% for zinc, respectively, in Q2 Fiscal 2016, resulting largely from the ongoing dilution control and operation management improvements.
In Q2 Fiscal 2017, the Ying Mining District sold approximately 1.6 million ounces of silver, 1,000 ounces of gold, 17.8 million pounds of lead, and 1.8 million pounds of zinc, up 44%, 43%, 54%, and 22% respectively, compared to 1.1 million ounces of silver, 700 ounces of gold, 11.5 million pounds of lead, and 1.5 million pounds of zinc in Q2 Fiscal 2016. The increase in metals sold is mainly due to: i) the improved head grades achieved and higher ore production in the quarter, and ii) an increase in silver-lead concentrate inventories of 1,798 tonnes to 2,228 tonnes in the prior year quarter as the Company started intentionally to increase its concentrate inventories in reaction to the low metal prices in Q2 Fiscal 2016.
Total and cash mining costs per tonne in Q2 Fiscal 2017 were $76.30and $49.13, respectively, compared to $86.29and $62.15, respectively, in Q2 Fiscal 2016. The decrease in cash mining costs was mainly due to: i) a 22% decrease in contractor costs; ii) a 24% saving on raw material and maintenance costs; and offset by a 10% increase in labour costs.
Total ore milled at the Ying Mining District in Q2 Fiscal 2017 was 180,154 tonnes, an increase of 2% compared to 176,936 tonnes in Q2 Fiscal 2016. Cash milling costs in Q2 Fiscal 2017 were $8.85compared to $11.55in Q2 Fiscal 2016, and the decrease was mainly due to: i) a 7% reduction on utility costs; ii) a 6% decrease in raw material and maintenance costs; and iii) the exclusion of mineral resource tax from milling costs. Prior to June 30, 2016, mineral resource tax was levied at RMB¥13.0 per tonne of ore milled and included as part of milling costs. Effective July 1, 2016, mineral resource tax was changed to a levy based on a certain percentage of sales, and therefore such tax is excluded from milling costs but expensed directly and included in government fee and other taxes.
Cash production cost per tonne of ore processed at the Ying Mining District in Fiscal Q2 2017 was $61.79, a decrease of 21% compared to $77.95in Q2 Fiscal 2016 as a result of the decrease in both per tonne cash mining and milling cost.
Cash cost per ounce of silver, net of by-product credits, at the Ying Mining District, was negative $2.68in Q2 Fiscal 2017 compared to $1.88in Q2 Fiscal 2016. The decrease was mainly due to: i) lower per tonne cash production costs as discussed above; and ii) a 60% increase in by-product credits, arising from more lead and zinc sold and higher metal prices.
All in sustaining costs per ounce of silver, net of by-product credits, at the Ying Mining District in Q2 2017 was $2.33per ounce of silver compared to $9.88in Q2 Fiscal 2016. The decrease was mainly due to: i) lower per tonne cash production cost and the increase in by-product credits as discussed above; and ii) a $0.7 milliondecrease in sustaining capital expenditures.
For the six months ended September 30, 2016, the total ore mined at the Ying Mining District was 352,702 tonnes, up 4% compared to 338,120 tonnes in the same prior year period. Correspondingly, total ore milled was 347,901 tonnes, up 3% compared to 337,213 tonnes. Average head grades were 305 g/t for silver, 4.7% for lead, and 1.1% for zinc compared to 252 g/t for silver, 3.7% for lead, and 0.8% for zinc, respectively.
During the same time periods, the Ying Mining District sold approximately 3.1 million ounces of silver, 1,900 ounces of gold, 32.6 million pounds of lead, and 3.6 million pounds of zinc, compared to 2.3 million ounces of silver, 1,500 ounces of gold, 23.5 million pounds of lead, and 2.8 million pounds of zinc in prior year period.
For the six months ended September 30, 2016, the cash mining costs at the Ying Mining District was $50.70per tonne, a decrease of 15% compared to $59.43per tonne in the same prior year period. The cash milling cost was $9.44per tonne, a decrease of 23% compared to $12.23in the same prior year period.
Cash cost per ounce of silver and all in sustaining costs per ounce of silver, net of by-product credits, at the Ying Mining District, for the six months ended September 30, 2016, were negative $1.34and $3.99respectively, compared to $1.44and $9.52in the same prior year period.
In Q2 Fiscal 2017, approximately 22,188 meters ("m") of underground diamond drilling (Q2 Fiscal 2016 – 22,846 m) and 5,333 m of preparation tunnelling (Q2 Fiscal 2016 – 6,507 m) were completed and expensed as mining preparation costs at the Ying Mining District. In addition, approximately 16,013 m of horizontal tunnel, raise, and declines (Q2 Fiscal 2016 – 17,271 m) were completed and capitalized. Total capitalized exploration and development expenditures in Q2 Fiscal 2017 for the Ying Mining District were $4.8 millioncompared to $5.7 millionin Q2 Fiscal 2016.
For the six months ended September 30, 2016, approximately 35,038 m of underground diamond drilling (same prior year period – 39,212 m) and 10,169 m of preparation tunnelling (same prior year period – 12,563 m) were completed and expensed as mining preparation costs at the Ying Mining District. In addition, approximately 32,677 m of horizontal tunnel, raise, and declines (same prior year period – 35,790 m) were completed and capitalized. Total capitalized exploration and development expenditures for the six months ended September 30, 2016for the Ying Mining District were $9.7 millioncompared to $11.8 millionin same prior year period. The Company also paid $1.3 millionto renew the mining permit for TLP and LM mine.
2. GC Mine, Guangdong Province, China
| Operational results - GC Mine | Q2 2017 | Q1 2017 | Q4 2016 | Q3 2016 | Q2 2016 | | Six Months ended September 30, | | | | | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | | 2016 | 2015 | | | Ore Mined (tonne) | 74,692 | 64,349 | 50,014 | 71,288 | 69,546 | | 139,041 | 136,273 | | | Ore Milled (tonne) | 76,100 | 63,587 | 50,124 | 71,593 | 68,465 | | 139,687 | 135,145 | | | Head Grades | | | | | | | | | | | | Silver (gram/tonne) | 96 | 99 | 92 | 97 | 107 | | 97 | 107 | | | Lead (%) | 1.6 | 1.5 | 2.0 | 1.9 | 1.4 | | 1.5 | 1.4 | | | Zinc (%) | 2.8 | 2.9 | 2.7 | 2.6 | 2.8 | | 2.9 | 2.8 | | Recovery Rates | | | | | | | | | | | | Silver (%) | 76.2 | 76.8 | 79.1 | 80.2 | 77.0 | | 76.5 | 77.5 | | | Lead (%) | 86.6 | 86.9 | 84.9 | 88.3 | 89.5 | | 86.7 | 88.6 | | | Zinc (%) | 86.4 | 85.8 | 82.6 | 81.2 | 82.7 | | 86.1 | 82.9 | | Metal Sales | | | | | | | | | | | | Silver (in thousands of ounce) | 183 | 149 | 118 | 210 | 128 | | 332 | 309 | | | Lead (in thousands of pound) | 2,163 | 1,860 | 1,970 | 3,021 | 1,632 | | 4,023 | 4,052 | | | Zinc (in thousands of pound) | 4,106 | 3,407 | 2,576 | 3,525 | 3,172 | | 7,513 | 6,201 | | Cash mining cost ($ per tonne) | 28.61 | 33.50 | 26.24 | 38.22 | 36.49 | | 30.87 | 42.49 | | | Total mining cost ($ per tonne) | 36.78 | 41.91 | 34.76 | 46.52 | 44.68 | | 39.15 | 50.63 | | | Cash milling cost ($ per tonne) | 12.94 | 15.60 | 16.99 | 15.16 | 15.81 | | 14.15 | 15.67 | | | Total milling cost ($ per tonne) | 15.57 | 18.81 | 20.67 | 17.30 | 18.05 | | 17.05 | 17.94 | | | Cash production cost ($ per tonne) | 41.55 | 49.10 | 43.23 | 53.38 | 52.30 | | 45.02 | 58.16 | | | | | | | | | | | | | | Cash cost per ounce of silver ($) | (6.39) | (0.28) | (2.24) | 4.62 | (1.69) | | (3.65) | 1.52 | | | All-in sustaining cost per ounce of silver ($) | (1.49) | 4.76 | 1.19 | 9.80 | 13.73 | | 1.32 | 11.04 | | | | | | | | | | | | | | * Figures may not add due to rounding | | | | | | | | | |
In Q2 Fiscal 2017, the Company mined 74,692 tonnes of ore at the GC Mine, an increase of 7% compared to 69,546 tonnes in Q2 Fiscal 2016. Head grades were 96 g/t for silver, 1.6% for lead and 2.8% for zinc, compared to 107 g/t for silver, 1.4% for lead and 2.8% for zinc in Q2 Fiscal 2016. The total mining cost and cash mining cost were $36.78and $28.61, respectively, compared to $44.68and $36.49in Q2 Fiscal 2016. The decrease of cash mining costs was mainly because approximately 24% of ore was by-product ore from exploration tunnelling or extracted from previously mined stopes for which direct mining costs were paid in prior periods and the only cost involved was to ship the ore to the mill.
Total ore milled at the GC Mine in Q2 Fiscal 2017 was 76,100 tonnes, an increase of 11% compared to 68,465 tonnes in Q2 Fiscal 2016. The cash milling cost per tonne was $12.94, compared to $15.81in Q2 Fiscal 2016, with the decrease mainly due to the exclusion of mineral resource tax from milling costs as discussed above.
Correspondingly, cash production cost per tonne of ore processed at the GC Mine was $41.55, a decrease of 21% compared to $52.30in Q2 Fiscal 2016 as a result of the decrease in both per tonne cash mining and milling cost.
In Q2 Fiscal 2017, the GC Mine sold approximately 0.2 million ounces of silver, 2.2 million pounds of lead, and 4.1 million pounds of zinc, up 43%, 33% and 29% respectively, compared to 0.1 million ounces of silver, 1.6 million pounds of lead, and 3.2 million pounds of zinc in Q2 Fiscal 2016. The increase of metals sold at GC Mine was mainly due to higher output achieved.
Cash cost per ounce of silver, net of by-product credits, at the GC Mine, was negative $6.39in Q2 Fiscal 2017 compared to negative $1.69in Q2 Fiscal 2016. The decrease was mainly due to i) lower per tonne cash production costs as discussed above; and, ii) a 38% increase in by-product credits.
All in sustaining costs per ounce of silver, net of by-product credits, at the GC Mine in Q2 2017 was negative $1.49, compared to $13.73in Q2 Fiscal 2016. The decrease was mainly due to: i) lower per tonne cash production cost and the increase of by-product credits as discussion above: and, ii) a $1.0 milliondecrease in sustaining capital expenditures.
For the six months ended September 30, 2016, the total ore mined at the GC Mine was 139,041 tonnes, an increase of 2% compared to 136,273 tonnes in the same prior year period. Correspondingly, total ore milled was 139,687 tonnes, an increase of 3% compared to 135,145 milled in the same prior year period. Average head grades were 97 g/t for silver, 1.5% for lead, and 2.9% for zinc compared to 107 g/t for silver, 1.4% for lead, and 2.8% for zinc, respectively.
During the same time periods, the GC Mine sold approximately 0.3 million ounces of silver, 4.0 million pounds of lead, and 7.5 million pounds of zinc, compared to 0.3 million ounces of silver, 4.1 million pounds of lead, and 6.2 million pounds of zinc in the same prior year period.
For the six months ended September 30, 2016, the cash mining costs at the GC Mine was $30.87per tonne, a decrease of 27% compared to $42.49per tonne in the same prior year period. The cash milling cost was $14.15per tonne, a decrease of 10% compared to $15.67in the same prior year period.
Cash cost per ounce of silver and all in sustaining costs per ounce of silver, net of by-product credits, at the GC Mine, for the six months ended September 30, 2016, were negative $3.65and $1.32respectively, compared to $1.52and $11.04in the same prior year period.
In Q2 Fiscal 2017, approximately 2,245 m of underground diamond drilling (Q2 Fiscal 2016 – 6,882 m) and 3,850 m of tunnelling (Q2 Fiscal 2016 – 3,082 m) were completed and expensed as mining preparation costs at the GC Mine. In addition, approximately 606 m of horizontal tunnel, raise, and declines (Q2 Fiscal 2016 – 530 m) were completed and capitalized. Total capitalized exploration and development expenditures in Q2 Fiscal 2017 for the GC Mine were $0.2 millioncompared to $0.3 millionin Q2 Fiscal 2016.