q2 Silvercorp Reports Net Income of $12.2 Million, $0.07 Per Share, an Increase of 52% Compared to the Prior Year Quarter
Thursday, November 07, 2019, 4:46 PM ET
Silvercorp Reports Net Income of $12.2 Million, $0.07 Per Share, an Increase of 52% Compared to the Prior Year Quarter
VANCOUVER, British Columbia, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX/NYSE American: SVM) reported its financial and operating results for the second quarter ended September 30, 2019 ("Q2 Fiscal 2020"). All amounts are expressed in US Dollars.
Q2 FISCAL YEAR 2020 HIGHLIGHTS
-- Ore milled up 11% compared to the prior year quarter;
-- Produced and sold approximately 1.9 million ounces of silver, 1,100
ounces of gold, 19.1 million pounds of lead, and 6.7 million pounds of
zinc, compared 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 prior
year quarter;
-- Revenue up 4% to $49.9 million compared to the prior year quarter;
-- Net income attributable to equity shareholders of $12.2 million, or $0.07
per share, up 52% compared to $8.0 million, or $0.05 per share in the
prior year quarter;
-- Cash production cost per tonne of ore processed1 of $65.73, down 1%,
compared to $66.33 in the prior year quarter;
-- Cash cost per ounce of silver1, net of by-product credits, of negative
$2.72, up 20% compared to negative $3.37 in the prior year quarter;
-- All-in sustaining cost per ounce of silver1, net of by-product credits,
of $4.15, up 63% compared to $2.54 in the prior year quarter;
-- Cash flow from operations of $26.2 million, up 24% compared to $21.1
million in the prior year quarter;
-- Strong balance sheet with $135.2 million in cash and cash equivalents and
short-term investments, an increase of $19.9 million or 17%, compared to
$115.3 million as at March 31, 2019; and,
-- Ended the quarter with inventories of 4,176 tonnes of silver-lead
concentrate and 586 tonnes of zinc concentrate, up 28% and 59%,
respectively, compared to 3,248 tonnes of silver-lead concentrate and 586
tonnes of zinc concentrate as at March 31, 2019.
(1) Non-IFRS measure. Please refer to section 10 of the corresponding MD&A for reconciliation.
FINANCIALS
Net income attributable to equity shareholders of the Company in Q2 Fiscal 2020 was $12.2 million, or $0.07 per share, an increase of $4.2 million, compared to $8.0 million, or $0.05 per share in the three months ended September 30, 2018 ("Q2 Fiscal 2019").
Compared to Q2 Fiscal 2019, the Company's financial results in Q2 Fiscal 2020 were mainly impacted by i) increases of 18% and 17% in the average realized selling prices for silver and gold; ii) increases of 10% and 36% in gold and zinc sold; offset by iii) decreases of 12% and 31% in the average realized selling prices for lead and zinc, and iv) a decrease of 2% in lead sold.
Sales in Q2 Fiscal 2020 were $49.9 million, up 4% or $1.8 million, compared to $48.1 million in Q2 Fiscal 2019. Silver, gold, and base metals sales represented $27.4 million, $1.3 million, and $21.1 million, respectively, compared to silver, gold and base metals sales of $23.4 million, $1.0 million, and $23.6 million, respectively, in Q2 Fiscal 2019.
Cost of sales in Q2 Fiscal 2020 was $24.5 million, a decrease of $0.9 million or 4%, compared to $25.4 million in Q2 Fiscal 2019. The cost of sales included $17.3 million (Q2 Fiscal 2019 - $18.2 million) cash production costs, $1.4 million mineral resources tax (Q2 Fiscal 2019 - $1.4 million), and $5.8 million (Q2 Fiscal 2019 - $5.8 million) depreciation and amortization charges. The decrease in cash production costs expensed was mainly due to a decrease of 1% in cash production costs per tonne of ore processed and less silver and lead sold.
Gross profit margin in Q2 Fiscal 2020 was 51%, compared to 47% in Q2 Fiscal 2019. Ying Mining District's gross profit margin was 53% compared to 50% in Q2 Fiscal 2019. GC Mine's gross profit margin was 37% compared to 29% in Q2 Fiscal 2019.
General and administrative expenses in Q2 Fiscal 2020 were $4.9 million, an increase of $0.3 million, compared to $4.6 million in Q2 Fiscal 2019. The increase was mainly due to higher labour costs resulting from an increase in employees' pay-rates and non-cash share-based compensation expenses.
Share of loss in an associate in Q2 Fiscal 2020 was $0.2 million, compared to $0.1 million in Q2 Fiscal 2019. The loss represents the Company's equity pickup in New Pacific Metals Corp.("NUAG").
Income tax expenses in Q2 Fiscal 2020 were $5.1 million compared to $5.8 million in Q2 Fiscal 2019. The income tax expense recorded in Q2 Fiscal 2020 included current income tax expense of $1.0 million (Q2 Fiscal 2019 -- $5.1 million) and deferred income tax expense of $4.1 million (Q2 Fiscal 2019 -- $0.7 million).
Cash flow provided by operating activities in Q2 Fiscal 2020 was $26.2 million, an increase of $5.1 million, compared to $21.1 million in Q2 Fiscal 2019.
For the six months ended September 30, 2019, net income attributable to equity shareholders of the Company was $24.8 million or $0.14 per share, an increase of $5.8 million, compared to $19.0 million or $0.11 per share in the same prior year period; sales were $95.5 million, up 2% from $93.2 million in the same prior year period; share of loss in NUAG was $0.5 million, compared to $0.4 million in the same prior year period; and cash flow from operating activities was $46.1 million, up 9% from $42.2 million in the same prior year period.
The Company ended the period with $135.2 million in cash and short-term investments, an increase of $19.9 million or 17%, compared to $115.3 million as at March 31, 2019.
Working capital as at September 30, 2019 was $125.0 million, an increase of $28.0 million or 29%, compared to $97.0 million as at March 31, 2019.
OPERATIONS AND DEVELOPMENT
(i) Q2 Fiscal 2020 vs. Q2 Fiscal 2019
In Q2 Fiscal 2020, on a consolidated basis, the Company mined 259,257 tonnes of ore, an increase of 4% or 10,838 tonnes, compared to 248,419 tonnes in Q2 Fiscal 2019. Ore mined at the GC Mine increased by 23% or 15,415 tonnes, while the ore mined at the Ying Mining District decreased by 3% or 4,577 tonnes. Ore milled was 265,281 tonnes, up 11% compared to 239,728 tonnes in Q2 Fiscal 2019.
In Q2 Fiscal 2020, the Company sold approximately 1.9 million ounces of silver, 1,100 ounces of gold, 19.1 million pounds of lead, and 6.7 million pounds of zinc, compared 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 Q2 Fiscal 2019. As at September 30, 2019, the Company had inventories of 4,176 tonnes of silver-lead concentrate and 586 tonnes of zinc concentrate, up 28% and 59%, respectively, compared to 3,248 tonnes of silver-lead concentrate and 368 tonnes of zinc concentrate as at March 31, 2019.
In Q2 Fiscal 2020, the consolidated total mining costs and cash mining costs were $72.85 and $52.37 per tonne, compared to $72.71 and $53.90 per tonne, respectively, in Q2 Fiscal 2019. The consolidated total milling costs and cash milling costs in Q2 Fiscal 2020 were $12.46 and $10.76 per tonne, compared to $11.60 and $9.36 per tonne, respectively, in Q2 Fiscal 2019. The increase in the cash milling cost was mainly due to an increase of $0.3 million in material costs resulting from the timing difference of maintenance and prevention work performed at the mills.
The consolidated cash production cost per tonne of ore processed in Q2 Fiscal 2020 were $65.73, down 1% compared to $66.33 in Q2 Fiscal 2019, and below the Company's Fiscal 2020 annual guidance of $71.80. The consolidated all-in sustaining production cost per tonne of ore processed was $109.51, an increase of 2% compared to $107.51 in Q2 Fiscal 2019, but below the Company's Fiscal 2020 annual guidance of $125.50. The increase was primarily due to an increase of $1.7 million in sustaining capital expenditures.
In Q2 Fiscal 2020, the consolidated cash cost per ounce of silver, net of by-product credits, was negative $2.72, compared to negative $3.37 in the prior year quarter. The increase was mainly due to a decrease of $1.11 in by-product credits per ounce of silver mainly resulting from the decrease in the realized selling prices for lead and zinc. Sales from lead and zinc in the current quarter amounted to $20.2 million, a decrease of $2.9 million, compared to $23.2 million in the prior year
quarter. In Q2 Fiscal 2020, the consolidated all-in sustaining costs per ounce of silver, net of by-product credits, was $4.15 compared to $2.54 in Q2 Fiscal 2019. The increase was mainly due to the decrease in by-product credits and the increase in sustaining capital expenditures as discussed above.
In Q2 Fiscal 2020, on a consolidated basis, approximately 32,948 metres or $1.1 million worth of diamond drilling (Q2 Fiscal 2019 -- 30,027 metres or $0.8 million) and 11,656 metres or $3.1 million worth of preparation tunnelling (Q2 Fiscal 2019 -- 10,619 metres or $3.1 million) were completed and expensed as mining preparation costs. In addition, approximately 20,107 metres or $7.1 million worth of horizontal tunnels, raises, ramps and declines (Q2 Fiscal 2019 -- 18,875 metres or $6.2 million) were completed and capitalized.
(ii) Six months ended September 30, 2019 vs. six months ended September 30, 2018
For the six months ended September 30, 2019, on a consolidated basis, the Company mined 516,649 tonnes of ore, an increase of 6% or 31,532 tonnes, compared to 485,117 tonnes mined in the same prior year period. Ore milled was 524,824 tonnes, up 10% compared to 477,468 tonnes in the same prior year period.
The Company sold approximately 3.7 million ounces of silver, 2,100 ounces of gold, 36.9 million pounds of lead, and 14.0 million pounds of zinc, increases of 11%, 24%, 8%, and 24%, respectively, compared to 3.4 million ounces of silver, 1,700 ounces of gold, 34.3 million pounds of lead, and 11.3 million pounds of zinc sold in the same prior year period.
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