Silvercorp reports fiscal 2015 Q3 results; record silver production up 89%, net income up 153%, to $5.5 million, $0.03 per share
Silvercorp Metals (NYSE:SVM)
Today : Thursday 12 February 2015
VANCOUVER, Feb. 12, 2015 /PRNewswire/ - Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX: SVM) (NYSE: SVM) reported its financial and operating results for the third quarter ended December 31, 2014 ("Q3 Fiscal 2015").
The Company is pleased that management enhancements and operational improvements enacted in fiscal 2014 continue to favourably impact all aspects of operations, with improvements in head grade and mining tonnage, resulting in improved cash flow and profitability. Also, in this quarter, commercial production continued to ramp up at the GC silver-lead-zinc project in the Guangdong Province, which contributed $7.9 million in metal sales.
Compared to the same quarter last year, silver production increased 89% to 1.672 million ounces, lead production increased 85% to 16.7 million pounds, and zinc production increased 318% to 7.0 million pounds. Cash mining cost increased 5% to $49.57 per tonne, while G & A costs decreased by 15% to $5.4 million in Q3 Fiscal 2015. The Company ended the quarter with a cash and short-term investments balance of $83.7 million.
THIRD QUARTER HIGHLIGHTS
Record silver production of 1.672 million ounces, up 89% from the prior year period; Lead production of 16.7 million pounds and zinc production of 7.0 million pounds, up 85% and 318%, respectively, compared to the prior year period; Silver, lead and zinc head grades at the Ying Mining District improved 25%, 24% and 43% compared to the prior year period; Sales of $40.2 million, up 68% from the prior year period; Gross margin of 38% down from 44% in the prior year period, impacted by a 17% decline in average selling price of Silver from prior year period; Cash flow from operations of $15.4 million, or $0.09 per share, compared to $9.9 million or $0.06 per share in the prior year period; Net income of $5.5 million, or $0.03 per share, compared to net income of $2.2 million, or $0.01 per share in the prior year period; Cash cost per ounce of silver, net of by-product credits, of $0.53; All-in sustaining cost per ounce of silver, net of by-product credits, of $10.80; G&A costs decreased by 15% to $5.4 million in Q3 Fiscal 2015; and GC mine obtained its safety production permit and ramped up its commercial production, producing 90,287 tonnes of ore with metal sales of 251,000 ounces of silver, 2.5 million pounds of lead, and 4.45 million pounds of zinc compared to 151,000 ounces of silver and 1.4 million pounds of lead and 3.25 million pounds of zinc in the previous quarter. FINANCIALS
In Q3 Fiscal 2015, net income attributable to equity holders of the Company was $5.5 million, or $0.03 per share compared to net income of $2.2 million, or $0.01 per share for the three months ended December 31, 2013 ("Q3 Fiscal 2014"). For the nine months ended December 31, 2014, net income was $15.4 million, or $0.09 per share compared to net loss of $36.5 million, or $0.21 per share in the same prior year period.
In the current quarter, the Company's financial results were mainly impacted by: (i) increased silver, lead, and zinc production of 89%, 85%, and 318%, respectively, compared to the prior year quarter, (ii) increased metal sales of $16.3 million or 68% compared to prior year quarter, of which $7.9 million was added from the commercial production at the GC mine, (iii) a 15% decrease in general and administrative spending compared to prior year quarter, (iv) lower metal prices, as the realized selling price for silver dropped by 17%, (v) higher per tonne production costs, and (vi) lower gold production and sales, as the BYP mine remained on care and maintenance in this quarter.
In Q3 Fiscal 2015, the Company realized sales of $40.2 million compared to $24.0 million in Q3 Fiscal 2014. Metal sales in the quarter were mainly impacted by increased production at the Ying Mining District and contributions from recently commenced commercial production at the GC mine. For the nine months ended December 31, 2014, sales were $108.2 million compared to $92.3 million in the same prior year period.
Cost of sales in Q3 Fiscal 2015 was $24.8 million compared to $13.5 million in Q3 Fiscal 2014. The increase in cost of sales is mainly due to a 61% increase in ore production in the quarter along with a 7.6% increase in per tonne production cost.
The gross profit margin in Q3 Fiscal 2015 was 38% compared to 44% in Q3 Fiscal 2014. The inclusion of the 9% gross profit margin from the GC mine reduced the average gross profit margin. Ying Mining District's gross profit margin remained comparable at 45% in the current quarter. The decrease in overall gross profit margin was also due to lower realized metal prices for silver and lead and increased per tonne production costs. For the nine months ended December 31, 2014, gross profit margin was 46% compared to 45% in the same prior year period.
Cash flows from operations in Q3 Fiscal 2015 were $15.4 million, or $0.09 per share, compared to $9.7 million, or $0.06 per share, in Q3 Fiscal 2014. For the nine months ended December 31, 2014, cash flows from operations were $49.3 million or $0.29 per share, compared to $33 million, or $0.19 per share, in the same prior year period.
OPERATIONS AND DEVELOPMENT
In Q3 Fiscal 2015, the Company produced a record 1.672 million ounces of silver, 936 ounces of gold, 16.7 million pounds of lead, and 7.0 million pounds of zinc, compared to 0.9 million ounces of silver, 1,985 ounces of gold, 9.0 million pounds of lead, and 1.7 million pounds of zinc, respectively, in Q3 Fiscal 2014. Metal production in this quarter continues to be positively impacted by improved dilution control, mine planning and mining contractor management, which resulted in a 25%, 24% and 43% increase in silver, lead and zinc head grades, respectively, along with a 18% increase in ore production at the Ying Mining District. In addition, the commencement of commercial production at the GC mine contributed to higher metal production.
For the nine months ended December 31, 2014, the Company produced 4.2 million ounces of silver, 5,257 ounces of gold, 42.3 million pounds of lead, and 13.4 million pounds of zinc, compared to 3.3 million ounces of silver, 8,774 ounces of gold, 32.0 million pounds of lead, and 7.6 million pounds of zinc, respectively, in the same prior year period.
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