As the world rapidly embraces renewable energy and the New Electrification Economy, there will be a few mining companies that see tremendous growth and opportunities over the coming decade as demand for critical metals like Silver continues to rise. Among the key players meeting this global demand is Silvercorp Metals (TSX: SVM; NYSE: SVM), a prominent silver producer from Canada with significant mining operations in China.
After entering the Chinese mining sector back in 2003, Silvercorp Metals is now the largest primary producer of silver and plays a vital role in satisfying the silver requirements of China's booming solar power industry. As the Electrification Economy expands, China is the leader in manufacturing solar panels for global export. The expertise that Silvercorp brings to the mining industry in China will continue to make the company a mining giant and leader in the country.
So, let’s take look at why I think Silvercorp Metals will continue to operate efficiently and grow its silver production and revenues in the years ahead to help meet demand for silver and other critical metals from China and the rest of the World as we move towards an electrified economy.
Silvercorp Metal’s Organic Growth & Expanding Production Capacities
To meet the surging global demand, and especially from China's solar power industry, Silvercorp Metals is proactively expanding its mining production capabilities in China and around the world. The company's ongoing investments in exploration, mining technology, and process efficiency enhancements have set the stage for a robust increase in silver output and thus the company’s value in the coming years.
Mining production in China began in 2006 and the company has produced more than 85 million ounces of silver since then, with 6.6 million of that produced in fiscal 2023 and a projected 6.8 to 7.2 million ounces for 2024. The flagship Ying operations consist of seven underground mines (SGX, HZG, HPG, TLP, LME, LMW and DCG) and two processing plants with a combined 2,600 tons per day (TPD) capacity.
The company is sitting on a massive metals deposit, having a measured and indicated silver resource of 210.2 million ounces, including proven and probable reserves of 114.9 million ounces. This is enough resources for long-term continued production at existing mining locations and operations.
Silvercorp Targets Four Opportunities for Growth
The ability to grow revenues, production, and shareholder value is something all investors should look for when evaluating mining companies. Silvercorp has targeted four areas for continued growth within China and around the world, so let's take look at each one and see why I think this will add value to the company in the years ahead.
1. Expanding exploration targets at existing mines for low-hanging fruit to be fast tracked into development and production. Continuous exploration drilling, step out drilling, and seeking satellite deposits around existing mining operations will add value by increasing the company’s overall resources. The company recently announced additional drill results, which included the following highlights: 3.43 m of 3,943 g/t Ag and 2.83 m of 1,112 g/t Ag. There were significant amounts of other metals and gold. As the long as the exploration drills continue to turn and provide impressive results like these, I expect the deposit size around existing mining operations will grow and thus increase shareholder value.
2. Making capital investment in infrastructure is necessary to grow revenues. Silvercorp has committed a significant amount of capital to expand current mining operations in China to include a 3,000 TPD flotation mill (US$30 M budget) and a 19.1 million cubic meters tailings storage facility (US$38 M budget) at Ying.
3. With the additional infrastructure coming soon, the company is looking to consolidate the region further and seek prospective land packages for additional satellite deposits around current mining operations.
4. The company is not only growing operations in China, but has a strategy for global expansion by seeking projects with great near-term production capabilities so they can leverage their technical expertise and financial strength. Earlier in May of this year, the company announced a non-binding term sheet for the proposed acquisition of Celsius Resources Limited in the Philippines, which will help them create shareholder value while leveraging their underground mining expertise.
The most recent example of global expansion is Silvercorp's acquisition of Orecorp, which holds an 84% interest in the Nyanzaga Gold Project in Tanzania. A feasibility study estimated that Nyanzaga could deliver 2.5 million ounces of gold over 10.7 years.
Being in the right space at the right time in a growing industry does create value for shareholders.
Silvercorp is implementing and practicing ESG to help reduce costs, create efficiency and helping local communities. Here are some of the initiatives taken by Silvercorp to improve its ESG score… they recycle 85% of the water used processing plants, 100% of operations are ISO 45001 certified, and they invest in the local community via education, tourism, and public infrastructure. This commitment to sustainable polices have been adopted at the board level and its disclosure standards are aligned with UN SDGs.
I feel the company stands on a great foundation and history of profitability, growth and the ability to generate free cash flow from long-life mines. It is active in mergers and acquisitions, has a strong balance sheet and cash on hand. Since 2006, the company has provided more than $175 million for dividends and buybacks. This shows commitment to shareholders value and the stock price.
The company has reported for the 2023 fiscal year and it consists of $37 million in adjusted net income or $0.21 per share. It finished the 1Q23 with $203 million in cash and $142 million in equity investments.
With a solid foundation and proven success in China, Silvercorp can and will continue to grow its revenues and bottom line. This is something every investor should look for in a mining company, and it seems this company has the right conditions for shareholder stock price appreciation as it continues to expand operations in China and globally.
Silvercorp Metals' trajectory points towards continued growth, driven by the inexorable rise of China's solar power industry and the advancement of the New Electrification Economy.
The world is moving towards sustainable energy and Silvercorp Metals is diligently meeting the silver demand critical for solar panel manufacturing, electric vehicles, technology devices, and healthcare. Through visionary expansion, Silvercorp Metals is not only fulfilling the needs of the present, but also laying the foundation for a future powered by the Electrification Economy, and thus I see a very bright future for the company over the next decade or more.
Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. SilverSeek.com, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; SilverSeek.com makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of SilverSeek.com only and are subject to change without notice. SilverSeek.com assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report.
Additional Disclosure: SilverSeek.com employees own shares of Silvercorp Metals and the company is a sponsor of this website. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this report is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in stock reports are not a specific buy or sell recommendation and is presented solely for informational purposes only. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise outside of the trading timeframe listed above. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The companies mentioned herein may be sponsor of SilverSeek.com. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.