On August 3rd, SilverCorp Metals Corp. (TSX/NYSE Amercian:SVM) released positive first Fiscal quarter 2018 financials. The company reported sales were $39.7 million, up 13% compared to $35.3 million in the same quarter last year. Head grades improved marginally at the Ying Mining District and the company reported a $4.3 million gain on its balance sheet for the quarter from its sale of its net-smelter-royalty (NSR) in the Silvertip mine. Overall, the company has a strong position with positive cash flow and no debt.
The company reported a profit of 13.5 million up 107% compared to last year’s first quarter. Net income attributable to equity shareholders was $10.9-million, or seven cents per share, up 134 per cent, compared with net income attributable to equity shareholders of $4.7-million, or three cents per share, in the prior-year quarter. The company reported a gross margin of 50 per cent compared with 45 per cent in the prior-year quarter. Cash flow from operations of $16.9-million, compared with $20.2-million in the prior-year quarter. The company ended the quarter with $102.1-million in cash and cash equivalents and short-term investments, an increase of $5.6-million or 6 per cent compared with $96.5-million as at March 31, 2017.
In first quarter Fiscal 2018, the company sold 1.5 million ounces of silver, 900 ounces of gold, 15.9 million pounds of lead and 5.0 million pounds of zinc, compared with 1.6 million ounces of silver, 900 ounces of gold, 16.7 million pounds of lead and 5.2 million pounds of zinc, respectively, down 8 per cent, 5 per cent, and 4 per cent, respectively first quarter fiscal 2017. The decrease of metals sold was mainly due to not all metals produced in the quarter being sold in the same quarter as the company intentionally increased its concentrate inventory at the Ying mining district. As at June 30, 2017, lead concentrate inventory at the Ying mining district was 4,050 tonnes, an increase of 1,757 tonnes, compared with 2,293 tonnes of lead concentrate inventory as at March 31, 2017.
Silver and gold sales accounted for $20.2 million and $1 million, while base metals accounted for $18.6 million of total sales compared to gold and base metal sales of $20.8 million, $0.9 million, and $13.6 million, respectively in the same quarter in the previous year.
Head grades in the Ying Mining District improved slightly with 304 grams per ton (“g/t”) for silver, 4.6 per cent for lead and 0.8 per cent for zinc at the Ying mining district, compared with 308 g/t for silver, 4.4 per cent for lead and 1.1 per cent for zinc in the prior-year quarter. Total and cash mining costs per tonne ore were $68.12 and $50.29, respectively, compared with $68.70 and $47.24 in the prior-year quarter. Cash cost per ounce of silver, net of byproduct credits, was negative $3.57, compared with positive eight cents in the prior-year quarter; All-in sustaining cost per ounce of silver, net of byproduct credits was $4.70, compared with $7.06 in the prior-year quarter.
The company realized a gain of $4.3-million on the disposal of the company's 2.5-per-cent net smelter return (NSR) in the Silvertip mine in British Columbia to Maverix Metals. Back in April, the company signed an agreement for the NSR in return for 3.8 million shares plus another 2.8 million when Silvertip reaches certain production milestones. The Silvertip Mine is owned and operated by JDS Silver Inc. JDS acquired the project from Silvercorp in 2013 and continued previous permitting and development activities. In 2016, Denham Capital announced a partnership with JDS providing US$65 million to complete development and construction of the Silvertip Mine. JDS Silver began construction in December 2015 and initial production began in Q4 of 2016.
According to data collected by the Financial Times, as of August 4, 2017, the consensus forecast polled from two analysts covering Silvercorp advises that the company will outperform the market. This has been the consensus forecast since the investment analysts sentiment improved back in April after the release of company's annual financial results. The company is currently trading at $3.55 down 17.25% for the year.
Peter Spina's experience with the precious metal markets started back in the mid-1990s, which led to the creation of GoldSeek.com back in 1995. Today GoldSeek.com ranks in the top three most popular global gold websites and its sister site, SilverSeek.com ranks as the most visited silver website in the world. Back at the start of the new secular precious metals bull market, Peter established the technically-focused subscription newsletter, which at the start of 2005 was merged into the more comprehensive Gold Forecaster (goldforecaster.com) service. In addition to the newsletter and websites, Peter frequently appears in the media including MarketWatch, Reuters, and Investors Business Daily.
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