An anonymous director reports

SILVERCORP REPORTS ADJUSTED NET INCOME OF $15.8-MILLION, $0.09 PER SHARE, AND CASH FLOW FROM OPERATIONS OF $36.5-MILLION FOR Q1 FISCAL 2022

Silvercorp Metals Inc. has released its financial and operating results for the first quarter ended June 30, 2021. All amounts are expressed in U.S. dollars, and figures may not add due to rounding.

Q1 fiscal 2022 highlights:

• Mined 231,235 tonnes of ore and milled 243,077 tonnes of ore, down 9 per cent and 7 per cent compared with the prior-year quarter due primarily to slowdowns during contract renewal negotiations with mining contractors, which were successfully completed as announced July 13, 2021;
• Sold approximately 1.6 million ounces of silver, 1,000 ounces of gold, 16.8 million pounds of lead and 7.3 million pounds of zinc, representing decreases of 12 per cent, 9 per cent and 20 per cent in silver, gold and lead sold, and an increase of 4 per cent in zinc sold, compared with the prior-year quarter;
• Revenue of $58.8-million, up 26 per cent compared with $46.7-million in the prior-year quarter;
• Net income attributable to equity shareholders of $12.2-million, or seven cents per share, compared with $15.5-million, or nine cents per share, in the prior-year quarter;
• Adjusted earnings attributable to equity shareholders of $15.8-million, or nine cents per share, compared with $9.6-million, or five cents per share, in the prior-year quarter. The adjustments were made to remove the impacts from non-recurring items, share-based compensation, foreign exchange, mark-to-market equity investments and the share of associates' operating results;
• Income from mine operations in Q1 fiscal 2022 was $25.5-million, up 32 per cent compared with $19.3-million in prior-year quarter;
• Cash flow from operations of $36.5-million, up 21 per cent or $6.4-million compared with $30.1-million in the prior-year quarter;
• Cash cost per ounce of silver, net of byproduct credits, of negative $1.43 compared with negative $1.48 in the prior-year quarter;
• All-in sustaining cost per ounce of silver, net of byproduct credits, of $7.46, compared with $5.61 in the prior-year quarter;
• Paid $2.2-million of dividends to the company's shareholders;
• Invested $5.0-million in Whitehorse Gold Corp. (WHG) to increase the company's ownership interest in WHG by 2.5 per cent to 29.5 per cent;
• Strong balance sheet with $214.4-million in cash and cash equivalents and short-term investments, up $15.3-million or 8 per cent compared with $199.1-million as at March 31, 2021. This does not include the investments in associates and equity investment in other companies, having a total market value of $243.2-million as at June 30, 2021.

Net income attributable to equity shareholders of the company in Q1 fiscal 2022 was $12.2-million or seven cents per share, compared with $15.5-million or nine cents per share in three months ended June 30, 2020 (Q1 fiscal 2021).

Adjusted earnings attributable to equity shareholders of the company in Q1 fiscal 2022 was $15.8-million, or nine cents per share, compared with $9.6-million, or five cents per share, in Q1 fiscal 2021. The adjustments were made to remove the impacts from non-cash and unusual items, including elimination of share-based compensation, foreign exchange loss, share of loss in associates, gain or loss on mark-to-market equity investments, and one-time items.

In Q1 fiscal 2022, the company's consolidated financial results were mainly impacted by: (i) an increase of 48 per cent, 12 per cent, 25 per cent and 70 per cent, respectively, in the realized selling prices for silver, gold, lead and zinc, offset by: (ii) a decrease of 12 per cent, 9 per cent and 20 per cent, respectively, in silver, gold and lead sold; (iii) lower production; and (iv) the depreciation of the U.S. dollar against the company's functional currencies, mainly the Chinese yuan and the Canadian dollar.

Revenue in Q1 fiscal 2022 was $58.8-million, up 26 per cent or $12.1-million compared with $46.7-million in Q1 fiscal 2021. The increase was mainly due to: (i) an increase of $19.3-million arising from the increase in the net realized selling metal prices; (ii) an increase of $1.3-million arising from the increase in the quantities of zinc sold, offset by: (iii) a decrease of $8.5-million arising from the decrease in the quantities of silver, gold and lead sold. Revenues from silver, gold and base metal were $34.0-million, $1.5-million and $23.3-million, respectively, up 30 per cent, 2 per cent and 22 per cent, respectively, compared with $26.2-million, $1.5-million and $19.0-million in Q1 fiscal 2021. Revenue from the Ying mining district was $47.4-million, up 19 per cent, compared with $39.7-million in Q1 fiscal 2021. Revenue from the GC mine was $11.4-million, up 62 per cent, compared with $7.0-million in Q1 fiscal 2021.

Income from mine operations in Q1 fiscal 2022 was $25.5-million, up 32 per cent compared with $19.3-million in prior-year quarter. Income from mine operations at the Ying mining district was $21.2-million, up 20 per cent compared with $17.6-million in Q1 fiscal 2021. Income from mine operations at the GC mine was $4.4-million, up 144 per cent compared with $1.8-million in Q1 fiscal 2021.

Cash flow provided by operating activities in Q1 fiscal 2022 was $36.5-million, up 21 per cent or $6.3-million, compared with $30.1-million in Q1 fiscal 2021.

The company ended the quarter with $214.4-million in cash, cash equivalents and short-term investments, up 8 per cent or $15.3-million, compared with $199.1-million as at March 31, 2021.

Working capital as at June 30, 2021, was $188.9-million, up 3 per cent or $4.9-million, compared with $184.0-million as at March 31, 2021.

In Q1 fiscal 2022, on a consolidated basis, the company mined 231,235 tonnes of ore, down 9 per cent or 23,320 tonnes, compared with 254,555 tonnes in Q1 fiscal 2021. Ore milled in Q1 fiscal 2022 was 243,077 tonnes, down 7 per cent or 19,249 tonnes, compared with 262,326 tonnes in Q1 fiscal 2021. The decrease was primarily a result of the company's mining contract renewal negotiation at the Ying mining district as reported in the company's news releases dated July 13 and April 28, 2021. Contracts were renewed for an additional two years in mid-May, 2021, and the company expects to increase production in the remaining three quarters and meet its annual guidance.

In Q1 fiscal 2022, the company produced approximately 1.5 million ounces of silver, 1,000 ounces of gold, 15.9 million pounds of lead and 7.2 million pounds of zinc, compared with 1.8 million ounces of silver, 1,100 ounces of gold, 20.1 million pounds of lead and 7.5 million pounds of zinc sold in Q1 fiscal 2021.

Compared with Q1 fiscal 2021, the company's consolidated per-tonne costs in the current quarter were mainly impacted by: (i) 9-per-cent appreciation of the Chinese yuan against the U.S. dollar, resulting in higher costs presented in the U.S. dollar; (ii) an average 7-per-cent increase in frontline workers' pay rate; (iii) lower production at the Ying mining district resulting in higher per-tonne fixed cost allocation; and (iv) an overall 14.5-per-cent increase in mining contractors' fee rate at the Ying mining district as reported previously in the company's news release dated May 20, 2021. The consolidated cash production cost and all-in sustaining production cost per tonne of ore processed were $77.55 and $131.48, up 16 per cent and 17 per cent, respectively, compared with $67.05 and $112.59 in Q1 fiscal 2021, but both were in line with the company's fiscal 2022 annual guidance.

In Q1 fiscal 2022, the consolidated cash cost per ounce of silver, net of byproduct credits, was negative $1.43, compared with negative $1.48 in the prior-year quarter. The increase was mainly due to the increase in per-tonne cash production costs as discussed above, offset by an increase of $4.16 in byproduct credits per ounce of silver. Sales from lead and zinc in Q1 fiscal 2022 amounted to $21.8-million, up $3.3-million, compared with $18.5-million in Q1 fiscal 2021.

The consolidated all-in sustaining cost per ounce of silver, net of byproduct credits, was $7.46, compared with $5.61 in Q1 fiscal 2021. The increase was mainly due to the increase in per-tonne all-in sustaining production cost, offset by an increase of $4.16 in byproduct credits per ounce of silver.

In Q1 fiscal 2022, on a consolidated basis, a total of 107,913 metres or $4.6-million worth of diamond drilling were completed (Q1 fiscal 2021: 36,697 metres or $1.1-million), of which approximately 50,666 metres or $1.3-million worth of underground drilling were expensed as part of mining costs (Q1 fiscal 2021: 36,697 metres or $1.1-million), and approximately 57,247 metres or $3.3-million worth of exploration drilling were capitalized (Q1 fiscal 2021: nil). In addition, approximately 6,955 metres or $2.8-million worth of preparation tunnelling were completed and expensed as part of mining costs (Q1 fiscal 2021: 10,142 metres or $2.6-million), and approximately 17,263 metres or $6.6-million worth of tunnels, raises, ramps and declines were completed and capitalized (Q1 fiscal 2021: 26,375 metres or $9.0-million).

Individual mine operating performance

Ying mining district

In Q1 fiscal 2022, a total of 89,189 metres or $3.9-million worth of diamond drilling were completed (Q1 fiscal 2021: 28,485 metres or $800,000) at the Ying mining district, of which approximately 31,942 metres or $700,000 worth of underground drilling were expensed as part of mining costs (Q1 fiscal 2021: 28,485 metres or $800,000), and approximately 57,247 metres or $3.3-million worth of exploration drilling were capitalized (Q1 fiscal 2021: nil). In addition, approximately 6,501 metres or $2.5-million worth of preparation tunnelling were completed and expensed as part of mining costs (Q1 fiscal 2021: 6,207 metres or $1.8-million), and approximately 12,973 metres or $5.4-million worth of horizontal tunnels, raises, ramps and declines were completed and capitalized (Q1 fiscal 2021: 23,108 metres or $7.8-million).

GC mine

In Q1 fiscal 2022, approximately 18,724 metres or $600,000 worth of underground diamond drilling (Q1 fiscal 2021: 8,212 metres or $300,000), and 454 metres or $300,000 of tunnelling (Q1 fiscal 2021: 3,458 metres or $800,000) were completed and expensed as mining preparation costs at the GC mine. In addition, approximately 4,290 metres or $1.2-million of horizontal tunnels, raises and declines were completed and capitalized (Q1 fiscal 2021: 3,267 metres or $1.2-million).

Conference call details

A conference call to discuss these results will be held tomorrow, Friday, Aug. 6, at 9 a.m. PDT (12 p.m. EDT). To participate in the conference call, please dial the numbers below.

International toll:  416-764-8650

Canada/U.S. toll-free:  888-664-6383

Conference ID:  22851634

Participants should dial-in 10 to 15 minutes prior to the start time. A replay of the conference call and transcript will be available on the company's website.

Guoliang Ma, PGeo, manager of exploration and resources of the company, is the qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects (NI 43-101), and has reviewed and consented to the technical information contained in this news release.

This earnings release should be read in conjunction with the company's management discussion and analysis (MD&A), financial statements, and notes to financial statements for the corresponding period, which have been posted on SEDAR under the company's profile and are also available on the company's website. This earnings release refers to various alternative performance (non-international financial reporting standards) measures, such as adjusted earnings and adjusted earnings per share, cash cost and all-in sustaining cost per ounce of silver, net of byproduct credits, cash production cost and all-in sustaining production cost per tonne of ore processed, and working capital. These measures are widely used in the mining industry as a benchmark for performance, but do not have standardized meanings under IFRS as an indicator of performance and may differ from methods used by other companies with similar description. Accordingly, to facilitate a better understanding of these measures as calculated by the company, please refer to Section 10 -- alternative performance (non-IFRS) measures of the corresponding management discussion and analysis for detailed description and reconciliation.

About Silvercorp Metals Inc.

Silvercorp is a profitable Canadian mining company producing silver, lead and zinc metals in concentrates from mines in China. The company's goal is to continuously create healthy returns to shareholders through efficient management, organic growth and the acquisition of profitable projects. Silvercorp balances profitability, social and environmental relationships, employees' well-being, and sustainable development.

We seek Safe Harbor.