Silvercorp Metals earns $8.89-million (U.S.) in Q2 2009-11-10 05:30 ET - News Release Mr. Rui Feng reports SILVERCORP REPORTS NET INCOME OF $8.9 MILLION AND CASH FLOW OF $15.9 MILLION IN SECOND QUARTER
Silvercorp Metals Inc. has released its unaudited financial and operating results for the second quarter ended Sept. 30, 2009. The financial results are expressed in thousands of United States dollars, unless stated otherwise.
Second quarter highlights
During the quarter ended Sept. 30, 2009, financial highlights included:
- Net earnings of $8.9-million, 83 per cent higher compared with $4.9-million in the same quarter last year;
- Earnings per share of six cents, double the earnings per share of three cents in the same quarter last year;
- Production of 1.2 million ounces of silver and 15.2 million pounds of lead, representing 35-per-cent and 43-per-cent increases, respectively, compared with 800,000 ounces of silver and 10.7 million pounds of lead produced in the same quarter last year;
- Total production cost of negative $5.61 per ounce of silver and cash cost of negative $6.33 per ounce of silver, net credit of other metals, making Silvercorp an industry-leading low-cost silver producer;
- Generated $15.9-million cash from operating activities or 10 cents per share;
- Total cash, cash equivalents and short-term investments increased to $79-million.
Financials
Silvercorp produced 35 per cent more silver and 43 per cent more lead in this quarter, compared with the same quarter last year. Sales revenue for this quarter was $25.1-million compared with $20.1-million in the same quarter last year. Due to the increase in silver and lead production, a 25-per-cent increase in sales was achieved despite lower silver and lead prices compared with a year ago.
During the six months ended Sept. 30, 2009, sales revenue was $47.7-million, representing a $3.3-million or 6-per-cent reduction compared with the six months ended Sept. 30, 2008. The quantity of silver and lead sold during this period was 13 per cent and 25 per cent higher, respectively, than a year ago; however, this did not fully offset the impact of lower metal prices which were down 16 per cent for silver and 28 per cent for lead compared with the same period last year.
Cost of sales for the quarter was $5.2-million, representing a 33-per-cent decrease compared with the same quarter last year. During the six months ended Sept. 30, 2009, cost of sales was $10.1-million, down 35 per cent compared with a year ago. The cost reduction is a reflection of improved operational and cost control, and also due to the low mine production in TLP, LM and HPG mines.
Gross profit margin this quarter improved to 76 per cent from 51 per cent in the same quarter last year. The consolidated net income for this quarter was $8.9-million, or six cents per share, representing an increase of 83 per cent compared with $4.9-million or three cents per share in the same quarter last year.
For the six months ended Sept. 30, 2009, and Sept. 30, 2008, gross profit margin was 75 per cent and 62 per cent, respectively. Net income for the six months ended Sept. 30, 2009, and Sept. 30, 2008, was $16.4-million or 10 cents per share and $16.5-million or 11 cents per share, respectively.
Cash and cash equivalents plus short-term investments increased by $13.6-million to $79-million since March 31, 2009 ($65.4-million). The 21-per-cent increase is mainly due to $26.3-million cash generated by operating activities, offset by $8.5-million of capital expenditures and $5.5-million of cash dividend payments.
Operations
Silvercorp mined 102,461 tonnes of ore during the second quarter, 22,073 tonnes less than the same quarter last year, as operations at the TLP, LM and HPG mines were still in the ramping-up stage.
During the quarter, production was primarily from the company's flagship Ying mine where 83,263 tonnes of ore was mined, 13 per cent higher than the same quarter last year. Silver head grades at the Ying mine improved to 453 grams per tonne (g/t) from 331 g/t in the prior-year period. However, silver head grade decreased from 488 g/t last quarter, as mining was at a broken zone, causing higher dilution during the quarter.
Cash cost per ounce of silver for the second quarter improved to negative $6.24, compared with negative $5.14 per ounce of silver in the same quarter last year. This is also an improvement from the prior quarter cash cost of negative $5 per ounce. The improvement in cash cost per ounce of silver was mainly driven by higher realized byproducts prices.
OPERATING RESULTS FOR THE PAST FIVE QUARTERS AT THE Ying mine
For the three months ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
Ores mined (tonnes)
Direct smelting
ores (tonnes) 3,550 3,773 2,610 3,114 2,387
Ores to be milled
(tonnes) 79,713 82,475 55,232 77,968 71,456
--------- ---------- ---------- ---------- ----------
83,263 86,248 57,842 81,082 73,843
--------- ---------- ---------- ---------- ----------
Run-of-mine ores
(tonnes)
Direct smelting
ores (tonnes) 3,550 3,773 2,726 3,114 2,387
Ores milled
(tonnes) 80,657 77,330 60,167 70,854 69,493
--------- ---------- ---------- ---------- ----------
84,207 81,103 62,893 73,968 71,880
--------- ---------- ---------- ---------- ----------
Head grades of
run-of-mine ores
Silver (gram/tonne) 452.5 488.1 486.7 420.2 331.2
Lead (%) 8.1 9.1 9.1 7.7 6.0
Zinc (%) 3.0 3.1 3.1 2.6 2.5
--------- ---------- ---------- ---------- ----------
Recovery rate of the
run-of-mine ores
Silver (%) 92.8 93.3 93.1 92.9 91.3
Lead (%) 96.6 96.5 97.2 96.7 95.6
Zinc (%) 71.2 76.3 69.4 78.1 68.2
--------- ---------- ---------- ---------- ----------
Cash mining cost
($ per tonne) 46.16 42.27 45.44 45.10 55.71
Total mining cost
($ per tonne) 54.71 52.70 58.71 61.60 72.86
Cash milling cost
($ per tonne) 9.19 10.84 10.57 10.32 11.24
Total milling cost
($ per tonne) 10.16 11.74 11.76 11.24 12.24
--------- ---------- ---------- ---------- ----------
Production cost per
ounce of silver,
adjusted for
byproduct credits (5.51) (4.19) (3.24) 0.18 (3.44)
Cash cost per ounce
of silver,
adjusted for
byproduct credits (6.24) (5.00) (3.62) (1.39) (5.14)
Compared with the quarter ended June 30, 2009, the NSR prices for silver, lead and zinc all increased as a result of improved quoted metal prices and reduced smelter charges. NSR prices of silver and lead was approximately 85 per cent of quoted Shanghai metal prices, excluding the 17-per-cent value-added tax.
Outlook
For the remainder of fiscal year 2010, the company's production outlook is 204,000 tonnes, of which 160,000 tonnes will be mined from the Ying mine and 44,000 tonnes will come from the HPG, TLP and LM mines combined. This will bring total production for the entire fiscal year to 410,000 tonnes, in line with the company's annual production forecast.
At the Ying mine, the company produced 2.2 million ounces of silver, 29 million pounds of lead and seven million pounds of zinc for the six months ended Sept. 30, 2009. As the actual metal production exceeded forecasts for the first half of fiscal year 2010, the company is revising its annual production forecast for the Ying mine to 4.5 million ounces of silver, 58 million pounds of lead and 14 million pounds of zinc.
The company will continue to focus on mine development at the TLP, LM and HPG mines, where development activities were partially resumed in May, 2009. Through the extraction of byproduct ores during mine development from these three mines, the company expects an additional 200,000 to 500,000 ounces of silver to be produced from these mines for the remainder of the year, bringing consolidated silver production for the entire fiscal year to 4.7 million to five million ounces.
For the second half of fiscal 2010, capital expenditures are budgeted at $8-million, of which $5-million will be used for exploration drilling and development at the Ying mine and $3-million for exploration drilling and mine development at the TLP, LM and HPG mines. The company is also carrying out a regional IP geophysics program at the Ying mining camp with the aim of defining drill targets outside the current mining areas.
At the GC project in Guangdong province, China, the company is currently focusing on permitting and design for mine and mill construction. For the second half of fiscal year 2010, the company has budgeted approximately $3-million for the GC project.
Silvercorp continues to pursue future growth opportunities by carrying out an aggressive exploration program within the existing exploration and mining permit areas and seeking out acquisitions projects in China and other jurisdictions.
Conference call and webcast information
A conference call and live audio webcast to discuss these results is scheduled as follows.
Date: Tuesday, Nov. 10, 2009
Time: 9 a.m. PT (12 noon ET)
Dial-in number: 1-612-288-0329
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands of U.S. dollars, except per-share figures)
For the three months For the six months
ended Sept. 30, ended Sept. 30,
2009 2008 2009 2008
Sales $ 25,085 $ 20,103 $ 47,657 $ 50,962
------------- ------------- ------------- -------------
Cost of sales 5,173 7,668 10,145 15,607
Amortization and
depletion 824 2,201 1,753 3,769
------------- ------------- ------------- -------------
5,997 9,869 11,898 19,376
------------- ------------- ------------- -------------
Gross profit 19,088 10,234 35,759 31,586
------------- ------------- ------------- -------------
Expenses
Accretion of
asset-retirement
obligations 31 42 62 61
Amortization 168 147 370 441
Foreign exchange
loss (gain) 82 (3,150) (1,434) (3,031)
General
exploration and
property
investigation
expenses 959 1,150 3,266 1,630
Impairment
charges and bad
debt (recovery) (79) - 698 -
Investor
relations 110 259 181 354
General and
administrative 1,807 2,299 4,532 5,247
Professional
fees 663 884 1,238 1,174
------------- ------------- ------------- -------------
3,741 1,631 8,913 5,876
------------- ------------- ------------- -------------
15,347 8,603 26,846 25,710
Other income and
expenses
Equity (loss) in
investment (136) (1,240) (218) (1,444)
(Loss) on disposal
of property,
plant and
equipment (871) - (1,127) (10)
(Loss) on held for
trading
securities (11) - (11) -
Interest income 160 243 398 1,020
Other income 53 87 213 116
------------- ------------- ------------- -------------
(805) (910) (745) (318)
------------- ------------- ------------- -------------
Income before
income taxes and
non-controlling
interests 14,542 7,693 26,101 25,392
Income tax
expense
(recovery)
Current 1,940 1,365 3,518 3,404
Future 412 (235) 226 (388)
------------- ------------- ------------- -------------
2,352 1,130 3,744 3,016
------------- ------------- ------------- -------------
Income before
non-controlling
interests 12,190 6,563 22,357 22,376
Non-controlling
interests (3,297) (1,706) (5,977) (5,918)
------------- ------------- ------------- -------------
Net income $ 8,893 $ 4,857 $ 16,380 $ 16,458
============= ============= ============= =============
Basic earnings
per share $ 0.06 $ 0.03 $ 0.10 $ 0.11
============= ============= ============= =============
Diluted earnings
per share $ 0.05 $ 0.03 $ 0.10 $ 0.11
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