Q2 2025 Silvercorp Metals Inc Earnings Call
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Angelina: Thank you for standing by good afternoon. My name is Angelina and I will be your conference operator today at this time I would like to welcome everyone to the Silver Corp, second quarter fiscal 'twenty 25 financial results Conference call. All lines have been plays on me.
To prevent any background noise after the Speakers' remarks.
Angelina: To ask a question during this time simply press Star then the number one on your telephone keypad. If you would like to withdraw. Your question. Please press Star then the number that you think you and I would like to turn the conference over to Lon Shaver precedent of Silver Corp.
Lon Shaver: Please go ahead Sir.
Lon Shaver: Okay.
Speaker Change: Yeah, that's great. Thank you Angelina on behalf of Silver Corp, and I'd like to welcome everyone to the call. This morning.
Speaker Change: They will be discussing our second quarter for the fiscal 2025, our financial results, which were released yesterday after market close a copy of our news release, the MD&A and financial statements are available on our website and SEDAR plus.
Before we jump in note that certain statements on today's call will contain forward looking information within the meaning of securities laws.
Speaker Change: Additionally, please review the cautionary statements in our news release as well as the risk factors described in our most recent regulatory filings.
Speaker Change: Now to recap our quarterly financial results, we delivered a strong fiscal Q2 with a near record quarterly revenue of $68 million, which was a 26% increase from last year's quarter.
Speaker Change: This growth was driven by a robust commodity market, which led to improvements in realized metals prices, particularly in China compared to the same quarter last year.
Speaker Change: In particular, the realized silver price rose by 34% called Rose by 20% led rose by 15%.
Speaker Change: Zinc was up 43%.
Speaker Change: Silver remains our most important metal and contributed 64% of our Q2 revenue followed by lead at 20%.
Speaker Change: Just by comparison, our silver was 58% of revenue in last year's fiscal Q2.
Speaker Change: The results continue to reinforce why investors should own our shares, namely demonstrating that we provide leverage to higher metals prices. The response in our financial results.
Speaker Change: Moving down the income statement attributable net income for the quarter was 18 million or nine cents per share. This is up from 11 million or six cents per share in the comparative quarter.
The increase in our bottom line reflects higher metals prices, a 4% increase in silver sold and a 29% increase in zinc sold along with a 4 million gain on investments.
These increases were partially offset by a 51% and a 13% decrease in gold and lead full of 3 million increase in admin expenses.
Speaker Change: Including costs related to.
Speaker Change: To our efforts and.
Speaker Change: Related to the transaction costs for closing the adventurous acquisition as well as a 2 million loss in FX.
Speaker Change: Looking at cash flow from operating activities, we generated 23 million this past quarter.
Speaker Change: This is down 6 million from last year due to a 5 million increase in income tax paid.
Speaker Change: And a 5 million increase in noncash working capital compared to a positive noncash working capital adjustment of $3 million.
Speaker Change: In the prior year quarter if.
Speaker Change: If we adjust out changes in noncash working capital items, we generated 28 million in operating cash flow in Q2, representing an 8% year over year increase.
Speaker Change: Additionally, we invested $28 million in our mines and projects during the quarter. This is up 86% from last year largely stemming from increased underground development.
Speaker Change: Construction of the third tailings storage facility at Yang.
Speaker Change: And the mill expansion activities at Yang.
Speaker Change: As well as spending on the newly acquired El Domo and corridor projects. Despite the increase in capital expenditures, we ended the quarter with a strong cash position of 200 and telling me in a million.
Speaker Change: This position does not include our investments in associates and other companies.
Speaker Change: Which had a total market value of 84 million as of September 30th.
Speaker Change: Our new Pacific metals was the lion's share of that totaling $70 million.
Speaker Change: Turning our attention to our operating results as reported in October our mines performed as expected in Q2.
Speaker Change: We mined 361000 tons milled 209000 tonnes of ore during the quarter.
Speaker Change: Representing year over year increases of 32% and 14% respectively.
Speaker Change: Due to higher quarterly output or production of silver and zinc increased by 4% and 26%, respectively, but golden lead production decreased by 52% and 18% respectively due to lower head grades during the quarter.
Speaker Change: Year to date, we have produced $3 4 million ounces of silver.
Speaker Change: 2003 hundred ounces of gold and 29 million pounds of lead along with.
Speaker Change: 12 million pounds of zinc.
Speaker Change: We remain confident in achieving our annual production guidance set in April as we process. The stockpile of 129000 tonnes of ore in the second half of our fiscal year.
Our newly expanded milling facility, which we are now in the midst of commissioning.
Speaker Change: On the unit cost from production cost averaged $82 per ton in Q2, 2% higher than last year's results due to more mining preparation tunnels.
Grade control drilling completed an expense that's part of the mining costs in the current quarter.
Speaker Change: Year to date production cost averaged $81 per ton slightly higher than our annual cost guidance of 77 to $80 per ton.
Speaker Change: Our cash cost per ounce of silver net of byproduct credits was negative 74 cents in Q2 higher than the negative dollar in the prior year quarter due to the same factors impacting the unit production costs, partially offset by higher byproduct credits.
Speaker Change: The all in sustaining production costs decreased by 3% year over year to $146 per ton in Q2, driven by a 4% reduction in sustaining capital expenditures per ton.
Speaker Change: <unk> from higher mill throughput.
Speaker Change: Additionally year to date, all in sustaining production costs.
Speaker Change: <unk> hundred 40, <unk> per ton remains below our annual cost guidance of between 144 to 152 per ton.
Speaker Change: Our all in sustaining cost per ounce of silver net of byproduct credits was 11, 65, which was 1% higher than Q2 of last year.
Speaker Change: Due to the previously mentioned increase in cash cost per ounce of silver.
Turning to the yen growth projects. The mill number two capacity expansion has been completed on time and on budget and as I mentioned earlier commissioning is now underway.
Speaker Change: I recall that the project will expand young as total production capacity to 4000 tonnes per day from 2500 tonnes per day.
Speaker Change: Additionally, construction of phase one of the third tailings facility at young which will hold 10 million cubic meters of tailings is substantially complete.
And commissioning of this facility is underway it should be ready to receive tailings by the end of November of this month.
Speaker Change: As a reminder, this is a two phased facility that will ultimately hold 19 million cubic meters of tailings.
Speaker Change: Regarding the corn paying satellite deposit and the environmental impact assessment report.
Speaker Change: It was improved in July.
The mine safety design report was approved in September and the final approval for mine construction is a pending receipt from the province, we expect to commence development this fiscal year.
Speaker Change: Turning our attention to Ecuador since the acquisition, we have diligently reorganize our operational structure in Ecuador.
Speaker Change: At our fully permitted L. Domo copper gold project, we have undertaken a number of activities, including a review of the execution plan.
Speaker Change: Typically related to the contracting purchasing.
Speaker Change: And construction sequencing.
We've completed 800 meters, a metallurgical drilling to support a test program, which is aimed at optimizing the process flow sheet for improved gold recovery in the copper concentrate.
Speaker Change: And we've continued further engineering work to refine the mine layout and processing plant.
Speaker Change: Which includes adjustments such as relocating the camping mill building to reduce civil excavation.
Speaker Change: Moving to maintenance shop closer to the plant to share electrical infrastructure.
Speaker Change: Revising surface water management plans to simplify construction and reduce excavation and concrete needs.
Speaker Change: These efforts paved the way for a smooth transition to mine construction, which we intend in early 'twenty 'twenty five and remain optimistic for initial production targeted for the second half of calendar 'twenty 'twenty six.
Speaker Change: At the prospective Conor project, our focus has been on completing a resource review to assess future development plans and initiating site control activities in preparation for the start of underground exploration work we continue.
Speaker Change: To develop an exploration plan as we further our understanding of the project.
Speaker Change: We remain dedicated to working collaboratively with the government of Ecuador, local communities and salary our sellers our resources our in country partners, our commitment to modern responsible development will benefit both the local communities in the country as a whole.
Speaker Change: We intend to provide more details on our work plans for al Dor, Domo and Condor in the near future.
Speaker Change: With that I would like to open the call for questions.
Speaker Change: Yeah.
Speaker Change: Yeah.
Thank you Sir.
Speaker Change: Ladies and gentlemen, we will now conduct the question and answer session. If you would like to ask a question. Please.
Speaker Change: Press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press star two if you are using a speaker phone. Please lift the handset before pressing any keys one moment. Please for your first question.
Speaker Change: The first question comes from Joseph Reagor from Roth Capital Partners Analyst.
Speaker Change: Please go ahead.
Speaker Change: Hey, Ron Thanks for taking the questions and congrats on a good solid quarter.
Speaker Change: Picture.
Speaker Change: I guess first thing Enel Domo.
Speaker Change: That's how I saw that you know there was an appeal of the first decision there from the lower court and that appeals, but heard but there hasn't been a resolution yet when do you guys think you'll get an update you have a rough idea on timing and then it is there additional appeals that could occur and and how might those things impact you guys.
Speaker Change: As far as Capex spending next fiscal year.
Speaker Change: Yeah. The the appeal was heard on the 17th of October and were waiting for a formal ruling to be issued which we expect to come in the next few weeks.
We think it will you know finding in favor of the the government with respect to the validity of the permit.
Speaker Change: Yeah.
Speaker Change: Following that our understanding is.
Speaker Change: That this court case, you know could be picked up by the constitutional court.
But how are when and what it would mean from a timing standpoint.
It's unclear at this time, our view would be that with a positive ruling at this a provincial level, we were being in a position to proceed with our expenditure plans starting early next year.
Okay. So.
Speaker Change: That's that sounds good and I guess, the other thing I saw I'm going to release was with your license extension that Ying, there's a payment a potential payment required in the event you guys do have to make that payment when would you make it and it would it be something that would roll through the income statement is.
Speaker Change: The government tax fee or would it run through like your cash flow statement from an accounting standpoint.
A good question on which statement I'd have to check on that we have had these payments in the past. If you go back and look at previous renewals do you know these are tied into.
I mean basically the process of identifying the the resource base that you are permitting for and then there is basically a fee associated with that resource. So as you find more and you are continuing to produce and renew your payments renew your your permits based on go forward resources and reserves.
Speaker Change: Those payments can get triggered a we would expect that we would pay this out here within the next month.
Speaker Change: Okay. So so you're I guess fiscal Q3 and then.
Speaker Change: That extension gets you guys through I guess 2035, and then you'd have to essentially reapply for another extension.
Speaker Change: How that works it's been awhile since you guys had to do one yeah.
Speaker Change: One we did was for the T L P longman.
Speaker Change: Our mining permit and that one was renewed in.
Speaker Change: Spring of 2021.
Speaker Change: Yeah. So if you if you look through our materials. There's a schedule are associated with these renewal dates.
And this was the next one up on the schedule I believe its a few years until the until the next one comes up.
Speaker Change: Okay. Thanks, I'll turn it over.
Speaker Change: Okay. Thanks, John.
Thanks, Joe.
Speaker Change: Your next question comes from my Cylix Sheffey, calling from <unk> capital. Please go ahead.
Speaker Change: Yeah morning lawn congratulations on the quarter just a couple of quick questions for me does the 129000 tonnes stockpiled. So it's been amassed over the past two quarters. How long do you think it'll take you to kind of work through that.
Speaker Change: We are anticipating that we would get through it through the balance of the current quarter and the fourth quarter.
Speaker Change: Mhm Gotcha and Walla Walla.
Speaker Change: We're kind of working through that stockpiled material should we be expecting a you know mining rates to be kind of are in the same region in the same range as we've.
Speaker Change: Seen in our fiscal 25, so far so kind of $250 to 170000 tons per quarter or like this that would kind of roughly the range that we should be looking at or is that.
Speaker Change:
Speaker Change: Or is that would that would be potentially reduce while you're working through the stockpile.
I don't know my mining money should continue at these rates are the one thing that obviously recall in Q4 with Chinese new year, we usually have a a slower quarter and and that should be the case again this year from a mining standpoint.
Speaker Change: That's how you should work that seasonality into your tonnage forecast for mining, but from a milling standpoint, we're not looking at seeing a reduction in milling rate and plan to run the mill.
Speaker Change: Throughout the quarter.
Speaker Change: After the purchases of of getting that catch up.
Yeah.
Speaker Change: Just a quick just a quick question on Comping you set chosen the mounted what's budgeted for I guess development activities and clumping in fiscal 'twenty five how much did you say that was that.
Speaker Change: That was $1 million, just 1 million, okay, and they'll be focused on is that drilling or some like preparatory work.
Speaker Change: I know that would be basically mine development, so starting tomorrow.
Speaker Change: A decline down to the the resource areas to further delineate them and you know with a view to bringing them into reserves and our production.
Speaker Change: Okay, Alright makes sense alright, thank you.
Speaker Change: Okay. Thanks, so much.
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Speaker Change: Hi, there.
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As a reminder.
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Speaker Change: Luis racing hands, but trumping the question as well.
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Speaker Change: Alright, there are no further questions at this time.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to management for any closing remarks.
Speaker Change: Well that's great. Thank you all for tuning in today, if anyone has any further questions as always please call or email us and we look forward to hearing from you and look forward to joining you on our Q3 conference call have a great day.
Speaker Change: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a wonderful day.
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