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Press Release: Silvercorp Reports Net Income of -4-

· 02/04/2021 17:11
Capitalized Development Work and Expenditures Expensed --------------------------------------------------------------------------------------------- ------------------------ Mining Exploration and Surface Diamond Equipment & Preparation Underground Ramp Development Development Tunnels Drilling Facilities Total Tunnels drilling --------------------- --------------------- --------------------- ----------- ----------- ----------- ----------- (Metres) ($ Million) (Metres) ($ Million) (Metres) ($ Million) ($ Million) ($ Million) (Metres) (Metres) ------------- -------- ----------- -------- ----------- -------- ----------- ----------- ----------- ----------- ----------- Ying Mining District 6,100 5.2 52,200 18.8 50,000 3.5 6.3 33.8 23,400 148,400 GC Mine 500 0.4 10,300 3.0 - - 1.0 4.4 10,200 58,500 Consolidated 6,600 5.6 62,500 21.8 50,000 3.5 7.3 38.2 33,600 206,900 ------------- -------- ----------- -------- ----------- -------- ----------- ----------- ----------- ----------- -----------Head grades Metal production Production costs ------------------ -------------------------- ----------------- Cash Ore processed Silver Lead Zinc Silver Lead Zinc cost* AISC* (tonnes) (g/t) (%) (%) (Moz) (Mlbs) (Mlbs) ($/t) ($/t) ------------- ----------------- ------ ---- ---- ------ ------ ---------- ----- ---------- Fiscal 2022 production and cash costs guidance ---------------------------------------- ---- ---- ------ ------ ---------- ----- ---------- 87.1 Ying Mining 5.8 - 57.2 - - 134.2 - District 670,000-700,000 290 4.2 0.9 6.0 59.8 7.8 - 8.1 91.7 141.2 55.7 0.6 - 8.5 - 19.1 - - 81.3 - GC Mine 290,000-310,000 86 1.5 3.6 0.7 9.1 20.4 59.6 85.6 77.7 6.4 - 65.7 - 26.9 - - 130.7 - Consolidated 960,000-1,010,000 223 3.3 1.7 6.7 68.9 28.5 82.6 141.7 ------------- ----------------- ------ ---- ---- ------ ------ ---------- ----- ----------

In Q3 Fiscal 2021, approximately 17,029 metres or $0.6 million worth of underground diamond drilling (Q3 Fiscal 2020 -- 6,402 metres or $0.3 million) and 4,001 metres or $1.0 million worth of tunnelling (Q3 Fiscal 2020 -- 6,599 metres or $1.5 million) were completed and expensed as mining preparation costs at the GC Mine. In addition, approximately 2,815 metres or $1.1 million worth of horizontal tunnels, raises, ramps and declines (Q3 Fiscal 2020 -- 532 metres or $0.3 million) were completed and capitalized.

ii) Nine months ended December 31, 2020 vs. nine months ended December 31, 2019

For the nine months ended December 31, 2020, a total of 264,389 tonnes of ore were mined and 267,230 tonnes were milled at the GC Mine, up 6% and 4%, respectively, compared to 250,417 tonnes mined and 257,367 tonnes milled in the same prior year period. Average head grades of ore milled were 85 g/t for silver, 1.7% for lead, and 3.4% for zinc compared to 97 g/t for silver, 1.9% for lead, and 3.3% for zinc, in the same prior year period.

During the same time period, the GC Mine sold approximately 585 thousand ounces of silver, 8.7 million pounds of lead, and 17.7 million pounds of zinc, compared to 610 thousand ounces of silver, 9.6 million pounds of lead, and 15.9 million pounds of zinc in the same prior year period.

For the nine months ended December 31, 2020, the cash mining cost at the GC Mine was $37.89 per tonne, a decrease of 5% compared to $39.91 per tonne in the same prior year period. The cash milling cost was $12.22 per tonne, a decrease of 10% compared to $13.53 in the same prior year period. Correspondingly, the cash production cost per tonne of ore processed at the GC Mine was $50.11, a decrease of 6% compared to $53.44 in the same prior year period. The all-in sustaining production cost per tonne of ore processed was $71.58, an increase of 7% compared to $67.14 in the same prior year period.

For the nine months ended December 31, 2020, the cash cost per ounce of silver and all-in sustaining cost per ounce of silver, net of by--product credits, at the GC Mine were negative $11.21 and negative $0.10 respectively, compared to negative $7.30 and negative $0.33 in the same prior year period.

For the nine months ended December 31, 2020, approximately 36,975 metres or $1.7 million worth of underground diamond drilling (same prior year period -- 20,313 metres or $0.9 million) and 9,836 metres or $1.8 million of tunnelling (same prior year period -- 18,962 metres or $4.5 million) were completed and expensed as mining preparation costs at the GC Mine. In addition, approximately 10,482 metres or $3.3 million of horizontal tunnels, raise, and declines (same prior year period -- 1,476 metres or $1.0 million) were completed and capitalized.

FISCAL 2022 PRODUCTION, CASH COST, AND CAPITAL EXPENDITURE GUIDANCE

In Fiscal 2022, the Company expects to process approximately 960,000 -- 1,010,000 tonnes of ore, yielding 6.4 million to 6.7 million ounces of silver, 65.7 million to 68.9 million pounds of lead, and 26.9 million to 28.5 million pounds of zinc. Fiscal 2022 production guidance represents an anticipated increase of approximately 3% in silver production, and 7% to 10% in zinc production compared to the current Fiscal 2021 guidance. In Fiscal 2022, lead production is expected to be similar to the current Fiscal 2021 guidance.

*Both AISC and cash costs are non-IFRS measures. AISC refers to all-in sustaining costs per tonne of ore processed. Cash costs refer to cash production costs per tonne of ore processed. Foreign exchange rates assumptions used are: US$1 = CAD$1.30, US$1 = RMBYen6.50.

The Company has been consistently active in exploring its existing mining permit areas through drilling and tunneling, with the objective of replacing the depleted ore. In recent years, the Company has embarked on a capital investment program at both of its mining operations with the objective of adding facilities and infrastructure that will enhance the environmental friendliness, safety, efficiency and future profitability of the mines. This program includes the excavation of additional access ramps and tunnels which are expected to facilitate the efficient movement of ore, equipment and personnel within the mines, as well as provide access to new areas of mineralization that may be suitable for mining in current and future periods. Depending on the extent of each project and the rate of development progress, the spending associated with these projects may be spread across several reporting periods until they are complete.

For Fiscal 2022, the Company plans to i) complete 6,600 metres of ramp development tunneling at estimated capitalized expenditures of $5.6 million, representing a 20% decrease in meterage and a 19% decrease in total cost compared to Fiscal 2021 guidance; ii) complete 62,500 metres of exploration and other development tunneling at estimated capitalized expenditures of $21.8 million, representing a 32% decrease in meterage and a 28% decrease in total cost compared to Fiscal 2021 guidance, and iii) spend $7.3 million on equipment and facilities, an increase of 35% compared to Fiscal 2021 guidance. In addition, the Company plans to complete 50,000 metres of surface diamond drilling at estimated capitalized expenditures of $3.5 million. The total capital expenditures are budgeted at $38.2 million, representing a decrease of 10% compared to Fiscal 2021 annual guidance. The Company also plans to complete and expense 33,600 metres of mining preparation tunneling and 206,900 metres of underground diamond drilling. The table below summarizes the work plan and estimated capital expenditures in Fiscal 2022.

(a) Ying Mining District

In Fiscal 2022, the Company plans to mine and process 670,000 to 700,000 tonnes of ore at the Ying Mining District averaging 290 g/t silver, 4.2% lead, and 0.9% zinc with expected metal production of 5.8 million to 6.0 million ounces of silver, 57.2 million to 59.8 million pounds of lead, and 7.8 million to 8.1 million pounds of zinc. Fiscal 2022 production guidance at the Ying Mining District represents increases of approximately 4% to 6% in ore production, 3% to 4% in silver production, 1% to 3% in lead production, and 1% to 11% in zinc production compared to its Fiscal 2021 guidance.

The cash production costs are expected to be $87.1 to $91.7 per tonne of ore, and the all-in sustaining costs are estimated at $134.2 to $141.2 per tonne of ore processed.

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February 04, 2021 17:11 ET (22:11 GMT)