Silvercorp reports record silver production of 5.3 million ounces, record net income of $68.8 million, up 79%, and record cash flows of $104.2 million, up 60% for fiscal year 2011
Silvercorp Metals reported today its unaudited financial and operating results for the fourth quarter and fiscal year ended March 31, 2011, and provided an outlook for its fiscal 2012 year. The following financial results are expressed in US dollars (US$) unless stated otherwise.
FOURTH QUARTER HIGHLIGHTS
During the quarter ended March 31, 2011, the Company’s China operation was closed 28 days for the Chinese New Year Holiday. Highlights from the fourth quarter included:
- Net earnings up 29% to $12.6 million, or $0.07 per share, compared to net earnings of $9.8 million, or $0.06 per share, in the same quarter last year;
- Quarterly cash flows from operations up 44% to $34.3 million, or $0.20 per share, from $23.8 million in the same quarter last year;
- Produced 1.05 million ounces of silver in the quarter, resulting in a record annual production of 5.3 million ounces of silver and achieved the fifth consecutive year of production growth;
- Total production costs of negative $6.06 per ounce of silver and cash costs of negative $7.61 per ounce of silver, representing 31% and 35% improvements, respectively;
- Payment of $3.5 million, or CAD$0.02 per share in quarterly dividends to shareholders, and
- Closed the acquisition of the BYP Gold-Lead-Zinc Mine in Hunan Province, China.
UNAUDITED FISCAL 2011 YEAR HIGHLIGHTS
For the year ended March 31, 2011, highlights included:
- Record net earnings of $68.8 million, or $0.41 per share, a 79% increase compared to earnings of $38.5 million, or $0.24 per share, last year;
- Record sales of $167.3 million, 56% higher than last year;
- Record cash flows from operations of $104.2 million, or $0.62 per share, up 60% from $65.3 million last year;
- Record production of 5.3 million ounces of silver, or 5.46 million ounces of silver equivalent including 3,200 ounces gold produced. Silver production was up 15% from 4.6 million ounces last year;
- Total production costs of negative $5.58 per ounce of silver and cash costs of negative $6.80 per ounce of silver, representing 4% and 9% improvements, respectively;
- Paid cash dividends totaling CAD$0.08 per share, representing $13.1 million for the year;
- Raised $110.5 million net proceeds from an equity financing; and
- Increased total cash and short term investments to $206.3 million from $94.4 million a year ago, up by a 119%.
For the fourth quarter, Silvercorp recorded net earnings of $12.6 million, or $0.07 per share, an increase of 29% over the net earnings of $9.8 million, or $0.06 per share, in the same quarter last year. Net earnings improved primarily due to higher realized selling prices, offset by increased taxes, higher general and administrative (“G&A”) expenses and foreign exchange loss.
The Chinese tax holiday, which allowed the Company’s most profitable Chinese subsidiary, Henan Found, to have a preferential 12.5% income tax rate, expired on December 31, 2010. Henan Found is now subject to the normal income tax rate of 25%, resulting in a $3.1 million income tax increase for the quarter.
In addition, a VAT surtax, which was previously exempt for foreign invested companies in China and represented approximately 1.4% of sales, has been levied since December 1, 2010. This increased other taxes by $0.6 million for the quarter. Also included in other taxes was a one-time business tax of $0.4 million, relating to a capital transaction.
G&A expenses increased by $1.7 million compared to the same quarter last year, as the Company’s operations expanded to four locations from only one last year. As the US dollar continues to depreciate, the Company recorded a $1.6 unrealized foreign exchange loss, which was $1.4 million higher than the same quarter last year.
For the year ended March 31, 2011, the Company generated record net earnings of $68.8 million, or $0.41 per share, which was 79% higher than last year.
Sales in the fourth quarter rose to $42.4 million, a 50% increase from $28.2 million in the same quarter last year. For the year, Silvercorp reported record sales of $167.3 million, an increase of $60.2 million or 56% from last year. The increase in sales was mainly due to higher metal prices combined with higher quantities of metals sold for the year. The actual sales also exceeded the fiscal 2011 sales guidance of $140 million by 20%.
Cost of sales for the quarter was $8.6 million, representing a 9% increase compared to the same quarter last year. For the year, cost of sales was $35.5 million, an increase of 48% compared to $24.0 million a year ago. The cost of sales increased correspondingly with the production increase. The ore mined increased by 55% and 46% compared to the prior year quarter and the prior year, while the ore milled increased by 1% and 46%, respectively.
Gross profit margin during the quarter improved to 76% from 68% in the same quarter last year. For the year, gross profit margin was 75% compared to a gross profit margin of 74% last year.
Cash flow from operations for the fourth quarter was $34.3 million, or $0.20 per share, a 44% increase from $23.8 million in the same quarter last year. For the year, Cash flow generated from operations was $104.2 million, or $0.62 per share, an increase of $39.0 million or 60% from $65.3 million last year. The Company raised $110.5 million from an equity financing and ended the year with $206.3 million in cash and short investments, more than double the $94.4 million at the end of the prior year.
The Company mined 125,691 tonnes of ore in the fourth quarter, a 55% increase over 81,034 tonnes in the same period last year. Ore production during this quarter was lower than in the past three quarters, as the Company’s operations were closed for 28 days for the Chinese New Year Holiday. For the year, the Company mined a record of 592,330 tonnes of ore, which was 46% more than last year.
For the fourth quarter, consolidated cash mining costs decreased to $45.54 per tonne from $47.36 per tonne in the same quarter last year, as a result of improved productivity in the mines, off-set by higher labour, material and contractor costs. In addition, the stronger Chinese Yuan relative to the US Dollar added approximately $1.50 cash mining costs per tonne compared to last year. On an annual basis, consolidated cash mining costs for the year decreased to $43.70 per tonne from $47.43 per tonne in last year due to increased ore production.
A total of 135,464 tonnes of ore were milled in the quarter, comparable to the 133,921 tonnes in the same quarter last year. Cash milling costs increased to $15.31 per tonne from $9.43 per tonne a year ago due to: (i) more material and electronic/mechanical supplies being consumed, as the mills implemented a maintenance program to enhance recovery rates; (ii) higher labour costs incurred relating to increases in the number of workers, base salary and year-end bonus; and (iii) the US dollar depreciation. For the year, the Company milled 596,735 tonnes, representing 188,842 tonnes more, or a 46% increase from last year.
A total of 1.05 million ounces of silver were produced during the quarter. For the year, total silver production achieved a new company record of 5.3 million ounces, up 15% compared to 4.6 million ounces produced in the previous year.
Consolidated cash cost per ounce of silver for the quarter improved to negative $7.61 compared to negative $5.64 per ounce of silver in the same quarter last year, driven by higher realized prices for by-product credits. Consolidated cash cost per ounce of silver for the year improved to negative $6.80 compared with negative $6.22 in prior year.
In its fiscal year 2011 production guidance, the Company projected to mine 570,000 tonnes of ore at grades of 320 g/t silver, 6% lead and 2% zinc, yielding 5.3 million ounces of silver, 72 million pounds of lead and 17 million pounds of zinc. The Company achieved its fiscal 2011 production guidance of 5.3 million ounces of silver, and was slightly below guidance for lead and zinc metal production by about 3.0 million and 0.7 million pounds, or 4% each, respectively. In addition, the company produced 3,200 ounces of gold, up from 1,600 ounces in the prior year, and for which no guidance was given.
Read the full news release here.