PRECIOUS METALS

Silvercorp sets solid growth targets for fiscal 2023

Canada-based and China-focused Silvercorp expected firm production growth in its 2023 fiscal year (April-March) and met analysts’ expectations for October-December 2021 earnings.

Nathan Richardson
Silvercorp sets solid growth targets for fiscal 2023

The company - which touts itself as China's premier silver producer - expected to mine and process 1.04 million-1.14 million tonnes of ore in the fiscal year for 2023. Silvercorp expected this to yield 6,300-7,900 ounces of gold, 7 million-7.3 million ounces of silver, 68.4 million-71.3 million pounds of lead, and 32-34.5Mlbs of zinc.

Silvercorp said the guidance represented production increases of about 9% in ores, 100% in gold, 11% in silver, 3% in lead, and 12% to 21% in zinc, compared with guidance for the 2022 fiscal year.

Silvercorp's outlook was level-to-better when compared with forecasts from analysts at Canaccord Genuity and BMO Capital Markets.

CG and BMO had silver pegged at 7Moz and 6.5Moz, respectively; lead at 64Mlbs and 65Mlbs; and zinc at 33Mlbs and 30Mlbs.

"We are encouraged to see F2023 guidance show [about] 12% growth (AgEq) over F'22 as the company mines newly discovered resources," BMO's Ryan Thompson said.

"The increased production guidance is made possible by over 629,000m of exploration and resource upgrade drilling completed at the mines from 2020 to 2021. During 2021 alone, over 409,000m of drilling were completed," Silvercorp said.

The miner - which has a market capitalisation of C$761.55 million - reported adjusted earnings attributable to equity shareholders of US$13.4 million, or US$0.08 per share, in the December quarter, which compared with US$13.8 million, or US$0.08 per share, in the prior year's quarter.

Thompson said the adjusted EPS was in line with both BMO's and consensus estimates of US$0.07.

Net income attributable to shareholders for the quarter was US$5.1 million, or US$0.03 per share, compared with US$8.4 million, or US$0.05 per share, in the prior year's quarter.

"The decrease was mainly due to a market-to-market charge of US$8.5 million against equity and bond investments in the current quarter," Silvercorp said.

CG's Dalton Baretto said a surprise in Silvercorp's outlook for fiscal 2023 was capital expenditure guidance of US$49 million against the investment bank's forecast of US$37 million.

Silvercorp said the capex is up 27% compared with fiscal 2022 guidance, which was mainly a result of increased tunnelling and drilling work, "and a substantial increase in the price of explosives".

Silvercorp traded on the Toronto Stock Exchange on February 9 at C$4.30/share, which was down 1% day-on-day. The 52-week high/low trading range was C$8.395/C$3.95.

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