Earnings call transcript: Silvercorp Metals Q4 FY2025 reports mixed results

Silvercorp Metals Inc. reported its fourth-quarter earnings for fiscal year 2025, revealing a steady performance in revenue and earnings per share (EPS) that aligned with market forecasts. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, with a strong financial health score of 3.33 out of 5. Despite this, the company’s stock experienced a decline in after-hours trading, reflecting investor concerns over future guidance.

Key Takeaways

• Silvercorp’s Q4 revenue increased by 76% year-over-year to $75 million.
• The company reported an adjusted net income of $14.7 million, or $0.07 per share.
• Stock price fell by 4.39% post-earnings, closing at $3.70 in after-hours trading.
• Silvercorp’s production costs decreased slightly, while production volumes for silver and gold saw significant increases.
• The company plans significant investments in upcoming projects, including the El Domo project.

Company Performance

Silvercorp Metals Inc. demonstrated robust performance in the fourth quarter of FY2025, with revenue surging 76% year-over-year to $75 million. The company reported a net loss of $7.6 million but achieved an adjusted net income of $14.7 million, or $0.07 per share. The increase in revenue was largely driven by higher production volumes and improved commodity prices.

Financial Highlights

• Revenue: $75 million, up 76% YoY
• Adjusted net income: $14.7 million ($0.07 per share)
• Cash flow from operations: $31 million, up 200% YoY
• Full-year revenue FY2025: $299 million, up 39% YoY
• Full-year attributable net income: $58 million ($0.29 per share)

Earnings vs. Forecast

Silvercorp’s actual EPS of $0.07 met the forecasted EPS of $0.07. Revenue exceeded expectations, coming in at $75.1 million against a forecast of $66.77 million, indicating a positive surprise of approximately 13%.

Market Reaction

Despite meeting EPS expectations, Silvercorp’s stock fell by 4.39% in after-hours trading, closing at $3.70. The stock’s decline may be attributed to investor concerns over future earnings potential, as highlighted by the company’s guidance for upcoming quarters. InvestingPro analysis reveals several positive indicators, including maintaining dividend payments for 18 consecutive years and holding more cash than debt on its balance sheet. For deeper insights, InvestingPro offers 6 additional tips and a comprehensive Pro Research Report, available among 1,400+ top stocks covered by the platform.

Outlook & Guidance

Looking ahead to FY2026, Silvercorp projects a production target of 7.4-7.6 million ounces of silver and 9,100-10,400 ounces of gold. With analysts forecasting EPS of $0.47 for FY2026 and the company maintaining strong financial metrics, InvestingPro subscribers can access detailed valuation models and peer comparison tools to better evaluate the company’s growth potential. The company plans to invest $25 million in the Ying mine ramp and tunnel development, alongside a $241 million capital investment in the El Domo project.

Executive Commentary

"We are a growing and profitable silver producer that provides leverage to higher metals prices," stated Lon Shaver, President of Silvercorp Metals. He emphasized the company’s commitment to sustainable development and collaboration with local communities.

Risks and Challenges

• Commodity Price Volatility: Fluctuations in silver and gold prices could impact profitability.
• Project Execution: Delays or cost overruns in major projects like El Domo may affect financial performance.
• Regulatory Risks: Changes in mining regulations could pose challenges to operations.
• Market Sentiment: Continued stock price declines could impact investor confidence.

Silvercorp Metals’ Q4 FY2025 earnings report presents a mixed picture, with strong revenue growth and stable EPS overshadowed by cautious market reactions and future guidance concerns.

Full transcript - Silvercorp Metals Inc (SVM) Q4 2025:

Ludi, Conference Operator: Thank you for standing by. Good afternoon. My name is Ludi, and I will be your conference operator today. At this time, I would like to welcome everyone to the Silver Corp Fourth Quarter and Full Year Fiscal twenty twenty five Financial Results Conference Call. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. Thank you. I would now like to turn the conference over to Lon Shaver, President of Silber Corp. Please go ahead, sir.

Lon Shaver, President, Silver Corp: Thank you, Ludi. On behalf of Silver Corp, I’d like to welcome everyone to the call today. Today, we’ll discuss our fourth quarter and full fiscal twenty twenty five financial results, which were released yesterday after market close. A copy of our news release, the MD and A and financial statements are available on our website and SEDAR plus Before we jump in, please note that certain statements on today’s call will contain forward looking information within the meaning of securities laws. Additionally, please review the cautionary statements in our news release as well as the risk factors described in our most recent regulatory filings.

So let’s kick off with the financial results. With a performance that seems to have been misunderstood by the market a bit today, we finished fiscal twenty twenty five with our strongest ever fourth quarter, which is highlighted by silver production of 1,600,000 ounces, up 42% from last year. We had revenues of $75,000,000 which was up 76% from last year and cash flow from operating activities of $31,000,000 which was up 200% from last year. This performance was driven by our flagship Yiyang operation, which processed ore that was stockpiled from the previous three quarters of this year during Chinese New Year, a two week period when operations are typically paused. We also benefited through the quarter from higher throughput on the successful implementation of a mill expansion, which we completed last December, which increased production capacity from 2,500 to 4,000 tons per day.

In addition, a robust commodity market led to improved realized metals prices compared to the same period last year. In particular, the realized silver price was up 34%, gold was up 33%, zinc was up 23 and lead was up 6%. Silver remains our most significant revenue driver contributing 59% Additionally, I’d like to note that gold’s revenue contribution increased to 12%, up from just 4% over the first nine months of fiscal twenty twenty five, reflecting the higher gold content in the stockpiled ore that we processed during the quarter, as well as higher gold prices. Moving down the income statement, we reported a net loss of $7,600,000 for the quarter or $03 per share.

This was primarily driven by a non cash $21,000,000 charge on the fair value of derivative liabilities, which is related to the conversion rights of the convertible notes that we issued last November, as well as warrants. Adjusting for this as well as other non cash and one time items, our net income for the quarter was $14,700,000 or $07 per share and this would compare to $3,800,000 or $02 a share in the comparative quarter. The increase in our bottom line reflects the higher metals prices as well as higher volumes of gold, silver, lead and zinc that we sold. Looking at the cash flow from operating activities, our mines generated $31,000,000 this past quarter. As I mentioned earlier, this is up 200% year over year.

Even after adjusting for changes in non cash working capital during the quarter, our operating cash flow grew by 105% compared to Q4 twenty twenty four. During the quarter, we invested $13,000,000 in our operations, including $9,000,000 at the Ying mine and $3,000,000 at the El Domo project in Ecuador. Even after these investments, we were able to add to cash to our balance sheet and ended fiscal twenty twenty five with a cash balance of $369,000,000 and that’s up $14,000,000 from our numbers reported in December. This cash position does not include our investments in associates and other mining companies, which had a total market value of $71,000,000 as of March 31. To quickly summarize the full year results, just like the quarter, fiscal twenty twenty five was a record breaking year across the board.

Revenue reached $299,000,000 up 39% from the prior year, driven by a $61,000,000 increase from higher metal prices and $22,000,000 from increased sales volumes. Attributable net income for the year was $58,000,000 or $0.29 per share that compared to $36,000,000 or $0.21 per share in the prior year. The increase was mainly driven by higher revenue and a $12,000,000 gain on investments. These gains were partially offset by a $20,000,000 increase in production costs due to expanded production capacity and tunneling expenses, a $13,000,000 mineral rights royalty related to the SGX license renewal, a $9,000,000 non cash loss of the fair value of derivative liabilities and a $6,000,000 increase in corporate admin and business development expenses. However, our adjusted earnings for the year were $75,000,000 or $0.37 per share and this compared to $39,000,000 or $0.22 per share in the prior year.

Our annual cash flow from operating activities was $139,000,000 This was up from $92,000,000 in the prior year and the results reinforce why Silver Corp remains a compelling investment. We are a growing and profitable silver producer that provides leverage to higher metals prices. Capital expenditures for the year were approximately $86,000,000 and that was up from $64,000,000 in the prior year, largely due to increased underground development and completion of new tailings storage facility and mill expansion projects at Ying. And ongoing spending at El Domo, which was $7,000,000 and the Condor project at $1,000,000 in Ecuador. Additionally, over the year, we repaid Wheaton Precious Metals thirteen million dollars that had been drawn as an early deposit for the Aldomo project, paid $5,000,000 in dividends and repurchased close to $1,000,000 worth of our shares under the current NCIB program.

Just to quickly recap our Q4 operating results. As we reported in April, we mined over 246,000 tonnes and processed over 345,000 tonnes of ore in Q4. These numbers are up 2646% respectively compared to the same quarter last year. And we produced on a consolidated basis approximately 1,600,000 ounces of silver, 3,110 ounces of gold, 16,000,000 pounds of lead and 4,000,000 pounds of zinc in the quarter. And these were increases of 42, 60 two percent and 30 percent respectively in silver, gold and lead production and a modest 3% decrease in zinc production.

On the cost side, Q4 production costs averaged $83 per ton, down 1% from last year. This reflects a 7% decrease in unit costs at Ying due to the higher volumes mined and processed, partially offset by a 23% increase at GC due to less ore produced in the quarter and more underground development completed and expensed as part of the mining costs. The consolidated cash cost per ounce of silver net of byproduct credits was $2.49 in Q4 compared to $1.22 in the prior year quarter. This reflects a $14,000,000 increase in production costs offset by a $12,000,000 increase in byproduct credits. The all in sustaining production costs decreased by 8% year over year to $132 per ton in Q4 and on a per ounce net of byproducts basis, the all in sustaining cost was $14.31 per ounce, which is pretty much in line with the prior year quarter.

For the full year, we mined and milled 1,300,000 tons of ore, which is up 2019% year over year respectively. Metal production totaled 6,900,000 ounces of silver, 7,495 ounces of gold, 62,000,000 pounds of lead and 23,000,000 pounds of zinc. Silver and gold output rose 123%, respectively, while lead and zinc declined slightly by 20.3%. For the year, production costs averaged $81 per ton, up 3% from last year and $1 above the high end of our guidance range of $77 to $80 This in part reflects a 5% increase in unit mining costs at Ying due to our higher mine tunneling and grade control drilling, partially offset by a nine percent decrease in milling costs. Consolidated cash cost per ounce of silver net of byproduct credits was negative $0.54 compared to a negative $0.38 last year, with the improvement driven by a $21,000,000 increase in byproduct credits, but offset by a $20,000,000 rise in production costs.

The all in sustaining production costs averaged $142 per ton, up 1% year over year, but below our guidance of $144 to 152 and on a per ounce net of byproducts basis, all in sustaining cost was $12.12 up from $11.38 in fiscal twenty twenty four, reflecting modest increases in G and A, sustaining capital plus government payments totaling $13,000,000 Looking ahead to our fiscal twenty twenty six guidance, which we announced in April, we expect to produce between seven point four million and seven point six million ounces of silver, 9,100 to 10,400 ounces of gold, between 132,000,000 pounds of lead and between 29,000,000 to 30,000,000 pounds of zinc. These reflect potential increases of 9% in silver, 39% in gold, 6% in lead and 42% in zinc, if you’re looking at the upper end of the guidance compared to fiscal twenty twenty five. In terms of production cost guidance, we’re anticipating between $81.82 per tonne in fiscal twenty twenty six, which is consistent with fiscal twenty twenty five. And on an all in sustaining basis, we’re anticipating a cost between 155 and 158 per tonne, modestly higher than last year’s figure of $142 as we are going to be increasing some spending at Ying, as mentioned.

This is a good segue to discuss some of our growth projects. At Ying, we budgeted $25,000,000 in fiscal twenty twenty six for ramp and tunnel development to enhance underground access and materials handling, where we’re looking to replace shafts with a tracker system. An additional $25,000,000 is allocated to exploration tunneling and $6,000,000 to capitalized drilling as we continue to explore this district, which is prospective not only for silver lead and zinc, but also for its emerging gold potential. At Quanping, our satellite project north of Ying, all required permits and licenses for mine construction are in place and site preparation is underway. We budgeted $4,000,000 for construction activities in fiscal twenty twenty six.

Turning to Ecuador, we recently announced the construction plan is scheduled for the Al Domo project with first production targeted by the end of twenty twenty six. The capital cost is estimated at $241,000,000 And since acquiring the project since last July, we’ve optimized the site layout, infrastructure designs and open pit production plan to reduce haulage and support construction of the tailings storage facility. We’ve engaged a group called Jinpeng to lead detailed engineering for the process plant and oversee equipment selection, signed a power line agreement with Cinel, the state power company and initiated permitting for backup diesel generation. We finalized the project’s materials balance, which supported our shift to a unit cost approach to contract bidding, ensuring we pay only per ton of material moved. Based on this approach, we awarded the first civil works contract to CRCC fourteen, which is now on-site working on access roads and preparing temporary camp construction.

Bidding for the open pit mining contract is underway with pit stripping expected to begin in August. Construction of the main plant and auxiliary facilities is scheduled to start in September, followed by major equipment installation in May of twenty twenty six. Construction and installation are projected to be completed by November of twenty twenty six and plant commissioning is planned for December of twenty twenty six. At the Ponderay Gold Project, we recently published an updated mineral resource estimate, which outlined a higher grade underground resource at the Camp And Mosquitoes deposits. Based on this, we plan to complete a PEA for an underground gold operation later this year.

A 3,500 meter surface drill campaign is set to begin this month to test some priority targets at both deposits and in parallel, we are advancing permits and community agreements to support the development of exploration tunnels into the high grade zones, which would then help us make decisions about a potential feasibility study following the PDA. I’d like to thank our Ecuadorian team, our in country partner Salazar Resources and our stakeholders for their continued support and hard work in advancing these projects. And as always, as we expand our presence in Ecuador, we remain committed to working closely with the government, local communities and partners to develop these assets responsibly and sustainably, creating long term value for all stakeholders. And with that, operator, I’d like to open the call for questions.

Ludi, Conference Operator: Thank you, sir. And ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star two. If you’re using a speakerphone, please keep your handset before pressing any keys.

Once again, that would be star one to ask a question. One moment, please, for your first question. And I’m showing no further questions at this time. I would like to turn this back to Laurent Sheaver for closing remarks.

Lon Shaver, President, Silver Corp: Okay. Well, that’s great. Maybe it’s a busy morning today. So I thank everyone for their attendance. And as always, if anyone does come up with any questions, we remain available to answer them.

So, please reach out by phone or e mail. Thanks very much, everyone, and have a great day.

Ludi, Conference Operator: Thank you. And this concludes today’s conference call. You may now disconnect your lines. Thank you for participating, and have a wonderful day.

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