Silvercorp Metals has managed to avoid the disastrous fate of many of its mining brethren, with the Vancouver-based silver producer reporting in its June quarter results improved costs and increased production that did much to offset the plummeting price of its chief commodities, with the company also suspending operations at three of its mine sites in light of the price declines.
The results show that for the quarter that ended June 30, net income attributable to equity holders came to $4.6 million or $0.03 per share compared to the year before figures of $6.1 million or $0.04 per share. Sales of $39.8 million were realized, compared to $44.5 million a year earlier.
Net income for Silvercorp, which operates four silver-lead-zinc mines in China - the Ying, TLP, HPG, and LM mines in the Ying Mining District in Henan province - was down compared to the prior year figures due principally to a drop in the price of metals coupled with higher overall production costs as, due to heightened levels of production, more ore was processed.
Silver recorded a net realized price of $17.66 per ounce for the quarter, down 23% compared to the $22.97 per ounce the metal was fetching a year ago. In addition, the price of lead was 7% lower in the quarter compared to last while the price of zinc dropped 5% year-on-year.
Cash costs per ounce of silver overall were reported as $3.23, down from the $3.65 per ounce posted at the end of the company’s previous quarter. Total production costs per ounce of silver for the quarter came in at $5.33, down markedly again on the figure posted at the end of the quarter immediately preceding it of $5.82, but up from the $2.49 a year earlier.
Production for the quarter was up overall, coming to, on a consolidated basis, 1.4 million ounces of silver, 3777 ounces of gold, 13.5 million pounds of lead and 3.7 million pounds of zinc. This compares to the year ago figures of 1.2 million ounces of silver and 2653 ounces of gold, 13.7 million pounds of lead and 3.0 million pounds of zinc.
The company has reviewed its short term operating plans in accordance with the pressures of the new price environment. As a result, the company made the decision to suspend mining operations at three sites within the Ying Mining District as changes to the price environment rendered them uneconomical, a decision set to curtail ore production by about 63,000 tonnes for the remainder of the fiscal year and to reduce the anticipated silver production in the Ying Mining District by roughly 400,000 ounces.
Production guidance for the fiscal year for the Ying Mining District has thus been altered to 5.5 million ounces of silver, 4,700 ounces of gold and 74.7 million pounds of lead and zinc.