Saturday, June 25, 2022

Silvercorp Metals Inc (OTCMKTS:SVMLF) Delivers the Goods

Silvercorp Metals Inc (OTCMKTS:SVMLF) is a precious metals stock that we strongly recommended when we last covered the name back in late December. At that time, we said we thought the company was executing better than the rest of the space, and that metals were likely under-owned and oversold, and stood to benefit from the early days of a Donald Trump presidency.

The stock has powered 43% higher since that time, and the metals have powerfully rebounded. We also just got another report card out of this company as they reported financial and operating results for the third quarter and nine months ended December 31, 2016. In the quarter, the company piled up net income of $13.1 million, or $0.08 per share, up 294% compared with net income attributable to equity shareholders of $3.3 million or $0.02 per share in the prior-year quarter. That’s excellent. The stock has responded very well.

Silvercorp Metals Inc (OTCMKTS:SVMLF) trumpets itself as a company that engages in the acquisition, exploration, development, and mining of precious and base metal mineral properties in China.

The company holds interests in various silver-lead-zinc mines in the Ying Mining District in Henan Province, China, as well as GC mine, which includes silver, lead, and zinc exploration permits in Guangdong Province. Silvercorp Metals Inc. sells its products to local smelters or companies in the mineral products trading business.

The company was formerly known as SKN Resources Ltd. and changed its name to Silvercorp Metals Inc. in May 2005. Silvercorp Metals Inc. is headquartered in Vancouver, Canada.

According to company materials, “Silvercorp is a low-cost silver-producing Canadian mining company with multiple mines in China. The Company’s vision is to deliver shareholder value by focusing on the acquisition of under developed projects with resource potential and the ability to grow organically.”

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In the current quarter, the Company’s financial results were mainly impacted by the following: i) improved head grades yielded higher silver, lead, zinc sales, up 5%, 9% and 15%, respectively; ii) a 8% decrease in total production costs per tonne of ore processed; and iii) the increase of metals prices, as the realized selling price for silver, lead, and zinc increased by 15%, 52% and 83%, respectively, compared to the same prior year quarter.

Sales in Q3 Fiscal 2017 were $47.8 million, up 64% compared to $29.1 million in Q3 Fiscal 2016. Silver and gold sales represented $23.4 million and $0.7 million, respectively, while base metals represented $23.7 million of total sales in this quarter compared to silver, gold and base metals of $16.8 million, $0.4 million, and $11.9 million, respectively, in Q3 Fiscal 2016.

In addition, the company provided some guidance: Silvercorp’s Fiscal 2018 guidance (remember, for this company, we are currently in fiscal Q4 2017, meaning that fiscal 2018 starts in a couple months), for both production and cash costs, has improved relative to Fiscal 2017 guidance including a 12% increase in silver production guidance, a 10% increase in lead production guidance, and a 44% decrease in consolidated all-in sustaining cost per ounce of silver guidance.

We’ve witnessed 14% added to share values of the name over the past month of action. The situation may be worth watching. SVMLF is a stock with a past littered with sudden rips. Moreover, the listing has benefitted from a jump in recent trading volume to the tune of 46% beyond its prior sustained average level. Since we last covered the name, the stock has moved 43.6% higher.

Currently trading at a market capitalization of $537.2M, SVMLF has a significant war chest ($38.7M) of cash on the books, which is balanced by about $11.1M in total current liabilities. SVMLF is pulling in trailing 12-month revenues of $171.4M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 69.6%. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $SVMLF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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