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spk07: Thank you for standing by and good morning. My name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to the Silvercorp Metals Inc. fiscal 2021 fourth quarter and four year financial results conference call. Note that all participants lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press star followed by two. Thank you. And I would like to turn the conference to Lon Shaver, Vice President for Opening Remarks. Please go ahead, sir.
spk10: Thank you, Sylvie. Good morning and welcome, everyone. On behalf of Silvercorp Metals, I'd like to thank you for joining our call today. Before we get started, I'm required to remind you that certain statements On today's call, we'll contain forward-looking information within the meaning of securities laws. Please review the cautionary statements included in our news release and presentation, as well as the risk factors described in our most recent MD&A and financial statements. Also important to note, unless stated otherwise, all references to dollars in this call are U.S. dollars. So we're pleased to have finished fiscal 2021 with a solid financial quarter. As we previously announced in Q4, we mined 163,000 tons of ore and milled just over 180,000 tons. Those numbers are up 53% and 76% respectively compared to the prior year quarter. Our Q4 sales were up versus last year. Sales of silver were just over a million ounces, up 32%. Gold 7,000 ounces, 40%. Lead, just under 11 million pounds, that was up 13%. And zinc, just under 4.6 million pounds, that was up 50%. It's important to recall that Q4 is always impacted by the two-week Chinese New Year holiday mine suspension. This makes comparability to the results of the other quarters in the year, and the year itself somewhat difficult. Also, this Q4 was better than last year when we had an extended shutdown. But this year, we did still experience a slightly slower production resumption this year due to some of the COVID-19 prevention restrictions that did affect some of the travel affecting workers getting back to site. But for the quarter, our revenue was $35.7 million. That was up just under 90% compared to the prior year quarter. And our net earnings to shareholders were $7 million, or $0.04 per share. Our Q4 earnings were impacted by some accounting charges, namely an $800,000 foreign exchange loss and a $1.1 million loss on equity investments. Our cash flow from operations before changes in non-cash foreign capital for the quarter was $11.9 million. For the year, we've announced that we mined 964,925 tons of ore, milled 967,581. Those numbers up 9% and 8% respectively. And in terms of sales, we sold 6.3 million ounces of silver, 4,700 ounces of gold, 67 million pounds of lead, and just under 28 million pounds of zinc. Now, those production numbers, silver up 1%, gold up 42%, but that's a bit of an anomaly because we had a clear out of some concentrates at a mine that's on current maintenance. Lead was up 3% and zinc was up 10% compared to the prior year. Silver and lead production met guidance and zinc production beat guidance. Our revenue for the year was $192.1 million. That was up 21%. compared to $158.8 million in the prior year. I'd like to note that silver was 58% of revenues for the year on a net basis, compared to 53% in fiscal 2020. And looking a bit quickly at pricing, you know, realized pricing for us for silver was up 30% for the year, but 64% for Q4. Lead was, in fact, down 6% for the year, but up 21% in Q4. And zinc was up 26% for the year and up 92% for the quarter. It's also a little important to recall that COVID in early 2020 did skew the quarterly numbers for most metals. For this current year, net income to equity shareholders was $46.4 million, and that's up 35% compared to the prior year. And this worked out to $0.27 per share. I should note that in Q4 of this year, Hinan found our subsidiary was recognized as a high and new technology enterprise. So this is a classification at the national level. And we're proud of this. It's based on the efforts that we've made in mining research and innovation. And what it resulted is in an effective income tax rate reduction to 15% from the statutory 25%. This applied to taxes paid for calendar 2020 and led to a 4.3 million tax recovery reflected in the Q4 financials. And this tax rate incentive will last until December of 2022. at which point we can see if the program is still active and reapply. As a result of this, we have a $4 million tax refund due at year-end. The foreign exchange loss in fiscal 2021 was $7.7 million, and that was compared to a gain of $4.1 in fiscal 2020. And the foreign exchange gain and loss was really mainly driven by the exchange rate differences between the U.S. dollar and the Canadian dollar. Our cash flow from operations, this is after non-cash working capital in fiscal 2021, was $85.9 million, up 11% compared to $77.2 million in the prior year. And for the fiscal year, our cash cost per ounce of silver net of byproduct credits was negative $1.80 in fiscal 2021, and our all-in-sustaining cost per ounce of silver net of byproduct credits was $7.49 per ounce. Ying, which is our biggest contributor to our results, showed an 8 percent increase in the cash production cost per ton for the year, but the all and sustaining cost per ton was flat. Part of the reason for that is capital expenditures, which totaled $45.6 million, which was $3.2 million above our guidance as a result of a $4 million expenditure to build an aggregate plant to treat a million tons a year of our waste rock was not in the previous guidance. But otherwise, capital expenditures at the Ying Mining District and the GC Mine were below the annual guidance. And in fiscal 2021, Silvercorp was undertaking an extensive drilling programs at the Ying Mining District with two main objectives. One was to look at areas with existing development and access and re-examine them to potentially define additional resources and reserves. And this led to a reduction of about 17,000 meters or $5 million worth of exploration and development tunneling in fiscal 2021. And this drilling program is also looking at areas which may have been overlooked for potential gold mineralization. And these are being tested for different alteration styles from the typical silver lead zones that we're mining. We currently have 70 drill rigs at Ying drilling across the different mines for both surface and underground. For the year, we paid $4.4 million of dividends to our shareholders. And in terms of corporate development, during the year, we acquired a 27% interest in Whitehorse Gold. This was valued at $19 million as of March 31st. And this is a result of receiving shares in a spin-out by New Pacific and subscribing for additional shares for a total of $1.3 million under a private placement. During the year, we also won an online auction to acquire the exploration rights to the Zonghe Silver Project from the Henan Provincial Government in China, and with the mineral rights transfer contract pending a national security clearance by the related authorities. We acquired a 43.8% interest in the La Yesca Silver Project in Mexico for approximately $9.1 million. And we participated pro rata in an offering by New Pacific to the tune of $5.8 million. We ended the year with a strong balance sheet with $199.1 million in cash and cash equivalents. And this is up $56.6 million from the end of last year. And our working capital was up $53.7 million. Now, it's important to note that this cash and investment number does not include the equity investments in our other companies, which had a total market value of $212 million as of March 31st. In terms of outlook, a little quick review on that. Looking forward for fiscal 2022, we're expecting production of between 960,000 to just over a million tons of ore. Between 6.4 and 6.7 million ounces of silver, that's up approximately 3% compared to the guidance for fiscal 2021. Between 65.7 and 68.9 million pounds of lead, which is essentially flat to the fiscal 2021 guidance, and between 26.9 to 28.5 million pounds of zinc, and that'll be up between 7 to 10% compared to the guidance. For fiscal 2022, the total capital expenditures budget at the Union Mining District and the GC Mine are estimated around $38.2 million. And we also plan to complete and expense about 33,600 meters of mining preparation tunneling and 206,900 meters of underground diamond drilling. Further details on these numbers are available in our MD&A. In terms of other development plans for fiscal 2022, we plan to commence a phase one 10,000-meter drilling program at the La Yesca Silver Project, estimated cost around $3 million. We have applied for the necessary drilling permits from the respective Mexican government agencies, are optimistic to receive them soon, and commence drilling here within the next month. We also plan to initiate an extensive drilling campaign at the Zongho Project. We'll formalize the plan and update the cost estimates with respect to Zahar once the mineral rights transfer contract has been executed. Looking longer term, we're also in the process of applying for permits to build a third tailings facility near the existing facilities at the Ying mining district. The company is also considering plans to expand the current milling capacity or to build a new mill for future production expansion at the Ying mining district and to potentially accommodate some of the additional material we anticipate, both from within the Ying mines currently, as well as to process ore from the Zhonghe project during its development stage. We previously announced that our two-year mining contracts with the eight mining contractors at the Ying Mining District expired at the end of March. We successfully negotiated a renewed contract with all of the mining contractors at Ying, except for the one at the LME mine, which is actually our smallest mine at Ying. The renewed contracts have terms of two to three years and represent an overall 14.5% increase compared to previous agreements. And there haven't really been contract renewals for at least two years. Based on the renewed contracts and assuming the amount of work that was done in fiscal 2021, the total annual increase would have been estimated around 5 million, but we expect to offset this with reduced tunneling meterage as drilling activities in the previous mining areas are increasing instead of that tunneling. And that's, as I mentioned previously, in terms of our program. And with that, I think it would be appropriate to open the call for questions.
spk07: Thank you, sir. Ladies and gentlemen, as stated, if you would like to ask a question, please press star followed by one on your touch-tone phone. Once you do, you will hear a three-tone prompt acknowledging your request. And if you would like to withdraw your question, you will need to press star followed by two. And if you're using a speakerphone, you will need to please lift the handset before pressing any keys. Please go ahead and press star one now. if you have any questions. And your first question will be from Dalton Barreto at Canaccord. Please go ahead. Please unmute, Mr. Barreto.
spk13: Hi, sorry, can you hear me now? Yeah. Hi, Dalton. Hey, Lon, how you doing? Thanks for hosting this call, really appreciate it. A couple of questions for me, one just kind of housekeeping and then two bigger ones. First, just on the quarter, when I look at the cost per ton at Yang mostly, but to a lesser extent GC, they looked pretty high. I mean, based on the data I have, they're the highest cost at least going back to 2010. Is this kind of a function of this global inflation that we're hearing about, or is this kind of a one-off thing?
spk10: Well, I think there is some inflation coming in, including in the labor, as you can see with these renewals. Some of it's also, though, related to that shift in strategy with moving some of the development work that used to be categorized in capital into operating costs.
spk13: Got it. Okay. And then I just want to touch on what you were just talking about in terms of the mill expansion and maybe a new mill at Yen. How far along is the thinking on that? Do you plan to put out a new tactical report on it, and if so, when?
spk10: Yeah, I mean, it's still early days. I'd say what is being looked at currently right now and more near term is looking at more nominal adjustments to our mill number one to be able to accommodate both potential copper separation, as we're seeing some copper in some of the results we're hitting, but also adding a gravity concentrator to deal with some of the gold material. So I think that's probably more of the newer term is to see some tweaks there. But over the longer haul, yes, it is thinking about adding potentially another million ton per year type mill to the eating district for both, proper mines that we have right now, ones we're looking to develop on the footprint, both with the existing silver-lead zinc that we're mining and to accommodate potentially some gold zones, but also looking broadly at the district. That's clearly to deal with Zonghe, but then there are other targets within the Ying mining district that we think could be available. But really, it's very early days to be putting numbers out. We've got to do a lot of our internal studies. And yes, we'd be wrapping those around a proper technical report that we would bring forward.
spk13: Got it. Thanks. And then just one final one on the kind of big picture. And this is a two-part question on the incubator model. First of all, are you guys happy with the portfolio right now? Are you still looking to add projects to it? And then secondly, just on New Pacific, just looking at the progress those guys have made and they're about to publish a PEA, is there a natural point where they don't fit your incubator model anymore?
spk10: I'll answer the second one first, in part because I didn't catch part of the first question, so I'll ask you to repeat it afterwards. Yeah, I think with New Pacific, we're happy to monitor their progress and the work that they're doing and the developments that are coming for New Pacific are what we and everybody else are going to need to evaluate our strategy with respect to that investment. And so depending on how things progress, both in terms of the technical results, the ability of the company to finance itself, its suitability as a target for us or for somebody else. I mean, that could lead to us monetizing that investment, distributing that value to shareholders in some way, or potentially if the value is right and it can be justified to Silvercorp shareholders acquiring it. I mean, but right now it's still open and we're not at a point where we're needing to make those decisions yet.
spk13: Okay, and sorry, the first part of my question where I cut out was, are you happy with the number of portfolio projects you have or companies, or are you looking to add more?
spk10: Well, I wouldn't say it's a matter of being happy with them. I think we're out there looking to grow, looking to find attractive projects. And when projects come in the funnel and we look at them, they could end up as full-on acquisition targets. But if the model that's more suitable based on the project and the strategy and potentially a platform or infrastructure that might be there with existing management, that might lead to a strategic investment. And if we see a project that is attractive, but really it should be sort of a special purpose company, then we would incubate an opportunity and create a company around that too. to incentivize management to share some of the risks in maybe an earlier stage project and go about it that way. So I think it's really just a matter of being disciplined, looking at a lot of things, and seeing which opportunities truly meet our criteria.
spk13: Makes sense. Thanks, Lon. That's awesome. Thanks, Lon.
spk07: Thank you. Next question will be from Ryan Thompson at BMO. Please go ahead.
spk04: Yeah, hey Lon, thanks for the update. I was actually going to ask questions along the similar lines as Dalton, but maybe I'll just ask a couple of follow-ups. Maybe just on Lasieskas and Zonghe, can you give us any sort of timelines as to when you think you will be able to get the drilling permits for Lasieskas and the transfer of the title for Zonghe? And then maybe just a second question on the contract to renewal that you announced. Can you just give us a little bit more color as to where things are at for LME? I think was the only one that you mentioned hasn't had the contract renewed. So if you could just give us some additional color on that, that would be helpful too. Thanks.
spk10: Yeah, sure. So in terms of Zonghe, yeah, that's obviously taken a bit longer than anticipated. It's sort of caught up in a bit of a bureaucratic process, but we think we see that progressing. It's actually been fine in terms of the time it's taken because it's allowed us to really go forward and build up some of the staffing and the management at Ying for both our existing and for this project. I mentioned we have 70 drill rigs at Ying. When that Zonghe gets executed, we'll come back with more details in terms of budgets and costs. But the anticipation is that we would move maybe 10 of those rigs from Ying over to start tackling that Zonghe project. So I would expect we should have some news here in the next month or so. Similarly on La Yesca, all the paperwork was put in place. We're anticipating getting those permits here by the end of May, and we're targeting to begin drilling mid-June with the drilling program to take us through to about September to get just over 10,000 meters. With respect to the contract, Yeah, I mean, in terms of LMEs, it's important to note that I said that was the smallest mine. It's roughly 8% of production. So what has happened there is... We couldn't come to agreement with that contractor. A decision was made, well, then if we can't agree, then I guess you need to go. They've been ramping down as of the end of April. So there's been lower activity in the process of moving out. But what's great is that the contractors and the subcontractor team leaders want to stay. And so we've basically hired back most previous workers to work as internal contractors and, you know, hoping to get restarted here in the next week or so.
spk04: Okay. Thanks for that. So I guess the bottom line here is that there's no, no changes to production or cost guidance and you're, you're feeling pretty comfortable with where those are sitting for the year.
spk10: Yeah. Yeah. At this point, like I said, there might be a small disruption with LME, but it's, the smallest mine and we're confident we can make that up over the course of the year. And the shift in activities and the way we're doing things is something that has us comfortable with our guidance at this point. I should also note, I mean, the question in terms of looking going forward and part of the reason that the company has has gotten that high technology classification, which led to the reduction in our tax rate. We're constantly looking at ways to optimize our production, improve productivity. And so we're looking at different tools, techniques, different technology we can apply, even in narrow vein underground mining to make things run more efficiently. And so that's going to be a big thing going forward to help not just deal with the the fact of increased rates, but just also the challenges of getting, you know, human resources for doing mining or, you know, as other people are seeing in the construction industries, it's harder and harder to find people for those sectors.
spk04: Got it. Perfect. That's all I had. Thanks a lot for the update, Juan. Thanks, Juan.
spk07: Thank you. Once again, as a reminder, ladies and gentlemen, if you do have a question, please press star followed by one on your touchtone phone. And your next question will be from Justin Stevens at PI Financial. Please go ahead.
spk15: Hey, guys. Yeah, most of what I was going to ask has been covered, but I've got a few left on my list here. I was just wondering, in terms of the Zhanghe, is there going to be drill permits required once the transfer is done? And sort of what's the expected timeline on that?
spk10: No, I think once the transfer is done, really, it's more just in our court to how quickly we can ramp up. And, you know, the objective is to get going there as soon as we can. Got it.
spk15: Yeah, I guess the groundwork you're doing now should hopefully make that relatively short in terms of timeline.
spk10: Yeah, and we've been moving forward sort of hand in glove with like local authorities to get sort of other things, you know, in terms of access rights and other things ironed out. And all of that is going, you know, very smoothly. This is really more Just a hang up at the higher levels in the central government as opposed to the regional. I think everybody's operating on the basis this is going ahead, including the regional authorities. And so it's just a matter of waiting for paperwork and a stamp.
spk15: Got it. Sounds good. And I guess one of my other questions. The Ying, I know you guys are looking for that third tailings facility. I just wanted to confirm that you'll be looking and assuming it'll be conventional slurry disposal just in a nearby valley like the other ones?
spk10: Yeah, it's anticipated between sort of 500 meters to a kilometer north of the existing one. And, you know, this planning has been, you know, in progress here for a while. And again, with all the appropriate you know, regulators, and so there shouldn't be really any surprises. It's just a matter of going through the process just to get it set up so that we can accommodate what we see as being, you know, a longer term operating horizon here in the district.
spk15: Yeah, and I'm assuming you're at least, you know, keeping an eye on what you might be doing longer term, like you say, with the potential either mill expansion or, you know, the inclusion of extra material. This would accommodate some of that, right?
spk10: Yes, yes, that's right. I mean, some of these other opportunities, even if not initially, would likely have their own, you know, milling and disposal facilities down the road. But for Ying and to be able to accommodate some of these opportunities in the earlier ramp-up stages, you know, that's being factored into this planning. Perfect.
spk15: And lastly, any updates on BYP? I know it was mostly sort of a local government issue there, but just wondering if there was any updates you could share.
spk10: Not at this point other that we're feeling more confident that the process has gotten unstuck and that we should see some results here hopefully by the end of the year. So that is moving forward with the process. following the appropriate steps, which wasn't necessarily happening before. It was logged in. Now we are seeing progress there and are optimistic that we'll see something that we can report on by the end of the year on that one. Sounds good. All right, that's it for me.
spk15: Thanks so much.
spk10: Thanks, Justin.
spk07: Thank you. This concludes the question and answer session, and I would like to turn the conference back over to Lon Shaver, Vice President, for any closing comments.
spk10: Well, that's great. Thank you, Sylvie, and thanks, everyone, for tuning in today. But please, if any of you have additional questions or new questions, like always, please feel free to call us in the Investor Relations Group or email us. We'd be happy to answer those questions, and we look forward to updating you again in August on our Q1 results. Have a great day.
spk07: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Have a good weekend.
spk08: Good afternoon, ladies and gentlemen, and welcome to the Silver Corp. Metals Inc. Second Quarter Fiscal Results 2023 Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, November 4th, 2022. I would now like to turn the conference over to Lon Shaver. Please go ahead.
spk10: Thank you, Colin. On behalf of Silvercorp Metals, I'd like to welcome everyone for joining this call to discuss our second quarter fiscal 2023 financial results, which we released yesterday after markets. A copy of the news release, the MD&A, and the financial statements that we're talking about on today's call are available on our website and CDAR. Before we get started, I'm required to remind you that certain statements on today's call will contain forward-looking information within the meaning of securities laws. Please review the cautionary statements included in our news release and presentation, as well as the risk factors described in our most recent 10-Q and Form 40-F and annual information form. Getting to the quarterly results, with respect to the quarter, revenue in Q2 was $51.7 million. That was down 11% compared to the prior year quarter, mainly due to lower metals prices, with the realized selling price of silver, gold, and lead down 18%, 11%, and 5% respectively. Just note the silver price hit a two-year low in September. Based on production levels and the realized price of this quarter, Silver was 54% of revenues on a net realized basis compared to 56% in Q2 of last year, but that 54% was the same as in Q1 of this year. Our Q2 net loss attributable to equity shareholders was $1.7 million or $0.01 per share, and that was compared to net income of $9.4 million or $0.05 per share in the same period last year. And the main contributor to the loss was a $20 million impairment charge for the Laieska project, where we don't currently have any future work planned. In addition to the decrease in metals prices, zinc sales also decreased 22%, and the company booked a $1.6 million mark-to-market loss on equity investments. These were partially offset by a 3% and a 50% increase in silver and gold sales, respectively. a 5% increase in the realized zinc price, and a foreign exchange gain of $4.3 million. On an adjusted basis, however, with adjustments made to remove the impacts of non-cash and unusual items, such as share-based compensation, foreign exchange loss, impairment adjustments and reversals, the share of loss in our associates' operating results, gain or loss on investments, and one-time items, earnings for the quarter were $6.8 million, or $0.04 per share, and that compared to $13.6 million or $0.08 for the same period last year. Just a reminder, the adjusted earnings is a supplemental non-GAAP measure, and that's to give investors and market followers another metric to better measure the performance of the underlying business, its continuing profitability and growth potential. Our cash flow from operations in the quarter was $14.1 million. That compared to $30.9 million in the prior year quarter, The decrease was mainly due to the fact that we're reporting this cash flow after non-cash working capital. And in this quarter, we had a $6.8 million change to the negative in non-cash working capital. And that's in addition to the previously mentioned income factors. Excluding the non-cash working capital, our cash flow was $20.9 million, and that compared to $31.2 in Q1 and $31.7 in Q2 of last year. In Q2, the capital expenditures totaled around $17.4 million. That was up from $14.2 million in the prior year quarter, and that was mainly due to increased equipment and facilities investment at Ying. During this period, we also repurchased under our existing normal course issuer bid just over 500,000 shares of the company for a total of $1.2 million. We ended the quarter with $201 million in cash and cash equivalents in short-term investments That's down 11.9 million from the March number, and that's mainly due to a 15.6 million negative impact in terms of translation of currencies arising from the appreciation of the U.S. dollar against the Canadian dollar and the Chinese RMB. The cash position doesn't include our investments in associates and other equities. which had a total market value of $111 million as of September 30th. And just note, of that 111, New Pacific was $93 million of that. For a quarterly production review, as we previously reported, we mined 291,000 tons of ore and milled 292,000 tons of ore, down 1% and up 7%, respectively, compared to Q2 of fiscal 2022. Our Ying Mining District delivered another strong quarter in terms of operations with mine and mill productivity up 4 and 19% respectively compared to the same period in last year. However, at GC Q2 mine and mill productivity was down 12% and 16% respectively year over year. Operations at GC were partially affected in August and September. as we worked on improving ventilation and electric power facilities to comply with new safety production regulations that were issued by China's National Mine Safety Administration, and these became effective on September 1st. The improvements that were required were completed in October, and we expect mining at GC to return to its normal operating levels for the rest of the year. So for the period, we produced on a consolidated basis around 1.8 million ounces of silver 1,200 ounces of gold, 18 million pounds of lead, and 6 million pounds of zinc in the quarter. That was increases of 6% for silver, 50% for gold, and 2% for lead, and a decrease of 20% in zinc over Q2 of last year. Year-to-date, we're at 3.7 million ounces of silver, 2,300 ounces of gold, 37 million pounds of and 13 million pounds of zinc We're still aiming to hit the lower end of our fiscal 2023 production guidance, but we recognize we may come up a bit short in silver and particularly zinc. Now, the cash cost per ounce of silver net of byproduct credits was 77 cents in the second quarter, and that compared to a negative $1.65 in the prior year quarter. The increase is mainly due to safety production requirements to switch to digital detonators. That's for blasting in the mine. and also inflationary cost pressures resulting in higher explosives and utility costs. We also had an average 9% increase in employees' pay rates and, as well, lower byproduct credits due to the metal prices I discussed earlier. And these were offset by a 4% depreciation in the Chinese RMB against the US dollar. The all-in-sustaining cost per ounce of silver net of byproduct credits was $8.25. compared to 735 in Q2 of last year. And the increase reflects those cash cost impacts I mentioned above, offset by a modest decrease in admin expense taxes and sustaining capital. Now, turning to our growth projects, we completed an additional 5,525 meters of drilling during the quarter at the Quanping Project, which is a satellite property located north of our Ying mining district that we acquired last November. Last quarter, we reported that we had submitted the application for a mining permit at Quanping, which is pending review and approval by the provincial government. Satellite opportunities like Quanping and other recent near-mine discoveries, such as the new high-grade silver lead zinc structures at LMW that we announced in October, were not included in the updated Yang mineral resource and reserve estimate that we announced in September. That last update, which is expected to be published on CDAR today, incorporated results from the 2020 and the 2021 drill program, which showed that most of the major mineralized structures in the district are open for expansion. During the quarter, we spent a total of $2.5 million on the construction of a new 3,000 ton per day flotation mill on the new tailing storage facility at Ying. A total of 645 meters of drainage tunnels were completed and site prep for the new mill was also substantially completed. Additionally, the first batch of milling equipment has been ordered. With regards to permitting, the environmental and safety assessment study reports have been revised and are submitted. and pending government approval. And with that, I'd like to open the call for questions out there.
spk08: Thank you, Lon. Ladies and gentlemen, we'll now conduct the question and answer session. If at any time you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Okay, your first question comes from Joseph Rigor from Roth Capital. Please go ahead.
spk03: Hey, Lon. Thanks for taking the questions. So I guess first thing on this write-down, that was the project that was in the new Infini subsidiary, right?
spk10: Yeah, that's right, Joe.
spk03: Are there any other projects still in that subsidiary? Does that effectively write off that full subsidiary?
spk10: Yeah, that write-off was that full venture on that project, La Yesca, in Mexico. And really, I think it's important to note that really from the work that was done, we did get results. We did hit mineralization targets. But really, what we found didn't really fit with the models that we had, and so kind of results inconclusive. So there wasn't – at this point, we don't have any plans, and the accountants thought it was prudent, given that we're not planning on spending any money in the near future, that it was just best to write it off completely. But we still own the project, and at some point, if we have a different view on what's going on there, we could go back.
spk03: Okay. And then kind of given some of the other operators have been taking, let's say, advantage of the current market and buying up some more assets, do you see you guys doing some M&A in the near future to kind of put that cash balance that you have to work?
spk10: Yeah, I mean, that has been and remains our strategy, and those activities are ongoing in terms of looking at projects. Some of the turmoil we've seen in the equity markets right now has impacted share prices, but some of the companies, some of the targets still have resources, still have runway, so are not necessarily looking to transact at this point, but yeah, we're We're an open door and continue to look at a wide range of projects and a range of geographies.
spk03: Okay. And then one final thing. You kind of indicated that you think you guys might be able to still make the low end of guidance. I guess the bigger issue seems to be that GC is behind. Can you guys make up some of the tonnage before the end of the year that you lost in Q2?
spk10: I mean, that's certainly the objective, and the team is focused on doing that. And I think you've followed the company before to notice that where we've had disruptions, there really is a hard effort to try to make it back. As we've said, we're back running at more normal levels, but we're going to put a push on to see if we can get back what we've lost.
spk03: Okay. I'll turn it over. Thanks.
spk10: Thanks, Joe.
spk08: Your next question comes from Gabriel Gonzalez from Echelon Wealth Partners. Gabriel, please go ahead.
spk14: Thank you very much. Thank you, Lon. I was just wondering on the subject of the new mill and that expenditure with the first batch of milling equipment being ordered, I'm just wondering what is the timeline for having – the bulk or I guess what would functionally be the completed mill ready onsite for installation and how long after that would it be effectively ready to put the switch to turn on?
spk10: Sorry Gabriel, I'm having difficulty with my line connection. Operator, I'm going to actually try reconnecting Can you still hear me?
spk12: Yeah, I can hear you.
spk10: Okay, no, no, it seems to have gotten better. Sorry, Gabriel, I know it was a long question. Do you mind repeating it? My line was cutting out there. Sure.
spk14: Yeah, so I was just wondering about the milling equipment that has been ordered, about how long will it be until all of that mining equipment is on site, and from there, how long will it take to have it all installed and ready to turn on, effectively flip the switch on that mill.
spk10: Okay. Yeah, I mean, where we've gotten to is, as I mentioned, all the permitting applications and everything have been submitted in terms of we have largely the permits to go ahead. What we're waiting on is some of the environmental assessment reviews that are outstanding. And so, you know, with that, you know, we're going to probably take a bit of a pause until we can, you know, get that all confirmed and tucked away before, you know, continuing with those purchases and moving ahead. What it probably means, you know, at this point is potentially a six-month delay in terms of the mill, likely no delay on the tailing storage facility. But at this point, you know, we're getting sort of prepared for the fact that, you know, we might be delayed a bit.
spk14: Okay. All right. Thank you very much.
spk08: Ladies and gentlemen, as a reminder, should you wish to ask a question, please press star followed by one. And we have another question from Justin Steven from TI Financial. Please go ahead.
spk15: Hey, Len. Just one question, I think, really for me. Obviously, you guys are still waiting for the Quant and Ping approval, right? My question there is, are you guys planning to do any more exploration before you receive that permit, or is it really going to be a wait until you get the mining permit and wait to drill from underground before you sort of flush that out further?
spk10: Yeah, thank you, Justin. You can hear me probably not. Again, it was clicking during your question. Yeah, we're continuing the drilling, and I would say the – The permit's outstanding. Not anticipating any issues, but I think maybe the comment to share, you know, here and some of this applies to some of the other, you know, asks from administration that, and sorry, are we okay? Because there's this weird.
spk15: Yeah, the clicking's kicked back in.
spk10: It's been coming and going. Yeah, I don't know what's going on. I've tried disconnecting and reconnecting on another line.
spk08: Okay, I'll reconnect you as soon as you call back in. Hi, Justin. Are you still there?
spk10: Yeah, still here. Okay, great. Sorry about that. I don't know what the issue was with my lines, but I seem to be finally reconnected with a good line. Yeah, so to answer your question, yeah, we're continuing to do the work, and really from a permitting standpoint, Some of the things that are happening right now, as many of you know, in terms of the COVID restrictions in China means that travel is a bit of a challenge. What we're happy to report is the fact that our operations have been running smoothly. So really, other than the GC disruption, which was a completely different issue, our operations are running smoothly through this whole situation. But because of the limitations on travel and the difficulties for people in our operations office in Beijing to get back into Beijing, some of the sort of face time needed to move some of these things ahead isn't happening. So that's why we're seeing some of these items that they may drag on a bit longer. But it's just the situation we're dealing with right now. Hopefully things change. I'm hearing some chatter out there that – things may, you know, may improve here in terms of from, you know, a movement standpoint. And then that would allow for, you know, both the Kwan Ping and the Mill project to resume just because of getting, like I said, that face time with the people in the appropriate departments to work on and advance those items.
spk15: Got it. Now that makes sense. I guess the only other thing I was kind of wondering about is, you know, obviously some of the drilling you guys have been doing, some of the obviously modeling around these low angle, you know, gold copper veins at Ying. I'm assuming that most of this is probably going to be left until the new mill was in place, given the addition of the copper circuit makes it, I think, much more tenable to go after some of this stuff. Is that sort of the right way to think about this?
spk10: For the copper, I'd say yes. For some of the gold-only rich zones, we're into those, and you're starting to see some of that uptake in the gold production because of that. It's still early days, and we're working the kinks out of just getting a handle on mining a different structure with a different mining method, and also from a processing standpoint. But we've been working through the flow sheet. It's mainly a gravity recovery for some of those gold-rich areas. Some of that's being put into a gold concentrate to be sold separately. Some of that's being included in lead concentrates where we get pretty good payment terms. for the gold in that and but we're also you know considering things down the road like you know do we go right to dore which would be uh obviously a nice feature so yeah so so so starting to see that and that ramp up has really been happening uh starting you know late summer and uh starting to see that now so i think going forward you know you will see an ongoing impact from the from the gold zones in the uh in the results
spk15: Got it. Good to hear because that's always a nice little kicker then if you can actually tap some of that.
spk10: Yeah, for sure.
spk15: Great. That's it for me. Thanks.
spk08: Your next question comes from Felix Shepagolan from Eight Capital. Felix, please go ahead.
spk09: Hi, Lon. Just a couple of very quick questions. So the operational disruptions that you had at GC at the end of last quarter and in October of this quarter, is there any risk that you might run into something similar at Ying? Could you just give a little bit more color on that?
spk10: I would say the provinces do operate differently and where we are at Ying is a more industrialized area with more mines and I'd say more familiarity with mining activity. Some of the challenges maybe at GC is that there's not as many operations around. whether that's from an understanding of what's relevant or, you know, the size of the lobby group, you know, that's what's led to those things being implemented. Also, you know, being in a warmer climate certainly would have had an impact to some degree on, you know, some of the issues we had with ventilation and the maximum temperature allowable at the work face. that we reported, which, you know, less of a factor at Yang. So we're really not anticipating at this point any challenges at Yang.
spk09: Okay, thanks. And I noticed that your money market instruments, they've been declining by about $30 million per quarter for the past two quarters. So could you just provide just a little bit of color on this, like what's going on there?
spk10: Yeah, I mean, some of that is a bit complicated, but what it relates to is obviously we've got different currencies and different items in different currencies held both in Canada and through our offices in China. And so where we had RMB-denominated instruments from a reporting standpoint when we converted those to U.S. dollars, that would explain... why, with the strength of the U.S. dollar, some of those numbers are down.
spk09: Okay. Thanks, Colin. That's it for me.
spk08: There are no further questions at this time. You may make your closing remarks.
spk10: That's great. Thank you, Colin, and thanks to everyone for joining the call. I apologize for the sound issues and the with the call earlier. If there are any further questions related to the results or anything else about Silvercorp, please do reach out to us and we look forward to reconnecting with everyone on our next scheduled call for discussing our third quarter results. Thank you very much.
spk08: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
spk06: good afternoon ladies and gentlemen thank you for standing by my name is Michelle and I will be your conference operator today at this time I would like to welcome everyone to silver corpse first quarter fiscal 2023 financial results conference call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question-and-answer session If you would like to ask a question at that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. I would now like to turn the conference over to Lon Shaver, Vice President for Opening Remarks. Please go ahead, sir.
spk10: Lon Shaver Thank you, Michelle. On behalf of Silvercourt Metals, I'd like to welcome everyone for joining the call to discuss our first quarter fiscal 2023 financial results, which were released yesterday after the market. A copy of the news release, the MD&A, and the financial statements for today's call are available on our website. And before we get started, I'm required to remind you that certain statements on today's call will contain forward-looking information within the meaning of applicable securities laws. Please review the cautionary statements included in our news release and presentation, as well as the risk factors described in our most recent 10Q and Form 40F. as well as our annual information form. Now to jump into the results, we started off fiscal 2023 with a respectable quarter with all our minds delivering solid performance. Revenue in the quarter was $63.6 million, up 8% compared to last year's quarter. Based on the production levels and realized prices this quarter, silver was 54% of revenues on a net basis, down slightly from 58% in Q1 fiscal 2022. Our Q1 net earnings attributable to equity shareholders were $10.2 million, or $0.06 per share. That compared to $12.2 million, or $0.07 for the same period last year. The main contributors to the slight decrease were a 13% decrease in the realized selling price of silver, a 7% increase in unit production costs, a 5% decrease in zinc sold, and the booking of a $2.7 million mark-to-market loss on equity investments. These were offset by higher silver, gold, and lead sales, which increased 17%, 10%, and 14% respectively, as well as higher realized selling prices for gold, lead, and zinc, and a foreign exchange gain of $1.7 million. Our adjusted earnings for the quarter were $13.5 million, or $0.08 per share, compared to $15.8 million, or $0.09 per share, for the same period last year. And just a reminder, our adjusted earnings is a supplemental non-GAAP measure, which we're releasing to provide investors with another metric to better measure the performance of our underlying business, its continuing profitability and growth potential. Adjustments were made to remove the impacts from non-cash and unusual items, including the elimination of share-based compensation, foreign exchange loss, impairments, adjustments, and reversals. the share of loss in our associates' operating results and gain or loss in investments and one-time items. Our cash flow from operations in the quarter was $40.2 million, up 10%, or $3.7 million compared to $36.5 million in the prior year quarter. Capital expenditures in the quarter totaled approximately $18.1 million. That was up from $11.3 million in the prior year quarter, primarily due to increased underground exploration development equipment, and facilities investments at Yeang. During this period, we paid $2.2 million of dividends to shareholders and repurchased under our existing normal course issuer bid 334,990 shares of the company for a total of approximately $900,000. And earlier in this current quarter, we also repurchased an additional 404,970 shares for a total of $1 million. We ended the quarter in a strong financial position with $215.8 million in cash and cash equivalents and short-term investments. And this does not include the investments in Associates and other companies, which had a total market value of $147.4 million as of June. Of that number, New Pacific was $125 million of that total. Just for a quarterly production recap, as we previously reported, we mined 300,104 tons of ore and milled 298,176 tons. Those numbers were up 30% and 23% respectively compared to last year's Q1. We produced approximately 1.9 million ounces of silver, 1,100 ounces of gold, 19.1 million pounds of lead, and 6.9 million pounds of zinc in the quarter. And those were increases of 26% in silver, 10% in gold, 20% in lead production, and a decrease of 4% in zinc production over Q1 fiscal 2022. We're on track to produce between 7 and 7.3 million ounces of silver, between 6,300 and 7,900 ounces of gold, 68.4 to 71.3 million pounds of lead, and between 32 to 34.5 million pounds of zinc in fiscal 2023. Recall that this guidance represents increases between 14 to 19% in silver, between 85 and 132% in gold, between 6 and 11% in lead, and between 19 and 29% in zinc production compared to our actual fiscal 2022 numbers. The cash cost per ounce of silver net of byproduct credits was negative 157 in this Q1, and that compared to negative 143 in the prior year quarter. And our all-insustaining cost per ounce of silver net of our byproduct credits was 925 compared to 746 in Q1 of fiscal 2022. Cash cost and all-insustaining cost per ounce of silver during the quarter were impacted by some inflationary cost pressures that resulted in higher material costs and utility costs, an average 9% increase in employee pay rates, increased drilling and tunneling resulting in higher costs included in mining costs and sustaining capital expenditures, but was offset by higher byproduct credits, an average 2% depreciation in the Chinese RMB against the U.S. dollar. Now, turning to our growth projects, we completed just under 2,000 meters of drilling during the quarter at the Kuan Ping project, which is a satellite property located north of Ying that we acquired last November. We have submitted the application for a mining permit at Kuan Ping, which is now being reviewed by the provincial government. At Ying, we continue to make progress on our new 3,000 ton per day flotation mill and the new tailing storage facility, the preliminary design and engineering survey, the water and soil conservation studies, for the new mill and the tailing storage facility and the feasibility study for the tailing storage facility have been completed. The company also received the construction permit for the new mill and is in the process to negotiate purchases of major equipment. We expect that the final approval of the environmental and safety assessment studies as well as the detailed engineering design of the new mill and the tailing storage facility will be granted later this quarter. In addition, the company continues to work with its consultants to complete an updated NI 43-101 Reserve Estimate for the Union Mining District, which is expected to be completed this fall, probably early fall. And with that, I'd like to open the call for questions.
spk06: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you would like to ask a question, please press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Joseph Rieger at Roth Capital Partners. Please go ahead.
spk03: Hey, Lon and team. Thanks for taking the questions.
spk10: Hi, Joe. Good to have you on.
spk03: Thanks. First, the key topic I think has been on every call this year is cost inflation. What are you guys seeing as far as inflationary pressures, maybe year over year for consumables, labor, et cetera?
spk10: Yeah, I mean, some of those things are just a bit of an uptick that we're seeing in some costs. I mean, I think I'd like to point out that the labor costs that uptick are that we commented on. Last year, you recall, you had that renewal, and I think part of those numbers in terms of the new wage rates were in that quarter. This year, obviously, we have the full quarter at those higher rates, so that's had an impact. There's nothing really particularly outstanding in terms of key items. I think it's just a general increase in some costs. but nothing that is really alarming for us at this point. And obviously we've been benefiting from a depreciation in the RMB, which is helping to offset that a little bit.
spk03: Okay. And is there like a percentage you could put on what the total all-ins looked like?
spk10: Well, I think it's better to just go back to our overall guidance range. And I mean, I think for the most part... The GC was slightly above the upper end of our guidance. Ying was just about bang on. I think I would use that guidance range that we gave for the cost for the year and use that going forward from a modeling and a forecasting standpoint at this point.
spk03: Okay. And then a while back, you guys announced that there was going to be this investment in, I believe the name was New Infany. Is there any update you can give us there?
spk10: Yeah, I mean, we made a small comment in the disclosure, just that we've completed work at New Infany that really was drilling done through the course of 2021. You know, results really weren't kind of what we expected. There were some surprises, and we're still trying to assess exactly, you know, what the data means. So at this point, and just given some of the other priorities, it hasn't been a rush to get back to it. and drive it ahead. But at some point later this year, I think we'll have some more news on that.
spk03: Okay, fair enough. I'll turn it over.
spk10: Yeah, and Joe, I think what I would add to that comment would just be, you know, from a budgeting standpoint, you know, I wouldn't put any budget dollars or expenditures, you know, on our end at that project for the time being.
spk03: Okay, thanks.
spk06: Your next question comes from Felix Shafagolin of Eight Capital. Please go ahead.
spk09: Good morning, Lone Team. Thank you for taking my question. I have a two-part question, really, on oil and sustaining costs. So, on a dollar-per-ton basis, your oil and sustaining costs at GC, they came up at about $82 per ton, which is noticeably below the bottom range of your fiscal 23 guidance. So I was wondering if you could give some color on where that discrepancy comes from and should we be assuming sort of higher costs of GC on a per unit basis going forward?
spk10: Yeah, I think I would, I would look, you know, if you look at GC in that case, the actual cash costs on a per ton basis were, you know, slightly above the guidance range and the all in sustaining is, yeah, as you pointed out is below. Again, I would, I would, comment that there's, you know, fluctuation quarter to quarter, and it's not always, you know, the easiest to attribute some of the tunneling and development costs between operating and capital. But so for the purposes, again, of modeling, I would go back and look, you know, within the ranges that we've provided in terms of guidance. And yeah, if you wanted to look, you know, on the all-in sustaining side for GC, And again, this isn't going to be a huge impact given the overall numbers at GC, but I think if you looked at GC somewhere in the middle of that guidance, it's probably a better number than what we experienced in the first quarter. And obviously, you know that with small tonnages that are being processed, the timing of costs can really swing those numbers on a per ton basis pretty high. So again, I would guide maybe on the all-in sustaining for GC more to the middle of the range.
spk09: Got you. Okay. I understand. And at Ying, you essentially had an opposite situation. Your all-in sustaining there was above the 2023 guidance, which I understand was driven by sustaining CapEx. So I'm guessing that ties into the 300,000 meter drilling program you were doing at Ying. So I was wondering if you could provide some information on the progress of that program, how it's going along when you plan to complete it and just give more detail on that.
spk10: Well, I don't know if necessarily I think that drill program in terms of completed, I mean, it's been budgeted for the full year. And, you know, as you know, from looking at what we've been doing at Ying, you know, going back to 2020 and through 2021, it's been a fairly aggressive drilling program. And this year, in terms of our production guidance, we are calling for some tonnages coming from the gold ore zones that we've drilled off, that we've been drilling since 2020. So I think that drilling campaign continues, and some of that development costs and some of the movement in numbers that you're seeing is related to bringing on some of these new areas, as well as continue to drill off and add to the resource space. Just because we have a December cutoff for that 43-101 that we're looking to put out doesn't mean that the program that we started with multiple objectives of drilling at Yang is stopping. It's an ongoing activity.
spk09: Okay. All right. Thank you, Lon.
spk10: You're welcome.
spk06: Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 at this time. Your next question comes from Dalton Barreto of Canaccord. Please go ahead.
spk13: Thanks. Good morning, Lon and team. Lon, I think you actually just answered his question, but can you remind me again when you're putting out the new mine plan on Yank?
spk10: Yeah, so it's certainly been delayed from our expectations. We were hoping to have it out earlier in the summer. You remember we guided you to that. Just summer slowdowns, people being away, dealing with the consultants, people being tapped out. It's been pushed. It's possible that we'll have a news release out on the conclusions of the report by the end of August, but more likely it'll be out sometime in September. So... I'll try to keep you updated as to when, but right now it's more likely to be a September event.
spk13: Okay, perfect. And then there's been some news coming out of China around more and more power rationing, just given the heat waves and so on. And I'm just wondering, is there a risk to your downstream customers and do you have contingencies in place?
spk10: That's not something that we've heard about or has been a factor discussed, so I can't really comment on that. I can certainly look into it for more detail and come back to you, but it's not something that we've been overly worried. And yes, while we're certainly not shipping our concentrates far outside of the province. We do have a number of different off-takers at each of the mines for each of the products. At this point, we're not too concerned about that.
spk13: Maybe one last one on your balance sheet. It remains fairly healthy. You generally have a cash balance of $120 to $150. In no real major capital programs, you've been a little bit active on the buyback. Can you just talk about how you're thinking about your balance sheet, how you're thinking about maybe potential acquisitions, maybe, you know, accelerating the buyback, just anything around capital allocation would be great. Thank you.
spk10: Yeah, I mean, I think we've established a track record on the dividend. And at this point, I wouldn't anticipate, you know, any material changes. The buybacks are something, you know, clearly that's important. a tool we have at our disposal and we're going to be opportunistic on that. But we're also really trying to drive to a balance and retain the capital that we think would be necessary to deploy on a growth and development project. And we remain active on that. So, you know, don't want to sort of do anything hasty on that front and then find a great growth opportunity and then not have it be funded or at least the beginning of it funded. So I wouldn't really anticipate any big changes in strategy until we have something that we're prepared to announce in terms of a new project or an acquisition. Perfect.
spk13: That's all from me. Thanks, Lon. Enjoy the rest of the summer. Thanks, Dalton. Same to you.
spk06: There are no other questions on the phone lines. I would like to turn the conference back over to Lon Shaver for any closing remarks.
spk10: All right, well, thank you, Michelle, and thanks, everyone, for tuning in today on Friday in August. We'll wrap up here, but please, if anyone has any additional questions or any new questions, feel free, as always, to call or email us, and we'd be happy to tackle those in due course. We look forward to updating everyone again in November on our second quarter results. Have a good day.
spk06: Ladies and gentlemen, this concludes your conference call for this afternoon. We would like to thank everyone for participating and ask you to please disconnect your lines.
spk05: Thank you for standing by. Good morning and afternoon. My name is Anas and I'll be your conference operator today. At this time, I would like to welcome everyone to the Silver Corp's fourth quarter and full year fiscal 2022 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to answer your question, please press star, then the number two. Thank you. I would now like to turn the conference over to Mr. Lon Shaver, Vice President for Opening Remarks. Please go ahead, sir.
spk10: Thank you, Ines. Good morning, everyone. On behalf of the Silver Court Metals, I'd like to welcome you to the Silver Court Metals fourth quarter and fiscal 2022 financial results conference call. We released our results after yesterday's market close, and a copy of the news release, MD&A, and financial statements for today's call are available on our website and on CDAR. Before we get started, I'd like to remind you that certain statements on today's call will contain forward-looking information within the meaning of securities laws. Please review the cautionary statements included in our news release and presentation, as well as the risk factors described in our most recent second quarter, sorry, 10Q and Form 40F and AIF. So to review the results, we're pleased with the results you reported for the fourth quarter of fiscal 2022. Recall that this quarter is always impacted by a slowdown due to Chinese New Year. but overall operations at our mines ran smoothly, as indicated by the production numbers we reported previously. Revenue in Q4 was $41.6 million, up 16% compared to the prior year quarter, and based on production levels and realized prices this quarter, silver was 55% of revenues on a net basis compared to 59% in the same quarter last year. Our fourth quarter net earnings attributable to equity shareholders were $4 million, or 2 cents per share compared to 7 million or 4 cents for the same period last year. The main contributor to the decrease was the foreign exchange loss that we recorded during this quarter. If we back out this foreign exchange loss and other items, our adjusted earnings for the quarter were 9.5 million or 5 cents per share compared to 11 million or 6 cents per share for the same period last year. Just as a reminder, adjusted earnings is a supplemental non-GAAP measure. to give investors another metric to better measure the performance of our underlying business, its continuing profitability and growth potential. The adjustments were made to remove the impacts from non-cash and unusual items, including the elimination of share-based compensation, foreign exchange losses, as I mentioned, impairment adjustments and reversals, the share of losses in our associates' operating results, gain or loss in investments and one-time items. Our cash flow from operations in the quarter was $11.4 million, up significantly compared to $2.2 million in the prior year quarter. Our capital expenditures in the quarter totaled approximately $11.4 million. This was up from $9.4 million in the prior year quarter, and this was mainly driven by the expanded exploration and development programs that we were undertaking at Ying. To quickly cover the full year financial results, revenue for fiscal 2022 was $217.9 million. That was up 13% compared to the prior year. The net earnings attributable to equity shareholders were $30.6 million or $0.17 per share compared to $46.4 million or $0.27 for the same period. However, our adjusted earnings for the year were $52.4 million or $0.30 per share And that's compared to $49.8 million or $0.28 per share last year. Our cash flow from operations for the year was $107.4 million. That was up 25% compared to $85.9 million in the prior year. Capital expenditures total approximately $54 million in fiscal 2022. That was up from about $44.6 million in the same prior period. and was 41% over guidance for the year, mainly due to the decision to expand our exploration programs, ramp development, and other facilities improvement at our Ying mining operations. For a production recap for the quarter, we previously mined 180,505 tons of ore and milled 182,670 tons of ore in the quarter. That was up 5% and 17% respectively compared to last year's fourth quarter. And we produced approximately 1.1 million ounces of silver, 500 ounces of gold, 12 million pounds of lead, and 4.1 million pounds of zinc in the quarter. And those were production decreases compared to last year of 4% for silver, 2% for lead, and 12% for zinc, but an increase of 67% for gold over last year's quarter. Sales in the quarter were 1.2 million ounces of silver, 500 ounces of gold, 12.3 million pounds of lead, and 4.3 million pounds of zinc. Those were increases of 11% in silver and 13% in lead sold, and decreases of 5% in zinc and 14% in gold compared to Q4 of last year. Our cash cost per ounce of silver net of byproduct credits was negative 54 cents U.S. in the fourth quarter of this year compared to negative 39 cents in the prior year quarter. And our all-insustaining cost per ounce of silver on a consolidated basis net of byproduct credits was $12.61 compared to $12.55 in Q4 of 2021. Looking at production for the full year ended March 2022. We mined 996,280 tons of ore and milled 964,925 tons of ore. That was up 3% and 4% respectively compared to last year's numbers. We sold 6.3 million ounces of silver. 3,400 ounces of gold, 63.6 million pounds of lead, and 26.8 million pounds of zinc. These were production decreases of 1%, 28, 5, and 4 in silver, gold, lead, and zinc, respectively. It's important to note, though, that gold sold last year included 1,200 ounces from the BYP mine concentrate inventory clean-out. For the year, the cash cost per ounce of silver net of byproduct credits was negative $1.29 in this fiscal year compared to negative $1.80 in fiscal 2021. And our all in sustaining costs net of byproduct credits for the year was $8.77 up compared to $7.49 in fiscal 2021. Compared to our fiscal 2022 production guidance on a consolidated basis, our milling tonnage was 2% over the low end of our guidance range. And regarding the metals produced, we hit 95% of the low end for silver, 96% for lead, and 97% for zinc. In terms of corporate development, the acquisition of the Quan Ping project was completed in November of 2021 for $13.1 million. This project is located in Henan Province, approximately 33 kilometers from our Ying mining district, and is approximately 12.4 square kilometers. The company, through our subsidiary, won an auction to acquire the Zonghen Silver project in December of 2020, but the execution of the transfer contract for the transfer of this project was subject to a new national security clearance, which has taken a long time. And in January 2022, the company has withdrew the application for this security review and transfer. Looking at our cash flow items and summing everything up, we ended the quarter and year in a strong financial position with $212.9 million in cash and cash equivalents and short-term investments. And this does not include the investments in Associates and other companies, which had a total market value of $146.5 million. as at March 31st. Now, switching to outlook, we're reiterating our production guidance for fiscal 2023, which we previously announced on February 8th. We expect to produce between 7 and 7.3 million ounces of silver, between 6,300 to 7,900 ounces of gold, between 68.4 to 71.3 million pounds of lead, and between 32 to 34.5 million pounds of zinc. And this reflects increases of 14 to 19% in silver production, 85 to 132% in gold, 6 to 11% increases in lead, and between 19 and 29% production increases for zinc compared to our actual fiscal 2022 results. The company is working with our consultants to complete an updated 43-101 resource and reserve estimate for the Yonge Mining District, expected to be completed this summer. And regarding an update on the construction of our mill number three at the Yonge Mining District, we're pleased to provide the following updates. Land leases have been entered into for the roughly 120 hectares required, and the rezoning process for this ground is well underway. We've drilled 142 drill holes that were required for foundation preparation. The tunnel contractor for the tailings dam has been selected and the selection process for the power plant construction contractor is in progress. Preliminary plant and tailings storage facility designs have been completed and the environmental assessment report has been posted on the appropriate government websites for a 10-day public comment period. If no material objections are raised, the report will be deemed to be approved. And I think with that, operator, I'd like to open up the call for any questions, if there are any.
spk05: Thank you, sir. Ladies and gentlemen, we will now conduct the question and answer session. If you'd like to ask a question, press star, number number one on your telephone keypad. If you'd like to answer a question, press star two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Gabriel Gonzalez with Echelon Capital Markets. Please go ahead.
spk14: Thank you very much and good afternoon, good morning. I just wanted to ask if there have been any changes in schedules, procurement or costs in relation to the expansion at Ying. Just given the fluid global supply chain situation and reported measures from COVID in some of the larger cities, or basically if everything remains more or less on track as per the February press release that provided the costs and scheduling information.
spk10: Yeah, thanks Gabriel. There's kind of two questions embedded in there. One with respect to the program, the plans for the construction. At this point, we don't anticipate any changes. I mean, of course, we're in the planning stage right now. We're not procuring the actual equipment. But we don't see anything that causes us to dramatically change our expectations on that. And of course we'll keep everyone informed if there are changes both to timing or budget as we move forward. But right now everything is moving along on the plans that we had anticipated. And I think tied into your question was, if I can sort of use this to elaborate or clarify, sort of what we've been experiencing with respect to COVID in China. And that has, to be honest, been very smooth. It has not really been a major disruption. Our mining operations have been operating without any interruptions. We've got measures in place for people who are arriving on site to quarantine prior to joining the crews and joining the rest of the teams. and that has worked well. To date, we have really had no issues with respect to cases at the operations. The comment regarding other cities, the Shanghai lockdown, I'd say, is probably being treated and handled differently in Beijing. Our employees at our Beijing head office Some are working as a skeleton crew or working in the office, and the rest are working from home, but really without much interruption or any real impact on our activities.
spk14: Okay, perfect. Thank you very much, Lon. That's really it for me. Thank you.
spk10: Thanks, Gabriel.
spk05: Thank you. Ladies and gentlemen, as a reminder, if you have any questions, please press star 1. There are no further questions at this time. Mr. Shaver, you may proceed.
spk10: Well, that's great. Thank you, Operator, and thanks, everyone, for tuning in today. I do think the numbers and the results really do speak for themselves. So, you know, perhaps we addressed everybody's questions, but if there are any additional questions from anyone on the call, like always, feel free to call or email us. We'd be happy to address any anything that you have, and we look forward to updating you again on our next results for our fourth quarter, which we'll be releasing in August. Have a great day.
spk05: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day. Thank you for standing by. Good afternoon. My name is Anas, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Silver Corp Third Quarter Fiscal 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you. I would now like to turn the conference over to Lon Shaver, Vice President for Opening Remarks. Please go ahead.
spk10: That's great. Thank you, Anas. Good morning, everyone. On behalf of Silvercorp Metals, I'd like to welcome you to the Silvercorp Metals third quarter fiscal 2022 financial results conference call. We released our results after yesterday's close. A copy of the news release, MDA, and financial statements for today's call are available on our website.
spk11: Before we get started, I'd like to remind you that certain statements on today's call will contain forward-looking information within the meaning of securities laws.
spk10: Please review the cautionary statements included in our news release and presentation, as well as the risk factors described in our most recent second quarter 10Q and Form 40F and annual information form. Now, getting into the quarterly results, we finished a solid financial quarter. Revenue in Q3 was $59.1 million, up 11% compared to the prior year quarter. Based on the production levels and realized prices, silver was 54% of our revenues on a net basis compared to 58% in the same quarter last year. Our Q3 net earnings attributable to shareholders were $5.1 million or $0.03 per share compared to $8.4 million or $0.05 for the same period last year. The decrease was mainly due to a mark-to-mark charge of $8.5 million against equity and bond investments in this quarter. Our adjusted earnings for the quarter were $13.4 million or $0.08 per share compared to $13.8 million or $0.08 per share in the same period last year. Just a reminder, our adjusted earnings is a supplemental non-GAAP measure, and it's intended to provide the market with another metric to better measure the performance of the underlying business. It's continuing profitability and growth potential. The adjustments made work to remove the impacts from non-cash and unusual items, including the elimination of share-based compensation, foreign exchange loss, impairment adjustments and reversals, share of loss in associated operating results, gain or loss in investments, and one-time items. For the nine months, revenue was $176.3 million. That was up 13% compared to the prior year period. And for the nine months, net earnings to shareholders were $26.7 million, or 15 cents, per share compared to $39.4 million, or $0.23 for the same period last year. On an adjusted basis, earnings from the nine months were $42.7 million, or $0.24 per share, and that compared to $38.8 million, or $0.22 per share in the same period last year. In terms of quarterly production, as previously reported, we mined 292,072 tons of ore and 304,772 tons of ore. Those numbers were up 5% and 17%, respectively, compared to last year's quarter. And we produced approximately 1.8 million ounces of silver, 1,100 ounces of gold, 19 million pounds of lead, and 8 million pounds of zinc in this Q3. And that was increases of 9%, 22%, and 11%, respectively, in silver, gold, and lead. and a 7% decrease in zinc production over the same quarter last year. In this third quarter, we sold approximately 1.7 million ounces of silver, 1,100 ounces of gold, 17.2 million pounds of lead, and 7.6 million pounds of zinc. Again, those are increases of 4%, 38%, and 2% in silver, gold, and lead, but a decrease of 15% in zinc sold compared to the the Q3 of fiscal 2021. Now, our cash cost per ounce of silver net of byproduct credits was negative $1.33 U.S. in this third quarter of fiscal 2022 compared to negative $2.76 in the prior year quarter. And on an all in sustaining basis, our cost per ounce of silver in U.S. dollars net of byproduct credits was $8.82 compared to $6.92 in Q3 of fiscal 2021. Now looking at nine-month results, for the nine months we produced 815,775 tons of ore and milled 819,665 tons. Those numbers were up 2% and 4% respectively compared to the prior year period. And year-to-date we have sold approximately 5.1 million ounces of silver, 2,900 ounces of gold, 51.3 million pounds of lead, and 22.5 million pounds of zinc. And on this nine-month period, that represented decreases of 3%, 29%, 9%, and 4% in silver, gold, lead, and zinc sold, respectively, compared to the prior year period. I'll also recall last year, the gold that was sold included 1,200 ounces, which was a clean-out from the BWED heme line. For the nine-month period, the cash cost per ounce of silver net of byproduct credits was negative $1.47 in this nine months of fiscal 2022 compared to negative $2.08 in the prior year period. And on an all-in sustaining basis for the nine months was $7.88 compared to $6.48 in the nine-month period of fiscal 2021. Compared to our fiscal 2022 production guidance on a consolidated basis after this nine months or roughly three quarters of the year, our milling tonnage is at 83% of the production target.
spk11: And with respect to the metal production, we have basically at this point achieved 78% of our silver target, 78% of our lead target, and 82% of our zinc target for the year.
spk10: Turning to cash flow. Our cash flow from operations in the quarter was $28.7 million, and that was up 20% compared to $23.9 million in the prior year quarter. Capital expenditures in the quarter were approximately $17.3 million compared to $15.5 million in the prior year quarter, and this is mainly driven by the expanded exploration programs that we've been undertaking at the Yang Line. As of December 31st, we had completed $2.8 million of expenditures that were capitalized at the new Infinii project. Our nine-month cash flow from operations was $95.97 million, up 15% compared to $83.7 million in the prior year quarter. Capital expenditures total approximately $44 million in the nine months. This is up 9% compared to $35.4 million in the same prior year period. And compared to our original fiscal 2022 CapEx guidance for this nine months and in December, our CapEx was about 150% of guidance.
spk11: Again, this was mainly due to the expanded exploration programs that we decided to undertake at both the Ying and our GC lines.
spk10: The company has been consistently exploring through extensive drilling and tunneling to delineate new ore. This program has also included the excavation of additional access ramps and tunnels that are expected to facilitate the efficient movement of ore. Equipment and personnel within the mines will provide access to new areas of mineralization that will be suitable for mining in the current and future periods, and more to follow on that later. With respect to corporate development in the quarter, the acquisition of the Quan Ping project was completed in November. The consideration net of some cash received was approximately $13.1 million. The Quan Ping project is located in the Shanzhou District in Henan Province. approximately 33 kilometers north of our Ying mining district and covers an area of roughly 12.4 square kilometers. Previously, the company, through its subsidiary, had won an auction to acquire the Zonghe Silver Project. This was in December of 2020, but the execution of the transfer contract has been subject to a delayed national security clearance by the relevant Chinese authorities. In January of this year, we have decided to withdraw our application for this national security regime. Adding up these cash flow items, we ended the quarter in a strong financial position with just under $212 million in cash and cash equivalents and short-term investments. And this does not include investments in associates and other equity investments in other mining companies, which had a total market value of $156.2 million as of December. So as part of our release, we are also providing our guidance for fiscal 2023 as it relates to production costs and capital expenditures. In fiscal 2023, the company expects to process approximately 1,040,000 tons to 1,140,000 tons of ore, which is expected to produce 6,300 to 7,900 ounces of gold. 7 to 7.3 million ounces of silver, 68.4 to 71.3 million pounds of lead, and 32 to 34.5 million pounds of zinc. Now this production guidance for fiscal 2023 represents an anticipated increase of approximately 9% in ore production, 100% increase in gold production, 11% increase in silver production, a 3% increase in lead and between 12 to 21% increase in zinc production compared to the current guidance for fiscal 2022, the current year. Also noteworthy is that in fiscal 2023, we expect to process a bulk sample of between 30 to 43,000 tons of gold ore at Ying with a head grade of 3.9 grams per ton, and this is expected to yield 3,400 to 4,900 ounces of gold, combined with an additional 2,900 to 3,000 ounces of gold from our silver ore.
spk11: As previously disclosed, our number one mill at Yang has been upgraded by the installation of a Nelson gravity concentrator, and this is to maximize our gold recovery from the SGX, HPG, LMW, and DCG
spk10: Now, this increased production guidance is really made possible by the over 629,000 meters of exploration and resource upgrade drilling that we've completed at the two mines between 2020 and 2021. And during 2021 alone, over 409,000 meters of drilling were completed. Now, some of this drilling has provided additional benefits, and that includes slowing down the rate of mining depth increases
spk11: And with some mines, we're seeing the average mining depths are becoming shallower.
spk10: It's also reducing the amount of tunnel development and raft development as more resources and reserves are being identified shallower and near existing infrastructure. Now, in terms of costs for next year, we're anticipating on a consolidated basis in terms of production costs between $83.3 to $85.9 per ton on a cash cost basis, and $141.6 to $143.5 on an all-in-sustain basis.
spk11: Now, in fiscal 2023, Silvercore plans to reduce the ramp development, but continue with more drilling and exploration and development time.
spk10: Overall CAPEX for the year is forecast at $88.6 million, but $39.9 or roughly $40 million is part of the budget to construct a new 3,000-tonne per day flotation mill and associated tailing storage facility at the Yangmai District, as we reported in the news release in November. Now, excluding the CAPEX for this new mill and storage facility, CapEx for equipment and facilities is budgeted at approximately $7.1 million, which is a nominal decrease compared to our fiscal 2022 year-to-date results, plus the Q4 estimates. Also looking ahead to next year, with respect to the Kwan-Fing project, we're expecting total capital expenditures of this project in fiscal 2023 at around $1.2 million. And that includes $700,000 for a 10,500-meter drilling program and $500,000 to complete reports and studies to apply for a mining permit.
spk13: I think with that, operator, I'd like to open the call for questions.
spk05: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have any questions, please press star followed by 1 on your touch-tone phone. You will hear a three-tone brown acknowledging your request and your questions will be pulled in the order they are received. Should we wish to decline from the polling process, please press star, follow fight 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Delta Lombaretto with Canaccord. Please go ahead.
spk13: Thank you. Good morning, Lana team. A couple of questions from me. First one. Now that we're past the Lunar New Year holiday, what's your assessment of the impact it's had on production? I mean, I remember you were flagging potential issues. I just want to know how that all panned out.
spk11: Yeah, I mean, I think right now looking at this year, it's probably a return to a more normal year.
spk10: It's maybe a little bit too early to have any sort of definitive answers. But it doesn't look like it's been the sort of disruptive years that we've seen in the past as related to obviously the big COVID interruption in 2020.
spk11: So I think from the question that you asked last time and where we are, recognizing that our guidance is a range and looking at the lower end of the range, I think we're going to come pretty close to that lower end for this last quarter. And really, the final numbers are going to be determined by what we see in the next few weeks.
spk13: Got it. Okay. And then I've got actually a couple of questions on this expansion here. First, I just want to try and square away some numbers. So if I look at your November press release, it says the mill is going to cost $25 million. It's going to be done by the end of 2023. The tailing stand is going to cost $38 million, and phase one is going to be done by the end of 2024. But off that $63 million budget, you're going to spend $40 million this year alone. Just trying to kind of square away the timing there.
spk10: Well, timing, I mean, yeah. Obviously, the tailings facility is expected to be operational with a bit of a lag relative to the mill. And so you can see that we are putting money into both the mill and the facility in this next fiscal year. And recognizing those numbers in that November news release, not that it's a big difference, but were related to calendar years.
spk13: Okay, but I guess I'm just wondering if you're spending 63% of the budget this year, why won't the mill be done until the end of next year and the 10th of the year after if you're spending this much up front?
spk10: No, but we'll be spending it in this fiscal year. year to then be looking at it producing in fiscal 2024 with the milling facility, the tailings facility coming on later in calendar 2024.
spk13: Okay, and then as a follow-up, I have two parts to this question here based on something you said in your comment. So number one, how should we think about the production profile post the expansion? And number two, I thought I heard you say that the Zongher project is no longer at the table. I think you pulled your application or something. Wasn't that supposed to kind of be a piece of the expansion? And how should we think about that?
spk10: Well, I think it was intended to be initially a potential source of satellite seed for an expanded mill. But I think what we're showing in the results is we've got enough to work with at our existing mining permits to justify the expansion. And so while it's unfortunate we haven't been able to proceed on this,
spk11: Important to note, we haven't put any money down on that project. It's unclear exactly what the outcome will be here, whether there's still the ability to move forward or what happens, but it doesn't really change the planning that we have for the Ying proper mining facilities as well as this mill expansion.
spk13: Okay, so then how should we think about the production profile in fiscal 2024 onwards?
spk11: Well, I think at this point it's early days for us to provide guidance in terms of the studies and projections.
spk10: We haven't completed sort of what you would call a 43-101 report that we could put out on that. So what I would guide to is looking at the next fiscal guidance for 2023 as an indication of what we can do with the existing facilities in terms of growth. And later in the year, we're looking forward to providing more details on what the expansion will actually provide.
spk13: Okay, so it is your intention to put out a tech report this year?
spk11: Yeah, and the exact nature of that report is still to be determined.
spk10: For sure, we're going to be addressing the reserves and resources and likely a mine plan. Not certain whether that mine plan will factor in the expansion. It may not. but as we obviously are driving towards getting these details finalized and getting the planning in place, we'll be in a better position to give guidance on what we expect from the expanded facility.
spk13: Okay, but since we're going to ding you for the CapEx, is it fair to say that the mill will run at 3,000 tons per day at reserve grade? Is that a reasonable assumption? Sorry, I heard the first part, 3,000 tons per day? I'm just saying, is if we're going to give you credit for the capex, is it fair then to just assume that the mill will run at 3,000 tons per day at reserve grades until you have a better mine plan?
spk10: Well, I think you know that our current mine plan doesn't run at reserve grades. There's obviously a prioritization of higher grades at the beginning of the mine plan, and then typically those will trail off. We've done a good job over the years with our ongoing exploration to keep finding new higher grade reserves and resources to keep deferring the lower grade. That obviously brings the overall down to the reserve grade average. But obviously with an expanded facility, different economics, the additional resources and reserves we're identifying within the mining permits, some of that planning has yet to be done. exactly what that production profile will look like. So I think if I were to give you guidance, I would run the numbers off of the existing facility and based off of a reasonable expanded mine plan, similar to this fiscal 2023 guidance, and look at the expansion as optionality that we'll be providing more information on.
spk13: Okay, that's all for me. Thank you.
spk05: Thank you. Your next question comes from Joseph Rager with Rob Capital Partners. Please go ahead.
spk03: Hey, Lon. Thanks for taking the questions. A couple of things. First, you had this write-off on bonds in the quarter. Any additional color than just we had a write-off on bonds?
spk11: Well, additional color, I think the, obviously, unfortunate, but we'll get through this. Obviously, it's a non-cash charge that we've taken.
spk10: You know, going forward, our notes show that in terms of the mix of short-term investments, you know, as of December, roughly 50 of the 59 million is in money market instruments. and there's only $10 million in bonds. So we're not anticipating any further impairment charges, but obviously we'll wait and see.
spk11: There's also the potential for a recovery.
spk03: Okay. That's fine. Second thing, this gold bulk sample you're doing – Can you give us any color on timing of that? Should we spread it evenly across the four quarters? Is it going to be done in a specific quarter? Obviously, it's going to impact the gold production when it occurs.
spk11: Yeah, it's not, in terms of time, it's obviously not a huge number. I don't have the quarterly breakdowns. So, at this point, I would spread it over the year until we have, you know, any further guidance for you on that.
spk03: Okay. Fair enough. And then, you know, I think the previous person asking questions was trying to get to, I think, the point of, you know, How should we be accounting for it properly? The sense I get is that while you guys don't have specific guidance yet, that your reserve grades are based off of a mine plan that's based off of a more lower throughput kind of scenario, and that as you expand and try to grow, you're going to pick up maybe a lower grade halo around the stuff you've been mining. that overall grades might come down a touch, but since production rates are going to go up so much, you know, on a, you know, margin basis, it might be the same. Is that something we could think about, and is that a fair assessment?
spk11: Yeah, I think that's certainly possible, and the other thing to consider in that model is on the higher throughput basis, you know, that may be – enable us to incorporate a bit more mechanization. which should lead to, you know, lower unit costs, you know, in the mining activities.
spk03: Right, right. So that would, you know, basically the economies of scale will offset potentially lower grades is kind of the assessment I'm coming up with here.
spk11: Yeah, yeah. No, no, that's certainly a possibility. We're looking, you know, we're obviously looking at Refreshing the mine, the mine's been running and producing profitably for many years. It still has a long life in front of it, but we're seeing opportunities here to grow the resource reserve base as well as the production profile. That may mean some changes, but we're not anticipating the economics to be less than what we've been experiencing, but in fact to be better.
spk10: and deliver bigger earnings and cash flow for investors going forward. Okay.
spk03: And then one final thing. I saw Rui is also going to be CEO of another company again. How do you think this might impact his use of his time between the two entities?
spk10: Well, I think it's important to recall he was CEO previously at both companies. Both companies have developed and advanced since that time. I don't really see, given the team in place, any issues with progress at either company. In fact, I think we'll see more progress based on what we're reporting as well as news that's been put out by New Pacific and future news on the development of SilverSan and its other projects.
spk03: Okay, great. I just wanted to confirm it wouldn't be a time issue for him.
spk11: No, no, no. We're not anticipating any issues in that area.
spk03: Great. I'll turn it over. Thanks.
spk05: Thanks, Joe. Thank you. Ladies and gentlemen, as a reminder, if you have any questions, please press star 1. Your next question comes from Craig Stanley with Raymond James. Please go ahead.
spk12: Thank you. Hello, everyone. Just first off, so can somebody else come in now and take that project?
spk10: Well, it's unclear exactly what the process will be going forward.
spk11: There might be a way that we can resolve this procedural impasse. It might be put up for auction again, at which point we may or may not participate. It's really too early to say.
spk10: I think it's just from our standpoint, you know, we're sending the message that we are, you know, in a position to move on because it's just taken too long and we're not seeing sort of a clear path forward to, you know, resolve this sort of regulatory process. Okay.
spk12: The bulk, I guess you're calling it a bulk sample that you're doing on the gold. How many mines is it being taken from?
spk10: I think it's mainly at this point, I don't have the mind-by-mind breakdown.
spk11: I think it's mainly focused from one, maybe two minds at this point.
spk10: But we'll have more details on this with the technical report that we'll put out later this year.
spk12: Okay, perfect. But it's around like sort of existing scopes and stuff.
spk10: well yeah it's obviously um if you look at the capital we've been putting in both in uh drilling tunneling and ramp access uh there's sort of been a a you know blanket programs across all the mines and uh and you know with that we've identified different zones um provided created access either as part of normal course activities to get to the silver lead zinc areas that we knew of but then also realizing that these gold zones that are available and We're obviously now in a position to include in our guidance that we'll be mining some of these gold zones and producing primarily gold ore from those areas.
spk12: Okay. The write-down that you had to do with those bonds, where were those bonds domiciled?
spk11: A lot of those would be bonds held in China in terms of a range of different companies. Some of them, yeah, across a range of industries.
spk12: And just finally, smelter charges, are you seeing anything much change?
spk11: No, I don't think there's really been any change in that area. And I know you flagged a question in terms of realized numbers. I think it's important to note that our realized pricing in U.S.
spk10: dollars is a function of obviously Western-based pricing, when we're actually selling, what the move is in the Western markets relative to the Chinese markets, and then also how the changes, especially how the changes in the exchange rate can have fluctuations in certain periods of time. What we have seen in recent years is a strengthening of the R&D to the U.S. dollar, so that that has had an impact on what appears to be our realized numbers in U.S. dollars, whereas the relationship on the ground really hasn't changed.
spk12: Perfect. Thanks, Juan. Thanks, Craig.
spk05: Thank you. Your next question comes from Gabriel Gonzalez with Echelon Capital Markets. Please go ahead.
spk14: Hi, Lon, and good morning. Just two main questions principally on costs. Just considering the guided cash costs and on sustaining cost increases at Ying, I just wanted to ask, given all of the drilling and development work that was done, and it sounds as though that is producing better access and perhaps in terms of costs, not much in the way of you know, potential increased costs to access deeper ore, harder to reach ore, is it fair to assume then that the majority of that cost increase is mainly related to increased labor, consumables, and COVID-related supply chain issues? And on the on and sustaining costs, is part of that increase going to come through from drilling exploration, drilling, um, that's coming on the heels of all of the drilling that you did to get to where you're at, uh, right now, uh, with, uh, the drilling that was done, uh, this, uh, this particular year.
spk11: Yeah. So, so that's, uh, there was quite a bit to, uh, to unpack there.
spk10: Um, obviously we've been doing a lot of drilling, the numbers, you know, the numbers show that, uh, we're, we're still expecting to, uh, to be working and drilling pretty, um, pretty aggressively going forward as we see a lot of opportunity there. Some of that drilling is capitalized, in particular the surface drilling. Some of the underground drilling is also capitalized as well. You can see in the numbers, you know, we are bringing down for fiscal 2023, you know, our ramping. So at Ying for 2022, it was 6,100 meters, $5.2 million.
spk11: You know, dropping that to 3.2. So that's an example of, you know, where we're sort of shifting activity, you know, based on the results that we've been seeing. But obviously, you know, gang drilling is still, you know, very strong.
spk10: And then I guess, yeah, to your previous point, you know, we have seen, as we reported earlier this year, that with the renegotiation of contracts with the contractors as well as our employees, you know, we did see some increases there. In the most recent quarter, there were some increases just in power prices. Those are not permanent. Those fluctuate based off of market conditions. We're anticipating just in terms of supplies and consumables, a regulatory shift in terms of the blasting caps that we're using is increasing some of the consumable costs, but that as a whole is not a huge number. I think really the bigger driver is now just the activity that we're putting in to explore and develop this mine and accommodate our growth plans going forward.
spk14: Okay, great. Thank you. And so just a question related to the capital costs for the expansion at Ying. With capital costs as a whole increasing considerably, for projects really throughout the world is, I guess, would you be able to quantify the confidence that you have in the numbers that you published, I believe it was November, for the expansion, or should we potentially make a little bit of conservatism, and then what do you think that conservatism might entail to those capital costs as we model them?
spk10: Yeah, Gabriel, that's a tough question. Obviously, those are the numbers, the best numbers we had at the time.
spk11: That's not just picked out of anywhere. That's been with very detailed discussions with the engineering groups that we've engaged to work on the detailed design.
spk10: The work that they're doing is also not just picking numbers out. They're looking at real-life quoting in the marketplace for what these products and services would be. So I think those are the best numbers that we have at the time as of November. I see no reason to change them at this point. You know, your guess is as good as mine what we're dealing with going forward in terms of inflation. And so I think you'll have to sort of make your call, but we'll keep the market up to date if we do think there's a a change that needs to be disclosed. But I would say those are quality numbers based on, you know, on-the-ground experience with people that would be working on actually executing on this plan given this timeframe that we're looking at.
spk14: Okay, perfect. Thank you very much, Lon. Thanks, Cameron.
spk05: Thank you. Ladies and gentlemen, as a final reminder, should you have any questions, please press star 1. This concludes this question and answer session. I would now like to turn the conference back over to Alain Shaver, Vice President, for any closing remarks.
spk11: Thank you.
spk10: Thank you, Anas. And thanks to everyone for joining us today. You know, obviously we'll wrap up here, but please, if you have any additional questions, as always, please do call or email us. We'll be happy to respond. to you and we look forward to updating you again in May on our EIDR and fiscal 2022 results.
spk11: Have a great day, everyone.
spk05: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
spk01: Thank you for standing by. Good afternoon. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the Silver Corp second quarter fiscal 2022 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you. I would now like to turn the conference over to Lon Shaver, Vice President for Opening Remarks. Please go ahead.
spk10: Thanks, Chris. Good morning, everyone. On behalf of Silvercorp, I'd like to thank you all for joining our call to discuss our second quarter fiscal 2022 financial results. We released our results after yesterday's close. A copy of the news release, the MD&A, and the financial statements for today's call are available on our website. Before we get going, I'd like to remind you that certain statements on today's call will contain forward-looking information within the meaning of applicable securities laws. Please review the cautionary statements included in our news release and presentation as well as the risk factors described in our most recent second quarter 10Q and Form 40F, an annual information form. So with respect to the quarter, we finished a solid quarter here. Revenue in Q2 was $58.4 million. That was up 4% compared to last year's quarter. And I'd like to note that silver was 56% of our revenues on a net realized basis. That compares to 59% in the same quarter of last year. Second quarter net earnings attributable to equity shareholders were $9.4 million or $0.05 per share. That compares to $15.5 million or $0.09 for the same period last year. And our adjusted earnings for the quarter were $13.6 million or $0.08 per share and that compares to $15.4 million, or $0.09 per share, in the same period last year. Just a reminder, the adjusted earnings is a supplemental non-GAAP measure to provide the market with another metric to better measure the performance of the underlying business. It's continuing profitability and growth potential. The adjustments made were to remove the impacts from non-cash, unusual items, including the elimination of share-based compensation foreign exchange loss, share of loss in our associates, and unrealized gains and losses on investments and other one-time items. As we previously reported, we produced just over 290,000 tons of ore and milled just over 270,000 tons of ore in the quarter. That's up 9% and 3% respectively compared to last year's quarter. The milling shortfall in the current quarter compared to what was mined was mainly as a result of transportation interruptions that were caused by heavy rains in the Ying Mining District. We're expecting to maintain a similar mining rate in the current quarter by increasing our milling tonnage at the Ying Mining District. That's for Q3 fiscal 2022. In the second quarter, we sold approximately 1.7 million ounces of silver 800 ounces of gold, 17.3 million pounds of lead, and 7.6 million pounds of zinc. That represents decreases of 1%, 64%, and 7% in silver, gold, and lead, respectively. But I'll note that the reduction in gold was due to a special item last year. And we did show an increase of 3% in zinc sold compared to the prior year quarter. Our cash cost per ounce of silver net of byproduct credits was negative 165 in this second quarter fiscal 2022. That's compared to negative 209 last year. And our all in sustaining cost per ounce of silver net of byproduct credits was 735 compared to 699 in Q2 fiscal 2021. Our cash flow from operations in the quarter was 30.9 million. That was $1.3 million higher than what was reported last year in the same quarter. Capital expenditures were approximately $14.2 million in this Q2 compared to $11.1 million in the prior year quarter. And this was driven primarily by a total of 124,544 meters or $6.2 million worth of diamond drilling that was capitalized and completed in the Yingmai District in this current quarter. Compared to just over 70,000 meters or only 2.5 million in Q2 fiscal 2021, everyone will recall we are in the midst of a very significant drill program at Yang with lots of results having been reported and to be reported. That increase was somewhat offset by reduced tunneling as the drilling activities in some of the previously mined areas have defined resources that require less development going forward. And as I said, we're continuing our expanding drilling programs to define additional resources and to test zones of gold mineralization at the Yang mining district. In the second quarter of fiscal 2022, Silver Corp, through its subsidiary, New Infini Silver Inc., initiated a phase one 10,000-meter drill program at the La Yesca project in Mexico. with now running at four active drill rigs as of September. New Infany had completed a total of just over 2,500 meters of drilling from nine holes, and a total of $1.1 million of expenditures have been capitalized. In terms of corporate development in the quarter, we invested $3.1 million to participate as a refundable deposit in the Kwan Ping Project Auction. The Kwan Ping Project is located in the Shanzhou District in Henan Province, approximately 33 kilometers north of our Yingmai District, and covers an area of just over 12 square kilometers, being approximately 3 kilometers wide and 5 kilometers long. Adding up these cash flow items, we entered the quarter in a strong financial position with $221 million in cash and cash equivalents and short-term investments. That's up $6.7 million compared to the $214.4 million we had as of June 30th of this year. This does not include the investments in associates and equity investments in other companies, which had a total market value of $172.8 million as of the end of September. Within that number, our position in New Pacific represented $145 million of this amount. And as of yesterday's close, New Pacific's value had increased to $151 million. In terms of outlook, as we announced on October 13th, the company won an online auction to acquire 100% interest in that Kwanping project for a total consideration of approximately $13.5 million. We pay the acquisition consideration in October and expect to complete the transfer of the rights in this month, November 2021. In October of 2021, the SGX mine at the Yung Mine District suspended production temporarily as a precautionary measure due to the heavy rainfall experienced in the Yellow River region. The water level at the nearby reservoir that discharges into the Yellow River reached an all-time high, causing the operations at the SGX mine to be suspended for 10 days, which has impacted production and head grade somewhat. Despite this interruption, we expect to maintain a similar mining rate as we saw in Q2 and increasing the milling tonnage at the Humani District in this third quarter of fiscal 2022. Looking forward, we continue to be on track to meet our annual guidance between 6.3 and 6.6 million ounces of silver, between 65 and 69 million pounds of lead, and between 27 and 29 million pounds of zinc for this current fiscal year. And with that, operator, I would like to open the call for questions.
spk01: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Dalton Burato, Canaccord. Dalton, please go ahead.
spk13: Thanks. Good morning, Lon and team.
spk10: Hi, Don.
spk13: Hey, I heard you say that you're reiterating your guidance here, but I'm just having a hard time figuring out how you're going to get there. So like at Ying, for example, the low end of your guidance is 5.7 million ounces. You've done 2.8 so far. You know, I understand you're going to try and ramp up the milling rates this quarter, but then you've got that one quarter of the Chinese New Year where things tend to drop. Is there something you're planning on doing around that? I have a hard time getting to that automatic guidance.
spk10: Yeah, no, totally understand, Dalton. I mean, we hate missing guidance. And while we are looking ahead to that quarter, and typically it's a slower quarter, I'll just say that the company and management is doing everything we can, looking at all kinds of options of shifting things around, maybe adding extra shifts, doing what we can to pull those numbers out. And so at this point, you know, we're not in a position where we're prepared to concede on that guidance yet.
spk13: Okay. And then just on the cost side of things too, on a per ton basis, it looks like you're running in the mid-90s now. You know, and that that's above your guidance range. But even historically, you guys used to be high 70s, low 80s. And I suspect some of that has to do with the new mining contracts. Some of that has to do with the renminbi. But is this kind of a level we should think about going forward? Like we'll stay at these levels?
spk10: Yeah, I mean, I think, you know, as you pointed out, we did have a renewal of those labor costs earlier this year, which has impacted that. You know, as we commented in the disclosure, the RMB has certainly, you know, been a factor. And that's something that, you know, we can't predict going forward. You know, we're not anticipating any dramatic, you know, changes going forward from here. So that is probably a reasonable number. And And I think, you know, overall, from an all-in-sustaining basis, we're still within that guidance. So I think it's maybe better to look at things, you know, on that kind of a basis because some of the activities we're doing, you know, it really is a bit of a judgment call as to whether those are operating costs to be expensed or are these longer-term investments that the company's going to benefit from.
spk13: Understood. Okay. And then Just one last one from me. Is it still your intention to put out a new mine plan for the Ying District this year?
spk10: Not necessarily a new mine plan. What we're aiming to do is update the reserves and resources early next year or sometime next year based on the drilling with a proposed cutoff date at the end of this year. Obviously, that's the first step to be able to speak to a mine plan, but we're clearly driving towards being able to give guidance on that As we've discussed in the past with some of these results, in particular looking at these gold zones, the work that's being done there is to try to identify a resource. Mine planning is being undertaken right now. It's just not to a level where we can give solid guidance, but that's obviously what we're aiming to do. We're not doing these activities just for the fun of it and to find you know, find mineralization. It's to find resources, put them into reserves and mine them. So as soon as we're able to give that, that's a plan and I'm hopeful we'll be in a position to do that in 2022.
spk13: Okay, great. And then just maybe I'll squeeze one more in if that's okay. From a corporate development perspective, you've been doing a lot of this kind of early stage stuff, you know, in China and Mexico and so on. Is that going to be the focus going forward, or are you still actively looking for something that's either operating or later stage, if you will?
spk10: No, I'd say our focus is sort of runs the full range of more advanced exploration to production would be really the criteria. I comment that the acquisitions of the two projects in the Ying mining district, you know, while we've not been in a position to report numbers, you know, those projects do have resource numbers calculated on a Chinese basis associated with them. So, you know, we are looking at those as being sort of analog to Ying and things that we can fast track into production. Again, it's just not at a state where we can give definitive guidance on those. With respect to some of the other projects, we've talked about Mexico before. That was arguably a bit of an earlier stage project, but it did have drill holes by the prior vendor, and that's, of course, why we've selected to put that project through more of an incubator model in terms of the approach. But I wouldn't say that we're shifting our priorities. Our sweet spot would be that ideal development asset that we can jump into and hopefully bring to production and cash flow quickly. But we're looking outside of that as well.
spk13: That's great. That's all from me, guys. Thank you.
spk01: Thank you. Your next question comes from Joseph Rager, Roth Capital Partners. Joseph, please go ahead.
spk03: Hey, Lon and team, thanks for taking my questions. Hi, Jim. So kind of following a little bit on the cost side of things you guys mentioned, you know, RMB, but are you guys starting to see cost inflation from the general move in inflation around the world?
spk11: I can't really say that that's the case.
spk10: I think, you know, as we've talked about on this call already and before, You know, the labor cost aspect, which we addressed early in the year, I mean, that was playing catch-up for contracts that typically have a two-year run rate and that were being revised. And, you know, when you look at the mining cost at, you know, at Ying, and you, you know, back out the other items, things like raw materials, utilities, you know, look like they're about sort of 20% of those costs with the balance being, you know, either our labor or contractor costs. So, you know, I think a lot of the increases that we've seen on an R&B basis have flowed through already. So now it really just comes down to a question of, well, what's that exchange rate, you know, what's the exchange rate impact on that?
spk03: Okay. And then, At Ying, you guys have kind of pointed to this potential additional, maybe a seventh mine, let's call it, over time now. When do you think we'll start to really get kind of a plan from the company and a timeline to how you guys might grow Ying from here?
spk10: Yeah, DCG, that seventh mine, I mean, it is in that process of ramping up and delivering small amounts of, you know, you might call it development ore. And you can see from our results, we're also drilling in around DCG and have identified some gold zones. But, you know, I think to my previous comment, we have over 70 rigs drilling, generating a lot of information. You know, we're packaging that up and putting that out in news releases just to alert to what we're doing, what we're finding. Love to be in a position to say what that resource reserve impact is. But, you know, clearly that calculation needs to be done here with that targeted cutoff of the end of December. And that's really going to be the foundation for a solid plan that we can articulate to the markets. So prior to that, I think it's just a matter of please be patient and understand the work's being done, and we want to do it right.
spk03: Fair enough. And last thing, looking at the cash balance, the short-term investments, the equity investments, the lack of debt, and then your share performance has almost been perfectly in line with your peer group. What are you guys doing on the corporate marketing side to kind of get out there and show the differentiation of the balance sheet to investors?
spk10: Yeah, no, that's clearly become a key message in our marketing. And we've been participating in conferences, looking at outreach to get in front of a broader investor base, ramping up our messaging on the social media side to make sure people, understand more about the company and what we're looking to do. And yes, obviously, we have a very strong balance sheet and we're looking to use that and leverage that for growth for the company with new assets. These acquisitions that we've made in the Ying district tie into a broader strategy of growth in Ying We've begun the planning and permitting process to look at adding milling capacity for Ying that would be a dramatic increase. The Ying concessions we currently have would be a key component of that growth, but also these satellite projects would be contributors in terms of mill feed to an expanded milling capacity. These are all the things that we're looking forward to doing to grow our presence and up our throughput and up our metal output, both in terms of our traditional silver lead and zinc, but also potentially that gold and even copper that we're seeing in some of these other zones. Okay. Thanks. I'll turn it over.
spk01: Thank you. Your next question comes from Ryan Thompson, BMO. Ryan, please go ahead.
spk04: Hey, Lon. Thanks for the update. I think most of my questions actually got asked, but Could you maybe just talk a little bit more about Laieska, just elaborate on some of the work that's been done there? Have you gotten any assays back yet? Do you like what you're seeing? Just whatever you can tell us about that project.
spk10: Yeah, it's still early days. We've been getting assays back. We've been getting numbers that have been confirmatory of some of the exciting silver grades that we saw in the previous work. but we're looking to get really a more wholesome package of information together. From a significant standpoint, we've capitalized $1.1 million. That's not really a lot of spending in the grand scheme of things. So we want to get a more complete package of results together, again, so that we can wrap more context and understanding what is it that we've that we've been drilling into what does it look like, what potential does it have, and what the game plan for it going forward is. And obviously, we're not there yet, having just started this summer.
spk04: Okay. And then maybe just one more follow-up on the previous caller's question there. Just on capital allocation, I think you guys put a share buyback program in place a little while back there. Can you just talk a little bit about that? how you're thinking about that? Is it something you plan to execute on or is it more just you have it in place in case there's a big drop in the share price? How do you guys think about that?
spk10: Yeah, well, I think you've kind of answered it in saying that it's always good to have options, have flexibility. So that was clearly why we wanted to have it in place. And You know, at this time, we don't have any immediate plan to use it, but, you know, that'll be decided upon, you know, at the circumstances as they arise. So, you know, right now, it's good to have in place, just like we have a shelf in place, just to be able to respond quickly to opportunities.
spk04: Got it. Okay. That's all I had. Thanks a lot for the update. Thanks, Ryan.
spk01: Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star 1 on your touchtone phone. Your next question comes from Justin Stevens, PI Financial. Justin, please go ahead.
spk15: Hey, Lon. Yeah, thanks for the update, and congrats on a pretty good quarter despite the challenges. So I know you guys said you're looking to ramp up the processing rate at Ying in fiscal Q3. Should we assume that you're probably targeting somewhere to get the milling rate around what the mining rate was achieved in fiscal Q1 or fiscal Q2? And will that be using, I guess, probably more mill one as well as mill two?
spk10: Yeah, that's correct. I mean, we do have that flexibility from a milling standpoint. Also, when you look at the... Some of the issues around Chinese New Year shutdown, that has a greater impact on mining rates than milling. So as it relates to being able to run the mill through that period at a higher rate, that's definitely easier than operating the mines. From an obvious standpoint, we're rolling over with... approximately 20,000 tons that got mined but not processed. That's obviously coming into this quarter. I think you're bang on in your assessment in terms of what we're trying to do.
spk15: Got it. You said about 20,000 tons was what the stockpile's increase was given that delta in mining and milling rates.
spk10: Yeah, that's the difference in the current quarter. So we have the flexibility now of bleeding that into our milling rate for the current quarter and then looking at what we're mining now and scheduling things appropriately to address this quarter, but then also the fiscal fourth quarter when we would have typically the Chinese New Year shutdown. Got it.
spk15: Yeah, that makes sense. I guess the other thing on the, you know, the obviously thermal coal prices have been in a bit of a swing lately, and there's some reports that China is looking to stave off power shortages. Do you guys expect any impacts to your operations, either from potentially higher power costs or potential power rationing?
spk10: No to the former, not really any indication in terms of power costs. You know, we were alerted to potential power rationing that could have taken place, but that notification, you know, for us at least, was in the month of October. It did not really kick in and have any impact, and as of the end of October, it was, we sort of passed that period. There's no guarantees or assurances that as we head into the winter heating period that for other reasons, as we've seen in the past, such as pollution mitigation, that there might not be power cutbacks, but we don't have anything specific or any solid guidance at this point.
spk15: Got it. Makes sense. And then last for me, with Guanping, just curious what your rough sort of exploration timeline would be. And if you think that you might need to do much new exploration before you could get a 43-101 compliant resource, or do you think it'll just be sort of relogging and verification?
spk10: It's more the latter. There's been some work. There's been a resource. I think that the main focus here is that this project is an advanced state to be able to apply for a mining permit. And sort of more typical of what we've done in Yang is get that permit, being able to start looking at mining activities, using those early mining activities as a means of justification to open up the mine get in and do exploration simultaneously.
spk15: That makes sense, yeah. So it should be hopefully completed this month, and then you'll probably be boots on the ground fairly soon thereafter, I suspect?
spk10: Yeah. I mean, the completion is really more the closing of the transfer of the interest in the company that owns the mine, and so that's intended to take place this month. And then shortly thereafter, it's the planning to be putting in the application for the mining permit. But yes, as you point out, we'll be able to get over there. And the team we have at Ying, just like for the other project that we've acquired, the team at Ying is the one that's going to be tasked with going back and looking at where to pick up from an exploration and development standpoint. Got it. Sounds good. That's it for me.
spk15: Thanks, guys. Thanks, Justin.
spk01: Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star 1 on your touch-tone phone. There are no further questions at this time. This concludes the question and answer session. I would like to turn the conference back over to Lon Shaver, Vice President, for any closing remarks.
spk10: That's great. Thank you, Chris, and thanks, everyone, for joining in today. That's all we have for this call. We're pleased if you have any additional questions or any new questions. As always, feel free to give us a call, reach out. Happy to answer those and look forward to updating you again in February on our Q3 fiscal 2022 results. Have a great day.
spk01: Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
spk06: Thank you for standing by. Good afternoon. My name is Michelle and I will be your operator for today. At this time, I would like to welcome everyone to Silver Corp's first quarter fiscal 2022 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press the star, followed by the 2. I would now like to turn the conference over to Lon Shaver, Vice President for Opening Remarks. Please go ahead.
spk10: Thank you, Michelle. Good morning or afternoon, everyone. I'm joined on this call today by Derek Liu, our Chief Financial Officer. And on behalf of Silvercorp Metals, I'd like to thank you for joining the call to discuss our first quarter fiscal 2022 financial results, which were released yesterday evening. The news release, MD&A, and financial statements are available on our website and posted on CDAR. Before we get started, I'm required to remind you that certain statements on today's call will contain forward-looking information within the meaning of applicable securities laws. Please review the cautionary statements included in our news release and presentation, as well as the risk factors described in our most recent first quarter 10 and Form 40F and Annual Information Form. Now let's kick off with some highlights from the results from the quarter. We're pleased with the results we generated for the first quarter. Revenue in the quarter was $58.8 million. That was up 26% compared to the prior year quarter. We are participating in the increased silver prices that we're seeing in the market, as both mines realized silver prices up approximately 50% versus last year's quarter. The mines also benefited from higher lead and zinc prices. It's important to note that silver was 58% of our net realized revenues, up slightly from 56% in last year's first quarter. Our first quarter net earnings attributable to shareholders were $12.2 million, or $0.07 per share. As of this quarter, we have also begun reporting adjusted earnings to provide a supplemental non-GAAP measure to better reflect the ongoing performance of our operating business. The adjustments this quarter and going forward will remove impacts from foreign exchange swings, non-recurring items, stock-based compensation calculations, mark-to-market of equity investments, and our share of associates' operating results, which you'll note are always losses at this point, given that they are exploration and development companies. On this basis, our adjusted earnings attributable to shareholders were $15.8 million, or $0.09 per share, and that compares to $9.6 million, or $0.05 per share, in the prior year quarter. Our cash flow from operations was $36.5 million in the first quarter, and that was up 21% compared to $30.1 million in the prior year quarter. And during this period, we paid $2.2 million of dividends to shareholders. We ended the quarter with a continued strong financial position with $214.4 million in cash and cash equivalents and short-term investments, and that's up $15.3 million, or 8%. compared to just this past March of 2021. And I'll highlight that this number does not include the investments in associates and equity investments in other mining companies, which have a total market value of $245.3 million as of June 30th. We had already released our production and sales figures on July 13th. As previously announced, we experienced a slight production decline in the current quarter, mainly due to the process of renewing mining contracts at the Yung Mining District. In the first quarter, we sold approximately 1.6 million ounces of silver, 1,000 ounces of gold, 16.8 million pounds of lead, and 7.3 million pounds of zinc. And these are decreases of 12%, 9%, 20% respectively in silver, gold, and lead, but an increase of 4% in zinc compared to the prior year quarter. Looking at our cost per ounce of silver, net of byproduct credits on our cash cost was negative $1.43 U.S. in the first quarter, and that compared to negative $1.48 in the prior year quarter, and this is on a consolidated basis. Our all-in sustaining cost per ounce of silver net of byproduct credits was $7.46 per ounce compared to $5.61 in Q2 of fiscal 2021. During the quarter, capital expenditures totaled approximately $11.1 million compared to $10.2 million in the prior year quarter, and the increase is driven primarily by a total of 57,247 meters or $3.2 million worth of diamond drilling that was capitalized at Ying, and we had no such capitalized drilling expenses last year. But this increase was offset somewhat by reduced tunneling, as drilling in some of these previously mined areas has defined mineralization that is expected to require less development going forward. Silvercorp is going to continue our extensive drilling programs to define additional resources and test for gold mineralization at the Ying mining district. In terms of our corporate development activities, notable items were that we invested $5 million in Whitehorse Gold. through a private placement and that brought our ownership up slightly to 29.45 and our position currently has a value of 19 million as of June 30th. Now looking ahead for the rest of fiscal 2022, we continue to expect to meet our guidance. We're looking to increase the production in the remaining three quarters to do so and hit between 6.3 and 6.6 million ounces of silver. between 65 and 69 million pounds of lead, and 27 to 29 million pounds of zinc in fiscal 2022. Also in the first quarter of this year, New Infany, our subsidiary, received a drilling permit and initiated a 10,000-meter drilling program at the La Yesca project in Mexico. And the execution of a transfer contract for the Zonghe Silver Project in the vicinity of the Yangmai District is still pending the national security clearance from the Chinese authorities, but we're expecting to see that over the next few weeks. And with that, I think it would be a good time to open up the call for questions.
spk06: Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 on your touchtone phone. Please stand by for your first question. Your first question comes from Joseph Rieger, Roth Capital Partners. Please go ahead.
spk03: Hey, Lon and team. Thanks for taking the questions. Thanks, Joe.
spk10: Good to have you on the call.
spk03: Thanks. So I guess first thing, on New Infany, have you guys put in a management team To run that, are you guys still running it as a subsidiary? And then longer term, is it still the plan to take that as a public company as well, like you've done with Whitehorse and New Pacific?
spk10: Yeah, Joe, the answer would be yes and yes. We do have an operating team on the ground in Mexico that are managing the day-to-day operations of gearing up for this exploration program. Currently, that is being overseen by Silvercorp management, both in Vancouver and Beijing, but it is the intention to get a dedicated management team in place and to list the company going forward.
spk03: Okay, thanks for that. And then you guys mentioned when you reported operating results that there had been some issues with getting some people back to the mine site, extending some contractor contracts, right? So is there any carryover of that into your fiscal Q2, or do you have everybody back and operations are running smoothly now?
spk10: Yeah, no, everyone's back in and things are back running back as planned for the most part. So I guess it would really be no carryover. And those were sort of, as we disclosed at the time, those were temporary factors just given the uncertainty, and it's hard to avoid the conversations around the water cooler where people say, well, what's happening? What's going to go on? Do you think we're going to get this contract signed? And that just led to some decreased productivity and some uncertainty. But then once that was resolved, everyone was back focused and getting back to work.
spk03: Okay, fair enough on that. And then one final thing. G&A expenses have been trending up both at the mine level and at the corporate levels over the last couple of quarters. I guess my assumption there is that a portion of that's due to a lot of the other items UBI has been working on, like the auction for the other project in China, the new Infini stuff, etc. But, you know, can you give us any guide, you know, just qualitatively what we should expect going forward there?
spk10: Yeah, I mean, that would be – you've touched on a few of them, but there definitely are a mix of factors. And in some cases, obviously, currency can be one, too, just based on where those expenses are domiciled. There's been some in both Canada and in China, some governmental changes in terms of increased employee benefits. But then to your point, yes, we are ramping up a team to execute on the Ying drilling project and to get ready for Zonghe. And so that has obviously been a bit of a staffing push to bring in and add to the team in those areas where we can see a need down the road.
spk03: Okay, thanks. I'll turn it over.
spk10: Thanks, Joe.
spk06: Your next question comes from . Please go ahead.
spk15: Hey, good afternoon, and thanks for taking my questions. I'm just wondering if there are any guidance changes at Ying as a result of the production results this quarter? We had noticed that the guidance given in the MD&A was slightly different than what you released in February.
spk10: To double check on that, really not much has changed and what we're seeing in terms of getting back on track to production is what's expected for the balance of the year, so not really anticipating any changes.
spk15: Can you provide more colour on what the strategy would be to catch up on the production in order to make guidance?
spk10: Well, the one thing that is immediate and obvious is the fact that we typically have excess milling capacity between our two mills. So that's one thing going for us. The other thing is with the drilling campaigns that we've been working on and opening up some new areas like the DCG, We're looking at areas where we can target mineralization that does require less development. You'll see that in some of the numbers where we've brought down some of the development activities. It's just going to be a matter of shifting some of those activities from development to mining. As we were provided in the guidance, we've been looking at bringing up the mining throughput as compared to previous years. So it's just a matter of accelerating that a bit further.
spk14: Okay, good. On that note, do we expect to see a mine plan incorporating all the drilling that you've been doing at Ying?
spk10: Yeah. At Ying, we had intended to put out at least an updated resource number, but then it became apparent that with the extensive drilling Anything that we would have published would have been already stale given the amount of drilling that's ongoing. So the intention here is to do an updated at least resource reserve statement for end of year 2021, so December. And so then that would be the basis of a more formal mine plan that we could discuss with the market investors. At this point in time, it's really still just gathering all the information, doing the calculations. In some cases where there's obvious low hanging fruit, we may go in and actually mine those zones without them being in a reported mine plant. That just would obviously adjust and shift some of the plans we would have had to later periods.
spk15: Okay, great. Just one last question from me. Can you provide more color on the delay for the mining license at BYP?
spk10: Well, I think, yeah, that delay has been a long one, ongoing for quite a few years. It was caught up in a number of different issues, not so much related to the project, but land use considerations and just really the integration and discussion between different levels of government in the region. We feel that some of the obstacles have been removed, and we are optimistic that we'll see progress on getting that BYP mining permit by the end of this year.
spk14: Okay, great. Thanks for taking my questions. I'll leave it there.
spk10: Thanks very much.
spk06: Your next question comes from Justin Stevens, PI Financial. Please go ahead.
spk15: Thanks, guys. Yeah, thanks, Glenn, for taking the questions here. Most of what I was wondering has already been covered off, but one last one from me. I know you've talked about sort of these zones that may have been missed in previous modeling at Ying near existing developments. Can you give us maybe just a rough idea of about how much of that material is currently, I'd say, making up feed? Are we thinking 5%, 10% of that sort of the ballpark that we're looking at?
spk10: Yeah, that's a complicated question. I wouldn't have the answer to that handy given we're talking about six mines where that's the situation. and where the planning comes in, some sort of month-to-month, quarter-to-quarter, there can be some shifts in that. I'd have to do a bit more digging and come back to you with more specific numbers.
spk15: For sure. Yeah, obviously, there's several moving parts of these different assets. And I guess just on the genre, I'm assuming we're just waiting still for the security review to go through, but no real updates on potential timelines there?
spk10: No, I mean, we've been expecting it imminently for a while here. I think it's important to note that this process is a new one that was instituted in January. And we're not sure, but we think we might be the first party to have been sort of caught up in this process. And ultimately... There are no signs from any of the groups involved that there's any issues or objections. I think it's more just a matter of clarifying which party needs to sign which piece of paper next in the process and where it goes through the chain. Given that it's a new process, some of those kinks have yet to be worked out.
spk15: Got it. Yeah, that makes sense, especially if you're maybe one of the first ones making it through. The paperwork trail hasn't been well-worn yet.
spk10: Exactly.
spk15: Got it. That's it for me. Thanks, and looking forward to seeing the results for the next couple quarters here.
spk10: That's great. Thanks, Justin.
spk06: Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by the one on your keypad. This concludes the question and answer session. I would now like to turn the conference back over to Lon Shaver, Vice President, for any closing remarks. Please go ahead.
spk10: That's great. Thank you, Michelle, and thanks, everyone, for tuning in today. That's all we have to share on this call, but please, if anyone has additional questions, like always, feel free to call or email us in the investor relations team, and we'd be happy to answer your questions. We look forward to updating you again in November for our Q2 fiscal 2022. With that, I wish everyone a great day, and we're signing off. Thanks very much.
spk06: Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.
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