Silvercorp Metals Inc.

Thank you for standing by. Good afternoon. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Silver Corp. First Quarter Fiscal 2025 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 1 on your telephone keypad. If you'd like to withdraw your question, please press star, then the number 2. Thank you. I would now like to turn the conference over to Lon Shaver, President of Silvercorp. Please go ahead.

Thank you, Julie. On behalf of Silvercorp, I'd like to welcome everyone to the call this morning. Today we'll discuss our first quarter of fiscal 2025 financial results, which were released yesterday after the close of the market. A copy of the news release, our MD&A and financial statements are available on our website and CDAR+. Before we get going, please note that certain statements on today's call will contain forward-looking information within the meaning of applicable securities laws. And also, please review the cautionary statements in our news release, as well as the risk factors described in our most recent regulatory filings. Now, to recap our quarterly financial results, we kicked off the fiscal year with record quarterly revenue of $72 million. That was a 20% increase from last year. by a robust commodity market, which led to notable improvements in realized metal prices, particularly in China compared to Q1 of last year. In particular, the realized silver price rose by 36%, gold by 18%, lead by 18%, and zinc by 23%. Silver remains our most important metal, contributing 63% of our Q1 revenue, followed by lead at 22%. I'll note that silver was 59% of revenue in Q1 of 2024 and 55% of revenue in Q4 of 2024. The results of this quarter reinforce why investors should own our shares, namely demonstrating that we provide leverage to higher metals prices through the response in our financial results. Moving down the income statement, attributable net income for Q1 was $22 million or 12 cents per share. This is up significantly from $9 million or $0.05 per share in Q1 of fiscal 2024. The increase in our bottom line reflects those higher metals prices partially offset by lower sales volume and higher business expenses related to the Adventus acquisition. On an adjusted basis, removing the impact of non-cash and one-time items, our attributable adjusted net income for the quarter was $21 million or $0.12 per share compared to $12 million or $0.07 per share in Q1 of last year. Looking at cash flow from operating activities, our mines generated $40 million this past quarter. This is up 38% year over year and largely reflects those increased metals prices. But also, if we look at cash flow from operations before changes in non-cash working capital items, the increase was 65%. Additionally, in the quarter, we invested $20 million in our mines. This is up 23% from last year, largely stemming from increased underground development and and tailing storage facility construction activities at Ying. Despite the increase in capital expenditures, we ended the quarter with $216 million in cash, cash equivalents on short-term investments, and an increase of $31 million from March, our year end. This position does not include our investments in associates and other companies, which had a total market value of $108 million as of June 30th. Turning our attention to our operating results, as reported in July, our mines performed as expected in Q1. We mined 344,000 tons and milled 308,000 tons of ore during the quarter, representing year-over-year increases of 13% and 4%, respectively. Despite higher quarterly throughput, our production in silver, lead, and zinc decreased by 4%, 12%, and 6%, respectively, due to lower head grades in the current mine plan. Additionally, we stockpiled 59,000 tons of ore at Ying, which will be milled after the Mill No. 2 expansion is completed later this year. We remain confident in achieving our annual production guidance set in April, which, as a reminder, was between 6.8 to 7.2 million ounces of silver. On the unit cost front, we're also on track. Production costs average $80 per ton in Q1, 2% higher than last year's results, but in line with our annual cost guidance of between $77 to $80 per ton. The increase was mainly due to more mining preparation tunnels and grade control drilling completed and expense as part of the mining cost in the current quarter. Our cash cost per ounce of silver net of byproduct credits was negative $1.67 in the quarter, and that's a significant improvement from a negative $0.31 in the prior year quarter, and this change was driven by higher byproduct credits from higher metals prices. All-in sustaining costs, production costs, rose by 4% year-over-year to $140 per ton in Q1, but remain below our annual cost guidance of between $144 to $152 per ton. Our all-in sustaining cost per ounce of silver net of byproduct credits was $982, which is 4% higher than Q1 of last year due to the previously mentioned sustaining capital expenditures. Turning to the yielding growth projects, The mill number two capacity expansion remains on track and on budget to be completed by November of this year. As a reminder, this project will increase Ying's total production capacity to 4,000 tons per day. Construction on the third tailing storage facility is expected to be completed later this year. With $14 million spent to date, the total cost of construction is expected to be below the original estimate of $38 million. We plan to release an updated Ying technical report imminently. This 43-101 compliant report with an effective date of June 30 will incorporate drilling completed up to the end of 2023 to update reserves and resources, as well as provide an updated life of mine plan, including economics. Regarding the Kwan Ping project, the environmental assessment report was approved in July and the remaining mine safety report is pending approval by the province. We expect to commence development in fiscal 2025 and have allocated $1 million for mine construction in this year's budget. Last but not least, after the quarter ended, we successfully completed the acquisition of Adventus Mining on July 31st. This is a significant step in our strategy to create a globally diversified green metals producer. It provides an excellent opportunity to leverage our technical expertise and financial strength to unlock value for all stakeholders through the development of the El Domo project. Also, after the acquisition closed, Ecuador's Ministry of Energy and Mines issued the Resolution of Change of Phase for El Domo, a milestone that enables the construction and subsequent operation of the mine. Once in operation, El Domo will make a meaningful contribution to our production profile and financial results, while simultaneously adding country and commodity diversification. We are dedicated to working collaboratively with the government of Ecuador, local communities, and Salazar Resources, our in-country partners. Our commitment to modern responsible development will benefit both the local communities and the country as a whole. We intend to provide more indications of our plans for development of the El Domo project in the near future. With that, I'd like to open the call for questions.

Thank you, sir. Ladies and gentlemen, we will now conduct the question and answer session. If you'd like to ask a question, press start, then the number one on your telephone keypad. If you'd like to withdraw your question, press star 2. If you're using a speakerphone, please leave the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Joseph Rieger from Roth Capital Partners. Please go ahead.