Silvercorp Reports Q2 Fiscal 2017 Results: Net Income Up 454%, Cash Flows From Operations Of $27.0 Million On Record Silver Production

Press Release

VANCOUVER, British Columbia – November 3, 2016 – Silvercorp Metals Inc. (“Silvercorp” or the “Company”) (TSX: SVM) reported its financial and operating results for the second quarter ended September 30, 2016 (“Q2 Fiscal 2017”). All amounts are expressed in US Dollars.

SECOND QUARTER HIGHLIGHTS

Net income attributable to equity shareholders of $12.4 million, or $0.07 per share, up 454% compared with net earnings attributable to equity shareholders of $2.2 million or $0.01 per share in the prior year period;

Silver, lead and zinc sales up 44%, 51%, and 27%, respectively, from the prior year period, to approximately 1.8 million ounces silver, 19.9 million pounds lead, and 5.9 million pounds zinc;

Sales of $46.3 million, up 70% from the prior year period;

A 16%, 21%, and 22% increase in the head grades of silver, lead, and zinc; Gross margin improved to 58% from 32% in the prior year period;

Cash flows from operations of $27.0 million, an increase of $22.4 million compared to $4.6 million in the prior year period;

Cash production cost per tonne¹ of $55.84 compared with $70.49 in the prior year period;

Cash cost per ounce of silver¹, net of by‐product credits, of negative $3.05, compared to $1.52 in the prior year period;

All‐in sustaining cost per ounce of silver¹, net of by‐product credits, of $3.16, compared to $12.40 in the prior year quarter; and Ended the period with $92.1 million in cash and short term investments, an increase of $30.1 million compared to $62.0 million as at March 31, 2016.

FINANCIALS

Net income attributable to the shareholders of the Company in Q2 Fiscal 2017 was $12.4 million, or $0.07 per share, up 454% compared to $2.2 million, or $0.01 per share in Q2 Fiscal 2016.

In the current quarter, the Company’s financial results were mainly impacted by the following: i) improved head grades yielded higher silver, lead, zinc sales, up 44%, 51% and 27%, respectively; ii) a 14% decrease in total production costs per tonne of ore processed; and iii) the increase of metals prices, as the realized selling price for silver, lead, and zinc increased by 27%, 3% and 22%, respectively, compared to the same prior year quarter.

¹ Non‐IFRS measure, see section 9 of the corresponding management’s discussion and analysis for reconciliation

Sales in Q2 Fiscal 2017 were $46.3 million, up 70% compared to $27.2 million in Q2 Fiscal 2016. Silver and gold sales represented $27.0 million and $1.1 million, respectively, while base metals represented $18.2 million of total sales in this quarter compared to silver, gold and base metals of $14.7 million, $0.5 million, and $12.0 million, respectively, in Q2 Fiscal 2016.

Cost of sales in Q2 Fiscal 2017 was $19.5 million compared to $18.4 million in Q2 Fiscal 2016. The cost of sales included $13.8 million (Q2 Fiscal 2016 ‐ $14.4 million) cash costs and $5.7 million (Q2 Fiscal 2016 ‐ $4.0 million) depreciation, amortization and depletion charges. The decrease of cash cost of sales was mainly due to a 21% decrease in cash production costs per tonne of ore processed offset by an increase of metals sold. The total per tonne ore production cost was $79.61 in Q2 Fiscal 2017, a decrease of 14%, from $92.19 in Q2 Fiscal 2016.

Gross profit margin in Q2 Fiscal 2017 was 58% compared to 32% in Q2 Fiscal 2016. The improvement of gross profit margin was mainly due to: i) the improvement of head grades; ii) the decrease of per tonne ore production costs; and iii) the increase of metal prices. Ying Mining District’s gross profit margin was 61% compared to a 35% gross profit margin in the same prior year quarter, while GC Mine’s profit margin was 38% compared to a 18% gross profit margin in Q2 Fiscal 2016.

Cash flows provided by operating activities were $27.0 million or $0.16 per share in Q2 Fiscal 2017 compared to $4.6 million or $0.03 per share in Q2 Fiscal 2016. Before changes in non‐cash operating working capital, cash flows provided by operating activities were $24.9 million, an increase of $15.7 million, compared to $9.2 million in Q2 Fiscal 2016 as a result of the improvement of operating earnings.

For the six months ended September 30, 2016, net income attributable to the shareholders of the Company was $17.1 million, or $0.10 per share, up 276% compared to $4.5 million, or $0.03 per share in the same period prior year; sales were $81.6 million, up 37% from $59.4 million in the same prior year period; and cash flows provided by operating activities were $47.2 million or $0.28 per share compared to $18.0 million or $0.11 per share in the same prior year period. Before changes in non‐cash operating working capital, cash flows provided by operating activities for the six months ended September 30, 2016 were $40.5 million, an increase of $22.0 million or 119%, compared to $18.5 million in the same prior year period.

The Company ended the period with $92.1 million in cash and short term investments, an increase of $30.1 million or 48.5% compared to $62.0 million as at March 31, 2016.

OPERATIONS AND DEVELOPMENT

In Q2 Fiscal 2017, the Company sold approximately 1.8 million ounces of silver, 19.9 million pounds of lead, and 5.9 million pounds of zinc, up 44%, 51% and 27%, respectively, compared to 1.3 million ounces of silver, 13.2 million pounds of lead, and 4.6 million pounds of zinc in Q2 Fiscal 2016. The increase of metals sold on a consolidated basis, was mainly due to: i) a 16%, 21%, and 22% increase in the head grades of silver, lead and zinc，resulting largely from the ongoing dilution control measures and operation management improvements; ii) a 4% increase of ore milled; and iii) an increase in silver‐lead concentrate inventories of 1,798 tonnes to 2,228 tonnes in Q2 Fiscal 2016 at the Ying Mining District. As at the end of Q2 Fiscal 2017, Ying Mining District held 3,880 tonnes of silver‐lead concentrate inventories, and the estimated metals contained in silver‐lead concentrate were approximately 0.4 million ounces of silver and 4.5 million pounds of lead.

For the six months ended September 30, 2016, on a consolidated basis, the Company sold approximately 3.5 million ounces of silver, 36.7 million pounds of lead, and 11.1 million pounds of zinc, up 31%, 33% and 23% compared to the same prior year period.

Read More: http://www.silvercorpmetals.com/_resources/news/nr_2016_11_03.pdf

NT2