Silvercorp - Second Quarter Fiscal 2026 Financial Results

• Adjusted net income of $22.6 million ($0.10 per share) after excluding $53.2 million non-cash charge on convertible notes and other adjustments
• Operating cash flow of $39.2 million, up $16.1 million from $23.1 million in the prior year quarter
• Revenue of $83.3 million, a 23% increase from $68.0 million in Q2 Fiscal 2025
• Production of 1.84 million ounces of silver equivalent, including 1.66 million ounces of silver and 2,085 ounces of gold
• Cash and short-term investments of $382.3 million and equity investments valued at $180.2 million at quarter end

Silvercorp Metals Inc. (TSX/NYSE American: SVM) is a Canadian mining company that produces silver, gold, lead and zinc. The company operates the Ying Mining District and GC Mine in China's Henan Province, and is developing the El Domo project in Ecuador whilst advancing the Condor project. Silvercorp's strategy focuses on generating free cash flow from long-life mines, pursuing organic growth through exploration, evaluating merger and acquisition opportunities, and maintaining responsible mining practices.

Q2 Fiscal 2026 Financial Results

Silvercorp reported revenue of $83.3 million in Q2 Fiscal 2026, up 23% from $68.0 million in the prior year quarter. The increase was attributed to higher metal prices, with silver prices up 28% and gold prices up 37%, contributing $13.1 million in additional revenue. Higher production volumes, particularly a 64% increase in gold production, added $2.9 million to revenue.

The company recorded adjusted net income of $22.6 million, or $0.10 per share, after excluding a $53.2 million non-cash mark-to-market charge on convertible notes, a $21.6 million gain on investments, and $2.5 million in other non-cash or one-time items. The reported net loss was $11.5 million, or $0.05 per share, compared to net income of $17.7 million in Q2 Fiscal 2025. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) was $38.3 million, or $0.18 per share.

Income from mine operations increased 29% to $40.9 million from $31.7 million in the prior year quarter. Production costs rose $3.9 million due to 15% more ore processed, and mineral rights royalties increased by $1.4 million following implementation by Chinese authorities in Q3 Fiscal 2025. Cash flow from operating activities was $39.2 million, up $16.1 million from $23.1 million in Q2 Fiscal 2025. Free cash flow was $11.4 million after capital expenditures.

Production Performance and Operating Costs

The company produced approximately 1.84 million ounces of silver equivalent in Q2 Fiscal 2026, comprising 1.66 million ounces of silver, 2,085 ounces of gold, 14.23 million pounds of lead and 5.64 million pounds of zinc. This represented increases of 0.2% in silver, 76% in gold, 5% in silver equivalent, and 8% in lead, with a 3% decrease in zinc production compared to Q2 Fiscal 2025.

At the Ying Mining District, production was 1.53 million ounces of silver, 2,085 ounces of gold (1.71 million ounces silver equivalent), 12.93 million pounds of lead, and 1.42 million pounds of zinc. Production was affected by temporary closure of certain mining areas, which have since reopened. Cash cost per tonne of ore at Ying decreased to $82.89 from $92.86 in the prior year quarter, attributed to a higher percentage of ore mined using mechanised shrinkage mining methods compared to more labour-intensive re-suing methods. Ore production at Ying is expected to be approximately 346,000 tonnes in Q3 Fiscal 2026, up 30% from Q2.

The GC Mine produced 0.13 million ounces of silver, 1.31 million pounds of lead, and 4.22 million pounds of zinc, representing decreases of 7%, 6%, and 5% respectively. Production was interrupted for approximately 10 days due to severe rain and typhoon conditions. Production costs per tonne at GC increased from $50.08 to $58.20 due to lower ore production. All-in sustaining cost per ounce of silver, net of by-product credits, was $13.94 company-wide, up from $11.66 in Q2 Fiscal 2025, reflecting higher sustaining capital expenditures and mineral rights royalties.

Capital Expenditures and Development Activities

Total capital expenditures in Q2 Fiscal 2026 were $26.7 million, down 5% from $28.1 million in Q2 Fiscal 2025. At the Ying Mining District, capitalised expenditures for underground tunnels and drilling totalled $12.4 million, plus $0.8 million for plant and equipment, compared to $13.6 million for underground development and $9.5 million for plant and equipment in the prior year quarter when Mill No. 2 expansion and TSF No. 3 construction were underway. The Kuanping project received $1.2 million in capital expenditures for underground development.

At the El Domo mine in Ecuador, approximately 1.29 million cubic metres of material were moved for site preparation, roads and channel construction, a 249% increase from the previous quarter. Since January 2025, approximately 1.66 million cubic metres of material have been moved and $18.9 million spent on capital expenditures and equipment prepayments. A 481-bed construction camp was completed, and construction of the tailing storage facility began in September 2025.

Construction contracts for the external power line have been awarded to Ecuadorian contractors, subject to review by Corporation Nacional de Electricidad. Equipment orders totalling approximately $22.2 million have been placed. After quarter end, the company drew down $43.875 million from its $175.5 million stream financing agreement with Wheaton Precious Metals International for El Domo construction. For the Condor project, a preliminary economic assessment study was initiated in Q2 Fiscal 2026, expected to be completed in Q3 Fiscal 2026.

Outlook

The company ended the quarter with cash, cash equivalents and short-term investments of $382.3 million, an increase of $5.1 million from the previous quarter, and equity investments with a market value of $180.2 million. Ore production at the Ying Mining District is expected to be approximately 346,000 tonnes in Q3 Fiscal 2026, up 30% from Q2, whilst GC Mine ore production is expected to reach approximately 83,000 tonnes, up 9% from Q2. The preliminary economic assessment for the Condor project is scheduled for completion in Q3 Fiscal 2026.

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