Silvercorp Reports $48.3 Million Operating Cash Flow in Q1 Fiscal 2026

• Operating cash flow of $48.3 million, up 21% from $40.0 million in prior year quarter
• Adjusted net income of $21.0 million ($0.10 per share) excluding $4.8 million derivative charge
• Cash and short-term investments totalled $377.1 million at quarter end
• Produced 2.0 million silver equivalent ounces with all-in sustaining costs of $13.49 per ounce
• Construction progress continues at El Domo project with $175 million stream financing available

Silvercorp Metals Inc. (TSX/NYSE American: SVM) is a Canadian mining company that produces silver, gold, lead, and zinc. The company operates mines primarily in China with development projects in Ecuador. Its operations include the Ying Mining District and GC Mine in China, along with the El Domo and Condor projects in Ecuador.

The company's stated strategy focuses on four areas: generating free cash flow from existing mines, organic growth through exploration drilling, merger and acquisition activities, and adherence to responsible mining practices. Silvercorp has maintained profitability across multiple commodity cycles since its establishment.

Financial Outcomes with Adjusted Profit Metrics

Net income attributable to equity shareholders was $18.1 million ($0.08 per share) compared to $21.9 million ($0.12 per share) in Q1 Fiscal 2025. The decrease was primarily due to a $4.8 million non-cash charge on derivative liabilities related to convertible notes issued in November 2024. Lower per-share earnings also reflected dilution from 38.8 million additional shares issued following the Adventus Mining Corporation acquisition in July 2024.

Adjusted net income, which excludes the derivative charge and other non-cash items, was $21.0 million ($0.10 per share) compared to $20.6 million ($0.12 per share) in the prior year. The adjusted figure removes the impact of derivative accounting to show operational performance. EBITDA attributable to equity shareholders was $33.8 million ($0.15 per share).

Revenue increased 13% to $81.3 million from $72.2 million in the prior year quarter. The increase came from higher production volumes contributing $5.4 million and improved metal prices adding $5.7 million to revenue. Silver prices rose 12% and gold prices increased 45% year-over-year. Income from mine operations decreased 2% to $35.8 million due to higher production costs from increased ore processing.

Cash Generation and Free Cash Flow

Cash flow from operating activities was $48.3 million compared to $40.0 million in Q1 Fiscal 2025, an increase of $8.3 million. This represented the primary cash generation metric for the quarter. The company converted operational activities into cash flow despite increased costs from higher ore processing volumes and new royalty payments.

Free cash flow was $22.5 million compared to $23.6 million in the prior year. The slight decrease reflected $7.6 million in expenditures for El Domo project construction and Condor project exploration in Ecuador. The company invested $18.8 million in exploration, development, and equipment for China operations and $5.4 million for Ecuador operations during the quarter.

Cash and cash equivalents plus short-term investments totalled $377.1 million at quarter end, up $8.1 million from the previous quarter. The company also holds equity investments with a market value of $72.2 million. A $175 million stream financing commitment from Wheaton Precious Metals International remains available for El Domo project construction. The company paid $2.7 million in cash dividends during the quarter.

Production Volumes and Cost Dynamics

Production for the quarter included approximately 1.8 million ounces of silver (up 6%), 2,050 ounces of gold (up 79%), 15.7 million pounds of lead (up 1%), and 5.2 million pounds of zinc (down 19%) compared to the prior year quarter. Total silver equivalent production was 2.0 million ounces, representing a 12% increase. The Ying Mining District accounted for the majority of production.

Consolidated cash cost per ounce of silver, net of by-product credits, was $1.11 compared to negative $1.67 in Q1 Fiscal 2025. The change reflected a 16% increase in ore processing while silver production rose only 6%, resulting in higher unit costs. By-product credits increased $0.9 million due to higher revenue from other metals. Production costs rose $5.9 million due to increased ore processing volumes.

All-in sustaining costs per ounce of silver were $13.49 compared to $9.82 in the prior year, an increase of 37%. Contributing factors included $1.0 million in additional general administrative expenses from the Adventus acquisition, $1.5 million in new mineral rights royalties implemented in China, and the higher cash costs noted above. The company processed 16% more ore tonnes during the quarter.

Looking Ahead

The company faces production constraints at the Ying Mining District following a contractor safety incident that resulted in mine area closures. Management estimates a potential 20-25% production shortfall for the current quarter while government safety investigations continue. The company is awaiting final investigation results and any required safety facility improvements.

Construction continues at the El Domo project in Ecuador alongside exploration at the Condor project. The Kuanping mine construction commenced in Q1 Fiscal 2026. Total capital expenditures were $24.2 million, up 23% from $19.7 million in the prior year quarter, reflecting ongoing development activities across the company's project portfolio.

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