‘We’re focused on making money at all points in the commodity cycle’ – Silvercorp Metals


Operating in China has distinct advantages for Silvercorp Metals, said Vice President Lon Shaver.

Last week Shaver spoke to Kitco at the Gold Forum Americas show in Colorado Springs.

Silvercorp Metals (NYSE:SVM) runs mines in China. Working in the country has benefits, such as stable mining regulations; workers who are capable and disciplined; and close proximity to customers, suppliers and smelters.

“We’re really close to our customers, and that’s really the customers for all mining companies. We’re able to deliver our lead and zinc concentrates to the smelters within the country on a very efficient price basis,” said Shaver.

The average mine life of existing Silvercorp operations is 15 years. Historical production is 84 million ounces of silver and 1.2 billion pounds of lead and zinc. Profit distribution is over $520 million.

Management is focused on generating free cash flow. As of September, the company has a $216 million cash position. Silvercorp Metals has no debt, and there hasn’t been any equity or debt financing since 2010.

“We’re focused on making money at all points in the commodity cycle, not just when silver prices
are high, so if you look back at our financial results you know we’ve been able to make money and put cash on the balance sheet through operations.”

With its financial position, the company has optionality. The company has drilled 629,000 meters of exploration at its operations during 2020-2021 alone, leading to production increases of 17% in silver, 9% in lead and 24% in zinc forecast for 2023 compared to the year prior.

The company has also invested in world-class opportunities. Since 2017 Silvercorp has invested $39 million in New Pacific Metals giving Silvercorp a 28.2% interest. Silvercorp’s stake in New Pacific has grown 3.4 times in value.

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0:35 – Lon, can you give an overview of Silvercorp?
1:05 – China is not a familiar mining jurisdiction. What’s the advantages?
1:45 – Can you talk about the focus on free cash flow?
4:20 – What’s the share structure?
4:42 – Talk about the management team.
5:15 – You are near the center of solar manufacturing for the world. How impactful will that be to silver?
6:42 – The company also has some investments that have grown?__________________________________________________________________
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