Silvercorp Reports Record Silver Production
On May 17 2012, the Vancouver-based mining company Silvercorp Metals Inc. reported its financial and operating results for the fourth quarter and fiscal year ending March 31, 2012. The company reported record silver production amounting to 5.6 million ounces. The company, however, also reported lower quarterly profit on account of higher production and administrative costs as well as legal fees.
The company, which mines silver in China, reported record results for fiscal year 2012. In addition to the record silver output, the company also indicated it had record revenue of $238.0 million, or a 42 percent increase, relative to $167.3 million a year earlier.
Silvercorp managed to achieve a record in silver production, and a 6 percent increase from the 5.3 million ounces of silver produced the previous year. The record production was 5.6 million ounces of silver, or 6.06 million ounces of silver equivalent, including 8.800 ounces of gold. In addition, the company reports that it is its sixth consecutive year of production growth. For fiscal year 2013, the company expects to increase its production to 659,000 tonnes of ore, yielding 5.9 million ounces of silver.
The record production results of Silvercorp to a certain extent correspond to a general trend of growing silver mine production. As noted in the April 2012 edition of the quarterly newsletter of the Silver Institute, “Silver News”, in 2011, silver mine production rose by 1.4 percent to 761.6 million ounces. According to “Silver News”, the increase is mostly on account of gains from by-product gold and lead/zinc mining. In 2011, the world’s largest silver-producing country was Mexico, followed by Peru, China, Australia and Chile.!m(/uploads/story/18/thumbs/silver_ore2_inline.png)
Despite the record silver production, on 17 May, Reuters reported that Silvercorp’s quarterly profit was lower relative to the corresponding quarter a year earlier. According to Reuters, the company’s net income attributable to shareholders was $9.7 million or 6 cents a share in the quarter ending March 31, 2012, whereas the profit observed in the year-earlier period was $12 million, or 7 cents a share.
Silvercorp notes in its report that there were several reasons for the reported lower quarterly net income result, with one of them being the higher production costs. The company also notes that it had three projects under development compared to only one the previous year, which led to higher general and administrative costs. Silvercorp, however, points out that the main reason for the lower net income are forensic audit and legal fees incurred to fight a short sellers’ attack, with the fees in question amounting to $1.5 million.
In September 2011, Bloomberg reported that an anonymous report posted on a website claimed that Silvercorp may have overstated its net income. There was also a subsequent allegation that the company also overstated the quality of ore from its silver mines in China. Silvercorp denied both allegations and sued the respective websites and their operators for allegedly spreading false information in an effort to drive down the company’s stock price, as reported by Bloomberg at the time.
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