Silvercorp Metals Inc (TSX:SVM, AMEX:SVM) released its 3Q results earlier that were in line with Canaccord Genuity (TSX:CF, LSE:CF)'s estimates, which the broker lauded in a new note.
For the three months ended December 31, 2021, the company mined 292,072 tonnes of ore and milled 304,772 tonnes, up 5% and 17% compared to the prior-year quarter.
The company sold approximately 1.7 million ounces of silver, 1,100 ounces of gold, 17.2 million pounds of lead, and 7.6 million pounds of zinc, representing increases of 4%, 38%, and 2% in silver, gold and lead sold, and a decrease of 15% in zinc sold, compared to the same quarter a year earlier, it said.
READ: Silvercorp Metals guides for strong 2023 production as it reports 3Q 2022 results
That resulted in revenue of $59.1 million, up 11% from the $53.3 million reported in the December 2020 quarter. Net income totalled $5.1 million, or $0.03 per share, compared to $8.4 million, or $0.05 per share in the prior-year quarter due to a mark-to-market charge of $8.5 million against equity and bond investments in the current quarter.
Revenue, earnings per share and the quarter-end fiscal position of the company were all largely in line with Canaccord’s estimates, according to the analysts.
“We continue to like (Silvercorp) for its 'pure-play' silver exposure as well as its strong margins, healthy balance sheet and emerging organic growth profile,” Canaccord analysts wrote.
The group noted that Silvercorp continues to trade at a slight premium to the junior precious metals producer peer group, given its silver leverage. The company currently trades at 5.4x 2022 EBITDA and 0.80x NAV, while its junior producer peer group averages of 5.2x and 0.72x, respectively.
Canaccord is also looking forward to a planned expansion of the Ying operation, which the group said is “on deck".
A new 3,000 tonnes per day (tpd) mill with a gravity gold circuit will be built by the end of 2023, following which Mill 1 (800tpd) will be decommissioned. Total available capacity post the expansion will be 5,000tpd, up from 2,800tpd currently, according to Canaccord. In addition, the tailings capacity will be expanded as well, in two phases, with Phase 1 is expected to be operational in 2024.
Canaccord is maintaining its 'Buy' rating and C$6 target price on Silvercorp stock, which is currently trading around $4.38 in Toronto.
Contact Angela at angela@proactiveinvestors.com
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