SVM:TSX/NYSE AMERICAN

Transcription

1 SVM:TSX/NYSE AMERICAN Corporate Presentation June 21, 2018

2 FORWARD LOOKING STATEMENTS Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995 Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of Such forward-looking statements, including but not limited, to those with respect to the price of silver, lead and zinc, the possibility, timing and amount of estimated future production, costs of production, and reserve determination and reserve conversion rates, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of Silvercorp Metals Inc. ( Silvercorp or the Company ) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks related to international operations, risks related to Chinese government issuance of mining and related development permits, risks related to joint venture operations, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, commodity price fluctuations especially in prices of silver, lead and zinc, as well as other factors. Readers should review the Company s most recent Form 40-F for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. Although Silvercorp has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such forward looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. No securities regulatory authority has in any way passed on the merits of this presentation nor any securities referred herein. Cautionary Note to U.S. Investors concerning estimates of Measured, Indicated and Inferred Resources This presentation uses the terms Measured, Indicated and Inferred Resources. U.S. investors are advised that while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. Inferred Resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves. U.S. investors are also cautioned not to assume that all or any part of an Inferred Resource exists, or is economically or legally mineable. SVM:TSX/NYSE AMERICAN 2

3 CHINA S PREMIER SILVER PRODUCER Historical Production (April 2006 March 2018) Silver: 57 Million Ounces Lead+Zinc: 834 Million lbs Profit Distribution*: US$380 million 15+ year mine life remaining Ying Mining District, Henan Province BYP Mine, Hunan Province (On Care and Maintenance) GC Mine, Guangdong Province * Profit distribution from Ying Mining District SVM:TSX/NYSE AMERICAN 3

4 57 MILLION OUNCES OF SILVER PRODUCED IN 12 YEARS (5.1) (5.7) * Silvercorp s fiscal year end is March 31 Red numbers in brackets are fiscal year s guidance SVM:TSX/NYSE AMERICAN 4

5 834 MILLION POUNDS OF LEAD AND ZINC PRODUCED IN 12 YEARS (76.3) (81.4) * Silvercorp s fiscal year end is March 31 Red numbers in brackets are fiscal year s guidance SVM:TSX/NYSE AMERICAN 5

6 IMPROVED AND STEADY HEAD GRADES AT YING MINING DISTRICT Dilution Control Improvement SVM:TSX/NYSE AMERICAN 6

7 Per Tonne Value Silver Price (us$ per ounce) FINANCIAL PERFORMANCE (VALUE & PROFIT OF PER TONNE ORE MINED) Cash + short-term investments: US$106.1M (as at Mar. 31, 2018) Dividend of US$0.02/share in fiscal 2018 No Receivables No Debt Invested US$23M in New Pacific Metals US$6.8M on share buyback since 2015 Paid US$3.4M dividend in fiscal 2018 * Realized silver price is calculated using Shanghai Metal Exchange price, less smelter charges, recovery, and 17% of value added tax. * Value added tax was reduced from 17% to 16% effective as of May 1, SVM:TSX/NYSE AMERICAN 7

8 REVENUE PERCENTAGE BY METALS GC Mine contributed to increased revenue for Lead and Zinc since Q Lead and Zinc price increases boosted Lead and Zinc revenue percentage SVM:TSX/NYSE AMERICAN 8

9 QUARTERLY FREE CASH FLOW SVM:TSX/NYSE AMERICAN 9

10 QUARTERLY ADJUSTED NET INCOME (LOSS) SVM:TSX/NYSE AMERICAN 10

11 STEADY & REDUCED SHARES OUTSTANDING * Source: BMO Capital Markets SVM:TSX/NYSE AMERICAN 11

12 COMPARISON WITH PEERS: FREE CASH FLOW PER SHARE AND MULTIPLES SVM:TSX/NYSE AMERICAN 12

13 COMPARISON WITH PEERS: ALL- IN SUSTAINING COST * All-in sustaining cost per ounce of silver, net of by-product credits. SVM:TSX/NYSE AMERICAN 13

14 COMPARISON WITH PEERS: RETURN ON EQUITY SVM:TSX/NYSE AMERICAN 14

15 GROWTH: GROW SHARES OUTSTANDING OR FREE CASH FLOW? M Silvercorp bought back 5,754,552 common shares of the Company since 2015 Free cash flow=operating cash flow less capital expenditures less capital lease payment SVM:TSX/NYSE AMERICAN 15

16 GROWING RESERVES & RESOURCES - SILVER 1 Measured & Indicated Resources inclusive of Reserves. See Appendix III, IV and V for breakout of Measured, Indicated and Inferred, Proven and Probable categories. 2 Excludes Lead and Zinc. Gold was converted to Silver equivalent at a rate of 65:1. SVM:TSX/NYSE AMERICAN 16

17 GROWING RESERVES & RESOURCES - LEAD & ZINC 1 Measured & Indicated Resources inclusive of Reserves. See Appendix III, IV and V for breakout of Measured, Indicated and Inferred, Proven and Probable categories. SVM:TSX/NYSE AMERICAN 17

18 ADOPT NEW INFORMATION TOOL ENTERPRISE BLOG IN OPERATION REDUCES DILUTION, IMPROVES SAFETY AND PRODUCTION EFFICIENCY Improvement in the head grades of metals can be attributed in part to an internal Enterprise Blog (EB) system in the management of Mine Production and Safety Information. EB is an intranet social media system that makes the collection, distribution and flow of the work related knowledge and information easy, transparent and in real time for parties at different locations. This supporting photo posted by an onsite technician clearly shows the CO reading for the stope is less thatn24 ppm as required by the government. This supporting photo posted by frontline technician shows an inspected stope with clearly marked ore boundaries and drill hole locations. SVM:TSX/NYSE AMERICAN 18

19 YING MINING DISTRICT IN HENAN: SILVERCORP S FLAGSHIP ASSET SGX, TLP, LME, LMW, HPG and HZG underground mines working over 200 veins within 68.74km²mining permits SGX HPG Two centralized mills of 3,200 t/d capacity to produce silver-lead and zinc concentrates 6 smelters within 200km HZG LMW TLP LME Produced 54.8 million oz silver plus 758 million lbs of lead & zinc since 2006 Over 1.5 million metres of drilling yields 15+ years remaining mine life after 12 years production Opportunity for further acquisitions in local area * The Ying Mining District mines are held by Henan Found Mining Co. Ltd., owned 77.5% by Silvercorp SVM:TSX/NYSE AMERICAN 19

20 GC MINE IN GUANGDONG: THE SECOND MINE Our Newest Mine Commercial production commenced in 2014 Underground silver/zinc mine Excellent infrastructure and access Profitable operations Main Access Ramp SVM:TSX/NYSE AMERICAN 20

21 BYP GOLD MINE : PREPARING FOR PRODUCTION Status: Suspended mining operations in August 2014 Capital requirements for upgrades to sustain ongoing production are being considered Continuing to review alternatives for this project To bring the project back to production may cost US$10 million 500 tpd Mill at the BYP Mine SVM:TSX/NYSE AMERICAN 21

22 STEADY PRODUCTION AND COST CONTROL TO SUPPORT QUALITY GROWTH Current Production: Growth: Maintain steady production, with stable or reduced cost Grow existing assets organically through drilling Bring BYP back to production Acquired ~29.8% equity interest in New Pacific Metals Corp. (TSX-V:NUAG; OTCQX:NUPMF) Acquire high grade exploration projects with defined resources that can quickly be brought into profitable operation with reasonable capital expenditures SVM:TSX/NYSE AMERICAN 22

23 COMPARISON WITH PEERS: REVENUE BY METALS * Source: BMO Capital Markets * Silvercorp forecasts by BMO are FY2019 and estimates effective as of May 30, 2018 SVM:TSX/NYSE AMERICAN 23

24 COMPARISON WITH PEERS: BALANCE SHEET * Stock prices were quoted as of March 31, 2018 * Balance sheet as of March 31, 2018 SVM:TSX/NYSE AMERICAN 24

25 COMPARISON WITH PEERS: KEY VALUATION RATIOS * Stock prices were quoted as of March 31, 2018 SVM:TSX/NYSE AMERICAN 25

26 COMPARISON WITH PEERS: KEY VALUATION RATIOS * Stock prices were quoted as of March 31, 2018 SVM:TSX/NYSE AMERICAN 26

27 METAL PRICES Silver Price US$ Per Ounce Lead Price US$ Per Pound Zinc Price US$ Per Pound * Current price & Silvercorp Net Realized Selling Price as of May 22, * Realized selling prices are calculated using Shanghai Metal Exchange price, less smelter charges, recovery, and 16% of value added tax. SVM:TSX/NYSE AMERICAN 27

28 FY2019 PRODUCTION GUIDANCE Ying Mining District GC Mine Consolidated Production and F2019 F2018 F2018 F2019 F2018 F2018 F2019 F2018 F2018 cash costs Guidance Guidance Actual Guidance Guidance Actual Guidance Guidance Actual Ore (000' tonne) Head Grades Silver (gram/tonne) Lead (%) Zinc (%) Metal Production* Silver (million ounces) Lead (million pounds) Zinc (million pounds) Costs ($/tonne of ore) Cash production costs AISC production costs * Estimated as per metal balance sheet Fiscal year end is March 31 SVM:TSX/NYSE AMERICAN 28

29 FY2019 CAPITAL EXPENDITURE GUIDANCE Ying Mining District GC Mine Consolidated Mine Development and Facilities Work (meters) Amount (US$ million) Work (meters) Amount (US$ million) Work (meters) Amount (US$ million) Mine Development and Capitalized Amount Tunneling* 66, , , Ramp development (4.2x3.8 meter in dimension) 4, , , Facilities and equipment Total Capital Expenditures 70, , , Expensed Tunneling and Drilling Tunneling* 17, , , Drilling 75, , , * For FY2019, total tunneling at Ying Mining District is budgeted at 83,000 meters, of which 66,000 meters will be capitalized and 17,000 meters will be expensed. * For FY2019, total tunneling at GC is budgeted at 16,000 meters, of which 1,000 meters will be capitalized and 15,000 meters will be expensed. SVM:TSX/NYSE AMERICAN 29

30 HEAD OFFICE Suite # Granville St., Vancouver, BC, Canada V6C 1S4 Tel: Fax: Toll-Free: SVM:TSX/NYSE AMERICAN Silvercorp s disclosure documents are available from the System for Electronic Document Analysis and Retrieval (SEDAR) at SVM:TSX/NYSE AMERICAN 30

31 APPENDICES SVM:TSX/NYSE AMERICAN 31

32 APPENDIX I: OWNERSHIP AND COVERAGE Top 10 Institutional Investors % O/S 1 Van Eck Associates Corporation 7.93 Ryan Thompson Analyst Coverage BMO Capital Markets 2 Old Mutual Global Investors (UK), LTD 3.11 Joe Reagor Roth Capital 3 Global X Management Company, 1.41 Bhakti Pavani Euro Pacific 4 DZ Privatbank S.A Stabilitas GmbH Goldman Sachs Asset Management International Marshall Wace North America, L.P Morgan Stanley Canada, LTD Sprott Asset Management, L.P AMG Fondsverwaltung AG 0.83 Under Review Retail Investors 65% Raymond James Ownership Institutions 31% Insiders 4% Source: BD Corporate May 2018 Data SVM:TSX/NYSE AMERICAN 32

33 APPENDIX II MANAGEMENT & BOARD Management Rui Feng, Ph.D., Geology Chairman and CEO, Director Derek Liu, MBA, CGA, CPA Chief Financial Officer Board of Directors Rui Feng Marina Katusa Yikang Liu Paul Simpson David Kong Luke Liu, M. Eng. PhD (Mining Eng.) Vice President China Operations Lorne Waldman, MBA, LL.B. Senior Vice President SVM:TSX/NYSE AMERICAN 33

34 APPENDIX III: SUMMARY OF RESERVES 1 Project Reserve Category Tonnes (Million) Silver (g/t) Average Grades Lead (%) Gold (g/t) Zinc (%) Silver (Moz) Contained Metal Reserves Silver² Eq. Lead (t) Zinc (t) (Moz) Ying Mining District GC Mine Proven ,950 72,240 Probable ,010 83,450 Proven ,200 14,800 Probable , ,500 Proven ,150 87,040 Consolidated Probable , ,950 Total , , Table includes HPG mine proven reserves of 16,430 oz Gold (470,000 tonnes grading 1.10 g/t Gold) and HPG mine probable reserves of 10,840 oz Gold (290,000 tonnes grading 1.15 g/t Gold) 2. Gold was converted to Silver equivalent at a rate of 65:1. SVM:TSX/NYSE AMERICAN 34

35 APPENDIX IV: SUMMARY OF RESOURCES 1 Project Resource Category Tonnes (Million) Silver (g/t) Average Grades Gold (g/t) Lead (%) Zinc (%) Contained Metal Resources (Inclusive of Reserves) Silver (Moz) Silver Eq.² (Moz) Lead (t) Zinc (t) Ying Mining District Measured ,600 96,690 Indicated , ,660 Inferred , ,220 Measured ,400 19,800 GC Mine Indicated , ,500 Inferred , ,900 BYP Mine Indicated , ,700 Inferred , ,600 Measured , ,490 Consolidated Indicated , ,860 Inferred , , Table includes HPG mine measured resources of 24,000 oz Gold (690,000 tonnes grading 1.10 g/t Gold), indicated resources of 22,000 oz Gold (630,000 tonnes grading 1.10 g/t Gold), inferred resources of 39,000 oz Gold (1,010,000 tonnes grading 1.21 g/t Gold). Table also includes BYP mine resources. 2. Gold was converted to Silver equivalent at a rate of 65:1. SVM:TSX/NYSE AMERICAN 35

36 APPENDIX V: BYP MINE RESOURCE Mineral Resources for Gold Zones: CLASS Cut-off Grades (g/t) Resource Tonnes (Million) Grades Gold (g/t) Contained Metal Resources Gold (oz) Indicated ,000 Inferred ,000 Mineral Resources for Lead and Zinc Zones: CLASS Cut-off Grades (%) Resource Tonnes (Million) Grades Lead (%) Zinc (%) Contained Metal Resources Lead (Tonnes) Zinc (Tonnes) Indicated Inferred 2.0 Lead+Zinc 2.0 Lead+Zinc , , , ,600 Notes to Resource Tables: 1. Resources as of December 31, Technical report filed on August 16, 2012 at SVM:TSX/NYSE AMERICAN 36

37 ENDNOTES AND CAUTIONARY STATEMENTS Guoliang Ma, P. Geo., is the Qualified Person within the meaning of National Instrument Standards Of Disclosure for Mineral Projects ( NI ) who supervised the preparation of the scientific and technical information of Silvercorp included in this presentation. For more information on Silvercorp s projects, readers should refer to Silvercorp s Annual Information Form, dated June 16, 2017, and its technical reports, each of which is available on SEDAR at The scientific and technical information related to Silvercorp s projects included in this investor presentation are derived from the technical reports entitled: - NI Technical Report for Ying Gold-Silver-Lead-Zinc Property, Henan Province, China, effective date 31 December, 2016 by P R Stephenson, P. Geo., H A Smith, P.Eng., A Ross, P. Geo, H Muller, Beng, MAusIMM, CP - Technical Report for BYP Gold-Lead-Zinc Property, Hunan Province, China, effective date 30 June, 2012, prepared by P R Stephenson, P. Geo., H A Smith, P.Eng., A Riles, MAIG, M Molavi, P.Eng, D. Nussipakynova, P.Geo., A. Ross, P.Geo. - NI Technical Report on the GC Ag-Zn-Pb Project in Guangdong Province, People s Republic of China, effective date 23 January, 2012, prepared by Brian O Connor, P. Geo, Peter Mokos, MAusIMM (CP), Alan Riles, MAIG, Owen Watson, MAusIMM (CP), Mo Molavi, P. Eng, Patrick Stephenson, P. Geo, AMC Mining Consultants (Canada) Ltd. SVM:TSX/NYSE AMERICAN 37