Silvercorp shares advance on Q3 profit news

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Silvercorp Metals Inc. [SVM-TSX, NYSE], a company with operations in China, reported adjusted net income of US$11.5 million or $0.06 per share in the fiscal 2024 third quarter ended December 31, 2023.

During the quarter the company produced 1.342 ounces of gold and 1.7 million ounces of silver, or approximately 1.8 million ounces of silver equivalent, plus 16.8 million pounds of lead and 7.4 million pounds of zinc.

Silvercorp shares advanced on the news, rising 5.24% or 16 cents to $3.21. The shares currently trade in a 52-week range of $5.59 and $2.88.

Silvercorp is currently refining the mine plan and expects to provide fiscal 2025 guidance along with the release of fiscal 2024 production results in April 2024.

In the fourth quarter of fiscal 2024, the company expects to process 215,000 to 240,000 tonnes of ore, producing approximately 1,200 to 1,300 ounces of gold, 1.1 million to 1.3 million ounces of silver, 11.5 million to 13.5 million pounds of lead and 4.5 million to 5.0 million pounds of zinc.

That would represent production increases of 11-30% in ore, 20-30% in gold, zero-17% in silver, 5.0-20% in lead and 26-40% in zinc, compared to production results in the same quarter last year.

The company said cash flow from operations in the third quarter of fiscal 2024 was US$23.6 million, down from US$25.7 million in the same period last year. The company ended the quarter with US$198.3 million in cash, cash equivalents and short-term investments, an increase of 5.0% from year ago levels.

Silvercorp currently has an offer on the table to acquire all the shares of Australia’s Orecorp Ltd. [ORR-ASX] that it doesn’t already own. The offer values Orecorp at approximately A$276.5 million.

Orecorp is a Western Australia-based mining development company. Its shares are listed on the Australian Securities Exchange (ASX). OreCorp.’s key project is the Nyanzaga Gold Project in Tanzania. SilverCorp currently holds 73.8 million OreCorp shares, or 15.74% of the fully paid ordinary shares.

Silvercorp is offering to acquire all of the OreCorp shares it doesn’t already own for A$0.19 cash plus 0.0967 Silvercorp shares per OreCorp share (the same consideration offered under the scheme of arrangement that this offer is replacing).

The off-market takeover offer is subject only to a 50.1% minimum acceptance conditions (and other customary conditions).

Silvercorp has said the transaction aims to create a globally diversified precious metals producer, and will provide enhanced trading liquidity, re-rating potential and the opportunity to participate in further upside from the Nyanzaga Project and Silvercorp’s existing mining portfolio to shareholders of both companies.

The Nyanzaga project is an advanced development project located approximately 60 kilometres southwest of the city of Mwanza, 60 kilometres east of the Geita Gold mine (AngloGold Ashanti Ltd. [AU-NYSE]) and 30 kilometres northeast of Barrick Gold Corp.’s [ABX-TSX, GOLD-NYSE] Bulyanhulu gold mine.

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