Silvercorp Metals Inc.
TSX : SVM
NYSE Amex : SVM

Silvercorp Metals Inc.

May 14, 2009 17:00 ET

Silvercorp Metals Inc.: Financial and Operating Results for the 4th Quarter and Fiscal Year Ended March 31, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2009) - Silvercorp Metals Inc. (TSX:SVM)(NYSE Amex:SVM) ("Silvercorp" or the "Company") reports its unaudited financial and operating results for the fourth quarter and fiscal year ended March 31, 2009 and provides an outlook for fiscal year 2010. The financial results in the following text are expressed in US dollars (US$) unless stated otherwise.

FOURTH QUARTER HIGHLIGHTS AND SIGNIFICANT ITEMS

- Net income was $1.2 million or $0.01 per share in the fourth quarter. Adjusted non-GAAP earnings for the quarter, after excluding three exceptional items, were $6.9 million or $0.05 per share, up 165% compared to $2.6 million or $0.02 in the last quarter.

- Cash flow from operations of $10.6 million in the quarter, up 25% from $8.5 million in the prior quarter. For the year, cash provided by operating activities was $47.0 million. Cash, cash equivalents and short term investments at the end of the year were in total $65 million, with no debt.

- 1.04 million ounces of silver produced in the quarter, resulting in an annual record of 4.2 million ounces, and the 3rd consecutive year of silver production growth.

- Silver head grade at the Ying Mine improved to 487 gram per tonne (g/t) in the quarter up from 420g/t in the previous quarter.

- Total production cost per ounce of silver adjusted for by-product credits at the Ying Mine improved to negative $3.24 per ounce, compared to $0.18 in the last quarter.

- The Net Smelter Return (NSR) for silver increased by 18% compared to the previous quarter.

- Silvercorp's common shares commenced trading on NYSE Amex.

- Raised CAD$30 million in March 2009 through a 10 million common share equity financing.

- Paid quarterly dividend of CAD$0.02 per share.

FINANCIALS

For the quarter, the Company recorded a net income of $1.2 million or $0.01 per share and adjusted non-GAAP earnings were $6.9 million or $0.05 per share, after excluding three exceptional items recorded during the quarter. Those items are:

- $1.2 million unrealized foreign exchange loss relating to translation from Chinese Yuan to Canadian dollars. The unrealized foreign exchange loss in the previous quarter was $2.5 million.

- $1.6 million accrued dividend withholding tax relating to dividends declared in February 2009 by the Company's 77.5% owned Chinese subsidiary Henan Found Mining Co. Ltd. from the 2008 calendar year earnings. According to a new Chinese Income Tax regulation effective on January 1, 2008, dividends paid to overseas investors are subject to a 10% withholding tax.

- $2.9 million non-cash impairment charge writing down an equity investment in New Pacific Metals Inc. to the market value.

Condensed statements of non-GAAP operation results for the three months and year ended March 31, 2009 are as follows:



Three months ended March 31, Years ended March 31,
2009 2009 2008 2009 2009 2008
--------------------------------------------------------------
(US $000's, Excluding Excluding
except per exceptional exceptional
share items(i) items(i)
numbers)

Sales 17,392 $ 17,392 26,845 83,523 83,523 $ 108,363
Gross profit 11,010 11,010 20,229 47,836 47,836 85,040
Accretion of
assets
retirement
obligations (35) (35) (17) (123) (123) (62)
Amortization (24) (24) (175) (817) (817) (517)
Foreign
exchange gain
(loss)(i) 1,853 673 507 7,538 2,872 (612)
General
exploration (500) (500) (1,038) (2,325) (2,325) (1,817)
Impairment
charges(i) - (2,907) - - (50,707) -
General
administration (2,262) (2,262) (3,936) (11,357) (11,357) (9,671)
Other income
and expenses (224) (224) 1,178 (782) (782) 7,324
--------------------------------------------------------------
Income (loss)
before income
taxes and non-
controlling
interest 9,818 5,731 16,748 39,970 (15,403) 79,685
Income tax
(expense)
recovery(i) (895) (2,480) (1,957) (4,618) 937 (551)
Non-
controlling
interest(i) (1,994) (2,013) (3,932) (8,033) (1,531) (19,197)
--------------------------------------------------------------
Net income
(loss) $ 6,929 $ 1,238 10,859 27,319 (15,997) $ 59,937
--------------------------------------------------------------
--------------------------------------------------------------
Earnings
(loss) per
share $ 0.05 0.01 0.07 $ 0.18 (0.11) $ 0.41

(i) The financial statements are prepared in accordance with Canadian GAAP
(GAAP). This news release refers to adjusted earnings and adjusted
earnings per share, which are not measures recognized under GAAP in
Canada or the United States and do not have a standardized meaning
prescribed by GAAP. For adjusted earnings and adjusted earnings per
share, the Company adjusted net income (loss) as reported to remove
the effect of unusual and/or nonrecurring transactions in these
measures, including: (i) non-cash impairment charges mainly relating
to writing down an equity investment in New Pacific Metals Inc. to
market value, (ii) accrued withholding taxes and (iii) unrealized
foreign exchange loss relating to translation from Chinese yuan to
Canadian dollars.


For the quarter, the Company recorded sales of $17.4 million, a decline of 35% compared to sales of $26.8 million for the same period last year, and an increase of 14% compared with sales of $15.2 million in the last quarter. The average quarterly Net Smelter Return (NSR) net of value added tax for silver, lead and zinc of $8.68/oz, $0.52/lb and $0.37/lb decreased by 33%, 51% and 32%, respectively, compared to a year ago, but increased by 18%, 27% and 32%, respectively, compared to the previous quarter.

For the year, the Company recorded sales of $83.5 million, a 23% decline compared to fiscal 2008 sales of $108.4 million. As previously mentioned, sales were negatively affected by the decline in metal prices. For the 2009 fiscal year, the average realized NSR for silver, lead and zinc were $10.17/oz, $0.65/lb and $0.41/lb, down 10%, 34% and 53% respectively, compared to fiscal 2008.

For the quarter, gross profit from operations were $11.0 million, representing a gross margin of 63%, down $9.2 million or 46% compared to the same quarter last year of $20.2 million, or 75% of sales, but up $5.8 million from the last quarter's gross profit of $5.2 million, or 35% of sales.

For the year, gross profit was $47.8 million, about 57% of sales, compared to $85.0 million being 78% of sales in fiscal 2008. The declining gross profit was mainly attributed to (i) declining metal prices since July 2008 and (ii) the lower grade nature of ores from the TLP, LM and HPG mines which increased the unit cost of production.

For the quarter, cash provided by operating activities was $10.6 million, a decrease of 38% from $17.2 million for the same period last year, but a 24% increase from $8.5 million in the last quarter.

For the 2009 fiscal year, cash provided by operating activities was $47.0 million, a decrease of 41% from $79.8 million for fiscal 2008.

The Company completed a CAD$31 million equity financing in March 2009. As at March 31, 2009, the Company had $41.5 million in cash and $24.0 million in short term investments and $47.6 million in working capital and remained debt-free.

For the quarter, capital expenditures amounted to $2.2 million, including the purchase of mineral rights and properties and capitalized exploration costs totaling $0.7 million and the purchase of equipment and construction costs for the new mill totaling $1.5 million.

For the year, cash capital expenditures amounted to $49.8 million. The major items included the acquisition of the GC/SMT property for $24.3 million, exploration and mine development at Ying Mining Camp of $12.8 million and the purchase of equipment and construction costs for the new mill totaling $12.7 million.

METAL PRICES

Sales revenue and selling prices (NSR, net of smelter charges and the value added tax) for the three months and year ended March 31, 2009, are as follows:



---------------------------------------------------------------------------
For the three months ended

March 31, 2009 December 31, 2008 March 31, 2008
---------------------------------------------------------------------------
Sales Sales Sales
NSR revenue NSR revenue NSR revenue
($ per ($ in ($ per ($ in ($ per ($ in
oz/lb) 000's) oz/lb) 000's) oz/lb) 000's)

Silver 8.68 8,987 7.34 8,006 12.89 12,897

Gold 648 258 449 270 491 227

Lead 0.52 6,869 0.41 6,047 1.06 12,406

Zinc 0.37 1,278 0.28 845 0.55 1,315
---------------------------------------------------------------------------


---------------------------------------------------------------------------
For the year ended

March 31, 2009 March 31, 2008
---------------------------------------------------------------------------
NSR Sales revenue NSR Sales revenue
($ per oz/lb) ($ in 000's) ($ per oz/lb) ($ in 000's)

Silver 10.17 42,583 11.28 44,678

Gold 614 1,154 552 1,190

Lead 0.65 34,424 0.98 48,433

Zinc 0.41 5,362 0.88 14,062
---------------------------------------------------------------------------


OPERATIONS

In the quarter, 60,466 tonnes of ores were mined which was less than previous quarters as the Company's operations were closed for three weeks for the Chinese New Year in January and mining operations at the TLP, HPG and LM mines were suspended. The comparison of total ores mined in the past five quarters are as follows:



---------------------------------------------------------------------------
Q4 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008
31-Mar-09 31-Dec-08 30-Sep-08 30-Jun-08 31-Mar-08
---------------------------------------------------------------------------

Ores Mined (tonne)

Direct Smelting
Ores (tonne) 2,624 3,288 2,571 3,388 3,169

Ores to be milled
(tonne) 57,842 118,658 121,963 129,465 69,319
-----------------------------------------------------

60,466 121,946 124,534 132,853 72,488
---------------------------------------------------------------------------


During the quarter, mining production was primarily from the Ying Mine. Enhanced management of mining contractors and quality control have reduced mining dilution significantly; as a result, silver head grade improved to 486.7g/t, 16% higher than the previous quarter's head grade of 420.2g/t. Head grades also improved compared to the last quarter for lead (9.1% vs. 7.7%) and zinc (3.1% vs. 2.6%).

For the quarter, production cost and cash cost per ounce of silver, adjusted for by-product credits, were negative $3.24 and negative $3.62, respectively, a significant improvement from $0.18 and negative $1.39 in the previous quarter. The reduced costs per ounce were mainly due to improved head grades and higher metal prices.

The operating results for the past five quarters at the Ying Mine are summarized as follows:



---------------------------------------------------------------------------
Q4 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008
31-Mar-09 31-Dec-08 30-Sep-08 30-Jun-08 31-Mar-08
---------------------------------------------------------------------------

Ores Mined (tonne)

Direct Smelting
Ores (tonne) 2,610 3,114 2,387 3,071 2,673

Ores to be milled
(tonne) 55,232 77,968 71,456 74,496 59,398
-----------------------------------------------------

57,842 81,082 73,843 77,567 62,071
---------------------------------------------------------------------------

Run of Mine Ores
(tonne)

Direct Smelting
Ores (tonne) 2,726 3,114 2,387 3,071 2,673

Ores Milled
(tonne) 60,167 70,854 69,493 74,691 51,996
-----------------------------------------------------

62,893 73,968 71,880 77,762 54,669
---------------------------------------------------------------------------

Head Grades of
Run of Mine Ores

Silver (gram/tonne) 486.7 420.2 331.2 396.0 488.9

Lead (%) 9.1 7.7 6.0 6.7 8.1

Zinc (%) 3.1 2.6 2.5 3.3 3.8
---------------------------------------------------------------------------

Recovery Rate of
the Run of Mine Ores

Silver (%) 93.1 92.9 91.3 90.7 91.6

Lead (%) 97.2 96.7 95.6 95.9 96.0

Zinc (%) 69.4 78.1 68.2 72.0 73.2
---------------------------------------------------------------------------

Sales Data

Silver
(in thousands ounce) 931 880 622 889 929

Lead
(in thousands pound) 12,150 11,419 8,096 11,250 9,596

Zinc
(in thousands pound) 3,082 2,894 2,300 4,062 2,167
---------------------------------------------------------------------------

Cash Mining cost
($ per tonne) 45.44 45.10 55.71 55.61 37.69

Total Mining cost
($ per tonne) 58.71 61.60 72.86 69.44 48.66

Cash Milling cost
($ per tonne) 10.57 10.32 11.24 10.80 10.41

Total Milling cost
($ per tonne) 11.76 11.24 12.24 11.75 11.30
---------------------------------------------------------------------------

Total Production Costs

Silver ($ per ounce) 2.48 3.49 4.46 3.28 3.23

Lead ($ per pound) 0.15 0.20 0.31 0.21 0.27

Zinc ($ per pound) 0.11 0.13 0.15 0.13 0.14
---------------------------------------------------------------------------

Production Cost per
Ounce of Silver,
adjusted for
by-product credits (3.24) 0.18 (3.44) (7.28) (5.97)

Cash Cost per Ounce of
Silver, adjusted for
by-product credits (3.62) (1.39) (5.14) (7.42) (6.15)
---------------------------------------------------------------------------


Fiscal year 2009 was the Company's third consecutive year of production growth with annual production of 4.2 million ounces of silver, a 6% increase over fiscal 2008. The Company also produced 53 million pounds of lead and 13 million pounds of zinc, compared to 50 million pounds of lead and 16 million pounds of zinc produced a year ago.

During fiscal 2009 two new mines, TLP and LM, were put into production, bringing total ores mined to 439,799 tonnes, a 44% increase from 306,143 tonnes in fiscal 2008.

The comparison of production for each producing mine and consolidated production is as follows:



---------------------------------------------------------------------------

Fiscal 2009 Fiscal 2008
--------------------------------------------------- -----------------------

Ying HPG TLP LM Consol' Ying HPG Consol'
--------------------------------------------------- -----------------------

Ores mined
(tonne)

Direct
Smelting
Ores
(tonne) 11,182 504 95 71 11,852 11,010 1,919 12,929

Ores to be
milled
(tonne) 279,152 54,361 59,118 35,316 427,947 242,829 50,385 293,214
--------------------------------------- -----------------------

290,334 54,865 59,213 35,387 439,799 253,839 52,304 306,143
--------------------------------------------------- -----------------------

Run of Mine
Ores (tonne)

Direct
Smelting
Ores
(tonne) 11,298 504 95 71 11,968 11,010 1,919 12,929

Ores
Milled
(tonne) 275,204 59,887 69,375 34,653 439,119 245,487 46,612 292,099
--------------------------------------- -----------------------

286,502 60,391 69,470 34,724 451,087 256,497 48,531 305,028
--------------------------------------------------- -----------------------

Head Grades
of Run of
Mine Ores

Silver
(gram/
tonne) 407.0 154.4 160.4 266.7 311.6 464.2 207.4 420.3

Lead (%) 7.3 5.8 2.3 1.8 5.6 7.4 7.4 7.4

Zinc (%) 2.9 0.9 - - 1.9 3.1 1.1 2.7
--------------------------------------------------- -----------------------

Recovery rate
of Run of
Mine Ores

Silver (%) 92.0 81.6 84.1 88.1 89.9 91.3 89.0 91.1

Lead (%) 96.5 93.2 2.3 86.8 94.3 95.8 93.8 95.5

Zinc (%) 69.3 71.4 - - 76.1 72.0 65.6 71.6
--------------------------------------------------- -----------------------

Sales Data

Silver (in
thousands
ounce) 3,408 209 271 301 4,189 3,684 276 3,960

Lead (in
thousands
pound) 42,914 5,899 2,932 1,320 53,065 42,282 7,342 49,624

Zinc (in
thousands
pound) 12,338 618 - - 12,956 15,136 776 15,912
--------------------------------------------------- -----------------------

Cash Mining
cost ($ per
tonne) 51.24 44.33 47.82 67.94 51.26 39.27 29.89 38.40

Total Mining
cost ($ per
tonne) 66.11 73.43 56.27 108.19 69.09 51.59 44.84 50.44

Cash Milling
cost ($ per
tonne) 10.63 12.50 11.44 15.55 11.39 10.01 15.95 10.85

Total Milling
cost ($ per
tonne) 11.62 13.80 12.54 15.55 12.37 11.00 17.36 11.93
--------------------------------------------------- -----------------------

Production
Costs

Silver
($ per
ounces) 3.49 7.72 9.48 7.22 4.34 2.25 3.90 2.44

Lead
($ per
pound) 0.22 0.46 0.57 0.45 0.28 0.19 0.35 0.21

Zinc
($ per
pound) 0.14 0.28 - - 0.18 0.18 0.28 0.19
--------------------------------------------------- -----------------------

Production
Costs per
Ounce of
Silver,
adjusted for
by-product
credits (2.86) 1.13 8.75 6.33 (1.25) (9.65) (17.12) (10.15)

Cash Costs
per Ounce
of Silver,
adjusted for
by-product
credits (3.87) (6.55) 5.14 5.15 (2.77) (10.11) (22.56) (10.99)
---------------------------------------------------------------------------


OUTLOOK

In light of somewhat improved global commodity prices, the Company has adjusted its China operations strategies accordingly. While maintaining full scale production at the Ying Mine, production at the TLP, LM and HPG mines, which was suspended in late December 2008, will be partially resumed.

At the Ying Mine, mining, development and exploration are proceeding as planned with production being maintained at 700-750 tonnes of ore per day. Ore production is forecast to be 260,000 tonnes for fiscal 2010. Projected head grades, recovery rates and metal production for the Ying Mine are listed in the table below:



---------------------------------------------------------------------------
Ying Mine Production Forecast
Fiscal 2010 (Ending March 31, 2010)
---------------------------------------------------------------------------
Ores mined/milled Commodity Grade Recoveries Projected metal sales
---------------------------------------------------------------------------
260,000 Tonnes Silver 480g/t 91% 3.65 Million oz
------------------------------------------------------
Lead 9% 95% 49 Million lbs
------------------------------------------------------
Zinc 3% 72% 12 Million lbs
---------------------------------------------------------------------------


At the TLP, HPG and LM mines, the Company will focus on exploration and mine development. Mine production is scheduled to be partially resumed in the first quarter fiscal 2010. Mine production is planned at 120,000 tonnes for the TLP and LM mines and 30,000 tonnes for the HPG mine in fiscal 2010. This will yield approximately 1.0-1.4 million ounces of silver to bring the total silver production from the Ying Mining Camp to around 4.65-5.05 million ounces in fiscal 2010.

Using metal prices in January 2009 and the above production projections, the Company's mining operations are projected to operate with a gross profit margin of between 55% and 60%, resulting in expected cash flows from operations of $35 million to $40 million. Capital expenditures for fiscal 2010 are budgeted at $16 million for the Ying Mining Camp, including $11 million for the Ying Mine and $5 million for the TLP, LM and HPG mines.

At the GC project in Guangdong Province, the Company has made the following progress in applying for a mining permit and advancing the project towards production:

- An Environmental Assessment Report was completed in March 2009 and has passed a review by an expert panel appointed by the Environmental Protection Bureau of Guangdong Province and by the local community. The panel recommended that the Environmental Protection Bureau approve the GC project mining development. Pending receipt of the final approval from the Environmental Protection Bureau, a mining permit application can be submitted to the Ministry of Land and Resources of China in Beijing.

- 2008 exploration results and recent drilling results are being incorporated into a NI43-101 technical update with a new resource estimate for the GC project which is expected to be released in June 2009.

- The Company has engaged a Chinese engineering firm with Class A qualification in mine and mill designs to provide a full mine and mill design for the GC project. This will be equivalent to a feasibility study in Canada.

The Company has budgeted approximately $4 million for the GC project in fiscal 2010 for exploration, reports, mine and mill designs, and for permitting. This brings the Company's overall capital expenditures budget for fiscal 2010 to $20 million.

The Company is also actively evaluating mining assets with defined resources in North America for acquisition or joint venture.

Selected unaudited interim consolidated results for the three months and year ended March 31, 2009 are attached to this news release.

CONFERENCE CALL AND WEBCAST INFORMATION

A conference call and live audio webcast to discuss these results have been scheduled as follows:

Date: Friday, May 15, 2009

Time: 7:00 am PT (10:00 am ET)

Dial-In Number: 1-612-332-0107

Live audio webcast: www.silvercorp.ca (click on the link on the home page)

Playback webcast can be accessed at: www.silvercorp.ca

About Silvercorp Metals Inc.

Silvercorp Metals Inc., China's largest primary silver producer, is engaged in the acquisition, exploration and development of silver related mineral properties located in the People's Republic of China ("China"). Silvercorp Metals Inc. is operating and developing four Silver-Lead-Zinc mines at the highly profitable Ying Mining Camp, Henan Province, China. Silvercorp is also applying for a mining permit at the newly acquired, 95% owned, GC&SMT property to profitably mine and produce silver, lead and zinc in Guangdong Province, China. The Company's common shares are included as a component of the S&P/TSX Composite and the S&P/TSX Global Mining Indexes.

CAUTIONARY DISCLAIMER -- FORWARD LOOKING STATEMENTS

Statements in this press release other than purely historical factual information, including statements relating to mineral resources and reserves, or the Company's future plans and objectives, or expected production levels, exploration, head grades, recovery rates, cash flows, and capital expenditures constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in mineral exploration, development, and mining. Production projections are based not on mineral reserves but on mineral resources which do not have demonstrated economic viability. There can be no assurance that such forward-looking statements, including those in the outlook section, will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on such statements. Except in accordance with applicable securities laws, the Company expressly disclaims any obligation to update any forward-looking statements or forward-looking statements that are incorporated by reference herein.



SILVERCORP METALS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited - expressed in thousands of US dollars)

March 31, March 31,
2009 2008
-----------------------------------------------------------------------
ASSETS

Current Assets
Cash and cash equivalents $ 41,470 $ 47,093
Short term investments 23,962 37,146
Restricted cash 732 -
Accounts receivable and prepaids 2,933 5,260
Inventories 1,529 2,389
Current portion of future income taxes 143 -
Amount due from related parties 249 47
-----------------------------------------------------------------------
71,018 91,935

Long term prepaids 1,050 5,194
Long term investments 12,186 17,874
Restricted cash 293 -
Property, plant and equipment 29,072 14,349
Mineral rights and properties 89,413 60,905
Reclamation deposits 8 10
Future income tax assets 2,162 -
-----------------------------------------------------------------------
$ 205,202 $ 190,267
-----------------------------------------------------------------------

LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities $ 8,533 $ 7,027
Deposits received from customers 1,290 2,573
Notes payable 658 -
Dividends payable 2,564 -
Income tax payable 3,041 720
Amounts due to related parties 7,353 12,118
-----------------------------------------------------------------------
23,439 22,438

Future income tax liabilities 19,678 6,346
Asset retirement obligation 2,029 1,226
-----------------------------------------------------------------------
45,146 30,010

Non-controlling interests 7,610 11,265

SHAREHOLDERS' EQUITY

Share capital 135,604 78,334
Contributed surplus 3,764 1,722
Reserves 31,893 2,078
Accumulated other comprehensive income (loss) (10,167) 14,122
Retained earnings (8,648) 52,736
-----------------------------------------------------------------------
152,446 148,992
-----------------------------------------------------------------------

$ 205,202 $ 190,267
-----------------------------------------------------------------------
-----------------------------------------------------------------------


SILVERCORP METALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - expressed in thousands of US dollars, except for share figures)

Three months ended March 31, Years ended March 31,
-------------------------------------------------------
2009 2008 2009 2008
---------------------------------------------------------------------------

Sales $ 17,392 $ 26,845 $ 83,523 $ 108,363
---------------------------------------------------------------------------

Cost of sales 6,276 6,459 29,322 20,114
Amortization and
depletion 106 157 6,365 3,208
---------------------------------------------------------------------------
6,382 6,616 35,687 23,322
---------------------------------------------------------------------------

Gross profit 11,010 20,229 47,836 85,041
---------------------------------------------------------------------------

Expenses
Accretion of asset
retirement
obligations 35 17 123 62
Amortization 24 175 817 517
Foreign exchange
loss (gain) (673) (507) (2,872) 612
General exploration
and property
investigation
expenses 500 1,038 2,325 1,817
Impairment charges 2,907 - 50,707 -
Investor relations 109 69 550 284
Office,
administration and
miscellaneous 2,023 2,410 9,319 7,254
Professional fees 130 1,457 1,488 2,134
---------------------------------------------------------------------------
5,055 4,659 62,457 12,680
---------------------------------------------------------------------------
Earnings (loss)
before other income
and expenses 5,955 15,570 (14,621) 72,361
Other income and
expenses
Equity loss in
investment 12 (78) (1,455) (250)
Exploration cost
after recovery - 563 - -
Gain (loss) on
disposal of mineral
rights and property - - (819) 563
Loss on disposal of
property, plant and
equipment (308) - (328) (48)
Interest income 75 693 1,342 2,585
Other income (3) - 478 4,474
---------------------------------------------------------------------------
(224) 1,178 (782) 7,324
Income (loss)
before
income taxes and
non-controlling
interests 5,731 16,748 (15,403) 79,685

Income tax expense
(recovery)
Current 2,805 1,988 6,988 441
Future (325) (31) (7,925) 110
---------------------------------------------------------------------------
2,480 1,957 (937) 551

Income (loss)
before
non-controlling
interests 3,251 14,791 (14,466) 79,134

Non-controlling
interests (2,013) (3,932) (1,531) (19,197)
---------------------------------------------------------------------------

Net income (loss) $ 1,238 $ 10,859 $ (15,997) $ 59,937
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Basic earnings
(loss) per share $ 0.01 $ 0.07 $ (0.11) $ 0.41
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Diluted earnings
(loss) per share $ 0.01 $ 0.07 $ (0.11) $ 0.40
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted Average
Number of Shares
Outstanding - Basic 153,869,610 148,940,949 152,350,041 147,660,730
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted Average
Number of Shares
Outstanding -
Diluted 154,996,312 151,005,453 152,350,041 150,954,072
---------------------------------------------------------------------------
---------------------------------------------------------------------------


SILVERCORP METALS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited - expressed in thousands of US dollars)

Three months ended Years ended
March 31, March 31,
----------------------------------------
2009 2008 2009 2008
---------------------------------------------------------------------------

Net income (loss) for the period $ 1,238 $ 10,859 $ (15,997) $ 59,937
Other comprehensive income (loss),
net of taxes:
Transition adjustment to opening
balance upon adoption of new
standards - - - 9
Unrealized loss on available for
sale securities (48) (49) (155) (48)
Unrealized exchange gain on
translation of self-sustaining
foreign operations 1,079 2,656 11,270 3,972
Unrealized exchange gain (loss) on
translation of functional currency
to reporting currency (5,770) 13,592 (35,404) 9,709
---------------------------------------------------------------------------
Other comprehensive income (loss) (4,739) 16,199 (24,289) 13,642
---------------------------------------------------------------------------
Comprehensive income (loss) $ (3,501) $ 27,058 $ (40,286) $ 73,579
---------------------------------------------------------------------------
---------------------------------------------------------------------------


SILVERCORP METALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - expressed in thousands of US dollars)

Three months ended Years ended
March 31, March 31,
---------------------------------------------------------------------------
2009 2008 2009 2008
---------------------------------------------------------------------------
Cash provided by (used for)
Operating activities
Net income (loss)
for the period $ 1,238 $ 10,859 $ (15,997) $ 59,937
Add (deduct) items not
affecting cash:
Accretion of asset
retirement obligations 35 17 122 62
Amortization 130 332 7,182 3,725
Equity Investment
loss (gain) (12) 78 1,455 250
Future income tax expenses
(recovery) (325) (31) (7,925) 110
Impairment charges 2,907 - 50,707 -
Loss (gain) on disposal of
mineral property - (563) 819 (563)
Loss on disposal of property,
plant, and equipment 309 - 328 48
Non-cash other income - - - (4,388)
Non-controlling interests 2,013 3,932 1,531 19,197
Stock-based compensation 107 595 2,103 2,473
Unrealized foreign exchange
loss on future income
tax liabilities 883 - 4,378 -
---------------------------------------------------------------------------
7,285 15,219 44,703 80,851

Net change in non-cash
working capital
Accounts receivable
and prepaids 339 (2,030) 2,513 (3,627)
Inventory 3,028 (975) 496 (342)
Restricted cash (1,020) - (1,020) -
Accounts payable and
accrued liabilities (1,633) 2,441 (734) 3,413
Asset retirement obligation
discharged upon payment - - - (514)
Income tax payable 2,361 662 2,300 (950)
Deposits received from
customers 265 1,913 (1,272) 955
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Cash provided by operating
activities 10,625 17,230 46,986 79,786
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Investing activities
Acquisition of mineral
rights and properties (713) (10,212) (37,115) (36,583)
Acquisition of property,
plant, and equipment (1,524) (4,019) (12,697) (7,452)
Purchase of long term
investments (146) (1,648) (291) (5,552)
Decrease (increase) of
short term investments (9,414) (1,164) 12,982 (29,489)
Decrease (increase) in
long term prepaids 1,499 366 (354) (3,397)
Proceeds from disposal of
mineral rights and properties - 563 814 563
Proceeds from disposal of
property, plant, and equipment - - 2 157
Distribution to non-controlling
interest shareholder (1,974) - (13,173) (3,371)
Cash dividends distributed (2,476) - (5,466) (6,891)
Non-controlling interest
contribution - - 215 -
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Cash used in investing activities (14,748) (16,114) (55,083) (92,015)
---------------------------------------------------------------------------

Financing activities
Repayment from (advance to)
related parties (225) 74 (36) (1,429)
Advance (repayment) under loans
payable 655 (1,689) 655 -
Share subscriptions for cash,
net of commission and expenses 22,634 475 22,656 2,294
Shares returned to treasury for
cancellation - - (9,473) -
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Cash provided by (used in)
financing activities 23,064 (1,140) 13,802 865
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Effect of exchange rate changes
on cash and cash equivalents (6,279) (165) (11,326) 5,128

Increased (decrease) in cash and
cash equivalents 12,662 (189) (5,623) (6,237)

Cash and cash equivalents,
beginning of period 28,808 47,282 47,093 53,330
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Cash and cash equivalents,
end of period $ 41,470 $ 47,093 $ 41,470 $ 47,093
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Supplemental information:
Interest paid $ - $ 13 $ 30 $ 87
Income tax paid $ 554 $ - $ 4,703 $ 1,274

Non-cash investing activities:
Common shares issued for mineral
rights and properties $ - $ - $ 36,484 $ -
Common shares of New Pacific
Metals Corp. received as partial
consideration for the Option
Agreement related to Kang Dian
Project $ - $ 1,336 $ - $ 4,388
Capitalized future income tax on
acquisiton of mineral rights
and properties $ - $ - $ 19,220 $ -
Capitalized asset retirement
obligation as per initial
measurement $ - $ - $ 726 $ -


SILVERCORP METALS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited - expressed in thousands of US dollars)

Three months ended Years ended
March 31, March 31,
-------------------------------------------
2009 2008 2009 2008
-------------------------------------------

Share capital
Common shares $ 135,604 $ 78,334 $ 135,604 $ 78,334
-------------------------------------------
135,604 78,334 135,604 78,334

Contributed Surplus 3,764 1,722 3,764 1,722
Reserves 31,893 2,078 31,893 2,078

Accumulated comprehensive
income
Retained earnings,
beginning of periods 13,511 41,877 52,736 1,767
Net earnings (loss) 1,238 10,859 (15,997) 59,937
Cancellation of shares
under normal course
issuer bid - - (7,541) -
Dividends declared (2,565) - (8,031) (6,891)
Appropriation to reserves (20,832) - (29,815) (2,077)
-------------------------------------------
Retained earnings,
end of periods (8,648) 52,736 (8,648) 52,736
Accumulated other
comprehansive income
(loss) (10,167) 14,122 (10,167) 14,122
---------------------------------------------------------------------------
(18,815) 66,858 (18,815) 66,858
---------------------------------------------------------------------------
$ 152,446 $ 148,992 $ 152,446 $ 148,992
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Contact Information

  • Silvercorp Metals Inc.
    Rui Feng
    Chairman & CEO
    (604) 669-9397 or Toll Free 1(888) 224-1881
    or
    Silvercorp Metals Inc.
    Lorne Waldman
    Corporate Secretary
    (604) 669-9397 or Toll Free 1(888) 224-1881
    (604) 669-9387 (FAX)
    info@silvercorp.ca
    www.silvercorp.ca