Corporate Presentation San Francisco Hard Assets November 2012 - - PowerPoint PPT Presentation
Corporate Presentation San Francisco Hard Assets November 2012 - - PowerPoint PPT Presentation
Corporate Presentation San Francisco Hard Assets November 2012 Cautionary Statements Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995: Except for the statements of historical fact contained herein,
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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 Private Securities Litigation Reform Act of 1995. 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, 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 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, future prices
- f silver, lead and zinc, as well as other 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 statements 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 forward-looking statements. The shares of Silvercorp Metals Inc. trade on the New York Stock Exchange (NYSE:SVM) and the Toronto Stock Exchange (TSX: SVM). Neither the NYSE nor the TSX have approved or disapproved the form or content of this presentation. 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 Mineral Resource exists, or is economically or legally mineable.
Cautionary Statements
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About Us – Strategically Focused in China
China Canada
GC Project, Guangdong Province
FY2013:~170Koz Ag
Silvertip Project, British Columbia Ying Mining District, Henan Province
FY2013:~5.3Moz Ag
BYP Project, Hunan Province
FY2013:~4.7Koz Au
X Mine Projects, Henan Province
FY2013: ~50Koz Ag
Reserves & Resources1 Silver (MOz) Lead (Mt) Zinc (Mt) Proven & Probable Reserves 97.4 458.5 277.4 Measured & Indicated Resources 150.8 717.6 558.4 Inferred Resources 95.9 401.9 464.1
1 Excludes BYP Mine Resource
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Silvercorp’s Strategy
Our Strategy
- Acquire under-explored small-scale mining projects with resource potential
- Self-fund the growth of those assets
Proven Execution
- Successfully acquired and developed projects
- Less than $300 million in acquisition and development costs to date
- Built 800,000 t/y mining + milling capacity at Ying Mining District and completing 500,000 t/y
mine and mill at GC Project (expected to commence production in January 2013).
- Consolidated Mine Life of >10 Years
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1 As at September 30, 2012 2 Silvercorp’s Fiscal Year ends March 31st
Corporate Snapshot
Fiscal Year 2013 Q2 – 3 mos (millions) Fiscal Year 2013 Q2 – 6 mos (millions) Revenue US$45.2 US$89.8 Net Income US $9.5 US$15.6 Operating Cash Flow US$23.9 US$43.2 Cash1: US$136.5 Million F2013E2 Silver Production: 5.52 million ounces F2013E2 Gold Production: 8,300 ounces F2013E2 Lead & Zinc Production: 85.7 million pounds Dividend: CAD$0.10 per annum ($0.025/quarter) No LT Debt; Unhedged 4
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A Track Record of Performance
$39,777 $108,363 $83,523 $107,164 $167,327 $237,962 Fiscal 2007 Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011 Fiscal 2012
Net Metal Sales
$8.58 $57.94 $51.77 $19.98 $24.88 $33.69 Fiscal 2007 Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011 Fiscal 2012
Cash Margin per Ounce of Silver*
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*Cash margin = Revenue (net of smelting charges) less cash portion of Cost of Sales
6 Silver, 65% Zinc, 5% Lead, 24% Gold, 6%
FQ2 Results
- Low cost producer of silver - for
the period ended September 30, 2012 cash cost of -$0.74 per Ag ounce
Q2FY2013 Sales Mix by Metal
* Quarter-ended September 30, 2012.
64% 56% 46% 39% 22%
0% 40% 80% Silvercorp First Majestic Hecla Endeavour Silver Silver Standard
Gross Profit Margin* 6
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Consolidation of the Ying Mining District: Next Steps for Growth
- Extensive development work
(~110,000 m underground tunnels for fiscal 2013) to increase mining capacity from current 2000 t/d to match milling capacity of 3200 t/d (or 1.15 million t/year) in 2 years.
- Extensive underground drilling
(144,000 metres) to maintain mine life at ~10 years at expanded mining rate (for the last 6 years; mine life was maintained at 10 year every year).
- New processing strategy to
increase efficiency: centralized processing with ore blended from each mine within the District
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- Increase the combined production capacity of the LM and LM West
to 300,000 tonnes of ore per year by 2014:
- LM West – developing Shaft 969
- LM West - 4,800 metre access ramp down to the 500 metre
elevation at LM West in 2014
- LM – shaft in operation and tunnel development has
commenced at 5 mining levels Ying Mining District: LM & LM West – Increasing Production
- No. 2 – 2,200 tpd Mill
No.1 – 1,000 tpd Mill
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Ying Mining District: LM & LM West
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Ying Mining District: More Efficient Mining
Current Future
Mining Method Focus Resuing Method (stope width <0.7m) Shrinkage Method (stope width 0.8m ~ 3m) Mining Method Allocation 40% Shrinkage 60% Resuing 80% Shrinkage 20% Resuing Tunnel Dimensions Required Per Stope 50m x 50m x 0.5m 50m x 50m x 1.2m Ore per Stope 3,750 tonne 7,500 tonne Metres of Development Required per 10,000 Tonnes of Ore 1,000 metres 500 metres Cut-off Grade SGX Mine: 300g/t AgEq Satellite Mines: 150g/t AgEq SGX Mine: 150g/t AgEq Satellite Mines: 110g/t AgEq
- June 2012 NI 43-101 Technical Report reduced cutoff grade to 150 g/t Ag. This has enabled
us to increase mining width from ~0.5 metres to ~1.2 metres:
- Lower mining cost per tonne with more ore per stope
- Less tunneling required: lower development cost per stope and less pressure on mine
management
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Ying Mining District: More Efficient Exploration
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GC Project: Progressing towards production
Advancing Stage 1 Ramp
- FY2013 mine and mill development budget: $30.3MM
- Continued construction of 1,600 t/d (or 500,000 t/year) mill
(Expected completion: Q4 2012)
- Continued mine development to support 500,000 tonnes
per annum:
- 2,200 metres main access ramp down to 220 metres
depth (65% completed)
- 4,600 metres second ramp down to 600 metres depth
(17% completed)
- 618 metres vertical shaft (6 metre diameter)
completed to 376 metres depth by June.
- Expect to declare production in early 2013 and currently
expect 12 year mine life with IRR of 33%
Office & Dormitory
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Concentrate Thickener Mill Plant Temporary Shaft for Sinking the Main Shaft
GC Project: Progressing towards production
Main Ramp Access 13
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GC Project: Continuing exploration
- While constructing the
mine and mill at GC, exploration to further define and potentially expand resources continues.
- FY2013 drilling plan:
26,400 metres ($1.9millions).
- Continue exploration
success- recent drilling has discovered new high grade silver veins, such as 1,684 g/t Ag
- ver 2.12 m and 609 g/t
Ag over 3.88 metres.
GC Cross Section on Line 24
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15 1.9 4.1 4.3 4.7 5.5 5.8 5.5 7.3 7.9
0.2
1.5 1.4
0.3 0.3
0.9 0.9 0.0 2.0 4.0 6.0 8.0 10.0 FY2007A FY2008A FY2009A FY2010A FY2011A FY2012A FY2013E FY2014E FY2015E
Million Ounces
AgEq Production – Actual and Forecast1,2
Others (BYP/X-Mines*) GC Ying Mining District 6.1 5.9E 9.7E 10.2E 1.9 4.1 4.3 4.7 5.5
Near-term Organic Growth
1 Gold converted to silver at a rate of 50:1; 2 Silvercorp’s fiscal year ends March 31st * Development ores only
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CapEx vs. Operating Cash Flow*
*Price Assumption: F2013-F2015 Operating Cash Flows are forecast based on BMO Long-term Metal Prices (Silver: Y2013 - $30/oz, Y2014 $30/oz, Y2015 $28/oz; Gold: Y2013 - $1,700/oz, Y2014 $1,500/oz, Y2015 $1,400/oz; Lead: Y2013 - $1.00/lb, Y2014 $1.55/lb, Y2015 $1.55/lb; Zinc: Y2013 - $1.20/lb, Y2014 $1.50/lb, 2015 $1.50/lb.
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$37 $37 $21 $26 $43 $90 $49 $40 $80 $48 $65 $104 $113 $160 $248 $293 Fiscal 2008A Fiscal 2009A Fiscal 2010A Fiscal 2011A Fiscal 2012A Fiscal 2013E Fiscal 2014E Fiscal 2015E
Capital Expenditures Operating Cashflow
Ag Prices: 2013 - $30/oz, 2014 $30/oz, 2015 $28/oz
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Returning Value to Shareholders
9% 11% 18% 13% 13% 10% 8% 3% 3% 2007 2008 2009 2010 2011
Cash Dividend as % of Operating Cash Flow
Silvercorp Silver Wheaton Hecla Pan American
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*Silvercorp’s fiscal year ends on March 31. Other companys’ fiscal year ends on December 31.
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More Growth Opportunities
Other potential growth opportunities in our existing portfolio of projects:
- The X-Mines
- BYP Mine
…..These projects will self-fund their development work as per the Company’s strategy
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- Ying Mining District :
- Increase mining capacity to match milling capacity
- More efficient mining
- More efficient exploration
- GC Project:
- Complete construction
- Receive permit from local government to commence production
Key Catalysts
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Appendices
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Projects
FY2013 Q1 Actual FY2013 Q2-Q4 Guidance FY2013 Total Guidance Silver (‘000 oz) Gold (‘000 oz) Lead&Zinc (mil lbs) Silver (‘000 oz) Gold (‘000 oz) Lead&Zinc (mil lbs) Silver (‘000 oz) Gold (‘000 oz) Lead&Zinc (mil lbs) Ying Mining District 1,223 0.8 16.7 4,077 2.8 61.3 5,300 3.6 78.0 GC Project
- 170
- 2.7
170
- 2.7
BYP Mine
- 1.7
- 3.0
1.3
- 4.7
1.3 The X Mines Project 1 0.1 0.031 49
- 3.7
50
- 3.7
Total 1,224 2.6 16.7 4,296 5.7 69.0 5,520 8.3 85.7
Appendix I: FY2013 Revised Production Guidance
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22 * Tunnel includes ramps, shafts, raises, declines and horizontal tunnels.
Appendix II: FY2013 - Capital Expenditure
Projects Mine Development Mill, Surface Facilities & Permitting Exploration Total Cost
($million)
Tunnel *
(metre)
Cost
($million)
Cost
($million)
Drilling
(metre)
Cost
($million)
Ying Mining Camp Ying 15.7 38,000 8.2 3.3 80,800 27.2 TLP, HPG & LM 17.1 72,790
- 2.3
63,400 19.4 Subtotal 32.8 110,790 8.2 5.6 144,200 46.6 GC Project 12.8 11,700 17.5 1.9 26,400 32.2 BYP Mine 3.0 3,580 0.2 0.2 1,800 3.4 XHP & XHP Projects 2.0 8,600 1.9 2.1 33,600 6.0 Silvertip Project
- 1.5
- 1.5
Total Budget 50.6 134,670 29.3 9.8 206,000 89.7
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Appendix III: Ownership and Coverage Snapshot
Top 10 Institutional Investors – Firms and Funds % O/S 1 Van Eck Associates Corporation 10.11 2 Royce & Associates, LLC 3.33 3 Feng (Rui) 2.42 4 Renaissance Technologies Corp. 2.03 5 AXA Investment Managers UK Ltd. 1.32 6 Global X Management Company LLC 1.13 7 PSP Investments 1.00 8 I.G. Investment Management, Ltd. 0.82 9 BlackRock Institutional Trust Company, N.A. 0.79 10 BCIMC 0.75
33.5% 62.7% 3.8% Institutional Retail Insider
Analyst Coverage Andrew Kaip BMO Capital Markets Brad Humphrey Raymond James Ash Guglani Salman Partners Chris Lichtenheldt UBS
Source: StockWatch
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Board of Directors
Rui Feng Myles J. Gao Earl Drake Robert Gayton David Kong Yikang Liu Paul Simpson Management Rui Feng, Ph.D., Geology
Chairman & CEO, Director
Myles J. Gao, P.Geo.
President, Director
Maria Tang, CA, CPA
Chief Financial Officer
Shaoyang Shen, MBA, CMA
Chief Operating Officer
Peter Torn, MBA, LL.B.
Corporate Secretary & General Counsel
Jonathan Hackshaw, B.Sc (Hons.), M.Sc., MBA
Director, Investor Relations
Appendix IV: Management & Board
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Appendix V: Summary of Silver Reserves1,2,3
1Table excludes HPG mine Proven reserves of 4,900 oz Au (240,000 tonnes grading 0.63 g/t Au) and HPG mine Probable reserves of 14,300 oz Au (390,000 tonnes grading 1.14 g/t Au) 2For further information please refer to the Technical Report for Ying Gold-Silver-Lead-Zinc Property (filed in June 2012) and the GC Technical Report (filed February 2012). All reports are
available on SEDAR (www.sedar.com).
3Rounding of some figures may lead to minor discrepancies in some totals
Resource (Tonnes) Ag (g/t) Pb (%) Zn (%) Ag (Moz) Pb (t) Zn (t) Proven 2,620,000 274 5.08 2.17 23.1 133,100 56,800 Probable 7,170,000 242 3.67 1.12 55.8 263,300 80,300 Proven 464,000 199 1.12 3.19 3.0 5,200 14,800 Probable 4,286,000 113 1.33 2.93 15.5 56,900 125,500 Proven 3,084,000 263 4.48 2.32 26.1 138,300 71,600 Probable 11,456,000 194 2.80 1.80 71.3 320,200 205,800 Total 14,540,000 208 3.15 1.91 97.4 458,500 277,400 Contained Metal Reserves Ying Mining District GC Project Consolidated Project Reserve Category Head Grades
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Appendix VI: Summary of Silver Resources1,2,3,4
1Table excludes HPG mine Measured resources of 6,400 oz Au (230,000 tonnes grading 0.87 g/t Au), Indicated resources of 16,600 oz Au (340,000 tonnes grading 1.5 g/t Au), Inferred
resources of 5,100 oz Au (140,000 tonnes grading 1.10 g/t Au), LM mine Indicated resource of 23,400 oz Au (20,000 tonnes grading 48.04 g/t Au), Silvertip project indicated resource of 32,598 oz Au (2,455,000 tonnes grading 0.41g/t Au), and inferred resource of 4,931 oz Au (1,649,000 tonnes grading 0.09 g/t Au). Table also excludes BYP Au-Pb-Zn project resources (BYP resources summarized on Slide 20).
2For further information please refer to the Technical Report for Ying Gold-Silver-Lead-Zinc Property (filed in June 2012) and the GC Technical Report (filed February 2012). All reports are
available on*SEDAR (www.sedar.com).
3Rounding of some figures may lead to minor discrepancies in some totals 4 Resources are inclusive of resources converted in mineral reserves. Mineral reserves include consideration of mining dilution.
Resource (Tonnes) Ag (g/t) Pb(%) Zn (%) Ag (Moz) Pb (t) Zn (t) Measured 2,420,000 369 6.9 3.2 28.0 161,600 67,700 Indicated 6,790,000 311 4.6 1.5 67.9 311,600 101,100 Inferred 4,740,000 294 4.0 1.6 44.9 190,300 73,300 Measured 593,000 230 1.3 3.4 4.4 8,000 20,000 Indicated 7,039,000 113 1.3 3.1 25.6 93,000 216,000 Inferred 7,960,000 123 1.4 2.7 31.5 113,000 212,000 Indicated 2,455,000 315 5.9 6.3 24.9 144,354 153,683 Inferred 5,287,000 114 1.9 3.4 19.5 98,677 178,861 Measured 3,013,000 335 5.6 2.9 32.4 169,600 87,700 Indicated 16,284,000 226 3.4 2.9 118.4 548,954 470,783 Inferred 17,987,000 166 2.2 2.6 95.9 401,977 464,161 Head Grades Contained Metal Resources (Inclusive of Reserves) Ying Mining District GC Project Silvertip Consolidated Project RESOURCE CATEGORY
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Mineral Resources for Gold Zones as of December 31, 2011:
Appendix VII: BYP Mine Resource
CLASS Cut-off Grades (g/t) Resource Grades Contained Metal Resources (tonne)
Au (g/t)
Au (oz)
Indicated 1.0 3,510,000 2.59 292,000 Inferred 1.0 2,470,000 1.84 146,000 Mineral Resources for Lead and Zinc Zones as of December 31, 2011:
CLASS Cut-off Grades (g/t) Resource Grades Contained Metal Resources (tonne)
Pb(%) Zn(%)
Pb (Tonnes) Zn (Tonnes)
Indicated 2.0 Pb+Zn 7,330,000 1.16 2.52 85,000 184,700 Inferred 2.0 Pb+Zn 7,550,000 0.85 2.75 64,200 207,600
Notes to Resource Tables:
- 1. CIM definitions apply
- 2. Mined tonnages deducted
- 3. Resources are rounded to nearest 10,000 tonnes
- 4. Cut-off grades are based on mining, processing and G & A costs of $38/t.
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Appendix VIII: Silvertip Project
Completed NI 43-101 Report Nearing completion of a Small Mine Permit application; permit allows 75,000 tonnes per year
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Myles Gao, P.Geo, Silvercorp’s President, is the “Qualified Person” within the meaning of National Instrument 43-101 – Standards Of Disclosure for Mineral Projects (“NI 43-101”) 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 19, 2012, and its technical reports, each of which is available on SEDAR at www.sedar.com. The scientific and technical information related to Silvercorp’s projects included in this investor presentation are derived from the technical reports entitled:
- NI 43-101 Technical Report for Ying Gold-Silver-Lead-Zinc Property, Henan Province, China, dated May 1, 2012, prepared by P R Stephenson, P. Geo., B J
O’Connor, P.Geo., H A Smith, P.Eng., A Riles, MAIG, M Molavi, P.Eng
- NI 43-101 Technical Report on the BYP Gold-Lead-Zinc Property, Hunan Province, China, dated June 30, 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 43-101 Technical Report for the Silvertip Property, Upper (Exhalite) and Lower (Manto) Zone, Northern British Columbia, dated June 27, 2012, prepared by Brian
Thoms, P. Geo., Paul Palmer, P.Geo., P.Eng., and Greg Greenough, P.Geo.
- NI 43-101 Technical Report on the GC Ag-Zn-Pb Project in Guangdong Province, People’s Republic of China, dated January 23, 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.
- A Preliminary Assessment of the Silvertip Deposit Northern BC, Canada, dated January 18, 2011, prepared by Golder Associates Ltd.
Endnotes and Cautionary Statements
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30 Suite #1378 - 200 Granville St., Vancouver, BC, Canada V6C 1S4 Tel: 604-669-9397 | Fax: 604-669-9387 | Toll-Free: 1-888-224-1881 Email: investor@silvercorp.ca Website: www.silvercorp.ca
Head Office
Silvercorp’s disclosure documents are available from the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com
Contact Information
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