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Operator: Thank you for standing by and good afternoon. My name is Chloe and I will be your conference operator for today. At this time, I would like to welcome everyone to the Silvercorp’s Third Quarter Fiscal 2025 Financial Results Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Lon Shaver, President of Silvercorp. Please go ahead.

Lon Shaver: Thank you, Chloe. On behalf of Silvercorp, I’d like to welcome everyone to the call this morning or afternoon, wherever you may be. Today, we’ll discuss our third quarter fiscal 2025 financial results, which we released on Tuesday after the market closed. A copy of the news release, our MD&A and the financial statements are available on our website and on SEDAR+. Before we jump in on the call, note that certain statements on today’s call will contain forward-looking information within the meaning of securities laws and please review the cautionary statements in our news release as well as the risk factors described in our most recent regulatory filings. And now to jump in and recap our financial results. Fiscal Q3 was our strongest quarter ever.

And this was highlighted by record revenue of $84 million, which was up 43% from the quarter last year, record operating cash flow of $45 million, which is up 90%, and record silver production of 1.9 million ounces, which was up 16%. This growth was driven by a strong performance from our flagship Ying Mine, which also successfully completed a mill expansion in early December and will be increasing production capacity from 2,500 tons to 4,000 tons per day. In addition, a robust commodity market led to improve realized metals prices compared to the same period last year. And in particular, the realized gold and silver price rose by 35%. The zinc price rose by 49% and lead by 8%. Silver remains our most important metal and contributed 63% of our net realized Q3 revenue this year and that compared to 59% of revenue in last year’s fiscal Q3.

The results, again, reinforce why Silvercorp remains a compelling investment. We are a growing and profitable silver producer and that provides investors with leverage to higher metals prices. Moving down the income statement. Attributable net income for the quarter was $26 million or $0.12 per share, more than double the $11 million or $0.06 a share that was reported in the same period last year. On an adjusted basis, removing the impact of non-cash and onetime items, our net income for the quarter was $22 million or $0.10 per share compared to $11 million or $0.06 in the comparative quarter. The increase in our bottom line primarily reflects the higher metals prices as well as higher volumes of gold, silver and lead sold, which increased 40%, 15% and 5%, respectively, year-over-year.

And these increases were partially offset by a 10% decrease in zinc sold, a $2 million increase in admin expenses and a one-time $12 million government payment related to the renewal of our mining license at the SGX mine. Now looking at cash flow from operating activities, our mines generated $45 million this past quarter. This is up 90% year-over-year, driven by higher metal prices, increased sales and $10 million inflow from changes in non-GAAP working capital and that’s compared to $135,000 outflow for the changes of non-cash working capital last year. Even after adjusting for non-cash working capital changes, our cash flow still grew by 47% year-over-year. During the quarter, we invested $25 million in our mines and projects. This is up 29% from last year and is largely due to increased underground development and completion of the new tailing storage facility and the mill expansion projects at the Ying Mine as well as ongoing spending at El Domo and Condor projects in Ecuador.

Additionally, we repaid Wheaton Precious Metals of $13.25 million that had been drawn as an early deposit for the El Domo project, paid $2.7 million in dividends and repurchased close to $1 million worth of our shares under the current NCIB program. We ended 2024 with a healthy cash balance of $355 million which includes $143 million in net proceeds from our convertible notes offering, which we completed last November. This cash position does not include our investments in our associates and other companies, which had a total market value of $69 million as of December 31 and this value is up slightly to $73 million as of today. Turning to our operating results. As we reported in January, Ying delivered record performance in Q3, which drove an 11% and 16% increase year-over-year in the company’s total ore mined and milled.

As a result, our production of silver, gold and lead increased by 16%, 53% and 5%, respectively, in Q3. Zinc production decreased by 10% and compared to last year due to lower head grades. Year-to-date, we have produced 5.3 million ounces of silver, 4,400 ounces of gold, 46 million pounds of lead and 19 million pounds of zinc. With the successful expansion of our mill #2 and a 145,000-tonne ore stockpile, we kept the plant running at Ying during Chinese New Year and we remain confident in achieving our silver guidance of between 6.7 million to 7.2 million ounces for fiscal 2025. On the unit cost front, production costs averaged $78 per ton in Q3, 5% higher than last year due to more underground development and grade control drilling completed and expensed as part of the mining cost.

Year-to-date production costs averaged $80 per ton, which was in line with our annual cost guidance of between $77 and $80 per ton. Our cash cost per ounce of silver net of byproducts was negative $1.88 in Q3, lower than the negative $0.96 in the prior year quarter, which reflected a $6 million increase in byproduct credits, which offset the impact of higher production costs. And our all-in sustaining production cost increased by 10% year-over-year to $150 per ton in Q3, driven by a 5% increase in unit production costs and a 3% increase in sustaining capital expenditures. However, year-to-date all-in sustaining production cost of $146 per ton is in line with our annual guidance of between $144 to $152 per ton. Our all-in sustaining cost per ounce of silver net of byproduct credits was 12.75%, a 13% increase year-over-year, reflecting increases in G&A, some sustaining capital plus some government payments totaling $6 million.

Turning to our growth projects. As mentioned earlier, we commissioned the mill #2 capacity expansion and Phase 1 of our third tailings storage facility at Ying last December. Both were completed on time and under budget. With these upgrades, we are well positioned for sustained production growth in the coming years as we continue to increase mechanization at our underground mines. Additionally, we secured all necessary permits and licenses for the Kuanping satellite project, which is now ready for construction. Recall, as part of our fiscal 2025 budget, we’ve allocated $1 million for development at Kuanping. We are leveraging our mine billing expertise in Ecuador as we advance construction of the El Domo Copper Gold project. Since acquiring the project last July, we have strengthened our in-country technical and management team.

We’ve optimized the site layout, project infrastructure designs and our open pit production plan and commenced detailed engineering for the process plant, while conducting some additional metallurgical testing to potentially improve gold recovery in our copper concentrate. Additionally, we have signed a powerline contract with the Ecuadorian state utility, CNEL. And we finalized the project’s materials balance. And for everyone, this is basically an earthmoving schedule and it really speaks to exactly what moves when to where, and that includes ore coming from the open pit. We have also adopted a unit cost method for contractor bidding, ensuring we pay only on a per ton of material move basis going forward. Based on this approach, we are awarded the first civil contract to RCC 14, a seasoned operator in country with over a decade of experience building large infrastructure and mining projects in Ecuador.

The RCC is now mobilized to build the temporary camp, initial phase of the tailings facility, the waste dump and other important infrastructure. The remaining two civil contracts for pit stripping and mining as well as for CNEL process plant construction are set to be awarded in the coming months, keeping us on track for initial production targeted in the second half of 2026. We look to provide guidance on our capital budget for fiscal 2026 along with our production targets in April. At the early stage Condor project, our focus has been on completing a resource review to assess future development plans or what would be a high-grade underground gold mine, and we continue to develop an exploration plan as we further our understanding of the project.

We are committed to working closely with the Government of Ecuador, local communities and our in-country partners Salazar Resources. Our focus on responsible and sustainable development aims to create lasting benefits for both the local communities in the country. And for that – with that, operator, I would like to open the call for questions.

Operator: [Operator Instructions] Our first question comes from the line of Dalton Baretto from Canaccord. Your line is open.

Dalton Baretto: Thanks operator. Good morning guys. I am going to start with sort of a housekeeping question here. My understanding is that you guys aren’t exposed at all to a lot of the tariff talk that’s happening. I just want to confirm that that’s the case in how you are fielding questions from investors. Thank you.

Lon Shaver: Yes. Hi Dalton and thanks. Yes, question is definitely coming up on that front. But as you know, we sell all our concentrates to smelters in the country. And that’s really not that different from, say, a Mexican or a Peruvian miner that’s producing concentrates that obviously has to ship them to a smelter. But obviously, there is advantages to us being a domestic producer. And really, once the metals leave our mine site in concentrate form, and we have been paid for them, we really have no further exposure. And we are not exporting anything from China. Obviously, I sometimes joke the only thing we export is cash in the form of dividends. So, we are not bringing anything out of the country to bring into the U.S. But obviously, Dalton, your analysis follows the sector and the world markets.

So, if the tariffs were to impact global economic activity in some way, and that’s somehow led to an impact on global metals prices, we would be affected indirectly like any other miner that would be in your coverage universe.

Dalton Baretto: Got it. Thank you for that. And then just as a follow-up on El Domo. Is it – I mean are you planning to put out some sort of an overall game plan going forward with this April update, how comprehensive is it going to be?

Lon Shaver: Yes, we are. And what we will do if we have the benefit of some more contracts being signed, then we will have some fixed numbers in terms of being able to report on actuals. But what we will be putting together is a budget, which is our best estimates of both the total construction as well as the budget for this current fiscal year. So, have to wait just a little bit longer, but we will have numbers to provide that update. It just seemed a bit premature to put them out now while we are in the midst of finalizing some very important details regarding the construction. But we continue to see the opportunity to cut back on that initial capital, which in the feasibility study have been $248 million. And there is nothing that we are seeing now that causes us to change our view.

Dalton Baretto: Okay. So, that’s fine on the CapEx. But just in terms of a mine plan because I know you guys are looking at pretty much everything. Are you going to put an updated mine plan as well?

Lon Shaver: The mine plan isn’t really expected to change once we get into production that much. So, it’s more just related to pre-stripping and some of the scheduling upfront, but we don’t see a huge impact on the actual mine plan once we are into mining. So, the production numbers that you would be using from the feasibility study are still the best to use going forward.

Dalton Baretto: Got it. Thank you. And if I can just squeeze one last one. Is Salazar still committed to their stake, or is there an opportunity for you to consolidate that as well?

Lon Shaver: We can’t comment on that. You will have to ask them. But obviously, we are very happy having a local partner in country and our relationship with Salazar is very good.

Dalton Baretto: Got it. Thanks a lot and that’s all for me.

Operator: Our next question comes from the line of Joseph Reagor from ROTH Capital Partners. Your line is open.

Joseph Reagor: Hey Lon and team. Thanks for taking the questions. So, I guess first thing, part of modeling your guys’ assets is the difference in pricing that you guys get for individual commodities being Chinese-based rather than the rest of the world. As you look at El Domo and the concentrates you will produce there and the sales you have, should we be more modeling like an LME pricing basis or an SME pricing basis?

Lon Shaver: Yes. No. an LME and a more typical pricing structure would be appropriate. We have got in place an off-take agreement that was entered into by Adventus with the concentrate traders, and this is based on sort of market terms and conditions at the times of delivery. So, if you use Western-based LME pricing and a more typical concentrate pricing model that would be appropriate.

Joseph Reagor: Okay. That’s helpful. And then I know the intention is to keep the mill running through the Chinese New Year this year. Do you have kind of a rough estimate of how much extra tonnage you are going to get? I know you always have a stockpile, but how much of that you are going to process during this extra milling time?

Lon Shaver: Our view – I mean obviously we are through Chinese New Year now. But we are still milling stockpile awards, and we will be doing that. I think our current estimate is that we will end the quarter with a more typical a more typical ore inventory that we would have carried in the past. So, not the 145,000 tons, but I think in the past, we have had somewhere in the range of sort of the 15,000 ton type numbers or whatever that we have carried. So, I think you could model that we will have run through the bulk of the ore stockpile to the end of March.

Joseph Reagor: Right. And adjusting that 15 to the fact that the mill is a little larger, that number might be a little larger.

Lon Shaver: Yes. I mean we haven’t sort of hit steady state yet. And obviously, as we are ramping up production on the mine, and we have been, and that’s obviously why we were able to build that stockpile. As we are ramping up, there will be periods of time where something we will get a point where we are running at a higher rate from the mine. And obviously, the mill now is in a position to ramp up to match that.

Joseph Reagor: Okay. Thanks and congrats on good quarter.

Lon Shaver: Thanks Joe.

Operator: [Operator Instructions] This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Shaver for any closing remarks.

Lon Shaver: Okay. Well, that’s great. I would like to thank everyone for tuning in today. And as always, if anyone has any further questions please call or e-mail us, and we look forward to hearing from you and continuing the conversation. Thanks everyone and have a great day.

Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a wonderful day.