Silvercorp Metals (TSX: SVM; WKN: A0EAS0) reported revenue of US$83.3 million for the second quarter of fiscal year 2026, which ended on September 30, 2025 – a 23% increase compared to the same period last year. Production amounted to 1.66 million ounces of silver, 2,085 ounces of gold (totaling approximately 1.84 million ounces of silver equivalent), 14.23 million pounds of lead, and 5.64 million pounds of zinc. Drivers were higher selling prices for silver (+28%) and gold (+37%), as well as slightly higher sales volumes. Operating income from mining operations rose to US$40.9 million.
Ultimately, Silvercorp Metals reported a net loss of US$11.5 million (–US$0.05 per share) – primarily due to a non-cash valuation effect (US$53.2 million) on the fair values of convertible bonds. Adjusted for these and other special effects, net income was US$22.6 million (US$0.10 per share). Adjusted EBITDA amounted to US$38.3 million (US$0.18 per share). Operating cash flow increased to US$39.2 million, and free cash flow rose to US$11.4 million.
All-in Sustaining Costs (AISC) per ounce of silver, after byproduct credits, were US$13.94. Net cash costs per ounce of silver equivalent amounted to US$0.002 – in the previous year, they were negative due to different volumes and credits.
Operations: Ying Mining District and GC Mine
In Q2, Silvercorp Metals produced 1.53 million ounces of silver, 2,085 ounces of gold, 12.93 million pounds of lead, and 1.42 million pounds of zinc in the Ying Mining District in China. Temporary closures of individual mining areas (now reopened) affected the quarter’s performance, while the cash cost basis per tonne of ore decreased to US$82.89 (previous year: US$92.86), partly due to a higher proportion of mechanized mining methods. AISC per ounce of silver in the Ying District was US$11.75 after byproduct credits. For the current third quarter, the company expects approximately 346,000 tonnes of ore production in the Ying District (+30% compared to Q2).
The GC Mine delivered 0.13 million ounces of silver, 1.31 million pounds of lead, and 4.22 million pounds of zinc. Production losses resulted from heavy rain and typhoon events over approximately ten days. Cash costs per tonne increased to US$58.20 due to lower ore tonnages (Q2 FY 2025: US$50.08). For the third quarter, Silvercorp Metals anticipates approximately 83,000 tonnes of ore production (about +9% compared to Q2). AISC per ounce of silver after credits was US$4.71 for the quarter, with values in this mining operation typically fluctuating more significantly with zinc/lead credits.
In summary, Silvercorp Metals recorded largely stable silver production and increasing gold production, while zinc volumes declined quarter-on-quarter. This mix reflects the polymetallic nature of the deposits in the Ying District and at GC.
Financial Position, Cost Structure, and Investments
At the end of the quarter, Silvercorp Metals held US$382.3 million in cash, cash equivalents, and short-term investments (previous quarter: US$377.1 million), as well as equity investments with a market value of US$180.2 million (previous quarter: +US$108.0 million). Working capital amounted to US$311.9 million.
AISC increased compared to the prior-year quarter, driven by higher sustaining investments, a mining rights royalty levied in China since the third quarter of 2025, and higher cash costs per ounce of silver due to a 15% increase in ore tonnage production with nearly unchanged silver recovery. This was offset by lower administrative costs.
Silvercorp Metals invested US$15.8 million in its Chinese sites during the quarter (exploration, development, equipment). Total Capex was US$26.7 million (previous year: US$28.1 million). For the Ecuador portfolio, US$10.9 million was capitalized, primarily for the construction and development of the El Domo mine and for permitting activities at the Condor project. Free cash flow remained positive despite construction expenditures – an indication of internal cash generation from operations.
Silvercorp Projects in Ecuador: El Domo Construction Progress and Condor Studies
At El Domo (Curipamba Project, Ecuador), Silvercorp Metals reported significant construction progress during the quarter: Approximately 1.29 million m³ of material were moved for site preparation, road construction, and drainage (+249% compared to the previous quarter), a 481-bed construction camp was completed, and construction of the Tailings Storage Facility (TSF) began in September 2025. Since January 2025, a total of approximately 1.66 million m³ has been moved, and US$18.9 million in Capex and advance payments for equipment have been made. Contracts for external power connection were awarded to qualified Ecuadorian contractors (subject to review by CNEL), and equipment orders totaling approximately US$22.2 million were placed.
After the quarter-end, the company called the first tranche of US$43.875 million from the streaming financing with Wheaton Precious Metals International (total volume US$175.5 million) for the construction of El Domo. Concurrently, a Preliminary Economic Assessment (PEA) for the Condor project was initiated in Q2 FY 2026, with completion scheduled for the current third quarter.
For Silvercorp Metals, Ecuador is set to become a second operational focus alongside the cash flow backbone in China. The next milestones include further construction progress at El Domo and the completion of the PEA for Condor, while production rates at the Chinese mines are expected to recover after temporary restrictions.
