Silvercorp’s Adjusted Net Income Climbs 27% as Operating Cash Flow Hits $39.2M in Q2 Fiscal 2026

Higher Metal Prices and Strong Gold Output Boost Adjusted Earnings

Silvercorp Metals Inc. reported a sharp improvement in underlying performance for Q2 Fiscal 2026, posting adjusted net income of $22.6 million, up 27% from a year earlier. The increase comes as both silver and gold prices climbed, and the company produced 64% more gold compared to the same period last year. Revenues reached $83.3 million, up 23%, primarily on higher realized prices and improved production at key operations.

Notably, Silvercorp sold 1.66 million ounces of silver and 2,033 ounces of gold this quarter, reflecting year-over-year increases in both categories. Operating activities delivered $39.2 million in cash flow—69% higher than Q2 last year—showcasing management’s emphasis on converting production into real cash.

Underlying Profitability Remains Robust Despite Accounting Loss

On a GAAP basis, Silvercorp reported a net loss of $11.5 million for the quarter, stemming from a $53.2 million non-cash charge related to mark-to-market adjustments of convertible notes. Stripping out this one-off accounting effect and similar items, adjusted EBITDA soared to $38.3 million—a 31% jump over Q2 last year—reinforcing the operational health of the business.

Production Efficiency: China Mines Drive Margins While Weather Hits GC Output

Production results point to Silvercorp’s steady expansion. The flagship Ying Mining District delivered 1.53 million ounces of silver and 2,085 ounces of gold, supporting a 6% year-over-year rise in silver equivalent output. Costs at Ying were notably well managed: the cash cost per tonne dropped to $82.89 from $92.86 a year ago, driven by increased use of cost-efficient mechanized mining methods. The AISC (all-in sustaining cost) per tonne also improved to $139.22 from $146.90.

The GC Mine faced a 10-day interruption due to severe weather, which led to slight drops in metal output but still kept costs within guidance. Silver production at GC was 0.13 million ounces, down 7% year-over-year, with cash costs rising to $58.20 per tonne.

Stronger Prices and Free Cash Flow Position Fuel Ongoing Growth

The quarter was defined by price momentum: silver fetched $33.89/oz (up 28%), gold $2,986/oz (up 37%), supporting strong top-line growth. Free cash flow hit $11.4 million versus just $0.56 million in the prior-year quarter, providing fuel for investment and shareholder returns. Total cash, cash equivalents, and short-term investments grew to $382.3 million, while equity investments in other companies rose sharply to $180.2 million, giving Silvercorp flexibility for ongoing development.

Capex and Growth Initiatives Set Up a Robust Future Pipeline

Capital spending remained disciplined, totaling $26.7 million for the quarter—a 5% decrease from Q2 last year. Notably, investments focused on expanding mine life at existing operations in China and on fast-tracking the El Domo mine construction in Ecuador, where $10.9 million was spent. A first $43.9 million was also drawn from stream financing for El Domo, indicating major construction progress.

With development efforts scaling at El Domo and early work at the Condor Project in Ecuador, Silvercorp is actively growing beyond its core Chinese portfolio, laying groundwork for the next phase of production and cash flow growth.

Takeaway: Solid Execution, Prudent Investment, and Clear Growth Visibility

Despite non-cash charges weighing on headline net income, Silvercorp’s core business is demonstrating robust financial and operational performance. Higher metal prices, rising gold production, improved efficiency, and prudent capital allocation are driving cash flow and setting up continued expansion—both in China and new geographies.

For investors, the story is one of resilient margins and disciplined investment amid commodity price strength. The upcoming quarters will reveal how efficiently Silvercorp translates its strong cash position and pipeline projects into sustainable returns.

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