Silvercorp Metals (TSX:SVM, NYSEMKT:SVM) reported its financial and operating results for the first quarter endedJune 30, 2017. All amounts are expressed in US Dollars.

FIRST QUARTER HIGHLIGHTS

  • Net income attributable to equity shareholders of$10.9 million, or$0.07per share1, up 134% compared to net income attributable to equity shareholders of$4.7 million, or$0.03per share in the prior year quarter;

  • Sales of$39.7 million, up 13% compared to$35.3 millionin the prior year quarter;

  • Gross margin of 50% compared with 45% in the prior year quarter;

  • Cash flow from operations of$16.9 million, compared to$20.2 millionin the prior year quarter;

  • Dividend of$1.7 million, or$0.01per share, paid to the equity shareholders;

  • Ended the quarter with$102.1 millionin cash and cash equivalents and short-term investments, an increase of$5.6 millionor 6% compared to$96.5 millionas atMarch 31, 2017;

  • Silver, lead, and zinc metals sold amounted to approximately 1.5 million ounces silver, 15.9 million pounds lead, and 5.0 million pounds zinc, down 8%, 5%, and 4%, respectively from the prior year quarter;

  • Head grades were 304 grams per ton (g/t) for silver, 4.6% for lead, and 0.8% for zinc at the Ying Mining District, compared to 308 g/t for silver, 4.4% for lead and 1.1% for zinc in the prior year quarter;

  • Total and cash mining costs per tonne ore2of$68.12and$50.29, respectively, compared to$68.70and$47.24in the prior year quarter;

  • Cash cost per ounce of silver2, net of by-product credits, of negative$3.57, compared to positive$0.08in the prior year quarter;

  • All-in sustaining cost per ounce of silver2, net of by-product credits, of$4.70, compared to$7.06in the prior year quarter; and,

  • Realized a gain of$4.3 millionon the disposal of the Company’s 2.5% net smelter return (NSR) in the Silvertip mine.

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1

Earnings per share refers to basic earnings per share

2

Non IFRS measure, please refer to section 10 of the corresponding MD&A for reconciliation

FINANCIALS

Net income attributable to equity shareholders of the Companyin Q1 Fiscal 2018 was$10.9 million, or$0.07per share, compared to$4.7 million, or$0.03per share in Q1 Fiscal 2017.

The Company’s financial results in Q1 Fiscal 2018 were mainly impacted by the following: i) the increase of metal prices, as the realized selling price for silver, lead, and zinc increased by 5%, 35%, and 65%, compared to the prior year quarter; ii) a$4.3 milliongain on disposal of Silvertip Mine’s NSR; offset by i) a$1.6 millionforeign exchange loss, ii) less metals sold, and iii) a 3% increase in per tonne cash production costs.

Salesin Q1 Fiscal 2018 were$39.7 million, up 13% compared to$35.3 millionin the same quarter last year. Silver and gold sales represented$20.2 millionand$1.0 million, respectively, while base metals represented$18.5 millionof total sales compared to silver, gold and base metals sales of$20.8 million,$0.9 million, and$13.6 million, respectively, in the prior year quarter.

Cost of salesin Q1 Fiscal 2018 was$19.7 millioncompared to$19.5 millionin Q1 Fiscal 2017. The cost of sales included$14.1 million(Q1 Fiscal 2017 $14.2 million) production costs,$1.1 millionmineral resources tax (Q1 Fiscal 2017 $0.4 million), and$4.5 million(Q1 Fiscal 2017 $5.0 million) depreciation and amortization charges. The increase of mineral resources tax was mainly because the mineral resources tax was levied based on a certain percentage of sales in the current quarter while it was levied based on the tonnage of ore milled in the prior year quarter. The decrease of depreciation and amortization charges was mainly due to higher mineral reserves at the Ying Mining District as defined in the NI43-101 technical report released inFebruary 2017, resulting in lower depreciation and amortization charges per unit of metal production.

Gross profit marginin Q1 Fiscal 2018 improved to 50%, compared to 45% in Q1 Fiscal 2017. The improvement of gross profit margin was mainly due to the increase of metal prices. Ying Mining District’s gross margin was 56% compared to a 49% gross profit margin in the prior year quarter, while GC Mine’s profit margin was 30% compared to a 17% gross profit margin in the prior year.

General andadministrative expensesin Q1 Fiscal 2018 were$4.6 million, an increase of 4% or$0.2 million, compared to$4.4 millionin Q1 Fiscal 2017.

Gain on disposal of mineral rights and propertiesin Q1 Fiscal 2018 was$4.3 millioncompared to $nil in the prior year quarter, as the Company’s 2.5% NSR in the Silvertip mine was disposed in the current quarter.

Income tax expensesin Q1 Fiscal 2018 were$4.0 millioncompared to$2.8 millionin Q1 Fiscal 2017. The income tax expenses recorded in Q1 Fiscal 2018 included current income tax expenses of$3.2 million(Q1 Fiscal 2017 $0.7 million) and deferred income taxes expenses of$0.8 million(Q1 Fiscal 2017 $2.1 million).

Cash flows provided by operating activitiesin Q1 Fiscal 2018 were$16.9 million, a decrease of$3.2 millionor 16%, compared to$20.2 millionin the prior year quarter. Before changes in non-cash operating working capital, cash flows provided by operating activities in Q1 Fiscal 2018 were$14.8 million, a decrease of$0.7 millionor 5%, compared to$15.5 millionin the prior year quarter. The decrease in cash flow provided by operating activities is mainly due to$4.1 millionincome tax paid in the current quarter while net tax refunds of$0.1 millionwere received in the prior year quarter.

The Company also paid dividend of$1.7 million, or$0.01per share to the equity shareholders, and ended the quarter with$102.1 millionin cash and short-term investments, an increase of$5.6 millionor 6%, compared to$96.5 millionas atMarch 31, 2