VANCOUVER - Silvercorp Metals Inc. says profit and sales revenue dropped sharply in the latest quarter on lower silver prices and a drop in metal production.
The Vancouver-based miner (TSX:SVM), which has been fighting fraud allegations, says it earned net income attributable to equity holders of $6.1 million, or four cents per share for the period ended June 30.
That's down from $25.6 million or 15 cents per share in the same period last year.
Silvercorp, which operates primarily in China, posted sales of $44.5 million for the quarter, down from $69.7 million year-over-year.
Adjusted net income, excluding one-time items, was $8.1 million, or five cents per share — missing analyst expectations by five cents.
The average analyst estimate had been for earnings of 10 cents per share, according to Thomson Reuters.
During the quarter, the company said it sold 1.2 million ounces of silver, 400,000 ounces less than in the same period last year. The realized selling price for silver was $22.97 per ounce, a decrease of 23 per cent year over year.
The company also revised its guidance for the fiscal year. On a consolidated basis, the company now expects to produce approximately 5.5 million ounces of silver, 8,300 ounces of gold and 85 million pounds of lead and zinc.
Earlier this year Silvercorp said it expected to yield 5.9 million ounces of silver, 3,350 ounces of gold, and 87 million pounds of lead and zinc.
It also said construction of a new power supply facility and the unexpected suspension of the construction of the tailings storage facility at its GC project in Guangdong Province means production there will start three months later than planned.
Cost of sales in the quarter was $19 million, an increase of 35 per cent compared to the same period in 2011, due to more ore being mined and processed along with a higher production cost per tonne.
Silvercorp has a lawsuit against several companies and individuals accusing them of spreading lies about the mining company as part of a short-selling stock manipulation scheme.
Shares in Silvercorp dropped by as much as 20 per cent in a day last year after anonymous letters were sent to B.C. and Ontario securities regulators and comments were posted on websites alleging Silvercorp had overstated its financial statements and resource deposits.
The company has repeatedly denied any wrongdoing and alleged that it was the victim of a smear campaign designed to drive down the value of its shares.
Silvercorp is the largest primary silver producer in China with four silver-lead-zinc mines at the Ying mining district in Henan province. In addition to its operations in China, Silvercorp is developing the Silvertip project in northern British Columbia.
The company bought the project from Silver Standard in 2010 for $15 million in cash and shares.
Companies that operate in China but list on foreign stock exchanges were put under the microscope following accusations against Chinese timber company Sino-Forest Corp. (TSX:TRE) by short-seller Muddy Waters Research.