Silvercorp Metals Updates El Domo Project Financials
Trading Symbol: TSX/NYSE American: SVM
Silvercorp Metals Inc. announces an update regarding the construction budget and timeline for the El Domo Project. The updated budget is now set at $284 million, which is an increase of $44 million from the previous estimate of $240 million made earlier. This adjustment reflects the company's commitment to meticulous planning and execution to ensure the project's success.
This latest budget revision aligns with the increases and changes that have taken place since the initial estimate, which was based on the 2021 Feasibility Study Budget, projected at $248 million. Here are the key factors contributing to this updated budget:
- **VAT Costs**: The Value Added Tax (VAT) rate has been revised from 10% to 15%, effectively increasing this cost from $19 million to $35 million. This adjustment contributes to a significant portion of the increased budget, though the Company anticipates recovering this VAT as a tax credit in the first year of operations.
- **Construction Changes**: Package #1 has increased by $5.1 million owing to necessary detailed design changes and the addition of two rock buttresses for waste dumps.
- **Equipment Purchases**: The expenses for the process plant equipment and material purchases have risen by $15 million. This is attributed to included equipment previously missing in older feasibility studies, along with underestimation in logistics costs.
- **Process Plant Construction**: Estimated costs for the construction and installation of the process plant have escalated by $7.2 million, based on accurate quotes obtained during construction phases.
- **Access Road Enhancements**: An increase of $3.3 million is attributed to upgrades required for the new southern access road to accommodate large container trucks.
- **External Powerline Costs**: Added expenses of $2.3 million represent payments to the Ecuador National Power Company for required land easements and oversight.
- **Missing Items and Quality Assurance**: Missing components like Engineer of Record supervision and construction quality assurance have cumulatively added $10.1 million to the budget.
- **Support for Local Economy**: A $6.6 million allocation to local purchases helps support local businesses and supply chains.
- **Owner's Cost Adjustments**: The owner's cost has also seen an increase from $30 million to $32.5 million, adjusting for various expenses incurred.
- **Mining and Stripping Package Savings**: The estimated cost for Package #2 has seen a reduction of $4.2 million thanks to favorable bidding outcomes.
- **Overall Contingency**: The contingency fund is now reduced from 20% to 8%, indicating a more precise estimation of budget needs while accounting for ongoing uncertainties in construction.
In light of these adjustments, the project is now expected to begin production by July 1, 2027, which represents a slight delay from previously forecasted timelines.
2025 Progress Overview for El Domo Project
The year 2025 proved to be pivotal for the El Domo Project, with significant strides taken on various construction packages. The focus remained primarily on the first construction package, including site preparation, road construction, and water management initiatives. A new construction team was established, and despite adversity in the form of a challenging rainy season, considerable progress was made.
Here is a summary of the key achievements such as:
- Investment of $44.5 million, which corresponds to approximately 16% of the newly adjusted budget.
- Completion of archaeological clearances for over 1,000 units, fully complying with permit requirements.
- Moving over 2.6 million cubic meters of material, which facilitates site preparation.
- Construction of 8.1 km of internal haul roads and substantial upgrades to external access routes.
- Establishment of a sizable construction camp, enhancing logistical efficiency.
- Successful execution of blasting operations to prepare fresh rock material needed for site development.
- Initiation of the procurement process for essential equipment needed for operations, while handling community engagements effectively.
- Vigorous enhancement of a safety culture, achieving over 960,000 work hours without major incidents.
- Strict adherence to environmental management protocols throughout construction activities.
Contractual Developments for Mining and Stripping Activities
In a recent competitive bidding process, the company anticipates entering into a contract with China Railway 19th Bureau Group Co., Ltd. for mining and stripping operations at the Project site. This contract, valued at around $35 million for the construction phase and approximately $63 million for subsequent five-year operations, embodies detailed phases including essential groundwork and mining operations.
Processing Plant Developments and Future Steps
Moving forward, Yantai Jinpeng Mining Machinery Co., Ltd. is finalizing the detailed engineering designs for the processing plant, which is expected to help solidify cost estimates as part of the upcoming bidding stages. With critical equipment already ordered, key variables such as construction costs remain focal points for planning.
Powerline Project and Backup Solutions
The project requires a comprehensive external powerline spanning 61.3 km. The northern segment and associated substations have been contracted, with anticipated completion in 2027. Moreover, 14MW diesel generator sets have been procured to provide a reliable power supply irrespective of external powerline status.
Company Overview
Silvercorp, a Canadian mining entity focused on sustainable production of silver, gold, lead, and zinc, is distinguished by its commitment to creating shareholder value through effective cash flow management, organic development strategies, and ongoing mergers and acquisitions. The company prioritizes responsible mining practices while adhering to environmental, social, and governance (ESG) obligations.
Frequently Asked Questions
1. What is the current budget for the El Domo Project?
The updated budget for the El Domo Project is $284 million.
2. When is the production expected to begin?
Production is scheduled to start on July 1, 2027.
3. What have been the significant achievements in 2025?
In 2025, over $44 million were spent, and significant construction and archaeological clearance milestones were accomplished.
4. Which company has been contracted for mining operations?
China Railway 19th Bureau Group Co., Ltd. has been selected for the mining and stripping operations.
5. How does Silvercorp uphold its commitment to sustainable practices?
Silvercorp emphasizes responsible mining, community engagement, and adherence to environmental standards as part of its operational strategy.
