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Silvercorp Metals receives a reiterated 'buy' from Canaccord Genuity on valuation grounds

"Based on our conversations with investors, the true value proposition of the company is not well understood"

Silvercorp Metals Inc -
Canaccord Genuity also raised its share price target for Silvercorp to $11.00 from $10.75

Silvercorp Metals Inc (CVE:SVM) has had its 'buy' stance repeated by Canaccord Genuity analyst Dalton Baretto on valuation grounds. 

Following the third quarter operating results last week, Baretto has also repeated his share price target for Silvercorp of $11.00. Silvercorp shares recorded a 16% gain in calendar 2020, underperforming the peer group average of 51%, despite a 45% rally in the silver price. 

READ: Silvercorp Metals on track to meet fiscal 2021 output guidance as it reports third-quarter numbers

The analyst notes that in fiscal 3Q, overall production and sales figures were modestly below Canaccord estimates, driven by lower ore milling rates at the Ying mining complex.

"We are not concerned with the modest miss, as SVM is well on track to meet its fiscal 2021 production guidance for all metals. In addition, the company will likely make up at least of part of the lost production this quarter," said Baretto.

"We expect management’s focus in calendar 2021 to remain on the same key aspects as in 2020: operational prowess, exploration, and the acquisition of another asset (one outside China). Key catalysts include movements in the silver price, capital allocation decisions, and acquisition efforts."

On Friday, January 15, Silvercorp told investors that it is set to achieve its annual production guidance for fiscal 2021 as the miner posted operating results for its third quarter to end-December, 2020. 

Consolidated silver production for the three months to December 31 last year was 1,676 ounces, down from 1,779 ounces in the same quarter in fiscal 2020. 

Gold output for the period came in at 900 ounces (the same as in 3Q, 2020), while the company produced 17,111 pounds of lead, down from 20,044 pounds in the same quarter last year. It generated 8,673 pounds of zinc, up from 8,035 pounds in the same period of fiscal 2020.

For fiscal 2021 as a whole (to end March this year), Silvercorp said it was on track to produce between 6.2 and 6.5 million ounces of silver, between 66.1 and 68.5 million pounds of lead, and between 24.5 and 26.7 million pounds of zinc.

The metals producer generates gold, silver, lead and zinc from two sites -  its Ying project and the GC mine - both in China. 

Contact the author at jon.hopkins@proactiveinvestors.com

 

Quick facts: Silvercorp Metals Inc

Price: 6.59 CAD

TSX:SVM
Market: TSX
Market Cap: $1.16 billion
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