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
Baretto said: “Based on our conversations with investors, the true value proposition of the company is not well understood, as it is overshadowed by the China-centric presence, exposure to ‘secondary metals’ (silver, lead and zinc), non-traditional pricing structure (given methodology at Chinese smelters) and limited scale.”
He added: “The hallmark event for Silvercorp in 2020 was the attempted acquisition of Guyana Goldfields; ultimately Silvercorp was outbid by deep-pocketed Chinese entity Zijin Mining. We believe an M&A overhang may also be responsible for Silvercorp’s underperformance in 2020.”
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.
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Story by ProactiveInvestors
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