Silver Producer with $12 Costs at $35+ Prices Stands Strong While Building New Project in Ecuador

In the competitive landscape of precious metals mining, Silvercorp Metals has emerged as a standout performer with a two-decade track record of profitability that sets it apart from industry peers. Operating primarily in China, the company has demonstrated remarkable resilience throughout multiple market cycles, generating consistent free cash flow even during periods when silver prices languished at much lower levels.

The company’s cost structure represents a significant competitive advantage in today’s market. With all-in sustaining costs of just over $12 per ounce of silver, Silvercorp enjoys substantial profit margins as silver prices hover around $35-36 per ounce. This cost efficiency stems from the maturity of its Chinese operations and production expertise developed over nearly 20 years of continuous operation.

“We’ve been able to be profitable at much lower silver prices, but now that we’ve hit into this band, we’re trading in that $35-36 range,” said Lon Shaver, President of Silvercorp Metals, highlighting the company’s favorable position in the current market.

Unlike many junior miners that struggle to fund growth initiatives, Silvercorp’s profitability has allowed it to accumulate significant cash reserves, which are now being deployed toward strategic expansion. The company’s growth strategy focuses on geographic diversification while maintaining its core competency in precious metals production.

The centerpiece of this expansion is a new mine under construction in Ecuador, with production targeted to begin in 2027. Work is already underway, with the company having signed the first of several major bid packages late last year. Current activities include road preparation, development of waste dump areas, and establishment of temporary camps.

“We’re targeting to have it ready to go and switched on at the end of 2026. So, we’ll start to see production coming out in 2027,” Shaver explained. Notably, this significant growth project is being funded through internally generated cash flows, avoiding shareholder dilution through equity raises—a rare achievement in the capital-intensive mining sector.

Industry analysts point to the changing fundamentals in the silver market as a tailwind for established producers like Silvercorp. Management believes the market has entered what they describe as a “new paradigm” for silver pricing, where prices are unlikely to fall below $30 per ounce and could reach $40 in the foreseeable future.

This structural shift is driven by silver’s unique position as both a precious metal and an industrial commodity. Investment demand has strengthened as inflation concerns persist, while industrial consumption continues to grow, particularly in green energy applications like solar panels and electric vehicles.

“People are recognizing the fact that there are positive attributes to both elements of silver’s dual nature—both the investment fundamentals and that precious metals store of value currency hedge aspect of silver, as well as the pure supply-demand imbalance that exists,” Shaver noted.

The supply side of the equation further supports this bullish outlook. New silver projects face increasingly complex permitting processes, financing challenges, and technical hurdles. Industry participants describe the development pipeline as “skinny,” suggesting limited new supply additions in the near term, which could further strengthen pricing fundamentals.

Beyond its core operations and Ecuador expansion, Silvercorp maintains strategic optionality through its investment in New Pacific Metals, providing exposure to promising silver assets in Bolivia. “We’ve got some excellent exposure to two great silver growth assets in Bolivia through our position in New Pacific. So that’s something that could potentially be a catalyst for us down the road,” Shaver said.

This diversified approach to growth—combining operational expansion of existing assets, development of new mines, and strategic investments—provides multiple avenues for future value creation while managing jurisdictional risk.

Silvercorp’s capital allocation strategy reflects a disciplined approach to growth. Rather than pursuing aggressive expansion that could strain financial resources, the company has methodically built cash reserves from profitable operations to fund measured growth initiatives. This approach reduces execution risk and maintains financial flexibility for future opportunities.

As the silver market continues to evolve, companies with established production, low costs, and strategic growth initiatives appear well-positioned to benefit from improving fundamentals. With its combination of operational profitability, growth pipeline, and favorable cost structure, Silvercorp Metals exemplifies the type of producer that could thrive in what management sees as a new era for silver prices.

“A lot of things that we want to do as a society are going to mean more silver consumption,” Shaver observed, pointing to the long-term demand drivers that could support sustained higher prices for the metal that has been integral to both monetary systems and industrial applications throughout human history.