One Sector Is 'Firing On Both Cylinders' And Investors Are Still Underweight | Lon Shaver

We're speaking on the sidelines of the PDAC, the world's largest binding conference, and we have a

unique opportunity to gain some insights from the CEO of a large producing silver company,

SilverCorp Metals. I'm here with Lawnshaver President of SilverCorp. Metals and a ticker is SVM

both on the TSXV and the NYSE American SilverCorp Metals is a close to 3.7 billion dollar market

cap Canadian project, and we'll talk about the company in a lot of detail. What's next for the

company? What's next for the entire sector? Are we at a market top? Is the concern for a lot of

investors? Or is this just the beginning of much more growth? Lawn, welcome to the show. Good

to see you. Thanks, Dave. Pleasure to be here. Your stock was trading at just under I would say

$3 last year, around $3 last year, and now at $12.33. So that's a 4x from about a year ago. So

congrats on that. We'll talk about what you've done as a president of the company to gain

that torque to the silver price because that's what investors ultimately are chasing in this

environment. Let's address the current silver market overall. We're at the PDAC, the world's

largest mining conferences I was telling you offline. One of the concerns from investors,

and I see this from talking to people, as well as seeing on social media, these large funds

posting on social media, that they're concerned about a market top just based on sentiment,

alone from gauging new entrants to the marketplace at this conference. People who seem like tourists

and aren't really here for the long haul, and this in itself, and by the way, this is probably

the most packed conference in history. This in itself may signal a market top. That's just one

viewpoint. Let me get your viewpoint as an operator of an actual producing company. What is

different this time versus 2011, which was the then market top? What are miners doing differently?

Well, I think in terms of what miners are doing differently is focused on returns,

and that's what we're certainly focused on from our existing operations. You mentioned the

silver price. We've had a luxury of being a low-cost producer. What it just really means is that

these prices were just making more free cash flow than we ever had historically. That really is

attracting attention from investors, looking to get exposure to the space.

The mistakes that companies made in 2011, what are we doing as an industry right now to avoid

those mistakes? I don't know if I can comment on the entire industry. I know that we've been sticking

to our knitting on our game plan, which is to look at projects that fit our profile. We're looking

for things that we can get in and that are actionable. Not an interesting, exciting project,

but where there's a lot of de-risking still to be done from a technical or from a permitting

standpoint. If you look at the moves that we've made to add this growth pipeline, it's in projects

that we feel we can move ahead with quickly. That's certainly what we've done in Ecuador.

You're producing projects in China must have generated a significantly more cash flow this year

versus last because of where the market is headed or has head. What are you doing now with this

additional cash buffer? Well, really we're not adjusting our capital plans and we have capital

plans that have been ongoing out those minds to expand them, debondle them and move to more

mechanization. We haven't really changed the budgets. The excess cash flow that we'll be generating

will be available for us corporately to make investments to grow the company with new assets

and new jurisdictions. Have you been tempted or persuaded to as soon as the silver price reached

nearly $80 to look at a new project to acquire ASAP? We're not really chasing things based on

the current spot price. We look at things with a longer-term perspective, which has certainly

gotten more difficult when we look at targets now because of the price expectations from the seller,

as well as there being a very active buyers market with new money coming in and that's looking

to get deployed and exposed in the sector. We're really looking for those kinds of opportunities

that find a diamond in the rough or something that we can bring our particular skill set to to

unlock value and that value will get unlocked at these great prices but should be able to withstand

lower prices in the cycle. You've been in the industry a long time. What is really a standout

difference to you with what silver is doing right now versus when you first started in the industry?

Well, I think what silver has captured in terms of investor attention is really the fact that

right now it's dual nature. It's firing on both cylinders and so there is a very strong

industrial demand component to silver that has picked up in recent years because of the solar panels

but now electrification of our society, electronics, EVs, and now people are talking about silver and

what that could be in terms of some of these data centers and advanced computing technologies.

So right now there's just a very robust market for physical industrial demand and then you layer

on top of that the same kind of drivers that we've seen in gold which is the world's an unstable

place, not sure about where things are headed, where can I put my money as a store of value and a

hedge against currencies or against uncertainty. See that in gold, gold move first as is typically the

case but now investors are looking for the same kind of security in silver. Yeah, the demand factors

make sense but why do you think silver moves so much so quickly and there wasn't just over a period

of many years that it reached a hundred dollars. It was 30 and then all of a sudden 50 and then

within a month and a half. Well, that's typically been the case for silver in terms of being more

volatile and I think it's playing out very much according to plan or past patterns in that regard.

What needs to happen for the silver price to sustain current momentum you think?

Well, I think we've established a new level exactly what that is. We'll have to see. From our

standpoint, it's a level that really for us generates a lot of profit. I think the really

come back again to those supply demand factors. On the supply side, there's not really a lot of new

mining operations that are coming on imminently that are going to affect the, you know,

the silver market. So, question will be is whether investment demands stay strong.

And if it does, that keeps it from reversing and becoming a disinvestment supply.

And so that will be tied back to investor psychology as to what does the physical,

that the industrial market look like and those same factors that are driving gold.

Do you think the market has attracted a different type of investor now in 2026 and versus two years

ago? Well, I think it's a, I think the investors that are coming in now are realizing there's been

some great gains, but they're terribly underway at the sector. And based on everything that we're

seeing in terms of those market fundamentals for the metals are looking to find that exposure right

now. So let's just go back to your company and use that as an example. So again, your current

share price is 1231. It was exactly $3 just about a year ago. And that's US.

US, yeah, US, sorry, to specify that. It's in the NYS, the ARCA exchange. What have you done to

gain that 4x leverage? Because even, you know, silver is up about 150, 200 percent in about that

period. 4x is significant leverage to the silver price. What happened?

Well, one from our financial results has done some of the work for us because certainly our

results have reflected those higher silver prices and our profitability. But then it's getting

out and telling the story to investors who are looking for those entry points to get exposure.

And so we've been active getting out and telling our story. And I think the other thing that we've

been able to do and surprise people who thought they knew what silver court was is we've come out

and shown that we've got a very interesting growth pipeline that we did not have before.

And I think that's brought new investors into the story. Did you make new acquisitions last year?

Well, we closed an acquisition in late 2024. And the key reason for that was the lead project was

a permitted project that we could start building a mine. And we started in January of 2025

building that mine. So we're showing progress on that build, which will come to an end here

in mid-2027 when we think it'll come on stream. There's another project in that acquisition,

a second project in Ecuador that we think has great promise. And then most recently in January,

we pulled off an acquisition of a significant gold resource in Central Asia and at a price that

would be hard to achieve in other markets. So let's walk through all the projects here of

silver court medals. You've got producing projects. You've got wanting them to construction.

You have an exploration project and a permitting mine. So investors are probably wondering to you

or wondering to themselves right now, Lawn. How would you allocate resources now given where

silver price is such that you would maximize your hold of return in the next two years? In other

words, how would you prioritize how to spend your money to grow your company at current stages?

Because you have projects at all stages in the mine cycle. Well, they each have a bit of a

different capital profile to them. So at our mines in China, fully self-funded at a cash flow,

our development plans haven't changed. Our CAPEX estimate for this year,

fiscal year, which is ended March, is 75 million. No change to that. You can kind of expect that

we'll continue this program of debodel, necking, and expansion. And it's going to be incremental.

I mentioned the project in Ecuador, El Domo, that we're in the middle of construction. We'd

spent 45 million up to December this year in 2026. It's going to be a big spender of 190 million

on that project, which we can find out of cash, but also we have contributions from Wheaton,

who have a stream on that project. And so we would expect to make a few more draws against that.

The other project in Ecuador, earlier stage, fairly minimal capital, as we move things along

and get more information, leading up to hopefully a construction decision in a few years.

And the projects in Kyrgyzstan that we acquired, the first one has a fairly modest initial capital

of 150 million to get an open pit to heap-leach mine running. And we expect that we could start

deploying capital on that later this year with what would be in our plans, a fairly rapid build cycle.

I've talked to some miners, not just in this over space, but outside Severing Copper and Gold,

that have, as they have grown like you in the last year in terms of market cap,

they've now started to de-risk some of their profiles, meaning they've started to prioritize

later stage development projects and de-prioritize some of the earlier stage projects.

Is that something that's always been our strategy?

Yeah. As I said, we've been focused on looking at projects that have been de-risked

from a technical standpoint and from a permitting standpoint. And so our move into Ecuador

is because that lead project had received the permit to go into full construction.

So we've always been employing...

But that had nothing to do with the price of Silver.

No, no, that was finding an opportunity-driven situation that we felt would provide our shareholders

with a good return.

Yeah.

Okay. And has management given guidance on the EBITDA margin of reproducing mines,

assuming Silver doesn't change next year?

Well, we've on a trailing basis, our EBITDA margin is north of 50%,

and right now pick a silver price, and then we then we can do the math.

But you're not planning to change the cost profile at all for...

No, I mean, what we're doing in these programs at Ging in particular is focused on more mechanization.

And so we can deliver more tons of ore to the mill at a lower cost intensity,

and then we've expanded our mill.

So we're getting efficiencies at the milling side as well.

So if anything, we're seeing our operating costs per ton coming down as a result of that.

Overall, corporate vision and strategy for Silver Core.

And I just want to focus on the jurisdictional aspect of this company.

You have producing mines in China, and then you have developing and exploration projects in South

America. These are two parts of the world.

A lot of miners have everything consolidated in one place.

What is your vision here?

Well, I think there's a number of other companies that do have geographic diversity.

And again, it comes down to opportunity driven.

So we've identified regions in regions that are open for business for us.

And it's a case of looking at what are those projects that meet the technical criteria.

And then is there a hospitable environment from the top down political side as well as the

bottom up on the community side?

And if we can check all of those boxes, we think we know we have, we could have a winner.

And if we then look and think that we can get going quickly,

use our skills and access to equipment and potentially consulting and contracting that we've

been able to, for example, in Ecuador, then those are our situations that we can see moving

ahead quickly and getting us to that finish line, which is adding another revenue generating

cash flow, producing asset.

So let's talk about Aldomo and Ecuador. Not only is it under construction, but it's not a

silver deposit, correct? So tell us about that project. It's copper gold. And ultimately,

what percentage in a couple of years, let's say five years, what percentage of the

reduction do you think will be silver versus other metals?

I mean, silver will come down in the future, unless we identify and bring on some other projects.

But from our standpoint, that's okay in the future because what we need to do is really grow

a bigger company. And if you look at our peers in the silver sector,

increasingly, they've taken on projects in other commodities, most often gold.

You know, we looked at Aldomo and saw it as just an inherently billable project for us

to establish a beachhead in Ecuador. And we were very comfortable with adding

some element of copper to our mix. We currently have 70% of our revenues coming from silver.

The balance would be from lead, gold, and zinc in that order. We think gold will grow from our

existing mines in China and adding this sort of slice of copper to the mix. You know, we think

is okay. And we think it's good diversification. The website says it's slated to be under production

in late 2026. Is that still the timeline? I know we've updated the schedule just a couple

weeks ago and we're looking at getting it up and running July of 2027. Okay. And is it fully funded?

So far? Fully funded, yeah. Okay. And how does that change overall NPV of the company

once it starts getting into production? Well, I think the sell side and some investors will look at

the project, run their numbers, come up with an NPV, and then logically risk adjust that based

on the fact that it's not currently in production yet. But as we de-risk and get closer to that

production milestone, we should look to a re-rate in that NPV or in the implied target price

from its contribution to our overall package. And your other projects that are a more early stage,

how far away from construction or production are they? Well, the first phase of production coming

from Kyrgyzstan, we can see us getting into construction later this year, which would continue

into 2027 and get, or on the heap leach paths late 2027, maybe poor gold then, or if not early 2028.

And then the Condor project could make a contribution coming from that gold in Ecuador

in sort of 2029, 2030 timeframe. But it's earlier stage from a permitting in a technical standpoint,

but we're just looking ahead to what we see the asset could be. How would you explain the

uniqueness of the jurisdictions in which you operate to a layman who may not be a mining expert? Let's

start with Ecuador, since we're just talking about Ecuador. Well, Ecuador is definitely got a great

middle or endowment, but very notably compared to its neighbors, it only has two commercial

scale mines operating in the country. And those have been, I would say, successful from a technical

standpoint, and also have been a great contributors to the Ecuadorian economy. El Domo is slated to be the

third commercial scale mine that we're building. And from a country standpoint, the country has made

a commitment to grow the mining industry and have it become a bigger portion of overall GDP.

So there's support for the industry in the country. I talked to some other people in this space,

and everyone's talking about the uniqueness of their jurisdiction. A lot of American operators will

cite Nevada as an example of something with goods to port from the government, good infrastructure,

long history of mining. You're operating at some probably more remote regions, but there are still

qualities here that perhaps investors will not get. And let's say Alaska or Nevada, what are

these qualities? Well, I think the quality is entry point and entry price. If you step into a

well-established operation in Nevada that has those characteristics, you're going to be paying

top valuations for that. And so if you're pricing that off of $5,000 gold and it stays $5,000 or

goes higher, you're making money. If you price it off of $5,000 gold and pay that premium

then gold slips. Now you're into damaged returns. You won't get those kind of returns. In Ecuador,

what we bought was an asset that was trading at a significant discount. And it's our job to now

go and shrink that discount and get full value for that as we bring it forward and into production.

Ecuador is growing a mining industry. And what we've been able to do is employ and engage some

contractors that have been active in country already, building, involving those other two mines.

And so we're benefiting from their local experience to actually get Eldomo built. And we'll probably

follow the same model as we advance Condor going ahead. Okay. And you're always looking and a new

acquisition projects or potential. Tell us about the criteria that management uses for evaluating

the next target. Well, I think there's two very different profiles. One is are there existing

assets that are in production that we think could make an immediate contribution and we could get

them at a reasonable price at once you factory and whatever financing package you take on for it

that you can get that financing paid back from the asset and then expose shareholders to further

upside. So that's on the production side and we're pretty open-minded from a jurisdictional standpoint.

On the development end, it really comes back again to that technical criteria. Does it seem to have

those elements that make it a profitable business when it's built into a mine?

Can we build it on a reasonable time frame and that reasonable cost and does it employ our skill sets

in terms of mine building and planning? Are there any jurisdictions you would not operate in

because they just don't align with the company vision? Well, yeah, I think there's, you know,

I don't necessarily want to name names, but if you look at certain regions of the world,

like, you know, we've been open to Africa as an example, but that doesn't mean every country in Africa

is welcoming, stable, has infrastructure to get in and to do what we want to do again,

which is to bring something up rapidly. But there are countries there that do fit that,

do you fit that mold? As a producer looking to expand, would you be more interested in developing

your own brown field or green field exploration projects or would it be better just to acquire

other projects? As I said, open to both. It really comes down to the particulars of the situation

and the valuation of that. And if it's development, is it, you know, I think it's no secret we're not

looking for multi-billion dollar projects, high in the mountains that are going to take many,

many years to build. We're looking really for more near-term actionable, more modest capex projects.

Because I think it's about starting a business that starts to generate returns quickly.

And then you have the flexibility to reinvest those funds to grow the business. And that's really

been our story in China, like all of everything that we've built in China as well as the money

that we've brought out of China to build our cash balance, make acquisitions and make these

other investments and other companies came from an initial five million dollar investment

to get that initial mind running in China that everything has been from cash flow.

Some people might ask and understandably so if having a diversified company,

meaning silver and then ultimately copper and gold as well,

will change the way the company is value because they move in different directions. But actually,

if you look at the price charts, which I can show you in just a minute, gold, silver and copper

to some extent have all been moving in tandem in the last two years. First of all, can you comment

on this pattern? Is it usual for the metals industry and do you expect this correlation to continue?

Well, certainly, copper is the industrial metal tied into the cyclicality of the economy.

And one could argue would be counter to gold and silver, which are safe havens in times of

insecurity and economic instability. But I think from a mining standpoint, one of the key drivers,

again, it comes back to the fact that it's hard to find and to build mines.

And so there's not an immediate supply response just because the price is high.

The price being $5,000 of gold doesn't mean that suddenly...

Is it harder to develop and find projects today than 20 years ago?

I think so, yeah.

Yeah, I think so.

Is it just because of the scarcity aspect or other issues?

Well, I think the scarcity, the obvious, easy deposits to find were the first to be found

and the first to get advanced and developed. So now you're looking for things that are in

more remote places that are deeper and with those come bigger challenges.

And then from a, I'd say, a societal sensitivity to mining or even just industrial activity

generally, getting a big project permitted so you can bring it into production, you know,

hasn't gotten easier anywhere in the world, despite all the recent rhetoric from governments.

Yeah, I mean, that's kind of an existential risk that all companies in this sector face is 20,

40, 50, 60 years down the line. Resources will continue to dwindle.

Yeah, and just looking ahead, putting your futurist hat on here, how do you think the

mining industry is going to adapt to continuously dwindling reserves harder to find high quality

ores and so on? Well, the commodities being driven off of supply and demand, the commodity price

should correct for that. And so if it's harder to find and bring them on and society still needs them,

that means they'll trade at a higher price. Yeah. And that will be the motivating factor to keep

doing that, that hard work. Okay. Well, that, that, that in itself speaks to a lot about how our

economy is going to develop because if we're, if we're suggesting that these commodities,

sovereign copper and other things are going to be critical in the foreseeable future and supply

is not getting any larger. Well, that means higher prices, like you said, perhaps higher inflation

for everything that we use that requires silver and copper. Is that, is that the future that we're

looking at? You think? Well, I think so. And I think right now, society's sort of decoupled.

And other people have sort of made this comment. It's time for revenge of the miners, right? Which

is the fact that I've never heard that. Where's that come? Where did that come from? Yeah, that's,

that's a Robert Friedland comment that he's made, which is, you know, get ready. It's, it's,

it's time because society has really lost track of understanding all of these things that we take

for granted in our quality of life, really come back to mining. And so as it becomes, sort of more

aware that to keep having these things, there's a scarcity element to them and we have to find them

and develop them. And that's really what's driving prices. And I think that's what's driving people

to become aware of getting exposed to the sector. Well, Friedland has also said that in the next 10

years, society will use more copper than I think last 10,000 years put together. And I think

a case could be made that silver will see the same fate. The silver demand continues to rise.

And according to the silver institute, there's been ongoing deficits and that will continue,

right? So what is the mining industry doing if anything to fill that gap? Is there anything to be

done in the short term? Well, higher prices will be an incentive to increase production. Yeah.

If you have a mine that's in operation and you can address the production rate to bring on more

metals so that you're selling more into these higher prices, you certainly can and you will be doing

that in this environment. But it's again, not easy. You can't just flick a swit.

And that's my next question. Some people don't understand that to change the production profile

isn't like a one day thing. You can't just tell the not. You can't just tell the drillers to

hey, cut it by half or up it by 50%. How does that process work? Well, I think again, it's different,

different from underground mines versus open pit mines. And if you've got an open pit mine and it's

all planned out, go back to the drawing board and remodel and replant it all out. In your case,

how would that work? Well, in our case, that would be drilling off new areas, really, because it's

like we're dealing with underground fairly narrow vein mining in China. It's not as though you can

just throw a bunch more people down there to get more production. We'd have to open up new areas

that would take time to drill them, drill them off, develop access into those areas, which will

consume some capital. You need more equipment then to go in and to mine that. And then again,

if you're generating more tonnage, where does that tonnage go? Do you have a mill that is prepared

to handle that tonnage? There's no point delivering more tonnage from the mine if your mill is not

scoped to treat it. So all of those are going to be draws against capital and then also draws

against the equipment supply chain. Have you had discussions as to whether or not that process you

just described as worth it right now from a ROI perspective to dramatically invest in higher production

at current market prices? Well, I think our plans have been in place for a while. We're longer term

planners in terms of the kinds of changes that we're trying to make. And we're not here to sort of

try to boost production on a quick basis to make a quick buck, but then potentially jeopardize

the long term future of the mine by making dramatic changes ending up with in case silver doesn't

stay above $100 forever. Well, it's not just that is you go and make a big shift and yes, it does

change or other factors change, but then also pushing something beyond its sort of natural

equilibrium state can come with risks. Right. So if an investor were to say,

Lawn, I understand where you're coming from, but hey, silver just tripled in the last six months.

Let's also triple production. What would your response? Our response will be is we will make

those changes that we can that we think are prudent for the long term future and sustainability

of the mine. I understand. Great. Well, tell us a little bit about your background. Everyone's

well, investors are interested to know about the management teams history. So tell us about

your professional background leading up to silver core. Yeah. So I have mainly capital markets

background. I began my career on the sell side as in the as a research associate and then analyst

covering mining companies. So covered range of uranium, gold and and base metals. Yeah.

And then I moved over to investment banking initially in Toronto, but then in Vancouver.

And silver corp had been a investment banking client of mine when I was in mining investment banking

in Vancouver. Right. And when I left investment banking, what attracted me to silver corp was the

fact that a company with great potential and where we can really be the authors of growing something

great. That's right. Not too small that you're sort of vulnerable to to to the ups and downs of

the market and not so big that were, you know, slotted into just one area and where we can't see

the the fruits of our having worked in banking. You were exposed to a lot of different companies

and you've learned from you know, all these experiences. So what are you doing now as president

to build a company that you yourself would have given the buy rating to let's say 30 years ago?

Well, I think it's it's managing expectations and delivering on what it is that you said you were

going to do. Okay. I think that's I think that's the key thing. And there's lots of management who

come out and work things for a short term period, but really aren't positioned to withstand.

And you know, nobody wants to hear it now, but yes, the mining industry goes through down cycles.

And so you need to be in a position to weather those storms as well as enjoy the good days that

we're having now. Okay. Very good. And and final question. Give us just a few characteristics of

silver corp that are different than your peers that would really push it towards a buy rating you

think. Well, I think we are a silver company that doesn't trade at a silver company premium.

So for our existing business, what does that mean? Well, most silver companies trade at premium

evaluations. Sure. And so we are trading at at a lower evaluation than our peers. Yeah.

Despite being a highly the majority of our revenues are coming from silver. So it's an

immediate entry point to the silver market. We do have lower costs than many of our peers. So if

things go the wrong way, we'll still be in business and not needing to worry from a financing

standpoint. Yeah. But what we've got is a growth pipeline that we think when we start to

prove and that we're delivering on that growth will generate excess returns compared to final

question on that note. Everyone's concerned about ASIC on this staining cost. You said you're keeping

you're keeping your cost low. How are you doing that? Well, the key focus is always thinking about

what are those elements within your control? And so for example, at our minds, we have power price

deferentials. So you adjust your plans and programs so that for certain power intensive activities,

you run those things at night when power is cheaper. Looking at again, mechanization to address

what is labor cost inflation by having some more equipment and being able to deliver those

tons with fewer people involved in the process. I'm curious to see how robotics going to change the

industry in the next 10 years. That's something to keep in mind. Yeah. I mean, it's starting to come

on our last analyst site visit. We saw some robots that had just gotten delivered. We're still

on the pallets and had the plastic on them. And they are going to be used for basically lifting up

and pouring the reagents into the mill for adding those to the milling process.

And so that will be an ability to streamline a bit more labor costs out of the operation.

Yeah, I'm excited about the future. I wonder if you think the long term trend of ASIC in the industry

is going to be flat down or up. Hard to say. It's hard to say. We'll see how much robotics

can do to counter energy costs. And that'll be an element of focus for sure.

All right, Lon. Before we head off, tell us about one major milestone for the company

that investors need to be watching for next. What can I have three?

Three, four, as many as you need. Yeah, I mean, I think one of the key ones

will be off of this asset that we acquired in Kyrgyzstan. And that will be an announcement

that we have started deploying capital to build that mine. And I think that comes later this year.

And I think that'll catch a lot of people off guard. The second one will be starting to drive

some tunnels into the Condor Gold Project in Ecuador. And then the third one will be

we're looking to add another listing and get a Hong Kong listing, which we expect towards the

end of the year or early in 2027. And we think that will expose us to a new investor audience

that isn't really currently aware or are able to buy our shares.

Okay, great. We'll put the link to the website down below. Sovercourtmetals.com. Sovercourtmetals.com

rather, people can follow that website for more information. Thank you very much, Lawn.

Thanks, David. For giving us your time. And thank you for watching. Don't forget to like and

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