Silvercorp raises El Domo construction budget to $284M amid VAT, design and scope changes

El Domo budget reset signals scope and tax shifts for Silvercorp

Silvercorp Metals Inc. (TSX/NYSE American: SVM) is updating the construction budget and schedule for its El Domo silver‑lead‑zinc project, raising the total construction budget to $284 million. The revised figure increases the company’s estimate by $44 million from the $240 million budget dated March 31, 2025 and is above the 2021 feasibility study budget of $248 million. Silvercorp frames the update as a response to design evolution, regulatory tax changes and more detailed vendor and logistics pricing obtained during advanced engineering.

El Domo budget drivers and material changes

The largest single driver of the budget increase is a value‑added tax (VAT) revision from 10% to 15%, which adds $16 million of cash impact now and increases the VAT line from $19 million to $35 million. Silvercorp says it expects to recover roughly $16 million of that VAT as a tax credit in the first year of operations once concentrate exports commence; the company notes the VAT change accounts for about 36% of total budget growth. Owner’s costs rise to $32.5 million from $30 million, reflecting higher burn rates, insurance, services, community and security costs and a six‑month extension to construction.

Engineering, equipment and site works also account for significant increases. Process plant equipment and materials climb by $15 million because previously omitted items and larger equipment are required — examples include a water‑recycling system for the tailings storage facility, a SAG mill, a regrind mill, and larger flotation cells and thickeners to handle an increase in sulphur content from 9% in the 2021 design to 25% in the current design; roughly $11 million of the $15 million increase is attributable to that additional equipment. Package #1 construction increases by $5.1 million for detailed design changes and the addition of two buttresses for waste dumps, while logistics costs rise by about $4 million for sea freight, customs, storage, local transport, insurance and an estimated 3.5% import tax.

Other schedule, permitting and local works

Additional scope additions include $7.2 million for a 5,000 m² ROM ore shack, $3.3 million for a bypass and upgraded southern access roads to accept 40‑foot container trucks, and $2.3 million for external powerline payments to CNEL. The company also allocates $10.1 million for items missing from prior estimates — engineer of record, QA/QC, internal power, environmental rehabilitation and a 4G network — plus $6.6 million of local purchases.

Operational and community implications

Silvercorp presents the revisions as necessary to de‑risk construction and accommodate higher sulphur ore characteristics and export logistics. The budget and schedule update aims to align procurement, local infrastructure and environmental controls ahead of commissioning and concentrate export.