SILVERCORP METALS INC. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and six months ended September 30, 2022 and 2021
(Tabular amounts are in thousands of US dollars, unless otherwise stated)
(Unaudited)
SILVERCORP METALS INC.
Condensed Consolidated Interim Statements of (Loss) Income
(Unaudited) (Expressed in thousands of U.S. dollars)
|
Three Months Ended September 30, |
Six Months Ended September 30, | |||||||||||||||||
| Notes | 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Revenue | 3(a)(c) | $ | 51,739 | $ | 58,435 | $ | 115,331 | $ | 117,254 | |||||||||
| Cost of mine operations | ||||||||||||||||||
| Production costs | 25,398 | 22,771 | 51,542 | 45,256 | ||||||||||||||
| Depreciation and amortization | 7,354 | 6,878 | 14,912 | 13,092 | ||||||||||||||
| Mineral resource taxes | 1,308 | 1,703 | 2,848 | 3,116 | ||||||||||||||
| Government fees and other taxes | 4 | 556 | 710 | 1,340 | 1,401 | |||||||||||||
| General and administrative | 5 | 2,762 | 2,761 | 5,426 | 5,273 | |||||||||||||
| 37,378 | 34,823 | 76,068 | 68,138 | |||||||||||||||
| Income from mine operations | 14,361 | 23,612 | 39,263 | 49,116 | ||||||||||||||
| Corporate general and administrative | 5 | 3,476 | 3,749 | 7,033 | 7,587 | |||||||||||||
| Property evaluation and business development | 71 | 244 | 203 | 634 | ||||||||||||||
| Foreign exchange gain | (4,340 | ) | (2,063 | ) | (5,996 | ) | (1,613 | ) | ||||||||||
| Loss on equity investments desgined as FVTPL | 9 | 1,596 | 4,142 | 4,267 | 4,864 | |||||||||||||
| Share of loss in associates | 10 | 771 | 469 | 1,499 | 865 | |||||||||||||
| Loss on disposal of plant and equipment | 11 | 51 | 51 | 320 | 136 | |||||||||||||
| Impairment of mineral rights and properties | 12 | 20,211 | - | 20,211 | - | |||||||||||||
| Other (income) loss | (61 | ) | 165 | (231 | ) | 4 | ||||||||||||
| Income from operations | (7,414 | ) | 16,855 | 11,957 | 36,639 | |||||||||||||
| Finance income | 6 | 1,096 | 1,344 | 2,418 | 2,697 | |||||||||||||
| Finance costs | 6 | (73 | ) | (86 | ) | (595 | ) | (174 | ) | |||||||||
| Income before income taxes | (6,391 | ) | 18,113 | 13,780 | 39,162 | |||||||||||||
| Income tax expense | 7 | 3,811 | 5,355 | 9,898 | 10,172 | |||||||||||||
| Net (loss) income | $ | (10,202 | ) | $ | 12,758 | $ | 3,882 | $ | 28,990 | |||||||||
| Attributable to: | ||||||||||||||||||
| Equity holders of the Company | $ | (1,712 | ) | $ | 9,393 | $ | 8,457 | $ | 21,605 | |||||||||
| Non-controlling interests | 17 | (8,490 | ) | 3,365 | (4,575 | ) | 7,385 | |||||||||||
| $ | (10,202 | ) | $ | 12,758 | $ | 3,882 | $ | 28,990 | ||||||||||
|
(Loss) earnings per share attributable to the equity holders of the Company Basic (loss) earnings per share | $ | (0.01 | ) | $ | 0.05 | $ | 0.05 | $ | 0.12 | |||||||||
| Diluted (loss) earnings per share | $ | (0.01 | ) | $ | 0.05 | $ | 0.05 | $ | 0.12 | |||||||||
| Weighted Average Number of Shares Outstanding - Basic | 176,693,226 | 176,285,864 | 177,007,901 | 176,120,380 | ||||||||||||||
| Weighted Average Number of Shares Outstanding - Diluted | 179,245,850 | 178,496,716 | 179,375,066 | 178,411,042 |
| Approved on behalf of the Board: | |
| (Signed) David Kong | |
| Director | |
| (Signed) Rui Feng | |
| Director |
See accompanying notes to the condensed consolidated interim financial statements
2
SILVERCORP METALS INC.
Condensed Consolidated Interim Statements of Comprehensive Income (loss)
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures)
|
Three Months Ended September 30, |
Six Months Ended September 30, | |||||||||||||||||
| Notes | 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Net income (loss) | $ | (10,202 | ) | $ | 12,758 | $ | 3,882 | $ | 28,990 | |||||||||
| Other comprehensive income (loss), net of taxes: | ||||||||||||||||||
| Items that may subsequently be reclassified to net income or loss: | ||||||||||||||||||
| Currency translation adjustment, net of tax of $nil | (34,664 | ) | (4,864 | ) | (63,510 | ) | 2,490 | |||||||||||
| Share of other comprehensive (loss) income in associate | 10 | (606 | ) | (423 | ) | (1,004 | ) | 3,182 | ||||||||||
| Items that will not subsequently be reclassified to net income or loss: | ||||||||||||||||||
| Change in fair value on equity investments designated as FVTOCI, net of tax of $nil | 9 | (288 | ) | 375 | (1,239 | ) | 870 | |||||||||||
| Other comprehensive income (loss), net of taxes | $ | (35,558 | ) | $ | (4,912 | ) | $ | (65,753 | ) | $ | 6,542 | |||||||
| Attributable to: | ||||||||||||||||||
| Equity holders of the Company | $ | (30,700 | ) | $ | (4,826 | ) | $ | (56,159 | ) | $ | 5,727 | |||||||
| Non-controlling interests | 17 | (4,858 | ) | (86 | ) | (9,594 | ) | 815 | ||||||||||
| $ | (35,558 | ) | $ | (4,912 | ) | $ | (65,753 | ) | $ | 6,542 | ||||||||
| Total comprehensive income (income) | $ | (45,760 | ) | $ | 7,846 | $ | (61,871 | ) | $ | 35,532 | ||||||||
| Attributable to: | ||||||||||||||||||
| Equity holders of the Company | $ | (32,412 | ) | $ | 4,567 | $ | (47,702 | ) | $ | 27,332 | ||||||||
| Non-controlling interests | (13,348 | ) | 3,279 | (14,169 | ) | 8,200 | ||||||||||||
| $ | (45,760 | ) | $ | 7,846 | $ | (61,871 | ) | $ | 35,532 |
See accompanying notes to the condensed consolidated interim financial statements
3
SILVERCORP METALS INC.
Condensed Consolidated Interim Statements of Financial Position
(Unaudited) (Expressed in thousands of U.S. dollars)
|
As at September 30, |
As at March 31, | |||||||||
| Notes | 2022 | 2022 | ||||||||
| ASSETS | ||||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | 20 | $ | 166,370 | $ | 113,302 | |||||
| Short-term investments | 8 | 34,598 | 99,623 | |||||||
| Trade and other receivables | 1,346 | 3,615 | ||||||||
| Current portion of lease receivable | 13 | 63 | 182 | |||||||
| Inventories | 7,767 | 9,124 | ||||||||
| Due from related parties | 18 | 71 | 66 | |||||||
| Income tax receivable | 726 | 928 | ||||||||
| Prepaids and deposits | 5,826 | 5,468 | ||||||||
| 216,767 | 232,308 | |||||||||
| Non-current Assets | ||||||||||
| Long-term prepaids and deposits | 1,800 | 974 | ||||||||
| Reclamation deposits | 7,825 | 8,876 | ||||||||
| Other investments | 9 | 12,318 | 17,768 | |||||||
| Investment in associates | 10 | 50,170 | 56,841 | |||||||
| Plant and equipment | 11 | 73,888 | 79,418 | |||||||
| Mineral rights and properties | 12 | 285,188 | 326,448 | |||||||
| Deferred income tax assets | 317 | 905 | ||||||||
| TOTAL ASSETS | $ | 648,273 | $ | 723,538 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable and accrued liabilities | $ | 39,075 | $ | 39,667 | ||||||
| Current portion of lease obligation | 13 | 397 | 649 | |||||||
| Deposits received | 6,216 | 5,445 | ||||||||
| Income tax payable | 143 | 277 | ||||||||
| 45,831 | 46,038 | |||||||||
| Non-current Liabilities | ||||||||||
| Long-term portion of lease obligation | 13 | 437 | 614 | |||||||
| Deferred income tax liabilities | 45,285 | 48,033 | ||||||||
| Environmental rehabilitation | 14 | 7,735 | 8,739 | |||||||
| Total Liabilities | 99,288 | 103,424 | ||||||||
| Equity | ||||||||||
| Share capital | 254,460 | 255,444 | ||||||||
| Equity reserves | (11,711 | ) | 43,250 | |||||||
| Retained earnings | 219,943 | 213,702 | ||||||||
| Total equity attributable to the equity holders of the Company | 462,692 | 512,396 | ||||||||
| Non-controlling interests | 17 | 86,293 | 107,718 | |||||||
| Total Equity | 548,985 | 620,114 | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 648,273 | $ | 723,538 |
See accompanying notes to the condensed consolidated interim financial statements
4
SILVERCORP METALS INC.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited) (Expressed in thousands of U.S. dollars)
|
Three Months Ended September 30, |
Six Months Ended September 30, | |||||||||||||||||
| Notes | 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Cash provided by | ||||||||||||||||||
| Operating activities | ||||||||||||||||||
| Net (loss) income | $ | (10,202 | ) | $ | 12,758 | $ | 3,882 | $ | 28,990 | |||||||||
| Add (deduct) items not affecting cash: | ||||||||||||||||||
| Finance costs | 6 | 73 | 86 | 595 | 174 | |||||||||||||
| Income tax expense | 7 | 3,811 | 5,355 | 9,898 | 10,172 | |||||||||||||
| Depreciation, amortization and depletion | 7,797 | 7,361 | 15,822 | 14,060 | ||||||||||||||
| Loss on equity investments desgined as FVTPL | 9 | 1,596 | 4,142 | 4,267 | 4,864 | |||||||||||||
| Share of loss in associates | 10 | 771 | 469 | 1,499 | 865 | |||||||||||||
| Impairment of mineral rights and properties | 12 | 20,211 | - | 20,211 | - | |||||||||||||
| Loss on disposal of plant and equipment | 11 | 51 | 51 | 320 | 136 | |||||||||||||
| Share-based compensation | 15(b) | 1,120 | 1,773 | 2,292 | 3,877 | |||||||||||||
| Reclamation expenditures | (7 | ) | (39 | ) | (15 | ) | (126 | ) | ||||||||||
| Income taxes paid | (4,348 | ) | (273 | ) | (6,645 | ) | (4,002 | ) | ||||||||||
| Interest paid | 13 | (12 | ) | (19 | ) | (26 | ) | (39 | ) | |||||||||
| Changes in non-cash operating working capital | 20 | (6,797 | ) | (810 | ) | 2,140 | 8,335 | |||||||||||
| Net cash provided by operating activities | 14,064 | 30,854 | 54,240 | 67,306 | ||||||||||||||
| Investing activities | ||||||||||||||||||
| Plant and equipment | ||||||||||||||||||
| Additions | (4,539 | ) | (3,380 | ) | (6,706 | ) | (4,604 | ) | ||||||||||
| Proceeds on disposals | 11 | - | 4 | - | 38 | |||||||||||||
| Mineral rights and properties | ||||||||||||||||||
| Capital expenditures | (6,852 | ) | (10,746 | ) | (22,770 | ) | (20,805 | ) | ||||||||||
| Acquisition | 3 | - | (3,093 | ) | - | (3,093 | ) | |||||||||||
| Reclamation deposits | ||||||||||||||||||
| Paid | (14 | ) | (16 | ) | (30 | ) | (59 | ) | ||||||||||
| Other investments | ||||||||||||||||||
| Acquisition | 9 | - | (4,306 | ) | (1,770 | ) | (6,917 | ) | ||||||||||
| Proceeds on disposals | 9 | - | 205 | 504 | 974 | |||||||||||||
| Investment in associates | 10 | (187 | ) | - | (757 | ) | (4,960 | ) | ||||||||||
| Short-term investment | ||||||||||||||||||
| Purchase | (18,277 | ) | (52,343 | ) | (80,284 | ) | (74,229 | ) | ||||||||||
| Redemption | 47,067 | 14,797 | 138,011 | 75,207 | ||||||||||||||
| Principal received on lease receivable | 13 | 54 | 54 | 109 | 108 | |||||||||||||
| Net cash provided by (used in) investing activities | 17,252 | (58,824 | ) | 26,307 | (38,340 | ) | ||||||||||||
| Financing activities | ||||||||||||||||||
| Principal payments on lease obligation | 13 | (169 | ) | (155 | ) | (337 | ) | (311 | ) | |||||||||
| Cash dividends distributed | 15(c) | - | - | (2,216 | ) | (2,202 | ) | |||||||||||
| Non-controlling interests | ||||||||||||||||||
| Distribution | 17 | (3,629 | ) | - | (7,256 | ) | (3,896 | ) | ||||||||||
| Proceeds from issuance of common shares | - | 418 | - | 1,172 | ||||||||||||||
| Common shares repurchased as part of normal course issuer bid | (1,197 | ) | - | (2,078 | ) | - | ||||||||||||
| Net cash used in (provided by) financing activities | (4,995 | ) | 263 | (11,887 | ) | (5,237 | ) | |||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (10,212 | ) | (1,822 | ) | (15,592 | ) | (535 | ) | ||||||||||
| Increase (decrease) in cash and cash equivalents | 16,109 | (29,529 | ) | 53,068 | 23,194 | |||||||||||||
| Cash and cash equivalents, beginning of the period | 150,261 | 171,458 | 113,302 | 118,735 | ||||||||||||||
| Cash and cash equivalents, end of the period | $ | 166,370 | $ | 141,929 | $ | 166,370 | $ | 141,929 | ||||||||||
| Supplementary cash flow information | 20 |
See accompanying notes to the condensed consolidated interim financial statements
5
SILVERCORP METALS INC.
Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share figures)
| Share capital | Equity reserves | Total equity attributable to the | ||||||||||||||||||||||||||||||||||||
| Notes |
Number of shares | Amount | Share option reserve | Reserves | Accumulated other comprehensive loss | Retained earnings |
equity holders of the Company | Non-controlling interests | Total equity | |||||||||||||||||||||||||||||
| Balance, April 1, 2021 | 175,742,544 | $ | 250,199 | $ | 16,610 | $ | 25,409 | $ | (12,550 | ) | $ | 187,906 | $ | 467,574 | $ | 98,154 | $ | 565,728 | ||||||||||||||||||||
| Options exercised | 443,333 | 1,568 | (396 | ) | - | - | - | 1,172 | - | 1,172 | ||||||||||||||||||||||||||||
| Restricted share units vested | 245,714 | 1,141 | (1,141 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Share-based compensation | - | - | 3,877 | - | - | - | 3,877 | - | 3,877 | |||||||||||||||||||||||||||||
| Dividends declared | - | - | - | - | - | (2,202 | ) | (2,202 | ) | - | (2,202 | ) | ||||||||||||||||||||||||||
| Distribution to non-controlling interests | - | - | - | - | - | - | - | (3,896 | ) | (3,896 | ) | |||||||||||||||||||||||||||
| Contribution to reserves | - | - | - | 425 | - | (425 | ) | - | - | - | ||||||||||||||||||||||||||||
| Comprehensive income | - | - | - | - | 5,727 | 21,605 | 27,332 | 8,200 | 35,532 | |||||||||||||||||||||||||||||
| Balance, September 30, 2021 | 176,431,591 | $ | 252,908 | $ | 18,950 | $ | 25,834 | $ | (6,823 | ) | $ | 206,884 | $ | 497,753 | $ | 102,458 | $ | 600,211 | ||||||||||||||||||||
| Options exercised | 353,750 | 960 | (224 | ) | - | - | - | 736 | - | 736 | ||||||||||||||||||||||||||||
| Restricted share units vested | 320,458 | 1,576 | (1,576 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Share-based compensation | - | - | 2,219 | - | - | - | 2,219 | - | 2,219 | |||||||||||||||||||||||||||||
| Dividends declared | - | - | - | - | - | (2,211 | ) | (2,211 | ) | - | (2,211 | ) | ||||||||||||||||||||||||||
| Distribution to non-controlling interests | - | - | - | - | - | - | - | (1,200 | ) | (1,200 | ) | |||||||||||||||||||||||||||
| Comprehensive income | - | - | - | - | 4,870 | 9,029 | 13,899 | 6,460 | 20,359 | |||||||||||||||||||||||||||||
| Balance, March 31, 2022 | 177,105,799 | $ | 255,444 | $ | 19,369 | $ | 25,834 | $ | (1,953 | ) | $ | 213,702 | $ | 512,396 | $ | 107,718 | $ | 620,114 | ||||||||||||||||||||
| Restricted share units vested | 214,375 | 1,094 | (1,094 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Share-based compensation | 15(b) | - | - | 2,292 | - | - | - | 2,292 | - | 2,292 | ||||||||||||||||||||||||||||
| Dividends declared | 15(c) | - | - | - | - | - | (2,216 | ) | (2,216 | ) | - | (2,216 | ) | |||||||||||||||||||||||||
| Common shares repurchased as part of normal course issuer bid | 15(d) | (838,237 | ) | (2,078 | ) | - | - | - | (2,078 | ) | (2,078 | ) | ||||||||||||||||||||||||||
| Distribution to non-controlling interests | 17 | - | - | - | - | - | - | - | (7,256 | ) | (7,256 | ) | ||||||||||||||||||||||||||
| Comprehensive income (loss) | - | - | - | - | (56,159 | ) | 8,457 | (47,702 | ) | (14,169 | ) | (61,871 | ) | |||||||||||||||||||||||||
| Balance, September 30, 2022 | 176,481,937 | $ | 254,460 | $ | 20,567 | $ | 25,834 | $ | (58,112 | ) | $ | 219,943 | $ | 462,692 | $ | 86,293 | $ | 548,985 |
See accompanying notes to the condensed consolidated interim financial statements
6
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 1. | CORPORATE INFORMATION |
Silvercorp Metals Inc., along with its subsidiary companies (collectively the "Company"), is engaged in the acquisition, exploration, development, and mining of mineral properties. The Company's producing mines are located in China, and current exploration and development projects are located in China and Mexico.
The Company is a publicly listed company incorporated in the Province of British Columbia, Canada, with limited liability under the legislation of the Province of British Columbia. The Company's shares are traded on the Toronto Stock Exchange and NYSE American.
The head office, registered address and records office of the Company are located at 1066 West Hastings Street, Suite 1750, Vancouver, British Columbia, Canada, V6E 3X1.
Operating results for the three and six months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending March 31, 2023.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Statement of Compliance |
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting ("IAS 34") of the International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These condensed consolidated interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended March 31, 2022. These condensed consolidated interim financial statements follow the same significant accounting policies set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2022.
These condensed consolidated interim financial statements were authorized for issue in accordance with a resolution of the Board of Directors dated November 2, 2022.
| (b) | Basis of Consolidation |
These condensed consolidated interim financial statements include the accounts of the Company and its wholly or partially owned subsidiaries.
Subsidiaries are consolidated from the date on which the Company obtains control up to the date of the disposition of control. Control is achieved when the Company has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to use its power to affect its returns.
7
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
For non-wholly owned subsidiaries over which the Company has control, the net assets attributable to outside equity shareholders are presented as "non-controlling interests" in the equity section of the consolidated balance sheets. Net income for the period that is attributable to the non-controlling interests is calculated based on the ownership of the non-controlling interest shareholders in the subsidiary. Adjustments to recognize the non-controlling interests' share of changes to the subsidiary's equity are made even if this results in the non-controlling interests having a deficit balance. Changes in the Company's ownership interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling interests is adjusted to reflect the change in the non-controlling interests' relative interests in the subsidiary and the difference between the adjustment to the carrying amount of non-controlling interest and the Company's share of proceeds received and/or consideration paid is recognized directly in equity and attributed to equity holders of the Company.
Balances, transactions, revenues and expenses between the Company and its subsidiaries are eliminated on consolidation.
Details of the Company's significant subsidiaries which are consolidated are as follows:
| Proportion of ownership interest held | ||||||||||||||
| Country of | September 30, | March 31, | ||||||||||||
| Name of subsidiaries | Principal activity | incorporation | 2022 | 2022 | Mineral properties | |||||||||
| Silvercorp Metals China Inc. | Holding company | Canada | 100 | % | 100 | % | ||||||||
| Silvercorp Metals (China) Inc. | Holding company | China | 100 | % | 100 | % | ||||||||
| 0875786 B.C. LTD. | Holding company | Canada | 100 | % | 100 | % | ||||||||
| Fortune Mining Limited | Holding company | BVI (i) | 100 | % | 100 | % | ||||||||
| Fortune Copper Limited | Holding company | BVI | 100 | % | 100 | % | ||||||||
| Fortune Gold Mining Limited | Holding company | BVI | 100 | % | 100 | % | ||||||||
| Victor Resources Ltd. | Holding company | BVI | 100 | % | 100 | % | ||||||||
| Yangtze Mining Ltd. | Holding company | BVI | 100 | % | 100 | % | ||||||||
| Victor Mining Ltd. | Holding company | BVI | 100 | % | 100 | % | ||||||||
| Yangtze Mining (H.K.) Ltd. | Holding company | Hong Kong | 100 | % | 100 | % | ||||||||
| Fortune Gold Mining (H.K.) Limited | Holding company | Hong Kong | 100 | % | 100 | % | ||||||||
| Wonder Success Limited | Holding company | Hong Kong | 100 | % | 100 | % | ||||||||
| New Infini Silver Inc. ("New Infini") | Holding company | Canada | 46.1 | % | 46.1 | % | ||||||||
| Infini Metals Inc. | Holding company | BVI | 46.1 | % | 46.1 | % | ||||||||
| Infini Resources (Asia) Co. Ltd. | Holding company | Hong Kong | 46.1 | % | 46.1 | % | ||||||||
| Golden Land (Asia) Ltd. | Holding company | Hong Kong | 46.1 | % | 46.1 | % | ||||||||
| Henan Huawei Mining Co. Ltd. ("Henan Huawei") | Mining | China | 80 | % | 80 | % | Ying Mining District | |||||||
| Henan Found Mining Co. Ltd. ("Henan Found") | Mining | China | 77.5 | % | 77.5 | % | ||||||||
| Xinshao Yunxiang Mining Co., Ltd. ("Yunxiang") | Mining | China | 70 | % | 70 | % | BYP | |||||||
| Guangdong Found Mining Co. Ltd. ("Guangdong Found") | Mining | China | 99 | % | 99 | % | GC | |||||||
| Infini Resources S.A. de C.V. | Mining | Mexico | 46.1 | % | 46.1 | % | La Yesca | |||||||
| Shanxi Xinbaoyuan Mining Co., Ltd. ("Xinbaoyuan") | Mining | China | 77.5 | % | 77.5 | % | Kuanping | |||||||
| (i) British Virgin Islands ("BVI") |
| (c) | Significant Accounting Judgments and Estimates |
These condensed consolidated interim financial statements follow the same significant accounting judgments and estimates set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2022.
8
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 3. | SEGMENTED INFORMATION |
The Company's reportable operating segments are components of the Company where separate financial information is available that is evaluated regularly by the Company's Chief Executive Officer who is the Chief Operating Decision Maker ("CODM"). The operational segments are determined based on the Company's management and internal reporting structure. Operating segments are summarized as follows:
| Operational Segments | Subsidiaries Included in the Segment | Properties Included in the Segment | ||
| Mining | ||||
| Henan Luoning | Henan Found and Henan Huawei | Ying Mining District | ||
| Hunan | Yunxiang | BYP | ||
| Guangdong | Guangdong Found | GC | ||
| Other | Infini Resources S.A. de C.V. | La Yesca, Kuanping | ||
| Administrative | ||||
| Vancouver | Silvercorp Metals Inc. and holding companies | |||
| Beijing | Silvercorp Metals (China) Inc. |
| (a) | Segmented information for operating results is as follows: |
| Three months ended September 30, 2021 | ||||||||||||||||||||||||||||
| Mining | Administrative | |||||||||||||||||||||||||||
| Henan | ||||||||||||||||||||||||||||
| Statement of operations: | Luoning | Hunan(1) | Guangdong | Other | Beijing | Vancouver | Total | |||||||||||||||||||||
| Revenue | $ | 43,959 | $ | - | $ | 7,780 | $ | - | $ | - | $ | - | $ | 51,739 | ||||||||||||||
| Costs of mine operations | (31,033 | ) | (102 | ) | (6,239 | ) | (4 | ) | - | - | (37,378 | ) | ||||||||||||||||
| Income from mine operations | 12,926 | (102 | ) | 1,541 | (4 | ) | - | - | 14,361 | |||||||||||||||||||
| Operating (expenses) income | (24 | ) | (106 | ) | 15 | (2 | ) | (483 | ) | (964 | ) | (1,564 | ) | |||||||||||||||
| Impairment of mineral rights and properties | - | - | - | (20,211 | ) | - | - | (20,211 | ) | |||||||||||||||||||
| Finance items | 614 | (8 | ) | 140 | - | 65 | 212 | 1,023 | ||||||||||||||||||||
| Income tax expenses | (2,523 | ) | 171 | (211 | ) | - | - | (1,248 | ) | (3,811 | ) | |||||||||||||||||
| Net income (loss) | $ | 10,993 | $ | (45 | ) | $ | 1,485 | $ | (20,217 | ) | $ | (418 | ) | $ | (2,000 | ) | $ | (10,202 | ) | |||||||||
| Attributed to: | ||||||||||||||||||||||||||||
| Equity holders of the Company | 8,613 | (25 | ) | 1,471 | (9,660 | ) | (418 | ) | (1,693 | ) | (1,712 | ) | ||||||||||||||||
| Non-controlling interests | 2,380 | (20 | ) | 14 | (10,557 | ) | - | (307 | ) | (8,490 | ) | |||||||||||||||||
| Net income (loss) | $ | 10,993 | $ | (45 | ) | $ | 1,485 | $ | (20,217 | ) | $ | (418 | ) | $ | (2,000 | ) | $ | (10,202 | ) |
| (1) | Hunan's BYP project was placed on care and maintenance starting August 2014. |
| Three months ended September 30, 2021 | ||||||||||||||||||||||||||||
| Mining | Administrative | |||||||||||||||||||||||||||
| Henan | ||||||||||||||||||||||||||||
| Statement of operations: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | Total | |||||||||||||||||||||
| Revenue | $ | 47,102 | $ | - | $ | 11,333 | $ | - | $ | - | $ | - | $ | 58,435 | ||||||||||||||
| Costs of mine operations | (27,800 | ) | (131 | ) | (6,879 | ) | (13 | ) | - | - | (34,823 | ) | ||||||||||||||||
| Income from mine operations | 19,302 | (131 | ) | 4,454 | (13 | ) | - | - | 23,612 | |||||||||||||||||||
| Operating expenses | (291 | ) | 8 | 59 | 92 | (508 | ) | (6,117 | ) | (6,757 | ) | |||||||||||||||||
| Finance items | 667 | (8 | ) | 106 | - | 54 | 439 | 1,258 | ||||||||||||||||||||
| Income tax expenses | (4,411 | ) | (87 | ) | (875 | ) | - | - | 18 | (5,355 | ) | |||||||||||||||||
| Net income (loss) | $ | 15,267 | $ | (218 | ) | $ | 3,744 | $ | 79 | $ | (454 | ) | $ | (5,660 | ) | $ | 12,758 | |||||||||||
| Attributed to: | ||||||||||||||||||||||||||||
| Equity holders of the Company | 11,955 | (147 | ) | 3,707 | 35 | (454 | ) | (5,703 | ) | 9,393 | ||||||||||||||||||
| Non-controlling interests | 3,312 | (71 | ) | 37 | 44 | - | 43 | 3,365 | ||||||||||||||||||||
| Net income (loss) | $ | 15,267 | $ | (218 | ) | $ | 3,744 | $ | 79 | $ | (454 | ) | $ | (5,660 | ) | $ | 12,758 |
9
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| Six months ended September 30, 2022 | ||||||||||||||||||||||||||||
| Mining | Administrative | |||||||||||||||||||||||||||
| Henan | ||||||||||||||||||||||||||||
| Luoning | Hunan(1) | Guangdong | Other | Beijing | Vancouver | Total | ||||||||||||||||||||||
| Statement of income: | ||||||||||||||||||||||||||||
| Revenue | $ | 96,921 | $ | - | $ | 18,410 | $ | - | $ | - | $ | - | $ | 115,331 | ||||||||||||||
| Costs of mine operations | (62,581 | ) | (220 | ) | (13,251 | ) | (16 | ) | - | - | (76,068 | ) | ||||||||||||||||
| Income from mine operations | 34,340 | (220 | ) | 5,159 | (16 | ) | - | - | 39,263 | |||||||||||||||||||
| Operating (expenses) income | 16 | (204 | ) | (145 | ) | (3 | ) | (904 | ) | (5,855 | ) | (7,095 | ) | |||||||||||||||
| Impairment of mineral rights and properties | - | - | - | (20,211 | ) | - | - | (20,211 | ) | |||||||||||||||||||
| Finance items, net | 1,561 | (15 | ) | 271 | - | 150 | (144 | ) | 1,823 | |||||||||||||||||||
| Income tax expenses | (6,741 | ) | 62 | (664 | ) | - | - | (2,555 | ) | (9,898 | ) | |||||||||||||||||
| Net income (loss) | $ | 29,176 | $ | (377 | ) | $ | 4,621 | $ | (20,230 | ) | $ | (754 | ) | $ | (8,554, | ) | $ | 3,882 | ||||||||||
| Attributable to: | ||||||||||||||||||||||||||||
| Equity holders of the Company | 22,793 | (250 | ) | 4,576 | (9,668 | ) | (754 | ) | (8,240 | ) | 8,457 | |||||||||||||||||
| Non-controlling interests | 6,383 | (127 | ) | 45 | (10,562 | ) | - | (314 | ) | (4,575 | ) | |||||||||||||||||
| Net income (loss) | $ | 29,176 | $ | (377 | ) | $ | 4,621 | $ | (20,230 | ) | $ | (754 | ) | $ | (8,554 | ) | $ | 3,882 |
| (1) | Hunan's BYP project was placed on care and maintenance in August 2014. |
| Six months ended September 30, 2021 | ||||||||||||||||||||||||||||
| Mining | Administrative | |||||||||||||||||||||||||||
| Henan | ||||||||||||||||||||||||||||
| Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | Total | ||||||||||||||||||||||
| Statement of income: | ||||||||||||||||||||||||||||
| Revenue | $ | 94,520 | $ | - | $ | 22,734 | $ | - | $ | - | $ | - | $ | 117,254 | ||||||||||||||
| Costs of mine operations | (53,975 | ) | (261 | ) | (13,889 | ) | (13 | ) | - | - | (68,138 | ) | ||||||||||||||||
| Income from mine operations | 40,545 | (261 | ) | 8,845 | (13 | ) | - | - | 49,116 | |||||||||||||||||||
| Operating expenses | (223 | ) | 60 | 45 | 36 | (1,060 | ) | (11,335 | ) | (12,477 | ) | |||||||||||||||||
| Finance items, net | 1,310 | (17 | ) | 165 | - | 96 | 969 | 2,523 | ||||||||||||||||||||
| Income tax expenses | (7,566 | ) | (102 | ) | (1,065 | ) | - | - | (1,439 | ) | (10,172 | ) | ||||||||||||||||
| Net income (loss) | $ | 34,066 | $ | (320 | ) | $ | 7,990 | $ | 23 | $ | (964 | ) | $ | (11,805 | ) | $ | 28,990 | |||||||||||
| Attributable to: | ||||||||||||||||||||||||||||
| Equity holders of the Company | 26,639 | (213 | ) | 7,911 | 10 | (964 | ) | (11,778 | ) | 21,605 | ||||||||||||||||||
| Non-controlling interests | 7,427 | (107 | ) | 79 | 13 | - | (27 | ) | 7,385 | |||||||||||||||||||
| Net income (loss) | $ | 34,066 | $ | (320 | ) | $ | 7,990 | $ | 23 | $ | (964 | ) | $ | (11,805 | ) | $ | 28,990 |
10
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| (b) | Segmented information for assets and liabilities is as follows: |
| September 30, 2022 | ||||||||||||||||||||||||||||
| Mining | Administrative | |||||||||||||||||||||||||||
| Henan | ||||||||||||||||||||||||||||
| Statement of financial position items: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | Total | |||||||||||||||||||||
| Current assets | $ | 114,234 | $ | 720 | $ | 16,730 | $ | 600 | $ | 7,746 | $ | 76,737 | $ | 216,767 | ||||||||||||||
| Plant and equipment | 55,506 | 3,142 | 13,477 | 156 | 694 | 913 | 73,888 | |||||||||||||||||||||
| Mineral rights and properties | 236,143 | 6,736 | 29,699 | 12,610 | - | - | 285,188 | |||||||||||||||||||||
| Investment in associates | - | - | - | - | - | 50,170 | 50,170 | |||||||||||||||||||||
| Other investments | 63 | - | - | - | - | 12,255 | 12,318 | |||||||||||||||||||||
| Reclamation deposits | 3,462 | - | 4,356 | - | - | 7 | 7,825 | |||||||||||||||||||||
| Long-term prepaids and deposits | 1,286 | 93 | 421 | - | - | - | 1,800 | |||||||||||||||||||||
| Deferred income tax assets | - | - | 317 | - | - | - | 317 | |||||||||||||||||||||
| Total assets | $ | 410,694 | $ | 10,691 | $ | 65,000 | $ | 13,366 | $ | 8,440 | $ | 140,082 | $ | 648,273 | ||||||||||||||
| Current liabilities | $ | 37,537 | $ | 448 | $ | 4,532 | $ | 471 | $ | 218 | $ | 2,625 | $ | 45,831 | ||||||||||||||
| Long-term portion of lease obligation | - | - | - | - | - | 437 | 437 | |||||||||||||||||||||
| Deferred income tax liabilities | 44,290 | 995 | - | - | - | - | 45,285 | |||||||||||||||||||||
| Environmental rehabilitation | 5,324 | 943 | 1,468 | - | - | - | 7,735 | |||||||||||||||||||||
| Total liabilities | $ | 87,151 | $ | 2,386 | $ | 6,000 | $ | 471 | $ | 218 | $ | 3,062 | $ | 99,288 |
| March 31, 2022 | ||||||||||||||||||||||||||||
| Mining | Administrative | |||||||||||||||||||||||||||
| Henan | ||||||||||||||||||||||||||||
| Statement of financial position items: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | Total | |||||||||||||||||||||
| Current assets | $ | 141,376 | $ | 870 | $ | 14,919 | $ | 1,566 | $ | 8,570 | $ | 65,007 | $ | 232,308 | ||||||||||||||
| Plant and equipment | 58,189 | 3,708 | 15,282 | 163 | 864 | 1,212 | 79,418 | |||||||||||||||||||||
| Mineral rights and properties | 254,071 | 7,571 | 32,091 | 32,715 | - | - | 326,448 | |||||||||||||||||||||
| Investment in associates | - | - | - | - | - | 56,841 | 56,841 | |||||||||||||||||||||
| Other investments | 72 | - | - | - | - | 17,696 | 17,768 | |||||||||||||||||||||
| Reclamation deposits | 3,996 | - | 4,872 | - | - | 8 | 8,876 | |||||||||||||||||||||
| Long-term prepaids and deposits | 588 | 104 | 282 | - | - | - | 974 | |||||||||||||||||||||
| Deferred income tax assets | - | - | 905 | - | - | - | 905 | |||||||||||||||||||||
| Total assets | $ | 458,292 | $ | 12,253 | $ | 68,351 | $ | 34,444 | $ | 9,434 | $ | 140,764 | $ | 723,538 | ||||||||||||||
| Current liabilities | $ | 37,161 | $ | 545 | $ | 5,155 | $ | 2 | $ | 295 | $ | 2,880 | $ | 46,038 | ||||||||||||||
| Long-term portion of lease obligation | - | - | - | - | - | 614 | 614 | |||||||||||||||||||||
| Deferred income tax liabilities | 46,849 | 1,184 | - | - | - | - | 48,033 | |||||||||||||||||||||
| Environmental rehabilitation | 6,053 | 1,044 | 1,642 | - | - | - | 8,739 | |||||||||||||||||||||
| Total liabilities | $ | 90,063 | $ | 2,773 | $ | 6,797 | $ | 2 | $ | 295 | $ | 3,494 | $ | 103,424 |
11
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| (c) | Sales by metal |
The sales generated for the three and six months ended September 30, 2022 and 2021 were all earned in China and were comprised of:
| Three months ended September, 2022 | ||||||||||||
| Henan Luoning | Guangdong | Total | ||||||||||
| Silver (Ag) | $ | 26,064 | $ | 1,651 | $ | 27,715 | ||||||
| Gold (Au) | 1,579 | - | 1,579 | |||||||||
| Lead (Pb) | 13,294 | 1,406 | 14,700 | |||||||||
| Zinc (Zn) | 2,128 | 4,290 | 6,418 | |||||||||
| Other | 894 | 433 | 1,327 | |||||||||
| $ | 43,959 | $ | 7,780 | $ | 51,739 |
| Three months ended September, 2021 | ||||||||||||
| Henan Luoning | Guangdong | Total | ||||||||||
| Silver (Ag) | $ | 30,306 | $ | 2,499 | $ | 32,805 | ||||||
| Gold (Au) | 1,186 | - | 1,186 | |||||||||
| Lead (Pb) | 12,859 | 2,551 | 15,410 | |||||||||
| Zinc (Zn) | 1,731 | 6,090 | 7,821 | |||||||||
| Other | 1,020 | 193 | 1,213 | |||||||||
| $ | 47,102 | $ | 11,333 | $ | 58,435 |
| Six months ended September 30, 2022 | ||||||||||||
| Henan Luoning | Guangdong | Total | ||||||||||
| Silver (Ag) | $ | 58,390 | $ | 3,774 | $ | 62,164 | ||||||
| Gold (Au) | 3,332 | - | 3,332 | |||||||||
| Lead (Pb) | 28,329 | 3,486 | 31,815 | |||||||||
| Zinc (Zn) | 4,667 | 10,253 | 14,920 | |||||||||
| Other | 2,203 | 897 | 3,100 | |||||||||
| $ | 96,921 | $ | 18,410 | $ | 115,331 |
| Six months ended September 30, 2021 | ||||||||||||
| Henan Luoning | Guangdong | Total | ||||||||||
| Silver (Ag) | 61,230 | $ | 5,569 | $ | 66,799 | |||||||
| Gold (Au) | 2,694 | - | 2,694 | |||||||||
| Lead (Pb) | 25,046 | 4,764 | 29,810 | |||||||||
| Zinc (Zn) | 3,345 | 11,844 | 15,189 | |||||||||
| Other | 2,205 | 557 | 2,762 | |||||||||
| $ | 94,520 | $ | 22,734 | $ | 117,254 |
12
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| (d) | Major customers |
For the six months ended September 30, 2022, three major customers (six months ended September 30, 2021 - four major customers) each accounted for 23%, 21%, and 16% (six months ended September 30, 2021 - 20%, 17%, 17%, and 17%), and collectively 60% (six months ended September 30, 2021 - 71%) of the total sales of the Company.
4.GOVERNMENT FEES AND OTHER TAXES
Government fees and other taxes consist of:
|
Three months ended September 30, |
Six months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Government fees | $ | 25 | $ | 17 | $ | 36 | $ | 28 | ||||||||
| Other taxes | 531 | 693 | 1,304 | 1,373 | ||||||||||||
| $ | 556 | $ | 710 | $ | 1,340 | $ | 1,401 |
Government fees include environmental protection fees paid to the state and local Chinese government. Other taxes were composed of surtax on value-added tax, land usage levy, stamp duty and other miscellaneous levies, duties and taxes imposed by the state and local Chinese government.
5.GENERAL AND ADMINISTRATIVE
General and administrative expenses consist of:
| Three months ended September 30,2022 | Three months ended September 30, 2021 | |||||||||||||||||||||||
| Corporate | Mines | Total | Corporate | Mines | Total | |||||||||||||||||||
| Amortization and depreciation | $ | 142 | $ | 301 | $ | 443 | $ | 144 | $ | 343 | $ | 487 | ||||||||||||
| Office and administrative expenses | 460 | 767 | 1,227 | 379 | 707 | 1,086 | ||||||||||||||||||
| Professional fees | 55 | 111 | 166 | 192 | 113 | 305 | ||||||||||||||||||
| Salaries and benefits | 1,699 | 1,583 | 3,282 | 1,366 | 1,598 | 2,964 | ||||||||||||||||||
| Share-based compensation | 1,120 | - | 1,120 | 1,668 | - | 1,668 | ||||||||||||||||||
| $ | 3,476 | $ | 2,762 | $ | 6,238 | $ | 3,749 | $ | 2,761 | $ | 6,510 |
| Six months ended September 30, 2022 | Six months ended September 30, 2021 | |||||||||||||||||||||||
| Corporate | Mines | Total | Corporate | Mines | Total | |||||||||||||||||||
| Amortization and depreciation | $ | 291 | $ | 618 | $ | 909 | $ | 290 | $ | 678 | $ | 968 | ||||||||||||
| Office and administrative expenses | 815 | 1,386 | 2,201 | 947 | 1,392 | 2,339 | ||||||||||||||||||
| Professional fees | 363 | 233 | 596 | 337 | 219 | 556 | ||||||||||||||||||
| Salaries and benefits | 3,272 | 3,189 | 6,461 | 2,354 | 2,984 | 5,338 | ||||||||||||||||||
| Share-based compensation | 2,292 | - | 2,292 | 3,659 | - | 3,659 | ||||||||||||||||||
| $ | 7,033 | $ | 5,426 | $ | 12,459 | $ | 7,587 | $ | 5,273 | $ | 12,860 |
13
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 6. | FINANCE ITEMS |
Finance items consist of:
|
Three months ended September 30, |
Six months ended September 30, | |||||||||||||||
| Finance income | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Interest income | $ | 1,096 | $ | 1,344 | $ | 2,418 | $ | 2,537 | ||||||||
| Dividend income | - | - | - | 160 | ||||||||||||
| $ | 1,096 | $ | 1,344 | $ | 2,418 | $ | 2,697 |
|
Three months ended September 30, |
Six months ended September 30, | |||||||||||||||
| Finance costs | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Interest on lease obligation | $ | 12 | 19 | $ | 26 | $ | 39 | |||||||||
| Impairment charges for expected credit loss against bond investments (Note 8) | - | - | 445 | - | ||||||||||||
| Unwinding of discount of environmental rehabilitation provision (Note 14) | 61 | 67 | 124 | 135 | ||||||||||||
| $ | 73 | $ | 86 | $ | 595 | $ | 174 |
| 7. | INCOME TAX |
The significant components of income tax expense are as follows:
|
Three months ended September 30, |
Six months ended September 30, | |||||||||||||||
| Income tax expense | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Current | $ | 2,422 | $ | 3,181 | $ | 6,411 | $ | 7,144 | ||||||||
| Deferred | 1,389 | 2,174 | 3,487 | 3,028 | ||||||||||||
| $ | 3,811 | $ | 5,355 | $ | 9,898 | $ | 10,172 |
| 8. | SHORT-TERM INVESTMENTS |
As at September 30, 2022, short-term investments consist of the following:
| Amount | Interest rates | Maturity | ||||||
| Bonds | $ | 7,484 | 5.50% - 13.00% | April 9, 2022 - January 16, 2025 | ||||
| Money market instruments | 27,114 | |||||||
| $ | 34,598 |
During the six months ended September 30, 2022, the Company recorded impairment charges of $0.4 million against the bond investment issued by a Chinese real estate developing companies as the Company observed financial difficulty of the bond issuer. The impairment charge was included in finance costs on the condensed consolidated interim statement of income.
As at September 30, 2022, the carrying value and face value of the bond investments that impaired was $2.1 million and $12.7 million, respectively.
As at March 31, 2022, short-term investments consist of the following:
| Amount | Interest rates | Maturity | ||||||
| Bonds | $ | 9,168 | 5.50% - 13.00% | April 9, 2022 - January 16, 2025 | ||||
| Money market instruments | 90,455 | |||||||
| $ | 99,623 |
As at March 31, 2022, the carrying value and face value of the bond investments that impaired was $1.7 million and $11.2 million, respectively.
14
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 9. | OTHER INVESTMENTS |
|
September 30, 2022 |
March 31, 2022 | |||||||
| Equity investments designated as FVTOCI | ||||||||
| Public companies | $ | 1,006 | $ | 2,383 | ||||
| Private companies | 63 | 71 | ||||||
| 1,069 | 2,454 | |||||||
| Equity investments designated as FVTPL | ||||||||
| Public companies | 7,802 | 11,533 | ||||||
| Private companies | 3,447 | 3,781 | ||||||
| 11,249 | 15,314 | |||||||
| Total | $ | 12,318 | $ | 17,768 |
Investments in publicly traded companies represent equity interests of other publicly-trading mining companies that the Company has acquired through the open market or through private placements. Investment in equity instruments that are held for trading are classified as FVTPL. For other investment in equity instruments, the Company can make an irrevocable election, on an instrument-by-instrument basis, to designate them as FVTOCI.
The continuity of such investments is as follows:
| Fair Value | Accumulated fair value change included in OCI | Accumulated fair value change included in P&L | ||||||||||
| April 1, 2021 | $ | 15,733 | $ | (22,810 | ) | $ | 7,188 | |||||
| Loss on equity investments designated as FVTOCI | (1,526 | ) | (1,526 | ) | - | |||||||
| Loss equity investments designated as FVTPL | (3,485 | ) | - | (3,485 | ) | |||||||
| Acquisition | 8,235 | - | ||||||||||
| Disposal | (1,362 | ) | - | |||||||||
| Impact of foreign currency translation | 173 | - | ||||||||||
| March 31, 2022 | $ | 17,768 | $ | (24,336 | ) | $ | 3,703 | |||||
| Loss on equity investments designated as FVTOCI | (1,239 | ) | (1,239 | ) | - | |||||||
| Loss equity investments designated as FVTPL | (4,267 | ) | - | (4,267 | ) | |||||||
| Acquisition | 1,770 | - | - | |||||||||
| Disposal | (504 | ) | - | - | ||||||||
| Impact of foreign currency translation | (1,210 | ) | - | - | ||||||||
| September 30, 2022 | $ | 12,318 | $ | (25,575 | ) | $ | (564 | ) |
15
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 10. | INVESTMENT IN ASSOCIATES |
| (a) | Investment in New Pacific Metals Corp. |
New Pacific Metals Corp. ("NUAG") is a Canadian public company listed on the Toronto Stock Exchange (symbol: NUAG) and NYSE American (symbol: NEWP). NUAG is a related party of the Company by way of two common directors and one common officer, and the Company accounts for its investment in NUAG using the equity method as it is able to exercise significant influence over the financial and operating policies of NUAG.
During the six months ended September 30, 2022, the Company acquired 260,200 common shares of NUAG from the public market (six month ended September 30, 2021- nil) for a total cost of $0.8 million (six months ended September 30, 2021, $nil).
As at September 30, 2022, the Company owned 44,302,416 common shares of NUAG (March 31, 2022 - 44,042,216), representing an ownership interest of 28.3% (March 31, 2022 - 28.2%).
The summary of the investment in NUAG common shares and its market value as at the respective reporting dates are as follows:
| Number of shares | Amount | Value of NUAG's common shares per quoted market price | ||||||||||
| Balance, April 1, 2021 | 43,917,216 | $ | 50,399 | $ | 181,257 | |||||||
| Purchase from open market | 125,000 | 352 | ||||||||||
| Share of net loss | (1,715 | ) | ||||||||||
| Share of other comprehensive income | 95 | |||||||||||
| Foreign exchange impact | 306 | |||||||||||
| Balance, March 31, 2022 | 44,042,216 | $ | 49,437 | $ | 140,275 | |||||||
| Purchase from open market | 260,200 | 757 | ||||||||||
| Share of net loss | (1,250 | ) | ||||||||||
| Share of other comprehensive loss | (1,025 | ) | ||||||||||
| Foreign exchange impact | (4,284 | ) | ||||||||||
| Balance, September 30, 2022 | 44,302,416 | $ | 43,635 | $ | 93,408 |
| (b) | Investment in Whitehorse Gold Corp. |
Whitehorse Gold Corp. ("WHG") is a Canadian public company listed on the TSX Venture Exchange (symbol: WHG). WHG is a related party of the Company by way of one common director, and the Company accounts for its investment in WHG using the equity method as it is able to exercise significant influence over the financial and operating policies of WHG.
On May 14, 2021, the Company participated in a brokered private placement of WHG and purchased 4,000,000 units at a cost of $5.0 million. Each unit was comprised of one WHG common share and one common share purchase warrant at exercise price of CAD$2 per share. The common share purchase warrant expires on May 14, 2026.
16
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
As at September 30, 2022, the Company owned 15,514,285 common shares of WHG (March 31, 2022 - 15,514,285), representing an ownership interest of 28.9% (March 31, 2022 - 29.3%).
The summary of the investment in WHG common shares and its market value as at the respective reporting dates are as follows:
| Number of shares | Amount | Value of WHG's common shares per quoted market price | ||||||||||
| Balance, April 1, 2021 | 11,514,285 | $ | 3,058 | $ | 15,108 | |||||||
| Participation in private placement | 4,000,000 | 4,960 | ||||||||||
| Share of net loss | (473 | ) | ||||||||||
| Foreign exchange impact | (141 | ) | ||||||||||
| Balance, March 31, 2022 | 15,514,285 | $ | 7,404 | $ | 6,208 | |||||||
| Share of net loss | (249 | ) | ||||||||||
| Share of other comprehensive income | 21 | |||||||||||
| Foreign exchange impact | (641 | ) | ||||||||||
| Balance, September 30, 2022 | 15,514,285 | $ | 6,535 | $ | 5,320 |
| 11. | PLANT AND EQUIPMENT |
Plant and equipment consist of:
| Cost | Land use rights and building | Office equipment | Machinery | Motor vehicles | Construction in progress | Total | ||||||||||||||||||
| Balance as at April 1, 2021 | $ | 110,151 | $ | 9,660 | $ | 31,074 | $ | 7,537 | $ | 1,342 | $ | 159,764 | ||||||||||||
| Additions | 1,613 | 967 | 2,575 | 763 | 3,647 | 9,565 | ||||||||||||||||||
| Disposals | (293 | ) | (68 | ) | (539 | ) | (245 | ) | - | (1,145 | ) | |||||||||||||
| Reclassification of asset groups | 2,100 | 154 | 191 | - | (2,445 | ) | - | |||||||||||||||||
| Impact of foreign currency translation | 3,676 | 296 | 1,078 | 258 | 59 | 5,367 | ||||||||||||||||||
| Balance as at March 31, 2022 | $ | 117,247 | $ | 11,009 | $ | 34,379 | $ | 8,313 | $ | 2,603 | $ | 173,551 | ||||||||||||
| Additions | 221 | 738 | 1,099 | 504 | 5,238 | 7,800 | ||||||||||||||||||
| Disposals | (372 | ) | (53 | ) | (441 | ) | (233 | ) | - | (1,099 | ) | |||||||||||||
| Reclassification of asset groups | 2,491 | - | 12 | - | (2,503 | ) | - | |||||||||||||||||
| Impact of foreign currency translation | (13,038 | ) | (1,196 | ) | (3,859 | ) | (925 | ) | (441 | ) | (19,459 | ) | ||||||||||||
| Ending balance as at September 30, 2022 | $ | 106,549 | $ | 10,498 | $ | 31,190 | $ | 7,659 | $ | 4,897 | $ | 160,793 | ||||||||||||
| Impairment, accumulated depreciation and amortization | ||||||||||||||||||||||||
| Balance as at April 1, 2021 | $ | (51,570 | ) | $ | (6,246 | ) | $ | (21,171 | ) | $ | (5,048 | ) | $ | - | $ | (84,035 | ) | |||||||
| Disposals | 158 | 64 | 419 | 220 | - | 861 | ||||||||||||||||||
| Depreciation and amortization | (4,422 | ) | (867 | ) | (2,172 | ) | (649 | ) | - | (8,110 | ) | |||||||||||||
| Impact of foreign currency translation | (1,750 | ) | (183 | ) | (741 | ) | (175 | ) | - | (2,849 | ) | |||||||||||||
| Balance as at March 31, 2022 | $ | (57,584 | ) | $ | (7,232 | ) | $ | (23,665 | ) | $ | (5,652 | ) | $ | - | $ | (94,133 | ) | |||||||
| Disposals | 146 | 47 | 376 | 210 | - | 779 | ||||||||||||||||||
| Depreciation and amortization | (2,205 | ) | (476 | ) | (1,068 | ) | (327 | ) | - | (4,076 | ) | |||||||||||||
| Impact of foreign currency translation | 6,442 | 770 | 2,682 | 631 | - | 10,525 | ||||||||||||||||||
| Ending balance as at September 30, 2022 | $ | (53,201 | ) | $ | (6,891 | ) | $ | (21,675 | ) | $ | (5,138 | ) | $ | - | $ | (86,905 | ) | |||||||
| Carrying amounts | ||||||||||||||||||||||||
| Balance as at March 31, 2022 | $ | 59,663 | $ | 3,777 | $ | 10,714 | $ | 2,661 | $ | 2,603 | $ | 79,418 | ||||||||||||
| Ending balance as at September 30, 2022 | $ | 53,348 | $ | 3,607 | $ | 9,515 | $ | 2,521 | $ | 4,897 | $ | 73,888 |
17
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| Carrying amounts as at September 30, 2022 | Ying Mining District | BYP | GC | Other | Total | |||||||||||||||
| Land use rights and building | $ | 39,361 | $ | 2,504 | $ | 10,145 | $ | 1,338 | $ | 53,348 | ||||||||||
| Office equipment | 2,942 | 13 | 440 | 212 | 3,607 | |||||||||||||||
| Machinery | 7,062 | 118 | 2,279 | 56 | 9,515 | |||||||||||||||
| Motor vehicles | 2,001 | 17 | 346 | 157 | 2,521 | |||||||||||||||
| Construction in progress | 4,140 | 490 | 267 | - | 4,897 | |||||||||||||||
| Total | $ | 55,506 | $ | 3,142 | $ | 13,477 | $ | 1,763 | $ | 73,888 |
| Carrying amounts as at March 31, 2022 | Ying Mining District | BYP | GC | Other | Total | |||||||||||||||
| Land use rights and building | $ | 42,953 | $ | 2,965 | $ | 12,027 | $ | 1,718 | $ | 59,663 | ||||||||||
| Office equipment | 2,973 | 16 | 516 | 272 | 3,777 | |||||||||||||||
| Machinery | 8,225 | 155 | 2,276 | 58 | 10,714 | |||||||||||||||
| Motor vehicles | 2,127 | 20 | 323 | 191 | 2,661 | |||||||||||||||
| Construction in progress | 1,911 | 552 | 140 | - | 2,603 | |||||||||||||||
| Total | $ | 58,189 | $ | 3,708 | $ | 15,282 | $ | 2,239 | $ | 79,418 |
| 12. | MINERAL RIGHTS AND PROPERTIES |
Mineral rights and properties consist of:
| Producing and development properties | Exploration and evaluation properties | |||||||||||||||||||||||||||
| Cost | Ying Mining District | BYP | GC | RZY | Kuanping | La Yesca | Total | |||||||||||||||||||||
| Balance as at April 1, 2021 | $ | 348,000 | $ | 64,609 | $ | 115,610 | $ | 185 | $ | - | $ | 16,747 | $ | 545,151 | ||||||||||||||
| Capitalized expenditures | 37,307 | - | 4,507 | - | 24 | 2,588 | 44,426 | |||||||||||||||||||||
| Acquisition (Note 3) | - | - | - | - | 13,135 | - | 13,135 | |||||||||||||||||||||
| Environmental rehabilitation | (68 | ) | (18 | ) | 898 | - | - | - | 812 | |||||||||||||||||||
| Derecognition | - | - | - | (185 | ) | - | - | (185 | ) | |||||||||||||||||||
| Foreign currency translation impact | 12,096 | 501 | 3,891 | - | 221 | - | 16,709 | |||||||||||||||||||||
| Balance as at March 31, 2022 | $ | 397,335 | $ | 65,092 | $ | 124,906 | $ | - | $ | 13,380 | $ | 19,335 | $ | 620,048 | ||||||||||||||
| Capitalized expenditures | 20,958 | - | 2,493 | - | 752 | 879 | 25,082 | |||||||||||||||||||||
| Foreign currency translation impact | (45,068 | ) | (1,710 | ) | (13,911 | ) | - | (1,522 | ) | - | (62,211 | ) | ||||||||||||||||
| Ending balance as at September 30, 2022 | $ | 373,225 | $ | 63,382 | $ | 113,488 | $ | - | $ | 12,610 | $ | 20,214 | $ | 582,919 | ||||||||||||||
| Impairment and accumulated depletion | ||||||||||||||||||||||||||||
| Balance as at April 1, 2021 | $ | (122,977 | ) | $ | (57,264 | ) | $ | (87,296 | ) | $ | (185 | ) | $ | - | $ | - | $ | (267,722 | ) | |||||||||
| Depletion | (15,974 | ) | - | (2,595 | ) | - | - | - | (18,569 | ) | ||||||||||||||||||
| Derecognition | - | - | - | 185 | - | - | 185 | |||||||||||||||||||||
| Foreign currency translation impact | (4,313 | ) | (257 | ) | (2,924 | ) | - | - | - | (7,494 | ) | |||||||||||||||||
| Balance as at March 31, 2022 | $ | (143,264 | ) | $ | (57,521 | ) | $ | (92,815 | ) | $ | - | $ | - | $ | - | $ | (293,600 | ) | ||||||||||
| Impairment | - | - | - | - | (20,214 | ) | (20,214 | ) | ||||||||||||||||||||
| Depletion | (10,221 | ) | - | (1,273 | ) | - | - | - | (11,494 | ) | ||||||||||||||||||
| Foreign currency translation impact | 16,403 | 875 | 10,299 | - | - | - | 27,577 | |||||||||||||||||||||
| Ending balance as at September 30, 2022 | $ | (137,082 | ) | $ | (56,646 | ) | $ | (83,789 | ) | $ | - | $ | - | $ | (20,214 | ) | $ | (297,731 | ) | |||||||||
| Carrying amounts | ||||||||||||||||||||||||||||
| Balance as at March 31, 2022 | $ | 254,071 | $ | 7,571 | $ | 32,091 | $ | - | $ | 13,380 | $ | 19,335 | $ | 326,448 | ||||||||||||||
| Ending balance as at September 30, 2022 | $ | 236,143 | $ | 6,736 | $ | 29,699 | $ | - | $ | 12,610 | $ | - | $ | 285,188 |
During the six months ended September 30, 2022, the Company completed the review and evaluation on the results of the drilling program completed in Fiscal 2022. The Company does not plan to undertake further significant work at the La Yesca Project in the near future. As a result, the decision was taken to impair fully the value of the La Yesca Project and recognized an impairment charge of $20.2 million.
18
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 13. | LEASES |
The following table summarizes changes in the Company's lease receivable and lease obligation related to the Company's office lease and sublease.
| Lease Receivable | Lease Obligation | |||||||
| Balance, April 1, 2021 | $ | 396 | $ | 1,741 | ||||
| Addition | - | 149 | ||||||
| Interest accrual | 15 | 72 | ||||||
| Interest received or paid | (15 | ) | (72 | ) | ||||
| Principal repayment | (217 | ) | (637 | ) | ||||
| Foreign exchange impact | 3 | 10 | ||||||
| Balance, March 31, 2022 | $ | 182 | $ | 1,263 | ||||
| Interest accrual | 3 | 26 | ||||||
| Interest received or paid | (3 | ) | (26 | ) | ||||
| Principal repayment | (109 | ) | (337 | ) | ||||
| Foreign exchange impact | (10 | ) | (92 | ) | ||||
| Balance, September 30, 2022 | $ | 63 | $ | 834 | ||||
| Less: current portion | (63 | ) | (397 | ) | ||||
| Non-current portion | $ | - | $ | 437 |
The following table presents a reconciliation of the Company's undiscounted cash flows to their present value for its lease receivable and lease obligation as at September 30, 2022:
| Lease Receivable | Lease Obligation | |||||||
| Within 1 year | $ | 64 | $ | 415 | ||||
| Between 2 to 5 years | - | 468 | ||||||
| Total undiscounted amount | 64 | 883 | ||||||
| Less future interest | (1 | ) | (49 | ) | ||||
| Total discounted amount | $ | 63 | $ | 834 | ||||
| Less: current portion | (63 | ) | (397 | ) | ||||
| Non-current portion | $ | - | $ | 437 |
The lease receivable and lease obligation were discounted using an estimated incremental borrowing rate of 5%.
19
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 14. | ENVIRONMENTAL REHABILITATION OBLIGATION |
The following table presents the reconciliation of the beginning and ending obligations associated with the retirement of the properties:
| Balance, April 1, 2021 | $ | 7,863 | ||
| Reclamation expenditures | (467 | ) | ||
| Unwinding of discount of environmental rehabilitation | 269 | |||
| Revision of provision | 812 | |||
| Foreign exchange impact | 262 | |||
| Balance, March 31, 2022 | $ | 8,739 | ||
| Reclamation expenditures | (165 | ) | ||
| Unwinding of discount of environmental rehabilitation | 124 | |||
| Foreign exchange impact | (963 | ) | ||
| Balance, September 30, 2022 | $ | 7,735 |
| 15. | SHARE CAPITAL |
(a) Authorized
Unlimited number of common shares without par value. All shares issued as at September 30, 2022 were fully paid.
(b) Share-based compensation
The Company has a share-based compensation plan (the "Plan") which consists of stock options, restricted share units (the "RSUs") and performance share units (the "PSUs"). The Plan allows for the maximum number of common shares to be reserved for issuance on any share-based compensation to be a rolling 10% of the issued and outstanding common shares from time to time. Furthermore, no more than 3% of the reserve may be granted in the form of RSUs and PSUs.
For the three and six months ended September 30, 2022, a total of $1.1 million and $2.3 million, respectively (three and six months ended September 30, 2021 - $1.7 million and $3.9 million, respectively) in share-based compensation expense was recognized and included in the general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.
20
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| (i) | Stock options |
The following is a summary of option transactions:
|
Number of shares | Weighted average exercise price per share CAD$ | |||||||
| Balance, April 1, 2021 | 1,862,418 | $ | 5.45 | |||||
| Options exercised | (797,083 | ) | 2.98 | |||||
| Options cancelled/forfeited | (70,000 | ) | 7.46 | |||||
| Balance, March 31, 2022 | 995,335 | $ | 7.28 | |||||
| Option granted | 535,000 | 3.93 | ||||||
| Options cancelled/forfeited | (132,000 | ) | 6.01 | |||||
| Balance, September 30, 2022 | 1,398,335 | $ | 6.12 |
The following table summarizes information about stock options outstanding as at September 30, 2022:
| Exercise price |
Number of options outstanding at September 30, |
Weighted average remaining contractual life |
Weighted average exercise price in |
Number of options exercisable at September 30, |
Weighted average exercise price in | |||||||||||||||||
| in CAD$ | 2022 | (Years) | CAD$ | 2022 | CAD$ | |||||||||||||||||
| $ | 3.93 | 478,000 | 4.57 | $ | 3.93 | - | $ | - | ||||||||||||||
| $ | 5.46 | 505,335 | 2.65 | $ | 5.46 | 336,338 | $ | 5.46 | ||||||||||||||
| $ | 9.45 | 415,000 | 3.12 | $ | 9.45 | 212,500 | $ | 9.45 | ||||||||||||||
| $3.93 to $9.45 | 1,398,335 | 3.45 | $ | 6.12 | 548,838 | $ | 7.00 |
During the three and six months ended September 30, 2022, a total of nil and 535,000, respectively, options with a life of five years were granted to directors, officers, and employees at exercise prices of CAD$3.93 per share subject to a vesting schedule over a three-year term with 1/6 of the options vesting every six months from the date of grant until fully vested.
The fair value of stock options granted during the six months ended September 30, 2022 were calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
| Six months ended September 30, 2022 | ||||
| Risk free interest rate | 2.49 | % | ||
| Expected life of option in years | 2.75 years | |||
| Expected volatility | 62.53 | % | ||
| Expected dividend yield | 0.81 | % | ||
| Estimated forfeiture rate | 9.81 | % | ||
| Weighted average share price at date of grant | $3.93 CAD |
Subsequent to September 30, 2022, a total of 2,500 options with exercise prices of CAD$9.45 was forfeited.
21
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| (ii) | RSUs |
The following is a summary of RSUs transactions:
| Number of shares |
Weighted average grant date closing price per share $CAD | |||||||
| Balance, April 1, 2021 | 1,249,336 | $ | 6.28 | |||||
| Granted | 1,000,000 | 6.40 | ||||||
| Forfeited | (46,999 | ) | 6.63 | |||||
| Distributed | (566,172 | ) | 5.90 | |||||
| Balance, March 31, 2022 | 1,636,165 | $ | 6.47 | |||||
| Granted | 961,000 | 3.93 | ||||||
| Forfeited | (122,122 | ) | 5.41 | |||||
| Distributed | (214,375 | ) | 6.53 | |||||
| Balance, September 30, 2022 | 2,260,668 | $ | 5.44 |
Subsequent to September 30, 2022, a total of 86,166 RSUs with grant prices of CAD$6.40 were distributed.
| (c) | Cash dividends declared |
During the three and six months ended September 30, 2022, dividends of $nil and $2.2 million, respectively, (three months ended September 30, 2021 - $nil and $2.2 million, respectively) were declared and paid.
| (d) | Normal course issuer bid |
On August 25, 2021, the Company announced a normal course issuer bid (the "2021 NCIB") which allows it to repurchase and cancel up to 7,054,000 of its own common shares until August 26, 2022. A total of 739,960 common shares were repurchased under 2021 NCIB at a weighted average price of CAD$3.25.
On August 24, 2022, the Company announced a normal course issuer bid (the "2022 NCIB", together with the 2021 NCIB, the "NCIB Programs") which allows it to repurchase and cancel up to 7,079,407 of its own common shares until August 28, 2023.
During the three and six months ended September 30, 2022, the Company repurchased a total of 503,247 and 838,237, respectively, common shares at a cost of $1.2 million and $2.1 million, respectively, under the NCIB Programs. All shares bought were subsequently cancelled.
| 16. | ACCUMULATED OTHER COMPREHENSIVE LOSS |
|
September 30, 2022 |
March 31, 2022 | |||||||
| Change in fair value on equity investments designated as FVTOCI | $ | 24,282 | $ | 23,043 | ||||
| Share of other comprehensive loss in associate | 1,498 | 494 | ||||||
| Currency translation adjustment | 32,332 | (21,584 | ) | |||||
| Balance, end of the period | $ | 58,112 | $ | 1,953 |
The change in fair value on equity investments designated as FVTOCI, share of other comprehensive loss in associates, and currency translation adjustment are net of tax of $nil for all periods presented.
22
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 17. | NON-CONTROLLING INTERESTS |
The continuity of non-controlling interests is summarized as follows:
| Henan Found | Henan Huawei | Yunxiang | Guangdong Found | New Infini | Total | |||||||||||||||||||
| Balance, April 1, 2021 | $ | 78,564 | $ | 5,182 | $ | 3,032 | $ | (351 | ) | $ | 11,727 | $ | 98,154 | |||||||||||
| Share of net income (loss) | 12,639 | 182 | (185 | ) | 154 | (140 | ) | 12,650 | ||||||||||||||||
| Share of other comprehensive income | 1,732 | 194 | 68 | 16 | - | 2,010 | ||||||||||||||||||
| Distributions | (3,266 | ) | (630 | ) | - | - | (1,200 | ) | (5,096 | ) | ||||||||||||||
| Balance, March 31, 2022 | $ | 89,669 | $ | 4,928 | $ | 2,915 | $ | (181 | ) | $ | 10,387 | $ | 107,718 | |||||||||||
| Share of net income (loss) | 6,639 | (256 | ) | (127 | ) | 45 | (10,876 | ) | (4,575 | ) | ||||||||||||||
| Share of other comprehensive loss | (8,826 | ) | (523 | ) | (177 | ) | (68 | ) | - | (9,594 | ) | |||||||||||||
| Distributions | (6,626 | ) | (630 | ) | - | - | - | (7,256 | ) | |||||||||||||||
| Balance, September 30, 2022 | $ | 80,856 | $ | 3,519 | $ | 2,611 | $ | (204 | ) | $ | (489 | ) | $ | 86,293 |
As at September 30, 2022, non-controlling interests in Henan Found, Henan Huawei, Yunxiang, Guangdong Found and New Infini were 22.5%, 20%, 30%, 1%, and 53.9%, respectively (March 31, 2022 - 22.5%, 20%, 30%, 1%, and 53.9%, respectively).
| 18. | RELATED PARTY TRANSACTIONS |
Related party transactions are made on terms agreed upon by the related parties. The balances with related parties are unsecured, non-interest bearing, and due on demand. Related party transactions not disclosed elsewhere in the condensed consolidated interim financial statements are as follows:
| September 30, 2022 |
March 31, 2022 | |||||||
| NUAG (a) | $ | 67 | $ | 43 | ||||
| WHG (b) | 4 | 23 | ||||||
| $ | 71 | $ | 66 |
| (a) | The Company recovers costs for services rendered to NUAG and expenses incurred on behalf of NUAG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2022, the Company recovered $0.2 million and $0.3 million, respectively, (three and six months ended September 30, 2021 - $0.2 million and $0.3 million, respectively) from NUAG for services rendered and expenses incurred on behalf of NUAG. The costs recovered from NUAG were recorded as a direct reduction of general and administrative expenses on the condensed consolidated statements of income. |
| (b) | The Company recovers costs for services rendered to WHG and expenses incurred on behalf of WHG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2022, the Company recovered $0.04 million and $0.1 million, respectively (three and six months ended September 30, 2021 - $0.04 million and $0.1 million, respectively), from WHG for services rendered and expenses incurred on behalf of WHG. The costs recovered from WHG were recorded as a direct reduction of general and administrative expenses on the condensed consolidated statements of income. |
23
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 19. | FINANCIAL INSTRUMENTS |
The Company manages its exposure to financial risks, including liquidity risk, foreign exchange risk, interest rate risk, credit risk and equity price risk in accordance with its risk management framework. The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework and reviews the Company's policies on an ongoing basis.
(a) Fair value
The Company classifies its fair value measurements within a fair value hierarchy, which reflects the significance of the inputs used in making the measurements as defined in IFRS 13, Fair Value Measurement ("IFRS 13").
Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Unobservable inputs which are supported by little or no market activity.
The following tables set forth the Company's financial assets and liabilities that are measured at fair value level on a recurring basis within the fair value hierarchy as at September 30, 2022 and March 31, 2022 that are not otherwise disclosed. As required by IFRS 13, the assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
| Fair value as at September 30, 2022 | ||||||||||||||||
| Recurring measurements | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | $ | 166,370 | $ | - | $ | - | $ | 166,370 | ||||||||
| Short-term investments - money market instruments | 27,114 | - | - | 27,114 | ||||||||||||
| Investments in public companies | 8,808 | - | - | 8,808 | ||||||||||||
| Investments in private companies | - | - | 3,510 | 3,510 |
| Fair value as at March 31, 2022 | ||||||||||||||||
| Recurring measurements | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | $ | 113,302 | $ | - | $ | - | $ | 113,302 | ||||||||
| Short-term investments - money market instruments | 90,455 | - | - | 90,455 | ||||||||||||
| Investments in public companies | 13,916 | - | - | 13,916 | ||||||||||||
| Investments in private companies | - | - | 3,852 | 3,852 |
Financial assets classified within Level 3 are equity investments in private companies owned by the Company. Significant unobservable inputs are used to determine the fair value of the financial assets, which includes recent arm's length transactions of the investee, the investee's financial performance as well as any changes in planned milestones of the investees.
24
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at September 30, 2022 and March 31, 2022, due to the short-term nature of these instruments.
There were no transfers into or out of Level 3 during the three and six months ended September 30, 2022 and 2021.
(b) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its short-term business requirements. The Company has in place a planning and budgeting process to help determine the funds required to support the Company's normal operating requirements on an ongoing basis and its expansion plans.
In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following summarizes the remaining contractual maturities of the Company's financial liabilities and operating commitments on an undiscounted basis.
| September 30, 2022 | ||||||||||||
| Within a year | 2-5 years | Total | ||||||||||
| Accounts payable and accrued liabilities | $ | 39,075 | $ | - | $ | 39,075 | ||||||
| Lease obligation | 415 | 468 | 883 | |||||||||
| Deposits received | 6,216 | - | 6,216 | |||||||||
| Total Contractual Obligation | $ | 45,706 | $ | 468 | $ | 46,174 |
| March 31, 2022 | ||||||||||||
| Within a year | 2-5 years | Total | ||||||||||
| Accounts payable and accrued liabilities | $ | 39,667 | $ | - | $ | 39,667 | ||||||
| Lease obligation | 677 | 666 | 1,343 | |||||||||
| Deposits received | 5,445 | - | 5,445 | |||||||||
| Total Contractual Obligation | $ | 45,789 | $ | 666 | $ | 46,455 |
(c) Foreign exchange risk
The Company reports its financial statements in US dollars. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is the Canadian dollar ("CAD")and the functional currency of all Chinese subsidiaries is the Chinese yuan ("RMB"). The functional currency of New Infini and its subsidiaries is the US dollar ("USD"). The Company is exposed to foreign exchange risk when the Company undertakes transactions and holds assets and liabilities in currencies other than its functional currencies.
25
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
The Company currently does not engage in foreign exchange currency hedging. The Company's exposure to currency risk affect net income is summarized as follows:
|
September 30, 2022 |
March 31, 2022 | |||||||
| Financial assets denominated in U.S. Dollars | $ | 74,257 | $ | 59,272 |
As at September 30,2022, with other variables unchanged, a 10% strengthening (weakening) of the CAD against the USD would have decreased (increased) net income by approximately $7.4 million.
(d) Interest rate risk
The Company is exposed to interest rate risk on its cash equivalents and short-term investments. As at September 30, 2022, all of its interest-bearing cash equivalents and short-term investments earn interest at market rates that are fixed to maturity or at variable interest rates with terms of less than one year. The Company monitors its exposure to changes in interest rates on cash equivalents and short-term investments. Due to the short-term nature of these financial instruments, fluctuations in interest rates would not have a significant impact on the Company's net income.
(e) Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company is exposed to credit risk primarily associated to accounts receivable, due from related parties, cash and cash equivalents, and short-term investments. The carrying amount of assets included on the balance sheet represents the maximum credit exposure.
The Company undertakes credit evaluations on counterparties as necessary, requests deposits from customers prior to delivery, and has monitoring processes intended to mitigate credit risks. There were no material amounts in trade or other receivables which were past due on September 30, 2022 (at March 31, 2022 - $nil).
(f) Equity price risk
The Company holds certain marketable securities that will fluctuate in value as a result of trading on financial markets. As the Company's marketable securities holdings are mainly in mining companies, the value will also fluctuate based on commodity prices. Based upon the Company's portfolio as at September 30, 2022, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign currency effects, would have resulted in an increase (decrease) to the net income (loss) and other comprehensive income (loss) of $0.8 million and $0.1 million, respectively.
26
SILVERCORP METALS INC.
Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021
(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)
| 20. | SUPPLEMENTARY CASH FLOW INFORMATION |
|
Three Months Ended September 30, |
Six Months Ended September 30, | |||||||||||||||
| Changes in non-cash operating working capital: | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Trade and other receivables | $ | 1,170 | $ | (177 | ) | $ | 1,372 | $ | (39 | ) | ||||||
| Inventories | 186 | (2,530 | ) | 174 | 1,082 | |||||||||||
| Prepaids and deposits | (199 | ) | 103 | (1,096 | ) | (1,580 | ) | |||||||||
| Accounts payable and accrued liabilities | (10,983 | ) | 3,991 | 248 | 6,929 | |||||||||||
| Deposits received | 3,022 | (2,200 | ) | 1,453 | 1,954 | |||||||||||
| Due from a related party | 7 | 3 | (11 | ) | (11 | ) | ||||||||||
| $ | (6,797 | ) | $ | (810 | ) | $ | 2,140 | $ | 8,335 |
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| Non-cash capital transactions: | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Environmental rehablitation expenditure paid from reclamation deposit | $ | 126 | $ | 34 | $ | 150 | $ | 56 | ||||||||
| Additions of plant and equipment included in accounts payable and accrued liabilities | $ | 566 | $ | (1,286 | ) | $ | 1,094 | $ | (1,465 | ) | ||||||
| Capital expenditures of mineral rights and properties included in accounts payable and accrued liabilities | $ | 5,284 | $ | 1,311 | $ | 2,312 | $ | 1,379 |
|
September 30, 2022 |
March 31, 2022 | |||||||
| Cash on hand and at bank | $ | 46,629 | $ | 72,782 | ||||
| Bank term deposits and short-term money market investments | 119,741 | 40,520 | ||||||
| Total cash and cash equivalents | $ | 166,370 | $ | 113,302 |
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Silvercorp Metals Inc. published this content on 07 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 November 2022 11:13:27 UTC.
