Exhibit 99.4
SILVERCORP METALS INC.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended December 31, 2020 and 2019
(Expressed in thousands of US dollars, unless otherwise stated)
(Unaudited)
SILVERCORP METALS INC. |
Condensed Consolidated Interim Statements of Financial Position |
(Unaudited) (Expressed in thousands of U.S. dollars) |
As at December 31, | As at March 31, | |||||
Notes | 2020 | 2020 | ||||
ASSETS | ||||||
Current Assets | ||||||
Cash and cash equivalents | 20 | $ | 103,347 | $ | 65,777 | |
Short-term investments | 4 | 100,774 | 76,742 | |||
Trade and other receivables | 1,196 | 1,178 | ||||
Current portion of lease receivable | 9 | 210 | 186 | |||
Inventories | 9,751 | 8,430 | ||||
Due from related parties | 13 | 102 | 1,519 | |||
Income tax receivable | - | 1,093 | ||||
Prepaids and deposits | 4,770 | 3,254 | ||||
220,150 | 158,179 | |||||
Non-current Assets | ||||||
Long-term prepaids and deposits | 406 | 390 | ||||
Long-term portion lease receivable | 9 | 234 | 348 | |||
Reclamation deposits | 8,447 | 9,230 | ||||
Investment in associates | 5 | 53,988 | 44,555 | |||
Other investments | 6 | 18,763 | 8,750 | |||
Plant and equipment | 7 | 76,217 | 66,722 | |||
Mineral rights and properties | 8 | 277,688 | 224,586 | |||
TOTAL ASSETS | $ | 655,893 | $ | 512,760 | ||
LIABILITIES AND EQUITY | ||||||
Current Liabilities | ||||||
Accounts payable and accrued liabilities | $ | 45,446 | $ | 23,129 | ||
Current portion of lease obligation | 9 | 644 | 567 | |||
Deposits received | 2,819 | 3,195 | ||||
Income tax payable | 2,493 | 937 | ||||
51,402 | 27,828 | |||||
Non-current Liabilities | ||||||
Long-term portion of lease obligation | 9 | 1,225 | 1,502 | |||
Deferred income tax liabilities | 41,976 | 35,758 | ||||
Environmental rehabilitation | 9,457 | 8,700 | ||||
Total Liabilities | 104,060 | 73,788 | ||||
Equity | ||||||
Share capital | 248,762 | 243,926 | ||||
Equity reserves | 29,397 | (21,142 | ) | |||
Retained earnings | 180,885 | 145,898 | ||||
Total equity attributable to the equity holders of the Company | 459,044 | 368,682 | ||||
Non-controlling interests | 12 | 92,789 | 70,290 | |||
Total Equity | 551,833 | 438,972 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 655,893 | $ | 512,760 |
Approved on behalf of the Board:
(Signed) David Kong
Director
(Signed) Rui Feng
Director
See accompanying notes to the condensed consolidated interim financial statements
1
SILVERCORP METALS INC. |
Condensed Consolidated Interim Statements of Income |
(Unaudited)(Expressed in thousands of U.S. dollars, except numbers for share and per share figures) |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||
Notes | 2020 | 2019 | 2020 | 2019 | |||||||||
Revenue | 19(b)(c) | $ | 53,296 | $ | 44,508 | $ | 156,373 | $ | 139,970 | ||||
Cost of mine operations | |||||||||||||
Production costs | 18,025 | 18,395 | 55,460 | 53,685 | |||||||||
Depreciation and amortization | 5,596 | 5,886 | 16,928 | 17,569 | |||||||||
Mineral resource taxes | 1,337 | 1,322 | 4,106 | 3,981 | |||||||||
Government fees and other taxes | 15 | 777 | 787 | 1,965 | 1,877 | ||||||||
General and administrative | 14 | 2,760 | 2,348 | 7,156 | 6,688 | ||||||||
28,495 | 28,738 | 85,615 | 83,800 | ||||||||||
Income from mine operations | 24,801 | 15,770 | 70,758 | 56,170 | |||||||||
Corporate general and administrative | 14 | 3,525 | 2,568 | 8,996 | 7,504 | ||||||||
Property evaluation and business development | 4 | 209 | 232 | (3,450 | ) | 405 | |||||||
Foreign exchange loss | 2,954 | 1,277 | 6,973 | 1,334 | |||||||||
Loss on disposal of plant and equipment | 7 | 36 | 110 | 247 | 373 | ||||||||
Gain on disposal of mineral rights and properties | 8 | - | - | - | (1,477 | ) | |||||||
Share of loss in associates | 5 | 550 | 322 | 1,030 | 847 | ||||||||
Dilution gain on investment in associate | 5 | - | - | - | (723 | ) | |||||||
Reclassification of other comprehensive income upon ownership dilution of investment in associate | - | - | - | (21 | ) | ||||||||
Gain on equity investments designated as FVTPL | 4, 6 | (600 | ) | - | (8,837 | ) | - | ||||||
Other (income) expense | (503 | ) | (182 | ) | (682 | ) | 308 | ||||||
Income from operations | 18,630 | 11,443 | 66,481 | 47,620 | |||||||||
Finance income | 16 | 1,108 | 1,122 | 2,796 | 2,869 | ||||||||
Finance costs | 16 | (1,403 | ) | (134 | ) | (1,634 | ) | (445 | ) | ||||
Income before income taxes | 18,335 | 12,431 | 67,643 | 50,044 | |||||||||
Income tax expense | 17 | 6,046 | 3,715 | 17,305 | 8,366 | ||||||||
Net income | $ | 12,289 | $ | 8,716 | $ | 50,338 | $ | 41,678 | |||||
Attributable to: | |||||||||||||
Equity holders of the Company | $ | 8,392 | $ | 6,283 | $ | 39,355 | $ | 31,111 | |||||
Non-controlling interests | 12 | 3,897 | 2,433 | 10,983 | 10,567 | ||||||||
$ | 12,289 | $ | 8,716 | $ | 50,338 | $ | 41,678 | ||||||
Earnings per share attributable to the equity holders of the Company | |||||||||||||
Basic earnings per share | $ | 0.05 | $ | 0.04 | $ | 0.23 | $ | 0.18 | |||||
Diluted earnings per share | $ | 0.05 | $ | 0.04 | $ | 0.22 | $ | 0.18 | |||||
Weighted Average Number of Shares Outstanding - Basic | 175,261,808 | 172,691,444 | 174,651,536 | 171,179,368 | |||||||||
Weighted Average Number of Shares Outstanding - Diluted | 177,515,646 | 174,760,433 | 177,134,575 | 172,963,914 |
See accompanying notes to the condensed consolidated interim financial statements
2
SILVERCORP METALS INC. |
Condensed Consolidated Interim Statements of Comprehensive Income |
(Unaudited) (Expressed in thousands of U.S. dollars) |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||
Notes | 2020 | 2019 | 2020 | 2019 | |||||||||
Net income | $ | 12,289 | $ | 8,716 | $ | 50,338 | $ | 41,678 | |||||
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 | 21,300 | 10,749 | 44,076 | (7,905 | ) | ||||||||
Share of other comprehensive loss in associate | 5 | (820 | ) | (314 | ) | (1,953 | ) | (536 | ) | ||||
Reclassification to net income upon ownership dilution of investment in associate | - | - | - | (21 | ) | ||||||||
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 | 4,6 | (34 | ) | 1,903 | 12,855 | 2,739 | |||||||
Other comprehensive income (loss), net of taxes | $ | 20,446 | $ | 12,338 | $ | 54,978 | $ | (5,723 | ) | ||||
Attributable to: | |||||||||||||
Equity holders of the Company | $ | 17,736 | $ | 10,767 | $ | 49,473 | $ | (3,602 | ) | ||||
Non-controlling interests | 12 | 2,710 | 1,571 | 5,505 | (2,121 | ) | |||||||
$ | 20,446 | $ | 12,338 | $ | 54,978 | $ | (5,723 | ) | |||||
Total comprehensive income | $ | 32,735 | $ | 21,054 | $ | 105,316 | $ | 35,955 | |||||
Attributable to: | |||||||||||||
Equity holders of the Company | $ | 26,128 | $ | 17,050 | $ | 88,828 | $ | 27,509 | |||||
Non-controlling interests | 6,607 | 4,004 | 16,488 | 8,446 | |||||||||
$ | 32,735 | $ | 21,054 | $ | 105,316 | $ | 35,955 |
See accompanying notes to the condensed consolidated interim financial statements
3
SILVERCORP METALS INC. |
Condensed Consolidated Interim Statements of Cash Flows |
(Unaudited) (Expressed in thousands of U.S. dollars) |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||
Notes | 2020 | 2019 | 2020 | 2019 | |||||||||
Cash provided by | |||||||||||||
Operating activities | |||||||||||||
Net income | $ | 12,289 | $ | 8,716 | $ | 50,338 | $ | 41,678 | |||||
Add (deduct) items not affecting cash: | |||||||||||||
Finance costs | 16 | 1,403 | 134 | 1,634 | 445 | ||||||||
Depreciation, amortization and depletion | 6,063 | 6,268 | 18,240 | 18,691 | |||||||||
Share of loss in associates | 5 | 550 | 322 | 1,030 | 847 | ||||||||
Dilution gain on investment in associate | 5 | - | - | - | (723 | ) | |||||||
Reclassification of other comprehensive loss upon ownership dilution of investment in associate | - | - | - | (21 | ) | ||||||||
Income tax expense | 17 | 6,046 | 3,715 | 17,305 | 8,366 | ||||||||
Gain on equity investments designated as FVTPL | 4, 6 | (600 | ) | - | (8,837 | ) | - | ||||||
Loss on disposal of plant and equipment | 7 | 36 | 110 | 247 | 373 | ||||||||
Gain on disposal of mineral rights and properties | 8 | - | - | - | (1,477 | ) | |||||||
Share-based compensation | 1,263 | 947 | 3,018 | 1,973 | |||||||||
Reclamation expenditures | (50 | ) | (222 | ) | (118 | ) | (296 | ) | |||||
Income taxes paid | (6,041 | ) | (485 | ) | (11,864 | ) | (3,415 | ) | |||||
Interest paid | (23 | ) | (30 | ) | (73 | ) | (135 | ) | |||||
Changes in non-cash operating working capital | 20 | 3,002 | 5,377 | 12,761 | 4,662 | ||||||||
Net cash provided by operating activities | 23,938 | 24,852 | 83,681 | 70,968 | |||||||||
Investing activities | |||||||||||||
Mineral rights and properties | |||||||||||||
Capital expenditures | (12,432 | ) | (7,912 | ) | (29,146 | ) | (21,921 | ) | |||||
Acquisition | 3 | (6,566 | ) | - | (6,566 | ) | - | ||||||
Proceeds on disposals | 8 | - | - | - | 6,146 | ||||||||
Plant and equipment | |||||||||||||
Additions | (3,049 | ) | (1,909 | ) | (6,044 | ) | (6,238 | ) | |||||
Proceeds on disposals | 7 | 46 | 5 | 47 | 8 | ||||||||
Reclamation deposits | |||||||||||||
Paid | (125 | ) | (11 | ) | (386 | ) | (1,560 | ) | |||||
Refund | 34 | - | 1,839 | - | |||||||||
Other investments | |||||||||||||
Acquisition | 6 | (1,305 | ) | (2,133 | ) | (12,708 | ) | (3,859 | ) | ||||
Proceeds on disposals | 6 | 64 | 4,875 | 17,870 | 6,141 | ||||||||
Investment in associate | 5 | (1,326 | ) | (3,820 | ) | (7,131 | ) | (7,030 | ) | ||||
Net redemptions (purchases) of short-term investments | 6,130 | (11,866 | ) | (9,321 | ) | (45,484 | ) | ||||||
Principal received on lease receivable | 9 | 49 | 35 | 143 | 71 | ||||||||
Net cash used in investing activities | (18,480 | ) | (22,736 | ) | (51,403 | ) | (73,726 | ) | |||||
Financing activities | |||||||||||||
Related parties | |||||||||||||
Repayments received | - | 2,922 | 1,423 | 2,922 | |||||||||
Bank loan | |||||||||||||
Repayment | - | - | - | (4,369 | ) | ||||||||
Principal payments on lease obligation | 9 | (144 | ) | (81 | ) | (414 | ) | (369 | ) | ||||
Non-controlling interests | |||||||||||||
Distribution | 12 | - | - | (3,239 | ) | (3,259 | ) | ||||||
Cash dividends distributed | 10(c) | (2,190 | ) | (2,162 | ) | (4,368 | ) | (4,287 | ) | ||||
Proceeds from issuance of common shares | 198 | 1,917 | 2,884 | 6,994 | |||||||||
Net cash (used in) provided by financing activities | (2,136 | ) | 2,596 | (3,714 | ) | (2,368 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 4,705 | 1,090 | 9,006 | (421 | ) | ||||||||
Increase (decrease) in cash and cash equivalents | 8,027 | 5,802 | 37,570 | (5,547 | ) | ||||||||
Cash and cash equivalents, beginning of the period | 95,320 | 56,092 | 65,777 | 67,441 | |||||||||
Cash and cash equivalents, end of the period | $ | 103,347 | $ | 61,894 | $ | 103,347 | $ | 61,894 | |||||
Supplementary cash flow information | 20 |
See accompanying notes to the condensed consolidated interim financial statements
4
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 | |||||||||||||||||||||||
Notes | Number of shares | Amount | Share option reserve | Reserves | Accumulated other comprehensive loss | Retained earnings | Total equity attributable to the equity holders of the Company | Non-controlling interests | Total equity | |||||||||||||||
Balance, April 1, 2019 | 169,842,052 | $ | 231,269 | $ | 15,898 | $ | 25,409 | $ | (41,864 | ) | $ | 116,734 | $ | 347,446 | $ | 65,735 | $ | 413,181 | ||||||
Adjustment upon adoption of IFRS 16 | - | - | - | - | 167 | (823 | ) | (656 | ) | - | (656 | ) | ||||||||||||
Options exercised | 3,247,406 | 9,630 | (2,636 | ) | - | - | - | 6,994 | - | 6,994 | ||||||||||||||
Share-based compensation | - | - | 1,973 | - | - | - | 1,973 | - | 1,973 | |||||||||||||||
Dividends declared | - | - | - | - | - | (4,287 | ) | (4,287 | ) | - | (4,287 | ) | ||||||||||||
Distribution to non-controlling interests | - | - | - | - | - | - | - | (3,259 | ) | (3,259 | ) | |||||||||||||
Disposal of common shares held by associate | - | 1,127 | - | - | - | - | 1,127 | - | 1,127 | |||||||||||||||
Comprehensive (loss) income | - | - | - | - | (3,602 | ) | 31,111 | 27,509 | 8,446 | 35,955 | ||||||||||||||
Balance, December 31, 2019 | 173,089,458 | $ | 242,026 | $ | 15,235 | $ | 25,409 | $ | (45,299 | ) | $ | 142,735 | $ | 380,106 | $ | 70,922 | $ | 451,028 | ||||||
Options exercised | 586,000 | 1,373 | (366 | ) | - | - | - | 1,007 | - | 1,007 | ||||||||||||||
Restricted share units vested | 141,376 | 527 | (527 | ) | - | - | - | - | - | - | ||||||||||||||
Share-based compensation | - | - | 696 | - | - | - | 696 | - | 696 | |||||||||||||||
Dividends declared | - | - | - | - | - | - | - | - | - | |||||||||||||||
Comprehensive (loss) income | - | - | - | - | (16,290 | ) | 3,163 | (13,127 | ) | (632 | ) | (13,759 | ) | |||||||||||
Balance, March 31, 2020 | 173,816,834 | $ | 243,926 | $ | 15,038 | $ | 25,409 | $ | (61,589 | ) | $ | 145,898 | $ | 368,682 | $ | 70,290 | $ | 438,972 | ||||||
Options exercised | 1,299,589 | 3,931 | (1,047 | ) | - | - | - | 2,884 | - | 2,884 | ||||||||||||||
Restricted share units vested | 232,623 | 905 | (905 | ) | - | - | - | - | - | - | ||||||||||||||
Share-based compensation | - | - | 3,018 | - | - | - | 3,018 | - | 3,018 | |||||||||||||||
Dividends declared | 10(c) | - | - | - | - | - | (4,368 | ) | (4,368 | ) | - | (4,368 | ) | |||||||||||
Acquisition of La Yesca | 3 | - | - | - | - | - | - | 9,250 | 9,250 | |||||||||||||||
Distribution to non-controlling interests | 12 | - | - | - | - | - | - | - | (3,239 | ) | (3,239 | ) | ||||||||||||
Comprehensive income | - | - | - | - | 49,473 | 39,355 | 88,828 | 16,488 | 105,316 | |||||||||||||||
Balance,December 31, 2020 | 175,349,046 | $ | 248,762 | $ | 16,104 | $ | 25,409 | $ | (12,116 | ) | $ | 180,885 | $ | 459,044 | $ | 92,789 | $ | 551,833 |
See accompanying notes to the condensed consolidated interim financial statements
5
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed 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 and other current exploration and development projects are located in China.
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 nine months ended December 31, 2020, are not necessarily indicative of the results that may be expected for the year ending March 31, 2021.
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, 2020. 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, 2020.
These condensed consolidated interim financial statements were authorized for issue in accordance with a resolution of the Board of Directors dated February 3, 2021.
(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.
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
6
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
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 | December 31, | March 31, | |||
Name of subsidiaries | Principal activity | incorporation | 2020 | 2020 | 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 | 45% | N/A | |
Infini Metals Inc. | Holding company | BVI | 45% | N/A | |
Infini Resources (Asia) Co. Ltd. | Holding company | Hong Kong | 45% | N/A | |
Golden Land (Asia) Ltd. | Holding company | Hong Kong | 45% | N/A | |
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 | 45% | N/A | La Yesca |
(i) British Virgin Islands (“BVI”)
(c) Significant Accounting Judgments and Estimates
The current outbreak of COVID-19 resulted in a series of public health and emergency measures that have been put in place globally to combat the spread of the virus. These measures have led to significant disruption to the global economic conditions and financial markets. The full extent of the impact of COVID-19 on operations and future financial performances is currently unknown.
IFRS requires management to make judgments, estimates and assumptions about future events that affect the reported amounts and disclosures, including but not limited to the potential impact arising from COVID-19 and government regulations and measures amid at reducing its transmission. As the extent and duration of the impact from COVID-19 remain unclear, the Company’s judgments and estimates may evolve as conditions change. Actual results may differ from those estimates.
As at December 31, 2020, the Company owned 45% interest in New Infini (Note 3) and is of the view that the Company has control over New Infini due to New Infini’s share structure, board composition and other related facts. Accordingly consolidates New Infini’s results from the date of acquisition.
7
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
3. | LA YESCA ACQUISITION |
On December 17, 2020 the Company and its subsidiary New Infini entered into a framework agreement (the “Agreement”) with various arm’s length vendors (the “Vendors”), whereby New Infini agreed to acquire 100% interest in the La Yesca Silver Project (“La Yesca”) through indirect purchase of all of the issued and outstanding shares of Infini Resources, S.A. de C.V., a Mexican company which owns La Yesca.
La Yesca is a silver-polymetallic, epithermal-type project located approximately 100 kilometres (“km”) (185 km by road) northwest of Guadalajara, the second-largest city in Mexico. The concessions comprising La Yesca cover an area of approximately 47.7 km2. In total, 7,649 metres from 25 drill holes have previously been completed, all of which intersected mineralization.
The purchase consideration and payment terms for the acquisition of La Yesca are summarized as follows:
Upon closing of the Agreement, a $8,250 cash payment (the “Initial Cash Payment”) and the transfer of a 45% interest in the issued and outstanding shares of New Infini (the “New Infini Shares”) to the Vendors;
Within 90 days of closing of the Agreement, a cash payment of $1,000, less any liabilities contemplated under the Agreement (together with the Initial Cash Payment, the “Cash Consideration”); and
A “Discovery payment” of up to $30,000 calculated on the basis of $0.20 per ounce of Ag resources as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects paid by New Infini to the Vendors subject to certain permitting considerations.
The Company paid $7,568 of the Cash Consideration through a capital injection to New Infini to hold 45% of the issued and outstanding New Infini Shares. A group of the Company’s directors, officers, employees and consultants paid $1,682 of the Cash Consideration collectively to hold 10% of the issued and outstanding New Infini Shares. The transaction has been accounted for as an acquisition of assets as the purchase price was concentrated on a single asset, the La Yesca mineral property interest. The purchase consideration was allocated to the assets acquired based on their relative fair values at the date of the acquisition, net of any associated liabilities.
Subsequent to December 31, 2020, the Company participated in a private placement of New Infini Shares and purchased an additional 3,000,000 New Infini Shares for $1,500. Upon completion of the private placement, the Company owned 21,000,000 New Infini Shares, representing a 43.93% interest in New Infini.
8
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
4. | SHORT-TERM INVESTMENT |
As at December 31, 2020, short-term investments consist of the following:
Amount | Interest rates | Maturity | ||
Bankers acceptance | $ | 3,215 | 3.56% | March 17, 2020 - March 29, 2021 |
Bonds | 18,700 | 5.38% - 13.00% | March 23, 2022 - June 9, 2024 | |
Money market instruments | 78,859 | |||
$ | 100,774 |
As at March 31, 2020, short-term investments consist of the following:
Amount | Interest rates | Maturity | ||
Bonds | $ | 23,313 | 6.00% - 13.00% | April 2, 2020 - June 27, 2024 |
Money market instruments | 53,429 | |||
$ | 76,742 |
All bonds were purchased in open markets and are readily tradable.
On April 26, 2020, the Company entered into a definitive agreement with Guyana Goldfields Inc. (“Guyana Goldfields”), and subsequently amended on May 16, 2020 (collectively, the “Arrangement Agreement”) to acquire all of the issued and outstanding shares of Guyana Goldfields. On June 10, 2020, Guyana Goldfield terminated the Arrangement Agreement and paid the Company a break fee of $6,497 (CAD$9,000). The gain was recorded as a recovery of property evaluation and business development expense on the condensed consolidated interim statements of income to net off related expenditure and cost. The fair value of the shares of Guyana Goldfields that the Company held as at June 30, 2020 was reclassified to short-term investments from other investments. All shares of Guyana Goldfields held by the Company were then disposed and gains of $461 and $352 were recognized in the Condensed Consolidated Interim Statement of Income and Condensed Consolidated Interim Statement of Comprehensive Income respectively.
5. | 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). 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.
On June 9, 2020, the Company participated in an underwritten offering of common shares of NUAG and acquired an additional 1,320,710 common shares of NUAG for a cost of $5,805.
On July 22 2020, NUAG announced the spin-out by way of a plan of arrangement (the “Arrangement”) of its then wholly-owned subsidiary, Whitehorse Gold Corp. (“WHG”), which owns 100% Skukum Gold Project (formerly “Tagish Lake Gold Project”) located in Yukon, Canada. Upon completion of the Arrangement on November 18, 2020, NUAG and WHG became two separate entities, and NUAG distributed all of the WHG common shares held by NUAG to its shareholders on a pro rata basis. WHG common shares were listed on the TSX Venture Exchange.
9
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
As at December 31, 2020, the Company owned 43,917,216 common shares of NUAG (March 31, 2020 - 42,596,506), representing an ownership interest of 28.6% (March 31, 2020 - 28.8%). The summary of the investment in NUAG common shares and its market value as at the respective balance sheet dates are as follows:
Value of NUAG’s | |||||||
Number of | common shares per | ||||||
shares | Amount | quoted market price | |||||
Balance April 1, 2019 | 39,346,300 | $ | 38,703 | $ | 69,783 | ||
Purchase from open market | 502,600 | 861 | |||||
Exercise of warrants | 1,500,000 | 2,349 | |||||
Participation in public offering | 1,247,606 | 3,820 | |||||
Share of net loss | (1,276 | ) | |||||
Share of other comprehensive income | 1,077 | ||||||
Dilution gain | 723 | ||||||
Disposal of common shares held by the associate | 1,127 | ||||||
Foreign exchange impact | (2,829 | ) | |||||
Balance March 31, 2020 | 42,596,506 | $ | 44,555 | $ | 148,624 | ||
Participation in public offering | 1,320,710 | 5,805 | |||||
WHG Spin-out | (1,793 | ) | |||||
Share of net loss | (978 | ) | |||||
Share of other comprehensive loss | (1,953 | ) | |||||
Foreign exchange impact | 5,206 | ||||||
Balance December 31, 2020 | 43,917,216 | $ | 50,842 | $ | 276,983 |
(b) Investment in Whitehorse Gold Corp.
WHG is a Canadian public company listed on the TSX Venture Exchange (symbol: WHG). 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 November 18, 2020, the Company received 5,740,286 WHG common shares distributed by NUAG to the Company under the Arrangement. In connection with the Arrangement, WHG conducted a non-brokered private placement financing. The Company participated in WHG’s private placement and acquired an additional 5,774,000 common shares of WHG for a cost of $1,326.
10
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
As at December 31, 2020, the Company owned 11,514,286 common shares of WHG (March 31, 2020 - nil), representing an ownership interest of 26.99% (March 31, 2020 - nil). The summary of the investment in WHG common shares and its market value as at the respective balance sheet dates are as follows:
Value of WHG’s | |||||||
Number of | common shares per | ||||||
shares | Amount | quoted market price | |||||
Balance April 1, 2020 | |||||||
Distributed by NUAG for WHG spin-out | 5,740,286 | 1,793 | |||||
Participation in private placement | 5,774,000 | 1,326 | |||||
Share of other net loss | (52 | ) | |||||
Foreign exchange impact | 79 | ||||||
Balance December 31, 2020 | 11,514,286 | $ | 3,146 | $ | 35,541 |
6. | OTHER INVESTMENTS |
December 31, 2020 | March 31, 2020 | ||||
Equity investments designated as FVTOCI | |||||
Public companies | $ | 4,842 | $ | 6,633 | |
Private companies | 2,296 | 2,117 | |||
7,138 | 8,750 | ||||
Equity investments designated as FVTPL | |||||
Public companies | 11,625 | - | |||
Total | $ | 18,763 | $ | 8,750 |
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.
11
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
The continuity of such investments is as follows:
Accumulated fair | Accumulated fair | ||||||||
value change | value change | ||||||||
Fair Value | included in OCI | included in P&L | |||||||
April 1, 2019 | $ | 9,253 | $ | (35,128 | ) | $ | - | ||
Gain on equity investments | 249 | 249 | - | ||||||
Acquisition | 7,851 | - | - | ||||||
Disposal | (8,454 | ) | - | - | |||||
Impact of foreign currency translation | (149 | ) | - | - | |||||
March 31, 2020 | $ | 8,750 | $ | (34,879 | ) | $ | - | ||
Gain on equity investments designated as FVTOCI | 12,503 | 12,503 | - | ||||||
Gain on equity investments designated as FVTPL | 8,376 | - | 8,376 | ||||||
Acquisition | 12,708 | - | - | ||||||
Disposal | (17,870 | ) | - | - | |||||
Reclassified to short-term investments | (7,511 | ) | - | - | |||||
Impact of foreign currency translation | 1,807 | - | - | ||||||
December 31, 2020 | $ | 18,763 | $ | (22,376 | ) | $ | 8,376 |
7. | PLANT AND EQUIPMENT |
Plant and equipment consist of:
Land use rights | Office | Motor | Construction | |||||||||||||||
Cost | and building | equipment | Machinery | vehicles | in progress | Total | ||||||||||||
Balance as at April 1, 2019 | $ | 100,028 | $ | 7,735 | $ | 29,452 | $ | 6,722 | $ | 5,790 | $ | 149,727 | ||||||
Adjustment upon adoption of IFRS 16 | 360 | - | - | - | - | 360 | ||||||||||||
Additions | 1,736 | 1,060 | 1,082 | 681 | 3,618 | 8,177 | ||||||||||||
Disposals | (6,932 | ) | (368 | ) | (3,265 | ) | (630 | ) | (52 | ) | (11,247 | ) | ||||||
Reclassification of asset groups(1) | 6,908 | - | 65 | - | (6,973 | ) | - | |||||||||||
Impact of foreign currency translation | (5,646 | ) | (417 | ) | (1,534 | ) | (357 | ) | (247 | ) | (8,201 | ) | ||||||
Balance as at March 31, 2020 | $ | 96,454 | $ | 8,010 | $ | 25,800 | $ | 6,416 | $ | 2,136 | $ | 138,816 | ||||||
Additions | 47 | 772 | 910 | 971 | 6,061 | 8,761 | ||||||||||||
Disposals | (87 | ) | (89 | ) | (242 | ) | (431 | ) | (84 | ) | (933 | ) | ||||||
Reclassification of asset groups(1) | 2,200 | - | 1,015 | - | (3,215 | ) | - | |||||||||||
Impact of foreign currency translation | 8,351 | 722 | 2,298 | 574 | 327 | 12,272 | ||||||||||||
Ending balance as at December 31, 2020 | $ | 106,965 | $ | 9,415 | $ | 29,781 | $ | 7,530 | $ | 5,225 | $ | 158,916 | ||||||
Impairment, accumulated depreciation and amortization | ||||||||||||||||||
Balance as at April 1, 2019 | $ | (49,929 | ) | $ | (5,409 | ) | $ | (20,701 | ) | $ | (5,017 | ) | $ | (54 | ) | $ | (81,110 | ) |
Disposals | 6,821 | 278 | 3,051 | 574 | 52 | 10,776 | ||||||||||||
Depreciation and amortization | (3,481 | ) | (527 | ) | (1,601 | ) | (384 | ) | - | (5,993 | ) | |||||||
Impact of foreign currency translation | 2,602 | 283 | 1,083 | 263 | 2 | 4,233 | ||||||||||||
Balance as at March 31, 2020 | $ | (43,987 | ) | $ | (5,375 | ) | $ | (18,168 | ) | $ | (4,564 | ) | $ | - | $ | (72,094 | ) | |
Disposals | 76 | 83 | 136 | 344 | - | 639 | ||||||||||||
Depreciation and amortization | (2,878 | ) | (459 | ) | (1,178 | ) | (349 | ) | - | (4,864 | ) | |||||||
Impact of foreign currency translation | (3,898 | ) | (477 | ) | (1,617 | ) | (388 | ) | - | (6,380 | ) | |||||||
Ending balance as at December 31, 2020 | $ | (50,687 | ) | $ | (6,228 | ) | $ | (20,827 | ) | $ | (4,957 | ) | $ | - | $ | (82,699 | ) | |
Carrying amounts | ||||||||||||||||||
Balance as at March 31, 2020 | $ | 52,467 | $ | 2,635 | $ | 7,632 | $ | 1,852 | $ | 2,136 | $ | 66,722 | ||||||
Ending balance as at December 31, 2020 | $ | 56,278 | $ | 3,187 | $ | 8,954 | $ | 2,573 | $ | 5,225 | $ | 76,217 |
(1) When an asset is available for use, it is reclassified from construction in progress to one of the appropriate plant and equipment categories.
12
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
Carrying amounts as at December 31, 2020 | Ying Mining District | BYP | GC | Other | Total | ||||||
Land use rights and building | $ | 38,503 | $ | 3,122 | $ | 12,571 | $ | 2,082 | $ | 56,278 | |
Office equipment | 2,396 | 22 | 464 | 305 | 3,187 | ||||||
Machinery | 6,052 | 233 | 2,669 | - | 8,954 | ||||||
Motor vehicles | 2,012 | 21 | 380 | 160 | 2,573 | ||||||
Construction in progress | 4,644 | 535 | 46 | - | 5,225 | ||||||
Total | $ | 53,607 | $ | 3,933 | $ | 16,130 | $ | 2,547 | $ | 76,217 | |
Carrying amounts as at March 31, 2020 | Ying Mining District | BYP | GC | Other | Total | ||||||
Land use rights and building | $ | 35,476 | $ | 3,094 | $ | 11,762 | $ | 2,135 | $ | 52,467 | |
Office equipment | 1,886 | 26 | 403 | 320 | 2,635 | ||||||
Machinery | 5,734 | 258 | 1,640 | - | 7,632 | ||||||
Motor vehicles | 1,598 | 22 | 232 | - | 1,852 | ||||||
Construction in progress | 419 | 493 | 1,224 | - | 2,136 | ||||||
Total | $ | 45,113 | $ | 3,893 | $ | 15,261 | $ | 2,455 | $ | 66,722 |
During the three and nine months ended December 31, 2020, certain plant and equipment were disposed for proceeds of $46 and $47, respectively (three and nine months ended December 31, 2019 - $5 and $8, respectively) and loss of $36 and $247, respectively (three and nine months ended December 31, 2019 - loss of $110 and $373, respectively).
8. | MINERAL RIGHTS AND PROPERTIES |
Mineral rights and properties consist of:
Producing and development properties | Exploration and evaluation properties | ||||||||||||||||||||||
Cost | Ying Mining District | BYP | GC | XHP | RZY | La Yesca | Total | ||||||||||||||||
Balance as at April 1, 2019 | $ | 288,453 | $ | 64,305 | $ | 107,161 | $ | 20,909 | $ | 174 | $ | - | $ | 481,002 | |||||||||
Capitalized expenditures | 23,871 | 6 | 1,617 | - | - | - | 25,494 | ||||||||||||||||
Mine right fees | 797 | - | - | - | - | - | 797 | ||||||||||||||||
Environmental rehabiliation | (4,299 | ) | 39 | 239 | - | - | - | (4,021 | ) | ||||||||||||||
Disposition | - | - | - | (20,485 | ) | - | - | (20,485 | ) | ||||||||||||||
Foreign currecy translation impact | (15,686 | ) | (778 | ) | (5,706 | ) | (424 | ) | (10 | ) | - | (22,604 | ) | ||||||||||
Balance as at March 31, 2020 | $ | 293,136 | $ | 63,572 | $ | 103,311 | $ | - | $ | 164 | $ | - | $ | 460,183 | |||||||||
Capitalized expenditures | 26,491 | 29 | 3,279 | - | - | - | 29,799 | ||||||||||||||||
Acquisition (Note 3) | - | - | - | - | - | 16,660 | 16,660 | ||||||||||||||||
Foreign currecy translation impact | 26,279 | 1,188 | 8,976 | - | 19 | - | 36,462 | ||||||||||||||||
Ending balance as at December 31, 2020 | $ | 345,906 | $ | 64,789 | $ | 115,566 | $ | - | $ | 183 | $ | 16,660 | $ | 543,104 | |||||||||
Impairment and accumulated depletion | |||||||||||||||||||||||
Balance as at April 1, 2019 | $ | (91,179 | ) | $ | (57,083 | ) | $ | (80,491 | ) | $ | (13,155 | ) | $ | (174 | ) | $ | - | $ | (242,082 | ) | |||
Depletion | (14,282 | ) | - | (2,165 | ) | - | - | - | (16,447 | ) | |||||||||||||
Disposition | - | - | - | 12,888 | - | - | 12,888 | ||||||||||||||||
Foreign currecy translation impact | 5,071 | 395 | 4,301 | 267 | 10 | - | 10,044 | ||||||||||||||||
Balance as at March 31, 2020 | $ | (100,390 | ) | $ | (56,688 | ) | $ | (78,355 | ) | $ | - | $ | (164 | ) | $ | - | $ | (235,597 | ) | ||||
Depletion | (11,325 | ) | - | (1,976 | ) | - | - | - | (13,301 | ) | |||||||||||||
Foreign currecy translation impact | (9,115 | ) | (600 | ) | (6,784 | ) | - | (19 | ) | - | (16,518 | ) | |||||||||||
Ending balance as at December 31, 2020 | $ | (120,830 | ) | $ | (57,288 | ) | $ | (87,115 | ) | $ | - | $ | (183 | ) | $ | - | $ | (265,416 | ) | ||||
Carrying amounts | |||||||||||||||||||||||
Balance as at March 31, 2020 | $ | 192,746 | $ | 6,884 | $ | 24,956 | $ | - | $ | - | $ | - | $ | 224,586 | |||||||||
Ending balance as at December 31, 2020 | $ | 225,076 | $ | 7,501 | $ | 28,451 | $ | - | $ | - | $ | 16,660 | $ | 277,688 |
13
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
9. | 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 | |||||
Adjustment upon adoption of IFRS 16, April 1, 2019 | $ | 447 | $ | 1,463 | ||
Addition | 238 | 1,239 | ||||
Interest accrual | 27 | 112 | ||||
Interest received or paid | (27 | ) | (112 | ) | ||
Principal repayment | (118 | ) | (503 | ) | ||
Foreign exchange impact | (33 | ) | (130 | ) | ||
Balance, March 31, 2020 | $ | 534 | $ | 2,069 | ||
Interest accrual | 19 | 73 | ||||
Interest received or paid | (19 | ) | (73 | ) | ||
Principal repayment | (143 | ) | (414 | ) | ||
Foreign exchange impact | 53 | 214 | ||||
Balance, December 31, 2020 | $ | 444 | $ | 1,869 | ||
Less: current portion | (210 | ) | (644 | ) | ||
Non-current portion | $ | 234 | $ | 1,225 |
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 December 31, 2020:
Lease Receivable | Lease Obligation | |||||
Within 1 year | $ | 228 | $ | 684 | ||
Between 2 to 5 years | 239 | 1,344 | ||||
Total undiscounted amount | 467 | 2,028 | ||||
Less future interest | (23 | ) | (159 | ) | ||
Total discounted amount | $ | 444 | $ | 1,869 | ||
Less: current portion | (210 | ) | (644 | ) | ||
Non-current portion | $ | 234 | $ | 1,225 |
The lease receivable and lease obligation were discounted using an estimated incremental borrowing rate of 5%.
14
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
10. | SHARE CAPITAL |
(a) Authorized
Unlimited number of common shares without par value. All shares issued as at December 31, 2020 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 nine months ended December 31, 2020, a total of $1,263 and $3,018, respectively (three and nine months ended December 31, 2019 - $947 and $1,973, respectively) in share-based compensation expense was recognized and included in the general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.
(i) Stock options
The following is a summary of option transactions:
Weighted average | |||||
exercise price per | |||||
Number of shares | share CAD$ | ||||
Balance, April 1, 2019 | 6,480,916 | $ | 2.86 | ||
Options exercised | (3,833,406 | ) | 2.78 | ||
Options forfeited | (123,750 | ) | 3.29 | ||
Options expired | (100,000 | ) | 1.75 | ||
Balance, March 31, 2020 | 2,423,760 | $ | 3.00 | ||
Option granted | 1,127,000 | 7.25 | |||
Options exercised | (1,299,589 | ) | 2.98 | ||
Options forfeited | (115,004 | ) | 3.83 | ||
Balance, December 31, 2020 | 2,136,167 | $ | 5.21 |
During the nine months ended December 31, 2020, a total of 1,127,000 options with a life of five years were granted to directors, officers, and employees at an exercise price of CAD$5.46 to $9.45 per share subject to a vesting schedule over a three-year term with 1/6 of the options vesting every six months after the date of grant until fully vested.
15
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
The fair value of stock options granted during the nine months ended December 31, 2020 were calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
Nine months ended December 31, | |||
2020 | |||
Risk free interest rate | 0.31% | ||
Expected life of option in years | 2.75 years | ||
Expected volatility | 67% | ||
Expected dividend yield | 0.51% | ||
Estimated forfeiture rate | 9.87% | ||
Weighted average share price at date of grant | $7.25 CAD |
The weighted average grant date fair value of options granted during the nine months ended December 31, 2020 was CAD$2.93 (US$2.30). Volatility was determined based on the historical volatility of the Company’s shares over the estimated life of stock options.
The following table summarizes information about stock options outstanding as at December 31, 2020:
Weighted | ||||||||
Number of options | Weighted average | Number of options | average | |||||
outstanding at | Weighted average remaining | exercise price in | exercisable at | exercise price | ||||
Exercise price in CAD$ | December 31, 2020 | contractual life (Years) | CAD$ | December 31, 2020 | in CAD$ | |||
$ | 2.60 | 445,000 | 0.88 | $ | 2.60 | 445,000 | $ | 2.60 |
$ | 3.23 | 207,500 | 0.19 | $ | 3.23 | 207,500 | $ | 3.23 |
$ | 3.40 | 390,000 | 0.65 | $ | 3.40 | 390,000 | $ | 3.40 |
$ | 5.46 | 588,667 | 4.40 | $ | 5.46 | 95,337 | $ | 5.46 |
$ | 9.45 | 505,000 | 4.86 | $ | 9.45 | - | $ | - |
$2.60 to $9.45 | 2,136,167 | 2.68 | $ | 5.21 | 1,137,837 | $ | 3.23 |
Subsequent to December 31, 2020, a total of 9,166 options with exercise prices of CAD$3.40 to $5.46 were exercised.
16
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed 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:
Weighted average | |||||
grant date closing | |||||
Number of shares | price per share $CAD | ||||
Balance, April 1, 2019 | - | $ | - | ||
Granted | 850,500 | 4.94 | |||
Cancelled | (31,750 | ) | 4.94 | ||
Distributed | (141,376 | ) | 4.94 | ||
Balance, March 31, 2020 | 677,374 | $ | 4.94 | ||
Granted | 1,021,500 | 6.68 | |||
Cancelled | (232,623 | ) | 4.94 | ||
Distributed | (60,500 | ) | 4.94 | ||
Balance, December 31, 2020 | 1,405,751 | $ | 5.21 |
During the nine months ended December 31, 2020, a total of 1,021,500 RSUs were granted to directors, officers, and employees of the Company at grant date closing price of CAD$5.46 to $9.45 per share subject to a vesting schedule over a three-year term with 1/6 of the RSUs vesting every six months from the date of grant. All RSUs will be settled in shares.
(c) Cash dividends declared
During the three and nine months ended December 31, 2020, dividends of $2,190 and $4,368, respectively (three months and nine months ended December 31, 2019 - $2,162 and $4,287, respectively) were declared and paid.
11. | ACCUMULATED OTHER COMPREHENSIVE LOSS |
December 31, 2020 | March 31, 2020 | |||||
Change in fair value on equity investments designated as FVTOCI | $ | 22,024 | $ | 34,879 | ||
Share of other comprehensive loss in associate | 218 | (1,735 | ) | |||
Currency translation adjustment | (10,126 | ) | 28,445 | |||
Balance, end of the period | $ | 12,116 | $ | 61,589 |
The change in fair value on equity investments designated as FVTOCI, share of other comprehensive income in associate, and currency translation adjustment are net of tax of $nil for all periods presented.
17
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
12. | NON-CONTROLLING INTERESTS |
The continuity of non-controlling interests is summarized as follows:
Henan | Henan | Guangdong | ||||||||||||||||
Found | Huawei | Yunxiang | Found | New Infini | Total | |||||||||||||
Balance, April 1, 2019 | $ | 58,262 | $ | 4,903 | $ | 3,017 | $ | (447 | ) | $ | 65,735 | |||||||
Share of net income (loss) | 10,440 | 664 | (221 | ) | 46 | 10,929 | ||||||||||||
Share of other comprehensive loss | (2,768 | ) | (209 | ) | (73 | ) | (65 | ) | (3,115 | ) | ||||||||
Distributions | (2,603 | ) | (656 | ) | - | - | (3,259 | ) | ||||||||||
Balance, March 31, 2020 | $ | 63,331 | $ | 4,702 | $ | 2,723 | $ | (466 | ) | $ | - | $ | 70,290 | |||||
Share of net income | 10,054 | 602 | 265 | 71 | (9 | ) | 10,983 | |||||||||||
Share of other comprehensive income | 4,867 | 505 | 104 | 29 | - | 5,505 | ||||||||||||
Acquisition of La Yesca (Note 3) | - | - | - | - | 9,250 | 9,250 | ||||||||||||
Distributions | (2,600 | ) | (639 | ) | - | - | - | (3,239 | ) | |||||||||
Balance, December 31, 2020 | $ | 75,652 | $ | 5,170 | $ | 3,092 | $ | (366 | ) | $ | 9,241 | $ | 92,789 |
As at December 31, 2020, non-controlling interests in Henan Found, Henan Huawei, Yunxiang, Guangdong Found and New Infini were 22.5%, 20%, 30%, 1%, and 55%, respectively (March 31, 2020 - 22.5%, 20%, 30% 1% and nil, respectively).
13. | 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:
Due from related parties | December 31, 2020 | March 31, 2020 | |||
NUAG (a) | $ | 86 | $ | 94 | |
WHG (b) | 16 | - | |||
Henan Non-ferrous (c) | - | 1,425 | |||
$ | 102 | $ | 1,519 |
(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 nine months ended December 31, 2020, the Company recovered $136 and $476, respectively (the three and nine months ended December 31, 2019 - $183 and $397, 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 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 nine months ended December 31, 2020, the Company recovered $44 and $44, respectively (the three and nine months ended December 31, 2019 - $nil and $nil), 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 consolidated statements of income. |
18
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
(c) | In January 2020, Henan Found advanced a loan of $1,426 (RMB¥10 million) to Henan Non-ferrous. The loan has a term of four months and bears an interest rate of 4.35% per annum. In May 2020, the loan, including accumulated interest, of $1,423 (RMB¥10.1 million) was repaid in full. |
The balances with related parties are unsecured.
14. | GENERAL AND ADMINISTRATIVE |
General and administrative expenses consist of:
Three months ended December 31, 2020 | Three months ended December 31, 2019 | ||||||||||||||||||
Corporate | Mines | Total | Corporate | Mines | Total | ||||||||||||||
Amortization and depreciation | $ | 139 | $ | 329 | $ | 468 | $ | 118 | $ | 264 | $ | 382 | |||||||
Office and administrative expenses | 531 | 896 | 1,427 | 563 | 815 | 1,378 | |||||||||||||
Professional fees | 198 | 118 | 316 | 67 | 106 | 173 | |||||||||||||
Salaries and benefits | 1,442 | 1,417 | 2,859 | 971 | 1,163 | 2,134 | |||||||||||||
Share-based compensation | 1,215 | - | 1,215 | 849 | - | 849 | |||||||||||||
$ | 3,525 | $ | 2,760 | $ | 6,285 | $ | 2,568 | $ | 2,348 | $ | 4,916 | ||||||||
Nine months ended December 31, 2020 | Nine months ended December 31, 2019 | ||||||||||||||||||
Corporate | Mines | Total | Corporate | Mines | Total | ||||||||||||||
Amortization and depreciation | $ | 391 | $ | 922 | $ | 1,313 | $ | 325 | $ | 797 | $ | 1,122 | |||||||
Office and administrative expenses | 1,559 | 2,227 | 3,786 | 1,787 | 2,065 | 3,852 | |||||||||||||
Professional fees | 561 | 345 | 906 | 333 | 413 | 746 | |||||||||||||
Salaries and benefits | 3,574 | 3,662 | 7,236 | 3,235 | 3,413 | 6,648 | |||||||||||||
Share-based compensation | 2,911 | - | 2,911 | 1,824 | - | 1,824 | |||||||||||||
$ | 8,996 | $ | 7,156 | $ | 16,152 | $ | 7,504 | $ | 6,688 | $ | 14,192 |
15. | GOVERNMENT FEES AND OTHER TAXES |
Government fees and other taxes consist of:
Three months ended December 31, | Nine months ended December 31, | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||
Government fees | $ | 24 | $ | 91 | $ | 52 | $ | 197 | |
Other taxes | 753 | 696 | 1,913 | 1,680 | |||||
$ | 777 | $ | 787 | $ | 1,965 | $ | 1,877 |
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.
19
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
16. | FINANCE ITEMS |
Finance items consist of:
Three months ended December 31, | Nine months ended December 31, | ||||||||
Finance income | 2020 | 2019 | 2020 | 2019 | |||||
Interest income | $ | 1,108 | $ | 1,122 | $ | 2,796 | $ | 2,869 | |
Three months ended December 31, | Nine months ended December 31, | ||||||||
Finance costs | 2020 | 2019 | 2020 | 2019 | |||||
Interest on bank loan | $ | - | $ | - | $ | 45 | |||
Interest on lease obligation | 23 | 29 | 73 | 84 | |||||
Expected credit loss of bonds | 1,335 | - | 1,376 | - | |||||
Unwinding of discount of environmental rehabilitation provision | 45 | 105 | 185 | 316 | |||||
$ | 1,403 | $ | 134 | $ | 1,634 | $ | 445 |
17. | INCOME TAX |
The significant components of income tax expense are as follows:
Three months ended December 31, | Nine months ended December 31, | ||||||||
Income tax expense | 2020 | 2019 | 2020 | 2019 | |||||
Current | $ | 4,553 | $ | 2,786 | $ | 14,277 | $ | 5,498 | |
Deferred | 1,493 | 929 | 3,028 | 2,868 | |||||
$ | 6,046 | $ | 3,715 | $ | 17,305 | $ | 8,366 |
18. | 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.
20
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
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 December 31, 2020 and March 31, 2020 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 December 31, 2020 | |||||||||
Recurring measurements | Level 1 | Level 2 | Level 3 | Total | |||||
Financial assets | |||||||||
Cash and cash equivalents | $ | 103,347 | $ | - | $ | - | $ | 103,347 | |
Short-term investments - money market instruments | 78,859 | - | - | 78,859 | |||||
Investments in public companies | 16,467 | - | - | 16,467 | |||||
Investments in private companies | - | - | 2,296 | 2,296 | |||||
Fair value as at March 31, 2020 | |||||||||
Recurring measurements | Level 1 | Level 2 | Level 3 | Total | |||||
Financial assets | |||||||||
Cash and cash equivalents | $ | 65,777 | $ | - | $ | - | $ | 65,777 | |
Short-term investments - money market instruments | 53,430 | - | - | 53,430 | |||||
Investments in public companies | 6,633 | - | - | 6,633 | |||||
Investments in private companies | - | - | 2,117 | 2,117 |
Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at December 31, 2020 and March 31, 2020, due to the short-term nature of these instruments.
There were no transfers into or out of Level 3 during the three and nine months ended December 31, 2020 and 2019.
(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.
December 31, 2020 | March 31, 2020 | ||||||||||
Within a year | 2-5 years | Over 5 years | Total | Total | |||||||
Accounts payable and accrued liabilities | 45,446 | - | - | 45,446 | 23,129 | ||||||
Lease obligation | 644 | 1,225 | - | 1,869 | 2,069 | ||||||
$ | 46,090 | $ | 1,225 | $ | - | $ | 47,315 | $ | 25,198 |
21
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
(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 CAD and the functional currency of all Chinese subsidiaries is RMB. 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.
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:
December 31, 2020 | March 31, 2020 | ||||
Financial assets denominated in U.S. Dollars | $ | 58,210 | $ | 60,534 |
As at December 31, 2020, with other variables unchanged, a 10% strengthening (weakening) of the CAD against the USD would have decreased (increased) net income by approximately $5.8 million.
(d)Interest rate risk
The Company is exposed to interest rate risk on its cash equivalents and short term investments. As at December 31, 2020, all of its interest-bearing cash equivalents and short-term investments earn interest at market rates that are fixed to maturity or at variable interest rates with terms of less than one year. The Company monitors its exposure to changes in interest rates on cash equivalents and short term investments. Due to the short-term nature of these financial instruments, fluctuations in interest rates would not have a significant impact on the Company’s net income.
(e) Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company is exposed to credit risk primarily associated to accounts receivable, due from related parties, cash and cash equivalents, and short-term investments. The carrying amount of assets included on the balance sheet represents the maximum credit exposure.
The Company undertakes credit evaluations on counterparties as necessary, requests deposits from customers prior to delivery, and has monitoring processes intended to mitigate credit risks. There were no amounts in trade or other receivables which were past due on December 31, 2020 (at March 31, 2020 -$nil) for which no provision is recognized.
(f) Equity price risk
The Company holds certain marketable securities that will fluctuate in value as a result of trading on Canadian 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 December 31, 2020, 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 and other comprehensive income of $1,163 and $484, respectively.
22
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
19. | 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. , Songxian Gold Mining Co., Ltd. (“SX Gold”) (i) | La Yesca and XHP |
Administrative | ||
Vancouver | Silvercorp Metals Inc. and holding companies | |
Beijing | Silvercorp Metals (China) Inc. |
(i) SX Gold was disposed in April 2019.
23
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
(a) Segmented information for assets and liabilities are as follows:
December 31, 2020 | |||||||||||||||||||||||
Mining | Administrative | ||||||||||||||||||||||
Henan | Total | ||||||||||||||||||||||
Statement of financial position items: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | |||||||||||||||||
Current assets | $ | 123,682 | $ | 1,030 | $ | 12,805 | $ | 159 | $ | 4,248 | $ | 78,226 | $ | 220,150 | |||||||||
Plant and equipment | 53,607 | 3,933 | 16,130 | - | 1,011 | 1,536 | 76,217 | ||||||||||||||||
Mineral rights and properties | 225,076 | 7,501 | 28,451 | 16,660 | - | - | 277,688 | ||||||||||||||||
Investment in an associate | - | - | - | - | - | 53,988 | 53,988 | ||||||||||||||||
Other investments | 2,296 | - | - | - | - | 16,467 | 18,763 | ||||||||||||||||
Reclamation deposits | 3,820 | - | 4,619 | - | - | 8 | 8,447 | ||||||||||||||||
Long-term prepaids and deposits | 209 | 101 | 96 | - | - | - | 406 | ||||||||||||||||
Long-term portion of lease receivable | - | - | - | - | - | 234 | 234 | ||||||||||||||||
Total assets | $ | 408,690 | $ | 12,565 | $ | 62,101 | $ | 16,819 | $ | 5,259 | $ | 150,459 | $ | 655,893 | |||||||||
Current liabilities | $ | 37,948 | $ | 721 | $ | 7,959 | $ | - | $ | 316 | $ | 4,458 | $ | 51,402 | |||||||||
Long-term portion of lease obligation | - | - | - | - | - | 1,225 | 1,225 | ||||||||||||||||
Deferred income tax liabilities | 40,955 | 1,021 | - | - | - | - | 41,976 | ||||||||||||||||
Environmental rehabilitation | 7,375 | 1,124 | 958 | - | - | - | 9,457 | ||||||||||||||||
Total liabilities | $ | 86,278 | $ | 2,866 | $ | 8,917 | $ | - | $ | 316 | $ | 5,683 | $ | 104,060 | |||||||||
March 31, 2020 | |||||||||||||||||||||||
Mining | Administrative | ||||||||||||||||||||||
Henan | Total | ||||||||||||||||||||||
Statement of financial position items: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | |||||||||||||||||
Current assets | $ | 80,160 | $ | 1,467 | $ | 3,665 | $ | - | $ | 4,289 | $ | 68,598 | $ | 158,179 | |||||||||
Plant and equipment | 45,113 | 3,893 | 15,261 | - | 862 | 1,593 | 66,722 | ||||||||||||||||
Mineral rights and properties | 192,746 | 6,884 | 24,956 | - | - | - | 224,586 | ||||||||||||||||
Investment in an associate | - | - | - | - | - | 44,555 | 44,555 | ||||||||||||||||
Other investments | 2,117 | - | - | - | - | 6,633 | 8,750 | ||||||||||||||||
Reclamation deposits | 5,043 | - | 4,180 | - | - | 7 | 9,230 | ||||||||||||||||
Long-term prepaids and deposits | 205 | 99 | 86 | - | - | - | 390 | ||||||||||||||||
Long-term portion of lease receivable | - | - | - | - | - | 348 | 348 | ||||||||||||||||
Total assets | $ | 325,384 | $ | 12,343 | $ | 48,148 | $ | - | $ | 5,151 | $ | 121,734 | $ | 512,760 | |||||||||
Current liabilities | $ | 19,495 | $ | 1,322 | $ | 3,154 | $ | - | $ | 625 | $ | 3,232 | $ | 27,828 | |||||||||
Long-term portion of lease obligation | - | - | - | - | - | 1,502 | 1,502 | ||||||||||||||||
Deferred income tax liabilities | 34,761 | 997 | - | - | - | - | 35,758 | ||||||||||||||||
Environmental rehabilitation | 6,775 | 1,015 | 910 | - | - | - | 8,700 | ||||||||||||||||
Total liabilities | $ | 61,031 | $ | 3,334 | $ | 4,064 | $ | - | $ | 625 | $ | 4,734 | $ | 73,788 |
24
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
(b) Segmented information for operating results is as follows:
Three months ended December 31, 2020 | |||||||||||||||||||||||
Mining | Administrative | ||||||||||||||||||||||
Henan | Total | ||||||||||||||||||||||
Statement of operations: | Luoning | Hunan(1) | Guangdong | Other | Beijing | Vancouver | |||||||||||||||||
Revenue | $ | 42,486 | $ | 28 | $ | 10,782 | $ | - | $ | - | $ | - | $ | 53,296 | |||||||||
Costs of mine operations | (20,828 | ) | (217 | ) | (7,450 | ) | - | - | - | (28,495 | ) | ||||||||||||
Income from mine operations | 21,658 | (189 | ) | 3,332 | - | - | - | 24,801 | |||||||||||||||
Operating expenses | 132 | 579 | 8 | - | (487 | ) | (6,403 | ) | (6,171 | ) | |||||||||||||
Finance items | 568 | (4 | ) | 62 | - | 30 | (951 | ) | (295 | ) | |||||||||||||
Income tax expenses | (5,222 | ) | 91 | (585 | ) | - | - | (330 | ) | (6,046 | ) | ||||||||||||
Net income (loss) | $ | 17,136 | $ | 477 | $ | 2,817 | $ | - | $ | (457 | ) | $ | (7,684 | ) | $ | 12,289 | |||||||
Attributed to: | |||||||||||||||||||||||
Equity holders of the Company | 13,403 | 331 | 2,790 | - | (457 | ) | (7,675 | ) | 8,392 | ||||||||||||||
Non-controlling interests | 3,733 | 146 | 27 | - | - | (9 | ) | 3,897 | |||||||||||||||
Net income (loss) | $ | 17,136 | $ | 477 | $ | 2,817 | $ | - | $ | (457 | ) | $ | (7,684 | ) | $ | 12,289 |
(1) Hunan’s BYP project was placed on care and maintenance starting August 2014.
Three months ended December 31, 2019 | |||||||||||||||||||||||
Mining | Administrative | ||||||||||||||||||||||
Henan | Total | ||||||||||||||||||||||
Statement of operations: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | |||||||||||||||||
Revenue | $ | 35,681 | $ | - | $ | 8,827 | $ | - | $ | - | $ | - | $ | 44,508 | |||||||||
Costs of mine operations | (21,189 | ) | (105 | ) | (7,444 | ) | - | - | - | (28,738 | ) | ||||||||||||
Income from mine operations | 14,492 | (105 | ) | 1,383 | - | - | - | 15,770 | |||||||||||||||
Operating expenses | (8 | ) | (94 | ) | 57 | - | (443 | ) | (3,839 | ) | (4,327 | ) | |||||||||||
Finance items | 445 | (35 | ) | 29 | - | 32 | 517 | 988 | |||||||||||||||
Income tax expenses | (3,582 | ) | (12 | ) | (113 | ) | - | (1 | ) | (7 | ) | (3,715 | ) | ||||||||||
Net income (loss) | $ | 11,347 | $ | (246 | ) | $ | 1,356 | $ | - | $ | (412 | ) | $ | (3,329 | ) | $ | 8,716 | ||||||
Attributed to: | |||||||||||||||||||||||
Equity holders of the Company | 8,854 | (172 | ) | 1,342 | - | (412 | ) | (3,329 | ) | 6,283 | |||||||||||||
Non-controlling interests | 2,493 | (74 | ) | 14 | - | - | - | 2,433 | |||||||||||||||
Net income (loss) | $ | 11,347 | $ | (246 | ) | $ | 1,356 | $ | - | $ | (412 | ) | $ | (3,329 | ) | $ | 8,716 |
25
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
Nine months ended December 31, 2020 | |||||||||||||||||||||||
Mining | Administrative | ||||||||||||||||||||||
Henan | Total | ||||||||||||||||||||||
Statement of income: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | |||||||||||||||||
Revenue | $ | 127,843 | $ | 1,553 | $ | 26,977 | $ | - | $ | - | $ | - | $ | 156,373 | |||||||||
Costs of mine operations | (65,488 | ) | (1,224 | ) | (18,903 | ) | - | - | - | (85,615 | ) | ||||||||||||
Income from mine operations | 62,355 | 329 | 8,074 | - | - | - | 70,758 | ||||||||||||||||
Operating expenses | 60 | 567 | 10 | - | (1,356 | ) | (3,558 | ) | (4,277 | ) | |||||||||||||
Finance items, net | 1,319 | (21 | ) | 113 | - | 92 | (341 | ) | 1,162 | ||||||||||||||
Income tax expenses | (14,937 | ) | 58 | (946 | ) | - | (8 | ) | (1,472 | ) | (17,305 | ) | |||||||||||
Net income (loss) | $ | 48,797 | $ | 933 | $ | 7,251 | $ | - | $ | (1,272 | ) | $ | (5,371 | ) | $ | 50,338 | |||||||
Attributable to: | |||||||||||||||||||||||
Equity holders of the Company | 38,141 | 668 | 7,180 | - | (1,272 | ) | (5,362 | ) | 39,355 | ||||||||||||||
Non-controlling interests | 10,656 | 265 | 71 | - | - | (9 | ) | 10,983 | |||||||||||||||
Net income (loss) | $ | 48,797 | $ | 933 | $ | 7,251 | $ | - | $ | (1,272 | ) | $ | (5,371 | ) | $ | 50,338 |
(1) Hunan’s BYP project was placed on care and maintenance in August 2014.
Nine months ended December 31, 2019 | |||||||||||||||||||||||
Mining | Administrative | ||||||||||||||||||||||
Henan | Total | ||||||||||||||||||||||
Statement of income: | Luoning | Hunan | Guangdong | Other | Beijing | Vancouver | |||||||||||||||||
Revenue | $ | 115,753 | $ | - | $ | 24,217 | $ | - | $ | - | $ | - | $ | 139,970 | |||||||||
Costs of mine operations | (64,677 | ) | (319 | ) | (18,779 | ) | - | (25 | ) | - | (83,800 | ) | |||||||||||
Income from mine operations | 51,076 | (319 | ) | 5,438 | (25 | ) | - | 56,170 | |||||||||||||||
Operating income (expenses) | 1,080 | (98 | ) | (95 | ) | (60 | ) | (1,240 | ) | (8,137 | ) | (8,550 | ) | ||||||||||
Finance items, net | 1,013 | (105 | ) | 73 | - | 94 | 1,349 | 2,424 | |||||||||||||||
Income tax recoveries (expenses) | (4,483 | ) | (41 | ) | (1,049 | ) | - | (1 | ) | (2,792 | ) | (8,366 | ) | ||||||||||
Net income (loss) | $ | 48,686 | $ | (563 | ) | $ | 4,367 | $ | (60 | ) | $ | (1,172 | ) | $ | (9,580 | ) | $ | 41,678 | |||||
Attributable to: | |||||||||||||||||||||||
Equity holders of the Company | 37,994 | (394 | ) | 4,323 | (60 | ) | (1,172 | ) | (9,580 | ) | 31,111 | ||||||||||||
Non-controlling interests | 10,692 | (169 | ) | 44 | - | - | - | 10,567 | |||||||||||||||
Net income (loss) | $ | 48,686 | $ | (563 | ) | $ | 4,367 | $ | (60 | ) | $ | (1,172 | ) | $ | (9,580 | ) | $ | 41,678 |
26
SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed 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 nine months ended December 31, 2020 and 2019 were all earned in China and were comprised of:
Three months ended December 31, 2020 | |||||||||
Henan Luoning | Hunan | Guangdong | Total | ||||||
Silver (Ag) | $ | 28,013 | $ | - | $ | 2,707 | $ | 30,720 | |
Gold (Au) | 1,194 | 28 | - | 1,222 | |||||
Lead (Pb) | 10,892 | - | 1,961 | 12,853 | |||||
Zinc (Zn) | 2,114 | - | 5,809 | 7,923 | |||||
Other | 273 | - | 305 | 578 | |||||
$ | 42,486 | $ | 28 | $ | 10,782 | $ | 53,296 | ||
Three months ended December 31, 2019 | |||||||||
Henan Luoning | Hunan | Guangdong | Total | ||||||
Silver (Ag) | $ | 21,437 | $ | - | $ | 2,603 | $ | 24,040 | |
Gold (Au) | 890 | - | - | 890 | |||||
Lead (Pb) | 11,112 | - | 3,021 | 14,133 | |||||
Zinc (Zn) | 1,836 | - | 3,203 | 5,039 | |||||
Other | 406 | - | - | 406 | |||||
$ | 35,681 | $ | - | $ | 8,827 | $ | 44,508 |
Nine months ended December 31, 2020 | |||||||||
Henan Luoning | Hunan | Guangdong | Total | ||||||
Silver (Ag) | $ | 82,625 | $ | - | $ | 7,326 | $ | 89,951 | |
Gold (Au) | 4,164 | 1,553 | - | 5,717 | |||||
Lead (Pb) | 35,386 | - | 6,228 | 41,614 | |||||
Zinc (Zn) | 4,556 | - | 12,758 | 17,314 | |||||
Other | 1,112 | - | 665 | 1,777 | |||||
$ | 127,843 | $ | 1,553 | $ | 26,977 | $ | 156,373 | ||
Nine months ended December 31, 2019 | |||||||||
Henan Luoning | Hunan | Guangdong | Total | ||||||
Silver (Ag) | $ | 68,648 | $ | - | $ | 6,389 | $ | 75,037 | |
Gold (Au) | 3,286 | - | - | 3,286 | |||||
Lead (Pb) | 37,750 | - | 7,763 | 45,513 | |||||
Zinc (Zn) | 4,460 | - | 9,776 | 14,236 | |||||
Other | 1,609 | - | 289 | 1,898 | |||||
$ | 115,753 | $ | - | $ | 24,217 | $ | 139,970 |
(d) Major customers
For the nine months ended December 31, 2020, four major customers (nine months ended December 31, 2019 - four major customers) each accounted for 13%, 15%, 16%, and 22% (nine months ended December 31, 2019 - 12%, 18%, 19%, and 22%), and collectively 66% (nine months ended December 31, 2019 - 71%) of the total sales of the Company.
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SILVERCORP METALS INC. |
Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2020 and |
for three and nine months ended December 31, 2020 and 2019 |
(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated) |
20. | SUPPLEMENTARY CASH FLOW INFORMATION |
December 31, 2020 | March 31, 2020 | ||||
Cash on hand and at bank | $ | 95,894 | $ | 65,251 | |
Bank term deposits and GICs | 7,453 | 526 | |||
Total cash and cash equivalents | $ | 103,347 | $ | 65,777 |
Changes in non-cash operating working capital: | Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
Trade and other receivables | $ | 238 | $ | 233 | $ | 104 | $ | (205 | ) | ||||
Inventories | (2,166 | ) | (593 | ) | (696 | ) | 44 | ||||||
Prepaids and deposits | 489 | 2,505 | (1,038 | ) | 736 | ||||||||
Accounts payable and accrued liabilities | 6,300 | 2,304 | 15,006 | 4,003 | |||||||||
Deposits received | (1,814 | ) | 975 | (617 | ) | 233 | |||||||
Due from a related party | (45 | ) | (47 | ) | 2 | (149 | ) | ||||||
$ | 3,002 | $ | 5,377 | $ | 12,761 | $ | 4,662 |
21. | SUBSEQUENT EVENT |
On January 21, 2021, the Company announced that its subsidiary, Henan Found, won an online auction to acquire the exploration rights to the Zhonghe Silver Project (the “Zhonghe Project”) from the Henan provincial government. The auction was held on December 17, 2020 and following a public comment period, the Company received confirmation of its successful bid. The Zhonghe Project covers an area of 4.96 km2 approximately 50 km (75 km by road) northeast of the Company’s Ying Mining District, also located in Luoning County. The final winning bid submitted by the Company to acquire the project was RMB 495 million, or approximately US$76,000 (the “Purchase Price”).
The Company will enter into a mineral rights transfer contract with the Department of Natural Resources of Henan Province and is required to make an initial payment of approximately US$15,200, once the project area is cleared by the authorities as not being in military area. The initial payment represents 20% of the Purchase Price.
The balance of the Purchase Price is due only if the exploration rights to Zhonghe Project are converted into a mining license and shall be paid annually over the duration of the term of the mining license.
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