EX-99.1 2 exh_991.htm EXHIBIT 99.1

Exhibit 99.1

 

 

 

 

 

 

MAG Silver Corp.

 

Unaudited Condensed Interim Consolidated Financial Statements

(expressed in thousands of US dollars)

 

For the three months ended March 31, 2024

 

Dated: May 13, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

VANCOUVER OFFICE

Suite 770

800 W. Pender Street

Vancouver, BC V6C 2V6

 

604 630 1399 phone

866 630 1399 toll free

604 681 0894 fax

    

TSX: MAG

NYSE American: MAG

info@magsilver.com

 

 

 

 

 

 

 

 

  

MAG SILVER CORP.         
Condensed Interim Consolidated Statements of Income and Comprehensive Income
For the three months ended March 31, 2024 and 2023         
(In thousands of US dollars, except for shares and per share amounts - Unaudited)
        For the three months ended  
        March 31, 2024      March 31, 2023  
   Note    $      $  
          
Income from equity accounted investment in Juanicipio   5    19,244    7,919 
General and administrative expenses   3    (4,109)   (3,272)
General exploration and business development        (357)   (102)
Operating income        14,778    4,545 
                
Interest income        827    564 
Other income   8    537    127 
Foreign exchange loss        (163)   (180)
Income before income tax        15,979    5,056 
                
Deferred income tax expense        (1,084)   (343)
Net income        14,895    4,713 
                
Other comprehensive income               
Items that will not be reclassified subsequently to profit or loss:               
Unrealized loss on equity securities        (2)   (1)
Total comprehensive income        14,893    4,712 
                
                
Basic earnings per share        0.14    0.05 
Diluted earnings per share        0.14    0.05 
                
Weighted average number of shares outstanding   7           
Basic        102,979,176    101,117,919 
Diluted        103,111,227    101,319,086 

   

See accompanying notes to the condensed interim consolidated financial statements

 

  2

 

  

MAG SILVER CORP.         
Condensed Interim Consolidated Statements of Financial Position   
As at March 31, 2024 and December 31, 2023      
(In thousands of US dollars, unless otherwise stated - Unaudited)
     Note      March 31, 2024      December 31, 2023  
         $    $ 
Assets               
Current assets               
Cash        74,683    68,707 
Accounts receivable   4    1,032    1,559 
Prepaid expenses        2,450    1,787 
         78,165    72,053 
Non-current assets               
Investment in Juanicipio   5    397,012    394,622 
Exploration and evaluation assets   6    61,820    52,637 
Deferred financing fees   9    823    909 
Property and equipment        279    301 
Investments        6    8 
         459,940    448,477 
Total assets        538,105    520,530 
Liabilities               
Current liabilities               
Trade and other payables        3,785    2,668 
Lease obligation        115    154 
Flow-through share premium liability   8    1,432    1,969 
         5,332    4,791 
Non-current liabilities               
Deferred income taxes        9,582    8,498 
Provision for reclamation        484    484 
Total liabilities        15,398    13,773 
                
Equity               
Share capital        614,480    614,364 
Equity reserve        21,705    20,764 
Accumulated other comprehensive income        779    781 
Deficit        (114,257)   (129,152)
Total equity        522,707    506,757 
Total liabilities and equity        538,105    520,530 

 

See accompanying notes to the condensed interim consolidated financial statements

 

  3

 

 

MAG SILVER CORP.         
Condensed Interim Consolidated Statements of Cash Flows         
For the three months ended March 31, 2024 and 2023         
(In thousands of US dollars, unless otherwise stated - Unaudited)
    For the three months ended  
        March 31, 2024      March 31, 2023  
   Note    $      $  
          
OPERATING ACTIVITIES               
Net income        14,895    4,713 
Items not involving cash:               
Amortization of flow-through premium liability   8    (537)   (127)
Depreciation and amortization   3    145    10 
Deferred income tax expense        1,084    343 
Amortization of deferred financing fees   9    86    - 
Income from equity accounted investment in Juanicipio   5    (19,244)   (7,919)
Share-based compensation expense   3,7    966    763 
Unrealized foreign exchange loss (gain)        (52)   175 
                
Movements in non-cash working capital               
Accounts receivable        (206)   (205)
Prepaid expenses        (663)   (728)
Trade and other payables        836    (131)
Net cash used in operating activities        (2,690)   (3,106)
                
INVESTMENT ACTIVITIES               
Exploration and evaluation expenditures   6    (5,054)   (2,979)
Acquisition of Goldstake property   6    (3,752)   - 
Investment in Juanicipio   5    -    (25,159)
Receipt of principal on loans to Juanicpio   5    14,975    - 
Receipt of interest on loans to Juanicipio   5    2,484    149 
Net cash from / (used in) investing activities        8,653    (27,989)
                
FINANCING ACTIVITIES               
Issuance of common shares upon exercise of stock options   7    -    225 
Issuance of common shares, net of share issue costs   7    -    39,472 
Issuance of flow-through shares, net of share issue costs   7    -    16,208 
Payment of lease obligation (principal)        (39)   (30)
Net cash (used in) / from financing activities        (39)   55,875 
                
Effect of exchange rate changes on cash        52    (122)
                
Increase in cash during the period        5,976    24,658 
Cash, beginning of period        68,707    29,955 
Cash, end of period        74,683    54,613 

 

See accompanying notes to the condensed interim consolidated financial statements

 

  4

 

  

MAG SILVER CORP.                     
Condensed Interim Consolidated Statements of Changes in Equity           
For the three months ended March 31, 2024 and 2023            
(In thousands of US dollars, except shares - Unaudited)                             
         Common shares without
par value		         Accumulated           
                        other           
         Number of         Equity    comprehensive           
    Notes    Shares    Amount    Reserve    income (loss)    Deficit    Total Equity 
         #    $    $    $    $    $ 
Balance, January 1, 2023        98,956,808    559,933    18,790    784    (177,811)   401,696 
Stock options exercised        28,787    397    (90)   -    -    307 
Restricted and performance share units converted        112,605    1,215    (1,215)   -    -    - 
Shares issued for cash, net of flow-through share premium liability        3,874,450    56,761    -    -    -    56,761 
Share issue costs        -    (3,942)   -    -    -    (3,942)
Share-based compensation        -    -    3,279    -    -    3,279 
                                    
Other comprehensive loss        -    -    -    (3)   -    (3)
Net income        -    -    -    -    48,659    48,659 
Balance, December 31, 2023        102,972,650    614,364    20,764    781    (129,152)   506,757 
Restricted and performance share units converted   7    6,905    116    (116)   -    -    - 
Share-based compensation   7    -    -    1,057    -    -    1,057 
                                    
Other comprehensive loss        -    -    -    (2)   -    (2)
Net income        -    -    -    -    14,895    14,895 
Balance, March 31, 2024        102,979,555    614,480    21,705    779    (114,257)   522,707 
                                    
                                    
Balance, January 1, 2023        98,956,808    559,933    18,790    784    (177,811)   401,696 
Stock options exercised        21,346    292    (67)   -    -    225 
Shares issued for cash, net of flow-through share premium liability        3,874,450    56,761    -    -    -    56,761 
Share issue costs        -    (4,011)   -    -    -    (4,011)
Share-based compensation        -    -    830    -    -    830 
                                    
Other comprehensive loss        -    -    -    (1)   -    (1)
Net income        -    -    -    -    4,713    4,713 
Balance, March 31, 2023        102,852,604    612,975    19,553    783    (173,098)   460,213 

 

See accompanying notes to the condensed interim consolidated financial statements

 

  5

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

1.NATURE OF OPERATIONS

 

MAG Silver Corp. (the “Company” or “MAG”) is a growth-oriented Canadian exploration company focused on advancing high-grade, district scale precious metals projects in the Americas. MAG is the ultimate parent company of its consolidated group, was incorporated on April 21, 1999, and is governed by the Business Corporations Act of the Province of British Columbia (“BCABC"). MAG’s shares are listed on both the Toronto Stock Exchange in Canada and the NYSE American, LLC in the United States of America.

 

The Company’s principal asset is a 44% interest in the Juanicipio Mine (Note 5 “Investment in Juanicipio”) located in Zacatecas, Mexico, which achieved commercial production at its 4,000 tonnes per day (“tpd”) processing facility on June 1, 2023.

 

Address of registered office of the Company:

3500 – 1133 Melville Street

Vancouver, British Columbia,

Canada V6E 4E5

 

Head office and principal place of business:

770 – 800 West Pender Street

Vancouver, British Columbia,

Canada V6C 2V6

 

2.MATERIAL ACCOUNTING POLICY INFORMATION

 

(a)Statement of compliance

 

These condensed interim consolidated financial statements (“Interim Financial Statements”) are prepared under International Accounting Standards 34 Interim Financial Reporting (“IAS 34”) in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). They do not include all of the information required for full annual IFRS financial statements and therefore should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023.

 

The accounting policies applied in the preparation of the Interim Financial Statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2023.

 

These Interim Financial Statements have been prepared on a historical cost basis except for the revaluation of certain financial instruments, which are stated at their fair value.

 

These Interim Financial Statements were authorized for issuance by the Board of Directors of the Company on May 13, 2024.

 

  6

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

(b)Significant accounting judgments and estimates

 

The Company makes certain significant judgments and estimates in the process of applying the Company’s accounting policies. Management believes the judgments and estimates used in these condensed interim consolidated financial statements are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows. The areas involving significant judgments and estimates have been set out in Note 5 of the Company’s audited consolidated financial statements for the year ended December 31, 2023.

 

 

3.GENERAL AND ADMINISTRATIVE EXPENSES

 

    For the three months ended 
    March 31,    March 31, 
    2024    2023 
    $    $ 
Accounting and audit   277    128 
Compensation and consulting fees   1,174    1,135 
Depreciation and amortization   145    10 
Filing and transfer agent fees   198    267 
Amortization of deferred financing fees   86    - 
General office expenses   247    144 
Insurance   339    489 
Juanicipio oversight costs   266    - 
Legal   180    125 
Share-based compensation expense (see Note 7)   966    763 
Shareholder relations   127    116 
Travel   104    95 
    4,109    3,272 

 

4.ACCOUNTS RECEIVABLE

 

    March 31,    December 31, 
    2024    2023 
    $    $ 
Receivable from Minera Juanicipio (Notes 5 & 13)   87    855 
Value added tax (“IVA” and “GST”)   930    700 
Other receivables   15    4 
    1,032    1,559 

 

  7

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

5.INVESTMENT IN JUANICIPIO

 

Minera Juanicipio was created for the purpose of holding the Juanicipio property, and is held 56% by Fresnillo plc (“Fresnillo”) and 44% by the Company. On December 27, 2021, the Company and Fresnillo created Equipos Chaparral in the same ownership proportions. Equipos Chaparral owns the processing facility and mining equipment which is leased to Minera Juanicipio. Minera Juanicipio and Equipos Chaparral are collectively referred to herein as “Juanicipio,” or, the “Juanicipio Mine.”

 

Juanicipio is governed by a shareholders’ agreement and by corporate by-laws. All costs relating to Juanicipio are required to be shared by the Company and Fresnillo pro-rata based on their ownership interests in Juanicipio, and if either party does not fund pro-rata, their ownership interest will be diluted in accordance with the shareholders’ agreement and by-laws.

 

Fresnillo is the operator of Juanicipio, and with its affiliates, beneficially owns 9,314,877 common shares of the Company as at March 31, 2024, as publicly reported by Fresnillo.

 

The Company has recorded its Investment in Juanicipio using the equity method of accounting. The recorded value of the investment includes the carrying value of the deferred exploration, mineral and surface rights, Juanicipio costs incurred by the Company, the required net cash investments to establish and maintain its 44% interest in Juanicipio, and the Company’s 44% share of income (loss) from Juanicipio.

 

Changes during the period of the Company’s investment relating to its interest in Juanicipio are detailed as follows:

 

     
   March 31,   December 31, 
   2024   2023 
   $   $ 
Balance, beginning of period   394,622    338,316 
Juanicipio oversight expenditures incurred 100% by MAG   -    384 
Amortization of Juanicipio's oversight expenditures incurred 100% by MAG   (129)   (305)
Cash contributions and advances to Juanicipio (3)   -    24,992 
Loan repayments from Juanicipio (2)   (14,975)   (25,714)
Total for the period   (15,104)   (642)
Income from equity accounted Investment in Juanicipio   19,244    65,099 
Interest earned, reclassified to accounts receivable (1)   (1,751)   (8,150)
Balance, end of period   397,012    394,622 

 

(1) A portion of the Investment in Juanicipio is in the form of interest bearing shareholder loans. For the three months ended March 31, 2024, the Company earned interest amounting to $1,751 (year ended December 31, 2023: $8,150) while $2,484 of interest payments were received from Juanicipio (year ended December 31, 2023: $7,639).

 

  8

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

(2) During the three months ended March 31, 2024, no loans to Juanicipio were converted into equity (December 31, 2023: $7,251). As at March 31, 2024, the Company has advanced $79,438 as shareholder loans to Juanicipio (December 31, 2023: $94,414).

 

(3) During the three months ended March 31, 2024 no cash contributions and advances were made to Juanicipio (December 31, 2023: 24,992 cash contributions and advances, with $22,726 in the form of loans and $2,276 in the form of equity).

 

A summary of financial information of Juanicipio (on a 100% basis reflecting adjustments made by the Company, including adjustments for differences in accounting policies) is as follows:

 

Juanicipio Statements of Income

 

   For the three months ended 
   March 31,   March 31, 
   2024   2023 
    $    $ 
           
Sales   123,689    51,482 
Cost of sales:          
Production cost   (36,787)   (27,378)
Depreciation and amortization   (22,038)   (7,955)
Cost of sales   (58,825)   (35,333)
Gross profit   64,864    16,149 
           
Consulting and administrative expenses   (4,189)   (1,499)
Extraordinary mining and other duties   (1,392)   (520)
    59,283    14,131 
           
Exchange losses and other   (1,297)   (2,864)
Interest expense   (3,979)   (3,816)
Income tax (expense) recovery   (14,249)   6,731 
           
Net income   39,758    14,182 
           
MAG's 44% portion of net income   17,494    6,240 
Interest on Juanicipio loans - MAG's 44%   1,751    1,679 
MAG's 44% equity income   19,244    7,919 

 

  9

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

Juanicipio Statements of Financial Position

 

   March 31,   December 31, 
   2024   2023 
   $   $ 
Assets          
           
Current assets          
Cash and cash equivalents   30,991    42,913 
Value added tax and other receivables   2,214    3,162 
Income tax receivable   10,324    3,758 
Concentrate sales receivable   60,009    56,532 
Inventories          
Stockpiles   2,248    2,417 
Metal concentrates   4,373    2,361 
Materials and supplies   18,684    18,414 
Prepaids and other assets   3,256    5,501 
    132,101    135,058 
Non-current assets          
Right-of-use assets   1,412    1,590 
Mineral interests, plant and equipment   782,691    794,512 
Deferred tax assets   16,433    24,336 
    800,537    820,438 
Total assets   932,638    955,496 
           
Liabilities          
           
Current liabilities          
Payables   14,205    22,167 
Interest and other payables to shareholders   5,577    12,160 
Taxes payable   5,230    14,395 
    25,013    48,722 
Non-current liabilities          
Lease obligation   1,523    1,597 
Provisions          
Reserves for retirement and pension   115    112 
Reclamation and closure   3,678    3,605 
Deferred tax liabilities   4,566    9,439 
    9,882    14,753 
Total liabilities   34,895    63,475 
           
Equity          
           
Shareholders' equity including shareholder advances   897,743    892,021 
Total equity   897,743    892,021 
Total liabilities and equity   932,638    955,496 

 

  10

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

Juanicipio Statements of Cash Flows

 

   For the three months ended 
   March 31,   March 31, 
   2024   2023 
    $    $ 
Operating activities          
Net income   39,758    14,182 
Items not involving cash          
Depreciation and amortization   22,038    7,955 
Income tax expense (recovery)   14,249    (6,731)
Interest incurred on loans   3,979    3,816 
Other   97    3,304 
Income tax payments   (25,772)   (39,601)
Change in other operating working capital   (11,829)   (12,835)
           
Net cash from operating activities   42,521    (29,910)
           
Investing activities          
Capital expenditures including plant, mine development and exploration   (15,370)   (19,073)
Other   878    69 
Net cash used in investing activities   (14,492)   (19,004)
           
Financing activities          
Loans and other capital provided by shareholders   -    56,800 
Repayments of loans to shareholders   (34,036)   - 
Interest paid to shareholders   (5,647)   (338)
Payment of lease obligations   (208)   (179)
Net cash (used in) from financing activities   (39,891)   56,282 
           
Effect of exchange rate changes on cash and cash equivalents   (59)   (17)
           
(Decrease) increase in cash and cash equivalents during the period   (11,921)   7,351 
           
Cash and cash equivalents, beginning of period   42,913    1,102 
           
Cash and cash equivalents, end of period   30,991    8,454 

 

  11

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

6.EXPLORATION AND EVALUATION ASSETS

 

(a)In 2018, the Company entered into an option agreement with a private group, whereby the Company has the right to earn 100% ownership interest in a company which owns the Deer Trail Project in Utah. The Company paid $150 upon signing the agreement, $150 in each of 2020 and 2021, and $200 in each of 2022 and 2023. To earn 100% interest in the property, the Company must make remaining cash payments totaling $1,150 over the next 5 years and fund a cumulative of $30,000 of eligible exploration expenditures by 2028 (as of March 31, 2024, the Company has incurred $28,941 of eligible exploration expenditures on the property). As at March 31, 2024, the Company has also bonded and recorded a $484 reclamation liability for the project. Other than the reclamation liability, the balance of cash payments and exploration commitments are optional at the Company’s discretion. Upon the Company’s 100% earn-in, the vendors will retain a 2% net smelter returns (“NSR”) royalty.

 

(b)In 2022, through the acquisition of Gatling Exploration Inc. (“Gatling”) the Company acquired 100% of the Larder Project in Ontario. During the three months ended March 31, 2024, the Company incurred a total of $3,263 in exploration and evaluation expenditures, as well as acquisition cost of $3,752 relating to the purchase of 100% ownership of the Goldstake property (“Goldstake”), contiguous to Gatling’s current land holdings.

 

 

 

 

 

 

 

 

 

 

  12

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

During the three months ended March 31, 2024 and year ended December 31, 2023, the Company has incurred the following exploration and evaluation expenditures on these projects:

 

     March 31,      December 31,  
     2024      2023  
     $      $  
Deer Trail Project          
Option and other payments   -    275 
Total acquisition costs   -    275 
Drilling and geotechnical   1,849    5,854 
Camp and site costs   205    875 
Land taxes and government fees   4    213 
Legal, community and other consultation costs   70    343 
Travel   40    190 
Total for the period   2,168    7,750 
Balance, beginning of period   27,315    19,565 
Total Deer Trail Project cost   29,483    27,315 
Larder Project          
Acquisition of Goldstake property   3,752    - 
Total acquisition costs   3,752    - 
Drilling and geotechnical   2,303    6,357 
Camp and site costs   802    772 
Land taxes and government fees   20    43 
Legal, community and other consultation costs   109    347 
Travel   29    109 
Total for the period   7,015    7,628 
Balance, beginning of period   25,322    17,694 
Total Larder Project cost   32,337    25,322 
Total Exploration and Evaluation Assets   61,820    52,637 

 

  13

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

7.SHARE CAPITAL

 

(a)Public offerings

 

On February 7, 2023, the Company closed a $42,558 bought deal public offering and issued 2,905,000 common shares, at a price of $14.65 per common share.

 

On February 16, 2023, the Company closed a $17,133 (C$23,024) bought deal private placement and issued 969,450 common shares on a “flow-through” basis” (as defined in the Income Tax Act (Canada)) (the Flow-Through Shares”), at a price of $17.67 (C$23.75) per Flow-Through Share. The premium paid by investors on the flow-through shares was calculated as $3.08 per share. Accordingly, $2,986 was recorded as flow-through share premium liability (Note 8).

 

The aggregate gross proceeds from the combined bought deal public offering and bought deal private placement amounted to $59,691. The Company paid commissions to underwriters of $3,010 and legal and filing fees totalling $932 yielding net proceeds of $55,749.

 

(b)Stock options

 

The Company may enter into Incentive Stock Option Agreements in accordance with the Company’s Stock Option Plan (the “Plan”). On June 26, 2023, the Shareholders re-approved the Plan. The maximum number of common shares that may be issuable under the Plan is set at 5% of the number of issued and outstanding common shares on a non-diluted basis at any time, provided that the number of common shares issued or issuable under the combined Plan and Share Unit Plan (Note 7(e)) shall not exceed 5% of the issued and outstanding common shares of the Company on a non-diluted basis. Options granted under the Plan have a maximum term of 5 years.

 

  14

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

The following table summarizes the Company’s stock options activity, excluding the Gatling replacement options, for the period:

 

   Stock options
activity		  Weighted average
exercise price
(C$/option)
       
Outstanding, January 1, 2023   1,012,794    17.56 
Granted   236,928    16.42 
Expired   (20,000)   19.41 
Forfeited   (13,564)   18.35 
Exercised for cash   (28,787)   14.34 
           
Outstanding, December 31, 2023   1,187,371    17.37 
Granted   -    - 
Expired   (7,791)   21.36 
Forfeited   -    - 
Exercised for cash   -    - 
           
Outstanding, March 31, 2024   1,179,580    17.35 

 

During the three months ended March 31, 2024, the Company recorded a share-based compensation expense of $245 (March 31, 2023: $436) and capitalized $40 (March 31, 2023: $31) to exploration and evaluation assets relating to stock options to employees and consultants.

 

 

 

  15

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

The following table summarizes the Company’s stock options, excluding the Gatling replacement options, outstanding and exercisable as at March 31, 2024.

 

Exercise price    Number    Number    Weighted avg. remaining
(C$/option)    Outstanding    Exercisable    contractual life (years)
 13.46    209,432    209,432    0.03 
 14.98    239,333    239,333    0.91 
 16.09    6,021    -    4.00 
 16.43    223,039    74,337    4.00 
 17.02    100,000    33,333    3.13 
 20.20    109,799    36,595    3.02 
 21.26    50,000    33,333    2.67 
 21.29    9,191    3,063    3.02 
 21.57    182,765    182,765    1.69 
 23.53    50,000    50,000    1.80 
 13.46 - 23.53    1,179,580    862,191    1.99 

 

In 2022, the Company issued 43,675 replacement stock options pursuant to the Gatling acquisition of which 31,983 replacement stock options expired unexercised. The following table summarizes the Gatling replacement options that are outstanding and exercisable as at March 31, 2024:

 

Exercise price  Number  Number  Weighted average remaining
(C$/option)  outstanding  exercisable  contractual life (years)
 21.40    1,706    1,706    0.30 
 21.68 - 21.93    9,986    9,986    0.37 
 21.40 - 21.93    11,692    11,692    0.36 

 

  16

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

(c)Restricted and performance share units

 

On June 26, 2023, the Shareholders re-approved a share unit plan (the “Share Unit Plan”) for the benefit of the Company’s officers, employees and consultants. The Share Unit Plan provides for the issuance of common shares from treasury, in the form of restricted share units (“RSUs”) and performance share units (“PSUs”). The maximum number of common shares that may be issuable under the Share Unit Plan is set at 1.5% of the number of issued and outstanding common shares on a non-diluted basis, provided that the number of common shares issued or issuable under the combined Share Unit Plan and Stock Option Plan (Note 7(b)) shall not exceed 5% of the issued and outstanding common shares on a non-diluted basis. RSUs and PSUs granted under the Share Unit Plan have a term of 5 years unless otherwise specified by the Board, and each unit entitles the participant to receive one common share of the Company subject to vesting criteria, and in the case of PSUs, performance criteria which may also impact the number of PSUs to vest between 0-200%. PSUs for which the performance targets are not achieved during the performance period are automatically forfeited and cancelled.

 

The following table summarizes the Company’s RSUs activity for the period:

 

     RSU activity      Weighted average
fair value (C$/RSU)		  
       
Outstanding, January 1, 2023   101,059    18.47 
Granted   56,425    16.42 
Forfeited   (4,244)   17.07 
Exercised   (54,985)   17.19 
           
Outstanding, December 31, 2023   98,255    17.82 
Granted   -    - 
Forfeited   -    - 
Exercised   -    - 
           
Outstanding, March 31, 2024   98,255    17.82 

 

During the three months ended March 31, 2024, the Company recorded share-based compensation expense of $122 (March 31, 2023: $304) and capitalized $30 (March 31, 2023: $10) to exploration and evaluation assets relating to RSUs to employees and consultants.

 

  17

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

The following table summarizes the Company’s PSUs activity for the period:

 

    PSU activity    Weighted average
fair value (C$/PSU)		 
           
Outstanding, January 1, 2023   231,255    17.91 
Granted   156,861    16.42 
Forfeited   (43,047)   19.71 
Exercised   (57,620)   13.17 
           
Outstanding, December 31, 2023   287,449    17.78 
Granted   -    - 
Forfeited   -    - 
Exercised   (6,905)   21.57 
           
Outstanding, March 31, 2024   280,544    17.68 

 

During the three months ended March 31, 2024, the Company recorded share-based compensation expense of $252 (March 31, 2023: $244) and capitalized $21 (March 31, 2023: $27) to exploration and evaluation assets relating to PSUs to employees and consultants.

 

(d)Deferred share units

 

On June 26, 2023, the Shareholders re-approved a Deferred Share Unit Plan (the “DSU Plan”) for the benefit of the Company’s non-executive directors. The DSU Plan provides for the issuance of common shares from treasury, on conversion of Deferred Share Units (“DSUs”) granted. Directors may also elect to receive all or a portion of their annual retainer in the form of DSUs. DSUs may be settled in cash or in common shares issued from treasury, as determined by the Board at the time of the grant. The maximum number of common shares that may be issuable under the DSU Plan is set at 1.0% of the number of issued and outstanding common shares on a non-diluted basis.

 

  18

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

The following table summarizes the Company’s DSUs activity for the period:

 

    DSU activity    Weighted average
fair value (C$/DSU)		 
           
Outstanding, January 1, 2023   420,115    14.80 
Granted   78,474    14.81 
Exercised   -    - 
           
Outstanding, December 31, 2023   498,589    14.80 
Granted   32,517    14.36 
Exercised   -    - 
           
Outstanding, March 31, 2024   531,106    14.77 

 

During the three months ended March 31, 2024, the Company recorded share-based compensation expense of $347 (March 31, 2023: $214) relating to DSUs to directors. Furthermore, 31,365 DSUs were granted under the plan and 1,112 DSUs were granted to directors who elected to receive a portion of their annual retainer in DSUs rather than in cash (March 31, 2023: 15,365 and 1,646 respectively).

 

(e)Diluted earnings per share

 

    March 31,    March 31, 
    2024    2023 
Net earnings   14,893    4,712 
Basic weighted average number of shares outstanding   102,979,176    101,117,919 
Effect of dilutive common share equivalents:          
Stock options   -    92,642 
Restricted and performance share units   132,051    108,525 
Diluted weighted average number of shares outstanding   103,111,227    101,319,086 
           
Diluted earnings per share  $0.14   $0.05 

 

As of March 31, 2024, there are 1,191,272 anti-dilutive stock options (March 31, 2023: 761,149), 246,748 anti-dilutive restricted and performance share units (March 31, 2023: 418,363), and 531,106 anti-dilutive deferred share units (March 31, 2023: 437,126).

 

  19

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

8.FLOW-THROUGH PREMIUM LIABILITY

 

As at March 31, 2024, the Company has a flow-through share premium liability of $1,432 (December 31, 2023: $1,969) in relation to the flow-through share financing completed on February 16, 2023 (see Note 7(a) for full details of the financing). Flow-through shares are issued at a premium, and in the Company’s case, considering the separate offerings for flow-through shares and standard public offering for common shares both made on January 25, 2023, this premium has been calculated as the difference between the pricing of a flow-through share and that of a common share from the public offering made on the same date. Tax deductions generated by the eligible expenditures are passed through to the shareholders of the flow-through shares once the eligible expenditures are incurred and renounced. Below is a summary of the flow-through financing and the related flow-through share premium liability generated.

 

     Shares issued      Flow-through
share price		      Premium per flow
through share price		      Flow-through
premium liability		  
        $      $      $  
February 2023 Financing   969,450    17.67    3.08    2,986 

 

The following table is a continuity of the flow-through share funding and expenditures along with the corresponding impact on the flow-through share premium liability:

 

     Flow-through
funding and
expenditures		      Flow-through
premium liability		  
    $     $  
Balance at January 1, 2023   -    - 
Flow-through funds raised   17,133    2,986 
Flow-through eligible expenditures   (5,835)   (1,017)
           
Balance at December 31, 2023   11,298    1,969 
           
Flow-through eligible expenditures   (3,079)   (537)
           
Balance at March 31, 2024   8,218    1,432 

 

The Company renounced the entirety of tax deductions from incurred and not yet incurred eligible spend to its shareholders of flow-through shares as at December 31, 2023.

 

  20

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

9.DEBT FACILITY

 

In October 2023 the Company entered into a $40,000 senior secured revolving credit facility with the Bank of Montreal (the “Credit Facility”). There is a provision for an accordion feature whereby, upon request, the facility may be increased to $75,000 any time prior to the maturity date, at the discretion of the lender. The Credit Facility will bear interest on a sliding scale of SOFR or the Lender’s Base Rate on US Dollar commercial loans plus an applicable margin on a sliding scale of between 200 and 400 basis points based on the Company’s leverage ratio. Interest incurred on drawn amounts is to be paid quarterly. Commitment fees on the undrawn portion of the facility are calculated on a similar sliding scale of between 50 and 75 basis points, and are also to be paid on a quarterly basis. The term of the facility is 34 months, maturing on August 4, 2026, at which date any drawn amount is required to be paid back in full. All debts, liabilities and obligations under the facility are guaranteed by the Company's material subsidiaries and secured by assets of the Company including the pledge of a material subsidiary. The facility includes a number of customary covenants (liquidity, leverage, tangible net worth) and conditions including limitations on acquisitions and investments (excluding exploration and capital expenditures) funded using cash with no limitations when equity is used as a funding source. As at March 31, 2024, the Company is in compliance with all applicable covenants.

 

As of March 31, 2024, the Company has not drawn down any funds from its Credit Facility, and as a result expensed $49 of commitment fees for the three months ended March 31, 2024.

 

10.CAPITAL RISK MANAGEMENT

 

The Company’s objectives in managing its liquidity and capital are to safeguard the Company’s ability to continue as a going concern and to provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of its equity (comprised of share capital, equity reserve, accumulated other comprehensive income and deficit), its undrawn Credit Facility (see Note 9) and lease obligation, net of cash and investments in equity securities as follows:

 

    March 31,    December 31, 
    2024    2023 
    $    $ 
Equity   522,707    506,757 
Lease obligation   115    154 
Cash   (74,683)   (68,707)
Investments   (6)   (8)
Total   448,133    438,196 

 

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt and/or acquire or dispose of assets.

 

  21

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

As at March 31, 2024, the Company does not have any long-term debt outstanding, is in compliance with all applicable Credit Facility covenants, and is not subject to any other externally imposed capital requirements.

 

11.FINANCIAL RISK MANAGEMENT

 

The Company’s operations consist of the acquisition, exploration and advancement of mineral projects in the Americas. The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks. Where material, these risks are reviewed and monitored by the Board of Directors.

 

(a)Market risk

 

The Company conducts the majority of its business through its equity interest in its associates, Juanicipio (Note 5). Juanicipio is exposed to commodity price risk, specifically to the prices of silver, gold, and to a lesser extent, lead and zinc. Currently, Juanicipio produces and sells concentrates containing these metals which are each subject to market price fluctuations which will affect its profitability and its ability to generate cash flow. Juanicipio does not hedge any of the commodities produced and does not have any such positions outstanding at March 31, 2024.

 

(b)Credit risk

 

Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Company by those counterparties, less any amounts owed to the counterparty by the Company where a legal right of set-off exists and also includes the fair values of contracts with individual counterparties which are recorded in the financial statements.

 

(i)Trade credit risk

Juanicipio, in which the Company has a 44% interest, has revenue from its operations as described in Note 5. Juanicipio sells and receives payment for its concentrates at market terms, under an offtake agreement with Met-Mex Peñoles, S.A. de C.V. (“Met-Mex”), a related party to Fresnillo. The Company believes Juanicipio is not exposed to significant trade credit risk.

 

(ii)Cash

In order to manage credit and liquidity risk, the Company’s practice is to invest only in highly rated investment grade instruments backed by Canadian commercial banks, and in the case of its Mexican and US operations, the Company maintains minimal cash in its US and Mexican subsidiaries.

 

  22

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

The Company’s maximum exposure to credit risk is the carrying value of its cash, accounts receivable and loans receivable from Juanicipio which is classified as an Investment in Juanicipio in the consolidated statements of financial position, as follows:

 

    March 31,    December 31, 
    2024    2023 
    $    $ 
Cash   74,683    68,707 
Accounts receivable (Note 4)   1,032    1559 
Juanicipio loans (Notes 5 & 14)   79,438    94,414 
    155,153    164,680 

 

 

(c)Liquidity risk

 

The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements, its exploration and mineral projects advancement plans, and its various optional property and other commitments (Notes 5, 6, 8 and 14). The annual budget is approved by the Board of Directors. The Company ensures that there are sufficient cash balances to meet its short-term business requirements.

 

To increase its flexibility with regards to access to capital, in October 2023 the Company entered into a $40,000 Credit Facility (see Note 9 for full details of the debt facility).

 

The Company estimates it has the ability to fund the next 12 months of corporate and exploration expenses with its liquidity position, and the Company 's overall liquidity risk has not changed significantly from December 31, 2023. Future liquidity may therefore depend upon the Company’s ability to repatriate capital from Juanicipio, arrange additional debt or additional equity financing.

 

(d)Currency risk

 

The Company is exposed to the financial risks related to the fluctuation of foreign exchange rates, both in the Mexican peso and C$, relative to the US$. The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.

 

  23

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

Exposure to currency risk

 

As at March 31, 2024, the Company is exposed to currency risk through the following assets and liabilities denominated in currencies other than the functional currency of the applicable entity:

 

    Mexican peso    Canadian dollar 
(in US$ equivalent)   $    $ 
Cash   5    5,005 
Accounts receivable   215    728 
Prepaid expenses   14    1,963 
Investments   -    6 
Accounts payable   (246)   (3,367)
Lease obligations   -    (115)
Net (liabilities) assets exposure   (11)   4,221 

 

Mexican peso relative to the US$

 

Although the majority of operating expenses in Mexico are both determined and denominated in US$, an appreciation in the Mexican peso relative to the US$ will increase the Company’s cost of operations in Mexico (reported in US$) related to those operating costs denominated and determined in Mexican pesos. Alternatively, a depreciation in the Mexican peso relative to the US$ will decrease the Company’s cost of operations in Mexico (reported in US$) related to those operating costs denominated and determined in Mexican pesos.

 

An appreciation/depreciation in the Mexican peso against the US$ will also result in a gain/loss before tax and deferred tax to the extent that the Company holds net monetary assets (liabilities) in pesos. Specifically, the Company's foreign currency exposure is comprised of peso denominated cash, prepaids and value added taxes receivable, net of trade and other payables. The carrying amount of the Company’s peso denominated net monetary liabilities at March 31, 2024 is 190 thousand pesos (March 31, 2023: 737 thousands pesos net monetary assets). A 10% appreciation or depreciation in the peso against the US$ would have an immaterial effect on the Company’s income (loss) before tax.

 

Mexican peso relative to the US$ - Investment in Juanicipio

 

The Company conducts the majority of its business through its equity interest in its associates (Note 5). The Company accounts for this investment using the equity method and recognizes the Company's 44% share of earnings and losses of Juanicipio. Juanicipio also has a US$ functional currency and is exposed to the same currency risks noted above for the Company.

 

  24

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

An appreciation/depreciation in the Mexican peso against the US$ will also result in a gain/loss after tax and deferred taxes (Note 5) in Juanicipio to the extent that it holds net monetary assets (liabilities) in pesos, comprised of peso denominated cash, value added taxes receivable, net of trade and other payables. The carrying amount of Juanicipio’s net peso denominated monetary liabilities at March 31, 2024 is 153 million pesos (March 31, 2023: 69.1 million). A 10% appreciation in the peso against the US$ would result in a loss before tax at March 31, 2024 of $1,021 (March 31, 2023: $424) in Juanicipio, of which the Company would record its 44% share being $449 loss from equity investment in Juanicipio (March 31, 2023: $187 loss), while a 10% depreciation in the peso relative to the US$ would result in an equivalent gain.

 

C$ relative to the US$

 

The Company is exposed to gains and losses from fluctuations in the C$ relative to the US$.

 

As general and administrative overheads in Canada are predominantly denominated in C$, an appreciation in the C$ relative to the US$ will increase the Company’s overhead costs as reported in US$. Alternatively, a depreciation in the C$ relative to the US$ will decrease the Company’s overhead costs as reported in US$.

 

An appreciation/depreciation in the C$ against the US$ will result in a gain/loss to the extent that MAG, the parent entity, and the Larder Project holds net monetary assets (liabilities) in C$. The carrying amount of the Company’s net Canadian denominated monetary assets at March 31, 2024 is C$5.7 million (March 31, 2023: C$17.1 million net monetary assets). A 10% appreciation or depreciation in the C$ against the US$ would have a $572 effect on the Company’s income (loss) before tax.

 

(e)Interest rate risk

 

The Company’s interest income earned on cash is exposed to interest rate risk. A decrease in interest rates would result in lower relative interest income and an increase in interest rates would result in higher relative interest income.

 

The Company’s Credit Facility is based on variable interest rate, where it will bear interest on a sliding scale of SOFR or the Lender’s Base Rate on US Dollar commercial loans plus an applicable margin on a sliding scale of between 200 and 400 basis points based on the Company’s leverage ratio. As of March 31, 2024, the Company has not drawn down any funds from its Credit Facility.

 

  25

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

12.FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES

 

The Company’s financial instruments include cash, accounts receivable, investments, and trade and other payables. The carrying values of cash, accounts receivable, and trade and other payables reported in the consolidated statement of financial position approximate their respective fair values due to the relatively short-term nature of these instruments.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value as described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Observable inputs other than quoted prices in Level 1 such as quoted prices for similar assets or 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 Company’s financial assets or liabilities as measured in accordance with the fair value hierarchy described above are:

 

As at March 31, 2024   Level 1    Level 2    Level 3    Total 
    $    $    $    $ 
Investments   6    -    -    6 
                     
As at December 31, 2023   Level 1    Level 2    Level 3    Total 
    $    $    $    $ 
Investments   8    -    -    8 

 

There were no transfers between levels 1, 2 and 3 during the three months ended March 31, 2024 or during the year ended December 31, 2023.

 

 

13.SEGMENTED INFORMATION

 

The Company operates in one operating segment, being the exploration and advancement of mineral projects in North America. The Company’s principal asset, its 44% ownership in the Juanicipio Mine, is located in Mexico, and the Company also has other exploration properties in North America. The Company’s executive and head office is located in Canada.

 

  26

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

14.RELATED PARTY TRANSACTIONS

 

The Company does not have offices or direct personnel in Mexico, but rather is party to a Field Services Agreement, whereby it has contracted administrative and exploration services in Mexico with Minera Cascabel, S.A. de C.V. (“Cascabel”) and IMDEX Inc. (“IMDEX”). Dr. Peter Megaw, the Company’s Chief Exploration Officer, is a principal of both IMDEX and Cascabel, and is remunerated by the Company through fees to IMDEX. In addition to corporate executive responsibilities with MAG, Dr. Megaw is responsible for the planning, execution and assessment of the Company’s exploration programs.

 

During the quarter, the Company incurred expenses with Cascabel and IMDEX as follows:

 

    March 31,    March 31, 
    2024    2023 
    $    $ 
           
Fees related to Dr. Megaw:          
Exploration and marketing services   58    78 
Travel and expenses   11    13 
Other fees to Cascabel and IMDEX:          
Administration for Mexican subsidiaries   14    13 
Field exploration services   45    37 
Share-based payments (Note 7)   95    114 
    223    255 

 

All transactions are incurred in the normal course of business and are negotiated on arm’s length terms between the parties for all services rendered. A portion of the expenditures are incurred on the Company’s behalf and are charged to the Company on a “cost + 10%” basis. The services provided do not include drilling and assay work which are contracted out independently from Cascabel and IMDEX.

 

Any amounts due to related parties arising from the above transactions are unsecured, non-interest bearing and are due upon receipt of invoices.

 

The details of the Company’s significant subsidiary and controlling ownership interests are as follows:

 

Name  Country of  Principal   MAG's effective interest 
   Incorporation  Project   2024(%)   2023(%)
Minera Los Lagartos, S.A. de C.V.  Mexico  Juanicipio (44%)   100%   100%

 

 

Balances and transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.

 

  27

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

As at March 31, 2024, Fresnillo and the Company have advanced $180,550 as shareholder loans (MAG’s 44% share $79,438) to Juanicipio, bearing interest at 1 and 6 months SOFR + 2%. From January 2022, with the mine being brought into commercial production, a portion of the interest incurred by Juanicipio was expensed whereas the remainder, pertaining to the processing facility, continued to be capitalized. From January 2023, with the commencement of commissioning of the processing facility at Juanicipio, all of the interest is expensed. Interest recorded by the Company for the three months ended March 31, 2024 totalling $1,751 (three months ended March 31, 2023: $1,679) has therefore been included in MAG’s income from equity investment in Juanicipio.

 

During the three months ended March 31, 2024 and 2023, compensation of key management personnel (including directors) was as follows:

 

    For the three months ended 
    March 31,    March 31, 
    2024    2023 
    $    $ 
Salaries and other short term employee benefits   463    371 
Share-based compensation (non-cash) (Note 7)   740    654 
    1,203    1,025 

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, and consists of its directors, the Chief Executive Officer, the Chief Financial Officer, the Chief Sustainability Officer, and effective January 1, 2024 onwards, the Chief Development Officer.

 

15.COMMITMENTS AND CONTINGENCIES

 

The following table discloses the contractual obligations of the Company and its subsidiaries as at March 31, 2024 for committed exploration work and committed other obligations.

 

   Total  Less than 1 year  1-3 Years  3-5 Years  More than 5 years
   $  $  $  $  $
Minera Juanicipio (1)   -    -    -    -    - 
Financing and consulting contractual commitments   802    256    546    -    - 
Office lease commitments   2,148    63    385    410    1,290 
Total Obligations and Commitments   2,950    319    931    410    1,290 

 

 (1)According to the operator, Fresnillo, contractual commitments including project development and for continuing operations and purchase orders issued for project capital, sustaining capital, and continuing operations total $6,880 (December 31, 2023: $13,779), with respect to Juanicipio on a 100% basis as at March 31, 2024.

 

The concessions associated with the Larder Project are all in good standing with various underlying obligations or royalties ranging from nil-2% NSRs associated with various mineral claims, and various payments upon a production announcement.

 

  28

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

 

The Company is obligated to a 2.5% NSR royalty on the Cinco de Mayo property.

 

The Company could be subject to various investigations, claims and legal and tax proceedings covering matters that arise in the ordinary course of business activities. Each of these matters would be subject to various uncertainties and it is possible that some matters may be resolved unfavourably to the Company. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company is not aware of any such claims or investigations, and as such has not recorded any related provisions and does not expect such matters to result in a material impact on the results of operations, cash flows and financial position.

 

 

 

 

 

 

 

 

 

 

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