EX-99.1 2 exhibit99-1.htm FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 Exhibit 99.1

Exhibit 99.1

 

SILVERCORP METALS INC.

 

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and six months ended September 30, 2022 and 2021

(Tabular amounts are in thousands of US dollars, unless otherwise stated)

(Unaudited)

 

 

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of (Loss) Income

(Unaudited) (Expressed in thousands of U.S. dollars)

 

      Three Months Ended
September 30,		   Six Months Ended
September 30,		 
   Notes  2022   2021   2022   2021 
Revenue  3(a)(c)  $51,739   $58,435   $115,331   $117,254 
Cost of mine operations                       
Production costs      25,398    22,771    51,542    45,256 
Depreciation and amortization      7,354    6,878    14,912    13,092 
Mineral resource taxes      1,308    1,703    2,848    3,116 
Government fees and other taxes  4   556    710    1,340    1,401 
General and administrative  5   2,762    2,761    5,426    5,273 
       37,378    34,823    76,068    68,138 
Income from mine operations      14,361    23,612    39,263    49,116 
Corporate general and administrative  5   3,476    3,749    7,033    7,587 
Property evaluation and business development      71    244    203    634 
Foreign exchange gain      (4,340)   (2,063)   (5,996)   (1,613)
Loss on equity investments desgined as FVTPL  9   1,596    4,142    4,267    4,864 
Share of loss in associates  10   771    469    1,499    865 
Loss on disposal of plant and equipment  11   51    51    320    136 
Impairment of mineral rights and properties  12   20,211    -    20,211    - 
Other (income) loss      (61)   165    (231)   4 
Income from operations      (7,414)   16,855    11,957    36,639 
Finance income  6   1,096    1,344    2,418    2,697 
Finance costs  6   (73)   (86)   (595)   (174)
Income before income taxes      (6,391)   18,113    13,780    39,162 
Income tax expense  7   3,811    5,355    9,898    10,172 
Net (loss) income     $(10,202)  $12,758   $3,882   $28,990 
                        
Attributable to:                       
Equity holders of the Company     $(1,712)  $9,393   $8,457   $21,605 
Non-controlling interests  17   (8,490)   3,365    (4,575)   7,385 
      $(10,202)  $12,758   $3,882   $28,990 
                        
(Loss) earnings per share attributable to the equity holders of the Company
Basic (loss) earnings per share		     $(0.01)  $0.05   $0.05   $0.12 
Diluted (loss) earnings per share     $(0.01)  $0.05   $0.05   $0.12 
Weighted Average Number of Shares Outstanding - Basic      176,693,226    176,285,864    177,007,901    176,120,380 
Weighted Average Number of Shares Outstanding - Diluted      179,245,850    178,496,716    179,375,066    178,411,042 

 

Approved on behalf of the Board:  
   
(Signed) David Kong  
Director  
   
(Signed) Rui Feng  
Director  

 

See accompanying notes to the condensed consolidated interim financial statements

 

2

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Comprehensive Income (loss)

(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share and per share figures)

 

      Three Months Ended
September 30,		   Six Months Ended
September 30,		 
   Notes  2022   2021   2022   2021 
Net income (loss)     $(10,202)  $12,758   $3,882   $28,990 
Other comprehensive income (loss), net of taxes:                       
Items that may subsequently be reclassified to net income or loss:                       
Currency translation adjustment, net of tax of $nil      (34,664)   (4,864)   (63,510)   2,490 
Share of other comprehensive (loss) income in associate  10   (606)   (423)   (1,004)   3,182 
Items that will not subsequently be reclassified to net income or loss:                       
Change in fair value on equity investments designated as FVTOCI, net of tax of $nil  9   (288)   375    (1,239)   870 
Other comprehensive income (loss), net of taxes     $(35,558)  $(4,912)  $(65,753)  $6,542 
Attributable to:                       
Equity holders of the Company     $(30,700)  $(4,826)  $(56,159)  $5,727 
Non-controlling interests  17   (4,858)   (86)   (9,594)   815 
      $(35,558)  $(4,912)  $(65,753)  $6,542 
Total comprehensive income (income)     $(45,760)  $7,846   $(61,871)  $35,532 
Attributable to:                       
Equity holders of the Company     $(32,412)  $4,567   $(47,702)  $27,332 
Non-controlling interests      (13,348)   3,279    (14,169)   8,200 
      $(45,760)  $7,846   $(61,871)  $35,532 

 

See accompanying notes to the condensed consolidated interim financial statements

 

3

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited) (Expressed in thousands of U.S. dollars)

 

      As at
September 30,		   As at
March 31,		 
   Notes  2022   2022 
ASSETS           
Current Assets           
Cash and cash equivalents  20  $166,370   $113,302 
Short-term investments  8   34,598    99,623 
Trade and other receivables      1,346    3,615 
Current portion of lease receivable  13   63    182 
Inventories      7,767    9,124 
Due from related parties  18   71    66 
Income tax receivable      726    928 
Prepaids and deposits      5,826    5,468 
       216,767    232,308 
Non-current Assets             
Long-term prepaids and deposits      1,800    974 
Reclamation deposits      7,825    8,876 
Other investments  9   12,318    17,768 
Investment in associates  10   50,170    56,841 
Plant and equipment  11   73,888    79,418 
Mineral rights and properties  12   285,188    326,448 
Deferred income tax assets      317    905 
TOTAL ASSETS     $648,273   $723,538 
LIABILITIES AND EQUITY             
Current Liabilities             
Accounts payable and accrued liabilities     $39,075   $39,667 
Current portion of lease obligation  13   397    649 
Deposits received      6,216    5,445 
Income tax payable      143    277 
       45,831    46,038 
Non-current Liabilities             
Long-term portion of lease obligation  13   437    614 
Deferred income tax liabilities      45,285    48,033 
Environmental rehabilitation  14   7,735    8,739 
Total Liabilities      99,288    103,424 
Equity             
Share capital      254,460    255,444 
Equity reserves      (11,711)   43,250 
Retained earnings      219,943    213,702 
Total equity attributable to the equity holders of the Company      462,692    512,396 
Non-controlling interests  17   86,293    107,718 
Total Equity      548,985    620,114 
              
TOTAL LIABILITIES AND EQUITY     $648,273   $723,538 

 

See accompanying notes to the condensed consolidated interim financial statements

 

4

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited) (Expressed in thousands of U.S. dollars)

 

      Three Months Ended
September 30,		   Six Months Ended
September 30,		 
   Notes  2022   2021   2022   2021 
Cash provided by                   
Operating activities                   
Net (loss) income     $(10,202)  $12,758   $3,882   $28,990 
Add (deduct) items not affecting cash:                       
Finance costs  6   73    86    595    174 
Income tax expense  7   3,811    5,355    9,898    10,172 
Depreciation, amortization and depletion      7,797    7,361    15,822    14,060 
Loss on equity investments desgined as FVTPL  9   1,596    4,142    4,267    4,864 
Share of loss in associates  10   771    469    1,499    865 
Impairment of mineral rights and properties  12   20,211    -    20,211    - 
Loss on disposal of plant and equipment  11   51    51    320    136 
Share-based compensation  15(b)   1,120    1,773    2,292    3,877 
Reclamation expenditures      (7)   (39)   (15)   (126)
Income taxes paid      (4,348)   (273)   (6,645)   (4,002)
Interest paid  13   (12)   (19)   (26)   (39)
Changes in non-cash operating working capital  20   (6,797)   (810)   2,140    8,335 
Net cash provided by operating activities      14,064    30,854    54,240    67,306 
                        
Investing activities                       
Plant and equipment                       
Additions      (4,539)   (3,380)   (6,706)   (4,604)
Proceeds on disposals  11   -    4    -    38 
Mineral rights and properties                       
Capital expenditures      (6,852)   (10,746)   (22,770)   (20,805)
Acquisition  3   -    (3,093)   -    (3,093)
Reclamation deposits                       
Paid      (14)   (16)   (30)   (59)
Other investments                       
Acquisition  9   -    (4,306)   (1,770)   (6,917)
Proceeds on disposals  9   -    205    504    974 
Investment in associates  10   (187)   -    (757)   (4,960)
Short-term investment                       
Purchase      (18,277)   (52,343)   (80,284)   (74,229)
Redemption      47,067    14,797    138,011    75,207 
Principal received on lease receivable  13   54    54    109    108 
Net cash provided by (used in) investing activities      17,252    (58,824)   26,307    (38,340)
                        
Financing activities                       
Principal payments on lease obligation  13   (169)   (155)   (337)   (311)
Cash dividends distributed  15(c)   -    -    (2,216)   (2,202)
Non-controlling interests                       
Distribution  17   (3,629)   -    (7,256)   (3,896)
Proceeds from issuance of common shares      -    418    -    1,172 
Common shares repurchased as part of normal course issuer bid      (1,197)   -    (2,078)   - 
Net cash used in (provided by) financing activities      (4,995)   263    (11,887)   (5,237)
Effect of exchange rate changes on cash and cash equivalents      (10,212)   (1,822)   (15,592)   (535)
                        
Increase (decrease) in cash and cash equivalents      16,109    (29,529)   53,068    23,194 
Cash and cash equivalents, beginning of the period      150,261    171,458    113,302    118,735 
Cash and cash equivalents, end of the period     $166,370   $141,929   $166,370   $141,929 
Supplementary cash flow information  20                    

 

See accompanying notes to the condensed consolidated interim financial statements

 

5

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited) (Expressed in thousands of U.S. dollars, except numbers for share figures)

 

      Share capital   Equity reserves       Total equity attributable to the         
   Notes  Number
of shares		   Amount   Share option reserve   Reserves   Accumulated other comprehensive loss   Retained earnings   equity
holders
of the
Company		   Non-controlling interests   Total equity 
Balance, April 1, 2021      175,742,544   $250,199   $16,610   $25,409   $(12,550)  $187,906   $467,574   $98,154   $565,728 
Options exercised      443,333    1,568    (396)   -    -    -    1,172    -    1,172 
Restricted share units vested      245,714    1,141    (1,141)   -    -    -    -    -    - 
Share-based compensation      -    -    3,877    -    -    -    3,877    -    3,877 
Dividends declared      -    -    -    -    -    (2,202)   (2,202)   -    (2,202)
Distribution to non-controlling interests      -    -    -    -    -    -    -    (3,896)   (3,896)
Contribution to reserves      -    -    -    425    -    (425)   -    -    - 
Comprehensive income      -    -    -    -    5,727    21,605    27,332    8,200    35,532 
Balance, September 30, 2021      176,431,591   $252,908   $18,950   $25,834   $(6,823)  $206,884   $497,753   $102,458   $600,211 
Options exercised      353,750    960    (224)   -    -    -    736    -    736 
Restricted share units vested      320,458    1,576    (1,576)   -    -    -    -    -    - 
Share-based compensation      -    -    2,219    -    -    -    2,219    -    2,219 
Dividends declared      -    -    -    -    -    (2,211)   (2,211)   -    (2,211)
Distribution to non-controlling interests      -    -    -    -    -    -    -    (1,200)   (1,200) 
Comprehensive income      -    -    -    -    4,870    9,029    13,899    6,460    20,359 
Balance, March 31, 2022      177,105,799   $255,444   $19,369   $25,834   $(1,953)  $213,702   $512,396   $107,718   $620,114 
Restricted share units vested      214,375    1,094    (1,094)   -    -    -    -    -    - 
Share-based compensation  15(b)   -    -    2,292    -    -    -    2,292    -    2,292 
Dividends declared  15(c)   -    -    -    -    -    (2,216)   (2,216)   -    (2,216)
Common shares repurchased as part of normal course issuer bid  15(d)   (838,237)   (2,078)   -    -    -         (2,078)        (2,078)
Distribution to non-controlling interests  17   -    -    -    -    -    -    -    (7,256)   (7,256)
Comprehensive income (loss)      -    -    -    -    (56,159)   8,457    (47,702)   (14,169)   (61,871)
Balance, September 30, 2022      176,481,937   $254,460   $20,567   $25,834   $(58,112)  $219,943   $462,692   $86,293   $548,985 

 

See accompanying notes to the condensed consolidated interim financial statements

 

6

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

1.CORPORATE INFORMATION

 

Silvercorp Metals Inc., along with its subsidiary companies (collectively the “Company”), is engaged in the acquisition, exploration, development, and mining of mineral properties. The Company’s producing mines are located in China, and current exploration and development projects are located in China and Mexico.

 

The Company is a publicly listed company incorporated in the Province of British Columbia, Canada, with limited liability under the legislation of the Province of British Columbia. The Company’s shares are traded on the Toronto Stock Exchange and NYSE American.

 

The head office, registered address and records office of the Company are located at 1066 West Hastings Street, Suite 1750, Vancouver, British Columbia, Canada, V6E 3X1.

 

Operating results for the three and six months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending March 31, 2023.

 

2.SIGNIFICANT ACCOUNTING POLICIES

 

(a)Statement of Compliance

 

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting (“IAS 34”) of the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2022. These condensed consolidated interim financial statements follow the same significant accounting policies set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2022.

 

These condensed consolidated interim financial statements were authorized for issue in accordance with a resolution of the Board of Directors dated November 2, 2022.

 

(b)Basis of Consolidation

 

These condensed consolidated interim financial statements include the accounts of the Company and its wholly or partially owned subsidiaries.

 

Subsidiaries are consolidated from the date on which the Company obtains control up to the date of the disposition of control. Control is achieved when the Company has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to use its power to affect its returns.

 

7

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

For non-wholly owned subsidiaries over which the Company has control, the net assets attributable to outside equity shareholders are presented as “non-controlling interests” in the equity section of the consolidated balance sheets. Net income for the period that is attributable to the non-controlling interests is calculated based on the ownership of the non-controlling interest shareholders in the subsidiary. Adjustments to recognize the non-controlling interests’ share of changes to the subsidiary’s equity are made even if this results in the non-controlling interests having a deficit balance. Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling interests is adjusted to reflect the change in the non-controlling interests’ relative interests in the subsidiary and the difference between the adjustment to the carrying amount of non-controlling interest and the Company’s share of proceeds received and/or consideration paid is recognized directly in equity and attributed to equity holders of the Company.

 

Balances, transactions, revenues and expenses between the Company and its subsidiaries are eliminated on consolidation.

 

Details of the Company’s significant subsidiaries which are consolidated are as follows:

 

      Proportion of ownership interest held
      Country of  September 30,   March 31,    
Name of subsidiaries  Principal activity  incorporation  2022   2022   Mineral properties
Silvercorp Metals China Inc.  Holding company  Canada   100%   100%   
Silvercorp Metals (China) Inc.  Holding company  China   100%   100%   
0875786 B.C. LTD.  Holding company  Canada   100%   100%   
Fortune Mining Limited  Holding company  BVI (i)   100%   100%   
Fortune Copper Limited  Holding company  BVI   100%   100%   
Fortune Gold Mining Limited  Holding company  BVI   100%   100%   
Victor Resources Ltd.  Holding company  BVI   100%   100%   
Yangtze Mining Ltd.  Holding company  BVI   100%   100%   
Victor Mining Ltd.  Holding company  BVI   100%   100%   
Yangtze Mining (H.K.) Ltd.  Holding company  Hong Kong   100%   100%   
Fortune Gold Mining (H.K.) Limited  Holding company  Hong Kong   100%   100%   
Wonder Success Limited  Holding company  Hong Kong   100%   100%   
New Infini Silver Inc. (“New Infini”)  Holding company  Canada   46.1%   46.1%   
Infini Metals Inc.  Holding company  BVI   46.1%   46.1%   
Infini Resources (Asia) Co. Ltd.  Holding company  Hong Kong   46.1%   46.1%   
Golden Land (Asia) Ltd.  Holding company  Hong Kong   46.1%   46.1%   
Henan Huawei Mining Co. Ltd. (“Henan Huawei”)  Mining  China   80%   80%  Ying Mining District
Henan Found Mining Co. Ltd. (“Henan Found”)  Mining  China   77.5%   77.5%   
Xinshao Yunxiang Mining Co., Ltd. (“Yunxiang”)  Mining  China   70%   70%  BYP
Guangdong Found Mining Co. Ltd. (“Guangdong Found”)  Mining  China   99%   99%  GC
Infini Resources S.A. de C.V.  Mining  Mexico   46.1%   46.1%  La Yesca
Shanxi Xinbaoyuan Mining Co., Ltd. (“Xinbaoyuan”)  Mining  China   77.5%   77.5%  Kuanping
(i) British Virgin Islands (“BVI”)                   

 

(c)Significant Accounting Judgments and Estimates

 

These condensed consolidated interim financial statements follow the same significant accounting judgments and estimates set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2022.

 

8

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

3.SEGMENTED INFORMATION

 

The Company’s reportable operating segments are components of the Company where separate financial information is available that is evaluated regularly by the Company’s Chief Executive Officer who is the Chief Operating Decision Maker (“CODM”). The operational segments are determined based on the Company’s management and internal reporting structure. Operating segments are summarized as follows:

 

Operational Segments   Subsidiaries Included in the Segment   Properties Included in the Segment
Mining        
Henan Luoning   Henan Found and Henan Huawei   Ying Mining District
Hunan   Yunxiang   BYP
Guangdong   Guangdong Found   GC
Other   Infini Resources S.A. de C.V.   La Yesca, Kuanping
Administrative        
Vancouver   Silvercorp Metals Inc. and holding companies    
Beijing   Silvercorp Metals (China) Inc.    

 

(a)Segmented information for operating results is as follows:

 

Three months ended September 30, 2021 
   Mining   Administrative     
   Henan                         
Statement of operations:  Luoning   Hunan(1)   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $43,959   $-   $7,780   $-   $-   $-   $51,739 
Costs of mine operations   (31,033)   (102)   (6,239)   (4)   -    -    (37,378)
Income from mine operations   12,926    (102)   1,541    (4)   -    -    14,361 
                                    
Operating (expenses) income   (24)   (106)   15    (2)   (483)   (964)   (1,564)
Impairment of mineral rights and properties   -    -    -    (20,211)   -    -    (20,211)
Finance items   614    (8)   140    -    65    212    1,023 
Income tax expenses   (2,523)   171    (211)   -    -    (1,248)   (3,811)
Net income (loss)  $10,993   $(45)  $1,485   $(20,217)  $(418)  $(2,000)  $(10,202)
                                    
Attributed to:                                   
Equity holders of the Company   8,613    (25)   1,471    (9,660)   (418)   (1,693)   (1,712)
Non-controlling interests   2,380    (20)   14    (10,557)   -    (307)   (8,490)
Net income (loss)  $10,993   $(45)  $1,485   $(20,217)  $(418)  $(2,000)  $(10,202)
(1)Hunan’s BYP project was placed on care and maintenance starting August 2014.

 

Three months ended September 30, 2021 
   Mining   Administrative     
   Henan                         
Statement of operations:  Luoning   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $47,102   $-   $11,333   $-   $-   $-   $58,435 
Costs of mine operations   (27,800)   (131)   (6,879)   (13)   -    -    (34,823)
Income from mine operations   19,302    (131)   4,454    (13)   -    -    23,612 
                                    
Operating expenses   (291)   8    59    92    (508)   (6,117)   (6,757)
Finance items   667    (8)   106    -    54    439    1,258 
Income tax expenses   (4,411)   (87)   (875)   -    -    18    (5,355)
Net income (loss)  $15,267   $(218)  $3,744   $79   $(454)  $(5,660)  $12,758 
                                    
Attributed to:                                   
Equity holders of the Company   11,955    (147)   3,707    35    (454)   (5,703)   9,393 
Non-controlling interests   3,312    (71)   37    44    -    43    3,365 
Net income (loss)  $15,267   $(218)  $3,744   $79   $(454)  $(5,660)  $12,758 

 

9

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

 

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

Six months ended September 30, 2022 
   Mining   Administrative     
   Henan                         
   Luoning   Hunan(1)   Guangdong   Other   Beijing   Vancouver   Total 
Statement of income:                            
Revenue  $96,921   $-   $18,410   $-   $-   $-   $115,331 
Costs of mine operations   (62,581)   (220)   (13,251)   (16)   -    -    (76,068)
Income from mine operations   34,340    (220)   5,159    (16)   -    -    39,263 
                                    
Operating (expenses) income   16   (204)   (145)   (3)   (904)   (5,855)   (7,095)
Impairment of mineral rights and properties   -    -    -    (20,211)   -    -    (20,211)
Finance items, net   1,561    (15)   271    -    150    (144)   1,823 
Income tax expenses   (6,741)   62    (664)   -    -    (2,555)   (9,898)
Net income (loss)  $29,176   $(377)  $4,621   $(20,230)  $(754)  $(8,554,)  $3,882
                                    
Attributable to:                                   
Equity holders of the Company   22,793    (250)   4,576    (9,668)   (754)   (8,240)   8,457
Non-controlling interests   6,383    (127)   45    (10,562)   -    (314)   (4,575)
Net income (loss)  $29,176   $(377)  $4,621   $(20,230)  $(754)  $(8,554) $3,882
(1)Hunan’s BYP project was placed on care and maintenance in August 2014.

 

Six months ended September 30, 2021 
   Mining   Administrative     
   Henan                         
   Luoning   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
Statement of income:                            
Revenue  $94,520   $-   $22,734   $-   $-   $-   $117,254 
Costs of mine operations   (53,975)   (261)   (13,889)   (13)   -    -    (68,138)
Income from mine operations   40,545    (261)   8,845    (13)   -    -   49,116 
                                    
Operating expenses   (223)   60    45    36    (1,060)   (11,335)   (12,477)
Finance items, net   1,310    (17)   165    -    96    969    2,523 
Income tax expenses   (7,566)   (102)   (1,065)   -    -    (1,439)   (10,172)
Net income (loss)  $34,066   $(320)  $7,990   $23   $(964)  $(11,805)  $28,990 
                                    
Attributable to:                                   
Equity holders of the Company   26,639    (213)   7,911    10    (964)   (11,778)   21,605 
Non-controlling interests   7,427    (107)   79    13    -    (27)   7,385 
Net income (loss)  $34,066   $(320)  $7,990   $23   $(964)  $(11,805)  $28,990 

 

10

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

 

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

(b)Segmented information for assets and liabilities is as follows:

 

September 30, 2022 
   Mining   Administrative     
   Henan                        
Statement of financial position items:  Luoning   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
                             
Current assets  $114,234   $720   $16,730   $600   $7,746   $76,737   $216,767 
Plant and equipment   55,506    3,142    13,477    156    694    913    73,888 
Mineral rights and properties   236,143    6,736    29,699    12,610    -    -    285,188 
Investment in associates   -    -    -    -    -    50,170    50,170 
Other investments   63    -    -    -    -    12,255    12,318 
Reclamation deposits   3,462    -    4,356    -    -    7    7,825 
Long-term prepaids and deposits   1,286    93    421    -    -    -    1,800 
Deferred income tax assets   -    -    317    -    -    -    317 
Total assets  $410,694   $10,691   $65,000   $13,366   $8,440   $140,082   $648,273 
Current liabilities  $37,537   $448   $4,532   $471   $218   $2,625   $45,831 
Long-term portion of lease obligation   -    -    -    -    -    437    437 
Deferred income tax liabilities   44,290    995    -    -    -    -    45,285 
Environmental rehabilitation   5,324    943    1,468    -    -    -    7,735 
Total liabilities  $87,151   $2,386   $6,000   $471   $218   $3,062   $99,288 

 

March 31, 2022 
   Mining   Administrative     
   Henan                         
Statement of financial position items:  Luoning   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
                             
Current assets  $141,376   $870   $14,919   $1,566   $8,570   $65,007   $232,308 
Plant and equipment   58,189    3,708    15,282    163    864    1,212    79,418 
Mineral rights and properties   254,071    7,571    32,091    32,715    -    -    326,448 
Investment in associates   -    -    -    -    -    56,841    56,841 
Other investments   72    -    -    -    -    17,696    17,768 
Reclamation deposits   3,996    -    4,872    -    -    8    8,876 
Long-term prepaids and deposits   588    104    282    -    -    -    974 
Deferred income tax assets   -    -    905    -    -    -    905 
Total assets  $458,292   $12,253   $68,351   $34,444   $9,434   $140,764   $723,538 
Current liabilities  $37,161   $545   $5,155   $2   $295   $2,880   $46,038 
Long-term portion of lease obligation   -    -    -    -    -    614    614 
Deferred income tax liabilities   46,849    1,184    -    -    -    -    48,033 
Environmental rehabilitation   6,053    1,044    1,642    -    -    -    8,739 
Total liabilities  $90,063   $2,773   $6,797   $2   $295   $3,494   $103,424 

 

11

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

 

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

(c)Sales by metal

 

The sales generated for the three and six months ended September 30, 2022 and 2021 were all earned in China and were comprised of:

 

   Three months ended September, 2022 
   Henan Luoning   Guangdong   Total 
Silver (Ag)  $26,064   $1,651   $27,715 
Gold (Au)   1,579    -    1,579 
Lead (Pb)   13,294    1,406    14,700 
Zinc (Zn)   2,128    4,290    6,418 
Other   894    433    1,327 
   $43,959   $7,780   $51,739 

 

   Three months ended September, 2021 
   Henan Luoning   Guangdong   Total 
Silver (Ag)  $30,306   $2,499   $32,805 
Gold (Au)   1,186    -    1,186 
Lead (Pb)   12,859    2,551    15,410 
Zinc (Zn)   1,731    6,090    7,821 
Other   1,020    193    1,213 
   $47,102   $11,333   $58,435 

 

   Six months ended September 30, 2022 
   Henan Luoning   Guangdong   Total 
Silver (Ag)  $58,390   $3,774   $62,164 
Gold (Au)   3,332    -    3,332 
Lead (Pb)   28,329    3,486    31,815 
Zinc (Zn)   4,667    10,253    14,920 
Other   2,203    897    3,100 
   $96,921   $18,410   $115,331 

 

   Six months ended September 30, 2021 
   Henan Luoning   Guangdong   Total 
Silver (Ag)   61,230   $5,569   $66,799 
Gold (Au)   2,694    -    2,694 
Lead (Pb)   25,046    4,764    29,810 
Zinc (Zn)   3,345    11,844    15,189 
Other   2,205    557    2,762 
   $94,520   $22,734   $117,254 

 

12

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

 

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

(d)Major customers

 

For the six months ended September 30, 2022, three major customers (six months ended September 30, 2021 - four major customers) each accounted for 23%, 21%, and 16% (six months ended September 30, 2021 – 20%, 17%, 17%, and 17%), and collectively 60% (six months ended September 30, 2021 – 71%) of the total sales of the Company.

 

4. GOVERNMENT FEES AND OTHER TAXES

 

Government fees and other taxes consist of:

 

   Three months ended
September 30,		   Six months ended
September 30,		 
   2022   2021   2022   2021 
Government fees  $25   $17   $36   $28 
Other taxes   531    693    1,304    1,373 
   $556   $710   $1,340   $1,401 

 

Government fees include environmental protection fees paid to the state and local Chinese government. Other taxes were composed of surtax on value-added tax, land usage levy, stamp duty and other miscellaneous levies, duties and taxes imposed by the state and local Chinese government.

 

5. GENERAL AND ADMINISTRATIVE

 

General and administrative expenses consist of:

 

   Three months ended September 30,2022   Three months ended September 30, 2021 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $142   $301   $443   $144   $343   $487 
Office and administrative expenses   460    767    1,227    379    707    1,086 
Professional fees   55    111    166    192    113    305 
Salaries and benefits   1,699    1,583    3,282    1,366    1,598    2,964 
Share-based compensation   1,120    -    1,120    1,668    -    1,668 
   $3,476   $2,762   $6,238   $3,749   $2,761   $6,510 

 

   Six months ended September 30, 2022   Six months ended September 30, 2021 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $291   $618   $909   $290   $678   $968 
Office and administrative expenses   815    1,386    2,201    947    1,392    2,339 
Professional fees   363    233    596    337    219    556 
Salaries and benefits   3,272    3,189    6,461    2,354    2,984    5,338 
Share-based compensation   2,292    -    2,292    3,659    -    3,659 
   $7,033   $5,426   $12,459   $7,587   $5,273   $12,860 

 

13

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

6.FINANCE ITEMS

 

Finance items consist of:

 

   Three months ended
September 30,		   Six months ended
September 30,		 
Finance income  2022   2021   2022   2021 
Interest income  $1,096   $1,344   $2,418   $2,537 
Dividend income   -    -    -    160 
   $1,096   $1,344   $2,418   $2,697 

 

   Three months ended
September 30,		   Six months ended
September 30,		 
Finance costs  2022   2021   2022   2021 
Interest on lease obligation  $12    19   $26   $39 
Impairment charges for expected credit loss against bond investments (Note 8)   -    -    445    - 
Unwinding of discount of environmental rehabilitation provision (Note 14)   61    67    124    135 
   $73   $86   $595   $174 

 

7.INCOME TAX

 

The significant components of income tax expense are as follows:

 

   Three months ended
September 30,		   Six months ended
September 30,		 
Income tax expense  2022   2021   2022   2021 
Current  $2,422   $3,181   $6,411   $7,144 
Deferred   1,389    2,174    3,487    3,028 
   $3,811   $5,355   $9,898   $10,172 

 

8.SHORT-TERM INVESTMENTS

 

As at September 30, 2022, short-term investments consist of the following:

 

   Amount   Interest rates  Maturity
Bonds  $7,484   5.50% - 13.00%    April 9, 2022 - January 16, 2025
Money market instruments   27,114       
   $34,598       

 

During the six months ended September 30, 2022, the Company recorded impairment charges of $0.4 million against the bond investment issued by a Chinese real estate developing companies as the Company observed financial difficulty of the bond issuer. The impairment charge was included in finance costs on the condensed consolidated interim statement of income.

 

As at September 30, 2022, the carrying value and face value of the bond investments that impaired was $2.1 million and $12.7 million, respectively.

 

As at March 31, 2022, short-term investments consist of the following:

 

   Amount   Interest rates  Maturity
Bonds  $9,168   5.50% - 13.00%    April 9, 2022 - January 16, 2025
Money market instruments   90,455       
   $99,623       

 

As at March 31, 2022, the carrying value and face value of the bond investments that impaired was $1.7 million and $11.2 million, respectively.

 

14

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

9.OTHER INVESTMENTS

 

   September 30,
2022		   March 31,
2022		 
Equity investments designated as FVTOCI        
Public companies  $1,006   $2,383 
Private companies   63    71 
    1,069    2,454 
Equity investments designated as FVTPL          
Public companies   7,802    11,533 
Private companies   3,447    3,781 
    11,249    15,314 
Total  $12,318   $17,768 

 

Investments in publicly traded companies represent equity interests of other publicly-trading mining companies that the Company has acquired through the open market or through private placements. Investment in equity instruments that are held for trading are classified as FVTPL. For other investment in equity instruments, the Company can make an irrevocable election, on an instrument-by-instrument basis, to designate them as FVTOCI.

 

The continuity of such investments is as follows:

 

   Fair Value   Accumulated fair value change included in OCI   Accumulated fair value change included in P&L 
April 1, 2021  $15,733   $(22,810)  $7,188 
Loss on equity investments designated as FVTOCI   (1,526)   (1,526)   - 
Loss equity investments designated as FVTPL   (3,485)   -    (3,485)
Acquisition   8,235    -      
Disposal   (1,362)   -      
Impact of foreign currency translation   173    -      
March 31, 2022  $17,768   $(24,336)  $3,703 
Loss on equity investments designated as FVTOCI   (1,239)   (1,239)   - 
Loss equity investments designated as FVTPL   (4,267)   -    (4,267)
Acquisition   1,770    -    - 
Disposal   (504)   -    - 
Impact of foreign currency translation   (1,210)   -    - 
September 30, 2022  $12,318   $(25,575)  $(564)

 

15

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

10.INVESTMENT IN ASSOCIATES

 

(a)Investment in New Pacific Metals Corp.

 

New Pacific Metals Corp. (“NUAG”) is a Canadian public company listed on the Toronto Stock Exchange (symbol: NUAG) and NYSE American (symbol: NEWP). NUAG is a related party of the Company by way of two common directors and one common officer, and the Company accounts for its investment in NUAG using the equity method as it is able to exercise significant influence over the financial and operating policies of NUAG.

 

During the six months ended September 30, 2022, the Company acquired 260,200 common shares of NUAG from the public market (six month ended September 30, 2021– nil) for a total cost of $0.8 million (six months ended September 30, 2021, $nil).

 

As at September 30, 2022, the Company owned 44,302,416 common shares of NUAG (March 31, 2022 – 44,042,216), representing an ownership interest of 28.3% (March 31, 2022 – 28.2%).

 

The summary of the investment in NUAG common shares and its market value as at the respective reporting dates are as follows:

 

   Number of shares   Amount   Value of NUAG’s common shares per quoted market price 
Balance, April 1, 2021   43,917,216   $50,399   $181,257 
Purchase from open market   125,000    352      
Share of net loss        (1,715)     
Share of other comprehensive income        95      
Foreign exchange impact        306      
Balance, March 31, 2022   44,042,216   $49,437   $140,275 
Purchase from open market   260,200    757      
Share of net loss        (1,250)     
Share of other comprehensive loss        (1,025)     
Foreign exchange impact        (4,284)     
Balance, September 30, 2022   44,302,416   $43,635   $93,408 

 

(b)Investment in Whitehorse Gold Corp.

 

Whitehorse Gold Corp. (“WHG”) is a Canadian public company listed on the TSX Venture Exchange (symbol: WHG). WHG is a related party of the Company by way of one common director, and the Company accounts for its investment in WHG using the equity method as it is able to exercise significant influence over the financial and operating policies of WHG.

 

On May 14, 2021, the Company participated in a brokered private placement of WHG and purchased 4,000,000 units at a cost of $5.0 million. Each unit was comprised of one WHG common share and one common share purchase warrant at exercise price of CAD$2 per share. The common share purchase warrant expires on May 14, 2026.

 

16

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

As at September 30, 2022, the Company owned 15,514,285 common shares of WHG (March 31, 2022 – 15,514,285), representing an ownership interest of 28.9% (March 31, 2022 – 29.3%).

 

The summary of the investment in WHG common shares and its market value as at the respective reporting dates are as follows:

 

   Number of shares   Amount   Value of WHG’s common shares per quoted market price 
Balance, April 1, 2021   11,514,285   $3,058   $15,108 
Participation in private placement   4,000,000    4,960      
Share of net loss        (473)     
Foreign exchange impact        (141)     
Balance, March 31, 2022   15,514,285   $7,404   $6,208 
Share of net loss        (249)     
Share of other comprehensive income        21      
Foreign exchange impact        (641)     
Balance, September 30, 2022   15,514,285   $6,535   $5,320 

 

11.PLANT AND EQUIPMENT

 

Plant and equipment consist of:

 

Cost  Land use rights and building   Office equipment   Machinery   Motor vehicles   Construction in progress   Total 
Balance as at April 1, 2021  $110,151   $9,660   $31,074   $7,537   $1,342   $159,764 
Additions   1,613    967    2,575    763    3,647    9,565 
Disposals   (293)   (68)   (539)   (245)   -    (1,145)
Reclassification of asset groups   2,100    154    191    -    (2,445)   - 
Impact of foreign currency translation   3,676    296    1,078    258    59    5,367 
Balance as at March 31, 2022  $117,247   $11,009   $34,379   $8,313   $2,603   $173,551 
Additions   221    738    1,099    504    5,238    7,800 
Disposals   (372)   (53)   (441)   (233)   -    (1,099)
Reclassification of asset groups   2,491    -    12    -    (2,503)   - 
Impact of foreign currency translation   (13,038)   (1,196)   (3,859)   (925)   (441)   (19,459)
Ending balance as at September 30, 2022  $106,549   $10,498   $31,190   $7,659   $4,897   $160,793 
                               
Impairment, accumulated depreciation and amortization                              
Balance as at April 1, 2021  $(51,570)  $(6,246)  $(21,171)  $(5,048)  $-   $(84,035)
Disposals   158    64    419    220    -    861 
Depreciation and amortization   (4,422)   (867)   (2,172)   (649)   -    (8,110)
Impact of foreign currency translation   (1,750)   (183)   (741)   (175)   -    (2,849)
Balance as at March 31, 2022  $(57,584)  $(7,232)  $(23,665)  $(5,652)  $-   $(94,133)
Disposals   146    47    376    210    -    779 
Depreciation and amortization   (2,205)   (476)   (1,068)   (327)   -    (4,076)
Impact of foreign currency translation   6,442    770    2,682    631    -    10,525 
Ending balance as at September 30, 2022  $(53,201)  $(6,891)  $(21,675)  $(5,138)  $-   $(86,905)
                               
Carrying amounts                              
Balance as at March 31, 2022  $59,663   $3,777   $10,714   $2,661   $2,603   $79,418 
Ending balance as at September 30, 2022  $53,348   $3,607   $9,515   $2,521   $4,897   $73,888 

 

17

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

Carrying amounts as at September 30, 2022  Ying Mining District   BYP   GC   Other   Total 
Land use rights and building  $39,361   $2,504   $10,145   $1,338   $53,348 
Office equipment   2,942    13    440    212    3,607 
Machinery   7,062    118    2,279    56    9,515 
Motor vehicles   2,001    17    346    157    2,521 
Construction in progress   4,140    490    267    -    4,897 
Total  $55,506   $3,142   $13,477   $1,763   $73,888 

 

Carrying amounts as at March 31, 2022  Ying Mining District   BYP   GC   Other   Total 
Land use rights and building  $42,953   $2,965   $12,027   $1,718   $59,663 
Office equipment   2,973    16    516    272    3,777 
Machinery   8,225    155    2,276    58    10,714 
Motor vehicles   2,127    20    323    191    2,661 
Construction in progress   1,911    552    140    -    2,603 
Total  $58,189   $3,708   $15,282   $2,239   $79,418 

 

12.MINERAL RIGHTS AND PROPERTIES

 

Mineral rights and properties consist of:

 

   Producing and development properties   Exploration and evaluation properties     
Cost  Ying Mining District   BYP   GC   RZY   Kuanping   La Yesca   Total 
Balance as at April 1, 2021  $348,000   $64,609   $115,610   $185   $-   $16,747   $545,151 
Capitalized expenditures   37,307    -    4,507    -    24    2,588    44,426 
Acquisition (Note 3)   -    -    -    -    13,135    -    13,135 
Environmental rehabilitation   (68)   (18)   898    -    -    -    812 
Derecognition   -    -    -    (185)   -    -    (185)
Foreign currency translation impact   12,096    501    3,891    -    221    -    16,709 
Balance as at March 31, 2022  $397,335   $65,092   $124,906   $-   $13,380   $19,335   $620,048 
Capitalized expenditures   20,958    -    2,493    -    752    879    25,082 
Foreign currency translation impact   (45,068)   (1,710)   (13,911)   -    (1,522)   -    (62,211)
Ending balance as at September 30, 2022  $373,225   $63,382   $113,488   $-   $12,610   $20,214   $582,919 
                                    
Impairment and accumulated depletion                                   
Balance as at April 1, 2021  $(122,977)  $(57,264)  $(87,296)  $(185)  $-   $-   $(267,722)
Depletion   (15,974)   -    (2,595)   -    -    -    (18,569)
Derecognition   -    -    -    185    -    -    185 
Foreign currency translation impact   (4,313)   (257)   (2,924)   -    -    -    (7,494)
Balance as at March 31, 2022  $(143,264)  $(57,521)  $(92,815)  $-   $-   $-   $(293,600)
Impairment   -    -    -    -         (20,214)   (20,214)
Depletion   (10,221)   -    (1,273)   -    -    -    (11,494)
Foreign currency translation impact   16,403    875    10,299    -    -    -    27,577 
Ending balance as at September 30, 2022  $(137,082)  $(56,646)  $(83,789)  $-   $-   $(20,214)  $(297,731)
                                    
Carrying amounts                                   
Balance as at March 31, 2022  $254,071   $7,571   $32,091   $-   $13,380   $19,335   $326,448 
Ending balance as at September 30, 2022  $236,143   $6,736   $29,699   $-   $12,610   $-   $285,188 

 

During the six months ended September 30, 2022, the Company completed the review and evaluation on the results of the drilling program completed in Fiscal 2022. The Company does not plan to undertake further significant work at the La Yesca Project in the near future. As a result, the decision was taken to impair fully the value of the La Yesca Project and recognized an impairment charge of $20.2 million.

 

18

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

13.LEASES

 

The following table summarizes changes in the Company’s lease receivable and lease obligation related to the Company’s office lease and sublease.

 

   Lease Receivable   Lease Obligation 
Balance, April 1, 2021  $396   $1,741 
Addition   -    149 
Interest accrual   15    72 
Interest received or paid   (15)   (72)
Principal repayment   (217)   (637)
Foreign exchange impact   3    10 
Balance, March 31, 2022  $182   $1,263 
Interest accrual   3    26 
Interest received or paid   (3)   (26)
Principal repayment   (109)   (337)
Foreign exchange impact   (10)   (92)
Balance, September 30, 2022  $63   $834 
Less: current portion   (63)   (397)
Non-current portion  $-   $437 

 

The following table presents a reconciliation of the Company’s undiscounted cash flows to their present value for its lease receivable and lease obligation as at September 30, 2022:

 

   Lease Receivable   Lease Obligation 
Within 1 year  $64   $415 
Between 2 to 5 years   -    468 
Total undiscounted amount   64    883 
Less future interest   (1)   (49)
Total discounted amount  $63   $834 
Less: current portion   (63)   (397)
Non-current portion  $-   $437 

 

The lease receivable and lease obligation were discounted using an estimated incremental borrowing rate of 5%.

 

19

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

14.ENVIRONMENTAL REHABILITATION OBLIGATION

 

The following table presents the reconciliation of the beginning and ending obligations associated with the retirement of the properties:

     
Balance, April 1, 2021  $7,863 
Reclamation expenditures   (467)
Unwinding of discount of environmental rehabilitation   269 
Revision of provision   812 
Foreign exchange impact   262 
Balance, March 31, 2022  $8,739 
Reclamation expenditures   (165)
Unwinding of discount of environmental rehabilitation   124 
Foreign exchange impact   (963)
Balance, September 30, 2022  $7,735 

 

15.SHARE CAPITAL

 

(a) Authorized

 

Unlimited number of common shares without par value. All shares issued as at September 30, 2022 were fully paid.

 

(b) Share-based compensation

 

The Company has a share-based compensation plan (the “Plan”) which consists of stock options, restricted share units (the “RSUs”) and performance share units (the “PSUs”). The Plan allows for the maximum number of common shares to be reserved for issuance on any share-based compensation to be a rolling 10% of the issued and outstanding common shares from time to time. Furthermore, no more than 3% of the reserve may be granted in the form of RSUs and PSUs.

 

For the three and six months ended September 30, 2022, a total of $1.1 million and $2.3 million, respectively (three and six months ended September 30, 2021 - $1.7 million and $3.9 million, respectively) in share-based compensation expense was recognized and included in the general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.

 

20

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

(i)Stock options

 

The following is a summary of option transactions:

 

   Number
of shares		   Weighted average exercise price per share CAD$ 
Balance, April 1, 2021   1,862,418   $5.45 
Options exercised   (797,083)   2.98 
Options cancelled/forfeited   (70,000)   7.46 
Balance, March 31, 2022   995,335   $7.28 
Option granted   535,000    3.93 
Options cancelled/forfeited   (132,000)   6.01 
Balance, September 30, 2022   1,398,335   $6.12 

 

The following table summarizes information about stock options outstanding as at September 30, 2022:

 

Exercise price    Number of
options outstanding
at September 30,		   Weighted
average
remaining
contractual life		   Weighted
average
exercise
price in		   Number of
options
exercisable
at September 30,		   Weighted
average
exercise
price in		 
in CAD$   2022   (Years)   CAD$   2022   CAD$ 
$3.93    478,000    4.57   $3.93    -   $- 
$5.46    505,335    2.65   $5.46    336,338   $5.46 
$9.45    415,000    3.12   $9.45    212,500   $9.45 
 $3.93 to $9.45    1,398,335    3.45   $6.12    548,838   $7.00 

 

During the three and six months ended September 30, 2022, a total of nil and 535,000, respectively, options with a life of five years were granted to directors, officers, and employees at exercise prices of CAD$3.93 per share subject to a vesting schedule over a three-year term with 1/6 of the options vesting every six months from the date of grant until fully vested.

 

The fair value of stock options granted during the six months ended September 30, 2022 were calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

   Six months ended September 30,
2022		 
Risk free interest rate   2.49%
Expected life of option in years   2.75 years 
Expected volatility   62.53%
Expected dividend yield   0.81%
Estimated forfeiture rate   9.81%
Weighted average share price at date of grant   $3.93 CAD 

 

Subsequent to September 30, 2022, a total of 2,500 options with exercise prices of CAD$9.45 was forfeited.

 

21

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

(ii)RSUs

 

The following is a summary of RSUs transactions:

 

   Number of shares   Weighted average grant date closing price
per share $CAD		 
Balance, April 1, 2021   1,249,336   $6.28 
Granted   1,000,000    6.40 
Forfeited   (46,999)   6.63 
Distributed   (566,172)   5.90 
Balance, March 31, 2022   1,636,165   $6.47 
Granted   961,000    3.93 
Forfeited   (122,122)   5.41 
Distributed   (214,375)   6.53 
Balance, September 30, 2022   2,260,668   $5.44 

 

Subsequent to September 30, 2022, a total of 86,166 RSUs with grant prices of CAD$6.40 were distributed.

 

(c)Cash dividends declared

 

During the three and six months ended September 30, 2022, dividends of $nil and $2.2 million, respectively, (three months ended September 30, 2021 - $nil and $2.2 million, respectively) were declared and paid.

 

(d)Normal course issuer bid

 

On August 25, 2021, the Company announced a normal course issuer bid (the “2021 NCIB”) which allows it to repurchase and cancel up to 7,054,000 of its own common shares until August 26, 2022. A total of 739,960 common shares were repurchased under 2021 NCIB at a weighted average price of CAD$3.25.

 

On August 24, 2022, the Company announced a normal course issuer bid (the “2022 NCIB”, together with the 2021 NCIB, the “NCIB Programs”) which allows it to repurchase and cancel up to 7,079,407 of its own common shares until August 28, 2023.

 

During the three and six months ended September 30, 2022, the Company repurchased a total of 503,247 and 838,237, respectively, common shares at a cost of $1.2 million and $2.1 million, respectively, under the NCIB Programs. All shares bought were subsequently cancelled.

 

16.ACCUMULATED OTHER COMPREHENSIVE LOSS

 

   September 30,
2022		   March 31,
2022		 
Change in fair value on equity investments designated as FVTOCI  $24,282   $23,043 
Share of other comprehensive loss in associate   1,498    494 
Currency translation adjustment   32,332    (21,584)
Balance, end of the period  $58,112   $1,953 

 

The change in fair value on equity investments designated as FVTOCI, share of other comprehensive loss in associates, and currency translation adjustment are net of tax of $nil for all periods presented.

 

22

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

17.NON-CONTROLLING INTERESTS

 

The continuity of non-controlling interests is summarized as follows:

 

   Henan Found   Henan Huawei   Yunxiang   Guangdong Found   New Infini   Total 
Balance, April 1, 2021  $78,564   $5,182   $3,032   $(351)  $11,727   $98,154 
Share of net income (loss)   12,639    182    (185)   154    (140)   12,650 
Share of other comprehensive income   1,732    194    68    16    -    2,010 
Distributions   (3,266)   (630)   -    -    (1,200)   (5,096)
Balance, March 31, 2022  $89,669   $4,928   $2,915   $(181)  $10,387   $107,718 
Share of net income (loss)   6,639    (256)   (127)   45    (10,876)   (4,575)
Share of other comprehensive loss   (8,826)   (523)   (177)   (68)   -    (9,594)
Distributions   (6,626)   (630)   -    -    -    (7,256)
Balance, September 30, 2022  $80,856   $3,519   $2,611   $(204)  $(489)  $86,293 

 

As at September 30, 2022, non-controlling interests in Henan Found, Henan Huawei, Yunxiang, Guangdong Found and New Infini were 22.5%, 20%, 30%, 1%, and 53.9%, respectively (March 31, 2022 – 22.5%, 20%, 30%, 1%, and 53.9%, respectively).

 

18.RELATED PARTY TRANSACTIONS

 

Related party transactions are made on terms agreed upon by the related parties. The balances with related parties are unsecured, non-interest bearing, and due on demand. Related party transactions not disclosed elsewhere in the condensed consolidated interim financial statements are as follows:

 

   September 30,
2022		   March 31,
2022		 
NUAG (a)  $   67   $43 
WHG (b)   4    23 
   $71   $66 

 

(a)The Company recovers costs for services rendered to NUAG and expenses incurred on behalf of NUAG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2022, the Company recovered $0.2 million and $0.3 million, respectively, (three and six months ended September 30, 2021 - $0.2 million and $0.3 million, respectively) from NUAG for services rendered and expenses incurred on behalf of NUAG. The costs recovered from NUAG were recorded as a direct reduction of general and administrative expenses on the condensed consolidated statements of income.

 

(b)The Company recovers costs for services rendered to WHG and expenses incurred on behalf of WHG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2022, the Company recovered $0.04 million and $0.1 million, respectively (three and six months ended September 30, 2021 - $0.04 million and $0.1 million, respectively), from WHG for services rendered and expenses incurred on behalf of WHG. The costs recovered from WHG were recorded as a direct reduction of general and administrative expenses on the condensed consolidated statements of income.

 

23

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

19.FINANCIAL INSTRUMENTS

 

The Company manages its exposure to financial risks, including liquidity risk, foreign exchange risk, interest rate risk, credit risk and equity price risk in accordance with its risk management framework. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.

 

(a) Fair value

 

The Company classifies its fair value measurements within a fair value hierarchy, which reflects the significance of the inputs used in making the measurements as defined in IFRS 13, Fair Value Measurement (“IFRS 13”).

 

Level 1 – Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

 

Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3 – Unobservable inputs which are supported by little or no market activity.

 

The following tables set forth the Company’s financial assets and liabilities that are measured at fair value level on a recurring basis within the fair value hierarchy as at September 30, 2022 and March 31, 2022 that are not otherwise disclosed. As required by IFRS 13, the assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

   Fair value as at September 30, 2022 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                
Cash and cash equivalents  $166,370   $-   $-   $166,370 
Short-term investments - money market instruments   27,114    -    -    27,114 
Investments in public companies   8,808    -    -    8,808 
Investments in private companies   -    -    3,510    3,510 

 

   Fair value as at March 31, 2022 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                
Cash and cash equivalents  $113,302   $-   $-   $113,302 
Short-term investments - money market instruments   90,455    -    -    90,455 
Investments in public companies   13,916    -    -    13,916 
Investments in private companies   -    -    3,852    3,852 

 

Financial assets classified within Level 3 are equity investments in private companies owned by the Company. Significant unobservable inputs are used to determine the fair value of the financial assets, which includes recent arm’s length transactions of the investee, the investee’s financial performance as well as any changes in planned milestones of the investees.

 

24

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at September 30, 2022 and March 31, 2022, due to the short-term nature of these instruments.

 

There were no transfers into or out of Level 3 during the three and six months ended September 30, 2022 and 2021.

 

(b) Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its short-term business requirements. The Company has in place a planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans.

 

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following summarizes the remaining contractual maturities of the Company’s financial liabilities and operating commitments on an undiscounted basis.

 

   September 30, 2022 
   Within a year   2-5 years   Total 
Accounts payable and accrued liabilities  $39,075   $-   $39,075 
Lease obligation   415    468    883 
Deposits received   6,216    -    6,216 
Total Contractual Obligation  $45,706   $468   $46,174 

 

   March 31, 2022 
   Within a year   2-5 years   Total 
Accounts payable and accrued liabilities  $39,667   $-   $39,667 
Lease obligation   677    666    1,343 
Deposits received   5,445    -    5,445 
Total Contractual Obligation  $45,789   $666   $46,455 

 

(c) Foreign exchange risk

 

The Company reports its financial statements in US dollars. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is the Canadian dollar (“CAD”)and the functional currency of all Chinese subsidiaries is the Chinese yuan (“RMB”). The functional currency of New Infini and its subsidiaries is the US dollar (“USD”). The Company is exposed to foreign exchange risk when the Company undertakes transactions and holds assets and liabilities in currencies other than its functional currencies.

 

25

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

The Company currently does not engage in foreign exchange currency hedging. The Company’s exposure to currency risk affect net income is summarized as follows:

 

   September 30,
2022		   March 31,
2022		 
Financial assets denominated in U.S. Dollars  $74,257   $59,272 

 

As at September 30,2022, with other variables unchanged, a 10% strengthening (weakening) of the CAD against the USD would have decreased (increased) net income by approximately $7.4 million.

 

(d) Interest rate risk

 

The Company is exposed to interest rate risk on its cash equivalents and short-term investments. As at September 30, 2022, all of its interest-bearing cash equivalents and short-term investments earn interest at market rates that are fixed to maturity or at variable interest rates with terms of less than one year. The Company monitors its exposure to changes in interest rates on cash equivalents and short-term investments. Due to the short-term nature of these financial instruments, fluctuations in interest rates would not have a significant impact on the Company’s net income.  

 

(e) Credit risk

 

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company is exposed to credit risk primarily associated to accounts receivable, due from related parties, cash and cash equivalents, and short-term investments. The carrying amount of assets included on the balance sheet represents the maximum credit exposure.

 

The Company undertakes credit evaluations on counterparties as necessary, requests deposits from customers prior to delivery, and has monitoring processes intended to mitigate credit risks. There were no material amounts in trade or other receivables which were past due on September 30, 2022 (at March 31, 2022 - $nil).

 

(f) Equity price risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on financial markets. As the Company’s marketable securities holdings are mainly in mining companies, the value will also fluctuate based on commodity prices. Based upon the Company’s portfolio as at September 30, 2022, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign currency effects, would have resulted in an increase (decrease) to the net income (loss) and other comprehensive income (loss) of $0.8 million and $0.1 million, respectively.

 

26

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2022 and for the three and six months ended September 30, 2022 and 2021

(Unaudited) (Tabular amounts are in thousands of U.S. dollars, except numbers for share and per share figures or otherwise stated)

 

20.SUPPLEMENTARY CASH FLOW INFORMATION

 

   Three Months Ended
September 30,		   Six Months Ended
September 30,		 
Changes in non-cash operating working capital:  2022   2021   2022   2021 
Trade and other receivables  $1,170   $(177)  $1,372   $(39)
Inventories   186    (2,530)   174    1,082 
Prepaids and deposits   (199)   103    (1,096)   (1,580)
Accounts payable and accrued liabilities   (10,983)   3,991    248    6,929 
Deposits received   3,022    (2,200)   1,453    1,954 
Due from a related party   7    3    (11)   (11)
   $(6,797)  $(810)  $2,140   $8,335 

 

   Three Months Ended September 30,   Six Months Ended September 30, 
Non-cash capital transactions:  2022   2021   2022   2021 
Environmental rehablitation expenditure paid from reclamation deposit  $126   $34   $150   $56 
Additions of plant and equipment included in accounts payable and accrued liabilities  $566   $(1,286)  $1,094   $(1,465)
Capital expenditures of mineral rights and properties included in accounts payable and accrued liabilities  $5,284   $1,311   $2,312   $1,379 

 

   September 30,
2022		   March 31,
2022		 
Cash on hand and at bank  $46,629   $72,782 
Bank term deposits and short-term money market investments   119,741    40,520 
Total cash and cash equivalents  $166,370   $113,302 

 

 

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