EX-99.1 2 exhibit99-1.htm FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 Exhibit 99.1

Exhibit 99.1

 

 

SILVERCORP METALS INC.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended December 31, 2023 and 2022

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

(Unaudited)

 

 

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Income

(Unaudited) (Expressed in thousands of U.S. dollars, except per share amount and number of shares)

 

      Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
   Notes  2023   2022   2023   2022 
Revenue  3(a)(c)  $58,508   $58,651   $172,506   $173,982 
Cost of mine operations                       
Production costs      22,566    24,603    68,132    76,145 
Depreciation and amortization      7,382    7,599    21,560    22,511 
Mineral resource taxes      1,372    1,438    4,335    4,286 
Government fees and other taxes  4   808    633    2,216    1,973 
General and administrative  5   3,073    2,634    8,712    8,060 
       35,201    36,907    104,955    112,975 
Income from mine operations      23,307    21,744    67,551    61,007 
                        
Corporate general and administrative  5   3,228    3,171    10,688    10,204 
Property evaluation and business development      562    173    785    376 
Foreign exchange loss (gain)      701    850    1,614    (5,146)
(Gain) loss on investments  9   (6,204)   (3,010)   (6,687)   1,257 
Share of loss in associates  10   5,680    677    7,025    2,176 
Dilution gain on investment in associate  10   -    -    (733)   - 
Loss on disposal of plant and equipment  12   8    111    38    431 
Impairment of mineral rights and properties  13   -    -    -    20,211 
Other expense      1,649    2,507    2,178    2,276 
Income (loss) from operations      17,683    17,265    52,643    29,222 
                        
Finance income  6   1,561    592    4,797    3,010 
Finance costs  6   (51)   (661)   (165)   (1,256)
       19,193    17,196    57,275    30,976 
                        
Income tax expense  7   5,123    2,259    15,222    12,157 
Net income (loss)     $14,070   $14,937   $42,053   $18,819 
                        
Attributable to:                       
Equity holders of the Company     $10,510   $11,916   $30,777   $20,373 
Non-controlling interests  18   3,560    3,021    11,276    (1,554)
      $14,070   $14,937   $42,053   $18,819 
                        
Earnings per share attributable to the equity holders of the Company Basic earnings (loss) per share     $0.06   $0.07   $0.17   $0.12 
Diluted earnings (loss) per share     $0.06   $0.07   $0.17   $0.11 
Weighted Average Number of Shares Outstanding - Basic      176,905,791    176,723,433    176,892,354    176,892,860 
Weighted Average Number of Shares Outstanding - Diluted      179,437,206    178,938,856    179,423,769    179,024,844 

 

Approved on behalf of the Board:  
   
(Signed) Ken Robertson  
Director  
   
(Signed) Rui Feng  
Director  

 

See accompanying notes to the condensed consolidated interim financial statements

 

1

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Comprehensive Income (loss)

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

 

      Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
   Notes  2023   2022   2023   2022 
Net income (loss)     $14,070   $14,937   $42,053   $18,819 
Other comprehensive income (loss), net of taxes:                       
Items that may subsequently be reclassified to net income or loss:                       
Currency translation adjustment      15,071    15,546    (9,315)   (47,964)
Share of other comprehensive loss in associate  10   239    107    236    (897)
Reclassification to net income upon ownership dilution of investment in associate      -    -    (34)   - 
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   113    59    5    (1,180)
Other comprehensive income (loss), net of taxes     $15,423   $15,712   $(9,108)  $(50,041)
Attributable to:                       
Equity holders of the Company     $13,237   $13,075   $(6,834)  $(43,084)
Non-controlling interests  18   2,186    2,637    (2,274)   (6,957)
      $15,423   $15,712   $(9,108)  $(50,041)
Total comprehensive income (loss)     $29,493   $30,649   $32,945   $(31,222)
                        
Attributable to:                       
Equity holders of the Company     $23,747   $24,991   $23,943   $(22,711)
Non-controlling interests      5,746    5,658    9,002    (8,511)
      $29,493   $30,649   $32,945   $(31,222)

 

See accompanying notes to the condensed consolidated interim financial statements

 

2

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Financial Position

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

 

      As at
December 31,		   As at
March 31,		 
   Notes  2023   2023 
ASSETS             
Current Assets             
Cash and cash equivalents  21  $143,280   $145,692 
Short-term investments  8   55,015    57,631 
Trade and other receivables      240    1,806 
Inventories      11,893    8,343 
Due from related parties  19   296    88 
Income tax receivable      59    582 
Prepaids and deposits      7,120    4,906 
       217,903    219,048 
Non-current Assets             
Long-term prepaids and deposits      1,473    871 
Reclamation deposits      3,934    6,981 
Other investments  9   46,982    15,540 
Investment in associates  10   50,757    50,695 
Investment properties  11   482    - 
Plant and equipment  12   80,285    80,059 
Mineral rights and properties  13   317,282    303,426 
Deferred income tax assets      -    179 
TOTAL ASSETS     $719,098   $676,799 
LIABILITIES AND EQUITY             
Current Liabilities             
Accounts payable and accrued liabilities     $52,539   $36,737 
Current portion of lease obligation  14   281    269 
Deposits received      4,354    4,090 
Income tax payable      1,174    144 
       58,348    41,240 
Non-current Liabilities             
Long-term portion of lease obligation  14   117    314 
Deferred income tax liabilities      50,470    48,096 
Environmental rehabilitation  15   6,457    7,318 
Total Liabilities      115,392    96,968 
Equity             
Share capital      257,210    255,684 
Equity reserves      (2,220)   3,484 
Retained earnings      256,234    229,885 
Total equity attributable to the equity holders of the Company      511,224    489,053 
Non-controlling interests  18   92,482    90,778 
Total Equity      603,706    579,831 
TOTAL LIABILITIES AND EQUITY     $719,098   $676,799 

 

See accompanying notes to the condensed consolidated interim financial statements

 

3

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Cash Flows

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

 

      Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
   Notes  2023   2022   2023   2022 
Cash provided by                   
Operating activities                   
Net income (loss)     $14,070   $14,937   $42,053   $18,819 
Add (deduct) items not affecting cash:                       
Finance costs  6   51    661    165    1,256 
Income tax expense  7   5,123    2,259    15,222    12,157 
Depreciation, amortization and depletion      7,819    8,022    22,834    23,844 
(Gain) loss on investments  9   (6,204)   (3,010)   (6,687)   1,257 
Share of loss in associates  10   5,680    677    7,025    2,176 
Dilution gain on investment in associate  10   -    -    (733)   - 
Impairment of mineral rights and properties  13   -    -    -    20,211 
Loss on disposal of plant and equipment      8    111    38    431 
Share-based compensation  16(b)   765    841    3,502    3,133 
Reclamation  expenditures      (272)   (370)   (533)   (385)
Income taxes paid      (3,293)   (138)   (9,610)   (6,783)
Interest paid  6   (5)   (9)   (18)   (35)
Changes in non-cash operating working capital  21   (135)   1,680    8,074    3,820 
Net cash provided by operating activities      23,607    25,661    81,332    79,901 
Investing activities                       
Plant and equipment                       
Additions      (2,157)   (4,231)   (8,714)   (10,937)
Proceeds on disposals      377    10    849    10 
Mineral rights and properties                       
Capital expenditures      (14,622)   (11,466)   (38,593)   (34,236)
Reclamation deposits                       
Paid      (336)   (274)   (365)   (304)
Refund      2,929    -    2,962    - 
Other investments                       
Acquisition  9   (1,246)   (1,932)   (23,305)   (3,702)
Proceeds on disposals  9   263    21    1,103    525 
Investment in associates  10   -    (1,181)   (4,982)   (1,938)
Short-term investment                       
Purchase      (32,000)   (32,020)   (61,464)   (112,304)
Redemption      47,566    26,515    61,103    164,526 
Principal received on lease receivable  14   -    53    -    162 
Net cash used in investing activities      774    (24,505)   (71,406)   1,802 
Financing activities                       
Principal payments on lease obligation  14   (66)   (164)   (195)   (501)
Cash dividends distributed  16(e)   (2,214)   (2,209)   (4,428)   (4,425)
Non-controlling interests                       
Distribution  18   (50)   -    (7,298)   (7,256)
Common shares repurchased as part of normal course issuer bid      (274)   -    (846)   (2,078)
Net cash used in  financing activities      (2,604)   (2,373)   (12,767)   (14,260)
Effect of exchange rate changes on cash and cash equivalents      2,405    5,688    429    (9,904)
Increase (decrease) in cash and cash equivalents      24,182    4,471    (2,412)   57,539 
Cash and cash equivalents, beginning of the period      119,098    166,370    145,692    113,302 
Cash and cash equivalents, end of the period     $143,280   $170,841   $143,280   $170,841 
Supplementary cash flow information  21                    

 

See accompanying notes to the condensed consolidated interim financial statements

 

4

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

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

 

      Share capital   Equity reserves       Total equity         
   Notes  Number
of shares		   Amount   Share option
reserve		   Reserves   Accumulated
other
comprehensive
loss		   Retained
earnings		  attributable
to the equity
holders of the
Company		   Non-controlling
interests		   Total equity 
Balance, April 1, 2022      177,105,799   $255,444  $19,369   $25,834   $     (1,953)  $213,702   $     512,396   $    107,718   $620,114 
Restricted share units vested      503,703    2,307    (2,307)   -    -    -    -    -    - 
Share-based compensation      -    -    3,133    -    -    -    3,133    -    3,133 
Dividends declared      -    -    -    -    -    (4,425)   (4,425)   -    (4,425)
Common shares repurchased as part of normal course issuer bid      (838,237)   (2,078)   -    -    -         (2,078)        (2,078)
Contribution from non-controlling interests      -    -    -    -    -    -    -         - 
Acquisition of La Yesca      -    -    -    -    -    -    -           
Distribution to non-controlling interests      -    -    -    -    -    -    -    (7,256)   (7,256)
Comprehensive income      -    -    -    -    (43,084)   20,373    (22,711)   (8,511)   (31,222)
Balance, December 31, 2022      176,771,265   $255,673  $20,195   $25,834   $(45,037)  $229,650   $486,315   $91,951   $578,266 
Restricted share units vested      -    11    (11)   -    -    -    -    -    - 
Share-based compensation      -    -    709    -    -    -    709    -    709 
Distribution to non-controlling interests      -    -    -         -    -    -    (3,624)   (3,624)
Comprehensive income      -    -    -    -    1,794    235    2,029    2,451    4,480 
Balance, March 31, 2023      176,771,265   $255,684  $20,893   $25,834   $(43,243)  $229,885   $489,053   $90,778   $579,831 
Restricted share units vested      580,923    2,372    (2,372)   -    -    -    -    -    - 
Share-based compensation  16(b)   -    -    3,502    -    -    -    3,502    -    3,502 
Dividends declared  16(e)   -    -    -    -    -    (4,428)   (4,428)   -    (4,428)
Common shares repurchased as part of normal course issuer bid  16(f)   (315,824)   (846)   -    -    -    -    (846)   -    (846)
Distribution to non-controlling interests  18   -    -    -    -    -    -    -    (7,298)   (7,298)
Comprehensive income (loss)      -    -    -    -    (6,834)   30,777    23,943    9,002    32,945 
Balance, December 31, 2023      177,036,364   $257,210  $22,023   $25,834   $(50,077)  $256,234   $511,224   $92,482   $603,706 

 

See accompanying notes to the condensed consolidated interim financial statements

 

5

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

(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.

 

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.

 

2.MATERIAL ACCOUNTING POLICY INFORMATION

 

(a)Statement of Compliance

 

These unaudited 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”) and have been condensed with certain disclosures from the Company’s audited consolidated financial statements for the year ended March 31, 2023. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2023. These unaudited condensed consolidated interim financial statements follow the same accounting policies set out in Note 2 to the audited consolidated financial statements for the year ended March 31, 2023 with the exception of the mandatory adoption of certain amendments noted below.

 

Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction

 

The amendments to IAS 12 clarify that the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition.

 

The adoption of this amendment did not have a material impact on the Company’s condensed consolidated interim financial statements.

 

Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies

 

The amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. This amendment did not have a material impact on the Company’s condensed consolidated interim financial statements.

 

6

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

Amendments to IAS 8 – Definition of Accounting Estimates

 

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.”

 

The definition of a change in accounting estimates was deleted. However, IASB retained the concept of changes in accounting estimates in IFRS with the following clarification:

 

●A change in accounting estimate that results from new information or new developments is not the correction of an error.

 

●The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors.

 

The adoption of this amendment did not have a material impact on the Company’s condensed interim consolidated financial statements.

 

These unaudited condensed consolidated interim financial statements were authorized for issue in accordance with a resolution of the Board of Directors of the Company dated February 6, 2024.

 

(b)New Accounting Standards

 

Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. Management is still evaluating and does not expect any such pronouncements to have a material impact on the Company’s consolidated financial statements upon adoption.

 

(c)Basis of Consolidation

 

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

 

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

 

For non-wholly owned subsidiaries over which the Company has control, the net assets attributable to outside equity shareholders are presented as “non-controlling interests” in the equity section of the condensed consolidated interim statements of financial position. 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.

 

7

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

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

 

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

  

         Proportion of ownership interest held  
      Country of  December 31,   March 31,      
Name of subsidiaries  Principal activity  incorporation  2023   2023   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”)

 

(d)Critical 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, 2023.

 

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 operating segments are determined based on the Company’s management and internal reporting structure. Operating segments are summarized as follows:

 

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

 

8

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

(a)Segmented information for operating results

 

Segmented operating results for the three months ended December 31, 2023 and 2022 are summarized as follows:

 

Three months ended December 31, 2023
   Mining   Administrative    
Statement of operations:  Henan
Luoning		   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $49,427   $9,081   $-   $-   $-   $58,508 
Costs of mine operations   (27,941)   (7,169)   (91)   -    -    (35,201)
Income (loss) from mine operations   21,486    1,912    (91)   -    -    23,307 
                               
Operating (expenses) income   (1,778)   101    37    (517)   (3,467)   (5,624)
Finance items   600    100    (7)   45    772    1,510 
Income tax expenses   (3,603)   (435)   -    -    (1,085)   (5,123)
Net income (loss)  $16,705   $1,678   $(61)  $(472)  $(3,780)  $14,070 
                               
Attributed to:                              
Equity holders of the Company   13,133    1,662    (33)   (472)   (3,780)   10,510 
Non-controlling interests   3,572    16    (28)   -    -    3,560 
Net income (loss)  $16,705   $1,678   $(61)  $(472)  $(3,780)  $14,070 

 

Three months ended December 31, 2022
   Mining   Administrative     
Statement of operations:  Henan
Luoning		   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $48,808   $9,843   $-   $-   $-   $58,651 
Costs of mine operations   (29,833)   (6,974)   (100)   -    -    (36,907)
Income (loss) from mine operations   18,975    2,869    (100)   -    -    21,744 
                               
Operating expenses   (2,521)   (147)   90    (460)   (1,441)   (4,479)
Finance items   108    43    (7)   56    (269)   (69)
Income tax expenses   (2,284)   (16)   (1)   -    42    (2,259)
Net income (loss)  $14,278   $2,749   $(18)  $(404)  $(1,668)  $14,937 
                               
Attributed to:                              
Equity holders of the Company   11,268    2,722    (4)   (404)   (1,666)   11,916 
Non-controlling interests   3,010    27    (14)   -    (2)   3,021 
Net income (loss)  $14,278   $2,749   $(18)  $(404)  $(1,668)  $14,937 

 

9

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

Segmented operating results for the three nine ended December 31, 2023 and 2022 are summarized as follows:

 

Nine months ended December 31, 2023
   Mining   Administrative     
Statement of income:  Henan
Luoning		   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $149,842   $22,664   $-   $-   $-   $172,506 
Costs of mine operations   (84,825)   (19,828)   (302)   -    -    (104,955)
Income (loss) from mine operations   65,017    2,836    (302)   -    -    67,551 
                               
Operating expenses   (2,485)   215    (44)   (1,529)   (11,065)   (14,908)
Finance items, net   1,764    360    (21)   130    2,399    4,632 
Income tax expenses   (11,376)   (264)   -    -    (3,582)   (15,222)
Net income (loss)  $52,920   $3,147   $(367)  $(1,399)  $(12,248)  $42,053 
                               
Attributable to:                              
Equity holders of the Company   41,531    3,117    (230)   (1,399)   (12,242)   30,777 
Non-controlling interests   11,389    30    (137)   -    (6)   11,276 
Net income (loss)  $52,920   $3,147   $(367)  $(1,399)  $(12,248)  $42,053 

 

Nine months ended December 31, 2022
   Mining   Administrative     
Statement of income:  Henan
Luoning		   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $145,729   $28,253   $-   $-   $-   $173,982 
Costs of mine operations   (92,414)   (20,225)   (336)   -    -    (112,975)
Income (loss) from mine operations   53,315    8,028    (336)   -    -    61,007 
                               
Operating expenses   (2,505)   (292)   (117)   (1,364)   (7,296)   (11,574)
Impairment of mineral rights and properties   -    -    (20,211)   -    -    (20,211)
Finance items, net   1,669    314    (22)   206    (413)   1,754 
Income tax expenses   (9,025)   (680)   61    -    (2,513)   (12,157)
Net income (loss)  $43,454   $7,370   $(20,625)  $(1,158)  $(10,222)  $18,819 
                               
Attributable to:                              
Equity holders of the Company   34,061    7,298    (9,922)   (1,158)   (9,906)   20,373 
Non-controlling interests   9,393    72    (10,703)   -    (316)   (1,554)
Net income (loss)  $43,454   $7,370   $(20,625)  $(1,158)  $(10,222)  $18,819 

 

10

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

(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 as at December 31, 2023 and 2022 is summarized as follows:

 

December 31, 2023
   Mining   Administrative     
Statement of financial position items:  Henan
Luoning		   Guangdong   Other   Beijing   Vancouver   Total 
Current assets  $128,046   $10,089   $1,013   $7,656   $71,099   $217,903 
Plant and equipment   61,871    14,213    3,016    524    661    80,285 
Mineral rights and properties   263,497    34,015    19,770    -    -    317,282 
Investment in associates   -    -    -    -    50,757    50,757 
Other investments   63    -    -    -    46,919    46,982 
Reclamation deposits   853    3,073    -    -    8    3,934 
Long-term prepaids and deposits   951    118    93    -    311    1,473 
Investment properties   482    -    -    -    -    482 
Total assets  $455,763   $61,508   $23,892   $8,180   $169,755   $719,098 
                               
Current liabilities  $48,808   $6,064   $385   $274   $2,817   $58,348 
Long-term portion of lease obligation   -    -   $-    -    117    117 
Deferred income tax liabilities   49,406    66   $998    -    -    50,470 
Environmental rehabilitation   4,142    1,368   $947    -    -    6,457 
Total liabilities  $102,356   $7,498   $2,330   $274   $2,934   $115,392 

 

March 31, 2023
   Mining   Administrative     
Statement of financial position items:  Henan
Luoning		   Guangdong   Other   Beijing   Vancouver   Total 
Current assets  $112,936   $20,605   $1,149   $7,608   $76,750   $219,048 
Plant and equipment   59,854    15,289    3,314    644    958    80,059 
Mineral rights and properties   251,150    32,070    20,206    -    -    303,426 
Investment in associates   -    -    -    -    50,695    50,695 
Other investments   65    -    -    -    15,475    15,540 
Reclamation deposits   3,626    3,348    -    -    7    6,981 
Long-term prepaids and deposits   686    89    96    -    -    871 
Deferred income tax assets   -    179    -    -    -    179 
Total assets  $428,317   $71,580   $24,765   $8,252   $143,885   $676,799 
                               
Current liabilities  $33,102   $5,509   $433   $226   $1,970   $41,240 
Long-term portion of lease obligation   -    -    -    -    314    314 
Deferred income tax liabilities   47,065    -    1,031    -    -    48,096 
Environmental rehabilitation   4,883    1,477    958    -    -    7,318 
Total liabilities  $85,050   $6,986   $2,422   $226   $2,284   $96,968 

 

11

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

(c)Revenue by metal

 

Revenue generated for the three months ended December 31, 2023 and 2022 were all earned in China and were comprised of:

 

   Three months ended December 31, 2023 
   Henan
Luoning		   Guangdong   Total 
Gold  $2,305   $-   $2,305 
Silver   31,700    2,605    34,305 
Lead   12,429    1,782    14,211 
Zinc   1,881    4,155    6,036 
Other   1,112    539    1,651 
   $49,427   $9,081   $58,508 

 

   Three months ended December 31, 2022 
   Henan
Luoning		   Guangdong   Total 
Gold  $1,695   $-   $1,695 
Silver   29,403    2,514    31,917 
Lead   14,401    1,944    16,345 
Zinc   2,182    4,639    6,821 
Other   1,127    746    1,873 
   $48,808   $9,843   $58,651 

 

Revenue generated for the nine months ended December 31, 2023 and 2022 were all earned in China and were comprised of:

 

   Nine months ended December 31, 2023 
   Henan
Luoning		   Guangdong   Total 
Gold  $9,385   $-   $9,385 
Silver   94,051    6,559    100,610 
Lead   37,433    4,500    41,933 
Zinc   5,408    9,902    15,310 
Other   3,565    1,703    5,268 
   $149,842   $22,664   $172,506 

 

   Nine months ended December 31, 2022 
   Henan
Luoning		   Guangdong   Total 
Gold  $5,027   $-   $5,027 
Silver   87,793    6,288    94,081 
Lead   42,730    5,430    48,160 
Zinc   6,849    14,892    21,741 
Other   3,330    1,643    4,973 
    145,729   $28,253   $173,982 

 

12

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

(d)Major customers

 

Revenue from major customers is summarized as follows:

 

   Nine months ended December 31, 2023 
Customers  Henan
Luoning		   Guangdong   Total   Percentage of
total revenue		 
Customer A  $40,737   $3,860   $44,597    26%
Customer B   39,763    -    39,763    23%
Customer C   14,556    1,737    16,293    9%
Customer D   32,830    -    32,830    19%
Customer E   14,406    2,693    17,099    10%
   $142,292   $8,290   $150,582    87%

 

   Nine months ended December 31, 2022 
Customers  Henan
Luoning		   Guangdong   Total   Percentage of
total revenue		 
Customer A  $24,133   $-   $24,133    14%
Customer B   26,565    -    26,565    15%
Customer C   38,003    686    38,689    22%
Customer D   35,654    -    35,654    20%
Customer E   10,406    1,431    11,837    7%
   $134,761   $2,117   $136,878    78%

 

4.GOVERNMENT FEES AND OTHER TAXES

 

Government fees and other taxes consist of:

 

   Three months ended
December 31,		   Nine months ended
December 31,		 
   2023   2022   2023   2022 
Government fees  $11   $15   $40   $51 
Other taxes   797    618    2,176    1,922 
   $808   $633   $2,216   $1,973 

 

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.

 

13

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

5.GENERAL AND ADMINISTRATIVE

 

General and administrative expenses consist of:

 

   Three months ended December 31, 2023   Three months ended December 31, 2022 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $146   $290   $436   $139   $285   $424 
Office and administrative expenses   362    887    1,249    511    652    1,163 
Professional fees   307    251    558    239    97    336 
Salaries and benefits   1,648    1,645    3,293    1,441    1,600    3,041 
Share-based compensation   765    -    765    841    -    841 
   $3,228   $3,073   $6,301   $3,171   $2,634   $5,805 

 

   Nine months ended December 31, 2023   Nine months ended December 31, 2022 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $442   $831   $1,273   $430   $903   $1,333 
Office and administrative expenses   1,419    2,435    3,854    1,326    2,038    3,364 
Professional fees   721    478    1,199    602    330    932 
Salaries and benefits   4,604    4,968    9,572    4,713    4,789    9,502 
Share-based compensation   3,502    -    3,502    3,133    -    3,133 
   $10,688   $8,712   $19,400   $10,204   $8,060   $18,264 

 

6.FINANCE ITEMS

 

Finance items consist of:

 

   Three months ended
December 31,		   Nine months ended
December 31,		 
Finance income  2023   2022   2023   2022 
Interest income  $1,561   $516   $4,797   $2,934 
Dividend income   -    76    -    76 
Interest income  $1,561   $592   $4,797   $3,010 

 

   Three months ended
December 31,		   Nine months ended
December 31,		 
Finance costs  2023   2022   2023   2022 
Interest on lease obligation  $5    9   $18   $35 
Impairment charges for expected credit loss against bond investments (Note 8)   -    501    -    946 
Loss on disposal of bonds   -    93         93 
Unwinding of discount of environmental rehabilitation provision (Note 15)   46    58    147    182 
   $51   $661   $165   $1,256 

 

7.INCOME TAX

 

The significant components of income tax expense are as follows:

 

   Three months ended
December 31,		   Nine months ended
December 31,		 
Income tax expense  2023   2022   2023   2022 
Current  $3,784   $1,235   $11,152   $7,646 
Deferred   1,339    1,024    4,070    4,511 
   $5,123   $2,259   $15,222   $12,157 

 

14

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

8.SHORT-TERM INVESTMENTS

 

Short-term investments consist of the following:

 

   Carraying Value   Interest rates    Maturity  
As at December 31, 2023              
Bonds  $1,403   5.5% - 6.9%    June 9, 2024 - January 16, 2025  
Money market instruments   53,612           
   $55,015           
As at March 31, 2023               
Bonds  $3,802   5.5% - 13.0%    January 25, 2023 - January 16, 2025  
Money market instruments   53,829           
   $57,631           

 

9.OTHER INVESTMENTS

 

   December 31,
2023		   March 31,
2023		 
Investments designated as FVTOCI        
Public companies  $870   $918 
Private companies   63    65 
    933    983 
Investments designated as FVTPL          
Public companies   42,814    11,396 
Private companies   3,235    3,161 
    46,049    14,557 
Total  $46,982   $15,540 

 

The Company makes irrevocable elections, on an instrument-by-instrument basis, to designate other investment as fair value to profit and loss (“FVTPL”) or fair value to other comprehensive income (“FVTOCI”).

 

15

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

The continuity of such investments is as follows:

 

   Fair Value   Accumulated
fair value
change
included in OCI		   Accumulated
fair value
change
included in P&L		 
April 1, 2022  $17,768   $(24,336)  $3,703 
Loss on equity investments designated as FVTOCI   (1,312)   (1,312)   - 
Loss on equity investments designated as FVTPL   (2,318)   -    (2,318)
Acquisition   3,702    -    - 
Disposal   (1,035)   -    - 
Impact of foreign currency translation   (1,265)   -    - 
March 31, 2023  $15,540   $(25,648)  $1,385 
Gain on equity investments designated as FVTOCI   5    5    - 
Gain on equity investments designated as FVTPL   7,975    -    7,975 
Acquisition   23,305    -    - 
Disposal   (1,103)   -    - 
Impact of foreign currency translation   1,260    -    - 
December 31, 2023  $46,982   $(25,643)  $9,360 

 

On August 6, 2023, the Company and OreCorp Limited (ASX: ORR) (“OreCorp”) announced the signing of a binding scheme implementation deed (the “Agreement”) whereby the Company will acquire all fully-paid ordinary shares of OreCorp not held by the Company or its associates (the “OreCorp Shares”), pursuant to an Australian scheme of arrangement under Part 5.1 of the Corporation Act 2001(Cth) (the “Scheme”), subject to the satisfaction and/or waiver of various conditions, whereby each holder of OreCorp Shares will receive, for each OreCorp Share held, 0.15 Australian dollar (“A$”) in cash and 0.0967 of a Silvercorp common share.

 

Concurrently with entering into the Agreement, the Company and OreCorp entered into a placement agreement, whereby Silvercorp agreed to purchase 70,411,334 new fully-paid ordinary shares of OreCorp at a price of A$0.40 per OreCorp Share for aggregate proceeds of approximately $18.5 million (A$28.0 million). The placement was completed in August 2023, and as a result, the Company held approximately 15% of the total outstanding ordinary shares of OreCorp. Subsequent to the private placement, the Company acquired additional 3,477,673 OreCorp Shares on the market through the Australian Securities Exchange (the “ASX”) for approximately $1.1 million, and as of December 31, 2023, the Company held 73,889,007 OreCorp Shares, representing 15.74% of the total outstanding ordinary shares of OreCorp.

 

The Agreement and the Scheme were amended and restated on November 23, 2023 (the “Amending Deed”) to increase the cash consideration from A$0.15 to A$0.19 with no change to the share consideration, being 0.0967 of a Silvercorp common share, for each OreCorp Share.

 

On December 26, 2023, the Company and OreCorp have entered into a Bid Implementation Deed (“BID”), pursuant to which Silvercorp has agreed to acquire, by means of an off-market takeover offer, all of the OreCorp Shares not already owned by Silvercorp for consideration comprising 0.0967 common shares of Silvercorp and A$0.19 cash per OreCorp Share (the “Consideration”).

 

16

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

Under the BID, Silvercorp and OreCorp have provided undertakings to each other to facilitate the Transaction. The offer is subject to minimal conditions, including:

 

●Silvercorp having a relevant interest in at least 50.1% of the OreCorp Shares (not yet met);

 

●no regulatory action which could reasonably be expected to restrain, impede or prohibit the Offer and completion of the Transaction;

 

●no OreCorp material adverse change or prescribed occurrence (both terms defined in a customary manner); and

 

●normal course listing approval for the new Silvercorp Shares to be issued (conditional approval from Toronto Stock Exchange and authorization of the Company’s supplemental listing application from NYSE American received).

 

The OreCorp Board is unanimously recommending that OreCorp shareholders accept the Offer subject to their Independent Expert’s Report concluding, and continuing to conclude, that the Offer is reasonable to OreCorp shareholders and there being no Superior Proposal. Subject to those same qualifications, the OreCorp Board, who collectively hold 3.94% of the OreCorp Shares, intends to accept the offer in respect of all OreCorp Shares they own or control.

 

The BID includes market standard deal protection measures equivalent to those previously agreed under the Scheme, including “no talk” and “no due diligence” provisions (subject to a fiduciary out exception) and “no shop”. It also includes notification and matching rights for Silvercorp in the event of a competing proposal. Pursuant to these deal protection measures, OreCorp has agreed, inter alia that it will not solicit, encourage or initiate any competing proposal and further, that it will not participate in any discussions or negotiations with a third party in relation to any competing proposal (unless certain conditions are satisfied, including where a failure to do so would constitute a breach of the OreCorp Board’s fiduciary duties or statutory obligations).

 

As with the Scheme, under certain circumstances a break fee of approximately A$2.8 million will be payable by OreCorp to Silvercorp if the BID is terminated.

 

The offer is not subject to the approval of the Silvercorp’s shareholders and is not subject to any financing or due diligence conditions.

 

In conjunction with the execution of the BID, Silvercorp and OreCorp have mutually agreed to terminate the Agreement and the Amending Deed.

 

The off-market takeover offer document was dispatched to OreCorp shareholders on January 15, 2024 and since then, the offer is open for acceptance by OreCorp shareholders until February 23, 2024 (Sydney time), unless extended.

 

On February 1, 2024, the Company announced that it received a Merger Clearance Certificate (dated January 30, 2024) from the Tanzanian Fair Competition Commission (the “FCC”) providing unconditional merger control approval for the Transaction. This approval represents the sole Tanzanian regulatory requirements needed to complete the Transaction and clears any possibility of the potential breach of the “no regulatory action” condition as stated in the BID.

 

17

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

(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

 

   Amount   Market value per
quoted share
prices		 
Balance, April 1, 2022  $56,841   $146,483 
Purchase from open market   874      
Paricipation in financing   1,181      
Share of net loss   (2,901)     
Share of other comprehensive loss   (886)     
Dilution loss   (107)     
Foreign exchange impact   (4,307)     
Balance, March 31, 2023  $50,695   $126,398 
Participation in financing   4,982      
Dilution Gain   733      
Share of net loss   (7,025)     
Share of other comprehensive loss   236      
Foreign exchange impact   1,136      
Balance, December 31, 2023  $50,757   $92,534 

 

(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). 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.

 

In September 2023, the Company participated in a bought deal financing of common shares of NUAG to acquire an additional 2,541,890 common shares of NUAG for a cost of approximately $5.0 million. As a result of the financing, the Company’s ownership in NUAG was diluted to 27.4% and a dilution gain of $0.7 million was recorded on the unaudited condensed consolidated interim statements of income.

 

As at December 31, 2023, the Company owned 46,893,506 common shares of NUAG (March 31, 2023 – 44,351,616), representing an ownership interest of 27.4% (March 31, 2023 – 28.2%).

 

As at December 31, 2023, the carrying value of the investment in NUAG was $48.9 million (March 31, 2023 - $42.3 million), while the market value based on the quoted market price of NUAG’s common share was $89.0 million.

 

(b)Investment in Tincorp Metals Inc.

 

Tincorp Metals Inc. (“TIN”), formerly Whitehorse Gold Corp., is a Canadian public company listed on the TSX Venture Exchange (symbol: TIN). The Company accounts for its investment in TIN using the equity method as it is able to exercise significant influence over the financial and operating policies of TIN.

 

On December 15, 2022, the Company participated in a non-brokered private placement of TIN and purchased 4,000,000 units at a cost of $1.2 million. Each unit was comprised of one TIN common share and one-half common share purchase warrant at exercise price of CAD$0.65 per share. The common share purchase warrant expires on December 15, 2024.

 

18

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

As at December 31, 2023, the Company owned 19,514,285 common shares of TIN (March 31, 2023 – 19,514,285), representing an ownership interest of 29.3% (March 31, 2023 – 29.3%).

 

As at December 31, 2023, the carrying value of the investment in TIN was $1.9 million (March 31, 2023 - $7.4 million), while the market value based on the quoted market price of TIN’s common share was $3.5 million (March 31, 2023 - $6.8 million).

 

Subsequent to December 31, 2023, the Company and TIN entered into an interest-free unsecured credit facility agreement with no conversion features (the “Facility”) to allow TIN to advance up to $1.0 million from the Company. Upon signing the Facility, the Company advanced $0.5 million to TIN and received 350,000 common shares of TIN as the Bonus Shares for granting the Facility. The Facility has a maturity date of January 31, 2025.

 

11.INVESTMENT PROPERTIES

 

Investment properties consist of:

 

Cost  Total 
Balance, March 31, 2023  $- 
Additions   287 
Transfer from property, plant, and equipment   838 
Impact of foreign currency translation   9 
Balance, December 31, 2023  $1,134 
      
Accumulated depreciation and amortization     
Balance, March 31, 2023  $- 
Depreciation and amortization   (29)
Transfer from property, plant, and equipment   (619)
Impact of foreign currency translation   (4)
Balance, December 31, 2023  $(652)
      
Carrying amounts     
Balance, March 31, 2023  $- 
Balance, December 31, 2023  $482 

 

Investment properties include real estate properties that are rented out to earn rental income. The investment properties were initially recorded at cost, and subsequently measured at cost less accumulated depreciation. Depreciation is computed on a straight-line basis based on the nature and an estimated 20 years’ useful life of the asset. The Company did not engage an independent valuer to value the properties, and the fair value of the properties estimated based on the quoted market prices for the similar real estate properties in the nearby neighborhoods were approximately $2.8 million as at December 31,2023.

 

During the three and nine months ended December 31, 2023, the Company recorded rental income of $0.03 million and $0.09 million, which was included in other expense on the unaudited condensed consolidated interim statements of income.

 

19

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

12.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, 2022  $117,247   $11,009   $34,379   $8,313   $2,603   $173,551 
Additions   499    1,169    3,097    879    9,925    15,569 
Disposals   (985)   (511)   (1,085)   (494)   -    (3,075)
Reclassification of asset groups   4,400    33    655    -    (5,088)   - 
Impact of foreign currency translation   (9,040)   (821)   (2,672)   (636)   (212)   (13,381)
Balance as at March 31, 2023  $112,121   $10,879   $34,374   $8,062   $7,228   $172,664 
Additions   144    575    1,704    505    6,890    9,818 
Disposals   (1,060)   (176)   (940)   (273)   -    (2,449)
Reclassification of asset groups   1,941    53    334    -    (2,328)   - 
Impact of foreign currency translation   (3,509)   (296)   (1,109)   (256)   (197)   (5,367)
Ending balance as at December 31, 2023  $109,637   $11,035   $34,363   $8,038   $11,593   $174,666 
                               
Impairment, accumulated depreciation and amortization                              
Balance as at April 1, 2022  $(57,584)  $(7,232)  $(23,665)  $(5,652)  $-   $(94,133)
Disposals   733    500    767    407    -    2,407 
Depreciation and amortization   (4,373)   (940)   (2,162)   (660)   -    (8,135)
Impact of foreign currency translation   4,443    530    1,847    436    -    7,256 
Balance as at March 31, 2023  $(56,781)  $(7,142)  $(23,213)  $(5,469)  $-   $(92,605)
Disposals   777    162    211    196    -    1,346 
Depreciation and amortization   (3,258)   (653)   (1,605)   (459)   -    (5,975)
Impact of foreign currency translation   1,748    183    748    174    -    2,853 
Ending balance as at December 31, 2023  $(57,514)  $(7,450)  $(23,859)  $(5,558)  $-   $(94,381)
                               
Carrying amounts                              
Balance as at March 31, 2023  $55,340   $3,737   $11,161   $2,593   $7,228   $80,059 
Ending balance as at December 31, 2023  $52,123   $3,585   $10,504   $2,480   $11,593   $80,285 

 

The carrying value of the plant and equipment of each reporting segment is summarized as follows:

 

Carrying amounts as at December 31, 2023  Ying Mining District   GC   Other   Administrative   Total 
Land use rights and building  $38,932   $9,978   $2,269   $944   $52,123 
Office equipment   2,893    436    52    204    3,585 
Machinery   7,082    3,289    133    -    10,504 
Motor vehicles   2,055    318    70    37    2,480 
Construction in progress   10,909    192    492    -    11,593 
Total  $61,871   $14,213   $3,016   $1,185   $80,285 

 

Carrying amounts as at March 31, 2023  Ying Mining District   GC   Other   Adminstrative   Total 
Land use rights and building  $41,155   $10,403   $2,490   $1,292   $55,340 
Office equipment   2,991    440    63    243    3,737 
Machinery   7,433    3,568    160    -    11,161 
Motor vehicles   2,067    367    92    67    2,593 
Construction in progress   6,208    511    509    -    7,228 
Total  $59,854   $15,289   $3,314   $1,602   $80,059 

 

20

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

13.MINERAL RIGHTS AND PROPERTIES

 

Mineral rights and properties consist of:

 

   Producing and development properties   Exploration and evaluation properties     
Cost  Ying Mining District   BYP   GC   Kuanping   La Yesca   Total 
Balance as at April 1, 2022  $397,335   $65,092   $124,906   $13,380   $19,335   $620,048 
Capitalized expenditures   35,632    -    4,839    907    876    42,254 
Environmental rehabilitation   (224)   (36)   12    -    -    (248)
Foreign currency translation impact   (30,731)   (1,192)   (9,639)   (1,034)   -    (42,596)
Balance as at March 31, 2023  $402,012   $63,864   $120,118   $13,253   $20,211   $619,458 
Capitalized expenditures   35,681    -    4,901    209    -    40,791 
Foreign currency translation impact   (12,637)   (454)   (3,760)   (427)   -    (17,278)
Balance as at December 31, 2023  $425,056   $63,410   $121,259   $13,035   $20,211   $642,971 
                               
Impairment and accumulated depletion                              
Balance as at April 1, 2022  $(143,264)  $(57,521)  $(92,815)  $-   $-   $(293,600)
Impairment   -    -    -    -    (20,211)   (20,211)
Depletion   (18,689)   -    (2,398)   -    -    (21,087)
Foreign currency translation impact   11,091    610    7,165    -    -    18,866 
Balance as at March 31, 2023  $(150,862)  $(56,911)  $(88,048)  $-   $(20,211)  $(316,032)
Depletion   (15,423)   -    (1,953)   -    -    (17,376)
Foreign currency translation impact   4,726    236    2,757    -    -    7,719 
Balance as at December 31, 2023  $(161,559)  $(56,675)  $(87,244)  $-   $(20,211)  $(325,689)
                               
Carrying amounts                              
Balance as at March 31, 2023  $251,150   $6,953   $32,070   $13,253   $-   $303,426 
Balance as at December 31, 2023  $263,497   $6,735   $34,015   $13,035   $-   $317,282 

 

14.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, 2022  $182   $1,263 
Interest accrual   4    43 
Interest received or paid   (4)   (43)
Principal repayment   (172)   (597)
Foreign exchange impact   (10)   (83)
Balance, March 31, 2023  $-   $583 
Interest accrual        18 
Interest received or paid        (18)
Principal repayment        (195)
Foreign exchange impact        10 
Balance, December 31, 2023  $-   $398 
Less: current portion   -    (281)
Non-current portion  $-   $117 

 

21

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

The following table presents a reconciliation of the Company’s undiscounted cash flows to their present value for its lease obligation as at December 31, 2023:

 

   Lease Obligation 
Within 1 year  $291 
Between 2 to 5 years   121 
Total undiscounted amount   412 
Less future interest   (14)
Total discounted amount  $398 
Less: current portion   (281)
Non-current portion  $117 

 

The lease obligation was discounted using an estimated incremental borrowing rate of 5%.

 

15.ENVIRONMENTAL REHABILITATION OBLIGATION

 

The following table summarizes the changes of the Company’s discounted environmental rehabilitation obligation.

 

   Total 
Balance, April 1, 2022  $8,739 
Reclamation expenditures   (740)
Unwinding of discount of environmental rehabilitation   239 
Revision of provision   (248)
Foreign exchange impact   (672)
Balance, March 31, 2023  $7,318 
Reclamation expenditures   (766)
Unwinding of discount of environmental rehabilitation   147 
Foreign exchange impact   (242)
Balance, December 31, 2023  $6,457 

 

16.SHARE CAPITAL

 

(a)Authorized

 

Unlimited number of common shares without par value. All shares issued as at December 31, 2023 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. The Company has not yet granted any PSUs since the Plan was implemented.

 

22

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

For the three and nine months ended December 31, 2023, a total of $0.8 million and $3.5 million, respectively (three and nine months ended December 31, 2022 - $0.8 million and $3.1 million, respectively) in share-based compensation expense was recognized and included in the corporate general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.

 

(c)Stock options

 

The following is a summary of option transactions:

 

   Number of shares   Weighted average exercise price per share CAD$ 
Balance, March 31, 2022   995,335   $7.28 
Options granted   595,000    3.95 
Options cancelled/forfeited   (158,667)   6.29 
Balance, March 31, 2023   1,431,668   $6.01 
Options cancelled/forfeited   (43,334)   7.59 
Balance, December 31, 2023   1,388,334   $5.96 

 

The following table summarizes information about stock options outstanding as at December 31, 2023:

 

Exercise price in CAD$   Number of options outstanding at
December 31, 2023		   Weighted average remaining contractual life (Years)   Weighted average exercise price in CAD$   Number of options exercisable at
December 31, 2023		   Weighted average exercise price in CAD$ 
$3.93    473,000    3.32   $3.93    239,000   $3.93 
$4.08    60,000    4.15   $4.08    10,000   $4.08 
$5.46    480,334    1.40   $5.46    480,334   $5.46 
$9.45    375,000    1.86   $9.45    375,000   $9.45 
$3.93 to $9.45    1,388,334    2.30   $5.96    1,104,334   $6.47 

 

The options were granted to directors, officers, and employees with a life of five years 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.

 

Subsequent to December 31, 2023, a total of 13,333 options with exercise prices from CAD$3.93 - CAD$5.46 were cancelled and/or forfeited.

 

23

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

(d)RSUs

 

The following is a summary of RSUs transactions:

 

   Number of
shares		   Weighted
average
grant date
closing
price per
share $CAD		 
Balance, March 31, 2022   1,636,165   $ 6.47 
Granted   1,154,000    3.96 
Forfeited   (159,792)   5.44 
Distributed   (503,703)   6.04 
Balance, March 31, 2023   2,126,670   $5.29 
Granted   1,056,000    5.28 
Forfeited   (70,332)   5.13 
Distributed   (580,923)   5.56 
Balance, December 31, 2023  2,531,415   $5.22 

 

Subsequent to December 31, 2023, a total of 341,834 RSUs were distributed.

 

(e)Cash dividends

 

During the three and nine months ended December 31, 2023, dividends of $2.2 and $4.4 million, respectively, (three and nine months ended December 31, 2022 - $2.2 and $4.4 million, respectively) were declared and paid.

 

(f)Normal course issuer bid

 

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

 

On September 15, 2023, the Company announced a normal course issuer bid (the “2023 NCIB”), which allowed the Company to repurchase and cancel up to 8,487,191 of its own common shares until September 18, 2024.

 

During the three and nine months ended December 31, 2023, the Company repurchased a total of 119,270 and 315,824, respectively, (three and nine months ended December 31, 2022 – nil and 838,237, respectively) common shares at a cost of $0.3 million and $0.8 million, respectively (three and nine months ended December 31, 2022 – $nil and $2.1 million, respectively), under the normal course issuer bids. All shares bought were subsequently cancelled.

 

24

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

17.ACCUMULATED OTHER COMPREHENSIVE LOSS

 

   December 31,
2023		   March 31,
2023		 
Change in fair value on equity investments designated as FVTOCI  $24,349   $24,355 
Share of other comprehensive  loss  in associate   1,177    1,380 
Currency translation adjustment   24,551    17,508 
Balance, end of the period  $50,077   $43,243 

 

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

 

18.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, 2022  $89,669   $4,928   $2,915   $(181)  $10,387   $107,718 
Share of net income (loss)   11,584    (121)   (157)   78    (10,892)   492 
Share of other comprehensive loss   (6,037)   (351)   (118)   (46)   -    (6,552)
Distributions   (9,934)   (946)   -    -    -    (10,880)
Balance, March 31, 2023  $85,282   $3,510   $2,640   $(149)  $(505)  $90,778 
Share of net income (loss)   10,874    513    (120)   30    (21)   11,276 
Share of other comprehensive loss   (2,061)   (57)   (72)   (84)   -    (2,274)
Distributions   (6,615)   (633)   -    (50)   -    (7,298)
Balance, December 31, 2023  $87,480   $3,333   $2,448   $(253)  $(526)  $92,482 

 

As at December 31, 2023, 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, 2023 – 22.5%, 20%, 30%, 1%, and 53.9%, respectively).

 

19.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 unaudited condensed consolidated interim financial statements are as follows:

 

   December 31,
2023		   March 31,
2023		 
NUAG (a)  $125   $51 
TIN (b)   171    37 
   $296   $88 

 

(a)The Company recovers costs for services rendered to NUAG and expenses incurred on behalf of NUAG pursuant to a services and administrative costs reallocation agreement. During the three and nine months ended December 31, 2023, the Company recovered $0.2 million and $0.7 million, respectively (three and nine months ended December 31, 2022 - $0.2 million and $0.7 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 unaudited condensed consolidated statements of income.

 

25

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

(b)The Company recovers costs for services rendered to TIN and expenses incurred on behalf of TIN pursuant to a services and administrative costs reallocation agreement. During the three and nine months ended December 31, 2023, the Company recovered $0.1 million and $0.3 million, respectively (three and nine months ended December 31, 2022 - $0.07 million and $0.1 million, respectively,), from TIN for services rendered and expenses incurred on behalf of TIN. The costs recovered from TIN were recorded as a direct reduction of general and administrative expenses on the unaudited condensed consolidated statements of income.

 

20.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 December 31, 2023 and March 31, 2023 that are not otherwise disclosed. As required by IFRS 13, the assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

   Fair value as at December 31, 2023 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                
Cash and cash equivalents  $143,280   $-   $-   $143,280 
Short-term investments - money market instruments   53,612    -    -    53,612 
Investments in public companies   43,684    -    -    43,684 
Investments in private companies   -    -    3,298    3,298 

 

26

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

   Fair value as at March 31, 2023 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                
Cash and cash equivalents  $145,692   $-   $-   $145,692 
Short-term investments - money market instruments   53,829    -    -    53,829 
Investments in public companies   12,314    -    -    12,314 
Investments in private companies   -    -    3,226    3,226 

 

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.

 

Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at December 31, 2023 and March 31, 2023, due to the short-term nature of these instruments.

 

There were no transfers into or out of Level 3 during the three and nine months ended December 31, 2023 and 2022.

 

(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.

 

   December 31, 2023 
   Within a year   2-5 years   Total 
Accounts payable and accrued liabilities  $52,539   $-   $52,539 
Lease obligation   291    121    412 
Deposits received   4,354    -    4,354 
Total Contractual Obligation  $57,184   $121   $57,305 

 

(c)Foreign exchange risk

 

The Company reports its financial statements in US dollars. The functional currency of the parent entity, 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.

 

27

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

(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 sensitivity of the Company’s net income due to the exchange rates of the Canadian dollar against the U.S. dollar and the Australian dollar as at December 31, 2023 is summarized as follows:

 

   Cash and cash
equivelents		   Short-term
investments		   Other
investments		   Accounts
payable
and accrued
liabilities		   Net financial
assets
explosure		   Effect of +/- 10%
change in
currency		 
US dollar  $68,539   $1,403   $2,654   $(330)  $72,266   $7,227 
Australian dollar   253    -    32,294    -    32,547    3,255 
   $68,792   $1,403   $34,948   $(330)  $104,813   $10,482 

 

(d)Interest rate risk

 

The Company is exposed to interest rate risk on its cash equivalents and short-term investments. As at December 31, 2023, 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 statements of financial position 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 December 31, 2023 (at March 31, 2023 - $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 December 31, 2023, 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 $4.3 million and $0.1 million, respectively.

 

28

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022

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

 

21.SUPPLEMENTARY CASH FLOW INFORMATION

 

The following table summarizes adjustments for changes in working capital items and significant non-cash items:

 

   Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
Changes in non-cash operating working capital:  2023   2022   2023   2022 
Trade and other receivables  $1,437   $364   $1,497   $1,736 
Inventories   (3,007)   483    (3,043)   657 
Prepaids and deposits   (2,313)   1,089    (3,451)   (7)
Accounts payable and accrued liabilities   3,387    3,712    12,819    3,960 
Deposits received   390    (3,923)   454    (2,470)
Due from a related party   (29)   (45)   (202)   (56)
   $(135)  $1,680   $8,074   $3,820 

 

The following table summarizes other adjustments for non-cash items related to capital expenditures and acquisition transactions:

 

   Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
Non-cash capital transactions:  2023   2022   2023   2022 
Environmental rehablitation expenditure paid from reclamation deposit  $390   $107   $233   $257 
Additions of plant and equipment included in accounts payable and accrued liabilities  $1,749   $1,065    1,104    2,159 
Capital expenditures of mineral rights and properties included in accounts payable and accrued liabilities  $1,106   $(1,279)  $2,197   $1,033 

 

Cash and cash equivalents consist of:

 

   December 31,
2023		   March 31,
2023		 
Cash on hand and at bank  $47,310   $50,871 
Bank term deposits and short-term money market investments   95,970    94,821 
Total cash and cash equivalents  $143,280   $145,692 

 

29