EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Vizsla Silver Corp.: Exhibit 99.1 - Filed by newsfilecorp.com

 

 

Condensed Consolidated Interim Financial Statements

(Expressed in Canadian Dollars - unaudited)

For the three months ended July 31, 2023 and 2022

 

 

 

 


VIZSLA SILVER CORP.

Condensed Consolidated Interim Statements of Financial Position

Expressed in Canadian dollars - unaudited

As at Note   July 31, 2023
 
    April 30, 2023
(Audited)
 
        $     $  
ASSETS              
Current assets              
  Cash and cash equivalents     811,650     12,608,704  
  Short-term investments 3   40,115,000     40,115,000  
  Taxes receivable 4   19,275,306     17,498,525  
  Other receivables     857,764     783,490  
  Prepaid expenses     2,667,879     3,015,115  
Total current assets     63,727,599     74,020,834  
               
Non-current assets              
  Long-term prepaid expenses     129,529     168,792  
  Property, plant, and equipment 5   472,265     384,728  
  Investment 6   1,214,220     1,297,098  
  Exploration and evaluation assets 7   178,205,128     162,731,725  
Total non-current assets     180,021,142     164,582,343  
Total assets     243,748,741     238,603,177  
                 
LIABILITIES              
Current liabilities              
  Accounts payable and accrued liabilities     5,357,084     6,175,346  
  Due to related party 8   71,750     280,505  
Total liabilities     5,428,834     6,455,851  
               
SHAREHOLDERS' EQUITY              
  Share capital 9   237,468,220     237,460,259  
  Reserves     33,062,836     30,324,553  
  Accumulated other comprehensive gain     17,294,238     9,465,293  
  Deficit     (49,505,387 )   (45,102,779 )
Total shareholders' equity      238,319,907     232,147,326  
Total liabilities and shareholders' equity      243,748,741     238,603,177  

Note 1 - Nature and Continuance of Operations

They are signed on the Company's behalf by:


  "Michael Konnert"   "Craig Parry"
  Director, CEO   Director, Chairman

The accompanying notes are an integral part of these condensed consolidated interim financial statements



VIZSLA SILVER CORP.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

Expressed in Canadian dollars - unaudited

               
For the three months ended Note   July 31, 2023     July 31, 2022  
      $     $  
General and administrative expenses              
Amortization     67,258     45,893  
Consulting fees     282,493     208,909  
Directors fees 8   77,924     87,500  
Foreign exchange (gain) / loss     (174,628 )   90,469  
Insurance     187,085     177,768  
Management fees 8   87,500     87,500  
Marketing     698,860     767,933  
Office and miscellaneous 8   268,444     350,355  
Professional fees     91,033     150,038  
Share-based compensation 9e, f   2,738,283     1,240,564  
Transfer agent and filing     93,695     75,347  
Travel and promotion     16,627     103,145  
               
      (4,434,574 )   (3,385,421 )
Other income / (loss)              
    Interest income     114,844     35,183  
Revaluation loss on investment in equity instruments 6   (82,878 )   -  
Net loss     (4,402,608 )   (3,350,238 )
               
Other comprehensive gain/(loss)              
Items that will be reclassified subsequently              
    Translation gain/(loss) on foreign operations     7,828,945     (183,906 )
Comprehensive gain / (loss)     3,426,337     (3,534,144 )
Basic and diluted loss per share     (0.02 )   (0.02 )
               
Weighted average number of common shares                 
Basic and diluted     207,940,239     154,875,802  

The accompanying notes are an integral part of these condensed consolidated interim financial statements


VIZSLA SILVER CORP.

Condensed Consolidated Interim Statements of Cash Flows

Expressed in Canadian dollars - unaudited

               
For the three months ended Note   July 31, 2023     July 31, 2022  
      $     $  
Operating activities              
Net loss for the period     (4,402,608 )   (3,350,238 )
Items not affecting cash:              
Amortization 5   67,258     45,893  
Share-based compensation 9   2,738,283     1,240,564  
Revaluation loss on investment in equity instruments 6   82,878     -  
               
Changes in non-cash working capital items:              
Accounts payable and accrued liabilities     (644,338 )   (3,733,739 )
Due to related parties 8   (208,755 )   (17,708 )
Taxes receivable 4   (1,776,781 )   1,045,273  
Other receivable     (74,274 )   8,912  
Prepaid expenses     386,499     (17,237 )
               
Net cash flows used in operating activities     (3,831,838 )   (4,778,280 )
               
Investing activities              
Purchase of exploration and evaluation assets 7   -     (6,824,175 )
Exploration and evaluation expenditures 7   (8,063,516 )   (7,606,608 )
Payable related to exploration and evaluation assets     (173,924 )   -  
Purchase of equipment 5   (136,220 )   (160,827 )
               
Net cash flows used in investing activities     (8,373,660 )   (14,591,610 )
               
Financing activities              
Issuance of common shares - warrants exercise 9   7,961     -  
               
Net cash flows provided by financing activities     7,961     -  
               
Effects of foreign exchange     400,483     -  
               
Decrease in cash and cash equivalents     (11,797,054 )   (19,369,890 )
               
Cash and cash equivalents, beginning of the period     12,608,704     30,482,269  
               
Cash and cash equivalents, end of the period     811,650     11,112,379  

The accompanying notes are an integral part of these condensed consolidated interim financial statements


VIZSLA SILVER CORP.

Condensed Consolidated Interim Statements of Changes in Equity

Expressed in Canadian dollars, except for number of shares - unaudited

      Common shares                          
  Note   Number       Amount     Reserves     Other
comprehensive
income (loss)
    Deficit     Total  
            $     $     $     $     $  
                                       
Balance, April 30, 2022     154,875,802     163,972,960     23,691,609     (368,411 )   (31,511,051 )   155,785,107  
Stock based compensation     -     -     1,240,564     -     -     1,240,564  
Net loss and comprehensive loss for the period     -     -     -     (183,906 )   (3,350,238 )   (3,534,144 )
                                       
Balance, July 31, 2022     154,875,802     163,972,960     24,932,173     (552,317 )   (34,861,289 )   153,491,527  
                                       
                                       
Balance, April 30, 2023     207,938,329     237,460,259     30,324,553     9,465,293     (45,102,779 )   232,147,326  
Shares issued pursuant to the exercise of warrants and options 10   5,490     7,961     -     -     -     7,961  
Stock-based compensation 10   -     -     2,738,283     -     -     2,738,283  
Net loss and other comprehensive gain for the period     -     -     -     7,828,945     (4,402,608 )   3,426,337  
                                       
Balance, July 31, 2023     207,943,819     237,468,220     33,062,836     17,294,238     (49,505,387 )   238,319,907  

The accompanying notes are an integral part of these condensed consolidated interim financial statements


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

1. Nature and Continuance of Operations

The Company was incorporated on September 26, 2017, under the Business Corporations Act (British Columbia) under the name Vizsla Capital Corp. On March 8, 2018, the Company changed its name to Vizsla Resources Corp. The Company's principal business activity is the exploration of mineral properties. The Company currently conducts substantially all its operations in Canada and Mexico in one business segment. On February 8, 2021, the Company changed its name to Vizsla Silver Corp. (the "Company", "Vizsla Silver"). It is trading on the venture exchange under the symbol VZLA.

On January 21, 2022, Vizsla Silver Corp was listed on the NYSE American and commenced trading under the symbol "VZLA".

The head office and principal address of the Company is located at 700- 1090 West Georgia Street, Vancouver, B.C., V6E 3V7.

The Company has not yet determined whether its properties contain ore reserves that are economically recoverable. The recoverability of the amounts shown for mineral properties and exploration costs is dependent upon the existence of economically recoverable ore reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties, and future profitable production or proceeds from the disposal of properties.

These condensed consolidated interim financial statements have been prepared using accounting principles applicable to a going concern which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation.

The Company continues to experience risks associated with global inflation and volatility in foreign exchange rates. The Company continues to monitor each of these risks and will execute timely and appropriate measures as necessary. Further, near-term metal prices, exchange rates, discount rates, and other key assumptions used in the Company's accounting estimates are subject to greater uncertainty given the current economic environment. Changes in these assumptions could significantly impact the Company's accounting estimates.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

2. Significant Accounting Policies and Basis of Presentation

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB"). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") have been omitted or condensed, and therefore these condensed consolidated interim financial statements should be read in conjunction with the Company's April 30, 2023, audited annual consolidated financial statements and the notes to such financial statements.

These condensed consolidated interim financial statements are based on the IFRS issued and effective as of July 31, 2023. These condensed consolidated interim financial statements were authorized for issuance by the Company's Board of Directors on September 8, 2023, and follow the same accounting policies and methods of computation as the most recent annual consolidated financial statements:

a) Basis of Consolidation

The principal subsidiaries of the Company, which are accounted for under the consolidation method, are as follows:

Entity Principal activities Country of
incorporation
and operation
Ownership
interest as
at July 31, 2023
Ownership
interest as at
April 30,
2023
Canam Alpine Ventures Ltd. Holding Co Canada 100% 100%
         
Minera Canam S.A. DE C.V. Exploring evaluating mineral properties Mexico 100% 100%
         
Operaciones Canam Alpine
S.A. DE C.V.
Exploring evaluating mineral properties Mexico 100% 100%
         
Vizsla Royalty Corp. (formerly Vizsla Copper Corp. and 1283303 B.C. Ltd.) Royalty Company Canada 100% 100%
         
Canam Royalties Mexico, S.A. de C.V. Royalty Company Mexico 100% 100%

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. All significant intercompany transactions and balances have been eliminated.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

2. Significant Accounting Policies and Basis of Presentation (continued)

b) Accounting Standards Issued but Not Yet Adopted

The new standards or amendments issued but not yet effective are either not applicable or not expected to have a significant impact on the Company's condensed consolidated interim financial statements.

c) Significant Accounting Judgments and Estimates

The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and related disclosure. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgment is used mainly in determining how a balance or transaction should be recognized in the financial statements. Estimates and assumptions are used mainly in determining the measurement of recognized transactions and balances. Actual results may differ from these estimates.

Significant areas where management's judgment has been applied include:

- Impairment of exploration and evaluation assets (E&E assets)

In accordance with the Company's accounting policy, the Company's E&E assets are evaluated every reporting period to determine whether there are any indications of impairment. If any such indication exists, which is often judgmental, a formal estimate of recoverable amount is performed, and an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount. The recoverable amount of an asset or cash generating group of assets is measured at the higher of fair value less costs to sell and value in use.

The evaluation of asset carrying values for indications of impairment includes consideration of both external and internal sources of information, including such factors as market and economic conditions, metal prices, plans for the Company's mineral properties and mineral resources and/or reserve estimates.

Management has assessed for impairment indicators for the Company's E&E assets and has concluded that no indicators of impairment were identified, and the Company plans to continue with its objective of developing Panuco - Copala Property.

Significant areas requiring the use of management estimates and assumptions include:

- Fair value calculation of share-based payments

The fair value of share-based payments in relation to the warrants and options granted is calculated using a Black Scholes option pricing model. There are several estimates used in the calculation such as the expected option life, rate of forfeiture of options granted, risk-free interest rate used and the future price volatility of the underlying security which can vary from actual future events. The factors applied in the calculation are management's best estimates based on industry average and future forecasts.

- Prismo strategic investment and intangible asset (Note 6)

Prismo shares, Prismo warrants, and Vizsla shares issued to Prismo were fair valued using the discount for lack of marketability ("DLOM") method. DLOM is based on the risk arising from the restricted holding period and voluntary escrow. The intangible asset is calculated based on the difference between the fair value of Prismo Units and Vizsla shares and cash consideration. The factors applied in the calculation are management's best estimates based on industry averages and future forecasts.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

2. Significant Accounting Policies and Basis of Presentation (continued)

c) Significant Accounting Judgments and Estimates (continued)

- Assessing whether deferred tax assets and liabilities are recognized in accordance with IAS 12, Income taxes.

Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the outcome of these tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made.

- Tax receivables

Value-added tax ("VAT") receivable is collectible from the government of Mexico. The collection of VAT is subject to risk due to the complex application and collection process and therefore, risk related to the collectability and timing of payment from the Mexican government. The Company uses its best estimates based on the facts known at the time and its experience to determine its best estimate of the collectability and timing of these recoveries. Changes in the assumptions regarding collectability and the timing of collection could impact the valuation and classification of VAT receivable.

3. Cash and Cash Equivalents and Short-term Investments

Cash and cash equivalents include $811,650 (April 30, 2023 - $12,608,704) in the operating bank accounts.  As of April 30, 2023, cash and cash equivalents also included $6,789,000 (US$5,000,000)) in short-term guaranteed investment certificates ("GICs") that are cashable within one to two months. The GICs earn interest at 5.30%.

Short-term investments include $40,115,000 (April 30, 2023 - $40,115,000) of GICs with maturities of more than 90 days ranging from six months to eight months earning interest at 5.18% to 5.24% (April 30, 2023 - 5.18% to 5.24%).

At July 31, 2023, the Company had 542,927 Mexican pesos (April 30, 2023 - 6,877,311 pesos) and $513,982 US dollars (April 30, 2023- $7,797,176 US dollars).

4. Taxes Receivable

    July 31, 2023     April 30, 2023  
    $     $  
Goods and Service Tax (GST) recoverable   51,757     84,648  
Mexican Value Added Tax (IVA) recoverable   19,223,549     17,413,877  
Total   19,275,306     17,498,525  

* Mexican IVA is net of provision of MXD 5,868,290 (April 30, 2023- MXD 5,868,290).


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

5. Property, Plant and Equipment

      Computer
equipment
    Computer
software
    Office
equipment
    Mining
equipment
    Office
improvements
    Total  
Cost   $     $     $     $     $     $  
Balance - April 30, 2022   39,916     -     39,873     144,598     185,411     409,798  
   Additions   29,326     55,212     8,565     165,637     27,112     285,852  
  Disposal   -     -     -     -     -     -  
  Effect of change in exchange rate   9,992     -     9,005     45,279     40,673     104,949  
Balance - April 30, 2023   79,234     55,212     57,443     355,514     253,196     800,599  
  Additions   162     -     269     135,789     -     136,220  
  Disposal   -     -     -     -     -     -  
  Effect of change in exchange rate   3,135     -     2,531     17,627     11,272     34,565  
Balance - July 31, 2023   82,531     55,212     60,243     508,930     264,468     971,384  
                                       
Accumulated Amortization                                    
Balance - April 30, 2022   15,005     -     8,121     53,299     28,507     104,932  
  Amortization   17,537     55,212     28,896     61,741     105,800     269,186  
  Disposal   -     -     -     -     -     -  
  Effect of change in exchange rate   3,480     -     5,343     13,613     19,317     41,753  
Balance - April 30, 2023   36,022     55,212     42,360     128,653     153,624     415,871  
  Amortization   5,589     -     11,789     20,431     29,449     67,258  
  Disposal   -     -     -     -     -     -  
  Effect of change in exchange rate   1,328     -     2,139     5,053     7,470     15,990  
Balance - July 31, 2023   42,939     55,212     56,288     154,137     190,543     499,119  
                                       
Carrying amounts                                    
As at April 30, 2022   24,911     -     31,752     91,299     156,904     304,866  
As at April 30, 2023   43,212     -     15,083     226,861     99,572     384,728  
As at July 31, 2023   39,592     -     3,955     354,793     73,925     472,265  


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

6. Strategic Investment in Prismo Metals Inc. and Intangible Asset

On December 16, 2022, the Company entered a strategic investment with Prismo Metals Inc. ("Prismo"). Prismo is trading on the Canadian Securities Exchange under the symbol "PRIZ". The Company finalized its strategic investment in Prismo on January 6, 2023 ("Closing Date").

Pursuant to the strategic investment, the Company acquired (i) a right of first refusal ("ROFR") to purchase the Palos Verdes project from Prismo, which will remain valid until January 6, 2027, four years from the Closing Date, and (ii) 4,000,000 units of Prismo ("Prismo Units").

ROFR in this context refer to the obligation of Prismo to notify the Company of any written offers received from third parties to purchase any portion of the Palos Verdes Properties (referred to as the "Offered Interest"). The Company reserves the right to purchase the Offered Interest at the same price and under the same conditions within a 45-day window. If the Company declines or fails to respond, Prismo is permitted to sell to the third party after laps of 90 days, and the Company's rights expire after four years, unless its percentage of ownership is below 8%. The Company's ROFR persists through any changes of control of Prismo.

The Company acquired 4,000,000 Prismo Units, each Prismo Unit consists of one common share of Prismo (a "Prismo Share") and one-half of one common share purchase warrant (a "Prismo Warrant"). Each Prismo Warrant entitles the Company to purchase one additional Prismo Share for a period of two years from the closing date at a price of $0.75. The Prismo shares are subject to a statutory hold period of four months and one day, and a voluntary escrow period of 24 months with 25% of the securities released every six months. The Prismo Units were fair valued at $1,413,225.

The valuation of Prismo shares follows a level 2 fair value measurement. The share price is derived from the market price on the Closing Date of $0.48, with consideration for the lack of marketability. The DLOM rate used is provided below.

The consideration for the strategic investment consisted of a cash payment of $500,000 (paid) and 1,000,000 common shares of the Company. The consideration shares are subject to a statutory hold period of four months and one day, and a voluntary escrow period of 24 months with 25% of the securities released every six months. The shares were fair valued at $1,357,155.

The fair value of Vizsla shares is determined using a level 2 fair value measurement. The share price is based on the market price on the Closing Date of $1.62, after factoring in the lack of marketability. The applicable DLOM rate is provided below.

As at Jan 6, 2023
Date
DLOM
Vizsla Prismo
06-Jul-23 10.6% 21.3%
06-Jan-24 15.9% 28.1%
06-Jul-24 18.0% 30.1%
06-Jan-25 20.4% 31.4%


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

6. Strategic Investment in Prismo Metals Inc. and Intangible Asset (continued)

An intangible asset with a fair value of $443,930 was recognized for the difference between the fair value of the Prismo Units and Vizsla shares, as well as the cash paid as consideration. Due to the lack of evidence of future economic benefits, the Company wrote off the intangible asset as impairment loss in the year ended April 30, 2023. The continuity of the intangible asset is below:

      Right of first refusal     Total  
Cost     $     $  
Balance - April 30, 2022   -     -  
  Additions   443,930     443,930  
  Write off as impairment loss   (443,930 )   (443,930 )
Balance - April 30 and July 31, 2023   -     -  
               
Carrying amounts            
As at April 30, 2022   -     -  
As at April 30, 2023   -     -  
As at July 31, 2023   -     -  

In connection with the strategic investment, Prismo and the Company have agreed to form a technical committee to pursue district-scale exploration of the Panuco silver-gold district.

Immediately prior to the closing of the strategic investment, the Company did not beneficially own, directly or indirectly, or exercise control or direction over, any Prismo Shares or any securities convertible into or exercisable for Prismo Shares. Immediately following the closing of the strategic investment, the Company owns 4,000,000 Prismo Shares and 2,000,000 Prismo Warrants, representing 10.08% of the issued and outstanding Prismo Shares on a non-diluted basis and 14.4% of the Prismo Shares on a partially diluted basis. As of July 31, 2023, 1 million Prismo shares has been released from the voluntary hold.

As the Company has no common management or directors, it does not have significant influence. As such, the Prismo Units have been recognised as investment and measured at fair value through profit or loss. The change in the fair value during the period ended July 31, 2023, was $82,878 (year ended April 30, 2023: $116,127) and recorded in other loss. The continuity schedule of the investment is below:

      Strategic Investment  
      $  
Balance - April 30, 2022   -  
  Additions   1,413,225  
  Gain (loss) from fair value adjustment   (116,127 )
Fair value - April 30, 2023   1,297,098  
  Gain (loss) from fair value adjustment   (82,878 )
Fair value - July 31, 2023   1,214,220  


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

6. Strategic Investment in Prismo Metals Inc. and Intangible Asset (continued)

Prismo shares are fair valued using the discount for lack of marketability ("DLOM") method. DLOM is based on the risk arising from the restricted holding period and voluntary escrow. The valuation of Prismo shares follows a level 2 fair value measurement. The share price is derived from the market price on the period-end date, July 31, 2023, of $0.29 (April 30, 2023: $0.335), with consideration for the lack of marketability. The DLOM rate used is provided below:

  April 30, 2023 July 31, 2023
Date DLOM DLOM
06-Jul-23 8.90% Issued
06-Jan-24 22.10% 18.61%
06-Jul-24 27.50% 24.83%
06-Jan-25 30.00% 28.26%

The fair value of the Prismo warrants granted was calculated as of the year-end date using the Black-Scholes option pricing model with the following assumptions:

  April 30, 2023 July 31, 2023
Risk Free Interest Rate 3.78% 4.73%
Expected Dividend Yield - -
Expected Volatility 115.74% 154.08%
Expected Term in Years 1.69 years 1.44 years


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

7. Exploration and Evaluation Assets

Canam Alpine Ventures Ltd. - Panuco-Copala Property

On November 5, 2019, pursuant to a definitive share exchange agreement (the "Agreement") dated September 13, 2019, the Company acquired all of the issued and outstanding common shares of Canam Alpine Ventures Ltd.("Canam"), a private British Columbia company. Canam owns two subsidiaries in Mexico, Minera Canam S.A. DE C.V. and Operaciones Canam Alpine S.A. DE C.V. According to the Agreement, the Company agreed to pay the consideration of $45,000 cash and issue 6,000,000 common shares (issued) and 12,000,000 Milestone Shares on the occurrence of milestone events as follows:

-  Milestone event 1: Upon exercise of any defined options by Canam, the Company will issue 6,500,000 common shares (issued);

- Milestone event 2: Upon definition of a resource greater than 200,000 gold equivalent ounces, the Company will issue 5,500,000 common shares (issued).

In addition, the Company issued 250,000 common shares at the closing of the transaction and agreed to issue an additional 250,000 common shares on each occurrence of Milestone event 1 and 2 for a total of 750,000 common shares as finders' fees. The Company recorded $296,250 and $12,344 as contingent consideration in relation to the two milestone events and related finder's fees, respectively, which represented its fair value at the date of acquisition and was classified as shares to be issued, representing the fair value at the date of acquisition of the fixed number of shares that are required to be issued based on the milestones. The contingent consideration will not be remeasured, and settlement is accounted for in equity. As of April 30, 2022, the milestones have occurred, and the shares have been issued. As a result, the full $308,595 of contingent consideration has been reversed.

On August 8, 2019, Canam entered into an option agreement with Minera Rio Panuco S.A. de C.V. ("Panuco") whereby the Company can earn a 100% interest in certain concessions and assets by spending USD$2,000,000 in exploration by the second anniversary date of the agreement and paying a cumulative of USD$23,000,000. The option agreement was amended on May 6, 2020, to extend the schedule of Canam's payment and investment obligations for an additional one year and the Company paid USD$80,000 for the extension.

On September 9, 2019, Canam entered into an option agreement with Silverstone Resources S.A. de C.V. ("Copala") whereby the Company can earn a 100% interest in certain concessions and assets by spending USD$1,423,000 in exploration by the second anniversary date of the agreement and paying a cumulative of USD$20,000,000. Certain claims of Copala are subject to a 3.0% net smelter royalty ("NSR") which can be brought down to 1.5% for 10% interest or property right on the mining concessions.

On July 21, 2021, the Company signed a binding amending agreement (the "Panuco Amending Agreement") with Panuco and has executed a binding option exercise notice ("Copala Exercise Notice") with Copala, which together will constitute the acceleration and exercise of the Company's option to acquire 100% of the Panuco-Copala silver gold district ("Panuco District" or the "Project").


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

7. Exploration and Evaluation Assets (continued)

Canam Alpine Ventures Ltd. - Panuco-Copala Property (continued)

Under the Amending Agreement, Vizsla/Canam and Panuco have agreed to amend the terms of the original Panuco option agreement in order to accelerate the Company's exercise of its option on the Panuco property (the "Panuco Property"). Upon closing of the transactions contemplated by the Panuco Amending Agreement, Vizsla will acquire a 100% ownership interest in the Panuco Property (comprising 43 mining concessions with a combined surface area of 3,839 Ha) and the "El Coco" mill (the "Mill") in consideration for:

  • A cash payment of US$4,250,000 (paid) to Panuco upon signing of the Amending Agreement;
  • The issuance to Panuco of 6,245,902 common shares of Vizsla priced at $2.44 per share (for a total value of US$12,000,000) upon the completion of the transfer of the Panuco Property on or before August 10, 2021 (issued); and
  • A cash payment of US$6,100,000: US$250,000 was paid on August 19, 2021; US$850,000 was paid on February 1, 2022, for the mineral claims around the Coco mill. On May 6th, 2022, following the refurbishment and transfer of ownership of the mill, US$5,000,000 was paid.

The mineral concessions comprising the Panuco Property include the Napoleon vein corridor, which has seen the majority of Vizsla's exploration and are unencumbered by royalties.

Under the Copala Exercise Notice, Vizsla and Copala have agreed to amend the terms of the original Copala option agreement in order to accelerate the Company's exercise of its option on the Copala property (the "Copala Property"). A definitive agreement was signed on July 20, 2021 (the "Copala Amending Agreement" and, together with the Panuco Amending Agreement, the "Amending Agreements"). Upon closing of the transactions contemplated by the Copala Amending Agreement, Vizsla will acquire a 100% ownership interest in the Copala Property (comprising 64 mining concessions with a combined surface area of 5,547 Ha) in consideration for:

  • A cash payment of US$9,500,000 payable to Copala upon the completion of the transfer of the Copala Property on or before August 3, 2021 (paid); and
  • The issuance to Copala of 4,944,672 common shares of Vizsla priced at $2.44 per share upon the completion of the transfer of the Copala Property (issued).

VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

7. Exploration and Evaluation Assets (continued)

Canam Alpine Ventures Ltd. - Panuco-Copala Property (continued)

Costs related to the properties can be summarized as follows:

      Balance
April 30, 2022
    Additions     Balance
April 30, 2023
    Additions     Balance
July 31, 2023
 
Acquisition costs                              
  Cash $ 19,744,301   $ 6,396,000   $ 26,140,301   $ -   $ 26,140,301  
  Effective settlement of loans receivables   1,190,024     -     1,190,024     -     1,190,024  
  Shares   58,146,988     -     58,146,988     -     58,146,988  
  Transaction cost   -     -     -     -     -  
  Subtotal $ 79,081,313   $ 6,396,000   $ 85,477,313   $ -   $ 85,477,313  
                                 
                                 
      Balance
April 30, 2022
    Additions     Balance
April 30, 2023
    Additions     Balance
July 31, 2023
 
Exploration costs                              
  Analysis $ 5,166,595   $ 3,135,842   $ 8,302,436   $ 698,983   $ 9,001,419  
  Depreciation   23,951     53,711     77,662     20,431     98,093  
  Drilling   20,936,016     14,672,917     35,608,933     4,000,009     39,608,942  
  Ejido Rights   421,243     -     421,243     -     421,243  
  Engineering consulting   671,537     512,516     1,184,053     47,252     1,231,305  
  Equipment   1,306,386     1,094,354     2,400,740     509,984     2,910,724  
  Field Cost   4,342,210     1,711,210     6,053,420     516,279     6,569,699  
  Geological consulting   4,203,068     3,930,707     8,133,775     1,082,397     9,216,172  
  GIS management   -     203,054     203,054     40,068     243,122  
  Geophysical survey   -     158,542     158,542     3,693     162,235  
  Maintenance   396,939     452,923     849,862     8,215     858,077  
  Rent of land   239,695     146,953     386,648     -     386,648  
  Travel and miscellaneous   2,375,661     4,675,810     7,051,471     1,136,205     8,187,676  
  Subtotal $ 40,083,301   $ 30,748,538   $ 70,831,839   $ 8,063,516   $ 78,895,355  
                                 
    $ 119,164,614   $ 37,144,538   $ 156,309,152   $ 8,063,516   $ 164,372,668  
  Effect of change in exchange rate   (374,872 )   6,797,445     6,422,573     7,409,887     13,832,460  
Total   $ 118,789,742   $ 43,941,983   $ 162,731,725   $ 15,473,403   $ 178,205,128  

The Company created a 100% owned subsidiary, Canam Royalties Mexico, S.A. de C.V. ("Canam Royalties") through Vizsla Royalty Corp., which is 100% owned by the Company. On February 23, 2022, Vizsla transferred 2% NSR on certain concessions and 0.5% NSR on certain concessions to Canam Royalties.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

8. Related Party Transactions

During the three months ended July 31, 2023, and 2022, the Company has the following related party transactions:

(a) The Company has incurred $321,874 (2022: $330,652) in salary and consulting fees to the Company's officers and companies owned by the Company's officers as compensation.

(b) The Company has incurred $75,000 (2022: $87,500) in director fees to the Company's directors.

(c) The Company has paid $150,000 (2022: $150,000) to a company with common directors and officers for rent expenses and administration expenses.

(d) For the three months ended July 31, 2023, the Company has granted 2,965,000 (2022: 530,000) stock options to officers and directors of the Company (Note 9(e)).

(e) As of July 31, 2023, $71,750 (April 30, 2023: $280,505) was payable to officers of the Company.

These transactions are in the normal course of operations and have been valued in these condensed consolidated interim financial statements at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

9. Share Capital

a) Authorized:

Unlimited number of common shares with no par value.

b) Issued and Outstanding

As at July 31, 2023, 207,943,819 (April 30, 2023: 172,201,698) common shares with no par value were issued and outstanding.

During the three-months ended July 31, 2023, 5,490 warrants were exercised for proceeds of $7,691. No other shares were issued during the three months ended July 31, 2023.

During the year ended April 30, 2023, the Company issued common shares of the Company (the "Shares") as follow:

On February 9, 2023, the Company completed a private placement during which it issued 27,286,050 common shares at a price of $1.65 for gross proceeds of $45,021,982. The Company paid a cash commission of $2,701,319 equal to 6% of the gross proceeds of the offering and issued 1,637,163 compensation options to the Agents. Each compensation option is exercisable to acquire one common share of the Company at the issue price of $1.65 until February 9, 2025. The compensation options have a fair value of $1,408,313 using the Black-Scholes Options pricing model. The Company incurred a total of $3,023,679 in cash share issue costs.

All securities issued under the private placement will be subject to a statutory hold period in Canada expiring four months and one day from the date of issuance.

On November 15, 2022, the Company closed a bought deal financing of 23,805,000 units at a price of $1.45 per units for gross proceeds of $34,517,250. Each Unit consists of one common share of the Company and one-half of one common share purchase warrant (each whole common share purchase warrant, a "Warrant"). Each Warrant entitles the holder to acquire one common share of the Company until November 15, 2024, at a price of $2.00. The warrants were not assigned a value since the market price of the Company's share on November 15, 2022, was equivalent to the price of the unit at $1.45.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

9. Share Capital (continued)

b) Issued and Outstanding (continued)

During the year ended April 30, 2023, the Company issued common shares of the Company (the "Shares") as follow:

The financing was subject to 6% cash finders fees and 6% finders warrants exercisable at $1.45 on or before November 15, 2024. The finders' warrants have a fair value of $1,138,453 using the Black-Scholes Options pricing model. The Company incurred a total of $2,542,864 in cash share issue costs.

The net proceeds from both the private placement and the bought deal financing will be used to advance the exploration, drilling, and development of the Company's Panuco Project, as well as for working capital and general corporate purposes.

On January 6, 2023, the Company issued 1,000,000 shares in connection to the strategic investment in Prismo Metals Inc. The shares are subject to a statutory hold period of four months and one day, and a voluntary escrow period of 24 months with 25% of the securities released every six months. The shares are fair valued at $1,357,155 (Note 6).

For the year ended April 30, 2023, 775,347 options were exercised for proceeds of $318,000. The weighted average share price on date of exercise is $1.76. 196,130 warrants were exercised for proceeds of $386,221. The weighted average share price of on date of exercise is $2.10. 

c) Escrow shares

As of April 30, 2023, the Company has 750,000 shares in escrow (April 30, 2023: 1,000,000). The escrow shares relate to the Prismo transaction (Note 6) are subject to a voluntary escrow period of 24 months. During this period, 25% of the securities will be released every six months, starting from the closing date of January 6, 2023. During the three months ended July 31, 2023, 250,000 have been released and 750,000 shares remain in escrow.

d) Warrants

As of July 31, 2023, the Company has 14,766,343 warrants exercisable (April 30, 2023: 14,771,833). 

During the three-months ended July 31, 2023, 5,490 warrants were exercised for proceeds of $7,691. No other warrants were issued during the three months ended July 31, 2023.

During the year ended April 30, 2023, the Company issued 11,902,500 warrants and 1,428,300 broker warrants, totaling 13,330,800 warrants in relation to the bought deal financing which closed on November 15, 2022. Each warrant entitles the holder to acquire one common share of the Company until November 15, 2024, at a price of $2.00. The Company issued 1,637,163 compensation warrants in relation to the private placement which closed on February 9, 2023. Each compensation warrant is exercisable to acquire one Common Share at $1.65 until February 9, 2025. 32,424,902 warrants expired.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

9. Share Capital (continued)

d) Warrants (continued)

The following is a summary of warrant transactions for the three months ended July 31, 2023, and year ended April 30, 2023:

    July 31, 2023     April 30, 2023  
    Number of
warrants
    Weighted
average

exercise
price
    Number of
warrants
    Weighted
average

exercise price
 
          $           $  
Warrants outstanding, beginning of the period   14,771,833     1.91     32,424,902     2.68  
Issued   -     -     14,967,963     1.57  
Exercised   (5,490 )   1.45     (196,130 )   1.97  
Expired   -     -     (32,424,902 )   (2.68 )
Warrants outstanding, end of the period   14,766,343     1.91     14,771,833     1.91  

The following warrants were outstanding and exercisable July 31, 2023:

Expiry date Exercise
price
$
Number of warrants
outstanding and
exercisable
15-Nov-24 2.00       11,717,350
15-Nov-24 1.45         1,411,830
09-Feb-25 1.65         1,637,163
          14,766,343

As at July 31, 2023, the weighted average remaining contractual life for outstanding warrants is 1.32 years (April 30, 2023: 1.57 years).


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

9. Share Capital (continued)

e) Options

The Company has adopted a Stock Option Plan (the "Plan") pursuant to which options may be granted to directors, officers and consultants of the Company. Under the terms of the Plan, the Company can issue a maximum of 10% of the issued and outstanding common shares at the time of the grant, a maximum term of 10 years and the exercise price of each option is determined by the directors but may not be less than the closing market price of the Common Shares on the day preceding the date of granting of the option less any available discount, in accordance with TSXV Policies. No option may be granted for a term longer than ten years. Options granted under the Plan including vesting and the term, are determined by, and at the discretion of, the Board of Directors.

The continuity of stock options for the three-month ended July 31, 2023, and year ended April 30, 2023, is as follows:

    July 31, 2023     April 30, 2023  
    Number of
options
    Weighted
average
exercise
price
    Number of
options
    Weighted
average
exercise
price
 
        $           $  
Options outstanding, beginning of the period   15,926,972     1.69     14,640,472     1.64  
Issued   3,850,000     1.60     2,720,000     1.63  
Cancelled   -     -     (658,153 )   (2.06 )
Exercised   -     -     (775,347 )   (0.41 )
Options outstanding, end of the period   19,776,972     1.67     15,926,972     1.69  
Options exercisable, end of the period   14,580,722     1.68     13,692,722     1.69  


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

9. Share Capital (continued)

e)  Options (continued)

The following options were outstanding and exercisable as July 31, 2023:

Expiry date Exercise price
$
*Adjusted
exercise price
$
Number of
Options
outstanding
Number of
Options
exercisable
         
27-Feb-29                     0.15                   0.14 655,000 655,000
13-Jun-24                     0.17                   0.16 350,000 350,000
30-Dec-24                     0.69                   0.66 875,000 875,000
07-Jan-25                     0.72                   0.69 75,000 75,000
29-Jun-25                     0.79                   0.76 1,006,250 1,006,250
06-Aug-25                     2.15                   2.07 1,490,000 1,490,000
27-Aug-25                     1.76                   1.69 75,000 75,000
01-Oct-25                     1.46                   1.40 125,000 93,750
01-Dec-25                     1.46                   1.40 100,000 75,000
12-Jan-26                     1.71                   1.64 60,000 60,000
17-Feb-26                     1.50                   1.44 2,007,722 2,007,722
22-Jun-26                     2.31                   2.22 3,784,000 3,784,000
12-Jul-26                     2.44                   2.34 220,000 220,000
27-Jul-26                     2.44                   2.34 139,000 139,000
24-Sep-26                     2.25                   2.25 1,945,000 1,945,000
01-Feb-27                     2.45                   2.45 300,000 180,000
02-Jun-27                     1.74                   1.74 590,000 354,000
10-Feb-28                     1.60                   1.60 2,130,000 426,000
19-May-25                     1.60                   1.60 3,850,000 770,000
      19,776,972 14,580,722

The fair value of the options granted was calculated using the Black-Scholes option pricing model with the following assumptions for options granted in the three months ended July 31, 2023, and 2022:

  For the three months ended
  July 31, 2023 July 31, 2022
Risk Free Interest Rate 3.29% 2.72% -2.89%
Expected Dividend Yield - -
Expected Volatility 96.24% 100% - 104%
Expected Term in Years 5 years 5 years

The Company recorded a fair value of $2,455,724 as share-based compensation related to options granted for the three-month ended July 31, 2023 (July 31, 2022 - $1,240,564).


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

9. Share Capital (continued)

f) Restricted Shares Units

On February 10, 2023, pursuant to the Company's Equity Incentive Compensation Plan, the Company granted 1,133,572 restricted share units (each, an "RSU") to directors, officers, employees, and consultants of the Company. The RSUs will vest in three equal annual installments commencing on the first anniversary of the grant date. The Company can settle each vested RSUs with cash, sharers, or a combination of cash and share at the Company's discretion.

The fair value of each RSU is $1.60 which is the value of a Vizsla common share on issuance day (February 10, 2023). The total share-based compensation of the RSUs is valued at $1,813,715, which will be realized as the RSUs vest.

For the three-month ended July 31, 2023, the Company has recognized a fair value of $282,559 (July 31, 2022: $nil) for the RSUs.

10. Financial Instruments

Fair value of financial instruments

The Company applied the following fair value hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels:

The three levels are defined as follows:

  • Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
  • Level 2 - inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
  • Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's financial instruments are cash and cash equivalent, short-term investments, investment, other receivables, due to related party, and accounts payable and accrued liabilities. All these financial instruments are carried on the consolidated interim statements of financial position at amortized cost except investments, which are carried at fair value through profit or loss using a level 2 fair value measurement (Note 6). The fair values of these financial instruments approximate their carrying value due to their short-term nature.

The Company's financial instruments are exposed to certain financial risks, including liquidity risk, credit risk and interest rate risk.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

10. Financial Instruments (continued)

Liquidity risk

Liquidity risk is the risk that the Company will not meet its financial obligations as they become due.  The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at July 31, 2023, the Company had a cash and cash equivalent balance of $811,650 and short-term investments of $40,115,000 to settle accounts payable and accrued liabilities of $5,428,834. All the Company's financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company's access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

Market risk

Market risk is the risk that changes in market prices will affect the Company's earnings or the value of its financial instruments. Market risk is comprised of commodity price risk and interest rate risk. The objective of market risk management is to manage and control exposures within acceptable limits, while maximizing returns. The Company is not exposed to significant market risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. An immaterial amount of interest rate exposure exists in respect of cash balances on the statement of financial position. As a result, the Company is not exposed to material cash flow interest rate risk on its cash balances.

Foreign currency risk

Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar, United States dollar, and Mexican Peso will affect the Company's operations and financial results. The Company and its subsidiaries are exposed to foreign currency risk to the extent that it has monetary assets and liabilities denominated in foreign currencies.

The Company measures the effect on total assets or total receipts of reasonably foreseen changes in interest rates and foreign exchange rates. The analysis is used to determine if these risks are material to the financial position of the Company. A 1% change in foreign exchange rate of CAD to MXN would increase/decrease the net and comprehensive loss for the three months ended July 31, 2023, by approximately $153,000 (three months ended July 31, 2022: $97,000). Actual financial results for the coming year will vary since the balances of financial assets are expected to decline as funds are used for Company expenses.

Price risk

This risk relates to fluctuations in commodity and equity prices. The Company closely monitors commodity prices of precious and base metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company. Fluctuations in pricing may be significant.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit-related losses in the event of non-performance by the counterparties. The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date. Cash and cash equivalent are held with reputable banks in Canada. The long-term credit rating of these banks, as determined by Standard and Poor's, was A+. As at July 31, 2023, the cash on deposit at these institutions was in excess of federally insured limits. However, management believes credit risk is low given the good credit ratings of the banks.


VIZSLA SILVER CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended July 31, 2023, and 2022

Expressed in Canadian dollars - unaudited

11. Capital Management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business.

The Panuco-Copala property in which the Company currently has an interest are in the exploration stage, as such the Company has historically relied on the equity markets to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

The capital structure of the Company consists of shareholders' equity, comprising issued capital and deficit. The Company is not exposed to any externally imposed requirements. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

12. Segment Information

The Company has one operating segment, being principally mineral exploration.

Geographic Information

The Company's non-current assets, excluding non-current deposits, by location of assets are as follows:

    July 31, 2023     April 30, 2023  
    $     $  
Canada   1,343,749     1,465,890  
Mexico   178,677,393     163,116,453  
    180,021,142     164,582,343