EX-99.4 5 exhibit99-4.htm FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2021 Exhibit 99.4

Exhibit 99.4

 

 

SILVERCORP METALS INC.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and six months ended September 30, 2021 and 2020
(Expressed in thousands of US dollars, unless otherwise stated) (Unaudited)

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Financial Position

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

 

    As at September 30, As at March 31,
  Notes   2021 2021

ASSETS

Current Assets

Cash and cash equivalents

19

 

 

$

 

 

141,929

 

 

$

118,735

Short-term investments 3   79,121 80,357
Trade and other receivables     1,513 1,485
Current portion of lease receivable 8   210 213
Inventories     8,399 9,768
Due from related parties 12   868 847
Income tax receivable     2,406 4,978
Prepaids and deposits     6,386 4,806
    240,832 221,189

Non-current Assets

Long-term prepaids and deposits

 

  

 

4,101

 

409

Long-term portion lease receivable 8   77 183
Reclamation deposits     8,627 8,513
Investment in associates 4   59,733 53,457
Other investments 5   18,311 15,733
Plant and equipment 6   75,726 75,729
Mineral rights and properties 7   293,365 277,429
TOTAL ASSETS $ 700,772 $ 652,642

LIABILITIES AND EQUITY

Current Liabilities

Accounts payable and accrued liabilities

 

 

 

 

$

 

 

 

38,060

 

 

 

$

30,298

Current portion of lease obligation 8   657 657
Deposits received     6,874 4,857
Income tax payable     1,935 1,363
      47,526 37,175

Non-current Liabilities

Long-term portion of lease obligation

8

  

 

759

 

1,084

Deferred income tax liabilities     44,357 40,792
Environmental rehabilitation     7,919 7,863
Total Liabilities     100,561 86,914

Equity

Share capital

 

  

 

252,908

 

250,199

Equity reserves     37,961 29,469
Retained earnings     206,884 187,906
Total equity attributable to the equity holders of the Company     497,753 467,574
Non-controlling interests 11   102,458 98,154
Total Equity     600,211 565,728

 

TOTAL LIABILITIES AND EQUITY

 

 

$

 

700,772

 

$

652,642

         
Approved on behalf of the Board:        

(Signed) David Kong

 

      
Director        
         

(Signed) Rui Feng

 

      
Director        

See accompanying notes to the condensed consolidated interim financial statements

1 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Income

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

    Three Months Ended September 30,   Six Monsths Ended September 30,  
  Notes 2021   2020   2021   2020  

Revenue

  18(b)(c) $

58,435

  $

56,372

  $

117,254

  $

103,077

 

Cost of mine operations

Production costs

      22,771   19,688   45,256   37,435 
Depreciation and amortization      6,878   5,592   13,092   11,332 
Mineral resource taxes      1,703   1,433   3,116   2,769 
Government fees and other taxes  14   710   648   1,401   1,188 
General  and administrative  13   2,761   2,339   5,273   4,396 
       34,823   29,700   68,138   57,120 
Income from mine operations      23,612   26,672   49,116   45,957 
                     
Corporate general  and administrative  13   3,749   2,784   7,587   5,471 
Property evaluation and business development      244   126   634   (3,659)
Foreign exchange (gain) loss      (2,063)  1,349   (1,613)  4,019 
Loss on disposal of plant and equipment  6   51   19   136   211 
Share of loss  in associates  4   469   319   865   480 
Loss (gain) on investments  3,5   4,142   (2,771)  4,864   (8,237)
Other expense (income)      165   69   4   (179)
Income from operations      16,855   24,777   36,639   47,851 
                     
Finance income  15   1,344   741   2,697   1,688 
Finance costs  15   (86)  (84)  (174)  (231)
Income before income taxes      18,113   25,434   39,162   49,308 
                     
Income tax expense  16   5,355   5,877   10,172   11,259 
Net income     $12,758  $19,557  $28,990  $38,049 

 

Attributable to:

Equity holders of the Company

     $9,393  $15,472  $21,605  $30,963 
Non-controlling interests  11   3,365   4,085   7,385   7,086 
      $12,758  $19,557  $28,990  $38,049 

 

Earnings per share attributable to the equity holders of the Company
Basic earnings per share

  

 

  $0.05  $0.09  $0.12  $0.18 
Diluted earnings per share     $0.05  $0.09  $0.12  $0.18 
Weighted Average Number of Shares Outstanding - Basic      176,285,864   174,688,227   176,120,380   174,344,733 
Weighted Average Number of Shares Outstanding - Diluted      178,496,716   177,112,569   178,411,042   176,697,376 

See accompanying notes to the condensed consolidated interim financial statements

2 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Comprehensive Income

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

 

    Three Months Ended September 30,     Six Months Ended September 30,
  Notes 2021     2020     2021     2020

Net income

     $12,758    $19,557   $

28,990

     $

38,049

Other comprehensive (loss) income, net of taxes:                          
Items that may subsequently be reclassified to net income or loss:                          
Currency translation adjustment, net of tax of $nil      (4,864)    16,357     2,490       22,776
Share of other comprehensive (loss) income in associate  4   (423)    (538)    3,182       (1,133)
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  5   375     1,983     870       12,889
Other comprehensive (loss) income, net of taxes     $(4,912)   $17,802   $ 6,542     $ 34,532
Attributable to:                          
Equity holders of the Company     $(4,826)   $15,270   $ 5,727     $ 31,737
Non-controlling interests  11   (86)    2,532     815       2,795
      $(4,912)   $17,802   $ 6,542     $ 34,532
Total comprehensive income      $7,846    $37,359    $ 35,532     $ 72,581

 

Attributable to:

                          
Equity holders of the Company       $4,567    $30,742   $ 27,332     $ 62,700
Non-controlling interests        3,279     6,617     8,200       9,881
        $7,846    $37,359   $ 35,532     $ 72,581

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 September 30,   Six Months Ended September 30,  
    Notes     2021   2020     2021     2020  

Cash provided by Operating activities

Net income

       $12,758  $19,557  $28,990  $38,049  

Add (deduct) items not affecting cash:

                    

Finance costs

  15   86   84   174   231 
Depreciation, amortization and depletion        7,361   6,029   14,060   12,177 
Share of loss in associates  4   469   319   865   480 
Income tax expense  16   5,355   5,877   10,172   11,259 
Loss (gain) on investments  3,5   4,142   (2,771)  4,864   (8,237)
Loss on disposal of plant and equipment  6   51   19   136   211 
Share-based compensation  9(b)  1,773   1,032   3,877   1,755 
Reclamation expenditures        (39)  10   (126)  (68)
Income taxes paid        (273)  (3,074)  (4,002)  (5,823)
Interest paid  15   (19)  (25)  (39)  (50)
Changes in non-cash operating working capital  19   (810)  2,544   8,335   9,759 
Net cash provided by operating activities        30,854   29,601   67,306   59,743 
                       
Investing activities                      

Mineral rights and properties

                      

Capital expenditures

        (10,746)  (8,863)  (20,805)  (16,714)
Deposit for Kuanping project auction  7   (3,093)  -   (3,093)  - 
Plant and equipment
Additions		        (3,380)  (2,189)  (4,604)  (2,995)
Proceeds on disposals  6   4   -   38   1 
Reclamation deposits                      
Paid        (16)  (11)  (59)  (261)
Refund        -   30   -   1,805 
Other investments
Acquisition		  5   (4,306)  (5,865)  (6,917)  (11,403)
Proceeds on disposals  5   205   1,232   974   17,806 
Investment in associates  4   -   -   (4,960)  (5,805)
Net (purchases) redemptions of short-term investments        (37,546)  (16,341)  978   (15,451)
Principal received on lease receivable  8   54   49   108   94 
Net cash used in investing activities        (58,824)  (31,958)  (38,340)  (32,923)

 

Financing activities

Related parties

Repayments received

  12   -   -   -   1,423 
Principal payments on lease obligation
 8   (155)  (138)  (311)  (270)
Non-controlling interests
Distribution		  11   -   -   (3,896)  (3,239)
Cash dividends distributed  9(c)  -   -   (2,202)  (2,178)
Proceeds from issuance of common shares        418   1,854   1,172   2,686 
Net cash (used in) provided by financing activities        263   1,716   (5,237)  (1,578)
Effect of exchange rate changes on cash and cash equivalents        (1,822)  1,937   (535)  4,301 

 

(Decrease) increase in cash and cash equivalents

        (29,529)  1,296   23,194   29,543 
Cash and cash equivalents, beginning of the period        171,458   94,024   118,735   65,777 
Cash and cash equivalents, end of the period       $141,929 $95,320  $141,929 $95,320 
Supplementary cash flow information  19             

See accompanying notes to the condensed consolidated interim financial statements

4 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

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

 

        Share capital   Equity reserves                  
    Notes   Number of
shares		   Amount   Share
option
reserve		   Reserves   Accumulated
other
comprehensive loss		   Retained
earnings		   Total equity
attributable
to the equity
holders of
the Company		   Non-controlling
interests		   Total equity  
Balance, April 1, 2020     173,816,834  $243,926  $15,038  $25,409  $(61,589) $145,898 $368,682  $70,290  $438,972 
Options exercised     1,218,756   3,663   (977)  -   -   -   2,686   -   2,686 
Restricted share units vested     155,874   582   (582)  -   -   -   -   -   - 
Share-based compensation     -   -   1,755   -   -   -   1,755   -   1,755 
Dividends declared     -   -   -   -   -   (2,178)  (2,178)  -   (2,178)
Distribution to non-controlling interests     -   -   -   -   -   -   -   (3,239)  (3,239)
Comprehensive income     -   -   -   -   31,737   30,963   62,700   9,881   72,581 
Balance, September 30, 2020     175,191,464  $248,171  $15,234  $25,409  $(29,852) $174,683  $433,645  $76,932  $510,577 
Options exercised     334,582   1,161   (309)  -   -   -   852   -   852 
Restricted share units vested     216,498   867   (867)  -   -   -   -   -   - 
Share-based compensation     -   -   2,552   -   -   -   2,552   -   2,552 
Dividends declared     -   -   -   -   -   (2,190)  (2,190)  -   (2,190)
Acquisition of La Yesca     -   -   -   -   -   -   -   9,250   9,250 
Contribution from non-controlling interests     -   -   -   -   -   -   -   2,500   2,500 
Comprehensive income     -   -   -   -   17,302   15,413   32,715   9,472   42,187 
Balance, March 31, 2021     175,742,544  $250,199  $16,610  $25,409  $(12,550) $187,906  $467,574  $98,154  $565,728 
Options exercised     443,333   1,568   (396)  -   -   -   1,172   -   1,172 
Restricted share units vested     245,714   1,141   (1,141)  -   -   -   -   -   - 
Share-based compensation  9(b) -   -   3,877   -   -   -   3,877   -   3,877 
Dividends declared  9(c) -   -   -   -   -   (2,202)  (2,202)  -   (2,202)
Distribution to non-controlling interests  11  -   -   -   -   -   -   -   (3,896)  (3,896)
Contribution to reserves     -   -   -   425   -   (425)  -   -   - 
Comprehensive income     -   -   -   -   5,727   21,605   27,332   8,200   35,532 
Balance, September 30, 2021     176,431,591  $252,908  $18,950  $25,834  $(6,823) $206,884  $497,753  $102,458  $600,211 
                                        

See accompanying notes to the condensed consolidated interim financial statements

5 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

1.CORPORATE INFORMATION

 

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

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

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

Operating results for the three and six months ended September 30, 2021, are not necessarily indicative of the results that may be expected for the year ending March 31, 2022.

2.SIGNIFICANT ACCOUNTING POLICIES
(a)Statement of Compliance

 

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting (“IAS 34”) of the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2021. These condensed consolidated interim financial statements follow the same significant accounting policies set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2021 except for the following:

Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16

 

In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment.

The Company adopted this amendment on April 1, 2021 without any material impact.

 

These condensed consolidated interim financial statements were authorized for issue in accordance with a resolution of the Board of Directors dated November 3, 2021.

6 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

(b)Basis of Consolidation

 

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

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

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

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

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

 

      Proportion of ownership interest held  
Name of subsidiaries Principal activity

Country of

incorporation

 September 30,
2021		 March 31,
2021		 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 43.8% 43.8%  
Infini Metals Inc. Holding company BVI 43.8% 43.8%  
Infini Resources (Asia) Co. Ltd. Holding company Hong Kong 43.8% 43.8%  
Golden Land (Asia) Ltd. Holding company Hong Kong 43.8% 43.8%  
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 43.8% 43.8% La Yesca

7 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

(c)Significant Accounting Judgments and Estimates

 

These condensed consolidated interim financial statements follow the same significant accounting judgments and estimates set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2021.

3.SHORT-TERM INVESTMENTS

 

As at September 30, 2021, short-term investments consist of the following:

 

  Amount Interest rates Maturity
Bonds $ 20,165 5.38% - 13.00% January 10, 2022 - January 16, 2025
Money market instruments 58,956    
  $ 79,121    

 

During the three months ended September 30, 2021, the Company recorded impairment charges of $777 against the bond investment as one of the bond issuers was in default to pay interest. The impairment charge was included in loss on investments on the condensed consolidated interim statement of income.

As at March 31, 2021, short-term investments consist of the following:

 

  Amount Interest rates Maturity
Bonds $ 15,812 5.38% - 13.00% January 10, 2022 - September 3, 2024
Money market instruments 64,545    
  $ 80,357    

 

4.INVESTMENT IN ASSOCIATES

 

(a)Investment in New Pacific Metals Corp.

 

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

In November 2020, NUAG completed a spin-out by way of a plan of arrangement (the “Arrangement”) of its then wholly-owned subsidiary, Whitehorse Gold Corp. (“WHG”), which owns 100% Skukum Gold Project (formerly “Tagish Lake Gold Project”) located in Yukon, Canada, and distributed all of the WHG common shares its shareholders on a pro rata basis.

As at September 30, 2021, the Company owned 43,917,216 common shares of NUAG (March 31, 2021 – 43,917,216), representing an ownership interest of 28.3% (March 31, 2021 – 28.6%).

8 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

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

 

 

Number of

shares

 

 

Amount

Value of NUAG's

common shares per

quoted market price

Balance April  1, 2020 42,596,506 $ 44,555 $ 148,624
Participation  in  public  offering 1,320,710 5,805  
WHG Spin-out   (1,793)  
Share of net loss   (1,672)  
Share of other comprehensive loss   (2,324)  
Foreign exchange impact   5,828  
Balance March 31, 2021 43,917,216 $ 50,399 $ 181,257
Share of net loss   (587)  
Share of other comprehensive income   3,182  
Foreign exchange impact   (717)  
Balance September 30, 2021 43,917,216 $ 52,277 $ 145,115

 

(b)Investment in Whitehorse Gold Corp.

 

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

On May 14, 2021, the Company participated in a brokered private placement of WHG and purchased 4,000,000 units at a cost of $4,960. Each unit was comprised of one WHG common share and one common share purchase warrant at exercise price of CAD$2 per share. The common share purchase warrant expires on May 14, 2026.

As at September 30, 2021, the Company owned 15,514,285 common shares of WHG (March 31, 2021 – 11,514,285), representing an ownership interest of 29.5% (March 31, 2021 – 27.0%). The summary of the investment in WHG common shares and its market value as at the respective balance sheet dates are as follows:

 

 

 

Number of

shares

 

 

Amount

Value of WHG's

common shares per quoted market price

Balance April 1, 2020

Distributed under WHG spin-out

 

5,740,285

 

1,793

  
Participation in private placement 5,774,000 1,326  
Share of net loss   (174)  
Foreign exchange impact   113  
Balance March 31, 2021 11,514,285 $ 3,058 $ 15,108
Participation in private placement 4,000,000 4,960  
Share of net loss   (278)  
Foreign exchange impact   (284)  
Balance September 30, 2021 15,514,285 $ 7,456 $ 9,376

9 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

5.OTHER INVESTMENTS

 

  September 30, 2021 March 31, 2021

Equity investments designated as FVTOCI

Public companies

 

$ 2,846

 

$ 2,966

Private companies 2,319 2,289
  5,165 5,255

Equity investments designated as FVTPL

Public companies

 

9,438

 

10,478

Private companies 3,708 -
  13,146 10,478
Total $ 18,311 $ 15,733

 

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

The continuity of such investments is as follows:  

 

   

 

 

 

Fair Value

  

Accumulated fair

value change included in OCI

  

Accumulated fair

value change included in P&L

April 1, 2020 $ 8,750 $ (34,879) $ -
Gain on equity investments designated as FVTOCI   12,069   12,069   -
Gain on equity investments designated as FVTPL   7,188   -   7,188
Acquisition   12,708   -   -
Disposal   (19,301)   -   -
Reclassified to short-term investments   (7,511)   -   -
Impact of foreign currency translation   1,830   -   -
March 31, 2021 $ 15,733 $ (22,810) $ 7,188
Gain on equity investments designated as FVTOCI   870   870   -
Loss equity investments designated as FVTPL   (4,088)   -   (4,088)
Acquisition   6,917   -   -
Disposal   (974)   -   -
Impact of foreign currency translation   (147)   -   -
September 30, 2021 $ 18,311 $ (21,940) $ 3,100

10 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

6.PLANT AND EQUIPMENT

 

Plant and equipment consist of:            

  Land use rights   Office       Motor   Construction        
Cost and building   equipment   Machinery   vehicles   in progress   Total  
Balance as at April 1, 2020 $96,454  $8,010  $25,800  $6,416  $2,136  $138,816 
Additions  182   864   1,117   1,059   7,189   10,411 
Disposals  (205)  (250)  (291)  (480)  -   (1,226)
Reclassification  of  asset groups(1)  5,579   325   2,221   -   (8,125)  - 
Impact of foreign currency translation  8,141   711   2,227   542   142   11,763 
Balance as at March 31, 2021 $110,151  $9,660  $31,074  $7,537  $1,342  $159,764 
Additions  257   579   841   477   985   3,139 
Disposals  (278)  (46)  (247)  (131)  -   (702)
Reclassification  of  asset groups(1)  903   -   34   -   (937)  - 
Impact of foreign currency translation  1,391   93   413   99   18   2,014 
Ending balance as at September 30, 2021 $112,424  $10,286  $32,115  $7,982  $1,408  $164,215 

 

Impairment, accumulated depreciation and amortization

                        
Balance as at April 1, 2020 $(43,987) $(5,375) $(18,168) $(4,564) $-  $(72,094)
Disposals  90   228   176   388   -   882 
Depreciation and amortization  (3,921)  (630)  (1,629)  (496)  -   (6,676)
Impact of foreign currency translation  (3,752)  (469)  (1,550)  (376)  -   (6,147)
Balance as at March 31, 2021 $(51,570) $(6,246) $(21,171) $(5,048) $-  $(84,035)
Disposals  153   42   218   115   -   528 
Depreciation and amortization  (2,165)  (411)  (1,048)  (309)  -   (3,933)
Impact of foreign currency translation  (647)  (52)  (283)  (67)  -   (1,049)
Ending balance as at September 30, 2021 $(54,229) $(6,667) $(22,284) $(5,309) $-  $(88,489)

 

Carrying amounts

                        
Balance as at March 31, 2021 $58,581  $3,414  $9,903  $2,489  $1,342  $75,729 
Ending balance as at September 30, 2021 $58,195  $3,619  $9,831  $2,673  $1,408  $75,726 

(1) When an asset is  available for use, it is reclassified from construction in progress to one of the appropriate plant and equipment categories.                                    

 

Carrying amounts as at September 30, 2021 Ying Mining District BYP GC

Other 

 Total
Land use rights and building $41,364  $2,941  $12,124  $1,766  $58,195 
Office equipment  2,777   17   518   307   3,619 
Machinery  7,295   179   2,296   61   9,831 
Motor vehicles  2,111   19   325   218   2,673 
Construction in progress  833   540   35   -   1,408 
Total $54,380  $3,696  $15,298  $2,352  $75,726 

 

Carrying amounts as at March 31, 2021 Ying Mining District BYP GC

Other 

 Total
Land use rights and building $41,177  $3,047  $12,369  $1,988  $58,581 
Office equipment  2,647   20   448   299   3,414 
Machinery  7,114   213   2,576   -   9,903 
Motor vehicles  1,917   20   359   193   2,489 
Construction in progress  796   533   13   -   1,342 
Total $53,651  $3,833  $15,765  $2,480  $75,729 

 

During the three and six months ended September 30, 2021, certain plant and equipment were disposed for proceeds of $4 and $38 (three and six months ended September 30, 2020 - $nil and 1) and resulting in loss of $51 and $136 (three and six months ended September 30, 2020 - loss of $19 and $211).

11 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

7.MINERAL RIGHTS AND PROPERTIES

Mineral rights and properties consist of:

 

  Producing and development properties   Exploration and evaluation properties        
Cost Ying Mining District      BYP     GC     RZY     La Yesca     Total  
Balance as at April 1, 2020 $293,136 $63,572 $103,311  $164 $-  $460,183 
Capitalized expenditures  31,138   30   3,890   -   87   35,145 
Acquisition  -   -   -   -   16,660   16,660 
Environmental rehabiliation  (1,268)  (135)  (207)  -   -   (1,610)
Foreign currecy translation impact  24,994   1,142   8,616   21   -   34,773 
Balance as at March 31, 2021 $348,000 $64,609 $115,610 $185 $16,747  $545,151 
Capitalized expenditures  18,777   -   2,331   -   1,076   22,184 
Foreign currecy translation impact  4,550   195   1,481   (2)  -   6,224 
Ending balance as at September 30, 2021 $371,327 $64,804 $119,422 $183 $17,823  $573,559 

 

Impairment and accumulated depletion

                        
Balance as at April 1, 2020 $(100,390) $(56,688) $(78,355) $(164) $-  $(235,597)
Depletion  (13,921)  -   (2,419)  -   -   (16,340)
Foreign currecy translation impact  (8,666)  (576)  (6,522)  (21)  -   (15,785)
Balance as at March 31, 2021 $(122,977) $(57,264) $(87,296) $(185) $-  $(267,722)
Depletion  (8,167)  -   (1,480)  -   -   (9,647)
Foreign currecy translation impact  (1,612)  (101)  (1,114)  2   -   (2,825)
Ending balance as at September 30, 2021 $(132,756) $(57,365) $(89,890) $(183) $-  $(280,194)

 

Carrying amounts

                        
Balance as at March 31, 2021 $225,023 $7,345 $28,314 $-  $16,747  $277,429 
Ending balance as at September 30, 2021 $238,571 $7,439 $29,532 $-  $17,823  $293,365 

 

In September 2021, the Company, through a 100% owned subsidiary of Henan Found, paid $3,093 (RMB¥20.0 million) as a refundable deposit to register participation in an online open auction to acquire a 100% interest in the Kuanping silver-lead-zinc-gold project (the “Kuanping Project”). The acquisition was through the acquisition of a 100% interest in the shares of Shanxian Xinbaoyuan Mining Co. Ltd. (“Xinbaoyuan”), an affiliate of a Henan Provincial government-controlled company located in Sanmenxia City, Henan Province. The only asset held by Xinbaoyuan is the Kuanping Project. The Kuanping Project is located in Shanzhou District, Sanmenxia City, Henan Province, China, approximately 33 kilometres (“km”) north of Ying Mining District. It covers an area of 12.39 km2, being approximately 3 km wide (east-west) and 5 km long (north-south).

In October 2021, the Company won the auction for a total consideration of approximately $13,500, including approximately $11,400 (RMB ¥73.5 million) for 100% of the common shares of Xinbaoyuan (the “Share Consideration”) plus the assumption of approximately $2,100 (RMB ¥13.3 million) debt (the “Debt”). The execution of the share transfer agreement was completed and the Company paid the Share Consideration and the Debt in October, 2021.

12 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

8.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, 2020 $ 534 $ 2,069
Interest accrual   24   95
Interest received or paid   (24)   (95)
Principal repayment   (196)   (563)
Foreign exchange impact   58   235
Balance, March 31, 2021 $ 396 $ 1,741
Interest accrual   9   39
Interest received or paid   (9)   (39)
Principal repayment   (108)   (311)
Foreign exchange impact   (1)   (14)
Balance, September 30, 2021 $ 287 $ 1,416
Less: current portion   (210)   (657)
Non-current portion $ 77 $ 759

 

The following table presents a reconciliation of the Company’s undiscounted cash flows to their present value for its lease receivable and lease obligation as at September 30, 2021:

 

  Lease Receivable Lease Obligation
Within 1 year $ 228 $ 687
Between 2 to 5 years   69   827
Total undiscounted amount   297   1,514
Less future interest   (10)   (98)
Total discounted amount $ 287 $ 1,416
Less: current portion   (210)   (657)
Non-current portion $ 77 $ 759

 

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

13 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

9.SHARE CAPITAL
(a)Authorized

 

Unlimited number of common shares without par value. All shares issued as at September 30, 2021 were fully paid.

(b)Share-based compensation

 

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

For the three and six months ended September 30, 2021, a total of $1,773 and $3,877, respectively (three and six months ended September 30, 2020 - $1,032 and $1,755) in share-based compensation expense was recognized and included in the general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.

(i)Stock options

 

The following is a summary of option transactions:

 

Number of shares

Weighted average exercise price per

share CAD$

Balance, April 1, 2020 2,423,760 $ 3.00
Option granted 1,127,000   7.25
Options exercised (1,553,338 ) 3.02
Options cancelled (135,004 ) 4.52
Balance, March 31, 2021 1,862,418 $ 5.45
Options exercised (443,333 ) 3.28
Options cancelled (25,000 ) 7.06
Balance, September 30, 2021 1,394,085 $ 6.11

14 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

The following table summarizes information about stock options outstanding as at September 30, 2021:

 

Exercise price in CAD$ Number of options
outstanding at
September 30, 2021		 Weighted average
remaining contractual
life (Years)		 Weighted average
exercise price in
CAD$		 Number of options
exercisable at
September 30, 2021		 Weighted average
exercise price
in CAD$
$ 2.60 353,750 0.13 $ 2.60 353,750 $ 2.60
$ 5.46 560,335 3.65 $ 5.46 178,998 $ 5.46
$ 9.45 480,000 4.11 $ 9.45 80,002 $ 9.45
$2.60 to $9.45 1,394,085 2.92 $ 6.11 612,750 $ 4.33

(ii)RSUs

 

The following is a summary of RSUs transactions: 

  Number of shares Weighted average grant date closing price per share $CAD
Balance, April 1, 2020 677,374 $ 4.94
Granted 1,021,500   6.68
Cancelled (77,166 ) 5.82
Distributed (372,372 ) 5.05
Balance, March 31, 2021 1,249,336 $ 6.28
Granted 1,000,000   6.40
Cancelled (21,000 ) 6.50
Distributed (245,714 ) 5.71
Balance, September 30, 2021 1,982,622 $ 6.41

 

Subsequent to September 30, 2021, a total of 113,250 RSUs were distributed.

(c)Cash dividends declared

 

During the three and six months ended September 30, 2021, dividends of $nil and $2,202, respectively (three and six months ended September 30, 2020 - $nil and $2,178, respectively) were declared and paid.

 

10.ACCUMULATED OTHER COMPREHENSIVE LOSS

 

   September 30, 2021    March 31, 2021  
Change in fair value on equity investments designated as FVTOCI  $21,458   $22,328 
Share of other comprehensive (income) loss   in associate   (2,593)   589 
Currency translation adjustment   (12,042)   (10,367)
Balance, end of the period  $6,823   $12,550 

 

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

15 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

11.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, 2020  $63,331   $4,702   $2,723$   (466)  $-   $70,290 
Share of net income (loss)   13,210    639    219    88    (23)   14,133 
Share of other comprehensive income   4,623    480    90    27    -    5,220 
Acquisition of La Yesca   -    -    -    -    9,250    9,250 
Contributions   -    -    -    -    2,500    2,500 
Distributions   (2,600)   (639)   -    -    -    (3,239)
Balance, March 31, 2021  $78,564   $5,182   $3,032$   (351)  $11,727   $98,154 
Share of net income (loss)   7,212    215    (107)   79    (14)   7,385 
Share of other comprehensive income   685    87    37    6    -    815 
Distributions   (3,266)   (630)   -    -    -    (3,896)
Balance, September 30, 2021  $83,195   $4,854   $2,962$   (266)  $11,713   $102,458 

 

As at September 30, 2021, non-controlling interests in Henan Found, Henan Huawei, Yunxiang, Guangdong Found and New Infini were 22.5%, 20%, 30%, 1%, and 56.25%, respectively (March 31, 2021 – 22.5%, 20%, 30%, 1%, and 56.25%, respectively).

12.RELATED PARTY TRANSACTIONS

 

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

 

Due from related parties  September 30, 2021  March 31, 2021
NUAG (a)  $58   $59 
WHG (b)   13    19 
Henan Non-ferrous (c)   797    769 
   $868   $847 
(a)The Company recovers costs for services rendered to NUAG and expenses incurred on behalf of NUAG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2021, the Company recovered $173 and $336 (three and six months ended September 30, 2020 - $179 and $340), from NUAG for services rendered and expenses incurred on behalf of NUAG. The costs recovered from NUAG were recorded as a direct reduction of general and administrative expenses on the consolidated statements of income.
(b)The Company recovers costs for services rendered to WHG and expenses incurred on behalf of WHG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2021, the Company recovered $46 and $104 (three and six months ended September 30, 2020 - $nil and $nil), from WHG for services rendered and expenses incurred on behalf of WHG. The costs recovered from WHG were recorded as a direct reduction of general and administrative expenses on the consolidated statements of income.

16 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

(c)In January 2021, Henan Found advanced a loan of $744 (RMB¥5 million) to Henan Non-ferrous. The loan bears an interest rate of 4.35% per annum.

The balances with related parties are unsecured.

13.GENERAL AND ADMINISTRATIVE

 

General and administrative expenses consist of:

 

   Three months ended September 30, 2021     Three months ended September 30, 2020 
     Corporate      Mines      Total      Corporate       Mines    Total
Amortization and depreciation  $144   $343   $487   $132   $305   $ 437
Office and administrative expenses   379    707    1,086    492    740     1,232
Professional fees   192    113    305    45    114     159
Salaries and benefits   1,366    1,598    2,964    1,099    1,180     2,279
Share-based compensation   1,668    -    1,668    1,016    -     1,016
  $3,749   $2,761   $6,510   $2,784   $2,339    $ 5,123

 

   Six months ended September 30, 2021     Six months ended September 30, 2020 
     Corporate      Mines      Total      Corporate      Mines    Total
Amortization and depreciation  $290   $678   $968   $252    $593   $ 845
Office and administrative expenses   947    1,392    2,339    1,028     1,331     2,359
Professional fees   337    219    556    363     227     590
Salaries and benefits   2,354    2,984    5,338    2,132     2,245     4,377
Share-based compensation   3,659    -    3,659    1,696     -     1,696
  $7,587   $5,273   $12,860   $5,471    $4,396    $ 9,867

 

14.GOVERNMENT FEES AND OTHER TAXES

 

Government fees and other taxes consist of:

 

   Three months ended September 30,     Six months ended September 30,   
   2021      2020      2021      2020  
Government fees  $17   $14   $28   $28 
Other taxes   693    634    1,373    1,160 
   $710   $648   $1,401   $1,188 

 

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.

15.FINANCE ITEMS

 

Finance items consist of:

 

   Three months ended September 30,     Six months ended September 30,   
Finance income    2021      2020      2021      2020  
Interest income  $1,344    741   $2,537   $1,688 
Dividend income   -    -    160    - 
   $1,344   $741   $2,697   $1,688 

17 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

   Three months ended September 30,     Six months ended September 30,  
Finance costs    2021      2020      2021      2020  
Interest on lease obligation   19    25  $39   $50 
(Gain) loss on disposal of bonds    -    (12)   -    41 
Unwinding of discount of environmental rehabilitation provision   67    

 

71

   -135    

 

140

 
   $86   $84  $174   $231 

 

16.INCOME TAX

 

The significant components of income tax expense are as follows:

 

   Three months ended September 30,     Six months ended September 30,  
Income tax expense    2021      2020      2021      2020  
Current  $3,181   $5,155   $7,144   $9,724 
Deferred   2,174    722    3,028    1,535 
   $5,355   $5,877   $10,172   $11,259 

 

17.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.

18 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

The following tables set forth the Company’s financial assets and liabilities that are measured at fair value level on a recurring basis within the fair value hierarchy as at September 30, 2021 and March 31, 2021 that are not otherwise disclosed. As required by IFRS 13, the assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

   Fair value as at September 30, 2021 
Recurring measurements    Level 1      Level 2      Level 3      Total  
Financial assets                    
Cash and cash equivalents  $141,929   $-   $-   $141,929 
Short-term investments - money market instruments   58,956    -    -    58,956 
Investments in public companies   12,284    -    -    12,284 
Investments in private companies   -    -    6,027    6,027 

 

   Fair value as at March 31, 2021 
Recurring measurements    Level 1      Level 2      Level 3      Total  
Financial assets                    
Cash and cash equivalents  $118,735   $-   $-   $118,735 
Short-term investments - money market instruments   64,545    -    -    64,545 
Investments in public companies   13,444    -    -    13,444 
Investments in private companies   -    -    2,289    2,289 

 

Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at September 30, 2021 and March 31, 2021, due to the short-term nature of these instruments.

There were no transfers into or out of Level 3 during the three and six months ended September 30, 2021 and 2020.

(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.

 

   September 30, 2021    March 31, 2021  
   Within a year      2-5 years      Total      Total  
Accounts payable and accrued liabilities  $38,060   $-   $38,060   $30,298 
Lease obligation   657    759    1,416    1,741 
   $38,717   $759   $39,476   $32,039 

19 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

(c)Foreign exchange risk

 

The Company reports its financial statements in US dollars. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is CAD and the functional currency of all Chinese subsidiaries is RMB. The functional currency of New Infini and its subsidiaries is 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.

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

 

   September 30, 2021    March 31, 2021  
Financial assets denominated in U.S. Dollars  $71,930   $58,610 
           
Financial liabilities denominated in U.S. Dollars  $376   $52 

 

As at September 30,2021, with other variables unchanged, a 10% strengthening (weakening) of the CAD against the USD would have decreased (increased) net income by approximately $7.2 million.

(d)Interest rate risk

 

The Company is exposed to interest rate risk on its cash equivalents and short term investments. As at September 30, 2021, all of its interest-bearing cash equivalents and short-term investments earn interest at market rates that are fixed to maturity or at variable interest rates with terms of less than one year. The Company monitors its exposure to changes in interest rates on cash equivalents and short term investments. Due to the short-term nature of these financial instruments, fluctuations in interest rates would not have a significant impact on the Company’s net income.

(e)Credit risk

 

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

The Company undertakes credit evaluations on counterparties as necessary, requests deposits from customers prior to delivery, and has monitoring processes intended to mitigate credit risks. There were no material amounts in trade or other receivables which were past due on September 30, 2021 (at March 31, 2021 - $nil).

For the period ended September 30, 2021, the Company observed unfavorable market movements of certain bond holding within its short-term investments. These bond holdings totaling $15.0 million, were issued by some Chinese real estate developers and their subsidiaries. Although there is significant uncertainty regarding their collectability, for the bonds that are not in default and payment are current as at September 30, 2021, management determined that impairment was not required. Management

20 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

exercised significant judgements in terms of the collectability of the interest and principal payments and evaluate these holdings as needed for potential impairment and to manage the credit risk exposure.

(f)Equity price risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on financial markets. As the Company’s marketable securities holdings are mainly in mining companies, the value will also fluctuate based on commodity prices. Based upon the Company’s portfolio as at September 30, 2021, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign currency effects, would have resulted in an increase (decrease) to the net income and other comprehensive income of $944 and $285, respectively.

18.SEGMENTED INFORMATION

 

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

 

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

21 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

(a)Segmented information for assets and liabilities are as follows:

 

September 30, 2021
   Mining    Administrative       
Statement of financial position items:  Henan
Luoning		    Hunan    Guangdong    Other    Beijing    Vancouver    Total  

Current assets

  $143,124   $1,070   $10,343   $272   $4,239   $81,784   $240,832 
Plant and equipment   54,380    3,696    15,298    174    934    1,244    75,726 
Mineral rights and properties   238,571    7,439    29,532    17,823    -    -    293,365 
Investment in an associate   -    -    -    -    -    59,733    59,733 
Other investments   2,319    -    -    -    -    15,992    18,311 
Reclamation deposits   3,907    -    4,712    -    -    8    8,627 
Long-term prepaids and deposits   3,867    102    132    -    -    -    4,101 
Long-term portion of lease receivable   -    -    -    -    -    77    77 
Total assets  $446,168   $12,307   $60,017   $18,269   $5,173   $158,838   $700,772 

 

Current liabilities

  $36,767   $588   $6,382   $369   $186   $3,234   $47,526 
Long-term portion of lease obligation   -    -    -    -    -    759    759 
Deferred income tax liabilities   43,205    1,152    -    -    -    -    44,357 
Environmental rehabilitation   6,178    1,024    717    -    -    -    7,919 
Total liabilities  $86,150   $2,764   $7,099   $369   $186   $3,993   $100,561 

 

March 31, 2021
   Mining   Administrative      
Statement of financial position items:  Henan
Luoning		   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
Current assets  $124,636   $909   $11,177   $191   $4,322   $79,954   $221,189 
Plant and equipment   53,651    3,833    15,765    59    965    1,456    75,729 
Mineral rights and properties   225,023    7,345    28,314    16,747    -    -    277,429 
Investment in an associate   -    -    -    -    -    53,457    53,457 
Other investments   2,289    -    -    -    -    13,444    15,733 
Reclamation deposits   3,898    -    4,607    -    -    8    8,513 
Long-term prepaids and deposits   221    101    87    -    -    -    409 
Long-term portion of lease receivable   -    -    -    -    -    183    183 
Total assets  $409,718   $12,188   $59,950   $16,997   $5,287   $148,502   $652,642 

Current liabilities

  $28,654   $625   $4,570   $-   $112   $3,214   $37,175 
Long-term portion of lease obligation   -    -    -    -    -    1,084    1,084 
Deferred income tax liabilities   39,756    1,036    -    -    -    -    40,792 
Environmental rehabilitation   6,115    993    755    -    -    -    7,863 
Total liabilities  $74,525   $2,654   $5,325   $-   $112   $4,298   $86,914 

22 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

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

 

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

(1) Hunan's BYP project was placed on care and maintenance starting August 2014.

 

Three months ended September 30, 2020
   Mining   Administrative      
Statement of operations:  Henan
Luoning		   Hunan   Guangdong   Beijing   Vancouver   Total  
Revenue  $45,671   $1,524   $9,177   $-   $-   $56,372  
Costs of mine operations   (22,549)   (893)   (6,258)   -    -    (29,700 )
Income from mine operations   23,122    631    2,919    -    -    26,672  
Operating expenses   (160)   (12)   37    (409)   (1,351)   (1,895 )
Finance items   369    (9)   10    27    260    657  
Income tax expenses   (5,453)   (33)   (361)   (8)   (22)   (5,877 )
Net income (loss)  $17,878   $577   $2,605   $(390 )   (1,113)  $19,557
Attributed to:                               
Equity holders of the Company   13,983    413    2,579    (390 )   (1,113)   15,472  
Non-controlling interests   3,895    164    26    -    -    4,085  
Net income (loss)  $17,878   $577   $2,605   $(390)  $(1,113)  $19,557  

23 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

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

(1) Hunan's BYP project was placed on care and maintenance in August 2014.

 

Six months ended September 30, 2020
  Mining  Administrative    

 

Statement of income:

  Henan
Luoning		 

 

Hunan

 

 

Guangdong

  Beijing  Vancouver 

Total

 

Revenue  $85,357   $1,524   $16,196   $-   $-   $103,077 
Costs of mine operations   (44,660)   (1,007)   (11,453)   -    -    (57,120)
Income from mine operations   40,697    517    4,743    -    -    45,957 
Operating expenses   (72)   (12)   2    (869)   2,845    1,894 
Finance items, net   751    (17)   51    62    610    1,457 
Income tax expenses   (9,715)   (33)   (361)   (8)   (1,142)   (11,259)
Net income (loss)  $31,661   $455   $4,435   $(815)  $2,313   $38,049 
Attributable to:                              
Equity holders of the Company   24,738    336    4,391    (815)   2,313    30,963 
Non-controlling interests   6,923    119    44    -    -    7,086 
Net income (loss)  $31,661   $455   $4,435   $(815)  $2,313   $38,049 

24 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

(c)Sales by metal

 

The sales generated for the three and six months ended September 30, 2021 and 2020 were all earned in China and were comprised of:

 

   Three months ended September 30, 2021  
    Henan
Luoning		      Hunan      Guangdong      Total  
Silver (Ag)  $30,306   $-   $2,499   $32,805 
Gold (Au)   1,186    -    -    1,186 
Lead (Pb)   12,859    -    2,551    15,410 
Zinc (Zn)   1,731    -    6,090    7,821 
Other   1,020    -    193    1,213 
   $47,102   $-   $11,333   $58,435 
                     
   Three months ended September 30, 2020 
    Henan
Luoning		      Hunan      Guangdong      Total  
Silver (Ag)  $30,506   $-   $2,542   $33,048 
Gold (Au)   1,492    1,524    -    3,016 
Lead (Pb)   12,148    -    2,239    14,387 
Zinc (Zn)   1,071    -    4,165    5,236 
Other   454    -    231    685 
   $45,671   $1,524   $9,177   $56,372 
                     
   Six months ended September 30, 2021 
    Henan
Luoning		      Hunan      Guangdong      Total  
Silver (Ag)  $61,230   $-   $5,569   $66,799 
Gold (Au)   2,694    -    -    2,694 
Lead (Pb)   25,046    -    4,764    29,810 
Zinc (Zn)   3,345    -    11,844    15,189 
Other   2,205    -    557    2,762 
   $94,520   $-   $22,734   $117,254 
                     
   Six months ended September 30, 2020 
    Henan
Luoning		      Hunan      Guangdong      Total  
Silver (Ag)  $54,613   $-   $4,620   $59,233 
Gold (Au)   2,969    1,524    -    4,493 
Lead (Pb)   24,494    -    4,267    28,761 
Zinc (Zn)   2,442    -    6,949    9,391 
Other   839    -    360    1,199 
   $85,357   $1,524   $16,196   $103,077 

 

(d)Major customers

 

For the six months ended September 30, 2021, four major customers (six months ended September 30, 2020 - four major customers) each accounted for 17%, 17%, 17%, and 20% (six months ended September 30, 2020 – 14%, 17%, 19%, and 22%), and collectively 71% (six months ended September 30, 2020 – 72%) of the total sales of the Company.

25 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2021 and for the three and six months ended September 30, 2021 and 2020

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

 

19.SUPPLEMENTARY CASH FLOW INFORMATION

 

  September 30, 2021  March 31, 2021
Cash on hand and at bank  $82,841   $111,191 
Bank term deposits and short-term money market investments   59,088    7,544 
Total cash and cash equivalents  $141,929   $118,735 

 

Changes in non-cash operating working capital:

 

Three Months Ended September 30,

  

Six Months Ended September 30,

 
    2021    2020    2021    2020 
Trade and other receivables  $(177)  $(331)  $(39)  $(134)
Inventories   (2,530)   855    1,082    1,470 
Prepaids and deposits   103    (1,040)   (1,580)   (1,527)
Accounts payable and accrued liabilities   3,991    1,883    6,929    8,706 
Deposits received   (2,200)   1,165    1,954    1,197 
Due from a related party   3    12    (11)   47 
   $(810)$  $2,544   $8,335  $9,759 

 

26