EX-99.4 5 exhibit99-4.htm FINANCIAL STATEMENTS FOR NINE MONTH ENDED DECEMBER 31, 2021

Exhibit 99.4

 

 

 

SILVERCORP METALS INC.

 

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended December 31, 2021 and 2020

(Tabular amounts are 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 December 31,   As at March 31,
   Notes   2021   2021
ASSETS           
Current Assets             
Cash and cash equivalents  20   $152,027   $118,735
Short-term investments  4    59,587    80,357
Trade and other receivables       1,912    1,485
Current portion of lease receivable  9    210    213
Inventories       10,570    9,768
Due from related parties  17    896    847
Income tax receivable       641    4,978
Prepaids and deposits       5,525    4,806
        231,368    221,189
Non-current Assets             
Long-term prepaids and deposits       788    409
Long-term portion lease receivable  9    24    183
Reclamation deposits       8,817    8,513
Other investments  5    20,123    15,733
Investment in associates  6    60,143    53,457
Plant and equipment  7    78,787    75,729
Mineral rights and properties  8    321,201    277,429
TOTAL ASSETS      $721,251   $652,642
              
LIABILITIES AND EQUITY             
Current Liabilities             
Accounts payable and accrued liabilities      $45,423   $30,298
Current portion of lease obligation  9    707    657
Deposits received       3,398    4,857
Income tax payable       574    1,363
        50,102    37,175
Non-current Liabilities             
Long-term portion of lease obligation  9    705    1,084
Deferred income tax liabilities       47,348    40,792
Environmental rehabilitation       7,904    7,863
Total Liabilities       106,059    86,914
              
Equity             
Share capital       255,444    250,199
Equity reserves       44,443    29,469
Retained earnings       209,736    187,906
Total equity attributable to the equity holders of the Company       509,623    467,574
Non-controlling interests  12    105,569    98,154
Total Equity       615,192    565,728
              
TOTAL LIABILITIES AND EQUITY      $721,251   $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 December 31,    Nine Months Ended December 31,  
   Notes    2021   2020    2021   2020  
                        
Revenue  19(b)(c)    $59,079   $53,296    $176,333   $156,373  
Cost of mine operations                           
Production costs        25,055    18,025     70,311    55,460  
Depreciation and amortization        6,822    5,596     19,914    16,928  
Mineral resource taxes        1,824    1,337     4,940    4,106  
Government fees and other taxes  13     796    777     2,197    1,965  
General and administrative  14     3,106    2,760     8,379    7,156  
         37,603    28,495     105,741    85,615  
Income from mine operations        21,476    24,801     70,592    70,758  
                            
Corporate general and administrative  14     3,310    3,525     10,897    8,996  
Property evaluation and business development        204    209     838    (3,450 )
Foreign exchange (gain) loss        (1,813)   2,954     (3,426)   6,973  
Loss on disposal of plant and equipment  7     35    36     171    247  
Share of loss in associates  6     403    550     1,268    1,030  
(Gain) loss on equity investments desgined as FVTPL  5     (1,101)   (600)    2,986    (8,837 )
Other expense (income)        1,242    (503)    1,246    (682 )
Income from operations        19,196    18,630     56,612    66,481  
                            
Finance income  15     1,506    1,108     4,203    2,796  
Finance costs  15     (9,677)   (1,403)    (10,628)   (1,634 )
Income before income taxes        11,025    18,335     50,187    67,643  
                            
Income tax expense  16     3,093    6,046     13,265    17,305  
Net income       $7,932   $12,289    $36,922   $50,338  
                            
Attributable to:                           
Equity holders of the Company       $5,063   $8,392    $26,668   $39,355  
Non-controlling interests  12     2,869    3,897     10,254    10,983  
        $7,932   $12,289    $36,922   $50,338  
                            
Earnings per share attributable to the equity holders of the Company                           
Basic earnings per share       $0.03   $0.05    $0.15   $0.23  
Diluted earnings per share       $0.03   $0.05    $0.15   $0.22  
Weighted Average Number of Shares Outstanding - Basic        176,799,362    175,261,808     176,347,530    174,651,536  
Weighted Average Number of Shares Outstanding - Diluted        178,537,718    177,515,646     178,224,810    177,134,575  

 

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 December 31,    Nine Months Ended December 31,  
   Notes   2021   2020    2021   2020  
                       
Net income      $7,932   $12,289    $36,922   $50,338  
Other comprehensive income (loss), net of taxes:                          
Items that may subsequently be reclassified to net income or loss:                          
Currency translation adjustment, net of tax of $nil       8,212    21,300     10,702    44,076  
Share of other comprehensive income (loss) in associate  6    151    (820 )   3,333    (1,953 )
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    93    (34 )   963    12,855  
Other comprehensive income, net of taxes      $8,456   $20,446    $14,998   $54,978  
Attributable to:                          
Equity holders of the Company      $7,014   $17,736    $12,741   $49,473  
Non-controlling interests  12    1,442    2,710     2,257    5,505  
       $8,456   $20,446    $14,998   $54,978  
Total comprehensive income      $16,388   $32,735    $51,920   $105,316  
                           
Attributable to:                          
Equity holders of the Company      $12,077   $26,128    $39,409   $88,828  
Non-controlling interests       4,311    6,607     12,511    16,488  
       $16,388   $32,735    $51,920   $105,316  

 

See accompanying notes to the condensed consolidated interim financial statements

3

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Cash Flows

 

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

 




























       Three Months Ended December 31,   Nine Months Ended December 31, 
   Notes   2021   2020   2021   2020 
Cash provided by Operating activities                        
Net income      $7,932   $12,289   $36,922   $50,338 
Add (deduct) items not affecting cash:                        
Finance costs  15    9,677    1,403    10,628    1,634 
Depreciation, amortization and depletion       7,303    6,063    21,363    18,240 
Share of loss in associates  6    403    550    1,268    1,030 
Income tax expense  16    3,093    6,046    13,265    17,305 
(Gain) loss on equity investments desgined as FVTPL  5    (1,101)   (600)   2,986    (8,837)
Loss on disposal of plant and equipment  7    35    36    171    247 
Share-based compensation  10(b)   1,268    1,263    5,145    3,018 
Reclamation expenditures       (99)   (50)   (225)   (118)
Income taxes paid       (501)   (6,041)   (4,503)   (11,864)
Interest paid  15    (17)   (23)   (56)   (73)
Changes in non-cash operating working capital  20    673    3,002    9,008    12,761 
Net cash provided by operating activities       28,666    23,938    95,972    83,681 
                         
Investing activities                        
Mineral rights and properties                        
Capital expenditures       (14,698)   (12,432)   (35,503)   (29,146)
Acquisition  3    (10,042)   (6,566)   (13,135)   (6,566)
Plant and equipment                        
Additions       (2,564)   (3,049)   (7,168)   (6,044)
Proceeds on disposals  7    12    46    50    47 
Reclamation deposits                        
Paid       (159)   (125)   (218)   (386)
Refund       -    34    -    1,839 
Other investments                        
Acquisition  5    (535)   (1,305)   (7,452)   (12,708)
Proceeds on disposals  5    -    64    974    17,870 
Investment in associates  6    (352)   (1,326)   (5,312)   (7,131)
Net redemptions (purchases) of short-term investments       10,995    6,130    11,973    (9,321)
Principal received on lease receivable  9    54    49    162    143 
Net cash used in investing activities       (17,289)   (18,480)   (55,629)   (51,403)
                         
Financing activities                        
Related parties                        
Repayments received  17    -    -    -    1,423 
Principal payments on lease obligation  9    (159)   (144)   (470)   (414)
Non-controlling interests                        
Distribution  12    (1,200)   -    (5,096)   (3,239)
Cash dividends distributed  10(c)   (2,211)   (2,190)   (4,413)   (4,368)
Proceeds from issuance of common shares       736    198    1,908    2,884 
Net cash used in financing activities       (2,834)   (2,136)   (8,071)   (3,714)
Effect of exchange rate changes on cash and cash equivalents       1,555    4,705    1,020    9,006 
                         
Increase in cash and cash equivalents          10,098       8,027       33,292       37,570  
Cash and cash equivalents, beginning of the period       141,929    95,320    118,735    65,777 
Cash and cash equivalents, end of the period         $ 152,027     $ 103,347     $ 152,027     $ 103,347  
Supplementary cash flow information  20                     

 

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           
         Accumulated     Total equity attributable      
      Number of     share option    other comprehensive  Retained  to the equity holders of  Non-controlling  Total
   Notes  shares  Amount  reserve  Reserves  loss earnings  the Company  interests  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      1,299,589    3,931    (1,047)   -    -    -    2,884    -    2,884 
Restricted share units vested      232,623    905    (905)   -    -    -    -    -    - 
Share-based compensation      -    -    3,018    -    -    -    3,018    -    3,018 
Dividends declared      -    -    -    -    -    (4,368)   (4,368)   -    (4,368)
Acquisition of La Yesca      -    -    -    -    -    -    -    9,250    9,250 
Distribution to non-controlling interests      -    -    -    -    -    -    -    (3,239)   (3,239)
Comprehensive income      -    -    -    -    49,473    39,355    88,828    16,488    105,316 
Balance, December 31, 2020      175,349,046   $248,762   $16,104   $25,409   $(12,116)  $180,885   $459,044   $92,789   $551,833 
Options exercised      253,749    893    (239)   -    -    -    654    -    654 
Restricted share units vested      139,749    544    (544)   -    -    -    -    -    - 
Share-based compensation      -    -    1,289    -    -    -    1,289    -    1,289 
Dividends declared      -    -    -    -    -    -    -    -    - 
Contribution from non-controlling interests      -    -    -    -    -    -    -    2,500    2,500 
Comprehensive income      -    -    -    -    (434)   7,021    6,587    2,865    9,452 
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      797,083    2,528    (620)   -    -    -    1,908    -    1,908 
Restricted share units vested      566,172    2,717    (2,717)   -    -    -    -    -    - 
Share-based compensation  10(b)   -    -    5,145    -    -    -    5,145    -    5,145 
Dividends declared  10(c)   -    -    -    -    -    (4,413)   (4,413)   -    (4,413)
Distribution to non-controlling interests  12   -    -    -    -    -    -    -    (5,096)   (5,096)
Contribution to reserves      -    -    -    425    -    (425)   -    -    - 
Comprehensive income      -    -    -    -    12,741    26,668    39,409    12,511    51,920 
Balance, December 31, 2021      177,105,799   $255,444   $18,418   $25,834   $191   $209,736   $509,623   $105,569   $615,192 

 

See accompanying notes to the condensed consolidated interim financial statements

5

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

1.CORPORATE INFORMATION

 

Silvercorp Metals Inc., along with its subsidiary companies (collectively the “Company”), is engaged in the acquisition, exploration, development, and mining of mineral properties. The Company’s producing mines are located in China, and current exploration and development projects are located in 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 nine months ended December 31, 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 February 7, 2021.

 

6

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

(Unaudited) (Tabular amounts are 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   
      Country of  December 31,  March 31,   
Name of subsidiaries  Principal activity  incorporation  2021  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  46.2%  43.8%   
Infini Metals Inc.  Holding company  BVI  46.2%  43.8%   
Infini Resources (Asia) Co. Ltd.  Holding company  Hong Kong  46.2%  43.8%   
Golden Land (Asia) Ltd.  Holding company  Hong Kong  46.2%  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  46.2%  43.8%  La Yesca
Shanxi Xinbaoyuan Mining Co., Ltd. ("Xinbaoyuan")  Mining  China  77.5%  0.0%  Kuanping
(i) British Virgin Islands ("BVI")               

 

7

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

(Unaudited) (Tabular amounts are 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.ACQUISITION

 

In September 2021, the Company, through a 100% owned subsidiary of Henan Found registered the 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 Shanxi 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 net consideration of approximately $13.1 million, including approximately $11.4 million (RMB ¥73.5 million) for 100% of the common shares of Xinbaoyuan (the “Share Consideration”) plus the assumption of approximately $2.0 (RMB ¥13.3 million) debt (the “Debt”) and $0.3 million cash. The execution of the share transfer agreement was completed and the Company paid the Share Consideration and the Debt in October, 2021.

 

The transaction was accounted for as an acquisition of assets as the purchase price was concentrated on a single asset. The purchase price was allocated to the assets acquired and liabilities assumed on a relative fair value basis with $13.1 million allocated to mineral property interest.

 

4.SHORT-TERM INVESTMENTS

 

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

   Amount  Interest rates  Maturity
Bonds  $10,321   5.50% - 13.00%   January 10, 2022 - January 16, 2025 
Money market instruments   49,266         
   $59,587         

 

During the three and nine months ended December 31, 2021, the Company recorded impairment charges of $9.6 million and $10.4 million, respectively, against the bond investment issued by a few Chinese real estate developing companies as the Company observed financial difficulty of these bond issuers. The carrying value of such bond investments was $2.1 million as at December 31, 2021. The impairment charge was included in finance costs 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         

 

8

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

5.OTHER INVESTMENTS

 

   December 31, 2021  March 31, 2021
Equity investments designated as FVTOCI          
Public companies  $2,956   $2,966 
Private companies   2,361    2,289 
    5,317    5,255 
Equity investments designated as FVTPL          
Public companies   11,080    10,478 
Private companies   3,726    - 
    14,806    10,478 
Total  $20,123   $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:

      Accumulated fair  Accumulated fair
      value change  value change
   Fair Value  included in OCI  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   963    963    - 
Loss equity investments designated as FVTPL   (2,986)   -    (2,986)
Acquisition   7,452    -    - 
Disposal   (974)   -    - 
Impact of foreign currency translation   (65)   -    - 
December 31, 2021  $20,123   $(21,847)  $4,202 

 

9

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

6.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 two common officers, and the Company accounts for its investment in NUAG using the equity method as it is able to exercise significant influence over the financial and operating policies of NUAG.

 

During the three and nine months ended December 31, 2021, the Company acquired 125,000 and 125,000, respectively, common shares of NUAG from the public market (three and nine months ended December 31, 2020, nil and nil) for a total cost of $0.4 million and $0.4 million, respectively (three and nine months ended December 31, 2021, $nil and $nil).

 

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 to its shareholders on a pro rata basis.

 

As at December 31, 2021, the Company owned 44,042,216 common shares of NUAG (March 31, 2021 – 43,917,216), representing an ownership interest of 28.3% (March 31, 2021 – 28.6%).

 

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

 

           Value of NUAG's 
   Number of       common shares per 
   shares   Amount   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 
Purchase from open market   125,000    352      
Share of net loss        (808)     
Share of other comprehensive income        3,333      
Foreign exchange impact        (445)     
Balance December 31, 2021   44,042,216   $52,831   $129,924 

 

10

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

(b)Investment in Whitehorse Gold Corp.

 

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

 

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

 

As at December 31, 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:

 

           Value of WHG's 
   Number of       common shares per 
   shares   Amount   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        (460)     
Foreign exchange impact        (246)     
Balance December 31, 2021   15,514,285   $7,312   $6,119 

 

11

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

7.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   525    813    2,236    708    2,653    6,935 
Disposals   (287)   (50)   (462)   (176)   -    (975)
Reclassification of asset groups (1)   1,899    89    53    -    (2,041)   - 
Impact of foreign currency translation   3,362    258    1,000    240    50    4,910 
Ending balance as at December 31, 2021  $115,650   $10,770   $33,901   $8,309   $2,004   $170,634 

 

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   157    46    396    155    -    754 
Depreciation and amortization   (3,270)   (627)   (1,597)   (476)   -    (5,970)
Impact of foreign currency translation   (1,596)   (154)   (684)   (162)   -    (2,596)
Ending balance as at December 31, 2021  $(56,279)  $(6,981)  $(23,056)  $(5,531)  $-   $(91,847)
                               
Carrying amounts                              
Balance as at March 31, 2021  $58,581   $3,414   $9,903   $2,489   $1,342   $75,729 
Ending balance as at December 31, 2021  $59,371   $3,789   $10,845   $2,778   $2,004   $78,787 

 

(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 December 31, 2021  Ying Mining District   BYP   GC   Other   Total 
Land use rights and building  $42,387   $3,027   $12,134   $1,823   $59,371 
Office equipment   2,972    17    515    285    3,789 
Machinery   8,411    167    2,206    61    10,845 
Motor vehicles   2,221    20    332    205    2,778 
Construction in progress   1,370    550    84    -    2,004 
Total  $57,361   $3,781   $15,271   $2,374   $78,787 

 

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 nine months ended December 31, 2021, certain plant and equipment were disposed for proceeds of $0.01 million and $0.05 million, respectively, (three and nine months ended December 31, 2020 - $0.05 million and $0.05 million) and resulting in loss of $0.03 million and $0.17 million, respectively (three and nine months ended December 31, 2020 - loss of $0.03 million and $0.25 million).

 

12

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

8.MINERAL RIGHTS AND PROPERTIES

 

Mineral rights and properties consist of:

 

   Producing and development properties   Exploration and evaluation properties     
Cost  Ying Mining
District		   BYP   GC   RZY   Kuanping   La Yesca   Total 
Balance as at April 1, 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 rehabilitation   (1,268)   (135)   (207)   -    -    -    (1,610)
Foreign currency 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   30,539    -    3,701    -    10    2,846    37,096 
Acquisition (Note 3)   -    -    -    -    13,135    -    13,135 
Derecognition   -    -    -    (185)   -    -    (185)
Foreign currency translation impact   11,196    463    3,586    -    189    -    15,434 
Ending balance as at December 31, 2021  $389,735   $65,072   $122,897   $-   $13,334   $19,593   $610,631

                                    
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 currency 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   (12,770)   -    (2,202)   -    -    -    (14,972)
Derecognition   -    -    -    185    -    -    185 
Foreign currency translation impact   (3,989)   (239)   (2,693)   -    -    -    (6,921)
Ending balance as at December 31, 2021  $(139,736)  $(57,503)  $(92,191)  $-   $-   $-   $(289,430)
                                    
Carrying amounts                                   
Balance as at March 31, 2021  $225,023   $7,345   $28,314   $-   $-   $16,747   $277,429 
Ending balance as at December 31, 2021  $249,999   $7,569   $30,706   $-   $13,334   $19,593   $321,201 

 

9.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 
Addition   -    149 
Interest accrual   12    56 
Interest received or paid   (12)   (56)
Principal repayment   (162)   (470)
Foreign exchange impact   -    (8)
Balance, December 31, 2021  $234   $1,412 
Less: current portion   (210)   (707)
Non-current portion  $24   $705 

 

13

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

The following table presents a reconciliation of the Company’s undiscounted cash flows to their present value for its lease receivable and lease obligation as at December 31, 2021:

 

   Lease Receivable   Lease Obligation 
Within 1 year  $229   $738 
Between 2 to 5 years   11    769 
Total undiscounted amount   240    1,507 
Less future interest   (6)   (95)
Total discounted amount  $234   $1,412 
Less: current portion   (210)   (707)
Non-current portion  $24   $705 

 

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

 

10.SHARE CAPITAL

 

(a)Authorized

 

Unlimited number of common shares without par value. All shares issued as at December 31, 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 nine months ended December 31, 2021, a total of $1.3 million and $5.1 million, respectively (three and nine months ended December 31, 2020 - $1.3 million and $3.0 million) 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.

 

14

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

(i) Stock options

 

The following is a summary of option transactions:

 

         Weighted average
exercise price per		 
    Number of shares    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   (797,083)   2.98 
Options cancelled   (25,000)   7.06 
Balance, December 31, 2021   1,040,335   $7.30 

 

The following table summarizes information about stock options outstanding as at December 31, 2021:

 

            Weighted         
    Number of options   Weighted average   average   Number of options   Weighted 
    outstanding at   remaining contractual   exercise price   exercisable at   average exercise 
Exercise price in CAD$   Decemer 31, 2021   life (Years)   in CAD$   December 31, 2021   price in CAD$ 
$5.46    560,335    3.40    $5.46    274,335   $5.46 
$9.45    480,000    3.86    $9.45    159,998   $9.45 
 $5.46 to $9.45    1,040,335    3.61    $7.30    434,333   $6.93 

 

(ii) RSUs

 

The following is a summary of RSUs transactions:

 

         Weighted average 
         grant date closing 
   Number of shares   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   (20,998)   6.50 
Distributed   (566,172)   5.90 
Balance, December 31, 2021   1,662,166   $6.48 

15

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

(c)Cash dividends declared

 

During the three and nine months ended December 31, 2021, dividends of $2.2 million and $4.4 million, respectively (three and nine months ended December 31, 2020 - $2.2 million and $4.4 million, respectively) were declared and paid.

 

11.ACCUMULATED OTHER COMPREHENSIVE LOSS

 

   December 31, 2021    March 31, 2021 
Change in fair value on equity investments designated as FVTOCI  $21,365   $22,328 
Share of other comprehensive (income) loss in associate   (2,744)   589 
Currency translation adjustment   (18,812)   (10,367)
Balance, end of the period  $(191)  $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.

 

12.NON-CONTROLLING INTERESTS

 

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

 

   Henan   Henan       Guangdong         
   Found   Huawei   Yunxiang   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)   10,232    162    (137)   125    (128)   10,254 
Share of other comprehensive income   1,988    182    72    15    -    2,257 
Distributions   (3,266)   (630)   -    -    (1,200)   (5,096)
Balance, December 31, 2021  $87,518   $4,896   $2,967   $(211)  $10,399   $105,569 

 

As at December 31, 2021, non-controlling interests in Henan Found, Henan Huawei, Yunxiang, Guangdong Found and New Infini were 22.5%, 20%, 30%, 1%, and 53.8%, respectively (March 31, 2021 – 22.5%, 20%, 30%, 1%, and 56.3%, respectively).

 

13.GOVERNMENT FEES AND OTHER TAXES

 

Government fees and other taxes consist of:

 

   Three months ended December 31,  Nine months ended December 31,
   2021   2020   2021   2020 
Government fees  $18   $24   $46   $52 
Other taxes   778    753    2,151    1,913 
   $796   $777   $2,197   $1,965 

 

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.

16

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

14.GENERAL AND ADMINISTRATIVE

 

General and administrative expenses consist of:

 

   Three months ended December 31, 2021  Three months ended December 31, 2020
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $145   $336   $481   $139   $329   $468 
Office and administrative expenses   281    1,028    1,309    531    896    1,427 
Professional fees   186    107    293    198    118    316 
Salaries and benefits   1,482    1,635    3,117    1,442    1,417    2,859 
Share-based compensation   1,216    -    1,216    1,215    -    1,215 
   $3,310   $3,106   $6,416   $3,525   $2,760   $6,285 

 

   Nine months ended December 31, 2021  Nine months ended December 31, 2020
   Corporate   Mines   Total   Corporate     Mines   Total 
Amortization and depreciation  $435   $1,014   $1,449   $391   $922   $1,313 
Office and administrative expenses   1,228    2,420    3,648    1,559    2,227    3,786 
Professional fees   523    326    849    561    345    906 
Salaries and benefits   3,836    4,619    8,455    3,574    3,662    7,236 
Share-based compensation   4,875    -    4,875    2,911    -    2,911 
   $10,897   $8,379   $19,276   $8,996   $7,156   $16,152 

 

15.FINANCE ITEMS

 

Finance items consist of:

 

   Three months ended December 31,  Nine months ended December 31,
Finance income  2021   2020   2021   2020 
Interest income  $1,468   $1,108   $4,005   $2,796 
Dividend income   38    -    198    - 
   $1,506   $1,108   $4,203   $2,796 

 

   Three months ended December 31,  Nine months ended December 31,
Finance costs  2021    2020   2021   2020 
Interest on lease obligation  $17     23   $56   $73 
Impairment charges for expected credit loss against                     
bond investments   9,592     1,335    10,369    1,376 
Unwinding of discount of environmental rehabilitation                     
provision   68     45    203    185 
   $9,677    $1,403   $10,628   $1,634 

17

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

16.INCOME TAX

 

The significant components of income tax expense are as follows:

 

   Three months ended December 31,   Nine months ended December 31, 
Income tax expense  2021   2020   2021   2020 
Current  $906   $4,553   $8,050   $14,277 
Deferred   2,187    1,493    5,215    3,028 
   $3,093   $6,046   $13,265   $17,305 

 

17.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  December 31, 2021   March 31, 2021 
NUAG (a)  $58   $59 
WHG (b)   19    19 
Henan Non-ferrous (c)   819    769 
   $896   $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 nine months ended December 31, 2021, the Company recovered $0.2 million and $0.5 million (three and nine months ended December 31, 2020 - $0.1 million and $0.5 million), 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 nine months ended December 31, 2021, the Company recovered $0.1 million and $0.2 million (three and nine months ended December 31, 2020 - $0.04 million and $0.04 million), 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.

18

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

(Unaudited) (Tabular amounts are 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 $0.8 million (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.

 

18.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.

19

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

(Unaudited) (Tabular amounts are 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 December 31, 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 December 31, 2021 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                
Cash and cash equivalents  $152,027   $-   $-   $152,027 
Short-term investments - money market instruments   49,266    -    -    49,266 
Investments in public companies   14,036    -    -    14,036 
Investments in private companies   -    -    6,087    6,087 

 

   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 

 

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

 

Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at December 31, 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 nine months ended December 31, 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.

 

       December 31, 2021       March 31, 2021 
   Within a year   2-5 years   Total   Total 
Accounts payable and accrued liabilities  $45,423   $-   $45,423   $30,298 
Lease obligation   707    705    1,412    1,741 
   $46,130   $705   $46,835   $32,039 

20

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

(Unaudited) (Tabular amounts are 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:

 

   December 31, 2021   March 31, 2021 
Financial assets denominated in U.S. Dollars  $61,731   $58,610 
           
Financial liabilities denominated in U.S. Dollars  $456   $52 

 

As at December 31,2021, with other variables unchanged, a 10% strengthening (weakening) of the CAD against the USD would have decreased (increased) net income by approximately $6.2 million.

 

(d) Interest rate risk

 

The Company is exposed to interest rate risk on its cash equivalents and short term investments. As at December 31, 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 December 31, 2021 (at March 31, 2021 - $nil).

21

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

(f) Equity price risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on financial markets. As the Company’s marketable securities holdings are mainly in mining companies, the value will also fluctuate based on commodity prices. Based upon the Company’s portfolio as at December 31, 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 $1.1 million and $0.3 million, respectively.

 

19.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 and Xinbaoyuan Ying Mining District
Hunan Yunxiang BYP
Guangdong Guangdong Found GC
Other Infini Resources S.A. de C.V. and Xinbaoyuan La Yesca, Kuanping
Administrative    
Vancouver Silvercorp Metals Inc. and holding companies  
Beijing Silvercorp Metals (China) Inc.  

22

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

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

 

   December 31, 2021           
   Mining     Administrative     
   Henan                         Total 
Statement of financial position items:  Luoning   Hunan   Guangdong   Other     Beijing   Vancouver    
Current assets  $136,557   $942   $14,319   $1,278     $8,617   $69,655   $231,368 
Plant and equipment   57,361    3,781    15,271    168      906    1,300    78,787 
Mineral rights and properties   249,999    7,569    30,706    32,927      -    -    321,201 
Investment in an associate   -    -    -    -      -    60,143    60,143 
Other investments   2,361    -    -    -      -    17,762    20,123 
Reclamation deposits   4,011    -    4,798    -      -    8    8,817 
Long-term prepaids and deposits   456    104    228    -      -    -    788 
Long-term portion of lease receivable   -    -    -    -      -    24    24 
                                      
Total assets  $450,745   $12,396   $65,322   $34,373     $9,523   $148,892   $721,251 
Current liabilities  $40,182   $569   $6,103   $450     $304   $2,494   $50,102 
Long-term portion of lease obligation   -    -    -    -      -    705    705 
Deferred income tax liabilities   46,170    1,178    -    -      -    -    47,348 
Environmental rehabilitation   6,118    1,051    735    -      -    -    7,904 
Total liabilities  $92,470   $2,798   $6,838   $450     $304   $3,199   $106,059 

 

       March 31, 2021                 
   Mining   Administrative     
   Henan                       Total 
Statement of financial position items:  Luoning   Hunan   Guangdong   Other   Beijing   Vancouver    
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 

 

23

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

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

 

   Three months ended December 31, 2021 
   Mining     Administrative        
   Henan                         Total 
Statement of operations:  Luoning     Hunan (1)     Guangdong     Other       Beijing   Vancouver     
Revenue  $48,166   $-   $10,913   $-     $-   $-   $59,079 
Costs of mine operations   (30,587)   (118)   (6,881)   (17)     -    -    (37,603)
Income from mine operations   17,579    (118)   4,032    (17)     -    -    21,476 
Operating (expenses) income   (1,308)   56    10    (166)     (579)   (293)   (2,280)
Finance items   912    (9)   77    1      80    (9,232)   (8,171)
Income tax expenses   (3,633)   (6)   539    -      -    7    (3,093)
Net income (loss)  $13,550   $(77)  $4,658   $(182)    $(499)  $(9,518)  $7,932 
Attributed to:                                     
Equity holders of the Company   10,576    (47)   4,612    (76)     (499)   (9,503)   5,063 
Non-controlling interests   2,974    (30)   46    (106)     -    (15)   2,869 
Net income (loss)  $13,550   $(77)  $4,658   $(182)    $(499)  $(9,518)  $7,932 
(1)Hunan's BYP project was placed on care and maintenance starting August 2014.

 

   Three months ended December 31, 2020 
   Mining     Administrative     
   Henan                     Total 
Statement of operations:  Luoning   Hunan   Guangdong     Beijing   Vancouver     
Revenue  $42,486   $28   $10,782     $-   $-   $53,296 
Costs of mine operations   (20,828)   (217)   (7,450)     -    -    (28,495)
Income from mine operations   21,658    (189)   3,332      -    -    24,801 
Operating expenses   132    579    8      (487)   (6,403)   (6,171)
Finance items   568    (4)   62      30    (951)   (295)
Income tax expenses   (5,222)   91    (585)     -    (330)   (6,046)
Net income (loss)  $17,136   $477   $2,817     $(457)  $(7,684)  $12,289 
Attributed to:                                
Equity holders of the Company   13,403    331    2,790      (457)   (7,675)   8,392 
Non-controlling interests   3,733    146    27      -    (9)   3,897 
Net income (loss)  $17,136   $477   $2,817     $(457)  $(7,684)  $12,289 

24

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

   Nine months ended December 31, 2021 
   Mining     Administrative     
   Henan                         Total 
Statement of income:  Luoning   Hunan   Guangdong   Other     Beijing   Vancouver     
Revenue  $142,686   $-   $33,647   $-     $-   $-   $176,333 
Costs of mine operations   (84,562)   (379)   (20,770)   (30)     -    -    (105,741)
Income from mine operations   58,124    (379)   12,877    (30)     -    -    70,592 
Operating (expenses) income   (1,531)   116    55    (130)     (1,639)   (10,851)   (13,980)
Finance items, net   2,222    (26)   242    1      176    (9,040)   (6,425)
Income tax expenses   (11,199)   (108)   (526)   -      -    (1,432)   (13,265)
Net income (loss)  $47,616   $(397)  $12,648   $(159)    $(1,463)  $(21,323)  $36,922 
Attributable to:                                     
Equity holders of the Company   37,215    (260)   12,523    (66)     (1,463)   (21,281)   26,668 
Non-controlling interests   10,401    (137)   125    (93)     -    (42)   10,254 
Net income (loss)  $47,616   $(397)  $12,648   $(159)    $(1,463)  $(21,323)  $36,922 

 

 

   Nine months ended December 31, 2020 
   Mining     Administrative     
   Henan                     Total 
Statement of income:  Luoning   Hunan   Guangdong     Beijing   Vancouver     
Revenue  $127,843   $1,553   $26,977     $-   $-   $156,373 
Costs of mine operations   (65,488)   (1,224)   (18,903)     -    -    (85,615)
Income from mine operations   62,355    329    8,074      -    -    70,758 
Operating expenses   60    567    10      (1,356)   (3,558)   (4,277)
Finance items, net   1,319    (21)   113      92    (341)   1,162 
Income tax expenses   (14,937)   58    (946)     (8)   (1,472)   (17,305)
Net income (loss)  $48,797   $933   $7,251     $(1,272)  $(5,371)  $50,338 
Attributable to:                                
Equity holders of the Company   38,141    668    7,180      (1,272)   (5,362)   39,355 
Non-controlling interests   10,656    265    71      -    (9)   10,983 
Net income (loss)  $48,797   $933   $7,251     $(1,272)  $(5,371)  $50,338 

25

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

(c) Sales by metal

 

The sales generated for the three and nine months ended December 31, 2021 and 2020 were all earned in China and were comprised of:

 

   Three months ended December 31, 2021 
   Henan
Luoning		   Hunan   Guangdong   Total 
Silver (Ag)  $29,615   $-   $2,124   $31,739 
Gold (Au)   1,504    -    -    1,504 
Lead (Pb)   13,840    -    1,974    15,814 
Zinc (Zn)   2,236    -    6,122    8,358 
Other   971    -    693    1,664 
   $48,166   $-   $10,913   $59,079 

 

   Three months ended December 31, 2020 
   Henan
Luoning		   Hunan   Guangdong   Total 
Silver (Ag)  $28,013   $-   $2,707   $30,720 
Gold (Au)   1,194    28    -    1,222 
Lead (Pb)   10,892    -    1,961    12,853 
Zinc (Zn)   2,114    -    5,809    7,923 
Other   273    -    305    578 
   $42,486   $28   $10,782   $53,296 

 

   Nine months ended December 31, 2021 
   Henan
Luoning		   Hunan   Guangdong   Total 
Silver (Ag)  $90,845   $-   $7,693   $98,538 
Gold (Au)   4,198    -    -    4,198 
Lead (Pb)   38,886    -    6,738    45,624 
Zinc (Zn)   5,581    -    17,966    23,547 
Other   3,176    -    1,250    4,426 
   $142,686   $-   $33,647   $176,333 

 

   Nine months ended December 31, 2020 
   Henan
Luoning		   Hunan   Guangdong   Total 
Silver (Ag)  $82,625   $-   $7,326   $89,951 
Gold (Au)   4,164    1,553    -    5,717 
Lead (Pb)   35,386    -    6,228    41,614 
Zinc (Zn)   4,556    -    12,758    17,314 
Other   1,112    -    665    1,777 
   $127,843   $1,553   $26,977   $156,373 

 

(d) Major customers

 

For the nine months ended December 31, 2021, four major customers (nine months ended December 31, 2020 - four major customers) each accounted for 15%, 17%, 18%, and 19% (nine months ended December 31, 2020 – 13%, 15%, 16%, and 22%), and collectively 69% (nine months ended December 31, 2020 – 71%) of the total sales of the Company.

26

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2021 and for the three and nine months ended December 31, 2021 and 2020

 

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

 

20.SUPPLEMENTARY CASH FLOW INFORMATION

 

Changes in non-cash operating working capital:  Three Months Ended December 31,   Nine Months Ended December 31, 
   2021   2020   2021   2020 
Trade and other receivables  $(373)  $238   $(412)  $104 
Inventories   (1,885)   (2,166)   (803)   (696)
Prepaids and deposits   906    489    (674)   (1,038)
Accounts payable and accrued liabilities   5,579    6,300    12,508    15,006 
Deposits received   (3,540)   (1,814)   (1,586)   (617)
Due from a related party   (14)   (45)   (25)   2 
   $673   $3,002   $9,008   $12,761 

 

   December 31, 2021   March 31, 2021 
Cash on hand and at bank       $84,696   $111,191 
Bank term deposits and short-term money market investments    67,331    7,544 
Total cash and cash equivalents       $152,027   $118,735 

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