EX-99.1 2 exhibit99-1.htm FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 Exhibit 99.1

Exhibit 99.1

 

 

SILVERCORP METALS INC.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended December 31, 2022 and 2021

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

 

 

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Income

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

 

      Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
   Notes  2022   2021   2022   2021 
Revenue  3(a)(c)  $58,651   $59,079   $173,982   $176,333 
Cost of mine operations                       
Production costs      24,603    25,055    76,145    70,311 
Depreciation and amortization      7,599    6,822    22,511    19,914 
Mineral resource taxes      1,438    1,824    4,286    4,940 
Government fees and other taxes  4   633    796    1,973    2,197 
General and administrative  5   2,634    3,106    8,060    8,379 
       36,907    37,603    112,975    105,741 
Income from mine operations      21,744    21,476    61,007    70,592 
Corporate general and administrative  5   3,171    3,310    10,204    10,897 
Property evaluation and business development      173    204    376    838 
Foreign exchange loss (gain)      850    (1,813)   (5,146)   (3,426)
(Gain) loss on equity investments designed as FVTPL  9   (3,010)   (1,101)   1,257    2,986 
Share of loss in associates  10   677    403    2,176    1,268 
Loss on disposal of plant and equipment  11   111    35    431    171 
Impairment of mineral rights and properties  12   -    -    20,211    - 
Other expenses      2,507    1,242    2,276    1,246 
Income from operations      17,265    19,196    29,222    56,612 
                        
Finance income  6   592    1,506    3,010    4,203 
Finance costs  6   (661)   (9,677)   (1,256)   (10,628)
Income before income taxes      17,196    11,025    30,976    50,187 
                        
Income tax expense  7   2,259    3,093    12,157    13,265 
Net income     $14,937   $7,932   $18,819   $36,922 
                        
Attributable to:                       
Equity holders of the Company     $11,916   $5,063   $20,373   $26,668 
Non-controlling interests  17   3,021    2,869    (1,554)   10,254 
      $14,937   $7,932   $18,819   $36,922 
                        
Earnings per share attributable to the equity holders of the Company Basic earnings per share     $0.07   $0.03   $0.12   $0.15 
Diluted earnings per share     $0.07   $0.03   $0.11   $0.15 
Weighted Average Number of Shares Outstanding - Basic      176,723,433    176,799,362    176,892,860    176,347,530 
Weighted Average Number of Shares Outstanding - Diluted      178,938,856    178,537,718    179,024,844    178,224,810 

 

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 Comprehensive Income (loss)

(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  2022   2021  2022   2021 
Net income     $14,937   $7,932  $18,819   $36,922 
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      15,546    8,212   (47,964)   10,702 
Share of other comprehensive (loss) income in associate  10   107    151   (897)   3,333 
Items that will not subsequently be reclassified to net income or loss:                      
Change in fair value on equity investments designated as FVTOCI, net of tax of $nil  9   59    93   (1,180)   963 
Other comprehensive income (loss), net of taxes     $15,712   $8,456  $(50,041)  $14,998 
Attributable to:                      
Equity holders of the Company     $13,075   $7,014  $(43,084)  $12,741 
Non-controlling interests  17   2,637    1,442   (6,957)   2,257 
      $15,712   $8,456  $(50,041)  $14,998 
Total comprehensive income (loss)     $30,649   $16,388  $(31,222)  $51,920 
Attributable to:                      
Equity holders of the Company     $24,991   $12,077  $(22,711)  $39,409 
Non-controlling interests      5,658    4,311   (8,511)   12,511 
      $30,649   $16,388  $(31,222)  $51,920 

 

See accompanying notes to the condensed consolidated interim financial statements

 

2

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Financial Position

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

 

      As at
December  31,		   As at
March 31,		 
   Notes  2022   2022 
ASSETS             
Current Assets             
Cash and cash equivalents  20  $170,841   $113,302 
Short-term investments  8   39,420    99,623 
Trade and other receivables      1,008    3,615 
Current portion of lease receivable  13   11    182 
Inventories      7,350    9,124 
Due from related parties  18   115    66 
Income tax receivable      275    928 
Prepaids and deposits      4,865    5,468 
       223,885    232,308 
Non-current Assets             
Long-term prepaids and deposits      1,205    974 
Reclamation deposits      8,249    8,876 
Other investments  9   17,234    17,768 
Investment in associates  10   51,362    56,841 
Plant and equipment  11   79,557    79,418 
Mineral rights and properties  12   299,189    326,448 
Deferred income tax assets      214    905 
TOTAL ASSETS     $680,895   $723,538 
LIABILITIES AND EQUITY             
Current Liabilities             
Accounts payable and accrued liabilities     $43,201   $39,667 
Current portion of lease obligation  13   301    649 
Deposits received      2,549    5,445 
Income tax payable      874    277 
       46,925    46,038 
Non-current Liabilities             
Long-term portion of lease obligation  13   378    614 
Deferred income tax liabilities      47,753    48,033 
Environmental rehabilitation  14   7,573    8,739 
Total Liabilities      102,629    103,424 
Equity             
Share capital      255,673    255,444 
Equity reserves      992    43,250 
Retained earnings      229,650    213,702 
Total equity attributable to the equity holders of the Company      486,315    512,396 
Non-controlling interests  17   91,951    107,718 
Total Equity      578,266    620,114 
TOTAL LIABILITIES AND EQUITY     $680,895   $723,538 

 

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  2022   2021   2022   2021 
Cash provided by                   
Operating activities                   
Net income     $14,937   $7,932   $18,819   $36,922 
Add (deduct) items not affecting cash:                       
Finance costs  6   661    9,677    1,256    10,628 
Income tax expense  7   2,259    3,093    12,157    13,265 
Depreciation, amortization and depletion      8,022    7,303    23,844    21,363 
(Gain) loss on equity investments designed as FVTPL  9   (3,010)   (1,101)   1,257    2,986 
Share of loss in associates  10   677    403    2,176    1,268 
Impairment of mineral rights and properties  12   -    -    20,211    - 
Loss on disposal of plant and equipment  11   111    35    431    171 
Share-based compensation  15(b)   841    1,268    3,133    5,145 
Reclamation expenditures      (370)   (99)   (385)   (225)
Income taxes paid      (138)   (501)   (6,783)   (4,503)
Interest paid  13   (9)   (17)   (35)   (56)
Changes in non-cash operating working capital  20   1,680    673    3,820    9,008 
Net cash provided by operating activities      25,661    28,666    79,901    95,972 
Investing activities                       
Plant and equipment                       
Additions      (4,231)   (2,564)   (10,937)   (7,168)
Proceeds on disposals  11   10    12    10    50 
Mineral rights and properties                       
Capital expenditures      (11,466)   (14,698)   (34,236)   (35,503)
Acquisition      -    (10,042)   -    (13,135)
Reclamation deposits                       
Paid      (274)   (159)   (304)   (218)
Other investments                       
Acquisition  9   (1,932)   (535)   (3,702)   (7,452)
Proceeds on disposals  9   21    -    525    974 
Investment in associates  10   (1,181)   (352)   (1,938)   (5,312)
Short-term investment                       
Purchase      (32,020)   (25,096)   (112,304)   (99,325)
Redemption      26,515    36,091    164,526    111,298 
Principal received on lease receivable  13   53    54    162    162 
Net cash provided by (used in ) investing activities      (24,505)   (17,289)   1,802    (55,629)
Financing activities                       
Principal payments on lease obligation  13   (164)   (159)   (501)   (470)
Cash dividends distributed  15(c)   (2,209)   (2,211)   (4,425)   (4,413)
Non-controlling interests                       
Distribution  17   -    (1,200)   (7,256)   (5,096)
Proceeds from issuance of common shares      -    736    -    1,908 
Common shares repurchased as part of normal course issuer bid      -    -    (2,078)   - 
Net cash used in (provided by) financing activities      (2,373)   (2,834)   (14,260)   (8,071)
Effect of exchange rate changes on cash and cash equivalents      5,688    1,555    (9,904)   1,020 
Increase (decrease) in cash and cash equivalents      4,471    10,098    57,539    33,292 
Cash and cash equivalents, beginning of the period      166,370    141,929    113,302    118,735 
Cash and cash equivalents, end of the period     $170,841   $152,027   $170,841   $152,027 
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       Total equity attributable to the         
   Notes  Number
of shares		   Amount   Share option reserve   Reserves   Accumulated other comprehensive loss   Retained earnings   equity
holders
of the
Company		   Non-controlling interests   Total equity 
Balance, April 1, 2021      175,742,544   $250,199   $16,610   $25,409   $(12,550)  $187,906   $467,574   $98,154   $565,728 
Options exercised      797,083    2,528    (620)   -    -    -    1,908    -    1,908 
Restricted share units vested      566,172    2,717    (2,717)   -    -    -    -    -    - 
Share-based compensation      -    -    5,145    -    -    -    5,145    -    5,145 
Dividends declared      -    -    -    -    -    (4,413)   (4,413)   -    (4,413)
Distribution to non-controlling interests      -    -    -    -    -    -    -    (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 
Options exercised      -    -    -    -    -    -    -    -    - 
Restricted share units vested      -    -    -    -    -    -    -    -    - 
Share-based compensation      -    -    951    -    -    -    951    -    951 
Dividends declared      -    -    -    -    -    -    -    -    - 
Distribution to non-controlling interests      -    -    -         -    -    -    -    - 
Comprehensive income      -    -    -    -    (2,144)   3,966    1,822    2,149    3,971 
Balance, March 31, 2022      177,105,799   $255,444   $19,369   $25,834   $(1,953)  $213,702   $512,396   $107,718   $620,114 
Restricted share units vested      503,703    2,307    (2,307)   -    -    -    -    -    - 
Share-based compensation  15(b)   -    -    3,133    -    -    -    3,133    -    3,133 
Dividends declared  15(c)   -    -    -    -    -    (4,425)   (4,425)   -    (4,425)
Common shares repurchased as part of normal course issuer bid  15(d)   (838,237)   (2,078)   -    -    -    -    (2,078)   -    (2,078)
Distribution to non-controlling interests  17   -    -    -    -    -    -    -    (7,256)   (7,256)
Comprehensive income (loss)      -    -    -    -    (43,084)   20,373    (22,711)   (8,511)   (31,222)
Balance, December 31, 2022      176,771,265   $255,673   $20,195   $25,834   $(45,037)  $229,650   $486,315   $91,951   $578,266 

 

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, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

1. CORPORATE INFORMATION

 

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

 

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

 

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

 

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

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

(a) Statement of Compliance

 

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

 

These condensed consolidated interim financial statements were authorized for issue in accordance with a resolution of the Board of Directors dated February 8, 2023.

 

(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.

 

6

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

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

 

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

 

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

 

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

 

(c) Significant Accounting Judgments and Estimates

 

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

 

7

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

3. SEGMENTED INFORMATION

 

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

 

Operating Segments   Subsidiaries Included in the Segment   Properties Included in the Segment
Mining        
Henan Luoning   Henan Found and Henan Huawei   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.    

 

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

 

Three months ended December 31, 2022
   Mining     Administrative     
    Henan                          
Statement of operations:   Luoning    Hunan(1)   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $48,808   $-   $9,843   $         -   $-   $-   $58,651 
Costs of mine operations   (29,833)   (100)   (6,974)   -    -    -    (36,907)
Income from mine operations   18,975    (100)   2,869    -    -    -    21,744 
Operating (expenses) income   (2,521)   98    (147)   (8)   (460)   (1,441)   (4,479)
Finance items   108    (7)   43    -    56    (269)   (69)
Income tax expenses   (2,284)   (1)   (16)   -    -    42    (2,259)
Net income (loss)  $14,278   $(10)  $2,749   $(8)  $(404)  $(1,668)  $14,937 
                                    
Attributed to:                                   
Equity holders of the Company   11,268    -    2,722    (4)   (404)   (1,666)   11,916 
Non-controlling interests   3,010    (10)   27    (4)   -    (2)   3,021 
Net income (loss)  $14,278   $(10)  $2,749   $(8)  $(404)  $(1,668)  $14,937 
(1)Hunan’s BYP project was placed on care and maintenance starting August 2014.

 

Three months ended December 31, 2021
   Mining   Administrative     
Statement of operations:  Henan
Luoning		   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
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   (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 

 

8

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

(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, 2022
   Mining   Administrative     
   Henan                         
Statement of income:  Luoning   Hunan(1)   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $145,729   $-   $28,253   $-   $-   $-   $173,982 
Costs of mine operations   (92,414)   (320)   (20,225)   (16)   -    -    (112,975)
Income from mine operations   53,315    (320)   8,028    (16)   -    -    61,007 
                                    
Operating (expenses) income   (2,505)   (106)   (292)   (11)   (1,364)   (7,296)   (11,574)
Impairment of mineral rights and properties   -    -    -    (20,211)   -    -    (20,211)
Finance items, net   1,669    (22)   314    -    206    (413)   1,754 
Income tax expenses   (9,025)   61    (680)   -    -    (2,513)   (12,157)
Net income (loss)  $43,454   $(387)  $7,370   $(20,238)  $(1,158)  $(10,222)  $18,819 
                                    
Attributable to:                                  
Equity holders of the Company   34,061    (250)   7,298    (9,672)   (1,158)   (9,906)   20,373 
Non-controlling interests   9,393    (137)   72    (10,566)   -    (316)   (1,554)
Net income (loss)  $43,454   $(387)  $7,370   $(20,238)  $(1,158)  $(10,222)  $18,819 

 

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

 

Nine months ended December 31, 2021
   Mining   Administrative     
   Henan                         
Statement of income:  Luoning   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
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   (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 

 

9

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

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

 

December 31, 2022
   Mining   Administrative     
Statement of financial position items:  Henan Luoning   Hunan   Guangdong   Other   Beijing   Vancouver   Total 
Current assets  $125,555   $709   $20,328   $481   $7,962   $68,850   $223,885 
Plant and equipment   59,128    3,179    15,500    155    677    918    79,557 
Mineral rights and properties   247,763    6,957    31,315    13,154    -    -    299,189 
Investment in associates   -    -    -    -    -    51,362    51,362 
Other investments   65    -    -    -    -    17,169    17,234 
Reclamation deposits   3,719    -    4,523    -    -    7    8,249 
Long-term prepaids and deposits   1,020    96    89    -    -    -    1,205 
Deferred income tax assets   -    -    214    -    -    -    214 
Total assets  $437,250   $10,941   $71,969   $13,790   $8,639   $138,306   $680,895 
                                    
Current liabilities  $37,134   $413   $6,795   $43   $275   $2,265   $46,925 
Long-term portion of lease obligation   -    -    -    -    -    378    378 
Deferred income tax liabilities   46,726    1,027    -    -    -    -    47,753 
Environmental rehabilitation   5,134    981    1,458    -    -    -    7,573 
Total liabilities  $88,994   $2,421   $8,253   $43   $275   $2,643   $102,629 

 

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

 

10

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

(c) Sales by metal

 

The sales generated for the three and nine months ended December 31, 2022 and 2021 were all earned in China and were comprised of:

 

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

 

   Three months ended December 31, 2021 
   Henan
Luoning		   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 

 

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

 

   Nine months ended December 31, 2021 
   Henan
Luoning		   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 

 

11

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

(d) Major customers

 

For the nine months ended December 31, 2022, four major customers ( nine months ended December 31, 2021 - four major customers) each accounted for 22%, 20%, 15% and 14% (nine months ended December 31, 2021 – 19%, 18%, 17%, and 15%), and collectively 72% (nine months ended December 31, 2021 – 69%) of the total sales of the Company.

 

4. GOVERNMENT FEES AND OTHER TAXES

 

Government fees and other taxes consist of:

 

   Three months ended 
December 31,		   Nine months ended 
December 31,		 
   2022   2021   2022   2021 
Government fees  $15   $18   $51   $46 
Other taxes   618    778    1,922    2,151 
   $633   $796   $1,973   $2,197 

 

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

 

5. GENERAL AND ADMINISTRATIVE

 

General and administrative expenses consist of:

 

   Three months ended December 31, 2022   Three months ended December 31, 2021 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $139   $285   $424   $145   $336   $481 
Office and administrative expenses   511    652    1,163    281    1,028    1,309 
Professional fees   239    97    336    186    107    293 
Salaries and benefits   1,441    1,600    3,041    1,482    1,635    3,117 
Share-based compensation   841    -    841    1,216    -    1,216 
   $3,171   $2,634   $5,805   $3,310   $3,106   $6,416 

 

   Nine months ended December 31, 2022   Nine months ended December 31, 2021 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $430   $903   $1,333   $435   $1,014   $1,449 
Office and administrative expenses   1,326    2,038    3,364    1,228    2,420    3,648 
Professional fees   602    330    932    523    326    849 
Salaries and benefits   4,713    4,789    9,502    3,836    4,619    8,455 
Share-based compensation   3,133    -    3,133    4,875    -    4,875 
   $10,204   $8,060   $18,264   $10,897   $8,379   $19,276 

 

12

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

6. FINANCE ITEMS

 

Finance items consist of:

 

   Three months ended
December 31,		   Nine months ended
December 31,		 
Finance income  2022   2021   2022   2021 
Interest income  $516   $1,468   $2,934   $4,005 
Dividend income   76    38    76    198 
   $592   $1,506   $3,010   $4,203 

 

   Three months ended
December 31,		   Nine months ended
December 31,		 
Finance costs  2022   2021   2022   2021 
Interest on lease obligation  $9    17   $35   $56 
Impairment charges for expected credit loss against bond investments (Note 8)   501    9,592    946    10,369 
Loss on disposal of bonds   93    -    93    - 
Unwinding of discount of environmental rehabilitation provision (Note 14)   58    68    182    203 
   $661   $9,677   $1,256   $10,628 

 

7. INCOME TAX

 

The significant components of income tax expense are as follows:

 

   Three months ended
December 31,		   Nine months ended
December 31,		 
Income tax expense  2022   2021   2022   2021 
Current  $1,235   $906   $7,646   $8,050 
Deferred   1,024    2,187    4,511    5,215 
   $2,259   $3,093   $12,157   $13,265 

 

8. SHORT-TERM INVESTMENTS

 

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

 

   Amount   Interest rates  Maturity 
Bonds  $5,993   5.50% - 13.00%   January 25, 2023 - January 16, 2025 
Money market instruments   33,427         
   $39,420         

 

During the three and nine months ended December 31, 2022, the Company recorded impairment charges of $0.5 million and $0.9 million, respectively, against bond investments issued by some Chinese real estate developing companies as the Company noted financial difficulty of the bond issuer. The impairment charge was included in finance costs on the condensed consolidated interim statements of income.

 

As at December 31, 2022, the carrying value and face value of the bond investments that were impaired was $2.1 million and $13.2 million, respectively.

 

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

 

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

 

13

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

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

 

9. OTHER INVESTMENTS

 

   December 31,
2022		   March 31, 
2022		 
Equity investments designated as FVTOCI        
Public companies  $1,054   $2,383 
Private companies    65    71 
    1,119    2,454 
Equity investments designated as FVTPL          
Public companies   12,851    11,533 
Private companies   3,264    3,781 
    16,115    15,314 
Total  $17,234   $17,768 

 

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

 

The continuity of such investments is as follows:

 

       Accumulated
fair		   Accumulated
fair		 
       value change   value change 
   Fair Value   included in
OCI		   included in
P&L		 
April 1, 2021  $15,733   $(22,810)  $    7,188 
Loss on equity investments designated as FVTOCI   (1,526)   (1,526)   - 
Loss equity investments designated as FVTPL   (3,485)   -    (3,485)
Acquisition   8,235    -      
Disposal   (1,362)   -      
Impact of foreign currency translation   173    -      
March 31, 2022  $17,768   $(24,336)  $3,703 
Loss on equity investments designated as FVTOCI   (1,180)   (1,180)   - 
Loss equity investments designated as FVTPL   (1,257)   -    (1,257)
Acquisition   3,702    -    - 
Disposal    (525)   -    - 
Impact of foreign currency translation   (1,274)   -    - 
December 31, 2022  $17,234   $(25,516)  $2,446 

 

14

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and for the three and nine months ended December 31, 2022 and 2021

 

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

 

10. INVESTMENT IN ASSOCIATES

 

(a)Investment in New Pacific Metals Corp.

 

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

 

During the three and nine months ended December 31, 2022, the Company acquired nil and 260,200, respectively, common shares of NUAG from the public market (three and nine month ended December 31, 2021– 125,000 and 125,000, respectively) for a total cost of $nil and $0.8 million (three and nine months ended December 31, 2021 – $0.4 million and $0.4 million, respectively).

 

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

 

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

 

   Number of
shares		   Amount   Value of NUAG’s common shares per quoted market price 
Balance, April 1, 2021   43,917,216   $50,399   $181,257 
Purchase from open market   125,000    352      
Share of net loss        (1,715)     
Share of other comprehensive income        95      
Foreign exchange impact        306      
Balance, March 31, 2022   44,042,216   $49,437   $140,275 
Purchase from open market   260,200    757      
Share of net loss        (1,777)     
Share of other comprehensive loss        (905)     
Foreign exchange impact        (3,783)     
Balance, December 31, 2022   44,302,416   $43,729   $98,130 

 

(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.

 

15

 

 

SILVERCORP METALS INC. 

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

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

 

As at December 31, 2022, the Company owned 19,514,285 common shares of WHG (March 31, 2022 – 15,514,285), representing an ownership interest of 31.6% (March 31, 2022 – 29.3%). Subsequent to December 31, 2022, WHG completed another tranche of non-brokered private placement. The Company’s ownership interest in WHG decreased to 29.3%.

 

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

 

   Number of
shares		   Amount   Value of WHG’s common shares per quoted market price 
Balance, April 1, 2021   11,514,285   $3,058   $15,108 
Participation in private placement   4,000,000    4,960      
Share of net loss        (473)     
Foreign exchange impact        (141)     
Balance, March 31, 2022   15,514,285   $7,404   $6,208 
Participation in private placement   4,000,000    1,181      
Share of net loss        (399)     
Share of other comprehensive income        8      
Foreign exchange impact        (561)     
Balance, December 31, 2022   19,514,285   $7,633   $6,484 

 

16

 

 

SILVERCORP METALS INC. 

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

11. 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, 2021  $110,151   $9,660   $31,074   $7,537   $1,342   $159,764 
Additions   1,613    967    2,575    763    3,647    9,565 
Disposals   (293)   (68)   (539)   (245)   -    (1,145)
Reclassification of asset groups   2,100    154    191    -    (2,445)   - 
Impact of foreign currency translation   3,676    296    1,078    258    59    5,367 
Balance as at March 31, 2022  $117,247   $11,009   $34,379   $8,313   $2,603   $173,551 
Additions   324    998    2,901    788    8,085    13,096 
Disposals   (419)   (71)   (828)   (407)   -    (1,725)
Reclassification of asset groups   4,129    5    137    -    (4,271)   - 
Impact of foreign currency translation   (9,527)   (873)   (2,818)   (670)   (235)   (14,123)
Ending balance as at December 31, 2022  $111,754   $11,068   $33,771   $8,024   $6,182   $170,799 

 

Impairment, accumulated depreciation and amortization
Balance as at April 1, 2021  $(51,570)  $(6,246)  $(21,171)  $(5,048)  $-   $(84,035)
Disposals   158    64    419    220    -    861 
Depreciation and amortization   (4,422)   (867)   (2,172)   (649)   -    (8,110)
Impact of foreign currency translation   (1,750)   (183)   (741)   (175)   -    (2,849)
Balance as at March 31, 2022  $(57,584)  $(7,232)  $(23,665)  $(5,652)  $-   $(94,133)
Disposals   172    64    689    359    -    1,284 
Depreciation and amortization   (3,265)   (710)   (1,592)   (489)   -    (6,056)
Impact of foreign currency translation   4,693    566    1,945    459    -    7,663 
Ending balance as at December 31, 2022  $(55,984)  $(7,312)  $(22,623)  $(5,323)  $-   $(91,242)
                               
Carrying amounts                              
Balance as at March 31, 2022  $59,663   $3,777   $10,714   $2,661   $2,603   $79,418 
Ending balance as at December 31, 2022  $55,770   $3,756   $11,148   $2,701   $6,182   $79,557 

 

Carrying amounts as at December 31, 2022  Ying Mining District   BYP   GC   Other   Total 
Land use rights and building  $41,438   $2,528   $10,547   $1,257   $55,770 
Office equipment   3,001    13    455    287    3,756 
Machinery   7,288    113    3,691    56    11,148 
Motor vehicles   2,146    18    387    150    2,701 
Construction in progress   5,255    507    420    -    6,182 
Total  $59,128   $3,179   $15,500   $1,750   $79,557 

 

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

 

17

 

 

SILVERCORP METALS INC. 

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

12. MINERAL RIGHTS AND PROPERTIES

 

Mineral rights and properties consist of:

 

   Producing and development properties   Exploration and evaluation properties     
Cost  Ying Mining District   BYP   GC   RZY   Kuanping   La Yesca   Total 
Balance as at April 1, 2021  $348,000   $64,609   $115,610   $185   $-   $16,747   $545,151 
Capitalized expenditures   37,307    -    4,507    -    24    2,588    44,426 
Acquisition (Note 3)   -    -    -    -    13,135    -    13,135 
Environmental rehabilitation   (68)   (18)   898    -    -    -    812 
Derecognition   -    -    -    (185)   -    -    (185)
Foreign currency translation impact   12,096    501    3,891    -    221    -    16,709 
Balance as at March 31, 2022  $397,335   $65,092   $124,906   $-   $13,380   $19,335   $620,048 
Capitalized expenditures   29,697    -    3,831    -    865    876    35,269 
Foreign currency translation impact   (32,413)   (1,256)   (10,151)   -    (1,091)   -    (44,911)
Ending balance as at December 31, 2022  $394,619   $63,836   $118,586   $-   $13,154   $20,211   $610,406 
                                    
Impairment and accumulated depletion                                   
Balance as at April 1, 2021  $(122,977)  $(57,264)  $(87,296)  $(185)  $-   $-   $(267,722)
Depletion   (15,974)   -    (2,595)   -    -    -    (18,569)
Derecognition   -    -    -    185    -    -    185 
Foreign currency translation impact   (4,313)   (257)   (2,924)   -    -    -    (7,494)
Balance as at March 31, 2022  $(143,264)  $(57,521)  $(92,815)  $-   $-   $-   $(293,600)
Impairment   -    -    -    -         (20,211)   (20,211)
Depletion   (15,310)   -    (1,992)   -    -    -    (17,302)
Foreign currency translation impact   11,718    642    7,536    -    -    -    19,896 
Ending balance as at December 31, 2022  $(146,856)  $(56,879)  $(87,271)  $-   $-   $(20,211)  $(311,217)
                                    
Carrying amounts                                   
Balance as at March 31, 2022  $254,071   $7,571   $32,091   $-   $13,380   $19,335   $326,448 
Ending balance as at December 31, 2022  $247,763   $6,957   $31,315   $-   $13,154   $-   $299,189 

 

During the nine months ended December 31, 2022, the Company completed the review and evaluation on the results of the drilling program completed in Fiscal 2022. The Company does not plan to undertake further significant work at the La Yesca Project in the near future. As a result, the decision was taken to impair fully the value of the La Yesca Project and recognized an impairment charge of $20.2 million in the condensed consolidated interim statements of income for the three months ended September 30, 2022.

 

18

 

 

SILVERCORP METALS INC. 

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

13. LEASES

 

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

 

   Lease Receivable   Lease Obligation 
Balance, April 1, 2021  $396   $1,741 
Addition   -    149 
Interest accrual   15    72 
Interest received or paid   (15)   (72)
Principal repayment   (217)   (637)
Foreign exchange impact   3    10 
Balance, March 31, 2022  $182   $1,263 
Interest accrual   4    35 
Interest received or paid   (4)   (35)
Principal repayment   (162)   (501)
Foreign exchange impact   (9)   (83)
Balance, December 31, 2022  $11   $679 
Less: current portion   (11)   (301)
Non-current portion  $-   $378 

 

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, 2022:

 

   Lease Receivable   Lease Obligation 
Within 1 year  $11   $317 
Between 2 to 5 years   -    402 
           
Total undiscounted amount   11    719 
Less future interest   -    (40)
           
Total discounted amount  $11   $679 
Less: current portion   (11)   (301)
Non-current portion  $-   $378 

 

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

 

19

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

14. ENVIRONMENTAL REHABILITATION OBLIGATION

 

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

 

   Total 
Balance, April 1, 2021  $7,863 
Reclamation expenditures   (467)
Unwinding of discount of environmental rehabilitation   269 
Revision of provision   812 
Foreign exchange impact   262 
Balance, March 31, 2022  $8,739 
Reclamation expenditures   (642)
Unwinding of discount of environmental rehabilitation   182 
Foreign exchange impact   (706)
Balance, December 31, 2022  $7,573 

 

15. SHARE CAPITAL

 

(a) Authorized

 

Unlimited number of common shares without par value. All shares issued as at December 31, 2022 were fully paid.

 

(b) Share-based compensation

 

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

 

For the three and nine months ended December 31, 2022, a total of $0.8 million and $3.1 million, respectively (three and nine months ended December 31, 2021 - $1.3 million and $5.1 million, respectively) in share-based compensation expense was recognized and included in the corporate general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.

 

20

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

(i) Stock options

 

The following is a summary of option transactions:

 

   Number of shares   Weighted average
exercise price per
share CAD $		 
Balance, April 1, 2021   1,862,418   $5.45 
Options exercised   (797,083)   2.98 
Options cancelled/forfeited   (70,000)   7.46 
Balance, March 31, 2022   995,335   $7.28 
Option granted   535,000    3.93 
Options cancelled/forfeited   (140,333)   6.12 
Balance, December 31, 2022   1,390,002   $6.11 

 

The following table summarizes information about stock options outstanding as at December 31, 2022:

 

Exercise price
in CAD $		   Number of options
outstanding at
December 31, 2022		   Weighted average
remaining
contractual life
(Years)		   Weighted average
exercise price in
CAD $		   Number of options
exercisable at
December 31, 2022		   Weighted average
exercise price in
CAD $		 
$3.93    478,000    4.32   $3.93    79,666   $3.93 
$5.46    502,002    2.40   $5.46    417,499   $5.46 
$9.45    410,000    2.86   $9.45    275,002   $9.45 
$3.93 to $9.45    1,390,002    3.20   $6.11    772,167   $6.72 

 

During the three and nine months ended December 31, 2022, a total of nil and 535,000, respectively, options with a life of five years were granted to directors, officers, and employees at exercise prices of CAD$3.93 per share subject to a vesting schedule over a three-year term with 1/6 of the options vesting every six months from the date of grant until fully vested.

 

The fair value of stock options granted during the nine months ended December 31, 2022 were calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

   Nine months ended December 31, 
   2022 
Risk free interest rate   2.49%
Expected life of option in years   2.75 years 
Expected volatility   62.53%
Expected dividend yield   0.81%
Estimated forfeiture rate   9.81%
Weighted average share price at date of grant  $3.93 CAD 

 

21

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

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

 

(ii) RSUs

 

The following is a summary of RSUs transactions:

 

   Number of shares   Weighted average
grant date closing
price per share $ CAD		 
Balance, April 1, 2021   1,249,336   $6.28 
Granted   1,000,000    6.40 
Forfeited   (46,999)   6.63 
Distributed   (566,172)   5.90 
Balance, March 31, 2022   1,636,165   $6.47 
Granted   961,000    3.93 
Forfeited   (139,790)   5.42 
Distributed   (503,703)   6.04 
Balance, December 31, 2022   1,953,672   $5.41 

 

(c) Cash dividends declared      

 

During the three and nine months ended December 31, 2022, dividends of $2.2 and $4.4 million, respectively, (three and nine months ended December 31, 2021 - $2.2 and $4.4 million, respectively) were declared and paid.

 

(d) Normal course issuer bid

 

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

 

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

 

During the three and nine months ended December 31, 2022, the Company repurchased a total of nil and 838,237, respectively, common shares at a cost of $nil and $2.1 million, respectively, under the NCIB Programs. All shares bought were subsequently cancelled.

 

16. ACCUMULATED OTHER COMPREHENSIVE LOSS

 

   December 31, 2022   March 31, 2022 
Change in fair value on equity investments designated as FVTOCI  $24,223   $23,043 
Share of other comprehensive loss in associate   1,391    494 
Currency translation adjustment   19,423    (21,584)
Balance, end of the period  $45,037   $1,953 

 

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

 

22

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

17. NON-CONTROLLING INTERESTS

 

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

 

   Henan
Found		   Henan
Huawei		   Yunxiang   Guangdong
Found		   New Infini   Total 
Balance, April 1, 2021  $78,564   $5,182   $3,032   $(351)  $11,727   $98,154 
Share of net income (loss)   12,639    182    (185)   154    (140)   12,650 
Share of other comprehensive income   1,732    194    68    16    -    2,010 
Distributions   (3,266)   (630)   -    -    (1,200)   (5,096)
Balance, March 31, 2022  $89,669   $4,928   $2,915   $(181)  $10,387   $107,718 
Share of net income (loss)   9,539    (146)   (137)   72    (10,882)   (1,554)
Share of other comprehensive loss   (6,395)   (394)   (120)   (48)   -    (6,957)
Distributions   (6,626)   (630)   -    -    -    (7,256)
Balance, December 31, 2022  $86,187   $3,758   $2,658   $(157)  $(495)  $91,951 

 

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

 

18. RELATED PARTY TRANSACTIONS

 

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

 

   December 31,
2022		   March 31,
2022		 
NUAG (a)  $91   $43 
WHG (b)   24    23 
   $115   $66 

 

(a)The Company recovers costs for services rendered to NUAG and expenses incurred on behalf of NUAG pursuant to a services and administrative costs reallocation agreement. During the three and nine months ended December 31, 2022, the Company recovered $0.2 million and $0.7 million, respectively, (three and nine months ended December 31, 2021 - $0.2 million and $0.5 million, respectively) from NUAG for services rendered and expenses incurred on behalf of NUAG. The costs recovered from NUAG were recorded as a direct reduction of general and administrative expenses on the condensed consolidated statements of income.

 

(b)The Company recovers costs for services rendered to WHG and expenses incurred on behalf of WHG pursuant to a services and administrative costs reallocation agreement. During the three and nine months ended December 31, 2022, the Company recovered $0.07 million and $0.1 million, respectively (three and nine months ended December 31, 2021 - $0.1 million and $0.2 million, respectively), from WHG for services rendered and expenses incurred on behalf of WHG. The costs recovered from WHG were recorded as a direct reduction of general and administrative expenses on the condensed consolidated statements of income.

 

23

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

19. FINANCIAL INSTRUMENTS

 

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

 

(a) Fair value

 

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

 

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

 

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

 

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

 

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

 

   Fair value as at December 31, 2022 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                
Cash and cash equivalents  $170,841   $          -   $        -   $170,841 
Short-term investments - money market instruments   33,427    -    -    33,427 
Investments in public companies   13,905    -    -    13,905 
Investments in private companies   -    -    3,329    3,329 

 

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

 

24

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

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

 

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

 

There were no transfers into or out of Level 3 during the three and nine months ended December 31, 2022 and 2021.

 

(b) Liquidity risk

 

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

 

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

 

   December 31, 2022 
   Within a year   2-5 years   Total 
Accounts payable and accrued liabilities  $43,201   $-   $43,201 
Lease obligation   317    402    719 
Deposits received   2,549    -    2,549 
Total Contractual Obligation  $46,067   $402   $46,469 

 

(c) Foreign exchange risk

 

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

 

25

 

 

SILVERCORP METALS INC.

 

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

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

 
   December 31,
2022		   March 31,
2022		 
Financial assets denominated in U.S. Dollars  $60,987   $59,272 

 

As at December 31, 2022, with other variables unchanged, a 10% strengthening (weakening) of the CAD against the USD would have decreased (increased) net income by approximately $6.1 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, 2022, all of its interest-bearing cash equivalents and short-term investments earn interest at market rates that are fixed to maturity or at variable interest rates with terms of less than one year. The Company monitors its exposure to changes in interest rates on cash equivalents and short-term investments. Due to the short-term nature of these financial instruments, fluctuations in interest rates would not have a significant impact on the Company’s net income.

 

(e) Credit risk

 

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

 

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

 

(f) Equity price risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on financial markets. As the Company’s marketable securities holdings are mainly in mining companies, the value will also fluctuate based on commodity prices. Based upon the Company’s portfolio as at December 31, 2022, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign currency effects, would have resulted in an increase (decrease) to the net income (loss) and other comprehensive income (loss) of $1.3 million and $0.1 million, respectively.

 

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SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at December 31, 2022 and
for the three and nine months ended December 31, 2022 and 2021

 

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

 

20. SUPPLEMENTARY CASH FLOW INFORMATION

 

   Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
Changes in non-cash operating working capital:  2022   2021   2022   2021 
Trade and other receivables  $364   $(373)  $1,736   $(412)
Inventories   483    (1,885)   657    (803)
Prepaids and deposits   1,089    906    (7)   (674)
Accounts payable and accrued liabilities   3,712    5,579    3,960    12,508 
Deposits received   (3,923)   (3,540)   (2,470)   (1,586)
Due from a related party   (45)   (14)   (56)   (25)
   $1,680   $673   $3,820   $9,008 

 

   Three Months Ended
December 31,		   Nine Months Ended
December 31,		 
Non-cash capital transactions:  2022   2021   2022   2021 
Environmental rehablitation expenditure paid from reclamation deposit  $107   $123   $257   $179 
Additions of plant and equipment included in accounts payable and accrued liabilities  $1,065   $1,232   $2,159   $(233)
Capital expenditures of mineral rights and properties included in accounts payable and accrued liabilities  $(1,279)  $214   $1,033   $1,593 

 

   December 31,
2022		   March 31,
2022		 
Cash on hand and at bank  $53,528   $72,782 
Bank term deposits and short-term money market investments   117,313    40,520 
Total cash and cash equivalents  $170,841   $113,302 

 

 

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