EX-99.1 2 exhibit99-1.htm FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 Exhibit 99.1

Exhibit 99.1

 

SILVERCORP METALS INC.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and six months ended September 30, 2023 and 2022

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

(Unaudited)

 

 

 

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Income (Loss)

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

 

      Three Months Ended
September 30,		   Six Months Ended
September 30,		 
   Notes  2023   2022   2023   2022 
Revenue  3(a)(c)  $53,992   $51,739   $113,998   $115,331 
Cost of mine operations                       
Production costs      21,268    25,398    45,566    51,542 
Depreciation and amortization      6,515    7,354    14,178    14,912 
Mineral resource taxes      1,597    1,308    2,963    2,848 
Government fees and other taxes  4   751    556    1,408    1,340 
General and administrative  5   2,918    2,762    5,639    5,426 
       33,049    37,378    69,754    76,068 
Income from mine operations      20,943    14,361    44,244    39,263 
                        
Corporate general and administrative  5   3,810    3,476    7,460    7,033 
Property evaluation and business development      114    71    223    203 
Foreign exchange (gain) loss      (1,314)   (4,340)   913    (5,996)
Loss (gain) on investments  9   603    1,596    (483)   4,267 
Share of loss in associates  10   705    771    1,345    1,499 
Dilution gain on investment in associate  10   (733)   -    (733)   - 
Loss on disposal of plant and equipment  12   35    51    30    320 
Impairment of mineral rights and properties  13   -    20,211    -    20,211 
Other expense (income)      763    (61)   529    (231)
Income (loss) from operations      16,960    (7,414)   34,960    11,957 
                        
Finance income  6   1,742    1,096    3,236    2,418 
Finance costs  6   (54)   (73)   (114)   (595)
       18,648    (6,391)   38,082    13,780 
                        
Income tax expense  7   3,878    3,811    10,099    9,898 
Net income (loss)     $14,770   $(10,202)  $27,983   $3,882 
                        
Attributable to:                       
Equity holders of the Company     $11,050   $(1,712)  $20,267   $8,457 
Non-controlling interests  18   3,720    (8,490)   7,716    (4,575)
      $14,770   $(10,202)  $27,983   $3,882 
Earnings per share attributable to the equity holders of the Company                       
Basic earnings (loss) per share     $0.06   $(0.01)  $0.11   $0.05 
Diluted earnings (loss) per share     $0.06   $(0.01)  $0.11   $0.05 
Weighted Average Number of Shares Outstanding - Basic      176,844,107    176,693,226    176,885,599    177,007,901 
Weighted Average Number of Shares Outstanding - Diluted      179,750,876    179,245,850    179,792,368    179,375,066 

 

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

 

See accompanying notes to the condensed consolidated interim financial statements

 

1

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Comprehensive Income (loss)

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

 

      Three Months Ended
September 30,		   Six Months Ended
September 30,		 
   Notes  2023   2022   2023   2022 
                    
Net income (loss)     $14,770   $(10,202)  $27,983   $3,882 
Other comprehensive (loss) income, net of taxes:                       
Items that may subsequently be reclassified to net income or loss:                       
Currency translation adjustment, net of tax of $nil      (5,969)   (34,664)   (24,386)   (63,510)
Share of other comprehensive loss in associate  10   (58)   (606)   (3)   (1,004)
Reclassification to net income upon ownership dilution of investment in associate      (34)   -    (34)   - 
Items that will not subsequently be reclassified to net income or loss:                       
Change in fair value on equity investments designated as FVTOCI, net of tax of $nil  9   6    (288)   (108)   (1,239)
Other comprehensive loss, net of taxes     $(6,055)  $(35,558)  $(24,531)  $(65,753)
Attributable to:                       
Equity holders of the Company     $(5,571)  $(30,700)  $(20,071)  $(56,159)
Non-controlling interests  18   (484)   (4,858)   (4,460)   (9,594)
      $(6,055)  $(35,558)  $(24,531)  $(65,753)
Total comprehensive income (loss)     $8,715   $(45,760)  $3,452   $(61,871)
                        
Attributable to:                       
Equity holders of the Company     $5,479   $(32,412)  $196   $(47,702)
Non-controlling interests      3,236    (13,348)   3,256    (14,169)
      $8,715   $(45,760)  $3,452   $(61,871)

 

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
September 30,		   As at
March 31,		 
   Notes  2023   2023 
ASSETS           
Current Assets           
Cash and cash equivalents  21  $119,098   $145,692 
Short-term investments  8   69,993    57,631 
Trade and other receivables      1,643    1,806 
Inventories      7,949    8,343 
Due from related parties  19   260    88 
Income tax receivable      40    582 
Prepaids and deposits      5,275    4,906 
       204,258    219,048 
Non-current Assets             
Long-term prepaids and deposits      1,322    871 
Reclamation deposits      6,373    6,981 
Other investments  9   36,613    15,540 
Investment in associates  10   55,088    50,695 
Investment properties  11   479    - 
Plant and equipment  12   76,511    80,059 
Mineral rights and properties  13   299,416    303,426 
Deferred income tax assets      362    179 
TOTAL ASSETS     $680,422   $676,799 
              
LIABILITIES AND EQUITY             
Current Liabilities             
Accounts payable and accrued liabilities     $44,877   $36,737 
Current portion of lease obligation  14   273    269 
Deposits received      3,851    4,090 
Income tax payable      927    144 
       49,928    41,240 
Non-current Liabilities             
Long-term portion of lease obligation  14   183    314 
Deferred income tax liabilities      47,818    48,096 
Environmental rehabilitation  15   6,507    7,318 
Total Liabilities      104,436    96,968 
Equity             
Share capital      256,113    255,684 
Equity reserves      (14,851)   3,484 
Retained earnings      247,938    229,885 
Total equity attributable to the equity holders of the Company      489,200    489,053 
Non-controlling interests  18   86,786    90,778 
Total Equity      575,986    579,831 
TOTAL LIABILITIES AND EQUITY     $680,422   $676,799 

 

See accompanying notes to the condensed consolidated interim financial statements

 

3

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Cash Flows

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

 

      Three Months Ended
September 30,		   Six Months Ended
September 30,		 
   Notes  2023   2022   2023   2022 
Cash provided by
Operating activities		                   
Net income (loss)     $14,770   $(10,202)  $27,983   $3,882 
Add (deduct) items not affecting cash:                       
Finance costs  6   54    73    114    595 
Income tax expense  7   3,878    3,811    10,099    9,898 
Depreciation, amortization and depletion      6,927    7,797    15,015    15,822 
Loss (gain) on investments  9   603    1,596    (483)   4,267 
Share of loss in associates  10   705    771    1,345    1,499 
Dilution gain on investment in associate  10   (733)   -    (733)   - 
Impairment of mineral rights and properties  13   -    20,211    -    20,211 
Loss on disposal of plant and equipment      35    51    30    320 
Share-based compensation  16(b)   1,366    1,120    2,737    2,292 
Reclamation expenditures      (214)   (7)   (261)   (15)
Income taxes paid      (1,784)   (4,348)   (6,317)   (6,645)
Interest paid  6   (6)   (12)   (13)   (26)
Changes in non-cash operating working capital  21   3,243    (6,797)   8,209    2,140 
Net cash provided by operating activities      28,844    14,064    57,725    54,240 
                        
Investing activities                       
Plant and equipment                       
Additions      (3,343)   (4,539)   (6,557)   (6,706)
Proceeds on disposals      348    -    472    - 
Mineral rights and properties                       
Capital expenditures      (12,086)   (6,852)   (23,971)   (22,770)
Reclamation deposits                       
Paid      (14)   (14)   (29)   (30)
Refund      33    -    33    - 
Other investments                       
Acquisition  9   (18,465)   -    (22,059)   (1,770)
Proceeds on disposals  9   770    -    840    504 
Investment in associates   10   (4,982)   (187)   (4,982)   (757)
Short-term investment                       
Purchase      (20,912)   (18,277)   (29,464)   (80,284)
Redemption      7,587    47,067    13,537    138,011 
Principal received on lease receivable  14   -    54    -    109 
Net cash used in investing activities      (51,064)   17,252    (72,180)   26,307 
                        
Financing activities                       
Principal payments on lease obligation  14   (65)   (169)   (129)   (337)
Cash dividends distributed  16(e)   -    -    (2,214)   (2,216)
Non-controlling interests                       
Distribution  18   -    (3,629)   (7,248)   (7,256)
Common shares repurchased as part of normal course issuer bid      (572)   (1,197)   (572)   (2,078)
Net cash used in financing activities      (637)   (4,995)   (10,163)   (11,887)
Effect of exchange rate changes on cash and cash equivalents      (1,323)   (10,212)   (1,976)   (15,592)
Increase (decrease) in cash and cash equivalents      (24,180)   16,109    (26,594)   53,068 
Cash and cash equivalents, beginning of the period      143,278    150,261    145,692    113,302 
Cash and cash equivalents, end of the period     $119,098   $166,370   $119,098   $166,370 
Supplementary cash flow information  21                    

 

See accompanying notes to the condensed consolidated interim financial statements

 

4

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

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

 

      Share capital   Equity reserves                
   Notes  Number of shares   Amount   Share option reserve   Reserves   Accumulated other comprehensive loss   Retained earnings   Total equity attributable to the equity holders of the Company   Non-controlling interests   Total equity 
Balance, April 1, 2022      177,105,799   $255,444   $19,369   $25,834   $(1,953)  $213,702   $512,396   $107,718   $620,114 
Restricted share units vested      214,375    1,094    (1,094)   -    -    -    -    -    - 
Share-based compensation      -    -    2,292    -    -    -    2,292    -    2,292 
Dividends declared      -    -    -    -    -    (2,216)   (2,216)   -    (2,216)
Common shares repurchased as part of normal course issuer bid      (838,237)   (2,078)   -    -    -         (2,078)        (2,078)
Distribution to non-controlling interests      -    -    -    -    -    -    -    (7,256)   (7,256)
Comprehensive income      -    -    -    -    (56,159)   8,457    (47,702)   (14,169)   (61,871)
Balance, September 30, 2022      176,481,937   $254,460   $20,567   $25,834   $(58,112)  $219,943   $462,692   $86,293   $548,985 
Restricted share units vested      289,328    1,224    (1,224)   -    -    -    -    -    - 
Share-based compensation      -    -    1,550    -    -    -    1,550    -    1,550 
Dividends declared      -    -    -    -    -    (2,209)   (2,209)   -    (2,209)
Distribution to non-controlling interests      -    -    -         -    -    -    (3,624)   (3,624)
Comprehensive income      -    -    -    -    14,869    12,151    27,020    8,109    35,129 
Balance, March 31, 2023      176,771,265   $255,684   $20,893   $25,834   $(43,243)  $229,885   $489,053   $90,778   $579,831 
Restricted share units vested      245,278    1,001    (1,001)   -    -    -    -    -    - 
Share-based compensation  16(b)   -    -    2,737    -    -    -    2,737    -    2,737 
Dividends declared  16(e)   -    -    -    -    -    (2,214)   (2,214)   -    (2,214)
Common shares repurchased as part of normal course issuer bid  16(f)   (196,554)   (572)   -    -    -    -    (572)   -    (572)
Distribution to non-controlling interests  18   -    -    -    -    -    -    -    (7,248)   (7,248)
Comprehensive income (loss)      -    -    -    -    (20,071)   20,267    196    3,256    3,452 
Balance, September 30, 2023      176,819,989   $256,113   $22,629   $25,834   $(63,314)  $247,938   $489,200   $86,786   $575,986 

 

See accompanying notes to the condensed consolidated interim financial statements

5

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

1.CORPORATE INFORMATION

 

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

 

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

 

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

 

2.MATERIAL ACCOUNTING POLICY INFORMATION

 

(a)Statement of Compliance

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting (“IAS 34”) of the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and have been condensed with certain disclosures from the Company’s audited consolidated financial statements for the year ended March 31, 2023. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2023. These unaudited condensed consolidated interim financial statements follow the same accounting policies set out in Note 2 to the audited consolidated financial statements for the year ended March 31, 2023 with the exception of the mandatory adoption of certain amendments noted below.

 

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

 

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

 

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

 

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

 

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

 

6

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

Amendments to IAS 8 – Definition of Accounting Estimates

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)New Accounting Standards

 

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

 

(c)Basis of Consolidation

 

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

 

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

 

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

 

7

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

proceeds received and/or consideration paid is recognized directly in equity and attributed to equity holders of the Company.

 

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

 

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

 

                Proportion of ownership interest held          
Name of subsidiaries   Principal activity     Country of incorporation     September 30,
2023		     March  31,
2023		     Mineral properties  
Silvercorp Metals China Inc.     Holding company       Canada       100%       100%          
Silvercorp Metals (China) Inc.     Holding company       China       100%       100%          
0875786 B.C. LTD.     Holding company       Canada       100%       100%          
Fortune Mining Limited     Holding company       BVI (i)       100%       100%          
Fortune Copper Limited     Holding company       BVI       100%       100%          
Fortune Gold Mining Limited     Holding company       BVI       100%       100%          
Victor Resources Ltd.     Holding company       BVI       100%       100%          
Yangtze Mining Ltd.     Holding company       BVI       100%       100%          
Victor Mining Ltd.     Holding company       BVI       100%       100%          
Yangtze Mining (H.K.) Ltd.     Holding company       Hong Kong       100%       100%          
Fortune Gold Mining (H.K.) Limited     Holding company       Hong Kong       100%       100%          
Wonder Success Limited     Holding company       Hong Kong       100%       100%          
New Infini Silver Inc. (“New Infini”)     Holding company       Canada       46.1%       46.1%          
Infini Metals Inc.     Holding company       BVI       46.1%       46.1%          
Infini Resources (Asia) Co. Ltd.     Holding company       Hong Kong       46.1%       46.1%          
Golden Land (Asia) Ltd.     Holding company       Hong Kong       46.1%       46.1%          
Henan Huawei Mining Co. Ltd. (“Henan Huawei”)     Mining       China       80%       80%       Ying Mining District  
Henan Found Mining Co. Ltd. (“Henan Found”)     Mining       China       77.5%       77.5%          
Xinshao Yunxiang Mining Co., Ltd. (“Yunxiang”)     Mining       China       70%       70%       BYP  
Guangdong Found Mining Co. Ltd. (“Guangdong Found”)     Mining       China       99%       99%       GC  
Infini Resources S.A. de C.V.     Mining       Mexico       46.1%       46.1%       La Yesca  
Shanxi Xinbaoyuan Mining Co., Ltd. (“Xinbaoyuan”)     Mining       China       77.5%       77.5%       Kuanping  

(i) British Virgin Islands (“BVI”)

 

(d)Critical Accounting Judgments and Estimates

 

These condensed consolidated interim financial statements follow the same significant accounting judgments and estimates set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2023.

 

3.SEGMENTED INFORMATION

 

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

 

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

 

8

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

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

 

Three months ended September 30, 2023
   Mining   Administrative     
Statement of operations:  Henan Luoning   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $49,839   $4,153   $-   $-   $-   $53,992 
Costs of mine operations   (28,023)   (4,902)   (124)   -    -    (33,049)
Income (loss) from mine operations   21,816    (749)   (124)   -    -    20,943 
                               
Operating (expenses) income   (853)   38    24    (513)   (2,679)   (3,983)
Impairment of mineral rights and properties   -    -    -    -    -    - 
Finance items   583    126    (7)   45    941    1,688 
Income tax expenses   (4,015)   139    -    -    (2)   (3,878)
Net income (loss)  $17,531   $(446)  $(107)   $ (468)  $(1,740)  $14,770 
                               
Attributed to:                              
Equity holders of the Company   13,760    (441)   (67)   (468)   (1,734)   11,050 
Non-controlling interests   3,771    (5)   (40)   -    (6)   3,720 
Net income (loss)  $17,531   $(446)  $(107)  $(468)  $(1,740)  $14,770 

 

Three months ended September 30, 2023
   Mining   Administrative     
Statement of operations:  Henan
Luoning		   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $43,959   $7,780   $-   $-   $-   $51,739 
Costs of mine operations   (31,033)   (6,239)   (106)   -    -    (37,378)
Income (loss) from mine operations   12,926    1,541    (106)   -    -    14,361 
                               
Operating expenses   (24)   15    (108)   (483)   (964)   (1,564)
Impairment of mineral rights and properties   -    -    (20,211)   -    -    (20,211)
Finance items   614    140    (8)   65    212    1,023 
Income tax expenses   (2,523)   (211)   171    -    (1,248)   (3,811)
Net income (loss)  $10,993   $1,485   $(20,262)  $(418)  $(2,000)  $(10,202)
                               
Attributed to:                              
Equity holders of the Company   8,613    1,471    (9,685)   (418)   (1,693)   (1,712)
Non-controlling interests   2,380    14    (10,577)   -    (307)   (8,490)
Net income (loss)  $10,993   $1,485   $(20,262)  $(418)  $(2,000)  $(10,202)

 

9

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

Six months ended September 30, 2023

 

    Mining   Administrative       

Statement of income:

 

Henan

Luoning

  

 

Guangdong

  

 

Other

     Beijing  

 

Vancouver

   Total 
Revenue  $100,415   $13,583   $-   $-   $-   $113,998 
Costs of mine operations   (56,884)   (12,659)   (211)   -    -    (69,754)
Income (loss) from mine operations   43,531    924    (211)   -    -    44,244 
                               
Operating expenses   (707)   114    (81)   (1,012)   (7,598)   (9,284)
Finance items, net   1,164    260    (14)   85    1,627    3,122 
Income tax expenses   (7,773)   171    -    -    (2,497)   (10,099)
Net income (loss)  $36,215   $1,469   $(306)  $(927)  $(8,468)  $27,983 
                               
Attributable to:                              
Equity holders of the Company   28,398    1,455    (197)   (927)   (8,462)   20,267 
Non-controlling interests   7,817    14    (109)   -    (6)   7,716 
Net income (loss)  $36,215   $1,469   $(306)  $(927)  $(8,468)  $27,983 

 

Six months ended September 30, 2022

 

   Mining   Administrative         
Statement of income:  Henan Luoning   Guangdong   Other   Beijing   Vancouver   Total 
Revenue  $96,921   $18,410   $-   $-   $-   $115,331 
Costs of mine operations   (62,581)   (13,251)   (236)   -    -    (76,068)
Income (loss) from mine operations   34,340    5,159    (236)   -    -    39,263 
                               
Operating expenses   16    (145)   (207)   (904)   (5,855)   (7,095)
Impairment of mineral rights and properties   -    -    (20,211)   -    -    (20,211)
Finance items, net   1,561    271    (15)   150    (144)   1,823 
Income tax expenses   (6,741)   (664)   62    -    (2,555)   (9,898)
Net income (loss)  $29,176   $4,621   $(20,607)  $(754)  $(8,554)  $3,882 
                               
Attributable to:                              
Equity holders of the Company   22,793    4,576    (9,918)   (754)   (8,240)   8,457 
Non-controlling interests   6,383    45    (10,689)   -    (314)   (4,575)
Net income (loss)  $29,176   $4,621   $(20,607)  $(754)  $(8,554)  $3,882 

 

10

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

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

 

September 30, 2023

 

    Mining   Administrative       

 

Statement of financial position items:

 

Henan

Luoning

  

 

Guangdong

  

 

Other

   Beijing  

Vancouver

   Total 
Current assets  $105,204   $18,588   $1,041   $7,128   $72,297   $204,258 
Plant and equipment   58,343    13,882    2,992    543    751    76,511 
Mineral rights and properties   248,378    31,893    19,145    -    -    299,416 
Investment in associates   -    -    -    -    55,088    55,088 
Other investments   62    -    -    -    36,551    36,613 
Reclamation deposits   3,221    3,145    -    -    7    6,373 
Long-term prepaids and deposits   756    165    90    -    311    1,322 
Investment properties   479    -    -    -    -    479 
Deferred income tax assets   -    362    -    -    -    362 
Total assets  $416,443   $68,035   $23,268   $7,671   $165,005   $680,422 
                               

Current liabilities

  $37,922   $4,544   $373   $235   $6,854   $49,928 
Long-term portion of lease obligation   -    -   $-    -    183    183 
Deferred income tax liabilities   46,848    -   $970    -    -    47,818 
Environmental rehabilitation   4,239    1,354   $914    -    -    6,507 
Total liabilities  $89,009   $5,898   $2,257   $235   $7,037   $104,436 

 

March 31, 2023

 

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

 

11

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

(c)Revenue by metal

 

Revenue generated for the three and six months ended September 30, 2023 and 2022 were all earned in China and were comprised of:

 

   Three months ended September 30, 2023 
   Henan Luoning   Guangdong   Total 
Gold  $4,565   $-   $4,565 
Silver   29,990    1,163    31,153 
Lead   12,358    769    13,127 
Zinc   1,736    1,879    3,615 
Other   1,190    342    1,532 
   $49,839   $4,153   $53,992 

 

   Three months ended September 30, 2022 
   Henan Luoning   Guangdong   Total 
Gold  $1,579   $-   $1,579 
Silver   26,064    1,651    27,715 
Lead   13,294    1,406    14,700 
Zinc   2,128    4,290    6,418 
Other   894    433    1,327 
   $43,959   $7,780   $51,739 

 

   Six months ended September 30, 2023 
   Henan Luoning   Guangdong   Total 
Gold  $7,080   $-   $7,080 
Silver   62,351    3,954    66,305 
Lead   25,004    2,718    27,722 
Zinc   3,527    5,747    9,274 
Other   2,453    1,164    3,617 
   $100,415   $13,583   $113,998 

 

   Six months ended September 30, 2022 
   Henan Luoning   Guangdong   Total 
Gold  $3,332   $-    3,332 
Silver   58,390    3,774    62,164 
Lead   28,329    3,486    31,815 
Zinc   4,667    10,253    14,920 
Other   2,203    897    3,100 
   $96,921   $18,410   $115,331 

 

12

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

(d)Major customers

 

Revenue from major customers is summarized as follows:

 

   Six months ended September 30, 2023 
Customers  Henan Luoning   Guangdong   Total   Percentage of
total revenue		 
Customer A  $25,218   $2,268   $27,486    24%
Customer B   24,575    -    24,575    22%
Customer C   14,671    1,156    15,827    14%
Customer D   21,533    -    21,533    19%
Customer E   9,056    1,807    10,863    10%
   $95,053   $5,231   $100,284    89%

 

   Six months ended September 30, 2022 
Customers  Henan
Luoning		   Guangdong   Total   Percentage of
total revenue		 
Customer A  $10,511   $-   $10,511    9%
Customer B   18,185    -    18,185    16%
Customer C   26,079    19    26,098    23%
Customer D   23,816    -    23,816    21%
Customer E   9,605    1,009    10,614    9%
   $88,196   $1,028   $89,224    78%

 

4.GOVERNMENT FEES AND OTHER TAXES

 

Government fees and other taxes consist of:

 

   Three months ended
September 30,		   Six months ended 
September 30,		 
   2023   2022   2023   2022 
Government fees  $13   $25   $29   $36 
Other taxes   738    531    1,379    1,304 
   $751   $556   $1,408   $1,340 

 

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

 

13

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

5.GENERAL AND ADMINISTRATIVE

 

General and administrative expenses consist of:

 

   Three months ended September 30, 2023   Three months ended September 30, 2022 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $148   $264   $412   $142   $301   $443 
Office and administrative expenses   516    840    1,356    460    767    1,227 
Professional fees   239    124    363    55    111    166 
Salaries and benefits   1,541    1,690    3,231    1,699    1,583    3,282 
Share-based compensation   1,366    -    1,366    1,120    -    1,120 
   $3,810   $2,918   $6,728   $3,476   $2,762   $6,238 

 

   Six months ended September 30, 2023   Six months ended September 30, 2022 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $296   $541   $837   $291   $618   $909 
Office and administrative expenses   1,057    1,548    2,605    815    1,386    2,201 
Professional fees   414    227    641    363    233    596 
Salaries and benefits   2,956    3,323    6,279    3,272    3,189    6,461 
Share-based compensation   2,737    -    2,737    2,292    -    2,292 
   $7,460   $5,639   $13,099   $7,033   $5,426   $12,459 

 

6.FINANCE ITEMS

 

Finance items consist of:

 

   Three months ended
September 30,		   Six months ended
September 30,		 
Finance income  2023   2022   2023   2022 
Interest income  $1,742   $1,096   $3,236   $2,418 
                     
   Three months ended
September 30,		   Six months ended
September 30,		 
Finance costs  2023   2022   2023   2022 
Interest on lease obligation  $6   12   $13   $26 
Impairment charges for expected credit loss against bond investments (Note 8)   -    -    -    445 
Unwinding of discount of environmental rehabilitation provision (Note 15)   48    61    101    124 
   $54   $73   $114   $595 

 

14

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

7.INCOME TAX

 

The significant components of income tax expense are as follows:

 

   Three months ended
September 30,		   Six months ended
September 30,		 
Income tax expense  2023   2022   2023   2022 
Current  $2,485   $2,422   $7,368   $6,411 
Deferred   1,393    1,389    2,731    3,487 
   $3,878   $3,811   $10,099   $9,898 

 

8.SHORT-TERM INVESTMENTS

 

Short-term investments consist of the following:

 

   Carraying Value   Interest rates  Maturity
As at September 30, 2023           
Bonds  $2,772   5.50% - 13.00%  June 9, 2024 - January 16, 2025
Money market instruments  67,221       
   $69,993       
            
As at September 30, 2023           
Bonds  $3,802   5.50% - 13.00%  January 25, 2023 - January 16, 2025
Money market instruments  53,829       
   $57,631       

 

9.OTHER INVESTMENTS

 

   September 30,
2023		   March 31,
2023		 
Equity investments designated as FVTOCI        
Public companies  $804   $918 
Private companies   61    65 
    865    983 
Equity investments designated as FVTPL          

Public companies

   32,584    11,396 
Private companies   3,164    3,161 
    35,748    14,557 
Total  $36,613   $15,540 

 

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. Investments in equity instruments that are held for trading are classified as FVTPL. For other investments in equity instruments, the Company can make an irrevocable election, on an instrument-by-instrument basis, to designate them as FVTOCI.

 

15

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

The continuity of such investments is as follows:

 

   Fair Value   Accumulated
fair
value change
included in
OCI		   Accumulated
fair
value change
included in
P&L		 
April 1, 2022  $17,768   $(24,336)  $3,703 
Loss on equity investments designated as FVTOCI   (1,312)   (1,312)   - 
Loss on equity investments designated as FVTPL   (2,318)   -    (2,318)
Acquisition   3,702    -    - 
Disposal   (1,035)   -    - 
Impact of foreign currency translation   (1,265)   -    - 
March 31, 2023  $15,540   $(25,648)  $1,385 
Loss on equity investments designated as FVTOCI   (108)   (108)   - 
Gain on equity investments designated as FVTPL   483    -    483 
Acquisition   22,059    -    - 
Disposal   (840)   -    - 
Impact of foreign currency translation   (521)   -    - 
September 30, 2023  $36,613   $(25,756)  $1,868 

 

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

 

Concurrently with entering into the Agreement, the Company and OreCorp entered into a placement agreement, whereby Silvercorp agreed to purchase 70,411,334 new fully-paid ordinary shares of OreCorp at a price of A$0.40 per OreCorp Share for aggregate proceeds of approximately $18.5 million (A$28.0 million). The placement was completed in August 2023, and as a result, the Company holds approximately 15% of the total outstanding ordinary shares of OreCorp. The investment in OreCorp is designated as FVTPL.

 

The OreCorp Board has unanimously approved the transaction and has recommended that all OreCorp shareholders vote in favour of the Scheme at the meeting of the shareholders of OreCorp (the “Scheme Meeting”), in the absence of a Superior Proposal and subject to the independent expert appointed by OreCorp (the “Independent Expert”) concluding (and continuing to conclude) that the Scheme is in the best interests of OreCorp shareholders.

 

The Scheme is subject to customary closing conditions for a transaction of this nature, including but not limited to:

 

●OreCorp shareholders approving the Scheme at the Scheme Meeting, currently set for early December 2023;

 

●Approval of the Federal Court of Australia;

 

●The Independent Expert issuing an Independent Expert’s Report which concludes (and continues

 

16

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

to conclude) that the Scheme is in the best interests of OreCorp shareholders;

 

●Tanzanian Fair Competition Commission (“FCC”) and any other applicable approvals;

 

●OreCorp performance rights and OreCorp options being dealt with such that none will remain in existence on completion of the Scheme;

 

●No material adverse change and no prescribed occurrence in relation to either Silvercorp or OreCorp;

 

●Approval for quotation on TSX and NYSE of the Silvercorp common shares to be issued to OreCorp shareholders as the scrip component of the consideration; and

 

●Other customary conditions.

 

Under the Agreement, Silvercorp has agreed to use reasonable endeavours to apply for admission of Silvercorp to the official list of Australian Securities Exchange (the “ASX”) and the Company has submitted an application to the ASX for preliminary suitability review. If ASX has provided Silvercorp with conditional approval for admission to the official list of ASX by the business day before the date of the second court hearing, OreCorp shareholders (other than ineligible shareholders) may elect to receive the scrip component of the consideration in the form of CHESS Depositary Interests (which may be traded on ASX) instead of in the form of Silvercorp common shares. If conditional approval is not provided by ASX by the business day before the date of the second court hearing, all OreCorp shareholders (other than ineligible shareholders) would receive the scrip component of the consideration in the form of Silvercorp shares, tradable on the TSX and NYSE American.

 

The Agreement also contains customary deal protection mechanisms, including no talk and no due diligence provisions, (subject to a fiduciary out exception) and no shop, as well as notification and matching rights for Silvercorp in the event of a competing proposal. The transaction may incur a capital gains tax payable under Tanzanian legislation. A break fee of approximately A$2.8 million shall be payable by OreCorp to Silvercorp if the Agreement is terminated as a result of certain specified circumstances.

 

The first court hearing by the Federal Court of Australia was held on November 2, 2023, and the Federal Court of Australia made orders:

 

●Directing OreCorp to convene a meeting of OreCorp shareholders (other than Silvercorp and its associates) to consider and vote on the Scheme (Scheme Meeting); and
●Approving the despatch of an explanatory statement providing information about the Scheme together with the notice of the Scheme Meeting (together, the Scheme Booklet) to OreCorp shareholders (other than Silvercorp and its associates).

 

The Scheme Booklet, including the notice of the Scheme Meeting as well as an Independent Expert’s Report and an Independent Expert’s Report and Independent Limited Assurance Report, was despatched to OreCorp shareholders on November 8, 2023, following the registration of the Scheme Booklet with the Australian Securities and Investments Commission.

 

On November 6, 2023, OreCorp received a Merger Clearance Certificate (dated November 3, 2023) from FCC with an approval of the proposed acquisition by the Company of all fully-paid ordinary shares of OreCorp not held by Silvercorp.

 

17

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

10.INVESTMENT IN ASSOCIATES

 

(a)Investment in New Pacific Metals Corp.

 

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

 

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

 

As at September 30, 2023, the Company owned 46,893,506 common shares of NUAG (March 31, 2023 – 44,351,616), representing an ownership interest of 27.4% (March 31, 2023 – 28.2%).

 

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, 2022   44,042,216   $49,437   $140,275 
Purchase from open market   309,400    874      
Share of net loss        (2,411)     
Share of other comprehensive loss        (894)     
Foreign exchange impact        (3,753)     
Balance, March 31, 2023   44,351,616   $43,253   $119,621 
Participation in bought deal   2,541,890    4,982      
Dilution Gain        733      
Share of net loss        (1,111)     
Share of other comprehensive loss        (3)     
Foreign exchange impact        15      
Balance, September 30, 2023   46,893,506   $47,869   $81,162 

 

(b)Investment in Tincorp Metals Inc.

 

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

 

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

 

As at September 30, 2023, the Company owned 19,514,285 common shares of TIN (March 31, 2023 – 19,514,285), representing an ownership interest of 29.3% (March 31, 2023 – 29.3%).

 

18

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

The table below summarizes the investment in TIN common shares and its market value as at the respective reporting dates.

 

   Number of shares   Amount   Value of TIN’s
common shares per
quoted market price		 
Balance, April 1, 2022   15,514,285   $7,404   $6,208 
Participation in private placement   4,000,000    1,181      
Dilution loss        (107)     
Share of net loss        (490)     
Share of other comprehensive income        8      
Foreign exchange impact        (554)     
Balance, March 31, 2023   19,514,285   $7,442   $6,777 
Share of net loss        (234)     
Foreign exchange impact        11      
Balance, September 30, 2023   19,514,285   $7,219   $6,206 

 

11.INVESTMENT PROPERTIES

 

Investment properties consist of:

 

Cost  Total 
Balance, March 31, 2023  $- 
Additions   289 
Transfer from property, plant, and equipment   842 
Impact of foreign currency translation   (27)
Balance, September 30, 2023  $1,104 
      
Accumulated depreciation and amortization     
Balance, March 31, 2023  $- 
Depreciation and amortization   (18)
Transfer from property, plant, and equipment   (622)
Impact of foreign currency translation   15 
Balance, September 30, 2023  $(625)
      
Carrying amounts     
Balance, March 31, 2023  $- 
Balance, September 30, 2023  $479 

 

Investment properties include real estate properties that are rented out to earn rental income. The investment properties were initially recorded at cost, and subsequently measured at cost less accumulated depreciation. Depreciation is computed on a straight-line basis based on the nature and an estimated 20 years’ useful life of the asset. The Company did not engage an independent valuer to value the properties, and the fair value of the properties estimated based on the quoted market prices for the similar real estate properties in the near neighborhoods was approximately $2.8 million as at September 30,2023.

 

During the three and six months ended September 30, 2023, the Company recorded rental income of $0.03 million and $0.06 million, which was included in other income on the unaudited condensed consolidated interim statements of income.

 

19

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and

for the three and six months ended September 30, 2023 and 2022

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

 

12.PLANT AND EQUIPMENT

 

Plant and equipment consist of:

 

Cost  Land use rights and building   Office equipment   Machinery   Motor vehicles   Construction in progress   Total 
Balance as at April 1, 2022  $117,247   $11,009   $34,379   $8,313   $2,603   $173,551 
Additions   499    1,169    3,097    879    9,925    15,569 
Disposals   (985)   (511)   (1,085)   (494)   -    (3,075)
Reclassification of asset groups   4,400    33    655    -    (5,088)   - 
Impact of foreign currency translation   (9,040)   (821)   (2,672)   (636)   (212)   (13,381)
Balance as at March 31, 2023  $112,121   $10,879   $34,374   $8,062   $7,228   $172,664 
Additions   48    208    400    210    5,046    5,912 
Disposals   (1,048)   (119)   (481)   (238)   -    (1,886)
Reclassification of asset groups   1,466    18    308    -    (1,792)   - 
Impact of foreign currency translation   (6,506)   (580)   (2,045)   (471)   (501)   (10,103)
Ending balance as at September 30, 2023  $106,081   $10,406   $32,556   $7,563   $9,981   $166,587 
                               
Impairment, accumulated depreciation and amortization                                               
Balance as at April 1, 2022  $(57,584)  $(7,232)  $(23,665)  $(5,652)  $-   $(94,133)
Disposals   733    500    767    407    -    2,407 
Depreciation and amortization   (4,373)   (940)   (2,162)   (660)   -    (8,135)
Impact of foreign currency translation   4,443    530    1,847    436    -    7,256 
Balance as at March 31, 2023  $(56,781)  $(7,142)  $(23,213)  $(5,469)  $-   $(92,605)
Disposals   770    107    142    144    -    1,163 
Depreciation and amortization   (2,194)   (437)   (1,110)   (310)   -    (4,051)
Impact of foreign currency translation   3,309    375    1,407    326    -    5,417 
Ending balance as at September 30, 2023  $(54,896)  $(7,097)  $(22,774)  $(5,309)  $-   $(90,076)
                               
Carrying amounts                                                
Balance as at March 31, 2023   $ 55,340     $ 3,737   $ 11,161   $ 2,593     $ 7,228     $ 80,059  
Ending balance as at September 30, 2023   $ 51,185     $ 3,309   $ 9,782   $ 2,254     $ 9,981     $ 76,511  

 

Carrying amounts as at
September 30, 2023		   Ying Mining District     GC     Other      Corporate     Total  
Land use rights and building   $ 38,110     $ 9,788     $ 2,252     $ 1,035     $ 51,185  
Office equipment     2,644       395       56       214       3,309  
Machinery     6,406       3,240       136       -       9,782  
Motor vehicles     1,834       306       69       45       2,254  
Construction in progress     9,349       153       479       -       9,981  
Total   $ 58,343     $ 13,882     $ 2,992     $ 1,294     $ 76,511  

 

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

 

20

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

13. MINERAL RIGHTS AND PROPERTIES

 

Mineral rights and properties consist of:

 

   Producing and
development properties		  Exploration and
evaluation properties		     
Cost  Ying Mining
District		   BYP   GC    Kuanping   La Yesca   Total 
Balance as at April 1, 2022  $397,335   $65,092   $124,906    $13,380   $19,335   $620,048 
Capitalized expenditures   35,632    -    4,839     907    876    42,254 
Environmental rehabilitation   (224)   (36)   12     -    -    (248)
Foreign currency translation impact   (30,731)   (1,192)   (9,639)    (1,034)   -    (42,596)
Balance as at March 31, 2023  $402,012   $63,864   $120,118    $13,253   $20,211   $619,458 
Capitalized expenditures   22,080    -    2,855     127    -    25,062 
Foreign currency translation impact   (24,158)   (834)   (7,061)    (785)   -    (32,838)
Balance as at September 30, 2023  $399,934   $63,030   $115,912    $12,595   $20,211   $611,682 
                                
Impairment and accumulated depletion                               
Balance as at April 1, 2022  $(143,264)  $(57,521)  $(92,815)   $-   $-   $(293,600)
Impairment   -    -    -         (20,211)   (20,211)
Depletion   (18,689)   -    (2,398)    -    -    (21,087)
Foreign currency translation impact   11,091    610    7,165     -    -    18,866 
Balance as at March 31, 2023  $(150,862)  $(56,911)  $(88,048)   $-   $(20,211)  $(316,032)
Depletion   (9,796)   -    (1,110)    -    -    (10,906)
Foreign currency translation impact   9,102    431    5,139     -    -    14,672 
Balance as at September 30, 2023  $(151,556)  $(56,480)  $(84,019)   $-   $(20,211)  $(312,266)
                                
Carrying amounts                               
Balance as at March 31, 2023  $251,150   $6,953   $32,070    $13,253   $-   $303,426 
Balance as at September 30, 2023  $248,378   $6,550   $31,893    $12,595   $-   $299,416 

 

14. LEASES

 

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

 

   Lease Receivable   Lease Obligation 
Balance, April 1, 2022  $182   $1,263 
Interest accrual   4    43 
Interest received or paid   (4)   (43)
Principal repayment   (172)   (597)
Foreign exchange impact   (10)   (83)
Balance, March 31, 2023  $-   $583 
Interest accrual       13 
Interest received or paid      (13)
Principal repayment      (129)
Foreign exchange impact       2 
Balance, September 30, 2023  $-   $456 
Less: current portion   -   (273)
Non-current portion  $-   $183 

 

21

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

The following table presents a reconciliation of the Company’s undiscounted cash flows to their present value for its lease obligation as at September 30, 2023:

 

   Lease Obligation 
Within 1 year  $285 
Between 2 to 5 years   190 
Total undiscounted amount   475 
Less future interest   (19)
Total discounted amount  $456 
Less: current portion   (273)
Non-current portion  $183 

 

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

 

15. ENVIRONMENTAL REHABILITATION OBLIGATION

 

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

 

   Total 
Balance, April 1, 2022  $8,739 
Reclamation expenditures   (740)
Unwinding of discount of environmental rehabilitation   239 
Revision of provision   (248)
Foreign exchange impact   (672)
Balance, March 31, 2023  $7,318 
Reclamation expenditures   (489)
Unwinding of discount of environmental rehabilitation   101 
Foreign exchange impact   (423)
Balance, September 30, 2023  $6,507 

 

16. SHARE CAPITAL

 

(a)Authorized

 

Unlimited number of common shares without par value. All shares issued as at September 30, 2023 were fully paid.

 

(b)Share-based compensation

 

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

 

For the three and six months ended September 30, 2023, a total of $1.4 million and $2.7 million, respectively (three and six months ended September 30, 2022 - $1.1 million and $2.3 million, respectively) in share-

 

22

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

based compensation expense was recognized and included in the corporate general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.

 

(c)Stock options

 

The following is a summary of option transactions:

 

   Number of
shares		   Weighted average
exercise price per share
CAD $		 
Balance, March 31, 2022   995,335   $7.28 
Options granted   595,000    3.95 
Options cancelled/forfeited   (158,667)   6.29 
Balance, March 31, 2023   1,431,668   $6.01 
Options cancelled/forfeited   (10,000)   9.45 
Balance, September 30, 2023   1,421,668    5.98 

 

The following table summarizes information about stock options outstanding as at September 30, 2023:

 

    Number of options    Weighted average
   Weighted average    Number of options    Weighted average  
Exercise price in
CAD$		   outstanding at
September 30,
2023		   remaining
contractual life
(Years)		   exercise
price in
CAD$		   exercisable at
September 30,
2023		   exercise
price in
CAD$		 
$3.93    478,000    3.57   $3.93    159,334   $3.93 
$4.08    60,000    4.40   $4.08    10,000   $4.08 
$5.46    493,668    1.65   $5.46    493,668   $5.46 
$9.45    390,000    2.12   $9.45    325,832   $9.45 
$3.93 to $9.45    1,421,668    2.54   $5.98    988,834   $6.51 

 

The options were granted to directors, officers, and employees with a life of five years subject to a vesting schedule over a three-year term with 1/6 of the options vesting every six months from the date of grant until fully vested.

 

Subsequent to September 30, 2023, a total of 16,667 options with exercise prices from CAD$5.46 - CAD$9.45 were cancelled and/or forfeited.

 

23

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

(d)RSUs

 

The following is a summary of RSUs transactions:

 

       Weighted
average		 
         grant date
closing		 
    Number of
shares		    price
per share
$CAD		 
Balance, March 31, 2022   1,636,165   $6.47 
Granted   1,154,000    3.96 
Forfeited   (159,792)   5.44 
Distributed   (503,703)   6.04 
Balance, March 31, 2023   2,126,670   $5.29 
Granted   1,056,000    5.28 
Forfeited   (30,623)   5.18 
Distributed   (245,278)   5.51 
Balance, September 30, 2023   2,906,769   $5.27 

 

Subsequent to September 30, 2023, a total of 23,689 RSUs were cancelled and/or forfeited.

 

(e)Cash dividends

 

During the three and six months ended September 30, 2023, dividends of $nil and $2.2 million, respectively, (three and six months ended September 30, 2022 - $nil and $2.2 million, respectively) were declared and paid.

 

(f)Normal course issuer bid

 

On August 25, 2021, the Company announced a normal course issuer bid (the “2021 NCIB”) which allowed the Company to repurchase and cancel up to 7,054,000 of its own common shares until August 26, 2022.

 

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.

 

On September 19, 2023, the Company announced a normal course issuer bid (the “2023 NCIB”), which allowed the Company to repurchase and cancel up to 8,487,191 of its own common shares until September 18, 2024.

 

During the three and six months ended September 30, 2023, the Company repurchased a total of 196,554 and 196,554, respectively, (three and six months ended September 30, 2022 – 503,247 and 838,237, respectively) common shares at a cost of $0.6 million and $0.6 million, respectively (three and six months ended September 30, 2022 – $1.2 million and $2.1 million, respectively), under the NCIB Programs. All shares bought were subsequently cancelled.

 

24

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

17. ACCUMULATED OTHER COMPREHENSIVE LOSS

 

   September 30,
2023		   March 31,
2023		 
Change in fair value on equity investments designated as FVTOCI  $24,462   $24,355 
Share of other comprehensive loss in associate   1,416    1,380 
Currency translation adjustment   37,436    17,508 
Balance, end of the period  $63,314   $43,243 

 

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.

 

18. NON-CONTROLLING INTERESTS

 

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

 

    Henan
Found		   Henan
Huawei		   Yunxiang   Guangdong
Found		   New Infini   Total 
Balance, April 1, 2022   $89,669   $4,928   $2,915   $(181)  $10,387   $107,718 
Share of net income (loss)    11,584    (121)   (157)   78    (10,892)   492 
Share of other comprehensive loss    (6,037)   (351)   (118)   (46)   -    (6,552)
Distributions    (9,934)   (946)   -    -    -    (10,880)
Balance, March 31, 2023   $85,282   $3,510   $2,640   $(149)  $(505)  $90,778 
Share of net income (loss)    7,432    383    (99)   14    (14)   7,716 
Share of other comprehensive loss    (4,147)   (164)   (112)   (37)   -    (4,460)
Distributions    (6,615)   (633)   -    -    -    (7,248)
Balance, September 30, 2023   $81,952   $3,096   $2,429   $(172)  $(519)  $86,786 

 

As at September 30, 2023, non-controlling interests in Henan Found, Henan Huawei, Yunxiang, Guangdong Found and New Infini were 22.5%, 20%, 30%, 1%, and 53.9%, respectively (March 31, 2023 – 22.5%, 20%, 30%, 1%, and 53.9%, respectively).

 

19. RELATED PARTY TRANSACTIONS

 

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

 

   September 30,
2023		   March 31,
2023		 
NUAG (a)  $        214   $    51 
TIN (b)   19    37 
   $260   $88 

 

(a)The Company recovers costs for services rendered to NUAG and expenses incurred on behalf of NUAG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2023, the Company recovered $0.2 million and $0.5 million, respectively (three and six months ended September 30, 2022 - $0.2 million and $0.3 million, respectively) from NUAG for services rendered and expenses incurred on behalf of NUAG. The costs recovered from NUAG were recorded as a direct reduction of general and administrative expenses on the unaudited condensed consolidated statements of income.

 

25

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

(b)The Company recovers costs for services rendered to TIN and expenses incurred on behalf of TIN pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2023, the Company recovered $0.05 million and $0.13 million, respectively (three and six months ended September 30, 2022 - $0.04 million and $0.1 million, respectively,), from TIN for services rendered and expenses incurred on behalf of TIN. The costs recovered from TIN were recorded as a direct reduction of general and administrative expenses on the unaudited condensed consolidated statements of income.

 

20. FINANCIAL INSTRUMENTS

 

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

 

(a)Fair value

 

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

 

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

 

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

 

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

 

The following tables set forth the Company’s financial assets and liabilities that are measured at fair value level on a recurring basis within the fair value hierarchy as at September 30, 2023 and March 31, 2023 that are not otherwise disclosed. As required by IFRS 13, the assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

   Fair value as at September 30, 2023 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                
Cash and cash equivalents  $119,098   $-   $-   $119,098 
Short-term investments - money market instruments   67,221    -    -    67,221 
Investments in public companies   33,387    -    -    33,387 
Investments in private companies   -    -    3,226    3,226 

 

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SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

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

 

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

 

Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at September 30, 2023 and March 31, 2023, due to the short-term nature of these instruments.

 

There were no transfers into or out of Level 3 during the three and six months ended September 30, 2023 and 2022.

 

(b)Liquidity risk

 

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

 

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

 

   September 30, 2023 
   Within a year   2-5 years   Total 
Accounts payable and accrued liabilities  $44,877   $-   $44,877 
Lease obligation   273    183    456 
Deposits received   3,851    -    3,851 
Total Contractual Obligation  $49,001   $183   $49,184 

 

(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.

 

27

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

The Company currently does not engage in foreign exchange currency hedging. The sensitivity of the Company’s net income due to the exchange rates of the Canadian dollar against the U.S. dollar and the Australian dollar as at September 30, 2023 is summarized as follows:

 

   Cash and cash equivelents   Short-term investments   Other investments   Accounts payable
and accrued liabilities		   Net financial
assets explosure		   Effect of
+/- 10%
change in currency		 
US dollar  $67,790   $2,772   $2,530   $(330)  $72,762   $7,276 
Australian dollar   240    -    25,536    -    25,776    2,578 
   $68,030   $2,772   $28,066   $(330)  $98,538   $9,854 

 

(d)Interest rate risk

 

The Company is exposed to interest rate risk on its cash equivalents and short-term investments. As at September 30, 2023, all of its interest-bearing cash equivalents and short-term investments earn interest at market rates that are fixed to maturity or at variable interest rates with terms of less than one year. The Company monitors its exposure to changes in interest rates on cash equivalents and short-term investments. Due to the short-term nature of these financial instruments, fluctuations in interest rates would not have a significant impact on the Company’s net income.

 

(e)Credit risk

 

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

 

The Company undertakes credit evaluations on counterparties as necessary, requests deposits from customers prior to delivery, and has monitoring processes intended to mitigate credit risks. There were no material amounts in trade or other receivables which were past due on September 30, 2023 (at March 31, 2023 - $nil).

 

(f)Equity price risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on financial markets. As the Company’s marketable securities holdings are mainly in mining companies, the value will also fluctuate based on commodity prices. Based upon the Company’s portfolio as at September 30, 2023, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign currency effects, would have resulted in an increase (decrease) to the net income (loss) and other comprehensive income (loss) of $3.3 million and $0.1 million, respectively.

 

28

 

 

SILVERCORP METALS INC.

Notes to Condensed Consolidated Interim Financial Statements as at September 30, 2023 and
for the three and six months ended September 30, 2023 and 2022

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

 

21. SUPPLEMENTARY CASH FLOW INFORMATION

 

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

 

   Three Months Ended
September 30,		   Six Months Ended
September 30,		 
Changes in non-cash operating working capital:  2023   2022   2023   2022 
Trade and other receivables  $(52)  $1,170   $60   $1,372 
Inventories   (1,056)   186   (36)   174 
Prepaids and deposits   (362)   (199)   (1,138)   (1,096)
Accounts payable and accrued liabilities   6,511    (10,983)   9,432    248 
Deposits received   (1,599)   3,022   64    1,453 
Due from a related party   (199)   7   (173)   (11)
   $3,243   $(6,797)  $8,209   $2,140 

 

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

 

   Three Months Ended
September 30,		   Six Months Ended
September 30,		 
Non-cash capital transactions:  2023   2022   2023   2022 
Environmental rehablitation expenditure paid from reclamation deposit  $(163)  $126   $(157)  $150 
Additions of plant and equipment included in accounts payable and accrued liabilities   (870)   566    (645)   1,094 
Capital expenditures of mineral rights and properties included in accounts payable and accrued liabilities  $499   $5,284  $1,091   $2,312 

 

Cash and cash equivalents consist of:

 

   September 30,
2023		   March 31,
2023		 
Cash on hand and at bank  $72,818   $50,871 
Bank term deposits and short-term money market investments   46,280    94,821 
Total cash and cash equivalents  $119,098   $145,692 

 

 

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