UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of: February 2024
Commission File No. 001-34184
SILVERCORP
METALS INC.
(Translation of registrant's name into English)
Suite 1750 – 1066 W. Hastings Street
Vancouver BC, Canada V6E 3X1
(Address of principal executive office)
[Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F]
Form 20-F [ ] Form 40-F [ X ]
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [ ]
Note: Regulation S-T Rule 101(b)(1) only
permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is "submitting"
the Form 6-K in paper as permitted by Regulation S-T "Rule" 101(b)(7) [ ]
Note: Regulation S-T Rule 101(b)(7)
only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private
issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized
(the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are
traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s
security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing
on EDGAR.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 8, 2024 |
SILVERCORP METALS INC. |
|
|
|
/s/ Derek Liu |
|
Derek Liu |
|
Chief Financial Officer |
EXHIBIT INDEX
EXHIBITS 99.1 AND 99.2 INCLUDED WITH THIS
REPORT ARE HEREBY INCORPORATED BY REFERENCE AS EXHIBITS TO THE REGISTRANT’S REGISTRATION STATEMENT ON FORM F-10 (FILE NO. 333-249939),
AS AMENDED AND SUPPLEMENTED, AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT SUPERSEDED BY
DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
3
Exhibit 99.1
SILVERCORP METALS INC.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended December
31, 2023 and 2022
(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 | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Revenue | |
3(a)(c) | |
$ | 58,508 | | |
$ | 58,651 | | |
$ | 172,506 | | |
$ | 173,982 | |
Cost of mine operations | |
| |
| | | |
| | | |
| | | |
| | |
Production costs | |
| |
| 22,566 | | |
| 24,603 | | |
| 68,132 | | |
| 76,145 | |
Depreciation and amortization | |
| |
| 7,382 | | |
| 7,599 | | |
| 21,560 | | |
| 22,511 | |
Mineral resource taxes | |
| |
| 1,372 | | |
| 1,438 | | |
| 4,335 | | |
| 4,286 | |
Government fees and other taxes | |
4 | |
| 808 | | |
| 633 | | |
| 2,216 | | |
| 1,973 | |
General and administrative | |
5 | |
| 3,073 | | |
| 2,634 | | |
| 8,712 | | |
| 8,060 | |
| |
| |
| 35,201 | | |
| 36,907 | | |
| 104,955 | | |
| 112,975 | |
Income from mine operations | |
| |
| 23,307 | | |
| 21,744 | | |
| 67,551 | | |
| 61,007 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Corporate general and administrative | |
5 | |
| 3,228 | | |
| 3,171 | | |
| 10,688 | | |
| 10,204 | |
Property evaluation and business development | |
| |
| 562 | | |
| 173 | | |
| 785 | | |
| 376 | |
Foreign exchange loss (gain) | |
| |
| 701 | | |
| 850 | | |
| 1,614 | | |
| (5,146 | ) |
(Gain) loss on investments | |
9 | |
| (6,204 | ) | |
| (3,010 | ) | |
| (6,687 | ) | |
| 1,257 | |
Share of loss in associates | |
10 | |
| 5,680 | | |
| 677 | | |
| 7,025 | | |
| 2,176 | |
Dilution gain on investment in associate | |
10 | |
| - | | |
| - | | |
| (733 | ) | |
| - | |
Loss on disposal of plant and equipment | |
12 | |
| 8 | | |
| 111 | | |
| 38 | | |
| 431 | |
Impairment of mineral rights and properties | |
13 | |
| - | | |
| - | | |
| - | | |
| 20,211 | |
Other expense | |
| |
| 1,649 | | |
| 2,507 | | |
| 2,178 | | |
| 2,276 | |
Income (loss) from operations | |
| |
| 17,683 | | |
| 17,265 | | |
| 52,643 | | |
| 29,222 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Finance income | |
6 | |
| 1,561 | | |
| 592 | | |
| 4,797 | | |
| 3,010 | |
Finance costs | |
6 | |
| (51 | ) | |
| (661 | ) | |
| (165 | ) | |
| (1,256 | ) |
| |
| |
| 19,193 | | |
| 17,196 | | |
| 57,275 | | |
| 30,976 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
7 | |
| 5,123 | | |
| 2,259 | | |
| 15,222 | | |
| 12,157 | |
Net income (loss) | |
| |
$ | 14,070 | | |
$ | 14,937 | | |
$ | 42,053 | | |
$ | 18,819 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Attributable to: | |
| |
| | | |
| | | |
| | | |
| | |
Equity holders of the Company | |
| |
$ | 10,510 | | |
$ | 11,916 | | |
$ | 30,777 | | |
$ | 20,373 | |
Non-controlling interests | |
18 | |
| 3,560 | | |
| 3,021 | | |
| 11,276 | | |
| (1,554 | ) |
| |
| |
$ | 14,070 | | |
$ | 14,937 | | |
$ | 42,053 | | |
$ | 18,819 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Earnings per
share attributable to the equity holders of the Company Basic earnings (loss) per share | |
| |
$ | 0.06 | | |
$ | 0.07 | | |
$ | 0.17 | | |
$ | 0.12 | |
Diluted earnings (loss) per share | |
| |
$ | 0.06 | | |
$ | 0.07 | | |
$ | 0.17 | | |
$ | 0.11 | |
Weighted Average Number of Shares Outstanding - Basic | |
| |
| 176,905,791 | | |
| 176,723,433 | | |
| 176,892,354 | | |
| 176,892,860 | |
Weighted Average Number of Shares Outstanding - Diluted | |
| |
| 179,437,206 | | |
| 178,938,856 | | |
| 179,423,769 | | |
| 179,024,844 | |
Approved on behalf of the Board: |
|
|
|
(Signed) Ken Robertson |
|
Director |
|
|
|
(Signed) Rui Feng |
|
Director |
|
See accompanying notes to the condensed consolidated interim financial statements
SILVERCORP METALS INC.
Condensed Consolidated
Interim Statements of Comprehensive Income (loss)
(Unaudited) (Expressed in thousands of U.S.
dollars)
| |
| |
Three Months Ended
December 31, | | |
Nine Months Ended
December 31, | |
| |
Notes | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net income (loss) | |
| |
$ | 14,070 | | |
$ | 14,937 | | |
$ | 42,053 | | |
$ | 18,819 | |
Other comprehensive income (loss), net of taxes: | |
| |
| | | |
| | | |
| | | |
| | |
Items that may subsequently be reclassified to net income or loss: | |
| |
| | | |
| | | |
| | | |
| | |
Currency translation adjustment | |
| |
| 15,071 | | |
| 15,546 | | |
| (9,315 | ) | |
| (47,964 | ) |
Share of other comprehensive loss in associate | |
10 | |
| 239 | | |
| 107 | | |
| 236 | | |
| (897 | ) |
Reclassification to net income upon ownership dilution of investment in associate | |
| |
| - | | |
| - | | |
| (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 | |
| 113 | | |
| 59 | | |
| 5 | | |
| (1,180 | ) |
Other comprehensive income (loss), net of taxes | |
| |
$ | 15,423 | | |
$ | 15,712 | | |
$ | (9,108 | ) | |
$ | (50,041 | ) |
Attributable to: | |
| |
| | | |
| | | |
| | | |
| | |
Equity holders of the Company | |
| |
$ | 13,237 | | |
$ | 13,075 | | |
$ | (6,834 | ) | |
$ | (43,084 | ) |
Non-controlling interests | |
18 | |
| 2,186 | | |
| 2,637 | | |
| (2,274 | ) | |
| (6,957 | ) |
| |
| |
$ | 15,423 | | |
$ | 15,712 | | |
$ | (9,108 | ) | |
$ | (50,041 | ) |
Total comprehensive income (loss) | |
| |
$ | 29,493 | | |
$ | 30,649 | | |
$ | 32,945 | | |
$ | (31,222 | ) |
| |
| |
| | | |
| | | |
| | | |
| | |
Attributable to: | |
| |
| | | |
| | | |
| | | |
| | |
Equity holders of the Company | |
| |
$ | 23,747 | | |
$ | 24,991 | | |
$ | 23,943 | | |
$ | (22,711 | ) |
Non-controlling interests | |
| |
| 5,746 | | |
| 5,658 | | |
| 9,002 | | |
| (8,511 | ) |
| |
| |
$ | 29,493 | | |
$ | 30,649 | | |
$ | 32,945 | | |
$ | (31,222 | ) |
See accompanying notes to the condensed consolidated interim financial statements
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 | |
2023 | | |
2023 | |
ASSETS | |
| |
| | | |
| | |
Current Assets | |
| |
| | | |
| | |
Cash and cash equivalents | |
21 | |
$ | 143,280 | | |
$ | 145,692 | |
Short-term investments | |
8 | |
| 55,015 | | |
| 57,631 | |
Trade and other receivables | |
| |
| 240 | | |
| 1,806 | |
Inventories | |
| |
| 11,893 | | |
| 8,343 | |
Due from related parties | |
19 | |
| 296 | | |
| 88 | |
Income tax receivable | |
| |
| 59 | | |
| 582 | |
Prepaids and deposits | |
| |
| 7,120 | | |
| 4,906 | |
| |
| |
| 217,903 | | |
| 219,048 | |
Non-current Assets | |
| |
| | | |
| | |
Long-term prepaids and deposits | |
| |
| 1,473 | | |
| 871 | |
Reclamation deposits | |
| |
| 3,934 | | |
| 6,981 | |
Other investments | |
9 | |
| 46,982 | | |
| 15,540 | |
Investment in associates | |
10 | |
| 50,757 | | |
| 50,695 | |
Investment properties | |
11 | |
| 482 | | |
| - | |
Plant and equipment | |
12 | |
| 80,285 | | |
| 80,059 | |
Mineral rights and properties | |
13 | |
| 317,282 | | |
| 303,426 | |
Deferred income tax assets | |
| |
| - | | |
| 179 | |
TOTAL ASSETS | |
| |
$ | 719,098 | | |
$ | 676,799 | |
LIABILITIES AND EQUITY | |
| |
| | | |
| | |
Current Liabilities | |
| |
| | | |
| | |
Accounts payable and accrued liabilities | |
| |
$ | 52,539 | | |
$ | 36,737 | |
Current portion of lease obligation | |
14 | |
| 281 | | |
| 269 | |
Deposits received | |
| |
| 4,354 | | |
| 4,090 | |
Income tax payable | |
| |
| 1,174 | | |
| 144 | |
| |
| |
| 58,348 | | |
| 41,240 | |
Non-current Liabilities | |
| |
| | | |
| | |
Long-term portion of lease obligation | |
14 | |
| 117 | | |
| 314 | |
Deferred income tax liabilities | |
| |
| 50,470 | | |
| 48,096 | |
Environmental rehabilitation | |
15 | |
| 6,457 | | |
| 7,318 | |
Total Liabilities | |
| |
| 115,392 | | |
| 96,968 | |
Equity | |
| |
| | | |
| | |
Share capital | |
| |
| 257,210 | | |
| 255,684 | |
Equity reserves | |
| |
| (2,220 | ) | |
| 3,484 | |
Retained earnings | |
| |
| 256,234 | | |
| 229,885 | |
Total equity attributable to the equity holders of the Company | |
| |
| 511,224 | | |
| 489,053 | |
Non-controlling interests | |
18 | |
| 92,482 | | |
| 90,778 | |
Total Equity | |
| |
| 603,706 | | |
| 579,831 | |
TOTAL LIABILITIES AND EQUITY | |
| |
$ | 719,098 | | |
$ | 676,799 | |
See accompanying notes to the condensed consolidated interim financial statements
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 | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Cash provided by | |
| |
| | |
| | |
| | |
| |
Operating activities | |
| |
| | |
| | |
| | |
| |
Net income (loss) | |
| |
$ | 14,070 | | |
$ | 14,937 | | |
$ | 42,053 | | |
$ | 18,819 | |
Add (deduct) items not affecting cash: | |
| |
| | | |
| | | |
| | | |
| | |
Finance costs | |
6 | |
| 51 | | |
| 661 | | |
| 165 | | |
| 1,256 | |
Income tax expense | |
7 | |
| 5,123 | | |
| 2,259 | | |
| 15,222 | | |
| 12,157 | |
Depreciation, amortization and depletion | |
| |
| 7,819 | | |
| 8,022 | | |
| 22,834 | | |
| 23,844 | |
(Gain) loss on investments | |
9 | |
| (6,204 | ) | |
| (3,010 | ) | |
| (6,687 | ) | |
| 1,257 | |
Share of loss in associates | |
10 | |
| 5,680 | | |
| 677 | | |
| 7,025 | | |
| 2,176 | |
Dilution gain on investment in associate | |
10 | |
| - | | |
| - | | |
| (733 | ) | |
| - | |
Impairment of mineral rights and properties | |
13 | |
| - | | |
| - | | |
| - | | |
| 20,211 | |
Loss on disposal of plant and equipment | |
| |
| 8 | | |
| 111 | | |
| 38 | | |
| 431 | |
Share-based compensation | |
16(b) | |
| 765 | | |
| 841 | | |
| 3,502 | | |
| 3,133 | |
Reclamation expenditures | |
| |
| (272 | ) | |
| (370 | ) | |
| (533 | ) | |
| (385 | ) |
Income taxes paid | |
| |
| (3,293 | ) | |
| (138 | ) | |
| (9,610 | ) | |
| (6,783 | ) |
Interest paid | |
6 | |
| (5 | ) | |
| (9 | ) | |
| (18 | ) | |
| (35 | ) |
Changes in non-cash operating working capital | |
21 | |
| (135 | ) | |
| 1,680 | | |
| 8,074 | | |
| 3,820 | |
Net cash provided by operating activities | |
| |
| 23,607 | | |
| 25,661 | | |
| 81,332 | | |
| 79,901 | |
Investing activities | |
| |
| | | |
| | | |
| | | |
| | |
Plant and equipment | |
| |
| | | |
| | | |
| | | |
| | |
Additions | |
| |
| (2,157 | ) | |
| (4,231 | ) | |
| (8,714 | ) | |
| (10,937 | ) |
Proceeds on disposals | |
| |
| 377 | | |
| 10 | | |
| 849 | | |
| 10 | |
Mineral rights and properties | |
| |
| | | |
| | | |
| | | |
| | |
Capital expenditures | |
| |
| (14,622 | ) | |
| (11,466 | ) | |
| (38,593 | ) | |
| (34,236 | ) |
Reclamation deposits | |
| |
| | | |
| | | |
| | | |
| | |
Paid | |
| |
| (336 | ) | |
| (274 | ) | |
| (365 | ) | |
| (304 | ) |
Refund | |
| |
| 2,929 | | |
| - | | |
| 2,962 | | |
| - | |
Other investments | |
| |
| | | |
| | | |
| | | |
| | |
Acquisition | |
9 | |
| (1,246 | ) | |
| (1,932 | ) | |
| (23,305 | ) | |
| (3,702 | ) |
Proceeds on disposals | |
9 | |
| 263 | | |
| 21 | | |
| 1,103 | | |
| 525 | |
Investment in associates | |
10 | |
| - | | |
| (1,181 | ) | |
| (4,982 | ) | |
| (1,938 | ) |
Short-term investment | |
| |
| | | |
| | | |
| | | |
| | |
Purchase | |
| |
| (32,000 | ) | |
| (32,020 | ) | |
| (61,464 | ) | |
| (112,304 | ) |
Redemption | |
| |
| 47,566 | | |
| 26,515 | | |
| 61,103 | | |
| 164,526 | |
Principal received on lease receivable | |
14 | |
| - | | |
| 53 | | |
| - | | |
| 162 | |
Net cash used in investing activities | |
| |
| 774 | | |
| (24,505 | ) | |
| (71,406 | ) | |
| 1,802 | |
Financing activities | |
| |
| | | |
| | | |
| | | |
| | |
Principal payments on lease obligation | |
14 | |
| (66 | ) | |
| (164 | ) | |
| (195 | ) | |
| (501 | ) |
Cash dividends distributed | |
16(e) | |
| (2,214 | ) | |
| (2,209 | ) | |
| (4,428 | ) | |
| (4,425 | ) |
Non-controlling interests | |
| |
| | | |
| | | |
| | | |
| | |
Distribution | |
18 | |
| (50 | ) | |
| - | | |
| (7,298 | ) | |
| (7,256 | ) |
Common shares repurchased as part of normal course issuer bid | |
| |
| (274 | ) | |
| - | | |
| (846 | ) | |
| (2,078 | ) |
Net cash used in financing activities | |
| |
| (2,604 | ) | |
| (2,373 | ) | |
| (12,767 | ) | |
| (14,260 | ) |
Effect of exchange rate changes on cash and cash equivalents | |
| |
| 2,405 | | |
| 5,688 | | |
| 429 | | |
| (9,904 | ) |
Increase (decrease) in cash and cash equivalents | |
| |
| 24,182 | | |
| 4,471 | | |
| (2,412 | ) | |
| 57,539 | |
Cash and cash equivalents, beginning of the period | |
| |
| 119,098 | | |
| 166,370 | | |
| 145,692 | | |
| 113,302 | |
Cash and cash equivalents, end of the period | |
| |
$ | 143,280 | | |
$ | 170,841 | | |
$ | 143,280 | | |
$ | 170,841 | |
Supplementary cash flow information | |
21 | |
| | | |
| | | |
| | | |
| | |
See accompanying notes to the condensed consolidated interim financial statements
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 | | |
| | |
| |
| |
Notes | |
Number
of shares | | |
Amount | | |
Share
option
reserve | | |
Reserves | | |
Accumulated
other comprehensive loss | | |
Retained
earnings | | |
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 | |
| |
| 503,703 | | |
| 2,307 | | |
| (2,307 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Share-based
compensation | |
| |
| - | | |
| - | | |
| 3,133 | | |
| - | | |
| - | | |
| - | | |
| 3,133 | | |
| - | | |
| 3,133 | |
Dividends
declared | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (4,425 | ) | |
| (4,425 | ) | |
| - | | |
| (4,425 | ) |
Common
shares repurchased as part of normal course issuer bid | |
| |
| (838,237 | ) | |
| (2,078 | ) | |
| - | | |
| - | | |
| - | | |
| | | |
| (2,078 | ) | |
| | | |
| (2,078 | ) |
Contribution
from non-controlling interests | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
Acquisition
of La Yesca | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| | | |
| | |
Distribution
to non-controlling interests | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (7,256 | ) | |
| (7,256 | ) |
Comprehensive
income | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| (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 | |
Restricted
share units vested | |
| |
| - | | |
| 11 | | |
| (11 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Share-based
compensation | |
| |
| - | | |
| - | | |
| 709 | | |
| - | | |
| - | | |
| - | | |
| 709 | | |
| - | | |
| 709 | |
Distribution
to non-controlling interests | |
| |
| - | | |
| - | | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| (3,624 | ) | |
| (3,624 | ) |
Comprehensive
income | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,794 | | |
| 235 | | |
| 2,029 | | |
| 2,451 | | |
| 4,480 | |
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 | |
| |
| 580,923 | | |
| 2,372 | | |
| (2,372 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Share-based
compensation | |
16(b) | |
| - | | |
| - | | |
| 3,502 | | |
| - | | |
| - | | |
| - | | |
| 3,502 | | |
| - | | |
| 3,502 | |
Dividends
declared | |
16(e) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (4,428 | ) | |
| (4,428 | ) | |
| - | | |
| (4,428 | ) |
Common
shares repurchased as part of normal course issuer bid | |
16(f) | |
| (315,824 | ) | |
| (846 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (846 | ) | |
| - | | |
| (846 | ) |
Distribution
to non-controlling interests | |
18 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (7,298 | ) | |
| (7,298 | ) |
Comprehensive
income (loss) | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| (6,834 | ) | |
| 30,777 | | |
| 23,943 | | |
| 9,002 | | |
| 32,945 | |
Balance,
December 31, 2023 | |
| |
| 177,036,364 | | |
$ | 257,210 | | |
$ | 22,023 | | |
$ | 25,834 | | |
$ | (50,077 | ) | |
$ | 256,234 | | |
$ | 511,224 | | |
$ | 92,482 | | |
$ | 603,706 | |
See accompanying notes to the condensed consolidated interim financial statements
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
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 consolidated interim 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 consolidated interim
financial statements.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 February 6, 2024.
| (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 proceeds received and/or consideration paid is recognized
directly in equity and attributed to equity holders of the Company.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
Balances, transactions, revenues and expenses
between the Company and its subsidiaries are eliminated on consolidation.
Details of the Company’s significant subsidiaries
which are consolidated are as follows:
| |
| |
| |
Proportion of ownership interest held |
|
| |
| |
Country of | |
December 31, | | |
March 31, | | |
|
|
Name of subsidiaries | |
Principal activity | |
incorporation | |
2023 | | |
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.
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. |
|
|
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 |
Segmented operating results for the three months
ended December 31, 2023 and 2022 are summarized as follows:
Three months ended December 31, 2023 |
| |
Mining | | |
Administrative | | |
| |
Statement of operations: | |
Henan
Luoning | | |
Guangdong | | |
Other | | |
Beijing | | |
Vancouver | | |
Total | |
Revenue | |
$ | 49,427 | | |
$ | 9,081 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 58,508 | |
Costs of mine operations | |
| (27,941 | ) | |
| (7,169 | ) | |
| (91 | ) | |
| - | | |
| - | | |
| (35,201 | ) |
Income (loss) from mine operations | |
| 21,486 | | |
| 1,912 | | |
| (91 | ) | |
| - | | |
| - | | |
| 23,307 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating (expenses) income | |
| (1,778 | ) | |
| 101 | | |
| 37 | | |
| (517 | ) | |
| (3,467 | ) | |
| (5,624 | ) |
Finance items | |
| 600 | | |
| 100 | | |
| (7 | ) | |
| 45 | | |
| 772 | | |
| 1,510 | |
Income tax expenses | |
| (3,603 | ) | |
| (435 | ) | |
| - | | |
| - | | |
| (1,085 | ) | |
| (5,123 | ) |
Net income (loss) | |
$ | 16,705 | | |
$ | 1,678 | | |
$ | (61 | ) | |
$ | (472 | ) | |
$ | (3,780 | ) | |
$ | 14,070 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Attributed to: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Equity holders of the Company | |
| 13,133 | | |
| 1,662 | | |
| (33 | ) | |
| (472 | ) | |
| (3,780 | ) | |
| 10,510 | |
Non-controlling interests | |
| 3,572 | | |
| 16 | | |
| (28 | ) | |
| - | | |
| - | | |
| 3,560 | |
Net income (loss) | |
$ | 16,705 | | |
$ | 1,678 | | |
$ | (61 | ) | |
$ | (472 | ) | |
$ | (3,780 | ) | |
$ | 14,070 | |
Three months ended December 31, 2022 |
| |
Mining | | |
Administrative | | |
| |
Statement of operations: | |
Henan
Luoning | | |
Guangdong | | |
Other | | |
Beijing | | |
Vancouver | | |
Total | |
Revenue | |
$ | 48,808 | | |
$ | 9,843 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 58,651 | |
Costs of mine operations | |
| (29,833 | ) | |
| (6,974 | ) | |
| (100 | ) | |
| - | | |
| - | | |
| (36,907 | ) |
Income (loss) from mine operations | |
| 18,975 | | |
| 2,869 | | |
| (100 | ) | |
| - | | |
| - | | |
| 21,744 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| (2,521 | ) | |
| (147 | ) | |
| 90 | | |
| (460 | ) | |
| (1,441 | ) | |
| (4,479 | ) |
Finance items | |
| 108 | | |
| 43 | | |
| (7 | ) | |
| 56 | | |
| (269 | ) | |
| (69 | ) |
Income tax expenses | |
| (2,284 | ) | |
| (16 | ) | |
| (1 | ) | |
| - | | |
| 42 | | |
| (2,259 | ) |
Net income (loss) | |
$ | 14,278 | | |
$ | 2,749 | | |
$ | (18 | ) | |
$ | (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 | | |
| 27 | | |
| (14 | ) | |
| - | | |
| (2 | ) | |
| 3,021 | |
Net income (loss) | |
$ | 14,278 | | |
$ | 2,749 | | |
$ | (18 | ) | |
$ | (404 | ) | |
$ | (1,668 | ) | |
$ | 14,937 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
Segmented operating results for the three nine
ended December 31, 2023 and 2022 are summarized as follows:
Nine months ended December 31, 2023 |
| |
Mining | | |
Administrative | | |
| |
Statement of income: | |
Henan
Luoning | | |
Guangdong | | |
Other | | |
Beijing | | |
Vancouver | | |
Total | |
Revenue | |
$ | 149,842 | | |
$ | 22,664 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 172,506 | |
Costs of mine operations | |
| (84,825 | ) | |
| (19,828 | ) | |
| (302 | ) | |
| - | | |
| - | | |
| (104,955 | ) |
Income (loss) from mine operations | |
| 65,017 | | |
| 2,836 | | |
| (302 | ) | |
| - | | |
| - | | |
| 67,551 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| (2,485 | ) | |
| 215 | | |
| (44 | ) | |
| (1,529 | ) | |
| (11,065 | ) | |
| (14,908 | ) |
Finance items, net | |
| 1,764 | | |
| 360 | | |
| (21 | ) | |
| 130 | | |
| 2,399 | | |
| 4,632 | |
Income tax expenses | |
| (11,376 | ) | |
| (264 | ) | |
| - | | |
| - | | |
| (3,582 | ) | |
| (15,222 | ) |
Net income (loss) | |
$ | 52,920 | | |
$ | 3,147 | | |
$ | (367 | ) | |
$ | (1,399 | ) | |
$ | (12,248 | ) | |
$ | 42,053 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Equity holders of the Company | |
| 41,531 | | |
| 3,117 | | |
| (230 | ) | |
| (1,399 | ) | |
| (12,242 | ) | |
| 30,777 | |
Non-controlling interests | |
| 11,389 | | |
| 30 | | |
| (137 | ) | |
| - | | |
| (6 | ) | |
| 11,276 | |
Net income (loss) | |
$ | 52,920 | | |
$ | 3,147 | | |
$ | (367 | ) | |
$ | (1,399 | ) | |
$ | (12,248 | ) | |
$ | 42,053 | |
Nine months ended December 31, 2022 |
| |
Mining | | |
Administrative | | |
| |
Statement of income: | |
Henan
Luoning | | |
Guangdong | | |
Other | | |
Beijing | | |
Vancouver | | |
Total | |
Revenue | |
$ | 145,729 | | |
$ | 28,253 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 173,982 | |
Costs of mine operations | |
| (92,414 | ) | |
| (20,225 | ) | |
| (336 | ) | |
| - | | |
| - | | |
| (112,975 | ) |
Income (loss) from mine operations | |
| 53,315 | | |
| 8,028 | | |
| (336 | ) | |
| - | | |
| - | | |
| 61,007 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| (2,505 | ) | |
| (292 | ) | |
| (117 | ) | |
| (1,364 | ) | |
| (7,296 | ) | |
| (11,574 | ) |
Impairment of mineral rights and properties | |
| - | | |
| - | | |
| (20,211 | ) | |
| - | | |
| - | | |
| (20,211 | ) |
Finance items, net | |
| 1,669 | | |
| 314 | | |
| (22 | ) | |
| 206 | | |
| (413 | ) | |
| 1,754 | |
Income tax expenses | |
| (9,025 | ) | |
| (680 | ) | |
| 61 | | |
| - | | |
| (2,513 | ) | |
| (12,157 | ) |
Net income (loss) | |
$ | 43,454 | | |
$ | 7,370 | | |
$ | (20,625 | ) | |
$ | (1,158 | ) | |
$ | (10,222 | ) | |
$ | 18,819 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Equity holders of the Company | |
| 34,061 | | |
| 7,298 | | |
| (9,922 | ) | |
| (1,158 | ) | |
| (9,906 | ) | |
| 20,373 | |
Non-controlling interests | |
| 9,393 | | |
| 72 | | |
| (10,703 | ) | |
| - | | |
| (316 | ) | |
| (1,554 | ) |
Net income (loss) | |
$ | 43,454 | | |
$ | 7,370 | | |
$ | (20,625 | ) | |
$ | (1,158 | ) | |
$ | (10,222 | ) | |
$ | 18,819 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 as at December
31, 2023 and 2022 is summarized as follows: |
December 31, 2023 |
| |
Mining | | |
Administrative | | |
| |
Statement of financial position items: | |
Henan Luoning | | |
Guangdong | | |
Other | | |
Beijing | | |
Vancouver | | |
Total | |
Current assets | |
$ | 128,046 | | |
$ | 10,089 | | |
$ | 1,013 | | |
$ | 7,656 | | |
$ | 71,099 | | |
$ | 217,903 | |
Plant and equipment | |
| 61,871 | | |
| 14,213 | | |
| 3,016 | | |
| 524 | | |
| 661 | | |
| 80,285 | |
Mineral rights and properties | |
| 263,497 | | |
| 34,015 | | |
| 19,770 | | |
| - | | |
| - | | |
| 317,282 | |
Investment in associates | |
| - | | |
| - | | |
| - | | |
| - | | |
| 50,757 | | |
| 50,757 | |
Other investments | |
| 63 | | |
| - | | |
| - | | |
| - | | |
| 46,919 | | |
| 46,982 | |
Reclamation deposits | |
| 853 | | |
| 3,073 | | |
| - | | |
| - | | |
| 8 | | |
| 3,934 | |
Long-term prepaids and deposits | |
| 951 | | |
| 118 | | |
| 93 | | |
| - | | |
| 311 | | |
| 1,473 | |
Investment properties | |
| 482 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 482 | |
Total assets | |
$ | 455,763 | | |
$ | 61,508 | | |
$ | 23,892 | | |
$ | 8,180 | | |
$ | 169,755 | | |
$ | 719,098 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Current liabilities | |
$ | 48,808 | | |
$ | 6,064 | | |
$ | 385 | | |
$ | 274 | | |
$ | 2,817 | | |
$ | 58,348 | |
Long-term portion of lease obligation | |
| - | | |
| - | | |
$ | - | | |
| - | | |
| 117 | | |
| 117 | |
Deferred income tax liabilities | |
| 49,406 | | |
| 66 | | |
$ | 998 | | |
| - | | |
| - | | |
| 50,470 | |
Environmental rehabilitation | |
| 4,142 | | |
| 1,368 | | |
$ | 947 | | |
| - | | |
| - | | |
| 6,457 | |
Total liabilities | |
$ | 102,356 | | |
$ | 7,498 | | |
$ | 2,330 | | |
$ | 274 | | |
$ | 2,934 | | |
$ | 115,392 | |
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 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
Revenue generated for the three months ended December
31, 2023 and 2022 were all earned in China and were comprised of:
| |
Three months ended December 31, 2023 | |
| |
Henan
Luoning | | |
Guangdong | | |
Total | |
Gold | |
$ | 2,305 | | |
$ | - | | |
$ | 2,305 | |
Silver | |
| 31,700 | | |
| 2,605 | | |
| 34,305 | |
Lead | |
| 12,429 | | |
| 1,782 | | |
| 14,211 | |
Zinc | |
| 1,881 | | |
| 4,155 | | |
| 6,036 | |
Other | |
| 1,112 | | |
| 539 | | |
| 1,651 | |
| |
$ | 49,427 | | |
$ | 9,081 | | |
$ | 58,508 | |
| |
Three months ended December 31, 2022 | |
| |
Henan
Luoning | | |
Guangdong | | |
Total | |
Gold | |
$ | 1,695 | | |
$ | - | | |
$ | 1,695 | |
Silver | |
| 29,403 | | |
| 2,514 | | |
| 31,917 | |
Lead | |
| 14,401 | | |
| 1,944 | | |
| 16,345 | |
Zinc | |
| 2,182 | | |
| 4,639 | | |
| 6,821 | |
Other | |
| 1,127 | | |
| 746 | | |
| 1,873 | |
| |
$ | 48,808 | | |
$ | 9,843 | | |
$ | 58,651 | |
Revenue generated for the nine months ended December
31, 2023 and 2022 were all earned in China and were comprised of:
| |
Nine months ended December 31, 2023 | |
| |
Henan
Luoning | | |
Guangdong | | |
Total | |
Gold | |
$ | 9,385 | | |
$ | - | | |
$ | 9,385 | |
Silver | |
| 94,051 | | |
| 6,559 | | |
| 100,610 | |
Lead | |
| 37,433 | | |
| 4,500 | | |
| 41,933 | |
Zinc | |
| 5,408 | | |
| 9,902 | | |
| 15,310 | |
Other | |
| 3,565 | | |
| 1,703 | | |
| 5,268 | |
| |
$ | 149,842 | | |
$ | 22,664 | | |
$ | 172,506 | |
| |
Nine months ended December 31, 2022 | |
| |
Henan
Luoning | | |
Guangdong | | |
Total | |
Gold | |
$ | 5,027 | | |
$ | - | | |
$ | 5,027 | |
Silver | |
| 87,793 | | |
| 6,288 | | |
| 94,081 | |
Lead | |
| 42,730 | | |
| 5,430 | | |
| 48,160 | |
Zinc | |
| 6,849 | | |
| 14,892 | | |
| 21,741 | |
Other | |
| 3,330 | | |
| 1,643 | | |
| 4,973 | |
| |
| 145,729 | | |
$ | 28,253 | | |
$ | 173,982 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
Revenue from major customers is summarized as
follows:
| |
Nine months ended December 31, 2023 | |
Customers | |
Henan Luoning | | |
Guangdong | | |
Total | | |
Percentage of total revenue | |
Customer A | |
$ | 40,737 | | |
$ | 3,860 | | |
$ | 44,597 | | |
| 26 | % |
Customer B | |
| 39,763 | | |
| - | | |
| 39,763 | | |
| 23 | % |
Customer C | |
| 14,556 | | |
| 1,737 | | |
| 16,293 | | |
| 9 | % |
Customer D | |
| 32,830 | | |
| - | | |
| 32,830 | | |
| 19 | % |
Customer E | |
| 14,406 | | |
| 2,693 | | |
| 17,099 | | |
| 10 | % |
| |
$ | 142,292 | | |
$ | 8,290 | | |
$ | 150,582 | | |
| 87 | % |
| |
Nine months ended December 31, 2022 | |
Customers | |
Henan Luoning | | |
Guangdong | | |
Total | | |
Percentage of total revenue | |
Customer A | |
$ | 24,133 | | |
$ | - | | |
$ | 24,133 | | |
| 14 | % |
Customer B | |
| 26,565 | | |
| - | | |
| 26,565 | | |
| 15 | % |
Customer C | |
| 38,003 | | |
| 686 | | |
| 38,689 | | |
| 22 | % |
Customer D | |
| 35,654 | | |
| - | | |
| 35,654 | | |
| 20 | % |
Customer E | |
| 10,406 | | |
| 1,431 | | |
| 11,837 | | |
| 7 | % |
| |
$ | 134,761 | | |
$ | 2,117 | | |
$ | 136,878 | | |
| 78 | % |
| 4. | GOVERNMENT FEES AND OTHER TAXES |
Government fees and other taxes consist of:
| |
Three months ended
December 31, | | |
Nine months ended
December 31, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Government fees | |
$ | 11 | | |
$ | 15 | | |
$ | 40 | | |
$ | 51 | |
Other taxes | |
| 797 | | |
| 618 | | |
| 2,176 | | |
| 1,922 | |
| |
$ | 808 | | |
$ | 633 | | |
$ | 2,216 | | |
$ | 1,973 | |
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.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 December 31, 2023 | | |
Three months ended December 31,
2022 | |
| |
Corporate | | |
Mines | | |
Total | | |
Corporate | | |
Mines | | |
Total | |
Amortization and depreciation | |
$ | 146 | | |
$ | 290 | | |
$ | 436 | | |
$ | 139 | | |
$ | 285 | | |
$ | 424 | |
Office and administrative expenses | |
| 362 | | |
| 887 | | |
| 1,249 | | |
| 511 | | |
| 652 | | |
| 1,163 | |
Professional fees | |
| 307 | | |
| 251 | | |
| 558 | | |
| 239 | | |
| 97 | | |
| 336 | |
Salaries and benefits | |
| 1,648 | | |
| 1,645 | | |
| 3,293 | | |
| 1,441 | | |
| 1,600 | | |
| 3,041 | |
Share-based compensation | |
| 765 | | |
| - | | |
| 765 | | |
| 841 | | |
| - | | |
| 841 | |
| |
$ | 3,228 | | |
$ | 3,073 | | |
$ | 6,301 | | |
$ | 3,171 | | |
$ | 2,634 | | |
$ | 5,805 | |
| |
Nine months
ended December 31, 2023 | | |
Nine months ended December 31,
2022 | |
| |
Corporate | | |
Mines | | |
Total | | |
Corporate | | |
Mines | | |
Total | |
Amortization and depreciation | |
$ | 442 | | |
$ | 831 | | |
$ | 1,273 | | |
$ | 430 | | |
$ | 903 | | |
$ | 1,333 | |
Office and administrative expenses | |
| 1,419 | | |
| 2,435 | | |
| 3,854 | | |
| 1,326 | | |
| 2,038 | | |
| 3,364 | |
Professional fees | |
| 721 | | |
| 478 | | |
| 1,199 | | |
| 602 | | |
| 330 | | |
| 932 | |
Salaries and benefits | |
| 4,604 | | |
| 4,968 | | |
| 9,572 | | |
| 4,713 | | |
| 4,789 | | |
| 9,502 | |
Share-based compensation | |
| 3,502 | | |
| - | | |
| 3,502 | | |
| 3,133 | | |
| - | | |
| 3,133 | |
| |
$ | 10,688 | | |
$ | 8,712 | | |
$ | 19,400 | | |
$ | 10,204 | | |
$ | 8,060 | | |
$ | 18,264 | |
Finance items consist of:
| |
Three months ended
December 31, | | |
Nine months ended
December 31, | |
Finance income | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Interest income | |
$ | 1,561 | | |
$ | 516 | | |
$ | 4,797 | | |
$ | 2,934 | |
Dividend income | |
| - | | |
| 76 | | |
| - | | |
| 76 | |
Interest income | |
$ | 1,561 | | |
$ | 592 | | |
$ | 4,797 | | |
$ | 3,010 | |
| |
Three months ended
December 31, | | |
Nine months ended
December 31, | |
Finance costs | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Interest on lease obligation | |
$ | 5 | | |
| 9 | | |
$ | 18 | | |
$ | 35 | |
Impairment charges for expected credit loss against bond investments (Note 8) | |
| - | | |
| 501 | | |
| - | | |
| 946 | |
Loss on disposal of bonds | |
| - | | |
| 93 | | |
| | | |
| 93 | |
Unwinding of discount of environmental rehabilitation provision (Note 15) | |
| 46 | | |
| 58 | | |
| 147 | | |
| 182 | |
| |
$ | 51 | | |
$ | 661 | | |
$ | 165 | | |
$ | 1,256 | |
The significant components of income tax expense
are as follows:
| |
Three months ended
December 31, | | |
Nine months ended
December 31, | |
Income tax expense | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Current | |
$ | 3,784 | | |
$ | 1,235 | | |
$ | 11,152 | | |
$ | 7,646 | |
Deferred | |
| 1,339 | | |
| 1,024 | | |
| 4,070 | | |
| 4,511 | |
| |
$ | 5,123 | | |
$ | 2,259 | | |
$ | 15,222 | | |
$ | 12,157 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
Short-term investments consist of the following:
| |
Carraying Value | | |
Interest rates | |
|
Maturity |
|
As at December 31, 2023 | |
| | |
| |
|
|
|
Bonds | |
$ | 1,403 | | |
5.5% - 6.9% | |
|
June 9, 2024 - January 16, 2025 |
|
Money market instruments | |
| 53,612 | | |
| |
|
|
|
| |
$ | 55,015 | | |
| |
|
|
|
As at March 31, 2023 | |
| | | |
| |
|
|
|
Bonds | |
$ | 3,802 | | |
5.5% - 13.0% | |
|
January 25, 2023 - January 16, 2025 |
|
Money market instruments | |
| 53,829 | | |
| |
|
|
|
| |
$ | 57,631 | | |
| |
|
|
|
| |
December 31,
2023 | | |
March 31,
2023 | |
Investments designated as FVTOCI | |
| | |
| |
Public companies | |
$ | 870 | | |
$ | 918 | |
Private companies | |
| 63 | | |
| 65 | |
| |
| 933 | | |
| 983 | |
Investments designated as FVTPL | |
| | | |
| | |
Public companies | |
| 42,814 | | |
| 11,396 | |
Private companies | |
| 3,235 | | |
| 3,161 | |
| |
| 46,049 | | |
| 14,557 | |
Total | |
$ | 46,982 | | |
$ | 15,540 | |
The Company makes irrevocable elections, on an
instrument-by-instrument basis, to designate other investment as fair value to profit and loss (“FVTPL”) or fair value to
other comprehensive income (“FVTOCI”).
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 | |
Gain on equity investments designated as FVTOCI | |
| 5 | | |
| 5 | | |
| - | |
Gain on equity investments designated as FVTPL | |
| 7,975 | | |
| - | | |
| 7,975 | |
Acquisition | |
| 23,305 | | |
| - | | |
| - | |
Disposal | |
| (1,103 | ) | |
| - | | |
| - | |
Impact of foreign currency translation | |
| 1,260 | | |
| - | | |
| - | |
December 31, 2023 | |
$ | 46,982 | | |
$ | (25,643 | ) | |
$ | 9,360 | |
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 held approximately 15% of the total outstanding ordinary shares of OreCorp.
Subsequent to the private placement, the Company acquired additional 3,477,673 OreCorp Shares on the market through the Australian Securities
Exchange (the “ASX”) for approximately $1.1 million, and as of December 31, 2023, the Company held 73,889,007 OreCorp Shares,
representing 15.74% of the total outstanding ordinary shares of OreCorp.
The Agreement and the Scheme were amended and
restated on November 23, 2023 (the “Amending Deed”) to increase the cash consideration from A$0.15 to A$0.19 with no change
to the share consideration, being 0.0967 of a Silvercorp common share, for each OreCorp Share.
On December 26, 2023, the Company and OreCorp
have entered into a Bid Implementation Deed (“BID”), pursuant to which Silvercorp has agreed to acquire, by means of an off-market
takeover offer, all of the OreCorp Shares not already owned by Silvercorp for consideration comprising 0.0967 common shares of Silvercorp
and A$0.19 cash per OreCorp Share (the “Consideration”).
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
Under the BID, Silvercorp and OreCorp have provided
undertakings to each other to facilitate the Transaction. The offer is subject to minimal
conditions, including:
| ● | Silvercorp
having a relevant interest in at least 50.1% of the OreCorp Shares (not yet met); |
| ● | no
regulatory action which could reasonably be expected to restrain, impede or prohibit the Offer and completion of the Transaction; |
| ● | no
OreCorp material adverse change or prescribed occurrence (both terms defined in a customary manner); and |
| ● | normal
course listing approval for the new Silvercorp Shares to be issued (conditional approval from Toronto Stock Exchange and authorization
of the Company’s supplemental listing application from NYSE American received). |
The
OreCorp Board is unanimously recommending that OreCorp shareholders accept the Offer subject to their Independent Expert’s Report
concluding, and continuing to conclude, that the Offer is reasonable to OreCorp shareholders and there being no Superior Proposal. Subject
to those same qualifications, the OreCorp Board, who collectively hold 3.94% of the OreCorp Shares, intends to accept the offer in respect
of all OreCorp Shares they own or control.
The
BID includes market standard deal protection measures equivalent to those previously agreed under the Scheme, including “no talk”
and “no due diligence” provisions (subject to a fiduciary out exception) and “no shop”. It also includes notification
and matching rights for Silvercorp in the event of a competing proposal. Pursuant to these deal protection measures, OreCorp has
agreed, inter alia that it will not solicit, encourage or initiate any competing proposal and further, that it will not participate in
any discussions or negotiations with a third party in relation to any competing proposal (unless certain conditions are satisfied, including
where a failure to do so would constitute a breach of the OreCorp Board’s fiduciary duties or statutory obligations).
As with the Scheme, under certain circumstances
a break fee of approximately A$2.8 million will be payable by OreCorp to Silvercorp if the BID is terminated.
The offer is not subject to the approval of the
Silvercorp’s shareholders and is not subject to any financing or due diligence conditions.
In conjunction with the execution of the BID,
Silvercorp and OreCorp have mutually agreed to terminate the Agreement and the Amending Deed.
The off-market takeover offer document was dispatched
to OreCorp shareholders on January 15, 2024 and since then, the offer is open for acceptance by OreCorp shareholders until February 23,
2024 (Sydney time), unless extended.
On February 1, 2024, the Company announced that
it received a Merger Clearance Certificate (dated January 30, 2024) from the Tanzanian Fair Competition Commission (the “FCC”)
providing unconditional merger control approval for the Transaction. This approval represents the sole Tanzanian regulatory requirements
needed to complete the Transaction and clears any possibility of the potential breach of the “no regulatory action” condition
as stated in the BID.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 |
| |
Amount | | |
Market value per
quoted share
prices | |
Balance, April 1, 2022 | |
$ | 56,841 | | |
$ | 146,483 | |
Purchase from open market | |
| 874 | | |
| | |
Paricipation in financing | |
| 1,181 | | |
| | |
Share of net loss | |
| (2,901 | ) | |
| | |
Share of other comprehensive loss | |
| (886 | ) | |
| | |
Dilution loss | |
| (107 | ) | |
| | |
Foreign exchange impact | |
| (4,307 | ) | |
| | |
Balance, March 31, 2023 | |
$ | 50,695 | | |
$ | 126,398 | |
Participation in financing | |
| 4,982 | | |
| | |
Dilution Gain | |
| 733 | | |
| | |
Share of net loss | |
| (7,025 | ) | |
| | |
Share of other comprehensive loss | |
| 236 | | |
| | |
Foreign exchange impact | |
| 1,136 | | |
| | |
Balance, December 31, 2023 | |
$ | 50,757 | | |
$ | 92,534 | |
| (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 December 31, 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%).
As at December 31, 2023, the carrying value of
the investment in NUAG was $48.9 million (March 31, 2023 - $42.3 million), while the market value based on the quoted market price of
NUAG’s common share was $89.0 million.
| (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.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
As at December 31, 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%).
As at December 31, 2023, the carrying value of
the investment in TIN was $1.9 million (March 31, 2023 - $7.4 million), while the market value based on the quoted market price of TIN’s
common share was $3.5 million (March 31, 2023 - $6.8 million).
Subsequent to December 31, 2023, the Company and
TIN entered into an interest-free unsecured credit facility agreement with no conversion features (the “Facility”) to allow
TIN to advance up to $1.0 million from the Company. Upon signing the Facility, the Company advanced $0.5 million to TIN and received 350,000
common shares of TIN as the Bonus Shares for granting the Facility. The Facility has a maturity date of January 31, 2025.
Investment properties consist of:
Cost | |
Total | |
Balance, March 31, 2023 | |
$ | - | |
Additions | |
| 287 | |
Transfer from property, plant, and equipment | |
| 838 | |
Impact of foreign currency translation | |
| 9 | |
Balance, December 31, 2023 | |
$ | 1,134 | |
| |
| | |
Accumulated depreciation and amortization | |
| | |
Balance, March 31, 2023 | |
$ | - | |
Depreciation and amortization | |
| (29 | ) |
Transfer from property, plant, and equipment | |
| (619 | ) |
Impact of foreign currency translation | |
| (4 | ) |
Balance, December 31, 2023 | |
$ | (652 | ) |
| |
| | |
Carrying amounts | |
| | |
Balance, March 31, 2023 | |
$ | - | |
Balance, December 31, 2023 | |
$ | 482 | |
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 nearby neighborhoods were approximately $2.8
million as at December 31,2023.
During the three and nine months ended December
31, 2023, the Company recorded rental income of $0.03 million and $0.09 million, which was included in other expense on the unaudited
condensed consolidated interim statements of income.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
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 | |
| 144 | | |
| 575 | | |
| 1,704 | | |
| 505 | | |
| 6,890 | | |
| 9,818 | |
Disposals | |
| (1,060 | ) | |
| (176 | ) | |
| (940 | ) | |
| (273 | ) | |
| - | | |
| (2,449 | ) |
Reclassification of asset groups | |
| 1,941 | | |
| 53 | | |
| 334 | | |
| - | | |
| (2,328 | ) | |
| - | |
Impact of foreign currency translation | |
| (3,509 | ) | |
| (296 | ) | |
| (1,109 | ) | |
| (256 | ) | |
| (197 | ) | |
| (5,367 | ) |
Ending balance as at December 31, 2023 | |
$ | 109,637 | | |
$ | 11,035 | | |
$ | 34,363 | | |
$ | 8,038 | | |
$ | 11,593 | | |
$ | 174,666 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
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 | |
| 777 | | |
| 162 | | |
| 211 | | |
| 196 | | |
| - | | |
| 1,346 | |
Depreciation and amortization | |
| (3,258 | ) | |
| (653 | ) | |
| (1,605 | ) | |
| (459 | ) | |
| - | | |
| (5,975 | ) |
Impact of foreign currency translation | |
| 1,748 | | |
| 183 | | |
| 748 | | |
| 174 | | |
| - | | |
| 2,853 | |
Ending balance as at December 31, 2023 | |
$ | (57,514 | ) | |
$ | (7,450 | ) | |
$ | (23,859 | ) | |
$ | (5,558 | ) | |
$ | - | | |
$ | (94,381 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Carrying amounts | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as at March 31, 2023 | |
$ | 55,340 | | |
$ | 3,737 | | |
$ | 11,161 | | |
$ | 2,593 | | |
$ | 7,228 | | |
$ | 80,059 | |
Ending balance as at December 31, 2023 | |
$ | 52,123 | | |
$ | 3,585 | | |
$ | 10,504 | | |
$ | 2,480 | | |
$ | 11,593 | | |
$ | 80,285 | |
The carrying value of the plant and equipment
of each reporting segment is summarized as follows:
Carrying amounts as at December 31, 2023 | |
Ying Mining District | | |
GC | | |
Other | | |
Administrative | | |
Total | |
Land use rights and building | |
$ | 38,932 | | |
$ | 9,978 | | |
$ | 2,269 | | |
$ | 944 | | |
$ | 52,123 | |
Office equipment | |
| 2,893 | | |
| 436 | | |
| 52 | | |
| 204 | | |
| 3,585 | |
Machinery | |
| 7,082 | | |
| 3,289 | | |
| 133 | | |
| - | | |
| 10,504 | |
Motor vehicles | |
| 2,055 | | |
| 318 | | |
| 70 | | |
| 37 | | |
| 2,480 | |
Construction in progress | |
| 10,909 | | |
| 192 | | |
| 492 | | |
| - | | |
| 11,593 | |
Total | |
$ | 61,871 | | |
$ | 14,213 | | |
$ | 3,016 | | |
$ | 1,185 | | |
$ | 80,285 | |
Carrying amounts as at March 31, 2023 | |
Ying Mining District | | |
GC | | |
Other | | |
Adminstrative | | |
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 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 | |
| 35,681 | | |
| - | | |
| 4,901 | | |
| 209 | | |
| - | | |
| 40,791 | |
Foreign currency translation impact | |
| (12,637 | ) | |
| (454 | ) | |
| (3,760 | ) | |
| (427 | ) | |
| - | | |
| (17,278 | ) |
Balance as at December 31, 2023 | |
$ | 425,056 | | |
$ | 63,410 | | |
$ | 121,259 | | |
$ | 13,035 | | |
$ | 20,211 | | |
$ | 642,971 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
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 | |
| (15,423 | ) | |
| - | | |
| (1,953 | ) | |
| - | | |
| - | | |
| (17,376 | ) |
Foreign currency translation impact | |
| 4,726 | | |
| 236 | | |
| 2,757 | | |
| - | | |
| - | | |
| 7,719 | |
Balance as at December 31, 2023 | |
$ | (161,559 | ) | |
$ | (56,675 | ) | |
$ | (87,244 | ) | |
$ | - | | |
$ | (20,211 | ) | |
$ | (325,689 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Carrying amounts | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as at March 31, 2023 | |
$ | 251,150 | | |
$ | 6,953 | | |
$ | 32,070 | | |
$ | 13,253 | | |
$ | - | | |
$ | 303,426 | |
Balance as at December 31, 2023 | |
$ | 263,497 | | |
$ | 6,735 | | |
$ | 34,015 | | |
$ | 13,035 | | |
$ | - | | |
$ | 317,282 | |
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 | |
| | | |
| 18 | |
Interest received or paid | |
| | | |
| (18 | ) |
Principal repayment | |
| | | |
| (195 | ) |
Foreign exchange impact | |
| | | |
| 10 | |
Balance, December 31, 2023 | |
$ | - | | |
$ | 398 | |
Less: current portion | |
| - | | |
| (281 | ) |
Non-current portion | |
$ | - | | |
$ | 117 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 December 31, 2023:
| |
Lease Obligation | |
Within 1 year | |
$ | 291 | |
Between 2 to 5 years | |
| 121 | |
Total undiscounted amount | |
| 412 | |
Less future interest | |
| (14 | ) |
Total discounted amount | |
$ | 398 | |
Less: current portion | |
| (281 | ) |
Non-current portion | |
$ | 117 | |
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 | |
| (766 | ) |
Unwinding of discount of environmental rehabilitation | |
| 147 | |
Foreign exchange impact | |
| (242 | ) |
Balance, December 31, 2023 | |
$ | 6,457 | |
Unlimited number of common shares without par
value. All shares issued as at December 31, 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. The Company has not yet granted any PSUs since the Plan was implemented.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 2023 and 2022
(Unaudited) (Tabular amounts are in thousands
of U.S. dollars, except numbers for share and per share figures or otherwise stated)
For the three and nine months ended December 31,
2023, a total of $0.8 million and $3.5 million, respectively (three and nine months ended December 31, 2022 - $0.8 million and $3.1 million,
respectively) in share-based compensation expense was recognized and included in the corporate general and administrative expenses and
property evaluation and business development expenses on the condensed consolidated interim statements of income.
The following is a summary of option transactions:
| |
Number of shares | | |
Weighted average exercise price per share CAD$ | |
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 | |
| (43,334 | ) | |
| 7.59 | |
Balance, December 31, 2023 | |
| 1,388,334 | | |
$ | 5.96 | |
The following table summarizes information about
stock options outstanding as at December 31, 2023:
Exercise price in CAD$ | | |
Number of options outstanding at December 31, 2023 | | |
Weighted average remaining contractual life (Years) | | |
Weighted average exercise price in CAD$ | | |
Number of options exercisable at December 31, 2023 | | |
Weighted average exercise price in CAD$ | |
$ | 3.93 | | |
| 473,000 | | |
| 3.32 | | |
$ | 3.93 | | |
| 239,000 | | |
$ | 3.93 | |
$ | 4.08 | | |
| 60,000 | | |
| 4.15 | | |
$ | 4.08 | | |
| 10,000 | | |
$ | 4.08 | |
$ | 5.46 | | |
| 480,334 | | |
| 1.40 | | |
$ | 5.46 | | |
| 480,334 | | |
$ | 5.46 | |
$ | 9.45 | | |
| 375,000 | | |
| 1.86 | | |
$ | 9.45 | | |
| 375,000 | | |
$ | 9.45 | |
$ | 3.93 to $9.45 | | |
| 1,388,334 | | |
| 2.30 | | |
$ | 5.96 | | |
| 1,104,334 | | |
$ | 6.47 | |
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 December 31, 2023, a total of 13,333
options with exercise prices from CAD$3.93 - CAD$5.46 were cancelled and/or forfeited.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 is a summary of RSUs transactions:
| |
Number of
shares | | |
Weighted
average
grant date
closing
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 | |
| (70,332 | ) | |
| 5.13 | |
Distributed | |
| (580,923 | ) | |
| 5.56 | |
Balance, December 31, 2023 | |
| 2,531,415 | | |
$ | 5.22 | |
Subsequent to December 31, 2023, a total of 341,834
RSUs were distributed.
During the three and nine months ended December
31, 2023, dividends of $2.2 and $4.4 million, respectively, (three and nine months ended December 31, 2022 - $2.2 and $4.4 million, respectively)
were declared and paid.
| (f) | Normal course issuer bid |
On August 24, 2022, the Company announced a normal
course issuer bid (the “2022 NCIB”) which allows it to repurchase and cancel up to 7,079,407 of its own common shares until
August 28, 2023.
On September 15, 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 nine months ended December
31, 2023, the Company repurchased a total of 119,270 and 315,824, respectively, (three and nine months ended December 31, 2022 –
nil and 838,237, respectively) common shares at a cost of $0.3 million and $0.8 million, respectively (three and nine months ended December
31, 2022 – $nil and $2.1 million, respectively), under the normal course issuer bids. All shares bought were subsequently cancelled.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 |
| |
December 31,
2023 | | |
March 31,
2023 | |
Change in fair value on equity investments designated as FVTOCI | |
$ | 24,349 | | |
$ | 24,355 | |
Share of other comprehensive loss in associate | |
| 1,177 | | |
| 1,380 | |
Currency translation adjustment | |
| 24,551 | | |
| 17,508 | |
Balance, end of the period | |
$ | 50,077 | | |
$ | 43,243 | |
The change in fair value on equity investments
designated as FVTOCI and share of other comprehensive loss in associates 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) | |
| 10,874 | | |
| 513 | | |
| (120 | ) | |
| 30 | | |
| (21 | ) | |
| 11,276 | |
Share of other comprehensive loss | |
| (2,061 | ) | |
| (57 | ) | |
| (72 | ) | |
| (84 | ) | |
| - | | |
| (2,274 | ) |
Distributions | |
| (6,615 | ) | |
| (633 | ) | |
| - | | |
| (50 | ) | |
| - | | |
| (7,298 | ) |
Balance, December 31, 2023 | |
$ | 87,480 | | |
$ | 3,333 | | |
$ | 2,448 | | |
$ | (253 | ) | |
$ | (526 | ) | |
$ | 92,482 | |
As at December 31, 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:
| |
December 31,
2023 | | |
March 31,
2023 | |
NUAG (a) | |
$ | 125 | | |
$ | 51 | |
TIN (b) | |
| 171 | | |
| 37 | |
| |
$ | 296 | | |
$ | 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
nine months ended December 31, 2023, the Company recovered $0.2 million and $0.7 million, respectively (three and nine months ended December
31, 2022 - $0.2 million and $0.7 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. |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 nine
months ended December 31, 2023, the Company recovered $0.1 million and $0.3 million, respectively (three and nine months ended December
31, 2022 - $0.07 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. |
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.
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, 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 December 31, 2023 | |
Recurring measurements | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Financial assets | |
| | |
| | |
| | |
| |
Cash and cash equivalents | |
$ | 143,280 | | |
$ | - | | |
$ | - | | |
$ | 143,280 | |
Short-term investments - money market instruments | |
| 53,612 | | |
| - | | |
| - | | |
| 53,612 | |
Investments in public companies | |
| 43,684 | | |
| - | | |
| - | | |
| 43,684 | |
Investments in private companies | |
| - | | |
| - | | |
| 3,298 | | |
| 3,298 | |
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 December 31, 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 nine months ended December 31, 2023 and 2022.
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, 2023 | |
| |
Within a year | | |
2-5 years | | |
Total | |
Accounts payable and accrued liabilities | |
$ | 52,539 | | |
$ | - | | |
$ | 52,539 | |
Lease obligation | |
| 291 | | |
| 121 | | |
| 412 | |
Deposits received | |
| 4,354 | | |
| - | | |
| 4,354 | |
Total Contractual Obligation | |
$ | 57,184 | | |
$ | 121 | | |
$ | 57,305 | |
The Company reports its financial statements in
US dollars. The functional currency of the parent entity, 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.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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 December 31, 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 | |
$ | 68,539 | | |
$ | 1,403 | | |
$ | 2,654 | | |
$ | (330 | ) | |
$ | 72,266 | | |
$ | 7,227 | |
Australian dollar | |
| 253 | | |
| - | | |
| 32,294 | | |
| - | | |
| 32,547 | | |
| 3,255 | |
| |
$ | 68,792 | | |
$ | 1,403 | | |
$ | 34,948 | | |
$ | (330 | ) | |
$ | 104,813 | | |
$ | 10,482 | |
The Company is exposed to interest rate risk on
its cash equivalents and short-term investments. As at December 31, 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.
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 statements of financial position 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, 2023 (at March 31, 2023 - $nil).
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, 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 $4.3 million and $0.1 million, respectively.
SILVERCORP METALS INC.
Notes to Condensed
Consolidated Interim Financial Statements as at December 31, 2023 and
for the three and nine months ended December 31, 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
December 31, | | |
Nine Months Ended
December 31, | |
Changes in non-cash operating working capital: | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Trade and other receivables | |
$ | 1,437 | | |
$ | 364 | | |
$ | 1,497 | | |
$ | 1,736 | |
Inventories | |
| (3,007 | ) | |
| 483 | | |
| (3,043 | ) | |
| 657 | |
Prepaids and deposits | |
| (2,313 | ) | |
| 1,089 | | |
| (3,451 | ) | |
| (7 | ) |
Accounts payable and accrued liabilities | |
| 3,387 | | |
| 3,712 | | |
| 12,819 | | |
| 3,960 | |
Deposits received | |
| 390 | | |
| (3,923 | ) | |
| 454 | | |
| (2,470 | ) |
Due from a related party | |
| (29 | ) | |
| (45 | ) | |
| (202 | ) | |
| (56 | ) |
| |
$ | (135 | ) | |
$ | 1,680 | | |
$ | 8,074 | | |
$ | 3,820 | |
The following table summarizes other adjustments
for non-cash items related to capital expenditures and acquisition transactions:
| |
Three Months Ended
December 31, | | |
Nine Months Ended
December 31, | |
Non-cash capital transactions: | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Environmental rehablitation expenditure paid from reclamation deposit | |
$ | 390 | | |
$ | 107 | | |
$ | 233 | | |
$ | 257 | |
Additions of plant and equipment included in accounts payable and accrued liabilities | |
$ | 1,749 | | |
$ | 1,065 | | |
| 1,104 | | |
| 2,159 | |
Capital expenditures of mineral rights and properties included in accounts payable and accrued liabilities | |
$ | 1,106 | | |
$ | (1,279 | ) | |
$ | 2,197 | | |
$ | 1,033 | |
Cash and cash equivalents consist of:
| |
December 31,
2023 | | |
March 31,
2023 | |
Cash on hand and at bank | |
$ | 47,310 | | |
$ | 50,871 | |
Bank term deposits and short-term money market investments | |
| 95,970 | | |
| 94,821 | |
Total cash and cash equivalents | |
$ | 143,280 | | |
$ | 145,692 | |
Exhibit 99.2
SILVERCORP METALS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Three and Nine Months Ended December
31, 2023
(Expressed in thousands of US dollars, except
per share figures or otherwise stated)
Table of Contents |
|
|
|
1. |
Core Business and Strategy |
2 |
|
|
|
2. |
Third Quarter of Fiscal Year 2024 Highlights |
2 |
|
|
|
3. |
Operating Performance |
3 |
|
|
|
4. |
Investment in Associates |
13 |
|
|
|
5. |
Overview of Financial Results |
15 |
|
|
|
6. |
Liquidity, Capital Resources, and Contractual Obligations |
21 |
|
|
|
7. |
Environmental Rehabilitation Provision |
23 |
|
|
|
8. |
Risks and Uncertainties |
24 |
|
|
|
9. |
Off-Balance Sheet Arrangements |
32 |
|
|
|
10. |
Transactions with Related Parties |
32 |
|
|
|
11. |
Alternative Performance (Non-IFRS) Measures |
32 |
|
|
|
12. |
Material Accounting Policies, Judgments, and Estimates |
37 |
|
|
|
13. |
New Accounting Standards |
38 |
|
|
|
14. |
Other MD&A Requirements |
38 |
|
|
|
15. |
Outstanding Share Data |
38 |
|
|
|
16. |
Disclosure Controls and Procedures |
39 |
|
|
|
17. |
Management’s Report on Internal Control over Financial Reporting |
39 |
|
|
|
18. |
Changes in Internal Control over Financial Reporting |
40 |
|
|
|
19. |
Directors and Officers |
40 |
|
|
|
Technical Information |
40 |
|
|
Forward Looking Statements |
40 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
This Management’s Discussion and Analysis
(“MD&A”) is intended to help the reader understand the significant factors that have affected Silvercorp Metals Inc. and
its subsidiaries’ (“Silvercorp” or the “Company”) performance and such factors that may affect its future
performance. This MD&A should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements
for the three and nine months ended December 31, 2023 and the related notes contained therein. In addition, this MD&A should be read
in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2023, the related MD&A,
the Annual Information Form (available on SEDAR+ at www.sedarplus.ca), and the annual report on Form 40-F (available on EDGAR at www.sec.gov).
The Company reports its financial position, financial performance and cash flow in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Silvercorp’s material accounting
policy information is set out in Note 2 of the unaudited consolidated interim financial statements for the three and nine months ended
December 31, 2023, as well as Note 2 to the audited consolidated financial statements for the year ended March 31, 2023. This MD&A
refers to various alternative performance (non-IFRS) measures, such as adjusted earnings and adjusted earnings per share, working capital,
silver equivalent, cash cost per ounce of silver, net of by-product credits, all-in & all-in sustaining cost per ounce of silver,
net of by-product credits, production cost per tonne, and all-in sustaining production costs per tonne. Non-IFRS measures do not have
standardized meanings under IFRS. Accordingly, non-IFRS measures should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS. To facilitate a better understanding of these measures as calculated by the Company,
additional information has been provided in this MD&A. Please refer to section 11, “Alternative Performance (Non-IFRS) Measures”
of this MD&A for detailed descriptions and reconciliations. Figures may not add due to rounding.
This MD&A is prepared as of February 6, 2024
and expressed in thousands of U.S. dollars, except share, per share, unit cost, and production data, or unless otherwise stated.
1. | Core Business and Strategy |
Silvercorp is a Canadian mining company producing
silver, gold, lead, zinc, and other metals with a long history of profitability and growth potential. The Company’s strategy is
to create shareholder value by focusing on generating free cashflow from long life mines; organic growth through extensive drilling for
discovery; ongoing merger and acquisition efforts to unlock value; and long-term commitment to responsible mining and sound Environmental,
Social and Governance (“ESG”) practices. Silvercorp operates several silver-lead-zinc mines at the Ying Mining District in
Henan Province, China and the GC silver-lead-zinc mine in Guangdong Province, China. The Company’s common shares are traded on the
Toronto Stock Exchange and NYSE American under the symbol “SVM”.
2. | Third Quarter of Fiscal Year 2024 Highlights |
| ● | Mined
345,273 tonnes of ore, milled 312,500 tonnes of ore, and produced approximately 1,342 ounces
of gold, 1.7 million ounces of silver, or approximately 1.8 million ounces of silver equivalent1,
plus 16.8 million pounds of lead and 7.4 million pounds of zinc; |
| ● | Sold approximately 1,342 ounces of gold, 1.7 million ounces of silver, 16.2 million pounds of lead, and
7.3 million pounds of zinc, for revenue of $58.5 million; |
| ● | Reported net income attributable to equity shareholders of $10.5 million, or $0.06 per share; |
| ● | Realized adjusted earnings attributable to equity shareholders1
of $11.5 million, or $0.06 per share; |
| ● | Generated cash flow from operating activities of $23.6 million; |
| ● | Cash costs per ounce of silver, net of by-product credits1, of negative $0.96; |
| 1 | Non-IFRS measures, please refer to section 11 for reconciliation. |
| Management’s Discussion and Analysis | Page 2 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| ● | All-in sustaining costs per ounce of silver, net of by-product credits1,
of $11.33; |
| ● | Spent and capitalized $1.6 million on exploration drilling, $14.1 million on underground development,
and $3.9 million on equipment and facilities, including $1.3 million on construction of the new tailings storage facility; |
| ● | Entered into a Bid Implementation Deed (“BID”) with OreCorp Limited (ASX: ORR) (“OreCorp”)
to launch an off-market takeover to acquire all OreCorp Shares not already owned by Silvercorp for A$0.19 cash plus 0.0967 common shares
of Silvercorp per OreCorp Share; and |
| ● | Strong balance sheet with $198.3 million in cash and cash equivalents and short-term investments.
The Company holds a further equity investment portfolio in associates and other companies with a total market value of $139.5 million
as at December 31, 2023. |
| (a) | Consolidated operating performance |
The following table summarizes consolidated operational
information for the three and nine months ended December 31, 2023 and 2022:
| |
Three months ended December 31, | | |
Nine months ended December 31, | |
Consolidated | |
2023 | | |
2022 | | |
Changes | | |
2023 | | |
2022 | | |
Changes | |
Production Data | |
| | |
| | |
| | |
| | |
| | |
| |
Ore Mined (tonne) | |
| 345,273 | | |
| 296,050 | | |
| 17 | % | |
| 921,958 | | |
| 887,135 | | |
| 4 | % |
Ore Milled (tonne) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold Ore | |
| 12,726 | | |
| - | | |
| 100 | % | |
| 36,419 | | |
| - | | |
| 100 | % |
Silver Ore | |
| 299,774 | | |
| 303,442 | | |
| -1 | % | |
| 832,283 | | |
| 893,261 | | |
| -7 | % |
| |
| 312,500 | | |
| 303,442 | | |
| 3 | % | |
| 868,702 | | |
| 893,261 | | |
| -3 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Average Head Grades | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Silver (grams/tonne) | |
| 182 | | |
| 207 | | |
| -12 | % | |
| 196 | | |
| 209 | | |
| -6 | % |
Lead (%) | |
| 2.7 | | |
| 3.3 | | |
| -16 | % | |
| 2.9 | | |
| 3.2 | | |
| -9 | % |
Zinc (%) | |
| 1.3 | | |
| 1.3 | | |
| 0 | % | |
| 1.2 | | |
| 1.3 | | |
| -8 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Average Recovery Rates | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Silver (%) | |
| 93.2 | | |
| 94.4 | | |
| -1 | % | |
| 93.7 | | |
| 94.4 | | |
| -1 | % |
Lead (%) | |
| 94.3 | | |
| 94.7 | | |
| 0 | % | |
| 94.6 | | |
| 94.3 | | |
| 0 | % |
Zinc (%) | |
| 85.2 | | |
| 81.3 | | |
| 5 | % | |
| 83.4 | | |
| 79.2 | | |
| 5 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal Production | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold (ounces) | |
| 1,342 | | |
| 1,100 | | |
| 22 | % | |
| 5,352 | | |
| 3,400 | | |
| 57 | % |
Silver (in thousands of ounces) | |
| 1,684 | | |
| 1,853 | | |
| -9 | % | |
| 5,054 | | |
| 5,511 | | |
| -8 | % |
Silver equivalent (in thousands of ounces)* | |
| 1,795 | | |
| 1,949 | | |
| -8 | % | |
| 5,520 | | |
| 5,802 | | |
| -5 | % |
Lead (in thousands of pounds) | |
| 16,763 | | |
| 20,059 | | |
| -16 | % | |
| 50,644 | | |
| 57,130 | | |
| -11 | % |
Zinc (in thousands of pounds) | |
| 7,404 | | |
| 6,974 | | |
| 6 | % | |
| 18,826 | | |
| 19,886 | | |
| -5 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost Data* | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Mining costs ($/tonne) | |
| 59.43 | | |
| 62.69 | | |
| -5 | % | |
| 62.43 | | |
| 67.07 | | |
| -7 | % |
Shipping costs ($/tonne) | |
| 2.39 | | |
| 2.48 | | |
| -4 | % | |
| 2.46 | | |
| 2.69 | | |
| -9 | % |
Milling costs ($/tonne) | |
| 12.44 | | |
| 12.56 | | |
| -1 | % | |
| 12.68 | | |
| 12.49 | | |
| 2 | % |
Production costs ($/tonne) | |
| 74.26 | | |
| 77.73 | | |
| -4 | % | |
| 77.57 | | |
| 82.25 | | |
| -6 | % |
All-in sustaining production costs ($/tonne) | |
| 136.86 | | |
| 136.90 | | |
| 0 | % | |
| 139.79 | | |
| 137.33 | | |
| 2 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash cost per ounce of silver, net of by-product
credits ($) | |
| (0.96 | ) | |
| (1.15 | ) | |
| 17 | % | |
| (0.74 | ) | |
| (0.68 | ) | |
| -9 | % |
All-in sustaining cost per ounce of silver, net of by-product credits ($) | |
| 11.33 | | |
| 9.28 | | |
| 22 | % | |
| 10.72 | | |
| 8.94 | | |
| 20 | % |
| * | Alternative performance
(non-IFRS) measure. Please refer to section 11 for reconciliation. |
| 1 | Non-IFRS measures, please refer to section 11 for reconciliation. |
| Management’s Discussion and Analysis | Page 3 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| (i) | Mine and Mill Production |
For the three months ended December 31, 2023 (“Q3
Fiscal 2024”), the Company mined 345,273 tonnes of ore, up 17% compared to 296,050 tonnes in the three months ended December 31,
2022(“Q3 Fiscal 2023”). Ore milled in Q3 Fiscal 2024 was 312,500 tonnes, up 3% compared to 303,442 tonnes in Q3 Fiscal 2023.
A total of 60,095 tonnes of ores were stockpiled at the Ying Mining District and will be processed in the fourth quarter during the Chinese
New Year holiday.
For the nine months ended December 31, 2023, on
a consolidated basis, the Company mined 921,958 tonnes of ore, up 4% compared to 887,135 tonnes in the same prior year period. Ore milled
was 868,702 tonnes, down 7% compared to 893,261 tonnes in the same prior year period.
In Q3 Fiscal 2024, the Company produced approximately
1,342 ounces of gold, 1.7 million ounces of silver, or approximately 1.8 million ounces of silver equivalent, plus 16.8 million pounds
of lead and 7.4 million pounds of zinc, representing increases of 22% and 6%, respectively, in gold and zinc production, and decreases
of 9% and 16%, respectively, in silver and lead production over Q3 Fiscal 2023. The decreases in silver and lead production were mainly
due to i) lower head grades achieved due to mining sequences; ii) more ores stockpiled to be processed in the fourth quarter during the
Chinese New Year holiday; and iii) 12,700 tonnes of gold ore with grades of 1.9 grams per tonne (“g/t”) gold, 74 g/t silver,
1.0% lead and 0.1% zinc mined and processed, at the Ying Mining District.
For the nine months ended December 31, 2023, the
Company produced approximately 5,352 ounces of gold, 5.1 million ounces of silver, or approximately 5.5 million ounces of silver equivalent,
plus 50.6 million pounds of lead and 18.8 million of pounds of zinc, representing an increase of 57% in gold production, and decreases
of 8%, 11% and 5%, respectively, in silver, lead and zinc production over the same prior year period.
In Q3 Fiscal 2024, the consolidated mining costs
were $59.43 per tonne, down 5% compared to $62.69 per tonne in Q3 Fiscal 2023. The consolidated milling costs were $12.44 per tonne, down
1% compared to $12.56 per tonne in Q3 Fiscal 2023. Correspondingly, the consolidated production costs per tonne of ore processed were
$74.26, down 4% compared to $77.73 in Q3 Fiscal 2023. The all-in sustaining production costs per tonne of ore processed in Q3 Fiscal 2024
were $136.89, a slight decrease compared to $136.90 in Q3 Fiscal 2023. The decrease was mainly attributed to higher ore production resulting
in lower unit fixed costs allocation and an approximately 4% depreciation of the Chinese yuan against the US dollar over the same prior
year period.
For the nine months ended December 31, 2023, the
consolidated mining costs were $62.43 per tonne, down 7% compared to $67.07 per tonne in the same prior year period. The consolidated
milling costs were $12.68 per tonne, up 2% compared to $12.49 per tonne in the same year prior period. Correspondingly, the consolidated
production costs per tonne of ore processed were $77.57 per tonne, down 6% compared to $82.25 per tonne in the same prior year period,
while the all-in sustaining production costs per tonne ore processed were $139.79 per tonne, up 2% compared to $137.33 per tonne in the
same prior year period.
| (iv) | Costs per Ounce of Silver, Net of By-Product Credits1 |
In Q3 Fiscal 2024, the consolidated cash costs
per ounce of silver, net of by-product credits, were negative $0.96, compared to negative $1.15 in the prior year quarter. The consolidated
all-in sustaining costs per ounce of silver, net of by-product credits, were $11.33 compared to $9.28 in Q3 Fiscal 2023. The increase
was mainly due to i) a decrease of $2.5 million in by-product credits, offset by a decrease of $0.5 million in all-in sustaining costs;
and ii) less silver sold resulting in higher unit costs per ounces of silver.
For the nine months ended December 31, 2023, the
consolidated cash costs per ounce of silver, net of by-product credits, were negative $0.74, compared to negative $0.68 in the same prior
year period. The consolidated all-in sustaining costs per once of silver, net of by-product credits, were $10.72, compared to $8.94 in
the same prior year period.
| 1 | Non-IFRS measures, please refer to section 11 for reconciliation. |
| Management’s Discussion and Analysis | Page 4 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| (v) | Exploration and Development |
The following table summarizes the development
work and capital expenditures in Q3 Fiscal 2024.
| |
Capitalized Development and Expenditures | | |
Expensed | |
| |
Ramp Development | | |
Exploration and Development Tunnels | | |
Drilling | | |
Equipment & Mill and TSF | | |
Total | | |
Mining Preparation Tunnels | | |
Drilling | |
| |
(Metres) | | |
($ Thousand) | | |
(Metres) | | |
($ Thousand) | | |
(Metres) | | |
($ Thousand) | | |
($ Thousand) | | |
($ Thousand) | | |
(Metres) | | |
(Metres) | |
Q3 Fiscal 2024 | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Ying Mining District | |
| 3,986 | | |
$ | 2,651 | | |
| 23,834 | | |
$ | 9,612 | | |
| 39,085 | | |
$ | 1,338 | | |
| 3,679 | | |
$ | 17,280 | | |
| 10,010 | | |
| 24,693 | |
GC Mine | |
| 81 | | |
| 108 | | |
| 3,747 | | |
| 1,688 | | |
| 10,912 | | |
| 250 | | |
| 218 | | |
| 2,264 | | |
| 2,145 | | |
| 12,327 | |
Corporate and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 82 | | |
| 9 | | |
| 91 | | |
| - | | |
| - | |
Consolidated | |
| 4,067 | | |
$ | 2,759 | | |
| 27,581 | | |
$ | 11,300 | | |
| 49,997 | | |
$ | 1,670 | | |
$ | 3,906 | | |
$ | 19,635 | | |
| 12,155 | | |
| 37,020 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Q3 Fiscal 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining District | |
| 1,776 | | |
$ | 1,294 | | |
| 15,527 | | |
$ | 6,549 | | |
| 27,066 | | |
$ | 895 | | |
| 3,250 | | |
$ | 11,988 | | |
| 7,933 | | |
| 25,270 | |
GC Mine | |
| - | | |
| - | | |
| 3,642 | | |
| 1,133 | | |
| 4,444 | | |
| 204 | | |
| 1,951 | | |
| 3,288 | | |
| 1,786 | | |
| 12,470 | |
Corporate and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| 978 | | |
| 268 | | |
| 95 | | |
| 363 | | |
| - | | |
| - | |
Consolidated | |
| 1,776 | | |
$ | 1,294 | | |
| 19,169 | | |
$ | 7,682 | | |
| 32,488 | | |
$ | 1,367 | | |
$ | 5,296 | | |
$ | 15,639 | | |
| 9,719 | | |
| 37,740 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Variances (%) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining District | |
| 124 | % | |
| 105 | % | |
| 54 | % | |
| 47 | % | |
| 44 | % | |
| 49 | % | |
| 13 | % | |
| 44 | % | |
| 26 | % | |
| -2 | % |
GC Mine | |
| 100 | % | |
| 100 | % | |
| 3 | % | |
| 49 | % | |
| 146 | % | |
| 23 | % | |
| -89 | % | |
| -31 | % | |
| 20 | % | |
| -1 | % |
Corporate and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| -100 | % | |
| -69 | % | |
| -91 | % | |
| -75 | % | |
| - | | |
| - | |
Consolidated | |
| 129 | % | |
| 113 | % | |
| 44 | % | |
| 47 | % | |
| 54 | % | |
| 22 | % | |
| -26 | % | |
| 26 | % | |
| 25 | % | |
| -2 | % |
Total capital expenditures in Q3 Fiscal 2024 were
$19.6 million, up 26% compared to $15.6 million in Q3 Fiscal 2023. The increase is mainly due to more tunneling development and exploration
activities conducted in Q3 Fiscal 2024.
In Q3 Fiscal 2024, on a consolidated basis, a
total of 87,017 metres or $2.4 million worth of diamond drilling were completed (Q3 Fiscal 2023 – 70,228 metres or $2.5 million
), of which approximately 37,020 metres or $0.7 million worth of underground drilling were expensed as part of mining costs (Q3 Fiscal
2023 – 37,740 metres or $1.1 million) and approximately 49,997 metres or $1.6 million worth of drilling were capitalized (Q3 Fiscal
2023 – 32,448 metres or $1.4 million ). In addition, approximately 12,155 metres or $4.5 million worth of preparation tunnelling
were completed and expensed as part of mining costs (Q3 Fiscal 2023 – 9,719 metres or $3.8 million), and approximately 31,648 metres
or $14.1 million worth of tunnels, raises, ramps and declines were completed and capitalized (Q3 Fiscal 2023 – 20,945 metres or
$9.0 million).
For the nine months ended December 31, 2023, the
development work and capital expenditures are summarized as follows:
| |
Capitalized Development and Expenditures | | |
Expensed | |
| |
Ramp Development | | |
Exploration
and Development Tunnels | | |
Drilling | | |
Equipment & Mill and TSF | | |
Total | | |
Mining Preparation Tunnels | | |
Drilling | |
| |
(Metres) | | |
($ Thousand) | | |
(Metres) | | |
($ Thousand) | | |
(Metres) | | |
($ Thousand) | | |
($ Thousand) | | |
($ Thousand) | | |
(Metres) | | |
(Metres) | |
Nine months ended December 31, 2023 | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Ying Mining District | |
| 9,742 | | |
$ | 6,856 | | |
| 63,384 | | |
$ | 24,855 | | |
| 112,778 | | |
$ | 3,970 | | |
$ | 9,375 | | |
$ | 45,056 | | |
| 27,913 | | |
| 73,598 | |
GC Mine | |
| 329 | | |
| 303 | | |
| 9,189 | | |
| 3,410 | | |
| 24,620 | | |
| 1,188 | | |
| 411 | | |
| 5,312 | | |
| 6,608 | | |
| 36,804 | |
Corporate and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 209 | | |
| 32 | | |
| 241 | | |
| - | | |
| - | |
Consolidated | |
| 10,071 | | |
$ | 7,159 | | |
| 72,573 | | |
$ | 28,265 | | |
| 137,398 | | |
$ | 5,367 | | |
$ | 9,818 | | |
$ | 50,609 | | |
| 34,521 | | |
| 110,402 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Nine month ended December 31, 2022 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining District | |
| 5,469 | | |
$ | 4,127 | | |
| 51,118 | | |
$ | 20,636 | | |
| 108,023 | | |
$ | 4,933 | | |
$ | 10,278 | | |
$ | 39,974 | | |
| 26,162 | | |
| 110,449 | |
GC Mine | |
| - | | |
| - | | |
| 10,503 | | |
| 3,275 | | |
| 15,052 | | |
| 555 | | |
| 2,719 | | |
| 6,549 | | |
| 5,579 | | |
| 39,655 | |
Corporate and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| 8,485 | | |
| 1,744 | | |
| 99 | | |
| 1,843 | | |
| - | | |
| - | |
Consolidated | |
| 5,469 | | |
$ | 4,127 | | |
| 61,621 | | |
$ | 23,911 | | |
| 131,560 | | |
$ | 7,232 | | |
$ | 13,096 | | |
$ | 48,366 | | |
| 31,741 | | |
| 150,104 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Changes (%) | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining District | |
| 78 | % | |
| 66 | % | |
| 24 | % | |
| 20 | % | |
| 4 | % | |
| -20 | % | |
| -9 | % | |
| 13 | % | |
| 7 | % | |
| -33 | % |
GC Mine | |
| 100 | % | |
| 100 | % | |
| -13 | % | |
| 4 | % | |
| 64 | % | |
| 114 | % | |
| -85 | % | |
| -19 | % | |
| 18 | % | |
| -7 | % |
Corporate and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| -100 | % | |
| -88 | % | |
| -68 | % | |
| -87 | % | |
| - | | |
| - | |
Consolidated | |
| 84 | % | |
| 73 | % | |
| 18 | % | |
| 18 | % | |
| 4 | % | |
| -26 | % | |
| -25 | % | |
| 5 | % | |
| 9 | % | |
| -26 | % |
Total capital expenditures for the nine months
ended December 31, 2023 were $50.6 million, up 5% compared to $48.4 million in the same prior period. Total capital expenditures incurred
to construct the new tailing storage facility (“TSF”) were approximately $5.4 million in the current period and $9.9 million
since inception, and the Company remains on track to complete the TSF in 2024.
| Management’s Discussion and Analysis | Page 5 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
For the nine months ended December 31, 2023, on
a consolidated basis, a total of 247,800 metres or $7.7 million worth of diamond drilling were completed (same prior year period –
281,664 metres or $11.5 million), of which approximately 110,402 metres or $2.3 million worth of underground drilling were expensed as
part of mining costs (same prior year period – 150,104 metres or $4.2 million) and approximately 137,398 metres or $5.4 million
worth of drilling were capitalized (same prior year period – 131,560 metres or $7.2 million). In addition, approximately 34,521
metres or $12.5 million worth of preparation tunnelling were completed and expensed as part of mining costs (same period year period –
31,741 metres or $11.9 million), and approximately 82,644 metres or $35.4 million worth of tunnels, raises, ramps and declines were completed
and capitalized (same prior year period – 67,090 metres or $28.0 million).
| (b) | Individual Mine Performance |
The following table summarizes the operational
information at the Ying Mining District for the three and nine months ended December 31, 2023 and 2022. The Ying Mining District is the
Company’s primary source of production and revenue, and consists of four mining licenses, including the SGX, HPG, TLP-LME-LMW, and
DCG mines.
| |
Three months ended December 31, | | |
Nine months ended December 31, | |
Ying Mining District | |
2023 | | |
2022 | | |
Changes | | |
2023 | | |
2022 | | |
Changes | |
Production Data | |
| | |
| | |
| | |
| | |
| | |
| |
Ore Mined (tonne) | |
| 245,606 | | |
| 206,854 | | |
| 19 | % | |
| 679,990 | | |
| 636,819 | | |
| 7 | % |
Ore Milled (tonne) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold Ore | |
| 12,726 | | |
| - | | |
| | | |
| 36,419 | | |
| - | | |
| | |
Silver Ore | |
| 201,475 | | |
| 213,830 | | |
| -6 | % | |
| 599,459 | | |
| 642,147 | | |
| -7 | % |
| |
| 214,201 | | |
| 213,830 | | |
| 0 | % | |
| 635,878 | | |
| 642,147 | | |
| -1 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Average Head Grades | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Silver (grams/tonne) | |
| 235 | | |
| 262 | | |
| -10 | % | |
| 241 | | |
| 262 | | |
| -8 | % |
Lead (%) | |
| 3.5 | | |
| 4.0 | | |
| -13 | % | |
| 3.5 | | |
| 3.9 | | |
| -10 | % |
Zinc (%) | |
| 0.7 | | |
| 0.7 | | |
| 0 | % | |
| 0.7 | | |
| 0.7 | | |
| 0 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Average Recovery Rates | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold (%)** | |
| 91.2 | | |
| - | | |
| | | |
| 91.6 | | |
| - | | |
| | |
Silver (%) | |
| 94.9 | | |
| 95.7 | | |
| -1 | % | |
| 95.0 | | |
| 95.7 | | |
| -1 | % |
Lead (%) | |
| 94.8 | | |
| 95.4 | | |
| -1 | % | |
| 95.1 | | |
| 95.0 | | |
| 0 | % |
Zinc (%) | |
| 71.4 | | |
| 66.4 | | |
| 8 | % | |
| 70.7 | | |
| 62.3 | | |
| 13 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal Production | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold (ounces) | |
| 1,342 | | |
| 1,100 | | |
| 22 | % | |
| 5,352 | | |
| 3,400 | | |
| 57 | % |
Silver (in thousands of ounces) | |
| 1,511 | | |
| 1,674 | | |
| -10 | % | |
| 4,614 | | |
| 5,027 | | |
| -8 | % |
Silver equivalent (in thousands of ounces) | |
| 1,622 | | |
| 1,770 | | |
| -8 | % | |
| 5,080 | | |
| 5,318 | | |
| -4 | % |
Lead (in thousands of pounds) | |
| 14,552 | | |
| 17,647 | | |
| -18 | % | |
| 44,952 | | |
| 50,566 | | |
| -11 | % |
Zinc (in thousands of pounds) | |
| 2,153 | | |
| 2,082 | | |
| 3 | % | |
| 6,463 | | |
| 5,986 | | |
| 8 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost Data* | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Mining costs ($/tonne) | |
| 68.87 | | |
| 73.80 | | |
| -7 | % | |
| 69.59 | | |
| 77.57 | | |
| -10 | % |
Shipping costs ($/tonne) | |
| 3.53 | | |
| 3.51 | | |
| 1 | % | |
| 3.35 | | |
| 3.73 | | |
| -10 | % |
Milling costs ($/tonne) | |
| 11.61 | | |
| 11.35 | | |
| 2 | % | |
| 11.39 | | |
| 11.05 | | |
| 3 | % |
Production costs ($/tonne) | |
| 84.01 | | |
| 88.66 | | |
| -5 | % | |
| 84.33 | | |
| 92.35 | | |
| -9 | % |
All-in sustaining production costs ($/tonne) | |
| 143.80 | | |
| 141.21 | | |
| 2 | % | |
| 140.20 | | |
| 141.66 | | |
| -1 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash cost per ounce of silver, net of by-product credits ($) | |
| (0.09 | ) | |
| 0.24 | | |
| -138 | % | |
| (0.38 | ) | |
| 0.78 | | |
| -149 | % |
All-in sustaining cost per ounce of silver, net of by-product credits ($) | |
| 8.99 | | |
| 7.66 | | |
| 17 | % | |
| 8.04 | | |
| 7.71 | | |
| 4 | % |
| * | Alternative
performance (non-IFRS) measure. Please refer to section 11 for reconciliation. |
| ** | Gold recovery only refers to the recovery rate for gold ore
processed. |
In Q3 Fiscal 2024, a total of 245,606 tonnes
of ore were mined at the Ying Mining District, up 19% compared to 206,854 tonnes in Q3 Fiscal 2023, and 214,201 tonnes of ore were milled,
a slight increase compared to 213,830 tonnes milled in Q3 Fiscal 2023. A total of 60,095 tonnes of ores were stockpiled and will be processed
in the fourth quarter during the Chinese New Year holidays.
Average head grades of ore processed were 235
g/t for silver, 3.5% for lead, and 0.7% for zinc compared to 262 g/t for silver, 4.0% for lead, and 0.7% for zinc in Q3 Fiscal 2023.
| Management’s Discussion and Analysis | Page 6 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
Metals produced at the Ying Mining District were
approximately 1,342 ounces of gold, 1.5 million ounces of silver, or approximately 1.6 million ounces of silver equivalent, plus 14.5
million pounds of lead and 2.2 million pounds of zinc, representing increases of 22% and 3% in gold and zinc production, and decreases
of 10% and 18% in silver and lead production, respectively, compared to 1,100 ounces of gold, 1.7 million ounces of silver, 17.6 million
pounds of lead, and 2.1 million pounds of zinc in Q3 Fiscal 2023. The decreases in silver and lead production were mainly due to i) lower
head grades achieved due to mining sequences; ii) more ores stockpiled to be processed in the fourth quarter during the Chinese New Year
holidays; and iii) 12,700 tonnes of gold ore with grades of 1.9 grams per tonne (“g/t”) gold, 74 g/t silver, 1.0% lead and
0.1% zinc mined and processed.
In Q3 Fiscal 2024, the mining costs at the Ying
Mining District were $68.87 per tonne, down 7% compared to $73.80 per tonne in Q3 Fiscal 2023, while the milling costs were $11.61 per
tonne, up 2% compared to $11.35 per tonne in Q3 Fiscal 2023. Correspondingly, the production costs per tonne of ore processed were $84.01,
down 5% compared to $88.66 in Q3 Fiscal 2023. The decrease was mainly attributed to higher ore production resulting in lower unit costs
and an approximately 4% depreciation of the Chinese yuan against the US dollar over the same prior year period.
The all-in sustaining costs per tonne of ore processed
were $143.80, up 2% compared to $141.21 in Q3 Fiscal 2023. The increase was mainly due to an increase of $0.9 million in sustaining capital
expenditures and $0.7 million in general administrative expenses and government fee and other taxes, offset by the decrease in the production
costs per tonne of ore processed.
In Q3 Fiscal 2024, the cash costs per ounce of
silver, net of by-product credits, at the Ying Mining District were negative $0.09, compared to $0.24 in Q3 Fiscal 2023. The decrease
was primarily due to the decrease in the production costs per tonne offset by a decrease of $1.7 million in by-product credits. The all-in
sustaining costs per ounce of silver, net of by-product credits, were $8.99, up 17% compared to $7.66 in Q3 Fiscal 2023. The increase
was mainly due to i) an increase of $0.9 million in sustaining capital expenditures; ii) an increase of $0.7 million in general administrative
expenses and government fee; and iii) less silver sold resulting in higher unit costs per ounce of silver.
In Q3 Fiscal 2024, a total of 63,778 metres or
$1.8 million worth of diamond drilling were completed (Q3 Fiscal 2023 – 52,336 metres or $1.6 million), of which approximately 24,693
metres or $0.5 million worth of underground drilling were expensed as part of mining costs (Q3 Fiscal 2023 – 25,270 metres or $0.8
million) and approximately 39,085 metres or $1.3 million worth of drilling were capitalized (Q3 Fiscal 2023 – 27,066 metres or $0.8
million). In addition, approximately 10,010 metres or $3.6 million worth of preparation tunnelling were completed and expensed as part
of mining costs (Q3 Fiscal 2023 – 7,933 metres or $3.2 million), and approximately 27,820 metres or $12.3 million worth of horizontal
tunnels, raises, ramps, and declines were completed and capitalized (Q3 Fiscal 2023 – 17,303 metres or $7.8 million).
For the nine months ended December 31, 2023, a
total of 679,990 tonnes of ore were mined and 635,878 tonnes of ore were milled at the Ying Mining District, compared to 636,819 tonnes
mined and 642,147 tonnes milled in the same prior year period.
Average head grades of ore processed were 241
g/t for silver, 3.5% for lead, and 0.7% for zinc compared to 262 g/t for silver, 3.9% for lead, and 0.7% for zinc in the same prior year
period.
Metals produced at the Ying Mining District were
approximately 5,352 ounces of gold, 4.6 million ounces of silver, or approximately 5.1 million ounces of silver equivalent, plus 45.0
million pounds of lead and 6.5 million pounds of zinc, up 57% and 8%, respectively, in gold and zinc production, and down 8% and 11%,
respectively, in silver and lead production, compared to 3,400 ounces of gold, 5.3 million ounces of silver, 50.6 million pounds of lead,
and 6.0 million pounds of zinc in the same prior year period.
For the nine months ended December 31, 2023, the
mining costs at the Ying Mining District were $69.59 per tonne, down 10% compared to $77.57 per tonne in the same prior year period while
the milling costs were $11.39 per tonne, up 3% compared to $11.05 per tonne in the same prior year period. Correspondingly, the production
costs per tonne of ore processed were $84.33, down 9% compared to $92.35 in the same prior year period. The decrease was mainly due to
less drilling expensed and the depreciation of the Chinese yuan against the US dollar over the same prior year period.
| Management’s Discussion and Analysis | Page 7 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
The all-in sustaining costs per tonne of ore processed
was $140.20, down 1% compared to $141.66 in the same prior year period. The decrease was mainly due the decrease in the production costs
per tonne offset by an increase of $2.9 million in sustaining capital expenditures and $1.0 million in general administrative and government
fees and other taxes.
For the nine months ended December 31, 2023, the
cash costs per ounce of silver, net of by-product credits, at the Ying Mining District were negative $0.38, compared to $0.78 in the same
prior year period. The all-in sustaining costs per ounce of silver, net of by-product credits, were $8.04, up 4% compared to $7.71 in
the same prior year period.
For the nine months ended December 31, 2023, a
total of 186,376 metres or $5.6 million worth of diamond drilling were completed (same prior year period – 218,472 metres or $8.0
million), of which approximately 73,598 metres or $1.8 million worth of underground drilling were expensed as part of mining costs (same
prior year period – 110,449 metres or $3.0 million) and approximately 112,778 metres or $4.0 million worth of drilling were capitalized
(same prior year period – 108,023 metres or $4.9 million). In addition, approximately 27,913 metres or $10.3 million worth of preparation
tunnelling were completed and expensed as part of mining costs (same prior year period – 26,162 metres or $10.2 million), and approximately
73,126 metres or $31.7 million worth of horizontal tunnels, raises, ramps, and declines were completed and capitalized (same prior year
period – 56,587 metres or $24.8 million).
The following table summarizes the operational
information at the GC Mine for the three and nine months ended December 31, 2023 and 2022:
| |
Three months ended December
31, | | |
Nine months ended December 31, | |
GC Mine | |
2023 | | |
2022 | | |
Changes | | |
2023 | | |
2022 | | |
Changes | |
Production Data | |
| | |
| | |
| | |
| | |
| | |
| |
Ore Mined (tonne) | |
| 99,667 | | |
| 89,196 | | |
| 12 | % | |
| 241,968 | | |
| 250,316 | | |
| -3 | % |
Ore Milled (tonne) | |
| 98,299 | | |
| 89,612 | | |
| 10 | % | |
| 232,824 | | |
| 251,114 | | |
| -7 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Average Head Grades | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Silver (grams/tonne) | |
| 68 | | |
| 75 | | |
| -9 | % | |
| 72 | | |
| 73 | | |
| -1 | % |
Lead (%) | |
| 1.1 | | |
| 1.4 | | |
| -21 | % | |
| 1.2 | | |
| 1.3 | | |
| -8 | % |
Zinc (%) | |
| 2.7 | | |
| 2.8 | | |
| -4 | % | |
| 2.7 | | |
| 2.8 | | |
| -4 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Average Recovery Rates | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Silver (%) ** | |
| 80.3 | | |
| 83.0 | | |
| -3 | % | |
| 81.8 | | |
| 82.5 | | |
| -1 | % |
Lead (%) | |
| 90.9 | | |
| 90.3 | | |
| 1 | % | |
| 90.7 | | |
| 89.6 | | |
| 1 | % |
Zinc (%) | |
| 90.1 | | |
| 90.1 | | |
| 0 | % | |
| 90.2 | | |
| 90.1 | | |
| 0 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal Production | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Silver (in thousands of ounces) | |
| 173 | | |
| 179 | | |
| -3 | % | |
| 440 | | |
| 484 | | |
| -9 | % |
Silver equivalent (in thousands of ounces) | |
| 173 | | |
| 1,770 | | |
| | | |
| 440 | | |
| 484 | | |
| -9 | % |
Lead (in thousands of pounds) | |
| 2,211 | | |
| 2,412 | | |
| -8 | % | |
| 5,692 | | |
| 6,564 | | |
| -13 | % |
Zinc (in thousands of pounds) | |
| 5,251 | | |
| 4,892 | | |
| 7 | % | |
| 12,363 | | |
| 13,900 | | |
| -11 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost Data* | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Mining costs ($/tonne) | |
| 36.15 | | |
| 36.91 | | |
| -2 | % | |
| 42.31 | | |
| 40.35 | | |
| 5 | % |
Shipping costs ($/tonne) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Milling costs ($/tonne) | |
| 14.23 | | |
| 15.44 | | |
| -8 | % | |
| 16.19 | | |
| 16.16 | | |
| 0 | % |
Production costs ($/tonne) | |
| 50.38 | | |
| 52.35 | | |
| -4 | % | |
| 58.50 | | |
| 56.51 | | |
| 4 | % |
All-in sustaining production costs ($/tonne) | |
| 76.84 | | |
| 88.26 | | |
| -13 | % | |
| 86.93 | | |
| 83.02 | | |
| 5 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash cost per ounce of silver, net of by-product credits ($) | |
| (8.95 | ) | |
| (13.72 | ) | |
| 35 | % | |
| (4.69 | ) | |
| (16.08 | ) | |
| 71 | % |
All-in sustaining cost per ounce of silver, net of by-product credits ($) | |
| 8.01 | | |
| 5.02 | | |
| 60 | % | |
| 11.98 | | |
| (0.71 | ) | |
| 1787 | % |
| * | Alternative
performance (non-IFRS) measure. Please refer to section 11 for reconciliation. |
| ** | Silver
recovery includes silver recovered in lead concentrate and silver recovered in zinc concentrate. |
In Q3 Fiscal 2024, a total of 99,667 tonnes of
ore were mined and 98,299 tonnes were milled at the GC Mine, up 12% and 10%, respectively, compared to 89,196 tonnes mined and 89,612
tonnes milled in Q3 Fiscal 2023.
| Management’s Discussion and Analysis | Page 8 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
In Q3 Fiscal 2024, a total of 13,649 tonnes of
waste was removed through the XRT Ore Sorting System.
Average head grades of ore milled were 68 g/t
for silver, 1.1% for lead, and 2.7% for zinc compared to 75 g/t for silver, 1.4% for lead, and 2.8% for zinc in Q3 Fiscal 2023.
Metals produced at the GC Mine were approximately
173 thousand ounces of silver, 2.2 million pounds of lead, and 5.3 million pounds of zinc, representing an increase of 7% in zinc, and
decreases of 3% and 8%, respectively, in silver and lead, compared to 179 thousand ounces of silver, 2.4 million pounds of lead, and 4.9
million pounds of zinc in Q3 Fiscal 2023. The decrease in silver and lead production was mainly due to lower head grades achieved due
to mining sequence.
The mining costs at the GC Mine were $36.15 per
tonne, down 2% compared to $36.91 per tonne in Q3 Fiscal 2023, and the milling costs were $14.23 per tonne, down 8% compared to $15.44
per tonne in Q3 Fiscal 2023. The production costs per tonne or ore processed were $50.38, down 4% compared to $52.35 in Q3 Fiscal 2023.
The all-in sustaining production costs per tonne of ore processed were $76.84, down 13%, compared to $88.26 in Q3 Fiscal 2023. The decrease
was primarily due to the higher ore production resulting in a lower unit fixed overhead costs allocation and the depreciation of the Chinese
yuan against the US dollar over the same prior year period.
The cash costs per ounce of silver, net of by-product
credits, at the GC Mine, in Q3 Fiscal 2024, were negative $8.95, compared to negative $13.72 in Q3 Fiscal 2023. The all-in sustaining
costs per ounce of silver, net of by-product credits, were $8.01, compared to negative $5.02 in Q3 Fiscal 2023. The increase was mainly
due to a decrease of $0.9 million in by-product credits offset by the decrease in the production costs per tonne of ore processed.
In Q3 Fiscal 2024, approximately 23,239 metres
or $0.5 million worth of diamond drilling were completed (Q3 Fiscal 2023 – 16,914 metres or $0.5 million), of which approximately
12,327 metres or $0.2 million worth of underground drilling were expensed as part of mining costs (Q3 Fiscal 2023 – 12,470 metres
or $0.3 million) and approximately 10,912 metres or $0.3 million of drilling were capitalized (Q3 Fiscal 2023 – 4,444 metres or
$0.2 million). In addition, approximately 2,145 metres or $0.9 million of tunnelling were completed and expensed as part of mining costs
(Q3 Fiscal 2023 – 1,786 metres or $0.6 million), and approximately 3,828 metres or $1.8 million of horizontal tunnels, raises, and
declines were completed and capitalized (Q3 Fiscal 2023 – 3,642 metres or $1.1 million).
For the nine months ended December 31, 2023, a
total of 241,968 tonnes of ore were mined and 232,824 tonnes were milled at the GC Mine, down 3% and 7%, respectively, compared to 250,316
tonnes mined and 251,114 tonnes milled in the same prior year period.
For the nine months ended December 31, 2023, a
total of 22,252 tonnes of waste were removed through the XRT Ore Sorting System.
Average head grades of ore milled were 72 g/t
for silver, 1.2% for lead, and 2.7% for zinc compared to 73 g/t for silver, 1.3% for lead, and 2.8% for zinc in the same prior year period.
Metals produced at the GC Mine were approximately
440 thousand ounces of silver, 5.7 million pounds of lead, and 12.4 million pounds of zinc, down 9%, 13%, and 11%, respectively, compared
to 484 thousand ounces of silver, 6.6 million pounds of lead, and 13.9 million pounds of zinc in the same prior year period. The decrease
was mainly due to less ore production and lower head grades achieved.
For the nine months ended December 31, 2023, the
mining costs at the GC Mine were $42.31 per tonne, up 5% compared to $40.35 per tonne in the same prior year period, and the milling costs
were $16.19 per tonne, a slight increase compared to $16.16 per tonne in the same prior year period. The production costs per tonne of
ore processed were $58.50, up 4% compared to $56.51 in the same prior year period. The all-in sustaining production costs per tonne of
ore processed were $86.93, up 5%, compared to $83.02 in the same prior year period. The increase was primarily due to the lower ore production
resulting in a higher unit cost as well as the other factors discussed in the consolidated results.
| Management’s Discussion and Analysis | Page 9 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
For the nine months ended December 31, 2023, the
cash costs per ounce of silver, net of by-product credits, at the GC Mine, were negative $4.69, up 71% compared to negative $16.08 in
the same prior year period. The all-in sustaining costs per ounce of silver, net of by-product credits, were $11.98, compared to
negative $0.71 in the same prior year period.
For the nine months ended December 31, 2023, approximately
61,424 metres or $1.8 million worth of diamond drilling were completed (same prior year period – 54,707 metres or $1.8 million),
of which approximately 36,804 metres or $0.7 million worth of underground drilling were expensed as part of mining costs (same prior year
period – 39,655 metres or $1.2 million) and approximately 24,620 metres or $1.2 million of drilling were capitalized (same prior
year period – 15,052 metres or $0.6 million ). In addition, approximately 6,608 metres or $2.2 million of tunnelling were completed
and expensed as part of mining costs (same prior year period – 5,579 metres or $1.6 million), and approximately 9,518 metres or
$3.7 million of horizontal tunnels, raises, and declines were completed and capitalized (same prior year period – 10,503 metres
or $3.3 million).
Activities at the Kuanping Project in Fiscal 2024
have been focused on completing studies and reports as required to construct the mine. As of December 31, 2023, the Company has completed
studies on environmental, water, and soil assessments, and all these reports have been submitted to and approved by the relevant provincial
authorities. An updated mineral resources estimate report prepared as per Chinese standards has been reviewed and approved by the relevant
provincial authorities. A report, incorporating the mineral resources development and utilization plan, reclamation plan, and environmental
rehabilitation plan, was prepared by the Company and reviewed and approved by an external expert panel. Total capital expenditures at
the Kuanping Project during the nine months ended December 31, 2023 was $0.2 million.
The BYP Mine was placed on care and maintenance
in August 2014 due to required capital upgrades to sustain its ongoing production and the market environment. The Company is conducting
activities to apply for a new mining license, but the process has taken longer than expected. No guarantee can be given that the new mining
license for the BYP Mine will be issued, or if it is issued, that it will be issued under reasonable operational and/or financial terms,
or in a timely manner, or that the Company will be in a position to comply with all conditions that are imposed thereon.
The La Yesca Project was placed on hold last year and no further exploration
activities are planned.
| Management’s Discussion and Analysis | Page 10 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| (c) | Annual Operating Outlook |
All references to Fiscal 2024 Guidance in this
MD&A refer to the “Fiscal 2024 Operating Outlook” section in the Company’s Fiscal 2023 Annual MD&A dated May
24, 2023 (“Fiscal 2024 Guidance”) filed under the Company’s SEDAR+ profile at www.sedarplus.ca.
| (i) | Production and Production Costs |
The following table summarizes the production
and production costs achieved for the nine months ended December 31, 2023 compared to the respective Fiscal 2024 Guidance:
| |
| | |
Head
grades | | |
Metal
production | | |
Production
costs | |
| |
Ore processed | | |
Gold | | |
Silver | | |
Lead | | |
Zinc | | |
Gold | | |
Silver | | |
Lead | | |
Zinc | | |
Cash cost | | |
AISC | |
| |
(tonnes) | | |
(g/t) | | |
(g/t) | | |
(%) | | |
(%) | | |
(oz) | | |
(Koz) | | |
(Klbs) | | |
(Klbs) | | |
($/t) | | |
($/t) | |
Nine months ended December 31, 2023 | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Ying Mining District | |
| 635,878 | | |
| 0.14 | | |
| 241 | | |
| 3.5 | | |
| 0.7 | | |
| 5,352 | | |
| 4,614 | | |
| 44,952 | | |
| 6,463 | | |
| 84.33 | | |
| 140.20 | |
GC
Mine | |
| 232,824 | | |
| - | | |
| 72 | | |
| 1.2 | | |
| 2.7 | | |
| - | | |
| 440 | | |
| 5,692 | | |
| 12,363 | | |
| 58.50 | | |
| 86.93 | |
Consolidated | |
| 868,702 | | |
| 0.10 | | |
| 196 | | |
| 2.9 | | |
| 1.2 | | |
| 5,352 | | |
| 5,054 | | |
| 50,644 | | |
| 18,826 | | |
| 77.57 | | |
| 139.79 | |
| |
| . | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fiscal
2024 Guidance | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining District | |
| 770,000-810,000
| | |
| 0.20 | | |
| 267 | | |
| 3.9 | | |
| 0.8 | | |
| 4,400-5,500 | | |
| 6,180-6,500 | | |
| 62,950-65,630 | | |
| 9,120-9,520 | | |
| 90.4-92.6 | | |
| 143.8-148.8 | |
GC
Mine | |
| 330,000-360,000
| | |
| - | | |
| 75 | | |
| 1.2 | | |
| 2.9 | | |
| - | | |
| 620-670 | | |
| 7,530-8,180 | | |
| 18,530-20,140 | | |
| 50.3-52.3 | | |
| 79.6-84.2 | |
Consolidated | |
| 1,100,000-1,170,000
| | |
| 0.14 | | |
| 208 | | |
| 3.1 | | |
| 1.4 | | |
| 4,400
- 5,500 | | |
| 6,800-7,170 | | |
| 70,480-73,810 | | |
| 27,650-29,660 | | |
| 78.2-80.5 | | |
| 136.4-142.4 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
% of Fiscal
2024 Guidance* | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining District | |
| 80 | % | |
| 70 | % | |
| 90 | % | |
| 90 | % | |
| 88 | % | |
| 108 | % | |
| 73 | % | |
| 70 | % | |
| 69 | % | |
| 92 | % | |
| 96 | % |
GC
Mine | |
| 67 | % | |
| 0 | % | |
| 96 | % | |
| 100 | % | |
| 93 | % | |
| 0 | % | |
| 68 | % | |
| 72 | % | |
| 64 | % | |
| 114 | % | |
| 106 | % |
Consolidated | |
| 77 | % | |
| 71 | % | |
| 94 | % | |
| 94 | % | |
| 86 | % | |
| 108 | % | |
| 72 | % | |
| 70 | % | |
| 66 | % | |
| 98 | % | |
| 100 | % |
| * | Percentage caculated
based on mid-point of the related Fiscal 2024 Guidance |
| (ii) | Development and Capital Expenditures |
The following table summarizes the development work and capitalized
expenditures for the nine months ended December 31, 2023 compared to the respective Fiscal 2024 Guidance.
| |
Capitalized
Development and Expenditures | | |
Expensed | |
| |
Ramp
Development | | |
Exploration
and
Development
Tunnels | | |
Drilling | | |
Equipment &
Mill and TSF | | |
Total | | |
Mining
Preparation
Tunnels | | |
Drilling | |
| |
(Metres) | | |
($ Thousand) | | |
(Metres) | | |
($ Thousand) | | |
(Metres) | | |
($ Thousand) | | |
($ Thousand) | | |
($ Thousand) | | |
(Metres) | | |
(Metres) | |
Nine months ended December
31, 2023 | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Ying
Mining District | |
| 9,742 | | |
$ | 6,856 | | |
| 63,384 | | |
$ | 24,855 | | |
| 112,778 | | |
$ | 3,970 | | |
| 9,375 | | |
$ | 45,056 | | |
| 27,913 | | |
| 73,598 | |
GC Mine | |
| 329 | | |
| 303 | | |
| 9,189 | | |
| 3,410 | | |
| 24,620 | | |
| 1,188 | | |
| 411 | | |
| 5,312 | | |
| 6,608 | | |
| 36,804 | |
Corporate
and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 209 | | |
| 32 | | |
| 241 | | |
| - | | |
| - | |
Consolidated | |
| 10,071 | | |
$ | 7,159 | | |
| 72,573 | | |
$ | 28,265 | | |
| 137,398 | | |
$ | 5,367 | | |
$ | 9,818 | | |
$ | 50,609 | | |
| 34,521 | | |
| 110,402 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fiscal
2024 Guidance | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining
District | |
| 8,800 | | |
| 6,300 | | |
| 57,200 | | |
| 23,900 | | |
| 146,400 | | |
| 4,200 | | |
| 21,800 | | |
| 56,200 | | |
| 25,800 | | |
| 71,400 | |
GC Mine | |
| - | | |
| - | | |
| 14,700 | | |
| 6,400 | | |
| 30,200 | | |
| 800 | | |
| 700 | | |
| 7,900 | | |
| 5,300 | | |
| 24,800 | |
Corporate
and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 600 | | |
| 600 | | |
| - | | |
| - | |
Consolidated | |
| 8,800 | | |
$ | 6,300 | | |
| 71,900 | | |
$ | 30,300 | | |
| 176,600 | | |
$ | 5,000 | | |
$ | 23,100 | | |
$ | 64,700 | | |
| 31,100 | | |
| 96,200 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Percentage
of Fiscal 2024 Guidance | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ying Mining
District | |
| 111 | % | |
| 109 | % | |
| 111 | % | |
| 104 | % | |
| 77 | % | |
| 95 | % | |
| 43 | % | |
| 80 | % | |
| 108 | % | |
| 103 | % |
GC Mine | |
| - | | |
| - | | |
| 63 | % | |
| 53 | % | |
| 82 | % | |
| 149 | % | |
| 59 | % | |
| 67 | % | |
| 125 | % | |
| 148 | % |
Corporate
and other | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 5 | % | |
| 40 | % | |
| - | | |
| - | |
Consolidated | |
| 114 | % | |
| 114 | % | |
| 101 | % | |
| 93 | % | |
| 78 | % | |
| 107 | % | |
| 43 | % | |
| 78 | % | |
| 111 | % | |
| 115 | % |
The Company is currently refining the mine plan
and expects to provide Fiscal 2025 production guidance along with the release of Fiscal 2024 production results in April 2024.
In the fourth quarter of Fiscal 2024, the Company
expects to process 215,000 to 240,000 tonnes of ore to produce approximately 1,200 to 1,300 ounces of gold, 1.1 to 1.3 million ounces
of silver, 11.5 to 13.5 million pounds of lead, and 4.5 to 5.0 million pounds of zinc, representing production increases of 11% to 30%
in ore, 20% to 30% in gold, 0% to 17% in silver, 5% to 20% in lead, and 26% to 40% in zinc compared to the production results in the same
quarter last year.
| Management’s Discussion and Analysis | Page 11 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
To improve the operational efficiencies at the
Ying Mining District, a mobile XRT Ore Sorting System was installed and currently is in trial run at the processing plant to address the
higher anticipated dilution associated with shrinkage mining.
To preserve capital, instead of the original plan
to build a new 3,000 tonnes per day (“tpd”) mill and to abolish the existing No. 1 Mill, the Company plans to add a new production
line with 1,500 tpd capacity at the No. 2 Mill, which would increase the processing capacity at the Ying Mining District to 4,000 tpd.
The No. 2 Mill expansion is expected to be completed in Fiscal 2025 and additional details will be provided in the Company’s Fiscal
2025 guidance.
| (d) | Update on the Transactions with OreCorp |
On August 6, 2023, the Company and OreCorp Limited(ASX:
ORR) (“OreCorp”) announced the signing of a binding scheme implementation deed (the “Agreement”) whereby Silvercorp
will acquire all fully-paid ordinary shares of OreCorp not held by Silvercorp or its associates (the “OreCorp Shares”), pursuant
to an Australian scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) (the “Scheme”), subject to the satisfaction
and/or waiver of various conditions, and whereby each holder of OreCorp Shares will receive, for each OreCorp Share held, A$0.15 in cash
and 0.0967 of a Silvercorp common shares.
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 held approximately 15% of the total outstanding ordinary shares of OreCorp.
Subsequent to the private placement, the Company acquired additional 3,477,673 OreCorp Shares on the market through the Australian Securities
Exchange (the “ASX”) for approximately $1.1 million, and as of December 31, 2023 the Company held 73,889,007 OreCorp Shares,
representing 15.74% of the total outstanding ordinary shares of OreCorp.
The Agreement and the Scheme were amended and
restated on November 23, 2023 (the “Amending Deed”) to increase the cash consideration from A$0.15 to A$0.19 with no change
to the share consideration, being 0.0967 of a Silvercorp common share, for each OreCorp Share.
On December 26, 2023, the Company and OreCorp
have entered into a Bid Implementation (“BID”), pursuant to which Silvercorp agreed to acquire, by means of an off-market takeover
offer, all of the OreCorp Shares not already owned by Silvercorp for consideration comprising 0.0967 common shares of Silvercorp and A$0.19
cash per OreCorp Share (the “Consideration”).
Under the BID, Silvercorp and OreCorp have provided
undertakings to each other to facilitate the Transaction. The offer is subject to minimal conditions, including:
| ● | Silvercorp having a relevant interest in at least 50.1% of the OreCorp Shares (not yet met); |
| ● | no regulatory action which could reasonably be expected to restrain, impede or prohibit the Offer and
completion of the Transaction; |
| ● | no OreCorp material adverse change or prescribed occurrence (both terms defined in a customary manner);
and |
| ● | normal course listing approval for the new Silvercorp Shares to be issued (conditional approval from Toronto
Stock Exchange and authorization of the Company’s supplemental listing application from NYSE American received). |
The OreCorp Board is unanimously recommending
that OreCorp shareholders ACCEPT the Offer subject to their Independent Expert’s Report concluding, and continuing to conclude,
that the Offer is reasonable to OreCorp shareholders and there being no Superior Proposal. Subject to those same qualifications, the OreCorp
Board, who collectively hold 3.94% of the OreCorp Shares, intends to accept the offer in respect of all OreCorp Shares they own or control.
| Management’s Discussion and Analysis | Page 12 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
The BID includes market standard deal protection
measures equivalent to those previously agreed under the Scheme, including “no talk” and “no due diligence” provisions
(subject to a fiduciary out exception) and “no shop”. It also includes notification and matching rights for Silvercorp in
the event of a competing proposal. Pursuant to these deal protection measures, OreCorp has agreed, inter alia that it will not solicit,
encourage or initiate any competing proposal and further, that it will not participate in any discussions or negotiations with a third
party in relation to any competing proposal (unless certain conditions are satisfied, including where a failure to do so would constitute
a breach of the OreCorp Board’s fiduciary duties or statutory obligations).
As with the Scheme, under certain circumstances
a break fee of approximately A$2.8 million will be payable by OreCorp to Silvercorp if the BID is terminated.
The offer is not subject to the approval of the
Silvercorp’s shareholders and is not subject to any financing or due diligence conditions.
In conjunction with the execution of the BID,
Silvercorp and OreCorp have mutually agreed to terminate the Agreement and the Amending Deed.
The off-market takeover offer document was dispatched
to OreCorp shareholders on January 15, 2024 and since then, the offer is open for acceptance by OreCorp shareholders until February 23,
2024 (Sydney time), unless extended.
On February 1, 2024, the Company announced that
it received a Merger Clearance Certificate (dated January 30, 2024) from the Tanzanian Fair Competition Commission (the “FCC”)
providing unconditional merger control approval for the Transaction. This approval represents the sole Tanzanian regulatory requirements
needed to complete the Transaction and clears any possibility of the potential breach of the “no regulatory action” condition.
| 4. | Investment in Associates |
The following table shows a continuity of the Company’s investment
in associates:
| |
Amount | | |
Market value
per quoted
share prices | |
Balance, April 1, 2022 | |
$ | 56,841 | | |
$ | 146,483 | |
Purchase from open market | |
| 874 | | |
| | |
Paricipation in financing | |
| 1,181 | | |
| | |
Share of net loss | |
| (2,901 | ) | |
| | |
Share of other comprehensive loss | |
| (886 | ) | |
| | |
Dilution loss | |
| (107 | ) | |
| | |
Foreign exchange impact | |
| (4,307 | ) | |
| | |
Balance, March 31, 2023 | |
$ | 50,695 | | |
$ | 126,398 | |
Participation in financing | |
| 4,982 | | |
| | |
Dilution Gain | |
| 733 | | |
| | |
Share of net loss | |
| (7,025 | ) | |
| | |
Share of other comprehensive loss | |
| 236 | | |
| | |
Foreign exchange impact | |
| 1,136 | | |
| | |
Balance, December 31, 2023 | |
$ | 50,757 | | |
$ | 92,534 | |
| (a) | Investment in New Pacific Metals Corp. (“NUAG”) |
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 and acquired an additional 2,541,890 common shares of NUAG for a cost of $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 $733 was recorded on the
unaudited condensed consolidated interim statements of income.
| Management’s Discussion and Analysis | Page 13 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
As at December 31, 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%).
As at December 31, 2023, the carrying value of
the investment in NUAG was $48.9 million (March 31, 2023 - $42.3 million), while the market value based on the quoted market price of
NUAG’s common share was $89.0 million (March 31, 2023 - $119.6 million).
| (b) | Investment in Tincorp Metals Inc. (“TIN”) |
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 December 31, 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%).
As at December 31, 2023, the carrying value of
the investment in TIN was $1.9 million (March 31, 2023 - $7.4 million), while the market value based on the quoted market price of TIN’s
common share was $3.5 million (March 31, 2023 - $6.8 million).
Subsequent to December 31, 2023, the Company and
TIN entered into an interest-free unsecured credit facility agreement with no conversion features (the “Facility”) to allow
TIN to advance up to $1.0 million from the Company. Upon signing the Facility, the Company advanced $0.5 million to TIN and received 350,000
common shares of TIN as the Bonus Shares for granting the Facility. The Facility has a maturity date of January 31, 2025.
| Management’s Discussion and Analysis | Page 14 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
5. | Overview of Financial Results |
| (a) | Selected Annual and Quarterly Information |
The following tables set out selected quarterly
results for the past eleven quarters as well as selected annual results for the past two years. The dominant factors affecting results
presented below are the volatility of the realized selling metal prices and the timing of sales. The results for the quarters ended March
31 are normally affected by the extended Chinese New Year holiday.
Fiscal 2024 | |
Quarter Ended | | |
Period Ended | |
(In thousands of USD, other than per share amounts) | |
Jun 30, 2023 | | |
Sep 30, 2023 | | |
Dec 31, 2023 | | |
Dec 31, 2023 | |
Revenue | |
$ | 60,006 | | |
$ | 53,992 | | |
$ | 58,508 | | |
$ | 172,506 | |
Cost of mine operations | |
| 36,705 | | |
| 33,049 | | |
| 35,201 | | |
| 104,955 | |
Income from mine operations | |
| 23,301 | | |
| 20,943 | | |
| 23,307 | | |
| 67,551 | |
Corporate general and administrative expenses | |
| 3,650 | | |
| 3,810 | | |
| 3,228 | | |
| 10,688 | |
Foreign exchange loss (gain) | |
| 2,227 | | |
| (1,314 | ) | |
| 701 | | |
| 1,614 | |
Share of loss in associates | |
| 640 | | |
| 705 | | |
| 5,680 | | |
| 7,025 | |
Dilution gain on investment in associate | |
| - | | |
| (733 | ) | |
| - | | |
| (733 | ) |
Loss (gain) on investments | |
| (1,086 | ) | |
| 603 | | |
| (6,204 | ) | |
| (6,687 | ) |
Other items | |
| (130 | ) | |
| 912 | | |
| 2,219 | | |
| 3,001 | |
Income from operations | |
| 18,000 | | |
| 16,960 | | |
| 17,683 | | |
| 52,643 | |
Finance items | |
| (1,434 | ) | |
| (1,688 | ) | |
| (1,510 | ) | |
| (4,632 | ) |
Income tax expenses | |
| 6,221 | | |
| 3,878 | | |
| 5,123 | | |
| 15,222 | |
Net income | |
| 13,213 | | |
| 14,770 | | |
| 14,070 | | |
| 42,053 | |
Net income attributable to equity holders of the Company | |
| 9,217 | | |
| 11,050 | | |
| 10,510 | | |
| 30,777 | |
Basic earnings per share | |
| 0.05 | | |
| 0.06 | | |
| 0.06 | | |
| 0.17 | |
Diluted earnings per share | |
| 0.05 | | |
| 0.06 | | |
| 0.06 | | |
| 0.17 | |
Cash dividend declared | |
| 2,214 | | |
| - | | |
| 2,214 | | |
| 4,428 | |
Cash dividend declared per share | |
| 0.0125 | | |
| - | | |
| 0.0125 | | |
| 0.025 | |
Other financial information | |
| | | |
| | | |
| | | |
| | |
Total assets | |
| | | |
| | | |
| | | |
| 720,412 | |
Total liabilities | |
| | | |
| | | |
| | | |
| 115,392 | |
Total equity attributable to equity holders of the Company | |
| | | |
| | | |
| | | |
| 512,538 | |
Fiscal 2023 | |
Quarter Ended | | |
Year Ended | |
(In thousands of USD, other than per share amounts) | |
Jun 30, 2022 | | |
Sep 30, 2022 | | |
Dec 31, 2022 | | |
Mar 31, 2023 | | |
Mar 31, 2023 | |
Revenue | |
$ | 63,592 | | |
$ | 51,739 | | |
$ | 58,651 | | |
$ | 34,147 | | |
$ | 208,129 | |
Cost of mine operations | |
| 38,690 | | |
| 37,378 | | |
| 36,907 | | |
| 24,371 | | |
| 137,346 | |
Income from mine operations | |
| 24,902 | | |
| 14,361 | | |
| 21,744 | | |
| 9,776 | | |
| 70,783 | |
Corporate general and administrative expenses | |
| 3,557 | | |
| 3,476 | | |
| 3,171 | | |
| 3,045 | | |
| 13,249 | |
Foreign exchange loss (gain) | |
| (1,656 | ) | |
| (4,340 | ) | |
| 850 | | |
| 304 | | |
| (4,842 | ) |
Share of loss in associates | |
| 728 | | |
| 771 | | |
| 677 | | |
| 725 | | |
| 2,901 | |
Dilution loss on investment in associate | |
| | | |
| | | |
| | | |
| 107 | | |
| 107 | |
Loss (gain) on equity investments | |
| 2,671 | | |
| 1,596 | | |
| (3,010 | ) | |
| 1,061 | | |
| 2,318 | |
Impairment charges against mineral rights and properties | |
| - | | |
| 20,211 | | |
| - | | |
| - | | |
| 20,211 | |
Other items | |
| 231 | | |
| 61 | | |
| 2,791 | | |
| 9 | | |
| 3,092 | |
Income from operations | |
| 19,371 | | |
| (7,414 | ) | |
| 17,265 | | |
| 4,525 | | |
| 33,747 | |
Finance items | |
| (800 | ) | |
| (1,023 | ) | |
| 69 | | |
| 358 | | |
| (1,396 | ) |
Income tax expenses | |
| 6,087 | | |
| 3,811 | | |
| 2,259 | | |
| 1,886 | | |
| 14,043 | |
Net income | |
| 14,084 | | |
| (10,202 | ) | |
| 14,937 | | |
| 2,281 | | |
| 21,100 | |
Net income (loss) attributable to equity holders of the Company | |
| 10,169 | | |
| (1,712 | ) | |
| 11,916 | | |
| 235 | | |
| 20,608 | |
Basic earnings (loss) per share | |
| 0.06 | | |
| (0.01 | ) | |
| 0.07 | | |
| 0.00 | | |
| 0.12 | |
Diluted earnings (loss) per share | |
| 0.06 | | |
| (0.01 | ) | |
| 0.07 | | |
| 0.00 | | |
| 0.12 | |
Cash dividend declared | |
| 2,216 | | |
| - | | |
| 2,209 | | |
| - | | |
| 4,425 | |
Cash dividend declared per share | |
| 0.0125 | | |
| - | | |
| 0.0125 | | |
| - | | |
| 0.025 | |
Other financial information | |
| | | |
| | | |
| | | |
| | | |
| | |
Total assets | |
| | | |
| | | |
| | | |
| | | |
| 676,799 | |
Total liabilities | |
| | | |
| | | |
| | | |
| | | |
| 96,968 | |
Total attributable shareholders’ equity | |
| | | |
| | | |
| | | |
| | | |
| 489,053 | |
| Management’s Discussion and Analysis | Page 15 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
Fiscal 2022 | |
Quarter Ended | | |
Year Ended | |
(In thousands of USD, other than per share amounts) | |
Jun 30, 2021 | | |
Sep 30, 2021 | | |
Dec 31, 2021 | | |
Mar 31, 2022 | | |
Mar 31, 2022 | |
Revenue | |
$ | 58,819 | | |
$ | 58,435 | | |
$ | 59,079 | | |
$ | 41,590 | | |
$ | 217,923 | |
Cost of mine operations | |
| 33,315 | | |
| 34,823 | | |
| 37,603 | | |
| 27,881 | | |
| 133,622 | |
Income from mine operations | |
| 25,504 | | |
| 23,612 | | |
| 21,476 | | |
| 13,709 | | |
| 84,301 | |
Corporate general and administrative expenses | |
| 3,838 | | |
| 3,749 | | |
| 3,310 | | |
| 3,284 | | |
| 14,181 | |
Foreign exchange loss (gain) | |
| 450 | | |
| (2,063 | ) | |
| (1,813 | ) | |
| 3,159 | | |
| (267 | ) |
Share of loss in associates | |
| 396 | | |
| 469 | | |
| 403 | | |
| 920 | | |
| 2,188 | |
Loss (gain) on equity investments | |
| 722 | | |
| 3,365 | | |
| (1,101 | ) | |
| 499 | | |
| 3,485 | |
Other items | |
| 314 | | |
| 460 | | |
| 1,481 | | |
| (106 | ) | |
| 2,149 | |
Income from operations | |
| 19,784 | | |
| 17,632 | | |
| 19,196 | | |
| 5,953 | | |
| 62,565 | |
Finance items | |
| (1,265 | ) | |
| (481 | ) | |
| 8,171 | | |
| (932 | ) | |
| 5,493 | |
Income tax expenses (recovery) | |
| 4,817 | | |
| 5,355 | | |
| 3,093 | | |
| 523 | | |
| 13,788 | |
Net income | |
| 16,232 | | |
| 12,758 | | |
| 7,932 | | |
| 6,362 | | |
| 43,284 | |
Net income attributable to equity holders of the Company | |
| 12,212 | | |
| 9,393 | | |
| 5,063 | | |
| 3,966 | | |
| 30,634 | |
Basic earnings per share | |
| 0.07 | | |
| 0.05 | | |
| 0.03 | | |
| 0.02 | | |
| 0.17 | |
Diluted earnings per share | |
| 0.07 | | |
| 0.05 | | |
| 0.03 | | |
| 0.02 | | |
| 0.17 | |
Cash dividend declared | |
| 2,202 | | |
| - | | |
| 2,211 | | |
| - | | |
| 4,413 | |
Cash dividend declared per share | |
| 0.0125 | | |
| - | | |
| 0.0125 | | |
| - | | |
| 0.025 | |
Other financial information | |
| | | |
| | | |
| | | |
| | | |
| | |
Total assets | |
| | | |
| | | |
| | | |
| | | |
| 723,538 | |
Total liabilities | |
| | | |
| | | |
| | | |
| | | |
| 103,424 | |
Total attributable shareholders’ equity | |
| | | |
| | | |
| | | |
| | | |
| 512,396 | |
| (b) | Overview of Q3 Fiscal 2024 Financial Results |
Net income attributable to equity shareholders
of the Company in Q3 Fiscal 2024 was $10.5 million or $0.06 per share, compared to net income of $11.9 million or $0.07 per share
in Q3 Fiscal 2023.
Compared to Q3 Fiscal 2023, the Company’s
consolidated financial results in the current quarter were mainly impacted by i) increases of 11%, 17%, and 2%, respectively, in the realized
selling prices for gold, silver, and lead, and a decrease of 15% in the realized selling price for zinc; ii) increases of 22% and 3%,
respectively in gold and zinc sold and decreases of 8% and 16%, respectively, in silver and lead sold; iii) a decrease of 4% in per tonne
production costs; iv) an improvement of $4.4 million in mark-to-market investments; and v) an increase of $5.0 million in the share of
loss in associates.
Revenue in Q3 Fiscal 2024 was $58.5 million,
a slight decrease compared to $58.7 million in Q3 Fiscal 2023. The decrease is mainly due to a decrease of $5.8 million arising from the
decrease in silver and lead sold and a decrease of $1.0 million arising from a lower zinc price, offset by an increase of $6.2 million
arising from higher gold, silver and lead prices.
The following table summarizes the metals sold,
net realized selling price and revenue achieved for each metal.
| |
Three months ended December 31, 2023 | | |
Three months ended December 31, 2022 | |
| |
Ying Mining
District | | |
GC | | |
Consolidated | | |
Ying Mining
District | | |
GC | | |
Consolidated | |
Metal Sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold (ounces) | |
| 1,342 | | |
| - | | |
| 1,342 | | |
| 1,100 | | |
| - | | |
| 1,100 | |
Silver (in thousands of ounces) | |
| 1,536 | | |
| 167 | | |
| 1,703 | | |
| 1,675 | | |
| 185 | | |
| 1,860 | |
Lead (in thousands of pounds) | |
| 14,194 | | |
| 2,054 | | |
| 16,248 | | |
| 16,969 | | |
| 2,304 | | |
| 19,273 | |
Zinc (in thousands of pounds) | |
| 2,215 | | |
| 5,105 | | |
| 7,320 | | |
| 2,143 | | |
| 4,976 | | |
| 7,119 | |
Revenue | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold (in thousands of $) | |
| 2,305 | | |
| - | | |
| 2,305 | | |
| 1,695 | | |
| - | | |
| 1,695 | |
Silver (in thousands of $) | |
| 31,700 | | |
| 2,605 | | |
| 34,305 | | |
| 29,403 | | |
| 2,514 | | |
| 31,917 | |
Lead (in thousands of $) | |
| 12,429 | | |
| 1,782 | | |
| 14,211 | | |
| 14,401 | | |
| 1,944 | | |
| 16,345 | |
Zinc (in thousands of $) | |
| 1,881 | | |
| 4,155 | | |
| 6,036 | | |
| 2,182 | | |
| 4,639 | | |
| 6,821 | |
Other (in thousands of $) | |
| 1,112 | | |
| 539 | | |
| 1,651 | | |
| 1,127 | | |
| 746 | | |
| 1,873 | |
| |
| 49,427 | | |
| 9,081 | | |
| 58,508 | | |
| 48,808 | | |
| 9,843 | | |
| 58,651 | |
Average Selling Price, Net of Value Added Tax and Smelter Charges | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold ($ per ounce) | |
| 1,718 | | |
| - | | |
| 1,718 | | |
| 1,541 | | |
| - | | |
| 1,541 | |
Silver ($ per ounce) | |
| 20.64 | | |
| 15.60 | | |
| 20.14 | | |
| 17.55 | | |
| 13.59 | | |
| 17.17 | |
Lead ($ per pound) | |
| 0.88 | | |
| 0.87 | | |
| 0.87 | | |
| 0.85 | | |
| 0.84 | | |
| 0.85 | |
Zinc ($ per pound) | |
| 0.85 | | |
| 0.81 | | |
| 0.82 | | |
| 1.02 | | |
| 0.93 | | |
| 0.96 | |
| Management’s Discussion and Analysis | Page 16 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
The net realized selling price is calculated using
the Shanghai Metal Exchange (“SME”) price, less smelter charges, recovery, and value added tax (“VAT”). The metal
prices quoted on SME, excluding gold, include VAT. The following table is a comparison among the Company’s net realized selling
prices, prices quoted on SME, and prices quoted on London Metal Exchange (“LME”):
| |
Silver (in US$/ounce) | | |
Gold (in US$/ounce) | | |
Lead (in US$/pound) | | |
Zinc (in US$/pound) | |
| |
Q3 F2024 | | |
Q3 F2023 | | |
Q3 F2024 | | |
Q3 F2023 | | |
Q3 F2024 | | |
Q3 F2023 | | |
Q3 F2024 | | |
Q3 F2023 | |
Net realized selling prices | |
$ | 20.14 | | |
$ | 17.17 | | |
$ | 1,718 | | |
$ | 1,541 | | |
$ | 0.87 | | |
$ | 0.85 | | |
$ | 0.82 | | |
$ | 0.96 | |
SME | |
$ | 25.26 | | |
$ | 21.28 | | |
$ | 2,028 | | |
$ | 1,753 | | |
$ | 1.01 | | |
$ | 0.98 | | |
$ | 1.33 | | |
$ | 1.57 | |
LME | |
$ | 23.22 | | |
$ | 21.08 | | |
$ | 1,977 | | |
$ | 1,726 | | |
$ | 0.96 | | |
$ | 0.95 | | |
$ | 1.14 | | |
$ | 1.36 | |
Costs of mine operations in Q3 Fiscal 2024
were $35.2 million, down 5% compared to $36.9 million in Q3 Fiscal 2023. Items included in costs of mine operations are as follows:
| |
Q3 Fiscal 2024 | | |
Q3 Fiscal 2023 | | |
Change | |
Production costs | |
$ | 22,566 | | |
$ | 24,603 | | |
| -8 | % |
Depreciation and amortization | |
| 7,382 | | |
| 7,599 | | |
| -3 | % |
Mineral resource taxes | |
| 1,372 | | |
| 1,438 | | |
| -5 | % |
Government fees and other taxes | |
| 808 | | |
| 633 | | |
| 28 | % |
General and administrative | |
| 3,073 | | |
| 2,634 | | |
| 17 | % |
| |
$ | 35,201 | | |
| 36,907 | | |
| -5 | % |
Production costs expensed in Q3 Fiscal 2024 were
$22.6 million, down 8% compared to $24.6 million in Q3 Fiscal 2023. The decrease was mainly due to less metals sold and a decrease of
4% in per tonne production costs. The production costs expensed represent approximately 304,000 tonnes of ore processed expensed at $74.26
per tonne, compared to approximately 316,500 tonnes of ore processed expensed at $77.73 per tonne in Q3 Fiscal 2023.
The decrease in the mineral resource taxes was
mainly due to lower revenue achieved in Q3 Fiscal 2024. Government fees and other taxes are comprised of environmental protection fees,
surtaxes on VAT, land usage levies, stamp duties and other miscellaneous levies, duties and taxes imposed by the state and local Chinese
governments.
Mine general and administrative expenses for the
mine operations in Q3 Fiscal 2024 were $3.1 million, comparable to $2.6 million in Q3 Fiscal 2023. Items included in general and administrative
expenses for the mine operations are as follows:
| |
Q3 Fiscal 2024 | | |
Q3 Fiscal 2023 | | |
Change | |
Amortization and depreciation | |
$ | 290 | | |
$ | 285 | | |
| 2 | % |
Office and administrative expenses | |
| 887 | | |
| 652 | | |
| 36 | % |
Professional Fees | |
| 251 | | |
| 97 | | |
| 159 | % |
Salaries and benefits | |
| 1,645 | | |
| 1,600 | | |
| 3 | % |
| |
$ | 3,073 | | |
$ | 2,634 | | |
| 17 | % |
Income from mine operations in Q3 Fiscal
2024 was $23.3 million, up 7% compared to $21.7 million in Q3 Fiscal 2023. Income from mine operations at the Ying Mining District was
$21.5 million, compared to $19.0 million in Q3 Fiscal 2023. Income from mine operations at the GC Mine was $1.9 million, compared to
income of $2.9 million in Q3 Fiscal 2023.
| Management’s Discussion and Analysis | Page 17 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
Corporate general and administrative expenses
in Q3 Fiscal 2024 were $3.2 million, up 0% compared to $3.2 million in Q3 Fiscal 2023. The increase was mainly due to the increase in
salaries and benefits arising from more manpower employed and pay rate adjustments, offset by the decreases in share-based compensation
expenses and office and administrative expenses. Items included in corporate general and administrative expenses are as follows:
| |
Q3 Fiscal 2024 | | |
Q3 Fiscal 2023 | | |
Change | |
Amortization and depreciation | |
$ | 146 | | |
$ | 139 | | |
| 5 | % |
Office and administrative expenses | |
| 362 | | |
| 511 | | |
| -29 | % |
Professional Fees | |
| 307 | | |
| 239 | | |
| 28 | % |
Salaries and benefits | |
| 1,648 | | |
| 1,441 | | |
| 14 | % |
Share-based compensation | |
| 765 | | |
| 841 | | |
| -9 | % |
| |
$ | 3,228 | | |
$ | 3,171 | | |
| 2 | % |
Foreign exchange loss in Q3 Fiscal 2024
was $0.7 million compared to $0.9 million in Q3 Fiscal 2023. The foreign exchange gain or loss is mainly driven by the exchange rates
of the US dollar and the Australian dollar against the Canadian dollar.
Gain on investments in Q3 Fiscal 2024 was
$6.2 million, an increase of $3.2 million compared to $3.0 million in Q3 Fiscal 2023. The gain was mainly due to the changes in value
of mark-to-market investments.
Share of loss in associates in Q3 Fiscal
2024 was $5.7 million, compared to $0.7 million in Q3 Fiscal 2023. Share of loss in an associate represents the Company’s equity
pickup in NUAG and TIN.
Finance income in Q3 Fiscal 2024 was $1.6
million compared to $0.6 million in Q3 Fiscal 2023. The Company invests in short-term investments which include term deposits, money market
instruments, and bonds.
Finance costs in Q3 Fiscal 2024 was $0.1
million compared to $0.7 million in Q3 Fiscal 2023. The finance costs primarily comprised of the following:
| |
Q3 Fiscal 2024 | | |
Q3 Fiscal 2023 | |
Interest on lease obligation | |
$ | 5 | | |
$ | 9 | |
Unwinding of discount of environmental rehabilitation provision | |
| 46 | | |
| 58 | |
Impairment charges against debt investment | |
| - | | |
| 501 | |
Loss on disposal of bonds | |
| - | | |
| 93 | |
| |
$ | 51 | | |
$ | 661 | |
Income tax expenses in Q3 Fiscal 2024 were
$5.1 million, up 127% compared to $2.3 million in Q3 Fiscal 2023. The increase is mainly due to the increase in taxable income from mine
operations and the withholding tax paid on funds distributed out of China through dividend payments. The income tax expense recorded in
Q3 Fiscal 2024 included a current income tax expense of $3.8 million (Q3 Fiscal 2023 - $1.2 million) and a deferred income tax expense
of $1.3 million (Q3 Fiscal 2023 - $1.1 million). The current income tax expenses in Q3 Fiscal 2024 included withholding tax expenses of
$1.1 million (Q3 Fiscal 2023- $nil), which were paid at a rate of 10% on dividends distributed out of China.
| (c) | Overview of the Financial Results for the nine months ended December 31, 2023 |
Net income attributable to equity shareholders
of the Company for the nine months ended December 31, 2023 was $32.1 million or $0.18 per share, compared to net income of $20.4 million
or $0.12 per share in the same prior year period.
Compared to the same prior year period, the Company’s
consolidated financial results for the nine months ended December 31, 2023 were mainly impacted by i) an increase of 57% in gold sold,
and decreases of 8%, 12% and 6%, respectively, in silver, lead and zinc sold; ii) increases of 19% and 17%, respectively, in the realized
selling price for gold and silver, and decreases of 1% and 26%, respectively, in the realized selling prices for lead and zinc; iii) a
decrease of $6.7 million in foreign exchange gain; iv) an improvement of $8.0 million in mark-to-market investments, v) an increase of
$4.8 million in the share loss in associate, and vi) $nil impairment charge versus a $20.2 million impairment charge against the mineral
rights and properties in the same prior year period.
| Management’s Discussion and Analysis | Page 18 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
Revenue for the nine months ended December
31, 2023 was $172.5 million, down 1% compared to $174.0 million in the same prior year period. The decrease is mainly due to a decrease
of $16.0 million arising from the decreases in silver, lead and zinc sold and a decrease of $5.8 million arising from lower lead and zinc
price, offset by an increase of $3.4 million arising from the increase in gold sold and an increase of $16.7 million arising from higher
gold and silver prices. The following table summarizes the metals sold, net realized selling price and revenue achieved for each metal.
| |
Nine months ended December 31, 2023 | | |
Nine months ended December 31, 2022 | |
| |
Ying Mining
District | | |
GC | | |
Consolidated | | |
Ying Mining
District | | |
GC | | |
Consolidated | |
Metal Sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold (ounces) | |
| 5,352 | | |
| - | | |
| 5,352 | | |
| 3,400 | | |
| - | | |
| 3,400 | |
Silver (in thousands of ounces) | |
| 4,665 | | |
| 431 | | |
| 5,096 | | |
| 5,083 | | |
| 481 | | |
| 5,564 | |
Lead (in thousands of pounds) | |
| 43,471 | | |
| 5,282 | | |
| 48,753 | | |
| 49,316 | | |
| 6,350 | | |
| 55,666 | |
Zinc (in thousands of pounds) | |
| 6,510 | | |
| 12,308 | | |
| 18,818 | | |
| 6,060 | | |
| 13,927 | | |
| 19,987 | |
Revenue | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold (in thousands of $) | |
| 9,385 | | |
| - | | |
| 9,385 | | |
| 5,027 | | |
| - | | |
| 5,027 | |
Silver (in thousands of $) | |
| 94,051 | | |
| 6,559 | | |
| 100,610 | | |
| 87,793 | | |
| 6,288 | | |
| 94,081 | |
Lead (in thousands of $) | |
| 37,433 | | |
| 4,500 | | |
| 41,933 | | |
| 42,730 | | |
| 5,430 | | |
| 48,160 | |
Zinc (in thousands of $) | |
| 5,408 | | |
| 9,902 | | |
| 15,310 | | |
| 6,849 | | |
| 14,892 | | |
| 21,741 | |
Other (in thousands of $) | |
| 3,565 | | |
| 1,703 | | |
| 5,268 | | |
| 3,330 | | |
| 1,643 | | |
| 4,973 | |
| |
| 149,842 | | |
| 22,664 | | |
| 172,506 | | |
| 145,729 | | |
| 28,253 | | |
| 173,982 | |
Average Selling Price, Net of Value Added Tax and Smelter Charges | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold ($ per ounce) | |
| 1,754 | | |
| - | | |
| 1,754 | | |
| 1,479 | | |
| - | | |
| 1,479 | |
Silver ($ per ounce) | |
| 20.16 | | |
| 15.22 | | |
| 19.74 | | |
| 17.27 | | |
| 13.07 | | |
| 16.91 | |
Lead ($ per pound) | |
| 0.86 | | |
| 0.85 | | |
| 0.86 | | |
| 0.87 | | |
| 0.86 | | |
| 0.87 | |
Zinc ($ per pound) | |
| 0.83 | | |
| 0.80 | | |
| 0.81 | | |
| 1.13 | | |
| 1.07 | | |
| 1.09 | |
Costs of mine operations for the nine months
ended December 31, 2023 were $105.0 million, down 7% compared to $113.0 million in the same prior year period. Items included in costs
of mine operations are as follows:
| |
Nine months ended December 31, | |
| |
2023 | | |
2022 | | |
Change | |
Production costs | |
$ | 68,132 | | |
$ | 76,145 | | |
| -11 | % |
Depreciation and amortization | |
| 21,560 | | |
| 22,511 | | |
| -4 | % |
Mineral resource taxes | |
| 4,335 | | |
| 4,286 | | |
| 1 | % |
Government fees and other taxes | |
| 2,216 | | |
| 1,973 | | |
| 12 | % |
General and administrative | |
| 8,712 | | |
| 8,060 | | |
| 8 | % |
| |
$ | 104,955 | | |
| 112,975 | | |
| -7 | % |
Production costs expensed for the nine months
ended December 31, 2023 were $68.1 million, down 11% compared to $76.1 million in the same prior year period. The decrease was mainly
due to less metals sold and a decrease of 6% in per tonne production costs. The production costs expensed represent approximately 878,000
tonnes of ore processed and expensed at $77.57 per tonne, compared to approximately 925,800 tonnes of ore processed and expensed at $82.25
per tonne in the same prior year period.
Mine general and administrative expenses for the
mine operations for the nine months ended December 31, 2023 were $8.7 million, up 8% compared to $8.1 million in the same prior year period.
Items included in general and administrative expenses for the mine operations are as follows:
| |
Nine months ended December 31, | |
| |
2023 | | |
2022 | | |
Change | |
Amortization and depreciation | |
$ | 831 | | |
$ | 903 | | |
| -8 | % |
Office and administrative expenses | |
| 2,435 | | |
| 2,038 | | |
| 19 | % |
Professional Fees | |
| 478 | | |
| 330 | | |
| 45 | % |
Salaries and benefits | |
| 4,968 | | |
| 4,789 | | |
| 4 | % |
| |
$ | 8,712 | | |
$ | 8,060 | | |
| 8 | % |
Income from mine operations for the nine
months ended December 31, 2023 was $67.6 million, up 11% compared to $61.0 million in the same prior year period. Income from mine operations
at the Ying Mining District was $65.0 million, compared to $53.3 million in the same prior year period. Income from mine operations at
the GC Mine was $2.8 million, compared to $8.0 million in the same prior year period.
| Management’s Discussion and Analysis | Page 19 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
Corporate general and administrative expenses
for the nine months ended December 31, 2023 were $10.7 million, up 5% compared to $10.2 million in the same prior year period. Items included
in corporate general and administrative expenses are as follows:
| |
Nine months ended December 31, | |
| |
2023 | | |
2022 | | |
Change | |
Amortization and depreciation | |
$ | 442 | | |
$ | 430 | | |
| 3 | % |
Office and administrative expenses | |
| 1,419 | | |
| 1,326 | | |
| 7 | % |
Professional Fees | |
| 721 | | |
| 602 | | |
| 20 | % |
Salaries and benefits | |
| 4,604 | | |
| 4,713 | | |
| -2 | % |
Share-based compensation | |
| 3,502 | | |
| 3,133 | | |
| 12 | % |
| |
$ | 10,688 | | |
$ | 10,204 | | |
| 5 | % |
Foreign exchange loss for the nine months
ended December 31, 2023 was $1.6 million compared to a gain of $5.1 million in the same prior year period. The foreign exchange gain or
loss is mainly driven by the exchange rates of the US dollar and the Australian dollar against the Canadian dollar.
Gain on investments for the nine months
ended December 31, 2023 was $6.7 million, compared to a loss of $1.3 million in the same prior year period. The gain or loss was mainly
due to the changes in value of mark-to-market investments.
Share of loss in an associate for the nine
months ended December 31, 2023 was $7.0 million, compared to $2.2 million in the same prior year period. Share of loss in an associate
represents the Company’s equity pickup in NUAG and TIN.
Dilution gain on investment in associate for
the nine months ended December 31, 2023 was $0.7 million, compared to $nil in the same prior year period. As at December 31, 2023, the
Company’s ownership in NUAG was diluted to 27.4% from 28.2% as at March 31, 2023.
Impairment of mineral rights and properties
for the nine months ended December 31, 2023 was $nil million, compared to $20.2 million in the same prior year period. In Q3 Fiscal
2023, the Company decided not to plan further significant work at the Las Yesca Project and an impairment charge of $20.2 was recorded.
Finance income for the nine months ended
December 31, 2023 was $4.8 million compared to $3.0 million in the same prior year period. The Company invests in short-term investments
which include term deposits, money market instruments, and bonds.
Finance costs for the nine months ended
December 31, 2023 was $0.2 million compared to $1.3 million in the same prior year period. The finance costs primarily comprised of the
following:
| |
Nine months ended December 31, | |
| |
2023 | | |
2022 | |
Interest on lease obligation | |
$ | 18 | | |
$ | 35 | |
Unwinding of discount of environmental rehabilitation provision | |
| 147 | | |
| 182 | |
Impairment charges against debt investment | |
| - | | |
| 946 | |
Loss on disposal of bonds | |
| - | | |
| 93 | |
| |
$ | 165 | | |
$ | 1,256 | |
Income tax expenses for the nine months
ended December 31, 2023 were $15.2 million, up 25% compared to $12.2 million in the same prior year period. The income tax expense recorded
for the nine months ended December 31, 2023 included a current income tax expense of $11.2 million (same prior year period - $7.6 million)
and a deferred income tax expense of $4.1 million (same prior year period - $4.5 million). The current income tax expenses for the nine
months ended December 31, 2023 included withholding tax expenses of $3.6 million (same prior year period- $2.6 million), which was paid
at a rate of 10% on dividends distributed out of China.
| Management’s Discussion and Analysis | Page 20 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| 6. | Liquidity, Capital Resources, and Contractual Obligations |
Liquidity
The following tables summarize the Company’s
cash and cash equivalents, short-term investments, and working capital position.
As at | |
December 31,
2023 | | |
March 31,
2023 | | |
Changes | |
Cash and cash equivalents | |
$ | 143,280 | | |
$ | 145,692 | | |
$ | (2,412 | ) |
Short-term investments | |
| 55,015 | | |
| 57,631 | | |
| (2,616 | ) |
| |
$ | 198,295 | | |
$ | 203,323 | | |
$ | (5,028 | ) |
Working capital | |
$ | 159,555 | | |
$ | 177,808 | | |
$ | (18,253 | ) |
Cash, cash equivalents and short-term investments
as at December 31, 2023 were $198.3 million, down 2% or $3.7 million compared to $203.3 million as at March 31, 2023.
Working capital as at December 31, 2023
was $159.6 million, down 10% compared to $177.8 million as at March 31, 2023.
The decrease is mainly due to i) $38.6 million
spent on mineral rights and property development expenditures and $8.7 million on the acquisition of plant and equipment; ii) $23.3 million
investment in other investment and $5.0 million investment in an associate; iii) $4.4 million dividend to shareholders of the Company
and $7.3 million distribution to non-controlling interest partners; offset by iv) $81.3 million cash from operations.
The following table summarizes the Company’s
cash flow for the three and nine months ended December 31, 2023 and 2022.
| |
Three months ended December 31, | | |
Nine months ended December 31, | |
| |
2023 | | |
2022 | | |
Changes | | |
2023 | | |
2022 | | |
Changes | |
Cash flow | |
| | |
| | |
| | |
| | |
| | |
| |
Cash provided by operating activities | |
$ | 23,607 | | |
$ | 25,661 | | |
$ | (2,054 | ) | |
$ | 81,332 | | |
$ | 79,901 | | |
$ | 1,431 | |
Cash provided by (used in) investing activities | |
| 774 | | |
| (24,505 | ) | |
| 25,279 | | |
| (71,406 | ) | |
| 1,802 | | |
| (73,208 | ) |
Cash provided by (used in) financing activities | |
| (2,604 | ) | |
| (2,373 | ) | |
| (231 | ) | |
| (12,767 | ) | |
| (14,260 | ) | |
| 1,493 | |
Increase (decrease) in cash and cash equivalents | |
| 21,777 | | |
| (1,217 | ) | |
| 22,994 | | |
| (2,841 | ) | |
| 67,443 | | |
| (70,284 | ) |
Effect of exchange rate changes on cash and cash equivalents | |
| 2,405 | | |
| 5,688 | | |
| (3,283 | ) | |
| 429 | | |
| (9,904 | ) | |
| 10,333 | |
Cash and cash equivalents, beginning of the period | |
| 119,098 | | |
| 166,370 | | |
| (47,272 | ) | |
| 145,692 | | |
| 113,302 | | |
| 32,390 | |
Cash and cash equivalents, end of the period | |
$ | 143,280 | | |
$ | 170,841 | | |
$ | (27,561 | ) | |
$ | 143,280 | | |
$ | 170,841 | | |
$ | (27,561 | ) |
Cash flow provided by operating activities
in Q3 Fiscal 2024 was $23.6 million, down $2.1 million, compared to $25.7 million in Q3 Fiscal 2023. The increase was due to:
| ● | $23.7 million cash flow from operating activities before changes in non-cash operating working capital,
down $0.3 million, compared to $24.0 million in Q3 Fiscal 2023, and the decrease was mainly due to the increase in income tax payments;
and |
| ● | $0.1 million cash used by the changes in non-cash working capital, compared to $1.7 million provided in
Q3 Fiscal 2023. |
For the nine months ended December 31, 2023, cash
flow provided by operating activities was $81.3 million, up $1.4 million compared to $79.9 million. Before changes in non-cash operating
working capital, cash flow from operating activities was $73.3 million, down $2.8 million compared to $76.1 million for the same prior
year period.
Cash flow provided in investing activities
in Q3 Fiscal 2024 was $0.8 million, compared to $24.5 million cash used in Q3 Fiscal 2023, and comprised mostly of:
| · | $47.6 million proceeds from the redemptions of short-term investments (Q3 Fiscal 2023 - $26.5 million); |
| ● | $0.3 million proceeds from disposal of other investments (Q3 Fiscal 2023 - $0.5 million); |
| ● | $2.9 million refunds from reclamation deposits (Q3 Fiscal 2023 - $nil); offset by, |
| Management’s Discussion and Analysis | Page 21 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| · | $32.0 million spent on investment in short-term investments (Q3 Fiscal 2023 - $32.0 million); |
| ● | $14.6 million spent on mineral exploration and development expenditures (Q3 Fiscal 2023 - $11.5 million); |
| ● | $2.2 million spent to acquire plant and equipment (Q3 Fiscal 2023 - $4.2 million). |
| · | $1.2 million spent on investment in other investments (Q3 Fiscal 2023 - $1.9 million); |
| ● | $nil spent on investment in an associate (Q3 Fiscal 2023 - $1.2 million). |
For the nine months ended December 31, 2023, cash
flow used in investing activities was $71.4 million, compared to $1.8 million provided by the same prior year period, and comprised mostly
of:
| · | $61.5 million spent on investment in short-term investments (same prior year period - $112.3 million); |
| ● | $38.6 million spent on mineral exploration and development expenditures (same prior year period - $34.2
million); |
| ● | $23.3 million spent on the acquisition of other investments (same prior year period - $3.7 million), including
$19.6 million spent on the investment in OreCorp; |
| ● | $5.0 million spent on investment in an associate (same prior year period - $1.9 million); |
| ● | $8.7 million spent to acquire plant and equipment (same prior year period - $10.9 million); offset by, |
| · | $61.1 million proceeds from the redemptions of short-term investments (same prior year period - $164.5
million); |
| ● | $1.1 million proceeds from the disposal of other investments (same prior year period - $0.5 million). |
Cash flow used in financing activities
in Q3 Fiscal 2024 was $2.6 million, compared to $2.4 million cash from financing activities in Q3 Fiscal 2023, and comprised mostly of:
| ● | $0.1 million lease payment (Q3 Fiscal 2023 - $0.2 million); |
| ● | $0.3 million spent to buy back 119,270 common shares of the Company under the Normal Course Issuer Bid
(Q3 Fiscal 2023 - $nil); and |
| ● | $0.1 million in distributions to non-controlling shareholders (Q3 Fiscal 2023 - $nil). |
Cash flow used in financing activities for the
nine months ended December 31, 2023 was $12.8 million, compared to $14.3 million in the same prior year period, and comprised mostly of:
| ● | $0.2 million lease payment (same prior year period - $0.5 million); |
| ● | $7.3 million in distributions to non-controlling shareholders (same prior year period - $7.3 million); |
| ● | $4.4 million cash dividends paid to equity holders of the Company (same prior year period - $4.4 million); |
| ● | $0.8 million spent to buy back 315,824 common shares of the Company under the Normal Course Issuer Bid
(same prior year period - $2.1 million spent to buy back 838,237 common shares). |
Capital Resources
The Company’s objective when managing capital
is to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments for
shareholders. The Company’s strategy to achieve these objectives is to invest its excess cash balance in a portfolio of primarily
fixed income instruments.
The Company monitors its capital structure based
on changes in operations and economic conditions, and may adjust the structure by repurchasing shares, issuing new shares, or issuing
debt. If additional funds are raised through the issuance of equity securities, the percentage ownership of current shareholders will
be reduced, and such equity securities may have rights, preferences or privileges senior to those of the holders of the Company’s
common shares.
| Management’s Discussion and Analysis | Page 22 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
As at December 31, 2023, the Company has cash,
cash equivalents, and short-term investments of $199.6 million and working capital of $160.9 million. The Company’s financial position
at December 31, 2023 and the operating cash flows that are expected over the next 12 months lead the Company to believe that the Company’s
liquid assets are sufficient to satisfy the Company’s Fiscal 2024 working capital requirements, fund currently planned capital expenditures,
and to discharge liabilities as they come due. The Company remains well positioned to take advantage of strategic opportunities as they
become available. Liquidity risks are discussed further in the “Risks and Uncertainties” section of this MD&A. The Company
is not subject to any externally imposed capital requirements.
Contractual Obligation and Commitments
In the normal course of business, the Company
enters into contracts that give rise to commitments for future minimum payments. The following table summarizes the remaining contractual
maturities of the Company’s financial and non-financial liabilities, shown in contractual undiscounted cash flow as at December
31, 2023.
| |
Within a year | | |
2-5 years | | |
Total | |
Accounts payable and accrued liabilities | |
$ | 52,539 | | |
$ | - | | |
$ | 52,539 | |
Deposit received | |
| 4,354 | | |
| - | | |
| 4,354 | |
Lease obligation | |
| 291 | | |
| 121 | | |
| 412 | |
Income tax payable | |
| 1,174 | | |
| - | | |
| 1,174 | |
| |
$ | 58,358 | | |
$ | 121 | | |
$ | 58,479 | |
Subsequent to December 31, 2023, the Company and
TIN entered into an interest-free unsecured credit facility agreement with no conversion features (the “Facility”) to allow
TIN to advance up to $1.0 million from the Company. Upon signing the Facility, the Company advanced $0.5 million to TIN and received 350,000
common shares of TIN as the Bonus Shares for granting the Facility. The Facility has a maturity date of January 31, 2025.
The Company’s customers are required to
make full amount of payment as deposits prior to the shipment of its concentrate inventories, and the customers also have rights to demand
repayment of any unused deposits paid.
As at December 31, 2023, the Company has working
capital of $159.6 million (March 31, 2023 - $177.8 million). The Company believes it has sufficient capital to meet its cash needs for
the next 12 months, including the cost of compliance with continuous reporting requirements.
| 7. | Environmental Rehabilitation Provision |
The estimated future environmental rehabilitation
costs are based principally on the requirements of relevant authorities and the Company’s environmental policies. The provision
is measured using management’s assumptions and estimates for future cash outflows. In view of uncertainties concerning environmental
rehabilitation obligations, the ultimate costs could be materially different from the amounts estimated. The Company accrues these costs,
which are determined by discounting costs using rates specific to the underlying obligation. Upon recognition of a liability for the environmental
rehabilitation costs, the Company capitalizes these costs to the related mine and amortizes such amounts over the life of each mine on
a unit-of-production basis. The accretion of the discount due to the passage of time is recognized as an increase in the liability and
a finance expense.
As at December 31, 2023, the total inflated and
undiscounted amount of estimated cash flows required to settle the Company’s environmental rehabilitation provision was $9.9 million
(March 31, 2023 - $10.2 million) over the next twenty years, which has been discounted using an average discount rate of 2.83% (March
31, 2023 – 2.83%).
The accretion of the discounted charge for the
nine months ended December 31, 2023 was $0.1 million (same prior year period - $0.2 million), and reclamation expenditures incurred for
the nine months ended December 31, 2023 was $0.8 million (same prior year period - $0.6 million).
| Management’s Discussion and Analysis | Page 23 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| 8. | Risks and Uncertainties |
The Company is exposed to a number of risks in
conducting its business, including but not limited to: metal price risk as the Company derives its revenue from the sale of silver, lead,
zinc, and gold; credit risk in the normal course of dealing with other companies and financial institutions; foreign exchange risk as
the Company reports its financial statements in USD whereas the Company operates in jurisdictions that utilize other currencies; equity
price risk and interest rate risk as the Company has investments in marketable securities that are traded in the open market or earn interest
at market rates that are fixed to maturity or at variable interest rates; inherent risk of uncertainties in estimating mineral reserves
and mineral resources; political risks; economic and social risks related to conducting business in foreign jurisdictions such as China,
Mexico, and Tanzania; environmental risks; risks related to its relations with employees and local communities where the Company operates,
and emerging risks relating to the widespread outbreak of epidemics, pandemics, or other health crises, which has to date resulted in
profound health and economic impacts globally and which presents future risks and uncertainties that are largely unknown at this time.
Management and the Board continuously assess risks
that the Company is exposed to and attempt to mitigate these risks where practical through a range of risk management strategies.
These and other risks are described in the Company’s
Annual Information Form, NI 43-101 technical reports, Form 40-F, and annual Audited Consolidated Financial Statements, which are available
on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Readers are encouraged to refer to these documents for a more detailed description
of the risks and uncertainties inherent to Silvercorp’s business.
| (a) | Financial Instruments Risk Exposure |
The Company is exposed to financial risks, including
metal price risk, credit risk, interest rate risk, foreign currency exchange rate risk, and liquidity risk. The Company’s exposures and
management of each of those risks is described in the condensed interim consolidated financial statements for the three and nine months
ended December 31, 2023 under Note 20 “Financial Instruments”, along with the financial statement classification, the significant
assumptions made in determining the fair value, and amounts of income, expenses, gains and losses associated with financial instruments.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect the estimates. The following provides a description of the risks related
to financial instruments and how management manages these risks:
Liquidity risk
Liquidity risk is the risk that the Company will
not be able to meet its financial obligations as they arise. The Company manages liquidity risk by monitoring actual and projected cash
flows and matching the maturity profile of financial assets and liabilities. Cash flow forecasting is performed regularly to ensure that
there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and
our holdings of cash and cash equivalents, and short-term investments.
Foreign exchange risk
The Company reports its financial statements in
US dollars. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is CAD and the functional
currency of all Chinese subsidiaries is RMB. The functional currency of New Infini and its subsidiaries is USD. The Company is exposed
to foreign exchange risk when the Company undertakes transactions and holds assets and liabilities in currencies other than its functional
currencies.
| Management’s Discussion and Analysis | Page 24 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless 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 December 31, 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 | |
$ | 68,539 | | |
$ | 1,403 | | |
$ | 2,654 | | |
$ | (330 | ) | |
$ | 72,266 | | |
$ | 7,227 | |
Australian dollar | |
| 253 | | |
| - | | |
| 32,294 | | |
| - | | |
| 32,547 | | |
| 3,255 | |
| |
$ | 68,792 | | |
$ | 1,403 | | |
$ | 34,948 | | |
$ | (330 | ) | |
$ | 104,813 | | |
$ | 10,482 | |
Interest rate risk
The Company is exposed to interest rate risk on
its cash equivalents and short-term investments. As at December 31, 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.
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 statements of financial position 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, 2023 (at March 31, 2023 - $nil).
Equity price risk
The Company holds certain marketable securities
that will fluctuate in value as a result of trading on Canadian 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, 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 and other comprehensive income of $4.3 million and $0.1 million, respectively.
The Company’s sales price for silver is
fixed against the Shanghai White Platinum & Silver Exchange as quoted at www.ex-silver.com; lead and zinc are fixed against the Shanghai
Metals Exchange as quoted at www.shmet.com; and gold is fixed against the Shanghai Gold Exchange as quoted at www.sge.com.cn.
The Company’s revenues, if any, are expected
to be in large part derived from the mining and sale of silver, lead, zinc, and gold contained in metal concentrates. The prices of those
commodities have fluctuated widely, particularly in recent years, and are affected by numerous factors beyond the Company’s control
including international and regional economic and political conditions; expectations of inflation; currency exchange fluctuations; interest
rates; global or regional supply and demand for jewelry and industrial products containing silver and other metals; sale of silver and
other metals by central banks and other holders, forward selling activities, speculators and producers of silver and other metals; availability
and costs of metal substitutes; and increased production due to new mine developments and improved mining and production methods. The
effects of these factors on the price of base and precious metals, and therefore the viability of the Company’s exploration projects
and mining operations, cannot be accurately predicted and thus the price of base and precious metals may have a significant influence
on the market price of the Company’s shares and the value of its projects.
| Management’s Discussion and Analysis | Page 25 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
If silver and other metal prices were to decline
significantly for an extended period of time, the Company may be unable to continue operations, develop its projects, or fulfil obligations
under agreements with the Company’s joint venture partners or under its permits or licenses.
| (c) | Uncertainty in the Estimation of Mineral Resources and Mineral Reserves, and Metal Recovery |
There is a degree of uncertainty attributable
to the estimation of Mineral Resources, Mineral Reserves, mineralization and corresponding grades being mined or dedicated to future production.
Until Mineral Resources, Mineral Reserves or mineralization are actually mined and processed, the quantity of metals and grades must be
considered as estimates only. The figures for Mineral Reserves and Mineral Resources contained herein are estimates only based on a number
of assumptions, any adverse changes to which could require us to lower our Mineral Resource and Mineral Reserve estimates and no assurance
can be given that the anticipated tonnages and grades will be achieved, that the indicated level of recovery will be realized or that
Mineral Reserves could be mined or processed profitably. Our estimates of economically recoverable reserves are primarily based upon interpretations
of geological models, which make various assumptions, such as assumptions with respect to, prices, costs, regulations, and environmental
and geological factors. These assumptions have a significant effect on the amounts recognized in our technical reports and our financial
statements, and any material difference between these assumptions and actual events may affect the economic viability of our properties
or any project undertaken by us. There are numerous uncertainties inherent in estimating Mineral Reserves and Mineral Resources, including
many factors beyond the Company’s control. Such estimation is a subjective process, and the accuracy of any reserve or resource
estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and
geological interpretation. Short-term operating factors relating to the Mineral Reserves, such as the need for orderly development of
the ore bodies or the processing of new or different ore grades, may cause the mining operation to be unprofitable in any particular accounting
period. Valid estimates made at a given time may significantly change when new information becomes available. Any material change in quantity
of Mineral Resources, Mineral Reserves, mineralization, or grade may affect the economic viability of the Company’s projects. In
addition, there can be no assurance that precious or other metal recoveries in small-scale laboratory tests will be duplicated in larger
scale tests or during production, or that the existing known and experienced recoveries will continue.
Global financial conditions and the global economy
in general have, at various times in the past and may in the future, experience extreme volatility in response to economic shocks or other
events. Many industries, including the mining industry, are impacted by volatile conditions in response to the widespread outbreak of
epidemics, pandemics, or other health crises. Such public health crises and the responses of governments and private actors can result
in disruptions and volatility in economies, financial markets, and global supply chain as well as declining trade and market sentiment
and reduced mobility of people, all of which could impact commodity prices, interest rates, credit ratings, credit risk and inflation.
Any public health crises could materially and
adversely impact the Company’s business, including without limitation, employee health, workforce availability and productivity,
limitations on travel, supply chain disruptions, increased insurance premiums, increased costs and reduced efficiencies, the availability
of industry experts and personnel, restrictions on the Company’s exploration and drilling programs and/or the timing to process
drill and other metallurgical testing and the slowdown or temporary suspension of operations at some or all of the Company’s properties,
resulting in reduced production volumes. Any such disruptions could have adverse effect on the Company’s production, revenue, costs,
and net income.
| Management’s Discussion and Analysis | Page 26 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| (e) | Operations and political conditions |
All the Company’s material operations are
located in China. These operations are subject to the risks normally associated with conducting business in China, which has different
regulatory and legal standards than North America. Some of these risks are more prevalent in countries which are less developed or have
emerging economies, including uncertain political and economic environments, as well as risks of civil disturbances or other risks which
may limit or disrupt a project, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property
by nationalization or expropriation without fair compensation, risk of adverse changes in laws or policies, increases in foreign taxation
or royalty obligations, license fees, permit fees, delays in obtaining or the inability to obtain necessary governmental permits, limitations
on ownership and repatriation of earnings, and foreign exchange controls and currency devaluations, all of which could adversely affect
the Company’s business and financial condition.
In addition, the Company may face import and export
regulations, including export restrictions, disadvantages of competing against companies from countries that are not subject to similar
laws, restrictions on the ability to pay dividends offshore, and risk of loss due to disease and other potential endemic health issues.
Although the Company is not currently experiencing any significant or extraordinary problems in China arising from such risks, there can
be no assurance that such problems will not arise in the future. The Company currently does not carry political risk insurance coverage.
The Company’s interests in its mineral properties
are held through legal entities incorporated under and governed by the laws of China. The non-controlling interest partners in China include
state-sector entities and, like other state-sector entities, their actions and priorities may be dictated by government policies instead
of purely commercial considerations, which could adversely affect the Company’s business and results of operations. Additionally,
companies with a foreign ownership component operating in China may be required to work within a framework which maybe different from
that imposed on domestic Chinese companies, such as the “National Security Review” introduced by China in 2021 for any new
mineral project to be developed by a company with more than 25% foreign investment in share holdings. The Chinese government currently
allows foreign investment in certain mining projects under central government guidelines. There can be no assurance that these guidelines
will not change in the future. Any further such changes may constrain the Company’s future expansion plans and adversely affect
its profitability.
| (f) | Regulatory environment in China |
The Company’s principal mining operations
are in China, and are subject to a range of Chinese laws, regulations, policies, standards and requirements in relation to, among
other things, mine exploration, development, production, taxation, labour standards, occupational health and safety, waste treatment and
environmental protection, and operation management. Any changes to these laws, regulations, policies, standards and requirements or to
the interpretation or enforcement thereof may increase the Company’s operating costs and thus adversely affect the Company’s
results of operations.
The laws of China differ significantly from those
of Canada and all such laws are subject to change. Mining is subject to potential risks and liabilities associated with pollution of the
environment and disposal of waste products occurring as a result of mineral exploration and production.
Failure to comply with applicable laws and regulations
may result in enforcement actions and may also include corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason
of mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws and regulations.
China’s legislation is undergoing a relatively
fast transformation with some old laws superseded by newly enacted laws. New laws and regulations, amendments to existing laws and regulations,
administrative interpretation of existing laws and regulations, or more stringent enforcement of existing laws and regulations could create
risks or uncertainty for investors in mineral projects or have a material adverse impact on future cash flow, results of operations and
the financial condition of the Company.
| Management’s Discussion and Analysis | Page 27 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
In December 2021, Cyberspace Administration of
China (“CAC”) announced the adoption of the Cybersecurity Review Measures, which became effective on February 15, 2022 and
pursuant to which network platform operators possessing personal information of more than one million individual users must undergo a
cybersecurity review by the CAC when they seek a listing on a foreign exchange. The Cybersecurity Review Measures provide that critical
information infrastructure operators purchasing network products and services and network platform operators carrying out data processing
activities, which affect or may affect national security, shall apply for cybersecurity review to the applicable local cyberspace administration
in accordance with the provisions thereunder. The Company and its subsidiaries in China do not carry out business in China through any
self-owned network platform or hold personal information, and the Company currently is not subject to the cybersecurity review. However,
it is uncertain if the Company will be required to apply for the cybersecurity review in the future. If the review is required, it is
uncertain if the Company can fully or timely comply with the Cybersecurity Review Measures and related regulations. Non-compliance could
materially and adversely affect our business, financial condition, and results of operations.
In February 2023, Chinese Security Regulatory
Commission (“CSRC”) issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies
(the “Trial Measures of Overseas Listing”) which have been effective on March 31, 2023. The Trial Measures of Overseas Listing
require that 1) where a domestic company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate
a major domestic operating entity, which shall, as the domestic responsible entity, file with the CSRC; 2) initial public offerings or
listings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas,
and subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall
be filed with the CSRC within 3 working days after the offering is completed; 3) any overseas offering and listing made by an issuer that
meets both the following conditions will be determined as indirect overseas offering and listing: (a) 50% or more of the issuer’s operating
revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting
year is accounted for by domestic companies; and (b) the main parts of the issuer’s business activities are conducted in the Chinese Mainland,
or its main places of business are located in the Chinese Mainland, or the senior managers in charge of its business operation and management
are mostly Chinese citizens or domiciled in the Chinese Mainland. [The underwriters or brokers assisting the issuer with the offering,
if any, must also make certain filings and undertakings with the CSRC.] The determination as to whether or not an overseas offering and
listing by domestic companies is indirect overseas offering and listing, shall be made on a substance over form basis. The Company may
be subject to the Trial Measures of Overseas Listing, meaning that if the Company issues new shares or convertible securities in the future,
the Company [and any underwriter or broker assisting the Company with the offering] may need to make a post issuance filing to the CSRC.
This may increase the regulatory complexity, timing and cost of the Company’s equity financings, and may in practice restrict the
Company’s selection of [underwriters or brokers] for an equity financing. Any further governmental actions to restrict financing
transactions by issuers such as the Company could further limit or hinder our ability to offer securities to investors and cause the value
of our securities to significantly decline.
In addition, on February 24, 2023, CSRC, Ministry
of Finance; National Administration of State Secrets Protection and National Archives Administration of China issued the Provisions on
Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (“Revised
Confidentiality and Archives Administration Provisions”) which became effective on March 31, 2023. The Revised Confidentiality and
Archives Administration Provisions require that in the overseas issuance and listing activities of domestic enterprises, the securities
companies and securities service providers that undertake relevant businesses shall strictly abide by applicable laws and regulations
of China and the Revised Confidentiality and Archives Administration Provisions, enhance legal awareness of keeping state secrets and
strengthening archives administration, institute a sound confidentiality and archives administration system, take necessary measures to
fulfill confidentiality and archives administration obligations, and shall not leak any state secret and working secret of government
agencies, or harm national security and public interest. Failure to comply with the Revised Confidentiality and Archives Administration
Provisions may have negative impact on the Company’s financing activities as CSRC may not accept our filing and may also expose
management to legal liabilities in China.
| Management’s Discussion and Analysis | Page 28 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
In addition, China has further strengthened its
national security review of foreign investment. The measures will continue to create an additional layer of uncertainty with respect to
foreign investment. Investment plans, timetables, terms and conditions for closing for investment must take into account the timing and
contingency of obtaining approval from the national security review process.
Although the Company seeks to comply with all
new Chinese laws, regulations, policies, standards and requirements applicable to the mining industry or all changes in existing laws,
regulations, policies, standards and requirements, the Company may not be able to comply with them economically or at all. Furthermore,
any such new Chinese laws, regulations, policies, standards and requirements or any such change in existing laws, regulations, policies,
standards and requirements may also constrain the Company’s future expansion plans and adversely affect its profitability.
All mineral resources and mineral reserves of
the Company’s subsidiaries are owned by their respective governments. Mineral exploration and mining activities in China may only
be conducted by entities that have obtained or renewed exploration or mining permits and licenses in accordance with the relevant mining
laws and regulations. Under the Chinese laws and regulations, if there are residual reserves in a property when the mining permit in respect
of such property expires, the holder of the expiring mining permit will be entitled to apply for an extension for an additional term.
The Company believes that there will be no material substantive obstacle in renewing such permits. Nevertheless, there can be no assurance
as to whether the current relevant Chinese laws and regulations, as well as the current mining industry policy, will remain unchanged
at the time of the extension application of such permits, nor can there be any assurance that the competent authorities will not use their
discretion to deny or delay the renewal or the extension of relevant mining permits due to factors outside the Company’s control.
Therefore, there can be no assurance that the Company will successfully renew its mining permits on favourable terms, or at all, once
such permits expire.
Any failure to obtain or any delay in obtaining
or retaining any required governmental approvals, permits or licenses could subject the Company to a variety of administrative penalties
or other government actions and adversely impact the Company’s business operations. The relevant state and provincial authorities
in China do not allow exploration permit renewal applications to be submitted earlier than 30 days before the permit expiration date and
a delay of 2 to 3 months for permit application processing times is not uncommon. The relevant state and provincial authorities in China
do not issue formal documentation to guarantee permit renewal while processing renewal applications. If any administrative penalties and
other government actions are imposed on or taken against the Company due to the Company’s failure to obtain, or delay in obtaining
or retaining, any required governmental approvals, permits or licenses, the Company’s business, financial condition and results
of operations could be materially and adversely affected.
No guarantee can be given that the necessary exploration
and mining permits and licenses will be issued to the Company or, if they are issued, that they will be renewed, or if renewed under reasonable
operational and/or financial terms, or in a timely manner, or that the Company will be in a position to comply with all conditions that
are imposed.
The validity of mining or exploration titles or
claims or rights, which constitute most of our property holdings, can be uncertain and may be contested. Our properties may be subject
to prior unregistered liens, agreements or transfers, indigenous land claims, or undetected title defects. In some cases, we do not own
or hold rights to the mineral concessions we mine. We have not conducted surveys of all the claims in which we hold direct or indirect
interests and therefore, the precise area and location of such claims may be in doubt. No assurance can be given that applicable governments
will not revoke or significantly alter the conditions of the applicable exploration and mining titles or claims, or that such exploration
and mining titles or claims will not be challenged or impugned by third parties.
We may be unable to operate our properties as
expected, or to enforce our rights to our properties. Any defects in title to our properties, or the revocation of our rights to mine,
could have a material adverse effect on our operations and financial condition.
| Management’s Discussion and Analysis | Page 29 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
We operate in countries with developing mining
laws, and changes in such laws could materially impact our rights or interests to our properties. We are also subject to expropriation
risk, including the risk of expropriation or extinguishment of property rights based on a perceived lack of development or advancement.
Expropriation, extinguishment of rights and any other such similar governmental actions would likely have a material adverse effect on
our operations and profitability.
In the jurisdictions in which we operate, legal
rights applicable to mining concessions are different and separate from legal rights applicable to surface lands. Accordingly, title holders
of mining concessions in many jurisdictions must agree with surface landowners on compensation in respect of mining activities conducted
on such land. We do not hold title to all of the surface lands at many of our operations and rely on contracts or other similar rights
to conduct surface activities.
Title insurance is generally not available for
mineral properties in China and the Company’s ability to ensure that it has obtained secure claims to individual mineral properties
or mining concessions may be severely constrained. Accordingly, the Company may have little or no recourse as a result of any successful
challenge to title to any of its properties. The Company’s properties may be subject to prior unregistered liens, agreements or
transfers, land claims or undetected title defects which may have a material adverse effect on the Company’s ability to develop
or exploit the properties.
| (i) | Environmental and safety risks |
The Company’s activities are subject to
extensive laws and regulations governing environmental protection and employee health and safety, including environmental laws and regulations
in China. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection
of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. The Company’s
Chinese subsidiaries are required to have been issued environmental permits and safety production permits with various expiration dates.
These permits are also subject to periodic inspection by government authorities. Failure to pass the inspections may result in penalties.
No guarantee can be given that the necessary permits will be issued to the Company or, if they are issued, that they will be renewed,
or if renewed under reasonable operational and/or financial terms, or in a timely manner, or that the Company will be in a position to
comply with all conditions that are imposed.
Nearly all mining projects require government
approval and permits relating to environmental, social, land and water usage, community matters, and other matters.
There are also laws and regulations prescribing
reclamation activities on some mining properties. Environmental legislation in many countries, including China, is evolving and the trend
has been toward stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments
of proposed projects and increasing responsibility for companies and their officers, directors and employees. Compliance with environmental
laws and regulations may require significant capital outlays on behalf of the Company and may cause material changes or delays in the
Company’s intended activities. There can be no assurance that the Company has been or will be at all times in complete compliance
with current and future environmental, and health and safety laws, and the status of permits will not materially adversely affect the
Company’s business, results of operations or financial condition. It is possible that future changes in these laws or regulations
could have a significant adverse impact on some portion of the Company’s business, causing the Company to re-evaluate those activities
at that time. The Company’s compliance with environmental laws and regulations entails uncertain costs.
| Management’s Discussion and Analysis | Page 30 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| (j) | Risks and hazards of mining operations |
Mining is inherently dangerous and the Company’s
operations are subject to a number of risks and hazards including, without limitation: environmental hazards; discharge of pollutants
or hazardous chemicals; industrial accidents; failure of processing and mining equipment; labour disputes; supply problems and delays;
encountering unusual or unexpected geologic formations or other geological or grade problems; encountering unanticipated ground or water
conditions; cave-ins, pit wall failures, flooding, rock bursts and fire; periodic interruptions due to inclement or hazardous weather
conditions; equipment breakdown; other unanticipated difficulties or interruptions in development, construction or production; other acts
of God or unfavourable operating conditions; and health and safety risks associated with spread of COVID-19 pandemic, and any future emergence
and spread of similar pathogens.
Such risks could result in damage to, or destruction
of, mineral properties or processing facilities, personal injury or death, loss of key employees, environmental damage, delays in mining,
monetary losses and possible legal liability. Satisfying such liabilities may be very costly and could have a material adverse effect
on the Company’s future cash flow, results of operations and financial condition.
The Company is subject to cybersecurity risks
including unauthorized access to privileged information, destroying data or disable, degrade, or sabotage our systems, including through
the introduction of computer viruses. Although we take steps to secure our configurations and manage our information system, including
our computer systems, internet sites, emails and other telecommunications, and financial/geological data, there can be no assurance that
measures we take to ensure the integrity of our systems will provide protection, especially because cyberattack techniques used change
frequently or are not recognized until successful. The Company has not experienced any material cybersecurity incident in the past, but
there can be no assurance that the Company will not experience a material cybersecurity incident in the future. If our systems are compromised,
do not operate properly or are disable, we could suffer financial loss, disruption of business, loss of geology data which could affect
our ability to conduct effective mine planning and accurate mineral resources estimates, loss of financial data which could affect our
ability to provide accurate and timely financial reporting.
There is significant evidence of the effects of
climate change on our planet and an intensifying focus on addressing these issues. The Company recognizes that climate change is a global
challenge that may have both favorable and adverse effects on our business in a range of possible ways. Mining and processing operations
are energy intensive and result in a carbon footprint either directly or through the purchase of fossil-fuel based electricity. As such,
the Company is impacted by current and emerging policy and regulation relating to greenhouse gas emission levels, energy efficiency, and
reporting of climate-change related risks. While some of the costs associated with reducing emissions may be offset by increased energy
efficiency, technological innovation, or the increased demand for our metals as part of technological innovations, the current regulatory
trend may result in additional transition costs at some of our operations. Governments are introducing climate change legislation and
treaties at the international, national, and local levels, and regulations relating to emission levels and energy efficiency are evolving
and becoming more rigorous. Current laws and regulatory requirements are not consistent across the jurisdictions in which we operate,
and regulatory uncertainty is likely to result in additional complexity and cost in our compliance efforts. Public perception of mining
is, in some respects, negative and there is increasing pressure to curtail mining in many jurisdictions as a result, in part, of perceived
adverse effects of mining on the environment.
Concerns around climate change may also affect
the market price of our shares as institutional investors and others may divest interests in industries that are thought to have more
environmental impacts. While we are committed to operating responsibly and reducing the negative effects of our operations on the environment,
our ability to reduce emissions, energy and water usage by increasing efficiency and by adopting new innovation is constrained by technological
advancement, operational factors and economics. Adoption of new technologies, the use of renewable energy, and infrastructure and operational
changes necessary to reduce water usage may also increase our costs significantly. Concerns over climate change, and our ability to respond
to regulatory requirements and societal pressures, may have significant impacts on our operations and on our reputation, and may even
result in reduced demand for our products.
| Management’s Discussion and Analysis | Page 31 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
The physical risks of climate change could also
adversely impact our operations. These risks include, among other things, extreme weather events, resource shortages, changes in rainfall
and in storm patterns and intensities, water shortages, changing sea levels and extreme temperatures. Climate-related events such as mudslides,
floods, droughts and fires can have significant impacts, directly and indirectly, on our operations and could result in damage to our
facilities, disruptions in accessing our sites with labour and essential materials or in shipping products from our mines, risks to the
safety and security of our personnel and to communities, shortages of required supplies such as fuel and chemicals, inability to source
enough water to supply our operations, and the temporary or permanent cessation of one or more of our operations. There is no assurance
that we will be able to anticipate, respond to, or manage the risks associated with physical climate change events and impacts, and this
may result in material adverse consequences to our business and to our financial results.
| (m) | Claims and Legal Proceeding Risks |
The Company is subject to various claims and legal
proceedings covering a wide range of matters that arise in the ordinary course of business activities. Each of these matters is subject
to various uncertainties and it is possible that some of these other matters may be resolved in a manner that is unfavourable to the Company
which may result in a material adverse impact on the Company’s financial performance, cash flow or results of operations. The Company
carries liability insurance coverage and establishes provisions for matters that are probable and can be reasonably estimated, however
there can be no guarantee that the amount of such coverage is sufficient to protect against all potential liabilities. In addition, the
Company may in the future be subjected to regulatory investigations or other proceedings and may be involved in disputes with other parties
in the future which may result in a significant impact on our financial condition, cash flow and results of operations.
| 9. | Off-Balance Sheet Arrangements |
The Company does not have any off-balance sheet
arrangements.
| 10. | Transactions with Related Parties |
Related party transactions are made on terms agreed
upon with the related parties. The balances with related parties are unsecured. Related party transactions not disclosed elsewhere in
this MD&A are as follows:
| |
December 31,
2023 | | |
March 31,
2023 | |
NUAG (a) | |
$ | 125 | | |
$ | 51 | |
TIN (b) | |
| 171 | | |
| 37 | |
| |
$ | 296 | | |
$ | 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 nine months ended December 31, 2023, the Company recovered
$0.2 million and $0.7 million, respectively (three and nine months ended December 31, 2022- $0.2 million and $0.7 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. |
| (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 nine months ended December 31, 2023, the Company recovered
$0.1 million and $0.3 million, respectively (three and nine months ended December 31, 2022- $0.07 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. |
| 11. | Alternative Performance (Non-IFRS) Measures |
The Company uses the following alternative performance
measures to manage and evaluate operating performance of the Company’s mines and are widely reported in the silver mining industry
as benchmarks for performance but are alternative performance (non-IFRS) measures that do not have standardized meaning prescribed by
IFRS and therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, it is intended to provide
additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance
with IFRS. To facilitate a better understanding of these measures, the tables in this section provide the reconciliation of these measures
to the financial statements for the three and nine months ended December 31, 2023 and 2022:
| Management’s Discussion and Analysis | Page 32 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| (a) | Adjusted Earnings and Adjusted Earnings per Share |
Adjusted earnings and adjusted earnings per share
are non-IFRS measures and supplement information to the Company’s consolidated financial statements. The Company believes that,
in addition to the conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information
to evaluate the Company’s underlying core operating performance. The presentation of adjusted earnings and adjusted earnings per
share is not meant to be a substitute of net income and net income per share presented in accordance with IFRS, but rather should be evaluated
in conjunction with such IFRS measure.
The Company defines the adjusted earnings as net
income adjusted to exclude certain non-cash items, and items that in the Company’s judgment are subject to volatility as a result
of factors which are unrelated to the Company’s operation in the period, and/or relate to items that will settle in future period,
including impairment adjustments and reversal, foreign exchange gain or loss, dilution gain or loss, share-based compensation, share of
gain or loss of associates, and gain or loss on investments. Certain items that become applicable in a period may be adjusted for, with
the Company retroactively presenting comparable periods with an adjustment for such items and, conversely, items no longer applicable
may be removed from the calculation. The following table provides a detailed reconciliation of net income as reported in the Company’s
consolidated financial statements to adjusted earnings and adjusted earning per share.
| |
Three months ended
December 31, | | |
Nine months ended
December 31, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net income (loss) as reported for the period | |
$ | 14,070 | | |
$ | 14,937 | | |
$ | 42,053 | | |
$ | 18,819 | |
Adjustments, net of tax | |
| | | |
| | | |
| | | |
| | |
Share-based compensation included in general and administrative | |
| 765 | | |
| 841 | | |
| 3,502 | | |
| 3,133 | |
Foreign exchange loss (gain) | |
| 701 | | |
| 850 | | |
| 1,614 | | |
| (5,146 | ) |
Share of loss in associates | |
| 5,680 | | |
| 677 | | |
| 7,025 | | |
| 2,176 | |
Loss (gain) on investments | |
| (6,204 | ) | |
| (3,010 | ) | |
| (6,687 | ) | |
| 1,257 | |
Dilution gain on investment in associates | |
| - | | |
| - | | |
| (733 | ) | |
| - | |
Impairment charges to mineral rights and properties | |
| - | | |
| - | | |
| - | | |
| 20,211 | |
Impairment loss on bonds investments included in finance costs | |
| - | | |
| 501 | | |
| - | | |
| 946 | |
Adjusted earnings for the period | |
$ | 15,012 | | |
$ | 14,796 | | |
$ | 46,774 | | |
$ | 41,396 | |
Non-controlling interest as reported | |
| 3,560 | | |
| 3,021 | | |
| 11,276 | | |
| (1,554 | ) |
Adjustments to non-controlling interest | |
| - | | |
| - | | |
| - | | |
| 10,894 | |
Adjusted non-controlling interest | |
| 3,560 | | |
| 3,021 | | |
| 11,276 | | |
| 9,340 | |
Adjusted earnings attributable to equity holders | |
$ | 11,452 | | |
$ | 11,775 | | |
$ | 35,498 | | |
$ | 32,056 | |
Adjusted earnings per share attributable to the equity shareholders of the Company | |
| | | |
| | | |
| | | |
| | |
Basic adjusted earning per share | |
$ | 0.06 | | |
$ | 0.07 | | |
$ | 0.20 | | |
$ | 0.18 | |
Diluted adjusted earning per share | |
$ | 0.06 | | |
$ | 0.07 | | |
$ | 0.20 | | |
$ | 0.18 | |
Basic weighted average shares outstanding | |
| 176,905,791 | | |
| 176,723,433 | | |
| 176,892,354 | | |
| 176,892,860 | |
Diluted weighted average shares outstanding | |
| 179,437,206 | | |
| 178,938,856 | | |
| 179,423,769 | | |
| 179,024,844 | |
Working capital is an alternative performance
(non-IFRS) measure calculated as current asset less current liabilities. Working capital does not have any standardized meaning prescribed
by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. The Company and certain investors
use this information to evaluate whether the Company is able to meet its current obligations using its current assets.
Silver equivalent is an alternative performance
(non-IFRS) measure calculated by converting the gold metals quantity to its silver equivalent using the ratio between the realized selling
prices of gold and silver and adding the converted amount expressed in silver ounces to the ounces of silver.
| Management’s Discussion and Analysis | Page 33 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
The following table provides a reconciliation
of the Company’s production in silver equivalent:
| |
Q3 Fiscal 2024 | | |
Q3
Fiscal 2023 | |
| |
Ying Mining District | | |
GC | | |
Consolidated | | |
Ying
Mining District | | |
GC | | |
Consolidated | |
Gold production (ounces) | |
| 1,342 | | |
| - | | |
| 1,342 | | |
| 1,100 | | |
| - | | |
| 1,100 | |
Realized selling price for gold ($/ounce) | |
| 1,718 | | |
| - | | |
| 1,718 | | |
| 1,541 | | |
| - | | |
| 1,541 | |
Realized selling price for silver ($/ounce) | |
| 20.64 | | |
| - | | |
| 20.14 | | |
| 17.55 | | |
| - | | |
| 17.17 | |
Silver Equivalent Production | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold coverted into silver (in thousands of ounces) | |
| 111 | | |
| - | | |
| 111 | | |
| 96 | | |
| - | | |
| 96 | |
Silver production (in thousands of ounces) | |
| 1,511 | | |
| 173 | | |
| 1,684 | | |
| 1,674 | | |
| 179 | | |
| 1,853 | |
Silver Equivalent (in thousands ounces) | |
| 1,622 | | |
| 173 | | |
| 1,795 | | |
| 1,770 | | |
| 179 | | |
| 1,949 | |
| |
Nine months
ended December 31, 2023 | | |
Nine
months ended December 31, 2022 | |
| |
Ying
Mining
District | | |
GC | | |
Consolidated | | |
Ying
Mining District | | |
GC | | |
Consolidated | |
Gold production (ounces) | |
| 5,352 | | |
| - | | |
| 5,352 | | |
| 3,400 | | |
| - | | |
| 3,400 | |
Realized selling price for gold ($/ounce) | |
| 1,754 | | |
| - | | |
| 1,754 | | |
| 1,479 | | |
| - | | |
| 1,479 | |
Realized selling price for silver ($/ounce) | |
| 20.16 | | |
| - | | |
| 19.74 | | |
| 17.27 | | |
| - | | |
| 16.91 | |
Silver Equivalent Production | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold coverted into silver (in thousands of ounces) | |
| 466 | | |
| - | | |
| 466 | | |
| 291 | | |
| - | | |
| 291 | |
Silver production (in thousands of ounces) | |
| 4,614 | | |
| 440 | | |
| 5,054 | | |
| 5,027 | | |
| 484 | | |
| 5,511 | |
Silver Equivalent (in thousands ounces) | |
| 5,080 | | |
| 440 | | |
| 5,520 | | |
| 5,318 | | |
| 484 | | |
| 5,802 | |
| (d) | Costs per Ounce of Silver |
Cash costs and all-in sustaining costs (“AISC”)
per ounce of silver, net of by-product credits, are non-IFRS measures. The Company produces by-product metals incidentally to its silver
mining activities. The Company has adopted the practice of calculating a performance measure with the net costs of producing an ounce
of silver, its primary payable metal, after deducting revenues gained from incidental by-product production. This performance measure
has been commonly used in the mining industry for many years and was developed as a relatively simple way of comparing the net production
costs of the primary metal for a specific period against the prevailing market price of such metal.
Cash costs is calculated by deducting revenue
from the sales of all metals other than silver from the production costs reported on statements of income and is calculated per ounce
of silver sold.
AISC is an extension of the “cash costs”
metric and provides a comprehensive measure of the Company’s operating performance and ability to generate cash flows. AISC has
been calculated based on World Gold Council (“WGC”) guidance released in 2013 and updated in 2018. The WGC is not a regulatory
organization and does not have the authority to develop accounting standards for disclosure requirements.
AISC is based on the Company’s cash costs,
net of by-product sales, and further includes general and administrative expense, mineral resources tax, government fees and other taxes,
reclamation cost accretion, lease liability payments, and sustaining capital expenditures. Sustaining capital expenditures are those costs
incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of production output. Excluded
are non-sustaining capital expenditures, which result in a material increase in the life of assets, materially increase resources or reserves,
productive capacity, or future earning potential, or significant improvement in recovery or grade, or which do not relate to the current
production activities. The Company believes that this measure represents the total sustainable costs of producing silver from current
operations and provides additional information about the Company’s operational performance and ability to generate cash flows.
| Management’s Discussion and Analysis | Page 34 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
The following table provides a reconciliation
of cash costs and AISC per ounce of silver, net of by-product credits:
| |
| |
Three
months ended December 31, 2023 | | |
Three months ended December
31, 2022 | |
(Expressed in thousands
of U.S. dollars, except ounce and per ounce amount) | |
| |
Ying
Mining District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | | |
Ying Mining
District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | |
Production costs
expensed as reported | |
A | |
$ | 17,585 | | |
$ | 4,981 | | |
$ | - | | |
$ | - | | |
$ | 22,566 | | |
$ | 19,812 | | |
$ | 4,791 | | |
$ | - | | |
$ | - | | |
$ | 24,603 | |
By-product sales | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold | |
| |
| (2,305 | ) | |
| - | | |
| - | | |
| - | | |
| (2,305 | ) | |
| (1,695 | ) | |
| - | | |
| - | | |
| - | | |
| (1,695 | ) |
Lead | |
| |
| (12,429 | ) | |
| (1,782 | ) | |
| - | | |
| - | | |
| (14,211 | ) | |
| (14,401 | ) | |
| (1,944 | ) | |
| - | | |
| - | | |
| (16,345 | ) |
Zinc | |
| |
| (1,881 | ) | |
| (4,155 | ) | |
| - | | |
| - | | |
| (6,036 | ) | |
| (2,182 | ) | |
| (4,639 | ) | |
| - | | |
| - | | |
| (6,821 | ) |
Other | |
| |
| (1,112 | ) | |
| (539 | ) | |
| - | | |
| - | | |
| (1,651 | ) | |
| (1,127 | ) | |
| (746 | ) | |
| - | | |
| - | | |
| (1,873 | ) |
Total by-product sales | |
B | |
| (17,727 | ) | |
| (6,476 | ) | |
| - | | |
| - | | |
| (24,203 | ) | |
| (19,405 | ) | |
| (7,329 | ) | |
| - | | |
| - | | |
| (26,734 | ) |
Total cash costs, net of by-product
credits | |
C=A+B | |
| (142 | ) | |
| (1,495 | ) | |
| - | | |
| - | | |
| (1,637 | ) | |
| 407 | | |
| (2,538 | ) | |
| - | | |
| - | | |
| (2,131 | ) |
Add: Mineral resources tax | |
| |
| 1,141 | | |
| 231 | | |
| - | | |
| - | | |
| 1,372 | | |
| 1,190 | | |
| 248 | | |
| - | | |
| - | | |
| 1,438 | |
General and administrative | |
| |
| 2,303 | | |
| 680 | | |
| 90 | | |
| 3,228 | | |
| 6,301 | | |
| 1,837 | | |
| 697 | | |
| 100 | | |
| 3,171 | | |
| 5,805 | |
Amortization included in general
and administrative | |
| |
| (158 | ) | |
| (76 | ) | |
| (56 | ) | |
| 180 | | |
| (110 | ) | |
| (134 | ) | |
| (83 | ) | |
| (68 | ) | |
| (139 | ) | |
| (424 | ) |
Property evaluation and business
development* | |
| |
| - | | |
| - | | |
| 12 | | |
| 550 | | |
| 562 | | |
| - | | |
| - | | |
| - | | |
| 173 | | |
| 173 | |
Government fees and other taxes | |
| |
| 567 | | |
| 240 | | |
| 1 | | |
| - | | |
| 808 | | |
| 373 | | |
| 256 | | |
| 4 | | |
| - | | |
| 633 | |
Reclamation accretion | |
| |
| 30 | | |
| 9 | | |
| 7 | | |
| - | | |
| 46 | | |
| 40 | | |
| 11 | | |
| 7 | | |
| - | | |
| 58 | |
Lease payment | |
| |
| - | | |
| - | | |
| - | | |
| 66 | | |
| 66 | | |
| - | | |
| - | | |
| - | | |
| 164 | | |
| 164 | |
Sustaining
capital expenditures | |
| |
| 10,065 | | |
| 1,748 | | |
| 81 | | |
| (5 | ) | |
| 11,889 | | |
| 9,121 | | |
| 2,337 | | |
| - | | |
| 87 | | |
| 11,545 | |
All-in sustaining costs, net
of by-product credits | |
F | |
| 13,806 | | |
| 1,337 | | |
| 135 | | |
| 4,019 | | |
| 19,297 | | |
| 12,834 | | |
| 928 | | |
| 43 | | |
| 3,456 | | |
| 17,261 | |
Add: Non-sustaining
capital expenditures | |
| |
| 4,310 | | |
| 566 | | |
| - | | |
| - | | |
| 4,876 | | |
| 3,025 | | |
| 488 | | |
| 639 | | |
| - | | |
| 4,152 | |
All-in costs, net of by-product
credits | |
G | |
| 18,116 | | |
| 1,903 | | |
| 135 | | |
| 4,019 | | |
| 24,173 | | |
| 15,859 | | |
| 1,416 | | |
| 682 | | |
| 3,456 | | |
| 21,413 | |
Silver ounces sold (’000s) | |
H | |
| 1,536 | | |
| 167 | | |
| - | | |
| - | | |
| 1,703 | | |
| 1,675 | | |
| 185 | | |
| - | | |
| - | | |
| 1,860 | |
Cash costs per ounce of silver,
net of by-product credits | |
C/H | |
$ | (0.09 | ) | |
$ | (8.95 | ) | |
$ | - | | |
$ | - | | |
$ | (0.96 | ) | |
$ | 0.24 | | |
$ | (13.72 | ) | |
$ | - | | |
$ | - | | |
$ | (1.15 | ) |
All-in sustaining costs per ounce
of silver, net of by-product credits | |
F/H | |
$ | 8.99 | | |
$ | 8.01 | | |
$ | - | | |
$ | - | | |
$ | 11.33 | | |
$ | 7.66 | | |
$ | 5.02 | | |
$ | - | | |
$ | - | | |
$ | 9.28 | |
All-in costs per ounce of silver,
net of by-product credits | |
G/H | |
$ | 11.79 | | |
$ | 11.40 | | |
$ | - | | |
$ | - | | |
$ | 14.19 | | |
$ | 9.47 | | |
$ | 7.65 | | |
$ | - | | |
$ | - | | |
$ | 11.51 | |
By-product credits per ounce of silver | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold | |
| |
| (1.50 | ) | |
| - | | |
| - | | |
| - | | |
| (1.35 | ) | |
| (1.01 | ) | |
| - | | |
| - | | |
| - | | |
| (0.91 | ) |
Lead | |
| |
| (8.09 | ) | |
| (10.67 | ) | |
| - | | |
| - | | |
| (8.34 | ) | |
| (8.60 | ) | |
| (10.51 | ) | |
| - | | |
| - | | |
| (8.79 | ) |
Zinc | |
| |
| (1.22 | ) | |
| (24.88 | ) | |
| - | | |
| - | | |
| (3.54 | ) | |
| (1.30 | ) | |
| (25.08 | ) | |
| - | | |
| - | | |
| (3.67 | ) |
Other | |
| |
| (0.72 | ) | |
| (3.23 | ) | |
| - | | |
| - | | |
| (0.97 | ) | |
| (0.67 | ) | |
| (4.03 | ) | |
| - | | |
| - | | |
| (1.01 | ) |
Total by-product credits per
ounce of silver | |
| |
$ | (11.53 | ) | |
$ | (38.78 | ) | |
$ | - | | |
$ | - | | |
$ | (14.20 | ) | |
$ | (11.58 | ) | |
$ | (39.62 | ) | |
$ | - | | |
$ | - | | |
$ | (14.38 | ) |
| |
| |
Nine
months ended December 31, 2023 | | |
Nine months ended December
31, 2022 | |
| |
| |
Ying
Mining
District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | | |
Ying Mining
District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | |
Production costs
expensed as reported | |
A | |
$ | 54,016 | | |
$ | 14,085 | | |
$ | 31 | | |
$ | - | | |
$ | 68,132 | | |
$ | 61,914 | | |
$ | 14,231 | | |
$ | - | | |
$ | - | | |
$ | 76,145 | |
By-product sales | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold | |
| |
| (9,385 | ) | |
| - | | |
| - | | |
| - | | |
| (9,385 | ) | |
| (5,027 | ) | |
| - | | |
| - | | |
| - | | |
| (5,027 | ) |
Lead | |
| |
| (37,433 | ) | |
| (4,500 | ) | |
| - | | |
| - | | |
| (41,933 | ) | |
| (42,730 | ) | |
| (5,430 | ) | |
| - | | |
| - | | |
| (48,160 | ) |
Zinc | |
| |
| (5,408 | ) | |
| (9,902 | ) | |
| - | | |
| - | | |
| (15,310 | ) | |
| (6,849 | ) | |
| (14,892 | ) | |
| - | | |
| - | | |
| (21,741 | ) |
Other | |
| |
| (3,565 | ) | |
| (1,703 | ) | |
| - | | |
| - | | |
| (5,268 | ) | |
| (3,330 | ) | |
| (1,643 | ) | |
| - | | |
| - | | |
| (4,973 | ) |
Total by-product sales | |
B | |
| (55,791 | ) | |
| (16,105 | ) | |
| - | | |
| - | | |
| (71,896 | ) | |
| (57,936 | ) | |
| (21,965 | ) | |
| - | | |
| - | | |
| (79,901 | ) |
Total cash costs, net of by-product
credits | |
C=A+B | |
| (1,775 | ) | |
| (2,020 | ) | |
| 31 | | |
| - | | |
| (3,764 | ) | |
| 3,978 | | |
| (7,734 | ) | |
| - | | |
| - | | |
| (3,756 | ) |
Add: Mineral resources tax | |
| |
| 3,772 | | |
| 563 | | |
| - | | |
| - | | |
| 4,335 | | |
| 3,549 | | |
| 737 | | |
| - | | |
| - | | |
| 4,286 | |
General and administrative | |
| |
| 6,379 | | |
| 2,066 | | |
| 267 | | |
| 10,688 | | |
| 19,400 | | |
| 5,683 | | |
| 2,044 | | |
| 333 | | |
| 10,204 | | |
| 18,264 | |
Amortization included in general
and administrative | |
| |
| (417 | ) | |
| (243 | ) | |
| (171 | ) | |
| (116 | ) | |
| (947 | ) | |
| (412 | ) | |
| (262 | ) | |
| (229 | ) | |
| (430 | ) | |
| (1,333 | ) |
Property evaluation and business
development* | |
| |
| - | | |
| - | | |
| 34 | | |
| 751 | | |
| 785 | | |
| - | | |
| - | | |
| - | | |
| 376 | | |
| 376 | |
Government fees and other taxes | |
| |
| 1,795 | | |
| 417 | | |
| 4 | | |
| - | | |
| 2,216 | | |
| 1,501 | | |
| 468 | | |
| 4 | | |
| - | | |
| 1,973 | |
Reclamation accretion | |
| |
| 96 | | |
| 30 | | |
| 21 | | |
| - | | |
| 147 | | |
| 126 | | |
| 34 | | |
| 22 | | |
| - | | |
| 182 | |
Lease payment | |
| |
| - | | |
| - | | |
| - | | |
| 195 | | |
| 195 | | |
| - | | |
| - | | |
| - | | |
| 501 | | |
| 501 | |
Sustaining
capital expenditures | |
| |
| 27,676 | | |
| 4,349 | | |
| 208 | | |
| 18 | | |
| 32,251 | | |
| 24,768 | | |
| 4,372 | | |
| - | | |
| 99 | | |
| 29,239 | |
All-in sustaining costs, net
of by-product credits | |
F | |
| 37,526 | | |
| 5,162 | | |
| 394 | | |
| 11,536 | | |
| 54,618 | | |
| 39,193 | | |
| (341 | ) | |
| 130 | | |
| 10,750 | | |
| 49,732 | |
Add: Non-sustaining
capital expenditures | |
| |
| 13,962 | | |
| 1,080 | | |
| - | | |
| - | | |
| 15,042 | | |
| 13,518 | | |
| 1,316 | | |
| 1,100 | | |
| - | | |
| 15,934 | |
All-in costs, net of by-product
credits | |
G | |
| 51,488 | | |
| 6,242 | | |
| 394 | | |
| 11,536 | | |
| 69,660 | | |
| 52,711 | | |
| 975 | | |
| 1,230 | | |
| 10,750 | | |
| 65,666 | |
Silver ounces sold (’000s) | |
H | |
| 4,665 | | |
| 431 | | |
| - | | |
| - | | |
| 5,096 | | |
| 5,083 | | |
| 481 | | |
| - | | |
| - | | |
| 5,564 | |
Cash costs per ounce of silver,
net of by-product credits | |
C/H | |
$ | (0.38 | ) | |
$ | (4.69 | ) | |
$ | - | | |
$ | - | | |
$ | (0.74 | ) | |
$ | 0.78 | | |
$ | (16.08 | ) | |
$ | - | | |
$ | - | | |
$ | (0.68 | ) |
All-in sustaining costs per ounce
of silver, net of by-product credits | |
F/H | |
$ | 8.04 | | |
$ | 11.98 | | |
$ | - | | |
$ | - | | |
$ | 10.72 | | |
$ | 7.71 | | |
$ | (0.71 | ) | |
$ | - | | |
$ | - | | |
$ | 8.94 | |
All-in costs per ounce of silver,
net of by-product credits | |
G/H | |
$ | 11.04 | | |
$ | 14.48 | | |
$ | - | | |
$ | - | | |
$ | 13.67 | | |
$ | 10.37 | | |
$ | 2.03 | | |
$ | - | | |
$ | - | | |
$ | 11.80 | |
By-product credits per ounce of silver | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold | |
| |
| (2.01 | ) | |
| - | | |
| - | | |
| - | | |
| (1.84 | ) | |
| (0.99 | ) | |
| - | | |
| - | | |
| - | | |
| (0.90 | ) |
Lead | |
| |
| (8.02 | ) | |
| (10.44 | ) | |
| - | | |
| - | | |
| (8.23 | ) | |
| (8.41 | ) | |
| (11.29 | ) | |
| - | | |
| - | | |
| (8.66 | ) |
Zinc | |
| |
| (1.16 | ) | |
| (22.97 | ) | |
| - | | |
| - | | |
| (3.00 | ) | |
| (1.35 | ) | |
| (30.96 | ) | |
| - | | |
| - | | |
| (3.91 | ) |
Other | |
| |
| (0.76 | ) | |
| (3.95 | ) | |
| - | | |
| - | | |
| (1.03 | ) | |
| (0.66 | ) | |
| (3.42 | ) | |
| - | | |
| - | | |
| (0.89 | ) |
Total by-product credits per
ounce of silver | |
| |
$ | (11.95 | ) | |
$ | (37.36 | ) | |
$ | - | | |
$ | - | | |
$ | (14.10 | ) | |
$ | (11.41 | ) | |
$ | (45.67 | ) | |
$ | - | | |
$ | - | | |
$ | (14.36 | ) |
| (e) | Costs per Tonne of Ore Processed |
The Company uses costs per tonne of ore processed
to manage and evaluate operating performance at each of its mines. Production costs per tonne of ore processed is calculated based on
total production costs on a sales basis, adjusted for changes in inventory, to arrive at total production costs that relate to ore production
during the period. These total production costs are then further divided into mining costs, shipping costs, and milling costs. Mining
costs includes costs of material and supplies, labour costs, applicable mine overhead costs, and mining contractor costs for mining ore;
shipping costs includes freight charges for shipping stockpile ore from mine sites and mill sites, and milling costs include costs of
materials and supplies, labour costs, and applicable mill overhead costs related to ore processing. Mining costs per tonne is the mining
costs divided by the tonnage of ore mined, shipping cost per tonne is the shipping costs divided by the tonnage of ore shipped from mine
sites to mill sites; and milling costs per tonne is the milling costs divided by the tonnage of ore processed at the mill. Costs per tonne
of ore processed are the total of per tonne mining costs, per tonne shipping costs, and per tonne milling costs.
| Management’s Discussion and Analysis | Page 35 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
All-in sustaining production costs per tonne
is an extension of the production costs per tonne and provides a comprehensive measure of the Company’s operating performance and
ability to generate cash flows. All-in sustaining production costs per tonne is based on the Company’s production costs, and further
includes general and administrative expenses, government fees and other taxes, reclamation cost accretion, lease liability payments,
and sustaining capital expenditures. The Company believes that this measure represents the total sustainable costs of processing ore
from current operations and provides additional information about the Company’s operational performance and ability to generate
cash flows.
The following table provides a reconciliation
of production costs and all-in sustaining production costs per tonne of ore processed:
| |
| |
Three
months ended December 31, 2023 | | |
Three months ended December 31, 2022 |
(Expressed
in thousands of U.S. dollars, except ounce and per ounce amount) | |
| |
Ying
Mining District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | | |
Ying
Mining District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | |
Production
costs expensed as reported | |
| |
$ | 17,585 | | |
$ | 4,981 | | |
$ | - | | |
$ | - | | |
$ | 22,566 | | |
$ | 19,812 | | |
$ | 4,791 | | |
$ | - | | |
$ | - | | |
$ | 24,603 | |
Adjustment
for aggregate plant operations | |
| |
| (202 | ) | |
| - | | |
| - | | |
| - | | |
| (202 | ) | |
| (615 | ) | |
| - | | |
| - | | |
| - | | |
| (615 | ) |
Changes
in stockpile and concentrate inventory | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Less:
stockpile and concentrate inventory - Beginning | |
| |
| (4,057 | ) | |
| (119 | ) | |
| - | | |
| - | | |
| (4,176 | ) | |
| (3,093 | ) | |
| (169 | ) | |
| (31 | ) | |
| - | | |
| (3,293 | ) |
Add:
stockpile and concentrate inventory - Ending | |
| |
| 7,343 | | |
| 144 | | |
| - | | |
| - | | |
| 7,487 | | |
| 2,254 | | |
| 42 | | |
| 32 | | |
| - | | |
| 2,328 | |
Net
change of depreciation and amortization charged to inventory | |
| |
| 633 | | |
| 6 | | |
| - | | |
| - | | |
| 639 | | |
| (221 | ) | |
| (21 | ) | |
| - | | |
| - | | |
| (242 | ) |
Adjustment
for foreign exchange movement | |
| |
| (1,156 | ) | |
| (10 | ) | |
| - | | |
| - | | |
| (1,166 | ) | |
| 306 | | |
| 33 | | |
| (1 | ) | |
| - | | |
| 338 | |
| |
| |
| 2,763 | | |
| 21 | | |
| - | | |
| - | | |
| 2,784 | | |
| (754 | ) | |
| (115 | ) | |
| - | | |
| - | | |
| (869 | ) |
Adjusted
production cost | |
| |
$ | 20,146 | | |
$ | 5,002 | | |
$ | - | | |
$ | - | | |
$ | 25,148 | | |
$ | 18,443 | | |
$ | 4,676 | | |
$ | - | | |
$ | - | | |
$ | 23,119 | |
Mining
costs | |
A | |
| 16,916 | | |
| 3,603 | | |
| - | | |
| - | | |
| 20,519 | | |
| 15,266 | | |
| 3,292 | | |
| - | | |
| - | | |
| 18,558 | |
Shipping
costs | |
B | |
| 743 | | |
| - | | |
| - | | |
| - | | |
| 743 | | |
| 751 | | |
| - | | |
| - | | |
| - | | |
| 751 | |
Milling
Costs | |
C | |
| 2,487 | | |
| 1,399 | | |
| - | | |
| - | | |
| 3,886 | | |
| 2,426 | | |
| 1,384 | | |
| - | | |
| - | | |
| 3,810 | |
Total
production cost | |
| |
$ | 20,146 | | |
$ | 5,002 | | |
$ | - | | |
$ | - | | |
$ | 25,148 | | |
$ | 18,443 | | |
$ | 4,676 | | |
$ | - | | |
$ | - | | |
$ | 23,119 | |
General
and administrative | |
| |
| 2,303 | | |
| 680 | | |
| 90 | | |
| 3,228 | | |
| 6,301 | | |
| 1,837 | | |
| 697 | | |
| 100 | | |
| 3,171 | | |
| 5,805 | |
Amortization
included in general and administrative | |
| |
| (158 | ) | |
| (76 | ) | |
| (56 | ) | |
| 180 | | |
| (110 | ) | |
| (134 | ) | |
| (83 | ) | |
| (68 | ) | |
| (139 | ) | |
| (424 | ) |
Property
evaluation and business development | |
| |
| - | | |
| - | | |
| 12 | | |
| 550 | | |
| 562 | | |
| - | | |
| - | | |
| - | | |
| 173 | | |
| 173 | |
Government
fees and other taxes | |
| |
| 567 | | |
| 240 | | |
| 1 | | |
| - | | |
| 808 | | |
| 373 | | |
| 256 | | |
| 4 | | |
| - | | |
| 633 | |
Reclamation
accretion | |
| |
| 30 | | |
| 9 | | |
| 7 | | |
| - | | |
| 46 | | |
| 40 | | |
| 11 | | |
| 7 | | |
| - | | |
| 58 | |
Lease
payment | |
| |
| - | | |
| - | | |
| - | | |
| 66 | | |
| 66 | | |
| - | | |
| - | | |
| - | | |
| 164 | | |
| 164 | |
Adjustment
for aggregate plant operations | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Sustaining
capital expenditures | |
| |
| 10,065 | | |
| 1,748 | | |
| 81 | | |
| (5 | ) | |
| 11,889 | | |
| 9,121 | | |
| 2,337 | | |
| - | | |
| 87 | | |
| 11,545 | |
All-in
sustaining production cost | |
D | |
$ | 32,953 | | |
$ | 7,603 | | |
$ | 135 | | |
$ | 4,019 | | |
$ | 44,710 | | |
$ | 29,680 | | |
$ | 7,894 | | |
$ | 43 | | |
$ | 3,456 | | |
$ | 41,073 | |
Non-sustaining
capital expenditures | |
| |
| 4,310 | | |
| 566 | | |
| - | | |
| - | | |
| 4,876 | | |
| 3,025 | | |
| 488 | | |
| 639 | | |
| - | | |
| 4,152 | |
All
in production cost | |
E | |
$ | 37,263 | | |
$ | 8,169 | | |
$ | 135 | | |
$ | 4,019 | | |
$ | 49,586 | | |
$ | 32,705 | | |
$ | 8,382 | | |
$ | 682 | | |
$ | 3,456 | | |
$ | 45,225 | |
Ore
mined (’000s) | |
F | |
| 245.606 | | |
| 99.667 | | |
| - | | |
| - | | |
| 345.273 | | |
| 206.854 | | |
| 89.196 | | |
| - | | |
| - | | |
| 296.050 | |
Ore
shipped (’000s) | |
G | |
| 210.618 | | |
| 99.667 | | |
| - | | |
| - | | |
| 310.285 | | |
| 213.830 | | |
| 89.196 | | |
| - | | |
| - | | |
| 303.026 | |
Ore
milled (’000s) | |
H | |
| 214.201 | | |
| 98.299 | | |
| - | | |
| - | | |
| 312.500 | | |
| 213.830 | | |
| 89.612 | | |
| - | | |
| - | | |
| 303.442 | |
Per tonne
Production cost | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Mining
cost ($/tonne) | |
I=A/F | |
| 68.87 | | |
| 36.15 | | |
| - | | |
| - | | |
| 59.43 | | |
| 73.80 | | |
| 36.91 | | |
| - | | |
| - | | |
| 62.69 | |
Shipping
costs ($/tonne) | |
J=B/G | |
| 3.53 | | |
| - | | |
| - | | |
| - | | |
| 2.39 | | |
| 3.51 | | |
| - | | |
| - | | |
| - | | |
| 2.48 | |
Milling
costs ($/tonne) | |
K=C/H | |
| 11.61 | | |
| 14.23 | | |
| - | | |
| - | | |
| 12.44 | | |
| 11.35 | | |
| 15.44 | | |
| - | | |
| - | | |
| 12.56 | |
Cash
production costs ($/tonne) | |
L=I+J+K | |
$ | 84.01 | | |
$ | 50.38 | | |
$ | - | | |
$ | - | | |
$ | 74.26 | | |
$ | 88.66 | | |
$ | 52.35 | | |
$ | - | | |
$ | - | | |
$ | 77.73 | |
All-in
sustaining production costs ($/tonne) | |
M=(D-A-B-C)/H+L | |
$ | 143.80 | | |
$ | 76.84 | | |
$ | - | | |
$ | - | | |
$ | 136.86 | | |
$ | 141.21 | | |
$ | 88.26 | | |
$ | - | | |
$ | - | | |
$ | 136.90 | |
All
in costs ($/tonne) | |
N=M+(E-D)/H | |
$ | 163.92 | | |
$ | 82.60 | | |
$ | - | | |
$ | - | | |
$ | 152.46 | | |
$ | 155.36 | | |
$ | 93.71 | | |
$ | - | | |
$ | - | | |
$ | 150.58 | |
| Management’s Discussion and Analysis | Page 36 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| |
| |
Nine
months ended December 31, 2023 | | |
Nine months ended December 31, 2022 | |
| |
| |
Ying
Mining District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | | |
Ying Mining
District | | |
GC | | |
Other | | |
Corporate | | |
Consolidated | |
Production
costs expensed as reported | |
| |
$ | 54,016 | | |
$ | 14,085 | | |
$ | 31 | | |
$ | - | | |
$ | 68,132 | | |
$ | 61,914 | | |
$ | 14,231 | | |
$ | - | | |
$ | - | | |
$ | 76,145 | |
Adjustment
for aggregate plant operations* | |
| |
| (651 | ) | |
| - | | |
| - | | |
| - | | |
| (651 | ) | |
| (1,281 | ) | |
| - | | |
| - | | |
| - | | |
| (1,281 | ) |
Changes
in stockpile and concentrate inventory | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Less: stockpile and concentrate
inventory - Beginning | |
| |
| (3,657 | ) | |
| (246 | ) | |
| (32 | ) | |
| - | | |
| (3,935 | ) | |
| (4,740 | ) | |
| (139 | ) | |
| (35 | ) | |
| - | | |
| (4,914 | ) |
Add: stockpile and concentrate
inventory - Ending | |
| |
| 7,343 | | |
| 144 | | |
| - | | |
| - | | |
| 7,487 | | |
| 2,254 | | |
| 42 | | |
| 32 | | |
| - | | |
| 2,328 | |
Net change of depreciation and
amortization charged to inventory | |
| |
| 623 | | |
| (16 | ) | |
| - | | |
| - | | |
| 607 | | |
| (494 | ) | |
| (17 | ) | |
| - | | |
| - | | |
| (511 | ) |
Adjustment
for foreign exchange movement | |
| |
| (875 | ) | |
| 41 | | |
| 1 | | |
| - | | |
| (833 | ) | |
| 1,240 | | |
| 42 | | |
| 3 | | |
| - | | |
| 1,285 | |
| |
| |
| 3,434 | | |
| (77 | ) | |
| (31 | ) | |
| - | | |
| 3,326 | | |
| (1,740 | ) | |
| (72 | ) | |
| - | | |
| - | | |
| (1,812 | ) |
Adjusted production cost | |
| |
$ | 56,799 | | |
$ | 14,008 | | |
$ | - | | |
$ | - | | |
$ | 70,807 | | |
$ | 58,893 | | |
$ | 14,159 | | |
$ | - | | |
$ | - | | |
$ | 73,052 | |
Mining costs | |
A | |
| 47,322 | | |
| 10,238 | | |
| - | | |
| - | | |
| 57,560 | | |
| 49,398 | | |
| 10,100 | | |
| - | | |
| - | | |
| 59,498 | |
Shipping costs | |
B | |
| 2,234 | | |
| - | | |
| - | | |
| - | | |
| 2,234 | | |
| 2,398 | | |
| - | | |
| - | | |
| - | | |
| 2,398 | |
Milling
Costs | |
C | |
| 7,243 | | |
| 3,770 | | |
| - | | |
| - | | |
| 11,013 | | |
| 7,097 | | |
| 4,059 | | |
| - | | |
| - | | |
| 11,156 | |
Total production cost | |
| |
$ | 56,799 | | |
$ | 14,008 | | |
$ | - | | |
$ | - | | |
$ | 70,807 | | |
$ | 58,893 | | |
$ | 14,159 | | |
$ | - | | |
$ | - | | |
$ | 73,052 | |
General and administrative | |
| |
| 6,379 | | |
| 2,066 | | |
| 267 | | |
| 10,688 | | |
| 19,400 | | |
| 5,683 | | |
| 2,044 | | |
| 333 | | |
| 10,204 | | |
| 18,264 | |
Amortization included in general
and administrative | |
| |
| (417 | ) | |
| (243 | ) | |
| (171 | ) | |
| (116 | ) | |
| (947 | ) | |
| (412 | ) | |
| (262 | ) | |
| (229 | ) | |
| (430 | ) | |
| (1,333 | ) |
Property evaluation and business
development | |
| |
| - | | |
| - | | |
| 34 | | |
| 751 | | |
| 785 | | |
| - | | |
| - | | |
| - | | |
| 376 | | |
| 376 | |
Government fees and other taxes | |
| |
| 1,795 | | |
| 417 | | |
| 4 | | |
| - | | |
| 2,216 | | |
| 1,501 | | |
| 468 | | |
| 4 | | |
| - | | |
| 1,973 | |
Reclamation accretion | |
| |
| 96 | | |
| 30 | | |
| 21 | | |
| - | | |
| 147 | | |
| 126 | | |
| 34 | | |
| 22 | | |
| - | | |
| 182 | |
Lease payment | |
| |
| - | | |
| - | | |
| - | | |
| 195 | | |
| 195 | | |
| - | | |
| - | | |
| - | | |
| 501 | | |
| 501 | |
Adjustment for aggregate plant
operations | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Sustaining
capital expenditures | |
| |
| 27,676 | | |
| 4,349 | | |
| 208 | | |
| 18 | | |
| 32,251 | | |
| 24,768 | | |
| 4,372 | | |
| - | | |
| 99 | | |
| 29,239 | |
All-in sustaining production
cost | |
D | |
$ | 92,328 | | |
$ | 20,627 | | |
$ | 363 | | |
$ | 11,536 | | |
$ | 124,854 | | |
$ | 90,559 | | |
$ | 20,815 | | |
$ | 130 | | |
$ | 10,750 | | |
$ | 122,254 | |
Non-sustaining
capital expenditures | |
| |
| 13,962 | | |
| 1,080 | | |
| - | | |
| - | | |
| 15,042 | | |
| 13,518 | | |
| 1,316 | | |
| 1,100 | | |
| - | | |
$ | 15,934 | |
All in production cost | |
E | |
$ | 106,290 | | |
$ | 21,707 | | |
$ | 363 | | |
$ | 11,536 | | |
$ | 139,896 | | |
$ | 104,077 | | |
$ | 22,131 | | |
$ | 1,230 | | |
$ | 10,750 | | |
$ | 138,188 | |
Ore mined (’000s) | |
F | |
| 679.990 | | |
| 241.968 | | |
| - | | |
| - | | |
| 921.958 | | |
| 636.819 | | |
| 250.316 | | |
| - | | |
| - | | |
| 887.135 | |
Ore shipped (’000s) | |
G | |
| 667.355 | | |
| 241.968 | | |
| - | | |
| - | | |
| 909.323 | | |
| 642.147 | | |
| 250.316 | | |
| - | | |
| - | | |
| 892.463 | |
Ore milled
(’000s) | |
H | |
| 635.878 | | |
| 232.824 | | |
| - | | |
| - | | |
| 868.702 | | |
| 642.147 | | |
| 251.114 | | |
| - | | |
| - | | |
| 893.261 | |
Per tonne Production cost | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Mining cost ($/tonne) | |
I=A/F | |
| 69.59 | | |
| 42.31 | | |
| - | | |
| - | | |
| 62.43 | | |
| 77.57 | | |
| 40.35 | | |
| - | | |
| - | | |
| 67.07 | |
Shipping costs ($/tonne) | |
J=B/G | |
| 3.35 | | |
| - | | |
| - | | |
| - | | |
| 2.46 | | |
| 3.73 | | |
| - | | |
| - | | |
| - | | |
| 2.69 | |
Milling
costs ($/tonne) | |
K=C/H | |
| 11.39 | | |
| 16.19 | | |
| - | | |
| - | | |
| 12.68 | | |
| 11.05 | | |
| 16.16 | | |
| - | | |
| - | | |
| 12.49 | |
Production costs ($/tonne) | |
L=I+J+K | |
$ | 84.33 | | |
$ | 58.50 | | |
$ | - | | |
$ | - | | |
$ | 77.57 | | |
$ | 92.35 | | |
$ | 56.51 | | |
$ | - | | |
$ | - | | |
$ | 82.25 | |
All-in
sustaining production costs ($/tonne) | |
M=(D-A-B-C)/H+L | |
$ | 140.20 | | |
$ | 86.93 | | |
$ | - | | |
$ | - | | |
$ | 139.79 | | |
$ | 141.66 | | |
$ | 83.02 | | |
$ | - | | |
$ | - | | |
$ | 137.33 | |
All in costs ($/tonne) | |
N=M+(E-D)/H | |
$ | 162.16 | | |
$ | 91.57 | | |
$ | - | | |
$ | - | | |
$ | 157.10 | | |
$ | 162.71 | | |
$ | 88.26 | | |
$ | - | | |
$ | - | | |
$ | 155.17 | |
| * | The operation of the aggregate plant is considered an
integrated part of the operations at the Ying Mining District, and its revenue is treated as credits to offset its production costs. |
| 12. | Material Accounting Policies, Judgments, and Estimates |
| (a) | Material Accounting Policies |
The accounting policies applied in the preparation
of these unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in the audited
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.
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.
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. |
| Management’s Discussion and Analysis | Page 37 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| ● | 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.
| (b) | Critical Judgments and Estimates |
The preparation of financial statements in conformity
with IFRS requires management to make estimates and assumptions that affect the amounts reported on the consolidated financial statements.
These critical accounting estimates represent management estimates and judgements that are uncertain and any changes in these estimates
could materially impact the Company’s consolidated financial statements. Management continuously reviews its estimates and assumptions
using the most current information available. The Company’s critical accounting policies, judgements and estimates are described
in Note 2 of the unaudited condensed consolidated interim financial statements for the three and nine months ended December 31, 2023,
as well as the audited financial statements for the year ended March 31, 2023.
| 13. | New Accounting Standards |
Certain new accounting standards and interpretations
have been published that are not effective 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.
| 14. | Other MD&A Requirements |
Additional information relating to the Company:
(a) may be found on SEDAR+ at www.sedarplus.ca;
(b) may be found
at the Company’s website www.silvercorpmetals.com;
(c) may be found
in the Company’s Annual Information Form; and
(d) is also provided
in the Company’s annual audited consolidated financial statements as of March 31, 2023.
| 15. | Outstanding Share Data |
As at the date of this MD&A, the following
securities were outstanding:
(a) Share Capital
Authorized - unlimited number of common shares
without par value
Issued and outstanding – 177,378,198
common shares with a recorded value of $258.6 million
Shares subject to escrow or pooling agreements
- $nil.
(b) Options
As at the date of this MD&A, the outstanding
options comprise the following:
Number of Options | |
Exercise Price (CAD$) | |
Expiry Date |
|
468,000 | |
$ | 3.93 | |
2027-04-26 |
|
60,000 | |
$ | 4.08 | |
2028-02-23 |
|
472,001 | |
$ | 5.46 | |
2025-05-26 |
|
375,000 | |
$ | 9.45 | |
2025-11-11 |
|
1,375,001 | |
| | |
|
|
(c) Restricted Share Units (RSUs)
Outstanding – 2,189,581 RSUs.
| Management’s Discussion and Analysis | Page 38 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| 16. | Disclosure Controls and Procedures |
Disclosure controls and procedures (a) under Canadian
law, are designed to provide reasonable assurance that material information is gathered and reported to senior management, including the
Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), as appropriate to allow for timely decision
about public disclosure, and (b) under U.S. law, are designed to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”) is recorded,
processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms,
and include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the U.S. Exchange Act is accumulated and communicated to the Company’s management, including
its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Management of the Company, including the CEO and
CFO, is responsible for establishing and maintaining adequate disclosure controls and procedures. Under the supervision and with the participation
of the CEO and CFO, management has evaluated the effectiveness of the design and operation of the Company’s disclosure controls
and procedures in accordance with requirements of National Instrument 52-109 of the Canadian Securities Commission (“NI 52-109”)
and U.S. Exchange Act.
As of December 31, 2023, based on the evaluation,
management concluded that the disclosure controls and procedures are effective in providing reasonable assurance that the information
required to be disclosed in annual filings, interim filings, and other reports the Company filed or submitted under United States and
Canadian securities legislation were recorded, processed, summarized and reported within the time periods specified in those rules.
| 17. | Management’s Report on Internal Control over Financial Reporting |
Management of the Company is responsible for establishing
and maintaining an adequate system of internal control, including internal controls over financial reporting. Internal control over financial
reporting is a process designed by and/or under the supervision of the CEO and CFO and effected by the Board, management and other personnel
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS as issued by IASB. The Company’s internal control over financial reporting includes those policies
and procedures that:
| ● | pertain to maintaining records, that in reasonable detail, accurately and fairly reflect our transactions
and dispositions of the assets of the Company; |
| ● | provide reasonable assurance that transactions are recorded as necessary for preparation of our consolidated
financial statements in accordance with generally accepted accounting principles; |
| ● | provide reasonable assurance that receipts and expenditures are made in accordance with authorizations
of management and the directors of the Company; and |
| ● | provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that
could have a material effect on the Company’s consolidated financial statements would be prevented or detected on a timely basis. |
The Company’s management, including its
Chief Executive Officer and Chief Financial Officer, believes that due to its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements on a timely basis. In addition, projections of any evaluation of the effectiveness of internal
control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management evaluates the effectiveness
of the Company’s internal control over financial reporting based upon the criteria set forth in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organization of the Treadway Commission. Based on the evaluation, management
concluded that the Company’s internal control over financial reporting as of December 31, 2023 was effective and provides a reasonable
assurance of the reliability of the Company’s financial reporting and preparation of the financial statements.
| Management’s Discussion and Analysis | Page 39 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
| 18. | Changes in Internal Control over Financial Reporting |
There has been no change in the Company’s
internal control over financial reporting during the period ended December 31, 2023 that has materially affected or is reasonably likely
to materially affect, its internal control over financial reporting.
| 19. | Directors and Officers |
As at the date of this MD&A, the Company’s
directors and officers are as follows:
Directors |
|
Officers |
Dr. Rui Feng, Director, Chairman |
|
Rui Feng, Chief Executive Officer |
Paul Simpson, Independent Director |
|
Lon Shaver, President |
Yikang Liu, Independent Director |
|
Derek Liu, Chief Financial Officer |
Marina A. Katusa, Independent Director |
|
Jonathon Hoyles, General Counsel |
Ken Robertson, Independent Director |
|
|
Hongyu (Helen) Cai, Independent Director |
|
|
Technical Information
Scientific and technical information contained
in this MD&A has been reviewed and approved by Mr. Guoliang Ma, P.Geo., Manager of Exploration and Resources of the Company and a
Qualified Person as such term is defined in NI 43-101.
Forward Looking Statements
Certain of the statements and information in
this MD&A constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation
Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian provincial securities laws.
Any statements or information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”,
“is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”,
“assumes”, “intends”, “strategies”, “targets”, “goals”, “forecasts”,
“objectives”, “budgets”, “schedules”, “potential” or variations thereof or stating that
certain actions, events or results “may”, “could”, “would”, “might” or “will”
be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and
may be forward-looking statements or information. Forward-looking statements or information relate to, among other things:
| ● | the price of silver and other metals; |
| ● | estimates of the Company’s revenues and capital expenditures; |
| ● | estimated ore production and grades from the Company’s mines in the Ying Mining District and
the GC Mine; |
| ● | projected cash operating costs and all-in sustaining costs, and budgets, on a consolidated and mine-by-mine
basis; |
| ● | statements regarding anticipated exploration, drilling, development, construction, and other activities
or achievements of the Company; |
| ● | statements regarding the proposed transactions between the Company and OreCorp; |
| ● | plans, projections and estimates included in the Fiscal 2024 Guidance |
| ● | expected production and operation outlooks in the fourth quarter of Fiscal 2024 |
| ● | timing of receipt of permits, licenses, and regulatory approvals. |
| Management’s Discussion and Analysis | Page 40 |
SILVERCORP METALS INC.
Management’s Discussion and Analysis
For the Three and Nine Months Ended December 31, 2023
(Expressed in thousands of U.S.
dollars, except per share data or unless otherwise stated)
Forward-looking statements or information are
subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from
those reflected in the forward-looking statements or information, including, without limitation, risks relating to,
| ● | fluctuating commodity prices; |
| ● | fluctuating currency exchange rates; |
| ● | exploration and development programs; |
| ● | feasibility and engineering reports; |
| ● | title to our properties; |
| ● | operations and political conditions; |
| ● | regulatory environment in China, Mexico and Canada; |
| ● | the completion and timing of the proposed transactions between the Company and OreCorp; |
| ● | general economic conditions; and |
| ● | matters referred to in this MD&A under the heading “Risks and Uncertainties” and other
public filings of the Company. |
This list is not exhaustive of the factors
that may affect any of the Company’s forward-looking statements or information. Forward-looking statements or information are statements
about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ
materially from those expressed or implied in the forward-looking statements or information. Although the Company has attempted to identify
important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated,
estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information.
The Company’s forward-looking statements
and information are necessarily based on a number of estimates, assumptions, beliefs, expectations and opinions of management as of the
date of this MD&A that, while considered reasonable by management of the Company, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. These estimates, assumptions, beliefs, expectations and options include, but
are not limited to, those related to the Company’s ability to carry on current and future operations, including: the duration and
effects of epidemics, pandemics, or other health crises on our operations and workforce; development and exploration activities; the timing,
extent, duration and economic viability of such operations; the accuracy and reliability of estimates, projections, forecasts, studies
and assessments; the Company’s ability to meet or achieve estimates, projections and forecasts; the availability and cost of inputs;
the price and market for outputs; foreign exchange rates; taxation levels; the timely receipt of necessary approvals, licenses or permits;
the ability to meet current and future obligations; the ability to obtain timely financing on reasonable terms when required; the current
and future social, economic and political conditions; and other assumptions and factors generally associated with the mining industry.
Other than as required by applicable securities
laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management’s
assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information.
For the reasons set forth above, investors should not place undue reliance on forward-looking statements and information.
| Management’s Discussion and Analysis | Page 41 |
Exhibit 99.3
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Rui Feng, Chief Executive Officer of Silvercorp Metals Inc. certify
the following:
| 1. |
Review: I have reviewed the interim financial report and interim MD&A (together, the
“interim filings”) of Silvercorp Metals Inc. (the “issuer”) for the interim period ended December 31, 2023. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the
interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that
is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered
by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings fairly present in all material respects
the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim
filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those
terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the
issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s
other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance
that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period
in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports
filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified
in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s
GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s)
and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR – material weakness relating to design: The issuer has disclosed in its interim
MD&A for each material weakness relating to design existing at the end of the interim period |
| (a) | a description of the material weakness; |
| (b) | the impact of the material weakness on the issuer’s financial reporting and its ICFR; and |
| (c) | the issuer’s current plans, if any, or any actions already undertaken, for remediating the material
weakness. |
| 6. |
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s
ICFR that occurred during the period beginning on October 1, 2023 and ended on December 31, 2023 that has materially affected, or is reasonably
likely to materially affect, the issuer’s ICFR. |
Date: February 8, 2024
/s/ “Rui Feng”
Rui Feng
Chief Executive Officer
2
Exhibit 99.4
Form 52-109F2
Certification of
Interim Filings
Full Certificate
I, Derek Liu, Chief Financial Officer of Silvercorp
Metals Inc. certify the following:
| 1. | Review:
I have reviewed the interim financial report and interim MD&A (together, the
“interim filings”) of Silvercorp Metals Inc. (the “issuer”)
for the interim period ended December 31, 2023. |
| 2. | No
misrepresentations: Based on my knowledge, having exercised reasonable diligence,
the interim filings do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated or that is necessary to make a statement not misleading
in light of the circumstances under which it was made, with respect to the period covered
by the interim filings. |
| 3. | Fair
presentation: Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings
fairly present in all material respects the financial condition, financial performance and
cash flows of the issuer, as of the date of and for the periods presented in the interim
filings. |
| 4. | Responsibility:
The issuer’s other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (DC&P) and internal control over financial
reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification
of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design:
Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s
other certifying officer(s) and I have, as at the end of the period covered by the interim
filings |
| (a) | designed
DC&P, or caused it to be designed under our supervision, to provide reasonable assurance
that |
| (i) | material
information relating to the issuer is made known to us by others, particularly during the
period in which the interim filings are being prepared; and |
| (ii) | information
required to be disclosed by the issuer in its annual filings, interim filings or other reports
filed or submitted by it under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation; and |
| (b) | designed
ICFR, or caused it to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control
framework: The control framework the issuer’s other certifying officer(s) and
I used to design the issuer’s ICFR is the Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). |
| 5.2 | ICFR
– material weakness relating to design: The issuer has disclosed in its interim
MD&A for each material weakness relating to design existing at the end of the interim
period |
| (a) | a
description of the material weakness; |
| (b) | the
impact of the material weakness on the issuer’s financial reporting and its ICFR; and |
| (c) | the
issuer’s current plans, if any, or any actions already undertaken, for remediating
the material weakness. |
| 6. | Reporting
changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s
ICFR that occurred during the period beginning on October 1, 2023 and ended on December 31,
2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s
ICFR. |
Date: February 8, 2024
/s/ “Derek Liu”
Derek Liu
Chief Financial Officer
2
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