NEWP New Pacific Metals Corporation

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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: August, 2023

Commission File No. 0001-40381

NEW PACIFIC METALS CORP.
(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]

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SIGNATURES

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: August 24, 2023	NEW PACIFIC METALS CORP.
	/s/ Jalen Yuan
	Jalen Yuan
	Chief Financial Officer

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EXHIBIT INDEX

EXHIBITS 99.4, 99.5, 99.6 and 99.7 INCLUDED WITH THIS REPORT ARE HEREBY INCORPORATED BY REFERENCE AS EXHIBITS TO THE REGISTRANT’S REGISTRATION STATEMENT ON FORM F-10 (FILE NO. 333-273541), 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AMENDED AND SUPPLEMENTED, AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

EXHIBIT	DESCRIPTION OF EXHIBIT
99.1	News Release dated August 24, 2023
99.2	Form 52-109F1 Certificate of Annual Filings - full certificate - CFO
99.3	Form 52-109F1 Certificate of Annual Filings - full certificate - CEO
99.4	New Pacific Metals Corp. Financial Statements for the year ended June 30, 2023
99.5	New Pacific Metals Corp. MD&A for the year ended June 30, 2023
99.6	Consent of Alex Zhang, P. Geo.
99.7	Consent of Deloitte LLP

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Exhibit 99.2

 

Form 52-109F1

Certification of Annual Filings
Full Certificate

 

I, Rui Feng, Chief Executive Officer of New Pacific Metals Corp. certify the following:

 

1.

Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of New Pacific Metals Corp. (the “issuer”) for the financial year ended June 30, 2023.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual 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, for the period covered by the annual filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual 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 annual 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 financial year end

 

(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: N/A

 

5.3

Limitation on scope of design: N/A

 

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6.

Evaluation The issuer’s other certifying officer(s) and I have

 

(a)

evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

(b)

evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

(i)

our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

(ii)

N/A.

 

7.

Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

 

8.

Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: August 24, 2023

 

“Rui Feng”
Rui Feng
Chief Executive Officer

 

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Exhibit 99.3

 

Form 52-109F1

Certification of Annual Filings
Full Certificate

 

I, Jalen Yuan, Chief Financial Officer of New Pacific Metals Corp. certify the following:

 

1.

Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of New Pacific Metals Corp. (the “issuer”) for the financial year ended June 30, 2023.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual 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, for the period covered by the annual filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual 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 annual 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 financial year end

 

(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: N/A

 

5.3

Limitation on scope of design: N/A

 

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6.

Evaluation The issuer’s other certifying officer(s) and I have

 

(a)

evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

(b)

evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

(i)

our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

(ii)

N/A.

 

7.

Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

 

8.

Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: August 24, 2023

 

“Jalen Yuan”
Jalen Yuan
Chief Financial Officer

 

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Exhibit 99.4

 

 

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

June 30, 2023 and 2022

 

(Expressed in US Dollars)

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and the Board of Directors of New Pacific Metals Corp.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated statements of financial position of New Pacific Metals Corp. and subsidiaries (the “Company”) as of June 30, 2023 and 2022, the related consolidated statements of loss, comprehensive loss, changes in equity, and cash flows, for each of the two years in the period ended June 30, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and its financial performance and its cash flows for each of the two years in the period ended June 30, 2023, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Deloitte LLP

 

Chartered Professional Accountants
Vancouver, Canada

August 23, 2023

 

We have served as the Company's auditor since 2004.

 

 

New Pacific Metals Corp.

Consolidated Statements of Financial Position

(Expressed in US dollars) 

 

		Notes				June 30, 2023				June 30, 2022
ASSETS
Current Assets
Cash						$	6,296,312			$	29,322,504
Short-term investments			3				198,375				192,398
Receivables							421,860				3,193,926
Deposits and prepayments							631,402				479,266
							7,547,949				33,188,094
Non-current Assets
Other tax receivable			4				5,530,422				3,631,796
Equity investments			5				283,081				496,741
Plant and equipment			7				1,339,839				1,462,848
Mineral property interests			8				103,606,250				85,298,776
TOTAL ASSETS						$	118,307,541			$	124,078,255
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued liabilities			9			$	2,280,553			$	3,492,269
Due to a related party			10				56,102				377,031
							2,336,655				3,869,300
Total Liabilities							2,336,655				3,869,300
Equity
Share capital			11				155,840,052				153,707,576
Share-based payment reserve							18,636,297				15,395,486
Accumulated other comprehensive income							10,227,980				11,704,949
Deficit							(68,623,306	)			(60,527,857	)
Total equity attributable to the equity holders of the Company							116,081,023				120,280,154
Non-controlling interests			12				(110,137	)			(71,199	)
Total Equity							115,970,886				120,208,955
TOTAL LIABILITIES AND EQUITY						$	118,307,541			$	124,078,255

 

Approved on behalf of the Board:
(Signed) Maria Tang
Director
(Signed) Rui Feng
Director

 

See accompanying notes to the consolidated financial statements

 

 

New Pacific Metals Corp.

Consolidated Statements of Loss

(Expressed in US dollars)

 

						Years Ended June 30,
		Notes				2023				2022
Operating expense
Project evaluation and corporate development						$	(460,901	)		$	(582,253	)
Depreciation							(213,531	)			(174,007	)
Filing and listing							(306,514	)			(296,370	)
Investor relations							(576,065	)			(698,146	)
Professional fees							(387,420	)			(540,371	)
Salaries and benefits							(1,684,063	)			(1,828,059	)
Office and administration							(1,465,132	)			(1,716,546	)
Share-based compensation			11(b)				(3,162,449	)			(941,647	)
							(8,256,075	)			(6,777,399	)
Other income (expense)
Net income from investments			6			$	178,046			$	220,112
Loss on disposal of plant and equipment			7				-				(14,804	)
Loss on disposal of mineral property interest			8(d)				-				(85,052	)
Foreign exchange (loss) gain							(22,103	)			185,475
							155,943				305,731
Net loss						$	(8,100,132	)		$	(6,471,668	)
Attributable to:
Equity holders of the Company						$	(8,095,449	)		$	(6,420,885	)
Non-controlling interests			12				(4,683	)			(50,783	)
Net loss						$	(8,100,132	)		$	(6,471,668	)
Loss per share attributable to the equity holders of the Company
Loss per share - basic and diluted			11(d)			$	(0.05	)		$	(0.04	)
Weighted average number of common shares - basic and diluted			11(d)				156,991,661				155,626,128

 

See accompanying notes to the consolidated financial statements

 

 

New Pacific Metals Corp.

Consolidated Statements of Comprehensive Loss

(Expressed in US dollars)

 

						Years Ended June 30,
		Notes				2023				2022
Net loss						$	(8,100,132	)		$	(6,471,668	)
Other comprehensive loss, net of taxes:
Items that may subsequently be reclassified to net income or loss:
Currency translation adjustment, net of tax of $nil							(1,511,224	)			(1,953,256	)
Other comprehensive loss, net of taxes						$	(1,511,224	)		$	(1,953,256	)
Attributable to:
Equity holders of the Company						$	(1,476,969	)		$	(1,936,430	)
Non-controlling interests			12				(34,255	)			(16,826	)
Other comprehensive loss, net of taxes						$	(1,511,224	)		$	(1,953,256	)
Total comprehensive loss, net of taxes						$	(9,611,356	)		$	(8,424,924	)
Attributable to:
Equity holders of the Company						$	(9,572,418	)		$	(8,357,315	)
Non-controlling interests							(38,938	)			(67,609	)
Total comprehensive loss, net of taxes						$	(9,611,356	)		$	(8,424,924	)

 

See accompanying notes to the consolidated financial statements

 

 

New Pacific Metals Corp.

Consolidated Statements of Cash Flows

(Expressed in US dollars)

 

						Years Ended June 30,
		Notes				2023				2022
Operating activities
Net loss						$	(8,100,132	)		$	(6,471,668	)
Add (deduct) items not affecting cash:
Net income from investments			6				(178,046	)			(220,112	)
Depreciation							213,531				174,007
Loss on disposal of mineral property interest			8(d)				-				85,052
Loss on disposal of plant and equipment			7				-				14,804
Share-based compensation			11(b)				3,244,613				961,484
Unrealized foreign exchange loss (gain)							22,103				(185,475	)
Changes in non-cash operating working capital			17				(1,086,144	)			925,800
Interest received							370,100				152,111
Net cash used in operating activities							(5,513,975	)			(4,563,997	)
Investing activities
Mineral property interest
Capital expenditures							(18,025,316	)			(11,095,064	)
Proceeds on disposals							2,986,188				-
Plant and equipment
Additions							(92,835	)			(538,548	)
Proceeds on disposals			7				-				1,808
Changes in other tax receivable							(1,898,626	)			(1,415,404	)
Net cash used in investing activities							(17,030,589	)			(13,047,208	)
Financing activities
Proceeds from issuance of common shares							825,116				1,782,895
Net cash provided by financing activities							825,116				1,782,895
Effect of exchange rate changes on cash							(1,306,744	)			(1,290,668	)
Decrease in cash							(23,026,192	)			(17,118,978	)
Cash, beginning of the year							29,322,504				46,441,482
Cash, end of the year						$	6,296,312			$	29,322,504
Supplementary cash flow information			17

 

See accompanying notes to the consolidated financial statements

 

 

New Pacific Metals Corp. Consolidated Statements of Changes in Equity

(Expressed in US dollars)

 

				Share capital																				Total equity
																Accumulated								attributable
				Number of								Share-based				other								to the equity				Non-
				common								payment				comprehensive								holders of				controlling
		Notes		shares issued				Amount				reserve				income				Deficit				the Company				interests				Total equity
Balance, July 1, 2021					154,451,263			$	149,629,543			$	16,564,197			$	13,641,379			$	(54,106,972	)		$	125,728,147			$	(3,590	)		$	125,724,557
Options exercised					1,838,331				2,677,895				(895,000	)			-				-				1,782,895				-				1,782,895
Restricted share units distributed					342,233				1,400,138				(1,400,138	)			-				-				-				-				-
Share-based compensation					-				-				1,126,427				-				-				1,126,427				-				1,126,427
Net loss					-				-				-				-				(6,420,885	)			(6,420,885	)			(50,783	)			(6,471,668	)
Currency translation adjustment					-				-				-				(1,936,430	)			-				(1,936,430	)			(16,826	)			(1,953,256	)
Balance, June 30, 2022					156,631,827			$	153,707,576			$	15,395,486			$	11,704,949			$	(60,527,857	)		$	120,280,154			$	(71,199	)		$	120,208,955
Options exercised		11(b)(i)			445,000				892,966				(288,292	)			-				-				604,674				-				604,674
Restricted share units distributed		11(b)(ii)			324,255				1,019,068				(1,019,068	)			-				-				-				-				-
Private placement		11(c)			90,090				220,442				-				-				-				220,442				-				220,442
Share-based compensation		11(b)			-				-				4,548,171				-				-				4,548,171				-				4,548,171
Net loss					-				-				-				-				(8,095,449	)			(8,095,449	)			(4,683	)			(8,100,132	)
Currency translation adjustment					-				-				-				(1,476,969	)			-				(1,476,969	)			(34,255	)			(1,511,224	)
Balance, June 30, 2023					157,491,172			$	155,840,052			$	18,636,297			$	10,227,980			$	(68,623,306	)		$	116,081,023			$	(110,137	)		$	115,970,886

 

See accompanying notes to the consolidated financial statements

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

1. CORPORATE INFORMATION

 

New Pacific Metals Corp. along with its subsidiaries (collectively, the “Company” or “New Pacific”) is a Canadian mining issuer engaged in exploring and developing mineral properties in Bolivia. The Company is in the stage of exploring and advancing the development of its mineral properties and has not yet determined if they contain economically recoverable mineral reserves. The underlying value and the recoverability of the amounts shown for mineral property interests are entirely dependent upon the existence of recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of the mineral properties, and future profitable production or proceeds from the disposition of the mineral property interests.

 

The Company is publicly listed on the Toronto Stock Exchange (“TSX”) under the symbol “NUAG” and on the NYSE American stock exchange (“NYSE-A”) under the symbol “NEWP”. The head office, registered address and records office of the Company are located at 1066 Hastings Street, Suite 1750, Vancouver, British Columbia, Canada, V6E 3X1.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

(a) Statement of Compliance

 

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The policies applied in these consolidated financial statements are based on IFRS in effect as of June 30, 2023.

 

These consolidated financial statements have been prepared on a going concern basis.

 

The consolidated financial statements of the Company as at and for the year ended June 30, 2023 were authorized for issue in accordance with a resolution of the Board of Directors (the “Board”) dated on August 23, 2023.

 

(b) Basis of Consolidation

 

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

 

Subsidiaries are consolidated from the date on which the Company obtains control up to the date of the disposition of control. Control is achieved when the Company has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary; and has the ability to use its power to affect its returns. For non-wholly-owned subsidiaries over which the Company has control, the net assets attributable to outside equity shareholders are presented as “non-controlling interests” in the equity section of the consolidated statements of financial position. Net income or loss 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.

 

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

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

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

 

						Proportion of ownership interest held
Name of subsidiaries		Principal activity		Country of incorporation		June 30, 2023		June 30, 2022		Mineral properties
New Pacific Offshore Inc.		Holding company		BVI (i)		100%		100%
SKN Nickel & Platinum Ltd.		Holding company		BVI		100%		100%
Glory Metals Investment Corp. Limited		Holding company		Hong Kong		100%		100%
New Pacific Investment Corp. Limited		Holding company		Hong Kong		100%		100%
New Pacific Andes Corp. Limited		Holding company		Hong Kong		100%		100%
Fortress Mining Inc.		Holding company		BVI		100%		100%
New Pacific Success Inc.		Holding company		BVI		100%		0%
New Pacific Forward Inc.		Holding company		BVI		100%		0%
Minera Alcira S.A.		Mining company		Bolivia		100%		100%		Silver Sand
NPM Minerales S.A.		Mining company		Bolivia		100%		100%
Colquehuasi S.R.L.		Mining company		Bolivia		100%		100%		Silverstrike
Minera Hastings S.R.L.		Mining company		Bolivia		100%		100%		Carangas
Qinghai Found Mining Co., Ltd.		Mining company		China		82%		82%
(i) British Virgin Islands  (“BVI”)

 

(c) Foreign Currency Translation

 

The functional currency for each subsidiary of the Company is the currency of the primary economic environment in which the entity operates. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is the Canadian dollar (“CAD”). The functional currency of all Bolivian subsidiaries is the US dollar (“USD”). The functional currency of the Chinese subsidiary is the Chinese Renminbi (“RMB”).

 

Foreign currency monetary assets and liabilities are translated into the functional currency using exchange rates prevailing at the balance sheet date. Foreign currency non-monetary assets are translated using exchange rates prevailing at the transaction date. Foreign exchange gains and losses are included in the determination of net income.

 

The consolidated financial statements are presented in USD. The financial position and results of the Company’s entities are translated from functional currencies to USD as follows:

 

-

assets and liabilities are translated using exchange rates prevailing at the reporting date;

-

income and expenses are translated using average exchange rates prevailing during the period; and

-

all resulting exchange gains or losses are included in other comprehensive income or loss.

 

The Company treats inter-company loan balances, which are not intended to be repaid in the foreseeable future, as part of its net investment. When a foreign entity is sold, the historical exchange differences plus the foreign exchange impact that arises on the transaction are recognized in the consolidated statement of loss as part of the gain or loss on sale.

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

(d) Plant and Equipment

 

Plant and equipment are initially recorded at cost, including all directly attributable costs to bring the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. Plant and equipment are subsequently measured at cost less accumulated depreciation and applicable impairment losses. Depreciation is computed using the straight-line method based on the nature and estimated useful lives as follows:

 

Land	Not depreciated
Buildings	20 Years
Machinery	5 Years
Motor vehicles	5 Years
Office equipment and furniture	5 Years
Computer software	5 Years

 

Subsequent costs that meet the asset recognition criteria are capitalized while costs incurred that do not extend the economic useful life of an asset are considered repair and maintenance, which are accounted for as an expense recognized during the period. The Company conducts an annual assessment of the residual balances, useful lives, and depreciation methods being used for plant and equipment and any changes are applied prospectively.

 

Assets under construction are capitalized as construction-in-progress. The cost of construction-in-progress comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use. Construction-in-progress assets are not depreciated until they are completed and available for use.

 

(e) Mineral Property Interests

 

The cost of acquiring mineral rights and properties either as an individual asset purchase or as part of a business combination is capitalized and represents the property’s fair value at the date of acquisition. Fair value is determined by estimating the value of the property’s reserves, resources and exploration potential.

 

Exploration and evaluation costs, incurred associated with specific mineral rights and properties prior to demonstrable technical feasibility and commercial viability of extracting a mineral resource, are capitalized.

 

The Company determines that a property is in the development stage when its technical feasibility and commercial viability are demonstrable. Costs incurred in the development stage prior to commercial production are capitalized and included in the carrying amount of the related property in the period incurred. Proceeds from sales during this period, if any, are offset against costs capitalized.

 

(f) Impairment of Long-lived Assets

 

Long-lived assets, including mineral property interests, plant and equipment are reviewed and tested for impairment when indicators of impairment are considered to exist. Impairment assessments are conducted at the level of cash-generating units (“CGU”) or at the individual asset level, whichever is the lowest level for which identifiable cash inflows are largely independent of the cash flows of other assets. An impairment loss is recognized for any excess of carrying amount of a CGU over its recoverable amount, which is the greater of its fair value less costs to sell and value in use. For mineral properties, the recoverable amount is estimated as the discounted future net cash inflows expected to be derived from expected future

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

production, metal prices, and net proceeds from the disposition of assets on retirement, less operating and capital costs. Impairment losses are recognized in the period they are incurred.

 

For exploration and evaluation assets, indication of impairment includes but is not limited to expiration of the right to explore, substantive expenditures in the specific area are neither budgeted nor planned, and exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources.

 

Impairment losses are reversed if there is evidence the loss no longer exists or has decreased. This reversal is recognized in net income in the period the reversal occurs limited by the carrying value that would have been determined, net of any depreciation, had no impairment charge been recognized in prior years.

 

(g) Share-based Payments

 

The Company grants share-based awards, including restricted share units (“RSUs”) and stock options to directors, officers, employees, and consultants.

 

For share-based awards, the fair value is charged to the consolidated statements of loss and credited to equity, on a straight-line basis over the vesting period, after adjusting for the estimated number of awards that are expected to vest. The fair value of share units is determined based on quoted market price of the Company’s common shares at the date of grant. The fair value of the stock options granted to employees, officers, and directors is determined at the date of grant using the Black-Scholes option pricing model with market related input. The fair value of stock options granted to consultants is measured at the fair value of the services delivered unless that fair value cannot be estimated reliably, which then is determined using the Black-Scholes option pricing model. Stock options with graded vesting schedules are accounted for as separate grants with different vesting periods and fair values.

 

At each statement of financial position date prior to vesting, the cumulative expense representing the extent to which the vesting period has expired and management’s best estimate of the awards that are ultimately expected to vest is computed. The movement in cumulative expense is recognized in the consolidated statements of loss with a corresponding entry within equity. The amount recognized as expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met.

 

(h) Income Taxes

 

Current tax for each taxable entity is based on the local taxable income at the local substantively enacted statutory tax rate at the balance sheet date and includes adjustments to taxes payable or recoverable in respect to previous periods.

 

Current tax assets and current tax liabilities are only offset if a legally enforceable right exists to set off the amounts, and the Company intends to settle on a net basis, or to realize the asset and settle the liability simultaneously.

 

Deferred tax is recognized using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities, and their carrying amounts for financial reporting purposes. Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilized, except:

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

-

where the deferred tax asset or liability relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

-

in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

 

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered.

 

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been substantively enacted by the end of the reporting period.

 

Deferred tax relating to items recognized outside profit or loss is recognized in other comprehensive income or directly in equity.

 

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

 

(i) Earnings (loss) per Share

 

Earnings (loss) per share is computed by dividing net income (loss) attributable to equity holders of the Company by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if additional common shares are assumed to be issued under securities that entitle their holders to obtain common shares in the future. For vested RSUs, the full outstanding numbers as at the end of the period are included in the calculation of diluted earnings per share. For stock options, the number of additional shares for inclusion in diluted earnings per share calculations is determined when the exercise price is less than the average market price of the Company’s common shares; the stock options are assumed to be exercised and the proceeds are used to repurchase common shares at the average market price for the period. The incremental number of common shares issued under stock options and repurchased from proceeds is included in the calculation of diluted earnings per share. When loss per share is presented in the period, the Company’s calculation of diluted loss per share excludes any incremental shares from the assumed calculation of RSUs and stock options as they would be anti-dilutive.

 

(j) Financial Instruments

 

Initial recognition:

On initial recognition, all financial assets and financial liabilities are recorded at fair value adjusted for directly attributable transaction costs except for financial assets and liabilities classified as fair value through profit or loss (“FVTPL”), in which case transaction costs are expensed as incurred.

Subsequent measurement of financial assets:

Subsequent measurement of financial assets depends on the classification of such assets.

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

I.

Non-equity instruments:

IFRS 9 includes a single model that has only two classification categories for financial instruments other than equity instruments: amortized cost and fair value. To qualify for amortized cost accounting, the instrument must meet two criteria:

i.

The objective of the business model is to hold the financial asset for the collection of the cash flows; and

ii.

All contractual cash flows represent only principal and interest on that principal.

		All other instruments are mandatorily measured at fair value.
	II.	Equity instruments:

At initial recognition, for equity instruments other than held for trading, the Company may make an irrevocable election to designate it as either FVTPL or fair value through other comprehensive income (“FVTOCI”).

 

Financial assets classified as amortized cost are measured using the effective interest method. Amortized cost is calculated by taking into account any discount or premiums on acquisition and fees that are an integral part of the effective interest method. Amortization from the effective interest method is included in finance income.

 

Financial assets classified as FVTPL are measured at fair value with changes in fair values recognized in profit or loss.

 

Impairment of financial assets carried at amortized cost:

The Company assesses at the end of each reporting period whether there is objective evidence that financial assets or group of financial assets measured at amortized cost are impaired. Impairment losses and reversal of impairment losses, if any, are recognized in profit or loss in the period they are incurred.

 

Subsequent measurement of financial liabilities:

Financial liabilities classified as amortized cost are measured using the effective interest method. Amortized cost is calculated by taking into account any discount or premiums on acquisition and fees that are an integral part of the effective interest method. Amortization using the effective interest method is included in finance costs.

 

The Company classifies its financial instruments as follows:

-	Financial assets classified as FVTPL: cash, short-term investments – bonds, and equity investments;

-	Financial assets classified as amortized cost: receivables and short-term investments – guaranteed investment certificates; and

-	Financial liabilities classified as amortized cost: trade and other payables, and due to related parties.

 

Bonds:

The Company acquired bonds issued by other companies from various industries through the open market. These bonds are held to receive coupon interest payments and to realize potential gains. The bonds may also be disposed on demand through the open market should the Company require funds for other operational or investment needs. Bonds are classified as FVTPL and are measured at fair value on initial recognition and subsequent measurement.

 

Equity investments:

Equity investments represent equity interests of other publicly-traded or privately-held companies that the Company has acquired through the open market or through private placements. These equity interests consist of common shares and warrants. Equity investments are classified as FVTPL and are measured at

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

fair value on initial recognition and subsequent measurement. The fair value of warrants was determined using the Black-Scholes pricing model as at the acquisition date as well as at each period end.

 

Derecognition of financial assets and financial liabilities:

A financial asset is derecognized when:

-

The rights to receive cash flows from the asset have expired; or

-

The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

 

Gains and losses on derecognition of financial assets and liabilities classified as amortized cost are recognized in profit or loss when the instrument is derecognized or impaired, as well as through the amortization process.

 

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability. In this case, a new liability is recognized, and the difference in the respective carrying amounts is recognized in the consolidated statement of income.

 

Offsetting of financial instruments:

Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial position if and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle liabilities simultaneously.

 

Fair value of financial instruments:

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without deduction for transaction costs. For financial instruments that are not traded in active markets, the fair value is determined using appropriate valuation techniques, such as using a recent arm’s length market transaction between knowledgeable and willing parties, discounted cash flow analysis, reference to the current fair value of another instrument that is substantially the same, or other valuation models.

 

(k)	Significant Judgments and Estimation Uncertainties

 

Many amounts included in the consolidated financial statements require management to make judgments and/or estimates. These judgments and estimates are continuously evaluated and are based on management’s experience and knowledge of relevant facts and circumstances. Actual results may differ from the amounts included in the consolidated statement of financial position.

 

Areas of significant judgment include:

-	Capitalization of expenditures with respect to exploration, evaluation and development costs to be included in mineral rights and properties;

-	Determination of functional currency;

-	Recognition, measurement and impairment or impairment reversal assessment for mineral rights and properties; and

-	Accounting assessment and classification for equity investments and short-term investments.

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

Areas of significant estimates include:

-

The estimated fair values of CGUs for impairment or impairment reversal tests, including estimates of future costs to produce proven and probable reserves, future commodity prices, discount rates, probabilities of expected cash flows from disposal and salvage value of plant and equipment;

-

Valuation input and forfeiture rates used in calculation of share-based compensation; and

-

Valuation of securities that do not have a quoted market price.

 

The Company estimates its mineral resources based on information compiled by qualified persons as defined in accordance with National Instrument 43-101.

 

3. SHORT-TERM INVESTMENTS

 

Short-term investments consist of the following:

 

		June 30, 2023				June 30, 2022
Bonds		$	198,375			$	192,398

 

The Company acquired bonds issued by other corporations from various industries through the open market. These bonds were held to receive coupon interest payments and to realize potential gains. The bonds may also be disposed on demand through the open market should the Company require funds for operational or investment needs. The Company accounts for the bonds at fair value at each reporting date.

 

The continuity of short-term investments is summarized as follows:

 

		Amount
Balance, July 1, 2021		$	143,914
Gain on fair value change			48,484
Balance, June 30, 2022		$	192,398
Gain on fair value change			5,977
Balance, June 30, 2023		$	198,375

 

4. OTHER TAX RECEIVABLE

 

Other tax receivable is composed of value-added tax (“VAT”) imposed by the Bolivian government. The Company had VAT outputs through its exploration costs and general expenses incurred in Bolivia. These VAT outputs are deductible against future VAT inputs that will be generated through sales.

 

5. EQUITY INVESTMENTS

 

The equity investments are summarized as follows:

 

		June 30, 2023				June 30, 2022
Common shares
Public companies		$	283,081			$	496,741
		$	283,081			$	496,741

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

The continuity of equity investments is summarized as follows:

 

						Accumulated mark-to-
						market gain included
		Fair value				in deficit
Balance, July 1, 2022		$	496,526			$	3,971,145
Change in fair value			19,517				19,517
Foreign exchange impact			(19,302	)			-
Balance, June 30, 2022		$	496,741			$	3,990,662
Change in fair value			(198,031	)			(198,031	)
Foreign exchange impact			(15,629	)			-
Balance, June 30, 2023		$	283,081			$	3,792,631

 

6. INCOME FROM INVESTMENTS

 

Income from investments consist of:

 

		Years Ended June 30,
		2023				2022
Fair value change on equity investments		$	(198,031	)		$	19,517
Fair value change on bonds			5,977				48,484
Interest income			370,100				152,111
Net income from investments		$	178,046			$	220,112

 

7. PLANT AND EQUIPMENT

 

		Land and												Office equipment				Computer
Cost		building				Machinery				Motor vehicles				and furniture				software				Total
Balance, July 1, 2021		$	630,000			$	202,247			$	242,582			$	315,241			$	201,735			$	1,591,805
Additions			-				135,450				349,929				53,171				-				538,550
Disposals			-				(5,768	)			(13,486	)			(21,292	)			(269	)			(40,815	)
Reclassifed among asset groups			-				76,426				-				(76,426	)			-				-
Foreign currency translation impact			-				3				7				(4,330	)			(7,692	)			(12,012	)
Balance, June 30, 2022		$	630,000			$	408,358			$	579,032			$	266,364			$	193,774			$	2,077,528
Additions			-				77,259				-				15,576				-				92,835
Disposals			-				-				-				(12,259	)			(99,442	)			(111,701	)
Foreign currency translation impact			-				-				-				(2,406	)			(817	)			(3,223	)
Balance, June 30, 2023		$	630,000			$	485,617			$	579,032			$	267,275			$	93,515			$	2,055,439
Accumulated depreciation and amortization
Balance, July 1, 2021		$	-			$	(72,071	)		$	(137,584	)		$	(135,591	)		$	(127,920	)		$	(473,166	)
Depreciation			-				(44,169	)			(66,854	)			(38,907	)			(24,077	)			(174,007	)
Disposals			-				2,602				5,869				15,502				230				24,203
Foreign currency translation impact			-				(2	)			(3	)			2,996				5,299				8,290
Balance, June 30, 2022		$	-			$	(113,640	)		$	(198,572	)		$	(156,000	)		$	(146,468	)		$	(614,680	)
Depreciation			-				(57,272	)			(98,338	)			(35,170	)			(22,751	)			(213,531	)
Disposals			-				-				-				12,259				99,442				111,701
Foreign currency translation impact			-				-				-				1,627				(717	)			910
Balance, June 30, 2023		$	-			$	(170,912	)		$	(296,910	)		$	(177,284	)		$	(70,494	)		$	(715,600	)
Carrying amount
Balance, June 30, 2022		$	630,000			$	294,718			$	380,460			$	110,364			$	47,306			$	1,462,848
Balance, June 30, 2023		$	630,000			$	314,705			$	282,122			$	89,991			$	23,021			$	1,339,839

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

During the year ended June 30, 2023, certain plant and equipment were disposed for proceeds of $nil (year ended June 30, 2022, $1,808) and loss of $nil (year ended June 30, 2022, loss of $14,804).

 

8. MINERAL PROPERTY INTERESTS

 

(a) Silver Sand Project

 

On July 20, 2017, the Company acquired the Silver Sand Project. The Project is located in the Colavi District of the Potosí Department, in Southwestern Bolivia, 33 kilometres (“km”) northeast of Potosí City, the department capital. The project covers an area of approximately 5.42 km² at an elevation of 4,072 metres (“m”) above sea level.

 

For the year ended June 30, 2023, total expenditures of $6,316,500 (year ended June 30, 2022 - $7,639,287) were capitalized under the project.

 

(b) Carangas Project

 

In April 2021, the Company signed an agreement with a private Bolivian company to acquire a 98% interest in the Carangas Project. The project is located approximately 180 km southwest of the city of Oruro and within 50 km from Bolivia’s border with Chile. The private Bolivian company is 100% owned by Bolivian nationals and holds title to the three exploration licenses that cover an area of 40.75 km².

 

Under the agreement, the Company is required to cover 100% of the future expenditures on exploration, mining, development, and production activities for the project. The agreement has a term of 30 years and is renewable for an additional 15 years.

 

For the year ended June 30, 2023, total expenditures of $10,817,356 (year ended June 30, 2022-$5,224,138) were capitalized under the project.

 

(c) Silverstrike Project

 

In December 2019, the Company acquired a 98% interest in the Silverstrike Project from a private Bolivian corporation. The project covers an area of approximately 13 km² and is located approximately 140 km southwest of the city of La Paz, Bolivia.

 

For the year ended June 30, 2023, total expenditures of $1,409,101 (year ended June 30, 2022 - $142,078) were capitalized under the project.

 

(d) RZY Project

 

The RZY Project, located in Qinghai, China was an early stage silver-lead-zinc exploration project. The RZY Project is located approximately 237 km from the city of Yushu Tibetan Autonomous Prefecture. In 2016, the Qinghai Government issued a moratorium which suspended exploration for 26 mining projects in the region, including the RZY Project, and classified the region as a National Nature Reserve Area.

 

During Fiscal 2020, the Company’s subsidiary, Qinghai Found Mining Co., Ltd. (“Qinghai Found”), reached a compensation agreement with the Qinghai Government for the RZY Project. Pursuant to the agreement, Qinghai Found will surrender its title to the RZY Project to the Qinghai Government for one-time cash compensation of $2.99 million (RMB ¥20 million) (the “RZY compensation transaction”).

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

On June 25, 2022, the Qinghai Government completed its approval process of the RZY compensation transaction. As a result, the Company disposed its RZY Project for cash consideration of $2,986,188 (RMB ¥20 million), which is included in the receivables balance as at June 30, 2022 and was received in full during the year ended June 30, 2023. For the year ended June 30, 2022, a loss of $85,052 was recognized upon disposal of the RZY Project.

 

The continuity schedule of mineral property acquisition costs and deferred exploration and development costs is summarized as follows:

 

Cost		Silver Sand				Silverstrike				Carangas				RZY Project				Total
Balance, July 1, 2021		$	69,245,500			$	3,163,304			$	255,250			$	2,871,368			$	75,535,422
Capitalized exploration expenditures
Reporting and assessment			353,109				40				-				-				353,149
Drilling and assaying			4,990,082				1,625				3,752,094				-				8,743,801
Project management and support			1,917,060				45,773				1,020,422				-				2,983,255
Camp service			364,507				61,578				443,810				-				869,895
Geological surveys			-				25,508				-				-				25,508
Permit and license			14,529				7,554				7,812				-				29,895
Disposition			-				-				-				(3,071,240	)			(3,071,240	)
Foreign currency impact			(316,189	)			(36,150	)			(18,442	)			199,872				(170,909	)
Balance, June 30, 2022		$	76,568,598			$	3,269,232			$	5,460,946			$	-			$	85,298,776
Capitalized exploration expenditures
Reporting and assessment			1,008,174				-				88,558				-				1,096,732
Drilling and assaying			1,925,695				977,881				8,289,678				-				11,193,254
Project management and support			2,719,120				256,569				1,424,573				-				4,400,262
Camp service			467,690				174,651				1,005,158				-				1,647,499
Permit and license			195,821				-				9,389				-				205,210
Foreign currency impact			(201,972	)			(24,680	)			(8,831	)			-				(235,483	)
Balance, June 30, 2023		$	82,683,126			$	4,653,653			$	16,269,471			$	-			$	103,606,250

 

9. TRADE AND OTHER PAYABLES

 

Trade and other payables consist of:

 

		June 30, 2023				June 30, 2022
Trade payable		$	1,391,525			$	2,087,599
Accrued liabilities			889,028				1,404,670
		$	2,280,553			$	3,492,269

 

10. 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 consolidated financial statements are as follows:

 

Due to a related party		June 30, 2023				June 30, 2022
Silvercorp Metals Inc.		$	56,102			$	377,031

 

(a) Silvercorp Metals Inc. (“Silvercorp”) has one director and one officer (June 30, 2022 – two directors and one officer) in common with the Company. Silvercorp and the Company share office space and Silvercorp provides various general and administrative services to the Company. The Company expects to continue making payments to Silvercorp in the normal course of business. Office and administrative

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

expenses rendered and incurred by Silvercorp on behalf of the Company for the year ended June 30, 2023 were $844,949 (year ended June 30, 2022 - $726,387).

 

During the year ended June 30, 2022, the Company’s subsidiary Qinghai Found borrowed a loan of $283,688 (RMB ¥1.9 million) from one of Silvercorp’s subsidiaries in China to facilitate the closure of the RZY compensation transaction. During the year ended June 30, 2023, the loan plus interest of $23,422 were repaid in full.

 

(b)

Compensation of key management personnel

 

The remuneration of directors and other members of key management personnel for the years ended June 30, 2023 and 2022 are as follows:

 

		Years ended June 30,
		2023				2022
Director’s cash compensation		$	59,715			$	82,608
Director’s share-based compensation			624,263				338,702
Key management’s cash compensation			867,499				988,753
Key management’s share-based compensation			2,137,888				461,947
		$	3,689,365			$	1,872,010

 

Other than as disclosed above, the Company does not have any ongoing contractual or other commitments resulting from transactions with related parties.

 

11. SHARE CAPITAL

 

(a)

Share Capital - authorized share capital

 

The Company’s authorized share capital consists of an unlimited number of common shares without par value.

 

(b)

Share-based compensation

 

The Company has a share-based compensation plan (the “Plan”) under which the Company may issue stock options and restricted share units (“RSUs”). The maximum number of common shares to be reserved for issuance on any share-based compensation under the Plan is a rolling 10% of the issued and outstanding common shares from time to time.

 

For the year ended June 30, 2023, a total of $3,162,449 (year ended June 30, 2022 - $941,647) was recorded as share-based compensation expense.

 

For the year ended June 30, 2023, a total of $82,164 (year ended June 30, 2022 - $19,837) was included in the project evaluation and corporate development expense.

 

For the year ended June 30, 2023, a total of $1,303,558 (year ended June 30, 2022 - $164,943) was capitalized under mineral property interests.

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

(i)

Stock options

 

The continuity schedule of stock options, as at June 30, 2023, is as follows:

 

		Number of options				Weighted average exercise price (CAD$)
Balance, July 1, 2021			3,115,832				1.56
Options Granted			2,702,000				3.72
Options exercised			(1,838,331	)			1.23
Options forfeited			(317,334	)			3.13
Balance, June 30, 2022			3,662,167				3.18
Options Granted			1,186,000				3.47
Options exercised			(445,000	)			1.82
Options forfeited			(446,000	)			3.66
Balance, June 30, 2023			3,957,167				3.37

 

During the year ended June 30, 2023, a total of 1,186,000 (year ended June 30, 2022 – 2,702,000) options with a life of five years were granted to directors, officers, and employees at an exercise price of CAD$3.42 to CAD$3.92 (year ended June 30, 2022 – CAD$3.33 to CAD$4.00) per share subject to a vesting schedule over a three-year term with 1/6 of the options vesting every 6 months after the date of grant until fully vested.

 

The fair value of the options granted during the year ended June 30, 2023 and 2022 were calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

		Years ended June 30,
		2023				2022
Risk free interest rate			3.31	%			2.33	%
Expected volatility			79.79	%			76.40	%
Expected life of options in years			2.75				2.75
Estimated forfeiture rate			14.4	%			14.1	%

 

The weighted average grant date fair value of options granted during the year ended June 30, 2023, was CAD$1.75 (year ended June 30, 2022 – CAD$1.80). Volatility was determined based on the historical volatility of the Company’s shares over the estimated life of stock options.

 

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

 

Exercise				Number of options outstanding as at				Weighted average remaining				Number of options exercisable as at				Weighted average
prices (CAD$)				2023-06-30				contractual life (years)				2023-06-30				exercise price (CAD$)
$	2.15				774,167				0.65				774,167				$2.15
$	3.33				713,000				3.60				237,667				$3.33
$	3.42				939,000				4.56				-				-
$	3.67				120,000				4.57				-				-
$	3.89				10,000				3.65				3,334				$3.89
$	3.92				50,000				4.79				-				-
$	4.00				1,351,000				3.93				452,998				$4.00
	$2.15 - $4.00				3,957,167				3.41				1,468,166				$2.92

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

Subsequent to June 30, 2023, a total of 4,000 options with exercise price of CAD$4.00 were forfeited.

 

(ii)

RSUs

 

The continuity schedule of RSUs, as at June 30, 2023, is as follows: 

 

		Number of shares				Weighted average grant date closing price per share (CAD$)
Balance, July 1, 2021			794,900			$	5.48
Granted			1,299,000				3.80
Forfeited			(274,451	)			5.25
Distributed			(342,233	)			5.21
Balance, June 30, 2022			1,477,216			$	4.11
Granted			967,000				3.48
Forfeited			(222,801	)			4.01
Distributed			(324,255	)			4.20
Balance, June 30, 2023			1,897,160			$	3.79

 

During the year ended June 30, 2023, a total of 967,000 (year ended June 30, 2022 – 1,299,000) RSUs were granted to directors, officers, employees, and consultants of the Company at grant date closing price of CAD$3.42 to CAD$3.92 per share (year ended June 30, 2022 – CAD$3.33 to CAD$4.00 per share) subject to a vesting schedule over a three-year term with 1/6 of the RSUs vesting every six months from the date of grant.

 

Subsequent to June 30, 2023, a total of 114,168 RSUs were vested and distributed.

 

(c)

Private placement

 

On February 28, 2023, the Company closed a private placement to issue a total of 90,090 common shares at a price of CAD$3.33 (US$2.45) per share for gross proceeds of $220,442. The Company’s president, Mr. Andrew Williams, subscribed 75,075 common shares and one of the Company’s director, Mr. Dickson Hall, subscribed 15,015 common shares in this private placement.

 

(d)

Loss per share

 

		For the years ended June 30,
		2023												2022
		Loss				Shares				Per-Share				Income				Shares				Per-Share
		(Numerator)				(Denominator)				Amount				(Numerator)				(Denominator)				Amount
Net loss Attributable to equity holders of the Company		$	(8,095,449	)										$	(6,420,885	)
Basic loss per share			(8,095,449	)			156,991,661			$	(0.05	)			(6,420,885	)			155,626,128			$	(0.04	)
Effect of dilutive securities:
Stock options and RSUs							-												-
Diluted loss per share		$	(8,095,449	)			156,991,661			$	(0.05	)		$	(6,420,885	)			155,626,128			$	(0.04	)

 

Anti-dilutive options that are not included in the diluted loss per share calculation were nil for the year ended June 30, 2023 (year ended June 30, 2022 – nil).

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

12. NON-CONTROLLING INTEREST

 

		Qinghai Found
Balance, July 1, 2021		$	(3,590	)
Share of net loss			(50,783	)
Share of other comprehensive loss			(16,826	)
Balance, June 30, 2022		$	(71,199	)
Share of net loss			(4,683	)
Share of other comprehensive loss			(34,255	)
Balance, June 30, 2023		$	(110,137	)

 

As at June 30, 2023 and June 30, 2022, the non-controlling interest in the Company’s subsidiary Qinghai Found was 18%.

 

13. FINANCIAL INSTRUMENTS

 

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

 

(a)

Fair Value

 

The Company classifies its fair value measurements within a fair value hierarchy, which reflects the significance of 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.

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

The following table sets forth the Company’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy as at June 30, 2023 and June 30, 2022 that are not otherwise disclosed. As required by IFRS 13, financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

		Fair value as at June 30, 2023
Recurring measurements		Level 1				Level 2				Level 3				Total
Financial Assets
Cash		$	6,296,312			$	-			$	-			$	6,296,312
Short-term investments			198,375				-				-				198,375
Equity investments			283,081				-				-				283,081

 

		Fair value as at June 30, 2022
Recurring measurements		Level 1				Level 2				Level 3				Total
Financial Assets
Cash		$	29,322,504			$	-			$	-			$	29,322,504
Short-term investments			192,398				-				-				192,398
Equity investments			496,741				-				-				496,741

 

Fair value of other financial instruments excluded from the table above approximates their carrying amount as of June 30, 2023, and June 30, 2022, respectively, due to the short-term nature of these instruments.

 

There were no transfers into or out of Level 3 during the year ended June 30, 2023.

 

(b)

Liquidity Risk

 

The Company has a history of losses and no operating revenues from its operations. Liquidity risk is the risk that the Company will not be able to meet its short term business requirements. As at June 30, 2023, the Company had a working capital position of $5,211,294 and sufficient cash resources to meet the Company’s short-term financial liabilities and its planned exploration and development expenditures on various projects in Bolivia for, but not limited to, the next 12 months.

 

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:

 

		June 30, 2023								June 30, 2022
		Due within a year				Total				Total
Accounts payable and  accrued liabilities		$	2,280,553			$	2,280,553			$	3,492,269
Due to a related party			56,102				56,102				377,031
		$	2,336,655			$	2,336,655			$	3,869,300

 

 

New Pacific Metals Corp.

Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

(c)

Foreign Exchange Risk

 

The Company is exposed to foreign exchange risk when it undertakes transactions and holds assets and liabilities denominated in foreign currencies other than its functional currencies. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is CAD. The functional currency of all Bolivian subsidiaries is USD. The functional currency of the Chinese subsidiary is RMB. The Company currently does not engage in foreign exchange currency hedging. The Company’s exposure to foreign exchange risk that could affect net income is summarized as follows:

 

Financial assets denominated in foreign currencies other than
relevant functional currency		As at June 30, 2023				June 30, 2022
United States dollars		$	320,994			$	468,714
Bolivianos			869,869				886,188
Total		$	1,190,863			$	1,354,902
Financial liabilities denominated in foreign currencies other than
relevant functional currency
United States dollars		$	73,970			$	-
Bolivianos			1,543,889				1,619,261
Total		$	1,617,859			$	1,619,261

 

As at June 30, 2023, with other variables unchanged, a 1% strengthening (weakening) of the USD against the CAD would have increased (decreased) net income by approximately $2,500.

 

As at June 30, 2023, with other variables unchanged, a 1% strengthening (weakening) of the Bolivianos against the USD would have increased (decreased) net income by approximately $6,800.

 

(d)

Interest Rate Risk

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company holds a portion of cash in bank accounts that earn variable interest rates. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have significant impact on the fair values of the financial instruments as of June 30, 2023. The Company, from time to time, also owns guaranteed investment certificates (“GICs”) and bonds that earn interest payments at fixed rates to maturity. Fluctuation in market interest rates usually will have an impact on bond’s fair value. An increase in market interest rates will generally reduce bond’s fair value while a decrease in market interest rates will generally increase it. The Company monitors market interest rate fluctuations closely and adjusts the investment portfolio accordingly.

 

(e)

Credit Risk

 

Credit risk is the risk of financial loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposure to credit risk is primarily associated with cash, bonds, and receivables. The carrying amount of financial assets included on the statement of financial position represents the maximum credit exposure.

 

The Company has deposits of cash that meet minimum requirements for quality and liquidity as stipulated by the Board. Management believes the risk of loss to be remote, as the majority of its cash are held with major financial institutions. Bonds by nature are exposed to more credit risk than cash. The Company manages its risk associated with bonds by only investing in large globally recognized corporations from

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

  

diversified industries. As at June 30, 2023, the Company had a receivables balance of $421,860 (June 30, 2022 - $3,193,926). There were no material amounts in receivables which were past due on June 30, 2023 (June 30, 2022 - $nil).

 

(f)

Equity Price Risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on global financial markets. Based upon the Company’s portfolio at June 30, 2023, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign exchange effects would have resulted in an increase (decrease) to net income of approximately $30,000.

 

14. CAPITAL MANAGEMENT

 

The objectives of the capital management policy are to safeguard the Company’s ability to support exploration and operating requirements on an ongoing basis, continue the investment in high quality assets along with safeguarding the value of its mineral properties, and support any expansionary plans.

 

The capital of the Company consists of the items included in equity less cash and bonds. Risk and capital management are primarily the responsibility of the Company’s corporate finance function and is monitored by the Board. The Company manages the capital structure and makes adjustments depending on economic conditions. Significant risks are monitored and actions are taken, when necessary, according to the Company’s approved policies.

 

15. INCOME TAXES

 

The provision for income taxes differs from the amount computed by applying the cumulative Canadian federal and provincial income tax rates to the loss before income tax provision due to the following:

 

		Years ended June 30,
		2023				2022
Canadian statutory tax rate			27.00	%			27.00	%
Loss before income taxes		$	(8,100,132	)		$	(6,471,668	)
Income tax recovery computed at Canadian statutory rates			(2,187,036	)			(1,747,348	)
Foreign tax rates different from statutory rate			(178,193	)			234,160
Permanent items and other			1,169,318				459,813
Change in unrecognized deferred tax assets			1,195,911				1,053,375
		$	-			$	-

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

Deferred tax assets are recognized to the extent that the realization of the related tax benefit through future taxable profit is probable. The ability to realize the tax benefits is dependent upon numerous factors, including the future profitability of operations in the jurisdiction in which the tax benefit arise. Deductible temporary differences and unused tax losses for which no deferred tax assets have been recognized are attributable to the following:

 

		June 30, 2023				June 30, 2022
Non-capital loss carry forward		$	16,926,886			$	13,633,304
Capital loss carry forward			19,072,271				19,596,218
Plant and equipment			217,340				190,799
Equity investments			568,995				408,622
Share issuance cost			506,890				1,041,630
		$	37,292,382			$	34,870,573

 

As of June 30, 2023, the Company has the following net operating losses, expiring various years to 2043 and available to offset future taxable income in Canada, Bolivia and China, respectively:

 

		Canada				Bolivia				China
2023			-				22,571				-
2024			-				115,876				-
2026			-				763,735				-
2027			-				1,312,466				-
2028			-				1,787,409				-
2032			-				-				251,040
2033			-				-				24,935
2041			3,251,360				-				-
2042			3,496,560				-				-
2043			5,900,934				-				-
		$	12,648,854			$	4,002,057			$	275,975

 

As at June 30, 2023, the Company had capital loss carry forward of $19,072,271 that can be carried indefinitely in Canada (June 30, 2022 - $19,596,218).

 

16. SEGMENTED INFORMATION

 

As at and for the year ended June 30, 2023, the Company operates in four (as at and for the year ended June 30, 2022 – four) reportable operating segments, one being the corporate segment; the other three being the exploration and development segments based on mineral properties in Bolivia. These reportable segments are components of the Company where separate financial information is available that is evaluated regularly by the Company’s Chief Executive Officer, the chief operating decision maker (“CODM”).

 

Effective July 1, 2022, the Company revised its reportable segments to reflect recent changes in the CODM’s way of reviewing and assessing the Company’s performance. As a result, the “Silver Sand”, “Carangas”, and “Silverstrike” mineral projects, which were previously included in the “Bolivia” segment, are separately presented. The previously presented “China” reportable segment is now being reported as part of the Corporate segment. The comparative information has been reclassified as a result of these changes.

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

(a)

Segment information for assets and liabilities are as follows:

 

		June 30, 2023
						Exploration and Development
		Corporate				Silver Sand				Carangas				Silverstrike				Total
Cash		$	6,232,985			$	58,497			$	260			$	4,570			$	6,296,312
Short-term investments			198,375				-				-				-				198,375
Equity investments			283,081				-				-				-				283,081
Plant and equipment			104,450				517,065				58,212				660,112				1,339,839
Mineral property interests			-				82,683,126				16,269,471				4,653,653				103,606,250
Other assets			908,823				3,563,256				1,888,293				223,312				6,583,684
Total Assets		$	7,727,714			$	86,821,944			$	18,216,236			$	5,541,647			$	118,307,541
Total Liabilities		$	(1,307,795	)		$	(228,966	)		$	(795,379	)		$	(4,515	)		$	(2,336,655	)

 

		June 30, 2022
						Exploration and Development
		Corporate				Silver Sand				Carangas				Silverstrike				Total
Cash		$	27,721,156			$	1,008,477			$	584,375			$	8,496			$	29,322,504
Short-term investments			192,398				-				-				-				192,398
Equity investments			496,741				-				-				-				496,741
Plant and equipment			86,901				665,207				40,275				670,465				1,462,848
Mineral property interests			-				76,568,598				5,460,946				3,269,232				85,298,776
Other assets			3,507,076				3,168,832				559,763				69,317				7,304,988
Total Assets		$	32,004,272			$	81,411,114			$	6,645,359			$	4,017,510			$	124,078,255
Total Liabilities		$	(1,693,443	)		$	(1,076,469	)		$	(1,092,415	)		$	(6,973	)		$	(3,869,300	)

 

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

(b)

Segment information for operating results are as follows:

 

		Year ended June 30, 2023
						Exploration and Development
		Corporate				Silver Sand				Carangas				Silverstrike				Total
Project evaluation and corporate development		$	(460,901	)			-			$	-			$	-			$	(460,901	)
Salaries and benefits			(1,684,063	)			-				-				-				(1,684,063	)
Share-based compensation			(3,162,449	)			-				-				-				(3,162,449	)
Other operating expenses			(2,560,859	)			(294,361	)			(71,971	)			(21,471	)			(2,948,662	)
Total operating expense			(7,868,272	)			(294,361	)			(71,971	)			(21,471	)			(8,256,075	)
Net income from investments			178,046				-				-				-				178,046
Foreign exchange (loss) gain			(41,304	)			4,296				13,620				1,285				(22,103	)
Net loss		$	(7,731,530	)		$	(290,065	)		$	(58,351	)		$	(20,186	)		$	(8,100,132	)
Attributed to:
Equity holders of the Company		$	(7,726,847	)		$	(290,065	)		$	(58,351	)		$	(20,186	)		$	(8,095,449	)
Non-controlling interests			(4,683	)			-				-				-				(4,683	)
Net loss		$	(7,731,530	)		$	(290,065	)		$	(58,351	)		$	(20,186	)		$	(8,100,132	)

 

		Year ended June 30, 2022
						Exploration and Development
		Corporate				Silver Sand				Carangas				Silverstrike				Total
Project evaluation and corporate development		$	(582,253	)			-			$	-			$	-			$	(582,253	)
Salaries and benefits			(1,828,059	)			-				-				-				(1,828,059	)
Share-based compensation			(941,647	)			-				-				-				(941,647	)
Other operating expenses			(3,094,578	)			(270,102	)			(50,459	)			(10,301	)			(3,425,440	)
Total operating expense			(6,446,537	)			(270,102	)			(50,459	)			(10,301	)			(6,777,399	)
Net income from investments			220,112				-				-				-				220,112
Loss on disposal of plant and equipment			(14,804	)			-				-				-				(14,804	)
Loss on disposal of mineral property interest			(85,052	)			-				-				-				(85,052	)
Foreign exchange gain			185,475				-				-				-				185,475
Net loss		$	(6,140,806	)		$	(270,102	)		$	(50,459	)		$	(10,301	)		$	(6,471,668	)
Attributed to:
Equity holders of the Company		$	(6,090,023	)		$	(270,102	)		$	(50,459	)		$	(10,301	)		$	(6,420,885	)
Non-controlling interests			(50,783	)			-				-				-				(50,783	)
Net loss		$	(6,140,806	)		$	(270,102	)		$	(50,459	)		$	(10,301	)		$	(6,471,668	)

  

 

New Pacific Metals Corp. Notes to the Consolidated Financial Statements

(Expressed in US dollars)

 

17. SUPPLEMENTARY CASH FLOW INFORMATION

 

Changes in non-cash operating working capital:		Years Ended June 30,
		2023				2022
Receivables		$	(215,425	)		$	30,117
Deposits and prepayments			(306,662	)			27,796
Accounts payable and accrued liabilities			(256,447	)			551,707
Due to a related party			(307,610	)			316,180
		$	(1,086,144	)		$	925,800

 

Non-cash capital transactions:		Years Ended June 30,
		2023				2022
Addition of capital expenditures of mineral property interest from deposits and prepayments		$	143,495			$	-
(Payment) addition of capital expenditures of mineral property interest in accounts payable and accrued liabilities		$	(929,408	)		$	1,910,439

 

 

 

 

---

Exhibit 99.5

 

 

 

 

 

 

 

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the year ended June 30, 2023
(Expressed in US Dollars)

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

DATE OF REPORT: August 23, 2023

 

This management’s discussion and analysis (“MD&A”) for New Pacific Metals Corp. and its subsidiaries (collectively, “New Pacific” or the “Company”) should be read in conjunction with the Company’s audited consolidated financial statements for year ended June 30, 2023 and the related notes contained therein. The Company prepares its financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The Company’s significant accounting policies are set out in Note 2 of the audited consolidated financial statements for the year ended June 30, 2023. All dollar amounts are expressed in United States dollars (“USD”) unless otherwise stated. Certain amounts shown in this MD&A may not add exactly to total amounts due to rounding differences. This MD&A contains “forward-looking statements” that are subject to risk factors set out in a cautionary note contained at the end of this MD&A. All information contained in this MD&A is current and has been approved by the Board of Directors of the Company (the “Board”) as of August 23, 2023.

 

BUSINESS OVERVIEW AND STRATEGY

 

The Company is a Canadian mining issuer engaged in exploring and developing mineral properties in Bolivia. The Company’s precious metal projects include the flagship Silver Sand project (the “Silver Sand Project”), the Carangas project (the “Carangas Project”) and the Silverstrike project (the “Silverstrike Project”). With experienced management and sufficient technical and financial resources, management believes the Company is well positioned to create shareholder value through exploration and resource development.

 

The Company is publicly listed on the Toronto Stock Exchange under the symbol “NUAG” and on the NYSE American stock exchange under the symbol “NEWP”. 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.

 

FISCAL 2023 HIGHLIGHTS

 

§

The Company filed its independent preliminary economic assessment technical report (the “PEA Technical Report”) in respect of the Silver Sand Project on February 16, 2023. The PEA Technical Report shows a post-tax net present value (“NPV”) (at a 5% discount rate) of $726 million with an internal return rate (“IRR”) of 39%, underpinned by a total silver production of 171 million ounces over 14 years of mine life. The PEA Technical Report also includes an updated mineral resource estimate (the “MRE”) with total measured and indicated mineral resource of 201.77 million ounces of silver at a head grade of 116 grams per tonne (“g/t”). Please see “Cautionary Note Regarding Results of Preliminary Economic Assessment”.

 

§

The Company completed the 2023 drill program at the Carangas Project for a total of 17,623 m in 39 drill holes. Assay results of all drill holes have been received and released through two news releases on July 6, 2023 and May 30, 2023, respectively. The Company also completed the 2022 drill program at the Carangas Project for a total of 50,368 m in 115 drill holes. Assay results of all drill holes have been received and released through eight news releases between July 13, 2022 and April 6, 2023. The assay results continue to indicate that a thick zone of gold mineralization occurs beneath a shallow silver horizon measuring approximately 1,000 m long, 800 m wide, and up to 200 m thick. The Company has completed more than 80,000 m in 189 drill holes since 2021. Assay results from these drill holes will be used for an inaugural MRE to be completed later in 2023.

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

§	The Company strengthened the Board and management team by appointing Dr. Peter Megaw and Mr. Dickson Hall as directors and Mr. Andrew Williams as President of the Company.

 

PROJECTS OVERVIEW

 

Bolivian Licence Tenure

 

A summary of Bolivian mining laws with respect to the Administrative Mining Contract (“AMC”) and exploration license is presented below.

 

Exploration and mining rights in Bolivia are granted by the Ministry of Mines and Metallurgy through the Autoridad Jurisdictional Administrativa Minera (“AJAM”). Under Bolivian mining laws, tenure is granted as either an AMC or an exploration license. Tenure held under the previous legislation was converted to Autorización Transitoria Especiales (each, and “ATE”) which are required to be consolidated into new 25-hectare sized cuadriculas (concessions) and converted to AMCs. AMCs created by conversion recognize existing rights of exploration and/or exploitation and development, including treatment, metal refining, and/or trading. AMCs have a fixed term of 30 years and can be extended for an additional 30 years if certain conditions are met. Each AMC requires ongoing work and the submission of plans to AJAM.

 

Exploration licenses allow exploration activities only and must be converted to AMCs to conduct exploitation and development activities. Exploration licenses are valid for a maximum of five years and provide the holder with the preferential right to request an AMC. In specific areas, mineral tenure is owned by the Bolivian state mining corporation, Corporación Minera de Bolivia (“COMIBOL”). In these areas, development and production agreements can be obtained by entering into a Mining Production Contract (“MPC”) with COMIBOL.

 

Silver Sand Project

 

The Silver Sand Project is located in the Colavi District of Potosí Department in southwestern Bolivia at an elevation of 4,072 m above sea level, 33 kilometres (“km”) northeast of Potosí City, the department capital.

 

The Silver Sand Project is comprised of two claim blocks, the Silver Sand south and north blocks, which covers a total area of 5.42 km². The Silver Sand south block, covering an area of 3.17 km² hosts the Silver Sand deposit. On August 12, 2021, the Company announced the receipt of an AMC for the Silver Sand south block from AJAM. The Silver Sand north block covers an area of 2.25 km² and is comprised of two AMCs (Jisasjardan and Bronce). The AMCs establish a clear title to the Silver Sand Project.

 

Since acquiring the Silver Sand Project in 2017, the Company has carried out extensive exploration and resource definition drill programs.

 

In 2021, the Company completed a drill program of 13,313.7 m in 55 holes. The 2021 drill program comprised structure orientation drilling, step-out and infill drilling as well as exploration drilling. Assay results of all drill holes have been received. Detailed structural logging and assay of the oriented drill cores confirmed previous understanding of the orientation of mineralized structures and resource model which are dominantly striking in the direction of north and northwest and dipping in direction of west at high angles which are also evidenced at surface outcrops and historical underground workings. Step-out drilling was carried out mainly outside of the major mineralized trends with results indicating the existence of multiple smaller satellite mineralized zones between the major mineralized trends. For details of the 2021

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

drill program, please refer to the Company’s news release dated April 6, 2022.

 

In 2022, the Company conducted a resource infill drilling and step-out drilling program at the Silver Sand south block and completed 19,323 m in 86 drill holes. Assay results for all drill holes have been received. The resource infill drilling aimed to improve the confidence in the continuity of mineralization in the core area of the Silver Sand Project and upgrade resources, while the step-out drilling was designed to test the extension of the mineralized zones up and down dip as well as on strike. The infill and step-out drilling results were included in the MRE update and incorporated into the PEA Technical Report. For details on the 2022 drill program, please refer to the Company’s news releases dated September 19, 2022, May 31, 2022, and April 6, 2022.

 

On November 28, 2022, the Company released the MRE update. Based on the MRE, the Silver Sand Project has an estimated measured and indicated mineral resource of 201.77 million ounces (“oz”) of silver at head grade of 116 g/t and an estimated inferred mineral resource of 12.95 million oz of silver at 88 g/t. For further details, please refer to the Company’s news release dated November 28, 2022.

 

On February 16, 2023, the Company filed its independent PEA Technical Report for its Silver Sand Project. AMC Mining Consultants (Canada) Ltd. (mineral resource, mining, infrastructure and financial analysis) was contracted to conduct the PEA Technical Report in cooperation with Halyard Inc. (metallurgy and processing), and New Fields Canada Mining & Environment ULC (tailings, water and water management). The PEA Technical Report is based on the MRE, which was reported on November 28, 2022. Highlights from the PEA Technical Report, with a base case silver price of $22.50/oz are as follows:

 

§	pre-tax NPV (5%) of $1.1 billion with an IRR of 52%, and a post-tax NPV (5%) of $726 million with an IRR of 39%;

§	using a +/- 20% sensitivity analysis for silver price, a post-tax NPV (5%) of $1,054 million with an IRR of 50% at $27/oz silver, or a post-tax NPV (5%) of $398 million with an IRR of 26% at $18/oz silver;

§	14-year mine life producing approximately 171 million ounces payable silver metal;

§	initial capital cost of $308 million, which includes $52 million in contingency cost;

§	life-of-mine (“LOM”) total sustaining capital cost of $20 million;

§	average LOM operating cash cost of $8.45/oz and total all-in sustaining cost of $10.42/oz silver; and

§	annual payable metal production exceeds 15 million ounces of silver in years one through four, with LOM average annual payable metal production exceeding 12 million ounces of silver.

 

Please see “Cautionary Note Regarding Results of Preliminary Economic Assessment”. For more details on the PEA Technical Report, please refer to the Company’s news releases dated February 16, 2023 and January 9, 2023.

 

Project Expenditures

 

For the three months and year ended June 30, 2023, total expenditures of $895,465 and $6,316,500, respectively (three months and year ended June 30, 2022 - $3,198,033 and $7,639,287, respectively) were capitalized under the Silver Sand Project.

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

Mining Production Contract

 

On January 11, 2019, New Pacific announced that its 100% owned subsidiary, Minera Alcira S.A. (“Alcira”), entered into an MPC with COMIBOL granting Alcira the right to carry out exploration, development and mining production activities in ATEs and cuadriculas owned by COMIBOL adjoining the Silver Sand Project. An updated to the MPC was made with COMIBOL on January 19, 2022. The MPC is comprised of two areas. The first area is located to the south and west of the Silver Sand Project. The second area includes additional geologically prospective ground to the north, east and south of the Silver Sand Project, wherein COMIBOL is expected to apply for exploration and mining rights with AJAM. Upon granting of the exploration and mining rights, COMIBOL will contribute these additional properties to the MPC.

 

There are no known economic mineral deposits, nor any previous drilling or exploration discoveries within the MPC area. The MPC presents an opportunity to explore and evaluate the possible extensions and/or satellites of mineralization outside of the currently defined Silver Sand Project.

 

The MPC remains subject to ratification and approval by the Plurinational Legislative Assembly of Bolivia. As of the date of this MD&A, the MPC has not been ratified nor approved by the Plurinational Legislative Assembly of Bolivia. The Company cautions that there is no assurance that the Company will be successful in obtaining ratification of the MPC in a timely manner or at all, or that the ratification of the MPC will be obtained on reasonable terms. The Company cannot predict the Bolivia government’s positions on foreign investment, mining concessions, land tenure, environmental regulation, community relations, taxation or otherwise. A change in the government’s position on these issues could adversely affect the ratification of the MPC and the Company’s business.

 

Carangas Project

 

In April 2021, the Company signed an agreement with a private Bolivian company to acquire a 98% interest in the Carangas Project. The Carangas Project is located approximately 180 km southwest of the city of Oruro and within 50 km from Bolivia’s border with Chile. The private Bolivian company is 100% owned by Bolivian nationals and holds title to the three exploration licenses that cover an area of 40.75 km².

 

Under the agreement, the Company is required to cover 100% of the future expenditures on exploration, mining, development and production activities for the Carangas Project. The agreement has a term of 30 years and is renewable for another 15 years.

 

In 2021, the Company completed an initial discovery drill program of 13,209 m in 35 drill holes. Assay results of all drill holes have been received. Results from the 2021 discovery drill program confirmed the broad silver-rich polymetallic mineralization near surface and intersected a wide zone of gold mineralization below it. For details of the 2021 discovery drill program, please refer to the Company’s news releases dated May 17, 2022, February 23, 2022, and February 10, 2022.

 

Following the success of the 2021 discovery drill program, the Company completed the 2022 resource definition drill program for a total of 50,368 m in 115 drill holes. Assay results of all 115 drill holes have been received and released to date. The assay results continue to indicate that a thick zone of gold mineralization occurs beneath a shallow silver horizon measuring approximately 1,000 m long, 800 m wide, and up to 200 m thick. The 2022 drill results also indicate the gold system is open to the north and northeast directions with these targets being drill tested as part of the Company’s 2023 drill program. For details of the 2022 drill program, please refer to the Company’s news releases dated April 6, 2023, February 21, 2023,

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

February 1, 2023, January 24, 2023, November 14, 2022, October 19, 2022, August 8, 2022, and July 13, 2022.

 

To the date of this MD&A, the Company completed its 2023 drill program at the Carangas Project for a total of 17,623 m in 39 drill holes. Assay results of all 39 drill holes have been received and released to date. For details of the 2023 drill program, please refer to the Company’s news releases dated July 6, 2023 and May 30, 2023. The results from the 2023 drill program, together with the results from 2021 and 2022 drill programs, will be used for an inaugural MRE to be completed later in 2023.

 

Project Expenditures

 

For the three months and year ended June 30, 2023, total expenditures of $1,627,199 and $10,817,356, respectively (three months and year ended June 30, 2022- $2,097,824 and $5,224,138, respectively) were capitalized under the project.

 

Silverstrike Project

 

The Silverstrike Project is located approximately 140 km southwest of La Paz, Bolivia. In December 2019, the Company signed a mining association agreement and acquired a 98% interest in the Silverstrike Project from a private Bolivian corporation. The private Bolivian corporation is owned 100% by Bolivian nationals and holds the title to the nine ATEs (covering an area of approximately 13 km²) that comprise the SIlverstrike Project.

 

Under the mining association agreement, the Company is required to cover 100% of future expenditures including exploration, contingent on results of development and subsequent mining production activities at the Silverstrike Project. The agreement has a term of 30 years and is renewable for another 15 years.

 

During 2020, the Company’s exploration team completed reconnaissance and detailed mapping and sampling programs on the northern portion of the Silverstrike Project. The results to date identified near surface broad zones of silver mineralization in altered sandstones to the north, with similarities to that at the Silver Sand Project; and in the Silverstrike Project’s central area, a near surface broad silver zone that occurs near the top of a 900 m diameter volcanic dome of ignimbrite (volcaniclastic sediments) units with intrusion of rhyolite dyke swarm and andesite flows; and a broad gold zone occurs half way from the top of the dome.

 

In 2022, the Company completed a 3,200 m drill program at the Silverstrike Project. Assay results for the two drill holes were released in the news releases dated November 1, 2022 and September 12, 2022.

 

Project Expenditures

 

For the three months and year ended June 30, 2023, total expenditures of $63,030 and $1,409,101, respectively (three months and year ended June 30, 2021 - $100,677 and $142,078, respectively) were capitalized under the Silverstrike Project.

 

Frontier Area – Carangas Project and Silverstrike Project

 

The Carangas Project and the Silverstrike Project are located within 50 km of the Bolivian border with Chile. In line with many South American countries, Bolivia does not permit foreign entities to own property within 50 km of international borders (the “Frontier Area”). Property owners in the Frontier Area are, however,

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

permitted to enter into mining association agreements with third parties, including foreign entities, for the development of mining activities under Bolivian Law No. 535 on Mining and Metallurgy. While the Company believes the mining association agreements for the Carangas Project and the Silverstrike Project are legally compliant with the Frontier Area requirements and Bolivian mining laws, there is no assurance that the Company’s Bolivian partners will be successful in obtaining the approval of AJAM to convert the exploration licenses to AMC in the case of the Carangas Project, or that even if approved, that such relationships and structures will not be challenged by other Bolivian organizations or communities.

 

RZY Project

 

The Company’s former RZY project (the “RZY Project”), located in Qinghai, China was an early stage silver-lead-zinc exploration project. The RZY Project was located approximately 237 km from the city of Yushu Tibetan Autonomous Prefecture. In 2016, the Qinghai Government issued a moratorium which suspended exploration for 26 mining projects in the region, including the RZY Project, and classified the region as a National Nature Reserve Area.

 

During Fiscal 2020, the Company’s subsidiary, Qinghai Found Mining Co., Ltd. (“Qinghai Found”), reached a compensation agreement with the Qinghai Government for the RZY Project. Pursuant to the agreement, Qinghai Found will surrender its title to the RZY Project to the Qinghai Government for one-time cash compensation of $2.99 million (RMB ¥20 million) (the “RZY Compensation Transaction”).

 

On June 25, 2022, the Qinghai Government completed its approval process of the RZY Compensation Transaction. As a result, the Company disposed its RZY Project for cash consideration of $2,986,188 (RMB ¥20 million), which is included in the receivables balance as at June 30, 2022 and was received in full during the year ended June 30, 2023. For the year ended June 30, 2022, a loss of $85,052 was recognized upon disposal of the RZY Project.

 

Overall Expenditure Summary

 

The continuity schedule of mineral property acquisition costs, deferred exploration and development costs are summarized as follows:

 

Cost		Silver Sand				Silverstrike				Carangas				RZY Project				Total
Balance, July 1, 2021		$	69,245,500			$	3,163,304			$	255,250			$	2,871,368			$	75,535,422
Capitalized exploration expenditures
Reporting and assessment			353,109				40				-				-				353,149
Drilling and assaying			4,990,082				1,625				3,752,094				-				8,743,801
Project management and support			1,917,060				45,773				1,020,422				-				2,983,255
Camp service			364,507				61,578				443,810				-				869,895
Geological surveys			-				25,508				-				-				25,508
Permit and license			14,529				7,554				7,812				-				29,895
Disposition			-				-				-				(3,071,240	)			(3,071,240	)
Foreign currency impact			(316,189	)			(36,150	)			(18,442	)			199,872				(170,909	)
Balance, June 30, 2022		$	76,568,598			$	3,269,232			$	5,460,946			$	-			$	85,298,776
Capitalized exploration expenditures
Reporting and assessment			1,008,174				-				88,558				-				1,096,732
Drilling and assaying			1,925,695				977,881				8,289,678				-				11,193,254
Project management and support			2,719,120				256,569				1,424,573				-				4,400,262
Camp service			467,690				174,651				1,005,158				-				1,647,499
Permit and license			195,821				-				9,389				-				205,210
Foreign currency impact			(201,972	)			(24,680	)			(8,831	)			-				(235,483	)
Balance, June 30, 2023		$	82,683,126			$	4,653,653			$	16,269,471			$	-			$	103,606,250

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

FINANCIAL RESULTS

 

Selected Annual Information
		Fiscal 2023				Fiscal 2022				Fiscal 2021
Operating expense		$	(8,256,075	)		$	(6,777,399	)		$	(5,945,985	)
Income from Investments			178,046				220,112				395,543
Other (loss) income			(22,103	)			85,619				(1,023,932	)
Net loss			(8,100,132	)			(6,471,668	)			(6,574,374	)
Net loss attributable to equity holders			(8,095,449	)			(6,420,885	)			(6,566,440	)
Basic and diluted loss per share			(0.05	)			(0.04	)			(0.04	)
Total current assets			7,547,949				33,188,094				47,452,145
Total non-current assets			110,759,592				90,890,161				79,366,979
Total current liabilities			2,336,655				3,869,300				1,094,567
Total non-current liabilities			-				-				-

 

Net loss attributable to equity holders of the Company for the year ended June 30, 2023 was $8,095,449 or $0.05 per share (year ended June 30, 2022 – net loss of $6,420,885 or $0.04 per share).

 

For the three months ended June 30, 2023, net loss attributable to equity holders of the Company was $1,864,029 or 0.01 per share (three months ended June 30, 2022 - net loss of $2,337,826 or $0.01 per share).

 

The Company’s net loss attributable to equity holders of the Company for the three months and year ended June 30, 2023 and the respective comparative periods were mainly impacted by its operating expenses and net income from investments. Details of the variance analysis on operating expenses and net income from investments are explained below.

 

Operating expenses for the three months and year ended June 30, 2023 were $1,892,005 and $8,256,075, respectively (three months and year ended June 30, 2022 - $2,291,704 and $6,777,399, respectively). Items included in operating expenses were as follows:

 

(i)

Project evaluation and corporate development expenses for the three months and year ended June 30, 2023 - $120,787 and $460,901, respectively (three months and year ended June 30, 2022 - $92,103 and $582,253, respectively). The decrease in project evaluation and corporate development expenses in the current year was a result of the Company focusing on the exploration and development of its existing projects and not incurring significant expenditures in new project evaluation in recent periods.

 

(ii)

Filing and listing fees for the three months and year ended June 30, 2023 of $41,730 and $306,514, respectively (three months and year ended June 30, 2022 - $90,795 and $296,370, respectively). Filing fees for the current year and comparative year were consistent and incurred in the ordinary course of business. Filing fees for current quarter and comparative quarter varies due to different timing of services incurred and payments made.

 

(iii)

Investor relations expenses for the three months and year ended June 30, 2023 of $80,889 and $576,065, respectively (three months and year ended June 30, 2022 - $348,549 and $698,146, respectively). Investor relation expenses decreased for the current periods was a result of reduced investor relation activities, the Company attended less conferences in current periods.

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

(iv)

Professional fees for the three months and year ended June 30, 2023 of $99,907 and $387,420, respectively (three months and year ended June 30, 2022 - $163,107 and $540,371, respectively). The decrease in professional fees for the current periods was a result of additional professional fees related to the Company’s base shelf prospectus incurred in the comparative periods.

 

(v)

Salaries and benefits expense for the three months and year ended June 30, 2023 of $512,094 and $1,684,063, respectively (three months and year ended June 30, 2022 - $399,650 and $1,828,059, respectively). The decrease in salaries and benefits for the current year was a result of the departure of a few employees during early 2022. The increase in salaries and benefits for the current quarter was a result of recent hirings of a few key management positions.

 

(vi)

Office and administration expenses for the three months and year ended June 30, 2023 of $332,510 and $1,465,132, respectively (three months and year ended June 30, 2022 - $683,606 and $1,716,546, respectively). The decrease in office and administrative expenses for the current periods was a result of reduced administrative activities.

 

(vii)

Share-based compensation for the three months and year ended June 30, 2023 of $647,214 and $3,162,449, respectively (three months and year ended June 30, 2022 - $462,375 and $941,647, respectively). The increase in share-based compensation for the current periods was a result of recent grants of stock options and restricted share units.

 

Net income from investments for the year ended June 30, 2023 was $178,046 (year ended June 30, 2022 - $220,112). The decrease in net income from investments for the current year was a result of: (i) a $198,031 loss on the Company’s equity investments for the current year compared to a gain of $19,517 for the comparative year; (ii) a $5,977 gain on bonds compared to a gain of $48,484 for the comparative year; and (iii) offset by $370,100 interest earned from cash accounts compared to $152,111 interest earned in the comparative year.

 

For the three months ended June 30, 2023, net income from investments was $16,827 (three months ended June 30, 2022 – $11,700 ).

 

Foreign exchange loss for the year ended June 30, 2023 was $22,103 (year ended June 30, 2022 – gain of $185,475). The Company holds a portion of cash and short-term investments in USD to support its operations in Bolivia. Revaluation of these USD-denominated financial assets to their Canadian dollar (“CAD”) functional currency equivalents resulted in unrealized foreign exchange gain or loss for the relevant reporting periods. For the year ended June 30, 2023, the USD appreciated by 3.0% against the CAD (from 1.2886 to 1.3240) while in the prior year the USD appreciated by 4.0% against the CAD (from 1.2394 to 1.2886).

 

For the three months ended June 30, 2023, foreign exchange gain was $10,437 (three months ended June 30, 2022 – $21,070).

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

Selected Quarterly Information

 

		For the Quarters Ended
		Jun. 30, 2023				Mar. 31, 2023				Dec. 31, 2022				Sep. 30, 2022
Operating expense		$	(1,892,005	)		$	(2,377,480	)		$	(1,927,708	)		$	(2,058,882	)
Income (loss) from Investments			16,827				119,438				83,455				(41,674	)
Other income (loss)			10,437				(18,683	)			(28,750	)			14,893
Net loss			(1,864,741	)			(2,276,725	)			(1,873,003	)			(2,085,663	)
Net loss attributable to equity holders			(1,864,029	)			(2,275,519	)			(1,870,718	)			(2,085,183	)
Basic and diluted loss per share			(0.01	)			(0.01	)			(0.01	)			(0.01	)
Total current assets			7,547,949				12,020,235				18,538,490				25,537,824
Total non-current assets			110,759,592				107,788,104				102,583,739				96,522,875
Total current liabilities			2,336,655				3,492,542				4,128,183				4,925,522
Total non-current liabilities			-				-				-				-

 

		For the Quarters Ended
		Jun. 30, 2022				Mar. 31, 2022				Dec. 31, 2021				Sep. 30, 2021
Operating expense		$	(2,291,704	)		$	(1,524,374	)		$	(1,364,790	)		$	(1,596,531	)
Income (loss) from Investments			11,700				124,860				131,471				(47,919	)
Other (loss) income			(78,786	)			(36,439	)			(63,527	)			264,371
Net loss			(2,358,790	)			(1,435,953	)			(1,296,846	)			(1,380,079	)
Net loss attributable to equity holders			(2,337,826	)			(1,408,892	)			(1,295,940	)			(1,378,227	)
Basic and diluted loss per share			(0.01	)			(0.01	)			(0.01	)			(0.01	)
Total current assets			33,188,094				37,075,018				40,250,158				43,821,937
Total non-current assets			90,890,161				88,171,122				85,318,722				82,251,766
Total current liabilities			3,869,300				2,353,255				2,150,602				2,165,146
Total non-current liabilities			-				-				-				-

 

LIQUIDITY AND CAPITAL RESOURCES

 

Cash Flows

 

Cash used in operating activities for the three months and year ended June 30, 2023 was $1,150,278 and $5,513,975, respectively (three months and year ended June 30, 2022 - $1,821,805 and $4,563,997, respectively). Cash flow from operating activities are mainly driven by the Company’s operating expenses discussed in the previous sections.

 

Cash used in investing activities for the year ended June 30, 2023 was $17,030,589 (year ended June 30, 2022 - $13,047,208). Cash flows from investing activities were mainly impacted by: (i) capital expenditures for mineral properties and equipment of $18,118,151 on the exploration projects in Bolivia compared to $11,633,612 in the prior year; (ii) value-added tax of $1,898,626 paid in Bolivia in the current year compared to $1,415,404 paid in the prior year; and (iii) offset by proceeds of $2,986,188 received from the RZY compensation transaction during the current year.

 

For the three months ended June 30, 2023, cash used in investing activities was $3,475,075 (three months ended June 30, 2022 – cash used in investing activities of $4,157,035) and was mainly impacted by: (i) capital expenditures for mineral properties and equipment of $3,317,241 on the exploration projects in Bolivia compared to $3,600,638 in the comparative quarter; and (ii) value-added tax of $157,834 paid in Bolivia in the current quarter compared to $556,397 paid in the comparative quarter.

 

Cash provided by financing activities for the year ended June 30, 2023 was $825,116 (year ended June 30,

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

2022 – $1,782,895) comprised of $604,674 (year ended June 30, 2022 - $1,782,895) proceeds from stock option exercises and $220,442 (year ended June 30, 2022 – nil) proceeds from private placement.

 

For the three months ended June 30, 2023, cash provided by financing activities was $320,128 (three months ended June 30, 2022 – cash provided by financing activities of $486,687) from proceeds of stock option exercises.

 

Liquidity and Access to Capital

 

As of June 30, 2023, the Company had working capital of $5,211,294 (June 30, 2022 – $29,318,794), comprised of cash of $6,296,312 (June 30, 2022 - $29,322,504), short term investments of $198,375 (June 30, 2022 - $192,398), and other current assets of $1,053,262 (June 30, 2022 - $3,673,192) offset by current liabilities of $2,336,655 (June 30, 2022 - $3,869,300). Management believes that the Company has sufficient funds to support its normal exploration and operating requirements on an ongoing basis.

 

The Company does not have unlimited resources and its future capital requirements will depend on many factors, including, among others, cash flow from interest, dividends, and realized gains on investments. To the extent that its existing resources and the funds generated by future income are insufficient to fund the Company’s operations, the Company may need to raise additional funds through public or private debt or equity financing. If additional funds are raised through the issuance of equity securities, the percentage ownership of current shareholders may be diluted and such equity securities may have rights, preferences or privileges senior to those of the holders of the Company’s common shares. No assurance can be given that additional financing will be available or that, if available, it can be obtained on terms favourable to the Company and its shareholders. If adequate funds are not available, the Company may be required to delay, limit or eliminate some or all of its proposed operations. The Company believes it has sufficient capital to meet its cash needs for the next 12 months, including the costs of compliance with continuing reporting requirements.

 

Use of Proceeds of Prior Financings

 

The Company has fully utilized the net proceeds raised from all historical financings prior to the beginning of the current fiscal year.

 

FINANCIAL INSTRUMENTS

 

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

 

(a)

Fair Value

 

The Company classifies its fair value measurements within a fair value hierarchy, which reflects the significance of 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.

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

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 table sets forth the Company’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy as at June 30, 2023 and June 30, 2022 that are not otherwise disclosed. As required by IFRS 13, financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

		Fair value as at June 30, 2023
Recurring measurements		Level 1				Level 2				Level 3				Total
Financial Assets
Cash		$	6,296,312			$	-			$	-			$	6,296,312
Short-term investments			198,375				-				-				198,375
Equity investments			283,081				-				-				283,081

 

			Fair value as at June 30, 2022
Recurring measurements			Level 1				Level 2				Level 3				Total
Financial Assets
Cash		$	29,322,504			$	-			$	-			$	29,322,504
Short-term investments			192,398				-				-				192,398
Equity investments			496,741				-				-				496,741

 

Fair value of other financial instruments excluded from the table above approximates their carrying amount as of June 30, 2023, and June 30, 2022, respectively, due to the short-term nature of these instruments.

 

There were no transfers into or out of Level 3 during the year ended June 30, 2023.

 

(b)

Liquidity Risk

 

The Company has a history of losses and no operating revenues from its operations. Liquidity risk is the risk that the Company will not be able to meet its short term business requirements. As at June 30, 2023, the Company had a working capital position of $5,211,294 and sufficient cash resources to meet the Company’s short-term financial liabilities and its planned exploration expenditures on various projects in Bolivia for, but not limited to, the next 12 months.

 

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:

 

		June 30, 2023								June 30, 2022
		Due within a year				Total				Total
Accounts payable and accrued liabilities		$	2,280,553			$	2,280,553			$	3,492,269
Due to a related party			56,102				56,102				377,031
		$	2,336,655			$	2,336,655			$	3,869,300

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

(c)

Foreign Exchange Risk

 

The Company is exposed to foreign exchange risk when it undertakes transactions and holds assets and liabilities denominated in foreign currencies other than its functional currencies. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is CAD. The functional currency of all Bolivian subsidiaries is USD. The functional currency of the Chinese subsidiary is RMB. The Company currently does not engage in foreign exchange currency hedging. The Company’s exposure to foreign exchange risk that could affect net income is summarized as follows:

 

Financial assets denominated in foreign currencies other than relevant functional currency		As at June 30, 2023				June 30, 2022
United States dollars		$	320,994			$	468,714
Bolivianos			869,869				886,188
Total		$	1,190,863			$	1,354,902
Financial liabilities denominated in foreign currencies other than relevant functional currency
United States dollars		$	73,970			$	-
Bolivianos			1,543,889				1,619,261
Total		$	1,617,859			$	1,619,261

 

As at June 30, 2023, with other variables unchanged, a 1% strengthening (weakening) of the USD against the CAD would have increased (decreased) net income by approximately $2,500.

 

As at June 30, 2023, with other variables unchanged, a 1% strengthening (weakening) of the Bolivianos against the USD would have increased (decreased) net income by approximately $6,800.

 

(d)

Interest Rate Risk

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company holds a portion of cash in bank accounts that earn variable interest rates. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have significant impact on the fair values of the financial instruments as of June 30, 2023. The Company, from time to time, also owns guaranteed investment certificates (“GICs”) and bonds that earn interest payments at fixed rates to maturity. Fluctuation in market interest rates usually will have an impact on bond’s fair value. An increase in market interest rates will generally reduce bond’s fair value while a decrease in market interest rates will generally increase it. The Company monitors market interest rate fluctuations closely and adjusts the investment portfolio accordingly.

 

(e)

Credit Risk

 

Credit risk is the risk of financial loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposure to credit risk is primarily associated with cash, bonds, and receivables. The carrying amount of financial assets included on the statement of financial position represents the maximum credit exposure.

 

The Company has deposits of cash that meet minimum requirements for quality and liquidity as stipulated

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

by the Board. Management believes the risk of loss to be remote, as the majority of its cash are held with major financial institutions. Bonds by nature are exposed to more credit risk than cash. The Company manages its risk associated with bonds by only investing in large globally recognized corporations from diversified industries. As at June 30, 2023, the Company had a receivables balance of $421,860 (June 30, 2022 - $3,193,926). There were no material amounts in receivables which were past due on June 30, 2023 (June 30, 2022 - $nil).

 

(f)

Equity Price Risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on global financial markets. Based upon the Company’s portfolio at June 30, 2023, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign exchange effects would have resulted in an increase (decrease) to net income of approximately $30,000.

 

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 this MD&A are as follows:

 

Due to a related party		June 30, 2023				June 30, 2022
Silvercorp Metals Inc.		$	56,102			$	377,031

 

(a)       Silvercorp Metals Inc. (“Silvercorp”) has one director (Dr. Rui Feng) and one officer (Dr. Rui Feng as Chief Executive Officer) in common with the Company. Silvercorp and the Company share office space and Silvercorp provides various general and administrative services to the Company. The Company expects to continue making payments to Silvercorp in the normal course of business. Office and administrative expenses rendered and incurred by Silvercorp on behalf of the Company for the year ended June 30, 2023 were $844,949 (year ended June 30, 2022 - $726,387).

 

During the year ended June 30, 2022, the Company’s subsidiary Qinghai Found borrowed a loan of $283,688 (RMB ¥1.9 million) from one of Silvercorp’s subsidiaries in China to help facilitate the closure of the RZY Compensation Transaction. During the year ended June 30, 2023, the loan plus interest of $23,422 were repaid in full.

 

(b)        Compensation of key management personnel

 

The remuneration of directors and other members of key management personnel for the years ended June 30, 2023 and 2022 are as follows:

 

		Years ended June 30,
		2023				2022
Director’s cash compensation		$	59,715			$	82,608
Director’s share-based compensation			624,263				338,702
Key management’s cash compensation			867,499				988,753
Key management’s share-based compensation			2,137,888				461,947
		$	3,689,365			$	1,872,010

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

Other than as disclosed above, the Company does not have any ongoing contractual or other commitments resulting from transactions with related parties.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

The Company does not have any off-balance sheet financial arrangements.

 

PROPOSED TRANSACTIONS

 

As at the date of this MD&A, there are no proposed acquisitions or disposals of assets or business, other than those in the ordinary course of business, approved by the Board.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

The preparation of the consolidated financial statements in accordance with IFRS as issued by IASB requires management to make estimates and assumptions that affect the amounts reported on the consolidated financial statements. These critical accounting estimates represent management’s estimates 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 and estimates are described in Note 2 of the audited consolidated financial statements for the year ended June 30, 2023.

 

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 – 157,605,340 common shares with a recorded value of $156 million.

●

Shares subject to escrow or pooling agreements – nil.

 

(b)

Options

 

The outstanding options as at the date of this MD&A are summarized as follows:

 

Options Outstanding			Exercise Price CAD$	Expiry Date
774,167			2.15	February 22, 2024
713,000			3.33	February 4, 2027
10,000			3.89	February 22, 2027
1,347,000			4.00	June 6, 2027
939,000			3.42	January 19, 2028
120,000			3.67	January 24, 2028
50,000			3.92	April 14, 2028
3,953,167			$                            2.50

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

(c)	Restricted Share Units (“RSUs”)

 

The outstanding RSUs as at the date of this MD&A are summarized as follows:

 

				Weighted average
					grant date closing
	RSUs Outstanding				price per share (CAD$)
	1,782,992				$                           3.81

 

RISK FACTORS

 

The Company is subject to many risks which are outlined in this MD&A, the Company’s Annual Information Form (the “AIF”) and other public filings which are available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. In addition, please refer to the “Financial Instruments” section of this MD&A for an analysis of financial risk factors.

 

Political and Economic Risks in Bolivia

 

The Company’s projects are located in Bolivia and, therefore, the Company’s current and future mineral exploration and mining activities are exposed to various levels of political, economic, and other risks and uncertainties. There has been a significant level of political and social unrest in Bolivia in recent years resulting from a number of factors, including Bolivia’s history of political and economic instability under a variety of governments and high rate of unemployment.

 

The Company’s exploration and development activities may be affected by changes in government, political instability, and the nature of various government regulations relating to the mining industry. Bolivia’s fiscal regime has historically been favourable to the mining industry, but there is a risk that this could change. The Company cannot predict the government’s positions on foreign investment, mining concessions, land tenure, environmental regulation, or taxation. A change in government positions on these issues could adversely affect the Company’s business and/or its holdings, assets, and operations in Bolivia. Any changes in regulations or shifts in political conditions are beyond the control of the Company. Moreover, protestors and cooperatives have previously targeted foreign companies in the mining sector, and as a result there is no assurance that future social unrest will not have an adverse impact on the Company’s operations. Labour in Bolivia is customarily unionized and there are risks that labour unrest or wage agreements may impact operations.

 

The Company’s operations in Bolivia may also be adversely affected by economic uncertainty characteristic of developing countries. In addition, operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, currency remittance, income taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use, and safety factors.

 

The MPC remains subject to ratification and approval by the Plurinational Legislative Assembly of Bolivia. As of the date of this MD&A, the MPC has not been ratified nor approved by the Plurinational Legislative Assembly of Bolivia. The Company cautions that there is no assurance that the Company will be successful in obtaining ratification of the MPC in a timely manner or at all, or that the ratification of the MPC will be obtained on reasonable terms. The Company cannot predict any new government’s positions on foreign

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

investment, mining concessions, land tenure, environmental regulations, community relations, taxation or otherwise.

 

Community Relations and Social Licence to Operate

 

Mining companies are increasingly required to operate in a sustainable manner and to provide benefits to affected communities and there are risks associated with the Company failing to acquire and subsequently maintain a “social licence” to operate on its mineral properties. “Social licence” does not refer to a specific permit or licence, but rather is a broad term used to describe community acceptance of a company’s plans and activities related to exploration, development or operations on its mineral projects.

 

The Company places a high priority on, and dedicates considerable efforts and resources toward, its community relationships and responsibilities. Despite its best efforts, there are factors that may affect the Company’s efforts to establish and maintain social licence at any of its projects, including national or local changes in sentiment toward mining, evolving social concerns, changing economic conditions and challenges, and the influence of third-party opposition toward mining on local support. There can be no guarantee that social licence can be earned by the Company or if established, that social licence can be maintained in the long term, and without strong community support the ability to secure necessary permits, obtain project financing, and/or move a project into development or operation may be compromised or precluded. Delays in projects attributable to a lack of community support or other community-related disruptions or delays can translate directly into a decrease in the value of a project or into an inability to bring the project to, or maintain, production. The cost of measures and other issues relating to the sustainable development of mining operations may result in additional operating costs, higher capital expenditures, reputational damage, active community opposition (possibly resulting in delays, disruptions and stoppages), legal suits, regulatory intervention and investor withdrawal.

 

Acquisition and Maintenance of Permits and Governmental Approvals

 

Exploration and development of, and production from, any deposit at the Company’s mineral projects require permits from various government authorities. There can be no assurance that any required permits will be obtained in a timely manner or at all, or that they will be obtained on reasonable terms. Delays or failure to obtain, expiry of, or a failure to comply with the terms of such permits could prohibit development of the Company’s mineral projects and have a material adverse impact on the Company.

 

While the Company believes the contractual relationships and the structures it has in place with private Bolivian companies owned 100% by Bolivian nationals for the Silverstrike Project and the Carangas Project are legally compliant with Bolivian laws related to the Frontier Areas, there is no assurance that the Company’s Bolivian partner will be successful in obtaining approval of AJAM to convert the exploration licenses to AMCs in the case of Carangas Project, or that even if approved, that such contractual relationship and structure will not be challenged by other Bolivian organizations or communities.

 

The Company’s current and future operations, including development activities and commencement of production, if warranted, require permits from government authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety, and other matters. Companies engaged in property exploration and the development or operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations, and permits. The

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

Company cannot predict if all permits which it may require for continued exploration, development, or construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms, if at all. Time delays and associated costs related to applying for and obtaining permits and licenses may be prohibitive and could delay planned exploration and development activities. Failure to comply with or any violations of the applicable laws, regulations, and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.

 

Parties engaged in mining operations may be required to compensate those impacted by mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations, and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company’s operations and cause increases in capital expenditures or production costs, or reduction in levels of production at producing properties, or require abandonment or delays in the development of new mining properties.

 

DISCLOSURE CONTROLS AND PROCEDURES

 

Disclosure controls and procedures are designed to provide reasonable assurance that material information related to the Company 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 decisions about the Company’s public disclosure.

 

Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in the rules of the U.S. Securities and Exchange Commission and the national instrument of the Canadian Securities Administrators. The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on this evaluation, management concluded that as of June 30, 2023, the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 and National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings) are effective.

 

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

(a)	Internal Control over Financial Reporting

 

Management of the Company is responsible for establishing and maintaining an adequate system of internal control over financial reporting and used the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate, with the participation of the CEO and CFO, the effectiveness of the Company’s internal controls. The Company’s internal control over financial reporting includes:

 

·

maintaining records, that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

 

·

providing reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles;

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

·

providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and the directors of the Company; and

 

·

providing 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.

 

Based on this evaluation, management concluded that as of June 30, 2023, the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by COSO was effective and provided a reasonable assurance of the reliability of the Company’s financial reporting and preparation of the financial statements.

 

No matter how well a system of internal control over financial reporting is designed, any system has inherent limitations. Even systems determined to be effective can provide only reasonable assurance of the reliability of financial statement preparation and presentation. Also, controls may become inadequate in the future because of changes in conditions or deterioration in the degree of compliance with the Company’s policies and procedures.

 

Emerging growth companies are exempt from Section 404(b) of the Sarbanes-Oxley Act, which generally requires public companies to provide an independent auditor attestation of management’s assessment of the effectiveness of their internal control over financial reporting. The Company qualifies as an emerging growth company and therefore has not included an independent auditor attestation of management’s assessment of the effectiveness of its internal control over financial reporting in its audited annual consolidated financial statements for the year ended June 30, 2023.

 

(b)	Changes in Internal Control over Financial Reporting

 

There has been no change in the Company’s internal control over financial reporting during the year ended June 30, 2023 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

 

TECHNICAL INFORMATION

 

The scientific and technical information contained in this MD&A has been reviewed and approved by Alex Zhang, P. Geo., Vice President of Exploration of the Company, who is a qualified person (as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”)) for the purposes of NI 43-101.

 

CAUTIONARY NOTE REGARDING RESULTS OF PRELIMINARY ECONOMIC ASSESSMENT

 

The results of the independent preliminary economic assessment (the “PEA”) contained in the PEA Technical Report are preliminary in nature and are intended to provide an initial assessment of the Silver Sand Project’s economic potential and development options. The PEA mine schedule and economic assessment includes numerous assumptions and is based on both indicated and inferred mineral resources. Inferred resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the project economic assessments described herein will be achieved or that the PEA results will be realized. The estimate of mineral resources may be materially affected by geology, environmental, permitting, legal, title, socio-

 

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

political, marketing or other relevant issues. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Additional exploration will be required to potentially upgrade the classification of the inferred mineral resources to be considered in future advanced studies. AMC Mining Consultants (Canada) Ltd. (“AMC Consultants”) (mineral resource, mining, infrastructure and financial analysis) was contracted to conduct the PEA in cooperation with Halyard Inc. (metallurgy and processing), and NewFields Canada Mining & Environment ULC (tailings, water and waste management). The qualified persons (as defined in NI 43-101) for the PEA for the purposes of NI 43-101 are Mr. John Morton Shannon, P.Geo, General Manage and Principal Geologist at AMC Consultants, Mr. Wayne Rogers, P.Eng, and Mr. Mo Molavi, P.Eng, both Principal Mining Engineers with AMC Consultants, Mr. Andrew Holloway, P.Eng, Process Director with Halyard Inc., and Mr. Leon Botham, P.Eng., Principal Engineer with NewFields Canada Mining & Environment ULC, in addition to Ms. Dinara Nussipakynova, P.Geo., Principal Geologist with AMC Consultants, who estimated the mineral resources. All qualified persons for the PEA have reviewed the disclosure of the PEA herein. The PEA is based on the MRE, which was reported on November 28, 2022. The effective date of the MRE is October 31, 2022. The cut-off applied for reporting the pit-constrained mineral resources is 30 g/t silver. Assumptions made to derive a cut-off grade included mining costs, processing costs and recoveries and were obtained from comparable industry situations. The model is depleted for historical mining activities. Mineral resources are constrained by optimized pit shells at a silver price of US$22.50 per ounce, silver metallurgical recovery of 91%, silver payability of 99%, open pit mining cost of US$2.6/t, processing cost of US$16/t, G&A cost of US$2/t, and slope angle of 44-47 degrees. Key assumptions used for pit optimization for the PEA mining pit include silver price of US$22.50 per ounce, silver metallurgical recovery of 91%, silver payability of 99%, open pit mining cost of US$2.6/t, incremental mining cost of US$0.04/t (per 10 m bench), processing cost of US$16/t, tailing storage facility operating cost of US$0.7/t, G&A cost of US$2/t, royalty of 6.00%, mining recovery of 92%, dilution of 8%, and cut-off grade of 30 g/t silver.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

 

Except for statements of historical facts relating to the Company, certain information contained herein constitutes “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 (collectively, “forward-looking statements”). Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “goals”, “forecast”, “budget”, “potential” or variations thereof and other similar words, or statements that certain events or conditions “may”, “could”, “would”, “might”, “will” or “can” occur. Forward-looking statements include, but are not limited to: statements regarding anticipated exploration, drilling, development, construction, and other activities or achievements of the Company; inferred, indicated or measured mineral resources or mineral reserves on the Company’s projects; the results of the PEA; timing of receipt of permits and regulatory approvals; and estimates of the Company’s revenues and capital expenditures; and the sufficiency of funds to support the Company’s normal exploration, development and operating requirements on an ongoing basis.

 

Forward-looking statements are based on the opinions and estimates of management on the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include fluctuating equity prices, bond prices and commodity prices; calculation of resources, reserves and mineralization; general economic conditions; foreign exchange risks; interest rate risk; foreign investment risk; loss of key personnel; conflicts of interest; dependence on management; uncertainties relating to the availability and costs of financing needed in the future; environmental risks; operations and

 

NEW PACIFIC METALS CORP.

Management’s Discussion and Analysis

For the year ended June 30, 2023

(Expressed in US dollars, unless otherwise stated)

 

political conditions; the regulatory environment in Bolivia and Canada; risks associated with community relations and corporate social responsibility; and other factors described in this MD&A, under the heading “Risk Factors”, in the AIF and its other public filings. The foregoing is not an exhaustive list of the factors that may affect any of the Company’s forward-looking statements or information.

 

The forward-looking statements 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, are inherently subject to significant business, economic and competitive uncertainties and contingencies. These estimates, assumptions, beliefs, expectations and opinions include, but are not limited to, those related to the Company’s ability to carry on current and future operations, including: 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 stabilization of the political climate in Bolivia; the availability and cost of inputs; the price and market for outputs; foreign exchange rates; taxation levels; the timely receipt of necessary approvals or permits; including the ratification and approval of the MPC by the Plurinational Legislative Assembly of Bolivia; the ability of the Company’s Bolivian partner to convert the exploration licenses at the Carangas Project to AMC; the completion of an MRE based on the results of the 2023, 2022 and 2021 drill programs; 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.

 

Although the forward-looking statements contained in this MD&A are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this MD&A are qualified by these cautionary statements. Accordingly, readers should not place undue reliance on such statements. Other than specifically required by applicable laws, the Company is under no obligation and expressly disclaims any such obligation to update or alter the forward-looking statements whether as a result of new information, future events or otherwise except as may be required by law. These forward-looking statements are made as of the date of this MD&A.

 

CAUTIONARY NOTE TO U.S. INVESTORS

 

This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada which differ from the requirements of United States securities laws. All mining terms used herein but not otherwise defined have the meanings set forth in NI 43-101. Unless otherwise indicated, the technical and scientific disclosure herein has been prepared in accordance with NI 43-101, which differs significantly from the requirements adopted by the U.S. Securities and Exchange Commission.

 

Accordingly, information contained in this MD&A containing descriptions of the Company’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of United States federal securities laws and the rules and regulations thereunder.

 

Additional information relating to the Company, including the AIF, can be obtained under the Company’s profile on SEDAR+ at www.sedarplus.ca, on EDGAR at www.sec.gov, and on the Company’s website at www.newpacificmetals.com.

 

 

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Exhibit 99.6

 

CONSENT OF EXPERT

 

The undersigned hereby consents to the inclusion in the Management’s Discussion & Analysis of New Pacific Metals Corp. (the “Company”) for the period ended June 30, 2023 of references to the undersigned as a qualified person and the undersigned's name with respect to the disclosure of technical and scientific information contained therein.

 

The undersigned further consents to the inclusion or incorporation by reference of all references to the undersigned in the Company’s Registration Statement on Form F-10 (No. 333-273541). This consent extends to any amendments to the Form F-10, including post-effective amendments.

 

/s/ Alex Zhang
Alex Zhang, P.Geo.
August 24, 2023

 

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Exhibit 99.7

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the incorporation by reference in Registration Statement No. 333-273541 on Form F-10 of our report dated August 23, 2023 relating to the financial statements of New Pacific Metals Corp. appearing in this Current Report on Form 6-K dated August 24, 2023.

 

/s/ Deloitte LLP

 

Chartered Professional Accountants
Vancouver, Canada
August 24, 2023

 

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