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 November, 2024

Commission File No. 0001-34184

SILVERCORP METALS INC.
(Translation of registrant’s name into English)

Suite 1750 - 1066 West 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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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 8, 2024 SILVERCORP METALS INC.
 

/s/ Jonathan Hoyles

 

Jonathan Hoyles

 

General Counsel and Corporate Secretary

 

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Exhibit 99.1

 

 

SILVERCORP METALS INC.

 

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and six months ended September 30, 2024 and 2023

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

 

 

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Income

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

 

      Three Months Ended September 30,   Six months Ended September 30, 
   Notes  2024   2023   2024   2023 
Revenue  4  $68,003   $53,992   $140,168   $113,998 
Cost of mine operations                       
Production costs      23,337    21,268    46,805    45,566 
Depreciation and amortization      6,887    6,515    14,167    14,178 
Mineral resource taxes      1,547    1,597    3,195    2,963 
Government fees and other taxes  5   715    751    1,350    1,408 
General and administrative  6   3,856    2,918    6,476    5,639 
       36,342    33,049    71,993    69,754 
Income from mine operations      31,661    20,943    68,175    44,244 
                        
Corporate general and administrative  6   4,976    3,810    9,263    7,460 
Property evaluation and business development      1,257    114    2,679    223 
Foreign exchange loss (gain)      1,120    (1,314)   (629)   913 
(Gain) loss on investments  10   (3,840)   603    (6,056)   (483)
Share of loss in associates  11   472    705    884    1,345 
Dilution gain on investment in associate  11       (733)       (733)
Loss on disposal of plant and equipment      35    35    147    30 
Other expense      24    763    409    529 
Income from operations      27,617    16,960    61,478    34,960 
                        
Finance income  7   1,934    1,742    3,614    3,236 
Finance costs  7   (82)   (54)   (147)   (114)
       29,469    18,648    64,945    38,082 
                        
Income tax expense  8   6,415    3,878    13,762    10,099 
Net income     $23,054   $14,770   $51,183   $27,983 
Attributable to:                       
Equity holders of the Company     $17,707   $11,050   $39,645   $20,267 
Non-controlling interests  20   5,347    3,720    11,538    7,716 
      $23,054   $14,770   $51,183   $27,983 
                        
Earnings per share attributable to the equity holders of the Company                       
Basic earnings per share     $0.09   $0.06   $0.21   $0.11 
Diluted earnings per share     $0.09   $0.06   $0.20   $0.11 
Weighted Average Number of Shares Outstanding - Basic      203,532,135    176,844,107    190,625,815    176,885,599 
Weighted Average Number of Shares Outstanding - Diluted      206,474,605    179,750,876    193,546,078    179,792,368 

 

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

 

See accompanying notes to the consolidated financial statements

 

1

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Comprehensive Income (loss)

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

 

      Three Months Ended September 30,   Six Months Ended September 30, 
   Notes  2024   2023   2024   2023 
                    
Net income     $23,054   $14,770   $51,183   $27,983 
Other comprehensive income (loss), net of taxes:                       
Items that may subsequently be reclassified to net income or loss:                       
Currency translation adjustment      18,026    (5,969)   13,798    (24,386)
Share of other comprehensive income (loss) in associates  11   169    (58)   24    (3)
Reclassification to net income upon ownership dilution of investment in associates          (34)       (34)
Items that will not subsequently be reclassified to net loss:                       
Change in fair value on equity investments designated as FVTOCI  10   (117)   6    (139)   (108)
Other comprehensive income (loss), net of taxes     $18,078   $(6,055)  $13,683   $(24,531)
Attributable to:                       
Equity holders of the Company     $14,684   $(5,571)  $10,667   $(20,071)
Non-controlling interests  20   3,394    (484)   3,016    (4,460)
      $18,078   $(6,055)  $13,683   $(24,531)
Total comprehensive income     $41,132   $8,715   $64,866   $3,452 
                        
Attributable to:                       
Equity holders of the Company     $32,391   $5,479   $50,312   $196 
Non-controlling interests      8,741    3,236    14,554    3,256 
      $41,132   $8,715   $64,866   $3,452 

 

See accompanying notes to the consolidated financial statements

 

2

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Financial Position

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

 

As at  Notes  September 30, 2024   March 31, 2024 
ASSETS             
Current Assets             
Cash and cash equivalents  24  $180,325   $152,942 
Short-term investments  9   29,180    31,949 
Trade and other receivables      1,258    2,202 
Inventories      19,640    7,395 
Due from related parties  21   1,197    590 
Income tax receivable      27    71 
Prepaids and deposits      10,209    6,749 
       241,836    201,898 
Non-current Assets             
Long-term prepaids and deposits      3,979    1,634 
Reclamation deposits      4,539    4,409 
Other investments  10   12,433    46,254 
Investment in associates  11   48,746    49,426 
Investment properties  12   455    463 
Plant and equipment  4, 13   93,031    79,898 
Mineral rights and properties  4, 14   575,716    318,833 
Long-term receivables      784     
TOTAL ASSETS     $981,519   $702,815 
LIABILITIES AND EQUITY             
Current Liabilities             
Accounts payable and accrued liabilities     $73,435   $41,797 
Current portion of lease obligation  16   231    213 
Deposits received      4,446    4,223 
Income tax payable      1,412    921 
       79,524    47,154 
Non-current Liabilities             
Long-term portion of lease obligation  16   1,019    1,102 
Long-term deposits received  15   13,250     
Deferred income tax liabilities      55,926    51,108 
Environmental rehabilitation  17   6,241    6,442 
Total Liabilities      155,960    105,806 
Equity             
Share capital      408,125    258,400 
Equity reserves      2,180    (12,908)
Retained earnings      293,584    261,763 
Total equity attributable to the equity holders of the Company      703,889    507,255 
              
Non-controlling interests  4, 20   121,670    89,754 
Total Equity      825,559    597,009 
              
TOTAL LIABILITIES AND EQUITY     $981,519   $702,815 

 

See accompanying notes to the consolidated financial statements

 

3

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Cash Flows

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

 

      Three Months Ended September 30,   Six Months Ended September 30, 
   Notes  2024   2023   2024   2023 
Cash provided by                       
Operating activities                       
Net income     $23,054   $14,770   $51,183   $27,983 
Add (deduct) items not affecting cash:                       
Finance costs  7   82    54    147    114 
Income tax expense  8   6,415    3,878    13,762    10,099 
Depreciation, amortization and depletion      7,325    6,927    15,061    15,015 
(Gain) loss on investments  10   (3,840)   603    (6,056)   (483)
Share of loss in associates  11   472    705    884    1,345 
Dilution gain on investment in associate          (733)       (733)
Loss on disposal of plant and equipment      35    35    147    30 
Share-based compensation  18   1,182    1,366    2,383    2,737 
Reclamation expenditures  17   (287)   (214)   (475)   (261)
Income taxes paid      (6,768)   (1,784)   (9,904)   (6,317)
Interest paid  7   (29)   (6)   (59)   (13)
Changes in non-cash operating working capital  24   (4,513)   3,243    (3,990)   8,209 
Net cash provided by operating activities      23,128    28,844    63,083    57,725 
                        
Investing activities                       
Plant and equipment                       
Additions      (5,581)   (3,343)   (9,372)   (6,557)
Proceeds on disposals      40    348    40    472 
Mineral rights and properties                       
Acquisition  3, 24   (4,953)       (4,953)    
Capital expenditures      (16,985)   (12,086)   (29,579)   (23,971)
Reclamation deposits                       
Paid      (23)   (14)   (39)   (29)
Refund      19    33    44    33 
Other investments                       
Acquisition  10   (1,011)   (18,465)   (19,784)   (22,059)
Proceeds on disposals  10   95    770    34,202    840 
Investment in associates  11       (4,982)   (4)   (4,982)
Short-term investment                       
Purchase      (22,156)   (20,912)   (95,087)   (29,464)
Redemption      65,399    7,587    98,667    13,537 
Net cash used in investing activities      14,844    (51,064)   (25,865)   (72,180)
                        
Financing activities                       
Principal payments on lease obligation  16   (45)   (65)   (85)   (129)
Cash dividends distributed  18(c)           (2,221)   (2,214)
Non-controlling interests                       
Distribution  4, 20   (7,316)       (11,049)   (7,248)
Related parties                       
Payments made  21           (500)    
Proceeds from issuance of common shares      1,120        1,246     
Common shares repurchased as part of normal course issuer bid          (572)       (572)

 

See accompanying notes to the consolidated financial statements

 

4

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Cash Flows

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

  

Net cash used in financing activities      (6,241)   (637)   (12,609)   (10,163)
                        
Effect of exchange rate changes on cash and cash equivalents      4,180    (1,323)   2,774    (1,976)
                        
Decrease in cash and cash equivalents      35,911    (24,180)   27,383    (26,594)
                        
Cash and cash equivalents, beginning of the period      144,414    143,278    152,942    145,692 
                        
Cash and cash equivalents, end of the period     $180,325   $119,098   $180,325   $119,098 
Supplementary cash flow information  24                    

 

See accompanying notes to the consolidated financial statements

 

5

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

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

 

      Share capital   Equity reserves                 
   Notes  Number of
shares
   Amount   Share option reserve   Reserves   Accumulated
other
comprehensive
loss
   Retained
earnings
   Total equity
attributable to the
equity holders of
the Company
   Non-controlling interests   Total equity 
Balance, April 1, 2023      176,771,265   $255,684   $20,893   $25,834   $(43,243)  $229,885   $489,053   $90,778   $579,831 
Restricted share units vested      245,278    1,001    (1,001)                        
Share-based compensation              2,737                2,737        2,737 
Dividends declared                          (2,214)   (2,214)       (2,214)
Distribution to non-controlling interests                                  (7,248)   (7,248)
Shares buy-back as per normal course issuer bid      (196,554)   (572)                   (572)       (572)
Comprehensive income (loss)                      (20,071)   20,267    196    3,256    3,452 
Balance, September 30, 2023      176,819,989   $256,113   $22,629   $25,834   $(63,314)  $247,938   $489,200   $86,786   $575,986 
Restricted share units vested      683,477    2,735    (2,735)                        
Share-based compensation              1,409                1,409        1,409 
Dividends declared                          (2,214)   (2,214)       (2,214)
Shares buy-back as per normal course issuer bid      (191,770)   (448)                   (448)       (448)
Distribution to non-controlling interests                                  (3,840)   (3,840)
Comprehensive income                      3,269    16,039    19,308    6,808    26,116 
Balance, March 31, 2024      177,311,696   $258,400   $21,303   $25,834   $(60,045)  $261,763   $507,255   $89,754   $ 597,009 
Options exercised      450,131    2,088    (842)               1,246        1,246 
Restricted share units vested      345,329    1,621    (1,621)                        
Securities issued upon acquisition of Adventus      38,818,841    146,016    4,501                150,517    22,808    173,325 
Share-based compensation  18(b)           2,383                2,383        2,383 
Dividends declared  18(c)                        (2,221)   (2,221)       (2,221)
Adjustment to non-controlling interests  20                       (5,603)   (5,603)   5,603     
Distribution to non-controlling interests  20                               (11,049)   (11,049)
Comprehensive income                      10,667    39,645    50,312    14,554    64,866 
Balance, September 30, 2024      216,925,997   $ 408,125   $ 25,724   $25,834   $(49,378)  $ 293,584   $703,889   $121,670   $825,559 

 

See accompanying notes to the consolidated financial statements

 

6

 

 

SILVERCORP METALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements

 

7

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

1.CORPORATE INFORMATION

 

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

 

On July 31, 2024, the Company acquired a 75% interest in the El Domo project, a permitted, pre-construction stage copper-gold project (the “El Domo Project”), and a 98.7% interest in the Condor project, a development stage gold project (the “Condor Project”), through the acquisition of Adventus Mining Corporation (“Adventus”), a Canadian company focused on the exploration and development of its mineral properties in Ecuador. The acquisition is expected to contribute to the Company’s diversification of its mining assets and enhance its geographical market presence in Latin America (note 3).

 

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

 

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

 

2.MATERIAL ACCOUNTING POLICIES

 

(a) Statement of Compliance

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting (“IAS 34”) of the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and have been condensed with certain disclosures from the Company’s audited consolidated financial statements for the year ended March 31, 2024. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2024. These unaudited condensed consolidated interim financial statements follow the same accounting policies set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2024 with the exception of the adoption of certain amendments noted in note 2(b) below.

 

These unaudited condensed consolidated interim financial statements were authorized for issue in accordance with a resolution of the Board of Directors dated November 6, 2024.

 

(b) Adoption of New Accounting Standards, Interpretation or Amendments

 

The Company adopted the following new standards or amendments to IFRS as at April 1, 2024. Their adoption has not had any material impact on the disclosures or the amounts reported in these unaudited condensed consolidated interim financial statements.

 

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

 

The amendments to IAS 1 clarify the presentation of liabilities. The classification of liabilities as current or non-current is based on contractual rights that are in existence at the end of the reporting period and is affected by expectations about whether an entity will exercise its right to defer settlement. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment also introduces a definition of ’settlement’ to make clear that settlement refers to the transfer of cash, equity instruments,

 

8

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

other assets, or services to the counterparty. The amendment issued in October 2022 also clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. Covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. The amendments were applied effective April 1, 2024 and did not have a material impact on the Company’s unaudited condensed consolidated interim financial statements.

 

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

 

The amendments require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions entered into after the date of initial application. The amendments were applied effective April 1, 2024 and did not have a material impact on the Company’s unaudited condensed consolidated interim financial statements.

 

Supplier Financing Arrangements (Amendments to IAS 7 and IFRS 7)

 

The amendments require disclosure requirements regarding the effects of supplier finance arrangement on their liabilities, cash flows and exposure to liquidity risk. Entities are required to disclose the followings:

 

The terms and conditions;

 

The amount of the liabilities that are part of the arrangements, breaking out the amounts for which the suppliers have already received payment from the finance providers, and stating where the liabilities are reflected in the balance sheet;

 

Ranges of payment due dates; and

 

Liquidity risk information.

 

The amendments were applied effective April 1, 2024 and did not have a material impact on the Company’s unaudited condensed consolidated interim financial statements.

 

(c) New Accounting Standards Issued but not effective

 

Certain new accounting standards and interpretations have been issued that are not mandatory for the current period and have not been early adopted.

 

Presentation and Disclosure in Financial Statements (IFRS 18 replaces IAS 1)

 

In April 2024, the IASB released IFRS 18 Presentation and Disclosure in Financial Statements. IFRS 18 replaces IAS 1 Presentation of Financial Statements while carrying forward many of the requirements in IAS 1. IFRS 18 introduces new requirements to: i) present specified categories and defined subtotals in the statement of earnings, ii) provide disclosures on management-defined performance measures (“MPMs”) in the notes to the financial statements, iii) improve aggregation and disaggregation. Some of the requirements in IAS 1 are moved to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7 Financial Instruments: Disclosures. The IASB also made minor amendments to

 

9

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

IAS 7 Statement of Cash Flows and IAS 33 Earnings per Share in connection with the new standard. IFRS 18 requires retrospective application with specific transition provisions.

 

The amendments are effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact of IFRS 18 on its financial statements.

 

Lack of Exchangeability (Amendments to IAS 21)

 

The amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. The amendments are effective for annual reporting periods beginning on or after January 1, 2025. The Company is currently evaluating the impact of this amendment.

 

Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)

 

The amendments contain guidance to derecognition of a financial liability settled through electronic transfer, as well as classification of financial assets for:

 

Contractual terms that are consistent with a basic lending arrangement;

 

Assets with non-recourse features;

 

Contractually linked instruments.

 

Also, additional disclosures relating to investments in equity instruments designated at fair value through other comprehensive income (“FVOCI”) and added disclosure requirements for financial instruments with contingent features. The amendments are effective for annual reporting periods beginning on or after January 1, 2026. The Company is currently evaluating the impact of these amendments.

 

(d) Basis of Consolidation

 

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

 

Subsidiaries are consolidated from the date on which the Company obtains control up to the date of the disposition of control. Control is achieved when the Company has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to use its power to affect its returns. These unaudited condensed consolidated interim financial statements include the financial results of Adventus after its acquisition on July 31, 2024.

 

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

 

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

 

10

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

Table below summarizes the Company’s material subsidiaries which are consolidated as follows:

 

Name of subsidiaries Principal activity Place of
incorporation
Ownership interest Mineral
properties
Silvercorp Metals (China) Inc. Corporate China 100%  
Adventus Mining Corporation(ii) Holding Canada 100%  
Luminex Resources Corp.(ii) Holding Canada 100%  
Salazar Holdings Limited(ii) Holding Canada 75%  
Fortune Mining Limited Holding BVI (i) 100%  
Victor Resources Ltd. Holding BVI 100%  
Victor Mining Ltd. Holding BVI 100%  
Yangtze Mining (H.K.) Ltd. Holding Hong Kong 100%  
Wonder Success Limited Holding Hong Kong 100%  
Henan Huawei Mining Co. Ltd. (“Henan Huawei”) Mining China 80% Ying Mining
District
Henan Found Mining Co. Ltd. (“Henan Found”) Mining China 77.5%
Xinshao Yunxiang Mining Co., Ltd. (“Yunxiang”) Care and maintenance China 70% BYP
Guangdong Found Mining Co. Ltd. (“Guangdong Found”) Mining China 99% GC
Shanxi Xinbaoyuan Mining Co., Ltd. (“Xinbaoyuan”) Development and exploration China 77.5% Kuanping
Curimining S.A(ii) Development and exploration Ecuador 75% El Domo
Condormine S.A(ii) Exploration Ecuador 98.7% Condor

 

(i) British Virgin Islands (“BVI”)

 

(ii) Entities added as part of the Adventus acquisition set out in note 3

 

(e) Business combinations or asset acquisition

 

It follows the same policies set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2024.

 

Previously held interest

 

In a step acquisition that is not accounted for as a business combination, previously held equity interest in an acquiree is remeasured to fair value at the acquisition date, and a gain or loss is recognized in profit or loss, or other comprehensive income, as appropriate (depending on whether the previously held equity interest was measured at fair value through profit or loss or fair value through other comprehensive income).

 

(f) Critical Accounting Judgments and Estimates

 

These unaudited condensed consolidated interim financial statements follow the same significant accounting judgments and estimates set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2024.

 

In addition to the judgments and estimates set out in note 2 to the audited consolidated financial statements for the year ended March 31, 2024, the Company has made critical judgments in assessing whether transactions undertaken during

 

11

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

the reporting period represent business combinations or asset acquisitions in applying IFRS 3 Business Combinations. This distinction affects how assets and liabilities acquired are accounted for and the resulting financial statement impact.

 

For each acquisition, the Company evaluated whether the transaction met the definition of a business under IFRS 3. This involved assessing if the acquisition included (i) an integrated set of activities and assets, (ii) inputs, and (iii) processes that have the capability to create outputs. Where an acquired set of activities and assets did not meet the criteria of a business, the transaction was classified as an asset acquisition, and consideration paid was allocated to the identifiable net assets on a relative fair value basis.

 

The following key factors were considered:

 

Inputs and processes acquired: Whether the acquired assets included organized workflows, management processes, or a workforce capable of managing and producing outputs.

 

Control over critical processes: An assessment of whether the Group obtained control over processes that are critical to generating outputs.

 

Synergies and strategic benefits: The extent to which the transaction provided synergies or additional strategic capabilities.

 

The application of this judgment has a material effect on the financial statements as it influences whether goodwill, deferred taxes are recognized and the accounting treatment for transaction costs.

 

(g) Deferred revenue

 

When a cash prepayment is received from customers prior to a sale meeting the criteria of revenue recognition, the amount received is recognized as deferred revenue on the statements of financial position. Revenue will be subsequently recognized in the consolidated statements of income when such criteria are met.

 

Where the Company determines at the beginning of a precious metals streaming contract that the obligations under it will be satisfied through the delivery of its own production of non-financial items (i.e. gold and silver credits) instead of cash or other financial assets, the Company will account for any upfront cash deposit as deposit liability to be reclassified to deferred revenue on completion of the mine.

 

The consideration received from deliveries of the gold and silver credits is variable, subject to changes in the total estimated production as well as the prices of the gold and silver credits at the time of delivery. Changes to the variable consideration are accounted for in revenue in the consolidated statements of income.

 

The deferred revenue contains a significant financing component as the upfront cash deposit is received in advance of the delivery of the concentrate and a financing charge on the deferred revenue is recognized. The interest rate used is based on the implicit rate for the streaming contract on the date of inception, based on the discount rate and the reserve and resources assumed. The financing component attributable to the qualifying asset is capitalized and included as its carrying amounts until the asset is ready for their intended use, in accordance with the Company’s accounting policy for borrowing costs.

 

3.ACQUISITION OF ADVENTUS MINING CORPORATION

 

On July 31, 2024, the Company completed the acquisition of Adventus through the purchase of all issued and outstanding common shares of Adventus, not already owned by Silvercorp, by issuing a total of 38,818,841 Silvercorp shares to the original shareholders of Adventus. The Company also issued a total of 1,766,721 Silvercorp stock options to replace Adventus’ outstanding options, and 2,787,020 Silvercorp warrants to replace Adventus’ outstanding warrants. All

 

12

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

Adventus restricted share units outstanding immediately before closing were settled in cash, funded by the Company through Adventus.

 

Adventus is a Canadian company focused on the exploration and development of copper-gold mineral projects, mainly the El Domo Project and the Condor Project, in Ecuador. Adventus owns 75% interest in the El Domo Project and 98.7% interest in the Condor Project.

 

The acquisition has been accounted for as an asset acquisition as it was determined that the mineral projects did not constitute a business as defined by IFRS 3 - Business Combination. The consideration paid along with the transaction costs incurred in connection with the acquisition of Adventus, were determined in accordance with IFRS 2 - Share-based Payment, and were allocated to the assets acquired and liabilities assumed based on their relative fair values.

 

Table below summarizes the total acquisitions incurred and their allocation to the assets acquired and liabilities assumed.

 

Consideration Paid    
38,818,841 common shares of Silvercorp issued  $146,016 
1,766,721 stock options of Silvercorp issued   2,403 
2,787,020 warrants of Silvercorp issued   2,098 
Previously held interest in Adventus   25,748 
Funds advanced to Adventus before closing   1,239 
   $177,504 
Transaction costs   3,838 
Total acquisition costs to be allocated  $181,342 
      
Fair value of assets acquired and liabilities assumed     
Cash and cash equivalent  $3,483 
Other receivable   710 
Prepaid and deposits   324 
Other investment   21 
Property, plant and equipment   523 
Mineral rights and properties   225,958 
Other assets   645 
Accounts payable and accrued liabilities   (14,248)
Lease obligation   (16)
Deposit received (note 15)   (13,250)
Non-controlling interests   (22,808)
Net assets acquired  $181,342 

 

4.SEGMENTED INFORMATION

 

All of the Company’s operations are within the mining and metals industry. The Company reviews its segment reporting to ensure it reflects the operational structure of the Company after the Adventus acquisition and enables the Company’s chief operating decision maker to review operating segment performance.

 

13

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

An operating segment is defined as a component of the Company that:

 

Engages in business activities from which it may earn revenues or incur expenses;

 

Whose operating results are reviewed regularly by the entity’s chief operating decision maker; and

 

For which discrete financial information is available.

 

The Company has determined that each producing mine and significant development property represents an operating segment. The Company has organized its reportable and operating segments by significant revenue streams and geographic regions.

 

As of September 30, 2024, the Company’s significant operating segments include its two producing properties in China, two development and exploration projects in Ecuador. “Other” consists primarily of the Company’s corporate assets, other development and exploration properties, and corporate expenses which are not allocated to operating segments.

 

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

 

Three months ended September 30, 2024

   China   Ecuador         
Statements of Income  Ying Mining District   GC Mine   El Domo   Condor   Other   Total 
Revenue  $58,704   $9,299   $   $   $   $68,003 
Costs of mine operations   (29,577)   (6,327)   (5)   (62)   (371)   (36,342)
Income (loss) from mine operations   29,127    2,972    (5)   (62)   (371)   31,661 
                               
Operating expenses   (1,295)   (40)   53    (17)   (2,745)   (4,044)
Finance items, net   477    73            1,302    1,852 
Income tax expenses   (4,497)   (363)           (1,555)   (6,415)
Net income (loss)  $23,812   $2,642   $48   $(79)  $(3,369)  $23,054 
                               
Attributable to:                              
Equity holders of the Company   18,481    2,615    39    (78)   (3,350)   17,707 
Non-controlling interest   5,331    27    9    (1)   (19)   5,347 
Net income (loss)  $23,812   $2,642   $48   $(79)  $(3,369)  $23,054 

 

14

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

Three months ended September 30, 2023
   China   Ecuador         
Statements of Income  Ying Mining District   GC Mine   El Domo   Condor   Other   Total 
Revenue  $49,839   $4,153   $   $   $   $53,992 
Costs of mine operations   (28,023)   (4,902)           (124)   (33,049)
Income (loss) from mine operations   21,816    (749)           (124)   20,943 
                               
Operating expenses   (853)   38            (3,168)   (3,983)
Finance items, net   583    126            979    1,688 
Income tax (expense)/recovery   (4,015)   139            (2)   (3,878)
Net income (loss)   17,531    (446)           (2,315)   14,770 
                               
Attributable to:                              
Equity holders of the Company   13,760    (441)           (2,269)   11,050 
Non-controlling interest   3,771    (5)           (46)   3,720 
Net income (loss)  $17,531   $(446)  $   $   $(2,315)  $14,770 

 

Six months ended September 30, 2024
   China   Ecuador         
Statements of Income  Ying Mining District   GC Mine   El Domo   Condor   Other   Total 
Revenue  $121,487   $18,681   $   $   $   $140,168 
Costs of mine operations   (58,772)   (12,682)   (5)   (62)   (472)   (71,993)
Income (loss) from mine operations   62,715    5,999    (5)   (62)   (472)   68,175 
                               
Operating expenses   (1,949)   (19)   53    (17)   (4,765)   (6,697)
Finance items, net   942    131            2,394    3,467 
Income tax expenses   (9,668)   (900)           (3,194)   (13,762)
Net income (loss)  $52,040   $5,211   $48   $(79)  $(6,037)  $51,183 
                               
Attributable to:                              
Equity holders of the Company   40,499    5,159    39    (78)   (5,974)   39,645 
Non-controlling interest   11,541    52    9    (1)   (63)   11,538 
Net income (loss)  $52,040   $5,211   $48   $(79)  $(6,037)  $51,183 

 

15

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

Six months ended September 30, 2023
   China   Ecuador         
Statements of Income  Ying Mining District   GC Mine   El Domo   Condor   Other   Total 
Revenue  $100,415   $13,583   $   $   $   $113,998 
Costs of mine operations   (56,884)   (12,659)           (211)   (69,754)
Income (loss) from mine operations   43,531    924            (211)   44,244 
                               
Operating expenses   (707)   114            (8,691)   (9,284)
Finance items, net   1,164    260            1,698    3,122 
Income tax expenses   (7,773)   171            (2,497)   (10,099)
Net income (loss)   36,215    1,469            (9,701)   27,983 
                               
Attributable to:                              
Equity holders of the Company   28,398    1,455            (9,586)   20,267 
Non-controlling interest   7,817    14            (115)   7,716 
Net income (loss)  $36,215   $1,469   $   $   $(9,701)  $27,983 

 

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

 

   China   Ecuador         
As at September 30, 2024  Ying Mining District   GC Mine   El Domo   Condor   Other   Total 
Current assets  $103,391   $13,818   $1,737   $435   $122,455   $241,836 
Long-term prepaids and deposits   3,549    333            97    3,979 
Reclamation deposits   1,380    3,152            7    4,539 
Other investments                   12,433    12,433 
Investment in associates                   48,746    48,746 
Investment properties   455                    455 
Plant and equipment   74,650    13,337    217    142    4,685    93,031 
Mineral rights and properties   287,954    38,253    203,546    25,514    20,449    575,716 
Long-term receivables           784            784 
Total Assets  $471,379   $68,893   $206,284   $26,091   $208,872   $981,519 
Current liabilities   57,804    6,225    3,745    516    11,234    79,524 
Long-term portion of lease obligation                   1,019    1,019 
Long-term deposits received                   13,250    13,250 
Deferred income tax liabilities   53,047    1,063            1,816    55,926 
Environmental rehabilitation   3,709    1,519            1,013    6,241 
Total liabilities  $114,560   $8,807   $3,745   $516   $28,332   $155,960 
Non-controlling interests  $91,605   $(192)  $28,816   $(395)  $1,836   $121,670 

 

16

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

   China   Ecuador         
As at March 31, 2024  Ying Mining District   GC Mine   El Domo   Condor   Other   Total 
Current assets  $91,777   $9,272   $   $   $100,849   $201,898 
Long-term prepaids and deposits   1,104    129            401    1,634 
Reclamation deposits   1,370    3,032            7    4,409 
Other investments   63                46,191    46,254 
Investment in associates                   49,426    49,426 
Investment properties   463                    463 
Plant and equipment   61,350    13,648            4,900    79,898 
Mineral rights and properties   264,903    34,409            19,521    318,833 
Total Assets  $421,030   $60,490   $   $   $221,295   $702,815 
Current liabilities   38,271    5,621            3,262    47,154 
Long-term portion of lease obligation                   1,102    1,102 
Deferred income tax liabilities   50,001    133            974    51,108 
Environmental rehabilitation   4,000    1,486            956    6,442 
Total liabilities  $92,272   $7,240   $   $   $6,294   $105,806 
Non-controlling interests  $88,166   $(262)  $   $   $1,850   $89,754 

 

(c) Sales by metal

 

The sales generated for the three and six months ended September 30, 2024 and 2023 were all earned in China and were comprised of:

 

   Three months ended September 30, 2024 
   Ying Mining District   GC   Total 
Gold  $2,699   $   $2,699 
Silver   40,757    2,712    43,469 
Lead   12,028    1,259    13,287 
Zinc   2,081    4,568    6,649 
Other   1,139    760    1,899 
   $58,704   $9,299   $68,003 

 

17

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

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

 

   Six months ended September 30, 2024 
   Ying Mining District   GC   Total 
Gold  $4,685   $   $4,685 
Silver   83,543    5,724    89,267 
Lead   26,098    2,772    28,870 
Zinc   4,651    8,579    13,230 
Other   2,510    1,606    4,116 
   $121,487   $18,681   $140,168 

 

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

 

(d) Major customers

 

Revenue from major customers is summarized as follows:

 

18

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

   Six months ended September 30, 2024 
Customers  Ying Mining District   GC   Total   Percentage of
total revenue
 
Customer D  $34,644   $   $34,644    25%
Customer E   24,972    1,754    26,726    19%
Customer B   24,446        24,446    17%
Customer A   19,550    106    19,656    14%
Customer F   10,030        10,030    7%
   $113,642   $1,860   $115,502    82%

 

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

 

19

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

5.GOVERNMENT FEES AND OTHER TAXES

 

Government fees and other taxes consist of:

 

   Three  months ended September 30,   Six months ended September 30, 
   2024   2023   2024   2023 
Government fees  $16   $13   $31   $29 
Other taxes   699    738    1,319    1,379 
   $715   $751   $1,350   $1,408 

 

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

 

6.GENERAL AND ADMINISTRATIVE

 

General and administrative expenses consist of:

 

   Three months ended September 30, 2024   Three months ended September 30, 2023 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $169   $272   $441   $148   $264   $412 
Office administrative expenses   650    1,429    2,079    516    840    1,356 
Professional fees   153    156    309    239    124    363 
Salaries and benefits   2,822    1,999    4,821    1,541    1,690    3,231 
Share-based compensation   1,182        1,182    1,366        1,366 
   $4,976   $3,856   $8,832   $3,810   $2,918   $6,728 

 

   Six months ended September 30, 2024   Six months ended September 30, 2023 
   Corporate   Mines   Total   Corporate   Mines   Total 
Amortization and depreciation  $347   $550   $897   $296   $541   $837 
Office administrative expenses   1,315    2,117    3,432    1,057    1,548    2,605 
Professional fees   466    246    712    414    227    641 
Salaries and benefits   4,752    3,563    8,315    2,956    3,323    6,279 
Share-based compensation   2,383        2,383    2,737        2,737 
   $9,263   $6,476   $15,739   $7,460   $5,639   $13,099 

 

7.FINANCE ITEMS

 

Finance items consist of:

 

   Three months ended September 30,   Six months ended September 30, 
Finance income  2024   2023   2024   2023 
Interest income  $1,934   $1,742   $3,614   $3,236 

 

20

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

   Three months ended September 30,   Six months ended September 30, 
Finance costs  2024   2023   2024   2023 
Interest in lease obligation  $29   $6   $59   $13 
Accretion of environmental rehabilitation liabilities   53    48    88    101 
   $82   $54   $147   $114 

 

8.INCOME TAX

 

The significant components of income tax expense are as follows:

 

   Three months ended September 30,   Six months ended September 30, 
Income tax expense  2024   2023   2024   2023 
Current  $6,076   $2,485   $10,397   $7,368 
Deferred   339    1,393    3,365    2,731 
   $6,415   $3,878   $13,762   $10,099 

 

9.SHORT-TERM INVESTMENTS

 

Short-term investments consist of the following:

 

As at September 30, 2024

  Carrying Value   Interest rates  Maturity
Bonds  $1,310   0% - 5.5%  Up to January 16, 2025
Money market instruments   27,870       
   $29,180       

 

As at March 31, 2024  Carrying Value   Interest rates  Maturity
Bonds  $1,329   0% - 6.9%  Up to January 16, 2025
Money market instruments   30,620       
   $31,949       

 

21

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

10.OTHER INVESTMENTS

 

   As at September 30, 2024   As at March 31, 2024 
Investments designated as FVTOCI        
Public companies  $529   $547 
Private companies       62 
    529    609 
Investments designated as FVTPL          
Public companies   9,370    42,488 
Private companies   2,534    3,157 
    11,904    45,645 
Total  $12,433   $46,254 

 

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

 

The continuity of such investments is as follows:

 

   Fair Value   Accumulated fair
value change included
in OCI
   Accumulated fair
value change included
in P&L
 
As at April 1, 2023  $15,540   $(25,648)  $1,385 
Loss on equity investments designated as FVTOCI   (67)   (67)    
Gain on equity investments designated as FVTPL   9,074        9,074 
Acquisition   23,305         
Disposal   (1,492)        
Impact of foreign currency translation   (106)        
As at March 31, 2024  $46,254   $(25,715)  $10,459 
Loss on equity investments designated as FVTOCI   (139)   (139)    
Gain on equity investments designated as FVTPL   6,056        6,056 
Acquisition   19,784         
Disposal   (34,202)        
Transferred upon acquisition of Adventus   (25,748)        
Impact of foreign currency translation   428         
As at September 30, 2024  $12,433   $(25,854)  $16,515 

 

22

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

11.INVESTMENT IN ASSOCIATES

 

(a)Investment in New Pacific Metals Corp.

 

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

 

As at September 30, 2024, the Company owned 46,907,606 common shares of NUAG (March 31, 2024 – 46,904,706), representing an ownership interest of 27.4% (March 31, 2024 – 27.4%).

 

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

 

   Number of shares   Amount   Value of NUAG’s common shares
per quoted market price
 
As at April 1, 2023   44,351,616   $43,253   $119,621 
Participation in bought deal   2,541,890    4,982      
Purchase from open market   11,200    15      
Dilution gain        733      
Share of net loss        (1,784)     
Share of other comprehensive loss        (28)     
Foreign exchange impact        (91)     
As at March 31, 2024   46,904,706   $47,080   $63,693 
Purchase from open market   2,900    4      
Share of net loss        (749)     
Share of other comprehensive income        31      
Foreign exchange impact        169      
As at September 30, 2024   46,907,606   $46,535   $69,498 

 

(b)Investment in Tincorp Metals Inc.

 

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

 

As at September 30, 2024, the Company owned 19,864,285 common shares of TIN (March 31, 2024 – 19,864,285), representing an ownership interest of 29.7% (March 31, 2024 – 29.7%).

 

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

 

23

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

   Number of shares   Amount   Value of TIN’s common
shares per quoted market
price
 
As at April 1, 2023   19,514,285    7,442    6,777 
Tincorp shares received under credit facility agreement   350,000    78      
Share of net loss        (908)     
Share of other comprehensive income        (8)     
Impairment        (4,251)     
Foreign exchange impact        (7)     
As at March 31, 2024   19,864,285   $2,346   $2,346 
Share of net loss        (135)     
Share of other comprehensive loss        (7)     
Foreign exchange impact        7      
As at September 30, 2024   19,864,285   $2,211   $2,428 

 

12.INVESTMENT PROPERTIES

 

Investment properties consist of:

 

   Costs   Accumulated
depreciation and
amortization
   Net carrying value 
As at April 1, 2023  $   $   $ 
Additions   287        287 
Transfer from property, plant, and equipment   837    (619)   218 
Depreciation and amortization       (39)   (39)
Impact of foreign currency translation   (9)   6    (3)
As at March 31, 2024   1,115    (652)   463 
Depreciation and amortization       (21)   (21)
Impact of foreign currency translation   34    (21)   13 
As at September 30, 2024  $1,149   $(694)  $455 

 

Investment properties include real estate properties that are rented out to earn rental income. The investment properties were initially recorded at cost, and subsequently measured at cost less accumulated depreciation. Depreciation is computed on a straight-line basis based on the nature and an estimated 20 years’ useful life of the asset. The Company did not engage an independent valuer to value the properties, and the fair value of the properties estimated based on the quoted market prices for the similar real estate properties in the nearby neighborhoods were approximately $1.9 million as at September 30, 2024 (March 31, 2024 - $2.8 million).

 

During the three and six months ended September 30, 2024, the Company recorded rental income of $0.06 million and $0.09 million (three and six months ended September 30, 2023 - $0.03 million and $0.06 million), which was included in other expenses (income) on the condensed consolidated interim statements of income.

 

24

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

13.PLANT AND EQUIPMENT

 

Plant and equipment consist of:

 

   Land use
rights and
building
   Office
equipment
   Machinery   Motor
vehicles
   Construction
in progress
   Total 
Cost                              
As at April 1, 2023  $112,121   $10,879   $34,374   $8,062   $7,228   $172,664 
Additions   1,020    853    1,965    609    8,469    12,916 
Disposals   (1,082)   (234)   (1,033)   (290)       (2,639)
Reclassification of asset groups   2,209    461    840    (410)   (3,100)    
Impact of foreign currency translation   (5,459)   (495)   (1,723)   (394)   (404)   (8,475)
As at March 31, 2024  $108,809   $11,464   $34,423   $7,577   $12,193   $174,466 
Additions   21    290    1,524    260    12,088    14,183 
Acquisition of Adventus       51    347    125        523 
Disposals   (265)   (70)   (102)   (146)   (2)   (585)
Reclassification of asset groups   1,012    67    247        (1,326)    
Impact of foreign currency translation   3,302    329    1,104    234    665    5,634 
As at September 30, 2024  $112,879   $12,131   $37,543   $8,050   $23,618   $194,221 
Accumulated amortization and impairment
As at April 1, 2023  $(56,781)  $(7,142)  $(23,213)  $(5,469)  $   $(92,605)
Disposals   778    216    291    211        1,496 
Depreciation and amortization   (4,315)   (1,031)   (2,263)   (390)       (7,999)
Impact of foreign currency translation   2,777    316    1,176    271        4,540 
As at March 31, 2024  $(57,541)  $(7,641)  $(24,009)  $(5,377)  $   $(94,568)
Disposals   62    70    119    147        398 
Depreciation and amortization   (2,177)   (476)   (1,095)   (345)       (4,093)
Impact of foreign currency translation   (1,770)   (217)   (769)   (171)       (2,927)
As at September 30, 2024  $(61,426)  $(8,264)  $(25,754)  $(5,746)  $   $(101,190)
Carrying amounts                              
As at March 31, 2024  $51,268   $3,823   $10,414   $2,200   $12,193   $79,898 
As at September 30, 2024  $51,453   $3,867   $11,789   $2,304   $23,618   $93,031 

 

25

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

14.MINERAL RIGHTS AND PROPERTIES

 

Mineral rights and properties consist of:

 

As at  September 30, 2024   March 31, 2024 
Producing mineral properties  $326,207   $299,312 
Non-producing mineral properties   249,509    19,521 
   $575,716   $318,833 

 

Producing properties  Ying Mining District   GC   Total 
Carrying values               
As at April 1, 2023  $402,012   $120,118   $522,130 
Capitalized expenditures   44,633    6,202    50,835 
Environmental rehabilitation   89    151    240 
Foreign currency translation impact   (20,174)   (5,914)   (26,088)
As at March 31, 2024  $426,560   $120,557   $547,117 
Capitalized expenditures   26,294    3,812    30,106 
Foreign currency translation impact   13,718    3,746    17,464 
As at September 30, 2024  $466,572   $128,115   $594,687 
Accumulated depletion and impairment               
As at April 1, 2023  $(150,862)  $(88,048)  $(238,910)
Depletion   (18,379)   (2,405)   (20,784)
Foreign currency translation impact   7,584    4,305    11,889 
As at March 31, 2024  $(161,657)  $(86,148)  $(247,805)
Depletion   (11,713)   (1,089)   (12,802)
Foreign currency translation impact   (5,248)   (2,625)   (7,873)
   $(178,618)  $(89,862)  $(268,480)
Carrying values               
As at March 31, 2024  $264,903   $34,409   $299,312 
As at September 30, 2024  $287,954   $38,253   $326,207 

 

Non-producing properties  BYP   Kuanping   El Domo   Condor   Total 
Carrying values                         
As at April 1, 2023  $6,953   $13,253   $   $   $20,206 
Capitalized expenditures       290            290 
Environmental rehabilitation   20                20 
Foreign currency translation impact   (337)   (658)           (995)
As at March 31, 2024  $6,636   $12,885   $   $   $19,521 
Acquisition           201,013    24,945    225,958 
Capitalized expenditures       325    2,533    569    3,427 
Foreign currency translation impact   200    403            603 
As at September 30, 2024  $6,836   $13,613   $203,546   $25,514   $249,509 

 

The BYP Mine was placed on care and maintenance since August 2014 and the Company is conducting activities to apply for a new mining license, but the process has taken longer than expected.

 

26

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

The Kuanping Project was acquired in 2021 and is located in Shanzhou District, Sanmenxia City, Henan Province, China, approximately 33 km north of the Ying Mining District. The Company has completed all studies and reports required to construct the mine, and the final approval from the provincial authorities to construct the mine is pending.

 

The Company acquired the El Domo Project and the Condor Project through the acquisition of Adventus on July 31, 2024.

 

The El Domo Project is a permitted, pre-construction stage copper-gold project, 75% owned by Adventus. The El Domo Project is located in central Ecuador, approximately 150 km northeast of the major port city of Guayaquil - about a 3-hour drive. The El Domo Project spans low-lying hills and plains between 300 to 900 m above sea level.

 

In June 2024, an action seeking to void the environmental license of the El Domo project was brought in local court in Las Naves Canton, Bolívar Province, Ecuador (the “Court”) by a group of plaintiffs alleging defects in the environmental consultation process for the El Domo Project. The Court rejected the litigation on July 24, 2024 ruling that the Ecuadorean government correctly discharged its environmental consultation obligations prior to issuing an environmental license for the El Domo Project. The plaintiffs filed an appeal (the “Appeal”) to the provincial court, and the Appeal was heard by the provincial court of Bolívar Province on October 17, 2024, but a ruling has not yet been made.

 

The Condor Project is located within one of the most developed trends in Ecuador, near large-scale operations such as the Fruta del Norte gold mine (33 km north) and the Mirador copper mine (55 km north) and 98.7% owned by Adventus.

 

Based on the information posted on the website of the Mineral Rights Administration of the Department of Natural Resources of Henan Province, China (the “Department of Natural Resources”), the Company’s application to renew Yuelianggou Mining License (the “License”), containing the SGX and HZG silver-lead-zinc mine, located in the western part of the Ying Mining District, for another 11 years to September 24, 2035 with an increase in allowable production capacity to 500,000 tonnes per year, has been approved by the Department of Natural Resources. An assessment report, prepared by a third party regarding the historical government investment in the License area and the payment required to compensate the mineral resources transferred to the Company was published on the website of the Department of Natural Resources and was available for public inquires until November 5, 2024. If the Department of Natural Resources did not receive any objections to the assessment report by the end of the public inquiry period, the Department of Natural Resources will enter into a mineral resource transfer agreement with the Company and a digital certificate representing the License will be issued to the Company. The Company has not yet been made aware of any objections. Based on the current assessment report, the Company may be required to make a lump sum payment of approximately $7.2 million to the government upon issuance of the License.

 

15.LONG TERM DEPOSITS RECEIVED

 

In order to develop the El Domo Project, Adventus entered into a precious metals purchase agreement (“PMPA”) with Wheaton Precious Metals International Ltd. (“Wheaton”). The PMPA provides Adventus with access to an upfront cash consideration of $175.5 million and a $5.0 million equity commitment. Of this, $13.0 million was made available as an early deposit (the “Early Deposit”) for pre-construction activities, and $0.5 million for local community development initiatives (the “ESG Deposit”) prior to production. The remainder will be available in four installments during construction, subject to certain customary conditions precedent being satisfied.

 

Under the PMPA, Wheaton will purchase 50% of the payable gold production until 145,000 ounces have been delivered, thereafter dropping to 33% for the life of mine; and 75% of the payable silver production until 4,600,000 ounces have been delivered, thereafter dropping to 50% for the life of mine.

 

Wheaton will make ongoing payments for the gold and silver ounces delivered equal to 18% of the spot prices (“Production Payment”) until the value of gold and silver delivered less the Production Payment is equal to the upfront consideration of $175.5 million, at which point the Production Payment will increase to 22% of the spot prices.

 

27

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

As at September 30, 2024, Wheaton advanced Adventus a total of $13.25 million (July 31, 2024 - $13.25 million), being the $13.0 million as Early Deposit and $0.25 million as ESG Deposit to support the training programs for members of the communities. Pursuant to the terms of the PMPA, Adventus was required to deliver approximately 92.3 ounces to Wheaton monthly until the development of the El Domo Project reaches certain milestones or the deposits will be repaid. The estimated liabilities of this gold delivery were $2.3 million as at September 30, 2024, which are derivative liabilities and have been included in the accounts payable and accrued liabilities on the unaudited condensed consolidated interim statements of financial position.

 

16.LEASES

 

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

 

   Lease Obligations 
As at April 1, 2023  $583 
Addition   998 
Interest accrual   22 
Interest received or paid   (22)
Principal repayment   (262)
Foreign exchange impact   (4)
As at March 31, 2024  $1,315 
Addition   16 
Interest accrual   59 
Interest received or paid   (59)
Principal repayment   (85)
Foreign exchange impact   4 
As at September 30, 2024  $1,250 
Less: current portion   231 
Non-current portion  $1,019 

 

28

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

The following table presents a reconciliation of the Company’s undiscounted cash flows to their present value for its lease obligation as at September 30, 2024:

 

   Lease Obligations 
Within 1 year  $292 
Between 2 to 5 years  $1,108 
Over 5 years   195 
Total undiscounted amount   1,595 
Less future interest   (345)
Total discounted amount  $1,250 
Less: current portion   231 
Non-current portion  $1,019 

 

The lease obligations were discounted at discount rates ranging from 9.2% to 15.6% as at September 30, 2024.

 

17.ENVIRONMENTAL REHABILITATION OBLIGATION

 

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

 

   Environmental
rehabilitation obligation
 
As at April 1, 2023  $7,318 
Reclamation expenditures   (970)
Accretion of environmental rehabilitation liabilities   191 
Revision of provision   259 
Foreign exchange impact   (356)
As at March 31, 2024  $6,442 
Reclamation expenditures   (475)
Accretion of environmental rehabilitation liabilities   88 
Foreign exchange impact   186 
As at September 30, 2024  $6,241 

 

18.SHARE CAPITAL

 

(a)Authorized

 

Unlimited number of common shares without par value. All shares issued as at September 30, 2024 were fully paid.

 

(b)Share-based compensation

 

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

 

29

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

For the three and six months ended September 30, 2024, a total of $1.2 million and $2.4 million (three and six months ended September 30, 2023 - $1.4 million and $2.7 million) in share-based compensation expense was recognized and included in the corporate general and administrative expenses and property evaluation and business development expenses on the condensed consolidated interim statements of income.

 

(i)Stock options

 

The following is a summary of option transactions:

   Number of options   Weighted average
exercise price per
share CAD
 
Balance, April 1, 2023   1,431,668   $6.01 
Options cancelled/forfeited   (104,667)   5.83 
Balance, March 31, 2024   1,327,001   $6.02 
Options granted to directors, officers and employees   330,000    4.41 
Replacement options issued upon Adventus Acquisition   1,766,721    5.71 
Options exercised   (450,131)   3.74 
Options cancelled/forfeited   (5,000)   9.45 
Balance, September 30, 2024   2,968,591   $6.00 

 

The following table summarizes information about stock options outstanding as at September 30, 2024:

 

30

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

Exercise
price in
CAD
   Number of options
outstanding at
September 30, 2024
   Weighted average
remaining
contractual life
(Years)
   Number of options
exercisable at
September 30, 2024
   Weighted average
exercise price in
CAD
 
$12.52    35,525    1.17    35,525   $12.52 
 9.96    41,956    1.16    41,956    9.96 
 9.56    81,200    0.06    81,200    9.56 
 9.45    370,000    1.11    370,000    9.45 
 9.27    39,236    0.04    39,236    9.27 
 9.07    224,989    2.34    224,989    9.07 
 8.48    50,750    0.35    50,750    8.48 
 7.99    126,875    2.38    126,875    7.99 
 7.49    49,096    2.15    49,096    7.49 
 6.21    15,225    2.66    15,225    6.21 
 5.46    405,667    0.65    405,667    5.46 
 5.13    361,658    3.30    361,658    5.13 
 4.93    5,075    3.24    5,075    4.93 
 4.41    330,000    4.50         
 4.08    60,000    3.40    30,000    4.08 
 3.93    341,334    2.57    195,333    3.93 
 3.75    10,150    2.99    10,150    3.75 
 3.65    24,514    3.15    24,514    3.65 
 3.16    76,125    4.49    76,125    3.16 
 3.06    10,150    1.07    10,150    3.06 
 2.67    309,066    4.32    309,066    2.67 
$12.52    2,968,591    2.47    2,462,590   $6.36 

 

The options exercisable at September 30, 2024 have a weighted average exercise price of $6.36 (March 31, 2024 - $6.52).

 

The fair value of stock options granted during the six months ended September 30, 2024 were calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

   Six months ended September 30,  
   2024  
Risk free interest rate   3.39%  
Expected life of option in years   3.11 years  
Expected volatility   50.14%  
Expected dividend yield   0.68%  
Estimated forfeiture rate   9.77%  
Weighted average share price at date of grant   $5.08 CAD  

 

Subsequent to September 30, 2024, a total of 440,602 stock options with grant date closing prices of CAD$2.67 to CAD$5.46 were exercised, and a total of 143,770 stock options were cancelled and/or forfeited.

 

31

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

(ii)Share purchase warrants

 

The following is a summary of share purchase warrant transactions:

 

   Number of warrants  

Weighted average exercise price

CAD

 
Balance, April 1, 2023 and 2024      $ 
Warrants issued upon Adventus acquisition   2,787,020    5.46 
Balance, September 30, 2024   2,787,020   $5.46 

 

The following table summarizes information about share purchase warrants outstanding as at September 30, 2024:

 

  

Exercise price

CAD

   Number of warrants
outstanding at
September 30, 2024
   Expiry date  
Warrants issued upon Adventus acquisition  $6.47    1,416,771   February 16, 2025  
Warrants issued upon Adventus acquisition   4.41    1,370,249   August 3, 2026  
         2,787,020      

 

The fair value of share purchase warrants issued during the six months ended September 30, 2024 were calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

   Six months ended

September 30, 2024

 
Risk free interest rate   3.43%  
Expected life in years   1.27 years  
Expected volatility   46.55%  
Expected dividend yield   0.68%  
Estimated forfeiture rate   —%  
Weighted average share price at date of issuance   $ 5.21 CAD  

 

Subsequent to September 30, 2024, a total of 6,939 share purchase warrants with grant date closing price of CAD$6.47 were exercised.

 

(iii)RSUs

 

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SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

The following is a summary of RSUs transactions:

 

   Number of units   Weighted average
grant date closing
price per share CAD
 
Balance, April 1, 2023   2,126,670   $5.29 
Granted   1,056,000    5.28 
Forfeited   (113,665)   5.04 
Distributed   (928,755)   5.44 
Balance, March 31, 2024   2,140,250   $5.23 
Granted   1,044,750    4.41 
Forfeited   (14,333)   4.82 
Distributed   (345,329)   6.44 
Balance, September 30, 2024   2,825,338   $4.78 

 

During the three and six months ended September 30, 2024, a total of nil and 1,044,750 RSUs were granted to directors, officers, and employees of the Company at grant date closing prices of CAD$4.41 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 September 30, 2024, a total of 188,456 RSUs with grant date closing prices of CAD$4.0 to CAD$5.28 were distributed, and a total of 27,084 RSUs were cancelled and/or forfeited.

 

(c)Cash dividends declared

 

During the three and six months ended September 30, 2024, dividends of $nil and $2.2 million or $0.0125 per share, respectively, (three and six months ended September 30, 2023 - $nil and $2.2 million or $0.025 per share) were declared and paid.

 

(d)Normal course issuer bid

 

On September 17, 2024, the Company announced a normal course issuer bid (the “2024 NCIB”) commencing September 19, 2024 to repurchase up to 8,670,700 of its own common shares until September 18, 2025.

 

19.ACCUMULATED OTHER COMPREHENSIVE LOSS

 

As at  September 30, 2024   March 31, 2024 
Loss on investments designated as FVTOCI  $24,560   $24,421 
Share of loss in associate   1,425    1,449 
Loss on currency translation adjustment   23,393    34,175 
   $49,378   $60,045 

 

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

 

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SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

20.NON-CONTROLLING INTERESTS

 

Tables below summarize the financial information and continuity of the Company’s material non-controlling interests:

 

As of September 30, 2024  Henan
Found
   Henan
Huawei
   Yunxiang   Salazar
Holdings
 
Non-controlling interests percentage   22.5%   20.0%   30.0%   25.0%
Current assets  $100,303   $1,881   $609   $2,098 
Non-current assets   357,082    10,118    9,582    204,547 
Current liabilities   (55,927)   (1,879)   (271)   (6,057)
Non-current liabilities   (55,356)   (1,400)   (36,845)   (41,784)
Net Assets (deficit)  $346,102   $8,720   $(26,925)  $158,804 
                     
Revenue  $121,395   $14,849   $   $ 
Net income (loss) and comprehensive income (loss)  $61,477   $3,865   $(27)  $222 
Cash flows provided by (used in) operating activities  $59,164   $976   $(111)  $(33)
Cash flows used in investing activities  $(33,064)  $(13)  $   $(2,198)
Cash flows used in financing activities  $(33,004)  $(3,141)  $   $(3)

 

Non-controlling interest continuity  Henan
Found
   Henan
Huawei
   Yunxiang   Salazar
Holdings
 
As at April 1, 2023  $85,282   $3,510   $2,640   $ 
Share of net income (loss)   12,846    673    (151)    
Share of other comprehensive loss   (3,063)   (55)   (96)    
Distribution   (10,088)   (950)        
As at March 31, 2024  $84,977   $3,178   $2,393   $ 
Acquisition               23,204 
Share of net income (loss)   10,938    602    (61)   40 
Share of other comprehensive income   2,776    171    53     
Adjustment to NCI               5,603 
Distribution   (10,128)   (921)        
As at September 30, 2024  $88,563   $3,030   $2,385   $28,847 

 

During the year ended March 31, 2024, Henan Non-ferrous transferred 12.25% equity interest of Henan Found to Henan First Geological Brigade Ltd. (“First Geological Brigade”), a company who has the same ultimate parent company as Henan Non-ferrous. As at March 31, 2024, Henan Non-ferrous is the 5.25% equity holder of Henan Found and First Geological Brigade is the 12.25% equity holder of Henan Found.

 

Salazar Resources Ltd. (“Salazar”) is 25% owner of the common share of Salazar Holding Limited (“Salazar Holding”), who owns 100% interest in the El Domo Project. Pursuant to the option agreement and shareholders’ agreement with Salazar, the Company has priority repayment of its investment in the El Domo according to an agreed distribution formula. Based on this formula, the percentage share of non-controlling interest will change as a function of advances made by the Company and the earnings or loss recorded by Salazar Holdings and its subsidiaries over the time. After the Company has

 

34

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

received priority repayment of its investment, the non-controlling interest will revert to 25%. As at September 30, 2024, the effective percentage of the non-controlling interest in Salazar Holding is 18.17%.

 

21.RELATED PARTY TRANSACTIONS

 

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

 

(a)Due from related parties

 

 

As at  September 30, 2024   March 31, 2024 
NUAG (i)  $80   $28 
TIN (ii)   1117    562 
   $1,197   $590 

 

i.The Company recovers costs for services rendered to NUAG and expenses incurred on behalf of NUAG pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2024, a total of $0.3 million and $0.5 million (three and six months ended September 30, 2023 - $0.2 million and $0.5 million, respectively) of services rendered to and expenses incurred on behalf of NUAG. The costs recoverable from NUAG were recorded as a direct reduction of general and administrative expenses on the condensed consolidated interim statements of income.

 

ii.The Company recovers costs for services rendered to TIN and expenses incurred on behalf of TIN pursuant to a services and administrative costs reallocation agreement. During the three and six months ended September 30, 2024, a total of $0.02 million and $0.05 million (three and six months ended September 30, 2023 - $0.05 million and $0.13 million, respectively) of services rendered to and expenses incurred on behalf of TIN. The costs recoverable from TIN were recorded as a direct reduction of general and administrative expenses on the condensed consolidated interim statements of income. In January 2024, the Company and TIN entered into an interest-free unsecured credit facility agreement with no conversion features (the “Facility”) to allow TIN to advance up to $1.0 million from the Company. In January 2024, the Company advanced $0.5 million to TIN and received 350,000 common shares of TIN as the Bonus Shares for granting the Facility. In April 2024, the Company advanced the remaining $0.5 million to TIN.

 

22.CAPITAL DISCLOSURES

 

The Company’s objectives of capital management are intended to safeguard the entity’s ability to support the Company’s normal operating requirement on an ongoing basis, continue the development and exploration of its mineral properties, and support any expansionary plans.

 

The capital of the Company consists of the items included in equity less cash and cash equivalents and short-term investments. Risk and capital management are primarily the responsibility of the Company’s corporate finance function and are monitored by the Board of Directors. The Company manages the capital structure and makes adjustments depending on economic conditions. Funds have been primarily secured through profitable operations and issuances of equity capital. The Company invests all capital that is surplus to its immediate needs in short-term, liquid and highly rated financial instruments, such as cash and other short-term deposits, all held with major financial institutions. Significant risks are monitored and actions are taken, when necessary, according to the Company’s approved policies.

 

23.FINANCIAL INSTRUMENTS

 

35

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

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

 

(a)Fair value

 

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

 

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

 

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

 

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

 

The following tables set forth the Company’s financial assets and liabilities that are measured at fair value level on a recurring basis within the fair value hierarchy as at September 30, 2024 and March 31, 2024 that are not otherwise disclosed. As required by IFRS 13, the assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

   Fair value as at September 30, 2024 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                    
Cash and cash equivalents  $180,325   $   $   $180,325 
Short-term investments - money market instruments   27,870            27,870 
Investments in public companies   9,899            9,899 
Investments in private companies           2,534    2,534 
                     
Financial liability                    
Accounts payable and accrued liabilities - derivative liabilities           2,290    2,290 

 

   Fair value as at March 31, 2024 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial assets                    
Cash and cash equivalents  $152,942   $   $   $152,942 
Short-term investments - money market instruments   30,620            30,620 
Investments in public companies   41,818        1,217    43,035 
Investments in private companies           3,219    3,219 

 

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

 

36

 

 

SILVERCORP METALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

 

Fair value of the other financial instruments excluded from the table above approximates their carrying amount as at September 30, 2024 and March 31, 2024, due to the short-term nature of these instruments.

 

There were no transfers into or out of Level 3 during the three and six months ended September 30, 2024 and 2023.

 

(b)Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they arise. The Company manages liquidity risk by monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities. Cash flow forecasting is performed regularly to ensure that there is sufficient capital in order to meet short-term business requirements, after considering cash flows from operations and our holdings of cash and cash equivalents, and short-term investments.

 

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

 

   September 30, 2024 
   Within a year   2-5 years   Over 5 years   Total 
Accounts payable and accrued liabilities  $73,435   $   $   $73,435 
Lease obligation   292    1,108    195    1,595 
Deposits received   4,446    13,250        17,696 
Total Contractual Obligation  $78,173   $14,358   $195   $92,726 

 

(c)Foreign exchange risk

 

The Company reports its financial statements in US dollars. The functional currency of the head office, Canadian subsidiaries and all intermediate