Americas Gold & Silver Corp 6-K, filed Aug 14, 2023
Americas Gold & Silver Corp (USAS)
6-K
2023-08-14
For: 2023-08-14
View Original
Added on
April 11, 2026
About this 6-K
Americas Gold & Silver Corp filed this 6-K on August 14, 2023.
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 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
Commission File Number 001-37982
|
AMERICAS GOLD AND SILVER CORPORATION
|
|
(Translation of registrant’s name into English)
|
|
145 King Street West, Suite 2870
Toronto, Ontario, Canada
M5H 1J8
|
|
(Address of principal executive offices)
|
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F
|
Form 20-F
|
☐ |
Form 40-F
|
☒
|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
|
|
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
|
|
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and
make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are
traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K
submission or other Commission filing on EDGAR.
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMERICAS GOLD AND SILVER CORPORATION |
||
|
Date: August 14, 2023
|
/s/ Peter McRae
|
|
| Peter McRae | ||
| Chief Legal Officer and Senior Vice President Corporate Affairs |
||
INDEX TO EXHIBITS
| Exhibit 99.1 |
AMERICAS GOLD AND SILVER CORPORATION
Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
Americas Gold and Silver Corporation
Condensed interim consolidated statements of financial position
(In thousands of U.S. dollars, unaudited)
|
|
June 30,
|
December 31,
|
||||||
|
As at
|
2023
|
2022
|
||||||
|
Assets
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
$
|
1,627
|
$
|
1,964
|
||||
|
Trade and other receivables (Note 5)
|
13,043
|
11,552
|
||||||
|
Inventories (Note 6)
|
8,882
|
8,835
|
||||||
|
Prepaid expenses
|
3,216
|
3,030
|
||||||
|
|
$
|
26,768
|
$
|
25,381
|
||||
|
Non-current assets
|
||||||||
|
Restricted cash
|
4,247
|
4,139
|
||||||
|
Property, plant and equipment (Note 7)
|
162,149
|
161,299
|
||||||
|
Total assets
|
$
|
193,164
|
$
|
190,819
|
||||
|
|
||||||||
|
Liabilities
|
||||||||
|
Current liabilities
|
||||||||
|
Trade and other payables
|
$
|
25,810
|
$
|
27,060
|
||||
|
Metals contract liability (Note 8)
|
11,681
|
11,324
|
||||||
|
Derivative instruments (Note 9)
|
1,320
|
991
|
||||||
|
Pre-payment facility (Note 10)
|
3,000
|
-
|
||||||
|
Promissory note (Note 11)
|
625
|
2,500
|
||||||
|
Royalty payable (Note 12)
|
2,251
|
-
|
||||||
|
Government loan
|
222
|
222
|
||||||
|
|
44,909
|
42,097
|
||||||
|
Non-current liabilities
|
||||||||
|
Other long-term liabilities
|
1,726
|
1,815
|
||||||
|
Metals contract liability (Note 8)
|
21,555
|
19,665
|
||||||
|
RoyCap convertible debenture (Note 9)
|
14,727
|
9,621
|
||||||
|
Promissory note (Note 11)
|
1,250
|
-
|
||||||
|
Royalty payable (Note 12)
|
1,838
|
-
|
||||||
|
Post-employment benefit obligations
|
5,868
|
6,969
|
||||||
|
Decommissioning provision
|
12,346
|
11,715
|
||||||
|
Deferred tax liabilities (Note 19)
|
514
|
348
|
||||||
|
Total liabilities
|
104,733
|
92,230
|
||||||
|
|
||||||||
|
Equity
|
||||||||
|
Share capital (Note 13)
|
453,304
|
449,374
|
||||||
|
Equity reserve
|
52,168
|
50,905
|
||||||
|
Foreign currency translation reserve
|
8,499
|
9,797
|
||||||
|
Deficit
|
(444,218
|
)
|
(428,849
|
)
|
||||
|
Attributable to shareholders of the Company
|
69,753
|
81,227
|
||||||
|
Non-controlling interests (Note 15)
|
18,678
|
17,362
|
||||||
|
Total equity
|
$
|
88,431
|
$
|
98,589
|
||||
|
|
||||||||
|
Total liabilities and equity
|
$
|
193,164
|
$
|
190,819
|
||||
Going concern (Note 2), Contingencies (Note 22)
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 1
Americas Gold and Silver Corporation
Condensed interim consolidated statements of income (loss) and comprehensive income (loss)
(In thousands of U.S. dollars, except share and per share amounts, unaudited)
|
|
For the three-month period ended
|
For the six-month period ended
|
||||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
|
|
||||||||||||||||
|
Revenue (Note 16)
|
$
|
24,222
|
$
|
19,948
|
$
|
46,315
|
$
|
46,384
|
||||||||
|
|
||||||||||||||||
|
Cost of sales (Note 17)
|
(20,501
|
)
|
(17,718
|
)
|
(38,285
|
)
|
(34,337
|
)
|
||||||||
|
Depletion and amortization (Note 7)
|
(5,208
|
)
|
(5,959
|
)
|
(10,325
|
)
|
(11,719
|
)
|
||||||||
|
Care and maintenance costs
|
(860
|
)
|
(1,011
|
)
|
(1,996
|
)
|
(2,334
|
)
|
||||||||
|
Corporate general and administrative (Note 18)
|
(2,171
|
)
|
(2,051
|
)
|
(4,522
|
)
|
(4,700
|
)
|
||||||||
|
Exploration costs
|
(945
|
)
|
(914
|
)
|
(1,600
|
)
|
(2,000
|
)
|
||||||||
|
Accretion on decommissioning provision
|
(140
|
)
|
(102
|
)
|
(281
|
)
|
(186
|
)
|
||||||||
|
Interest and financing expense
|
(1,821
|
)
|
(1,078
|
)
|
(4,151
|
)
|
(2,105
|
)
|
||||||||
|
Foreign exchange gain (loss)
|
906
|
(1,903
|
)
|
455
|
(1,193
|
)
|
||||||||||
|
Gain on disposal of assets
|
85
|
-
|
85
|
-
|
||||||||||||
|
Gain (loss) on metals contract liability (Note 8)
|
1,701
|
3,186
|
(853
|
)
|
434
|
|||||||||||
|
Other gain (loss) on derivatives (Note 9)
|
(45
|
)
|
(101
|
)
|
47
|
(79
|
)
|
|||||||||
|
Fair value loss on royalty payable (Note 12)
|
(240
|
)
|
-
|
(240
|
)
|
-
|
||||||||||
|
Gain on government loan forgiveness
|
-
|
-
|
-
|
4,277
|
||||||||||||
|
Loss before income taxes
|
(5,017
|
)
|
(7,703
|
)
|
(15,351
|
)
|
(7,558
|
)
|
||||||||
|
Income tax expense (Note 19)
|
(2,074
|
)
|
(1,575
|
)
|
(2,264
|
)
|
(2,016
|
)
|
||||||||
|
Net loss
|
$
|
(7,091
|
)
|
$
|
(9,278
|
)
|
$
|
(17,615
|
)
|
$
|
(9,574
|
)
|
||||
|
|
||||||||||||||||
|
Attributable to:
|
||||||||||||||||
|
Shareholders of the Company
|
$
|
(6,392
|
)
|
$
|
(7,483
|
)
|
$
|
(16,130
|
)
|
$
|
(8,895
|
)
|
||||
|
Non-controlling interests (Note 15)
|
(699
|
)
|
(1,795
|
)
|
(1,485
|
)
|
(679
|
)
|
||||||||
|
Net loss
|
$
|
(7,091
|
)
|
$
|
(9,278
|
)
|
$
|
(17,615
|
)
|
$
|
(9,574
|
)
|
||||
|
|
||||||||||||||||
|
Other comprehensive income (loss)
|
||||||||||||||||
|
Items that will not be reclassified to net loss
|
||||||||||||||||
|
Remeasurement of post-employment benefit obligations
|
$
|
1,692
|
$
|
1,943
|
$
|
1,268
|
$
|
4,941
|
||||||||
|
Items that may be reclassified subsequently to net loss
|
||||||||||||||||
|
Foreign currency translation reserve
|
(1,153
|
)
|
251
|
(1,298
|
)
|
396
|
||||||||||
|
Other comprehensive income (loss)
|
539
|
2,194
|
(30
|
)
|
5,337
|
|||||||||||
|
Comprehensive loss
|
$
|
(6,552
|
)
|
$
|
(7,084
|
)
|
$
|
(17,645
|
)
|
$
|
(4,237
|
)
|
||||
|
|
||||||||||||||||
|
Attributable to:
|
||||||||||||||||
|
Shareholders of the Company
|
$
|
(6,530
|
)
|
$
|
(6,066
|
)
|
$
|
(16,667
|
)
|
$
|
(5,534
|
)
|
||||
|
Non-controlling interests (Note 15)
|
(22
|
)
|
(1,018
|
)
|
(978
|
)
|
1,297
|
|||||||||
|
Comprehensive loss
|
$
|
(6,552
|
)
|
$
|
(7,084
|
)
|
$
|
(17,645
|
)
|
$
|
(4,237
|
)
|
||||
|
|
||||||||||||||||
|
Loss per share attributable to shareholders of the Company
|
||||||||||||||||
|
Basic and diluted
|
(0.03
|
)
|
(0.04
|
)
|
(0.08
|
)
|
(0.05
|
)
|
||||||||
|
|
||||||||||||||||
|
Weighted average number of common shares
|
||||||||||||||||
|
outstanding
|
||||||||||||||||
|
Basic and diluted (Note 14)
|
211,454,795
|
180,795,755
|
208,844,380
|
176,871,371
|
||||||||||||
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 2
Americas Gold and Silver Corporation
Condensed interim consolidated statements of changes in equity
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, except share amounts in thousands of units, unaudited)
|
|
Foreign
|
|||||||||||||||||||||||||||||||
|
|
Share capital
|
currency
|
Attributable
|
Non-
|
||||||||||||||||||||||||||||
|
|
Common
|
Equity
|
translation
|
to shareholders
|
controlling
|
Total
|
||||||||||||||||||||||||||
|
|
Shares
|
Amount
|
reserve
|
reserve
|
Deficit
|
of the Company
|
interests
|
equity
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Balance at January 1, 2023
|
204,456
|
$
|
449,374
|
$
|
50,905
|
$
|
9,797
|
$
|
(428,849
|
)
|
$
|
81,227
|
$
|
17,362
|
$
|
98,589
|
||||||||||||||||
|
Net loss for the period
|
-
|
-
|
-
|
-
|
(16,130
|
)
|
(16,130
|
)
|
(1,485
|
)
|
(17,615
|
)
|
||||||||||||||||||||
|
Other comprehensive income (loss) for the period
|
-
|
-
|
-
|
(1,298
|
)
|
761
|
(537
|
)
|
507
|
(30
|
)
|
|||||||||||||||||||||
|
Contribution from non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
2,294
|
2,294
|
||||||||||||||||||||||||
|
At-the-market offering
|
4,548
|
2,310
|
-
|
-
|
-
|
2,310
|
-
|
2,310
|
||||||||||||||||||||||||
|
Common shares issued
|
679
|
350
|
-
|
-
|
-
|
350
|
-
|
350
|
||||||||||||||||||||||||
|
Warrants issued
|
-
|
-
|
435
|
-
|
-
|
435
|
-
|
435
|
||||||||||||||||||||||||
|
Retraction of RoyCap convertible debenture
|
2,424
|
1,270
|
(152
|
)
|
-
|
-
|
1,118
|
-
|
1,118
|
|||||||||||||||||||||||
|
Amendment of RoyCap convertible debenture
|
-
|
-
|
(272
|
)
|
-
|
-
|
(272
|
)
|
-
|
(272
|
)
|
|||||||||||||||||||||
|
Share-based payments
|
-
|
-
|
1,252
|
-
|
-
|
1,252
|
-
|
1,252
|
||||||||||||||||||||||||
|
Balance at June 30, 2023
|
212,107
|
$
|
453,304
|
$
|
52,168
|
$
|
8,499
|
$
|
(444,218
|
)
|
$
|
69,753
|
$
|
18,678
|
$
|
88,431
|
||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Balance at January 1, 2022
|
165,145
|
$
|
423,098
|
$
|
51,088
|
$
|
6,833
|
$
|
(387,949
|
)
|
$
|
93,070
|
$
|
10,765
|
$
|
103,835
|
||||||||||||||||
|
Net loss for the period
|
-
|
-
|
-
|
-
|
(8,895
|
)
|
(8,895
|
)
|
(679
|
)
|
(9,574
|
)
|
||||||||||||||||||||
|
Other comprehensive income for the period
|
-
|
-
|
-
|
396
|
2,965
|
3,361
|
1,976
|
5,337
|
||||||||||||||||||||||||
|
Contribution from non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
1,974
|
1,974
|
||||||||||||||||||||||||
|
At-the-market offering
|
12,213
|
10,164
|
-
|
-
|
-
|
10,164
|
-
|
10,164
|
||||||||||||||||||||||||
|
Sandstorm private placements
|
5,290
|
4,630
|
-
|
-
|
-
|
4,630
|
-
|
4,630
|
||||||||||||||||||||||||
|
Retraction of RoyCap convertible debenture
|
1,629
|
1,377
|
(249
|
)
|
-
|
-
|
1,128
|
-
|
1,128
|
|||||||||||||||||||||||
|
Share-based payments
|
-
|
-
|
1,717
|
-
|
-
|
1,717
|
-
|
1,717
|
||||||||||||||||||||||||
|
Balance at June 30, 2022
|
184,277
|
$
|
439,269
|
$
|
52,556
|
$
|
7,229
|
$
|
(393,879
|
)
|
$
|
105,175
|
$
|
14,036
|
$
|
119,211
|
||||||||||||||||
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 3
Americas Gold and Silver Corporation
Condensed interim consolidated statements of cash flows
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unaudited)
|
|
June 30,
|
June 30,
|
||||||
|
|
2023
|
2022
|
||||||
|
Cash flow generated from (used in)
|
||||||||
|
|
||||||||
|
Operating activities
|
||||||||
|
Net loss for the period
|
$
|
(17,615
|
)
|
$
|
(9,574
|
)
|
||
|
Adjustments for the following items:
|
||||||||
|
Depletion and amortization
|
10,325
|
11,719
|
||||||
|
Income tax expense
|
2,264
|
2,016
|
||||||
|
Accretion and decommissioning costs
|
281
|
186
|
||||||
|
Share-based payments
|
1,252
|
1,717
|
||||||
|
Non-cash expenses from common shares and warrants issued
|
785
|
-
|
||||||
|
Provision on other long-term liabilities
|
65
|
27
|
||||||
|
Interest and financing expense
|
1,491
|
860
|
||||||
|
Net charges on post-employment benefit obligations
|
167
|
361
|
||||||
|
Inventory write-downs
|
574
|
1,457
|
||||||
|
Gain on disposal of assets
|
(85
|
)
|
-
|
|||||
|
Loss (gain) on metals contract liability
|
853
|
(434
|
)
|
|||||
|
Other loss (gain) on derivatives
|
(47
|
)
|
79
|
|||||
|
Fair value loss on royalty payable
|
240
|
-
|
||||||
|
Gain on government loan forgiveness
|
-
|
(4,277
|
)
|
|||||
|
Changes in non-cash working capital items:
|
||||||||
|
Trade and other receivables
|
(1,491
|
)
|
3,538
|
|||||
|
Inventories
|
(1,455
|
)
|
(1,135
|
)
|
||||
|
Prepaid expenses
|
(186
|
)
|
(1,267
|
)
|
||||
|
Trade and other payables
|
(1,702
|
)
|
(124
|
)
|
||||
|
Net cash generated from (used in) operating activities
|
(4,284
|
)
|
5,149
|
|||||
|
|
||||||||
|
Investing activities
|
||||||||
|
Expenditures on property, plant and equipment
|
(11,394
|
)
|
(7,965
|
)
|
||||
|
Proceeds from disposal of assets
|
810
|
-
|
||||||
|
Net cash used in investing activities
|
(10,584
|
)
|
(7,965
|
)
|
||||
|
|
||||||||
|
Financing activities
|
||||||||
|
Pre-payment facilities
|
3,000
|
(1,451
|
)
|
|||||
|
Lease payments
|
(1,956
|
)
|
(1,701
|
)
|
||||
|
Promissory note repayments
|
(625
|
)
|
(1,250
|
)
|
||||
|
At-the-market offerings
|
2,310
|
10,164
|
||||||
|
Sandstorm private placements
|
-
|
4,630
|
||||||
|
Financing from RoyCap convertible debenture
|
6,020
|
-
|
||||||
|
Metals contract liability, net
|
681
|
(4,079
|
)
|
|||||
|
Royalty agreement, net
|
3,849
|
-
|
||||||
|
Contribution from non-controlling interests
|
2,294
|
1,974
|
||||||
|
Net cash generated from financing activities
|
15,573
|
8,287
|
||||||
|
|
||||||||
|
Effect of foreign exchange rate changes on cash
|
(1,042
|
)
|
453
|
|||||
|
Increase (decrease) in cash and cash equivalents
|
(337
|
)
|
5,924
|
|||||
|
Cash and cash equivalents, beginning of period
|
1,964
|
2,900
|
||||||
|
Cash and cash equivalents, end of period
|
$
|
1,627
|
$
|
8,824
|
||||
|
|
||||||||
|
Cash and cash equivalents consist of:
|
||||||||
|
Cash
|
$
|
1,627
|
$
|
8,824
|
||||
|
|
||||||||
|
Interest paid during the period
|
$
|
1,060
|
$
|
965
|
||||
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 4
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
1. Corporate information
Americas Gold and Silver Corporation (the “Company") was incorporated under the Canada Business Corporations Act on May 12, 1998 and conducts mining exploration, development and production in the Americas. The
address of the Company’s registered office is 145 King Street West, Suite 2870, Toronto, Ontario, Canada, M5H 1J8. The Company’s common shares are listed on the Toronto Stock Exchange under the symbol “USA” and on the New York Stock Exchange
American under the symbol “USAS”.
The condensed interim consolidated financial statements of the Company for the three and six months ended June 30, 2023 were approved and authorized for issue by the Board of
Directors of the Company on August 14, 2023.
2. Basis of presentation and going concern
These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) which the Canadian Accounting Standards Board has approved for incorporation into Part 1 of the Handbook of Chartered Professional Accountants
of Canada applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These condensed interim consolidated financial statements do not include all the
information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2022. In particular, the
Company’s significant accounting policies were summarized in Note 3 of the consolidated financial statements for the year ended December 31, 2022, and further updated in Note 3 of these financial statements, and have been consistently applied in
the preparation of these condensed interim consolidated financial statements.
These unaudited condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will be able to realize its
assets and discharge its liabilities in the normal course of operations as they come due for the foreseeable future. The Company had a working capital deficit of $18.1 million, including cash and cash equivalents of $1.6 million as at June 30,
2023. During the six-month period ended June 30, 2023, the Company reported a net loss of $17.6 million, including a decrease in revenue of $0.1 million and an increase in cost of sales of $3.9 million compared to the six-month period ended June
30, 2022, plus interest and financing expense of $4.2 million and a loss on metals contract liability $0.9 million. At June 30, 2023, the Company does not have sufficient liquidity on hand to fund its operations for the next twelve months and will
require further financing to meet its financial obligations and execute on its business plans at its mining operations.
Cash flow during the six-month period was impacted by a 17-day maintenance shutdown of the Cosalá Operations, ongoing capital costs for the Galena hoist project, and lower U.S. dollar to Mexican peso exchange rate,
in addition to fluctuations in commodity prices compared to the prior six-month period ended June 30, 2022 and inflationary pressures on certain operating and capital costs.
Continuance as a going concern is dependent upon the Company’s ability to achieve profitable operations, obtain adequate equity or debt financing, or, alternatively, dispose of its non-core properties on an
advantageous basis, among other things. Since 2020 to year-to-date 2023, the Company was successful in raising funds through equity offerings, debt arrangements, convertible debentures, royalty sales, and registered shelf prospectuses. While it has
been successful in the past in obtaining financing for its operations, there is no assurance that it will be able to obtain adequate financing in the future. The ability to raise additional financing, to achieve cash flow positive production at the
Cosalá Operations and Galena Complex, allowing the Company to generate sufficient operating cash flows, are significant judgments in these consolidated financial statements.
As a result, several material uncertainties cast substantial doubt upon the going concern assumption, including cash flow positive production at the Cosalá Operations and Galena Complex, and ability to raise
additional funds as necessary to fund these operations and meet obligations as they come due.
These unaudited condensed interim consolidated financial statements do not reflect any adjustments to carrying values of assets and liabilities and the reported expenses and condensed interim consolidated statement
of financial position classification that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
Page 5
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
3. Changes in accounting policies and recent accounting pronouncements
The Company adopted amendments to IAS 12 - Income Taxes requiring companies to recognize deferred tax on transactions that give rise to equal amounts of taxable and deductible temporary differences on initial
recognition. The amendments were effective for accounting periods beginning on or after January 1, 2023 and adoption did not have a material impact on the Company’s financial statements.
Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. These standards are not expected to have a material impact on
the Company in the current or future reporting periods.
4. Significant accounting judgments and estimates
The preparation of the condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments and estimates that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
In preparing these condensed interim consolidated financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were
the same as those that applied to the Company’s annual consolidated financial statements as at and for the year ended December 31, 2022, in addition to the significant judgments mentioned in Note 2.
5. Trade and other receivables
|
|
June 30,
|
December 31,
|
||||||
|
|
2023
|
2022
|
||||||
|
|
||||||||
|
Trade receivables
|
$
|
9,734
|
$
|
5,624
|
||||
|
Other receivables
|
3,309
|
5,928
|
||||||
|
|
$
|
13,043
|
$
|
11,552
|
||||
Value added taxes were in a net payable position of $0.1 million as at June 30, 2023 (December 31, 2022: $0.2 million) and was reclassified to trade and other payables for presentation purposes.
Other receivables include $4.0 million CAD from amendment of the RoyCap Convertible Debenture on June 21, 2023, collected in July 2023 (December 31, 2022: $5.3 million in refundable tax credits from the Galena
Complex through the Employee Retention Credit under the U.S. CARES Act collected in April 2023).
6. Inventories
|
|
June 30,
|
December 31,
|
||||||
|
|
2023
|
2022
|
||||||
|
|
||||||||
|
Concentrates
|
$
|
1,976
|
$
|
1,694
|
||||
|
Finished goods
|
199
|
368
|
||||||
|
In-circuit work in progress
|
259
|
205
|
||||||
|
Ore stockpiles
|
656
|
898
|
||||||
|
Spare parts and supplies
|
5,792
|
5,670
|
||||||
|
|
$
|
8,882
|
$
|
8,835
|
||||
The amount of inventories recognized in cost of sales was $20.5 million during the three-month period ended June 30, 2023 (2022: $17.7 million) and $38.3 million during the six-month period ended June 30, 2023 (2022:
$34.3 million), including concentrates, ore on leach pads, and ore stockpiles write-down to net realizable value of $0.3 million (2022: $1.4 million) during the three-month period ended June 30, 2023 and $0.6 million during the six-month period
ended June 30, 2023 (2022: $1.5 million).
Page 6
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
7. Property, plant and equipment
|
|
Corporate
|
|||||||||||||||||||||||
|
|
Mining
|
Non-producing
|
Plant and
|
Right-of-use
|
office
|
|||||||||||||||||||
|
|
interests
|
properties
|
equipment
|
lease assets
|
equipment
|
Total
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Cost
|
||||||||||||||||||||||||
|
Balance at January 1, 2022
|
$
|
208,266
|
$
|
12,469
|
$
|
110,273
|
$
|
11,373
|
$
|
240
|
$
|
342,621
|
||||||||||||
|
Acquisition of Pershing Gold
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
Asset additions
|
9,302
|
-
|
10,304
|
720
|
(4
|
)
|
20,322
|
|||||||||||||||||
|
Change in decommissioning provision
|
(2,156
|
)
|
-
|
-
|
-
|
-
|
(2,156
|
)
|
||||||||||||||||
|
Balance at December 31, 2022
|
215,412
|
12,469
|
120,577
|
12,093
|
236
|
360,787
|
||||||||||||||||||
|
Asset additions
|
5,448
|
-
|
5,930
|
171
|
-
|
11,549
|
||||||||||||||||||
|
Asset disposals
|
-
|
-
|
(79
|
)
|
(646
|
)
|
-
|
(725
|
)
|
|||||||||||||||
|
Change in decommissioning provision
|
351
|
-
|
-
|
-
|
-
|
351
|
||||||||||||||||||
|
Balance at June 30, 2023
|
$
|
221,211
|
$
|
12,469
|
$
|
126,428
|
$
|
11,618
|
$
|
236
|
$
|
371,962
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Accumulated depreciation
|
||||||||||||||||||||||||
|
and depletion
|
||||||||||||||||||||||||
|
Balance at January 1, 2022
|
$
|
(101,091
|
)
|
$
|
-
|
$
|
(57,755
|
)
|
$
|
(5,732
|
)
|
$
|
(130
|
)
|
$
|
(164,708
|
)
|
|||||||
|
Depreciation/depletion for the year
|
(9,918
|
)
|
-
|
(10,077
|
)
|
(1,306
|
)
|
(39
|
)
|
(21,340
|
)
|
|||||||||||||
|
Impairment for the year
|
(3,539
|
)
|
-
|
(9,901
|
)
|
-
|
-
|
(13,440
|
)
|
|||||||||||||||
|
Balance at December 31, 2022
|
(114,548
|
)
|
-
|
(77,733
|
)
|
(7,038
|
)
|
(169
|
)
|
(199,488
|
)
|
|||||||||||||
|
Depreciation/depletion for the period
|
(5,707
|
)
|
-
|
(3,992
|
)
|
(610
|
)
|
(16
|
)
|
(10,325
|
)
|
|||||||||||||
|
Balance at June 30, 2023
|
$
|
(120,255
|
)
|
$
|
-
|
$
|
(81,725
|
)
|
$
|
(7,648
|
)
|
$
|
(185
|
)
|
$
|
(209,813
|
)
|
|||||||
|
|
||||||||||||||||||||||||
|
Carrying value
|
||||||||||||||||||||||||
|
at December 31, 2022
|
$
|
100,864
|
$
|
12,469
|
$
|
42,844
|
$
|
5,055
|
$
|
67
|
$
|
161,299
|
||||||||||||
|
at June 30, 2023
|
$
|
100,956
|
$
|
12,469
|
$
|
44,703
|
$
|
3,970
|
$
|
51
|
$
|
162,149
|
||||||||||||
Non-current assets are tested for impairment or impairment reversals when events or changes in circumstances suggest that the carrying amount may not be recoverable. No impairment or impairment reversal were
identified for the six-month period ended June 30, 2023 for each of the Company’s cash-generating unit, including non-producing properties and properties placed under care and maintenance.
The carrying amounts of mineral interests, plant and equipment, and right-of-use lease assets from the Relief Canyon Mine is approximately $22.4 million, $11.0 million, and $1.9 million, respectively, as at June 30,
2023 (December 31, 2022: $22.5 million, $12.4 million, and $3.0 million, respectively).
The Company completed the acquisition of the San Felipe property located in Sonora, Mexico on October 8, 2020. As at June 30, 2023, the carrying amount of this property was $12.5 million included in non-producing
properties.
8. Precious metals delivery and purchase agreement
On April 3, 2019, the Company entered into a $25 million precious metals delivery and purchase agreement (the “Purchase Agreement”) with Sandstorm Gold Ltd. (“Sandstorm”) for the construction and development of the
Relief Canyon Mine. The Purchase Agreement consisted of a combination of fixed and variable deliveries from the Relief Canyon Mine. The Purchase Agreement has a repurchase option for the Company exercisable at any time to reduce the variable
deliveries to Sandstorm from 4% to 2% by delivering 4,000 ounces of gold plus additional ounces of gold compounded annually at 10%. On initial recognition and as at June 30, 2023, the fair value of the repurchase option was nil.
The Company initially recorded the advances received on precious metals delivery, net of transaction costs, as deferred revenue and expected to recognize the amounts in revenue as performance obligations to metals
delivery were satisfied over the term of the metals delivery and purchase agreements.
As at December 31, 2021, the Company derecognized the outstanding carrying value of deferred revenue, net of transaction costs, and recognized the fixed and variable deliveries of precious metals as a financial
liability measured at fair value through profit or loss as the Company expected that metal deliveries to Sandstorm may no longer be satisfied through internal gold production alone. The fair value of the metals contract liability was determined
using forward commodity pricing curves at the end of the fiscal 2021 reporting period resulting in $20.8 million loss to fair value on metals contract liability. A $0.9 million loss to fair value on metals contract liability due to changes in
forward commodity pricing curves was recorded during the six-month period ended June 30, 2023 (2022: $0.4 million gain).
Page 7
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
On February 26, 2023, the Company amended its Purchase Agreement with Sandstorm for the right to increase its advance payment by $2.75 million per calendar quarter or up to $11.0 million in aggregate during fiscal
2023 in order to satisfy the gold delivery obligations under the Purchase Agreement. The advances are to be repaid through balancing fixed deliveries of gold commencing at the end of the existing agreement within the 12-month period from November
2025 to October 2026. The first and second calendar quarter advance of $2.75 million per quarter were drawn in March and May 2023, respectively, with further draws expected for subsequent quarters during fiscal 2023 as allowed under the amendment.
The following table summarizes the continuity of the Company’s net metals contract liability during the period:
|
|
Six-month
|
Year
|
||||||
|
|
period ended
|
ended
|
||||||
|
|
June 30,
|
December 31,
|
||||||
|
|
2023
|
2022
|
||||||
|
|
||||||||
|
Net metals contract liability, beginning of period
|
$
|
30,989
|
$
|
40,905
|
||||
|
Advance increase (net of financing expense)
|
7,029
|
-
|
||||||
|
Delivery of metals produced
|
(834
|
)
|
(3,278
|
)
|
||||
|
Delivery of metals purchased
|
(4,819
|
)
|
(7,436
|
)
|
||||
|
Revaluation of metals contract liability
|
871
|
798
|
||||||
|
Net metals contract liability, end of period
|
$
|
33,236
|
$
|
30,989
|
||||
|
|
||||||||
|
Current portion
|
$
|
11,681
|
$
|
11,324
|
||||
|
Non-current portion
|
21,555
|
19,665
|
||||||
|
|
$
|
33,236
|
$
|
30,989
|
||||
9. RoyCap convertible debenture
On April 28, 2021, the Company issued a $12.5 million CAD convertible debenture (the “RoyCap Convertible Debenture”) to Royal Capital Management Corp. (“RoyCap”) due April 28, 2024 with interest payable at 8% per
annum secured by the Company’s interest in the Galena Complex and by shares of one of the Company’s Mexican subsidiaries.
The RoyCap Convertible Debenture was: redeemable at the Company’s option to prepay the principal amount subject to payment of a redemption premium of 30% during the first year, 20% during the second year, and 10%
during the third year prior to maturity (the “Redemption Option”); retractable at RoyCap’s option at a cumulative $0.3 million CAD per month starting in the second month from inception where the Company may settle the retraction amount through
either cash or issuance of the Company’s common shares determined by dividing 95% of the 20 day volume weighted average price of the Company’s common shares (the “Retraction Option”); and convertible at RoyCap’s option into the Company’s common
shares at a conversion price of $3.35 CAD (the “Conversion Option”).
On inception, the RoyCap Convertible Debenture, which may be settled through a fixed amount of the Company’s own equity instruments, was treated as a compound financial instrument with the principal portion
classified as a liability component and the Conversion Option as an equity component. The initial fair value of the principal portion was determined using a market interest rate for an equivalent non-convertible instrument at the issue date. The
principal portion is subsequently recognized on an amortized cost basis until extinguished on conversion or maturity. The remainder of the proceeds were allocated to the Conversion Option as equity. A net derivative liability of $1.4 million was
recorded on initial recognition based on the estimated fair value of the combined Redemption Option and Retraction Option.
Page 8
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
On November 12, 2021, the Company amended the RoyCap Convertible Debenture by increasing the principal balance by $6.3 million CAD to a total outstanding principal of $18.8 million CAD, in addition to amending its
conversion price of $3.35 CAD to $1.48 CAD, and the terms to its Retraction Option retractable at a cumulative $0.3 million CAD per month to a cumulative $0.45 million CAD per month. All other material terms of the RoyCap Convertible Debenture
remained unchanged. The Company derecognized the associated carrying values of the RoyCap Convertible Debenture prior to amendment and recognized an amended compound financial instrument with the amended principal portion classified as a liability
component and the amended Conversion Option as an equity component. The fair value of the amended principal portion was determined using a market interest rate for an equivalent non-convertible instrument at the date of the amendment. A net
derivative liability of $2.1 million was recorded on amendment date based on the estimated fair value of the combined Redemption Option and Retraction Option.
On October 22, 2022, the Company amended the RoyCap Convertible Debenture by increasing the principal balance by $7.0 million CAD to a total outstanding principal of $25.8 million CAD, in addition to amending its
interest rate of 8% per annum to 9.5% per annum, its conversion price of $1.48 CAD to $1.00 CAD, and the terms to its Retraction Option retractable at a cumulative $0.45 million CAD per month to a cumulative $0.5 million CAD per month with a
beginning cumulated retraction balance of $1.5 million CAD. All other material terms of the RoyCap Convertible Debenture remained unchanged. The Company derecognized the associated carrying values of the RoyCap Convertible Debenture prior to
amendment and recognized an amended compound financial instrument with the amended principal portion classified as a liability component and the amended Conversion Option as an equity component. The fair value of the amended principal portion was
determined using a market interest rate for an equivalent non-convertible instrument at the date of the amendment. A net derivative liability of $1.3 million was recorded on amendment date based on the estimated fair value of the combined
Redemption Option and Retraction Option.
On June 21, 2023, the Company amended the RoyCap Convertible Debenture by increasing the principal balance by $8.0 million CAD to a total outstanding principal of $33.8 million CAD, in addition to amending its
interest rate of 9.5% per annum to 11.0% per annum, its conversion price of $1.00 CAD to $0.80 CAD, the terms to its Retraction Option retractable at a cumulative $0.5 million CAD per month to a cumulative $1.0 million CAD per month starting in
August 2023, and extending the maturity date from April 28, 2024 to July 1, 2024 with mutual option to extend by one calendar quarter up to April 28, 2025. All other material terms of the RoyCap Convertible Debenture remained unchanged. The Company
derecognized the associated carrying values of the RoyCap Convertible Debenture prior to amendment and recognized an amended compound financial instrument with the amended principal portion classified as a liability component and the amended
Conversion Option as an equity component. The fair value of the amended principal portion was determined using a market interest rate for an equivalent non-convertible instrument at the date of the amendment. A net derivative liability of $1.3
million was recorded on amendment date based on the estimated fair value of the combined Redemption Option and Retraction Option.
During the six-month period ended June 30, 2023, the principal amount of the RoyCap Convertible Debenture was reduced by $1.4 million CAD through partial exercises of the Retraction Option by RoyCap settled through
issuance of 2,424,149 of the Company’s common shares (year ended December 31, 2022: $7.2 million CAD settled through issuance of 11,240,839 common shares).
The Company recognized a gain of $0.1 million for the six-month period ended June 30, 2023 (2022: loss of $0.1 million) as a result of the change in the estimated fair value of the combined Redemption Option and
Retraction Option.
10. Pre-payment facility
On December 12, 2022, the Company amended its existing offtake agreement with Ocean Partners USA, Inc. of lead concentrates produced from the Galena Complex to include a pre-payment facility of $3.0 million with an
initial term of three years at an interest of U.S. SOFR rate plus 6.95% per annum (the “Facility”) to fund general working capital at the Galena Complex. Principal on the Facility is repaid through semi-monthly installments deductible from
concentrate deliveries or paid in cash and can be redrawn on a revolving basis. The Facility shall automatically extend for a full calendar year if there is an outstanding payment balance within 12 months of the maturity of the Facility. The
Facility was drawn in full in February 2023.
Page 9
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
11. Promissory note
On December 15, 2020, the Company issued a $5 million promissory note (the “Promissory Note”) to Sandstorm due March 15, 2023 with interest payable at 7% per annum and repayable at the Company’s option prior to
maturity. Repayment of principal on the Promissory Note began in June 2022 where $2.5 million was paid during the year ended December 31, 2022. On March 31, 2023, the Company amended the Promissory Note with the remaining principal of $2.5 million
be repaid in four equal instalments due June 30 and October 1, 2023, and July 1 and October 1, 2024, in addition to amending its interest rate to 8% per annum.
12. Royalty payable
On April 12, 2023, the Company entered into a $4.0 million net smelter returns royalty agreement (the “Royalty Agreement”) with Sandstorm to be repaid through a 2.5% royalty on attributable production from the Galena
Complex and Cosalá Operations. The royalty reduces to 0.2% on attributable production from the Galena Complex and Cosalá Operations after the aggregate repayment of $4.0 million and may be eliminated thereafter with a buyout payment of $1.9
million.
On inception, the Royalty Agreement was classified as a hybrid instrument of host financial liability with embedded derivatives from the reduced 0.2% royalty on attributable production and buyout payment. The Company
elected at inception to designate the entire hybrid instrument at fair value through profit or loss with its initial fair value be representative of the $4.0 million in proceeds received. Subsequent measurement of fair value for the hybrid
instrument was determined based on an income approach of expected future cash flows into a single current discounted amount. Key assumptions used in the fair value determination of the hybrid instrument as at June 30, 2023 include timing of
repayment of the $4.0 million, which considers factors such as forecasted production and commodity prices in quantifying expected net smelter returns, feasibility of the reduced 0.2% royalty on attributable production versus the buyout payment, and
applicable discount rates. The Company recognized a loss of $0.2 million for the six-month period ended June 30, 2023 as a result of the change in the estimated fair value of the Royalty Agreement.
13. Share capital
On May 17, 2021, the Company entered into an at-the-market offering agreement (the “May 2021 ATM Agreement”) where the Company may at its discretion and from time-to-time during the term of the May 2021 ATM
Agreement, sell in the United States, through its agent, such number of common shares of the Company as would result in aggregate gross proceeds of up to $50.0 million. The May 2021 ATM Agreement expired on February 28, 2023 and the Company has
received aggregate gross proceeds of $44.4 million through issuance of 44,085,122 common shares, with approximately $1.7 million in transaction costs incurred and offset against share capital.
During fiscal 2022, the Company closed quarterly non-brokered private placements with Sandstorm for total gross proceeds of $9.9 million through total issuance of 15,200,000 of the Company’s common shares priced at
approximately $0.85 CAD per share.
a. Authorized
Authorized share capital consists of an unlimited number of common and preferred shares.
|
|
June 30,
|
December 31,
|
||||||
|
|
2023
|
2022
|
||||||
|
|
||||||||
|
Issued
|
||||||||
|
212,107,575 (2022: 204,455,721) common shares
|
$
|
453,304
|
$
|
449,374
|
||||
|
Nil (2022: Nil) preferred shares
|
-
|
-
|
||||||
|
|
$
|
453,304
|
$
|
449,374
|
||||
Each non-voting preferred share is convertible, at the holder’s option, without payment of any additional consideration by the holder thereof, initially on a one-to-one basis into common shares, subject to
adjustment, and in accordance with the terms of the non-voting preferred shares.
Page 10
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
b. Stock option plan
The number of shares reserved for issuance under the Company’s stock option plan is limited to 10% of the number of common shares which are issued and outstanding on the date of a particular grant of options. Under
the plan, the Board of Directors determines the term of a stock option to a maximum of 10 years, the period of time during which the options may vest and become exercisable as well as the option exercise price which shall not be less than the
closing price of the Company’s share on the Toronto Stock Exchange on the date immediately preceding the date of grant. The Compensation Committee determines and makes recommendations to the Board of Directors as to the recipients of, and nature
and size of, share-based compensation awards in compliance with applicable securities law, stock exchange and other regulatory requirements.
A summary of changes in the Company’s outstanding stock options is presented below:
|
|
Six-month
|
Year
|
||||||||||||||
|
|
period ended
|
ended
|
||||||||||||||
|
|
June 30,
|
December 31,
|
||||||||||||||
|
|
2023
|
2022
|
||||||||||||||
|
|
Weighted
|
Weighted
|
||||||||||||||
|
|
average
|
average
|
||||||||||||||
|
|
exercise
|
exercise
|
||||||||||||||
|
|
Number
|
price
|
Number
|
price
|
||||||||||||
|
|
(thousands)
|
CAD
|
(thousands)
|
CAD
|
||||||||||||
|
|
||||||||||||||||
|
Balance, beginning of period
|
12,367
|
$
|
2.40
|
12,579
|
$
|
2.81
|
||||||||||
|
Granted
|
4,275
|
0.90
|
3,750
|
1.20
|
||||||||||||
|
Expired
|
(372
|
)
|
3.10
|
(3,962
|
)
|
2.56
|
||||||||||
|
Balance, end of period
|
16,270
|
$
|
1.99
|
12,367
|
$
|
2.40
|
||||||||||
The following table summarizes information on stock options outstanding and exercisable as at June 30, 2023:
|
|
Weighted
|
|||||||||||||||||||
|
|
average
|
Weighted
|
Weighted
|
|||||||||||||||||
|
|
remaining
|
average
|
average
|
|||||||||||||||||
|
Exercise
|
contractual
|
exercise
|
exercise
|
|||||||||||||||||
|
price
|
life
|
Outstanding
|
price
|
Exercisable
|
price
|
|||||||||||||||
|
CAD
|
(years)
|
(thousands)
|
CAD
|
(thousands)
|
CAD
|
|||||||||||||||
|
|
||||||||||||||||||||
|
$0.01 to $1.00
|
2.52
|
4,575
|
$
|
0.89
|
1,525
|
$
|
0.89
|
|||||||||||||
|
$1.01 to $2.00
|
1.36
|
6,785
|
1.47
|
4,523
|
1.47
|
|||||||||||||||
|
$3.01 to $4.00
|
0.88
|
4,910
|
3.74
|
4,910
|
3.74
|
|||||||||||||||
|
|
16,270
|
$
|
1.99
|
10,958
|
$
|
2.40
|
||||||||||||||
c. Share-based payments
The weighted average fair value at grant date of the Company’s stock options granted during the six-month period ended June 30, 2023 was $0.32 (2022: $0.44).
Page 11
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
The Company used the Black-Scholes Option Pricing Model to estimate fair value using the following weighted-average assumptions:
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
|||||||||||||
|
period ended
|
period ended
|
period ended
|
period ended
|
|||||||||||||
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||
|
Expected stock price volatility (1)
|
-
|
-
|
68
|
%
|
68
|
%
|
||||||||||
|
Risk free interest rate
|
-
|
-
|
3.48
|
%
|
1.64
|
%
|
||||||||||
|
Expected life
|
-
|
-
|
3 years
|
3 years
|
||||||||||||
|
Expected forfeiture rate
|
-
|
-
|
3.85
|
%
|
3.48
|
%
|
||||||||||
|
Expected dividend yield
|
-
|
-
|
0
|
%
|
0
|
%
|
||||||||||
|
Share-based payments included in cost of sales
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
|
Share-based payments included in general and
|
||||||||||||||||
|
administrative expenses
|
314
|
598
|
1,120
|
1,591
|
||||||||||||
|
Total share-based payments
|
$
|
314
|
$
|
598
|
$
|
1,120
|
$
|
1,591
|
||||||||
(1) Expected volatility has been based on historical volatility of the Company’s publicly traded shares.
d. Warrants
The warrants that are issued and outstanding as at June 30, 2023 are as follows:
|
Number of
warrants
|
Exercise
price (CAD)
|
Issuance
date
|
Expiry
date
|
|
1,074,999
|
3.12
|
Oct 2018
|
Oct 1, 2023
|
|
200,793
|
0.94
|
Nov 2021
|
Nov 22, 2023
|
|
3,500,000
|
0.80
|
Jun 2023
|
Jun 21, 2026
|
|
4,775,792
|
|
|
|
e. Deferred Share Units:
The Company has a Deferred Share Unit Plan under which eligible directors of the Company receive awards of deferred share units on a quarterly basis as payment for 50% to 100% of their director fees earned. Deferred
share units are settled in either cash or common shares at the Company’s discretion when the director leaves the Company’s Board of Directors. The Company recognizes a cost in director fees and a corresponding increase in equity reserve upon
issuance of deferred share units. As at June 30, 2023, 1,822,989 (December 31, 2022: 1,409,069) deferred share units are issued and outstanding.
14. Weighted average basic and diluted number of common shares outstanding
|
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
||||||||||||
|
|
period ended
|
period ended
|
period ended
|
period ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
|
|
||||||||||||||||
|
Basic weighted average number of shares
|
211,454,795
|
180,795,755
|
208,844,380
|
176,871,371
|
||||||||||||
|
Effect of dilutive stock options and warrants
|
-
|
-
|
-
|
-
|
||||||||||||
|
Diluted weighted average number of shares
|
211,454,795
|
180,795,755
|
208,844,380
|
176,871,371
|
||||||||||||
Diluted weighted average number of common shares for the three-month and six-month periods ended June 30, 2023 excludes nil anti-dilutive preferred shares (2022: nil), 16,270,000 anti-dilutive stock options (2022:
12,066,667) and 4,775,792 anti-dilutive warrants (2022: 2,571,962).
15. Non-controlling interests
The Company entered into a joint venture agreement with Mr. Eric Sprott effective October 1, 2019 for 40% non-controlling interest of the Company’s Galena Complex with an initial contribution of $15 million to fund
capital improvements and operations. Mr. Eric Sprott committed to contributing additional funds to support the ongoing operations alongside the Company in proportion of their respective ownership up to $5 million for the first year of operations
with the Company contributing any potential excess as necessary. The initial obligations of both Sprott and the Company have been met under the agreement. After the first year, contributions reverted to the proportional percentage of ownership
interests to fund capital projects and operations.
Page 12
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
The Company recognized non-controlling interests of $14.3 million equal to the proportionate non-controlling interests’ carrying amount of the Galena Complex at initial recognition classified as a separate component
of equity. Subsequent contributions and proportionate share changes in equity are recognized to the carrying amount of the non-controlling interests.
16. Revenue
The following is a disaggregation of revenue categorized by commodities sold for the three-month and six-month periods ended June 30, 2023 and 2022:
|
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
||||||||||||
|
|
period ended
|
period ended
|
period ended
|
period ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
|
|
||||||||||||||||
|
Silver
|
||||||||||||||||
|
Sales revenue
|
$
|
17,307
|
$
|
8,766
|
$
|
31,713
|
$
|
19,045
|
||||||||
|
Derivative pricing adjustments
|
358
|
(579
|
)
|
615
|
189
|
|||||||||||
|
|
17,665
|
8,187
|
32,328
|
19,234
|
||||||||||||
|
Zinc
|
||||||||||||||||
|
Sales revenue
|
$
|
10,071
|
$
|
15,984
|
$
|
20,026
|
$
|
31,584
|
||||||||
|
Derivative pricing adjustments
|
(77
|
)
|
(118
|
)
|
(121
|
)
|
1,530
|
|||||||||
|
|
9,994
|
15,866
|
19,905
|
33,114
|
||||||||||||
|
Lead
|
||||||||||||||||
|
Sales revenue
|
$
|
7,192
|
$
|
7,333
|
$
|
14,189
|
$
|
15,999
|
||||||||
|
Derivative pricing adjustments
|
27
|
(407
|
)
|
(94
|
)
|
(331
|
)
|
|||||||||
|
|
7,219
|
6,926
|
14,095
|
15,668
|
||||||||||||
|
Other by-products
|
||||||||||||||||
|
Sales revenue
|
$
|
292
|
$
|
206
|
$
|
614
|
$
|
395
|
||||||||
|
Derivative pricing adjustments
|
78
|
99
|
114
|
181
|
||||||||||||
|
|
370
|
305
|
728
|
576
|
||||||||||||
|
|
||||||||||||||||
|
Total sales revenue
|
$
|
34,862
|
$
|
32,289
|
$
|
66,542
|
$
|
67,023
|
||||||||
|
Total derivative pricing adjustments
|
386
|
(1,005
|
)
|
514
|
1,569
|
|||||||||||
|
Gross revenue
|
$
|
35,248
|
$
|
31,284
|
$
|
67,056
|
$
|
68,592
|
||||||||
|
Treatment and selling costs
|
(11,026
|
)
|
(11,336
|
)
|
(20,741
|
)
|
(22,208
|
)
|
||||||||
|
|
$
|
24,222
|
$
|
19,948
|
$
|
46,315
|
$
|
46,384
|
||||||||
Derivative pricing adjustments represent subsequent variations in revenue recognized as an embedded derivative from contracts with customers and are accounted for as financial instruments (see Note 20).
Page 13
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
17. Cost of sales
Cost of sales is costs that directly relate to production at the mine operating segments and excludes depletion and amortization. The following are components of cost of sales for the three-month and six-month
periods ended June 30, 2023 and 2022:
|
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
||||||||||||
|
|
period ended
|
period ended
|
period ended
|
period ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
|
|
||||||||||||||||
|
Salaries and employee benefits
|
$
|
8,214
|
$
|
7,748
|
$
|
16,619
|
$
|
14,573
|
||||||||
|
Raw materials and consumables
|
8,436
|
7,051
|
16,595
|
13,327
|
||||||||||||
|
Utilities
|
961
|
1,169
|
2,022
|
2,171
|
||||||||||||
|
Other costs
|
2,418
|
1,807
|
3,930
|
3,944
|
||||||||||||
|
Changes in inventories
|
220
|
(1,481
|
)
|
(1,455
|
)
|
(1,135
|
)
|
|||||||||
|
Inventory write-downs
|
252
|
1,424
|
574
|
1,457
|
||||||||||||
|
|
$
|
20,501
|
$
|
17,718
|
$
|
38,285
|
$
|
34,337
|
||||||||
18. Corporate general and administrative expenses
Corporate general and administrative expenses are costs incurred at corporate and other segments that do not directly relate to production. The following are components of corporate general and administrative
expenses for the three-month and six-month periods ended June 30, 2023 and 2022:
|
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
||||||||||||
|
|
period ended
|
period ended
|
period ended
|
period ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
|
|
||||||||||||||||
|
Salaries and employee benefits
|
$
|
531
|
$
|
490
|
$
|
1,080
|
$
|
1,044
|
||||||||
|
Directors’ fees
|
84
|
102
|
170
|
199
|
||||||||||||
|
Share-based payments
|
314
|
598
|
1,120
|
1,591
|
||||||||||||
|
Professional fees
|
710
|
227
|
1,050
|
833
|
||||||||||||
|
Office and general
|
532
|
634
|
1,102
|
1,033
|
||||||||||||
|
|
$
|
2,171
|
$
|
2,051
|
$
|
4,522
|
$
|
4,700
|
||||||||
19. Income taxes
Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual rate used for the six-month
period ended June 30, 2023 was 26.5% and for the year ended December 31, 2022 was 26.5%.
The Company’s net deferred tax liability relates to the Mexican mining royalty and arises principally from the following:
|
June 30,
|
December 31,
|
|||||||
|
2023
|
2022
|
|||||||
|
Property, plant and equipment
|
$
|
800
|
$
|
815
|
||||
|
Other
|
548
|
333
|
||||||
|
Total deferred tax liabilities
|
1,348
|
1,148
|
||||||
|
Provisions and reserves
|
(834
|
)
|
(800
|
)
|
||||
|
Net deferred tax liabilities
|
$
|
514
|
$
|
348
|
||||
The inventory write-downs and impairments described in Note 6 and 7 will result in certain non-capital losses and timing differences which have not been recorded given uncertainty of recoverability in future periods.
Page 14
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
20. Financial risk management
a. Financial risk factors
The Company’s risk exposures and the impact on its financial instruments are summarized below:
(i) Credit Risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash and cash equivalents and trade and other
receivables. The credit risk on cash and cash equivalents is limited because the Company invests its cash in deposits with well-capitalized financial institutions with strong credit ratings in Canada and the United States. Under current concentrate
offtake agreements, risk on trade receivables related to concentrate sales is managed by receiving payments for 85% to 100% of the estimated value of the concentrate within one month following the time of shipment.
As of June 30, 2023, the Company’s exposure to credit risk with respect to trade receivables amounts to $9.7 million (December 31, 2022: $5.6 million). The Company believes credit risk is not significant and there
was no significant change to the Company’s allowance for expected credit losses as at June 30, 2023 and December 31, 2022.
(ii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they arise. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to
meet liabilities when due. The Company’s liquidity requirements are met through a variety of sources, including cash, cash generated from operations, credit facilities and debt and equity capital markets. The Company’s trade payables have
contractual maturities of less than 30 days and are subject to normal trade terms.
The following table presents the contractual maturities of the Company’s financial liabilities and provisions on an undiscounted basis:
|
|
June 30, 2023
|
|||||||||||||||||||
|
|
Less than
|
Over 5
|
||||||||||||||||||
|
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
|
|
||||||||||||||||||||
|
Trade and other payables
|
$
|
25,810
|
$
|
25,810
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Pre-payment facility
|
3,000
|
3,000
|
-
|
-
|
-
|
|||||||||||||||
|
Promissory note
|
1,875
|
625
|
1,250
|
-
|
-
|
|||||||||||||||
|
Interest on promissory note
|
126
|
88
|
38
|
-
|
-
|
|||||||||||||||
|
RoyCap convertible debenture
|
18,353
|
-
|
18,353
|
-
|
-
|
|||||||||||||||
|
Interest on RoyCap convertible debenture
|
2,022
|
1,856
|
166
|
-
|
-
|
|||||||||||||||
|
Government loan
|
222
|
222
|
-
|
-
|
-
|
|||||||||||||||
|
Royalty payable
|
5,749
|
2,475
|
3,274
|
-
|
-
|
|||||||||||||||
|
Metals contract liability
|
33,236
|
11,681
|
21,555
|
-
|
-
|
|||||||||||||||
|
Projected pension contributions
|
5,056
|
998
|
1,724
|
1,853
|
481
|
|||||||||||||||
|
Decommissioning provision
|
20,369
|
-
|
-
|
-
|
20,369
|
|||||||||||||||
|
Other long-term liabilities
|
1,726
|
-
|
751
|
374
|
601
|
|||||||||||||||
|
|
$
|
117,544
|
$
|
46,755
|
$
|
47,111
|
$
|
2,227
|
$
|
21,451
|
||||||||||
Minimum lease payments in respect to lease liabilities are included in trade and other payables and other long-term liabilities as follows:
Page 15
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
|
|
June 30, 2023
|
|||||||||||||||||||
|
|
Less than
|
Over 5
|
||||||||||||||||||
|
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
|
|
||||||||||||||||||||
|
Trade and other payables
|
$
|
910
|
$
|
910
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Other long-term liabilities
|
1,125
|
-
|
751
|
374
|
-
|
|||||||||||||||
|
|
$
|
2,035
|
$
|
910
|
$
|
751
|
$
|
374
|
$
|
-
|
||||||||||
The following table summarizes the continuity of the Company’s total lease liabilities discounted using an incremental borrowing rate ranging from 3% to 20% applied during the period:
|
|
Six-month
|
Year
|
||||||
|
|
period ended
|
ended
|
||||||
|
|
June 30,
|
December 31,
|
||||||
|
|
2023
|
2022
|
||||||
|
|
||||||||
|
Lease liabilities, beginning of period
|
$
|
3,142
|
$
|
4,774
|
||||
|
Additions
|
156
|
720
|
||||||
|
Lease principal payments
|
(1,859
|
)
|
(2,352
|
)
|
||||
|
Lease interest payments
|
(97
|
)
|
(1,040
|
)
|
||||
|
Accretion on lease liabilities
|
693
|
1,040
|
||||||
|
Lease liabilities, end of period
|
$
|
2,035
|
$
|
3,142
|
||||
(iii) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency
risk and price risk.
|
(1)
|
Interest rate risk
|
The Company is subject to interest rate risk of the 3 months U.S. LIBOR rate plus 7% per annum from Cosalá Operations’ advance payments of concentrate, the 1 month U.S. SOFR rate plus 4% per annum
from Galena Complex's advance payments of concentrate, and the 6 month U.S. SOFR rate plus 6.95% per annum from the Facility. Interest rates of other financial instruments are fixed.
|
(2)
|
Currency risk
|
As at June 30 2023, the Company is exposed to foreign currency risk through financial assets and liabilities denominated in CAD and MXN:
Financial instruments that may impact the Company’s net income (loss) or other comprehensive income (loss) due to currency fluctuations include CAD and MXN denominated assets and liabilities which
are included in the following table:
|
|
As at June 30, 2023
|
|||||||
|
|
CAD
|
MXN
|
||||||
|
|
||||||||
|
Cash and cash equivalents
|
$
|
66
|
$
|
124
|
||||
|
Trade and other receivables
|
3,084
|
210
|
||||||
|
Trade and other payables
|
3,405
|
11,063
|
||||||
Page 16
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
As at June 30, 2023, the CAD/USD and MXN/USD exchange rates were 1.32 and 17.07, respectively. The sensitivity of the Company’s net income (loss) and other comprehensive income (loss) due to
changes in the exchange rates for the six-month period ended June 30, 2023 is included in the following table:
|
|
CAD/USD
|
MXN/USD
|
||||||
|
|
Exchange rate
|
Exchange rate
|
||||||
|
|
+/- 10%
|
|
+/- 10%
|
|
||||
|
|
||||||||
|
Approximate impact on:
|
||||||||
|
Net loss
|
$
|
773
|
$
|
2,124
|
||||
|
Other comprehensive loss
|
105
|
25
|
||||||
The Company may, from time to time, employ derivative financial instruments to manage exposure to fluctuations in foreign currency exchange rates.
As at June 30, 2023 and December 31, 2022, the Company does not have any non-hedge foreign exchange forward contracts outstanding. During the six-month periods ended June 30, 2023 and 2022, the
Company did not settle any non-hedge foreign exchange forward contracts.
|
(3)
|
Price risk
|
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or
currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments in the market. As at June 30, 2023 the Company had certain amounts
related to the sales of concentrates that have only been provisionally priced. A ±10% fluctuation in silver, zinc, lead, and gold prices would affect trade receivables by approximately $1.0 million (December 31, 2022: $0.6 million).
As at June 30, 2023 and December 31, 2022, the Company does not have any non-hedge commodity forward contracts outstanding. During the six-month periods ended June 30, 2023 and 2022, the Company
did not settle any non-hedge commodity forward contracts.
Net amount of gain or loss on derivative instruments from non-hedge foreign exchange and commodity forward contracts recognized through profit or loss during the six-month period ended June 30, 2023 was nil (2022:
nil). Total amount of gain or loss on derivative instruments including those recognized through profit or loss from the Company’s convertible debenture during the six-month period ended June 30, 2023 was a gain of $0.1 million (2022: loss of $0.1
million).
b. Fair values
The fair value of cash, restricted cash, trade and other receivables, and other financial assets and liabilities listed below approximate their carrying amounts mainly due to the short-term maturities of these
instruments.
The methods and assumptions used in estimating the fair value of financial assets and liabilities are as follows:
|
●
|
Cash and cash equivalents: The fair value of cash equivalents is valued using quoted market prices in active markets. The Company’s cash equivalents consist of money market accounts held at financial
institutions which have original maturities of less than 90 days.
|
|
●
|
Trade and other receivables: The fair value of trade receivables from silver sales contracts that contain provisional pricing terms is determined using the appropriate quoted forward price from the exchange
that is the principal active market for the particular metal. As such, there is an embedded derivative feature within trade receivables.
|
|
●
|
Metals contract liability: Fixed and variable deliveries of precious metals are classified and measured as financial liabilities at fair value through profit or loss determined using forward commodity
pricing curves at end of the reporting period.
|
|
●
|
Convertible debenture and promissory note: The principal portion of the convertible debenture and promissory note are initially measured at fair value and subsequently carried at amortized cost.
|
|
●
|
Royalty payable: The financial liability is measured at fair value through profit or loss determined using discounted cash flows of expected future royalty payments at end of the reporting period.
|
|
●
|
Embedded derivatives: Revenues from the sale of metals produced from silver sales contracts since the commencement of commercial production are based on provisional prices at the time of shipment.
Variations between the price recorded at the time of sale and the actual final price received from the customer are caused by changes in market prices for metals sold and result in an embedded derivative in revenues and accounts
receivable.
|
|
●
|
Derivatives: The Company uses derivative and non-derivative instruments to manage financial risks, including commodity, interest rate, and foreign exchange risks. The use of derivative contracts is governed
by documented risk management policies and approved limits. The Company does not use derivatives for speculative purposes. The fair value of the Company’s derivative instruments is based on quoted market prices for similar instruments and
at market prices at the valuation date.
|
Page 17
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value:
|
●
|
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
|
●
|
Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or
liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs
that are derived principally from or corroborated by observable market data or other means.
|
|
●
|
Level 3 inputs are unobservable (supported by little or no market activity).
|
|
|
June 30,
|
December 31,
|
||||||
|
|
2023
|
2022
|
||||||
|
|
||||||||
|
Level 1
|
||||||||
|
Cash and cash equivalents
|
$
|
1,627
|
$
|
1,964
|
||||
|
Restricted cash
|
4,247
|
4,139
|
||||||
|
|
||||||||
|
Level 2
|
||||||||
|
Trade and other receivables
|
13,043
|
11,552
|
||||||
|
Derivative instruments
|
1,320
|
991
|
||||||
|
Metals contract liability
|
33,236
|
30,989
|
||||||
|
|
||||||||
|
Level 3
|
||||||||
|
Royalty payable
|
4,089
|
-
|
||||||
|
|
||||||||
|
Amortized cost
|
||||||||
|
Pre-payment facility
|
3,000
|
-
|
||||||
|
Promissory note
|
1,875
|
2,500
|
||||||
|
Government loan
|
222
|
222
|
||||||
|
RoyCap convertible debenture
|
14,727
|
9,621
|
||||||
21. Segmented and geographic information, and major customers
a. Segmented information
The Company’s operations comprise of four reporting segments engaged in acquisition, exploration, development and exploration of mineral resource properties in Mexico and the United States. Management has determined
the operating segments based on the reports reviewed by the chief operating decision makers that are used to make strategic decisions.
Page 18
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
b. Geographic information
All revenues from sales of concentrates for the three-month and six-month periods ended June 30, 2023 and 2022 were earned in Mexico and the United States. The following segmented information is presented as at June
30, 2023 and December 31, 2022, and for the three-month and six-month periods ended June 30, 2023 and 2022. The Cosalá Operations segment operates in Mexico while the Galena Complex and Relief Canyon segments operate in the United States.
|
|
As at June 30, 2023
|
As at December 31, 2022
|
||||||||||||||||||||||||||||||||||||||
|
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
182
|
$
|
1,125
|
$
|
225
|
$
|
95
|
$
|
1,627
|
$
|
317
|
$
|
204
|
$
|
717
|
$
|
726
|
$
|
1,964
|
||||||||||||||||||||
|
Trade and other receivables
|
6,281
|
3,678
|
-
|
3,084
|
13,043
|
3,921
|
7,593
|
-
|
38
|
11,552
|
||||||||||||||||||||||||||||||
|
Inventories
|
5,388
|
2,898
|
596
|
-
|
8,882
|
5,390
|
2,727
|
718
|
-
|
8,835
|
||||||||||||||||||||||||||||||
|
Prepaid expenses
|
839
|
959
|
397
|
1,021
|
3,216
|
745
|
1,232
|
452
|
601
|
3,030
|
||||||||||||||||||||||||||||||
|
Restricted cash
|
161
|
53
|
4,033
|
-
|
4,247
|
141
|
53
|
3,945
|
-
|
4,139
|
||||||||||||||||||||||||||||||
|
Property, plant and equipment
|
51,639
|
74,512
|
35,310
|
688
|
162,149
|
52,141
|
70,479
|
37,927
|
752
|
161,299
|
||||||||||||||||||||||||||||||
|
Total assets
|
$
|
64,490
|
$
|
83,225
|
$
|
40,561
|
$
|
4,888
|
$
|
193,164
|
$
|
62,655
|
$
|
82,288
|
$
|
43,759
|
$
|
2,117
|
$
|
190,819
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Trade and other payables
|
$
|
12,557
|
$
|
6,552
|
$
|
1,331
|
$
|
5,370
|
$
|
25,810
|
$
|
12,861
|
$
|
8,029
|
$
|
2,658
|
$
|
3,512
|
$
|
27,060
|
||||||||||||||||||||
|
Derivative instruments
|
-
|
-
|
-
|
1,320
|
1,320
|
-
|
-
|
-
|
991
|
991
|
||||||||||||||||||||||||||||||
|
Pre-payment facility
|
-
|
3,000
|
-
|
-
|
3,000
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Other long-term liabilities
|
-
|
1,153
|
-
|
573
|
1,726
|
-
|
1,192
|
-
|
623
|
1,815
|
||||||||||||||||||||||||||||||
|
Metals contract liability
|
-
|
-
|
-
|
33,236
|
33,236
|
-
|
-
|
-
|
30,989
|
30,989
|
||||||||||||||||||||||||||||||
|
RoyCap convertible debenture
|
-
|
-
|
-
|
14,727
|
14,727
|
-
|
-
|
-
|
9,621
|
9,621
|
||||||||||||||||||||||||||||||
|
Promissory note
|
-
|
-
|
-
|
1,875
|
1,875
|
-
|
-
|
-
|
2,500
|
2,500
|
||||||||||||||||||||||||||||||
|
Royalty payable
|
-
|
-
|
-
|
4,089
|
4,089
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Government loan
|
-
|
222
|
-
|
-
|
222
|
-
|
222
|
-
|
-
|
222
|
||||||||||||||||||||||||||||||
|
Post-employment benefit obligations
|
-
|
5,868
|
-
|
-
|
5,868
|
-
|
6,969
|
-
|
-
|
6,969
|
||||||||||||||||||||||||||||||
|
Decommissioning provision
|
2,514
|
5,765
|
4,067
|
-
|
12,346
|
2,070
|
5,603
|
4,042
|
-
|
11,715
|
||||||||||||||||||||||||||||||
|
Deferred tax liabilities
|
514
|
-
|
-
|
-
|
514
|
348
|
-
|
-
|
-
|
348
|
||||||||||||||||||||||||||||||
|
Total liabilities
|
$
|
15,585
|
$
|
22,560
|
$
|
5,398
|
$
|
61,190
|
$
|
104,733
|
$
|
15,279
|
$
|
22,015
|
$
|
6,700
|
$
|
48,236
|
$
|
92,230
|
||||||||||||||||||||
|
Three-month period ended June 30, 2023
|
Three-month period ended June 30, 2022
|
|||||||||||||||||||||||||||||||||||||||
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
|||||||||||||||||||||||||||||||
|
Revenue
|
$
|
13,235
|
$
|
10,956
|
$
|
31
|
$
|
-
|
$
|
24,222
|
$
|
12,681
|
$
|
7,256
|
$
|
11
|
$
|
-
|
$
|
19,948
|
||||||||||||||||||||
|
Cost of sales
|
(10,959
|
)
|
(9,398
|
)
|
(144
|
)
|
-
|
(20,501
|
)
|
(7,953
|
)
|
(8,599
|
)
|
(1,166
|
)
|
-
|
(17,718
|
)
|
||||||||||||||||||||||
|
Depletion and amortization
|
(1,968
|
)
|
(2,313
|
)
|
(886
|
)
|
(41
|
)
|
(5,208
|
)
|
(1,890
|
)
|
(2,270
|
)
|
(1,759
|
)
|
(40
|
)
|
(5,959
|
)
|
||||||||||||||||||||
|
Care and maintenance costs
|
-
|
(99
|
)
|
(761
|
)
|
-
|
(860
|
)
|
-
|
(107
|
)
|
(904
|
)
|
-
|
(1,011
|
)
|
||||||||||||||||||||||||
|
Corporate general and administrative
|
-
|
-
|
-
|
(2,171
|
)
|
(2,171
|
)
|
-
|
-
|
-
|
(2,051
|
)
|
(2,051
|
)
|
||||||||||||||||||||||||||
|
Exploration costs
|
(312
|
)
|
(599
|
)
|
(34
|
)
|
-
|
(945
|
)
|
(266
|
)
|
(571
|
)
|
(77
|
)
|
-
|
(914
|
)
|
||||||||||||||||||||||
|
Accretion on decommissioning provision
|
(52
|
)
|
(51
|
)
|
(37
|
)
|
-
|
(140
|
)
|
(41
|
)
|
(37
|
)
|
(24
|
)
|
-
|
(102
|
)
|
||||||||||||||||||||||
|
Interest and financing expense
|
(75
|
)
|
(81
|
)
|
(39
|
)
|
(1,626
|
)
|
(1,821
|
)
|
(47
|
)
|
(14
|
)
|
(143
|
)
|
(874
|
)
|
(1,078
|
)
|
||||||||||||||||||||
|
Foreign exchange gain (loss)
|
(45
|
)
|
-
|
-
|
951
|
906
|
(540
|
)
|
-
|
-
|
(1,363
|
)
|
(1,903
|
)
|
||||||||||||||||||||||||||
|
Gain on disposal of assets
|
-
|
-
|
85
|
-
|
85
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Gain on metals contract liability
|
-
|
-
|
-
|
1,701
|
1,701
|
-
|
-
|
-
|
3,186
|
3,186
|
||||||||||||||||||||||||||||||
|
Other loss on derivatives
|
-
|
-
|
-
|
(45
|
)
|
(45
|
)
|
-
|
-
|
-
|
(101
|
)
|
(101
|
)
|
||||||||||||||||||||||||||
|
Fair value loss on royalty payable
|
-
|
-
|
-
|
(240
|
)
|
(240
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||
|
Income (loss) before income taxes
|
(176
|
)
|
(1,585
|
)
|
(1,785
|
)
|
(1,471
|
)
|
(5,017
|
)
|
1,944
|
(4,342
|
)
|
(4,062
|
)
|
(1,243
|
)
|
(7,703
|
)
|
|||||||||||||||||||||
|
Income tax expense
|
(2,074
|
)
|
-
|
-
|
-
|
(2,074
|
)
|
(1,575
|
)
|
-
|
-
|
-
|
(1,575
|
)
|
||||||||||||||||||||||||||
|
Net income (loss) for the period
|
$
|
(2,250
|
)
|
$
|
(1,585
|
)
|
$
|
(1,785
|
)
|
$
|
(1,471
|
)
|
$
|
(7,091
|
)
|
$
|
369
|
$
|
(4,342
|
)
|
$
|
(4,062
|
)
|
$
|
(1,243
|
)
|
$
|
(9,278
|
)
|
|||||||||||
Page 19
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2023 and 2022
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
|
Six-month period ended June 30, 2023
|
Six-month period ended June 30, 2022
|
|||||||||||||||||||||||||||||||||||||||
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
|||||||||||||||||||||||||||||||
|
Revenue
|
$
|
24,247
|
$
|
21,965
|
$
|
103
|
$
|
-
|
$
|
46,315
|
$
|
28,792
|
$
|
17,553
|
$
|
39
|
$
|
-
|
$
|
46,384
|
||||||||||||||||||||
|
Cost of sales
|
(18,541
|
)
|
(19,295
|
)
|
(449
|
)
|
-
|
(38,285
|
)
|
(15,812
|
)
|
(17,294
|
)
|
(1,231
|
)
|
-
|
(34,337
|
)
|
||||||||||||||||||||||
|
Depletion and amortization
|
(3,923
|
)
|
(4,463
|
)
|
(1,859
|
)
|
(80
|
)
|
(10,325
|
)
|
(3,653
|
)
|
(4,414
|
)
|
(3,573
|
)
|
(79
|
)
|
(11,719
|
)
|
||||||||||||||||||||
|
Care and maintenance costs
|
-
|
(210
|
)
|
(1,786
|
)
|
-
|
(1,996
|
)
|
-
|
(295
|
)
|
(2,039
|
)
|
-
|
(2,334
|
)
|
||||||||||||||||||||||||
|
Corporate general and administrative
|
-
|
-
|
-
|
(4,522
|
)
|
(4,522
|
)
|
-
|
-
|
-
|
(4,700
|
)
|
(4,700
|
)
|
||||||||||||||||||||||||||
|
Exploration costs
|
(431
|
)
|
(1,113
|
)
|
(56
|
)
|
-
|
(1,600
|
)
|
(700
|
)
|
(1,142
|
)
|
(158
|
)
|
-
|
(2,000
|
)
|
||||||||||||||||||||||
|
Accretion on decommissioning provision
|
(101
|
)
|
(104
|
)
|
(76
|
)
|
-
|
(281
|
)
|
(79
|
)
|
(66
|
)
|
(41
|
)
|
-
|
(186
|
)
|
||||||||||||||||||||||
|
Interest and financing expense
|
(140
|
)
|
(145
|
)
|
(659
|
)
|
(3,207
|
)
|
(4,151
|
)
|
(74
|
)
|
(28
|
)
|
(302
|
)
|
(1,701
|
)
|
(2,105
|
)
|
||||||||||||||||||||
|
Foreign exchange gain (loss)
|
(538
|
)
|
-
|
-
|
993
|
455
|
(478
|
)
|
-
|
-
|
(715
|
)
|
(1,193
|
)
|
||||||||||||||||||||||||||
|
Gain on disposal of assets
|
-
|
-
|
85
|
-
|
85
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Gain (loss) on metals contract liability
|
-
|
-
|
-
|
(853
|
)
|
(853
|
)
|
-
|
-
|
-
|
434
|
434
|
||||||||||||||||||||||||||||
|
Other gain (loss) on derivatives
|
-
|
-
|
-
|
47
|
47
|
-
|
-
|
-
|
(79
|
)
|
(79
|
)
|
||||||||||||||||||||||||||||
|
Fair value loss on royalty payable
|
-
|
-
|
-
|
(240
|
)
|
(240
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||
|
Gain on government loan forgiveness
|
-
|
-
|
-
|
-
|
-
|
-
|
4,277
|
-
|
-
|
4,277
|
||||||||||||||||||||||||||||||
|
Income (loss) before income taxes
|
573
|
(3,365
|
)
|
(4,697
|
)
|
(7,862
|
)
|
(15,351
|
)
|
7,996
|
(1,409
|
)
|
(7,305
|
)
|
(6,840
|
)
|
(7,558
|
)
|
||||||||||||||||||||||
|
Income tax expense
|
(2,264
|
)
|
-
|
-
|
-
|
(2,264
|
)
|
(2,016
|
)
|
-
|
-
|
-
|
(2,016
|
)
|
||||||||||||||||||||||||||
|
Net income (loss) for the period
|
$
|
(1,691
|
)
|
$
|
(3,365
|
)
|
$
|
(4,697
|
)
|
$
|
(7,862
|
)
|
$
|
(17,615
|
)
|
$
|
5,980
|
$
|
(1,409
|
)
|
$
|
(7,305
|
)
|
$
|
(6,840
|
)
|
$
|
(9,574
|
)
|
|||||||||||
c. Major customers
For the three-month period ended June 30, 2023, the Company sold concentrates and finished goods to two major customers accounting for 50% of total revenues from Cosalá Operations and 50% of total
revenues from Galena Complex (2022: one major customer accounting for 99% of total revenues from Cosalá Operations and Galena Complex). For the six-month period ended June 30, 2023, the Company sold concentrates and finished goods to two major
customers accounting for 55% of total revenues from Cosalá Operations and 45% of total revenues from Galena Complex (2022: one major customer accounting for 99% of total revenues from Cosalá Operations and Galena Complex).
22. Contingencies
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters arise in the ordinary course of business. The Company accrues for such items when a liability is both probable and the
amount can be reasonably estimated.
In November 2010, the Company received a reassessment from the Mexican tax authorities related to its Mexican subsidiary, Minera Cosalá, for the year ended December 31, 2007. The tax authorities disallowed the deduction of transactions with
certain suppliers for an amount of approximately $11.5 million (MXN 196.8 million), of which $4.9 million (MXN 84.4 million) would be applied against available tax losses. The Company appealed this reassessment and the Mexican tax authorities
subsequently reversed $5.5 million (MXN 94.6 million) of their original reassessment. The remaining $6.0 million (MXN 102.2 million) consists of $4.9 million (MXN 84.4 million) related to transactions with certain suppliers and $1.0 million (MXN 17.8
million) of value added taxes thereon. The Company appealed the remaining reassessment with the Mexican Tax Court in December 2011. The Company may be required to post a bond of approximately $1.0 million (MXN 17.8 million) to secure the value added
tax portion of the reassessment. The deductions of $4.9 million (MXN 84.4 million), if denied, would be offset by available tax losses. The Company accrued $1.2 million (MXN 19.9 million) in the consolidated financial statements as at December 31,
2018 as a probable obligation for the disallowance of value added taxes related to the Mexican tax reassessment. As at June 30, 2023, the accrued liability of the probable obligation was $1.0 million (December 31, 2022: $1.0 million).
Page 20
| Exhibit 99.2 |
AMERICAS GOLD AND SILVER CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
DATED AUGUST 14, 2023
Americas Gold and Silver Corporation
Management’s Discussion and Analysis
Table of Contents
|
Forward-Looking Statements
|
1 |
|
Management’s Discussion and Analysis
|
2 |
|
Overview
|
3 |
|
Recent Developments and Operational Discussion
|
4 |
|
Results of Operations
|
10 |
|
Summary of Quarterly Results
|
11 |
|
Liquidity
|
13 |
|
Capital Resources
|
15 |
|
Off-Balance Sheet Arrangements
|
15 |
|
Transactions with Related Parties
|
15 |
|
Risk Factors
|
16 |
|
Accounting Standards and Pronouncements
|
16 |
|
Financial Instruments
|
16 |
|
Capital Structure
|
17 |
|
Controls and Procedures
|
17 |
|
Technical Information
|
17 |
|
Non-GAAP and Other Financial Measures
|
17 |
Unless otherwise indicated, in this Management Discussion and Analysis all reference to “dollar” or the use of the symbol “$” are to the United States of America dollar and all references to “C$”
are to the Canadian dollar. Additionally, percentage changes in this Management’s Discussion and Analysis are based on dollar amounts before rounding.
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Forward-Looking Statements
Statements contained in this Management’s Discussion and Analysis (“MD&A”) of Americas Gold and Silver Corporation (the “Company” or “Americas Gold and Silver”) that are not current or historical factual statements
may constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable Canadian and United States securities laws ("forward-looking statements"). These forward-looking statements are presented for the purpose of
assisting the Company's securityholders and prospective investors in understanding management's views regarding those future outcomes and may not be appropriate for other purposes. When used in this MD&A, the words "may", "would", "could",
"will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. All such forward-looking statements are subject
to important risks, uncertainties and assumptions. These statements are forward-looking because they are based on current expectations, estimates and assumptions. It is important to know that: (i) unless otherwise indicated, forward-looking
statements in this MD&A describe expectations as at the date hereof; and (ii) actual results and events could differ materially from those expressed or implied. Capitalized terms used but not defined in this “Forward-Looking Statements” section
of this MD&A shall have the meaning ascribed to such term elsewhere in this MD&A.
Specific forward-looking statements in this MD&A include, but are not limited to: any objectives, expectations, intentions, plans, results, levels of activity, goals or achievements; estimates of mineral
reserves and resources; the realization of mineral reserve estimates; the impairment of mining interests and non-producing properties; the timing and amount of estimated future production, production guidance, costs of production, capital
expenditures, costs and timing of development; the success of exploration and development activities; the Company’s testing work (and receipt of the results thereof), production, development plans and performance expectations at the Relief Canyon
mine and its ability to operate, finance, develop and operate Relief Canyon, including the timing and conclusions of the technical studies, data compilation and analysis occurring at Relief Canyon and the potential for reassessment of the
remaining carrying value of the Relief Canyon asset; statements regarding the Galena Complex Recapitalization Plan, including with respect to underground development improvements, equipment procurement and the high-grade Phase II extension
exploration drilling program and expected results thereof and completion of the shaft repair related to the Galena hoist project on its expected schedule and budget, and the realization of the anticipated benefits therefrom; Company's Cosalá
Operations, including expected production levels; the ability of the Company to target higher-grade silver ores at the Cosalá Operations; statements relating to the future financial condition, assets, liabilities (contingent or otherwise),
business, operations or prospects of the Company; material uncertainties that may impact the Company’s liquidity in the short term; changes in accounting policies not yet in effect; permitting timelines; government regulation of mining
operations; environmental risks; labour relations, employee recruitment and retention, and pension funding and valuation; the timing and possible outcomes of pending disputes or litigation; negotiations or regulatory investigations; exchange rate
fluctuations; cyclical or seasonal aspects of the Company’s business; the Company’s dividend policy; the suspension of certain operating metrics such as cash costs and all-in sustaining costs for Relief Canyon; the liquidity of the Company’s
common shares; and other events or conditions that may occur in the future. Inherent in the forward-looking statements are known and unknown risks, uncertainties and other factors beyond the Company's ability to control or predict that may cause
the actual results, performance or achievements of the Company, or developments in the Company's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by
such forward-looking statements.
Page 1
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Some of the risks and other factors (some of which are beyond Americas Gold and Silver's control) that could cause results to differ materially from those expressed in the forward-looking statements and information
contained in this MD&A include, but are not limited to: risks associated with market fluctuations in commodity prices; risks associated with generally elevated inflation; risks related to changing global economic conditions and market volatility,
risks relating to geopolitical instability, political unrest, war, and other global conflicts may result in adverse effects on macroeconomic conditions, including volatility in financial markets, adverse changes in trade policies, inflation, supply
chain disruptions, any or all of which may affect the Company's results of operations and financial condition; the Company’s dependence on the success of its Cosalá Operations, including the San Rafael project, the Galena Complex and the Relief
Canyon mines, which are exposed to operational risks and other risks, including certain development and exploration related risks, as applicable; risks related to mineral reserves and mineral resources, development and production and the Company's
ability to sustain or increase present production; risks related to global financial and economic conditions; risks related to government regulation and environmental compliance; risks related to mining property claims and titles, and surface rights
and access; risks related to labour relations, disputes and/or disruptions, employee recruitment and retention and pension funding and valuation; some of the Company's material properties are located in Mexico and are subject to changes in political
and economic conditions and regulations in that country; risks related to the Company's relationship with the communities where it operates; risks related to actions by certain non-governmental organizations; substantially all of the Company's assets
are located outside of Canada, which could impact the enforcement of civil liabilities obtained in Canadian and U.S. courts; risks related to currency fluctuations that may adversely affect the financial condition of the Company; the Company may need
additional capital in the future and may be unable to obtain it or to obtain it on favourable terms; risks associated with the Company's outstanding debt and its ability to make scheduled payments of interest and principal thereon; risks associated
with any hedging activities of the Company; risks associated with the Company's business objectives; risks relating to mining and exploration activities and future mining operations; operational risks and hazards inherent in the mining industry;
risks related to competition in the mining industry; risks relating to negative operating cash flows; risks relating to the possibility that the Company’s working capital requirements may be higher than anticipated and/or its revenue may be lower
than anticipated over relevant periods; and risks relating to climate change and the legislation governing it.
The list above is not exhaustive of the factors that may affect any of the Company's forward-looking statements. Investors and others should carefully consider these and other factors and not place undue reliance on
the forward-looking statements. The forward-looking statements contained in this MD&A represent the Company's views only as of the date such statements were made. Forward-looking statements contained in this MD&A are based on management's
plans, estimates, projections, beliefs and opinions as at the time such statements were made and the assumptions related to these plans, estimates, projections, beliefs and opinions may change. Although forward-looking statements contained in this
MD&A are based on what management considers to be reasonable assumptions based on information currently available to it, there can be no assurances that actual events, performance or results will be consistent with these forward-looking
statements, and management's assumptions may prove to be incorrect. Some of the important risks and uncertainties that could affect forward-looking statements are described further in this MD&A. The Company cannot guarantee future results, levels
of activity, performance or achievements, should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, the actual results or developments may differ materially from those contemplated by the
forward-looking statements. The Company does not undertake to update any forward-looking statements, even if new information becomes available, as a result of future events or for any other reason, except to the extent required by applicable
securities laws.
Management’s Discussion and Analysis
This MD&A of the results of operations, liquidity and capital resources of Americas Gold and Silver Corporation
constitutes management’s review of the Company’s financial and operating performance for the three and six months ended June 30, 2023, including the Company’s financial condition and future prospects. Except as otherwise noted, this discussion is
dated August 14, 2023 and should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements and the notes thereto for the three and six months ended June 30, 2023 and 2022. The unaudited condensed
interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022 are prepared in accordance with International Accounting Standards (“IAS”) 34 under International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board. The Company prepared its latest financial statements in U.S. dollars and all amounts in this MD&A are expressed in U.S. dollars, unless otherwise stated. These documents along with additional
information relating to the Company are available on SEDAR+ at www.sedarplus.ca, on EDGAR at www.sec.gov, and on the Company’s
website at www.americas-gold.com. The content of the
Company’s website and information accessible through the website do not form part of this MD&A.
Page 2
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
In this report, the management of the Company presents operating highlights for the three months ended June 30, 2023 (“Q2-2023”) compared to the three months ended June 30, 2022 (“Q2-2022”) and for the six
months ended June 30, 2023 (“YTD-2023”) compared to the six months ended June 30, 2022 (“YTD-2022”) as well as comments on plans for the future. Throughout this MD&A, consolidated production results and consolidated operating metrics are based
on the attributable ownership percentage of each operating segment.
The Company has included certain non-GAAP and other financial measures, which the Company believes, that together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate
the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar non-GAAP and other financial performance employed by other
companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Reconciliations and descriptions can be found under “Non-GAAP
and Other Financial Measures”.
This MD&A contains statements about the Company’s future or expected financial condition, results of operations and business. See “Forward-Looking Statements” above for more information on forward-looking
statements.
Overview
The Company is a precious metals producer with two operations in the world's leading silver mining regions: the Galena Complex in Idaho, USA and the Cosalá Operations in Sinaloa, Mexico, and is advancing technical
studies at the Relief Canyon mine (“Relief Canyon”) in Nevada, USA following a suspension of mining activities in August 2021.
In Idaho, USA, the Company operates the 60%-owned producing Galena Complex (40% owned by Mr. Eric Sprott (“Sprott”)) whose primary assets are the operating Galena mine, the Coeur mine, and the contiguous Caladay
development project in the Coeur d’Alene Mining District of the northern Idaho Silver Valley. The Galena Complex has recorded production of over 230 million ounces of silver along with associated by-product metals of copper and lead over a production
history of more than sixty years. The Company entered into a joint venture agreement with Sprott effective October 1, 2019 for a 40% non-controlling interest of the Galena Complex. The goal of the joint venture agreement is to position the Galena
Complex to significantly grow resources, increase production, and reduce operating costs at the mine (the “Recapitalization Plan”).
In Sinaloa, Mexico, the Company operates the 100%-owned Cosalá Operations, which includes the San Rafael silver-zinc-lead mine (“San Rafael”), after declaring commercial production in December 2017. Prior to that time,
it operated the Nuestra Señora silver-zinc-copper-lead mine after commissioning the Los Braceros processing facility and declaring commercial production in January 2009. The Cosalá area land holdings also host several other known precious metals and
polymetallic deposits, past-producing mines, and development projects including the Zone 120 silver-copper deposit and the El Cajón silver-copper deposit. These properties are located in close proximity to the Los Braceros processing plant. The
Company also owns a 100% interest in the San Felipe development project in Sonora, Mexico, which it acquired on October 8, 2020.
In Nevada, USA, the Company is advancing technical studies at the 100%-owned, Relief Canyon located in Pershing County. The mine poured its first gold in February 2020 and declared commercial production in January
2021. Operations were suspended in August 2021 in order to resolve technical challenges related to the metallurgical characteristics of the deposit. The past-producing mine includes three historic open-pit mines, a crusher, ore conveying system,
leach pads, and a refurbished heap-leach processing facility. The landholdings at Relief Canyon and the surrounding area cover over 11,700 hectares, providing the Company the potential to expand the Relief Canyon deposit and to explore for new
discoveries close to existing processing infrastructure.
Page 3
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
The Company’s mission is to profitably expand its precious metals production through the development of its own projects and consolidation of complementary projects. The Company is also focused on extending the mine
life of its current assets through exploration and charting a path to profitability at the Galena Complex with the Recapitalization Plan, as well as resolving technical challenges at Relief Canyon. The Company will continue exploring and evaluating
prospective areas accessible from existing infrastructure and the surface at the Galena Complex, and early-stage targets with an emphasis on the Cosalá District.
The Company’s management and Board of Directors (the “Board”) are comprised of senior mining executives who have extensive experience identifying, acquiring, developing, financing, and operating precious metals
deposits globally. The Company’s principal and registered office is located at 145 King Street West, Suite 2870, Toronto, Ontario, Canada, M5H 1J8. The Company is a reporting issuer in each of the provinces of Canada, and is listed on the TSX trading
under the symbol “USA” and on the NYSE American trading under the symbol “USAS”.
Recent Developments and Operational Discussion
Q2-2023 Highlights
|
•
|
Revenue of $24.2 million for Q2-2023 representing an increase of $4.2 million compared to Q2-2022 primarily due to higher silver and lead production from the Galena
Complex, and higher silver production from the Cosalá Operations for a combined increase in silver production of 92%.
|
|
•
|
A net loss of $7.1 million for Q2-2023, or an attributable loss of $0.03 per share representing a decrease in net loss of $2.2 million compared to Q2-2022, primarily due to
$4.2 million higher net revenue offset in part by $2.8 million higher cost of sales.
|
|
•
|
Consolidated attributable production of approximately 1.3 million ounces of silver equivalent1, including 0.6 million ounces of silver, 9.6 million pounds of
zinc and 5.9 million pounds of lead, with cost of sales of $13.12/oz silver equivalent produced1, cash costs of $10.00/oz silver produced1 and all-in sustaining costs of $16.78/oz silver produced1 during
the quarter.
|
|
•
|
The Company successfully installed the Galena Hoist which is now operational as of the end of Q2-2023 with only shaft repair remaining before final certification can be
obtained. These repairs are expected to be completed in Q4-2023.
|
|
•
|
Cash generated from operating activities1 improved by $2.9 million to $0.6 million during Q2-2023 compared to cash used in operating activities of $2.3 million
during Q2-2022 before changes in non-cash working capital items.
|
|
•
|
The Company had a cash and cash equivalents balance of $1.6 million and working capital1 deficit of $18.1 million as at June 30, 2023.
|
Q2-2023 continued to be challenging due to the decrease in precious and base metals prices as investors adjusted capital flows and allocations in response to heightened recession expectations, inflationary impacts, general overall
increased global interest rates, and the continuing conflict in the Ukraine, among other macroeconomic events. The market price of silver increased by 7% quarter-to-quarter to average $23.41 per ounce in June 2023 compared to an average
price of $21.49 per ounce in June 2022. However, the market prices of both zinc and lead significantly decreased this period: zinc decreased from over $2/lb in April 2022 to averaging $1.07/lb in June 2023 (35% decrease quarter-to-quarter),
and lead prices decreased from over $1.10/lb in April 2022 to averaging $0.96/lb in June 2023 (4% decrease). The Company is dependant on both precious and base metal prices for profitability and liquidity. In addition, the USD/MXN exchange
ratio decreased during the second quarter to approximately 16.6:1 as at June 30, 2023 from over 20:1 in the second quarter of 2022.
1 This is a supplementary or non-GAAP financial measure or ratio. See “Non-GAAP and Other Financial Measures” section for further information.
Page 4
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Cosalá Operations
The Cosalá Operations produced approximately 335,000 ounces of silver, 9.6 million pounds of zinc and 3.2 million pounds of lead in Q2-2023, compared to approximately 128,000 ounces of silver (162% increase in silver
production), 9.9 million pounds of zinc and 3.9 million pounds of lead in Q2-2022, benefitting from more production from the higher-grade silver areas in the Upper Zone of the San Rafael mine. Cash costs per silver ounce increased significantly in
the quarter to $11.10 per ounce from $(25.89) per ounce in Q2-2022 due to the lower price of zinc (primarily) combined with lower base metal production, and the devaluation of the USD relative to the Mexican peso, partially offset by the increase in
silver production between the periods.
Production at the Cosalá Operations during YTD-2023 was impacted by a 17-day maintenance shutdown of the Cosalá Operations tailings facility in February in order to perform remedial
work on a decant tunnel as part of the long-term environmental plan at the operations. This temporary shutdown allowed the San Rafael mine to rebuild stockpiles that had been drawn down in 2022 and allowed scheduled maintenance to be carried out at
the Los Braceros mill, setting the operation up for a strong remainder of 2023.
Galena Complex
The Galena Complex produced approximately 397,000 ounces of silver and 4.4 million pounds of lead in Q2-2023, compared to approximately 286,000 ounces of silver (a 39% increase in
silver production) and 4.2 million pounds of lead in Q2-2022 (a 5% increase in lead production). These increases highlight the continuing benefit and further potential of increased production following completion of the Galena Recapitalization Plan
which includes rehabilitation of the Galena shaft. Cash costs decreased to $17.74 per ounce silver in Q3-2022 from $22.09 per ounce silver the prior year with a similar decrease in AISC due to increases in both silver and lead production.
The Company began mining high-grade silver ore from the 3700 Level in mid-December 2022 and started development on the 4300 Level to access the Upper 360 Complex reserve area. The 4300
Level mining front will increase the number of producing stopes and boost production output to coincide with the completion of the Galena hoist project. The Galena hoist was operational by the end of Q2-2023. The Company is focused on finishing the
remaining shaft repair work, which is not expected to impact production guidance for the Galena Complex in 2023The shaft was fully inspected with a LIDAR survey showing less than a few hundred feet of the shaft requiring more extensive repair.
These repairs are expected to be completed in Q4-2023. The Galena hoist will increase hoisting capacity at the Galena Complex, support plans to increase production and improve operational flexibility. Cash costs per ounce at the Galena Complex are
also anticipated to decrease with the completion of the Galena replacement hoist as the benefits of scaling economies on the existing cost base with higher grade silver ore are realized.
Galena Exploration Update
A diamond drill was relocated during the first quarter 2023 to the 4900 Level, while development to the final planned drill station on the 5500 Level is completed, to drill the
projected down dip extension of the 360 Complex. This drill is also targeting the Caladay Zone which has historically been underexplored and is located east of all existing production workings. Hole 49-626 encountered high-grade mineralization
approximately 10 meters above the 5500 Level and approximately 350 meters east of the nearest development on the 5500 Level. This area contains no current mineral reserve or mineral resource and has potential to be a new high-grade production area
for the property.
Page 5
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
|
o
|
49-626:
|
650 g/t silver and 11.0% lead (1,054 g/t AgEq) over 7.7 m2,3
|
|
|
including: | 1,209 g/t silver and 16.3% lead (1,815 g/t AgEq) over 0.6 m |
|
|
including: |
521 g/t silver and 6.4% lead (759 g/t AgEq) over 1.1 m
|
|
|
including:
|
1,797 g/t silver and 27.5% lead (2,817 g/t AgEq) over 1.0 m
|
|
|
including:
|
1,005 g/t silver and 25.1% lead (1,914 g/t AgEq) over 0.8 m
|
|
o
|
49-627:
|
203 g/t silver and 12.5% lead (653 g/t AgEq) over 1.8 m |
|
|
and: |
335 g/t silver and 12.3% lead (777 g/t AgEq) over 0.9 m
|
|
|
and: |
185 g/t silver and 8.3% lead (484 g/t AgEq) over 1.3 m
|
|
|
and:
|
744 g/t silver and 35.8% lead (2,033 g/t AgEq) over 0.7 m
|
In addition to successful drilling from the 4900 Level testing the Caladay Zone and deep 360 Complex, the Company is also targeting the 360 Complex between modeled mineral reserve areas on the 4300 and 4900
Levels. Hole 46-324 provided impressive intercepts which corresponded with geological projections.
|
o
|
46-324:
|
400 g/t silver and 15.0% lead (942 g/t AgEq) over 1.1 m
|
|
|
and: |
299 g/t silver and 12.0% lead (731 g/t AgEq) over 7.3 m
|
|
|
including: |
415 g/t silver and 14.4% lead (934 g/t AgEq) over 1.1 m
|
|
|
including:
|
521 g/t silver and 24.5% lead (1,404 g/t AgEq) over 1.1 m
|
A full table of the Company’s latest published drill results can be found at:
https://americas-gold.com/site/assets/files/4297/dr20230404.pdf.
The Company’s current consolidated mineral reserve and mineral resource statement can be found at:
https://americas-gold.com/site/assets/files/5151/reserves20230112.pdf.
Information contained on the Company’s website is not incorporated by reference herein and should not be considered part of this MD&A.
Relief Canyon Update
The Company is continuing efforts to resolve metallurgical challenges experienced at Relief Canyon. Relief Canyon suspended mining operations as of August 13, 2021 with approval by the Board of Directors. The Company
continues leaching operations and working to improve recovery through ongoing technical studies and metallurgical test programs. These technical studies have not yet identified an economical path to resuming near-term production. The Company will
reassess the status of the operation as the results of these efforts (and others) become available and the results are evaluated.
Other Items During Fiscal 2023
On May 17, 2021, the Company announced it had entered into an at-the-market offering agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC, acting as the lead agent, and Roth Capital Partners, LLC, as
agent, pursuant to which the Company established an at-the-market equity program for aggregate gross proceeds to the Company of up to $50.0 million. This agreement expired on February 28, 2023 and approximately 44.1 million common shares were sold
pursuant to the ATM Agreement with an average price per common share of approximately $1.01 for gross proceeds of approximately $44.4 million.
3 AgEq for drilling results only were calculated using metal prices of $20.00/oz silver, $3.00/lb copper and $1.05/lb lead and equivalent metallurgical recoveries were assumed for all metals (silver, lead and copper). Otherwise
throughout this MD&A, silver equivalent production was calculated based on all metals production at average realized silver, zinc, and lead prices during each respective period.
4 Meters represent “True Width” which is calculated for significant intercepts only and based on orientation axis of core across the estimated dip of the vein.
Page 6
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
On December 12, 2022, the Company amended its existing offtake agreement with Ocean Partners USA, Inc. for lead concentrates produced from the Galena Complex to include a pre-payment facility of $3.0 million (the
“Facility”) to fund general working capital at the Galena Complex. Principal on the Facility is being repaid through semi-monthly installments deductible from concentrate deliveries primarily and can be redrawn on a revolving basis. The Facility
was drawn in full in February 2023.
On February 26, 2023, the Company amended its metals delivery agreement (the “Purchase Agreement”) with Sandstorm Gold Ltd. (“Sandstorm”) for the right to increase its advance payment by $2.75 million per calendar
quarter or up to $11.0 million in aggregate during fiscal 2023 in order to satisfy the gold delivery obligations under the Purchase Agreement. The advances are to be repaid through balancing fixed deliveries of gold commencing at the end of the
existing agreement (2025+). The first and second calendar quarter advance of $2.75 million per quarter were drawn in March and May 2023, respectively, with further draws expected for subsequent quarters during fiscal 2023 as allowed under the
amendment.
On March 31, 2023, the Company amended the existing promissory note to Sandstorm with the remaining principal of $2.5 million to be repaid in four equal instalments due June 30 and October 1, 2023, and July 1 and
October 1, 2024, in addition to amending its interest rate to 8% per annum.
On April 12, 2023, the Company entered into a $4.0 million net smelter returns royalty agreement (the “Royalty Agreement”) with Sandstorm to be repaid through a 2.5% royalty on attributable production from the
Cosalá Operations and Galena Complex. The royalty reduces to 0.2% on attributable production from the Cosalá Operations and Galena Complex after the aggregate repayment of $4.0 million and may be eliminated thereafter with a buyout payment of $1.9
million.
On June 21, 2023, the Company’s issued an additional secured convertible debenture to an investor under the Company’s existing RoyCap
Convertible Debenture, increasing the principal balance by C$8.0 million to a total of C$24.3 million outstanding at the end of the second quarter. The Company also amended the interest payable to 11% per annum, the conversion price to C$0.80,
and extended the term of the maturity to July 1, 2024 with option to extend by incremental calendar quarters up to April 28, 2025, among other terms. The RoyCap Convertible Debenture’s outstanding balance was further reduced to C$23.3 million
as of August 14, 2023, through additional retractions of C$1.0 million settled through issuance of approximately 2.1 million of the Company’s common shares.
2023 Guidance and 2024 Outlook
|
|
2023 Guidance1
|
2024 Outlook1
|
|
Silver Production (oz)
|
2.2 - 2.6 Moz
|
3.5 - 4 Moz
|
|
Zinc Production (lb)
|
33 - 37 Mlb
|
23 - 27 Mlb
|
|
Lead Production (lb)
|
22 - 26 Mlb
|
18 - 22 Mlb
|
|
Copper Production (lb)
|
-
|
1.5 - 2 Mlb
|
|
Silver Equivalent Production (oz)
|
5.5 - 6 Moz
|
6.5 - 7 Moz
|
|
Cash Costs/Ag Oz Production ($/oz)
|
$8.00 - $9.00/oz
|
|
|
Capital Expenditures - Sustaining ($)
|
$9 - $10 M
|
|
|
Capital Expenditures - Discretionary ($)
|
$3 - $4 M
|
|
|
Exploration Drilling - Discretionary ($)
|
$3 - $4 M
|
|
| 1 |
Throughout this MD&A, guidance for 2023 and outlook for 2024 was based on production of the Cosalá Operations at 100% and the Galena Complex at 60% (40% owned by Sprott), and silver equivalent production for guidance and outlook was
calculated based on $22.00/oz silver, $1.45/lb zinc, $1.00/lb lead, and $3.75/lb copper.
|
Page 7
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
The Company’s production guidance for 2023 remains unchanged with consolidated attributable silver equivalent production expected to range between 5.5 to 6 million ounces and with consolidated attributable silver
production expected to range between 2.2 and 2.6 million ounces.
The Company anticipates consolidated silver equivalent production to further increase in 2024 benefitting from a full year of the increased hoisting capacity following the completion of the Galena hoist and higher
silver contribution from the Cosalá Operations. Consolidated silver equivalent production for 2024 is expected to range between 6.5 to 7 million ounces.
Consolidated Results and Developments
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Revenue ($ M)
|
$
|
24.2
|
$
|
20.0
|
$
|
46.3
|
$
|
46.4
|
||||||||
|
Silver Produced (oz)1
|
573,382
|
299,228
|
1,073,059
|
599,544
|
||||||||||||
|
Zinc Produced (lb)1
|
9,574,772
|
9,941,949
|
16,799,304
|
19,515,192
|
||||||||||||
|
Lead Produced (lb)1
|
5,873,499
|
6,447,775
|
11,415,868
|
12,815,252
|
||||||||||||
|
Total Silver Equivalent Produced ($/oz)1,2
|
1,264,646
|
1,343,062
|
2,447,771
|
2,617,532
|
||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)1,3
|
$
|
13.12
|
$
|
9.76
|
$
|
12.30
|
$
|
10.00
|
||||||||
|
Cash Costs/Ag Oz Produced ($/oz)1,3
|
$
|
10.00
|
$
|
(2.72
|
)
|
$
|
10.55
|
$
|
(6.13
|
)
|
||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)1,3
|
$
|
16.78
|
$
|
5.37
|
$
|
16.82
|
$
|
1.34
|
||||||||
|
Net Loss ($ M)
|
$
|
(7.1
|
)
|
$
|
(9.3
|
)
|
$
|
(17.6
|
)
|
$
|
(9.6
|
)
|
||||
|
Comprehensive Income (Loss) ($ M)
|
$
|
(6.5
|
)
|
$
|
(7.0
|
)
|
$
|
(17.6
|
)
|
$
|
(4.2
|
)
|
||||
| 1 |
Throughout this MD&A, consolidated production results and consolidated operating metrics are based on the attributable ownership percentage of each operating segment (100% Cosalá Operations and 60% Galena Complex).
|
| 2 |
Throughout this MD&A, silver equivalent production was calculated based on all metals production at average realized silver, zinc, and lead prices during each respective period.
|
| 3 |
This is a supplementary or non-GAAP financial measure or ratio. See “Non-GAAP and Other Financial Measures” section for further information.
|
Consolidated attributable silver production during Q2-2023 increased by 92% compared to the same period in Q2-2022. Consolidated attributable silver equivalent production during
Q2-2023 decreased by 6% compared to Q2-2022. Despite the significant increase in silver production, YTD-2023 production was impacted by a 17-day maintenance shutdown of the Cosalá Operations tailings facility in order to perform remedial work on
a decant tunnel as part of the long-term environmental plan at the operation. This temporary shutdown allowed the San Rafael mine to rebuild stockpiles that had been drawn down in 2022 and allowed scheduled maintenance to be carried out at the
Los Braceros mill, setting the operation up for a strong remainder of 2023.
Revenue increased by $4.2 million or 21% to $24.2 million for the three months ended June 30, 2023 from $20.0 million for the three months ended June 30, 2022. The increase was
primarily due to higher revenue from the Galena Complex from higher silver and lead production during the period, plus higher revenue from the Cosalá Operations from higher silver production during the period, offset by lower zinc prices and
lower base metal production at the Cosalá Operations. The average realized silver, zinc, and lead prices1 increased by 5% and decreased by 34%, and 1%, respectively, from Q2-2022 to Q2-2023. The average realized silver price of
$23.58/oz. for Q2-2023 (Q2-2022 – $22.45/oz.) is comparable to the average London silver spot price of $24.20/oz. for Q2-2023 (Q2-2022 – $22.65/oz.).
1 These are supplementary or non-GAAP financial measures
or ratios. See “Non-GAAP and Other Financial Measures” section for further information.
The Company recorded a net loss of $7.1 million for the three months ended June 30, 2023 compared to a net loss of $9.3 million for the three months ended June 30, 2022. The decrease in net loss was primarily
attributable to higher net revenue, and lower foreign exchange loss, offset in part by higher cost of sales, and lower gain on fair value of metals contract liability. These variances are further discussed in the following sections.
4 These are supplementary or non-GAAP financial measures or ratios. See “Non-GAAP and Other Financial Measures” section for further information.
Page 8
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Cosalá Operations
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Tonnes Milled
|
150,370
|
147,583
|
276,651
|
288,175
|
||||||||||||
|
Silver Grade (g/t)
|
93
|
50
|
91
|
51
|
||||||||||||
|
Zinc Grade (%)
|
3.56
|
3.96
|
3.43
|
3.96
|
||||||||||||
|
Lead Grade (%)
|
1.38
|
1.65
|
1.38
|
1.71
|
||||||||||||
|
Silver Recovery (%)
|
74.9
|
53.7
|
73.8
|
53.8
|
||||||||||||
|
Zinc Recovery (%)
|
81.1
|
77.2
|
80.3
|
77.6
|
||||||||||||
|
Lead Recovery (%)
|
70.7
|
73.1
|
70.8
|
71.6
|
||||||||||||
|
Silver Produced (oz)
|
334,992
|
127,803
|
600,113
|
254,570
|
||||||||||||
|
Zinc Produced (lb)
|
9,574,772
|
9,941,949
|
16,799,304
|
19,515,192
|
||||||||||||
|
Lead Produced (lb)
|
3,221,616
|
3,915,273
|
5,938,413
|
7,793,520
|
||||||||||||
|
Total Silver Equivalent Produced ($/oz)1,2
|
918,354
|
1,063,644
|
1,745,922
|
2,053,844
|
||||||||||||
|
Silver Sold (oz)
|
349,165
|
116,564
|
587,364
|
239,841
|
||||||||||||
|
Zinc Sold (lb)
|
8,955,472
|
9,280,165
|
15,998,450
|
18,428,995
|
||||||||||||
|
Lead Sold (lb)
|
3,152,439
|
3,570,350
|
5,764,682
|
7,335,305
|
||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)2
|
$
|
11.93
|
$
|
7.48
|
$
|
10.62
|
$
|
7.70
|
||||||||
|
Cash Costs/Ag Oz Produced ($/oz)2
|
$
|
4.51
|
$
|
(35.97
|
)
|
$
|
4.56
|
$
|
(42.39
|
)
|
||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)2
|
$
|
11.10
|
$
|
(25.89
|
)
|
$
|
10.41
|
$
|
(34.17
|
)
|
||||||
| 1 |
Throughout this MD&A, silver equivalent production was calculated based on all metals production at average realized silver, zinc, and lead prices during each respective period.
|
| 2 |
This is a supplementary or non-GAAP financial measure or ratio. See “Non-GAAP and Other Financial Measures” section for further information.
|
The Cosalá Operations benefitted from more production from the higher-grade silver areas in the Upper Zone of the San Rafael mine resulting in a 162% increase in silver production
compared to Q2-2022, though with lower production of zinc and lead due to lower base metal grades. Cash costs per silver ounce increased significantly in the quarter to $11.10 per ounce from $(25.89) per ounce in Q2-2022 due to the lower price of
zinc and lower base metal production, and the devaluation of the U.S. dollar relative to the Mexican peso, partially offset by the increase in silver production between the periods.
Production at the Cosalá Operations during YTD-2023 was impacted by a 17-day maintenance shutdown of the Cosalá Operations tailings facility in February in order to perform remedial
work on the decant tunnel as part of the long-term environmental plan at the operations. This temporary shutdown allowed the San Rafael mine to rebuild stockpiles that had been drawn down in 2022 and allowed scheduled maintenance to be carried
out at the Los Braceros mill, setting the operation up for a strong remainder of 2023.
Page 9
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Galena Complex
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Tonnes Milled
|
30,721
|
28,585
|
61,922
|
58,385
|
||||||||||||
|
Silver Grade (g/t)
|
412
|
319
|
406
|
315
|
||||||||||||
|
Lead Grade (%)
|
6.94
|
6.99
|
7.12
|
6.82
|
||||||||||||
|
Silver Recovery (%)
|
97.8
|
97.5
|
97.6
|
97.3
|
||||||||||||
|
Lead Recovery (%)
|
94.1
|
95.8
|
93.9
|
95.3
|
||||||||||||
|
Silver Produced (oz)
|
397,316
|
285,707
|
788,243
|
574,956
|
||||||||||||
|
Lead Produced (lb)
|
4,419,805
|
4,220,837
|
9,129,092
|
8,369,554
|
||||||||||||
|
Total Silver Equivalent Produced ($/oz)1,2
|
577,154
|
465,697
|
1,169,749
|
939,480
|
||||||||||||
|
Silver Sold (oz)
|
379,653
|
274,162
|
780,053
|
579,059
|
||||||||||||
|
Lead Sold (lb)
|
4,412,416
|
4,029,850
|
9,051,635
|
8,450,602
|
||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)2
|
$
|
16.28
|
$
|
18.46
|
$
|
16.49
|
$
|
18.41
|
||||||||
|
Cash Costs/Ag Oz Produced ($/oz)2
|
$
|
17.74
|
$
|
22.09
|
$
|
18.17
|
$
|
20.62
|
||||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)2
|
$
|
24.74
|
$
|
28.67
|
$
|
24.96
|
$
|
27.55
|
||||||||
|
All-In Sustaining Costs with Galena
|
||||||||||||||||
|
Recapitalization Plan/Ag Oz Produced ($/oz)2
|
$
|
28.89
|
$
|
36.75
|
$
|
30.30
|
$
|
34.25
|
||||||||
| 1 |
Throughout this MD&A, silver equivalent production was calculated based on all metals production at average realized silver, zinc, and lead prices during each respective period.
|
| 2 |
This is a supplementary or non-GAAP financial measure or ratio. See “Non-GAAP and Other Financial Measures” section for further information.
|
The Galena Complex increased silver production by over 39% in Q2-2023, producing approximately 397,000 ounces of silver and 4.4 million pounds of lead. These increases highlight the
continuing benefit and further potential of increased production following completion of the Galena Recapitalization Plan which includes rehabilitation of the Galena shaft. Cash costs decreased to $17.74 per ounce silver in Q2-2023 from $22.09
per ounce silver in Q2-2022 with a similar decrease in AISC due to the increase silver and lead production.
The Company began mining high-grade silver ore from the 3700 Level in mid-December 2022 and started development on the 4300 Level to access the Upper 360 Complex reserve area. The
4300 Level mining front will increase the number of producing stopes and boost production output to coincide with the completion of the Galena hoist project. The Galena hoist was operational by the end of Q2-2023. The Company is focused on
finishing the remaining shaft repair work, which is not expected to impact production guidance for the Galena Complex in 2023. The shaft was fully inspected with a LIDAR survey showing less than a few hundred feet of the shaft requiring more
extensive repair. These repairs are expected to be completed in Q4-2023. The Galena hoist will increase hoisting capacity at the Galena Complex, support plans to increase production and improve operational flexibility. Cash costs per ounce at the
Galena Complex are also anticipated to decrease with the completion of the Galena replacement hoist as the benefits of scaling economies on the existing cost base with higher grade silver ore are realized.
Results of Operations
Analysis of the three months ended June 30, 2023 vs. the three months ended June 30, 2022
The Company recorded a net loss of $7.1 million for the three months ended June 30, 2023 compared to a net loss of $9.3 million for the three months ended June 30, 2022. The decrease in net loss was
primarily attributable to higher net revenue ($4.2 million), and lower foreign exchange loss ($2.8 million), offset in part by higher cost of sales ($2.8 million), and lower gain on fair value of metals contract liability ($1.5 million), each of
which are described in more detail below.
Page 10
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Revenue increased by $4.2 million to $24.2
million for the three months ended June 30, 2023 from $19.9 million for the three months ended June 30, 2022. The increase was primarily due to $3.7 million higher revenue from the Galena Complex from higher silver and lead production during
the period, plus $0.6 million higher revenue from the Cosalá Operations from higher silver production during the period. These increases were offset by lower base metal production and lower realized zinc prices at the Cosalá Operations during
the period.
Cost of sales increased by $2.8 million to $20.5 million for the three months ended June 30, 2023 from $17.7 million
for the three months ended June 30, 2022. The increase was primarily due to $3.0 million and $0.8 million increase in cost of sales from the Cosalá Operations and Galena Complex, respectively, due to increase in operating costs due to global
inflation and the devaluation of the U.S. dollar relative to the Mexican peso, offset in part by $1.0 million decrease in inventory net realizable value write-downs at Relief Canyon recognized during the period.
Foreign exchange loss decreased by $2.8 million to a $0.9 million
gain for the three months ended June 30, 2023 from a $1.9 million loss for the three months ended June 30, 2022 mainly due to material changes in foreign exchange rates during the period impacting valuation of non-functional currency
instruments from the Company’s Canadian subsidiaries.
Gain on fair value of metals contract liability decreased by $1.5 million to a $1.7 million gain for the three months ended June 30, 2023 from a $3.2
million gain for the three months ended June 30, 2022 due to the change in fair value of the Company’s metals contract liability to Sandstorm during the period, primarily due to the increase in gold price forward curve compared to prior periods.
Analysis of the six months ended June 30, 2023 vs. the six months ended June 30, 2022
The Company recorded a net loss of $17.6 million for the six months ended June 30, 2023 compared to a net loss of $9.6 million for the six months ended June 30, 2022. The increase in net loss was primarily
attributable to higher cost of sales ($4.0 million), higher interest and financing expense ($2.0 million), lower gain on fair value of metals contract liability ($1.3 million), and prior period gain on government loan forgiveness ($4.3 million),
offset in part by lower depletion and amortization ($1.4 million), and lower foreign exchange loss ($1.7 million), each of which are described in more detail below.
Revenue decreased by $0.1 million to $46.3
million for the six months ended June 30, 2023 from $46.4 million for the six months ended June 30, 2022. The decrease was primarily due to $4.5 million lower revenue from the Cosalá Operations from lower realized metals prices during the
period and lower zinc and lead production from a 17-day maintenance shutdown, offset by $4.4 million higher revenue from the Galena Complex from higher silver and lead production during the period.
Cost of sales increased by $4.0 million to $38.3 million for the six months ended June 30, 2023 from $34.3 million
for the six months ended June 30, 2022. The increase was primarily due to $2.7 million and $2.0 million increase in cost of sales from the Cosalá Operations and Galena Complex, respectively, due to increase in operating costs, primarily related to
increases in employee costs and the USD/MXN exchange rate, offset in part by $0.8 million decrease in inventory net realizable value write-downs at Relief Canyon recognized during the period.
Depletion and amortization decreased by $1.4 million to $10.3 million for the six months ended June 30, 2023 from $11.7 million for the six months ended
June 30, 2022. The decrease was primarily due to $1.7 million decrease in depletion and amortization from the Relief Canyon mine following the write down of its net asset carrying amount in fiscal 2022.
Interest and financing expense increased by $2.0 million mainly due to higher financing expense and lease accretion recognized during the period.
Foreign exchange loss decreased by $1.7 million to a $0.5 million gain for the six months ended June 30, 2023 from a $1.2 million loss for the six months
ended June 30, 2022 mainly due to material changes in foreign exchange rates during the period impacting valuation of non-functional currency instruments from the Company’s Canadian subsidiaries.
Page 11
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Gain on fair value of metals contract liability decreased by $1.3 million to a $0.9 million loss for the six months ended June 30, 2023 from a $0.4 million
gain for the six months ended June 30, 2022 due to the change in fair value of the Company’s metals contract liability to Sandstorm during the period, primarily due to the increase in gold price forward curve compared to prior periods.
Gain on government loan forgiveness of $4.3 million was recorded during fiscal 2022 as forgiveness of the Company’s loan through the Paycheck Protection
Program from the U.S. CARES Act was confirmed during the period.
Summary of Quarterly Results
The following table presents a summary of the consolidated operating results for each of the most recent eight quarters ending with June 30, 2023.
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
|||||||||||||||||||||||||
|
2023
|
2023
|
2022
|
2022
|
2022
|
2022
|
2021
|
1,5
|
2021
|
1,5
|
|||||||||||||||||||||||
|
Revenue ($ M)
|
$
|
24.2
|
$
|
22.1
|
$
|
20.3
|
$
|
18.3
|
$
|
20.0
|
$
|
26.4
|
$
|
14.2
|
$
|
10.9
|
||||||||||||||||
|
Net Loss ($ M)
|
(7.1
|
)
|
(10.5
|
)
|
(11.0
|
)
|
(24.6
|
)
|
(9.3
|
)
|
(0.3
|
)
|
(32.4
|
)
|
(18.6
|
)
|
||||||||||||||||
|
Comprehensive Income (Loss) ($ M)
|
(6.5
|
)
|
(11.1
|
)
|
(14.3
|
)
|
(20.1
|
)
|
(7.0
|
)
|
2.8
|
(34.9
|
)
|
(19.1
|
)
|
|||||||||||||||||
|
Silver Produced (oz)2
|
573,382
|
499,677
|
377,353
|
331,304
|
299,228
|
300,316
|
61,001
|
-
|
||||||||||||||||||||||||
|
Zinc Produced (lb)2
|
9,574,772
|
7,224,532
|
10,369,679
|
9,434,924
|
9,941,949
|
9,573,243
|
4,164,185
|
-
|
||||||||||||||||||||||||
|
Lead Produced (lb)2
|
5,873,499
|
5,542,369
|
5,926,134
|
5,865,288
|
6,447,775
|
6,367,477
|
1,672,806
|
-
|
||||||||||||||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)2,3,4
|
$
|
13.12
|
$
|
11.43
|
$
|
9.20
|
$
|
10.33
|
$
|
9.76
|
$
|
10.26
|
$
|
7.47
|
-
|
|||||||||||||||||
|
Cash Costs/Ag Oz Produced ($/oz)2,3,4
|
$
|
10.00
|
$
|
11.18
|
$
|
3.62
|
$
|
10.01
|
$
|
(2.72
|
)
|
$
|
(9.55
|
)
|
$
|
(18.53
|
)
|
-
|
||||||||||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)2,3,4
|
$
|
16.78
|
$
|
16.87
|
$
|
14.89
|
$
|
18.66
|
$
|
5.37
|
$
|
(2.67
|
)
|
$
|
(14.67
|
)
|
-
|
|||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Current Assets (qtr. end) ($ M)
|
$
|
26.8
|
$
|
25.3
|
$
|
25.4
|
$
|
19.3
|
$
|
29.1
|
$
|
29.0
|
$
|
23.5
|
$
|
28.3
|
||||||||||||||||
|
Current Liabilities (qtr. end) ($ M)
|
44.9
|
45.0
|
42.1
|
36.0
|
38.1
|
33.5
|
45.6
|
38.2
|
||||||||||||||||||||||||
|
Working Capital (qtr. end) ($ M)
|
(18.1
|
)
|
(19.7
|
)
|
(16.7
|
)
|
(16.7
|
)
|
(9.0
|
)
|
(4.5
|
)
|
(22.1
|
)
|
(9.9
|
)
|
||||||||||||||||
|
Total Assets (qtr. end) ($ M)
|
$
|
193.2
|
$
|
192.0
|
$
|
190.8
|
$
|
186.5
|
$
|
209.4
|
$
|
215.8
|
$
|
213.4
|
$
|
205.5
|
||||||||||||||||
|
Total Liabilities (qtr. end) ($ M)
|
104.7
|
100.1
|
92.2
|
81.0
|
90.2
|
93.7
|
109.6
|
80.8
|
||||||||||||||||||||||||
|
Total Equity (qtr. end) ($ M)
|
88.5
|
91.9
|
98.6
|
105.5
|
119.2
|
122.1
|
103.8
|
124.7
|
| 1 |
Production results are nil for the Cosalá Operations from Q2-2020 to Q3-2021 due to it being placed under care and maintenance effective February 2020 as a result of the illegal blockade and exclude the Galena Complex due to suspension
of certain operating metrics during the Galena Recapitalization Plan implementation.
|
| 2 |
Throughout this MD&A, consolidated production results and consolidated operating metrics are based on the attributable ownership percentage of each operating segment (100% Cosalá Operations and 60% Galena Complex).
|
| 3 |
Costs per ounce measurements during Q4-2021 were based on operating results starting from December 1, 2021 following return to nameplate production of the Cosalá Operations. Throughout this MD&A, all other production results from the
Cosalá Operations during Q4-2021 were determined based on total production during the period.
|
| 4 |
This is a supplementary or non-GAAP financial measure or ratio. See “Non-GAAP and Other Financial Measures” section for further information.
|
| 5 |
Certain fiscal 2021 amounts were adjusted through changes in accounting policies. See “Accounting Standards and Pronouncements” section for further information.
|
Page 12
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Liquidity
The change in cash since December 31, 2022 can be summarized as follows (in millions of U.S. dollars):
|
Opening cash balance as at December 31, 2022
|
$
|
2.0
|
||
|
Cash generated from operations
|
0.6
|
|||
|
Expenditures on property, plant and equipment
|
(11.4
|
)
|
||
|
Lease payments
|
(2.0
|
)
|
||
|
Repayments to promissory note
|
(0.6
|
)
|
||
|
At-the-market offering
|
2.3
|
|||
|
Pre-payment facility
|
3.0
|
|||
|
Financing from RoyCap convertible debenture
|
6.0
|
|||
|
Metals contract liability
|
0.7
|
|||
|
Royalty payable
|
3.8
|
|||
|
Contribution from non-controlling interests
|
2.3
|
|||
|
Proceeds from disposal of assets
|
0.8
|
|||
|
Decrease in trade and other receivables
|
(1.5
|
)
|
||
|
Change in inventories
|
(1.5
|
)
|
||
|
Change in prepaid expenses
|
(0.2
|
)
|
||
|
Change in trade and other payables
|
(1.7
|
)
|
||
|
Change in foreign exchange rates
|
(1.0
|
)
|
||
|
Closing cash balance as at June 30, 2023
|
$
|
1.6
|
The Company’s cash and cash equivalents balance decreased from $2.0 million to $1.6 million since December 31, 2022 with a working capital deficit of $18.1 million. This minor decrease was mainly due to an increase
in cash from net proceeds received from the at-the-market offering, pre-payment facility, convertible debenture, royalty payable, and contribution from non-controlling interests, offset by expenditures of property, plant and equipment (including
the Galena hoist project), and increased operating costs. Current liabilities as at June 30, 2023 were $44.9 million which is $2.8 million higher than at December 31, 2022, principally due to an increase balance in the revolving pre-payment
facility.
The Company operates in a cyclical industry where cash flow has historically been correlated to market prices for commodities. Several material uncertainties cast substantial doubt upon the going concern assumption,
including cash flow positive production at the Cosalá Operations and Galena Complex, and ability to raise additional funds as necessary to fund these operations and meet obligations as they come due. The Company’s cash flow is dependent upon its
ability to achieve profitable operations, obtain adequate equity or debt financing, or, alternatively, dispose of its non-core properties on an advantageous basis to fund its near-term operations, development and exploration plans, while meeting
production targets at current commodity price levels.
Page 13
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
The Company’s financial instruments consist of cash, trade receivables, restricted cash, trade and other payables, and other long-term liabilities. The fair value of these financial instruments approximates their
carrying values, unless otherwise noted. The Company is not exposed to significant interest or credit risk arising from financial instruments. The majority of the funds of the Company are held in accounts at major banks in Canada, Mexico and the
United States.
The Company received confirmation via letters from the U.S. Internal Revenue Service that $5.3 million in refunds were approved through the Employee Retention Credit from the U.S. CARES Act to assist with payroll and
other expenses at the Galena Complex during the COVID-19 pandemic. $3.5 million in refunds was received in January 2023 with the remaining $1.8 million received in April 2023.
Post-Employment Benefit Obligations
The Company’s liquidity has been, and will continue to be, impacted by pension funding commitments as required by the terms of the defined benefit pension plans offered to both its hourly and salaried
workers at the Galena Complex (see Note 14 in the audited consolidated financial statements of the Company and the notes thereto for the year ended December 31, 2022). Both pension plans are under-funded due to actuarial losses incurred from
market conditions and changes in discount rates; the Company intends to fund to the minimum levels required by applicable law. The Company currently estimates total annual funding requirements for both Galena Complex pension plans to be
approximately $0.9 million per year for each of the next 5 years (excluding fiscal 2022 funding requirements paid in January 2023), with approximately $0.4 million funded during fiscal 2023 (as of August 14, 2023). Effects from market volatility
and interest rates may impact long term annual funding commitments.
The Company evaluates the pension funding status on an annual basis in order to update all material information in its assessment, including updated mortality rates, investment performance, discount rates,
contribution status among other information. The pension valuation was remeasured at the end of Q2-2023 and adjusted by approximately $1.3 million as a result of unrealized gains on returns net of increases to interest rates set by central banks
and governments globally. The Company expects to continue to review the pension valuation quarterly.
Page 14
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Capital Resources
The Company’s cash flow is dependent on delivery of its metal concentrates to market. The Company’s contracts with the concentrate purchasers provide for provisional payments based on timing of concentrate
deliveries. The Company has not had any problems collecting payments from concentrate purchasers in a reliable and timely manner and expects no such difficulties in the foreseeable future. However, this cash flow is dependent on continued mine
production which can be subject to interruption for various reasons including fluctuations in metal prices and concentrate shipment difficulties, and, in the case of Relief Canyon, the suspension of mining operations. Additionally, unforeseen
cessation in the counterparty’s capabilities could severely impact the Company’s capital resources.
The Company made capital expenditures of $11.4 million during the six months ended June 30, 2023 (2022: $8.0 million). Money was spent on purchase of property, plant and equipment mostly associated with the Galena
Complex Recapitalization Plan.
The following table sets out the Company’s contractual obligations as of June 30, 2023:
|
|
Less than
|
Over 5
|
||||||||||||||||||
|
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
|
Trade and other payables
|
$
|
25,810
|
$
|
25,810
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Pre-payment facility
|
3,000
|
$
|
3,000
|
-
|
-
|
-
|
||||||||||||||
|
Promissory note
|
1,875
|
625
|
1,250
|
-
|
-
|
|||||||||||||||
|
Interest on promissory note
|
126
|
88
|
38
|
-
|
-
|
|||||||||||||||
|
RoyCap convertible debenture
|
18,353
|
-
|
18,353
|
-
|
-
|
|||||||||||||||
|
Interest on RoyCap convertible debenture
|
2,022
|
1,856
|
166
|
-
|
-
|
|||||||||||||||
|
Government loan
|
222
|
222
|
-
|
-
|
-
|
|||||||||||||||
|
Royalty payable
|
5,749
|
2,475
|
3,274
|
-
|
-
|
|||||||||||||||
|
Metals contract liability
|
33,236
|
11,681
|
21,555
|
-
|
-
|
|||||||||||||||
|
Projected pension contributions
|
5,056
|
998
|
1,724
|
1,853
|
481
|
|||||||||||||||
|
Decommissioning provision
|
20,369
|
-
|
-
|
-
|
20,369
|
|||||||||||||||
|
Other long-term liabilities
|
1,726
|
-
|
751
|
374
|
601
|
|||||||||||||||
|
Total
|
$
|
117,544
|
$
|
46,755
|
$
|
47,111
|
$
|
2,227
|
$
|
21,451
|
||||||||||
1 – Minimum lease payments in respect to lease liabilities are included in trade and other payables and other long-term liabilities. Further details available in Note 19 of
the unaudited condensed interim consolidated financial statements for the six months ended June 30, 2023.
2 – Certain of these estimates are dependent on market conditions and assumed rates of return on assets. Therefore, the estimated obligation of the Company may vary over time.
Off-Balance Sheet Arrangements
As of the date of this filing, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition
of the Company including, without limitation, such considerations as liquidity and capital resources that have not previously been discussed.
Transactions with Related Parties
There were no related party transactions for the six months ended June 30, 2023.
Page 15
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Risk Factors
The Company’s condensed interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022 contain going concern disclosure
The Company’s condensed interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022 contain disclosure related to the Company’s ability to continue as a
going concern. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital, achieve sustainable revenues and profitable operations, and obtain the necessary financing to meet obligations
and repay liabilities when they become due. No assurances can be given that the Company will be successful in achieving these goals. If the Company is unable to achieve these goals, its ability to carry out and implement planned business
objectives and strategies will be significantly delayed, limited or may not occur. These circumstances cast substantial doubt on the Company’s ability to continue as a going concern and ultimately on the appropriateness of the use of the
accounting principles applicable to a going concern. The Company’s financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going
concern. There are no guarantees that access to equity and debt capital from public and private markets in Canada or the U.S. will be available to the Company.
Accounting Standards and Pronouncements
Accounting standards issued but not yet applied
The Company adopted amendments to IAS 12 - Income Taxes requiring companies to recognize deferred tax on transactions that give rise to equal amounts of taxable and deductible temporary differences on initial
recognition. The amendments were effective for accounting periods beginning on or after January 1, 2023 and adoption did not have a material impact on the Company’s financial statements.
Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. These standards are not expected to have a material impact on
the Company in the current or future reporting periods.
Financial Instruments
The Company may, from time to time, employ derivative financial instruments to manage exposure to fluctuations in foreign currency exchange rates and commodity prices.
As at June 30, 2023, the Company does not have any non-hedge foreign exchange or commodity forward contracts outstanding.
Page 16
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Capital Structure
The Company is authorized to issue an unlimited number of common and preferred shares, where each common share provides the holder with one vote while preferred shares are non-voting. As at June 30, 2023, there were
212,107,575 common shares and nil preferred shares issued and outstanding.
Controls and Procedures
Management is responsible for establishing and maintaining disclosure controls and procedures ("DC&P") and internal controls over financial reporting ("ICFR"), as those terms are defined in National Instrument
52‐109 ‐ Certification of Disclosure in Issuers’ Annual and Interim Filings ("NI 52‐109").
The Company’s DC&P are designed to ensure that all important information about the Company, including operating and financial activities, is communicated fully, accurately and in a timely way and that they
provide the Company with assurance that the financial reporting is accurate.
ICFR means a process by or under the supervision of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with IFRS.
As at June 30, 2023, the Company’s CEO and CFO have certified that the DC&P are effective and that during the period ended June 30, 2023, the Company did not make any material changes in the ICFR that materially
affected or are reasonably likely to materially affect the Company’s ICFR.
The internal controls are not expected to prevent and detect all misstatements due to error or fraud.
Technical Information
The scientific and technical information relating to the operation of the Company’s material operating mining properties contained herein has been reviewed and approved by Daren Dell, P.Eng., Chief Operating Officer
of the Company. Mr. Dell is a "qualified person" for the purposes of NI 43-101.
The Company’s current Annual Information Form and the NI 43-101 Technical Reports for its other material mineral properties, all of which are available on SEDAR+ at www.sedarplus.ca, contain further details regarding mineral reserve and mineral resource estimates, classification and reporting parameters, key assumptions and associated risks for each of the Company’s material mineral
properties, including a breakdown by category.
Page 17
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Non-GAAP and Other Financial Measures
The Company has included certain non-GAAP financial and other measures to supplement the Company’s consolidated financial statements, which are presented in accordance with IFRS, including the following:
|
●
|
average realized silver, zinc and lead prices;
|
|
●
|
cost of sales/Ag Eq oz produced;
|
|
●
|
cash costs/Ag oz produced;
|
|
●
|
all-in sustaining costs/Ag oz produced;
|
|
●
|
net cash generated from operating activities;
|
|
●
|
working capital; and
|
|
●
|
silver equivalent production (Ag Eq).
|
Management uses these measures, together with measures determined in accordance with IFRS, internally to better assess performance trends and understands that a number of investors, and others who follow the
Company’s performance, also assess performance in this manner. These non-GAAP and other financial measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Non-GAAP and other
financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may differ from methods used by other companies with similar descriptions. Management's determination of the components of non-GAAP financial
measures and other financial measures are evaluated on a periodic basis influenced by new items and transactions, a review of investor uses and new regulations as applicable. Any changes to the measures are duly noted and retrospectively applied as
applicable. Subtotals and per unit measures may not calculate based on amounts presented in the following tables due to rounding.
Average Realized Silver, Zinc and Lead Prices
The Company uses the financial measures "average realized silver price", "average realized zinc price” and “average realized lead price” because it understands that in addition to conventional measures prepared in
accordance with IFRS, certain investors and analysts use this information to evaluate the Company’s performance vis-à-vis average market prices of metals for the period. The presentation of average realized metal prices is not meant to be a
substitute for the revenue information presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measure.
Average realized metal prices represent the sale price of the underlying metal excluding unrealized mark-to-market gains and losses on provisional pricing and concentrate treatment and refining charges. Average
realized silver, zinc and lead prices are calculated as the revenue related to each of the metals sold, e.g. revenue from sales of silver divided by the quantity of ounces sold.
Page 18
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
|
Reconciliation of Average Realized Silver, Zinc and Lead Prices
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Gross silver sales revenue ('000)
|
$
|
17,269
|
$
|
8,748
|
$
|
31,675
|
$
|
18,995
|
||||||||
|
Payable metals and fixed pricing adjustments ('000)
|
(87
|
)
|
25
|
(86
|
)
|
10
|
||||||||||
|
Payable silver sales revenue ('000)
|
$
|
17,182
|
$
|
8,773
|
$
|
31,589
|
$
|
19,005
|
||||||||
|
Divided by silver sold (oz)
|
728,818
|
390,726
|
1,367,417
|
818,900
|
||||||||||||
|
Average realized silver price ($/oz)
|
$
|
23.58
|
$
|
22.45
|
$
|
23.10
|
$
|
23.21
|
||||||||
|
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Gross zinc sales revenue ('000)
|
$
|
10,071
|
$
|
15,984
|
$
|
20,026
|
$
|
31,584
|
||||||||
|
Payable metals and fixed pricing adjustments ('000)
|
(24
|
)
|
(115
|
)
|
(15
|
)
|
(102
|
)
|
||||||||
|
Payable zinc sales revenue ('000)
|
$
|
10,047
|
$
|
15,869
|
$
|
20,011
|
$
|
31,482
|
||||||||
|
Divided by zinc sold (lb)
|
8,955,472
|
9,280,165
|
15,998,450
|
18,428,995
|
||||||||||||
|
Average realized zinc price ($/lb)
|
$
|
1.12
|
$
|
1.71
|
$
|
1.25
|
$
|
1.71
|
||||||||
|
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Gross lead sales revenue ('000)
|
$
|
7,192
|
$
|
7,333
|
$
|
14,189
|
$
|
15,999
|
||||||||
|
Payable metals and fixed pricing adjustments ('000)
|
4
|
(49
|
)
|
11
|
(56
|
)
|
||||||||||
|
Payable lead sales revenue ('000)
|
$
|
7,196
|
$
|
7,284
|
$
|
14,200
|
$
|
15,943
|
||||||||
|
Divided by lead sold (lb)
|
7,564,855
|
7,600,200
|
14,816,317
|
15,785,907
|
||||||||||||
|
Average realized lead price ($/lb)
|
$
|
0.95
|
$
|
0.96
|
$
|
0.96
|
$
|
1.01
|
||||||||
Cost of Sales/Ag Eq Oz Produced
The Company uses the financial measure “Cost of Sales/Ag Eq Oz Produced” because it understands that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts use this
information to evaluate the Company’s underlying cost of operations. Silver equivalent production are based on all metals production at average realized silver, zinc, and lead prices during each respective period, except as otherwise noted.
|
Reconciliation of Consolidated Cost of Sales/Ag Eq Oz Produced1
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cost of sales ('000)
|
$
|
20,357
|
$
|
16,552
|
$
|
37,836
|
$
|
33,106
|
||||||||
|
Less non-controlling interests portion ('000)
|
(3,759
|
)
|
(3,440
|
)
|
(7,718
|
)
|
(6,918
|
)
|
||||||||
|
Attributable cost of sales ('000)
|
16,598
|
13,112
|
30,118
|
26,188
|
||||||||||||
|
Divided by silver equivalent produced (oz)
|
1,264,646
|
1,343,062
|
2,447,771
|
2,617,532
|
||||||||||||
|
Cost of sales/Ag Eq oz produced ($/oz)
|
$
|
13.12
|
$
|
9.76
|
$
|
12.30
|
$
|
10.00
|
||||||||
|
Reconciliation of Cosalá Operations Cost of Sales/Ag Eq Oz Produced
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cost of sales ('000)
|
$
|
10,959
|
$
|
7,953
|
$
|
18,541
|
$
|
15,812
|
||||||||
|
Divided by silver equivalent produced (oz)
|
918,354
|
1,063,644
|
1,745,922
|
2,053,844
|
||||||||||||
|
Cost of sales/Ag Eq oz produced ($/oz)
|
$
|
11.93
|
$
|
7.48
|
$
|
10.62
|
$
|
7.70
|
||||||||
Page 19
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
|
Reconciliation of Galena Complex Cost of Sales/Ag Eq Oz Produced
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cost of sales ('000)
|
$
|
9,398
|
$
|
8,599
|
$
|
19,295
|
$
|
17,294
|
||||||||
|
Divided by silver equivalent produced (oz)
|
577,154
|
465,697
|
1,169,749
|
939,480
|
||||||||||||
|
Cost of sales/Ag Eq oz produced ($/oz)
|
$
|
16.28
|
$
|
18.46
|
$
|
16.49
|
$
|
18.41
|
||||||||
| 1 |
Throughout this MD&A, consolidated production results and consolidated operating metrics are based on the attributable ownership percentage of each operating segment (100% Cosalá Operations and 60% Galena Complex).
|
Cash Costs and Cash Costs/Ag Oz Produced
The Company uses the financial measures “Cash Costs” and “Cash Costs/Ag Oz Produced” in accordance with measures widely reported in the silver mining industry as a benchmark for performance measurement and because it
understands that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts use this information to evaluate the Company’s underlying cash costs of operations.
Cash costs are determined on a mine-by-mine basis and include mine site operating costs such as: mining, processing, administration, production taxes and royalties which are not based on sales or taxable income
calculations. Non-cash costs consist of: non-cash related charges to cost of sales including inventory movements, write-downs to net realizable value of concentrates, ore stockpiles, and spare parts and supplies, and employee profit share accruals.
|
Reconciliation of Consolidated Cash Costs/Ag Oz Produced1
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cost of sales ('000)
|
$
|
20,357
|
$
|
16,552
|
$
|
37,836
|
$
|
33,106
|
||||||||
|
Less non-controlling interests portion ('000)
|
(3,759
|
)
|
(3,440
|
)
|
(7,718
|
)
|
(6,918
|
)
|
||||||||
|
Attributable cost of sales ('000)
|
16,598
|
13,112
|
30,118
|
26,188
|
||||||||||||
|
Non-cash costs ('000)
|
(822
|
)
|
71
|
(543
|
)
|
(1,725
|
)
|
|||||||||
|
Direct mining costs ('000)
|
$
|
15,776
|
$
|
13,183
|
$
|
29,575
|
$
|
24,463
|
||||||||
|
Smelting, refining and royalty expenses ('000)
|
5,867
|
6,447
|
11,109
|
12,074
|
||||||||||||
|
Less by-product credits ('000)
|
(15,901
|
)
|
(20,440
|
)
|
(29,358
|
)
|
(40,215
|
)
|
||||||||
|
Cash costs ('000)
|
$
|
5,742
|
$
|
(810
|
)
|
$
|
11,326
|
$
|
(3,678
|
)
|
||||||
|
Divided by silver produced (oz)
|
573,382
|
299,228
|
1,073,059
|
599,544
|
||||||||||||
|
Cash costs/Ag oz produced ($/oz)
|
$
|
10.00
|
$
|
(2.72
|
)
|
$
|
10.55
|
$
|
(6.13
|
)
|
||||||
|
Reconciliation of Cosalá Operations Cash Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cost of sales ('000)
|
$
|
10,959
|
$
|
7,953
|
$
|
18,541
|
$
|
15,812
|
||||||||
|
Non-cash costs ('000)
|
(793
|
)
|
20
|
(501
|
)
|
(1,421
|
)
|
|||||||||
|
Direct mining costs ('000)
|
$
|
10,166
|
$
|
7,973
|
$
|
18,040
|
$
|
14,391
|
||||||||
|
Smelting, refining and royalty expenses ('000)
|
4,839
|
5,485
|
9,027
|
10,184
|
||||||||||||
|
Less by-product credits ('000)
|
(13,493
|
)
|
(18,055
|
)
|
(24,332
|
)
|
(35,366
|
)
|
||||||||
|
Cash costs ('000)
|
$
|
1,512
|
$
|
(4,597
|
)
|
$
|
2,735
|
$
|
(10,791
|
)
|
||||||
|
Divided by silver produced (oz)
|
334,992
|
127,803
|
600,113
|
254,570
|
||||||||||||
|
Cash costs/Ag oz produced ($/oz)
|
$
|
4.51
|
$
|
(35.97
|
)
|
$
|
4.56
|
$
|
(42.39
|
)
|
||||||
Page 20
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
|
Reconciliation of Galena Complex Cash Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cost of sales ('000)
|
$
|
9,398
|
$
|
8,599
|
$
|
19,295
|
$
|
17,294
|
||||||||
|
Non-cash costs ('000)
|
(49
|
)
|
85
|
(70
|
)
|
(507
|
)
|
|||||||||
|
Direct mining costs ('000)
|
$
|
9,349
|
$
|
8,684
|
$
|
19,225
|
$
|
16,787
|
||||||||
|
Smelting, refining and royalty expenses ('000)
|
1,713
|
1,603
|
3,470
|
3,150
|
||||||||||||
|
Less by-product credits ('000)
|
(4,012
|
)
|
(3,975
|
)
|
(8,376
|
)
|
(8,081
|
)
|
||||||||
|
Cash costs ('000)
|
$
|
7,050
|
$
|
6,312
|
$
|
14,319
|
$
|
11,856
|
||||||||
|
Divided by silver produced (oz)
|
397,316
|
285,707
|
788,243
|
574,956
|
||||||||||||
|
Cash costs/Ag oz produced ($/oz)
|
$
|
17.74
|
$
|
22.09
|
$
|
18.17
|
$
|
20.62
|
||||||||
| 1 |
Throughout this MD&A, consolidated production results and consolidated operating metrics are based on the attributable ownership percentage of each operating segment (100% Cosalá Operations and 60% Galena Complex).
|
All-In Sustaining Costs and All-In Sustaining Costs/Ag Oz Produced
The Company uses the financial measures “All-In Sustaining Costs” and “All-In Sustaining Costs/Ag Oz Produced” in accordance with measures widely reported in the silver mining industry as a benchmark for performance
measurement and because it understands that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts use this information to evaluate the Company’s total costs of producing silver from operations.
All-in sustaining costs is cash costs plus all development, capital expenditures, and exploration spending, excluding costs related to the Galena Recapitalization Plan implementation.
|
Reconciliation of Consolidated All-In Sustaining Costs/Ag Oz Produced1
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cash costs ('000)
|
$
|
5,742
|
$
|
(810
|
)
|
$
|
11,326
|
$
|
(3,677
|
)
|
||||||
|
Capital expenditures ('000)
|
3,205
|
2,138
|
5,624
|
3,761
|
||||||||||||
|
Exploration costs ('000)
|
672
|
278
|
1,099
|
722
|
||||||||||||
|
All-in sustaining costs ('000)
|
$
|
9,619
|
$
|
1,606
|
$
|
18,049
|
$
|
806
|
||||||||
|
Divided by silver produced (oz)
|
573,382
|
299,228
|
1,073,059
|
599,544
|
||||||||||||
|
All-in sustaining costs/Ag oz produced ($/oz)
|
$
|
16.78
|
$
|
5.37
|
$
|
16.82
|
$
|
1.34
|
||||||||
|
Reconciliation of Cosalá Operations All-In Sustaining Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2023
|
YTD-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cash costs ('000)
|
$
|
1,512
|
$
|
(4,597
|
)
|
$
|
2,735
|
$
|
(10,791
|
)
|
||||||
|
Capital expenditures ('000)
|
1,896
|
1,022
|
3,079
|
1,393
|
||||||||||||
|
Exploration costs ('000)
|
312
|
266
|
431
|
700
|
||||||||||||
|
All-in sustaining costs ('000)
|
$
|
3,720
|
$
|
(3,309
|
)
|
$
|
6,245
|
$
|
(8,698
|
)
|
||||||
|
Divided by silver produced (oz)
|
334,992
|
127,803
|
600,113
|
254,570
|
||||||||||||
|
All-in sustaining costs/Ag oz produced ($/oz)
|
$
|
11.10
|
$
|
(25.89
|
)
|
$
|
10.41
|
$
|
(34.17
|
)
|
||||||
Page 21
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
|
Reconciliation of Galena Complex All-In Sustaining Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2023
|
YTD-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cash costs ('000)
|
$
|
7,050
|
$
|
6,312
|
$
|
14,319
|
$
|
11,856
|
||||||||
|
Capital expenditures ('000)
|
2,181
|
1,860
|
4,241
|
3,946
|
||||||||||||
|
Exploration costs ('000)
|
599
|
20
|
1,113
|
37
|
||||||||||||
|
All-in sustaining costs ('000)
|
$
|
9,830
|
$
|
8,192
|
$
|
19,673
|
$
|
15,839
|
||||||||
|
Galena Complex Recapitalization Plan costs ('000)
|
1,648
|
2,308
|
4,213
|
3,855
|
||||||||||||
|
All-in sustaining costs with Galena Recapitalization Plan ('000)
|
$
|
11,478
|
$
|
10,500
|
$
|
23,886
|
$
|
19,694
|
||||||||
|
Divided by silver produced (oz)
|
397,316
|
285,707
|
788,243
|
574,956
|
||||||||||||
|
All-in sustaining costs/Ag oz produced ($/oz)
|
$
|
24.74
|
$
|
28.67
|
$
|
24.96
|
$
|
27.55
|
||||||||
|
All-in sustaining costs with Galena Recapitalization Plan/Ag oz produced ($/oz)
|
$
|
28.89
|
$
|
36.75
|
$
|
30.30
|
$
|
34.25
|
||||||||
| 1 |
Throughout this MD&A, consolidated production results and consolidated operating metrics are based on the attributable ownership percentage of each operating segment (100% Cosalá Operations and 60% Galena Complex).
|
Net Cash Generated from Operating Activities
The Company uses the financial measure “net cash generated from operating activities” because it understands that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts
use this information to evaluate the Company’s liquidity, operational efficiency, and short-term financial health.
This is a financial measure disclosed in the Company’s statements of cash flows determined as cash generated from operating activities, after changes in non-cash working capital items.
|
Reconciliation of Net Cash Generated from Operating Activities
|
||||||||||||||||
|
|
Q2-2023
|
Q2-2022
|
YTD-2023
|
YTD-2022
|
||||||||||||
|
Cash generated from (used in) operating activities ('000)
|
$
|
642
|
$
|
(2,312
|
)
|
$
|
550
|
$
|
4,137
|
|||||||
|
Changes in non-cash working capital items ('000)
|
(6,586
|
)
|
9,284
|
(4,834
|
)
|
1,012
|
||||||||||
|
Net cash generated from (used in) operating activities ('000)
|
$
|
(5,944
|
)
|
$
|
6,972
|
$
|
(4,284
|
)
|
$
|
5,149
|
||||||
Working Capital
The Company uses the financial measure “working capital” because it understands that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts use this information to
evaluate the Company’s liquidity, operational efficiency, and short-term financial health.
Working capital is the excess of current assets over current liabilities.
|
Reconciliation of Working Capital
|
||||||||
|
|
Q2-2023
|
Q2-2022
|
||||||
|
Current Assets ('000)
|
$
|
26,768
|
$
|
29,091
|
||||
|
Less current liabilities ('000)
|
(44,909
|
)
|
(38,061
|
)
|
||||
|
Working capital ('000)
|
$
|
(18,141
|
)
|
$
|
(8,970
|
)
|
||
Page 22
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2023
Supplementary Financial Measures
The Company references certain supplementary financial measures that are not defined terms under IFRS to assess performance because it believes they provide useful supplemental information to investors.
Silver Equivalent Production
References to silver equivalent production are based on all metals production at average realized silver, zinc, and lead prices during each respective period, except as otherwise
noted.
Page 23
| Exhibit 99.3 |
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Darren Blasutti, Chief Executive Officer of Americas Gold and Silver Corporation, certify the following:
|
1.
|
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Americas Gold and Silver Corporation (the “issuer”) for the
interim period ended Jume 30, 2023.
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2.
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No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to
be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
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3.
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Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material
respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
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4.
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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.
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5.
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Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
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(a)
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designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
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(i)
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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
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(ii)
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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
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(b)
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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.
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5.1
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Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Committee of Sponsoring Organizations framework.
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5.2
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ICFR – material weakness relating to design: N/A
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5.3
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Limitation on scope of design:
The issuer has disclosed in its interim MD&A
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(a) the fact that the issuer’s other certifying officer(s) and I have limited the scope of our
design of DC&P and ICFR to exclude controls, policies and procedures of
(i) N/A;
(ii) N/A; or
(iii) a business that the issuer acquired not more than 365 days before the last day
of the period covered by the interim filings; and
(b) summary financial information about the proportionately consolidated entity, special
purpose entity or business that the issuer acquired that has been proportionately
consolidated or consolidated in the issuer’s financial statements.
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6.
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Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and
ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
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Date: August 14, 2023
“Darren Blasutti”
Darren Blasutti
President & Chief Executive Officer
| Exhibit 99.4 |
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Warren Varga, Chief Financial Officer of Americas Gold and Silver Corporation, certify the following:
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1.
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Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Americas Gold and Silver Corporation (the “issuer”) for the
interim period ended June 30, 2023.
|
|
2.
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to
be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
|
3.
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material
respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
|
4.
|
Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as
those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
|
|
5.
|
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
|
|
(a)
|
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
|
(i)
|
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
|
(ii)
|
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported
within the time periods specified in securities legislation; and
|
|
(b)
|
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the issuer’s GAAP.
|
|
5.1
|
Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Committee of Sponsoring Organizations framework.
|
|
5.2
|
ICFR – material weakness relating to design: N/A
|
|
5.3
|
Limitation on scope of design:
The issuer has disclosed in its interim MD&A
|
(a) the fact that the issuer’s other certifying officer(s) and I have limited the scope of our
design of DC&P and ICFR to exclude controls, policies and procedures of
(i) N/A;
(ii) N/A; or
(iii) a business that the issuer acquired not more than 365 days before the last day
of the period covered by the interim filings; and
(b) summary financial information about the proportionately consolidated entity, special
purpose entity or business that the issuer acquired that has been proportionately
consolidated or consolidated in the issuer’s financial statements.
|
6.
|
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and
ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
|
Date: August 14 , 2023
“Warren Varga”
Warren Varga
Chief Financial Officer