Americas Gold & Silver Corp 6-K, filed Aug 12, 2022
Americas Gold & Silver Corp (USAS)
6-K
2022-08-12
For: 2022-08-12
View Original
Added on
July 07, 2026
About this 6-K
Americas Gold & Silver Corp filed this 6-K on August 12, 2022.
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 2022
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 |
|
| /s/ Peter McRae | |
|
Date: August 12, 2022
|
Peter McRae
|
| Chief Legal Officer and Senior Vice President Corporate Affairs |
INDEX TO EXHIBITS
| Quarterly Financial Statements | |
|
|
|
| Quarterly Management Discussion and Analysis | |
|
|
|
| Certification of Interim Filings - CEO | |
|
|
|
| Certification of Interim Filings - CFO |
Exhibit 99.1
AMERICAS GOLD AND SILVER CORPORATION
Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2022 and 2021
(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
|
2022
|
2021
|
||||||
|
Assets
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
$
|
8,824
|
$
|
2,900
|
||||
|
Trade and other receivables (Note 5)
|
4,670
|
8,208
|
||||||
|
Inventories (Note 6)
|
11,904
|
10,009
|
||||||
|
Prepaid expenses
|
3,693
|
2,426
|
||||||
|
|
$
|
29,091
|
$
|
23,543
|
||||
|
Non-current assets
|
||||||||
|
Restricted cash
|
4,083
|
4,078
|
||||||
|
Inventories (Note 6)
|
4,181
|
7,900
|
||||||
|
Property, plant and equipment (Note 7)
|
172,048
|
177,913
|
||||||
|
Total assets
|
$
|
209,403
|
$
|
213,434
|
||||
|
|
||||||||
|
Liabilities
|
||||||||
|
Current liabilities
|
||||||||
|
Trade and other payables
|
$
|
21,299
|
$
|
20,576
|
||||
|
Metals contract liability (Note 8)
|
10,785
|
11,971
|
||||||
|
Derivative instruments (Note 9)
|
2,005
|
2,162
|
||||||
|
Glencore pre-payment facility
|
-
|
1,451
|
||||||
|
Promissory note
|
3,750
|
5,000
|
||||||
|
Government loan (Note 10)
|
222
|
4,499
|
||||||
|
|
38,061
|
45,659
|
||||||
|
Non-current liabilities
|
||||||||
|
Other long-term liabilities
|
1,321
|
1,543
|
||||||
|
Metals contract liability (Note 8)
|
24,162
|
28,934
|
||||||
|
RoyCap convertible debenture (Note 9)
|
8,638
|
8,665
|
||||||
|
Post-employment benefit obligations
|
6,286
|
10,866
|
||||||
|
Decommissioning provision
|
11,465
|
13,444
|
||||||
|
Deferred tax liabilities (Note 17)
|
259
|
488
|
||||||
|
Total liabilities
|
90,192
|
109,599
|
||||||
|
|
||||||||
|
Equity
|
||||||||
|
Share capital (Note 11)
|
439,269
|
423,098
|
||||||
|
Equity reserve
|
52,556
|
51,088
|
||||||
|
Foreign currency translation reserve
|
7,229
|
6,833
|
||||||
|
Deficit
|
(393,879
|
)
|
(387,949
|
)
|
||||
|
Attributable to shareholders of the Company
|
105,175
|
93,070
|
||||||
|
Non-controlling interests (Note 13)
|
14,036
|
10,765
|
||||||
|
Total equity
|
$
|
119,211
|
$
|
103,835
|
||||
|
|
||||||||
|
Total liabilities and equity
|
$
|
209,403
|
$
|
213,434
|
||||
Contingencies (Note 20)
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 loss and comprehensive 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,
|
||||||||||||
|
|
2022
|
2021
|
2022
|
2021Revised (1)
|
||||||||||||
|
|
||||||||||||||||
|
Revenue (Note 14)
|
$
|
19,948
|
$
|
9,515
|
$
|
46,384
|
$
|
19,948
|
||||||||
|
|
||||||||||||||||
|
Cost of sales (Note 15)
|
(17,718
|
)
|
(16,776
|
)
|
(34,337
|
)
|
(54,507
|
)
|
||||||||
|
Depletion and amortization (Note 7)
|
(5,959
|
)
|
(3,376
|
)
|
(11,719
|
)
|
(7,301
|
)
|
||||||||
|
Care and maintenance costs
|
(1,011
|
)
|
(2,167
|
)
|
(2,334
|
)
|
(4,300
|
)
|
||||||||
|
Corporate general and administrative (Note 16)
|
(2,051
|
)
|
(2,341
|
)
|
(4,700
|
)
|
(4,460
|
)
|
||||||||
|
Exploration costs
|
(914
|
)
|
(999
|
)
|
(2,000
|
)
|
(2,507
|
)
|
||||||||
|
Accretion on decommissioning provision
|
(102
|
)
|
(55
|
)
|
(186
|
)
|
(98
|
)
|
||||||||
|
Interest and financing expense
|
(1,078
|
)
|
(1,029
|
)
|
(2,105
|
)
|
(1,755
|
)
|
||||||||
|
Foreign exchange loss
|
(1,903
|
)
|
(444
|
)
|
(1,193
|
)
|
(665
|
)
|
||||||||
|
Impairment to property, plant and equipment (Note 7)
|
-
|
-
|
-
|
(55,623
|
)
|
|||||||||||
|
Gain on metals contract liability (Note 8)
|
3,186
|
-
|
434
|
-
|
||||||||||||
|
Other gain (loss) on derivatives (Note 9)
|
(101
|
)
|
(52
|
)
|
(79
|
)
|
1,767
|
|||||||||
|
Gain on government loan forgiveness (Note 10)
|
-
|
-
|
4,277
|
-
|
||||||||||||
|
Loss before income taxes
|
(7,703
|
)
|
(17,724
|
)
|
(7,558
|
)
|
(109,501
|
)
|
||||||||
|
Income tax expense (Note 17)
|
(1,575
|
)
|
(58
|
)
|
(2,016
|
)
|
(81
|
)
|
||||||||
|
Net loss
|
$
|
(9,278
|
)
|
$
|
(17,782
|
)
|
$
|
(9,574
|
)
|
$
|
(109,582
|
)
|
||||
|
|
||||||||||||||||
|
Attributable to:
|
||||||||||||||||
|
Shareholders of the Company
|
$
|
(7,483
|
)
|
$
|
(16,992
|
)
|
$
|
(8,895
|
)
|
$
|
(108,119
|
)
|
||||
|
Non-controlling interests (Note 13)
|
(1,795
|
)
|
(790
|
)
|
(679
|
)
|
(1,463
|
)
|
||||||||
|
Net loss
|
$
|
(9,278
|
)
|
$
|
(17,782
|
)
|
$
|
(9,574
|
)
|
$
|
(109,582
|
)
|
||||
|
|
||||||||||||||||
|
Other comprehensive income (loss)
|
||||||||||||||||
|
Items that will not be reclassified to net loss
|
||||||||||||||||
|
Remeasurement of post-employment benefit obligations
|
$
|
1,943
|
$
|
(1,496
|
)
|
$
|
4,941
|
$
|
3,025
|
|||||||
|
Items that may be reclassified subsequently to net loss
|
||||||||||||||||
|
Foreign currency translation reserve
|
251
|
566
|
396
|
767
|
||||||||||||
|
Other comprehensive income (loss)
|
2,194
|
(930
|
)
|
5,337
|
3,792
|
|||||||||||
|
Comprehensive loss
|
$
|
(7,084
|
)
|
$
|
(18,712
|
)
|
$
|
(4,237
|
)
|
$
|
(105,790
|
)
|
||||
|
|
||||||||||||||||
|
Attributable to:
|
||||||||||||||||
|
Shareholders of the Company
|
$
|
(6,066
|
)
|
$
|
(17,324
|
)
|
$
|
(5,534
|
)
|
$
|
(105,537
|
)
|
||||
|
Non-controlling interests (Note 13)
|
(1,018
|
)
|
(1,388
|
)
|
1,297
|
(253
|
)
|
|||||||||
|
Comprehensive loss
|
$
|
(7,084
|
)
|
$
|
(18,712
|
)
|
$
|
(4,237
|
)
|
$
|
(105,790
|
)
|
||||
|
|
||||||||||||||||
|
Loss per share attributable to shareholders of the Company
|
||||||||||||||||
|
Basic and diluted
|
(0.04
|
)
|
(0.13
|
)
|
(0.05
|
)
|
(0.83
|
)
|
||||||||
|
|
||||||||||||||||
|
Weighted average number of common shares
|
||||||||||||||||
|
outstanding
|
||||||||||||||||
|
Basic and diluted (Note 12)
|
180,795,755
|
133,928,463
|
176,871,371
|
130,618,095
|
||||||||||||
|
(1)
|
Certain fiscal 2021 amounts were adjusted through changes in accounting policies (see Note 3)
|
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, 2022 and 2021
(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, 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
|
||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Balance at January 1, 2021
|
117,975
|
$
|
350,707
|
$
|
42,378
|
$
|
6,842
|
$
|
(230,253
|
)
|
$
|
169,674
|
$
|
11,488
|
$
|
181,162
|
||||||||||||||||
|
Net loss for the period
|
-
|
-
|
-
|
-
|
(108,119
|
)
|
(108,119
|
)
|
(1,463
|
)
|
(109,582
|
)
|
||||||||||||||||||||
|
Other comprehensive income for the period
|
-
|
-
|
-
|
767
|
1,815
|
2,582
|
1,210
|
3,792
|
||||||||||||||||||||||||
|
Contribution from non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
227
|
227
|
||||||||||||||||||||||||
|
At-the-market offering
|
3,833
|
6,014
|
-
|
-
|
-
|
6,014
|
-
|
6,014
|
||||||||||||||||||||||||
|
January bought deal public offering
|
10,253
|
24,987
|
-
|
-
|
-
|
24,987
|
-
|
24,987
|
||||||||||||||||||||||||
|
Conversion of Sandstorm convertible debenture
|
4,673
|
12,844
|
-
|
-
|
-
|
12,844
|
-
|
12,844
|
||||||||||||||||||||||||
|
Conversion option of RoyCap convertible debenture
|
-
|
-
|
2,366
|
-
|
-
|
2,366
|
-
|
2,366
|
||||||||||||||||||||||||
|
Common shares issued
|
303
|
735
|
-
|
-
|
-
|
735
|
-
|
735
|
||||||||||||||||||||||||
|
Share-based payments
|
-
|
-
|
1,717
|
-
|
-
|
1,717
|
-
|
1,717
|
||||||||||||||||||||||||
|
Exercise of options
|
90
|
240
|
(68
|
)
|
-
|
-
|
172
|
-
|
172
|
|||||||||||||||||||||||
|
Balance at June 30, 2021
|
137,127
|
$
|
395,527
|
$
|
46,393
|
$
|
7,609
|
$
|
(336,557
|
)
|
$
|
112,972
|
$
|
11,462
|
$
|
124,434
|
||||||||||||||||
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, 2022 and 2021
(In thousands of U.S. dollars, unaudited)
|
|
June 30,
|
June 30,
|
||||||
|
|
2022
|
2021
|
||||||
|
Cash flow generated from (used in)
|
||||||||
|
|
||||||||
|
Operating activities
|
||||||||
|
Net loss for the period
|
$
|
(9,574
|
)
|
$
|
(109,582
|
)
|
||
|
Adjustments for the following items:
|
||||||||
|
Depletion and amortization
|
11,719
|
7,301
|
||||||
|
Income tax expense
|
2,016
|
81
|
||||||
|
Accretion and decommissioning costs
|
186
|
98
|
||||||
|
Share-based payments
|
1,717
|
1,717
|
||||||
|
Provision on other long-term liabilities
|
27
|
22
|
||||||
|
Deferred costs on convertible debenture
|
-
|
47
|
||||||
|
Deferred revenue
|
-
|
(1,719
|
)
|
|||||
|
Interest and financing expense
|
860
|
997
|
||||||
|
Net charges on post-employment benefit obligations
|
361
|
(646
|
)
|
|||||
|
Inventory write-downs
|
1,457
|
34,928
|
||||||
|
Impairment to property, plant and equipment
|
-
|
55,623
|
||||||
|
Gain on metals contract liability
|
(434
|
)
|
-
|
|||||
|
Other loss (gain) on derivatives
|
79
|
(1,663
|
)
|
|||||
|
Gain on government loan forgiveness
|
(4,277
|
)
|
-
|
|||||
|
|
4,137
|
(12,796
|
)
|
|||||
|
Changes in non-cash working capital items:
|
||||||||
|
Trade and other receivables
|
3,538
|
(727
|
)
|
|||||
|
Inventories
|
(1,135
|
)
|
(17,445
|
)
|
||||
|
Prepaid expenses
|
(1,267
|
)
|
(367
|
)
|
||||
|
Trade and other payables
|
(124
|
)
|
(569
|
)
|
||||
|
Net cash generated from (used in) operating activities
|
5,149
|
(31,904
|
)
|
|||||
|
|
||||||||
|
Investing activities
|
||||||||
|
Expenditures on property, plant and equipment
|
(7,965
|
)
|
(5,363
|
)
|
||||
|
Development costs on Relief Canyon Mine
|
-
|
(1,432
|
)
|
|||||
|
Net cash used in investing activities
|
(7,965
|
)
|
(6,795
|
)
|
||||
|
|
||||||||
|
Financing activities
|
||||||||
|
Repayments to Glencore pre-payment facility
|
(1,451
|
)
|
(750
|
)
|
||||
|
Lease payments
|
(1,701
|
)
|
(1,623
|
)
|
||||
|
Repayments to promissory note
|
(1,250
|
)
|
-
|
|||||
|
At-the-market offerings
|
10,164
|
6,014
|
||||||
|
January bought deal public offering
|
-
|
24,987
|
||||||
|
Sandstorm private placements
|
4,630
|
-
|
||||||
|
Financing from RoyCap convertible debenture
|
-
|
9,939
|
||||||
|
Metals contract liability
|
(4,079
|
)
|
-
|
|||||
|
Loan payable
|
-
|
(4,616
|
)
|
|||||
|
Proceeds from exercise of options
|
-
|
172
|
||||||
|
Contribution from non-controlling interests
|
1,974
|
227
|
||||||
|
Net cash generated from financing activities
|
8,287
|
34,350
|
||||||
|
|
||||||||
|
Effect of foreign exchange rate changes on cash
|
453
|
766
|
||||||
|
Increase (decrease) in cash and cash equivalents
|
5,924
|
(3,583
|
)
|
|||||
|
Cash and cash equivalents, beginning of period
|
2,900
|
4,705
|
||||||
|
Cash and cash equivalents, end of period
|
$
|
8,824
|
$
|
1,122
|
||||
|
|
||||||||
|
Cash and cash equivalents consist of:
|
||||||||
|
Cash
|
$
|
8,824
|
$
|
1,122
|
||||
|
|
||||||||
|
Interest paid during the period
|
$
|
965
|
$
|
667
|
||||
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, 2022 and 2021
(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, 2022 were approved and authorized for issue by the
Board of Directors of the Company on August 12, 2022.
The Company has been closely monitoring developments in the COVID-19 outbreak declared as a global pandemic on March 11, 2020. Preventive measures to ensure the safety
of the Company’s workforce and local communities have been implemented. All of the Company’s mining and corporate operations continue while the Company manages and responds to COVID-19 to mitigate and minimize its potential impacts, in addition to
other uncertainties, such as the price of commodities and ongoing production.
2. Basis of presentation
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, 2021. In particular, the Company’s significant accounting policies were summarized in Note 3 of the consolidated financial statements for the year ended December 31, 2021, 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 were prepared on a going
concern basis.
3. Changes in accounting policies and recent accounting pronouncements
The following are changes in accounting policies effective as of January 1, 2022:
(i) Property, plant and equipment
Amendments to IAS 16 - Property, Plant and Equipment – Proceeds before Intended Use - The standard is amended to prohibit
deducting from the cost of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, the
Company recognizes the proceeds from selling such items, and the cost of producing those items, in profit or loss. The amendments to IAS 16 are effective for annual periods beginning on or after January 1, 2022, with early adoption permitted. The
amendments apply retrospectively only to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period
presented in the financial statements in which the Company first applies the amendments. The Company adopted the standard effective January 1, 2022 and retrospectively recognized proceeds and costs related to sales from the Relief Canyon Mine prior
to its declaration of commercial production during fiscal 2021 (see Note 14 and 15).
Page 5
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
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, 2021, except for:
(viii) Cash flows from ongoing production and impact on operations
The Company had positive operating cash flows during the six months ended June 30, 2022 with a working capital deficit as at June 30, 2022. The ability to maintain cash
flow positive production at the Cosalá Operations through meeting production targets and at the Galena Complex through implementing the Galena Recapitalization Plan, allowing the Company to generate sufficient operating cash flows while facing market
fluctuations in commodity prices and inflationary pressures, are significant judgments in these condensed interim consolidated financial statements with respect to the Company’s liquidity. Should the Company experience negative operating cash flows
in future periods, the Company may need to raise additional funds through the issuance of equity or debt securities.
5. Trade and other receivables
|
|
June 30,
|
December 31,
|
||||||
|
|
2022
|
2021
|
||||||
|
|
||||||||
|
Trade receivables
|
$
|
4,051
|
$
|
4,740
|
||||
|
Value added taxes receivable
|
284
|
3,219
|
||||||
|
Other receivables
|
335
|
249
|
||||||
|
|
$
|
4,670
|
$
|
8,208
|
||||
6. Inventories
|
|
June 30,
|
December 31,
|
||||||
|
|
2022
|
2021
|
||||||
|
|
||||||||
|
Concentrates
|
$
|
1,910
|
$
|
1,929
|
||||
|
Finished goods
|
761
|
-
|
||||||
|
In-circuit work in progress
|
361
|
886
|
||||||
|
Ore on leach pads
|
3,092
|
1,515
|
||||||
|
Ore stockpiles
|
477
|
526
|
||||||
|
Spare parts and supplies
|
5,303
|
5,153
|
||||||
|
|
11,904
|
10,009
|
||||||
|
|
||||||||
|
Long-term ore on leach pads
|
3,227
|
6,505
|
||||||
|
Long-term ore stockpiles
|
954
|
1,395
|
||||||
|
|
4,181
|
7,900
|
||||||
|
|
||||||||
|
|
$
|
16,085
|
$
|
17,909
|
||||
Long-term ore on leach pads and ore stockpiles represent inventories expected to convert into saleable form beyond one year.
Page 6
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
The amount of inventories recognized in cost of sales was $17.7 million during the three-month period ended June 30, 2022 (2021: $16.8 million) and $34.3 million during
the six-month period ended June 30, 2022 (2021: $54.5 million), including concentrates, ore on leach pads, and ore stockpiles write-down to net realizable value of $1.4 million (2021: $7.5 million) during the three-month period ended June 30, 2022
and $1.5 million during the six-month period end June 30, 2022 (2021: $34.9 million).
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, 2021
|
$
|
128,729
|
$
|
108,341
|
$
|
105,031
|
$
|
9,912
|
$
|
240
|
$
|
352,253
|
||||||||||||
|
Asset additions
|
7,017
|
952
|
5,242
|
1,461
|
-
|
14,672
|
||||||||||||||||||
|
Change in decommissioning provision
|
4,962
|
-
|
-
|
-
|
-
|
4,962
|
||||||||||||||||||
|
Reclassification
|
67,558
|
(96,824
|
)
|
-
|
-
|
-
|
(29,266
|
)
|
||||||||||||||||
|
Balance at December 31, 2021
|
208,266
|
12,469
|
110,273
|
11,373
|
240
|
342,621
|
||||||||||||||||||
|
Asset additions
|
4,611
|
-
|
3,353
|
56
|
-
|
8,020
|
||||||||||||||||||
|
Change in decommissioning provision
|
(2,166
|
)
|
-
|
-
|
-
|
-
|
(2,166
|
)
|
||||||||||||||||
|
Balance at June 30, 2022
|
$
|
210,711
|
$
|
12,469
|
$
|
113,626
|
$
|
11,429
|
$
|
240
|
$
|
348,475
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Accumulated depreciation
|
||||||||||||||||||||||||
|
and depletion
|
||||||||||||||||||||||||
|
Balance at January 1, 2021
|
$
|
(54,360
|
)
|
$
|
-
|
$
|
(37,889
|
)
|
$
|
(596
|
)
|
$
|
(89
|
)
|
$
|
(92,934
|
)
|
|||||||
|
Depreciation/depletion for the year
|
(5,486
|
)
|
-
|
(8,845
|
)
|
(1,423
|
)
|
(41
|
)
|
(15,795
|
)
|
|||||||||||||
|
Impairment for the year
|
(41,245
|
)
|
-
|
(11,021
|
)
|
(3,713
|
)
|
-
|
(55,979
|
)
|
||||||||||||||
|
Balance at December 31, 2021
|
(101,091
|
)
|
-
|
(57,755
|
)
|
(5,732
|
)
|
(130
|
)
|
(164,708
|
)
|
|||||||||||||
|
Depreciation/depletion for the period
|
(5,899
|
)
|
-
|
(5,421
|
)
|
(379
|
)
|
(20
|
)
|
(11,719
|
)
|
|||||||||||||
|
Balance at June 30, 2022
|
$
|
(106,990
|
)
|
$
|
-
|
$
|
(63,176
|
)
|
$
|
(6,111
|
)
|
$
|
(150
|
)
|
$
|
(176,427
|
)
|
|||||||
|
|
||||||||||||||||||||||||
|
Carrying value
|
||||||||||||||||||||||||
|
at December 31, 2021
|
$
|
107,175
|
$
|
12,469
|
$
|
52,518
|
$
|
5,641
|
$
|
110
|
$
|
177,913
|
||||||||||||
|
at June 30, 2022
|
$
|
103,721
|
$
|
12,469
|
$
|
50,450
|
$
|
5,318
|
$
|
90
|
$
|
172,048
|
||||||||||||
Effective January 11, 2021, the Relief Canyon Mine declared commercial production which the Company defined as operating at an average of 60% targeted capacity within
its mining feasibility study. As a result, the Company transferred from non-producing properties $29.3 million and $67.6 million in net book value to inventories and mining interests, respectively.
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, 2022 for each of the Company’s cash-generating unit, including non-producing properties and properties placed under care and maintenance. The Company recognized
an impairment loss of $0.4 million during the year ended December 31, 2021 related to damaged equipment from the Cosalá Operations.
Impairment indicators were identified during the three-month period ended March 31, 2021 from gold production of the Relief Canyon Mine due to differences observed
between the modelled (planned) and mined (actual) ore tonnage and carbonaceous material identified in the early phases of the mine plan. The Company assessed the recoverability of the $121.8 million carrying amount of the cash-generating unit and a $55.6 million impairment to the carrying value of the Relief Canyon Mine was identified.
The Company allocated $41.2 million of the impairment against mineral interests, $10.7 million to plant and equipment, and $3.7 million to right-of-use lease assets relating to the Relief Canyon Mine as at March 31,
2021. The $66.2 million recoverable amount of the Relief Canyon Mine’s net assets was determined based on the after-tax discounted cash flows expected to be derived from this property’s fair-market value
less estimated costs of disposal. The after-tax discounted cash flows were determined based on an updated life-of-mine cash flow projection which incorporated management’s best estimates of commodity prices, future capital requirements and production
costs along with geological assumptions and judgments made in estimating the size, grade and recovery of the ore bodies.
Page 7
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
Fair value models are considered to be Level 3 within the fair value hierarchy. Key assumptions used in Relief Canyon Mine’s fair value model as at March 31, 2021
include estimation of production profile and reserves from its life-of-mine plan, operating and capital costs to extract the reserves, discount rate of 6-8% based on the Company’s weighted average cost of capital, gold price from $1,860 per ounce in
2021 down to $1,608 per ounce in 2025 and beyond based on observable market data including spot price and industry analyst consensus, and mine life of 5 years. An increase and decrease in discount rate of 1% would impact the recoverable amount by
estimates of approximately $2.3 million decrease and $2.4 million increase, respectively, an increase and decrease in gold recovery rate of 1% would impact the recoverable amount by estimates of approximately $4.7 million increase and $4.7 million
decrease, respectively, and an increase and decrease in long-term gold price of $100 per ounce would impact the recoverable amount by estimates of approximately $16.6 million increase and $17.3 million decrease, respectively. This impairment was
assessed on the extrapolation of data from the initial phases of mining onto the remaining mining phases with additional leaching test work ongoing. If a subsequent impairment test indicated further changes in the expected cash flows, gold
production, and commodity prices, it could result in a material recovery or impairment to the carrying amount.
The carrying amounts of mineral interests, plant and equipment, and right-of-use lease assets from the Relief Canyon Mine is approximately $26.1 million, $24.2 million,
and $3.8 million, respectively, as at June 30, 2022 (December 31, 2021: $26.8 million, $27.4 million, and $4.1 million, respectively).
On March 2, 2017, the Company entered into an option acquisition agreement with Impulsora Minera Santacruz S.A. de C.V., a wholly-owned subsidiary of Santacruz Silver
Mining Ltd., to acquire an existing option with Minera Hochschild Mexico S.A. de C.V. (“Hochschild”) for the right to acquire a 100% interest of the San Felipe property located in Sonora, Mexico. On October 8, 2020, the Company settled its remaining
contractual option payments with Hochschild to acquire the 100% interest of the San Felipe property. As at June 30, 2022, the carrying amount of the San Felipe property was $12.5 million included in non-producing properties.
The amount of borrowing costs capitalized as property, plant and equipment was nil during the three-month period ended June 30, 2022 (2021: nil) and nil during
six-month period ended June 30, 2022 (2021: $0.1 million).
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 consists 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, 2022, the fair value
of the repurchase option was nil.
The Company recorded the advances received on precious metals delivery, net of transaction costs, as deferred revenue and would recognize the amounts in revenue as
performance obligations to metals delivery are satisfied over the term of the metals delivery and purchase agreements. The advances received on precious metals delivery is expected to reduce to nil through deliveries of the Company’s own production
to Sandstorm.
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 expects that metal deliveries to Sandstorm may no longer be satisfied through internal gold production alone. Fair value of the metals
contract liability was determined using forward commodity pricing curves at end of the fiscal 2021 reporting period resulting in $20.8 million loss to fair value on metals contract liability. A $0.4 million gain 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, 2022.
Page 8
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
The following table summarizes the continuity of the Company’s net metals contract liability during the period:
|
|
Six-month
|
|||
|
|
period ended
|
|||
|
|
June 30,
|
|||
|
|
2022
|
|||
|
|
||||
|
Net metals contract liability, beginning of period
|
$
|
40,905
|
||
|
Delivery of metals produced
|
(1,502
|
)
|
||
|
Delivery of metals purchased
|
(4,079
|
)
|
||
|
Revaluation of metals contract liability
|
(377
|
)
|
||
|
Net metals contract liability, end of period
|
$
|
34,947
|
||
|
|
||||
|
Current portion
|
$
|
10,785
|
||
|
Non-current portion
|
24,162
|
|||
|
|
$
|
34,947
|
||
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 is 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”), is 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.
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 remain 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.
During the six-month period ended June 30, 2022, the principal amount of the RoyCap Convertible Debenture was reduced by $1.6 million CAD through partial exercises of
the Retraction Option by RoyCap settled through issuance of 1,628,740 of the Company’s common shares (year ended December 31, 2021: $0.9 million CAD settled through issuance of 798,579 common shares).
The Company recognized a loss of $0.1 million for the six-month period ended June 30, 2022 (2021: loss of $0.1 million) as a result of the change in the estimated fair
value of the combined Redemption Option and Retraction Option.
Page 9
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
10. Government loan
On May 11, 2020, the Company received approximately $4.5 million in loan through the Paycheck Protection Program from the U.S. CARES Act (the “Government Loan”) to
assist with payroll and other expenses at the Galena Complex during the COVID-19 pandemic. The Government Loan has a term of two years at an interest rate of 1% per annum and may be forgiven if proceeds are used for payroll and other specifically
defined expenses and employee and compensation levels are maintained. The Company received confirmation via letter dated March 31, 2022 from the U.S. Small Business Administration that $4.3 million of the Government Loan has been forgiven resulting
in a gain on forgiveness recognized through profit or loss during the six-month period ended June 30, 2022.
11. Share capital
On January 29, 2021, the Company completed a bought deal public offering of 10,253,128 common shares at a price of $3.31 CAD per common share for aggregate gross
proceeds of approximately $26.7 million or $33.94 million CAD, which included the partial exercise by the underwriters of the over-allotment option granted by the Company to the underwriters. As part of the bought deal public offering, approximately
$1.7 million in transaction costs were incurred and offset against 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. As at June 30, 2022, the Company
has received aggregate gross proceeds of $42.0 million through issuance of 39,536,834 common shares from the May 2021 ATM Agreement, with approximately $1.6 million in transaction costs incurred and offset against share capital.
On October 21, 2021, the Company closed a non-brokered private placement with Sandstorm for gross proceeds of $2.5 million through issuance of 3,346,542 of the
Company’s common shares priced at approximately $0.94 CAD per share. As part of the non-brokered private placement, approximately $0.1 million in transaction costs were incurred and offset against share capital, and 200,793 common shares and 200,793
warrants for approximately $0.2 million and $0.1 million, respectively, were issued to the Company’s advisor and offset against share capital where each warrant is exercisable for one common share at an exercise price of $0.94 CAD for a period of two
years starting November 22, 2021.
On March 24, 2022, the Company closed a non-brokered private placement with Sandstorm for gross proceeds of $2.5 million through issuance of 2,120,000 of the Company’s
common shares priced at approximately $1.50 CAD per share.
On June 24, 2022, the Company closed a non-brokered private placement with Sandstorm for gross proceeds of $2.2 million through issuance of 3,170,000 of the Company’s
common shares priced at approximately $0.90 CAD per share.
a. Authorized
Authorized share capital consists of an unlimited number of common and preferred shares.
|
|
June 30,
|
December 31,
|
||||||
|
|
2022
|
2021
|
||||||
|
|
||||||||
|
Issued
|
||||||||
|
184,277,372 (2021: 165,145,187) common shares
|
$
|
439,269
|
$
|
423,098
|
||||
|
Nil (2021: Nil) preferred shares
|
-
|
-
|
||||||
|
|
$
|
439,269
|
$
|
423,098
|
||||
Page 10
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
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.
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,
|
||||||||||||||
|
|
2022
|
2021
|
||||||||||||||
|
|
Weighted
|
Weighted
|
||||||||||||||
|
|
average
|
average
|
||||||||||||||
|
|
exercise
|
exercise
|
||||||||||||||
|
|
Number
|
price
|
Number
|
price
|
||||||||||||
|
|
(thousands)
|
CAD
|
(thousands)
|
CAD
|
||||||||||||
|
|
||||||||||||||||
|
Balance, beginning of period
|
12,579
|
$
|
2.81
|
10,659
|
$
|
3.45
|
||||||||||
|
Granted
|
3,450
|
1.24
|
3,700
|
1.70
|
||||||||||||
|
Exercised
|
-
|
-
|
(90
|
)
|
2.39
|
|||||||||||
|
Expired
|
(3,962
|
)
|
2.56
|
(1,690
|
)
|
4.43
|
||||||||||
|
Balance, end of period
|
12,067
|
$
|
2.44
|
12,579
|
$
|
2.81
|
||||||||||
The following table summarizes information on stock options outstanding and exercisable as at June 30, 2022:
|
|
Weighted
|
|||||||||||||||||||
|
|
average
|
Weighted
|
Weighted
|
|||||||||||||||||
|
|
remaining
|
average
|
average
|
|||||||||||||||||
|
Exercise
|
contractual
|
exercise
|
exercise
|
|||||||||||||||||
|
price
|
life
|
Outstanding
|
price
|
Exercisable
|
price
|
|||||||||||||||
|
CAD
|
(years)
|
(thousands)
|
CAD
|
(thousands)
|
CAD
|
|||||||||||||||
|
|
||||||||||||||||||||
|
$1.00 to $2.00
|
2.36
|
6,900
|
$
|
1.47
|
2,300
|
$
|
1.47
|
|||||||||||||
|
$3.01 to $4.00
|
1.87
|
5,167
|
3.74
|
4,158
|
3.70
|
|||||||||||||||
|
|
12,067
|
$
|
2.44
|
6,458
|
$
|
2.91
|
||||||||||||||
Page 11
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
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, 2022 was $0.44 (2021: no stock options
granted).
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,
|
|||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Expected stock price volatility (1)
|
-
|
-
|
68
|
%
|
-
|
|||||||||||
|
Risk free interest rate
|
-
|
-
|
1.64
|
%
|
-
|
|||||||||||
|
Expected life
|
-
|
-
|
3 years
|
-
|
||||||||||||
|
Expected forfeiture rate
|
-
|
-
|
3.48
|
%
|
-
|
|||||||||||
|
Expected dividend yield
|
-
|
-
|
0
|
%
|
-
|
|||||||||||
|
Share-based payments included in cost of sales
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
|
Share-based payments included in general and
|
||||||||||||||||
|
administrative expenses
|
598
|
749
|
1,591
|
1,555
|
||||||||||||
|
Total share-based payments
|
$
|
598
|
$
|
749
|
$
|
1,591
|
$
|
1,555
|
||||||||
(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, 2022 are as follows:
|
Number of
|
Exercise
|
Issuance
|
Expiry
|
|
warrants
|
price (CAD)
|
date
|
date
|
|
1,074,999
|
3.12
|
Oct 2018
|
Oct 1, 2023
|
|
118,664
|
3.37
|
Jul 2019
|
Jul 25, 2022
|
|
177,506
|
4.45
|
Oct 2019
|
Oct 30, 2022
|
|
1,000,000
|
3.50
|
Jul 2020
|
Jul 9, 2022
|
|
200,793
|
0.94
|
Nov 2021
|
Nov 22, 2023
|
|
2,571,962
|
|
|
|
e. Restricted Share Units:
The Company has a Restricted Share Unit Plan under which eligible directors, officers and key employees of the Company are entitled to receive awards of restricted
share units. Each restricted share unit is equivalent in value to the fair market value of a common share of the Company on the date of grant with the value of each cash settled award charged to compensation expense over the period of vesting. At
each reporting date, the compensation expense and associated liability (which is included in trade and other long-term liabilities in the consolidated statement of financial position) are adjusted to reflect changes in market value. As at June 30,
2022, nil (December 31, 2021: 122,466) restricted share units are outstanding at an aggregate value of nil (December 31, 2021: $0.1 million).
f. 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, 2022, 1,069,911 (December 31, 2021: 878,744) deferred share units are issued and outstanding.
Page 12
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
12. 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,
|
||||||||||||
|
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
|
|
||||||||||||||||
|
Basic weighted average number of shares
|
180,795,755
|
133,928,463
|
176,871,371
|
130,618,095
|
||||||||||||
|
Effect of dilutive stock options and warrants
|
-
|
-
|
-
|
-
|
||||||||||||
|
Diluted weighted average number of shares
|
180,795,755
|
133,928,463
|
176,871,371
|
130,618,095
|
||||||||||||
Diluted weighted average number of common shares for the three-month and six-month periods ended June 30, 2022 excludes nil anti-dilutive preferred shares (2021: nil),
12,066,667 anti-dilutive stock options (2021: 9,133,957) and 2,571,962 anti-dilutive warrants (2021: 4,018,029).
13. 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
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. After the first year, contributions revert to the proportional percentage of ownership interests to fund capital projects and operations.
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.
Page 13
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
14. Revenue
The following is a disaggregation of revenue categorized by commodities sold for the three-month and six-month periods ended June 30, 2022 and 2021:
|
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
||||||||||||
|
|
period ended
|
period ended
|
period ended
|
period ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
|
|
||||||||||||||||
|
Gold
|
||||||||||||||||
|
Sales revenue
|
$
|
-
|
$
|
688
|
$
|
-
|
$
|
1,719
|
||||||||
|
Derivative pricing adjustments
|
-
|
-
|
-
|
-
|
||||||||||||
|
|
-
|
688
|
-
|
1,719
|
||||||||||||
|
Silver
|
||||||||||||||||
|
Sales revenue
|
$
|
8,766
|
$
|
6,682
|
$
|
19,045
|
$
|
13,469
|
||||||||
|
Derivative pricing adjustments
|
(579
|
)
|
46
|
189
|
235
|
|||||||||||
|
|
8,187
|
6,728
|
19,234
|
13,704
|
||||||||||||
|
Zinc
|
||||||||||||||||
|
Sales revenue
|
$
|
15,984
|
$
|
-
|
$
|
31,584
|
$
|
-
|
||||||||
|
Derivative pricing adjustments
|
(118
|
)
|
-
|
1,530
|
55
|
|||||||||||
|
|
15,866
|
-
|
33,114
|
55
|
||||||||||||
|
Lead
|
||||||||||||||||
|
Sales revenue
|
$
|
7,333
|
$
|
4,550
|
$
|
15,999
|
$
|
9,255
|
||||||||
|
Derivative pricing adjustments
|
(407
|
)
|
27
|
(331
|
)
|
34
|
||||||||||
|
|
6,926
|
4,577
|
15,668
|
9,289
|
||||||||||||
|
Other by-products
|
||||||||||||||||
|
Sales revenue
|
$
|
206
|
$
|
-
|
$
|
395
|
$
|
83
|
||||||||
|
Derivative pricing adjustments
|
99
|
-
|
181
|
(46
|
)
|
|||||||||||
|
|
305
|
-
|
576
|
37
|
||||||||||||
|
|
||||||||||||||||
|
Total sales revenue
|
$
|
32,289
|
$
|
11,920
|
$
|
67,023
|
$
|
24,526
|
||||||||
|
Total derivative pricing adjustments
|
(1,005
|
)
|
73
|
1,569
|
278
|
|||||||||||
|
Gross revenue
|
$
|
31,284
|
$
|
11,993
|
$
|
68,592
|
$
|
24,804
|
||||||||
|
Proceeds before intended use
|
-
|
-
|
-
|
247
|
||||||||||||
|
Treatment and selling costs
|
(11,336
|
)
|
(2,478
|
)
|
(22,208
|
)
|
(5,103
|
)
|
||||||||
|
|
$
|
19,948
|
$
|
9,515
|
$
|
46,384
|
$
|
19,948
|
||||||||
The amount of gold sales revenue recognized from deferred revenue (see Note 8) was nil during the three-month period ended June 30, 2022 (2021: $0.7 million) and nil
million during the six-month period ended June 30, 2022 (2021: $1.7 million).
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 18).
Proceeds before intended use represents gold and silver sales revenue recognized from the Relief Canyon Mine prior to its declaration of commercial production during
fiscal 2021 (see Note 3).
Page 14
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
15. 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, 2022 and 2021:
|
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
||||||||||||
|
|
period ended
|
period ended
|
period ended
|
period ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
|
|
||||||||||||||||
|
Salaries and employee benefits
|
$
|
7,748
|
$
|
5,759
|
$
|
14,573
|
$
|
11,340
|
||||||||
|
Contract services on site
|
-
|
8,709
|
3
|
14,338
|
||||||||||||
|
Raw materials and consumables
|
7,051
|
3,186
|
13,327
|
6,098
|
||||||||||||
|
Utilities
|
1,169
|
685
|
2,171
|
1,540
|
||||||||||||
|
Other costs
|
1,807
|
1,760
|
3,941
|
3,461
|
||||||||||||
|
Costs before intended use
|
-
|
-
|
-
|
247
|
||||||||||||
|
Changes in inventories
|
(1,481
|
)
|
(10,872
|
)
|
(1,135
|
)
|
(17,445
|
)
|
||||||||
|
Inventory write-downs
|
1,424
|
7,549
|
1,457
|
34,928
|
||||||||||||
|
|
$
|
17,718
|
$
|
16,776
|
$
|
34,337
|
$
|
54,507
|
||||||||
16. 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, 2022 and 2021:
|
|
Three-month
|
Three-month
|
Six-month
|
Six-month
|
||||||||||||
|
|
period ended
|
period ended
|
period ended
|
period ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
|
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
|
|
||||||||||||||||
|
Salaries and employee benefits
|
$
|
490
|
$
|
526
|
$
|
1,044
|
$
|
1,044
|
||||||||
|
Directors’ fees
|
102
|
113
|
199
|
192
|
||||||||||||
|
Share-based payments
|
598
|
667
|
1,591
|
1,349
|
||||||||||||
|
Professional fees
|
227
|
472
|
833
|
949
|
||||||||||||
|
Office and general
|
634
|
563
|
1,033
|
926
|
||||||||||||
|
|
$
|
2,051
|
$
|
2,341
|
$
|
4,700
|
$
|
4,460
|
||||||||
17. 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, 2022 was 26.5% and for the year ended December 31, 2021 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,
|
|||||||
|
2022
|
2021
|
|||||||
|
Property, plant and equipment
|
$
|
1,080
|
$
|
1,321
|
||||
|
Provisions and reserves
|
(821
|
)
|
(833
|
)
|
||||
|
Net deferred tax liabilities
|
$
|
259
|
$
|
488
|
||||
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 15
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
18. 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, 2022, the Company’s exposure to credit risk with respect to trade receivables amounts to $4.1 million (December 31, 2021: $4.7 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, 2022 and December 31, 2021.
(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 on an undiscounted basis:
|
|
June 30, 2022
|
|||||||||||||||||||
|
|
Less than
|
Over 5
|
||||||||||||||||||
|
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
|
|
||||||||||||||||||||
|
Trade and other payables
|
$
|
21,299
|
$
|
21,299
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Promissory note
|
3,750
|
3,750
|
-
|
-
|
-
|
|||||||||||||||
|
Interest on promissory note
|
121
|
121
|
-
|
-
|
-
|
|||||||||||||||
|
RoyCap convertible debenture
|
12,649
|
-
|
12,649
|
-
|
-
|
|||||||||||||||
|
Interest on RoyCap convertible debenture
|
1,852
|
1,010
|
842
|
-
|
-
|
|||||||||||||||
|
Government loan
|
222
|
222
|
-
|
-
|
-
|
|||||||||||||||
|
Metals contract liability
|
34,947
|
10,785
|
21,197
|
2,965
|
-
|
|||||||||||||||
|
Projected pension contributions
|
3,187
|
553
|
1,093
|
1,219
|
322
|
|||||||||||||||
|
Decommissioning provision
|
18,099
|
-
|
-
|
-
|
18,099
|
|||||||||||||||
|
Other long-term liabilities
|
1,321
|
-
|
440
|
318
|
563
|
|||||||||||||||
|
|
$
|
97,447
|
$
|
37,740
|
$
|
36,221
|
$
|
4,502
|
$
|
18,984
|
||||||||||
Page 16
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
Minimum lease payments in respect to lease liabilities are included in trade and other payables and other long-term liabilities as follows:
|
|
June 30, 2022
|
|||||||||||||||||||
|
|
Less than
|
Over 5
|
||||||||||||||||||
|
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
|
|
||||||||||||||||||||
|
Trade and other payables
|
$
|
2,548
|
$
|
2,548
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Other long-term liabilities
|
758
|
-
|
440
|
318
|
-
|
|||||||||||||||
|
|
$
|
3,306
|
$
|
2,548
|
$
|
440
|
$
|
318
|
$
|
-
|
||||||||||
The following table summarizes the continuity of the Company’s total lease liabilities discounted using an incremental borrowing rate ranging from 5% to 11% applied
during the period:
|
|
Six-month
|
Year
|
||||||
|
|
period ended
|
ended
|
||||||
|
|
June 30,
|
December 31,
|
||||||
|
|
2022
|
2021
|
||||||
|
|
||||||||
|
Lease liabilities, beginning of period
|
$
|
4,774
|
$
|
6,377
|
||||
|
Additions
|
54
|
1,123
|
||||||
|
Lease principal payments
|
(1,522
|
)
|
(2,720
|
)
|
||||
|
Lease interest payments
|
(179
|
)
|
(507
|
)
|
||||
|
Accretion on lease liabilities
|
179
|
501
|
||||||
|
Lease liabilities, end of period
|
$
|
3,306
|
$
|
4,774
|
||||
(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 month U.S. LIBOR rate plus 5% per annum from the Cosalá
Operations’ advance payments of concentrate. Interest rates of other financial instruments are fixed.
|
(2)
|
Currency risk
|
As at June 30, 2022, 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, 2022
|
|||||||
|
|
CAD
|
MXN
|
||||||
|
|
||||||||
|
Cash and cash equivalents
|
$
|
1,336
|
$
|
568
|
||||
|
Trade and other receivables
|
19
|
586
|
||||||
|
Trade and other payables
|
2,669
|
7,518
|
||||||
Page 17
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
As at June 30, 2022, the CAD/USD and MXN/USD exchange rates were 1.29 and 19.98, 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, 2022 is included in the following table:
|
|
CAD/USD
|
MXN/USD
|
||||||
|
|
Exchange rate
|
Exchange rate
|
||||||
|
|
+/- 10%
|
|
+/- 10%
|
|
||||
|
|
||||||||
|
Approximate impact on:
|
||||||||
|
Net income (loss)
|
$
|
524
|
$
|
1,651
|
||||
|
Other comprehensive income (loss)
|
(58
|
)
|
19
|
|||||
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, 2022 and December 31, 2021, the Company does not have any non-hedge foreign exchange forward contracts outstanding. During the
six-month periods ended June 30, 2022 and 2021, 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, 2022 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 $0.4 million (December
31, 2021: $0.5 million).
As at June 30, 2022 and December 31, 2021, the Company does not have any non-hedge commodity forward contracts outstanding. During the six-month
periods ended June 30, 2022 and 2021, 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, 2022 was nil (2021: nil). Total amount of gain or loss on derivative instruments including those recognized through profit or loss from the Company’s convertible debentures during the six-month period ended June 30,
2022 was a loss of $0.1 million (2021: gain of $1.8 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 debentures and promissory note: The principal portion of the convertible debentures and promissory note are initially measured at fair value and
subsequently carried at amortized cost.
|
|
●
|
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 18
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(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,
|
||||||
|
|
2022
|
2021
|
||||||
|
|
||||||||
|
Level 1
|
||||||||
|
Cash and cash equivalents
|
$
|
8,824
|
$
|
2,900
|
||||
|
Restricted cash
|
4,083
|
4,078
|
||||||
|
|
||||||||
|
Level 2
|
||||||||
|
Trade and other receivables
|
4,670
|
8,208
|
||||||
|
Derivative instruments
|
2,005
|
2,162
|
||||||
|
Metals contract liability
|
34,947
|
40,905
|
||||||
|
|
||||||||
|
Amortized cost
|
||||||||
|
Glencore pre-payment facility
|
-
|
1,451
|
||||||
|
Promissory note
|
3,750
|
5,000
|
||||||
|
Government loan
|
222
|
4,499
|
||||||
|
RoyCap convertible debenture
|
8,638
|
8,665
|
||||||
19. 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.
b. Geographic information
All revenues from sales of concentrates for the three-month and six-month periods ended June 30, 2022 and 2021 were earned in Mexico and the United States. The
following segmented information is presented as at June 30, 2022 and December 31, 2021, and for the three-month and six-month periods ended June 30, 2022 and 2021. The Cosalá Operations segment operates in Mexico while the Galena Complex and Relief
Canyon segments operate in the United States.
Page 19
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
|
|
As at June 30, 2022
|
As at December 31, 2021
|
||||||||||||||||||||||||||||||||||||||
|
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
3,836
|
$
|
1,482
|
$
|
426
|
$
|
3,080
|
$
|
8,824
|
$
|
531
|
$
|
569
|
$
|
1,472
|
$
|
328
|
$
|
2,900
|
||||||||||||||||||||
|
Trade and other receivables
|
2,786
|
1,865
|
-
|
19
|
4,670
|
6,852
|
1,326
|
-
|
30
|
8,208
|
||||||||||||||||||||||||||||||
|
Inventories
|
6,055
|
2,412
|
7,618
|
-
|
16,085
|
6,113
|
2,724
|
9,072
|
-
|
17,909
|
||||||||||||||||||||||||||||||
|
Prepaid expenses
|
1,021
|
822
|
541
|
1,309
|
3,693
|
423
|
1,072
|
584
|
347
|
2,426
|
||||||||||||||||||||||||||||||
|
Restricted cash
|
137
|
53
|
3,893
|
-
|
4,083
|
133
|
53
|
3,892
|
-
|
4,078
|
||||||||||||||||||||||||||||||
|
Property, plant and equipment
|
53,438
|
64,346
|
54,097
|
167
|
172,048
|
55,950
|
63,423
|
58,292
|
248
|
177,913
|
||||||||||||||||||||||||||||||
|
Total assets
|
$
|
67,273
|
$
|
70,980
|
$
|
66,575
|
$
|
4,575
|
$
|
209,403
|
$
|
70,002
|
$
|
69,167
|
$
|
73,312
|
$
|
953
|
$
|
213,434
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Trade and other payables
|
$
|
9,509
|
$
|
5,240
|
$
|
2,403
|
$
|
4,147
|
$
|
21,299
|
$
|
5,802
|
$
|
5,755
|
$
|
6,270
|
$
|
2,749
|
$
|
20,576
|
||||||||||||||||||||
|
Derivative instruments
|
-
|
-
|
-
|
2,005
|
2,005
|
-
|
-
|
-
|
2,162
|
2,162
|
||||||||||||||||||||||||||||||
|
Glencore pre-payment facility
|
-
|
-
|
-
|
-
|
-
|
1,451
|
-
|
-
|
-
|
1,451
|
||||||||||||||||||||||||||||||
|
Other long-term liabilities
|
-
|
1,321
|
-
|
-
|
1,321
|
-
|
1,361
|
159
|
23
|
1,543
|
||||||||||||||||||||||||||||||
|
Metals contract liability
|
-
|
-
|
-
|
34,947
|
34,947
|
-
|
-
|
-
|
40,905
|
40,905
|
||||||||||||||||||||||||||||||
|
RoyCap convertible debenture
|
-
|
-
|
-
|
8,638
|
8,638
|
-
|
-
|
-
|
8,665
|
8,665
|
||||||||||||||||||||||||||||||
|
Promissory note
|
-
|
-
|
-
|
3,750
|
3,750
|
-
|
-
|
-
|
5,000
|
5,000
|
||||||||||||||||||||||||||||||
|
Government loan
|
-
|
222
|
-
|
-
|
222
|
-
|
4,499
|
-
|
-
|
4,499
|
||||||||||||||||||||||||||||||
|
Post-employment benefit obligations
|
-
|
6,286
|
-
|
-
|
6,286
|
-
|
10,866
|
-
|
-
|
10,866
|
||||||||||||||||||||||||||||||
|
Decommissioning provision
|
1,867
|
5,654
|
3,944
|
-
|
11,465
|
2,008
|
6,929
|
4,507
|
-
|
13,444
|
||||||||||||||||||||||||||||||
|
Deferred tax liabilities
|
259
|
-
|
-
|
-
|
259
|
488
|
-
|
-
|
-
|
488
|
||||||||||||||||||||||||||||||
|
Total liabilities
|
$
|
11,635
|
$
|
18,723
|
$
|
6,347
|
$
|
53,487
|
$
|
90,192
|
$
|
9,749
|
$
|
29,410
|
$
|
10,936
|
$
|
59,504
|
$
|
109,599
|
||||||||||||||||||||
|
Three-month period ended June 30, 2022
|
Three-month period ended June 30, 2021
|
|||||||||||||||||||||||||||||||||||||||
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
|||||||||||||||||||||||||||||||
|
Revenue
|
$
|
12,681
|
$
|
7,256
|
$
|
11
|
$
|
-
|
$
|
19,948
|
$
|
-
|
$
|
8,754
|
$
|
761
|
$
|
-
|
$
|
9,515
|
||||||||||||||||||||
|
Cost of sales
|
(7,953
|
)
|
(8,599
|
)
|
(1,166
|
)
|
-
|
(17,718
|
)
|
-
|
(7,635
|
)
|
(9,141
|
)
|
-
|
(16,776
|
)
|
|||||||||||||||||||||||
|
Depletion and amortization
|
(1,890
|
)
|
(2,270
|
)
|
(1,759
|
)
|
(40
|
)
|
(5,959
|
)
|
(309
|
)
|
(1,476
|
)
|
(1,550
|
)
|
(41
|
)
|
(3,376
|
)
|
||||||||||||||||||||
|
Care and maintenance costs
|
-
|
(107
|
)
|
(904
|
)
|
-
|
(1,011
|
)
|
(1,567
|
)
|
(600
|
)
|
-
|
-
|
(2,167
|
)
|
||||||||||||||||||||||||
|
Corporate general and administrative
|
-
|
-
|
-
|
(2,051
|
)
|
(2,051
|
)
|
-
|
-
|
-
|
(2,341
|
)
|
(2,341
|
)
|
||||||||||||||||||||||||||
|
Exploration costs
|
(266
|
)
|
(571
|
)
|
(77
|
)
|
-
|
(914
|
)
|
-
|
(886
|
)
|
(113
|
)
|
-
|
(999
|
)
|
|||||||||||||||||||||||
|
Accretion on decommissioning provision
|
(41
|
)
|
(37
|
)
|
(24
|
)
|
-
|
(102
|
)
|
(31
|
)
|
(9
|
)
|
(15
|
)
|
-
|
(55
|
)
|
||||||||||||||||||||||
|
Interest and financing expense
|
(47
|
)
|
(14
|
)
|
(143
|
)
|
(874
|
)
|
(1,078
|
)
|
(50
|
)
|
-
|
(537
|
)
|
(442
|
)
|
(1,029
|
)
|
|||||||||||||||||||||
|
Foreign exchange gain (loss)
|
(540
|
)
|
-
|
-
|
(1,363
|
)
|
(1,903
|
)
|
12
|
-
|
-
|
(456
|
)
|
(444
|
)
|
|||||||||||||||||||||||||
|
Gain on metals contract liability
|
-
|
-
|
-
|
3,186
|
3,186
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Other loss on derivatives
|
-
|
-
|
-
|
(101
|
)
|
(101
|
)
|
-
|
-
|
-
|
(52
|
)
|
(52
|
)
|
||||||||||||||||||||||||||
|
Income (loss) before income taxes
|
1,944
|
(4,342
|
)
|
(4,062
|
)
|
(1,243
|
)
|
(7,703
|
)
|
(1,945
|
)
|
(1,852
|
)
|
(10,595
|
)
|
(3,332
|
)
|
(17,724
|
)
|
|||||||||||||||||||||
|
Income tax expense
|
(1,575
|
)
|
-
|
-
|
-
|
(1,575
|
)
|
(58
|
)
|
-
|
-
|
-
|
(58
|
)
|
||||||||||||||||||||||||||
|
Net income (loss) for the period
|
$
|
369
|
$
|
(4,342
|
)
|
$
|
(4,062
|
)
|
$
|
(1,243
|
)
|
$
|
(9,278
|
)
|
$
|
(2,003
|
)
|
$
|
(1,852
|
)
|
$
|
(10,595
|
)
|
$
|
(3,332
|
)
|
$
|
(17,782
|
)
|
|||||||||||
|
Six-month period ended June 30, 2022
|
Six-month period ended June 30, 2021
|
|||||||||||||||||||||||||||||||||||||||
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
Cosalá Operations
|
Galena Complex
|
Relief Canyon
|
Corporate and Other
|
Total
|
|||||||||||||||||||||||||||||||
|
Revenue
|
$
|
28,792
|
$
|
17,553
|
$
|
39
|
$
|
-
|
$
|
46,384
|
$
|
40
|
$
|
17,735
|
$
|
2,173
|
$
|
-
|
$
|
19,948
|
||||||||||||||||||||
|
Cost of sales
|
(15,812
|
)
|
(17,294
|
)
|
(1,231
|
)
|
-
|
(34,337
|
)
|
-
|
(15,125
|
)
|
(39,382
|
)
|
-
|
(54,507
|
)
|
|||||||||||||||||||||||
|
Depletion and amortization
|
(3,653
|
)
|
(4,414
|
)
|
(3,573
|
)
|
(79
|
)
|
(11,719
|
)
|
(627
|
)
|
(3,036
|
)
|
(3,557
|
)
|
(81
|
)
|
(7,301
|
)
|
||||||||||||||||||||
|
Care and maintenance costs
|
-
|
(295
|
)
|
(2,039
|
)
|
-
|
(2,334
|
)
|
(3,561
|
)
|
(739
|
)
|
-
|
-
|
(4,300
|
)
|
||||||||||||||||||||||||
|
Corporate general and administrative
|
-
|
-
|
-
|
(4,700
|
)
|
(4,700
|
)
|
-
|
-
|
-
|
(4,460
|
)
|
(4,460
|
)
|
||||||||||||||||||||||||||
|
Exploration costs
|
(700
|
)
|
(1,142
|
)
|
(158
|
)
|
-
|
(2,000
|
)
|
-
|
(2,220
|
)
|
(287
|
)
|
-
|
(2,507
|
)
|
|||||||||||||||||||||||
|
Accretion on decommissioning provision
|
(79
|
)
|
(66
|
)
|
(41
|
)
|
-
|
(186
|
)
|
(60
|
)
|
(14
|
)
|
(24
|
)
|
-
|
(98
|
)
|
||||||||||||||||||||||
|
Interest and financing expense
|
(74
|
)
|
(28
|
)
|
(302
|
)
|
(1,701
|
)
|
(2,105
|
)
|
(91
|
)
|
-
|
(1,147
|
)
|
(517
|
)
|
(1,755
|
)
|
|||||||||||||||||||||
|
Foreign exchange gain (loss)
|
(478
|
)
|
-
|
-
|
(715
|
)
|
(1,193
|
)
|
107
|
-
|
-
|
(772
|
)
|
(665
|
)
|
|||||||||||||||||||||||||
|
Impairment to property, plant and equipment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(55,623
|
)
|
-
|
(55,623
|
)
|
||||||||||||||||||||||||||||
|
Gain on metals contract liability
|
-
|
-
|
-
|
434
|
434
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Other gain (loss) on derivatives
|
-
|
-
|
-
|
(79
|
)
|
(79
|
)
|
-
|
-
|
-
|
1,767
|
1,767
|
||||||||||||||||||||||||||||
|
Gain on government loan forgiveness
|
-
|
4,277
|
-
|
-
|
4,277
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Income (loss) before income taxes
|
7,996
|
(1,409
|
)
|
(7,305
|
)
|
(6,840
|
)
|
(7,558
|
)
|
(4,192
|
)
|
(3,399
|
)
|
(97,847
|
)
|
(4,063
|
)
|
(109,501
|
)
|
|||||||||||||||||||||
|
Income tax expense
|
(2,016
|
)
|
-
|
-
|
-
|
(2,016
|
)
|
(81
|
)
|
-
|
-
|
-
|
(81
|
)
|
||||||||||||||||||||||||||
|
Net income (loss) for the period
|
$
|
5,980
|
$
|
(1,409
|
)
|
$
|
(7,305
|
)
|
$
|
(6,840
|
)
|
$
|
(9,574
|
)
|
$
|
(4,273
|
)
|
$
|
(3,399
|
)
|
$
|
(97,847
|
)
|
$
|
(4,063
|
)
|
$
|
(109,582
|
)
|
|||||||||||
Page 20
Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)
c. Major customers
For the three-month period ended June 30, 2022, the Company sold concentrates and finished goods to one major customer (2021: two major customers) accounting for 99%
(2021: 92% and 7%) of revenues. For the six-month period ended June 30, 2022, the Company sold concentrates and finished goods to one major customer (2021: two major customers) accounting for 99% (2021: 90% and 9%) of revenues.
20. 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 $9.8 million (MXN 196.8 million), of which $4.2 million (MXN 84.4 million) would be applied against available tax losses. The
Company appealed this reassessment and the Mexican tax authorities subsequently reversed $4.7 million (MXN 94.6 million) of their original reassessment. The remaining $5.1 million (MXN 102.2 million) consists of $4.2 million (MXN 84.4 million)
related to transactions with certain suppliers and $0.9 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 $0.9 million (MXN 17.8 million) to secure the value added tax portion of the reassessment. The deductions of $4.2 million (MXN 84.4 million), if denied, would be offset by available tax losses. The Company accrued $1.0 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, 2022, the accrued liability of the probable
obligation was $1.0 million (December 31, 2021: $1.0 million).
In July 2021, the Company was served with a statement of claim that was filed in the Ontario Superior Court of Justice to commence a proposed class action lawsuit
against the Company and its Chief Executive Officer (the “Action”). Pursuant to the Action, the representative plaintiff seeks damages of $130 million CAD in relation to the Company’s public disclosure concerning its Relief Canyon Mine. Although no
assurance can be given with respect to the ultimate outcome, the Company believes that the complaint against it is unfounded and without merit, and it intends to vigorously defend the proceeding.
Page 21
Exhibit 99.2
AMERICAS GOLD AND SILVER CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
DATED AUGUST 12, 2022
Americas Gold and Silver Corporation
Management’s Discussion and Analysis
Table of Contents
|
Forward-Looking Statements
|
1 |
| Management’s Discussion and Analysis | 2 |
|
Overview
|
3 |
|
Recent Developments and Operational Discussion
|
5 |
|
Results of Operations
|
11 |
|
Summary of Quarterly Results
|
13
|
|
Liquidity
|
13
|
|
Capital Resources
|
15 |
|
Off-Balance Sheet Arrangements
|
16
|
|
Transactions with Related Parties
|
16
|
|
Risk Factors
|
16
|
|
Accounting Standards and Pronouncements
|
17
|
|
Financial Instruments
|
17 |
|
Capital Structure
|
17 |
|
Controls and Procedures
|
17 |
|
Technical Information
|
18 |
|
Non-GAAP and Other Financial Measures
|
18 |
Unless otherwise indicated, in this Management Discussion and Analysis all reference to “dollar” or the use of the symbol “$” 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, 2022
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 the MD&A shall have the meaning ascribed to such term elsewhere in the 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 for completion of the testing work and receipt of the results thereof
at Relief Canyon; the timing for resumption of mining operations at Relief Canyon and if and when determined achieving ramp-up to full operations at Relief Canyon; 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; 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; material uncertainties that may impact the Company’s liquidity in the short term; the effects of COVID-19; the Company’s review of
pension valuation; 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; the timing and
possible outcomes of pending disputes or litigation; negotiations or regulatory investigations; exchange rate fluctuations; cyclical or seasonal aspects of our business; our dividend policy; capital expenditures; the Company’s ability to operate the
Relief Canyon mine; the return to full production and maintaining full production at the Company's Cosalá Operations following the resolution of the illegal blockade and the resumption of mining and processing 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; the suspension of certain operating metrics such as cash costs and all-in sustaining costs for the Galena Complex and Relief Canyon; the liquidity of the Company’s common shares; the proposed class action lawsuit against the Company and its
Chief Executive Officer, 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, 2022
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; actual and potential risks and uncertainties relating to the emergence of new strains and/or the resurgence
of COVID-19, actions that have been and may be taken by governmental authorities to contain the COVID-19 pandemic or to treat its impact and the availability, effectiveness and use of treatments and vaccines (including the effectiveness of
boosters), including potential material adverse effects on the Company’s business, operations and financial performance; actions that have been and may be taken by governmental authorities to contain COVID-19 or to treat its impact on the Company’s
business; the actual and potential negative impacts of COVID-19 on the global economy, supply chains and financial markets; the Company is dependent on the success of the San Rafael project as well as its Cosalá Operations, the Galena Complex and
the Relief Canyon mine, 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; 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; the Company may engage in hedging activities; 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 the 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, 2022, including the Company’s financial condition and future prospects. Except as otherwise noted, this discussion is dated August 12, 2022 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, 2022 and 2021. The unaudited condensed interim consolidated financial statements for the three and six months
ended June 30, 2022 and 2021 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.sedar.com,
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, 2022
In this report, the management of the Company presents operating highlights for the three months ended June 30, 2022 (“Q2-2022”) compared to the three months ended June 30, 2021
(“Q2-2021”) and for the six months ended June 30, 2022 (“YTD-2022”) compared to the six months ended June 30, 2021 (“YTD-2021”) 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 with
an initial contribution of $15 million to fund capital improvements. 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 in Sinaloa, Mexico, 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.
Page 3
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
In Nevada, USA, the Company is advancing technical studies at the 100%-owned, Relief Canyon mine 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 newly-constructed crusher, ore conveyor 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.
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 restarted the Cosalá Operations in Q4-2021 following the signing of an accord with the SNM Union and witnessed by the Mexican Ministries of Economy, Interior and Labour on July 6, 2021. 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 and the Relief Canyon area.
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”.
Page 4
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Recent Developments and Operational Discussion
Q2-2022 Highlights
|
●
|
Consolidated attributable production of approximately 1.3 million ounces of silver equivalent1, including 0.3 million ounces of silver, 9.9 million pounds of zinc
and 6.4 million pounds of lead, with cost of sales of $9.76/oz silver equivalent produced1, cash costs of ($2.72)/oz silver produced1 and all-in sustaining costs of $5.37/oz silver produced1 during the
quarter.
|
|
●
|
Revenue of $20.0 million and net loss of $9.3 million for Q2-2022, or an attributable loss of $0.04 per share, representing an increase of $10.5 million in revenue2
and a decrease in net loss of $8.5 million compared to Q2-2021, mainly due to higher revenue from restart of the Cosalá Operations, and gain on fair value of metals contract liability, offset in part by higher depletion and amortization,
and higher income tax expense.
|
|
●
|
Net cash generated from operating activities1 of $7.0 million during Q2-2022 representing a significant increase of $22.6 million compared to Q2-2021.
|
|
●
|
Following the resolution of the illegal blockade and reopening of the Cosalá Operations, the second quarter of 2022 continued with another strong quarter of production with
approximately 128,000 ounces of silver, 9.9 million pounds of zinc, and 3.9 million pounds of lead produced, and all-in sustaining costs of $(25.89)/oz silver produced1 during the quarter.
|
|
●
|
Phase II drilling of Galena’s Recapitalization Plan has completed approximately 19,000 meters of drilling with a focus on continued deeper exploration drilling and upgrading
inferred mineral resources. The updated mineral resource estimate is expected to increase when completed in late Q3-2022.
|
|
●
|
Galena’s Recapitalization Plan is proceeding well with the Galena Complex increasing production to 285,707 ounces or 24% higher year-over-year silver production in Q2-2022
compared to Q2-2021. The Galena hoist project is proceeding well with commissioning expected in late Q4-2022.
|
|
●
|
YTD-2022 net income from the Cosalá Operations and Galena Complex operating segments increased by $10.3 million (+240%) and $2.0 million (+59%) compared to YTD-2021,
respectively, for aggregate YTD-2022 segment net income of $4.6 million from those units.
|
|
●
|
The Company’s 2022 guidance remains at attributable production of 1.4 to 1.8 million silver ounces and 4.8 to 5.2 million silver equivalent ounces at cash costs of $4.00 to
$5.00 per ounce silver.
|
|
●
|
The Company had a cash and cash equivalents balance of $8.8 million and working capital1 deficit of $9.0 million as at June 30, 2022.
|
Cosalá Operations
The first half of 2022 was successful at the Cosalá Operations where production increased significantly as normal mining operations were re-established following the resolution of the
illegal blockade and the reopening of the Cosalá Operations on September 13, 2021. During another full quarter of production in Q2-2022, the Cosalá Operations produced approximately 128,000 ounces of silver, 9.9 million pounds of zinc and 3.9 million
pounds of lead. The Los Braceros processing plant was fed with over 147,583 tonnes with the milling rate averaging approximately 1,600 tonnes per day during Q2-2022 compared to nil from Q2-2021.
Initial production from the restart focused on maximizing near-term free cash flow by mining high-grade zinc areas of the Main Zone which were fully developed prior to the illegal
blockade. The increase in production and higher realized silver, zinc, and lead prices provided greater liquidity for the Company and its consolidated operations. Over the course of the next few months, the mine will continue development and increase
production from the Upper Zone, which is expected to carry significantly higher silver grades approximately 5-6 times higher than the Main Zone beginning in August 2022.
1 This is a supplementary or non-GAAP financial measure or ratio. See “Non-GAAP and Other Financial Measures” section for further information.
2 Certain fiscal 2021 amounts were adjusted through changes in accounting policies. See “Accounting Standards and Pronouncements” section for further
information.
Page 5
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Galena Recapitalization Plan
The Recapitalization Plan at the Galena Complex is continuing to progress with year-over-year silver production increasing in 2022 compared to 2021. Production in Q2-2022 was 285,707
ounces of silver and 4,220,837 pounds of lead compared with 230,071 ounces of silver and 4,329,163 pounds of lead in Q2-2021, a year-over-year increase of 24% in silver and decrease of 3% in lead, respectively. This improvement was due to the
refurbishment and purchase of underground mobile equipment, capital investments (machinery and development), and mine-wide rehabilitation, including the 5500 Level loading pocket, which allows ore and waste to be skipped from this level. The Company
also completed the purchase of a replacement hoist for the Galena hoist in Q3-2021 and is advancing engineering work to prepare for its commissioning by late Q4-2022. Further underground development improvements, additional equipment procurements,
and an exploration drilling program designed to target high-grade extensions of historic veins below current workings will benefit the operation longer term by discovering additional high-grade silver resources, further improving mining efficiency
and lowering cash costs.
Galena Exploration Update
The Phase II drill program at the Galena Complex began in late August 2021. Phase II exploration has completed approximately 19,000 meters of drilling with a focus on continued deeper
exploration drilling and upgrading inferred mineral resources. The initial focus was to test the recently discovered Silver Vein extension below the 5500 Level, the deepest level of the mine. To date, the Silver Vein extension has been delineated to
over 400 ft below the 5500 Level. As part of the 5500 Level drilling of the Silver Vein extension, the Company successfully intersected the high grade 185 Vein approximately 800 ft below the 5500 Level. Key intercepts from the Silver Vein extension
and the 185 Vein include:
|
●
|
5500 Level:
|
|
o
|
55-196: 780 g/t silver and 1.1% copper (890 g/t AgEq3) over 1.5 m4
|
|
o
|
55-199: 1,405 g/t silver and 1.5% copper (1,561 g/t AgEq) over 1.8 m
|
|
o
|
55-200: 1,593 g/t silver, 0.2% lead and 0.9% copper (1,690 g/t AgEq) over 0.7 m
|
|
|
including: 3,220 g/t silver, 0.4% lead and 1.7% copper (3,410 g/t AgEq) over 0.2 m
|
|
o
|
55-216: 4,010 g/t silver and 3.9% copper (4,420 g/t AgEq) over 1.2 m
|
|
o
|
55-217: 1,460 g/t silver and 1.3% copper (1,594 g/t AgEq) over 1.7 m
|
|
|
including: 9,600 g/t silver and 8.8% copper (10,500 g/t AgEq) over 0.2 m
|
|
|
and: 4,120 g/t silver and 3.1% copper (4,440 g/t AgEq) over 0.3 m
|
|
|
and: 1,745 g/t silver, 7.8% lead and 0.8% copper (2,111 g/t AgEq) over 0.8 m
|
In addition to deep exploration drilling, the Company has focused on in-fill drilling to upgrade inferred mineral resources adjacent to current production areas to the measured and
indicated categories. The updated mineral resource estimate is expected to further increase when completed in late Q3-2022.
A full table of the Company’s latest drill results can be found at:
https://americas-gold.com/site/assets/files/4297/dr20220623.pdf. The information contained on our website is not incorporated by reference herein and should not be considered part
of this MD&A.
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, 2022
Relief Canyon Update
The Company is committed to continuing efforts to resolve metallurgical challenges experienced at Relief Canyon. Relief Canyon temporarily 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 and operations through ongoing technical studies and metallurgical test programs. The Company will reassess the status of the
operation as the results of these efforts (and others) become available and the results are evaluated.
COVID-19 Pandemic
The COVID-19 pandemic continued to disrupt global health and the economy and has created an indeterminate period of volatility in the markets in which the Company operates. The Company
has been closely monitoring on-going developments of COVID-19, declared a global pandemic by the World Health Organization on March 11, 2020, and continues to mitigate risks related to the COVID-19 pandemic and the impact on the Company’s projects,
operations, business, supply chain, and most importantly the health and safety of its employees. Preventive measures to ensure the safety of the Company’s workforce and local communities were implemented. There have been no significant outbreaks of
COVID-19 that have impacted the Company’s ability to operate at any of the Company’s operations to date.
Other Items During YTD-2022
On April 29, 2021, the Company issued a secured convertible debenture to Royal Capital Management Corp. (“RoyCap”) due April 28, 2024 (the “2024 Convertible Debenture”) for total of
C$18.8 million with interest payable at 8% per annum, repayable at the Company’s option prior to maturity subject to payment of a redemption premium, and convertible into common shares of the Company at the holder’s option at a conversion price of
C$3.35, ending with an outstanding principal balance of C$17.9 million at the end of fiscal 2021. As of August 12, 2022, the 2024 Convertible Debenture was further reduced to C$16.3 million through partial retractions by RoyCap for C$1.6 million
settled through issuance of approximately 1.6 million of the Company’s common shares.
In July 2021, the Company was served with a statement of claim filed in the Ontario Superior Court of Justice to commence a proposed class action lawsuit against the Company and its
Chief Executive Officer (the “Action”). Pursuant to the Action, the representative plaintiff seeks damages of C$130 million in relation to the Company’s public disclosure concerning its Relief Canyon mine. Although no assurance can be given with
respect to the ultimate outcome, the Company believes that the complaint against it is unfounded and without merit and intends to vigorously defend the proceeding.
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. As of August 12, 2022, approximately 39.5 million common shares were
sold pursuant to the ATM Agreement with an average price per common share of approximately $1.06 for gross proceeds of approximately $42.0 million.
On March 24, 2022, the Company closed a non-brokered private placement with Sandstorm Gold Ltd. (“Sandstorm”) for gross proceeds of $2.5 million through issuance of approximately 2.1
million of the Company’s common shares priced at approximately C$1.50 per share.
On June 24, 2022, the Company closed a non-brokered private placement with Sandstorm Gold Ltd. (“Sandstorm”) for gross proceeds of $2.2 million through issuance of approximately 3.2
million of the Company’s common shares priced at approximately C$0.90 per share.
Page 7
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Consolidated Results and Developments
|
|
Q2-2022
|
Q2-2021
|
4,5
|
YTD-2022
|
YTD-20214,5
|
|||||||||||
|
Revenue ($ M)
|
$
|
20.0
|
$
|
9.5
|
$
|
46.4
|
$
|
19.9
|
||||||||
|
Silver Produced (oz)1
|
299,228
|
138,043
|
599,544
|
289,344
|
||||||||||||
|
Zinc Produced (lb)1
|
9,941,949
|
-
|
19,515,192
|
-
|
||||||||||||
|
Lead Produced (lb)1
|
6,447,775
|
2,597,498
|
12,815,252
|
5,619,664
|
||||||||||||
|
Total Silver Equivalent Produced ($/oz)1,2,3
|
1,343,062
|
232,561
|
2,617,532
|
488,851
|
||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)1,3
|
$
|
9.76
|
-
|
$
|
10.00
|
-
|
||||||||||
|
Cash Costs/Ag Oz Produced ($/oz)1,3
|
$
|
(2.72
|
)
|
-
|
$
|
(6.13
|
)
|
-
|
||||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)1,3
|
$
|
5.37
|
-
|
$
|
1.34
|
-
|
||||||||||
|
Net Loss ($ M)
|
$
|
(9.3
|
)
|
$
|
(17.8
|
)
|
$
|
(9.6
|
)
|
$
|
(109.6
|
)
|
||||
|
Comprehensive Income (Loss) ($ M)
|
$
|
(7.0
|
)
|
$
|
(18.7
|
)
|
$
|
(4.2
|
)
|
$
|
(105.8
|
)
|
||||
| 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.
|
| 4 |
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 disclosure of certain operating metrics were suspended during the Galena Recapitalization Plan implementation.
|
| 5 |
Certain fiscal 2021 amounts were adjusted through changes in accounting policies. See “Accounting Standards and Pronouncements” section for further information.
|
Consolidated operating results from Q2-2022 were significantly improved compared to Q2-2021 due to the restart of mining operations at the Cosalá Operations in Q4-2021 and
return to full production thereafter following the removal of the illegal blockade. The consolidated attributable production of silver and silver equivalent5 during Q2-2022 increased by approximately 117% and over 478%, respectively,
compared to Q2-2021.
Revenue increased by $10.5 million or 110% to $20.0 million in Q2-2022 from $9.5 million during Q2-2021. The increase in revenue was primarily due to the restarted Cosalá Operations with increased silver, zinc, and lead production, and increased silver production at the Galena Complex though at lower realized silver prices during the period. The average realized zinc price3
increased by 30% during the period to $1.71/lb. (increase in realized zinc price was determined by comparison to the average London silver spot price as there were no sales of zinc during Q2-2021). The average realized silver price3
decreased by 15% from Q2-2021 to Q2-2022 with a price of $22.45/oz for Q2-2022 (Q2-2021 – $26.42/oz) which is comparable to the average London silver spot price of $22.65/oz for Q2-2022 (Q2-2021 – $26.70/oz).
The Company recorded a net loss of $9.3 million for the three months ended June 30, 2022 compared to a net loss of $17.8 million for the three months ended June 30, 2021. The decrease in
net loss was primarily attributable to higher net revenue, and gain on fair value of metals contract liability, offset in part by higher depletion and amortization, and higher income tax expense. The Company significantly reduced the consolidated
monthly spend with the suspension of mining at Relief Canyon that contributed to prior period’s net loss. These variances are further discussed in the following sections.
5 This is a supplementary or non-GAAP
financial measure or ratio. See “Non-GAAP and Other Financial Measures” section for further information.
Page 8
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Cosalá Operations
|
|
Q2-2022
|
Q2-2021
|
3
|
YTD-2022
|
YTD-20213
|
|||||||||||
|
Tonnes Milled
|
147,583
|
-
|
288,175
|
-
|
||||||||||||
|
Silver Grade (g/t)
|
50
|
-
|
51
|
-
|
||||||||||||
|
Zinc Grade (%)
|
3.96
|
-
|
3.96
|
-
|
||||||||||||
|
Lead Grade (%)
|
1.65
|
-
|
1.71
|
-
|
||||||||||||
|
Silver Recovery (%)
|
53.7
|
-
|
53.8
|
-
|
||||||||||||
|
Zinc Recovery (%)
|
77.2
|
-
|
77.6
|
-
|
||||||||||||
|
Lead Recovery (%)
|
73.1
|
-
|
71.6
|
-
|
||||||||||||
|
Silver Produced (oz)
|
127,803
|
-
|
254,570
|
-
|
||||||||||||
|
Zinc Produced (lb)
|
9,941,949
|
-
|
19,515,192
|
-
|
||||||||||||
|
Lead Produced (lb)
|
3,915,273
|
-
|
7,793,520
|
-
|
||||||||||||
|
Total Silver Equivalent Produced ($/oz)1,2
|
1,063,644
|
-
|
2,053,844
|
-
|
||||||||||||
|
Silver Sold (oz)
|
116,564
|
-
|
239,841
|
-
|
||||||||||||
|
Zinc Sold (lb)
|
9,280,165
|
-
|
18,428,995
|
-
|
||||||||||||
|
Lead Sold (lb)
|
3,570,350
|
-
|
7,335,305
|
-
|
||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)2
|
$
|
7.48
|
-
|
$
|
7.70
|
-
|
||||||||||
|
Cash Costs/Ag Oz Produced ($/oz)2
|
$
|
(35.97
|
)
|
-
|
$
|
(42.39
|
)
|
-
|
||||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)2
|
$
|
(25.89
|
)
|
-
|
$
|
(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.
|
| 3 |
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.
|
The first half of 2022 was successful at the Cosalá Operations where production increased significantly during the period as normal mining operations were re-established following the
resolution of the illegal blockade with the reopening of the Cosalá Operations on September 13, 2021. Continuing full quarter of production in Q2-2022, the Cosalá Operations produced approximately 128,000 ounces of silver, 9.9 million pounds of zinc
and 3.9 million pounds of lead. The Los Braceros plant processed approximately 147,583 tonnes with the milling rate averaging approximately 1,600 tonnes per day during Q2-2022 compared to nil from Q2-2021. Operating cost metrics have benefited
significantly from the increase in realized prices of zinc and lead.
Initial production from the restart focused on maximizing near-term free cash flow by mining high-grade zinc areas of the Main Zone which were fully developed prior to the illegal
blockade. Over the course of the next few months, the mine will continue development and increase production from the Upper Zone, which is expected to carry silver grades approximately 5-6 times higher than the Main Zone.
Page 9
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Galena Complex
|
|
Q2-2022
|
Q2-2021
|
3
|
YTD-2022
|
YTD-20213
|
|||||||||||
|
Tonnes Milled
|
28,585
|
30,503
|
58,385
|
60,707
|
||||||||||||
|
Silver Grade (g/t)
|
319
|
242
|
315
|
256
|
||||||||||||
|
Lead Grade (%)
|
6.99
|
6.88
|
6.82
|
7.52
|
||||||||||||
|
Silver Recovery (%)
|
97.5
|
96.8
|
97.3
|
96.5
|
||||||||||||
|
Lead Recovery (%)
|
95.8
|
93.6
|
95.3
|
93.1
|
||||||||||||
|
Silver Produced (oz)
|
285,707
|
230,071
|
574,956
|
482,240
|
||||||||||||
|
Lead Produced (lb)
|
4,220,837
|
4,329,163
|
8,369,554
|
9,366,107
|
||||||||||||
|
Total Silver Equivalent Produced ($/oz)1,2
|
465,697
|
387,601
|
939,480
|
814,751
|
||||||||||||
|
Silver Sold (oz)
|
274,162
|
248,405
|
579,059
|
507,412
|
||||||||||||
|
Lead Sold (lb)
|
4,029,850
|
4,745,453
|
8,450,602
|
9,946,561
|
||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)2
|
$
|
18.46
|
-
|
$
|
18.41
|
-
|
||||||||||
|
Cash Costs/Ag Oz Produced ($/oz)2
|
$
|
22.09
|
-
|
$
|
20.62
|
-
|
||||||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)2
|
$
|
28.67
|
-
|
$
|
27.55
|
-
|
||||||||||
|
All-In Sustaining Costs with Galena
|
||||||||||||||||
|
Recapitalization Plan/Ag Oz Produced ($/oz)2
|
$
|
36.75
|
-
|
$
|
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.
|
| 3 |
Disclosure of certain operating metrics were suspended during the Galena Recapitalization Plan implementation.
|
The Company announced a strategic joint venture agreement with Sprott in September 2019 to recapitalize the mining operations at the Galena Complex. The goal of the joint
venture is to position the Galena Complex to significantly grow resources, increase production, and reduce operating costs at the mine. The strategic 60/40 joint venture has allowed the Company to take positive action: to advance development,
modernize infrastructure, purchase new mining equipment, and explore to define and expand silver resources.
The Company aims to commission the Galena hoist in late Q4-2022 which will increase hoisting capacity at the operation in Q4-2022 and beyond. Cash costs per ounce and
all-in sustaining costs per ounce at the Galena Complex are also anticipated to decrease with the completion of the Galena replacement hoist considering most of the operations costs do not fluctuate significantly with increased ore tons mined or
milled and are expected to decrease on a per silver ounce basis assuming expected higher silver and lead production beyond 2022.
Relief Canyon
As a result of consolidated capital allocation decisions, Relief Canyon suspended mining operations as of August 13, 2021, with the approval by the Board of Directors, while it continues
leaching operations and ongoing technical studies. During YTD-2022, gold production was 1,347 ounces and silver production was 3,014 ounces from continuing leaching operations with 936 ounces of gold and 2,115
ounces of silver delivered and sold, respectively.
Page 10
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Guidance and Outlook
|
|
2022 Guidance1
|
2023 Outlook1
|
2024 Outlook1
|
|
Silver Production (oz)
|
1.4 - 1.8 Moz
|
2.4 - 2.8 Moz
|
3.4 - 3.8 Moz
|
|
Zinc Production (lb)
|
36 - 40 Mlb
|
31 - 35 Mlb
|
33 - 37 Mlb
|
|
Lead Production (lb)
|
22 - 26 Mlb
|
21 - 25 Mlb
|
22 - 26 Mlb
|
|
Silver Equivalent Production (oz)
|
4.8 - 5.2 Moz
|
5.6 - 6 Moz
|
7 - 7.4 Moz
|
|
Cash Costs/Ag Oz Production ($/oz)
|
$4.00 - $5.00/oz
|
|
|
|
Capital Expenditures - Sustaining ($)
|
$12 - $14 M
|
|
|
|
Capital Expenditures - Growth ($)
|
$6 - $7 M
|
|
|
|
Exploration Drilling ($)
|
$2.5 - $3 M
|
|
|
| 1 |
Throughout this MD&A, guidance for 2022 and outlook for 2023 and 2024 is 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, $1.30/lb zinc and $0.95/lb lead.
|
The Company continues to expect significant increases to metals production in 2022 following the resolution of the illegal blockade at the Cosalá Operations and continued
recapitalization at the Galena Complex. The Company’s guidance for 2022 remains at attributable production of 1.4 to 1.8 million silver ounces and 4.8 to 5.2 million silver equivalent ounces at cash costs of $4.00 to $5.00 per ounce silver.
Results of Operations
Analysis of the three months ended June 30, 2022 vs. the three months ended June 30, 2021
The Company recorded a net loss of $9.3 million for the three months ended June 30, 2022 compared to a net loss of $17.8 million for the three months ended June 30, 2021. The decrease in
net loss was primarily attributable to higher net revenue ($10.5 million) and gain on fair value of metals contract liability ($3.2 million), offset in part by higher cost of sales ($0.9 million), higher depletion and amortization ($2.6 million), and
higher income tax expense ($1.5 million) each of which are described in more detail below.
Revenue increased by $10.5 million to $20.0 million for the three months ended June 30, 2022 from $9.5 million for the three
months ended June 30, 2021. The increase was primarily due to $12.7 million in revenue from the Cosalá Operations in Q2-2022, less a $1.5 million decrease in silver and lead revenue at the Galena Complex from
lower realized metal prices during the period.
Cost of sales increased by $0.9 million to $17.7 million for the three months ended
June 30, 2022 from $16.8 million for the three months ended June 30, 2021. The increase was primarily due to a $8.0 million decrease in cost of sales due to the suspension of mining operations at Relief Canyon,
offset by a $7.9 million increase in cost of sales from the Cosalá Operations in Q2-2022, and a $1.0 million increase in cost of sales from the Galena Complex due to an
increase in operating costs.
Depletion and amortization increased by $2.6 million to $6.0 million for the three months ended June 30, 2022 from $3.4
million for the three months ended June 30, 2021. The increase was primarily due to a $1.6 million increase in depletion and amortization from the Cosalá Operations Q2-2022 plus a $0.8 million increase in
depletion and amortization from the Galena Complex due to increased units of production.
Gain on fair value of metals contract liability of $3.2 million was recorded during the three months ended June 30, 2022 due
to a change in fair value of the Company’s metals contract liability to Sandstorm during the period, primarily due to the decrease in gold price forward curve compared to Q1-2022.
Income tax expense increased by $1.5 million due to income and mining taxes accrued from the Cosalá
Operations during the period.
Page 11
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Analysis of the six months ended June 30, 2022 vs. the six months ended June 30, 2021
The Company recorded a net loss of $9.6 million for the six months ended June 30, 2022 compared to a net loss of $109.6 million for the six months ended June 30, 2021. The decrease in
net loss was primarily attributable to higher net revenue ($26.4 million), lower cost of sales ($20.2 million), lower impairment to property, plant and equipment ($55.6 million), and gain on government loan forgiveness ($4.3 million), offset in part
by higher depletion and amortization ($4.4 million), and higher income tax expense ($1.9 million), each of which are described in more detail below.
Revenue increased by $26.4 million to $46.4 million for the six months ended June 30, 2022 from $20.0 million for the six
months ended June 30, 2021. The increase was primarily due to $28.8 million in revenue from the Cosalá Operations YTD-2022, less a $2.1 million decrease in gold and silver revenue due to the suspension of mining operations at Relief Canyon.
Cost of sales decreased by $20.2 million to $34.3 million for the six months ended
June 30, 2022 from $54.5 million for the six months ended June 30, 2021. The decrease was primarily due to a $38.2 million decrease in cost of sales at Relief Canyon from inventory write-downs recognized in YTD-2021, offset by a $15.8 million
increase in cost of sales from the Cosalá Operations in YTD-2022, and a $2.2 million increase in cost of sales from the Galena Complex due to an increase in operating costs.
Depletion and amortization increased by $4.4 million to $11.7 million for the six months ended June 30, 2022 from $7.3 million
for the six months ended June 30, 2021. The increase was primarily due to a $3.0 million increase in depletion and amortization from the Cosalá Operations in YTD-2022 plus a $1.4 million increase in depletion and
amortization from the Galena Complex due to increased units of production.
Impairment to property, plant and equipment of $55.6 million was recorded during the six months ended June 30, 2021 as a
result of changes to Relief Canyon’s expected gold production, impairing the recovery of its net asset carrying amount. There were no comparable impairments during YTD-2022.
Gain on government loan forgiveness of $4.3 million was recorded during the six months ended June 30, 2022 as forgiveness of
the Company’s loan through the Paycheck Protection Program from the U.S. CARES Act was confirmed during the period.
Income tax expense increased by $1.9 million due to income and mining taxes accrued from the Cosalá
Operations during the period.
Page 12
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Summary of Quarterly Results
The following table presents a summary of the consolidated operating results for each of the most recent eight quarters ending with June 30, 2022.
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
|||||||||||||||||||||||||
|
2022
|
2022
|
2021
|
1,5
|
2021
|
1,5
|
2021
|
1,5
|
2021
|
1,5
|
2020
|
1
|
2020
|
1
|
|||||||||||||||||||
|
Revenue ($ M)
|
$
|
20.0
|
$
|
26.4
|
$
|
14.2
|
$
|
10.9
|
$
|
9.5
|
$
|
10.4
|
$
|
8.7
|
$
|
7.3
|
||||||||||||||||
|
Net Loss ($ M)
|
(9.3
|
)
|
(0.3
|
)
|
(32.4
|
)
|
(18.6
|
)
|
(17.8
|
)
|
(91.8
|
)
|
(9.0
|
)
|
(6.2
|
)
|
||||||||||||||||
|
Comprehensive Income (Loss) ($ M)
|
(7.0
|
)
|
2.8
|
(34.9
|
)
|
(19.1
|
)
|
(18.7
|
)
|
(87.1
|
)
|
(9.6
|
)
|
(5.7
|
)
|
|||||||||||||||||
|
Silver Produced (oz)2
|
299,228
|
300,316
|
61,001
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Zinc Produced (lb)2
|
9,941,949
|
9,573,243
|
4,164,185
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Lead Produced (lb)2
|
6,447,775
|
6,367,477
|
1,672,806
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Cost of Sales/Ag Eq Oz Produced ($/oz)2,3,4
|
$
|
9.76
|
$
|
10.26
|
$
|
7.47
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
|
Cash Costs/Ag Oz Produced ($/oz)2,3,4
|
$
|
(2.72
|
)
|
$
|
(9.55
|
)
|
$
|
(18.53
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
All-In Sustaining Costs/Ag Oz Produced ($/oz)2,3,4
|
$
|
5.37
|
$
|
(2.67
|
)
|
$
|
(14.67
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Current Assets (qtr. end) ($ M)
|
$
|
29.1
|
$
|
29.0
|
$
|
23.5
|
$
|
28.3
|
$
|
29.4
|
$
|
27.7
|
$
|
20.1
|
$
|
36.0
|
||||||||||||||||
|
Current Liabilities (qtr. end) ($ M)
|
38.1
|
33.5
|
45.6
|
38.2
|
39.0
|
27.9
|
39.0
|
34.6
|
||||||||||||||||||||||||
|
Working Capital (qtr. end) ($ M)
|
(9.0
|
)
|
(4.5
|
)
|
(22.1
|
)
|
(9.9
|
)
|
(9.6
|
)
|
(0.2
|
)
|
(18.9
|
)
|
1.4
|
|||||||||||||||||
|
Total Assets (qtr. end) ($ M)
|
$
|
209.4
|
$
|
215.8
|
$
|
213.4
|
$
|
205.5
|
$
|
207.7
|
$
|
207.0
|
$
|
284.8
|
$
|
279.6
|
||||||||||||||||
|
Total Liabilities (qtr. end) ($ M)
|
90.2
|
93.7
|
109.6
|
80.8
|
83.3
|
73.8
|
103.6
|
96.4
|
||||||||||||||||||||||||
|
Total Equity (qtr. end) ($ M)
|
119.2
|
122.1
|
103.8
|
124.7
|
124.4
|
133.2
|
181.2
|
183.2
|
| 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.
|
Liquidity
The change in cash since December 31, 2021 can be summarized as follows (in millions of U.S. dollars):
|
Opening cash balance as at December 31, 2021
|
$
|
2.9
|
||
|
Cash generated from operations
|
4.1
|
|||
|
Expenditures on property, plant and equipment
|
(8.0
|
)
|
||
|
Repayments to Glencore pre-payment facility
|
(1.5
|
)
|
||
|
Lease payments
|
(1.7
|
)
|
||
|
Repayments to promissory note
|
(1.2
|
)
|
||
|
At-the-market offering
|
10.2
|
|||
|
Sandstorm private placements
|
4.6
|
|||
|
Delivery of metals purchased
|
(4.1
|
)
|
||
|
Contribution from non-controlling interests
|
2.0
|
|||
|
Decrease in trade and other receivables
|
3.5
|
|||
|
Change in inventories
|
(1.1
|
)
|
||
|
Change in prepaid expenses
|
(1.3
|
)
|
||
|
Change in trade and other payables
|
(0.1
|
)
|
||
|
Change in foreign exchange rates
|
0.5
|
|||
|
Closing cash balance as at June 30, 2022
|
$
|
8.8
|
Page 13
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
The Company’s cash and cash equivalents balance increased from $2.9 million to $8.8 million since December 31, 2021 with a working capital deficit of $9.0 million mainly due to cash
generated from operations, and net proceeds received from the at-the-market offering and the Sandstorm private placements in YTD-2022. This increase was offset by expenditures of property, plant and equipment (including the Galena hoist project),
lease payments, repayment of the Glencore pre-payment facility, repayments to the existing promissory note, and delivery of metals to Sandstorm. Current liabilities as at June 30, 2022 were $38.0 million which is $7.6 million lower than at December
31, 2021, principally due to repayments on the outstanding Glencore pre-payment facility, and forgiveness of the U.S. CARES Act government loan.
The Company operates in a cyclical industry where cash flow has historically been correlated to market prices for commodities. 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. Management evaluates viable financing alternatives to ensure sufficient liquidity including debt instruments, concentrate offtake agreements, sale of non-core assets, private equity financing, sale of
royalties on its properties, metal prepayment and streaming arrangements, and the issuance of equity. Despite increases in the market price of silver, zinc and lead during the first half of 2022, several material uncertainties may impact the
Company’s liquidity in the short term, such as: the price of commodities, general inflationary pressures, cash flow positive production at both the Company’s operating mines, the Galena Complex Recapitalization Plan, and COVID-19. The Company
believes that it has sufficient access to capital and cash flow to fund its 2022 operations, development, and exploration plans while meeting production targets (other than production in respect of temporary suspension of mining operations at Relief
Canyon) at current commodity price levels. In the longer term, as the Cosalá Operations sustain full production, the hoist project is finalized on the currently anticipated timing and budget and the Galena Complex is optimized on our currently
anticipated plans, and the outlook for silver, zinc, copper, and lead prices remains positive, the Company believes that cash flow will be sufficient to fund ongoing operations. However, additional impairments to the carrying value of the Company’s
mining interests and property and equipment may also be required depending on ongoing technical studies at Relief Canyon, or if both precious and base metal prices decrease from their current levels.
The Company’s liquidity has improved significantly since December 31, 2021 with the restart of the Cosalá Operations and continuing operational improvements at the Galena Complex in the current metal
price environment. As a result, the Company’s going concern note disclosure that was present in its December 31, 2021 financial statements was removed due to the improvements in operating cash flow, working capital, net income, and metal
production, among other factors. However, the ability to maintain cash flow positive production at the Cosalá Operations through meeting production targets and at the Galena Complex through implementing the Galena Recapitalization Plan, allowing
the Company to generate sufficient operating cash flows while facing market fluctuations in commodity prices and inflationary pressures, are significant judgments in the condensed interim consolidated financial statements with respect to the
Company’s liquidity. Should the Company experience negative operating cash flows in future periods, the Company may need to raise additional funds through the issuance of equity (including the existing ATM offering) or debt securities.
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.
On May 11, 2020, the Company received approximately $4.5 million in loan through the Paycheck Protection Program from the U.S. CARES Act to assist with payroll and other expenses at the
Galena Complex during the COVID-19 pandemic. The Company received confirmation via letter dated March 31, 2022 from the U.S. Small Business Administration that $4.3 million of the loan has been forgiven thus far. The Company has filed an appeal under
the Paycheck Protection Program for the remaining $0.2 million of the loan.
Page 14
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
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 16 in the audited consolidated financial statements of the Company and the notes thereto for the year ended December 31, 2021). 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 $0.5 million per year for each of the next 5 years (excluding fiscal 2021 funding requirements paid during YTD-2022), with approximately $0.2 million funded during YTD-2022 (as of August 12, 2022). Interest rates and market volatility
have increased in recent months which may impact future funding commitments. Further effects from COVID-19 may add significant volatility to market conditions and changes in discount rates which may impact long term annual funding requirements.
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 Q2-2022 and adjusted by approximately $4.9 million as a result of significant market volatility and increases to interest
rates set by central banks and governments globally. The Company expects to continue to review the pension valuation quarterly.
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 $8.0 million during the six months ended June 30, 2022 (2021: $6.8 million) spent on purchase of property, plant and equipment mostly towards the
Galena Complex Recapitalization Plan.
Page 15
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
The following table sets out the Company’s contractual obligations as of June 30, 2022:
|
|
Less than
|
Over 5
|
||||||||||||||||||
|
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
|
Trade and other payables
|
$
|
21,299
|
$
|
21,299
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Promissory note
|
3,750
|
3,750
|
-
|
-
|
-
|
|||||||||||||||
|
Interest on promissory note
|
121
|
121
|
-
|
-
|
-
|
|||||||||||||||
|
RoyCap convertible debenture
|
12,649
|
-
|
12,649
|
-
|
-
|
|||||||||||||||
|
Interest on RoyCap convertible debenture
|
1,852
|
1,010
|
842
|
-
|
-
|
|||||||||||||||
|
Government loan
|
222
|
222
|
-
|
-
|
-
|
|||||||||||||||
|
Metals contract liability
|
34,947
|
10,785
|
21,197
|
2,965
|
-
|
|||||||||||||||
|
Projected pension contributions
|
3,187
|
553
|
1,093
|
1,219
|
322
|
|||||||||||||||
|
Decommissioning provision
|
18,099
|
-
|
-
|
-
|
18,099
|
|||||||||||||||
|
Other long-term liabilities
|
1,321
|
-
|
440
|
318
|
563
|
|||||||||||||||
|
Total
|
$
|
97,447
|
$
|
37,740
|
$
|
36,221
|
$
|
4,502
|
$
|
18,984
|
||||||||||
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 18 of the unaudited condensed interim consolidated financial statements for the six months ended June 30, 2022.
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, 2022.
Risk Factors
The business of the Company is subject to a substantial number of risks and uncertainties. In addition to considering the information disclosed in the
forward-looking statements, financial statements and the other publicly filed documentation regarding the Company available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov, and on the Company’s website at www.americas-gold.com, the reader should
carefully consider each of, and the cumulative effect of, the risk factors relating to the Company found under the heading “Risk Factors” in the Company’s Annual Information Form dated March 28, 2022 or the Company’s MD&A for the year ended
December 31, 2021 dated March 17, 2022. Any of these risk elements could have material adverse effects on the business of the Company. See note 26 – Financial risk management of the Company’s audited consolidated
financial statements for the year ended December 31, 2021 and note 18 – Financial risk management of the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2022 and 2021.
Inflationary pressure and global supply chain delays may negatively impact the Company’s operations
The geographic areas and markets in which the Company operates have been experiencing and continue to experience elevated inflationary pressures. During YTD-2022,
the Company has experienced, among other things, higher machinery, raw material and equipment costs, as well as wage pressures in some markets. Inflationary pressures on the Company are expected to continue through 2022 and potentially further and
such pressures could be exacerbated by global supply chain shortages and delays and increased input costs. Inflationary price increases and related pressures that are not offset by commodity price increases and operational efficiencies may have a
material adverse effect on the Company’s results of operations and profitability.
Page 16
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Accounting Standards and Pronouncements
Accounting standards issued and applied
The following are changes in accounting policies effective as at January 1, 2022:
(i) Property, plant and
equipment
Amendments to IAS 16 - Property, Plant and Equipment – Proceeds before Intended Use - The standard is amended to prohibit deducting from the cost of property, plant and equipment any
proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, the Company recognizes the proceeds from selling such items, and
the cost of producing those items, in profit or loss. The amendments to IAS 16 are effective for annual periods beginning on or after January 1, 2022, with early adoption permitted. The amendments apply retrospectively only to property, plant and
equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the Company
first applies the amendments. The Company adopted the standard effective January 1, 2022 and retrospectively recognized $0.2 million in proceeds and costs related to sales from the Relief Canyon Mine prior to its declaration of commercial production
during fiscal 2021.
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, 2022, the Company does not have any non-hedge foreign exchange or commodity forward contracts outstanding.
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, 2022, there were 184,277,372 common shares and nil preferred shares issued and outstanding.
As at August 12, 2022, there were 184,277,372 common shares and nil preferred shares issued and outstanding, and 12,066,667 options outstanding which are exchangeable in common shares of
the Company. The number of common shares issuable on the exercise of warrants is 1,453,298.
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, 2022, the Company’s CEO and CFO have certified that the DC&P are effective and that during the period ended June 30, 2022, 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.
Page 17
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
Technical Information
The scientific and technical information relating to the operation of the Company’s material operating mining properties and relating to mineral reserves contained herein has been
reviewed and approved by Daren Dell, P.Eng., Chief Operating Officer of the Company. The scientific and technical information relating to mineral resources and exploration contained herein has been reviewed and approved by Niel de Bruin, P.Geo.,
Director of Geology of the Company. Each of Messrs. Dell and de Bruin are "qualified persons" 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.sedar.com, 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.
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, 2022
|
Reconciliation of Average Realized Silver, Zinc and Lead Prices
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20211
|
|
|
YTD-2022 |
|
YTD-20211 | |||||||||
|
Gross silver sales revenue ('000)
|
$
|
8,748
|
$
|
6,586
|
$
|
18,995
|
$
|
13,286
|
||||||||
|
Payable metals and fixed pricing adjustments ('000)
|
25
|
(23
|
)
|
10
|
(4
|
)
|
||||||||||
|
Payable silver sales revenue ('000)
|
$
|
8,773
|
$
|
6,563
|
$
|
19,005
|
$
|
13,282
|
||||||||
|
Divided by silver sold (oz)
|
390,726
|
248,405
|
818,900
|
507,412
|
||||||||||||
|
Average realized silver price ($/oz)
|
$
|
22.45
|
$
|
26.42
|
$
|
23.21
|
$
|
26.18
|
||||||||
|
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20211
|
|
|
YTD-2022 |
|
YTD-20211 | |||||||||
|
Gross zinc sales revenue ('000)
|
$
|
15,984
|
-
|
$
|
31,584
|
-
|
||||||||||
|
Payable metals and fixed pricing adjustments ('000)
|
(115
|
)
|
-
|
(102
|
)
|
-
|
||||||||||
|
Payable zinc sales revenue ('000)
|
$
|
15,869
|
-
|
$
|
31,482
|
-
|
||||||||||
|
Divided by zinc sold (lb)
|
9,280,165
|
-
|
18,428,995
|
-
|
||||||||||||
|
Average realized zinc price ($/lb)
|
$
|
1.71
|
-
|
$
|
1.71
|
-
|
||||||||||
|
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20211
|
|
|
YTD-2022 |
|
YTD-20211 | |||||||||
|
Gross lead sales revenue ('000)
|
$
|
7,333
|
$
|
4,550
|
$
|
15,999
|
$
|
9,255
|
||||||||
|
Payable metals and fixed pricing adjustments ('000)
|
(49
|
)
|
1
|
(56
|
)
|
(12
|
)
|
|||||||||
|
Payable lead sales revenue ('000)
|
$
|
7,284
|
$
|
4,551
|
$
|
15,943
|
$
|
9,243
|
||||||||
|
Divided by lead sold (lb)
|
7,600,200
|
4,745,453
|
15,785,907
|
9,946,561
|
||||||||||||
|
Average realized lead price ($/lb)
|
$
|
0.96
|
$
|
0.96
|
$
|
1.01
|
$
|
0.93
|
||||||||
| 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.
|
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
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20212
|
|
YTD-2022
|
YTD-20212
|
|||||||||||
|
Cost of sales ('000)
|
$
|
16,552
|
-
|
$
|
33,106
|
-
|
||||||||||
|
Less non-controlling interests portion ('000)
|
(3,440
|
)
|
-
|
(6,918
|
)
|
-
|
||||||||||
|
Attributable cost of sales ('000)
|
13,112
|
-
|
26,188
|
-
|
||||||||||||
|
Divided by silver equivalent produced (oz)
|
1,343,062
|
-
|
2,617,532
|
-
|
||||||||||||
|
Cost of sales/Ag Eq oz produced ($/oz)
|
$
|
9.76
|
-
|
$
|
10.00
|
-
|
||||||||||
Page 19
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
|
Reconciliation of Cosalá Operations Cost of Sales/Ag Eq Oz Produced
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20212
|
|
YTD-2022
|
YTD-20212
|
|||||||||||
|
Cost of sales ('000)
|
$
|
7,953
|
-
|
$
|
15,812
|
-
|
||||||||||
|
Divided by silver equivalent produced (oz)
|
1,063,644
|
-
|
2,053,844
|
-
|
||||||||||||
|
Cost of sales/Ag Eq oz produced ($/oz)
|
$
|
7.48
|
-
|
$
|
7.70
|
-
|
||||||||||
|
Reconciliation of Galena Complex Cost of Sales/Ag Eq Oz Produced
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20212
|
|
YTD-2022
|
YTD-20212
|
|||||||||||
|
Cost of sales ('000)
|
$
|
8,599
|
-
|
$
|
17,294
|
-
|
||||||||||
|
Divided by silver equivalent produced (oz)
|
465,697
|
-
|
939,480
|
-
|
||||||||||||
|
Cost of sales/Ag Eq oz produced ($/oz)
|
$
|
18.46
|
-
|
$
|
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).
|
| 2 |
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.
|
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
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20212
|
YTD-2022
|
YTD-20212
|
||||||||||||
|
Cost of sales ('000)
|
$
|
16,552
|
-
|
$
|
33,106
|
-
|
||||||||||
|
Less non-controlling interests portion ('000)
|
(3,440
|
)
|
-
|
(6,918
|
)
|
-
|
||||||||||
|
Attributable cost of sales ('000)
|
13,112
|
-
|
26,188
|
-
|
||||||||||||
|
Non-cash costs ('000)
|
71
|
-
|
(1,725
|
)
|
-
|
|||||||||||
|
Direct mining costs ('000)
|
$
|
13,183
|
-
|
$
|
24,463
|
-
|
||||||||||
|
Smelting, refining and royalty expenses ('000)
|
6,447
|
-
|
12,074
|
-
|
||||||||||||
|
Less by-product credits ('000)
|
(20,440
|
)
|
-
|
(40,215
|
)
|
-
|
||||||||||
|
Cash costs ('000)
|
$
|
(810
|
)
|
-
|
$
|
(3,678
|
)
|
-
|
||||||||
|
Divided by silver produced (oz)
|
299,228
|
-
|
599,544
|
-
|
||||||||||||
|
Cash costs/Ag oz produced ($/oz)
|
$
|
(2.72
|
)
|
-
|
$
|
(6.13
|
)
|
-
|
||||||||
Page 20
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
|
Reconciliation of Cosalá Operations Cash Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20212
|
|
YTD-2022
|
YTD-20212
|
|||||||||||
|
Cost of sales ('000)
|
$
|
7,953
|
-
|
$
|
15,812
|
-
|
||||||||||
|
Non-cash costs ('000)
|
20
|
-
|
(1,421
|
)
|
-
|
|||||||||||
|
Direct mining costs ('000)
|
$
|
7,973
|
-
|
$
|
14,391
|
-
|
||||||||||
|
Smelting, refining and royalty expenses ('000)
|
5,485
|
-
|
10,184
|
-
|
||||||||||||
|
Less by-product credits ('000)
|
(18,055
|
)
|
-
|
(35,366
|
)
|
-
|
||||||||||
|
Cash costs ('000)
|
$
|
(4,597
|
)
|
-
|
$
|
(10,791
|
)
|
-
|
||||||||
|
Divided by silver produced (oz)
|
127,803
|
-
|
254,570
|
-
|
||||||||||||
|
Cash costs/Ag oz produced ($/oz)
|
$
|
(35.97
|
)
|
-
|
$
|
(42.39
|
)
|
-
|
||||||||
|
Reconciliation of Galena Complex Cash Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2022
|
Q2-202122
|
YTD-2022
|
YTD-20212
|
||||||||||||
|
Cost of sales ('000)
|
$
|
8,599
|
-
|
$
|
17,294
|
-
|
||||||||||
|
Non-cash costs ('000)
|
85
|
-
|
(507
|
)
|
-
|
|||||||||||
|
Direct mining costs ('000)
|
$
|
8,684
|
-
|
$
|
16,787
|
-
|
||||||||||
|
Smelting, refining and royalty expenses ('000)
|
1,603
|
-
|
3,150
|
-
|
||||||||||||
|
Less by-product credits ('000)
|
(3,975
|
)
|
-
|
(8,081
|
)
|
-
|
||||||||||
|
Cash costs ('000)
|
$
|
6,312
|
-
|
$
|
11,856
|
-
|
||||||||||
|
Divided by silver produced (oz)
|
285,707
|
-
|
574,956
|
-
|
||||||||||||
|
Cash costs/Ag oz produced ($/oz)
|
$
|
22.09
|
-
|
$
|
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).
|
| 2 |
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.
|
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
|
||||||||||||||||
|
|
Q2-2022
|
Q2-202122
|
|
YTD-2022
|
YTD-20212
|
|||||||||||
|
Cash costs ('000)
|
$
|
(809
|
)
|
-
|
$
|
(3,677
|
)
|
-
|
||||||||
|
Capital expenditures ('000)
|
2,138
|
-
|
3,761
|
-
|
||||||||||||
|
Exploration costs ('000)
|
278
|
-
|
722
|
-
|
||||||||||||
|
All-in sustaining costs ('000)
|
$
|
1,607
|
-
|
$
|
806
|
-
|
||||||||||
|
Divided by silver produced (oz)
|
299,228
|
-
|
599,544
|
-
|
||||||||||||
|
All-in sustaining costs/Ag oz produced ($/oz)
|
$
|
5.37
|
-
|
$
|
1.34
|
-
|
||||||||||
Page 21
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
|
Reconciliation of Cosalá Operations All-In Sustaining Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20212
|
|
YTD-2022
|
YTD-20212
|
|||||||||||
|
Cash costs ('000)
|
$
|
(4,597
|
)
|
-
|
$
|
(10,791
|
)
|
-
|
||||||||
|
Capital expenditures ('000)
|
1,022
|
-
|
1,393
|
-
|
||||||||||||
|
Exploration costs ('000)
|
266
|
-
|
700
|
-
|
||||||||||||
|
All-in sustaining costs ('000)
|
$
|
(3,309
|
)
|
-
|
$
|
(8,698
|
)
|
-
|
||||||||
|
Divided by silver produced (oz)
|
127,803
|
-
|
254,570
|
-
|
||||||||||||
|
All-in sustaining costs/Ag oz produced ($/oz)
|
$
|
(25.89
|
)
|
-
|
$
|
(34.17
|
)
|
-
|
||||||||
|
Reconciliation of Galena Complex All-In Sustaining Costs/Ag Oz Produced
|
||||||||||||||||
|
|
Q2-2022
|
Q2-20212
|
YTD-2022
|
YTD-20212
|
||||||||||||
|
Cash costs ('000)
|
$
|
6,312
|
-
|
$
|
11,856
|
-
|
||||||||||
|
Capital expenditures ('000)
|
1,860
|
-
|
3,946
|
-
|
||||||||||||
|
Exploration costs ('000)
|
20
|
-
|
37
|
-
|
||||||||||||
|
All-in sustaining costs ('000)
|
$
|
8,192
|
-
|
$
|
15,839
|
-
|
||||||||||
|
Galena Complex Recapitalization Plan costs ('000)
|
2,308
|
-
|
3,855
|
-
|
||||||||||||
|
All-in sustaining costs with Galena Recapitalization Plan ('000)
|
$
|
10,500
|
-
|
$
|
19,694
|
-
|
||||||||||
|
Divided by silver produced (oz)
|
285,707
|
-
|
574,956
|
-
|
||||||||||||
|
All-in sustaining costs/Ag oz produced ($/oz)
|
$
|
28.67
|
-
|
$
|
27.55
|
-
|
||||||||||
|
All-in sustaining costs with Galena Recapitalization Plan/Ag oz produced ($/oz)
|
$
|
36.75
|
-
|
$
|
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).
|
| 2 |
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.
|
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
|
||||||||||||||||
|
|
Q2-2022
|
Q2-2021
|
YTD-2022
|
YTD-2021
|
||||||||||||
|
Cash generated from (used in) operating activities ('000)
|
$
|
(2,312
|
)
|
$
|
(5,604
|
)
|
$
|
4,137
|
$
|
(12,796
|
)
|
|||||
|
Changes in non-cash working capital items ('000)
|
9,284
|
(9,987
|
)
|
1,012
|
(19,108
|
)
|
||||||||||
|
Net cash generated from (used in) operating activities ('000)
|
$
|
6,972
|
$
|
(15,591
|
)
|
$
|
5,149
|
$
|
(31,904
|
)
|
||||||
Page 22
Americas Gold and Silver Corporation
Management’s Discussion & Analysis
For the three and six months ended June 30, 2022
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
|
||||||||
|
|
Q2-2022
|
Q2-2021
|
||||||
|
Current Assets ('000)
|
$
|
29,091
|
$
|
29,370
|
||||
|
Less current liabilities ('000)
|
(38,061
|
)
|
(39,034
|
)
|
||||
|
Working capital ('000)
|
$
|
(8,970
|
)
|
$
|
(9,664
|
)
|
||
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 June 30, 2022.
|
|
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.
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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)
|
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
|
(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)
|
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
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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
|
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, 2022 and
ended on June 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
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Date: August 12, 2022
“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, 2022.
|
|
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.
|
|
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, 2022 and
ended on June 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
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Date: August 12, 2022
“Warren Varga”
Warren Varga
Chief Financial Officer