Vizsla Silver Corp 40-F for FY2024
Vizsla Silver Corp. (VZLA)
About this 40-F
Vizsla Silver Corp filed this 40-F on July 19, 2024, covering the fiscal year ended April 30, 2024 (FY2024).
Headline figures
Fiscal year ended April 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- 15.95M CAD
- compared with a net loss of 13.59M CAD a year earlier
- Diluted EPS
- -0.08 CAD
- compared with -0.08 CAD a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934 |
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Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 |
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Commission File Number
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(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant's name into English (if applicable))
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British Columbia, |
1040 |
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(Province or other jurisdiction of |
(Primary Standard Industrial Classification |
(I.R.S. Employer |
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Code Number) |
Identification Number) |
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(Address and telephone number of Registrant's principal executive offices)
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(Name, address (including zip code) and telephone number (including
area code) of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
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For annual reports, indicate by check mark the information filed with this Form:
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Indicate the number of outstanding shares of each of the registrant's classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
| † | The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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EXPLANATORY NOTE
Vizsla Silver Corp. (the "Company," "Registrant," or "Vizsla") is a "foreign private issuer" as defined in Rule 3b-4 under Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is a Canadian issuer eligible to file its annual report ("Annual Report") pursuant to Section 13 of the Exchange Act on Form 40-F pursuant to the multi-jurisdictional disclosure system (the "MJDS") adopted by the United States Securities and Exchange Commission (the "SEC"). The Company's common shares are listed on the TSX Venture Exchange and the NYSE American LLC ("NYSE") under the trading symbol "VZLA".
In this annual report, references to "we", "our", "us", the "Company", the "Registrant", or "Vizsla", mean Vizsla Silver Corp., unless the context suggests otherwise.
FORWARD LOOKING STATEMENTS
Certain information, estimates and projections contained in this Annual Report, and the documents incorporated by reference herein, if any, constitute forward-looking statements regarding the Company, its operations and projects, including, but not limited to, the Panuco-Copala Property (as defined in the Management Discussion and Analysis of the Company for the year ended April 30, 2024, attached as Exhibit 99.3 to this Annual Report). All statements that are not historical facts, involving without limitation, statements regarding future projections, plans and objectives, securing strategic partners and financing requirements and the ability to fund future mine development are forward-looking statements, or forward-looking information. Forward-looking information and statements involve risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such information or statements. Such risk factors and uncertainties include, but are in no way limited to, statements with respect to the effect and estimated timeline of the drilling and assay results of the Company, the estimation of mineral reserves and mineral resources, the timing and amount of estimated future exploration, costs of exploration, capital expenditures, success of exploration activities, permitting time lines and permitting, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, fluctuations in mineral prices, volatility in the global financial markets, increased inflation, and other risk factors, as discussed in the Company's filings with Canadian securities regulatory agencies including the documents incorporated by reference herein. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.
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There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company disclaims any obligation to update any forward-looking statements or information, other than as may be specifically required by applicable securities laws and regulations.
Forward-looking statements are subject to a variety of risks, uncertainties, and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation those risks outlined under the heading "Risk Factors" beginning on page 9 in the Annual Information Form for the year ended April 30, 2024, attached as Exhibit 99.1 to this Annual Report, and incorporated herein by reference, and under the heading "Risks Factors and Uncertainties" on beginning page 27 in the Registrant's Management's Discussion & Analysis for the year ended April 30, 2024, attached as Exhibit 99.3 to this Annual Report, and incorporated herein by reference, and in other filings that the Registrant has made and may make with applicable securities authorities in the future.
NOTICE TO UNITED STATES READERS - DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The Registrant is permitted, under the MJDS, to prepare this Annual Report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Registrant has historically prepared its consolidated financial statements, which are filed as Exhibit 99.2, and incorporated herein by reference, to this Annual Report on Form 40-F, in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board, which are subject to Canadian auditing and auditor independence standards. Financial statements prepared in IFRS may differ from financial statements prepared in United States GAAP ("U.S. GAAP") and from practices prescribed by the SEC. Therefore, the Registrant's financial statements filed with this Annual Report may not be comparable to financial statements of United States companies prepared in accordance with U.S. GAAP.
Unless otherwise indicated, all dollar amounts in this annual report on Form 40-F are in Canadian dollars. The exchange rate of Canadian dollars into U.S. dollars, on July 17, 2024 based upon the closing rate published by the Bank of Canada, was U.S.$1.00=CDNU.S.$1.00=CDN$1.37. Bank of Canada exchange rates are nominal quotations and are not buying or selling rates. These rates are intended for statistical or analytical purposes. Rates available from financial institutions will differ. Rates are expressed in Canadian dollars, converted from U.S. dollars.
PRINCIPAL DOCUMENTS
The following documents have been filed as part of this annual report on Form 40-F:
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1 Nauth NTD: To be obtained on day before filing.
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A. Annual Information Form
The Registrant's Annual Information Form for the fiscal year ended April 30, 2024 is attached as Exhibit 99.1 to this Annual Report on Form 40-F, and is incorporated by reference herein.
B. Audited Annual Financial Statements
The Registrant's consolidated audited annual financial statements, including the reports of the independent registered public accounting firm with respect thereto, are attached as Exhibit 99.2 to this Annual Report on Form 40-F, and is incorporated by reference herein.
C. Management's Discussion and Analysis
The Registrant's management's discussion and analysis of financial condition and results of operations for the year ended April 30, 2024 is attached as Exhibit 99.3 to this Annual Report on Form 40-F, and is incorporated by reference herein.
TAX MATTERS
Purchasing, holding or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this Annual Report on Form 40-F.
DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to ensure that (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company's reports filed under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer ("CEO") and its Chief Financial Officer ("CFO"), as appropriate, to allow for timely decisions regarding required disclosure.
At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Company's management, including the CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on that evaluation, the Company's CEO and CFO have concluded that, as of April 30, 2024, the Company's disclosure controls and procedures were effective.
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MANAGEMENT'S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company's management, including the Company's CEO and CFO, is responsible for establishing and maintaining adequate internal control over the Company's internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS. The Company's internal control over financial reporting includes policies and procedures that: pertain to the maintenance of records that, in reasonable detail accurately and fairly reflect the transactions and disposition of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with IFRS and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.
Because of their inherent limitations, internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company's management (with the participation of the CEO and the CFO) conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of April 30, 2024. This evaluation was based on the criteria set forth in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management has concluded that the Company's internal control over financial reporting was effective as at April 30,2024, and management's assessment did not identify any material weaknesses.
ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
This Annual Report does not include an attestation report of the Registrant's registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Under Section 3 of the Exchange Act, as a result of enactment of the Jumpstart Our Business Startups Act (the "JOBS Act"), "emerging growth companies" are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002, which generally requires that a public company's registered public accounting firm provide an attestation report relating to management's assessment of internal control over financial reporting. The Registrant qualifies as an "emerging growth company" and therefore has not included in, or incorporated by reference into, this Annual Report such an attestation report as of the end of the period covered by this Annual Report.
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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in the Registrant's internal control over financial reporting during the fiscal year ended April 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
NOTICES PURSUANT TO REGULATION BTR
None.
CODE OF CONDUCT
The Registrant has adopted a written "code of ethics" (as defined by the rules and regulations of the SEC), entitled "Code of Business Conduct and Ethics" (the "Code") that applies to all members of the Board of Directors, officers, employees, and consultants of the Company and its affiliates and subsidiaries worldwide. Adherence to this code is a condition of employment with or providing services to the Company.
The Code may be obtained upon request from Vizsla Silver Corp.'s head office at Suite 1723, 595 Burrard Street, Vancouver, British Columbia, V7X 1J1, or by viewing the Registrant's web site at www.vizslasilvercorp.ca.
All amendments to the Code, and all waivers of the Code with respect to any director, executive officer or principal financial and accounting officers, will be posted on the Registrant's web site within five business days following the date of the amendment or waiver and any amendment will be provided in print to any shareholder upon request.
AUDIT COMMITTEE
The Board of Directors has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act and Section 803B of the NYSE American LLC Company Guide. The Company's Audit Committee is comprised of Harry Pokrandt (Chair), Eduardo Luna, and David Cobbold, all of whom, in the opinion of the Company's Board of Directors, are independent (as determined under Rule 10A-3 of the Exchange Act and Section 803A of the NYSE American LLC Company Guide). All three members of the Audit Committee are financially literate, meaning they are able to read and understand the Company's financial statements and to understand the breadth and level of complexity of the issues that can reasonably be expected to be raised by the Company's financial statements. The Audit Committee meets the composition requirements set forth by Section 803B(2) of the NYSE American LLC Company Guide.
The members of the Audit Committee are appointed by the Company's Board of Directors annually. Each member of the Audit Committee will remain on the committee until the next annual meeting of shareholders after his or her appointment, unless otherwise removed or replaced by the Board of Directors at any time.
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The full text of the Audit Committee Charter is available on the Company's website at https://vizslasilvercorp.com/.
Audit Committee Financial Expert
The Board of Directors has determined that each of Suki Gill, Harry Pokrandt, and David Cobbold (i) is financially sophisticated within the meaning of Rule 803B of the NYSE American LLC Company Guide; (ii) is an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K; and (iii) is independent (as determined under Exchange Act Rule 10A-3 and Section 803A of the NYSE American LLC Company Guide).
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The required disclosure is included under the heading "Audit Committee Information" under the sub-heading "External Auditor Service Fees" in the Company's Annual Information Form for the fiscal year ended April 30, 2024, filed as Exhibit 99.1 to this Annual Report on Form 40-F, and incorporated herein by reference.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PROVIDED BY
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee Charter sets out responsibilities regarding the provision of non-audit services by the Registrant's external auditors and requires the Audit Committee to pre-approve all permitted non-audit services to be provided by the Registrant's external auditors, in accordance with applicable law.
OFF-BALANCE SHEET ARRANGEMENTS
The Registrant currently has no off-balance sheet arrangements.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The following table lists, as of April 30, 2024, information with respect to the Registrant's known contractual obligations (in thousands):
| Payments due by period | |||||||||||||||
| Less than | More than | ||||||||||||||
| Contractual Obligations | Total | 1 year | 1-3 years | 3-5 years | 5 years | ||||||||||
| Long-Term Debt Obligations | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
| Capital (Finance) Lease Obligations | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
| Operating Lease Obligations | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
| Purchase Obligations | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
| Other Long-Term Liabilities Reflected on Balance Sheet | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
| Total | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
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NYSE AMERICAN LLC CORPORATE GOVERNANCE
The Registrant is a foreign private issuer, and its common shares are listed on the NYSE American LLC. As a Canadian corporation listed on the NYSE American LLC ("NYSE American"), we are not required to comply with certain NYSE American corporate governance standards, so long as we comply with applicable Canadian and TSX Venture Exchange ("TSXV") corporate governance requirements. In order to claim relief under these provisions, Section 110 of the NYSE American LLC Company Guide (the "Company Guide") requires us to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law.
A comparison of NYSE American corporate governance rules required to be followed by U.S. domestic issuers under NYSE American's listing standards and our corporate governance practices (such disclosure required by Section 110 of the Company Guide) is detailed below.
Shareholder Approval
Section 711 of the Company Guide requires shareholder approval of all equity compensation plans and material revisions to such plans. The Company follows the shareholder approval requirements listed in Policy 4.4 of the TSXV Corporate Finance Manual (the "TSXV Manual") in connection with equity compensation arrangements. Pursuant to the TSXV Manual, shareholder approval is required (a) on adoption of certain types of security-based compensation plans, (b) annually in respect of certain types of security-based compensation plans, and (c) in connection with the amendment of any security-based compensation plan.
Sections 712 and 713 of the Company Guide require a listed company to obtain the approval of its shareholders for certain kinds of securities issuances. The Company follows the shareholder approval requirements in the TSXV Manual in connection with securities issuances, including Policy 4.1 in connection with private placements. Pursuant to the TSXV Manual, shareholder approval is required in connection with private placements that (a) will result in the creation of a new control person (b) appear to be undertaken as a defensive tactic to a takeover bid, or (c) unless an exemption is available, constitute a related party transaction.
Quorum
Section 123 of the Company Guide recommends a quorum of not less than one-third of a listed company's shares issued and outstanding entitled to vote at a meeting of shareholders. The Company's quorum requirement under its Articles is two shareholders entitled to vote at the meeting whether in person or by proxy who hold, in the aggregate, at least 5% of the issued shares entitled to be voted at the meeting. The Company's quorum requirements comply with the requirements under the TSXV Manual and the corporate law of British Columbia.
The foregoing is consistent with the laws, customs, and practices in the province of British Columbia and Canada.
Further information about the Registrant's governance practices is included on the Registrant's website at www.vizslasilvercorp.ca.
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MINE SAFETY DISCLOSURE
Not applicable.
UNDERTAKING
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
CONSENT TO SERVICE OF PROCESS
The Registrant has previously filed with the SEC a written consent to service of process on Form F-X. Any change to the name or address of the Registrant's agent for service shall be communicated promptly to the SEC by amendment to the Form F-X referencing the file number of the Registrant.
ADDITIONAL INFORMATION
Additional information relating to the Registrant may be found on the System for Electronic Document Analysis and Retrieval (SEDAR+) at www.sedarplus.ca and on the SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system at www.sec.gov.
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VIZSLA SILVER CORP. | ||
| By: | /s/ Michael Konnert | |
| Name: Michael Konnert | ||
| Title: Chief Executive Officer |
Date: July 18, 2024
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EXHIBIT INDEX
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CLAWBACK POLICY
December 2023
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ARTICLE 1
INTRODUCTION
1.1 The following is the policy of Vizsla Silver Corp. and its subsidiaries (collectively the "Company") regarding the recovery of incentive compensation erroneously awarded (the "Policy") to Covered Persons as a result of erroneous financial measures that are restated. This policy is intended to comply with Section 811 ("Section 811") of the New York Stock Exchange American's ("NYSE American") Company Guide and Securities and Exchange Commission ("SEC") Rule 10D-1.
ARTICLE 2
POLICY
2.1 It is the policy of the Company that if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, the Company will recover reasonably promptly from each Covered Person all Erroneously Awarded Compensation the Covered Person received during the Applicable Recovery Period due to the error in calculating Financial Reporting Measures that resulted in the restatement.
2.2 This Policy will apply to all Incentive-based compensation received by a person (a) after the person begins service as an Executive Officer or otherwise is designated by the Committee as a Covered Person (b) who served as an Executive Officer, or otherwise was a Covered Person, during the performance period for that Incentive-Based Compensation, (c) while the Company has a class of securities listed on NYSE American or any other national securities exchange or a national securities association, and (d) during the Applicable Recovery Period.
ARTICLE 3
DEFINED TERMS
3.1 When used in, or with regard to, this Policy, the following terms will have the meanings given to them in Section 811 of NYSE American (with all references to the issuer being to the Company):
Executive Officer
Incentive-Based Compensation
Financial Reporting Measures
Received
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3.2 In addition, when used in, or with regard to, this Policy, the following terms will have the following meanings:
"Applicable Recovery Period" means, with respect to a Material Restatement, the three completed fiscal years immediately preceding the Restatement Date of that Material Restatement (including as a fiscal year any transition period between the last day of the Company's previous fiscal year end and the first day of its new fiscal year that comprises a period of between nine and twelve months due to the Company's changing its fiscal year within or immediately following the aforementioned three completed fiscal years). The Company's obligation to recover Erroneously Awarded Compensation will not be dependent on if or when the restated financial statements are filed.
"Committee" means the Compensation Committee of the Company's board of directors ("Board" or "Board of Directors".
"Covered Person" means an executive officer of the Company and any other person designated by the Committee to be a Covered Person during a specified period.
"Erroneously Awarded Compensation" means, with respect to a Material Restatement, the amount of Incentive-Based Compensation Received by a Covered Person during the Applicable Recovery Period in excess of the amount that would have been received by that Covered Person if the Incentive-Based Compensation had been determined based on the restated amounts determined following the Material Restatement, computed without respect to any taxes paid (i.e. without consideration of any withholding or other taxes paid when the Incentive-Based Compensation was awarded or issued). If the Incentive-Based Compensation is based on stock price or total shareholder return and the Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an accounting restatement, it will be based on a reasonable estimate of the effect of the Material Restatement on the stock price or total shareholder return on which the Incentive-Based Compensation was received.
"Material Restatement" means an accounting restatement of previously issued financial statements of the Company due to the Company's material noncompliance with a financial requirement under the securities laws.
"Restatement Date" means, with respect to a Material Restatement, the earlier of (i) the date the Company's Board, a Committee of the Company's Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare the Material Restatement, or (ii) the date a court, regulator or other legally authorized body, directs the Company to prepare the Material Restatement.
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ARTICLE 4
EXCEPTION TO POLICY
4.1 The Company may elect not to seek to recover Erroneously Awarded Compensation from a Covered Person if the Committee determines that recovery would be impractical and one or more of the following conditions is met: (i) the direct expense paid to a third party for assistance in enforcing this Policy would exceed the amount to be recovered, and the Company has made a reasonable attempt to recover the Erroneously Awarded Compensation, documented such reasonable attempt to recover, and provided that documentation to NYSE American (ii) recovery would cause the Company to violate a law of Canada or a province of Canada that was adopted prior to November 28, 2022, and the Company obtains, and provides to NYSE American, an opinion of Canadian counsel acceptable to NYSE American that recovery would result in a violation of a law of Canada or a province of Canada, or (iii) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
ARTICLE 5
NO INDEMNIFICATION
5.1 The Company is prohibited from indemnifying any Covered Person or former Covered Person against the loss of Erroneously Awarded Compensation. No Covered Person will be entitled to indemnification from the Company or any of its subsidiaries for any costs of defending against a claim by the Company for Erroneously Received Compensation.
ARTICLE 6
ENFORCEMENT OF POLICY
6.1 The Committee will determine the steps the Company should take to recover Erroneously Awarded Compensation, provided that the Committee will not determine not to proceed against a Covered Person who received Erroneously Paid Compensation, unless it has received written advice from counsel to the effect that it is more likely than not that if the Company attempts to recover Erroneously Awarded Compensation, the effort will not result in a material net recovery by the Company (whether because of doubts regarding the Company's right to recover the Erroneously Awarded Compensation or because of doubts about the Covered Person's financial ability to return the Erroneously Awarded Compensation).
6.2 No Covered Person will be entitled to indemnification from the Company or any of its subsidiaries for any costs of defending against a claim by the Company for Erroneously Received Compensation.
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ARTICLE 7
RIGHTS AGAINST COVERED PERSONS
7.1 Every employee of the Company or any of its subsidiaries who is, or becomes, a Covered Person, will be deemed by accepting Incentive-Based Compensation to agree that that Incentive-Based Compensation is received, and will be held by the Covered Person, subject to this Policy, and that this Policy may be enforced to recover Erroneously Awarded Compensation from the Covered Person.
ARTICLE 8
ADMINISTRATION AND INTERPRETATION
8.1 The Committee will be responsible for all decisions regarding the application and interpretation of this Policy. However, in interpreting this Policy, the Committee will do so in a manner that is, to the fullest extent practicable, consistent with SEC Rule 10D-1 and Section 811 of the NYSE American Company Guide.
ARTICLE 9
MAINTAINING RECORDS
9.1 The Company will be responsible for maintaining documentation of the determination of the reasonable estimate as detailed under Section 811(c)(1)(1)(iii)(B) of NYSE American and provide such documentation to NYSE American.
9.2 The Company will also be responsible for filing all disclosures with respect to such recovery policy in accordance with the requirements of the Federal securities laws, including the disclosure required by the applicable SEC filings.
ARTICLE 10
REVIEW
10.1 The Compensation Committee shall be responsible for administering this Policy. The Compensation Committee shall review this Policy periodically and recommend appropriate changes to the Board of Directors of the Company.
ARTICLE 11
EFFECTIVE DATE
11.1 This Policy was implemented by the board of directors of the Company on December 15, 2023.LAWBACK POLICY
ANNUAL INFORMATION FORM
For the year ended April 30, 2024
Date: July 18, 2024
TABLE OF CONTENTS
PRELIMINARY NOTES
Date of Information
Unless otherwise indicated, all information contained in this Annual Information Form (this "AIF") of Vizsla Silver Corp. (the "Company") is as of April 30, 2024.
Financial Information
The Company's financial results are prepared and reported in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and Interpretations of the International Financial Reporting Interpretations Committee.
Currency and Exchange Rate Information
All dollar amounts (i.e. "$"), unless otherwise indicated, are expressed in Canadian.
Documents Incorporated by Reference
The technical report titled "Technical Report on the Updated Mineral Resource Estimate for the Panuco Ag-Au-Pb-Zn Project, Sinaloa State, Mexico" (the "Technical Report") with an effective date of September 1, 2023, prepared for the Company by Allan Armitage, Ph. D., P.Geo. of SGS Geological Services ("SGS"), Ben Eggers, MAIG, P.Geo. of SGS and Peter Mehrfert, P.Eng. of Ausenco Engineering Canada ULC ("Ausenco") is specifically incorporated by reference into this Annual Information Form and may be obtained online at the SEDAR+ website at www.sedarplus.ca.
FORWARD-LOOKING INFORMATION
Certain information, estimates and projections contained herein, and the documents incorporated by reference herein, if any, constitute forward-looking statements regarding the Company, its operations and projects, including, but not limited to, the Panuco-Copala Property (as defined herein). All statements that are not historical facts, involving without limitation, statements regarding future projections, plans and objectives, securing strategic partners and financing requirements and the ability to fund future mine development are forward-looking statements, or forward-looking information. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Forward-looking information and statements involve risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such information or statements. Such risk factors and uncertainties include, but are in no way limited to, statements with respect to the effect and estimated timeline of the drilling and assay results of the Company, the estimation of mineral reserves and mineral resources, the timing and amount of estimated future exploration, costs of exploration, capital expenditures, success of exploration activities, permitting time lines and permitting, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, fluctuations in mineral prices, uncertainties and other factors relating to public health crises, volatility in the global financial markets, increased inflation, turbulence in mining markets resulting from risks related to war (including the Russian invasion of Ukraine and the war in the Middle East), macroeconomic risks and other risk factors, as discussed in the Company's filings with Canadian securities regulatory agencies including the documents incorporated by reference herein, including those risk factors described herein under "Risk Factors". Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company disclaims any obligation to update any forward-looking statements or information, other than as may be specifically required by applicable securities laws and regulations. Actual results may differ materially from those expressed or implied by such forward-looking statements.
CORPORATE STRUCTURE
Name, Address and Incorporation
The Company was incorporated on September 26, 2017 pursuant to the Business Corporations Act (British Columbia) under the name "Vizsla Capital Corp.". On March 8, 2018, the Company changed its name to "Vizsla Resources Corp.". On February 5, 2021, the Company change its name to "Vizsla Silver Corp.".
The head office of the Company is located at Suite 1723, 595 Burrard Street, Vancouver, British Columbia V7X 1J1. The registered and records office of the Company is located at Suite 401, 353 Water Street, Vancouver, British Columbia V6B 1B8.
The Company is a reporting issuer in all provinces and territories of Canada and its common shares (the "Common Shares") are listed on the TSX Venture Exchange (the "TSXV") under the trading symbol "VZLA". The Company is classified as a Tier 2 Mining Issuer on the TSXV. On January 21, 2022, the Common Shares were listed on the NYSE American and commenced trading under the symbol "VZLA".
Intercorporate Relationships
As at April 30, 2024, the Company had two wholly-owned subsidiaries: Vizsla Royalties Corp. and Canam Alpine Ventures Ltd., both of which were incorporated pursuant to the Business Corporations Act (British Columbia). Canam Alpine Ventures Ltd. has two wholly-owned subsidiaries in Mexico: Minera Canam S.A. DE C.V., Operaciones Canam Alpine S.A. DE C.V. and Vizsla Royalties Corp. has one wholly-owned subsidiary in Canada: Panuco Royalty Corp. incorporated pursuant to the Business Corporations Act (British Columbia) and one wholly-owned subsidiary in Mexico: Canam Royalties Mexico, S.A. DE C.V.
GENERAL DEVELOPMENT OF THE BUSINESS
The Company was formed to engage in the business of the acquisition, exploration and development of mineral resource properties. The Company is currently focused on the exploration and development of the Company's 100% owned flagship Panuco-Copala silver-gold project located in Mexico (the "Panuco-Copala Property").
Three Year History
On June 3, 2021, the Company closed a bought deal prospectus offering of 27,600,000 units of the Company at a price of C$2.50 per unit for aggregate gross proceeds of C$69,000,000 (the "2021 Prospectus Offering"). Each unit consisted of one Common Share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one Common Share of the Company until December 3, 2022, at a price of C$3.25.
The 2021 Prospectus Offering was conducted by Canaccord Genuity Corp., as lead underwriter and sole bookrunner, PI Financial Corp., Clarus Securities Inc. and Sprott Capital Partners LP (the "2021 Prospectus Underwriters"). In connection with the 2021 Prospectus Offering, the Company paid the 2021 Prospectus Underwriters a cash commission cash commission equal to 6% of the gross proceeds raised under the 2021 Prospectus Offering, other than in respect of sales of the 2021 Prospectus Offering to the Company's president's list (the "President's List") for which the Company paid a cash commission equal to 3%. As further consideration for the services provided by the 2021 Prospectus Underwriters in connection with the 2021 Prospectus Offering, on closing the Company issued broker warrants to the 2021 Prospectus Underwriters, exercisable at any time on or before December 3, 2022, to acquire that number of common shares of the Company which is equal to 6% of the number of units sold under the 2021 Prospectus Offering (3% in respect of the President's List) at an exercise price of C$2.50.
On June 21, 2021, the Company closed a non-brokered private placement whereby it issued a total of 1,690,000 units at a price of C$2.50 per unit for gross proceeds of C$4,225,000. Each unit consisted of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one Common Share at a price of $3.25 per Common Share for a period of 18 months. In connection with the private placement, the Company paid cash finder's fees in the amount of $253,500 and issued 101,400 finder warrants, exercisable at any time on or before December 18, 2022 at an exercise price of C$2.50.
On April 19, 2021, the Company entered into an arrangement agreement with Vizsla Copper Corp. ("SpinCo") pursuant to which the Company agreed to a court approved plan of arrangement spin-out of its British Columbia copper exploration assets to SpinCo (the "Arrangement"). The Arrangement involved a distribution of common shares of SpinCo to the Company's shareholders, such that each shareholder of the Company would receive 0.3333 common share of SpinCo for every one common shares of the Company held, with the effect that, on the effective date of the Arrangement, the shareholders of the Company, other than dissenting shareholders, would own 100% of SpinCo.
The Arrangement was completed on September 20, 2021, and the Company injected $1,122,356 working capital to SpinCo in connection with the Arrangement. On September 20, 2021, the Company transferred its 100% interest in the Blueberry copper project located in the Babine porphyry belt of Central British Columbia and the option to acquire a 60% interest in the Carruthers Pass copper property located 200 kilometres north of Smithers, British Columbia to SpinCo and completed the Arrangement to spin out the shares of SpinCo to the shareholders of the Company. Pursuant to the Arrangement, holders of common shares of the Company on September 19, 2021, received one new common share of the Company and 0.3333 of a SpinCo share for each common share held.
On July 20, 2021, the Company entered into a binding amending agreement (the "Panuco Amending Agreement") with Minera Rio Panuco SA de CV and a binding option exercise notice ("Copala Exercise Notice") with Silverstone Resources SA de CV, which together constituted the acceleration and exercise of the Company's option to acquire 100% of the Panuco-Copala Property.
Under the Panuco Amending Agreement, the Company agreed to:
- A cash payment of US$4,250,000 payable to Minera Rio Panuco SA de CV upon signing of the Panuco Amending Agreement;
- The issuance to Minera Rio Panuco SA de CV of 6,245,902 Common Shares at a price of C$2.44 per Common Share upon the completion of the transfer of the Panuco property on or before August 10, 2021; and
- A cash payment of US$6,100,000 on or before February 1, 2022, following the refurbishment and transfer of ownership of the mill which is to occur on or before December 31, 2021.
Under the Copala Exercise Notice, the Company agreed to:
- A cash payment of US$9,500,000 payable to Silverstone Resources SA de CV upon the completion of the transfer of the Copala Property on or before August 3, 2021; and
- The issuance to Silverstone Resources SA de CV of 4,944,672 Common Shares at a price of C$2.44 per share upon the completion of the transfer of the Copala property.
On July 27, 2021, the Company appointed Michael Pettingell as VP of Business Development and Strategy.
On January 21, 2022, the Company's common shares were approved to list on the NYSE American and commenced trading under the symbol "VZLA".
On January 10, 2022, Vizsla Royalty Corp. incorporated a 100% owned subsidiary, Canam Royalties Mexico, S.A. de C.V. ("Canam Royalties"), which is 100% owned by the Company. On February 23, 2022, the Company transferred 2% NSR on certain concessions and 0.5% NSR on certain concessions to Canam Royalties.
On April 7, 2022, the Company filed on SEDAR+ an independent technical report containing a maiden mineral resource estimate on the Company's Panuco-Copala Property.
On May 5, 2022, Martin Dupuis was appointed to Chief Operating Officer from VP, Technical Services and Jesus Velador was appointed VP of Exploration.
On July 5, 2022, Stuart Smith resigned as a director of the Company.
On November 15, 2022, the Company closed a bought deal prospectus offering of 23,805,000 units of the Company at a price of C$1.45 per unit for aggregate gross proceeds of C$34,517,250 (the "2022 Prospectus Offering"). Each unit consisted of one Common Share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one Common Share of the Company until November 15, 2024, at a price of C$2.00.
The 2022 Prospectus Offering was conducted by PI Financial Corp. and Canaccord Genuity Corp., as co-lead underwriters and joint bookrunners, and Raymond James Ltd., H.C. Wainwright & Co., LLC, Roth Canada Inc. and Stifel Nicolaus Canada Inc. (the "2022 Prospectus Underwriters"). In connection with the 2022 Prospectus Offering, the Company paid the 2022 Prospectus Underwriters a cash commission cash commission equal to 6% of the gross proceeds raised under the 2022 Prospectus Offering. As further consideration for the services provided by the 2022 Prospectus Underwriters in connection with the 2022 Prospectus Offering, on closing the Company issued broker warrants to the 2022 Prospectus Underwriters, exercisable at any time on or before November 15, 2024, to acquire that number of common shares of the Company which is equal to 6% of the number of units sold under the 2022 Prospectus Offering at an exercise price of C$1.45.
On November 22, 2022, Veljko Brcic resigned as VP of Corporate Development of the Company and was appointed Corporate Development Advisor of the Company.
On December 8, 2022, David Cobbold was elected as a director of the Company at its annual general meeting.
On December 16, 2022, the Company entered into a binding strategic investment agreement (the "Definitive Agreement") with Prismo Metals Inc. ("Prismo"). Pursuant to the Definitive Agreement, the Company agreed to make a strategic investment (the "Strategic Investment") with a right of first refusal to purchase the Palos Verdes project from Prismo and acquire 4,000,000 units of Prismo (the "Prismo Units"), for aggregate consideration of C$2,000,000 ("Prismo Units").
On January 6, 2023, the Company closed its Strategic Investment with Prismo. The consideration for the Strategic Investment consisted of a cash payment of C$500,000 and 1,000,000 common shares of the Company (the "Consideration Shares"). The Consideration Shares are subject to a voluntary escrow period of 24 months with 25% of the securities released every six months. The Company acquired 4,000,000 Prismo Unit. Each Prismo Unit consisted of one common share of Prismo (a "Prismo Share") and one-half of one common share purchase warrant (a "Prismo Warrant"). Each Prismo Warrant entitles the Company to purchase one additional Prismo Share up to January 6, 2025, at a price of $0.75.
On January 27, 2023, Charles Funk resigned as a director of the Company to satisfy the requirements of the US Securities Exchange to have an independent board and was appointed Lead Technical Advisor to the board. Michael Pettingell was promoted from VP Business Development and Strategy to Senior Vice President, Business Development and Strategy.
On February 9, 2023, the Company closed a brokered private placement of 27,286,050 common shares of the Company at a price of C$1.65 per common share for aggregate gross proceeds of C$45,021,982 (the "Offering").
The Offering was led by PI Financial Corp. on behalf of a syndicate of agents that included Canaccord Genuity Corp., Raymond James Ltd., Stifel Nicolaus Canada Inc., Roth Canada Inc. and Alliance Global Partners (the "2023 Agents"). In connection with the Offering, the Company paid the 2023 Agents a cash commission equal to 6% of the gross proceeds of the Offering and issued 1,637,163 compensation options (the "Compensation Options") to the 2023 Agents. Each Compensation Option is exercisable to acquire one Common Share at $1.65 until February 9, 2025.
On November 15, 2023, Eduardo Luna was appointed as a director of the Company.
On December 18, 2023, the Company filed its first inaugural sustainability report on SEDAR+.
On January 30, 2024, Simon Cmrlec was appointed as Chief Operation Officer effective April 1, 2024, replacing Martin Dupuis.
On February 20, 2024, the Company filed the Technical Report on SEDAR+ containing an updated mineral resource estimate on the Company's Panuco-Copala Property.
On February 29, 2024, the Company closed a bought deal prospectus offering of 23,000,000 common shares of the Company (the "Offered Shares") at a price of C$1.50 per Offered Share for aggregate gross proceeds of C$34,500,000, which includes the exercise in full of the Underwriters' (as defined below) over-allotment option for 3,000,000 Offered Shares (the "Offering").
The Offering was conducted by PI Financial Corp., as lead underwriter and sole bookrunner, and Canaccord Genuity Corp., CIBC World Markets Inc., Raymond James Ltd., Stifel Nicolaus Canada Inc. and BMO Nesbitt Burns Inc. (collectively, the "Underwriters"). In consideration for the services provided by the Underwriters in connection with the Offering, the Company paid to the Underwriter a cash commission equal to 6% of the gross proceeds raised under the Offering. As further consideration for the services provided by the Underwriters in connection with the Offering, the Company issued compensation warrants to the Underwriters, exercisable at any time on or before February 28, 2026, to acquire that number of common shares of the Company which is equal to 6% of the number of Offered Shares sold under the Offering at an exercise price of C$1.50. The Offering was completed pursuant to a prospectus supplement dated February 23, 2024 to the short form base shelf prospectus of the Company dated March 31, 2023 in each of the provinces and territories of Canada (except Quebec), in the United States on a private placement basis pursuant to an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") and applicable state securities laws and other jurisdictions outside of Canada and the United States on an exempt basis. The Offering remains subject to the final approval of the TSX Venture Exchange (the "TSX-V").
On March 27, 2024, the Company entered into an arrangement agreement with Vizsla Royalties Corp. ("Vizsla Royalties") whereby the business of the Company will be reorganized into two companies by way of a plan of arrangement (the "VROY Arrangement") under the Business Corporations Act (British Columbia).
The VROY Arrangement involves, among other things, the distribution of common shares (the "Vizsla Royalties Shares") and warrants of Vizsla Royalties (the "Vizsla Royalties Warrants") to Vizsla Silver shareholders such that each shareholder as of a particular date, immediately prior to closing of the transaction (the "Record Date") will receive 1/3 of a Vizsla Royalties Share and 1/3 of a Vizsla Royalties Warrant for each common share of Vizsla Silver (the "Vizsla Silver Shares") held as of the Record Date.
Also on March 27, 2024, the Company entered into an equity distribution agreement with Canaccord Genuity Corp. and filed a Prospectus Supplement in respect of an at-the-market equity program (the "ATM Program").
The ATM Program allows the Company to issue and sell up to C$50,000,000 of Vizsla Silver Shares from treasury to the public, from time to time, through Canaccord Genuity, at the Company's discretion and in accordance with the terms and conditions of the Distribution Agreement. All Vizsla Silver Shares issued under the ATM Program will be sold in transactions that are deemed to be "at-the-market distributions" as defined in National Instrument 44-102 - Shelf Distributions, including sales made directly on the TSX Venture Exchange or on any other "marketplace" (as defined in National Instrument 21-101 - Marketplace Operation) in Canada, and/or any other method permitted by applicable law, at the prevailing market price at the time of sale and, as such, prices may vary among purchasers during the period of the ATM Program.
On March 28, 2024, the Company entered into an agreement to acquire the past-producing La Garra-Metates district (the "La Garra-Metates District") situated in the heart of the silver-gold-rich Panuco - San Dimas corridor.
The La Garra-Metates District is located 108 kilometres northeast of the City of Mazatlan, in the Municipality of Mazatlan, Sinaloa, Mexico and approximately 32 km north-northwest of the Panuco Project and 32 km south-southwest of San Dimas in the Mazatlán municipality.
On April 12, 2024, Suki Gill was appointed as a director of the Company.
On April 16, 2024, the Company entered into an agreement to acquire two large claims comprising 10,667.0 Ha (the "San Enrique prospect") located south and partially adjacent to the Company's Panuco-Copala Property.
The San Enrique prospect is situated along the highly prospective Panuco - San Dimas corridor and is covered 100% with LiDAR and partially covered with high-resolution aero-magnetic and radiometric surveys.
Recent Developments
On June 24, 2024, the Company completed the spinout of certain assets of the Company, including a royalty on the Company's Panuco Project in southern Sinaloa, Mexico into Vizsla Royalties by way of a court approved plan of arrangement under the Business Corporations Act (British Columbia). Prior to closing of the VROY Arrangement, the Company completed an internal reorganization whereby certain assets of the Company were transferred to Vizsla Royalties. Prior to the internal reorganization, the Company held the only issued and outstanding Vizsla Royalties Share. Pursuant to the VROY Arrangement, shareholders of the Company received: (i) one new Vizsla Silver Share; (ii) 1/3 of a Vizsla Royalties Share; and (iii) 1/3 of a Vizsla Royalties Warrant for each Vizsla Silver Share held on June 21, 2024. Vizsla Silver warrants and options were also adjusted pursuant to the VROY Arrangement. Following completion of the transaction, the Company had ownership and control over 83,000,000 Vizsla Royalties, representing approximately 50.8% of the then issued and outstanding Vizsla Royalties Shares, with the remainder held by shareholders of the Company. As at the date of this AIF, Vizsla Royalties is not listed on a public stock exchange but does operate as a reporting issuer.
Significant Acquisitions
During the year ended April 30, 2024, the Company did not complete any significant acquisitions for which disclosure is required under Part 8 of National Instrument 51-102.
DESCRIPTION OF BUSINESS
General Description of the Business
Business of the Company
As of the date of this AIF, the primary business of the Company is the exploration and development of the Panuco-Copala Property.
Specialized Skill and Knowledge
A number of aspects of the Company's business require specialized skills and knowledge. Such skills and knowledge include the areas of geology, drilling, logistical planning, geophysics, metallurgy and mineral processing, implementation of exploration programs, mine construction and operation, and accounting. While recent increased activity in the resource mining industry has made it more difficult to locate competent employees and consultants in such fields, the Company has found that it can locate and retain such employees and consultants and believes it will continue to be able to do so.
Competitive Conditions
As a mineral exploration and development company, the Company may compete with other entities in the mineral exploration and development business in various aspects of the business including: (a) seeking out and acquiring mineral exploration and development properties; (b) obtaining the resources necessary to identify and evaluate mineral properties and to conduct exploration and development activities on such properties; and (c) raising the capital necessary to fund its operations. The mining industry is intensely competitive in all its phases, and the Company may compete with other companies that have greater financial resources and technical facilities. Competition could adversely affect the Company's ability to acquire suitable properties or prospects in the future or to raise the capital necessary to continue with operations.
Cycles
The mineral exploration business is subject to mineral price cycles. The marketability of minerals and mineral concentrates and the ability to finance the Company on favourable terms is also affected by worldwide economic cycles.
Environmental Protection
The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous materials and other matters.
The Company may also be held liable should environmental problems be discovered that were caused by former owners and operators of its properties. The Company conducts its mineral exploration activities in compliance with applicable environmental protection legislation. The Company is not aware of any existing environmental problems related to any of its properties that may result in material liability to the Company.
Employees
As of April 30, 2024, the Company had two full-time employees and five consultants at its head office in Vancouver, Canada. The Company had sixty-four full-time employees at its offices in Mazatlán, Mexico.
Foreign Operations
The Panuco-Copala Property is the Company's material property. The Panuco-Copala Property is located in Sinaloa, Mexico. As such, the Company's operations and investments may be affected by local political and economic developments, including expropriation, invalidation of government orders, permits or agreements pertaining to property rights, political unrest, labour disputes, limitations on repatriation of earnings, limitations on mineral exports, limitations on foreign ownership, inability to obtain or delays in obtaining necessary mining permits, opposition to mining from local, environmental or other non-governmental organizations, government participation, royalties, duties, rates of exchange, high rates of inflation, price controls, exchange controls, currency fluctuations, taxation and changes in laws, regulations or policies as well as by laws and policies of Canada affecting foreign trade, investment and taxation.
Bankruptcy and Similar Procedures
There is no bankruptcy, receivership or similar proceedings against the Company, nor is the Company aware of any such pending or threatened proceedings. There have not been any voluntary bankruptcy, receivership or similar proceedings by the Company within the three most recently completed financial years or currently proposed for the current financial year.
Reorganizations
Other than as disclosed in this AIF, there have been no material reorganizations of or involving the Company within the three most recently completed financial years or currently proposed for the current financial year.
Social or Environmental Policies
At its current stage of development and activities (i.e., drilling, prospecting and development), the Company has limited financial obligations in meeting applicable environmental standards. This will change as the Company advances its projects. Environmental regulations that are applicable to the Company cover a wide variety of matters, including, without limitation, prevention of waste, pollution and protection of the environment, labour regulations and worker safety. While the Company does not currently expect the impact of costs and other effects related to compliance with environmental, health and safety regulations to have a material adverse effect on the Company's financial condition or results of operations, such regulations are evolving in a manner which is likely to result in stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their directors and employees. Such stricter standards could impact the Company's costs and have an adverse effect on results of operations. Furthermore, an environmental, safety or security incident could impact the Company's reputation in such a way that the result could have a material adverse effect on its business and on the value of its securities.
Risk Factors
The Company is in the business of acquiring, exploring and, if warranted, developing and exploiting natural resource properties. Due to the nature of the Company's proposed business and the present stage of exploration of its mineral properties, the following risk factors, among others, will apply:
Resource Exploration and Development is a Speculative Business
Resource exploration and development is a speculative business and involves a high degree of risk, including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in size to return a profit from production. The marketability of natural resources that may be acquired or discovered by the Company will be affected by numerous factors beyond the control of the Company. These factors include market fluctuations, the proximity and capacity of natural resource markets, government regulations, including regulations relating to prices, taxes, royalties, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital.
Substantial expenditures are required to establish ore reserves through drilling and metallurgical and other testing techniques, determine metal content and metallurgical recovery processes to extract metal from the ore, and construct, renovate or expand mining and processing facilities. No assurance can be given that any level of recovery of ore reserves will be realized or that any identified mineral deposit, even it is established to contain an estimated resource, will ever qualify as a commercial mineable ore body which can be legally and economically exploited. The great majority of exploration projects do not result in the discovery of commercially mineable deposits of ore.
Fluctuation of Metal Prices
Even if commercial quantities of mineral deposits are discovered by the Company, there is no guarantee that a profitable market will exist for the sale of the metals produced. Factors beyond the control of the Company may affect the marketability of any substances discovered. The prices of gold, silver, copper, lead, zinc, moly, and other minerals have fluctuated widely in recent years and are affected by several factors beyond the Company's control, including international economic and political conditions, expectations of inflation, international currency exchange rates, interest rates, consumption patterns, and speculative activities and increased production due to improved exploration and production methods. Fluctuations in commodity prices will influence the willingness of investors to fund mining and exploration companies and the willingness of companies to participate in joint ventures with the Company and the level of their financial commitment. The supply of commodities is affected by various factors, including political events, economic conditions, and production costs in major producing regions. There can be no assurance that the price of any commodities will be such that any of the properties in which the Company has, or has the right to acquire, an interest may be mined at a profit.
Financing Risks
Although the Company has been successful in the past in obtaining financing through the sale of equity securities, there can be no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing(s) will be favorable. Failure to obtain such additional financing(s) could result in delay or indefinite postponement of further exploration and development of its projects with the possible loss of such properties. At present, the Company has cash resources to fund planned exploration for the next twelve months. Timing of additional equity funding will depend on market conditions as well as exploration requirements.
Increased Costs
Management anticipates that costs at the Company's projects will frequently be subject to variation from one year to the next due to several factors, such as the results of ongoing exploration activities (positive or negative), changes in mineralization encountered, and revisions to exploration programs, if any, in response to the foregoing. Increases in the prices of such commodities or a scarcity of consultants or drilling contractors could render the costs of exploration programs to increase significantly over those budgeted. A material increase in costs for any significant exploration programs could have a significant effect on the Company's operating funds and ability to continue its planned exploration programs.
Reclamation
There is a risk that monies allotted for land reclamation may not be sufficient to cover all risks, due to changes in the nature of the waste rock or tailings and/or revisions to government regulations. Therefore, additional funds, or reclamation bonds or other forms of financial assurance may be required over the tenure of any mineral project of the Company to cover potential risks. These additional costs may have a material adverse effect on the Company's business, financial condition and results of operations.
Mining Industry is Intensely Competitive
The Company's business of the acquisition, exploration and development of mineral properties is intensely competitive. Increased competition could adversely affect the Company's ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.
Permits and Licenses
The operations of the Company will require licenses and permits from various governmental authorities. There can be no assurance that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects, on reasonable terms or at all. Delays or a failure to obtain such licenses and permits or a failure to comply with the terms of any such licenses and permits that the Company does obtain, could have a material adverse effect on the Company.
Government Regulation
Any exploration, development or mining operations carried on by the Company, will be subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labour standards. In addition, the profitability of any mining prospect is affected by the market for precious and/or base metals which is influenced by many factors including changing production costs, the supply and demand for metals, the rate of inflation, the inventory of metal producing corporations, the political environment and changes in international investment patterns.
Environmental Restrictions
The activities of the Company are subject to environmental regulations promulgated by government agencies in different countries from time to time. Environmental legislation generally provides for restrictions and prohibitions on spills, releases or emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.
Global Economy
The volatility of global capital markets, including the general economic slowdown in the mining sector, over the past several years has generally made the raising of capital by equity or debt financing more difficult. The Company may be dependent upon capital markets to raise additional financing in the future. As such, the Company is subject to liquidity risks in meeting its operating expenditure requirements and future development cost requirements in instances where adequate cash positions are unable to be maintained or appropriate financing is unavailable. These factors may impact the ability to raise equity or obtain loans and other credit facilities in the future and on terms favourable to the Company and its management. If these levels of volatility persist or if there is a further economic slowdown, the Company's operations, the Company's ability to raise capital and the trading price of the Company's securities could be adversely impacted.
Inflation
The Company's operating costs could escalate and become uncompetitive due to supply chain disruptions, inflationary cost pressures, equipment limitations, escalating supply costs, commodity prices and additional government intervention through stimulus spending or additional regulations. The Company's inability to manage costs may impact, among other things, future development decisions, which could have a material adverse impact on the Company's financial performance.
Public Health Crises
Public health crises can result in volatility and disruptions in the supply and demand for gold and other metals and minerals, global supply chains and financial markets, as well as declining trade and market sentiment and reduced mobility of people, all of which could affect commodity prices, interest rates, credit ratings, credit risk and inflation. The risks to the Company of such public health crises also include risks to employee health and safety, a slowdown or temporary suspension of operations in geographic locations impacted by an outbreak, increased labour and fuel costs, regulatory changes, political or economic instabilities or civil unrest. Any of these could affect the Company's ability to advance exploration and development with such risks to include challenges in recruiting and retaining staff and personnel, restricted access for employees and contractors to the Ana Paula Project, equipment and materials not being delivered to site on schedule or at all, and further inefficiencies required to be put in place to health and safety resulting in less productivity.
Macroeconomic Risks
Political and economic instability (including Russia's invasion of Ukraine and the war in the Middle East), global or regional adverse conditions, such as pandemics or other disease outbreaks or natural disasters, currency exchange rates, trade tariff developments, transport availability and cost, including import-related taxes, transport security, inflation and other factors are beyond the Company's control. The macroeconomic environment remains challenging and the Company's results of operations could be materially affected by such macroeconomic conditions.
Foreign Countries and Political Risk
Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business, or if significant enough, may make it impossible to continue to operate in the country. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, foreign exchange restrictions, export controls, income taxes, expropriation of property, environmental legislation and mine safety.
Changes to Mining Laws and Regulation
On May 8, 2023, the Mexican Government enacted a decree amending several provisions of the Mining Law, the Law on National Waters, the Law on Ecological Equilibrium and Environmental Protection and the General Law for the Prevention and Integral Management of Waste (the "Decree"), which became effective on May 9, 2023. The Decree amends the mining and water laws, including: (i) the duration of the mining concession titles, (ii) the process to obtain new mining concessions (through a public tender), (iii) imposing conditions on water use and availability for the mining concessions, (iv) the elimination of "free land and first applicant" scheme; (iv) new social and environmental requirements in order to obtain and keep mining concessions, (v) the authorization by the Ministry of Economy of any mining concession's transfer, (vi) new penalties and cancellation of mining concessions grounds due to non-compliance with the applicable laws, (vii) the automatic dismissal of any application for new concessions, and (viii) new financial instruments or collaterals that should be provided to guarantee the preventive, mitigation and compensation plans resulting from the social impact assessments, among other amendments.
These amendments are expected to have an impact on our current and future exploration activities and operations in Mexico and the extent of such impact is yet to be determined but could be material for the Company. On June 7, 2023, the Senators of the opposition parties (PRI, PAN and PRD) filed a constitutional action against the Decree, which is pending to be decided by Plenary of the Supreme Court of Justice. During the second quarter of 2023, the Company filed various amparo lawsuits, challenging the constitutionality of the Decree. As of the date of this AIF, some of these amparos have been granted in favour of the Company, whilst others are still pending before the District Courts.
The Company's income and its mining, exploration and development projects, could be adversely affected by amendments to such laws and regulations, by future laws and regulations, by more stringent enforcement of current laws and regulations, by changes in applicable government policies affecting investment, mining and repatriation of financial assets, by shifts in political attitudes and by exchange controls. The effect, if any, of these factors cannot be accurately predicted. Further, there can be no assurance that the Company will be able to obtain or maintain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at the Company's projects.
The costs of discovering, evaluating, planning, designing, developing, constructing, operating and closing the Company's mining, exploration and development activities and operations in compliance with such laws and regulations are significant. It is possible that the costs and delays associated with compliance with such laws and regulations, and new taxes, could become such that the Company would not proceed with mining, exploration and development at one or more of its properties. Moreover, it is possible that future regulatory developments, such as increasingly strict environmental protection laws, regulations and enforcement policies thereunder, and claims for damages to property and persons resulting from the Company's mining, exploration and development projects could result in substantial costs and liabilities for the Company, such that the Company would halt or not proceed with mining, exploration and development at one or more of its properties.
Title Matters
Although the Company has taken steps to verify the title to the mineral properties in which it has or has a right to acquire an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee title (whether of the Company or of any underlying vendor(s) from whom the Company may be acquiring its interest). Title to mineral properties may be subject to unregistered prior agreements or transfers and may also be affected by undetected defects or the rights of indigenous peoples. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties for which titles have been issued are in good standing.
Exploration and Mining Risks
Fires, power outages, labour disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis. The economics of developing mineral properties is affected by many factors including the cost of operations, variations of the grade of ore mined, fluctuations in the price of gold or other minerals produced, costs of processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. In addition, the grade of mineralization ultimately mined may differ from that indicated by drilling results and such differences could be material. Short term factors, such as the need for orderly development of ore bodies or the processing of new or different grades, may have an adverse effect on mining operations and on the results of operations. There can be no assurance that minerals recovered in small scale laboratory tests will be duplicated in large scale tests under on-site conditions or in production scale operations. Material changes in geological resources, grades, stripping ratios or recovery rates may affect the economic viability of projects.
Regulatory Requirements
The activities of the Company are subject to extensive regulations governing various matters, including environmental protection, management and use of toxic substances and explosives, management of natural resources, exploration, development of mines, production and post-closure reclamation, exports, price controls, taxation, regulations concerning business dealings with indigenous peoples, labour standards on occupational health and safety, including mine safety, and historic and cultural preservation. Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties, enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions, any of which could result in the Company incurring significant expenditures. The Company may also be required to compensate those suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible that future laws and regulations, or more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspension of the Company's operations and delays in the exploration and development of the Company's properties.
No Assurance of Profitability
The Company has no history of earnings and, due to the nature of its business there can be no assurance that the Company will ever be profitable. The Company has not paid dividends on its Common Shares since incorporation and does not anticipate doing so in the foreseeable future. The only present source of funds available to the Company is from the sale of its Common Shares or, possibly, from the sale or optioning of a portion of its interest in its mineral properties. Even if the results of exploration are encouraging, the Company may not have sufficient funds to conduct the further exploration that may be necessary to determine whether or not a commercially mineable deposit exists. While the Company may generate additional working capital through further equity offerings or through the sale or possible syndication of its properties, there can be no assurance that any such funds will be available on favorable terms, or at all. At present, it is impossible to determine what amounts of additional funds, if any, may be required. Failure to raise such additional capital could put the continued viability of the Company at risk.
Taxation in Multiple Jurisdictions
In the normal course of business, the Company is subject to assessment by taxation authorities in various jurisdictions. Income tax provisions and income tax filing positions require estimates and interpretations of income tax rules and regulations of the various jurisdictions in which the Company and its subsidiaries operate and judgments as to their interpretation and application to the specific situation. In assessing the probability of realizing income tax assets recognized, the Company makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, the Company gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. While management believes that the Company's provision for income tax is appropriate and in accordance with IFRS and applicable legislation and regulations, tax filing positions are subject to review and adjustment by taxation authorities who may challenge the Company's interpretation of the applicable tax legislation and regulations. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Any review or adjustment may result in the Company or its subsidiaries incurring additional tax liabilities. Any such liabilities may have a material adverse effect on the Company's financial condition.
The introduction of new tax laws, tax reforms, regulations or rules, or changes to, or differing interpretation of, or application of, existing tax laws, regulations or rules in Canada or Mexico or any other countries in which the Company's subsidiaries may be located, or to which shipments of products are made, could result in an increase in the Company's taxes payable, or other governmental charges, interest and penalties, duties or impositions. No assurance can be given that new tax laws, tax reforms, regulations or rules will not be enacted or that existing tax laws, regulations or rules will not be changed, interpreted or applied in a manner which could result in the Company's profits being subject to additional taxation, interest and penalties, or which could otherwise have a material adverse effect on the Company.
Violence and other Criminal Activities in Mexico
Certain areas of Mexico have experienced outbreaks of localized violence, threats, thefts, kidnappings and extortion associated with drug cartels and other criminal organizations in various regions. Any increase in the level of violence, or a concentration of violence in areas where the projects and properties of the Company are located, could have an adverse effect on the results and the financial condition of the Company. The Company maintains extensive security at each of its properties, however, there can be no guarantee that the Company's security will be sufficient or that such protocols and procedures will be effective at preventing future occurrences of theft or other criminal activity.
Uninsured or Uninsurable Risks
Exploration, development and mining operations involve various hazards, including environmental hazards, industrial accidents, metallurgical and other processing problems, unusual or unexpected rock formations, structural cave-ins or slides, flooding, fires, metal losses and periodic interruptions due to inclement or hazardous weather conditions. These risks could result in damage to or destruction of mineral properties, facilities or other property, personal injury, environmental damage, delays in operations, increased cost of operations, monetary losses and possible legal liability. The Company may not be able to obtain insurance to cover these risks at economically feasible premiums or at all. The Company may elect not to insure where premium costs are disproportionate to the Company's perception of the relevant risks. The payment of such insurance premiums and of such liabilities would reduce the funds available for exploration and production activities.
Potential Conflicts of Interest
The directors and officers of the Company may serve as directors and/or officers for other public and private companies, including companies in which the Company has invested in, and may devote a portion of their time to manage other business interests. This may result in certain conflicts of interest. To the extent that such other companies may participate in ventures in which the Company is also participating, and to the extent that such companies may receive funds from the Company, such directors and officers of the Company may have a conflict of interest in negotiating and reaching an agreement with respect to the extent of each company's participation. The Business Corporations Act (British Columbia), which governs the Company, requires the directors and officers to act honestly, in good faith, and in the best interests of the Company and its shareholders. However, in conflict of interest situations, directors and officers of the Company may owe the same duty to another company and will need to balance the competing obligations and liabilities of their actions. There is no assurance that the needs of the Company will receive priority in all cases. From time to time, several companies may participate together in the acquisition, exploration and development of natural resource properties, thereby allowing these companies to: (i) participate in larger programs; (ii) acquire an interest in a greater number of programs; and (iii) reduce their financial exposure to any one program. A particular company may assign, at its cost, all or a portion of its interests in a particular program to another affiliated company due to the financial position of the Company making the assignment. In determining whether or not the Company will participate in a particular program and the interest therein to be acquired by it, it is expected that the directors and officers of the Company will primarily consider the degree of risk to which the Company may be exposed and its financial position at that time.
Key Executives and Outside Consultants
The Company is dependent upon the services of key executives, including the directors of the Company, and will be dependent on a small number of highly skilled and experienced executives and personnel if development plans progress at the Panuco-Copala Property. Due to the relatively small size of the Company, the loss of these persons or the inability of the Company to attract and retain additional highly skilled employees may adversely affect its business and future operations.
The Company has also relied upon outside consultants, geologists, engineers and others and intends to rely on these parties for their exploration and development expertise. Substantial expenditures are required to construct mines, to establish mineral resources and reserves estimates through drilling, to carry out environmental and social impact assessments, to develop metallurgical processes and to develop the development, exploration and plant infrastructure at any particular site. If such parties' work is deficient or negligent or is not completed in a timely manner, it could have a material adverse effect on the Company's business, financial condition and results of operations.
Accounting Policies and Internal Controls
The Company prepares its financial reports in accordance with International Financial Reporting Standards. In preparation of its financial reports, management may need to rely upon assumptions, make estimates or use their best judgment in determining the financial condition of the Company. Significant accounting policies are described in more detail in the Company's audited financial statements. In order to have a reasonable level of assurance that financial transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported, the Company has implemented and continues to analyze its internal control systems for financial reporting, as further explained in its audited financial statements. Although the Company believes its financial reporting and financial statements are prepared with reasonable safeguards to ensure reliability, the Company cannot provide absolute assurance in this regard.
Litigation
Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Like most companies, the Company is subject to the threat of litigation and may be involved in disputes with other parties in the future which may result in litigation or other proceedings. The results of litigation or any other proceedings cannot be predicted with certainty. If the Company is unable to resolve these disputes favourably, it could have a material adverse effect on the Company's business, financial condition and results of operations.
Anti-Corruption and Anti-Bribery Laws
The Company's operations are governed by, and involve interactions with, many levels of government in numerous countries. The Company is required to comply with anti-corruption and anti-bribery laws, including the Corruption of Foreign Public Officials Act (Canada) and the Foreign Corrupt Practices Act (Canada) and similar laws in the other jurisdictions in which it operates or maintains a public listing. In recent years, there has been a general increase in both the frequency of enforcement and the severity of penalties under such laws, resulting in greater scrutiny and punishment to companies convicted of violating anti-corruption and anti-bribery laws. Furthermore, a company may be found liable for violations by not only its employees, but also by its contractors and third-party agents. The Company's internal procedures and programs may not always be effective in ensuring that it, its employees, contractors or third-party agents will comply strictly with all such applicable laws. Annual training on the policy is provided to all supervisory employees. If the Company becomes subject to an enforcement action or is found to be in violation of such laws, this may have a material adverse effect on the Company's reputation, result in significant penalties, fines and/or sanctions, and/or have a material adverse effect on the Company's operations.
Potential Volatility of Market Price of Common Shares and Related Litigation Risks
Securities of publicly listed companies such as the Company have, from time to time, experienced significant price and volume fluctuations unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of the Common Shares. In addition, the market price of the Common Shares is likely to be highly volatile. Factors such as gold prices, the average volume of shares traded, announcements by competitors, changes in stock market analysts' recommendations regarding the Company and general market conditions and attitudes affecting other exploration and mining companies may have a significant effect on the market price of the Company's Common Shares. It is likely that the Company's results or development and exploration activities may fluctuate significantly or may fail to meet the expectations of stock market analysts and investors and, in such event, the market price of the Common Shares could be materially adversely affected. In the past, securities class action litigation has often been initiated following periods of volatility in the market price of a company's securities. Such litigation, if brought against the Company, could result in substantial costs and a diversion of management's attention and resources, which could have a material adverse effect on the Company's business, financial position and results of operations.
Future Sales of Common Shares by Existing Shareholders
Sales of a large number of common shares in the public markets, or the potential for such sales, could decrease the trading price of the common shares and could impair the Company's ability to raise capital through future sales of common shares. The Company has previously completed private placements at prices per share which may be, from time to time, lower than the market price of the common shares. Accordingly, a significant number of the Company's shareholders at any given time may have an investment profit in the common shares that they may seek to liquidate.
Dividend Policy
No dividends on the Common Shares have been paid by the Company to date. The Company currently plans to retain all future earnings and other resources, if any, of the future operation and development of its business. Payment of any future dividends, if any, will be at the discretion of the Company's board of directors (the "Board") after taking into account many factors, including the Company's operating results, financial condition and current and anticipated cash needs.
The Company's management consider the risks disclosed to be the most significant to potential investors of the Company, but not all risks associated with an investment in securities of the Company. If any of these risks materialize into actual events or circumstances or other possible additional risks and uncertainties of which the directors are currently unaware or which they consider not to be material in relation to the Company's business, actually occur, the Company's assets, liabilities, financial condition, results of operations (including future results of operations), business and business prospects, are likely to be materially and adversely affected. In such circumstances, the price of the Company's securities could decline and investors may lose all or part of their investment.
Material Mineral Projects
As at the date of this AIF, the Panuco-Copala Property is the Company's only material property.
The Panuco-Copala Property
In accordance with the instructions set out in Section 5.4 of Form 51-102F2 - Annual Information Form, the Company has reproduced below the summary from the Technical Report on the Panuco-Copala Property dated with an effective date of September 1, 2023 and prepared for the Company by Allan Armitage, Ph.D., P.Geo, of SGS, Ben Eggers, MAIG, P.Geo of SGS and Peter Mehrfert, P.Eng. of Ausenco Engineering Canada ULC ("Ausenco"). Defined terms in the summary below have the meanings ascribed to them in the Technical Report. Portions of the disclosure below are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the Technical Report, which is incorporated by reference in its entirety into this AIF, and which is available for review under the Company's profile on SEDAR+ at www.sedarplus.ca.
Summary
SGS was contracted by the Company to complete an updated Mineral Resource Estimate ("MRE") for the Panuco-Copala Property (also referred to in this section as "Panuco" or the "Project") in Sinaloa, Mexico, and to prepare a National Instrument 43-101 ("NI 43-101") Technical Report written in support of the updated MRE. The Project is considered an early-stage exploration project.
The Company was incorporated as Vizsla Capital Corp. under the Business Corporations Act (British Columbia) on September 26, 2017. On March 8, 2018, the Company changed its name to Vizsla Resources Corp. On February 8, 2021, the Company changed its name to Vizsla Silver Corp. The Company's principal business activity is the exploration of mineral properties. The Company currently conducts its operations in Panuco-Copala Property Mexico and Canada. It trades on the TSXV under the symbol VZLA.
On January 21, 2022, the Company was listed on the NYSE American exchange and commenced trading under the symbol "VZLA".
The Technical Report is authored by Allan Armitage, Ph.D., P. Geo., ("Armitage") and Ben Eggers, MAIG, P.Geo. ("Eggers") of SGS (collectively the "Authors"). The Authors are independent Qualified Persons as defined by NI 43-101 and are responsible for all sections of this report. The updated MRE presented in this report was estimated by Armitage.
The reporting of the updated MRE complies with all disclosure requirements for Mineral Resources set out in NI 43-101. The classification of the updated MRE is consistent with the 2014 Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards (2014 CIM Definitions) and adheres as best as possible to the 2019 CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines (2019 CIM Guidelines).
The Technical Report will be used by the Company in fulfillment of their continuing disclosure requirements under Canadian securities laws, including NI 43-101. The Technical Report is written in support of an updated MRE completed for the Company.
Property Description, Location, Access, and Physiography
The Project is in the Panuco-Copala mining district in the municipality of Concordia, southern Sinaloa state, along the western margin of the Sierra Madre Occidental physiographic province in western Mexico. The Panuco-Copala Property is centered at 23 25' north latitude and 105 56' west longitude on map sheets F13A-37.
The Project comprises 117 approved mining concessions in nineteen blocks, covering a total area of 5,869.87 hectares (ha), and two mineral concessions covering 1,321.15 ha. The mineral concessions are held 100% by the Company. The concessions are valid for 50 years, provided semi-annual property tax payments are made in January and July each year and if minimum annual investment requirements are met, or if there is minimum annual production equal to the amount of the annual investment requirement. The concession owner may apply for a second 50-year term. Annual payments of 2.03 million Mexican Pesos were made in January of 2023, and 2.03 million Pesos were made in July of 2023 by the Company.
The Project area is accessed from Mazatlán via Federal Highway 15 to Villa Union, then on Highway 40 for 56 km (one-hour drive) (see Figure 4-1 of the Technical Report). Highway 40 crosscuts the Project area and most of the vein structures. Toll Highway 40D also crosses the Project. In addition, local dirt roads provide access to most of the workings, but some require repairs or are overgrown, and four-wheel-drive vehicles are recommended in the wet season.
The Project is in the Concordia municipality, which has a population of approximately 27,000 inhabitants. Public services, including health clinics and police, are in the town of Concordia. Residents provide an experienced mine labour force. Contractors in Durango and Hermosillo have a strong mining tradition and provide the Project with a local source of knowledgeable labour and contract mining services. Drilling companies and mining contractors are available in Mazatlán, Durango, Hermosillo, Zacatecas, Fresnillo, and other areas of Mexico. The Project area is also used for cattle grazing, with limited agricultural use.
Two power lines connecting Durango and Mazatlán cross the Project, with 400 kV and 240 kV capacities.
The Company owns the 500 tonnes per day Coco mill on its property. In addition, there are some mineral processing plants held by third parties in the district that range from 200 to 700 tonnes per day in capacity.
History of Exploration, Drilling
Capitan Francisco de Ibarra founded Concordia in 1565, and gold and silver veins in Panuco and Copala were first exploited in the centuries that followed Sim (2008) and Robinson (2019). Although production has been carried out on the Project over the last 460 years, no production records are available to the Company.
The first recorded modern mining activity commenced late in the 20th century. The Mineral Resources Council (Consejo de Recursos Minerales ("CRM"), the predecessor of the Mexican Geological Service ("SGM") carried out 1:50,000 scale mapping on map sheet F13-A37 and fine-fraction stream sediment sampling in 1999. In 2003, the CRM published additional 1:50,000 scale mapping on map sheet F13-A36, and fine-fraction stream sediment sampling (Polanco-Salas et al., 2003). In 2019 the SGM conducted 1:50,000 scale geological mapping and fine-fraction stream sediment sampling on map sheet F13-A46.
In 1989 the CRM optioned and sold several mineral concessions in the district, including to Grupo Minera Bacis ("Bacis") in 1989. Bacis subsequently acquired claims from other parties active in the area, including Minas del Oro y del Refugio S.A. de C.V. Bacis drilled 19 holes totaling 2,822.8 m along the Animas-Refugio corridor, but only collar and survey records exist of this work.
From 1999 to 2001, Minera Rio Panuco S.A. de C.V. (Rio Panuco) explored the Animas-Refugio and Cordon del Oro structures culminating in 45 holes for 8,358.6 m. No geological drill logs, downhole survey data, downhole sample data, or geochemical assay data have been preserved. Graphic drill-hole sections are available, with limited downhole geology and geochemical data.
Capstone Mining Corp. ("Capstone") optioned the Bacis concessions in 2004 and carried out geologic mapping and sampling of the Animas-Refugio and Cordon del Oro structures. In 2005, Capstone drilled 15,374 m in 131 holes on down-dip extensions of the Clemens and El Muerto mines on the Animas-Refugio vein. In 2007, Capstone explored the La Colorada structure with surface mapping and sampling, followed by 6,659 m of drilling in 64 holes.
Also, in 2007, Capstone transferred the claims of the Copala, Claudia, Promontorio, Montoros, and Martha projects to Silverstone Corp. ("Silverstone"). Capstone and Silverstone completed 21,641 m of drilling in 200 holes from 2005 to 2008.
Silverstone merged with Silver Wheaton Ltd. ("Silver Wheaton") in 2009, and Silver Wheaton subsequently sold the shares of concession owner Silverstone to Mexican owners. The Silverstone owners mined out a portion of the Mineral Resource defined in 2008 over the next decade. Silverstone mined parts of the Clemens, El Muerto, La Pipa, Mariposa, El 40, and San Martin ore shoots until mining encountered the water table, preventing further mining. Silverstone or unauthorized mining activity in the intervening years exploited most of the Mineral Resources estimated by Christopher and Sim (2008).
MRP contracted Geophysical Surveys S.A. de C.V. of Mexico City in 2016 to conduct an airborne magnetics survey. However, no data are available, and no survey or flight specifications are included in the report. The survey was flown in two blocks.
Since acquiring the Property in November 2019, the Company has conducted several significant drill campaigns in the Napoleon, Copala-Tajitos, Animas and San Antonio areas. Up to September 2023 (data cut-off date for the MRE), the Company has completed 822 surface diamond drill holes totaling 302,931 m and collected 47,694 assays intervals representing 55,368 m of drilling. The Company has continued to drill at the Project since the data cut off for the Mineral Resource estimate of September 1, 2023.
In November 2019, the Company began drilling on the Project on the Animas-Refugio corridor near the La Pipa and Mariposa mine areas. A total of 820.50 m in three drill holes was completed in 2019. The three drill holes targeted the La Pipa structure to test below the old historic ore shoot. Results showed low-grade and narrow widths; no further test work was carried out.
Drill holes AMS-19-01A and AMS-19-02 were drilled to test the downdip extension of the La Pipa ore shoot that has seen extensive mining. The first hole intersected historic workings and a footwall vein over 5.5m at 135.0m downhole. Deeper in the hole a 2.0 m wide quartz-amethyst vein was intersected at 241.5m downhole. The second hole was completed 77 m down dip on the same section and intersected a shallow hanging wall vein with 3 m grading 125.3 g/t Ag and 0.59 g/t Au and a zone of low-grade veinlets in the projection of the Animas Vein.
Drilling for 2020 totalled 28,643.42 m in 129 drill holes. The four main corridors of Napoleon, Cinco Senores, Cordon del Oro, and Animas-Refugio were tested.
In January 2020, drilling resumed at the Mariposa mine area, another historically mined area. Other targets in the Animas-Refugio corridor included, from south to north, Mojocuan, San Carlos, Paloma, and Honduras veins.
Drilling at the Napoleon corridor began in June 2020. A total of 64 drill holes tested the Napoleon structure, for 12,546.02 m. Targets were in the central part of the north-south-trending structure, below old mine workings, and 650 m north in the Papayo area.
At the Cordon del Oro corridor, drilling totalled 6,432.05 m in 28 drill holes. The drilling targeted the Mojocuan, San Carlos, and Peralta mine areas, in addition to the Aguita Zarca vein.
Cinco Senores corridor saw 2,927.10 m of drilling in 14 drill holes. The Tajitos vein was the drilling target, and previously unknown workings were encountered in the first four holes.
Drilling at the Project in 2021 totaled 100,242.55 m in 318 drill holes. The drilling focussed along the Napoleon and Tajitos vein areas, with 54,759.15 m in 180 drill holes and 34,769.35 m in 102 drill holes, respectively (see Table 10-1 of the Technical Report). Additionally, 4,438.50 m in 14 drill holes were drilled in the Animas-Refugio corridor, and 6,275.55 m in 22 drill holes in the Cordon del Oro corridor. Highlights of the 2021 drilling are presented in the Technical Report.
At Napoleon, infill and delineation drilling focussed on denser drilling to inform the Mineral Resource estimate and expand the structure's strike length. The Josephine vein, a subparallel system to Napoleon which was identified initially as an electromagnetic geophysical target, was first intersected in Hole NP-21-132, leading to additional targeting in the area and its inclusion in the Mineral Resource estimate. Further drill testing included the Cruz Negra and Alacran vein areas.
Drilling at the Tajitos vein area focussed on delineation and infilling, with additional exploration drilling to the north. The Tajitos resource drilling led to the discovery of the Copala vein -- a relatively thick sub horizontal structure on the Tajitos northeastern extent. Other exploration drilling along the Cinco Senores corridor included the Cinco Senores and Colorada veins to the north of Tajitos.
In the Animas-Refugio corridor, drilling tested the Rosarito segment included in the Mineral Resource estimate, in addition to the Peralta and Cuevillas veins.
Drilling at the Cordon del Oro corridor targeted the San Antonio structure included in the Mineral Resource estimate, in addition to exploration near the Aguita Zarca vein.
Drilling for totaled 113,48705 m in 271 drill holes. The four main corridors of Napoleon, Cinco Senores, Cordon del Oro, and Animas-Refugio were tested.
Drilling at the Napoleon corridor included 106 drill holes that tested the Napoleon structure for 52,306.40 m. At the Cordon del Oro corridor, drilling totalled 4,251.8 m in 19 drill holes. Drilling at Cinco Senores, including Copala and Tajitos veins, included 135 drill holes for 52,045.10 m. Additionally, 4,883.70 m in 11 drill holes were drilled in the Animas-Refugio corridor.
The bulk of 2022 drilling was centred on the western portion of the district, focused on upgrading and expanding resources at the Copala and Napoleon areas. At Copala, mineralization has now been traced over 1,100 meters along strike, 400 meters down dip, and remains open to the north and southeast.
At Napoleon, drilling throughout 2022 successfully expanded mineralization along strike and down plunge to the south, several vein splays were identified in the hanging wall and footwall of the main structure.
Other notable discoveries include the Cristiano Vein; marked by high precious metal grades up to 1,935 g/t Ag and 15.47 g/t Au over 1.46 metres, located immediately adjacent to Copala; and La Luisa Vein, located ~700 metres west of Napoleon which continues to display similar silver and gold zonation as that seen at Napoleon.
Drilling for 2023 (to September) totalled 60,432.95 m in 103 drill holes. The main Napoleon and Cinco Senores corridors were tested.
Drilling at the Napoleon corridor included 44 drill holes testing the Napoleon structure, for 25,298.30 m. Drilling at the Copala/Tajitos veins included 59 drill holes for 35,134.65 m.
The 2023 drilling was centred on the western portion of the district, focused on upgrading and expanding resources at the Copala and Napoleon areas. At Copala, mineralization has now been traced over 1,700 m along strike and to depths of 450 to 550 m and remains open to the north and southeast.
At Napoleon, drilling throughout 2023 successfully expanded mineralization along strike and down plunge/dip to the south, several vein splays were identified in the hanging wall and footwall of the main structure.
Geology and Mineralization
The Project is on the western margin of the Sierra Madre Occidental (SMO), a high plateau and physiographic province that extends from the U.S.A.-Mexico border to the east-trending Trans-Mexican Volcanic Belt. The SMO a Large Igneous Province (LIP) recording continental magmatic activity from the Late Cretaceous to the Miocene; it has been divided into two main episodes.
The first episode, termed the Lower Volcanic Complex (LVC), comprises a suite of intrusive bodies, including the Sonora, Sinaloa, and Jalisco batholiths and andesitic volcanic rock units with minor dacite and rhyolite tuffs and ignimbrites that are correlative with the Tarahumara Formation in Sonora of Late Cretaceous to Eocene age. The second magmatic episode is dominated by rhyolitic ignimbrites and tuffs that built one of the earth's largest silicic volcanic provinces and has been termed the Upper Volcanic Supergroup (UVS). These dominantly rhyolitic units were extruded in two episodes, from about 32 to 28 Ma and 24 to 20 Ma. These two periods of magmatic activity are associated with the subduction of the Farallon plate under North America and the Laramide orogeny that occurred between the Upper Cretaceous - Paleocene and the Eocene. The third episode comprises post subduction alkali basalts and ignimbrites associated with the opening of the Gulf of California between the late Miocene and Pleistocene - Quaternary.
The western part of the SMO in Sonora and Sinaloa is cut by north-northwest-trending normal fault systems developed during the opening of the Gulf of California between 27 and 15 Ma. The normal fault systems favoured the formation of elongated basins that were subsequently filled with continental sedimentary rocks. The basins occur in a north-northwest-trending belt extending from western Sonora to most of Sinaloa.
The basement to the SMO is locally exposed in northern Sinaloa, near Mazatlan and on small outcrops within the project area. It comprises folded metasedimentary and metavolcanic rocks, deformed granitoids, phyllitic sandstones, quartzites, and schists of the Tahue terrane of Jurassic to Early Cretaceous age (Montoya-Lopera et al., 2019, Sedlock et al., 1993 and Campa and Coney 1982).
In the broader Project area, the LVC comprises granite, granodiorite, and diorite intrusive phases correlative with the Late Cretaceous to Early Paleocene San Ignacio and Eocene Piaxtla batholiths in San Dimas district. The andesite lavas, rhyolite-dacite tuffs, and ignimbrites are locally intruded by the Late Cretaceous to Early Paleocene intrusive phases and younger Eocene-Oligocene felsic dikes and domes. Northwest trending intermontane basins filled with continental conglomerates and sandstones incise the UVS and LVC in the Project area. The Oligocene age ignimbrites of the UVS occur east of the property towards Durango state.
The structure of the Project area is dominated by north-northwest-trending extensional and transtensional faults developed or reactivated during the Basin and Range tectonic event (~28 to 18 Ma). The extensional belt is associated with aligned rhyolite domes and dikes and Late Oligocene to Middle Miocene grabens.
Mineralization on the Property comprises several epithermal quartz veins. Previous workers and recent mapping and prospecting works conducted by the Company's geologists determined a cumulate length of veins traces of 86 km. Individual vein corridors are up to 7.6 km long, and individual veins range from decimetres to greater than 10 m wide. Veins have narrow envelopes of silicification, and local argillic alteration, commonly marked by clay gouge. Propylitic alteration consisting of chlorite-epidote in patches and veins affecting the andesites and diorite are common either proximal or distal to the veins.
The primary mineralization along the vein corridors comprises hydrothermal quartz veins and breccias with evidence of four to five different quartz stages: generally white, grey and translucent and varying grain size from amorphous-microcrystalline-coarse. A late stage of amethyst quartz is also observed in some veins. The grey colour in quartz is due to the presence of fine-grained disseminated sulphides, believed to be mainly pyrite and acanthite. The Company has delineated several hydrothermal breccias with grey quartz occurring more commonly at lower levels of the vein structures. Barren to low grade, quartz is typically white and is more common in the upper parts of the veins and breccias. Locally, mineralized structures are cut by narrow, banded quartz veins with thin, dark argentite/acanthite, sphalerite, galena, and pyrite bands. Bladed and lattice quartz pseudomorphs after calcite have been noted at several locations within the veins and indicate boiling conditions during mineral deposition. Later quartz veinlets cut all the mineralized zones with a mix of white quartz and purple amethyst. The amethyst is related to mixing near-surface waters as the hydrothermal system is collapsing, as has been noted in the nearby San Dimas district (Montoya- Lopera et al., 2019).
The Mineral Resource includes ten mineralized vein systems: the Napoleon, Napoleon hanging wall, Josephine, and Cruz Negra veins; the Copala, Cristiano, Tajitos and Copala 2 veins; the San Antonio vein; and the Rosarito vein. These trends are west to east within the Napoleon, Cinco Senores, Cordon del Oro, and Animas-Refugio corridors. The bulk of the resource veins strike north-northwest to north-northeast, with thicknesses varying from 1.5 m to over 10 m.
Mineralization on the Property comprises several epithermal quartz veins. Previous workers and recent mapping and prospecting works conducted by the Company's geologists determined a cumulate length of veins traces of 86 km. Individual vein corridors are up to 7.6 km long, and individual veins range from decimetres to greater than 10 m wide. Veins have narrow envelopes of silicification, and local argillic alteration, commonly marked by clay gouge. Propylitic alteration consisting of chlorite-epidote in patches and veins affecting the andesites and diorite are common either proximal or distal to the veins.
The primary mineralization along the vein corridors comprises hydrothermal quartz veins and breccias with evidence of four to five different quartz stages: generally white, grey and translucent and varying grain size from amorphous-microcrystalline-coarse. A late stage of amethyst quartz is also observed in some veins. The grey colour in quartz is due to the presence of fine-grained disseminated sulphides, believed to be mainly pyrite and acanthite. The Company has delineated several hydrothermal breccias with grey quartz occurring more commonly at lower levels of the vein structures. Barren to low grade, quartz is typically white and is more common in the upper parts of the veins and breccias. Locally, mineralized structures are cut by narrow, banded quartz veins with thin, dark argentite/acanthite, sphalerite, galena, and pyrite bands. Bladed and lattice quartz pseudomorphs after calcite have been noted at several locations within the veins and indicate boiling conditions during mineral deposition. Later quartz veinlets cut all the mineralized zones with a mix of white quartz and purple amethyst. The amethyst is related to mixing near-surface waters as the hydrothermal system is collapsing, as has been noted in the nearby San Dimas district (Montoya- Lopera et al., 2019).
The Mineral Resource includes ten mineralized vein systems: the Napoleon, Napoleon hanging wall, Josephine, and Cruz Negra veins; the Copala, Cristiano, Tajitos and Copala 2 veins; the San Antonio vein; and the Rosarito vein. These trends are west to east within the Napoleon, Cinco Senores, Cordon del Oro, and Animas-Refugio corridors. The bulk of the resource veins strike north-northwest to north-northeast, with thicknesses varying from 1.5 m to over 10 m.
Mineral Processing, Metallurgical Testing and Recovery Methods
Preliminary Metallurgical Testing on the Napoleon Deposit
Preliminary metallurgical test programs have been completed on each of the 3 main deposits that form the Panuco resource. All test programs were conducted at ALS Metallurgy in Kamloops, BC, Canada.
The Napoleon test program was conducted in 2021 on samples obtained from 7 drill holes in the 2020 and 2021 drill programs. The selected intervals ranged from depths of 46 to 201 meters down the drill holes.
The Tajitos test program was conducted in 2022 on samples from 22 drill holes in the 2020 and 2021 drill programs. The selected intervals ranged from depths of 51 to 345 meters down the drill holes.
The Copala test program was conducted in 2023 on samples from 8 drill holes in the 2022 drill program. The selected intervals ranged from depths of 111 to 385 meters down the drill holes.
The sample selections covered a range of identified lithologies. Master composites were assembled to obtain feed grades that were similar to the expected average resource grades, variability composites were assembled to cover ranges of grades and lithologies. The majority of the testing was completed on the master composites of each deposit.
Comminution testing was completed which suggested that the materials were somewhat hard with respect to both impact and attrition breakage. Drop Weight tests (SMC) were only conducted on the Copala samples and returned an average Axb value of 33. Bond ball mill tests conducted on samples from all three deposits measured ball mill work index (BMWi) values ranging from 16.4 to 18.9 kWhr/tonne.
Mineralogical assessments on the feed samples using QEMSCAN indicated that the host rock was primarily quartz and feldspars. Quartz contents ranged from 55 to 86%. The samples contained generally low levels of sulphide minerals, with pyrite as the most abundant sulphide mineral. The Napoleon samples contained elevated levels of galena and sphalerite, these base metal mineral contents were generally quite low in the Tajitos and Copala samples. Analyses on the Tajitos and Copala samples indicated that silver was mostly present in the form of a silver sulphide mineral acanthite, although small amounts were present in silver-copper sulphides. Detailed analyses on the Copala samples indicated a significant portion of the silver bearing sulphide minerals were quite fine grained and poorly liberated, suggesting that somewhat fine primary grind sizes may be required to achieve high silver recoveries.
Froth flotation tests were conducted on all samples, investigating the potential to sequentially float lead and zinc, as well as simply recovering a bulk sulphide concentrate. Open circuit cleaner testing on the Napoleon master composite demonstrated that production of lead and zinc concentrates that meet typical marketing grade targets would be possible using typical processing conditions. In this flowsheet, about 70 and 80 percent of the silver and gold, respectively, would report to the lead concentrate. The zinc concentrates contained approximately 0.4% cadmium, which may be of concern for marketing, otherwise no other deleterious elements were measured at penalty levels.
Lead-zinc sequential flotation was only investigated in rougher flotation protocols on the Tajitos and Copala samples, distributions of silver and gold to the rougher concentrates were similar to the Napoleon material. Bulk sulphide flotation on all three deposits indicated that bulk sulphide concentrates containing 50-60 g/t gold could be generated on each material, silver concentrations ranged from 1500 to over 8000 g/t depending on the sulphide mineral contents in the feed. In general, about 80-90% of the silver and gold reported to bulk rougher concentrates at the primary grind sizes tested, recoveries to cleaner concentrates were not confirmed as tests were only conducted in open circuit.
Cyanide leaching of the rougher flotation tails was investigated on the Tajitos and Copala samples. Approximately 60-70% of the silver and 80-85% of the gold remaining in the rougher tails could be extracted in tests conducted over 48 and 72 hours. Leaching of rougher flotation concentrates was investigated on all deposits, but most extensively on the Copala samples. Silver extractions ranged from 85 to 98% and gold extractions ranged from 93 to 97% after 48 hours of leaching the concentrates, depending on the level of regrinding applied.
Whole feed leaching was investigated on samples from all deposits, which indicated that about 83-86% of the silver and 90-94% of the gold could be extracted after 96 hours of leaching. These tests were conducted at primary grind sizes ranging from 63 to 100µm P80.
Panuco Project Mineral Resource Estimate
Mineral Resource Statement
Completion of the updated MREs for the Napoleon-Luisa and Copala-Tajitos deposit areas involved the assessment of an updated drill hole database, which included all data for surface drilling completed between November 2019 and September 2023. The MREs for the Animas and San Antonio deposit areas included data for surface drilling completed between November 2019 and September 2022; there has been no new drilling on the Animas and San Antonio deposit areas and these MREs previously published are considered current. Completion of the MREs also included the assessment of updated three-dimensional (3D) mineral resource models (resource domains), 3D topographic surface models, 3D models of historical underground workings, and available written reports.
The Inverse Distance Squared ("ID2") calculation method restricted to mineralized domains was used to interpolate grades for Ag (g/t), Au (g/t), Pb (ppm) and Zn (ppm) into block models for all deposit areas.
Indicated and inferred mineral resources are reported in the summary tables in Section 14.11 of the Technical Report. The MREs presented below take into consideration that all deposits on the Property may be mined by underground mining methods.
The reporting of the updated MRE complies with all disclosure requirements for Mineral Resources set out in the NI 43-101 Standards of Disclosure for Mineral Projects. The classification of the updated MRE is consistent with the 2014 Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards (2014 CIM Definitions) and adheres as best as possible to the 2019 CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines (2019 CIM Guidelines).
The updated MRE for the Project is presented in Table 1 1 and Table 1 2.
Highlights of the Project Mineral Resource Estimate are as follows:
- Indicated Mineral Resources are estimated at 9.48 Mt grading 289 g/t silver, 2.41 g/t gold, 0.27% lead, and 0.84% zinc (511 AgEq). The current MRE includes indicated mineral resources of 88.2 Moz of silver, 736 koz of gold, 56 Mlbs of lead, and 176 Mlbs of zinc (155.8 Moz AgEq).
- Inferred Mineral Resources are estimated at 12.19 Mt grading 239 g/t silver, 1.93 g/t gold, 0.29% lead, and 1.03% zinc (433 g/t AgEq). The current MRE includes inferred mineral resources of 93.7 Moz of silver, 758 koz of gold, 78 Mlbs of lead, and 276 Mlbs of zinc (169.6 Moz AgEq).
Table 1-1 Panuco Project Mineral Resource Estimate, September 1, 2023
|
Resource Class |
Tonnes (MT) |
Grade |
Total Metal |
||||||||
|
Au |
Ag |
Pb |
Zn |
AgEq |
Au |
Ag |
Pb |
Zn |
AgEq* |
||
|
Indicated |
9.48 |
2.41 |
289 |
0.27 |
0.84 |
511 |
736 |
88,192 |
56.0 |
176.1 |
155,841 |
|
Inferred |
12.19 |
1.93 |
239 |
0.29 |
1.03 |
433 |
758 |
93,653 |
78.1 |
276.2 |
169,647 |
* AgEq = Ag ppm + (((Au ppm x Au price/gram) + (Pb% x Pb price/t) + (Zn% x Zn price/t))/Ag price/gram) with price assumptions of $24.00/oz Ag, $1800/oz Au, $1.10/lb Pb and $1.35/lb Zn
Table 1-2 Panuco Project Mineral Resource Estimate by Area, September 1, 2023
Copala Area: Copala, Tajitos and Cristiano
|
Area |
Resource |
Tonnes |
Grade |
Total Metal |
||||||||
|
Au g/t |
Ag g/t |
Pb % |
Zn % |
AgEq |
Au |
Ag |
Pb |
Zn |
AgEq |
|||
|
Copala |
Indicated |
4.52 |
2.46 |
380 |
0.08 |
0.15 |
573 |
358 |
55,201 |
8.2 |
15.3 |
83,270 |
|
Inferred |
3.16 |
1.77 |
332 |
0.12 |
0.20 |
476 |
179 |
33,722 |
8.2 |
13.6 |
48,320 |
|
|
Tajitos |
Indicated |
0.63 |
2.24 |
358 |
0.12 |
0.21 |
538 |
46 |
7,295 |
1.6 |
2.9 |
10,953 |
|
Inferred |
1.04 |
2.04 |
365 |
0.22 |
0.39 |
540 |
69 |
12,260 |
5.2 |
8.9 |
18,140 |
|
|
Cristiano |
Indicated |
0.21 |
3.37 |
581 |
0.25 |
0.43 |
858 |
23 |
3,961 |
1.1 |
2.0 |
5,851 |
|
Inferred |
0.72 |
2.54 |
443 |
0.15 |
0.29 |
650 |
59 |
10,213 |
2.4 |
4.5 |
14,974 |
|
|
Total |
Indicated |
5.37 |
2.48 |
385 |
0.09 |
0.17 |
580 |
427 |
66,457 |
11 |
20 |
100,074 |
|
Inferred |
4.92 |
1.94 |
355 |
0.15 |
0.25 |
515 |
307 |
56,195 |
16 |
27 |
81,434 |
|
Napoleon Area: Napoleon, Cruz, Josephine and Luisa
|
Area |
Resource |
Tonnes |
Grade |
Total Metal |
||||||||
|
Au g/t |
Ag g/t |
Pb % |
Zn |
AgEq |
Au |
Ag |
Pb |
Zn |
AgEq |
|||
|
Luisa |
Indicated |
0.27 |
2.56 |
177 |
0.39 |
2.01 |
459 |
22 |
1,556 |
2.3 |
12.1 |
4,027 |
|
Inferred |
2.04 |
2.13 |
159 |
0.30 |
1.51 |
386 |
139 |
10,439 |
13.3 |
67.9 |
25,326 |
|
|
Cruz/Negra |
Indicated |
0.03 |
2.01 |
144 |
0.37 |
1.71 |
373 |
2 |
153 |
0.3 |
1.2 |
396 |
|
Inferred |
0.31 |
3.75 |
170 |
0.31 |
1.48 |
519 |
37 |
1,698 |
2.1 |
10.1 |
5,169 |
|
|
Josephine |
Indicated |
0.07 |
2.88 |
221 |
0.39 |
1.11 |
492 |
6 |
491 |
0.6 |
1.7 |
1,092 |
|
Inferred |
0.22 |
2.05 |
161 |
0.33 |
1.00 |
364 |
15 |
1,161 |
1.6 |
4.9 |
2,618 |
|
|
Napoleon_ |
Indicated |
0.43 |
1.72 |
164 |
0.42 |
1.53 |
365 |
24 |
2,259 |
4.0 |
14.4 |
5,029 |
|
Inferred |
0.85 |
2.17 |
220 |
0.59 |
2.02 |
479 |
59 |
5,976 |
10.9 |
37.6 |
13,027 |
|
|
Napoleon+ Splays |
Indicated |
3.31 |
2.39 |
162 |
0.52 |
1.73 |
425 |
255 |
17,276 |
37.8 |
126.5 |
45,223 |
|
Inferred |
3.18 |
1.64 |
137 |
0.45 |
1.76 |
342 |
168 |
14,045 |
31.8 |
123.2 |
35,063 |
|
|
Total |
Indicated |
4.12 |
2.34 |
164 |
0.50 |
1.72 |
421 |
309 |
21,735 |
45 |
156 |
55,767 |
|
Inferred |
6.60 |
1.97 |
157 |
0.41 |
1.68 |
383 |
418 |
33,319 |
60 |
244 |
81,203 |
|
San Antonio Area: Generales and Animas Area: Cuevillas and Rosarito
|
Area |
Resource |
Tonnes |
Grade |
Total Metal |
||||||||
|
Au g/t |
Ag g/t |
Pb |
Zn |
AgEq (g/t) |
Au (koz) |
Ag (koz) |
Pb (Mlbs) |
Zn (Mlbs) |
AgEq (koz) |
|||
|
San Antonio |
Inferred |
0.28 |
1.30 |
226 |
0.01 |
0.03 |
325 |
12 |
2,038 |
0.1 |
0.2 |
2,936 |
|
Animas |
Inferred |
0.39 |
1.68 |
169 |
0.29 |
0.60 |
327 |
21 |
2,101 |
2.5 |
5.2 |
4,074 |
Recommendations
The Deposits of the Project contain underground Indicated and Inferred Mineral Resources that are associated with well-defined mineralized trends and models. All deposits are open along strike and at depth.
Armitage considers that the Project has the potential for the delineation of additional Mineral Resources and that further exploration is warranted. Given the prospective nature of the Project, it is the opinion of Armitage that the Project merits further exploration and that a proposed plan for further work by the Company is justified.
Armitage is recommending the Company conduct further exploration, subject to funding and any other matters which may cause the proposed exploration program to be altered in the normal course of its business activities or alterations that may affect the program as a result of exploration activities themselves.
For 2024, the company plans to drill ~65,000 m on current resource areas, priority targets proximal to current resources in the west, as well as on other high-priority targets in the eastern portion of the district.
Resource Extension Targets
-
The Copala structure remains open along strike to the north and down dip to the south. In 2024, Vizsla plans to continue 1) upgrading inferred resources in south Copala and 2) continue expanding Copala and its footwall splays down dip.
-
At Napoleon, Vizsla plans to upgrade inferred resources and to conduct resource expansion drilling along the hanging wall-4 vein (HW4) to the east, as well as to explore three potential vein feeders along the main Napoleon structure at depth.
Proximal Targets
-
At La Luisa, the team plans to continue expanding the footprint of the high-grade shoot on the south and infill drilling the recently defined 400 m gap between the northern most drill-hole intercepts and the high-grade shoot on the south.
-
The EL Molino Vein reported significant silver and gold grades close to surface, and Vizsla plans to explore the vein along strike and at depth to add additional high-grade resources close to planned infrastructure in 2024.
-
The Company plans to drill-test a conceptual target at the projected northern intersection of the Copala fault with the Napoleon vein system near La Estrella area.
District Targets
New mapping efforts completed in 2023 have highlighted an abundance of historic workings in the northeastern portion of the district. This new area named "Camelia" is marked by serval high-grade surface samples grading up to 400 g/t Ag and 5.0 g/t Au. Given, the overall density of veins mapped on surface and the abundance of surface samples related to historic workings this has become a high priority district target in the east.
Bulk Sample / Test Mine
Vizsla has received permits to develop and operate a test mine program at its Panuco project to extract a combined 25,000 tonne bulk sample from the Copala and Napoleon structures. Initial engineering for the bulk sample test mine has already begun with plans to begin underground development in early 2024.
DIVIDENDS
The Company has not paid any dividends since incorporation and it has no plans to pay dividends for the foreseeable future. The directors of the Company will determine if and when dividends should be declared and paid in the future based on the Company's financial position at the relevant time. All of the Common Shares are entitled to an equal share of any dividends declared and paid.
CAPITAL STRUCTURE
Common Shares
The Company's authorized capital consists of an unlimited number of Common Shares without par value. As of April 30, 2024, a total of 232,642,035 Common Shares were issued and outstanding. As of the date of this AIF, a total of 241,896,605 Common Shares are issued and outstanding.
Each Common Share ranks equally with all other Common Shares with respect to dissolution, liquidation or winding-up of the Company and payment of dividends. The holders of Common Shares are entitled to one vote for each share of record on all matters to be voted on by such holders and are entitled to receive pro rata such dividends as may be declared by the Board out of funds legally available therefore and to receive, pro rata, the remaining property of the Company on dissolution. The holders of Common Shares have no redemption, retraction, purchase, pre-emptive or conversion rights. The rights attaching to the Common Shares can only be modified by the affirmative vote of at least two-thirds of the votes cast at a meeting of shareholders called for that purpose.
Warrants
There were 15,437,163 Common Share purchase warrants ("Warrants") outstanding as of April 30, 2024, exercisable into 15,437,163 Common Shares, with a weighted average exercise price of $1.89 per Common Share. As of the date of this AIF, 8,979,041 Warrants are outstanding, exercisable into 8,979,041 Common Shares, with a weighted average exercise price of $1.96 per Common Share, which would result in $17,625,346 cash proceeds to the Company, if exercised.
Stock Options and Restricted Share Units
The Company has approved an Omnibus Equity Incentive Plan (the "Equity Plan"), for the employees, directors, officers, consultants and employees of a person or company which provides management services to the Company or its associated, affiliated, controlled and subsidiary companies (the "Participants"). The Equity Plan replaced the existing Stock Option Plan that was in place since 2018. The Equity Plan includes a rolling 10% stock option plan to issue stock options ("Stock Options") and a fixed 8% other equity plan. Other equity available to issue are Restricted Share Units ("RSUs"), Performance Share Units ("PSUs") and Deferred Share Units ("DSUs") (together "Awards"). The Equity Plan can be found on the Company's Corporate Governance page on the website or under the Company's profile on SEDAR+ or EDGAR.
There were 18,803,722 Stock Options outstanding as of April 30, 2024, exercisable into 18,803,722 Common Shares, with a weighted average exercise price of $1.66 per Common Share. As of the date of this AIF, there are 22,618,722 options outstanding, exercisable into 22,618,722 Common Shares with a weighted average exercise price of $1.90 per Common Share, which would result in $42,877,230 cash proceeds to the Company, if exercised.
350,000 options outstanding are exercisable into one Common Share up to June 13, 2024 and are fully vested. 875,000 options outstanding are exercisable into one Common Share up to December 30, 2024 and are fully vested. 60,000 options outstanding are exercisable into one Common Share up to January 7, 2025 and are fully vested. 920,000 options outstanding are exercisable into one Common Share up to June 29, 2025 and are fully vested. 1,490,000 options outstanding are exercisable into one Common Share up to August 6, 2025 and are fully vested. 115,000 options outstanding are exercisable into one Common Share up to October 1, 2025 and are fully vested. 100,000 options outstanding are exercisable into one Common Share up to December 1, 2025 and are fully vested. 60,000 options outstanding are exercisable into one Common Share up to January 12, 2026 and are fully vested. 1,867,722 options outstanding are exercisable into one Common Share up to February 17, 2026 and are fully vested. 3,581,000 options outstanding are exercisable into one Common Share up to June 22, 2026 and are fully vested. 220,000 options outstanding are exercisable into one Common Share up to July 12, 2026 and are fully vested. 139,000 options outstanding are exercisable into one Common Share up to July 27, 2026 and are fully vested. 1,825,000 options outstanding are exercisable into one Common Share up to September 24, 2026 and are fully vested. 300,000 options outstanding are exercisable into one Common Share up to February 1, 2027 and are fully vested. 509,000 options outstanding are exercisable into one Common Share up to June 2, 2027 and are 409,000 are vested. 1,797,000 options outstanding are exercisable into one Common Share up to February 10, 2028 and 1,083,000 are vested. 3,340,000 options outstanding are exercisable into one Common Share up to May 19, 2028 and 1,324,000 are vested. 400,000 options outstanding are exercisable into one Common Share up to November 15, 2028 and 80,000 are vested. 250,000 options outstanding are exercisable into one Common Share up to December 18, 2025 and 62,500 are vested. 605,000 options outstanding are exercisable into one Common Share up to February 26, 2029 and are fully vested.
There were 1,044,071 RSUs outstanding as of April 30, 2024 and will fully vest by April 1, 2027 and as of the date of the AIF there were 1,705,760 RSUs outstanding that will fully vest by June 12, 2027.
MARKET FOR SECURITIES
Trading Price and Volume
The Common Shares are listed and posted for trading on the TSXV under the trading symbol "VZLA". The following table sets forth the high and low trading prices and trading volume of the Common Shares for its most recently completed financial year and as at the date of this AIF as reported by the TSXV for the periods indicated:
|
Period |
High ($) |
Low ($) |
Volume |
|
July 1-17, 2024 |
2.85 |
2.30 |
4,691,219 |
|
Jun-24 |
2.45 |
2.24 |
8,908,749 |
|
May-24 |
2.55 |
1.82 |
14,519,011 |
|
Apr-24 |
2.10 |
1.78 |
10,002,495 |
|
Mar-24 |
1.77 |
1.55 |
6,142,229 |
|
Feb-24 |
2.00 |
1.46 |
7,317,473 |
|
Jan-24 |
2.25 |
1.56 |
11,962,288 |
|
Dec-23 |
1.72 |
1.52 |
4,654,501 |
|
Nov-23 |
1.67 |
1.35 |
4,539,995 |
|
Oct-23 |
1.52 |
1.34 |
3,015,838 |
|
Sep-23 |
1.77 |
1.37 |
2,647,396 |
|
Aug-23 |
1.47 |
1.30 |
2,393,770 |
|
Jul-23 |
1.64 |
1.49 |
1,544,106 |
|
Jun-23 |
1.81 |
1.45 |
3,811,346 |
|
May-23 |
2.02 |
1.61 |
2,886,039 |
PRIOR SALES
During the year ended April 30, 2024, the Company issued the following securities that are not listed or quoted on a marketplace:
Warrants
During the Company's most recently completed financial year, 1,380,000 Broker Warrants were issued. Since May 1, 2024, no Warrants have been issued.
As of the date of this AIF, there are Warrants outstanding to purchase 8,979,041 Common Shares.
Stock Options & Restricted Share Units
During the Company's most recently completed financial year, 4,500,000 incentive stock options ("Options") were granted as follows:
|
Date of Grant |
Number of |
Exercise |
Expiry Date |
|
19-May-2023 |
3,850,000 |
$1.60 |
19-May-2028 |
|
15-Nov-2023 |
400,000 |
$1.36 |
15-Nov-2028 |
|
18-Dec-2023 |
250,000 |
$1.53 |
18-Dec-2025 |
Since May 1, 2024, the following Options have been granted:
|
Date of Grant |
Number of |
Exercise |
Expiry Date |
|
12-Jun-2024 |
6,050,000 |
$2.26 |
12-Jun-2029 |
During the Company's most recently completed financial year, 318,000 restricted share units ("RSUs") were granted.
Since May 1, 2024, 775,000 RSUs have been granted as follows:
|
Date of Grant |
Number of |
Grant |
|
12-Jun-2024 |
775,000 |
$2.26 |
As of the date of this AIF, there are Options outstanding to purchase an aggregate of 22,618,722 Common Shares and there are 1,705,760 RSUs outstanding.
ESCROWED SECURITIES
As of April 30, 2024, the Company has 500,000 shares in escrow. The escrow shares relate to the Prismo transaction and are subject to a voluntary escrow period of 24 months.
DIRECTORS AND OFFICERS
Name, Occupation and Security Holdings
The following table sets out the names of the directors and officers of the Company as at the date of this AIF and their respective provinces or states and countries of residence, positions with the Company, principal occupations within the five preceding years, periods during which each director has served as a director and the number of each class of securities of the Company and percentage of such class beneficially owned, directly or indirectly, or subject to control or direction by that person.
| Name, Position and City, Province and Country of Residence |
Principal Occupation or Employment for Past 5 Years(1) |
Director or Officer Since |
No. and Class of Securities(1) |
Percentage of Class(2) |
| Michael Konnert British Columbia, Canada President and CEO |
Mr. Konnert is the founder of Vizsla Silver Corp. and he is currently the Chief Executive Officer and a Director of the Company. | September 26, 2017 | 2,393,701 |
0.99% |
| Craig Andrew Parry British Columbia, Canada Director |
Mr. Parry is the Chairman of Vizsla Silver Corp. He also the CEO and Executive Chairman of Vizsla Copper Corp. and serves on various other boards as a director. | December 18, 2018 | 8,542,485 |
3.53% |
| Simon Cmrlec British Columbia, Canada Director and Chief Operating Officer |
Mr. Cmrlec is the Chief Operating Officer of the Company. He was previously Chief Operating Officer at Ausenco Limited. | February 21, 2019 | 1,135,700 |
0.47% |
| Harry Pokrandt (3)(4) British Columbia, Canada Director |
Mr. Pokrandt is a director for the Company. He is currently Chairman of Spectrum Energy and a Board Member of Big Brothers Foundation of Greater Vancouver. | November 23, 2021 | 352,500 |
0.15% |
| David Cobbold (3)(4) British Columbia, Canada Director |
Mr. Cobbold is currently Vice Chairman of Metals and Mining, Macquarie Group. | December 8, 2022 | - |
- |
| Eduardo Luna Mexico Director |
Mr. Luna is currently the Chairman of the Board of Directors of Rochester Resources Ltd. He formerly served as a member of the Board of Directors of Wheaton Precious Metals Corporation. |
November 15, 2023 | - | - |
|
Name, Position and |
Principal Occupation or |
Director or |
No. and |
Percentage |
| Sukhjit Gill (3)(5) British Columbia, Canada Director |
Ms. Gill currently serves as a partner at Smythe LLP. | April 12, 2024 | - | - |
| Mahesh Liyanage British Columbia, Canada Chief Financial Officer |
Mr. Liyanage is the CFO of the Company. | December 1, 2020 | 36,944 |
0.02% |
| Michael Pettingell British Columbia, Canada SVP, Business Development and Strategy |
Mr. Pettingell is currently SVP of Business Development of the Company. | July 27, 2021 | 61,947 | 0.03% |
| Dr. Jesus Velador British Columbia, Canada VP, Exploration |
Dr. Velador is currently VP, Exploration of the Company. | May 5, 2022 | 54,991 | 0.02% |
| Jennifer Hanson British Columbia, Canada Corporate Secretary |
Ms. Hanson is currently Corporate Secretary for Vizsla Silver Corp. She serves as Corporate Secretary for various public companies. | December 18, 2018 | - | - |
Notes:
(1) The information as to principal occupation and shares beneficially owned has been furnished by the respective individuals.
(2) Based upon the 241,831,005 Common Shares issued and outstanding as of the date of this AIF.
(3) Member of the Audit Committee.
(4) Member of the Compensation Committee
(5) Chairman of the Audit Committee
As at the date of this AIF, 12,578,268 Common Shares of the Company are beneficially owned, directly or indirectly, by the directors and executive officers as a group, representing approximately 5.20% of the issued and outstanding voting securities of the Company.
Director Biographies
Michael Konnert, Director, President and Chief Executive Officer
Mr. Konnert is a mining entrepreneur with deep expertise in deal-making, financing, team leadership and strategic corporate development. As the Founder, President, Director and CEO of Vizsla Silver Corp. (NYSE:VZLA), he has successfully led the company in consolidating one of Mexico's highest-grade silver and gold districts, positioning it to develop one of the world's largest single-asset silver producers. He is also co-founder and Managing Partner of Inventa Capital, a natural resource incubator company dedicated to acquiring and developing assets in the natural resource sector. Since its founding in 2017, Inventa has raised over C$800M in capital, focusing on discovering emerging opportunities in the industry.
In 2017, Mr. Konnert co-founded CobaltOne Energy Corp, a battery metal exploration company, which he successfully led to acquisition by Blackstone Minerals (ASX: BSX). He also serves as Executive Chairman of Vizsla Royalties and holds board positions at Vizsla Copper (TSX-V: VCU) and Summa Silver (CSE: SSVR). Michael's career is marked by his strategic vision, commitment to sustainable development, and innovative approach to the mining industry.
Craig Parry, Director
Through the course of his career, Mr. Parry has been a founder, director, CEO, senior executive and geologist working across a broad range of commodities with several companies. He is currently Chairman of Skeena Resources Ltd and has been a Director since December 15, 2016. He is the Executive Chairman and CEO of Vizsla Copper Corp. (since September 1, 2021). He is a founder and Chairman of Vizsla Silver Corp. (since December 18, 2018), Gold Bull Resources (since June 29, 2020) and Outback Goldfields Ltd (since January 2019). He was a founder, CEO and/or director of IsoEnergy Ltd (TSXV:ISO), NexGen Energy Ltd (NYSE:NXE), EMR Capital, Tigers Realm Coal (ASX:TIG), Tigers Realm Minerals, and G-Resources Group. He worked for Rio Tinto from 2000 to 2008.
Mr. Parry has led teams and been involved in a number of exceptional discoveries and resource projects including Vizsla's discovery of new veins at its Panuco-Copala silver district, IsoEnergy's Hurricane uranium deposit, NexGen's Arrow uranium deposit and Tigers Realm Coal's Amaam and Amaam North coking coal deposits.
Mr. Parry graduated from The University of New South Wales and holds a Bachelor of Science (Applied Geology) with first class Honours and the University Medal. He is a member of the AusIMM.
Simon Cmrlec, Director and Chief Operating Officer
Mr. Cmrlec is a highly experienced senior engineer with over 30-years of industry experience who has been a director of the Company since its formation and has most recently held the position of Chief Operating Officer of Ausenco, a global mining engineering and consulting firm. He has extensive experience in building mining projects around the world and across a number of different commodities and will be tasked with advancing Vizsla Silver's world-class Panuco silver-gold Project towards production, with the goal of becoming one of the world's largest single-asset silver producers.
Mr. Cmrlec began his career with Western Mining at its Olympic Dam Operations in South Australia where he held a number of technical and operations roles. He was one of the Owners Representatives for the Olympic Dam Expansion Project (ODP) where he was involved in the design, construction and commissioning of the Smelter and Hydrometallurgical facilities. Following the completion of the ODP project Simon joined Kvaerner and was involved in the construction and commissioning of various base metals, iron ore and gold projects in the US, South America, Middle East and South Africa. In 2001 he joined Inco on the Goro Nickel project in New Caledonia as the Project Manager responsible for the Refinery facility. Simon held a number of roles on the Goro Nickel project including Senior Project Manager and Construction director in his eight years there. Simon joined Ausenco in 2009 and held a number of positions with the company including President, Program Management and President APAC/Africa before moving to Canada in 2015 in the role of President, North America and finally Chief Operating Officer.
He became a Director of Vizsla Silver in 2018 before joining the company as Chief Operating Officer in 2024.
Mr. Cmrlec attended the Gartrell School of Mining, Metallurgy and Applied Geology at the University of South Australia and graduated with a B.Eng (Hons) in Metallurgical Engineering in 1994.
Harry Pokrandt, Director
Mr. Pokrandt is a Capital Markets Executive with 30+ years experience in mining and technology. He is a currently Chairman of Spectrum Energy and a Director of Big Brothers Foundation of Greater Vancouver. He is formerly Chairman of Mayfair Gold and former Managing Director at Macquarie Capital Markets, CEO of Hive Block chain, Director of Kore Mining, Gold X Mining Corp., BQ Metals Corp, Lithium X and Fiore Exploration.
David Cobbold, Director
Mr. Cobbold is a veteran investment banker with 27 years of financial services experience. Currently, he is Vice Chairman of Metals and Mining, Macquarie Group where he is responsible for sourcing and leading merger, acquisition, sale and defence transactions for clients ranging from exploration and development companies to global metals & mining companies. Mr. Cobbold's clients are based in Canada, US, U.K., South Africa and Australia.
In addition, Mr. Cobbold has extensive experience in global commodity and securities markets. Mr. Cobbold joined Macquarie in 2011 as a Managing Director, Head of Mining, Macquarie Capital Markets Canada. Prior to joining Macquarie, Mr. Cobbold worked at CIBC World Markets and CIBC Capital Partners for 13 years in various capacities, including as a Managing Director, Global Mining Investment Banking and Managing Director, Equity Capital Markets.
Mr. Cobbold holds a Bachelor of Arts in Economics, University of Western Ontario and Masters of Business Administration (MBA), Harvard Business School.
Eduardo Luna, Director
Mr. Luna has spent over forty years in the precious metals mining industry and has held prior senior executive and board positions at several companies including Industrial Peñoles, Goldcorp Inc., Luismin SA de CV, Wheaton River Minerals Ltd., Alamos Gold Inc., Dyna Resource, Inc. and Primero Mining Corporation.
He is currently the Chairman of the Board of Directors of Rochester Resources Ltd., a junior natural resources company with assets in Mexico. He formerly served as a member of the Board of Directors of Wheaton Precious Metals Corporation. Mr. Luna is the former President of the Mexican Mining Chamber and a former President of the Silver Institute.
He is an inductee in the Mexico Mining Hall of Fame and serves as Chairman of the Advisory Board of the Faculty of Mines at the University of Guanajuato where he received a degree in Mining Engineering.
Sukhjit Gill, Director
Ms. Gill currently serves as a partner at Smythe LLP and practice group leader of Smythe’s assurance group. She is a Chartered Professional Accountant with 23 years of experience and specializes in providing audit and assurance services to publicly traded companies operating in the resource industry, as well as private companies across several industries in both Canada and the United States. Ms. Gill is also a director of Skeena Resources Limited. She was previously on the board of directors for the Provincial Health Services Authority and British Columbia Emergency Health Services.
Ms. Gill holds a Bachelor of Technology in Accounting from BCIT and a Chartered Professional Accountants of British Columbia.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Other than as disclosed below, to the knowledge of the Company, no director or executive officer of the Company nor a shareholder holding a sufficient number of Common Shares to materially affect the control of the Company, nor a personal holding company of any of them,
(a) is, at the date of this AIF or has been within the 10 years before the date of this AIF, a director or executive officer of any company (including the Company), that while that person was acting in that capacity,
(i) was the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or
(ii) was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities registration, for a period of more than 30 consecutive days; or
(iii) within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager, or trustee appointed to hold its assets; or
(b) has, within the 10 years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or comprise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, officer or shareholder.
Mahesh Liyanage was the Chief Financial Officer of Synodon Inc. from March 1, 2016, to November 17, 2016. On November 30, 2016, a Receiver was appointed under the Bankruptcy and Insolvency Act (Canada) pursuant to a Court Order of the Court of Queen's Bench of Alberta and on May 8, 2017 Synodon Inc. was cease traded by the Alberta Securities Commission.
To the knowledge of the Company, no director or executive officer of the Company, nor a shareholder holding a sufficient number of Common Shares of the Company to affect materially the control of the Company, nor a personal holding company of any of them, has been subject to:
(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a security's regulatory authority; or
(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.
Conflicts of Interest
Certain directors and officers of the Company are directors and officers of other companies, some of which are in the same business as the Company. The directors and officers of the Company are required by law to act in the best interests of the Company. They have the same obligations to the other companies in respect of which they act as directors and officers. Discharge by the directors and officers of their obligations to the Company may result in a breach of their obligations to the other companies, and in certain circumstances this could expose the Company to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of the Company. Such conflicting legal obligations may expose the Company to liability to others and impair its ability to achieve its business objectives.
AUDIT COMMITTEE INFORMATION
Pursuant to the provisions of National Instrument 52-110 Audit Committees ("NI 52-110") the Company is required to provide the following disclosure with respect to its Audit Committee.
Audit Committee Mandate
The text of the Audit Committee's Charter is attached as Appendix "A" to this AIF.
Composition of the Audit Committee
The Company's audit committee consists of Suki Gill, Harry Pokrandt, and David Cobbold (the "Members"). The Members are independent of the Company. Ms. Gill is the Chairman of the Audit Committee.
Relevant Education and Experience
Each member of the Audit Committee has considerable experience participating in the management of private and/or publicly traded companies and has the ability to read and understand financial statements that present the breadth and level of complexity of accounting issues that would generally be expected to be raised by the Company's financial statements. See "Directors and Officers - Director Biographies" for additional information on each director's education and experience.
Each Audit Committee member has had extensive experience reviewing financial statements. Each member has an understanding of the Company's business and has an appreciation for the relevant accounting principles for that business.
Reliance on Certain Exemptions
At no time since the commencement of the Company's most recently completed financial year has the Company relied on: (a) the exemption in section 2.4 (De Minimis Non-audit Services), or (b) an exemption from NI 52-110, in whole or in part, granted under Part 8 (Exemptions).
Audit Committee Oversight
For the year ended April 30, 2024, the audit committee of the Company has not made any recommendations to nominate or compensate an external auditor which were not adopted by the Board.
Pre-Approval Policy and Procedures
The audit committee has not adopted any specific policies and procedures for the engagement of non-audit
services.
External Auditor Service Fees
The following table sets forth the fees paid by the Company and its subsidiaries to MNP LLP for services rendered in the years ended April 30, 2024 and April 30, 2023:
|
Category |
Year ended April 30, 2024 |
Year ended April 30, 2023 |
|
Audit Fees(1) |
$174,571 |
$166,920 |
|
Audit Related Fees(2) |
- |
- |
|
Tax Fees(3) |
- |
- |
|
All Other Fees(4) |
$19,700 |
$24,075 |
|
Total |
$194,271 |
$190,995 |
Notes:
(1) "Audit fees" include aggregate fees billed by the Company's external auditor in each of the last two fiscal years for audit fees.
(2) "Audit related fees" include the aggregate fees billed in each of the last two fiscal years for assurance and related services by the Company's external auditor that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported under "Audit fees" above. The services provided include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.
(3) "Tax fees" include the aggregate fees billed in each of the last two fiscal years for professional services rendered by the Company's external auditor for tax compliance, tax advice and tax planning. The services provided include tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities. In the year ended April 30, 2023, the tax note and tax return were prepared internally.
(4) "All other fees" include the aggregate fees billed in each of the last two fiscal years for products and services provided by the Company's
external auditor, other than "Audit fees", "Audit related fees" and "Tax fees" above. Other fees included review work on the prospectus and other relevant forms for the NYSE.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
Legal Proceedings
The Company is not aware of any actual or pending material legal proceedings to which the Company is or is likely to be party or of which any of its business or property is or is likely to be subject.
Regulatory Actions
No penalties or sanctions were imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during the year ended April 30, 2024.
No penalties or sanctions were imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision.
The Company did not enter into any settlement agreements before a court relating to securities legislation or with a securities regulatory authority during the year ended April 30, 2024.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than as disclosed in this AIF, no director, executive officer or persons or companies who beneficially own, control or direct, directly or indirectly, more than 10 percent of any class of outstanding voting securities of the Company, nor any associate or affiliate of the foregoing persons, has or has had any material interest, direct or indirect, in any transactions with the Company within the three most recently completed financial years or during the current financial year, that has materially affected or is reasonably expected to have a material effect on the Company.
TRANSFER AGENT AND REGISTRAR
The Company's transfer agent and registrar is Computershare Trust Company of Canada ("Computershare"). Computershare's register of transfers for the common shares of the Company is located at 510 Burrard Street, Second Floor, Vancouver, British Columbia, Canada, V6C 3B9.
MATERIAL CONTRACTS
Other than contracts entered into in the ordinary course of business, the only material contract that the Company entered into during the year ended April 30, 2024 was the Arrangement Agreement with Vizsla Royalties Corp. (see General Development of Business - Three Year History).
INTERESTS OF EXPERTS
MNP LLP is the independent registered public accounting firm of the Company and is independent within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia.
Allan Armitage, Ph.D, P.Geo. of SGS, Ben Eggers, MAIG, P.Geo. of SGS and Peter Mehrfert, P.Eng. of Ausenco prepared the Technical Report. To management's knowledge, Messrs. Armitage, Eggers and Mehrfert do not have any registered or beneficial interests, direct or indirect, in any securities or other property of the Company (or of any of its associates or affiliates).
ADDITIONAL INFORMATION
Additional information relating to the Company may be found on SEDAR+ at www.sedarplus.ca.
Additional information including directors' and officers' remuneration and indebtedness, principal holders of the Company's securities, and securities authorized for issuance under the Company's Equity Plan, as applicable, is contained in the Company's information circular dated September 22, 2023 and its Statement of Executive Compensation dated July 20, 2023, both of which may be viewed on SEDAR+ (www.sedarplus.ca).
Additional financial information is provided in the Company's audited financial statements and the Management's Discussion and Analysis of the Company for the year ended April 30, 2024, a copy of which may be requested from the Company's head office, or may be viewed on SEDAR+ (www.sedarplus.ca).
APPENDIX "A"
AUDIT AND RISK COMMITTEE CHARTER
ARTICLE 1
PURPOSE
1.1 The Audit and Risk Committee (the "Committee") of the Board of Directors (the "Board") of Vizsla Silver Corp. (the "Company") shall assist the Board in fulfilling its financial oversight responsibilities. The overall purpose of the Committee is (i) to ensure that the Company's management has designed and implemented an effective system of internal financial controls, (ii) to review and report on the integrity of the consolidated financial statements and related financial disclosure of the Company, (iii) to review the Company's compliance with regulatory and statutory requirements as they relate to financial statements, taxation matters and disclosure of financial information, and (iv) to oversee the external auditor's qualification and independence and the performance of the external auditors. In performing its duties, the Committee will maintain effective working relationships with the Board, management, and the external auditors and monitor the independence of those auditors. To perform his or her role effectively, each member of the Committee will obtain an understanding of the responsibilities of the Committee membership as well as the Company's business, its operations and related risks.
ARTICLE 2
COMPOSITION, PROCEDURE, AND ORGANIZATION
2.1 The Committee shall consist of at least three members of the Board (each a "Committee Member" or "Member"). Each Committee Member shall be an "independent director" as determined in accordance with applicable legal requirements for audit committee service, including the requirements of the National Instrument 52-110 of the Canadian Securities Administrators ("NI 52-110") and Rule 10A-3(b) of the U.S. Securities Exchange Act of 1934 (as amended, the "Exchange Act"), as such rules are revised, updated or replaced from time to time.
2.2 If, a Member ceases to be independent for reasons outside the member's reasonable control, the member is exempt from the requirements in NI 52-110 or Rule 10A-3(b) of the Exchange Act for a period ending on the later of:
a) the next annual meeting of the issuer; and
b) the date that is six months from the occurrence of the event which caused the member to not be independent.
2.3 All members of the Committee shall, to the satisfaction of the Board, be "financially literate", and at least one member shall have accounting or related financial management expertise to qualify as a "financial expert" in accordance with applicable legal requirements, including the requirements of NI 52-1101 and the Exchange Act, as revised, updated or replaced from time to time.
2.4 The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, shall appoint the members of the Committee for the ensuing year. The Board may at any time remove or replace any member of the Committee and may fill any vacancy in the Committee.
2.5 Unless the Board shall have appointed a Chair of the Committee, the members of the Committee shall elect a Chair of the Committee by majority vote of the full membership of the Committee.
2.6 The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other.
2.7 The Committee shall have access to such officers and employees of the Company and to the Company's external auditors, and to such information respecting the Company, as it considers to be necessary or advisable in order to perform its duties and responsibilities.
2.8 Meetings of the Committee shall be conducted as follows:
(a) the Committee shall meet at least four times annually at such times and at such locations as maybe requested by the chair of the Committee. The external auditors or any member of the Committee may request a meeting of the Committee;
(b) the external auditors shall receive notice of and have the right to attend all meetings of the Committee; and
(c) management representatives may be invited to attend all meetings except private sessions with the external auditors.
2.9 The external auditors shall have a direct line of communication to the Committee through its chair and may bypass management if deemed necessary. The Committee, through its chair, may contact directly any employee in the Company as it deems necessary, and any employee may bring before the Committee any matter involving questionable, illegal or improper financial practices or transactions.
2.10 The Committee will conduct and review with the Board annually an evaluation of the Committee's performance with respect to the requirements of this Charter. This evaluation should also set forth the goals and objectives of the Committee for the upcoming year. The Committee may conduct this performance evaluation in such manner as the Committee, in its business judgment, deems appropriate.
ARTICLE 3
ROLES AND RESPONSIBILITIES
3.1 The overall duties and responsibilities of the Committee shall be as follows:
(a) to report regularly to the Board and to assist the Board in the discharge of its responsibilities relating to the Company's accounting principles, reporting practices and internal controls and its approval of the Company's annual and interim consolidated financial statements and related financial disclosure;
(b) to establish and maintain a direct line of communication with the Company's external auditors and assess their performance;
(c) to set clear hiring policies for employees or former employees of the external auditors;
(d) to review and approve in advance any proposed related-party transactions and required disclosures of such in accordance with applicable securities laws and regulations, and report to the Board on any approved transactions.
(e) to review with management and the external auditors, the financial reporting of any transactions between the Company and any officer, director or other "related party" (including significant shareholder) or any entity in which any person has a financial interest and any potential conflicts of interest;
(f) to ensure that the management of the Company has designed, implemented, and is maintaining an effective system of internal financial controls and to discuss policies with respect to risk assessment and risk management;
(g) to prepare the disclosure required by Item 407(d)(3)(i) of Regulation S-K under the U.S. Securities Act of 1933, as amended;
(h) to oversee procedures relating to the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls or auditing matters and the confidential anonymous submission by employees of the Company of concerns regarding questionable accounting of auditing matters, pursuant to the Company's whistleblower policy;
(i) to meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with the external auditors;
(j) to review with the external auditors any audit problems or difficulties and management's response; and
(k) to report regularly to the Board on the fulfilment of its duties and responsibilities.
3.2 The duties and responsibilities of the Committee as they relate to the external auditors shall be as follows:
(a) to recommend to the Board a firm of external auditors to be engaged by the Company, and to verify the independence of such external auditors;
(b) to review and approve the fee, scope and timing of the audit and other related services rendered by the external auditors;
(c) review the audit plan of the external auditors prior to the commencement of the audit;
(d) to review with the external auditors, upon completion of their audit, the contents of their report (such report to be provided at least annually), including and as well as:
(i) the scope and quality of the audit work performed;
(ii) the adequacy of the Company's financial and auditing personnel;
(iii) co-operation received from the Company's personnel during the audit;
(iv) internal resources used;
(v) significant transactions outside of the normal business of the Company;
(vi) the Company's internal quality-control procedures;
(vii) any material issues raised by the most recent internal quality-control review, or peer review, of the Company, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the external auditors,
(viii) any steps taken to deal with any such issues, and (to assess the external auditor's independence) all relationships between the external auditors and the Company;
(ix) significant proposed adjustments and recommendations for improving internal accounting controls, accounting principles or management systems; and
(x) the non-audit services provided by the external auditors;
(e) to meet to review and discuss the Company's annual audited financial statements and quarterly financial statements with management and the external auditors, including reviewing the Company's specific disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations";
(f) to discuss with the external auditors the quality and not just the acceptability of the Company's accounting principles; and
(g) to implement structures and procedures to ensure that the Committee meets the external auditors on a regular basis in the absence of management.
3.3 The duties and responsibilities of the Committee as they relate to the internal control procedures of the Company are to:
(a) review the appropriateness and effectiveness of the Company's policies and business practices which impact on the financial integrity of the Company, including those relating to insurance, accounting, information services and systems and financial controls, management reporting and risk management;
(b) review compliance under the Company's business conduct and ethics policies and to periodically review these policies and recommend to the Board changes which the Committee may deem appropriate;
(c) review any unresolved issues between management and the external auditors that could affect the financial reporting or internal controls of the Company; and
(d) periodically review the Company's financial and auditing procedures and the extent to which recommendations made by the external auditors have been implemented.
3.4 The Committee is also charged with the responsibility to:
(a) review and approve the Company's annual and interim financial statements and related Management's Discussion & Analysis ("MD&A"), including the impact of unusual items and changes in accounting principles and estimates;
(b) review and approve the financial sections of any of the following disclosed documents prepared by the Company:
(i) the annual report to shareholders;
(ii) the annual information form;
(iii) annual MD&A;
(iv) prospectuses;
(v) news releases discussing financial results of the Company;
(vi) financial information and earnings guidance provided to analysts and rating agencies; and
(vii) other public reports of a financial nature requiring approval by the Board,
and report to the Board with respect thereto;
(c) review regulatory filings and decisions as they relate to the Company's consolidated financial statements;
(d) review the appropriateness of the policies and procedures used in the preparation of the Company's consolidated financial statements and other required disclosure documents, and consider recommendations for any material change to such policies;
(e) review any significant tax exposures and tax planning initiatives intended to promote compliance with applicable laws while minimizing tax costs;
(f) review and report on the integrity of the Company's consolidated financial statements;
(g) review the minutes of any audit committee meeting of subsidiary companies;
(h) review with management, the external auditors and, if necessary, with legal counsel, any litigation, claim or other contingency, including tax assessments that could have a material effect upon the financial position or operating results of the Company and the manner in which such matters have been disclosed in the consolidated financial statements;
(i) review the principal risks of the Company's business and operations, and any other circumstances and events that could have significant impact on the Company's assets and shareholders;
(j) assessing the Company's risk tolerance, the overall process for identifying principal business and operational risks and the implementation of appropriate measures to manage and disclose such risks;
(k) monitoring reporting trends on emerging risks and making recommendations to management on implementation of appropriate measures to manage and disclose such risks;
(l) reviewing with senior management annually, the Company's insurance policies and considering the extent of any uninsured exposure and the adequacy of coverage;
(m) reviewing the Company's cybersecurity, privacy and data security risk exposures and measures taken to protect the confidentiality, integrity and availability of its information systems and Company data;
(n) review the Company's compliance with regulatory and statutory requirements as they relate to financial statements, tax matters and disclosure of financial information; and
(o) develop a calendar of activities to be undertaken by the Committee for each ensuing year and to submit the calendar in the appropriate format to the Board following each annual general meeting of shareholders.
3.5 Without limiting the generality of anything in this Charter, the Committee has the authority:
(a) to engage independent counsel and other advisors as it determines necessary to carry out its duties,
(b) to set and pay the compensation for any advisors employed by the Committee, and
(c) to communicate directly with the external auditors.
ARTICLE 4
EFFECTIVE DATE
4.1 This Charter was adopted by the Board on May 22, 2018.
4.2 This Charter was reviewed and amended on October 15, 2021.
Consolidated Financial Statements
(Expressed in Canadian Dollars)
For the years ended April 30, 2024, and 2023
| Independent Auditor's Report |
|
To the Shareholders of Vizsla Silver Corp.:
Opinion
We have audited the consolidated financial statements of Vizsla Silver Corp. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at April 30, 2024 and April 30, 2023, and the consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at April 30, 2024 and April 30, 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS as issued by the International Accounting Standards Board ("IFRS").
Basis for Opinion
We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Value Added Tax (VAT) Receivable
Key Audit Matter Description
We draw attention to Note 4 to the consolidated financial statements. As at April 30, 2024, the Company recognized a Mexican value-added tax receivable (IVA receivable). The Company makes a number of assumptions in assessing the recoverability of the IVA receivable which are subject to risk and uncertainty, including the timing and likelihood of receiving the refund from Mexican tax authorities. We considered this as a key audit matter given the significant judgment made by management in estimating the timing and likelihood of collecting the refund. This resulted in a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the audit evidence related to managements estimates.
| 2200 - 1021 West Hastings Street, Vancouver BC, V6E 0C3 | 1.877.688.8408 T: 604.685.8408 F: 604.685.8594 |
Audit Response
We responded to this matter by performing procedures in relation to the classification and recoverability of the IVA receivable. Our audit work in relation to this included, but was not restricted to, the following:
• Reviewed management's assessment on recoverability of the IVA receivable in Mexico and critically assessed areas where there was significant management judgment, including accounting estimates that are subject to a high degree of estimation uncertainty. This included validating the refund status against the Mexican tax authorities' website, obtaining management's assessment on recoverability, and evaluating the reasonableness of procedures in place to expedite the refund process;
• Performed a retrospective review of historical collection and the balances filed;
• Reviewed supporting documentation for VAT receivable incurred and amounts of refunds received during the year, and obtained correspondence between the Company and the Mexican tax authorities to understand the status of VAT receivable filed but not received; and
• Reviewed the adequacy of the disclosures in the consolidated financial statements, including disclosures related to significant judgments and estimates.
Other Information
Management is responsible for the other information. The other information comprises Management's Discussion and Analysis as well as the Annual Report on Form 40-F.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis and the Annual Report on Form 40-F prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
| 2200 - 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3 1.877.688.8408 T: 604.685.8408 F: 604.685.8594 MNP.ca |
 |
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
| 2200 - 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3 1.877.688.8408 T: 604.685.8408 F: 604.685.8594 MNP.ca |
|
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Jian-Kun Xu.
|
|
|
July 18, 2024 |
Chartered Professional Accountants |
| 2200 - 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3 1.877.688.8408 T: 604.685.8408 F: 604.685.8594 MNP.ca |
|
VIZSLA SILVER CORP.
Consolidated Statements of Financial Position
Expressed in Canadian dollars
| As at | Note | April 30, 2024 | April 30, 2023 | |||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 3 | |||||||
| Short-term investments | 3 | |||||||
| Taxes receivable | 4 | |||||||
| Other receivables | ||||||||
| Prepaid expenses | ||||||||
| Deferred payment | 7a | |||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Long-term prepaid expenses | ||||||||
| Long-term taxes receivable | 4 | |||||||
| Property, plant, and equipment | 5 | |||||||
| Investment | 6 | |||||||
| Exploration and evaluation assets | 7a | |||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Due to related party | 8 | |||||||
| Total liabilities | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Share capital | 9 | |||||||
| Shares to be issued | 9g | |||||||
| Reserves | ||||||||
| Accumulated other comprehensive gain | ||||||||
| Deficit | ( |
) | ( |
) | ||||
| Total shareholders' equity | ||||||||
| Total liabilities and shareholders' equity | ||||||||
Note 1 - Nature and Continuance of Operations
Note 14 - Subsequent Events
| They are signed on the Company's behalf by: | |
| "Michael Konnert" | "Craig Parry" |
| Director, CEO | Director, Chairman |
The accompanying notes are an integral part of these consolidated financial statements
Page | 2
VIZSLA SILVER CORP.
Consolidated Statements of Loss and Comprehensive Loss
Expressed in Canadian dollars
| For the years ended | |||||||
| Note | April 30, 2024 | April 30, 2023 | |||||
| $ | $ | ||||||
| General and administrative expenses | |||||||
| Amortization | |||||||
| Consulting fees | |||||||
| Directors fees | 8 | ||||||
| Foreign exchange (gain) / loss | ( |
) | |||||
| Insurance | |||||||
| Management fees | 8 | ||||||
| Marketing | |||||||
| Office and miscellaneous | 8 | ||||||
| Professional fees | |||||||
| Share based compensation | 9e, f | ||||||
| Transaction costs | |||||||
| Transfer agent and filing | |||||||
| Travel and promotion | |||||||
| ( |
) | ( |
) | ||||
| Other income / (loss) | |||||||
| Interest income | |||||||
| Revaluation loss on investment in equity instruments | 6 | ( |
) | ( |
) | ||
| Impairment loss | 6 | ( |
) | ||||
| Net loss | ( |
) | ( |
) | |||
| Other comprehensive gain | |||||||
| Items that will be reclassified subsequently | |||||||
| Translation gain on foreign operations | |||||||
| Comprehensive loss | ( |
) | ( |
) | |||
| Basic and diluted loss per share | ( |
) | ( |
) | |||
| Weighted average number of common shares | |||||||
| Basic and diluted | |||||||
The accompanying notes are an integral part of these consolidated financial statements
Page | 3
VIZSLA SILVER CORP.
Consolidated Statements of Cash Flows
Expressed in Canadian dollars
| For the years ended | Note | April 30, 2024 | April 30, 2023 | ||||
| $ | $ | ||||||
| Operating activities | |||||||
| Net loss for the year | ( |
) | ( |
) | |||
| Items not affecting cash: | |||||||
| Amortization | 5 | ||||||
| Share-based compensation | 9 | ||||||
| Revaluation loss on investment in equity instruments | 6 | ||||||
| Impairment loss | 6 | ||||||
| Changes in non-cash working capital items: | |||||||
| Accounts payable and accrued liabilities | ( |
) | |||||
| Due to related parties | 8 | ||||||
| Taxes receivable | 4 | ( |
) | ( |
) | ||
| Other receivable | ( |
) | |||||
| Prepaid expenses | ( |
) | |||||
| Net cash flows used in operating activities | ( |
) | ( |
) | |||
| Investing activities | |||||||
|
Purchase of exploration and evaluation assets |
7a |
( |
) | ||||
| Deferred payment of exploration and evaluation assets | 7a | ( |
) | ||||
| Exploration and evaluation expenditures | 7a | ( |
) | ( |
) | ||
| Accounts payable related to exploration and evaluation assets | ( |
) | ( |
) | |||
| Purchase of equipment | 5 | ( |
) | ( |
) | ||
| Strategic investment expenditures | ( |
) | |||||
| Redemption (Investment) of term deposits | ( |
) | |||||
| Net cash flows provided by/(used) in investing activities | ( |
) | |||||
| Financing activities | |||||||
| Cash proceeds of common shares issued net of issuance costs | 9b | ||||||
| Issuance of common shares - warrants exercise | 9d | ||||||
| Issuance of common shares - option exercise | 9e | ||||||
| Net cash flows provided by financing activities | |||||||
| Effects of foreign exchange | |||||||
| Increase (Decrease) in cash and cash equivalents | ( |
) | |||||
| Cash and cash equivalents, beginning of year | |||||||
| Cash and cash equivalents, end of year | |||||||
| Supplemental cash flow | |||||||
| Issuance of common shares for strategic investment | |||||||
| Share issuance costs - finders warrants | 9d | ||||||
|
Shares issued for RSUs |
9f |
|
|||||
| Shares to be issued for E&E acquisition | 9g |
The accompanying notes are an integral part of these consolidated financial statements
Page | 4
VIZSLA SILVER CORP.
Consolidated Statements of Changes in Equity
Expressed in Canadian dollars, except for number of shares
| Common shares | ||||||||||||||||||||||
| Note | Number | Amount | Reserves | Share to be issued |
Other comprehensive income (loss) |
Deficit | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Balance, April 30, 2022 | ( |
) | ( |
) | ||||||||||||||||||
| Shares issued pursuant to private placement and prospectus |
9b | - | - | - | - | |||||||||||||||||
| Shares issued pursuant to strategic investment | 9b | - | - | - | - | |||||||||||||||||
| Shares issued pursuant to exercise of warrants and options | 9b | - | - | - | - | |||||||||||||||||
| Share issuance costs - cash | 9b | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||
| Share issuance costs - finders warrants | 9d | - | ( |
) | - | - | - | - | ||||||||||||||
| Stock based compensation - options | 9e | - | - | - | - | - | ||||||||||||||||
| Stock based compensation - RSUs | 9f | - | - | - | - | - | ||||||||||||||||
| Net loss and other comprehensive loss for the year | - | - | - | - | ( |
) | ( |
) | ||||||||||||||
| Balance, April 30, 2023 | ( |
) | ||||||||||||||||||||
| Shares issued pursuant to private placement and prospectus | 9b | - | - | - | - | |||||||||||||||||
| Shares to be issued pursuant to property acquisition | 9g | - | - | - | - | - | ||||||||||||||||
| Shares issued pursuant to exercise of warrants, options, and RSUs | 9b | ( |
) | - | - | - | ||||||||||||||||
| Share issuance costs - cash | 9b | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||
| Share issuance costs - finders warrants | 9d | - | ( |
) | - | - | - | - | ||||||||||||||
| Stock based compensation - options | 9e | - | - | - | - | - | ||||||||||||||||
| Stock based compensation - RSUs | 9f | - | - | - | - | - | ||||||||||||||||
| Net loss and other comprehensive loss for the year | - | - | - | - | ( |
) | ( |
) | ||||||||||||||
| Balance, April 30, 2024 | ( |
) | ||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
Page | 5
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
1. Nature and Continuance of Operations
The Company was incorporated on September 26, 2017, under the Business Corporations Act (British Columbia) under the name Vizsla Capital Corp. On March 8, 2018, the Company changed its name to Vizsla Resources Corp. On February 5, 2021, the Company changed its name to Vizsla Silver Corp. (the "Company", "Vizsla Silver"). It is trading on the venture exchange under the symbol VZLA. The Company's principal business activity is the exploration of mineral properties. The Company currently conducts substantially all its operations in Canada and Mexico in one business segment.
On January 21, 2022, Vizsla Silver Corp was listed on the NYSE American and commenced trading under the symbol "VZLA".
The head office and principal address of the Company is located at 595 Burrard Street, Suite 1723 Vancouver, BC V7X 1J1.
The Company has not yet determined whether its properties contain ore reserves. The recoverability of the amounts shown for mineral properties and exploration costs is dependent upon the existence of ore reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties, and future profitable production or proceeds from the disposal of properties.
These consolidated financial statements have been prepared using accounting principles applicable to a going concern which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation.
The Company continues to experience risks associated with global inflation and volatility in foreign exchange rates. The Company continues to monitor each of these risks and will execute timely and appropriate measures as necessary. Further, near-term metal prices, exchange rates, discount rates, and other key assumptions used in the Company's accounting estimates are subject to greater uncertainty given the current economic environment. Changes in these assumptions could significantly impact the Company's accounting estimates.
Page | 6
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standard ("IFRS") issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").
These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments measured at their fair value as explained in the accounting policies below.
In addition, these consolidated financial statements have been prepared using the accrual basis of accounting other than the consolidated statements of cash flows. The consolidated financial statements were approved by the Board of Directors of the Company on July 18, 2024.
a) Basis of Consolidation
The principal subsidiaries of the Company, which are accounted for under the consolidation method, are as follows:
| Entity | Principal activities | Country of incorporation and operation |
Ownership interest as at April 30, 2024 |
Ownership interest as at April 30, 2023 |
| Canam Alpine Ventures Ltd. | Holding Co | |||
| Minera Canam S.A. DE C.V. | Exploring evaluating mineral properties | |||
| Operaciones Canam Alpine S.A. DE C.V. |
Exploring evaluating mineral properties | |||
| Panuco Royalty Corp. (formerly Vizsla Royalty Corp., Vizsla Copper Corp., and 1283303 B.C. Ltd.) | Royalty Company | |||
| Canam Royalties Mexico, S.A. de C.V. | Royalty Company | |||
| Vizsla Royalties Corp. | Royalty Company | N/A |
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to or has rights to, variable returns from its involvement with the entity and can affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. All significant intercompany transactions and balances have been eliminated.
On October 13, 2023, Vizsla Royalty Corp.'s name was changed to Panuco Royalty Corp., and Vizsla Royalties Corp. was incorporated. Vizsla Royalties Corp. became the Company's wholly-owned subsidiary, and Panuco Royalty Corp. became its wholly-owned subsidiary.
Page | 7
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies
Foreign Currency Translation
i) Functional and Presentation Currency
Items included in the financial statements of each consolidated entity in Vizsla Silver Corp.'s group are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The functional currency of the Company and its Canadian subsidiaries is Canadian dollars ("CAD"), the functional currency of the Company's Mexican subsidiaries is Mexican Peso ("MXD"). The consolidated financial statements are presented in CAD, which is the Company's presentation currency.
For the purpose of presenting these consolidated financial statements, entities that have a functional currency different from the presentation currency ("foreign operations") are translated into CAD as follows:
- Assets and liabilities: at the closing rate at the date of the statement of financial position; and
- Income and expenses: at the average rate for the period (as this is considered a reasonable approximation of actual rates prevailing at the transaction dates).
Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity. When an entity disposes of its entire interest in a foreign operation, or loses control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If an entity disposes part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-controlling interests.
ii) Transactions and Balances
In preparing the financial statements of each individual Vizsla Silver Corp. entity and subsidiary, transactions in currencies other than the entity's functional currency ("foreign currency") are recognized at the rates of exchange prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for the exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
Page | 8
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Cash and cash equivalents
Cash consists of cash on hand, deposits in banks with no restrictions, and highly liquid savings accounts. Cash equivalents include other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The Company's cash and cash equivalents are invested with major financial institutions in business accounts.
Short-term investments
Short-term investments consist of term deposits with original maturities of more than three months to a year and which are subject to an insignificant risk of changes in value. The Company's term deposits are with major financial institutions.
Property, plant, and equipment
Property, plant, and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably.
The major categories of property, plant, and equipment are depreciated on a straight-line basis as follows:
|
Mining Equipment |
|
|
Office Equipment |
|
|
Computer Equipment |
|
|
Office improvements |
|
|
Computer software |
|
Impairment losses are included as part of other gains and losses on the consolidated statements of loss and comprehensive loss.
Exploration and evaluation assets
The Company is in the exploration stage with respect to its investment in mineral interests. Accordingly, once a license to explore an area has been secured, the Company follows the practice of capitalizing all costs relating to the acquisition of, exploration for, and development of exploration and evaluation assets. Such costs include but are not limited to, geological and geophysical studies, exploratory drilling, and sampling. When commercial production commences, these costs will be charged to operations on a unit-of-production method based on proven and probable resources. The aggregate costs, related to abandoned exploration and evaluation assets are charged to operations at the time of any abandonment or when it has been determined that there is evidence of a permanent impairment.
Page | 9
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Provision for restoration and rehabilitation
A provision for restoration and rehabilitation is recognized when there is a present legal or constructive obligation because of exploration and development activities undertaken; it is more likely than not that an outflow of economic benefits will be required to settle the obligation and the amount of the provision can be measured reliably. The estimated future obligation includes the cost of removing facilities, abandoning sites, and restoring the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date. The estimated cost is capitalized into the cost of the related asset and amortized on the same basis as the related assets. If the estimated cost does not relate to an asset, it is charged to earnings in the period in which the event giving raises to the liability occurs.
As at April 30, 2024, and 2023, the Company did not have any provision for restoration and rehabilitation.
Related party transactions
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control, related parties may be individuals or corporate entities. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties.
Share capital
Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share purchase warrants are recognized as a deduction from equity, net of any tax effects.
Share issue costs
Professional, consulting, regulatory and other costs directly attributable to equity financing transactions are recorded as share issue costs when the financing transactions are completed if the completion of the transaction is considered likely. Otherwise, they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred share issue costs related to financing transactions that are not completed are charged to expenses.
Warrants
Proceeds from issuances by the Company of units consisting of shares and warrants are allocated based on the residual method, whereby the carrying amount of the warrants is determined based on any difference between gross proceeds and the estimated fair market value of the shares. If the proceeds from the offering are less than or equal to the estimated fair market value of shares issued, a nil carrying amount is assigned to the warrants.
Page | 10
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Share-based payments
The Company grants share-based compensation to directors, officers, employees and service providers. Each tranche in an award is considered a separate award with its own vesting period. The Company applies the fair value method of accounting for share-based payments and the fair value is calculated using the Black-Scholes option pricing model.
Share-based payments for employees and others providing similar services are determined based on the grant date fair value. Share-based payments for non-employees are determined based on the fair value of the goods/services received or fair value of the share-based payment measured at the date on which the Company obtains such goods/services. Compensation expense is recognized over each tranche's vesting period, in earnings or capitalized as appropriate, based on the number of awards expected to vest.
The Company estimates a forfeiture rate based on historical data and expectations of future forfeitures. The forfeiture rate is reviewed and adjusted, if necessary, at each reporting date. The impact of any changes to the forfeiture rate is recognized in the statement of loss and comprehensive loss with a corresponding adjustment to equity.
Income taxes
Income tax expense comprises current and deferred tax. Income tax is recognized in the statement of loss and comprehensive loss except to the extent it relates to items recognized directly in equity.
Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.
Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); and does not give rise to equal taxable and deductible temporary differences. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Page | 11
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Earnings (Loss) per share
Basic earnings per share are computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares using the treasury stock method. If the Company incurs net losses in a fiscal year, basic and diluted losses per share are the same.
Financial Instruments
Financial assets
The Company classifies its financial assets in the following categories:
- Fair value through profit or loss (FVTPL)
- Fair value through other comprehensive income (FVTOCI)
- Amortized cost
The determination of the classification of financial assets is made at initial recognition. The Company's accounting policy for each of the categories is as follows:
Financial assets at FVTPL
Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the consolidated statements of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of financial assets held at FVTPL are included in the consolidated statements of loss and comprehensive loss.
Financial assets at FVTOCI
Financial assets carried at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently, they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive losses.
Financial assets at amortized cost
A financial asset is measured at amortized cost if the objective is to hold the financial asset for the collection on contractual cash flows and the asset's contractual cash flows are comprised solely of payments of principal and interest. The financial asset is classified as current or non-current based on its maturity date and is initially recognized at fair value and subsequently carried at amortized cost less any impairment. The Company classifies cash and due from related parties, other receivables and loan receivables in this category.
Impairment of financial assets at amortized cost
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost.
Page | 12
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Financial Instruments (continued)
Financial liabilities
The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was incurred. The Company's accounting policy for each category is as follows:
Financial liabilities at FVTPL
This category comprises derivatives or liabilities acquired or incurred principally for the purpose of selling or repurchasing in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in the statements of loss and comprehensive loss.
Other financial liabilities
This category includes accounts payable and accrued liabilities and due to related parties, which are recognized at amortized cost using the effective interest method.
The effective interest method calculates the amortized cost of a financial liability and allocates interest expense over the corresponding period. The effective interest rate is the rate that discounts estimated future cash receipts over the expected life of the financial liability, or, where appropriate, a shorter period. Transaction costs in respect of financial liabilities at fair value through profit or loss are recognized in the statements of operations and comprehensive loss immediately while transaction costs associated with other financial liabilities are included in the initial measurement of the financial liability.
The financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Financial liabilities are derecognized when its contractual obligations are discharged, cancelled or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.
Page | 13
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and any accumulated impairment losses.
Intangible assets with a finite useful life are amortized on a straight-line basis over their useful lives. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Any changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates.
Accounting standards issued but not yet adopted
The new standards or amendments issued but not yet effective are either not applicable or not expected to have a significant impact on the Company's consolidated financial statements.
Accounting pronouncements
Adoption of New Accounting Standards
The new standards, or amendments to standards and interpretations that were adopted by the Company, effective May 1, 2023, are as follows:
Disclosure of Accounting Policies (Amendments to IAS 1)
The IASB has issued amendments to IAS 1 Presentation of Financial Statements which require entities to disclose their "material" accounting policy information rather than their "significant" accounting policies. The amendments explain that accounting policy information is material if omitting, misstating; or obscuring that information could reasonably be expected to influence decisions that the primary users of the financial statements make on, the basis of, those financial statements. The amendments also clarify that accounting policy information may be material because of its nature, even if the related amounts are immaterial.
This amendment is effective for annual periods beginning on or after May 1, 2023. The adoption of this amendment did not have a material impact on the Company's consolidated financial statements.
Definition of Accounting Estimates (Amendments to IAS 8)
The IASB has issued amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors which introduce a definition of accounting estimates and provide other clarifications to help entities distinguish accounting policies from accounting estimates. Under the amendments, accounting estimates are defined as "monetary amounts in financial statements that are subject to measurement uncertainty". The amendments also emphasize that a change in an accounting estimate that results from new information or new developments is not an error correction and that changes in an input or a measurement technique used to develop an accounting estimate are considered changes in accounting estimates if those changes in an input or measurement technique are not the result of an error correction.
This amendment is effective for annual periods beginning on or after May 1, 2023. The adoption of this amendment did not have a material impact on the Company's consolidated financial statements.
Page | 14
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Significant accounting judgments and estimates
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and related disclosure. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Judgment is used mainly in determining how a balance or transaction should be recognized in the financial statements. Estimates and assumptions are used mainly in determining the measurement of recognized transactions and balances. Actual results may differ from these estimates.
Significant areas where management's judgment has been applied include:
- Impairment of exploration and evaluation assets (E&E assets)
In accordance with the Company's accounting policy, the Company's E&E assets are evaluated every reporting period to determine whether there are any indications of impairment. If any such indication exists, which is often judgmental, a formal estimate of recoverable amount is performed, and an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount. The recoverable amount of an asset or cash generating group of assets is measured at the higher of fair value less costs to sell and value in use.
The evaluation of asset carrying values for indications of impairment includes consideration of both external and internal sources of information, including such factors as market and economic conditions, metal prices, future plans for the Company's mineral properties and mineral resources and/or reserve estimates.
Management has assessed for impairment indicators for the Company's E&E assets and has concluded that no indicators of impairment were identified as at April 30, 2024, and April 30, 2023, and the Company plans to continue with its objective of developing Panuco - Copala Property.
- Going concern basis of preparation
The financial statements have been prepared on a going concern basis, which assumes that the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.
Page | 15
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
2. Material Accounting Policies and Basis of Presentation (continued)
b) Material Accounting Policies (continued)
Significant Accounting Judgments and Estimates (continued)
Significant areas requiring the use of management estimates and assumptions include:
- Fair value calculation of share-based payments
The fair value of share-based payments in relation to the warrants and options granted is calculated using a Black Scholes option pricing model. There are several estimates used in the calculation such as the expected option life, rate of forfeiture of options granted, risk-free interest rate used and the future price volatility of the underlying security which can vary from actual future events. The factors applied in the calculation are management's best estimates based on industry averages and future forecasts.
- Assessing whether deferred tax assets and liabilities are recognized in accordance with IAS 12, Income taxes.
Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date, an additional liability could result from audits by taxing authorities. Where the outcome of these tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made.
- Tax receivables
Value-added tax ("VAT") receivable is collectible from the government of Mexico. The collection of VAT is subject to risk due to the complex application and collection process and therefore, risk related to the collectability and timing of payment from the Mexican government. The Company uses its best estimates based on the facts known at the time and its experience to determine its best estimate of the collectability and timing of these recoveries. Changes in the assumptions regarding collectability and the timing of collection could impact the valuation and classification of VAT receivable.
3. Cash and Cash Equivalents and Short-term Investments
Cash and cash equivalents of $
Short-term investments include $
At April 30, 2024, the Company had
Page | 16
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
4. Taxes Receivable
Taxes receivables consist of amounts due from tax authorities and are classified into current and non-current portions based on the expected timing of recovery.
Current taxes receivables
The current portion of taxes receivable represents amounts expected to be recovered within the next twelve months.
As at April 30, 2024, the current taxes receivable are as follows:
| April 30, 2024 | April 30, 2023 | |||||
| $ | $ | |||||
| Goods and Service Tax (GST) recoverable | ||||||
| Mexican Value Added Tax (IVA) recoverable - current | ||||||
| Total current taxes receivable |
*Mexican IVA is net of provision of $
Non-current taxes receivables
The non-current portion of taxes receivable represents amounts expected to be recovered after more than twelve months from the reporting date.
As at April 30, 2024, the non-current taxes receivable are as follows:
| April 30, 2024 | April 30, 2023 | |||||
| $ | $ | |||||
| Mexican Value Added Tax (IVA) recoverable - long-term | ||||||
| Total non-current taxes receivable |
Page | 17
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
5. Property, Plant and Equipment
| Computer equipment |
Computer software |
Office equipment |
Mining equipment |
Office improvements |
Total | ||||||||||||||
| Cost | $ | $ | $ | $ | $ | $ | |||||||||||||
| Balance - April 30, 2022 | |||||||||||||||||||
| Additions | |||||||||||||||||||
| Disposal | |||||||||||||||||||
| Effect of change in exchange rate | |||||||||||||||||||
| Balance - April 30, 2023 | |||||||||||||||||||
| Additions | |||||||||||||||||||
| Disposal | |||||||||||||||||||
| Effect of change in exchange rate | |||||||||||||||||||
| Balance - April 30, 2024 | |||||||||||||||||||
| Accumulated Amortization | |||||||||||||||||||
| Balance - April 30, 2022 | |||||||||||||||||||
| Amortization | |||||||||||||||||||
| Disposal | |||||||||||||||||||
| Effect of change in exchange rate | |||||||||||||||||||
| Balance - April 30, 2023 | |||||||||||||||||||
| Amortization | |||||||||||||||||||
| Disposal | |||||||||||||||||||
| Effect of change in exchange rate | |||||||||||||||||||
| Balance - April 30, 2024 | |||||||||||||||||||
| Carrying amounts | |||||||||||||||||||
| As at April 30, 2023 | |||||||||||||||||||
| As at April 30, 2024 | |||||||||||||||||||
Page | 18
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
6. Strategic Investment in Prismo Metals Inc. and Intangible Asset
On December 16, 2022, the Company entered a strategic investment with Prismo Metals Inc. ("Prismo"). Prismo is trading on the Canadian Securities Exchange under the symbol "PRIZ". The Company finalized its strategic investment in Prismo on January 6, 2023 ("Closing Date").
Pursuant to the strategic investment, the Company acquired (i) a right of first refusal ("ROFR") to purchase the Palos Verdes project from Prismo, which will remain valid until January 6, 2027, four years from the Closing Date, and (ii)
ROFR in this context refer to the obligation of Prismo to notify the Company of any written offers received from third parties to purchase any portion of the Palos Verdes Properties (referred to as the "Offered Interest").
The Company acquired
The valuation of Prismo shares follows a level 2 fair value measurement. The share price is derived from the market price on the Closing Date of $
The consideration for the strategic investment consisted of a cash payment of $
The fair value of Vizsla shares is determined using a level 2 fair value measurement. The share price is based on the market price on the Closing Date of $
| As at Jan 6, 2023 | DLOM | |
| Date | Vizsla | Prismo |
| 06-Jul-23 | ||
| 06-Jan-24 | ||
| 06-Jul-24 | ||
| 06-Jan-25 | ||
Page | 19
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
6. Strategic Investment in Prismo Metals Inc. and Intangible Asset (continued)
An intangible asset with a fair value of $
| Right of first refusal | Total | ||||||
| Cost | $ | $ | |||||
| Balance - April 30, 2022 | |||||||
| Additions | |||||||
| Write off as impairment loss | ( |
) | ( |
) | |||
| Balance |
|||||||
In connection with the strategic investment, Prismo and the Company have agreed to form a technical committee to pursue district-scale exploration of the Panuco silver-gold district.
Immediately prior to the closing of the strategic investment, the Company did not beneficially own, directly or indirectly, or exercise control or direction over, any Prismo Shares or any securities convertible into or exercisable for Prismo Shares. Immediately following the closing of the strategic investment, the Company owns
As the Company has no common management or directors, it does not have significant influence. As such, the Prismo Units have been recognised as investment and measured at fair value through profit or loss. The change in the fair value during the year ended April 30, 2024, was $
| Strategic Investment | ||||
| $ | ||||
| Balance - April 30, 2022 | ||||
| Additions | ||||
| Gain (loss) from fair value adjustment | ( |
) | ||
| Fair value - April 30, 2023 | ||||
| Gain (loss) from fair value adjustment | ( |
) | ||
| Fair value - April 30, 2024 | ||||
Page | 20
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
6. Strategic Investment in Prismo Metals Inc. and Intangible Asset (continued)
Prismo shares are fair valued using the discount for lack of marketability ("DLOM") method. DLOM is based on the risk arising from the restricted holding period and voluntary escrow. The valuation of Prismo shares follows a level 2 fair value measurement. The share price is derived from the market price on the period-end date, April 30, 2024, of $
| April 30, 2024 | April 30, 2023 | |
| Date | DLOM | DLOM |
| 06-Jul-23 | Issued | |
| 06-Jan-24 | Issued | |
| 06-Jul-24 | ||
| 06-Jan-25 |
The fair value of the Prismo warrants granted was calculated as of the year-end date using the Black-Scholes option pricing model with the following assumptions:
| April 30, 2024 | April 30, 2023 | |
| Risk Free Interest Rate | ||
| Expected Dividend Yield | ||
| Expected Volatility | ||
| Expected Term in Years |
Page | 21
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
7. Exploration and Evaluation Assets
a) Canam Alpine Ventures Ltd. - Panuco-Copala Property
On November 5, 2019, pursuant to a definitive share exchange agreement (the "Agreement") dated September 13, 2019, the Company acquired all of the issued and outstanding common shares of Canam Alpine Ventures Ltd.("Canam"), a private British Columbia company. Canam owns two subsidiaries in Mexico, Minera Canam S.A. DE C.V. and Operaciones Canam Alpine S.A. DE C.V. According to the Agreement, the Company agreed to pay the consideration of $
- Milestone event 1: Upon exercise of any defined options by Canam, the Company will issue
- Milestone event 2: Upon definition of a resource greater than
In addition, the Company issued
On August 8, 2019, Canam entered into an option agreement with Minera Rio Panuco S.A. de C.V. ("Panuco") whereby the Company can earn a
On September 9, 2019, Canam entered into an option agreement with Silverstone Resources S.A. de C.V. ("Copala") whereby the Company can earn a
On July 21, 2021, the Company signed a binding amending agreement (the "Panuco Amending Agreement") with Panuco and has executed a binding option exercise notice ("Copala Exercise Notice") with Copala, which together will constitute the acceleration and exercise of the Company's option to acquire
Under the Amending Agreement, Vizsla/Canam and Panuco have agreed to amend the terms of the original Panuco option agreement in order to accelerate the Company's exercise of its option on the Panuco property (the "Panuco Property"). Upon closing of the transactions contemplated by the Panuco Amending Agreement, Vizsla will acquire a 100% ownership interest in the Panuco Property (comprising 43 mining concessions with a combined surface area of 3,839 Ha) and the "El Coco" mill (the "Mill") in consideration for:
Page | 22
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
7. Exploration and Evaluation Assets (continued)
a) Canam Alpine Ventures Ltd. - Panuco-Copala Property (continued)
|
•
|
A cash payment of US$
|
|
|
•
|
The issuance to Panuco of
|
|
|
•
|
A cash payment of US$
|
The mineral concessions comprising the Panuco Property include the Napoleon vein corridor, which has seen the majority of Vizsla's exploration and are unencumbered by royalties.
Under the Copala Exercise Notice, Vizsla and Copala have agreed to amend the terms of the original Copala option agreement in order to accelerate the Company's exercise of its option on the Copala property (the "Copala Property"). A definitive agreement was signed on July 20, 2021 (the "Copala Amending Agreement" and, together with the Panuco Amending Agreement, the "Amending Agreements"). Upon closing of the transactions contemplated by the Copala Amending Agreement, Vizsla will acquire a
|
•
|
A cash payment of US$
|
|
|
•
|
The issuance to Copala of
|
Page | 23
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
7. Exploration and Evaluation Assets (continued)
a) Canam Alpine Ventures Ltd. - Panuco-Copala Property (continued)
Costs related to the properties can be summarized as follows:
|
Balance |
Additions |
Balance |
Additions |
Balance |
||||||||||||
|
Acquisition costs |
||||||||||||||||
| Cash | $ | $ | $ | $ | $ | |||||||||||
| Effective settlement of loans receivables | ||||||||||||||||
| Shares | * | |||||||||||||||
| Subtotal | $ | $ | $ | $ | $ | |||||||||||
| Balance April 30, 2022 |
Additions | Balance April 30, 2023 |
Additions | Balance April 30, 2024 |
||||||||||||
| Exploration costs | ||||||||||||||||
| Analysis | $ | $ | $ | $ | ||||||||||||
| Depreciation | ||||||||||||||||
| Drilling | ||||||||||||||||
| Ejido rights | ||||||||||||||||
| Engineering consulting | ||||||||||||||||
| Equipment | ||||||||||||||||
| Field cost | ||||||||||||||||
| Geological consulting | ||||||||||||||||
| Geophysical survey | ||||||||||||||||
| Geotech | ||||||||||||||||
| GIS management | ||||||||||||||||
| Land and reclamation fees | ||||||||||||||||
| Maintenance | ||||||||||||||||
| Metallurgical testing | ||||||||||||||||
| Other consulting | ||||||||||||||||
| Project development | ||||||||||||||||
| Rent of land | ||||||||||||||||
| Special project | ||||||||||||||||
| Travel and miscellaneous | ||||||||||||||||
| Subtotal | $ | $ | $ | $ | $ | |||||||||||
| $ | $ | $ | $ | $ | ||||||||||||
| Effect of change in exchange rate | ( |
) | ||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||
* Shares addition during the year ended April 30, 2024, is related to the acquisition of El Richard – San Enrique claims.
Page | 24
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
7. Exploration and EvaluationAssets (continued)
a) Canam Alpine Ventures Ltd. - Panuco-Copala Property (continued)
The Company created a
On June 24, 2024, the Company completed the arrangement agreement to spin out Vizsla Royalties Corp. to shareholders under the Business Corporations Act (British Columbia) (Note 14).
Acquisition of El Richard - San Enrique claims
The Company entered into an asset purchase agreement (the "APA") dated March 5, 2024, with Inca Azteca Gold S.A.P.I. de C.V. ("Inca Azteca Gold") and the Company's wholly owned subsidiary, Minera Canam, S.A. de C.V. ("Minera Canam") pursuant to which the Company agreed to acquire, through Minera Canam, all of Inca Azteca Gold's right, title and interest in and to the mineral concessions (the "Acquisition"). The Acquisition includes two large claims comprising 10,667 hectares (the "El Richard - San Enrique claims" or "San Enrique prospect") located south and partially adjacent to the Company's Panuco project (the "Panuco Project" or "Panuco"). The San Enrique prospect is situated along the highly prospective Panuco - San Dimas corridor. All acquisition cost related to the San Enrique prospect will be summarized in Note 7a as part of the Panuco-Copala Property since the "El Richard - San Enrique claims" is now considered part of the Panuco project.
Pursuant to the APA, the Company has agreed to issue an aggregate of US$
On May 3, 2024, subsequently to April 30, 2024, the Company issued to the Inca Azteca Gold
The Consideration Shares are subject to a four-month hold period pursuant to applicable Canadian securities laws and Inca Azteca Gold has agreed to voluntary resale restrictions, whereby
Page | 25
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
b) Acquisition of Goanna Resources, S.A.P.I. de C.V (La Garra claims)
The Company has entered into an agreement to acquire the past-producing La Garra-Metates district ("La Garra") situated in the heart of the silver-gold-rich Panuco - San Dimas corridor. As of April 30, 2024, and July 18, 2024, the transaction was not closed.
The Company entered into a share purchase agreement (the "SPA") dated March 27, 2024, with Exploradora Minera La Hacienda S.A. de C.V. and Manuel de Jesus Hernandez Tovar (collectively, the "Sellers") pursuant to which the agreed to acquire (the "Acquisition") all of the outstanding shares of Goanna Resources, S.A.P.I. de C.V. ("Goanna Resources"), a private Mexican corporation, from the Sellers. Goanna Resources is the owner of the La Garra-Metates District. Pursuant to the SPA, the Company has agreed to make cash payments in an aggregate of US$
Cash Payments will be made, and the La Garra Consideration Shares will be issued over a period of 24 months from closing.
| In US$ | Cash | Shares (ii) |
| $ | ||
| Signing of nonbinding LOI (i) | ||
| Closing of the transaction | ||
| 3 months from effective date | ||
| 6 months from effective date | ||
| 9 months from effective date | ||
| 12 months from effective date | ||
| 15 months from effective date | ||
| 18 months from effective date | ||
| 24 months from effective date | ||
(i) Paid on January 18, 2024.
(ii) Deemed share price is determined based on the greater of the volume weighted average price of Vizsla shares on the NYSE over the period of 45 consecutive trading days ending on the date prior to the execution date (March 27, 2024) and the market price.
For accounting purposes, the acquisition will be recorded as an asset acquisition as Goanna Resources did not meet the definition of a business, as defined in IFRS 3 Business Combinations.
The Company made two payments prior to April 30, 2024: $
The acquisition is subject to closing conditions, including the approval of the TSX Venture Exchange and the NYSE.
Page | 26
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
8. Related Party Transactions
During the years ended April 30, 2024, and 2023 ("2023"), the Company has the following related party transactions:
(a) The Company has incurred $
(b) The Company has incurred $
(c) The Company has paid $
(d) For the year ended April 30, 2024, the Company has granted
(e) As of April 30, 2024, $
These transactions are in the normal course of operations and have been valued in these consolidated financial statements at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
Page | 27
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
9. Share Capital
a) Authorized
Unlimited number of common shares with no par value.
b) Issued and outstanding
As at April 30, 2024,
During the year ended April 30, 2024, the Company issued common shares of the Company as follow:
On February 21, 2024, the Company entered into an agreement with PI Financial Corp. as sole bookrunner and lead underwriter, on its own behalf and on behalf of a syndicate of underwriters (the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a "bought deal" basis,
The Company agreed to grant the Underwriters an option to cover over-allotments (the "Over-Allotment Option"), which will allow the Underwriters to purchase up to an additional
The Company paid the Underwriter a cash commission equal to
During the year ended April 30, 2023, the Company issued common shares of the Company as follow:
On February 9, 2023, the Company completed a private placement during which it issued
All securities issued under the private placement will be subject to a statutory hold period in Canada expiring four months and one day from the date of issuance.
Page | 28
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
9. Share Capital (continued)
b) Issued and outstanding (continued)
During the year ended April 30, 2023, the Company issued common shares of the Company as follow (continued):
On November 15, 2022, the Company closed a bought deal financing of
The financing was subject to
The net proceeds from both the private placement and the bought deal financing will be used to advance the exploration, drilling, and development of the Company's Panuco Project, as well as for working capital and general corporate purposes.
On January 6, 2023, the Company issued
For the year ended April 30, 2023,
c) Escrow shares
As of April 30, 2024, the Company has
Page | 29
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
9. Share Capital (continued)
d) Warrants
As of April 30, 2024, the Company has
During the year ended April 30, 2024,
During the year ended April 30, 2023, the Company issued
The following is a summary of warrant transactions for the years ended April 30, 2024, and April 30, 2023:
|
April 30, 2024 |
April 30, 2023 |
|||||||||||
|
Number of |
Weighted |
Number of |
Weighted |
|||||||||
|
|
$ |
$ |
||||||||||
| Warrants outstanding, beginning of the year | ||||||||||||
| Issued | ||||||||||||
| Exercised | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Expired | ( |
) | ( |
) | ||||||||
| Warrants outstanding, end of the year | ||||||||||||
The following warrants were outstanding and exercisable on April 30, 2024:
|
Expiry date |
Exercise $ |
Number of warrants |
|
15-Nov-24 |
|
|
|
15-Nov-24 |
|
|
|
09-Feb-25 |
|
|
|
28-Feb-26 |
|
|
|
|
|
|
As at April 30, 2024, the weighted average remaining contractual life for outstanding warrants is
Page | 30
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
9. Share Capital (continued)
d) Warrants (continued)
The fair value of the broker warrants granted was calculated as of the grant date using the Black-Scholes pricing model with the following assumptions:
|
For the year ended |
||
|
|
April 30, 2024 |
April 30, 2023 |
|
Risk Free Interest Rate |
|
|
|
Expected Dividend Yield |
|
|
|
Expected Volatility |
|
|
|
Expected Term in Years |
|
|
During the year ended April 30, 2024, the Company recorded fair value of $
e) Options
The Company has adopted a Stock Option Plan (the "Plan") pursuant to which options may be granted to directors, officers, and consultants of the Company. Under the terms of the Plan, the Company can issue a maximum of
On May 19, 2023, the Company granted
On November 15, 2023, the Company has granted
On December 18, 2023, the Company has granted
During the year ended April 30, 2024,
The continuity of stock options for the years ended April 30, 2024, and April 30, 2023, is as follows:
| April 30, 2024 | April 30, 2023 | |||||||||||
| Number of options |
Weighted average exercise price |
Number of options |
Weighted average exercise price |
|||||||||
| $ | $ | |||||||||||
| Options outstanding, beginning of the year | ||||||||||||
| Issued | ||||||||||||
| Cancelled | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Exercised | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Options outstanding, end of the year | ||||||||||||
| Options exercisable, end of the year | ||||||||||||
Page | 31
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
9. Share Capital (continued)
e) Options (continued)
The following options were outstanding and exercisable as April 30, 2024:
| Expiry date |
Exercise price $ |
Adjusted |
Number of Options outstanding |
Number of Options exercisable |
||||||||
| 27-Feb-29 | ||||||||||||
| 13-Jun-24 | ||||||||||||
| 30-Dec-24 | ||||||||||||
| 07-Jan-25 | ||||||||||||
| 29-Jun-25 | ||||||||||||
| 06-Aug-25 | ||||||||||||
| 01-Oct-25 | ||||||||||||
| 01-Dec-25 | ||||||||||||
| 12-Jan-26 | ||||||||||||
| 17-Feb-26 | ||||||||||||
| 22-Jun-26 | ||||||||||||
| 12-Jul-26 | ||||||||||||
| 27-Jul-26 | ||||||||||||
| 24-Sep-26 | ||||||||||||
| 01-Feb-27 | ||||||||||||
| 02-Jun-27 | ||||||||||||
| 10-Feb-28 | ||||||||||||
| 19-May-28 | ||||||||||||
| 15-Nov-28 | ||||||||||||
| 18-Dec-25 | ||||||||||||
Page | 32
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
9. Share Capital (continued)
e) Options (continued)
The fair value of the options granted was calculated using the Black-Scholes option pricing model with the following assumptions for options granted in the nine months ended April 30, 2024, and 2023:
|
|
For the year ended |
|
|
|
April 30, 2024 |
April 30, 2023 |
|
Risk Free Interest Rate |
|
|
|
Expected Dividend Yield |
|
|
|
Expected Volatility |
|
|
|
Expected Term in Years |
|
|
The Company recorded a fair value of $
f) Restricted shares units ("RSU")
As of April 30, 2024, the Company has
During the year ended April 30, 2024:
On April 1, 2024, the Company granted
The fair value of each RSU is $
For the year ended April 30, 2024, the Company has recognized a share-based compensation of $
During the year ended April 30, 2023:
On February 10, 2023, pursuant to the Company's Equity Incentive Compensation Plan, the Company granted
The fair value of each RSU is $
No other RSUs were issued, canceled, or expired during the year ended April 30, 2023.
Page | 33
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
9. Share Capital (continued)
f) Restricted shares units ("RSU") (continued)
The continuity of RSUs for the years ended April 30, 2024, and April 30, 2023, is as follows:
| April 30, 2024 | April 30, 2023 | |||||||||||
| Number of RSUs |
Weighted average exercise price |
Number of RSUs |
Weighted average exercise price |
|||||||||
| $ | $ | |||||||||||
| RSUs outstanding, beginning of the year | ||||||||||||
| Issued | ||||||||||||
| Exercised and converted to shares | ( |
) | ( |
) | ||||||||
| Cancelled | ( |
) | ( |
) | ||||||||
| RSUs outstanding, end of the year | ||||||||||||
The following RSUs were outstanding and exercisable on April 30, 2024:
|
Expiry date |
Exercise $ |
Number of |
Number of |
|
10-Feb-26 |
|
|
|
|
01-Apr-27 |
|
|
|
|
|
|
|
|
g) Shares to be issued
In relation to the acquisition of El Richard - San Enrique claims, the Company agreed to issue an aggregate of US$
On May 3, 2024, the Company issued to the Inca Azteca Gold
Page | 34
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
10. Financial Instruments
Fair value of financial instruments
The Company applied the following fair value hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels:
The three levels are defined as follows:
- Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
- Level 2 - inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
- Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company's financial instruments are cash and cash equivalent, short-term investments, investment, taxes receivable, other receivables, due to related party, and accounts payable and accrued liabilities. All these financial instruments are carried on the consolidated statements of financial position at amortized cost except investments, which are carried at fair value through profit or loss using a level 2 fair value measurement (Note 6). The fair values of these financial instruments approximate their carrying value due to their short-term nature.
The Company's financial instruments are exposed to certain financial risks, including liquidity risk, credit risk and interest rate risk.
Liquidity risk
Liquidity risk is the risk that the Company will not meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at April 30, 2024, the Company had a cash and cash equivalent balance of $
Market risk
Market risk is the risk that changes in market prices will affect the Company's earnings or the value of its financial instruments. Market risk is comprised of commodity price risk and interest rate risk. The objective of market risk management is to manage and control exposures within acceptable limits, while maximizing returns. The Company is not exposed to significant market risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. An immaterial amount of interest rate exposure exists in respect of cash balances on the statement of financial position. As a result, the Company is not exposed to material cash flow interest rate risk on its cash balances.
Page | 35
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
10. Financial Instruments (continued)
Foreign currency risk
Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar, United States dollar, and Mexican Peso will affect the Company's operations and financial results. The Company and its subsidiaries are exposed to foreign currency risk to the extent that it has monetary assets and liabilities denominated in foreign currencies.
The Company measures the effect on total assets or total receipts of reasonably foreseen changes in interest rates and foreign exchange rates. The analysis is used to determine if these risks are material to the financial position of the Company.
Price risk
This risk relates to fluctuations in commodity and equity prices. The Company closely monitors commodity prices of precious and base metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company. Fluctuations in pricing may be significant.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit-related losses in the event of non-performance by the counterparties. The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date. Cash and cash equivalent are held with reputable banks in Canada. The long-term credit rating of these banks, as determined by Standard and Poor's, was A+. As at April 30, 2024, the cash on deposit at these institutions was in excess of federally insured limits. However, management believes credit risk is low given the good credit ratings of the banks.
11. Capital Management
The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business.
The Panuco-Copala property in which the Company currently has an interest are in the exploration stage, as such the Company has historically relied on the equity markets to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.
The capital structure of the Company consists of shareholders' equity, comprising issued capital and deficit. The Company is not exposed to any externally imposed requirements. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
Page | 36
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
12. Segment Information
The Company has one operating segment, principally mineral exploration.
Geographic Information
The Company's non-current assets, excluding non-current deposits, by location of assets are as follows:
|
|
April 30, 2024 |
April 30, 2023 |
|
|
$ |
$ |
|
Canada |
|
|
|
Mexico |
|
|
|
|
|
|
13. Income Tax
The following table reconciles the expected income taxes expense (recovery) at the Canadian statutory income tax rates to the amounts recognized in the consolidated statements of loss and comprehensive loss for the years ended April 30, 2024, and 2023:
| 2024 | 2023 | |||||
| $ | $ | |||||
| Net loss before tax | ( |
) | ( |
) | ||
| Statutory tax rate | ||||||
| Expected income recovery | ( |
) | ( |
) | ||
| Change in deferred tax assets not recognized | ( |
) | ||||
| Share issuance costs | ( |
) | ( |
) | ||
| Foreign exchange | ( |
) | ( |
) | ||
| Change in estimate | ( |
) | ||||
| Tax effect of spinout | ||||||
| Non-deductible items and other | ||||||
| Total income tax expense (recovery) |
Page | 37
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
13. Income Tax (Continued)
The deferred taxes assets and liabilities reflect the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax values. The recognized deferred tax liability and assets as at April 30, 2024 and 2023 are comprised of the following:
| 2024 | 2023 | |||||
| $ | $ | |||||
| Non-capital loss carryforwards | ||||||
|
Property and equipment |
|
|||||
| Exploration and evaluation assets | ( |
( |
) | |||
| Net deferred tax asset (liability) |
The unrecognized deductible temporary differences as at April 30, 2024, and 2023 are comprised of the following:
| 2024 | 2023 | |||||
| $ | $ | |||||
| Non-capital loss carryforwards | ||||||
| Property, plant, and equipment | ||||||
| Equity investments | ||||||
|
Intangible assets |
|
|||||
| Financing costs | ||||||
| Total unrecognized deductible temporary differences |
| Expiry | |
| $ | |
| 2044 | |
| 2043 | |
| 2042 | |
| 2041 | |
| 2040 | |
| 2039 | |
| 2038 | |
| 2037 | |
| 2036 | |
| 2035 | |
| 2034 | |
| 2033 | |
| 2032 | |
| Total |
Page | 38
| VIZSLA SILVER CORP. |
| Notes to Consolidated Financial Statements |
| For the years ended April 30, 2024, and 2023 |
| Expressed in Canadian dollars |
14. Subsequent Events
Spin out of Vizsla Royalties Corp.
On January 17, 2024, the Company announced its intention to enter into an arrangement agreement (the "Arrangement") with its wholly-owned subsidiary Vizsla Royalties Corp. ("Spinco"). Spinco currently holds, indirectly, a net smelter royalty (the "Royalty") on any potential future mineral production at the Company's flagship,
On June 17, 2024, the Company received approval for the transaction at its special meeting of shareholders. On June 19, 2024, the Supreme Court of British Columbia issued its final order approving the Arrangement under the Business Corporations Act (British Columbia). On June 20, 2024, the Company received final TSX-V's approval for the Arrangement. The Arrangement was completed on June 24, 2024.
Following closing of the Arrangement, Vizsla Silver and Spinco intend to complete a number of steps, including the following (collectively, the "Post-Closing Steps"): (a) the parties will settle an outstanding loan from Vizsla Silver into Spinco Shares, (b) Vizsla Silver will make an additional $
Vizsla Silver and Spinco have entered into a royalty right agreement which provides that, if Vizsla Silver or any of its affiliates acquires mineral properties within a two-kilometer boundary around the Panuco Project, it must offer Spinco an NSR on such mineral property to Spinco on terms proposed by Vizsla Silver.
Exercise and grant of warrants, options, and RSUs subsequently
Subsequent to April 30, 2024,
On June 12, 2024, the Company granted
Page | 39
MANAGEMENT DISCUSSION ANALYSIS
FOR THE YEAR ENDED
APRIL 30, 2024
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
BASIS OF DISCUSSION & ANALYSIS
This Management Discussion and Analysis ("MD&A") of the financial position and results of Vizsla Silver Corp. (the "Company" or "Vizsla") should be read in conjunction with the Company's consolidated financial statements for the years ended April 30, 2024, and 2023. The MD&A was prepared to conform to National Instrument 51-102F1 and was approved by the Board of Directors prior to its release. Readers are cautioned that the MD&A contains forward-looking statements and that actual events may vary from management's expectations. Readers are encouraged to read the Forward-Looking Statement disclaimer included with this MD&A.
The consolidated financial statements and MD&A are presented in Canadian dollars, unless otherwise indicated, and have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The statements and any summary of results presented in the MD&A were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Please consult the consolidated financial statements for the years ended April 30, 2024, and 2023 for more complete financial information.
All the Company's public disclosure filings, including its most recent management information circular, annual information form ("AIF"), material change reports, press releases, and other information, may be accessed via www.sedar.com and readers are urged to review these materials, including the technical reports filed with respect to the Company's mineral properties. Information on risks associated with investing in the Company's securities is contained in the most recently filed AIF.
DATE
This MD&A has been prepared based on information available to the Company as of July 18, 2024.
OVERALL PERFORMANCE
NATURE OF BUSINESS
Vizsla Silver Corp. (the "Company", "Vizsla Silver") was incorporated as Vizsla Capital Corp. under the Business Corporations Act (British Columbia) on September 26, 2017. On March 8, 2018, the Company changed its name to Vizsla Resources Corp. The Company shares are trading on the TSX Venture Exchange under the symbol "VZLA". On February 5, 2021, the Company changed its name to Vizsla Silver Corp. On January 21, 2023, Vizsla Silver Corp was listed on the NYSE American exchange and commenced trading under the symbol "VZLA".
The head office and principal address of the Company is located at Suite 1723, 595 Burrard Street, Vancouver, BC V7X 1J1.
The Company has no substantial revenue and supports its operations through the sale of equity or assets such as mineral properties. The value of any mineral property is dependent upon the existence or potential existence of economically recoverable mineral reserves. See the section related to "Risk Factors" in this statement.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
OVERALL PERFORMANCE (Continued)
FINANCING FEBRUARY 2024
On February 29, 2024, the Company completed a bought deal along with the over-allotment option exercise for gross proceed of $34,500,000 with PI Financial Corp (the “Underwriters”).
The Company paid to the Underwriter a cash commission equal to 6% of the gross proceeds raised. As further consideration for the services provided by the Underwriters in connection with the financing, the Company issued compensation warrants to the Underwriters, exercisable at any time on or before February 28, 2026, to acquire that number of common shares of the Company which is equal to 6% of the number of Offered Shares sold under the Offering at an exercise price of $1.50. The compensation warrants have a fair value of $742,418 using the Black-Scholes options pricing model. The Company incurred a total of $2,228,139 in cash share issue costs.
WARRANTS AND OPTIONS EXERCISED
During the year ended April 30, 2024, 714,670 warrants were exercised at a weighted average exercises price of $1.46 for proceeds of $1,042,597, and 782,250 options were exercised at a weighted average exercise price of $1.38 for proceeds of $1,083,250. 206,786 restricted share units (“RSUs”) were exercised and converted to common shares at the vested price of $1.60.
Subsequent to April 30, 2024, and up to the date of this MD&A, 6,016,614 warrants were exercised at a weighted average exercises price of $1.81 for proceeds of $10,877,977, and 2,676,508 options were exercised at a weighted average exercise price of $1.04 for proceeds of $2,805,493. 113,311 RSUs were exercised and converted to common shares at the vested price of $1.60.
ACQUISITION OF EL RICHARD - SAN ENRIQUE CLAIMS
The Company entered into an asset purchase agreement (the "APA") dated March 5, 2024, with Inca Azteca Gold S.A.P.I. de C.V. ("Inca Azteca Gold") and the Company's wholly owned subsidiary, Minera Canam, S.A. de C.V. ("Minera Canam") pursuant to which the Company agreed to acquire, through Minera Canam, all of Inca Azteca Gold's right, title and interest in and to the mineral concessions (the "Acquisition"). The Acquisition includes two large claims comprising 10,667 hectares (the "El Richard - San Enrique claims" or "San Enrique prospect") located south and partially adjacent to the Company's Panuco project (the "Panuco Project" or "Panuco"). The San Enrique prospect is situated along the highly prospective Panuco - San Dimas corridor.
Pursuant to the APA, on May 3, 2024, the Company issued an aggregate of US$650,000 in common shares of the Company at the exchange rate and market price applicable on the effective date (April 15, 2024) plus applicable value added tax to Inca Azteca Gold.
The Consideration Shares are subject to a four-month hold period pursuant to applicable Canadian securities laws and Inca Azteca Gold has agreed to voluntary resale restrictions, whereby 12.5% of the Consideration Shares will become free trading on the date that is four months and one day from the effective date and an additional 12.5% will become free trading every three months thereafter.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
ACQUISITION OF GOANNA RESOURCES, S.A.P.I. DE C.V. (LA GARRA CLAIMS)
The Company has entered into an agreement to acquire the past-producing La Garra-Metates district ("La Garra") situated in the heart of the silver-gold-rich Panuco - San Dimas corridor. As of April 30, 2024, and July 18, 2024, the transaction was not closed.
The Company entered into a share purchase agreement (the “SPA”) dated March 27, 2024, with Exploradora Minera La Hacienda S.A. de C.V. and Manuel de Jesus Hernandez Tovar (collectively, the “Sellers”) pursuant to which the agreed to acquire (the “Acquisition”) all of the outstanding shares of Goanna Resources, S.A.P.I. de C.V. (“Goanna Resources”), a private Mexican corporation, from the Sellers. Goanna Resources is the owner of the La Garra-Metates District. Pursuant to the SPA, the Company has agreed to make cash payments in an aggregate of US$3,075,000 in cash (collectively, the “Cash Payments”) and issue an aggregate of 5,555,555 common shares in the capital of the Company (collectively, the “La Garra Consideration Shares”) to the Sellers. Also, the Company agreed to pay tenement taxes owed by Goanna Goanna Resources to Governmental Entities concerning the mineral concessions in the amount of US$1,606,500.
Cash Payments will be made, and the La Garra Consideration Shares will be issued over a period of 24 months from closing.
| In US$ | Cash | Shares (ii) | ||||
| Signing of nonbinding LOI (i) | $ | 100,000 | ||||
| Closing of the transaction | $ | - | 257,937 | |||
| 3 months from effective date | $ | 150,000 | 476,190 | |||
| 6 months from effective date | $ | 275,000 | 535,714 | |||
| 9 months from effective date | $ | 225,000 | 595,238 | |||
| 12 months from effective date | $ | 350,000 | 714,286 | |||
| 15 months from effective date | $ | 300,000 | 833,333 | |||
| 18 months from effective date | $ | 375,000 | 952,381 | |||
| 24 months from effective date | $ | 1,300,000 | 1,190,476 | |||
| $ | 3,075,000 | 5,555,555 |
(i) Paid on January 18, 2024.
(ii) Deemed share price is determined based on the greater of the volume weighted average price of Vizsla Silver shares on the NYSE over the period of 45 consecutive trading days ending on the date prior to the execution date (March 27, 2024) and the market price.
The Company made two payments prior to April 30, 2024: $135,050 (US$100,000) on January 18, 2024, upon signing a non-binding letter of intent, and $1,095,768 (US$810,000) on March 6, 2024, as deferred payments to the Sellers to pay tenement taxes owed by Goanna Resources to Governmental Entities concerning the mineral concessions.
The Company is responsible for the back taxes owing on the concessions.
The acquisition is subject to closing conditions, including the approval of the TSX Venture Exchange.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
ACQUISITION OF GOANNA RESOURCES, S.A.P.I. DE C.V. (LA GARRA CLAIMS) (continued)
Royalty Agreement
Within 90 days of the closing date, the Company and the Sellers shall enter into a royalty agreement in a form satisfactory to the Parties, pursuant to which the Sellers will be granted a 1% net smelter returns royalty ("NSR") on the La Garra-Metates District. The Buyer will have the right to repurchase such royalty at any time for consideration equal to US$750,000.
Pledge Agreement
Within 90 days of the closing date, the Company shall execute and deliver to the Sellers a pledge and security agreement in a form satisfactory to the Company and the Sellers and take such other actions sufficient under applicable Laws to grant the Sellers a first priority lien on the Purchased Shares to secure the Company's obligations with regards to the acquisition costs.
Finder's fees
The finder's fees are 2% NSR of the project payable to an arm's length Mexican Company. The Acquisition is subject to standard closing conditions, including the approval of the TSX Venture Exchange.
SPIN OUT VIZSLA ROYALTIES CORP.
On January 17, 2024, the Company announced its intention to enter into an arrangement agreement (the "Arrangement") with its wholly-owned subsidiary Vizsla Royalties Corp. ("Spinco"). Spinco currently holds, indirectly, a net smelter royalty (the "Royalty") on any potential future mineral production at the Company's flagship, 100% owned Panuco silver-gold project located in Sinaloa, Mexico. Under the Arrangement, the owners of common shares of Vizsla Silver (the "VZLA Shares") are entitled to receive one new VZLA Share, one-third of a common share of Spinco and one-third of a common share purchase warrant of Spinco for each VZLA Share held immediately prior to the closing of the Arrangement. Following the Arrangement, Spinco will no longer be a wholly owned subsidiary of Vizsla Silver.
On June 17, 2024, the Company received approval for the transaction at its special meeting of shareholders. On June 19, 2024, the Supreme Court of British Columbia issued its final order approving the Arrangement under the Business Corporations Act (British Columbia). On June 20, 2024, the Company received final TSX-V's approval for the Arrangement. The Arrangement was completed on June 24, 2024.
Following closing of the Arrangement, Vizsla Silver and Spinco intend to complete a number of steps, including the following (collectively, the "Post-Closing Steps"): (a) the parties will settle an outstanding loan from Vizsla Silver into Spinco Shares, (b) Vizsla Silver will make an additional $3,500,000 loan to Spinco if required, (c) Spinco may exercise its buyback right on an underlying royalty on the Panuco Project, after which point the royalty held by Spinco will consist of a 2% NSR on the entire Panuco Project, (d) Spinco will complete a private placement for gross proceeds of at least $3,000,000, and (e) Spinco will complete a consolidation of the Spinco Shares on the basis of one new Spinco Share for every ten old Spinco Shares.
Vizsla Silver and Spinco have entered into a royalty right agreement which provides that, if Vizsla Silver or any of its affiliates acquires mineral properties within a two-kilometer boundary around the Panuco Project, it must offer Spinco an NSR on such mineral property to Spinco on terms proposed by Vizsla Silver.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
INCENTIVE PLAN REWARDS, GRANTS, EXERCISE, AND CANCELLATION OF STOCK OPTIONS AND WARRANTS
On June 12, 2024, the Company granted 6,050,000 stock options at an exercise price of $2.26 and 775,000 restricted share units ("RSUs") to directors, officers, employees, and consultants of the Company. These options are exercisable for five years and will vest over the next two years and the RSUs will vest in three equal annual installments commencing on the first anniversary of the grant date.
On April 1, 2024, the Company granted 318,000 RSUs to an officer of the Company pursuant to the Company's Omnibus Equity Incentive Compensation Plan. The RSUs will vest in three equal annual installments commencing on the first anniversary of the grant date.
On December 18, 2023, the Company granted 250,000 stock options at an exercise price of $1.53 to a consultant of the Company. These options are exercisable for two years and will vest over the next one year.
On November 15, 2023, the Company granted 400,000 stock options at an exercise price of $1.36 to a director and a consultant of the Company, pursuant to the Company's Omnibus Equity Incentive Compensation Plan. These options are exercisable for five years and will vest over the next two years.
On May 19, 2023, pursuant to the Company's Omnibus Equity Incentive Compensation Plan, the Company granted 3,850,000 stock options at an exercise price of $1.60 to directors, officers, employees, and consultants of the Company. These options are exercisable for five years and will vest over the next two years.
USE OF PROCEEDS
Net proceeds from the financing completed in February 2023 have been deployed for the drill program to increase the resources, conduct environmental assessments, complete geotechnical and hydrological drilling, social baseline work, and general and administration expenses.
Net proceeds of the financing completed in February 2024 of $32,271,861 will be deployed to continue the drilling program to upgrade and expand resources to provide an updated mineral resource estimate and complete a preliminary economic assessment; complete additional mapping, sampling, geophysics, and drilling to find new bodies of mineralization, and undertake metallurgy, mine engineering studies, a review of mill optimization options, and complete an environmental baseline study. The proceeds will also be allocated towards possible acquisitions of assets in Mexico.
| Use of Proceeds | February 2023 | February 2024 | Total | ||||||
| $ | $ | $ | |||||||
| Gross proceeds | 45,021,983 | 34,500,000 | 79,521,983 | ||||||
| Share issue costs | (3,023,679 | ) | (2,228,139 | ) | (5,251,818 | ) | |||
| Net proceeds | 41,998,304 | 32,271,861 | 74,270,165 | ||||||
| Allocation | |||||||||
| Exploration and development expenses on the Panuco-Copala project | (21,186,148 | ) | - | (21,186,148 | ) | ||||
| Potential future acquisition | - | - | - | ||||||
| General and administrative expenses | (15,535,713 | ) | - | (15,535,713 | ) | ||||
| (36,721,861 | ) | - | (36,721,861 | ) | |||||
| Total | 5,276,443 | 32,271,861 | 37,548,304 |
The Company will continue to evaluate and acquire future growth opportunities including strengthening the land holding in the district. The Company also will continue with the resource/discovery-based drill program. A Mineral Resource update for the Panuco Project was released on January 8, 2024.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
SELECTED ANNUAL FINANCIAL INFORMATION
| Year Ended | Year Ended | Year Ended | |||||||
| April 30, 2024 | April 30, 2023 | April 30, 2022 | |||||||
| $ | $ | $ | |||||||
| Interest income | 1,632,960 | 959,740 | 139,864 | ||||||
| Net loss for the year | 15,948,389 | 13,591,728 | 15,270,556 | ||||||
| Comprehensive loss for the year | 3,486,349 | 3,758,024 | 15,644,443 | ||||||
| Loss per share (basic and diluted) | 0.08 | 0.08 | 0.11 | ||||||
| Total assets | 272,782,932 | 238,603,177 | 165,934,248 | ||||||
| Current liabilities | 3,675,973 | 6,455,851 | 10,149,141 | ||||||
| Shareholders' equity | 269,106,959 | 232,147,326 | 155,785,107 | ||||||
| Cash dividends declared - per share | N/A | N/A | N/A |
The year-over-year decrease in comprehensive loss is due to the strengthening of the Mexican peso in 2023 and 2024, compared to 2022 and 2023, resulting in translation gains of $12,462,040 and $9,833,704 for the Mexican operations, respectively. The year-over-year increase in interest income can be attributed to a larger cash balance and higher interest rates. The Company's total assets grew year over year due to its initiatives to expand and develop the Panuco-Copala Project and increase exploration and evaluation activities. Current liabilities decreased year-over-year as the Company utilize available cash to pay off short-term liabilities.
RESULTS OF OPERATION
PANUCO-COPALA PROJECT - MEXICO
MINERAL RESOURCE ESTIMATE
On January 8th, 2024, the Company announced the results of the Panuco project mineral resource estimate update. The company in conjunction with an independent qualified person ("QP") completed a geostatistical block model estimate. Details of the methods used, and other project information are available for review in a NI43-101 compliant report available on SEDAR+ (February 20, 2024).
Panuco Project Resource Summary - January 8, 2024 (150 g/t AgEq cut-off) or (2.00 g/t AuEq cut-off)
|
Classification |
Tonnes |
Average Grade |
Contained Metal |
||||||||||
|
Ag |
Au |
Pb |
Zn |
AgEq |
Au Eq |
Ag |
Au |
Pb |
Zn |
AgEq |
AuEq |
||
|
(Mt) |
(g/t) |
(g/t) |
(%) |
(%) |
(g/t) |
(g/t) |
(koz) |
(koz) |
(kt) |
(kt) |
(koz) |
(koz) |
|
|
Indicated |
9.5 |
289 |
2.41 |
0.27 |
0.84 |
511 |
6.81 |
88,192 |
736 |
25.4 |
79.9 |
155,841 |
2,076 |
|
Inferred |
12.2 |
239 |
1.93 |
0.29 |
1.03 |
433 |
5.76 |
93,653 |
758 |
35.4 |
125.3 |
169,647 |
2,261 |
AgEq = Ag ppm + (((Au ppm x Au price/gram) + (Pb% x Pb price/t) + (Zn% x Zn price/t))/Ag price/gram).
AuEq = Au ppm + (((Ag ppm x Ag price/gram) + (Pb% x Pb price/t) + (Zn% x Zn price/t))/Au price/gram).
Metal price assumptions are $24.00/oz silver, $1,800/oz gold, $2,425/t lead, and $2,976/t zinc.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
RESULTS OF OPERATION (Continued)
PANUCO-COPALA PROJECT - MEXICO (Continued)
MINERAL RESOURCE ESTIMATE (Continued)
Panuco Project Indicated & Inferred Resource Summary by Vein (150 g/t AgEq cut-off) or (2.00 g/t AuEq cut-off)
| Classification | Tonnes | Average Grade | Contained Metal | ||||||||||
| Ag | Au | Pb | Zn | AgEq | Au Eq | Ag | Au | Pb | Zn | AgEq | AuEq | ||
| (Mt) | (g/t) | (g/t) | (%) | (%) | (g/t) | (g/t) | (koz) | (koz) | (kt) | (kt) | (koz) | (koz) | |
| Indicated | |||||||||||||
| Copala | 4.5 | 380 | 2.46 | 0.08 | 0.15 | 573 | 7.64 | 55,201 | 358 | 3.7 | 6.9 | 83,270 | 1110 |
| Tajitos | 0.6 | 358 | 2.24 | 0.12 | 0.21 | 538 | 7.18 | 7,295 | 46 | 0.7 | 1.3 | 10,953 | 146 |
| Cristiano | 0.2 | 581 | 3.37 | 0.25 | 0.43 | 858 | 11.45 | 3,961 | 23 | 0.5 | 0.9 | 5,851 | 78 |
| Copala Area Total | 5.4 | 385 | 2.48 | 0.09 | 0.17 | 580 | 7.74 | 66,457 | 427 | 5.0 | 9.2 | 100,074 | 1343 |
| Napoleon | 3.3 | 162 | 2.39 | 0.52 | 1.73 | 425 | 5.66 | 17,276 | 255 | 17.2 | 57.4 | 45,223 | 603 |
| Napoleon HW | 0.4 | 164 | 1.72 | 0.42 | 1.53 | 365 | 4.87 | 2,259 | 24 | 1.8 | 6.5 | 5,029 | 67 |
| Luisa | 0.3 | 177 | 2.56 | 0.39 | 2.01 | 459 | 6.12 | 1556 | 22 | 1.1 | 5.5 | 4,027 | 54 |
| Josephine | 0.1 | 221 | 2.88 | 0.39 | 1.11 | 492 | 6.56 | 491 | 6 | 0.3 | 0.8 | 1,092 | 15 |
| Cruz | 0.0 | 144 | 2.01 | 0.37 | 1.71 | 373 | 4.97 | 153 | 2 | 0.1 | 0.6 | 396 | 5 |
| NP Area Total | 4.1 | 164 | 2.34 | 0.50 | 1.72 | 421 | 5.66 | 21,735 | 309 | 20.4 | 70.7 | 55,767 | 743 |
| Total Indicated | 9.5 | 289 | 2.41 | 0.27 | 0.84 | 511 | 6.81 | 88,192 | 736 | 25.4 | 79.9 | 155,841 | 2076 |
| Inferred | |||||||||||||
| Copala | 3.2 | 332 | 1.77 | 0.12 | 0.20 | 476 | 6.34 | 33,722 | 179 | 3.7 | 6.2 | 48,320 | 644 |
| Tajitos | 1.0 | 365 | 2.04 | 0.22 | 0.39 | 540 | 7.21 | 12,260 | 69 | 2.3 | 4.0 | 18,140 | 242 |
| Cristiano | 0.7 | 443 | 2.54 | 0.15 | 0.29 | 650 | 8.66 | 10,213 | 59 | 1.1 | 2.0 | 14,974 | 200 |
| Copala Area Total | 4.9 | 355 | 1.94 | 0.15 | 0.25 | 515 | 6.86 | 56,195 | 307 | 7.1 | 12.3 | 81,434 | 1081 |
| Napoleon | 3.2 | 137 | 1.64 | 0.45 | 1.76 | 342 | 4.57 | 14,045 | 168 | 14.4 | 55.9 | 35,063 | 467 |
| Napoleon HW | 0.8 | 220 | 2.17 | 0.59 | 2.02 | 479 | 6.39 | 5,976 | 59 | 5.0 | 17.0 | 13,027 | 174 |
| La Luisa | 2.0 | 159 | 2.13 | 0.30 | 1.51 | 386 | 5.15 | 10,439 | 139 | 6.0 | 30.8 | 25,326 | 338 |
| Josephine | 0.2 | 161 | 2.05 | 0.33 | 1.00 | 364 | 4.85 | 1161 | 15 | 0.7 | 2.2 | 2,618 | 35 |
| Cruz | 0.3 | 170 | 3.75 | 0.31 | 1.48 | 519 | 6.91 | 1698 | 37 | 1.0 | 4.6 | 5,169 | 69 |
| NP Area Total | 6.6 | 157 | 1.97 | 0.41 | 1.68 | 383 | 5.10 | 33,319 | 418 | 27.1 | 110.6 | 81,203 | 1082 |
| San Antonio | 0.3 | 226 | 1.30 | 0.01 | 0.03 | 325 | 4.33 | 2,038 | 12 | 0.0 | 0.1 | 2,936 | 39 |
| *Animas | 0.4 | 169 | 1.68 | 0.29 | 0.60 | 327 | 4.37 | 2,101 | 21 | 1.1 | 2.3 | 4,074 | 54 |
| Total Inferred | 12.2 | 239 | 1.93 | 0.29 | 1.03 | 433 | 5.76 | 93,653 | 758 | 35.4 | 125.3 | 169,647 | 2261 |
AgEq = Ag ppm + (((Au ppm x Au price/gram) + (Pb% x Pb price/t) + (Zn% x Zn price/t))/Ag price/gram).
AuEq = Au ppm + (((Ag ppm x Ag price/gram) + (Pb% x Pb price/t) + (Zn% x Zn price/t))/Au price/gram).
Metal price assumptions are $24.00/oz silver, $1,800/oz gold, $2,425/t lead, and $2,976/t zinc.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
RESULTS OF OPERATION (Continued)
PANUCO-COPALA PROJECT - MEXICO (Continued)
MINERAL RESOURCE ESTIMATE (Continued)
Panuco Project Indicated & Inferred Resource Sensitivity Table
| Classification | Tonnes | Average Grade | Contained Metal | ||||||||||
| COG AgEq | Ag | Au | Pb | Zn | AgEq | AuEq | Ag | Au | Pb | Zn | AgEq | AuEq | |
| (Mt) | (g/t) | (koz) | (%) | (%) | (g/t) | (g/t) | (koz) | (koz) | (kt) | (kt) | (koz) | (koz) | |
| Indicated: | |||||||||||||
| 300 | 5.6 | 415 | 3.41 | 0.31 | 0.96 | 718 | 9.57 | 74,501 | 612 | 17.2 | 53.5 | 128,810 | 1,716 |
| 250 | 6.5 | 375 | 3.09 | 0.3 | 0.95 | 653 | 8.70 | 78,809 | 651 | 19.5 | 62.2 | 137,286 | 1,830 |
| 200 | 7.9 | 331 | 2.75 | 0.29 | 0.9 | 581 | 7.75 | 83,610 | 694 | 22.2 | 70.8 | 146,774 | 1,958 |
| 150 | 9.5 | 289 | 2.41 | 0.27 | 0.84 | 511 | 6.81 | 88,192 | 736 | 25.4 | 79.9 | 155,841 | 2,076 |
| 120 | 10.8 | 263 | 2.2 | 0.25 | 0.79 | 467 | 6.22 | 91,066 | 759 | 26.8 | 85.3 | 161,308 | 2,149 |
| 100 | 11.7 | 246 | 2.05 | 0.24 | 0.75 | 437 | 5.82 | 92,965 | 773 | 27.7 | 88.5 | 164,833 | 2,195 |
| Inferred: | |||||||||||||
| 300 | 6.5 | 355 | 2.82 | 0.36 | 1.23 | 634 | 8.34 | 73,931 | 587 | 23.1 | 79.4 | 131,930 | 1,734 |
| 250 | 7.9 | 317 | 2.54 | 0.34 | 1.17 | 565 | 7.51 | 80,365 | 644 | 26.8 | 92.1 | 143,338 | 1,908 |
| 200 | 9.7 | 278 | 2.24 | 0.32 | 1.12 | 499 | 6.66 | 86,784 | 698 | 30.9 | 108.4 | 155,748 | 2,076 |
| 150 | 12.2 | 239 | 1.93 | 0.29 | 1.03 | 433 | 5.76 | 93,653 | 758 | 35.4 | 125.2 | 169,647 | 2,261 |
| 120 | 14.0 | 216 | 1.75 | 0.28 | 0.97 | 393 | 5.25 | 97,502 | 791 | 38.6 | 136.1 | 177,648 | 2,368 |
| 100 | 15.5 | 201 | 1.63 | 0.26 | 0.92 | 367 | 4.89 | 99,985 | 812 | 40.8 | 142.9 | 182,671 | 2,433 |
AgEq = Ag ppm + (((Au ppm x Au price/gram) + (Pb% x Pb price/t) + (Zn% x Zn price/t))/Ag price/gram).
AuEq = Au ppm + (((Ag ppm x Ag price/gram) + (Pb% x Pb price/t) + (Zn% x Zn price/t))/Au price/gram).
Metal price assumptions are $24.00/oz silver, $1,800/oz gold, $2,425/t lead, and $2,976/t zinc.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
RESULTS OF OPERATION (Continued)
PANUCO-COPALA PROJECT - MEXICO (Continued)
Metallurgical Studies
The Company had preliminary metallurgical test work completed for the Napoleon ore body. A consulting company with experts in the field performed the studies using a third-party laboratory. Results for the Napoleon ore body were announced on February 17, 2023.
| Process Option |
Stage | Mass Recovery (%) |
Global Recovery (%) | Product Grade (% or g/t) | ||||||
| Ag | Au | Pb | Zn | Ag | Au | Pb | Zn | |||
| Whole Ore Leach |
Direct Cyanidation Leach |
100 | 87 | 93 | - | - | - | - | - | - |
| Bulk Sulfide Flotation* |
Rougher Conc. | 17.0 | 93 | 90 | 94 | 94 | 666 | 16 | 6.8 | 5.8 |
| 1 Stage Cleaner Conc | 7.1 | 89 | 88 | 87 | 90 | 1,524 | 36 | 15.1 | 13.2 | |
| 2 Stage Cleaner Conc | 5.6 | 87 | 86 | 82 | 87 | 1888 | 45 | 18.1 | 16.2 | |
| Sequential Flotation* |
Lead Rougher Conc | 6.0 | 79 | 80 | 93 | 24 | 1,804 | 40 | 18.3 | 4.4 |
| Zinc Rougher Conc | 6.2 | 9 | 8 | 3 | 72 | 194 | 4 | 0.5 | 12.8 | |
| Lead Rougher Conc | 6.0 | 79 | 80 | 93 | 24 | 1,804 | 40 | 18.3 | 4.4 | |
| 1 Stage Cleaner Conc | 2.1 | 71 | 76 | 87 | 12 | 4,656 | 110 | 49.1 | 6.3 | |
| 2 Stage Cleaner Conc | 1.7 | 68 | 74 | 83 | 9 | 5,550 | 134 | 58.4 | 5.7 | |
| Zinc Rougher Conc | 6.2 | 9 | 8 | 3 | 72 | 194 | 4 | 0.5 | 12.8 | |
| 1 Stage Cleaner Conc | 1.7 | 8 | 7 | 2 | 71 | 628 | 13 | 1.4 | 47.2 | |
| 2 Stage Cleaner Conc | 1.4 | 7 | 7 | 1 | 71 | 692 | 15 | 1.2 | 56.2 | |
| Gravity Concentration |
Knelson Concentrate | 3.6 | 29 | 40 | 28 | 12 | 1,087 | 31 | 8.9 | 3.5 |
| Tabled Knelson Conc | 0.6 | 12 | 26 | 13 | 2 | 2,670 | 122 | 24.8 | 2.9 | |
Summary of results from optimized test work for Napoleon ore body. *Open circuit tests
Further preliminary metallurgical testing of the Tajitos ore body was conducted, and results were released in the company's Technical Report dated March 10, 2023, and posted on SEDAR+.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
RESULTS OF OPERATION (Continued)
PANUCO-COPALA PROJECT - MEXICO (Continued)
Metallurgical Studies (Continued)
| Composite | Flowsheet | Displayed Values |
Extraction - percent |
Reagent Cons. - kg/tonne feed |
||
| (%) | Ag | Au | NaCN | Lime | ||
| Diorite MC | Cyanidation of Flotation Concentrate and Tails | Combined CN Extractions | 90.3 | 89.7 | 1.0 | 1.0 |
| Salable Concentrate/ Cyanidation on Tails | Combined Float/CN | 87.3* | 89.4* | 0.4-0.6* | 0.8* | |
| Andesite MC | Cyanidation of Flotation Concentrate on Tails | Combined CN Extractions | 94.2 | 87.3 | 1.0 | 1.4 |
| Salable Concentrate / Cyanidation on Tails | Combined Float/CN | 94.1* | 89.8* | 0.4-0.6* | 0.8* | |
| Andesite Low MnOX MC | Cyanidation of Flotation Concentrate and Tails | Combined CN Extractions | 90.1 | 80.8 | 0.9 | 0.8 |
Potential Flowsheet Comparison for Tajitos ore body
Note: *Estimated Values, testing would be required to confirm
Preliminary metallurgical testing of the Copala ore body was conducted, and results were released in a news release dated August 16, 2023, and posted on SEDAR+.
| Process Option | Stage | Mass Recovery |
Recovery (%) | |
| (%) | Ag | Au | ||
| Flotation Concentrate | Flotation + regrind +Cyanide Leach | 7.0 | 76.3 | 74.9 |
| Rougher Tails | Cyanide Leach | 93.0 | 14.2 | 18.8 |
| Flotation Plus Cyanide Leach | Total | 100 | 90.6 | 93.7 |
Summary of results from optimized test work for Copala ore body
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
RESULTS OF OPERATION (Continued)
PANUCO-COPALA PROJECT - MEXICO (Continued)
EXERCISE OF OPTION AGREEMENTS
As of April 30, 2024, the Company fully owned the Panuco and Copala Property.
The mineral concessions comprising the Panuco Property include the Napoleon vein corridor, which has seen the majority of Vizsla Silver's exploration and are unencumbered by royalties.
On September 9, 2019, Canam entered into an option agreement with Silverstone Resources S.A. de C.V. (“Copala”) whereby the Company can earn a 100% interest in certain concessions and assets by spending USD$1,423,000 in exploration by the second-anniversary date of the agreement and paying a cumulative of USD$20,000,000. Certain claims of Copala are subject to a 3.0% net smelter royalty (“NSR”) which can be brought down to 1.5% for 10% of the purchase price of those mining concessions. .
During the year ended April 30, 2024, the Company continues its exploration program at Panuco-Copala flagship project with a drill program. The exploration program has comprised prospecting and detailed mapping and systematic sampling of surface which led to diamond drilling. Drilling has been carried out at forty targets thus far with 338,235 metres of drilling carried out to date.
LOCATION AND CONCESSIONS
The Panuco Silver Project is in the Panuco - Copala mining district in the municipality of Concordia in southern Sinaloa state along the western margin of the Sierra Madre Occidental physiographic province in western Mexico. The Panuco project area is accessed from Mazatlán via Federal Highway 15 to Villa Union and then on Highway 40 for a total of 56 kilometres. The project is centered at 23º19' North latitude and 105º54' West longitude.
The Project comprises 119 approved mining concessions covering a total area of 16,536.87 ha, and two applications for two mineral concessions covering 1,321.15 ha. The mineral concessions are held 100% by Vizsla Silver. The company also held 4,103 hectares on four concessions located west of the Panuco Project and 16,962 hectares in the newly consolidated, past producing La Garra District.
GEOLOGY
The Panuco project is located along the western margin of the Sierra Madre Occidental ("SMO"), a high plateau and physiographic province that extends from the U.S.A. - Mexico border to the east-trending Trans Mexican Volcanic Belt. The SMO is an igneous province recording continental magmatic activity from the Late Cretaceous to the Miocene that has been separated into two episodes: the Lower Volcanic Complex (LVC) and the Upper Volcanic Series (UVS).
The stratigraphic column in the Project consists predominantly of intrusive, volcanic and volcaniclastic rocks of intermediate to felsic composition of the LVC that have been intruded by younger domes and dikes of rhyolite and basalt compositions of the UVS. An approximately 9 by 3-km pluton of diorite to quartz diorite composition and lavas and tuffs of andesite composition are the main host lithologies of the epithermal veins in the district. The rhyolites and dacites on top of the andesite (upper part of the LVS) host vein mineralization in minor proportion. Field work and interpretations conducted in the Project, suggest that the andesites of the LVC units are correlative with the Tarahumara formation of Sonora, and the ~77 to 69 Ma Socavon, Buelna and Portal members described in San Dimas. The rocks of the LVC in San Dimas are intruded by the Piaxtla batholith, dated at 49 to 44 Ma, whereas the age of epithermal mineralization has been constrained there between 41 and 37.8 (Enriquez et al, 2018 and Montoya et al, 2019). The diorite to quartz diorite pluton in Panuco has not been dated, but it is interpreted to be older than the Piaxtla intrusive, and correlative with the 64 Ma San Ignacio batholith dated by Montoya et al, (2019) in a locality west of San Dimas. In Panuco, two adularia samples, from each of Napoleon and Copala, dated at ActLabs in Ontario, resolved statistically identical ages of 25.81 ± 0.05 Ma and 25.72 ± 0.06 Ma. Previous field observations that rhyolite dikes of possible Oligocene age (intruding the LVS units) are crosscut by veins in southern Napoleon area agree with a young age of epithermal mineralization. The rhyolite-dacite dome in the Animas zone, adjacent to the El Muerto mine shows strong silicification and quartz veining as well.
|
VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
RESULTS OF OPERATION (Continued)
PANUCO-COPALA PROJECT - MEXICO (Continued)
GEOLOGY (continued)
Additionally, the Jurassic - Early Cretaceous basement (Tahue terrane), comprised of metasediments (phyllites and sandstones) have been recognized through tectonic/erosional "windows" into the LVS and in some drill-holes. The basement rocks are unconformably overlain by the LVC andesites and felsic rocks of the Tarahumara Formation and intruded by the diorite-granodiorite and granite plutons centered in Panuco project. The granite intrusion around the Panuco town has a reported K/Ar age of 57 Ma (McDowell and Kayzer 1977) whereas a granodiorite porphyry in Malpica located 30 km southeast of the Project area was dated at 54.2 Ma by K/Ar (Henry, 1975). Recent dating of orthoclase at ActLabs, resolved a younger and more accurate age of 52.60 ± 0.21 Ma for the Panuco granite. Locally, the diorite intrusion has been observed to contain clasts of andesite and granite, implying a younger age for the diorite in the project area. Another intrusive phase of granodiorite to quartz-monzonite that may be coeval with the main diorite pluton, has been mapped in the footwall of the Animas-Refugio structure (Henry, 2003). Following deposition of the Tarahumara andesites, a quiescence period in volcanism, concomitant with uplift and erosion, favored formation of lakes and deposition of water-lain hyaloclastites and volcaniclastics composed of alternating rhyolite and andesite tuffs of Eocene age. These volcaniclastic unit is believed to be correlative with the Productive andesite member in San Dimas. The unit is hundreds of metres thick and has been intruded also by felsic stocks, plugs and dikes of the UVS.
MINERALIZATION
Mineralization on the property comprises several epithermal quartz veins. To date approximately 86 kilometres of these veins have been traced by Vizsla Silver and previous workers. Individual vein corridors are up to 3.7 kilometres long and range from decimeters to greater than 10 metres in width. Veins have narrow envelopes of silicification, local argillic alteration and are commonly marked by clay gouge. More distal alteration comprises propylitic alteration bearing chlorite and epidote.
The mineralization along the vein corridors comprises hydrothermal veins - breccias with grey silica in the matrix and white or grey quartz clasts. The grey colour is due to the presence of very fine-grained disseminated sulphides, presumed to be mainly acanthite, sphalerite and galena. Several hydrothermal breccias have been identified to date by Vizsla Silver's geologists: breccias with grey quartz tend to occur at lower levels in the fault structures whereas breccias with barren white quartz tend to occur at higher levels. Locally, mineralized zones bear banded textures consisting of alternating quartz with thin dark bands of sulfides (acanthite, sphalerite, galena, and pyrite). In the higher-grade zones fine-grained pyrite is disseminated in the quartz with rare fine-grained sphalerite and / or galena. Bladed quartz pseudomorphs after calcite have been noted at various locations within the fault zone and are indicative of boiling conditions. All the mineralized zones have been cut by late stage quartz veinlets consisting of white quartz and purple amethyst quartz. The amethyst is thought to be related to mixing of near surface waters as the hydrothermal system is collapsing, as has been noted at the nearby San Dimas district (Montoya-Lopera et al, 2019).
The main structural corridors are Copala - Colorada, Napoleon, Animas-Refugio, Cordon del Oro, and the newly identified Camelia - Florida corridor. Each structural corridor contains multiple prospects.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
RESULTS OF OPERATION (Continued)
PANUCO-COPALA PROJECT - MEXICO (Continued)
EXPLORATION UPDATE
Vizsla Silver uses a multi-phase method of exploration. The initial activity consists of prospecting with aid of a LiDAR survey, surface mapping and sampling to identify areas of interest. The next phase is detailed mapping and systematic sampling. Mapping and sampling of mine workings are also performed to define potential areas for future work. A total of 4,723 surface samples and 800 underground channel samples plus 801 QA/QC controls have been analyzed since work by the company began. The prospects are then catalogued and prioritized for drilling based on an internal procedure that uses an internally developed ranking-matrix.
Since November 2019, over 40 prospects have been tested with 354,035 m drilled in 934 holes completed on HQ and NQ diameter. A total of 53,391 core samples plus 9,708 QA/QC controls have been analyzed to date.
On May 2024, the company started an Infill drilling campaign in Central Copala to upgrade Indicated Mineral Resources to Measured Mineral Resources. The campaign consists of approximately 10,000 metres of diamond drilling distributed in 35 holes drilled at 25 metre-centers.
In terms of Project Development, in February 2024, Vizsla Silver started with the Preliminary Economic Assessment ("PEA") preparation. The study is expected to be completed in Q3 2024.
On December 18, 2023, the Company announced the release of its inaugural Sustainability Report (the "Report"), highlighting the Company's commitment to sustainable practices and responsible corporate citizenship.
The Report provides detailed insights into Vizsla Silver's performance and initiatives across three key pillars of sustainability - environmental stewardship, social responsibility, and ethical governance. Key performance highlights include:
Environmental:
• Commissioned a greenhouse gas inventory - the first step in reducing the Company's carbon footprint.
• Explored options to incorporate on-site renewable energy.
Social:
• Increased health and well-being of local Mexican residents through bi-annual health fairs and community health campaigns.
• Achieved a safety milestone - exceeding one million consecutive work hours without a lost time incident.
Governance:
• Published the inaugural Sustainability Report.
The Company's 2023 Report was prepared by a third party and is aligned with the IFRS Foundation International Sustainability Standards Board SASB Metals and Mining Standard. The Report includes goals, actions, and performance metrics, providing stakeholders an opportunity to gain a comprehensive understanding of the Company's sustainability journey. The Report will be shared through various communication channels, including the Company's website. To view the full 2023 Sustainability Report, please visit www.vizslasilvercorp.ca.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
TECHNICAL DISCLOSURE
All technical disclosure covering the Company's mineral properties was prepared under the supervision of Jesus Velador, P. Geo, VP Exploration for the Company, and a "Qualified Person" within the meaning of NI 43-101.
FINANCIAL RESULTS - YEAR ENDED APRIL 30, 2024
During the year ended April 30, 2024 ("2024"), Vizsla recorded a comprehensive loss of $3,486,349, whereas the comprehensive loss for the same year in 2023 ("2023") was $3,758,024. Excluding non-cash items such as stock-based compensation and amortization, the net loss for 2024 was $9,782,666 compared to $9,236,364 for 2023. This represents an increase of $546,302 in losses from the prior year.
In 2024, there has been a decrease in General and Administrative expenses compared to 2023. This increase can be attributed to various factors:
- Insurance expenses decreased by $91,662 as management was able to negotiate more favourable insurance costs.
- Office expenses decreased by $82,396, resulting from a reduction in health tax payments for employees, the absence of relocation fees, and a general reduction of general and administrative expenses.
- Professional fees decreased by $147,308, due to the timing of audit fee billings and a reduction in legal fees as there are less transactions and financings in 2024.
- Transfer agent expenses decreased by $306,873 as the 2023 amount included listing fees related to a new listing.
- Travel expenses decreased by $466,262, as travel expenses related to marketing, travel show and conferences were classified as marketing expenses.
The previously mentioned reductions were counterbalanced by several increases.
- Expenditure on consulting services increased by $660,480, fueled by both a rise in the number of consultants hired and the expanded scope of services rendered.
- Director fees also increased by $13,497 due to an increased number of independent directors and the length of services compared to 2023.
- Management fees increased by $137,500 due to an increase in fees paid and increase in allocation of performance bonus to an executive.
- Marketing expenses saw a $670,864 increase due to heightened marketing activities aimed at promoting the Company, alongside the reclassification of travel expenses related to marketing, travel show and conferences.
- Transaction cost in 2024 of $164,696 is related to the spin-out of Vizsla Royalties Corp.
The fluctuation of foreign exchange is due to volatility in foreign exchange rates between Mexican pesos, United States dollars, and Canadian dollars.
Interest income increased by $673,220 in 2024 compared to 2023, primarily due to the higher interest rates and availability of cash flow to invest in high interest term deposits.
There is a $575,577 increase in revaluation loss from the change in fair value of the shares related to the Strategic investment.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
FINANCIAL RESULTS - YEAR ENDED APRIL 30, 2024 (Continued)
The table below shows the major variances for the years ended April 30, 2024, and 2023:
| For the year ended |
For the year ended |
||||||||
| April 30, 2024 | April 30, 2023 | Variance | |||||||
| $ | $ | $ | |||||||
| Consulting fees | 2,035,028 | 1,374,548 | 660,480 | ||||||
| Directors fees | 338,047 | 324,550 | 13,497 | ||||||
| Foreign exchange (gain)/loss | 487,069 | (48,270 | ) | 535,339 | |||||
| Insurance | 646,113 | 737,775 | (91,662 | ) | |||||
| Management fees | 787,500 | 650,000 | 137,500 | ||||||
| Marketing | 3,764,546 | 3,093,682 | 670,864 | ||||||
| Office and miscellaneous | 1,237,028 | 1,319,424 | (82,396 | ) | |||||
| Professional fees | 834,492 | 981,800 | (147,308 | ) | |||||
| Share based compensation | 5,836,747 | 4,086,178 | 1,750,569 | ||||||
| Transaction costs | 164,696 | - | 164,696 | ||||||
| Transfer agent and filing | 335,260 | 642,133 | (306,873 | ) | |||||
| Travel and promotion | 94,143 | 560,405 | (466,262 | ) | |||||
| Other (income) / loss | |||||||||
| Interest income | (1,632,960 | ) | (959,740 | ) | (673,220 | ) | |||
| Revaluation loss on investment in equity instruments | 691,704 | 116,127 | 575,577 | ||||||
| Impairment loss | - | 443,930 | (443,930 | ) |
FINANCIAL RESULTS - THREE MONTHS ENDED APRIL 30, 2024
During the three months ended April 30, 2024 ("2024"), Vizsla recorded a comprehensive income of $6,090,490, whereas the comprehensive income for the same period in 2023 ("2023") was $5,013,791. The comprehensive income for the three months period ended April 30, 2024, included $9,367,682 of translation gain (2023 - $10,181,345) to translate the exploration and evaluation assets from Mexican pesos to Canadian dollars.
Excluding non-cash items such as stock-based compensation and amortization, the net loss in 2024 was $3,002,589 compared to $3,529,721 for 2023. This represents a decrease of $527,132 in costs from the prior year.
In 2024, General and Administrative expenses have decreased compared to 2023, due to:
- Reallocation of exploration investigation expenses of $135,050 in 2024 as the Company proceeds with the acquisition of Goanna Resources.
- Insurance expenses decreased by $91,904 as management was able to negotiate more favourable insurance costs.
- Professional fees decreased by $48,217, due to the timing of audit fee billings and a reduction in legal fees as there are less transactions and financings in 2024.
- Transfer agent expenses decreased by $121,700 as the 2023 amount included significant listing fees elated to new listing.
- Travel expenses decreased by $240,489, as travel expenses related to marketing, travel show and conferences were classified as marketing expenses.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
FINANCIAL RESULTS - THREE MONTHS ENDED APRIL 30, 2024 (Continued)
Some of the reductions mentioned earlier have been partially offset by several increases.
- Consulting fees increased by $546,192, driven by both an increase in the number of consultants hired and the expanded scope of services rendered.
- Director fees also increased by $15,390 due to an increased number of independent directors and the length of services compared to 2023.
- Management fees increased by $225,000 due to an increase in fees paid and in increase in the allocation of performance bonus to an executive.
- The rise in marketing expenses by $338,375 is primarily because of new digital marketing initiatives and the reclassification of travel expenses related to marketing, travel show and conferences.
- Office expenses increased by $140,361 due to the increase in general and administrative costs to support the expansion of operation.
- Transaction cost in 2024 of $164,696 is related to the spin-out of Vizsla Royalties Corp.
Interest income in 2024 decreased by $153,040 compared to 2023, primarily due to the lowering of interest rates and the lower available cash balance in term deposits in 2024 compared to 2023.
There is a revaluation gain of $20,358 resulting from the change in the fair value of shares and a $443,930 impairment loss from the written-off of intangible assets associated with the strategic investment.
The fluctuations in foreign exchange are a result of the volatility observed in the exchange rates between Mexican pesos, United States dollars, and Canadian dollars.
The table below shows the major variances for the three months ended April 30, 2024, and 2023:
| Three months ended |
Three months ended |
||||||||
| April 30, 2024 | April 30, 2023 | Variance | |||||||
| $ | $ | $ | |||||||
| Consulting fees | 755,303 | 209,111 | 546,192 | ||||||
| Directors fees | 94,107 | 78,717 | 15,390 | ||||||
| Exploration investigation (recovery) | (135,050 | ) | - | (135,050 | ) | ||||
| Foreign exchange loss | 96,773 | 1,146,027 | (1,049,254 | ) | |||||
| Insurance | 112,731 | 204,635 | (91,904 | ) | |||||
| Management fees | 412,500 | 187,500 | 225,000 | ||||||
| Marketing | 1,082,232 | 743,857 | 338,375 | ||||||
| Office and miscellaneous | 493,687 | 353,326 | 140,361 | ||||||
| Professional fees | 320,424 | 368,641 | (48,217 | ) | |||||
| Transaction costs | 164,696 | - | 164,696 | ||||||
| Transfer agent and filing | 95,943 | 217,643 | (121,700 | ) | |||||
| Travel and promotion | 12,457 | 252,946 | (240,489 | ) | |||||
| Other (income) / loss | |||||||||
| Interest income | (480,694 | ) | (633,734 | ) | 153,040 | ||||
| Revaluation gains on investment in equity instruments | (22,520 | ) | (42,878 | ) | 20,358 | ||||
| Impairment loss | - | 443,930 | (443,930 | ) |
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
SUMMARY OF QUARTERLY RESULTS
Selected quarterly information for each of the eight most recently completed financial periods is set out below. All results were compiled using IFRS.
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||
| April 30, | January 31, | October 31, | July 31, | April 30, | January 31, | October 31, | July 31, | |||||||||||||||||
| 2024 | 2024 | 2023 | 2023 | 2023 | 2023 | 2022 | 2022 | |||||||||||||||||
| Interest income | $ | 480,694 | $ | 725,333 | $ | 312,089 | $ | 114,844 | $ | 633,734 | $ | 228,656 | $ | 62,167 | $ | 35,183 | ||||||||
| Net loss | $ | 3,277,192 | $ | 4,074,203 | $ | 4,194,386 | $ | 4,402,608 | $ | 5,167,554 | $ | 2,977,812 | $ | 2,096,124 | $ | 3,350,238 | ||||||||
| Loss per common share | $ | 0.02 | $ | 0.02 | $ | 0.02 | $ | 0.02 | $ | 0.03 | $ | 0.02 | $ | 0.01 | $ | 0.02 | ||||||||
The fluctuations in net loss over the past eight quarters can be attributed to several factors, including increased exploration activities in Panuco-Copala, the expansion of office operations, and changes in the fair value of stock-based compensation. Additionally, interest income has varied due to fluctuations in interest rates and the availability of cash flow for investment in short-term high-interest savings accounts.
In fiscal 2024, as operations stabilize and the Company's sustained focus on the Panuco-Copala project is maintained, net loss also stabilizes.
LIQUIDITY
The Company’s cash and cash equivalents on April 30, 2024, were $37,548,304 compared to $12,608,704 on April 30, 2023. The Company had a working capital of $53,337,482 on April 30, 2024, compared to a working capital of $67,564,983 at April 30, 2023.
During the year ended April 30, 2024, $14.5 million was used in operating activities compared to $12.3 million in April 30, 2023. $4.9 million was generated in investing activities during 2024 compared to $83.2 million which was used in April 30, 2023. $33.7 million was generated from financing during 2024 compared to $74.7 million in April 30, 2023.
The Company's financial instruments are cashable at any time without restriction.
The Company has no long-term debt. The Company has commitment related to the acquisition of Goanna Resources (La Garra claims).
As the Company has no revenues, its ability to fund operations is dependent upon its ability to secure financing through the sale of equity or assets. The value of any mineral property is dependent upon the existence of economically recoverable mineral reserves, or the possibility of discovering such reserves, or proceeds from the disposition of such properties. See Section "Risk Factors", below.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
CAPITAL RESOURCES
The Company had 232,642,035 issued and outstanding common shares as of April 30, 2024 (April 30, 2023 - 207,938,329).
Financing
On February 21, 2024, the Company entered into an agreement with PI Financial Corp. as sole bookrunner and lead underwriter, on its own behalf and on behalf of a syndicate of underwriters (the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a "bought deal" basis, 20,000,000 common shares (the "Shares") of the Company at a price of $1.50 per Share for aggregate gross proceeds of $30,000,000 (the "Offering"), excluding additional proceeds raised from the exercise of the Over-Allotment Option.
The Company agreed to grant the Underwriters an option to cover over-allotments (the "Over-Allotment Option"), which will allow the Underwriters to purchase up to an additional 15% of the Shares sold pursuant to the Offering, on the same terms as the Offering. The Over-Allotment Option may be exercised in whole or in part at any time, for 30 days after the closing date of February 29, 2024. The Over Allotment Options were exercised in full, and the Company completed the bought deal prospectus for gross proceeds of $34,500,000 on February 29, 2024.
The Company paid the Underwriter a cash commission equal to 6% of the gross proceeds raised under the Offering. As further consideration for the services provided by the Underwriters in connection with the Offering, the Company issued compensation warrants to the Underwriters, exercisable at any time on or before February 28, 2026, to acquire that number of common shares of the Company which is equal to 6% of the number of Offered Shares sold under the Offering at an exercise price of $1.50. The compensation warrants have a fair value of $742,418 using the Black-Scholes Options pricing model. The Company incurred a total of $2,228,139 in cash share issue costs.
Warrants
As of April 30, 2024, the Company had 15,437,163 warrants outstanding (April 30, 2023: 14,771,833).
During the year ended April 30, 2024, 714,670 warrants were exercised at a weighted average exercises price of $1.46 for proceeds of $1,042,597. The Company issued 1,380,000 broker warrants in relation to the bought deal financing which closed on February 29, 2024. Each warrant entitles the holder to acquire one common share of the Company until February 28, 2026, at a price of $1.50.
The fair value of the warrants granted was calculated using the Black-Scholes pricing model with a risk-free interest rate of 4.18%, expected volatility of 61.35%, and zero expected dividend yield for a two-year to five-year term. The Company recorded $742,418 against reserves for the year ended April 30, 2024 (April 30, 2023: $2,546,766).
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
CAPITAL RESOURCES (Continued)
Options
As of April 30, 2024, the Company had 18,803,722 options outstanding (April 30, 2023: 15,926,972).
During the year ended April 30, 2024, 782,250 were exercised with weighted average exercise price of $1.38 for proceeds of $1,083,250, and 841,000 options were canceled. No other options were issued, canceled, or expired during the year ended April 30, 2024.
On May 19, 2023, the Company granted 3,850,000 stock options at an exercise price of $1.60 to directors, officers, employees, and consultants of the Company. These options are exercisable for a period of five years and will vest over the next two years.
On November 15, 2023, the Company has granted 400,000 stock options at an exercise price of $1.36 to a director and a consultant of the Company. These options are exercisable for a period of five years and will vest over the next two years.
On December 18, 2023, the Company has granted 250,000 stock options at an exercise price of $1.53 to a consultant of the Company. These options are exercisable for a period of two years and will vest over the next one year.
The fair value of the options granted was calculated using the Black-Scholes option pricing model with a risk-free interest rate of 3.29%-3.99%, expected volatility of 63%-96.24%, and zero expected dividend yield for a two-year to five-year term. For the year ended April 30, 2024, the Company recorded $5,059,733 as share-based compensation and used an estimated forfeiture rate of 4%, resulting in an impact of $210,822 (April 30,2023: $nil) which reduces the fair value of share-based compensation.
Restricted shares units ("RSU")
As of April 30, 2024, the Company had 1,044,073 RSUs outstanding (April 30, 2023: 1,133,572).
On April 1, 2024, the Company granted 318,000 RSUs to an officer of the Company. The RSUs will vest in three equal annual installments commencing on the first anniversary of the grant date. The Company can settle each vested RSUs with cash, shares, or a combination of cash and shares at the Company's discretion.
The fair value of each RSU is $1.89 which is the value of a Vizsla common share on grant day (April 1, 2024). The total share-based compensation of the RSUs is valued at $601,020, which will be realized as the RSUs vest.
206,786 RSUs were exercised and converted to common shares, and 200,713 RSUs were canceled. No other RSUs were issued, canceled, or expired during the year ended April 30, 2024.
For the year ended April 30, 2024, the Company has recognized a share-based compensation of $777,014 (April 30, 2023: $239,767) for the RSUs, and used an estimated forfeiture rate of 4%, resulting in an impact of $32,376 (April 30,2023: $nil) which reduces the fair value of share-based compensation.
OFF-BALANCE SHEET ARRANGEMENTS
As a policy, the Company does not enter off-balance sheet arrangements with special-purpose entities in the normal course of business, nor does it have any unconsolidated affiliates.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
TRANSACTIONS WITH RELATED PARTIES
During the year ended April 30, 2024, and 2023, the Company has the following related party transactions:
(a) The Company has incurred $2,698,461 (April 30, 2023: $2,238,520) in salary and consulting fees to the Company's officers and companies owned by the Company's officers as compensation.
(b) The Company has incurred $338,047 (April 30, 2023: $324,550) in director fees to the Company's directors.
(c) The Company has paid $675,000 (April 30, 2023: $600,000) to a company with common directors and officers for rent expenses and administration expenses.
(d) For the year ended April 30, 2024, the Company has granted 3,165,000 (April 30, 2023: 2,075,000) stock options to officers and directors of the Company.
(e) As of April 30, 2024, $673,600 (April 30, 2023: $nil) was payable to officers of the Company, $475,000 was payable to the former COO of the Company (April 30, 2023: $nil).
Below is a summary of cash compensation, stocked based compensation, and restricted shares units paid to officers and directors of the Company:
| For the year ended | ||||||
| Cash compensation including bonus | April 30, 2024 | April 30, 2023 | ||||
| CEO fees | $ | 787,500 | $ | 462,500 | ||
| CFO fees | 399,021 | 314,997 | ||||
| COO fees | 779,688 | 398,000 | ||||
| SVP Business Development and Strategy fees | 401,672 | 292,500 | ||||
| VP Exploration fees | 330,580 | 156,717 | ||||
| Director fees | 338,047 | 245,833 | ||||
| $ | 3,036,508 | $ | 1,870,547 | |||
| For the year ended | ||||||
| Stock-based compensation | April 30, 2024 | April 30, 2023 | ||||
| CEO fees | $ | 1,114,241 | $ | 451,870 | ||
| CFO fees | 469,827 | 170,759 | ||||
| COO fees | 566,168 | 172,662 | ||||
| SVP Business Development and Strategy fees | 421,393 | 196,139 | ||||
| VP Exploration | 356,477 | 198,726 | ||||
| Director fees | 938,832 | 660,660 | ||||
| $ | 3,866,938 | $ | 1,850,816 | |||
| For the year ended | ||||||
| Restricted shares units | April 30, 2024 | April 30, 2023 | ||||
| CEO fees | $ | 122,626 | $ | 33,650 | ||
| CFO fees | 35,971 | 9,871 | ||||
| COO fees | 26,894 | 25,638 | ||||
| SVP Business Development and Strategy fees | 57,692 | 15,831 | ||||
| VP Exploration | 85,546 | 23,475 | ||||
| Director fees | 177,633 | 28,843 | ||||
| $ | 506,362 | $ | 137,308 | |||
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
FOURTH QUARTER
During the three months ended April 30, 2024, the Company continued with exploration of the Panuco-Copala project and prepared for the PEA. The study is expected to be completed in Q3 2024.
The Company also prepared for the spin out of Vizsla Royalties Corp. The Company appointed Suki Gill as an independent director.
The Company entered into an equity distribution agreement with Canaccord Genuity Corp. and filed a prospectus supplement dated March 26, 2024, in respect of an at-the-market equity program. The program allows the Company to issue and sell up to C$50,000,000 of Vizsla Silver Shares from treasury to the public, from time to time, through Canaccord Genuity, at the Company’s discretion and in accordance with the terms and conditions of the distribution agreement. The Company will pay Canaccord Genuity a cash fee equal to 3% of the gross proceeds of Vizsla Silver Shares sold under the distribution agreement.
On February 29, 2024, the Company completed a bought deal along with the over-allotment option exercise of gross proceed of $34,500,000 with PI Financial Corp (the “Underwriters”). The Company paid to the Underwriter a cash commission equal to 6% of the gross proceeds raised. As further consideration for the services provided by the Underwriters in connection with the financing, the Company issued compensation warrants to the Underwriters, exercisable at any time on or before February 28, 2026, to acquire that number of common shares of the Company which is equal to 6% of the number of Offered Shares sold under the Offering at an exercise price of $1.50. The compensation warrants have a fair value of $742,418 using the Black-Scholes options pricing model. The Company incurred a total of $2,228,139 in cash share issue costs.
On April 1, 2024, the Company granted 318,000 RSUs to an officer of the Company. The RSUs will vest in three equal annual installments commencing on the first anniversary of the grant date. The Company can settle each vested RSUs with cash, shares, or a combination of cash and shares at the Company's discretion. 206,786 RSUs were exercised and converted to common shares at the vested price of $1.60, and 200,715 RSUs were canceled.
During the three months period that ended April 30, 2024, 11,500 warrants were exercised at a weighted average exercise price of $2.00 for gross proceeds of $23,000. 697,250 options were exercised at a weighted average exercise price of $1.51 for gross proceeds of $1,050,700.
PROPOSED TRANSACTIONS
As of the date of this MD&A, the Company’s only proposed transaction is the acquisition of Goanna Resources.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company's annual audited consolidated financial statements requires management to make certain estimates that affect the amounts reported in the annual audited consolidated financial statements. The accounting estimates considered to be significant include the recognition of deferred income tax assets and share-based compensation.
Share-based compensation
Calculating share-based compensation requires estimates of expected volatility in the share price, risk-free interest rates, number of options expected to vest, and a determination that standard option pricing models such as Black-Scholes fairly represent the actual compensation associated with options. Share price volatility is calculated using the Company's own trading history. The risk-free interest rate is obtained from the Bank of Canada zero coupon bond yield for the expected life of the options. The Company believes that the Black-Scholes option pricing model is appropriate for determining the compensation cost associated with the grant of options.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
CRITICAL ACCOUNTING ESTIMATES (Continued)
Impairment of exploration and evaluation assets (E&E assets)
Judgment is involved in assessing whether there is any indication that an asset may be impaired. This assessment is made based on the analysis of, amongst other factors, changes in the market or business environment, events that have transpired that have impacted the asset, and information from internal reporting.
Deferred tax assets and liabilities
Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the outcome of these tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made.
Prismo strategic investment
Prismo shares, Prismo warrants, and Vizsla shares are fair valued using the discount for lack of marketability ("DLOM") method. DLOM is based on the risk arising from the restricted holding period and voluntary escrow. The intangible asset is calculated based on the difference between the fair value of Prismo Units and Vizsla shares and cash consideration. The factors applied in the calculation are management's best estimates based on industry averages and future forecasts.
Financial assets at amortized cost
A financial asset is measured at amortized cost if the objective is to hold the financial asset for the collection on contractual cash flows and the asset’s contractual cash flows are comprised solely of payments of principal and interest. The financial asset is classified as current or non-current based on its maturity date and is initially recognized at fair value and subsequently carried at amortized cost less any impairment. The Company classifies cash and cash equivalent, other receivables, and strategic investment in this category.
Tax receivables
Value-added tax ("VAT") receivable is collectible from the government of Mexico. The collection of VAT is subject to risk due to the complex application and collection process and therefore, risk related to the collectability and timing of payment from the Mexican government. The Company uses its best estimates based on the facts known at the time and its experience to determine its best estimate of the collectability and timing of these recoveries. Changes in the assumptions regarding collectability and the timing of collection could impact the valuation and classification of VAT receivable.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
CRITICAL ACCOUNTING ESTIMATES (Continued)
Income taxes
Income tax expense comprises current and deferred tax. Income tax is recognized in the statement of loss and comprehensive loss except to the extent it relates to items recognized directly in equity.
Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable regarding previous years.
Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); and does not give rise to equal taxable and deductible temporary differences. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
There has been no adoption or recognition of accounting policies other than that are disclosed in note 2 of the consolidated financial statements for the years ended April 30, 2024, and note 3 of the consolidated financial statements for the years ended April 30, 2023.
Adoption of New Accounting Standards
The new standards, or amendments to standards and interpretations that were adopted by the Company, effective May 1, 2023, are as follows:
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
Disclosure of Accounting Policies (Amendments to IAS 1)
The IASB has issued amendments to IAS 1 Presentation of Financial Statements which require entities to disclose their "material" accounting policy information rather than their "significant" accounting policies. The amendments explain that accounting policy information is material if omitting, misstating; or obscuring that information could be expected to influence decisions that the primary users of the financial statements make on, the basis of, those financial statements. The amendments also clarify that accounting policy information may be material because of its nature, even if the related amounts are immaterial.
This amendment is effective for annual periods beginning on or after May 1, 2023. The adoption of this amendment did not have a material impact on the Company’s consolidated financial statements.
Definition of Accounting Estimates (Amendments to IAS 8)
The IASB has issued amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors which introduce a definition of accounting estimates and provide other clarifications to help entities distinguish accounting policies from accounting estimates. Under the amendments, accounting estimates are defined as "monetary amounts in financial statements that are subject to measurement uncertainty." The amendments also emphasize that a change in an accounting estimate that results from latest information or new developments is not an error correction and that changes in an input or a measurement technique used to develop an accounting estimate are considered changes in accounting estimates if those changes in an input or measurement technique are not the result of an error correction.
This amendment is effective for annual periods beginning on or after May 1, 2023. The adoption of this amendment did not have a material impact on the Company’s consolidated financial statements.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Company's activities expose it to a variety of financial risks, which include market risk, foreign currency risk, interest rate risk, price risk, credit risk and liquidity risk. The Company's risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance.
Market risk
Market risk is the risk that changes in market prices will affect the Company's earnings or the value of its financial instruments. Market risk is comprised of commodity price risk and interest rate risk. The objective of market risk management is to manage and control exposures within acceptable limits, while maximizing returns. The Company is not exposed to significant market risk.
Interest rate risk
Interest rate risk is the risk of losses that arise because of changes in contracted interest rates. The Company is not exposed to significant interest rate risk.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS (continued)
Foreign currency risk
The Company incurs certain expenses in currencies other than the Canadian dollar. The Company is subject to foreign exchange risk because of fluctuations in exchange rates. The Company manages this risk by maintaining bank accounts in US dollars and Mexican pesos to pay foreign currency expenses as they arise. Receipts in foreign currencies are maintained in those currencies. The Company does not undertake currency hedging activities. The Company also does not attempt to hedge the net investment and equity of integrated foreign operations.
The Company measures the effect on total assets or total receipts of reasonably foreseen changes in interest rates and foreign exchange rates. The analysis is used to determine if these risks are material to the financial position of the Company. A 1% change in the foreign exchange rate of CAD to MXN would increase/decrease the net and comprehensive loss for the year ended April 30, 2024, by approximately $212,000 (year ended April 30, 2023: $139,000). Actual financial results for the coming year will vary since the balances of financial assets are expected to decline as funds are used for Company expenses.
Price risk
This risk relates to fluctuations in commodity and equity prices. The Company closely monitors commodity prices of precious and base metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company. Fluctuations in pricing may be significant.
Credit risk
Credit risk is the risk of an unexpected loss if a counterparty or third party to a financial instrument fails to meet its contractual obligations. To reduce credit risk, cash and cash equivalents are on deposit at major financial institutions. The Company is not aware of any counterparty risk that could have an impact on the fair value of the cash and cash equivalents.
The carrying value of the financial assets represents the maximum credit exposure. The Company minimizes credit risk by reviewing the credit risk of the counterparties to its arrangements prior to entering into such agreements.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an ongoing basis, including exploration plans. The Company attempts to ensure that there are sufficient funds to meet its short-term business requirements, considering its anticipated cash flows from operations and holdings of cash and cash equivalents.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
OTHER REQUIREMENTS
Risks Factors and Uncertainties
Information on risks associated with investing in the Company's securities is contained in the most recently filed AIF.
Overview
The Company is subject to many risks that may affect future operations over which the Company has little control. These risks include, but are not limited to, intense competition in the resource industry, market conditions and the Company's ability to access new sources of capital, mineral property title, results from property exploration and development activities, and currency fluctuations. The Company has a history of recurring losses and there is no expectation that this situation will change in the foreseeable future.
Competition
Other exploration companies, including those with greater financial resources than the Company, could adopt or may have adopted the same business strategies and thereby compete directly with the Company, or may seek to acquire and develop mineral claims in areas targeted by the Company. While the risk of direct competition may be mitigated by the Company's experience and technical capabilities, there can be no assurance that competition will not increase or that the Company will be able to compete successfully.
Access to Capital
The exploration and subsequent development of mineral properties is capital intensive. Should it not be possible to raise additional equity funds when required, the Company may not be able to continue to fund its operations which would have a material adverse effect on the Company's potential profitability and ability to continue as a going concern. At present, the Company has cash resources to fund planned exploration for the next twelve months. Timing of additional equity funding will depend on market conditions as well as exploration requirements.
In recent years, the securities markets in Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly those considered exploration stage companies, have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. These conditions may persist for an indeterminate period.
Foreign Operations and Political Risk
The Company's mineral properties are in Canada, Mexico, and the United States. In foreign jurisdictions, mineral exploration and mining activities may be affected in varying degrees by political or economic instability, expropriation of property and changes in government regulations such as tax laws, business laws, environmental laws, and mining laws. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may materially adversely affect its business, or if significant enough, may make it impossible to continue to operate in certain countries. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, foreign exchange restrictions, export controls, income taxes, expropriation of property, environmental legislation and exploration health and safety. These risks are not unique to foreign jurisdictions and apply equally to the property interest in Canada.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
OTHER REQUIREMENTS (Continued)
Risks Factors and Uncertainties (Continued)
Mineral Property Tenure and Permits
The Company has completed a review of its mineral property titles and believes that all requirements have been met to ensure continued access and tenure for these titles. However, ongoing requirements are complex and constantly changing so there is no assurance that these titles will remain valid. The operations of the Company will require consents, approvals, licenses and/or permits from various governmental authorities. There can be no assurance that the Company will be able to obtain all necessary consents, approvals, licenses and permits that may be required to carry out exploration, development, and production operations at its projects.
Although the Company acquired the rights to some or all the resources in the ground subject to the tenures that it acquired, in most cases it does not thereby acquire any rights to, or ownership of, the surface to the areas covered by its mineral tenures. In such cases, applicable laws usually provide for rights of access to the surface for the purpose of carrying on exploration activities, however, the enforcement of such rights can be costly and time consuming. It is necessary, as a practical matter, to negotiate surface access.
There can be no guarantee that, despite having the right at law to access the surface and carry-on exploration activities, the Company will be able to negotiate a satisfactory agreement with existing landowners for such access, and therefore it may be unable to carry out exploration activities. In addition, in circumstances where such access is denied, or no agreement can be reached, the Company may need to rely on the assistance of local officials or the courts in such jurisdictions.
Reclamation
There is a risk that monies allotted for land reclamation may not be sufficient to cover all risks, due to changes in the nature of the waste rock or tailings and/or revisions to government regulations. Therefore, additional funds, or reclamation bonds or other forms of financial assurance may be required over the tenure of any mineral project of the Company to cover potential risks. These additional costs may have a material adverse effect on the Company's business, financial condition, and results of operations.
Environmental Restrictions
The activities of the Company are subject to environmental regulations promulgated by government agencies in different countries from time to time. Environmental legislation generally provides for restrictions and prohibitions on spills, releases or emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers, and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
OTHER REQUIREMENTS (Continued)
Risks Factors and Uncertainties (Continued)
Title Matters
Although the Company has taken steps to verify the title to the mineral properties in which it has or has a right to acquire an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee title (whether of the Company or of any underlying vendor(s) from whom the Company may be acquiring its interest). Title to mineral properties may be subject to unregistered prior agreements or transfers and may also be affected by undetected defects or the rights of indigenous peoples. The Company has investigated title to all its mineral properties and, to the best of its knowledge, title to all its properties for which titles have been issued are in good standing.
Exploration and Mining Risks
Fires, power outages, labour disruptions, flooding, explosions, cave-ins, landslides, and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis. The economics of developing mineral properties is affected by many factors including the cost of operations, variations of the grade of ore mined, fluctuations in the price of gold or other minerals produced, costs of processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. In addition, the grade of mineralization ultimately mined may differ from that indicated by drilling results and such differences could be material. Short term factors, such as the need for orderly development of ore bodies or the processing of new or different grades, may have an adverse effect on mining operations and on the results of operations. There can be no assurance that minerals recovered in small scale laboratory tests will be duplicated in large scale tests under on-site conditions or in production scale operations. Material changes in geological resources, grades, stripping ratios or recovery rates may affect the economic viability of projects.
Speculative Nature of Mineral Exploration and Development
The exploration for and development of mineral deposits involves significant risk which even a combination of careful evaluation, experience and knowledge may not adequately mitigate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. There is no assurance that commercial quantities of ore will be discovered on any of the Company's properties. Even if commercial quantities of ore are discovered, there is no assurance that the mineral property will be brought into production. Whether a mineral deposit will be commercially viable depends on several factors, including the attributes of the deposit, such as its size, grade, metallurgy, and proximity to infrastructure; commodity prices, which have fluctuated widely in recent years; and government regulations, including those relating to taxes, royalties, land tenure, land use, aboriginal rights, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, and the Company's business may be adversely affected by its inability to advance projects to commercial production.
Uninsured or Uninsurable Risks
The Company may become subject to liability for pollution or hazards against which it cannot insure or against which it may elect not to insure where premium costs are disproportionate to the Company's evaluation of the relevant risks. The payment of such insurance premiums and of such liabilities would reduce the funds available for exploration and operating activities.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
OTHER REQUIREMENTS (Continued)
Risks Factors and Uncertainties (Continued)
Commodity Prices
The prices of gold, silver, copper, lead, zinc, moly, and other minerals have fluctuated widely in recent years and are affected by several factors beyond the Company's control, including international economic and political conditions, expectations of inflation, international currency exchange rates, interest rates, consumption patterns, and speculative activities and increased production due to improved exploration and production methods. Fluctuations in commodity prices will influence the willingness of investors to fund mining and exploration companies and the willingness of companies to participate in joint ventures with the Company and the level of their financial commitment. The supply of commodities is affected by various factors, including political events, economic conditions, and production costs in major producing regions. There can be no assurance that the price of any commodities will be such that any of the properties in which the Company has, or has the right to acquire, an interest may be mined at a profit.
Increased Costs
Management anticipates that costs at the Company's projects will frequently be subject to variation from one year to the next due to several factors, such as the results of ongoing exploration activities (positive or negative), changes in mineralisation encountered, and revisions to exploration programs, if any, in response to the foregoing. Increases in the prices of such commodities or a scarcity of consultants or drilling contractors could render the costs of exploration programs to increase significantly over those budgeted. A material increase in costs for any significant exploration programs could have a significant effect on the Company's operating funds and ability to continue its planned exploration programs.
Conflicts of Interest
Certain directors and officers of the Company also serve as directors, officers and advisors of other companies involved in natural resource exploration and development. To the extent that such companies may participate in ventures with the Company, such directors and officers may have conflicts of interest in negotiating and concluding the terms of such ventures. Such other companies may also compete with the Company for the acquisition of mineral property rights. If any such conflict of interest arises, the Company's policy is that such director or officer will disclose the conflict to the board of directors and, if the conflict involves a director, such director will abstain from voting on the matter. In accordance with the Business Corporations Act (BC), the directors and officers of the Company are required to act honestly and in good faith with a view to the best interests of the Company.
Dependence Upon Others and Key Personnel
The success of the Company's operations will depend upon numerous factors including its ability to attract and retain additional key personnel in exploration, marketing, joint venture operations and finance. This will require the use of outside suppliers as well as the talents and efforts of the Company and its consultants and employees. There can be no assurance that the Company will be successful in finding and retaining the necessary employees, personnel and/or consultants to be able to successfully carry out such activities. This is especially true as the competition for qualified geological, technical personnel and consultants can be particularly intense.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
OTHER REQUIREMENTS (Continued)
Risks Factors and Uncertainties (Continued)
Government Regulation
The Company operates in an industry which is governed by numerous regulations, including but not limited to, environmental regulations as well as occupational health and safety regulations. Most of the Company's mineral properties are subject to government reporting regulations. The Company believes that it is in full compliance with all regulations and requirements related to mineral property interest claims. However, it is possible that regulations or tenure requirements could be changed by the respective governments resulting in additional costs or barriers to development of the properties. This would adversely affect the value of properties and the Company's ability to hold onto them without incurring significant additional costs. It is also possible that the Company could be in violation of, or non-compliant with, regulations it is not aware of.
Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure controls and procedures. Due to its inherent limitations, internal control over financial reporting and disclosure may not prevent or detect all misstatements. Further, the effectiveness of internal control is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may change. There were no changes in our internal controls over financial reporting during the year period ended April 30, 2024, that have materially affected, or are likely to materially affect, our internal controls over financial reporting.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, management will continue to monitor and evaluate the design and effectiveness of its internal control over financial reporting and disclosure controls and procedures, and may make modifications from time to time as considered necessary.
ADDITIONAL DISCLOSURE FOR ISSUERS WITHOUT SIGNIFICANT REVENUE
The significant components of general and administrative expenditures are presented in the consolidated financial statements. Significant components of mineral property expenditures are included in section Results of Operations.
Outstanding Share Data
As of the date of this MD&A, the Company had 241,896,605 issued and outstanding common shares. In addition, the Company has 22,618,722 options outstanding that are expiring through June 12, 2029, 8,979,041 warrants outstanding that are expiring through February 28, 2026, and 1,705,760 RSUs outstanding that are vesting through June 12, 2027. Details of issued share capital are included in Note 9 of the consolidated financial statements for the year ended April 30, 2024.
OTHER INFORMATION
All technical reports on material properties, press releases, and material change reports are filed on he Company's System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca, or the Company's Electronic Data Gathering, Analysis, and Retrieval system ("EDGAR") profile at www.sec.gov, or on the Company's website: www.vizslasilvercorp.com.
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VIZSLA SILVER CORP. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED APRIL 30, 2024 |
FORWARD-LOOKING STATEMENTS
Certain information, estimates and projections contained herein, and the documents incorporated by reference herein, if any, constitute forward-looking statements regarding the Company, its operations, and projects, including, but not limited to, the Panuco-Copala Property (as defined herein). All statements that are not historical facts, involving without limitation, statements regarding future projections, plans and objectives, securing strategic partners and financing requirements and the ability to fund future mine development are forward-looking statements, or forward-looking information. Forward-looking information and statements involve risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such information or statements. Such risk factors and uncertainties include, but are in no way limited to, statements with respect to the effect and estimated timeline of the drilling and assay results of the Company, the estimation of mineral reserves and mineral resources, the timing and amount of estimated future exploration, costs of exploration, capital expenditures, success of exploration activities, permitting time lines and permitting, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, fluctuations in mineral prices, volatility in the global financial markets, increased inflation, and other risk factors, as discussed in the Company's filings with Canadian securities regulatory agencies including the documents incorporated by reference herein.
Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance, or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company disclaims any obligation to update any forward-looking statements or information, other than as may be specifically required by applicable securities laws and regulations.
EXHIBIT 99.4
CERTIFICATION
I, Michael Konnert, Chief Executive Officer of Vizsla Silver Corp., certify that;
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I have reviewed this Annual Report on Form 40-F of Vizsla Silver Corp.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting 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 generally accepted accounting principles: |
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: July 18, 2024
By: /s/ "Michael Konnert"
Name: Michael Konnert
Title: Chief Executive Officer
EXHIBIT 99.5
CERTIFICATION
I, Mahesh Liyanage, Chief Financial Officer of Vizsla Silver Corp., certify that;
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I have reviewed this Annual Report on Form 40-F of Vizsla Silver Corp.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting 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 generally accepted accounting principles; |
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: July 18, 2024
By: /s/ "Mahesh Liyanage"
Name: Mahesh Liyanage
Title: Chief Financial Officer
EXHIBIT 99.6
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Konnert, Chief Executive Officer of Vizsla Silver Corp. (the "Company"), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
| a. | the Annual Report on Form 40-F of the Company for the fiscal year ended April 30, 2024 (the "Annual Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| b. | the information contained in the Annual Report fairly presents in all material respects the financial condition and results of operations of the Company. |
Date: July 18, 2024
By:
/s/ "Michael Konnert"
Name: Michael Konnert
Title: Chief Executive Officer
EXHIBIT 99.7
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Mahesh Liyanage, Chief Financial Officer of Vizsla Silver Corp. (the "Company"), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
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a. |
the Annual Report on Form 40-F of the Company for the fiscal year ended April 30, 2024 (the "Annual Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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b. |
the information contained in the Annual Report fairly presents in all material respects the financial condition and results of operations of the Company. |
Date: July 18, 2024
By:
/s/ "Mahesh Liyanage"
Name: Mahesh Liyanage
Title: Chief Financial Officer
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Annual Report on Form 40-F, of our auditor's report dated July 18, 2024 with respect to the consolidated financial statements of Vizsla Silver Corp. and its subsidiaries (the "Company") as at April 30, 2024 and 2023 and for each of the years in the two year period ended April 30, 2024, as filed with the United States Securities Exchange and Commission.
Chartered Professional Accountants
July 18, 2024
Vancouver, Canada
Exhibit 99.9
CONSENT OF EXPERT
Reference is made to the Annual Report on Form 40-F, and the documents incorporated by reference therein, of Vizsla Silver Corp. for the fiscal year ended April 30, 2024, and any amendments thereto (the "40-F"), to be filed with the United States Securities and Exchange Commission (the "SEC"), and the Annual Information Form (the "AIF") and Management's Discussion and Analysis (the "MD&A") for the year then ended, which are filed as exhibits to and incorporated by reference in the 40-F, and the Registration Statement on Form F-10 (Registration No. 333-270533), and any amendments thereto, (the "F-10") of Vizsla Silver Corp. filed with the SEC (the "Registration Statement").
I hereby consent to the use of my name and references to, excerpts from, and summaries of the following report:
Technical Report titled "Mineral Resource Estimate Update for the Panuco Ag-Au-Pb-Zn Project, Sinaloa State, Mexico" prepared for Vizsla Silver Corp., dated effective January 19, 2023
in the 40-F, the AIF, the MD&A, and the Registration Statement.
/s/ "Allan Armitage"
Allan Armitage, Ph.D, P.Geo.
And on behalf of SGS Geological Services
July 18, 2024
Exhibit 99.10
CONSENT OF EXPERT
Reference is made to the Annual Report on Form 40-F, and the documents incorporated by reference therein, of Vizsla Silver Corp. for the fiscal year ended April 30, 2024, and any amendments thereto (the "40-F"), to be filed with the United States Securities and Exchange Commission (the "SEC"), and the Annual Information Form (the "AIF") and Management's Discussion and Analysis (the "MD&A") for the year then ended, which are filed as exhibits to and incorporated by reference in the 40-F, and the Registration Statement on Form F-10 (Registration No. 333-270533), and any amendments thereto, (the "F-10") of Vizsla Silver Corp. filed with the SEC (the "Registration Statement").
I hereby consent to the use of my name and references to, excerpts from, and summaries of the following report:
Technical Report titled "Mineral Resource Estimate Update for the Panuco Ag-Au-Pb-Zn Project, Sinaloa State, Mexico" prepared for Vizsla Silver Corp., dated effective January 19, 2023
in the 40-F, the AIF, the MD&A, and the Registration Statement.
/s/ "Ben Eggers"
Ben Eggers, MAIG, P.Geo.
And on behalf of SGS Geological Services
July 18, 2024
Exhibit 99.11
CONSENT OF EXPERT
Reference is made to the Annual Report on Form 40-F, and the documents incorporated by reference therein, of Vizsla Silver Corp. for the fiscal year ended April 30, 2024, and any amendments thereto (the "40-F"), to be filed with the United States Securities and Exchange Commission (the "SEC"), and the Annual Information Form (the "AIF") and Management's Discussion and Analysis (the "MD&A") for the year then ended, which are filed as exhibits to and incorporated by reference in the 40-F, and the Registration Statement on Form F-10 (Registration No. 333-270533), and any amendments thereto, (the "F-10") of Vizsla Silver Corp. filed with the SEC (the "Registration Statement").
I hereby consent to the use of my name and references to, excerpts from, and summaries of the following report:
Technical Report titled "Mineral Resource Estimate Update for the Panuco Ag-Au-Pb-Zn Project, Sinaloa State, Mexico" prepared for Vizsla Silver Corp., dated effective January 19, 2023
in the 40-F, the AIF, the MD&A, and the Registration Statement.
/s/ "Peter Mehrfert"
Peter Mehrfert, P.Eng.
And on behalf of Ausenco Engineering Canada ULC
July 18, 2024