925 West Georgia Street, Suite 1800, Vancouver, B.C., Canada V6C 3L2
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Keith Neumeyer | Andrew W. Poon, CPA, CA | ||||||||||
President & CEO | Interim CFO | ||||||||||
March 9, 2022 | March 9, 2022 |
Management’s Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
/s/ Deloitte LLP
Chartered Professional Accountants
TABLE OF CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS | ||||||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||||||||
General | ||||||||
Statements of Earnings (Loss) | ||||||||
Statements of Financial Position | ||||||||
Other items | ||||||||
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) | |||||
FOR THE YEARS ENDED DECEMBER 31, 2021 and 2020 | |||||
Audited Consolidated Financial Statements | (In thousands of US dollars, except share and per share amounts) | ||||
The Consolidated Statements of Earnings (Loss) provide a summary of the Company’s financial performance and net earnings or loss over the reporting periods. |
Year Ended December 31, | |||||||||||||||||
Note | 2021 | 2020 | |||||||||||||||
Revenues | 6 | $584,117 | $363,876 | ||||||||||||||
Mine operating costs | |||||||||||||||||
Cost of sales | 7 | 366,085 | 194,305 | ||||||||||||||
Cost of sales - standby costs | 7 | 0 | 10,112 | ||||||||||||||
Depletion, depreciation and amortization | 116,613 | 54,405 | |||||||||||||||
482,698 | 258,822 | ||||||||||||||||
Mine operating earnings | 101,419 | 105,054 | |||||||||||||||
General and administrative expenses | 8 | 27,063 | 24,855 | ||||||||||||||
Share-based payments | 12,290 | 8,255 | |||||||||||||||
Mine holding costs | 9 | 12,056 | 21,583 | ||||||||||||||
Loss on divestiture of exploration projects | 0 | 3,685 | |||||||||||||||
Acquisition costs | 4 | 1,973 | 0 | ||||||||||||||
Foreign exchange (gain) loss | (1,165) | 6,319 | |||||||||||||||
Operating earnings | 49,202 | 40,357 | |||||||||||||||
Unrealized loss on foreign currency derivatives | 0 | (982) | |||||||||||||||
Investment and other (loss) income | 10 | (2,948) | 5,127 | ||||||||||||||
Finance costs | 11 | (21,004) | (14,773) | ||||||||||||||
Earnings before income taxes | 25,250 | 29,729 | |||||||||||||||
Income taxes | |||||||||||||||||
Current income tax expense | 23 | 49,283 | 9,966 | ||||||||||||||
Deferred income tax recovery | 23 | (19,110) | (3,324) | ||||||||||||||
30,173 | 6,642 | ||||||||||||||||
Net (loss) earnings for the year | ($4,923) | $23,087 | |||||||||||||||
(Loss) earnings per common share | |||||||||||||||||
Basic | 12 | ($0.02) | $0.11 | ||||||||||||||
Diluted | 12 | ($0.02) | $0.11 | ||||||||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 12 | 244,749,772 | 213,879,622 | ||||||||||||||
Diluted | 12 | 244,749,772 | 215,878,829 |
Keith Neumeyer, Director | Douglas Penrose, Director |
The accompanying notes are an integral part of the audited consolidated financial statements | |||||
First Majestic Silver Corp. 2021 Annual Report | Page 1 |
Note | Year Ended December 31, | |||||||||||||
2021 | 2020 | |||||||||||||
Net (loss) earnings for the year | ($4,923) | $23,087 | ||||||||||||
Other comprehensive (loss) income | ||||||||||||||
Items that will not be subsequently reclassified to net (loss) earnings: | ||||||||||||||
Unrealized (loss) gain on fair value of investments in marketable securities, net of tax | 14(b) | (12,456) | 10,249 | |||||||||||
Realized (loss) gain on investments in marketable securities, net of tax | 14(b) | (1,439) | 211 | |||||||||||
Remeasurement of retirement benefit plan | 95 | (515) | ||||||||||||
Other comprehensive (loss) income | (13,800) | 9,945 | ||||||||||||
Total comprehensive (loss) income | ($18,723) | $33,032 |
The accompanying notes are an integral part of the audited consolidated financial statements | |||||
First Majestic Silver Corp. 2021 Annual Report | Page 2 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
FOR THE YEARS ENDED DECEMBER 31, 2021 and 2020 | |||||
Audited Consolidated Financial Statements | (In thousands of US dollars) |
Year Ended December 31, | |||||||||||||||||
Note | 2021 | 2020 | |||||||||||||||
Operating Activities | |||||||||||||||||
Net (loss) earnings for the year | ($4,923) | $23,087 | |||||||||||||||
Adjustments for: | |||||||||||||||||
Depletion, depreciation and amortization | 118,283 | 56,283 | |||||||||||||||
Share-based payments | 12,290 | 8,255 | |||||||||||||||
Income tax expense | 30,173 | 6,642 | |||||||||||||||
Finance costs | 11 | 21,004 | 14,773 | ||||||||||||||
Acquisition costs | 4 | 1,973 | 0 | ||||||||||||||
Loss of write-down of plant and equipment | 10 | 2,501 | 0 | ||||||||||||||
Loss (gain) from marketable securities and silver futures derivatives | 1,521 | (4,051) | |||||||||||||||
Loss on divestiture of exploration projects | 15 | 0 | 3,894 | ||||||||||||||
Fair value adjustment on foreign currency derivatives | 0 | 982 | |||||||||||||||
Unrealized foreign exchange gain | (6,067) | (2,522) | |||||||||||||||
Operating cash flows before working capital and taxes | 176,755 | 107,343 | |||||||||||||||
Net change in non-cash working capital items | 26 | (31,504) | (22,831) | ||||||||||||||
Income taxes paid | (76,528) | (4,799) | |||||||||||||||
Cash provided by operating activities | 68,723 | 79,713 | |||||||||||||||
Investing Activities | |||||||||||||||||
Restricted cash acquired on the acquisition of Jerritt Canyon | 4 | 30,000 | 0 | ||||||||||||||
Reclassification to restricted cash related to the acquisition of Jerritt Canyon | 18 | (12,574) | 0 | ||||||||||||||
Expenditures on mining interests | (132,409) | (68,647) | |||||||||||||||
Acquisition of property, plant and equipment | (56,558) | (43,322) | |||||||||||||||
Deposits paid for acquisition of non-current assets | (7,839) | (13,846) | |||||||||||||||
Jerritt Canyon acquisition costs, net of cash acquired | 4 | (948) | 0 | ||||||||||||||
Acquisition of Springpole Silver Stream | 15(d) | 0 | (2,521) | ||||||||||||||
Other | 26 | (425) | 1,221 | ||||||||||||||
Cash used in investing activities | (180,753) | (127,115) | |||||||||||||||
Financing Activities | |||||||||||||||||
Proceeds from prospectus offering, net of share issue costs | 24(a) | 66,674 | 126,132 | ||||||||||||||
Proceeds from 2021 convertible debenture, net of transaction costs | 20(a) | 222,776 | 0 | ||||||||||||||
Payment for redemption of 2018 convertible debenture | 20(a) | (171,841) | 0 | ||||||||||||||
Proceeds from exercise of stock options | 21,793 | 14,011 | |||||||||||||||
Repayment of lease liabilities | 21 | (9,287) | (7,706) | ||||||||||||||
Finance costs paid | (4,326) | (4,200) | |||||||||||||||
Proceeds from debt facilities | 20(b) | 30,000 | 10,000 | ||||||||||||||
Repayment of debt facilities | 20(b) | (40,000) | (19,969) | ||||||||||||||
Dividends declared and paid | 24(g) | (3,930) | 0 | ||||||||||||||
Shares repurchased and cancelled | 24(f) | (42) | (1,694) | ||||||||||||||
Cash provided by financing activities | 111,817 | 116,574 | |||||||||||||||
Effect of exchange rate on cash and cash equivalents held in foreign currencies | (439) | 397 | |||||||||||||||
(Decrease) increase in cash and cash equivalents | (213) | 69,172 | |||||||||||||||
Cash and cash equivalents, beginning of the year | 238,578 | 169,009 | |||||||||||||||
Cash and cash equivalents, end of year | $237,926 | $238,578 | |||||||||||||||
Cash | $237,926 | $207,132 | |||||||||||||||
Short-term investments | 0 | 31,446 | |||||||||||||||
Cash and cash equivalents, end of year | $237,926 | $238,578 | |||||||||||||||
Supplemental cash flow information | 26 |
The accompanying notes are an integral part of the audited consolidated financial statements | |||||
First Majestic Silver Corp. 2021 Annual Report | Page 3 |
Note | December 31, 2021 | December 31, 2020 | ||||||||||||||||||
Assets | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $237,926 | $238,578 | ||||||||||||||||||
Restricted cash | 18(a) | 12,570 | 0 | |||||||||||||||||
Trade and other receivables | 7,729 | 4,271 | ||||||||||||||||||
Value added taxes receivable | 25 | 46,531 | 41,641 | |||||||||||||||||
Inventories | 13 | 60,613 | 32,512 | |||||||||||||||||
Other financial assets | 14 | 26,486 | 36,319 | |||||||||||||||||
Prepaid expenses and other | 5,352 | 2,725 | ||||||||||||||||||
Total current assets | 397,207 | 356,046 | ||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Mining interests | 15 | 1,048,530 | 509,730 | |||||||||||||||||
Property, plant and equipment | 16 | 449,237 | 258,220 | |||||||||||||||||
Right-of-use assets | 17 | 29,225 | 14,330 | |||||||||||||||||
Deposits on non-current assets | 10,949 | 14,246 | ||||||||||||||||||
Non-current restricted cash | 18(b) | 115,012 | 0 | |||||||||||||||||
Non-current value added taxes receivable | 25(c) | 572 | 15,301 | |||||||||||||||||
Deferred tax assets | 23 | 74,257 | 69,644 | |||||||||||||||||
Total assets | $2,124,989 | $1,237,517 | ||||||||||||||||||
Liabilities and Equity | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Trade and other payables | 19 | $120,666 | $76,002 | |||||||||||||||||
Unearned revenue | 6 | 12,226 | 2,717 | |||||||||||||||||
Current portion of debt facilities | 20 | 125 | 10,975 | |||||||||||||||||
Current portion of lease liabilities | 21 | 11,825 | 5,358 | |||||||||||||||||
Income taxes payable | 23 | 27,980 | 6,574 | |||||||||||||||||
Total current liabilities | 172,822 | 101,626 | ||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||
Debt facilities | 20 | 181,108 | 141,733 | |||||||||||||||||
Lease liabilities | 21 | 28,036 | 15,217 | |||||||||||||||||
Decommissioning liabilities | 22 | 153,607 | 51,471 | |||||||||||||||||
Other liabilities | 5,797 | 5,406 | ||||||||||||||||||
Non-current income taxes payable | 23 | 21,812 | 23,099 | |||||||||||||||||
Deferred tax liabilities | 23 | 150,836 | 48,729 | |||||||||||||||||
Total liabilities | $714,018 | $387,281 | ||||||||||||||||||
Equity | ||||||||||||||||||||
Share capital | 1,659,781 | 1,087,139 | ||||||||||||||||||
Equity reserves | 98,943 | 101,997 | ||||||||||||||||||
Accumulated deficit | (347,753) | (338,900) | ||||||||||||||||||
Total equity | $1,410,971 | $850,236 | ||||||||||||||||||
Total liabilities and equity | $2,124,989 | $1,237,517 | ||||||||||||||||||
Commitments (Note 15; Contingencies (Note 27); Subsequent event (Note 30) |
The accompanying notes are an integral part of the audited consolidated financial statements | |||||
First Majestic Silver Corp. 2021 Annual Report | Page 4 |
Share Capital | Equity Reserves | Accumulated deficit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Share-based payments(a) | Other comprehensive income(loss)(b) | Equity component of convertible debenture(c) | Total equity reserves | Total equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 208,112,072 | $933,182 | $74,060 | ($2,532) | $19,164 | $90,692 | ($361,553) | $662,321 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings for the year | — | — | — | — | — | — | 23,087 | 23,087 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 9,945 | — | 9,945 | — | 9,945 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | 9,945 | — | 9,945 | 23,087 | 33,032 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based payments | — | — | 8,255 | — | — | 8,255 | — | 8,255 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prospectus offerings (Note 24(a)) | 10,654,338 | 126,132 | — | — | — | — | — | 126,132 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options (Note 24(b)) | 2,473,906 | 19,914 | (5,903) | — | — | (5,903) | — | 14,011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Springpole Silver Stream (Note 15(d)) | 805,698 | 7,479 | — | — | — | — | — | 7,479 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of mining interests | 66,997 | 700 | — | — | — | — | — | 700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of restricted share units (Note 24(c)) | 127,000 | 992 | (992) | — | — | (992) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased and cancelled (Note 24(f)) | (275,000) | (1,260) | — | — | — | — | (434) | (1,694) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 221,965,011 | $1,087,139 | $75,420 | $7,413 | $19,164 | $101,997 | ($338,900) | $850,236 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss for the year | — | — | — | — | — | — | (4,923) | (4,923) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (13,800) | — | (13,800) | — | (13,800) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive loss | — | — | — | (13,800) | — | (13,800) | (4,923) | (18,723) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based payments | — | — | 12,421 | — | — | 12,421 | — | 12,421 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Jerritt Canyon (Note 4) | 26,719,727 | 416,561 | 23,150 | — | — | 23,150 | — | 439,711 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sprott private placement (Note 4) | 1,705,514 | 26,589 | — | — | — | — | — | 26,589 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prospectus offerings (Note 24(a)) | 4,225,000 | 66,674 | — | — | — | — | — | 66,674 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt settlement (Note 20) | 2,579,093 | 27,733 | — | — | (46,127) | (46,127) | — | (18,394) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options (Note 24(b)) | 2,502,234 | 30,436 | (8,643) | — | — | (8,643) | — | 21,793 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Springpole Silver Stream (Note 15(d)) | 287,300 | 3,750 | — | — | — | — | — | 3,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of restricted share units (Note 24(c) and 24(e)) | 73,692 | 941 | (963) | — | — | (963) | — | (22) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity component of convertible notes, net of tax (Note 20) | — | — | — | — | 30,908 | 30,908 | — | 30,908 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased and cancelled (Note 24(f)) | (6,913) | (42) | — | — | — | — | — | (42) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend declared and paid (Note 24(g)) | — | — | — | — | — | — | (3,930) | (3,930) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 260,050,658 | $1,659,781 | $101,385 | ($6,387) | $3,945 | $98,943 | ($347,753) | $1,410,971 |
The accompanying notes are an integral part of the audited consolidated financial statements | |||||
First Majestic Silver Corp. 2021 Annual Report | Page 5 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
Audited Consolidated Financial Statements | (Tabular amounts are expressed in thousands of US dollars) |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 6 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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Accounting Policy: | Acquisitions of businesses are accounted for using the acquisition method. The consideration of each business combination is measured, at the date of the exchange, as the aggregate of the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Company to the former owners of the acquiree in exchange for control of the acquiree. Acquisition-related costs incurred for the business combination are expensed. The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair value at the acquisition date. Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the consideration of the acquisition over the Company’s interest in the fair value of the net identifiable assets, liabilities and contingent liabilities recognized. If the Company’s interest in the fair value of the acquiree’s net identifiable assets, liabilities and contingent liabilities exceeds the cost of the acquisition, the excess is recognized in earnings or loss immediately. Goodwill may also arise as a result of the requirement under IFRS to record a deferred tax liability on the excess of the fair value of the acquired assets over their corresponding tax bases, with the corresponding offset recorded as goodwill. |
Accounting Estimates and Judgments: | Determination of a Business Determination of whether a set of assets acquired and liabilities assumed constitute a business may require the Company to make certain judgments, taking into account all facts and circumstances. A business consists of inputs, including non-current assets and processes, including operational processes, that when applied to those inputs have the ability to create outputs that provide a return to the Company and its shareholders. In 2021, the Company concluded that Jerritt Canyon Canada Ltd. ("Jerritt Canyon") met the definition of a business and, accordingly, the acquisition was accounted for as a business combination (Note 4). |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 7 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Estimates and Judgments: | Fair Value Estimates In business combinations, it generally requires time to obtain the information necessary to identify and measure the following as of the acquisition date: (i) The identifiable assets acquired and liabilities assumed; (ii) The consideration transferred in exchange for an interest in the acquiree; (iii) The resulting goodwill. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The measurement period ends as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable and shall not exceed one year from the acquisition date. The fair value of assets acquired and liabilities assumed requires that management make judgments and estimates taking into account information available at the time of the acquisition about future events including, but not restricted to, estimates of mineral reserves and resources, exploration potential, future metal prices, future operating costs and capital expenditures and discount rates. During the allowable measurement period, the Company will retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The Company may also recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable and shall not exceed one year from the acquisition date. The fair value of assets acquired and liabilities assumed are subject to change for up to one year from the Acquisition Date. If new information arises which would impact management's assessment of the fair value at the Acquisition Date, any adjustments to the allocation of the purchase consideration will be recognized retrospectively and comparative information will be revised. Consequently, the final allocation of the purchase price may result in different adjustments than those shown in these audited consolidated financial statements. |
Accounting Estimates and Judgments: | Consideration for the acquisition of Jerritt Canyon Acquisitions of businesses are accounted for using the acquisition method. The consideration of each business combination is measured, at the date of the exchange, as the aggregate of the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Company to the former owners of the acquiree in exchange for control of the acquiree. Management made judgments and estimates in calculating the value of the shares and warrants transferred, including but not limited to share price, volatility, rate of quarterly dividends and the discount rate. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 8 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Estimates and Judgments: | Determining what is part of the business combination in the acquisition of Jerritt Canyon The Company needs to assess if other arrangement(s) or transaction(s) shall be recognized as part of applying the acquisition method. To determine if the arrangement(s) or transaction(s), is(are) part of the business combination, the Company considers the following factors: (i) The reasons for the arrangement(s) or transaction(s); (ii) Who initiated the arrangement(s) or transaction(s); and (iii) The timing of the arrangement(s) or transaction(s). Management applied judgment based on the above criteria to determine if private placement shares included as part of the acquisition of Jerritt Canyon were a part of the business combination. |
Accounting Policy: | Goodwill arising on the acquisition of a business is carried at cost as established at the date of the acquisition less accumulated impairment losses, if any. Goodwill is allocated to each of the Company’s cash-generating units that is expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statements of earnings or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods. As at December 31, 2021, the Company had $nil goodwill (2020 - $nil). |
Accounting Policy: | The consolidated financial statements are presented in U.S. dollars. The individual financial statements of each entity are presented in their functional currency, which is the currency of the primary economic environment in which the entity operates. Transactions in foreign currencies are translated into the entities’ functional currencies at the exchange rates at the date of the transactions. Monetary assets and liabilities of the Company’s operations denominated in a currency other than the U.S. dollar are translated using exchange rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates on the dates of the transactions. Revenue and expense items are translated at the exchange rates in effect at the date of the underlying transaction, except for depletion and depreciation related to non-monetary assets, which are translated at historical exchange rates. Exchange differences are recognized in the statements of earnings or loss in the period in which they arise. |
Accounting Estimates and Judgments: | Determination of Functional Currency The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. The Company has determined that the functional currency of each entity is the U.S. dollar. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 9 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | The Company's primary product is silver and gold. Other metals, such as lead and zinc, produced as part of the extraction process are considered to be by-products arising from the production of silver and gold. Smelting and refining charges are net against revenue from the sale of metals.
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Metals in doré sold are priced on date of transfer of control. Final weights and assays are adjusted on final settlement which is approximately one month after delivery. Metals in concentrate sold are provisionally priced at the date of transfer of control as the final selling price is subject to movements in the monthly average prices up to the final settlement date, typically one to three months after delivery to the customer. Upon transfer of control of the concentrate, the Company recognizes revenue on a provisional basis based on spot price and, at each period end, subsequently re-estimated by reference to forward market prices of the estimated month of settlement, with the impact of changes in the forward market prices recognized as revenue adjustments as they occur until final settlement. Revenue from the sale of coins, ingots and bullion is recorded when the products have been shipped and funds have been received. When cash was received from customers prior to shipping of the related finished goods, the amounts are recorded as unearned revenue until the products are shipped. |
Accounting Estimates and Judgments: | Determination of Performance Obligations The Company applied judgment to determine if a good or service that is promised to a customer is distinct based on whether the customer can benefit from the good or service on its own or together with other readily available resources and whether the good or service is separately identifiable. Based on these criteria, the Company determined the primary performance obligation relating to its sales contracts is the delivery of the bullion, doré and concentrates. Shipping and insurance services arranged by the Company for its concentrate sales customers that occur after the transfer of control are also considered to be performance obligations. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 10 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | Mineral inventories, including stockpiled ore, work in process and finished goods, are valued at the lower of weighted average cost and estimated net realizable value. Cost includes all direct costs incurred in production including direct labour and materials, freight, depreciation and amortization and directly attributable overhead costs. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and future metal prices less estimated future production costs to convert the inventories into saleable form. Any write-downs of inventory to net realizable value are recorded as cost of sales. If there is a subsequent increase in the value of inventories, the previous write-downs to net realizable value are reversed to the extent that the related inventory has not been sold. |
Stockpiled ore inventory represents ore that has been extracted from the mine and is available for further processing. Costs added to stockpiled ore inventory are valued based on current mining cost per ounce incurred up to the point of stockpiling the ore and are removed at the weighted average cost per ounce. Stockpiled ore tonnage and head grades are verified by periodic surveys and physical counts. Work in process inventory includes precipitates, inventories in tanks and in the milling process. Finished goods inventory includes metals in their final stage of production prior to sale, including primarily doré and dried concentrates at our operations and finished goods in-transit. Materials and supplies inventories are valued at the lower of weighted average cost and net realizable value. Costs include acquisition, freight and other directly attributable costs. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 11 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Exploration Potential, Exploration and Evaluation Expenditures (Note 15)
Accounting Policy: | Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activity includes: • acquiring the rights to explore; • researching and analyzing historical exploration data; • gathering exploration data through topographical, geochemical and geophysical studies; • exploratory drilling, trenching and sampling; • determining and examining the volume and grade of the resource; • surveying transportation and infrastructure requirements; and • compiling pre-feasibility and feasibility studies. Capitalization of exploration and evaluation expenditures commences on acquisition of a beneficial interest or option in mineral rights. Capitalized costs are recorded as mining interests at cost less accumulated transfers to producing mineral properties and impairment charges, if applicable. No amortization is charged during the exploration and evaluation phase as the asset is not available for use. Exploration and evaluation assets include exploration potential which represents the potential additional mineralization beyond the existing known reserves and resources of a producing mineral property which the Company gain access through acquiring the mineral rights and/or concessions. The exploration potential is recorded at cost less accumulated transfers to producing mineral properties and accumulated impairment losses, if any. No amortization is charged during the exploration and evaluation phase as the asset is not available for use. The majority of the Company’s exploration and evaluation expenditures focus on mineral deposits in proximity to its existing mining operations. Where the Company is acquiring a new property, the Company makes a preliminary evaluation to determine that the property has significant potential to develop an economic ore body. Exploration and evaluation expenditures are transferred to development or producing mining interests when technical feasibility and commercial viability of the mineral resource have been demonstrated. Factors taken into consideration include: • there is sufficient geological certainty of converting the mineral deposit into proven and probable reserves; • life of mine plan and economic modeling support the economic extraction of such reserves and resources; • for new properties, a scoping study and/or feasibility study demonstrates that the additional reserves and resources will generate a positive economic outcome; and • operating and environmental permits exist or are reasonably assured as obtainable. Exploration and evaluation expenditures remain as exploration mining interests and do not qualify as producing mining interests until the aforementioned criteria are met. Exploration and evaluation expenditures are transferred to development or producing mining interests when the technical feasibility and commercial viability of a mineral resource has been demonstrated according to the above mentioned factors. Once the technical feasibility, commercial viability and a development decision have been established, the value of the exploration and evaluation asset is reclassified and accounted for in accordance with IAS 16, Property, Plant and Equipment (“IAS 16”). The exploration and evaluation asset is subject to an impairment test prior to reclassification in accordance with IFRS 6. It is subsequently measured at cost less accumulated depletion and accumulated impairment losses, if any. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 12 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Estimates and Judgments: | Economic recoverability and probability of future economic benefits of exploration, evaluation and development costs Management has determined that exploratory drilling, evaluation, development and related costs incurred which were capitalized have potential future economic benefits and are potentially economically recoverable, subject to impairment analysis. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefit including geologic and metallurgic information, exploration plans and results, accessible facilities and existing permits. |
Accounting Policy: | Exploration, development and field support costs directly related to mining interests are deferred until the property to which they directly relate is placed into production, sold, abandoned or subject to a condition of impairment. The deferred costs are amortized over the useful life of the ore body following commencement of production, or written off if the property is sold or abandoned. Administration costs and other exploration costs that do not relate to any specific property are expensed as incurred. Upon commencement of commercial production, mining interests are depleted on a units-of-production basis over the estimated economic life of the mine. In applying the units of production method, depletion is determined using quantity of material extracted from the mine in the period as a portion of total quantity of material to be extracted in current and future periods based on reserves and resources considered to be highly probable to be economically extracted over the life of mine. If no published reserves and resources are available, the Company may rely on internal estimates of economically recoverable mineralized material, prepared on a basis consistent with that used for determining reserves and resources, for purpose of determining depletion. From time to time, the Company acquires or disposes of properties pursuant to the terms of option agreements. Options are exercisable entirely at the discretion of the optionee with no obligation or sale until exercised or expired and, accordingly, are recorded as mineral property costs or recoveries when the payments are made or received. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 13 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Estimates and Judgments: | Mineral Reserve and Resource Estimates Mineral reserve and resource estimates affect the determination of recoverable value used in impairment assessments, the depletion and depreciation rates for non-current assets using the units of production method and the expected timing of reclamation and closure expenditures. The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101 ("NI 43-101") Technical Report standards. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Company’s control. Such estimation is a subjective process and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Differences between management’s assumptions including economic assumptions such as metal prices and market conditions could have a material effect in the future on the Company’s financial position, results of operation and cash flows. |
Accounting Estimates and Judgments: | Depletion Rate for Mining Interests Depletion expenses are allocated based on estimated useful life of the asset. Should the expected asset life and associated depletion rate differ from the initial estimate, the change in estimate would be made prospectively in the consolidated statements of earnings or loss. |
Accounting Policy: | A stream asset is a long-term metal purchase agreement for which settlement is called for in silver, the amount of which is based on production at a mine corresponding to the specific agreement. On acquisition of a stream asset, it is recorded at cost and is accounted for in accordance with IFRS 6, Exploration and Evaluation of Mineral Resources (“IFRS 6”). A stream asset where the mine corresponding to the specific agreement is an exploration and evaluation stage property is classified as exploration and evaluation asset and is assessed for impairment whenever indicators of impairment exist in accordance with IFRS 6. An impairment loss is recognized for the amount by which the asset’s carrying value exceeds its recoverable amount. Once the technical feasibility, commercial viability and a development decision have been established, the value of the stream asset is reclassified and accounted for in accordance with IAS 16, Property, Plant and Equipment (“IAS 16”). The exploration and evaluation asset is subject to an impairment test prior to reclassification in accordance with IFRS 6. It is subsequently measured at cost less accumulated depletion and accumulated impairment losses, if any. A producing stream asset is depleted using the units-of-production method over the life of the property to which the interest relates, which is estimated using available information of proven and probable reserves and the portion of resources expected to be classified as mineral reserves at the mine corresponding to the specific agreement. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 14 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | Property, plant and equipment are recorded at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment includes the purchase price or construction cost, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use, an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, and borrowing costs related to the acquisition or construction of qualifying assets. Property, plant and equipment are depreciated using either the straight-line or units-of-production method over the shorter of the estimated useful life of the asset or the expected life of mine. Where an item of property, plant and equipment comprises of major components with different useful lives, the components are accounted for as separate items of property, plant and equipment. Assets under construction are recorded at cost and reclassified to machinery and equipment when it becomes available for use. Depreciation commences when the asset is in the condition and location necessary for it to operate in the manner intended by management. Depreciation charges on assets that are directly related to mineral properties are allocated to those mineral properties. The Company conducts an annual review of residual balances, useful lives and depreciation methods utilized for property, plant and equipment. Any changes in estimate that arise from this review are accounted for prospectively. |
Accounting Estimates and Judgments: | Commencement of Commercial Production Prior to reaching commercial production levels intended by management, costs incurred are capitalized as part of the related mine or mill . Depletion of capitalized costs for mining properties and depreciation and amortization of property, plant and equipment begin when operating levels intended by management have been reached. Determining when a mine or mill is in the condition necessary for it to be capable of operating in the manner intended by management is a matter of judgment dependent on the specific facts and circumstances. The following factors may indicate that commercial production has commenced: • substantially all major capital expenditures have been completed to bring the asset to the condition necessary to operate in the manner intended by management; • the mine or mill has reached a pre-determined percentage of design capacity; • the ability to sustain a pre-determined level of design capacity for a significant period of time (i.e. the ability to process ore continuously at a steady or increasing level); • the completion of a reasonable period of testing of the mine plant and equipment; • the ability to produce a saleable product (i.e. the ability to produce concentrate within required sellable specifications); • the mine or mill has been transferred to operating personnel from internal development groups or external contractors; and • mineral recoveries are at or near the expected production levels. |
Accounting Estimates and Judgments: | Depreciation and Amortization Rates for Property, Plant and Equipment Depreciation and amortization expenses are determined based on estimated useful life of the asset. Should the expected asset life and associated depreciation rates differ from the initial estimate, the change in estimate would be made prospectively in the consolidated statements of earnings or loss. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 15 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset until the asset is substantially ready for its intended use. Other borrowing costs are recognized as an expense in the period incurred. As at December 31, 2021 and 2020, the Company does not have any qualifying assets under construction. |
Accounting Policy: | The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise: • fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; • variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; • the amount expected to be payable by the lessee under residual value guarantees; • the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and • payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: • the lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. • the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). • a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 16 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | The right-of-use assets comprise of the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on borrowing costs. |
Accounting Policy: | At each statement of financial position date, the Company reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where the asset does not generate independent cash inflows, the Company estimates the recoverable amount of the cash generating unit (“CGU”) to which the asset belongs.
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The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 17 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Estimates and Judgments: | Indications of Impairment and Reversal of Impairment Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s property, plant and equipment and mining interests are impaired or previous impairments should be reversed. External sources of information management considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of its property, plant and equipment and mining interests. Internal sources of information management considers includes the manner in which mining properties and plant and equipment are being used or are expected to be used and indications of economic performance of the assets. For exploration and evaluation assets, indications include but are not limited to expiration of the right to explore, substantive expenditure in the specific area is neither budgeted nor planned, and if the entity has decided to discontinue exploration activity in the specific area. The Company did not identify any indicators of potential impairment or impairment reversal on its non-current assets and CGUs during the years ended December 31, 2021 and 2020. Fair Value Estimates In determining the recoverable amounts of the Company’s property, plant and equipment and mining interests, management makes estimates of the discounted future cash flows expected to be derived from the Company’s mining properties, costs of disposal of the mining properties and the appropriate discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future capital expenditures, reductions in the amount of recoverable reserves, resources, and exploration potential, and/or adverse current economics can result in an impairment of the carrying amounts of the Company’s non-current assets. Conversely, favourable changes to the aforementioned factors can result in a reversal of previous impairments. |
Accounting Policy: | Employees (including directors and officers) of the Company may receive a portion of their remuneration in the form of stock options which are share-based payment transactions (“share-based payments”). Stock options issued to employees are measured by reference to their fair value using the Black-Scholes model at the date on which they were granted. Forfeitures are estimated at grant date and adjusted prospectively based on actual forfeitures. Share-based payments expense, for stock options that are forfeited or cancelled prior to vesting, is reversed. The costs of share-based payments are recognized, together with a corresponding increase in the equity reserve, over the period in which the services and/or performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). On exercise by the employee, the associated option value in the equity reserve is reclassified to share capital. The Company adopted the 2019 LTIP to allow the Company to grant to its directors, employees and consultants non-transferable Restricted Share Units ("RSU's") based on the value of the Company's share price at the date of grant. Unless otherwise stated, the awards typically have a graded vesting schedule over a three-year period and can be settled either in cash or equity upon vesting at the discretion of the Company. The Company intends to settle all RSU's in equity. In situations where equity instruments are issued to non-employees, the share-based payments are measured at the fair value of goods or services received. If some or all of the goods or services received by the Company as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 18 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Estimates and Judgments: | Valuation of Share-based Payments The Company uses the Black-Scholes Option Pricing Model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves. |
Accounting Policy: | Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case they are recognized in other comprehensive income or directly in equity. Current income tax is based on taxable earnings for the year. The tax rates and tax laws to compute the amount payable are those that are substantively enacted in each tax regime at the date of the statement of financial position. Deferred income tax is recognized, using the liability method, on temporary differences between the carrying value of assets and liabilities in the statement of financial position, unused tax losses, unused tax credits and the corresponding tax bases used in the computation of taxable earnings, based on tax rates and tax laws that are substantively enacted at the date of the statement of financial position and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. |
Accounting Policy (continued): | Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, and interests in joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences to the extent that the realization of the related tax benefit through future taxable earnings is probable. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset the current tax assets against the current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 19 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Estimates and Judgments: | Recognition of Deferred Income Tax Assets In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax 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, management 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. Forecasted cash flows from operations are based on life of mine projections internally developed, reviewed by management and are consistent with the forecasts utilized for business planning and impairment testing purposes. Weight is attached to tax planning opportunities that are within the Company’s control, and are feasible and implementable without significant obstacles. The likelihood that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on individual facts and circumstances of the relevant tax position evaluated in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. At the end of each reporting period, the Company reassesses recognized and unrecognized income tax assets. |
Accounting Estimates and Judgments: | Tax Contingencies The Company’s operations involve dealing with uncertainties and judgments in the application of tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with tax authorities in various jurisdictions and resolution of disputes arising from tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these liabilities in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If the estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result. |
Accounting Policy: | Cash in the statement of financial position includes cash on hand and held at banks and cash equivalents include short-term guaranteed investment certificates redeemable within three months or less at the date of purchase. |
Accounting Estimates and Judgments: | Determination and classification of current and non-current restricted cash (Note 18) | |||||||
The Company determines if the funds on hand and held at banks meets the definition of cash or cash equivalents. When there is a restriction on those funds, the Company assesses the nature of the restriction and if it is applicable, excludes the related amounts from the cash and cash equivalents balance. The Company then assesses the classification of the restricted cash between current and non-current based on the following factors: •an asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the period; and •it expects to realize the asset within twelve months after the reporting period. The evaluation was performed based on the available information at the end of the reporting period; if there are changes in the circumstances the Company will reassess the classification. |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 20 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
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3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, all financial assets and financial liabilities are recorded at fair value, net of attributable transaction costs, except for financial assets and liabilities classified as at fair value through profit or loss (“FVTPL”). The directly attributable transaction costs of financial assets and liabilities classified as at FVTPL are expensed in the period in which they are incurred.
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Amortized cost Financial assets that meet the following conditions are measured subsequently at amortized cost: •the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and •the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. Interest income is recognized using the effective interest method. The Company's financial assets at amortized cost primarily include cash and cash equivalents, trade and other receivables and value added taxes receivable included in other current and non-current financial assets in the Consolidated Statement of Financial Position. Fair value through other comprehensive income ("FVTOCI") Financial assets that meet the following conditions are measured at FVTOCI: •The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and •The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has designated certain investments in marketable securities that are not held for trading as FVTOCI (Note 14). On initial recognition, the Company may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination. Investments in equity instruments at FVTOCI are initially measured 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 OCI. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity instrument, instead, it is transferred to retained earnings. |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 21 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | Financial assets measured subsequently at fair value through profit or loss (“FVTPL”) By default, all other financial assets, including derivatives, are measured subsequently at FVTPL. The Company, at initial recognition, may also irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are not part of a designated hedging relationship. Fair value is determined in the manner described in Note 25. The Company's financial assets at FVTPL include its account receivable arising from sales of metal contained in concentrates. |
Financial liabilities and equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for trading or designated as FVTPL, are measured at amortized cost using the effective interest method. The Company's financial liabilities at amortized cost primarily include trade and other payables, debt facilities (Note 20) and lease liabilities (Note 21). |
Accounting Policy: | Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate of the obligation can be made. The amount recognized as a provision is the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as finance costs. |
Accounting Estimates and Judgments: | Estimated Reclamation and Closure Costs The Company’s provision for decommissioning liabilities represents management’s best estimate of the present value of the future cash outflows required to settle estimated reclamation and closure costs at the end of the mine’s life. The provision reflects estimates of future costs, inflation, movements in foreign exchange rates and assumptions of risks associated with the future cash outflows, and the applicable risk-free interest rates for discounting the future cash outflows. Changes in the above factors can result in a change to the provision recognized by the Company. Changes to reclamation and closure cost obligations are recorded with a corresponding change to the carrying amounts of related mining properties. Adjustments to the carrying amounts of related mining properties can result in a change to future depletion expense. |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 22 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
Accounting Policy: | Basic earnings or loss per share for the period is calculated by dividing the earnings or loss attributable to equity holders of the Company by the weighted average number of shares outstanding during the reporting period. Diluted earnings or loss per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potentially dilutive share equivalents, such as stock options, restricted share units, convertible debt and share purchase warrants. Diluted earnings or loss per share is calculated using the treasury stock method and assumes the receipt of proceeds upon exercise of the options with exercise prices below the average market price to determine the number of shares assumed to be purchased at the average market price during the period. |
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgments—Disclosure of Accounting Policies
The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 23 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 24 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 25 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Total Consideration | ||||||||
26,719,727 Consideration Shares issued to Sprott Mining with an accounting fair value of $15.59 per share(1) | $416,561 | |||||||
1,705,514 Private Placement Shares issued to Sprott Mining with an accounting fair value of $15.59 per share(1) | 26,589 | |||||||
5,000,000 Consideration Warrants issued to Sprott Mining with an accounting fair value of $4.63 per warrant(2) | 23,150 | |||||||
Estimated Triggered Tax Adjustment | 12,570 | |||||||
Total consideration | $478,870 |
Stock price (as of opening on April 30, 2021) | $15.59 | |||||||||||
Exercise price of Consideration Warrants | $20.00 | |||||||||||
Term (years) | 3 | |||||||||||
Volatility | 55% | |||||||||||
Annual rate of quarterly dividends | 0% | |||||||||||
Discount rate - bond equivalent yield | 0.5% | |||||||||||
Total fair value of warrants | $23,150 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 26 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Allocation of Purchase Price | ||||||||||||||
Preliminary as reported June 30, 2021 | Adjustments | Revised as reported December 31, 2021 | ||||||||||||
Cash and cash equivalents | $1,025 | $0 | $1,025 | |||||||||||
Inventories | 19,304 | 0 | 19,304 | |||||||||||
Trade and other receivables | 135 | (63 | ) | 72 | ||||||||||
Other financial assets | 3,581 | 0 | 3,581 | |||||||||||
Prepaid expenses | 1,662 | 62 | 1,724 | |||||||||||
Restricted cash(1) | 96,985 | 0 | 96,985 | |||||||||||
Mining interest | 409,930 | 22,729 | 432,659 | |||||||||||
Property, plant and equipment | 224,034 | (48,307 | ) | 175,727 | ||||||||||
Deposit on non-current assets | 128 | 0 | 128 | |||||||||||
Trade and other payables | (27,159 | ) | 3,974 | (23,185 | ) | |||||||||
Lease liabilities(3) | (2,194 | ) | 0 | (2,194 | ) | |||||||||
Income taxes payable | (47,185 | ) | 1,866 | (45,319 | ) | |||||||||
Contingent environmental provision(2) | (17,900 | ) | 17,900 | 0 | ||||||||||
Decommissioning liabilities(2) | (87,705 | ) | 16,570 | (71,135 | ) | |||||||||
Deferred tax liabilities | (98,186 | ) | (12,316 | ) | (110,502 | ) | ||||||||
Net assets acquired | $476,455 | $2,415 | $478,870 |
Short-term and long-term gold price | $1,750 | |||||||
Discount rate | 5.1% | |||||||
Mine life (years) | 11 | |||||||
Average gold grade over life of mine | 6.0 g/t | |||||||
Average gold recovery rate | 86% |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 27 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, 2021 and 2020 | Revenue | Cost of sales | Depletion, depreciation, and amortization | Mine operating earnings (loss) | Capital expenditures | ||||||||||||||||||||||||||||||||||||
Mexico | |||||||||||||||||||||||||||||||||||||||||
San Dimas | 2021 | $275,463 | $132,550 | $44,859 | $98,054 | $56,385 | |||||||||||||||||||||||||||||||||||
2020 | 217,576 | 110,782 | 33,738 | 73,056 | 43,772 | ||||||||||||||||||||||||||||||||||||
Santa Elena | 2021 | 117,303 | 77,126 | 17,536 | 22,641 | 67,453 | |||||||||||||||||||||||||||||||||||
2020 | 76,051 | 52,990 | 10,472 | 12,589 | 33,739 | ||||||||||||||||||||||||||||||||||||
La Encantada | 2021 | 81,738 | 45,350 | 8,123 | 28,265 | 11,355 | |||||||||||||||||||||||||||||||||||
2020 | 73,632 | 37,794 | 8,265 | 27,573 | 10,733 | ||||||||||||||||||||||||||||||||||||
Non-producing Properties | 2021 | 0 | 0 | 418 | (418) | 1,977 | |||||||||||||||||||||||||||||||||||
2020 | 183 | 1,362 | 848 | (2,027) | 4,338 | ||||||||||||||||||||||||||||||||||||
United States | |||||||||||||||||||||||||||||||||||||||||
Jerritt Canyon | 2021 | 123,808 | 117,324 | 43,511 | (37,027) | 46,408 | |||||||||||||||||||||||||||||||||||
2020 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Others(1) | 2021 | 10,882 | 6,073 | 2,166 | 2,643 | 36,190 | |||||||||||||||||||||||||||||||||||
2020 | 2,251 | 4,173 | 1,082 | (3,004) | 32,453 | ||||||||||||||||||||||||||||||||||||
Intercompany elimination(2) | 2021 | (25,077) | (12,338) | 0 | (12,739) | 0 | |||||||||||||||||||||||||||||||||||
2020 | (5,817) | (2,684) | 0 | (3,133) | 0 | ||||||||||||||||||||||||||||||||||||
Consolidated | 2021 | $584,117 | $366,085 | $116,613 | $101,419 | $219,768 | |||||||||||||||||||||||||||||||||||
2020 | $363,876 | $204,417 | $54,405 | $105,054 | $125,036 |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 28 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
At December 31, 2021 and 2020 | Mining Interests | Property, plant and equipment | Total mining assets | Total assets | Total liabilities | ||||||||||||||||||||||||||||||||||||||||||
Producing | Exploration | ||||||||||||||||||||||||||||||||||||||||||||||
Mexico | |||||||||||||||||||||||||||||||||||||||||||||||
San Dimas | 2021 | $213,526 | $29,186 | $105,473 | $348,185 | $495,479 | $119,764 | ||||||||||||||||||||||||||||||||||||||||
2020 | 204,592 | 17,179 | 112,105 | 333,876 | 439,145 | 105,462 | |||||||||||||||||||||||||||||||||||||||||
Santa Elena | 2021 | 97,271 | 31,067 | 64,843 | 193,181 | 257,244 | 66,795 | ||||||||||||||||||||||||||||||||||||||||
2020 | 52,892 | 33,951 | 49,245 | 136,088 | 166,525 | 33,467 | |||||||||||||||||||||||||||||||||||||||||
La Encantada | 2021 | 25,827 | 4,640 | 20,680 | 51,147 | 114,634 | 35,245 | ||||||||||||||||||||||||||||||||||||||||
2020 | 25,865 | 2,955 | 16,555 | 45,375 | 99,185 | 29,354 | |||||||||||||||||||||||||||||||||||||||||
Non-producing Properties | 2021 | 106,215 | 38,752 | 27,180 | 172,147 | 215,725 | 31,760 | ||||||||||||||||||||||||||||||||||||||||
2020 | 108,837 | 37,004 | 29,888 | 175,730 | 219,109 | 40,274 | |||||||||||||||||||||||||||||||||||||||||
United States | |||||||||||||||||||||||||||||||||||||||||||||||
Jerritt Canyon | 2021 | 362,811 | 104,431 | 172,857 | 640,099 | 733,725 | 233,484 | ||||||||||||||||||||||||||||||||||||||||
2020 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
Others | 2021 | 0 | 34,804 | 58,204 | 93,008 | 308,182 | 226,970 | ||||||||||||||||||||||||||||||||||||||||
2020 | 0 | 26,455 | 50,427 | 76,882 | 313,553 | 178,724 | |||||||||||||||||||||||||||||||||||||||||
Consolidated | 2021 | $805,649 | $242,881 | $449,237 | $1,497,767 | $2,124,989 | $714,018 | ||||||||||||||||||||||||||||||||||||||||
2020 | $392,185 | $117,545 | $258,220 | $767,950 | $1,237,517 | $387,281 |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 29 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | ||||||||||||||||
Gross revenue from payable metals: | |||||||||||||||||
Silver | $307,304 | 52 | % | $242,338 | 66 | % | |||||||||||
Gold | 279,921 | 48 | % | 124,264 | 34 | % | |||||||||||
Lead | 0 | 0 | % | 74 | 0 | % | |||||||||||
Gross revenue | 587,225 | 100 | % | 366,676 | 100 | % | |||||||||||
Less: smelting and refining costs | (3,108) | (2,800) | |||||||||||||||
Revenues | $584,117 | $363,876 |
The accompanying notes are an integral part of the audited consolidated financial statements |
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First Majestic Silver Corp. 2021 Annual Report | Page 30 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Consumables and materials | $78,463 | $36,760 | |||||||||||||||||||||
Labour costs | 194,846 | 103,075 | |||||||||||||||||||||
Energy | 42,881 | 25,075 | |||||||||||||||||||||
Other costs | 27,011 | 11,275 | |||||||||||||||||||||
Production costs | $343,201 | $176,185 | |||||||||||||||||||||
Transportation and other selling costs | 2,739 | 2,288 | |||||||||||||||||||||
Workers participation costs | 15,939 | 14,245 | |||||||||||||||||||||
Environmental duties and royalties | 5,835 | 2,010 | |||||||||||||||||||||
Inventory changes | (2,304) | (423) | |||||||||||||||||||||
Other | 675 | 0 | |||||||||||||||||||||
Cost of Sales | $366,085 | $194,305 | |||||||||||||||||||||
Cost of Sales - Standby Costs(1) | $0 | $10,112 |
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Corporate administration | $7,806 | $5,012 | ||||||||||||
Salaries and benefits | 11,636 | 11,271 | ||||||||||||
Audit, legal and professional fees | 4,619 | 5,353 | ||||||||||||
Filing and listing fees | 506 | 499 | ||||||||||||
Directors fees and expenses | 826 | 842 | ||||||||||||
Depreciation | 1,670 | 1,878 | ||||||||||||
$27,063 | $24,855 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 31 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Del Toro | $3,385 | $7,999 | ||||||||||||
La Parrilla | 3,278 | 5,563 | ||||||||||||
San Martin | 2,597 | 5,265 | ||||||||||||
La Guitarra | 2,796 | 2,757 | ||||||||||||
$12,056 | $21,583 |
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
(Loss) gain from investment in marketable securities (Note 14(a)) | ($2,054) | $1,973 | ||||||||||||
Loss on write-down of plant and equipment(1)(2) | (2,501) | 0 | ||||||||||||
Gain from investment in silver futures derivatives | 532 | 2,079 | ||||||||||||
Interest income and other | 1,075 | 1,075 | ||||||||||||
($2,948) | $5,127 |
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Debt facilities(1) (Note 20) | $10,541 | $10,593 | ||||||||||||
Lease liabilities (Note 21) | 2,013 | 1,479 | ||||||||||||
Loss on settlement of senior convertible note(2) (Note 20(a)) | 4,642 | 0 | ||||||||||||
Accretion of decommissioning liabilities | 3,228 | 2,362 | ||||||||||||
Silver sales and other | 580 | 339 | ||||||||||||
$21,004 | $14,773 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 32 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Net (loss) earnings for the year | ($4,923) | $23,087 | ||||||||||||
Weighted average number of shares on issue - basic | 244,749,772 | 213,879,622 | ||||||||||||
Impact of effect on dilutive securities: | ||||||||||||||
Stock options | 0 | 1,705,689 | ||||||||||||
Restricted, performance and deferred share units | 0 | 293,518 | ||||||||||||
Weighted average number of shares on issue - diluted(1) | 244,749,772 | 215,878,829 | ||||||||||||
(Loss) earnings per share - basic and diluted | ($0.02) | $0.11 |
December 31, 2021 | December 31, 2020 | ||||||||||
Finished goods - doré | $3,735 | $2,812 | |||||||||
Work-in-process | 6,409 | 2,780 | |||||||||
Stockpile | 9,015 | 1,336 | |||||||||
Silver coins and bullion | 10,790 | 956 | |||||||||
Materials and supplies | 30,664 | 24,628 | |||||||||
$60,613 | $32,512 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 33 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
December 31, 2021 | December 31, 2020 | ||||||||||
FVTPL marketable securities (a) | $10,851 | $13,876 | |||||||||
FVTOCI marketable securities (b) | 15,635 | 22,443 | |||||||||
Total other financial assets | $26,486 | $36,319 |
December 31, 2021 | December 31, 2020 | ||||||||||
Depletable properties | $805,649 | $392,185 | |||||||||
Non-depletable properties (exploration and evaluation costs, exploration potential) | 242,881 | 117,545 | |||||||||
$1,048,530 | $509,730 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 34 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Depletable properties | San Dimas | Santa Elena | La Encantada | Jerritt Canyon | Non-producing Properties(1) | Total | |||||||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||||||||||||
At December 31, 2019 | $220,658 | $61,654 | $111,590 | $0 | $494,132 | $888,034 | |||||||||||||||||||||||||||||
Additions | 21,263 | 6,218 | 4,201 | 0 | 0 | 31,682 | |||||||||||||||||||||||||||||
Change in decommissioning liabilities (Note 22) | 4,527 | 1,191 | 2,049 | 0 | 3,059 | 10,826 | |||||||||||||||||||||||||||||
Transfer from exploration properties | 3,645 | 4,229 | 472 | 0 | 0 | 8,346 | |||||||||||||||||||||||||||||
At December 31, 2020 | $250,093 | $73,292 | $118,312 | $0 | $497,191 | $938,888 | |||||||||||||||||||||||||||||
Additions | 34,894 | 16,150 | 2,546 | 16,618 | 0 | 70,208 | |||||||||||||||||||||||||||||
Acquisition of Jerritt Canyon (Note 4) | 0 | 0 | 0 | 340,652 | 0 | 340,652 | |||||||||||||||||||||||||||||
Change in decommissioning liabilities (Note 22) | 1,209 | 2,177 | 584 | 28,799 | (2,623) | 30,147 | |||||||||||||||||||||||||||||
Transfer from exploration properties | 0 | 34,302 | 1,293 | 0 | 0 | 35,595 | |||||||||||||||||||||||||||||
At December 31, 2021 | $286,196 | $125,921 | $122,735 | $386,069 | $494,569 | $1,415,490 | |||||||||||||||||||||||||||||
Accumulated depletion, amortization and impairment | |||||||||||||||||||||||||||||||||||
At December 31, 2019 | ($27,225) | ($16,608) | ($88,499) | $0 | ($388,354) | ($520,686) | |||||||||||||||||||||||||||||
Depletion and amortization | (18,277) | (3,792) | (3,948) | 0 | 0 | (26,017) | |||||||||||||||||||||||||||||
At December 31, 2020 | ($45,502) | ($20,400) | ($92,447) | $0 | ($388,354) | ($546,703) | |||||||||||||||||||||||||||||
Depletion and amortization | (27,169) | (8,250) | (4,461) | (23,258) | 0 | (63,138) | |||||||||||||||||||||||||||||
At December 31, 2021 | ($72,671) | ($28,650) | ($96,908) | ($23,258) | ($388,354) | ($609,841) | |||||||||||||||||||||||||||||
Carrying values | |||||||||||||||||||||||||||||||||||
At December 31, 2020 | $204,592 | $52,892 | $25,865 | $0 | $108,837 | $392,185 | |||||||||||||||||||||||||||||
At December 31, 2021 | $213,526 | $97,271 | $25,827 | $362,811 | $106,215 | $805,649 |
Non-depletable properties | San Dimas(a) | Santa Elena(b) | La Encantada | Jerritt Canyon(c) | Non-producing Properties(1) | Exploration Projects(2) | Springpole Stream(d) | Total | |||||||||||||||||||||||||||||||||||||||
At December 31, 2019 | $8,699 | $18,592 | $1,104 | $0 | $32,938 | $34,710 | $0 | $96,043 | |||||||||||||||||||||||||||||||||||||||
Exploration and evaluation expenditures | 12,125 | 19,588 | 2,323 | 0 | 4,066 | 1,142 | 4,356 | 43,601 | |||||||||||||||||||||||||||||||||||||||
Change in decommissioning liabilities (Note 22) | 0 | 0 | 0 | 0 | 0 | 59 | 0 | 59 | |||||||||||||||||||||||||||||||||||||||
Sale of exploration project | 0 | 0 | 0 | 0 | 0 | (13,812) | 0 | (13,812) | |||||||||||||||||||||||||||||||||||||||
Transfer to producing properties | (3,645) | (4,229) | (472) | 0 | 0 | 0 | 0 | (8,346) | |||||||||||||||||||||||||||||||||||||||
At December 31, 2020 | $17,179 | $33,951 | $2,955 | $0 | $37,004 | $22,099 | $4,356 | $117,545 | |||||||||||||||||||||||||||||||||||||||
Exploration and evaluation expenditures | 12,007 | 31,418 | 2,978 | 12,424 | 1,748 | 985 | 7,500 | 69,060 | |||||||||||||||||||||||||||||||||||||||
Change in decommissioning liabilities (Note 22) | 0 | 0 | 0 | 0 | 0 | (136) | 0 | (136) | |||||||||||||||||||||||||||||||||||||||
Acquisition of Jerritt Canyon (Note 4) | 0 | 0 | 0 | 92,007 | 0 | 0 | 0 | 92,007 | |||||||||||||||||||||||||||||||||||||||
Transfer to producing properties | 0 | (34,302) | (1,293) | 0 | 0 | 0 | 0 | (35,595) | |||||||||||||||||||||||||||||||||||||||
At December 31, 2021 | $29,186 | $31,067 | $4,640 | $104,431 | $38,752 | $22,948 | $11,856 | $242,881 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 35 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
15. MINING INTERESTS (continued)
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 36 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
15. MINING INTERESTS (continued)
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 37 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Land and Buildings(1) | Machinery and Equipment | Assets under Construction(2)(3) | Other | Total | |||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||||||
At December 31, 2019 | $198,412 | $456,655 | $27,645 | $24,438 | $707,150 | ||||||||||||||||||||||||
Additions | 0 | 2,096 | 47,266 | 391 | 49,753 | ||||||||||||||||||||||||
Transfers and disposals | 917 | 9,873 | (19,242) | 3,822 | (4,630) | ||||||||||||||||||||||||
At December 31, 2020 | $199,329 | $468,624 | $55,669 | $28,651 | $752,273 | ||||||||||||||||||||||||
Additions | 34 | 2,974 | 77,151 | 341 | 80,500 | ||||||||||||||||||||||||
Acquisition of Jerritt Canyon (Note 4) | 32,992 | 137,219 | 4,337 | 1,179 | 175,727 | ||||||||||||||||||||||||
Transfers and disposals | 12,602 | 15,645 | (46,706) | 3,412 | (15,047) | ||||||||||||||||||||||||
At December 31, 2021 | $244,957 | $624,462 | $90,451 | $33,583 | $993,453 | ||||||||||||||||||||||||
Accumulated depreciation, amortization and impairment | |||||||||||||||||||||||||||||
At December 31, 2019 | ($129,040) | ($326,300) | $0 | ($15,171) | ($470,511) | ||||||||||||||||||||||||
Depreciation and amortization | (4,188) | (19,833) | 0 | (2,555) | (26,576) | ||||||||||||||||||||||||
Transfers and disposals | 72 | 2,754 | 0 | 208 | 3,034 | ||||||||||||||||||||||||
At December 31, 2020 | ($133,156) | ($343,379) | $0 | ($17,518) | ($494,053) | ||||||||||||||||||||||||
Depreciation and amortization | (13,923) | (33,137) | 0 | (2,899) | (49,959) | ||||||||||||||||||||||||
Transfers and disposals | 0 | 1,637 | 0 | 240 | 1,877 | ||||||||||||||||||||||||
Loss on disposal of equipment | 0 | 0 | 0 | (2,081) | (2,081) | ||||||||||||||||||||||||
At December 31, 2021 | ($147,079) | ($374,879) | $0 | ($22,258) | ($544,216) | ||||||||||||||||||||||||
Carrying values | |||||||||||||||||||||||||||||
At December 31, 2020 | $66,173 | $125,245 | $55,669 | $11,133 | $258,220 | ||||||||||||||||||||||||
At December 31, 2021 | $97,878 | $249,583 | $90,451 | $11,325 | $449,237 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 38 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
16. PROPERTY, PLANT AND EQUIPMENT (continued)
Property, plant and equipment, including land and buildings, machinery and equipment, assets under construction and other assets above are allocated by mine as follow:
San Dimas | Santa Elena | La Encantada | Jerritt Canyon | Non-producing Properties(1) | Other | Total | |||||||||||||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||||||||||||||||||
At December 31, 2019 | $136,303 | $90,762 | $137,302 | $0 | $297,240 | $45,543 | $707,150 | ||||||||||||||||||||||||||||||||||
Additions | 10,384 | 7,933 | 4,209 | 0 | 272 | 26,955 | 49,753 | ||||||||||||||||||||||||||||||||||
Transfers and disposals | 41 | (1,364) | 1,999 | 0 | (3,751) | (1,555) | (4,630) | ||||||||||||||||||||||||||||||||||
At December 31, 2020 | $146,728 | $97,331 | $143,510 | $0 | $293,761 | $70,943 | $752,273 | ||||||||||||||||||||||||||||||||||
Additions(2) | 9,484 | 19,885 | 5,831 | 17,366 | 229 | 27,705 | 80,500 | ||||||||||||||||||||||||||||||||||
Acquisition of Jerritt Canyon (Note 4) | 0 | 0 | 0 | 175,727 | 0 | 0 | 175,727 | ||||||||||||||||||||||||||||||||||
Transfers and disposals | 2,316 | 5,381 | 1,377 | (8) | (8,184) | (15,929) | (15,047) | ||||||||||||||||||||||||||||||||||
At December 31, 2021 | $158,528 | $122,597 | $150,718 | $193,085 | $285,806 | $82,719 | $993,453 | ||||||||||||||||||||||||||||||||||
Accumulated depreciation, amortization and impairment | |||||||||||||||||||||||||||||||||||||||||
At December 31, 2019 | ($19,747) | ($42,975) | ($122,566) | $0 | ($266,190) | ($19,033) | ($470,511) | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | (15,032) | (6,451) | (2,646) | 0 | (592) | (1,855) | (26,576) | ||||||||||||||||||||||||||||||||||
Transfers and disposals | 156 | 1,340 | (1,743) | 0 | 2,909 | 372 | 3,034 | ||||||||||||||||||||||||||||||||||
At December 31, 2020 | ($34,623) | ($48,086) | ($126,955) | $0 | ($263,873) | ($20,516) | ($494,053) | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | (17,801) | (6,997) | (2,259) | (20,228) | (266) | (2,408) | (49,959) | ||||||||||||||||||||||||||||||||||
Transfers and disposals | (631) | (2,671) | (824) | 0 | 5,513 | 490 | 1,877 | ||||||||||||||||||||||||||||||||||
Write-down on assets held-for-sale | 0 | 0 | 0 | 0 | 0 | (2,081) | (2,081) | ||||||||||||||||||||||||||||||||||
At December 31, 2021 | ($53,055) | ($57,754) | ($130,038) | ($20,228) | ($258,626) | ($24,515) | ($544,216) | ||||||||||||||||||||||||||||||||||
Carrying values | |||||||||||||||||||||||||||||||||||||||||
At December 31, 2020 | $112,105 | $49,245 | $16,555 | $0 | $29,888 | $50,427 | $258,220 | ||||||||||||||||||||||||||||||||||
At December 31, 2021 | $105,473 | $64,843 | $20,680 | $172,857 | $27,180 | $58,204 | $449,237 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 39 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Land and Buildings | Machinery and Equipment | Other | Total | ||||||||||||||||||||
At December 31, 2019 | $4,207 | $7,812 | $15 | $12,034 | |||||||||||||||||||
Additions | 1,939 | 554 | 0 | 2,494 | |||||||||||||||||||
Remeasurements | 2,789 | (10) | 0 | 2,779 | |||||||||||||||||||
Depreciation and amortization | (848) | (2,106) | (7) | (2,961) | |||||||||||||||||||
Disposals | 0 | (16) | 0 | (16) | |||||||||||||||||||
At December 31, 2020 | $8,087 | $6,234 | $8 | $14,330 | |||||||||||||||||||
Additions | 1,294 | 17,560 | 0 | 18,854 | |||||||||||||||||||
Remeasurements | 363 | 1,668 | 0 | 2,031 | |||||||||||||||||||
Depreciation and amortization | (1,325) | (4,520) | (7) | (5,851) | |||||||||||||||||||
Disposals | (117) | (23) | — | (139) | |||||||||||||||||||
At December 31, 2021 | $8,302 | $20,921 | $2 | $29,225 |
December 31, 2021 | December 31, 2020 | ||||||||||
Nevada Division of Environmental Protection bond(1) | $39,727 | $0 | |||||||||
Chartis Commutation Account(2) | 27,275 | 0 | |||||||||
SAT Primero tax dispute(3) | 48,010 | 0 | |||||||||
$115,012 | $0 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 40 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
December 31, 2021 | December 31, 2020 | ||||||||||
Trade payables | $41,827 | $31,262 | |||||||||
Trade related accruals | 30,621 | 18,635 | |||||||||
Payroll and related benefits | 28,162 | 21,427 | |||||||||
Estimated Triggered Tax Adjustment and Working Capital Adjustment payable, net (Note 4) | 12,570 | 0 | |||||||||
NSR royalty liabilities (Notes 15(b)(c)) | 1,147 | 0 | |||||||||
Environmental duty and net mineral sales proceeds tax | 3,281 | 2,156 | |||||||||
Other accrued liabilities | 3,058 | 2,522 | |||||||||
$120,666 | $76,002 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 41 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Convertible Debentures (a) | Revolving Credit Facility (b) | Total | ||||||||||||||||||
Balance at December 31, 2019 | $136,607 | $19,211 | $155,818 | |||||||||||||||||
Finance costs | ||||||||||||||||||||
Interest expense | 2,984 | 763 | 3,747 | |||||||||||||||||
Accretion | 6,168 | 678 | 6,846 | |||||||||||||||||
Proceeds from drawdown of revolving credit facility | 0 | 10,000 | 10,000 | |||||||||||||||||
Repayments of principal | 0 | (19,969) | (19,969) | |||||||||||||||||
Payments of finance costs | (2,934) | (800) | (3,734) | |||||||||||||||||
Balance at December 31, 2020 | $142,825 | $9,883 | $152,708 | |||||||||||||||||
Gross proceeds from debt financing | $230,000 | $0 | $230,000 | |||||||||||||||||
Portion allocated to equity reserves from debt financing | (42,340) | 0 | ($42,340) | |||||||||||||||||
Finance costs | ||||||||||||||||||||
Interest expense | 2,846 | 537 | 3,383 | |||||||||||||||||
Accretion | 6,809 | 349 | 7,158 | |||||||||||||||||
Proceeds from drawdown of revolving credit facility | 0 | 30,000 | 30,000 | |||||||||||||||||
Repayments of principal | (125,576) | (40,000) | (165,576) | |||||||||||||||||
Conversion of senior convertible notes to common shares | (23,230) | 0 | (23,230) | |||||||||||||||||
Transaction costs | (7,224) | (101) | (7,325) | |||||||||||||||||
Payments of finance costs | (2,932) | (612) | (3,544) | |||||||||||||||||
Balance at December 31, 2021 | $181,178 | $56 | $181,234 | |||||||||||||||||
Statements of Financial Position Presentation | ||||||||||||||||||||
Current portion of debt facilities | $1,092 | $9,883 | $10,975 | |||||||||||||||||
Non—current portion of debt facilities | 141,733 | 0 | 141,733 | |||||||||||||||||
Balance at December 31, 2020 | $142,825 | $9,883 | $152,708 | |||||||||||||||||
Current portion of debt facilities | $69 | $56 | $125 | |||||||||||||||||
Non—current portion of debt facilities | 181,108 | 0 | 181,108 | |||||||||||||||||
Balance at December 31, 2021 | $181,178 | $56 | $181,234 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 42 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 43 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The Company may not redeem the Notes before January 20, 2025 except in the event of certain changes in Canadian tax law. At any time on or after January 20, 2025 and until maturity, the Company may redeem all or part of the Notes for cash if the last reported share price of the Company’s common shares for 20 or more trading days in a period of 30 consecutive trading days exceeds 130% of the conversion price in effect on each such trading day. The redemption price is equal to the sum of: (i) 100% of the principal amount of the Notes to be redeemed and (ii) accrued and unpaid interest, if any, to the redemption date.
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 44 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 45 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The movement in lease liabilities during the year ended December 31, 2021 and year ended December 31, 2020 are comprised of the following:
Finance Leases | Operating Leases(a) | Equipment Financing(b) | Total | ||||||||||||||||||||
Balance at December 31, 2019 | $50 | $18,951 | $2,935 | $21,936 | |||||||||||||||||||
Additions | 0 | 2,494 | 0 | 2,494 | |||||||||||||||||||
Remeasurements | 0 | 2,779 | 0 | 2,779 | |||||||||||||||||||
Finance costs | 0 | 1,396 | 83 | 1,479 | |||||||||||||||||||
Repayments of principal | (50) | (5,353) | (2,303) | (7,706) | |||||||||||||||||||
Payments of finance costs | 0 | 0 | (126) | (126) | |||||||||||||||||||
Foreign exchange gain | 0 | (281) | 0 | (281) | |||||||||||||||||||
Balance at December 31, 2020 | $0 | $19,986 | $589 | $20,575 | |||||||||||||||||||
Acquisition of Jerritt Canyon (Note 4) | 2,194 | 0 | 0 | 2,194 | |||||||||||||||||||
Additions | 4,001 | 18,854 | 0 | 22,855 | |||||||||||||||||||
Remeasurements | 0 | 2,031 | 0 | 2,031 | |||||||||||||||||||
Disposals | 0 | (150) | 0 | (150) | |||||||||||||||||||
Finance costs | 89 | 1,915 | 9 | 2,013 | |||||||||||||||||||
Repayments of principal | (942) | (7,824) | (521) | (9,287) | |||||||||||||||||||
Payments of finance costs | (89) | 0 | (13) | (102) | |||||||||||||||||||
Foreign exchange gain | 0 | (268) | 0 | (268) | |||||||||||||||||||
Balance at December 31, 2021 | $5,253 | $34,544 | $64 | $39,861 | |||||||||||||||||||
Statements of Financial Position Presentation | |||||||||||||||||||||||
Current portion of lease liabilities | $0 | $4,820 | $538 | $5,358 | |||||||||||||||||||
Non-current portion of lease liabilities | 0 | 15,166 | 51 | 15,217 | |||||||||||||||||||
Balance at December 31, 2020 | $0 | $19,986 | $589 | $20,575 | |||||||||||||||||||
Current portion of lease liabilities | $2,165 | $9,596 | $64 | $11,825 | |||||||||||||||||||
Non-current portion of lease liabilities | 3,088 | 24,948 | 0 | 28,036 | |||||||||||||||||||
Balance at December 31, 2021 | $5,253 | $34,544 | $64 | $39,861 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 46 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||||||||
Expenses relating to variable lease payments not included in the measurement of lease liability | $109,565 | $25,560 | ||||||||||||
Expenses relating to short-term leases | 41,283 | 19,607 | ||||||||||||
Expenses relating to low value leases | 5 | 81 | ||||||||||||
$150,853 | $45,248 |
(b) Equipment financing
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 47 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
San Dimas | Santa Elena | La Encantada | Jerritt Canyon | San Martin | La Parrilla | Del Toro | La Guitarra | La Luz | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $9,442 | $4,971 | $8,112 | $0 | $7,103 | $4,337 | $3,769 | $2,178 | $616 | $40,528 | |||||||||||||||||||||||||||||||||||||||||||||||||
Movements during the year: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposition of exploration project | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (153) | 0 | (153) | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in rehabilitation provision | 4,527 | 1,191 | 2,049 | 0 | 1,240 | 830 | 772 | 217 | 59 | 10,885 | |||||||||||||||||||||||||||||||||||||||||||||||||
Reclamation costs incurred | 0 | (55) | 0 | 0 | (81) | (20) | 0 | 0 | 0 | (156) | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest or accretion expense | 565 | 295 | 477 | 0 | 418 | 259 | 226 | 122 | 0 | 2,362 | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange loss | (475) | (252) | (415) | 0 | (359) | (216) | (190) | (86) | (2) | (1,995) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $14,059 | $6,150 | $10,223 | $0 | $8,321 | $5,190 | $4,577 | $2,278 | $673 | $51,471 | |||||||||||||||||||||||||||||||||||||||||||||||||
Movements during the year: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Jerritt Canyon | 0 | 0 | 0 | 71,135 | 0 | 0 | 0 | 0 | 0 | 71,135 | |||||||||||||||||||||||||||||||||||||||||||||||||
Change in rehabilitation provision | 1,209 | 2,177 | 584 | 28,799 | (1,435) | (900) | (565) | 278 | (137) | 30,010 | |||||||||||||||||||||||||||||||||||||||||||||||||
Reclamation costs incurred | 0 | 0 | 0 | (186) | (339) | (17) | (64) | 0 | 0 | (606) | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest or accretion expense | 715 | 313 | 521 | 642 | 424 | 264 | 234 | 115 | 0 | 3,228 | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange (loss) gain | (454) | (199) | (333) | 0 | (264) | (169) | (148) | (73) | 9 | (1,631) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $15,529 | $8,441 | $10,995 | $100,390 | $6,707 | $4,368 | $4,034 | $2,598 | $545 | $153,607 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 48 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Earnings before tax | $25,250 | $29,729 | ||||||||||||
Combined statutory tax rate | 27 | % | 27 | % | ||||||||||
Income tax expense computed at statutory tax rate | 6,818 | 8,027 | ||||||||||||
Reconciling items: | ||||||||||||||
Effect of different foreign statutory tax rates on earnings of subsidiaries | 4,962 | (4,760) | ||||||||||||
Impact of foreign exchange on deferred income tax assets and liabilities | (1,419) | 15,688 | ||||||||||||
Change in unrecognized deferred income tax asset | 14,100 | (4,596) | ||||||||||||
7.5% mining royalty in Mexico | 13,389 | 7,415 | ||||||||||||
Other non-deductible expenses | 15,491 | 758 | ||||||||||||
Impact of inflationary adjustments | (13,504) | (1,317) | ||||||||||||
Change in tax provision estimates | (945) | 10,387 | ||||||||||||
Impact of divestitures and restructurings | 102 | (16,724) | ||||||||||||
Other | (8,821) | (8,236) | ||||||||||||
Income tax expense | $30,173 | $6,642 | ||||||||||||
Statements of Earnings Presentation | ||||||||||||||
Current income tax expense | $49,283 | $9,966 | ||||||||||||
Deferred income tax recovery | (19,110) | (3,324) | ||||||||||||
Income tax expense | $30,173 | $6,642 | ||||||||||||
Effective tax rate | 119 | % | 22 | % |
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Current income tax payable | $27,980 | $6,574 | ||||||||||||
Non-current income tax payable | 21,812 | 23,099 | ||||||||||||
$49,792 | $29,673 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 49 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
During the years ended December 31, 2021 and 2020, the movement in deferred tax assets and deferred tax liabilities is shown as follows:
Deferred tax assets | Losses | Provisions | Deferred tax asset not recognized | Other | Total | ||||||||||||
At December 31, 2019 | $126,472 | $22,887 | ($100,504) | $8,845 | $57,700 | ||||||||||||
Benefit to statement of earnings | 21,327 | 2,389 | 11,788 | 456 | 35,960 | ||||||||||||
At December 31, 2020 | $147,799 | $25,276 | ($88,716) | $9,301 | $93,660 | ||||||||||||
Benefit (expense) to statement of earnings | 29,196 | 16,467 | (12,891) | 4,667 | 37,439 | ||||||||||||
Acquired from Jerritt Canyon | 10,275 | 0 | 0 | 2,801 | 13,076 | ||||||||||||
At December 31, 2021 | $187,270 | $41,743 | ($101,607) | $16,769 | $144,175 | ||||||||||||
Deferred tax liabilities | Property, plant and equipment and mining interests | Effect of Mexican tax deconsolidation | Other | Total | |||||||||||||
At December 31, 2019 | $33,001 | $4,429 | $33,045 | $70,475 | |||||||||||||
Expense (Benefit) to statement of earnings | 23,883 | (113) | (18,311) | 5,459 | |||||||||||||
Reclassed to current income taxes payable | 0 | (2,245) | 0 | (2,245) | |||||||||||||
Charged to OCI | 0 | 0 | 1,633 | 1,633 | |||||||||||||
Divestiture of exploration projects | 0 | 0 | (2,577) | (2,577) | |||||||||||||
At December 31, 2020 | $56,884 | $2,071 | $13,790 | $72,745 | |||||||||||||
Expense to statement of earnings | 12,186 | 84 | 6,059 | 18,329 | |||||||||||||
Reclassed to current income taxes payable | 0 | (1,549) | 0 | (1,549) | |||||||||||||
Acquired from Jerritt Canyon | 123,578 | 0 | 0 | 123,578 | |||||||||||||
Benefit to equity | 0 | 0 | 9,843 | 9,843 | |||||||||||||
Translation and other | 0 | 0 | (2,192) | (2,192) | |||||||||||||
At December 31, 2021 | $192,648 | $606 | $27,500 | $220,754 | |||||||||||||
Statements of Financial Position Presentation | |||||||||||||||||
Deferred tax assets | $69,644 | ||||||||||||||||
Deferred tax liabilities | 48,729 | ||||||||||||||||
At December 31, 2020 | ($20,915) | ||||||||||||||||
Deferred tax assets | $74,257 | ||||||||||||||||
Deferred tax liabilities | 150,836 | ||||||||||||||||
At December 31, 2021 | $76,579 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 50 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Non-capital losses | $239,175 | $207,853 | ||||||||||||
Capital losses | 10,619 | 0 | ||||||||||||
Accrued expenses | 78,754 | 25,513 | ||||||||||||
Mineral properties, plant and equipment | 44,300 | 55,460 | ||||||||||||
Other | 17,578 | 6,897 | ||||||||||||
$390,426 | $295,723 |
Year of expiry | Canadian non-capital losses | US non-capital losses | Mexican non-capital losses | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||
2022 | $0 | $0 | $4,025 | $4,025 | $3,835 | ||||||||||||||||||||||||
2023 | 0 | 0 | 2,052 | 2,052 | 3,878 | ||||||||||||||||||||||||
2024 | 0 | 0 | 37,355 | 37,355 | 2,071 | ||||||||||||||||||||||||
2025 | 0 | 0 | 41,286 | 41,286 | 34,964 | ||||||||||||||||||||||||
2026 | 0 | 0 | 108,513 | 108,513 | 38,901 | ||||||||||||||||||||||||
2027 | 0 | 0 | 11,579 | 11,579 | 104,044 | ||||||||||||||||||||||||
2028 | 0 | 0 | 55,852 | 55,852 | 21,040 | ||||||||||||||||||||||||
2029 | 0 | 0 | 75,381 | 75,381 | 57,809 | ||||||||||||||||||||||||
2030 | 0 | 0 | 153,152 | 153,152 | 68,074 | ||||||||||||||||||||||||
2031 and after | 11,113 | 14,334 | 57,889 | 83,336 | 152,862 | ||||||||||||||||||||||||
No expiry | 0 | 66,578 | 0 | 66,578 | 0 | ||||||||||||||||||||||||
Total | $11,113 | $80,912 | $547,084 | $639,109 | $487,478 | ||||||||||||||||||||||||
Unrecognized losses | $11,113 | $0 | $243,180 | $254,293 | $199,775 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 51 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, 2021 | Year Ended December 31, 2020 | ||||||||||||||||||||||
Number of Shares | Net Proceeds | Number of Shares | Net Proceeds | ||||||||||||||||||||
ATM program(1) | 4,225,000 | $66,674 | 5,654,338 | $67,896 | |||||||||||||||||||
Prospectus offering | 0 | 0 | 5,000,000 | 58,240 | |||||||||||||||||||
4,225,000 | $66,674 | 10,654,338 | $126,136 |
Options Outstanding | Options Exercisable | ||||||||||||||||||||||||||||||||||
Exercise prices (CAD$) | Number of Options | Weighted Average Exercise Price (CAD $/Share) | Weighted Average Remaining Life (Years) | Number of Options | Weighted Average Exercise Price (CAD $/Share) | Weighted Average Remaining Life (Years) | |||||||||||||||||||||||||||||
5.01 - 10.00 | 2,226,614 | 8.62 | 6.87 | 1,819,114 | 8.57 | 6.70 | |||||||||||||||||||||||||||||
10.01 - 15.00 | 1,369,993 | 13.62 | 8.19 | 537,120 | 13.31 | 7.61 | |||||||||||||||||||||||||||||
15.01 - 20.00 | 1,296,821 | 16.21 | 8.45 | 286,973 | 15.93 | 7.56 | |||||||||||||||||||||||||||||
20.01 - 250.00 | 744,955 | 21.56 | 8.76 | 52,705 | 22.55 | 0.23 | |||||||||||||||||||||||||||||
5,638,383 | 13.29 | 7.80 | 2,695,912 | 10.57 | 6.85 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 52 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended | Year Ended | ||||||||||||||||||||||
December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
Number of Options | Weighted Average Exercise Price (CAD $/Share) | Number of Options | Weighted Average Exercise Price (CAD $/Share) | ||||||||||||||||||||
Balance, beginning of the year | 7,074,092 | 12.07 | 7,583,439 | 10.70 | |||||||||||||||||||
Granted | 1,400,000 | 18.98 | 2,621,924 | 13.46 | |||||||||||||||||||
Exercised | (2,502,234) | 10.87 | (2,473,926) | 7.50 | |||||||||||||||||||
Cancelled or expired | (333,475) | 29.45 | (657,345) | 18.96 | |||||||||||||||||||
Balance, end of the year | 5,638,383 | 13.29 | 7,074,092 | 12.07 |
During the year ended December 31, 2021, the aggregate fair value of stock options granted was $9.9 million (December 31, 2020 - $12.1 million), or a weighted average fair value of $7.04 per stock option granted (2020 - $4.63).
Year Ended | Year Ended | |||||||||||||||||||
Assumption | Based on | December 31, 2021 | December 31, 2020 | |||||||||||||||||
Risk-free interest rate (%) | Yield curves on Canadian government zero- coupon bonds with a remaining term equal to the stock options’ expected life | 1.04 | 1.03 | |||||||||||||||||
Expected life (years) | Average of the expected vesting term and expiry term of the option | 5.93 | 5.83 | |||||||||||||||||
Expected volatility (%) | Historical and implied volatility of the precious metals mining sector | 49.00 | 49.00 | |||||||||||||||||
Expected dividend yield (%) | Annualized dividend rate as of the date of grant | 0.10% | 0 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 53 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, 2021 | Year Ended December 31, 2020 | ||||||||||||||||
Number of shares | Weighted Average Fair Value (CAD$) | Number of shares | Weighted Average Fair Value (CAD$) | ||||||||||||||
Outstanding, beginning of the year | 184,483 | 15.66 | 128,944 | 10.36 | |||||||||||||
Granted | 312,991 | 17.19 | 211,192 | 15.72 | |||||||||||||
Settled | (69,504) | 15.79 | (127,000) | 10.32 | |||||||||||||
Forfeited | (27,421) | 16.56 | (28,653) | 15.93 | |||||||||||||
Outstanding, end of the year | 400,549 | 16.77 | 184,483 | 15.66 |
Year Ended December 31, 2021 | Year Ended December 31, 2020 | ||||||||||||||||
Number of shares | Weighted Average Fair Value (CAD$) | Number of shares | Weighted Average Fair Value (CAD$) | ||||||||||||||
Outstanding, beginning of the year | 109,035 | 15.62 | 0 | 0 | |||||||||||||
Granted | 184,050 | 17.15 | 122,575 | 15.65 | |||||||||||||
Forfeited | (17,569) | 16.56 | (13,540) | 15.93 | |||||||||||||
Outstanding, end of the year | 275,516 | 16.58 | 109,035 | 15.62 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 54 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Year Ended December 31, 2021 | Year Ended December 31, 2020 | ||||||||||||||||
Number of shares | Weighted Average Fair Value (CAD$) | Number of shares | Weighted Average Fair Value (CAD$) | ||||||||||||||
Outstanding, beginning of the year | 0 | 0 | 0 | 0 | |||||||||||||
Granted | 31,040 | 18.08 | 0 | 0 | |||||||||||||
Settled | (5,855) | 17.08 | 0 | 0 | |||||||||||||
Outstanding, end of the year | 25,185 | 18.31 | 0 | 0 |
Declaration Date | Record Date | Dividend per Common Share | |||||||||||||||||||||
May 6, 2021 | May 17, 2021 | $0.0045 | |||||||||||||||||||||
August 16, 2021 | August 26, 2021 | $0.0060 | |||||||||||||||||||||
November 4, 2021 | November 17, 2021 | $0.0049 | |||||||||||||||||||||
March 10, 2022(1) | March 21, 2022 | $0.0079 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 55 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Financial Instruments Measured at Fair Value | Valuation Method | |||||||
Marketable securities - common shares | Marketable securities and silver future derivatives are valued based on quoted market prices for identical assets in an active market (Level 1) as at the date of statements of financial position. Marketable securities - stock warrants are valued using the Black-Scholes model based on the observable market inputs (Level 2). | |||||||
Marketable securities - stock warrants | ||||||||
Silver futures derivatives | ||||||||
Financial Instruments Measured at Amortized Cost | Valuation Method | |||||||
Cash and cash equivalents | Approximated carrying value due to their short-term nature | |||||||
Restricted cash | ||||||||
Trade and other receivables | ||||||||
Trade and other payables | ||||||||
Debt facilities | Approximated carrying value as discount rate on these | |||||||
instruments approximate the Company's credit risk. |
December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
Fair value measurement | Fair value measurement | ||||||||||||||||||||||||||||||||||
Carrying value | Level 1 | Level 2 | Carrying value | Level 1 | Level 2 | ||||||||||||||||||||||||||||||
Financial assets | |||||||||||||||||||||||||||||||||||
Marketable securities (Note 14) | $ | 26,486 | $ | 22,531 | $ | 3,955 | $ | 36,319 | $ | 30,996 | $ | 5,323 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 56 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
December 31, 2021 | December 31, 2020 | ||||||||||
Equity | $1,410,971 | $850,236 | |||||||||
Debt facilities | 181,233 | 152,708 | |||||||||
Lease liabilities | 39,861 | 20,575 | |||||||||
Less: cash and cash equivalents | (237,926) | (238,578) | |||||||||
| $1,394,139 | $784,941 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 57 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Carrying Amount | Contractual Cash Flows | Less than 1 year | 2 to 3 years | 4 to 5 years | After 5 years | |||||||||||||||||||||||||||||||||
Trade and other payables | $120,666 | $120,666 | $120,666 | $0 | $0 | $0 | ||||||||||||||||||||||||||||||||
Debt facilities | 181,233 | 234,666 | 1,216 | 1,725 | 231,725 | 0 | ||||||||||||||||||||||||||||||||
Lease liabilities | 39,861 | 44,561 | 11,252 | 21,312 | 10,752 | 1,245 | ||||||||||||||||||||||||||||||||
Other liabilities | 5,797 | 5,797 | 0 | 0 | 0 | 5,797 | ||||||||||||||||||||||||||||||||
$347,557 | $405,690 | $133,134 | $23,037 | $242,477 | $7,042 |
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | Restricted cash | Value added taxes receivable | Other financial assets | Trade and other payables | Trade and other receivables | Net assets (liabilities) exposure | Effect of +/- 10% change in currency | ||||||||||||||||||||||||||||||||||||||||
Canadian dollar | $52,978 | $12,574 | $0 | $7,644 | ($3,547) | $90 | $69,739 | $6,974 | |||||||||||||||||||||||||||||||||||||||
Mexican peso | 36,575 | 48,010 | 42,979 | 0 | (47,023) | 0 | 80,541 | 8,054 | |||||||||||||||||||||||||||||||||||||||
$89,553 | $60,584 | $42,979 | $7,644 | ($50,570) | $90 | $150,280 | $15,028 |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 58 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
Effect of +/- 10% change in metal prices | ||||||||||||||||||||||||||||||||||||||
Silver | Gold | Total | ||||||||||||||||||||||||||||||||||||
Metals in doré inventory | $2,217 | $571 | $2,788 | |||||||||||||||||||||||||||||||||||
$2,217 | $571 | $2,788 |
Year Ended December 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Other adjustments to investing activities: | ||||||||||||||
Purchase of marketable securities | ($3,522) | ($1,522) | ||||||||||||
Proceeds from disposal of marketable securities | 2,564 | 664 | ||||||||||||
Cash received on settlement of derivatives | 533 | 2,079 | ||||||||||||
($425) | $1,221 | |||||||||||||
Net change in non-cash working capital items: | ||||||||||||||
(Increase) decrease in trade and other receivables | ($3,386) | $24 | ||||||||||||
Decrease (increase) in value added taxes receivable | 9,839 | (27,525) | ||||||||||||
Increase in inventories | (8,956) | (4,288) | ||||||||||||
Increase in prepaid expenses and other | (903) | (692) | ||||||||||||
Decrease (increase) in income taxes payable | 3,332 | (1,115) | ||||||||||||
Increase in trade and other payables | 16,580 | 10,765 | ||||||||||||
Increase in restricted cash (Note 18(b)) | (48,010) | 0 | ||||||||||||
($31,504) | ($22,831) | |||||||||||||
Non-cash investing and financing activities: | ||||||||||||||
Acquisition of Jerritt Canyon (Note 4) | $466,300 | $0 | ||||||||||||
Transfer of share-based payments reserve upon settlement of RSU's | 963 | 992 | ||||||||||||
Transfer of share-based payments reserve upon exercise of options | 8,643 | 5,903 | ||||||||||||
Acquisition of mining interests | (3,750) | (8,179) | ||||||||||||
Assets acquired by finance lease | (4,001) | 0 | ||||||||||||
Conversion to common shares upon settlement of the convertible note | (23,230) | 0 | ||||||||||||
$444,925 | ($1,284) |
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 59 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 60 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The Company continues to defend the APA in the Mexican legal proceedings, and initiated proceedings under relevant tax treaties between the competent tax authorities of Mexico, Canada, Luxembourg and Barbados, all of which were subsequently dismissed on a unilateral basis by the SAT ("Dismissals") in May 2020. The Company believes that the Dismissals breach international obligations regarding double taxation treaties, and also that the APA remains valid and legally binding. The Company will continue disputing the Reassessments, exhausting its domestic and international remedies.
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 61 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
The accompanying notes are an integral part of the audited consolidated financial statements |
| ||||
First Majestic Silver Corp. 2021 Annual Report | Page 62 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |||||
(Tabular amounts are expressed in thousands of US dollars) |
|
Name of subsidiary | Operations and Projects | Location | 2021 % Ownership | 2020 % Ownership | ||||||||||
First Majestic Silver Corp. | Parent company and bullion sales | Canada | 100% | 100% | ||||||||||
Corporación First Majestic, S.A. de C.V. | Holding company | Mexico | 100% | 100% | ||||||||||
Primero Empresa Minera, S.A de C.V. | San Dimas Silver/Gold Mine | Mexico | 100% | 100% | ||||||||||
Nusantara de Mexico, S.A. de C.V. | Santa Elena Silver/Gold Mine | Mexico | 100% | 100% | ||||||||||
Minera La Encantada, S.A. de C.V. | La Encantada Silver Mine | Mexico | 100% | 100% | ||||||||||
First Majestic Plata, S.A. de C.V. | La Parrilla Silver Mine | Mexico | 100% | 100% | ||||||||||
Minera El Pilón, S.A. de C.V. | San Martin Silver Mine | Mexico | 100% | 100% | ||||||||||
First Majestic Del Toro, S.A. de C.V. | Del Toro Silver Mine | Mexico | 100% | 100% | ||||||||||
La Guitarra Compañia Minera, S.A. de C.V. | La Guitarra Silver Mine | Mexico | 100% | 100% | ||||||||||
Majestic Services, S.A. de C.V. | Service company | Mexico | 100% | 100% | ||||||||||
Jerritt Canyon Canada Ltd. | Holding company | Canada | 100% | 0% | ||||||||||
Jerritt Canyon Gold LLC | Jerritt Canyon Gold Mine | United States | 100% | 0% | ||||||||||
FM Metal Trading (Barbados) Inc. | Metals trading company | Barbados | 100% | 100% | ||||||||||
FMS Trading AG | Metals trading company | Switzerland | 100% | 100% | ||||||||||
Year Ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
Salaries, bonuses, fees and benefits | |||||||||||
Independent members of the Board of Directors | $868 | $803 | |||||||||
Other members of key management | 3,790 | 3,937 | |||||||||
Share-based payments | |||||||||||
Independent members of the Board of Directors | 769 | 402 | |||||||||
Other members of key management | 3,661 | 2,646 | |||||||||
$9,088 | $7,788 |
The accompanying notes are an integral part of the audited consolidated financial statements | |||||
First Majestic Silver Corp. 2021 Annual Report | Page 63 |