,
Unaudited Condensed Interim Consolidated Financial Statements and Notes
FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2024
Condensed Interim Consolidated Statements of Financial Position (unaudited, in thousands of U.S. dollars) |
June 30, 2024 | December 31, 2023 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 98,320 | $ | 85,964 | ||||
Bullion (Note 7) | 24,026 | 19,191 | ||||||
Trade and other receivables | 436 | 114 | ||||||
Value-added tax receivables | 14,558 | 16,250 | ||||||
Inventories (Note 8) | 56,228 | 49,798 | ||||||
Prepaids and other assets | 8,989 | 7,216 | ||||||
202,557 | 178,533 | |||||||
Non-current assets | ||||||||
Mineral properties, plant and equipment (Note 9) | 263,152 | 246,728 | ||||||
Deferred tax assets (Note 18) | 8,658 | 22,723 | ||||||
Long-term value-added tax receivables | 15,504 | 12,190 | ||||||
Prepaids and other long-term assets | 8,142 | - | ||||||
Total assets | $ | 498,013 | $ | 460,174 | ||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities (Note 10, 6(a)) | $ | 22,395 | $ | 17,924 | ||||
Tax liabilities | 8,438 | 33,614 | ||||||
Derivative liabilities | 3,531 | 168 | ||||||
Lease obligations | 164 | 67 | ||||||
34,528 | 51,773 | |||||||
Non-current liabilities | ||||||||
Long-term lease obligations | 362 | 221 | ||||||
Deferred tax liabilities (Note 18) | 4,738 | - | ||||||
Reclamation provision (Note 12) | 5,057 | 5,855 | ||||||
Total liabilities | 44,685 | 57,849 | ||||||
Equity (Note 13) | ||||||||
Issued capital | 420,855 | 406,890 | ||||||
Share option reserve | 8,018 | 11,338 | ||||||
Currency translation reserve | (3,538) | (3,538) | ||||||
Retained earnings | 27,993 | (12,365) | ||||||
Total equity | 453,328 | 402,325 | ||||||
Total liabilities and equity | $ | 498,013 | $ | 460,174 |
See accompanying notes to the condensed interim consolidated financial statements
Approved by the Board on August 7, 2024
"signed" | N. Eric Fier, Director | "signed" | Anna Ladd-Kruger, Director |
SILVERCREST METALS INC. | 2 |
Condensed Interim Consolidated Statements of Earnings and Comprehensive Earnings (unaudited, in thousands of U.S. dollars except per share amounts) |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Revenue (Note 14) | $ | 72,741 | $ | 61,999 | $ | 136,387 | $ | 119,982 | ||||||
Cost of sales | ||||||||||||||
Production costs (Note 15) | (22,680) | (18,402) | (40,883) | (36,440) | ||||||||||
Depreciation | (8,187) | (4,990) | (15,963) | (9,035) | ||||||||||
Government royalties | (386) | (314) | (576) | (608) | ||||||||||
(31,253) | (23,706) | (57,422) | (46,083) | |||||||||||
Mine operating earnings | 41,488 | 38,293 | 78,965 | 73,899 | ||||||||||
General and administrative expenses (Note 16) | (5,437) | (2,881) | (10,132) | (6,414) | ||||||||||
Exploration and project expenses | (187) | (151) | (409) | (377) | ||||||||||
Foreign exchange losses | (2,751) | (8,641) | (2,385) | (7,522) | ||||||||||
Earnings from operations | 33,113 | 26,620 | 66,039 | 59,586 | ||||||||||
Interest income | 1,235 | 1,133 | 2,873 | 1,905 | ||||||||||
Interest and finance expense (Note 17) | (306) | (668) | (621) | (2,037) | ||||||||||
Other expense (Note 22) | (1,375) | — | (25) | — | ||||||||||
Earnings before income taxes | 32,667 | 27,085 | 68,266 | 59,454 | ||||||||||
Income tax expense (Note 18) | (26,173) | (3,383) | (27,908) | (8,587) | ||||||||||
Net earnings | $ | 6,494 | $ | 23,702 | $ | 40,358 | $ | 50,867 | ||||||
Other comprehensive income | ||||||||||||||
Currency translation adjustment | — | 9,926 | — | 10,255 | ||||||||||
Total comprehensive earnings | $ | 6,494 | $ | 33,628 | $ | 40,358 | $ | 61,122 | ||||||
Net earnings attributable to common shareholders | ||||||||||||||
Basic earnings per share | $ | 0.04 | $ | 0.16 | $ | 0.27 | $ | 0.35 | ||||||
Diluted earnings per share | $ | 0.04 | $ | 0.16 | $ | 0.27 | $ | 0.34 | ||||||
Weighted average shares outstanding (in 000’s) Basic | 147,728 | 147,231 | 147,341 | 147,216 | ||||||||||
Weighted average shares outstanding (in 000’s) Diluted | 149,197 | 150,867 | 148,810 | 150,511 |
See accompanying notes to the condensed interim consolidated financial statements
SILVERCREST METALS INC. | 3 |
Condensed Interim Consolidated Statements of Cash Flows (unaudited, in thousands of U.S. dollars) |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
(Note 19) | (Note 19) | |||||||||||||
Operating activities | ||||||||||||||
Net earnings for the period | $ | 6,494 | $ | 23,702 | $ | 40,358 | $ | 50,867 | ||||||
Income tax expense (Note 18) | 26,173 | 3,383 | 27,908 | 8,587 | ||||||||||
Depreciation | 8,187 | 5,008 | 15,963 | 9,075 | ||||||||||
Share-based compensation expense | 1,821 | 294 | 2,886 | 1,414 | ||||||||||
Unrealized foreign exchange losses | 2,041 | 15,572 | 2,525 | 13,943 | ||||||||||
Interest income | (1,235) | (1,133) | (2,873) | (1,905) | ||||||||||
Interest expense (Note 17) | 152 | 533 | 299 | 1,775 | ||||||||||
Interest paid (Note 19) | (164) | (455) | (213) | (1,532) | ||||||||||
Interest received (Note 19) | 1,235 | 1,363 | 2,873 | 2,084 | ||||||||||
Income taxes paid | (14,436) | — | (40,600) | (987) | ||||||||||
Other operating activities (Note 19) | 1,503 | 116 | 259 | 223 | ||||||||||
Change in working capital (Note 19) | 7,802 | 6,333 | (10,933) | (2,211) | ||||||||||
$ | 39,573 | $ | 54,716 | $ | 38,452 | $ | 81,333 | |||||||
Investing activities | ||||||||||||||
Payments for mineral properties, plant and equipment | (19,544) | (12,919) | (34,348) | (20,849) | ||||||||||
Proceeds from sale of mineral properties, plant and equipment | 259 | — | 259 | — | ||||||||||
Purchase of bullion | (930) | (3,981) | (930) | (5,791) | ||||||||||
Payments for derivatives | (706) | — | (545) | — | ||||||||||
$ | (20,921) | $ | (16,900) | $ | (35,564) | $ | (26,640) | |||||||
Financing activities | ||||||||||||||
Common share proceeds | 9,112 | — | 9,770 | 179 | ||||||||||
Repayment of debt (Note 11) | — | (25,000) | — | (50,000) | ||||||||||
Payments of equipment leases | (36) | (28) | (47) | (71) | ||||||||||
$ | 9,076 | $ | (25,028) | $ | 9,723 | $ | (49,892) | |||||||
Effects of exchange rate changes on cash and cash equivalents | (493) | (5,140) | (255) | (2,149) | ||||||||||
Increase in cash and cash equivalents | 27,235 | 7,648 | 12,356 | 2,652 | ||||||||||
Cash and cash equivalents at the beginning of the period | 71,085 | 45,765 | 85,964 | 50,761 | ||||||||||
Cash and cash equivalents at the end of the period | $ | 98,320 | $ | 53,413 | $ | 98,320 | $ | 53,413 |
Supplemental cash flow information and restatement of prior period (Note 19)
See accompanying notes to the condensed interim consolidated financial statements
SILVERCREST METALS INC. | 4 |
Condensed Interim Consolidated Statements of Changes in Equity (unaudited, in thousands of U.S. dollars except for number of shares) |
Issued shares | Issued capital | Share option reserve | Currency translation reserve | Retained earnings | Total | |||||||||||||||
Balance, December 31, 2022 | 147,156 | $ | 405,811 | $ | 10,945 | $ | (13,793) | $ | (125,969) | $ | 276,994 | |||||||||
Total comprehensive earnings | ||||||||||||||||||||
Net earnings for the period | — | — | — | — | 50,867 | 50,867 | ||||||||||||||
Foreign exchange translation | — | — | — | 10,255 | — | 10,255 | ||||||||||||||
— | — | — | 10,255 | 50,867 | 61,122 | |||||||||||||||
Shares issued on the exercise of stock options | 75 | 294 | (115) | — | — | 179 | ||||||||||||||
Stock options forfeited | — | — | (37) | — | 37 | — | ||||||||||||||
Share-based compensation on option grants | — | — | 1,280 | — | — | 1,280 | ||||||||||||||
Balance, June 30, 2023 | 147,231 | 406,105 | 12,073 | (3,538) | (75,065) | 339,575 | ||||||||||||||
Total comprehensive earnings | ||||||||||||||||||||
Net earnings for the year | — | — | — | — | 65,853 | 65,853 | ||||||||||||||
— | — | — | — | 65,853 | 65,853 | |||||||||||||||
Shares issued on the exercise of stock options | 1,208 | 4,814 | (1,862) | — | — | 2,952 | ||||||||||||||
Stock options forfeited | — | — | 37 | — | (37) | — | ||||||||||||||
Share-based compensation on option grants | — | — | 1,090 | — | — | 1,090 | ||||||||||||||
Shares repurchased and cancelled | (1,504) | (4,029) | — | — | (3,116) | (7,145) | ||||||||||||||
Balance, December 31, 2023 | 146,935 | 406,890 | 11,338 | (3,538) | (12,365) | 402,325 | ||||||||||||||
Total comprehensive earnings | ||||||||||||||||||||
Net earnings for the period | — | — | — | — | 40,358 | 40,358 | ||||||||||||||
— | — | — | — | 40,358 | 40,358 | |||||||||||||||
Shares issued on the exercise of stock options | 1,590 | 13,946 | (4,176) | — | — | 9,770 | ||||||||||||||
Shares issued on the settlement of share units | 3 | 19 | — | — | — | 19 | ||||||||||||||
Share-based compensation on option grants | — | — | 856 | — | — | 856 | ||||||||||||||
Balance, June 30, 2024 | 148,528 | $ | 420,855 | $ | 8,018 | $ | (3,538) | $ | 27,993 | $ | 453,328 |
See accompanying notes to the condensed interim consolidated financial statements
SILVERCREST METALS INC. | 5 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
1. Nature of Operations |
SilverCrest Metals Inc. (the "Company" or "SilverCrest") is a corporation governed by the Business Corporations Act (British Columbia). The Company’s corporate office and principal address is located at 501-570 Granville Street, Vancouver, British Columbia, Canada, V6C 3P1. The Company’s registered office is 19th Floor, 885 West Georgia Street, Vancouver, BC, Canada, V6C 3H4. SilverCrest shares trade on the Toronto Stock Exchange under the symbol SIL and the NYSE-American under the symbol SILV.
SilverCrest engages in silver and gold mining and related activities, including exploration and mine development from its Las Chispas mine located in Sonora, Mexico.
2. Basis of Preparation |
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) applicable to the preparation of interim financial statements, under International Accounting Standard ("IAS") 34 - Interim Financial Reporting and have been condensed with certain disclosures from the Company's audited consolidated financial statements for the year ended December 31, 2023 (the "2023 Annual Financial Statements") omitted. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the 2023 Annual Financial Statements.
These unaudited condensed interim consolidated financial statements were approved for issuance by the Board of Directors on August 7, 2024.
3. Material Accounting Policies |
The accounting policies applied in the preparation of these unaudited condensed interim consolidated financial statements, with the exception of those described in Note 4, are consistent with those applied and disclosed in the 2023 Annual Financial Statements.
4. Changes in Accounting Standards |
Application of New and Revised Accounting Standards
Presentation of Financial Statements (Amendments to IAS 1)
We have adopted the amendments to IAS 1 Presentation of Financial Statements regarding the classification of liabilities as current or non-current based on contractual rights that are in existence at the end of the reporting period. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment also introduces a definition of ‘settlement’ to make clear that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. The amendment issued in October 2022 also clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. Covenants to be compiled with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. The amendments are effective for annual reporting periods beginning on or after January 1, 2024. These amendments did not have a material impact on the Company.
Accounting Standards Issued but Not Yet Applied
Presentation and Disclosure in Financial Statements (IFRS 18)
IFRS 18 has been issued to achieve comparability of the financial performance of similar entities. The standard, which replaces IAS 1, impacts the presentation of primary financial statements and notes, mainly the income statement where companies will be required to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for each new category. IFRS 18 will require management-defined performance measures to be explained and included in a separate note within the consolidated financial statement. The standard is effective for financial statements beginning on January 1, 2027, including interim financial statements and requires retrospective application. The Company is currently assessing the impact of this amendment.
SILVERCREST METALS INC. | 6 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
There are no other standards or amendments or interpretations to existing standards issued but not yet effective that are expected to have a material impact on the Company.
5. Significant Judgments and Estimates |
In preparing the Company’s unaudited condensed interim financial statements for the three and six months ended June 30, 2024, critical judgements made in applying the Company's accounting policies and key sources of estimation uncertainty are consistent with those disclosed in Notes 5 and 6, respectively, of its 2023 Annual Financial Statements.
6. Financial Instruments |
a)Carrying Values and Measurement of Financial Assets and Liabilities at Amortized Cost or Fair Value through Profit and Loss ("FVTPL")
June 30, 2024 | Amortized cost | FVTPL | Total | ||||||||
Financial assets | |||||||||||
Cash and cash equivalents | $ | 98,320 | $ | - | $ | 98,320 | |||||
Trade and other receivables | 436 | - | 436 | ||||||||
Financial liabilities | |||||||||||
Accounts payable and accrued liabilities | 17,345 | 5,050 | 22,395 | ||||||||
Derivative liabilities | - | 3,531 | 3,531 |
December 31, 2023 | Amortized cost | FVTPL | Total | ||||||||
Financial assets | |||||||||||
Cash and cash equivalents | $ | 85,964 | $ | - | $ | 85,964 | |||||
Trade and other receivables | 114 | - | 114 | ||||||||
Financial liabilities | |||||||||||
Accounts payable and accrued liabilities | 14,080 | 3,844 | 17,924 | ||||||||
Derivative liabilities | - | 168 | 168 |
b)Derivative Instruments
The Company's derivatives are comprised of bullion contracts and foreign currency contracts. During the three and six months ended June 30, 2024, the Company sold call options and purchased put options on bullion and foreign currency contracts. The Company initially records the cash premium from the sale of an option as a liability which is then recognized as a derivative gain upon contract settlement. The value of the option is remeasured using the Black-Scholes option pricing model at each reporting date, with gains or losses recorded as other expense, along with a corresponding increase or decrease to the derivative assets or liabilities.
The derivative losses, which are recorded in other expense (Note 22), for the three and six months ended June 30, 2024 were as follows:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Realized derivative losses | $ | (489) | $ | — | $ | (489) | $ | — | ||||||
Unrealized derivative losses | (3,952) | — | (3,418) | — | ||||||||||
$ | (4,440) | $ | - | $ | (3,907) | $ | - |
SILVERCREST METALS INC. | 7 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
c)Fair Value Information
i.Fair Value Measurement
The categories of the fair value hierarchy of inputs used in the valuation techniques are as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3: Inputs for the asset or liability based on unobservable market data
The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the Condensed Consolidated Interim Statements of Financial Position at fair value on a recurring basis were categorized as follows:
At June 30, 2024 | At December 31, 2023 | |||||||||||||
Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||
Assets and Liabilities: | ||||||||||||||
Derivative liabilities | — | 3,531 | — | 168 |
The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remain unchanged from that at December 31, 2023.
d)Financial Instruments and Related Risks
The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The principal financial risks to which the Company is exposed are:
i)Credit risk
ii)Liquidity risk
iii)Market risk
1.Currency risk
2.Interest rate risk
3.Price risk
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.
i.Credit Risk
Credit risk is the risk that a counterparty may fail to satisfy its performance obligations under the terms of a financial instrument. Credit risk results from cash and cash equivalents and trade and other receivables.
The Company manages credit risk on its cash and cash equivalents by diversifying these asset holdings with multiple highly rated financial institutions, including the Bank of Montreal ("BMO") and the Bank of Nova Scotia (“BNS”) in Canada and BNS in Mexico. Further, credit risk on trade and other receivables is managed by ensuring amounts are receivable from highly rated financial institutions. The Company has recognized nominal amount of credit losses with respect to trade and other receivables. For cash and cash equivalents and trade and other receivables, credit risk exposure equals the carrying amount on the balance sheet.
ii.Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company ensures that sufficient committed loan facilities exist to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.
As at June 30, 2024, the Company continues to maintain its ability to meet its financial obligations as they come due.
SILVERCREST METALS INC. | 8 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
iii.Market Risk
1.Currency Risk
The functional and reporting currency of the Company including its subsidiaries is the United States dollar ("USD") and the Company reports results using USD; however, the Company operates in jurisdictions that utilize the Canadian dollar ("CAD") and Mexican peso ("MXN"). As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to these local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse.
In order to mitigate its exposure to currency risk, the Company entered into option contracts designed to limit the effective exchange rate between the Mexican peso and US dollar. The notional value of open contracts as at June 30, 2024 totaled $97.9 million, with maturities from July 2024 until June 2025 and exchange rates between $17.31 and $18.57. During the three and six months ended June 30, 2024, the Company recorded derivative losses of $4.4 million and $3.9 million, respectively (Note 22).
2.Interest Rate Risk
Interest rate risk is the risk that the fair values or future cash flows of the Company will fluctuate because of changes in market interest rates. The average interest rate earned by the Company during the six months ended June 30, 2024 on its cash and cash equivalents was 5.32% (2023 - 5.39%).
On November 29, 2022, the Company's entered into a $120 million senior secured credit facility (the "Credit Facility") comprised of a $50 million term facility (the "Term Facility") and a $70 million revolving facility (the "Revolving Facility") (Note 11). The Company repaid the Term Facility during the first five months of 2023 and incurred a weighted average interest rate of 7.79% during that time. There were no amounts drawn on the Revolving Facility during the three and six months ended June 30, 2024 or comparative period.
3.Price Risk
The Company is exposed to price risk on precious metals that impact the valuation of the Company’s derivative positions, comprised of gold and silver call options written, which has a direct and immediate impact on net earnings. The prices of precious metals are volatile and affected by many factors beyond the Company’s control, and there can be no assurance that precious metal prices will not be subject to wide fluctuations in the future. A substantial or extended change in precious metal prices could have an adverse effect on the Company’s financial position, income, and cash flows.
7. Bullion |
The Company purchases gold and silver bullion from a bullion bank as part of its liquidity management program.
Bullion held by the Company was comprised of the following:
June 30, 2024 | December 31, 2023 | |||||||||||||
Cost | Fair value | Cost | Fair value | |||||||||||
Gold bullion | $ | 6,465 | $ | 7,423 | $ | 5,535 | $ | 5,743 | ||||||
Silver bullion | 13,139 | 16,603 | 13,139 | 13,448 | ||||||||||
$ | 19,604 | $ | 24,026 | $ | 18,674 | $ | 19,191 |
The Company records bullion at fair value with gains of $3.1 million and $3.9 million, respectively, included in other expense (Note 22) for the three and six months ended June 30, 2024 and no amount recorded in the comparative period.
SILVERCREST METALS INC. | 9 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
8. Inventories |
The Company’s inventories were comprised of the following:
June 30, 2024 | December 31, 2023 | |||||||
Stockpile | $ | 30,900 | $ | 27,115 | ||||
In-process | 3,221 | 2,055 | ||||||
Finished | 13,327 | 11,496 | ||||||
Materials and supplies | 8,780 | 9,132 | ||||||
$ | 56,228 | $ | 49,798 |
For the three and six months ended June 30, 2024, the Company recognized a $1.0 million impairment of materials and supplies inventories in production costs (Note 15). No amounts were recorded in the comparative periods.
9. Mineral Properties, Plant, and Equipment |
June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
Cost | Accumulated Depreciation | Carrying Value | Cost | Accumulated Depreciation | Carrying Value | ||||||||||||||||||
Producing: | |||||||||||||||||||||||
Mexico | Las Chispas | $ | 316,252 | $ | (55,587) | $ | 260,665 | $ | 281,371 | $ | (37,130) | $ | 244,241 | ||||||||||
Non-Producing: | |||||||||||||||||||||||
Mexico | Other | 2,748 | (261) | $ | 2,487 | 2,748 | (261) | $ | 2,487 | ||||||||||||||
Canada | Other | 58 | (58) | $ | - | 58 | (58) | $ | — | ||||||||||||||
2,806 | (319) | 2,487 | 2,806 | (319) | 2,487 | ||||||||||||||||||
Total | $ | 319,058 | $ | (55,906) | $ | 263,152 | $ | 284,177 | $ | (37,449) | $ | 246,728 |
10. Accounts Payable and Accrued Liabilities |
Accounts payable and accrued liabilities consist of:
June 30, 2024 | December 31, 2023 | |||||||
Trade payables | $ | 2,797 | $ | 2,938 | ||||
Accrued liabilities | 11,999 | 9,890 | ||||||
Payroll related liabilities | 2,549 | 1,957 | ||||||
Share unit accrued liabilities | 5,050 | 3,139 | ||||||
$ | 22,395 | $ | 17,924 |
11. Debt |
Revolving Facility
On November 29, 2022, the Company entered into a $120 million Credit Facility comprised of a $50 million Term Facility, maturing November 28, 2025, and a $70 million Revolving Facility, maturing November 27, 2026. On closing the Credit Facility, the Company drew $50 million from the Term Facility and used $40 million of available cash to repay its $92.9 million secured project financing facility.
The Company fully repaid the Term Facility during the first five months of 2023 and has not drawn from the Revolving Facility in 2024 or 2023. As of June 30, 2024, the Company was in compliance with all financial covenants under the $70 million Revolving Facility.
SILVERCREST METALS INC. | 10 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
The Revolving Facility bears interest, and the Term Facility when outstanding bore interest, at a rate based initially on an adjusted Term secured overnight financing rate ("SOFR") as administered by the Federal Reserve Bank of New York, plus an applicable margin ranging from 2.50% to 3.75%. The undrawn portion of the Revolving Facility is subject to a standby fee ranging from 0.5625% to 0.8428% per annum. During the three and six months ended June 30, 2024, $0.1 million and $0.2 million, respectively, (2023 - $0.2 million and $0.3 million, respectively) of standby fees and interest were recorded as interest and finance expense.
12. Reclamation Provision |
Changes to the reclamation and closure provision for the six months ended June 30, 2024 and year ended December 31, 2023 is as follows:
June 30, 2024 | December 31, 2023 | |||||||
Balance, beginning of period | $ | 5,855 | $ | 4,590 | ||||
Accretion of reclamation provision (Note 17) | 276 | 493 | ||||||
Revisions in estimates and obligations | (1,074) | 772 | ||||||
Balance, end of period | $ | 5,057 | $ | 5,855 |
13. Share Capital and Employee Compensation Plans |
a)Stock Options
For the three and six months ended June 30, 2024, the total share-based compensation expense relating to stock options was $0.4 million and $0.9 million, respectively (2023 - $0.3 million and $0.6 million, respectively) and is presented as a component of general and administrative expense.
Stock options
During the three and six months ended June 30, 2024, the Company granted 13,500 and 634,300 stock options, respectively (nil for the three and six months ended June 30, 2023). During the three and six months ended June 30, 2024, the Company issued 1,464,113 and 1,590,029 common shares, respectively (2023 - nil and 75,000, respectively), in connection with the exercise of stock options.
The following table summarizes changes in stock options for the six months ended June 30, 2024 and year ended December 31, 2023:
Six months ended June 30, 2024 | Year ended December 31, 2023 | |||||||||||||
Number of options | Weighted average exercised price CAD | Number of options | Weighted average exercised price CAD | |||||||||||
Outstanding, beginning of period | 4,105 | $ | 9.16 | 5,560 | $ | 7.87 | ||||||||
Granted | 634 | 7.51 | 65 | 7.13 | ||||||||||
Exercised | (1,590) | 8.39 | (1,283) | 3.34 | ||||||||||
Forfeited | (70) | 10.09 | (238) | 9.80 | ||||||||||
Outstanding, end of period | 3,079 | $ | 9.20 | 4,105 | $ | 9.16 |
SILVERCREST METALS INC. | 11 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
The following table summarizes information about the Company's stock options outstanding at June 30, 2024:
Options Outstanding | Options Exercisable | ||||||||||||||||
Range of Exercise Prices CAD | Number Outstanding as at June 30, 2024 | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price CAD | Number Outstanding as at June 30, 2024 | Weighted Average Exercise Price CAD | ||||||||||||
$4.54 - $8.21 | 905 | 3.6 | $ | 7.57 | 204 | $ | 8.17 | ||||||||||
$8.22 - $8.50 | 772 | 2.8 | 8.44 | 338 | 8.36 | ||||||||||||
$8.51 - $10.80 | 572 | 2.4 | 9.83 | 325 | 9.80 | ||||||||||||
$10.81 - $12.63 | 830 | 1.7 | 11.21 | 800 | 11.21 | ||||||||||||
3,079 | 2.7 | $ | 9.19 | 1,667 | $ | 9.98 |
b)PSUs
The Company recorded a $0.3 million and $0.4 million expense, respectively, for PSUs for the three and six months ended June 30, 2024 (2023 - $0.2 million and $0.1 million recovery, respectively) which is included in general and administrative expense.
The following table summarizes changes in PSUs for the six months ended June 30, 2024 and year ended December 31, 2023:
Six months ended June 30, 2024 | Year ended December 31, 2023 | |||||||||||||
Number outstanding | Fair value | Number outstanding | Fair value | |||||||||||
Outstanding, beginning of period | 153 | $ | 705 | 174 | $ | 764 | ||||||||
Granted | 97 | 151 | 62 | 451 | ||||||||||
Settled for cash | (62) | (405) | (83) | (535) | ||||||||||
Change in value | - | 229 | — | 25 | ||||||||||
Outstanding, end of period | 188 | $ | 679 | 153 | $ | 705 |
c)RSUs
The Company recorded a $0.6 million and $0.8 million expense, respectively, for RSUs for the three and six months ended June 30, 2024 (2023 - $nil and $0.1 million, respectively) which is included in general and administrative expense.
The following table summarizes changes in RSUs for the six months ended June 30, 2024 and year ended December 31, 2023:
Six months ended June 30, 2024 | Year ended December 31, 2023 | |||||||||||||
Number outstanding | Fair value | Number outstanding | Fair value | |||||||||||
Outstanding, beginning of period | 235 | $ | 1,055 | 249 | $ | 254 | ||||||||
Granted | 387 | 736 | - | - | ||||||||||
Settled for cash | (88) | (564) | - | - | ||||||||||
Settled for shares | (3) | (16) | - | - | ||||||||||
Forfeited | (33) | - | (14) | (20) | ||||||||||
Change in value | - | 328 | - | 821 | ||||||||||
Outstanding, end of period | 498 | $ | 1,538 | 235 | $ | 1,055 |
SILVERCREST METALS INC. | 12 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
d)DSUs
The Company recorded a $0.5 million expense and a $0.8 million, respectively, for DSUs for the three and six months ended June 30, 2024 (2023 - $0.3 million and $0.1 million recovery, respectively) which is included in general and administrative expense.
The following table summarizes changes in DSUs for the six months ended June 30, 2024 and year ended December 31, 2023:
Six months ended June 30, 2024 | Year ended December 31, 2023 | |||||||||||||
Number outstanding | Fair value | Number outstanding | Fair value | |||||||||||
Outstanding, beginning of period | 228 | $ | 1,498 | 228 | $ | 1,364 | ||||||||
Granted | 119 | 970 | - | - | ||||||||||
Change in value | - | 364 | - | 134 | ||||||||||
Outstanding, end of period | 347 | $ | 2,832 | 228 | $ | 1,498 |
e)Authorized Shares
The Company's authorized capital stock consists of an unlimited number of common shares and an unlimited number of preferred shares without nominal or par value.
14. Revenue |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Gold | $ | 32,432 | $ | 26,680 | $ | 63,355 | $ | 53,356 | ||||||
Silver | 40,309 | 35,319 | 73,032 | 66,626 | ||||||||||
Revenue | $ | 72,741 | $ | 61,999 | $ | 136,387 | $ | 119,982 |
15. Production Costs |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Materials and consumables (1) | $ | 13,819 | $ | 9,404 | $ | 25,069 | $ | 18,485 | ||||||
Salaries and benefits | 2,883 | 2,961 | 5,697 | 6,116 | ||||||||||
Contractors | 6,460 | 5,556 | 12,440 | 9,683 | ||||||||||
Refining and transportation | 459 | 453 | 911 | 1,060 | ||||||||||
Other | 689 | 602 | 1,205 | 1,088 | ||||||||||
Changes in inventories | (1,630) | (574) | (4,439) | 8 | ||||||||||
$ | 22,680 | $ | 18,402 | $ | 40,883 | $ | 36,440 |
(1)Includes a $1.0 million impairment of materials and supplies inventories in production costs for the three and six months ended June 30, 2024 with no amounts recorded in the comparative periods.
SILVERCREST METALS INC. | 13 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
16. General and Administrative Expenses |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Corporate administration | $ | 3,616 | $ | 3,043 | $ | 7,246 | $ | 5,858 | ||||||
Share-based compensation | 1,821 | (162) | 2,886 | 556 | ||||||||||
$ | 5,437 | $ | 2,881 | $ | 10,132 | $ | 6,414 |
17. Interest and Finance Expense |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Interest expense | $ | 152 | $ | 526 | $ | 299 | $ | 1,765 | ||||||
Reclamation accretion expense (Note 12) | 140 | 116 | 276 | 223 | ||||||||||
Other financing costs | 14 | 26 | 46 | 49 | ||||||||||
$ | 306 | $ | 668 | $ | 621 | $ | 2,037 |
18. Income Taxes |
The income taxes recognized in net earnings and comprehensive earnings are as follows:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Current tax (recovery) expense | $ | 11,838 | $ | 2,717 | $ | 9,105 | $ | 5,200 | ||||||
Deferred tax expense | 14,335 | 666 | 18,803 | 3,387 | ||||||||||
$ | 26,173 | $ | 3,383 | $ | 27,908 | $ | 8,587 |
Reconciliation of effective income tax rate:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Earnings for the period before income taxes | $ | 32,667 | $ | 27,085 | $ | 68,266 | $ | 59,454 | ||||||
Statutory tax rate | 27 | % | 27 | % | 27 | % | 27 | % | ||||||
Income taxes computed at statutory rates | 8,820 | 7,313 | 18,432 | 16,052 | ||||||||||
Increase (decrease) due to: | ||||||||||||||
Permanent differences | 44 | 3,279 | 448 | 17 | ||||||||||
Effect of other taxes (recovered) paid, mining and withholding | 3,132 | 2,717 | 5,031 | 5,200 | ||||||||||
Change in unrecognized temporary differences and other | 14,177 | (9,926) | 3,997 | (12,682) | ||||||||||
$ | 26,173 | $ | 3,383 | $ | 27,908 | $ | 8,587 |
SILVERCREST METALS INC. | 14 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
19. Supplemental Cash Flow |
The following table summarizes other operating activities adjustments for non-cash income statement items in operating activities:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
Other operating activities | 2024 | 2023 | 2024 | 2023 | ||||||||||
Adjustments for non-cash income statement items: | ||||||||||||||
Reclamation accretion expense (Note 12) | $ | 140 | $ | 116 | $ | 276 | $ | 223 | ||||||
Bullion gains (Note 7) | (3,057) | - | (3,904) | - | ||||||||||
Derivative losses (Note 6) | 4,440 | - | 3,907 | - | ||||||||||
Gains on sale of mineral properties, plant and equipment (Note 9) | (20) | - | (20) | - | ||||||||||
$ | 1,503 | $ | 116 | $ | 259 | $ | 223 |
The following table summarizes the change in working capital in operating activities:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
Change in working capital | 2024 | 2023 | 2024 | 2023 | ||||||||||
Trade and other receivables | $ | 6,770 | $ | 5,525 | $ | (1,942) | $ | 1,468 | ||||||
Inventories | (1,456) | (997) | (3,988) | 3,183 | ||||||||||
Prepaid expenses | 1,287 | 1,510 | (6,527) | 1,271 | ||||||||||
Accounts payable | 826 | 295 | 1,149 | (8,133) | ||||||||||
Provisions | 375 | - | 375 | - | ||||||||||
$ | 7,802 | $ | 6,333 | $ | (10,933) | $ | (2,211) |
During the year ended December 31, 2023, the Company retrospectively applied an accounting policy change. This adjustment involved the inclusion of cash flows from both interest paid and received within operating activities in the consolidated statements of cash flows. This decision was made as the Company views these forms of financing and investment to be for the benefit of operations, in consideration of a full year of production. The following table provides a reconciliation of the impact of the accounting policy change on the amounts presented for the three and six months ended June 30, 2023:
Three months | Six months | |||||||
Interest paid(1) | $ | (455) | $ | (1,532) | ||||
Interest received(2) | $ | 1,363 | $ | 2,084 | ||||
(1)Previously presented as loan interest payments included in financing activities.
(2)Previously presented in investing activities.
SILVERCREST METALS INC. | 15 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
20. Segmented Information |
The Company’s reportable operating segment is assessed regularly for performance by the Company’s Chief Executive Officer, who is the Company’s chief operating decision maker ("CODM"). The Company has concluded that it has a single operating segment: Las Chispas Mine, which includes Picacho. Corporate includes the corporate team that provides administrative, technical, financial, and other support to the Company’s business units.
Segments and their performance measures are listed below:
For the three months ended June 30, 2024 | |||||||||||||||||
Segment | Revenue | Production costs and government royalties | Depreciation | Mine operating earnings | Capital expenditures | ||||||||||||
Las Chispas | $ | 72,741 | $ | 23,066 | $ | 8,187 | $ | 41,488 | $ | 19,544 | |||||||
For the three months ended June 30, 2023 | |||||||||||||||||
Segment | Revenue | Production costs and government royalties | Depreciation | Mine operating earnings | Capital expenditures | ||||||||||||
Las Chispas | $ | 61,999 | $ | 18,716 | $ | 4,990 | $ | 38,293 | $ | 12,919 | |||||||
For the six months ended June 30, 2024 | |||||||||||||||||
Segment | Revenue | Production costs and government royalties | Depreciation | Mine operating earnings | Capital expenditures | ||||||||||||
Las Chispas | $ | 136,387 | $ | 41,459 | $ | 15,963 | $ | 78,965 | $ | 34,348 | |||||||
For the six months ended June 30, 2023 | |||||||||||||||||
Segment | Revenue | Production costs and government royalties | Depreciation | Mine operating earnings | Capital expenditures | ||||||||||||
Las Chispas | $ | 119,982 | $ | 37,048 | $ | 9,035 | $ | 73,899 | $ | 20,849 | |||||||
At June 30, 2024 | |||||||||||
Segment | Assets | Liabilities | Net assets | ||||||||
Las Chispas | $ | 423,864 | $ | 30,204 | $ | 393,660 | |||||
Corporate | 72,856 | 14,473 | 58,383 | ||||||||
Other | 1,293 | 7 | 1,286 | ||||||||
$ | 498,013 | $ | 44,684 | $ | 453,329 |
At December 31, 2023 | |||||||||||
Segment | Assets | Liabilities | Net assets | ||||||||
Las Chispas | $ | 420,613 | $ | 43,899 | $ | 376,714 | |||||
Corporate | 38,039 | 13,926 | 24,113 | ||||||||
Other | 1,522 | 24 | 1,498 | ||||||||
$ | 460,174 | $ | 57,849 | $ | 402,325 |
21. Related Party Transactions |
The Company’s related parties include its subsidiaries, and key management personnel. Related party transactions primarily consist of short-term employee benefits and share-based compensation paid to key management personnel. Transactions with the Company's subsidiaries have been eliminated on consolidation.
SILVERCREST METALS INC. | 16 |
Notes to the Condensed Interim Consolidated Financial Statements | |||||
As at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023 (unaudited with tabular amounts in thousands of shares, options and USD$ except per share amounts, unless otherwise noted) |
22. Other Expense |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Derivative losses (Note 6(b)) | $ | (4,440) | $ | - | $ | (3,907) | $ | - | ||||||
Bullion gains | 3,057 | - | 3,904 | - | ||||||||||
Mineral properties, plant and equipment losses (Note 9) | 20 | - | 20 | - | ||||||||||
Miscellaneous expense | (12) | - | (42) | - | ||||||||||
$ | (1,375) | $ | - | $ | (25) | $ | - |
SILVERCREST METALS INC. | 17 |