FORM 40-F
|
☐ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
|
☒ |
ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Registered Agent Solutions, Inc.
99 Washington Avenue, Suite 1008 Albany, New York 12260 (888) 705-7274 |
Copies to:
Richard Raymer Dorsey & Whitney LLP 161 Bay Street, Suite 4310 Toronto, Ontario M5J 2S1 (416) 367-7388 |
(Name, address (including zip code) and telephone number (including area code) of
agent for service in the United States)
|
Title of Each Class:
|
Name of Each Exchange On Which Registered:
|
Common Shares, no par value
|
NYSE American
|
2016
|
2017
|
|||||||
Audit Fees
(1)
|
$
|
412,000
|
$
|
240,000
|
||||
Audit-Related Fees
(2)
|
Nil
|
Nil
|
||||||
Tax Fees
(3)
|
18,685
|
33,900
|
||||||
All Other Fees
(4)
|
Nil
|
Nil
|
||||||
Total
|
$
|
430,685
|
$
|
273,900
|
(1)
|
“Audit Fees” include fees necessary to perform the audit of the Company’s consolidated financial statements. Audit Fees include quarterly reviews, fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.
|
(2)
|
“Audit-Related Fees” include services that are traditionally performed by the auditor. These audit-related services include due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.
|
(3)
|
“Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for filing tax returns for U.S. subsidiary, tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.
|
(4)
|
“All Other Fees” include fees relating to the aggregate fees billed in each of the last two fiscal years for products and services provided by the Company’s external auditor, other than the services reported under clauses 1 to 3 above.
|
December 31, 2017
|
||||||||||||||||||||
Total
|
Less than
1 year
|
2-3 years
|
4-5 years
|
More than
5 years
|
||||||||||||||||
Trade and other payables
|
$
|
10,393
|
$
|
10,393
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Credit facilities
|
15,000
|
4,000
|
11,000
|
-
|
-
|
|||||||||||||||
Interest on credit facilities
|
1,601
|
856
|
745
|
-
|
-
|
|||||||||||||||
Leases
|
1,438
|
290
|
563
|
540
|
45
|
|||||||||||||||
Other long-term liabilities
|
564
|
-
|
95
|
-
|
469
|
|||||||||||||||
$
|
28,996
|
$
|
15,539
|
$
|
12,403
|
$
|
540
|
$
|
514
|
|
AMERICAS SILVER CORPORATION
|
|
|
|
|
|
|
|
|
By:
|
/s/ Warren Varga
|
|
Name:
|
Warren Varga
|
|
Title:
|
Chief Financial Officer
|
|
Date:
|
March 5, 2018
|
PRELIMINARY NOTES |
3
|
|
CONFLICT OF INTEREST |
54
|
|
|
|
||
CORPORATE STRUCTURE |
6
|
|
LEGAL PROCEEDINGS AND REGULATORY ACTIONS |
54
|
|
|
|
||
GENERAL DEVELOPMENT OF THE BUSINESS |
7
|
|
INTEREST OF MANAGEMENT AND OTHERS IN
MATERIAL TRANSACTIONS
|
54
|
|
|
|
||
DESCRIPTION OF THE BUSINESS |
13
|
|
TRANSFER AGENT AND REGISTRAR
|
55
|
|
|
|
||
MATERIAL PROJECTS |
18
|
|
MATERIAL CONTRACTS |
55
|
|
|
|
||
RISK FACTORS |
31
|
|
INTEREST OF EXPERTS |
55
|
|
|
|
||
DIVIDENDS |
45
|
|
AUDIT COMMITTEE INFORMATION |
56
|
|
|
|
||
GENERAL DESCRIPTION OF CAPITAL STRUCTURE |
46
|
|
APPENDIX A DEFINITIONS, TECHNICAL TERMS,
ABBREVIATIONS AND CONVERSION
|
58
|
|
|
|
||
MARKET FOR SECURITIES |
47
|
|
APPENDIX B AUDIT COMMITTEE CHARTER
|
66
|
|
|
|
||
DIRECTORS AND OFFICERS |
48
|
|
|
|
|
|
|
||
CEASE TRADE ORDERS, BANKRUPTCIES,
PENALTIES OR SANCTIONS
|
53
|
|
|
United States Dollars into
Canadian Dollars
|
2017
|
2016
|
2015
|
Closing
|
1.2545
|
1.3427
|
1.3840
|
Average
|
1.2986
|
1.3248
|
1.2787
|
High
|
1.3743
|
1.4589
|
1.3990
|
Low
|
1.2128
|
1.2544
|
1.1728
|
Mexican Pesos into
Canadian Dollars
|
2017
|
2016
|
2015
|
Closing
|
0.06380
|
0.06510
|
0.08048
|
Average
|
0.06884
|
0.07110
|
0.08063
|
High
|
0.07418
|
0.08075
|
0.08521
|
Low
|
0.06033
|
0.06429
|
0.07735
|
2017 Consolidated Production Highlights
|
||||||||||||
2017
|
2016
|
Change
|
||||||||||
Processed Ore (tonnes milled)
|
690,498
|
671,616
|
3
|
%
|
||||||||
Silver Production (ounces)
|
2,056,017
|
2,389,808
|
-14
|
%
|
||||||||
Silver Equivalent Production (ounces)
|
4,746,387
|
4,579,373
|
4
|
%
|
||||||||
Silver Grade (grams per tonne)
|
104
|
126
|
-18
|
%
|
||||||||
Cost of Sales ($ per silver equiv. ounce)*
|
$
|
10.19
|
$
|
10.08
|
1
|
%
|
||||||
Cash Costs ($ per silver ounce)*
|
$
|
9.37
|
$
|
10.00
|
-6
|
%
|
||||||
All-in Sustaining Costs ($ per silver ounce)*
|
$
|
13.12
|
$
|
12.71
|
3
|
%
|
||||||
Zinc Production (pounds)
|
11,623,138
|
10,488,773
|
11
|
%
|
||||||||
Lead Production (pounds)
|
25,392,619
|
29,067,673
|
-13
|
%
|
||||||||
Copper Production (pounds)
|
1,167,401
|
1,058,250
|
10
|
%
|
Cosalá Operations
|
Galena Complex
|
Corporate
|
Total
|
|
Hourly
|
231
|
200*
|
0
|
431
|
Salary
|
103
|
42
|
10
|
155
|
TOTAL
|
334
|
242
|
10
|
586
|
Grade
|
Contained Metal
|
||||||||||||||||
Tonnes
|
Silver
|
Copper
|
Lead
|
Zinc
|
Silver
|
Copper
|
Lead
|
Zinc
|
|||||||||
000’s
|
g/t
|
%
|
%
|
%
|
koz
|
Mlbs
|
Mlbs
|
Mlbs
|
|||||||||
Cosalá
|
|||||||||||||||||
Nuestra Señora
|
|||||||||||||||||
Proven
|
34
|
79
|
0.20
|
0.80
|
1.43
|
87
|
0.2
|
0.6
|
1.1
|
||||||||
Probable
|
228
|
96
|
0.27
|
0.90
|
1.74
|
708
|
1.3
|
4.5
|
8.8
|
||||||||
Nuestra Señora P&P
|
263
|
94
|
0.26
|
0.89
|
1.70
|
794
|
1.5
|
5.1
|
9.9
|
||||||||
San Rafael
|
|||||||||||||||||
Proven
|
1,585
|
110
|
1.83
|
4.15
|
5,623
|
63.9
|
145.0
|
||||||||||
Probable
|
2,156
|
93
|
1.59
|
4.05
|
6,476
|
75.7
|
192.6
|
||||||||||
San Rafael P&P
|
3,741
|
101
|
1.69
|
4.09
|
12,100
|
139.6
|
337.6
|
||||||||||
Total Cosalá P&P
|
4,004
|
100
|
0.02
|
1.64
|
3.94
|
12,894
|
1.5
|
144.8
|
347.5
|
||||||||
Galena
|
|||||||||||||||||
Silver-Copper
|
|||||||||||||||||
Proven
|
162
|
506
|
0.44
|
2,635
|
1.6
|
||||||||||||
Probable
|
237
|
584
|
0.42
|
4,453
|
2.2
|
||||||||||||
Silver-Copper P&P
|
399
|
552
|
0.43
|
7,088
|
3.8
|
||||||||||||
Silver-Lead
|
|||||||||||||||||
Proven
|
443
|
268
|
8.35
|
3,817
|
81.5
|
||||||||||||
Probable
|
512
|
273
|
8.48
|
4,491
|
95.6
|
||||||||||||
Silver-Lead P&P
|
954
|
271
|
8.42
|
8,308
|
177.1
|
||||||||||||
Total Galena P&P
|
1,354
|
354
|
0.13
|
5.93
|
15,396
|
3.8
|
177.1
|
||||||||||
TOTAL P&P
|
5,358
|
164
|
0.04
|
2.73
|
2.94
|
28,290
|
5.2
|
321.9
|
347.5
|
1.
|
CIM Definition Standards were followed for Mineral Reserve estimates.
|
2.
|
Mineral Reserves are estimated at a NSR cut-off value of US$40/tonne at Nuestra Señora, US$54/tonne at San Rafael and US$190/tonne at Galena. The NSR cut-off is calculated using recent operating results for recoveries, off-site concentrate costs, and on-site operating costs.
|
3.
|
Mineral Reserves are estimated using metal prices of US$16.00/oz Ag, $2.50/lb Cu, $0.90/lb Pb and $0.90/lb Zn.
|
4.
|
A minimum mining width of 4.5 feet was used for estimating Galena Reserves, with a minimum additional dilution of 0.5 feet from both the hanging wall and footwall. A mining recovery of 95% was used to reflect the selective nature of the mining methods used at the operation. A mining recovery of 90% was used for estimating Mineral Reserves at Nuestra Señora and San Rafael to reflect the mining methods used at the operations.
|
5.
|
Numbers may not add due to rounding.
|
Grade
|
Contained Metal
|
||||||||||||||||
Tonnes
|
Silver
|
Copper
|
Lead
|
Zinc
|
Silver
|
Copper
|
Lead
|
Zinc
|
|||||||||
000’s
|
g/t
|
%
|
%
|
%
|
koz
|
Mlbs
|
Mlbs
|
Mlbs
|
|||||||||
Cosalá
|
|||||||||||||||||
Nuestra Señora
|
|||||||||||||||||
Measured
|
257
|
85
|
0.16
|
0.84
|
1.76
|
700
|
0.9
|
4.8
|
10.0
|
||||||||
Indicated
|
1,779
|
89
|
0.20
|
0.81
|
1.74
|
5,069
|
7.7
|
31.9
|
68.1
|
||||||||
Nuestra Señora M&I
|
2,036
|
88
|
0.19
|
0.82
|
1.74
|
5,769
|
8.6
|
36.7
|
78.0
|
||||||||
San Rafael
|
|||||||||||||||||
Measured
|
1,233
|
110
|
0.95
|
2.15
|
4,345
|
25.7
|
58.3
|
||||||||||
Indicated
|
1,641
|
88
|
0.93
|
2.08
|
4,628
|
33.5
|
75.3
|
||||||||||
San Rafael M&I
|
2,874
|
97
|
0.9
|
2.11
|
8,973
|
59.2
|
133.6
|
||||||||||
Zone 120
|
|||||||||||||||||
Measured
|
0
|
||||||||||||||||
Indicated
|
2,090
|
187
|
0.48
|
12,569
|
22.3
|
||||||||||||
Zone 120 M&I
|
2,090
|
187
|
0.48
|
12,569
|
22.3
|
||||||||||||
El Cajón
|
|||||||||||||||||
Measured
|
0
|
||||||||||||||||
Indicated
|
1,003
|
177
|
0.55
|
5,719
|
12.2
|
||||||||||||
El Cajón M&I
|
1,003
|
177
|
0.55
|
5,719
|
12.2
|
||||||||||||
Total Cosalá M&I
|
8,003
|
128
|
0.24
|
0.54
|
1.20
|
33,030
|
43.1
|
95.9
|
211.6
|
||||||||
Galena
|
|||||||||||||||||
Silver-Copper
|
|||||||||||||||||
Measured
|
220
|
583
|
0.70
|
4,117
|
3.4
|
||||||||||||
Indicated
|
502
|
626
|
0.61
|
10,115
|
6.7
|
||||||||||||
Silver-Copper M&I
|
722
|
613
|
0.63
|
14,231
|
10.1
|
||||||||||||
Silver-Lead
|
|||||||||||||||||
Measured
|
437
|
282
|
9.18
|
3,962
|
88.3
|
||||||||||||
Indicated
|
750
|
276
|
9.01
|
6,661
|
149.0
|
||||||||||||
Silver-Lead M&I
|
1,187
|
278
|
9.07
|
10,623
|
237.3
|
||||||||||||
Total Galena M&I
|
1,909
|
405
|
0.24
|
5.64
|
24,854
|
10.1
|
237.3
|
||||||||||
TOTAL M&I
|
9,912
|
182
|
0.24
|
1.52
|
0.97
|
57,884
|
53.1
|
333.2
|
211.6
|
1.
|
CIM Definition Standards were followed for Mineral Resource estimates.
|
2.
|
Mineral Resources are estimated at a NSR cut-off value of US$34/tonne at San Rafael, US$40/tonne at Zone 120, US$30/tonne at El Cajón and US$190/tonne at Galena. Mineral Resources at Nuestra Señora are estimated at a 90 g/t silver equivalent grade. NSR and silver equivalent cut-offs were calculated using recent or expected operating results for recoveries, off-site concentrate costs, and on-site operating costs.
|
3.
|
Mineral Resources are estimated using metal prices of US$18.00/oz Ag, US$3.00/lb Cu, US$1.05/lb Pb and US$1.05/lb Zn.
|
4.
|
Numbers may not add due to rounding.
|
Grade
|
Contained Metal
|
||||||||||||||||
Tonnes
|
Silver
|
Copper
|
Lead
|
Zinc
|
Silver
|
Copper
|
Lead
|
Zinc
|
|||||||||
000’s
|
g/t
|
%
|
%
|
%
|
koz
|
Mlbs
|
Mlbs
|
Mlbs
|
|||||||||
Cosalá
|
|||||||||||||||||
Nuestra Señora
|
2,009
|
101
|
0.26
|
0.83
|
1.90
|
6,539
|
11.3
|
37.0
|
84.3
|
||||||||
San Rafael
|
461
|
166
|
2.20
|
0.39
|
2,455
|
22.4
|
4.0
|
||||||||||
Zone 120
|
1,379
|
216
|
0.59
|
9,590
|
17.9
|
||||||||||||
El Cajón
|
278
|
103
|
0.18
|
923
|
1.1
|
||||||||||||
Total Cosalá Inferred
|
4,127
|
147
|
0.33
|
0.65
|
0.97
|
19,507
|
30.3
|
59.4
|
88.3
|
||||||||
Galena
|
|||||||||||||||||
Inferred Silver-Copper
|
316
|
671
|
0.74
|
6,815
|
5.1
|
||||||||||||
Inferred Silver-Lead
|
1,351
|
240
|
9.24
|
10,409
|
275.3
|
||||||||||||
Total Galena Inferred
|
1,667
|
321
|
0.14
|
7.49
|
17,224
|
5.1
|
275.3
|
||||||||||
TOTAL INFERRED
|
5,794
|
197
|
0.28
|
2.62
|
0.69
|
36,731
|
35.4
|
334.7
|
88.3
|
San Rafael
|
US$/t
|
Operating Costs
|
Processed
|
Mining
|
21.15
|
Processing
|
13.67
|
Technical Services
|
1.80
|
G&A
|
6.07
|
Total Operating Cost
|
42.69
|
San Rafael
|
Initial
|
Sustaining
|
Total
|
Capital Costs
|
K USD
|
K USD
|
K USD
|
Mine Development
|
6,072
|
20,704
|
26,776
|
Mine Infrastructure
|
7,855
|
14,678
|
22,533
|
Process Infrastructure
|
2,011
|
1,777
|
3,788
|
Other
|
340
|
1,883
|
2,223
|
10% Contingency
|
1,021
|
370
|
1,391
|
Working
|
4,154
|
(4,154)
|
-
|
Total Capital Cost
|
21,452
|
35,259
|
56,711
|
• |
Galena processing facility
|
• |
Galena and #3 shafts equipped for hoisting
|
• |
Coeur processing facility
|
• |
Coeur shaft equipped for hoisting
|
• |
Caladay shaft for ventilation only
|
• |
A tailings storage facility located near the town of Osburn
|
• |
Shops, offices, warehouse facilities and a mine dry
|
• |
Inter-connected level development connecting the 4 shafts
|
• |
Crushing and Screening
|
• |
Grinding and Cycloning
|
• |
Flotation Concentration
|
• |
Concentrate Dewatering
|
• |
Tailings Pumping for Sand Fill
|
• |
Tailings Pumping for Osburn Tailings Storage Facility
|
Galena Complex
|
US$/ton
|
Operating Costs
|
Processed
|
Mining
|
80.00
|
Processing
|
12.00
|
Exploration
|
2.00
|
G&A
|
53.00
|
Total Operating Cost
|
147.00
|
·
|
New 7.5% mining royalty. This royalty is deductible for tax purposes and is calculated as 7.5% of a royalty base which is computed as taxable revenues (except interest and inflationary adjustments), less allowable deductions for income tax purposes (except interest, inflationary adjustment, depreciation and mining fees), less prospecting and exploration expenses for the year;
|
·
|
New environmental duty of 0.5% of gross income arising from the sale of gold and silver;
|
·
|
Corporate income tax rate to remain at 30%, eliminating the scheduled reduction to 29% in 2014 and to 28% in 2015;
|
·
|
Elimination of the IETU;
|
·
|
Elimination of the option for depreciation of capital assets on an accelerated basis;
|
·
|
Elimination of 100% deduction on exploration expenses for locating and quantifying new deposits in pre-operating periods. These exploration costs will be amortized on a straight-line basis over 10 years; and
|
·
|
Reduction of deductibility for various employee fringe benefits; and imposes a 10% withholding tax on dividends distributed to resident individuals or foreign residents (including foreign corporations). According to the Mexico-Canada tax treaty, this dividend withholding tax rate may be reduced to 5%.
|
Period
|
High (C$)
|
Low (C$)
|
Total Volume
|
December, 2017
|
4.85
|
4.02
|
876,500
|
November, 2017
|
5.21
|
4.5
|
1,401,200
|
October, 2017
|
5.96
|
4.70
|
1,576,300
|
September, 2017
|
6.11
|
4.87
|
2,429,100
|
August, 2017
|
5.52
|
3.65
|
1,361,700
|
July, 2017
|
4.18
|
3.22
|
672,700
|
June, 2017
|
4.09
|
3.58
|
687,900
|
May, 2017
|
4.22
|
3.50
|
1,219,700
|
April, 2017
|
4.35
|
3.83
|
1,095,300
|
March, 2017
|
4.24
|
3.61
|
1,319,000
|
February, 2017
|
4.76
|
4.13
|
1,721,400
|
January, 2017
|
4.65
|
3.42
|
2,473,700
|
Peter Hawley
Quebec, Canada
Director
Director since:
May 12, 1998
|
Mr. Hawley is the founder of the Company and is currently the Chairman of Scorpio Gold Corporation. He is also the Executive Chairman of Defiance Silver Corp. Formerly he was President and CEO of the Company from July 20, 2012 to April 21, 2013 and prior to December 2010. Mr. Hawley has over 35 years’ experience in the exploration and mining industry and has worked as a consulting geologist to a large number of intermediate and senior mining companies including Teck Corp, Noranda Inc., Placer Dome Inc. and Barrick.
|
153,619 (0.37%)
|
Bradley R. Kipp
Ontario, Canada
Director
Director since
:
June 12, 2014
|
Mr. Kipp is currently the Executive Vice-President and Director of JSF Group Inc., formerly AR3 Capital Partners Inc., (commodity trading and protein distribution) since August 2015; Vice-President Finance of Summit Resource Management Limited (venture capital) since 1997. Director of Equity Financial Holdings Inc. since June 2008; Chief Financial Officer and Director of Blackshire Capital Corp. since February 2017. Previously he was Chief Financial Officer and Director of African Copper PLC (mining and exploration) from September 2004 to July 2015. Mr. Kipp has over 20 years’ experience specializing in operations, corporate finance and public company reporting in the mining sector. As part of these activities he has been Chief Financial Officer and/or a Director of several public companies listed on the Toronto and London AIM exchanges. Mr. Kipp is a member of the Chartered Professional Accountants of Canada and a member of the Chartered Financial Analyst Institute.
|
Nil
|
Gordon E. Pridham
Ontario, Canada
Director
Director since:
December 23, 2014
(U.S. Silver & Gold since August 13, 2012 and U.S. Silver Corp. since November 10, 2008)
|
Mr. Pridham is currently Principal of Edgewater Capital and sits on the public company boards of Newalta Corporation (Chairman), CHC Student Housing Inc. (Chairman), Orvana Minerals Inc. Formerly, Chairman of the Board of U.S. Silver. He is on the advisory board for Enertech Capital a Clean Tech Venture Fund. Recent activities include merger of US Silver with RX Gold as Chairman, sale of Norock Realty to Partners REIT as Chairman of the Special Committee, and sale of Western Prospector to CNNC as Chairman of the Special Committee. Mr. Pridham has over 35 years of experience financing and advising public and private companies in a cross section of industries, particularly in the resource sector. He has worked in New York, Calgary, Toronto and Hong Kong for global financial institutions in Corporate Banking, Investment Banking and Capital Markets. Mr. Pridham is a graduate of the University of Toronto and the Institute of Corporate Directors program.
|
30,102 (0.07%)
|
Manuel Rivera,
Mexico, Mexico
Director
Director since:
August 2, 2017
|
Mr. Rivera is the President & Founder of LATAMFUV, an investment firm focused in enabling, technology transfer from Israel innovation ecosystem into Latin America; With vast experience in media, digital, corporate transformation and M&A Mr. Rivera for more than a decade was the President & CEO of Grupo Expansión, one of Mexico's most influential media companies that under his leadership was taken from a minor magazine player to one of the largest digital publishers in Mexico and Latin America, successfully sold to a major strategic player in 2017. Mr. Rivera is also the current Co-chair of the Global Future Council for Media and Information of the World Economic Forum and also Chairman of the board for Make-A-Wish Mexico.
|
Nil
|
Lorie Waisberg
Ontario, Canada
Director
Director since:
December 23, 2014
(U.S. Silver & Gold since August 13, 2012 and RX Gold & Silver since July 6, 2011)
|
Mr. Waisberg is a corporate director currently serving as Chairman and a director of Chemtrade Logistics Income Fund and a director of Chantrell Ventures Corp. and Metalex Ventures Ltd. Prior to retirement, Mr. Waisberg served as Executive Vice President, Finance and Administration of Co-Steel Inc., a steel manufacturer. Prior thereto, Mr. Waisberg practiced law with a major Canadian law firm. Mr. Waisberg is accredited as ICD.D by the Institute of Corporate Directors.
|
618 (0%)
|
OFFICERS
|
||
Darren Blasutti
Ontario, Canada
President and Chief Executive Officer
|
See information for Mr. Blasutti set forth above in the Directors section of this table.
|
See above
|
Warren Varga
Ontario, Canada
Chief Financial Officer
|
Mr. Varga is currently the Chief Financial Officer of the Company; former Chief Financial Officer of U.S. Silver; Chief Financial Officer, RX Gold; Senior Director, Corporate Development, Barrick Gold Corporation
|
1,526 (0%)
|
Peter J. McRae
Ontario, Canada
Senior Vice President, Corporate Affairs & Chief Legal Officer
|
Mr. McRae is currently the Senior Vice President, Corporate Affairs & CLO of the Company, he also serves on the board of Barksdale Capital Corp.;
formerly
Vice President, General Counsel of
U.S. Silver; Vice President, Corporate Counsel, RX Gold; attorney at Weil, Gotshal & Manges LLP in New York.
|
381 (0%)
|
Daren Dell
Ontario, Canada
Chief Operating Officer
|
Mr. Dell is currently the Chief Operating Officer of the Company; former Vice President, Technical Services of U.S. Silver; Director, Corporate Development and Director, Technical Evaluations at Barrick Gold.
|
3,400 (0.01%)
|
Board Committee
|
Committee Members
|
Audit Committee
|
Bradley Kipp (Chair)
Lorie Waisberg
Gordon Pridham
|
Compensation and Corporate Governance Committee
|
Lorie Waisberg (Chair)
Alex Davidson
Gordon Pridham
|
Sustainability & Technical Committee
|
Alan Edwards (Chair)
Alex Davidson
Peter Hawley
|
(i)
|
was subject to an order that was issued while the director was acting in the capacity as director, chief executive officer or chief financial officer, or
|
(ii)
|
was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.
|
(i)
|
is, as at the date hereof, or has been, within 10 years before the date hereof, a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver-manager or trustee appointed to hold its assets; or
|
(ii)
|
has, within 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver-manager or trustee appointed to hold the assets of the director or executive officer.
|
(i)
|
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or
|
(ii)
|
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.
|
·
|
The Collective Bargaining Agreement with the United Steel Workers Union from June 29, 2014 to June 28, 2017 covering all of the hourly employees at the Galena Complex as described under “
General Development of the Business – Operations – Three Year History
”; and
|
·
|
The Pre-Payment Facility with Metagri S.A. de C.V., a subsidiary of Glencore PLC, that is in effect from January 2017 as described under
“General Development of the Business –
Financing Arrangements – Last 3 years
”
.
|
Member
|
Relevant Education and Experience
|
Bradley R. Kipp
(Chair)
|
·
Over 20 years’ experience in the mining sector specializing in operations, corporate finance and public reporting
·
Has been Chief Financial Officer and/or director of several public companies listed on both the Toronto and London AIM stock exchanges
4
|
Lorie Waisberg
|
·
Corporate director who has served on the audit committees of several public companies
·
Former Executive Vice President, Finance and Administration of Co-Steel Inc.
|
Gordon Pridham
|
·
More than 25 years’ experience in investment banking, capital markets and corporate finance
·
Has worked in New York, Calgary, Toronto and Hong Kong for global financial institutions and has financed and advised companies in the
public and private markets
|
Financial Year
|
Audit Fees (C$)
|
Audit Related Fees (C$)
|
Tax Fees (C$)
|
All Other Fees (C$)
|
2016
|
412,000
|
Nil
|
18,685
|
Nil
|
2017
|
240,000
|
Nil
|
33,900
|
Nil
|
Ag
|
silver
|
Au
|
gold
|
Cu
|
copper
|
g
|
gram
|
NI 43-101
|
National Instrument 43-101 –
Standards of Disclosure for Mineral Projects
|
km
|
kilometer
|
ha
|
hectare
|
NSR
|
net smelter return
|
m
|
meter
|
oz
|
ounce
|
Pb
|
lead
|
Zn
|
zinc
|
Imperial
|
Converts to
|
Metric
|
1 in
|
=
|
2.54 cm
|
1 ft (12 in)
|
=
|
0.3048 m
|
1 yd (3ft)
|
=
|
0.9144 m
|
1 mile (1760 yd)
|
=
|
1.6093 km
|
1 square in (in2)
|
=
|
6.4516 cm
2
|
1 square ft (ft
2
)
|
=
|
0.0929 m
2
|
1 square yd (yd
2
)
|
=
|
0.8361 m
2
|
1 acre (4840 yd
2
)
|
=
|
0.4047 ha
|
1 square mile (640 acres)
|
=
|
2.59 km
2
|
short ton
|
=
|
0.907 metric tonnes
|
1.
|
Role of the Audit Committee
|
(a)
|
The role of the Audit Committee is to assist the Board of Directors (the “
Board
”) in its oversight and evaluation of the following matters in respect of Americas Silver Corporation and its subsidiaries (the “
Company
”):
|
(i)
|
The quality and integrity of the financial statements of the Company;
|
(ii)
|
The compliance by the Company with legal and regulatory requirements in respect of financial disclosure;
|
(iii)
|
The Company’s internal control over financial reporting;
|
(iv)
|
The
qualification,
independence
and
performanceoftheCompany’s independent auditor;
|
(v)
|
The assessment, monitoring and management of the financial risks of the Company’s business;
|
(vi)
|
The performance of the Company’s Chief Financial Officer (the “
CFO
”); and
|
(vii)
|
Such other matters as assigned to it by the Board from time-to-time.
|
(b)
|
In addition, the Audit Committee provides an avenue for communication between the independent auditor, the Company’s CFO and other senior management, other employees and the Board concerning accounting, auditing and financial risk management matters.
|
(c)
|
The Audit Committee is directly responsible for the recommendation of the appointment and retention (and termination) and for the compensation and the oversight of the work of the independent auditor for the purpose of preparing audit reports or performing other audit, review or attest services for the Company.
|
(d)
|
The Audit Committee is
not
responsible for:
|
(i)
|
Planning or conducting audits, or
|
(ii)
|
Certifying or determining the completeness or accuracy of the Company’s financial statements or that those financial statements are in accordance with generally accepted accounting principles (“
GAAP
”).
|
(e)
|
Each member of the Audit Committee shall be entitled to rely in good faith upon:
|
(i)
|
Financial statements of the Company represented to him or her by senior management of the Company or in a written report of the independent auditor to present fairly the financial position of the Company in accordance with GAAP; and
|
(ii)
|
Any report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by any such person.
|
Americas Silver Corporation
|
Audit Committee Charter
|
2.
|
Membership
|
(a)
|
Members of the Audit Committee shall be appointed by the Board, on the recommendation of the Compensation and Corporate Governance Committee, and shall be made up of at least three (3) members of the Board.
|
(b)
|
The appointment of members of the Audit Committee shall take place annually at the first meeting of the Board after a meeting of shareholders at which directors are elected, provided that if the appointment of members of the Audit Committee is not so made, the directors who are then serving as members of the Audit Committee shall continue as members of the Audit Committee until their successors are appointed. The Board may appoint a member to fill a vacancy that occurs in the Audit Committee between annual elections of directors.
|
(c)
|
Any member of the Audit Committee may be removed from the Audit Committee by a resolution of the Board.
|
(d)
|
The Board shall appoint a Chair of the Audit Committee who shall be an independent non-executive director. In the absence of the Chair and/or an appointed deputy, the remaining members present shall elect one (1) of the members present to chair the meeting.
|
(e)
|
Each of the members of the Audit Committee shall (i) meet the standards of Director “independence” and (ii) shall be “financially literate”, in accordance with applicable legislation and stock exchange requirements, including Section 803 of the Company Guide and Rule 10A-3.
|
Americas Silver Corporation
|
Audit Committee Charter
|
(f)
|
At least one member of the Audit Committee shall be considered “financial sophisticated” as such term is used in the Company Guide and shall meet the requirements of an “Audit Committee Financial Expert” as defined by the United States Securities and Exchange Commission (the “
SEC
”).
|
(g)
|
No member of the Audit Committee shall:
|
(i)
|
Accept (directly or indirectly) any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries (other than remuneration for acting in his or her capacity as a director or Committee member) or be an “affiliated person” of the Company or any of its subsidiaries; or
|
(ii)
|
Concurrently serve on the audit committee of more than three (3) other public companies without the prior approval of the Audit Committee, the Compensation and Corporate Governance Committee and the Board and their determination that such simultaneous service would not impair the ability of the member to effectively serve on the Audit Committee (which determination shall be disclosed in the Company’s annual management information circular).
|
3.
|
Meetings and Procedure
|
(a)
|
The General Counsel/Corporate Secretary or such other appropriate designee shall act as the Secretary of the Audit Committee.
|
(b)
|
The quorum necessary for the transaction of business at any meeting of the Audit Committee shall be a majority of the number of members of the Audit Committee or such greater number as the Audit Committee shall by resolution determine.
|
(c)
|
The powers of the Audit Committee may be exercised at a duly convened meeting at which a quorum of the Audit Committee is present in person or by telephone or other electronic means or by a resolution signed by all members entitled to vote on that resolution at a meeting of the Audit Committee.
|
(d)
|
Each member (including the Chair) is entitled to one (but only one) vote in Audit Committee proceedings.
|
(e)
|
The Audit Committee shall meet at least quarterly and more frequently as circumstances require at such times and places as the Chair of the Audit Committee may determine.
|
(f)
|
The Audit Committee shall meet separately, periodically, with senior management and the independent auditor and may request any member of the Company’s senior management or the Company’s independent auditor or outside counsel to attend meetings of the Audit Committee or with any members of, or advisors to, the Audit Committee. The Audit Committee will also meet in camera at each of its regularly scheduled meetings.
|
(g)
|
Meetings of the Audit Committee shall be summoned by the Secretary of the Audit Committee at the request of any of its members.
|
Americas Silver Corporation
|
Audit Committee Charter
|
(h)
|
Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda shall be forwarded to each member of the Audit Committee, the independent auditor and any other person requested or required to attend, no fewer than three (3) working days prior to the meeting, or such period as may be reasonably necessary in the circumstances as determined by the Chair. Supporting materials shall be sent to the members of the Audit Committee and to other attendees as appropriate, at the same time or at such time as is practicable to enable appropriate review.
|
(i)
|
The Secretary of the Audit Committee or appropriate designee shall minute the proceedings and resolutions of all Audit Committee meetings. Minutes of the Audit Committee meetings shall be circulated to all members of the Audit Committee for their approval in due course.
|
(j)
|
Except as otherwise provided in this Charter, the Audit Committee may form and delegate authority to individual members and subcommittees of the Audit Committee where the Audit Committee determines it is appropriate to do so.
|
4.
|
Responsibilities
|
4.1
|
Independent Auditor
– The Audit Committee shall:
|
(a)
|
Recommend the appointment and the compensation of, and, if appropriate, the termination of the independent auditor, subject to such Board and shareholder approval as is required under applicable legislation and stock exchange requirements.
|
(b)
|
Obtain confirmation from the independent auditor that it ultimately is accountable, and will report directly, to the Audit Committee.
|
(c)
|
Pre-approve all audit and non-audit services (including any internal control-related services) provided by the independent auditor (subject to any restrictions on such non- audit services imposed by applicable legislation, regulatory requirements and applicable policies of securities administrators) and adopt policies as it determines appropriate for the pre-approval of such services including procedures for the delegation of authority to provide such approval to one or more members of the Audit Committee.
|
(d)
|
Review the experience and qualifications of the senior members of the independent auditor’s team.
|
(e)
|
Oversee the work of the independent auditor, including the resolution of any disagreements between senior management and the independent auditor regarding financial reporting.
|
(f)
|
Review with the independent auditor:
|
(i)
|
The quality, as well as the acceptability of the accounting principles that have been applied;
|
Americas Silver Corporation
|
Audit Committee Charter
|
(ii)
|
Any problems or difficulties the independent auditor may have encountered during the provision of its audit services, including any restrictions on the scope of activities or access to requested information and any significant disagreements with senior management, any management letter provided by the independent auditor or other material communication (including any schedules of unadjusted differences) to senior management and the Company’s response to that letter or communication; and
|
(iii)
|
Any changes to the Company’s significant auditing and accounting principles and practices suggested by the independent auditor or other members of senior management.
|
(g)
|
Obtain and review an annual report from the independent auditor regarding the independent auditor’s internal quality-control procedures outlining:
|
(i)
|
Any material issues raised by the most recent internal quality-control review, or peer review, of the auditor, or by any inquiry or investigation by governmental or professional authorities within the preceding five (5) years respecting one or more independent audits carried out by the firm;
|
(ii)
|
Any steps taken to deal with any such issues; and
|
(iii)
|
All relationships between the independent auditor and the Company.
|
(h)
|
Evaluate, annually, the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor’s independence.
|
(i)
|
Confirm with the independent auditor that it is in compliance with applicable legal, regulatory and professional standards relating to auditor independence.
|
(j)
|
Confirm with the independent auditor that it is a participating audit firm of the Canadian Public Accountability Board in compliance with all restrictions or sanctions imposed on it (if any).
|
(k)
|
Approve all engagements for accounting advice prepared to be provided by an accounting firm other than the independent auditor and review reports from senior management on tax advisory or other services provided by accounting firms other than the independent auditor.
|
(l)
|
Review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the issuer.
|
Americas Silver Corporation
|
Audit Committee Charter
|
4.2
|
Audit Process, Financial Statements and Related Disclosure and Internal Controls
– The Audit Committee shall:
|
(a)
|
Meet with senior management and/or the independent auditor to review and discuss:
|
(i)
|
The planning and staffing of the audit by the independent auditor;
|
(ii)
|
Before public disclosure, the Company’s annual audited financial statements and quarterly financial statements, the Company’s accompanying disclosure of Management’s Discussion and Analysis, earnings and related press releases, the Company’s annual report to be filed with the SEC, the Company’s annual information form, management information circular, and any prospectus or registration statement and make recommendations to the Board as to their approval and dissemination of those statements and disclosure;
|
(iii)
|
Financial information and earnings guidance provided to analysts and rating agencies: this review need not be done on a case by case basis but may be done generally (consisting of a discussion of the types of information disclosed and the types of presentations made) and need not take place in advance of the disclosure;
|
(iv)
|
Any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the selection or application of accounting principles, any major issues regarding auditing principles and practices, and the adequacy of internal controls that could significantly affect the Company’s financial statements;
|
(v)
|
All critical accounting policies and practices used;
|
(vi)
|
All alternative treatments of financial information within GAAP that have been discussed with senior management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor;
|
(vii)
|
The use of “
pro forma
” or “adjusted” non-GAAP information, the effect of new regulatory and accounting pronouncements;
|
(viii)
|
The effect of any material off-balance sheet structures, transactions, arrangements and obligations (contingent or otherwise) on the Company’s financial statements;
|
(ix)
|
Any disclosures concerning any weaknesses or any deficiencies in the design or operation of internal controls or disclosure controls made to the Audit Committee in connection with certification of forms by the CEO and/or the CFO for filing with applicable securities regulators;
|
Americas Silver Corporation
|
Audit Committee Charter
|
(x)
|
The adequacy of the Company’s internal accounting controls and management information systems and its financial, auditing and accounting organizations and personnel (including any fraud involving an individual with a significant role in internal controls or management information systems) and any special steps adopted in light of any material control deficiencies; and
|
(xi)
|
The adequacy of the Company’s procedures for the disclosure of any financial information extracted or derived from the Company’s financial statements.
|
4.3
|
Financial Risks
– The Audit Committee shall:
|
4.4
|
Compliance
– The Audit Committee shall:
|
(a)
|
Review with senior management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports, which raise material issues regarding the Company’s financial statements or accounting policies.
|
(b)
|
Review with the Company’s CFO and General Counsel legal matters that may have a material impact on the financial statements, the Company’s compliance policies and any material reports or inquiries received from regulators or governmental agencies.
|
(c)
|
Review for fairness to the Company proposed transactions, contracts and other arrangements between the Company and its subsidiaries and any insider, related party or affiliate (“
Related Party Transactions
”), and make recommendations to the Board whether any such transactions, contracts and other arrangements should be approved or continued.
5
The foregoing shall not include any compensation payable pursuant to any plan, program, contract or arrangement subject to the authority of the Company’s Compensation and Corporate Governance Committee. To avoid any confusion, the Audit Committee responsibilities identified in this subsection are the sole responsibility of the Audit Committee and may not be allocated by the Board to a different committee without revisions to this Charter.
|
(d)
|
Establish procedures for:
|
(i)
|
the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters; and
|
(ii)
|
the confidential, anonymous submission by employees of the Company with concerns regarding any accounting or auditing matters.
|
Americas Silver Corporation
|
Audit Committee Charter
|
5.
|
Reporting
|
(a)
|
The Audit Committee shall report to the Board on a regular basis. The reports of the Audit Committee shall include any issues of which the Audit Committee is aware with respect to the quality or integrity of the Company’s financial statements, its compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditor and changes in financial risks.
|
(b)
|
The Audit Committee also shall prepare, as required by applicable law, any audit committee report required for inclusion in the Company’s publicly filed documents.
|
6.
|
Access to Management and Independent Advisors
|
7.
|
Annual Evaluation
|
(a)
|
Conduct a review and evaluation of the performance of the Audit Committee and its members, including the compliance of the Audit Committee with this Charter.
|
(b)
|
Review and assess the adequacy of this Charter and any position description for its committee Chair and recommend to the Board any improvements to this Charter or the position description that the Audit Committee determines to be appropriate, except for minor technical amendments to this Charter, authority for which is delegated to the General Counsel/Corporate Secretary, who will report any such amendments to the Board at its next regular meeting.
|
AMERICAS SILVER CORPORATION
|
|
|
|
Consolidated Financial Statements
|
|
|
|
For the years ended December 31, 2017 and 2016
|
|
(In thousands of U.S. dollars, unless otherwise stated)
|
|
|
Page
|
|
Management’s Responsibility for Financial Reporting
|
2
|
Independent Auditor’s Report
|
3
|
Consolidated Statements of Financial Position
|
5
|
Consolidated Statements of Loss and Comprehensive Loss
|
6
|
Consolidated Statements of Changes in Equity
|
7
|
Consolidated Statements of Cash Flows
|
8
|
Notes to the Consolidated Financial Statements
|
9 – 31
|
(Signed) Darren Blasutti
|
(Signed) Warren Varga
|
President & Chief Executive Officer
|
Chief Financial Officer
|
|
|
|
|
Toronto, Ontario, Canada
|
|
March 5, 2018
|
|
|
December 31,
|
December 31,
|
||||||
As at
|
2017
|
2016
|
||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
9,325
|
$
|
24,055
|
||||
Trade and other receivables (Note 6)
|
6,631
|
4,002
|
||||||
Inventories (Note 7)
|
9,366
|
6,618
|
||||||
Prepaid expenses
|
869
|
1,385
|
||||||
Available-for-sale investment
|
-
|
503
|
||||||
|
26,191
|
36,563
|
||||||
Non-current assets
|
||||||||
Restricted cash
|
331
|
151
|
||||||
Long-term investments
|
4
|
28
|
||||||
Property, plant and equipment (Note 8)
|
100,301
|
80,548
|
||||||
Total assets
|
$
|
126,827
|
$
|
117,290
|
||||
|
||||||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Trade and other payables
|
$
|
10,393
|
$
|
8,727
|
||||
Credit facilities (Note 9)
|
-
|
7,758
|
||||||
Pre-payment facility (Note 10)
|
4,000
|
-
|
||||||
|
14,393
|
16,485
|
||||||
Non-current liabilities
|
||||||||
Other long-term liabilities
|
564
|
882
|
||||||
Pre-payment facility (Note 10)
|
11,000
|
-
|
||||||
Post-employment benefit obligations (Note 11)
|
8,618
|
8,116
|
||||||
Decommissioning provision (Note 12)
|
3,948
|
3,829
|
||||||
Deferred tax liabilities (Note 17)
|
246
|
834
|
||||||
Total liabilities
|
38,769
|
30,146
|
||||||
|
||||||||
Equity
|
||||||||
Share capital (Note 13)
|
207,012
|
202,191
|
||||||
Equity reserve
|
34,760
|
34,400
|
||||||
Foreign currency translation reserve
|
6,284
|
6,454
|
||||||
Changes in available-for-sale investment
|
-
|
237
|
||||||
Deficit
|
(159,998
|
)
|
(156,138
|
)
|
||||
Total equity
|
88,058
|
87,144
|
||||||
|
||||||||
Total liabilities and equity
|
$
|
126,827
|
$
|
117,290
|
Contingencies (Note 22)
|
|
|
|
APPROVED BY THE BOARD
|
|
|
|
|
|
(Signed) Brad Kipp
|
(Signed) Gordon Pridham
|
Director
|
Director
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
|
|
2017
|
2016
|
||||||
|
||||||||
Revenue
|
$
|
54,280
|
$
|
58,866
|
||||
|
||||||||
Cost of sales (Note 15)
|
(40,038
|
)
|
(46,145
|
)
|
||||
Depletion and amortization (Note 8)
|
(6,709
|
)
|
(7,388
|
)
|
||||
Care, maintenance and restructuring costs
|
(701
|
)
|
(993
|
)
|
||||
Corporate general and administrative (Note 16)
|
(6,651
|
)
|
(5,355
|
)
|
||||
Exploration costs
|
(2,726
|
)
|
(1,681
|
)
|
||||
Accretion on decommissioning provision (Note 12)
|
(185
|
)
|
(152
|
)
|
||||
Interest and financing expense
|
(723
|
)
|
(2,337
|
)
|
||||
Foreign exchange gain (loss)
|
(225
|
)
|
340
|
|||||
Loss on disposal of assets (Note 8)
|
-
|
(20
|
)
|
|||||
Loss on available-for-sale investment
|
(11
|
)
|
(132
|
)
|
||||
Write-down of equipment (Note 8)
|
(204
|
)
|
-
|
|||||
Loss before income taxes
|
(3,893
|
)
|
(4,997
|
)
|
||||
Income tax recovery (expense) (Note 17)
|
427
|
(210
|
)
|
|||||
Net loss
|
(3,466
|
)
|
(5,207
|
)
|
||||
|
||||||||
Other comprehensive income (loss)
|
||||||||
Items that will not be reclassified to net loss
|
||||||||
Actuarial gain (loss) on post-employment benefit obligations
|
(394
|
)
|
1,607
|
|||||
Items that may be reclassified subsequently to net loss
|
||||||||
Foreign currency translation reserve
|
(170
|
)
|
(1,334
|
)
|
||||
Change in fair value of available-for-sale securities
|
(237
|
)
|
237
|
|||||
Other comprehensive income (loss)
|
(801
|
)
|
510
|
|||||
Comprehensive loss
|
$
|
(4,267
|
)
|
$
|
(4,697
|
)
|
||
|
||||||||
Loss per share
|
||||||||
Basic and diluted
|
(0.09
|
)
|
(0.15
|
)
|
||||
|
||||||||
Weighted average number of common shares
|
||||||||
outstanding
|
||||||||
Basic and diluted (Note 14)
|
40,194,660
|
34,526,435
|
|
Foreign
|
Changes in fair
|
||||||||||||||||||||||||||
|
currency
|
value of
|
||||||||||||||||||||||||||
|
Share capital
|
Equity
|
translation
|
available-for-
|
Total
|
|||||||||||||||||||||||
|
Shares (000s)
|
Amount
|
reserve
|
reserve
|
sale investment
|
Deficit
|
equity
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance at January 1, 2016
|
28,935
|
$
|
181,143
|
$
|
28,452
|
$
|
7,788
|
$
|
-
|
$
|
(152,538
|
)
|
$
|
64,845
|
||||||||||||||
Net loss for the year
|
-
|
-
|
-
|
-
|
-
|
(5,207
|
)
|
(5,207
|
)
|
|||||||||||||||||||
Other comprehensive income (loss) for the year
|
-
|
-
|
-
|
(1,334
|
)
|
237
|
1,607
|
510
|
||||||||||||||||||||
Share-based payments
|
-
|
-
|
585
|
-
|
-
|
-
|
585
|
|||||||||||||||||||||
Shares and warrants issued on private placements
|
8,766
|
17,889
|
5,161
|
-
|
-
|
-
|
23,050
|
|||||||||||||||||||||
Proceeds from exercise of options and warrants
|
1,839
|
3,159
|
(1,149
|
)
|
-
|
-
|
-
|
2,010
|
||||||||||||||||||||
Warrants issued and amended
|
-
|
-
|
1,351
|
-
|
-
|
-
|
1,351
|
|||||||||||||||||||||
Balance at December 31, 2016
|
39,540
|
$
|
202,191
|
$
|
34,400
|
$
|
6,454
|
$
|
237
|
$
|
(156,138
|
)
|
$
|
87,144
|
||||||||||||||
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance at January 1, 2017
|
39,540
|
$
|
202,191
|
$
|
34,400
|
$
|
6,454
|
$
|
237
|
$
|
(156,138
|
)
|
$
|
87,144
|
||||||||||||||
Net loss for the year
|
-
|
-
|
-
|
-
|
-
|
(3,466
|
)
|
(3,466
|
)
|
|||||||||||||||||||
Other comprehensive loss for the year
|
-
|
-
|
-
|
(170
|
)
|
(237
|
)
|
(394
|
)
|
(801
|
)
|
|||||||||||||||||
Share-based payments
|
-
|
-
|
1,956
|
-
|
-
|
-
|
1,956
|
|||||||||||||||||||||
Proceeds from exercise of options and warrants
|
1,957
|
4,821
|
(1,596
|
)
|
-
|
-
|
-
|
3,225
|
||||||||||||||||||||
Balance at December 31, 2017
|
41,497
|
$
|
207,012
|
$
|
34,760
|
$
|
6,284
|
$
|
-
|
$
|
(159,998
|
)
|
$
|
88,058
|
|
2017
|
2016
|
||||||
Cash flow generated from (used in)
|
||||||||
|
||||||||
Operating activities
|
||||||||
Net loss for the year
|
$
|
(3,466
|
)
|
$
|
(5,207
|
)
|
||
Adjustments for the following non-cash items:
|
||||||||
Depletion and amortization
|
6,709
|
7,388
|
||||||
Deferred income tax expense (recovery)
|
(588
|
)
|
210
|
|||||
Accretion and decommissioning costs
|
185
|
152
|
||||||
Share-based payments
|
1,930
|
1,237
|
||||||
Unrealized loss (gain) on long-term investments
|
24
|
(17
|
)
|
|||||
Provision on other long-term liabilities
|
185
|
143
|
||||||
Deferred costs on credit facilities
|
173
|
1,178
|
||||||
Net charges on post-employment benefit obligations
|
108
|
433
|
||||||
Loss on disposal of assets
|
-
|
20
|
||||||
Loss on available-for-sale investment
|
8
|
132
|
||||||
Write-down of equipment
|
204
|
-
|
||||||
|
5,472
|
5,669
|
||||||
Changes in non-cash working capital items:
|
||||||||
Trade and other receivables
|
(2,629
|
)
|
542
|
|||||
Inventories
|
(2,748
|
)
|
2,172
|
|||||
Prepaid expenses
|
336
|
(648
|
)
|
|||||
Trade and other payables
|
1,147
|
(2,348
|
)
|
|||||
Net cash generated from operating activities
|
1,578
|
5,387
|
||||||
|
||||||||
Investing activities
|
||||||||
Expenditures on property, plant and equipment
|
(7,176
|
)
|
(4,660
|
)
|
||||
Net development costs on San Rafael
|
(13,435
|
)
|
(2,777
|
)
|
||||
Net development costs on El Cajón
|
1,054
|
(535
|
)
|
|||||
Purchase of San Felipe property option
|
(7,108
|
)
|
-
|
|||||
Net cash used in investing activities
|
(26,665
|
)
|
(7,972
|
)
|
||||
|
||||||||
Financing activities
|
||||||||
Sale of available-for-sale investment
|
274
|
89
|
||||||
Financing from (repayments to) credit facilities
|
(8,005
|
)
|
600
|
|||||
Financing from pre-payment facility
|
15,000
|
-
|
||||||
Proceeds from private placement
|
-
|
23,787
|
||||||
Proceeds from exercise of options and warrants
|
3,225
|
2,010
|
||||||
Net cash generated from financing activities
|
10,494
|
26,486
|
||||||
|
||||||||
Effect of foreign exchange rate changes on cash
|
(137
|
)
|
(1,165
|
)
|
||||
Increase (decrease) in cash and cash equivalents
|
(14,730
|
)
|
22,736
|
|||||
Cash and cash equivalents, beginning of year
|
24,055
|
1,319
|
||||||
Cash and cash equivalents, end of year
|
$
|
9,325
|
$
|
24,055
|
||||
|
||||||||
Cash and cash equivalents consist of:
|
||||||||
Cash
|
$
|
9,325
|
$
|
24,005
|
||||
Term deposits
|
-
|
-
|
||||||
|
$
|
9,325
|
$
|
24,005
|
||||
|
||||||||
Interest paid during the year
|
$
|
1,165
|
$
|
1,122
|
·
|
the title, specific risks and rewards of ownership have been transferred to the purchaser;
|
·
|
the Company does not retain continuing managerial involvement to the degree usually associated with ownership or effective control over the concentrate sold;
|
·
|
the amount of revenue and costs can be measured reliably; and
|
·
|
it is probable that the economic benefits associated with the transaction will flow to the Company.
|
•
|
Mining interests – unit of production based upon estimated proven and probable reserves
|
•
|
Plant and equipment – 3 – 30 years over straight line basis
|
•
|
Corporate office equipment – 3 – 10 years over straight line basis
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Trade receivables
|
$
|
3,779
|
$
|
2,126
|
||||
Value added taxes receivable
|
2,751
|
1,638
|
||||||
Other receivables
|
101
|
238
|
||||||
|
$
|
6,631
|
$
|
4,002
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Concentrates
|
$
|
1,391
|
$
|
1,266
|
||||
Ore stockpiles
|
2,877
|
161
|
||||||
Spare parts and supplies
|
5,098
|
5,191
|
||||||
|
$
|
9,366
|
$
|
6,618
|
|
Mining
|
Non-producing
|
Plant and
|
Corporate
office
|
||||||||||||||||
|
interests
|
properties
|
equipment
|
equipment
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Cost
|
||||||||||||||||||||
Balance at January 1, 2016
|
$
|
63,954
|
$
|
75,746
|
$
|
38,196
|
$
|
161
|
$
|
178,057
|
||||||||||
Assets additions
|
4,569
|
1,583
|
1,817
|
3
|
7,972
|
|||||||||||||||
Change in decommissioning provision
|
(952
|
)
|
61
|
-
|
-
|
(891
|
)
|
|||||||||||||
Disposals
|
-
|
-
|
-
|
(83
|
)
|
(83
|
)
|
|||||||||||||
Balance at December 31, 2016
|
67,571
|
77,390
|
40,013
|
81
|
185,055
|
|||||||||||||||
Assets additions
|
5,233
|
5,526
|
8,795
|
3
|
19,557
|
|||||||||||||||
Property purchase option acquired
|
-
|
7,108
|
-
|
-
|
7,108
|
|||||||||||||||
Change in decommissioning provision
|
(37
|
)
|
38
|
-
|
-
|
1
|
||||||||||||||
Reclassification | 31,595 | (31,595 | ) | - | - | - | ||||||||||||||
Balance at December 31, 2017
|
$
|
104,362
|
$
|
58,467
|
$
|
48,808
|
$
|
84
|
$
|
211,721
|
||||||||||
|
||||||||||||||||||||
Accumulated depreciation
|
||||||||||||||||||||
and depletion
|
||||||||||||||||||||
Balance at January 1, 2016
|
$
|
28,298
|
$
|
50,502
|
$
|
18,305
|
$
|
77
|
$
|
97,182
|
||||||||||
Depreciation/depletion for the year
|
3,112
|
-
|
4,261
|
15
|
7,388
|
|||||||||||||||
Disposals
|
-
|
-
|
-
|
(63
|
)
|
(63
|
)
|
|||||||||||||
Balance at December 31, 2016
|
31,410
|
50,502
|
22,566
|
29
|
104,507
|
|||||||||||||||
Depreciation/depletion for the year
|
3,438
|
-
|
3,261
|
10
|
6,709
|
|||||||||||||||
Write-down of equipment
|
-
|
-
|
204
|
-
|
204
|
|||||||||||||||
Balance at December 31, 2017
|
$
|
34,848
|
$
|
50,502
|
$
|
26,031
|
$
|
39
|
$
|
111,420
|
||||||||||
|
||||||||||||||||||||
Carrying value
|
||||||||||||||||||||
at December 31, 2016
|
$
|
36,161
|
$
|
26,888
|
$
|
17,447
|
$
|
52
|
$
|
80,548
|
||||||||||
at December 31, 2017
|
$
|
69,514
|
$
|
7,965
|
$
|
22,777
|
$
|
45
|
$
|
100,301
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Present value of funded obligations
|
$
|
26,730
|
$
|
23,910
|
||||
Fair value of plan assets
|
18,112
|
15,794
|
||||||
Deficit of funded plans
|
$
|
8,618
|
$
|
8,116
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Obligations, beginning of year
|
$
|
23,910
|
$
|
24,495
|
||||
Current service costs
|
774
|
781
|
||||||
Interest costs
|
999
|
1,057
|
||||||
Benefits paid
|
(901
|
)
|
(830
|
)
|
||||
Actuarial loss (gain)
|
1,948
|
(1,593
|
)
|
|||||
Obligations, end of year
|
$
|
26,730
|
$
|
23,910
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Assets, beginning of year
|
$
|
15,794
|
$
|
15,205
|
||||
Return on assets
|
678
|
648
|
||||||
Actuarial gain
|
1,555
|
13
|
||||||
Employer contributions
|
986
|
758
|
||||||
Benefits paid
|
(901
|
)
|
(830
|
)
|
||||
Assets, end of year
|
$
|
18,112
|
$
|
15,794
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Current service costs and interest costs
|
||||||||
included in cost of sales
|
$
|
1,773
|
$
|
1,838
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Discount rate (expense)
|
4.25
|
%
|
4.25
|
%
|
||||
Discount rate (year end disclosures)
|
3.75
|
%
|
4.25
|
%
|
||||
Future salary increases (salaried plan only)
|
5.00
|
%
|
5.00
|
%
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Provisions, beginning of year
|
$
|
3,829
|
$
|
4,568
|
||||
Decommissioning costs and change in estimates
|
(66
|
)
|
(891
|
)
|
||||
Accretion on decommissioning provision
|
185
|
152
|
||||||
Provisions, end of year
|
$
|
3,948
|
$
|
3,829
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Issued
|
||||||||
41,496,950 (2016: 39,540,384) common shares
|
$
|
207,012
|
$
|
202,191
|
|
December 31,
|
December 31,
|
||||||||||||||
|
2017
|
2016
|
||||||||||||||
|
Weighted
|
Weighted
|
||||||||||||||
|
average
|
average
|
||||||||||||||
|
exercise
|
exercise
|
||||||||||||||
|
Number
|
price
|
Number
|
price
|
||||||||||||
|
(thousands)
|
CAD
|
(thousands)
|
CAD
|
||||||||||||
|
||||||||||||||||
Balance, beginning of year
|
1,771
|
$
|
4.64
|
1,516
|
$
|
9.50
|
||||||||||
Granted
|
1,058
|
3.86
|
808
|
2.09
|
||||||||||||
Exercised
|
(261
|
)
|
3.22
|
(93
|
)
|
3.12
|
||||||||||
Expired
|
(252
|
)
|
17.31
|
(460
|
)
|
16.50
|
||||||||||
Balance, end of year
|
2,316
|
$
|
3.06
|
1,771
|
$
|
4.64
|
|
Weighted
|
||||||||||||||||||||
|
average
|
Weighted
|
Weighted
|
||||||||||||||||||
|
remaining
|
average
|
average
|
||||||||||||||||||
Exercise
|
contractual
|
exercise
|
exercise
|
||||||||||||||||||
price
|
life
|
Outstanding
|
price
|
Exercisable
|
price
|
||||||||||||||||
CAD
|
(years)
|
(thousands)
|
CAD
|
(thousands)
|
CAD
|
||||||||||||||||
|
|||||||||||||||||||||
2.00 to 3.00
|
0.78
|
1,163
|
$
|
2.14
|
899
|
$
|
2.17
|
||||||||||||||
3.01 to 4.00
|
2.07
|
1,050
|
3.85
|
350
|
3.85
|
||||||||||||||||
4.01 to 5.00
|
1.75
|
25
|
4.59
|
14
|
4.63
|
||||||||||||||||
5.01 to 6.00
|
0.41
|
78
|
5.65
|
78
|
5.65
|
||||||||||||||||
|
2,316
|
$
|
3.06
|
1,341
|
$
|
2.84
|
|
Year ended
|
Year ended
|
||||||
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Expected stock price volatility
(1)
|
83
|
%
|
83
|
%
|
||||
Risk free interest rate
|
0.87
|
%
|
0.47
|
%
|
||||
Expected life
|
3 years
|
3 years
|
||||||
Expected forfeiture rate
|
4.18
|
%
|
4.97
|
%
|
||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
||||
|
||||||||
Share-based payments included in cost of sales
|
$
|
-
|
$
|
19
|
||||
Share-based payments included in general and
|
||||||||
administrative expenses
|
1,491
|
566
|
||||||
Total share-based payments
|
$
|
1,491
|
$
|
585
|
(1)
|
Expected volatility has been based on historical volatility of the Company’s publicly traded shares.
|
Number of
|
Exercise
|
Issuance
|
Expiry
|
warrants
|
price (CAD)
|
date
|
date
|
742,883
|
4.68
|
Jul 2016
|
Jun 14, 2021
|
224,728
|
4.20
|
Jul 2016
|
Jun 14, 2018
|
1,350,204
|
4.68
|
Jun 2016
|
Jun 9, 2021
|
388,886
|
4.20
|
Jun 2016
|
Jun 9, 2018
|
1,537,355
|
1.20
|
Feb 2016
|
Feb 10, 2019
|
307,777
|
1.20
|
Nov 2015
|
Nov 10, 2018
|
29,166
|
1.56
|
Aug 2015
|
Aug 26, 2018
|
190,906
|
3.00
|
Aug 2015
|
Aug 26, 2018
|
395,486
|
1.56
|
May 2015
|
May 27, 2018
|
5,167,391
|
|
|
|
|
Year ended
|
Year ended
|
||||||
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Basic weighted average number of shares
|
40,194,660
|
34,526,435
|
||||||
Effect of dilutive stock options and warrants
|
-
|
-
|
||||||
Diluted weighted average number of shares
|
40,194,660
|
34,526,435
|
|
Year ended
|
Year ended
|
||||||
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Salaries and employee benefits
|
$
|
22,314
|
$
|
23,430
|
||||
Raw materials and consumables
|
14,252
|
15,065
|
||||||
Utilities
|
3,902
|
4,113
|
||||||
Other costs
|
2,318
|
1,768
|
||||||
Changes in inventories
|
(2,748
|
)
|
1,769
|
|||||
|
$
|
40,038
|
$
|
46,145
|
|
Year ended
|
Year ended
|
||||||
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Salaries and employee benefits
|
$
|
2,173
|
$
|
2,153
|
||||
Directors’ fees
|
269
|
251
|
||||||
Share-based payments
|
1,930
|
1,237
|
||||||
Professional fees
|
477
|
639
|
||||||
Office and general
|
1,802
|
1,075
|
||||||
|
$
|
6,651
|
$
|
5,355
|
|
Year ended
|
Year ended
|
||||||
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Current income tax expense
|
$
|
161
|
$
|
-
|
||||
Deferred income tax expense (recovery)
|
(588
|
)
|
210
|
|||||
Income tax expense (recovery)
|
$
|
(427
|
)
|
$
|
210
|
|
Year ended
|
Year ended
|
||||||
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Tax recovery at statutory rates
|
$
|
(1,032
|
)
|
$
|
(1,330
|
)
|
||
Mexican mining royalty
|
199
|
210
|
||||||
Impact of foreign tax rates
|
18
|
215
|
||||||
Non-deductible expenses
|
535
|
1,477
|
||||||
Alternative minimum tax credits
|
(626
|
)
|
-
|
|||||
Losses not recognized (recognized)
|
479
|
(362
|
)
|
|||||
Income tax expense (recovery)
|
$
|
(427
|
)
|
$
|
210
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Property, plant and equipment
|
$
|
900
|
$
|
972
|
||||
Total deferred tax liabilities
|
900
|
972
|
||||||
|
||||||||
Alternative minimum tax credits
|
626
|
-
|
||||||
Other
|
28
|
138
|
||||||
Total deferred tax assets
|
654
|
138
|
||||||
Net deferred tax liabilities
|
$
|
246
|
$
|
834
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Property, plant and equipment
|
$
|
4,890
|
$
|
3,272
|
||||
Mexican tax losses (expiring in 2018 - 2027)
|
42,843
|
52,702
|
||||||
Canadian tax losses (expiring in 2029 - 2037)
|
35,173
|
30,268
|
||||||
U.S. tax losses (expiring in 2020 - 2037)
|
32,070
|
29,764
|
||||||
Provisions and other
|
24,956
|
24,718
|
||||||
Deferred Mexican mining royalty
|
872
|
834
|
||||||
|
$
|
140,804
|
$
|
141,558
|
|
Year ended
|
|
Year ended
|
|
December 31,
|
|
December 31,
|
|
2017
|
|
2016
|
|
|
|
|
Salaries and benefits
|
$ 888
|
$ 860
|
|
Severance
|
-
|
75
|
|
Directors’ fees
|
269
|
251
|
|
Share-based payments
|
1,617
|
968
|
|
December 31, 2017
|
|||||||||||||||||||
|
Less than
|
Over 5
|
||||||||||||||||||
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
|
||||||||||||||||||||
Trade and other payables
|
$
|
10,393
|
$
|
10,393
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Pre-payment facility
|
15,000
|
4,000
|
11,000
|
-
|
-
|
|||||||||||||||
Interest on pre-payment facility
|
1,601
|
856
|
745
|
-
|
-
|
|||||||||||||||
Leases
|
1,438
|
290
|
563
|
540
|
45
|
|||||||||||||||
Other long-term liabilities
|
564
|
-
|
95
|
-
|
469
|
|||||||||||||||
|
$
|
28,996
|
$
|
15,539
|
$
|
12,403
|
$
|
540
|
$
|
514
|
(1)
|
Interest rate risk
|
(2)
|
Currency risk
|
|
As at December 31, 2017
|
|||||||
|
CAD
|
MXP
|
||||||
|
||||||||
Cash and cash equivalents
|
$
|
1,436
|
$
|
1,681
|
||||
Trade and other receivables
|
19
|
2,814
|
||||||
Trade and other payables
|
1,831
|
4,385
|
|
CAD/USD
|
MXP/USD
|
||||||
|
Exchange rate
|
Exchange rate
|
||||||
|
+/- 10%
|
|
+/- 10%
|
|
||||
|
||||||||
Approximate impact on:
|
||||||||
Net loss
|
$
|
732
|
$
|
850
|
||||
Other comprehensive loss
|
(93
|
)
|
110
|
(3)
|
Price risk
|
·
|
Cash and cash equivalents: The fair value of cash equivalents is valued using quoted market prices in active markets. The Company’s cash equivalents consist of money market accounts held at financial institutions which have original maturities of less than 90 days.
|
·
|
Trade and other receivables: The fair value of trade receivables from silver sales contracts that contain provisional pricing terms is determined using the appropriate quoted forward price from the exchange that is the principal active market for the particular metal. As such, there is an embedded derivative feature within trade receivables.
|
·
|
Available-for-sale investment: Investment in publicly quoted equity securities have been marked to market based on the trading price as at December 31, 2017.
|
·
|
Long-term investments: The fair value of long-term investments is determined based on the closing price of each security at the balance sheet date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular security.
|
·
|
Embedded derivatives: Revenues from the sale of metals produced since the commencement of commercial production are based on provisional prices at the time of shipment. Variations between the price recorded at the time of sale and the actual final price received from the customer are caused by changes in market prices for metals sold and result in an embedded derivative in revenues and accounts receivable.
|
·
|
Derivatives: The Company uses derivative and non-derivative instruments to manage financial risks, including commodity, interest rate, and foreign exchange risks. The use of derivative contracts is governed by documented risk management policies and approved limits. The Company does not use derivatives for speculative purposes. The fair value of the Company’s derivative instruments is based on quoted market prices for similar instruments and at market prices at the valuation date.
|
·
|
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
·
|
Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means.
|
·
|
Level 3 inputs are unobservable (supported by little or no market activity).
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Level 1
|
||||||||
Cash and cash equivalents
|
$
|
9,325
|
$
|
24,055
|
||||
Restricted cash
|
331
|
151
|
||||||
Available-for-sale investment
|
-
|
503
|
||||||
Long-term investments
|
4
|
28
|
||||||
|
||||||||
Level 2
|
||||||||
Trade and other receivables
|
6,631
|
4,002
|
||||||
Credit facilities
|
-
|
7,758
|
||||||
Pre-payment facility
|
15,000
|
-
|
|
As at December 31, 2017
|
As at December 31, 2016
|
||||||||||||||||||||||||||||||
|
Mexican Operations
|
U.S.
Operations
|
Corporate and Other
|
Total
|
Mexican Operations
|
U.S.
Operations
|
Corporate and Other
|
Total
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Cash and cash equivalents
|
$
|
5,963
|
$
|
1,791
|
$
|
1,571
|
$
|
9,325
|
$
|
1,875
|
$
|
3,511
|
$
|
18,669
|
$
|
24,055
|
||||||||||||||||
Trade and other receivables
|
4,901
|
1,711
|
19
|
6,631
|
2,855
|
1,106
|
41
|
4,002
|
||||||||||||||||||||||||
Inventories
|
6,301
|
3,065
|
-
|
9,366
|
3,738
|
2,880
|
-
|
6,618
|
||||||||||||||||||||||||
Prepaid expenses
|
346
|
305
|
218
|
869
|
840
|
353
|
192
|
1,385
|
||||||||||||||||||||||||
Available-for-sale investment
|
-
|
-
|
-
|
-
|
-
|
-
|
503
|
503
|
||||||||||||||||||||||||
Restricted cash
|
160
|
171
|
-
|
331
|
-
|
151
|
-
|
151
|
||||||||||||||||||||||||
Long-term investments
|
-
|
-
|
4
|
4
|
-
|
-
|
28
|
28
|
||||||||||||||||||||||||
Property, plant and equipment
|
59,686
|
40,570
|
45
|
100,301
|
42,474
|
38,022
|
52
|
80,548
|
||||||||||||||||||||||||
Total assets
|
$
|
77,357
|
$
|
47,613
|
$
|
1,857
|
$
|
126,827
|
$
|
51,782
|
$
|
46,023
|
$
|
19,485
|
$
|
117,290
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Trade and other payables
|
$
|
5,893
|
$
|
2,608
|
$
|
1,892
|
$
|
10,393
|
$
|
4,144
|
$
|
2,422
|
$
|
2,161
|
$
|
8,727
|
||||||||||||||||
Other long-term liabilities
|
-
|
469
|
95
|
564
|
-
|
448
|
434
|
882
|
||||||||||||||||||||||||
Credit facilities
|
-
|
-
|
-
|
-
|
-
|
-
|
7,758
|
7,758
|
||||||||||||||||||||||||
Pre-payment facility
|
15,000
|
-
|
-
|
15,000
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Post-employment benefit obligations
|
-
|
8,618
|
-
|
8,618
|
-
|
8,116
|
-
|
8,116
|
||||||||||||||||||||||||
Decommissioning provision
|
1,904
|
2,044
|
-
|
3,948
|
1,834
|
1,995
|
-
|
3,829
|
||||||||||||||||||||||||
Deferred tax liabilities (assets)
|
872
|
(626
|
)
|
-
|
246
|
834
|
-
|
-
|
834
|
|||||||||||||||||||||||
Total liabilities
|
$
|
23,669
|
$
|
13,113
|
$
|
1,987
|
$
|
38,769
|
$
|
6,812
|
$
|
12,981
|
$
|
10,353
|
$
|
30,146
|
|
Year ended December 31, 2017
|
Year ended December 31, 2016
|
||||||||||||||||||||||||||||||
|
Mexican Operations
|
U.S.
Operations
|
Corporate and Other
|
Total
|
Mexican Operations
|
U.S.
Operations
|
Corporate and Other
|
Total
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Revenue
|
$
|
21,512
|
$
|
32,768
|
$
|
-
|
$
|
54,280
|
$
|
23,322
|
$
|
35,544
|
$
|
-
|
$
|
58,866
|
||||||||||||||||
Cost of sales
|
(10,195
|
)
|
(29,843
|
)
|
-
|
(40,038
|
)
|
(17,679
|
)
|
(28,466
|
)
|
-
|
(46,145
|
)
|
||||||||||||||||||
Depletion and amortization
|
(3,247
|
)
|
(3,452
|
)
|
(10
|
)
|
(6,709
|
)
|
(3,534
|
)
|
(3,839
|
)
|
(15
|
)
|
(7,388
|
)
|
||||||||||||||||
Care, maintenance and restructuring costs
|
(60
|
)
|
(473
|
)
|
(168
|
)
|
(701
|
)
|
(399
|
)
|
(495
|
)
|
(99
|
)
|
(993
|
)
|
||||||||||||||||
Corporate general and administrative
|
-
|
-
|
(6,651
|
)
|
(6,651
|
)
|
-
|
-
|
(5,355
|
)
|
(5,355
|
)
|
||||||||||||||||||||
Exploration costs
|
(2,407
|
)
|
(319
|
)
|
-
|
(2,726
|
)
|
(690
|
)
|
(991
|
)
|
-
|
(1,681
|
)
|
||||||||||||||||||
Accretion on decommissioning provision
|
(144
|
)
|
(41
|
)
|
-
|
(185
|
)
|
(112
|
)
|
(40
|
)
|
-
|
(152
|
)
|
||||||||||||||||||
Interest and financing income (expense)
|
(35
|
)
|
-
|
(688
|
)
|
(723
|
)
|
2
|
-
|
(2,339
|
)
|
(2,337
|
)
|
|||||||||||||||||||
Foreign exchange gain (loss)
|
(308
|
)
|
-
|
83
|
(225
|
)
|
384
|
-
|
(44
|
)
|
340
|
|||||||||||||||||||||
Loss on disposal of assets
|
-
|
-
|
-
|
-
|
-
|
-
|
(20
|
)
|
(20
|
)
|
||||||||||||||||||||||
Loss on available-for-sale investment
|
-
|
-
|
(11
|
)
|
(11
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
Write-down of equipment
|
-
|
(204
|
)
|
-
|
(204
|
)
|
-
|
-
|
(132
|
)
|
(132
|
)
|
||||||||||||||||||||
Income (loss) before income taxes
|
5,116
|
(1,564
|
)
|
(7,445
|
)
|
(3,893
|
)
|
1,294
|
1,713
|
(8,004
|
)
|
(4,997
|
)
|
|||||||||||||||||||
Income tax recovery (expense)
|
(219
|
)
|
646
|
-
|
427
|
(210
|
)
|
-
|
-
|
(210
|
)
|
|||||||||||||||||||||
Net income (loss) for the year
|
$
|
4,897
|
$
|
(918
|
)
|
$
|
(7,445
|
)
|
$
|
(3,466
|
)
|
$
|
1,084
|
$
|
1,713
|
$
|
(8,004
|
)
|
$
|
(5,207
|
)
|
|
December 31,
|
December 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Equity attributable to shareholders of the Company
|
$
|
88,058
|
$
|
87,144
|
|
|
|
|
AMERICAS SILVER CORPORATION
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
FOR THE YEAR ENDED DECEMBER 31, 2017
|
|
DATED MARCH 5, 2018
|
|
|
|
|
|
Forward-Looking Statements
|
1
|
Cautionary Note to Investors in United States Regarding Resources and Reserves
|
1
|
Management’s Discussion and Analysis
|
2
|
Overview
|
3
|
Recent Developments and Operational Discussion
|
4
|
Results of Operations
|
11
|
Selected Annual Financial Information
|
14
|
Summary of Quarterly Results
|
15
|
Liquidity
|
15
|
Capital Resources |
16
|
Off-Balance Sheet Arrangements
|
17
|
Transactions with Related Parties
|
17
|
Risk Factors
|
17
|
Significant Accounting Policies and Estimates
|
30
|
Financial Instruments
|
32
|
Capital Structure
|
33
|
Controls and Procedures
|
33
|
Non-IFRS Measures: Cash Cost per Ounce and All-In Sustaining Cost per Ounce
|
33
|
·
|
Production of 4.7 million consolidated silver equivalent ounces and 2.1 million silver ounces at cost of sales of $10.13/oz. equivalent silver, by-product cash cost of $9.45/oz. silver, and all-in sustaining cost of $13.29/oz. silver for the year.
|
·
|
Revenue of $54.3 million and net loss of $3.5 million for the year or ($0.09) per share (excluding $4.9 million El Cajón and $4.0 million San Rafael pre-production revenues).
|
·
|
Cash flow generated from operating activities before non-cash working capital items of $5.5 million during the year.
|
·
|
The San Rafael mine declared commercial production effective December 19, 2017 and was constructed for approximately $16 million, 32% below the initial pre-feasibility estimate.
|
·
|
Released significant results from an initial drill program in August, 2017 around Zone 120 and expanded the program by seven additional holes completed in Q4-2017, resulting in a Board approved $4 million exploration program for fiscal 2018.
|
·
|
Closed a $15 million concentrate pre-payment facility with a subsidiary of Glencore PLC at U.S. LIBOR rate plus 5% per annum to fund a portion of the San Rafael mine development costs.
|
·
|
Repaid outstanding debt of $8 million to the Company’s previous lenders.
|
·
|
Purchased an option on the San Felipe property (Ag, Zn, Pb) in Sonora, Mexico for payments totalling $7 million (plus VAT).
|
·
|
Completed the Company’s listing of its common shares on the NYSE American to increase the Company’s share liquidity and access to capital.
|
·
|
Step-out hole SR-396 with 61.4
1
meters grading 306g/t Ag, 0.23g/t Au and 0.79% Cu (412g/t AgEq
2
) including 5.9 meters of 932g/t Ag, 0.82g/t Au and 1.94% Cu (1,213g/t AgEq), plus another interval of 9.4 meters grading 479g/t Ag, 0.29g/t Au and 1.07% Cu (622g/t AgEq)
|
·
|
Step-out hole SR-401 with 39.6 meters grading 205g/t Ag, 0.28g/t Au and 0.53% Cu (289g/t AgEq) including 11.4 meters of 473g/t Ag, 0.68g/t Au and 1.20% Cu (659g/t AgEq)
|
·
|
Infill hole SR-391 with 22.8 meters grading 138g/t Ag, 0.22g/t Au and 0.37% Cu (196g/t AgEq) including 4.0 meters of 460g/t Ag, 0.20g/t Au and 0.88% Cu (575g/t AgEq)
|
·
|
Infill hole SR-392 with 18.1 meters grading 113g/t Ag, 0.08g/t Au and 0.17% Cu (138g/t AgEq)
|
·
|
Hole SR-402, containing 16.9 meters grading 138g/t Ag, 0.23g/t Au and 0.43% Cu (204g/t AgEq
3
)
|
·
|
Hole SR-409, containing 2.0 meters grading 920g/t Ag, 0.40g/t Au and 2.36% Cu (1,218g/t AgEq)
|
·
|
Hole SR-415, containing 23.4 meters grading 259g/t Ag, 0.40g/t Au and 0.5% Cu (345g/t AgEq) and 7.2 meters grading 335 g/t Ag, 0.23 g/t Au and 0.55% Cu (413g/t AgEq)
|
·
|
Hole SR-416 with 12.6 meters grading 119g/t Ag, 0.17g/t Au and 0.29% Cu (165g/t AgEq
3
)
|
·
|
Hole SR-417 with 21.7 meters grading 124g/t Ag, 0.21g/t Au and 0.34% Cu (178g/t AgEq)
|
·
|
Hole SR-420 with 29.2 meters grading 115g/t Ag, 0.12g/t Au and 0.42% Cu (173g/t AgEq)
|
Fiscal Year Ended December 31,
|
||||||||
|
2017
|
2016
|
||||||
Revenues ($ M)
|
$
|
54.3
|
$
|
58.9
|
||||
Silver Produced (oz)
|
2,056,017
|
2,389,808
|
||||||
Zinc Produced (lbs)
|
11,623,138
|
10,488,773
|
||||||
Lead Produced (lbs)
|
25,392,619
|
29,067,673
|
||||||
Copper Produced (lbs)
|
1,167,401
|
1,058,250
|
||||||
Total Silver Equivalent Produced (oz)
1
|
4,746,387
|
4,579,373
|
||||||
Cost of Sales/Ag Eq Oz Produced ($/oz)
3
|
$
|
10.13
|
$
|
10.08
|
||||
Cash Cost/Ag Oz Produced ($/oz)
2,3
|
$
|
9.45
|
$
|
10.00
|
||||
All-In Sustaining Cost/Ag Oz Produced ($/oz)
2,3
|
$
|
13.29
|
$
|
12.71
|
||||
Net Income (Loss) ($ M)
|
$
|
(3.5
|
)
|
$
|
(5.2
|
)
|
||
Comprehensive Income (Loss) ($ M)
|
$
|
(4.3
|
)
|
$
|
(4.7
|
)
|
1 |
Throughout this MD&A, silver equivalent production was calculated based on average silver, zinc, lead and copper realized prices during each respective period.
|
2 |
Refer to “Non-IFRS Measures: Cash Cost per Ounce and All-In Sustaining Cost per Ounce” section in this MD&A.
|
3 |
Calculation excludes pre-production of 50,490 silver ounces and 435,323 silver equivalent ounces mined from San Rafael during its commissioning period, and excludes pre-production of 245,391 silver ounces and 360,530 silver equivalent ounces mined
from
El
Cajón
during its commissioning period. Pre-production revenue and cost of sales from San Rafael and El
Cajón are capitalized as an offset to development costs
.
|
Fiscal Year Ended December 31,
|
||||||||
|
2017
|
2016
|
||||||
Tonnes Milled
|
526,726
|
500,509
|
||||||
Silver Grade (g/t)
|
66
|
78
|
||||||
Zinc Grade (%)
1
|
1.66
|
1.35
|
||||||
Lead Grade (%)
1
|
0.82
|
0.57
|
||||||
Copper Grade (%)
1
|
0.17
|
0.20
|
||||||
Silver Recovery (%)
|
82.5
|
79.9
|
||||||
Zinc Recovery (%)
|
76.6
|
70.9
|
||||||
Lead Recovery (%)
|
75.1
|
66.4
|
||||||
Copper Recovery (%)
|
68.6
|
47.2
|
||||||
Silver Produced (oz)
|
920,806
|
1,006,119
|
||||||
Zinc Produced (lbs)
|
11,623,138
|
10,488,773
|
||||||
Lead Produced (lbs)
|
5,616,905
|
4,188,539
|
||||||
Copper Produced (lbs)
|
1,167,401
|
1,058,250
|
||||||
Total Silver Equivalent Produced (oz)
|
2,386,135
|
1,960,694
|
||||||
Silver Sold (oz)
|
912,983
|
956,939
|
||||||
Zinc Sold (lbs)
|
10,919,556
|
10,258,081
|
||||||
Lead Sold (lbs)
|
5,351,596
|
4,251,898
|
||||||
Copper Sold (lbs)
|
1,144,385
|
1,017,940
|
||||||
Realized Silver Price ($/oz)
|
$
|
17.11
|
$
|
17.07
|
||||
Realized Zinc Price ($/lb)
|
$
|
1.33
|
$
|
0.96
|
||||
Realized Lead Price ($/lb)
|
$
|
1.07
|
$
|
0.86
|
||||
Realized Copper Price ($/lb)
|
$
|
2.79
|
$
|
2.22
|
||||
Cost of Sales/Ag Eq Oz Produced ($/oz)
3
|
$
|
6.41
|
$
|
9.02
|
||||
Cash Cost/Ag Oz Produced ($/oz)
2,3
|
$
|
(0.13
|
)
|
$
|
7.79
|
|||
All-In Sustaining Cost/Ag Oz Produced ($/oz)
2,3
|
$
|
0.57
|
$
|
9.31
|
1 |
Zinc and lead grades only refer to grades from silver-zinc-lead-copper and silver-zinc-lead ores, and copper grades only refer to grades from silver-zinc-lead-copper and silver-copper ores.
|
2 |
Refer to “Non-IFRS Measures: Cash Cost per Ounce and All-In Sustaining Cost per Ounce” section in this MD&A.
|
3 |
Calculation excludes pre-production of 50,490 silver ounces and 435,323 silver equivalent ounces mined from San Rafael during its commissioning period, and excludes pre-production of 245,391 silver ounces and 360,530 silver equivalent ounces mined
from
El
Cajón
during its commissioning period. Pre-production revenue and cost of sales from San Rafael and El
Cajón are capitalized as an offset to development costs
.
|
Fiscal Year Ended December 31,
|
||||||||
|
2017
|
2016
|
||||||
Tonnes Milled
|
163,772
|
171,107
|
||||||
Silver Grade (g/t)
|
227
|
266
|
||||||
Lead Grade (%)
|
6.02
|
7.29
|
||||||
Silver Recovery (%)
|
95.0
|
94.4
|
||||||
Lead Recovery (%)
|
90.9
|
90.5
|
||||||
Silver Produced (oz)
|
1,135,211
|
1,383,689
|
||||||
Lead Produced (lbs)
|
19,775,714
|
24,879,134
|
||||||
Total Silver Equivalent Produced (oz)
|
2,360,252
|
2,618,679
|
||||||
Silver Sold (oz)
|
1,143,139
|
1,384,380
|
||||||
Lead Sold (lbs)
|
19,792,596
|
24,976,822
|
||||||
Realized Silver Price ($/oz)
|
$
|
17.11
|
$
|
17.21
|
||||
Realized Lead Price ($/lb)
|
$
|
1.06
|
$
|
0.86
|
||||
Cost of Sales/Ag Eq Oz Produced ($/oz)
|
$
|
12.64
|
$
|
10.87
|
||||
Cash Cost/Ag Oz Produced ($/oz)
1
|
$
|
14.73
|
$
|
11.60
|
||||
All-In Sustaining Cost/Ag Oz Produced ($/oz)
1
|
$
|
20.30
|
$
|
15.18
|
1 |
Refer to “Non-IFRS Measures: Cash Cost per Ounce and All-In Sustaining Cost per Ounce” section in this MD&A.
|
Fiscal Year Ended December 31
|
2017
|
2016
|
2015
|
|||||||||
Revenues ($ M)
|
$
|
54.3
|
$
|
58.9
|
$
|
53.5
|
||||||
Net Loss ($ M)
|
(3.5
|
)
|
(5.2
|
)
|
(19.4
|
)
|
||||||
Comprehensive Loss ($ M)
|
(4.3
|
)
|
(4.7
|
)
|
(23.7
|
)
|
||||||
|
||||||||||||
Net Loss per Common Share - Basic and Diluted
|
$
|
(0.09
|
)
|
$
|
(0.15
|
)
|
$
|
(0.68
|
)
|
|||
|
||||||||||||
Silver Produced (oz)
|
2,056,017
|
2,389,808
|
2,652,026
|
|||||||||
Zinc Produced (lbs)
|
11,623,138
|
10,488,773
|
11,647,962
|
|||||||||
Lead Produced (lbs)
|
25,392,619
|
29,067,673
|
22,905,826
|
|||||||||
Copper Produced (lbs)
|
1,167,401
|
1,058,250
|
2,054,896
|
|||||||||
Cost of Sales/Ag Eq Oz Produced ($/oz)
|
$
|
10.13
|
$
|
9.86
|
$
|
10.80
|
||||||
Cash Cost/Ag Oz Produced ($/oz)
1
|
$
|
9.45
|
$
|
10.00
|
$
|
12.75
|
||||||
All-In Sustaining Cost/Ag Oz Produced ($/oz)
1
|
$
|
13.29
|
$
|
12.71
|
$
|
17.16
|
||||||
|
||||||||||||
Cash ($ M)
|
$
|
9.3
|
$
|
24.1
|
$
|
1.3
|
||||||
Receivables ($ M)
|
6.6
|
4.0
|
4.5
|
|||||||||
Inventories ($ M)
|
9.4
|
6.6
|
8.8
|
|||||||||
|
||||||||||||
Property, Plant and Equipment ($ M)
|
$
|
100.3
|
$
|
80.5
|
$
|
80.9
|
||||||
|
||||||||||||
Current Assets ($ M)
|
$
|
26.2
|
$
|
36.6
|
$
|
15.8
|
||||||
Current Liabilities ($ M)
|
14.4
|
16.5
|
10.3
|
|||||||||
Working Capital ($ M)
|
11.8
|
20.1
|
5.5
|
|||||||||
|
||||||||||||
Total Assets ($ M)
|
$
|
126.8
|
$
|
117.3
|
$
|
96.9
|
||||||
Total Liabilities ($ M)
|
38.8
|
30.1
|
32.0
|
|||||||||
Total Equity ($ M)
|
88.0
|
87.2
|
64.9
|
1 |
Refer to “Non-IFRS Measures: Cash Cost per Ounce and All-In Sustaining Cost per Ounce” section in this MD&A.
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
|||||||||||||||||||||||||
|
2017
|
2017
|
2017
|
2017
|
2016
|
2016
|
2016
|
2016
|
||||||||||||||||||||||||
Revenues ($ M)
|
$
|
12.1
|
$
|
9.8
|
$
|
17.2
|
$
|
15.2
|
$
|
14.4
|
$
|
16.8
|
$
|
12.8
|
$
|
14.9
|
||||||||||||||||
Net Income (Loss) ($ M)
|
(1.4
|
)
|
(2.8
|
)
|
0.9
|
(0.2
|
)
|
(2.4
|
)
|
1.0
|
(2.1
|
)
|
(1.7
|
)
|
||||||||||||||||||
Comprehensive Income (Loss) ($ M)
|
(1.8
|
)
|
(2.9
|
)
|
0.8
|
(0.5
|
)
|
(1.0
|
)
|
0.8
|
(2.5
|
)
|
(2.0
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Silver Produced (oz)
|
409,545
|
564,833
|
557,892
|
523,747
|
564,475
|
596,855
|
556,404
|
672,074
|
||||||||||||||||||||||||
Zinc Produced (lbs)
|
4,895,670
|
1,433,961
|
2,904,374
|
2,389,133
|
2,671,391
|
2,183,814
|
2,081,046
|
3,552,522
|
||||||||||||||||||||||||
Lead Produced (lbs)
|
7,427,357
|
5,369,482
|
6,435,048
|
6,160,732
|
7,277,346
|
7,991,507
|
6,677,247
|
7,121,573
|
||||||||||||||||||||||||
Copper Produced (lbs)
|
78,541
|
507,285
|
273,475
|
308,100
|
260,018
|
326,639
|
225,785
|
245,808
|
||||||||||||||||||||||||
Cost of Sales/Ag Eq Oz Produced ($/oz)
|
$
|
10.16
|
$
|
9.17
|
$
|
11.00
|
$
|
9.93
|
$
|
9.91
|
$
|
10.25
|
$
|
10.80
|
$
|
9.52
|
||||||||||||||||
Cash Cost/Ag Oz Produced ($/oz)
1
|
$
|
8.75
|
$
|
12.61
|
$
|
7.21
|
$
|
9.89
|
$
|
8.91
|
$
|
10.00
|
$
|
11.33
|
$
|
9.80
|
||||||||||||||||
All-In Sustaining Cost/Ag Oz Produced ($/oz)
1
|
$
|
14.20
|
$
|
15.92
|
$
|
10.65
|
$
|
13.37
|
$
|
11.57
|
$
|
12.86
|
$
|
14.57
|
$
|
12.00
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Current Assets (qtr. end) ($ M)
|
$
|
26.2
|
$
|
27.0
|
$
|
29.9
|
$
|
36.0
|
$
|
36.6
|
$
|
41.1
|
$
|
38.9
|
$
|
17.9
|
||||||||||||||||
Current Liabilities (qtr. end) ($ M)
|
14.4
|
12.1
|
11.6
|
11.1
|
16.5
|
13.1
|
20.8
|
12.5
|
||||||||||||||||||||||||
Working Capital (qtr. end) ($ M)
|
11.8
|
14.9
|
18.3
|
24.9
|
20.1
|
28.0
|
18.1
|
5.4
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total Assets (qtr. end) ($ M)
|
$
|
126.8
|
$
|
126.1
|
$
|
127.7
|
$
|
127.1
|
$
|
117.3
|
$
|
120.4
|
$
|
119.3
|
$
|
98.3
|
||||||||||||||||
Total Liabilities (qtr. end) ($ M)
|
38.8
|
38.6
|
38.6
|
39.1
|
30.1
|
32.4
|
41.4
|
33.6
|
||||||||||||||||||||||||
Total Equity (qtr. end) ($ M)
|
88.0
|
87.5
|
89.1
|
88.0
|
87.2
|
88.0
|
77.9
|
64.7
|
1 |
Refer to “Non-IFRS Measures: Cash Cost per Ounce and All-In Sustaining Cost per Ounce” section in this MD&A.
|
Opening cash balance as at December 31, 2016
|
$
|
24.1
|
||
Cash generated from operations
|
5.5
|
|||
Purchase of San Felipe property option
|
(7.1
|
)
|
||
Net development costs on San Rafael
|
(13.4
|
)
|
||
Net development costs on El Cajón
|
1.0
|
|||
Other property, plant and equipment spending
|
(7.2
|
)
|
||
Financing from pre-payment facility
|
15.0
|
|||
Repayments to credit facilities
|
(8.0
|
)
|
||
Proceeds from exercise of options and warrants
|
3.2
|
|||
Proceeds from sale of investments
|
0.2
|
|||
Increase in trade and other receivables
|
(2.6
|
)
|
||
Change in inventories during the year
|
(2.8
|
)
|
||
Increase in prepaid expenses during the year
|
0.3
|
|||
Decrease in payables during the year
|
1.1
|
|||
Closing cash balance as at December 31, 2017
|
$
|
9.3
|
|
Less than
|
Over 5
|
||||||||||||||||||
|
Total
|
1 year
|
2-3 years
|
4-5 years
|
years
|
|||||||||||||||
Trade and other payables
|
$
|
10,393
|
$
|
10,393
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Credit facilities
|
15,000
|
4,000
|
11,000
|
-
|
-
|
|||||||||||||||
Interest on credit facilities
|
1,601
|
856
|
745
|
-
|
-
|
|||||||||||||||
Leases
|
1,438
|
290
|
563
|
540
|
45
|
|||||||||||||||
Other long-term liabilities
|
564
|
-
|
95
|
-
|
469
|
|||||||||||||||
Total
|
$
|
28,996
|
$
|
15,539
|
$
|
12,403
|
$
|
540
|
$
|
514
|
·
|
New 7.5% mining royalty. This royalty is deductible for tax purposes and is calculated as 7.5% of a royalty base which is computed as taxable revenues (except interest and inflationary adjustments), less allowable deductions for income tax purposes (except interest, inflationary adjustment, depreciation and mining fees), less prospecting and exploration expenses for the year;
|
·
|
New environmental duty of 0.5% of gross income arising from the sale of gold and silver;
|
·
|
Corporate income tax rate to remain at 30%, eliminating the scheduled reduction to 29% in 2014 and to 28% in 2015;
|
·
|
Elimination of the IETU;
|
·
|
Elimination of the option for depreciation of capital assets on an accelerated basis;
|
·
|
Elimination of 100% deduction on exploration expenses for locating and quantifying new deposits in pre-operating periods. These exploration costs will be amortized on a straight-line basis over 10 years; and
|
·
|
Reduction of deductibility for various employee fringe benefits; and imposes a 10% withholding tax on dividends distributed to resident individuals or foreign residents (including foreign corporations). According to the Mexico-Canada tax treaty, this dividend withholding tax rate may be reduced to 5%.
|
Reconciliation of Consolidated Cash Cost per Ounce
|
||||||||
|
2017
|
2016
|
||||||
Cost of sales ('000)
|
$
|
40,038
|
$
|
46,167
|
||||
Non-cash costs ('000)
1
|
1,306
|
(1,707
|
)
|
|||||
Direct mining costs ('000)
|
$
|
41,344
|
$
|
44,460
|
||||
Smelting, refining and royalty expenses ('000)
|
9,249
|
13,472
|
||||||
Less by-product credits ('000)
|
(33,952
|
)
|
(34,045
|
)
|
||||
Total cash costs ('000)
|
$
|
16,641
|
$
|
23,887
|
||||
Divided by silver produced (oz)
2
|
1,760,136
|
2,389,808
|
||||||
Silver cash costs ($/oz)
|
$
|
9.45
|
$
|
10.00
|
Reconciliation of Cosalá Operations Cash Cost per Ounce
|
||||||||
|
2017
|
2016
|
||||||
Cost of sales ('000)
|
$
|
10,195
|
$
|
17,701
|
||||
Non-cash costs ('000)
1
|
1,762
|
(1,649
|
)
|
|||||
Direct mining costs ('000)
|
$
|
11,957
|
$
|
16,052
|
||||
Smelting, refining and royalty expenses ('000)
|
2,431
|
5,502
|
||||||
Less by-product credits ('000)
|
(14,466
|
)
|
(13,712
|
)
|
||||
Total cash costs ('000)
|
$
|
(78
|
)
|
$
|
7,842
|
|||
Divided by silver produced (oz)
2
|
624,925
|
1,006,119
|
||||||
Silver cash costs ($/oz)
|
$
|
(0.13
|
)
|
$
|
7.79
|
Reconciliation of Galena Complex Cash Cost per Ounce
|
||||||||
|
2017
|
2016
|
||||||
Cost of sales ('000)
|
$
|
29,843
|
$
|
28,466
|
||||
Non-cash costs ('000)
1
|
(456
|
)
|
(58
|
)
|
||||
Direct mining costs ('000)
|
$
|
29,387
|
$
|
28,408
|
||||
Smelting, refining and royalty expenses ('000)
|
6,818
|
7,970
|
||||||
Less by-product credits ('000)
|
(19,486
|
)
|
(20,333
|
)
|
||||
Total cash costs ('000)
|
$
|
16,719
|
$
|
16,045
|
||||
Divided by silver produced (oz)
|
1,135,211
|
1,383,689
|
||||||
Silver cash costs ($/oz)
|
$
|
14.73
|
$
|
11.60
|
Reconciliation of Consolidated All-In Sustaining Cost per Ounce
|
||||||||
|
||||||||
|
2017
|
2016
|
||||||
Total cash costs ('000)
|
$
|
16,641
|
$
|
23,887
|
||||
Capital expenditures ('000)
|
6,565
|
4,870
|
||||||
Exploration costs ('000)
|
192
|
1,616
|
||||||
Total all-in sustaining costs ('000)
|
$
|
23,398
|
$
|
30,373
|
||||
Divided by silver produced (oz)
2
|
1,760,136
|
2,389,808
|
||||||
Silver all-in sustaining costs ($/oz)
|
$
|
13.29
|
$
|
12.71
|
Reconciliation of Cosalá Operations All-In Sustaining Cost per Ounce
|
||||||||
|
2017
|
2016
|
||||||
Total cash costs ('000)
|
$
|
(78
|
)
|
$
|
7,842
|
|||
Capital expenditures ('000)
|
436
|
831
|
||||||
Exploration costs ('000)
|
-
|
690
|
||||||
Total all-in sustaining costs ('000)
|
$
|
358
|
$
|
9,363
|
||||
Divided by silver produced (oz)
2
|
624,925
|
1,006,119
|
||||||
Silver all-in sustaining costs ($/oz)
|
$
|
0.57
|
$
|
9.31
|
Reconciliation of Galena Complex All-In Sustaining Cost per Ounce
|
||||||||
|
2017
|
2016
|
||||||
Total cash costs ('000)
|
$
|
16,719
|
$
|
16,045
|
||||
Capital expenditures ('000)
|
6,129
|
4,039
|
||||||
Exploration costs ('000)
|
192
|
926
|
||||||
Total all-in sustaining costs ('000)
|
$
|
23,040
|
$
|
21,010
|
||||
Divided by silver produced (oz)
|
1,135,211
|
1,383,689
|
||||||
Silver all-in sustaining costs ($/oz)
|
$
|
20.30
|
$
|
15.18
|
1 |
Non-cash costs consist of non-cash related charges to cost of sales including inventory movements and write-downs to net realizable value of concentrates, ore stockpiles, and spare parts and supplies.
|
2 |
Calculation excludes pre-production of 50,490 silver ounces and 435,323 silver equivalent ounces mined from San Rafael during its commissioning period, and excludes pre-production of 245,391 silver ounces and 360,530 silver equivalent ounces mined
from
El
Cajón
during its commissioning period. Pre-production revenue and cost of sales from San Rafael and El
Cajón are capitalized as an offset to development costs
.
|
Date: March 5, 2018 | By: | /s/ Darren Blasutti |
Darren Blasutti | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
Date: March 5, 2018 | By: | /s/ Warren Varga |
Warren Varga | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
March 5, 2018 | /s/ Darren Blasutti |
Darren Blasutti | |
President and Chief Executive Officer | |
(Principal Executive Officer) |
March 5, 2018 | /s/ Warren Varga |
Warren Varga | |
Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
Mine
|
Section
104(a) S&S Citations 1 (#) |
Section
104(b) Orders 2 (#) |
Section
104(d) Citations and Orders 3 (#) |
Section
110(b)(2) Violations 4 (#) |
Section
107(a) Orders 5 (#) |
Total
Dollar Value of MSHA Assess- ments Proposed 6 ($) |
Total
Number of Mining Related Fatalities (#) |
Received
Notice of Pattern of Violations or Potential Thereof Under Section 104(e) 7 (yes/no) |
Legal
Actions Pending as of Last Day of Period 8 (#) |
Legal
Actions Initiated During Period (#) |
Legal
Actions Resolved During Period (#) |
Galena
|
11
|
0
|
0
|
0
|
0
|
29,437
|
0
|
no
|
0
|
1
|
1
|
1.
|
Citations and Orders are issued under Section 104 of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 814) (the “Act”) for violations of the Act or any mandatory health or safety standard, rule, order or regulation promulgated under the Act. A Section 104(a) “Significant and Substantial” or “S&S” citation is considered more severe than a non-S&S citation and generally is issued in a situation where the conditions created by the violation do not cause imminent danger, but the violation is of such a nature as could significantly and substantially contribute to the cause and effect of a mine safety or health hazard. It should be noted that, for purposes of this table, S&S citations that are included in another column, such as Section 104(d) citations, are not also included as Section 104(a) S&S citations in this column.
|
|
|
|
|
|
2.
|
A Section 104(b) withdrawal order is issued if, upon a follow up inspection, an MSHA inspector finds that a violation has not been abated within the period of time as originally fixed in the violation and determines that the period of time for the abatement should not be extended. Under a withdrawal order, all persons, other than those required to abate the violation and certain others, are required to be withdrawn from and prohibited from entering the affected area of the mine until the inspector determines that the violation has been abated.
|
|
|
|
|
3.
|
A citation is issued under Section 104(d) where there is an S&S violation and the inspector finds the violation to be caused by an unwarrantable failure of the operator to comply with a mandatory health or safety standard. Unwarrantable failure is a special negligence finding that is made by an MSHA inspector and that focuses on the operator’s conduct. If during the same inspection or any subsequent inspection of the mine within 90 days after issuance of the citation, the MSHA inspector finds another violation caused by an unwarrantable failure of the operator to comply, a withdrawal order is issued, under which all persons, other than those required to abate the violation and certain others, are required to be withdrawn from and prohibited from entering the affected area until the inspector determines that the violation has been abated.
|
|
|
|
|
4.
|
A flagrant violation under Section 110(b)(2) is a violation that results from a reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory health or safety standard that substantially and proximately caused, or reasonable could have been expected to cause, death or serious bodily injury.
|
|
5.
|
An imminent danger order under Section 107(a) is issued when an MSHA inspector finds that an imminent danger exists in a mine. An imminent danger is the existence of any condition or practice which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated. Under an imminent danger order, all persons, other than those required to abate the condition or practice and certain others, are required to be withdrawn from and are prohibited from entering the affected area until the inspector determines that such imminent danger and the conditions or practices which caused the imminent danger no longer exist.
|
|
|
|
|
6.
|
These dollar amounts include the total amount of all proposed assessments from MSHA under the Act relating to any type of violation during the period, including proposed assessments for non-S&S citations that are not specifically identified in this exhibit, regardless of whether the Company has challenged or appealed the assessment.
|
|
|
|
|
7.
|
A Notice is given under Section 104(e) if an operator has a pattern of S&S violations. If upon any inspection of the mine within 90 days after issuance of the notice, or at any time after a withdrawal notice has been given under Section 104(e), an MSHA inspector finds another S&S violation, an order is issued, under which all persons, other than those required to abate the violation and certain others, are required to be withdrawn from and prohibited from entering the affected area until the inspector determines that the violation has been abated.
|
|
|
|
|
8.
|
There were no legal actions pending before the Federal Mine Safety and Health Review Commission as of the last day of the period covered by this report. In addition, there were no pending actions that are (a) contests of citations and orders referenced in Subpart B of 29 CFR Part 2700, (b) complaints for compensation referenced in subpart D of 29 CFR Part 2700; (c) complaints of discharge, discrimination or interference referenced in Subpart E of 29 CFR Part 2700; (d) applications for temporary relief referenced in Subpart F of 29 CFR Part 2700; or (e) appeals of judges’ decisions or orders to the Federal Mine Safety and Health Review Commission referenced in Subpart H of 29 CFR Part 2700.
|