Americas Gold and Silver(USAS) - 2024 Q4 - Annual Report

Financial Statements Management's Responsibility for Financial Reporting Management confirms its responsibility for preparing the consolidated financial statements in accordance with IFRS Accounting Standards and maintaining a system of internal control - Management is responsible for preparing the financial statements in accordance with IFRS Accounting Standards[2] - The Board of Directors, via the audit committee, approves the financial statements and oversees management's reporting responsibilities[3] Independent Auditor's Report The auditor issued a qualified opinion highlighting substantial doubt about the company's ability to continue as a going concern due to its working capital deficit and net losses - The auditor's opinion is that the financial statements are fairly presented in all material respects in conformity with IFRS Accounting Standards[6] - A key audit matter highlights a material uncertainty that casts substantial doubt on the Company's ability to continue as a going concern, citing its working capital deficit and net losses[7] Consolidated Statements of Financial Position The company's financial position weakened, with a significant increase in liabilities leading to a working capital deficit of $28.7 million and a reduction in total equity Consolidated Financial Position Summary (in thousands of U.S. dollars) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $40,714 | $23,036 | | Total Assets | $192,640 | $180,488 | | Total Current Liabilities | $69,410 | $61,207 | | Total Liabilities | $139,191 | $108,288 | | Total Equity | $53,449 | $72,200 | - Cash and cash equivalents significantly increased to $20.0 million in 2024 from $2.1 million in 2023, primarily due to financing activities[13] - The company shifted from a working capital surplus to a deficit of $28.7 million as of December 31, 2024, as current liabilities exceeded current assets[13] Consolidated Statements of Loss and Comprehensive Loss The company's net loss widened to $48.9 million, driven by a significant increase in the loss on the metals contract liability despite a slight rise in revenue Statement of Loss Summary (in thousands of U.S. dollars) | Metric | 2024 | 2023 (Revised) | | :--- | :--- | :--- | | Revenue | $100,188 | $95,160 | | Cost of sales | $(82,740) | $(80,658) | | Loss on metals contract liability | $(10,065) | $(3,396) | | Net Loss | $(48,886) | $(38,173) | | Loss per share (Basic & Diluted) | $(0.17) | $(0.16) | - The loss on the metals contract liability nearly tripled, contributing significantly to the increased net loss in 2024[15] Consolidated Statements of Changes in Equity Total equity decreased by $18.8 million to $53.4 million, as the net loss and acquisition of non-controlling interests outweighed significant capital raised from equity financing - Equity was significantly impacted by the net loss for the year ($44.9 million attributable to shareholders)[18] - The company raised substantial capital through various equity issuances, including a $33.4 million private placement of subscription receipts and a $9.2 million non-brokered private placement[18] - The acquisition of the remaining 40% non-controlling interest in the Galena Complex reduced equity by $19.2 million attributable to shareholders and eliminated the $18.3 million non-controlling interest balance[18] Consolidated Statements of Cash Flows The company's cash balance increased by $17.9 million, driven by $35.1 million in net financing activities that covered cash used in operations and investments Cash Flow Summary (in thousands of U.S. dollars) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,068) | $(1,013) | | Net cash used in investing activities | $(18,850) | $(18,133) | | Net cash generated from financing activities | $35,121 | $20,324 | | Increase in cash and cash equivalents | $17,941 | $97 | | Cash and cash equivalents, end of year | $20,002 | $2,061 | - Major financing inflows in 2024 included a $33.4 million private placement of subscription receipts, $9.2 million from non-brokered private placements, and $9.4 million from a new credit facility[20] Notes to the Consolidated Financial Statements 1. Corporate Information Americas Gold and Silver Corporation is a Canadian mining company engaged in exploration, development, and production, with shares listed on the TSX and NYSE American - The company conducts mining exploration, development, and production in the Americas[22] - Common shares are listed on the TSX under 'USA' and NYSE American under 'USAS'[22] 2. Basis of Presentation and Going Concern A material uncertainty exists regarding the company's ability to continue as a going concern due to a significant working capital deficit and insufficient liquidity for the next year - The company reported a working capital deficit of $28.7 million and a net loss of $48.9 million for the year ended December 31, 2024[25] - Management states the company does not have sufficient liquidity to fund its operations for the next twelve months and will require further financing[25] - Continuance as a going concern is dependent on achieving profitable operations and obtaining adequate equity or debt financing, creating a material uncertainty[26][27] 3. Summary of Material Accounting Policies This section outlines key accounting policies, including revenue recognition for concentrate sales, depletion of mining interests, and impairment testing for assets - Revenue from concentrate sales is recognized at the time of delivery based on forward prices, with subsequent variations in metal prices treated as embedded derivative adjustments[35][36] - Producing mining interests are depleted using the unit-of-production method based on estimated recoverable mineral reserves[60] - The company reviews property, plant, and equipment for impairment when indicators exist, with the recoverable amount determined as the higher of value in use or fair value less costs to dispose[68][69] 4. Significant Accounting Judgments and Estimates Management's key judgments and estimates involve mineral reserves, decommissioning provisions, deferred taxes, asset impairment, and the company's overall liquidity - Significant estimates are required for mineral reserves, which directly impact depletion and amortization calculations[83] - Accounting for decommissioning provisions requires estimates of the timing and future costs of rehabilitation work[85] - The ability to achieve positive cash flow from operations and maintain access to capital markets is a significant judgment affecting the company's liquidity and going concern assessment[91][92] 6. Acquisition of Non-controlling Interests The company acquired the remaining 40% non-controlling interest in the Galena Complex through a transaction involving shares, cash, and a future silver delivery obligation - On December 19, 2024, the company acquired the remaining 40% non-controlling interest of the Galena Complex[94] Acquisition Consideration | Consideration Component | Value/Description | | :--- | :--- | | Common Shares Issued | 170,000,000 shares (valued at $64.5M) | | Cash Payment | $10 million | | Silver Delivery Obligation | 18,500 oz/month for 36 months starting Jan 2026 | | Working Capital Assumed | $1.3 million | - The acquisition was accounted for as an equity transaction, with $9.0 million in related expenses charged to retained earnings[96] 9. Property, Plant and Equipment The carrying value of PP&E decreased to $147.4 million as depreciation and depletion charges of $24.1 million exceeded asset additions PP&E Carrying Value (in thousands of U.S. dollars) | Category | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Mining interests | $92,979 | $94,345 | | Plant and equipment | $38,967 | $42,788 | | Total Carrying Value | $147,399 | $153,101 | - Depreciation and depletion expense for 2024 was $24.1 million, an increase from $20.8 million in 2023[100] - In 2023, a $6.0 million impairment charge was recorded for the Relief Canyon Mine cash-generating unit due to its market capitalization being less than its net assets[101] 10. Precious Metals Delivery and Purchase Agreement The fair value of the metals delivery liability increased to $40.9 million, resulting in a $10.1 million revaluation loss due to changes in commodity prices Metals Contract Liability Continuity (in thousands of U.S. dollars) | Description | 2024 | 2023 | | :--- | :--- | :--- | | Beginning Balance | $36,837 | $30,989 | | Advance increase (net) | $12,512 | $13,989 | | Delivery of metals purchased | $(18,564) | $(9,899) | | Revaluation (Loss) | $10,083 | $3,478 | | Ending Balance | $40,868 | $36,837 | - The company recognized a $10.1 million loss on the metals contract liability in 2024, compared to a $3.4 million loss in 2023[108] 11. Silver Metals Delivery Agreement A new silver delivery agreement was established as part of the Galena Complex acquisition, creating a financial liability with an initial fair value of $19.8 million - A new silver delivery agreement was established with Mr. Eric Sprott, requiring delivery of 18,500 oz of silver per month for 36 months, beginning January 2026[114] - The agreement resulted in the recognition of a financial liability measured at fair value, initially valued at $19.8 million[114] 12. Convertible Debenture The outstanding convertible debenture of $16.8 million CAD was fully converted into common shares subsequent to the year-end - The outstanding principal of the convertible debenture was $16.8 million CAD ($11.7 million USD) at year-end 2024, down from $24.0 million CAD ($18.1 million USD) in 2023[124] - The debenture was fully converted into 32,307,692 common shares on January 31, 2025, subsequent to the reporting period[124] 14. Credit Facility The company secured a new $15 million credit facility to fund the EC120 project, of which $10.0 million was drawn as of year-end - A new secured credit facility of up to $15 million was signed with Trafigura on August 14, 2024[127] - The facility is intended to fund the development of the EC120 silver-copper project and was drawn for $10.0 million in August 2024[127] 19. Share Capital The company's share capital increased substantially through multiple equity offerings and the issuance of shares for an acquisition, raising the share count to 594.5 million Issued Common Shares | Date | Number of Shares | Value (in thousands of U.S. dollars) | | :--- | :--- | :--- | | Dec 31, 2023 | 218,689,766 | $455,548 | | Dec 31, 2024 | 594,450,243 | $573,532 | - Completed a bought deal private placement of subscription receipts for gross proceeds of $50 million CAD ($35.1 million USD), issuing 125,000,000 common shares[145] - Issued 170,000,000 common shares as part of the consideration for the acquisition of the remaining 40% of the Galena Complex[145] 21. Non-controlling Interests The 40% non-controlling interest in the Galena Complex was acquired, resulting in the derecognition of the $18.3 million carrying amount and reducing the balance to zero - On December 19, 2024, the company acquired the remaining 40% non-controlling interest in the Galena Complex[160] - The $18.3 million carrying amount of the non-controlling interest was derecognized upon completion of the acquisition, resulting in a nil balance at year-end[160] 22. Revenue Net revenue increased to $100.2 million, with silver and zinc sales being the primary contributors, while treatment and selling costs decreased Revenue by Commodity (in thousands of U.S. dollars) | Commodity | 2024 | 2023 (Revised) | | :--- | :--- | :--- | | Silver | $62,378 | $63,106 | | Zinc | $38,864 | $38,746 | | Lead | $18,207 | $25,457 | | Other by-products | $1,402 | $1,240 | | Gross Revenue | $120,851 | $128,549 | | Treatment and selling costs | $(24,341) | $(33,577) | | Net Revenue | $100,188 | $95,160 | 27. Financial Risk Management The company faces significant liquidity risk, along with market risks from interest rates, foreign currency fluctuations, and commodity price volatility - Liquidity risk is a key concern, managed through cash reserves, operational cash flow, and access to debt and equity markets[172] - The company is exposed to currency risk from financial assets and liabilities denominated in Canadian dollars (CAD) and Mexican pesos (MXN)[177] - Commodity price risk exists for concentrate sales that are provisionally priced; a 10% fluctuation in metal prices would affect trade receivables by approximately $0.4 million[180] 28. Segmented and Geographic Information, and Major Customers The company's revenue is generated by its Cosalá and Galena segments and is highly concentrated, with two major customers accounting for 91% of total revenue Segment Revenue (in thousands of U.S. dollars) | Segment | 2024 Revenue | 2023 Revenue | | :--- | :--- | :--- | | Cosalá Operations | $54,111 | $50,871 | | Galena Complex | $46,077 | $44,173 | | Relief Canyon | $- | $116 | | Total | $100,188 | $95,160 | - The company relies heavily on two major customers, who accounted for 91% of consolidated revenue in 2024 (45% from Cosalá, 46% from Galena)[195] 30. Contingencies The company has a contingent liability related to a 2007 tax reassessment in Mexico, with a disputed amount of $5.0 million and an accrued liability of $1.0 million - The company is involved in a tax dispute in Mexico from a 2007 reassessment, with a remaining disputed amount of $5.0 million (MXN 102.2 million)[200] - A liability of $1.0 million has been accrued for this contingency as of December 31, 2024, representing the probable obligation[200]