Americas Gold and Silver(USAS) - 2025 Q1 - Quarterly Report

Condensed Interim Consolidated Financial Statements This section presents the company's financial position, performance, equity changes, and cash flows for the interim period Condensed Interim Consolidated Statements of Financial Position As of March 31, 2025, the company's total assets decreased to $184.3 million from $192.6 million at the end of 2024, while total liabilities also decreased to $128.9 million from $139.2 million, with total equity seeing a slight increase to $55.4 million, but a key concern is the working capital deficit of $27.8 million, indicating significant short-term liquidity pressure | Financial Position | March 31, 2025 ($'000) | December 31, 2024 ($'000) | | :--- | :--- | :--- | | Total Current Assets | 29,826 | 40,714 | | Total Assets | 184,287 | 192,640 | | Total Current Liabilities | 57,617 | 69,410 | | Total Liabilities | 128,868 | 139,191 | | Total Equity | 55,419 | 53,449 | - The company reported a working capital deficit of $27.8 million as of March 31, 2025, calculated as current assets of $29.8 million minus current liabilities of $57.6 million[2][14] Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the three months ended March 31, 2025, the company's revenue increased to $23.5 million from $20.9 million year-over-year, however, the net loss widened to $18.9 million compared to $16.2 million in the prior year period, primarily driven by a $9.0 million loss on metals contract liabilities, while basic and diluted loss per share improved to ($0.03) from ($0.07) due to a significant increase in the weighted average number of shares outstanding | Income Statement | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | Revenue | 23,547 | 20,852 | | Cost of Sales | (21,139) | (21,038) | | Loss on metals contract liabilities | (9,024) | (3,046) | | Loss before income taxes | (18,946) | (16,172) | | Net Loss | (18,918) | (16,157) | | Comprehensive Loss | (21,098) | (12,909) | | Basic and Diluted Loss Per Share | $(0.03) | $(0.07) | - The weighted average number of common shares outstanding increased substantially from 221.9 million in Q1 2024 to 620.0 million in Q1 2025, impacting the loss per share calculation[5] Condensed Interim Consolidated Statements of Changes in Equity Total equity increased from $53.4 million at the beginning of the period to $55.4 million at March 31, 2025, primarily driven by capital injections from private placements ($3.6 million), conversion of debentures ($11.0 million), and other share issuances, which more than offset the net loss of $18.9 million for the period | Equity Changes (Q1 2025) | Amount ($'000) | | :--- | :--- | | Balance at January 1, 2025 | 53,449 | | Net loss for the period | (18,918) | | Other comprehensive loss | (2,180) | | Non-brokered private placements | 3,567 | | Conversion of convertible debenture | 11,042 | | Other share issuances & payments | 8,459 | | Balance at March 31, 2025 | 55,419 | Condensed Interim Consolidated Statements of Cash Flows The company experienced a significant decrease in cash, ending Q1 2025 with $8.8 million compared to $20.0 million at the start of the year, with cash used in operating activities being $7.0 million, a sharp decline from cash generated of $0.2 million in Q1 2024, and net cash from financing activities of $3.9 million was insufficient to cover the cash used in operations and $6.6 million used in investing activities | Cash Flow Statement | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | Net cash from (used in) operating activities | (7,031) | 171 | | Net cash used in investing activities | (6,561) | (4,813) | | Net cash generated from financing activities | 3,873 | 5,401 | | Increase (decrease) in cash | (11,251) | 1,843 | | Cash and cash equivalents, end of period | 8,751 | 3,904 | Notes to the Condensed Interim Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed interim consolidated financial statements Note 2: Basis of Presentation and Going Concern The financial statements are prepared on a going concern basis, but management highlights material uncertainties that cast substantial doubt on this assumption, as the company had a working capital deficit of $27.8 million and a net loss of $18.9 million in Q1 2025, and does not have sufficient liquidity to fund operations for the next twelve months, requiring additional financing - The company had a working capital deficit of $27.8 million and cash and cash equivalents of $8.8 million as at March 31, 2025[14] - Management states that the company does not have sufficient liquidity to fund its operations for the next twelve months and will require further financing to meet its obligations and execute its business plans[14] - Material uncertainties, including achieving cash flow positive production and the ability to raise additional funds, cast substantial doubt upon the going concern assumption[16] Note 7: Property, Plant and Equipment The carrying value of Property, Plant, and Equipment (PP&E) increased to $149.9 million as of March 31, 2025, up from $147.4 million at the end of 2024, reflecting asset additions of $7.6 million, partially offset by depreciation and depletion charges of $5.5 million for the quarter, with no impairments identified | PP&E Carrying Value | March 31, 2025 ($'000) | December 31, 2024 ($'000) | | :--- | :--- | :--- | | Mining interests | 94,615 | 92,979 | | Non-producing properties | 12,469 | 12,469 | | Plant and equipment | 40,186 | 38,967 | | Right-of-use lease assets | 2,587 | 2,973 | | Corporate office equipment | 35 | 11 | | Total | 149,892 | 147,399 | - Depreciation and depletion expense for the three-month period ended March 31, 2025, was $5.5 million[25] Note 8: Precious Metals Delivery and Purchase Agreement The company has a precious metals delivery and purchase agreement with Sandstorm Gold Ltd., with the associated net metals contract liability increasing from $40.9 million at year-end 2024 to $44.3 million as of March 31, 2025, driven by a $7.1 million revaluation loss, partially offset by $3.7 million in metal deliveries during the quarter | Metals Contract Liability Continuity | Q1 2025 ($'000) | | :--- | :--- | | Beginning Balance | 40,868 | | Delivery of metals purchased | (3,719) | | Revaluation of liability | 7,115 | | Ending Balance | 44,264 | - In December 2024, the agreement was amended, giving the company the right to satisfy gold delivery obligations by having Sandstorm subscribe for up to $1.9 million in common shares per quarter through December 2027[31] Note 9: Silver Metals Delivery Agreement In December 2024, the company entered into a silver delivery agreement with Mr. Eric Sprott, requiring monthly deliveries of 18,500 ounces of silver for 36 months starting in January 2026, which created a financial liability measured at fair value, resulting in a $1.9 million loss due to changes in forward commodity prices during Q1 2025 - The agreement requires fixed monthly deliveries of 18,500 ounces of silver for 36 months, beginning January 2026[33] - A fair value loss of $1.9 million was recorded on the metals contract liability during the three-month period ended March 31, 2025[33] Note 10: Convertible Debenture The company's outstanding convertible debenture, with a principal balance of $16.8 million CAD ($11.7 million USD), was fully converted by the holders as of January 31, 2025, resulting in the issuance of 32.3 million common shares and the elimination of the debenture liability from the balance sheet - The convertible debenture was fully converted by January 31, 2025, at a price of $0.52 CAD, resulting in the issuance of 32,307,692 common shares[37] - A gain of $0.7 million was recognized in Q1 2025 from the change in the estimated fair value of the debenture's embedded options, compared to a loss of $1.1 million in Q1 2024[37] Note 14: Share Capital The company's share capital increased during Q1 2025 due to multiple financing and settlement activities, including a non-brokered private placement raising $3.6 million, the issuance of 2.9 million shares to settle $1.4 million in payables, and the issuance of 32.3 million shares upon the conversion of its convertible debenture, with the number of issued common shares growing to 649.1 million Share Issuances and Financings During Q1 2025, the company raised gross proceeds of $3.6 million through a non-brokered private placement of 7.2 million common shares, and additionally settled $1.4 million of transaction-related payables by issuing 2.9 million common shares, following a significant acquisition and financing in late 2024 - In Q1 2025, the company closed non-brokered private placements for total gross proceeds of $3.6 million through the issuance of 7,174,558 common shares[46] - The company settled $1.4 million of transaction-related payables by issuing 2,906,504 common shares in Q1 2025[47] - On December 19, 2024, the company acquired the remaining 40% non-controlling interest of the Galena Complex and completed a concurrent private placement raising $50 million CAD ($35.1 million USD)[44] Stock Options, Warrants, and Share Units As of March 31, 2025, the company had significant potential share dilution from various equity instruments, with 25.6 million stock options outstanding, 9.6 million granted in Q1 2025, and additionally 26.2 million warrants, 20.4 million share-settled Restricted Share Units (RSUs), and 7.8 million Deferred Share Units (DSUs) outstanding | Equity Instrument | Outstanding as of March 31, 2025 | | :--- | :--- | | Stock Options | 25,592,000 | | Warrants | 26,244,100 | | Share-settled RSUs | 20,400,000 | | Deferred Share Units (DSUs) | 7,806,408 | - During Q1 2025, 9.55 million stock options were granted with a weighted average exercise price of $0.55 CAD[52] Note 16: Non-Controlling Interests The company's non-controlling interests (NCI) were eliminated on December 19, 2024, following the acquisition of the remaining 40% interest in the Galena Complex from Mr. Eric Sprott, with the transaction resulting in the derecognition of the $18.3 million NCI carrying amount from the consolidated financial statements - On December 19, 2024, the company completed the acquisition of the remaining 40% non-controlling interests of the Galena Complex[62] - The $18.3 million carrying amount of the non-controlling interests was derecognized from the financial statements upon completion of the acquisition[62] Note 17: Revenue Total revenue for Q1 2025 was $23.5 million, up from $20.9 million in Q1 2024, primarily driven by silver sales, which accounted for $13.6 million, followed by zinc sales at $9.6 million, with lead and other by-products contributing the remaining revenue | Revenue by Commodity (Net) | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | Silver | 13,608 | 14,127 | | Zinc | 9,581 | 8,750 | | Lead | 3,356 | 4,258 | | Other by-products | 306 | 397 | | Gross Revenue | 26,851 | 27,532 | | Treatment/Selling Costs & Other | (3,304) | (6,680) | | Total Revenue | 23,547 | 20,852 | Note 19: Corporate General and Administrative Expenses Corporate general and administrative (G&A) expenses surged to $6.5 million in Q1 2025, a nearly fourfold increase from $1.7 million in Q1 2024, primarily due to significant increases in directors' fees (to $1.9 million from $0.1 million) and share-based payments (to $1.7 million from $0.2 million) | G&A Expenses | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | Salaries and employee benefits | 1,148 | 512 | | Directors' fees | 1,881 | 122 | | Share-based payments | 1,676 | 156 | | Professional fees | 976 | 368 | | Office and general | 816 | 499 | | Total | 6,497 | 1,657 | Note 21: Financial Risk Management The company is exposed to significant financial risks, most notably liquidity risk, given its working capital deficit and need for additional capital, and also faces market risks from commodity price volatility, which affects provisionally priced concentrate sales, and currency risk from its operations in Canada (CAD) and Mexico (MXN) Liquidity Risk The company faces substantial liquidity risk, with $60.7 million in undiscounted financial liabilities due within one year, compared to a cash balance of only $8.8 million, and total contractual maturities for all financial liabilities amount to $142.1 million | Contractual Maturities (Undiscounted) | Total ($'000) | Less than 1 year ($'000) | | :--- | :--- | :--- | | Trade and other payables | 31,560 | 31,560 | | Pre-payment facility | 2,500 | 2,500 | | Credit facility & Interest | 11,089 | 5,074 | | Royalty payable | 3,026 | 3,026 | | Metals contract liability | 44,264 | 16,282 | | Silver contract liability | 20,092 | 513 | | Other liabilities | 29,601 | 1,787 | | Total | 142,132 | 60,742 | Market Risk The company is exposed to market risks including currency and commodity price fluctuations, where a +/- 10% change in the CAD/USD exchange rate would impact net loss by approximately $0.7 million, while a similar change in the MXN/USD rate would have a $1.2 million impact, and a +/- 10% fluctuation in metal prices would affect trade receivables by approximately $0.6 million - The company is exposed to foreign currency risk through financial assets and liabilities denominated in Canadian Dollars (CAD) and Mexican Pesos (MXN)[78] | Currency Sensitivity (Impact of +/- 10% change) | Impact on Net Loss ($'000) | | :--- | :--- | | CAD/USD | 683 | | MXN/USD | 1,178 | - A ±10% fluctuation in silver, zinc, lead, and gold prices would affect trade receivables from provisionally priced sales by approximately $0.6 million[81] Note 22: Segmented and Geographic Information The company's operations are divided into three main segments: Cosalá Operations in Mexico, and the Galena Complex and Relief Canyon in the United States, with Cosalá and Galena being the primary revenue generators in Q1 2025, contributing $11.8 million and $11.7 million, respectively, both operating segments reported losses before income taxes for the period, and two major customers accounted for 50% of Cosalá's revenue and 40% of Galena's revenue | Segment Performance (Q1 2025) | Revenue ($'000) | Loss Before Taxes ($'000) | | :--- | :--- | :--- | | Cosalá Operations | 11,816 | (1,559) | | Galena Complex | 11,731 | (2,140) | | Relief Canyon | - | 58 | | Corporate and Other | - | (15,305) | | Total | 23,547 | (18,946) | - For Q1 2025, two major customers accounted for 50% of revenues from Cosalá Operations and 40% of revenues from Galena Complex[96] Note 23: Contingencies The company has an ongoing contingency related to a 2007 tax reassessment from Mexican authorities, with the dispute involving the disallowance of deductions for transactions with certain suppliers, and as of March 31, 2025, the company maintains an accrued liability of $1.0 million for this matter - The company received a reassessment from Mexican tax authorities for the 2007 fiscal year, disallowing certain deductions[98] - An accrued liability of $1.0 million related to the probable obligation from the ongoing appeal was recorded and remains outstanding as of March 31, 2025[98]