Americas Gold and Silver(USAS) - 2025 Q2 - Quarterly Report

Condensed Interim Consolidated Financial Statements Condensed Interim Consolidated Statements of Financial Position Total assets grew to $244.3 million, driven by cash, while liabilities increased to $188.0 million due to new loans and contracts Key Financial Position Data (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Total assets | $244,293 | $192,640 | $51,653 | 26.8% | | Cash and cash equivalents | $61,683 | $20,002 | $41,681 | 208.4% | | Total liabilities | $188,025 | $139,191 | $48,834 | 35.1% | | Total equity | $56,268 | $53,449 | $2,819 | 5.3% | - The increase in total assets was primarily driven by a significant rise in cash and cash equivalents[2] Condensed Interim Consolidated Statements of Loss and Comprehensive Loss Net loss significantly increased to $34.0 million, primarily due to higher G&A expenses and increased losses on metals contracts Key Loss and Comprehensive Loss Data (in thousands of U.S. dollars) | For the six-month period ended | June 30, 2025 | June 30, 2024 (Revised) | Change ($) | Change (%) | | :----------------------------- | :------------ | :---------------------- | :--------- | :--------- | | Revenue | $50,474 | $54,065 | $(3,591) | -6.6% | | Corporate general and administrative | $(12,588) | $(3,365) | $(9,223) | 274.1% | | Loss on metals contract liabilities | $(14,573) | $(4,714) | $(9,859) | 209.1% | | Net loss | $(34,021) | $(20,160) | $(13,861) | 68.7% | | Basic and diluted loss per share | $(0.05) | $(0.08) | $0.03 | -37.5% | - The significant increase in net loss was largely due to higher corporate general and administrative expenses and increased losses on metals contract liabilities[4] Condensed Interim Consolidated Statements of Changes in Equity Total equity rose to $56.3 million, driven by financing activities and conversions, despite a $34.0 million net loss Key Equity Changes (Six-month period ended June 30, 2025, in thousands of U.S. dollars) | Item | Amount | | :---------------------------------------- | :--------- | | Balance at January 1, 2025 | $53,449 | | Net loss for the period | $(34,021) | | Non-brokered private placements | $16,003 | | Conversion of convertible debenture | $11,526 | | Share-based payments | $6,194 | | Exercise of options, warrants, and deferred share units | $6,679 | | Balance at June 30, 2025 | $56,268 | - Equity growth was driven by capital raises and conversions, offsetting the net loss incurred during the period[6] Condensed Interim Consolidated Statements of Cash Flows Cash and cash equivalents increased significantly due to substantial cash generation from financing activities, offsetting operating and investing outflows Key Cash Flow Data (Six-month period, in thousands of U.S. dollars) | Cash Flow Activity | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :----------------- | :------------ | :------------ | :--------- | :--------- | | Operating activities | $(1,855) | $2,446 | $(4,301) | -175.8% | | Investing activities | $(16,767) | $(9,520) | $(7,247) | 76.1% | | Financing activities | $63,862 | $7,092 | $56,770 | 800.5% | | Increase in cash and cash equivalents | $41,681 | $1,576 | $40,105 | 2544.7% | - The substantial increase in cash and cash equivalents was primarily driven by significant cash generation from financing activities, particularly a new term loan facility and non-brokered private placements[9][10] Notes to the Condensed Interim Consolidated Financial Statements 1. Corporate Information Americas Gold and Silver Corporation, incorporated in Canada, conducts mining operations in North America, with shares listed on TSX and NYSE American - The company was incorporated on May 12, 1998, under the Canada Business Corporations Act[11] - Its common shares are listed on the Toronto Stock Exchange (symbol 'USA') and the New York Stock Exchange American (symbol 'USAS')[11] - The unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2025, were approved by the Board of Directors on August 11, 2025[12] 2. Basis of Presentation and Going Concern Interim financial statements are prepared under IAS 34, but material uncertainties regarding going concern exist due to net loss and liquidity needs - Financial statements are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, using accounting policies consistent with IFRS[13] - Material uncertainties cast substantial doubt upon the going concern assumption, including a net loss of $34.0 million for the six-month period ended June 30, 2025, and potential insufficient liquidity for the next twelve months[14][16] - Continuance as a going concern is dependent on achieving profitable operations, obtaining adequate equity or debt financing, or disposing of non-core properties[15] - The company completed the acquisition of the remaining 40% non-controlling interests of the Galena Complex on December 19, 2024[15][18] 3. Changes in Accounting Policies and Recent Accounting Pronouncements The company is assessing the impact of new IASB standards, including IFRS 9, 7, and 18, not yet mandatory or early adopted - Amendments to IFRS 9 and 7 – Classification and Measurement of Financial Instruments are mandatory for annual reporting periods beginning on or after January 1, 2026[24] - IFRS 18 – Presentation and Disclosure in Financial Statements is mandatory for annual reporting periods beginning on or after January 1, 2027[24] - These standards are currently being assessed for their impact on the Company in current or future reporting periods[19] 4. Significant Accounting Judgments and Estimates Management's significant judgments and estimates for interim statements are consistent with 2024 annual statements, alongside going concern considerations - Significant judgments and estimates made by management were consistent with those applied to the Company's annual consolidated financial statements as at and for the year ended December 31, 2024, in addition to the significant judgments mentioned in Note 2[21] - Actual results could differ significantly from these estimates[20] 5. Trade and Other Receivables Trade and other receivables increased to $10.4 million, primarily due to higher trade receivables and new value-added taxes receivable Trade and Other Receivables (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :---------------- | :--------- | :--------- | | Trade receivables | $6,373 | $3,572 | $2,801 | 78.4% | | Value added taxes receivable | $941 | $- | $941 | N/A | | Other receivables | $3,112 | $3,560 | $(448) | -12.6% | | Total | $10,426 | $7,132 | $3,294 | 46.2% | 6. Inventories Total inventories decreased to $8.2 million, mainly due to a reduction in concentrates, with $1.9 million in inventory write-downs included in cost of sales Inventories (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :------------------ | :------------ | :---------------- | :--------- | :--------- | | Concentrates | $545 | $2,971 | $(2,426) | -81.7% | | Ore stockpiles | $1,715 | $1,767 | $(52) | -2.9% | | Spare parts and supplies | $5,909 | $5,966 | $(57) | -1.0% | | Total | $8,169 | $10,704 | $(2,535) | -23.7% | - Inventory write-downs included in cost of sales were $1.9 million for the six-month period ended June 30, 2025, compared to $0.8 million in 2024[23] 7. Property, Plant and Equipment Carrying value of property, plant, and equipment increased to $155.8 million, driven by $20.0 million in asset additions during the period Property, Plant and Equipment Carrying Value (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Carrying value | $155,837 | $147,399 | $8,438 | 5.7% | - Asset additions for the six-month period ended June 30, 2025, totaled $20.024 million[25] - Depreciation and depletion for the six-month period ended June 30, 2025, was $12.006 million[25] - No impairment or impairment reversals were identified for the six-month period ended June 30, 2025[25] 8. Precious Metals Delivery and Purchase Agreement A $25 million precious metals agreement for Relief Canyon was amended, establishing a fixed gold delivery schedule and increasing net metals contract liability to $43.0 million - The company has a $25 million precious metals delivery and purchase agreement with Sandstorm Gold Ltd. for the Relief Canyon Mine[28] - The agreement was amended on December 19, 2024, establishing a quarterly fixed delivery schedule for gold with final delivery in December 2027[29] - Sandstorm has the right to subscribe for common shares of the Company for proceeds up to $1.9 million per calendar quarter to satisfy gold delivery obligations[29] Net Metals Contract Liability (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Net metals contract liability | $43,026 | $40,868 | $2,158 | 5.3% | | Revaluation of metals contract liability (6-month period) | $10,203 | $10,083 | $120 | 1.2% | 9. Silver Metals Delivery Agreement A new silver delivery agreement requires monthly deliveries of 18,500 ounces, resulting in a $4.4 million fair value loss due to commodity pricing changes - The company entered into a silver metals delivery agreement for monthly purchases and deliveries of 18,500 ounces of silver for 36 months, starting January 2026[31] - The fixed deliveries are recognized as a financial liability measured at fair value through profit or loss, with an expected satisfaction through external purchase of silver[32] - A $4.4 million loss to fair value on metals contract liability was recorded during the six-month period ended June 30, 2025, due to changes in forward commodity pricing curves[32] 10. Convertible Debenture The $12.5 million CAD convertible debenture was fully converted into 32.3 million common shares, leading to a $0.7 million gain from fair value changes - The Convertible Debenture was fully converted by holders as of January 31, 2025, at a conversion price of $0.52 CAD[36] - The conversion resulted in the issuance of 32,307,692 common shares[36] - The Company recognized a gain of $0.7 million for the six-month period ended June 30, 2025, from the change in the estimated fair value of the combined Redemption Option and Retraction Option (2024: loss of $0.7 million)[36] 11. Pre-payment Facility The company amended its offtake agreement to include a $3.0 million pre-payment facility for Galena Complex, drawn in full in June 2025 - The company amended its existing unsecured offtake agreement with Ocean Partners USA, Inc. to include a pre-payment facility of $3.0 million[38] - The Facility was drawn in full for $3.0 million in June 2025[38] - The interest rate was amended to U.S. SOFR rate plus 4.75% per annum[38] 12. Credit Facility A secured credit and offtake agreement with Trafigura for up to $15 million was signed, with $10.0 million drawn for the Zone 120 and El Cajón project - The company signed a credit and offtake agreement with Trafigura PTE Ltd. for a secured credit facility of up to $15 million[39] - The Credit Facility was drawn for $10.0 million in August 2024[39] - The term of the Credit Facility is 36 months, including a 12-month principal repayment grace period, and bears interest of U.S. SOFR rate plus 6% per annum (6.5% thereafter for drawings above $12 million)[39] 13. Term Loan Facility A senior secured debt facility of up to $100 million with SAF Group was closed, with an initial $50 million advance and a 5-year term - The company closed a senior secured debt facility with SAF Group for funds of up to $100 million on June 24, 2025[40] - The Term Loan Facility consists of three tranches, with an initial $50 million term loan advanced upon closing[40] - The Initial Advance is due in 5 years, subject to a 6.0% original issue discount, and bears interest of U.S. SOFR rate (4% floor) plus 6% per annum[41] 14. Royalty Payable A $4.0 million net smelter returns royalty agreement with Sandstorm resulted in a $0.3 million fair value loss for the period - The company entered into a $4.0 million net smelter returns royalty agreement with Sandstorm on April 12, 2023[43] - The royalty is 2.5% on attributable production from the Galena Complex and Cosalá Operations, reducing to 0.2% after $4.0 million repayment, with a $1.9 million buyout option[43] - A loss of $0.3 million was recognized for the six-month period ended June 30, 2025, due to the change in the estimated fair value of the Royalty Agreement[44] 15. Share Capital The company raised $16.7 million through private placements and settled $1.4 million in payables by issuing common shares, significantly impacting share capital - During the six-month period ended June 30, 2025, the Company closed non-brokered private placements for total gross proceeds of $16.7 million, issuing 26,099,212 common shares and 2,610,000 warrants[45] - The Company settled $1.4 million of transaction-related payables through the issuance of 2,906,504 common shares during the six-month period ended June 30, 2025[46] - On December 19, 2024, the Company completed the acquisition of the remaining 40% non-controlling interests of the Galena Complex by issuing 170,000,000 common shares and $10 million in cash[48] a. Authorized Authorized share capital consists of an unlimited number of common and preferred shares, with no preferred shares issued - Authorized share capital consists of an unlimited number of common and preferred shares[50] - No preferred shares have been issued to date[50] b. Stock Option Plan Shares reserved for the stock option plan are limited to 10% of outstanding common shares, with 24.6 million options outstanding at period-end - The number of shares reserved for issuance under the stock option plan is limited to 10% of the number of common shares issued and outstanding[51] Stock Options Outstanding (in thousands) | As at | Number (thousands) | Weighted average exercise price (CAD) | | :------------------------- | :----------------- | :------------------------------------ | | Balance, beginning of period (Jan 1, 2025) | 20,110 | $0.67 | | Granted (6-month period) | 9,750 | $0.56 | | Exercised (6-month period) | (1,250) | $0.39 | | Expired (6-month period) | (3,976) | $1.05 | | Balance, end of period (June 30, 2025) | 24,634 | $0.58 | c. Share-based Payments Share-based payments totaled $1.04 million for the six-month period, with fair value estimated using the Black-Scholes model - The weighted average fair value at grant date of stock options granted during the six-month period ended June 30, 2025, was $0.23 (2024: $0.12)[54] - The Black-Scholes Option Pricing Model was used to estimate fair value[54] Total Share-based Payments (in thousands of U.S. dollars) | Period | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Six-month period ended | $1,040 | $311 | d. Warrants The company had 22.95 million warrants outstanding at June 30, 2025, with various exercise prices and expiry dates Warrants Outstanding as at June 30, 2025 | Number of warrants | Exercise price (CAD) | Issuance date | Expiry date | | :----------------- | :------------------- | :------------ | :----------- | | 17,600 | 0.30 | Mar 2024 | Mar 27, 2026 | | 1,000,000 | 0.55 | Jun 2023 | Jun 21, 2026 | | 16,322,500 | 0.40 | Mar 2024 | Mar 27, 2027 | | 3,000,000 | 0.42 | Aug 2024 | Aug 14, 2027 | | 2,610,000 | 1.00 | Mar 2025 | Mar 31, 2028 | | Total: 22,950,100 | | | | e. Restricted Share Units 234,076 cash-settled restricted share units were outstanding, and 20.5 million share-settled units were included in equity reserve - As at June 30, 2025, 234,076 cash-settled restricted share units were outstanding at an aggregate value of $0.2 million[56] - Effective January 1, 2025, the Company amended its accounting policy for share-settled restricted share units, with 20,516,115 units outstanding at June 30, 2025, included in equity reserve[57] f. Deferred Share Units 8.35 million deferred share units were outstanding, awarded to directors and settled in cash or shares upon departure - As at June 30, 2025, 8,350,376 deferred share units were issued and outstanding (December 31, 2024: 3,562,917)[58] - Deferred share units are awarded to eligible directors as payment for 50% to 100% of their director fees and are settled in cash or common shares upon the director leaving the Board[58] 16. Weighted Average Basic and Diluted Number of Common Shares Outstanding The weighted average common shares outstanding significantly increased to 639.2 million, reflecting recent equity issuances, with anti-dilutive options excluded Weighted Average Common Shares Outstanding | Period | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Basic and diluted (six-month period) | 639,174,498 | 237,268,113 | - Diluted weighted average number of common shares for the six-month period ended June 30, 2025, excludes 24,633,601 anti-dilutive stock options and 22,950,100 anti-dilutive warrants[59] 17. Non-controlling Interests The company acquired the remaining 40% non-controlling interests of Galena Complex, making net loss 100% attributable to shareholders from December 2024 - The company completed the acquisition of the remaining 40% non-controlling interests of the Galena Complex on December 19, 2024[60] - From December 19, 2024, consolidated net loss and other comprehensive loss are 100% attributable to the shareholders of the Company[18][60] 18. Revenue Total revenue decreased to $50.5 million, primarily due to lower silver, zinc, and lead sales, despite positive derivative pricing adjustments Revenue by Commodity (Six-month period, in thousands of U.S. dollars) | Commodity | June 30, 2025 | June 30, 2024 (Revised) | Change ($) | Change (%) | | :---------- | :------------ | :---------------------- | :--------- | :--------- | | Silver | $29,844 | $36,041 | $(6,197) | -17.2% | | Zinc | $11,857 | $20,577 | $(8,720) | -42.4% | | Lead | $5,130 | $9,950 | $(4,820) | -48.4% | | Other by-products | $413 | $805 | $(392) | -48.7% | | Total Revenue | $50,474 | $54,065 | $(3,591) | -6.6% | - Derivative pricing adjustments represent subsequent variations in revenue recognized as an embedded derivative from contracts with customers[63] 19. Cost of Sales Cost of sales increased to $44.6 million, mainly due to higher raw materials and consumables costs and a significant rise in inventory write-downs Cost of Sales Components (Six-month period, in thousands of U.S. dollars) | Component | June 30, 2025 | June 30, 2024 (Revised) | Change ($) | Change (%) | | :------------------------ | :------------ | :---------------------- | :--------- | :--------- | | Salaries and employee benefits | $14,466 | $15,821 | $(1,355) | -8.6% | | Raw materials and consumables | $13,126 | $17,190 | $(4,064) | -23.6% | | Inventory write-downs | $1,924 | $818 | $1,106 | 135.2% | | Total Cost of Sales | $44,618 | $42,600 | $2,018 | 4.7% | - Certain transportation costs were reclassified from treatment and selling costs in revenue to cost of sales in fiscal 2024[64] 20. Corporate General and Administrative Expenses Corporate G&A expenses significantly increased to $12.6 million, driven by higher salaries, directors' fees, professional fees, and share-based payments Corporate G&A Expenses (Six-month period, in thousands of U.S. dollars) | Component | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :------------------------ | :------------ | :------------ | :--------- | :--------- | | Salaries and employee benefits | $2,322 | $1,113 | $1,209 | 108.6% | | Directors' fees | $2,773 | $226 | $2,547 | 1127.9% | | Share-based payments | $3,601 | $311 | $3,290 | 1057.9% | | Professional fees | $2,156 | $676 | $1,480 | 218.9% | | Office and general | $1,736 | $1,039 | $697 | 67.1% | | Total | $12,588 | $3,365 | $9,223 | 274.1% | 21. Income Taxes The estimated average annual income tax rate was 26.5%, with net deferred tax liabilities slightly increasing to $51 thousand - The estimated average annual income tax rate for the six-month period ended June 30, 2025, was 26.5%, consistent with the rate for the year ended December 31, 2024[67] Net Deferred Tax Liabilities (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :---------------- | :--------- | :--------- | | Net deferred tax liabilities | $51 | $48 | $3 | 6.3% | - Inventory write-downs and impairments may result in non-capital losses and timing differences which have not been recorded due to uncertainty of recoverability[68] 22. Financial Risk Management The company manages credit, liquidity, and market risks, with sensitivities disclosed for currency and commodity price fluctuations - This section details the company's exposure to credit, liquidity, and market risks, and how they are managed[69][71][74] a. Financial Risk Factors This section details the company's exposure to credit, liquidity, and market risks, and how they are managed (i) Credit Risk Credit risk is low, primarily from cash and trade receivables, managed by investing in strong institutions and prompt collection - Credit risk is primarily attributable to cash and cash equivalents and trade and other receivables[69] - Credit risk on cash is limited by investing in well-capitalized financial institutions; trade receivables risk is managed by receiving 85% to 100% of estimated value within one month of shipment[69] - The Company's exposure to credit risk with respect to trade receivables was $6.4 million as of June 30, 2025 (December 31, 2024: $3.6 million), and is not considered significant[70] (ii) Liquidity Risk Liquidity is managed through cash, operations, and financing, with significant contractual maturities in the short to medium term - Liquidity requirements are met through cash, cash generated from operations, credit facilities, and debt and equity capital markets[71] Contractual Maturities of Financial Liabilities and Provisions (June 30, 2025, in thousands of U.S. dollars) | Item | Total | Less than 1 year | 2-3 years | 4-5 years | Over 5 years | | :------------------------ | :------- | :--------------- | :-------- | :-------- | :----------- | | Trade and other payables | $40,970 | $40,970 | $- | $- | $- | | Pre-payment facility | $3,000 | $3,000 | $- | $- | $- | | Credit facility | $10,000 | $6,000 | $4,000 | $- | $- | | Term loan facility | $53,191 | $798 | $13,165 | $39,228 | $- | | Metals contract liability | $43,026 | $17,404 | $25,622 | $- | $- | | Silver contract liability | $22,566 | $2,735 | $15,942 | $3,889 | $- | | Total | $230,584 | $82,597 | $74,238 | $52,482 | $21,267 | - Total lease liabilities discounted were $3.448 million at June 30, 2025, with $1.534 million due within 1 year[73] (iii) Market Risk Market risk encompasses interest rate, currency, and price risks, with potential impacts on net loss and trade receivables - Market risk comprises interest rate risk, currency risk, and price risk[74] (1) Interest Rate Risk The company is exposed to interest rate risk from variable rates on several credit and loan facilities tied to U.S. SOFR - The Company is subject to interest rate risk from variable rates on Cosalá Operations' advance payments (U.S. SOFR + 7.2%), the pre-payment facility (U.S. SOFR + 4.75%), the Credit Facility (U.S. SOFR + 6%), and the Term Loan Facility (U.S. SOFR + 6%)[75] (2) Currency Risk The company faces foreign currency risk from CAD and MXN denominated assets and liabilities, with potential impacts on net loss - The Company is exposed to foreign currency risk through financial assets and liabilities denominated in CAD and MXN[76] Approximate Impact on Net Loss and Other Comprehensive Loss from +/- 10% Exchange Rate Change (June 30, 2025, in thousands of U.S. dollars) | Currency | Net loss | Other comprehensive loss | | :------- | :------- | :----------------------- | | CAD/USD | $1,424 | $324 | | MXN/USD | $2,393 | $32 | - The Company may employ derivative financial instruments to manage foreign currency exchange rate fluctuations, but had no non-hedge foreign exchange forward contracts outstanding or settled during the periods[77][78] (3) Price Risk Commodity price fluctuations, particularly in silver, zinc, lead, and gold, could affect trade receivables by approximately $0.6 million - A ±10% fluctuation in silver, zinc, lead, and gold prices would affect trade receivables by approximately $0.6 million as at June 30, 2025[79] - The Company did not have any non-hedge commodity forward contracts outstanding or settled during the six-month periods ended June 30, 2025 and 2024[80] - Total gain on derivative instruments, including the convertible debenture, was $0.7 million for the six-month period ended June 30, 2025 (2024: loss of $0.7 million)[81] b. Fair Values Fair values of most financial instruments approximate carrying amounts due to short-term maturities, with a hierarchy classifying inputs - The fair value of cash, restricted cash, trade and other receivables, and other financial assets and liabilities approximate their carrying amounts due to short-term maturities[82] Fair Value Hierarchy (June 30, 2025, in thousands of U.S. dollars) | Level | Item | June 30, 2025 | | :------ | :------------------------ | :------------ | | Level 1 | Cash and cash equivalents | $61,683 | | | Restricted cash | $4,624 | | Level 2 | Trade and other receivables | $10,426 | | | Metals contract liability | $43,026 | | | Silver contract liability | $22,566 | | Level 3 | Royalty payable | $3,043 | - Valuation techniques classify inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[86] 23. Segmented and Geographic Information, and Major Customers The company operates four segments across Mexico and the United States, with all revenues earned in these countries and significant customer concentration - The Company's operations comprise four reporting segments: Cosalá Operations, Galena Complex, Relief Canyon, and Corporate and Other[88] - All revenues from sales of concentrates for the three-month and six-month periods ended June 30, 2025 and 2024, were earned in Mexico and the United States[89] - For the six-month period ended June 30, 2025, three major customers accounted for 46% of revenues from Cosalá Operations and 54% of revenues from Galena Complex[94] a. Segmented Information The company's operations are divided into four reporting segments for mineral resource properties in Mexico and the United States - The Company's operations comprise four reporting segments engaged in acquisition, exploration, development, and exploration of mineral resource properties in Mexico and the United States[88] - Management determines operating segments based on reports reviewed by chief operating decision makers for strategic decisions[88] b. Geographic Information All revenues are earned in Mexico and the United States, with total assets and net loss segmented by operational region - All revenues are earned in Mexico (Cosalá Operations) and the United States (Galena Complex and Relief Canyon)[89] Total Assets by Segment (June 30, 2025, in thousands of U.S. dollars) | Segment | Total Assets | | :---------------- | :----------- | | Cosalá Operations | $68,221 | | Galena Complex | $89,571 | | Relief Canyon | $27,949 | | Corporate and Other | $58,552 | | Total | $244,293 | Net Loss by Segment (Six-month period ended June 30, 2025, in thousands of U.S. dollars) | Segment | Net Loss | | :---------------- | :----------- | | Cosalá Operations | $(4,168) | | Galena Complex | $(3,612) | | Relief Canyon | $(1,198) | | Corporate and Other | $(25,043) | | Total | $(34,021) | c. Major Customers Three major customers accounted for 46% of Cosalá Operations' revenues and 54% of Galena Complex's revenues - For the six-month period ended June 30, 2025, three major customers accounted for 46% of revenues from Cosalá Operations and 54% of revenues from Galena Complex[94] 24. Contingencies The company faces legal and tax contingencies, including an ongoing appeal against a Mexican tax reassessment with an accrued liability of $1.0 million - The Company accrues for legal and tax matters when a liability is both probable and the amount can be reasonably estimated[95] - An ongoing appeal exists against a Mexican tax reassessment from 2010 for its subsidiary, Minera Cosalá, related to the year ended December 31, 2007[96] - The accrued liability for the probable obligation from the ongoing appeal was $1.0 million as at June 30, 2025 (December 31, 2024: $1.0 million)[96]