Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Consolidated Statements of Comprehensive Income (Loss) | ||
| Net income (loss) | $ (22,108) | $ 27,391 |
| Items that may be subsequently classified to net loss: | ||
| Currency translation adjustments on foreign operations | (544) | 130 |
| Total comprehensive income (loss) | (22,652) | 27,521 |
| Total comprehensive income (loss) attributable to shareholders | (27,907) | 23,549 |
| Non-controlling interests | 5,255 | 3,972 |
| Total comprehensive income (loss) attributable to shareholders | $ (22,652) | $ 27,521 |
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands |
Common Shares |
Other reserves |
Retained earnings (accumulated deficit) |
Total attributable to shareholders |
Non-controlling Interest |
Total |
|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2019 | $ 230,456 | $ 11,566 | $ (65,239) | $ 176,783 | $ 35,236 | $ 212,019 |
| Balance (in shares) at Dec. 31, 2019 | 162,115,379 | |||||
| Exercise of RSUs | $ 524 | (524) | 0 | 0 | 0 | 0 |
| Exercise of RSUs (in shares) | 695,174 | |||||
| Share-based compensation expense | $ 0 | 668 | 0 | 668 | 0 | 668 |
| Total comprehensive income (loss) | 0 | 130 | 23,419 | 23,549 | 3,972 | 27,521 |
| Balance at Dec. 31, 2020 | $ 230,980 | 11,840 | (41,820) | 201,000 | 39,208 | 240,208 |
| Balance (in shares) at Dec. 31, 2020 | 162,810,553 | |||||
| Exercise of RSUs | $ 1,935 | (1,935) | 0 | 0 | 0 | 0 |
| Exercise of RSUs (in shares) | 617,597 | |||||
| Share-based compensation expense | $ 0 | 1,059 | 0 | 1,059 | 0 | 1,059 |
| Dividends paid to shareholders (note 13 (c)) | (4,903) | (4,903) | (4,903) | |||
| Dividends paid to non-controlling interest (note 14) | (9,080) | (9,080) | ||||
| Total comprehensive income (loss) | 0 | (544) | (27,363) | (27,907) | 5,255 | (22,652) |
| Balance at Dec. 31, 2021 | $ 232,915 | $ 10,420 | $ (74,086) | $ 169,249 | $ 35,383 | $ 204,632 |
| Balance (in shares) at Dec. 31, 2021 | 163,428,150 |
Description of business and nature of operations |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2021 | |||
| Description of business and nature of operations | |||
| Description of business and nature of operations |
Sierra Metals Inc. (“Sierra Metals” or the “Company”) was incorporated under the Canada Business Corporations Act on April 11, 1996 and is a diversified Canadian mining company focused on the production, exploration and development of precious and base metals in Peru and Mexico. The Company’s key priorities are to generate strong cash flows and to maximize shareholder value. The Company’s shares are listed on the TSX, NYSE American Exchange, and the Bolsa de Valores de Lima (“BVL”) and its registered office is 161 Bay Street, Suite 4260, Toronto, Ontario, M5J 2S1, Canada. The Company owns an 81.84% interest in the polymetallic Yauricocha Mine in Peru and a 100% interest in the Bolivar and Mines in Mexico. In addition to its producing mines, the Company also owns various exploration projects in Mexico and Peru. |
Significant accounting policies |
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| Significant accounting policies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Significant accounting policies |
The significant accounting policies used in the preparation of these consolidated financial statements are as follows:
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). The financial statements were approved by the Board of Directors on March 14, 2022.
These consolidated financial statements include the accounts of the Company and its subsidiaries, which are entities controlled by the Company. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date that control commences until the date that control ceases. Non-controlling interests represent equity interests in subsidiaries owned by outside parties. Changes in the parent company’s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The principal subsidiaries of the Company and their geographical locations as at December 31, 2021 are as follows:
Items included in the financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The functional currency of Sierra Metals Inc., the parent entity, is the Canadian dollar (“C$”). The functional currency of the Mexican and Peruvian subsidiaries is the United States dollar.
The presentation currency of the financial statements is United States dollar (“$”). The financial statements of entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities – at the closing rate at the date of the statement of financial position, income and expenses – at the average rate of the period (as this is considered a reasonable approximation of the actual rates prevailing at the transaction dates). All resulting differences are recognized in other comprehensive income as cumulative translation adjustments.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in currencies other than an entity’s functional currency are recognized in the consolidated statement of loss.
Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less.
The Company’s financial assets and liabilities (financial instruments) include cash and cash equivalents, trade receivables, accounts payable and accrued liabilities and long-term debt. The Company recognizes financial assets and financial liabilities on the date the Company becomes a party to the contractual provisions of the instruments. A financial asset is derecognized either when the Company has transferred substantially all the risks and rewards of ownership of the financial asset or when cash flows expire. A financial liability is derecognized when the obligation specified in the contract is discharged, canceled or expired. Financial Assets Cash and cash equivalents are recorded at amortized cost using the effective interest method. Trade receivables are classified as financial assets at fair value through profit or loss and measured at fair value.
Financial Liabilities Financial liabilities, including accounts payable and accrued liabilities, as well as debt and financing obligations are accounted for at amortized cost. Non-hedge derivatives The Company may hold derivative financial instruments to hedge its risk explosure to fluctuations in commodity prices. These derivative financial instruments are classified as financial instruments through profit or loss and recorded in the balance sheet at fair value. Changes in the estimated fair value of non-hedge derivatives at each reporting date are included in the Consolidated Statement of Income (Loss) as derivative gain or loss.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Chief Executive Officer of the Company.
Inventories consist of concentrates, ore stockpiles, supplies and spare parts. Concentrates include stockpiled concentrates at milling operations or at warehouses. Stockpiled ore is comprised of in-process mineralized material awaiting processing at milling facilities and materials for use in milling operations. Concentrates and stockpiled ore are valued at the lower of average production cost and net realizable value (“NRV”). Concentrates and stockpiled ore inventory costs include all direct costs incurred in production including direct labor and materials, freight and amortization, and directly attributable overhead costs. NRV is calculated as the estimated price at the time of sale based on prevailing metal market prices less estimated future costs to convert the inventories into saleable form and estimated costs to sell. The supplies and spare parts inventories will be used for exploration and production and are valued at the lower of average cost and net realizable value. Cost includes acquisition, freight and other directly attributable costs. If the carrying value of inventory exceeds NRV, a write-down is recognized as production costs of sales in the consolidated statement of income (loss). If there is a subsequent increase in the value of the inventory, the previous write-downs to NRV are reversed up to cost to the extent that the related inventory has not been sold.
Exploration and evaluation expenditures are comprised of costs that are directly attributable to:
Exploration expenditures are costs incurred in the search for resources suitable for commercial exploitation. Evaluation expenditures are costs incurred in determining the technical feasibility and commercial viability of a mineral resource. Exploration and evaluation expenditures are capitalized when there is a high degree of confidence in the project’s viability and thus it is probable that future economic benefits will flow to the Company. Any items of property, plant and equipment used for exploration and evaluation are capitalised within property, plant and equipment. Capitalized exploration and evaluation expenditures are considered to be tangible assets as they form part of the underlying mineral property and are recorded within property, plant and equipment - exploration and evaluation expenditures.
Property, plant and equipment is stated at cost, less accumulated depreciation and impairment losses. The cost of an item of property, plant and equipment comprises its purchase price, any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and the estimated close down and restoration costs associated with the asset, and for qualifying assets, the associated borrowing costs. Once a mining project has been established as commercially viable, expenditure other than on land, buildings, plant and equipment is capitalized under ‘Mining properties’ together with any amount capitalized relating to that mining project from ‘Exploration and evaluation’. Where an item of property, plant and equipment is comprised of major components with different useful lives, the components are accounted for as separate items of property, plant and equipment and depreciated over their estimated useful lives. Costs associated with commissioning new assets, in the period before they are capable of operating in the manner intended by management, are capitalized. Revenue generated during the development stage from the sale of concentrate and related costs can be deducted from capitalized costs only if the production of the saleable material is directly attributable to bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management. Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to future economic benefits and these costs can be measured reliably. Repairs and maintenance costs are charged to the consolidated statement of income (loss) during the period in which they are incurred. Property, plant and equipment is depreciated over its useful life, or over the remaining life of the mine if shorter. Depreciation commences when the asset is available for use. Land is not depreciated. The major categories of property, plant and equipment are depreciated on a straight-line basis using the following average estimated useful lives below:
Mining properties are depleted over the life of the mine using the units of production method. In applying the units of production method, depletion is normally calculated using the quantity of material to be extracted in current and future periods based on proven and probable reserves or measured and indicated resources. Such non-reserve material may be included in depletion calculations in limited circumstances and where there is a high degree of confidence in its economic extraction.
The Company conducts an annual review of residual values, useful lives, depletion and depreciation methods used for property, plant and equipment. Changes to estimated residual values or useful lives are accounted for prospectively.
Property, plant and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is assessed at the level of cash generating units (‘CGUs’). The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Fair value less costs to sell is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction. The best evidence of fair value is the value obtained from an active market or binding sales agreement. Where this information is not available, fair value can be estimated as the present value of future cash flows expected to be realized from the continued use of the asset including expansion projects. Value in use is determined as the present value of expected future cash flows to be realized from the continued use of the asset in its present condition and from its ultimate disposal. Capitalized exploration expenditures are reviewed for indicators of impairment, which included a decision to discontinue activities in a specific area and the existence of sufficient data indicating that the carrying amount of an exploration and evaluation asset is unlikely to be recovered from the development or sale of the asset. Non-financial assets that have suffered impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized and included in the carrying amounts of those assets until they are ready for their intended use. All other borrowing costs are recognized as an expense in the period incurred.
Revenues include sales of metal concentrates net of treatment and refining charges. The Company sells concentrate from certain of its mines to third-party smelter customers. These concentrates predominantly contain zinc, lead, and copper, along with quantities of gold and silver. The Company recognizes revenue from these concentrate sales when control of the concentrate has transferred to the customer, which is the point in time that the concentrate is delivered to the customer. Upon delivery, the customer has legal right to, physical possession of, and the risks and rewards of ownership of the concentrate. The customer is also committed to accept and pay for the concentrates once delivered; therefore, the customer is able to direct the use of and obtain substantially all of the remaining benefits from the concentrate.
The final prices for metals contained in the concentrate are generally determined based on the prevailing spot market metal prices on a specific future date, which is established on a date prior to the concentrate being delivered to the customer. Upon transfer of control at delivery, the Company measures revenue under these contracts based on forward prices agreed upon with the customer at the time of delivery and the most recent determination of the quantity of contained metals less smelting and refining charges charged by the customer. This reflects the best estimate of the transaction price expected to be received at final settlement. The variability associated with the embedded derivative for changes in the metal prices is recognized at fair value. These changes in the fair value of the receivable are adjusted through revenue from other sources at each subsequent financial statement date.
At inception of a contract, the Company assesses whether a contract is, or contains, a lease by determining whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. A right-of-use ("ROU") asset and lease liability is recognized at the lease commencement date. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received. The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability. A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the interest rate implicit in the lease, or if that rate cannot be readily determined, the incremental borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in our estimate or assessment of the expected amount payable under a residual value guarantee, purchase, extension or termination option. Variable lease payments not included in the initial measurement of the lease liability are charged directly to profit.
Common shares are classified as equity. Incremental costs directly attributable to the issuance of the shares are recognized as a deduction from equity.
The fair value of the estimated number of stock options and restricted share units (“RSUs”) awarded to employees, officers and directors that will eventually vest, determined as of the date of grant, is recognized as share-based compensation expense over the vesting period of the stock options and RSUs, with a corresponding increase to equity. The fair value of each tranche is determined using the Black-Scholes option pricing model with market related inputs as of the date of grant. The fair value of RSUs is the market value of the underlying shares as of the date of grant. The number of awards expected to vest is reviewed at least annually, with any change in the estimate recognized immediately in share-based payments expense with a corresponding adjustment to equity.
The Company deducts from contributed surplus any excess of consideration paid over book value where the Company has repurchased any of its own common shares. Book value is calculated as the weighted average price of the shares issued and outstanding prior to the cancellation date.
Basic earnings per share (“EPS”) is calculated by dividing the net income (loss) for the period attributable to the shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method. The Company’s potentially dilutive common shares comprise stock options and RSUs granted to employees. In periods of loss, basic and diluted EPS are the same, as the effect of dilutive instruments is anti-dilutive.
Tax expense comprises current and deferred income and resource taxes. Current income, deferred income and resources taxes are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that the parent is able to control the timing of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Decommissioning and restoration costs include the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas. These costs are a normal consequence of mining activity and the majority of these expenditures are expected to be incurred at the end of the life of mine. Estimated decommissioning and restoration costs are provided in the accounting period when the obligation arising from the related disturbance occurs, based on the net present value of the estimated future costs discounted using the credit adjusted risk free rate. This provision is adjusted in each reporting period to reflect known developments, e.g. revisions to costs estimates and the timing of cash outflows. The initial decommissioning and restoration provision together with other movements resulting from changes in estimated cash flows or the credit adjusted risk free rates is capitalized within property, plant and equipment and amortized over the life of the asset to which it relates except where it relates to a closed mine where the expenses are recognized in the statement of loss. Provision is made for the estimated present value of costs of environmental clean-up obligations outstanding as at the date of the statement of financial position, and these costs are charged to the income statement as an operating cost. The amortization or unwinding of the discount applied in establishing the net present value of provision is accreted to the income statement in each accounting period with each interest charge included as a financing cost rather than as an operating cost. |
Significant accounting estimates and judgments |
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| Significant accounting estimates and judgments | ||||||||||||||||||||||
| Significant accounting estimates and judgments |
In the application of the Company’s accounting policies, which are described in note 2, management is required to make judgements, estimates and assumptions about the effects of uncertain future events on the carrying amounts of assets and liabilities. The estimates and associated assumptions are based on management’s best knowledge of the relevant facts and circumstances and historical experience. Actual results may differ from these estimates, potentially having a material future effect on the Company’s consolidated financial statements. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The following are the significant judgements that management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements:
In accordance with the Company’s accounting policy (note 2(j)), at every reporting period, the Company assesses whether there are any indicators that the carrying value of its assets or CGUs may be impaired, which is a significant management judgment. Where there is an indication that the carrying amount of an asset may not be recoverable, the Company prepares a formal estimate of the recoverable amount by analyzing discounted cash flows. The resulting valuations are particularly sensitive to changes in estimates such as long-term commodity prices, exchange rates, sales volume, operating costs, and discount rates. In the event of impairment, if there is a subsequent adverse change in any of the assumptions or estimates used in the discounted cash flow model, this could result in a further impairment of the asset. Also, in accordance with the Company’s accounting policy (note 2(h)), the Company capitalizes evaluation expenditures when there is a high degree of confidence that these costs are recoverable and have a probable future benefit. As at December 31, 2021, the Company’s assessment of its long-lived assets and exploration and evaluation expenditures resulted in an impairment of $35.0 million on its Cusi mine (December 31, 2020 - $nil) (note 7).
The Company estimates mineral reserves and resources based on information prepared by qualified persons as defined in accordance with the Canadian Securities Administrators’ National Instrument (“NI”) 43-101. These estimates form the basis of the Company’s life of mine (“LOM”) plans, which are used for a number of important and significant accounting purposes, including: the calculation of depletion expense and impairment charges, forecasting the timing of the payment of decommissioning costs and future taxes. There are significant uncertainties inherent in the estimation of mineral reserves and the assumptions used, including commodity prices, production costs, recovery rates and exchange rates. These assumptions may change significantly when new information becomes available and could result in mineral reserves being revised, which in turn would impact depletion expense, asset carrying values and the provision for decommissioning costs.
The Company’s management makes significant estimates and judgments in determining the Company’s tax expense for the period and the deferred tax assets and liabilities. Management interprets tax legislation in a variety of jurisdictions and makes estimates of the expected timing of the reversal of deferred tax assets and liabilities. In addition, management makes estimates related to expectations of future taxable income based on cash flows from operations and the application of existing tax laws in each jurisdiction. Assumptions used in the cash flow forecast are based on management’s estimates of future production and sales volume, commodity prices, operating costs, capital expenditures, dividends, and decommissioning and reclamation expenditures. These estimates are subject to risk and uncertainty and could result in an adjustment to the deferred tax provision and a corresponding credit or charge to the statement of loss. The Company is subject to assessments by various tax authorities who may interpret the tax laws differently. These differences may impact the final amount or the timing of the payment of taxes. The Company provides for such differences where known based on management’s best estimates of the probable outcome of these matters.
The Company’s provision for decommissioning and restoration costs is based on management’s best estimate of the present value of the future cash outflows required to settle the liability. In determining the liability, management makes estimates about the future costs, inflation, foreign exchange rates, risks associated with the cash flows, and the applicable risk-free interest rates for discounting future cash flows. Changes in any of these estimates could result in a change in the provision recognized by the Company. Also, the ultimate costs of environmental disturbance are uncertain and cost estimates can vary in response to many factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other mine sites. Changes in decommissioning and restoration liabilities are recorded with a corresponding change to the carrying amounts of the assets to which they relate. Adjustments made to the carrying amounts of the asset can result in a change to the depreciation charged in the consolidated statement of loss.
In preparing the Company’s consolidated financial statements, the management makes judgments in applying its accounting policies. The areas of policy judgment are consistent with those reported in the Company’s 2020 annual consolidated financial statements. In addition, the Company makes assumptions about the future in deriving estimates used in preparing our consolidated financial statements. Sources of estimation uncertainty include estimates used to determine the recoverable amounts of long-lived assets, recoverable reserves and resources, the provision for income taxes and the related deferred tax assets and liabilities and the valuation of other assets and liabilities including decommissioning and restoration provisions.
The Company has assessed the economic impacts of the COVID-19 pandemic on its consolidated financial statements. Mining operations at the Company's Bolivar mine were impacted during the year ended December 31, 2021, resulting in a high cost of stockpile and concentrate inventory and consequent reduction of these inventories to their net realizable value (“NRV”). Further, the availability of personnel remained an issue throughout 2021, considering the absenteeism caused by quarantines and due to the recovery phase of the workers who tested COVID-positive. Low availability of manpower led to delays in mine development and consequent impact on metal production, which was particularly noticed at the Bolivar mine. The measures taken by the Company to detect and restrict the spread of COVID resulted in additional costs of $9.6 million (2020 - $5.9 million). Despite these impacts, the management has determined that the Company's ability to execute its medium- and longer-term plans and the economic viability of its assets including the carrying value of its long-lived assets are not materially impacted. In making this judgment, management has assessed various criteria including, but not limited to, existing laws, regulations, orders, disruptions and potential disruptions in our supply chain, disruptions in the markets for our products, commodity prices and foreign exchange prices and the actions that the Company has taken at its operations to protect the health and safety of its workforce and local community. |
Adoption of new accounting standards and future accounting changes |
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| Adoption of new accounting standards and future accounting changes | ||||||||||||||
| Adoption of new accounting standards and future accounting changes |
The following new accounting standard was not yet effective for the year ended December 31, 2021 and have not been applied in preparing these consolidated financial statements. Amendment to IAS 1, Classification of liabilities On January 23, 2020, the IASB issued amendments to IAS 1 Presentation of Financial Statements, to clarify the classification of liabilities as current or non-current. On July 15, 2020 the IASB issued an amendment to defer the effective date by one year. For the purposes of non-current classification, the amendments removed the requirement for a right to defer settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must have substance and exist at the end of the reporting period. The amendments also clarify how a company classifies a liability that includes a counterparty conversion option. The amendments are effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. The Company is evaluating the impact of this amendment on its Financial Statements. IAS 16, Property, Plant and Equipment The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use. The amendment is effective for annual periods beginning on or after January 1, 2022, with earlier application permitted. The Company is currently evaluating the impacts that this modification will have on the iron ore plant project at its Bolivar mine.
Interest Rate Reforms On August 27, 2020, the IASB finalized its response to the ongoing reform of inter-bank offered rates and other interest rate benchmarks by issuing a package of amendments to IFRS Standards (Phase 2). The standards impacted include: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. The amendments complement those issued in 2019 as part of Phase 1 amendments and mainly relate to:
The Company’s credit facility with BCP (note 10) is exposed to 3-month LIBOR. As at December 31, 2021, the Company has not yet transitioned this credit agreement to an alternative benchmark interest rate. While there remains some uncertainty around the timing of adoption and the precise nature of an alternative benchmark rate, the replacement of the rate is not expected to result in a significant change in the Company’s interest rate risk management strategy or interest rate risk. |
Trade and other receivables |
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| Trade and other receivables |
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Inventories |
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| Inventories | |||||||||||||||||||||||||||||||||||||||||||
| Inventories |
Cost of sales are comprised of production costs and depletion, depreciation and amortization, and represent the cost of inventories recognized as an expense for the years ended December 31, 2021 and 2020 of $190,795 and $165,303, respectively. Supplies and spare parts inventory as at December 31, 2021 is stated net of a provision of $6,396 (2020 - $3,808) to write inventories down due to obsolescence or infrequent use. During the year ended December 31, 2021, the Company wrote down stockpiles and concentrates inventory to its NRV, recording a charge of $5,752 (2020 - $1,248). Stockpiles and concentrates inventory held at NRV as at December 31, 2021 was $2,710 (2020 - $nil). |
Property, plant and equipment |
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| Property, plant and equipment |
impairment loss was allocated to mineral properties and exploration & evaluation assets based on their pro rata carrying values.
The key assumptions used in making this assessment as of December 31, 2021 included future metal prices, discount rate, quantities of mineral resources and the Company's ability to convert those resources to reserves, silver grades, future production costs, and the weighted probabilities of different scenarios. Estimated quantities of mineral resources are based on information compiled by management’s internal and external experts. Future forecasted metal prices for silver were obtained from independent sources and range between $21.04/oz and $24.07/oz during the life of the mine. If the prices used by management were to decrease by 10%, the company would have had to recognize an additional impairment charge of $18,870. A discount rate of 10.5% was estimated based on the Cusi’s weighted average cost of capital, considering the nature of the assets being valued and their specific risk profile. If the discount rate applied to the cash flow projections had been 100 basis points higher, the company would have to recognize an additional impairment charge of $1,727. The quantities of mineral resources used in the determination of the FVLCD, was determined based on recent exploration results, and was estimated based on information provided by internal and external experts. If the estimated quantities of mineral resources were 10% lower than the one estimated by management, the Company would have recognized an additional impairment charge of $6,554. If the silver grades were 10% lower than those estimated in the different scenarios, the Company would have recognized an additional impairment charge of $18,314. If the estimated future production costs were 10% higher than the one estimated by management, the Company would have recognized an additional impairment charge of $11,811. If the probabilities of the different scenarios had been 10% more negative than management’s estimates, the Company would have recognized an additional impairment charge of $3,024.
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Accounts payable and accrued liabilities |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| Accounts payable and accrued liabilities | |||||||||||||||||||||||||||||||||||||||||||
| Accounts payable and accrued liabilities |
All accounts payable and accrued liabilities are expected to be settled within 12 months. |
Current and deferred income tax liability |
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| Current and deferred income tax liability | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current and deferred income tax liability |
A reconciliation between income tax expense and the product of loss before income taxes multiplied by the combined Canadian federal and provincial income tax rate for the years ended December 31, 2021 and 2020 is as follows:
The significant components and movements of the Company’s net deferred tax assets and liabilities are as follows:
Deferred tax assets have not been recognized in respect of the following temporary differences:
In Canada, the Company has aggregate tax losses not recognized of $46,399 (December 31, 2020 – $37,771) expiring in periods from 2027 to 2041. Deferred tax assets have not been recognized in respect of these losses because it is not probable that future taxable profit will be available against which the Company can utilise the benefits there from. Also, the Company has $1,403 of capital losses in Canada that are without expiry as at December 31, 2021 (December 31, 2020 - $1,403).
As at December 31, 2021, the Company has taxable temporary difference of $83,052 (2020 - $77,582) relating to investments in subsidiaries that has not been recognized because the Company controls whether the liability will be incurred and it is satisfied that it will not be incurred in the foreseeable future. |
Loans payable and notes payable |
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| Loans payable and notes payable |
Senior Secured Corporate Credit Facility with BCP On March 11, 2019, the Company entered into a six-year senior secured corporate credit facility (“Corporate Facility”) with BCP that provides funding of up to $100 million effective March 8, 2019. The Corporate Facility provides the Company with additional liquidity and will provide the financial flexibility to fund future capital projects in Mexico as well as corporate working capital requirements. The Company also used the proceeds of the new facility to repay existing debt balances. The most significant terms of the agreement were:
The Corporate Facility is subject to customary covenants, including consolidated net leverage and interest coverage ratios and customary events of default. The Company is in compliance with all covenants as at December 31, 2021. The Company drew down $21.4 million on March 11, 2019, $48.6 million on May 8, 2019 and the balance of $30.0 million on June 29, 2019. The Company repaid the amount owed on the Corona Acquisition Loan on May 11, 2019 using funds drawn from the new facility. Interest is payable quarterly and interest payments began on the drawn and undrawn portions of the facility starting in June 2019. During the year ended December 31, 2021, The Company made interest payments of $3,209 (2020 - $4,066). On February 17, 2020, BCP entered into a syndication agreement with Banco Santander S.A for $30.0 million of this credit facility. BCP continues to remain as the principal lender and there were no changes to the terms and conditions of the original agreement. Principal payments on the amount drawn from the facility began in June 2021. The loan is recorded at amortized cost and is being accreted to face value over 4 years using an effective interest rate of 3.26%. |
Decommissioning liability |
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| Decommissioning liability |
The Company’s decommissioning liability represents the present value of estimated costs for required future decommissioning and other site restoration activities. The majority of the decommissioning and site restoration expenditures occur at the end of each operation’s life. During 2021 and 2020, the decommissioning liability was calculated based on the following key assumptions:
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Other liabilities |
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| Other liabilities |
As at December 31, 2021, there is a provision amounting to $6,404 for employee profit sharing in Peru and $3,791 for wages, salaries and other employee benefits outstanding (December 31, 2020 - $2,244 and $5,023, respectively). |
Share capital and share-based payments |
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| Disclosure of terms and conditions of share-based payment arrangement [abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share capital and share-based payments |
The Company has an unlimited amount of authorized common shares with no par value.
The changes in RSU’s issued during the years ended December 31, 2021 and 2020 was as follows:
On June 30, 2020, the Company’s shareholders approved the RSU plan, whereby RSUs may be granted to directors, officers, consultants or employees at the discretion of the Board of Directors. The RSU plan provides for the issuance of common shares from treasury upon the exercise of vested RSUs at no additional consideration. There is no cash settlement related to the vesting of RSU’s as they are all settled with equity. The current maximum number of common shares authorized for issue under the RSU plan is 5% of the number of issued and outstanding common shares of the Company at the time of grant. The RSUs have vesting conditions determined by the Board of Directors, and the vesting conditions are non-market conditions and are not performance based. During the year ended December 31, 2021, the Company granted RSU’s totalling 617,187 which had a fair value of C$3.95 based on the closing share price at grant date. RSUs exercised during the year ended December 31, 2021 had a weighted average fair value of C$1.81 (2020 – C$2.60) and the RSUs forfeited had a weighted average fair value of C$2.17 (2020 – C$1.88). As at December 31, 2021, the weighted average fair value of the RSUs outstanding is C$2.63 (2020 – C$1.57). The total RSU expense recognized during the year ended December 31, 2021 was $1,059 with a corresponding credit to other reserves (2020 - $668).
On November 5, 2021, the Company declared an annual cash dividend of $0.03 per common share to the holders of issued and outstanding shares as of the close of business on November 22, 2021. Accordingly, this dividend of $4,903 was paid on December 7, 2021 (2020 - ). |
Non-controlling interest |
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| Non-controlling interest |
Set out below is the summarized financial information of our subsidiary Corona which has a material non-controlling interest (note 2(b)). The information below is before intercompany eliminations and after fair value adjustments on acquisition of the entity. Summarized statements of financial position
Summarized income statement
Summarized cash flows
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Expenses by nature |
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| Expenses by nature |
Mining costs include mine production costs, milling and transport costs, royalty expenses, site administration costs but not the primary mine development costs which are capitalized and depreciated over the specific useful life or reserves related to that development and ore included in depreciation and amortization. The mining costs for the years ended December 31, 2021 and 2020 relate to the Yauricocha, Bolivar and Cusi Mines.
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| Other expenses (income) |
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Interest expense and other finance costs |
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| Interest expense and other finance costs |
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Segment reporting |
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| Segment reporting |
The Company primarily manages its business on the basis of the geographical location of its operating mines. The Company’s operating segments are based on the reports reviewed by the senior management group that are used to make strategic decisions. The Chief Executive Officer considers the business from a geographic perspective considering the performance of the Company’s business units. The corporate division only earns income that is considered to be incidental to the activities of the Company and thus it does not meet the definition of an operating segment; as such it has been included within “other reconciling items.” The reporting segments identified are the following:
The following is a summary of the reported amounts of net income (loss) and the carrying amounts of assets and liabilities by operating segment:
For the year ended December 31, 2021, 66% of the revenues ($180,598) were from seven customers based in Peru and the remaining 34% of the revenues ($91,416) were from two customers based in Mexico. In Peru, two major customers accounted for 53% and 25% of the revenues. In Mexico, the two customers accounted for 69% and 31% of the revenues. As at December 31, 2021, the trade receivable balance of $27,001 ($28,750 as at December 31, 2020) includes amounts outstanding of $5,943 ($10,957 as at December 31, 2020) and $21,058 ($17,793 as at December 31, 2020) from the customers in Mexico and Peru, respectively. For the year ended December 31, 2020, 60% of the revenues ($146,941) were from six customers based in Peru and the remaining 40% of the revenues ($99,947) were from two customers based in Mexico. In Peru, two major customers accounted for 37% and 33% of the revenues. In Mexico, the two customers accounted for 77% and 23% of the revenues. |
Financial instruments and financial risk management |
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| Financial instruments and financial risk management | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial instruments and financial risk management |
The Company’s financial instruments include cash and cash equivalents, trade receivables, financial assets, accounts payable and loans payable.
As at December 31, 2021 and 2020, the fair value of the financial instruments approximates their carrying value.
Financial instruments carried at fair value are categorized based on a three-level valuation hierarchy that reflects the significance of inputs used in making the fair value measurements as follows: Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) The Company’s metal concentrate sales are subject to provisional pricing with the selling prices adjusted at the end of the quotational period. The Company’s trade receivables are marked-to-market at each reporting period based on quoted forward prices for which there exists an active commodity market.
Level 3 – inputs for the asset or liability that are not based on observable market data. At December 31, 2021 and 2020, the levels in the fair value hierarchy into which the Company’s financial assets and liabilities are measured and recognized on the Consolidated Statement of Financial Position are categorized as follows:
There were no transfers between Level 1 and Level 2 during the years ended December 31, 2021 and 2020.
The Company is exposed to financial risks, including credit risk, liquidity risk, currency risk, interest rate risk and price risk. The aim of the Company’s overall risk management strategy is to reduce the potential adverse effect that these risks may have on the Company’s financial position and results. The Company’s Board of Directors has overall responsibility and oversight of management’s risk management practices. Risk management is carried out under policies approved by the Board of Directors. The Company may from time to time, use foreign exchange contracts and commodity price future and forward contracts to manage its exposure to fluctuations in foreign currency and metals prices. The Company does not ordinarily enter into hedging arrangements to cover long term commodity price risk unless it has the obligation to so under a credit facility, which would be approved of the Board of Directors.
Currency risk is the risk that the fair values or future cash flows of the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company and its subsidiaries’ financial instruments are exposed to currency risk where those instruments are denominated in currencies that are not the same as their functional currency; exchange gains and losses in these situations impact net income or loss. The Company’s sales of silver, copper, lead and zinc are denominated in United States dollars and the Company’s costs are incurred in Canadian dollars, United States dollars, Mexican pesos and Peruvian Nuevo Soles. The United States dollar is the functional currency of the Peruvian and Mexican entities. The Canadian dollar is the functional currency of all other entities. The Company also holds cash and cash equivalents, trade and other receivables and accounts payable and other liabilities that are subject to currency risk.
The following are the most significant areas of exposure to currency risk:
The Company manages and monitors this risk with the objective of mitigating the potential adverse effect that fluctuations in currencies against the Canadian dollar and US dollar could have on the Company’s Consolidated Statement of Financial Position and Consolidated Statement of Income (Loss). As at December 31, 2021, the Company has not entered into any derivative contracts to mitigate this risk. A 10% appreciation in the US dollar exchange rate against the Peruvian Nuevo Soles and the Mexican Peso based on the financial assets and liabilities held at December 31, 2021, with all the other variables held constant, would have resulted in an increase to the Company’s net income of $2,455 (2020 - $1,965). A 10% appreciation in the Canadian dollar exchange rate against the US dollar based on the financial assets and liabilities held at December 31, 2021 and 2020, with all the other variables held constant, would have resulted in a negligible impact to the Company’s net income (loss).
Interest rate risk is the risk that the fair values or future cash flows of the Company will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its loans payable (note 10). The Company monitors its exposure to interest rates closely and has not entered into any derivative contracts to manage its risk. The weighted average interest rate paid by the Company during the year ended December 31, 2021 on its loans and notes payable was 3.31% (2020 – 4.07%). With all other variables unchanged a 1% increase in the interest rate would have increased the Company’s net loss by $678 (2020 - $708).
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments in the market. As at December 31, 2021 and 2020, the Company had certain amounts related to the sales of concentrates that have only been provisionally priced. The Company’s exposure to commodity price risk is as follows:
The increase in commodity price risk in 2021 compared to 2020 resulted from higher metal prices and the increase in unhedged positions. As at December 31, 2021 and 2020, the Company did not have any forward contracts outstanding. ii) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall due. The Company has in place planning, budgeting and forecasting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion and development plans. The Company tries to ensure that it has sufficient committed credit facilities to meet its short-term operating needs, note 10. In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following table summarizes the remaining contractual maturities and undiscounted cash flows as at December 31, 2021 of the Company’s financial liabilities and operating and capital commitments:
In the opinion of management, the working capital at December 31, 2021, together with future cash flows from operations and available loan facilities, is sufficient to support the Company’s commitments through 2022. iii) Credit risk Credit risk is the risk that the counterparty to a financial instrument might fail to discharge its obligations under the terms of a financial contract. Credit risk is primarily associated with trade receivables; however, it also arises on cash and cash equivalents. The Company sells its concentrate to large international organizations. The Company is exposed to significant concentration of credit risk given that 78% of its revenue in Peru is from two customers and 100% of its revenue in Mexico is from two customers. There are no significant provisions recorded for expected credit losses as at December 31, 2021 and 2020. The Company’s policy is to keep its cash and cash equivalents only with highly rated financial institutions and to only invest in government securities. The Company considers the risk of loss associated with cash and cash equivalents to be low. The counterparty to the financial asset is a large international financial institution with strong credit ratings and thus the credit risk is considered to be low. The Company’s maximum exposure to credit risk is as follows:
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Capital management |
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital management | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital management |
The Company’s objectives of capital management are to safeguard its ability to support the Company’s normal operating requirements on an ongoing basis; continue the development and exploration of its mining properties and pursue strategic growth initiatives, while minimizing the cost of such capital; and to provide an adequate return to its shareholders. The capital of the Company consists of items included in equity attributable to owners of the Company and debt, net of cash and cash equivalents as follows:
In order to facilitate the management of capital requirements, annual budgets are prepared and updated as necessary based on various factors, many of which are beyond the Company’s control. In assessing liquidity, the Company takes into account its expected cash flows from operations, including capital asset expenditures, and its cash and cash equivalents. The Board of Directors reviews the annual and updated budgets. The Company ensures that there are sufficient committed credit facilities to meet its short-term requirements. At December 31, 2021, the Company expects its current capital resources to be sufficient to support its normal operating requirements on an ongoing basis and planned development and explorations programs. At December 31, 2021, the Company was in compliance with the external capital requirements. |
Related party transactions |
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| Related party transactions | ||||||||||||||||||||||||||||||||||||
| Related party transactions |
During the year ended December 31, 2021, the Company recorded consulting fees of $200 (2020 - $200) to companies related by common directors or officers. Related party transactions occurred in the normal course of business. (b) Compensation of directors and key management personnel The remuneration of the Company’s directors, officers and other key management personnel during the years ended December 31, 2021 and 2020 are as follows:
1 calculated at fair value on day of the grant |
Changes in working capital |
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| Changes in working capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in working capital |
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Revenues from mining operations |
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| Revenues from mining operations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues from mining operations |
The Company has recognized the following amounts related to revenue in the consolidated statements of income:
The following table sets out the disaggregation of revenue by metals and form of sale:
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Contingencies |
12 Months Ended | ||
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Dec. 31, 2021 | |||
| Contingencies | |||
| Contingencies |
The Company and its subsidiaries have been named as defendants in certain actions incurred in the normal course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of Management, these matters will not have a material effect on the consolidated financial statements of the Company. These matters include an ongoing personal action filed in Mexico against Dia Bras Mexicana S.A de C.V (“DBM”) by an individual, Carlos Emilio Seijas Bencomo, claiming the annulment and revocation of the purchase agreement of two mining concessions, Bolívar III and IV between Minera Senda de Plata S.A. de C.V. and Ambrosio Bencomo Casavantes, and with this, the nullity of purchase agreement between DBM and Minera Senda de Plata S.A. de C.V. Carlos. Emilio Seijas Bencomo passed away in 2020 and his heirs appointed Mr. Emilio Ambrosio Bencomo Portillo as legal representative to pursue this case. As per the latest development, on March 21, 2021, the first Civil Court of Chihuahua absolved DBM of all claims raised by the plaintiff. Although the plaintiff filed an appeal against this ruling on April 7, 2021, the Company believes that there is no merit in this appeal and the possibility of reversal of the March 12, 2021 ruling is very unlikely. |
Subsequent event |
12 Months Ended |
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Dec. 31, 2021 | |
| Subsequent event | |
| Subsequent event | 25Subsequent event In January 2022, the Company launched the process of divestiture of the Cusi assets. |
Significant accounting policies (Policies) |
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| Significant accounting policies | |||||||||||||||||||||||||||||||||||||||||||
| Basis of preparation | These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). The financial statements were approved by the Board of Directors on March 14, 2022. |
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| Basis of consolidation | These consolidated financial statements include the accounts of the Company and its subsidiaries, which are entities controlled by the Company. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date that control commences until the date that control ceases. Non-controlling interests represent equity interests in subsidiaries owned by outside parties. Changes in the parent company’s ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The principal subsidiaries of the Company and their geographical locations as at December 31, 2021 are as follows:
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| Foreign currency translation |
Items included in the financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The functional currency of Sierra Metals Inc., the parent entity, is the Canadian dollar (“C$”). The functional currency of the Mexican and Peruvian subsidiaries is the United States dollar.
The presentation currency of the financial statements is United States dollar (“$”). The financial statements of entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities – at the closing rate at the date of the statement of financial position, income and expenses – at the average rate of the period (as this is considered a reasonable approximation of the actual rates prevailing at the transaction dates). All resulting differences are recognized in other comprehensive income as cumulative translation adjustments.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in currencies other than an entity’s functional currency are recognized in the consolidated statement of loss. |
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| Cash and cash equivalents | Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less. |
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| Financial Instruments | The Company’s financial assets and liabilities (financial instruments) include cash and cash equivalents, trade receivables, accounts payable and accrued liabilities and long-term debt. The Company recognizes financial assets and financial liabilities on the date the Company becomes a party to the contractual provisions of the instruments. A financial asset is derecognized either when the Company has transferred substantially all the risks and rewards of ownership of the financial asset or when cash flows expire. A financial liability is derecognized when the obligation specified in the contract is discharged, canceled or expired. Financial Assets Cash and cash equivalents are recorded at amortized cost using the effective interest method. Trade receivables are classified as financial assets at fair value through profit or loss and measured at fair value.
Financial Liabilities Financial liabilities, including accounts payable and accrued liabilities, as well as debt and financing obligations are accounted for at amortized cost. Non-hedge derivatives The Company may hold derivative financial instruments to hedge its risk explosure to fluctuations in commodity prices. These derivative financial instruments are classified as financial instruments through profit or loss and recorded in the balance sheet at fair value. Changes in the estimated fair value of non-hedge derivatives at each reporting date are included in the Consolidated Statement of Income (Loss) as derivative gain or loss. |
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| Segment reporting | Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Chief Executive Officer of the Company. |
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| Inventories | Inventories consist of concentrates, ore stockpiles, supplies and spare parts. Concentrates include stockpiled concentrates at milling operations or at warehouses. Stockpiled ore is comprised of in-process mineralized material awaiting processing at milling facilities and materials for use in milling operations. Concentrates and stockpiled ore are valued at the lower of average production cost and net realizable value (“NRV”). Concentrates and stockpiled ore inventory costs include all direct costs incurred in production including direct labor and materials, freight and amortization, and directly attributable overhead costs. NRV is calculated as the estimated price at the time of sale based on prevailing metal market prices less estimated future costs to convert the inventories into saleable form and estimated costs to sell. The supplies and spare parts inventories will be used for exploration and production and are valued at the lower of average cost and net realizable value. Cost includes acquisition, freight and other directly attributable costs. If the carrying value of inventory exceeds NRV, a write-down is recognized as production costs of sales in the consolidated statement of income (loss). If there is a subsequent increase in the value of the inventory, the previous write-downs to NRV are reversed up to cost to the extent that the related inventory has not been sold. |
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| Exploration and evaluation expenditure | Exploration and evaluation expenditures are comprised of costs that are directly attributable to:
Exploration expenditures are costs incurred in the search for resources suitable for commercial exploitation. Evaluation expenditures are costs incurred in determining the technical feasibility and commercial viability of a mineral resource. Exploration and evaluation expenditures are capitalized when there is a high degree of confidence in the project’s viability and thus it is probable that future economic benefits will flow to the Company. Any items of property, plant and equipment used for exploration and evaluation are capitalised within property, plant and equipment. Capitalized exploration and evaluation expenditures are considered to be tangible assets as they form part of the underlying mineral property and are recorded within property, plant and equipment - exploration and evaluation expenditures. |
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| Property, plant and equipment | Property, plant and equipment is stated at cost, less accumulated depreciation and impairment losses. The cost of an item of property, plant and equipment comprises its purchase price, any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and the estimated close down and restoration costs associated with the asset, and for qualifying assets, the associated borrowing costs. Once a mining project has been established as commercially viable, expenditure other than on land, buildings, plant and equipment is capitalized under ‘Mining properties’ together with any amount capitalized relating to that mining project from ‘Exploration and evaluation’. Where an item of property, plant and equipment is comprised of major components with different useful lives, the components are accounted for as separate items of property, plant and equipment and depreciated over their estimated useful lives. Costs associated with commissioning new assets, in the period before they are capable of operating in the manner intended by management, are capitalized. Revenue generated during the development stage from the sale of concentrate and related costs can be deducted from capitalized costs only if the production of the saleable material is directly attributable to bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management. Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to future economic benefits and these costs can be measured reliably. Repairs and maintenance costs are charged to the consolidated statement of income (loss) during the period in which they are incurred. Property, plant and equipment is depreciated over its useful life, or over the remaining life of the mine if shorter. Depreciation commences when the asset is available for use. Land is not depreciated. The major categories of property, plant and equipment are depreciated on a straight-line basis using the following average estimated useful lives below:
Mining properties are depleted over the life of the mine using the units of production method. In applying the units of production method, depletion is normally calculated using the quantity of material to be extracted in current and future periods based on proven and probable reserves or measured and indicated resources. Such non-reserve material may be included in depletion calculations in limited circumstances and where there is a high degree of confidence in its economic extraction.
The Company conducts an annual review of residual values, useful lives, depletion and depreciation methods used for property, plant and equipment. Changes to estimated residual values or useful lives are accounted for prospectively. |
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| Impairment of non-financial assets | Property, plant and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is assessed at the level of cash generating units (‘CGUs’). The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Fair value less costs to sell is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction. The best evidence of fair value is the value obtained from an active market or binding sales agreement. Where this information is not available, fair value can be estimated as the present value of future cash flows expected to be realized from the continued use of the asset including expansion projects. Value in use is determined as the present value of expected future cash flows to be realized from the continued use of the asset in its present condition and from its ultimate disposal. Capitalized exploration expenditures are reviewed for indicators of impairment, which included a decision to discontinue activities in a specific area and the existence of sufficient data indicating that the carrying amount of an exploration and evaluation asset is unlikely to be recovered from the development or sale of the asset. Non-financial assets that have suffered impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. |
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| Borrowing costs | Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized and included in the carrying amounts of those assets until they are ready for their intended use. All other borrowing costs are recognized as an expense in the period incurred. |
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| Revenue recognition | Revenues include sales of metal concentrates net of treatment and refining charges. The Company sells concentrate from certain of its mines to third-party smelter customers. These concentrates predominantly contain zinc, lead, and copper, along with quantities of gold and silver. The Company recognizes revenue from these concentrate sales when control of the concentrate has transferred to the customer, which is the point in time that the concentrate is delivered to the customer. Upon delivery, the customer has legal right to, physical possession of, and the risks and rewards of ownership of the concentrate. The customer is also committed to accept and pay for the concentrates once delivered; therefore, the customer is able to direct the use of and obtain substantially all of the remaining benefits from the concentrate.
The final prices for metals contained in the concentrate are generally determined based on the prevailing spot market metal prices on a specific future date, which is established on a date prior to the concentrate being delivered to the customer. Upon transfer of control at delivery, the Company measures revenue under these contracts based on forward prices agreed upon with the customer at the time of delivery and the most recent determination of the quantity of contained metals less smelting and refining charges charged by the customer. This reflects the best estimate of the transaction price expected to be received at final settlement. The variability associated with the embedded derivative for changes in the metal prices is recognized at fair value. These changes in the fair value of the receivable are adjusted through revenue from other sources at each subsequent financial statement date. |
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| Leases |
At inception of a contract, the Company assesses whether a contract is, or contains, a lease by determining whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. A right-of-use ("ROU") asset and lease liability is recognized at the lease commencement date. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received. The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability. A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the interest rate implicit in the lease, or if that rate cannot be readily determined, the incremental borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in our estimate or assessment of the expected amount payable under a residual value guarantee, purchase, extension or termination option. Variable lease payments not included in the initial measurement of the lease liability are charged directly to profit. |
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| Share capital | Common shares are classified as equity. Incremental costs directly attributable to the issuance of the shares are recognized as a deduction from equity. |
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| Share-based payments | The fair value of the estimated number of stock options and restricted share units (“RSUs”) awarded to employees, officers and directors that will eventually vest, determined as of the date of grant, is recognized as share-based compensation expense over the vesting period of the stock options and RSUs, with a corresponding increase to equity. The fair value of each tranche is determined using the Black-Scholes option pricing model with market related inputs as of the date of grant. The fair value of RSUs is the market value of the underlying shares as of the date of grant. The number of awards expected to vest is reviewed at least annually, with any change in the estimate recognized immediately in share-based payments expense with a corresponding adjustment to equity. |
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| Share repurchases | The Company deducts from contributed surplus any excess of consideration paid over book value where the Company has repurchased any of its own common shares. Book value is calculated as the weighted average price of the shares issued and outstanding prior to the cancellation date. |
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| Earnings per share | Basic earnings per share (“EPS”) is calculated by dividing the net income (loss) for the period attributable to the shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method. The Company’s potentially dilutive common shares comprise stock options and RSUs granted to employees. In periods of loss, basic and diluted EPS are the same, as the effect of dilutive instruments is anti-dilutive. |
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| Income taxes | Tax expense comprises current and deferred income and resource taxes. Current income, deferred income and resources taxes are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that the parent is able to control the timing of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. |
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| Decommissioning and restoration liabilities |
Decommissioning and restoration costs include the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas. These costs are a normal consequence of mining activity and the majority of these expenditures are expected to be incurred at the end of the life of mine. Estimated decommissioning and restoration costs are provided in the accounting period when the obligation arising from the related disturbance occurs, based on the net present value of the estimated future costs discounted using the credit adjusted risk free rate. This provision is adjusted in each reporting period to reflect known developments, e.g. revisions to costs estimates and the timing of cash outflows. The initial decommissioning and restoration provision together with other movements resulting from changes in estimated cash flows or the credit adjusted risk free rates is capitalized within property, plant and equipment and amortized over the life of the asset to which it relates except where it relates to a closed mine where the expenses are recognized in the statement of loss. Provision is made for the estimated present value of costs of environmental clean-up obligations outstanding as at the date of the statement of financial position, and these costs are charged to the income statement as an operating cost. The amortization or unwinding of the discount applied in establishing the net present value of provision is accreted to the income statement in each accounting period with each interest charge included as a financing cost rather than as an operating cost. |
Significant accounting policies (Tables) |
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| Significant accounting policies | |||||||||||||||||||||||||||||||||||||||||
| Schedule of subsidiaries of the company and their geographical locations | The principal subsidiaries of the Company and their geographical locations as at December 31, 2021 are as follows:
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| Schedule of average estimated useful lives of property, plant and equipment |
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Trade and other receivables (Tables) |
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| Trade and other receivables | ||||||||||||||||||||||||||||||||||||
| Schedule of trade and other receivables |
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Inventories (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||||||||||||||||||||
| Schedule of inventories |
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Property, plant and equipment (Tables) |
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| Property, plant and equipment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property, plant and equipment |
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Accounts payable and accrued liabilities (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Accounts payable and accrued liabilities | |||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts payable and accrued liabilities |
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Current and deferred income tax liability (Tables) |
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| Current and deferred income tax liability | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of income and resource taxes |
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| Schedule of reconciliation between income tax expense and the product of loss |
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| Schedule of temporary differences and components and movements of net deferred tax assets and liabilities |
Deferred tax assets have not been recognized in respect of the following temporary differences:
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Loans payable and notes payable (Tables) |
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| Loans payable and notes payable | |||||||||||||||||||||||||||||||||||||||||
| Schedule of loans payable |
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Decommissioning liability (Tables) |
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| Decommissioning liability | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of decommissioning liability |
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| Schedule of key assumptions of calculation of decommissioning liability |
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Other liabilities (Tables) |
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| Other liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other liabilities |
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Share capital and share-based payments (Tables) |
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| Disclosure of terms and conditions of share-based payment arrangement [abstract] | |||||||||||||||||||||||||||||||||||||||||
| Schedule of changes in RSU's issued | The changes in RSU’s issued during the years ended December 31, 2021 and 2020 was as follows:
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Non-controlling interest (Tables) |
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| Non-controlling interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of non-controlling interest | Summarized statements of financial position
Summarized income statement
Summarized cash flows
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Expenses by nature (Tables) |
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| Expenses by nature | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of mining cost |
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| Schedule of general and administrative expenses |
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Other expenses (income) (Tables) |
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| Other expenses (income) | |||||||||||||||||||||||||||||||||||||||||
| Schedule of Other expenses (income) |
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Interest expense and other finance costs (Tables) |
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| Interest expense and other finance costs | |||||||||||||||||||||||||||||||||||||||||
| Schedule of interest expense and other finance costs |
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Segment reporting (Tables) |
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment reporting | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of summary of the reported amounts of net income (loss) and the carrying amounts of assets and liabilities |
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Financial instruments and financial risk management (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial instruments and financial risk management [line items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of financial assets and liabilities by category |
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| Schedule of fair value measurements of assets | At December 31, 2021 and 2020, the levels in the fair value hierarchy into which the Company’s financial assets and liabilities are measured and recognized on the Consolidated Statement of Financial Position are categorized as follows:
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| Currency risk | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial instruments and financial risk management [line items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of exposure to risks |
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| Credit risk | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial instruments and financial risk management [line items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of exposure to risks |
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| Commodity price risk | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial instruments and financial risk management [line items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of exposure to risks |
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| Liquidity risk | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial instruments and financial risk management [line items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of remaining contractual maturities and undiscounted cash flows |
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Capital management (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Capital management | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of capital of the Company | The capital of the Company consists of items included in equity attributable to owners of the Company and debt, net of cash and cash equivalents as follows:
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Related party transactions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||
| Related party transactions | |||||||||||||||||||||||||||||||
| Schedule of remuneration to directors and key management personnel | The remuneration of the Company’s directors, officers and other key management personnel during the years ended December 31, 2021 and 2020 are as follows:
|
Changes in working capital (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in working capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of changes in working capital |
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Revenues from mining operations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues from mining operations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenue in consolidated statements of income | The Company has recognized the following amounts related to revenue in the consolidated statements of income:
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| Schedule of disaggregation of revenue | The following table sets out the disaggregation of revenue by metals and form of sale:
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Description of business and nature of operations (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Yauricocha Mine | |
| Description Of Business And Nature Of Operations Disclosure [Line Items] | |
| Ownership interest | 81.84% |
| Bolivar | |
| Description Of Business And Nature Of Operations Disclosure [Line Items] | |
| Ownership interest | 100.00% |
| Cusi Mines | |
| Description Of Business And Nature Of Operations Disclosure [Line Items] | |
| Ownership interest | 100.00% |
Significant accounting policies (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Dia Bras EXMIN Resources Inc. | |
| Disclosure of subsidiaries [line items] | |
| Ownership interest | 100.00% |
| Location | Canada |
| Sociedad Minera Corona, S. A. ("Corona") | |
| Disclosure of subsidiaries [line items] | |
| Ownership interest | 81.84% |
| Location | Perú |
| Dia Bras Peru S. A. C. ("Dia Bras Peru") | |
| Disclosure of subsidiaries [line items] | |
| Ownership interest | 100.00% |
| Location | Perú |
| Dia Bras Mexicana S. A. de C. V. ("Dia Bras Mexicana") | |
| Disclosure of subsidiaries [line items] | |
| Ownership interest | 100.00% |
| Location | México |
| EXMIN, S. A. de C. V. | |
| Disclosure of subsidiaries [line items] | |
| Ownership interest | 100.00% |
| Location | México |
| Servicios de Produccion Y Extraccion de Chihuahua, S.A. de C.V | |
| Disclosure of subsidiaries [line items] | |
| Ownership interest | 100.00% |
| Location | México |
Significant accounting policies - Subsidiaries (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Disclosure of subsidiaries [line items] | |
| Depreciation method | straight-line basis |
| Corona | |
| Disclosure of subsidiaries [line items] | |
| Ownership interest through Dia Bras Peru | 81.84% |
| Percentage of voting shares in subsidiary | 92.33% |
| Unowned non controlling interest | 18.16% |
Significant accounting estimates and judgments (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Disclosure of changes in accounting estimates [line items] | ||
| Asset impairment | $ 35,000 | |
| Expenses related to detect and restrict the spread of COVID-19 | 9,600 | $ 5,900 |
| Cusi Mine | ||
| Disclosure of changes in accounting estimates [line items] | ||
| Asset impairment | $ 35,000 | |
Trade and other receivables (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Trade and other receivables | ||
| Trade receivables | $ 27,001 | $ 28,750 |
| Sales tax receivables | 10,121 | 9,944 |
| Total | $ 37,122 | $ 38,694 |
Inventories (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventories | ||
| Stockpiles | $ 4,092 | $ 1,047 |
| Concentrates | 3,630 | 4,185 |
| Supplies and spare parts | 18,955 | 18,244 |
| Total | $ 26,677 | $ 23,476 |
Inventories - Additional information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Inventories Line Items [Line Items] | ||
| Cost of inventories recognised as expense | $ 190,795 | $ 165,303 |
| Net of provision write-off | 6,396 | 3,808 |
| Inventory write-down | 5,752 | $ 1,248 |
| Stockpile and concentrate | ||
| Inventories Line Items [Line Items] | ||
| Inventories, at net realisable value | $ 2,710 | |
Accounts payable and accrued liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Accounts payable and accrued liabilities | ||
| Trade payables | $ 28,436 | $ 16,949 |
| Other payables and accrued liabilities | 15,872 | 13,368 |
| Accounts payable and accrued liabilities | $ 44,308 | $ 30,317 |
Current and deferred income tax liability - Income and resource taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Current Tax Expense | ||
| Current income tax | $ 27,543 | $ 20,535 |
| Total Current Tax Expense | 27,543 | 20,535 |
| Deferred Tax Recovery | ||
| Deferred tax expense (recovery) | (2,440) | 2,051 |
| Total Deferred Tax Expense (recovery) | (2,440) | 2,051 |
| Total tax expense | $ 25,103 | $ 22,586 |
Current and deferred income tax liability - Tax rate reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Current and deferred income tax liability | ||
| Income before income taxes | $ 2,995 | $ 49,977 |
| Expected tax rate @ 26.50% (2020 - 26.50%) | 794 | 13,244 |
| Effect of tax rate differences | (814) | 1,838 |
| Stock based compensation costs | 177 | 177 |
| Other non-deductible expenses | 7,044 | 909 |
| Unrealized foreign exchange income | (69) | (175) |
| Inflation adjustment for Mexico tax purposes | 638 | 150 |
| Utilization of prior year losses | 12,372 | 3,896 |
| Foreign exchange and other | 4,125 | (3,326) |
| Mining royalties and other | 836 | 5,873 |
| Income tax expense | $ 25,103 | $ 22,586 |
Current and deferred income tax liability - Deferred tax assets (Details) - Temporary differences - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
| Non-capital and capital losses | $ 49,641 | $ 62,250 |
| Property, plant and equipment | 96 | 83 |
| Mineral properties | 37,290 | 2,280 |
| Other | (37) | (37) |
| TOTAL | $ 86,990 | $ 64,576 |
Current and deferred income tax liability - Tax losses and Unrecognized deferred tax liabilities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Current and deferred income tax liability | ||
| Unrealized aggregate tax losses | $ 46,399 | $ 37,771 |
| Capital losses without expiry | 1,403 | 1,403 |
| Taxable temporary difference of investments in subsidiaries that has not been recognized | $ 83,052 | $ 77,582 |
| Applicable tax rate | 26.50% | 26.50% |
Loans payable and notes payable (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Disclosure of detailed information about borrowings [line items] | ||
| Long term Portion | $ 55,949 | $ 80,903 |
| Total loans payable | 80,804 | 99,383 |
| Senior Secured Corporate Credit Facility with Banco de Credito del Peru ("BCP") | ||
| Disclosure of detailed information about borrowings [line items] | ||
| Current Portion | 24,855 | 18,480 |
| Long term Portion | 55,949 | 80,903 |
| Total loans payable | $ 80,804 | $ 99,383 |
Decommissioning liability (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Decommissioning liability | ||
| Balance, beginning of year | $ 22,467 | $ 16,894 |
| Liabilities settled during the year | (799) | (405) |
| Interest cost | 478 | 551 |
| Revisions and new estimated cash flows | (3,994) | 5,427 |
| Balance, end of year | 18,152 | 22,467 |
| Less: current portion | 1,012 | 1,260 |
| Long-term decommissioning liability | $ 17,140 | $ 21,207 |
Decommissioning liability - Estimated costs for required future decommissioning (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Mexico | ||
| Disclosure of other provisions [line items] | ||
| Estimated undiscounted cash flows ($) | $ 1,261 | $ 1,182 |
| Discount rate (%) | 7.80% | 5.60% |
| Settlement period (years) | 3 years | 4 years |
| Inflation (%) | 4.00% | 4.00% |
| Peru | ||
| Disclosure of other provisions [line items] | ||
| Estimated undiscounted cash flows ($) | $ 19,984 | $ 24,297 |
| Discount rate (%) | 7.00% | 4.10% |
| Inflation (%) | 2.50% | 2.00% |
| Minimum | Peru | ||
| Disclosure of other provisions [line items] | ||
| Settlement period (years) | 5 years | 3 years |
| Maximum | Peru | ||
| Disclosure of other provisions [line items] | ||
| Settlement period (years) | 11 years | 14 years |
Other liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Current | ||
| Profit-sharing and other employee related obligations | $ 10,195 | $ 7,267 |
| Current portion of lease liabilities | 988 | 295 |
| Total liabilities current | 11,183 | 7,562 |
| Non-current | ||
| Other employee related obligations | 1,831 | 1,426 |
| Lease liabilities | 1,646 | 781 |
| Total liabilities non-current | $ 3,477 | $ 2,207 |
Other liabilities - Additional Information (Details) - Peru - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Disclosure Of Other Liabilities [Line Items] | ||
| Employee profit sharing | $ 6,404 | $ 2,244 |
| Provision for wages, salaries and other employee benefits | $ 3,791 | $ 5,023 |
Share capital and share-based payments - (Details) - RSU - shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
| Outstanding, beginning of period | 1,409,058 | 1,630,423 |
| Granted | 617,187 | 898,857 |
| Exercised | (617,597) | (695,174) |
| Forfeited | (362,817) | (425,048) |
| Outstanding, ending of period | 1,045,831 | 1,409,058 |
Share capital and share-based payments - Additional information (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Dec. 07, 2021 |
Nov. 05, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
| Number of RSU's granted under tranche two | 617,187 | |||
| Share-based compensation | $ 1,059 | $ 668 | ||
| Cash dividend declared per common share | $ 0.03 | |||
| Dividend paid, common shares | $ 4,903 | $ 0 | ||
| RSU | ||||
| Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
| Percentage of maximum number of common shares authorized for issue | 5.00% | |||
| Fair value of RSU's granted under tranche two | $ 3.95 | |||
| Weighted average fair value of RSUs exercised under tranche two | 1.81 | $ 2.60 | ||
| Weighted average fair value of RSUs forfeited under tranche two | 2.17 | 1.88 | ||
| Weighted average fair value of RSUs outstanding under tranche two | $ 2.63 | $ 1.57 | ||
Non-controlling interest - Summarized statements of financial position (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Current | ||
| Assets | $ 106,123 | $ 136,049 |
| Liabilities | (88,802) | (65,164) |
| Non-current | ||
| Assets | 290,701 | |
| Subsidiary Corona | ||
| Current | ||
| Assets | 97,988 | 118,045 |
| Liabilities | (38,845) | (26,890) |
| Total current net assets | 59,143 | 91,155 |
| Non-current | ||
| Assets | 178,610 | 170,277 |
| Liabilities | (42,558) | (45,145) |
| Total non-current net assets | 136,052 | 125,132 |
| Net assets | $ 195,195 | $ 216,287 |
Non-controlling interest - Summarized income statement (Details 1) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Disclosure of subsidiaries [line items] | ||
| Revenue | $ 272,014 | $ 246,888 |
| Income before income tax | 2,995 | 49,977 |
| Income tax (expense) recovery | (25,103) | (22,586) |
| Total income (loss) | (22,108) | 27,391 |
| Total income attributable to non-controlling interests | 5,255 | 3,972 |
| Subsidiary Corona | ||
| Disclosure of subsidiaries [line items] | ||
| Revenue | 180,598 | 146,941 |
| Income before income tax | 54,957 | 39,809 |
| Income tax (expense) recovery | (26,048) | (17,934) |
| Total income (loss) | 28,909 | 21,875 |
| Total income attributable to non-controlling interests | $ 5,255 | $ 3,972 |
Expenses by nature - Mining Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Expenses by nature | ||
| Employee compensation and benefits | $ 29,756 | $ 26,472 |
| Third party and contractors costs | 68,962 | 52,616 |
| Depreciation | 44,700 | 41,654 |
| Consumables | 33,910 | 30,850 |
| Changes in inventory and other | 13,467 | 13,711 |
| Total Mining costs | $ 190,795 | $ 165,303 |
Expenses by nature - General and administrative Expenses (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Expenses by nature | ||
| Salaries and benefits | $ 9,929 | $ 9,097 |
| Consulting and professional fees | 6,016 | 2,922 |
| Office expenses | 2,211 | 2,182 |
| Marketing and communication expenses | 804 | 815 |
| Share-based compensation expense | 1,059 | 668 |
| Listing and filing fees | 299 | 257 |
| Director expenses | 941 | 1,307 |
| Travelling expense | 368 | 237 |
| Other | 2,210 | 2,785 |
| Total General and administrative expenses | $ 23,837 | $ 20,270 |
Other expenses (income) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Other expenses (income) | ||
| Loss on sale of supplies and fixed assets | $ 1,441 | $ 124 |
| Exploration expenditure written off | 1,312 | 1,829 |
| Allowance for inventory obsolescence | 2,291 | 176 |
| Miscellaneous expenses (income) | 1,850 | (1,464) |
| Total other expenses (income) | $ (6,894) | $ (665) |
Interest expense and other finance costs (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Interest expense and other finance costs | ||
| Interest expense on loans | $ 3,181 | $ 4,046 |
| Interest cost on decommissioning liability | 471 | 547 |
| Other interest | 294 | |
| Interest income | (301) | (300) |
| Interest expense and other finance costs | $ 3,645 | $ 4,293 |
Financial instruments and financial risk management (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|---|
| ASSETS | |||
| Cash and cash equivalents | $ 34,929 | $ 71,473 | $ 42,980 |
| Trade receivables | 27,001 | 28,750 | |
| Total Financial assets | 61,930 | 100,223 | |
| LIABILITIES | |||
| Accounts payable and accrued liabilities | 44,308 | 30,317 | |
| Loans payable | 80,804 | 99,383 | |
| Total Financial liabilities | 125,112 | 129,700 | |
| Amortized Cost | |||
| ASSETS | |||
| Cash and cash equivalents | 34,929 | ||
| Total Financial assets | 34,929 | ||
| LIABILITIES | |||
| Accounts payable and accrued liabilities | 44,308 | ||
| Loans payable | 80,804 | ||
| Total Financial liabilities | 125,112 | ||
| FVTPL | |||
| ASSETS | |||
| Trade receivables | 27,001 | 28,750 | |
| Total Financial assets | $ 27,001 | 28,750 | |
| Loans and receivables | |||
| ASSETS | |||
| Cash and cash equivalents | 71,473 | ||
| Total Financial assets | 71,473 | ||
| LIABILITIES | |||
| Accounts payable and accrued liabilities | 30,317 | ||
| Loans payable | 99,383 | ||
| Total Financial liabilities | $ 129,700 |
Financial instruments and financial risk management - Trade receivables (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Disclosure of fair value measurement of assets [line items] | ||
| Trade receivables | $ 27,001 | $ 28,750 |
| Level 2 | ||
| Disclosure of fair value measurement of assets [line items] | ||
| Trade receivables | 27,001 | 28,750 |
| Trade receivables | ||
| Disclosure of fair value measurement of assets [line items] | ||
| Trade receivables | 27,001 | 28,750 |
| Trade receivables | Level 2 | ||
| Disclosure of fair value measurement of assets [line items] | ||
| Trade receivables | $ 27,001 | $ 28,750 |
Financial instruments and financial risk management - Commodity price risk (Details) - Commodity price risk - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Sales revenue from silver | ||
| Financial instruments and financial risk management [line items] | ||
| 10% decrease in commodity prices | $ (1,458) | $ (471) |
| Sales revenue from copper | ||
| Financial instruments and financial risk management [line items] | ||
| 10% decrease in commodity prices | (3,213) | (743) |
| Sales revenue from zinc | ||
| Financial instruments and financial risk management [line items] | ||
| 10% decrease in commodity prices | (605) | (354) |
| Sales revenue from lead | ||
| Financial instruments and financial risk management [line items] | ||
| 10% decrease in commodity prices | (1,002) | (105) |
| Sales revenue from gold | ||
| Financial instruments and financial risk management [line items] | ||
| 10% decrease in commodity prices | $ (297) | $ (928) |
Financial instruments and financial risk management - Credit risk (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|---|
| Financial instruments and financial risk management [line items] | |||
| Cash and cash equivalents | $ 34,929 | $ 71,473 | $ 42,980 |
| Trade receivables | 27,001 | 28,750 | |
| Total Financial assets | 61,930 | 100,223 | |
| Credit risk | |||
| Financial instruments and financial risk management [line items] | |||
| Cash and cash equivalents | 34,929 | 71,473 | |
| Trade receivables | 27,001 | 28,750 | |
| Total Financial assets | $ 61,930 | $ 100,223 |
Financial instruments and financial risk management - Additional information (Detaila) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Financial instruments and financial risk management [line items] | ||
| Percentage of appreciation in Canadian dollar exchange rate against US dollar | 10.00% | 10.00% |
| Percentage of appreciation in US dollar exchange rate against Peruvian Nuevo Soles and Mexican Peso | 10.00% | 10.00% |
| Net foreign exchange gain | $ 2,455 | $ 1,965 |
| Customer concentration risk | Revenue | Peru | ||
| Financial instruments and financial risk management [line items] | ||
| Concentration of credit risk, percentage | 78.00% | |
| Customer concentration risk | Revenue | Mexico | ||
| Financial instruments and financial risk management [line items] | ||
| Concentration of credit risk, percentage | 100.00% | |
Financial instruments and financial risk management - Interest rate risk (Details) - Interest rate risk - Peru - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Financial instruments and financial risk management [line items] | ||
| Weighted average interest rate for loans and notes payable | 3.31% | 4.07% |
| Variable in Interest rate | 1.00% | 1.00% |
| Increase (Decrease) in Net Loss | $ 678 | $ 708 |
Capital management (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|---|
| Capital management | |||
| Equity attributable to owners of the Company | $ 169,249 | $ 201,000 | |
| Loans payable | 80,804 | 99,383 | |
| Capital including cash and cash equivalents | 250,053 | 300,383 | |
| Less: Cash and cash equivalents | (34,929) | (71,473) | $ (42,980) |
| Capital | $ 215,124 | $ 228,910 |
Related party transactions - Compensation of directors and key management personnel (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Related party transactions | ||
| Salaries, Cash Bonuses, Severance and Directors Fees | $ 2,626 | $ 2,289 |
| Share-based payments | 1,373 | 496 |
| Total compensation | $ 3,999 | $ 2,785 |
Related party transactions (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Key management personnel of entity or parent | ||
| Disclosure of transactions between related parties [line items] | ||
| Consulting fees | $ 200 | $ 200 |
Changes in working capital (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Changes in working capital | ||
| Trade and other receivables | $ 1,572 | $ (6,802) |
| Financial and other assets | (1,470) | (63) |
| Inventories | (5,492) | 1,918 |
| Accounts payable and accrued liabilities | 13,991 | (12,600) |
| Other liabilities | 3,070 | 556 |
| Total | $ 11,671 | $ (16,991) |
Revenues from mining operations - Consolidated statements of income (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Revenues from mining operations | ||
| Revenues from contracts with customers | $ 273,277 | $ 243,698 |
| Provisional pricing adjustments on concentrate sales | (1,263) | 3,190 |
| Total revenues | $ 272,014 | $ 246,888 |
Contingencies (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2021
item
| |
| Polo y Ron Minerals, S.A. de C.V. | Legal proceedings contingent liability | |
| Disclosure of contingent liabilities [line items] | |
| Number of mining concessions | 2 |