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Form 6-K Americas Gold & Silver For: Aug 12

August 12, 2022 7:01 AM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
  
For the month of August 2022
 
 
Commission File Number 001-37982
 
AMERICAS GOLD AND SILVER CORPORATION
(Translation of registrant’s name into English)
 
145 King Street West, Suite 2870
Toronto, Ontario, Canada
M5H 1J8
(Address of principal executive offices)
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F
 
 
Form 20-F
Form 40-F
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐            
 
 
Note:  Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐      
 
 
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.




SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  AMERICAS GOLD AND SILVER CORPORATION
   
  /s/ Peter McRae
Date:   August 12, 2022
Peter McRae
  Chief Legal Officer and Senior Vice President Corporate Affairs



INDEX TO EXHIBITS



Exhibit 99.1











AMERICAS GOLD AND SILVER CORPORATION

Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)










Americas Gold and Silver Corporation
Condensed interim consolidated statements of financial position
(In thousands of U.S. dollars, unaudited)

 
 
June 30,
   
December 31,
 
As at
 
2022
   
2021
 
Assets
           
Current assets
           
Cash and cash equivalents
 
$
8,824
   
$
2,900
 
Trade and other receivables (Note 5)
   
4,670
     
8,208
 
Inventories (Note 6)
   
11,904
     
10,009
 
Prepaid expenses
   
3,693
     
2,426
 
 
 
$
29,091
   
$
23,543
 
Non-current assets
               
Restricted cash
   
4,083
     
4,078
 
Inventories (Note 6)
   
4,181
     
7,900
 
Property, plant and equipment (Note 7)
   
172,048
     
177,913
 
Total assets
 
$
209,403
   
$
213,434
 
 
               
Liabilities
               
Current liabilities
               
Trade and other payables
 
$
21,299
   
$
20,576
 
Metals contract liability (Note 8)
   
10,785
     
11,971
 
Derivative instruments (Note 9)
   
2,005
     
2,162
 
Glencore pre-payment facility
   
-
     
1,451
 
Promissory note
   
3,750
     
5,000
 
Government loan (Note 10)
   
222
     
4,499
 
 
   
38,061
     
45,659
 
Non-current liabilities
               
Other long-term liabilities
   
1,321
     
1,543
 
Metals contract liability (Note 8)
   
24,162
     
28,934
 
RoyCap convertible debenture (Note 9)
   
8,638
     
8,665
 
Post-employment benefit obligations
   
6,286
     
10,866
 
Decommissioning provision
   
11,465
     
13,444
 
Deferred tax liabilities (Note 17)
   
259
     
488
 
Total liabilities
   
90,192
     
109,599
 
 
               
Equity
               
Share capital (Note 11)
   
439,269
     
423,098
 
Equity reserve
   
52,556
     
51,088
 
Foreign currency translation reserve
   
7,229
     
6,833
 
Deficit
   
(393,879
)
   
(387,949
)
Attributable to shareholders of the Company
   
105,175
     
93,070
 
Non-controlling interests (Note 13)
   
14,036
     
10,765
 
Total equity
 
$
119,211
   
$
103,835
 
 
               
Total liabilities and equity
 
$
209,403
   
$
213,434
 

Contingencies (Note 20)

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 1

Americas Gold and Silver Corporation
Condensed interim consolidated statements of loss and comprehensive loss
(In thousands of U.S. dollars, except share and per share amounts, unaudited)

 
 
For the three-month period ended
   
For the six-month period ended
 
 
 
June 30,
   
June 30,
   
June 30,
   
June 30,
 
 
 
2022
   
2021
   
2022
   
2021Revised (1)
 
 
                       
Revenue (Note 14)
 
$
19,948
   
$
9,515
   
$
46,384
   
$
19,948
 
 
                               
Cost of sales (Note 15)
   
(17,718
)
   
(16,776
)
   
(34,337
)
   
(54,507
)
Depletion and amortization (Note 7)
   
(5,959
)
   
(3,376
)
   
(11,719
)
   
(7,301
)
Care and maintenance costs
   
(1,011
)
   
(2,167
)
   
(2,334
)
   
(4,300
)
Corporate general and administrative (Note 16)
   
(2,051
)
   
(2,341
)
   
(4,700
)
   
(4,460
)
Exploration costs
   
(914
)
   
(999
)
   
(2,000
)
   
(2,507
)
Accretion on decommissioning provision
   
(102
)
   
(55
)
   
(186
)
   
(98
)
Interest and financing expense
   
(1,078
)
   
(1,029
)
   
(2,105
)
   
(1,755
)
Foreign exchange loss
   
(1,903
)
   
(444
)
   
(1,193
)
   
(665
)
Impairment to property, plant and equipment (Note 7)
   
-
     
-
     
-
     
(55,623
)
Gain on metals contract liability (Note 8)
   
3,186
     
-
     
434
     
-
 
Other gain (loss) on derivatives (Note 9)
   
(101
)
   
(52
)
   
(79
)
   
1,767
 
Gain on government loan forgiveness (Note 10)
   
-
     
-
     
4,277
     
-
 
Loss before income taxes
   
(7,703
)
   
(17,724
)
   
(7,558
)
   
(109,501
)
Income tax expense (Note 17)
   
(1,575
)
   
(58
)
   
(2,016
)
   
(81
)
Net loss
 
$
(9,278
)
 
$
(17,782
)
 
$
(9,574
)
 
$
(109,582
)
 
                               
Attributable to:
                               
Shareholders of the Company
 
$
(7,483
)
 
$
(16,992
)
 
$
(8,895
)
 
$
(108,119
)
Non-controlling interests (Note 13)
   
(1,795
)
   
(790
)
   
(679
)
   
(1,463
)
Net loss
 
$
(9,278
)
 
$
(17,782
)
 
$
(9,574
)
 
$
(109,582
)
 
                               
Other comprehensive income (loss)
                               
Items that will not be reclassified to net loss
                               
Remeasurement of post-employment benefit obligations
 
$
1,943
   
$
(1,496
)
 
$
4,941
   
$
3,025
 
Items that may be reclassified subsequently to net loss
                               
Foreign currency translation reserve
   
251
     
566
     
396
     
767
 
Other comprehensive income (loss)
   
2,194
     
(930
)
   
5,337
     
3,792
 
Comprehensive loss
 
$
(7,084
)
 
$
(18,712
)
 
$
(4,237
)
 
$
(105,790
)
 
                               
Attributable to:
                               
Shareholders of the Company
 
$
(6,066
)
 
$
(17,324
)
 
$
(5,534
)
 
$
(105,537
)
Non-controlling interests (Note 13)
   
(1,018
)
   
(1,388
)
   
1,297
     
(253
)
Comprehensive loss
 
$
(7,084
)
 
$
(18,712
)
 
$
(4,237
)
 
$
(105,790
)
 
                               
Loss per share attributable to shareholders of the Company
                               
Basic and diluted
   
(0.04
)
   
(0.13
)
   
(0.05
)
   
(0.83
)
 
                               
Weighted average number of common shares
                               
outstanding
                               
Basic and diluted (Note 12)
   
180,795,755
     
133,928,463
     
176,871,371
     
130,618,095
 

(1)
Certain fiscal 2021 amounts were adjusted through changes in accounting policies (see Note 3)

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 2

Americas Gold and Silver Corporation
Condensed interim consolidated statements of changes in equity
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, except share amounts in thousands of units, unaudited)

 
                   
Foreign
                         
 
 
Share capital
         
currency
         
Attributable
   
Non-
       
 
 
Common
   
Equity
   
translation
         
to shareholders
   
controlling
   
Total
 
 
 
Shares
   
Amount
   
reserve
   
reserve
   
Deficit
   
of the Company
   
interests
   
equity
 
 
                                               
Balance at January 1, 2022
   
165,145
   
$
423,098
   
$
51,088
   
$
6,833
   
$
(387,949
)
 
$
93,070
   
$
10,765
   
$
103,835
 
Net loss for the period
   
-
     
-
     
-
     
-
     
(8,895
)
   
(8,895
)
   
(679
)
   
(9,574
)
Other comprehensive income for the period
   
-
     
-
     
-
     
396
     
2,965
     
3,361
     
1,976
     
5,337
 
Contribution from non-controlling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
1,974
     
1,974
 
At-the-market offering
   
12,213
     
10,164
     
-
     
-
     
-
     
10,164
     
-
     
10,164
 
Sandstorm private placements
   
5,290
     
4,630
     
-
     
-
     
-
     
4,630
     
-
     
4,630
 
Retraction of RoyCap convertible debenture
   
1,629
     
1,377
     
(249
)
   
-
     
-
     
1,128
     
-
     
1,128
 
Share-based payments
   
-
     
-
     
1,717
     
-
     
-
     
1,717
     
-
     
1,717
 
Balance at June 30, 2022
   
184,277
   
$
439,269
   
$
52,556
   
$
7,229
   
$
(393,879
)
 
$
105,175
   
$
14,036
   
$
119,211
 
 
                                                               
Balance at January 1, 2021
   
117,975
   
$
350,707
   
$
42,378
   
$
6,842
   
$
(230,253
)
 
$
169,674
   
$
11,488
   
$
181,162
 
Net loss for the period
   
-
     
-
     
-
     
-
     
(108,119
)
   
(108,119
)
   
(1,463
)
   
(109,582
)
Other comprehensive income for the period
   
-
     
-
     
-
     
767
     
1,815
     
2,582
     
1,210
     
3,792
 
Contribution from non-controlling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
227
     
227
 
At-the-market offering
   
3,833
     
6,014
     
-
     
-
     
-
     
6,014
     
-
     
6,014
 
January bought deal public offering
   
10,253
     
24,987
     
-
     
-
     
-
     
24,987
     
-
     
24,987
 
Conversion of Sandstorm convertible debenture
   
4,673
     
12,844
     
-
     
-
     
-
     
12,844
     
-
     
12,844
 
Conversion option of RoyCap convertible debenture
   
-
     
-
     
2,366
     
-
     
-
     
2,366
     
-
     
2,366
 
Common shares issued
   
303
     
735
     
-
     
-
     
-
     
735
     
-
     
735
 
Share-based payments
   
-
     
-
     
1,717
     
-
     
-
     
1,717
     
-
     
1,717
 
Exercise of options
   
90
     
240
     
(68
)
   
-
     
-
     
172
     
-
     
172
 
Balance at June 30, 2021
   
137,127
   
$
395,527
   
$
46,393
   
$
7,609
   
$
(336,557
)
 
$
112,972
   
$
11,462
   
$
124,434
 

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 3

Americas Gold and Silver Corporation
Condensed interim consolidated statements of cash flows
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unaudited)

 
 
June 30,
   
June 30,
 
 
 
2022
   
2021
 
Cash flow generated from (used in)
           
 
           
Operating activities
           
Net loss for the period
 
$
(9,574
)
 
$
(109,582
)
Adjustments for the following items:
               
Depletion and amortization
   
11,719
     
7,301
 
Income tax expense
   
2,016
     
81
 
Accretion and decommissioning costs
   
186
     
98
 
Share-based payments
   
1,717
     
1,717
 
Provision on other long-term liabilities
   
27
     
22
 
Deferred costs on convertible debenture
   
-
     
47
 
Deferred revenue
   
-
     
(1,719
)
Interest and financing expense
   
860
     
997
 
Net charges on post-employment benefit obligations
   
361
     
(646
)
Inventory write-downs
   
1,457
     
34,928
 
Impairment to property, plant and equipment
   
-
     
55,623
 
Gain on metals contract liability
   
(434
)
   
-
 
Other loss (gain) on derivatives
   
79
     
(1,663
)
Gain on government loan forgiveness
   
(4,277
)
   
-
 
 
   
4,137
     
(12,796
)
Changes in non-cash working capital items:
               
Trade and other receivables
   
3,538
     
(727
)
Inventories
   
(1,135
)
   
(17,445
)
Prepaid expenses
   
(1,267
)
   
(367
)
Trade and other payables
   
(124
)
   
(569
)
Net cash generated from (used in) operating activities
   
5,149
     
(31,904
)
 
               
Investing activities
               
Expenditures on property, plant and equipment
   
(7,965
)
   
(5,363
)
Development costs on Relief Canyon Mine
   
-
     
(1,432
)
Net cash used in investing activities
   
(7,965
)
   
(6,795
)
 
               
Financing activities
               
Repayments to Glencore pre-payment facility
   
(1,451
)
   
(750
)
Lease payments
   
(1,701
)
   
(1,623
)
Repayments to promissory note
   
(1,250
)
   
-
 
At-the-market offerings
   
10,164
     
6,014
 
January bought deal public offering
   
-
     
24,987
 
Sandstorm private placements
   
4,630
     
-
 
Financing from RoyCap convertible debenture
   
-
     
9,939
 
Metals contract liability
   
(4,079
)
   
-
 
Loan payable
   
-
     
(4,616
)
Proceeds from exercise of options
   
-
     
172
 
Contribution from non-controlling interests
   
1,974
     
227
 
Net cash generated from financing activities
   
8,287
     
34,350
 
 
               
Effect of foreign exchange rate changes on cash
   
453
     
766
 
Increase (decrease) in cash and cash equivalents
   
5,924
     
(3,583
)
Cash and cash equivalents, beginning of period
   
2,900
     
4,705
 
Cash and cash equivalents, end of period
 
$
8,824
   
$
1,122
 
 
               
Cash and cash equivalents consist of:
               
Cash
 
$
8,824
   
$
1,122
 
 
               
Interest paid during the period
 
$
965
   
$
667
 

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Page 4

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


1.  Corporate information
 
Americas Gold and Silver Corporation (the “Company") was incorporated under the Canada Business Corporations Act on May 12, 1998 and conducts mining exploration, development and production in the Americas. The address of the Company’s registered office is 145 King Street West, Suite 2870, Toronto, Ontario, Canada, M5H 1J8. The Company’s common shares are listed on the Toronto Stock Exchange under the symbol “USA” and on the New York Stock Exchange American under the symbol “USAS”.

The condensed interim consolidated financial statements of the Company for the three and six months ended June 30, 2022 were approved and authorized for issue by the Board of Directors of the Company on August 12, 2022.

The Company has been closely monitoring developments in the COVID-19 outbreak declared as a global pandemic on March 11, 2020. Preventive measures to ensure the safety of the Company’s workforce and local communities have been implemented. All of the Company’s mining and corporate operations continue while the Company manages and responds to COVID-19 to mitigate and minimize its potential impacts, in addition to other uncertainties, such as the price of commodities and ongoing production.
 
2.  Basis of presentation
 
These unaudited condensed interim 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 of the International Financial Reporting Interpretations Committee (“IFRIC”) which the Canadian Accounting Standards Board has approved for incorporation into Part 1 of the Handbook of Chartered Professional Accountants of Canada applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These condensed interim consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2021. In particular, the Company’s significant accounting policies were summarized in Note 3 of the consolidated financial statements for the year ended December 31, 2021, and further updated in Note 3 of these financial statements, and have been consistently applied in the preparation of these condensed interim consolidated financial statements. These unaudited condensed interim consolidated financial statements were prepared on a going concern basis.
 
3.  Changes in accounting policies and recent accounting pronouncements
 
The following are changes in accounting policies effective as of January 1, 2022:

(i)            Property, plant and equipment

Amendments to IAS 16 - Property, Plant and Equipment – Proceeds before Intended Use - The standard is amended to prohibit deducting from the cost of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, the Company recognizes the proceeds from selling such items, and the cost of producing those items, in profit or loss. The amendments to IAS 16 are effective for annual periods beginning on or after January 1, 2022, with early adoption permitted. The amendments apply retrospectively only to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the Company first applies the amendments. The Company adopted the standard effective January 1, 2022 and retrospectively recognized proceeds and costs related to sales from the Relief Canyon Mine prior to its declaration of commercial production during fiscal 2021 (see Note 14 and 15).
 
Page 5

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


4.  Significant accounting judgments and estimates
 
The preparation of the condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments and estimates that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
 
In preparing these condensed interim consolidated financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Company’s annual consolidated financial statements as at and for the year ended December 31, 2021, except for:

(viii)            Cash flows from ongoing production and impact on operations

The Company had positive operating cash flows during the six months ended June 30, 2022 with a working capital deficit as at June 30, 2022. The ability to maintain cash flow positive production at the Cosalá Operations through meeting production targets and at the Galena Complex through implementing the Galena Recapitalization Plan, allowing the Company to generate sufficient operating cash flows while facing market fluctuations in commodity prices and inflationary pressures, are significant judgments in these condensed interim consolidated financial statements with respect to the Company’s liquidity. Should the Company experience negative operating cash flows in future periods, the Company may need to raise additional funds through the issuance of equity or debt securities.
 
5.  Trade and other receivables
 
 
 
June 30,
   
December 31,
 
 
 
2022
   
2021
 
 
           
Trade receivables
 
$
4,051
   
$
4,740
 
Value added taxes receivable
   
284
     
3,219
 
Other receivables
   
335
     
249
 
 
 
$
4,670
   
$
8,208
 
 
6.  Inventories
 
 
 
June 30,
   
December 31,
 
 
 
2022
   
2021
 
 
           
Concentrates
 
$
1,910
   
$
1,929
 
Finished goods
   
761
     
-
 
In-circuit work in progress
   
361
     
886
 
Ore on leach pads
   
3,092
     
1,515
 
Ore stockpiles
   
477
     
526
 
Spare parts and supplies
   
5,303
     
5,153
 
 
   
11,904
     
10,009
 
 
               
Long-term ore on leach pads
   
3,227
     
6,505
 
Long-term ore stockpiles
   
954
     
1,395
 
 
   
4,181
     
7,900
 
 
               
 
 
$
16,085
   
$
17,909
 

Long-term ore on leach pads and ore stockpiles represent inventories expected to convert into saleable form beyond one year.

Page 6

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


The amount of inventories recognized in cost of sales was $17.7 million during the three-month period ended June 30, 2022 (2021: $16.8 million) and $34.3 million during the six-month period ended June 30, 2022 (2021: $54.5 million), including concentrates, ore on leach pads, and ore stockpiles write-down to net realizable value of $1.4 million (2021: $7.5 million) during the three-month period ended June 30, 2022 and $1.5 million during the six-month period end June 30, 2022 (2021: $34.9 million).

7.  Property, plant and equipment

 
                         
Corporate
       
 
 
Mining
   
Non-producing
   
Plant and
   
Right-of-use
   
office
       
 
 
interests
   
properties
   
equipment
   
lease assets
   
equipment
   
Total
 
 
                                   
Cost
                                   
Balance at January 1, 2021
 
$
128,729
   
$
108,341
   
$
105,031
   
$
9,912
   
$
240
   
$
352,253
 
Asset additions
   
7,017
     
952
     
5,242
     
1,461
     
-
     
14,672
 
Change in decommissioning provision
   
4,962
     
-
     
-
     
-
     
-
     
4,962
 
Reclassification
   
67,558
     
(96,824
)
   
-
     
-
     
-
     
(29,266
)
Balance at December 31, 2021
   
208,266
     
12,469
     
110,273
     
11,373
     
240
     
342,621
 
Asset additions
   
4,611
     
-
     
3,353
     
56
     
-
     
8,020
 
Change in decommissioning provision
   
(2,166
)
   
-
     
-
     
-
     
-
     
(2,166
)
Balance at June 30, 2022
 
$
210,711
   
$
12,469
   
$
113,626
   
$
11,429
   
$
240
   
$
348,475
 
 
                                               
Accumulated depreciation
                                               
   and depletion
                                               
Balance at January 1, 2021
 
$
(54,360
)
 
$
-
   
$
(37,889
)
 
$
(596
)
 
$
(89
)
 
$
(92,934
)
Depreciation/depletion for the year
   
(5,486
)
   
-
     
(8,845
)
   
(1,423
)
   
(41
)
   
(15,795
)
Impairment for the year
   
(41,245
)
   
-
     
(11,021
)
   
(3,713
)
   
-
     
(55,979
)
Balance at December 31, 2021
   
(101,091
)
   
-
     
(57,755
)
   
(5,732
)
   
(130
)
   
(164,708
)
Depreciation/depletion for the period
   
(5,899
)
   
-
     
(5,421
)
   
(379
)
   
(20
)
   
(11,719
)
Balance at June 30, 2022
 
$
(106,990
)
 
$
-
   
$
(63,176
)
 
$
(6,111
)
 
$
(150
)
 
$
(176,427
)
 
                                               
Carrying value
                                               
   at December 31, 2021
 
$
107,175
   
$
12,469
   
$
52,518
   
$
5,641
   
$
110
   
$
177,913
 
   at June 30, 2022
 
$
103,721
   
$
12,469
   
$
50,450
   
$
5,318
   
$
90
   
$
172,048
 

Effective January 11, 2021, the Relief Canyon Mine declared commercial production which the Company defined as operating at an average of 60% targeted capacity within its mining feasibility study. As a result, the Company transferred from non-producing properties $29.3 million and $67.6 million in net book value to inventories and mining interests, respectively.

Non-current assets are tested for impairment or impairment reversals when events or changes in circumstances suggest that the carrying amount may not be recoverable. No impairment or impairment reversal were identified for the six-month period ended June 30, 2022 for each of the Company’s cash-generating unit, including non-producing properties and properties placed under care and maintenance. The Company recognized an impairment loss of $0.4 million during the year ended December 31, 2021 related to damaged equipment from the Cosalá Operations.

Impairment indicators were identified during the three-month period ended March 31, 2021 from gold production of the Relief Canyon Mine due to differences observed between the modelled (planned) and mined (actual) ore tonnage and carbonaceous material identified in the early phases of the mine plan. The Company assessed the recoverability of the $121.8 million carrying amount of the cash-generating unit and a $55.6 million impairment to the carrying value of the Relief Canyon Mine was identified. The Company allocated $41.2 million of the impairment against mineral interests, $10.7 million to plant and equipment, and $3.7 million to right-of-use lease assets relating to the Relief Canyon Mine as at March 31, 2021. The $66.2 million recoverable amount of the Relief Canyon Mine’s net assets was determined based on the after-tax discounted cash flows expected to be derived from this property’s fair-market value less estimated costs of disposal. The after-tax discounted cash flows were determined based on an updated life-of-mine cash flow projection which incorporated management’s best estimates of commodity prices, future capital requirements and production costs along with geological assumptions and judgments made in estimating the size, grade and recovery of the ore bodies.

Page 7

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


Fair value models are considered to be Level 3 within the fair value hierarchy. Key assumptions used in Relief Canyon Mine’s fair value model as at March 31, 2021 include estimation of production profile and reserves from its life-of-mine plan, operating and capital costs to extract the reserves, discount rate of 6-8% based on the Company’s weighted average cost of capital, gold price from $1,860 per ounce in 2021 down to $1,608 per ounce in 2025 and beyond based on observable market data including spot price and industry analyst consensus, and mine life of 5 years. An increase and decrease in discount rate of 1% would impact the recoverable amount by estimates of approximately $2.3 million decrease and $2.4 million increase, respectively, an increase and decrease in gold recovery rate of 1% would impact the recoverable amount by estimates of approximately $4.7 million increase and $4.7 million decrease, respectively, and an increase and decrease in long-term gold price of $100 per ounce would impact the recoverable amount by estimates of approximately $16.6 million increase and $17.3 million decrease, respectively. This impairment was assessed on the extrapolation of data from the initial phases of mining onto the remaining mining phases with additional leaching test work ongoing. If a subsequent impairment test indicated further changes in the expected cash flows, gold production, and commodity prices, it could result in a material recovery or impairment to the carrying amount.

The carrying amounts of mineral interests, plant and equipment, and right-of-use lease assets from the Relief Canyon Mine is approximately $26.1 million, $24.2 million, and $3.8 million, respectively, as at June 30, 2022 (December 31, 2021: $26.8 million, $27.4 million, and $4.1 million, respectively).

On March 2, 2017, the Company entered into an option acquisition agreement with Impulsora Minera Santacruz S.A. de C.V., a wholly-owned subsidiary of Santacruz Silver Mining Ltd., to acquire an existing option with Minera Hochschild Mexico S.A. de C.V. (“Hochschild”) for the right to acquire a 100% interest of the San Felipe property located in Sonora, Mexico. On October 8, 2020, the Company settled its remaining contractual option payments with Hochschild to acquire the 100% interest of the San Felipe property. As at June 30, 2022, the carrying amount of the San Felipe property was $12.5 million included in non-producing properties.

The amount of borrowing costs capitalized as property, plant and equipment was nil during the three-month period ended June 30, 2022 (2021: nil) and nil during six-month period ended June 30, 2022 (2021: $0.1 million).
 
8.  Precious metals delivery and purchase agreement
 
On April 3, 2019, the Company entered into a $25 million precious metals delivery and purchase agreement (the “Purchase Agreement”) with Sandstorm Gold Ltd. (“Sandstorm”) for the construction and development of the Relief Canyon Mine. The Purchase Agreement consists of a combination of fixed and variable deliveries from the Relief Canyon Mine. The Purchase Agreement has a repurchase option for the Company exercisable at any time to reduce the variable deliveries to Sandstorm from 4% to 2% by delivering 4,000 ounces of gold plus additional ounces of gold compounded annually at 10%. On initial recognition and as at June 30, 2022, the fair value of the repurchase option was nil.

The Company recorded the advances received on precious metals delivery, net of transaction costs, as deferred revenue and would recognize the amounts in revenue as performance obligations to metals delivery are satisfied over the term of the metals delivery and purchase agreements. The advances received on precious metals delivery is expected to reduce to nil through deliveries of the Company’s own production to Sandstorm.

As at December 31, 2021, the Company derecognized the outstanding carrying value of deferred revenue, net of transaction costs, and recognized the fixed and variable deliveries of precious metals as a financial liability measured at fair value through profit or loss as the Company expects that metal deliveries to Sandstorm may no longer be satisfied through internal gold production alone. Fair value of the metals contract liability was determined using forward commodity pricing curves at end of the fiscal 2021 reporting period resulting in $20.8 million loss to fair value on metals contract liability. A $0.4 million gain to fair value on metals contract liability due to changes in forward commodity pricing curves was recorded during the six-month period ended June 30, 2022.

Page 8

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


The following table summarizes the continuity of the Company’s net metals contract liability during the period:

 
 
Six-month
 
 
 
period ended
 
 
 
June 30,
 
 
 
2022
 
 
     
Net metals contract liability, beginning of period
 
$
40,905
 
Delivery of metals produced
   
(1,502
)
Delivery of metals purchased
   
(4,079
)
Revaluation of metals contract liability
   
(377
)
Net metals contract liability, end of period
 
$
34,947
 
 
       
Current portion
 
$
10,785
 
Non-current portion
   
24,162
 
 
 
$
34,947
 
 
9.  RoyCap convertible debenture
 
On April 28, 2021, the Company issued a $12.5 million CAD convertible debenture (the “RoyCap Convertible Debenture”) to Royal Capital Management Corp. (“RoyCap”) due April 28, 2024 with interest payable at 8% per annum secured by the Company’s interest in the Galena Complex and by shares of one of the Company’s Mexican subsidiaries.

The RoyCap Convertible Debenture is redeemable at the Company’s option to prepay the principal amount subject to payment of a redemption premium of 30% during the first year, 20% during the second year, and 10% during the third year prior to maturity (the “Redemption Option”), is retractable at RoyCap’s option at a cumulative $0.3 million CAD per month starting in the second month from inception where the Company may settle the retraction amount through either cash or issuance of the Company’s common shares determined by dividing 95% of the 20 day volume weighted average price of the Company’s common shares (the “Retraction Option”), and convertible at RoyCap’s option into the Company’s common shares at a conversion price of $3.35 CAD (the “Conversion Option”).

On inception, the RoyCap Convertible Debenture, which may be settled through a fixed amount of the Company’s own equity instruments, was treated as a compound financial instrument with the principal portion classified as a liability component and the Conversion Option as an equity component. The initial fair value of the principal portion was determined using a market interest rate for an equivalent non-convertible instrument at the issue date. The principal portion is subsequently recognized on an amortized cost basis until extinguished on conversion or maturity. The remainder of the proceeds were allocated to the Conversion Option as equity. A net derivative liability of $1.4 million was recorded on initial recognition based on the estimated fair value of the combined Redemption Option and Retraction Option.

On November 12, 2021, the Company amended the RoyCap Convertible Debenture by increasing the principal balance by $6.3 million CAD to a total outstanding principal of $18.8 million CAD, in addition to amending its conversion price of $3.35 CAD to $1.48 CAD, and the terms to its Retraction Option retractable at a cumulative $0.3 million CAD per month to a cumulative $0.45 million CAD per month. All other material terms of the RoyCap Convertible Debenture remain unchanged. The Company derecognized the associated carrying values of the RoyCap Convertible Debenture prior to amendment and recognized an amended compound financial instrument with the amended principal portion classified as a liability component and the amended Conversion Option as an equity component. The fair value of the amended principal portion was determined using a market interest rate for an equivalent non-convertible instrument at the date of the amendment. A net derivative liability of $2.1 million was recorded on amendment date based on the estimated fair value of the combined Redemption Option and Retraction Option.

During the six-month period ended June 30, 2022, the principal amount of the RoyCap Convertible Debenture was reduced by $1.6 million CAD through partial exercises of the Retraction Option by RoyCap settled through issuance of 1,628,740 of the Company’s common shares (year ended December 31, 2021: $0.9 million CAD settled through issuance of 798,579 common shares).
The Company recognized a loss of $0.1 million for the six-month period ended June 30, 2022 (2021: loss of $0.1 million) as a result of the change in the estimated fair value of the combined Redemption Option and Retraction Option.
 
Page 9

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


10.  Government loan
 
On May 11, 2020, the Company received approximately $4.5 million in loan through the Paycheck Protection Program from the U.S. CARES Act (the “Government Loan”) to assist with payroll and other expenses at the Galena Complex during the COVID-19 pandemic. The Government Loan has a term of two years at an interest rate of 1% per annum and may be forgiven if proceeds are used for payroll and other specifically defined expenses and employee and compensation levels are maintained. The Company received confirmation via letter dated March 31, 2022 from the U.S. Small Business Administration that $4.3 million of the Government Loan has been forgiven resulting in a gain on forgiveness recognized through profit or loss during the six-month period ended June 30, 2022.
 
11.  Share capital
 
On January 29, 2021, the Company completed a bought deal public offering of 10,253,128 common shares at a price of $3.31 CAD per common share for aggregate gross proceeds of approximately $26.7 million or $33.94 million CAD, which included the partial exercise by the underwriters of the over-allotment option granted by the Company to the underwriters. As part of the bought deal public offering, approximately $1.7 million in transaction costs were incurred and offset against share capital.

On May 17, 2021, the Company entered into an at-the-market offering agreement (the “May 2021 ATM Agreement”) where the Company may at its discretion and from time-to-time during the term of the May 2021 ATM Agreement, sell in the United States, through its agent, such number of common shares of the Company as would result in aggregate gross proceeds of up to $50.0 million. As at June 30, 2022, the Company has received aggregate gross proceeds of $42.0 million through issuance of 39,536,834 common shares from the May 2021 ATM Agreement, with approximately $1.6 million in transaction costs incurred and offset against share capital.

On October 21, 2021, the Company closed a non-brokered private placement with Sandstorm for gross proceeds of $2.5 million through issuance of 3,346,542 of the Company’s common shares priced at approximately $0.94 CAD per share. As part of the non-brokered private placement, approximately $0.1 million in transaction costs were incurred and offset against share capital, and 200,793 common shares and 200,793 warrants for approximately $0.2 million and $0.1 million, respectively, were issued to the Company’s advisor and offset against share capital where each warrant is exercisable for one common share at an exercise price of $0.94 CAD for a period of two years starting November 22, 2021.

On March 24, 2022, the Company closed a non-brokered private placement with Sandstorm for gross proceeds of $2.5 million through issuance of 2,120,000 of the Company’s common shares priced at approximately $1.50 CAD per share.

On June 24, 2022, the Company closed a non-brokered private placement with Sandstorm for gross proceeds of $2.2 million through issuance of 3,170,000 of the Company’s common shares priced at approximately $0.90 CAD per share.

a.   Authorized

Authorized share capital consists of an unlimited number of common and preferred shares.

 
 
June 30,
   
December 31,
 
 
 
2022
   
2021
 
 
           
Issued
           
184,277,372 (2021: 165,145,187) common shares
 
$
439,269
   
$
423,098
 
Nil (2021: Nil) preferred shares
   
-
     
-
 
 
 
$
439,269
   
$
423,098
 

Page 10

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


Each non-voting preferred share is convertible, at the holder’s option, without payment of any additional consideration by the holder thereof, initially on a one-to-one basis into common shares, subject to adjustment, and in accordance with the terms of the non-voting preferred shares.

b.   Stock option plan

The number of shares reserved for issuance under the Company’s stock option plan is limited to 10% of the number of common shares which are issued and outstanding on the date of a particular grant of options. Under the plan, the Board of Directors determines the term of a stock option to a maximum of 10 years, the period of time during which the options may vest and become exercisable as well as the option exercise price which shall not be less than the closing price of the Company’s share on the Toronto Stock Exchange on the date immediately preceding the date of grant. The Compensation Committee determines and makes recommendations to the Board of Directors as to the recipients of, and nature and size of, share-based compensation awards in compliance with applicable securities law, stock exchange and other regulatory requirements.

A summary of changes in the Company’s outstanding stock options is presented below:

 
       
Six-month
         
Year
 
 
       
period ended
         
ended
 
 
       
June 30,
         
December 31,
 
 
       
2022
         
2021
 
 
       
Weighted
         
Weighted
 
 
       
average
         
average
 
 
       
exercise
         
exercise
 
 
 
Number
   
price
   
Number
   
price
 
 
 
(thousands)
   
CAD
   
(thousands)
   
CAD
 
 
                       
Balance, beginning of period
   
12,579
   
$
2.81
     
10,659
   
$
3.45
 
Granted
   
3,450
     
1.24
     
3,700
     
1.70
 
Exercised
   
-
     
-
     
(90
)
   
2.39
 
Expired
   
(3,962
)
   
2.56
     
(1,690
)
   
4.43
 
Balance, end of period
   
12,067
   
$
2.44
     
12,579
   
$
2.81
 

The following table summarizes information on stock options outstanding and exercisable as at June 30, 2022:

 
 
Weighted
                         
 
 
average
         
Weighted
         
Weighted
 
 
 
remaining
         
average
         
average
 
 Exercise
 
contractual
         
exercise
         
exercise
 
 price
 
life
   
Outstanding
   
price
   
Exercisable
   
price
 
 CAD
 
(years)
   
(thousands)
   
CAD
   
(thousands)
   
CAD
 
 
                             
 $1.00 to $2.00
   
2.36
     
6,900
   
$
1.47
     
2,300
   
$
1.47
 
 $3.01 to $4.00
   
1.87
     
5,167
     
3.74
     
4,158
     
3.70
 
 
           
12,067
   
$
2.44
     
6,458
   
$
2.91
 

Page 11

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


c.   Share-based payments

The weighted average fair value at grant date of the Company’s stock options granted during the six-month period ended June 30, 2022 was $0.44 (2021: no stock options granted).

The Company used the Black-Scholes Option Pricing Model to estimate fair value using the following weighted-average assumptions:

   
Three-month
   
Three-month
   
Six-month
   
Six-month
 
   
period ended
   
period ended
   
period ended
   
period ended
 
   
June 30,
   
June 30,
   
June 30,
   
June 30,
 
   
2022
   
2021
   
2022
   
2021
 
                         
Expected stock price volatility (1)
   
-
     
-
     
68
%
   
-
 
Risk free interest rate
   
-
     
-
     
1.64
%
   
-
 
Expected life
   
-
     
-
   
3 years
     
-
 
Expected forfeiture rate
   
-
     
-
     
3.48
%
   
-
 
Expected dividend yield
   
-
     
-
     
0
%
   
-
 
                                 
Share-based payments included in cost of sales
 
$
-
   
$
-
   
$
-
   
$
-
 
Share-based payments included in general and
                               
   administrative expenses
   
598
     
749
     
1,591
     
1,555
 
Total share-based payments
 
$
598
   
$
749
   
$
1,591
   
$
1,555
 

(1)   Expected volatility has been based on historical volatility of the Company’s publicly traded shares.

d.   Warrants

The warrants that are issued and outstanding as at June 30, 2022 are as follows:

Number of
 Exercise
 Issuance
 Expiry
 warrants
 price (CAD)
 date
 date
                                       1,074,999
                                                3.12
 Oct 2018
 Oct 1, 2023
                                          118,664
                                                3.37
 Jul 2019
 Jul 25, 2022
                                          177,506
                                                4.45
 Oct 2019
 Oct 30, 2022
                                       1,000,000
                                                3.50
 Jul 2020
 Jul 9, 2022
                                          200,793
                                                0.94
 Nov 2021
 Nov 22, 2023
                                       2,571,962
 
 
 

e.   Restricted Share Units:

The Company has a Restricted Share Unit Plan under which eligible directors, officers and key employees of the Company are entitled to receive awards of restricted share units. Each restricted share unit is equivalent in value to the fair market value of a common share of the Company on the date of grant with the value of each cash settled award charged to compensation expense over the period of vesting. At each reporting date, the compensation expense and associated liability (which is included in trade and other long-term liabilities in the consolidated statement of financial position) are adjusted to reflect changes in market value. As at June 30, 2022, nil (December 31, 2021: 122,466) restricted share units are outstanding at an aggregate value of nil (December 31, 2021: $0.1 million).

f.   Deferred Share Units:

The Company has a Deferred Share Unit Plan under which eligible directors of the Company receive awards of deferred share units on a quarterly basis as payment for 50% to 100% of their director fees earned. Deferred share units are settled in either cash or common shares at the Company’s discretion when the director leaves the Company’s Board of Directors. The Company recognizes a cost in director fees and a corresponding increase in equity reserve upon issuance of deferred share units. As at June 30, 2022, 1,069,911 (December 31, 2021: 878,744) deferred share units are issued and outstanding.

Page 12

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)

 
12.  Weighted average basic and diluted number of common shares outstanding
 
 
 
Three-month
   
Three-month
   
Six-month
   
Six-month
 
 
 
period ended
   
period ended
   
period ended
   
period ended
 
 
 
June 30,
   
June 30,
   
June 30,
   
June 30,
 
 
 
2022
   
2021
   
2022
   
2021
 
 
                       
Basic weighted average number of shares
   
180,795,755
     
133,928,463
     
176,871,371
     
130,618,095
 
Effect of dilutive stock options and warrants
   
-
     
-
     
-
     
-
 
Diluted weighted average number of shares
   
180,795,755
     
133,928,463
     
176,871,371
     
130,618,095
 

Diluted weighted average number of common shares for the three-month and six-month periods ended June 30, 2022 excludes nil anti-dilutive preferred shares (2021: nil), 12,066,667 anti-dilutive stock options (2021: 9,133,957) and 2,571,962 anti-dilutive warrants (2021: 4,018,029).
 
13.  Non-controlling interests
 
The Company entered into a joint venture agreement with Mr. Eric Sprott effective October 1, 2019 for 40% non-controlling interest of the Company’s Galena Complex with initial contribution of $15 million to fund capital improvements and operations. Mr. Eric Sprott committed to contributing additional funds to support the ongoing operations alongside the Company in proportion of their respective ownership up to $5 million for the first year of operations with the Company contributing any potential excess as necessary. After the first year, contributions revert to the proportional percentage of ownership interests to fund capital projects and operations.

The Company recognized non-controlling interests of $14.3 million equal to the proportionate non-controlling interests’ carrying amount of the Galena Complex at initial recognition classified as a separate component of equity. Subsequent contributions and proportionate share changes in equity are recognized to the carrying amount of the non-controlling interests.
 
Page 13

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)



14.  Revenue
 
The following is a disaggregation of revenue categorized by commodities sold for the three-month and six-month periods ended June 30, 2022 and 2021:

 
 
Three-month
   
Three-month
   
Six-month
   
Six-month
 
 
 
period ended
   
period ended
   
period ended
   
period ended
 
 
 
June 30,
   
June 30,
   
June 30,
   
June 30,
 
 
 
2022
   
2021
   
2022
   
2021
 
 
                       
Gold
                       
Sales revenue
 
$
-
   
$
688
   
$
-
   
$
1,719
 
Derivative pricing adjustments
   
-
     
-
     
-
     
-
 
 
   
-
     
688
     
-
     
1,719
 
Silver
                               
Sales revenue
 
$
8,766
   
$
6,682
   
$
19,045
   
$
13,469
 
Derivative pricing adjustments
   
(579
)
   
46
     
189
     
235
 
 
   
8,187
     
6,728
     
19,234
     
13,704
 
Zinc
                               
Sales revenue
 
$
15,984
   
$
-
   
$
31,584
   
$
-
 
Derivative pricing adjustments
   
(118
)
   
-
     
1,530
     
55
 
 
   
15,866
     
-
     
33,114
     
55
 
Lead
                               
Sales revenue
 
$
7,333
   
$
4,550
   
$
15,999
   
$
9,255
 
Derivative pricing adjustments
   
(407
)
   
27
     
(331
)
   
34
 
 
   
6,926
     
4,577
     
15,668
     
9,289
 
Other by-products
                               
Sales revenue
 
$
206
   
$
-
   
$
395
   
$
83
 
Derivative pricing adjustments
   
99
     
-
     
181
     
(46
)
 
   
305
     
-
     
576
     
37
 
 
                               
Total sales revenue
 
$
32,289
   
$
11,920
   
$
67,023
   
$
24,526
 
Total derivative pricing adjustments
   
(1,005
)
   
73
     
1,569
     
278
 
Gross revenue
 
$
31,284
   
$
11,993
   
$
68,592
   
$
24,804
 
Proceeds before intended use
   
-
     
-
     
-
     
247
 
Treatment and selling costs
   
(11,336
)
   
(2,478
)
   
(22,208
)
   
(5,103
)
 
 
$
19,948
   
$
9,515
   
$
46,384
   
$
19,948
 

The amount of gold sales revenue recognized from deferred revenue (see Note 8) was nil during the three-month period ended June 30, 2022 (2021: $0.7 million) and nil million during the six-month period ended June 30, 2022 (2021: $1.7 million).

Derivative pricing adjustments represent subsequent variations in revenue recognized as an embedded derivative from contracts with customers and are accounted for as financial instruments (see Note 18).

Proceeds before intended use represents gold and silver sales revenue recognized from the Relief Canyon Mine prior to its declaration of commercial production during fiscal 2021 (see Note 3).
 
Page 14

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


15.  Cost of sales
 
Cost of sales is costs that directly relate to production at the mine operating segments and excludes depletion and amortization. The following are components of cost of sales for the three-month and six-month periods ended June 30, 2022 and 2021:

 
 
Three-month
   
Three-month
   
Six-month
   
Six-month
 
 
 
period ended
   
period ended
   
period ended
   
period ended
 
 
 
June 30,
   
June 30,
   
June 30,
   
June 30,
 
 
 
2022
   
2021
   
2022
   
2021
 
 
                       
Salaries and employee benefits
 
$
7,748
   
$
5,759
   
$
14,573
   
$
11,340
 
Contract services on site
   
-
     
8,709
     
3
     
14,338
 
Raw materials and consumables
   
7,051
     
3,186
     
13,327
     
6,098
 
Utilities
   
1,169
     
685
     
2,171
     
1,540
 
Other costs
   
1,807
     
1,760
     
3,941
     
3,461
 
Costs before intended use
   
-
     
-
     
-
     
247
 
Changes in inventories
   
(1,481
)
   
(10,872
)
   
(1,135
)
   
(17,445
)
Inventory write-downs
   
1,424
     
7,549
     
1,457
     
34,928
 
 
 
$
17,718
   
$
16,776
   
$
34,337
   
$
54,507
 

16.  Corporate general and administrative expenses

Corporate general and administrative expenses are costs incurred at corporate and other segments that do not directly relate to production. The following are components of corporate general and administrative expenses for the three-month and six-month periods ended June 30, 2022 and 2021:

 
 
Three-month
   
Three-month
   
Six-month
   
Six-month
 
 
 
period ended
   
period ended
   
period ended
   
period ended
 
 
 
June 30,
   
June 30,
   
June 30,
   
June 30,
 
 
 
2022
   
2021
   
2022
   
2021
 
 
                       
Salaries and employee benefits
 
$
490
   
$
526
   
$
1,044
   
$
1,044
 
Directors’ fees
   
102
     
113
     
199
     
192
 
Share-based payments
   
598
     
667
     
1,591
     
1,349
 
Professional fees
   
227
     
472
     
833
     
949
 
Office and general
   
634
     
563
     
1,033
     
926
 
 
 
$
2,051
   
$
2,341
   
$
4,700
   
$
4,460
 

17.  Income taxes

Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual rate used for the six-month period ended June 30, 2022 was 26.5% and for the year ended December 31, 2021 was 26.5%.

The Company’s net deferred tax liability relates to the Mexican mining royalty and arises principally from the following:

   
June 30,
   
December 31,
 
   
2022
   
2021
 
             
Property, plant and equipment
 
$
1,080
   
$
1,321
 
Provisions and reserves
   
(821
)
   
(833
)
Net deferred tax liabilities
 
$
259
   
$
488
 

The inventory write-downs and impairments described in Note 6 and 7 will result in certain non-capital losses and timing differences which have not been recorded given uncertainty of recoverability in future periods.

Page 15

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)

 
18.  Financial risk management
 
a.   Financial risk factors

The Company’s risk exposures and the impact on its financial instruments are summarized below:

(i)            Credit Risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash and cash equivalents and trade and other receivables. The credit risk on cash and cash equivalents is limited because the Company invests its cash in deposits with well-capitalized financial institutions with strong credit ratings in Canada and the United States. Under current concentrate offtake agreements, risk on trade receivables related to concentrate sales is managed by receiving payments for 85% to 100% of the estimated value of the concentrate within one month following the time of shipment.

As of June 30, 2022, the Company’s exposure to credit risk with respect to trade receivables amounts to $4.1 million (December 31, 2021: $4.7 million). The Company believes credit risk is not significant and there was no significant change to the Company’s allowance for expected credit losses as at June 30, 2022 and December 31, 2021.

(ii)            Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they arise. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. The Company’s liquidity requirements are met through a variety of sources, including cash, cash generated from operations, credit facilities and debt and equity capital markets. The Company’s trade payables have contractual maturities of less than 30 days and are subject to normal trade terms.

The following table presents the contractual maturities of the Company’s financial liabilities on an undiscounted basis:

 
 
June 30, 2022
 
 
       
Less than
               
Over 5
 
 
 
Total
   
1 year
   
2-3 years
   
4-5 years
   
years
 
 
                             
Trade and other payables
 
$
21,299
   
$
21,299
   
$
-
   
$
-
   
$
-
 
Promissory note
   
3,750
     
3,750
     
-
     
-
     
-
 
Interest on promissory note
   
121
     
121
     
-
     
-
     
-
 
RoyCap convertible debenture
   
12,649
     
-
     
12,649
     
-
     
-
 
Interest on RoyCap convertible debenture
   
1,852
     
1,010
     
842
     
-
     
-
 
Government loan
   
222
     
222
     
-
     
-
     
-
 
Metals contract liability
   
34,947
     
10,785
     
21,197
     
2,965
     
-
 
Projected pension contributions
   
3,187
     
553
     
1,093
     
1,219
     
322
 
Decommissioning provision
   
18,099
     
-
     
-
     
-
     
18,099
 
Other long-term liabilities
   
1,321
     
-
     
440
     
318
     
563
 
 
 
$
97,447
   
$
37,740
   
$
36,221
   
$
4,502
   
$
18,984
 

Page 16

Americas Gold and Silver Corporation
Notes to the condensed interim consolidated financial statements
For the six-month periods ended June 30, 2022 and 2021
(In thousands of U.S. dollars, unless otherwise stated, unaudited)


Minimum lease payments in respect to lease liabilities are included in trade and other payables and other long-term liabilities as follows:

 
 
June 30, 2022
 
 
       
Less than
               
Over 5
 
 
 
Total
   
1 year
   
2-3 years
   
4-5 years