99
CONSOLIDATED FINANCIAL STATEMENTS
DRIVING GROWTH FROM WITHIN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(All amounts in US$‘000’s unless otherwise stated)
d) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company
manages liquidity risk by continuing to monitor forecasted and actual cash flows. The Company has in place a planning
and budgeting process to help determine the funds required to support the Company’s normal operating requirements
on an ongoing basis and its development plans. The Company strives to maintain sufficient liquidity to meet its short
term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash, short
term investments, and its committed liabilities.
Expected payments due by period as at December 31, 2014
Less than
After
1 year
1–3 years
4–5 years
5 years
Total
Trade and other payables
$ 21,458
$ –
$ –
$ –
$ 21,458
Due to related parties
9
–
–
–
9
Income tax payable
9,745
–
–
–
9,745
Other liabilities
–
4,661
–
–
4,661
Operating leases
745
1,275
126
–
2,146
Provisions
871
902
1,620
11,447
14,840
$ 32,828
$ 6,838
$ 1,746
$ 11,447
$ 52,859
Operating leases includes leases for office premises, computer and other equipment used in the normal course of
business. Refer to Note 23. c).
On April 23, 2013, the Company entered into an amended and restated credit agreement with the Bank of Nova Scotia
for a $40 million senior secured revolving credit facility (“credit facility”) to be refinanced or repaid on or within three
years or before April 22, 2016. The credit facility is secured by a first ranking lien on Bateas, Cuzcatlan, Continuum, and
Barbados, and their assets and bears interest and fees at prevailing market rates. In the event that utilization under the
credit facility is less than $10 million, a commitment fee of 1.0% per annum is payable quarterly on the unutilized portion
of the available credit facility. No funds were drawn from this credit facility.
Subsequent to December 31, 2014, the Company is pending to enter an amended and restated credit agreement with
the Bank of Nova Scotia for a $60 million senior secured financing (“credit facility”) consisting of a $40 million term
credit facility with a 4 year term and a $20 million revolving credit facility for a two year period. The credit facility is to
be secured by a first ranking lien on Bateas, Cuzcatlan, Continuum, and Barbados, and their assets and bears interest
and fees at prevailing market rates. In the event that utilization under the credit facility is less than $10 million, a
commitment fee of 1.0% per annum is payable quarterly on the unutilized portion of the available credit facility. No funds
were drawn from this credit facility.
e) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The risk that the Company will realize a loss as a result of a decline in the fair value
is limited because the balances are generally held with major financial institutions in demand deposit accounts.
A 10% change in interest rates would cause a $2 change in income on an annualized basis.
f) Metal Price Risk
The Company is exposed to metals price risk with respect to silver, gold, zinc, and lead sold through its mineral
concentrate products. As a matter of policy, the Company does not hedge its silver production.
A 10% change in zinc, lead, silver, and gold prices would cause an $881, $607, $8,294, $2,910, respectively, change in
net earnings on an annualized basis.
The Company also enters into provisional concentrate contracts to sell the silver-gold, zinc, lead-silver concentrates
produced by the San Jose and Caylloma mines. For the year ended December 31, 2014, the impact of price adjustments
was a loss of $539 (2013: loss $4,456).
16. Management of Financial Risk (Continued)
