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Luca Mining Corp. — Interim / Quarterly Report 2025
May 28, 2025
43638_rns_2025-05-27_b3b45fc1-92c3-4010-a355-052df327372c.pdf
Interim / Quarterly Report
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HGH
Mining Corp.
Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2025 and 2024 (Unaudited)
Luca Mining Corp.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three months ended March 31, 2025 and 2024
NOTICE OF NO REVIEW BY AUDITOR
The accompanying unaudited condensed consolidated interim financial statements of Luca Mining Corp (the "Company") have been prepared by and are the responsibility of Company's management and approved by the Company's Audit Committee and Board of Directors.
In accordance with National Instrument 51 – 102 Continuous Disclosure Obligations of the Canadian Securities Administrators WE HEREBY GIVE NOTICE THAT the condensed consolidated interim financial statements which follow this notice have not been reviewed by an auditor.
LUCA
Mining Corp.
Condensed consolidated interim statements of financial position
(Unaudited - Expressed in thousands of US dollars)
| | Note | March 31
2025 | December 31
2024 |
| --- | --- | --- | --- |
| ASSETS | | | |
| Current assets | | | |
| Cash and cash equivalents | | $ 15,942 | $ 10,207 |
| Amounts receivable | 4 | 9,591 | 7,637 |
| Inventories | 5 | 9,384 | 8,591 |
| Prepaid expenses and deposits | 6 | 5,968 | 4,410 |
| Other current assets | | 693 | 116 |
| Total current assets | | 41,578 | 30,961 |
| Non-current assets | | | |
| Property, plant and equipment | 7 | 43,369 | 44,544 |
| Mineral properties | 8 | 62,751 | 59,427 |
| Other assets | | 7 | 42 |
| Total assets | | $ 147,705 | $ 134,974 |
| LIABILITIES | | | |
| Current liabilities | | | |
| Amounts payable and accrued liabilities | 9 | $ 24,944 | $ 24,715 |
| Current portion of lease liabilities | 10 | 1,822 | 1,796 |
| Current portion of loans payable | 11 | 7,703 | 14,603 |
| Derivative liabilities | 12 | - | 4,975 |
| Current portion of stream agreement | 13 | 6,358 | 5,840 |
| Total current liabilities | | 40,827 | 51,929 |
| Non-current liabilities | | | |
| Lease liabilities | 10 | 9,036 | 9,214 |
| Loans payable | 11 | 1,816 | 2,434 |
| Stream agreement | 13 | 19,546 | 16,964 |
| Provision for reclamation and rehabilitation | 14 | 6,947 | 6,749 |
| Total liabilities | | 78,172 | 87,290 |
| SHAREHOLDERS' EQUITY | | | |
| Share capital | 15 | 139,620 | 122,594 |
| Share subscriptions | | - | 10 |
| Reserves | 16 | 12,948 | 12,673 |
| Accumulated other comprehensive earnings | | 1,572 | 1,534 |
| Deficit | | (84,607) | (89,127) |
| Total equity | | 69,533 | 47,684 |
| Total liabilities and equity | | $ 147,705 | $ 134,974 |
Nature of operations (note 1)
Commitments and contingencies (note 26)
Subsequent events (notes 27)
"David Rhodes"
Director
"Phillip Brumit Sr."
Director
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
LUCRA
Mining Corp.
Condensed consolidated interim statements of earnings and comprehensive earnings
(Unaudited - Expressed in thousands of US dollars, except share and per share amounts)
| Notes | For the three months ended | ||
|---|---|---|---|
| March 31 2025 | March 31 2024 | ||
| Revenue | $ 47,400 | $ 21,882 | |
| Treatment and selling costs | (8,783) | (5,541) | |
| Net revenue | 18 | 38,617 | 16,341 |
| Cost of sales | 19 | 25,254 | 12,735 |
| Mine operating earnings | 13,363 | 3,606 | |
| General and administration | 20 | 3,237 | 2,043 |
| Share-based compensation | 16(b) | 464 | 129 |
| Foreign exchange loss | 69 | 221 | |
| Other operating income | (75) | (199) | |
| Operating earnings | 9,668 | 1,412 | |
| Interest and finance costs, net | 21 | (658) | (653) |
| Gain on debt modification and settlement | 11, 12 | 295 | 4,542 |
| Change in fair value of derivative liabilities | 13 | (4,785) | – |
| Net Earnings before income taxes | $ 4,520 | $ 5,301 | |
| Current income tax expense | – | – | |
| Deferred income tax expense | – | – | |
| Net earnings for the period | $ 4,520 | $ 5,301 | |
| Other comprehensive earnings (loss), net of tax | |||
| Items that will not be subsequently reclassified to net earnings: | |||
| Foreign currency translation differences | 38 | (358) | |
| Total comprehensive earnings for the period | $ 4,558 | $ 4,943 | |
| Earnings per common shares | |||
| Basic | 17 | $ 0.02 | $ 0.03 |
| Diluted | 17 | $ 0.02 | $ 0.03 |
| Weighted average shares outstanding (000's) | |||
| Basic | 17 | 230,252 | 161,566 |
| Diluted | 17 | 256,814 | 161,566 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
LUCA
Mining Corp.
Condensed consolidated interim statements of changes in equity
(Unaudited - Expressed in thousands of US dollars, except share and per share amounts)
| Notes | Number of common shares | Share capital | Share subscription received in advance | Equity settled share-based payments | Warrants | Reserves total | Accumulated deficit | Accumulated other comprehensive earnings (loss) | Total shareholders' equity | |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance, December 31, 2023 | 148,107,644 | 107,814 | - | 7,935 | 2,027 | 9,962 | (78,704) | 2,081 | 41,153 | |
| Shares issued upon settlement of debt | 15 | 17,750,000 | 3,566 | - | - | - | - | - | - | 3,566 |
| Share-based compensation | 16(b) | - | - | - | 165 | - | 165 | - | - | 165 |
| Comprehensive earnings (loss) | - | - | - | - | - | - | 5,301 | (358) | 4,943 | |
| Balance, March 31, 2024 | 165,857,644 | 111,380 | - | 8,100 | 2,027 | 10,127 | (73,403) | 1,723 | 49,827 | |
| Private placement, net of issue cost | 15 | 25,126,167 | 7,801 | - | - | - | - | - | - | 7,801 |
| Fair value of options allocated to share capital on exercise | 15 | 845,278 | 495 | - | (222) | - | (222) | - | - | 273 |
| Fair value of warrants allocated to share capital on exercise | 15 | 8,475,011 | 3,095 | 10 | (5) | - | (5) | - | - | 3,100 |
| Warrants issued for finder's fees | 15 | - | (177) | - | - | 177 | 177 | - | - | - |
| Share-based compensation | 16(b) | - | - | - | 2,596 | - | 2,596 | - | - | 2,596 |
| Comprehensive loss | - | - | - | - | - | - | (15,724) | (189) | (15,913) | |
| Balance, December 31, 2024 | 200,304,100 | $122,594 | 10 | $10,469 | $2,204 | $12,673 | $(89,127) | $1,534 | $47,684 | |
| Shares issued upon settlement of debt | 15 | 13,566,771 | 6,703 | - | - | - | - | - | - | 6,703 |
| Fair value of options allocated to share capital on exercise | 15 | 865,833 | 499 | - | (212) | - | (212) | - | - | 287 |
| Fair value of warrants allocated to share capital on exercise | 15 | 26,979,916 | 9,824 | (10) | (175) | - | (175) | - | - | 9,639 |
| Share-based compensation | 16(b) | - | - | - | 662 | - | 662 | - | - | 662 |
| Comprehensive earnings | - | - | - | - | - | - | 4,520 | 38 | 4,558 | |
| Balance, March 31, 2025 | 241,716,620 | $139,620 | - | $10,744 | $2,204 | $12,948 | $(84,607) | $1,572 | $69,533 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
LUCRA
Mining Corp.
Condensed consolidated interim statements of cash flows
(Unaudited - Expressed in thousands of US dollars)
| Notes | For the three months ended | ||
|---|---|---|---|
| March 31 2025 | March 31 2024 | ||
| Operating activities | |||
| Net earnings for the period | $ 4,520 | $ 5,301 | |
| Items not involving cash and cash equivalents: | |||
| Accretion relating to reclamation and rehabilitation | 161 | 162 | |
| Depreciation and amortization | 2,574 | 720 | |
| Amortization of deferred financing costs | - | 6 | |
| Amortization and accretion relating to stream agreement | - | 161 | |
| Accretion and interest on lease | 10 | 267 | 184 |
| Accretion and interest on debt | 11 | 275 | 836 |
| Share-based compensation | 16 (b) | 662 | 145 |
| Change in fair value of derivative liabilities | 13 | 4,784 | - |
| Gain on debt modification and settlement | 11,12 | (295) | (4,385) |
| Foreign exchange (gain) loss on translation to functional currency | 37 | 557 | |
| Gain on lease extinguishment | - | (9) | |
| Fair value of warrants issued in financing | - | (120) | |
| Changes in non-cash operating working capital | 25 | (9,618) | (4,262) |
| Net cash and cash equivalents provided by (used in) operating activities | 3,367 | (704) | |
| Investing activities | |||
| Acquisition of property, plant and equipment | (660) | (247) | |
| Investment in mineral properties | (614) | (163) | |
| Net cash and cash equivalents used in investing activities | (1,274) | (410) | |
| Financing activities | |||
| Interest paid on loans payable | 11 | (438) | (480) |
| Proceeds from debt | 11 | - | 2,500 |
| Proceeds from warrants and/or stock options exercised | 9,926 | - | |
| Repayment of lease liabilities | 10 | (552) | (389) |
| Repayment of debt | 11 | (5,332) | - |
| Net cash and cash equivalents provided by financing activities | 3,604 | 1,631 | |
| Effect of exchange rate change on cash and cash equivalents | 38 | (3) | |
| Change in cash and cash equivalents | 5,735 | 514 | |
| Cash and cash equivalents, beginning of the year | 10,207 | 2,058 | |
| Cash and cash equivalents, end of the period | $ 15,942 | $ 2,572 | |
| Cash and cash equivalents are consisted of: | |||
| -Cash | $ 13,836 | $ 2,572 | |
| -Redeemable guaranteed investment certificate ("GIC") | 2,106 | - | |
| Total cash and cash equivalents, end of the period | $ 15,942 | $ 2,572 |
Supplemental cash flow information (Note 25)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
1. NATURE OF OPERATIONS
Luca Mining Corp. is the parent company of its subsidiary group (collectively, the "Company" or "Luca") and is a publicly traded corporation incorporated in Canada, with its head office located at 410 – 1111 Melville Street, Vancouver, BC, V6E 3V6 and its registered and records office at 2501 – 550 Burrard Street, Vancouver, BC V6C 2B5. Luca's common shares are listed on the TSX Venture Exchange ("TSXV") under the symbol "LUCA", quoted on the OTCQX over-the-counter market in the USA under the symbol "LUCMF" and quoted on the Frankfurt Stock Exchange under the symbol "Z68".
The Company is a producer of base and precious metals and is also engaged in the acquisition, exploration and development of resource properties. The Company is currently producing gold, silver, zinc, copper and lead at the Campo Morado mine and mill ("Campo Morado") located in Guerrero, Mexico. Additionally, the Company is producing gold, silver, zinc, copper and lead at its Tahuehueto mine and mill ("Tahuehueto") in the state of Durango.
2. BASIS OF PREPARATION
These unaudited condensed consolidated interim financial statements ("Interim Financial Statements") have been prepared in accordance with International Accounting Standards ("IAS") 34 - Interim Financial Reporting and do not include all of the information required for a full annual financial statements and should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2024 (the "Annual Financial Statements").
The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
These Interim Financial Statements are presented in United States dollars ("US") and include the accounts of the Company and its wholly owned subsidiaries (Note 3). All intercompany transactions and balances have been eliminated upon consolidation of these subsidiaries.
On May 30, 2024, the Company sold its 99.98% interest in Prestadora de Servicios Arcelia, S.A. de C.V. ("PSA") to arm's length third party in Mexico for $2 ($45 Mexican Pesos). The results of PSA's operations are reflected in the consolidated financial statements through the date of sale, May 30, 2024.
The Company recorded a gain on the sale of $2,087 in the unaudited condensed consolidated interim statements of earning and comprehensive earnings. This gain represents the difference between the sale price and the carrying amounts of the assets and liabilities that were derecognized at the date of disposition.
These Interim Financial Statements were approved by the Company's Board of Directors on May 27, 2025.
3. MATERIAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
The material accounting policies applied in these Interim Financial Statements are the same as those applied in the Company's Annual Financial Statements as at and for the year ended December 31, 2024, except as described below.
In preparing these Interim Financial Statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the Annual Financial Statements and should be read in conjunction with the Annual Financial Statements.
The accounting policies below have been applied consistently to all years presented and by all subsidiaries in the group except for new accounting standards adopted during the period, which were adopted either on a prospective basis or on a modified retrospective basis, with restatement of comparative periods, where applicable, as described below.
a) Changes in accounting policies
During the second quarter of 2024, the Company changed its presentation currency to the United States dollar ("US") from the Canadian dollar ("CAD"). The Company determined that this change in presentation currency better reflects the Company's current activities, increases the comparability to its peers, and better enhances the relevance of the financial statements to users. The change in the financial statement presentation currency is an accounting policy change and has been accounted for retrospectively and restated the comparative financial information as if the presentation currency had always been US$, in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates, and IAS 8, Accounting Policies, Changes in Accounting Estimates and Error.
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
3. MATERIAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
The change in presentation currency has been performed on a retrospective basis with comparative periods translated into US$ as follows:
- Assets and liabilities previously presented in CAD were translated into US using the comparative reporting date exchange rate of 1.3226 CAD/US at December 31, 2023 and 1.3544 CAD/US at January 1, 2023;
- Equity, including reserves and deficit, were translated using the historical exchange rates; and
- The consolidated statements of loss and comprehensive loss and cash flows were translated using the average foreign exchange rates in effect during that period of 1.3488 CAD/US for the period January 1, 2024, to March 31, 2024 and 1.3495 CAD/US for the year ended December 31, 2023.
The resulting foreign currency exchange differences were recorded to the foreign currency translation reserve.
b) Adoption of new accounting standards, interpretation or amendments
Lack of Exchangeability (Amendments to IAS 21)
Effective January 1, 2025, the Company adopted the amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates, related to a lack of exchangeability. These amendments clarify how an entity should assess whether a currency is exchangeable and how to determine the spot exchange rate when exchangeability is lacking. The amendments also introduce disclosure requirements to enable users of the financial statements to understand the effects of a currency that is not exchangeable. The adoption of these amendments did not have a material impact on the Company's consolidated financial statements.
c) New accounting standards issued but not yet effective.
At the date of authorization of these Interim Financial Statements, the Company has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective.
Presentation and Disclosure in Financial Statements (IFRS 18)
In April 2024, the IASB released IFRS 18, Presentation and Disclosure in Financial Statements. IFRS 18 replaces IAS 1, Presentation of Financial Statements while carrying forward many of the requirements in IAS 1. IFRS 18 introduces new requirements to: i) present specified categories and defined subtotals in the statement of earnings or loss, ii) provide disclosures on management-defined performance measures ("MPMs") in the notes to the financial statements, iii) improve aggregation and disaggregation. Some of the requirements in IAS 1 are moved to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7, Financial Instruments: Disclosures. The IASB also made minor amendments to IAS 7, Statement of Cash Flows and IAS 33, Earnings per Share in connection with the new standard. IFRS 18 requires retrospective application with specific transition provisions. The Company is required to apply IFRS 18 for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact of IFRS 18 on its financial statements.
Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)
The IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures that provide additional guidance on the derecognition of financial liabilities settled through electronic transfers. The amendments also clarify the classification of financial assets in the following areas:
- Contractual terms consistent with a basic lending arrangement;
- Financial assets with non-recourse features; and
- Contractually linked instruments.
In addition, the amendments introduce new disclosure requirements related to investments in equity instruments designated at fair value through other comprehensive income (FVOCI), as well as enhanced disclosures for financial instruments with contingent features.
These amendments are effective for annual reporting periods beginning on or after January 1, 2026, with earlier application permitted. The Company is currently evaluating the potential impact of these amendments on its consolidated financial statements.
8
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
- AMOUNTS RECEIVABLE
| March 31 2025 | December 31 2024 | |
|---|---|---|
| Trade receivables | $ 5,335 | $ 770 |
| VAT recoverable | 4,089 | 6,608 |
| Other receivables | 174 | 267 |
| $ 9,598 | $ 7,645 | |
| Less: non-current portion of VAT recoverable | 7 | 8 |
| $ 9,591 | $ 7,637 |
The Company's trade receivables from concentrate sales are expected to be collected in accordance with the terms of the existing contracts with its customer. No amounts were past due as at March 31, 2025.
At the reporting date, the Company assessed the timing of collection of the total VAT receivable of $4,089 (December 31, 2024 – $6,608) and concluded that $7 (December 31, 2024 – $8) of the VAT recoverable is not expected to be collected within the next 12 months, therefore it was classified as non-current other assets.
- INVENTORIES
| March 31 2025 | December 31 2024 | |
|---|---|---|
| Concentrate | $ 2,238 | $ 2,292 |
| Ore stockpiles | 1,855 | 1,687 |
| Materials and supplies | 5,291 | 4,612 |
| $ 9,384 | $ 8,591 |
During the three months ended March 31, 2025, the Company expensed $21,728 of inventories to cost of sales (March 31, 2024, $11,927) and recognized an allowance for obsolete items in its supply inventories, which encompass replacement parts and other general supplies of $nil (year ended December 31, 2024 – $1,148).
- PREPAID EXPENSES AND DEPOSITS
| March 31 2025 | December 31 2024 | |
|---|---|---|
| Prepaids | $ 4,932 | $ 2,668 |
| Advances to suppliers | 1,036 | 1,742 |
| Total prepaids expenses and deposits | $ 5,968 | $ 4,410 |
- PROPERTY, PLANT AND EQUIPMENT
| Machinery and equipment | Land and buildings | Construction in process | Total | |
|---|---|---|---|---|
| COST | $ | $ | $ | $ |
| Balance December 31, 2024 | 24,718 | 33,944 | 4,803 | 63,465 |
| Additions | 291 | 133 | 193 | 617 |
| Transfers | - | 1,714 | (1,901) | (187) |
| Balance, March 31, 2025 | 25,009 | 35,791 | 3,095 | 63,895 |
| ACCUMULATED DEPRECIATION | ||||
| Balance December 31, 2024 | (12,645) | (6,276) | - | (18,921) |
| Depletion and amortization | (844) | (761) | - | (1,605) |
| Balance, March 31, 2025 | (13,489) | (7,037) | - | (20,526) |
| Net book value March 31, 2025 | 11,520 | 28,754 | 3,095 | 43,369 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
- PROPERTY, PLANT AND EQUIPMENT (continued)
| Machinery and equipment | Land and buildings | Construction in process | Total | |
|---|---|---|---|---|
| COST | $ | $ | $ | $ |
| Balance December 31, 2023 | 17,947 | 11,067 | 24,823 | 53,837 |
| Additions | 6,292 | 1,393 | 4,871 | 12,556 |
| Transfers | 513 | 21,732 | (24,887) | (2,642) |
| Dispositions | (34) | (227) | (4) | (265) |
| Foreign currency movement | - | (21) | - | (21) |
| Balance, December 31, 2024 | 24,718 | 33,944 | 4,803 | 63,465 |
| ACCUMULATED DEPRECIATION | ||||
| Balance December 31, 2023 | (8,291) | (3,916) | - | (12,207) |
| Depletion and amortization | (4,353) | (2,523) | - | (6,876) |
| Dispositions | 34 | 158 | - | 192 |
| Foreign currency movement | (35) | 5 | - | (30) |
| Balance, December 31, 2024 | (12,645) | (6,276) | - | (18,921) |
| Net book value December 31, 2024 | 12,073 | 27,668 | 4,803 | 44,544 |
- MINERAL PROPERTIES
| Campo Morado Mine | Tahuehueto Mine | Total | |
|---|---|---|---|
| COST | $ | $ | $ |
| Balance, December 31, 2024 | 17,523 | 44,093 | 61,616 |
| Additions | 2,999 | 1,107 | 4,506 |
| Transfers | - | 187 | 187 |
| Balance, March 31, 2025 | 20,522 | 45,387 | 65,909 |
| ACCUMULATED DEPRECIATION | |||
| Balance, December 31, 2024 | (1,414) | (775) | (2,189) |
| Depletion and amortization | (141) | (828) | (969) |
| Balance, March 31, 2025 | (1,555) | (1,603) | (3,158) |
| Net book value March 31, 2025 | 18,967 | 43,784 | 62,751 |
| Campo Morado Mine | Tahuehueto Mine | Total | |
| COST | $ | $ | $ |
| Balance, December 31, 2023 | 14,079 | 35,184 | 49,263 |
| Additions | 1,953 | 7,759 | 9,712 |
| Changes in closure and reclamation | 1,491 | 1,150 | 2,641 |
| Balance, December 31, 2024 | 17,523 | 44,093 | 61,616 |
| ACCUMULATED DEPRECIATION | |||
| Balance, December 31, 2023 | (959) | - | (959) |
| Depletion and amortization | (455) | (775) | (1,230) |
| Balance, December 31, 2024 | (1,414) | (775) | (2,189) |
| Net book value December 31, 2024 | 16,109 | 43,318 | 59,427 |
Tahuehueto Mine
The Company owns 99% of the Tahuehueto mining project located in the State of Durango, Mexico. The Company has a 30-year surface access rights agreement with the local communities under which the Company is obligated to make annual payments of $47, increasing 5% compounded annually. A portion of the Tahuehueto mine is subject to a 1.6% net smelter return royalty ("NSR") as well as a royalty streaming agreement (Note 13).
10
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
8. MINERAL PROPERTIES (continued)
For the period ended March 31, 2025, the Company capitalized $nil in borrowing costs (March 31, 2024 - $1,034) associated with the Tahuehueto mining project.
On March 31, 2025, the Company announced the commencement of commercial production at its Tahuehueto mine. Commercial production was achieved following the completion of construction activities and the ramp-up of operations, which demonstrated the plant's ability to operate at a throughput rate above 800 tonnes per day and achieve steady-state recoveries and throughput.
Campo Morado Mine
The Company owns 100% of the Campo Morado Mine located in the State of Guerrero, Mexico. The Campo Morado Mine is subject to a royalty between 2% - 3% of the net value of sales over the minerals extracted during the term of existence of the mining concession to the Servicio Geologico Mexicano ("SGM").
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Accounts payable | $ 7,633 | $ 8,490 |
| Tax payable | 4,124 | 4,310 |
| Payroll and benefits accrual | 1,482 | 1,410 |
| Contingent liabilities | 4,381 | 3,717 |
| Royalties | 2,004 | 1,623 |
| Accrued Liabilities | 4,430 | 3,831 |
| Other payables | 890 | 1,334 |
| $ 24,944 | $ 24,715 |
As at March 31, 2025, the Company has recognized $4,381 of contingent liabilities (December 31, 2024 - $3,717) in relation to litigation, claims and assessments (see Note 26).
10. LEASE LIABILITIES
Leases consist of machinery and equipment used to support operations at the Campo Morado and Tahuehueto mines. The Company also leases office space for its corporate offices in Vancouver, Canada and site headquarters located in Mexico City, Mexico.
The following outlines the continuity of lease liabilities:
| Balance, December 31, 2023 | $ 7,396 |
|---|---|
| Additions | 6,031 |
| Disposal | (77) |
| Payments | (2,317) |
| Interest expense | 1,185 |
| Interest paid | (1,173) |
| Foreign currency movement | (35) |
| Balance, December 31, 2024 | $ 11,010 |
| Additions | 133 |
| Payments | (286) |
| Interest expense | 267 |
| Interest paid | (266) |
| Balance, March 31, 2025 | $ 10,858 |
| March 31, 2025 | |
| --- | --- |
| Current | $ 1,822 |
| Non-current | 9,036 |
| $ 10,858 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
10. LEASE LIABILITIES (continued)
Future minimum lease payments (principal and interest) on the leases are as follows:
| Amount | |
|---|---|
| 2025 | $ 1,660 |
| 2026 | 1,932 |
| 2027 | 1,915 |
| 2028 | 1,868 |
| Thereafter | 6,960 |
| Total minimum lease payments | 14,335 |
| Present value of minimum lease payments | (3,477) |
| Lease obligations, March 31, 2025 | $ 10,858 |
11. LOANS PAYABLE
| Trafigura (Campo) | Trafigura (Tah) | Breakwater | Urion | Accendo | Total | |
|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | $ | |
| Balance, December 31, 2024 | 3,722 | 6,640 | 1,553 | 5,122 | - | 17,037 |
| Interest expense | 74 | 163 | 35 | - | - | 272 |
| Interest payments | (60) | (343) | (35) | - | - | (438) |
| Principal payments | (1,006) | (800) | (427) | - | - | (2,233) |
| Debt settlement with cash | - | - | - | (1,572) | - | (1,572) |
| Fair value of shares issued in settlement of debt obligations | - | - | - | (3,400) | - | (3,400) |
| Accretion and amortization | 8 | (1) | (4) | - | - | 3 |
| (Gain)/loss on debt settlement | - | - | - | (150) | - | (150) |
| Balance, March 31, 2025 | 2,738 | 5,659 | 1,122 | - | - | 9,519 |
| Which consists of: | ||||||
| Current portion of loans | 2,738 | 3,843 | 1,122 | - | - | 7,703 |
| Non-current portion of loans | - | 1,816 | - | - | - | 1,816 |
| Balance, March 31, 2025 | 2,738 | 5,659 | 1,122 | - | - | 9,519 |
| Trafigura (Campo) | Trafigura (Tah) | Breakwater | Urion | Accendo | Total | |
| --- | --- | --- | --- | --- | --- | --- |
| $ | $ | $ | $ | $ | $ | |
| Balance, December 31, 2023 | 1,385 | 12,602 | 1,653 | - | 7,878 | 23,518 |
| Additions, net of transaction fees | 2,500 | - | - | - | - | 2,500 |
| Interest expense | 389 | 1,402 | 167 | - | 51 | 2,009 |
| Interest payments | (333) | (1,348) | (154) | - | - | (1,835) |
| Principal payments | (260) | (400) | (110) | - | - | (770) |
| Conversion of debt into convertible debenture | - | (5,800) | - | 5,800 | - | - |
| Embedded derivative liability related to the convertible debenture | - | - | - | (6,555) | - | (6,555) |
| Fair value of shares issued in settlement of debt obligations | - | - | - | - | (3,694) | (3,694) |
| Accretion and Amortization | - | - | - | 111 | 307 | 418 |
| (Gain)/loss on modification | 41 | 184 | (3) | 5,766 | - | 5,988 |
| (Gain)/loss on debt settlement | - | - | - | - | (4,542) | (4,542) |
| Balance, December 31, 2024 | 3,722 | 6,640 | 1,553 | 5,122 | - | 17,037 |
| Which consists of: | ||||||
| Current portion of loans | 3,722 | 4,206 | 1,553 | 5,122 | - | 14,603 |
| Non-current portion of loans | - | 2,434 | - | - | - | 2,434 |
| Balance, December 31, 2024 | 3,722 | 6,640 | 1,553 | 5,122 | - | 17,037 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
11. LOANS PAYABLE (continued)
a) Trafigura (Campo and Tahuehueto)
The Company has had loans outstanding to Trafigura since 2017. As a result of previous non-compliance with the terms and conditions of the Company's loans with Trafigura, on November 12, 2020, the Company agreed to transfer all of its assets in the Campo Morado and Tahuehueto mining projects into a trust, governed by a trustee and a trust agreement (the "Trust"), in order to secure the full repayment of the outstanding loans. When the total debt due to Trafigura is fully repaid, the Trust will be terminated, and all assets held within the Trust will return to the Company.
On January 1, 2024, the Company had two outstanding loans to Trafigura, the Trafigura Campo loan ("Trafi Campo") and the Trafigura Tahuehueto loan ("Trafi Tah") for $1,385 and $12,602 respectively (collectively the "Trafigura Loans"). The Trafi Campo loan bore interest at three-month SOFR plus 5.26% and matured on June 30, 2024, and the Trafi Tah loan bore interest at one year SOFR plus 6.72% and matured on December 31, 2024.
On January 11, 2024, the Company received an additional loan from Trafigura for $2,500 under the Trafi Campo loan agreement, converted $5,800 of the Trafi Tah loan into a non-interest-bearing convertible debenture (The "Convertible Debenture") and concurrently amended the terms of the Trafigura Loans. The Trafi Campo loan's maturity date was extended to June 30, 2025, with repayments of $260 plus interest commencing on April 30, 2024. The Trafi Tah loan's maturity date was extended to January 3, 2026, with repayments of $200 plus interest commencing on March 31, 2024. After six months, the repayments on the Trafi Tah loan will increase to $345 plus interest.
Trafigura conditionally assigned the Convertible Debenture to its affiliate Urion Holdings ("Malta") Limited ("Urion"), with such assignment to be executed upon Urion being included in the existing security arrangements between the Company and Trafigura (the "Condition"). The Convertible Debenture was originally signed and placed in escrow, but was released on August 22, 2024 as the Condition was met. The Convertible Debenture matures three years from the date it was released from escrow and made effective but may be repaid prior to that date upon providing 60 days written notice and that the Trafigura Loans and the Breakwater Loan (Note 11(b)) have been repaid in full (the "Early Prepayment Option"). Trafigura may elect to convert in whole or in part, the Convertible Debenture principal at any time prior to the maturity date at the conversion price of CAD$0.35 per common share. Any Shares issued under the Convertible Debenture will be subject to a four month plus one day hold period under applicable Canadian securities laws.
The conversion option in the Convertible Debenture does not meet the fixed-for-fixed criterion under IAS 32 due to the currency mismatch between the US dollar denominated debenture and the Canadian dollar denominated conversion price and functional currency of the Company. This results in a variable conversion outcome driven by exchange rate fluctuations. The Early Prepayment Option also meets the definition of an embedded derivative because its value fluctuates based on interest rates and it is not closely related to the debt host instrument. Consequently, the entire debenture is classified as a financial liability, with the conversion feature and Early Prepayment Option recognized separately as a combined embedded derivative liability, measured at fair value through profit or loss (FVTPL) under IFRS 9. The host debt instrument is classified at amortized cost. The conversion of a portion of the Trafi Tah loan into the Convertible Debenture was accounted for as an extinguishment of the portion of the Trafi Tah loan. The portion of the Trafi Tah loan settled as part of this transaction was derecognized at its carrying amount, and the Convertible Debenture was recognized at its fair value, including the debt host component and the embedded derivatives. The difference between the carrying amount of the Trafi Tah loan that was extinguished, and the fair value of the Convertible Debenture was recognized as a loss of $5,766 on the consolidated statements of earnings and comprehensive earnings.
On August 22, 2024, the Company and Trafigura further amended the outstanding Trafigura Loans to extend the maturities of the Trafi Campo loan to December 2025 and the Trafi Tah loan to July 2026. For Trafi Campo, repayments are to be made in 15 equal installments commencing in October 2024 at $130 and increasing to $300 in January 2025. For Trafi Tah, repayments are to be made 22 installments commencing October 2024 at $200 and increasing to $345 in April 2025. The Company recognized a loss of $40 through the statement of earnings and comprehensive earnings for the change in fair value due to the amendment to the terms of both loans.
On January 7, 2025, the Company, along with an arm's-length third-party, Jaluca Limited ("Jaluca"), reached an agreement with Urion to repurchase 100% of Luca's $5,800 Convertible Debenture held by Urion. The Company and Jaluca purchased 43% and 57% of the Convertible Debenture, respectively. The total price paid for Luca's portion of the Convertible debenture was $3,099. Upon closing of the transaction, the Company immediately canceled its portion of the Convertible Debenture and Jaluca converted its purchased share of the Convertible Debenture at the Convertible Debenture's exercise price of $0.35 for a total of 13,566,771 shares, extinguishing the debt. The Company recognized a gain on the debt settlement of $150 in the period ending March 31, 2025, through the statements of earnings and comprehensive earnings.
13
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
11. LOANS PAYABLE (continued)
b) Breakwater Loan Agreement
The Company has a loan outstanding to Breakwater Resources Ltd. ("Breakwater"), a subsidiary of Trafigura Mexico, S.A. de C.V. ("Trafigura") which bears interest at 10% per annum and is repayable in equal monthly installments of $207. On January 11, 2024, the Company and Breakwater amended the terms of the loan agreement to extend the maturity date to June 2025 with repayment to commence in April 2024 with equal monthly principal repayments of $110 plus interest. On August 22, 2024 the Company and Breakwater further extended the maturity date of the loan to December 2025 with repayment to commence in October 2024 with payments initially at $55, increasing to $124 in January 2025.
c) Accendo Loan Facility
The Company had a loan facility agreement with Accendo Banco, S.A., Institucion de Banca Multiple ("Accendo") for $12,000 (the "Loan Facility"), of which $6,200 had been drawn down. The Loan Facility was for a four-year term with equal monthly principal repayments commencing after a twelve-month grace period, bore interest at 13.5% per annum, payable quarterly on the drawn amount and was secured by a second ranking security interest over all the assets of the Company.
On September 29, 2021, the Mexican National Banking and Securities Commission revoked Accendo's operating license to organize and operate as a multiple banking institution and commenced a liquidation process to protect the savings of the bank's clients. The Company had a balance of $5,800 available from the Loan Facility for drawdown. However, due to the ongoing liquidation process, the Company's ability to access this remaining balance was impaired.
The Company's Loan Facility was assigned to Latapi Consultores, S.A. de C.V. ("Latapi") by Accendo and on December 6, 2023, the Company and Latapi agreed to settle the outstanding Loan Facility's principal and interest of $7,993 by the Company issuing 17,750,000 common shares of the Company at $0.45 per share to Latapi and Latapi forgiving $2,205 of the Loan Facility. The transaction closed on January 23, 2024, with the issuance of the common shares. As a result of the settlement, the Company recognized a gain of $4,542 in the period ended June 30, 2024, through the statements of earnings and comprehensive earnings.
12. DERIVATIVE LIABILITIES
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Balance, December 31, 2023 | $ | - |
| Embedded derivative related to convertible debenture | 6,555 | |
| Change in FV of embedded derivative | (1,580) | |
| Balance December 31, 2024 | $ | 4,975 |
| Debt settlement with cash | (1,527) | |
| Fair value of shares issued in settlement of debt obligations | (3,303) | |
| Gain on debt settlement | (145) | |
| Balance March 31, 2025 | $ | - |
| March 31 | ||
| --- | --- | --- |
| 2025 | ||
| Current | $ | - |
| Non-current | - | |
| Balance | $ | - |
Outlined in (Note 11(a)), the Company issued the Convertible Debenture to Urion in August 2024, and it contained an embedded derivative that was classified as a financial instrument at FVTPL.
On January 7, 2025, the Company, along with an arm's-length third-party, Jaluca Limited ("Jaluca"), reached an agreement with Urion to repurchase 100% of Luca's $5,800 Convertible Debenture (Note 11(a)) held by Urion. The Company immediately canceled the embedded derivate recognizing a gain on the debt settlement of $145 in the period ending March 31, 2025, through the unaudited condensed consolidated interim statements of earnings and comprehensive earnings.
14
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
12. DERIVATIVE LIABILITIES (continued)
The fair value of the derivative liability was determined based on a valuation methodology and the following inputs.
| Inputs | December 31, 2024 |
|---|---|
| Common share price | CAD$0.54 |
| Dividend yield | 0.00% |
| Expected volatility | 80.14% |
| Credit spread | 2.58% |
| USD/CAD exchange rate | $1:CAD$1.4383 |
13. STREAM AGREEMENT
| Balance, December 31, 2023 | $ 7,446 |
|---|---|
| Accretion on streaming arrangements | 811 |
| Derecognition of deferred revenue | (8,257) |
| Balance, August 13, 2024 | $ - |
| Fair value of derivative liability in excess of deferred revenue | 22,697 |
| Silver deliveries | (1,837) |
| Change in fair value of derivative liability | 1,944 |
| Balance, December 31, 2024 | $ 22,804 |
| Silver deliveries | (1,685) |
| Change in fair value of derivative liability | 4,785 |
| Balance, March 31, 2025 | $ 25,904 |
| March 31, 2025 | |
| --- | --- |
| Current | $ 6,358 |
| Non-current | 19,546 |
| Balance | $ 25,904 |
On April 14, 2021, the Company entered into a silver stream agreement (the "Stream Agreement") with Empress Royalty Corp. ("Empress") in which Luca will deliver to Empress silver credits in an amount equivalent to 100% of the first 1,250,000 ounces of payable silver contained within produced lead and zinc concentrates from the Tahuehueto mining project; thereafter, the stream percentage of silver delivery will step down to 20% of the payable silver from produced lead and zinc concentrates. All streaming obligations will fully terminate after 10 years. To accommodate the arrangement, Empress has been accepted into the Trust Agreement. Empress, to secure the Stream Agreement advanced a total of $5,000 with a first initial payment of $2,000 received on April 29, 2021, and the remaining $3,000 advance payment received on July 22, 2021. The streaming arrangement is subject to variable consideration and contains a significant financing component. As such, the Company recognizes a financing charge at each reporting period and grosses up the deferred revenue balance to recognize the significant financing element that is part of the arrangement. In addition to the deposit amount, Luca is also compensated for delivering silver credits at 20% of the silver purchase price, further impacting the overall economics of the transaction.
On August 13, 2024, the Company and Empress amended the streaming agreement whereby, with the completion of the construction at Tahuehueto, the Company will deliver silver under the agreement beginning in July 2024, except the delivery of ounces of refined silver attributable to production for the month of July 2024 will be delivered on the earlier of (i) the completion of the Company's next equity financing or (ii) the date on which refined silver attributable to production for the month of September 2024 is delivered (The "Amended Streaming Agreement"). The Company fulfilled this obligation on September 11, 2024, and delivered 9,098.71 ounces for July production.
Additionally, as part of the Amended Streaming Agreement, on August 16 and August 30, 2024, the Company purchased from third parties 5,454.50 ounces and 10,221.46 ounces of refined silver valued at $150 and $300 respectively and delivered the ounces to Empress, and on September 26, 2024, the Company paid to Empress $150 in cash which was converted to the equivalent of 4,710.32 ounces of refined silver.
15
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
13. STREAM AGREEMENT (continued)
As a result of the Amended Streaming Agreement, the Company was required to settle the Stream Agreement other than with the delivery of silver from the Tahuehueto mining project; therefore, the Stream Agreement no longer meets the criteria to be accounted for as deferred revenue and has been accounted for as a derivative instrument since August 13, 2024. The fair value of the Stream Agreement was determined using a discounted cash flow model based on the expected future deliveries of silver to Empress, the future silver price and a discount rate determined using the USD SOFR interest rate and the Company's credit spread.
Further, the Amended Streaming Agreement provides that, in addition to the regular monthly streaming payments, commencing on October 31, 2024, the Company will deliver a total of 45,085.16 ounces of refined silver over twelve equal monthly installments of 3,757.10 ounces each.
The Company recognized the difference, amounting $14,440, between the initial recognition of the fair value of the Stream Agreement under IFRS 9 and the carrying value of the deferred revenue at August 13, 2024 in the statement of earnings and comprehensive earnings.
On March 31, 2025, The Stream Agreement was reassessed, and the company recognized a loss of $4,784 due to the change of the fair value of the derivative liability in the statement of earnings and comprehensive earnings.
14. PROVISION FOR RECLAMATION AND REHABILITATION
The Company recognized a provision for reclamation related to the environmental restoration and closure costs associated with the Campo Morado Mine and the Tahuehueto Mining Project. Significant reclamation and closure activities include land rehabilitation, decommissioning of buildings and mine facilities, ongoing care and maintenance and other costs.
| Campo Morado | Tahuehueto | Total | |
|---|---|---|---|
| Balance, December 31, 2023 | $ 4,226 | $ 2,584 | $ 6,810 |
| Accretion | 375 | 229 | 604 |
| Changes in estimate | (64) | 665 | 601 |
| Effect of change in foreign exchange rates | (785) | (481) | (1,266) |
| Balance, December 31, 2024 | $ 3,752 | $ 2,997 | $ 6,749 |
| Accretion | 90 | 71 | 161 |
| Changes in estimate | - | - | - |
| Effect of change in foreign exchange rates | 20 | 17 | 37 |
| Balance, March, 2025 | $ 3,862 | $ 3,085 | $ 6,947 |
| Campo Morado | Tahuehueto | ||
| --- | --- | --- | |
| Anticipated settlement date | 2044 | 2034 | |
| Undiscounted uninflated estimated cash flow (000's) | $ 10,092 | $ 4,5248 | |
| Estimated life of mine (years) | 19 | 9 | |
| Discount rate (%) | 9.5 | 9.5 | |
| Inflation rate (%) | 4.4 | 4.4 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
15. SHARE CAPITAL
a) Authorized share capital
The authorized share capital of the Company is as follows:
i. unlimited voting common shares without par value
ii. unlimited preferred shares without par value
b) Management of capital
The Company considers the items included in the condensed consolidated interim statements of changes in equity as capital. The Company's objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders. The Company's capital structure consists of shareholders' equity (comprising share capital plus reserves, deficit, accumulated other comprehensive income and share subscriptions) with a balance of $69,533 as at March 31, 2025 (March 31, 2024 - $49,827). The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through private placements, convertible debentures, asset acquisitions or return capital to shareholders. As at March 31, 2025, the Company is not subject to externally imposed capital requirements and the Company's overall objective with respect to capital risk management remains unchanged from the year end to December 31, 2024.
c) Equity offerings
During the three months ended March 31, 2025, the Company issued common shares as follows:
i. On January 7, 2025, the Company, along with an arm's-length third-party, Jaluca Limited ("Jaluca"), reached an agreement with Urion to repurchase 100% of Luca's $5,800 Convertible Debenture (Note 11(a)) held by Urion. The Company and Jaluca purchased 43% and 57% of the Convertible Debenture, respectively. Upon closing of the transaction, the Company immediately canceled its portion of the Convertible Debenture and Jaluca converted its purchased share of the Convertible Debenture at the Convertible Debenture's exercise price of $0.35 for a total of 13,566,771 shares which were issued on January 14, 2025.
ii. During the period ended March 31, 2025, the Company issued 26,979,916 common shares for gross proceeds of $9,639 (CAD$14,260) in connection with warrants exercised. The Company also issued 865,833 common shares for gross proceeds of $286 (CAD$410) in connection with stock options exercised.
During the year ended December 31, 2024, the Company issued common shares as follows:
i. On December 6, 2023, the Company agreed to settle the outstanding Loan Facility's principal and interest of $8,236 (CAD$11,030) in relation to Accendo's Loan Facility that was assigned to Latapi Consultores, S.A. de C.V. (Note 13(d)) by the Company issuing 17,750,000 common shares of the Company at $0.21 (CAD$0.45) per share to Latapi. The transaction closed on January 23, 2024, with the issuance of the common shares. The fair value of the shares issued was $3,694 and the total transaction cost was $128. A gain of $4,542 was realized on settlement based on the closing bid price of the shares issued on settlement.
ii. On September 26, 2024, the Company completed a private placement and sold 6,126,167 Units at a price of $0.33 (CAD$0.45) per unit for gross proceeds of $2,046 (CAD$2,756) and also concurrently closed its Listed Issuer Financing Exemption offering selling 19,000,000 Units at a price of $0.33 (CAD $0.45) per unit for gross proceeds of $6,346 (CAD$8,550) (combined the "Offering"). The Offering consists of one common share in the Company and one half of one share purchase warrant (the "Unit") entitling the holder to purchase an additional common share at a price of CAD$0.60 per common share until March 26, 2026. In connection with the Offering, the Company issued 1,140,000 finders' warrants with a fair value of $177 (CAD$239) and legal fees and other transaction costs of $591 (CAD$789). The entirety of the fair value net of share issuance costs have been allocated to share capital with the finders' warrants being allocated to other reserves.
iii. During the year ended December 31, 2024, the Company issued 8,475,011 common shares for gross proceeds of $3,100 (CAD$4,238) in connection with warrants exercised. The Company also issued 845,278 common shares for gross proceeds of $273 (CAD$383) in connection with stock options exercised.
17
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
16. RESERVES
a) Warrants
The following summarizes the continuity of common share purchase warrants:
| March 31,2025 | December 31,2024 | |||
|---|---|---|---|---|
| Number outstanding | Weighted average exercise price CAD$ | Number outstanding | Weighted average exercise price CAD$ | |
| Outstanding, beginning of the year | 54,947,535 | 0.55 | 50,614,949 | 0.60 |
| Issued | - | - | 13,703,083 | 0.59 |
| Exercised | (26,979,916) | 0.51 | (8,475,011) | 0.50 |
| Expired | - | - | (895,486) | 4.40 |
| Outstanding, end of the period | 27,967,619 | 0.58 | 54,947,535 | 0.55 |
As at March 31, 2025, the following common share purchase warrants were outstanding:
| Expiry date | Exercise price CAD$ | Warrants outstanding | Remaining life(years) |
|---|---|---|---|
| April 25, 2025 | 0.50 | 10,573,285 | 0.07 |
| June 2, 2025 | 0.50 | 1,443,881 | 0.17 |
| June 26, 2025 | 0.50 | 3,316,344 | 0.24 |
| June 30, 2025 | 2.80 | 622,272 | 0.25 |
| December 18, 2025 | 0.50 | 2,857,143 | 0.72 |
| March 26, 2026 | 0.59 | 9,154,694 | 0.99 |
| $ 0.58 | 27,967,619 | 0.46 |
a) Warrants
In determining the fair value of the warrants issued, the Company used the Black-Scholes option pricing model to establish the fair value of warrants granted by applying the following assumptions:
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Risk-free interest rate | - | 2.97% |
| Expected life of options (years) | - | 1.5 years |
| Expected annualized volatility | - | 87% |
| Expected dividend yield | - | Nil |
b) Stock Options
The Company has adopted an Omnibus equity compensation plan (the "Plan") under the rules of the TSXV pursuant to which the Company's Board of Directors is authorized, from time to time, to grant a varying range of incentive awards, including stock options, restricted share units ("RSU"), deferred share units ("DSU"), performance share units ("PSU") and other share-based awards (the "Awards") to employees, consultants, directors and officers. The Plan is a rolling Awards plan whereby the number of Awards issuable under the plan shall not exceed, on a rolling basis, 10% of the Company's issued and outstanding common shares at the time of grant.
Under the Plan, the exercise price of each stock option may be issued at a maximum of a 25% discount to the market price of the Company's common shares on the date of grant, or such higher price as determined by the Board of Directors. The stock options can be granted for a maximum term of 10 years with vesting terms determined by the Board of Directors. No individual may be granted options exceeding 5% and no consultant or individual employed to provide "investor relations activities" may be granted options exceeding 2% of the Company's common shares outstanding in any 12-month period.
18
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
16. RESERVES (continued)
b) Stock options (continued)
Continuity of the Company's stock options issued and outstanding was as follows:
| March 31,2025 | December 31,2024 | |||
|---|---|---|---|---|
| Number of options | Weighted average exercise price CAD$ | Number of options | Weighted average exercise price CAD$ | |
| Outstanding, beginning of the year | 15,260,249 | 0.51 | 6,661,320 | 0.46 |
| Granted | 1,300,000 | 0.87 | 10,059,833 | 0.54 |
| Exercised | (865,833) | 0.47 | (845,278) | 0.45 |
| Cancelled | (145,000) | 0.55 | (531,251) | 0.51 |
| Expired | (311,666) | 0.47 | (84,375) | 0.46 |
| Outstanding, end of the period | 15,237,750 | 0.54 | 15,260,249 | 0.51 |
The weighted average share price on the date of exercise of the options for the period ended March 31, 2025, was CAD$ 0.94
The following table summarizes the information about stock options outstanding as at March 31, 2025:
| Expire date | Options outstanding | Weighted average exercise price CAD$ | Remaining contractual life (years) | Options exercisable |
|---|---|---|---|---|
| May 22, 2025 | 20,000 | 0.55 | 0.14 | 20,000 |
| May 23, 2025 | 20,000 | 0.55 | 0.15 | 20,000 |
| May 29, 2025 | 40,000 | 0.55 | 0.16 | 40,000 |
| June 14, 2025 | 100,000 | 0.55 | 0.21 | 100,000 |
| August 6, 2025 | 12,500 | 0.50 | 0.35 | 12,500 |
| February 25, 2026 | 535,417 | 0.50 | 0.91 | 535,417 |
| May 1, 2026 | 200,000 | 0.45 | 1.08 | 150,000 |
| May 19, 2026 | 62,500 | 0.50 | 1.13 | 62,500 |
| August 9, 2026 | 12,500 | 0.50 | 1.36 | 12,500 |
| April 25, 2028 | 250,000 | 0.45 | 3.07 | 250,000 |
| June 7, 2028 | 3,435,000 | 0.46 | 3.19 | 3,435,000 |
| September 17, 2028 | 135,000 | 0.35 | 3.47 | 135,000 |
| January 2, 2029 | 200,000 | 0.35 | 3.76 | 200,000 |
| February 6, 2029 | 200,000 | 0.35 | 3.86 | 200,000 |
| March 31, 2029 | 200,000 | 0.37 | 4.00 | 133,333 |
| July 15, 2029 | 1,500,000 | 0.58 | 4.29 | 750,000 |
| August 15, 2029 | 6,164,833 | 0.55 | 4.38 | 4,109,889 |
| November 29, 2029 | 850,000 | 0.54 | 4.67 | 283,333 |
| January 6, 2030 | 600,000 | 0.58 | 4.77 | 225,000 |
| March 4, 2030 | 600,000 | 1.11 | 4.93 | 200,000 |
| March 17, 2030 | 100,000 | 1.22 | 4.96 | 33,333 |
| 15,237,750 | 0.54 | 3.88 | 10,907,806 |
During the three months ended March 31, 2025, the Company granted a total of 1,300,000 options (March 31, 2024 - 400,000) with a weighted average exercise price of CAD$0.87 (March 31, 2024 - CAD$0.21).
The Company uses the fair value method of accounting for all share-based payments to directors, officers, employees, and others providing similar services. During the three months ended March 31, 2025, an amount of $662 was expensed through the Statements of earning and comprehensive earning (March 31, 2024 - $146). Additionally, during the period ended March 31, 2025, $nil, (March 31, 2024 - $20) was capitalized to the Tahuehueto mineral property asset. The portion of share-based compensation recorded is commensurate with the vesting terms of the options.
19
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
16. RESERVES (continued)
In determining the fair value of the stock options issued, the Company used the Black-Scholes option pricing model to establish the fair value of options granted during the period by applying the following assumptions:
| | March 31
2025 | December 31
2024 |
| --- | --- | --- |
| Risk-free interest rate | 2.70% | 3.18% |
| Expected life of options (years) | 5.0 years | 5.0 years |
| Expected annualized volatility | 85% | 84% |
| Expected dividend yield | Nil | Nil |
c) Restricted share units
The Company's Restricted share units ("RSUs") are settled in equity. The fair value is determined based on the quoted market price of the Company's common shares at the date of the grant. The RSUs are recognized as share-based compensation and are expensed over the vesting period with corresponding amount recorded in equity reserves. All the RSUs vest on August 15, 2025
| Number of RSUs | |
|---|---|
| Outstanding, beginning of the year | - |
| Granted | 1,300,000 |
| Outstanding, end of the period | 1,300,000 |
17. EARNING PER SHARE
| Three months ended | ||
|---|---|---|
| March 31 | ||
| 2025 | March 31 | |
| 2024 | ||
| Basic: | ||
| Net earnings for the period | $ 4,520 | $ 5,301 |
| Weighted average number of shares(000's) | 230,252 | 161,566 |
| Earnings per share-basic | $ 0.02 | $ 0.03 |
| Three months ended | ||
| --- | --- | --- |
| March 31 | March 31 | |
| 2025 | 2024 | |
| Diluted: | ||
| Net earnings for the period | $ 4,520 | $ 5,301 |
| Weighted average number of shares (000's) | 230,252 | 161,566 |
| Incremental shares from dilutive potential shares (000's) | 26,562 | - |
| Weighted average diluted number of shares (000's) | 256,814 | 161,566 |
| Earnings per share-diluted | $ 0.02 | $ 0.03 |
For the three months ended March 31, 2025, diluted weighted average number of shares excluded 788 options, 1,742 warrants as they were out of the money at the end of the reporting period. For the three months ended March 31, 2024, all outstanding stock options and warrants have been excluded from the diluted weighted average number of shares since they were out of the money at the end of the reporting period.
20
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
18. NET REVENUE
The Company is principally engaged in the business of producing a bulk (copper and lead), lead and zinc concentrates in Mexico. The disaggregated revenue information for the three months ended March 31, 2025 and 2024, is as follows:
| Three months ended | ||
|---|---|---|
| March 31 | March 31 | |
| 2025 | 2024 | |
| Bulk concentrate | $ 17,109 | $ 8,929 |
| Lead concentrate | 14,669 | 5,635 |
| Zinc concentrate | 15,379 | 6,748 |
| Provisional pricing adjustments | 243 | 301 |
| Income/(expense) from stream | - | 269 |
| Treatment and selling costs | (8,783) | (5,541) |
| $ 38,617 | $ 16,341 |
The Company sells 100% of its concentrates to one customer.
19. COST OF SALES
| Three months ended | ||
|---|---|---|
| March 31 | March 31 | |
| 2025 | 2024 | |
| Production Costs | $ 21,902 | $ 12,348 |
| Royalties | 1,100 | 852 |
| Inventory changes | (113) | (897) |
| Depreciation | 2,365 | 432 |
| $ 25,254 | $ 12,735 |
20. GENERAL AND ADMINISTRATION
| Three months ended | ||
|---|---|---|
| March 31 | March 31 | |
| 2025 | 2024 | |
| Salaries and employee benefits | $ 1,440 | $ 834 |
| Professional fees | 275 | 427 |
| Corporate and administration | 1,476 | 657 |
| Depreciation and amortization | 46 | 125 |
| $ 3,237 | $ 2,043 |
21. INTEREST AND FINANCE COSTS
| Three months ended | ||
|---|---|---|
| March 31 | March 31 | |
| 2025 | 2024 | |
| Interest | $ 533 | $ 490 |
| Accretion relating to reclamation and rehabilitation | 161 | 162 |
| Accretion and amortization on loans | (42) | (4) |
| Bank fees, penalties, and other | 6 | 5 |
| $ 658 | $ 653 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
22. RELATED PARTIES
In addition to related party transactions described elsewhere in the notes to the consolidated financial statements, the Company had the following related party transactions:
a) Compensation of key management personnel
Key management personnel include persons having the authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The key management personnel of the Company are the members of the Company's executive management team and Board of Directors. Compensation provided to key management personnel is as follows:
| Three months ended | ||
|---|---|---|
| March 31, 2025 | March 31, 2024 | |
| Salaries, bonus and benefits | $ 1,073 | $ 230 |
| Consulting fees | 239 | 200 |
| Share-based compensation | 511 | 111 |
| $ 1,823 | $ 541 |
b) Related party balances
As at March 31, 2025, directors and officers or their related companies were owed $104 (December 31, 2024 - $127) included in accounts payable and accrued liabilities mainly in respect to directors' fees payable and reimbursement of labour obligations. These amounts are unsecured, non-interest bearing and have no specific terms of settlement.
c) Bursametrica Casa de Bolsa, S.A. de C.V. ("Bursametrica")
The Company has a service agreement with Bursametrica whereby the financial institution provides foreign exchange services primarily for the exchange of funds denominated in US dollars for funds denominated in the Mexican Peso. A director of the Company was deemed to have economic influence in the financial institution. This individual ceased to be a director of the Company on December 16, 2024. During the three months ended March 31, 2025, the amount exchanged for currency denominated in the Mexican Peso at exchange rates at the time of the conversion was $nil (March 31, 2024 - $615). As at March 31, 2025, the amount owed to Bursametrica was $nil (December 31, 2024 - $nil).
d) Cozen O'Connor LLP ("Cozen")
Cozen O'Connor is an Amlaw 100 international law firm to which the Company has legal services. A director of the Company was deemed to have economic influence in the law firm. During the three months ended March 31, 2025, the Company incurred legal expenses of $40 (March 31, 2024 - $56).
23. SEGMENTED INFORMATION
The Company is engaged in mining, exploration, and development of mineral properties in Mexico, with corporate offices based in Canada and Mexico and two reportable operating segments. The Company's operating segments are based on internal management reports that are reviewed by the Company's executives in assessing performance. Mining operations consists of the Campo Morado mine, which is currently operational and producing, and Tahuehueto mining project currently in a ramp-up stage and reached commercial production on March 31, 2025.
| March 31 2025 | Total assets | Total liabilities | Capital expenditures | ||
|---|---|---|---|---|---|
| Campo Morado | $ 44,846 | $ | 23,528 | $ | 3,263 |
| Tahuehueto | 94,068 | 26,242 | 1,326 | ||
| Corporate | 8,791 | 28,402 | 134 | ||
| Consolidated | $ 147,705 | $ | 78,172 | $ | 4,723 |
| December 31 2024 | Total assets | Total liabilities | Capital expenditures | ||
| Campo Morado | $ 38,017 | $ | 22,363 | $ | 7,327 |
| Tahuehueto | 92,102 | 28,675 | 14,824 | ||
| Corporate | 4,855 | 36,252 | 117 | ||
| Consolidated | $ 134,974 | $ | 87,290 | $ | 22,268 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
- SEGMENTED INFORMATION (continued)
| Three months ended March 31, 2025 | Campo Morado | Tahuehueto | Corporate | Total |
|---|---|---|---|---|
| Revenue, net | $ 23,017 | $ 15,600 | $ - | $ 38,617 |
| Cost of sales before depreciation and depletion | (14,337) | (8,552) | - | (22,889) |
| Depreciation and depletion in cost of sales | (556) | (1,809) | - | (2,365) |
| Mine operating earnings | 8,124 | 5,239 | - | 13,363 |
| General and administration | (747) | (659) | (1,831) | (3,237) |
| Share-based compensation | - | - | (464) | (464) |
| Foreign exchange gain (loss) | 49 | (129) | 11 | (69) |
| Other operating (expense) income | 139 | (55) | (9) | 75 |
| Operating earnings (loss) | 7,565 | 4,396 | (2,293) | 9,668 |
| Interest and finance costs, net | (197) | (431) | (30) | (658) |
| Gain on debt settlement | - | - | 295 | 295 |
| Change in fair value of financial instruments | - | - | (4,785) | (4,785) |
| Segmented earnings (loss) before income tax | $ 7,368 | $ 3,965 | $ (6,813) | $ 4,520 |
| Three months ended March 31, 2024 | Campo Morado | Tahuehueto | Corporate | Total |
| --- | --- | --- | --- | --- |
| Revenue, net | $ 10,193 | $ 6,148 | $ - | $ 16,341 |
| Cost of sales before depreciation and depletion | (8,163) | (4,140) | - | (12,303) |
| Depreciation and depletion in cost of sales | (432) | - | - | (432) |
| Mine operating earnings | 1,598 | 2,008 | - | 3,606 |
| General and administration | (223) | (289) | (1,531) | (2,043) |
| Share-based compensation | - | 20 | (149) | (129) |
| Foreign exchange (loss) gain | (195) | 236 | (262) | (221) |
| Other operating (expense) income | 743 | (885) | 341 | 199 |
| Operating earnings (loss) | 1,923 | 1,090 | (1,601) | 1,412 |
| Interest and finance costs, net | (187) | (63) | (403) | (653) |
| Gain on debt settlement | - | 2,305 | 2,237 | 4,542 |
| Segmented earnings before income tax | $ 1,736 | $ 3,332 | $ 233 | $ 5,301 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
24. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Fair value hierarchy
Financial instruments included in the consolidated statements of financial position are measured either at fair value or amortized cost. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means.
- Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.
The table below summarizes the valuation methods used to determine the fair value of each financial instrument:
| Financial asset or liability | Methods and assumptions used to estimate fair value |
|---|---|
| Trade receivables | Trade receivables arising from the sales of metal concentrates are subject to provisional pricing, and the final selling price is adjusted at the end of a quotational period. These are marked to market at each reporting date based on the forward price corresponding to the expected settlement date. |
| Derivative Liability | The fair value of the derivative liability arising from a convertible debenture used to cancel debt, is measured using a partial differential equation approach. |
| Stream Agreement | The fair value of the Stream Agreement is determined based on a discounted cash flow model using the assumptions outlined in Note 13. |
The carrying value of cash and cash equivalents, other receivables, other assets, amounts payable and accrued liabilities and loans payable, all of which are carried at amortized cost, approximate their fair value given their short-term nature. Trade receivables and related derivatives and derivative liability arising from the convertible debenture are classified within Level 2 of the fair value hierarchy. The fair value of the Stream Agreement is classified with level 3 of the fair value hierarchy.
24
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
- FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (continued)
| March 31, 2025 | Fair value through profit or loss | Amortized cost | Total | Level 1 | Level 2 | Level 3 | Carrying value approximates Fair Value |
|---|---|---|---|---|---|---|---|
| Financial assets measured at Fair Value | |||||||
| Trade receivables from sale of concentrate | $ 5,630 | $ - | $ 5,630 | $ - | $ 5,630 | $ - | $ - |
| $ 5,630 | $ - | $ 5,630 | $ - | $ 5,630 | $ - | $ - | |
| Financial assets not measured at Fair Value | |||||||
| Cash and cash equivalents | $ - | $ 15,942 | $ 15,942 | $ - | $ - | $ - | $ 15,942 |
| Other receivables | - | 3,961 | 3,961 | - | - | - | 3,961 |
| $ - | $ 19,903 | $ 19,903 | $ - | $ - | $ - | $ 19,903 | |
| Financial liabilities not measured at Fair Value | |||||||
| Amounts payable and accrued liabilities | $ - | $ (24,944) | $ (24,944) | $ - | $ - | $ - | $ (24,944) |
| Derivative liability from stream agreement | (25,904) | (25,904) | - | - | (25,904) | - | |
| Loans payable | - | (9,519) | (9,519) | - | - | - | (9,519) |
| $ (25,904) | $ (34,463) | $ (60,367) | $ - | $ - | $ (25,904) | $ (34,463) | |
| December 31, 2024 | Fair value through profit or loss | Amortized cost | Total | Level 1 | Level 2 | Level 3 | Carrying value approximates Fair Value |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Financial assets measured at Fair Value | |||||||
| Trade receivables from sale of concentrate | $ 1,005 | $ - | $ 1,005 | $ - | $ 1,005 | $ - | $ - |
| $ 1,005 | $ - | $ 1,005 | $ - | $ 1,005 | $ - | $ - | |
| Financial assets not measured at Fair Value | |||||||
| Cash and cash equivalents | $ - | $ 10,207 | $ 10,207 | $ - | $ - | $ - | $ 10,207 |
| Other receivables | - | 6,632 | 6,632 | - | - | - | 6,632 |
| $ - | $ 16,839 | $ 16,839 | $ - | $ - | $ - | $ 16,839 | |
| Financial liabilities not measured at Fair Value | |||||||
| Amounts payable and accrued liabilities | $ - | $ (24,715) | $ (24,715) | $ - | $ - | $ - | $ (24,715) |
| Derivative from convertible debenture | (4,975) | - | (4,975) | - | (4,975) | - | - |
| Derivative liability from stream agreement | (22,804) | - | (22,804) | - | - | (22,804) | - |
| Loans payable | - | (17,037) | (17,037) | - | - | - | (17,037) |
| $ (27,779) | $ (41,752) | $ (69,531) | $ - | $ (4,975) | $ (22,804) | $ (41,752) |
During the three ended March 31, 2025 and 2024, there were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy.
25
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
25. SUPPLEMENTAL CASHFLOW INFORMATION
The changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes for the periods as set out below are as follows:
| Loans | Leases | Royalty stnppn | Derivative liabilities | |
|---|---|---|---|---|
| As at December 31, 2023 | $ 23,518 | $ 7,396 | $ 7,446 | $ - |
| Additions | 2,500 | 5,954 | - | - |
| Interest paid | (1,835) | (1,173) | - | - |
| Interest expense | 2,009 | 1,185 | - | - |
| Embedded derivative liability related to the convertible debenture | (6,555) | - | - | 6,555 |
| Accretion | 418 | - | 811 | - |
| Payments | (770) | (2,317) | - | - |
| Silver deliveries | - | - | (1,837) | - |
| Foreign exchange | - | (35) | - | - |
| Fair value of derivative liability in excess of deferred Revenue | - | - | 14,440 | - |
| Change in fair value of derivative liability | - | - | 1,944 | - |
| Change in fair value of embedded derivative | - | - | - | (1,580) |
| Gain on settlement of debt | (4,542) | - | - | - |
| Loss on modification | 5,988 | - | - | - |
| Fair value of shares issued in debt settlement | (3,694) | - | - | - |
| As at December 31, 2024 | $ 17,037 | $ 11,010 | $ 22,804 | $ 4,975 |
| Additions | - | 133 | - | - |
| Interest paid | (438) | (266) | - | - |
| Interest expense | 272 | 267 | - | - |
| Accretion | 3 | - | - | - |
| Payments | (3,805) | (286) | - | (1,527) |
| Silver deliveries | - | - | (1,684) | - |
| Change in fair value of derivative liability | - | - | 4,784 | - |
| Gain on settlement of debt | (150) | - | - | (145) |
| Fair value of shares issued in debt settlement | (3,400) | - | - | (3,303) |
| As at March 31, 2025 | $ 9,519 | $ 10,858 | $ 25,904 | $ - |
The significant non-cash working capital, financing and investing transactions during the months ended March 31, 2025, and 2024, are as follows:
| Three months ended | ||
|---|---|---|
| March 31 2025 | March 31 2024 | |
| Changes in non-cash operating working capital: | ||
| Amounts receivable and other assets | $ (1,919) | $ (85) |
| Prepaid expenses and deposits | (1,558) | (1,748) |
| Inventories | (793) | (776) |
| Accounts payable and accrued liabilities | (3,087) | (1,653) |
| Purchases of silver bullion for Empress | (2,639) | - |
| Proceeds from Silver deliveries | 378 | - |
| $ (9,618) | $ (4,262) | |
| Changes in non-cash investing and financing activities: | ||
| Share based compensation capitalized | $ 114 | $ 88 |
| Depreciation Capitalized | $ 974 | $ 275 |
| Right of use depreciation capitalized | $ 39 | $ 173 |
| Shares issued on settlement of debt | $ 3,694 | $ 7,005 |
LUCA
Mining Corp.
Notes to the condensed consolidated interim financial statements
(Unaudited - Expressed in thousands of US dollars, unless otherwise indicated)
26. COMMITMENTS AND CONTINGENCIES
a) Commitments
As of March 31, 2025, the Company has commitments of $362 for contracted mining services which are expected to be expended within one year.
b) Contingencies
In the normal course of business, the Company is aware of certain claims and potential claims. The outcome of these claims and potential claims is not determinable at this time, although the Company does not believe these claims and potential claims will have a material adverse effect on the Company's results of operations or financial position.
As at March 31, 2025, the Company has estimated an accrual of $4,381 (December 31, 2024 - $3,717) in contingent liabilities, mainly as follows:
Servicio de Administracion Tributaria Vs Minas de Campo Morado, S.A. de C.V.
During the 2019 fiscal year, the Servicio de Administracion Tributaria ("SAT") performed an audit on the Company's subsidiary, Minas de Campo Morado, S. A. de C. V. ("MCM"), in relation to value added tax ("VAT") and Impuesto Sobre la Renta ("ISR") claimed for the years 2014 and 2015. As a result of the audit, the SAT determined a difference in taxes payable of approximately $810 (MXN$16,000) and possible reduction of accumulated tax losses for $5,290 (MXN$104,000), which the Company is challenging through a legal process. As at December 31, 2023, Minas de Campo Morado, S.A. de C.V. has non-capital losses available for future periods in excess of the claimed amount, thus no additional accrual has been recorded on a contingent basis.
During the 2024 fiscal year, the Mexican court issued a favorable resolution granting MCM 90% of the 2014 and 2015 tax credits, affirming that the deducted expenses complied with income tax regulations. On May 2024, MCM filed an appeal to seek the remaining 10% of the tax credit. This appeal was accepted, leading the upper court to instruct the tax court to issue a new judgment. As of the date of these financial statements, the Company is still awaiting the tax court's new resolution.
Size Solutions, S.A. de C.V.
In March 2020, the Company terminated its business relationship with Size Solutions S.A. de C.V. ("Size"), a payroll service provider for Minas de Campo Morado, S.A. de C.V., and corporate offices in Mexico City. The Company received notice from Size of outstanding amounts payable by the Company as at December 31, 2019 in the amount of $3,152 (MXN$62,000).
27. SUBSEQUENT EVENTS
Warrants and Stock Options
Subsequent to March 31, 2025, the Company issued 18,678,035 common shares for gross proceeds of $6,706 (CAD$ 9,321) through the exercise of 17,090,287 share purchase warrants and 1,587,748 stock options. Additionally, on April 22, 2025, the Company recognized the expiry of 293,666 options and the cancellation of 310,001 options.
27