MD&A

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# MD&A

Source: https://ayagoldsilver.com/_resources/financials/2021/Q4-FY2021-MDA-03292022FR.pdf
Published: 2022-03-29T00:00:00+00:00
Fetched: 2026-05-05T09:25:10.497+00:00
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## Content

# MD&A
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
For the year and quarter
ended December 31, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis (“MD&A”) of the operations, results, and financial position of Aya Gold &
Silver Inc. (“Aya”) and its subsidiaries (together the “Corporation”), dated March 29, 2022, covers the year ended
December 31, 2021 and should be read in conjunction with the Corporation’s audited consolidated financial statements
and related notes for the year ended December 31, 2021.
The Corporation’s December 31, 2021 consolidated financial statements and the financial information contained in this
MD&A have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and interpretation of the International Financial Reporting
Interpretations Committee (“IFRIC”). All financial results presented in this MD&A are expressed in United States dollars
unless otherwise indicated.
This MD&A contains forward-looking information that is subject to risk factors set out in a cautionary note in this MD&A
under “Cautionary Statement Regarding Forward-Looking Information”. All information contained in the Corporation’s
consolidated financial statements and this MD&A has been reviewed by the Audit Committee and approved by the
Corporation’s Board of Directors. This MD&A is current as of March 29, 2022, unless otherwise stated.
DESCRIPTION OF THE BUSINESS
Aya Gold & Silver Inc. is a Canadian-based precious metals mining corporation which focuses on the exploration,
development, production, and acquisition of precious metals mining projects. The Corporation is concentrated on
producing silver and exploration activities at its flagship project, the Zgounder property. Aya owns 85% of Zgounder
Millennium Silver Mine S.A (“ZMSM”), which owns the Zgounder property. The Corporation also owns 85% of the
Boumadine polymetallic project and owns the permits related to the Amizmiz, Azegour and Imiter-bis properties. These
properties are located in the Kingdom of Morocco. Following the acquisition of Algold Resources Ltd. (“Algold”)
completed on June 10, 2021 (See section Acquisition of Algold Resources Ltd.), Aya owns 75% of the Tijirit project
located in Mauritania.
Aya was incorporated under the Canada Business Corporations Act; its financial year-end is December 31, and it trades
on the Toronto Stock Exchange under the symbol “AYA”. Aya's issued and outstanding share capital totals 104,959,503
common shares on March 29, 2022. The Zgounder Silver Mine is in operation while all other projects are at the
exploration and evaluation stage.
Aya Gold & Silver Inc. 2021 - Management Discussion & Analysis 1
2021 ANNUAL HIGHLIGHTS
• Record year in terms of silver production, revenues and operating cash flow.
• Achieved acceptable operating standard at Zgounder which the Corporation can now optimize:
o Throughput averaged 609 tonnes per day ("tpd") during the year, exceeding design capacity in Q4-2021
by reaching 716 tpd.
o Combined mill recovery averaged 83%.
o Global availability of 86% and 90.5% for the flotation and cyanidation plants, respectively.
• Successful drill program at Zgounder:
o Increased measured and indicated (“M&I”) mineral resources by 116% to 96 (“Moz”) of silver (“Ag”).
Inferred resources grew to 6Moz Ag.
o 42,000m campaign returned 37 of Zgounder’s top 50 best intercepts.
• Zgounder expansion feasibility study advanced to plan in 2021 and was released in February 2022.
• Initial fieldwork from Imiter bis identified a 4km potential strike and five priority drill targets:
o Scout drilling confirmed the presence of gold (“Au”) and Ag in several discovery holes.
• Successfully completed a CA$70 million ($55 million) bought deal public offering.
• Robust financial position with $84.2 million of cash, cash equivalents and restricted cash.
• Launched ESG program and inaugural sustainability reporting.
• Acquired Algold and completed 85% of the Tijirit Project feasibility study by year-end.
• Expanded total land position by 40% in the Zgounder Regional and Azegour areas.
• Ranked #12 on the 2021 TSX30 as a top-performing stock, with a 3-year share appreciation of +253%.
2021 OPERATIONAL AND FINANCIAL HIGHLIGHTS
Variation
Key Performance Metrics 2021 2020 ’21 vs ‘20
Operational
Ore Processed (tonnes) 224,515 128,923 74%
Average Grade (g/t Ag) 269 255 5%
Mill Recovery (%) 82.1% 68.7% 13%
Silver Ingots Produced (oz) 692,392 439,448 58%
Silver in Concentrate Produced (oz) 908,254 286,871 217%
Total Silver Produced (oz) 1,600,646 726,319 120%
Silver Ingots Sold (oz) 640,499 395,489 62%
Silver in Concentrate Sold (oz) 874,057 266,079 228%
Total Silver Sales (oz) 1,514,556 661,567 129%
Avg. Net Realized Silver ($/oz) 22.65 20.89 8%
Avg. Silver Production Cost ($/oz) 11.43 13.46 (15)%
Financial
Revenues 34,301,914 13,822,709 148%
Cost of Sales 18,292,185 9,779,055 87%
Gross Margin 16,009,729 4,043,654 296%
Operating Income (Loss) 5,879,000 (1,692,329) 447%
Net Earnings (Loss) 1,272,142 (1,779,590) 171%
Operating Cash Flows 17,540,535 1,353,451 1,196%
Cash and Restricted Cash 84,185,219 33,291,691 153%
Shareholders
Earnings (Loss) per Share – basic 0.013 (0.021)
Earnings (Loss) per Share – diluted 0.012 (0.021)
Aya Gold & Silver Inc. 2021 - Management Discussion & Analysis 2
Operational Highlights
• Yearly silver production of 1,600,646 oz, comprised of 908,254 oz as silver concentrate and 692,392 oz as silver
ingots. The 120% year-over-year increase in silver ounces produced is a direct result of the operational efficiencies
generated by our turnaround plan.
• Milling operations averaged 609 tonnes per day (“tpd”) throughput the year. By the end of the year, both plants
were operating at or above their nameplate capacities.
• Average combined recovery increased to 82% compared to 69% in 2020, an increase of 13%.
• In 2021, 55,449m of drilling were completed in 2021 at Zgounder and an additional 4,380m at Imiter bis. These
drill campaigns were successful, increasing M&I resources at Zgounder by 116% and hitting a discovery hole
containing silver and gold at Imiter bis.
• Cost of sales of $18,292,185 (2020 – $9,779,055) with an average cost per oz of $11.43/oz compared to $13.46/oz
in last year.
Financial Highlights
• The Corporation had cash, cash equivalents and restricted cash of $84,185,219 as at December 31, 2021
compared to $33,291,691 as at December 31, 2020.
• Revenue from silver sales for the year totaled $34,301,914 compared to $13,822,709 in 2020, an increase of
148%. The average realized price in 2021 was $22.65/oz (2020-$20.89/oz). In addition, the Corporation had
$1,464,523 in ingot inventory held in consignment ($63,811 in Q4-2020) as the Corporation decided to hold higher
inventory as silver prices at the end of the year were abnormally low. These ingots were sold in Q1-2022.
• Operations generated a gross margin of $16,009,729 in 2021 compared to $4,043,654 in 2020, an increase of
296% due to an increase of volume of sales (1,514,556 oz in 2021 compared to 661,567 oz in 2020).
• Net income for the year was $1,272,142 (EPS of $0.013), compared to a net loss of $(1,779,590) (EPS of $(0.021))
in 2020. Net income for the yar was attributable to an important increase in production and silver sales. In addition,
the Corporation was also charged an additional 5% COVID-related tax temporarily levied by the Moroccan tax
authorities totalling $811,555.
• Cash flows generated by operating activities of $17,540,535 for the year, compared to $1,353,451 generated in
operating cash flows for 2020, representing an increase of 1,196%.
Aya Gold & Silver Inc. 2021 - Management Discussion & Analysis 3
Q4-2021 QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS
Three-month period ended
December 31,
Key Performance Metrics 2021 2020 Variation
Operational
Ore Processed (tonnes) 65,855 52,115 26%
Average Grade (g/t Ag) 248 309 (20)%
Mill Recovery (%) 82.4% 78.9% 4%
Silver Ingots Produced (oz) 172,655 193,264 (11)%
Silver in Concentrate Produced (oz) 261,087 214,722 22%
Total Silver Produced (oz) 433,742 407,986 6%
Silver Ingots Sold (oz) 129,500 177,376 (27)%
Silver in Concentrate Sold (oz) 209,091 266,079 (21%)
Total Silver Sales (oz) 338,591 443,454 (24%)
Avg. Net Realized Silver ($/oz) 23.70 21.44 11%
Avg. Silver Production Cost ($/oz) 10.68 12.23 (13)%
Financial
Revenues 8,025,122 9,508,703 (16)%
Cost of Sales 4,634,254 4,991,686 (7)%
Gross Margin 3,390,868 4,517,017 (25)%
Operating Income 408,806 3,595,137 (89)%
Net (Loss) Earnings (1,086,033) 1,635,140 (166)%
Operating Cash Flows 2,088,055 3,484,673 (40)%
Cash and Restricted Cash 84,185,219 33,291,691 153%
Shareholders
(Loss) Earnings per Share – basic (0.011) 0.021
(Loss) Earnings per Share – diluted (0.011) 0.021
Operational Highlights
• Quarterly silver production of 433,742 oz, comprising 261,087 oz as silver concentrate and 172,655 oz as silver
ingots. The 6% year-over-year increase in silver ounces produced is a direct result of increased throughput and
recovery at the flotation plant.
• Milling operations reached 716 tpd, surpassing design capacity.
• Average combined recovery increased to 82.4% compared to 78.9% in Q4-2020, an increase of 4%.
• Plant availabilities reached 89% and 95% for the flotation and cyanidation plants respectively. Availability at the
flotation plant was affected by a four-day planned shutdown at the end of December.
• 6,173m of drilling were completed at Zgounder in Q4-2021 along with 4,381m at Imiter bis. The Corporation
published its new resource estimate for Zgounder which included 96Moz Ag of M&I resources and 6Moz Ag of
inferred resources, an increase of 116% compared to the previous resource estimate.
• Cost of sales of $4,634,254 (Q4-2020 – $4,991,686) with an average cost per oz of $10.68/oz compared to
$12.23/oz in Q4-2020.
Aya Gold & Silver Inc. 2021 - Management Discussion & Analysis 4
Financial Highlights
• Revenue from silver sales for the quarter totaled $8,025,122 (Q4-2020 – $9,508,703), a decrease of 16%.
representing an average realized price of $23.70/oz. (Q4-2020-$21.44/oz). In addition, the Corporation had
$1,464,523 in ingot inventory held in consignment ($63,811 in Q4-2020) as the Corporation decided to hold higher
inventory as silver prices at the end of the year were abnormally low. These ingots were sold in Q1-2022.
• Operations generated a gross margin of $3,390,868 compared to $4,517,017 in Q4-2020, a decrease of 25%.
This was due to the decrease in the volume of sales during the period (338,591 oz sold in Q4 2021 compared to
443,454 oz sold in Q4 2020).
• Net income for the period was ($1,086,033) (EPS of $(0.011)), compared to a net income of $1,635,140 (EPS of
$0.021) in Q4-2020. In addition, the Corporation was also charged an additional 5% COVID-related tax temporarily
levied by the Moroccan tax authorities totalling $811,555.
• Cash flows generated by operating activities of $2,088,055 for the period, compared to $3,484,673 generated in
operating cash flows for Q4-2020, representing a decrease of 40%.
September Corporate Financing
On September 15, 2021, the Corporation closed a bought deal public financing and issued 6,830,000 common shares
of the Corporation at a price of CA$10.25 per common share for gross proceeds of CA$70,007,500 ($55,202,199). The
common shares were issued pursuant to a short form prospectus dated September 9, 2021, filed in each Canadian
province. The Corporation paid a total of $3,440,075 in commissions, legal fees, filing fees and other fees.
The proceeds from the financing are intended for the expansion of the Zgounder Mine, f

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