MD&A

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# MD&A

Source: https://ayagoldsilver.com/_resources/financials/2022/FY-2022-MD%26A-29032023F.pdf
Published: 2023-03-28T00:00:00+00:00
Fetched: 2026-05-05T09:25:05.324+00:00
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## Content

MANAGEMENT’S
DISCUSSION AND
ANALYSIS
For the year and quarter
ended December 31, 2022
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 28, 2023, covers the year ended
December 31, 2022 and should be read in conjunction with the Corporation’s audited consolidated financial statements
and related notes for the years ended December 31, 2022 and 2021.
The Corporation’s December 31, 2022 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 28, 2023, 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 100% 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, Zgounder Regional 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 116,326,740
common shares on March 28, 2023. The Zgounder Silver Mine is in operation while all other projects are at the
exploration and evaluation stage.
Aya Gold & Silver Inc. 2022 - Management Discussion & Analysis 1
2022 ANNUAL HIGHLIGHTS
• Record operations including silver production, recovery, availability, and ore processed
• Record revenue and sales:
o Revenue of $38.2 million, an 11% increase from 2021
o Silver sales of 1,935,154 oz, a 28% increase from 2021
• Operating cash flow for the year of $9.6 million, compared to $17.5 million for 2021
• Cash cost per silver ounce sold of $12.6 compared to $12.0 in 2021 (1).
• Completed 21,645 meters (“m”) of diamond drill hole (“DDH”) drilling at Zgounder
• Conducted a 4,012m DDH program on Zgounder Regional properties
• Explored the Corporation’s regional portfolio located along the South Atlas Fault:
o Boumadine: Expanded budget twice to complete an 18,335m DDH program on targets informed by
comprehensive geophysical and mapping program data
- Results confirmed polymetallic mineralization of the main trend and intersected massive sulfide
mineralized zones in many holes
- Extended the strike to 3.2 kilometers (“km”) towards the south and discovered parallel zones along
the main trend
o Imiter bis: Conducted a 4,754m DDH drilling program and an airborne geophysics survey
• Advanced Zgounder Mine expansion:
o Completed over 4,170m of lateral underground development
o Bulk earthworks are near-complete, and the civil works contractor has commenced work on site
o Advanced detailed engineering and fabrication of the ball mill to over 60%, and manufacturing of crushing
equipment to 90% completion
o Commenced construction of the new tailings and water storage facilities on schedule
• Secured a $100 million debt financing package with the European Bank for Reconstruction and Development
(“EBRD”) and Climate Investment Funds’ Clean Technology Fund (“CTF”) to support expansion of Zgounder
(See section Project Facility for Zgounder Silver Mine Expansion).
• Closed an agreement with the National Office of Hydrocarbons and Mines ("ONHYM") to acquire their 15%
interest in Zgounder for 55 million dirhams (approximately $5.2 million) and five adjacent permits to the Zgounder
Mine for 12 million dirhams (approximately $1.1 million). The acquisition of the 15% interest was completed on
November 28, 2022.
• Solid financial position with $41.8 million of cash, cash equivalents and restricted cash at December 31, 2022,
compared to $84.2 million at December 31, 2021 (2).
• Commenced trading on the OTCQX under the ticker symbol “AYASF”
• Ranked 18th on the 2022 TSX30 as a top-performing stock with a 3-year share appreciation of 245%
(1)
Non-GAAP Measures, refer to pages 19-20.
(2)
Non-GAAP Measures, consisting of cash and cash equivalents of $39,360,138 and restricted cash of $2,489,287 (December 31,
2021, balances of $81,665,834 and $2,519,385 respectively).
Aya Gold & Silver Inc. 2022 - Management Discussion & Analysis 2
2022 OPERATIONAL AND FINANCIAL HIGHLIGHTS
Variation
Key Performance Metrics 2022 2021 ’22 vs ‘21
Operational
Ore Mined (tonnes) 276,013 213,504 29%
Ore Processed (tonnes) 254,976 224,515 14%
Mill Average Feed Grade (g/t Ag) 265 269 (1.5%)
Mill Recovery (%) 86.6% 82.1% 4.5%
Silver Ingots Produced (oz) 855,351 692,392 24%
Silver in Concentrate Produced (oz) 1,025,356 908,254 13%
Total Silver Produced (oz) 1,880,707 1,600,646 17.5%
Silver Ingots Sold (oz) 921,242 640,499 44%
Silver in Concentrate Sold (oz) 1,013,912 874,057 16%
Total Silver Sales (oz) 1,935,154 1,514,556 28%
Avg. Net Realized Silver ($/oz) 19.76 22.65 (13%)
Cash Costs per Silver Ounce Sold (3) 12.63 11.95 5.7%
Financial
Revenue 38,244,921 34,301,914 11%
Cost of sales 27,960,944 18,292,185 53%
Gross Margin 10,283,977 16,009,729 (36%)
Operating Income 1,839,799 5,879,000 (69%)
Net Earnings 1,397,588 1,272,142 10%
Operating Cash Flow 9,648,774 17,502,239 (45%)
Cash and Restricted Cash (4) 41,849,425 84,185,219 (50%)
Shareholders
Earnings per Share – basic 0.013 0.013 NM
Earnings per Share – diluted 0.012 0.012 NM
*NM – Not Meaningful
Operational Highlights
Yearly silver production of 1,880,707 oz, of which 1,025,356 oz as silver concentrate and 855,351 oz as silver ingots.
The 17.5% year-over-year increase in silver ounces produced this year is a direct result of the higher mining rate, mill
throughput and recovery rate.
• Mill average feed grade of 265 g/t Ag was recorded in the year compared to 269 g/t Ag in the prior year, a
decrease of 1.5%.
• Milling operations averaged 699 tonnes per day (“tpd”) for the year compared to 615 tpd in 2021, an increase
of 13.6%. Combined mill recovery averaged 86.6% compared to 82.1% in 2021, an increase of 4.5%.
(3)
The Corporation reports non-GAAP measures, including cash costs per silver ounce and free cash flow, which are widely used in
the mining industry as a benchmark for performance, but do not have a standardized meaning and the methods used by the
Corporation to calculate such measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP
Measures” on pages 19 and 20 for a reconciliation of non-GAAP to GAAP measures.
(4)
See footnote (2) on page 2.
Aya Gold & Silver Inc. 2022 - Management Discussion & Analysis 3
• 21,645m of DDH were completed on the Zgounder mine permit.
• Cost of sales of $27,960,944 (2021 – $18,292,185) with an average cash cost per silver ounce sold during
the year of $12.63 /oz compared to $11.95 /oz in 2021 (5).
Financial Highlights
• The Corporation had cash, cash equivalents and restricted cash of $41,849,425 as at December 31, 2022
compared to $84,185,219 as at December 31, 2021.
• Revenue from silver sales for the year totaled $38,244,921 compared to $34,301,914 in 2021, an increase of
11.5% due to a 28% increase in the volume of sales. The increase in sales volume was partially offset by a
lower average realized price in 2022 of $19.76/oz (2021 – $22.65/oz).
• Operations generated a gross margin of $10,283,977 in 2022 compared to $16,009,729 in 2021, a decrease
of 36%.
• Net income for the year was $1,397,588 (diluted EPS of $0.012), compared to a net income of $1,272,142
(diluted EPS of $0.012) in 2021. Net income for the year was attributable to an increase in production and
silver sales as well as a net finance income of $2,761,242.
• Cash flows generated by operating activities of $9,648,774 for the year, compared to $17,502,239 generated
in operating cash flows for 2021, representing a decrease of 45%.
(5)
Non-GAAP Measures, refer to pages 19-20.
Aya Gold & Silver Inc. 2022 - Management Discussion & Analysis 4
Q4-2022 QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS
Three-month period ended
December 31,
Key Performance Metrics 2022 2021 Variation
Operational
Ore Mined (tonnes) 78,415 61,092 28%
Ore Processed (tonnes) 63,283 65,855 (3.9%)
Average Grade (g/t Ag) 364 248 47%
Mill Recovery (%) 89.9% 82.4% 7.5%
Silver Ingots Produced (oz) 327,625 172,655 90%
Silver in Concentrate Produced (oz) 333,996 261,087 28%
Total Silver Produced (oz) 661,621 433,742 53%
Silver Ingots Sold (oz) 350,943 129,500 171%
Silver in Concentrate Sold (oz) 318,563 209,091 52%
Total Silver Sales (oz) 669,506 338,591 98%
Avg. Net Realized Silver ($/oz) 19.90 23.70 (16%)
Cash Costs per Silver Ounce Sold (6) 10.94 14.50 (25%)
Financial
Revenues 13,321,806 8,025,122 66%
Cost of Sales 8,602,601 4,634,254 86%
Gross Margin 4,719,205 3,390,868 39%
Operating Income 2,914,344 408,806 613%
Net Earnings (loss) 1,963,362 (1,086,033) 281%
Operating Cash Flows 3,639,235 2,087,449 74%
Cash and Restricted Cash (7) 41,849,425 84,185,219 (50%)
Shareholders
Earnings (Loss) per Share – basic 0.019 (0.011) NM
Earnings (Loss) per Share – diluted 0.017 (0.011) NM
Operational Highlights
• Quarterly silver production of 661,621 oz, comprising 333,996 oz as silver concentrate and 327,625 oz as silver
ingots. The 53% quarter-over-quarter increase in silver ounces produced is a direct result of significantly higher
grade processed, and recovery.
• Mill average feed grade of 364 g/t Ag was recorded in the quarter compared to 248 g/t Ag in the same quarter the
year prior, an increase of 47%.
• Milling operations reached 688 tpd, surpassing design capacity of 670 tpd.
• Average combined mill recovery increased to 89.9% in the quarter compared to 82.4% in Q4-2021, an increase of
7.5%.
(6)
Non-GAAP Measures, refer to pages 19-20.
(7)
See footnote (2) on page 2.
Aya Gold & Silver Inc. 2022 - Management Discussion & Analysis 5
• Plant availabilities reached 81% and 97% 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.
• A total of 6,952m of drilling was completed on the Zgounder mine permit in Q4-2022, 4,012m on Zgounder Regional
and 6,563m on Boumadine.
• Cost of sales of $8,602,601 (Q4-2021 – $4,634,254) with an average cash cost (8) per oz of $10.94 compared to
$14.50/oz in Q4-2021. The decrease in the cash cost per silver ounces sold was primarily due to a 47% increase
in average grade

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