Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the
“Company”) today announced its second quarter 2024 financial and
operating results. The Company will host an investor and analyst
call on August 7, 2024, details of which are provided below.
The Company has a 70% interest in the Los Gatos
Joint Venture (“LGJV”), which in turn owns the Cerro Los Gatos
(“CLG”) mine in Mexico. Production for the second quarter of 2024
was previously disclosed on July 9, 2024. The Company’s reporting
currency is US dollars.
Dale Andres, CEO of Gatos Silver, commented:
“The LGJV generated record revenue and free cash flow in quarter,
reflecting significantly lower unit operating costs and higher
metal prices combined with the strong previously reported
production at CLG. The LGJV has distributed $95 million to its
partners so far this year through July, with our share being $66.5
million.
“We remain on track to achieve 2024 production
and cost guidance and we continue to expect that our updated life
of mine plan scheduled for the third quarter of 2024 will further
extend CLG’s mine life. We are also continuing to follow-up on the
exciting initial exploration results we announced on July 23, as we
continue to advance our district exploration program.”
Summary
LGJV Q2 2024 results compared to Q2 2023 (100%
basis):
- Record revenue of $94.2 million, up
62% from $58.3 million
- Cost of sales $32.0 million, up 24%
from $25.8 million
- Record net income $20.5 million, up
from $0.7 million
- Record EBITDA $54.1 million1, up
101% from $27.0 million
- Record cash flow from operations of
$54.5 million, up 59% from $34.3 million
- Record free cash flow $40.8
million1, up 107% from $19.7 million
- Silver production 2.30 million
ounces, up 15% from 2.00 million ounces
- Silver equivalent production of
3.88 million ounces2, up 18% from 3.30 million ounces
- By-product AISC of $6.571 per ounce
of payable silver, down 54% from $14.32
- Co-product AISC of $15.261 per
ounce of payable silver, down 13% from $17.55
Gatos Silver Q2 2024 results compared to Q2
2023:
- Net income of $9.2 million, up from
net loss of $3.6 million
- Basic and diluted earnings per
share of $0.13, up from loss of $0.05
- EBITDA of $8.2 million1, up from a
$3.5 million loss
- Cash flow provided by operating
activities and free cash flow of $11.8 million1, compared to cash
flow used by operating activities and free cash outflow of $3.8
million1
_________________________________ 1 See
“Non-GAAP Financial Measures” below.2 See definition of silver
equivalent production below
At the LGJV, the 62% increase in revenue in Q2
2024, compared to the same quarter in 2023, was primarily
attributable to higher sales volumes and higher realized metal
prices after final settlement adjustments. Cost of sales increased
by 24% primarily due to a 29% increase in concentrate sales volumes
and the associated increase in mining and milling rates. Site
operating unit costs of $101.28/t milled were 3% lower than in Q2
2023. By-product AISC1 per ounce of payable silver decreased to
$6.57 primarily due to significantly higher by-product production
and sales volumes, further supported by lower sustaining capital1
expenditures during the quarter.
For Gatos Silver, higher net income, earnings
per share and EBITDA1 for Q2 2024 were primarily attributable to
the higher equity income from the LGJV. This was partially offset
by an increase in general and administrative expenses, mainly due
to higher non-cash stock-based compensation expenses of $1.6
million and higher legal and consulting expenses which are not
expected to be recurring beyond 2024.
As of June 30, 2024, the Company had a cash
balance of $82.5 million, up 17% from $70.6 million at the end of
March 2024. The increase in cash was due to receipt of a $17.5
million capital distribution during the second quarter. On July 29,
2024, which was subsequent to the quarter end, the LGJV made a
capital distribution to its partners of $40.0 million of which the
Company received $28.0 million. As of July 31, 2024, the Company
had a cash balance of $108.9 million and the LGJV had a cash
balance of $24.4 million. The Company continues to be debt free
with $50.0 million available under the revolving credit
facility.
Financial and Operating Results
Below is select operational and financial
information for the three and six months ended June 30, 2024 and
2023. For a detailed discussion of financial and operating results
refer to the Form 10-Q for the three months ended June 30, 2024,
filed on August 6, 2024 on both the EDGAR and SEDAR+ systems
and posted on the Company’s website at https://gatossilver.com.
Los Gatos Joint Venture
|
LGJV 100% BasisSelected Financial
Information (Unaudited) |
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in millions, except where otherwise stated) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Revenue |
$ |
94.2 |
|
$ |
58.3 |
|
$ |
166.4 |
|
$ |
128.1 |
|
|
Cost of sales |
|
32.0 |
|
|
25.8 |
|
|
62.7 |
|
|
51.8 |
|
|
Royalties and duties |
|
0.7 |
|
|
0.3 |
|
|
1.0 |
|
|
0.7 |
|
|
Exploration |
|
1.6 |
|
|
0.7 |
|
|
3.0 |
|
|
1.1 |
|
|
General and administrative |
|
4.1 |
|
|
4.4 |
|
|
8.4 |
|
|
8.3 |
|
|
Depreciation, depletion and amortization |
|
20.8 |
|
|
22.0 |
|
|
41.1 |
|
|
42.8 |
|
|
Other expense (income) |
|
2.0 |
|
|
(0.4 |
) |
|
2.2 |
|
|
(0.9 |
) |
|
Income tax expense |
|
12.5 |
|
|
4.7 |
|
|
17.3 |
|
|
10.7 |
|
|
Net income and comprehensive
income2 |
$ |
20.5 |
|
$ |
0.7 |
|
$ |
30.7 |
|
$ |
13.4 |
|
|
Sustaining capital1 |
$ |
11.4 |
|
$ |
13.1 |
|
$ |
20.3 |
|
$ |
20.7 |
|
|
Resource development drilling expenditures1 |
$ |
1.9 |
|
$ |
4.0 |
|
$ |
5.1 |
|
$ |
7.0 |
|
|
EBITDA1 |
$ |
54.1 |
|
$ |
27.0 |
|
$ |
89.3 |
|
$ |
66.6 |
|
|
Cash provided by operating activities |
$ |
54.5 |
|
$ |
34.3 |
|
$ |
91.8 |
|
$ |
74.4 |
|
|
Free cash flow1 |
$ |
40.8 |
|
$ |
19.7 |
|
$ |
66.3 |
|
$ |
48.4 |
|
|
|
|
|
|
|
|
Operating Results (CLG 100% Basis) |
|
|
|
|
|
Tonnes milled (dmt) |
|
294,869 |
|
|
265,342 |
|
|
586,983 |
|
|
525,770 |
|
|
Tonnes milled per day (dmt) |
|
3,240 |
|
|
2,916 |
|
|
3,225 |
|
|
2,905 |
|
|
Average Grades |
|
|
|
|
|
Silver grade (g/t) |
|
273 |
|
|
265 |
|
|
279 |
|
|
296 |
|
|
Zinc grade (%) |
|
4.55 |
|
|
4.00 |
|
|
4.27 |
|
|
3.96 |
|
|
Lead grade (%) |
|
2.06 |
|
|
1.85 |
|
|
1.92 |
|
|
1.86 |
|
|
Gold grade (g/t) |
|
0.29 |
|
|
0.26 |
|
|
0.29 |
|
|
0.28 |
|
|
Production - Contained Metal |
|
|
|
|
|
Silver ounces (millions) |
|
2.30 |
|
|
2.00 |
|
|
4.67 |
|
|
4.43 |
|
|
Zinc pounds – in zinc conc. (millions) |
|
19.1 |
|
|
14.8 |
|
|
34.9 |
|
|
28.9 |
|
|
Lead pounds – in lead conc. (millions) |
|
12.0 |
|
|
9.7 |
|
|
22.2 |
|
|
19.1 |
|
|
Gold ounces – in lead conc. (thousands) |
|
1.36 |
|
|
1.20 |
|
|
2.75 |
|
|
2.58 |
|
|
Silver equivalent ounces (millions)2 |
|
3.88 |
|
|
3.30 |
|
|
7.58 |
|
|
6.99 |
|
|
Co-product cash cost per ounce of payable silver equivalent1 |
$ |
11.83 |
|
$ |
12.72 |
|
$ |
11.70 |
|
$ |
11.49 |
|
|
By-product cash cost per ounce of payable silver1 |
$ |
0.96 |
|
$ |
7.10 |
|
$ |
3.66 |
|
$ |
4.66 |
|
|
Co-product AISC per ounce of payable silver equivalent1 |
$ |
15.26 |
|
$ |
17.55 |
|
$ |
14.73 |
|
$ |
14.94 |
|
|
By-product AISC per ounce of payable silver1 |
$ |
6.57 |
|
$ |
14.32 |
|
$ |
8.42 |
|
$ |
9.80 |
|
|
|
|
|
|
|
|
Sales volumes by payable metal |
|
|
|
|
|
Silver ounces (millions) |
|
2.03 |
|
|
1.81 |
|
|
4.27 |
|
|
4.03 |
|
|
Zinc pounds – in zinc conc. (millions) |
|
15.9 |
|
|
11.7 |
|
|
29.6 |
|
|
23.7 |
|
|
Lead pounds – in lead conc. (millions) |
|
11.0 |
|
|
9.0 |
|
|
21.0 |
|
|
17.9 |
|
|
Gold ounces – in lead conc. (thousands) |
|
0.97 |
|
|
0.93 |
|
|
2.15 |
|
|
2.06 |
|
|
Copper pounds – in lead conc. (millions) |
|
0.03 |
|
|
— |
|
|
0.10 |
|
|
— |
|
|
|
|
|
|
|
|
Average realized price by payable metal |
|
|
|
|
|
Average realized price per silver ounce4 |
$ |
29.00 |
|
$ |
24.11 |
|
$ |
25.80 |
|
$ |
25.48 |
|
|
Average realized price per zinc pound4 |
$ |
1.53 |
|
$ |
0.99 |
|
$ |
1.32 |
|
$ |
1.21 |
|
|
Average realized price per lead pound4 |
$ |
0.96 |
|
$ |
0.92 |
|
$ |
0.91 |
|
$ |
0.99 |
|
|
Average realized price per gold ounce4 |
$ |
2,200 |
|
$ |
1,817 |
|
$ |
2,057 |
|
$ |
1,801 |
|
|
Average realized price per copper pound4 |
$ |
3.74 |
|
$ |
— |
|
$ |
3.83 |
|
$ |
— |
|
1 See Non-GAAP Financial Measures below2 Totals
may not add up due to rounding3 Silver equivalent production for
2024 is calculated using prices of $23/oz silver, $1.20/lb zinc,
$0.90/lb lead and $1,800/oz gold to “convert” zinc, lead and gold
production contained in concentrate to “equivalent” silver ounces
(contained metal, multiplied by price, divided by silver price).
For 2023, silver equivalent production was calculated using prices
of $22/oz silver, $1.20/lb zinc, $0.90/lb lead and $1,700/oz gold.
For comparative purposes, the calculated silver equivalent
production for the three and six months ended June, 2023 would be
3.24 million ounces and 6.89 million ounces, respectively, using
price assumptions for 2024.4 Realized prices include the impact of
final settlement adjustments from sales
Gatos Silver, Inc.
|
Selected Financial Information (Unaudited) |
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in millions, except where otherwise stated) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
General and Administrative |
$ |
7.9 |
|
$ |
6.1 |
|
$ |
14.8 |
|
$ |
11.7 |
|
|
Total expenses |
|
7.9 |
|
|
6.1 |
|
|
14.9 |
|
|
11.8 |
|
|
Equity income in affiliates |
|
14.5 |
|
|
1.5 |
|
|
21.8 |
|
|
6.5 |
|
|
Other income, net |
|
2.7 |
|
|
1.1 |
|
|
5.0 |
|
|
2.5 |
|
|
Total net other income |
|
17.2 |
|
|
2.6 |
|
|
26.8 |
|
|
9.0 |
|
|
Net income (loss) and comprehensive income
(loss)2 |
$ |
9.2 |
|
$ |
(3.6 |
) |
$ |
11.7 |
|
$ |
(2.8 |
) |
|
Net income (loss) and comprehensive income (loss) per share
(basic and diluted) |
$ |
0.13 |
|
$ |
(0.05 |
) |
$ |
0.17 |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
EBITDA1 |
$ |
8.2 |
|
$ |
(3.5 |
) |
$ |
10.0 |
|
$ |
(2.6 |
) |
|
Cash provided (used) by operating activities |
$ |
11.8 |
|
$ |
(3.8 |
) |
$ |
26.9 |
|
$ |
(7.9 |
) |
|
Free cash flow1 |
$ |
11.8 |
|
$ |
(3.8 |
) |
$ |
26.9 |
|
$ |
(7.9 |
) |
1 See Non-GAAP Financial Measures below2 Totals
may not add up due to rounding
2024 Guidance (CLG 100% basis)
Gatos Silver continues to expect plant
throughput in 2024 to average in the top half of our previously
announced guidance range of 3,000 and 3,300 tonnes processed per
day and compares to 2,935 tonnes per day in 2023. Mine
debottlenecking efforts are continuing to help achieve our
medium-term target of sustaining 3,500 tonnes per day beyond 2024,
or 40% above original design capacity.
We continue to expect both silver equivalent and
silver production to be in the top half of our previously announced
guidance ranges of 13.5 to 15.0 million ounces and 8.4 to 9.2
million ounces respectively for the full year in 2024, and full
year co-product and by-product AISCs to remain in the lower half of
our original guidance ranges of $14.00 to $16.00 per ounce of
payable silver equivalent and $9.50 to $11.50 per ounce of payable
silver.
Financial Results Webcast and Conference
Call
Investors and analysts are invited to attend the
financial results webcast and conference call as follows:
Date: Wednesday, August 7, 2024
Time: 11:00 a.m. ET
Listen-Only Webcast:
https://events.q4inc.com/attendee/924567096
Direct Event Registration Link (for Analysts
only): https://registrations.events/direct/Q4I98433134
An archive of the webcast will be available on
the Company’s website at: https://gatossilver.com within 24
hours.
About Gatos Silver
Gatos Silver is a silver dominant exploration,
development and production company that discovered a new silver and
zinc-rich mineral district in southern Chihuahua State, Mexico. As
a 70% owner of the Los Gatos Joint Venture (“LGJV”), the Company is
primarily focused on operating the Cerro Los Gatos mine and on
growth and development of the Los Gatos district. The LGJV includes
approximately 103,000 hectares of mineral rights, representing a
highly prospective and under-explored district with numerous
silver-zinc-lead epithermal mineralized zones identified as
priority targets.
Qualified Person
Scientific and technical disclosure in this
press release was approved by Anthony (Tony) Scott, P.Geo., Senior
Vice President of Corporate Development and Technical Services of
Gatos Silver who is a “Qualified Person” as defined in S-K 1300 and
NI 43-101.
Non-GAAP Financial Measures
We use certain measures that are not defined by
GAAP to evaluate various aspects of our business. These non-GAAP
financial measures are intended to provide additional information
only and do not have any standardized meaning prescribed by GAAP
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. The
measures are not necessarily indicative of operating profit or cash
flow from operations as determined under GAAP.
Cash Costs and All-In Sustaining
Costs
Cash costs and all-in sustaining costs (“AISC”)
are non-GAAP measures. AISC was calculated based on guidance
provided by the World Gold Council (“WGC”). WGC is not a regulatory
industry organization and does not have the authority to develop
accounting standards for disclosure requirements. Other mining
companies may calculate AISC differently as a result of differences
in underlying accounting principles and policies applied, as well
as definitional differences of sustaining versus expansionary (i.e.
non-sustaining) capital expenditures based upon each company’s
internal policies. Current GAAP measures used in the mining
industry, such as cost of sales, do not capture all of the
expenditures incurred to discover, develop and sustain production.
Therefore, we believe that cash costs and AISC are non-GAAP
measures that provide additional information to management,
investors and analysts that aid in the understanding of the
economics of the Company’s operations and performance compared to
other producers and provides investors visibility by better
defining the total costs associated with production.
Cash costs include all direct and indirect
operating cash costs related directly to the physical activities of
producing metals, including mining, processing and other plant
costs, treatment and refining costs, general and administrative
costs, royalties and mining production taxes. AISC includes total
production cash costs incurred at the LGJV’s mining operations plus
sustaining capital expenditures. The Company believes this measure
represents the total sustainable costs of producing silver from
current operations and provides additional information of the
LGJV’s operational performance and ability to generate cash flows.
As the measure seeks to reflect the full cost of silver production
from current operations, new project and expansionary capital at
current operations are not included. Certain cash expenditures such
as exploration, new project spending, tax payments, dividends, and
financing costs are not included.
EBITDA
Management uses earnings before interest, income
tax, depreciation, depletion and amortization (“EBITDA”) to
evaluate the Company’s operating performance, to plan and forecast
its operations, and assess leverage levels and liquidity measures.
The Company believes the use of EBITDA reflects the underlying
operating performance of our core mining business and allows
investors and analysts to compare results of the Company to similar
results of other mining companies. EBITDA do not represent, and
should not be considered an alternative to, net income (loss) or
cash flow from operations as determined under GAAP.
Free Cash Flow
Management uses free cash flow as a non-GAAP
measure to analyze cash flows generated from operations. Free cash
flow is cash provided by (used in) operating activities less cash
flow from (used in) investing activities, as presented on the
condensed consolidated statements of cash flows. The Company
believes free cash flow is also useful as one of the bases for
comparing the Company’s performance with its competitors. Although
free cash flow and similar measures are frequently used as measures
of cash flows generated from operations by other companies, the
Company’s calculation of free cash flow is not necessarily
comparable to such other similarly titled captions of other
companies.
Reconciliation of GAAP to non-GAAP
measures
The table below presents a reconciliation
between the most comparable GAAP measure of the LGJV’s expenses to
the non-GAAP measures of (i) cash costs, (ii) cash costs, net of
by-product credits, (iii) co-product AISC and (iv) by-product AISC
for our operations.
|
CLG 100% BasisFinancial |
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in thousands, except where otherwise stated) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Expenses |
$ |
59,180 |
|
$ |
53,215 |
|
$ |
116,193 |
|
$ |
104,839 |
|
|
Depreciation, depletion and amortization |
|
(20,821 |
) |
|
(22,027 |
) |
|
(41,077 |
) |
|
(42,846 |
) |
|
Exploration1 |
|
(1,601 |
) |
|
(657 |
) |
|
(2,972 |
) |
|
(1,120 |
) |
|
Treatment and refining costs2 |
|
2,339 |
|
|
3,917 |
|
|
6,296 |
|
|
8,072 |
|
|
Cash costs (A) |
$ |
39,097 |
|
$ |
34,448 |
|
$ |
78,440 |
|
$ |
68,945 |
|
|
Sustaining capital3 |
|
11,357 |
|
|
13,100 |
|
|
20,301 |
|
|
20,742 |
|
|
Co-product AISC (B) |
$ |
50,454 |
|
$ |
47,548 |
|
$ |
98,741 |
|
$ |
89,687 |
|
|
By-product credits4 |
|
(37,144 |
) |
|
(21,574 |
) |
|
(62,818 |
) |
|
(50,161 |
) |
|
AISC, net of by-product credits (C) |
$ |
13,310 |
|
$ |
25,974 |
|
$ |
35,923 |
|
$ |
39,526 |
|
|
Cash costs, net of by-product credits (D) |
$ |
1,953 |
|
$ |
12,874 |
|
$ |
15,622 |
|
$ |
18,784 |
|
|
|
|
|
|
|
|
Payable ounces of silver equivalent5 (E) |
|
3,306 |
|
|
2,709 |
|
|
6,703 |
|
|
6,002 |
|
|
Co-product cash cost per ounce of payable silver equivalent
(A/E) |
$ |
11.83 |
|
$ |
12.72 |
|
$ |
11.70 |
|
$ |
11.49 |
|
|
Co-product AISC per ounce of payable silver equivalent (B/E) |
$ |
15.26 |
|
$ |
17.55 |
|
$ |
14.73 |
|
$ |
14.94 |
|
|
|
|
|
|
|
|
Payable ounces of silver (F) |
|
2,025 |
|
|
1,814 |
|
|
4,268 |
|
|
4,033 |
|
|
By-product cash cost per ounce of payable silver (D/F) |
$ |
0.96 |
|
$ |
7.10 |
|
$ |
3.66 |
|
$ |
4.66 |
|
|
By-product AISC per ounce of payable silver (C/F) |
$ |
6.57 |
|
$ |
14.32 |
|
$ |
8.42 |
|
$ |
9.80 |
|
1 Exploration costs are not related to current
mining operations.2 Represent reductions on customer invoices and
are included in revenue of the LGJV combined statement of
operations and comprehensive income.3 Sustaining capital excludes
resource development drilling costs related to resource development
drilling of the South- East Deeps zone.4 By-product credits reflect
realized metal prices of zinc, lead and gold for the applicable
period, which includes any final settlement adjustments from prior
periods.5 Silver equivalents utilize the average realized prices
during the six months ended June 30, 2024, of $25.80/oz silver,
$1.32/lb zinc, $0.91/lb lead, $2,057/oz gold and $3.83/lb copper
and the average realized prices during the three months ended June
30, 2024, of $29.00/oz silver, $1.53/lb zinc, $0.96/lb lead and
$2,200/oz gold and $3.74/lb copper. Silver equivalents utilize the
average realized prices during the six months ended June 30, 2023,
of $25.48/oz silver, $1.21/lb zinc, $0.99/lb lead and $1,801/oz
gold and the average realized prices during the three months ended
June 30, 2023, of $24.11/oz silver, $0.99/lb zinc, $0.92/lb lead
and $1,817/oz gold. The average realized prices are determined
based on revenue inclusive of final settlements.
The following table provides a breakdown of cash
flows used by investing activities of the LGJV and a reconciliation
of sustaining capital and resource development drilling to that
measure:
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Cash flow used by investing activities |
$ |
13,729 |
|
$ |
14,626 |
|
$ |
25,557 |
|
$ |
25,992 |
|
|
Sustaining capital |
|
11,357 |
|
|
13,100 |
|
|
20,301 |
|
|
20,742 |
|
|
Resource development drilling |
|
1,885 |
|
|
4,041 |
|
|
5,107 |
|
|
7,047 |
|
|
Materials & supplies |
|
— |
|
|
914 |
|
|
— |
|
|
1,426 |
|
|
Change in capital-related accounts payable |
|
487 |
|
|
(3,429 |
) |
|
149 |
|
|
(3,223 |
) |
|
Total |
$ |
13,729 |
|
$ |
14,626 |
|
$ |
25,557 |
|
$ |
25,992 |
|
The table below reconciles EBITDA, a non-GAAP
measure to net income (loss) and comprehensive income (loss) for
the Company:
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Net income (loss) and comprehensive income
(loss) |
$ |
9,156 |
|
$ |
(3,593 |
) |
$ |
11,688 |
|
$ |
(2,758 |
) |
|
Interest expense |
|
— |
|
|
183 |
|
|
— |
|
|
347 |
|
|
Interest income |
|
(1,117 |
) |
|
(126 |
) |
|
(1,884 |
) |
|
(287 |
) |
|
Income tax expense |
|
129 |
|
|
— |
|
|
172 |
|
|
— |
|
|
Depreciation, depletion and amortization |
|
3 |
|
|
34 |
|
|
7 |
|
|
71 |
|
|
EBITDA |
$ |
8,171 |
|
$ |
(3,502 |
) |
$ |
9,983 |
|
$ |
(2,627 |
) |
The table below reconciles of EBITDA, a non-GAAP measure, to the
LGJV’s net income and comprehensive income:
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Net income and comprehensive income |
$ |
20,487 |
|
$ |
746 |
|
$ |
30,659 |
|
$ |
13,447 |
|
|
Interest expense |
|
554 |
|
|
15 |
|
|
749 |
|
|
141 |
|
|
Interest income |
|
(270 |
) |
|
(555 |
) |
|
(543 |
) |
|
(555 |
) |
|
Income tax expense |
|
12,544 |
|
|
4,741 |
|
|
17,319 |
|
|
10,698 |
|
|
Depreciation, depletion and amortization |
|
20,821 |
|
|
22,027 |
|
|
41,077 |
|
|
42,846 |
|
|
EBITDA |
$ |
54,136 |
|
$ |
26,974 |
|
$ |
89,261 |
|
$ |
66,577 |
|
The following table sets forth a reconciliation
of free cash flow, a non-GAAP financial measure, to net cash
provided (used) by operating activities operating activities for
the Company, which the Company believes to be the GAAP financial
measure most directly comparable to free cash flow.
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Net cash provided (used) by operating
activities |
$ |
11,799 |
|
$ |
(3,762 |
) |
$ |
26,935 |
|
$ |
(7,865 |
) |
|
Net cash used by investing activities |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Free cash flow |
$ |
11,799 |
|
$ |
(3,762 |
) |
$ |
26,935 |
|
$ |
(7,865 |
) |
The following table sets forth a reconciliation
of free cash flow, a non-GAAP financial measure, to net cash
provided by operating activities for the LGJV.
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Net cash provided by operating activities |
$ |
54,483 |
|
$ |
34,321 |
|
$ |
91,808 |
|
$ |
74,365 |
|
|
Net cash used by investing activities |
|
(13,729 |
) |
|
(14,626 |
) |
|
(25,557 |
) |
|
(25,992 |
) |
|
Free cash flow |
$ |
40,754 |
|
$ |
19,695 |
|
$ |
66,251 |
|
$ |
48,373 |
|
Please see Appendix A for the unaudited
condensed consolidated balance sheets of the Company and the LGJV
as of June 30, 2024 and December 31, 2023, the related unaudited
condensed consolidated statements of income (loss) and
comprehensive income (loss) of the Company, unaudited combined
statements of operations and comprehensive income of the LGJV for
the three and six months ended June 30, 2024 and 2023, and
unaudited statements of cash flows for the six months ended June
30, 2024 and 2023.
Forward-Looking Statements
This press release contains statements that
constitute “forward looking information” and “forward-looking
statements” within the meaning of U.S. and Canadian securities
laws. All statements other than statements of historical facts
contained in this press release, including statements regarding
prospective exploration, timing of an updated life of mine plan,
guidance for 2024 including processing rates, production and AISC
are forward-looking statements. Forward-looking statements are
based on management’s beliefs and assumptions and on information
currently available to management. Such statements are subject to
risks and uncertainties, and actual results may differ materially
from those expressed or implied in the forward-looking statements,
and such other risks and uncertainties described in our filings
with the U.S. Securities and Exchange Commission and Canadian
securities commissions. Gatos Silver expressly disclaims any
obligation or undertaking to update the forward-looking statements
contained in this press release to reflect any change in its
expectations or any change in events, conditions, or circumstances
on which such statements are based unless required to do so by
applicable law. No assurance can be given that such future results
will be achieved. Forward-looking statements speak only as of the
date of this press release.
Investors and Media ContactAndré van
NiekerkChief Financial Officerinvestors@gatossilver.com(604) 424
0984
APPENDIX A
GATOS SILVER, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
June 30, |
December 31, |
|
(US$ in thousands) |
|
2024 |
|
|
|
2023 |
|
|
ASSETS |
|
|
| Current
Assets |
|
|
|
Cash and cash equivalents |
$ |
82,476 |
|
|
$ |
55,484 |
|
|
Related party receivables |
|
155 |
|
|
|
560 |
|
|
Other current assets |
|
1,593 |
|
|
|
22,642 |
|
|
Total current assets |
|
84,224 |
|
|
|
78,686 |
|
| Non-Current
Assets |
|
|
|
Investment in affiliates |
|
305,228 |
|
|
|
321,914 |
|
|
Deferred tax assets |
|
200 |
|
|
|
266 |
|
|
Other non-current assets |
|
382 |
|
|
|
38 |
|
| Total
Assets |
$ |
390,034 |
|
|
$ |
400,904 |
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
| Current
Liabilities |
|
|
|
Accounts payable and other accrued liabilities |
$ |
8,938 |
|
|
$ |
33,357 |
|
| Non-Current
Liabilities |
|
|
|
Lease liability |
|
218 |
|
|
|
— |
|
| Stockholders’
Equity |
|
|
|
Common Stock, $0.001 par value; 700,000,000 shares authorized;
69,341,227 and 69,181,047 shares outstanding as of June 30, 2024
and December 31, 2023, respectively |
|
117 |
|
|
|
117 |
|
|
Paid-in capital |
|
554,962 |
|
|
|
553,319 |
|
|
Accumulated deficit |
|
(174,201 |
) |
|
|
(185,889 |
) |
|
Total stockholders’ equity |
|
380,878 |
|
|
|
367,547 |
|
| Total Liabilities and
Stockholders’ Equity |
$ |
390,034 |
|
|
$ |
400,904 |
|
| |
GATOS SILVER, INC.CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS)(UNAUDITED)
|
(US$ in thousands, except for share data) |
Three Months Ended June 30, |
Six months ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Expenses |
|
|
|
|
|
Exploration |
$ |
44 |
|
|
$ |
— |
|
|
$ |
75 |
|
|
$ |
26 |
|
|
General and administrative |
|
7,872 |
|
|
|
6,127 |
|
|
|
14,835 |
|
|
|
11,663 |
|
|
Amortization |
|
3 |
|
|
|
34 |
|
|
|
7 |
|
|
|
71 |
|
|
Total expenses |
|
7,919 |
|
|
|
6,161 |
|
|
|
14,917 |
|
|
|
11,760 |
|
| Other
income |
|
|
|
|
|
Equity income in affiliates |
|
14,526 |
|
|
|
1,474 |
|
|
|
21,814 |
|
|
|
6,485 |
|
|
Interest expense |
|
— |
|
|
|
(183 |
) |
|
|
— |
|
|
|
(347 |
) |
|
Interest income |
|
1,117 |
|
|
|
126 |
|
|
|
1,884 |
|
|
|
287 |
|
|
Other income |
|
1,561 |
|
|
|
1,151 |
|
|
|
3,079 |
|
|
|
2,577 |
|
|
Other income |
|
17,204 |
|
|
|
2,568 |
|
|
|
26,777 |
|
|
|
9,002 |
|
| Income (loss) before
taxes |
|
9,285 |
|
|
|
(3,593 |
) |
|
|
11,860 |
|
|
|
(2,758 |
) |
|
Income tax expense |
|
129 |
|
|
|
— |
|
|
|
172 |
|
|
|
— |
|
| Net income (loss) and
comprehensive income (loss) |
$ |
9,156 |
|
|
$ |
(3,593 |
) |
|
$ |
11,688 |
|
|
$ |
(2,758 |
) |
| Net income (loss) per
share: |
|
|
|
|
|
Basic and diluted |
$ |
0.13 |
|
|
$ |
(0.05 |
) |
|
$ |
0.17 |
|
|
$ |
(0.04 |
) |
| Weighted average shares
outstanding: |
|
|
|
|
|
Basic |
|
69,217,512 |
|
|
|
69,162,223 |
|
|
|
69,199,280 |
|
|
|
69,162,223 |
|
|
Diluted |
|
71,096,361 |
|
|
|
69,162,223 |
|
|
|
70,793,043 |
|
|
|
69,162,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GATOS SILVER, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Six months ended June 30, |
|
(US$ in thousands) |
|
2024 |
|
|
|
2023 |
|
|
OPERATING ACTIVITIES |
|
|
|
Net income (loss) and comprehensive income (loss) |
$ |
11,688 |
|
|
$ |
(2,758 |
) |
| |
|
|
| Adjustments to
reconcile net income to net cash provided (used) by operating
activities: |
|
|
|
Amortization |
|
7 |
|
|
|
71 |
|
|
Stock-based compensation expense |
|
3,295 |
|
|
|
1,205 |
|
|
Equity income in affiliates |
|
(21,814 |
) |
|
|
(6,485 |
) |
|
Deferred tax recovery |
|
57 |
|
|
|
— |
|
|
Other |
|
60 |
|
|
|
— |
|
|
Distributions received from affiliate |
|
38,500 |
|
|
|
— |
|
| |
|
|
| Changes in operating
assets and liabilities: |
|
|
|
Receivables from related‑parties |
|
405 |
|
|
|
(389 |
) |
|
Accounts payable and other accrued liabilities |
|
(26,338 |
) |
|
|
(648 |
) |
|
Other current assets |
|
21,075 |
|
|
|
1,139 |
|
|
Net cash provided (used) by operating activities |
|
26,935 |
|
|
|
(7,865 |
) |
| |
|
|
| INVESTING
ACTIVITIES |
|
|
|
Net cash used by investing activities |
|
— |
|
|
|
— |
|
| |
|
|
| FINANCING
ACTIVITIES |
|
|
|
Proceeds from exercise of stock options |
|
111 |
|
|
|
— |
|
|
Lease payments |
|
(54 |
) |
|
|
— |
|
|
Net cash used by financing activities |
|
(57 |
) |
|
|
— |
|
| Net increase (decrease) in
cash and cash equivalents |
|
26,992 |
|
|
|
(7,865 |
) |
| Cash and cash equivalents,
beginning of period |
|
55,484 |
|
|
|
17,004 |
|
| Cash and cash equivalents, end
of period |
$ |
82,476 |
|
|
$ |
9,139 |
|
| |
|
|
| Interest paid |
$ |
11 |
|
|
$ |
364 |
|
| Interest earned |
$ |
1,884 |
|
|
$ |
287 |
|
| |
|
|
|
|
|
|
|
LOS GATOS JOINT VENTURECOMBINED BALANCE
SHEETS(UNAUDITED)
|
|
June 30, |
December 31, |
|
(US$ in thousands) |
|
2024 |
|
|
|
2023 |
|
|
ASSETS |
|
|
| Current
Assets |
|
|
|
Cash and cash equivalents |
$ |
45,523 |
|
|
$ |
34,303 |
|
|
Receivables |
|
12,559 |
|
|
|
12,634 |
|
|
Inventories |
|
15,782 |
|
|
|
16,397 |
|
|
VAT receivable |
|
12,781 |
|
|
|
12,610 |
|
|
Income tax receivable |
|
13,580 |
|
|
|
20,185 |
|
|
Other current assets |
|
2,652 |
|
|
|
1,253 |
|
|
Total current assets |
|
102,877 |
|
|
|
97,382 |
|
| Non-Current
Assets |
|
|
|
Mine development, net |
|
231,138 |
|
|
|
234,980 |
|
|
Property, plant and equipment, net |
|
161,171 |
|
|
|
171,965 |
|
|
Deferred tax assets |
|
2,783 |
|
|
|
9,568 |
|
|
Total non-current assets |
|
395,092 |
|
|
|
416,513 |
|
| Total
Assets |
$ |
497,969 |
|
|
$ |
513,895 |
|
| LIABILITIES AND
OWNERS’ CAPITAL |
|
|
| Current
Liabilities |
|
|
|
Accounts payable and accrued liabilities |
$ |
47,293 |
|
|
$ |
38,704 |
|
|
Related party payable |
|
192 |
|
|
|
560 |
|
|
Total current liabilities |
|
47,485 |
|
|
|
39,264 |
|
| Non-Current
Liabilities |
|
|
|
Lease liability |
|
172 |
|
|
|
208 |
|
|
Asset retirement obligation |
|
12,027 |
|
|
|
11,593 |
|
|
Deferred tax liabilities |
|
3,681 |
|
|
|
3,885 |
|
|
Total non-current liabilities |
|
15,880 |
|
|
|
15,686 |
|
| Owners’
Capital |
|
|
|
Capital contributions |
|
400,638 |
|
|
|
455,638 |
|
|
Paid-in capital |
|
18,186 |
|
|
|
18,186 |
|
|
Retained earnings (accumulated deficit) |
|
15,780 |
|
|
|
(14,879 |
) |
|
Total owners’ capital |
|
434,604 |
|
|
|
458,945 |
|
| Total Liabilities and
Owners’ Capital |
$ |
497,969 |
|
|
$ |
513,895 |
|
| |
LOS GATOS JOINT VENTURECOMBINED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME(UNAUDITED)
|
|
Three months ended June 30, |
Six months ended June 30, |
|
(US$ in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Revenue |
$ |
94,198 |
|
|
$ |
58,259 |
|
|
$ |
166,416 |
|
|
$ |
128,124 |
|
| Expenses |
|
|
|
|
|
Cost of sales |
|
31,956 |
|
|
|
25,821 |
|
|
|
62,727 |
|
|
|
51,809 |
|
|
Royalties and duties |
|
713 |
|
|
|
308 |
|
|
|
1,043 |
|
|
|
726 |
|
|
Exploration |
|
1,601 |
|
|
|
657 |
|
|
|
2,972 |
|
|
|
1,120 |
|
|
General and administrative |
|
4,089 |
|
|
|
4,402 |
|
|
|
8,374 |
|
|
|
8,338 |
|
|
Depreciation, depletion and amortization |
|
20,821 |
|
|
|
22,027 |
|
|
|
41,077 |
|
|
|
42,846 |
|
|
Total expenses |
|
59,180 |
|
|
|
53,215 |
|
|
|
116,193 |
|
|
|
104,839 |
|
| |
|
|
|
|
| Other expense
(income) |
|
|
|
|
|
Accretion expense |
|
218 |
|
|
|
296 |
|
|
|
435 |
|
|
|
593 |
|
|
Interest expense |
|
554 |
|
|
|
15 |
|
|
|
749 |
|
|
|
141 |
|
|
Interest income |
|
(270 |
) |
|
|
(555 |
) |
|
|
(543 |
) |
|
|
(555 |
) |
|
Other expense |
|
653 |
|
|
|
43 |
|
|
|
648 |
|
|
|
31 |
|
|
Foreign exchange loss (gain) |
|
832 |
|
|
|
(242 |
) |
|
|
956 |
|
|
|
(1,070 |
) |
|
|
|
1,987 |
|
|
|
(443 |
) |
|
|
2,245 |
|
|
|
(860 |
) |
| |
|
|
|
|
| Income before
taxes |
|
33,031 |
|
|
|
5,487 |
|
|
|
47,978 |
|
|
|
24,145 |
|
| Income tax
expense |
|
12,544 |
|
|
|
4,741 |
|
|
|
17,319 |
|
|
|
10,698 |
|
| Net income and
comprehensive income |
$ |
20,487 |
|
|
$ |
746 |
|
|
$ |
30,659 |
|
|
$ |
13,447 |
|
| |
LOS GATOS JOINT VENTURECOMBINED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
Six months ended June 30, |
|
(US$ in thousands) |
|
2024 |
|
|
|
2023 |
|
|
Cash flows from operating activities: |
|
|
| Net income and comprehensive
income |
$ |
30,659 |
|
|
$ |
13,447 |
|
| Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
| Depreciation, depletion and
amortization |
|
41,077 |
|
|
|
42,846 |
|
| Accretion |
|
435 |
|
|
|
593 |
|
| Deferred taxes |
|
6,691 |
|
|
|
5,453 |
|
| Unrealized gain on foreign
currency rate change |
|
1,016 |
|
|
|
(55 |
) |
| Other |
|
— |
|
|
|
(7 |
) |
| |
|
|
| Changes in operating assets
and liabilities: |
|
|
| VAT receivable |
|
(442 |
) |
|
|
5,828 |
|
| Receivables |
|
75 |
|
|
|
20,910 |
|
| Inventories |
|
178 |
|
|
|
(400 |
) |
| Other current assets |
|
(1,404 |
) |
|
|
(1,281 |
) |
| Income tax receivable |
|
4,912 |
|
|
|
(2,459 |
) |
| Accounts payable and other
accrued liabilities |
|
8,978 |
|
|
|
(10,884 |
) |
| Payables to related
parties |
|
(367 |
) |
|
|
374 |
|
| Net cash provided by operating
activities |
|
91,808 |
|
|
|
74,365 |
|
| |
|
|
| Cash flows from
investing activities: |
|
|
| Mine development |
|
(21,071 |
) |
|
|
(18,597 |
) |
| Purchase of property, plant
and equipment |
|
(4,486 |
) |
|
|
(8,718 |
) |
| Materials and supplies
inventory |
|
— |
|
|
|
1,323 |
|
| Net cash used by investing
activities |
|
(25,557 |
) |
|
|
(25,992 |
) |
| |
|
|
| Cash flows from
financing activities: |
|
|
| Equipment loan and lease
payments |
|
(31 |
) |
|
|
(503 |
) |
| Capital distributions |
|
(55,000 |
) |
|
|
— |
|
| Net cash used by financing
activities |
|
(55,031 |
) |
|
|
(503 |
) |
| |
|
|
| Net Increase in cash and cash
equivalents |
|
11,220 |
|
|
|
47,870 |
|
| Cash and cash equivalents,
beginning of period |
|
34,303 |
|
|
|
34,936 |
|
| Cash and cash equivalents, end
of period |
$ |
45,523 |
|
|
$ |
82,806 |
|
| Interest paid |
$ |
419 |
|
|
$ |
132 |
|
| Interest earned |
$ |
543 |
|
|
$ |
555 |
|
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