Gatos Silver Reports Q2 2024 Production Results With Record Mill Throughput and Zinc Production

Rhea-AI Summary

Gatos Silver reported record production results for Q2 2024 at its Cerro Los Gatos mine. The mine achieved record mill throughput, averaging 3,240 tonnes per day, a 1% increase from Q1 2024 and 11% from Q2 2023. Silver equivalent production rose by 18% year-over-year to 3.88 million ounces, with zinc production hitting a record 19.1 million pounds, a 29% increase year-over-year. Silver production was up 15% to 2.30 million ounces. Lead and gold production also saw increases of 24% and 14%, respectively. The company remains on track to meet the higher end of its 2024 guidance. Exploration efforts have intensified, aimed at extending the mine's life. Cash and cash equivalents stood at $82.5 million as of June 30, 2024.

Positive

• Record mill throughput at 3,240 tonnes per day, up 1% from Q1 2024 and 11% from Q2 2023.
• Silver equivalent production increased by 18% year-over-year to 3.88 million ounces.
• Record zinc production of 19.1 million pounds, a 29% increase year-over-year.
• Silver production rose by 15% to 2.30 million ounces.
• Lead and gold production increased by 24% and 14%, respectively.
• The company remains on track to meet the higher end of its 2024 guidance.
• Cash and cash equivalents were $82.5 million as of June 30, 2024.

Negative

• Gold recovery rates declined from 53.9% to 48.8% for the quarter.

Insights

Financial Analyst

Gatos Silver's Q2 2024 production results indicate a strong operational performance, marked by record zinc production and high mill throughput. The company achieved a 18% increase in silver equivalent production compared to Q2 2023, which reflects efficient operations and possibly favorable market conditions. The mill throughput averaged 3,240 tonnes per day, an 11% increase from the same period last year, suggesting effective debottlenecking efforts.

The results show a 29% increase in zinc production, reaching 19.1 million pounds for the quarter, which is a significant achievement. This is bolstered by higher throughput, grades and recovery rates. Similarly, lead and gold production saw notable increases of 24% and 14%, respectively. These figures underscore the company's improved operational efficiencies and enhanced resource extraction.

It's important for investors to note that the company expects its production to remain at the upper end of its guidance ranges for the full year 2024. This consistency reinforces the company's reliability in meeting its operational goals. However, ongoing debottlenecking and optimization projects imply potential future improvements, which could further enhance production metrics.

From a financial health perspective, the combined cash and cash equivalents of the company and the Los Gatos Joint Venture totaled $128 million as of June 30, 2024. This liquidity position provides a solid buffer for ongoing and future operational improvements and exploration activities.

Market Research Analyst

The market should view Gatos Silver’s Q2 2024 results positively, given the record-breaking zinc production and mill throughput. These results not only demonstrate effective operational strategies but also position the company favorably in the zinc and silver markets. A 29% increase in zinc production combined with steady gains in silver and lead output highlights robust performance amidst the fluctuating commodity markets.

For investors, understanding the implications of production efficiency is crucial. The company’s success in maintaining high recovery rates while increasing throughput indicates strong operational management. This operational leverage could translate into better profit margins, especially if metal prices remain stable or increase.

It's also noteworthy that the company is advancing an updated life of mine plan, expected in Q3 2024. This plan aims to extend the mine’s life, which could have long-term positive implications for production stability and future revenue streams. Additionally, increased exploration drilling activities suggest potential for resource expansion, which could further enhance the company’s asset base and future output.

Investors should also keep an eye on the ongoing fleet rebuild and other optimization projects scheduled for the next 6 to 12 months. These initiatives are expected to improve mine production rates and operational efficiency, which could provide additional upside in production and financial performance.

Mining Engineer

Gatos Silver's operational data for Q2 2024 reveals several key insights into its mining efficiency and strategic direction. Achieving mill throughput of 3,240 tonnes per day and aiming for a sustained rate of 3,500 tonnes per day suggests that the company is successfully implementing its debottlenecking strategies. This throughput increase, alongside record zinc production, indicates that the company is extracting and processing ores more efficiently.

The increase in silver, zinc, lead and gold grades and recovery rates further reinforces this efficiency. Notably, zinc recovery increased to 64.6%, an improvement over the previous year. These enhancements are essential because higher recovery rates directly correlate with increased output and revenue potential.

The company’s strategy of focusing on near-mine exploration and at the San Luis prospect indicates a balanced approach to resource management and future production potential. By investing in exploration, Gatos Silver is positioning itself to discover new resources, thereby extending the life of its operations and ensuring long-term sustainability.

From an operational standpoint, the ongoing fleet rebuild and optimization projects are critical. These efforts are expected to mitigate bottlenecks and enhance operational efficiency, which are vital for maintaining and potentially increasing production rates in the future. This proactive approach to operational management bodes well for the company's ability to manage its assets effectively and maximize output.

VANCOUVER, British Columbia, July 09, 2024 (GLOBE NEWSWIRE) -- Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the “Company”) today announced production results for the quarter and six months ended June 30, 2024 at its 70%-owned Cerro Los Gatos (“CLG”) mine in Mexico.

Dale Andres, CEO of Gatos Silver, commented: “In the second quarter of 2024 the CLG mine delivered strong operational results, with record zinc production and the sixth consecutive quarterly record for mill throughput. Silver equivalent production for the quarter was 3.88 million ounces, an increase of 18% from the second quarter of 2023, and we continue to track at the top end of 2024 guidance.”

“Our mine debottlenecking efforts delivered a mill throughput average of 3,240 tonnes per day, up 1% from the first quarter of 2024 and up 11% from the second quarter of 2023, as we advanced towards our medium-term target of sustained throughput rates of 3,500 tonnes per day. We expect to complete an updated life of mine plan in the third quarter of 2024 with a target to further extend the mine life. We also increased exploration drilling efforts during the second quarter on both near mine targets and at the San Luis prospect located five kilometers from the CLG mine.”

Production Results (100% basis)

CLG comparative production highlights are summarized below:

	Three Months Ended June 30,				Six Months Ended June 30,
CLG Production (100% Basis)	2024		2023		2024		2023
Tonnes milled (dmt)	294,869		265,342		586,983		525,770
Tonnes milled per day (dmt)	3,240		2,916		3,225		2,905
Feed Grades
Silver (g/t)	273		265		279		296
Zinc (%)	4.55		4.00		4.27		3.96
Lead (%)	2.06		1.85		1.92		1.86
Gold (g/t)	0.29		0.26		0.29		0.28
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)1	3.88		3.30		7.58		6.99
Recoveries
Silver - in both lead and zinc concentrates	88.9%		88.6%		88.9%		88.4%
Zinc - in zinc concentrate	64.6%		63.5%		63.1%		62.8%
Lead - in lead concentrate	89.5%		89.1%		89.4%		88.9%
Gold - in lead concentrate	48.8%		53.9%		50.4%		54.7%

^{1 For 2024, silver equivalent production 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 30, 2023 would be 3.24 million ounces and 6.89 million ounces, respectively, using price assumptions for 2024.}

Silver equivalent¹ production for the second quarter of 2024 was 3.88 million ounces, 18% higher than the second quarter of 2023. Silver production was 2.30 million ounces, 15% higher than the comparable quarter of 2023. Zinc production increased by 29% compared with the second quarter of 2023 as a result of higher throughput, higher grades and higher recovery resulting in a record quarterly production of 19.1 million pounds.   Lead production and gold production increased by 24% and 14%, respectively, compared with the second quarter of 2023 due to higher throughput and grades. 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.

The processing plant is reliably performing above 3,500 tonnes per operating day with no reduction in metallurgical recoveries. The CLG team is focused on first consistently maintaining and then gradually increasing daily mine production rates by implementing various optimization and improvement projects across the maintenance and mine operation functions over the next 6 to 12 months. The rebuild program for the underground mobile equipment fleet is progressing well and is expected to help further debottlenecking efforts in the mine during the second half of 2024.

As of June 30, 2024, the Company and the Los Gatos Joint Venture (“LGJV”) reported cash and cash equivalents of $82.5 million and $45.5 million, respectively.

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 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.

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 production guidance for 2024, target throughput rate and timing to achieve such target, timing of an updated life of mine plan, life extension opportunities, mine debottlenecking, processing rates, and productivity improvements, 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 Contact

André van Niekerk
Chief Financial Officer
investors@gatossilver.com
(604) 424-0984

FAQ

What were Gatos Silver's Q2 2024 production results?

Gatos Silver reported record mill throughput of 3,240 tonnes per day, an 18% increase in silver equivalent production to 3.88 million ounces, and record zinc production of 19.1 million pounds.

How much did Gatos Silver's silver production increase in Q2 2024?

Silver production increased by 15% year-over-year to 2.30 million ounces in Q2 2024.

What was Gatos Silver's zinc production in Q2 2024?

Gatos Silver achieved a record zinc production of 19.1 million pounds in Q2 2024, a 29% increase year-over-year.

Did Gatos Silver's lead production increase in Q2 2024?

Yes, lead production increased by 24% year-over-year in Q2 2024.

What are Gatos Silver's cash and cash equivalents as of June 30, 2024?

As of June 30, 2024, Gatos Silver reported cash and cash equivalents of $82.5 million.

What is Gatos Silver's production guidance for 2024?

Gatos Silver expects silver equivalent and silver production to be in the top half of its 2024 guidance ranges of 13.5 to 15.0 million ounces and 8.4 to 9.2 million ounces, respectively.