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Gatos Silver Reports Third Quarter 2024 Results Including a 200% Increase in Earnings Per Share

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Gatos Silver (NYSE/TSX: GATO) reported strong Q3 2024 results with earnings per share of $0.14, up 200% from Q3 2023. The LGJV achieved record performance with revenue of $93.8 million, up 40%, and record net income of $25.7 million, up 71%. Silver production increased 9% to 2.42 million ounces. The company reported record quarterly free cash flow and ended Q3 with $116.7 million in cash. A merger with First Majestic Silver is expected to close in Q1 2025. The updated life of mine plan adds two years of reserves and projects a 36% increase in silver equivalent production.

Gatos Silver (NYSE/TSX: GATO) ha riportato risultati solidi per il terzo trimestre del 2024, con un utile per azione di $0.14, in aumento del 200% rispetto al terzo trimestre del 2023. La LGJV ha raggiunto performance record con un fatturato di $93.8 milioni, in aumento del 40%, e un reddito netto record di $25.7 milioni, in crescita del 71%. La produzione di argento è aumentata del 9% a 2.42 milioni di once. L'azienda ha riportato un flusso di cassa libero trimestrale record e ha concluso il terzo trimestre con $116.7 milioni in cassa. Una fusione con First Majestic Silver è prevista per essere completata nel primo trimestre del 2025. Il piano aggiornato della vita mineraria aggiunge due anni di riserve e prevede un aumento del 36% nella produzione equivalente di argento.

Gatos Silver (NYSE/TSX: GATO) informó resultados sólidos para el tercer trimestre de 2024, con ganancias por acción de $0.14, un aumento del 200% en comparación con el tercer trimestre de 2023. La LGJV logró un rendimiento récord con ingresos de $93.8 millones, un aumento del 40%, y un ingreso neto récord de $25.7 millones, un aumento del 71%. La producción de plata aumentó un 9% a 2.42 millones de onzas. La empresa reportó un flujo de efectivo libre trimestral récord y terminó el tercer trimestre con $116.7 millones en efectivo. Se espera que una fusión con First Majestic Silver se cierre en el primer trimestre de 2025. El plan de vida útil de la mina actualizado añade dos años de reservas y proyecta un aumento del 36% en la producción equivalente de plata.

가토스 실버 (NYSE/TSX: GATO)는 2024년 3분기 성과로 주당 순이익이 $0.14로, 200% 증가했다고 보고했습니다. LGJV는 $93.8 백만의 수익을 기록하며 40% 증가하고, 순이익은 $25.7 백만으로 71% 증가하는 기록적인 성과를 달성했습니다. 은 생산량은 2.42 백만 온스로 9% 증가했습니다. 회사는 기록적인 분기 자유 현금 흐름을 보고하였고 3분기를 $116.7 백만의 현금으로 마감했습니다. First Majestic Silver와의 합병은 2025년 1분기 내에 완료될 것으로 예상됩니다. 업데이트된 광산 수명 계획은 두 년의 자원을 추가하고 은 등가 생산량을 36% 증가시킬 것으로 예상합니다.

Gatos Silver (NYSE/TSX: GATO) a annoncé de solides résultats pour le troisième trimestre 2024, avec un bénéfice par action de $0.14, en hausse de 200% par rapport au troisième trimestre 2023. La LGJV a atteint des performances record avec des revenus de $93.8 millions, en hausse de 40%, et un bénéfice net record de $25.7 millions, en hausse de 71%. La production d'argent a augmenté de 9% pour atteindre 2.42 millions d'onces. L'entreprise a rapporté un flux de trésorerie libre trimestriel record et a terminé le troisième trimestre avec $116.7 millions en liquidités. Une fusion avec First Majestic Silver devrait se conclure au premier trimestre 2025. Le plan de vie de la mine mis à jour ajoute deux ans de réserves et prévoit une augmentation de 36% de la production équivalente en argent.

Gatos Silver (NYSE/TSX: GATO) berichtete über starke Ergebnisse im dritten Quartal 2024 mit einem Gewinn pro Aktie von $0.14, was einem Anstieg von 200% im Vergleich zum dritten Quartal 2023 entspricht. Die LGJV erzielte eine Rekordleistung mit einem Umsatz von $93.8 Millionen, was einem Anstieg von 40% entspricht, und einem Rekord-Nettoergebnis von $25.7 Millionen, was einem Anstieg von 71% entspricht. Die Silberproduktion stieg um 9% auf 2.42 Millionen Unzen. Das Unternehmen berichtete über einen rekordverdächtigen quartalsweisen freien Cashflow und beendete das dritte Quartal mit $116.7 Millionen in Bargeld. Eine Fusion mit First Majestic Silver wird voraussichtlich im ersten Quartal 2025 abgeschlossen. Der aktualisierte Lebenszeitplan der Mine fügt zwei Jahre Reserven hinzu und prognostiziert einen Anstieg der Silberäquivalentproduktion um 36%.

Positive
  • EPS increased 200% to $0.14 from $0.05 year-over-year
  • Revenue up 40% to $93.8 million in Q3 2024
  • Record net income of $25.7 million, up 71%
  • Record free cash flow of $42.6 million, up 199%
  • Silver production increased 9% to 2.42 million ounces
  • Cash position strengthened to $116.7 million, up 40% from Q2 2024
  • Production costs decreased with 8% lower site operating unit costs
Negative
  • Potential shareholder dilution from upcoming merger with First Majestic
  • Increased general and administrative expenses due to $5.3 million merger-related costs

Insights

The Q3 2024 results showcase exceptional financial performance with record-breaking metrics across multiple areas. The $93.8 million revenue represents a 40% year-over-year increase, driven by higher production volumes and improved metal prices. The company achieved a remarkable 200% increase in EPS to $0.14, while maintaining cost discipline with a 1% reduction in cost of sales.

The LGJV's record-breaking free cash flow of $42.6 million and strong cash positions ($116.7 million for Gatos Silver and $33.9 million for LGJV) demonstrate robust financial health. The 35% reduction in by-product AISC to $9.61 per ounce of payable silver indicates improving operational efficiency. The pending merger with First Majestic, combined with the extended mine life and increased production outlook, positions the company for substantial value creation.

Operational metrics show significant improvements with silver equivalent production reaching 3.84 million ounces, an 11% increase year-over-year. The mill throughput increase to 3,246 tonnes per day demonstrates enhanced operational efficiency, contributing to an 8% reduction in site operating costs to $96.93 per tonne.

The updated life of mine plan adding two years of reserves and projecting a 36% increase in silver equivalent production strengthens the long-term outlook. Notably, consistent grade maintenance (silver at 285 g/t) while increasing throughput indicates effective mine planning and execution. These operational improvements, coupled with higher metal prices, have translated directly into enhanced financial performance.

VANCOUVER, British Columbia, Nov. 11, 2024 (GLOBE NEWSWIRE) -- Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the “Company”) today announced its third quarter of 2024 financial and operating results including earnings per share of $0.14, up 200% from $0.05 in the third quarter of 2023. The Company will host an investor and analyst call on November 12, 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. The Company’s reporting currency is US dollars.

On September 5, 2024, Gatos Silver and First Majestic Silver Corp. (“First Majestic”) announced that they entered into a definitive merger agreement pursuant to which First Majestic will acquire all of the issued and outstanding common shares of Gatos Silver (the “Merger”). The proposed Merger is expected to close in the first quarter of 2025 and would consolidate three world-class, producing silver mining districts in Mexico to create a leading intermediate primary silver producer.

On September 25, 2024, Gatos Silver reported an updated life of mine plan (“LOM plan”) that adds two years of additional reserves and a 36% increase in silver equivalent production compared with the prior LOM plan at CLG.

Production for the third quarter of 2024 and improved guidance for the full year were disclosed on October 9, 2024.

“CLG’s strong third quarter 2024 production and cost performance together with higher metal prices resulted in record quarterly free cash flow at the LGJV and a record quarter-end cash balance for Gatos Silver,” said Dale Andres, CEO of Gatos Silver. “We believe we are well positioned to deliver significant value into the combination with First Majestic given the Company’s strong cash position and free cash flow generation together with CLG’s track record of performance, the extended mine plan disclosed in September and ongoing exploration efforts across the broader Los Gatos district.”

Summary

LGJV Q3 2024 results compared to Q3 2023 (100% basis):

  • Revenue of $93.8 million, up 40% from $67.0 million
  • Cost of sales of $31.2 million, down 1% from $31.4 million
  • Record net income of $25.7 million, up 71% from $15.1 million
  • Record EBITDA1 of $57.2 million, up 87% from $30.6 million
  • Record cash flow from operations of $58.2 million, up 98% from $29.4 million
  • Record free cash flow1 of $42.6 million, up 199% from $14.3 million
  • Silver production of 2.42 million ounces, up 9% from 2.22 million ounces
  • Silver equivalent production2 of 3.84 million ounces, up 11% from 3.46 million ounces
  • Co-product AISC1 of $16.13 per ounce of payable silver equivalent, down 9% from $17.64
  • By-product AISC1 of $9.61 per ounce of payable silver, down 35% from $14.71

Gatos Silver Q3 2024 results compared to Q3 2023:

  • Net income of $9.9 million, up from $3.3 million, and adjusted net income1 of $15.2 million
  • Basic and diluted earnings per share of $0.14, up from $0.05 per share, and adjusted basic and diluted earnings per share1 of $0.22 and $0.21, respectively
  • EBITDA1 of $9.1 million, compared to $3.2 million, and adjusted EBITDA1 of $14.4 million
  • Cash flow provided by operating activities and free cash flow1 of $34.2 million, compared to $33.3 million

__________________

1 See “Non-GAAP Financial Measures” below.
2 See definition of silver equivalent production below.

At the LGJV, the 40% increase in revenue in Q3 2024, compared to the same quarter in 2023, was primarily attributable to higher sales volumes and higher realized metal prices. Cost of sales decreased by 1% despite the higher sales volumes. Site operating unit costs of $96.93/t milled were 8% lower than in Q3 2023 primarily due to higher mill throughput in the quarter. By-product AISC1 per ounce of payable silver decreased to $9.61 primarily due to significantly higher silver and by-product production and sales volumes.

For Gatos Silver, higher unadjusted and adjusted net income, earnings per share and EBITDA1 for Q3 2024 were primarily attributable to the higher equity income from the LGJV and higher interest income. General and administrative expenses were higher in Q3 2024, mainly due to $5.3 million of costs related to the proposed Merger with First Majestic (which are excluded from adjusted net income1, adjusted earnings per share and adjusted EBITDA1 as described below), partially offset by a decrease of $1.1 million in non-cash stock-based compensation expense, a $0.9 million decrease in legal and consulting fees not associated with the proposed Merger, and a $0.4 million decrease in insurance expense.

As of September 30, 2024, the Company and the LGJV reported cash and cash equivalents of $116.7 million and $33.9 million, respectively. The Company’s quarter-end cash balance was a new record, up 40% from $82.5 million at the end of June 30, 2024. The increase in cash was due to $37.9 million of cash distributions received during the third quarter. As of October 31, 2024, the Company and the LGJV had cash and cash equivalents of $114.8 million and $47.3 million, respectively. On November 7, 2024, the LGJV made a capital distribution to its partners of $40.0 million, of which the Company received $28.0 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 nine months ended September 30, 2024 and 2023. For a detailed discussion of the three and nine months ended September 30, 2024 financial and operating results refer to the Form 10-Q expected to be filed on November 12, 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% Basis
Selected Financial Information (Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions, except where otherwise stated)202420232024
2023
Revenue$93.8 $67.0 $260.3 $195.2 
Cost of sales 31.2  31.4  93.9  83.3 
Royalties and duties 0.6  0.3  1.7  1.0 
Exploration 1.6  1.0  4.6  2.1 
General and administrative 3.9  4.4  12.3  12.7 
Depreciation, depletion and amortization 17.8  16.7  58.9  59.6 
Other (income) expense (1.0) (0.9) 1.3  (1.8)
Income tax expense (recovery) 13.9  (0.9) 31.2  9.8 
Net income and comprehensive income2$25.7 $15.1 $56.4 $28.5 
     
Sustaining capital1$12.9 $9.1 $33.2 $29.9 
Resource development drilling expenditures1$2.1 $3.5 $7.2 $10.5 
EBITDA1$57.2 $30.6 $146.4 $97.2 
Cash provided by operating activities$58.2 $29.4 $150.0 $103.8 
Free cash flow1$42.6 $14.3 $108.8 $62.6 
     
Operating Results (CLG 100% Basis)    
Tonnes milled (dmt) 298,586  268,312  885,570  794,082 
Tonnes milled per day (dmt) 3,246  2,916  3,232  2,909 
Average Grades    
Silver grade (g/t) 285  285  281  293 
Zinc grade (%) 4.04  3.82  4.19  3.92 
Lead grade (%) 1.97  1.84  1.93  1.85 
Gold grade (g/t) 0.30  0.30  0.29  0.29 
Production - Contained Metal    
Silver ounces (millions) 2.42  2.22  7.10  6.65 
Zinc pounds – in zinc conc. (millions) 16.5  13.8  51.5  42.7 
Lead pounds – in lead conc. (millions) 11.4  9.5  33.5  28.7 
Gold ounces – in lead conc. (thousands) 1.45  1.28  4.20  3.86 
Silver equivalent ounces (millions)3 3.84  3.46  11.42  10.45 
Co-product cash cost per ounce of payable silver equivalent1$12.13 $14.42 $11.86 $12.43 
By-product cash cost per ounce of payable silver1$3.69 $10.04 $3.67 $6.42 
Co-product AISC per ounce of payable silver equivalent1$16.13 $17.64 $15.21 $15.81 
By-product AISC per ounce of payable silver1$9.61 $14.71 $8.82 $11.40 
     
Sales volume by payable metal    
Silver ounces (millions) 2.18  1.96  6.45  5.99 
Zinc pounds – in zinc conc. (millions) 14.7  12.4  44.3  36.2 
Lead pounds – in lead conc. (millions) 10.6  8.7  31.6  26.6 
Gold ounces – in lead conc. (thousands) 1.13  0.96  3.28  3.02 
Copper pounds – in lead conc. (millions) 0.03    0.13   
     
Average realized price by payable metal    
Average realized price per silver ounce4$29.62 $24.24 $27.09 $25.08 
Average realized price per zinc pound4$1.26 $0.89 $1.30 $1.10 
Average realized price per lead pound4$0.93 $0.97 $0.92 $0.98 
Average realized price per gold ounce4$2,362 $1,885 $2,162 $1,828 
Average realized price per copper pound4$3.28 $ $3.72 $ 

1 See Non-GAAP Financial Measures below.
2 Totals may not add up due to rounding.
3 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 nine months ended September, 2023 would be 3.41 million ounces and 10.30 million ounces, respectively, using price assumptions for 2024.
4 Realized prices include the impact of final settlement adjustments from prior period sales.

Gatos Silver, Inc.

Selected Financial Information (Unaudited)Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions, except where otherwise stated)2024
2023
2024
2023
Exploration$0.1 $ $0.2 $ 
General and Administrative 10.4  7.5  25.3  19.2 
Total expenses2 10.6  7.5  25.5  19.3 
Equity income in affiliates 18.2  9.4  40.0  15.9 
Other income, net 2.8  1.3  7.8  3.9 
Total net other income2 21.0  10.8  47.8  19.8 
Income tax expense 0.5    0.7   
Net income and comprehensive income2$9.9 $3.3 $21.6 $0.5 
Net income per share basic$0.14 $0.05 $0.31 $0.01 
Net income per share diluted$0.14 $0.05 $0.30 $0.01 
     
Adjusted net income1$15.2 $3.3 $28.3 $0.5 
Adjusted net income per share (basic)1$0.22 $0.05 $0.41 $0.01 
Adjusted net income per share (diluted)1$0.21 $0.05 $0.40 $0.01 
     
EBITDA1$9.1 $3.2 $19.1 $0.6 
Adjusted EBITDA1$14.4 $3.2 $25.8 $0.6 
Net cash provided by operating activities$34.2 $33.3 $61.2 $25.5 
Free cash flow1$34.2 $33.3 $61.2 $25.5 

1 See Non-GAAP Financial Measures below.
2 Totals may not add up due to rounding.

Financial Results Webcast and Conference Call

Investors and analysts are invited to attend the financial results webcast and conference call as follows:

Date: Tuesday, November 12, 2024
Time: 11:00 a.m. ET
Listen-Only Webcast: https://events.q4inc.com/attendee/627122313
Direct Event Registration Link (for Analysts only): https://registrations.events/direct/Q4I98433625
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.

On September 5, 2024, Gatos Silver and First Majestic Silver Corp. (“First Majestic”) announced that they entered into a definitive merger agreement pursuant to which First Majestic will acquire all of the issued and outstanding common shares of Gatos Silver (the “Merger”). The proposed Merger would consolidate three world-class, producing silver mining districts in Mexico to create a leading intermediate primary silver producer. Information relating to the proposed Merger can be found at the Company’s website at www.gatossilver.com.

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.

Adjusted Net Income

Management uses adjusted net income, which exclude costs associated with the strategic review resulting in the proposed Merger with First Majestic, to evaluate the Company’s operating performance. The Company believes the use of adjusted net income reflects the underlying performance of our business and allows investors and analysts to compare the results of the Company to our historical results and to similar results of other mining companies. Management’s determination of the components of adjusted net income are evaluated periodically and is based, in part, on a review of non-GAAP financial measures used by mining industry analysts.

EBITDA

Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. EBITDA is defined as net income adjusted for interest expense, interest income, income tax expense and depreciation, depletion and amortization expense. The Company believes the use of EBITDA reflects the underlying operating performance of our core business and allows investors and analysts to compare results of the Company to similar results of other mining companies. EBITDA does not represent, and should not be considered an alternative to, net income or cash flow from operations as determined under GAAP. Other companies may calculate EBITDA differently and those calculations may not be comparable to our presentation.

Adjusted EBITDA

Management uses adjusted EBITDA to evaluate the Company’s ongoing operating performance, without the impact of costs associated with the strategic review resulting in the proposed Merger with First Majestic. The Company believes the use of adjusted EBITDA reflects the underlying operating performance of our core business and allows investors and analysts to compare the results of the Company to our historical results and to similar results of other mining companies. Adjusted EBITDA does not represent, and should not be considered an alternative to, net income or cash flow from operations as determined under GAAP. Other companies may calculate adjusted EBITDA differently and those calculations may not be comparable to our presentation.

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 investing activities as presented on the 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% Basis
Financial
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except where otherwise stated)2024202320242023
Expenses$55,215 $53,809 $171,408 $158,648 
Depreciation, depletion and amortization (17,824) (16,712) (58,901) (59,558)
Exploration1 (1,605) (998) (4,577) (2,118)
Treatment and refining costs2 3,420  4,793  9,716  12,865 
Cash costs$39,206 $40,892 $117,646 $109,837 
Sustaining capital3 12,919  9,128  33,220  29,870 
Co-product all-in sustaining costs$52,125 $50,020 $150,866 $139,707 
By-product credits4 (31,168) (21,246) (93,986) (71,407)
All-in sustaining costs, net of by-product credits$20,957 $28,774 $56,880 $68,300 
Cash costs, net of by-product credits$8,038 $19,646 $23,660 $38,430 
     
Payable ounces of silver equivalent5 3,232  2,835  9,917  8,837 
Co-product cash cost per ounce of payable silver equivalent$12.13 $14.42 $11.86 $12.43 
Co-product AISC per ounce of payable silver equivalent$16.13 $17.64 $15.21 $15.81 
     
Payable ounces of silver 2,180  1,956  6,448  5,989 
By-product cash cost per ounce of payable silver$3.69 $10.04 $3.67 $6.42 
By-product AISC per ounce of payable silver$9.61 $14.71 $8.82 $11.40 

1 Exploration costs are not related to current operations.
2 Represent reductions on customer invoices and included in sales of the LGJV combined statement of operations and income.
3 Sustaining capital excludes resource development drilling costs related to resource development drilling of the CLG deposit.
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 nine months ended September 30, 2024, of $27.09/oz silver, $1.30/lb zinc, $0.92/lb lead, $2,162/oz gold and $3.72/lb copper and the average realized prices during the three months ended September 30, 2024, of $29.62/oz silver, $1.26/lb zinc, $0.93/lb lead and $2,362/oz gold and $3.28/lb copper. Silver equivalents utilize the average realized prices during the nine months ended September 30, 2023, of $25.08/oz silver, $1.10/lb zinc, $0.98/lb lead and $1,828/oz gold and the average realized prices during the three months ended September 30, 2023, of $24.24/oz silver, $0.89/lb zinc, $0.97/lb lead and $1,885/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 Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024
2023
2024
2023
Cash flow used by investing activities$15,591 $15,168 $41,148 $41,160 
Sustaining capital 12,919  9,128  33,220  29,870 
Resource development drilling 2,092  3,452  7,199  10,499 
Materials & supplies   1,826    503 
Change in capital-related accounts payable 580  762  729  288 
Total$15,591 $15,168 $41,148 $41,160 
             

The table below reconciles adjusted net income and adjusted net income per share (basic and diluted), which are non-GAAP measures to net income and net income per share (basic and diluted), respectively, for the Company:

 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024
2023
2024
2023
Net income$9,884 $3,288 $21,572 $530 
Costs related to the proposed Merger with First Majestic 5,314    6,747   
Adjusted net income$15,198 $3,288 $28,319 $530 
Weighted average shares:    
Basic 69,343,979  69,162,223  69,247,280  69,162,223 
Diluted 71,613,178  69,524,838  71,110,386  69,381,222 
Net income per share (basic)$0.14 $0.05 $0.31 $0.01 
Costs related to the proposed Merger with First Majestic per share (basic)$0.08 $ $0.10 $ 
Adjusted net income per share (basic)$0.22 $0.05 $0.41 $0.01 
Costs related to the proposed Merger with First Majestic per share (diluted)$0.07 $ $0.09 $ 
Adjusted net income per share (diluted)$0.21 $0.05 $0.40 $0.01 
             

The table below reconciles EBITDA and adjusted EBITDA, which are non-GAAP measures, to net income for the Company:

 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Net income$9,884 $3,288 $21,572 $530 
Interest expense   332    679 
Interest income (1,322) (389) (3,206) (676)
Income tax expense 529    701   
Depreciation, depletion and amortization 4  3  11  74 
EBITDA$9,095 $3,234 $19,078 $607 
Costs related to the strategic review resulting in the Merger Agreement with First Majestic$5,314   $6,747   
Adjusted EBITDA$14,409 $3,234 $25,825 $607 
             

The table below reconciles EBITDA, a non-GAAP measure, to the LGJV’s net income:

 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Net income$25,720 $15,053 $56,379 $28,500 
Interest expense 102  343  851  484 
Interest income (349) (592) (892) (1,147)
Income tax expense (recovery) 13,867  (884) 31,186  9,814 
Depreciation, depletion and amortization 17,824  16,712  58,901  59,558 
EBITDA$57,164 $30,632 $146,425 $97,209 
             

The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to cash provided by operating activities for the Company, which the Company believes to be the GAAP financial measure most directly comparable to free cash flow.

 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024
2023
2024
2023
Net cash provided by operating activities$34,236 $33,330 $61,171 $25,465 
Net cash used by investing activities        
Free cash flow$34,236 $33,330 $61,171 $25,465 
             

The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to cash provided by operating activities for the LGJV.

 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2024202320242023
Net cash provided by operating activities$58,175 $29,424 $149,983 $103,789 
Net cash used by investing activities (15,591) (15,168) (41,148) (41,160)
Free cash flow$42,584 $14,256 $108,835 $62,629 
             

Please see Appendix A for the unaudited condensed consolidated balance sheets of the Company and the LGJV as of September 30, 2024 and December 31, 2023, the related unaudited condensed consolidated statements of income and comprehensive income of the Company, the unaudited combined statements of operations and comprehensive income of the LGJV for the three and nine months ended September 30, 2024 and 2023, and the unaudited statements of cash flows for the nine months ended September 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 our updated LOM plan, 2024 revised guidance and the expected timing, benefits, impacts, and completion of the proposed Merger with First Majestic, 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


APPENDIX A
GATOS SILVER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

 September 30,December 31,
(US$ in thousands)20242023
ASSETS  
Current Assets  
Cash and cash equivalents$116,732 $55,484 
Related party receivables 292  560 
Other current assets 1,215  22,642 
Total current assets 118,239  78,686 
Non-Current Assets  
Investment in affiliates 285,454  321,914 
Deferred tax assets 222  266 
Other non-current assets 348  38 
Total Assets$404,263 $400,904 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current Liabilities  
Accounts payable and other accrued liabilities$12,226 $33,357 
Non-Current Liabilities  
Lease liability 187   
Stockholders’ Equity  
Common Stock, $0.001 par value; 700,000,000 shares authorized; 69,352,645 and 69,181,047 shares outstanding as of September 30, 2024 and December 31, 2023, respectively 117  117 
Paid-in capital 556,050  553,319 
Accumulated deficit (164,317) (185,889)
Total stockholders’ equity 391,850  367,547 
Total Liabilities and Stockholders’ Equity$404,263 $400,904 
       

GATOS SILVER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)

 Three Months Ended September 30,Nine months ended September 30,
(US$ in thousands, except for share data)2024
20232024
2023
Expenses    
Exploration$144 $ $219 $26 
General and administrative 10,435  7,494  25,270  19,157 
Amortization 4  3  11  74 
Total expenses 10,583  7,497  25,500  19,257 
Other income    
Equity income in affiliates 18,171  9,437  39,985  15,922 
Interest expense   (332)   (679)
Interest income 1,322  389  3,206  676 
Other income 1,503  1,291  4,582  3,868 
Other income 20,996  10,785  47,773  19,787 
Income before taxes 10,413  3,288  22,273  530 
Income tax expense 529    701   
Net income and comprehensive income$9,884 $3,288 $21,572 $530 
Net income per share:    
Basic$0.14 $0.05 $0.31 $0.01 
Diluted$0.14 $0.05 $0.30 $0.01 
Weighted average shares outstanding:    
Basic 69,343,979  69,162,223  69,247,280  69,162,223 
Diluted 71,613,178  69,524,838  71,110,386  69,381,222 
             

GATOS SILVER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 Nine months ended September 30,
(US$ in thousands)20242023
OPERATING ACTIVITIES  
Net income$21,572 $530 
   
Adjustments to reconcile net income to net cash provided (used) by operating activities:  
Amortization 11  74 
Stock-based compensation expense 4,319  3,327 
Equity income in affiliates (39,985) (15,922)
Distributions and dividends received from affiliate 76,445  35,000 
Other 94  837 
   
Changes in operating assets and liabilities:  
Receivables from related‑parties 268  678 
Accounts payable and other accrued liabilities (23,007) 5 
Other current assets 21,454  936 
Net cash provided by operating activities 61,171  25,465 
   
INVESTING ACTIVITIES  
Net cash used by investing activities    
   
FINANCING ACTIVITIES  
Repayment of Credit facility   (9,000)
Lease payments (89)  
Proceeds from exercise of stock options 166   
Net cash provided (used) by financing activities 77  (9,000)
Net increase in cash and cash equivalents 61,248  16,465 
Cash and cash equivalents, beginning of period 55,484  17,004 
Cash and cash equivalents, end of period$116,732 $33,469 
   
Interest paid$16 $417 
Interest earned$3,206 $690 
       

LOS GATOS JOINT VENTURE
COMBINED BALANCE SHEETS
(UNAUDITED)

 September 30,December 31,
(US$ in thousands)2024
2023
ASSETS  
Current Assets  
Cash and cash equivalents$33,884 $34,303 
Receivables 13,646  12,634 
Inventories 16,180  16,397 
VAT receivable 13,417  12,610 
Income tax receivable 9,296  20,185 
Other current assets 3,435  1,253 
Total current assets 89,858  97,382 
Non-Current Assets  
Mine development, net 231,060  234,980 
Property, plant and equipment, net 159,220  171,965 
Deferred tax assets 699  9,568 
Total non-current assets 390,979  416,513 
Total Assets$480,837 $513,895 
LIABILITIES AND OWNERS’ CAPITAL  
Current Liabilities  
Accounts payable and accrued liabilities$33,999 $29,100 
VAT payable 11,873  8,684 
Income taxes payable 11,204  920 
Related party payable 270  560 
Total current liabilities 57,346  39,264 
Non-Current Liabilities  
Lease liability 155  208 
Asset retirement obligation 12,245  11,593 
Deferred tax liabilities 4,974  3,885 
Total non-current liabilities 17,374  15,686 
Owners’ Capital  
Capital contributions 360,638  455,638 
Paid-in capital 18,186  18,186 
Retained earnings (accumulated deficit) 27,293  (14,879)
Total owners’ capital 406,117  458,945 
Total Liabilities and Owners’ Capital$480,837 $513,895 
       

LOS GATOS JOINT VENTURE
COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)

 Three months ended September 30,Nine months ended September 30,
(US$ in thousands)2024202320242023
Revenue$93,839 $67,038 $260,255 $195,162 
Expenses    
Cost of sales 31,204  31,446  93,931  83,255 
Royalties and duties 639  298  1,682  1,024 
Exploration 1,605  998  4,577  2,118 
General and administrative 3,943  4,355  12,317  12,693 
Depreciation, depletion and amortization 17,824  16,712  58,901  59,558 
Total expenses 55,215  53,809  171,408  158,648 
     
Other (income) expense    
Accretion expense 217  273  652  866 
Interest expense 102  343  851  484 
Interest income (349) (592) (892) (1,147)
Other (income) expense (13) (18) 635  13 
Foreign exchange (gain) loss (920) (946) 36  (2,016)
  (963) (940) 1,282  (1,800)
     
Income before taxes 39,587  14,169  87,565  38,314 
Income tax expense (recovery) 13,867  (884) 31,186  9,814 
Net income and comprehensive income$25,720 $15,053 $56,379 $28,500 
             

LOS GATOS JOINT VENTURE
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 Nine months ended September 30,
(US$ in thousands)20242023
Cash flows from operating activities:  
Net income$56,379 $28,500 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation, depletion and amortization 58,901  59,558 
Accretion 652  866 
Deferred taxes 10,210  4,743 
Unrealized loss (gain) on foreign currency rate change 105  (5,007)
Other   (6)
   
Changes in operating assets and liabilities:  
VAT receivable (1,326) 11,215 
Receivables (1,012) 16,725 
Inventories (1,379) (1,429)
Other current assets (2,190) 403 
Income tax receivable 8,495  (633)
Accounts payable and other accrued liabilities 21,438  (8,596)
Payables to related parties (290) (730)
Asset Retirement Obligation   (1,820)
Net cash provided by operating activities 149,983  103,789 
   
Cash flows from investing activities:  
Mine development (32,263) (27,151)
Purchase of property, plant and equipment (8,885) (13,506)
Materials and supplies inventory   (503)
Net cash used by investing activities (41,148) (41,160)
   
Cash flows from financing activities:  
Equipment loan and lease payments (47) (532)
Capital distributions (95,000) (50,000)
Dividends paid to partners (14,207)  
Net cash used by financing activities (109,254) (50,532)
   
Net (decrease) Increase in cash and cash equivalents (419) 12,097 
Cash and cash equivalents, beginning of period 34,303  34,936 
Cash and cash equivalents, end of period$33,884 $47,033 
Interest paid$851 $484 
Interest earned$892 $1,147 
       

FAQ

What was Gatos Silver's (GATO) earnings per share in Q3 2024?

Gatos Silver reported earnings per share of $0.14 in Q3 2024, representing a 200% increase from $0.05 in Q3 2023.

How much silver did Gatos Silver (GATO) produce in Q3 2024?

Gatos Silver produced 2.42 million ounces of silver in Q3 2024, a 9% increase from 2.22 million ounces in Q3 2023.

When is Gatos Silver's (GATO) merger with First Majestic expected to close?

The merger between Gatos Silver and First Majestic is expected to close in the first quarter of 2025.

What was Gatos Silver's (GATO) revenue in Q3 2024?

Gatos Silver's LGJV reported revenue of $93.8 million in Q3 2024, up 40% from $67.0 million in Q3 2023.

Gatos Silver, Inc.

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