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) | 2024 | 2023 | 2024 |
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) | 2024 | 2023 | 2024 | 2023 | ||||||||
| 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) | 2024 | 2023 | 2024 | 2023 | ||||||||
| 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) | 2024 | 2023 | 2024 | 2023 | ||||||||
| 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) | 2024 | 2023 | 2024 | 2023 | ||||||||
| 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
[email protected]
(604) 424 0984
APPENDIX A
GATOS SILVER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, | December 31, | |||||
| (US$ in thousands) | 2024 | 2023 | ||||
| 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 |
2023 | 2024 |
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) | 2024 | 2023 | ||||
| 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) | 2024 | 2023 | 2024 | 2023 | ||||||||
| 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) | 2024 | 2023 | ||||
| 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 | ||
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