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Gatos Silver Reports 2023 Silver Production Near Top End of Guidance

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Gatos Silver Reports 2023 Silver Production Near Top End of Guidance

 

 

 

 

 

Gatos Silver, Inc. (NYSE:GATO) (TSX: GATO) announced production results for the quarter and year ended December 31, 2023 at its 70%-owned Cerro Los Gatos mine in Mexico. Silver production and silver equivalent production were both near the top end of the 2023 guidance range, even after taking into account an upward guidance revision in November 2023.

 

Dale Andres, CEO of Gatos Silver, commented: “The CLG mine performed very well during the fourth quarter and full year 2023. The operation achieved another record for mill throughput, with a quarterly average higher than 3,000 tonnes per day during the fourth quarter. This was the fourth consecutive quarterly increase in mill throughput rate, partially offsetting the expected lower grades of ore mined in 2023 compared with 2022. We are very encouraged by recent mill throughput tests, which indicate that 3,500 tonnes per day is possible without significant capital investment. We are also continuing to evaluate mill expansion options up to 4,000 tonnes per day in conjunction with further mine life extension opportunities.”

 

2023 CLG Production Results Compared with Guidance (100% basis)

 

Contained Metal Original 2023
Guidance
Updated 2023
Guidance
2023
Actual
Silver ounces (millions) 7.4 – 8.2 8.8 – 9.3 9.21
Zinc pounds – in zinc conc. (millions) 57 – 63 57 – 63 57.3
Lead pounds – in lead conc. (millions) 36 – 40 36 – 40 38.9
Gold ounces – in lead conc. (thousands) 5.4 – 6.2 5.4 – 6.2 5.26
Silver Equivalent ounces (millions)1 12.4 – 13.8 13.8 – 14.6 14.33

1 Silver equivalent production is calculated using prices of US$22/oz silver, US$1.20/lb zinc, US$0.90/lb lead and US$1,700/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).

 

Due to the continued strong performance of CLG during 2023 and changes to mine plan sequencing, Gatos Silver increased production guidance for silver and silver equivalent on November 6, 2023 from the original levels provided on February 23, 2023. Production guidance for zinc, lead and gold did not change after February 23, 2023. Gatos Silver expects to provide annual production and cost guidance for 2024 toward the end of February.

 

As shown in the table above, 2023 silver production of 9.21 million ounces and silver equivalent production of 14.33 million ounces were both close to the high end of upwardly revised guidance. For metals with no guidance change during 2023, lead production of 38.9 million pounds was close to the high end of guidance, zinc production of 57.3 million pounds was slightly higher than the low end of guidance, and gold production was slightly below guidance.

 

Production Results (100% basis)

 

CLG comparative production highlights are summarized below:

 

  Three Months Ended
December 31,
Year Ended
December 31,
CLG Production 2023 2022 2023 2022
Tonnes milled (dmt) 277,318 261,929 1,071,400 971,595
Tonnes milled per day (dmt) 3,014 2,847 2,935 2,662
Feed Grades        
Silver (g/t) 318 387 299 368
Zinc (%) 3.86 3.74 3.90 4.37
Lead (%) 1.86 1.95 1.85 2.31
Gold (g/t) 0.30 0.30 0.29 0.33
Contained Metal        
Silver ounces (millions) 2.56 2.92 9.21 10.32
Zinc pounds – in zinc conc. (millions) 14.6 13.5 57.3 60.7
Lead pounds – in lead conc. (millions) 10.2 9.7 38.9 43.9
Gold ounces – in lead conc. (thousands) 1.39 1.36 5.26 5.35
Silver Equivalent ounces (millions)1 3.88 4.16 14.33 15.84
Recoveries        
Silver – in both lead and zinc concentrates 90.3% 89.6% 89.4% 89.8%
Zinc – in zinc concentrate 61.8% 62.7% 62.1% 64.8%
Lead – in lead concentrate 89.8% 86.3% 88.7% 88.7%
Gold – in lead concentrate 51.6% 53.9% 52.4% 52.0%

1 Silver equivalent production is calculated using prices of US$22/oz silver, US$1.20/lb zinc, US$0.90/lb lead and US$1,700/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).

 

Mill throughput averaged 3,014 tonnes per day during the fourth quarter of 2023, an increase of 6% compared to the fourth quarter of 2022, and averaged 2,935 tonnes per day during 2023, an increase of 10% compared to 2022.

 

As expected, overall metal production in 2023 was lower than 2022 because lower ore grades more than offset improved mill throughput. Silver production in 2023 declined by 11% from a record 10.32 million ounces in 2022. Zinc production declined by 6%, lead production by 12%, and gold production by 2%.

 

Silver production in the fourth quarter of 2023 was 2.56 million ounces, 12% below the record 2.92 million ounces in the fourth quarter of 2022. However, zinc, lead and gold production increased by 8%, 5%, and 2%, respectively, compared with the fourth quarter of 2022.

 

Increased fourth quarter and 2023 mill throughput rates were supported by continued debottlenecking and optimization efforts focused on achieving higher mining rates through increased productivity and improved mine plan flexibility.

 

During December various mill throughput capacity tests were successfully completed to better understand current plant capabilities and future bottlenecks. The mill operated for 27.3 days during December and achieved an average of 3,573 tonnes per operational day with the highest being 4,096 tonnes with good metallurgical performance. During the test period, minor electrical modifications were made to the mill motors and mill programming. After taking into account maintenance downtime and the additional downtime for electrical upgrades during the month, the mill averaged 3,145 tonnes per day during the month.

 

The test work has identified further plant optimization work necessary for the plant to achieve 3,500 tonnes per day consistently, and those modifications are expected to be made during H1 2024 at a cost of less than US$0.5 million. The mine continues to be the constraint on improving mill throughput beyond 3,000 tonnes per day on a sustainable basis. During 2024, the operation will be focused on further debottlenecking efforts in the mine and life extension to take advantage of both current and future mill capabilities.

 

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, the Company is primarily focused on operating the Cerro Los Gatos mine and on growth and development of the Los Gatos district. The LGJV consists of 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.

 

Posted January 10, 2024

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