The Prospector News

Gatos Silver Reports Second Quarter 2023 Financial Results

You have opened a direct link to the current edition PDF

Open PDF Close
Uncategorized

Share this news article

Gatos Silver Reports Second Quarter 2023 Financial Results

 

 

 

 

 

Gatos Silver, Inc. (TSX: GATO) (NYSE:GATO) announced its second quarter 2023 financial and operating results. The Company will host an investor and analyst call on August 9, 2023, details of which are provided below.

 

The Company has a 70% interest in the Los Gatos Joint Venture, which in turn owns the Cerro Los Gatos mine in Mexico. Production for the second quarter of 2023 was previously disclosed on July 10, 2023. The Company’s reporting currency is US dollars.

 

Dale Andres, CEO of Gatos Silver, said: “The LGJV continues to generate robust cash flows and perform in line with our expectations, and we remain on track to achieve 2023 guidance at CLG. We are in a strong financial position with the Company now debt free and with a strong cash balance. We are progressing well with our planned update to CLG’s mineral resource and reserve estimate which we expect to announce later this quarter, including a new life of mine plan.”

 

Summary

 

LGJV Q2 2023 results compared to Q2 2022 (100% basis):

  • Revenue of $58.3 million, up 2% from $57.2 million
  • Cost of sales $25.8 million, down 7% from $27.8 million
  • Cash flow from operations of $34.3 million, down 11% from $38.5 million
  • Net income $0.7 million, down 78% from $3.4 million
  • Sustaining capital $13.1 million, down 41% from $22.2 million
  • EBITDA $27.5 million, up 29% from $21.4 million¹
  • Free cash flow $19.7 million, up 1% from $19.5 million¹
  • Silver production 2.00 million ounces, down 13% from 2.30 million
  • Silver equivalent production of 3.30 million ounces, down 12% from 3.73 million²
  • Co-product all-in sustaining costs (“AISC”) of $17.55 per ounce of payable silver, up 16% from $15.13¹
  • By-product AISC of $14.32 per ounce of payable silver, up 36% from $10.54¹

¹ See Non-GAAP Financial Measures below
² Silver equivalent production is calculated using prices of $22/oz silver, $1.20/lb zinc, $0.90/lb lead and $1,700/oz gold

 

In Q2 2023, Gatos Silver’s net loss was $3.6 million or $(0.05) per share compared with net income of $5.2 million or $0.08 per share in Q2 2022. The decline is primarily attributable to lower equity income from the LGJV driven by higher depreciation, depletion and amortization and income tax expenses. Higher general and administrative expenses for the quarter were attributable in part to auditing and consulting costs for the restatement of financial results which are non-recurring expenses.

 

On July 20, 2023, subsequent to the quarter end, the Company received a $35.0 million cash distribution from the LGJV, of which $9.0 million was used to pay the entire outstanding balance of the Revolving Credit Facility. As of July 31, 2023, the Company is debt free with a cash position of $36.0 million and $50 million available under the Revolving Credit Facility. As of July 31, 2023 the LGJV is debt free and has a cash position of $30.1 million.

 

Financial and Operating Results

 

Below is select operational and financial information for the three and six months ended June 30, 2023, and 2022. For a detailed discussion of the three and six months financial and operating results refer to the Form 10-Q for the quarter ended June 30, 2023 filed on August 8, 2023 on both the EDGAR and SEDAR systems and posted on the Company’s website at https://gatossilver.com. Totals may not add due to rounding.

 

Los Gatos Joint Venture

 

CLG 100% Basis
Selected Financial Information
Three Months Ended
June 30,
Six Months Ended
June 30,
Amounts in millions unless otherwise stated 2023 2022 2023 2022
Revenue $ 58.3   $ 57.2   $ 128.1   $ 144.8  
Cost of sales   25.8     27.8     51.8     52.9  
Royalties   0.3     0.9     0.7     2.4  
Exploration   0.7     2.2     1.1     4.4  
General and administrative   4.4     3.6     8.3     6.4  
Depreciation, depletion and amortization   22.0     16.1     42.8     32.4  
Other (income) expense   (0.4)     1.4     (0.9)     1.1  
Income tax expense   4.7     1.8     10.7     15.8  
Net income $ 0.7   $ 3.4   $ 13.4   $ 29.4  
         
Sustaining capital $ 13.1   $ 22.2   $ 20.7   $ 40.0  
Resource development drilling expenditures $ 4.0   $   $ 7.0   $  
EBITDA¹ $ 27.5   $ 21.4   $ 67.1   $ 77.9  
Cash flow provided by operating activities $ 34.3   $ 38.5   $ 74.4   $ 80.5  
Free cash flow¹ $ 19.7   $ 19.5   $ 48.4   $ 42.4  
         
Operating Results (CLG 100% Basis)        
Tonnes milled (dmt)   265,342     211,350     525,770     446,335  
Tonnes milled per day (dmt)   2,916     2,323     2,905     2,466  
Average Grades        
Silver grade (g/t)   265     374     296     363  
Zinc grade (%)   4.00     5.03     3.96     4.56  
Lead grade (%)   1.85     2.79     1.86     2.49  
Gold grade (g/t)   0.26     0.38     0.28     0.34  
Production – Contained Metal        
Silver ounces (millions)   2.00     2.30     4.43     4.69  
Zinc pounds – in zinc conc. (millions)   14.8     15.6     28.9     29.3  
Lead pounds – in lead conc. (millions)   9.7     11.8     19.1     22.0  
Gold ounces – in lead conc. (thousands)   1.2     1.3     2.6     2.6  
Silver equivalent ounces (millions)²   3.30     3.73     6.99     7.39  
Co-product cash cost per ounce of payable silver equivalent¹ $ 12.72   $ 9.48   $ 11.49   $ 9.48  
By-product cash cost per ounce of payable silver¹ $ 7.10   $ (0.10)   $ 4.66   $ (0.15)  
Co-product AISC per ounce of payable silver equivalent¹ $ 17.55   $ 15.13   $ 14.94   $ 14.77  
By-product AISC per ounce of payable silver¹ $ 14.32   $ 10.54   $ 9.80   $ 9.17  

¹ See Non-GAAP Financial Measures below
² Silver equivalent production is calculated using prices of $22/oz silver, $1.20/lb zinc, $0.90/lb lead and $1,700/oz gold

Gatos Silver, Inc.

 

Select Financial information Three Months Ended
June 30,
Six Months Ended
June 30,
(Amounts in millions, except net loss per share) 2023 2022 2023 2022
Exploration $   $   $   $ 0.1  
General and Administrative   6.1     4.3     11.7     11.0  
Amortization   0.0     0.0     0.1     0.1  
Total expenses   6.2     4.3     11.8     11.2  
Equity income in affiliates   1.5     8.8     6.5     15.6  
Other income   1.1     1.1     2.5     2.3  
Net other income   2.6     9.9     9.0     17.9  
Income tax expense       0.3         0.3  
Net (loss) income $ (3.6 ) $ 5.2   $ (2.8 ) $ 6.3  
Net (loss) income per share $ (0.05 ) $ 0.08   $ (0.04 ) $ 0.09  
         
EBITDA¹ $ (3.4 ) $ 5.7   $ (2.3 ) $ 6.9  
Cash (used) provided by operating activities $ (3.8 ) $ 2.0   $ (7.9 ) $ 0.7  
Free cash flow¹ $ (3.8 ) $ 2.0   $ (7.9 ) $ 0.7  

¹ See Non-GAAP Financial Measures below

2023 Guidance Unchanged

 

The Company’s 2023 production and cost guidance remains unchanged. Silver production was higher in the first half of 2023 than the annual guidance run rate as expected in the mine plan. Based on current mine plan sequencing at CLG, the Company expects the quarterly production run rate for silver to be lower and zinc and lead to be slightly higher for the remainder of the year compared with the first half.

 

Quarterly co-product and by-product AISCs are expected to be similar to the second quarter for the remainder of the year. The Company expects ongoing cost reduction initiatives to continue to help offset impacts from the current lower by-product prices and the stronger Mexican peso.

 

The Company continues to expect sustaining capital expenditures at CLG of $45 million in 2023 ($20.7 million spent in H1 2023). Total exploration and resource definition drilling expenditures are now expected to be $16 million in 2023 up from $13 million previously forecast. Of the $16 million, $13 million is expected to be capitalized as a resource development expenditure. In the first half of 2023, exploration expenditures were $1.1 million and capitalized resource definition drilling expenditures were $7.0 million.

 

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 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.

 

Posted August 9, 2023

Share this news article

MORE or "UNCATEGORIZED"


Hudbay Completes Upsized Bought Deal Equity Offering

Hudbay Minerals Inc. (TSX:HBM) (NYSE: HBM) is pleased to announc... READ MORE

May 24, 2024

PANTHER MINERALS CLOSES FIRST TRANCHE OF PRIVATE PLACEMENT

Panther Minerals Inc. (CSE: PURR), is pleased to announce that t... READ MORE

May 24, 2024

SILVERCORP REPORTS ADJUSTED NET INCOME OF $39.3 MILLION, $0.22 PER SHARE, AND CASH FLOW FROM OPERATIONS OF $91.6 MILLION FOR FISCAL 2024SILVERCORP REPORTS ADJUSTED NET INCOME OF $39.3 MILLION, $0.22 PER SHARE, AND CASH FLOW FROM OPERATIONS OF $91.6 MILLION FOR FISCAL 2024

Silvercorp Metals Inc.  (TSX: SVM) (NYSE American: SVM) reported... READ MORE

May 24, 2024

Guanajuato Silver Reports Q1 2024 Financial and Operating Results

Guanajuato Silver Company Ltd. (TSX-V:GSVR) (OTCQX:GSVRF) has r... READ MORE

May 24, 2024

ARIS MINING TO INCREASE OWNERSHIP IN SOTO NORTE PROJECT TO 51% AND COMMENCES STUDY TO ASSESS NEW DEVELOPMENT PLAN

Aris Mining Corporation (TSX: ARIS) (NYSE-A: ARMN) announces that... READ MORE

May 24, 2024

Copyright 2024 The Prospector News