Gatos Silver Reports Fourth Quarter and Full Year 2023 Results and Provides 2024 Guidance
Gatos Silver, Inc. announced its fourth quarter and full year 2023 financial results, highlighting strong operational performance and lower AISC per silver ounce. The Company expects silver production of 8.4-9.2 million ounces in 2024 with an AISC of $9.50-$11.50 per payable ounce produced. Net income, earnings per share, and EBITDA for Q4 2023 increased significantly. The Company remains debt-free with a cash balance of $55.5 million.
Positive
Strong operational performance with lower AISC per silver ounce in Q4 2023
Expected silver production of 8.4-9.2 million ounces in 2024 with AISC of $9.50-$11.50 per payable ounce produced
Significant increase in net income, earnings per share, and EBITDA for Q4 2023
Debt-free status with a cash balance of $55.5 million
The financial results of Gatos Silver, Inc. reflect a mixed performance. The company's net income and EBITDA for Q4 2023 have shown significant improvements year-over-year, indicating effective cost management and operational efficiency. However, revenue has decreased, suggesting a potential drop in silver prices or a reduction in silver sales volume. The increase in cash balance and the company's debt-free status are positive indicators of financial health, providing Gatos Silver with a buffer against market volatility and the flexibility to invest in further growth opportunities.
Investors should note the AISC as a key metric, which has remained at the lower end of the guidance range. This efficiency in maintaining low production costs, even after accounting for by-product credits, can be an attractive point for stakeholders, as it may signal the company's resilience to cost pressures and its potential to sustain profitability in a fluctuating commodities market.
Gatos Silver's operational performance, including the extension of CLG mine's life and the projected increase in silver production for 2024, is a strategic move that could impact the silver market supply dynamics. The company's debottlenecking initiatives and optimization efforts are poised to enhance production capacity, which could lead to increased market share and influence over silver prices. However, the forecasted lower feed grades in the first quarter may temper investor expectations in the short term.
Additionally, the company's focus on exploration and drilling, especially in the South East Deeps zone, underscores its commitment to resource expansion and longevity of operations. The capital allocation towards exploration reflects a long-term growth strategy that could yield significant returns if new silver deposits are discovered and developed efficiently.
The shift in cash distribution from dividends in 2022 to capital distributions in 2023 is a noteworthy change in Gatos Silver's financial strategy. This move, aimed at tax efficiency, requires careful consideration of the legal and regulatory implications, particularly in cross-border operations. Stakeholders should be aware of the potential impact on their individual tax situations and the overall effect on the company's financial statements. It is crucial for the company to maintain transparency and compliance with financial reporting standards to avoid legal complications and retain investor confidence.
02/21/2024 - 12:32 AM
VANCOUVER, British Columbia, Feb. 21, 2024 (GLOBE NEWSWIRE) -- Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the “Company”) today announced its fourth quarter and full year 2023 financial and operating results. The Company will host an investor and analyst call on February 21, 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. Production for the fourth quarter of 2023 was previously disclosed on January 9, 2024. The Company’s reporting currency is US dollars.
Dale Andres, CEO said: “During the fourth quarter we continued to add cash to the balance sheet, generated from another quarter of strong operational performance at the LGJV. All-in sustaining cost (“AISC”) per silver ounce was at the lower end of 2023 guidance thanks to improved operating efficiencies, which helped to offset inflationary cost pressures and the impact of the stronger Mexican peso.”
“For 2024, we expect silver production of 8.4 million ounces to 9.2 million ounces at an AISC, after by-product credits, of $9.50 t o $11.50 per payable ounce produced. On a quarterly basis, we expect production will gradually increase throughout the year as we debottleneck the mine and further optimize the mill at CLG. Conversion drilling of the South-East Deeps inferred resource to extend mine life is progressing well and the LGJV has started ramping up exploration efforts on near mine targets in the Los Gatos district.”
Summary
LGJV 2023 results (100% basis):
CLG life of mine extended by 2.75 years to the end of 2030 with a 46% increase in total silver production Cost of sales only 4% higher than 2022, despite mining and processing 10% more tonnes year over year Cash from operating activities of $142.0 million and free cash flow of $84.9 million 1 AISC after by-product credits of $11.33 1 per payable silver ounce produced on our previously disclosed production of 9.2 million ounces Gatos Silver 2023 results:
Net income of $12.9 million or $0.19 per basic and $0.18 per diluted share Received capital distribution of $59.5 million from the LGJV Cash used by operating activities of $12.0 million and free cash flow of $47.5 million 1 Year-end cash balance of $55.5 million and no debt LGJV Q4 2023 results compared to Q4 2022 (100% basis):
Revenue of $73.5 million , down 21% from $93.0 million Cost of sales $28.0 million , up 10% from $25.5 million Net income $24.9 million , down 16% from $29.8 million EBITDA $38.6 million , down 38% from $61.9 million 1 Cash from operating activities of $38.2 million , down 2% from $39.1 million Sustaining capital $11.7 million , down 40% from $19.5 million 1 Free cash flow $22.3 million , up 19% from $18.7 million 1 Co-product AISC of $14.73 per ounce of payable silver, down 0.5% from $14.80 1 By-product AISC of $11.12 per ounce of payable silver, down 8% from $12.13 1 Gatos Silver Q4 2023 results compared to Q4 2022:
Net income of $12.3 million , up 160% from $4.7 million Basic and diluted earnings per share of $0.18 , up 157% from $0.07 EBITDA $11.8 million , up 116% from $5.5 million 1 Cash used in operating activities of $2.5 million , compared to cash provided by operations of $5.9 million Free cash flow $22.0 million , up 277% from $5.8 million 1 1 See “Non-GAAP Financial Measures” below
For Gatos Silver, higher net income, earnings per share and EBITDA1 for Q4 2023 were primarily attributable to a decrease in general and administrative expenses and lower legal settlement expenses. The change in operating cash flow was primarily attributable to the dividend payment received in Q4 2022. The increase in free cash flow1 was a result of the capital distribution received in Q4 2023.
Cash distributions to the LGJV partners in 2023 have been made through capital distributions which is more tax efficient than distributing cash dividends. As a result, cash distributions are currently shown on the balance sheet as cash flow received from investing activities, as opposed to being included as cash flows from operating activities as in 2022 when dividends were paid by the LGJV.
As of December 31, 2023, the Company had a cash balance of $55.5 million , up 226% from $17.0 million a year earlier. The increase in cash was primarily due to receipt of $59.5 million in capital distributions and a $6.0 million management fee from the LGJV, partly offset by general and administrative costs incurred in the year.
As of January 31, 2023, the Company had a cash balance of $53.1 million and the LGJV had a cash balance of $43.1 million . On February 15, 2024, the LGJV made a capital distribution to its partners of $30.0 million of which the Company received $21.0 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 months and years ended December 31, 2023 and 2022. For a detailed discussion of the year ended December 31, 2023 financial and operating results refer to the Form 10-K for the year ended December 31, 2023, filed on February 20, 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 December 31, Year Ended December 31, (in millions, except where otherwise stated) 2023 2022 2023 2022 Revenue $73.5 $93.0 $268.7 $311.7 Cost of sales $28.0 $25.5 $111.3 $107.1 Royalties $0.3 $0.3 $1.4 $3.1 Exploration $0.8 $3.6 $2.9 $9.8 General and administrative $5.4 $4.5 $18.1 $14.3 Depreciation, depletion and amortization $15.6 $17.0 $75.1 $69.4 Other (income) expense $0.2 ($2.6 ) ($1.6 ) ($1.4 ) Income tax expense ($1.7 ) $14.8 $8.1 $37.3 Net income $ 24.9 $ 29.8 $ 53.4 $ 72.2 Sustaining capital1 $11.7 $19.5 $41.6 $76.5 Resource development drilling expenditures1 $3.0 $— $13.5 $— EBITDA1 $38.6 $61.9 $135.8 $179.5 Cash provided by operating activities $38.2 $39.1 $142.0 $157.4 Free cash flow1 $22.3 $18.7 $84.9 $75.1 Operating Results (CLG 100% Basis) 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 Average Grades Silver grade (g/t) 318 387 299 368 Zinc grade (%) 3.86 3.74 3.90 4.37 Lead grade (%) 1.86 1.95 1.85 2.31 Gold grade (g/t) 0.30 0.30 0.29 0.33 Production - Contained Metal Silver ounces (millions) 2.6 2.9 9.2 10.3 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) 1.4 1.3 5.3 5.3 Silver equivalent ounces (millions)2 3.9 4.2 14.3 15.8 Co-product cash cost per ounce of payable silver equivalent1 $11.26 $9.61 $12.11 $9.41 By-product cash cost per ounce of payable silver1 $6.02 $4.83 $6.31 $2.17 Co-product AISC per ounce of payable silver equivalent1 $14.73 $14.80 $15.51 $14.33 By-product AISC per ounce of payable silver1 $11.12 $12.13 $11.33 $10.24
1 See Non-GAAP Financial Measures below2 Totals may not add up due to rounding3 Silver equivalent production for both 2022 and 2023 is calculated using prices of $22 /oz silver, $1.20 /lb zinc, $0.90 /lb lead and $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).
Gatos Silver, Inc.
Selected Financial Information (Unaudited) Three Months Ended December 31, Year Ended December 31, (in millions, except where otherwise stated) 2023 2022 2023 2022 Exploration $— $— $— $ 0.1 General and Administrative 6.5 8.5 25.7 25.5 Amortization — — 0.1 0.2 Total expenses 6.5 8.5 25.8 25.8 Equity income in affiliates 17.7 20.7 33.6 45.2 Other income, net 1.3 (6.7 ) 5.1 (3.4 ) Total net other income 19.0 14.0 38.8 41.9 Income tax expense 0.1 0.7 0.1 1.6 Net income $ 12.3 $ 4.7 $ 12.9 $ 14.5 Net income per share basic $ 0.18 $ 0.07 $ 0.19 $ 0.21 Net income per share diluted $0.18 $0.07 $0.18 $0.21 EBITDA1 $11.8 $5.5 $12.4 $16.6 Cash (used) provided by operating activities ($2.5 ) $5.9 ($12.0 ) $14.6 Free cash flow1 $22.0 $5.8 $47.5 $14.5
1 See Non-GAAP Financial Measures below2 Totals may not add up due to rounding
2024 Guidance (CLG 100% basis)
Production and cost guidance for 2024 is shown in the table below:
CLG 2024 Full Year Guidance (100% Basis) Production guidance - Contained Metal Silver ounces (millions) 8.4 – 9.2 Zinc pounds - in zinc conc. (millions) 61 – 69 Lead pounds - in zinc conc. (millions) 40 – 46 Gold ounces - in zinc conc. (thousands) 4.5 – 5.5 Silver Equivalent ("AgEq") ounces - (millions)1 13.5 – 15.0 All-in Sustaining Cost (AISC)2 By-product basis ($/oz Ag payable) $9.50 – $11.50 Co-product basis ($/oz AgEq payable) $14.00 – $16.00
1 Silver equivalent production is calculated using prices of $23 /oz silver, $1.20 /lb zinc, $0.90 /lb lead and $1,800 /oz gold to “convert” zinc, lead and gold production contained in concentrate to “equivalent” silver ounces (contained metal, multiplied by price, divided by silver price). For 2022 and 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 in the table above at these price assumptions would be 13.7 – 15.3 million ounces.2 Financial metrics assume an exchange rate of 18.50 Mexican Pesos per US$1.00 . In 2022 and 2023, an exchange rate of 20.00 Mexican Pesos per US$1.00 was assumed. Costs used in calculating financial metrics include an allocation for Gatos Silver and Dowa corporate costs paid by the Los Gatos Joint Venture (“LGJV”) of approximately $7 million per year. See “Non-GAAP Financial Performance Measures” for additional information.
Gatos Silver expects plant throughput to average between 3,000 and 3,300 tonnes processed per day in 2024, compared to 2,935 tonnes per day in 2023. Feed grades to the mill are expected to be lower in the first quarter versus the average grades expected during the year. Following previously disclosed mill throughput tests conducted in December 2023 demonstrating higher capacity with good metallurgical performance, the LGJV plans to continue to strive to achieve sustainably higher plant throughput rates as mine debottlenecking efforts continue with a medium-term target to sustain 3,500 tonnes per day beyond 2024, or 40% above original design capacity.
The Company expects sustaining capital expenditures at CLG (100% basis) to be approximately $45 million in 2024, of which $25 million is for underground development primarily to access the lower levels of the NW and Central zones and to further develop access to the SE zone. The remainder of capital expenditures are expected to be primarily associated with minor upgrades to the processing plant, equipment replacements and rebuilds, and dewatering and other infrastructure work including projects to help improve operating efficiencies and to support debottlenecking efforts in the mine.
Exploration and definition drilling expenditures are expected to be approximately $18 million in 2024, of which $9 million is expected to be capitalized and incurred on resource development drilling primarily in the South East Deeps zone and $9 million expensed and incurred on greenfield exploration. The LGJV currently has eight active drill rigs on surface and four underground. The primary focus until the end of the first quarter of 2024 is infilling the South East Deeps zone to approximately 50 metre spacing for the 2024 mineral resource and mineral reserve update anticipated to be announced in the third quarter of 2024. After the end of the first quarter, the focus for the surface drilling rigs is expected to shift to other district targets including Portigueño, San Luis and El Lince.
Financial Results Webcast and Conference Call
Investors and analysts are invited to attend the financial results webcast and conference call as follows:
Date: Wednesday, February 21, 2024https://events.q4inc.com/attendee/541149212 https://registrations.events/direct/Q4I90079276
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.
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.
EBITDA
Management uses earnings before interest, income tax, depreciation, depletion and amortization (“EBITDA”) to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. EBITDA do not represent, and should not be considered an alternative to, net income or cash flow from operations as determined under GAAP.
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 December 31, Year Ended December 31, (in thousands, except where otherwise stated) 2023 2022 2023 2022 Expenses $ 50,034 $ 50,921 $ 208,682 $ 203,631 Depreciation, depletion and amortization (15,552 ) (17,040 ) (75,110 ) (69,380 ) Exploration1 (757 ) (3,565 ) (2,875 ) (9,800 ) Treatment and refining costs2 4,309 5,797 17,174 21,871 Cash costs $ 38,034 $ 36,113 $ 147,871 $ 146,322 Sustaining capital3 11,701 19,490 41,571 76,526 Co-product all-in sustaining costs $ 49,735 $ 55,603 $ 189,442 $ 222,848 By-product credits4 (24,241 ) (23,243 ) (95,648 ) (125,782 ) All-in sustaining costs, net of by-product credits $ 25,494 $ 32,360 $ 93,794 $ 97,066 Cash costs, net of by-product credits $ 13,793 $ 12,870 $ 52,223 $ 20,540 Payable ounces of silver equivalent5 3,377 3,756 12,214 15,552 Co-product cash cost per ounce of payable silver equivalent $ 11.26 $ 9.61 $ 12.11 $ 9.41 Co-product AISC per ounce of payable silver equivalent $ 14.73 $ 14.80 $ 15.51 $ 14.33 Payable ounces of silver 2,293 2,667 8,282 9,482 By-product cash cost per ounce of payable silver $ 6.02 $ 4.83 $ 6.31 $ 2.17 By-product AISC per ounce of payable silver $ 11.12 $ 12.13 $ 11.3 $ 10.24
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 income (loss).3 Sustaining capital excludes resource development drilling costs related to resource development drilling of the South- East Deeps zone.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 Payable silver equivalents utilize the average realized prices during the year ended December 31, 2023, of $24.33 /oz silver, $1.10 /lb zinc, $0.97 /lb lead and $1,818 /oz gold and the average realized prices during the three months ended December 31, 2023, of $22.36 /oz silver, $1.10 /lb zinc, $0.95 /lb lead and $1,789 /oz gold. Payable silver equivalents utilize the average realized prices during the year ended December 31, 2022, of $20.72 /oz silver, $1.58 /lb zinc, $0.90 /lb lead and $1,678 /oz gold and the average realized prices during the three months ended December 31, 2022, of $21.35 /oz silver, $1.09 /lb zinc, $0.89 /lb lead and $1,591 /oz gold. Realized prices include the impact of final settlement adjustments from sales.
The following table provides a breakdown of cash flows used by investing activities of the LGJV:
Three Months Ended December 31, Twelve Months Ended December 31, (in thousands) 2023 2022 2023 2022 Cash flow used by investing activities $ 15,927 $ 20,376 $ 57,087 $ 82,279 Sustaining capital $ 11,701 $ 19,490 $ 41,571 $ 76,526 Resource development drilling 2,965 — 13,464 — Materials & supplies 97 (8 ) 600 327 Amount included in accounts payable 1,164 894 1,452 5,426 Total $ 15,927 $ 20,376 $ 57,087 $ 82,279
The table below reconciles EBITDA, a non-GAAP measure to Net income for the Company:
Three Months Ended December 31, Twelve Months Ended December 31, (in thousands) 2023 2022 2023 2022 Net income $ 12,330 $ 4,744 $ 12,860 $ 14,529 Interest expense — 65 679 433 Interest income (656 ) (105 ) (1,332 ) (154 ) Income tax expense 114 700 114 1,565 Depreciation, depletion and amortization 5 48 79 180 EBITDA $ 11,793 $ 5,452 $ 12,400 $ 16,553
The table below reconciles of EBITDA, a non-GAAP measure, to the LGJV’s Net income:
Three Months Ended December 31, Twelve Months Ended December 31, (in thousands) 2023 2022 2023 2022 Net income $ 24,943 $ 29,822 $ 53,443 $ 72,216 Interest expense 176 214 660 582 Interest income (420 ) — (1,567 ) — Income tax expense (1,667 ) 14,818 8,147 37,306 Depreciation, depletion and amortization 15,552 17,040 75,110 69,380 EBITDA $ 38,584 $ 61,894 $ 135,793 $ 179,484
The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Cash (used) provided by operating activities 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 December 31, Twelve Months Ended December 31, (in thousands) 2023 2022 2023 2022 Net cash (used) provided by operating activities ($ 2,485 ) $ 5,874 ($ 12,020 ) $ 14,554 Net cash provided (used) by investing activities 24,500 (33 ) 59,500 (60 ) Free cash flow $ 22,015 $ 5,841 $ 47,480 $ 14,494
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 December 31, Twelve Months Ended December 31, (in thousands) 2023 2022 2023 2022 Net cash provided by operating activities $ 38,212 $ 39,124 $ 142,001 $ 157,374 Net cash used by investing activities (15,927 ) (20,376 ) (57,087 ) (82,279 ) Free cash flow $ 22,285 $ 18,748 $ 84,914 $ 75,095
Please see Appendix A for the unaudited balance sheets of the Company and the LGJV as of December 31, 2023 and 2022, the related unaudited consolidated statements of income of the Company, unaudited combined statements of operations of the LGJV, and statement of cash flows for the years then end.
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 the progress of conversion drilling and exploration, production and cost guidance for 2024, and expected or potential feed grades, mine debottlenecking, processing rates, capital costs and exploration expenditures, 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
APPENDIX A
GATOS SILVER, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED )
As of December 31, (US$ in thousands) 2023 2022 ASSETS Current Assets Cash and cash equivalents $ 55,484 $ 17,004 Related party receivables 560 1,773 Other current assets 22,642 16,871 Total current assets 78,686 35,648 Non-Current Assets Investment in affiliates 321,914 347,793 Deferred tax assets 266 — Other non-current assets 38 60 Total Assets $ 400,904 $ 383,501 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable, accrued and other liabilities $ 33,357 $ 26,358 Non-Current Liabilities Credit Facility, net of debt issuance costs — 8,661 Stockholders’ Equity Common Stock, $0.00 1 par value; 700,000,000 shares authorized; 69,181,047 and 69,162,223 shares outstanding as of December 31, 2023 and December 31, 2022, respectively 117 117 Paid-in capital 553,319 547,114 Accumulated deficit (185,889 ) (198,749 ) Total stockholders’ equity 367,547 348,482 Total Liabilities and Stockholders’ Equity $ 400,904 $ 383,501
GATOS SILVER, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(US$ in thousands, except for share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Expenses Exploration $ — $ — $ 26 $ 110 General and administrative 6,531 8,501 25,688 25,468 Amortization 5 48 79 180 Total expenses 6,536 8,549 25,793 25,758 Other income Equity income in affiliates 17,700 20,703 33,622 45,230 Legal settlement loss (1,500 ) (7,900 ) (1,500 ) (7,900 ) Interest expense — (65 ) (679 ) (433 ) Interest income 656 105 1,332 154 Other income 2,124 1,150 5,992 4,801 Total net other income 18,980 13,993 38,767 41,852 Income before taxes 12,444 5,444 12,974 16,094 Income tax expense 114 700 114 1,565 Net income $ 12,330 $ 4,744 $ 12,860 $ 14,529 Net income per share: Basic $ 0.18 $ 0.07 $ 0.19 $ 0.21 Diluted $ 0.18 $ 0.07 $ 0.18 $ 0.21 Weighted average shares outstanding: Basic 69,167,601 69,162,223 69,163,564 69,162,223 Diluted 70,074,615 69,309,019 69,536,298 69,309,019
GATOS SILVER, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the year ended December 31, (US$ in thousands) 2023 2022 OPERATING ACTIVITIES Net income $ 12,860 $ 14,529 Adjustments to reconcile net loss to net cash used by operating activities: Amortization 79 180 Stock-based compensation expense 5,336 2,840 Equity income in affiliates (33,622 ) (45,230 ) Other 1,159 199 Deferred tax asset (266 ) — Dividends from affiliates — 30,775 Changes in operating assets and liabilities: Receivables from related‑parties 1,213 (180 ) Accounts payable and other accrued liabilities 6,992 24,632 Other current assets (5,771 ) (13,191 ) Net cash (used) provided by operating activities (12,020 ) 14,554 INVESTING ACTIVITIES Purchase of property, plant and equipment — (60 ) Capital distribution received from affiliate 59,500 — Net cash provided (used) by investing activities 59,500 (60 ) FINANCING ACTIVITIES Credit Facility repayment (9,000 ) (4,000 ) Financing costs — (106 ) Net cash used by financing activities (9,000 ) (4,106 ) Net increase in cash and cash equivalents 38,480 10,388 Cash and cash equivalents, beginning of period 17,004 6,616 Cash and cash equivalents, end of period $ 55,484 $ 17,004 Interest paid $ 417 $ 645 Supplemental disclosure of noncash transactions: Recognition of Right of Use Asset and Lease Liability $ — $ 128
LOS GATOS JOINT VENTURE COMBINED BALANCE SHEETS (UNAUDITED)
As of December 31, (US$ in thousands) 2023 2022 ASSETS Current Assets Cash and cash equivalents $ 34,303 $ 34,936 Receivables 12,634 26,655 Inventories 16,397 11,542 VAT receivable 12,610 21,531 Income tax receivable 20,185 27,039 Other current assets 1,253 4,138 Total current assets 97,382 125,841 Non-Current Assets Mine development, net 234,980 232,515 Property, plant and equipment, net 171,965 198,600 Deferred tax assets 9,568 — Total non-current assets 416,513 431,115 Total Assets $ 513,895 $ 556,956 LIABILITIES AND OWNERS’ CAPITAL Current Liabilities Accounts payable and accrued liabilities $ 38,704 $ 46,751 Related party payable 560 1,792 Equipment loans — 480 Total current liabilities 39,264 49,023 Non-Current Liabilities Lease liability 208 268 Asset retirement obligation 11,593 15,809 Deferred tax liabilities 3,885 1,354 Total non-current liabilities 15,686 17,431 Owners’ Capital Capital contributions 455,638 540,638 Paid-in capital 18,186 18,186 Accumulated deficit (14,879 ) (68,322 ) Total owners’ capital 458,945 490,502 Total Liabilities and Owners’ Capital $ 513,895 $ 556,956
LOS GATOS JOINT VENTURE COMBINED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
Three Months Ended December 31, Year Ended December 31, (US$ in thousands) 2023 2022 2023 2022 Revenue $ 73,509 $ 92,994 $ 268,671 $ 311,724 Expenses Cost of sales 28,011 25,525 111,266 107,075 Royalties 339 330 1,363 3,069 Exploration 757 3,565 2,875 9,800 General and administrative 5,375 4,461 18,068 14,307 Depreciation, depletion and amortization 15,552 17,040 75,110 69,380 Total expenses 50,034 50,921 208,682 203,631 Other expense (income) Interest expense 176 214 660 582 Interest income (420 ) — (1,567 ) — Accretion expense 279 276 1,145 1,103 Other expense (income) 728 (766 ) 741 (766 ) Foreign exchange gain (564 ) (2,291 ) (2,580 ) (2,348 ) 199 (2,567 ) (1,601 ) (1,429 ) Income before taxes 23,276 44,640 61,590 109,522 Income tax expense/(recovery) (1,667 ) 14,818 8,147 37,306 Net income $ 24,943 $ 29,822 $ 53,443 $ 72,216
LOS GATOS JOINT VENTURE COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the year ended December 31, (US$ in thousands) 2023 2022 Cash flows from operating activities: Net income $ 53,443 $ 72,216 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 75,110 69,380 Accretion 1,145 1,103 Deferred taxes (7,623 ) 21,013 Unrealized gain on foreign currency rate change (4,523 ) (4,434 ) Other — (174 ) Changes in operating assets and liabilities: VAT receivable 9,619 23,986 Receivables 14,021 (15,393 ) Inventories (5,273 ) (353 ) Unearned revenue — (1,714 ) Other current assets 2,494 661 Income tax receivable 10,771 (27,039 ) Accounts payable and other accrued liabilities (5,951 ) 17,939 Payables to related parties (1,232 ) 183 Net cash provided by operating activities 142,001 157,374 Cash flows from investing activities: Mine development (36,637 ) (44,934 ) Purchase of property, plant and equipment (19,850 ) (37,018 ) Materials and supplies inventory (600 ) (327 ) Net cash used by investing activities (57,087 ) (82,279 ) Cash flows from financing activities: Capital distributions (85,000 ) — Equipment loan and Lease payments (547 ) (5,439 ) Partner dividends — (55,000 ) Net cash used by financing activities (85,547 ) (60,439 ) Net increase (decrease) in cash and cash equivalents (633 ) 14,656 Cash and cash equivalents, beginning of period 34,936 20,280 Cash and cash equivalents, end of period $ 34,303 $ 34,936 Interest paid $ 660 $ 236 Supplemental disclosure of noncash transactions: Asset retirement obligation $ 5,364 $ — Mine development costs included in accrued liabilities $ 10,205 $ 3,427 Property, plant and equipment included in accrued liabilities $ 11,046 $ 2,648 Materials and supplies included in accrued liabilities $ 1,018 $ 202 Recognition of Right of Use Asset and Lease Liability $ — $ 328
What were Gatos Silver's expected silver production and AISC guidance for 2024?
Gatos Silver expects silver production of 8.4-9.2 million ounces in 2024 with an AISC of $9.50-$11.50 per payable ounce produced.
How did Gatos Silver's net income, earnings per share, and EBITDA perform in Q4 2023?
Net income, earnings per share, and EBITDA for Gatos Silver in Q4 2023 increased significantly.
What is the current debt status of Gatos Silver?
Gatos Silver remains debt-free with a cash balance of $55.5 million.
What was the Company's cash balance as of December 31, 2023?
As of December 31, 2023, Gatos Silver had a cash balance of $55.5 million.
What was the revenue and net income for Gatos Silver in Q4 2023 compared to Q4 2022?
In Q4 2023, Gatos Silver's revenue was $73.5 million, down 21% from $93.0 million in Q4 2022. Net income was $12.3 million, up 160% from $4.7 million in Q4 2022.
