• Gatos Silver Reports Fourth Quarter and Full Year 2023 Results and Provides 2024 Guidance

    Источник: Nasdaq GlobeNewswire / 21 фев 2024 00:32:05   America/New_York

    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 to $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 million1
    • AISC after by-product credits of $11.331 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 million1
    • 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 million1
    • Cash from operating activities of $38.2 million, down 2% from $39.1 million
    • Sustaining capital $11.7 million, down 40% from $19.5 million1
    • Free cash flow $22.3 million, up 19% from $18.7 million1
    • Co-product AISC of $14.73 per ounce of payable silver, down 0.5% from $14.801
    • By-product AISC of $11.12 per ounce of payable silver, down 8% from $12.131

    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 million1
    • 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 million1

    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)23.9  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 below
    2 Totals may not add up due to rounding
    3 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 Administrative6.5  8.5  25.7  25.5  
    Amortization—  —  0.1  0.2  
    Total expenses6.5  8.5  25.8  25.8  
    Equity income in affiliates17.7  20.7  33.6  45.2  
    Other income, net1.3  (6.7) 5.1  (3.4) 
    Total net other income19.0  14.0  38.8  41.9  
    Income tax expense0.1  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 below
    2 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)113.5 – 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, 2024
    Time: 11:00 a.m. ET
    Listen-Only Webcast: https://events.q4inc.com/attendee/541149212
    Direct Event Registration Link (for Analysts only): https://registrations.events/direct/Q4I90079276
    Dial-in number: 1-888-500-3691 or +1-646-307-1951 Conference ID: 90079

    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 activities24,500  (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
    Chief Financial Officer
    investors@gatossilver.com
    604-424 0984


    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, $0.001 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 

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