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
- 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 |
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