Teck Resources Ltd Class B press release
Gatos Silver Reports Third Quarter 2024 Results Including a 200% Increase in Earnings Per Share
NYSE - New York Stock Exchange · Copper · Molybdenum · Zinc · Lead · Canada
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 EBITDA 1 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 flow 1 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 production 2 of 3.84 million ounces, up 11% from 3.46 million ounces Co-product AISC 1 of $16.13 per ounce of payable silver equivalent, down 9% from $17.64 By-product AISC 1 of $9.61 per ounce of payable silver, down 35% from $14.71
Gatos Silver Q3 2024 results compared to Q3 2023:
Net income of $9.9 million, up from $3.3 million, and adjusted net income 1 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 share 1 of $0.22 and $0.21, respectively EBITDA 1 of $9.1 million, compared to $3.2 million, and adjusted EBITDA 1 of $14.4 million Cash flow provided by operating activities and free cash flow 1 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 AISC 1 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 EBITDA 1 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 income 1 , adjusted earnings per share and adjusted EBITDA 1 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 income 2 | $ | 25.7 | | $ | 15.1 | | $ | 56.4 | | $ | 28.5 | | | | | | | | | | | | | | | | | Sustaining capital 1 | $ | 12.9 | | $ | 9.1 | | $ | 33.2 | | $ | 29.9 | | | Resource development drilling expenditures 1 | $ | 2.1 | | $ | 3.5 | | $ | 7.2 | | $ | 10.5 | | | EBITDA 1 | $ | 57.2 | | $ | 30.6 | | $ | 146.4 | | $ | 97.2 | | | Cash provided by operating activities | $ | 58.2 | | $ | 29.4 | | $ | 150.0 | | $ | 103.8 | | | Free cash flow 1 | $ | 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 | | | 2.22 | | | 7.10 | | | 6.65 | | | Zinc pounds – in zinc conc. (millions) | | 16.5 | | | 13.8 | | | 51.5 | | | 42.7 | | | Lead pounds – in lead conc. (millions) | | 11.4 | | | 9.5 | | | 33.5 | | | 28.7 | | | Gold ounces – in lead conc. (thousands) | | 1.45 | | | 1.28 | | | 4.20 | | | 3.86 | | | Silver equivalent ounces (millions) 3 | | 3.84 | | | 3.46 | | | 11.42 | | | 10.45 | | | Co-product cash cost per ounce of payable silver equivalent 1 | $ | 12.13 | | $ | 14.42 | | $ | 11.86 | | $ | 12.43 | | | By-product cash cost per ounce of payable silver 1 | $ | 3.69 | | $ | 10.04 | | $ | 3.67 | | $ | 6.42 | | | Co-product AISC per ounce of payable silver equivalent 1 | $ | 16.13 | | $ | 17.64 | | $ | 15.21 | | $ | 15.81 | | | By-product AISC per ounce of payable silver 1 | $ | 9.61 | | $ | 14.71 | | $ | 8.82 | | $ | 11.40 | | | | | | | | | | | | | | | | | Sales volume by payable metal | | | | | | | | | | | | | | Silver ounces (millions) | | 2.18 | | | 1.96 | | | 6.45 | | | 5.99 | | | Zinc pounds – in zinc conc. (millions) | | 14.7 | | | 12.4 | | | 44.3 | | | 36.2 | | | Lead pounds – in lead conc. (millions) | | 10.6 | | | 8.7 | | | 31.6 | | | 26.6 | | | Gold ounces – in lead conc. (thousands) | | 1.13 | | | 0.96 | | | 3.28 | | | 3.02 | | | Copper pounds – in lead conc. (millions) | | 0.03 | | | — | | | 0.13 | | | — | | | | | | | | | | | | | | | | | Average realized price by payable metal | | | | | | | | | | | | | | Average realized price per silver ounce 4 | $ | 29.62 | | $ | 24.24 | | $ | 27.09 | | $ | 25.08 | | | Average realized price per zinc pound 4 | $ | 1.26 | | $ | 0.89 | | $ | 1.30 | | $ | 1.10 | | | Average realized price per lead pound 4 | $ | 0.93 | | $ | 0.97 | | $ | 0.92 | | $ | 0.98 | | | Average realized price per gold ounce 4 | $ | 2,362 | | $ | 1,885 | | $ | 2,162 | | $ | 1,828 | | | Average realized price per copper pound 4 | $ | 3.28 | | $ | — | | $ | 3.72 | | $ | — | |
1 See Non-GAAP Financial Measures below. 2 Totals may not add up due to rounding. 3 Silver equivalent production for 2024 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 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 for the three and nine months ended September, 2023 would be 3.41 million ounces and 10.30 million ounces, respectively, using price assumptions for 2024. 4 Realized prices include the impact of final settlement adjustments from prior period sales.
Gatos Silver, Inc.
| Selected Financial Information (Unaudited) | Three Months Ended September 30, | Nine Months Ended September 30, | | | | | | | | | | | | (in millions, except where otherwise stated) | 2024 | 2023 | 2024 | 2023 | | | | | | | | | | Exploration | $ | 0.1 | | $ | — | | $ | 0.2 | | $ | — | | | General and Administrative | | 10.4 | | | 7.5 | | | 25.3 | | | 19.2 | | | Total expenses 2 | | 10.6 | | | 7.5 | | | 25.5 | | | 19.3 | | | Equity income in affiliates | | 18.2 | | | 9.4 | | | 40.0 | | | 15.9 | | | Other income, net | | 2.8 | | | 1.3 | | | 7.8 | | | 3.9 | | | Total net other income 2 | | 21.0 | | | 10.8 | | | 47.8 | | | 19.8 | | | Income tax expense | | 0.5 | | | — | | | 0.7 | | | — | | | Net income and comprehensive income 2 | $ | 9.9 | | $ | 3.3 | | $ | 21.6 | | $ | 0.5 | | | Net income per share basic | $ | 0.14 | | $ | 0.05 | | $ | 0.31 | | $ | 0.01 | | | Net income per share diluted | $ | 0.14 | | $ | 0.05 | | $ | 0.30 | | $ | 0.01 | | | | | | | | | | | | | | | | | Adjusted net income 1 | $ | 15.2 | | $ | 3.3 | | $ | 28.3 | | $ | 0.5 | | | Adjusted net income per share (basic) 1 | $ | 0.22 | | $ | 0.05 | | $ | 0.41 | | $ | 0.01 | | | Adjusted net income per share (diluted) 1 | $ | 0.21 | | $ | 0.05 | | $ | 0.40 | | $ | 0.01 | | | | | | | | | | | | | | | | | EBITDA 1 | $ | 9.1 | | $ | 3.2 | | $ | 19.1 | | $ | 0.6 | | | Adjusted EBITDA 1 | $ | 14.4 | | $ | 3.2 | | $ | 25.8 | | $ | 0.6 | | | Net cash provided by operating activities | $ | 34.2 | | $ | 33.3 | | $ | 61.2 | | $ | 25.5 | | | Free cash flow 1 | $ | 34.2 | | $ | 33.3 | | $ | 61.2 | | $ | 25.5 | |
1 See Non-GAAP Financial Measures below. 2 Totals may not add up due to rounding.
Financial Results Webcast and Conference Call
Investors and analysts are invited to attend the financial results webcast and conference call as follows:
Date: Tuesday, November 12, 2024 Time: 11:00 a.m. ET Listen-Only Webcast: https://events.q4inc.com/attendee/627122313 Direct Event Registration Link (for Analysts only): https://registrations.events/direct/Q4I98433625 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.
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 would consolidate three world-class, producing silver mining districts in Mexico to create a leading intermediate primary silver producer. Information relating to the proposed Merger can be found at the Company’s website at www.gatossilver.com .
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.
Adjusted Net Income
Management uses adjusted net income, which exclude costs associated with the strategic review resulting in the proposed Merger with First Majestic, to evaluate the Company’s operating performance. The Company believes the use of adjusted net income reflects the underlying performance of our business and allows investors and analysts to compare the results of the Company to our historical results and to similar results of other mining companies. Management’s determination of the components of adjusted net income are evaluated periodically and is based, in part, on a review of non-GAAP financial measures used by mining industry analysts.
EBITDA
Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. EBITDA is defined as net income adjusted for interest expense, interest income, income tax expense and depreciation, depletion and amortization expense. The Company believes the use of EBITDA reflects the underlying operating performance of our core business and allows investors and analysts to compare results of the Company to similar results of other mining companies. EBITDA does not represent, and should not be considered an alternative to, net income or cash flow from operations as determined under GAAP. Other companies may calculate EBITDA differently and those calculations may not be comparable to our presentation.
Adjusted EBITDA
Management uses adjusted EBITDA to evaluate the Company’s ongoing operating performance, without the impact of costs associated with the strategic review resulting in the proposed Merger with First Majestic. The Company believes the use of adjusted EBITDA reflects the underlying operating performance of our core business and allows investors and analysts to compare the results of the Company to our historical results and to similar results of other mining companies. Adjusted EBITDA does not represent, and should not be considered an alternative to, net income or cash flow from operations as determined under GAAP. Other companies may calculate adjusted EBITDA differently and those calculations may not be comparable to our presentation.
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 September 30, | Nine Months Ended September 30, | | | | | | | | | | | | (in thousands, except where otherwise stated) | 2024 | 2023 | 2024 | 2023 | | | | | | | | | | Expenses | $ | 55,215 | | $ | 53,809 | | $ | 171,408 | | $ | 158,648 | | | Depreciation, depletion and amortization | | (17,824 | ) | | (16,712 | ) | | (58,901 | ) | | (59,558 | ) | | Exploration 1 | | (1,605 | ) | | (998 | ) | | (4,577 | ) | | (2,118 | ) | | Treatment and refining costs 2 | | 3,420 | | | 4,793 | | | 9,716 | | | 12,865 | | | Cash costs | $ | 39,206 | | $ | 40,892 | | $ | 117,646 | | $ | 109,837 | | | Sustaining capital 3 | | 12,919 | | | 9,128 | | | 33,220 | | | 29,870 | | | Co-product all-in sustaining costs | $ | 52,125 | | $ | 50,020 | | $ | 150,866 | | $ | 139,707 | | | By-product credits 4 | | (31,168 | ) | | (21,246 | ) | | (93,986 | ) | | (71,407 | ) | | All-in sustaining costs, net of by-product credits | $ | 20,957 | | $ | 28,774 | | $ | 56,880 | | $ | 68,300 | | | Cash costs, net of by-product credits | $ | 8,038 | | $ | 19,646 | | $ | 23,660 | | $ | 38,430 | | | | | | | | | | | | | | | | | Payable ounces of silver equivalent 5 | | 3,232 | | | 2,835 | | | 9,917 | | | 8,837 | | | Co-product cash cost per ounce of payable silver equivalent | $ | 12.13 | | $ | 14.42 | | $ | 11.86 | | $ | 12.43 | | | Co-product AISC per ounce of payable silver equivalent | $ | 16.13 | | $ | 17.64 | | $ | 15.21 | | $ | 15.81 | | | | | | | | | | | | | | | | | Payable ounces of silver | | 2,180 | | | 1,956 | | | 6,448 | | | 5,989 | | | By-product cash cost per ounce of payable silver | $ | 3.69 | | $ | 10.04 | | $ | 3.67 | | $ | 6.42 | | | By-product AISC per ounce of payable silver | $ | 9.61 | | $ | 14.71 | | $ | 8.82 | | $ | 11.40 | |