Gatos Silver Provides Bi-weekly Status Report and Announces Resignation of Auditor
September 30 2022 - 4:48PM
Business Wire
Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the
“Company”) is providing this bi-weekly default status report in
accordance with National Policy 12-203 - Management Cease Trade
Orders (“NP 12-203”). In its March 18, 2022 news release (the
“Notice”), the Company announced the delay in the filing of its
annual report on Form 10-K for the year ended December 31, 2021,
which includes its audited consolidated financial statements as at
and for the year ended December 31, 2021, together with the
auditor’s report thereon and the notes thereto, its management’s
discussion and analysis for the year ended December 31, 2021
relating to the audited annual financial statements, and the Chief
Executive Officer and Chief Financial Officer certificates relating
to its annual filings by the filing deadline of March 31, 2022. In
its May 13, 2022 news release, the Company announced the delay in
the filing of its interim financial filings on Form 10-Q for the
quarterly period ended March 31, 2022, which includes interim
financial statements as at and for the quarterly period ended March
31, 2022, together with its management’s discussion and analysis
for the quarterly period ended March 31, 2022 relating to the
interim financial statements, and the Chief Executive Officer and
Chief Financial Officer certificates relating to its interim
filings by the filing deadline of May 16, 2022. In its August 5,
2022 news release, the Company announced the delay in filing its
interim financial filings on Form 10-Q for the quarterly and year
to date periods ended June 30, 2022, which includes interim
financial statements as at June 30, 2022 and for the quarterly and
year to date periods ended June 30, 2022, together with its
management’s discussion and analysis for the quarterly period ended
June 30, 2022 relating to the interim financial statements, and the
Chief Executive Officer and Chief Financial Officer certificates
relating to its interim filings by the filing deadline of August
15, 2022.
The Company expects to provide a detailed update on the Cerro
Los Gatos mineral reserve and mineral resource estimates, and life
of mine within the next week.
On September 28, 2022, KPMG LLP (“KPMG”) notified Gatos Silver
that it resigned as the Company’s independent registered public
accounting firm. The audit committee of the Company’s board of
directors accepted KPMG’s resignation. KPMG’s resignation was
prompted by its conclusion that KPMG is unable to serve as the
Company’s principal auditor for the year-ended December 31, 2021
due to the previously announced changes in the composition and
location of our executive team based on its understanding of the
Organization of Chartered Professional Accountants of British
Columbia Bylaws, which would require KPMG to be licensed in British
Columbia. KPMG’s audit reports on the Company’s consolidated
financial statements for the years ended December 31, 2020 and 2019
do not contain any adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope, or
accounting principles. As previously disclosed, the Company is
evaluating the impact on prior period financial statements of the
circumstances pertaining to the previously announced determination
that the Company’s mineral reserve report can no longer be relied
upon. During the two most recent fiscal years and the subsequent
interim period preceding KPMG’s resignation, there were no (i)
disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction
of KPMG, would have caused it to make reference to the subject
matter of the disagreements in connection with its report, or (ii)
“reportable events” as such term is defined in Item 304(a)(1)(v) of
Regulation S-K.
The Company is diligently working to identify and engage an
auditor to conduct the audit and review of the financial statements
required to be included in its annual report on Form 10-K for the
year ended December 31, 2021, its quarterly report on Form 10-Q for
the quarter ended March 31, 2022 and its quarterly report on Form
10-Q for the quarter ended June 30, 2022. The Company intends to
file such SEC reports as soon as practicable and expects to hold
its annual shareholder meeting once such reports have been filed.
While the Company is continuing to evaluate material weaknesses in
its internal controls over financial reporting related to the
mineral reserve reporting errors, the Company expects that it will
determine that at least one material weakness exists. The Company
is still evaluating the extent of this and other potential material
weaknesses. The Company’s financial statements for the year ended
December 31, 2021 and quarters ended March 31, 2022 and June 30,
2022 may be affected by the ongoing analysis of the aforementioned
mineral reserve matters.
A management cease trade order was granted by the Ontario
Securities Commission on April 1, 2022 (the “Original MCTO”) and
the Ontario Securities Commission granted additional management
cease trade orders on April 12, 2022 and July 7, 2022 (the
“Additional MCTOs” and together with the Original MCTO, the
“MCTO”).
Pursuant to NP 12-203, the Company must file bi-weekly status
reports in the form of further news releases during the period from
the Notice until the MCTO is revoked. The Company reports that
since the Notice: (i) there have been no material changes regarding
the information contained in the Notice that have not been
disclosed in a bi-weekly default status report; (ii) there have
been no failures by the Company in fulfilling its stated intentions
with respect to satisfying the provisions of the alternative
information guidelines under NP 12-203; and (iii) there has not
been any specified default subsequent to the default announced in
the Notice.
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 mine and mineral processing
plant at the LGJV’s Cerro Los Gatos deposit. The LGJV consists of
approximately 103,087-hectares of mineral rights, representing a
highly prospective and under-explored district with numerous
silver-zinc-lead epithermal mineralized zones identified as
priority targets.
Forward-Looking Statements
This press release may contain certain information that may
constitute “forward-looking statements” and “forward looking
information”(collectively, “forward-looking statements”) within the
meaning of U.S. and Canadian securities laws. The forward-looking
statements contained herein include statements about the timing for
filing of the Company’s interim financial information on Form 10-Q
and the Company’s annual report on Form 10-K, as well as timing for
holding the annual shareholder meeting, for the engagement of a
successor auditor and for releasing an update on mineral resource
and reserve estimates and life of mine. While the Company has based
these forward-looking statements on its current expectations about
future events, the statements are not guarantees of the Company’s
future performance and are subject to risks, uncertainties,
assumptions and other factors that could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Such risks, uncertainties, assumptions
and factors include, amongst others, the evaluation of material
weaknesses in its internal controls, the timing of filing updated
technical reports and the timing to engage a successor auditor.
Further, although the Company has attempted to identify factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. As there can
be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements, readers
should not place undue reliance on forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20220930005612/en/
Investors and Media Contact Tiffany Osburn Director,
Financial Reporting & Corporate Communications
investors@gatossilver.com (720) 726 9662
Gatos Silver (NYSE:GATO)
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