Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 11, 2024

GATOS SILVER, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation)

001-39649

(Commission File Number)

27-2654848

(I.R.S. Employer

Identification No.)

925 W Georgia Street, Suite 910

Vancouver, British Columbia, Canada

(Address of principal executive offices)

V6C 3L2

(Zip Code)

Registrant’s telephone number, including area code: (604) 424-0984

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

GATO

New York Stock Exchange

Toronto Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Item 2.02. Results of Operations and Financial Condition.

On November 11, 2024, Gatos Silver, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and nine months ended September 30, 2024 and providing certain other updates. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

The information included in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto are intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, regardless of any general incorporation language in the filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
99.1		Press Release, dated November 11, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GATOS SILVER, INC.


Date: November 12, 2024	By:	/s/ Dale Andres
		Dale Andres
		Chief Executive Officer

Exhibit 99.1

925 W Georgia St, Suite 910

Vancouver, British Columbia V6C 3L2

(604) 424-0984

www.gatossilver.com

GATOS SILVER REPORTS THIRD QUARTER 2024 RESULTS INCLUDING A 200% INCREASE IN EARNINGS PER SHARE

Vancouver, BC — November 11, 2024 — 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

Gatos Silver Q3 2024 results compared to Q3 2023:

•

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

•

EBITDA¹of $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

¹See “Non-GAAP Financial Measures” below.

²See 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			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 equivalent¹	$	12.13		$	14.42		$	11.86	$	12.43
By-product cash cost per ounce of payable silver¹	$	3.69		$	10.04		$	3.67	$	6.42
Co-product AISC per ounce of payable silver equivalent¹	$	16.13		$	17.64		$	15.21	$	15.81
By-product AISC per ounce of payable silver¹	$	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 ounce⁴	$	29.62		$	24.24		$	27.09	$	25.08
Average realized price per zinc pound⁴	$	1.26		$	0.89		$	1.30	$	1.10
Average realized price per lead pound⁴	$	0.93		$	0.97		$	0.92	$	0.98
Average realized price per gold ounce⁴	$	2,362		$	1,885		$	2,162	$	1,828
Average realized price per copper pound⁴	$	3.28		$	—		$	3.72	$	—

¹See Non-GAAP Financial Measures below.

²Totals may not add up due to rounding.

³Silver 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.

⁴Realized 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 expenses²		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 income²		21.0		10.8		47.8		19.8
Income tax expense		0.5		—		0.7		—
Net income and comprehensive income²	$	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 income¹	$	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

EBITDA¹	$	9.1	$	3.2	$	19.1	$	0.6
Adjusted EBITDA¹	$	14.4	$	3.2	$	25.8	$	0.6
Net cash provided by operating activities	$	34.2	$	33.3	$	61.2	$	25.5
Free cash flow¹	$	34.2	$	33.3	$	61.2	$	25.5

¹See 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	)
Exploration¹		(1,605	)		(998	)		(4,577	)		(2,118	)
Treatment and refining costs²		3,420			4,793			9,716			12,865
Cash costs	$	39,206		$	40,892		$	117,646		$	109,837
Sustaining capital³		12,919			9,128			33,220			29,870
Co-product all-in sustaining costs	$	52,125		$	50,020		$	150,866		$	139,707
By-product credits⁴		(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 equivalent⁵		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

¹Exploration costs are not related to current operations.

²Represent reductions on customer invoices and included in sales of the LGJV combined statement of operations and income.

³ Sustaining capital excludes resource development drilling costs related to resource development drilling of the CLG deposit.

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.

⁵Silver equivalents utilize the average realized prices during the nine months ended September 30, 2024, of $27.09/oz silver, $1.30/lb zinc, $0.92/lb lead, $2,162/oz gold and $3.72/lb copper and the average realized prices during the three months ended September 30, 2024, of $29.62/oz silver, $1.26/lb zinc, $0.93/lb lead and $2,362/oz gold and $3.28/lb copper. Silver equivalents utilize the average realized prices during the nine months ended September 30, 2023, of $25.08/oz silver, $1.10/lb zinc, $0.98/lb lead and $1,828/oz gold and the average realized prices during the three months ended September 30, 2023, of $24.24/oz silver, $0.89/lb zinc, $0.97/lb lead and $1,885/oz gold. The average realized prices are determined based on revenue inclusive of final settlements.

The following table provides a breakdown of cash flows used by investing activities of the LGJV and a reconciliation of sustaining capital and resource development drilling to that measure:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Cash flow used by investing activities	$	15,591	$	15,168	$	41,148	$	41,160
Sustaining capital		12,919		9,128		33,220		29,870
Resource development drilling		2,092		3,452		7,199		10,499
Materials & supplies		—		1,826		—		503
Change in capital-related accounts payable		580		762		729		288
Total	$	15,591	$	15,168	$	41,148	$	41,160

The table below reconciles adjusted net income and adjusted net income per share (basic and diluted), which are non-GAAP measures to net income and net income per share (basic and diluted), respectively, for the Company:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Net income	$	9,884	$	3,288	$	21,572	$	530
Costs related to the proposed Merger with First Majestic		5,314		—		6,747		—
Adjusted net income	$	15,198	$	3,288	$	28,319	$	530
Weighted average shares:
Basic		69,343,979		69,162,223		69,247,280		69,162,223
Diluted		71,613,178		69,524,838		71,110,386		69,381,222
Net income per share (basic)	$	0.14	$	0.05	$	0.31	$	0.01
Costs related to the proposed Merger with First Majestic per share (basic)	$	0.08	$	—	$	0.10	$	—
Adjusted net income per share (basic)	$	0.22	$	0.05	$	0.41	$	0.01
Costs related to the proposed Merger with First Majestic per share (diluted)	$	0.07	$	—	$	0.09	$	—
Adjusted net income per share (diluted)	$	0.21	$	0.05	$	0.40	$	0.01

The table below reconciles EBITDA and adjusted EBITDA, which are non-GAAP measures, to net income for the Company:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Net income	$	9,884		$	3,288		$	21,572		$	530
Interest expense		—			332			—			679
Interest income		(1,322	)		(389	)		(3,206	)		(676	)
Income tax expense		529			—			701			—
Depreciation, depletion and amortization		4			3			11			74
EBITDA	$	9,095		$	3,234		$	19,078		$	607
Costs related to the strategic review resulting in the Merger Agreement with First Majestic	$	5,314			—		$	6,747			—
Adjusted EBITDA	$	14,409		$	3,234		$	25,825		$	607

The table below reconciles EBITDA, a non-GAAP measure, to the LGJV’s net income:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Net income	$	25,720		$	15,053		$	56,379		$	28,500
Interest expense		102			343			851			484
Interest income		(349	)		(592	)		(892	)		(1,147	)
Income tax expense (recovery)		13,867			(884	)		31,186			9,814
Depreciation, depletion and amortization		17,824			16,712			58,901			59,558
EBITDA	$	57,164		$	30,632		$	146,425		$	97,209

The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to cash provided by 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 September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Net cash provided by operating activities	$	34,236	$	33,330	$	61,171	$	25,465
Net cash used by investing activities		—		—		—		—
Free cash flow	$	34,236	$	33,330	$	61,171	$	25,465

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 September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Net cash provided by operating activities	$	58,175		$	29,424		$	149,983		$	103,789
Net cash used by investing activities		(15,591	)		(15,168	)		(41,148	)		(41,160	)
Free cash flow	$	42,584		$	14,256		$	108,835		$	62,629

Please see Appendix A for the unaudited condensed consolidated balance sheets of the Company and the LGJV as of September 30, 2024 and December 31, 2023, the related unaudited condensed consolidated statements of income and comprehensive income of the Company, the unaudited combined statements of operations and comprehensive income of the LGJV for the three and nine months ended September 30, 2024 and 2023, and the unaudited statements of cash flows for the nine months ended September 30, 2024 and 2023.

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 our updated LOM plan, 2024 revised guidance and the expected timing, benefits, impacts, and completion of the proposed Merger with First Majestic, 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30,			December 31,
(US$ in thousands)	2024			2023
ASSETS
Current Assets
Cash and cash equivalents	$	116,732		$	55,484
Related party receivables		292			560
Other current assets		1,215			22,642
Total current assets		118,239			78,686
Non-Current Assets
Investment in affiliates		285,454			321,914
Deferred tax assets		222			266
Other non-current assets		348			38
Total Assets	$	404,263		$	400,904
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and other accrued liabilities	$	12,226		$	33,357
Non-Current Liabilities
Lease liability		187			—
Stockholders’ Equity
Common Stock, $0.001 par value; 700,000,000 shares authorized; 69,352,645 and 69,181,047 shares outstanding as of September 30, 2024 and December 31, 2023, respectively		117			117
Paid-in capital		556,050			553,319
Accumulated deficit		(164,317	)		(185,889	)
Total stockholders’ equity		391,850			367,547
Total Liabilities and Stockholders’ Equity	$	404,263		$	400,904

GATOS SILVER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended September 30,					Nine months ended September 30,
(US$ in thousands, except for share data)	2024		2023			2024		2023
Expenses
Exploration	$	144	$	—		$	219	$	26
General and administrative		10,435		7,494			25,270		19,157
Amortization		4		3			11		74
Total expenses		10,583		7,497			25,500		19,257
Other income
Equity income in affiliates		18,171		9,437			39,985		15,922
Interest expense		—		(332	)		—		(679	)
Interest income		1,322		389			3,206		676
Other income		1,503		1,291			4,582		3,868
Other income		20,996		10,785			47,773		19,787
Income before taxes		10,413		3,288			22,273		530
Income tax expense		529		—			701		—
Net income and comprehensive income	$	9,884	$	3,288		$	21,572	$	530
Net income per share:
Basic	$	0.14	$	0.05		$	0.31	$	0.01
Diluted	$	0.14	$	0.05		$	0.30	$	0.01
Weighted average shares outstanding:
Basic		69,343,979		69,162,223			69,247,280		69,162,223
Diluted		71,613,178		69,524,838			71,110,386		69,381,222

GATOS SILVER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine months ended September 30,
(US$ in thousands)	2024			2023
OPERATING ACTIVITIES
Net income	$	21,572		$	530

Adjustments to reconcile net income to net cash provided (used) by operating activities:
Amortization		11			74
Stock-based compensation expense		4,319			3,327
Equity income in affiliates		(39,985	)		(15,922	)
Distributions and dividends received from affiliate		76,445			35,000
Other		94			837

Changes in operating assets and liabilities:
Receivables from related-parties		268			678
Accounts payable and other accrued liabilities		(23,007	)		5
Other current assets		21,454			936
Net cash provided by operating activities		61,171			25,465

INVESTING ACTIVITIES
Net cash used by investing activities		—			—

FINANCING ACTIVITIES
Repayment of Credit facility		—			(9,000	)
Lease payments		(89	)		—
Proceeds from exercise of stock options		166			—
Net cash provided (used) by financing activities		77			(9,000	)
Net increase in cash and cash equivalents		61,248			16,465
Cash and cash equivalents, beginning of period		55,484			17,004
Cash and cash equivalents, end of period	$	116,732		$	33,469

Interest paid	$	16		$	417
Interest earned	$	3,206		$	690

LOS GATOS JOINT VENTURE

COMBINED BALANCE SHEETS

(UNAUDITED)

	September 30,		December 31,
(US$ in thousands)	2024		2023
ASSETS
Current Assets
Cash and cash equivalents	$	33,884	$	34,303
Receivables		13,646		12,634
Inventories		16,180		16,397
VAT receivable		13,417		12,610
Income tax receivable		9,296		20,185
Other current assets		3,435		1,253
Total current assets		89,858		97,382
Non-Current Assets
Mine development, net		231,060		234,980
Property, plant and equipment, net		159,220		171,965
Deferred tax assets		699		9,568
Total non-current assets		390,979		416,513
Total Assets	$	480,837	$	513,895
LIABILITIES AND OWNERS’ CAPITAL
Current Liabilities
Accounts payable and accrued liabilities	$	33,999	$	29,100
VAT payable		11,873		8,684
Income taxes payable		11,204		920
Related party payable		270		560
Total current liabilities		57,346		39,264
Non-Current Liabilities
Lease liability		155		208
Asset retirement obligation		12,245		11,593
Deferred tax liabilities		4,974		3,885
Total non-current liabilities		17,374		15,686
Owners’ Capital
Capital contributions		360,638		455,638
Paid-in capital		18,186		18,186
Retained earnings (accumulated deficit)		27,293		(14,879	)
Total owners’ capital		406,117		458,945
Total Liabilities and Owners’ Capital	$	480,837	$	513,895

LOS GATOS JOINT VENTURE

COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three months ended September 30,						Nine months ended September 30,
(US$ in thousands)	2024			2023			2024			2023
Revenue	$	93,839		$	67,038		$	260,255		$	195,162
Expenses
Cost of sales		31,204			31,446			93,931			83,255
Royalties and duties		639			298			1,682			1,024
Exploration		1,605			998			4,577			2,118
General and administrative		3,943			4,355			12,317			12,693
Depreciation, depletion and amortization		17,824			16,712			58,901			59,558
Total expenses		55,215			53,809			171,408			158,648

Other (income) expense
Accretion expense		217			273			652			866
Interest expense		102			343			851			484
Interest income		(349	)		(592	)		(892	)		(1,147	)
Other (income) expense		(13	)		(18	)		635			13
Foreign exchange (gain) loss		(920	)		(946	)		36			(2,016	)
		(963	)		(940	)		1,282			(1,800	)

Income before taxes		39,587			14,169			87,565			38,314
Income tax expense (recovery)		13,867			(884	)		31,186			9,814
Net income and comprehensive income	$	25,720		$	15,053		$	56,379		$	28,500

LOS GATOS JOINT VENTURE

COMBINED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine months ended September 30,
(US$ in thousands)	2024			2023
Cash flows from operating activities:
Net income	$	56,379		$	28,500
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		58,901			59,558
Accretion		652			866
Deferred taxes		10,210			4,743
Unrealized loss (gain) on foreign currency rate change		105			(5,007	)
Other		—			(6	)

Changes in operating assets and liabilities:
VAT receivable		(1,326	)		11,215
Receivables		(1,012	)		16,725
Inventories		(1,379	)		(1,429	)
Other current assets		(2,190	)		403
Income tax receivable		8,495			(633	)
Accounts payable and other accrued liabilities		21,438			(8,596	)
Payables to related parties		(290	)		(730	)
Asset Retirement Obligation		—			(1,820	)
Net cash provided by operating activities		149,983			103,789

Cash flows from investing activities:
Mine development		(32,263	)		(27,151	)
Purchase of property, plant and equipment		(8,885	)		(13,506	)
Materials and supplies inventory		—			(503	)
Net cash used by investing activities		(41,148	)		(41,160	)

Cash flows from financing activities:
Equipment loan and lease payments		(47	)		(532	)
Capital distributions		(95,000	)		(50,000	)
Dividends paid to partners		(14,207	)		—
Net cash used by financing activities		(109,254	)		(50,532	)

Net (decrease) Increase in cash and cash equivalents		(419	)		12,097
Cash and cash equivalents, beginning of period		34,303			34,936
Cash and cash equivalents, end of period	$	33,884		$	47,033
Interest paid	$	851		$	484
Interest earned	$	892		$	1,147

Cover	Nov. 11, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 11, 2024
Entity File Number	001-39649
Entity Registrant Name	GATOS SILVER, INC.
Entity Central Index Key	0001517006
Entity Tax Identification Number	27-2654848
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	925 W Georgia Street
Entity Address, Address Line Two	Suite 910
Entity Address, City or Town	Vancouver
Entity Address, State or Province	BC
Entity Address, Country	CA
Entity Address, Postal Zip Code	V6C 3L2
City Area Code	604
Local Phone Number	424-0984
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	GATO
Security Exchange Name	NYSE
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	true