Gatos Silver (GASO) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenues, cash flow from operations, and free cash flow at the Los Gatos Joint Venture, driven by strong operating performance and higher metal prices.

• Net income for Gatos Silver reached $9.2 million, reversing a net loss of $3.6 million in Q2 2023, supported by higher equity income from LGJV and increased interest income.

• Mill throughput reached a sixth consecutive quarterly record, positioning the company well to meet annual guidance.

• LGJV distributed $95 million to partners year-to-date through July, with Gatos Silver receiving $66.5 million.

• Focus shifted from infill drilling to greenfields exploration, with promising early results at several district targets.

Financial highlights

• Q2 2024 revenues increased 62% year-over-year to $94.2 million; LGJV net income was $20.5 million, up from $0.7 million in Q2 2023.

• Free cash flow for the quarter was $40.8 million, up 107% year-over-year; EBITDA at LGJV doubled to $54.1 million.

• Gatos Silver Q2 2024 EBITDA was $8.2 million, up from a $3.5 million loss; free cash flow was $11.8 million, compared to a $3.8 million outflow.

• Basic and diluted EPS were $0.13, compared to a loss of $0.05 per share in Q2 2023.

• Cash balance at July 31, 2024, was $108.9 million.

Outlook and guidance

• Throughput rates at Cerro Los Gatos expected to average in the top half of the 3,000–3,300 tpd guidance range for 2024, with a medium-term target of 3,500 tpd.

• Full-year production anticipated in the upper half of guidance; unit cost metrics tracking below midpoint.

• Exploration and definition drilling spend expected at $18 million, sustaining CapEx at $45 million for 2024.

• New life of mine plan and reserve update targeted for September 2024, aiming for higher throughput and mine life extension.

• Management expects sufficient liquidity and access to credit to support business plans for the next 12 months and beyond.