Gatos Silver (GASO) Q3 2024 earnings summary

Executive summary

• Entered into a merger agreement with First Majestic, consolidating three major silver districts in Mexico; expected to close in Q1 2025, pending regulatory, shareholder, and other approvals.

• Q3 2024 net income was $9.9M, up from $3.3M in Q3 2023; adjusted net income was $15.2M.

• Earnings per share for Q3 2024 rose 200% to $0.14, with adjusted EPS at $0.22.

• Updated life of mine plan extends mine life to October 2032 and increases silver equivalent production by 36%.

• Record free cash flow and cash balance position the company strongly ahead of the merger.

Financial highlights

• LGJV generated $58.2M in operating cash flow and $42.6M in free cash flow in Q3 2024, up 199% year-over-year.

• Revenues rose 40% to $93.8M in Q3 2024, driven by higher metal prices and sales volumes.

• LGJV net income for Q3 2024 was $25.7M, up from $15.1M in Q3 2023; EBITDA was $57.2M.

• By-product AISC per ounce of silver was $9.61, down 35% year-over-year; co-product AISC was $16.13, down 9%.

• Ended Q3 with $116.7M in cash; both the company and LGJV remain debt-free, with $50M available on credit facility.

Outlook and guidance

• Raised 2024 silver production guidance to 9.2–9.7M oz (from 8.4–9.2M); silver equivalent production guidance to 14.7–15.5M oz.

• By-product AISC guidance lowered to $8.50–$10.00/oz (from $9.50–$11.50/oz); co-product AISC guidance unchanged at $14.00–$16.00/oz.

• Sustaining capital expenditure guidance at $45M and exploration/resource drilling at $18M for 2024.

• Zinc, lead, and gold production expected near high end of original guidance.