DENVER--(BUSINESS WIRE)-- Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the “Company”) today reported second quarter 2021 (“Q2”) operational and financial results.

Key Highlights:

Achieved record quarterly net income of $13.5 million;
Produced a quarterly record of 2.1 million ounces of silver from the Los Gatos Joint Venture (“LGJV”) Cerro Los Gatos (“CLG”) mine, as well as record lead and zinc production based on record throughput and recoveries;
Achieved record quarterly by-product All-In Sustaining Cost (“AISC”) of $12.63 per ounce of payable silver
Achieved record LGJV plant throughput of 230,656 tonnes (averaging 2,535 tonnes per day), exceeding first quarter 2021 by 13% and above design capacity;
Started exploration at the Esther deposit to further define and expand resources as part of three active exploration drilling programs currently underway in the Los Gatos District;
Continued strong management of COVID-19 and community involvement including physical, social and mental health initiatives and community infrastructure support; and
Retired the LGJV’s Term Loan on July 26, 2021, of which Gatos Silver’s attributable portion and related costs was $155.9 million.

Gatos Silver
Operational and Financial Results

Three Months Ended Six Months Ended une 30, June 30,
Amounts in millions* 2021 2020 2021 2020
Exploration expenses $0.7 $0.2 $0.9 $0.4
G&A expenses 4.4 1.6 8.0 2.4
Operating expenses 5.1 1.8 8.9 2.8
Equity income (loss) in LGJV 18.3 (8.1) 21.0 (21.5)
Other income (loss) 0.3 (0.7) (0.2) (2.3)
Net other income (expense) 18.6 (8.8) 20.8 (23.8)
Net Income (Loss) $13.5 ($10.6) $11.9 ($26.6)

*2020 amounts exclude results of discontinued operations

Net income for Q2 was $13.5 million, or $0.23 per share, compared to a net loss of ($10.6) million, or ($0.26) per share, in the second quarter of 2020. Net income for the six months ended June 30, 2021 (“H1”) was $11.9 million, or $0.20 per share, compared to a net loss of ($26.6) million, or ($0.66) per share, for the six months ended June 30, 2020. The improved Q2 and H1 net income, compared to the same periods in 2020, were primarily due to substantial improvement in the profitability of the LGJV, partially offset by higher public company costs related to increased compensation, insurance, consulting expenses, and increased stock-based compensation expense.

Los Gatos Joint Venture
Three Months Ended Six Months Ended Financial June 30, June 30,

Amounts in millions
2021 2020 2021 2020
Sales $75.0 $18.3 $121.3 $37.2
Operating expenses 42.3 24.8 77.8 58.1
Other expenses 3.4 8.0 7.3 17.5
Net income (loss) $29.3 ($14.5) $36.2 ($38.4)

LGJV sales for Q2 and H1 were $75.0 million and $121.3 million, respectively. Q2 and H1 sales increased, compared to the same periods in 2020, primarily as a result of higher metals prices, higher average daily throughputs and a two-month Mexican government mandated suspension of all non-essential operations during April and May 2020.

Operating expenses for Q2 and H1 were $42.3 million and $77.8 million, respectively. Operating expenses increased in Q2 and H1, compared to the same periods in 2020, primarily due to higher 2021 production, higher mining and dewatering costs, and increased royalty expenses due to higher sales. Other expenses decreased to $3.4 million and $7.3 million for Q2 and H1, respectively, compared to $8.0 million and $17.5 million, for the same respective periods in 2020, due to lower interest expense, arrangement fees and a higher foreign exchange gain due to the strengthening Mexican Peso.

Stephen Orr, the Company’s Chief Executive Officer, stated: “We are extremely pleased with Gatos Silver’s performance improvement during the first half of 2021. Q2 was a record quarter on many financial and operational fronts, with CLG achieving record tonnes, recoveries, metal production and revenue. Through the first half of 2021, we improved production consistency while progressing strategic infrastructure initiatives and exploration drilling programs. These efforts will continue into the second half of 2021 and, together with improved financial flexibility achieved through the recent debt repayment, should further expand CLG’s potential and enhance long-term value for our shareholders.”

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