Gatos Silver’s Q3 2024 Results Show Record Profits As Merger Looms
Gatos Silver (TSX: GATO) announced a robust third quarter in 2024, posting an increase in revenue and net income, largely attributed to its performance at the Cerro Los Gatos mine in Mexico. Earnings per share jumped to $0.14, representing a notable 200% increase from $0.05 in Q3 2023.
Total revenue for the Los Gatos Joint Venture on a 100% basis reached $93.8 million, a 40% year-over-year increase from $67 million in Q3 2023, and an improvement from Q2 2024’s revenue of $91.2 million. The venture produced 3.84 million silver equivalent ounces in the third quarter, an improvement over the 3.46 million silver equivalent ounces produced in Q3 2023.
By-product all-in sustaining cost (AISC) per ounce of payable silver dropped to $9.61 from $14.71 in Q3 2023, a 35% decrease. This was largely due to higher sales volumes and increased production of silver and by-product metals like zinc and lead. The co-product AISC per ounce of payable silver equivalent also saw a reduction, falling to $16.13 from $17.64 last year. Sequentially, this figure shows minor improvement from Q2’s co-product AISC of $16.35.
Net income at the joint venture level grew substantially to $25.7 million in Q3 2024, up from $15.1 million in the same period last year, translating to a 71% increase. Compared to Q2 2024’s net income of $23.1 million, the sequential growth was more modest at 11%. Similarly, the record free cash flow of $42.6 million represented a 199% increase from Q3 2023’s $14.3 million, but was up only 7% compared to $39.8 million in Q2 2024.
Additionally, cash and cash equivalents at the LGJV level saw minimal change from $34.3 million at the end of Q2 2024 to $33.9 million in Q3 2024.
For Gatos, Adjusted EPS reached $0.22, a minor gain from Q2 2024’s adjusted EPS of $0.20. Adjusted EBITDA of $14.4 million, compared to $3.2 million in Q3 2023, also highlights strong operational gains, yet is only a modest improvement from Q2’s adjusted EBITDA of $13.9 million.
Gatos Silver ended the quarter with a cash position of $116.7 million, rising by 40% from Q2.
CEO Dale Andres attributed the quarterly results to “CLG’s robust production performance and higher metal prices,” which together produced record cash flow for the Los Gatos Joint Venture and Gatos Silver.
“We are well positioned to deliver significant value into the combination with First Majestic, given our strong cash position, free cash flow generation, and ongoing exploration efforts across the Los Gatos district,” he said.
Gatos Silver last traded at $22.62 on the TSX.
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