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Gatos Silver, Inc. (TSX:GATO) ("Gatos Silver" or the "Company") today announced production and cost guidance for 2023 at its 70% owned Cerro Los Gatos mine ("CLG"). The currency in this news release is U.S. dollars.
2023 CLG Guidance Highlights (100% basis):
Dale Andres, CEO of Gatos Silver commented: "The 2023 production and AISC guidance is consistent with the life of mine plan disclosed in October 2022. It reflects strong and consistent operational performance for the past 18 months, and our continued confidence in the quality of the CLG asset."
"With the recently completed paste backfill plant, CLG is well positioned to continue debottlenecking and business improvement efforts while continuing to control costs and maximize cash flows. Our objectives for the year include further optimizing operational performance, advancing mine life extension opportunities, accelerating definition drilling on the mineralization recently discovered at depth in the new South-East Deeps zone, and continuing exploration of the extensive land package in the highly prospective Los Gatos district. We continue to be a low-cost producer with substantial cash generation potential, and the Company expects to have the financial resources to fund planned exploration and future development expenses without new dilutive equity financings."
Production and cost guidance for 2023 is shown in the table below:
| CLG 2023 Full Year Guidance (100% Basis) | |
| Production Guidance – Contained Metal | |
| Silver ounces (millions) | 7.4 – 8.2 |
| Zinc pounds – in zinc conc. (millions) | 57 – 63 |
| Lead pounds – in lead conc. (millions) | 36 – 40 |
| Gold ounces – in lead conc. (thousands) | 5.4 – 6.2 |
| Silver Equivalent ("AgEq") ounces – (millions)1 | 12.4 – 13.8 |
| All-in Sustaining Cost (AISC)2 | |
| Co-product basis ($/oz AgEq payable) | $15.50 – $17.50 |
| By-product basis ($/oz Ag payable) | $11.00 – $13.00 |
1 Silver equivalent production is calculated using price assumptions of $22/oz Ag, $1.20/lb Zn, $0.90/lb Pb and $1,700/oz Au to "convert" zinc, lead and gold production contained in concentrate to "equivalent" silver ounces (contained metal, multiplied by price, divided by silver price).
2 Financial metrics assume an exchange rate of 20.00 Mexican Pesos per US$1.00. Costs used in calculating financial metrics include an allocation for Gatos Silver and Dowa corporate costs paid by the Los Gatos Joint Venture ("LGJV") of approximately $6 million per year. See "Non-GAAP Financial Performance Measures" for additional information.
Silver production is expected to be higher in the first half of 2023 than in the second half of 2023 based on sequencing of the mine plan. Zinc and lead production are expected to be higher in the second half of the year than in the first half. We expect consistent plant throughput of between 2,800 and 2,900 tonnes processed per day throughout the year.
The Company expects sustaining capital expenditures at CLG (100% basis) to be approximately $45 million in 2023, of which $25 million is for underground development primarily to access the lower levels of the NW and Central zones and to further develop access to the SE zone. Development of the SE zone is being accelerated in 2023 compared to the previous life of mine plan to support future development of the South-East Deeps zone and for additional production flexibility. The remainder of capital expenditures is expected to be primarily associated with equipment replacements and rebuilds, dewatering infrastructure, and for completion of the fluorine leach plant for zinc concentrates which we expect to commission in Q2. We do not expect significant tailings dam construction expenditures in 2023.
Exploration and definition drilling expenditures are expected to be approximately $13 million in 2023. The LGJV currently has five active drill rigs on surface and three underground, with the primary focus being on CLG life extension including drilling of the South-East Deeps zone. The focus will gradually shift towards exploration drilling of the Los Gatos district in the second half of 2023. The Company also plans to conduct detailed mapping of the district and undertake a geophysics program aiming to define structures and future drilling targets across the property including underneath the Rio Conchos basin.
