• Revenue: $94.2 million in Q2 2024, a 62% increase from the previous year.

• Free Cash Flow: $40.8 million in Q2 2024, a 60% increase from Q1 2024.

• Cash Flow from Operations: $54.5 million, a new quarterly record.

• Net Income: $20.5 million for the Los Gatos joint venture in Q2 2024.

• All-in Sustaining Costs per Payable Ounce of Silver: $6.57, 57% lower than Q2 2023.

• Mill Throughput: 3,240 tonnes per day, a 1% increase quarter-over-quarter.

• Silver Production: 2.3 million ounces, 15% higher than Q2 2023.

• Cash Balance: $108.9 million at the end of July 2024.

• General and Administrative Expenses: $7.9 million, up from $6.2 million in Q2 2023.

• Income Tax Expense: $12.5 million, up from $4.7 million in Q2 2023.

• Warning! GuruFocus has detected 3 Warning Signs with HYLN.

Release Date: August 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gatos Silver Inc (NYSE:GATO) reported record revenues, cash flow from operations, and free cash flow for the second quarter of 2024, driven by strong operating performance and higher metal prices.

• The Los Gatos joint venture achieved a record mill throughput, positioning the company well to meet its annual guidance.

• All-in sustaining costs per payable ounce of silver were significantly lower than the previous year and below the guidance range for 2024.

• The company has a strong cash position with nearly $109 million at the end of July, following a $40 million distribution from the joint venture.

• Gatos Silver Inc (NYSE:GATO) remains debt-free, providing financial flexibility for future growth initiatives.

Negative Points

• Cash costs for the quarter increased by 14% compared to the same period last year, primarily due to higher production rates.

• Cost of sales rose by 24%, driven by increased tonnage of concentrates sold and higher mining and processing costs.

• The company faced inflationary pressures and a strong Mexican peso, which impacted cost performance.

• Income tax expense increased significantly to $12.5 million, reflecting higher taxable income.

• General and administrative expenses rose by $1.7 million, partly due to non-recurring costs such as stock-based compensation and legal fees.

Q & A Highlights

Q: Can you give us any thoughts around the Mexican election in June and any expectations from the incoming administration with respect to mining that might impact you? A: We are optimistic that the new administration will be more pro-business. The ministerial appointments, including the Minister of Economy, have been pro-business, and the new minister has already met with the mining industry. We don't need immediate permits to continue operating, but we hope for improvements in the industry environment with the new administration.