Gatos Silver Inc (GATO) Q3 2023 Earnings: Net Income Down 6%, Full Year Production Guidance ...
Net income for Q3 2023 was $3.3 million, a decrease of 6% from Q3 2022 due to increased general and administrative expenses.
Full year silver and silver equivalent production guidance for 2023 has been increased by 16% and 8% respectively.
The company received a cash distribution of $24.5 million in October 2023, bringing the total returned to partners in 2023 to $85 million.
As of October 31, 2023, the company had a cash balance of $57.7 million, no debt, and $50.0 million available under the Revolving Credit Facility.
On November 7, 2023, Gatos Silver Inc (NYSE:GATO) released its third quarter 2023 financial and operating results. The company reported a net income of $3.3 million, down 6% from $3.5 million in Q3 2022. This decrease was primarily due to an increase in general and administrative expenses related to non-cash stock-based compensation. However, this was partially offset by higher equity income from the Los Gatos Joint Venture (LGJV), higher interest income, and a decrease in income tax expense.
Financial Performance
The company's EBITDA was $3.6 million, down 14% from $4.2 million in Q3 2022. Despite this, Gatos Silver Inc (NYSE:GATO) reported a significant increase in free cash flow, which was $33.3 million, up 317% from $8.0 million in Q3 2022. The company uses equity accounting for its 70% interest in the LGJV. Cash distributions to the LGJV partners in 2023 have been made through capital distributions, which is more tax-efficient than distributing cash dividends.
Increased Production Guidance
Due to good operational performance in the first month of the fourth quarter and recent optimization of the mine plan, the company is increasing its 2023 full year silver and silver equivalent production guidance by 16% and 8% respectively. The LGJV has returned a total of $85 million to its partners in 2023, with the company receiving another cash distribution of $24.5 million in October.
Financial Stability
Gatos Silver remains debt-free with a strong cash balance. As of October 31, 2023, the company had a cash balance of $57.7 million, no debt, and $50.0 million available under the Revolving Credit Facility after repaying the full outstanding balance on July 21, 2023. As of the same date, the LGJV had a cash balance of $20.9 million.
Looking Forward
With the continued good operational performance and recent optimization of the mine plan, Gatos Silver is increasing its full year 2023 guidance for silver production and silver equivalent production. The company expects full year zinc and gold production to be near the low end of the original guidance range, while full year lead production is expected to be within the upper half of the original guidance range.
Explore the complete 8-K earnings release (here) from Gatos Silver Inc for further details.
This article first appeared on GuruFocus.
