• Mine Life Extended to the End of 2032 with 36% Increase in Total Silver Equivalent Production
• Strong Free Cash Flows Throughout the Updated Life of Mine
• Numerous Opportunities Available for Further Growth, Mine Life Extension and Margin Improvement

VANCOUVER, British Columbia, Sept. 25, 2024 (GLOBE NEWSWIRE) -- Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the “Company”) today reported an updated life of mine plan (the “2024 LOM Plan”) that adds two years of additional reserves and a 36% increase in silver equivalent production compared with the prior LOM plan at the Cerro Los Gatos Mine (“CLG”) in Mexico.

Gatos Silver also disclosed an updated mineral reserve estimate (the “2024 Mineral Reserve”) and mineral resource estimate (the “2024 Mineral Resource”) (and together with the 2024 LOM Plan, the “2024 Updates”) with an effective date of July 1, 2024.

The Company has a 70% interest in the Los Gatos Joint Venture (“LGJV”), which in turn owns the CLG mine. The Company has agreed to be acquired by First Majestic Silver Corp. (“First Majestic”) subject to certain conditions, including approvals of the shareholders of Gatos Silver and First Majestic. All dollar amounts are expressed in, and references to “$” refer to, United States dollars unless otherwise noted.

Dale Andres, CEO of Gatos Silver, said: “We continue to deliver on CLG’s growth potential through disciplined optimization of our assets and successful near-mine resource expansion and conversion. The 2024 LOM Plan represents our second consecutive multi-year mine life extension with the current mine life now extended to the end of 2032 in conjunction with higher mill throughput rates, which are now expected to exceed design capacity by 40% starting in mid-2025.”

“The 2024 LOM Plan shows strong cash flows and attractive all-in-sustaining costs that demonstrate why CLG is one of the highest-quality primary silver operations. Together with ongoing exploration drilling, the results of the 2024 Updates illustrate the long-term potential at CLG and why it is expected to become a cornerstone district of the First Majestic portfolio going forward.”

Summary

• Robust 2024 LOM Plan at CLG with strong annual cash flow profile (100% LGJV basis):
  • Mine life extended to the end of 2032, an addition of two years at higher throughput rates of 3,500 tonnes per day
  • Low by-product all-in sustaining cost (“AISC”)1,2 of $6.29 per ounce of payable silver, and co-product AISC1,2 of $14.89 per ounce of payable silver equivalent
  • Average annual after-tax free cash flow2,3 of $80 million, resulting in an after-tax net present value (“NPV”)3 of $539 million based on 2024 reserve price assumptions at a silver price of $23/oz, and significant leverage to higher metal prices. The spot silver price on September 24, 2024 was $32.15/oz (XAG:USD)4.
    • Average annual after-tax free cash flow2,5 of $111 million, resulting in an after-tax NPV5 of $760 million, at a silver price of $30/oz
    • Average annual after-tax free cash flow2,5 of $136 million, resulting in an after-tax NPV5 of $935 million, at a silver price of $35/oz
  • Total silver equivalent production6 over the LOM expected to increase by 36% and total silver production expected to increase by 22%
  • Average annual production of 7.0 million ounces of silver and 14.0 million ounces of silver equivalent expected during the 2025 to 2027 period with further optimization potential
  • Average annual production over the LOM of 6.1 million ounces of silver, 67 million pounds of zinc and 50 million pounds of lead, or 12.9 million ounces of silver equivalent production
  • 2024 Mineral Reserve of 10.3 million tonnes at 172 g/t silver, 3.89% zinc, 2.07% lead, 0.22 g/t gold and 0.21% copper, with 57.3 million ounces of contained silver, up 28% from 8.1 million tonnes a year earlier7. For all of the mine’s five payable metals (silver, zinc, lead, gold and copper), contained metal increased even though grade was lower for all except copper.
  • 2024 Mineral Resource includes 0.8 million tonnes of measured and indicated resource, up 98% from 0.4 million tonnes a year earlier and 1.51 million tonnes of inferred resource, down 67% from 4.58 million tonnes a year earlier7, reflecting successful resource to reserve conversion
• Numerous opportunities to extend mine life and further increase margins at CLG:
  • Drilling continues to expand the SE Deeps zone beyond the 2024 Mineral Reserve and Mineral Resource estimates, as described in our news release dated July 23, 2024
  • Two drill rigs currently drilling the Central Deeps target below the current Central and North-west zones
  • Drilling of near-mine and district exploration targets increased in Q2 2024 with initial results at San Luis and Portigueño targets showing mineralization, as described in our news release dated July 23, 2024, and with follow-up drilling continuing
  • Several capital efficient margin improvement projects being studied, including metallurgical recovery optimization through ultra fines recovery and potential mill throughput growth up to 4,000 tpd

2024 CLG LOM Plan Update Summary

Table 1 presents a comparison of key metrics of the 2024 LOM Plan to the previous life of mine plan announced on September 6, 2023, (the “2023 LOM Plan”) considering the comparable periods from July 1, 2024 onwards (the effective date of the 2024 LOM Plan).

On this basis, total estimated silver equivalent production in the 2024 LOM Plan has increased by 36% compared with the 2023 LOM Plan, with lower unit operating costs resulting primarily from higher mill throughput rates which increase to a steady state of approximately 3,500 tpd by mid-2025. Total tonnes processed increased by 47% to 10.33 million tonnes. Sustaining capital increases by 63% reflecting additional underground development and infrastructure required to mine the additional tonnage. Silver equivalent production averages 12.9 million ounces per year over the mine life, and averages 14.0 million ounces during the 2025 to 2027 period. Figures 1, 2, 3 and 4 present annual and cumulative free cash flows, mill throughput rates and silver head grades, silver production and by-product AISC, and silver equivalent production and co-product AISC, respectively.

Table 1 – Summary of the 2024 LOM Plan and Comparison to the 2023 LOM Plan (100% LGJV Basis)(1,2,3)

(1)   Silver equivalent production for the 2024 LOM Plan is calculated using 2024 reserve price assumptions to “convert” zinc, lead, gold and copper production contained in concentrates to “equivalent” silver ounces (contained metal, multiplied by price, divided by silver price). Silver equivalent production for the 2024 LOM Plan uses 2024 reserve price assumptions of $23/oz silver, $1.25/lb zinc, $0.95/lb lead, $1,850/oz gold and $4.00/lb copper. Silver equivalent production for the 2023 LOM Plan did not include copper due to relatively low payable quantities, and used prices of $22/oz silver, $1.20/lb zinc, $0.90/lb lead, $1,700/oz gold, $3.50/lb copper.(2)   Silver production is silver contained in Pb, Zn and Cu concentrates, zinc production is zinc contained in Zn concentrate, lead production is lead contained in Pb concentrate. (3)   By-product AISC and Co-product AISC include the LGJV management fee and administrative costs of $1.35 / oz Ag payable and $0.65 / oz AgEq payable, respectively in the 2024 LOM Plan and $1.13 / oz Ag payable and $0.60 / oz AgEq payable, respectively in the 2023 LOM Plan from July 1, 2024. Refer to Table 9 for AISC details.

Figure 1 – 2024 LOM Annual Free Cash Flow (100% LGJV Basis)

Figure 2 – LOM Mill Throughput and Silver Grade (2024 LOM Plan and 2023 LOM Plan)

Figure 3 – 2024 LOM Silver Production and By-Product AISC (100% LGJV Basis)

Figure 4 – 2024 LOM Silver Equivalent Production and Co-Product AISC (100% LGJV Basis)

2024 CLG Mineral Reserve and Mineral Resource Tables

The 2024 Mineral Reserve for CLG by reserve category is summarized in Table 2 and the 2024 Mineral Resource for CLG reported by category is summarized in Table 3.

Table 2: 2024 CLG Mineral Reserve as at July 1, 2024(1,2,3,4,5,6,7,8,9,10)

(1)   Mineral Reserves are reported on a 100% LGJV basis and 70% GSI attributable basis and exclude all Mineral Reserve material mined prior to July 1, 2024.(2)   Specific gravity has been assumed on a dry basis.(3)   Tonnage and contained metal have been rounded to reflect the accuracy of the estimate and numbers may not sum exactly.(4)   Values are inclusive of mining recovery and dilution. Values are determined as of delivery to the mill (point of reference) and therefore not inclusive of milling recoveries.(5)   Mineral Reserves are reported within stope shapes using a variable cut-off basis with a Ag price of US$23/oz, Zn price of US$1.25/lb, Pb price of US$0.95/lb, Au price of US$1,850/oz and Cu price of $4.00/lb. Metallurgical recoveries used in the NSR calculation for generation of the stope solids vary based on the block Pb:Cu ratio. For a Pb:Cu ratio >15 the NSR metallurgical recovery parameters were 88.2% Ag, 63.4% Zn, 89.4% Pb, 54.2% Au and 0% Cu, for Pb:Cu of >7 and