Gatos Silver, Inc.

and thank you for standing by welcome to the data silver q1 2021 earnings call at this time all participants are in a listen-only mode after the speaker's presentation there will be a question and answer session to ask a question during today's session you will need to press star 1 on your telephone as a reminder you can never get through the participant view on your screen if you require any further assistance please press star zero I will now like to hand the conference over to your speaker today, Steven Orr. Please go ahead.

Thank you. Good morning, and I'd like to welcome everyone to Gatto Silver's Q1 2021 earnings call. Before I begin, I want to caution our attendees that I'll be making forward-looking statements. And these statements aren't guarantees of future performance. They involve risks, uncertainties, and assumptions regarding future events that are quite difficult to predict. So with that, turning to slide number three. And for those who are watching this on the screen, you'll be able to navigate the slides yourself. If you just put your mouse cursor over the top of the slide, you'll see the navigation arrows appear. Since Gato Silver's IPO in late 2020, we've been consistently executing initiatives to achieve expected operating performance at Cerro Los Gatos and to increase the project's financial flexibility and resume meaningful exploration within and around the Los Gatos district. And during Q1, we used about $113 million of proceeds from our IPO to increase our ownership in the entire Los Gatos district to 70% by purchasing another 18.5% from our JV partner, Doha Metals & Mining. And we concurrently retired the project's working capital facility, thereby delivering on two of the key value-adding initiatives to increase shareholder exposure to this new silver and zinc-rich district and reduce the project's debt. And as promised, we've also initiated all the near-term exploration programs for which another portion of the IPO proceeds are directed. There are currently five drills actively drilling to expand the resources at the Cerro Los Gatos deposit and the adjacent Ester resource and conduct initial exploration at Gato Silver's 100%-owned Santa Valeria project near to but outside the Los Gatos Joint Venture area of interest. This is the first time that we've had this many drills active since 2012, and we couldn't be more excited. Phil Pyle, our Vice President of Exploration and Chief Geologist, will be talking about these programs in greater detail later in the presentation. 2021 will be a year of optimization for natural silver, where we, one, focus on sustaining budgeted development and ore production rates from the mine and concentrate production from the processing plant. And secondly, adding additional infrastructure to improve the project's operating efficiency. Turning to slide number four. All of our achievements at Los Gatos would not have been possible without the support of the regional government in Mexico, regulatory agencies, and foremost the communities that are impacted by the project. We recognize that it's essential to conduct our operations in a manner that protects our employees' safety, doesn't harm the environment, and improves the lives of residents in the local communities. We believe we have an obligation to ensure that those impacted by Los Gatos benefit not only through employment opportunities, but also education assistance, medical care support, and provision of sustainable, clean water. As a priority, we hire our employees locally. 60% are from Chihuahua State, and 24% of those are from Los Gatos. diversity. Despite the resource industry's reputation of male employee dominance, we've managed to achieve a workforce where 20% are women, and they're working in all phases of the project, from management to mine production to process plant operators, engineering, and operations services. In terms of community support, we built the first full-time medical clinic in the ejido of San Jose del Sitio, and it's staffed by doctors from Mexico's social services. We also have our own clinic at the Cerro Los Gatos project with our own doctors. And our doctors work collaboratively with the doctors at San Jose Del Sitio's clinic on all sorts of local community health improvement initiatives with the focus most recently on COVID-19 prevention. And this has involved personal protection seminars, provision of molecular testing, and now the initiation of vaccinations. Our devotion to improving the lives of those impacted by our project has been recognized by the government and local communities, and we have never had any opposition to the project. Turning to slide number five, these are the highlights that I covered earlier in my comments. So moving to slide number six. Cerro Los Gatos achieved its 2,500 ton per day production target for all operating days during Q1. However, you can see that we lost a few operating days due to grid power loss during the quarter, with the most significant event being the extraordinary winter storm in Texas that interrupted delivery of natural gas, upon which northern Mexico depends to provide power to its electrical grid. The other events were high wind events that caused arcing between power lines coming into the project. The lines in those areas that are most vulnerable to high winds have now been further stabilized to prevent a future occurrence. The project development achieved an important milestone during Q1. We have now accessed higher grade portions of the deposit in the northwest and central zones, which resulted in meaningfully improved performance during April of the second quarter. And I'll provide further detail on that later in the presentation. The processing plant finished commissioning its on-stream analyzer, and this provides constant data on concentrated metal recovery that can adjust the processing plant operating parameters, such as reagent addition, to maximize metals recovery. I would now like to have Adam Dubas, our Chief Administrative Officer, cover the next two slides.

Thank you, Steve. I'll continue here on slide seven of the presentation. With Q1, we had a solid start to the beginning of this year. With Q1 production on the payable side, we had 1.3 million ounces of silver, 9,000 ounces of gold, 7.2 million pounds of lead, and 7.4 million pounds of zinc. On the all-in-sustaining cost basis, on a byproduct basis, we had approximately $19.76 per silver ounce. It's important to note here, too, this includes an element we've estimated about $2.50 per silver ounce associated with COVID-19 costs and the less ounce produced due to the power outages that Steve just covered. On a coproduct basis, our cost was $21.29 on a silver equivalent ounce basis for all unsustaining costs. On the cash cost side, our byproduct basis is at $10.44 per silver ounce and our coproduct basis is at $15.21 per silver equivalent ounce. Both the sustaining cost and the cash cost byproduct basis were calculated on $0.2415 for silver, $0.116 for zinc, $0.93 for lead, and $0.1812 per ounce for gold. Our operating costs for the quarter were in line with our expectations given the temporary suspensions of the power outage and the arc flashing event. We've also successfully sustained the 2,500 tons per day for all of the operating days in Q1 with our processing plant. Moving to slide eight. As we have previously communicated in our investor day and in our Q4 earnings call, 2021 was a year of optimization, and we're happy to report that it is well underway. Numerous strategic capital initiatives were commenced during this period. including the paste plant engineering, which is expected that the construction of that paste plant is expected to be completed in Q2 of 2022. The paste plant will have many efficiencies for the inline operation. Most notably, it will help with the efficiency of the backfill operation itself, but it will also free up the haulage trucks to be more efficient and streamlined to be only for haulage trucks. They won't have to move crushed rock fill underground on the return leg or crushed ore. We also commissioned the second mine refrigeration unit construction, with its expected completion in Q3 of this year. The third tailings lift also begun, and its expected completion is early Q1 2022. We've also been working on underground pumping stations, and both of those are currently underway. These pumping stations will allow more efficiency in our pumping operations by extracting clean water underground and pumping it immediately to surface. This will help keep the areas for development to be clear of water and to allow more efficiency in such development. Once that water is pumped to the surface, the only treatment that's required is just to cool it, given the temperature of the water prior to being released into the stream. Both of those are expected to be completed later this year, one in Q3 and one in Q4 this year. With respect to our production guidance 2021, which we previously communicated, that remains unchanged at this time. And just to recap, that guidance is 7.5 to 7.9 million ounces in recovered and concentrated silver, 4.5 to 5,000 ounces of gold, 40 to 42 million pounds of lead, and 49 to 52 million pounds of zinc. Again, our ASIC guidance also remains unchanged at a $17, $17.50 per silver ounce, and that is on a byproduct basis. Okay, I'd like to turn it over to our CFO to cover the next few slides on the financial results of the quarter.