Gatos Silver, Inc.

At this time, all participants are placed on mute to prevent any background noise. Turning your attention to slide two. Please note today's call contains forward-looking statements. Various risks and uncertainties may cause actual results to vary. Gareth Silver does not assume the obligation to update any forward-looking statements. And now, I would like to turn the call over to Dale Andrews. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Turning to slide three, I'd like to start with highlighting the excellent financial performance in the quarter. The Los Gatos Joint Venture had record revenues, record cash flow from operations, and record free cash flow. This was primarily due to the strong operating performance and higher middle prices in the quarter. As previously announced, the Los Gatos Joint Venture set yet another record for mill throughput during the quarter, and we continue to make meaningful progress towards achieving our medium term target of sustaining a 3,500 ton per day rate through the mill. Second quarter production results puts us in a strong position to achieve our annual guidance. As a result of the strong operating performance this quarter, Our all-in sustaining cost metrics for the full year are expected to remain in the lower half of our guidance range, despite the continued strong pace, although that is starting to weaken, and inflationary pressures in the first half of the year. I would also like to highlight the Los Gatos Joint Ventures free cash flow of almost $41 million in the second quarter of 2024, a 60% increase compared to the first quarter. Keeping to our quarterly cadence, the joint venture made a $40 million distribution in July, and as a result, Gato Silver had a cash balance of nearly $109 million at the end of July. Work on our new life of mine plan is progressing well, and we are on track to announce the results in September. We are aiming to increase throughput and also extend the mine life. During the second quarter, we shifted our main focus from infill drilling in the southeast deeps to more greenfields exploration drilling on both near mine and other targets in the highly prospective Los Gatos district. I'll talk about that more later on in the presentation. But first turning to slide four, mill throughput for the second quarter was 3,240 tons per day the sixth consecutive quarterly record. Mill throughput and metal grades were higher than in the second quarter of 2023, resulting in silver production being 15% higher compared to the second quarter of last year, and finishing this past quarter at 2.3 million ounces in silver equivalent production, which includes zinc, lead, and gold, and a little bit of copper at 3.9 million ounces for the quarter. Mill throughput increased 1%, quarter over quarter, with the mill regularly running at an operating rate of between 3,500 and 3,700 tons per day, and that's on a calendar day basis. As we have stated previously, mining is the bottleneck to achieve further throughput improvements, and we have a number of initiatives underway to address this bottleneck, including rebuilding the underground equipment fleet and various operational improvement projects which are focused on planning, maintenance, and operational execution. Site operating unit costs were approximately $101 per ton this quarter, and that's 3% lower than the comparable quarter in last year. Cash costs for the quarter were 14% higher than in the second quarter last year, and that's primarily due to the higher production rates. Our continuous improvement initiatives continued to help offset the strong peso and the inflationary cost pressures. All in sustaining costs per payable ounce of silver, and that's after byproduct credits, were $6.57, and that's 57% lower than the second quarter last year and below our guidance range for 2024. And again, that was helped by strong byproduct production and sales. All in sustaining costs per payable ounce on a silver equivalent basis, which is co-product basis, we're just over $15 and that's 13% lower than in the second quarter last year and well within our guidance range for 2024. And a bit more on guidance, moving to slide five, based on the strong production in the first half of the year, We continue to expect throughput rates at Cerro Los Gatos to average in the top half of our 3,000 to 3,300 tonne per day guidance range for the year. And we continue to expect full year production to be in the upper half of our guidance range for 2024. As you can see in the table, silver and silver equivalent production are at approximately 53% on a year to date basis. compared to the midpoint of guidance, and our unit cost metrics are tracking below the midpoint in the first half of the year. We still expect the exploration and definition drilling spend to be about 18 million for 2024, and sustaining capital expenditures to be approximately 45 million, with the majority of the capex spent on underground development, with continued focus on opening up the southeast area and mine equipment rebuilds. I'll now turn the call over to Andre to present our financial results.

Thank you, Dale. Moving to slide six. Good morning, everyone. The 70% owned Los Gatos joint venture, strong operating performance, and strong realized metal prices resulted in another quarter of robust cash flow generation. Cash flow provided by operations was approximately $54.5 million, a new quarterly record. The LGJV generated free cash flow of $40.8 million this quarter, 60% higher than the $25.5 million in Q1 2024, and 107% higher than the $19.7 million in Q2 2023. Also, a new record for the LGJV. The increase from the comparable quarter last year was primarily due to significantly higher revenues, partially offset by our operating costs largely due to higher volumes. Cash flow used in investing activities was $13.7 million in Q2 2024, $900,000 lower than in Q2 2023. Of that amount, $11.4 million was spent on sustaining capital expenditures and $1.9 million on resource development growing. The LGJV made a capital distribution of $25 million in April 2024, And as a result of the continued strong free cash flow generation in the second quarter, the joint venture made a $40 million capital distribution in July, subsequent to the end of the quarter. Now turning to slide seven to look at the financial results of the Los Gatos joint venture for the quarter. Revenues increased 62% to $94.2 million in the second quarter of 2024. Higher volumes of metal sold and higher realized metal prices contributed to the significant increase in revenue for the quarter. The provisional revenue adjustment was a $700,000 positive adjustment compared to a 3.1 billion negative adjustment in Q2 2023. Cost of sales increased by 24%, primarily due to a 29% increase in the tonnage of concentrate sold and the associated higher mining and processing costs as a result of an 11% increase in mill throughput. Cost of sales were further impacted by the stronger Mexican peso in Q2 2024 compared to Q2 2023. Depreciation, depletion and amortization expense decreased by approximately 5%, primarily due to the increase in mineral reserves and the extension of the life of mine, partially offset by capital additions. An income tax expense of $12.5 million was recorded compared to $4.7 million in Q2 2023. Income tax expense increased primarily due to higher taxable income at the LTJV. Finally, the LTJV recorded net income of approximately $20.5 million, a significant increase from the $700,000 net income recorded in Q2 2023, mainly as a result of the higher revenues. Turning to slide eight to review the financial results for Gatto Solver. Net income for the second quarter of 2024 was $9.2 million, compared to a net loss of 3.6 million in Q2 last year. Basic and diluted earnings were 13 cents per share this quarter, compared to a net loss per share of 5 cents in Q2 2023. Equity income in affiliates increased to $14.5 million, primarily due to the increase in net income of the LGJB. The company incurred general and administrative expenses of $7.9 million compared to 6.2 in Q2 2023. The $1.7 million increase is primarily due to a $1.2 million increase in non-cash stock-based compensation expense as a result of equity grants since September 2023 after an extended backup period, and also a $600,000 increase in legal and consulting fees. Most of these higher costs are non-recurring, and we do not expect it to continue beyond 2024. G&A excluding non-cash stock-based compensation expense worth $6.3 million compared to 5.7 in Q2 2023. And lastly, other income includes $1.5 million of the quarterly management fees received from the LGJV for the quarter. Turning to slide nine. As was mentioned earlier, the joint venture had a capital distribution of $25 million to its partners, Gattos Silver and Della, during the second quarter, of which we received $17.5 million. As a result, Gattos Silver ended the second quarter with a cash balance of $82.5 million. In July, the LGJV made another capital distribution of $40 million, of which the company received $28 million, bringing the company's cash balance $108.9 million at July 31st, 2024. The LGJV ended the second quarter with a cash balance of $45.5 million and had a cash balance of $24.4 million at July 31st, 2024. Both the GSI and the joint venture continue to remain debt-free. I will now hand it back to Doug.