Gatos Silver, Inc. has revealed an updated life of mine plan for the Cerro Los Gatos mine in Mexico. The plan extends the mine's life to the end of 2032, adding two years of additional reserves and a 36% increase in silver equivalent production compared with the previous plan.
The updated mineral reserve estimate for 2024 shows a significant increase, with 10.3 million tonnes at 172 g/t silver, 3.89% zinc, 2.07% lead, 0.22 g/t gold, and 0.21% copper. This represents a 28% increase in contained silver compared to the previous year.
The 2024 mineral resource estimate includes 0.8 million tonnes of measured and indicated resources, up 98% from the previous year, and 1.51 million tonnes of inferred resources, down 67% from the previous year, reflecting successful resource-to-reserve conversion.
The updated life of mine plan indicates that total silver equivalent production over the mine's life is expected to increase by 36%, reaching an average annual production of 7.0 million ounces of silver and 14.0 million ounces of silver equivalent from 2025 to 2027. The average annual production over the life of the mine is projected to be 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.
The company's CEO, Dale Andres, mentioned that the updated plan demonstrates strong cash flows and attractive all-in-sustaining costs, positioning Cerro Los Gatos as one of the highest-quality primary silver operations. The plan also presents numerous opportunities for mine life extension and margin improvement, including ongoing exploration drilling to expand the mineral reserves.
The 2024 life of mine plan also shows a 47% increase in total tonnes processed, with an average mill throughput rate of 3,401 tonnes per day, representing a 15% increase from the previous plan. The total estimated silver production is expected to increase by 22%, reaching 50.5 million ounces over the mine's life.
Furthermore, the plan forecasts an average annual after-tax free cash flow of $80 million, resulting in an after-tax net present value of $539 million at a silver price of $23/oz, with significant leverage to higher metal prices. At a silver price of $35/oz, the average annual after-tax free cash flow is projected to be $136 million, with an after-tax net present value of $935 million.
The company also highlighted 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.
As a result of these announcements, the company's shares have moved -0.9% on the market, and are now trading at a price of $16.11. If you want to know more, read the company's complete 8-K report here.
