To-date, 14 zones of mineralization have been defined within the district and all are characterized by silver-zinc-lead epithermal mineralization. More than 85% of the approximately 103,087-hectare mineral rights package has yet to be drilled, representing a highly prospective and under explored district. The Company recently built and commissioned its first operating mine and mineral processing plant at the Cerro Los Gatos deposit.
ABOUT GATOS SILVER
MAJORITY 70% OWNER OF THE EMERGING LOS GATOS DISTRICT
- Massive district comprising 103,087 hectares with significant exploration potential
- Only 15% explored to date
- Established mineral resource estimates at three of the 14 mineralized zones
CLG MINE IN PRODUCTION AND ACHIEVED 2,500TPD DESIGN THROUGHPUT IN LATE DECEMBER 2020
- One of the largest and highest-grade producing silver mines in North America
- Life-of-mine reserves of 642 g/t AgEq
DISTRICT SCALE EXPLORATION RECENTLY COMMENCED
- Unconstrained organic resource growth potential
EXPERIENCED MANAGEMENT TEAM AND BOARD WITH TRACK RECORD OF SUCCESS
- Unconstrained organic resource growth potential
THE LOS GATOS DISTRICT
14 ZONES OF MINERALIZATION DEFINED WITHIN THE DISTRICT WITH EXCEPTIONAL ORGANIC GROWTH POTENTIAL
- Exploration activities restarted+
- Three drills at CLG
- Permits received and another drill added at Esther
- Drilling commenced at Santa Valeria
- The LGJV owns all of the surface rights covering CLG, and the Esther and Amapola deposits+
- Significant exploration upside at Esther deposit and Amapola deposit+
- NI43-101 resource statements completed
- Strong grade continuity along system
- Similar characteristics identified during preliminary work at CLG
- Eleven other mineralized zones identified and defined by high-grade drill intersections in the Los Gatos District+
- 100% owned Santa Valeria target resides on the eastern fault boundary and appears to be a geologic mirror of Cerro Los Gatos+
OUR ESG COMMITMENT
GATOS SILVER ADHERES TO THE HIGHEST STANDARDS FOR ENVIRONMENTAL PROTECTION, SOCIALLY RESPONSIBLE CONDUCT AND CORPORATE GOVERNANCE PRACTICES.
We recognize it is essential to conduct our operations in a manner that does not harm the environment. Accordingly, the CLG mine was built to world-class environmental standards. We ensure the operation is not causing air pollution through enclosure of surface conveyors and ore storage areas that may emit dust during high-wind events. We constructed the tailings storage facility with a double liner and leak detection to prevent ground water contamination. We practice continual reclamation by replanting inactive disturbed areas with native species plants.
The Company also recognizes that it is essential to conduct our operations in a manner that protects our employee’s safety and ensures that the local communities benefit through not only employment opportunities, but also education assistance, medical care support and provision of sustainable, clean water. At the CLG project we constantly work to create a strong safety culture and this has resulted in a consistent reduction in the lost-time injury frequency. We annually fund the purchase of educational materials for local schools and provide scholarships for students to attend the University of Chihuahua. We built the first full-time medical clinic in the ejido of San Jose del Sitio and it is staffed by doctors from the Mexican Institute of Social Security. We funded the redevelopment of the community water system to ensure access to a sustainable source of water for all community residents.
Gatos Silver was also proactive in its response to COVID-19. The Company gained access to molecular nasal testing during the early stages of the pandemic. We instituted strong COVID-19 prevention protocols and aided the local communities with COVID-19 prevention seminars, donation of personal protection materials and nasal testing through the local medical clinic. We are pleased to report that these initiatives have been successful in preventing a COVID-19 outbreak at the CLG project.
In terms of employment, over 99% of our employees reside in Mexico with 24% from local communities and 60% residing in Chihuahua State. Women comprise 20% of our workforce and are employed throughout all phases of the CLG project, from mine operations to concentrate processing and technical services.
Our devotion to improving the lives of those impacted by our project has been recognized by Mexico’s government and local communities and we have never had any opposition to the project. We are proud that for the third consecutive year, the CLG project has been recognized by the Mexican government as a socially responsible company.
Gatos Silver has adopted corporate governance practices in accordance with the highest standards. During 2020, the Company separated the Board Chair and Chief Executive Officer role by appointing Ms. Janice Stairs as our first independent Chair of the Board. Through additional appointments, the Board
is now comprised of nine highly qualified Directors from the United States, Canada, United Kingdom, Monaco, Mexico and Peru. The Directors have extensive experience in the resource sector contributing expertise in mine operations, finance, law and capital markets.
KEY 2020 HIGHLIGHTS
Record production from the CLG mine – 652,739 ore tonnes were mined in 2020
Record silver, gold, zinc and lead metal recoveries at the CLG processing plant by the end of 2020
Silver, gold, zinc and lead recoveries exceeded plan during the fourth quarter
Profitable third and fourth quarters at LGJV to close 2020
Commenced a 27,000-meter exploration program at CLG in December
Successful completion of a $172.5 million IPO in the fourth quarter of 2020.
FINANCIAL SUMMARY
2020 PRODUCTION
During 2020, the CLG mine achieved steady improvement in its mining rates reaching 2,500 tonnes/day of production by year-end despite a Mexican government emergency health declaration and mandated temporary suspension in April and May. While CLG was able to adopt effective COVID-19 prevention protocols, mining activities were suspended until sufficient testing capabilities were implemented for the large mining labor complement. Mining activities resumed in early June 2020 and daily production progressively increased with COVID-19 prevention protocols fully implemented.
CLG MINE AVERAGE DAILY PRODUCTION BY MONTH
CLG MINE CUMULATIVE DEVELOPMENT
MINE DEVELOPMENT WAS NOT IMPACTED BY THE TEMPORARY SUSPENSION AND HAS CONSISTENTLY EXCEEDED PLAN SINCE THE INITIAL COMMISSIONING OF CERRO LOS GATOS.
By the end of 2020, the mine had achieved just under 16,000 meters of development in the NW and Central Zones, providing ample ore access to maintain mining rates.
2021 - A YEAR OF OPTIMIZATION
- Numerous strategic capital initiatives to enhance production proficiency and best-in-class standards+
- Expected sustaining capital expenditures: $65-$75M
- Construction of CLG paste plant commences
- Additional tailings capacity to be added
- Installation of second CLG mine refrigeration unit
- CLG production approaching life-of mine averages+
- 2021 recovered metal in concentrate(1):
- 7.5 – 7.9 million ounces Ag
- 4.5 – 5.0 thousand ounces Au
- 40 - 42 million pounds Pb
- 49 - 52 million pounds Zn
- AISC: $17.00 - $17.50/Ag oz(1)(2)
- 2021 recovered metal in concentrate(1):
(2) By-product AISC basis
(2) By-product AISC basis
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this presentation may constitute “forward-looking statements”. Those statements include, but are not limited to, statements with respect to production from the Cerro Los Gatos Mine, further exploration of the Los Gatos District, estimated calculations of mineral reserves and resources at our properties, results of the economic analysis contained in the Los Gatos Technical Report, our business strategy, general administrative expenses, the completion of the Reorganization, the entry into the Management Service Agreement, payment of royalty payments, production and sale of concentrates, future strategic infrastructure development at the Cerro Los Gatos Mine, expected cost savings, projected attributable net revenue and free cash flow, estimates of tax liabilities, our prospects, plans and objectives, industry trends, our requirements for additional capital, expectations generally regarding treatment under applicable government regimes for permitting or attaining approvals, unanticipated reclamation expenses, government regulation, environmental risks, reclamation and rehabilitation expenses, title disputes or claims, synergies of potential future acquisitions, expected actions of third parties, and limitations of insurance coverage. These statements are generally identified by the use of words such as “may,” “might,” “could,” “would,” “achieve,” “budget,” “scheduled,” “forecasts,” “should,” “expects,” “plans,” “anticipates,” ‘‘believes,’’ “estimates,” ‘‘predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our industry. All forward-looking statements speak only as of the date on which they are made. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions concerning future events that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. There are, or will be, important factors that could cause actual results to differ materially from those expressed or implied by forward-looking statements and recipients are cautioned not to place undue reliance on these statements. The Company does not undertake any obligation to publicly update these forward-looking statements, except as required by law.