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(Kitco News) – Mexico-focused silver producer Gatos Silver (NYSE: GATO) (TSX: GATO) reported yesterday that the Cerro Los Gatos (CLG) mine life extended from early 2028 through to the end of 2030, for an additional 2.75 years, with 46% increase in total silver production.
Gatos said that additional drilling has delivered a “significant increase” to the 2023 mineral reserves, which now amounted to 8.1 million tonnes at 217 g/t silver, 4.32% zinc, 2.20% lead, 0.25 g/t gold and 0.15% copper, with 56.3 million ounces of contained silver.
The company added that the new life of mine plan, which is based on recent operating performance, “demonstrates our continued confidence in CLG’s ability to deliver robust margins and consistent cash flow.”
Total silver production over the remaining mine life is expected to increase by 46% and total silver equivalent production is expected to increase by 50%, with an average annual production of 7.7 million ounces of silver during the 2024 to 2026 period.
Gatos expects average annual production over the life-of-mine (LOM) of 6.6 million ounces of silver, 65 million pounds of zinc and 47 million pounds of lead, or 12.4 million ounces of silver equivalent production.
Importantly, the company projects an average annual after-tax free cash flow of $75 million, resulting in an after-tax NPV of $462 million, an increase of $123 million from the 2022 LOM from July 1, 2023 onwards, – supported by an “attractive” by-product all-in sustaining costs of $7.7 per ounce of payable silver.
The company also said it is now analyzing a number of projects with the potential to further improve margins and mine life as the company moves forward.
“In the near term, the LGJV is continuing to define the South-East Deeps area and ramp up exploration efforts in the Los Gatos district with the mobilization of a seventh surface drill rig this month,” Gatos added.
Commenting on the results of the updated estimates, CEO Dale Andres said, “We have achieved significant life extension objectives with this updated mineral reserve estimate, exceeding our target of adding one to two years. The new life of mine plan, which is based on recent operating performance, demonstrates our continued confidence in CLG’s ability to deliver robust margins and consistent cash flow. Gatos Silver has a strong balance sheet and remains debt free, with regular cash distributions to the joint venture partners expected throughout CLG’s mine life.”
Gatos Silver is a silver dominant exploration, development and production company that discovered a new silver and zinc-rich mineral district in southern Chihuahua State, Mexico. The company has a 70% interest in the Los Gatos Joint Venture (LGJV), which in turn owns the Cerro Los Gatos (CLG) mine in Mexico.
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Read More: Gatos Silver extends CLG mine life, expects 46% increase in total silver