Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39649 GATOS SILVER, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpor ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39649 GATOS SILVER, INC. (Exact name of registrant as specified in its charter) Delaware 27-2654848 (State or other jurisdict ...

Part I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q3 2022 financials report **$18.3 million net income**, a turnaround from prior year loss with positive cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$388.4 million**, driven by cash and affiliate investments; shareholders' equity reached **$373.4 million** Condensed Consolidated Balance Sheets (in thousands) | | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $15,269 | $6,616 | | Total current assets | $16,932 | $11,766 | | **Non-Current Assets** | | | | Investment in affiliates | $371,452 | $355,310 | | **Total Assets** | **$388,423** | **$367,111** | | **Current Liabilities** | $2,334 | $1,406 | | **Non-Current Liabilities** | $12,730 | $12,620 | | **Total Shareholders' Equity** | **$373,359** | **$353,085** | | **Total Liabilities and Shareholders' Equity** | **$388,423** | **$367,111** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Nine-month **net income** reached **$18.3 million**, a **turnaround** from prior year's **$3.1 million net loss** Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total expenses | $5,977 | $7,754 | $17,209 | $19,200 | | Equity income in affiliates | $6,801 | $1,600 | $32,180 | $22,592 | | Other income (expense) | $1,076 | $(8,845) | $3,332 | $(6,520) | | **Net income (loss)** | **$1,900** | **$(14,999)** | **$18,303** | **$(3,128)** | | **Diluted EPS** | **$0.03** | **$(0.22)** | **$0.26** | **$(0.05)** | [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) **Shareholders' equity increased** to **$373.4 million**, driven by **$18.3 million net income** for the nine-month period - **Shareholders' equity grew** to **$373.4 million** at September 30, 2022, up from **$353.1 million** at December 31, 2021[12](index=12&type=chunk) - The primary driver for the **equity increase** was the **net income of $18.8 million** for the first quarter and **$1.9 million** for the third quarter, partially offset by a **net loss of $2.4 million** in the second quarter[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) **Operating cash flow** turned **positive** at **$16.0 million**, driven by affiliate **dividends**, **increasing cash** by **$8.7 million** Condensed Consolidated Statements of Cash Flows (in thousands) | | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used by) operating activities | $16,045 | $(15,494) | | Net cash used by investing activities | $(7,392) | $(261,439) | | Net cash provided by financing activities | $— | $139,185 | | **Net increase (decrease) in cash** | **$8,653** | **$(137,748)** | | Cash and cash equivalents, end of period | $15,269 | $12,398 | - The **positive shift** in **operating cash flow** was primarily driven by **$23.3 million** in **dividends** received from affiliates during the nine months ended September 30, 2022[14](index=14&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail related-party transactions, legal proceedings, credit facility terms, and LGJV affiliate investment performance - The company is involved in two putative class action lawsuits, one in the U.S. and one in Canada, alleging false and misleading statements regarding mineral resources and reserves at the Cerro Los Gatos mine[40](index=40&type=chunk)[41](index=41&type=chunk) - The company's Revolving Credit Facility was amended multiple times to address potential covenant deficiencies, with the credit limit temporarily reduced and subsequently re-established. The maturity date was extended to December 2025[53](index=53&type=chunk)[55](index=55&type=chunk)[58](index=58&type=chunk) - An **impairment charge** of **$51.6 million** was recorded on the **investment** in the LGJV during the fourth quarter of 2021 after a technical report indicated a significant **decrease** in mineral reserves[57](index=57&type=chunk)[60](index=60&type=chunk) LGJV Net Income (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $73,926 | $56,991 | $218,730 | $178,326 | | **Net income** | **$12,617** | **$5,523** | **$53,001** | **$41,720** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) **Improved financial performance** is driven by strong LGJV results, with Gatos Silver reporting **$1.9 million net income** in Q3 [Overview](index=22&type=section&id=Overview) Gatos Silver is a precious metals company, operating the Cerro Los Gatos mine through a **70% ownership stake** in the LGJV - The company's primary focus is the operation of the Los Gatos Joint Venture (LGJV) in Chihuahua, Mexico[76](index=76&type=chunk) - Gatos Silver holds a **70% ownership stake** in the LGJV, with Dowa holding the remaining **30%**[76](index=76&type=chunk) [Third Quarter 2022 Highlights](index=22&type=section&id=Third%20Quarter%202022%20Highlights) Q3 2022 highlights include **$1.9 million net income** and **59% increase in LGJV silver production** - Gatos Silver recorded **net income of $1.9 million** for Q3 2022, compared to a **net loss of $15.0 million** in Q3 2021[79](index=79&type=chunk) - The **cash balance increased** to **$15.3 million** at September 30, 2022, from **$6.6 million** at the end of 2021[79](index=79&type=chunk) - LGJV's silver **production increased** by **59%** to **2.7 million ounces** in Q3 2022 compared to Q3 2021[84](index=84&type=chunk) - LGJV's by-product **all-in sustaining cost (AISC)** per ounce of payable silver **decreased** by **41%** to **$9.79** for Q3 2022[82](index=82&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Gatos Silver's **net income improved** due to higher LGJV **equity income**; LGJV **revenue grew 30%** in Q3 Gatos Silver - Selected Financials (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Equity income in affiliates | $6,801 | $1,600 | $32,180 | $22,592 | | **Net income (loss)** | **$1,900** | **$(14,999)** | **$18,303** | **$(3,128)** | LGJV - Selected Financials (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $73,926 | $56,991 | $218,730 | $178,326 | | **Net income** | **$12,617** | **$5,523** | **$53,001** | **$41,720** | [Cash Flows](index=36&type=section&id=Cash%20Flows) **Operating cash flow** was **$16.0 million**, a reversal from prior year, driven by **$23.3 million** in LGJV **dividends** - Gatos Silver's **cash from operations** for the nine months ended Sep 30, 2022, was **$16.0 million**, compared to a use of (**$15.5 million**) in the prior year period[132](index=132&type=chunk) - The **increase** in **operating cash flow** was primarily due to the receipt of **$23.3 million** in **dividends** from the LGJV[132](index=132&type=chunk) - The LGJV generated **$118.3 million** in **cash from operations** and paid **$33 million** in **dividends** to its partners during the first nine months of 2022[137](index=137&type=chunk)[139](index=139&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$15.3 million** cash and **$13.0 million** outstanding on its credit facility, ensuring 12-month **liquidity** - The company had **cash and cash equivalents of $15.3 million** as of September 30, 2022[140](index=140&type=chunk) - As of September 30, 2022, **$13.0 million** was outstanding under the Credit Facility. A **$4.0 million** principal repayment was made in December 2022[141](index=141&type=chunk) - As of February 28, 2023, the company had **$15.6 million** in cash and **$41.0 million** available under its Credit Facility, while the LGJV had **$55.5 million** in cash[142](index=142&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, disclosure for market risk is not required - As a smaller reporting company, Gatos Silver is not required to provide disclosure under this item[154](index=154&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were **ineffective** due to material weaknesses in internal control over financial reporting from 2021 10-K - Management concluded that the company's disclosure controls and procedures were not **effective** as of September 30, 2022[156](index=156&type=chunk) - The **ineffectiveness** was attributed to material weaknesses in internal control over financial reporting previously identified in the 2021 10-K[156](index=156&type=chunk) - No material changes to internal controls over financial reporting occurred during the quarter ended September 30, 2022[157](index=157&type=chunk) Part II - OTHER INFORMATION [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company faces two class action lawsuits alleging false statements regarding mineral resources and reserves - A putative class action lawsuit was filed in the U.S. District Court for the District of Colorado on behalf of purchasers of Gatos common stock between December 9, 2020, and January 25, 2022, alleging false and misleading statements about mineral resources and reserves[163](index=163&type=chunk) - A similar putative class action was commenced in the Ontario Superior Court of Justice on behalf of individuals who acquired Gatos securities between October 28, 2020, and January 25, 2022[164](index=164&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to **risk factors** have occurred since the 2021 Annual Report on Form 10-K - As of the date of this report, there have been no material changes to the **risk factors** disclosed in the 2021 10-K[166](index=166&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity securities were issued or purchased by the issuer or affiliates during the quarter - The Company did not issue any unregistered shares of its common stock or other equity securities during the quarter ended September 30, 2022[168](index=168&type=chunk) [Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the period - There were no defaults upon senior securities during the period[170](index=170&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[171](index=171&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No other information to report for this item - There is no other information to report for this item[172](index=172&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists exhibits including corporate documents, credit facility amendments, and officer certifications

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or (604) 424-0984 (Registrant's telephone number, including area code) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number: 001-39649 GATOS SILVER, I ...

Part I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Gatos Silver, Inc.'s unaudited condensed consolidated financial statements for Q1 2022, including balance sheets, operations, equity, and cash flows, showing a net income of **$18.8 million** driven by LGJV equity income [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2022, shows total assets increased to **$388.6 million** from **$367.1 million** at year-end 2021, primarily due to the 'Investment in affiliates' (LGJV), with total shareholders' equity also rising to **$373.4 million** Condensed Consolidated Balance Sheet Highlights (as of March 31, 2022 vs. December 31, 2021) | Account | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | **Total Current Assets** | 8,764 | 11,766 | | Cash and cash equivalents | 5,284 | 6,616 | | **Investment in affiliates** | 379,818 | 355,310 | | **Total Assets** | **388,610** | **367,111** | | Total Current Liabilities | 2,557 | 1,406 | | Credit Facility, net | 12,657 | 12,620 | | **Total Shareholders' Equity** | **373,396** | **353,085** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2022, the company reported a net income of **$18.8 million**, a significant turnaround from a **$1.6 million** net loss in Q1 2021, primarily due to a substantial increase in equity income from its LGJV affiliate to **$24.6 million** Statement of Operations Summary (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :--- | :--- | :--- | | Total Expenses | 6,931 | 5,084 | | General and administrative | 6,777 | 4,853 | | Equity income in affiliates | 24,614 | 2,701 | | **Net Income (Loss)** | **18,829** | **(1,620)** | | **Diluted EPS** | **$0.27** | **($0.03)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used by operating activities improved to **$1.3 million** for Q1 2022 from **$6.6 million** in Q1 2021, with no investing activities this quarter, and cash and cash equivalents ending at **$5.3 million** Cash Flow Summary (Three Months Ended March 31) | Activity | 2022 ($ thousands) | 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash used by operating activities | (1,332) | (6,589) | | Net cash used by investing activities | — | (113,823) | | Net cash provided by financing activities | — | 1,297 | | **Net decrease in cash** | **(1,332)** | **(119,115)** | | **Cash and cash equivalents, end of period** | **5,284** | **31,031** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail financial statements, including related-party transactions with LGJV, ongoing legal proceedings regarding mineral reserve disclosures, credit facility amendments, and LGJV's financial performance, which drives company results - The company is facing two putative class action lawsuits, one in the U.S. and one in Canada, alleging false and misleading statements regarding mineral resources and reserves at the Cerro Los Gatos mine[42](index=42&type=chunk)[43](index=43&type=chunk) - On March 7, 2022, the Company amended its Revolving Credit Facility to address potential covenant deficiencies, reducing the credit limit to **$30 million** until a new financial model with updated mineral reserves is delivered[54](index=54&type=chunk) - The company recognized **$24.6 million** in equity income from its LGJV investment in Q1 2022, compared to **$2.7 million** in Q1 2021, following an impairment charge of **$51.6 million** against this investment in Q4 2021 due to a significant decrease in the mineral reserve estimate[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - Subsequent to the quarter, the LGJV paid its first dividend of **$20 million** in April 2022, with Gatos Silver's net share being **$5.9 million** after withholdings and a payment to partner Dowa[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Gatos Silver's Q1 2022 financial performance, highlighting the LGJV's operational success with **60%** silver production growth and **89%** revenue increase, driving Gatos Silver's **$18.8 million** net income, alongside cash flows, liquidity, and non-GAAP reconciliations [First Quarter 2022 Highlights](index=23&type=section&id=First%20Quarter%202022%20Highlights) Q1 2022 saw strong LGJV operational performance, with silver production up **60%** YoY to **2.4 million ounces** and revenues growing **89%** to **$87.6 million**, leading to Gatos Silver's **$18.8 million** net income - Gatos Silver recorded net income of **$18.8 million** in Q1 2022, a significant improvement from a net loss of **$1.6 million** in Q1 2021, primarily due to a **$21.9 million** increase in equity income from the LGJV[78](index=78&type=chunk) - LGJV's silver production was **2.4 million ounces** in Q1 2022, a **60%** increase over the **1.5 million ounces** produced in Q1 2021[78](index=78&type=chunk) - LGJV revenues increased **89%** to **$87.6 million** in Q1 2022, with net income of **$36.9 million** compared to **$6.9 million** in Q1 2021[82](index=82&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Gatos Silver's **$18.8 million** net income was driven by LGJV's strong performance, with revenue surging **89%** to **$87.6 million** due to higher production and metal prices, while by-product cash cost per ounce of payable silver decreased **96%** to **$0.42** - Gatos Silver's general and administrative expenses increased by **$1.9 million** to **$6.8 million** in Q1 2022, primarily due to higher legal fees related to the mineral reserve errors[83](index=83&type=chunk) LGJV Operational & Financial Results (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $87.6M | $46.3M | | Net Income | $36.9M | $6.9M | | Tonnes Milled per day | 2,611 | 2,261 | | Silver Production (M oz) | 2.4 | 1.5 | | By-product AISC per oz Ag | $8.46 | $19.76 | - LGJV's revenue increased by **89%** in Q1 2022 compared to Q1 2021, driven by higher concentrate sales volumes (zinc up **59%**, lead up **36%**) and higher realized metal prices (zinc up **50%**, lead up **17%**)[90](index=90&type=chunk) [Cash Flows, Liquidity and Capital Resources](index=30&type=section&id=Cash%20Flows,%20Liquidity%20and%20Capital%20Resources) Gatos Silver's cash decreased by **$1.3 million** to **$5.3 million**, while LGJV's cash increased by **$21.0 million** to **$41.2 million** due to strong operating cash flow, with Gatos Silver having **$13.0 million** outstanding on its credit facility and sufficient liquidity for the next 12 months Gatos Silver Cash Flow Summary (Q1 2022 vs Q1 2021) | Activity ($ thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash used by Operating | (1,332) | (6,589) | | Net cash used by Investing | — | (113,823) | | Net cash provided by Financing | — | 1,297 | | **Cash at end of period** | **5,284** | **31,031** | LGJV Cash Flow Summary (Q1 2022 vs Q1 2021) | Activity ($ thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by Operating | 42,054 | 23,335 | | Net cash used by Investing | (19,166) | (17,596) | | **Cash at end of period** | **41,231** | **5,441** | - As of March 31, 2022, the company had cash of **$5.3 million** and **$13.0 million** outstanding on its Credit Facility, and management believes it has sufficient cash and access to borrowings for at least the next 12 months[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Gatos Silver is exempt from providing disclosures under this item - As a smaller reporting company, Gatos Silver is not required to provide disclosure for this item[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2022, due to previously identified material weaknesses in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2022[125](index=125&type=chunk) - The ineffectiveness was attributed to material weaknesses in internal control over financial reporting, as described in the 2021 10-K[125](index=125&type=chunk) - No changes occurred during the quarter ended March 31, 2022, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[126](index=126&type=chunk) Part II - OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company faces two putative class action lawsuits in the U.S. and Canada, alleging false and misleading statements regarding mineral resources and reserves at the Cerro Los Gatos mine - A putative class action lawsuit was filed in the U.S. District Court for the District of Colorado on behalf of purchasers of Gatos common stock between December 9, 2020, and January 25, 2022[131](index=131&type=chunk) - A second putative class action was commenced in the Ontario Superior Court of Justice on behalf of purchasers of Gatos securities between October 28, 2020, and January 25, 2022[132](index=132&type=chunk) - Both lawsuits allege false and misleading statements and omissions regarding the mineral resources and reserves of the company[131](index=131&type=chunk)[132](index=132&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - As of the date of this report, there have been no material changes to the risk factors disclosed in the 2021 10-K[134](index=134&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2022, the company did not issue any unregistered equity securities nor did it repurchase any common stock - The Company did not issue any shares of its common stock or other equity securities that were not registered during the quarter ended March 31, 2022[135](index=135&type=chunk) - There were no purchases of the Company's common stock made by or on behalf of the Company or any affiliated purchaser during the quarter[136](index=136&type=chunk) [Other Items (3, 4, 5, 6)](index=37&type=section&id=Other%20Items%20(3,%204,%205,%206)) This section confirms no defaults on senior securities, no mine safety disclosures, no other material information, and lists exhibits filed with the report - Item 3: No defaults upon senior securities[137](index=137&type=chunk) - Item 4: Mine Safety Disclosures are not applicable[138](index=138&type=chunk) - Item 5: No other information to report[139](index=139&type=chunk) - Item 6: Lists the exhibits filed with the Form 10-Q[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39649 GATOS SILVER, INC. (Exact name of registrant as specified in its charter) Delaware 27-2654848 (State or other jurisdict ...

Gatos Silver, Inc. (NYSE:GATO) Q3 2021 Results Conference Call November 8, 2021 12:00 PM ET Company Participants Stephen Orr - Chairman and Chief Executive Officer Dale Andres - President Roger Johnson - Chief Financial Officer Conference Call Participants Ryan Thompson - BMO Operator Good day and thank you for standing by. Welcome to the Gatos Silver Third Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a ...

GHTOS Q3 2021 EARNINGS CALL High-Grade, Silver-Geared Producer with Exceptional Organic Growth Potential November 8 2O21 DISCLAIMER This presentation has been prepared by Gatos Silver, Inc. ("Gatos Silver" or the "Company" ) for the exclusive use of the party to whom the Company delivers this presentation. 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 ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company presents its unaudited condensed consolidated financial statements, detailing significant changes in assets, equity, and profitability [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Change (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $408,385 | $265,410 | +$142,975 | | Cash and cash equivalents | $12,398 | $150,146 | -$137,748 | | Investment in affiliates | $393,608 | $109,597 | +$284,011 | | Total current assets | $14,736 | $155,752 | -$141,016 | | Total shareholders' equity | $391,759 | $261,386 | +$130,373 | | Credit Facility, net | $12,583 | — | +$12,583 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Total expenses | $6,504 | $2,106 | $15,450 | $4,885 | | Equity income (loss) in affiliates | $1,600 | $3,447 | $22,592 | $(18,069) | | Term Loan closing fee | $(10,000) | — | $(10,000) | — | | Net income (loss) from continuing operations | $(14,999) | $433 | $(3,128) | $(26,207) | | Net loss | $(14,999) | $(1,185) | $(3,128) | $(31,150) | | Basic EPS (Continuing operations) | $(0.22) | $0.01 | $(0.05) | $(0.65) | [Condensed Consolidated Statements of Shareholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Deficit)) Shareholders' Equity Summary | Metric (in thousands) | Dec 31, 2020 | Sep 30, 2021 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total shareholders' equity | $261,386 | $391,759 | +$130,373 | | Paid-in capital | $409,728 | $542,193 | +$132,465 | | Accumulated deficit | $(147,423) | $(150,551) | -$3,128 | | Common Stock shares outstanding | 59,183,076 | 69,134,494 | +9,951,418 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary | Metric (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :-------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net cash used by operating activities | $(15,494) | $(11,898) | $(3,596) | | Net cash used by investing activities | $(261,439) | $(8,405) | $(253,034) | | Net cash provided by financing activities | $139,185 | $14,845 | +$124,340 | | Net decrease in cash and cash equivalents | $(137,748) | $(5,458) | $(132,290) | | Cash and cash equivalents, end of period | $12,398 | $3,627 | +$8,771 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of Business](index=8&type=section&id=1.%20Description%20of%20Business) - Gatos Silver's primary focus is the Los Gatos Joint Venture (LGJV) in Chihuahua, Mexico, where it operates a silver and zinc-rich mineral district[19](index=19&type=chunk) - As of September 30, 2021, Gatos Silver's ownership in the LGJV **increased to 70.0%**, with Dowa Metals and Mining Co, Ltd holding 30.0%[21](index=21&type=chunk) - The LGJV commenced commercial production of lead and zinc concentrates on September 1, 2019, which are sold to third-party customers[22](index=22&type=chunk) - The company is conducting infill and extension drilling at Cerro Los Gatos, and definition and exploratory drilling at the Esther deposit and its wholly-owned Santa Valeria project[23](index=23&type=chunk)[24](index=24&type=chunk) [2. Summary of Significant Accounting Policies](index=8&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - Interim financial statements are unaudited and prepared under GAAP for interim information, including normal recurring adjustments[27](index=27&type=chunk) - The company adopted ASU No 2019-12, Income Taxes, with **no material impact** on financial statements[29](index=29&type=chunk) - **No material changes** to significant accounting policies previously disclosed in the 2020 10-K[28](index=28&type=chunk) [3. Property, Plant and Equipment, net](index=9&type=section&id=3.%20Property,%20Plant%20and%20Equipment,%20net) - Mexican mineral concessions are valid for **50 years**, extendable, and require semi-annual fees and annual work reports[30](index=30&type=chunk) - The Santa Valeria concession requires a **1% production royalty payment** on net smelter returns[31](index=31&type=chunk) [4. Accounts Payable and Other Accrued Liabilities](index=9&type=section&id=4.%20Accounts%20Payable%20and%20Other%20Accrued%20Liabilities) Liabilities Summary | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | Change | | :-------------------- | :----------- | :----------- | :----- | | Accounts payable | $263 | $560 | -$297 | | Accrued expenses | $955 | $1,240 | -$285 | | Accrued compensation | $2,565 | $1,964 | +$601 | | Total | $4,043 | $4,024 | +$19 | [5. Related-Party Transactions](index=10&type=section&id=5.%20Related-Party%20Transactions) Related-Party Transactions Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | LGJV services earned | $1,250 | $900 | $3,750 | $3,000 | | LGJV receivables | $833 (Sep 30, 2021) | $1,200 (Dec 31, 2020) | | | | SSMRC services earned | nil | nil | $16 | nil | [6. Net Income (Loss) per Share](index=10&type=section&id=6.%20Net%20Income%20(Loss)%20per%20Share) Earnings Per Share Summary | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Basic EPS (Continuing operations) | $(0.22) | $0.01 | $(0.05) | $(0.65) | | Diluted EPS (Continuing operations) | $(0.22) | $0.01 | $(0.05) | $(0.65) | | Weighted average shares outstanding (Basic) | 67,325,644 | 40,506,144 | 62,210,848 | 40,505,790 | [7. Stockholders' Equity](index=10&type=section&id=7.%20Stockholders'%20Equity) - Public offering in July 2021 issued **8,930,000 shares** at $14.00/share, generating **$118,894 thousand** net proceeds[38](index=38&type=chunk) - An additional **286,962 shares** were issued in August 2021 via over-allotment option exercise, yielding **$3,837 thousand** net proceeds[38](index=38&type=chunk) - Total unrecognized stock-based compensation expense was **$8,346 thousand** as of September 30, 2021, to be recognized over 1.9 years[41](index=41&type=chunk) - **144,958 Deferred Stock Units (DSUs)** were outstanding at September 30, 2021, with 148,721 DSUs converted to common stock during the nine months ended September 30, 2021[44](index=44&type=chunk) Stock Option Activity (9 Months Ended Sep 30, 2021) | Stock Option Activity (9 Months Ended Sep 30, 2021) | Shares | Weighted-Average Exercise Price | | :-------------------------------------------------- | :----- | :------------------------------ | | Granted | 489,719 | $16.72 | | Exercised | 585,735 | $8.30 | | Outstanding at Sep 30, 2021 | 5,300,914 | $13.39 | [8. Fair Value Measurements](index=12&type=section&id=8.%20Fair%20Value%20Measurements) - Financial instruments (cash, receivables, payables) approximate fair value due to **short maturities**[48](index=48&type=chunk) - Non-financial assets and liabilities, including investment in affiliates, are classified as **Level 3** in the fair value hierarchy, using unobservable inputs and internal assumptions[49](index=49&type=chunk)[50](index=50&type=chunk) [9. Commitments, Contingencies and Guarantees](index=14&type=section&id=9.%20Commitments,%20Contingencies%20and%20Guarantees) - The LGJV's **$210,000 thousand Term Loan** with Dowa was fully repaid on July 26, 2021, with Gatos Silver contributing its 70% share and paying a **$10,000 thousand closing fee**[53](index=53&type=chunk)[54](index=54&type=chunk)[104](index=104&type=chunk) - The **$60,000 thousand Working Capital Facility (WCF)** with Dowa was extinguished on March 11, 2021, with Gatos Silver contributing **$42,000 thousand**[57](index=57&type=chunk)[105](index=105&type=chunk) - Gatos Silver repurchased an **18.5% interest** in the LGJV from Dowa for **$71,550 thousand** on March 11, 2021, increasing its ownership to 70.0%[56](index=56&type=chunk) - The company guarantees LGJV equipment loan agreements, with **$7,588 thousand outstanding** as of September 30, 2021[58](index=58&type=chunk)[100](index=100&type=chunk) [10. Debt](index=16&type=section&id=10.%20Debt) - Company entered a **$50,000 thousand Revolving Credit Facility** (expandable to $100,000 thousand) on July 12, 2021, maturing July 31, 2024[59](index=59&type=chunk)[106](index=106&type=chunk) - **$13,000 thousand** was outstanding under the Credit Facility as of September 30, 2021, with an interest rate of **LIBOR plus 3%**[60](index=60&type=chunk)[108](index=108&type=chunk) - The company recognized **$82 thousand in interest expense** for both the three and nine months ended September 30, 2021[61](index=61&type=chunk) [11. Discontinued Operations](index=16&type=section&id=11.%20Discontinued%20Operations) - In October 2020, the company distributed its wholly-owned subsidiary, Silver Opportunity Partners LLC (SOP), which is now reported as **discontinued operations**[25](index=25&type=chunk)[62](index=62&type=chunk) Discontinued Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :---------------------------- | :---------------------------- | | Net loss of discontinued operations | $1,618 | $4,943 | | Net cash used by operating activities of discontinued operations | N/A | $(3,181) | [12. Segment Information](index=18&type=section&id=12.%20Segment%20Information) - The company operates in two reportable segments: **Mexico** (development and exploration, including LGJV) and **Corporate**[64](index=64&type=chunk) Segment Assets | Segment (in thousands) | Total Assets (Sep 30, 2021) | Total Assets (Sep 30, 2020) | Change | | :--------------------- | :-------------------------- | :-------------------------- | :----- | | Mexico | $61,373 | $37,359 | +$24,014 | | Corporate | $347,012 | $75,574 | +$271,438 | | Total | $408,385 | $112,933 | +$295,452 | [13. Investment in Affiliate](index=18&type=section&id=13.%20Investment%20in%20Affiliate) - The equity income/loss includes amortization of the carrying value of the investment in excess of the underlying net assets of the LGJV Entities[65](index=65&type=chunk) Equity Income (Loss) in Affiliates | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Equity income (loss) in affiliates | $1,600 | $3,447 | $22,592 | $(18,069) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, operational updates, liquidity, and market risks, highlighting improved LGJV performance [Forward-Looking Statements](index=21&type=section&id=Forward-Looking%20Statements) - Forward-looking statements cover future financial performance, growth strategies, production, exploration, mineral reserves, expenses, and capital requirements[71](index=71&type=chunk) - Key risks include **negative operating cash flows**, dependence on two principal projects, significant debt, estimation uncertainties for mineral reserves, speculative exploration, and commodity price volatility[72](index=72&type=chunk) - The company does not undertake to revise forward-looking statements unless required by law[74](index=74&type=chunk) [Overview](index=23&type=section&id=Overview) - Gatos Silver is a U.S-based precious metals company focused on becoming a premier silver producer, primarily through the CLG mine and LGD exploration via the LGJV[75](index=75&type=chunk) - The LGD is a new mining district with **14 mineralized zones**, including CLG, Esther, and Amapola deposits, and 11 high-priority targets[76](index=76&type=chunk) CLG Mineral Reserves (100% Basis, as of July 1, 2020) | CLG Mineral Reserves (100% Basis, as of July 1, 2020) | Tonnes (millions) | Silver (g/t) | Gold (g/t) | Lead (%) | Zinc (%) | | :-------------------------------------------------- | :---------------- | :----------- | :--------- | :------- | :------- | | Proven and Probable (diluted) | 9.6 | 306 | 0.35 | 2.76 | 5.65 | | Proven (diluted) | 6.4 | | | | | | Probable (diluted) | 3.3 | | | | | [Operational Update](index=24&type=section&id=Operational%20Update) CLG Production (100% Basis) | CLG Production (100% Basis) | Q3 2021 | Q2 2021 | Q1 2021 | 2021 YTD | | :-------------------------- | :------ | :------ | :------ | :------- | | Tonnes milled (dmt) | 234,054 | 230,656 | 203,479 | 668,189 | | Tonnes milled per day (dmt) | 2,544 | 2,535 | 2,261 | 2,448 | | Average Silver grade (g/t) | 256 | 322 | 261 | 282 | | Contained Silver ounces (millions) | 1.7 | 2.1 | 1.5 | 5.3 | | Contained Lead pounds (millions) | 10.8 | 11.2 | 7.6 | 29.6 | | Contained Zinc pounds (millions) | 13.5 | 14.5 | 8.7 | 36.7 | | Silver Recoveries | 89% | 89% | 85% | 88% | [COVID-19 Pandemic](index=24&type=section&id=COVID-19%20Pandemic) - COVID-19 temporarily affected 2020 operations due to a **45-day government-mandated suspension** and protocol implementation costs[78](index=78&type=chunk) - New variants (e.g, Delta) pose risks of reimposed restrictions, additional costs, production delays, and operational restart costs[79](index=79&type=chunk) - **Significant uncertainty remains** regarding the duration and extent of the pandemic's impact on business, financial condition, and results of operations[79](index=79&type=chunk) [Exploration Update](index=24&type=section&id=Exploration%20Update) - Three exploration drilling programs are underway, totaling **51,400 meters** at an estimated cost of **$7,700 thousand**[80](index=80&type=chunk) - Cerro Los Gatos infill and extension drilling program expanded to **132 holes (27,000 meters)** to convert inferred resources and support a potential production rate increase to 3,000 tpd; 78 holes drilled by Sep 30, 2021[82](index=82&type=chunk) - Los Gatos District resource expansion program at Esther deposit involves **59 holes (19,000 meters)** to expand resources; 18 holes drilled by Sep 30, 2021[83](index=83&type=chunk) - The **5,400-meter exploration program** at the wholly-owned Santa Valeria project was completed by September 30, 2021, and data analysis is ongoing[84](index=84&type=chunk) [Components of Results of Operations](index=26&type=section&id=Components%20of%20Results%20of%20Operations) - **Exploration expenses are expected to increase** with expanded activities at LGD and other properties[85](index=85&type=chunk) - **General and administrative expenses have increased significantly** due to public company operating costs (salaries, benefits, stock compensation, legal, compliance, insurance)[86](index=86&type=chunk) - Equity income (loss) in affiliates represents the proportional share of LGJV's net income/loss and amortization of basis difference[87](index=87&type=chunk) - LGJV arrangement fees for the Term Loan and WCF **ceased** after their extinguishment on July 26, 2021, and March 11, 2021, respectively[88](index=88&type=chunk) - The company has historically **fully reserved for net deferred tax assets** due to substantial losses, believing realization is unlikely before expiration[89](index=89&type=chunk) [Results of Operations (Company)](index=27&type=section&id=Results%20of%20Operations%20(Company)) Company Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :-------------------------------- | :---------------------------- | :---------------------------- | :----- | :---------------------------- | :---------------------------- | :----- | | Net income (loss) from continuing operations | $(14,999) | $433 | $(15,432) | $(3,128) | $(26,207) | +$23,079 | | Term Loan closing fee | $(10,000) | — | $(10,000) | $(10,000) | — | $(10,000) | | Equity income (loss) in affiliates | $1,600 | $3,447 | $(1,847) | $22,592 | $(18,069) | +$40,661 | | General and administrative | $5,994 | $1,965 | +$4,029 | $14,008 | $4,345 | +$9,663 | [Liquidity and Capital Resources (Company)](index=28&type=section&id=Liquidity%20and%20Capital%20Resources%20(Company)) - Key cash outflows included **$71,550 thousand** for LGJV interest repurchase, **$42,000 thousand** for WCF extinguishment, **$144,809 thousand** for Term Loan repayment, and **$10,000 thousand** Term Loan closing fee[97](index=97&type=chunk) - Cash inflows included **$125,599 thousand net proceeds** from a July 2021 public offering and **$13,000 thousand** from a new Revolving Credit Facility[98](index=98&type=chunk)[99](index=99&type=chunk) - The company believes it has **sufficient liquidity for the next 12 months** but may need additional external financing for future exploration and development, with no assurance of availability on acceptable terms[101](index=101&type=chunk)[102](index=102&type=chunk) Liquidity Summary | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | Change | | :-------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $12,398 | $150,146 | $(137,748) | | Working capital | $10,693 | $151,728 | $(141,035) | [Results of LGJV Operations](index=32&type=section&id=Results%20of%20LGJV%20Operations) - Nine-month net income improvement driven by **30% silver, 35% zinc, and 17% lead price increases**, 67% higher lead concentrate production, 50% higher zinc concentrate production, and improved silver (27%) and zinc (9%) ore grades[117](index=117&type=chunk) LGJV Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :-------------------- | :---------------------------- | :---------------------------- | :----- | :---------------------------- | :---------------------------- | :----- | | Sales | $56,991 | $44,021 | +$12,970 | $178,326 | $81,181 | +$97,145 | | Net income (loss) | $5,523 | $7,788 | $(2,265) | $41,720 | $(30,577) | +$72,297 | | Interest expense | $847 | $2,862 | $(2,015) | $5,320 | $9,805 | $(4,485) | | Loss on Term Loan extinguishment | $4,359 | — | +$4,359 | $4,359 | — | +$4,359 | LGJV Cash Flows | LGJV Cash Flows (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :----------------------------- | :---------------------------- | :---------------------------- | :----- | | Operating activities | $84,964 | $31,411 | +$53,553 | | Investing activities | $(57,698) | $(44,208) | $(13,490) | | Financing activities | $(19,001) | $13,492 | $(32,493) | | Total change in cash | $8,265 | $695 | +$7,570 | [Non-GAAP Financial Measures](index=37&type=section&id=Non-GAAP%20Financial%20Measures) - Non-GAAP measures (Cash Costs, AISC) are used to evaluate business, providing additional information not standardized by GAAP[123](index=123&type=chunk)[124](index=124&type=chunk) - AISC includes direct/indirect operating cash costs and sustaining capital expenditures, reflecting **total sustainable production costs**[125](index=125&type=chunk) Non-GAAP Metrics | Non-GAAP Metric (in thousands, except unit costs) | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2021 | | :------------------------------------------------ | :---------------------------- | :---------------------------- | | Cash costs | $34,565 | $99,620 | | All-in sustaining costs | $55,745 | $151,484 | | All-in sustaining costs, net of by-product credits | $26,965 | $78,082 | | By-product cash cost per ounce of payable silver | $3.58 | $5.48 | | By-product all-in sustaining cost per ounce of payable silver | $16.71 | $16.33 | [Off-balance sheet arrangements](index=39&type=section&id=Off-balance%20sheet%20arrangements) - **No significant off-balance sheet arrangements** were reported that would materially affect financial condition, results, or liquidity[131](index=131&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) - Critical accounting policies and estimates are discussed in Note 2 of the consolidated financial statements in this report and the 2020 10-K[132](index=132&type=chunk) [Jumpstart Our Business Startups Act of 2012](index=39&type=section&id=Jumpstart%20Our%20Business%20Startups%20Act%20of%202012) - Gatos Silver, an "emerging growth company," elected to **"opt out"** of the extended transition period for new accounting standards under the JOBS Act[133](index=133&type=chunk) - The company will comply with new/revised accounting standards on the same dates as other public companies, and this decision is **irrevocable**[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company details its exposure to commodity price fluctuations, foreign currency exchange rates, and investment concentration risks - **Significant commodity price risk** from silver, lead, zinc, and gold sales; a sustained price decrease could materially impact the business[134](index=134&type=chunk) - **Foreign currency risk** exists due to expenditures in Mexican pesos, impacting operational costs[135](index=135&type=chunk) - **Concentration of risk** from placing nearly all cash investments with a single, high-quality financial institution[136](index=136&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures as of the reporting period end - Disclosure controls and procedures were evaluated and deemed **effective** as of September 30, 2021[137](index=137&type=chunk) - **No material changes** in internal control over financial reporting occurred during Q3 2021[138](index=138&type=chunk) - Management acknowledges inherent limitations in control systems, providing **reasonable, not absolute, assurance** against errors and fraud[139](index=139&type=chunk)[140](index=140&type=chunk) [PART II – OTHER INFORMATION](index=41&type=section&id=Part%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings impacting its financial condition or operations - The company is involved in normal business-related legal proceedings, **none of which are considered material** to its financial condition, cash flows, or results of operations[142](index=142&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) As of the report date, there have been no material changes to the risk factors previously disclosed in the 2020 10-K - **No material changes** to risk factors disclosed in the 2020 10-K as of the report date[143](index=143&type=chunk) - Existing and unknown risk factors could still significantly impact operations or financial condition[143](index=143&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has utilized approximately $131,972 thousand of its IPO net proceeds for LGJV-related activities and working capital - **No unregistered equity securities** were issued during the quarter ended September 30, 2021[144](index=144&type=chunk) - **$131,972 thousand of IPO net proceeds** used as of September 30, 2021[146](index=146&type=chunk) - Major uses of IPO proceeds include **$71,550 thousand** for LGJV interest repurchase and **$42,000 thousand** for LGJV WCF extinguishment[146](index=146&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Gatos Silver reported no defaults upon senior securities during the period - **No defaults** upon senior securities were reported[148](index=148&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to Gatos Silver, Inc - Mine Safety Disclosures are **not applicable**[149](index=149&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - **No other information** was reported[150](index=150&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate and financial agreements and certifications - Exhibits include Amended and Restated Certificate of Incorporation and By-Laws, Confirmation Agreement, Revolving Credit Facility, Separation Agreement, and Section 302/1350 Certifications[151](index=151&type=chunk)[152](index=152&type=chunk)

GHTOS Q2 2021 EARNINGS CALL High-Grade, Silver-Geared Producer with Exceptional Organic Growth Potential August 9 2O21 DISCLAIMER This presentation has been prepared by Gatos Silver, Inc. ("Gatos Silver" or the "Company" ) for the exclusive use of the party to whom the Company delivers this presentation. 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 re ...