Gatos Silver Investor Presentation Deck
Non-GAAP Financial Performance Measures
The Company uses certain measures that are not defined by GAAP to evaluate various aspects of our business. These non-GAAP financial measures are intended to provide additional information only and
do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are
not necessarily indicative of operating profit or cash flow from operations as determined under GAAP.
Cash Costs and All-In Sustaining Costs
Cash costs and all-in sustaining costs ("AISC") are non-GAAP measures. AISC was calculated based on guidance provided by the World Gold Council ("WGC"). WGC is not a regulatory industry organization
and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting
principles and policies applied, as well as definitional differences of sustaining versus expansionary (i.e. non-sustaining) capital expenditures based upon each company's internal policies. Current GAAP
measures used in the mining industry, such as cost of sales, do not capture all of the expenditures incurred to discover, develop and sustain production. Therefore, we believe that cash costs and AISC are
non-GAAP measures that provide additional information to management, investors and analysts that aid in the understanding of the economics of the Company's operations and performance compared to
other producers and provides investors visibility by better defining the total costs associated with production.
Cash costs include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, treatment and refining costs,
general and administrative costs, and royalties. AISC includes total production cash costs incurred at the LGJV's mining operations plus sustaining capital expenditures. The Company believes this measure
represents the total sustainable costs of producing silver from current operations and provides additional information of the LGJV's operational performance and ability to generate cash flows. As the
measure seeks to reflect the full cost of silver production from current operations, new project and expansionary capital at current operations are not included. Certain cash expenditures such as new project
spending, tax payments, dividends, and financing costs are not included.
Free Cash Flow
Management uses free cash flow ("FCF") as a non-GAAP measure to analyze cash flows generated from operations. As used herein, FCF is cash provided by operating activities less cash used in investing
activities. The Company believes that this measure assists in evaluating the Company's ability to generate cash flow after capital investments. The most directly comparable measure prepared in accordance
with GAAP is cash provided by operating activities. The Company believes FCF is also useful as one of the bases for comparing the Company's performance with its competitors. Although FCF and similar
measures are frequently used as measures of cash flows generated from operations by other companies, the Company's calculation of FCF is not necessarily comparable to such other similarly titled captions
of other companies. The Company is unable to provide without unreasonable efforts a reconciliation of forward-looking free cash flow on a per-year basis to cash flow provided by operating activities due to
the inherent difficulty in forecasting and quantifying certain amounts, some of which may be material, that are necessary for such reconciliation.
Reconciliation of FCF to Cash Flow from Operating Activities (as defined under US GAAP):
Free Cash Flow
Cash Flow provided by Operating Activities
Cash Flow used in Investing Activities
After-Tax Free Cash Flow
Mining and Income Taxes
Pre-Tax Free Cash Flow
GATOS
SILVER
Units
$M
$M
$M
$M
$M
2023 LOM Plan
(H2'23+)
$707.7
($160.2)
$547.5
$129.2
$676.7
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