Shares of Gatos Silver (TSX: GATO; NYSE: GATO) soared to a three-year high on Wednesday after the precious-base metals miner announced record quarterly zinc production from its flagship Cerro Los Gatos (CLG) mine in Mexico.
The stock traded as high as US$13.82 apiece in New York, and as of mid-afternoon was up 20.2% to US$13.41 a share, valuing the company at US$942.8 million.
"Our mine debottlenecking efforts delivered a mill throughput average of 3,240 tonnes per day, up 1% from the first quarter of 2024 and up 11% from the second quarter of 2023, as we advanced towards our medium-term target of sustained throughput rates of 3,500 tonnes per day," Gatos CEO Dale Andres said.
"We expect to complete an updated life of mine plan in the third quarter of 2024 with a target to further extend the mine life. We also increased exploration drilling efforts during the second quarter on both near mine targets and at the San Luis prospect located 5 km from the CLG mine."
For the three months ended June 30, 2024, Gatos had produced 2.3 million oz. of silver, 19.1 million lb. of zinc and 12 million lb. of lead, plus 1,360 oz. of gold. In silver-equivalent terms, total production was 3.8 million oz., which is 18% higher than the second quarter of 2023.
The half-year production totalled 4.6 million oz. of silver, 34.9 million lb. of zinc, 22.2 million lb. of lead and 2,750 oz. of gold, which is tracking towards the upper end of the 2024 guidance of 13.5 to 15 million ounces.
The company's record mill throughput for the sixth straight quarter, of about 3,240 tonnes per day, was in addition to higher recovery rates for all metals (except gold) than in last year's second quarter. The improvement in zinc production was the most notable, up 29% from the comparable quarter.
According to Gatos, the processing plant is already reliably performing above 3,500 tonnes per operating day with no reduction in metallurgical recoveries, and the CLG team is focused on implementing various projects over the next six to 12 months to increase its daily production rate.