Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Feb. 23, 2023 | Jun. 30, 2022 | |
Document and Entity Information | ||||
Entity Registrant Name | GATOS SILVER, INC. | |||
Document Type | 10-K | |||
Document Annual Report | true | |||
Document Transition Report | false | |||
Document Period End Date | Dec. 31, 2021 | |||
Entity File Number | 001-39649 | |||
Entity Incorporation, State or Country Code | DE | |||
Entity Tax Identification Number | 27-2654848 | |||
Entity Address, Address Line One | 925 W Georgia Street, Suite 910 | |||
Entity Address, City or Town | Vancouver | |||
Entity Address State Or Province | BC | |||
Entity Address, Country | CA | |||
Entity Address, Postal Zip Code | V6C 3L2 | |||
City Area Code | 604 | |||
Local Phone Number | 424-0984 | |||
Title of 12(b) Security | Common Stock, par value $0.001 per share | |||
Trading Symbol | GATO | |||
Security Exchange Name | NYSE | |||
Entity Well-known Seasoned Issuer | No | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | No | |||
Entity Interactive Data Current | No | |||
Entity Filer Category | Non-accelerated Filer | |||
Entity Small Business | true | |||
Entity Emerging Growth Company | true | |||
Entity Ex Transition Period | true | |||
ICFR Auditor Attestation Flag | false | |||
Entity Shell Company | false | |||
Entity Public Float | $ 115,071,927 | |||
Entity Common Stock, Shares Outstanding | 69,162,223 | |||
Entity Central Index Key | 0001517006 | |||
Current Fiscal Year End Date | --12-31 | |||
Document Fiscal Year Focus | 2021 | |||
Document Fiscal Period Focus | FY | |||
Amendment Flag | false | |||
Auditor Name | Ernst and Young LLP | KPMG LLP | ||
Auditor Firm ID | 1263 | 185 | ||
Auditor Location | Toronto, Canada | Denver, Colorado |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 6,616 | $ 150,146 |
Related party receivables | 1,592 | 1,727 |
Other current assets | 3,558 | 3,879 |
Total current assets | 11,766 | 155,752 |
Non-Current Assets | ||
Investment in affiliates | 355,310 | 109,597 |
Other non-current assets | 35 | 61 |
Total Assets | 367,111 | 265,410 |
Current Liabilities | ||
Accounts payable and other accrued liabilities | 1,406 | 4,024 |
Non-Current Liabilities | ||
Credit Facility, net of debt issuance costs | 12,620 | |
Shareholders' Equity | ||
Common Stock, $0.001 par value; 700,000,000 shares authorized; 69,162,223 and 59,183,076 shares outstanding as of December 31, 2021 and December 31, 2020, respectively | 117 | 108 |
Paid-in capital | 543,829 | 409,728 |
Accumulated deficit | (190,861) | (147,423) |
Treasury stock, at cost, nil and 144,589 shares as of December 31, 2021 and December 31, 2020, respectively | (1,027) | |
Total shareholders' equity | 353,085 | 261,386 |
Total Liabilities and Shareholders' Equity | $ 367,111 | $ 265,410 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 700,000,000 | 700,000,000 |
Common stock, shares outstanding | 69,162,223 | 59,183,076 |
Treasury stock, shares | 0 | 144,589 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Expenses | |||
Exploration | $ 1,657 | $ 785 | |
General and administrative | 20,893 | 7,765 | |
Amortization | 89 | 30 | |
Total expenses | 22,639 | 8,580 | |
Other income (expense) | |||
Equity income (loss) in affiliates | 35,883 | (17,585) | |
Impairment of investment in affiliates | (51,564) | ||
Arrangement fees | (195) | (4,843) | |
Interest expense | (185) | (4,047) | |
Other income (expense) | (4,738) | 28 | |
Total other expense | (20,799) | (26,447) | |
Net income (loss) from continuing operations | (43,438) | (35,027) | |
Net loss from discontinued operations | (5,414) | ||
Net loss | $ (43,438) | $ (40,441) | |
Basic | |||
Continuing operations | [1] | $ (0.68) | $ (0.80) |
Discontinued operations | [1] | (0.13) | |
Total | [1] | (0.68) | (0.93) |
Diluted | |||
Continuing operations | [1] | (0.68) | (0.80) |
Discontinued operations | [1] | (0.13) | |
Total | [1] | $ (0.68) | $ (0.93) |
Weighted average shares outstanding: | |||
Basic (in shares) | [1] | 63,994,693 | 43,655,601 |
Diluted (in shares) | [1] | 63,994,693 | 43,655,601 |
[1] Prior period results have been adjusted to reflect the two-for-one reverse split in October 2020. See Note 1, Description of Business for details. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | Oct. 30, 2020 |
CONSOLIDATED STATEMENTS OF OPERATIONS | |
Reverse stock split ratio | 2 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Common Stock | Treasury Stock | Paid-in Capital | Accumulated Deficit. | Total | |
Balance at Dec. 31, 2019 | $ 80 | $ (1,027) | $ 375,921 | $ (225,583) | $ 149,391 | |
Balance (in shares) at Dec. 31, 2019 | [1] | 40,323,430 | 144,589 | |||
Stock-based compensation | 4,563 | 4,563 | ||||
Issuance of common stock, net | $ 25 | 155,612 | 155,637 | |||
Issuance of common stock, net (in shares) | [1] | 24,644,500 | ||||
Convertible note conversion | $ 3 | 18,981 | 18,984 | |||
Convertible note conversion (In shares) | [1] | 2,712,003 | ||||
Deferred salary conversion | 329 | 329 | ||||
Deferred salary conversion (in shares) | [1] | 47,061 | ||||
DSU compensation | 61 | 61 | ||||
Distribution from Reorganization | (145,780) | 118,601 | (27,179) | |||
Distribution from Reorganization (in shares) | [1] | (8,543,918) | ||||
Other | 41 | 41 | ||||
Net loss | (40,441) | (40,441) | ||||
Balance at Dec. 31, 2020 | $ 108 | $ (1,027) | 409,728 | (147,423) | 261,386 | |
Balance (in shares) at Dec. 31, 2020 | [1] | 59,183,076 | 144,589 | |||
Stock-based compensation | 7,140 | 7,140 | ||||
Issuance of common stock, net | $ 9 | $ 1,027 | 126,071 | 127,107 | ||
Issuance of common stock, net (in shares) | [1] | 9,830,426 | (144,589) | |||
Deferred salary conversion | 1,163 | 1,163 | ||||
DSUs converted to common stock (in shares) | [1] | 148,721 | ||||
Other | (273) | (273) | ||||
Net loss | (43,438) | (43,438) | ||||
Balance at Dec. 31, 2021 | $ 117 | $ 543,829 | $ (190,861) | $ 353,085 | ||
Balance (in shares) at Dec. 31, 2021 | [1] | 69,162,223 | ||||
[1] Prior period results have been adjusted to reflect the two-for-one reverse split in October 2020. See Note 1, Description of Business for details. |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (Parenthetical) | Oct. 30, 2020 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) | |
Reverse stock split ratio | 2 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
OPERATING ACTIVITIES | ||
Net loss | $ (43,438) | $ (40,441) |
Plus net loss from discontinued operations | 5,414 | |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Amortization | 89 | 30 |
Stock-based compensation expense | 7,184 | 4,368 |
Equity (income) loss in affiliates | (35,883) | 17,585 |
Interest expense on convertible notes beneficial conversion terms | 3,984 | |
Impairment of investment in affiliates | 51,564 | |
Other | (260) | 329 |
Changes in operating assets and liabilities: | ||
Receivables from related-parties | 134 | (4,752) |
Accounts payable and other accrued liabilities | (1,196) | 2,027 |
Other current assets | 321 | (3,479) |
Operating cash flows from discontinued operations | (3,453) | |
Net cash used by operating activities | (21,485) | (18,388) |
INVESTING ACTIVITIES | ||
Transfers of restricted cash to cash | (151) | |
Investment in affiliates | (261,439) | (12,298) |
Investing cash flows from discontinued operations | 18 | |
Net cash used by investing activities | (261,439) | (12,129) |
FINANCING ACTIVITIES | ||
Related-party convertible debt | 15,000 | |
Credit Facility | 13,000 | |
Financing costs | (7,277) | (4,039) |
Issuance of common stock | 133,085 | 160,436 |
Issuance of treasury stock | 1,027 | |
Other | (441) | 260 |
Financing cash flows from discontinued operations | 807 | |
Net cash provided by financing activities | 139,394 | 172,464 |
Net (decrease) increase in cash and cash equivalents | (143,530) | 141,947 |
Cash and cash equivalents, beginning of period | 150,146 | 9,085 |
Less cash of discontinued operations | 886 | |
Cash and cash equivalents from continuing operations, end of period | 6,616 | 150,146 |
Interest paid | 168 | |
Supplemental disclosure of noncash transactions: | ||
Deferred financing costs included in accounts payable and accrued liabilities | 1,118 | |
Director fees in accrued liabilities converted to deferred share units | $ 306 | 61 |
Conversion of related party accounts receivable into LGJV capital contributions | 9,448 | |
Conversion of convertible notes to equity | 15,000 | |
Underwriting fees recorded to deferred financing costs | (12,076) | |
Deferred financing costs charged to equity | $ 16,874 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Description of Business | |
Description of Business | 1. Organization and Nature of Business Gatos Silver, Inc. (“Gatos Silver” or “the Company”) is a silver dominant exploration, development and production company that discovered a new silver, lead and zinc-rich mineral district in southern Chihuahua State, Mexico. The Company’s primary efforts are focused on the operation of the Los Gatos Joint Venture (“LGJV”) in Chihuahua, Mexico. On January 1, 2015, the Company entered into the LGJV to develop the Los Gatos District (“LGD”) with Dowa Metals and Mining Co., Ltd. (“Dowa”). The LGJV Operating entities consisted of Minera Plata Real S. de R.L. de C.V (“MPR”), Operaciones San Jose del Plata S. de R.L. de C.V. and Servicios San Jose del Plata S. de R.L. de C.V. (“Servicios”) (collectively, the “LGJV Entities”). Effective July 15, 2021, Servicios was merged into MPR. Dowa acquired a 30% interest in the LGJV and the right to purchase future zinc-concentrate production at market rates by completing its $50,000 funding requirement on April 1, 2016. The LGJV completed a feasibility study in January 2017 and a technical update to the feasibility study in July 2020. On January 25, 2022, the Company announced that the July 2020 technical report should not be relied upon. In May 2019, Dowa increased its ownership interest by 18.5% to 48.5% through the conversion of the Dowa MPR Loan to equity. On March 11, 2021, the Company repurchased the 18.5% interest from Dowa for a total consideration of $71,550, including Dowa holding costs of this incremental interest, increasing the Company’s ownership in the LGJV Entities to 70.0%. These transactions resulted in a $47,400 higher basis than the underlying net assets of the LGJV Entities. This basis difference is being amortized over the LGJV Entities proven and probable reserves. See Note 10 - Commitment, Contingencies and Guarantees for further discussion. The LGJV ownership is currently 70% Gatos Silver and 30% Dowa. Despite owning the majority interest in the LGJV, the Company does not exercise control over the LGJV due to certain provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions. On September 1, 2019, the LGJV commenced commercial production of its two concentrate products: a lead concentrate and a zinc concentrate. The LGJV’s lead and zinc concentrates are currently sold to third-party customers. The Company’s other regional Mexico exploration efforts outside of the LGJV district are conducted through its wholly-owned subsidiary, Minera Luz del Sol S. de R.L. de C.V. (“MLS”). In 2021, MLS completed a 5,400-meter exploration program on its wholly-owned Santa Valeria project, located approximately 15 kilometers from the Cerro Los Gatos deposit. In December 2021, Gatos Silver Canada Corporation (“GSC”) was formed to house certain corporate employees based in Canada. No employees existed and no transactions occurred in GSC until 2022. Reorganization In conjunction with the initial public offering (“IPO”) completed on October 30, 2020, the Company effected a reorganization (the “Reorganization”) in which (i) the Company changed its name from Sunshine Silver Mining & Refining Corporation to Gatos Silver, Inc., (ii) Silver Opportunity Partners LLC, which held the Company’s interest in the Sunshine Complex in Idaho, comprised of the Sunshine Mine and the Sunshine Big Creek Refinery, became a wholly owned subsidiary of a newly created Delaware corporation named Silver Opportunity Partners Corporation (“SOP”), (iii) all equity interest in SOP was distributed to the Company’s shareholders, and (iv) each share of the Company’s common stock was split at a ratio of two-for-one Pursuant to the distribution of SOP, the accounts for SOP are presented as discontinued operations in the Company’s consolidated financial statements for all periods presented. See Note 13 – Discontinued Operations for additional detail. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Basis of Consolidation and Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) and include the accounts of Gatos Silver and its subsidiaries, GSC and MLS. All Company subsidiaries are consolidated. All significant intercompany balances and transactions have been eliminated. All equity interest in the Company’s wholly-owned subsidiary, SOP, was distributed to its stockholders in October 2020. The accounts for SOP have been presented as discontinued operations in the accompanying consolidated financial statements. Prior year amounts have also been modified in these financial statements to properly report amounts under current operations and discontinued operations. See Note 13 – Discontinued Operations for further discussion. All common stock shares, options and deferred stock units amounts and prices in the consolidated financial statements have been adjusted for the Reverse Split. Equity method investment The Company accounts for its investment in affiliates using the equity method of accounting whereby, after valuing the initial investment, the Company recognizes its proportional share of results of operations of the affiliate in its consolidated financial statements. The value of equity method investments are adjusted if it is determined that there is an other-than-temporary decline in value. The Company’s investment in the LGJV Entities is presented as Investment in affiliates in the consolidated balance sheet. The basis difference between the carrying amount of the investment in affiliates and the Company’s equity in the LGJV Entities’ net assets is due to value of the LGJV mineral resources. This basis difference is amortized on a units of production basis as the mineral resource is mined. The Company incurred certain costs on behalf of the LGJV, primarily related to a project development loan arrangement fee. The Company’s proportional share of such costs are reported as an investment in affiliate and the residual costs, related to Dowa’s proportional ownership, are reported in the statement of loss as arrangement fees. Use of estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates are valuation of stock and stock options; valuation allowances for deferred tax assets; and the fair value of financial instruments and investment in affiliates. At the LGJV, significant items subject to such estimates and assumptions include mineral properties, life of mine revenue and cost assumptions, mineral resource conversion rates to mineral reserves; environmental reclamation and closure obligations and valuation allowances for deferred tax assets. Functional currency and translation of foreign currencies The U.S. dollar is the functional currency of the Company and its subsidiaries. Monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses reported in foreign exchange (gain) loss in the statement of operations and comprehensive loss. Non-monetary assets and liabilities are translated at historical exchange rates. Expenses and income items denominated in foreign currencies are translated into U.S. dollars at historical exchange rates. Cash and cash equivalents The Company considers all highly liquid short-term investments with a maturity of three months or less when purchased to be cash equivalents. Other than temporary impairment - investment A loss in value of an investment that is other than a temporary decline shall be recognized. Evidence of such losses might include, but are not limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. A current fair value of an investment that is less than its carrying amount may indicate a loss in value of the investment. If circumstances require an investment is tested for an other than temporary decline in value, the Company will first estimate the fair value of the investment based on discounted cash flows then compare it to the carrying value of the investment. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. We recognized an impairment on our Investment in Affiliate in 2021. See Note 15 – Investment in Affiliates for further discussion. Stock-based compensation The Company recognizes all employee stock-based compensation as a cost in the consolidated financial statements. Equity-classified awards are measured at the grant date fair value of the award. Stock-based compensation expense is included as a component of general and administrative expense over the requisite service period of the award. The fair value of stock options are estimated using the Black-Scholes option-pricing model. The fair value of performance share units (“PSUs”), which are subject to vesting based on the Company’s attainment of a pre-established market performance goals, are estimated using a Monte Carlo simulation valuation model. The Company’s estimates may be impacted by certain variables including, but not limited to, stock price volatility, estimates of forfeitures, the risk-free interest rate, expected dividend yields, and the Company’s performance. The Company estimates forfeitures of stock-based awards based on historical data and periodically adjusts the forfeiture rate. The adjustment of the forfeiture rate is recorded as a cumulative adjustment in the period the forfeiture estimate is changed. Net loss per share Basic and diluted loss per share are presented for net loss attributable to common shareholders. Basic net loss per share is computed by dividing the net loss available to common stockholders by the weighted-average number of common stock shares outstanding, including deferred stock units (“DSUs”), for the respective period presented. Diluted net loss per share is computed similarly, except that weighted-average common shares is increased to reflect the potential dilution that would occur if stock options were exercised, or PSUs were converted into common stock. The effects of the Company’s dilutive securities are excluded from the calculation of diluted weighted-average common shares outstanding if their effect would be anti-dilutive based on the treasury stock method or due to a net loss. Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Recently issued and adopted accounting standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Reference Rate Reform (Topic 848): Scope As of December 31, 2021, there are no additional recently issued or adopted accounting standard that could have a material impact on our financial statements. |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 2021 | |
Other Current Assets | |
Other Current Assets | 3. December 31, December 31, 2021 2020 Value added tax receivable $ 575 $ 318 Prepaid expenses 2,976 3,560 Other 7 1 Total other current assets $ 3,558 $ 3,879 |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment, net | |
Property, Plant and Equipment, net | 4. Mineral Properties Mining Concessions In Mexico, mineral concessions from the Mexican government can only be held by Mexican nationals or Mexican-incorporated companies. The concessions are valid for 50 years and are extendable provided the concessions are kept in good standing. For concessions to remain in good standing a semi-annual fee must be paid to the Mexican government and an annual report describing the work accomplished on the property must be filed. These concessions may be cancelled without penalty with prior notice to the Mexican government. MLS is the concession holder of a series of claims titles granted by the Mexican government. The rights to certain concessions are held through exploration agreements with purchase options, as discussed below: Santa Valeria Concession The Company was required to make monthly payments through 2020 to continue exploration activities and obtain ownership of the Santa Valeria concessions. If production commences, the Company is required to make a production royalty payment of 1% of the net smelter returns. The Company may terminate the agreement upon prior notice. The Company made and expensed mineral lease payments of $24 and $414 for the years ended December 31, 2021 and 2020, respectively. |
Accounts Payable and Other Accr
Accounts Payable and Other Accrued Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Accounts Payable and Other Accrued Liabilities | |
Accounts Payable and Other Accrued Liabilities | 5. December 31, December 31, 2021 2020 Accounts payable $ 196 $ 560 Accrued expenses 623 1,240 Accrued compensation 587 1,964 Other — 260 Total accounts payable and other current liabilities $ 1,406 $ 4,024 |
Related-Party Convertible Notes
Related-Party Convertible Notes | 12 Months Ended |
Dec. 31, 2021 | |
Related-Party Convertible Notes | |
Related-Party Convertible Notes | 6. During the second quarter of 2020, the Company entered into a convertible note purchase agreement with Electrum Silver US LLC, an affiliate and large shareholder, for the issuance of an aggregate of $15,000 of convertible notes. The convertible notes incurred an annual interest of 5%. On October 30, 2020, the outstanding $15,000 in convertible notes and $187 in accrued interest were converted into 2,712,003 shares of common stock of the Company as a result of the IPO in accordance with the conversion terms, and the Company incurred non-cash interest expense of $3,984. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related-Party Transactions | |
Related-Party Transactions | 7. LGJV Under the Unanimous Omnibus Partner Agreement, the Company provides certain management and administrative services. The Company earned $5,000 and $3,900 under this agreement for the years ended December 31, 2021 and 2020, respectively, and received $5,367 and $766 in cash from the LGJV under this agreement for the years ended December 31, 2021 and 2020, respectively. The Company had receivables under this agreement of $833 and $1,200 as of December 31, 2021 and 2020, respectively. The Company also incurs certain LGJV costs that are subsequently reimbursed by the LGJV. During the year ended December 31, 2020, $5,850 of receivables under this agreement, as well as other outstanding receivables to be reimbursed by the LGJV, were converted to capital of the LGJV, increasing Investment in affiliates. SSMRC The Company had a Management Services Agreement with Sunshine Silver Mining & Refining Corporation (“SSMRC”) (f.k.a SOP), pursuant to which the Company provided certain limited executive and managerial advisory services to SSMRC until terminated by either party. SSMRC reimbursed the Company for costs of such services. The Company earned $16 and $41 from SSMRC under this agreement during the years ended December 31, 2021 and 2020, respectively. This agreement was terminated effective December 31, 2021. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 8. The Company is authorized to issue 700,000,000 shares of $0.001 par value common stock and 50,000,000 shares of $0.001 par value preferred stock. As of December 31, 2021, 69,162,223 shares of common stock are outstanding, and no shares of preferred stock are outstanding. Common Stock Transactions On July 19, 2021, the Company completed a follow-on public offering of 8,930,000 shares of common stock at a price of $14.00 per share, resulting in net proceeds of $118,894, after deducting underwriting discounts and commissions. On August 18, 2021, the Company issued an additional 286,962 shares of common stock at a price of $14.00 per share, through the exercise of the over-allotment option, with net proceeds from the additional issuance of $3,837, after deducting underwriting discounts and commissions. Additionally, the Company incurred an additional $1,700 in other costs related to the offering. During October 2020, in connection with the Reorganization, each share of common stock was exchanged for approximately 0.39406 shares of the Company’s common stock (subject to rounding to eliminate fractional shares). In October 2020, the Company completed an IPO of 21,430,000 common stock shares, and in November 2020, the Company issued an additional 3,214,500 common stock shares through the underwriters’ over-allotment option, each at $7.00 per share raising an aggregate of $172,512. Underwriting fees incurred in conjunction with the IPO and issuance of additional common stock are recorded as a reduction to Paid-in Capital. In October 2020, the Company also issued 47,061 common stock shares to executive officers for deferred salary compensation incurred in 2020 and converted the outstanding convertible notes into 2,712,003 common stock shares, each at $7.00 per share. Stock-Based Compensation Equity Compensation Plan The Company has a Long-Term Incentive Plan under which options and shares of the Company’s common stock are authorized for grant or issuance as compensation to eligible employees, consultants, and members of the Board of Directors. Awards under the plan include stock options, stock appreciation rights, stock awards, deferred stock units, and performance awards. Stock options, performance awards and deferred stock units have been granted by the Company in different periods. As of December 31, 2021, approximately 8.1 million shares of common stock were available for grant under the plan. The Company recognized stock-based compensation expense as follows: Years ended December 31, 2021 2020 Stock Options $ 7,162 $ 4,368 PSUs 22 — $ 7,184 $ 4,368 Stock Option Transactions The Company’s stock options have a contractual term of 10 years and entitle the holder to purchase one share of the Company’s common stock. The options granted to the Company’s employees and LGJV personnel prior to 2020 have a requisite service period of four years and vest in equal annual installments. Starting in 2020, the options granted to the Company’s employees and LGJV personnel have a requisite service period of three years. The sign on options granted to the Company’s President in June 2021 vest in three equal tranches, the first of which vested immediately, and the remainder on the first and second anniversaries of employment with the Company, subject to continued employment on such vesting dates. The options granted to non-employee directors prior to 2020 have a requisite service period of one year and vest in equal monthly installments. The options granted to non-employee directors in January 2020 have a requisite service period of one and a half years The following table summarizes the respective vesting start dates and number of options granted to employees and directors in 2021 and 2020: Recipient Options Granted Vesting Start Date Grant Date Directors 197,666 January 20, 2020 January 20, 2020 Employees 416,000 January 20, 2020 January 20, 2020 Employees 164,000 January 30, 2020 January 30, 2020 Directors 20,667 March 1, 2020 March 1, 2020 Employees 12,000 July 31, 2020 July 31, 2020 Employees 1,127,500 October 27, 2020 October 27, 2020 Employees 100,000 March 31, 2021 May 14, 2021 Directors 7,253 May 14, 2021 May 14, 2021 Directors 32,466 June 1, 2021 June 22, 2021 Employees 283,333 June 1, 2021 June 22, 2021 Employees 66,667 June 22, 2021 June 22, 2021 Employees 589,500 December 27, 2021 December 27, 2021 The following assumptions were used to compute the fair value of the options granted using the Black-Scholes option valuation model: Grant Date Jan. Mar. Jul. Oct. May Jun. Dec. 2020 2020 2020 2020 2021 2021 2021 Risk-free interest rate 1.63 % 1.63 % 1.63 % 0.51 % 1.06 % 1.05 % 1.34 % Dividend yield — — — — — — — Estimated volatility 62.20 % 62.20 % 62.20 % 62.50 % 62.59 % 62.53 % 60.88 % Expected option life 6 years 6 years 6 years 6 years 6 years 6 years 6 years The weighted-average grant date fair value per share was $7.54 and $5.65 for the years ended December 31, 2021 and 2020, respectively. The following assumptions were used to compute the fair value of the LGJV Personnel options using the Black-Scholes option valuation model as of December 31, 2021 and 2020: December 31, 2021 2020 Risk-free interest rate 1.35 % 0.51 % Dividend yield — — Estimated volatility 60.86 % 62.09 % Expected option life 6 years 6 years The Company’s estimated volatility computation was based on the historical volatility of a group of peer companies’ common stock over the expected option life and included both exploration stage and development stage companies. Prior to our IPO in October 2020, our common stock was not publicly traded. As a result, the expected volatility assumption was based on peer information due to insufficient market trading history required to calculate a meaningful volatility factor. The computation of the expected option life was determined based on a reasonable expectation of the option life prior to being exercised or forfeited. The risk-free interest rate assumption was based on the U.S. Treasury constant maturity yield at the date of the grant over the expected life of the option. No dividends were expected to be paid. The following tables summarize the stock option activity for the year ended December 31, 2021: Weighted ‑ Weighted ‑ Average Aggregate Average Exercise Intrinsic Remaining Employee & Director Options Shares Price Value Life (Years) Outstanding at December 31, 2020 5,411,930 $ 12.52 — — Granted 1,079,219 $ 13.30 — — Exercised (602,181) $ 8.30 — — Forfeited (15,000) $ 7.00 — — Outstanding at December 31, 2021 5,873,968 $ 13.11 $ 8,107 5.70 Vested at December 31, 2021 3,817,271 $ 14.27 $ 4,560 4.11 Weighted ‑ Weighted ‑ Average Aggregate Average Exercise Intrinsic Remaining LGJV Personnel Options Shares Price Value Life (Years) Outstanding at December 31, 2020 43,676 $ 7.23 — — Exercised (11,283) $ 7.00 — — Outstanding and vested at December 31, 2021 32,393 $ 7.31 $ 99 4.27 The total fair value of stock options vested during the year ended December 31, 2021, was $5,712. The total intrinsic value of stock options exercised during the year ended December 31, 2021, was $4,548. For the year ended December 31, 2021, the Company received cash payments from the exercise of stock options totaling $4,996. Performance Share Unit Transactions Performance share units granted are reported as equity awards at fair value using a Monte Carlo simulation valuation model. On December 17, 2021, 119,790 PSUs were granted to the Company’s employees with a weighted average grant date fair value per share of $14.22. The PSUs are based on the Company’s total shareholder return (“TSR”) relative to a peer group over a three-year performance period. The number of PSUs awarded can range from 0% to 200% of the initial award granted, depending on the TSR percentile rank of the Company relative to the peer group, and are payable in common stock or cash, at the Company’s discretion, at the end of their performance period. Compensation expense is recognized ratably from the grant date over the requisite three-year vesting period. On December 31, 2021, unrecognized compensation expense related to the PSUs was $1,682 which is expected to be recognized over a weighted-average period of 3.0 years. The following assumptions were used to compute the fair value of PSUs granted during 2021: Risk-free interest rate 0.95 % Dividend yield — Estimated volatility 63.0 % Deferred Stock Unit Transactions Deferred stock units are awarded to directors at the discretion of the Board of Directors. The DSUs are fully vested on the grant date and each DSU entitles the holder to receive one share of the Company’s common stock upon the director’s cessation of continuous service. In addition, senior executives are eligible to elect to defer receipt of any portion of cash compensation or equity compensation awards other than from the exercise of stock options and take payment in the form of DSUs. Non-employee directors are eligible to elect to defer receipt of any portion of annual retainers or meeting awards and take payment in the form of DSUs. The DSU entitles the holder to receive one share of the Company’s common stock at either a date specified in the deferral election or cessation of service, whichever comes first. The fair value of DSUs are equal to the fair value of the Company’s common stock on the grant date. The Company recognized DSU expense of $879 for the year ended December 31, 2021. The following table summarizes the DSU activity for the year ended December 31, 2021: Weighted-Average Grant Date Fair Director DSUs Shares Value Outstanding at December 31, 2020 182,714 — Granted 112,803 $ 11.45 Converted (148,721) $ 8.67 Outstanding at December 31, 2021 146,796 $ 10.88 The total fair value of DSUs vested for the year ended December 31, 2021, was $1,292, and the total intrinsic value of DSUs converted during the year ended December 31, 2021, was $861. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | 9. The Company establishes a framework for measuring the fair value of assets and liabilities in the form of a fair value hierarchy that prioritizes the inputs into valuation techniques used to measure fair value into three broad levels. This hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs. Further, financial assets and liabilities should be classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy are as follows: Level 1 : Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. Level 2 : Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data. Level 3 : Unobservable inputs due to the fact there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability. Assets and Liabilities that are Measured at Fair Value on a Recurring Basis At December 31, 2021 and 2020, the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable and other current liabilities are carried at amortized cost, which approximate fair value due to their short maturities and are classified within Level 1 of the fair value hierarchy. The carrying value of the Company’s Revolving Credit Facility (the “Credit Facility”) entered into on July 12, 2021 approximates fair value due to its variable short-term interest rate, which is updated every one to three months to correlate with current market rates and is classified within Level 2 of the fair value hierarchy. The Company had a $13,000 outstanding balance under its Credit Facility as of December 31, 2021. Assets and Liabilities that are Measured at Fair Value on a Non-recurring Basis The Company discloses and recognizes its non-financial assets and liabilities at fair value on a non-recurring basis and makes adjustments to fair value, as needed (for example, when there is evidence of impairment). The Company recorded its initial investment in affiliates at fair value within Level 3 of the fair value hierarchy, as the valuation was determined based on internally developed assumptions with few observable inputs and no market activity. For the year ended December 31, 2021, the Company recorded impairment charges associated with the investment in the LGJV, and reduced the carrying amount of such asset subject to the impairment to their estimated fair value. See Note 15 – Investment in Affiliates for additional information on the impairment. |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 12 Months Ended |
Dec. 31, 2021 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 10. Commitments, Contingencies and Guarantees In determining its accruals and disclosures with respect to loss contingencies, the Company will charge to income an estimated loss if information available prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Legal expenses associated with the commitments and contingencies are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the combined financial statements when it is at least reasonably possible that a material loss could be incurred. Environmental Contingencies The Company’s mining and exploration activities are subject to various laws, regulations and permits governing the protection of the environment. These laws, regulations and permits are continually changing and are generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws, regulations and permits, but cannot predict the full amount of such future expenditures. Legal On February 22, 2022, a purported Gatos stockholder filed a putative class action lawsuit in the United States District Court for the District of Colorado against the Company, certain of our former officers, and several directors. An amended complaint was filed on August 15, 2022. The amended complaint, allegedly brought on behalf of certain purchasers of Gatos common stock and certain traders of call and put options on Gatos common stock from December 9, 2020 through January 25, 2022, seeks, among other things, damages, costs, and expenses, and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Sections 11 and 15 of the Securities Act of 1933. The amended complaint alleges that certain individual defendants and Gatos, pursuant to the control and authority of the individual defendants, made false and misleading statements and/or omitted certain material information regarding the mineral resources and reserves at the Cerro Los Gatos mine. Gatos and all defendants filed a motion to dismiss this action on October 14, 2022. That motion was fully briefed as of December 23, 2022. By Notice of Action issued February 9, 2022 and subsequent Statement of Claim dated March 11, 2022 Izabela Przybylska commenced a putative class action against Gatos Silver, Inc. (“Gatos”), certain of its former officers and directors, and others in the Ontario Superior Court of Justice on behalf of a purported class of all persons or entities, wherever they may reside or be domiciled, who acquired securities of Gatos in both the primary and secondary markets during the period from October 28, 2020 until January 25, 2022. The action asserts claims under Canadian securities legislation and at common law and seeks unspecified monetary damages and other relief in respect of allegations the defendants made false and misleading statements and omitted material information regarding the mineral resources and reserves of Gatos. The plaintiff filed motion materials for leave to proceed in respect of her statutory claims and for class certification on March 3, 2023. The court has tentatively set dates in late March of 2024 for the hearing of the plaintiff’s motions. There can be no assurance that any of the foregoing matters individually or in aggregate will not result in outcomes that are materially adverse for us. Dowa Debt Agreements In July 2017, the LGJV Entities entered into a loan agreement (the “Term Loan”) with Dowa whereby the LGJV Entities could borrow up to $210,000 for LGD development, with a maturity date of December 29, 2027. Interest on the Term Loan accrued daily at LIBOR plus 2.35%, with the interest added to the amount borrowed until commencement of production. During 2018, the LGJV paid Dowa a $4,200 closing fee. Commencing June 30, 2021, 14 consecutive semi-annual equal payments of the aggregate principal and capitalized interest began. The Company was required to pay an arrangement fee on the borrowing, calculated as 2% per annum of 70% of the outstanding principal balance, payable in semi-annual installments, on that date, which was two business days prior to June 30 and December 31 each fiscal year until maturity, commencing after the initial drawdown, which occurred in July 2018. The Term Loan also required additional principal payments equal to 70% of excess cash flows (as defined). On July 26, 2021, the Term Loan was repaid in full through capital contributions made to the LGJV by the Company and Dowa in amounts equal to their pro-rata ownership in the LGJV of 70% and 30%, respectively. In conjunction with the repayment, the Company paid a fee to Dowa of $10,000. On January 23, 2018, the LGJV entered into a loan agreement (the “Dowa MPR Loan”) with Dowa whereby the LGJV could borrow up to $65,700 to continue LGD development. Interest on this loan accrued daily at LIBOR plus 1.5% and was added to the amount borrowed. The amount borrowed plus accrued interest was due the earlier of June 30, 2019, or upon LGD’s substantial completion. If the Dowa MPR Loan was not repaid in full on or before the due date, Dowa could elect to convert all or a portion of the principal amount into additional LGJV ownership at a favorable conversion rate. In connection with entering into the WCF (as defined below), the Company contributed $18,200 to the LGJV in May 2019 to provide funding for partial repayment of principal and interest related to the Dowa MPR Loan. In late May 2019, the Dowa MPR Loan was fully extinguished with a cash payment of $18,200 and the conversion of the remaining $50,737 of principal and interest. The conversion of the remaining principal and interest increased Dowa’s ownership in the LGJV entities by 18.5% to 48.5%. On March 11, 2021, the Company repurchased the 18.5% interest from Dowa, for a total consideration of $71,550, increasing the Company’s ownership in the LGJV to 70.0%. These transactions resulted in a $47,400 higher basis than the underlying net assets of the LGJV Entities. This basis difference is being amortized as the LGJV Entities’ proven and probable reserves are processed. On May 30, 2019, the LGJV entered into a working capital facility agreement (the “WCF”) with Dowa whereby the LGJV could borrow up to $60,000 to fund the working capital and sustaining capital requirements of the LGD. Interest on this loan accrued daily at LIBOR plus 3.0% and all outstanding principal and interest was to mature on June 28, 2021. The Company was required to pay an arrangement fee on the borrowing, calculated as 15.0% per annum of 70.0% of the average daily principal amount outstanding under the WCF during such fiscal quarter. On March 11, 2021, the $60,000 outstanding under the WCF was extinguished using funds contributed to the LGJV. The Company’s pro-rata capital contribution to the LGJV was $42,000. The Company guarantees the payment of all obligations, including accrued interest, under the LGJV equipment loan agreements. As of December 31, 2021, the LGJV had $6,011 outstanding under the LGJV equipment loan agreements, net of unamortized debt discount of $14, with varying maturity dates through August 2023. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt | |
Debt | 11 . Debt On July 12, 2021, the Company entered into a Credit Facility. The Credit Facility provides for a revolving line of credit in a principal amount of $50,000 and has an accordion feature which at the time allowed for an increase in the total line of credit up to $100,000, subject to certain conditions. Loans under the Credit Facility bears interest at a rate equal to either the LIBOR rate plus a margin ranging from 3.00% to 4.00% or the U.S. Base Rate plus a margin ranging from 2.00% to 3.00%, as selected by the Company, in each case, with such margin determined in accordance with the Company’s consolidated net leverage ratio as of the end of the applicable period. The Credit Facility contains affirmative and negative covenants that are customary for credit agreements of this nature. The affirmative covenants consist of a leverage ratio, a liquidity covenant and an interest coverage ratio. The negative covenants include, among other things, limitations on asset sales, mergers, acquisitions, indebtedness, liens, dividends and distributions, investments and transactions with affiliates. Obligations under the Credit Facility may be accelerated upon the occurrence of certain customary events of default. The Company complied with all covenants under the Credit Facility as of December 31, 2021. On July 19, 2021, the Company borrowed $13,000 under the Credit Facility at a rate of LIBOR plus 3%. Debt issuance costs of $442 were to be amortized through July 31, 2024, prior to the amended and restated Credit Facility (see terms below). The current balance outstanding on the Credit Facility is $9,000, following a $4,000 principal repayment in December 2022. The Company recognized interest expense of $185 and $62 for amortization of debt issuance cost, for the year ended December 31, 2021. The Company paid interest of $168 for the year ended December 31, 2021. On March 7, 2022, the Company amended the Credit Facility with the lender, Bank of Montreal (“BMO”), to address potential loan covenant deficiencies. The amendment included the following revisions: ● audited financial statements were to be provided prior to November 15, 2022; ● the credit limit was reduced to $30,000 , until the Company delivered a new LOM CLG financial model with updated mineral reserves; ● upon assessment of the new CLG financial model, BMO, in its sole discretion, may increase the credit limit up to the original $50,000 ; ● requirement to provide updated financial projections for the CLG by September 30, 2022. The financial projections were provided by the required date and it was used as the basis for the amendment entered into on December 19, 2022 discussed below; and ● waivers of certain defaults, events of default, representations and warranties and covenants arising out of the facts that led to the potential reduction in metal content of the Company’s previously stated mineral reserve figures. On December 19, 2022, the Company entered an amended and restated Credit Facility with BMO extending the maturity date and re-establishing a credit limit of $50,000, with an accordion feature providing up to an additional $25,000. Key terms of the amended Credit Facility include: ● audited financial statements for fiscal years 2021 are to be provided no later than April 15, 2023, and audited financial statements for fiscal year 2022 and unaudited financial statements for the first three fiscal quarters in fiscal year 2022 are to be provided no later than April 30, 2023; ● $50,000 revolving line of credit with an accordion feature, which allows for an increase in the total line of credit up to $75,000 , subject to certain conditions; ● The maturity date is extended from July 31, 2024 to December 31, 2025; ● A change in the benchmark interest rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”); and ● Loans under the Revolver bear interest at a rate equal to either a term SOFR rate plus a margin ranging from 3.00% to 4.00% or a U.S. base rate plus a margin ranging from 2.00% to 3.00% , as selected by the Company. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | 12. The components of loss from continuing operations before income taxes were as follows for the years ended December 31: 2021 2020 U.S. $ (39,559) $ (32,964) Mexico (3,879) (2,063) Total $ (43,438) $ (35,027) The consolidated income tax benefit from continuing operations consisted of nil and nil, for the years ended December 31, 2021 and 2020, respectively. A reconciliation of the actual income tax benefit and the tax computed by applying the applicable U.S. federal rate of 21% to the loss before income taxes is as follows for the years ended December 31: 2021 2020 Tax provision (benefit) from continuing operations $ 8,307 $ 7,356 State tax benefit from continuing operations (2) 1,577 Nondeductible Expenses (8,368) (773) Change in Valuation Allowance (3,942) (8,707) Effect of Change in Tax Rates (9,223) 2,991 US/Foreign Tax Rate Differential — 49 True-up MLS at 30% MX tax rate (3,059) — Current Year NOL Utilization — (2,186) True-up LGJV 15,303 — True-up Stock Options 1,025 — Other (41) (307) Total income tax benefit $ — $ — The components of the net deferred tax assets (liabilities) are summarized as follows for the year ended: 2021 2020 Deferred tax assets Accrued compensation $ 29 $ 457 Deferred share unit awards 427 218 Investment in affiliate 27,800 — Other accrued liabilities 21 26 Mineral properties 2,057 2,487 Operating loss carryforward 22,340 30,729 Foreign branch tax benefit — 14,091 Stock Options 8,399 8,182 Loan Fees — 1,303 Other 22 27 Valuation allowances (60,262) (56,320) Total deferred tax assets $ 833 $ 1,200 Deferred tax liabilities Property, plant and equipment (229) (276) Exploration and Development (19) (16) Prepaid expenses (585) (908) Total deferred tax liabilities $ (833) $ (1,200) Net deferred income tax assets (liabilities) $ — $ — Based upon the level of taxable income (loss) and projections of future taxable income (loss) over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences, and thus has recorded a valuation allowance from continuing operations against the United States and Mexico net deferred tax asset balances of $60,262. If At December 31, 2021, the Company had $103,796 of net operating loss carryforwards from continuing operations in the United States. Of the total net operating loss from continuing operations, $84,866 expire at various dates through 2037, and $18,930 may be carried forward indefinitely. There are also $7,574 of net operating loss carryforwards (net of inflation adjustments) in Mexico which expire at various dates through 2031. No assets have been recognized for net operating loss carryforwards where the Company believes it is more likely than not that the net operating losses will not be realized. The Company will monitor the valuation on an ongoing basis and will make the appropriate adjustments as necessary should circumstances change. The Company has adopted the provisions of ASC 740-10, Income Taxes As of December 31, 2021, the Company has not recognized any increases or decreases in unrecognized tax benefits, as it is more likely than not that all tax positions will be upheld by the taxing authorities. The Company reports tax penalties in income tax expense. No such penalties were recognized during the periods presented. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2021 | |
Discontinued Operations | |
Discontinued Operations | 13. On October 30, 2020, in conjunction with the IPO, Gatos Silver, Inc. (f.k.a. Sunshine Silver Mining & Refining Corporation prior to October 30, 2020) completed the distribution of its reportable U.S. segment, which was comprised of SOP. SOP holds an interest in the Sunshine Complex located in the Coeur d’Alene Mining District in Idaho and is comprised of the Sunshine Mine and the Sunshine Big Creek Refinery. To effect the distribution, the Company distributed, on a pro rata basis, all equity interest of SOP to its stockholders of record immediately prior to completion of the IPO. Shareholders received approximately 0.10594 shares of common stock of SOP for every share of the Company’s common stock held. SOP became a wholly owned subsidiary of a newly created Delaware corporation named Silver Opportunity Partners Corporation, subsequently renamed to Sunshine Silver Mining & Refining Corporation. The results of discontinued operations are presented separately in the consolidated statements of operations. The results of operations for this entity for the period ended October 30, 2020, have been reflected as discontinued operations in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2020, and consist of the following: December 31, 2020 OPERATING EXPENSES OF DISCONTINUED OPERATIONS Exploration $ 352 Pre-development 1,700 General and administrative 1,431 Amortization 1,935 Total expenses 5,418 Other Income of Discontinued Operations Other income (4) Net Loss of Discontinued Operations $ 5,414 The Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the period ended October 30, 2020, have been reflected as discontinued operations in the consolidated statements of cash flows for the year ended December 31, 2020, and consist of the following: December 31, 2020 Discontinued Operating Activities Net loss $ (5,414) Adjustments to reconcile net loss to net cash used by operating activities: Amortization 1,935 Stock compensation expense 195 Accretion expense 91 Other — Changes in operating assets and liabilities: Accounts payable and other accrued liabilities (256) Materials and supplies inventory (2) Other current assets (2) Net cash used by operating activities of discontinued operations (3,453) Investing Activities of Discontinued Operations Purchase of property, plant and equipment (22) Transfers of restricted cash to cash 40 Net cash provided by investing activities of discontinued operations 18 Financing Activities of Discontinued Operations Related-party convertible notes 500 PPP Loan proceeds 307 Net cash provided by financing activities of discontinued operations 807 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2021 | |
Segment Information | |
Segment Information | 14. The Company operates in a single industry as a corporation engaged in the acquisition, exploration and development of primarily silver mineral interests. The Company has mineral property interests in Mexico. The Company’s reportable segments are based on the Company’s mineral interests and management structure and include Mexico and Corporate segments. The Mexico segment engages in the exploration, development and operation of the Company’s Mexican mineral interests and includes the Company’s investment in its LGJV. Financial information relating to the Company’s segments is as follows: Year Ended December 31, 2021 Year Ended December 31, 2020 Mexico Corporate Total Mexico Corporate Total Exploration $ 1,657 $ — $ 1,657 $ 785 $ — $ 785 General and administrative 1,424 19,469 20,893 549 7,216 7,765 Amortization — 89 89 — 30 30 Arrangement fees — 195 195 — 4,843 4,843 Interest expense — 185 185 — 4,047 4,047 Equity (income) loss in affiliates (35,883) — (35,883) 17,585 — 17,585 Impairment of investment in affiliates — 51,564 51,564 — — — Other (income) expense 40 4,698 4,738 9 (37) (28) Total assets 74,637 292,474 367,111 38,326 227,084 265,410 |
Investment in Affiliates
Investment in Affiliates | 12 Months Ended |
Dec. 31, 2021 | |
Investment in Affiliate | |
Investment in Affiliates | 15. During the years ended December 31, 2021 and 2020, the Company recognized income of $35,883 and a loss of $17,585, respectively, on its investment in the LGJV Entities, representing its ownership share of the LGJV Entities’ results. The equity income or loss in affiliate includes amortization of the carrying value of the investment in excess of the underlying net assets of the LGJV Entities. This basis difference is being amortized as the LGJV Entities’ proven and probable reserves are processed. On November 10, 2022, the Company provided an updated technical report, the Los Gatos Technical Report. The Los Gatos Technical Report indicated a significant decrease in the mineral reserve and mineral resource from the previously issued technical report in 2020. The Company considered this reduction in the mineral reserve and mineral resources as an indicator of a possible other-than-temporary impairment and as a result compared the carrying value of the LGJV on December 31, 2021 to the fair value of the LGJV. The fair value of the LGJV was estimated based on the net present value (“NPV”) of the expected cash flows to be generated by the LGJV on 70% basis. The discount rate used was 5.00%. The fair value of the investment in the LGJV was estimated to be $355,310 and the carrying value at December 31, 2021 was $406,874. Since the carrying value is exceeding the fair value, an impairment charge of $51,564 was recorded during the fourth quarter of 2021. See Note 9 – Fair Value Measurements for additional detail of the assumptions used in the determination of the fair value of the long-lived assets tested for impairment. For the year ended December 31, 2021, the Company contributed $260,039 to the LGJV to repurchase 18.5% of the ownership of the LGJV, to retire the WCF and the Term Loan and in support of exploration activities. For the year ended December 31, 2020, the Company contributed $17,227 to the LGJV in support of continued operations in the form of cash and receivables converted to capital of the LGJV, as described in Note 7 – Related-Party Transactions. In April 2022, July 2022 and November 2022, the Company received dividends from the LGJV in the amount of $5,936, $9,975 and $13,300, respectively. The LGJV Entities’ combined balance sheets as of December 31, 2021 and 2020, and combined statements of income (loss) for the years ended December 31, 2021 and 2020, are as follows: LOS GATOS JOINT VENTURE COMBINED BALANCE SHEETS (in thousands) December 31, December 31, 2021 2020 ASSETS Current Assets Cash and cash equivalents $ 20,280 $ 1,676 Receivables 11,263 3,988 Inventories 11,062 10,315 VAT receivable 46,242 50,732 Other current assets 4,515 2,891 Total current assets 93,362 69,602 Non ‑ Current Assets Mine development, net 229,076 202,874 Property, plant and equipment, net 190,896 196,942 Net deferred tax assets 9,226 — Total non‑current assets 429,198 399,816 Total Assets $ 522,560 $ 469,418 LIABILITIES AND OWNERS’ CAPITAL Current Liabilities Accounts payable and accrued liabilities $ 33,179 $ 35,767 Related party payable 1,609 1,703 Accrued interest 51 101 Unearned revenue 1,714 3,276 Income taxes 6,315 — Equipment loans 5,534 7,084 Term Loan — 31,826 Working Capital Facility — 60,000 Total current liabilities 48,402 139,757 Non ‑ Current Liabilities Term Loan — 187,767 Equipment loans 478 6,120 Asset retirement obligation 14,706 12,162 Total non‑current liabilities 15,184 206,049 Owners’ Capital Capital contributions 540,638 271,368 Paid‑in capital 18,370 16,366 Accumulated deficit (100,034) (164,122) Total owners’ capital 458,974 123,612 Total Liabilities and Owners’ Capital $ 522,560 $ 469,418 LOS GATOS JOINT VENTURE COMBINED STATEMENTS OF INCOME (LOSS) (in thousands) Years Ended December 31, 2021 2020 Revenue $ 249,194 $ 121,470 Expenses Cost of sales 97,710 65,005 Royalties 4,781 2,148 Exploration 5,383 841 General and administrative 13,345 9,718 Depreciation, depletion and amortization 52,402 44,904 Other — 3,416 Total expenses 173,621 126,032 Other income (expense) Interest expense (5,542) (12,484) Loss on Term Loan extinguishment (4,359) — Arrangement fee (2,090) (8,888) Accretion expense (924) (849) Other income 222 109 Foreign exchange loss (749) (1,042) Total other expense (13,442) (23,154) Income (loss) before taxes 62,131 (27,716) Mining tax expense (954) — Income (loss) before income taxes 61,177 (27,716) Income tax benefit 2,911 — Net income (loss) $ 64,088 $ (27,716) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Subsequent Events | 16. Subsequent Events The LGJV paid its first dividend of $20 million to its partners in April 2022. After withholding taxes and payment of the initial $10.3 million priority dividend to Dowa, we received $6 million. In July 2022 and November 2022, the LGJV paid additional dividends in the amount of $15 million and $20 million, respectively, to its partners. The Company’s share, after withholding taxes, was $10 million and $13.3 million, respectively, for the July 2022 and November 2022 dividend payments. On December 19, 2022, we entered into an amended and restated Credit Facility with BMO extending the maturity date and re-establishing a credit limit of $50 million, with an accordion feature, as further described above. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Consolidation and Presentation | Basis of Consolidation and Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) and include the accounts of Gatos Silver and its subsidiaries, GSC and MLS. All Company subsidiaries are consolidated. All significant intercompany balances and transactions have been eliminated. All equity interest in the Company’s wholly-owned subsidiary, SOP, was distributed to its stockholders in October 2020. The accounts for SOP have been presented as discontinued operations in the accompanying consolidated financial statements. Prior year amounts have also been modified in these financial statements to properly report amounts under current operations and discontinued operations. See Note 13 – Discontinued Operations for further discussion. All common stock shares, options and deferred stock units amounts and prices in the consolidated financial statements have been adjusted for the Reverse Split. |
Equity method investment | Equity method investment The Company accounts for its investment in affiliates using the equity method of accounting whereby, after valuing the initial investment, the Company recognizes its proportional share of results of operations of the affiliate in its consolidated financial statements. The value of equity method investments are adjusted if it is determined that there is an other-than-temporary decline in value. The Company’s investment in the LGJV Entities is presented as Investment in affiliates in the consolidated balance sheet. The basis difference between the carrying amount of the investment in affiliates and the Company’s equity in the LGJV Entities’ net assets is due to value of the LGJV mineral resources. This basis difference is amortized on a units of production basis as the mineral resource is mined. The Company incurred certain costs on behalf of the LGJV, primarily related to a project development loan arrangement fee. The Company’s proportional share of such costs are reported as an investment in affiliate and the residual costs, related to Dowa’s proportional ownership, are reported in the statement of loss as arrangement fees. |
Use of estimates | Use of estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates are valuation of stock and stock options; valuation allowances for deferred tax assets; and the fair value of financial instruments and investment in affiliates. At the LGJV, significant items subject to such estimates and assumptions include mineral properties, life of mine revenue and cost assumptions, mineral resource conversion rates to mineral reserves; environmental reclamation and closure obligations and valuation allowances for deferred tax assets. |
Functional currency and translation of foreign currencies | Functional currency and translation of foreign currencies The U.S. dollar is the functional currency of the Company and its subsidiaries. Monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses reported in foreign exchange (gain) loss in the statement of operations and comprehensive loss. Non-monetary assets and liabilities are translated at historical exchange rates. Expenses and income items denominated in foreign currencies are translated into U.S. dollars at historical exchange rates. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid short-term investments with a maturity of three months or less when purchased to be cash equivalents. |
Other than temporary impairment - investment | Other than temporary impairment - investment A loss in value of an investment that is other than a temporary decline shall be recognized. Evidence of such losses might include, but are not limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. A current fair value of an investment that is less than its carrying amount may indicate a loss in value of the investment. If circumstances require an investment is tested for an other than temporary decline in value, the Company will first estimate the fair value of the investment based on discounted cash flows then compare it to the carrying value of the investment. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. We recognized an impairment on our Investment in Affiliate in 2021. See Note 15 – Investment in Affiliates for further discussion. |
Stock-based compensation | Stock-based compensation The Company recognizes all employee stock-based compensation as a cost in the consolidated financial statements. Equity-classified awards are measured at the grant date fair value of the award. Stock-based compensation expense is included as a component of general and administrative expense over the requisite service period of the award. The fair value of stock options are estimated using the Black-Scholes option-pricing model. The fair value of performance share units (“PSUs”), which are subject to vesting based on the Company’s attainment of a pre-established market performance goals, are estimated using a Monte Carlo simulation valuation model. The Company’s estimates may be impacted by certain variables including, but not limited to, stock price volatility, estimates of forfeitures, the risk-free interest rate, expected dividend yields, and the Company’s performance. The Company estimates forfeitures of stock-based awards based on historical data and periodically adjusts the forfeiture rate. The adjustment of the forfeiture rate is recorded as a cumulative adjustment in the period the forfeiture estimate is changed. |
Net loss per share | Net loss per share Basic and diluted loss per share are presented for net loss attributable to common shareholders. Basic net loss per share is computed by dividing the net loss available to common stockholders by the weighted-average number of common stock shares outstanding, including deferred stock units (“DSUs”), for the respective period presented. Diluted net loss per share is computed similarly, except that weighted-average common shares is increased to reflect the potential dilution that would occur if stock options were exercised, or PSUs were converted into common stock. The effects of the Company’s dilutive securities are excluded from the calculation of diluted weighted-average common shares outstanding if their effect would be anti-dilutive based on the treasury stock method or due to a net loss. |
Income taxes | Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. |
Recently issued accounting standards | Recently issued and adopted accounting standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Reference Rate Reform (Topic 848): Scope As of December 31, 2021, there are no additional recently issued or adopted accounting standard that could have a material impact on our financial statements. |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Current Assets | |
Schedule of components of other current assets | December 31, December 31, 2021 2020 Value added tax receivable $ 575 $ 318 Prepaid expenses 2,976 3,560 Other 7 1 Total other current assets $ 3,558 $ 3,879 |
Accounts Payable and Other Ac_2
Accounts Payable and Other Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounts Payable and Other Accrued Liabilities | |
Schedule of components of accounts payable and other accrued liabilities | December 31, December 31, 2021 2020 Accounts payable $ 196 $ 560 Accrued expenses 623 1,240 Accrued compensation 587 1,964 Other — 260 Total accounts payable and other current liabilities $ 1,406 $ 4,024 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity | |
Schedule of stock-based compensation expense | Years ended December 31, 2021 2020 Stock Options $ 7,162 $ 4,368 PSUs 22 — $ 7,184 $ 4,368 |
Summary of vesting start dates and number of options granted to employees and directors | Recipient Options Granted Vesting Start Date Grant Date Directors 197,666 January 20, 2020 January 20, 2020 Employees 416,000 January 20, 2020 January 20, 2020 Employees 164,000 January 30, 2020 January 30, 2020 Directors 20,667 March 1, 2020 March 1, 2020 Employees 12,000 July 31, 2020 July 31, 2020 Employees 1,127,500 October 27, 2020 October 27, 2020 Employees 100,000 March 31, 2021 May 14, 2021 Directors 7,253 May 14, 2021 May 14, 2021 Directors 32,466 June 1, 2021 June 22, 2021 Employees 283,333 June 1, 2021 June 22, 2021 Employees 66,667 June 22, 2021 June 22, 2021 Employees 589,500 December 27, 2021 December 27, 2021 |
Schedule of assumptions used to compute fair value of options granted using Black-Scholes option valuation model | Grant Date Jan. Mar. Jul. Oct. May Jun. Dec. 2020 2020 2020 2020 2021 2021 2021 Risk-free interest rate 1.63 % 1.63 % 1.63 % 0.51 % 1.06 % 1.05 % 1.34 % Dividend yield — — — — — — — Estimated volatility 62.20 % 62.20 % 62.20 % 62.50 % 62.59 % 62.53 % 60.88 % Expected option life 6 years 6 years 6 years 6 years 6 years 6 years 6 years December 31, 2021 2020 Risk-free interest rate 1.35 % 0.51 % Dividend yield — — Estimated volatility 60.86 % 62.09 % Expected option life 6 years 6 years |
Schedule of stock option activity | Weighted ‑ Weighted ‑ Average Aggregate Average Exercise Intrinsic Remaining Employee & Director Options Shares Price Value Life (Years) Outstanding at December 31, 2020 5,411,930 $ 12.52 — — Granted 1,079,219 $ 13.30 — — Exercised (602,181) $ 8.30 — — Forfeited (15,000) $ 7.00 — — Outstanding at December 31, 2021 5,873,968 $ 13.11 $ 8,107 5.70 Vested at December 31, 2021 3,817,271 $ 14.27 $ 4,560 4.11 Weighted ‑ Weighted ‑ Average Aggregate Average Exercise Intrinsic Remaining LGJV Personnel Options Shares Price Value Life (Years) Outstanding at December 31, 2020 43,676 $ 7.23 — — Exercised (11,283) $ 7.00 — — Outstanding and vested at December 31, 2021 32,393 $ 7.31 $ 99 4.27 |
Performance Share Unit | |
Stockholders' Equity | |
Schedule of assumptions used to compute fair value of options granted using Black-Scholes option valuation model | Risk-free interest rate 0.95 % Dividend yield — Estimated volatility 63.0 % |
Director Stock Unit | |
Stockholders' Equity | |
Schedule of weighted average grant date fair value and total stock based compensation expense | Weighted-Average Grant Date Fair Director DSUs Shares Value Outstanding at December 31, 2020 182,714 — Granted 112,803 $ 11.45 Converted (148,721) $ 8.67 Outstanding at December 31, 2021 146,796 $ 10.88 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Schedule of components of loss from continuing operations before income taxes | 2021 2020 U.S. $ (39,559) $ (32,964) Mexico (3,879) (2,063) Total $ (43,438) $ (35,027) |
Schedule of reconciliation of the actual income tax benefit and the tax computed by applying the applicable U.S. federal rate to the loss before income taxes | 2021 2020 Tax provision (benefit) from continuing operations $ 8,307 $ 7,356 State tax benefit from continuing operations (2) 1,577 Nondeductible Expenses (8,368) (773) Change in Valuation Allowance (3,942) (8,707) Effect of Change in Tax Rates (9,223) 2,991 US/Foreign Tax Rate Differential — 49 True-up MLS at 30% MX tax rate (3,059) — Current Year NOL Utilization — (2,186) True-up LGJV 15,303 — True-up Stock Options 1,025 — Other (41) (307) Total income tax benefit $ — $ — |
Schedule of components of the net deferred tax assets (liabilities) | 2021 2020 Deferred tax assets Accrued compensation $ 29 $ 457 Deferred share unit awards 427 218 Investment in affiliate 27,800 — Other accrued liabilities 21 26 Mineral properties 2,057 2,487 Operating loss carryforward 22,340 30,729 Foreign branch tax benefit — 14,091 Stock Options 8,399 8,182 Loan Fees — 1,303 Other 22 27 Valuation allowances (60,262) (56,320) Total deferred tax assets $ 833 $ 1,200 Deferred tax liabilities Property, plant and equipment (229) (276) Exploration and Development (19) (16) Prepaid expenses (585) (908) Total deferred tax liabilities $ (833) $ (1,200) Net deferred income tax assets (liabilities) $ — $ — |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Discontinued Operations | |
Schedule of results of operations and cash flow activity from discontinued operations | December 31, 2020 OPERATING EXPENSES OF DISCONTINUED OPERATIONS Exploration $ 352 Pre-development 1,700 General and administrative 1,431 Amortization 1,935 Total expenses 5,418 Other Income of Discontinued Operations Other income (4) Net Loss of Discontinued Operations $ 5,414 December 31, 2020 Discontinued Operating Activities Net loss $ (5,414) Adjustments to reconcile net loss to net cash used by operating activities: Amortization 1,935 Stock compensation expense 195 Accretion expense 91 Other — Changes in operating assets and liabilities: Accounts payable and other accrued liabilities (256) Materials and supplies inventory (2) Other current assets (2) Net cash used by operating activities of discontinued operations (3,453) Investing Activities of Discontinued Operations Purchase of property, plant and equipment (22) Transfers of restricted cash to cash 40 Net cash provided by investing activities of discontinued operations 18 Financing Activities of Discontinued Operations Related-party convertible notes 500 PPP Loan proceeds 307 Net cash provided by financing activities of discontinued operations 807 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Information | |
Schedule of segment financial information | Year Ended December 31, 2021 Year Ended December 31, 2020 Mexico Corporate Total Mexico Corporate Total Exploration $ 1,657 $ — $ 1,657 $ 785 $ — $ 785 General and administrative 1,424 19,469 20,893 549 7,216 7,765 Amortization — 89 89 — 30 30 Arrangement fees — 195 195 — 4,843 4,843 Interest expense — 185 185 — 4,047 4,047 Equity (income) loss in affiliates (35,883) — (35,883) 17,585 — 17,585 Impairment of investment in affiliates — 51,564 51,564 — — — Other (income) expense 40 4,698 4,738 9 (37) (28) Total assets 74,637 292,474 367,111 38,326 227,084 265,410 |
Investment in Affiliate (Tables
Investment in Affiliate (Tables) - Los Gatos Joint Venture ("LGJV") | 12 Months Ended |
Dec. 31, 2021 | |
Investment in Affiliate | |
Schedule of combined balance sheets | LOS GATOS JOINT VENTURE COMBINED BALANCE SHEETS (in thousands) December 31, December 31, 2021 2020 ASSETS Current Assets Cash and cash equivalents $ 20,280 $ 1,676 Receivables 11,263 3,988 Inventories 11,062 10,315 VAT receivable 46,242 50,732 Other current assets 4,515 2,891 Total current assets 93,362 69,602 Non ‑ Current Assets Mine development, net 229,076 202,874 Property, plant and equipment, net 190,896 196,942 Net deferred tax assets 9,226 — Total non‑current assets 429,198 399,816 Total Assets $ 522,560 $ 469,418 LIABILITIES AND OWNERS’ CAPITAL Current Liabilities Accounts payable and accrued liabilities $ 33,179 $ 35,767 Related party payable 1,609 1,703 Accrued interest 51 101 Unearned revenue 1,714 3,276 Income taxes 6,315 — Equipment loans 5,534 7,084 Term Loan — 31,826 Working Capital Facility — 60,000 Total current liabilities 48,402 139,757 Non ‑ Current Liabilities Term Loan — 187,767 Equipment loans 478 6,120 Asset retirement obligation 14,706 12,162 Total non‑current liabilities 15,184 206,049 Owners’ Capital Capital contributions 540,638 271,368 Paid‑in capital 18,370 16,366 Accumulated deficit (100,034) (164,122) Total owners’ capital 458,974 123,612 Total Liabilities and Owners’ Capital $ 522,560 $ 469,418 |
Schedule of combined results of loss | Years Ended December 31, 2021 2020 Revenue $ 249,194 $ 121,470 Expenses Cost of sales 97,710 65,005 Royalties 4,781 2,148 Exploration 5,383 841 General and administrative 13,345 9,718 Depreciation, depletion and amortization 52,402 44,904 Other — 3,416 Total expenses 173,621 126,032 Other income (expense) Interest expense (5,542) (12,484) Loss on Term Loan extinguishment (4,359) — Arrangement fee (2,090) (8,888) Accretion expense (924) (849) Other income 222 109 Foreign exchange loss (749) (1,042) Total other expense (13,442) (23,154) Income (loss) before taxes 62,131 (27,716) Mining tax expense (954) — Income (loss) before income taxes 61,177 (27,716) Income tax benefit 2,911 — Net income (loss) $ 64,088 $ (27,716) |
Description of Business (Detail
Description of Business (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Mar. 11, 2021 USD ($) | Oct. 30, 2020 | Sep. 01, 2019 product | May 01, 2019 | May 31, 2019 | Dec. 31, 2021 item | Jul. 26, 2021 | Apr. 01, 2016 USD ($) | |
Description of Business | ||||||||
Reverse stock split ratio | 2 | |||||||
Minera Luz del Sol S. de R.L. de C.V. ("MLS") | ||||||||
Description of Business | ||||||||
Area of exploration program commenced (in meters) | item | 5,400 | |||||||
LGJV | ||||||||
Description of Business | ||||||||
Ownership percentage | 70% | 70% | 70% | |||||
Ownership interest that was repurchased | 18.50% | |||||||
Number of concentrate products | product | 2 | |||||||
Dowa | LGJV | ||||||||
Description of Business | ||||||||
Ownership percentage | 70% | 48.50% | 30% | 30% | 30% | |||
Funding requirement made | $ 50,000 | |||||||
Increase in equity interest in LGJV through loan conversion | 18.50% | |||||||
Ownership interest that was repurchased | 18.50% | |||||||
Total consideration for repurchase of interest | $ 71,550 | |||||||
Amount higher basis than the underlying net assets | $ 47,400 | |||||||
Dowa | LGJV | Minimum | ||||||||
Description of Business | ||||||||
Increase in equity interest in LGJV through loan conversion | 18.50% | |||||||
Dowa | LGJV | Maximum | ||||||||
Description of Business | ||||||||
Increase in equity interest in LGJV through loan conversion | 48.50% |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other Current Assets | ||
Value added tax receivable | $ 575 | $ 318 |
Prepaid expenses | 2,976 | 3,560 |
Other | 7 | 1 |
Total other current assets | $ 3,558 | $ 3,879 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment, net | ||
Santa Valeria Concession, royalty payment percentage | 1% | |
Mineral lease payments made | $ 24 | $ 414 |
Accounts Payable and Other Ac_3
Accounts Payable and Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accounts Payable and Other Accrued Liabilities | ||
Accounts payable | $ 196 | $ 560 |
Accrued expenses | 623 | 1,240 |
Accrued compensation | 587 | 1,964 |
Other | 260 | |
Total accounts payable and other current liabilities | $ 1,406 | $ 4,024 |
Related-Party Convertible Not_2
Related-Party Convertible Notes (Details) - USD ($) $ in Thousands | Oct. 30, 2020 | Dec. 31, 2021 | Jun. 30, 2020 |
Related Party Convertible Notes | |||
Amount outstanding | $ 15,000 | ||
Accrued interest | $ 187 | ||
IPO conversion common stock | 2,712,003 | ||
Non-cash interest expense | $ 3,984 | ||
Electrum silver US LLC | |||
Related Party Convertible Notes | |||
Debt instrument face amount | $ 15,000 | ||
Convertible promissory note | |||
Related Party Convertible Notes | |||
Debt instrument, interest rate, stated percentage | 5% |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Related-Party Transactions | ||
Receivables from related party | $ 1,592 | $ 1,727 |
Receivables converted into capital | 5,850 | |
LGJV | ||
Related-Party Transactions | ||
Receivables from related party | 833 | 1,200 |
Revenue from related parties | 5,367 | 766 |
LGJV | Consulting and Administrative Services Agreement | ||
Related-Party Transactions | ||
Revenue from related parties | 5,000 | 3,900 |
SSMRC | Management Services Agreement | ||
Related-Party Transactions | ||
Revenue from related parties | $ 16 | $ 41 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock Transactions and Equity Compensation Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Aug. 18, 2021 | Jul. 19, 2021 | Nov. 30, 2020 | Oct. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stockholders' Equity | ||||||
Common stock, shares authorized | 700,000,000 | 700,000,000 | ||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares authorized | 50,000,000 | |||||
Preferred stock, par value | $ 0.001 | |||||
Common Stock, Shares, Outstanding | 69,162,223 | 59,183,076 | ||||
Preferred stock, shares outstanding | 0 | |||||
Common stock, number of shares exchanged for each share pursuant to Reorganization | 0.39406 | |||||
Proceeds from issuance of shares | $ 133,085 | $ 160,436 | ||||
Shares available for grant under the Long-Term Incentive Plan | 8,100,000 | |||||
Stock-based compensation expense | $ 7,184 | 4,368 | ||||
Stock options | ||||||
Stockholders' Equity | ||||||
Stock-based compensation expense | 7,162 | $ 4,368 | ||||
Performance Share Unit [Member] | ||||||
Stockholders' Equity | ||||||
Stock-based compensation expense | $ 22 | |||||
Initial public offering | ||||||
Stockholders' Equity | ||||||
Number of shares issued | 21,430,000 | |||||
Gross proceeds from issuance of stock | $ 172,512 | |||||
Over-allotment option | ||||||
Stockholders' Equity | ||||||
Number of shares issued | 3,214,500 | |||||
Issued price per share | $ 7 | |||||
Follow-on public offering | ||||||
Stockholders' Equity | ||||||
Price per share | $ 14 | |||||
Number of shares issued | 3,837 | 8,930,000 | ||||
Other costs related to stock offering | $ 1,700 | |||||
Issued price per share | $ 14 | |||||
Gross proceeds from issuance of stock | $ 286,962 | |||||
Proceeds from issuance of shares | $ 118,894 | |||||
Executive Compensation | ||||||
Stockholders' Equity | ||||||
Issued price per share | $ 7 | |||||
Common stock shares issued to executive officers for deferred salary compensation | 47,061 | |||||
Common stock, shares issued upon conversion of outstanding convertible notes | 2,712,003 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock options | |||
Stockholders' Equity | |||
Contractual term of options | 10 years | ||
Shares underlying each stock option | 1 | ||
Total unrecognized stock based compensation expense | $ 10,346 | $ 10,346 | |
Total unrecognized stock based compensation expense, recognition period | 2 years 1 month 6 days | ||
Weighted average grant date fair value of options per share | $ 7.54 | $ 5.65 | |
Stock options | Non-employee directors | Awards granted prior to 2020 | |||
Stockholders' Equity | |||
Requisite service period for options | 1 year | ||
Stock options | Non-employee directors | Awards granted in January 2020 | |||
Stockholders' Equity | |||
Requisite service period for options | 1 year 6 months | ||
Stock options | Non-employee directors | Awards granted in June 2020 | |||
Stockholders' Equity | |||
Requisite service period for options | 1 year | ||
Employee and LGJV Personnel Options | |||
Stockholders' Equity | |||
Contractual term of options | 6 years | 6 years | |
Employee and LGJV Personnel Options | Employees | |||
Stockholders' Equity | |||
Requisite service period for options | 4 years |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of vesting start dates and number of options granted to employees and directors (Details) - Non-employee Director Options - shares | 12 Months Ended | |||||||||
Dec. 27, 2021 | Jun. 22, 2021 | Jun. 01, 2021 | May 14, 2021 | Oct. 27, 2020 | Jul. 31, 2020 | Mar. 01, 2020 | Jan. 30, 2020 | Jan. 20, 2020 | Dec. 31, 2021 | |
Stockholders' Equity | ||||||||||
Granted | 1,079,219 | |||||||||
Employees | ||||||||||
Stockholders' Equity | ||||||||||
Granted | 589,500 | 66,667 | 283,333 | 100,000 | 1,127,500 | 12,000 | 164,000 | 416,000 | ||
Non-employee directors | ||||||||||
Stockholders' Equity | ||||||||||
Granted | 32,466 | 7,253 | 20,667 | 197,666 |
Stockholders' Equity - Assumpti
Stockholders' Equity - Assumptions used in computing the fair value of options granted using the Black Scholes model (Details) | 1 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2021 | Jun. 30, 2021 | May 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Mar. 31, 2020 | Jan. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Non-employee Director Options | |||||||||
Stockholders' Equity | |||||||||
Risk-free interest rate | 1.34% | 1.05% | 1.06% | 0.51% | 1.63% | 1.63% | 1.63% | ||
Estimated volatility | 60.88% | 62.53% | 62.59% | 62.50% | 62.20% | 62.20% | 62.20% | ||
Expected option life | 6 years | 6 years | 6 years | 6 years | 6 years | 6 years | 6 years | ||
Employee and LGJV Personnel Options | |||||||||
Stockholders' Equity | |||||||||
Risk-free interest rate | 1.35% | 0.51% | |||||||
Estimated volatility | 60.86% | 62.09% | |||||||
Expected option life | 6 years | 6 years |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Weighted-Average Remaining Life (Years) | ||
Total fair value of stock options vested | $ 5,712 | |
Total intrinsic value of stock options exercised | 4,548 | |
Cash received from the exercise of stock options | $ 4,996 | |
Non-employee Director Options | ||
Shares | ||
Outstanding at December 31, 2020 | 5,411,930 | |
Granted | 1,079,219 | |
Exercised | (602,181) | |
Forfeited | (15,000) | |
Outstanding at December 31, 2021 | 5,873,968 | 5,411,930 |
Vested at December 31, 2021 | 3,817,271 | |
Weighted-Average Exercise Price | ||
Outstanding at December 31, 2020 | $ 12.52 | |
Granted | 13.30 | |
Exercised | 8.30 | |
Forfeited | 7 | |
Outstanding at December 31, 2021 | 13.11 | $ 12.52 |
Vested at December 31, 2021 | $ 14.27 | |
Aggregate Intrinsic Value | ||
Outstanding balance | $ 8,107 | $ 0 |
Vested at December 31, 2021 | $ 4,560 | |
Weighted-Average Remaining Life (Years) | ||
Outstanding balance | 5 years 8 months 12 days | 0 years |
Vested at December 31, 2021 | 4 years 1 month 10 days | |
Employee and LGJV Personnel Options | ||
Shares | ||
Outstanding at December 31, 2020 | 43,676 | |
Exercised | (11,283) | |
Outstanding at December 31, 2021 | 32,393 | 43,676 |
Weighted-Average Exercise Price | ||
Outstanding at December 31, 2020 | $ 7.23 | |
Exercised | 7 | |
Outstanding at December 31, 2021 | $ 7.31 | $ 7.23 |
Aggregate Intrinsic Value | ||
Outstanding balance | $ 99 | |
Weighted-Average Remaining Life (Years) | ||
Outstanding balance | 4 years 3 months 7 days | 0 years |
Stockholders' Equity - Performa
Stockholders' Equity - Performance Share Unit Transactions (Details) - Performance Share Unit - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 17, 2021 | Dec. 31, 2021 | |
Stockholders' Equity | ||
Granted | 119,790 | |
Weighted average grant date fair value | $ 14.22 | |
Vesting period | 3 years | |
Unrecognized compensation expense | $ 1,682 | |
Unrecognized compensation expense expected to be recognized over a weighted-average period | 3 years | |
Risk-free interest rate | 0.95% | |
Estimated volatility | 63% | |
Minimum | ||
Stockholders' Equity | ||
Number of shares awarded as a percentage of initial award granted | 0% | |
Maximum | ||
Stockholders' Equity | ||
Number of shares awarded as a percentage of initial award granted | 200% |
Stockholders' Equity - Deferred
Stockholders' Equity - Deferred Stock Unit Transactions (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) $ / shares shares | |
Stockholders' Equity | |
DSU expense | $ | $ 861 |
Weighted-Average Grant Date Fair Value | |
Total fair value of stock options vested | $ | $ 5,712 |
Director Stock Unit | |
Stockholders' Equity | |
Number of shares underlying that each unit entitles | 1 |
DSU expense | $ | $ 879 |
Shares | |
Outstanding at the beginning | 182,714 |
Granted | 112,803 |
Converted | (148,721) |
Outstanding at the end | 146,796 |
Weighted-Average Grant Date Fair Value | |
Granted | $ / shares | $ 11.45 |
Converted | $ / shares | 8.67 |
Outstanding at the end | $ / shares | $ 10.88 |
Total fair value of stock options vested | $ | $ 1,292 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Fair Value Measurements | |
Outstanding balance under Credit Facility | $ 13,000 |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||||
Jul. 26, 2021 USD ($) | Jun. 30, 2021 payment | Mar. 11, 2021 USD ($) | May 30, 2019 USD ($) | Jan. 23, 2018 USD ($) | May 31, 2019 USD ($) | Jul. 31, 2017 USD ($) | Dec. 31, 2021 USD ($) D | Dec. 31, 2018 USD ($) | Dec. 31, 2022 USD ($) | Apr. 01, 2016 | |
Commitments, Contingencies and Guarantees | |||||||||||
Maximum borrowing capacity for LGD development | $ 50,000 | ||||||||||
Dowa | Dowa MPR Loan | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Payments on debt | $ 18,200 | ||||||||||
Remaining principal and interest converted into equity stake in LGJV | 50,737 | ||||||||||
Dowa | Working capital facility agreement | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Arrangement fee (as a percent) | 15% | ||||||||||
Company's pro-rata capital contribution | $ 42,000 | ||||||||||
Arrangement fee, percentage of the average daily principal amount outstanding considered (as a percent) | 70% | ||||||||||
LGJV | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Capital contribution for repayment of debt | $ 18,200 | ||||||||||
Equity interest in LGJV repurchased | 18.50% | ||||||||||
Ownership percentage | 70% | 70% | 70% | ||||||||
LGJV | Dowa | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Equity interest in LGJV repurchased | 18.50% | ||||||||||
Consideration paid for repurchased equity interest in LGJV | $ 71,550 | ||||||||||
LGJV | Dowa | Term loan | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Ownership percentage | 70% | ||||||||||
Dowa | Term loan | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Payments for closing fees | $ 10,000 | ||||||||||
Dowa | LGJV | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Equity interest in LGJV repurchased | 18.50% | ||||||||||
Ownership percentage | 30% | 70% | 48.50% | 30% | 30% | ||||||
Increase in equity interest in LGJV through loan conversion | 18.50% | ||||||||||
Los Gatos Joint Venture | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Proven and probable reserves, basis difference | $ 47,400 | ||||||||||
Los Gatos Joint Venture | Equipment loan agreements | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Outstanding balance | $ 6,011 | ||||||||||
Unamortized debt discount | $ 14 | ||||||||||
Los Gatos Joint Venture | Dowa | Term loan | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Maximum borrowing capacity for LGD development | $ 210,000 | ||||||||||
Basis spread over LIBOR (as a percent) | 2.35% | ||||||||||
Payments for closing fees | $ 4,200 | ||||||||||
Number of consecutive semi annual equal payments commencing June 30, 2021 | payment | 14 | ||||||||||
Arrangement fee (as a percent) | 2% | ||||||||||
Arrangement fee, percentage of outstanding principal balance considered (as a percent) | 70% | ||||||||||
Arrangement fee semi-annual payment, number of business days prior to June 30 and December 31 on which installments come due | D | 2 | ||||||||||
Percentage of excess cash flow used to determine amount of additional payments | 70% | ||||||||||
Los Gatos Joint Venture | Dowa | Dowa MPR Loan | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Maximum borrowing capacity for LGD development | $ 65,700 | ||||||||||
Basis spread over LIBOR (as a percent) | 1.50% | ||||||||||
Los Gatos Joint Venture | Dowa | Working capital facility agreement | |||||||||||
Commitments, Contingencies and Guarantees | |||||||||||
Maximum borrowing capacity for LGD development | $ 60,000 | ||||||||||
Basis spread over LIBOR (as a percent) | 3% | ||||||||||
Payments on debt | $ 60,000 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Jul. 19, 2021 | Jul. 12, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 19, 2022 | |
Debt | ||||||
Borrowing capacity | $ 50,000 | |||||
Amount borrowed | $ 13,000 | |||||
Amortization of debt issuance costs | 195 | $ 4,843 | ||||
Decrease in maximum credit limit | $ 50,000 | |||||
Bank of Montreal | Upon assessment of the new CLG financial model | ||||||
Debt | ||||||
Borrowing capacity | 50,000 | |||||
LIBOR | Minimum | ||||||
Debt | ||||||
Spread on variable rate | 3% | |||||
LIBOR | Maximum | ||||||
Debt | ||||||
Spread on variable rate | 4% | |||||
Base Rate | Minimum | ||||||
Debt | ||||||
Spread on variable rate | 2% | |||||
Base Rate | Maximum | ||||||
Debt | ||||||
Spread on variable rate | 3% | |||||
Revolving Credit Facility | ||||||
Debt | ||||||
Borrowing capacity | $ 50,000 | |||||
Contingent increase, additional borrowing capacity | $ 100,000 | |||||
Amount borrowed | $ 13,000 | |||||
Current balance outstanding | 9,000 | |||||
Principal repayment | 4,000 | |||||
Amortization of debt issuance costs | 62 | |||||
Unamortized debt issuance cost | $ 442 | |||||
Interest Expense, Debt | 185 | |||||
Interest paid | 168 | |||||
Revolving Credit Facility | Bank of Montreal | ||||||
Debt | ||||||
Borrowing capacity | $ 30,000 | |||||
Revolving Credit Facility | Bank of Montreal | Upon assessment of the new CLG financial model | ||||||
Debt | ||||||
Current balance outstanding | $ 75,000 | |||||
Maximum additional accordion feature | $ 25,000 | |||||
Revolving Credit Facility | LIBOR | ||||||
Debt | ||||||
Spread on variable rate | 3% | |||||
Revolving Credit Facility | Base Rate | Minimum | Bank of Montreal | Upon assessment of the new CLG financial model | ||||||
Debt | ||||||
Spread on variable rate | 2% | |||||
Revolving Credit Facility | Base Rate | Maximum | Bank of Montreal | Upon assessment of the new CLG financial model | ||||||
Debt | ||||||
Spread on variable rate | 3% | |||||
Revolving Credit Facility | SOFR rate | Minimum | Bank of Montreal | Upon assessment of the new CLG financial model | ||||||
Debt | ||||||
Spread on variable rate | 3% | |||||
Revolving Credit Facility | SOFR rate | Maximum | Bank of Montreal | Upon assessment of the new CLG financial model | ||||||
Debt | ||||||
Spread on variable rate | 4% |
Income Taxes - Components of lo
Income Taxes - Components of loss before income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | ||
Total | $ (43,438) | $ (35,027) |
U.S. | ||
Income Taxes | ||
Total | (39,559) | (32,964) |
Mexico | ||
Income Taxes | ||
Total | $ (3,879) | $ (2,063) |
Income Taxes - Effective tax re
Income Taxes - Effective tax reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | ||
Tax provision (benefit) from continuing operations | $ 8,307 | $ 7,356 |
State tax benefit from continuing operations | (2) | 1,577 |
Nondeductible expenses | (8,368) | (773) |
Change in valuation allowance | (3,942) | (8,707) |
Effect of Change in Tax Rates | (9,223) | 2,991 |
US/Foreign Tax Rate Differential | 49 | |
True-up MLS at 30% MX tax rate | (3,059) | |
Current Year NOL Utilization | (2,186) | |
True-up LGJV | 15,303 | |
True-up Stock Options | 1,025 | |
Other | (41) | (307) |
Total income tax benefit | $ 0 | $ 0 |
Income Taxes - Components of th
Income Taxes - Components of the net deferred tax assets (liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets | ||
Accrued compensation | $ 29 | $ 457 |
Deferred share unit awards | 427 | 218 |
Investment in affiliate | 27,800 | |
Other accrued liabilities | 21 | 26 |
Mineral properties | 2,057 | 2,487 |
Operating loss carryforward | 22,340 | 30,729 |
Foreign branch tax benefit | 14,091 | |
Stock options | 8,399 | 8,182 |
Loan fees | 1,303 | |
Other | 22 | 27 |
Valuation allowances | (60,262) | (56,320) |
Total deferred tax assets | 833 | 1,200 |
Deferred tax liabilities | ||
Property, plant and equipment | (229) | (276) |
Exploration and development | (19) | (16) |
Prepaid expenses | (585) | (908) |
Total deferred tax liabilities | $ (833) | $ (1,200) |
Income Taxes - Additional infor
Income Taxes - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | ||
Valuation allowances | $ 60,262 | $ 56,320 |
Income tax benefit | 0 | $ 0 |
U.S. | ||
Income Taxes | ||
Valuation allowances | $ 60,262 | |
Federal rate | 21% | |
Operating loss carryforwards | $ 103,796 | |
Operating loss carryforwards that may be carried forward indefinitely | 84,866 | |
Mexico | ||
Income Taxes | ||
Valuation allowances | 60,119 | |
Operating loss carryforwards | 7,574 | |
Operating loss carryforwards subject to expiration through 2037 | 0 | |
Operating loss carryforwards that may be carried forward indefinitely | $ 18,930 |
Discontinued Operations - Resul
Discontinued Operations - Results of operations (Details) - Silver Opportunity Partners Corporation - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 30, 2020 | Dec. 31, 2020 | |
Discontinued Operations | ||
Number of shares of SOP received by Company's stockholders | 0.10594 | |
Spin off | ||
OPERATING EXPENSES OF DISCONTINUED OPERATIONS | ||
Exploration | $ 352 | |
Pre-development | 1,700 | |
General and administrative | 1,431 | |
Amortization | 1,935 | |
Total expenses | 5,418 | |
Other Income of Discontinued Operations | ||
Other income | (4) | |
Net Loss of Discontinued Operations | $ 5,414 |
Discontinued Operations - Cash
Discontinued Operations - Cash flow activity (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020 USD ($) | |
Changes in operating assets and liabilities: | |
Net cash used by operating activities of discontinued operations | $ (3,453) |
Financing Activities of Discontinued Operations | |
Net cash provided by financing activities of discontinued operations | 807 |
Silver Opportunity Partners Corporation | Spin off | |
Discontinued Operating Activities | |
Net loss from discontinued operations | (5,414) |
Adjustments to reconcile net loss to net cash used by operating activities: | |
Amortization | 1,935 |
Stock compensation expense | 195 |
Accretion expense | 91 |
Changes in operating assets and liabilities: | |
Accounts payable and other accrued liabilities | (256) |
Materials and supplies inventory | (2) |
Other current assets | (2) |
Net cash used by operating activities of discontinued operations | (3,453) |
Investing Activities of Discontinued Operations | |
Purchase of property, plant and equipment | (22) |
Transfers of restricted cash to cash | 40 |
Net cash provided by investing activities of discontinued operations | 18 |
Financing Activities of Discontinued Operations | |
Related-party convertible notes | 500 |
PPP Loan proceeds | 307 |
Net cash provided by financing activities of discontinued operations | $ 807 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Information | ||
Exploration | $ 1,657 | $ 785 |
General and administrative | 20,893 | 7,765 |
Amortization | 89 | 30 |
Arrangement fees | 195 | 4,843 |
Interest expense | 185 | 4,047 |
Equity (income) loss in affiliates | (35,883) | 17,585 |
Impairment of investment in affiliates | 51,564 | |
Other (income) expense | 4,738 | (28) |
Total Assets | 367,111 | 265,410 |
Continuing Operations | ||
Segment Information | ||
Exploration | 1,657 | 785 |
General and administrative | 20,893 | 7,765 |
Amortization | 89 | 30 |
Arrangement fees | 195 | 4,843 |
Interest expense | 185 | 4,047 |
Equity (income) loss in affiliates | (35,883) | 17,585 |
Impairment of investment in affiliates | 51,564 | |
Other (income) expense | 4,738 | (28) |
Total Assets | 367,111 | 265,410 |
Mexico. | Continuing Operations | ||
Segment Information | ||
Exploration | 1,657 | 785 |
General and administrative | 1,424 | 549 |
Equity (income) loss in affiliates | (35,883) | 17,585 |
Other (income) expense | 40 | 9 |
Total Assets | 74,637 | 38,326 |
Corporate | Continuing Operations | ||
Segment Information | ||
General and administrative | 19,469 | 7,216 |
Amortization | 89 | 30 |
Arrangement fees | 195 | 4,843 |
Interest expense | 185 | 4,047 |
Impairment of investment in affiliates | 51,564 | |
Other (income) expense | 4,698 | (37) |
Total Assets | $ 292,474 | $ 227,084 |
Investment in Affiliates (Detai
Investment in Affiliates (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Nov. 30, 2022 | Jul. 31, 2022 | Apr. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Investment in Affiliate | ||||||
Income (Loss) from Equity Method Investments | $ 35,883 | $ (17,585) | ||||
Carrying value | $ 355,310 | 355,310 | 109,597 | |||
Los Gatos Joint Venture ("LGJV") | ||||||
Investment in Affiliate | ||||||
Income (Loss) from Equity Method Investments | $ 35,883 | (17,585) | ||||
Net present value basis used to determine fair value | 70% | |||||
Discount rate | 5% | |||||
Fair value of the investment | 355,310 | $ 355,310 | ||||
Carrying value | 406,874 | 406,874 | ||||
Impairment charge | 51,564 | |||||
Amount contributed to investee | $ 260,039 | $ 260,039 | $ 17,227 | |||
Ownership interest that was repurchased | 18.50% | |||||
Dividends received | $ 13,300 | $ 9,975 | $ 5,936 |
Investment in Affiliate - Combi
Investment in Affiliate - Combined Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets | |||
Cash and cash equivalents | $ 6,616 | $ 150,146 | |
VAT receivable | 575 | 318 | |
Other current assets | 3,558 | 3,879 | |
Total current assets | 11,766 | 155,752 | |
Non-Current Assets | |||
Total Assets | 367,111 | 265,410 | |
Current Liabilities | |||
Income taxes | 833 | 1,200 | |
Non-Current Liabilities | |||
Dowa Term Loan | 12,620 | ||
Owners' Capital | |||
Paidin capital | 543,829 | 409,728 | |
Accumulated deficit | (190,861) | (147,423) | |
Total shareholders' equity | 353,085 | 261,386 | $ 149,391 |
Total Liabilities and Shareholders' Equity | 367,111 | 265,410 | |
Los Gatos Joint Venture ("LGJV") | |||
Current Assets | |||
Cash and cash equivalents | 20,280 | 1,676 | |
Receivables | 11,263 | 3,988 | |
Inventories | 11,062 | 10,315 | |
VAT receivable | 46,242 | 50,732 | |
Other current assets | 4,515 | 2,891 | |
Total current assets | 93,362 | 69,602 | |
Non-Current Assets | |||
Mine development, net | 229,076 | 202,874 | |
Property, plant and equipment, net | 190,896 | 196,942 | |
Net deferred tax assets | 9,226 | ||
Total noncurrent assets | 429,198 | 399,816 | |
Total Assets | 522,560 | 469,418 | |
Current Liabilities | |||
Accounts payable and accrued liabilities | 33,179 | 35,767 | |
Related party payable | 1,609 | 1,703 | |
Accrued interest | 51 | 101 | |
Unearned revenue | 1,714 | 3,276 | |
Income taxes | 6,315 | ||
Equipment loans | 5,534 | 7,084 | |
Dowa Term Loan | 31,826 | ||
Working Capital Facility | 60,000 | ||
Total current liabilities | 48,402 | 139,757 | |
Non-Current Liabilities | |||
Dowa Term Loan | 187,767 | ||
Equipment loans | 478 | 6,120 | |
Reclamation obligations | 14,706 | 12,162 | |
Total noncurrent liabilities | 15,184 | 206,049 | |
Owners' Capital | |||
Capital contributions | 540,638 | 271,368 | |
Paidin capital | 18,370 | 16,366 | |
Accumulated deficit | (100,034) | (164,122) | |
Total shareholders' equity | 458,974 | 123,612 | |
Total Liabilities and Shareholders' Equity | $ 522,560 | $ 469,418 |
Investment in Affiliate - Com_2
Investment in Affiliate - Combined Statement of income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Expenses | ||
Exploration | $ 1,657 | $ 785 |
General and administrative | 20,893 | 7,765 |
Total expenses | 22,639 | 8,580 |
Other expense | ||
Interest expense | (185) | (4,047) |
Arrangement fees | (195) | (4,843) |
Income tax benefit | 0 | 0 |
Net loss | (43,438) | (40,441) |
Los Gatos Joint Venture ("LGJV") | ||
Investment in Affiliate | ||
Sales | 249,194 | 121,470 |
Expenses | ||
Cost of sales | 97,710 | 65,005 |
Royalties | 4,781 | 2,148 |
Exploration | 5,383 | 841 |
General and administrative | 13,345 | 9,718 |
Depreciation, depletion and amortization | 52,402 | 44,904 |
Other | 3,416 | |
Total expenses | 173,621 | 126,032 |
Other expense | ||
Interest expense | (5,542) | (12,484) |
Loss on Term Loan extinguishment | (4,359) | |
Arrangement fees | (2,090) | (8,888) |
Accretion expense | (924) | (849) |
Other income | 222 | 109 |
Foreign exchange loss (gain) | (749) | (1,042) |
Total other (income) expense | 13,442 | 23,154 |
Income (loss) before taxes | 62,131 | (27,716) |
Mining tax expense | (954) | |
Income (loss) before income taxes | 61,177 | (27,716) |
Income tax benefit | 2,911 | |
Net loss | $ 64,088 | $ (27,716) |
Subsequent Events - (Details)
Subsequent Events - (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Dec. 29, 2022 | Nov. 30, 2022 | Jul. 31, 2022 | Apr. 30, 2022 | |
LGJV | ||||
Subsequent Event [Line Items] | ||||
Dividends received | $ 13,300 | $ 9,975 | $ 5,936 | |
Subsequent events. | ||||
Subsequent Event [Line Items] | ||||
Reestablishing credit limit value | $ 50,000 | |||
Subsequent events. | LGJV | ||||
Subsequent Event [Line Items] | ||||
Amount of dividend paid | 20,000 | 15,000 | 20,000 | |
Dividends received | $ 13,300 | $ 10,000 | 6,000 | |
Subsequent events. | LGJV | Dowa | ||||
Subsequent Event [Line Items] | ||||
Amount of dividend paid | $ 10,300 |