Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Mar. 24, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39649 | |
Entity Registrant Name | GATOS SILVER, INC. | |
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 $0.001 per share | |
Trading Symbol | GATO | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 69,162,223 | |
Entity Central Index Key | 0001517006 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 7,277 | $ 6,616 |
Related party receivables | 576 | 1,592 |
Other current assets | 2,222 | 3,558 |
Total current assets | 10,075 | 11,766 |
Non-Current Assets | ||
Investment in affiliates | 374,627 | 355,310 |
Other non-current assets | 48 | 35 |
Total Assets | 384,750 | 367,111 |
Current Liabilities | ||
Accounts payable and other accrued liabilities | 1,336 | 1,406 |
Non-Current Liabilities | ||
Credit Facility, net of debt issuance costs | 12,694 | 12,620 |
Stockholders' Equity | ||
Common Stock, $0.001 par value; 700,000,000 shares authorized; 69,162,223 shares outstanding as of June 30, 2022 and December 31, 2021 | 117 | 117 |
Paidin capital | 545,061 | 543,829 |
Accumulated deficit | (174,458) | (190,861) |
Total shareholders' equity | 370,720 | 353,085 |
Total Liabilities and Shareholders' Equity | $ 384,750 | $ 367,111 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
CONDENSED 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 | 69,162,223 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Expenses | ||||
Exploration | $ 694 | $ 110 | $ 918 | |
General and administrative | $ 4,257 | 5,661 | 11,034 | 10,514 |
Amortization | 44 | 7 | 88 | 14 |
Total expenses | 4,301 | 6,362 | 11,232 | 11,446 |
Other income | ||||
Equity income in affiliates | 765 | 18,291 | 25,379 | 20,992 |
Other income | 1,110 | 1,562 | 2,256 | 2,325 |
Net other income | 1,875 | 19,853 | 27,635 | 23,317 |
Net income (loss) | $ (2,426) | $ 13,491 | $ 16,403 | $ 11,871 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ (0.04) | $ 0.23 | $ 0.24 | $ 0.20 |
Diluted (in dollars per share) | $ (0.04) | $ 0.22 | $ 0.24 | $ 0.20 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 69,162,223 | 59,534,627 | 69,162,223 | 59,427,320 |
Diluted (in shares) | 69,162,223 | 60,623,496 | 69,309,019 | 60,420,811 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Treasury Stock | Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 108 | $ (1,027) | $ 409,728 | $ (147,423) | $ 261,386 |
Balance (in shares) at Dec. 31, 2020 | 59,183,076 | 144,589 | |||
Stock-based compensation | 1,078 | 1,078 | |||
Issuance of common stock | 1,559 | 1,559 | |||
Issuance of common stock (in shares) | 182,453 | ||||
DSUs converted to common stock (in shares) | 43,523 | ||||
Other | (262) | (262) | |||
Net income (loss) | (1,620) | (1,620) | |||
Balance at Mar. 31, 2021 | $ 108 | $ (1,027) | 412,103 | (149,043) | 262,141 |
Balance (in shares) at Mar. 31, 2021 | 59,409,052 | 144,589 | |||
Balance at Dec. 31, 2020 | $ 108 | $ (1,027) | 409,728 | (147,423) | 261,386 |
Balance (in shares) at Dec. 31, 2020 | 59,183,076 | 144,589 | |||
Net income (loss) | 11,871 | ||||
Balance at Jun. 30, 2021 | $ 108 | $ (1,027) | 417,248 | (135,552) | 280,777 |
Balance (in shares) at Jun. 30, 2021 | 59,774,201 | 144,589 | |||
Balance at Mar. 31, 2021 | $ 108 | $ (1,027) | 412,103 | (149,043) | 262,141 |
Balance (in shares) at Mar. 31, 2021 | 59,409,052 | 144,589 | |||
Stock-based compensation | 2,490 | 2,490 | |||
Issuance of common stock | 2,662 | 2,662 | |||
Issuance of common stock (in shares) | 331,497 | ||||
DSUs converted to common stock (in shares) | 33,652 | ||||
Other | (7) | (7) | |||
Net income (loss) | 13,491 | 13,491 | |||
Balance at Jun. 30, 2021 | $ 108 | $ (1,027) | 417,248 | (135,552) | 280,777 |
Balance (in shares) at Jun. 30, 2021 | 59,774,201 | 144,589 | |||
Balance at Dec. 31, 2021 | $ 117 | 543,829 | (190,861) | 353,085 | |
Balance (in shares) at Dec. 31, 2021 | 69,162,223 | ||||
Stock-based compensation | 1,482 | 1,482 | |||
Net income (loss) | 18,829 | 18,829 | |||
Balance at Mar. 31, 2022 | $ 117 | 545,311 | (172,032) | 373,396 | |
Balance (in shares) at Mar. 31, 2022 | 69,162,223 | ||||
Balance at Dec. 31, 2021 | $ 117 | 543,829 | (190,861) | 353,085 | |
Balance (in shares) at Dec. 31, 2021 | 69,162,223 | ||||
Net income (loss) | 16,403 | ||||
Balance at Jun. 30, 2022 | $ 117 | 545,061 | (174,458) | 370,720 | |
Balance (in shares) at Jun. 30, 2022 | 69,162,223 | ||||
Balance at Mar. 31, 2022 | $ 117 | 545,311 | (172,032) | 373,396 | |
Balance (in shares) at Mar. 31, 2022 | 69,162,223 | ||||
Stock-based compensation | (250) | (250) | |||
Net income (loss) | (2,426) | (2,426) | |||
Balance at Jun. 30, 2022 | $ 117 | $ 545,061 | $ (174,458) | $ 370,720 | |
Balance (in shares) at Jun. 30, 2022 | 69,162,223 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING ACTIVITIES | ||
Net income (loss) | $ 16,403 | $ 11,871 |
Adjustments to reconcile net income to net cash used by operating activities: | ||
Amortization | 88 | 14 |
Stock-based compensation expense | 1,360 | 3,426 |
Other | 127 | 44 |
Equity income in affiliates | (25,379) | (20,992) |
Dividends from affiliates, net of withholding taxes | 13,300 | |
Changes in operating assets and liabilities: | ||
Receivables from related-parties | 1,016 | (3,375) |
Accounts payable and other accrued liabilities | (198) | (572) |
Other current assets | 1,336 | 1,689 |
Net cash provided by (used by) operating activities | 8,053 | (7,895) |
INVESTING ACTIVITIES | ||
Purchase of property, plant and equipment | (27) | |
Investment in affiliates | (7,365) | (116,595) |
Net cash used by investing activities | (7,392) | (116,595) |
FINANCING ACTIVITIES | ||
Financing costs | (269) | |
Issuance of common stock | 4,221 | |
Other | (1) | |
Net cash provided by financing activities | 0 | 3,951 |
Net increase (decrease) in cash and cash equivalents | 661 | (120,539) |
Cash and cash equivalents, beginning of period | 6,616 | 150,146 |
Cash and cash equivalents, end of period | 7,277 | 29,607 |
Interest paid | $ 227 | |
Supplemental disclosure of noncash transactions: | ||
Deferred financing costs included in accounts payable and accrued liabilities | $ 284 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation Basis of Consolidation and Presentation The financial statements represent the condensed consolidated financial position and results of operations of Gatos Silver, Inc. and its subsidiaries, Gatos Silver Canada Corporation and Minera Luz del Sol S. de R.L. de C.V. Unless the context otherwise requires, references to Gatos Silver or the Company mean Gatos Silver, Inc. and its consolidated subsidiaries. The interim condensed |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Summary of Significant Accounting Policies The consolidated financial statements for the year ended December 31, 2021, disclose those accounting policies considered significant in determining results of operations and financial position. There have been no material changes to, or in the application of, the accounting policies previously identified and described in the 2021 10-K. Recent Accounting Pronouncements There have been no accounting pronouncements issued or adopted during the six months ended June 30, 2022, which are expected to have a material impact on the financial statements. |
Other Current Assets
Other Current Assets | 6 Months Ended |
Jun. 30, 2022 | |
Other Current Assets | |
Other Current Assets | 3. Other Current Assets June 30, December 31, 2022 2021 Value added tax receivable $ 655 $ 575 Prepaid expenses 1,347 2,976 Other 220 7 Total other current assets $ 2,222 $ 3,558 |
Accounts Payable and Other Accr
Accounts Payable and Other Accrued Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Accounts Payable and Other Accrued Liabilities | |
Accounts Payable and Other Accrued Liabilities | 4. Accounts Payable and Other Accrued Liabilities June 30, December 31, 2022 2021 Accounts payable $ 198 $ 196 Accrued expenses 618 623 Accrued compensation 520 587 Total accounts payable and other current liabilities $ 1,336 $ 1,406 |
Related-Party Transactions
Related-Party Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related-Party Transactions | |
Related-Party Transactions | 5. Related-Party Transactions LGJV Under the Unanimous Omnibus Partner Agreement, the Company provides certain management and administrative services to the LGJV. The Company earned $1,250 and $1,250 under this agreement for the three months ended June 30, 2022 and 2021, respectively, and during the six months ended June 30, 2022 and 2021, the Company earned $2,500 and $2,500, respectively. The income from these services has been recorded on the statements of operations under other income. In the June 30, 2021 unaudited financial statements filed on Form 10-Q, the management fee was presented as a reduction to general and administrative expense and is now presented in other income to be consistent with the 2021 10-K. The Company also incurs certain LGJV costs that are subsequently reimbursed by the LGJV. The Company received $2,917 and nil in cash from the LGJV under this agreement for the six months ended June 30, 2022 and 2021, respectively. The Company had receivables under this agreement of $417 and $833 as of June 30, 2022 and December 31, 2021, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 6. Stockholders’ Equity 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. 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 and expenses paid by the Company. 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 and expenses paid by the Company. Additionally, the Company incurred an additional $1,700 in other costs related to the offering. Stock-Based Compensation The Company recognized stock-based compensation expense (gain) as follows: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Stock Options $ (194) $ 2,287 $ 1,254 $ 3,426 Performance share units (34) — 106 — $ (228) $ 2,287 $ 1,360 $ 3,426 S The Company granted 100,000 stock options during the six months ended June 30, 2022, with a weighted-average grant-date fair value per share of $5.83. The Company received cash from the exercise of stock options of nil and $4,221 for the six months ended June 30, 2022 and 2021, respectively. Total unrecognized stock-based compensation expense as of June 30, 2022, was $4,264 which is expected to be recognized over a weighted average period of 1.9 years. Stock option activity for the six months ended June 30, 2022, is summarized in the following tables: Weighted ‑ Average Employee & Director Options Shares Exercise Price Outstanding at December 31, 2021 5,873,968 $ 13.11 Granted 100,000 $ 10.28 Forfeited (3,574,391) $ 13.50 Outstanding at June 30, 2022 2,399,577 $ 12.41 Vested at June 30, 2022 1,608,536 $ 12.75 Weighted ‑ Average LGJV Personnel Options Shares Exercise Price Outstanding at December 31, 2021 32,393 $ 7.31 Outstanding and vested at June 30, 2022 32,393 $ 7.31 Performance Share Unit ("PSU") Transactions 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 . For the six months ended June 30, 2022, 69,860 PSUs were forfeited. At June 30, 2022, there were 49,930 PSUs outstanding. On June 30, 2022, unrecognized compensation expense related to the PSUs was $584 which is expected to be recognized over a weighted-average period of 2.5 years. Deferred Stock Unit ("DSU") Transactions The following table summarizes the DSU activity for the six months ended June 30, 2022: Weighted ‑ Average Grant Date Fair Employee and Director DSUs Shares Value Outstanding at December 31, 2021 146,796 $ 10.88 Outstanding at June 30, 2022 146,796 $ 10.88 |
Net Income (Loss) per Share
Net Income (Loss) per Share | 6 Months Ended |
Jun. 30, 2022 | |
Net Income (Loss) per Share | |
Net Income (Loss) per Share | 7. Net Income (Loss) per Share Basic net income (loss) per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income (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 and DSUs were converted into common stock. The dilutive effects are calculated using the treasury stock method. For the three months ended June 30, 2022, the Company experienced a net loss, therefore all stock awards have been excluded from the diluted earnings per share calculation as they are anti-dilutive. For the six months ended June 30, 2022, stock options outstanding have been excluded from the dilutive earnings per common share calculation as the exercise price of these stock options was greater than the average market value of our common stock for those periods, resulting in an anti-dilutive effect. Additionally, for the six months ended June 30, 2022, all PSUs were excluded from the diluted earnings per common share calculation as the PSUs do not currently meet the criteria for issuance. For both the three and six months ended June 30, 2021, the computation of diluted earnings per common share excludes the effect of the assumed exercise of 1,391,236 stock options as the exercise price of these stock options was greater than the average market value of our common stock for those periods, resulting in an anti-dilutive effect. A reconciliation of basic and diluted earnings per common share for the three and six months ended June 30, 2022 and 2021, are as follows: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Net income $ (2,426) $ 13,491 $ 16,403 $ 11,871 Weighted average shares: Basic 69,162,223 59,534,627 69,162,223 59,427,320 Effect of dilutive stock options — 876,448 — 809,749 Effect of dilutive DSUs — 212,421 146,796 183,742 Diluted 69,162,223 60,623,496 69,309,019 60,420,811 Net income per share: Basic (0.04) 0.23 0.24 0.20 Diluted (0.04) 0.22 0.24 0.20 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | 8. Fair Value Measurements 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: Level 2: Level 3: 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 the investment in affiliate to its estimated fair value. |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 6 Months Ended |
Jun. 30, 2022 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 9. 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 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 operating entities consisting of Minera Plata Real S. de R.L. de C.V (“MPR”) and Operaciones San Jose del Plata S. de R.L. de C.V. (collectively, the “LGJV Entities”) entered into a loan agreement (the “Term Loan”) with Dowa whereby the LGJV Entities could borrow up to $210,000 for Los Gatos District (“LGD”) development, with a maturity date of December 29, 2027. Interest on the Term Loan accrued daily at LIBOR plus 2.35% per annum, 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, repayment of the Term Loan in 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 pro-rata amounts equal to their 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 with Dowa (the “Dowa MPR Loan”) whereby the LGJV could borrow up to $65,700 to continue LGD development. Interest on this loan accrued daily at LIBOR plus 1.5% per annum and was added to the amount borrowed. The amount borrowed plus accrued interest was due the earlier of June 30, 2019, or upon the Cerro Los Gatos mine’s substantial completion. If the Company’s 70% portion of 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% per annum 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 June 30, 2022, the LGJV had $2,611 outstanding under the LGJV equipment loan agreements, net of unamortized debt discount of $5, with maturity dates through August 2023. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt | |
Debt | 10. On July 12, 2021, the Company entered into a Revolving Credit Facility (the “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. Borrowings under the Credit Facility bear 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 was in compliance with all covenants under the Credit Facility, as amended, as of June 30, 2022. 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. For the three and six months ended June 30, 2022, the Company recognized interest expense of $123 and $226, respectively, with an effective interest rate of 3.5% and 3.8%, respectively, which has been recorded on the statements of operations under other income, and $37 and $74, respectively, for amortization of debt issuance costs. The Company paid interest of $125 and $227 for the three and six months ended June 30, 2022. 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, could 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 year 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; ● 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. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Segment Information | 11. Segment Information 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 properties and includes the Company’s investment in the LGJV. Financial information relating to the Company’s segments is as follows: Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Mexico Corporate Total Mexico Corporate Total Exploration $ — $ — $ — $ 694 $ — $ 694 General and administrative 780 3,477 4,257 178 5,483 5,661 Amortization 1 43 44 — 7 7 Equity (income) in affiliates (765) — (765) (18,291) — (18,291) Net other (income) expense 12 (1,122) (1,110) 5 (1,567) (1,562) Total assets $ 100,750 $ 284,000 $ 384,750 $ 59,679 $ 224,879 $ 284,558 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Mexico Corporate Total Mexico Corporate Total Exploration $ 110 $ — $ 110 $ 918 $ — $ 918 General and administrative 1,389 9,645 11,034 332 10,182 10,514 Amortization 1 87 88 — 14 14 Equity (income) in affiliates (25,379) — (25,379) (20,992) — (20,992) Net other (income) expense 14 (2,270) (2,256) 19 (2,344) (2,325) Total assets $ 100,750 $ 284,000 $ 384,750 $ 59,679 $ 224,879 $ 284,558 |
Investment in Affiliate
Investment in Affiliate | 6 Months Ended |
Jun. 30, 2022 | |
Investment in Affiliate | |
Investment in Affiliate | 12. Investment in Affiliate During the three months ended June 30, 2022 and 2021, the Company recognized $765 and $18,291 of income, respectively, and during the six months ended June 30, 2022 and 2021, the Company recognized $25,379 and $20,992 of income, 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. The Company provided an updated technical report compliant with Regulation S-K subpart 1300 (the “Los Gatos Technical Report”) dated November 10, 2022. 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 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 exceeded the fair value, an impairment charge of $51,564 was recorded during the fourth quarter of 2021. See Note 8 - 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. On March 17, 2022, we entered into a definitive agreement with Dowa to build and operate a leaching plant to reduce fluorine levels in zinc concentrates produced at CLG at an expected construction cost of $6,000. As part of the agreement, the initial payment of the $20,000 due to Dowa under the partner’s priority distribution agreement was reduced to $10,300. The reduced priority dividend amount reflects a portion of both the construction and future estimated operating costs of the leaching plant and is dependent on the successful construction and operation of the leaching plant. Should the leaching plant construction not be completed, or the leaching plant not operate according to certain parameters during the first five years, portions of the $9,700 reduction could be reinstated. In April 2022, the LGJV paid its first dividend of $20,000 to its partners. The Company’s share of the first dividend was $14,000, before withholding taxes of $700. A payment of $7,365 was subsequently made to Dowa to cover the full amount of the reduced initial priority distribution due, for a net dividend received of $5,935. The LGJV Entities combined balance sheets as of June 30, 2022, and December 31, 2021, and the combined statements of income for the three and six months ended June 30, 2022 and 2021, are as follows: LOS GATOS JOINT VENTURE COMBINED BALANCE SHEETS (UNAUDITED) (in thousands) June 30, December 31, 2022 2021 ASSETS Current Assets Cash and cash equivalents $ 40,324 $ 20,280 Receivables 9,297 11,263 Inventories 11,493 11,062 VAT receivable 25,384 46,242 Other current assets 14,038 4,515 Total current assets 100,536 93,362 Non ‑ Current Assets Mine development, net 232,754 229,076 Property, plant and equipment, net 191,960 190,896 Net deferred tax assets 16,110 9,226 Total non‑current assets 440,824 429,198 Total Assets $ 541,360 $ 522,560 LIABILITIES AND OWNERS' CAPITAL Current Liabilities Accounts payable and accrued liabilities $ 43,403 $ 33,179 Related party payable 594 1,609 Accrued interest 21 51 Income taxes — 6,315 Equipment loans 2,584 5,534 Unearned Revenue — 1,714 Total current liabilities 46,602 48,402 Non ‑ Current Liabilities Equipment loans 27 478 Lease liability 299 — Reclamation obligations 15,257 14,706 Total non‑current liabilities 15,583 15,184 Owners' Capital Capital contributions 540,638 540,638 Paid‑in capital 18,188 18,370 Accumulated deficit (79,651) (100,034) Total owners' capital 479,175 458,974 Total Liabilities and Owners' Capital $ 541,360 $ 522,560 Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Revenue $ 57,196 $ 75,005 $ 144,804 $ 121,335 Expenses Cost of sales 27,837 24,096 52,925 43,901 Royalties 918 1,415 2,412 2,299 Exploration 2,233 1,261 4,354 1,910 General and administrative 3,595 2,833 6,415 6,079 Depreciation, depletion and amortization 16,055 12,705 32,397 23,654 Total operating expenses 50,638 42,310 98,503 77,843 Other (income) expense Interest expense 174 2,356 265 4,473 Arrangement fee — 2,090 — 2,090 Accretion expense 275 228 551 456 Other (income) expense — 11 (1,339) (19) Foreign exchange (gain) loss 957 (1,335) 266 295 Total other (income) expense 1,406 3,350 (257) 7,295 Income before income and mining taxes 5,152 29,345 46,558 36,197 Income and mining tax expense (1,688) — (6,174) — Net income $ 3,464 $ 29,345 $ 40,384 $ 36,197 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events In July 2022 and November 2022, the LGJV paid additional dividends in the amount of $15,000 and $20,000, respectively, to its partners. The Company’s share, after withholding taxes of $525 and $700, respectively, was $9,975 and $13,300, respectively, for the July 2022 and November 2022 dividend payments. On December 19, 2022, the Company entered into 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, as further described above. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The consolidated financial statements for the year ended December 31, 2021, disclose those accounting policies considered significant in determining results of operations and financial position. There have been no material changes to, or in the application of, the accounting policies previously identified and described in the 2021 10-K. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There have been no accounting pronouncements issued or adopted during the six months ended June 30, 2022, which are expected to have a material impact on the financial statements. |
Other Current Assets (Tables)
Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Other Current Assets | |
Schedule of components of other current assets | June 30, December 31, 2022 2021 Value added tax receivable $ 655 $ 575 Prepaid expenses 1,347 2,976 Other 220 7 Total other current assets $ 2,222 $ 3,558 |
Accounts Payable and Other Ac_2
Accounts Payable and Other Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounts Payable and Other Accrued Liabilities | |
Schedule of components of accounts payable and other accrued liabilities | June 30, December 31, 2022 2021 Accounts payable $ 198 $ 196 Accrued expenses 618 623 Accrued compensation 520 587 Total accounts payable and other current liabilities $ 1,336 $ 1,406 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity | |
Schedule of stock-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Stock Options $ (194) $ 2,287 $ 1,254 $ 3,426 Performance share units (34) — 106 — $ (228) $ 2,287 $ 1,360 $ 3,426 |
Schedule of stock option activity | Weighted ‑ Average Employee & Director Options Shares Exercise Price Outstanding at December 31, 2021 5,873,968 $ 13.11 Granted 100,000 $ 10.28 Forfeited (3,574,391) $ 13.50 Outstanding at June 30, 2022 2,399,577 $ 12.41 Vested at June 30, 2022 1,608,536 $ 12.75 Weighted ‑ Average LGJV Personnel Options Shares Exercise Price Outstanding at December 31, 2021 32,393 $ 7.31 Outstanding and vested at June 30, 2022 32,393 $ 7.31 |
Director Share Unit | |
Stockholders' Equity | |
Schedule of stock option activity | Weighted ‑ Average Grant Date Fair Employee and Director DSUs Shares Value Outstanding at December 31, 2021 146,796 $ 10.88 Outstanding at June 30, 2022 146,796 $ 10.88 |
Net Income (Loss) per Share (Ta
Net Income (Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Net Income (Loss) per Share | |
Schedule of reconciliation of basic and diluted earnings per common share | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Net income $ (2,426) $ 13,491 $ 16,403 $ 11,871 Weighted average shares: Basic 69,162,223 59,534,627 69,162,223 59,427,320 Effect of dilutive stock options — 876,448 — 809,749 Effect of dilutive DSUs — 212,421 146,796 183,742 Diluted 69,162,223 60,623,496 69,309,019 60,420,811 Net income per share: Basic (0.04) 0.23 0.24 0.20 Diluted (0.04) 0.22 0.24 0.20 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Schedule of segment financial information | Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Mexico Corporate Total Mexico Corporate Total Exploration $ — $ — $ — $ 694 $ — $ 694 General and administrative 780 3,477 4,257 178 5,483 5,661 Amortization 1 43 44 — 7 7 Equity (income) in affiliates (765) — (765) (18,291) — (18,291) Net other (income) expense 12 (1,122) (1,110) 5 (1,567) (1,562) Total assets $ 100,750 $ 284,000 $ 384,750 $ 59,679 $ 224,879 $ 284,558 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Mexico Corporate Total Mexico Corporate Total Exploration $ 110 $ — $ 110 $ 918 $ — $ 918 General and administrative 1,389 9,645 11,034 332 10,182 10,514 Amortization 1 87 88 — 14 14 Equity (income) in affiliates (25,379) — (25,379) (20,992) — (20,992) Net other (income) expense 14 (2,270) (2,256) 19 (2,344) (2,325) Total assets $ 100,750 $ 284,000 $ 384,750 $ 59,679 $ 224,879 $ 284,558 |
Investment in Affiliate (Tables
Investment in Affiliate (Tables) - LGJV | 6 Months Ended |
Jun. 30, 2022 | |
Investment in Affiliate | |
Schedule of combined balance sheets | June 30, December 31, 2022 2021 ASSETS Current Assets Cash and cash equivalents $ 40,324 $ 20,280 Receivables 9,297 11,263 Inventories 11,493 11,062 VAT receivable 25,384 46,242 Other current assets 14,038 4,515 Total current assets 100,536 93,362 Non ‑ Current Assets Mine development, net 232,754 229,076 Property, plant and equipment, net 191,960 190,896 Net deferred tax assets 16,110 9,226 Total non‑current assets 440,824 429,198 Total Assets $ 541,360 $ 522,560 LIABILITIES AND OWNERS' CAPITAL Current Liabilities Accounts payable and accrued liabilities $ 43,403 $ 33,179 Related party payable 594 1,609 Accrued interest 21 51 Income taxes — 6,315 Equipment loans 2,584 5,534 Unearned Revenue — 1,714 Total current liabilities 46,602 48,402 Non ‑ Current Liabilities Equipment loans 27 478 Lease liability 299 — Reclamation obligations 15,257 14,706 Total non‑current liabilities 15,583 15,184 Owners' Capital Capital contributions 540,638 540,638 Paid‑in capital 18,188 18,370 Accumulated deficit (79,651) (100,034) Total owners' capital 479,175 458,974 Total Liabilities and Owners' Capital $ 541,360 $ 522,560 |
Schedule of combined results of loss | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Revenue $ 57,196 $ 75,005 $ 144,804 $ 121,335 Expenses Cost of sales 27,837 24,096 52,925 43,901 Royalties 918 1,415 2,412 2,299 Exploration 2,233 1,261 4,354 1,910 General and administrative 3,595 2,833 6,415 6,079 Depreciation, depletion and amortization 16,055 12,705 32,397 23,654 Total operating expenses 50,638 42,310 98,503 77,843 Other (income) expense Interest expense 174 2,356 265 4,473 Arrangement fee — 2,090 — 2,090 Accretion expense 275 228 551 456 Other (income) expense — 11 (1,339) (19) Foreign exchange (gain) loss 957 (1,335) 266 295 Total other (income) expense 1,406 3,350 (257) 7,295 Income before income and mining taxes 5,152 29,345 46,558 36,197 Income and mining tax expense (1,688) — (6,174) — Net income $ 3,464 $ 29,345 $ 40,384 $ 36,197 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Other Current Assets | ||
Value added tax receivable | $ 655 | $ 575 |
Prepaid expenses | 1,347 | 2,976 |
Other | 220 | 7 |
Total other current assets | $ 2,222 | $ 3,558 |
Accounts Payable and Other Ac_3
Accounts Payable and Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Accounts Payable and Other Accrued Liabilities | ||
Accounts payable | $ 198 | $ 196 |
Accrued expenses | 618 | 623 |
Accrued compensation | 520 | 587 |
Total accounts payable and other current liabilities | $ 1,336 | $ 1,406 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Related-Party Transactions | |||||
Related party receivables | $ 576 | $ 576 | $ 1,592 | ||
Other income | 1,110 | $ 1,562 | 2,256 | $ 2,325 | |
LGJV | |||||
Related-Party Transactions | |||||
Related party receivables | 417 | 417 | $ 833 | ||
Other income from related party transactions | 2,917 | 0 | |||
LGJV | Consulting and Administrative Services Agreement | |||||
Related-Party Transactions | |||||
Revenue from related parties | $ 1,250 | $ 1,250 | $ 2,500 | $ 2,500 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock Transactions and Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Aug. 18, 2021 | Jul. 19, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Stockholders' Equity | |||||||
Common stock, shares authorized | 700,000,000 | 700,000,000 | 700,000,000 | ||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Common Stock, Shares, Outstanding | 69,162,223 | 69,162,223 | 69,162,223 | ||||
Offering costs | $ 1,700 | ||||||
Proceeds from issuance of shares | $ 4,221 | ||||||
Stock-based compensation expense | $ (228) | $ 2,287 | $ 1,360 | 3,426 | |||
Other costs related to stock offering | $ 1,700 | ||||||
Stock options | |||||||
Stockholders' Equity | |||||||
Stock-based compensation expense | (194) | $ 2,287 | 1,254 | $ 3,426 | |||
Performance share units | |||||||
Stockholders' Equity | |||||||
Stock-based compensation expense | $ (34) | $ 106 | |||||
Over-allotment option | |||||||
Stockholders' Equity | |||||||
Number of shares additional issued | 286,962 | ||||||
Issued price per share | $ 14 | ||||||
Net proceeds from issuance of stock | $ 3,837 | ||||||
Follow-on public offering | |||||||
Stockholders' Equity | |||||||
Price per share | $ 14 | ||||||
Number of shares additional issued | 8,930,000 | ||||||
Proceeds from issuance of shares | $ 118,894 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Transactions (Details) - Employee Stock Option - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | ||
Stock options granted (in shares) | 100,000 | |
Value received from exercise of stock options | $ 0 | $ 4,221 |
Weighted average grant date fair value of options per share | $ 5.83 | |
Total unrecognized stock based compensation expense | $ 4,264 | |
Total unrecognized stock based compensation expense, recognition period | 1 year 10 months 24 days |
Stockholders' Equity - Performa
Stockholders' Equity - Performance Share Unit Transactions (Details) - PSU - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Dec. 17, 2021 | Jun. 30, 2022 | |
Stockholders' Equity | ||
Granted | 119,790 | |
Weighted average grant date fair value | $ 14.22 | |
Unrecognized compensation expense | $ 584 | |
Unrecognized compensation expense expected to be recognized over a weighted-average period | 2 years 6 months | |
forfeited | 69,860 | |
Awards outstanding (in shares) | 49,930 |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock option activity (Details) | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Employee Stock Option | |
Shares | |
Granted | 100,000 |
Employee Stock Option | LGJV | |
Shares | |
Outstanding at beginning | 32,393 |
Outstanding and vested at ending | 32,393 |
Weighted-Average Exercise Price | |
Outstanding at beginning | $ / shares | $ 7.31 |
Outstanding and vested at ending | $ / shares | $ 7.31 |
Employee Stock Option | Director and Employee | |
Shares | |
Outstanding at beginning | 5,873,968 |
Granted | 100,000 |
Forfeited | (3,574,391) |
Outstanding at ending | 2,399,577 |
Vested at ending | 1,608,536 |
Weighted-Average Exercise Price | |
Outstanding at beginning | $ / shares | $ 13.11 |
Granted | $ / shares | 10.28 |
Forfeited | $ / shares | 13.50 |
Outstanding at ending | $ / shares | 12.41 |
Vested at ending | $ / shares | $ 12.75 |
Director Share Unit | Director and Employee | |
Shares | |
Outstanding at beginning | 146,796 |
Outstanding and vested at ending | 146,796 |
Weighted-Average Exercise Price | |
Outstanding at beginning | $ / shares | $ 10.88 |
Outstanding at ending | $ / shares | $ 10.88 |
Net Income (Loss) per Share - R
Net Income (Loss) per Share - Reconciliation of basic and diluted earnings per common share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Net Income (Loss) per Share | ||||||
Net income | $ (2,426) | $ 18,829 | $ 13,491 | $ (1,620) | $ 16,403 | $ 11,871 |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||||||
Basic | 69,162,223 | 59,534,627 | 69,162,223 | 59,427,320 | ||
Effect of dilutive stock options | 876,448 | 809,749 | ||||
Effect of dilutive DSUs | 212,421 | 146,796 | 183,742 | |||
Diluted | 69,162,223 | 60,623,496 | 69,309,019 | 60,420,811 | ||
Basic (in dollars per share) | $ (0.04) | $ 0.23 | $ 0.24 | $ 0.20 | ||
Diluted (in dollars per share) | $ (0.04) | $ 0.22 | $ 0.24 | $ 0.20 |
Net Income (Loss) per Share - A
Net Income (Loss) per Share - Antidilutive securities (Details) - shares | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Stock options | ||
Net Income (Loss) per Share | ||
Shares excluded from the diluted earnings per common share | 1,391,236 | 1,391,236 |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||
Jul. 26, 2021 USD ($) | Jul. 19, 2021 USD ($) | Mar. 11, 2021 USD ($) | May 30, 2019 USD ($) | Jan. 23, 2018 USD ($) | May 31, 2019 USD ($) | Jul. 31, 2018 D | Jul. 31, 2017 USD ($) | Dec. 31, 2021 | Dec. 31, 2018 USD ($) payment | Jun. 30, 2022 USD ($) | Jul. 12, 2021 USD ($) | |
Commitments, Contingencies and Guarantees | ||||||||||||
Maximum borrowing capacity for LGD development | $ 50,000 | |||||||||||
Outstanding balance | $ 9,000 | |||||||||||
LIBOR | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Basis spread over LIBOR (as a percent) | 3% | |||||||||||
LGJV | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Equity interest in LGJV repurchased | 18.50% | 18.50% | ||||||||||
Ownership percentage | 70% | 70% | ||||||||||
Consideration paid for repurchased equity interest in LGJV | $ 71,550 | |||||||||||
LGJV | Dowa MPR Loan | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Payments for closing fees | $ 10,000 | |||||||||||
Capital contribution for repayment of debt | $ 18,200 | |||||||||||
LGJV | Dowa | Term loan | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Maximum borrowing capacity for LGD development | $ 210,000 | |||||||||||
Number of consecutive semi annual equal payments commencing June 30, 2021 | payment | 14 | |||||||||||
Arrangement fee (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% | |||||||||||
Debt closing fees | $ 4,200 | |||||||||||
LGJV | Dowa | Term loan | LIBOR | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Basis spread over LIBOR (as a percent) | 2.35% | |||||||||||
LGJV | Dowa | Dowa MPR Loan | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Maximum borrowing capacity for LGD development | $ 65,700 | |||||||||||
Capital contribution for repayment of debt | 18,200 | |||||||||||
Remaining principal and interest converted into equity stake in LGJV | $ 50,737 | |||||||||||
Debt instrument percentage of joint venture loan for which company is responsible | 70% | |||||||||||
LGJV | Dowa | Dowa MPR Loan | LIBOR | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Basis spread over LIBOR (as a percent) | 1.50% | |||||||||||
LGJV | Dowa | Working capital facility agreement | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Maximum borrowing capacity for LGD development | $ 60,000 | |||||||||||
Arrangement fee (as a percent) | 70% | |||||||||||
Arrangement fee, percentage of outstanding principal balance considered (as a percent) | 15% | |||||||||||
Outstanding balance | 60,000 | |||||||||||
Joint venture capital contributions | 42,000 | |||||||||||
LGJV | Dowa | Working capital facility agreement | LIBOR | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Basis spread over LIBOR (as a percent) | 3% | |||||||||||
LGJV | Dowa | Equipment loan agreements | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Outstanding balance | $ 2,611 | |||||||||||
Unamortized debt discount | $ 5 | |||||||||||
Dowa | LGJV | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Ownership percentage | 30% | 48.50% | ||||||||||
Increase in equity interest in LGJV through loan conversion | 18.50% | |||||||||||
Dowa | LGJV | Term loan | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Arrangement fee, percentage of outstanding principal balance considered (as a percent) | 2% | |||||||||||
LGJV | ||||||||||||
Commitments, Contingencies and Guarantees | ||||||||||||
Proven and probable reserves, basis difference | $ 47,400 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 19, 2021 | Jul. 12, 2021 | Jun. 30, 2022 | Jun. 30, 2022 | Dec. 19, 2022 | |
Debt | |||||
Borrowing capacity | $ 50,000 | ||||
Contingent increase, additional borrowing capacity | $ 100,000 | ||||
Amount borrowed | $ 13,000 | ||||
Current balance outstanding | $ 9,000 | ||||
Decrease in maximum credit limit | $ 50,000 | ||||
Bank of Montreal | Upon assessment of the new CLG financial model | |||||
Debt | |||||
Borrowing capacity | $ 50,000 | $ 50,000 | |||
LIBOR | |||||
Debt | |||||
Spread on variable rate | 3% | ||||
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 | |||||
Unamortized debt issuance cost | $ 442 | ||||
Principal repayment | $ 4,000 | ||||
Interest expense | $ 123 | $ 226 | |||
Effective interest rate | 3.50% | 3.80% | |||
Interest paid | $ 125 | $ 227 | |||
Amortization of debt issuance costs | 37 | 74 | |||
Revolving Credit Facility | Bank of Montreal | |||||
Debt | |||||
Borrowing capacity | $ 30 | $ 30 | |||
Revolving Credit Facility | Bank of Montreal | Upon assessment of the new CLG financial model | |||||
Debt | |||||
Maximum additional accordion feature | $ 25,000 | ||||
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% |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Segment Information | |||||
Exploration | $ 694 | $ 110 | $ 918 | ||
General and administrative | $ 4,257 | 5,661 | 11,034 | 10,514 | |
Amortization | 44 | 7 | 88 | 14 | |
Equity (income) loss in affiliates | (765) | (18,291) | (25,379) | (20,992) | |
Net other (income) expense | (1,110) | (1,562) | (2,256) | (2,325) | |
Total Assets | 384,750 | 284,558 | 384,750 | 284,558 | $ 367,111 |
Mexico | |||||
Segment Information | |||||
Exploration | 694 | 110 | 918 | ||
General and administrative | 780 | 178 | 1,389 | 332 | |
Amortization | 1 | 1 | |||
Equity (income) loss in affiliates | (765) | (18,291) | (25,379) | (20,992) | |
Net other (income) expense | 12 | 5 | 14 | 19 | |
Total Assets | 100,750 | 59,679 | 100,750 | 59,679 | |
Corporate | |||||
Segment Information | |||||
General and administrative | 3,477 | 5,483 | 9,645 | 10,182 | |
Amortization | 43 | 7 | 87 | 14 | |
Net other (income) expense | (1,122) | (1,567) | (2,270) | (2,344) | |
Total Assets | $ 284,000 | $ 224,879 | $ 284,000 | $ 224,879 |
Investment in Affiliates (Detai
Investment in Affiliates (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Mar. 17, 2022 | Mar. 11, 2021 | Apr. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Investment in Affiliate | |||||||||
Equity income in affiliates | $ 765 | $ 18,291 | $ 25,379 | $ 20,992 | |||||
Carrying value | 374,627 | $ 355,310 | 374,627 | $ 355,310 | |||||
Net dividend received | 13,300 | ||||||||
Dowa | |||||||||
Investment in Affiliate | |||||||||
Expected construction cost | $ 6,000 | ||||||||
Initial payment of construction cost | 20,000 | ||||||||
Reduction of amount under distribution agreement | 10,300 | ||||||||
Reduction of dividends | $ 9,700 | ||||||||
LGJV | |||||||||
Investment in Affiliate | |||||||||
Equity income in affiliates | 765 | $ 18,291 | $ 25,379 | $ 20,992 | |||||
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 | |||||||
Ownership interest that was repurchased | 18.50% | 18.50% | |||||||
LGJV | Dowa | |||||||||
Investment in Affiliate | |||||||||
Payment of first dividend | $ 20,000 | ||||||||
First dividend | $ 14,000 |
Investment in Affiliate - COMBI
Investment in Affiliate - COMBINED BALANCE SHEETS (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||||||
Cash and cash equivalents | $ 7,277 | $ 6,616 | ||||
VAT receivable | 655 | 575 | ||||
Other current assets | 2,222 | 3,558 | ||||
Total current assets | 10,075 | 11,766 | ||||
Non-Current Assets | ||||||
Total Assets | 384,750 | 367,111 | $ 284,558 | |||
Owners' Capital | ||||||
Paidin capital | 545,061 | 543,829 | ||||
Accumulated deficit | (174,458) | (190,861) | ||||
Total shareholders' equity | 370,720 | $ 373,396 | 353,085 | $ 280,777 | $ 262,141 | $ 261,386 |
Total Liabilities and Shareholders' Equity | 384,750 | 367,111 | ||||
LGJV | ||||||
Current Assets | ||||||
Cash and cash equivalents | 40,324 | 20,280 | ||||
Receivables | 9,297 | 11,263 | ||||
Inventories | 11,493 | 11,062 | ||||
VAT receivable | 25,384 | 46,242 | ||||
Other current assets | 14,038 | 4,515 | ||||
Total current assets | 100,536 | 93,362 | ||||
Non-Current Assets | ||||||
Mine development, net | 232,754 | 229,076 | ||||
Property, plant and equipment, net | 191,960 | 190,896 | ||||
Net deferred tax assets | 16,110 | 9,226 | ||||
Total noncurrent assets | 440,824 | 429,198 | ||||
Total Assets | 541,360 | 522,560 | ||||
Current Liabilities | ||||||
Accounts payable and accrued liabilities | 43,403 | 33,179 | ||||
Related party payable | 594 | 1,609 | ||||
Accrued interest | 21 | 51 | ||||
Income taxes | 6,315 | |||||
Equipment loans | 2,584 | 5,534 | ||||
Unearned revenue | 1,714 | |||||
Total current liabilities | 46,602 | 48,402 | ||||
Non-Current Liabilities | ||||||
Equipment loans | 27 | 478 | ||||
Lease liability | 299 | |||||
Reclamation obligations | 15,257 | 14,706 | ||||
Total noncurrent liabilities | 15,583 | 15,184 | ||||
Owners' Capital | ||||||
Capital contributions | 540,638 | 540,638 | ||||
Paidin capital | 18,188 | 18,370 | ||||
Accumulated deficit | (79,651) | (100,034) | ||||
Total shareholders' equity | 479,175 | 458,974 | ||||
Total Liabilities and Shareholders' Equity | $ 541,360 | $ 522,560 |
Investment in Affiliate - Com_2
Investment in Affiliate - Combined Statement of income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Expenses | ||||||
Exploration | $ 694 | $ 110 | $ 918 | |||
General and administrative | $ 4,257 | 5,661 | 11,034 | 10,514 | ||
Total expenses | 4,301 | 6,362 | 11,232 | 11,446 | ||
Other (income) expense | ||||||
Other (income) expense | (1,110) | (1,562) | (2,256) | (2,325) | ||
Net income (loss) | (2,426) | $ 18,829 | 13,491 | $ (1,620) | 16,403 | 11,871 |
LGJV | ||||||
Investment in Affiliate | ||||||
Revenue | 57,196 | 75,005 | 144,804 | 121,335 | ||
Expenses | ||||||
Cost of sales | 27,837 | 24,096 | 52,925 | 43,901 | ||
Royalties | 918 | 1,415 | 2,412 | 2,299 | ||
Exploration | 2,233 | 1,261 | 4,354 | 1,910 | ||
General and administrative | 3,595 | 2,833 | 6,415 | 6,079 | ||
Depreciation, depletion and amortization | 16,055 | 12,705 | 32,397 | 23,654 | ||
Total expenses | 50,638 | 42,310 | 98,503 | 77,843 | ||
Other (income) expense | ||||||
Interest expense | 174 | 2,356 | 265 | 4,473 | ||
Arrangement fee | 2,090 | 2,090 | ||||
Accretion expense | 275 | 228 | 551 | 456 | ||
Other (income) expense | 11 | (1,339) | (19) | |||
Foreign exchange (gain) loss | 957 | (1,335) | 266 | 295 | ||
Total other (income) expense | 1,406 | 3,350 | (257) | 7,295 | ||
Income before income and mining taxes | 5,152 | 29,345 | 46,558 | 36,197 | ||
Income and mining tax expense | (1,688) | (6,174) | ||||
Net income (loss) | $ 3,464 | $ 29,345 | $ 40,384 | $ 36,197 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent events - USD ($) $ in Thousands | 1 Months Ended | ||
Dec. 19, 2022 | Nov. 30, 2022 | Jul. 31, 2022 | |
Subsequent Events | |||
Reestablishing credit limit value | $ 50,000 | ||
LGJV | |||
Subsequent Events | |||
Amount of dividend paid | $ 20,000 | $ 15,000 | |
Dividends received | 13,300 | 9,975 | |
Payments of dividend after withholding tax | $ 700 | $ 525 |