# EDGAR Filing Document

**Accession Number:** 0001517006
**File Stem:** 0001104659-23-038836
**Filing Date:** 2023-3
**Character Count:** 119857
**Document Hash:** 3124390d0de7491c737e32965dc38684
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-038836.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0001104659-23-038836

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 59

**CONFORMED PERIOD OF REPORT**: 20220630

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Gatos Silver, Inc.
- **CENTRAL INDEX KEY:** 0001517006
- **STANDARD INDUSTRIAL CLASSIFICATION:** GOLD & SILVER ORES [1040]
- **IRS NUMBER:** 272654848
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39649
- **FILM NUMBER:** 23777513

**BUSINESS ADDRESS:**
- **STREET 1:** 925 W GEORGIA STREET
- **STREET 2:** SUITE 910
- **CITY:** VANCOUVER
- **STATE:** A1
- **ZIP:** V6C 2G3
- **BUSINESS PHONE:** 720 726 9662

**MAIL ADDRESS:**
- **STREET 1:** 925 W GEORGIA STREET
- **STREET 2:** SUITE 910
- **CITY:** VANCOUVER
- **STATE:** A1
- **ZIP:** V6C 2G3

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Sunshine Silver Mining & Refining Corp
- **DATE OF NAME CHANGE:** 20190618

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SUNSHINE SILVER MINES Corp
- **DATE OF NAME CHANGE:** 20110330

?xml version='1.0' encoding='UTF-8'?

[**Table of Contents**](#TOC)

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 001-39649

![Graphic](gato-20220630x10q003.jpg)

**GATOS SILVER, INC.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **27-2654848** |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

---

**925 W Georgia Street, Suite 910**

**Vancouver, British Columbia, Canada V6C 3L2**

(Address of principal executive offices) (Zip Code)

**(604) 424-0984**

(Registrant's telephone number, including area code)

**N/A**

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, par value $0.001 per share | GATO | New York Stock Exchange |

---

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☑

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☑ | Smaller reporting company | ☑ |
|  |  | Emerging growth company | ☑ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The Company has 700,000,000 shares of common stock, par value $0.001, authorized of which 69,162,223 were issued and outstanding as of March 24, 2023.

------

[**Table of Contents**](#TOC)

#### **TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | Page |
|  | [Part I - FINANCIAL INFORMATION](#PARTIFINANCIALINFORMATION_559642) |  |
| [Item 1.](#Item1FinancialStatements_946342) | [Financial Statements (Unaudited)](#Item1FinancialStatements_946342) |  |
|  | [Condensed Consolidated Balance Sheets](#CONDENSEDCONSOLIDATEDBALANCESHEETSUNAUDI) | 3 |
|  | [Condensed Consolidated Statements of Operations](#CONDENSEDCONSOLIDATEDSTATEMENTSOFOPERATI) | 4 |
|  | [Condensed Consolidated Statements of Shareholders' Equity (Deficit)](#CONDENSEDCONSOLIDATEDSTATEMENTSOFSHAREHO) | 5 |
|  | [Condensed Consolidated Statements of Cash Flows](#CONDENSEDCONSOLIDATEDSTATEMENTSOFCASHFLO) | 6 |
|  | [Notes to Condensed Consolidated Financial Statements](#NOTESTOTHECONDENSEDCONSOLIDATEDFINANCIAL) | 7 |
| [Item 2.](#Item2ManagementsDiscussionandAnalysisofF) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#Item2ManagementsDiscussionandAnalysisofF) | 17 |
| [Item 3.](#Item3QuantitativeandQualitativeDisclosur) | [Quantitative and Qualitative Disclosures about Market Risk](#Item3QuantitativeandQualitativeDisclosur) | 30 |
| [Item 4.](#Item4ControlsandProcedures_185188) | [Controls and Procedures](#Item4ControlsandProcedures_185188) | 30 |
|  | [Part II - OTHER INFORMATION](#PARTIIOTHERINFORMATION_413271) |  |
| [Item 1.](#Item1LegalProceedings_858676) | [Legal Proceedings](#Item1LegalProceedings_858676) | 31 |
| [Item 1A.](#Item1ARiskFactors_452210) | [Risk Factors](#Item1ARiskFactors_452210) | 31 |
| [Item 2.](#Item2UnregisteredSalesofEquitySecurities) | [Unregistered Sales of Equity Securities and Use of Proceeds](#Item2UnregisteredSalesofEquitySecurities) | 31 |
| [Item 3.](#Item3DefaultsUponSeniorSecurities_918440) | [Defaults Upon Senior Securities](#Item3DefaultsUponSeniorSecurities_918440) | 32 |
| [Item 4.](#Item4MineSafetyDisclosures_626374) | [Mine Safety Disclosures](#Item4MineSafetyDisclosures_626374) | 32 |
| [Item 5.](#Item5OtherInformation_413659) | [Other Information](#Item5OtherInformation_413659) | 32 |
| [Item 6.](#Item6Exhibits_872361) | [Exhibits](#Item6Exhibits_872361) | 32 |

---

[**Table of Contents**](#TOC)

#### PART I – FINANCIAL INFORMATION
**Item 1.** **Financial Statements**

#### GATOS SILVER, INC.

#### CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
**(In thousands of United States dollars, except for share and per share amounts)**

------

---

| | | | |
|:---|:---|:---|:---|
|  | <br>**Notes** | **June 30,** <br>**2022** | **December 31,** <br>**2021** |
| **ASSETS** |  |  |  |
| **Current Assets** |  |  |  |
| &nbsp;&nbsp;Cash and cash equivalents |  | $7277 | $6616 |
| &nbsp;&nbsp;Related party receivables | 5 | 576 | 1592 |
| &nbsp;&nbsp;Other current assets | 3 | 2222 | 3558 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets |  | 10075 | 11766 |
| **Non-Current Assets** |  |  |  |
| &nbsp;&nbsp;Investment in affiliates | 12 | 374627 | 355310 |
| &nbsp;&nbsp;Other non-current assets |  | 48 | 35 |
| **Total Assets** |  | $**384750** | $**367111** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |  |
| **Current Liabilities** |  |  |  |
| &nbsp;&nbsp;Accounts payable and other accrued liabilities | 4 | $1336 | $1406 |
| **Non-Current Liabilities** |  |  |  |
| &nbsp;&nbsp;Credit Facility, net of debt issuance costs | 10 | 12694 | 12620 |
| **Shareholders' Equity** |  |  |  |
| &nbsp;&nbsp;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 |
| &nbsp;&nbsp;Paid-in capital |  | 545061 | 543829 |
| &nbsp;&nbsp;Accumulated deficit |  | (174458) | (190861) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity |  | 370720 | 353085 |
| **Total Liabilities and Shareholders' Equity** |  | $**384750** | $**367111** |

---

See accompanying notes to the condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### GATOS SILVER, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
**(In thousands of United States dollars, except for share and per share amounts)**

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | **Three Months Ended**  | **Three Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | <br>**Notes** | **2022** | **2021** | **2022** | **2021** |
| **Expenses** |  |  |  |  |  |
| &nbsp;&nbsp;Exploration |  | $— | $694 | $110  | $918 |
| &nbsp;&nbsp;General and administrative |  | 4257  | 5661 | 11034  | 10514 |
| &nbsp;&nbsp;Amortization |  | 44  | 7 | 88  | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses |  | 4301  | 6362 | 11232  | 11446 |
| **Other income** |  |  |  |  |  |
| &nbsp;&nbsp;Equity income in affiliates | 12 | 765  | 18291 | 25379  | 20992 |
| &nbsp;&nbsp;Other income | 5 | 1110  | 1562 | 2256  | 2325 |
| &nbsp;&nbsp;Net other income |  | 1875  | 19853 | 27635  | 23317 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) |  | $(2426) | $13491 | $16403 | $11871 |
| Net income (loss) per share: | 7 |  |  |  |  |
| &nbsp;&nbsp;Basic |  | $(0.04) | $0.23  | $0.24  | $0.20  |
| &nbsp;&nbsp;Diluted |  | $(0.04) | $0.22  | $0.24  | $0.20  |
| Weighted average shares outstanding: |  |  |  |  |  |
| &nbsp;&nbsp;Basic |  | 69162223  | 59534627 | 69162223  | 59427320 |
| &nbsp;&nbsp;Diluted |  | 69162223  | 60623496 | 69309019  | 60420811 |

---

See accompanying notes to the condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### GATOS SILVER, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
**(In thousands of United States dollars, except for share amounts)**

------

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number** | **Number** | **Amount** | **Amount** | | | |
|  | **Common** <br>**Stock** | **Treasury** <br>**Stock** | **Common** <br>**Stock** | **Treasury** <br>**Stock** | <br>**Paid-in**<br>**Capital** | <br>**Accumulated** <br>**Deficit** | **&nbsp;&nbsp;&nbsp;&nbsp;**<br>**Total** |
| Balance at December 31, 2021 | 69162223 |  | $117 | $— | $543829 | $(190861) | $353085 |
| Stock-based compensation |  |  |  |  | 1482 |  | 1482 |
| Net income |  |  |  |  |  | 18829 | 18829 |
| Balance at March 31, 2022 | 69162223 |  | $117 | $— | $545311 | $(172032) | $373396 |
| Stock-based compensation |  |  |  |  | (250) |  | (250) |
| Net loss |  |  |  |  |  | (2426) | (2426) |
| Balance at June 30, 2022 | 69162223 |  | $117 | $— | $545061 | $(174458) | $370720 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number** | **Number** | **Amount** | **Amount** | | | |
|  | **Common**<br>**Stock** | **Treasury**<br>**Stock** | **Common**<br>**Stock** | **Treasury**<br>**Stock** | <br>**Paid-in**<br>**Capital** | <br>**Accumulated**<br>**Deficit** | <br>**Total** |
| Balance at December 31, 2020 | 59183076 | 144589 | $108 | $(1027) | $409728 | $(147423) | $261386 |
| Stock-based compensation |  |  |  |  | 1078 |  | 1078 |
| Issuance of common stock | 182453 |  |  |  | 1559 |  | 1559 |
| DSUs converted to common stock | 43523 |  |  |  |  |  |  |
| Other |  |  |  |  | (262) |  | (262) |
| Net loss |  |  |  |  |  | (1620) | (1620) |
| Balance at March 31, 2021 | 59409052 | 144589 | $108 | $(1027) | $412103 | $(149043) | $262141 |
| Stock-based compensation |  |  |  |  | 2490 |  | 2490 |
| Issuance of common stock | 331497 |  |  |  | 2662 |  | 2662 |
| DSUs converted to common stock | 33652 |  |  |  |  |  |  |
| Other |  |  |  |  | (7) |  | (7) |
| Net income |  |  |  |  |  | 13491 | 13491 |
| Balance at June 30, 2021 | 59774201 | 144589 | $108 | $(1027) | $417248 | $(135552) | $280777 |

---

See accompanying notes to the condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### GATOS SILVER, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
**(In thousands of United States dollars)**

------

---

| | | | |
|:---|:---|:---|:---|
|  | | **Six Months Ended**  | **Six Months Ended**  |
|  | | **June 30,**  | **June 30,**  |
|  | <br>**Notes** | **2022** | **2021** |
| **OPERATING ACTIVITIES** |  |  |  |
| Net income |  | $16403 | $11871 |
| **Adjustments to reconcile net income to net cash used by operating activities:** |  |  |  |
| &nbsp;&nbsp;Amortization |  | 88 | 14 |
| &nbsp;&nbsp;Stock-based compensation expense | 6 | 1360 | 3426 |
| &nbsp;&nbsp;Other | 6 | 127 | 44 |
| &nbsp;&nbsp;Equity income in affiliates | 12 | (25379) | (20992) |
| Dividends from affiliates, net of withholding taxes | 12 | 13300 |  |
| **Changes in operating assets and liabilities:** |  |  |  |
| &nbsp;&nbsp;Receivables from related-parties |  | 1016 | (3375) |
| &nbsp;&nbsp;Accounts payable and other accrued liabilities |  | (198) | (572) |
| &nbsp;&nbsp;Other current assets |  | 1336 | 1689 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used by) operating activities |  | 8053 | (7895) |
| **INVESTING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;Purchase of property, plant and equipment |  | (27) |  |
| &nbsp;&nbsp;Investment in affiliates | 12 | (7365) | (116595) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash used by investing activities |  | (7392) | (116595) |
| **FINANCING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;Financing costs |  |  | (269) |
| &nbsp;&nbsp;Issuance of common stock |  |  | 4221 |
| &nbsp;&nbsp;Other |  |  | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities |  |  | 3951 |
| Net increase (decrease) in cash and cash equivalents |  | 661 | (120539) |
| Cash and cash equivalents, beginning of period |  | 6616 | 150146 |
| Cash and cash equivalents, end of period |  | 7277 | 29607 |
| Interest paid |  | $227 | $— |
| Supplemental disclosure of noncash transactions: |  |  |  |
| &nbsp;&nbsp;Deferred financing costs included in accounts payable and accrued liabilities |  | $— | $284 |

---

See accompanying notes to the condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### GATOS SILVER, INC.

#### NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
**(In thousands of United States dollars, except share, per share, option, and stock unit amounts)**

------

**1.** &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **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 consolidated financial statements are unaudited, but include all adjustments, consisting of normal recurring entries, which are necessary for a fair presentation for the dates and periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information. Accordingly, they do not include all financial information and disclosures required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 10- K").

**2.** &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **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.

3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Current Assets

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2022** | **December 31,** <br>**2021** |
| Value added tax receivable | $655  | $575 |
| Prepaid expenses | 1347  | 2976 |
| Other | 220  | 7 |
| &nbsp;&nbsp;Total other current assets | $2222  | $3558 |

---

4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts Payable and Other Accrued Liabilities

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2022** | **December 31,** <br>**2021** |
| Accounts payable | $198  | $196 |
| Accrued expenses | 618  | 623 |
| Accrued compensation | 520  | 587 |
| &nbsp;&nbsp;Total accounts payable and other current liabilities | $1336  | $1406 |

---

[**Table of Contents**](#TOC)

5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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.

6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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**  | **Three Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2022** | **2021** | **2022** | **2021** |
| Stock Options | $(194) | $2287 | $1254 | $3426 |
| Performance share units | (34) |  | 106 |  |
|  | $(228) | $2287 | $1360 | $3426 |

---

*Stock Option Transactions*

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.

[**Table of Contents**](#TOC)

Stock option activity for the six months ended June 30, 2022, is summarized in the following tables:

---

| | | |
|:---|:---|:---|
| <br>**Employee & Director Options** | <br>**Shares** | **Weighted-**<br>**Average**<br>**Exercise Price** |
| Outstanding at December 31, 2021 | 5873968 | $13.11 |
| Granted | 100000  | $10.28  |
| Forfeited | (3574391) | $13.50  |
| Outstanding at June 30, 2022 | 2399577  | $12.41  |
| Vested at June 30, 2022 | 1608536  | $12.75  |

---

---

| | | |
|:---|:---|:---|
| <br>**LGJV Personnel Options** | <br>**Shares** | **Weighted-**<br>**Average**<br>**Exercise Price** |
| Outstanding at December 31, 2021 | 32393 | $7.31 |
| Outstanding and vested at June 30, 2022 | 32393 | $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:

---

| | | |
|:---|:---|:---|
| <br>**Employee and Director DSUs** | <br>**Shares** | **Weighted-Average**<br>**Grant Date Fair**<br>**Value** |
| Outstanding at December 31, 2021 | 146796 | $10.88 |
| Outstanding at June 30, 2022 | 146796 | $10.88 |

---

7. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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.

[**Table of Contents**](#TOC)

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**  | **Three Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2022** | **2021** | **2022** | **2021** |
| Net income | $(2426) | $13491 | $16403 | $11871 |
| Weighted average shares: |  |  |  |  |
| &nbsp;&nbsp;Basic | 69162223 | 59534627 | 69162223 | 59427320 |
| &nbsp;&nbsp;Effect of dilutive stock options |  | 876448 |  | 809749 |
| &nbsp;&nbsp;Effect of dilutive DSUs |  | 212421 | 146796 | 183742 |
| &nbsp;&nbsp;Diluted | 69162223 | 60623496 | 69309019 | 60420811 |
| Net income per share: |  |  |  |  |
| &nbsp;&nbsp;Basic | (0.04) | 0.23 | 0.24 | 0.20 |
| &nbsp;&nbsp;Diluted | (0.04) | 0.22 | 0.24 | 0.20 |

---

8. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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:** 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 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.

**9.** &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **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.

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***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.**

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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.

**10.**Debt

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

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● 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.

11. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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, 2022** | **Three Months Ended June 30, 2022** | **Three Months Ended June 30, 2021** | **Three Months Ended June 30, 2021** | **Three Months Ended June 30, 2021** |
|  | **Mexico** | **Corporate** | **Total** | **Mexico** | **Corporate** | **Total** |
| Exploration | $— | $— | $— | $694  | $— | $694  |
| General and administrative | 780  | 3477  | 4257  | 178  | 5483  | 5661  |
| Amortization | 1 | 43  | 44  |  | 7  | 7  |
| Equity (income) in affiliates | (765) |  | (765) | (18291) |  | (18291) |
| Net other (income) expense | 12  | (1122) | (1110) | 5  | (1567) | (1562) |
| Total assets | $100750  | $284000  | $384750  | $59679  | $224879  | $284558  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30, 2022** | **Six Months Ended June 30, 2022** | **Six Months Ended June 30, 2022** | **Six Months Ended June 30, 2021** | **Six Months Ended June 30, 2021** | **Six Months Ended June 30, 2021** |
|  | **Mexico** | **Corporate** | **Total** | **Mexico** | **Corporate** | **Total** |
| Exploration | $110  | $— | $110  | $918  | $— | $918  |
| General and administrative | 1389  | 9645  | 11034  | 332  | 10182  | 10514  |
| Amortization | 1 | 87  | 88  |  | 14  | 14  |
| Equity (income) in affiliates | (25379) |  | (25379) | (20992) |  | (20992) |
| Net other (income) expense | 14  | (2270) | (2256) | 19  | (2344) | (2325) |
| Total assets | $100750  | $284000  | $384750  | $59679  | $224879  | $284558  |

---

12. &nbsp;&nbsp;&nbsp;&nbsp; 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

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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:

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#### LOS GATOS JOINT VENTURE

#### COMBINED BALANCE SHEETS (UNAUDITED)
***(in thousands)***

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2022** | **December 31,** <br>**2021** |
| **ASSETS** |  |  |
| **Current Assets** |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $40324  | $20280 |
| &nbsp;&nbsp;Receivables | 9297  | 11263 |
| &nbsp;&nbsp;Inventories | 11493  | 11062 |
| &nbsp;&nbsp;VAT receivable | 25384  | 46242 |
| &nbsp;&nbsp;Other current assets | 14038  | 4515 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 100536  | 93362 |
| **Non-Current Assets** |  |  |
| &nbsp;&nbsp;Mine development, net | 232754  | 229076 |
| &nbsp;&nbsp;Property, plant and equipment, net | 191960  | 190896 |
| &nbsp;&nbsp;Net deferred tax assets | 16110  | 9226 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-current assets | 440824  | 429198 |
| **Total Assets** | $**541360**  | $**522560** |
| **LIABILITIES AND OWNERS' CAPITAL** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | $43403  | $33179 |
| &nbsp;&nbsp;Related party payable | 594  | 1609 |
| &nbsp;&nbsp;Accrued interest | 21  | 51 |
| &nbsp;&nbsp;Income taxes |  | 6315 |
| &nbsp;&nbsp;Equipment loans | 2584 | 5534 |
| &nbsp;&nbsp;Unearned Revenue |  | 1714 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 46602  | 48402 |
| **Non-Current Liabilities** |  |  |
| &nbsp;&nbsp;Equipment loans | 27  | 478 |
| &nbsp;&nbsp;Lease liability | 299 |  |
| &nbsp;&nbsp;Reclamation obligations | 15257  | 14706 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-current liabilities | 15583  | 15184 |
| **Owners' Capital** |  |  |
| &nbsp;&nbsp;Capital contributions | 540638  | 540638 |
| &nbsp;&nbsp;Paid-in capital | 18188  | 18370 |
| &nbsp;&nbsp;Accumulated deficit | (79651) | (100034) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total owners' capital | 479175  | 458974 |
| **Total Liabilities and Owners' Capital** | $**541360**  | $**522560** |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2022** | **2021** | **2022** | **2021** |
| **Revenue** | $57196  | $75005 | $144804  | $121335 |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;Cost of sales | 27837  | 24096 | 52925  | 43901 |
| &nbsp;&nbsp;Royalties | 918  | 1415 | 2412  | 2299 |
| &nbsp;&nbsp;Exploration | 2233  | 1261 | 4354  | 1910 |
| &nbsp;&nbsp;General and administrative | 3595  | 2833 | 6415  | 6079 |
| &nbsp;&nbsp;Depreciation, depletion and amortization | 16055 | 12705 | 32397  | 23654 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 50638 | 42310 | 98503 | 77843 |
| **Other (income) expense** |  |  |  |  |
| &nbsp;&nbsp;Interest expense | 174  | 2356 | 265  | 4473 |
| &nbsp;&nbsp;Arrangement fee |  | 2090 |  | 2090 |
| &nbsp;&nbsp;Accretion expense | 275  | 228 | 551  | 456 |
| &nbsp;&nbsp;Other (income) expense |  | 11 | (1339) | (19) |
| &nbsp;&nbsp;Foreign exchange (gain) loss  | 957  | (1335) | 266  | 295 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other (income) expense | 1406  | 3350 | (257) | 7295 |
| **Income before income and mining taxes** | 5152  | 29345 | 46558  | 36197 |
| **Income and mining tax expense** | (1688) |  | (6174) |  |
| **Net income** | $3464  | $29345 | $40384  | $36197 |

---

13. &nbsp;&nbsp;&nbsp;&nbsp; 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.

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#### Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
*The following discussion provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of the Company and should be read in conjunction with the Company's consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report on Form 10-Q (the "Report") and the Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021 and the related "Management's Discussion and Analysis of Financial Condition and Results of Operations," both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 10-K"), filed with the Securities and Exchange Commission ("SEC") on March 20, 2023.*

#### Forward-Looking Statements
This Report contains statements that constitute "forward looking information" and "forward-looking statements" within the meaning of U.S. and Canadian securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by words such as "may," "might," "could," "would," "achieve," "budget," "scheduled," "forecasts," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements may include, but are not limited to, the following:

● estimates of future mineral production and sales;

● estimates of future production costs, other expenses and taxes for specific operations and on a consolidated basis;

● estimates of future cash flows and the sensitivity of cash flows to gold, copper, silver, lead, zinc and other metal prices;

● estimates of future capital expenditures, construction, production or closure activities and other cash needs, for specific operations and on a consolidated basis, and expectations as to the funding or timing thereof;

● estimates as to the projected development of certain ore deposits, including the timing of such development, the costs of such development and other capital costs, financing plans for these deposits and expected production commencement dates;

● estimates of mineral reserves and mineral resources statements regarding future exploration results and mineral reserve and mineral resource replacement and the sensitivity of mineral reserves to metal price changes;

● statements regarding the availability of, and terms and costs related to, future borrowing or financing and expectations regarding future debt repayments;

● statements regarding future dividends and returns to shareholders;

● estimates regarding future exploration expenditures, programs and discoveries;

● statements regarding fluctuations in financial and currency markets;

● estimates regarding potential cost savings, productivity, operating performance and ownership and cost structures;

● expectations regarding statements regarding future transactions, including, without limitation, statements related to future acquisitions and projected benefits, synergies and costs associated with acquisitions and related matters;

● expectations of future equity and enterprise value;

● expectations regarding the start-up time, design, mine life, production and costs applicable to sales and exploration potential of our projects;

● statements regarding future hedge and derivative positions or modifications thereto;

● statements regarding local, community, political, economic or governmental conditions and environments;

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● statements regarding the outcome of any legal, regulatory or judicial proceeding;

● statements and expectations regarding the impacts of COVID-19 and variants thereof and other health and safety conditions;

● statements regarding the impacts of changes in the legal and regulatory environment in which we operate, including, without limitation, relating to regional, national, domestic and foreign laws;

● statements regarding climate strategy and expectations regarding greenhouse gas emission targets and related operating costs and capital expenditures;

● statements regarding expected changes in the tax regimes in which we operate, including, without limitation, estimates of future tax rates and estimates of the impacts to income tax expense, valuation of deferred tax assets and liabilities, and other financial impacts;

● estimates of income taxes and expectations relating to tax contingencies or tax audits;

● estimates of future costs, accruals for reclamation costs and other liabilities for certain environmental matters, including without limitation, in connection with water treatment and tailings management;

● statements relating to potential impairments, revisions or write-offs, including without limitation, the result of fluctuation in metal prices, unexpected production or capital costs, or unrealized mineral reserve potential;

● estimates of pension and other post-retirement costs;

● statements regarding estimates of timing of adoption of recent accounting pronouncements and expectations regarding future impacts to the financial statements resulting from accounting pronouncements;

● estimates of future cost reductions, synergies, savings and efficiencies in connection with full potential programs and initiatives; and

● expectations regarding future exploration and the development, growth and potential of operations, projects and investments, including in respect of the CLG and the LGD.

Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements.

All forward-looking statements speak only as of the date on which they are made. These statements are not a guarantee of future performance and involve certain risks, uncertainties and assumptions concerning future events that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. Such factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in this Report and those described from time to time in our filings with the U.S. Securities and Exchange Commission ("SEC"), including, but not limited to, our 2021 10-K. These risks and uncertainties, as well as other risks of which we are not aware or which we currently do not believe to be material, may cause our actual future results to be materially different than those expressed in our forward-looking statements. Undue reliance should not be placed on these forward-looking statements. We do not undertake any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events, except as required by law. Certain forward-looking statements are based on assumptions, qualifications and procedures which are set out only in the Los Gatos Technical Report. For a complete description of assumptions, qualifications and procedures associated with such information, reference should be made to the full text of the Los Gatos Technical Report.

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#### Overview
We are a Canadian headquartered, Delaware incorporated precious metals exploration, development and production company with the objective of becoming a leading silver producer. Our primary efforts are focused on the operation of the LGJV in Chihuahua, Mexico. The LGJV was formed on January 1, 2015 when we entered into the Unanimous Omnibus Partner Agreement with Dowa to further explore, and potentially develop and operate mining properties within the LGD. The LGJV Entities own certain surface and mineral rights associated with the LGD. The LGJV ownership is currently 70% Gatos Silver and 30% Dowa. On September 1, 2019, the LGJV commenced commercial production at CLG, which produces a silver containing lead concentrate and zinc concentrate. We are currently focused on the production and continued development of the CLG and the further exploration and development of the LGD.

**Second Quarter and First Half 2022 Highlights**

***Gatos Silver***

*Second Quarter and First Half 2022*

● The Company recorded a net loss of $2.4 million for the three months ended June 30, 2022, compared to $13.5 million of net income in the same period of the prior year as a result of lower equity income from affiliates earned during the second quarter of 2022;

● The Company recorded net income of $16.4 million for the six months ended June 30, 2022 compared to a net income of $11.9 million for the six months ended June 30, 2021 primarily due to $4.5 million increase in equity income from the LGJV; and

● The cash balance at June 30, 2022 was $7.3 million compared to $6.6 million at December 31, 2021, and access to the Credit Facility was maintained albeit at a reduced level. On December 19, 2022, the Credit Facility was extended and the full $50 million availability under the Credit Facility has been restored of which $9 million is currently drawn.

***LGJV***

*Operational highlights*

*Second Quarter 2022*

● Silver production was 2.3 million ounces for the three months ended June 30, 2022, an 8% increase over the 2.1 million ounces of silver produced for the three months ended June 30, 2021 primarily as a result of higher ore grades. The majority of production for the quarter was sourced from the Central Zone with the remainder from the Northwest Zone and the initial development into the Southeast Upper Zone;

● The processing plant processed 211,350 tonnes, a decrease of 8% compared to the second quarter of 2021, as a result of a temporary blasting suspension in the mine that impacted ore production for over two weeks starting in late April. Milling operations were suspended for 11 operating days due to the blasting suspension. The mill averaged 2,323 tonnes per day during the quarter. Excluding the suspension time, the mill averaged 2,642 tonnes per day during the quarter;

● Metal recoveries exceeded design rates for payable metals with silver recovery averaging 90.4%, zinc recovery averaging 66.4% and lead recovery averaging 90.5%; and

● Construction progress on key infrastructure projects continued, including the installation of underground dewatering equipment, the paste plant and a tailings dam raise. These projects are expected to support increased productivity and to help reduce unit operating costs. The tailings dam raise and the paste plant were subsequently completed in the fourth quarter of 2022.

*First Half 2022*

● CLG achieved record production of 4.7 million ounces of silver, 22.0 million pounds of lead and 29.3 million pounds of zinc for the six months ended June 30, 2022;

[**Table of Contents**](#TOC)

● The processing plant processed 446,335 tonnes, an increase of 2% compared to the first half of 2021, as a result of a increased throughput rates partially offset by the temporary blasting suspension in the mine that impacted ore production for over two weeks starting in late April; and

● Metal recoveries exceeded design rates for payable metals with silver recovery averaging 90.1%, zinc recovery averaging 65.4% and lead recovery averaging 89.9%.

*Financial highlights*

*Second Quarter 2022*

● Revenue of $57.2 million decreased 24% for the three months ended June 30, 2022 compared to the same period in 2021, primarily due to the mark-to-market adjustment of provisional revenue as a result of the decrease in commodity prices during the second quarter of 2022;

● Cost of sales totaled $27.8 million for the three months ended June 30, 2022, 16% higher compared to the same period in 2021, primarily as a result of increased operational costs primarily as a result of increased production, and increased equipment maintenance costs, cost of materials & supplies and higher power cost. Compared to the three months ended June 30, 2021, co-product cash cost per ounce of payable silver equivalent and by-product cash cost per ounce of payable silver decreased by 19% and 103% respectively, to $9.36 and ($0.10), respectively, for the three months ended June 30, 2022;

● Compared to the three months ended June 30, 2021, co-product all-in sustaining cost per ounce of payable silver equivalent and by-product all-in sustaining cost per ounce of payable silver decreased by 15% and 18% respectively, to $14.94 and $10.41, respectively, for the three months ended June 30, 2022;

● LGJV net income totaled $3.5 million the three months ended June 30, 2022 compared to $29.3 million in the same period in 2021. The 88% decrease in net income is primarily due to mark-to-market provisional revenue adjustments and higher costs of sales and depreciation, depletion and amortization incurred for the three months ended June 30, 2022; and

● The LGJV declared and paid its first dividend of $20 million in April 2022. This dividend paid the initial priority dividend due to Dowa. The dividend was paid to each partner on a pro rata basis net of withholding taxes.

*First Half 2022*

● Revenue of $144.8 million increased 19% for the six months ended June 30, 2022 compared to the same period in 2021 primarily due the increase in metal grades and higher realized metal prices;

● Cost of sales totaled $52.9 million for the six months ended June 30, 2022, 21% higher compared to the same period in 2021, primarily due to increased production and sales volumes. Co-product cash cost per ounce of payable silver equivalent and by-product cash cost per ounce of payable silver decreased by 27% and 97% respectively, to $9.54 and $0.16, respectively, for the six months ended June 30, 2022;

● Co-product all-in sustaining cost per ounce of payable silver equivalent and by-product all-in sustaining cost per ounce of payable silver decreased by 23% and 41% respectively, to $14.86 and $9.41, respectively, for the six months ended June 30, 2022; and

● LGJV net income totaled $40.4 million the six months ended June 30, 2022 compared to $36.2 million in the same period in 2021.

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#### Results of Operations
***Results of operations Gatos Silver***

The following table presents certain selected financial information for the three and six months ended June 30, 2022 and 2021. In accordance with generally accepted accounting principles in the United States (''U.S. GAAP''), these financial results represent the consolidated results of operations of our Company and its subsidiaries (in thousands).

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2022** | **2021** | **2022** | **2021** |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;Exploration | $— | $694 | $110 | $918 |
| &nbsp;&nbsp;General and administrative | 4257 | 5661 | 11034 | 10514 |
| &nbsp;&nbsp;Amortization | 44 | 7 | 88 | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 4301 | 6362 | 11232 | 11446 |
| **Other income** |  |  |  |  |
| &nbsp;&nbsp;Equity income in affiliates | 765 | 18291 | 25379 | 20992 |
| &nbsp;&nbsp;Other income | 1110 | 1562 | 2256 | 2325 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net other income | 1875 | 19853 | 27635 | 23317 |
| Net income (loss) | $(2426) | $13491 | $16403 | $11871 |
| Net income (loss) per share: |  |  |  |  |
| &nbsp;&nbsp;Basic | $(0.04) | $0.23 | $0.24 | $0.20 |
| &nbsp;&nbsp;Diluted | $(0.04) | $0.22 | $0.24 | $0.20 |

---

***Gatos Silver***

***Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021***

*Exploration expenses*

During 2022, our exploration activities were focused on the LGJV and no exploration costs were incurred for our wholly owned properties outside of the first quarter of 2022.

*General and administrative expenses*

During the three months ended June 30, 2022, we incurred general and administration expense of $4.3 million compared to $5.7 million for the three months ended June 30, 2021. The $1.4 million decrease is primarily due to lower share-based compensation expense.

*Equity income in affiliates* 

The decrease in equity income resulted primarily from the LGJV recording lower net income of $3.5 million for the three months ended June 30, 2022 compared to $29.3 million for the three months ended June 30, 2021. The decrease in net income at the LGJV was primarily due to mark-to-market provisional revenue adjustments and also higher costs of sales and depreciation, depletion and amortization incurred for the three months ended June 30, 2022.

*Other Income* 

Other income for the three months ended June 30, 2022 and 2021 consist primarily of management fees the Company received of $1.3 million for the three months ended June 30, 2022 and 2021 from the LGJV.

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*Net income (loss)*

For the quarter ended June 30, 2022, we recorded a net loss of $2.4 million, or $0.04 per diluted share, compared to a net income of $13.5 million, or $0.22 per diluted share, for the quarter ended June 30, 2021, mainly due to the decrease in equity income in affiliates as described above.

***Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021***

*Exploration expenses*

During 2022, our exploration activities were focused on the LGJV and no exploration costs were incurred for our wholly owned properties outside of the first quarter of 2022.

*General and administrative expenses*

During the six months ended June 30, 2022, we incurred general and administration expenses of $11.0 million, compared to $10.5 million for the six months ended June 30, 2021 primarily due to higher legal fees attributable to legal consultation regarding the mineral resource and mineral reserve errors in the July 2020 technical report for CLG.

*Equity income in affiliates*

The increase in equity income resulted primarily from the LGJV recording net income of $40.4 million for the six months ended June 30, 2022 compared to $36.2 million for the six months ended June 30, 2021. The increase in net income at the LGJV was primarily due to the increase in concentrate sold, higher grade and higher realized metals prices for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

*Other Income*

Other income for the six months ended June 30, 2022 and 2021 consists primarily of management fees the Company received of $2.5 million in the first half of 2022 and 2021 from the LGJV.

*Net income*

For the six months ended June 30, 2022, we recorded net income of $16.4 million, or $0.24 per diluted share, compared to net income of $11.9 million, or $0.20 per diluted share, for the six months ended June 30, 2021, mainly due to the increase in equity income in affiliates as described above.

***Results of operations LGJV***

The following table presents operational information of the LGJV for the three and six months ended June 30, 2022 and 2021 and select financial information of the LGJV for the three and six months ended June 30, 2022 and 2021. The financial and operational information of the LGJV and CLG is shown on a 100% basis.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| <br>**Financial** | **2022** | **2021** | **2022** | **2021** |
| *Amounts in thousands* |  |  |  |  |
| Revenue | $57196 | $75005 | $144804 | $121335 |
| &nbsp;&nbsp;Cost of sales | 27837 | 24096 | 52925 | 43901 |
| &nbsp;&nbsp;Royalties | 918 | 1415 | 2412 | 2299 |
| &nbsp;&nbsp;Exploration | 2223 | 1261 | 4354 | 1910 |
| &nbsp;&nbsp;General and administrative | 3595 | 2833 | 6415 | 6079 |
| &nbsp;&nbsp;Depreciation, depletion and amortization | 16055 | 12705 | 32397 | 23654 |
| Other (income) expense | 1406 | 3350 | (257) | 7295 |
| Income and mining tax expense | (1688) |  | (6174) |  |
| Net income  | 3464 | 29345 | 40384 | 36197 |
| Sustaining capital  | $22177 | $18431 | $39950 | $30647 |

---

[**Table of Contents**](#TOC)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| <br>**Operating Results** | **2022** | **2021** | **2022** | **2021** |
| Tonnes milled (dmt) | 211350 | 230656 | 446335 | 435821 |
| Tonnes milled per day (dmt) | 2323 | 2535 | 2466 | 2408 |
| Average Grades |  |  |  |  |
| &nbsp;&nbsp;Silver (g/t) | 374 | 322 | 363 | 296 |
| &nbsp;&nbsp;Zinc (%) | 5.03 | 4.41 | 4.56 | 3.87 |
| &nbsp;&nbsp;Lead (%) | 2.79 | 2.51 | 2.49 | 2.28 |
| &nbsp;&nbsp;Gold (g/t) | 0.38 | 0.35 | 0.34 | 0.33 |
| Contained Metal |  |  |  |  |
| &nbsp;&nbsp;Silver ounces (millions) | 2.30 | 2.1 | 4.7 | 3.6 |
| &nbsp;&nbsp;Zinc pounds - in zinc conc. (millions) | 15.6 | 14.5 | 29.3 | 23.2 |
| &nbsp;&nbsp;Lead pounds - in lead conc. (millions) | 11.8 | 11.2 | 22.0 | 18.9 |
| &nbsp;&nbsp;Gold ounces - in lead conc. (thousands) | 1.3 | 1.5 | 2.6 | 2.6 |
| Recoveries<sup>1</sup> |  |  |  |  |
| &nbsp;&nbsp;Silver – in both lead and zinc concentrates | 90.4% | 88.6% | 90.1% | 87.3% |
| &nbsp;&nbsp;Zinc - in zinc concentrate | 66.4% | 64.4% | 65.4% | 62.4% |
| &nbsp;&nbsp;Lead - in lead concentrate | 90.5% | 87.6% | 89.9% | 86.3% |
| &nbsp;&nbsp;Gold - in lead concentrate | 48.9% | 57.5% | 52.7% | 56.1% |
| Average realized price per silver ounce<sup>2</sup> | $20.05 | $26.18 | $22.26 | $25.40 |
| Average realized price per zinc pound<sup>2</sup> | $1.51 | $1.33 | $1.57 | $1.22 |
| Average realized price per lead pound<sup>2</sup> | $0.97 | $1.00 | $1.01 | $0.96 |
| Average realized price per gold ounce<sup>2</sup> | $1862 | $1830 | $1856 | $1819 |
| Co-product cash cost per ounce of payable silver equivalent<sup>3</sup> | $9.36 | $11.50 | $9.54 | $13.15 |
| By-product cash cost per ounce of payable silver<sup>3</sup> | $(0.10) | $2.87 | $0.16 | $6.31 |
| Co-product AISC per ounce of payable silver equivalent<sup>3</sup> | $14.93 | $17.65 | $14.87 | $19.35 |
| By-product AISC per ounce of payable silver<sup>3</sup> | $10.41 | $12.63 | $9.41 | $15.96 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Recoveries are reported for payable metals in the identified concentrate. Recoveries reported previously were based on total metal in both concentrates.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Realized prices include the impact of final settlement adjustments from sales.

&nbsp;&nbsp;&nbsp;&nbsp;(3) See "Non-GAAP Financial Measures" below.

***LGJV***

***Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021***

*Revenue*

The LGJV's concentrate sales for the three months ended June 30, 2022 and 2021 are summarized below:

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| | | |
|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
|  | **2022** | **2021** |
| Lead concentrate revenue | $51005 | $59378 |
| Zinc concentrate revenue | 28750 | 20476 |
| Treatment and refining charges | (4880) | (4473) |
| Subtotal | 74875 | 75381 |
| Provisional revenue adjustments | (17679) | (376) |
| Total Revenue | $57196 | $75005 |

---

Revenue decreased by 24% for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The decrease in revenue is primarily due to provisional revenue reductions and decreased realized silver prices, partially offset by slightly higher concentrate production.

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Lead revenue decreased by 14% for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to a 23% decrease in the realized silver price and 3% decrease in the realized lead prices partially offset by an 8% increase in lead concentrate production and higher silver and lead ore grades.

Zinc revenue increased by 40% for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to a 14% increase in the realized zinc price, a 7% increase in zinc concentrate production and higher silver and zinc ore grades, partially offset by a 23% decrease in the realized silver price.

Provisional revenue adjustments account for commodity price fluctuations in concentrate sales still subject to final settlement. Provisional revenue adjustments were lower period over period primarily due to decreases in actual and forward metals prices at the end of June 2022 as compared to the end of June 2021.

*Cost of sales*

Cost of sales increased by 16% primarily as a result of increased production, and increased equipment maintenance, materials & supplies and power costs. Co-product cash cost per ounce of payable silver equivalent and by-product cash cost per ounce of payable silver for the three months ended June 30, 2022 decreased by 19% and 103% respectively, to $9.36 and ($0.10), respectively, primarily due to higher metal production for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

*Royalties*

Royalty expense decreased by $0.5 million for the three months ended June 30, 2022 compared to the same period in 2021 due to lower revenue and the reduction of the royalty percentage for the three months ended June 30, 2022 based on the terms of the royalty agreement.

*General and administrative* 

General and administrative expense for the three months ended June 30, 2022 was $0.8 million higher as compared to the three months ended June 30, 2021 primarily due to inflation.

*Depreciation, depletion and amortization*

Depreciation, depletion, and amortization expense increased by approximately 26% quarter over quarter primarily as a result of an increase in tonnes mined and also due to the decrease in the mineral reserve and the shorter mine life based on the Los Gatos Technical Report dated November 10, 2022. The lower mineral reserve tonnes and shorter life-of-mine reduced the basis for the depreciation and as a result increased the depreciation, depletion, and amortization expense incurred for the three months ended June 30, 2022.

*Exploration*

Exploration expense for the three months ended June 30, 2022 was $0.9 million higher as compared to the three months ended June 30, 2021 primarily as a result of increased surface drilling around CLG, Esther and greenfield exploration targets. The dominant focus for drilling was at CLG aiming to convert Inferred Resources to Indicated and also to expand the Inferred Resource base, particularly in the South-East Deeps area.

*Other (income) expense*

Other (income) expense was lower primarily due to a 93% decrease in interest expense due to lower interest rates, lower borrowings and lower arrangement fees incurred during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 as a result of the retirement of the WCF and the Term Loan in March 2021 and July 2021, respectively.

*Income and mining tax expense*

Income and mining tax expense for the three months ended June 30, 2022 was $1.7 million higher as compared to the three months ended June 30, 2021 as a result of increased taxable income and less available losses carried forward.

[**Table of Contents**](#TOC)

*Net income* 

For the three months ended June 30, 2022, the LGJV had net income of $3.5 million compared to $29.3 million for the three months ended June 30, 2021. The change in net income was primarily due to the decrease in revenue driven by the mark-to-market adjustment of provisional revenue as a result of the decrease in commodity prices during the quarter, as well as an increase in cost of sales and depreciation depletion and amortization. In addition, interest expense decreased 93% due to lower borrowings and lower arrangement fees resulting from the retirement of the WCF and Term Loan.

*Sustaining capital*

For the three months ended June 30, 2022 sustaining capital expenditures primarily consisted of $7.3 million of mine development, $8.3 million on the construction of the paste-fill plant, $2.5 million on the construction of the raise of the tailings storage facility, $0.5 million on underground power distribution infrastructure and $0.8 million on the construction of a ventilation raise. During the three months ended June 30, 2021 major sustaining capital expenditures included $8.0 million of mine development, $2.4 million on the processing plant and tailings storage facility, $0.7 million for the construction of a ventilation raise, $0.8 million for the purchase of mining equipment, and $2.6 million on the construction of dewatering wells.

***Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021***

*Revenue*

The LGJV's concentrate sales for the six months ended June 30, 2022 and 2021, are summarized below, in thousands:

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| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2022** | **2021** |
| Lead concentrate revenue | $111087 | $100927 |
| Zinc concentrate revenue | 55978 | 32410 |
| Treatment and refining charges | (9844) | (11195) |
| Subtotal | 157221 | 122142 |
| Provisional revenue adjustments | (12417) | (807) |
| Total Revenue | $144804 | $121335 |

---

Revenue increased by 19% for the six months ended June 30 2022 compared to the six months ended June 30 2021, as a result of increased concentrate sales and realized lead and zinc prices in the first half of 2022 partially offset by provisional revenue reductions.

Lead concentrate revenue increased by 10% for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to an 17% increase in lead concentrate production, higher silver and lead ore grades and 5% increase in the realized lead prices, partially offset by an 12% decrease in the realized silver price.

Zinc concentrate revenue increased by 73% for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to a 29% increase in the realized zinc price and a 20% increase in zinc concentrate production, partially offset by a lower silver and zinc recoveries and a 12% decrease in the realized silver price.

Provisional revenue adjustments account for commodity price fluctuations in concentrate sales still subject to final settlement. Provisional revenue adjustments were lower period over period primarily due to decreases in actual and forward metals prices at the end of June 2022 as compared to the beginning of the period, compared to the end of June 2021.

*Cost of sales*

Cost of sales increased by 21% primarily as a result of increased production, increased equipment maintenance, materials & supplies and power costs during 2022. Co-product cash cost per ounce of payable silver equivalent and by-product cash cost per ounce of payable silver decreased by 27% and 97% respectively, to $9.54 and $0.16, respectively, for the six months ended June 30, 2022 primarily due to higher metal production.

[**Table of Contents**](#TOC)

*Royalties*

Royalty expense increased by $0.1 million for the six months ended June 30, 2022 due to higher revenue partially offset by the reduction of the royalty percentage for the six months ended June 30, 2022 based on the terms of the royalty agreement.

*General and administrative* 

General and administrative expense for the six months ended June 30, 2022 was 6% higher as compared to the six months ended June 30, 2021 primarily due to inflation.

*Depreciation, depletion and amortization*

Depreciation, depletion, and amortization expense increased by 37% for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily as a result of an increase in tonnes mined and also due to the decrease in the mineral reserve and the shorter mine life based on the Los Gatos Technical Report dated November 10, 2022. The lower mineral reserve tonnes and shorter life-of-mine reduced the basis for the depreciation and as a result increased the depreciation, depletion, and amortization expense for the six months ended June 30, 2022.

*Exploration*

Exploration expense for the six months ended June 30, 2022 was $2.5 million higher as compared to the six months ended June 30, 2021 primarily as a result of increased surface drilling around CLG, Esther and greenfield exploration targets. The dominant focus for drilling was at CLG aiming to convert Inferred Resources to Indicated and also to expand the Inferred Resource base, particularly in the South-East Deeps area.

*Other (income) expense*

Other (income) expense were lower primarily due to a 94% decrease in interest expense due to lower interest rates, lower borrowings and lower arrangement fees incurred during the six months ended June 30, 2022 compared to the six months ended June 30 2021 as a result of the retirement of the WCF and the Term Loan in March 2021 and July 2021, respectively.

*Income and mining tax expense*

Income and mining tax expense for the six months ended June 30, 2022 was $6.2 million higher as compared to the six months ended June 30, 2021 as a result of increased taxable income and less available losses carried forward.

*Net Income* 

For the six months ended June 30, 2022, the LGJV had net income of $40.4 million compared to $36.2 million for the six months ended June 30, 2021. The change in net income was primarily due to the increase in revenue driven by the strong improvement in production during 2022, partially offset by the mark-to-market adjustment of provisional revenue as a result of the decrease in commodity prices, an increase in cost of sales, royalties, exploration and depreciation depletion and amortization. In addition, interest expense decreased 94% due to lower borrowings and lower arrangement fees resulting from the retirement of the WCF and Term Loan.

*Sustaining capital*

During the six months ended June 30, 2022 sustaining capital expenditures primarily consisted of $14.5 million on mine development, $13.6 million on the construction of the paste-fill plant, $5.8 million on the construction of the raise of the tailings storage facility, $1.6 million on underground power distribution infrastructure and $1.5 million on the construction of a ventilation raise. During the six months ended June 30, 2021 major sustaining capital expenditures included $14.4 million on mine development, $4.4 million on the processing plant and tailings storage facility, $1.3 million for the construction of a ventilation raise, $2.0 million for the purchase of mining equipment and $3.4 million on the construction of dewatering wells.

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**Cash Flows**

***Gatos Silver***

The following table presents our cash flows for the six months ended June 30, 2022 and 2021.

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| | | |
|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| **Net cash provided by (used by)** |  |  |
| Operating activities | $8053 | $(7895) |
| Investing activities | (7392) | (116595) |
| Financing activities |  | 3951 |
| &nbsp;&nbsp;Total change in cash | $661 | $(120539) |
| Cash and cash equivalents, beginning of period | $6616 | $150146 |
| Cash and cash equivalents, end of period | $7277 | $29607 |

---

The cash balance at June 30, 2022 decreased to $7.3 million compared to $29.6 million at June 30, 2021.

*Six months ended June 30, 2022 compared to June 30, 2021*

Cash provided by (used by) operating activities was $8.1 million and ($7.9) million for the six months ended June 30, 2022 and 2021, respectively. The $16.0 million increase in cash was primarily due to receipt of a $13.3 million dividend from the LGJV and working capital changes from operations.

Cash used by investing activities was ($7.4) million and ($116.6) million for the six months ended June 30, 2022 and 2021, respectively. Cash used by investing activities for the six months ended June 30, 2022 was primarily due to the priority distribution payment made to Dowa. Cash used for the six months ended June 30, 2021, was primarily due to the $71.6 million acquisition of the 18.5% interest in the LGJV from Dowa and the $42.0 million pro-rata capital contribution to the LGJV for the extinguishment of the WCF in March 2021.

Cash provided by financing activities was nil and $4.0 million for the six months ended June 30, 2022 and 2021, respectively. Cash provided for the six months ended June 30, 2021, primarily related to the $4.2 million in proceeds from the issuance of common stock from the exercise of stock options.

***LGJV***

The following table presents summarized information relating to the LGJV's cash flows for the six months ended June 30, 2022 and 2021.

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| | | |
|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  |
|  | **2022** | **2021** |
| **Net cash provided by (used by)** |  |  |
| Operating activities | $80523 | $56225 |
| Investing activities | (38149) | (38613) |
| Financing activities | (22330) | (17046) |
| &nbsp;&nbsp;Total change in cash | $20044 | $566 |
| Cash and cash equivalents, beginning of period | $20280 | $1676 |
| Cash and cash equivalents, end of period | $40324 | $2242 |

---

The LGJV cash balance at June 30, 2022 was $40.3 million compared to $2.2 million at June 30, 2021.

*Six months ended June 30, 2022 compared to June 30, 2021*

Cash provided by operating activities was $80.5 million and $56.2 million for the six months ended June 30, 2022 and 2021, respectively. The $24.3 million increase in cash provided by operating activities was primarily due to the increase in revenue due to

[**Table of Contents**](#TOC)

higher metals prices and higher ore grades for the six months ended June 30, 2022, compared to the prior year period, partially offset by increased income taxes, receivables from customers and other favorable working capital changes.

Cash used by investing activities was $38.1 million and $38.6 million for the six months ended June 30, 2022 and 2021, respectively. The $0.5 million decrease in cash used was primarily due to $5.6 million of lower mine development expenditures largely related to ventilation and pumping wells, partially offset by $5.0 million of higher expenditures for property, plant and equipment largely related to construction of the paste plant. The majority of property, plant and equipment expenditures in 2022 are related to construction of the paste plant and continued construction of the tailings dam raise.

Cash used by financing activities was $22.3 million and $17.0 million for the six months ended June 30, 2022 and 2021, respectively. The $5.3 million increase in cash used was primarily due to $19 million of dividends paid to partners in 2022. For the six months ended June 30, 2021 financing activities consisted of capital contributions of $62.4 million received, $15.9 million paid for Term Loan payment in June 2021 and the $60.0 million paid to extinguish the Working Capital Facility.

***Liquidity and Capital Resources***

As of June 30, 2022 and December 31, 2021, the Company had cash and cash equivalents of $7.3 million and $6.6 million, respectively. The increase in cash and cash equivalents was primarily due to receipt of the first dividend payment in April 2022 of $5.9 million partially offset by operating costs.

On July 12, 2021, the Company entered into the Credit Facility that provides for a $50 million revolving line of credit and has an accordion feature, which allows for an increase in the total line of credit up to $100 million (reduced to $75 million per the December 19, 2022 amendment), subject to certain conditions. As of December 31, 2021, $13.0 million was outstanding under the Credit Facility. As of the date of this report the balance outstanding on the Credit Facility is $9.0 million following a $4.0 million principal repayment in December 2022.

On February 28, 2023 the Company's cash and cash equivalents were $15.6 million and we had $41.0 million available to be drawn under the Credit Facility. The LGJV had cash and cash equivalents of $55.5 million at February 28, 2023. We believe we have sufficient cash and access to borrowings and other resources to carry out our business plans for at least the next 12 months. We may decide to increase our current financial resources with external financings if our long-term business needs require us to do so, however there can be no assurance that the financing will be available to us on acceptable terms, or at all. We manage liquidity risk through our credit facility and the management of our capital structure.

**Contractual Obligations**

There have been no changes from the contractual obligations described in our 2021 10-K.

**Critical Accounting Policies**

Please refer to Note 2 – Summary of Significant Accounting Policies in our consolidated financial statements included in this Report and the 2021 10-K for discussion of our critical accounting policies and estimates.

**Jumpstart Our Business Startups Act of 2012**

The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") permits us, as an "emerging growth company," to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies. The decision to opt out of the extended transition period under the JOBS Act is irrevocable.

#### Non-GAAP Financial Measures
We use certain measures that are not defined by GAAP to evaluate various aspects of our business. These non-GAAP financial measures are intended to provide additional information only and do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Please see "*Cash Costs and All-In Sustaining Costs" and* "*Reconciliation of expenses (GAAP) to non-GAAP measures*" below.

[**Table of Contents**](#TOC)

#### Cash Costs and All-In Sustaining Costs
Cash costs and all-in sustaining costs ("AISC") are non-GAAP measures. AISC was calculated based on guidance provided by the World Gold Council ("WGC"). WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as definitional differences of sustaining versus expansionary (i.e. non-sustaining) capital expenditures based upon each company's internal policies. Current GAAP measures used in the mining industry, such as cost of sales, do not capture all of the expenditures incurred to discover, develop and sustain production. Therefore, we believe that cash costs and AISC are non-GAAP measures that provide additional information to management, investors and analysts that aid in the understanding of the economics of the Company's operations and performance compared to other producers and provides investors visibility by better defining the total costs associated with production.

Cash costs include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, treatment and refining costs, general and administrative costs, royalties and mining production taxes. AISC includes total production cash costs incurred at the LGJV's mining operations plus sustaining capital expenditures. The Company believes this measure represents the total sustainable costs of producing silver from current operations and provides additional information of the LGJV's operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver production from current operations, new project and expansionary capital at current operations are not included. Certain cash expenditures such as new project spending, tax payments, dividends, and financing costs are not included.

***Reconciliation of expenses (GAAP) to non-GAAP measures***

The table below presents a reconciliation between the most comparable GAAP measure of the LGJV's expenses to the non-GAAP measures of (i) cash costs, (ii) cash costs, net of by-product credits, (iii) co-product all-in sustaining costs and (iv) by-product all-in sustaining costs for our operations.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| <br>***(in thousands, except unit costs)*** | **June 30, 2022** | **June 30, 2021** | **June 30, 2022** | **June 30, 2021** |
| Cost of sales | $27837 | $24096 | $52925 | $43901 |
| Royalties | 918 | 1415 | 2412 | 2299 |
| Exploration | 2233 | 1261 | 4354 | 1910 |
| General and administrative | 3595 | 2833 | 6415 | 6079 |
| Depreciation, depletion and amortization | 16055 | 12705 | 32397 | 23654 |
| Expenses | $50638 | $42310 | $98503 | $77843 |
| Depreciation, depletion and amortization | (16055) | (12705) | (32397) | (23654) |
| Exploration<sup>1</sup> | (2233) | (1261) | (4354) | (1910) |
| Treatment and refining charges<sup>2</sup> | 4880 | 6142 | 9845 | 12776 |
| Cash costs (A) | $37230 | $34486 | $71597 | $65055 |
| Sustaining capital | 22177 | 18431 | 39950 | 30647 |
| AISC (B) | $59407 | $52917 | $111547 | $95702 |
| By-product credits<sup>3</sup> | (37444) | (29068) | (70896) | (45047) |
| AISC, net of by-product credits (C) | $21963 | $23849 | $40651 | $50655 |
| Cash costs, net of by-product credits (D) | $(214) | $5418 | $702 | $20008 |
| Payable ounces of silver equivalent4 (E) | 3978 | 2998 | 7504 | 4947 |
| Co-product cash cost per ounce of payable silver equivalent (A/E) | $9.36 | $11.50 | $9.54 | $13.15 |
| Co-product AISC per ounce of payable silver equivalent (B/E) | $14.93 | $17.65 | $14.87 | $19.35 |
| Payable ounces of silver (F) | 2110 | 1888 | 4320 | 3173 |
| By-product cash cost per ounce of payable silver (D/F) | $(0.10) | $2.87 | $0.16 | $6.31 |
| By-product AISC per ounce of payable silver (C/F) | $10.41 | $12.63 | $9.41 | $15.96 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Exploration costs are not related to current operations.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Represent reductions on customer invoices and included in Sales of the LGJV combined statement of income (loss).

&nbsp;&nbsp;&nbsp;&nbsp;(3) By-product credits reflect realized metal prices of zinc, lead and gold for the applicable period, which includes any final settlement adjustments from prior periods.

[**Table of Contents**](#TOC)

&nbsp;&nbsp;&nbsp;&nbsp;(4) Silver equivalents utilize the average realized prices during the six months ended June 30, 2022 of $22.26/oz silver, $1.57/lb zinc, $1.01/lb lead and $1,856/oz gold and the average realized prices during the three months ended June 30, 2022 of $20.05/oz silver, $1.51/lb zinc, $0.97/lb lead and $1,862/oz gold. Silver equivalents utilize the average realized prices during the six months ended June 30, 2021, of $25.40/oz silver, $1.22/lb zinc, $0.96/lb lead and $1,819/oz gold and the average realized prices during the three months ended June 30, 2021, of $26.18/oz silver, $1.33/lb zinc,$1.00/lb lead and $1,830/oz gold. Realized prices include the impact of final settlement adjustments from sales.

#### Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company and are not required to provide disclosure pursuant to this Item.

#### Item 4. Controls and Procedures
***Evaluation of Disclosure Controls and Procedures***

*We have established disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers as appropriate, to allow timely decisions regarding required disclosure.*

*Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of June 30, 2022, due to the material weaknesses in our internal control over financial reporting described in the 2021 10-K.*

***Changes in Internal Control over Financial Reporting***

There have not been any changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

***Limitations on Effectiveness of Controls***

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all errors and fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect resource constraints, which require management to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management's override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

[**Table of Contents**](#TOC)

#### PART II – OTHER INFORMATION

#### Item 1. Legal Proceedings
We are, from time to time, involved in legal proceedings of a nature considered normal to our business. We believe that other than as set out below in this Item none of the litigation in which we are currently involved, or have been involved since the beginning of our most recently completed financial year, individually or in the aggregate, is material to or potentially material to our consolidated financial condition, cash flows or results of operations.

On February 22, 2022, a purported Company 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 the Company's common stock and certain traders of call and put options on the Company's 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 the Company, 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. The Company 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 the Company, 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 the Company 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 the Company. 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.

#### Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Report include, but are not limited to, any of the risks described in the 2021 10-K. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not currently known to us or that we currently deem immaterial may also adversely affect us. As of the date of this Report, there have been no material changes to the risk factors disclosed in the 2021 10-K.

#### Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
*Unregistered Sales of Equity Securities*

During the six months ended June 30, 2022, the Company did not issue any shares of its common stock or other equity securities that were not registered under the Securities Act of 1933, as amended.

*Purchase of Equity Securities by the Issuer and Affiliated Purchasers*

During the six months ended June 30, 2022, there were no purchases made by or on behalf of the Company or any affiliated purchaser of the Company's common stock.

[**Table of Contents**](#TOC)

#### Item 3. Defaults Upon Senior Securities
None.

#### Item 4. Mine Safety Disclosures
Not applicable.

#### Item 5. Other Information
None.

#### Item 6. Exhibits

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;3.1 | [Amended and Restated Certificate of Incorporation of Gatos Silver, Inc. (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed October 30, 2020)](https://www.sec.gov/Archives/edgar/data/1517006/000110465920120067/tm1917157d30_ex3-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;3.2 | [Amended and Restated By-Laws of Gatos Silver, Inc. (incorporated by reference to Exhibit 3.2 of the Company's Current Report on Form 8-K filed October 30, 2020)](https://www.sec.gov/Archives/edgar/data/1517006/000110465920120067/tm1917157d30_ex3-2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.1.1 | [Revolving Credit Facility, dated July 12, 2021, between Gatos Silver, Inc. and Bank of Montreal, Chicago Branch (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed July 12, 2021)](https://www.sec.gov/Archives/edgar/data/1517006/000110465921091155/tm2121931d1_ex10-2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.1.2 | [Amendment and Waiver to the Revolving Credit Agreement, dated March 7, 2022, among Gatos Silver, Inc., certain subsidiaries of Gatos Silver, Inc. from time to time, Bank of Montreal, Chicago Branch and certain financial institutions from time to time, as lenders, Bank of Montreal, Chicago Branch, as bookrunner and mandated lead arranger, and Bank of Montreal, Chicago Branch, as administrative agent for and on behalf of the lenders (incorporated by reference to Exhibit 1.1 of the Company's Current Report on Form 8-K filed March 8, 2022)](https://www.sec.gov/Archives/edgar/data/1517006/000095010322004212/dp168793_ex0101.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.1.3 | [Amendment No. 2 to the Revolving Credit Agreement, dated August 15, 2022, among Gatos Silver, Inc., certain subsidiaries of Gatos Silver, Inc. from time to time, Bank of Montreal, Chicago Branch and certain financial institutions from time to time, as lenders, Bank of Montreal, Chicago Branch, as bookrunner and mandated lead arranger, and Bank of Montreal, Chicago Branch, as administrative agent for and on behalf of the lenders (incorporated by reference to Exhibit 1.1 of the Company's Current Report on Form 8-K filed October 14, 2022)](https://www.sec.gov/Archives/edgar/data/1517006/000095010322017836/dp182467_0101.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.1.4 | [Wavier No. 3 to the Revolving Credit Agreement, dated October 13, 2022, among Gatos Silver, Inc., certain subsidiaries of Gatos Silver, Inc. from time to time, Bank of Montreal, Chicago Branch and certain financial institutions from time to time, as lenders, Bank of Montreal, Chicago Branch, as bookrunner and mandated lead arranger, and Bank of Montreal, Chicago Branch, as administrative agent for and on behalf of the lenders (incorporated by reference to Exhibit 1.2 of the Company's Current Report on Form 8-K filed October 14, 2022)](https://www.sec.gov/Archives/edgar/data/1517006/000095010322017836/dp182467_0102.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.1.5 | [Amended and Restated Revolving Credit Agreement, dated December 20, 2022, among Gatos Silver, Inc., certain subsidiaries of Gatos Silver, Inc. from time to time, Bank of Montreal, Chicago Branch, as administrative agent, BMO Capital Markets, as bookrunner and mandated lead arranger, and Bank of Montreal, Chicago Branch and certain financial institutions from time to time, as lenders (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed December 22, 2022)](https://www.sec.gov/Archives/edgar/data/1517006/000095010322021272/dp185933_ex1001.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.2# | [Leaching Plant Confirmation Agreement dated March 17, 2022 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Gatos Silver, Inc. and Dowa Metals & Mining Co., Ltd. (incorporated by reference to Exhibit 10.7.1 of the Company's Annual Report on Form 10-K filed March 20, 2023)](https://www.sec.gov/Archives/edgar/data/1517006/000110465923034448/gato-20211231xex10d71.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;31.1\* | [Section 302 Certification of Chief Executive Officer](gato-20220630xex31d1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;31.2\* | [Section 302 Certification of Chief Financial Officer](gato-20220630xex31d2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;32.1\*\* | [Section 1350 Certification](gato-20220630xex32d1.htm)s |

---

[**Table of Contents**](#TOC)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;101.INS\* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| &nbsp;&nbsp;&nbsp;&nbsp;101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| &nbsp;&nbsp;&nbsp;&nbsp;101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| &nbsp;&nbsp;&nbsp;&nbsp;101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| &nbsp;&nbsp;&nbsp;&nbsp;101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| &nbsp;&nbsp;&nbsp;&nbsp;101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| &nbsp;&nbsp;&nbsp;&nbsp;104\* | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) |

---

\* Filed herewith

\*\* Furnished herewith

[**Table of Contents**](#TOC)

#### SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GATOS SILVER, INC. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GATOS SILVER, INC. |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Registrant) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Registrant) |
| March 30, 2023 |  |  |
|  | By: | /s/ Dale Andres |
|  |  | Dale Andres |
|  |  | Chief Executive Officer |
| March 30, 2023 |  |  |
|  | By: | /s/ André van Niekerk |
|  |  | André van Niekerk |
|  |  | Chief Financial Officer |

---

## Exhibit 31.1

**EXHIBIT 31.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

I, Dale Andres, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of Gatos Silver, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: March 30, 2023 | By: | /s/ Dale Andres |
|  |  | Dale Andres |
|  |  | Chief Executive Officer |

---

------

## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

I, André van Niekerk, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of Gatos Silver, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: March 30, 2023 | By: | /s/ André van Niekerk |
|  |  | André van Niekerk |
|  |  | Chief Financial Officer |

---

------

## Exhibit 32.1

**EXHIBIT 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of Gatos Silver, Inc. (the "Company") for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Dale Andres, as Chief Executive Officer of the Company, and André van Niekerk, as Chief Financial Officer of the Company, each hereby certifies, pursuant to and solely for the purpose of 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge and belief, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| |
|:---|
| /s/ Dale Andres |
| Dale Andres |
| Chief Executive Officer |
| March 30, 2023 |
| /s/ André van Niekerk |
| André van Niekerk |
| Chief Financial Officer |
| March 30, 2023 |

---

------