Gatos Silver, Inc. (NYSE/TSX: GATO) (“Gatos Silver” or the
“Company”) is providing this bi-weekly default status report in
accordance with National Policy 12-203 - Management Cease Trade
Orders (“NP 12-203”). In its March 18, 2022 news release (the
“Notice”), the Company announced the delay in the filing of its
annual report on Form 10-K for the year ended December 31,
2021which includes its audited consolidated financial statements as
at and for the year ended December 31, 2021, together with the
auditor’s report thereon and the notes thereto, its management’s
discussion and analysis for the year ended December 31, 2021
relating to the audited annual financial statements, and the Chief
Executive Officer and Chief Financial Officer certificates relating
to its annual filings by the filing deadline of March 31, 2022 (the
“2021 Annual Filings”). In its May 13, 2022 news release, the
Company announced the delay in the filing of its interim financial
filings on Form 10-Q for the quarterly period ended March 31, 2022,
which includes interim financial statements as at and for the
quarterly period ended March 31, 2022, together with its
management’s discussion and analysis for the quarterly period ended
March 31, 2022 relating to the interim financial statements, and
the Chief Executive Officer and Chief Financial Officer
certificates relating to its interim filings by the filing deadline
of May 16, 2022. In its August 5, 2022 news release, the Company
announced the delay in filing its interim financial filings on Form
10-Q for the quarterly and year to date periods ended June 30,
2022, which includes interim financial statements as at June 30,
2022 and for the quarterly and year to date periods ended June 30,
2022, together with its management’s discussion and analysis for
the quarterly period ended June 30, 2022 relating to the interim
financial statements, and the Chief Executive Officer and Chief
Financial Officer certificates relating to its interim filings by
the filing deadline of August 15, 2022. In its November 11, 2022
news release, the Company announced the delay in filing its interim
financial filings on Form 10-Q for the quarterly and year to date
periods ended September 30, 2022, which includes interim financial
statements as at September 30, 2022 and for the quarterly and year
to date periods ended September 30, 2022, together with its
management’s discussion and analysis for the quarterly period ended
September 30, 2022 relating to the interim financial statements,
and the Chief Executive Officer and Chief Financial Officer
certificates relating to its interim filings by the filing deadline
of November 14, 2022.
The Company filed its 2021 Annual Filings on
March 20, 2023 and quarterly reports on Form 10-Q for the quarters
ended March 31, 2022, June 30, 2022 and September 30, 2022 (“2022
Quarterly Filings”) on March 30, 2023. Subsequently on March 30,
2023, the Company announced a delay in filing its Annual Report on
Form 10-K for the fiscal year ended December 31, 2022 which
includes its audited consolidated financial statements as at and
for the year ended December 31, 2022, together with the auditor’s
report thereon and the notes thereto, its management’s discussion
and analysis for the year ended December 31, 2022 relating to the
audited annual financial statements, and the Chief Executive
Officer and Chief Financial Officer certificates relating to its
annual filings (“2022 Annual Filings”). On March 31, 2023, the
Company announced the reason for the delay and that it will need to
restate its 2021 Annual Filings and 2022 Quarterly Filings. In its
April 17, 2023 news release the Company announced a further delay
of its 2022 Annual Filings and advised that it was working
expeditiously to make the restated filings and the 2022 Annual
Filings. The Company also stated that it had postponed its Annual
Meeting of Stockholders previously scheduled to be held on May 31,
2023, noting that the meeting will be rescheduled once the 2022
Annual Filings are made. On April 18, 2023, the Company
advised that it received a notice from the New York Stock Exchange
(“NYSE”) stating, together with further details, that the Company
was not in compliance with Section 802.01E of the NYSE Listed
Company Manual as a result of its failure to timely file its 2022
Annual Filings with the Securities and Exchange Commission and that
the Company’s common stock will continue to trade on the NYSE
during an initial 6 month cure period. On April 20, 2023, the
Company announced, together with further details, that it received
a notice from the Toronto Stock Exchange (“TSX”) stating that the
TSX has commenced a review of the Company’s eligibility for
continued listing pursuant to Part VII of the TSX Company Manual
and that the Company has been granted 120 days to comply with all
requirements for continued listing.
As previously disclosed, in connection with its
ongoing review of the mineral reserve reporting errors and its
preparation of its 2021 and 2022 annual financial statements and
2022 interim financial statements, the Company has identified
material weaknesses in its internal controls over financial
reporting. The Company has determined that the material weaknesses
relate to its failures to design and maintain (i) an effective
control environment commensurate with the financial reporting
requirements of a public company in the United States and Canada,
and (ii) effective controls over the assessment of certain key
assumptions, inputs and outputs contained in its 2020 Technical
Report. The Company is continuing to assess the impact of these
material weaknesses and whether any other material weaknesses
exist. On January 9, 2023, the Company engaged a third-party expert
to assist management in documenting key processes related to the
Company’s internal control environment, designing and implementing
an effective risk assessment and monitoring program to identify
risks of material misstatements and ensuring that the internal
controls have been appropriately designed to address and
effectively monitor identified risks. On March 31, 2023, the
Company announced that it acknowledged the existence of an
additional material weakness in its internal control over financial
reporting as of December 31, 2022, with regards to the design and
maintenance of effective controls in response to the risks of
material misstatement related to the processes for recording income
taxes. The Company expects to provide additional information in its
upcoming public reports.
A management cease trade order was granted by
the Ontario Securities Commission on April 1, 2022 (the “Original
MCTO”) and the Ontario Securities Commission granted additional
management cease trade orders on April 12, 2022 and July 7, 2022
(the “Additional MCTOs” and together with the Original MCTO, the
“MCTO”).
Pursuant to NP 12-203, the Company must file
bi-weekly status reports in the form of further news releases
during the period from the Notice until the MCTO is revoked. The
Company reports that since the Notice: (i) there have been no
material changes regarding the information contained in the Notice
that have not been disclosed in a bi-weekly default status report
or in a news release referenced therein; (ii) there have been no
failures by the Company in fulfilling its stated intentions with
respect to satisfying the provisions of the alternative information
guidelines under NP 12-203; and (iii) there has not been any
specified default subsequent to the defaults announced in the
Notice and the news releases dated May 13, 2022, August 5, 2022,
November 11, 2022 and March 30, 2023.
About Gatos
Silver
Gatos Silver is a silver dominant exploration,
development and production company that discovered a new silver and
zinc-rich mineral district in southern Chihuahua State, Mexico. As
a 70% owner of the Los Gatos Joint Venture (“LGJV”), the Company is
primarily focused on operating the Cerro Los Gatos mine and on
growth and development of the Los Gatos district. The LGJV consists
of approximately 103,000 hectares of mineral rights, representing a
highly prospective and under-explored district with numerous
silver-zinc-lead epithermal mineralized zones identified as
priority targets.
Forward-Looking Statements
This press release may contain certain
information that may constitute “forward-looking statements” and
“forward looking information” (collectively, “forward-looking
statements”) within the meaning of U.S. and Canadian securities
laws. The forward-looking statements contained herein include
statements about the timing for re-filing of the Company’s 2021
Annual Report and 2022 Quarterly Reports and filing of the
Company’s 2022 Annual Report, and timing for holding the annual
shareholder meeting. While the Company has based these
forward-looking statements on its current expectations about future
events, the statements are not guarantees of the Company’s future
performance and are subject to risks, uncertainties, assumptions
and other factors that could cause actual results to differ
materially from future results expressed or implied by such
forward-looking statements. Such risks, uncertainties, assumptions
and factors include, amongst others, the evaluation of material
weaknesses in its internal controls and timing for completing the
audit and review of financial statements. Further, although the
Company has attempted to identify factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law. As there can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements, readers should not place undue
reliance on forward-looking statements.
Investors and Media Contact
André van NiekerkChief Financial Officer
investors@gatossilver.com +1 604 424 0984
Gatos Silver (TSX:GATO)
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