Mineros Reports Third Quarter 2023 Financial and Operational Results

(all dollar amounts other than per share amounts are expressed in thousands of U.S. dollars unless otherwise stated)

MEDELLIN, Colombia, Nov. 9, 2023 /CNW/ - Mineros S.A. (TSX: MSA) (MINEROS: CB) ("Mineros" or the "Company") today reported its financial and operational results for the three and nine months ended September 30, 2023. For further information, please see the Company's unaudited condensed interim financial statements and management's discussion and analysis ("MD&A") filed under its Mineros' profile on www.sedarplus.com. 

Andrés Restrepo, President and CEO of Mineros, commented, "During the third quarter of 2023 we sold the Gualcamayo Property in Argentina, in line with our strategy of actively managing our portfolio and focusing management's efforts on high margin, long-life and lower cost assets. We have full confidence that Eris LLC, the new owner, will leverage their experience and knowledge to maximize and enhance the future of the operation."

FINANCIAL AND OPERATING HIGHLIGHTS FOR THE THIRD QUARTER 2023

Gold Production

• 50,196 ounces of gold produced.
• A 12% decrease in gold production compared to the same period in 2022 (Q3/22: 56,930 ounces of gold produced), explained by a two-week suspension of the main processing plant at the Hemco Property in Nicaragua.

Cost of Sales, Cash Cost¹ and All-in Sustaining Cost ("AISC")¹ from continuing operations

• Cost of sales of $75,658, a 9% increase when compared to the same period in 2022 (Q3/22: $69,691).
• Cash Cost per ounce of gold sold^1,2 of $1,222 (Q3/22: $1,007), a 21% increase relative to the same period in 2022.
• AISC per ounce of gold sold^1,2 of $1,427 (Q3/22: $1,177), a 28% increase relative to the AISC per ounce of gold sold during the same period in 2022.

Dividend Payment

• $5,241 in dividends paid.
• A 7% decrease in dividends paid compared to the same period in 2022 (Q3/22: $5,655), due to foreign exchange differences.

Revenue

• Revenue of $101,371.
• Revenue increased by 2% compared to the same period in 2022 (Q3/22: $99,727).

_____________________________

1  Cash Cost and AISC are non-IFRS financial measures, and Cash Cost per ounce of gold sold and AISC per ounce of gold sold are non-IFRS ratios, with no standardized meaning under IFRS, and therefore they may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release. 2  Stated in dollars.

Profitability

• Gross profit down by 14% to $25,713 compared to the same period in 2022 (Q3/22: $30,036).
• Profit for the period from continuing operations up 36% to $13,284 ($0.04/share) compared to the same period in 2022 (Q3/22: $9,771 or $0.03/share).
• Loss for the period from discontinued operations up 539% to $45,791 compared to the same period in 2022 (Q3/22: $7,161).

Net Debt to Adjusted EBITDA ratio³

• Net Debt to Adjusted EBITDA ratio³ of 0.00x as at September 30, 2023.
• The Company continues to have a low Net Debt to Adjusted EBITDA ratio, with a 96% decrease compared to 0.11x as at September 30, 2022.

FINANCIAL AND OPERATING HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

Gold Production

• 157,669 ounces of gold produced.
• A 5% decrease in gold production compared to the same period in 2022 (nine months ended September 30, 2022: 166,308 ounces of gold produced).

Cost of Sales, Cash Cost and All-in Sustaining Cost ("AISC")

• Cost of sales of $219,225, a 2% increase when compared to the same period in 2022 (nine months ended September 30, 2022: $212,241)
• Cash Cost per ounce of gold sold of $1,124 (nine months ended September 30, 2022: $1,050), a 7% increase relative to the same period in 2022, mainly explained by the 12% decrease in gold production.
• AISC per ounce of gold sold¹ of $1,311 (nine months ended September 30, 2022: $1,234), a 10% increase relative to the AISC per ounce of gold sold during the same period in 2022.

Dividend Payment

• $15,291 in dividends paid.
• A 16% decrease in dividends paid compared to the same period in 2022 (nine months ended September 30, 2022: $18,128), explained by an extraordinary dividend of $0.01 per share paid in April of 2022.

Revenue

• Revenue of $316,863. Revenue increased by 2% when compared to the same period in 2022 (nine months ended September 30, 2022: $309,878).

____________________________

3  Net Debt to Adjusted EBITDA ratio is a non-IFRS ratio, with no standardized meaning under IFRS, and therefore it may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release.

Profitability

• Gross profit from continuing operations remained stable, standing at $97,638 compared to the same period in 2022 (nine months ended September 30, 2022: $97,637).
• Net profit for the period from continuing operations up 36% to $51,730 ($0.17/share) compared to the same period in 2022 (Q3/22: $37,961 or $0.05/share).
• Loss for the period from discontinued operations up 318%, to $56,281 compared to the same period in 2022 (nine months ended September 30, 2022: $13,480).

Financial and Operating Highlights

	Three Months Ended September 30,		Change		Nine Months Ended September 30,		Change
	2023	2022	$	%	2023	2022	#	%
Financial
Revenue	101,371	99,727	1,644	2 %	316,863	309,878	6,985	2 %
Cost of sales	(75,658)	(69,691)	5,967	9 %	(219,225)	(212,241)	6,984	3 %
Gross Profit	25,713	30,036	(4,323)	(14) %	97,638	97,637	1	0 %
Profit for the period from continuing operations	13,284	9,771	3,513	36 %	51,730	37,961	13,769	36 %
Basic and diluted earnings per share from continuing operations	$0.04	$0.03	$0.01	36 %	$0.17	$0.13	$0.05	36 %
Loss for the period from discontinued operations	(45,791)	(7,161)	(38,630)	539 %	(56,281)	(13,480)	(42,801)	318 %
Basic and diluted earnings per share from continuing and discontinued operations	$(0.11)	$0.01	$(0.12)	(1,345) %	$(0.02)	$0.08	$(0.10)	(119) %
Adjusted EBITDA1	33,379	37,403	(4,024)	(11) %	118,782	116,039	2,743	2 %
Net cash flows generated by operating activities	4,324	22,849	(18,525)	(81) %	36,976	46,005	(9,029)	(20) %
Net free cash flow1	911	7,807	(6,896)	(88) %	12,441	3,401	9,040	266 %
ROCE1	28 %	21 %	7 %	31 %	28 %	21 %	7 %	31 %
Net Debt to Adjusted EBITDA ratio1	—x	0.12x	(0.11x)	(96 %)	—x	0.12x	(0.11x)	(96 %)
Dividends paid	5,241	5,655	(414)	(7) %	15,291	18,128	(2,837)	(16) %
Operating
Average realized price per ounce of gold sold from continuing operations ($/oz)1	1,921	1,719	202	12 %	1,922	1,817	105	6 %
Total gold produced from continuing operations (oz)	50,196	56,930	(6,734)	(12) %	157,669	166,308	(8,639)	(5) %
Silver sold from continuing operations (oz)	135,776	84,427	51,349	61 %	416,329	269,455	146,874	55 %
Cash Cost per ounce of gold sold from continuing operations ($/oz)1	$1,222	$1,007	$215	21 %	$1,124	$1,050	$74	7 %
AISC per ounce of gold sold from continuing operations ($/oz)1	$1,427	$1,177	$249	21 %	$1,311	$1,234	$77	6 %

1.  Adjusted EBITDA, net free cash flow, and average realized price are Non-IFRS financial measures, and ROCE, Net Debt to Adjusted EBITDA ratio, Cash Cost per ounce of gold sold, and AISC per ounce of gold sold are Non-IFRS ratios, with no standardized meaning under IFRS, and therefore may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release.

Operational Highlights by Material Property

(All numbers in ounces unless otherwise noted)

	Three Months Ended September 30,		Change		Nine Months Ended September 30,		Change
	2023	2022	ounces	%	2023	2022	#	%
Nechí Alluvial Property (Colombia)	23,201	24,720	(1,519)	(6) %	65,837	67,399	(1,562)	(2) %
Hemco Property	5,514	10,918	(5,404)	(49) %	23,252	30,849	(7,597)	(25) %
Artisanal Mining	21,481	21,292	189	1 %	68,580	68,060	520	1 %
Nicaragua	26,995	32,210	(5,215)	(16) %	91,832	98,909	(7,077)	(7) %
Total Gold Produced from Continuing Operations	50,196	56,930	(6,734)	(12) %	157,669	166,308	(8,639)	(5) %
Gualcamayo Property (Argentina)	9,032	17,583	(8,551)	(49) %	31,061	48,276	(17,215)	(36) %
Total Gold Produced from Discontinued Operations	9,032	17,583	(8,551)	(49) %	31,061	48,276	(17,215)	(36) %
Total Gold Produced	59,228	74,513	(15,285)	(21) %	188,730	214,584	(25,854)	(12) %
Total Silver Produced	138,853	90,863	47,990	53 %	425,549	285,864	139,685	49 %

For the three months ended September 30, 2023, gold production from continuing operations was down 12%, with 50,196 ounces of gold produced, compared to 56,930 ounces in the third quarter of 2022, summarized in the table above. For the nine months ended September 30, 2023, gold production from continuing operations was down 5%, with 157,669 ounces of gold were produced during the nine months ended September 30, 2023, compared to 166,308 ounces in the same period of 2022. In each case, the decrease in production relative to the comparative quarter in 2022 is mainly due to a two-week suspension of operations at the Hemco Property in Nicaragua.

CORPORATE HIGHLIGHTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

Disposition of Minas Argentinas S.A. ("MASA")

On September 8, 2023, Mineros announced that it had signed a share purchase and sale agreement with Eris LLC dated September 7, 2023 to sell all of the outstanding shares of Mineros' subsidiary, Minas Argentinas S.A. ("MASA"). MASA holds a 100% interest in the Gualcamayo Property, which includes the Gualcamayo Mine and the Deep Carbonates Project. The transaction was completed on September 21, 2023. The disposed business, MASA (including its main asset, the Gualcamayo Property), has been presented as a discontinued operation in the Company's unaudited condensed interim financial statements for the period ending September 30, 2023.

Temporary suspension of the main processing plant at the Hemco Property in Nicaragua

On July 31, 2023, Mineros suspended operations at the Hemco Plant, its main processing plant at the Hemco Property, for two weeks. The Hemco Plant processes 89% of the material and disposal of tailings at the Hemco Property. The suspension was precautionary in nature, to allow for the swift completion of tailings detoxification capacity enhancements at the San José Tailings Dam, the primary tailings processing facility at the Hemco Property, prior to hurricane season in Nicaragua. Mineros resumed full operations at the Hemco Property on August 15, 2023, after making significant enhancements to its tailings detoxification capacity.

GROWTH AND EXPLORATION PROJECT UPDATES

Porvenir Project, Nicaragua: In the third quarter of 2023, with the aim of increasing or upgrading the category of Mineral Resources and Mineral Reserves, the Company completed 4,433 metres of diamond drilling in 14 holes, achieving approximately 102% of the 2023 drilling plan. Analytical results and geological model updates are expected to be completed in the fourth quarter of 2023, with a Mineral Resource update anticipated for 2024.

Luna Roja Deposit, Nicaragua: In the third quarter of 2023, the Company completed the geological model update of the Luna Roja Deposit and is currently focused on an internal Mineral Resource update.

OUTLOOK

Based on the sale of the Gualcamayo Property, on September 22, 2023, Mineros announced revisions to its 2023 consolidated production and cost guidance, as provided in the Company's MD&A for the three months and year ended December 31, 2022, dated February 17, 2022.

The following table sets out original and revised production and cost guidance for 2023, as well as actual results for the nine months ended September 30, 2023.

		As at September 30, 2023	Updated 2023 Guidance	Original 2023 Guidance
Gold production	oz	188,730	239,000 - 262,000	264,000 - 292,000
Cash costs per ounce of gold sold	$/oz	1,286	1,170 - 1,270	1,160 - 1,250
AISC per ounce of gold sold	$/oz	1,497	1,440 - 1,540	1,400 - 1,490

Mineros is not revising its 2023 guidance for the Hemco Property or the Nechí Alluvial Property. On a consolidated basis, guidance for 2023 for the Hemco Property and the Nechí Alluvial Property is as follows: total gold production is 209,000 – 229,000 oz, Cash Cost per ounce of gold sold is $1,060 – $1,150, and AISC per ounce of gold sold is $1,310 – $1,410. Mineros expects gold production for the Hemco Property to be close to the low end of 2023 guidance and AISC at the Nechí Alluvial Property close to the high end of 2023 guidance.

CONFERENCE CALL AND WEBCAST DETAILS

The Company will host a conference call on Friday, November 10, 2023, at 8:00 am EST (8:00 am COT) to discuss the results. The conference call will be in Spanish with simultaneous translation in English.

A live webcast of the conference all will be available at:
https://app.webinar.net/QMA7B586zWg 

Live webcast requires previous registration, and interested parties are advised to access the webcast approximately ten minutes prior to the start of the call. The webcast will be archived on the Company's website at www.mineros.com.co for approximately 30 days following the call.

ABOUT MINEROS S.A.

Mineros is a gold mining company headquartered in Medellin, Colombia. The Company has a diversified asset base, with mines in Colombia and Nicaragua and a pipeline of development and exploration projects throughout the region.

The board of directors and management of Mineros have extensive experience in mining, corporate development, finance and sustainability. Mineros has a long track record of maximizing shareholder value and delivering solid annual dividends. For almost 50 years Mineros has operated with a focus on safety and sustainability at all its operations.

Mineros' common shares are listed on the Toronto Stock Exchange under the symbol "MSA", and on the Colombia Stock Exchange under the symbol "MINEROS".

The Company has been granted an exemption from the individual voting and majority voting requirements applicable to listed issuers under Toronto Stock Exchange policies, on grounds that compliance with such requirements would constitute a breach of Colombian laws and regulations which require the directors to be elected on the basis of a slate of nominees proposed for election pursuant to an electoral quotient system. For further information, please see the Company's most recent annual information form filed on SEDAR+ at www.sedarplus.com.

QUALIFIED PERSON

The scientific and technical information contained in this news release has been reviewed and approved by Luis Fernando Ferreira de Oliveira, MAusIMM CP (Geo), Mineral Resources and Reserves Manager for Mineros S.A., who is a qualified person within the meaning of NI 43-101.

FORWARD-LOOKING STATEMENTS

This news release contains "forward looking information" within the meaning of applicable Canadian securities laws. Forward looking information includes statements that use forward looking terminology such as "may", "could", "would", "will", "should", "intend", "target", "plan", "expect", "budget", "estimate", "forecast", "schedule", "anticipate", "believe", "continue", "potential", "view" or the negative or grammatical variation thereof or other variations thereof or comparable terminology. Such forward looking information includes, without limitation, statements with respect to the Company's outlook for 2023; estimates for future mineral production and sales; the Company's expectations, strategies and plans for the Material Properties; the Company's planned exploration, development and production activities; completion of the drilling program; statements regarding the projected exploration and development of the Company's projects; adding or upgrading Mineral Resources and developing new mineral deposits; estimates of future capital and operating costs; the costs and timing of future exploration and development; the timing, receipt and maintenance of necessary approvals, licenses and permits form applicable governments, regulators or third parties; estimates for future prices of gold and other minerals; future financial or operating performance and condition of the Company and its business, operations and properties, including, without limitation, expectations regarding liquidity, capital structure, competitive position and payment of dividends; expectations regarding future currency exchange rates; and any other statement that may predict, forecast, indicate or imply future plans, intentions, levels of activity, results, performance or achievements.

Forward looking information is based upon estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this news release including, without limitation, assumptions about: favourable equity and debt capital markets; the ability to raise any necessary additional capital on reasonable terms to advance the production, development and exploration of the Company's properties and assets; future prices of gold and other metal prices; the timing and results of exploration and drilling programs, and technical and economic studies; the accuracy of any Mineral Reserve and Mineral Resource estimates; the geology of the Material Properties being as described in the applicable technical reports; production costs; the accuracy of budgeted exploration and development costs and expenditures; the price of other commodities such as fuel; future currency exchange rates and interest rates; operating conditions being favourable such that the Company is able to operate in a safe, efficient and effective manner; political and regulatory stability; the receipt of governmental, regulatory and third party approvals, licenses and permits on favourable terms; obtaining required renewals for existing approvals, licenses and permits on favourable terms; requirements under applicable laws; sustained labour stability; stability in financial and capital goods markets; inflation rates; availability of labour and equipment; positive relations with local groups, including artisanal mining cooperatives in Nicaragua, and the Company's ability to meet its obligations under its agreements with such groups; and satisfying the terms and conditions of the Company's current loan arrangements. While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward looking information. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.

For further information of these and other risk factors, please see the "Risk Factors" section of the Company's most recent annual information form filed on SEDAR+ at www.sedarplus.com.

The Company cautions that the foregoing lists of important assumptions and factors are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward looking information contained herein. There can be no assurance that forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information.

Forward looking information contained herein is made as of the date of this news release and the Company disclaims any obligation to update or revise any forward looking information, whether as a result of new information, future events or results or otherwise, except as and to the extent required by applicable securities laws.

NON-IFRS AND OTHER FINANCIAL MEASURES

The Company has included certain non-IFRS financial measures and non-IFRS ratios in this MD&A. Management believes that non-IFRS financial measures and non-IFRS ratios, when supplementing measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS financial measures and non-IFRS ratios do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For a discussion of the use of non-IFRS financial measures and reconciliations thereof to the most directly comparable IFRS measures, see below.

EBIT, EBITDA and Adjusted EBITDA

The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use the earnings before interest and tax ("EBIT"), earnings before interest, tax, depreciation and amortization ("EBITDA"), and adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA"), which excludes certain non-operating income and expenses, such as financial income or expenses, hedging operations, exploration expenses, impairment of assets, foreign currency exchange differences, and other expenses (principally, donations, corporate projects and taxes incurred). The Company believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results because it is consistent with the indicators management uses internally to measure the Company's performance, and is an indicator of the performance of the Company's mining operations.

The following table provides a reconciliation of EBIT, EBITDA, and Adjusted EBITDA to net profit for the three and nine months ended September 30, 2023 and 2022: 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Net (Loss) Profit for the Period	(32,507)	2,610	(4,551)	24,481
Less: Interest income	(390)	(136)	(950)	(363)
Add: Interest expense	1,222	1,095	3,561	3,014
Add: Current tax 1	6,982	8,640	30,089	28,929
Add/less: Deferred tax 1	(3,461)	1,959	(11,144)	2,040
EBIT	(28,154)	14,168	17,005	58,101
Add: Depreciation and amortization	11,161	10,981	32,769	32,409
EBITDA	(16,993)	25,149	49,774	90,510
Less: Other income 2	(326)	(222)	(5,022)	(623)
Less: Finance income (excluding interest income)	4	(36)	(99)	(130)
Add: Finance expense (excluding interest expense)	1,027	613	2,782	1,617
Add: Other expenses 3	2,076	1,708	5,901	5,270
Add: Exploration expenses	927	1,722	3,536	5,892
Less: Foreign exchange differences	873	(3,483)	5,629	(4,768)
Add: Loss for the period from discontinued operations 4	45,791	7,161	56,281	13,480
Adjusted EBITDA	33,379	37,403	118,782	116,039

1.	For additional information regarding taxes, see Note 15 of our unaudited condensed interim financial statements for the three and nine months ended September 30, 2023 and 2022.
2.	For additional information regarding other income, see Note 11 of unaudited condensed interim financial statements for the three and nine months ended September 30, 2023 and 2022.
3.	The reconciliation above does not include adjustments for Share of results of investments in associates, or (Impairment) reversal of Assets, because there would be a nil adjustment for the three and nine months ended September 30, 2023 and 2022.
4.	Composition of Adjusted EBITDA has been revised to include loss for the period from discontinued operations.

Cash Cost

The objective of Cash Cost is to provide stakeholders with a key indicator that reflects as close as possible the direct cost of producing and selling an ounce of gold.

The Company reports Cash Cost per ounce of gold sold which is calculated by deducting revenue from silver sales and depreciation and amortization from Cost of sales, and dividing the difference by the number of gold ounces sold. Production Cash Cost includes mining, milling, mine site security, royalties, and mine site administration costs, and excludes non-cash operating expenses. Cash Cost per ounce of gold sold is a non-IFRS financial measure used to monitor the performance of our gold mining operations and their ability to generate profit, and is consistent with the guidance methodology set out by the World Gold Council.

The following table provides a reconciliation of Cash Cost per ounce of gold sold on a by-product basis to cost of sales for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Cost of sales	75,658	69,691	219,225	212,241
Less: Cost of sales of non-mining operations 1	(195)	(134)	(494)	(478)
Less: Depreciation and amortization	(10,943)	(10,625)	(31,780)	(31,320)
Less: Sales of silver	(3,199)	(1,598)	(9,715)	(5,884)
Cash Cost from continuing operations	61,321	57,334	177,236	174,559
Gold sold from continuing operations (oz)	50,196	56,930	157,669	166,308
Cash Cost per ounce of gold sold from continuing operations ($/oz)	$1,222	$1,007	$1,124	$1,050
Cash Cost from discontinued operations	29,316	29,747	66,262	71,119
Gold sold from discontinued operations (oz)	9,947	20,815	31,737	49,121
Cash Cost per ounce of gold sold from discontinued operations ($/oz)	$2,947	$1,429	$2,088	$1,448
Cash Cost	90,637	87,081	243,498	245,678
Gold sold (oz)	60,143	77,745	189,406	215,429
Cash Cost per ounce of gold sold ($/oz)	$1,507	$1,120	$1,286	$1,140

1.	Refers to cost of sales incurred in the Company's "Others" segment. See Note 8 of our unaudited condensed interim financial statements for three and nine months ended September 30, 2023 and 2022. The majority of this amount relates to the cost of sales of latex.

All-in Sustaining Costs

The objective of AISC is to provide stakeholders with a key indicator that reflects as close as possible the full cost of producing and selling an ounce of gold. AISC per ounce of gold sold is a non-IFRS ratio that is intended to provide investors with transparency regarding the total costs of producing one ounce of gold in the relevant period.

The Company reports AISC per ounce of gold sold on a by-product basis. The methodology for calculating AISC per ounce of gold sold is set out below and is consistent with the guidance methodology set out by the World Gold Council. The World Gold Council definition of AISC seeks to extend the definition of total Cash Cost by deducting administrative expenses, cost of sales of non-mining operations, sustaining exploration, sustaining leases and leaseback, and sustaining capital expenditures. Non-sustaining costs are primarily those related to new operations and major projects at existing operations that are expected to materially benefit the current operation. The determination of classification of sustaining versus non-sustaining requires judgment by management. AISC excludes current and deferred income tax payments, finance expenses and other expenses. Consequently, these measures are not representative of all of the Company's cash expenditures. In addition, the calculation of AISC does not include depreciation and amortization cost or expense as it does not reflect the impact of expenditures incurred in prior periods. Therefore, it is not indicative of the Company's overall profitability. Other companies may quantify these measures differently because of different underlying principles and policies applied. Differences may also occur due to different definitions of sustaining versus non-sustaining.

The following table provides a reconciliation of AISC per ounce of gold sold to cost of sales for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Cost of sales	75,658	69,691	219,225	212,241
Less: Cost of sales of non-mining operations 1	(195)	(134)	(494)	(478)
Less: Depreciation and amortization	(10,943)	(10,625)	(31,780)	(31,320)
Less: Sales of silver	(3,199)	(1,598)	(9,715)	(5,884)
Less: Sales of electric energy	(1,119)	(994)	(3,275)	(2,796)
Add: Administrative expenses	3,495	3,614	11,625	14,007
Less: Depreciation and amortization of administrative expenses 2	(218)	(356)	(989)	(1,089)
Add: Sustaining leases and leaseback 3	2,241	1,995	5,925	5,011
Add: Sustaining exploration 4	256	1,569	548	3,162
Add: Sustaining capital expenditures 5	5,646	3,866	15,556	12,296
AISC from continuing operations	71,622	67,028	206,626	205,150
Gold sold from continuing operations (oz)	50,196	56,930	157,669	166,308
All-in sustaining costs per ounce of gold sold from continuing operations ($/oz)	$1,427	$1,177	$1,311	$1,234
AISC from discontinued operations	31,153	37,018	76,911	89,280
Gold sold from discontinued operations (oz)	9,947	20,815	31,737	49,121
All-in sustaining costs per ounce of gold sold from discontinued operations ($/oz)	$3,132	$1,778	$2,423	$1,818
AISC	102,775	104,046	283,537	294,430
Gold sold (oz)	60,143	77,745	189,406	215,429
All-in sustaining costs per ounce of gold sold ($/oz)	$1,709	$1,338	$1,497	$1,367

1.	Cost of sales of non-mining operations is the cost of sales excluding cost incurred by non-mining operations and the majority of this cost comprises cost of sales of latex.
2.	Depreciation and amortization of administrative expenses is included in the administrative expenses line on the unaudited condensed interim financial statements, and is mainly related to depreciation for corporate office spaces and local administrative buildings at the Hemco Property.
3.	Represents most lease payments as reported on the unaudited condensed interim financial statements of cash flows and is made up of the principal component of such cash payments, less non-sustaining lease payments. Lease payments for new development projects and capacity projects are classified as non-sustaining.
4.	Sustaining exploration: Exploration expenses and exploration and evaluation projects as reported on the unaudited condensed interim financial statements, less non-sustaining exploration. Explorations are classified as either sustaining or non-sustaining based on a determination of the type and location of the exploration expenditure. Exploration expenditures within the footprint of operating mines are considered costs required to sustain current operations and so are included in sustaining costs. Exploration expenditures focused on new ore bodies near existing mines (i.e. brownfield), new exploration projects (i.e. greenfield) or for other generative exploration activity not linked to existing mining operations are classified as non- sustaining.
5.	Sustaining capital expenditures: Represents the capital expenditures at existing operations including, periodic capitalized stripping and underground mine development costs, ongoing replacement of mine equipment and overhaul of existing equipment, and is calculated as total additions to property, plant and equipment (as reported on the consolidated statements of cash flows), less non-sustaining capital. Non-sustaining capital represents capital expenditures for major projects, including projects at existing operations that are expected to materially benefit the operation and provide a level of growth, as well as enhancement capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures during the three months ended September 30, 2023 are primarily related to major projects at the Hemco Property and Nechí Alluvial Property. The sum of sustaining capital expenditures and non-sustaining capital expenditures is reported as the total of additions of property plant and equipment in the unaudited condensed interim financial statements.

Net Free Cash Flow 

The Company uses the financial measure "net free cash flow", which is a non-IFRS financial measure, to supplement information regarding cash flows generated by operating activities. The Company believes that in addition to IFRS financial measures, certain investors and analysts use this information to evaluate the Company's performance with respect to its operating cash flow capacity to meet recurring outflows of cash.

Net free cash flow is calculated as cash flows generated by operating activities less non-discretionary sustaining capital expenditures and interest and dividends paid related to the relevant period.

The following table sets out the calculation of the Company's net free cash flow to net cash flows generated by

operating activities for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Net cash flows generated by operating activities	4,324	22,849	36,976	46,005
Non-discretionary items:
Sustaining capital expenditures	(5,646)	(3,866)	(15,556)	(12,296)
Interest paid	(2,707)	(1,431)	(6,451)	(3,601)
Dividends paid	(5,241)	(5,655)	(15,291)	(18,128)
Net cash flows used in (generated from) discontinued operations 1	10,181	(4,090)	12,763	(8,579)
Net free cash flow	911	7,807	12,441	3,401

1. Composition of net free cash flow has been revised to exclude net cash flows used in (generated from) discontinued operations.

Return on Capital Employed 

The Company uses ROCE as a measure of long-term operating performance to measure how effectively management utilizes the capital it has provided. This non-IFRS ratio is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The calculation of ROCE, expressed as a percentage, is Adjusted EBIT (calculated in the manner set out in the table below) divided by the average of the opening and closing capital employed for the 12 months preceding the period end. Capital employed for a period is calculated as total assets at the beginning of that period less total current liabilities. The following table sets out the calculation of ROCE as at September 30, 2023 and 2022.

	As at September 30,
	2023	2022
Adjusted EBITDA (Last 12 months)	158,899	146,972
Less: Depreciation and amortization (Last 12 months)	(43,515)	(46,536)
Adjusted EBIT (A)	115,384	100,436
Total Assets at the beginning of the Period	569,543	580,046
Less: Total current liabilities at the beginning of the Period	(134,581)	(110,601)
Opening Capital Employed (B)	434,962	469,445
Total Assets at the end of the Period	479,634	603,477
Less: Current Liabilities at the end of the Period	(93,993)	(135,161)
Closing Capital employed (C)	385,641	468,316
Average Capital employed (D)= (B) + (C) /2	410,302	468,881
ROCE (A/D)	28 %	21 %

Net Debt to Adjusted EBITDA Ratio 

Net Debt to Adjusted EBITDA ratio is a non-IFRS ratio that provides the liquidity position of the Company. The calculation of net debt shown below is calculated as nominal undiscounted debt including leases, less cash and cash equivalents. The following sets out the calculation of Net Debt to Adjusted EBITDA ratio as at September 30, 2023 and 2022.

	As at September 30,
	2023	2022
Loans and other borrowings	33,692	56,322
Less: Cash and cash equivalents	(32,933)	(38,805)
Net Debt	759	17,517
Adjusted EBITDA (Last 12 months)	146,694	155,084
Net Debt to Adjusted EBITDA ratio	0.00x	0.12x

Average Realized Price

The Company uses "average realized price per ounce of gold" and "average realized price per ounce of silver", which are non-IFRS financial measures. Average realized metal price represents the revenue from the sale of the underlying metal as per the statement of operations, adjusted to reflect the effect of trading at holding level (parent Company) on the sales of gold purchased from subsidiaries. Average realized prices are calculated as the revenue related to gold and silver sales divided by the number of ounces of metal sold. The following table sets out the reconciliation of average realized metal prices to sales of gold and sales of silver for the three and nine months ended September 30, 2023 and 2022: 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Sales of gold from continuing operations	96,450	97,868	303,117	302,220
Gold sold from continuing operations (oz)	50,196	56,930	157,669	166,308
Average realized price per ounce of gold sold from continuing operations ($/oz)	1,921	1,719	1,922	1,817
Sales of gold from discontinued operations	19,178	35,877	61,516	88,990
Gold sold from discontinued operations (oz)	9,947	20,815	31,737	49,121
Average realized price per ounce of gold sold from discontinued operations ($/oz)	1,928	1,724	1,938	1,812
Average realized price per ounce of gold sold ($/oz)	1,923	1,720	1,925	1,816
Sales of silver from continuing operations	3,199	1,722	9,860	6,180
Silver sold from continuing operations (oz)	135,776	84,427	416,329	269,455
Average realized price per ounce of silver sold from continuing operations ($/oz)	24	20	24	23
Sales of silver from discontinued operations	72	124	217	296
Silver sold from discontinued operations (oz)	3,077	6,436	9,220	16,409
Average realized price per ounce of silver sold from discontinued operations ($/oz)	23	19	24	18
Average realized price per ounce of silver sold ($/oz)	24	20	24	23

SOURCE Mineros S.A.

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