Sam Boughedda

Investing.com — Shares of Gatos Silver Inc (NYSE:) plunged more than 69% Wednesday after revealing a technical report — the Los Gatos Project, Chihuahua, Mexico report — from July had errors and indications of an overestimation in the existing resource model.

According to Cerro Los Gatos, the potential for a reduction of 30% to 50% in Cerro Los Gatos’ metal content is estimated by the company. “The 2020 Technical Report shouldn’t be relied upon,” he stated.

Gatos reported that “The company works with independent engineers to better understand how large the overestimation is, including conducting a detailed reconcilion of production to prior models and reserve calculation estimations, as well creating a new Life of Mine plan (“LOM”),” in its statement. 

It is expected that the work will be complete in the second half 2022.

Gatos may be forced to ask its lender for a waiver because of the resource underestimate. At December 31st, the company still owes $13million under its credit card. They believe that they have enough liquidity to handle the entire process.

RBC Capital’s and CIBC analysts downgraded RBC Capital stock. Michael Siperco from RBC stated that disclosures “are a significant adverse event and put our estimations and valuations in doubt.”