| COMPANY |
Gatos Silver, Inc. |
| COURT |
United States District Court for the District of Colorado |
| CASE NUMBER |
22-cv-00453 |
| JUDGE |
The Honorable Andrew Patrick Gordon |
| CLASS PERIOD |
October 28, 2020 - January 25, 2022 |
| SECURITY TYPE |
Securities |
Gatos investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than April 25, 2022 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired Gatos Silver, Inc. (“Gatos”) (NYSE: GATO): (1) common stock pursuant and/or traceable to the Registration Statement issued in connection with Gatos’ initial public offering (the “IPO” or “Offering”) conducted on or about October 28, 2020; and/or (2) securities between October 28, 2020 and January 25, 2022, inclusive (the “Class Period”).
Case Background:
Gatos focuses on the production, development and exploration of silver- and zincrich mineral deposits. Its primary efforts are the operation of the Los Gatos Joint Venture (“LGJV”) in Chihuahua, Mexico with Dowa Metals and Mining Co., Ltd. In addition to commercializing lead and zinc concentrates, Gatos performs additional definition drilling to define and expand mineralization of the Cerro Los Gatos deposit (“CLG”).
On October 29, 2020, Gatos filed its prospectus on a Form 424B4, which forms part of the Registration Statement. In the IPO, Gatos sold approximately 24,644,500 shares of common stock at a price of $7.00 per share. Gatos received net proceeds of approximately $156.1 million from the Offering. The proceeds from the IPO were purportedly to be used to retire a portion of the Los Gatos Working Capital Facility, repurchase an 18.5% interest in the Los Gatos Joint Venture, fund near-term debt service needs, conduct a feasibility study for a 3,000 tpd production rate expansion of the CLG mine, and working capital and general corporate purposes.
The Registration Statement stated that “[t]he Los Gatos Technical Report, which has an effective date of July 1, 2020, estimates that the deposit contains 9.6 million diluted tonnes of proven and probable mineral reserves (or 5.0 million diluted tonnes of proven and probable mineral reserves on a 51.5% basis), with 6.4 million diluted tonnes of proven mineral reserves (or 3.3 million diluted tonnes of proven mineral reserves on a 51.5% basis) and 3.3 million diluted tonnes of probable mineral reserves (or 1.7 million diluted tonnes of probable mineral reserves on a 51.5% basis). Average proven and probable mineral reserve grades are 306 g/t silver, 0.35 g/t gold, 2.76% lead and 5.65% zinc.”
The truth about Gatos emerged after the market closed on January 25, 2022, when Gatos revealed in a press release that “there were errors in the technical report entitled ‘Los Gatos Project, Chihuahua, Mexico’ with an effective date of July 1, 2020 . . . , as well as indications that there is an overestimation in the existing resource model.” On a preliminary basis, Gatos estimated a potential reduction of the metal content of the mineral reserve ranging from 30% to 50% of the metal content remaining after depletion.
Following this news, Gatos’ stock price fell $7.02, or 69%, to close at $3.17 per share on January 26, 2022. As of the date the initial complaint was filed, Gatos shares were trading as low as $3.20 per share, a nearly 54% decline from the $7.00 per share IPO price.
The complaint alleges that in the Registration Statement and throughout the Class Period, the defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about Gatos’ business, operations, and prospects. Specifically, the complaint alleges that the defendants failed to disclose to investors that: (1) the technical report for Gatos’s primary mine, the Cerro Los Gatos deposit, contained certain errors; (2) among other things, the mineral reserves had been overestimated by as much as 50%; and (3) as a result of the foregoing, the defendants’ positive statements about Gatos’ business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453 or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.