Le Lézard
Classified in: Mining industry, Business
Subjects: EARNINGS, Conference Call, Webcast

Pan American Silver Reports First Quarter 2024 Results


Pan American Silver Corp. (NYSE: PAAS) (TSX: PAAS) ("Pan American" or the "Company") reports unaudited results for the quarter ended March 31, 2024 ("Q1 2024").

"Cash flow from operations before working capital changes of $133.2 million in the first quarter reflects strong performance on production and costs, with silver and gold production in line with our expectations, and costs for both metals lower than expected," said Michael Steinmann, President and Chief Executive Officer. "We progressed our major projects, notably the new ventilation infrastructure at La Colorada and the plant upgrades at Jacobina, while returning $58.0 million of capital to shareholders through $36.5 million in total cash dividends paid and $21.5 million in shares repurchased."

Added Mr. Steinmann: "The sale of our La Arena asset in Peru, announced on May 1, 2024, will further improve our financial position with an upfront cash payment of $245 million on closing, and is aligned with our strategy of continued portfolio optimization."

The following highlights for Q1 2024 include certain measures that are not generally accepted accounting principles ("non-GAAP") financial measures. Please refer to the section titled "Alternative Performance (Non-GAAP) Measures" at the end of this news release for further information on these measures.

Consolidated Q1 2024 Highlights:

Q1 2024 Project Updates:

Pan American agrees to sell La Arena

On May 1, 2024, the Company announced that it has agreed to sell the La Arena gold mine as well as the La Arena II project in Peru, to Jinteng (Singapore) Mining Pte. Ltd., a subsidiary of Zijin Mining Group Co., Ltd. (collectively, "Zijin"). Under the terms of the agreement, at closing Zijin will pay $245 million in cash and will grant Pan American a life-of-mine gold net smelter return royalty of 1.5% for the La Arena II project. Additionally, upon commencement of commercial production from the La Arena II project, the agreement provides for an additional payment from Zijin of $50 million in cash. The closing of the transaction is subject to customary conditions and receipt of regulatory approvals. The Company expects the transaction to be completed in the third quarter of 2024.

Following the completion of the La Arena transaction, Pan American plans to update the 2024 Operating Outlook disclosed in its MD&A dated February 21, 2024. At La Arena, the 2024 Operating Outlook assumed 83 to 95 thousand ounces of gold production at Cash Costs of $1,400 to $1,470 per ounce and AISC of $1,675 to $1,775 per ounce. Sustaining capital expenditures were estimated to total $18 million to $19 million in 2024.

CONSOLIDATED RESULTS

 

Three months
ended March 31,
2024

Three months
ended March 31,
2023

Weighted average shares during period (thousands)

 

364,486

 

210,681

Shares outstanding end of period (thousands)

 

362,940

 

364,439

 

 

 

 

Three months ended
March 31,

 

2024

2023

FINANCIAL

 

 

Revenue

$

601.4

$

390.3

Cost of Sales(1)

$

530.4

$

313.1

Mine operating earnings

$

71.0

$

77.2

Net (loss) earnings

$

(30.8)

$

16.5

Basic (loss) earnings per share(2)

$

(0.08)

$

0.08

Adjusted earnings(3)

$

4.7

$

21.2

Basic adjusted earnings per share(2)(3)

$

0.01

$

0.10

Net cash generated from operating activities

$

61.1

$

51.3

Net cash generated from operating activities before changes in working capital(3)

$

133.2

$

43.3

Sustaining capital expenditures(3)

$

65.7

$

32.5

Non-sustaining capital expenditures(3)(4)

$

36.0

$

11.5

Cash dividend paid per share(2)

$

0.10

$

0.10

PRODUCTION

 

 

Silver (thousand ounces)

 

5,009

 

3,891

Gold (thousand ounces)

 

222.9

 

122.7

Zinc (thousand tonnes)

 

9.8

 

10.6

Lead (thousand tonnes)

 

4.6

 

5.3

Copper (thousand tonnes)

 

1.7

 

1.1

CASH COSTS(3) ($/ounce)

 

 

Silver Segment

 

12.67

 

12.19

Gold Segment

 

1,207

 

1,120

AISC(3) ($/ounce)

 

 

Silver Segment

 

15.89

 

14.13

Gold Segment

 

1,580

 

1,196

AVERAGE REALIZED PRICES(5)

 

 

Silver ($/ounce)

 

22.61

 

22.75

Gold ($/ounce)

 

2,078

 

1,895

Zinc ($/tonne)

 

2,424

 

3,133

Lead ($/tonne)

 

2,063

 

2,160

Copper ($/tonne)

 

8,373

 

8,903

(1)

Cost of Sales includes production costs, depreciation and amortization and royalties.

(2)

Per share amounts are based on basic weighted average common shares.

(3)

Non-GAAP measure; please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.

(4)

Non-sustaining capital expenditures primarily relate to project capital that is expected to increase future production.

(5)

Metal prices stated are inclusive of final settlement adjustments on concentrate sales.

 

OPERATING PERFORMANCE

 

Silver Production
(thousand ounces)

Gold Production
(thousand ounces)

Cash Costs
($ per ounce)(1)

AISC
($ per ounce)(1)

Silver Segment

 

 

 

 

La Colorada (Mexico)

1,107

0.5

25.01

25.37

Cerro Moro (Argentina)

766

20.9

1.62

6.43

Huaron (Peru)

882

--

8.24

13.99

San Vicente (Bolivia)(2)

788

--

15.56

17.62

Total Silver Segment(3)

3,543

21.4

12.67

 15.89

Gold Segment

 

 

 

 

Jacobina (Brazil)

--

46.9

934

1,263

El Peñon (Chile)

851

31.5

1,055

1,348

Timmins (Canada)

4

31.3

1,645

2,014

Shahuindo (Peru)

70

33.6

952

1,216

La Arena (Peru)

9

18.7

1,252

1,536

Minera Florida (Chile)

102

21.4

1,496

1,809

Dolores (Mexico)

430

17.9

1,412

2,367

Total Gold Segment(3)

1,466

201.4

1,207

 1,580

Total Consolidated(3)

5,009

222.9

 

(1)

Non-GAAP measure; please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.

(2)

San Vicente data represents Pan American's 95.0% interest in the mine's production. 

(3)

Totals may not add due to rounding.

Cash Costs, AISC, adjusted earnings, basic adjusted earnings per share, sustaining and non-sustaining capital, working capital, total debt and net cash are non-GAAP financial measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.

This news release should be read in conjunction with Pan American's unaudited Condensed Interim Consolidated Financial Statements and our MD&A for the three months ended March 31, 2024. This material is available on Pan American's website at https://panamericansilver.com/invest/financial-reports-and-filings/, on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

CONFERENCE CALL AND WEBCAST

Date:

May 9, 2024

Time:

11:00 am ET (8:00 am PT)

Dial-in numbers:

1-888-259-6580 (toll-free in Canada and the U.S.)

 

(+1) 416-764-8624 (international participants)

Conference ID:

12621721

Webcast:

https://events.q4inc.com/attendee/962587784

The live webcast, presentation slides and the report for Q1 2024 will be available at https://www.panamericansilver.com/invest/events-and-presentations/. An archive of the webcast will also be available for three months.

About Pan American

Pan American Silver is a leading producer of silver and gold in the Americas, operating mines in Canada, Mexico, Peru, Brazil, Bolivia, Chile and Argentina. We also own the Escobal mine in Guatemala that is currently not operating, and we hold interests in exploration and development projects. We have been operating in the Americas for three decades, earning an industry-leading reputation for sustainability performance, operational excellence and prudent financial management. We are headquartered in Vancouver, B.C. and our shares trade on the New York Stock Exchange and the Toronto Stock Exchange under the symbol "PAAS".

Learn more at panamericansilver.com

Follow us on LinkedIn

Alternative Performance (Non-GAAP) Measures

In this news release, we refer to measures that are non-GAAP financial measures. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning as prescribed by IFRS as an indicator of performance, and may differ from methods used by other companies with similar descriptions. These non-GAAP financial measures include:

Readers should refer to the "Alternative Performance (non-GAAP) Measures" section of Pan American's Q1 2024 MD&A for a more detailed discussion of these and other non-GAAP measures and their calculation.

Cautionary Note Regarding Forward-Looking Statements and Information

Certain of the statements and information in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian provincial securities laws. All statements, other than statements of historical fact, are forward-looking statements or information. Forward-looking statements or information in this news release relate to, among other things: future financial or operational performance, including our estimated production of silver, gold and other metals forecasted for 2024, our estimated Cash Costs and AISC, and our sustaining and project capital expenditures in 2024; expectations with respect to mineral grades and the impact of any variations relative to actual grades experienced; the anticipated dividend payment date of May 31, 2024; the receipt of regulatory approvals and successful completion of the proposed sale of La Arena, as well as the anticipated timing for the completion thereof; the anticipated commencement of production from the La Arena II project and the receipt of the contingent payment associated therewith; the ability of Pan American to successfully complete any capital projects including at La Colorada, Huaron and Timmins, and any anticipated economic or operational benefits to be derived from those projects; the completion of the optimization study at the Jacobina mine, and any potential benefits expected to be derived therefrom; future anticipated prices for gold, silver and other metals and assumed foreign exchange rates; and Pan American's plans and expectations for its properties and operations.

These forward-looking statements and information reflect Pan American's current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by Pan American, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include: the impact of inflation and disruptions to the global, regional and local supply chains; tonnage of ore to be mined and processed; future anticipated prices for gold, silver and other metals and assumed foreign exchange rates; the timing and impact of planned capital expenditure projects, including anticipated sustaining, project, and exploration expenditures; the ability to satisfy the closing conditions and receive regulatory approval to complete the sale of La Arena; the ongoing impact and timing of the court-mandated ILO 169 consultation process in Guatemala; ore grades and recoveries; capital, decommissioning and reclamation estimates; our mineral reserve and mineral resource estimates and the assumptions upon which they are based; prices for energy inputs, labour, materials, supplies and services (including transportation); no labour-related disruptions at any of our operations; no unplanned delays or interruptions in scheduled production; all necessary permits, licenses and regulatory approvals for our operations are received in a timely manner; our ability to secure and maintain title and ownership to mineral properties and the surface rights necessary for our operations; whether Pan American is able to maintain a strong financial condition and have sufficient capital, or have access to capital through our corporate sustainability-linked credit facility or otherwise, to sustain our business and operations; and our ability to comply with environmental, health and safety laws. The foregoing list of assumptions is not exhaustive.

Pan American cautions the reader that forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements or information contained in this news release and Pan American has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: the duration and effect of local and world-wide inflationary pressures and the potential for economic recessions; fluctuations in silver, gold and base metal prices; fluctuations in prices for energy inputs, labour, materials, supplies and services (including transportation); fluctuations in currency markets (such as the PEN, MXN, ARS, BOB, GTQ, CAD, CLP and BRL versus the USD); operational risks and hazards inherent with the business of mining (including environmental accidents and hazards, industrial accidents, equipment breakdown, unusual or unexpected geological or structural formations, cave-ins, flooding and severe weather); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom Pan American does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards; employee relations; relationships with, and claims by, local communities and indigenous populations; our ability to obtain all necessary permits, licenses and regulatory approvals in a timely manner; changes in laws, regulations and government practices in the jurisdictions where we operate, including environmental, export and import laws and regulations; changes in national and local government, legislation, taxation, controls or regulations and political, legal or economic developments in Canada, the United States, Mexico, Peru, Argentina, Bolivia, Guatemala, Chile, Brazil or other countries where Pan American may carry on business, including legal restrictions relating to mining, risks relating to expropriation and risks relating to the constitutional court-mandated ILO 169 consultation process in Guatemala; diminishing quantities or grades of mineral reserves as properties are mined; increased competition in the mining industry for equipment and qualified personnel; and those factors identified under the caption "Risks Related to Pan American's Business" in Pan American's most recent form 40-F and Annual Information Form filed with the United States Securities and Exchange Commission and Canadian provincial securities regulatory authorities, respectively.

Although Pan American has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Investors are cautioned against undue reliance on forward-looking statements or information. Forward-looking statements and information are designed to help readers understand management's current views of our near- and longer-term prospects and may not be appropriate for other purposes. Pan American does not intend, nor does it assume any obligation to update or revise forward-looking statements or information, whether as a result of new information, changes in assumptions, future events or otherwise, except to the extent required by applicable law.


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