Pan American Silver Announces 2023 Production and Cost Guidance Conference Call and Webcast April 27 at 11:00 am ET
Pan American Silver Announces 2023 Production and Cost Guidance
Conference Call and Webcast April 27 at 11:00 am ET
VANCOUVER, British Columbia--(BUSINESS WIRE)--April 27, 2023--Pan American Silver
Corp. (NYSE: PAAS) (TSX: PAAS) ("Pan American") today provided its guidance for
production, costs and certain expenditures in 2023. Pan American completed its previously
announced transaction with Yamana Gold Inc. ("Yamana") on March 31, 2023, resulting in the
addition of four producing mines (the "Acquired Operations"), plus several exploration and
development projects in Chile, Brazil and Argentina. The guidance reflects the contribution from
the Acquired Operations for the nine-month period from March 31 to December 31, 2023.
Guidance for the original Pan American operations reflect the full 12-month period of 2023.
"The 2023 guidance is in line with our expectation for a material increase in silver and gold
production together with lower consolidated operating costs following the acquisition of
Yamana, indicative of the accretive nature of the transaction," said Michael Steinmann, President
and Chief Executive Officer of Pan American. "The integration is progressing well and after only
one month of ownership of the Acquired Operations, we are on track to realize the $40 to $60
million in annual synergies we had identified. Our teams are now focused on delivering the
production and cost targets through the safe, efficient and environmentally sound operation of
our mines."
Pan American reports mines under either a Silver Segment or a Gold Segment with costs
calculated on a by-product basis (by-product metal sales a credit to costs to produce the primary
metal for that segment). Yamana reported production and costs in gold equivalent ounces
("GEO"), which is not directly comparable to the way in which Pan American reports its
production and costs.
The guidance also incorporates the application of Pan American's accounting and reporting
policies to the Acquired Operations, of which the most significant changes relate to re-allocating
large portions of previously capitalized mine development to operating expenses, and re-
categorizing certain capital expenditures (including exploration and tailings facility expansions)
from project capital to sustaining capital. This re-categorization will result in higher all-in
sustaining costs ("AISC"). Specifically, for the Acquired Operations in 2023, Pan American is
providing project capital guidance for Jacobina only, where it will be invested to complete
certain growth-related projects that were already underway prior to the closing of the transaction
with Yamana and to initiate a comprehensive mine optimization study. For the remaining
Acquired Operations, all capital expenditures are being classified as sustaining capital for the
remainder of 2023.
The following estimates contain forward-looking information about expected future events and
financial and operating performance of Pan American. Readers should refer to the risks and
assumptions set out in the "Cautionary Note Regarding Forward-Looking Statements and
Information" at the end of this news release. Pan American may revise forecasts during the year
to reflect actual results to date and those anticipated for the remainder of the year.
2023 Production and Cost Forecast
Silver
Production
(million
ounces)
Gold
Production
(thousand
ounces)
Cash Costs
($ per
ounce)(1)
AISC
($ per
ounce)(1)
Silver Segment:
La Colorada (Mexico) 5.5 - 5.9 3 14.00 - 15.50 17.00 - 18.50
Cerro Moro (Argentina)(2) 3.6 - 3.9 77 - 85 5.50 - 8.80 11.00 - 14.50
Huaron (Peru) 3.6 - 3.8 — 5.80 - 7.30 11.50 - 13.00
San Vicente (Bolivia)(3) 2.5 - 2.6 — 14.10 - 15.90 16.00 - 17.50
Manantial Espejo (Argentina)(4) 0.2 2 11.80 - 12.90 13.70 - 14.80
Total 15.4 - 16.4 82 - 90 10.00 - 12.00 14.00 - 16.00
Gold Segment:
Jacobina (Brazil)(2) — 144 - 164 750 - 810 1,020 - 1,110
El Peñón (Chile)(2) 2.9 - 3.5 122 - 142 600 - 770 785 - 985
Timmins (Canada) — 130 - 141 1,340 - 1,480 1,650 - 1,800
Shahuindo (Peru) 0.3 134 - 146 780 - 920 1,300 - 1,470
La Arena (Peru) — 98 - 106 1,200 - 1,270 1,600 - 1,690
Minera Florida (Chile)(2) 0.2 - 0.3 62 - 74 1,340 - 1,430 1,700 - 1,850
Dolores (Mexico) 2.2 - 2.5 98 - 107 1,110 - 1,240 1,230 - 1,360
Total 5.6 - 6.6 788 - 880 975 - 1,100 1,275 - 1,425
12-months Pan American Original Assets
Production(5) 14.3 - 15.3 465 - 505 n/a n/a
9-months Acquired Operations Production(6) 6.7 - 7.7 405 - 465 n/a n/a
Total Production 21.0 - 23.0 870 - 970 n/a n/a
(1)
AISC is a non-GAAP measure. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of
this news release for further information on this measure. The AISC forecast assumes metal prices of $22.00/oz
for silver, $1,850/oz for gold, $3,000/tonne ($1.36/lb) for zinc, $2,100/tonne ($0.95/lb) for lead, and
$8,000/tonne ($3.63/lb) for copper; and average annual exchange rates relative to 1 USD of 18.75 for the
Mexican peso ("MXN"), 3.75 for the Peruvian sol ("PEN"), 257.00 for the Argentine peso ("ARS"), 7.00 for the
Bolivian boliviano ("BOB"), $1.33 for the Canadian dollar ("CAD"), $800.00 for the Chilean peso ("CLP") and
$5.00 for the Brazilian real ("BRL").
(2) 2023 production and AISC forecasts for Cerro Moro, Jacobina, El Peñón and Minera Florida reflects ownership
for the nine- month period from March 31 to December 31, 2023.
(3) San Vicente data represents Pan American’s 95.0% interest in the mine's production.
(4) Mining activities have been completed at Manantial Espejo and the operation was placed on care and
maintenance at the end of 2022.
(5) Includes La Colorada, Huaron, San Vicente, Manantial Espejo, Timmins, Shahuindo, La Arena and Dolores
mines.
(6) Reflects ownership of the Cerro Moro, Jacobina, El Peñón and Minera Florida mines for the nine-month period
from March 31 to December 31, 2023.
2023 Consolidated Base Metal Production Forecast
Zinc
(kt)
Lead
(kt)
Copper
(kt)
Consolidated
Production 41 - 45 18 - 21 5
2023 Capital Expenditure Forecast
Expenditures ($ millions)
Sustaining Capital
La Colorada (Mexico) 15.0 - 16.0
Cerro Moro (Argentina) 20.0 - 21.0
Huaron (Peru) 17.0 - 18.0
San Vicente (Bolivia) 3.5 - 4.5
Jacobina (Brazil) 42.0 - 44.0
El Peñón (Chile) 25.5 - 26.5
Timmins (Canada) 41.0 - 43.0
Shahuindo (Peru) 72.0 - 74.0
La Arena (Peru) 38.0 - 40.0
Minera Florida (Chile) 24.0 - 25.0
Dolores (Mexico) 7.0 - 8.0
Sustaining Capital Sub-total 305.0 - 320.0
Project Capital
La Colorada Projects (Mexico) 16.0 - 18.0
Huaron Projects (Peru) 22.0 - 25.0
Timmins Projects (Canada) 11.0 - 13.0
Jacobina Projects (Brazil) 26.0 - 29.0
Project Capital Sub-Total 75.0 - 85.0
Total Capital Expenditures 380.0 - 405.0
In 2023, Pan American plans to invest an estimated $75 to $85 million of project capital in the
following projects.
At Jacobina, $26 to $29 million of project capital will be invested during the nine-months
of 2023 to stabilize the operation with the expansion underway, which involves
upgrading plant facility infrastructure to sustain a gold recovery of about 96%.
At La Colorada, $16 to $18 million of project capital will be invested in: continued
exploration and in-fill drilling on the Skarn project; advancing engineering work towards
a preliminary economic assessment for the Skarn project, which is expected to be
released in the second half of 2023; and advancing construction of the concrete-lined
ventilation shaft, which is expected to benefit both the long-term development of the
Skarn project, as well as the current vein-system operation. We expect to complete the
concrete-lined ventilation shaft by the end of 2023 and install and commission the high-
capacity fans in mid-2024. The shaft is currently at a depth of 270 metres, with the final
depth being 560 metres. Pan American assumes mining ore below reserve grades until
this additional infrastructure for the ventilation system is commissioned.
At Huaron, $22 to $25 million of project capital will be invested in advancing the
construction of a tailings pressure filtration plant and a dry-stack tailings storage facility
to replace the conventional tailings storage facility currently in operation. The project is
expected to be completed in 2024 and operational thereafter.
At Timmins, $12 to $13 million of project capital will be invested in the construction of a
paste fill plant at Bell Creek, which will improve backfill quality and availability for
more effective ground support systems and to increase resource recovery and throughput.
General and Administrative and Greenfield Exploration Expenditures
In order to include ongoing adjustments, management intends to provide estimates for annual
2023 consolidated general and administrative expenses, greenfield exploration expenditures and
care and maintenance spending as part of the unaudited financial results for the first quarter of
2023, scheduled to be released on May 10, 2023 after market close.
Strong Financial Position Post Completion of Yamana Acquisition
As at March 31, 2023, Pan American had cash and short-term investments of $513.1 million,
inclusive of $204.7 million related to the MARA project in Argentina, and $425.0 million
available under its $750.0 million revolving Sustainability-Linked Credit Facility.
Conference Call and Webcast
Date: April 27, 2023
Time: 11:00 am ET (8:00 am PT)
Dial-in numbers: 1-877-883-0383 (toll-free in Canada and the U.S.)
+1-412-902-6506 (international participants)
Conference ID: 9134520
Webcast: https://edge.media-server.com/mmc/p/mk5c7bnu/
The live webcast and presentation slides will be available at
https://www.panamericansilver.com/invest/events-and-presentations/. An archive of the webcast
will also be available for three months.
Technical Information
Scientific and technical information contained in this news release have been reviewed and
approved by Martin Wafforn, P.Eng., Senior Vice President Technical Services and Process
Optimization, and Christopher Emerson, FAusIMM, Vice President Business Development and
Geology, each of whom is a Qualified Person, as the term is defined in Canadian National
Instrument 43-101 - Standards of Disclosure of Mineral Projects.
For additional information about Pan American Silver's material mineral properties, please refer
to Pan American Silver’s Annual Information Form dated February 22, 2023, filed at
www.sedar.com, or Pan American Silver's most recent Form 40-F filed with the SEC. For further
information about the Yamana material mineral properties, please refer to Yamana’s Annual
Information Form dated March 29, 2023, filed at www.sedar.com or Yamana’s most recent Form
40-F filed with the SEC.
About Pan American
Pan American is a leading producer of precious metals in the Americas, operating silver and gold
mines in Canada, Mexico, Peru, Bolivia, Argentina, Chile and Brazil. We also own the Escobal
mine in Guatemala that is currently not operating. We have been operating in the Americas for
nearly 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 NYSE and the Toronto Stock Exchange under the symbol "PAAS".
Learn more at panamericansilver.com.
In this news release, we refer to measures that are not generally accepted accounting principle
("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:
Cash Costs. Pan American's method of calculating cash costs may differ from the
methods used by other entities and, accordingly, Pan American's Cash Costs may not be
comparable to similarly titled measures used by other entities. Investors are cautioned
that Cash Costs should not be construed as an alternative to production costs,
depreciation and amortization, and royalties determined in accordance with IFRS as an
indicator of performance.
All-in Sustaining Costs per silver or gold ounce sold, net of by-product credits ("AISC").
Pan American has adopted AISC as a measure of its consolidated operating performance
and its ability to generate cash from all operations collectively, and Pan American
believes it is a more comprehensive measure of the cost of operating our consolidated
business than traditional cash costs per payable ounce, as it includes the cost of replacing
ounces through exploration, the cost of ongoing capital investments (sustaining capital),
general and administrative expenses, as well as other items that affect Pan American's
consolidated earnings and cash flow.
This news release should be read in conjunction with Pan American's Audited Consolidated
Financial Statements and Management's Discussion and Analysis for the year ended December
31, 2022, and Pan American's Annual Information Form for the year ended December 31, 2022.
This material is available on Pan American’s website at panamericansilver.com, on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
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, and estimates of current
production levels that remain subject to verification and adjustment, including our estimated
production of silver, gold and other metals forecasted for 2023, our estimated Cash Costs, AISC
and expenditures in 2023; future anticipated prices for gold, silver and other metals and assumed
foreign exchange rates; whether Pan American is able to maintain a strong financial condition
and have sufficient capital, or have access to capital through our corporate credit facility or
otherwise, to sustain our business and operations and complete any anticipated capital spending;
whether Pan American is able to realize synergies as a result of the transaction with Yamana; ;
the ability of Pan American to successfully complete any capital projects, including with respect
to Jacobina, La Colorada, Huaron, and Timmins, and the expected economic or operational
results derived from those projects, and the impacts of any such projects on Pan American; the
ongoing impact and timing of the court-mandated ILO 169 consultation process in Guatemala;
and the future results of exploration activities, including with respect to the Skarn exploration
program at La Colorada.
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 world-wide economic and social impact of COVID-19 and the extent of any impacts related
to the COVID-19 pandemic; tonnage of ore to be mined and processed; ore grades and
recoveries; prices for silver, gold and base metals remaining as estimated; currency exchange
rates remaining as estimated; capital, decommissioning and reclamation estimates; our mineral
reserve and 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 properties
and the surface rights necessary for our 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 effects of COVID-19, and any other pandemics on our
operations and workforce, and the effects on global economies and society; 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, including in Chubut, Argentina, 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.
Contacts
For more information about Pan American:
Siren Fisekci
VP, Investor Relations & Corporate Communications
Ph: 604-806-3191
Email: [email protected]