Pan American Silver Announces $79.3 million in Net Cash Generated From Operating Activities in Q4 2017 Increases Dividend by 40%
Pan American Silver Announces $79.3 million in Net Cash Generated From Operating Activities in Q4 2017
Increases Dividend by 40%
All financial figures are in U.S. dollars unless otherwise indicated.
Vancouver, B.C. - February 20, 2018 - Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAAS) (“Pan American”, or the
“Company”) today reported unaudited results for the fourth quarter ("Q4 2017") and year-ended December 31, 2017.
These results are preliminary and could change based on final audited results.
“We generated $224.6 million in cash flow from operations in 2017. La Colorada, Morococha, Huaron and Dolores had
record annual operating free cash flow," said Michael Steinmann, President and Chief Executive Officer of the Company.
"Our cash and short-term investments increased by about $41 million in the quarter, resulting in a balance of $227.5
million at year-end. Operations at Morococha have been performing particularly well, which has led to a reversal of the
impairment we booked at that mine in 2015 and made a significant impact on earnings in Q4 2017."
Added Mr. Steinmann: "With a strong financial position, expansions completed at our largest mines, and operations
generating strong cash flow, the Board of Directors today declared a 40% increase in the dividend.”
Suite 1500 - 625 Howe St.
Vancouver, BC Canada, V6C 2T6
604-684-1175
www.panamericansilver.com
PAN AMERICAN SILVER CORP .
1
Highlights for the three and twelve-month periods ended December 31, 2017:
• Silver production in Q4 2017 was 6.58 million ounces, which is 4% higher than production in the fourth quarter
of 2016 ("Q4 2016"), primarily reflecting increases at Dolores, La Colorada and Morococha. Annual silver
production of 25.0 million ounces was similar to the 25.4 million produced in 2016, as increases at La Colorada
and Dolores offset the expected decline from the conclusion of Alamo Dorado operations.
• Gold production was 43.7 thousand ounces in Q4 2017 compared with 43.9 thousand ounces in Q4 2016.
Annual 2017 gold production was 160.0 thousand ounces compared with 183.9 thousand ounces in 2016. The
decrease was due to lower ore grades at Manantial Espejo and the conclusion of Alamo Dorado operations.
• Zinc production of 14.7 thousand tonnes in Q4 2017 was up 11% compared with Q4 2016. Annual 2017 zinc
production of 55.3 thousand tonnes was 7% more than in 2016. The increases primarily reflect the expansion of
the La Colorada operations.
• Lead production of 5.4 thousand tonnes in Q4 2017 was 2% lower than in Q4 2016. Annual 2017 production of
21.5 thousand tonnes was up 6% from 2016, driven by La Colorada.
• Copper production of 3.0 thousand tonnes in Q4 2017 and annual 2017 production of 13.4 thousand tonnes
were 3% and 7% lower, respectively, than the corresponding 2016 periods, largely due to mine sequencing at
Morococha.
• Revenue of $226.0 million in Q4 2017 was up 19% from Q4 2016. The increase was largely attributable to higher
sales volumes for all metals, except copper, and higher prices for all metals, except silver. Positive settlement
adjustments on concentrate shipments also contributed to the increase. Annual 2017 revenue was $816.8
million, up 5% from 2016, due to higher base metal prices and lower treatment and refining charges.
• Consolidated All-In Sustaining Costs per Silver Ounce Sold (“AISCSOS”) were $10.86 in Q4 2017 compared with
$10.38 in Q4 2016. Annual 2017 AISCSOS of $10.79 was $0.71 under the low end of management's original
forecast of $11.50 to $12.90 and within the revised forecast of $10.50 to $11.50.
• Consolidated cash costs per payable ounce of silver, net of by-product credits ("Cash Costs") were $3.18 in Q4
2017 compared with $6.66 in Q4 2016, reflecting higher productivity, increased by-product credits and
improved concentrate treatment terms. Annual 2017 Cash Costs of $4.55 were 28% lower than 2016, largely
due to increased throughput at La Colorada, higher by-product credits, and lower treatment and refining
charges.
• Net cash generated from operating activities was up 74% to $79.3 million in Q4 2017 compared with $45.7
million in Q4 2016, reflecting higher revenues, positive working capital changes and lower cash taxes. Annual
2017 operating cash flows of $224.6 million were 5% higher than the $214.8 million generated in 2016, driven
primarily by increased revenues and positive working capital changes, partially offset by higher cash taxes.
• Net earnings were $49.7 million ($0.32 basic earnings per share) in Q4 2017 compared with $22.3 million
($0.14 basic earnings per share) in Q4 2016. Q4 2017 net earnings include a $60.2 million reversal of the 2015
Morococha mine impairment. Annual 2017 net earnings were $123.5 million ($0.79 basic earnings per share)
compared with $101.8 million ($0.66 basic earnings per share) in 2016.
• Adjusted earnings were $19.2 million ($0.13 basic adjusted earnings per share) compared with $19.0 million
($0.12 basic adjusted earnings per share) in Q4 2016. Higher revenues in Q4 2017 were offset by increases in
production costs, including increased negative non-cash net realizable value inventory adjustments, as well as
higher depreciation and income tax expense. Annual 2017 adjusted earnings were $77.7 million ($0.51 basic
adjusted earnings per share) compared with $86.6 million ($0.57 basic adjusted earnings per share) in 2016.
• Liquidity and working capital position . During 2017, debt reduced by $32.7 million (including capital leases),
resulting in year end debt of $10.6 million, mostly related to finance lease liabilities. At December 31, 2017, the
Company had cash and short-term investment balances of $227.5 million, working capital of $410.8 million and
$300.0 million available under its revolving credit facility.
• Capital expenditures totaled $42.3 million in Q4 2017 compared with $56.5 million in Q4 2016. Annual 2017
capital expenditures were $145.8 million, including approximately $61.4 million of project capital, compared
with $198.5 million in 2016. The decrease was largely due to the completion of the La Colorada expansion,
partially offset by a $4.9 million year-over-year increase in sustaining capital.
• Dolores expansion. In 2017, we completed construction of the pulp agglomeration plant with commissioning
activities fully underway at year-end. We also advanced the underground mine development and reached the
planned daily stacking rate of 20,000 tonnes.
• The La Colorada expansion achieved full design processing rates of 1,800 tonnes per day by mid 2017 .
• COSE and Joaquin projects. We obtained authorizations to initiate construction on the two mining projects
located within ore trucking distance from our Manantial Espejo mine. At COSE, we have prepared the necessary
project infrastructure and advanced 148 metres on the underground decline.
• Pan American acquired a 12.1% interest in New Pacific Metals Corp. (approximately 16.44% fully diluted) for
approximately $22.7 million in November 2017. The acquisition provides Pan American with exposure to the
Silver Sand Project, a highly prospective exploration project located in the Potosí Department of Bolivia.
• A 40% increase in the quarterly cash dividend to $0.035 per common share, approximately $5.4 million in
aggregate cash dividends, has been approved by the Board of Directors. The dividend will be payable on or
about March 16, 2018, to holders of record of Pan American’s common shares as of the close on March 5, 2018.
Pan American's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada).
As is standard practice, the amounts and specific distribution dates of any future dividends will be evaluated
and determined by the Board of Directors on an ongoing basis.
The foregoing contains measures that are not generally accepted accounting principle ("non-GAAP") financial measures.
Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information
on these measures.
PAN AMERICAN SILVER CORP .
2
CONSOLIDATED FINANCIAL RESULTS
Unaudited in thousands of U.S. Dollars, except per ounce and per
share amounts
Three months ended
December 31,
Year ended
December 31,
2017 2016 2017 2016
Revenue 226,031 190,596 816,828 774,775
Mine operating earnings 43,285 48,956 168,760 198,879
Net earnings for the period 49,664 22,284 123,451 101,825
Adjusted earnings for the period (1) 19,219 18,965 77,705 86,600
Net cash generated from operating activities 79,291 45,668 224,559 214,804
All-in sustaining cost per silver ounce sold (1) 10.86 10.38 10.79 10.17
Net earnings per share attributable to
common shareholders (basic) 0.32 0.14 0.79 0.66
Adjusted earnings per share attributable to
common shareholders (basic) (1) 0.13 0.12 0.51 0.57
(1) Adjusted earnings and all-in sustaining costs per silver ounce sold are non-GAAP measures. Please refer to the "Alternative Performance
(non-GAAP) Measures" section of this news release for further information on these measures.
PAN AMERICAN SILVER CORP .
3
CONSOLIDATED OPERATIONAL RESULTS
Three months ended December 31, 2017 Three months ended December 31, 2016
Production Cash
Costs (1)
$
Production Cash
Costs (1)
$
Ag
(Moz)
Au
(koz)
Ag
(Moz)
Au
(koz)
La Colorada 1.87 1.26 0.43 1.67 0.86 4.38
Dolores 1.26 31.22 (3.93 ) 0.90 28.83 (5.93 )
Alamo Dorado 0.03 0.11 2.09 0.40 1.41 22.80
Huaron 0.95 0.19 2.08 0.94 0.20 4.54
Morococha (2) 0.72 0.82 (7.42 ) 0.58 0.43 5.52
San Vicente (3) 1.10 0.14 9.04 1.05 n/a 11.22
Manantial Espejo 0.65 9.98 26.52 0.78 12.21 14.61
TOTAL 6.58 43.71 3.18 6.31 43.94 6.66
Year ended December 31, 2017 Year ended December 31, 2016
Production Cash
Costs (1)
$
Production Cash
Costs (1)
$
Ag
(Moz)
Au
(koz)
Ag
(Moz)
Au
(koz)
La Colorada 7.06 4.29 2.08 5.80 2.93 6.15
Dolores 4.23 103.02 (1.65 ) 3.84 102.76 (1.08 )
Alamo Dorado 0.64 2.12 16.49 1.86 8.38 16.02
Huaron 3.68 1.15 1.35 3.81 0.81 5.79
Morococha (2) 2.63 3.53 (5.34 ) 2.54 2.14 4.21
San Vicente (3) 3.61 0.51 11.85 4.43 n/a 11.95
Manantial Espejo 3.12 45.34 18.25 3.14 66.89 4.28
TOTAL 24.98 159.96 4.55 25.42 183.92 6.29
Totals may not add up due to rounding.
(1) Cash costs are a non-GAAP measure. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release
for further information on these measures.
(2) Morococha data represents Pan American's 92.3% interest in the mine's production.
(3) San Vicente data represents Pan American's 95.0% interest in the mine's production.
By-Product Production Three months ended December 31, Year ended December 31,
2017 2016 2017 2016
Gold - ounces '000s ("koz") 43.7 43.9 160.0 183.9
Zinc - tonnes '000s ("kt") 14.7 13.2 55.3 51.9
Lead - kt 5.4 5.5 21.5 20.2
Copper - kt 3.0 3.1 13.4 14.4
PAN AMERICAN SILVER CORP .
4
Average Realized Metal Prices Three months ended December 31, Year ended December 31,
2017 2016 2017 2016
Silver $/ounce 16.65 17.65 16.99 17.35
Gold $/ounce 1,276 1,212 1,257 1,251
Zinc $/tonne 3,282 2,587 2,929 2,133
Lead $/tonne 2,472 2,178 2,351 1,892
Copper $/tonne 6,811 5,282 6,174 4,816
Capital Expenditures Annual Forecast (1) Year ended December 31,
(in millions of USD) 2017 2017 2016
La Colorada 10.5 – 11.5 13.3 9.9
Dolores 39.0 – 40.0 38.4 40.4
Alamo Dorado — — —
Huaron 8.0 – 9.0 8.8 11.1
Morococha 9.0 – 10.0 12.5 10.3
San Vicente 12.0 – 13.0 8.1 4.9
Manantial Espejo 3.5 – 4.5 3.3 2.9
Sustaining Capital Total (2) 82.0 - 88.0 84.4 79.5
La Colorada project capital 6.5 – 7.5 6.9 52.9
Dolores project capital 51.5 – 54.5 49.9 66.1
Joaquin and COSE projects (3) 11.0 – 12.5 4.7 —
Project Capital Total (2) 69.0 - 74.5 61.4 119.0
Consolidated Total 151.0 – 162.5 145.8 198.5
(1) Forecast amount per 2016 annual MD&A dated March 22, 2017, except for Joaquin and COSE projects, which were initially forecast in
the MD&A for the second quarter of 2017.
(2) The sustaining capital total amounts capitalized in 2017 were $0.2 million more than the $84.2 million of 2017 sustaining capital cash
outflows and project capital amounts capitalized in 2017 were $1.6 million less than the $63.0 million of 2017 project capital cash
outflows; the capital cash outflows are included in the 2017 AISCSOS calculation, shown in the “Alternative Performance (non-GAAP)
Measures” section of this news release, and are different from the capital amounts in the tables included in the "Individual Mine
Operation Highlights" section of this news release. These differences are due to the timing difference between the cash payment of
capital investments compared with the period in which investments are capitalized.
(3) Total expenditures of $9.7 million were incurred in 2017 for the Joaquin and COSE projects, of which $5.0 million was expensed as part
of 2017 exploration and project development expenses, and the remaining $4.7 million was capitalized.
PAN AMERICAN SILVER CORP .
5
2018 GUIDANCE AND THREE-YEAR OUTLOOK
There have been no revisions to the outlook Pan American provided in its press release dated January 11, 2018 for the
years 2018 to 2020 (the "Three-Year Outlook"), and as provided in the table below:
2018 Guidance 2019 Outlook 2020 Outlook
Production
Silver (million ounces) 25.0 - 26.5 27.7 - 29.7 30.5 - 33.0
Gold (thousand ounces) 175 - 185 183 - 193 165 - 179
Zinc (thousand tonnes) 60.0 - 62.0 55.5 - 59.5 60.5 - 64.5
Lead (thousand tonnes) 21.0 - 22.0 21.0 - 23.0 23.0 - 26.0
Copper (thousand tonnes) 12.0 - 12.5 10.5 - 12.5 11.5 - 13.5
Cash Costs (1) ($/ounce) 3.60 - 4.60 4.50 - 6.00 4.75 - 6.75
Sustaining capital ($ millions) 100 - 105 100 - 110 75 - 90
AISCSOS (1) ($/ounce) 9.30 - 10.80 9.50 - 11.50 8.50 - 11.00
(1) Cash Costs and AISCSOS are non-GAAP measures. Please refer to the section titled “Alternative Performance (non-GAAP)
Measures” at the end of this news release for further information on these measures.
The following table provides the price and foreign exchange rate assumptions used to forecast total Cash
Costs and AISCSOS in the Three-year Outlook :
Years 2018 to 2020
Metal prices
Silver ($/ounce) 16.50
Gold ($/ounce) 1,250
Zinc ($/tonne) 3,100
Lead ($/tonne) 2,350
Copper ($/tonne) 6,500
Average annual exchange rates relative to 1 USD
Mexican peso 18.50
Peruvian sol 3.23
Argentine peso 19.59
Bolivian boliviano 7.00
Technical information contained in this news release with respect to Pan American has been reviewed and approved by
Martin Wafforn, P .Eng., Senior Vice President, Technical Services & Process Optimization, who is the Company's Qualified
Person for the purposes of National Instrument 43-101. For additional information about the Company's material
mineral properties, other than the Joaquin property, please refer to the Company's Annual Information Form dated
March 22, 2017, filed at www.sedar.com. For further technical information relating to the development of the Joaquin
project, please refer to the National Instrument 43-101 technical report entitled “Technical Report for the Joaquin
Property, Santa Cruz, Argentina - Pre-feasibility Study”, with an effective date of November 30, 2017, which is filed on
SEDAR at www.sedar.com and available on the Company’s website. For further technical information relating to the La
Colorada and Dolores expansion projects, please refer to the National Instrument 43-101 technical reports entitled
“Technical Report - Preliminary Economic Analysis for the Expansion of the La Colorada Mine, Zacatecas, Mexico,” with
an effective date of December 31, 2013, and “Technical Report for the Dolores Property, Chihuahua, Mexico”, with an
effective date of December 31, 2016, both of which are filed on SEDAR at www.sedar.com and available on the
Company's website. The results of the preliminary economic assessments at La Colorada, Dolores and COSE are
preliminary in nature, in that they include inferred mineral resources that are considered too geologically speculative to
have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and
there is no certainty that the assessment will be realized. Mineral resources that are not mineral reserves have no
demonstrated economic viability.
PAN AMERICAN SILVER CORP .
6
2017 Annual Unaudited Results Conference Call and Webcast
Date: February 21, 2018
Time: 11:00 am ET (8:00 am PT)
Dial-in numbers: 1-800-319-4610 (toll-free in Canada and the U.S.)
+1-604-638-5340 (international participants)
A live and archived webcast and presentation slides will be available on the Company’s website at
www.panamericansilver.com.
PAN AMERICAN SILVER CORP .
7
About Pan American Silver
Pan American Silver Corp. is one of the world’s largest primary silver producers, providing investors with enhanced
exposure to silver through low-cost operations. Founded in 1994, Pan American is recognized for its operating expertise,
prudent financial management and commitment to responsible development. The Company is headquartered in
Vancouver, B.C. and owns and operates six mines in Mexico, Peru, Argentina and Bolivia. Our shares trade on NASDAQ
and the Toronto Stock Exchange under the symbol "PAAS".
For more information, visit: www.panamericansilver.com.
For more information contact:
Siren Fisekci
VP , Investor Relations & Corporate Communications
Ph: 604-806-3191
Email: [email protected]
Alternative Performance (Non-GAAP) Measures
In this press 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 per payable ounce of silver, net of by-product credits ("cash costs"). The Company's method of
calculating cash costs may differ from the methods used by other entities and, accordingly, the Company'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.
• Adjusted earnings and adjusted earnings per share. The Company believes that these measures better reflect
normalized earnings as they eliminate items that in management's judgment are subject to volatility as a result
of factors which are unrelated to operations in the period, and/or relate to items that will settle in future
periods.
• All-in sustaining costs per silver ounce sold ("AISCSOS"). The Company has adopted AISCSOS as a measure of its
consolidated operating performance and its ability to generate cash from all operations collectively, and the
Company 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 the Company's consolidated earnings and cash flow.
• Total debt is calculated as the total current and non-current portions of: long-term debt; finance lease liabilities;
and loans payable. Total debt does not have any standardized meaning prescribed by GAAP and is therefore
unlikely to be comparable to similar measures presented by other companies. The Company and certain
investors use this information to evaluate the financial debt leverage of the Company.
• Operating free cash flow is calculated as net cash generated from operating activities less cash invested in
sustaining capital. The Company believes the inclusion of sustaining capital investments better reflects total
operating cash flows. Operating free cash flow does not have any standardized meaning prescribed by GAAP
and is therefore unlikely to be comparable to similar measures presented by other companies.
Readers should refer to the "Alternative Performance (non-GAAP) Measures" section following the Consolidated
Statements of Cash Flows included in this news release for a more detailed discussion of these and other non-GAAP
measures and their calculation.
PAN AMERICAN SILVER CORP .
8
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 in 2018 and beyond, our estimated Cash Costs and AISCSOS in 2018 and beyond, and our expectations
with respect to future metal prices and exchange rates; the ability of the Company to successfully complete any capital
investment programs and projects, including whether on time, or on or below budget, and the success, expected
economic or operational results derived from those programs and projects, and the impacts of any such programs and
projects on the Company, including with respect to production, associated operational efficiencies and economic
returns; the election by the Company and its ability to successfully complete the acquisition of the COSE project; the
realization of benefits from any transactions, including the Joaquin and COSE transactions, and the financial and
operational impacts of any such transactions on the Company; and the approval or the amount of any future cash
dividends.
These forward-looking statements and information reflect the Company's current views with respect to future events
and are necessarily based upon a number of assumptions that, while considered reasonable by the Company, are
inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These
assumptions include: 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; and our ability to comply with
environmental, health and safety laws. The foregoing list of assumptions is not exhaustive.
The Company 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 the
Company has made assumptions and estimates based on or related to many of these factors. Such factors include,
without limitation: 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 Canadian dollar,
Peruvian sol, Mexican peso, Argentine peso and Bolivian boliviano versus the U.S. dollar); 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 the Company
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; legal
restrictions relating to mining, including in Chubut, Argentina; risks relating to expropriation; 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 the
Company'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 the Company has
attempted to identify important factors that could cause actual results to differ materially, there may be other factors