Pan American Silver reports audited financial results for 2021 and provides 2022 guidance Announces 20% increase to the declared dividend and a new dividend policy
Pan American Silver reports audited financial results for 2021 and provides 2022 guidance
Announces 20% increase to the declared dividend and a new dividend policy
Vancouver, B.C. - February 23, 2022 - Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) ("Pan American" or
the "Company") today reported fourth quarter (" Q4 2021") financial results and audited financial results for the
year ended December 31, 2021 ("FY 2021"). The Company also provided its outlook for 2022 production, costs and
capital expenditures, and announced a new dividend policy with a 20% increase to the dividend declared today.
“Q4 2021 marked a clear improvement in production and Silver Segment costs over the first three quarters of the
year, contributing to cash flow from operations in the quarter of $118.1 million," said Michael Steinmann,
President and Chief Executive Officer. "Our guidance for 2022 assumes the COVID-19 impact will diminish over the
course of the year, while incorporating the effect of lower workforce deployment levels in January and February
due to the Omicron variant. We are evaluating strategic alternatives for Morococha and have excluded the mine
from our 2022 guidance while placing the operation on care and maintenance."
Added Mr. Steinmann: "Strong operational cash flows resulted in a $116.4 million increase to our cash balances in
2021. Pan American exited the year with cash and cash equivalents of $283.6 million and short-term investments
of $51.7 million, enabling us to increase the return to our shareholders through a new dividend policy announced
today. At the same time, our strong financial position allows us to invest in growth by advancing our large La
Colorada Skarn project. In 2022, we plan to complete 55,000 metres of infill and exploration drilling and
commence development of the access ramp and ventilation shaft for the Skarn."
Q4 2021 and FY 2021 Highlights:
• Preliminary production results were previously reported on January 19, 2022. Consistent with that
disclosure, consolidated silver production was 5.3 million ounces in Q4 2021 and 19.2 million ounces in FY
2021. Consolidated gold production was 156.7 thousand ounces in Q4 2021 and 579.3 thousand ounces in
FY 2021. Silver and gold production in 2021 were both within the revised guidance ranges provided on
November 9, 2021.
• Revenue was $422.2 million in Q4 2021 and $1.6 billion for FY 2021. Revenue in Q4 2021 was impacted by
timing of sales, with a 13.3 thousand ounce build in gold finished goods inventory.
• Net earnings were $14.7 million ($0.07 basic earnings per share) and $98.6 million ($0.46 basic earnings
per share) in Q4 2021 and FY 2021, respectively. FY 2021 net earnings included mark-to-market losses on
short-term investments of $59.7 million, primarily for our interest in New Pacific Metals Corp. and an
income tax expense of $146.4 million. The high effective tax rate primarily reflects a significant number of
expenses in the year with no corresponding tax benefit, largely the Escobal care and maintenance
expenditures and the non-cash investment losses related to New Pacific.
• Adjusted earnings were $39.9 million ($0.19 basic adjusted earnings per share) and $161.8 million ($0.77
basic adjusted earnings per share) in Q4 2021 and FY 2021, respectively.
• Net cash generated from operating activities was $118.1 million and $392.1 million in Q4 2021 and FY
2021, respectively.
• FY 2021 Silver Segment Cash Costs and All-in Sustaining Costs ("AISC") of $11.51 and $15.62 per silver
ounce sold, respectively, were slightly lower than the revised guidance provided on November 9, 2021.
• FY 2021 Gold Segment Cash Costs and AISC of $899 and $1,214 per gold ounce sold, respectively, were
within the guidance ranges provided throughout 2021.
• Capital expenditures totaled $254.1 million in 2021, comprised of $207.6 million of sustaining capital and
$46.5 million of project capital. The project capital was largely invested in the La Colorada Skarn project
for exploration drilling, development studies, and the start of construction of the concrete-lined
ventilation shaft and refrigeration plant. Project capital was also invested at Timmins for the Wetmore
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 1
exploration project. Sustaining capital was below and project capital was above the revised guidance
provided on November 9, 2021.
• At December 31, 2021, the Company had cash and short-term investment balances of $335.3 million,
working capital of $613.5 million, and the full $500.0 million available under its sustainability-linked credit
facility. Total debt of $45.9 million was related to lease liabilities and construction loans.
Pan American introduces a new dividend policy
The Board of Directors has approved a new dividend policy, which adds a variable amount to a base dividend of
$0.10 per common share paid on a quarterly basis. The variable quarterly dividend will be linked to the net cash on
the balance sheet for the previous quarter, as illustrated in the following table:
Net Cash(1) Base Dividend
per Quarter
Variable Dividend
per Quarter
Total Dividend
per Quarter
Less than $100 million $0.10 per share $0.00 per share $0.10 per share
$100 million to less than $200
million
$0.10 per share $0.01 per share $0.11 per share
$200 million to less than $300
million
$0.10 per share $0.02 per share $0.12 per share
$300 million to less than $400
million
$0.10 per share $0.06 per share $0.16 per share
$400 million or greater $0.10 per share $0.08 per share $0.18 per share
(1) Net cash and total debt are non-GAAP measures; please refer to the "Alternative Performance (non-GAAP) Measures" section of this
news release for further information.
Based on the new dividend policy, the Board of Directors has approved a 20% increase in the cash dividend to
$0.12 per common share, or approximately $25.3 million in aggregate cash dividends, payable on or about March
21, 2022, to holders of record of Pan American’s common shares as of the close on March 7, 2022. As at
December 31, 2021, the Net Cash Position of $237.7 million is calculated in the following table:
Cash and cash equivalents 283,550
Short-term investments, other than equity securities (1) —
Total debt (45,861)
Net cash 237,689
(1) As at December 31, 2021, the Company's short-term investments are comprised entirely of equity investments and largely in exploration
and development companies.
ILO 169 Consultation for Escobal underway
The Company is pleased to report that the pre-consultation meetings for the court-mandated ILO 169 consultation
process for the Escobal mine in Guatemala have resumed following delays due to COVID-19. Three pre-
consultation meetings were held in 2021, and additional meetings were held in January and February of 2022. The
Guatemalan Ministry of Energy and Mines is leading the consultation process with the Xinka People, and Pan
American is a participant. Pan American looks forward to continuing its participation in a transparent, respectful
and inclusive process during 2022.
Morococha operation transitions into care and maintenance
As previously disclosed, in June 2010, we completed a framework agreement with Aluminum Corporation of China
("Chinalco"), which required the relocation of core Morococha facilities, including the Amistad processing plant, in
stages to enable the gradual expansion of Chinalco's Toromocho open pit copper mine. In early 2022, we agreed
with Chinalco to complete the closure of the Amistad plant and we will be placing the Morococha operation on
care and maintenance as we evaluate alternative opportunities, including monetization, joint venture operation of
the asset, or accelerating exploration of prospective areas that could enhance the attractiveness of allocating
capital to build a new processing facility.
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 2
Mr. Ignacio Couturier appointed Chief Financial Officer of Pan American
Pan American is pleased to announce the appointment of Ignacio Couturier to succeed Rob Doyle, who is retiring
as Chief Financial Officer (CFO) of Pan American. Ignacio has been with Pan American for 20 years in progressively
more senior roles, most recently as VP Finance. He will assume the position of CFO effective March 1, 2022, and
will be based in our Head Office in Vancouver. Over the past six months, the Company has conducted a rigorous
global selection process in which both external and internal candidates were assessed for the role. We are pleased
that this process has resulted in the selection of an internal candidate with a detailed understanding of Pan
American’s business.
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 3
CONSOLIDATED RESULTS
December 31,
2021
December 31,
2020
Weighted average shares during period (millions) 210.3 210.1
Shares outstanding end of period (millions) 210.5 210.3
Three months ended
December 31,
Year ended
December 31,
2021 2020 2021 2020
FINANCIAL
Revenue $ 422,170 $ 430,461 $ 1,632,750 $ 1,338,812
Mine operating earnings $ 76,039 $ 137,172 $ 367,938 $ 360,177
Net earnings $ 14,664 $ 169,018 $ 98,562 $ 176,455
Basic earnings per share(1) $ 0.07 $ 0.80 $ 0.46 $ 0.85
Adjusted earnings(2) $ 39,943 $ 89,885 $ 161,782 $ 181,243
Basic adjusted earnings per share(1) $ 0.19 $ 0.43 $ 0.77 $ 0.86
Net cash generated from operating activities $ 118,098 $ 170,571 $ 392,108 $ 462,315
Net cash generated from operating activities before changes in
working capital(2) $ 127,761 $ 151,995 $ 463,177 $ 365,333
Sustaining capital expenditures(2) $ 56,280 $ 52,007 $ 207,623 $ 162,047
Project capital expenditures(2) $ 16,899 $ 3,753 $ 46,476 $ 21,545
Cash dividend per share $ 0.10 $ 0.07 $ 0.34 $ 0.22
PRODUCTION
Silver (thousand ounces) 5,276 4,872 19,174 17,312
Gold (thousand ounces) 156.7 152.9 579.3 522.4
Zinc (thousand tonnes) 11.2 14.2 49.4 40.2
Lead (thousand tonnes) 4.1 5.4 18.1 15.7
Copper (thousand tonnes) 2.4 2.3 8.7 5.2
CASH COSTS(2) ($/ounce)
Silver Segment(3) 9.74 6.15 11.51 7.05
Gold Segment(4) 963 763 899 797
AISC(2) ($/ounce)
Silver Segment(3) 13.57 10.37 15.62 11.38
Gold Segment(4) 1,461 1,023 1,214 1,011
AVERAGE REALIZED PRICES(6)
Silver ($/ounce) 23.33 24.72 25.00 20.60
Gold ($/ounce) 1,792 1,874 1,792 1,758
Zinc ($/tonne) 3,352 2,566 2,997 2,288
Lead ($/tonne) 2,333 1,922 2,206 1,851
Copper ($/tonne) 9,545 7,234 9,297 6,412
(1) Per share amounts are based on basic weighted average common shares.
(2) Non- GAAP measure; please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further
information on these measures.
(3) As of Q1 2021, Dolores was moved from the Silver Segment to the Gold Segment due to the expected mine sequencing into a higher
gold zone of the mine. 2021 Silver Segment is comprised of the following operations: La Colorada, Huaron, Morococha, San Vicente and
Manantial Espejo. The 2020 Silver Segment metrics include Dolores.
(4) 2021 Gold Segment is comprised of the following operations: Dolores, Shahuindo, La Arena and Timmins. The 2020 Gold Segment
metrics exclude Dolores.
(5) Consolidated per silver ounce sold is based on total silver ounces sold and are net of by-product credits, including gold revenues.
Corporate general and administrative expense and exploration and project development expense are included in Consolidated AISC,
but not allocated amongst the operations and thus are not included in either the silver or gold segment totals.
(6) Metal prices stated are inclusive of final settlement adjustments on concentrate sales.
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 4
2022 GUIDANCE
The following tables provide management's guidance for 2022, as at February 23, 2022. The estimates below are
forward-looking statements and information that are subject to the cautionary note associated with forward-
looking statements and information at the end of this news release.
Annual Production Guidance, as at February 23, 2022
Silver – Moz 19.0 - 20.5
Gold – koz 550.0 - 605.0
Zinc – kt 35.0 - 40.0
Lead – kt 15.0 - 17.0
Copper – kt 5.5 - 6.5
The 2022 silver production forecast assumes production at La Colorada increases to a range of 6.85 to 7.10 million
ounces, and excludes Morococha because of the decision to place that operation on care and maintenance in early
2022. Relative to 2021, silver production at Dolores is expected to increase from an improvement in silver grades.
The forecast also assumes lower than normal capacity throughput rates across the operations due to COVID-19
related impacts on workforce levels for the early part of the year, with the impact expected to diminish over the
course of the year. Accordingly, production in 2022 is expected to be back loaded to the second half of the year.
The forecast for 2022 gold production incorporates increases at Dolores and Shahuindo, relative to 2021, from
improvements in irrigation efficiencies, which allow for a higher ratio of ounces produced to stacked. Production is
expected to be lower at La Arena and Manantial Espejo relative to 2021, largely from lower grades due to mine
sequencing.
Base metal production is expected to decrease for zinc, lead and copper in 2022 compared to 2021. The expected
decreases are largely driven by Morococha being placed on care and maintenance, which more than offsets the
increased throughput and grades at La Colorada and Huaron.
Cash Costs and AISC Guidance, as at February 23, 2022
Cash Costs(1)(2)
($ per ounce)
AISC(1)(2)
($ per ounce)
Silver Segment Total 10.70 - 12.20 14.50 - 16.00
Gold Segment Total 970 - 1,070 1,240 - 1,365
(1) Cash Costs and AISC are non-GAAP measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news
release for further information on these measures.
(2) The cash costs and AISC forecasts assume average metal prices of $22.50/oz for silver, $1,750/oz for gold, $3,000/tonne ($1.36/lb) for
zinc, $2,200/tonne ($1.00/lb) for lead, and $9,200/tonne ($4.17/lb) for copper; and average annual exchange rates relative to 1 USD of
20.00 for the Mexican peso ("MXN"), 4.10 for the Peruvian sol ("PEN"), 122.17 for the Argentine peso ("ARS"), 7.00 for the Bolivian
boliviano ("BOB"), and $1.25 for the Canadian dollar ("CAD").
Silver Segment cash costs and AISC are expected to benefit from improved throughput and production rates at La
Colorada and the anticipated easing of COVID-19 related restrictions during the year. These improvements are
expected to be largely offset by: inflationary pressures across the portfolio; the completion of mining activities at
the high-grade COSE deposit at Manantial Espejo, resulting in lower gold by-product credits in 2022; and higher
development rates at San Vicente.
Gold Segment cash costs in 2022 include inflationary pressures across the portfolio, higher community and
environmental spending, higher waste mining rates at Shahuindo, increased depth and greater requirements for
ground support and backfill at Timmins.
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 5
Capital Expenditures Guidance, as at February 23, 2022
(in millions of USD)
Sustaining Capital(1) 200.0 - 210.0
Project Capital 80.0 - 95.0
Total Capital 280.0 - 305.0
(1) Sustaining Capital includes $24.0 million for forecast lease and other payments, which include debt repayments on construction loan
facilities classified as "Debt" as per Note 17 of the Company's 2021 Financial Statements. These facilities are for constructions of pads
and other infrastructure in which the Company only makes cash payments upon completion of construction activities and on a
scheduled basis.
Sustaining capital expenditures in 2022 are consistent with 2021. Sustaining capital in 2022 includes increased
spending at La Colorada to advance development of the mine at depth using more mechanized long-hole stoping
methods, aimed at increasing throughput and reducing unit costs over the next few years. Sustaining capital at La
Colorada also includes further investment in underground ventilation infrastructure.
Project capital in 2022 is directed towards the La Colorada Skarn project for further exploration and infill drilling,
and engineering studies to determine the optimal project design. On November 9, 2021, Pan American released
further drill results for the Skarn, which indicated the potential for Mineral Resource expansion. At La Colorada,
the Company is also investing in site infrastructure upgrades, notably the commencement of ramp development in
mid-2022 to eventually access the Skarn deposit, the advancement of the concrete-lined ventilation shaft, and
completion and commissioning of a refrigeration plant. These infrastructure upgrades are expected to benefit
both the long-term development of the Skarn and the current vein system operation.
In addition, 2022 project capital is directed at the Timmins operation for the construction of a paste fill plant at
Bell Creek to improve backfill quality and availability for more effective ground support systems, and to increase
mineral resource recovery. Timmins' project capital also includes exploration expenditures related to the Wetmore
and Whitney projects.
2022 Exploration Expenditures Forecast
Exploration expenditures in 2022, including amounts that will be expensed and capitalized, are expected to
total between $42.0 million and $46.0 million, comprised of: (1) $12.0 million to $13.0 million for 95,000 metres of
near-mine brownfield exploration drilling targeting reserve replacement, which is included in the forecast for 2022
sustaining capital expenditures for each mine; (2) $8.0 million to $9.0 million in regional, greenfield exploration
in Peru, Mexico and Canada and corporate overhead; and (3) $22.0 million to $24.0 million for drilling the La
Colorada Skarn and adjacent vein systems, as well as exploring the Wetmore and Whitney projects adjacent to the
Bell Creek mine in Timmins, which is included in the forecast for 2022 project capital expenditures.
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 6
Fourth Quarter Consolidated Income Statements
(unaudited)
Three months ended
December 31,
2021 2020
Revenue $ 422,170 $ 430,461
Cost of sales
Production costs (263,442) (206,702)
Depreciation and amortization (76,141) (77,464)
Royalties (6,548) (9,123)
(346,131) (293,289)
Mine operating earnings 76,039 137,172
General and administrative (8,255) (10,681)
Exploration and project development (4,076) (1,091)
Mine care and maintenance (9,266) (6,755)
Foreign exchange losses (5,646) (1,206)
Gains on derivatives 1,638 7,289
(Losses) gains on sale of mineral properties, plant and equipment (551) 9,832
Income from equity investees 289 12,340
Other income (expense) 2,530 (13,517)
Earnings from operations 52,702 133,383
Investment (loss) income (6,083) 30,603
Interest and finance expense (3,484) (4,483)
Earnings before income taxes 43,135 159,503
Income tax (expense) recovery (28,471) 9,515
Net earnings and comprehensive earnings $ 14,664 $ 169,018
Net earnings and comprehensive earnings attributable to:
Equity holders of the Company 14,036 168,885
Non-controlling interests 628 133
$ 14,664 $ 169,018
Earnings per share attributable to common shareholders
Basic earnings per share $ 0.07 $ 0.80
Diluted earnings per share $ 0.07 $ 0.80
Weighted average shares outstanding (in 000’s) Basic 210,348 210,193
Weighted average shares outstanding (in 000’s) Diluted 210,450 210,370
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 7
Fourth Quarter Consolidated Statements of Cash Flows
(unaudited)
Three months ended
December 31,
2021 2020
Operating activities
Net earnings for the period $ 14,664 $ 169,018
Income tax expense (recovery) 28,471 (9,515)
Depreciation and amortization 76,141 78,665
Unrealized investment loss (income) 6,083 (30,596)
Accretion on closure and decommissioning provision 1,864 2,061
Unrealized foreign exchange losses 1,643 1,002
Interest expense 822 1,696
Interest paid (1,523) (1,503)
Interest received 27 19
Income taxes paid (22,810) (22,513)
Other operating activities 22,379 (36,339)
Net change in non-cash working capital items (9,663) 18,576
$ 118,098 $ 170,571
Investing activities
Payments for mineral properties, plant and equipment $ (70,147) $ (53,636)
Proceeds from sale of mineral properties, plant and equipment 1,067 12,028
Proceeds from short-term investments and other securities 455 973
Net proceeds from derivatives 2,300 502
$ (66,325) $ (40,133)
Financing activities
Proceeds from common shares issued $ 284 $ 9
Distributions to non-controlling interests (43) —
Dividends paid (21,032) (14,712)
Repayment of credit facility — (90,000)
Repayment of Loans (850) (5,616)
Payment of equipment leases (3,416) (3,180)
$ (25,057) $ (113,499)
Effects of exchange rate changes on cash and cash equivalents (675) (155)
Net increase in cash and cash equivalents 26,041 16,784
Cash and cash equivalents at the beginning of the period 257,509 150,329
Cash and cash equivalents at the end of the period $ 283,550 $ 167,113
Conference Call and Webcast
Pan American plans to release its audited results for Q4 and FY 2021 on February 23, 2022, after market close.
Details for the related conference call and webcast are as follows:
Date: February 24, 2022
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)
Webcast: panamericansilver.com
The live webcast, presentation slides and the Q4 and FY 2021 report will be available at panamericansilver.com. An
archive of the webcast will also be available for three months.
Q4 2021 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Tabular amounts
are in thousands of U.S. dollars except number of shares, options,
warrants, and per share amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 8