Pan American Silver reports cash flow from operations of $114.1 million in Q1 2020; maintains quarterly dividend
Pan American Silver reports cash flow from operations of $114.1 million in Q1 2020; maintains quarterly
dividend
Vancouver, B.C. - May 6, 2020 - Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) today reported unaudited
results for the first quarter ended March 31, 2020 ("Q1 2020"). Pan American's unaudited condensed interim
consolidated financial statements and notes ("financial statements"), as well as Pan American’s management's
discussion and analysis ("MD&A") for the three months ended March 31, 2020, are available on Pan American’s
website at panamericansilver.com and on SEDAR at www.sedar.com.
“The COVID-19 pandemic escalated quickly over Q1 2020. Pan American took immediate steps to protect the
health and safety of our people, and mobilized our business continuity plans. We are also providing support to our
local communities during this very difficult time. In addition to our existing community programs, we are donating
$2 million in food and hygiene supplies, as well as facilitating access to health care," said Michael Steinmann,
President and Chief Executive Officer.
Added Mr. Steinmann: "Cash flow generation of $114.1 million in Q1 reflects the Company's strong operating
performance before the impact of the COVID-19 related mine suspensions. However, earnings in the period were
significantly impacted by non-cash, mark-to-market investment losses and non-cash tax expense due to COVID-19
related currency devaluations. We have a strong balance sheet with approximately $479 million of total available
liquidity, and we have taken steps to defer or reduce non-essential expenditures to preserve our financial
strength. Many of the temporary COVID-19 related suspensions are now being lifted, and we are preparing to
restart those operations. Profit margins should benefit from the improvement in gold prices combined with lower
costs due to currency devaluations in our operating jurisdictions."
COVID-19 Update
As previously reported, Pan American suspended normal operations at its mines in Mexico, Peru, Argentina and
Bolivia in the latter part of March 2020 to comply with mandatory national quarantines imposed in response to
the COVID-19 pandemic. Limited production has continued at the open pit mines from circulation of process
solutions on the heap leach pad. As well, the Timmins West and Bell Creek gold mines in Canada have continued to
operate at 90% of throughput capacity.
The Company has taken steps to preserve its balance sheet strength by deferring certain capital expenditures and
exploration spending. As well, the Company's executive management team and board of directors have voluntarily
agreed to a 20% reduction in remuneration until the situation normalizes. As a precautionary measure, in April
2020, the Company increased its cash and cash equivalents holdings with an $80.0 million draw on the Credit
Facility.
The following provides a summary of the status in each of our operating jurisdictions as of today's date; the
circumstances can change rapidly and are difficult to predict.
In Mexico, the government has permitted a restart of mining activities on May 18, 2020, if the mine is located in a
municipality with no to few active COVID-19 cases. Our La Colorada and Dolores operations meet this requirement
at this time, and we are currently developing plans for restarting both operations, pending local authorizations and
acceptance.
In Argentina, we are currently restarting the Manantial Espejo operation at reduced underground mining rates and
redeploying personnel for the restart of the COSE and Joaquin operations.
In Bolivia, we are currently preparing for a restart of our San Vicente operations following the government
authorization that mining activities can resume on May 7, 2020.
In Peru, discussions are advancing with government officials on restarting large scale (greater than 5,000 tonnes
per day) open pit mining operations at reduced capacities, which could permit the restart of our La Arena and
Shahuindo operations, potentially on May 11, 2020.
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited 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
The restart of our operations will be a phased approach following health guidelines and government decrees in
each jurisdiction where we operate. We expect a gradual resumption of activities with modifications to
accommodate greater physical distancing, and with appropriate protocols in-place to protect the health and safety
of our workforce and communities.
The COVID-19 pandemic is a rapidly evolving situation and the impact on our operations cannot be predicted at
this time. We are not able at this time to determine at what capacity level operations will resume, nor when we
would be able to return to full-staffing and productive capacity levels. As such, the Company has withdrawn its
2020 annual guidance, as provided in the 2019 annual MD&A dated March 12, 2020. We expect to update the
2020 Guidance once sufficient clarity on the operating circumstances becomes available.
We currently have had no confirmed cases of COVID-19 at any of our Pan American Silver operations or offices.
Q1 2020 Highlights:
• Revenue was $358.4 million, which reflects the strong contribution from the Gold Segment mines with
consolidated gold production totaling 156.1 thousand ounces and an average realized price of $1,580 per
ounce.
• Silver production of 5.6 million ounces primarily reflects the suspensions of the Huaron, Morococha,
Manantial Espejo and San Vicente operations and the failure of an underground ventilation circuit at the
La Colorada operation. The Company is currently deploying an upgrade of the mine ventilation system to
re-establish access to a high-grade zone within the La Colorada mine.
• Net cash generated from operations was $114.1 million, reflecting strong operating earnings from the
Gold Segment mines.
• A net loss of $77.2 million ($0.37 basic loss per share) reflects: a tax expense of $52.7 million, primarily
driven by non-cash devaluations of certain tax assets denominated in foreign currencies; a $28.3 million
investment loss, primarily from non-cash unrealized mark to market adjustments on the Company's equity
interest in New Pacific Metals Corp.; $16.0 million in care and maintenance costs; and, $8.8 million in
mostly non-cash losses on foreign currency contracts.
• An adjusted loss of $7.6 million ($0.04 basic adjusted loss per share) was recorded, which includes $28.3
million ($0.13 per share) of non-cash, unrealized mark-to-market investment losses in our equity interests.
• Silver Segment Cash Costs and All-in Sustaining Costs ("AISC") were $8.18 and $15.26 per silver ounce sold,
respectively.
• Gold Segment Cash Costs and AISC were $757 and $969 per gold ounce sold, respectively.
• Consolidated AISC, including gold by-product credits from the Gold Segment mines, were $3.49 per silver
ounce sold.
• Project development expenditures of $8.7 million were directed at exploration drilling of the La Colorada
skarn deposit, development advances on the COSE project, and expansion of the Bell Creek mine and plant
at the Timmins operation.
• At March 31, 2020, the Company had cash and short-term investment balances of $239.2 million and
working capital of $488.0 million. Total debt was $299.2 million (including $39.2 million of lease liabilities).
During Q1 2020, the Company made a $15 million repayment of its four-year, $500 million Credit Facility,
reducing the drawn amount at March 31, 2020, to $260 million.
• The Board of Directors has approved a cash dividend of $0.05 per common share, or approximately $10.5
million in aggregate cash dividends, payable on or about May 29, 2020, to holders of record of Pan
American’s common shares as of the close on May 19, 2020. Pan American's dividends are designated as
eligible dividends for the purposes of the Income Tax Act (Canada). As is standard practice, the amounts
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited 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
and specific distribution dates of any future dividends will be evaluated and determined by the Board of
Directors on an ongoing basis.
Cash Costs, AISC, adjusted earnings, basic adjusted earnings per share, sustaining capital, project capital, working
capital, total debt and total available liquidity 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.
First Quarter 2020 Unaudited Results Conference Call and Webcast
Date: May 7, 2020
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
Callers should dial in 5 to 10 minutes prior to the scheduled start time. The live webcast and presentation slides
will be available on the Company's website at panamericansilver.com. An archive of the webcast will also be
available for three months.
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited 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
Three months
ended
Twelve months
ended
March 31,
2020
December 31,
2019
Weighted average shares during period (millions) 209.8 201.4
Shares outstanding end of period (millions) 210.0 209.8
Three months ended
March 31,
2020 2019
FINANCIAL
Revenue $ 358,428 $ 253,699
Mine operating earnings $ 50,058 $ 15,770
Net (loss) earnings $ (77,235) $ 3,320
Basic (loss) earnings per share(1) $ (0.37) $ 0.02
Adjusted (loss) earnings(2) $ (7,618) $ 4,499
Basic adjusted (loss) earnings per share(1) $ (0.04) $ 0.03
Net cash generated from operating activities $ 114,051 $ (12,911)
Net cash generated from operating activities before
changes in working capital(2) $ 75,900 $ 25,025
Sustaining capital expenditures(2) $ 50,207 $ 34,742
Project capital expenditures(2) $ 8,672 $ 9,874
Cash dividend per share $ 0.05 $ 0.035
PRODUCTION(3)
Silver (thousand ounces) 5,561 6,125
Gold (thousand ounces) 156.1 80.5
Zinc (thousand tonnes) 13.1 16.8
Lead (thousand tonnes) 5.3 6.5
Copper (thousand tonnes) 1.9 2.0
CASH COSTS(2) ($/ounce)
Silver Segment 8.18 5.46
Gold Segment 757 777
AISC(2) ($/ounce)
Silver Segment 15.26 10.83
Gold Segment 969 1,091
Consolidated Silver Basis 3.49 10.51
AVERAGE REALIZED PRICES
Silver ($/ounce)(4) 16.50 15.52
Gold ($/ounce)(4) 1,580 1,302
Zinc ($/tonne)(4) 2,125 2,750
Lead ($/tonne)(4) 1,857 2,039
Copper ($/tonne)(4) 5,801 6,207
(1) Per share amounts are based on basic weighted average common shares.
(2) Non- GAAP measures: adjusted earnings, basic adjusted earnings per share, and net cash generated from operating activities before changes in working
capital are non-GAAP financial measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further
information on these measures.
(3) 2019 production reflects results subsequent to the February 22, 2019 closing date of the acquisition of these mines pursuant to the Tahoe Resources
Inc. transaction.
(4) Metal prices stated are inclusive of final settlement adjustments on concentrate sales.
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited tabular amounts
are in thousands of U.S. dollars except number of shares, options, warrants, and per share
amounts, unless otherwise noted.
PAN AMERICAN SILVER CORP. 4
INDIVIDUAL MINE OPERATING PERFORMANCE
Silver Production
(ounces ‘000s)
Gold Production
(ounces ‘000s)
Three months ended
March 31,
Three months ended
March 31,
2020 2019 2020 2019
Silver Segment:
La Colorada 1,593 1,990 1.1 1.0
Dolores 1,230 1,112 27.1 30.0
Huaron 771 937 0.2 0.2
Morococha(1) 457 697 0.3 0.6
San Vicente(2) 738 851 0.1 0.1
Manantial Espejo 695 524 6.5 4.9
Gold Segment:
Shahuindo(3) 64 10 48.9 14.5
La Arena(3) 8 3 28.7 14.7
Timmins(3) 5 2 43.3 14.4
Total 5,561 6,125 156.1 80.5
(1) Morococha data represents Pan American 92.3% interest in the mine's production.
(2) San Vicente data represents Pan American 95.0% interest in the mine's production.
(3) Reflects production results subsequent to the February 22, 2019 closing date of the acquisition of these mines pursuant to the Tahoe Resources Inc.
transaction.
Cash Costs(1)
($ per ounce)
AISC(1)
($ per ounce)
Three months ended
March 31,
Three months ended
March 31,
2020 2019 2020 2019
La Colorada 7.23 2.16 9.98 3.37
Dolores 0.07 3.34 23.29 26.45
Huaron 7.95 4.38 10.56 8.54
Morococha 12.29 (1.01) 20.23 2.20
San Vicente 14.71 10.25 17.08 11.20
Manantial Espejo 13.69 27.53 14.85 27.94
Silver Segment Consolidated(2) 8.18 5.46 15.26 10.83
Shahuindo 617 616 775 657
La Arena 725 642 1,212 1,263
Timmins(3) 945 999 1,051 1,137
Gold Segment Consolidated(2)(3) 757 777 969 1,091
Consolidated metrics per silver ounce sold(3)(4):
All Operations 3.49 10.51
All Operations before NRV inventory adjustments 1.41 9.18
(1) Cash Costs and AISC are non-GAAP measures. Please refer to the section “Alternative Performance (Non-GAAP) Measures” of this MD&A for a detailed
description of these measures and where appropriate a reconciliation of the measure to the Q1 2020 Financial Statements.
(2) Silver segment Cash Costs and AISC are calculated net of credits for realized revenues from all metals other than silver ("silver segment by-product
credits"), and are calculated per ounce of silver sold. Gold segment Cash Costs and AISC are calculated net of credits for realized silver revenues ("gold
segment by-product credits"), and are calculated per ounce of gold sold. Consolidated AISC is based on total silver ounces sold and are net of by-product
credits from all metals other than silver ("silver basis consolidated by-product credits").
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited 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
(3) 2019 Timmins, Gold Segment, and Consolidated AISC were adjusted to reflect amounts recast, and presented, for the three months ended March 31,
2019 as if Timmins had not been classified as held for sale.
(4) Consolidated silver basis total is calculated per silver ounce sold with total gold revenues included within by-product credits. G&A costs are included in
the consolidated AISC, but not allocated in calculating AISC for each operation.
About Pan American Silver
Pan American owns and operates silver and gold mines located in Mexico, Peru, Canada, Argentina and Bolivia. We
also own the Escobal mine in Guatemala that is currently not operating. As the world's second largest primary
silver producer with the largest silver reserve base globally, we provide enhanced exposure to silver in addition to
a diversified portfolio of gold producing assets. Pan American has a 25-year history of operating in Latin America,
earning an industry-leading reputation for corporate social responsibility, operational excellence and prudent
financial management. We are headquartered in Vancouver, B.C. and our shares trade on NASDAQ and the
Toronto Stock Exchange under the symbol "PAAS”.
Learn more at panamericansilver.com.
For more information contact:
Siren Fisekci
VP, Investor Relations & Corporate Communications
Ph: 604-806-3191
Email: [email protected]
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited 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
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 Processing Optimization, and Christopher Emerson,
FAusIMM, Vice President Business Development and Geology, each of whom are Qualified Persons, as the term is
defined in Canadian National Instrument 43-101 - Standards of Disclosure of Mineral Projects ("NI 43-101").
For additional information about Pan American's material mineral properties, please refer to Pan American’s
Annual Information Form dated March 12, 2020, filed at www.sedar.com, or Pan American's most recent
Form 40-F furnished to the SEC.
Alternative Performance (Non-GAAP) Measures
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. 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 basic 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 or gold ounce sold, net of by-product credits ("AISC"). The Company has
adopted AISC 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.
• Working capital is calculated as current assets less current liabilities. Working capital 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
whether the Company is able to meet its current obligations using its current assets.
• Total available liquidity is calculated as the sum of Cash and cash equivalents, Short-term Investments, and
the amount available on the Credit Facility. Total available liquidity 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 liquid assets
available to the Company.
Readers should refer to the "Alternative Performance (non-GAAP) Measures" section of the Company’s
Management's Discussion and Analysis for the period ended December 31, 2019, for a more detailed discussion of
these and other non-GAAP measures and their calculation.
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited 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
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: the effect of any reductions or suspensions in our operations relating
to the COVID-19 pandemic may have on our financial and operational results; the ability of Pan American to
continue with any operations in Canada, or to successfully maintain our other operations on care and
maintenance, or to restart or ramp-up these operations efficiently or economically, or at all; whether Pan
American is able to maintain a strong financial condition and have sufficient capital, or have access to capital
through our credit facility or otherwise, to sustain our business and operations; the presence and impact of
COVID-19 on our workforce, suppliers and other essential resources and what effect those impacts, if they occur,
would have on our business; future financial or operational performance, including our profit margins in 2020; the
timing and disclosure of the Company’s 2020 operating guidance; the ability of the Company to successfully
complete any capital projects, the expected economic or operational results derived from those projects, and the
impacts of any such projects on the Company; the approval or the amount of any future cash dividends; the future
results of exploration activities, including with respect to the skarn exploration program at La Colorada; and our
portfolio growth profile.
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: the world-wide economic and social impact of COVID-19 is managed
and the duration and extent of the coronavirus pandemic is minimized or not long-term; successful restart or
ramp-up of our suspended operations efficiently or economically; continuation of our operations at Timmins West
and Bell Creek; our ability to determine the 2020 operating guidance in due course; 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.
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: the duration and effects of the coronavirus and 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, BOL, GTQ and CAD 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 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; changes in national and local
Q1 2020 NEWS RELEASE
All amounts expressed in U.S. dollars unless otherwise indicated. Unaudited 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