PAN AMERICAN SILVER CORP. Suite 1500 - 625 Howe St.
Vancouver, BC
Canada, V6C 2T6
604-684-1175
FOURTH QUARTER REPORT
TO SHAREHOLDERS
For the year ending
December 31, 2021
www.panamericansilver.com
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 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
PAN AMERICAN SILVER CORP. | 1 |
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.
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 | Variable Dividend | Total Dividend |
per Quarter | per Quarter | per Quarter |
Less than $100 million | $0.10 per share |
$100 million to less than $200 | $0.10 per share |
million | |
$200 million to less than $300 | $0.10 per share |
million | |
$300 million to less than $400 | $0.10 per share |
million | |
$400 million or greater | $0.10 per share |
$0.00 per share $0.01 per share $0.02 per share $0.06 per share $0.08 per share
$0.10 per share $0.11 per share $0.12 per share $0.16 per share $0.18 per share
- 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 |
- 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.
PAN AMERICAN SILVER CORP. | 2 |
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.
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.
PAN AMERICAN SILVER CORP. | 3 |
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.
CONSOLIDATED RESULTS
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
Weighted average shares during period (millions) | 210.3 | 210.1 | ||||||
Shares outstanding end of period (millions) | 210.5 | 210.3 | ||||||
Three months ended | Year ended | |||||||
December 31, | 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 |
- Per share amounts are based on basic weighted average common shares.
- Non- GAAP measure; please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.
- 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.
- 2021 Gold Segment is comprised of the following operations: Dolores, Shahuindo, La Arena and Timmins. The 2020 Gold Segment metrics exclude Dolores.
- 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.
- Metal prices stated are inclusive of final settlement adjustments on concentrate sales.
PAN AMERICAN SILVER CORP. | 4 |
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Pan American Silver Corporation published this content on 24 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 February 2022 08:51:02 UTC.
