"Our Q3 results reflect the industry-wide challenge of softening precious metal prices combined with inflationary cost pressures," said
Added
Consolidated Q3 2022 Highlights:
- Silver production of 4.5 million ounces and gold production of 128.8 thousand ounces.
- Revenue of
$338.9 million , inclusive of a negative$4.8 million adjustment on open concentrate shipments, largely related to the decline in metal prices towards the end of Q3 2022. - Net loss of
$71.2 million ($0.34 basic loss per share), impacted by:$15.1 million in net realizable value ("NRV") inventory adjustments, primarily atDolores ;$12.6 million in investment losses on our short-term investments; and mine closure severance provisions of$9.4 million recorded for Manantial Espejo. - Adjusted loss of
$2.8 million ($0.01 basic adjusted loss per share) excludes the impact from the NRV inventory adjustments related to theDolores heap inventory, investment losses and the Manantial Espejo severance provisions, among other adjustments. - Operations generated
$54.4 million of cash flow, net of$20.4 million in tax payments. - Silver Segment Cash Costs and All-in Sustaining Costs ("AISC") per silver ounce were
$14.62 and$17.97 , respectively. Excluding NRV inventory adjustments, Silver Segment AISC was$18.46 per ounce. - Gold Segment Cash Costs and AISC per gold ounce were
$1,184 and$1,614 , respectively. Excluding NRV inventory adjustments, Gold Segment AISC was$1,482 per ounce. - As at
September 30, 2022 , Pan American's financial position remains strong with working capital of$422.1 million , inclusive of cash and short-term investment balances of$187.2 million ; a long-term investment in Maverix Metals Inc. ("Maverix") with a fair value of$87.0 million ; and$500.0 million available under our sustainability-linked credit facility. Total debt of$68.5 million was related to lease liabilities and construction loans. - A cash dividend of
$0.10 per common share has been declared, payable on or aboutDecember 2, 2022 , to holders of record of Pan American's common shares as of the close onNovember 21, 2022 . The dividends are eligible dividends for Canadian income tax purposes. - Management is revising its estimate for full-year 2022 silver production to be between 18.0 and 18.5 million ounces from the 19.0 to 20.5 million ounces provided in the 2022 Original Operating Outlook. We expect the estimate for Silver Segment Cash Costs and AISC could be marginally above the high-end of the range in our 2022 Original Operating Outlook. Management reaffirms the 2022 Original Operating Outlook for gold production, and reaffirms the revised estimates for Gold Segment AISC provided in the Company's MD&A for the period ended
June 30, 2022 . Gold Segment Cash Costs are now expected to be above the high end of the of the 2022 Original Operating Outlook. Please see the "2022 Guidance" section of this news release for further details. - The ILO 169 consultation process for the Escobal mine continues to progress with two meetings completed in
October 2022 . At this time, no date has been set for a potential restart of operations at Escobal. - At the La Colorada Skarn project, we updated our estimate for the mineral resource, with 95.9 million tonnes now in the indicated category containing 94.4 million ounces of silver, 2.7 million tonnes of zinc and 1.2 million tonnes of lead. In addition, the estimated inferred mineral resource totals 147.8 million tonnes containing 132.9 million ounces of silver, 3.4 million tonnes of zinc and 1.5 million tonnes of lead. This mineral resource estimate does not include drill results released on
November 1, 2022 andJuly 21, 2022 that indicate a high-grade silver zone of mineralisation.
CONSOLIDATED RESULTS
Three months ended | Twelve months ended | |||
Weighted average shares during period (millions) | 210.5 | 210.3 | ||
Shares outstanding end of period (millions) | 210.5 | 210.5 | ||
Three months ended | ||||
2022 | 2021 | |||
FINANCIAL | ||||
Revenue | $ | 338,889 | $ | 460,349 |
Mine operating (loss) earnings | $ | (21,788) | $ | 98,887 |
Net (loss) earnings | $ | (71,202) | $ | 20,219 |
Basic (loss) earnings per share(1) | $ | (0.34) | $ | 0.10 |
Adjusted (loss) earnings(2) | $ | (2,755) | $ | 37,780 |
Basic adjusted (loss) earnings per share(1) | $ | (0.01) | $ | 0.18 |
Net cash generated from operating activities | $ | 54,418 | $ | 157,017 |
Net cash generated from operating activities before changes in working capital(2) | $ | 32,814 | $ | 134,010 |
Sustaining capital expenditures(2) | $ | 48,710 | $ | 52,908 |
Non-sustaining capital expenditures(2) | $ | 26,239 | $ | 13,277 |
Cash dividend paid per share | $ | 0.11 | $ | 0.10 |
PRODUCTION | ||||
Silver (thousand ounces) | 4,537 | 4,831 | ||
Gold (thousand ounces) | 128.8 | 142.6 | ||
Zinc (thousand tonnes) | 8.9 | 12.7 | ||
Lead (thousand tonnes) | 4.4 | 4.2 | ||
Copper (thousand tonnes) | 0.9 | 2.1 | ||
CASH COSTS(2) ($/ounce) | ||||
Silver Segment | 14.62 | 11.92 | ||
Gold Segment | 1,184 | 922 | ||
AISC(2) ($/ounce) | ||||
Silver Segment | 17.97 | 16.30 | ||
Gold Segment | 1,614 | 1,176 | ||
AVERAGE REALIZED PRICES(3) | ||||
Silver ($/ounce) | 18.76 | 24.16 | ||
Gold ($/ounce) | 1,705 | 1,782 | ||
Zinc ($/tonne) | 3,232 | 2,989 | ||
Lead ($/tonne) | 1,944 | 2,286 | ||
Copper ($/tonne) | 7,707 | 9,399 |
(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) | Metal prices stated are inclusive of final settlement adjustments on concentrate sales. |
Cash Costs, AISC, adjusted earnings, basic adjusted earnings per share, sustaining and non-sustaining capital, working capital, total debt and net cash 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.
This news release should be read in conjunction with Pan American's unaudited Condensed Interim Consolidated Financial Statements and our Management's Discussion and Analysis for the three and nine months ended
SUBSEQUENT EVENT: PAN AMERICAN AND AGNICO EAGLE ARRANGEMENT AGREEMENT WITH YAMANA
On
On
The previously scheduled special meeting of Yamana shareholders for
The Pan American – Agnico Proposed Transaction would, if completed, increase Pan American's portfolio to 12 operating mines and is estimated to increase silver production by approximately 50% and gold production by approximately 100%. Pan American has 28 years of proven expertise and experience building and operating mines in
CONFERENCE CALL AND WEBCAST
Pan American will discuss the Proposed Transaction and Pan American - Agnico Arrangement Agreement in conjunction with the conference call to discuss the Company's Q3 2022 unaudited results. Details are as follows:
Date: | ||
Time: | ||
Dial-in numbers: | 1-800-319-4610 (toll-free in +1-604-638-5340 (international participants) | |
Webcast: | https://services.choruscall.com/mediaframe/webcast.html?webcastid=OACOqFfL |
The live webcast, presentation slides and the Management's Discussion and Analysis for the period ended
2022 GUIDANCE
Based on YTD results and the expected results for the remainder of the year, Management reaffirms the 2022 Original Operating Outlook for gold production, as provided in the Company's 2021 MD&A dated
Based on YTD 2022 results, Management reaffirms the 2022 Original Operating Outlook for Silver Segment Cash Costs and AISC. However, we are continuing to assess the adverse impact supply chain disruptions and market distortions are having on the Company's input costs, which could result in Silver Segment costs being marginally above the high-end of the range in our 2022 Original Operating Outlook.
Based on YTD 2022 Cash Costs and the Inflationary and Supply Chain Cost Increases impacting the price of the Company's input costs, we now expect Gold Segment Cash Costs to be above the high-end of the 2022 Original Operating Outlook of between
These estimates 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.
The following tables provide Management's 2022 Guidance forecasts, as at
Annual Production
Silver – Moz | 18.0 - 18.5 |
Gold – koz | 550.0 - 605.0 |
Zinc – kt | 35.0 - 40.0 |
Lead – kt | 15.0 - 17.0 |
Copper – kt | 5.5 - 6.5 |
Cash Costs and AISC
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, excluding NRV adjustments(3) | 970 - 1,070 | 1,450 - 1,550 |
(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 |
(3) | Gold Segment AISC guidance provided excluding NRV adjustments due to |
Capital Expenditures
(in millions of USD) | |
Sustaining Capital | 240.0 - 250.0 |
55.0 - 60.0 | |
Total Capital | 295.0 - 310.0 |
About Pan American
Pan American owns and operates silver and gold mines located in
Learn more at panamericansilver.com.
Technical Information
Scientific and technical information contained in this news release have been reviewed and approved by
For additional information about Pan American's material mineral properties, please refer to Pan American's Annual Information Form dated
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. 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.
- Adjusted earnings and basic adjusted earnings per share. Pan American 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"). 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.
- 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. Pan American and certain investors use this information to evaluate the financial debt leverage of Pan American.
- Net cash is calculated as cash and cash equivalents plus short-term investments, other than equity securities less total debt.
- 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. Pan American and certain investors use this information to evaluate whether Pan American 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. Pan American and certain investors use this information to evaluate the liquid assets available to Pan American.
Readers should refer to the "Alternative Performance (non-GAAP) Measures" section of Pan American's Management's Discussion and Analysis for the period ended
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 forecasted for 2022, our estimated Cash Costs and AISC, and our sustaining and project capital expenditures in 2022; the anticipated timing for metals production and sales, including the expectation with respect to a material increase in gold production in the fourth quarter of 2022 and the timing and amount of any future sales related to inventory build-ups; the implementation and closing of the transactions contemplated by the Pan American-Agnico Arrangement Agreement and any anticipated benefits therefrom; estimated recoverable amounts of cash generating units; expectations with respect to mineral grades and the impact of any variations relative to actual grades experienced; the impact of inflationary pressures on our operations and business, particularly for diesel and certain consumables, as well as the impacts related to disruptions in the supply chain; future anticipated prices for gold, silver and other metals and assumed foreign exchange rates; expectations with respect to the future anticipated impact of COVID-19 on our operations and the assumptions that the impact of COVID-19, including the Omicron variant, will be such that we will be able to maintain our workforce at near normal levels for the remainder of 2022; whether Pan American is able to maintain a strong financial condition and have sufficient capital, or have access to capital through our corporate sustainability-linked credit facility or otherwise, to sustain our business and operations; and the ability of Pan American to successfully complete any capital projects, including, but not limited to, the La Colorada Skarn project, the expected economic or operational results derived from those projects, and the impacts of any such projects on Pan American; and Pan American's plans and expectations for its properties and operations.
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 impact of inflation and disruptions to the global, regional and local supply chains; the world-wide economic and social impact of COVID-19 and the duration and extent of the COVID-19 pandemic and related restrictions, and the presence and impact of COVID-19 and COVID-19 related restrictions on our workforce, suppliers and other essential resources and what effect those impacts, if they change, would have on our business; the effect that the COVID-19 pandemic may have on our financial and operational results; the ability of Pan American to continue with its operations, or to successfully maintain our operations on care and maintenance, should the situation related to COVID-19 not be as anticipated; tonnage of ore to be mined and processed; future anticipated prices for gold, silver and other metals and assumed foreign exchange rates; the timing and impact of planned capital expenditure projects, including anticipated sustaining, project, and exploration expenditures; the ongoing impact and timing of the court-mandated ILO 169 consultation process in
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 effect of local and world-wide inflationary pressures and the potential for economic recessions; 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 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 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
Cautionary Note to US Investors
This news release has been prepared in accordance with the requirements of Canadian National Instrument 43-101 (the "NI 43-101") and the
Canadian public disclosure standards, including NI 43-101, differ significantly from the requirements of the
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