Pan American Silver Corp. (NYSE: PAAS) (TSX: PAAS) ("Pan
American" or the "Company") today reported unaudited results for
the quarter ended March 31, 2023 ("Q1 2023").
"Pan American reported solid results for the first quarter of
2023, with adjusted earnings of $0.10 per share," said Michael
Steinmann, President and Chief Executive Officer. "Going forward,
Pan American will be a significantly larger, more diversified
company following our acquisition of Yamana. Our guidance for 2023
demonstrates the positive impact of the four new mines on
production and costs, and we are excited by the growth
opportunities the combined portfolio presents."
On March 31, 2023, Pan American completed its previously
announced acquisition of all of the issued and outstanding common
shares of Yamana Gold Inc. ("Yamana"), following the sale by Yamana
of its Canadian assets to Agnico Eagle Mines Limited, by way of a
plan of arrangement under the Canada Business Corporations Act (the
"Yamana transaction"). The Yamana transaction added four producing
mines to Pan American's portfolio: the Jacobina mining complex in
Brazil, the El Peñon and Minera Florida mines in Chile, and the
Cerro Moro mine in Argentina ("Acquired Operations"), plus several
exploration and development projects in Chile, Brazil and
Argentina. Operating and financial results reported in this news
release, except for the financial position as at March 31, 2023,
reflect only Pan American's original mines, specifically: La
Colorada, Huaron, San Vicente, Manantial Espejo, Timmins,
Shahuindo, La Arena and Dolores (the "Original Assets").
The following highlights for Q1 2023 include certain measures
that are not generally accepted accounting principle ("non-GAAP")
financial 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.
Consolidated Q1 2023 Highlights:
- Silver production of 3.9 million ounces and gold production of
122.7 thousand ounces. As previously disclosed, Manantial Espejo
has been placed on care and maintenance following the completion of
mining at the end of 2022; some residual production was recorded
for Q1 2023.
- Revenue was $390.3 million, inclusive of a negative $3.8
million price adjustment on open concentrate shipments.
- Net earnings of $16.5 million ($0.08 basic earnings per share),
including $18.9 million in transaction and integration costs
related to the Yamana transaction and $12.7 million in severance
provisions. Adjusted earnings were $21.2 million ($0.10 basic
adjusted earnings per share).
- Cash flow from operations of $51.3 million, net of $30.7
million in tax payments.
- Silver Segment Cash Costs and All-in Sustaining Costs ("AISC")
per silver ounce of $12.19 and $14.13, respectively. Excluding Net
Realizable Value ("NRV") inventory adjustments, Silver Segment AISC
was $14.11 per ounce.
- Gold Segment Cash Costs and AISC per gold ounce of $1,120 and
$1,196, respectively. Excluding NRV inventory adjustments, Gold
Segment AISC was $1,361 per ounce.
- Pan American's financial position as at March 31, 2023,
incorporates the assets and liabilities Pan American assumed
through the Yamana transaction. As at March 31, 2023, Pan American
had working capital of $826.6 million, inclusive of cash and
short-term investment balances of $513.1 million ($204.7 million
related to the Minera Agua Rica Alumbrera ("MARA") project in
Argentina), as well as $425 million available under its $750
million revolving sustainability-linked credit facility ("SL-Credit
Facility"). Total debt of $1,187.0 million relates to the SL-Credit
Facility, construction loans and leases, and two senior notes Pan
American assumed through the Yamana transaction: $500 million with
a coupon of 2.63% maturing in 2031 and $283 million with a coupon
of 4.625% maturing in 2027. Moody's Investors Service and S&P
Global have assigned Pan American with an investment grade credit
rating.
- A cash dividend of $0.10 per common share with respect to Q1
2023 was previously declared on March 24, 2023, payable on or about
May 12, 2023, to holders of record of Pan American’s common shares
as of the close of markets on April 14, 2023. The dividends are
eligible dividends for Canadian income tax purposes. Pan American
selected that record and payment date to harmonize its dividend
with respect to Q1 2023 with Yamana’s normal course dividend timing
for payment of a first quarter dividend. Subsequent dividends to be
declared by Pan American are expected to follow Pan American's
previous schedule of dividend payments.
- Two ILO 169 consultation meetings for the Escobal mine were
held in Q1 2023, as well as several working meetings between
Guatemala's Ministry of Energy and Mines and Xinka Indigenous
community representatives. At this time, no date has been set for a
potential restart of operations at Escobal.
CONSOLIDATED RESULTS
Three months ended
March 31, 2023
Three months ended March 31,
2022
Weighted average shares during period
(millions)
210.7
210.5
Shares outstanding end of period
(millions)
364.4
210.5
Three months ended
March 31,
2023
2022
FINANCIAL
Revenue
$
390.3
$
439.9
Mine operating earnings
$
77.2
$
66.8
Net earnings
$
16.5
$
76.8
Basic earnings per share(1)
$
0.08
$
0.36
Adjusted earnings(2)
$
21.2
$
31.9
Basic adjusted earnings per share(1)
$
0.10
$
0.15
Net cash generated from operating
activities
$
51.3
$
68.8
Net cash generated from operating
activities before changes in working capital(2)
$
43.3
$
83.6
Sustaining capital expenditures(2)
$
32.5
$
56.0
Non-sustaining capital expenditures(2)
$
11.5
$
9.8
Cash dividend paid per share
$
0.10
$
0.12
PRODUCTION
Silver (thousand ounces)
3,891
4,619
Gold (thousand ounces)
122.7
131.0
Zinc (thousand tonnes)
10.6
10.2
Lead (thousand tonnes)
5.3
4.7
Copper (thousand tonnes)
1.2
1.8
CASH COSTS(2) ($/ounce)
Silver Segment
12.19
10.23
Gold Segment
1,120
1,069
AISC(2) ($/ounce)
Silver Segment
14.13
13.41
Gold Segment
1,196
1,502
AVERAGE REALIZED PRICES(3)
Silver ($/ounce)
22.75
24.03
Gold ($/ounce)
1,895
1,880
Zinc ($/tonne)
3,133
3,792
Lead ($/tonne)
2,160
2,341
Copper ($/tonne)
8,903
9,767
(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 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
("MD&A") for the three months ended March 31, 2023. This
material is available on Pan American’s website at
panamericansilver.com, on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
CONFERENCE CALL AND WEBCAST
Date:
May 11, 2023
Time:
11:00 am ET (8:00 am PT)
Dial-in numbers:
1-888-396-8049 (toll-free in Canada and
the U.S.)
+1-416-764-8646 (international
participants)
Conference ID:
49301459
Webcast:
https://events.q4inc.com/attendee/492473712
The live webcast, presentation slides and the report for the
first quarter of 2023 will be available at
https://www.panamericansilver.com/invest/events-and-presentations/.
An archive of the webcast will also be available for three
months.
2023 GUIDANCE
The following provides Management's 2023 guidance, as at May 10,
2023. Relative to the guidance provided on April 27, 2023, the only
revision is an increase in estimated project capital expenditures
to a range of $95 million to $105 million from the previous range
of $75 million to $85 million. The revised range reflects an
updated estimate to complete the preliminary economic assessment
studies and to advance the exploration drilling for the La Colorada
Skarn project.
2023 General and Administrative, Care and Maintenance, and
Exploration Expense Forecast
2023 General and Administrative expenses are estimated to total
between $75 to $80 million, and reflects increased personnel
following the Yamana transaction, increased regulatory and
insurance costs, and a normalized year of stock based compensation,
which was lower than assumed in 2022 due to share price
performance.
2023 Care and Maintenance costs are estimated to total $98 to
$109 million, which reflects expenditures for Escobal, the MARA
project, Manantial Espejo and Morococha.
2023 Exploration Expense is estimated to total $14 to $16
million for regional greenfield expenditures. The expenditures
relating to near-mine exploration are included in the sustaining
and project capital amounts provided in the Capital Expenditures
Forecast table below.
The production and cost guidance provided in the following
tables reflect the contribution from the Acquired Operations for
the nine-month period from March 31, 2023 to December 31, 2023, and
the full 12-month period of 2023 for Pan American's Original
Assets. Please see our MD&A for the period ending March 31,
2023, for a more detailed breakdown of the guidance, including by
individual mine and on a quarterly basis for 2023. These estimates
are forward-looking statements and information that are subject to
the cautionary note associated with forward-looking statements and
information at the end of this news release.
Consolidated Annual Production
Forecast(1)
Silver – Moz
21.0 - 23.0
Gold – koz
870 - 970
Zinc – kt
41 - 45
Lead – kt
18 - 21
Copper – kt
5
Consolidated Cash Costs and AISC
Forecast(1)
Cash Costs(2) ($ per
ounce)
AISC(2) ($ per
ounce)
Silver Segment Total
10.00 - 12.00
14.00 - 16.00
Gold Segment Total
975 - 1,100
1,275 - 1,425
(1) 2023 production and AISC forecasts reflect ownership of the
Acquired Operations for the nine-month period from March 31 to
December 31, 2023 and the full 12 months for Pan American's
Original Assets.
(2) 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. The AISC
forecast assumes metal prices of $22.00/oz for silver, $1,850/oz
for gold, $3,000/tonne ($1.36/lb) for zinc, $2,100/tonne ($0.95/lb)
for lead, and $8,000/tonne ($3.63/lb) for copper; and average
annual exchange rates relative to 1 USD of 18.75 for the Mexican
peso ("MXN"), 3.75 for the Peruvian sol ("PEN"), 270.00 for the
Argentine peso ("ARS"), 7.00 for the Bolivian boliviano ("BOB"),
$1.33 for the Canadian dollar ("CAD"), $800.00 for the Chilean peso
("CLP") and $5.00 for the Brazilian real ("BRL").
Capital and Reclamation Expenditures
Forecast
($ millions)
Sustaining Capital
305 - 320
Project Capital
95 - 105
Total Capital
400 - 425
Reclamation Expenditures
18 - 20
About Pan American
Pan American is a leading producer of precious metals in the
Americas, operating silver and gold mines in Canada, Mexico, Peru,
Bolivia, Argentina, Chile and Brazil. We also own the Escobal mine
in Guatemala that is currently not operating, and we hold interests
in exploration and development projects, including the Minera Agua
Rica Alumbrera ("MARA") project in Argentina. We have been
operating in the Americas for nearly three decades, earning an
industry-leading reputation for sustainability performance,
operational excellence and prudent financial management. We are
headquartered in Vancouver, B.C. and our shares trade on New York
Stock Exchange and the Toronto Stock Exchange under the symbol
"PAAS". Learn more at https://www.panamericansilver.com/
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 Process Optimization,
and Christopher Emerson, FAusIMM, Vice President Exploration and
Geology, each of whom are Qualified Persons, as the term is defined
in Canadian National Instrument 43-101 - Standards of Disclosure
for Mineral Projects.
For additional information about Pan American's material mineral
properties, please refer to Pan American’s Annual Information Form
dated February 22, 2023, filed at www.sedar.com, or the Company's
most recent Form 40-F filed with the Securities and Exchange
Commission.
Alternative Performance (Non-GAAP) Measures
In this news release, we refer to measures that are 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.
- 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 December 31, 2022, for a more
detailed discussion of these and other non-GAAP measures and their
calculation.
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 2023, our estimated
Cash Costs and AISC, and our sustaining and project capital
expenditures in 2023; whether Pan American is able to realize
synergies or obtain the positive impact from the four new mines
resulting from the Yamana transaction; 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 anticipated dividend payment date of May
12, 2023; future anticipated prices for gold, silver and other
metals and assumed foreign exchange rates; 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;; 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
Guatemala; ore grades and recoveries; capital, decommissioning and
reclamation estimates; our mineral reserve and mineral 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 mineral
properties and the surface rights necessary for our operations;
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 our ability
to comply with environmental, health and safety laws. The foregoing
list of assumptions is not exhaustive.
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, CAD, CLP and
BRL 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 Canada, the United
States, Mexico, Peru, Argentina, Bolivia, Guatemala, Chile, Brazil
or other countries where Pan American may carry on business,
including legal restrictions relating to mining, including in
Chubut, Argentina, risks relating to expropriation and risks
relating to the constitutional court-mandated ILO 169 consultation
process in Guatemala; diminishing quantities or grades of mineral
reserves as properties are mined; increased competition in the
mining industry for equipment and qualified personnel; those
factors identified under the caption "Risks Related to Pan
American's Business" in Pan American'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; and those factors identified under the
caption "Risks of the Business" in Yamana'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 Pan American has
attempted to identify important factors that could cause actual
results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated, described or intended.
Investors are cautioned against undue reliance on forward-looking
statements or information. Forward-looking statements and
information are designed to help readers understand management's
current views of our near and longer term prospects and may not be
appropriate for other purposes. Pan American does not intend, nor
does it assume any obligation to update or revise forward-looking
statements or information, whether as a result of new information,
changes in assumptions, future events or otherwise, except to the
extent required by applicable law.
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 Institute of Mining, Metallurgy and
Petroleum Definition Standards, which differ from the requirements
of U.S. securities laws. NI 43-101 is a rule developed by the
Canadian Securities Administrators that establishes standards for
all public disclosure an issuer makes of scientific and technical
information concerning mineral projects.
Canadian public disclosure standards, including NI 43-101,
differ significantly from the requirements of the United States
Securities and Exchange Commission (the "SEC"), and information
concerning mineralization, deposits, mineral reserve and resource
information contained or referred to herein may not be comparable
to similar information disclosed by U.S. companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005398/en/
For more information:
Siren Fisekci VP, Investor Relations & Corporate
Communications Ph: 604-806-3191 Email: ir@panamericansilver.com
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