Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) announced its preliminary production results for the fourth quarter and full year 2020, and provided its guidance for production, costs and certain expenditures in 2021.
“We are expecting a 35% increase in silver production relative to 2020 and record gold production in 2021, despite our assumption that COVID-19 will continue to have an impact on operations,” said Michael Steinmann, President and Chief Executive Officer of Pan American. “Under our 2021 guidance assumptions, we expect to be generating robust levels of free cash flow. Our ability to overcome the extraordinary challenges over the past year while managing our nine operations, generating substantial free cash flow, advancing our La Colorada skarn project, and re-paying all our bank debt is a testament to our team and the benefit of having a diversified portfolio of quality assets. I anticipate 2021 being a much stronger year across all our operations.”
During 2020, Pan American repaid the remaining $275.0 million outstanding on its corporate credit facility and distributed $46.2 million in dividends to shareholders, with the quarterly dividend being increased twice during the year. As at December 31, 2020, Pan American had no bank debt, while the cash and short-term investment balances increased to approximately $279.1 million.
Preliminary 2020 Production Results
Figures are preliminary and subject to final adjustment. The final figures will be provided in Pan American’s financial results for Q4 and year ended December 31, 2020. Pan American plans to release its audited financial results for Q4 2020 and FY 2020 after market close on February 17, 2021.
|Q4 2020||FY 2020||Q4 2020||FY 2020|
|(1)||Morococha data represents Pan American’s 92.3% interest in the mine’s production.|
|(2)||San Vicente data represents Pan American’s 95.0% interest in the mine’s production.|
|(3)||Totals may not add due to rounding.|
|Consolidated Base Metal Production (thousand tonnes)|
|Q4 2020||FY 2020|
2020 Production Summary and Notes:
|(1) On May 6, 2020, Pan American withdrew its 2020 annual production, Cash Costs, AISC and capital expenditure forecasts, originally provided in the 2019 annual MD&A dated March 12, 2020. The decision to withdraw the 2020 guidance was based on the uncertainties regarding the impact of the COVID-19 pandemic on our operations. Pan American subsequently revised its 2020 annual production, Cash Costs, AISC and capital expenditure forecasts on August 5, 2020. On November 4, 2020, Pan American reduced its estimate for 2020 silver production and maintained the rest of the guidance provided on August 5, 2020.|
The estimates below are forward-looking in nature. Please refer to the cautionary note at the end of this news release. Management may revise guidance during the year to reflect actual and anticipated results.
Please note that the Dolores operation has been moved from the Silver Segment to the Gold Segment.
|Silver Production||Gold Production||Cash Costs||AISC|
|(million ounces)||(thousand ounces)||($ per ounce)(1)||($ per ounce)(1)|
|La Colorada||7.16 – 7.44||4.0 – 4.2||4.00 – 5.00||8.50 – 9.50|
|Huaron||3.61 – 3.86||0.5||4.80 – 7.90||9.50 – 12.50|
|Morococha (92.3%)(2)||2.25 – 2.42||0.8 – 0.9||10.00 – 14.20||13.50 – 17.50|
|San Vicente (95.0%)(3)||3.23 – 3.37||0.5||12.30 – 13.50||16.75 – 17.75|
|Manantial Espejo||3.18 – 3.46||33.2 – 35.3||16.30 – 17.30||19.00 -20.00|
|Silver Segment Consolidated(4,5)||19.43 – 20.55||39.0 – 41.4||8.50 – 10.00||12.50 – 14.00|
|Dolores||2.73 – 2.97||160.8 – 179.3||665 – 820||850 – 1,000|
|Shahuindo||0.29 – 0.43||153.9 – 165.0||715 – 795||1,125 – 1,250|
|La Arena||0.03||102.9 – 110.9||870 – 940||1,275 – 1,400|
|Timmins||0.02||148.4 – 158.5||1,085 – 1,160||1,375 – 1,450|
|Gold Segment Consolidated(4,5)||3.07 – 3.45||566.0 – 613.7||825 – 925||1,135 – 1,250|
|Total Production(4,5)||22.5 – 24.0||605.0 – 655.1||n/a||n/a|
|Consolidated AISC – Silver Basis(6)||(2.80) – 2.70|
|(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)||Morococha data represents Pan American’s 92.3% interest in the mine’s production.|
|(3)||San Vicente data represents Pan American’s 95.0% interest in the mine’s production.|
|(4)||Silver Segment Cash Costs and AISC are calculated net of credits for realized revenues from all metals other than silver and are calculated per ounce of silver sold. Gold Segment Cash Costs and AISC are calculated net of credits for realized silver revenues and are calculated per ounce of gold sold.|
|(5)||Totals may not add due to rounding.|
|(6)||Consolidated AISC is calculated per silver ounce sold with total gold revenues included within by-product credits. General and administrative (“G&A”) and greenfield exploration costs are included in the consolidated AISC, but not allocated in calculating AISC for each operation.|
2021 Guidance Assumptions
|Expenditures ($ millions)|
|La Colorada||27.0 – 29.5|
|Huaron||14.5 – 15.5|
|Morococha||6.0 – 7.0|
|San Vicente||13.5 – 14.5|
|Manantial Espejo||6.5 – 7.5|
|Dolores||26.0 – 30.0|
|Shahuindo||66.5 – 68.0|
|La Arena||44.5 – 45.0|
|Timmins||40.5 – 43.0|
|Sustaining Capital Sub-total||245.0 – 260.0|
|La Colorada skarn||50.0 – 55.0|
|Timmins Wetmore exploration||5.0|
|Project Capital Sub-total||55.0 – 60.0|
|Total Capital||300.0 – 320.0|
|Care & Maintenance|
|Escobal||20.0 – 21.0|
|Navidad||2.0 – 2.5|
|Total Care & Maintenance||22.0 – 23.5|
|Corporate General & Administrative(1)||39.0 – 42.0|
|(1) Includes stock-based compensation.|
Exploration expenditures are expected to total approximately $42 million, of which $22 million is included in project capital for drilling of the La Colorada skarn and the Wetmore project.
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 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.
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.
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 27-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.
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