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Pan American Silver reports revenue of $439.9 million in Q1 2022

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Pan American Silver reports revenue of $439.9 million in Q1 2022

 

 

 

 

 

Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) reported unaudited results for the quarter ended March 31, 2022.

 

“Pan American reported strong financial performance in the quarter, enabling us to declare a dividend of $0.12 per common share for Q1, in line with the new dividend policy announced in February 2022,” said Michael Steinmann, President and Chief Executive Officer. “As we indicated in our February 23, 2022 news release, our operations experienced high levels of workforce absenteeism in January and early February due to the Omicron variant of COVID-19. Workforce deployment is now back to more normal levels, and we are maintaining our guidance for 2022 with production weighted to the second half of the year.”

 

Consolidated Q1 2022 Highlights:

  • Silver production of 4.6 million ounces and gold production of 131.0 thousand ounces.
  • Revenue of $439.9 million included inventory draw downs of 531.6 thousand ounces of silver and 17.6 thousand ounces of gold.
  • Net earnings of $76.8 million ($0.36 basic income per share). Adjusted earnings were $32.0 million ($0.15 basic adjusted income per share), with the most significant adjustment being the exclusion of the $44.6 million one-time gain for Pan American’s investment in Maverix Metals Inc. (“Maverix”).
  • Operations generated $68.8 million of cash flow, net of $58.3 million in tax payments.
  • Silver Segment Cash Costs and All-in Sustaining Costs (“AISC”) per silver ounce were $10.23 and $13.41, respectively. Excluding Net Realizable Value (“NRV”) inventory adjustments, Silver Segment AISC was $13.08 per ounce.
  • Gold Segment Cash Costs and AISC per gold ounce were $1,069 and $1,502, respectively. Excluding NRV inventory adjustments, Gold Segment AISC was $1,409 per ounce.
  • Completed a quarterly-record 25,924 metres drilled on the La Colorada Skarn project, advanced pre-sinking of the concrete lined ventilation shaft and began commissioning of the refrigeration plant. See the news release issued on May 9, 2022, for further details on the recent drill results.
  • Management maintains its guidance for 2022 production, costs and capital expenditures. Production is expected to be weighted to the second half of 2022, reflecting the impact on production from reduced workforce deployment levels in Q1 2022 due to the Omicron variant and mine sequencing. See the “2022 Guidance” section of this news release for further details, and the Company’s Management’s Discussion and Analysis for the three months ended March 31, 2022.
  • As at March 31, 2022, Pan American had working capital of $620.7 million, inclusive of cash and short-term investment balances of $326.3 million; a long-term investment in Maverix with a market value of $124.7 million; and $500.0 million available under our sustainability-linked credit facility. Total debt of $47.0 million was related to lease liabilities and construction loans.
  • A cash dividend of $0.12 per common share has been declared, payable on or about June 3, 2022, to holders of record of Pan American’s common shares as of the close on May 24, 2022. The dividend is comprised of a base dividend of $0.10 per common share and a variable dividend of $0.02 per common share. On February 23, 2022, Pan American introduced a dividend policy that provides for a base dividend plus a supplemental dividend amount tied to our net cash balance. The dividends are eligible dividends for Canadian income tax purposes.

 

CONSOLIDATED RESULTS

 

Three months
ended

March 31, 2022
Twelve months
ended
Dec. 31, 2021
Weighted average shares during period (millions) 210.5 210.3
Shares outstanding end of period (millions) 210.5 210.5
Three months ended
March 31,
2022 2021
FINANCIAL
Revenue $           439,888 $           368,099
Mine operating earnings $             66,755 $             89,964
Net income (loss) $             76,831 $              (7,562)
       Basic income (loss) per share(1) $                 0.36 $                (0.04)
Adjusted income(2) $             31,977 $             37,433
       Basic adjusted income per share(1) $                 0.15 $                 0.18
Net cash generated from operating activities $             68,758 $             29,850
Net cash generated from operating activities before changes in working capital(2) $             83,816 $             77,248
Sustaining capital expenditures(2) $             55,957 $             45,210
Non-sustaining  capital expenditures(2) $               9,765 $               5,743
Cash dividend per share $                 0.12 $                 0.07
PRODUCTION
Silver (thousand ounces) 4,619 4,583
Gold (thousand ounces) 131.0 137.6
Zinc (thousand tonnes) 10.2 13.1
Lead (thousand tonnes) 4.7 5.0
Copper (thousand tonnes) 1.8 2.1
CASH COSTS(2) ($/ounce)
Silver Segment 10.23 12.30
Gold Segment 1,069 846
AISC(2) ($/ounce)
Silver Segment 13.41 16.99
Gold Segment 1,502 1,058
AVERAGE REALIZED PRICES(3)
Silver ($/ounce) 24.03 26.41
Gold ($/ounce) 1,880 1,788
Zinc ($/tonne) 3,792 2,756
Lead ($/tonne) 2,341 2,036
Copper ($/tonne) 9,767 8,515
(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 months ended March 31, 2022. 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.

 

2022 GUIDANCE

 

There are no changes to the guidance for 2022 provided on February 23, 2022, as detailed below. We are currently experiencing higher than expected overall inflationary pressures, particularly for diesel and certain consumables, as well as disruptions in the supply chain. Management is monitoring this situation and will adjust its cost estimates if required.

 

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.

 

Annual Production

 

Silver – Moz 19.0 – 20.5
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 970 – 1,070 1,240 – 1,365
(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 $22.50/oz for silver, $1,750/oz for gold, $3,000/tonne ($1.36/lb) for zinc, $2,200/tonne ($1.00/lb) for lead, and $9,200/tonne ($4.17/lb) for copper; and average annual exchange rates relative to 1 USD of 20.00 for the Mexican peso (“MXN”), 4.10 for the Peruvian sol (“PEN”), 122.17 for the Argentine peso (“ARS”), 7.00 for the Bolivian boliviano (“BOB”), and $1.25 for the Canadian dollar (“CAD”).

Capital Expenditures

 

(in millions of USD)
Sustaining Capital(1)                                                            200.0 – 210.0
Project Capital 80.0 – 95.0
Total Capital 280.0 – 305.0
(1) Sustaining Capital includes $24.0 million for forecast lease and other payments, which include debt repayments on construction loan facilities classified as “Debt” as per Note 17 of the Company’s audited financial statements for the year ended December 31, 2021. These facilities are for constructions of pads and other infrastructure in which the Company only makes cash payments upon completion of construction activities and on a scheduled basis.

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. Pan American provides enhanced exposure to silver through a large base of silver reserves and resources, as well as major catalysts to grow silver production. We have a 28-year history of operating in Latin America, earning an industry-leading reputation for sustainability performance, operational excellence and prudent financial management. We are headquartered in Vancouver, B.C.

 

Posted May 12, 2022

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