Q Earnings Review

Transcription

1 Q Earnings Review 1

2 Cautionary Note Non-GAAP Measures This presentation of Pan American Silver Corp. and its subsidiaries (collectively, Pan American, Pan American Silver, the Company, we or our ) refers to various non-gaap measures, such as cash costs per payable ounce of silver, net of by-product credits ( cash costs ), all-in sustaining cost per silver ounce sold ( AISCSOS ), total debt, adjusted net earnings, adjusted net earnings per share, total available liquidity, operating cash flow before changes in non-cash operating working capital and interest and taxes paid. These measures do not have a standardized meaning prescribed by IFRS as an indicator of performance, and may differ from methods used by other companies. Readers should refer to the Alternative Performance (Non-GAAP) Measures section of the Company s Management s Discussion and Analysis for the period ended September 30, 2018, available at Reporting Currency and Financial Information Unless we have specified otherwise, all references to dollar amounts or $ are to United States dollars. Cautionary Note Regarding Forward-Looking Statements and Information Certain of the statements and information in this presentation constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forwardlooking information" within the meaning of applicable Canadian provincial securities laws. All statements, other than statements of historical fact, are forward-looking statements or information. Forwardlooking statements or information in this presentation relate to, among other things: future financial or operational performance, including our estimated production of silver, gold and other metals in 2018, our estimated cash costs and AISCSOS in 2018, and our expectations with respect to future metal prices and exchange rates; the ability of the Company to successfully complete any capital investment programs and projects, including the COSE and Joaquin projects, whether on time, or on or below budget, the expected economic or operational results derived from those programs and projects, and the impacts of any such programs and projects on the Company, including with respect to production, associated operational efficiencies and economic returns; and the approval of or the amount of any future cash dividends. These forward-looking statements and information reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include: tonnage of ore to be mined and processed; ore grades and recoveries; prices for silver, gold and base metals remaining as estimated; currency exchange rates remaining as estimated; 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 our mine sites or maintain safe access to our mine sites due to criminal activity and violence; and our ability to comply with environmental, health and safety laws. The foregoing list of assumptions is not exhaustive. The Company 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 presentation and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: 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 Canadian dollar, Peruvian sol, Mexican peso, Argentine peso and Bolivian boliviano versus the U.S. dollar); 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 the Company 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; legal restrictions relating to mining, including in Chubut, Argentina; risks relating to expropriation; diminishing quantities or grades of mineral reserves as properties are mined; increased competition in the mining industry for equipment and qualified personnel; and those factors identified under the caption "Risks Related to Pan American's Business" in the Company'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 the Company 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. The Company 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. 2 November 6, 2018

3 Cautionary Note Technical Information Technical information contained in this presentation with respect to Pan American Silver Corp. has been reviewed and approved by Martin Wafforn, P.Eng., SVP Technical Services and Process Optimization, and Chris Emerson, FAusIMM, VP Business Development and Geology, who are the Company s qualified persons for the purposes of National Instrument Standards of Disclosure for Mineral Projects ( NI ). Mineral reserves and mineral resources in this presentation were prepared under the supervision of, or were reviewed by, Martin Wafforn and Chris Emerson. For additional information about the Company s material mineral properties, please refer to the Company s Annual Information Form dated March 22, 2018 and technical reports with respect to these mineral properties, filed at or the Company s most recent Form 40-F filed with the SEC. Cautionary Note to US Investors Regarding Reference to Mineral Reserves and Mineral Resources This presentation has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all mineral reserve and mineral resource estimates included in this presentation have been disclosed in accordance with NI and the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards. NI 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 , differ significantly from the requirements of 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. In particular, and without limiting the generality of the foregoing, this presentation uses the terms measured resources, indicated resources and inferred resources. U.S. investors are advised that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. The requirements of NI for identification of reserves are not the same as those of the SEC, and reserves reported by Pan American in compliance with NI may not qualify as reserves under SEC standards. Under U.S. standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. U.S. investors are cautioned not to assume that any part of a measured resource or indicated resource will ever be converted into a reserve. U.S. investors should also understand that inferred resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of inferred resources exist, are economically or legally mineable or will ever be upgraded to a higher category. Under Canadian securities laws, estimated inferred resources may not form the basis of feasibility or pre-feasibility studies except in rare cases. Disclosure of contained ounces in a mineral resource is permitted disclosure under Canadian securities laws. However, the SEC normally only permits issuers to report mineralization that does not constitute reserves by SEC standards as in place tonnage and grade, without reference to unit measures. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made public by companies that report in accordance with U.S. standards. 3 November 6, 2018

4 Q Highlights Produced 6.3 Moz of silver and 42.1 koz of gold Production on track to achieve guidance (1) Cash costs per payable ounce of silver, net of by-product credits ("cash costs") of $5.24 per ounce and All-in sustaining costs per silver ounce sold ( AISCSOS ) of $13.73, including $3.68 of negative net realizable value ( NRV ) adjustments Costs on track to achieve guidance (1)(2) Cash from operating activities of $41.7 million Cash and short-term investment balance of $252.7 million, up $2.4 million from June 30, 2018 Quarterly cash dividend of $0.035 per common share approved (1) Please refer to the Company s news release dated Nov. 6, 2018 for more information on the 2018 guidance. (2) Cash costs and AISCSOS are non-gaap financial measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 4 November 6, 2018

5 Consolidated Financial Results Unaudited in millions of US$, except per share amounts Q YTD 2018 Revenue Mine operating (loss) earnings (4.4) Net (loss) earnings (9.2) 75.6 Per share (0.06) 0.48 Adjusted (loss) earnings (1) (4.7) 61.5 Per share (0.03) 0.40 (1) Adjusted (loss) earnings is a non-gaap financial measure; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. Per share amounts are calculated using the basic weighted average shares outstanding for the period. 5 November 6, 2018

6 Q Consolidated Cash Flows STI (short-term investments) OCF (operating cash flow) WC (working capital) NCI (distributions to non-controlling interests) 6 November 6, 2018

7 Financial Position has Strengthened US$ Millions As at Sept. 30, 2018 As at Dec. 31, 2017 Cash and cash equivalents + short-term investments Working capital (1) Total debt (2) Revolving credit facility (undrawn) Total available liquidity (3) (1) Working capital is a non-gaap measure calculated as current assets less current liabilities. The Company and certain investors use this information to evaluate whether the Company is able to meet its current obligations using its current assets. (2) Total debt is a non-gaap measure; total debt at Sept. 30, 2018 reflects finance lease liabilities; total debt at Dec. 31, 2017 reflects finance lease liabilities and loans payable. (3) Total available liquidity is a non-gaap measure, and includes cash and cash equivalents, short-term investments, and the undrawn portion of the Company s secured revolving credit facility. See the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 7 November 6, 2018

8 Operating Results Consolidated Q YTD 2018 Guidance Silver production (million ounces) Gold production (thousand ounces) Zinc production (thousand tonnes) Lead production (thousand tonnes) Copper production (thousand tonnes) Cash Costs (1) ($/ounce) AISCSOS (1) (1) Realized metal prices for Q were: Ag $14.88/ounce, Au $1,212/ounce, Zn $2,472/tonne, Pb $2,072/tonne, and Cu $6,105/tonne. Realized metal prices for YTD 2018 were: Ag $15.98/ounce, Au $1,283/ounce, Zn $2,981/tonne, Pb $2,286/tonne, and Cu $6,641/tonne. Cash Costs per payable ounce of silver, net of by-product credits, and AISCSOS are non-gaap measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 8 November 6, 2018

9 La Colorada Mine Location: Zacatecas, Mexico Ownership: 100% Mine Type: Underground Q YTD Guidance (1) Production Silver - Moz Gold koz Zinc kt n/a Lead kt n/a Cash Costs (1) $3.50 $2.13 $ AISCSOS (1) $6.27 $4.20 $ (1) Please refer to the Company s news release dated Nov. 6, 2018 for more information on the 2018 guidance. Production guidance for each mine is as per the news release dated Jan. 11, Guidance for base metal production for each mine is not provided. (2) Cash Costs and AISCSOS are non-gaap financial measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 9 November 6, 2018

10 La Colorada Discovery 10 November 6, 2018

11 La Colorada Discovery 11 November 6, 2018

12 Dolores Mine Location: Chihuahua, Mexico Ownership: 100% Mine Type: Open Pit/Underground Q YTD Guidance (1) Production Silver - Moz Gold koz Cash Costs (2) $1.00 $(4.12) $(2.00) (2.50) AISCSOS (2) $25.52 $11.40 $ (1) Please refer to the Company s news release dated Nov. 6, 2018 for more information on the 2018 guidance. Production guidance for each mine is as per the news release dated Jan. 11, (2) Cash Costs and AISCSOS are non-gaap financial measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 12 November 6, 2018

13 Huaron Mine Location: Pasco, Peru Ownership: 100% Mine Type: Underground Q YTD Guidance (1) Production Silver - Moz Gold koz Zinc kt n/a Lead kt n/a Copper kt n/a Cash Costs (1) $3.25 $1.19 $ AISCSOS (1) $11.07 $7.18 $ (1) Please refer to the Company s news release dated Nov. 6, 2018 for more information on the 2018 guidance. Production guidance for each mine is as per the news release dated Jan. 11, Guidance for base metal production for each mine is not provided. (2) Cash Costs and AISCSOS are non-gaap financial measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 13 November 6, 2018

14 Morococha Mine (1) Location: Yauli, Peru Ownership: 92.3% Mine Type: Underground Q YTD Guidance (2) Production Silver - Moz Gold koz Zinc kt n/a Lead kt n/a Copper kt n/a Cash Costs (3) $(0.65) $(6.06) $(4.70) - (3.40) AISCSOS (3) $4.52 $0.59 $ (1) All figures reflect Pan American Silver s ownership in the project. (2) Please refer to the Company s news release dated Nov. 6, 2018 for more information on the 2018 guidance. Production guidance for each mine is as per the news release dated Jan. 11, Guidance for base metal production for each mine is not provided. (3) Cash Costs and AISCSOS are non-gaap financial measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 14 November 6, 2018

15 San Vicente Mine (1) Location: Potosí, Bolivia Ownership: 95% Mine Type: Underground Q YTD Guidance (2) Production Silver - Moz Gold koz Zinc kt n/a Lead kt n/a Copper kt n/a Cash Costs (2) $11.14 $10.44 $ AISCSOS (2) $11.11 $11.92 $ (1) All figures reflect Pan American Silver s ownership in the project. (2) Please refer to the Company s news release dated Nov. 6, 2018 for more information on the 2018 guidance. Production guidance for each mine is as per the news release dated Jan. 11, Guidance for base metal production for each mine is not provided. (3) Cash Costs and AISCSOS are non-gaap financial measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 15 November 6, 2018

16 Manantial Espejo Mine Location: Santa Cruz, Argentina Ownership: 100% Mine Type: Underground Q YTD Guidance (2) Production Silver - Moz Gold koz Cash Costs (1) $16.50 $11.19 $ AISCSOS (1) $24.78 $14.07 $ (1) Please refer to the Company s news release dated Nov. 6, 2018 for more information on the 2018 guidance. Production guidance for each mine is as per the news release dated Jan. 11, Guidance for base metal production for each mine is not provided. (2) Cash Costs and AISCSOS are non-gaap financial measures; see the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. 16 November 6, 2018

17 YTD 2018 vs Guidance (1) Consolidated YTD 2018 Actual Guidance as at Nov. 6, 2018 Guidance as at Jan. 11, 2018 Silver production (million ounces) Gold production (thousand ounces) Zinc production (thousand tonnes) Lead production (thousand tonnes) Copper production (thousand tonnes) Cash Costs (2) ($/ounce) AISCSOS (2) ($/ounce) Sustaining capital ($ millions) Project capital ($ millions) (1) Please refer to the Company s news releases dated Nov. 6, 2018 and Jan. 11, 2018 for more information on the respective guidance referenced above. (2) Cash Costs and AISCSOS are non-gaap financial measures; See the Non-GAAP Measures section of our Cautionary Note on page 2 of this presentation. The revised guidance assumes metal prices for the remainder of 2018 of: Ag $16.50/oz, Au $1,250/oz, Zn $2,600/tonne, Pb $2,300/tonne, and Cu $6,200/tonne. Exchange rates relative to US$1.00 assumed were: Mexican peso 18.50, Peruvian sol 3.23, Argentine peso 27.00, and Bolivian boliviano November 6, 2018

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19 Pan American Silver Proven and Probable Reserves at December 31, 2017 (1) (2) Property Location Category Tonnes (Mt) Ag (g/t) Contained Ag (Moz) Au (g/t) Contained Au (koz) Cu (%) Pb (%) Zn (%) Huaron Peru Proven Probable Morococha (92.3%) (3) Peru Proven Probable La Colorada Mexico Proven Probable Dolores Mexico Proven ,040.8 Probable La Bolsa Mexico Proven Probable Manantial Espejo Argentina Proven Probable San Vicente (95%) (3) Bolivia Proven Probable Joaquin Argentina Probable COSE Argentina Probable Proven + TOTALS (4) Probable , Notes: (1) Prices used to estimate mineral reserves for 2017 were $18.50 per ounce of silver, $1,300 per ounce of gold, $2,600 per tonne of zinc, $2,200 per tonne of lead, and $5,500 per tonne of copper, except at Manantial Espejo where $16.50 per ounce of silver and $1,250 per ounce of gold were used for planned 2018 production, reverting to $18.50 per ounce of silver and $1,300 per ounce of gold thereafter. Metal prices used for La Bolsa were $14.00 per ounce of silver and $825 per ounce of gold. (2) Mineral reserve estimates were prepared under the supervision of, or were reviewed by, Christopher Emerson, FAusIMM, Vice President Business Development and Geology and Martin G. Wafforn, P.Eng., Senior Vice President Technical Services and Process Optimization, each of whom are Qualified Persons as that term is defined in National Instrument (3) This information represents the portion of mineral reserves attributable to Pan American based on its ownership interest in the operating entity as indicated. (4) Totals may not add up due to rounding. 19 November 6, 2018

20 Pan American Silver Measured and Indicated Resources (1)(2) Property Location Category Tonnes (Mt) Ag (g/t) Contained Ag (Moz) Au (g/t) Contained Au (koz) Cu (%) Pb (%) Zn (%) Huaron Peru Measured Indicated Morococha (92.3%) (3) Peru Measured Indicated La Colorada Mexico Measured Indicated Dolores Mexico Measured Indicated La Bolsa Mexico Measured Indicated Manantial Espejo Argentina Measured Indicated San Vicente (95%) (3) Bolivia Measured Indicated Navidad Argentina Measured Indicated Pico Machay Peru Measured Indicated Joaquin Argentina Indicated Measured + TOTALS (4) Indicated Notes: (1) Prices used to estimate mineral resources for 2017 were $18.50 per ounce of silver, $1,300 per ounce of gold, $2,600 per tonne of zinc, $2,200 per tonne of lead, and $5,500 per tonne of copper, except at Dolores and Manantial Espejo, where $25.00 per ounce of silver and $1,400 per ounce of gold were used. Metal prices used for La Bolsa were $14.00 per ounce of silver and $825 per ounce of gold. Metal prices for Navidad were $12.52 per ounce of silver and $1,100 per tonne of lead. (2) Mineral resource estimates were prepared under the supervision of, or were reviewed by, Christopher Emerson, FAusIMM, Vice President Business Development and Geology and Martin G. Wafforn, P.Eng., Senior Vice President Technical Services and Process Optimization, each of whom are Qualified Persons as that term is defined in National Instrument Please refer to Cautionary Note Concerning Estimates of Mineral Reserves and Resources section in this presentation. (3) This information represents the portion of mineral resources attributable to Pan American based on its ownership interest in the operating entity asindicated. (4) Totals may not add up due to rounding. 20

21 Pan American Silver Inferred Resources (1)(2) Property Location Category Tonnes (Mt) Ag (g/t) Contained Ag (Moz) Au (g/t) Contained Au (koz) Huaron Peru Inferred Morococha (92.3%) (3) Peru Inferred La Colorada Mexico Inferred Dolores Mexico Inferred La Bolsa Mexico Inferred Manantial Espejo Argentina Inferred San Vicente (95%) (3) Bolivia Inferred Navidad Argentina Inferred Pico Machay Peru Inferred Joaquin Argentina Inferred COSE Argentina Inferred TOTALS (4) Inferred Cu (%) Pb (%) Zn (%) Notes: (1) Prices used to estimate mineral resources for 2017 were $18.50 per ounce of silver, $1,300 per ounce of gold, $2,600 per tonne of zinc, $2,200 per tonne of lead, and $5,500 per tonne of copper, except at Dolores and Manantial Espejo, where $25.00 per ounce of silver and $1,400 per ounce of gold were used. Metal prices used for La Bolsa were $14.00 per ounce of silver and $825 per ounce of gold. Metal prices for Navidad were $12.52 per ounce of silver and $1,100 per tonne of lead. (2) Mineral resource estimates were prepared under the supervision of, or were reviewed by, Christopher Emerson, FAusIMM, Vice President Business Development and Geology and Martin G. Wafforn, P.Eng., Senior Vice President Technical Services and Process Optimization, each of whom are Qualified Persons as that term is defined in National Instrument (3) This information represents the portion of mineral resources attributable to Pan American based on its ownership interest in the operating entity asindicated. (4) Totals may not add up due to rounding. 21

22 Archived recording The audio and presentation archive of this conference call and webcast will be accessible on the Events page of our website at: 22