2014 Annual General Mee/ng Vancouver, BC May 8, 2:00 pm

Transcription

1 2014 Annual General Mee/ng Vancouver, BC May 8, 2:00 pm

2 2013 A Record Year in Review Strong Opera,onal Performance Record silver produc/on 26.0 Moz Record gold produc/on Koz Cash costs of $10.81 per ounce of silver Discovered 40.1 Moz Ag replaced all mined reserves P&P reserves rose to record Moz Ag & 2.5 Moz Au * Achieved industry- leading safety record The best safety record in the Company s history 2 *At December 31, 2013

3 PAS - World- class Safety in Mining +20 million man- hours worked in 2013 at our opera,ons Safety # of LTIs (1) (1) Frequency (LTIF) (2) (2) Severity (3) (LTIS) (3) (1) LTI Lost Time Incidents (2) LTIF Lost Time Incident Frequency (per million work hours) (3) LTIS Lost Time Incident Severity (days lost per million work hours) Alamo Dorado Accumula,ng Excep,onal Safety Records (Hours Worked Since Last LTI - Through End of 2013) +4.4 million hours Manan/al Espejo San Vicente Dolores Explora/on +2.6 million hours +1.0 million hours +3.1 million hours +1.3 million hours 3

4 CSR Latest Recogni/ons In 2014, Pan American Silver Corp. received the Corporate Knights Recogni/on for future responsible Corporate Leaders in Canada We ranked 19 th out of 200 companies from several industries In 2013, all of our Mexican mines received the Clean Industry Cer/fica/on awarded by PROFEPA, and the ESR Cer/fica/on as Socially Responsible Industry 4

5 2013 A Record Year in Review Financial Results Revenues - $824.5M Opera/ng cash flows - $119.6M Returned $75.8M to shareholders through cash dividends and $6.7M through share repurchases Annual cash dividend con/nues to be an industry- leading $0.50 per share (approximately 4% yield at today s closing price) Finished the year with cash and short term investments of $422.7M and working capital of $689M * Alloca,on of 2013 Cash Flows (US$M) $2.0 $82.5 $11.4 $ $159.4 $98.0 Taxes PPE Investments Working Capital Shareholders Net financing ac/vi/es 5 *At December 31, 2013

6 2013 Revenue Distribu/on Metal Silver Gold FY 2013 Produc,on 26.0 Moz Koz 2013 Revenue by Metal 8% 3% 4% Zinc Lead 42,100 tonnes 13,500 tonnes 21% 64% Copper 5,500 tonnes Ag Au Zn Pb Cu Silver produc/on grew 4% to new Company record Gold produc/on grew 33% to new Company record Silver produc/on records achieved at La Colorada and San Vicente 6

7 2013 Explora/on In 2013: We added 40.1 Moz Ag of new P+P reserves to more than replace the 33.7 Moz Ag mined during the year Spent $16.3M and drilled almost 150K meters Consolidated P+P Ag mineral reserves rose 2% to record Moz Consolidated P+P Au mineral reserves were 2.5 Moz Since 2004: We have added 270 Moz Ag to mineral reserves solely through mine- site explora/on, excluding acquisi/ons, more than replacing 230 Moz Ag mined during the same period The average cost per ounce Ag discovered through explora/on is $0.38 per ounce 7

8 Organic Growth - La Colorada Expansion It starts with successful explora/on: Discovered approximately 85 Moz Ag in P+P reserves since 2009 (including 16.6 Moz Ag added in 2013) Largest P+P Ag reserve in our porlolio at 81.4 Moz Outstanding explora/on poten/al for further resource expansion - Amolillo and NC2 veins remain open at depth and to the East 8

9 La Colorada Amolillo Long Sec/on S Width 4.89m Ag 632 g/t Au 0.19 g/t Pb 0.24% Zn 0.21% S Width 5.65m Ag 710 g/t Au 0.26 g/t Pb 2.49% Zn 3.91% S Width 2.91m Ag 1,527 g/t Au 0.96 g/t Pb 2.28% Zn 3.83% S Width 2.72m Ag 1,791 g/t Au 1.03 g/t Pb 2.39% Zn 9.17% 2011 EOY P&P 0.4Mt Ag 255 g/t (3M oz) Au 0.31 g/t Pb 0.20 % Zn 0.26 % S Width 5.76m Ag 588 g/t Au 0.23 g/t Pb 0.51% Zn 0.23% S Width 6.53m Ag 254 g/t Au 0.15 g/t Pb 0.66% Zn 0.56% 2013 EOY P&P 2.7Mt Ag 379 g/t (33M oz) Au 0.35 g/t Pb 0.63 % Zn 1.11 % S Width 1.44m Ag 703 g/t Au 0.79 g/t Pb 1.65% Zn 1.80% S Width 1.38m Ag 1,476 g/t Au 1.12 g/t Pb 5.63% Zn 13.16% S Width 0.49m Ag 911 g/t Au 0.51 g/t Pb 1.23% Zn 1.85% 9 9

10 Organic Growth La Colorada Expansion Board of Directors approved the expansion of the La Colorada mine in December 2013 Project Scope: Installa/on of 600- metre deep shan and hoist between Candelaria and Estrella structures Expansion and upgrade of sulphide processing plant Increase mining rate from 1,250 tpd to 1,500 tpd (mid- 2016), then to 1,800 tpd (end of 2017) Expec/ng 67% increase in Ag produc/on from 4.6 Moz to 7.7 Moz annually Expec/ng 35% reduc,on in cash costs from $9.43/Ag oz to $6.10/Ag oz, (net of by- product credits) Expansion should not materially disrupt ongoing opera/ons 11

11 Organic Growth La Colorada Expansion Candelaria Recompensa 2013 EOY P&P 2.8Mt Ag 404g/t (36M oz) Au 0.39 g/t Pb 2.01 % Zn 3.69 % Estrella 2013 EOY P&P 0.1Mt Ag 274g/t (1.1M oz) Au 0.38 g/t Pb 0.90 % Zn 1.05 % Proven Reserves Probable Reserves Resources 2013 EOY P&P 2.7Mt Ag 379 g/t (33M oz) Au 0.35 g/t Pb 0.63 % Zn 1.11 % 11

12 Organic Growth La Colorada Expansion Incremental expansion capital to be spent es/mated at $80.0 million Total investment es/mated at $163.8 million Largest por/on of incremental expansion capital to be spent on: Shan sinking and hoist - $40.3 million Sulphide plant expansion - $46.0 million Addi/onal mining equipment - $8.2 million Other infrastructure upgrades, including tailings - $21.0 million Ten- Year Period ( ) Ag $19/oz Ag $25/oz Net revenue $1.4 B $1.8 B Net cash flow (aner tax) undiscounted $372 M $614 M Net cash flow (aner tax) 10% discount $196 M $354 M Expansion Project Net Cash Flow - 10% $38.6 M $71.7 M Expansion Project - IRR 22% 32% 12 Payback Period 2.5 years 2 years

13 2014 Our Plans

14 2014 Produc/on Forecast Mine Ag (Moz) Au (Koz) Cash Costs (1) La Colorada $ $9.50 Alamo Dorado $ $13.50 Dolores $ $14.25 Huaron $ $15.00 Morococha $ $16.50 San Vicente $ $13.00 Manan/al Espejo $ $10.00 Total $ $12.70 (1) Cash costs per silver ounce, net of by- product credits. By- product metal prices assump/ons used for 2014 cash costs calcula/on: Au $1,200/oz, Zn $1,850/tonne, Pb $2,100/tonne, Cu $7,000/tonne 14

15 2014 Forecast Capital Expenditures Opera,on Capex (US$ millions) La Colorada $8.0 Alamo Dorado $0.5 Dolores $32.5 Huaron $9.5 Morococha $9.0 San Vicente $6.0 Manan/al Espejo $30.0 Sub- total $95.5 La Colorada Project $32.0 Dolores Project $35.0 Project Subtotal $67.0 Total $162.5 Key capital projects for 2014 include: La Colorada: Installa/on of a new shan and hoist system Underground development Plant and tailings expansion Dolores: Leach pad expansion Power line project Manan,al Espejo and Dolores: Pre- stripping Alamo Dorado: Tailings dam Morococha, San Vincente and Huaron: Mine sustainment and small- scale upgrades 15

16 Organic Growth Dolores Pulp Agglomera/on Work on pulp agglomera/on project con/nues to be encouraging, par/cularly in view of resource model update Poten/al to significantly increase Ag and Au produc/on Ø to 1.3 Moz Ag annually Ø Koz Au annually Poten/al to increase Ag recovery by 15-20% and Au recovery by 10-15% Future underground produc/on poten/al Expect to release the results of evalua/on before the end of Q Construc/on decision will be mindful of current price environment 16

17 A Lower Price Environment Gold Silver 17

18 We Responded to Drama/c Price Changes In April 2013, precious metals prices tumbled and the industry quickly moved away from profitability into red territory. OUR RESPONSE We changed the way we operate by: Retuning our opera/ons reviewing mine plans Reducing opera/ng expenses Reducing non- cri/cal explora/on expenditures (green fields) Reducing overhead across our organiza/on Modestly reducing our capital programs (deferral and elimina/on of discre/onary investment) Con/nuing studies for organic growth opportuni/es Our Goal: To Preserve Our Balance Sheet Strength 20

19 How Did We Do? ü We produced 4% more silver ü We produced 33% more gold ü We materially lowered AISCSOS (18% lower than in 2012 from $22.26 to $18.33) ü We ini/ated the expansion of La Colorada to boost produc/on, lower unit costs and replace Alamo Dorado s declining produc/on ü We con/nued to return cash to our shareholders 21

20 2014 A Stronger Pan American We have become a stronger company, able to thrive in a lower price environment I remain op/mis/c that the price decline in both silver and gold will be temporary When investor sen,ment returns to the precious metals sector, likely when prices begin to rise again, pa,ent and suppor,ve shareholders of PAA should be well rewarded. 23

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