(All amounts in US$ unless otherwise
indicated)
VANCOUVER, May 11, 2015 /PRNewswire/ - Pan American
Silver Corp. (NASDAQ: PAAS; TSX: PAA) ("Pan American", or the
"Company") today reported unaudited results for the quarter ended
March 31, 2015. The following table
displays the key operational and financial highlights.
This news release should be read in conjunction with the
Financial Statements, Notes to the Financial Statements and
MD&A dated March 31, 2015, which
have been filed on SEDAR and are available at www.sedar.com and on
the Company website at www.panamericansilver.com.
First Quarter 2015
Highlights (unaudited) (1)
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- Silver production
of 6.08 million ounces
- Gold production of
37,500 ounces
- Consolidated All-in
Sustaining Costs per Silver Ounce Sold, net of by-product credits
("AISCSOS")(2) of $14.24
- Consolidated cash
costs(3) of $11.71 per silver ounce, net of by-product
credits
- Revenue of $178.1
million
- Mine operating
earnings of $2.6 million
- Cash flow generated
by operating activities of $11.9 million, or $0.08 per
share
- Adjusted
loss(4) of $19.9 million or $(0.13) per
share
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Financial Position
at March 31, 2015
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- Cash and short term
investments of $292.4 million
- Working
capital(5) of $488.5 million
- Total debt of $65.3
million
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(1)
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Financial information
in this news release is based on International Financial Reporting
Standards ("IFRS"); results
are unaudited; percentages compare the first quarter of 2015
against the first quarter of 2014.
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(2)
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All-In Sustaining
Costs per Silver Ounce Sold ("AISCSOS") is a non-GAAP measure of a
silver mining company's
consolidated operating performance and the ability to generate cash
flow from all operations collectively. We believe
it is a more comprehensive measure of the cost of operating our
consolidated business than traditional cash and total
costs per 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 the Company's
consolidated earnings and cash flow. Please refer to the section
"Alternative Performance (non-GAAP) Measures"
in the Company's Management Discussion & Analysis for the
quarter ended March 31, 2015, for a detailed description
of the AISCSOS calculation and a reconciliation of this measure to
the unaudited condensed interim consolidated
financial statements for the three months ended March 31, 2015 and
2014.
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(3)
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Consolidated cost per
ounce of silver is a non-GAAP measure. The Company believes that in
addition to production
costs, depreciation and amortization, and royalties, cash cost per
ounce is a useful and complementary benchmark
that investors use to evaluate the Company's performance and
ability to generate cash flows and is well understood
and widely reported in the silver mining industry. However, cash
cost per ounce does not have a standardized
meaning prescribed by IFRS as an indicator of performance.
Investors are cautioned that cash costs per ounce
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. The
Company's method of calculating cash costs per ounce
may differ from the methods used by other entities. Please refer to
the section "Alternative Performance (non-GAAP)
Measures" in the Company's Managements Discussion & Analysis
for the quarter ended March 31, 2015, for a detailed
description of the cash cost calculation, details of the Company's
by-product credits and a reconciliation of this measure
to the unaudited condensed interim consolidated financial
statements for the three months ended March 31, 2015 and
2014.
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(4)
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Adjusted loss and
adjusted loss per share attributable to common shareholders are
non-GAAP measures. Adjusted
(loss) earnings is calculated as net (loss) earnings for the period
adjusting for the gains or losses recorded on fair
market value adjustments on the Company's outstanding derivative
instruments, impairment of mineral property, unrealized
foreign exchange gains or losses, unrealized gain or loss on
commodity contracts, net realizable value adjustment to long
term heap inventory, gain or loss on sale of assets and the effect
for taxes on the above items. The Company considers
this measure to better reflect normalized earnings as it does not
include items which may be volatile from period to period.
Please refer to the section "Alternative Performance (non-GAAP)
Measures" in the Company's Managements Discussion
& Analysis for the quarter ended March 31, 2015, for a detailed
description of this measure.
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(5)
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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.
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Commenting on the Company's 2015 first quarter results,
Geoff Burns, Chief Executive Officer
said, "We have had a reasonable start to 2015, albeit our silver
and gold production were slightly behind our forecast, which was
reflected in our quarterly financial performance. Stacking and
leaching of higher grade ore at Dolores was about a month behind plan and
similarly, we didn't mine some of the expected higher grade ore at
Manantial Espejo until mid-April, which was about 8 weeks later
than scheduled." Burns continued, "I am happy to report that both
Dolores and Manantial Espejo
rebounded nicely through April and now into May, and we should be
right where we expected to be by the end of the 2nd
quarter. Consequently, I remain totally confident that we will meet
our annual production forecast of between 25.50 and 26.50 million
ounces of silver at cash costs of between $10.80 and $11.80 per ounce of silver, net of
by-product credits, with AISCSOS of between $15.50 and $16.50 per ounce."
Financial Results
During the first quarter of 2015, Pan American generated
$178.1 million in revenue, 15% less
than revenue generated in the comparable quarter of 2014. The
decline in sales was caused primarily by lower metal prices and
less silver ounces sold during the reporting quarter. The decline
in revenue was partially offset by higher quantities of gold and
copper sold.
Inclusive of settlement adjustments on concentrate sales, the
Company realized an average price of $16.43 per silver ounce and $1,226 per gold ounce during the first quarter of
2015, which were 18% and 4% lower than the prices realized in the
first quarter of 2014, respectively. The average realized price of
lead declined to $1,671 per tonne
from $2,103 a year ago, and the
average realized price of copper declined to $5,386 per tonne, from $6,995 per tonne a year ago. The average realized
price of zinc was relatively unchanged from the first quarter of
2014, at $2,032 per tonne.
Pan American generated a net loss of $19.8 million, or $(0.13) per share, during the first quarter of
2015, compared to net income of $6.8
million, or $0.05 per share
generated in the comparable quarter of 2014. The loss was the
result of lower silver sales volumes combined with lower realized
metal prices, higher depreciation charges and a $(6.4) million foreign exchange loss, partially
offset by lower income taxes.
After adjusting for the $2.1
million unrealized portion of the foreign exchange loss and
reversing a $2 million net realizable
value recovery on Dolores' heap
leach inventory, the Company recorded an adjusted loss of
$19.9 million, or $(0.13) per share during the three months ended
March 31, 2015.
Cash flow from operations generated during the first quarter of
2015 was $11.9 million or
$0.08 per share, compared to
$36.1 million or $0.24 per share generated in the first quarter of
2014. The decline in quarterly revenue previously described was the
primary driver behind the current quarter's decline in operating
cash flow, partially offset by $7.8
million less cash income taxes paid as compared to the first
quarter of 2014.
Pan American posted AISCSOS of $14.24, net of by-product credits, for the first
quarter of 2015, 5% lower than AISCSOS posted for the first quarter
of 2014 and well below the Company's 2015 full-year forecast of
$15.50 to $16.50, net of by-product
credits. AISCSOS for the first three months of 2015 declined mainly
due to lower costs of sales as a result of lower royalties and
smelting, refining, and transportation charges, as well as the
forecasted reduction in sustaining capital.
At March 30, 2015, Pan American
had $292.4 million in cash and
short-term investments and working capital of $488.5 million, a decline of $38.0 and $34.2
million, respectively, as compared to December 31, 2014. During the first quarter of
2015, the Company paid $19.0 million
in cash dividends to its shareholders.
On April 15, 2015, Pan American
entered into a senior secured revolving credit facility (the
"Facility") with a syndicate of eight lenders. The Facility is a
US$300 million secured revolving line
of credit that matures on April 15,
2019 and is available for general corporate purposes,
including organic growth opportunities and acquisitions. The terms
of the Facility provide the Company with the flexibility of various
borrowing and letter of credit options. No drawings have been
made under the Facility to date.
Operational Results
Pan American produced 6.08 million ounces of silver and 37,500
ounces of gold during the first quarter of 2015. Silver production
declined 8% in comparison to silver produced in the first quarter
of 2014, primarily due to less ounces produced at Alamo Dorado and
Manantial Espejo due to lower silver grades at both mines,
partially offset by more ounces produced at Huaron and La Colorada. Gold production during the
reporting quarter was 37,500 ounces, 18% lower than a year ago.
Lower gold production during the reporting quarter was a result of
fewer ounces produced at Manantial Espejo, due to the delay in
mining a higher grade area of the Maria pit, partially offset by
more ounces produced at Dolores.
The Company expects gold production from Manantial Espejo to rise
significantly in the second and third quarter of 2015 as the higher
grade ore originally scheduled to be produced in the first quarter
is mined and processed over the balance of the year.
During the first quarter of 2015, Pan American's consolidated
copper production was 3,100 tonnes, 82% higher than copper produced
in the first quarter of 2014, on account of significant increases
at the Company's Peruvian operations. Morococha's copper production
grew almost three-fold due to higher grades and recoveries, while
Huaron's production rose 36% due to higher throughput and
grades.
Pan American's consolidated lead production during the first
quarter of 2015 was practically unchanged from a year ago at 3,500
tonnes. In contrast, zinc production declined from 11,400 tonnes
during the first quarter of 2014 to 9,300 tonnes during the
reporting quarter as a result of lower zinc grades at Morococha and
San Vicente.
Mexico
During the first quarter of 2015, La
Colorada produced 1.26 million silver ounces at cash costs
of $7.75 per ounce, net of by-product
credits. Silver production rose 5% from the first quarter of 2014
due to higher grades and this had a positive effect on cash costs,
which were 5% lower due to more silver ounces produced.
During the first three months of 2015, Dolores produced 1.0 million silver ounces at
cash costs of $8.79 per ounce, net of
by-product credits. Silver production declined 2% compared to the
first quarter of 2014 as higher silver grades were offset by lower
throughput and lower recoveries due to stacking and leaching
sequencing. Cash costs declined 26% in comparison to the first
quarter of 2014 as a result of higher gold by-product credits on
more gold ounces produced due to higher gold grades, partially
offset by lower recoveries. Operating costs in Mexico have come down with the effect of the
weakening local currency, reduced fuel prices and decreased unit
costs of certain supplies.
Alamo Dorado produced 0.69 million silver ounces during the
first quarter of 2015 at cash costs of $15.98 per ounce, net of by-product credits. As
expected, silver production declined as higher throughput was
offset by lower grades given the increased proportion of
lower-grade stockpile ore being fed to the plant. Cash costs
increased from $10.69 per silver
ounce in the first quarter of 2014, due to consistent operating
expenditures year-over-year being offset by lower by-product
credits from less ounces of gold produced and lower gold
prices.
Peru
Huaron produced 0.90 million silver ounces during the first
quarter of 2015 at cash costs of $11.87 per ounce, net of by-product credits.
Silver production rose 8% from the comparable period of 2014 as a
result of higher throughput and grades and slightly better
recoveries. Cash costs were relatively unchanged from the
$11.93 per silver ounce posted during
the first quarter of 2014, as the benefits of lower operating costs
were almost completely offset by lower by-product credits from
lower zinc production, and lower copper and lead prices.
Morococha produced 0.52 million silver ounces during the first
quarter of 2015 at cash costs of $17.11 per ounce, net of by-product credits.
Silver production declined 13% from the first quarter of 2014, due
to lower silver grades and recoveries that were partly offset by
higher throughput. A revised mine plan has been developed that
involves transitioning out of some marginal narrow veins into a
newly discovered area of larger ore bodies with higher copper
grades known as the Esperanza
area. This area contributed to the significant increase in copper
production, from 500 tonnes in the first quarter of 2014 to 1,500
tonnes in the reporting quarter. Cash costs during the first
quarter of 2015 rose 15% from the comparable quarter of 2014, as a
consequence of higher smelting charges and lower silver production,
offset by higher by-product credits from more copper produced.
Bolivia
San Vicente produced 0.97
million silver ounces during the first quarter of 2015 at cash
costs of $12.57 per ounce, net of
by-product credits. Silver production was slightly lower than in
the first quarter of 2014 as a result of lower silver grades due to
mine sequencing. Cash costs were practically unchanged from the
comparable period of 2014 as a consequence of lower royalties on
lower prices, reduced operating, smelting and refining costs being
partially offset by lower by-product credits from less zinc
produced, and lower prices.
Argentina
Manantial Espejo produced 0.75 million ounces of silver during
the first quarter of 2015 at cash costs of $13.75 per ounce, net of by-product credits.
Silver production was 27% lower than in the first quarter of 2014
due to lower silver grades as lower-grade stockpiles compensated
for less ore mined from the open pit due to delays in open pit
waste pre-stripping during the previous 6 months. Cash costs rose
from $(4.82) during the first quarter
of 2014 to $13.75 during the first
quarter of 2015 due to higher throughput being offset by lower
silver grades and lower by-product credits from less gold produced.
The reduced gold production was also caused by the delayed
pre-stripping described before.
Consolidated Cash Costs
Pan American's consolidated cash costs during the first quarter
of 2015 rose to $11.71 per silver
ounce, net of by-product credits, from $8.66 per silver ounce during the first quarter
of 2014. The increase was due to the combination of lower silver
production and lower by-product credits on lower gold production.
Cash costs for the reporting quarter were at the high end of
management's annual forecast of $10.80 to
$11.80 per silver ounce, net of by-product credits. However,
management is confident that cash costs should decline in the
second quarter (at current metal prices) with Manantial Espejo
rebounding nicely from the effects of the delay in pre-stripping at
the Maria pit.
Capital Spending
During the first quarter of 2015, Pan American spent
$16.6 million on sustaining capital.
Dolores and Manantial Espejo spent
$4.9 million each, mainly on
pre-stripping activities. At Huaron, $2.3
million was spent primarily on equipment replacement and
maintenance, and on exploration. At La
Colorada, $2.1 million was
used on equipment replacement and rehabilitation, exploration
drilling, and on processing plant infrastructure.
In addition, the Company spent $8.7
million in long term project capital to advance the
La Colorada expansion, and another
$8.0 million on projects at the
Dolores mine, further described in
the Project Development section below.
Project Development
At the La Colorada expansion
project, activities focused on engineering work and procurement of
equipment for the new sulphide processing plant, where construction
is scheduled to start in the second quarter of 2015. In addition,
drilling of the pilot hole for the new raise bore shaft reached a
depth of 380 meters. Meanwhile, work on the new shaft components,
hoist, and head frame advanced as planned during the quarter with
fabrication of the new hoist now substantially complete. To prepare
for the increased mine production, 500 metres of underground mine
development was completed during the first quarter. In addition,
the Company continues to negotiate with local authorities for the
installation of a new 115 kV power line to the mine. To date, Pan
American has invested a total of $27.7
million on the expansion project.
At Dolores, Pan American
advanced the development of the new power line and the mobilization
and commencement of the new underground access ramp as part of a
just approved Dolores expansion
project. Right of way agreements for the power line have been
completed and the Company has awarded construction of the project
to a local company. The Company expects to receive the final
environmental permit for construction of the power line in the
second quarter and completion of the power line project is
scheduled for mid-2016.
Dolores Expansion Project
As announced earlier today, the Company's Board of Directors has
approved the $112.4 million expansion
project for the Dolores mine (the
"Project") (see the Company's news release dated May 11, 2015, entitled, "Pan American Silver to
Proceed With Dolores Pulp Agglomeration and Underground Expansion
Project"). The Project involves the construction of a 5,600 tonnes
per day ("tpd") pulp agglomeration plant and development of a 1,500
tpd underground mine. The Project is anticipated to be built over
the next 24 months and upon completion will increase the mine's
processing capacity from today's 16,500 tpd to approximately 20,000
tpd. The underground mine will provide access to higher grade
mineralization under the current open pit design and the pulp
agglomeration plant should improve overall recovery rates from the
higher grade ores when the plant is scheduled to start operations
in 2017. The Project is expected to increase silver production by
approximately 40% to 6.3 million ounces, and gold production by 52%
to 205,700 ounces in the first five years.
The Project is also expected to provide significant operating
costs savings. Once completed, cash costs are anticipated to
decline by approximately $4.37 to
$(11.28) per silver ounce, net of by-product credits for the
first five years and by approximately $0.99
to $(8.46) per silver ounce, net of by-product credits over
the remaining life of the mine. The Project should provide
excellent economic returns at both the Company's reserves prices
for gold and silver and at current prices. Using the
Company's long-term reserve prices of $18.50 per silver ounce and $1,250 per gold ounce thereafter, the Project is
expected to yield an internal rate of return of 35% and a payback
period of 23 months. Using current prices of $17.00 per silver ounce and $1,150 per gold ounce, it is anticipated that the
Project would yield an internal rate of return of 26% with a
payback period of 26 months.
For further technical information relating to the Project,
please refer the NI 43-101 technical report entitled "Technical
Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic
Assessment of a Pulp Agglomeration Treatment and Underground
Option" with an effective date of May 31,
2014, (the "PEA") filed on SEDAR at www.sedar.com. The
results of the PEA are preliminary in nature in that they include
inferred mineral resources that are considered too geologically
speculative to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves, and
there is no certainty that the PEA will be realized. Mineral
resources that are not mineral reserves have no demonstrated
economic viability.
Current and Future Dividends
The Board of Directors has also approved its second quarterly
cash dividend of 2015 in the amount of $0.05 per common share. The cash dividend will be
payable on or about Tuesday, June 2,
2015, to holders of record of common shares as of the close
of Friday, May 22, 2015. Pan
American's dividends are designated as eligible dividends for the
purposes of the Income Tax Act (Canada
The Company's decision to reduce the quarterly dividend by 60%,
to $0.05 per share, is directly
related to the concurrent decision to invest $112.4 million in the Dolores mine expansion project, as well as in
recognition of the current challenging silver price
environment. The savings to the Company from lowering the
quarterly dividend payments will be redirected to funding the
expansion.
As is standard practice, all future dividends will be evaluated
and determined by the Board of Directors on an ongoing basis.
Outlook
Pan American reaffirms its annual precious metals production
forecast of between 25.50 million and 26.50 million silver ounces,
and between 165,000 ounces and 175,000 ounces of gold. Provided
metal prices remain at or near current levels, the Company also
believes that it will be within its annual guidance for AISCSOS of
between $15.50 and $16.60, net of
by-product credits and annual consolidated cash costs of between
$10.80 and $11.80 per silver ounce,
net of by-product credits.
In addition, the Company reaffirms its forecast for 2015 annual
sustaining capital of between $71.0 and
$84.0 million. With the addition of the Dolores expansion project, the Company now
expects to invest between $111.0 million and
$120.0 million in project development in 2015.
Technical information contained in this news release with
respect to Pan American has been reviewed and approved by
Michael Steinmann, P.Geo.,
President, and Martin Wafforn, P.Eng., VP Technical Services, who
are the Company's Qualified Persons for the purposes of NI
43-101.
Pan American will
host a conference call to discuss these results on Tuesday, May 12,
2015 at 10:00 am EST (07:00 am PST). To participate in the
conference, please dial toll number 1-604-638-5340.
A live audio webcast
and Power Point presentation will be available at
http://services.choruscall.ca/links/pan150512.html. The call
and webcast will also be available for replay for one week after
the call by dialing 1-604-638-9010 and entering code 6218
followed by the # sign.
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About Pan American Silver
Pan American Silver's mission is to be the world's pre-eminent
silver producer, with a reputation for excellence in discovery,
engineering, innovation and sustainable development. The Company
has seven operating mines in Mexico, Peru,
Argentina and Bolivia. Pan American also owns several
development projects in Mexico,
USA, Peru and Argentina.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
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: THE APPROVAL OF ANY FUTURE DIVIDENDS
AND THE AMOUNT AND TIMING FOR THE SAME; OUR FORECAST PRODUCTION OF
SILVER, GOLD AND OTHER METALS IN 2015; OUR FORECAST CASH COSTS PER
OUNCE OF SILVER IN 2015; OUR ESTIMATED AISCSOS FOR 2015; OUR
ANTICIPATED CAPITAL INVESTMENTS FOR 2015; THE ABILITY OF THE
COMPANY TO SUCCESSFULLY COMPLETE ANY CAPITAL INVESTMENT PROGRAMS
AND PROJECTS, INCLUDING THE DOLORES EXPANSION PROJECT, AND THE IMPACTS OF
ANY SUCH PROGRAMS AND PROJECTS ON THE COMPANY; AND ANY ANTICIPATED
LEVEL OF FINANCIAL AND OPERATIONAL SUCCESS IN 2015.
THESE STATEMENTS 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; CAPITAL,
DECOMMISSIONING AND RECLAMATION ESTIMATES; OUR MINERAL RESERVE AND
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 IN OR INTERRUPTIONS IN
SCHEDULED PRODUCTION; ALL NECESSARY PERMITS, LICENCES AND
REGULATORY APPROVALS FOR OUR OPERATIONS ARE RECEIVED IN A TIMELY
MANNER; 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
NEWS RELEASE 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
METALS 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 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 LABOUR, ENVIRONMENTAL, IMPORT AND EXPORT LAWS
AND REGULATIONS, AND TAX; 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. 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 AND 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 AND
INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, CHANGES IN
ASSUMPTIONS, FUTURE EVENTS OR OTHERWISE, EXCEPT TO THE EXTENT
REQUIRED BY APPLICABLE LAW.
Pan American
Silver Corp.
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Financial &
Operating Highlights
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Three months ended
March 31,
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2015
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2014
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Consolidated
Financial Highlights
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(Unaudited in
thousands of U.S. Dollars, except as noted)
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Net (loss) earnings
for the period
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$
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(19,785)
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$
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6,760
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(Loss) earnings per
share attributable to common shareholders (basic)
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$
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(0.13)
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$
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0.05
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Adjusted (loss)
earnings for the period (1)
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$
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(19,907)
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$
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12,827
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Adjusted (loss)
earnings per share attributable to common shareholders
(basic)(1)
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$
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(0.13)
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$
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0.08
|
Mine operating
earnings
|
$
|
2,630
|
$
|
31,576
|
Net cash generated
from operating activities
|
$
|
11,946
|
$
|
36,125
|
Net cash generated
from operating activities per share
|
$
|
0.08
|
$
|
0.23
|
Operating cash flows
before changes in non-cash operating working capital
|
$
|
7,424
|
$
|
40,198
|
Capital
spending
|
$
|
32,446
|
$
|
36,811
|
Dividends
paid
|
$
|
18,955
|
$
|
18,940
|
Cash and short-term
investments
|
$
|
292,449
|
$
|
394,381
|
Working capital
(2)
|
$
|
488,453
|
$
|
680,318
|
|
|
|
|
|
Consolidated Metal
Production
|
|
|
|
|
Silver metal –
million ounces
|
|
6.08
|
|
6.61
|
Gold metal – thousand
ounces
|
|
37.5
|
|
45.9
|
Zinc metal – thousand
tonnes
|
|
9.3
|
|
11.4
|
Lead metal – thousand
tonnes
|
|
3.5
|
|
3.6
|
Copper metal –
thousand tonnes
|
|
3.1
|
|
1.7
|
|
|
|
|
|
Average Market
Metal Prices
|
|
|
|
|
Silver metal
($/oz)
|
$
|
16.71
|
$
|
20.48
|
Gold metal
($/oz)
|
$
|
1,218
|
$
|
1,293
|
|
|
|
|
|
Consolidated Costs
per Ounce of Silver (net of by-product
credits)
|
|
|
Cash cost per payable
ounce produced (3)(4)
|
$
|
11.71
|
$
|
8.66
|
All-in sustaining
cost per silver ounce sold (5)
|
$
|
14.24
|
$
|
15.06
|
Payable ounces of
silver sold – million ounces
|
|
5.88
|
|
6.74
|
|
|
|
|
|
(1)
|
Adjusted loss and
adjusted loss per share attributable to common shareholders are
Non-GAAP measures. Adjusted (loss) earnings is calculated as net
(loss) earnings for the period adjusting for the gains or losses
recorded on fair market value adjustments on the Company's
outstanding derivative instruments, impairment of mineral property,
unrealized foreign exchange gains or losses, unrealized gain or
loss on commodity contracts, net realizable value adjustment to
long term heap inventory, gain or loss on sale of assets and the
effect for taxes on the above items. The Company considers this
measure to better reflect normalized earnings as it does not
include items which may be volatile from period to
period
|
|
|
|
Three months ended
March 31,
|
Adjusted (loss)
Earnings Reconciliation
|
|
2015
|
|
2014*
|
|
Net (loss) earnings
for the period
|
$
|
(19,785)
|
$
|
6,760
|
|
Adjust derivative
gain
|
|
(229)
|
|
99
|
|
Adjust unrealized
foreign exchange losses
|
|
2,073
|
|
1,704
|
|
Adjust realized and
unrealized gain on commodity contracts
|
|
(544)
|
|
-
|
|
Adjust gain on sale
of mineral properties
|
|
(133)
|
|
(6)
|
|
Adjust net realizable
value of inventory
|
|
(2,036)
|
|
6,599
|
|
Adjust for effect of
taxes on above items
|
|
747
|
|
(2,329)
|
|
Adjusted (loss)
earnings for the period
|
$
|
(19,907)
|
$
|
12,827
|
|
Weighted average
shares for the period
|
|
151,643
|
|
151,500
|
|
Adjusted (loss)
earnings per share for the period
|
$
|
(0.13)
|
$
|
0.08
|
|
* Beginning in Q2
2014 the Company began excluding net realizable value adjustments
to long-term heap inventory from adjusted earning, certain
previously reported adjusted earnings amounts have been revised to
reflect this change. Adjusted earnings for the three-month period
ended March 31, 2014 increased by $4,273 from the $ 8,554 earnings
previously reported as result of this treatment change.
|
(2)
|
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.
|
(3)
|
Consolidated cost per
ounce of silver is a non-GAAP measure. The Company believes that in
addition to production costs, depreciation and amortization, and
royalties, cash cost per ounce is a useful and complementary
benchmark that investors use to evaluate the Company's performance
and ability to generate cash flows and is well understood and
widely reported in the silver mining industry. However, cash cost
per ounce does not have a standardized meaning prescribed by IFRS
as an indicator of performance. Investors are cautioned that cash
costs per ounce 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.
The Company's method of calculating cash costs per ounce may differ
from the methods used by other entities.
|
(4)
|
Previously reported
cash costs for the Company's Peruvian operations overstated copper
by-product credits. Consolidated cash costs for 2014 have been
adjusted to correct for this overstatement. The effect of these
corrections on Q1 2014's cash costs was a $0.41 per ounce increase
to consolidated cash.
|
(5)
|
All-In Sustaining
Costs per Silver Ounce Sold ("AISCSOS") is a measure of a silver
mining company's consolidated operating performance and the ability
to generate cash flow from all operations collectively. We believe
it is a more comprehensive measure of the cost of operating our
consolidated business than traditional cash and total costs per
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 the Company's consolidated earnings and cash
flow.
|
SOURCE Pan American Silver Corp.