(All amounts in US$ unless otherwise
indicated)
VANCOUVER, Nov. 12, 2015 /PRNewswire/ - Pan American
Silver Corp. (NASDAQ: PAAS; TSX: PAA) ("Pan American", or the
"Company") today reported unaudited results for the three and nine
months ended September 30, 2015.
This news release should be read in conjunction with the
Company's unaudited condensed interim consolidated financial
statements for the three and nine months ended September 30, 2015 and 2014, and related notes
contained therein, and the related management's discussion and
analysis, which have been filed on SEDAR and are available at
www.sedar.com and on the Company's website at
www.panamericansilver.com. The following table displays key
operational and financial highlights.
Third Quarter 2015
Highlights (unaudited)(1)
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- Silver production
of 6.61 million ounces, 7% higher than a year ago
- Record gold
production of 53,600 ounces, 57% higher than a year ago
- Cash flow generated
by operating activities of $32.9 million, or $0.22 per
share
- Consolidated cash
costs(3) of $8.74 per silver ounce net of by-product
credits, 32% lower than a year ago
- Consolidated All-in
Sustaining Costs per Silver Ounce Sold, net of by-product credits
("AISCSOS")(2) of $16.29, inclusive of $2.71 per ounce
net realizable value inventory charges per ounce
- Revenue of $159.4
million
- Net loss of $67.5
million or ($0.44) per share, inclusive of $53.5 million in
write-downs of Manantial Espejo assets
- Adjusted
loss(4) of $9.3 million, or ($0.06) per
share
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Financial Position
at September 30, 2015
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- Cash and short term
investments of $266.1 million
- Working
capital(5) of $420.1 million
- Total debt of $57.9
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.
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(2)
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All-In Sustaining
Costs per Silver Ounce Sold ("AISCSOS") is not a generally accepted
accounting principle ("non-GAAP") measure. The Company and certain
investors believe that AISCSOS is a measure of a silver mining
company's consolidated operating performance and the ability to
generate cash flow from all operations collectively, and is a more
comprehensive measure of the cost of operating our consolidated
business than traditional cash 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. AISCSOS does not
have a standardized meaning prescribed by GAAP, and the Company's
method of calculating AISCSOS as described in the "Alternative
Performance (Non-GAAP) Measures" section of the management
discussion and analysis for the three and nine months ended
September 30, 2015 and 2014 ("Q3 2015 MD&A") may differ from
the methods used by other entities. In 2014 it was determined that
certain charges to metal sales were being treated differently in
the quantification of AISCSOS for the Company's San Vicente mine
compared to the Company's other operations. As such, previously
reported AISCSOS for the San Vicente mine have been revised to
quantify AISCSOS with a methodology consistent with that used by
Company's other operations. The effect of this revision on
previously reported consolidated AISCSOS for the three and nine
month period ended September 30, 2014 was a $0.42 and $0.38
decrease to AISCSOS, respectively.
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(3)
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Cash cost per ounce
of silver, net of by-product credits ("cash costs per ounce") is a
non-GAAP measure. The Company believes that cash costs per ounce is
a useful measure for investors to evaluate the Company's
performance and ability to generate cash flows, and to facilitate
comparisons on a mine by mine basis. Cash costs per ounce is a
measure conceptually understood and widely reported in the silver
mining industry. However, cash cost per ounce does not have a
standardized meaning prescribed by GAAP and the Company's method of
calculating cash costs, as described in the Alternative Performance
(Non-GAAP) Measures section of the Q3 2015 MD&A, may differ
from the methods used by other entities. Cash costs per ounce
should not be construed as an alternative indicator of performance
to production costs, depreciation and amortization, and royalties
determined in accordance with GAAP. 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
for three and nine month period ended September 30, 2014 was a
$0.57 and $0.47 per ounce increase, respectively.
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(4)
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Adjusted (loss)
earnings, and adjusted (loss) earnings per share attributable to
common shareholders, are non-GAAP measures that the Company
considers to better reflect normalized earnings as they eliminate
items that may be volatile from period to period relating to
positions, which will settle in future periods, and items that are
non-recurring. To facilitate a better understanding of these
non-GAAP measures, as calculated by the Company, additional
information has been provided in the "Alternative Performance
(Non-GAAP) Measures" section of the Q3 2015 MD&A.
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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 third quarter results,
Geoff Burns, Chief Executive
Officer, said, "Continuing to respond to the difficult price
environment, we recorded a very strong operational quarter,
delivering an expected gain in silver production, a Company record
for gold production and our second-lowest quarterly cash costs in
over three years." Burns continued, "Clearly benefiting from the
determination of our operating teams to reduce costs and increase
productivities, we generated a very respectable $32.9 million or $0.22 per share in operating cash flow, more than
sufficient to fund our sustaining capital and cover our current
quarter's dividend".
Financial Results
Pan American generated $159.4
million in revenue during the third quarter of 2015, a
decline of 11% compared to the same quarter of 2014. The main
reason for the revenue decrease in the reporting quarter was the
significant price deterioration for all metals produced by the
Company, in addition to increased treatment and refining charges,
partially offset by increased quantities of gold and copper
sold.
Inclusive of negative settlement adjustments on concentrate
sales totaling $5.1 million, the
Company realized markedly lower prices for all metals produced.
During the third quarter of 2015 the Company received an average of
$14.75 per ounce of silver sold and
$1,122 per ounce of gold sold, 22%
and 13% lower respectively than in the same quarter of 2014. Base
metals were also lower compared to a year ago; lead decreased 29%
to $1,576 per tonne, while zinc and
copper declined 24% to $1,747; and
26% to $5,141 per tonne,
respectively.
During the third quarter of 2015, Pan American generated a net
loss of $67.5 million, or
$(0.44) per share, compared to a net
loss of $20.2 million, or
$(0.13) per share in the comparable
quarter of 2014. The net loss generated in the current quarter was
primarily the result of a $53.5
million write-down of the carrying value of the Manantial
Espejo mine.
The Company recorded an adjusted loss of $9.3 million, or $(0.06) per share during the reporting quarter,
after adjusting for: the write-down of assets at Manantial Espejo
in the amount of $47.4 million, a
$5.2 million write-down of a
receivable related to contracted services, a $3.2 million unrealized foreign exchange loss, a
negative $1.0 million adjustment on
the value of Dolores' heap
inventory, and an unrealized $1.8
million loss on commodity contracts. The current quarter's
adjusted loss was largely due to the continued decline in the
prices of the metals that the Company produces, offset in part by
increased gold and copper production, a 5% reduction in direct
production costs, and a $1.9 million
reduction in general and administration expenses.
Cash flow from operations during the third quarter of 2015 was
$32.9 million or $0.22 per share, compared to $38.3 million or $0.25 per share generated in the same quarter of
2014. Cash flow from operations generated during the reporting
quarter was negatively affected by lower revenue, partially offset
by a recovery of $8.2 million in
taxes paid.
Pan American's AISCSOS for the third quarter of 2015 was
$16.29, net of by-product credits, a
19% decline compared to the $20.08
posted in the same quarter of 2014. The decrease in AISCSOS in the
reporting quarter was due to lower direct production costs, lower
sustaining capital expenditures, lower royalties, and reduced
general and administrative expense, partially offset by higher
smelting, refining and transportation charges, a larger negative
net realizable value inventory adjustment and less payable silver
ounces sold due to the timing of shipments. Excluding the net
realizable value charges of $2.71 per
ounce, primarily related to Manantial Espejo stockpiles, AISCSOS
during the third quarter of 2015 was $13.58, $4.03 per
ounce or 23% lower than AISCSOS, excluding net realizable value
adjustments, posted in the comparable quarter of 2014.
At September 30, 2015, Pan
American had $266.1 million in cash
and short-term investments and working capital of $420.1 million, a decline of $8.8 million and $49.7
million, respectively, compared to June 30, 2015. During the third quarter of 2015,
the Company paid $7.6 million in cash
dividends to its shareholders and made $4.7
million in loan and lease repayments. Pan American has paid
$34.1 million in cash dividends to
its shareholders during 2015.
Pan American has a $300.0 million
secured revolving line of credit, which was undrawn at September 30, 2015. The line of credit provides
the Company with the flexibility of various liquidity and financing
options, should it require it.
Operational Results
During the third quarter of 2015 Pan American produced 6.61
million ounces of silver and a quarterly record of 53,600 ounces of
gold. Silver production rose 7% from the third quarter of 2014
mainly due to more ounces produced at the Company's Mexican and
Bolivian mines, partially offset by less ounces produced at
Morococha, Huaron, and Manantial Espejo. Gold production rose 57%
from the same quarter of 2014 on account of significant production
increases at Dolores, Alamo Dorado
and Manantial Espejo. Consolidated cash costs per ounce of silver
of $8.74, net of by-product credits,
were 32% lower than in the comparable quarter of 2014 as a result
of lower production costs, higher silver production and an increase
in gold by-product credits.
In addition, during the third quarter of 2015, Pan American
produced 10,700 tonnes of zinc and 3,500 tonnes of lead, which was
similar to zinc and lead production during the third quarter of
2014. Copper production during the reporting quarter rose 50% from
a year ago to 3,600 tonnes, mainly as a result of increased copper
production at the Company's Peruvian mines.
Mexico
La Colorada produced 1.32
million ounces of silver during the third quarter of 2015 at cash
costs per ounce of $6.76. Silver
production rose 5% from the comparable quarter of 2014 on account
of higher throughput, grades, and recoveries. Cash costs for the
reporting quarter were 21% lower than in the third quarter of 2014
as a result of higher silver production, lower production costs and
higher by-product credits, as well as reduced costs of underground
development, which has slowed to allow the ongoing construction of
the new shaft. Cash costs during the reporting quarter also
benefited from a more favourable exchange rate for the Mexican Peso
against the US Dollar and lower costs for some inputs.
During the third quarter of 2015, Dolores produced 1.20 million ounces of silver
at cash costs per ounce of $8.70.
Silver production rose 24% from the same quarter of 2014 on account
of higher throughput and better grades. Cash costs per ounce for
the reporting quarter declined 40% from the third quarter of 2014
as a result of lower operating costs, more silver produced, and
higher gold production. Operating costs improved due to less severe
rains compared to the year before, the favourable Mexican Peso
exchange rate and a reduction in the costs of certain consumables.
During the reporting quarter, Dolores produced 22,600 ounces of gold, which
was 46% more than in the comparable quarter of 2014.
Alamo Dorado produced 0.69 million ounces of silver during the
third quarter of 2015 at cash costs per ounce of $9.58. Silver production rose 3% compared to the
third quarter of 2014 as a result of higher recovery rates. Alamo
Dorado's gold production during the reporting quarter was 6,600
ounces, 83% higher than in the comparable quarter of 2014 on
account of significantly better grades due to mine sequencing and
higher recoveries. Cash costs were 44% lower than in the third
quarter of last year, due to the combined effect of higher gold
production and lower operating costs from less waste moved, lower
throughput, the favourable exchange rate, and lower costs of
certain consumables.
Peru
Huaron produced 0.88 million ounces of silver during the third
quarter of 2015 at cash costs per ounce of $11.51. Silver production declined 6% from the
third quarter of 2014 as a result of lower throughput, which was
caused by an unscheduled stoppage to repair a mill failure, partly
offset by slightly improved grades. Cash costs during the reporting
quarter rose 7% from the comparable quarter of 2014 on account of
lower by-product credits due to lower base metals prices and less
quantities of zinc produced, largely offset by lower operating
costs from the continued positive effects of mechanization. During
the reporting quarter, Huaron also produced approximately 3,000
tonnes of zinc, 1,600 tonnes of lead and 1,500 tonnes of
copper.
During the third quarter of 2015, Morococha produced 0.56
million ounces of silver at cash costs per ounce of $12.59. Silver production was 11% down from the
third quarter of 2014 as a result of a 21% decline in silver grades
due to the change in mine sequencing reported last quarter,
partially offset by higher throughput. Quarterly production was
also hindered by unexpected ground water flows encountered in the
vicinity of the Esperanza
structure in September. The water flows are still being addressed
in order to restore access to the copper-rich body, which has been
impeded since the issue arose. Cash costs rose 49% from the third
quarter of 2014 primarily as a result of less payable silver
produced and an increase in smelting costs, partially offset by the
benefits of mine mechanization and the depreciation of the Peruvian
Sol. During the reporting quarter, Morococha also produced 3,600
tonnes of zinc, 600 tonnes of lead, and 2,000 tonnes of copper.
Bolivia
During the third quarter of 2015 San Vicente produced 1.03
million ounces of silver at cash costs per ounce of $11.23. Silver production rose 36% from the
comparable quarter of 2014 as a result of markedly higher
throughput and higher grades due to mine sequencing. Cash costs
declined 30% from the comparable period of 2014 as a result of
higher silver production and an increase in by-product credits from
higher zinc and lead production, offset by lower prices
realized.
Argentina
Manantial Espejo produced 0.93 million ounces of silver during
the third quarter of 2015 at cash costs per ounce of $4.16. Silver production was down 5% from the
third quarter of 2014 due to a mill breakdown that occurred late in
the quarter and lower grades, partially offset by better
recoveries. Gold production rose 72% from the comparable quarter of
2014 to 22,700 ounces on account of an 84% rise in grades from the
mine sequencing, partially offset by the lower throughput
previously mentioned. Cash costs were 73% lower than in the
comparable quarter of 2014 due to increased gold production and
lower direct operating costs, partially offset by lower gold
prices.
Consolidated Cash Costs
Pan American's consolidated cash costs per ounce declined 32% to
$8.74 per ounce as compared to the
third quarter of 2014. Lower cash costs were driven by lower
operating costs at La Colorada,
Alamo Dorado, Huaron and Manantial Espejo, mainly due to the
devaluation of local currencies, the benefits of mine mechanization
and optimization, as well as lower costs for certain inputs. Cash
costs also benefited from higher by-product gold production from
Dolores, Manantial Espejo and
Alamo Dorado, as well as higher copper production from Huaron and
Morococha, partly offset by lower metal prices.
Cash costs is a non-GAAP measure. Please refer to Note 3 under
the highlights table at the beginning of this press release for a
further description of this measure.
Capital Spending
During the third quarter of 2015, Pan American spent
$16.0 million on sustaining capital.
At Dolores, the Company spent
$4.1 million on pre-stripping
activities, equipment upgrades and refurbishment, as well as on
exploration drilling and site infrastructure upgrades. At Huaron,
$4.1 million were spent primarily on
a tailings dam expansion and equipment refurbishments and
replacements. At La Colorada,
$2.7 million were spent on mine
development, mine equipment refurbishments and replacements,
infrastructure upgrades, and on access roads improvements. At
Manantial Espejo, $2.4 million were
spent mainly on pre-stripping and exploration. In addition,
$1.9 million were spent at Morococha
and $0.8 million were spent at
San Vicente on equipment
refurbishments and replacements, exploration, and infrastructure
upgrades.
During the third quarter of 2015, Pan American invested
$15.0 million in long term project
capital to advance the La Colorada
and Dolores mine expansions as
described in the Project Development section below.
Project Development
Michael Steinmann, President,
commented on the Company's organic growth projects, "In spite of a
slight delay on the construction of the new shaft at La Colorada, our two organic development
projects advanced as planned. I'm happy to report that the raise
bore for the shaft reached the surface in early November and the
underground ramp at Dolores is
ahead of schedule, having advanced a total of 670 metres to date.
Adding high quality and low cost production is crucial to our
long term success, particularly given the current market
conditions. These two projects are designed to do exactly
that, to add nearly 5 million ounces of silver and over 128,000
ounces of gold to our annual production, which will substantially
reduce our consolidated cash costs by the end of 2017."
Work on the La Colorada
expansion project advanced during the third quarter of 2015, with
an investment of $12.7 million.
Concrete pouring for the new sulphide processing plant was 50%
complete at the end of the reporting quarter. Construction crews
have started installing structural steel and all of the major
equipment components have been delivered to site. Installation is
scheduled to start during the fourth quarter of 2015 and
commissioning of the new sulphide processing plant is expected to
begin in mid-2016.
Construction of the new shaft advanced smoothly through good
ground conditions that allowed construction crews to complete 312
metres of the raise bore during the third quarter of 2015. At the
end of the third quarter, there was approximately 300 metres
remaining to complete the raise bore and the Company is pleased to
report that on November 5, 2015, the
raise bore broke through to the surface. Construction of the
headframe advanced as scheduled with the final installation
expected to be completed during the fourth quarter. The new shaft
is expected to be complete and operational towards the end of
2016.
Right of way negotiations for the new 115 kV power line to
La Colorada continued during the
reporting quarter. Construction is scheduled to start in the fourth
quarter of 2015 and the line is expected to be energized in early
2017.
At Dolores, Pan American
invested $5.0 million during the
third quarter of 2015. Approximately $2.4
million were used to construct a new power line and the
balance was used in basic and detailed engineering for the pulp
agglomeration plant and underground development. Construction of
the pulp agglomeration plant is scheduled to commence in the first
half of 2016 and completion of the power line construction is
expected in mid-2016. Once completed, the new power line will help
significantly reduce the mine's annual energy cost by replacing the
expensive diesel-generated power currently employed.
Current and Future Dividends
Today, the Board of Directors approved a quarterly cash dividend
in the amount of $0.05 per common
share. The cash dividend will be payable on or about Friday, December 4, 2015, to holders of record of
common shares as of the close of Monday,
November 23, 2015. Pan American's dividends are designated
as eligible dividends for the purposes of the Income Tax Act
(Canada). As is standard practice,
the amounts and specific distribution dates of any future dividends
will be evaluated and determined by the Board of Directors on an
ongoing basis.
Outlook
Year-to-date, Pan American has produced 19.33 million ounces of
silver and 135,500 ounces of gold. For the full-year 2015, the
Company reaffirms its annual silver production forecast of between
25.50 million and 26.50 million ounces of silver; however, Pan
American now expects 2015 annual gold production to increase to
between 175,000 and 180,000 ounces, up from the Company's original
annual production forecast of between 165,000 ounces and 175,000
ounces.
In addition, the Company is maintaining its annual production
forecasts of between 37,000 and 39,000 tonnes of zinc; between
13,000 and 13,500 tonnes of lead; and between 14,000 and 15,000
tonnes of copper.
The Company's consolidated year-to-date cash costs per ounce
were $9.92. Based on this, and on the
expectation of a modest increase in gold production and by-product
credits during the final quarter of 2015, Pan American now expects
full-year consolidated cash costs to be in the range of
$10.00 to $10.50 per ounce, well
below the original 2015 forecast of $10.80
to $11.80 per ounce.
Year-to-date AISCSOS of $14.99 was
below the full-year forecast of $15.50 to
$16.50. Based on the performance for the first nine months
of 2015 and provided metal prices remain at or near current levels,
the Company now believes that full-year consolidated AISCSOS will
be below the original annual guidance, and as a result has reduced
its full-year forecast for AISCSOS to between $15.00 and $15.50.
Year-to-date, Pan American has invested $50.2 million on sustaining capital at its seven
operating mines and $43.5 million on
project development at La Colorada
and Dolores. Due to the timing of
certain cash outflows and the pace of the construction of
La Colorada's new shaft, the
Company now expects to spend between $65.0
million and $75.0 million in 2015 on project development,
down from the latest estimate of between $90.0 million and $100.0 million. Pan American is
maintaining its consolidated sustaining capital expenditure
forecast of 2015 at $71.0 million to $84.0
million.
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 Thursday,
November 12, 2015 at 1:00 pm EST (10:00 am PST). To participate in
the conference, please dial toll number 1-604-638-5340.
A live audio webcast
and PowerPoint presentation will be available at
https://meet.panamericansilver.com/ir/F47VH3V7. The audio and
PowerPoint webcast will also be available for replay by visiting
the Events page of the Company's website at
www.panamericansilver.com/Investors/Events.
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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; PROGRESSION AND
COMPLETION OF CAPITAL INVESTMENT PROGRAMS AND PROJECTS, INCLUDING
THE LA COLORADA AND DOLORES EXPANSION PROJECTS, 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; 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, 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
September
30,
|
Nine months
ended
September
30,
|
(Unaudited in
thousands of U.S. Dollars, except as noted)
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Consolidated Metal
Production
|
|
|
|
|
|
|
|
|
|
Silver metal –
million ounces
|
|
|
6.61
|
|
6.19
|
|
19.33
|
|
19.37
|
Gold metal – thousand
ounces
|
|
|
53.6
|
|
34.1
|
|
135.5
|
|
117.6
|
Zinc metal – thousand
tonnes
|
|
|
10.7
|
|
10.5
|
|
29.2
|
|
33.3
|
Lead metal – thousand
tonnes
|
|
|
3.5
|
|
3.5
|
|
10.5
|
|
11.1
|
Copper metal –
thousand tonnes
|
|
|
3.6
|
|
2.4
|
|
11.0
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
Consolidated Costs
per Ounce of Silver (net of by-product credits)
|
|
|
|
|
|
|
|
|
|
Cash cost per payable
ounce produced (1)
|
|
$
|
8.74
|
$
|
12.86
|
$
|
9.92
|
$
|
11.30
|
All-in sustaining
cost per silver ounce sold (2)
|
|
$
|
16.29
|
$
|
20.08
|
$
|
14.99
|
$
|
17.64
|
Payable ounces of
silver sold – million ounces
|
|
|
6.05
|
|
6.23
|
|
18.46
|
|
19.08
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Financial Highlights
|
|
|
|
|
|
|
|
|
|
Net cash generated
from operating activities
|
|
$
|
32,866
|
$
|
38,345
|
$
|
65,291
|
$
|
123,365
|
Net cash generated
from operating activities per share
|
|
$
|
0.22
|
$
|
0.25
|
$
|
0.43
|
$
|
0.81
|
Net loss for the
period
|
|
$
|
(67,514)
|
$
|
(20,177)
|
$
|
(94,598)
|
$
|
(19,096)
|
Basic loss per share
attributable to common shareholders
|
|
$
|
(0.44)
|
$
|
(0.13)
|
$
|
(0.62)
|
$
|
(0.12)
|
Adjusted (loss)
earnings for the period(3)
|
|
$
|
(9,306)
|
$
|
(14,262)
|
$
|
(40,451)
|
$
|
382
|
Adjusted (loss)
earnings per share attributable to common
shareholders (basic) (3)
|
|
$
|
(0.06)
|
$
|
(0.09)
|
$
|
(0.27)
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Sustaining capital
for mineral properties, plant and equipment
|
|
$
|
15,953
|
$
|
25,803
|
$
|
50,225
|
$
|
74,912
|
Project capital for
mineral properties, plant and equipment
|
|
$
|
15,073
|
$
|
3,002
|
$
|
43,724
|
$
|
29,312
|
Dividends
paid
|
|
$
|
(7,586)
|
$
|
(18,939)
|
$
|
(34,124)
|
$
|
(56,817)
|
Cash and short-term
investments
|
|
$
|
266,093
|
$
|
377,488
|
$
|
266,093
|
$
|
377,488
|
Working
capital(4)
|
|
$
|
420,099
|
$
|
606,923
|
$
|
420,099
|
$
|
606,923
|
|
|
|
|
|
|
|
|
|
|
Average Market
Metal Prices
|
|
|
|
|
|
|
|
|
|
Silver metal
($/oz)
|
|
$
|
14.91
|
$
|
19.76
|
$
|
15.99
|
$
|
19.95
|
Gold metal
($/oz)
|
|
$
|
1,124
|
$
|
1,282
|
$
|
1,178
|
$
|
1,288
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Cash cost per ounce
of silver, net of by-product credits ("cash costs per ounce") is a
non-Generally Accepted Accounting Principles ("non-GAAP") measure.
The Company believes that cash costs per ounce is a useful measure
for investors to evaluate the Company's performance and ability to
generate cash flows, and to facilitate comparisons on a mine by
mine basis. Cash costs per ounce is a measure conceptually
understood and widely reported in the silver mining industry.
However, cash cost per ounce does not have a standardized meaning
prescribed by GAAP and the Company's method of calculating cash
costs, as described in the "Alternative Performance (Non-GAAP)
Measures" section of the Management Discussion and Analysis for the
three and nine months ended September 30, 2015 (the "Q3 2015
MD&A"), may differ from the methods used by other entities.
Cash costs per ounce should not be construed as an alternative
indicator of performance to production costs, depreciation and
amortization, and royalties determined in accordance with
GAAP.
In 2014 it was determined that 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 for three and nine months ended September 30,
2014 was a $0.57 and $0.47 per ounce increase,
respectively.
|
|
|
(2)
|
All-In Sustaining
Costs per Silver Ounce Sold ("AISCSOS") is non-GAAP measure.
AISCSOS Is a measure of a silver mining company's consolidated
operating performance and the ability to generate cash flow from
all operations collectively. The Company and certain investors
believe AISCSOS 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. AISCSOS does not have a standardized meaning prescribed by
GAAP, and the Company's method of calculating AISCSOS as described
in the "Alternative Performance (Non-GAAP) Measures" section of the
Q3 2015 MD&A may differ from the methods used by other
entities.
|
|
|
|
In 2014 it was
determined that certain charges to metal sales were being treated
differently in the quantification of AISCSOS for the Company's San
Vicente mine compared to the Company's other operations. As
such previously reported AISCSOS for the San Vicente mine have been
revised to quantify AISCSOS with a methodology consistent with that
used by Company's other operations. The effect of this revision on
previously reported consolidated AISCSOS for the three and nine
month period ended September 30, 2014 was a $0.42 and $0.38
decrease to AISCSOS, respectively
|
|
|
(3)
|
Adjusted (loss)
earnings, and adjusted (loss) earnings per share attributable to
common shareholders, are a non-GAAP measure that the Company
considers to better reflect normalized earnings as it eliminates
items that may be volatile from period to period relating to
positions which will settle in future periods, and items that are
non-recurring. To facilitate a better understanding of these
non-GAAP measures, as calculated by the Company, additional
information has been provided in the "Alternative Performance
(Non-GAAP) Measures" section of the Q3 2015 MD&A.
|
|
|
(4)
|
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.
|
SOURCE Pan American Silver Corp.