Announces 20% increase to the
declared dividend and a new dividend policy
VANCOUVER, BC, Feb. 23, 2022 /CNW/ - Pan American Silver
Corp. (NASDAQ: PAAS) (TSX: PAAS) ("Pan American" or the
"Company") today reported fourth quarter ("Q4 2021") financial
results and audited financial results for the year ended
December 31, 2021 ("FY 2021"). The Company also provided its
outlook for 2022 production, costs and capital expenditures, and
announced a new dividend policy with a 20% increase to the dividend
declared today.
"Q4 2021 marked a clear improvement in production and Silver
Segment costs over the first three quarters of the year,
contributing to cash flow from operations in the quarter of
$118.1 million," said Michael Steinmann, President and Chief Executive
Officer. "Our guidance for 2022 assumes the COVID-19 impact will
diminish over the course of the year, while incorporating the
effect of lower workforce deployment levels in January and February
due to the Omicron variant. We are evaluating strategic
alternatives for Morococha and have excluded the mine from our 2022
guidance while placing the operation on care and maintenance."
Added Mr. Steinmann: "Strong operational cash flows resulted in
a $116.4 million increase to our cash
balances in 2021. Pan American exited the year with cash and cash
equivalents of $283.6 million and
short term investments of $51.7
million, enabling us to increase the return to our
shareholders through a new dividend policy announced today. At the
same time, our strong financial position allows us to invest in
growth by advancing our large La Colorada Skarn project. In 2022,
we plan to complete 55,000 metres of infill and exploration
drilling and commence development of the access ramp and
ventilation shaft for the Skarn."
Q4 2021 and FY 2021 Highlights:
- Preliminary production results were previously reported on
January 19, 2022. Consistent with
that disclosure, consolidated silver production was 5.3
million ounces in Q4 2021 and 19.2 million ounces in FY 2021.
Consolidated gold production was 156.7 thousand ounces in Q4
2021 and 579.3 thousand ounces in FY 2021. Silver and gold
production in 2021 were both within the revised guidance ranges
provided on November 9, 2021.
- Revenue was $422.2
million in Q4 2021 and $1.6
billion for FY 2021. Revenue in Q4 2021 was impacted by
timing of sales, with a 13.3 thousand ounce build in gold finished
goods inventory.
- Net earnings were $14.7
million ($0.07 basic earnings
per share) and $98.6 million
($0.46 basic earnings per share) in
Q4 2021 and FY 2021, respectively. FY 2021 net earnings included
mark-to-market losses on short-term investments of $59.7 million, primarily for our interest in New
Pacific Metals Corp. and an income tax expense of $146.4 million. The high effective tax rate
primarily reflects a significant number of expenses in the year
with no corresponding tax benefit, largely the Escobal care and
maintenance expenditures and the non-cash investment losses related
to New Pacific.
- Adjusted earnings were $39.9
million ($0.19 basic adjusted
earnings per share) and $161.8
million ($0.77 basic adjusted
earnings per share) in Q4 2021 and FY 2021,
respectively.
- Net cash generated from operating activities was
$118.1 million and $392.1 million in Q4 2021 and FY 2021,
respectively.
- FY 2021 Silver Segment Cash Costs and All-in
Sustaining Costs ("AISC") of $11.51 and $15.62
per silver ounce sold, respectively, were slightly lower than the
revised guidance provided on November 9,
2021.
- FY 2021 Gold Segment Cash Costs and AISC of $899 and $1,214 per
gold ounce sold, respectively, were within the guidance ranges
provided throughout 2021.
- Capital expenditures totaled $254.1 million in 2021, comprised of $207.6 million of sustaining capital and
$46.5 million of project capital. The
project capital was largely invested in the La Colorada Skarn
project for exploration drilling, development studies, and the
start of construction of the concrete-lined ventilation shaft and
refrigeration plant. Project capital was also invested at
Timmins for the Wetmore
exploration project. Sustaining capital was below and project
capital was above the revised guidance provided on November 9, 2021.
- At December 31, 2021, the Company had cash and
short-term investment balances of $335.3
million, working capital of $613.5
million, and the full $500.0
million available under its sustainability-linked credit
facility. Total debt of $45.9 million
was related to lease liabilities and construction loans.
Pan American introduces a new dividend policy
The Board of Directors has approved a new dividend
policy, which adds a variable amount to a base dividend of
$0.10 per common share paid on a
quarterly basis. The variable quarterly dividend will be linked to
the net cash on the balance sheet for the previous quarter, as
illustrated in the following table:
Net Cash
Position(1)
|
Base Dividend
per
Quarter
|
Variable
Dividend per
Quarter
|
Total
Dividend per
Quarter
|
Less than $100
million
|
$0.10 per
share
|
$0.00 per
share
|
$0.10 per
share
|
$100 million to less
than $200 million
|
$0.10 per
share
|
$0.01 per
share
|
$0.11 per
share
|
$200 million to less
than $300 million
|
$0.10 per
share
|
$0.02 per
share
|
$0.12 per
share
|
$300 million to less
than $400 million
|
$0.10 per
share
|
$0.06 per
share
|
$0.16 per
share
|
$400 million or
greater
|
$0.10 per
share
|
$0.08 per
share
|
$0.18 per
share
|
(1) Net cash and
total debt are non- GAAP measures; please refer to the "Alternative
Performance (non-GAAP) Measures" section of this news release for
further information.
|
Based on the new dividend policy, the Board of Directors
has approved a 20% increase in the cash dividend to $0.12 per common share, or approximately
$25.3 million in aggregate cash
dividends, payable on or about March
21, 2022, to holders of record of Pan American's common
shares as of the close on March 7,
2022. As at December 31, 2021,
the Net Cash Position of $237.7
million is calculated in the following table:
|
|
Cash and cash
equivalents
|
283,550
|
Short-term
investments, other than equity
securities (1)
|
—
|
Total debt
|
(45,861)
|
Net cash
|
237,689
|
|
(1) As at December
31, 2021, the Company's short-term investments are comprised
entirely of equity investments and largely in exploration and
development companies.
|
ILO 169 Consultation for Escobal underway
The Company is pleased to report that the pre-consultation
meetings for the court-mandated ILO 169 consultation process for
the Escobal mine in Guatemala have
resumed following delays due to COVID-19. Three pre-consultation
meetings were held in 2021, and additional meetings were held in
January and February of 2022. The Guatemalan Ministry of Energy and
Mines is leading the consultation process with the Xinka People,
and Pan American is a participant. Pan American looks forward to
continuing its participation in a transparent, respectful and
inclusive process during 2022.
Morococha operation transitions into care and
maintenance
As previously disclosed, in June
2010, we completed a framework agreement with Aluminum
Corporation of China ("Chinalco"),
which required the relocation of core Morococha facilities,
including the Amistad processing plant, in stages to enable the
gradual expansion of Chinalco's Toromocho open pit copper mine. In
early 2022, we agreed with Chinalco to complete the closure of the
Amistad plant and we will be placing the Morococha operation on
care and maintenance as we evaluate alternative opportunities,
including monetization, joint venture operation of the asset, or
accelerating exploration of prospective areas that could enhance
the attractiveness of allocating capital to build a new processing
facility.
Mr. Ignacio Couturier
appointed Chief Financial Officer of Pan American
Pan American is pleased to announce the appointment of
Ignacio Couturier to succeed
Rob Doyle, who is retiring as Chief
Financial Officer (CFO) of Pan American. Ignacio has been with Pan
American for 20 years in progressively more senior roles, most
recently as VP Finance. He will assume the position of CFO
effective March 1, 2022, and will be
based in our Head Office in Vancouver. Over the past six months, the
Company has conducted a rigorous global selection process in which
both external and internal candidates were assessed for the role.
We are pleased that this process has resulted in the selection of
an internal candidate with a detailed understanding of Pan
American's business.
CONSOLIDATED RESULTS
|
|
|
December
31,
2021
|
December 31,
2020
|
Weighted average
shares during period (millions)
|
|
|
210.3
|
210.1
|
Shares outstanding
end of period (millions)
|
|
|
210.5
|
210.3
|
|
|
|
|
|
|
Three months
ended
December
31,
|
Year
ended
December
31,
|
|
2021
|
2020
|
2021
|
2020
|
FINANCIAL
|
|
|
|
|
Revenue
|
$
|
422,170
|
$
|
430,461
|
$
|
1,632,750
|
$
|
1,338,812
|
Mine operating
earnings
|
$
|
76,039
|
$
|
137,172
|
$
|
367,938
|
$
|
360,177
|
Net
earnings
|
$
|
14,664
|
$
|
169,018
|
$
|
98,562
|
$
|
176,455
|
Basic earnings
per share(1)
|
$
|
0.07
|
$
|
0.80
|
$
|
0.46
|
$
|
0.85
|
Adjusted
earnings(2)
|
$
|
39,943
|
$
|
89,885
|
$
|
161,782
|
$
|
181,243
|
Basic adjusted
earnings per share(1)
|
$
|
0.19
|
$
|
0.43
|
$
|
0.77
|
$
|
0.86
|
Net cash generated
from operating activities
|
$
|
118,098
|
$
|
170,571
|
$
|
392,108
|
$
|
462,315
|
Net cash generated
from operating activities before changes in working
capital(2)
|
$
|
127,761
|
$
|
151,995
|
$
|
463,177
|
$
|
365,333
|
Sustaining capital
expenditures(2)
|
$
|
56,280
|
$
|
52,007
|
$
|
207,623
|
$
|
162,047
|
Project capital
expenditures(2)
|
$
|
16,899
|
$
|
3,753
|
$
|
46,476
|
$
|
21,545
|
Cash dividend per
share
|
$
|
0.10
|
$
|
0.07
|
$
|
0.34
|
$
|
0.22
|
PRODUCTION
|
|
|
|
|
Silver (thousand
ounces)
|
5,276
|
4,872
|
19,174
|
17,312
|
Gold (thousand
ounces)
|
156.7
|
152.9
|
579.3
|
522.4
|
Zinc (thousand
tonnes)
|
11.2
|
14.2
|
49.4
|
40.2
|
Lead (thousand
tonnes)
|
4.1
|
5.4
|
18.1
|
15.7
|
Copper (thousand
tonnes)
|
2.4
|
2.3
|
8.7
|
5.2
|
CASH
COSTS(2) ($/ounce)
|
|
|
|
|
Silver
Segment(3)
|
9.74
|
6.15
|
11.51
|
7.05
|
Gold
Segment(4)
|
963
|
763
|
899
|
797
|
AISC(2)
($/ounce)
|
|
|
|
|
Silver
Segment(3)
|
13.57
|
10.37
|
15.62
|
11.38
|
Gold
Segment(4)
|
1,461
|
1,023
|
1,214
|
1,011
|
AVERAGE REALIZED
PRICES(6)
|
|
|
|
|
Silver
($/ounce)
|
23.33
|
24.72
|
25.00
|
20.60
|
Gold
($/ounce)
|
1,792
|
1,874
|
1,792
|
1,758
|
Zinc
($/tonne)
|
3,352
|
2,566
|
2,997
|
2,288
|
Lead
($/tonne)
|
2,333
|
1,922
|
2,206
|
1,851
|
Copper
($/tonne)
|
9,545
|
7,234
|
9,297
|
6,412
|
(1) Per share amounts
are based on basic weighted average common shares.
|
(2) Non- GAAP
measure; please refer to the "Alternative Performance (non-GAAP)
Measures" section of this news release for further
information on these measures.
|
(3) As of Q1 2021,
Dolores was moved from the Silver Segment to the Gold Segment due
to the expected mine sequencing into a higher
gold zone of the mine. 2021 Silver Segment is comprised of the
following operations: La Colorada, Huaron, Morococha, San Vicente
and
Manantial Espejo. The 2020 Silver Segment metrics include
Dolores.
|
(4) 2021 Gold Segment
is comprised of the following operations: Dolores, Shahuindo, La
Arena and Timmins. The 2020 Gold Segment
metrics exclude Dolores.
|
(5) Consolidated per
silver ounce sold is based on total silver ounces sold and are net
of by-product credits, including gold revenues.
Corporate general and administrative expense and exploration and
project development expense are included in Consolidated AISC,
but not allocated amongst the operations and thus are not included
in either the silver or gold segment totals.
|
(6) Metal prices
stated are inclusive of final settlement adjustments on concentrate
sales.
|
2022 GUIDANCE
The following tables provide management's guidance for 2022, as
at February 23, 2022. The estimates
below are forward-looking statements and information that are
subject to the cautionary note associated with forward-looking
statements and information at the end of this news release.
Annual Production Guidance, as at February 23, 2022
Silver –
Moz
|
|
19.0 -
20.5
|
Gold – koz
|
|
550.0 -
605.0
|
Zinc – kt
|
|
35.0 -
40.0
|
Lead – kt
|
|
15.0 -
17.0
|
Copper –
kt
|
|
5.5 - 6.5
|
The 2022 silver production forecast assumes production at
La Colorada increases to a range
of 6.85 to 7.10 million ounces, and excludes Morococha because of
the decision to place that operation on care and maintenance in
early 2022. Relative to 2021, silver production at Dolores is expected to increase from an
improvement in silver grades. The forecast also assumes lower than
normal capacity throughput rates across the operations due to
COVID-19 related impacts on workforce levels for the early part of
the year, with the impact expected to diminish over the course of
the year. Accordingly, production in 2022 is expected to be back
loaded to the second half of the year.
The forecast for 2022 gold production incorporates increases at
Dolores and Shahuindo, relative to
2021, from improvements in irrigation efficiencies, which allow for
a higher ratio of ounces produced to stacked. Production is
expected to be lower at La Arena and Manantial Espejo relative to
2021, largely from lower grades due to mine sequencing.
Base metal production is expected to decrease for zinc, lead and
copper in 2022 compared to 2021. The expected decreases are largely
driven by Morococha being placed on care and maintenance, which
more than offsets the increased throughput and grades at
La Colorada and
Huaron.
Cash Costs and AISC Guidance, as at February 23, 2022
|
Cash
Costs(1)(2)
($ per
ounce)
|
AISC(1)(2)
($ per
ounce)
|
Silver Segment
Total
|
10.70 -
12.20
|
14.50 -
16.00
|
Gold Segment
Total
|
970 -
1,070
|
1,240 -
1,365
|
(1) Cash Costs and
AISC are non-GAAP measures. Please refer to the "Alternative
Performance (non-GAAP) Measures" section of this news
release for further information on these measures.
|
(2) The cash costs
and AISC forecasts assume average metal prices of $22.50/oz for
silver, $1,750/oz for gold, $3,000/tonne ($1.36/lb) for
zinc, $2,200/tonne ($1.00/lb) for lead, and $9,200/tonne ($4.17/lb)
for copper; and average annual exchange rates relative to 1 USD
of
20.00 for the Mexican peso ("MXN"), 4.10 for the Peruvian sol
("PEN"), 122.17 for the Argentine peso ("ARS"), 7.00 for the
Bolivian
boliviano ("BOB"), and $1.25 for the Canadian dollar
("CAD").
|
Silver Segment cash costs and AISC are expected to benefit from
improved throughput and production rates at La Colorada and the anticipated easing of
COVID-19 related restrictions during the year. These improvements
are expected to be largely offset by: inflationary pressures across
the portfolio; the completion of mining activities at the
high-grade COSE deposit at Manantial Espejo, resulting in lower
gold by-product credits in 2022; and higher development rates at
San Vicente.
Gold Segment cash costs in 2022 include inflationary pressures
across the portfolio, higher community and environmental spending,
higher waste mining rates at Shahuindo, increased depth and greater
requirements for ground support and backfill at Timmins.
Capital Expenditures Guidance, as at February 23, 2022
|
(in millions of
USD)
|
Sustaining
Capital(1)
|
200.0 -
210.0
|
Project
Capital
|
80.0 -
95.0
|
Total
Capital
|
280.0 -
305.0
|
(1) Sustaining
Capital includes $24.0 million for forecast lease and other
payments, which include debt repayments on construction loan
facilities classified as "Debt" as per Note 17 of the Company's
2021 Financial Statements. These facilities are for constructions
of pads
and other infrastructure in which the Company only makes cash
payments upon completion of construction activities and on a
scheduled basis.
|
Sustaining capital expenditures in 2022 are consistent with
2021. Sustaining capital in 2022 includes increased spending at
La Colorada to advance development
of the mine at depth using more mechanized long-hole stoping
methods, aimed at increasing throughput and reducing unit costs
over the next few years. Sustaining capital at La Colorada also includes further investment
in underground ventilation infrastructure.
Project capital in 2022 is directed towards the La Colorada
Skarn project for further exploration and infill drilling, and
engineering studies to determine the optimal project design. On
November 9, 2021, Pan American
released further drill results for the Skarn, which indicated the
potential for Mineral Resource expansion. At La Colorada, the Company is also investing in
site infrastructure upgrades, notably the commencement of ramp
development in mid-2022 to eventually access the Skarn deposit, the
advancement of the concrete-lined ventilation shaft, and completion
and commissioning of a refrigeration plant. These infrastructure
upgrades are expected to benefit both the long-term development of
the Skarn and the current vein system operation.
In addition, 2022 project capital is directed at the
Timmins operation for the
construction of a paste fill plant at Bell Creek to improve
backfill quality and availability for more effective ground support
systems, and to increase mineral resource recovery. Timmins' project capital also includes
exploration expenditures related to the Wetmore and Whitney
projects.
2022 Exploration Expenditures Forecast
Exploration expenditures in 2022, including amounts that will be
expensed and capitalized, are expected to total between
$42.0 million and $46.0 million, comprised of: (1) $12.0 million to $13.0
million for 95,000 metres of near-mine brownfield
exploration drilling targeting reserve replacement, which is
included in the forecast for 2022 sustaining capital expenditures
for each mine; (2) $8.0 million to $9.0 million in regional, greenfield
exploration in Peru, Mexico and Canada and
corporate overhead; and (3) $22.0 million to $24.0 million for drilling the La Colorada Skarn
and adjacent vein systems, as well as exploring the Wetmore and
Whitney projects adjacent to the Bell Creek mine in Timmins, which is included in the forecast for
2022 project capital expenditures.
Fourth Quarter Consolidated Income
Statements
(unaudited)
|
Three months
ended
December 31,
|
|
2021
|
2020
|
Revenue
|
$
|
422,170
|
$
|
430,461
|
Cost of
sales
|
|
|
Production
costs
|
(263,442)
|
(206,702)
|
Depreciation and
amortization
|
(76,141)
|
(77,464)
|
Royalties
|
(6,548)
|
(9,123)
|
|
(346,131)
|
(293,289)
|
Mine operating
earnings
|
76,039
|
137,172
|
|
|
|
General and
administrative
|
(8,255)
|
(10,681)
|
Exploration and
project development
|
(4,076)
|
(1,091)
|
Mine care and
maintenance
|
(9,266)
|
(6,755)
|
Foreign exchange
losses
|
(5,646)
|
(1,206)
|
Gains on
derivatives
|
1,638
|
7,289
|
(Losses) gains on
sale of mineral properties, plant and equipment
|
(551)
|
9,832
|
Income from equity
investees
|
289
|
12,340
|
Other income
(expense)
|
2,530
|
(13,517)
|
Earnings from
operations
|
52,702
|
133,383
|
|
|
|
Investment (loss)
income
|
(6,083)
|
30,603
|
Interest and finance
expense
|
(3,484)
|
(4,483)
|
Earnings before
income taxes
|
43,135
|
159,503
|
Income tax (expense)
recovery
|
(28,471)
|
9,515
|
Net earnings and
comprehensive earnings
|
$
|
14,664
|
$
|
169,018
|
|
|
|
Net earnings and
comprehensive earnings attributable to:
|
|
|
Equity holders of the
Company
|
14,036
|
168,885
|
Non-controlling
interests
|
628
|
133
|
|
$
|
14,664
|
$
|
169,018
|
|
|
|
Earnings per share
attributable to common shareholders
|
|
|
Basic earnings per
share
|
$
|
0.07
|
$
|
0.80
|
Diluted earnings per
share
|
$
|
0.07
|
$
|
0.80
|
Weighted average
shares outstanding (in 000's) Basic
|
210,348
|
210,193
|
Weighted average
shares outstanding (in 000's) Diluted
|
210,450
|
210,370
|
Fourth Quarter Consolidated Statements of Cash
Flows
(unaudited)
|
Three months
ended
December 31,
|
|
2021
|
2020
|
Operating
activities
|
|
|
Net earnings for the
period
|
$
|
14,664
|
$
|
169,018
|
Income tax expense
(recovery)
|
28,471
|
(9,515)
|
Depreciation and
amortization
|
76,141
|
78,665
|
Unrealized investment
loss (income)
|
6,083
|
(30,596)
|
Accretion on closure
and decommissioning provision
|
1,864
|
2,061
|
Unrealized foreign
exchange losses
|
1,643
|
1,002
|
Interest
expense
|
822
|
1,696
|
Interest
paid
|
(1,523)
|
(1,503)
|
Interest
received
|
27
|
19
|
Income taxes
paid
|
(22,810)
|
(22,513)
|
Other operating
activities
|
22,379
|
(36,339)
|
Net change in
non-cash working capital items
|
(9,663)
|
18,576
|
|
$
|
118,098
|
$
|
170,571
|
Investing
activities
|
|
|
Payments for mineral
properties, plant and equipment
|
$
|
(70,147)
|
$
|
(53,636)
|
Proceeds from sale of
mineral properties, plant and equipment
|
1,067
|
12,028
|
Proceeds from
short-term investments and other securities
|
455
|
973
|
Net proceeds from
derivatives
|
2,300
|
502
|
|
$
|
(66,325)
|
$
|
(40,133)
|
Financing
activities
|
|
|
Proceeds from common
shares issued
|
$
|
284
|
$
|
9
|
Distributions to
non-controlling interests
|
(43)
|
—
|
Dividends
paid
|
(21,032)
|
(14,712)
|
Repayment of credit
facility
|
—
|
(90,000)
|
Repayment of
Loans
|
(850)
|
(5,616)
|
Payment of equipment
leases
|
(3,416)
|
(3,180)
|
|
$
|
(25,057)
|
$
|
(113,499)
|
Effects of exchange
rate changes on cash and cash equivalents
|
(675)
|
(155)
|
Net increase in cash
and cash equivalents
|
26,041
|
16,784
|
Cash and cash
equivalents at the beginning of the period
|
257,509
|
150,329
|
Cash and cash
equivalents at the end of the period
|
$
|
283,550
|
$
|
167,113
|
Conference Call and Webcast
Pan American plans to release its audited results for Q4 and FY
2021 on February 23, 2022, after
market close. Details for the related conference call and webcast
are as follows:
Date:
|
February 24,
2022
|
|
|
Time:
|
11:00 am ET (8:00 am
PT)
|
|
|
Dial-in
numbers:
|
1-800-319-4610
(toll-free in Canada and the U.S.)
|
|
+1-604-638-5340
(international participants)
|
|
|
Webcast:
|
panamericansilver.com
|
The live webcast, presentation slides and the Q4 and FY 2021
report will be available at panamericansilver.com. An archive of
the webcast will also be available for three months.
About Pan American Silver
Pan American Silver owns and operates silver and gold mines
located in Mexico, Peru, Canada,
Argentina and Bolivia. We also own the Escobal mine in
Guatemala that is currently not
operating. Pan American Silver provides enhanced exposure to silver
through a large base of silver reserves and resources, as well as
major catalysts to grow silver production. We have a 28-year
history of operating in Latin
America, earning an industry-leading reputation for
sustainability performance, operational excellence and prudent
financial management. We are headquartered in Vancouver, B.C. and our shares trade on NASDAQ
and the Toronto Stock Exchange under the symbol "PAAS".
Learn more at panamericansilver.com.
Technical Information
Scientific and technical information contained in this news
release have been reviewed and approved by Martin Wafforn, P.Eng.,
Senior Vice President Technical Services and Process Optimization,
and Christopher Emerson, FAusIMM,
Vice President Business Development and Geology, each of whom is a
Qualified Persons, as the term is defined in Canadian National
Instrument 43-101 - Standards of Disclosure of Mineral
Projects.
For additional information about Pan American Silver's material
mineral properties, please refer to Pan American Silver's Annual
Information Form dated February 23,
2022, filed at www.sedar.com, or Pan American Silver's most
recent Form 40-F filed with the SEC.
Alternative Performance (Non-GAAP) Measures
In this news release, we refer to measures that are not
generally accepted accounting principle ("non-GAAP") financial
measures. These measures are widely used in the mining
industry as a benchmark for performance, but do not have a
standardized meaning as prescribed by IFRS as an indicator of
performance, and may differ from methods used by other companies
with similar descriptions. These non-GAAP financial measures
include:
- Cash Costs. Pan American's method of calculating cash costs may
differ from the methods used by other entities and, accordingly,
Pan American's Cash Costs may not be comparable to similarly titled
measures used by other entities. Investors are cautioned that Cash
Costs 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.
- Adjusted earnings and basic adjusted earnings per share. Pan
American believes that these measures better reflect normalized
earnings as they eliminate items that in management's judgment are
subject to volatility as a result of factors, which are unrelated
to operations in the period, and/or relate to items that will
settle in future periods.
- All-in Sustaining Costs per silver or gold ounce sold, net of
by-product credits ("AISC"). Pan American has adopted AISC as a
measure of its consolidated operating performance and its ability
to generate cash from all operations collectively, and Pan American
believes it is a more comprehensive measure of the cost of
operating our consolidated business than traditional cash costs per
payable 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 Pan American's consolidated earnings and cash
flow.
- Total debt is calculated as the total current and non-current
portions of: long-term debt, finance lease liabilities and loans
payable. Total debt does not have any standardized meaning
prescribed by GAAP and is therefore unlikely to be comparable to
similar measures presented by other companies. Pan American and
certain investors use this information to evaluate the financial
debt leverage of Pan American.
- Net cash is calculated as cash and cash equivalents plus
short-term investments, other than equity securities less total
debt.
- Working capital is calculated as current assets less current
liabilities. Working capital does not have any standardized meaning
prescribed by GAAP and is therefore unlikely to be comparable to
similar measures presented by other companies. Pan American and
certain investors use this information to evaluate whether Pan
American is able to meet its current obligations using its current
assets.
- Total available liquidity is calculated as the sum of Cash and
cash equivalents, Short-term Investments, and the amount available
on the Credit Facility. Total available liquidity does not have any
standardized meaning prescribed by GAAP and is therefore unlikely
to be comparable to similar measures presented by other companies.
Pan American and certain investors use this information to evaluate
the liquid assets available to Pan American.
Readers should refer to the "Alternative Performance (non-GAAP)
Measures" section of Pan American's Management's Discussion and
Analysis for the period ended December 31, 2021, for a more
detailed discussion of these and other non-GAAP measures and their
calculation.
This news release references cash costs, AISC, adjusted
earnings, basic adjusted earnings per share, sustaining capital,
project capital, working capital, total debt, and net cash, which
are not generally accepted accounting principle ("non-GAAP")
financial measures. Please refer to the "Alternative Performance
(non-GAAP) Measures" section of this news release for further
information on these measures.
This news release should be read in conjunction with Pan
American's Audited Consolidated Financial Statements and
Management's Discussion and Analysis for the year ended
December 31, 2021, and the Company's
Annual Information Form for the year ended December 31, 2021. This material is available on
Pan American's website at panamericansilver.com, on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
Cautionary Note Regarding Forward-Looking Statements and
Information
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: future financial or
operational performance, including our estimated production of
silver, gold and other metals forecasted for 2022 and our estimated
Cash Costs, AISC, and sustaining and project capital expenditures
in 2022; future anticipated prices for gold, silver and other
metals and assumed foreign exchange rates; expectations with
respect to the future anticipated impact of COVID-19 on our
operations and the assumptions that the impact of COVID-19 on our
operations would be gradually diminishing in 2022; the anticipated
placement of the Morococha operation on care and maintenance, what
impact this will have on Pan American and its financial and
operating performance, and whether any alternative opportunities
for the Morococha operation will be viable or realized; whether Pan
American is able to maintain a strong financial condition and have
sufficient capital, or have access to capital through our corporate
credit facility or otherwise, to sustain our business and
operations; and the ability of Pan American to successfully
complete any capital projects, including, but not limited to, the
La Colorada Skarn project, the expected economic or operational
results derived from those projects, and the impacts of any such
projects on Pan American and Pan American's plans and expectations
for its properties and operations.
These forward-looking statements and information reflect Pan
American's current views with respect to future events and are
necessarily based upon a number of assumptions that, while
considered reasonable by Pan American, are inherently subject to
significant operational, business, economic and regulatory
uncertainties and contingencies. These assumptions include: the
world-wide economic and social impact of COVID-19 and the duration
and extent of the COVID-19 pandemic and related restrictions, and
the presence and impact of COVID-19 and COVID-19 related
restrictions on our workforce, suppliers and other essential
resources and what effect those impacts, if they change, would have
on our business; the effect that the COVID-19 pandemic may
have on our financial and operational results; the ability of Pan
American to continue with its operations, or to successfully
maintain our operations on care and maintenance, should the
situation related to COVID-19 not be as anticipated; continuation
of operations following shutdowns or reductions in production, our
ability to manage reduced operations efficiently and economically,
including to maintain necessary staffing; tonnage of ore to be
mined and processed; future anticipated prices for gold, silver and
other metals and assumed foreign exchange rates; the timing and
impact of planned capital expenditure projects at La Colorada and our other operations,
including anticipated sustaining, project, and exploration
expenditures; the ongoing impact and timing of the court-mandated
ILO 169 consultation process in Guatemala; 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 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 and maintain title and ownership to properties
and the surface rights necessary for our operations; and our
ability to comply with environmental, health and safety laws. The
foregoing list of assumptions is not exhaustive.
These forward-looking statements and information reflect Pan
American's current views with respect to future events and are
necessarily based upon a number of assumptions that, while
considered reasonable by Pan American, are inherently subject to
significant operational, business, economic and regulatory
uncertainties and contingencies. These assumptions include: the
world-wide economic and social impact of COVID-19 and the duration
and extent of the COVID-19 pandemic and related restrictions, and
the presence and impact of COVID-19 and COVID-19 related
restrictions on our workforce, suppliers and other essential
resources and what effect those impacts, if they change, would have
on our business; the effect that the COVID-19 pandemic may
have on our financial and operational results; the ability of Pan
American to continue with its operations, or to successfully
maintain our operations on care and maintenance, should the
situation related to COVID-19 not be as anticipated; continuation
of operations following shutdowns or reductions in production, our
ability to manage reduced operations efficiently and economically,
including to maintain necessary staffing; tonnage of ore to be
mined and processed; future anticipated prices for gold, silver and
other metals and assumed foreign exchange rates; the timing and
impact of planned capital expenditure projects at La Colorada and our other operations,
including anticipated sustaining, project, and exploration
expenditures; the ongoing impact and timing of the court-mandated
ILO 169 consultation process in Guatemala; 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 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 and maintain title and ownership to properties
and the surface rights necessary for our operations; and our
ability to comply with environmental, health and safety laws. The
foregoing list of assumptions is not exhaustive.
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SOURCE Pan American Silver Corp.