Pan American Silver Corp. · TSX:PAAS
Pan American Silver — Investor Presentation (March 2024)
69 slides from Pan American Silver's investor presentation, March 2024
Slide 1: Investor Presentation March 2024
INVESTOR PRESENTATION // FEBRUARY 2023 MARCH 2024
Slide 2: Cautionary Note
assumed foreign exchange rates; the timing and impact of planned capital factors identified under the caption "Risks of the Business" in Yamana Gold Inc.'s CAUTIONARY NOTE expenditure projects, including anticipated sustaining, project, and exploration most recent Form 40-F and Annual Information Fo
Slide 3: Cautionary Note Continued
CONTINUED made. U.S. investors are cautioned not to assume that any part of an "indicated resource" will ever be converted into a 3 For additional information regarding Pan American Silver's "reserve". U.S. investors should also understand that "inferred material mineral properties prior to the comp
Slide 4: Abbreviation Definitions
4 Abbreviation Definition tpd tonnes per day ktpa kilotonnes per annum Moz millions of ounces koz thousands of ounces dmt dry metric tonnes g/t grams per tonne n.d. No data
Slide 5: 2024 Guidance Overview
5 1 2024 Guidance Overview 2 Mine Planning and Operations 3 Commercialization 4 Operating Costs 5 Capital Expenditures 6 G&A and Corporate Level Costs 7 Taxes 8 Shareholder Returns 9 Skarn Project
Slide 6: 2024 Production and Cost Guidance Commentary
6 • Silver production is anticipated to increase by 0.6 – 2.6 Moz relative to 2023, largely related to the contribution of a full-year of production from El Peñon and higher silver production at La Colorada. • Gold production is expected to increase up to 117 koz relative to 2023, driven by the cont
Slide 7: 2024 Operating Forecast
7 2024 Operating Forecast Tonnes Mined Tonnes Processed Cost per Tonne (000s) (000s) processed ($) Silver Segment: La Colorada (Mexico) 570 - 615 570 - 615 192 - 214 Cerro Moro (Argentina)(1) 430 - 460 390 - 415 490 - 447 Huaron (Peru) 890 - 970 890 - 970 107 - 117 (2) San Vicente (Bolivia) 365 - 38
Slide 8: 2024 Capital Expenditures Forecast
8 2024 Capital Expenditures Forecast(2) 1. Capital expenditures at San Vicente are shown at a 100% ownership. 2. As disclosed in the Company’s 2023 Annual MD&A.
Slide 9: 2024 Quarterly Operating Outlook
9 • Silver production is anticipated to increase towards the second half of year largely as a result of increased production from La Colorada due to higher grades, and higher throughput following completion of ventilation improvements. • Gold production is expected to increase in the second half of
Slide 10: Mine Planning and Operations
10 2024 Guidance Overview 2 Mine Planning and Operations 3 Commercialization 4 Operating Costs 5 Capital Expenditures 6 G&A and Corporate Level Costs 7 Taxes 8 Shareholder Returns 9 Skarn Project
Slide 11: Mineral Reserves and Resource Conversion
11 Mineral Reserves Resource Conversion • As of June 30, 2023, Pan American has 486.8 Moz Ag and 7,708.4 • Historically Pan American has had a history of converting a koz Au of Proven & Probable Mineral Reserves. portion of measured, indicated and inferred mineral resources to proven and probable mi
Slide 12: P&P Additions and Exploration Capital
12 • Exploration expenditures are invested with the intension to result in mineral resource conversion; thus, extending Implied Mine Life. • Historically, Pan American has limited investment in operations which have shown more limited mineral resource conversion success. • The relative Cost of Miner
Slide 13: La Colorada
13 • Life-of-Mine (“LOM”) plan consists of an integrated operation where oxide and sulphide ores are fed to the processing plants at average throughput rates of up to 2,100 tpd. The base case is anticipated to achieve approximately 2,000 tpd between 2024 and 2029 for average production of 6.5Moz per
Slide 14: Cerro Moro
14 • LOM plan consists of an integrated operation where open pits and underground mines are fed to the processing plants at an average throughput of 1,060 tpd. • Silver production is forecast to decline relative to 2023 to 3.2 – 3.5 Moz, while gold production is forecast to increase to 93 – 115 koz,
Slide 15: Huaron
15 • LOM plan from October 2022 technical report is based on an annual processing rate of 1 Mtpa (2,800 tpd). • The construction of a tailings filtration plant and dry-stack tailings storage facility is expected to be completed during the second half of the year; transitioning to new facility will i
Slide 16: San Vicente
16 • San Vicente is a steady state producer of silver-zinc and silver-lead concentrates through standard floatation processes. • 2014 LOM plan(1) contemplates an annual processing rate of 330 ktpa throughout the mine life, although this has now been consistently exceeded due to investments in mill i
Slide 17: Jacobina
17 • Utilizes a Sublevel Open Stoping method without backfill to achieve an average production rate of ~8,500 tpd. • At the 8,500 tpd plant throughput, the LOM plan predicts an average gold production of 200 koz per year for the first 10.5 years. • We continue to advance with mine optimization studi
Slide 18: El Peñon
18 • While the plant has existing processing capacity of 4,200 tpd, additional exploration success would unlock opportunities to leverage the excess capacity. • Mined ore is approximately 1Mt per year with the remaining throughput made up from low-grade stockpiles. We had 1.2 million tonnes of low g
Slide 19: Shahuindo
19 • The LOM plan indicates an average of 13.1 Mtpa for 2023 – 2027, 9.4 Mtpa for 2028-2030, and 6.6 Mtpa for the last two years of production(1). • Metallurgical test work results indicate projected gold recoveries averaging 80%(1); however, realized recoveries have been below this figure due to th
Slide 20: Timmins
20 • Ground control mitigation strategies and the start-up of a paste plant at Bell Creek, anticipated in the second half of 2024, are expected to improve challenging ground conditions into 2025 and beyond that have impacted throughput in previous years. • 2024 gold production is expected to be larg
Slide 21: La Arena
21 • 2024 gold production is expected to be lower than 2023 reflecting lower tonnes stacked due to a higher waste-to-ore mining ratio in the mine plan. Throughput Production and Grades (1) Throughput (ktpa) Processing rate (tpd) Au Production (koz) Au Grades (g/t) 34,719 34,483 0.41 33,156 31,469 0.
Slide 22: Minera Florida
22 • Operation consists of several underground mines, from which ore is processed at an approximate rate of 2,450 tpd. Throughput Production and Grades (1) Throughput (ktpa) Processing rate (tpd) Au Production (koz) Au Grades (g/t) 3.32 3.37 2,890 3.03 3.08 2,775 3.02 2,578 2,649 2,445 2.87 2,043 2,
Slide 23: Dolores
23 • We anticipate the completion of mining and stacking on the heap to occur in Q3 2024, at which point the mine will enter its residual-leaching phase • As a result, gold production is forecast to be 30% - 39% lower in 2024 vs. 2023; silver production is expected to decrease up to 13% • Silver pro
Slide 24: El Peñon Stockpiles and Heap Leach Inventory Balance
24 El Peñon Stockpiles Open Pit Heap Leach Stockpiles Balance(1) La Arena Tonnes Au Ag 2019 2020 2021 2022 2023 LOM(2) Mt g/t koz g/t koz Waste Mined (kt) 27,494 20,521 27,007 22,684 17,265 P&P 0.6 1.06 18.9 20.62 367.6 Ore Mined (kt) 12,636 9,971 10,855 11,423 12,587 Strip Ratio 2.18 2.06 2.49 1.99
Slide 25: Commercialization
25 2024 Guidance Overview Mine Planning and Operations 3 Commercialization 4 Operating Costs 5 Capital Expenditures 6 G&A and Corporate Level Costs 7 Taxes 8 Shareholder Returns 9 Skarn Project
Slide 26: Concentrate Sales Process
26 Mine Delivery at Port Processing Warehouse or Final Settlement Plant Smelter or Weighing, sampling Final Assays Weighing, and moisture Provisional Agreed and Contract Assays Final Invoice sampling and content. Invoice Exchanged quantities and Administration moisture content Quotational period Iss
Slide 27: Refined Metal Sales Process
27 Refined Metal Refined Metal Mine Processing Plant Refineries Availability Availability (approx. 95%) (approx. 5%) Final quantities of Weighing Weighing Refinery Metal Assays metal agreed with and and Administration Sampling Availability Exchanged Refinery and refining Sampling invoice issued Sale
Slide 28: Treatment and Refining Charges Overview
28 Treatment Charge Overview Concentrate Direct Selling Costs History (US$/oz Ag sold)(1) • Treatment charge (“TC”) and refining charge (“RC”) are applied to $12.00 concentrates by refineries and smelters to convert dmt of concentrate into tonnes or ounces of metal. • Pan American’s mines which prod
Slide 29: Lead Concentrate Terms
29 Terms shown here are only representative of lead concentrate produced at La Colorada and Huaron. Terms Current Standard Terms Application Franchise 0.3% deduction Applied off the top to delivered tonnes Payability Deductions Lead Deductions 95% payable Applied on lead production 3% minimum Applie
Slide 30: Zinc Concentrate Terms
30 Terms shown here are only representative of zinc concentrate produced at La Colorada, Huaron and San Vicente. The Minera Florida zinc concentrate has a higher lead payability and lower gold and zinc payability. Terms Current Standard Terms Application Franchise 0.3% deduction Applied off the top
Slide 31: Copper Concentrate Terms
31 Terms shown here are only representative of copper concentrate produced at Huaron. Terms Current Standard Terms Application Franchise 0.3% deduction Applied off the top to delivered tonnes Payability Deductions Copper Deductions 96.5% payable Applied on copper production 1% minimum Applied on con
Slide 32: Silver Concentrate Terms
32 Terms shown here are only representative of silver concentrate produced at San Vicente. Terms Current Standard Terms Application Franchise 0.3% deduction Applied off the top to delivered tonnes Payability Deductions Lead Deductions 95% payable Applied on lead production 3% minimum Applied on conc
Slide 33: Net Revenue Calculation Example
33 Assumptions Net Revenue 100 DMT Lead Concentrate Gross Revenue $250,041 Lead Revenue $102,591 A Payability Deductions ($13,654) Silver Revenue $147,450 B TC/RC ($14,582) Content Pb $2,100 Pb 49% Prices Gross Revenue $250,041 Net Revenue $221,805 Ag $23.00 Ag 2,000 g/t Terms Current Standard Terms
Slide 34: FY 2023 Payability by Mine
34 Mine FY 2023 Payability Silver Ag Production (kt) Ag Payable (kt) Approx. Payability La Colorada 4,392 4,131 94% Cerro Moro(1) 3,547 3,547 100% Huaron 3,608 3,171 88% San Vicente(2) 2,978 2,724 91% El Peñon(1) 2,906 2,906 100% Dolores 2,194 2,191 100% Gold Au Production (kt) Au Payable (kt) Appro
Slide 35: Operating Costs
35 2024 Guidance Overview Mine Planning and Operations Commercialization 4 Operating Costs 5 Capital Expenditures 6 G&A and Corporate Level Costs 7 Taxes 8 Shareholder Returns 9 Skarn Project
Slide 36: On-Site Direct Operating Costs and Implied Cost per Tonne
36 • Pan American discloses On-Site Direct Operating Costs and Tonnes Processed for each operating mine in the annual MD&A. These costs would exclude (include) expenditures which result in inventory build-ups (drawdowns) such as the cash expenditures at Shahuindo related to the estimated inventory b
Slide 37: Reconciliation from Guidance to Cost per Tonne
37 • Pan American provides operating cost guidance in the form of Cash Costs and AISC, which can be reconciled to costs per tonne • Using the below example guidance, we can imply an operating cost per tonne of $38.38/t Example Reconciliation from Guidance to Cost per Tonne(1) Silver Production (Moz)
Slide 38: Reclassified Yamana Expenditures by Mine
38 Several expenditures that were capitalized by Yamana have been reclassified as operating expenditures by Pan American. 2022 Expenditures by Mine(1) (US$M) Jacobina El Peñon 3% 2% 23% 20% 26% 12% 20% 77% 73% 88% 58% Minera Florida Cerro Moro 18% 10% 8% 20% 25% 90% 62% 92% 75% Production Costs Sust
Slide 39: Depreciation Expense and Implied Unit Depreciation
39 • There are two methods which can be used to calculate depreciation expense in mining: • (i) Based on ore tonnes mined, or • (ii) Based on payable primary metal produced • For each mine, the Company uses the method which it believes is the most fair and accurate representation of depreciation • F
Slide 40: Third-Party Royalties and Streams
40 The listed royalties and streams below are not necessarily comprehensive, and include those that we are currently subject to in our 2024 mine plan and believe to be most material Mine 3rd Party Royalties and Streams Counterparty Modelling Terms and Details La Colorada Triple Flag Revenue 100% gol
Slide 41: Government Taxes and Royalties by Jurisdiction
41 The listed taxes below are not necessarily comprehensive, and include those that we are currently subject to in our 2024 mine plan and believe to be most material Jurisdiction Government Taxes and Royalties Tax Modelling Terms and Details Extraordinary Mining Duty Royalties 0.5% NSR applied to sa
Slide 42: Foreign Exchange Sensitivity
42 • Pan American currently operates mines in 7 jurisdictions, excluding Guatemala where Escobal is located and currently on Care & Maintenance • As a consequence, the financial results of our operations are subject to changes in the value of the USD relative to local currencies • The Company is neg
Slide 43: Currency Exposure Mitigation
43 • From time to time, we mitigate part of this currency exposure by: • (i) entering into contracts designed to fix or limit our exposure to changes in the value of local currencies, or • (ii) assuming liability positions to offset financial assets subject to currency risk • Realized derivative gai
Slide 44: Capital Expenditures
44 2024 Guidance Overview Mine Planning and Operations Commercialization Operating Costs 5 Capital Expenditures 6 G&A and Corporate Level Costs 7 Taxes 8 Shareholder Returns 9 Skarn Project
Slide 45: 2023 Sustaining Capital Expenditures
45 2023 Sustaining Capital Expenditures (US$M) La Cerro San La Minera Huaron Jacobina(1) El Peñon(1) Timmins Shahuindo Dolores Total Colorada Moro(1) Vicente Arena Florida(1) Pre-Stripping & Capitalized - 4.0 3.2 - - 1.1 - - 0.7 1.2 - 10.2 Development Exploration 5.7 13.6 2.3 0.8 14.1 12.4 7.2 - 1.0
Slide 46: Life of Mine Capital Investment Examples
46 Shahuindo(1) Heap Leach Pad and Waste Dump Expansions • Pan American occasionally provides annual or life of mine capital investment requirements and estimates in technical reports. • The cost of constructing heap leach pad capacity is estimated to average • Following are three examples of recent
Slide 47: G&A and Corporate Level Costs
47 2024 Guidance Overview Mine Planning and Operations Commercialization Operating Costs Capital Expenditures 6 G&A and Corporate Level Costs 7 Taxes 8 Shareholder Returns 9 Skarn Project
Slide 48: G&A and Greenfield Exploration Synergies
48 G&A (US$M) Greenfield Exploration and Overhead (US$M) Implied G&A Synergies = $85M Implied Exploration Cost Reduction = $50M $3 $50 $40 $58 $8 $85 $121 $150 $73 $18 $29 $11 (2) (2) PAAS G&A YRI G&A Combined Inflation Implied PAAS G&A PAAS Expl. YRI Expl. Combined Inflation Implied PAAS Expl. 2022
Slide 49: Q4 2023 Interest and Finance Expense
49 Q4 2023 Interest and Finance Expense (US$M) Commentary Reclamation Accretion Expense $24.5 • Accretion expense results from discounted reclamation liabilities reconciling towards undiscounted values • Discounted reclamation liabilities for our material mines are reported annually in our Annual Re
Slide 50: Reclamation Accretion Expense
50 • Annual accretion expense can be estimated by estimating the life of mine in concert with reported discounted reclamation liabilities and assumed discount rates between 3% – 10%. • Discount rates are based on relative interest rates in the jurisdiction that the mine is located and relative time
Slide 51: Taxes
51 2024 Guidance Overview Mine Planning and Operations Commercialization Operating Costs Capital Expenditures G&A and Corporate Level Costs 7 Taxes 8 Shareholder Returns 9 Skarn Project
Slide 52: Tax Payments and Tax Losses
52 • Corporate expenditures and expenditures in non-income generating operating units (ie. care and maintenance units) are not generally deductible for income tax purposes 2022 Tax Payments by Mine as per Extractive Sector Transparency Measures Act - Annual Report (US$M)(1) Minera San Description Ce
Slide 53: Shareholder Returns
53 2024 Guidance Overview Mine Planning and Operations Commercialization Operating Costs Capital Expenditures G&A and Corporate Level Costs Taxes 8 Shareholder Returns 9 Skarn Project
Slide 54: Shareholder Returns Strategy
54 Shareholder Returns Strategy Pan American adheres to the following priorities for deployment of FCF: 16% 28% Capital Allocation since 2010(1) 1 Maintain balance sheet flexibility, with low to zero debt Dividends Share buy-backs 2 Invest in high-return projects 6% Expansion Capital & Acquisition C
Slide 55: Skarn Project
55 2024 Guidance Overview Mine Planning and Operations Commercialization Operating Costs Capital Expenditures G&A and Corporate Level Costs Taxes Shareholder Returns 9 Skarn Project
Slide 56: La Colorada Skarn PEA Summary
56 Category Value Construction period 6 years Production mine life 17 years Production rate 50 ktpd (or 18.25 Mtpa) Mineable inventory 284.7 million tonnes Average annual silver produced first 10 years 17.2 million ounces Average annual zinc produced first 10 years 427 thousand tonnes Average annual
Slide 57: 2023 Mines by Total Zinc Production
57 … 2023 Mines by Total Zinc Production(1) (kt) Estimated Mine Life(2) 2031 2030 2047 2028 2040+ 2040+ 2033 2027 2030 2034 553 549 427 414 287 280 260 214 173 170 Red Dog Rampura La Colorada Antamina Mt Isa Zinc McArthur River Gamsberg San Cristobal Sindesar Khurd Dugald River Agucha Skarn Source:
Slide 58: 2023 Zinc Total Production Cost Curve
58 … 2023 Zinc Total Production Cost Curve(1) (kt, ₵ / lb) – inclusive of depreciation Production (%) 0% 25% 50% 75% 100% 200.00 Dugald River McArthur River San Cristobal La Colorada Skarn(2) Mt Isa Zinc Total Production Cost (¢/lb) 150.00 Rampura Agucha Gamsberg Red Dog Antamina Tayahua Sindear Khu
Slide 59: Q&A
Va PAN AMERICAN — SILVER — Q&A DA Faas
Slide 60: Appendix
Appendix DA Faas
Slide 61: Tonnes Processed by Mine
61 Mine Tonnes Processed (kt) 2019 2020(2) 2021 2022 2023 La Colorada 769 559 573 641 537(5) Cerro Moro 367 321 377 392 415(4) Huaron 994 556 940 938 944 San Vicente(1) 368 300 375 346 372 Jacobina 2,255 2,426 2,658 3,025 3,078(4) El Peñon 1,290 1,267 1,305 1,356 1,364(4) Timmins 1,716(3) 1,643 1,59
Slide 62: Recovery Rates by Mine
62 Mine Recovery Rate (%) Silver 2019 2020 2021 2022 2023 43-101 LOM(1) La Colorada 91.85% 90.84% 90.07% 91.00% 91.97% 91.64%(5) Cerro Moro 94.80% 93.50% 91.30% 94.70% 93.43%(4) 94.00% Huaron 84.02% 83.98% 82.95% 84.27% 84.56% 84.62% San Vicente 92.31% 92.57% 91.85% 92.17% 92.34% n.d.(6) El Peñon 86
Slide 63: Mineral Reserves 2019 to 2023
63 2019 Proven Mineral 2019 Probable Mineral 2023 Proven Mineral 2023 Probable Mineral 2020 – 2023 Contained 2020 – 2023 P&P Mine Reserves Reserves Reserves Reserves Production Additions Silver Segment Ag (Moz) Au (koz) Ag (Moz) Au (koz) Ag (Moz) Au (koz) Ag (Moz) Au (koz) Ag (Moz) Au (koz) Ag (Moz)
Slide 64: Mineral Reserves as of June 30, 2023
64 As of June 30, 2023 1. See table below entitled "Metal price assumptions used to estimate mineral reserves and mineral resources as at June 30, 2023". 2. Tables have been updated to reflect the sales of MARA (completed on Sept. 20, 2023), Morococha (completed on Sept. 22, 2023) and Jeronimo (comp
Slide 65: Mineral Resources as of June 30, 2023
65 As of June 30, 2023 1. See table below entitled "Metal price assumptions used to estimate mineral reserves and mineral resources as at June 30, 2023". 2. Mineral resources are reported exclusive of mineral reserves. 3. Tables have been updated to reflect the sales of MARA (completed on Sept. 20,
Slide 66: Mineral Resources as of June 30, 2023
66 As of June 30, 2023 1. See table below entitled "Metal price assumptions used to estimate mineral reserves and mineral resources as at June 30, 2023". 2. Mineral resources are reported exclusive of mineral reserves. 3. Tables have been updated to reflect the sales of MARA (completed on Sept. 20,
Slide 67: Mineral Resources as of June 30, 2023
67 As of June 30, 2023 1. See table below entitled "Metal price assumptions used to estimate mineral reserves and mineral resources as at June 30, 2023". 2. Mineral resources are reported exclusive of mineral reserves. 3. Tables have been updated to reflect the sales of MARA (completed on Sept. 20,
Slide 68: Metal Price Assumptions for Reserves and Resources
Metal Price Assumptions Used to Estimate Mineral Reserves and Resources As of June 30, 2023 Property Category _AGUSS/or __AUUSS/oz__CUUSS/t_—PHUSS/t _—_ZnUSS/t Muaron Allcategories 1900 1300 7000 2000 2,600 la Colorada All categories 19.00 1300 7,000 2.000 2600 La Colorada skarn Resource 22.00 2200
Slide 69: General Notes on Mineral Reserves and Resources
69 • All mineral reserves and mineral resources have been estimated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and NI 43-101. Mineral resources are reported exclusives of mineral reserves. • Pan American does not expect these mineral reserve and mi
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