Pan American Silver Corp. · TSX:PAAS
Pan American Silver — Q4 2021 Earnings Presentation
26 slides from Pan American Silver's earnings presentation, Feb 24, 2021
Slide 1: Conference Call, February 24, 2021
1 CONFERENCE CALL // FEBRUARY 24 2021
Slide 2: Cautionary Note Regarding Forward Looking Statements
2 silver and gold segments for the purposes of our financial reporting, as are inherently subject to significant operational, business, economic and described in the Company’s MD&A for the period ended December 31, regulatory uncertainties and contingencies. These assumptions include: the 2020. All
Slide 3: Cautionary Note (Continued)
3 CONTINUED statements or information to reflect changes in assumptions or in Canadian public disclosure standards, including NI 43-101, differ significantly circumstances or any other events affecting such statements or information, from the requirements of the United States Securities and Exchange
Slide 4: Highlights
4 NASDAQ: PAAS // TSX: PAAS Silver and gold production rose 11% over New dividend policy - adds a variable 2020 levels amount to the base quarterly dividend of $0.10 per common share Operating cash flow of $392.1 in FY 2021 20% increase to the dividend declared Exploration drilling at La Colorada Sk
Slide 5: Financial results Q4 and FY 2021
5 in millions of US$, except per share amounts Q4 2021 FY 2021 Revenue 422.2 1,632.8 Mine operating earnings 76.0 367.9 Net income 14.7 98.6 Basic income per share(1) 0.07 0.46 Adjusted income(2) 39.9 161.8 Basic adjusted income per share(1)(2) 0.19 0.77 Net cash generated from operating activities
Slide 6: Supporting long-life production from veins and future development of Skarn
6 // Supporting long-life production from veins and future development of Skarn Refrigeration unit and Electrical Room • Refrigeration unit - the installation of a cooling system will reduce the working temperature in the mining areas. Targeted for commissioning in mid 2022. • Concrete-lined ventila
Slide 7: Silver and Gold Production by mine
7 Silver Production Gold Production (ounces ‘000s) (ounces ‘000s) Q4 2021 FY 2021 Q4 2021 FY 2021 La Colorada 1,584 5,171 0.8 2.7 Huaron 838 3,513 0.3 1.1 Morococha(1) 540 2,175 0.4 1.1 San Vicente(2) 641 2,548 0.1 0.3 Manantial Espejo 1,090 3,236 11.3 33.8 Dolores 507 2,240 40.1 160.1 Shahuindo 61
Slide 8: Cash Costs and AISC
8 Cash Costs(1) AISC(1) ($ per ounce) ($ per ounce) 1. Cash Costs and AISC are non-GAAP measures. Please refer to the Q4 2021 FY 2021 Q4 2021 FY 2021 section “Alternative Performance (Non-GAAP) Measures” of the MD&A for the year ended December 31, 2021 for a detailed description of these measures an
Slide 9: Realized Metal Prices and Payable Metal Produced
9 Payable Metal Quantities of Metal Realized Metal Prices(1) Produced(2,3,4) Sold(2) Q4 2021 FY 2021 Q4 2021 FY 2021 Q4 2021 FY 2021 Silver $23.33 $25.00 5,008 18,142 5,067 17,470 Gold $1,792 $1,792 156.0 576.4 142.6 574.9 Zinc $3,352 $2,997 9.7 42.8 9.9 42.7 Lead $2,333 $2,206 4.0 17.4 4.1 17.0 Cop
Slide 10: Q4 Payable metal produced vs sold
10 Silver Gold Mine/Product Payable Metal Quantities of Inventory Produced(1,2) Metal Sold build/(draw) 59.6 million ounces drawn 13.3 thousand ounces built Silver (thousand ounces) La Colorada 1,510.3 1,668.9 (158.5) Metal Sold Payable Huaron 688.0 672.2 15.8 Payable 5,067.3 Metal Morococha 508.7 4
Slide 11: FY Payable metal produced vs sold
11 Silver Gold Mine/Product Payable Metal Quantities of Inventory Produced(1,2) Metal Sold build/(draw) 672.2 million ounces built 1.5 thousand ounces built Silver (thousand ounces) La Colorada 4,902.1 4,321.1 581.1 Payable Payable Huaron 2,929.7 2,976.1 (46.5) Metal Metal Sold Metal 574.9 Morococha
Slide 12: 2021 Actual vs Revised 2021 Forecast
12 1. On May 12, 2021, Pan American revised its 2021 annual silver 2021 Actual Revised 2021 Forecast(1) production, Cash Costs, AISC and capital expenditure forecasts, originally provided in the 2020 annual MD&A dated February 17, 2021. Pan American subsequently revised its 2021 annual silver Produc
Slide 13: 2021 Capital expenditures vs forecast
13 Revised 2021 Original 2021 (in US$ millions) 2021 Actual Forecast(1) Forecast(1) Sustaining Capital 207.6 217.5 - 226.0 245.0 - 260.0 Project Capital 46.5 43.5 - 45.0 55.0 - 60.0 Total Capital 254.1 261.0 - 271.0 300.0 - 320.0 Project capital largely invested in the La Colorada Skarn project; als
Slide 14: Q4 cash flow performance
14 Sustaining Cash Flow Performance Growth, Business Development, and Other $550 $500 $161 $1 $450 $400 ($56) ($23) $368 $1 ($21) ($10) $335 $350 $315 ($18) Millions ($9) ($6) $300 $250 $200 $150 $100 $50 $0 Cash and STI at Adjusted Net other (e.g. Sustaining Net income tax Dividends paid Net change
Slide 15: FY 2021 cash flow performance
15 Sustaining Cash Flow Performance Growth, Business Development, and Other $1,000 $950 $3 $629 $900 $850 $800 $750 $700 ($208) $650 Millions $600 $550 ($129) $500 $46 ($72) $431 $450 $400 ($71) ($60) $335 $350 ($50) $279 ($32) $300 $250 $200 $150 $100 $50 $0 Cash and STI at Adjusted Net other (e.g.
Slide 16: Q4 2021 Basic Adjusted Net Earnings
16 Q4 2021 Basic Adjusted Net Earnings $0.19/share (1) $50 $0.6 $1.6 $0.7 $3.6 $45 $6.1 $39.9 $40 $(7.4) $(0.3) $20.4 $35 $30 Millions $25 $20 $14.7 $15 $10 $5 $0 Net earnings for Heap inventory net Unrealized Effect of foreign Unrealized foreign Unrealized losses Gain on sale of Effect of taxes on
Slide 17: FY 2021 Basic Adjusted Net Earnings
17 FY 2021 Basic Adjusted Net Earnings $0.77/share (1) $250 $200 $3.8 $3.4 $6.7 $11.8 $14.3 $161.8 $59.7 $(32.2) $(4.3) $150 Millions $98.6 $100 $50 $0 Net earnings for Unrealized Effect of foreign Heap inventory Unrealized foreign Unrealized losses Effect of taxes on Gain on sale of Income from Adj
Slide 18: Total available liquidity
18 Cash + Short Term Investments //Prudent balance sheet management reduces risk, improves long-term shareholder returns TOTAL AVAILABLE $335.3M LIQUIDITY $835.3M Balance sheet management √ Total debt(2) of $45.9M related to equipment leases and construction loans Revolving Credit $500.0M Sustainabi
Slide 19: Free cash flow and cash flow priorities
19 7% 8% Treasury Build, net 24% Share of other Repurchases Dividends //$1.8B in FCF generated since 2010, returning $571M to shareholders (2) and investing $643M in expansions $1.8B FCF 2010 – YTD 2021 25% Debt Cash Flow Priorities Repayment(3) 1 Maintain balance sheet flexibility, with low to zero
Slide 20: Variable dividend linked to net cash
20 Linked to net cash on Net Cash(1) Base Dividend Variable-Dividend Total Dividend the balance sheet, per Quarter per Quarter per Quarter allowing shareholders to participate in an Less than $100 million $0.10 per share $0.00 per share $0.10 per share improving financial position $100 million to le
Slide 21: Objectives for 2022
21 // Objectives for 2022 • Complete 55,000 metres of exploration and infill drilling • Total of 160,000 metres drilled since discovery • Skarn footprint has expanded to over 1,400 metres x 650 metres and open in all directions • Evaluate potential to employ larger scale mining methods, such as sub-
Slide 22: 2022 annual production forecast
22 1. The 2022 forecast assumes placement of Morococha into care and Production assumes Annual Production(1) 2. maintenance while strategic alternatives are evaluated for this asset. Cash Costs and AISC are non-GAAP measures. Please refer to the gradual easing of section “Alternative Performance (No
Slide 23: 2022 production and costs by mine
23 Silver Production Gold Production Cash Costs AISC (million ounces) (thousand ounces) ($ per ounce)(1) ($ per ounce)(1) Silver Segment: La Colorada 6.85 - 7.10 2.8 - 3.0 8.00 - 9.00 12.40 - 13.40 Huaron 3.70 - 3.95 0.5 1.80 - 4.50 7.80 - 9.90 San Vicente(2) 2.35 - 2.50 0.2 15.30 - 16.55 18.70 - 19
Slide 24: 2022 capital expenditures forecast
24 Expenditures ($ millions) Sustaining capital Sustaining Capital includes spending at La Colorada 28.0 - 29.0 La Colorada to Huaron 16.0 - 19.0 advance development San Vicente 7.0 - 8.0 of the mine at depth Manantial Espejo 2.0 - 3.0 and further investment Dolores 33.0 - 34.0 in ventilation Shahui
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Slide 26: Audio and presentation archive
The audio and presentation archive of this conference call and webcast will be accessible on our website at: https://www.panamericansilver.com/investors/events-and-presentations/