Pan American Silver Corp. Price & Performance (PAAS)

Thank you, Sharon, and hello, everyone. I'm glad you could join us to discuss Pan American's 2024 results and our outlook for 2025. We are very pleased with the company's performance over the past year. Revenue was a record of $815,100,000.0 in Q4 and $2,800,000,000 in 2024. Reflecting the contribution of a full year of production from the acquired Yamana mines and strong metal prices. We achieved our production guidance for 2024 Silver production totaled 21,100,000 ounces, and gold production was a company record of 892,000 ounces. All in sustaining costs for the silver segment excluding NRE inventory adjustments, were $18.98 per ounce in 2024, slightly above the guidance. All segment all in sustaining costs excluding MLV inventory adjustments in 2024, were $15.00 $1 per ounce and were within the guidance. In 2024, we completed several major projects, notably the new ventilation We are now seeing the benefits in terms of higher throughput at La Colorada. Achieving our target 2,000 tons at the end of last year and lower per ounce operating costs. We finished construction of the new filtration plant and filter stack tailings storage facility at Waran and the PACE backfill plant at Timmins Pan. These investments have set those assets up well for the future.

While today, our operations are generating record cash flows. Cash flow generated from operations was a record $274,100,000 in Q4, and also a record of $724,100,000 for the full year reflecting strong margins. We also achieved record free cash flow of $196,200,000 in Q4 or $445,100,000 for the full year. We recorded net earnings of $107,800,000 or $0.3 per share in Q4. Full year net earnings were $112,700,000 or $0.31 per share in 2024. Net earnings in Q4 reflect a gain from the sale of Larena being almost entirely offset by adjustments at Dolores to the closure and decommissioning liability and to the net realizable value of the inventory. The adjustments at Dolores reflect the completion of mining and the transition to the residual leaching phase Based on our most recent estimates for residual heap leaching in the post mining phase, we expect economic production to continue decreasing rates through mid to late twenty twenty six. Again from the Larena sale, And the adjustments at the lowest were adjusted from earnings. This resulted in adjusted earnings of $126,900,000 or $0.35 per share in Q4. Full year adjusted earnings were $286,700,000 or $0.79 per share. Pet American is entering 2025 in a strong financial position.

We are now in a net cash position with $887,000,000 cash and short term investments against roughly $800,000,000 of largely related to the two long term bonds we acquired through the Amana transaction. Our credit facility remains undrawn giving us $1,600,000,000 of total available liquidity. This is a great position to be able to pursue our growth objectives while returning capital to shareholders. Yesterday we announced a $0.1 per share dividend with respect to [indiscernible] In the first quarter of twenty twenty five, we also repurchased approximately $20,000,000 or roughly 900,000 shares under the share buyback plan. That brings total share repurchases since introducing the share buyback plan last March to roughly 2,600,000.0 shares, Total dividends paid over 2024 were $145,400,000 I'm very proud that we have been able to reach and share buybacks to investors since 2010 by investing in growth, maintaining a strong balance sheet, and not issuing any equity through public offerings. Moving on to our guidance for this year. In 2025, we are expecting largely steady state being the sale of La Arena the LoRa Center in the residual leach phase and improved operations at La Colorada following the ventilation upgrade. We are expecting to produce between twenty twenty one million ounces of silver and seven thirty five thousand to 800,000 ounces of gold in 2025.

We expect both silver and gold production to be weighted to the second half of the year the corresponding effects of lower per unit costs over that period. Please see our Q4 news release and MD and A for quarterly production and cost estimates. Average all in sustaining costs for the silver segment in 2025 are expected to be between $16.25 and $18.25 per ounce. For the gold segment, we expect all in sustaining costs of between $15.25 dollars to $16.25 dollars per ounce in 2025. Sustaining capital is forecasted to be between $70,000,000 to $285,000,000 and project capital between $90,000,000 to $100,000,000 Project capital includes investment at La Colorada and current vein mine operation aimed at opening production access to 13 new veins. These discoveries will expand high grade zones in the eastern part of the mine and were highlighted in our 12/09/2024 annual exploration update news raise. For the La Colorada's current project, we plan to invest $39,000,000 to $42,000,000 in exploration and infill drilling and to advance the technical studies to determine the optimum development scenario. For the company. We're also investing project capital at Timmins for the construction of the Stage six tailings storage facility and exploration of satellite deposits.

At Jacobina, we are directing project capital to advance the comprehensive mine and plant optimization study expecting to describe some initial value enhancement projects by midyear. As we're on, we have some residual project capital related to the new tailings filtration plant and filter stack tailings storage which have been successfully commissioned and ramping up to full operation. We plan to invest about $80,000,000 on exploration in 2025 mostly for reserve replacement. We are forecasting cash taxes of $40,000,000 to $260,000,000 with approximately one third to be paid in the first quarter of twenty twenty five. Care maintenance costs are estimated to total between $20,500,000 to $24,000,000 mostly related to Escobal. Working meetings amongst the participants in the consultation process for Escobal resumed in late January after the Christmas break. We will continue to work with the government of Guatemala and Tashinco representatives to advance the consultation process. The government has not yet published the timeline for completion of [indiscernible] and there is no date for restart of the operation. Adding into 2025, Pan American is well positioned to benefit from this strong metal price environment we are in The mines we acquired through the Yamana transaction and the strong operating teams managing them are now well integrated in our We made significant strides in rationalizing the portfolio and we will continue with a focus on safe, efficient and sustainable mining operations.

We will continue to build an even better and stronger company that offers investors unique upside to silver with expanding margins in a rising metal price environment. We are well on track with that goal and I look forward to keeping you informed of our progress. I will be happy now to take your questions.

Thank you.

We will now begin the question and answer session.

Thank you.

The first question comes from Cosmos Xu with CIBC. Please go ahead. Thanks, Michael and team. Maybe my first question is on La Colorada. I see that your twenty twenty five guidance is 5,500,000 to 5,800,000 ounces. I would have thought that could have been slightly higher just given that you produced 1,600,000 ounces in Q4. But again, now everything is in a straight line. So you maybe comment on 2025 guidance for La Colorada? [indiscernible] Good morning. And I'll let Steve answer that question. [indiscernible] If you recall in December, we put out a press release that highlighted some of the really significant exploration intercepts we're seeing off to the East Side of that area on Candelaria Pan. What we decided to do is there's a bit of a balancing going on We're trying to reduce a little bit the burden We've got a capacity burden in the system on waste movement. And we want to develop out into this new area to bring long term value to to that operation.

So we're balancing what kind of impacts do we want to see next year compared to trying to get that aggressively opening up that new area and understanding better the potential reserves out in that area. So it was kind of a happy medium we chose for 2025, take a little bit of short term, get paying for long term gain there. And I'll let Chris talk a little bit about what we're seeing out there and why we're doing it. But before that, I just also want to mention that along the way going out to that East, we do cross a section of concession that belongs to one of our neighbors So we will be mining through a concession there and there seems to be some more there and we'll share some of the profits with that concession owner as we pass through there.

So that has a bit of an impact on on the cost and the production as well. But it's really the waste constraint We want to develop that area. We only have so much capacity to move ore and waste. So something's got to give as we open up that area. And we think long term it's going to bring substantial additional value to the company and I'll let Chris kind of highlight on that. Yes. Hi, Chris. This is Chris here.

Yes, as Mike mentioned, Yes. Hi. As Mike mentioned, 30 new structures, which was highlighted in the December exploration press release, We've been alluding to this over last year. We've put a lot of effort into sort of moving a lot of the exploration over to our east portion We have some of the major structures, the NC2, etcetera. But if you remember, the Lacloride Mine has been deepening And as we know that through these systems, it becomes more polymericallic rich. So finding new structures and finding new areas higher up in the system is obviously beneficial. And that's why we're really concentrating on the Eastern portion and Southeast of the Skan area, which is a depth as well.

But we've had some great results as you can see in that press release and that's certainly something to look forward to for the future of the company. Great. And maybe same type of question for Jacobina as well.

You're guiding to 185,000 to 195,000 ounces in 2025. [indiscernible] Thought that could have gone higher potentially as well just given that you're you did a record 52.4 in Q4 twenty twenty four.

Could you maybe comment on that and also maybe comment on I believe there's some optimization studies ongoing at Jacobina How that's going so far?

Yes, Cosmos, Steve here again. Yes, we had a remarkable year and a remarkable Q3 at Chekatabina. We're very, very happy with the way that operation is debottlenecking continues to debottleneck With that said, there are some projects that are underway during 2025 Outside of the optimization study, they try to firm up the plant and give us stability. We got some screens that are undersized. We're pushing them too hard. So we're replacing some screens in the crushing plant as well as the grinding circuit We're doing some upgrades on our CIP carbon and pulp tanks. To give us that sustainable run rate, but those projects won't be done till late in the year. So we didn't want to we didn't want to forecast the kind of production throughputs we had during during Q4 for the whole first nine months. Given those projects. Once those projects are done, we're quite confident and as part of the optimization work that I'll talk about next, we're quite confident mid year we'll be able to come out with some looking forward beyond '25 as to how we can push that plant up a little bit.

Relative to the optimization studies, that work is going really well. There's a few projects that are going to come out and we're going to be announcing them later in 2025 midyear that deals with handling of this concept of this PACE plant that we've been talking about for the underground mine that allow us to get a better recovery of the reserve and resources that exists there. But also, in the longer term picture, we got to change the way we're handling some of the tailings. So we're looking at a filter plant So the optimization studies is kind of starting to break up into different phases. The first phase will focus on getting those projects out along with with getting this mill sustained at the kind of throughput we saw in Q4. And then we see future potential is really starting to get exciting there as well too as to what we can do during 'twenty six and 'twenty seven.

And maybe one last question, sort of bigger picture. Michael, I'm sure you've noticed that Newmar has now sold Timmins assets. Does this now change how you view your Timmins assets? And then also Pan you remind us of the book value you have for these assets?

Look, these assets are doing really, really well. As you Pan imagine. But I think we talked about that in the past that I'm a strong believer and we are strong believers that that district, entire Timmins District can generate way more value in maybe a bit of different form looking at a not yet how that will look like. But working together on many fronts, there are lots of trucks and transportation going all different directions between Newmont or soon Discovery Silver and ourselves. So I think there's a lot to optimize It's probably a bit early to talk about that, but I think there's a lot we can do that helps our shareholders and probably helps Discovery shareholders as well. And that was obviously the reason why they did a deal with Newmont. I think that it's a great district in Canada Pan. Great producer of gold. And don't forget, it's not only our two operations there, but I think we shared in the past some results from some of the more satellite exploration programs that Chris is doing at Whitney and and Gold River, we have as well. So there are some very, very interesting additional satellites and I think everything will play in those decisions.

So I think it's a very exciting time for Timmins. Great. Thanks again, Michael, Steve, Chris are in and team. Those are the questions I have.

Thanks, Cosmos. The next question comes from Don DeMarco with National Bank Financial Pan.

Please go ahead.

Thank you, operator, and good morning, Michael and team.

Yes, constructive guidance really shows some stability in the ops Thank you.

So a few questions.

Can you hear me okay? We do, yes. Go ahead. Okay, great. So I jumped in a little bit late. You may have talked a bit about Jacobina, but what is the timing of the optimization study? And what details can you share now about the throughput increases or mine life extensions, things like that that had been talked about at one point Pan?

Yes. Hi, Don, Steve here. Yes, we had a great Q4 at Doctor. Bina. We were able to kind of a target we set ourselves of trying to get the throughput through the mine and the plant [indiscernible] just have 9,000 tons a day We accomplished that. We were very pleased with that. But we do have some projects that we have to complete in the plant We're changing some screens in the crusher. We're changing some screens in the grinding circle. We're upgrading some of the tanks.

And some of the tailings pumping that will give us stability and sustainability of that kind of throughput is what we're seeing. So a big part of the optimization study as those projects are done, it will capture those values and give us sustainability late into 2025 and certainly into 2026. And we'll kind of disclose what those numbers are looking like midyear. Now midyear, the optimization study is starting to split off into different phases. And we're seeing Phase one, where we're looking at this pace plant that we talked about over the last year or so bringing that in to allow us to recover more of the reserves And also we got a longer term tailings disposal alternatives, which the PACE plant helps us with. But also we're looking at a filter plant for tailings disposal So that will kind of be the Phase one optimization we'll announce kind of some projects around that and what the returns are, investments are we're targeting mid year in this year to do that.

And then beyond that, we'll move into Phase two, which once we understand how those feed in, we got some really interesting optimizations that we're going to be continuing on that will bring value into 2026, 2027, 2028 that will will be a Phase two program later.

Okay.

Thank you for that. And Steve, while I have your ear here, on El Penon, we're seeing stable production year over year, costs are stable and attractive ASIC midpoint of $12.35 actually even slightly lower year over year. Does this mean that those sort of initial integration hiccups are really in the rearview mirror and you're feeling comfortable with this asset now?

Absolutely. Yes, great question, Don. And yes, we're very pleased with the stability of that we're focusing a lot of effort on exploration. We want to extend that mine life. It's a great cash flowing asset for us. Costs are stable. The operation is stable. I'll remind you, it's at 130,000 ounces year gold production levels. Is a little less than what we aggressively pursued in 2023. But that kind of dialing that in we feel very comfortable with that operation and it's performing incredibly well.

Okay.

It was a I mean, if you recall, it was really it was really the spacing of some of the drilling in some of the stopes. That we saw that impact at the beginning. I wouldn't call it really an integration hiccup. I think team at Penon is doing an unbelievable job and and integrated very easily into our company and our system, so did the other Yamane assets. So not really an issue on the integration, but really that's space drilling and Chris and his team did a lot of work drilling that out. And I think we're seeing the result of that now.

Okay. Good to see. And Michael, last question on Escobal. You mentioned that the government hasn't published a timeline for completion of the consultation process. What is your sense here? It's been a stalemate for about a year now. There's probably other meetings going on. Are there reasons to be optimistic for 2025 or what are your thoughts on Escal?

Yes, I want to call it the stalemate. There's a lot of meetings going on. As you recall, with the new government coming in just about a year ago, there was kind of a slow start up last year.

To get there. But there's a lot of work going on in the background between the actors. So I wouldn't call it a stalemate, We had kind of some timings for meetings published years ago by the government. And I think that's really didn't really bring that much as it just put pressure on on actors as not necessary. So we'd rather just continue with many meetings, as many discussions we can on the way to to hopefully a positive solution here. So yes, I wouldn't call it a stalemate. I think there's probably well, maybe let me have Sean giving an update quick update here There's quite a lot going on. Yes. Well, thank you, Michael.

There was those changes in government last year and so they did change out Vice Minister of Sustainability Development who leads the process. So that was a key in some of the delays last year, but the meetings are ongoing into Q4. We had several meetings with the government as well as Shingle Parliament's meetings with the government. So those were good. And then things always slow down. Over the holidays and into early January, and then we just started picking up again with some meetings with the government. So I feel like there's going to be a lot more activity in the coming weeks and months and hopefully we're able to provide a more meaningful update of some of the developments after the Q1 results into May. So I'm looking forward to that.

Okay.

Okay. Excellent. Thank you for that. That's all for me. Good luck with Q1 and the rest of the year. Thank you. This concludes the question and answer session. I would like to turn the conference back over to Michael Steinman for any closing remarks. Please go ahead. Sorry, operator. I just see that question came in. Could we answer that, please?

Yes, of course. The next question comes from Oweh Sabeet with Scotia Please go ahead.

Hi, Michael and Panamuk and Jean. Just a couple of questions from me. Sorry.

If you've already touched upon some of these as I've been bouncing between a couple [indiscernible] Michael, just first question in regards to the guidance believe production in cost of second half weighted Any kind of color that you can provide in terms of what assets will drive the split between the first and second half?

Yes. I will let Steve do that. But just in general, for the listener, this is obviously a recurring theme with Pan American, and it's largely driven partially driven by the weather, so by the seasons, rainy seasons, dry seasons, cold winters, in the Far South. As you remember, we are in whole different kind of climates You saw the same last year, obviously, in the year before, and you saw the British strong production we had in Q4. Nothing obviously we can do with the climate there. That's just That's just what it is for the assets that are distributed so widely over different climate zones, but I'll have Steve give you a bit more details. [indiscernible] one of the bigger drivers is Cerro Moro. And that's just mine sequencing as we're opening up the Noddy open pit, we're getting the higher grade later in the year. That's really driving a big part of it. Shawndo, as Michael mentioned, is very, very weather dependent. So we generally see better production going in late in the year there as I think those are probably the two bigger drivers There's a bit of that at El Penon, but it's again, it's just mine sequence.

Perfect. Thanks for that, Steve and Michael as well. And my next question and is more of the fact that again you had a great Q4, generated a lot of free cash flow in Q4 that based on operations kind of it looks like there are stabilizing going into 2025 as well. So that's really good to see. Now that kind of you've integrated all those Yamana assets, you've done a great job on the non core as well. Is it time now to start focusing on more on exploration side or how should we look at 2025 in terms of exploration?

Well, we never really slowed down on exploration. You see there's a substantial budget for exploration. We tend to even increase our budget during the year. It really depends on the results. As you know, I am a geologist by trade and strong exploration results always will be rewarded with more investments. This is really the bread and butter of our business. And obviously, you have the plant already built and and the mine is already developed largely. So in each place replacing that reserve is [indiscernible] exploration always a very big focus, but our exploration, as you know, is really focused on brownfields are close to our sites. Reserve addition, maybe some truckable distance where we're looking at some trackable satellites in some places. I think Cerro Mora comes to to mine where we are actually mining at one zone right now. We are just discovered another one that Chris and his team are drilling out. So exploration is always a very core to us. If you look back, we have been incredibly successful replacing hundreds of millions of ounces of silver over the last, let's say, fifteen years. With brownfield exploration, on-site exploration, And don't forget, our exploration program [indiscernible] There will always be a big focus on that.

That's perfect. Thanks, Michael, for that and thanks for taking my questions. And Thank you. See you then.

The next question comes from Adrian Day with Yes, good morning. Just a follow-up, if I may, on Escobel, but taking a different direction. Once you get the approval to reopen and of course you'll obviously get an indication it's coming probably before it actually happens.

But how soon before you're producing again and how soon before it's fully rent? Back up Yes. Hi, Adrian.

Look, I'll take it take probably probably a good quarter to two to start up the first stope. As As you know or probably remember from the time with the tower when the asset was in production, those stopes are very sizable, a lot of silver. So that would start, I guess, one stoped escopile should be equivalent to about 5,000,000 to 6,000,000 ounces of silver per year. So that's already a strong start up. I think thereafter probably about a part of the year to bring it what would it take to bring it back to the full production which was somewhere in the range of 20,000,000 to 22,000,000 ounces a year.

Okay, okay. That's helpful. And just once the approval is granted, are you as a as a company, are you ready to start Or would you say, well, we've got other things going on, we'll leave it a few months now?

It's obviously an incredible mine and project So, of course, all our focus are on are on this. There's always a lot going on. We have a very accomplished team that can handle many assets at the same time. I think that we have shown that year over year over year. So but of course, that will be a number one focus. You probably noticed over the past years that we normally spend as much as $24,000,000 in the past, maybe now more between [indiscernible] To make sure that everything is in top shape Pan the restart can happen or could happen as quickly as possible.

Okay. I appreciate that. Thank you.

Thank you.

This concludes the question and answer session. I would like turn the conference back over to Michael Steinman for any closing remarks, please.

Thank you, operator, and thanks for everyone calling in today. Yes, these are exciting times for Pan American silver, very high metal prices, very strong cash flow generation and and great returns to our shareholders on maintaining a rigorous control in our costs to maintain those great margins that we are enjoying right now. And I'm really looking forward to update you in our Q1 call in May.

Until then, have a good day. Thank you, everyone.

This brings to close today's conference call. May disconnect your lines.