All amounts are expressed in US$ unless otherwise indicated.
Results are unaudited and could change based on final audited
financial results. This news release contains forward-looking
information about expected future events and financial and
operating performance of Pan American. Readers should refer to the
risks and assumptions set out in the "Cautionary Note Regarding
Forward-Looking Statements and Information" at the end of this news
release.
VANCOUVER, Jan. 15, 2020 /CNW/ - Pan American Silver
Corp. (NASDAQ: PAAS) (TSX: PAAS) ("Pan American") today
announced preliminary production results for the fourth quarter
("Q4 2019") and full year 2019 ("FY 2019"). Pan American today also
provided its guidance for production, costs and expenditures in
2020.
"2019 was a transformative year for Pan American and one of the
most important in our 25-year history. We completed the Tahoe
transaction and successfully integrated the new assets into our
portfolio, capturing $25 to
$30 million in annual G&A
synergies. Pan American is now a much larger, stronger and more
profitable company," said Michael
Steinmann, President and Chief Executive Officer of Pan
American. "Robust cash flow generation allowed us to repay a
further $40 million to our line of
credit in Q4 2019, continuing the rapid deleveraging of our balance
sheet post closing of the Tahoe transaction. In addition, we
advanced our skarn discovery at La
Colorada and published an initial resource estimate of 72.5
million tonnes of polymetallic mineralization. In 2020, Pan
American is well positioned for strong, low cost production.
Combined with current metal prices, that should result in a
rewarding year for our shareholders."
Preliminary 2019 Production Results
Production in 2019
reflects a full year of production for the Silver Segment mines and
from February 22, 2019 to
December 31, 2019 for the Gold
Segment mines.
Figures are preliminary and subject to final adjustment. The
final figures will be provided in Pan American's financial results
for the fourth quarter and year ended December 31, 2019. Pan American plans to release
its unaudited financial results for Q4 and FY 2019 after market
close on February 19, 2020.
|
Silver
Production (ounces '000s)
|
Gold
Production (ounces '000s)
|
|
Q4
2019
|
FY
2019
|
Q4
2019
|
FY
2019
|
Silver
Segment:
|
|
|
|
|
La
Colorada
|
2,080
|
|
8,206
|
|
1.3
|
|
4.6
|
|
Dolores
|
1,287
|
|
5,122
|
|
26.1
|
|
117.6
|
|
Huaron
|
935
|
|
3,796
|
|
0.2
|
|
1.0
|
|
Morococha(1)
|
554
|
|
2,456
|
|
0.2
|
|
1.4
|
|
San
Vicente(2)
|
877
|
|
3,528
|
|
0.1
|
|
0.5
|
|
Manantial
Espejo/COSE/Joaquin
|
817
|
|
2,599
|
|
6.7
|
|
22.4
|
|
Gold
Segment:
|
|
|
|
|
Shahuindo(3)
|
54
|
|
137
|
|
43.5
|
|
145.4
|
|
La
Arena(3)
|
11
|
|
26
|
|
48.4
|
|
122.5
|
|
Timmins
(3)
|
6
|
|
18
|
|
47.3
|
|
143.8
|
|
Total
(4)
|
6,622
|
|
25,886
|
|
173.9
|
|
559.2
|
|
|
|
(1)
|
Morococha data
represents Pan American's 92.3% interest in the mine's
production.
|
(2)
|
San Vicente data
represents Pan American's 95.0% interest in the mine's
production.
|
(3)
|
Reflects production
results subsequent to the February 22, 2019, closing date of the
acquisition of Tahoe Resources Inc., as described in the
"Acquisition of Tahoe" section of Pan American's management's
discussion and analysis ("MD&A") for the period ended September
30, 2019.
|
(4)
|
Totals may not add
due to rounding.
|
|
Consolidated Base
Metal Production (tonnes '000s)
|
Q4
2019
|
FY
2019
|
Zinc
|
16.6
|
|
67.6
|
|
Lead
|
7.2
|
|
27.3
|
|
Copper
|
2.3
|
|
8.7
|
|
2019 Highlights:
- Silver production of 25.9 million ounces was in line with the
revised guidance(1) range of 25.3 million to 26.3
million ounces provided on August 7,
2019.
- Gold production of 559.2 thousand ounces was in line with the
revised guidance(1) range of 550 thousand to 600
thousand ounces provided on August 7,
2019.
- Zinc, lead and copper production was 67.6, 27.3 and 8.7
thousand tonnes, respectively, compared with original guidance
provided on January 21, 2019, of 65.0
- 67.0, 24.0 - 25.0 and 9.8 - 10.3 thousand tonnes,
respectively.
- The La Colorada mine achieved
an average mining and processing rate of over 2,100 tonnes per day,
exceeding the targeted rate of 2,000 tonnes per day for 2019 and
resulting in record annual silver, zinc and lead production. Pan
American continues to achieve greater than expected efficiencies
from the mine expansion completed in 2017, which had a design
throughput rate of 1,800 tonnes per day.
- Pan American achieved several records in operating performance:
annual open pit mining rates at Dolores; annual mining and processing rates at
La Colorada, Huaron, and
Morococha; annual zinc and lead plant recovery rates at Morococha,
driving record annual zinc production at that mine; and, annual
mining and processing rates at San Vicente, which largely offset an
increase in operating costs per tonne due to the mining of narrower
ore bodies than in previous years.
- Pan American released an initial inferred mineral resource
estimate for the La Colorada skarn
deposit of 72.5 million tonnes, averaging 44 grams per tonne
silver, 0.17% copper, 2.02% lead and 4.40% zinc, assuming a cut-off
value of $60 per tonne after
accounting for transportation, smelting and refining costs. Please
refer to Pan American's news release dated December 11, 2019, for further details.
- Pan American repaid $60 million
of debt during 2019, including $40
million repaid in Q4 2019. As at December 31, 2019, Pan American had $275 million drawn under its revolving credit
facility and $238.3 million in cash
and short-term investments.
(1)
|
Pan American
initially provided its guidance for 2019 on January 21, 2019 (the
"original guidance"), and subsequently revised the guidance on May
8, 2019, to include certain forecast amounts for the mines acquired
from Tahoe Resources Inc. for the period February 22, 2019 to
December 31, 2019. Pan American revised its guidance again on
August 7, 2019, reducing 2019 annual consolidated silver and gold
production to between 25.3 and 26.3 million ounces and between
550.0 and 600.0 thousand ounces, respectively, primarily due to the
postponement of commercial production from the COSE and Joaquin
project.
|
2020 GUIDANCE
The estimates below are forward-looking
in nature. Please refer to the cautionary note at the end of this
news release. Management may revise guidance during the year to
reflect actual and anticipated results.
|
Silver
Production
|
Gold
Production
|
Cash
Costs
|
AISC
|
|
(million
ounces)
|
(thousand
ounces)
|
($ per
ounce)(1)
|
($ per
ounce)(1)
|
Silver
Segment:
|
|
|
|
|
La
Colorada
|
8.5 - 8.7
|
4.0 -5.0
|
3.00 -
4.00
|
5.50 -
6.50
|
Dolores
|
4.5 - 5.0
|
133.5 -
143.5
|
(8.50) -
(5.50)
|
4.25 -
6.25
|
Huaron
|
3.8 - 3.9
|
0.5
|
9.25 -
11.00
|
12.50 -
14.25
|
Morococha
(92.3%)(2)
|
2.6 - 2.8
|
1.3 - 1.5
|
9.50 -
11.75
|
13.50 -
15.50
|
San Vicente
(95.0%)(3)
|
3.5 -3.6
|
0.5
|
14.00 -
15.00
|
16.00 -
17.00
|
Manantial
Espejo/COSE/Joaquin
|
4.0 - 4.3
|
33.2 -
36.5
|
16.75 -
17.75
|
18.50 -
19.50
|
Total(4,5)
|
26.8 -
28.3
|
173.0 -
187.5
|
5.75 -
7.50
|
10.25 -
11.75
|
Gold
Segment:
|
|
|
|
|
Shahuindo
|
0.2
|
162.0 -
172.5
|
700 - 750
|
1,070 -
1,150
|
La Arena
|
—
|
125.0 -
135.0
|
800 - 850
|
1,120 -
1,200
|
Timmins
|
—
|
165.0 -
180.0
|
950 -
1,000
|
1,090 -
1,170
|
Total(4,5)
|
0.2
|
452.0 -
487.5
|
820 -
870
|
1,090 -
1,170
|
Total
Production(4,5)
|
27.0 -
28.5
|
625.0 -
675.0
|
|
|
Consolidated
Silver Basis
|
|
|
n/a(6)
|
4.50 -
6.50
|
|
|
(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. The Cash Costs and AISC forecasts
assume average metal prices of $17.50/oz for silver, $1,525/oz for
gold, $2,350/tonne ($1.07/lb) for zinc, $2,000/tonne ($0.91/lb) for
lead, and 6,150/tonne ($2.79/lb) for copper; and average annual
exchange rates relative to 1 USD of 19.50 for the Mexican peso
("MXN"), 3.34 of the Peruvian sol ("PEN"), 73.64 for the Argentine
peso ("ARS"), 6.91 for the Bolivian boliviano ("BOL"), and $1.30
for the Canadian dollar ("CAD").
|
(2)
|
Morococha data
represents Pan American's 92.3% interest in the mine's
production.
|
(3)
|
San Vicente data
represents Pan American's 95.0% interest in the mine's
production.
|
(4)
|
As shown in the
detailed quantification of consolidated AISC, included in the
"Alternative Performance (Non-GAAP) Measures" section of the
MD&A for the period ended September 30, 2019, corporate general
and administrative costs, and exploration and project development
expenses are included in Consolidated Silver Basis AISC, but are
not allocated in calculating AISC for the Silver and Gold
Segments.
|
(5)
|
Totals may not add
due to rounding.
|
(6)
|
Pan American will no
longer be providing guidance for Cash Costs on a Consolidated
Silver Basis, determining that AISC guidance is a more appropriate
measure of reflecting costs on a Consolidated Silver
Basis.
|
|
Expenditures ($
millions)
|
Sustaining
Capital
|
|
La
Colorada
|
15.5 -
16.5
|
Dolores
|
55.0 -
58.0
|
Huaron
|
9.0 - 10.0
|
Morococha
|
7.5 - 9.0
|
San
Vicente
|
6.0 - 7.0
|
Manantial
Espejo/COSE/Joaquin
|
4.0 - 5.5
|
Shahuindo
|
63.0 -
65.0
|
La Arena
|
42.0 -
44.0
|
Timmins
|
23.0 -
25.0
|
Sustaining Capital
Sub-total
|
225.0 -
240.0
|
Project
Capital
|
22.0 -
27.0
|
Total
Capital
|
247.0 -
262.0
|
Care &
Maintenance
|
|
Escobal
|
19.0 -
20.0
|
Navidad
|
2.5 - 3.0
|
Greenfield
Exploration(1)
|
11.5 -
12.5
|
Corporate General
& Administrative(2)
|
35.0 -
37.0
|
|
|
(1)
|
Regional exploration
focused on early-stage projects, and excludes brownfield
exploration for reserve replacement, which is included in
Sustaining Capital.
|
(2)
|
Includes stock-based
compensation.
|
2020 Guidance Highlights:
- Project capital expenditures relate mostly to: (1) the drilling
program, early stage engineering and metallurgical testing for the
La Colorada skarn discovery; and
(2) an approximate 20% expansion of the Bell Creek mine in
Timmins, with the purchase of
additional mine equipment and debottlenecking of the plant to
optimize improved efficiencies resulting from the commissioning of
the Bell Creek shaft in February
2019. Pan American is also focused on capturing additional
debottlenecking opportunities at Shahuindo and La Colorada.
- Pre-production underground development at both the COSE and
Joaquin mines progressed during 2019 along with the purchase of the
necessary mining equipment and the completion of the infrastructure
and facilities. Both mines will enter the production phase in early
2020, with no further project capital spending anticipated.
- Sustaining capital expenditures include: (1) completion of the
substantial heap leach pad expansions at Dolores and Shahuindo, (2) work on the waste
rock storage facilities at La
Arena and Shahuindo, (3) expansion of tailings storage
facilities at La Colorada and
Timmins, (4) advancing open pit
mine waste pre-stripping activities at Dolores and La
Arena; and (5) underground mine development at Huaron and
Morococha.
- Exploration expenditures total $37.5 to $39.5
million, comprised of: (1) $18.5
million to $19.5 million for
186,000 metres of near-mine brownfield exploration drilling for
reserve replacement, which is included in sustaining capital, (2)
$11.5 to $12.5
million in regional, greenfield exploration in Peru, Mexico
and Canada; and (3) $7.5 million for 44,000 metres of drilling on the
La Colorada skarn discovery, which
is included in project capital.
Retirement of Board Member
The Company announces that
Kevin McArthur has decided not to
stand for re-election as a director at Pan American's 2020 Annual
General Meeting on May 6, 2020. Mr.
McArthur was appointed director following Pan American's
acquisition of Tahoe Resources Inc. in February 2019. We thank Kevin for his
contributions to the Board, and in particular, for his
contributions during our successful integration of Tahoe.
Technical information contained in this news release with
respect to Pan American has been reviewed and approved by Martin
Wafforn, P.Eng., Senior Vice President, Technical Services &
Process Optimization, who is Pan American's Qualified Person for
the purposes of National Instrument 43-101. For additional
information about Pan American's material mineral properties,
please refer to Pan American's Annual Information Form dated
March 12, 2019, filed at
www.sedar.com, or Pan American's most recent Form 40-F furnished to
the SEC.
Q4 and Full Year 2019 Unaudited Results
Pan American plans to release its unaudited financial results
for Q4 and FY 2019 after market close on February 19, 2020.
Conference Call and Webcast
Date:
|
February 20,
2020
|
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
|
Callers should dial in 5 to 10 minutes prior to the scheduled
start time. The live webcast and presentation slides 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 is the world's second largest primary silver
producer, providing enhanced exposure to silver through a
diversified portfolio of assets, large reserves and growing
production. We own and operate mines in Mexico, Peru,
Canada, Argentina and Bolivia. In addition, we own the Escobal mine
in Guatemala that is currently not
operating. Pan American Silver has a 25-year history of operating
in Latin America, earning an
industry-leading reputation for operational excellence and
corporate social responsibility. 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.
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 do not have a standardized meaning prescribed by
IFRS as an indicator of performance. 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. Silver segment Cash Costs are calculated net of
credits for realized revenues from all metals other than silver,
and are calculated per ounce of silver sold. Gold segment Cash
Costs are calculated net of credits for realized silver revenues,
and are calculated per ounce of gold sold.
- Silver segment all-in sustaining costs ("AISC") are calculated
net of credits for realized revenues from all metals other than
silver, and are calculated per ounce of silver sold. Gold segment
AISC are calculated net of credits for realized silver revenues,
and are calculated per ounce of gold sold. Consolidated AISC is
based on total silver ounces sold net of by-product credits from
all metals other than silver. 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.
Readers should refer to the "Alternative Performance (non-GAAP)
Measures" section of Pan American's Management's Discussion
and Analysis for the period ended September 30, 2019, for a
more detailed discussion of these and other non-GAAP measures and
their calculation.
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, and may
include future-oriented financial information. 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; our 2020 forecast
production of silver, gold and other metals, and our estimated Cash
Costs and AISC in 2020; the anticipated timing and commencement of
commercial production at COSE and Joaquin, as well as the impact on
production anticipated for 2020; our expectations with respect to
future metal prices and exchange rates; the anticipated capital
expenditures and the timing thereof and the results of any future
exploration, development or expansion programs, including but not
limited to the La Colorada skarn
discovery, expansion of the Bell Creek mine in Timmins, and the debottlenecking projects at
Shahuindo and La Colorada.
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, and such uncertainty generally
increases with longer-term forecasts and outlook. These assumptions
include: tonnage of ore to be mined and processed; ore grades and
recoveries; prices for silver, gold and base metals remaining as
estimated; Pan American's development projects are completed and
perform in accordance with current expectations; currency exchange
rates remaining as estimated; availability of funds for Pan
American's projects and future cash requirements; 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; no
unplanned delays or interruptions in scheduled development and
production; all necessary permits, licenses and regulatory
approvals 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.
Pan American 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 Pan American has made assumptions and estimates based
on or related to many of these factors. Such factors include,
without limitation: fluctuations in silver and gold 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, Argentine 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 Pan
American 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, including
environmental, export and import laws and regulations; changes in
national and local government, legislation, taxation, controls or
regulations and political, legal or economic developments in
Canada, the United States, Mexico, Peru,
Argentina, Bolivia, Guatemala or other countries where Pan
American may carry on business, including legal restrictions
relating to mining, such as those in Chubut, Argentina, and the constitutional
court-mandated ILO 169 consultation process in Guatemala; risks relating to expropriation;
risk of liability relating to our past sale of the Quiruvilca mine
in Peru; 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 Pan American'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, respectively. Although Pan
American 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 or 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. Pan American does not intend, nor does it assume any
obligation to update or revise forward-looking statements or
information, whether as a result of new information, changes in
assumptions, future events or otherwise, except to the extent
required by applicable law.
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SOURCE Pan American Silver Corp.