Increases Dividend by 40%
All financial figures are in U.S. dollars unless otherwise
indicated.
VANCOUVER, Feb. 20, 2018 /CNW/ - Pan American Silver
Corp. (NASDAQ: PAAS; TSX: PAAS) ("Pan American", or the
"Company") today reported unaudited results for the fourth quarter
("Q4 2017") and year-ended December 31, 2017. These results
are preliminary and could change based on final audited
results.
"We generated $224.6 million in
cash flow from operations in 2017. La
Colorada, Morococha, Huaron and Dolores had record annual operating free cash
flow," said Michael Steinmann,
President and Chief Executive Officer of the Company. "Our cash and
short-term investments increased by about $41 million in the quarter, resulting in a
balance of $227.5 million at
year-end. Operations at Morococha have been performing particularly
well, which has led to a reversal of the impairment we booked at
that mine in 2015 and made a significant impact on earnings in Q4
2017."
Added Mr. Steinmann: "With a strong financial position,
expansions completed at our largest mines, and operations
generating strong cash flow, the Board of Directors today declared
a 40% increase in the dividend."
Highlights for the three and twelve-month periods ended
December 31, 2017:
- Silver production in Q4 2017 was 6.58 million ounces,
which is 4% higher than production in the fourth quarter of 2016
("Q4 2016"), primarily reflecting increases at Dolores, La
Colorada and Morococha. Annual silver production of 25.0
million ounces was similar to the 25.4 million produced in 2016, as
increases at La Colorada and
Dolores offset the expected
decline from the conclusion of Alamo Dorado operations.
- Gold production was 43.7 thousand ounces in Q4 2017
compared with 43.9 thousand ounces in Q4 2016. Annual 2017 gold
production was 160.0 thousand ounces compared with 183.9 thousand
ounces in 2016. The decrease was due to lower ore grades at
Manantial Espejo and the conclusion of Alamo Dorado
operations.
- Zinc production of 14.7 thousand tonnes in Q4 2017 was
up 11% compared with Q4 2016. Annual 2017 zinc production of 55.3
thousand tonnes was 7% more than in 2016. The increases primarily
reflect the expansion of the La
Colorada operations.
- Lead production of 5.4 thousand tonnes in Q4 2017 was 2%
lower than in Q4 2016. Annual 2017 production of 21.5 thousand
tonnes was up 6% from 2016, driven by La
Colorada.
- Copper production of 3.0 thousand tonnes in Q4 2017 and
annual 2017 production of 13.4 thousand tonnes were 3% and 7%
lower, respectively, than the corresponding 2016 periods, largely
due to mine sequencing at Morococha.
- Revenue of $226.0 million
in Q4 2017 was up 19% from Q4 2016. The increase was largely
attributable to higher sales volumes for all metals, except copper,
and higher prices for all metals, except silver. Positive
settlement adjustments on concentrate shipments also contributed to
the increase. Annual 2017 revenue was $816.8
million, up 5% from 2016, due to higher base metal prices
and lower treatment and refining charges.
- Consolidated All-In Sustaining Costs per Silver Ounce Sold
("AISCSOS") were $10.86 in Q4
2017 compared with $10.38 in Q4 2016.
Annual 2017 AISCSOS of $10.79
was $0.71 under the low end of
management's original forecast of $11.50 to $12.90
and within the revised forecast of $10.50 to $11.50.
- Consolidated cash costs per payable ounce of silver, net
of by-product credits ("Cash Costs") were $3.18 in Q4 2017 compared with $6.66 in Q4 2016, reflecting higher productivity,
increased by-product credits and improved concentrate treatment
terms. Annual 2017 Cash Costs of $4.55 were 28% lower than 2016, largely due to
increased throughput at La
Colorada, higher by-product credits, and lower treatment and
refining charges.
- Net cash generated from operating activities was up 74%
to $79.3 million in Q4 2017 compared
with $45.7 million in Q4 2016,
reflecting higher revenues, positive working capital changes and
lower cash taxes. Annual 2017 operating cash flows of $224.6 million were 5% higher than the
$214.8 million generated in 2016,
driven primarily by increased revenues and positive working capital
changes, partially offset by higher cash taxes.
- Net earnings were $49.7
million ($0.32 basic earnings
per share) in Q4 2017 compared with $22.3
million ($0.14 basic earnings
per share) in Q4 2016. Q4 2017 net earnings include a $60.2 million reversal of the 2015 Morococha mine
impairment. Annual 2017 net earnings were $123.5 million ($0.79 basic earnings per share) compared with
$101.8 million ($0.66 basic earnings per share) in 2016.
- Adjusted earnings were $19.2
million ($0.13 basic adjusted
earnings per share) compared with $19.0
million ($0.12 basic adjusted
earnings per share) in Q4 2016. Higher revenues in Q4 2017 were
offset by increases in production costs, including increased
negative non-cash net realizable value inventory adjustments, as
well as higher depreciation and income tax expense. Annual 2017
adjusted earnings were $77.7 million
($0.51 basic adjusted earnings per
share) compared with $86.6 million
($0.57 basic adjusted earnings per
share) in 2016.
- Liquidity and working capital position. During 2017,
debt reduced by $32.7 million (including capital leases),
resulting in year end debt of $10.6
million, mostly related to finance lease liabilities.
At December 31, 2017, the Company had
cash and short-term investment balances of $227.5 million, working capital of $410.8 million and $300.0
million available under its revolving credit facility.
- Capital expenditures totaled $42.3 million in Q4 2017 compared with
$56.5 million in Q4 2016. Annual 2017
capital expenditures were $145.8
million, including approximately $61.4 million of project capital, compared with
$198.5 million in 2016. The decrease
was largely due to the completion of the La Colorada expansion, partially offset by a
$4.9 million year-over-year increase
in sustaining capital.
- Dolores expansion. In
2017, we completed construction of the pulp agglomeration plant
with commissioning activities fully underway at year-end. We also
advanced the underground mine development and reached the planned
daily stacking rate of 20,000 tonnes.
- The La Colorada
expansion achieved full design processing rates of 1,800 tonnes
per day by mid 2017.
- COSE and Joaquin projects. We obtained authorizations to
initiate construction on the two mining projects located within ore
trucking distance from our Manantial Espejo mine. At COSE, we have
prepared the necessary project infrastructure and advanced 148
metres on the underground decline.
- Pan American acquired a 12.1% interest in New Pacific Metals
Corp. (approximately 16.44% fully diluted) for approximately
$22.7 million in November 2017. The acquisition provides Pan
American with exposure to the Silver Sand Project, a highly
prospective exploration project located in the Potosà Department of
Bolivia.
- A 40% increase in the quarterly cash dividend to
$0.035 per common share,
approximately $5.4 million in
aggregate cash dividends, has been approved by the Board of
Directors. The dividend will be payable on or about March 16, 2018, to holders of record of Pan
American's common shares as of the close on March 5, 2018. Pan American's dividends are
designated as eligible dividends for the purposes of the Income
Tax Act (Canada). As is
standard practice, the amounts and specific distribution dates of
any future dividends will be evaluated and determined by the Board
of Directors on an ongoing basis.
The foregoing contains measures that 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.
CONSOLIDATED FINANCIAL RESULTS
Unaudited in
thousands of U.S. Dollars, except per ounce and per share
amounts
|
Three months
ended
December 31,
|
Year ended
December 31,
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
226,031
|
190,596
|
816,828
|
774,775
|
Mine operating
earnings
|
43,285
|
48,956
|
168,760
|
198,879
|
Net earnings for the
period
|
49,664
|
22,284
|
123,451
|
101,825
|
Adjusted earnings for
the period(1)
|
19,219
|
18,965
|
77,705
|
86,600
|
Net cash generated
from operating activities
|
79,291
|
45,668
|
224,559
|
214,804
|
All-in sustaining
cost per silver ounce sold(1)
|
10.86
|
10.38
|
10.79
|
10.17
|
Net earnings per
share attributable to
common shareholders
(basic)
|
0.32
|
0.14
|
0.79
|
0.66
|
Adjusted earnings per
share attributable to
common shareholders
(basic)(1)
|
0.13
|
0.12
|
0.51
|
0.57
|
(1)
|
Adjusted earnings and
all-in sustaining costs per silver ounce sold are non-GAAP
measures. Please refer to the "Alternative Performance (non-GAAP)
Measures" section of this news release for further information on
these measures.
|
CONSOLIDATED OPERATIONAL RESULTS
|
Three months ended
December 31, 2017
|
Three months
ended December 31, 2016
|
|
Production
|
Cash
Costs(1) $
|
Production
|
Cash
Costs(1) $
|
|
Ag
(Moz)
|
Au
(koz)
|
Ag
(Moz)
|
Au
(koz)
|
La
Colorada
|
1.87
|
1.26
|
0.43
|
1.67
|
0.86
|
4.38
|
Dolores
|
1.26
|
31.22
|
(3.93)
|
0.90
|
28.83
|
(5.93)
|
Alamo
Dorado
|
0.03
|
0.11
|
2.09
|
0.40
|
1.41
|
22.80
|
Huaron
|
0.95
|
0.19
|
2.08
|
0.94
|
0.20
|
4.54
|
Morococha
(2)
|
0.72
|
0.82
|
(7.42)
|
0.58
|
0.43
|
5.52
|
San Vicente
(3)
|
1.10
|
0.14
|
9.04
|
1.05
|
n/a
|
11.22
|
Manantial
Espejo
|
0.65
|
9.98
|
26.52
|
0.78
|
12.21
|
14.61
|
TOTAL
|
6.58
|
43.71
|
3.18
|
6.31
|
43.94
|
6.66
|
|
Year ended
December 31, 2017
|
Year ended
December 31, 2016
|
|
Production
|
Cash
Costs(1) $
|
Production
|
Cash
Costs(1) $
|
|
Ag
(Moz)
|
Au
(koz)
|
Ag
(Moz)
|
Au
(koz)
|
La
Colorada
|
7.06
|
4.29
|
2.08
|
5.80
|
2.93
|
6.15
|
Dolores
|
4.23
|
103.02
|
(1.65)
|
3.84
|
102.76
|
(1.08)
|
Alamo
Dorado
|
0.64
|
2.12
|
16.49
|
1.86
|
8.38
|
16.02
|
Huaron
|
3.68
|
1.15
|
1.35
|
3.81
|
0.81
|
5.79
|
Morococha
(2)
|
2.63
|
3.53
|
(5.34)
|
2.54
|
2.14
|
4.21
|
San Vicente
(3)
|
3.61
|
0.51
|
11.85
|
4.43
|
n/a
|
11.95
|
Manantial
Espejo
|
3.12
|
45.34
|
18.25
|
3.14
|
66.89
|
4.28
|
TOTAL
|
24.98
|
159.96
|
4.55
|
25.42
|
183.92
|
6.29
|
Totals may not add up
due to rounding.
|
(1)
|
Cash costs are a
non-GAAP measure. Please refer to the "Alternative Performance
(non-GAAP) Measures" section of this news release for further
information on these measures.
|
(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.
|
By-Product Production
|
Three months ended
December 31,
|
Year ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
Gold - ounces '000s
("koz")
|
43.7
|
43.9
|
160.0
|
183.9
|
Zinc - tonnes '000s
("kt")
|
14.7
|
13.2
|
55.3
|
51.9
|
Lead - kt
|
5.4
|
5.5
|
21.5
|
20.2
|
Copper -
kt
|
3.0
|
3.1
|
13.4
|
14.4
|
Average Realized Metal Prices
|
Three months ended
December 31,
|
Year ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
Silver
$/ounce
|
16.65
|
17.65
|
16.99
|
17.35
|
Gold
$/ounce
|
1,276
|
1,212
|
1,257
|
1,251
|
Zinc
$/tonne
|
3,282
|
2,587
|
2,929
|
2,133
|
Lead
$/tonne
|
2,472
|
2,178
|
2,351
|
1,892
|
Copper
$/tonne
|
6,811
|
5,282
|
6,174
|
4,816
|
Capital Expenditures
|
Annual
Forecast(1)
|
Year ended
December 31,
|
(in millions of
USD)
|
2017
|
2017
|
2016
|
La
Colorada
|
10.5 –
11.5
|
13.3
|
9.9
|
Dolores
|
39.0 –
40.0
|
38.4
|
40.4
|
Alamo
Dorado
|
—
|
—
|
—
|
Huaron
|
8.0 – 9.0
|
8.8
|
11.1
|
Morococha
|
9.0 – 10.0
|
12.5
|
10.3
|
San
Vicente
|
12.0 –
13.0
|
8.1
|
4.9
|
Manantial
Espejo
|
3.5 – 4.5
|
3.3
|
2.9
|
Sustaining Capital
Total(2)
|
82.0 -
88.0
|
84.4
|
79.5
|
La Colorada project
capital
|
6.5 – 7.5
|
6.9
|
52.9
|
Dolores project
capital
|
51.5 –
54.5
|
49.9
|
66.1
|
Joaquin and COSE
projects(3)
|
11.0 –
12.5
|
4.7
|
—
|
Project Capital
Total(2)
|
69.0 -
74.5
|
61.4
|
119.0
|
Consolidated
Total
|
151.0 –
162.5
|
145.8
|
198.5
|
(1)
|
Forecast amount per
2016 annual MD&A dated March 22, 2017, except for Joaquin and
COSE projects, which were initially forecast in the MD&A for
the second quarter of 2017.
|
(2)
|
The sustaining
capital total amounts capitalized in 2017 were $0.2 million more
than the $84.2 million of 2017 sustaining capital cash outflows and
project capital amounts capitalized in 2017 were $1.6 million less
than the $63.0 million of 2017 project capital cash outflows; the
capital cash outflows are included in the 2017 AISCSOS calculation,
shown in the "Alternative Performance (non-GAAP) Measures" section
of this news release, and are different from the capital amounts in
the tables included in the "Individual Mine Operation Highlights"
section of this news release. These differences are due to
the timing difference between the cash payment of capital
investments compared with the period in which investments are
capitalized.
|
(3)
|
Total expenditures of
$9.7 million were incurred in 2017 for the Joaquin and COSE
projects, of which $5.0 million was expensed as part of 2017
exploration and project development expenses, and the remaining
$4.7 million was capitalized.
|
2018 GUIDANCE AND THREE-YEAR OUTLOOK
There have been no revisions to the outlook Pan American
provided in its press release dated January
11, 2018 for the years 2018 to 2020 (the "Three-Year
Outlook"), and as provided in the table below:
|
|
|
|
|
2018
Guidance
|
2019
Outlook
|
2020
Outlook
|
Production
|
|
|
|
|
Silver (million
ounces)
|
25.0 -
26.5
|
27.7 -
29.7
|
30.5 -
33.0
|
|
Gold (thousand
ounces)
|
175 - 185
|
183 - 193
|
165 - 179
|
|
Zinc (thousand
tonnes)
|
60.0 -
62.0
|
55.5 -
59.5
|
60.5 -
64.5
|
|
Lead (thousand
tonnes)
|
21.0 -
22.0
|
21.0 -
23.0
|
23.0 -
26.0
|
|
Copper (thousand
tonnes)
|
12.0 -
12.5
|
10.5 -
12.5
|
11.5 -
13.5
|
Cash
Costs(1)($/ounce)
|
3.60 -
4.60
|
4.50 -
6.00
|
4.75 -
6.75
|
Sustaining capital
($ millions)
|
100 - 105
|
100 - 110
|
75 - 90
|
AISCSOS(1) ($/ounce)
|
9.30 -
10.80
|
9.50 -
11.50
|
8.50 -
11.00
|
(1)
|
Cash Costs and
AISCSOS are non-GAAP measures. Please refer to the section
titled "Alternative Performance (non-GAAP) Measures" at the end of
this news release for further information on these
measures.
|
The following table provides the price and foreign exchange rate
assumptions used to forecast total Cash Costs and AISCSOS in the
Three-year Outlook:
|
|
|
Years 2018 to
2020
|
Metal
prices
|
|
|
Silver
($/ounce)
|
16.50
|
|
Gold
($/ounce)
|
1,250
|
|
Zinc
($/tonne)
|
3,100
|
|
Lead
($/tonne)
|
2,350
|
|
Copper
($/tonne)
|
6,500
|
Average annual
exchange rates relative to 1 USD
|
|
|
Mexican
peso
|
18.50
|
|
Peruvian
sol
|
3.23
|
|
Argentine
peso
|
19.59
|
|
Bolivian
boliviano
|
7.00
|
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 the Company's Qualified Person for the
purposes of National Instrument 43-101. For additional information
about the Company's material mineral properties, other than the
Joaquin property, please refer to the Company's Annual Information
Form dated March 22, 2017, filed at
www.sedar.com. For further technical information relating to the
development of the Joaquin project, please refer to the National
Instrument 43-101 technical report entitled "Technical Report for
the Joaquin Property, Santa Cruz,
Argentina - Pre-feasibility
Study", with an effective date of November
30, 2017, which is filed on SEDAR at www.sedar.com and
available on the Company's website. For further technical
information relating to the La
Colorada and Dolores
expansion projects, please refer to the National Instrument 43-101
technical reports entitled "Technical Report - Preliminary Economic
Analysis for the Expansion of the La Colorada Mine, Zacatecas, Mexico," with an effective date of
December 31, 2013, and "Technical
Report for the Dolores Property, Chihuahua, Mexico", with an effective date of
December 31, 2016, both of which are
filed on SEDAR at www.sedar.com and available on the Company's
website. The results of the preliminary economic assessments at
La Colorada, Dolores and COSE are preliminary in nature, in
that they include inferred mineral resources that are considered
too geologically speculative to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves, and there is no certainty that the assessment will be
realized. Mineral resources that are not mineral reserves have no
demonstrated economic viability.
2017 Annual Unaudited Results Conference Call and
Webcast
Date:
|
|
February 21,
2018
|
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)
|
A live and archived webcast and presentation slides will be
available on the Company's website at
www.panamericansilver.com.
About Pan American Silver
Pan American Silver Corp. is one of the world's largest primary
silver producers, providing investors with enhanced exposure to
silver through low-cost operations. Founded in 1994, Pan American
is recognized for its operating expertise, prudent financial
management and commitment to responsible development. The
Company is headquartered in Vancouver,
B.C. and owns and operates six mines in Mexico, Peru,
Argentina and Bolivia. Our
shares trade on NASDAQ and the Toronto Stock Exchange under the
symbol "PAAS".
For more information, visit: www.panamericansilver.com.
Alternative Performance (Non-GAAP) Measures
In this press 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 per payable ounce of silver, net of by-product
credits ("cash costs"). The Company's method of calculating cash
costs may differ from the methods used by other entities and,
accordingly, the Company'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 adjusted earnings per share. The Company
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 ounce sold ("AISCSOS"). The
Company has adopted AISCSOS as a measure of its consolidated
operating performance and its ability to generate cash from all
operations collectively, and the Company 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 the
Company'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. The Company and
certain investors use this information to evaluate the financial
debt leverage of the Company.
- Operating free cash flow is calculated as net cash generated
from operating activities less cash invested in sustaining capital.
The Company believes the inclusion of sustaining capital
investments better reflects total operating cash flows. Operating
free cash flow does not have any standardized meaning prescribed by
GAAP and is therefore unlikely to be comparable to similar measures
presented by other companies.
Readers should refer to the "Alternative Performance (non-GAAP)
Measures" section following the Consolidated Statements of Cash
Flows included in this news release 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. 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 in 2018 and beyond, our estimated
Cash Costs and AISCSOS in 2018 and beyond, and our expectations
with respect to future metal prices and exchange rates; the ability
of the Company to successfully complete any capital investment
programs and projects, including whether on time, or on or below
budget, and the success, expected economic or operational results
derived from those programs and projects, and the impacts of any
such programs and projects on the Company, including with respect
to production, associated operational efficiencies and economic
returns; the election by the Company and its ability to
successfully complete the acquisition of the COSE project; the
realization of benefits from any transactions, including the
Joaquin and COSE transactions, and the financial and operational
impacts of any such transactions on the Company; and the approval
or the amount of any future cash dividends.
These forward-looking statements and information reflect the
Company's current views with respect to future events and are
necessarily based upon a number of assumptions that, while
considered reasonable by the Company, are inherently subject to
significant operational, business, economic and regulatory
uncertainties and contingencies. 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; 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; and
our ability to comply with environmental, health and safety laws.
The foregoing list of assumptions is not exhaustive.
The Company 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 the Company has made assumptions and estimates based on
or related to many of these factors. Such factors include, without
limitation: fluctuations in silver, gold and base metal 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 the
Company 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 in the jurisdictions where we
operate, including environmental, export and import laws and
regulations; legal restrictions relating to mining, including in
Chubut, Argentina; risks relating
to expropriation; 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 the Company'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 the Company 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. The Company 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.
Cautionary Note to US Investors Concerning Estimates of
Mineral Reserves and Resources
This news release has been prepared in accordance with the
requirements of Canadian securities laws, which differ from the
requirements of U.S. securities laws. Unless otherwise indicated,
all mineral reserve and resource estimates included in this news
release have been disclosed in accordance with Canadian National
Instrument 43-101 - Standards of Disclosure for Mineral Projects
(''NI 43-101'') and the Canadian Institute of Mining, Metallurgy
and Petroleum definition standards. NI 43-101 is a rule developed
by the Canadian Securities Administrators that establishes
standards for all public disclosure an issuer makes of scientific
and technical information concerning mineral projects.
Canadian standards, including NI 43-101, differ significantly
from the requirements of the SEC, and information concerning
mineralization, deposits, mineral reserve and resource information
contained or referred to herein may not be comparable to similar
information disclosed by U.S. companies. In particular, and without
limiting the generality of the foregoing, this news release uses
the terms ''measured resources'', ''indicated resources'' and
''inferred resources''. U.S. investors are advised that, while such
terms are recognized and required by Canadian securities laws, the
SEC does not recognize them. The requirements of NI 43-101 for
identification of ''reserves'' are not the same as those of the
SEC, and reserves reported by Pan American in compliance with NI
43-101 may not qualify as ''reserves'' under SEC standards. Under
U.S. standards, mineralization may not be classified as a
''reserve'' unless the determination has been made that the
mineralization could be economically and legally produced or
extracted at the time the reserve determination is made. U.S.
investors are cautioned not to assume that any part of a "measured
resource" or "indicated resource" will ever be converted into a
"reserve". U.S. investors should also understand that "inferred
resources" have a great amount of uncertainty as to their existence
and great uncertainty as to their economic and legal feasibility.
It cannot be assumed that all or any part of "inferred resources"
exist, are economically or legally mineable or will ever be
upgraded to a higher category. Under Canadian securities laws,
estimated "inferred resources" may not form the basis of
feasibility or pre-feasibility studies except in rare cases.
Disclosure of "contained ounces" in a mineral resource is permitted
disclosure under Canadian securities laws. However, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC standards as in place tonnage and
grade, without reference to unit measures. Accordingly, information
concerning mineral deposits set forth herein may not be comparable
with information made public by companies that report in accordance
with U.S. standards.
Consolidated
Statements of Financial Position
|
(Unaudited in
thousands of U.S. dollars)
|
|
|
|
|
|
|
December 31,
2017
|
December 31,
2016
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
$
|
175,953
|
$
|
180,881
|
Short-term
investments
|
|
51,590
|
36,729
|
Trade and other
receivables
|
|
109,746
|
130,117
|
Income taxes
receivable
|
|
16,991
|
17,460
|
Inventories
|
|
218,715
|
237,329
|
Derivative financial
instruments
|
|
1,092
|
—
|
Assets held for
sale
|
|
7,949
|
—
|
Prepaid expenses and
other current assets
|
|
13,434
|
10,337
|
|
|
595,470
|
612,853
|
Non-current
assets
|
|
|
|
Mineral properties,
plant and equipment
|
|
1,336,683
|
1,222,727
|
Long-term refundable
tax
|
|
80
|
7,664
|
Deferred tax
assets
|
|
2,679
|
1,727
|
Investment in
associates
|
|
55,017
|
49,734
|
Other
assets
|
|
346
|
379
|
Goodwill
|
|
3,057
|
3,057
|
Total
Assets
|
|
$
|
1,993,332
|
$
|
1,898,141
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
139,698
|
$
|
143,502
|
Loans
payable
|
|
3,000
|
—
|
Derivative financial
instruments
|
|
1,906
|
2,815
|
Current portion of
provisions
|
|
8,245
|
8,499
|
Current portion of
finance lease
|
|
5,734
|
3,559
|
Income tax
payable
|
|
26,131
|
25,911
|
|
|
184,714
|
184,286
|
Non-current
liabilities
|
|
|
|
Long-term portion of
provisions
|
|
61,248
|
51,444
|
Deferred tax
liabilities
|
|
171,228
|
170,863
|
Long-term portion of
finance lease
|
|
1,825
|
3,542
|
Long-term
debt
|
|
—
|
36,200
|
Deferred
revenue
|
|
12,017
|
11,561
|
Other long-term
liabilities
|
|
26,954
|
27,408
|
Share purchase
warrants
|
|
14,295
|
13,833
|
Total
Liabilities
|
|
472,281
|
499,137
|
|
|
|
|
Equity
|
|
|
|
Capital and
reserves
|
|
|
|
Issued
capital
|
|
2,318,252
|
2,303,978
|
Share option
reserve
|
|
22,463
|
22,946
|
Investment
revaluation reserve
|
|
1,605
|
434
|
Deficit
|
|
(825,470)
|
(931,060)
|
Total Equity
attributable to equity holders of the Company
|
|
1,516,850
|
1,396,298
|
Non-controlling
interests
|
|
4,201
|
2,706
|
Total
Equity
|
|
1,521,051
|
1,399,004
|
Total Liabilities
and Equity
|
|
$
|
1,993,332
|
$
|
1,898,141
|
Consolidated
Income Statements
|
(Unaudited in
thousands of U.S. dollars except per share amounts)
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$
|
226,031
|
$
|
190,596
|
$
|
816,828
|
$
|
774,775
|
Cost of
sales
|
|
|
|
|
|
Production
costs
|
(139,697)
|
(110,466)
|
(500,670)
|
(428,333)
|
|
Depreciation and
amortization
|
(34,240)
|
(23,032)
|
(122,888)
|
(115,955)
|
|
Royalties
|
(8,809)
|
(8,142)
|
(24,510)
|
(31,608)
|
|
(182,746)
|
(141,640)
|
(648,068)
|
(575,896)
|
Mine operating
earnings
|
43,285
|
48,956
|
168,760
|
198,879
|
|
|
|
|
|
General and
administrative
|
(4,732)
|
(5,592)
|
(21,397)
|
(23,663)
|
Exploration and
project development
|
(4,269)
|
(3,068)
|
(19,755)
|
(11,334)
|
Foreign exchange
gains (losses)
|
1,052
|
(4,441)
|
1,823
|
(9,054)
|
Impairment
reversals
|
61,554
|
—
|
61,554
|
—
|
(Losses) gains on
commodity, diesel fuel swaps, and foreign
|
|
|
|
|
currency
contracts
|
(1,841)
|
(1,710)
|
606
|
(4,944)
|
(Loss) gain on sale
of mineral properties, plant and equipment
|
(794)
|
6,795
|
191
|
25,100
|
Share of loss from
associate and dilution gain
|
259
|
1,308
|
2,052
|
7,946
|
Other (expense)
income
|
(4,011)
|
3,254
|
(5,505)
|
1,542
|
Earnings from
operations
|
90,503
|
45,502
|
188,329
|
184,472
|
|
|
|
|
|
Gain on
derivatives
|
64
|
—
|
64
|
—
|
Investment
income
|
658
|
371
|
1,277
|
1,350
|
Interest and finance
expense
|
(2,353)
|
(2,730)
|
(7,185)
|
(9,551)
|
Earnings before
income taxes
|
88,872
|
43,143
|
182,485
|
176,271
|
Income tax
expense
|
(39,208)
|
(20,859)
|
(59,034)
|
(74,446)
|
Net earnings for
the period
|
$
|
49,664
|
$
|
22,284
|
$
|
123,451
|
$
|
101,825
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
Equity holders of the
Company
|
$
|
48,892
|
$
|
21,777
|
$
|
120,991
|
$
|
100,085
|
|
Non-controlling
interests
|
|
772
|
|
507
|
|
2,460
|
|
1,740
|
|
$
|
49,664
|
$
|
22,284
|
$
|
123,451
|
$
|
101,825
|
|
|
|
|
|
Earnings per share
attributable to common shareholders
|
|
|
|
|
Basic earnings per
share
|
$
|
0.32
|
$
|
0.14
|
$
|
0.79
|
$
|
0.66
|
Diluted earnings per
share
|
$
|
0.32
|
$
|
0.14
|
$
|
0.79
|
$
|
0.66
|
Weighted average
shares outstanding (in 000's) Basic
|
153,207
|
152,263
|
153,070
|
152,118
|
Weighted average
shares outstanding (in 000's) Diluted
|
153,434
|
152,669
|
153,353
|
152,504
|
Consolidated
Statements of Comprehensive Income
|
(Unaudited in
thousands of U.S. dollars)
|
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Net earnings for the
period
|
|
$
|
49,664
|
$
|
22,284
|
$
|
123,451
|
$
|
101,825
|
Items that may be
reclassified subsequently to net earnings:
|
|
|
|
|
|
|
Unrealized net gains
(losses) on available for sale securities
(net of $nil tax in 2017 and 2016)
|
|
1,376
|
(2,151)
|
810
|
912
|
|
Reclassification
adjustment for realized losses (gains) on
equity securities to earnings (net of $nil tax in 2017 and
2016)
|
|
250
|
(27)
|
361
|
(20)
|
Total
comprehensive earnings for the period
|
|
$
|
51,290
|
$
|
20,106
|
$
|
124,622
|
$
|
102,717
|
|
|
|
|
|
|
Total
comprehensive earnings attributable to:
|
|
|
|
|
|
Equity holders of the
Company
|
|
$
|
50,518
|
$
|
19,599
|
$
|
122,162
|
$
|
100,977
|
Non-controlling
interests
|
|
772
|
507
|
2,460
|
1,740
|
|
|
$
|
51,290
|
$
|
20,106
|
$
|
124,622
|
$
|
102,717
|
Consolidated
Statements of Cash Flows
|
(Unaudited in
thousands of U.S. dollars)
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
Cash flow from
operating activities
|
|
|
|
|
|
Net earnings for the
period
|
$
|
49,664
|
$
|
22,284
|
$
|
123,451
|
$
|
101,825
|
|
|
|
|
|
Current income tax
expense
|
26,706
|
9,841
|
62,877
|
44,031
|
Deferred income tax
expense (recovery)
|
12,502
|
11,018
|
(3,843)
|
30,415
|
Interest expense
(recovery)
|
284
|
891
|
(1,179)
|
2,115
|
Depreciation and
amortization
|
34,240
|
23,032
|
122,888
|
115,955
|
Impairment
reversals
|
(61,554)
|
—
|
(61,554)
|
—
|
Accretion on closure
and decommissioning provision
|
1,493
|
1,090
|
5,973
|
4,363
|
Unrealized losses
(gains) on foreign exchange
|
362
|
4,139
|
(383)
|
5,759
|
Losses (gains) on
commodity, diesel fuel swaps, and foreign
currency contracts
|
1,841
|
1,710
|
(606)
|
4,944
|
Loss (gain) on sale
of mineral properties, plant and equipment
|
794
|
(157)
|
(191)
|
(25,100)
|
Project development
write-down
|
—
|
—
|
1,898
|
—
|
Other operating
activities
|
5,856
|
(18,613)
|
13,269
|
(46,935)
|
Changes in non-cash
operating working capital
|
15,193
|
2,283
|
11,709
|
(5,545)
|
Operating cash
flows before interest and income taxes
|
$
|
87,381
|
$
|
57,518
|
$
|
274,309
|
$
|
231,827
|
|
|
|
|
|
Interest
paid
|
(413)
|
(1,800)
|
(2,367)
|
(2,553)
|
Interest
received
|
414
|
406
|
1,462
|
1,382
|
Income taxes
paid
|
(8,091)
|
(10,456)
|
(48,845)
|
(15,852)
|
Net cash generated
from operating activities
|
$
|
79,291
|
$
|
45,668
|
$
|
224,559
|
$
|
214,804
|
|
|
|
|
|
Cash flow from
investing activities
|
|
|
|
|
Payments for mineral
properties, plant and equipment
|
$
|
(36,473)
|
$
|
(56,477)
|
$
|
(142,232)
|
$
|
(202,661)
|
Acquisition of
mineral interests
|
—
|
—
|
(20,219)
|
—
|
Net (purchase of)
proceeds from sales of short-term investments
|
(703)
|
(3,199)
|
(14,267)
|
56,870
|
Proceeds from sale of
mineral properties, plant and equipment
|
36
|
738
|
1,674
|
16,319
|
Purchase of shares in
associate
|
—
|
—
|
(2,473)
|
—
|
Net proceeds
(payments) from commodity, diesel fuel swaps,
and foreign currency contracts
|
348
|
(2,145)
|
(304)
|
(4,965)
|
Exercise of warrants
and other payments
|
—
|
(5,460)
|
—
|
(5,460)
|
Net cash used in
investing activities
|
$
|
(36,792)
|
$
|
(66,543)
|
$
|
(177,821)
|
$
|
(139,897)
|
|
|
|
|
|
Cash flow from
financing activities
|
|
|
|
|
Proceeds from issue
of equity shares
|
$
|
28
|
$
|
96
|
$
|
2,606
|
$
|
2,399
|
Distributions to
non-controlling interests
|
(314)
|
(107)
|
(1,052)
|
(428)
|
Dividends
paid
|
(3,830)
|
(1,903)
|
(15,314)
|
(7,606)
|
Repayment of credit
facility
|
—
|
—
|
(36,200)
|
—
|
Proceeds from
(payment of) short-term loans
|
3,000
|
(5,172)
|
3,000
|
(19,536)
|
Payment of equipment
leases
|
(1,344)
|
(725)
|
(4,542)
|
(3,047)
|
Net cash used in
financing activities
|
$
|
(2,460)
|
$
|
(7,811)
|
$
|
(51,502)
|
$
|
(28,218)
|
Effects of exchange
rate changes on cash and cash equivalents
|
(80)
|
2
|
(164)
|
229
|
Net increase in cash
and cash equivalents
|
39,959
|
(28,684)
|
(4,928)
|
46,918
|
Cash and cash
equivalents at the beginning of the period
|
135,994
|
209,565
|
180,881
|
133,963
|
Cash and cash
equivalents at the end of the period
|
$
|
175,953
|
$
|
180,881
|
$
|
175,953
|
$
|
180,881
|
|
|
|
|
|
|
|
|
|
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
AISCSOS
AISCSOS is a non-GAAP financial measure.
AISCSOS does not have any standardized meaning prescribed by IFRS
and is therefore unlikely to be comparable to similar measures
presented by other companies. We believe that AISCSOS reflects a
comprehensive measure of the full cost of operating our
consolidated business given it includes the cost of replacing
silver ounces through exploration, the cost of ongoing capital
investments (sustaining capital), general and administrative
expenses, as well as other items that affect the Company's
consolidated cash flow. To facilitate a better understanding of
this measure as calculated by the Company, the following table
provides the detailed reconciliation of this measure to the
applicable cost items, as reported in the consolidated income
statements for the respective periods:
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
(In thousands of
USD, except as noted)
|
|
2017
|
2016
|
2017
|
2016
|
Direct operating
costs
|
|
$
|
134,202
|
$
|
120,496
|
$
|
488,363
|
$
|
472,806
|
Inventory net
realizable value ("NRV") adjustments
|
A
|
5,495
|
(10,715)
|
12,307
|
(42,815)
|
Production
costs(1)
|
|
$
|
139,697
|
$
|
109,781
|
$
|
500,670
|
$
|
429,991
|
Royalties
|
|
8,809
|
8,142
|
24,510
|
31,608
|
Direct selling costs
(2)
|
|
19,408
|
20,656
|
69,344
|
80,319
|
Less by-product
credits (2)
|
|
(131,679)
|
(109,571)
|
(462,663)
|
(424,442)
|
Cash cost of sales
net of by-products (3)
|
|
$
|
36,235
|
$
|
29,009
|
$
|
131,862
|
$
|
117,476
|
Sustaining capital
(4)
|
|
$
|
25,573
|
$
|
24,976
|
$
|
84,215
|
$
|
89,394
|
Exploration and
project development(5)
|
|
4,269
|
3,068
|
17,858
|
11,334
|
Reclamation cost
accretion
|
|
1,493
|
1,090
|
5,973
|
4,363
|
General and
administrative expense
|
|
4,732
|
5,592
|
21,397
|
23,663
|
All-in sustaining
costs (3)
|
B
|
$
|
72,303
|
$
|
63,735
|
$
|
261,304
|
$
|
246,230
|
Payable ounces
sold (in thousands)
|
C
|
6,659.4
|
6,138.2
|
24,211.7
|
24,199.5
|
All-in sustaining
cost per silver ounce sold, net of by-products
|
B/C
|
$
|
10.86
|
$
|
10.38
|
$
|
10.79
|
$
|
10.17
|
All-in sustaining
cost per silver ounce sold, net of by-products
(excludes NRV inventory adjustments)
|
(B-A)/C
|
$
|
10.03
|
$
|
12.13
|
$
|
10.28
|
$
|
11.94
|
(1)
|
For the purposes of
AISCSOS, Alamo Dorado production costs for the three and twelve
month periods ended December 31, 2016 have been decreased by $0.6
million and increased by $1.7 million, respectively, to exclude
non-cash adjustments to the closure and decommissioning liabilities
that are included in production costs as presented in the unaudited
consolidated statements of income (loss).
|
(2)
|
Included in the
revenue line of the interim consolidated income statements, and for
by-product credits are reflective of realized metal prices for the
applicable periods.
|
(3)
|
Totals may not add
due to rounding.
|
(4)
|
Please refer to the
table below. Further, 2017 annual sustaining capital cash
outflows included in this table were $0.2 million less than the
$84.4 million capitalized in 2017, as shown in the
Capital Expenditures table included in this news release. The
difference is due to the timing difference between the cash payment
of capital investments compared with the period in which
investments are capitalized.
|
(5)
|
The amounts for
year-to-date 2017 exclude $1.9 million from non-cash project
development write-downs.
|
As part of the AISCSOS measure, sustaining capital is included
while expansionary or acquisition capital (referred to by the
Company as non-sustaining capital) is not. Inclusion of sustaining
capital only is a measure of capital costs associated with current
ounces sold as opposed to investment capital, which is expected to
increase future production. For the periods under review, the items
noted below are associated with the La
Colorada expansion project, the Dolores leach pad and other expansionary
expenditures considered to be investment capital projects.
|
|
|
|
|
Reconciliation of
payments for mineral properties,
plant and equipment and sustaining capital
|
Three months
ended
December 31,
|
Year ended
December 31,
|
(in thousands of
USD)
|
2017
|
2016
|
2017
|
2016
|
Payments for mineral
properties, plant and equipment(1)
|
$
|
36,473
|
$
|
56,477
|
142,232
|
202,661
|
Add/(Subtract)
|
|
|
|
|
Advances received for
leases
|
1,385
|
2,213
|
5,000
|
6,151
|
Non-Sustaining
capital (Dolores, La Colorada projects, and other)
|
(12,284)
|
(33,714)
|
(63,017)
|
(119,418)
|
Sustaining
Capital(2)
|
$
|
25,573
|
$
|
24,976
|
84,215
|
89,394
|
(1)
|
As presented on the
unaudited interim consolidated statements of cash flows.
|
(2)
|
Totals may not add
due to rounding
|
|
Three months ended
December 31, 2017
|
(In thousands of
USD, except as noted)
|
La
Colorada
|
Dolores
|
Alamo Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial Espejo
|
PASCORP
|
Consolidated
|
Direct operating
costs
|
16,580
|
35,739
|
3,957
|
19,551
|
16,931
|
10,484
|
30,960
|
|
134,202
|
NRV inventory
adjustments
|
—
|
4,098
|
(1,916)
|
—
|
—
|
—
|
3,313
|
|
5,495
|
Production
costs
|
16,580
|
39,838
|
2,041
|
19,551
|
16,931
|
10,484
|
34,273
|
|
139,697
|
Royalties
|
106
|
1,966
|
—
|
—
|
—
|
6,105
|
633
|
|
8,809
|
Direct selling
costs
|
4,066
|
31
|
248
|
6,659
|
5,014
|
3,383
|
8
|
|
19,408
|
Less by-product
credits
|
(18,316)
|
(39,317)
|
(61)
|
(24,653)
|
(26,767)
|
(6,969)
|
(15,595)
|
|
(131,679)
|
Cash cost of sales
net of by-products(1)
|
2,435
|
2,518
|
2,227
|
1,557
|
(4,823)
|
13,002
|
19,319
|
|
36,235
|
Sustaining
capital
|
2,576
|
13,303
|
—
|
3,548
|
3,162
|
1,939
|
1,045
|
|
25,573
|
Exploration and
project development
|
73
|
564
|
—
|
428
|
543
|
—
|
936
|
1,726
|
4,269
|
Reclamation cost
accretion
|
112
|
296
|
89
|
162
|
105
|
56
|
619
|
54
|
1,493
|
General &
administrative expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
4,731
|
4,732
|
All-in sustaining
costs(1)
|
5,196
|
16,682
|
2,317
|
5,695
|
(1,013)
|
14,998
|
21,918
|
6,511
|
72,303
|
Payable ounces
sold (thousand)
|
1,847
|
1,225
|
133
|
813
|
658
|
1,218
|
766
|
|
6,659
|
All-in sustaining
cost per silver ounce
sold, net of by-products
|
$
|
2.81
|
$
|
13.62
|
$
|
17.45
|
$
|
7.00
|
$
|
(1.54)
|
$
|
12.31
|
$
|
28.63
|
|
$
|
10.86
|
All-in sustaining
cost per silver ounce
sold, net of by-products (excludes NRV
inventory adjustments)
|
2.81
|
10.27
|
31.89
|
7.00
|
(1.54)
|
12.31
|
24.30
|
|
10.03
|
(1)
|
Totals may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2017
|
(In thousands of
USD, except as noted)
|
La
Colorada
|
Dolores
|
Alamo Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial Espejo
|
PASCORP
|
Consolidated
|
Direct operating
costs
|
67,170
|
116,104
|
20,477
|
75,551
|
63,967
|
34,731
|
110,362
|
|
488,363
|
NRV inventory
adjustments
|
|
6,847
|
(2,598)
|
|
|
|
8,058
|
|
12,307
|
Production
costs
|
67,170
|
122,951
|
17,879
|
75,551
|
63,967
|
34,731
|
118,420
|
|
500,670
|
Royalties
|
475
|
6,501
|
79
|
—
|
—
|
14,321
|
3,134
|
|
24,510
|
Direct selling
costs
|
12,235
|
93
|
479
|
26,238
|
18,770
|
10,740
|
789
|
|
69,344
|
Less by-product
credits
|
(64,133)
|
(128,351)
|
(3,467)
|
(97,715)
|
(94,233)
|
(16,278)
|
(58,485)
|
|
(462,663)
|
Cash cost of sales
net of by-products(1)
|
15,748
|
1,194
|
14,970
|
4,074
|
(11,496)
|
43,513
|
63,858
|
|
131,862
|
Sustaining
capital
|
13,970
|
36,071
|
—
|
10,267
|
12,428
|
8,146
|
3,333
|
|
84,215
|
Exploration and
project development
|
251
|
2,444
|
—
|
1,713
|
1,629
|
—
|
4,588
|
7,232
|
17,858
|
Reclamation cost
accretion
|
448
|
1,186
|
357
|
646
|
420
|
225
|
2,474
|
216
|
5,973
|
General &
administrative expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
21,397
|
21,397
|
All-in sustaining
costs(1)
|
30,417
|
40,894
|
15,327
|
16,701
|
2,981
|
51,884
|
74,254
|
28,845
|
261,304
|
Payable ounces
sold (thousand)
|
6,853
|
4,089
|
867
|
3,181
|
2,448
|
3,603
|
3,171
|
|
24,212
|
All-in sustaining
cost per silver ounce
sold, net of by-products
|
$
|
4.44
|
$
|
10.00
|
$
|
17.69
|
$
|
5.25
|
$
|
1.22
|
$
|
14.40
|
$
|
23.42
|
|
$
|
10.79
|
All-in sustaining
cost per silver ounce
sold, net of by-products (excludes NRV
inventory adjustments)
|
$
|
4.44
|
$
|
8.33
|
$
|
20.68
|
$
|
5.25
|
$
|
1.22
|
$
|
14.40
|
$
|
20.88
|
|
$
|
10.28
|
(1)
|
Totals may not add
due to rounding.
|
|
Three months ended
December 31, 2016
|
(In thousands of
USD, except as noted)
|
La
Colorada
|
Dolores
|
Alamo Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial Espejo
|
PASCORP
|
Consolidated
|
Direct operating
costs
|
14,674
|
28,664
|
7,266
|
17,991
|
15,547
|
10,016
|
26,336
|
|
120,496
|
NRV inventory
adjustments
|
—
|
(6,350)
|
2,224
|
—
|
—
|
—
|
(6,589)
|
|
(10,715)
|
Production
costs
|
14,674
|
22,314
|
9,490
|
17,991
|
15,547
|
10,016
|
19,747
|
|
109,781
|
Royalties
|
135
|
1,604
|
33
|
—
|
—
|
5,598
|
772
|
|
8,142
|
Direct selling
costs
|
3,712
|
23
|
125
|
7,735
|
5,643
|
4,634
|
(1,215)
|
|
20,656
|
Less by-product
credits
|
(12,238)
|
(32,868)
|
(1,609)
|
(21,206)
|
(18,379)
|
(5,372)
|
(17,898)
|
|
(109,571)
|
Cash cost of sales
net of by-products(1)
|
6,283
|
(8,927)
|
8,039
|
4,520
|
2,812
|
14,876
|
1,406
|
|
29,009
|
Sustaining
capital
|
2,229
|
10,772
|
—
|
4,355
|
4,892
|
1,631
|
1,097
|
|
24,976
|
Exploration and
project development
|
31
|
628
|
—
|
576
|
109
|
—
|
—
|
1,723
|
3,068
|
Reclamation cost
accretion
|
72
|
179
|
104
|
126
|
86
|
54
|
433
|
37
|
1,090
|
General &
administrative expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
5,592
|
5,592
|
All-in sustaining
costs(1)
|
8,615
|
2,652
|
8,144
|
9,576
|
7,899
|
16,561
|
2,935
|
7,352
|
63,735
|
Payable ounces
sold (thousand)
|
1,561
|
895
|
286
|
759
|
526
|
1,332
|
779
|
|
6,138
|
All-in sustaining
cost per silver ounce
sold, net of by-products
|
$
|
5.52
|
$
|
2.96
|
$
|
28.44
|
$
|
12.62
|
$
|
15.02
|
$
|
12.43
|
$
|
3.77
|
|
$
|
10.38
|
All-in sustaining
cost per silver ounce
sold, net of by-products (excludes NRV
inventroy adjustments)
|
$
|
5.52
|
$
|
10.06
|
$
|
20.68
|
$
|
12.62
|
$
|
15.02
|
$
|
12.43
|
$
|
12.22
|
|
$
|
12.13
|
(1)
|
Totals may not add
due to rounding.
|
|
Year ended
December 31, 2016
|
(In thousands of
USD, except as noted)
|
La
Colorada
|
Dolores
|
Alamo Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial Espejo
|
PASCORP
|
Consolidated
|
Direct operating
costs
|
50,879
|
121,162
|
40,172
|
67,911
|
58,868
|
34,959
|
98,856
|
|
472,806
|
NRV inventory
adjustments
|
|
(22,434)
|
1,173
|
|
|
|
(21,554)
|
|
(42,815)
|
Production
costs
|
50,879
|
98,728
|
41,345
|
67,911
|
58,868
|
34,959
|
77,302
|
|
429,991
|
Royalties
|
401
|
6,224
|
235
|
—
|
—
|
20,929
|
3,818
|
|
31,608
|
Direct selling
costs
|
13,554
|
107
|
376
|
32,443
|
25,702
|
15,697
|
(7,562)
|
|
80,319
|
Less by-product
credits
|
(34,737)
|
(123,811)
|
(13,156)
|
(77,754)
|
(74,754)
|
(15,774)
|
(84,456)
|
|
(424,442)
|
Cash cost of sales
net of by-products(1)
|
30,098
|
(18,751)
|
28,800
|
22,600
|
9,817
|
55,811
|
(10,898)
|
|
117,476
|
Sustaining
capital
|
10,545
|
48,079
|
—
|
11,994
|
10,945
|
4,963
|
2,868
|
|
89,394
|
Exploration and
project development
|
186
|
1,792
|
—
|
837
|
1,053
|
—
|
—
|
7,465
|
11,334
|
Reclamation cost
accretion
|
287
|
714
|
416
|
505
|
345
|
218
|
1,731
|
148
|
4,363
|
General &
administrative expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
23,663
|
23,663
|
All-in sustaining
costs(1)
|
41,116
|
31,834
|
29,216
|
35,935
|
22,159
|
60,991
|
(6,299)
|
31,276
|
246,230
|
Payable ounces
sold (thousand)
|
5,486
|
3,839
|
1,967
|
3,233
|
2,377
|
4,264
|
3,033
|
|
24,200
|
All-in sustaining
cost per silver ounce sold, net of by-products
|
$
|
7.49
|
$
|
8.29
|
$
|
14.85
|
$
|
11.11
|
$
|
9.32
|
$
|
14.30
|
$
|
(2.08)
|
|
$
|
10.17
|
All-in sustaining
cost per silver ounce sold, net of by-products (excludes NRV
inventory adjustments)
|
$
|
7.49
|
$
|
14.14
|
$
|
14.26
|
$
|
11.11
|
$
|
9.32
|
$
|
14.30
|
$
|
5.03
|
|
$
|
11.94
|
(1)
|
Totals may not add
due to rounding.
|
- Cash Costs per Ounce of Silver, net of by-product
credits
Pan American produces by-product metals incidentally to our
silver mining activities. We have adopted the practice of
calculating the net cost of producing an ounce of silver, our
primary payable metal, after deducting revenues gained from
incidental by-product production, as a performance measure. This
performance measurement has been commonly used in the mining
industry for many years and was developed as a relatively simple
way of comparing the net production costs of the primary metal for
a specific period against the prevailing market price of that
metal.
Cash costs per ounce metrics, net of by-product credits, is used
extensively in our internal decision making processes. We believe
the metric is also useful to investors because it facilitates
comparison, on a mine-by-mine basis, notwithstanding the unique mix
of incidental by-product production at each mine, of our
operations' relative performance on a period-by-period basis, and
against the operations of our peers in the silver industry on a
consistent basis. Cash costs per ounce is conceptually understood
and widely reported in the silver mining industry. However, cash
cost per ounce of silver is a non-GAAP measure and does not have a
standardized meaning prescribed by GAAP and the Company's method of
calculating cash costs may differ from the methods used by other
entities.
To facilitate a better understanding of these measures as
calculated by the Company, the following table provides the
detailed reconciliation of these measures to the production costs,
as reported in the consolidated income statements for the
respective periods:
|
|
|
|
|
|
Total Cash Costs
per ounce of Payable Silver, net of by-product credits
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
(in thousands of
U.S. dollars except as noted)
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Production
costs
|
|
$
|
139,697
|
$
|
110,466
|
$
|
500,670
|
$
|
428,333
|
Add/(Subtract)
|
|
|
|
|
|
Royalties
|
|
8,809
|
8,142
|
24,510
|
31,608
|
Smelting, refining,
and transportation charges
|
|
18,469
|
22,204
|
73,222
|
91,371
|
Worker's
participation and voluntary payments
|
|
(1,374)
|
(876)
|
(5,067)
|
(3,397)
|
Change in
inventories
|
|
(12,776)
|
(3,473)
|
(16,011)
|
(11,937)
|
Other
|
|
555
|
358
|
1,559
|
(5,660)
|
Non-controlling
interests (1)
|
|
(64)
|
(811)
|
(1,126)
|
(3,358)
|
Inventory net
realizable value ("NRV") adjustments
|
|
(5,495)
|
10,715
|
(12,307)
|
42,815
|
Cash Operating
Costs before by-product credits(2)
|
|
147,820
|
146,725
|
565,450
|
569,775
|
|
Less gold
credit
|
|
(54,648)
|
(52,888)
|
(196,649)
|
(227,196)
|
|
Less zinc
credit
|
|
(40,826)
|
(28,486)
|
(137,826)
|
(93,428)
|
|
Less lead
credit
|
|
(12,687)
|
(11,226)
|
(46,948)
|
(35,890)
|
|
Less copper
credit
|
|
(20,026)
|
(14,667)
|
(77,348)
|
(63,404)
|
Cash Operating
Costs net of by-product credits (2)
|
A
|
19,633
|
39,457
|
106,678
|
149,857
|
Payable Silver
Production (koz)
|
B
|
6,172
|
5,925
|
23,444
|
23,818
|
Cash Costs per
ounce net of by-product credits
|
A/B
|
$
|
3.18
|
$
|
6.66
|
$
|
4.55
|
$
|
6.29
|
(1)
|
Figures presented in
the reconciliation table above are on a 100% basis as presented in
the consolidated financial statements with an adjustment line item
to account for the portion of the Morococha and San Vicente mines
owned by non-controlling interests, an expense item not included in
operating cash costs. The associated tables below are for the
Company's share of ownership only.
|
(2)
|
Figures in this table
and in the associated tables below may not add due to
rounding.
|
|
Three months ended
December 31, 2017 (1)
(in thousands of
USD except as noted)
|
|
|
La Colorada
|
Dolores
|
Alamo Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial Espejo
|
Consolidated Total
|
Cash Costs before
by-
product credits
|
A
|
$
|
18,708
|
$
|
34,778
|
$
|
136
|
$
|
26,440
|
$
|
20,276
|
$
|
15,300
|
$
|
29,800
|
$
|
145,437
|
|
Less gold
credit
|
b1
|
(1,377)
|
(39,708)
|
(90)
|
(9)
|
(625)
|
(79)
|
(12,704)
|
(54,592)
|
|
Less zinc
credit
|
b2
|
(11,337)
|
—
|
—
|
(12,296)
|
(12,205)
|
(3,767)
|
—
|
(39,605)
|
|
Less lead
credit
|
b3
|
(5,232)
|
—
|
—
|
(4,758)
|
(2,361)
|
(131)
|
—
|
(12,483)
|
|
Less copper
credit
|
b4
|
—
|
—
|
—
|
(7,671)
|
(9,585)
|
(1,868)
|
—
|
(19,124)
|
Sub-total
by-product credits
|
B=( b1+
b2+ b3+
b4)
|
$
|
(17,947)
|
$
|
(39,708)
|
$
|
(90)
|
$
|
(24,733)
|
$
|
(24,776)
|
$
|
(5,845)
|
$
|
(12,704)
|
$
|
(125,804)
|
Cash Costs net of
by-
product credits
|
C=(A+B)
|
$
|
761
|
$
|
(4,930)
|
$
|
46
|
$
|
1,706
|
$
|
(4,500)
|
$
|
9,455
|
$
|
17,095
|
$
|
19,633
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of
silver
(thousand)
|
D
|
1,777
|
1,254
|
22
|
821
|
607
|
1,046
|
645
|
6,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost per
ounce net
of by-products
|
C/D
|
$
|
0.43
|
$
|
(3.93)
|
$
|
2.09
|
$
|
2.08
|
$
|
(7.42)
|
$
|
9.04
|
$
|
26.52
|
$
|
3.18
|
(1)
|
Totals may not add
due to rounding.
|
|
Year ended
December 31, 2017(1)
(in thousands of
USD except as noted)
|
|
|
La Colorada
|
Dolores
|
Alamo
Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial
Espejo
|
Consolidated Total
|
Cash Costs before
by-
product credits
|
A
|
$
|
75,407
|
122,532
|
$
|
12,666
|
$
|
101,588
|
$
|
76,085
|
$
|
55,286
|
$
|
113,726
|
$
|
557,291
|
|
Less gold
credit
|
b1
|
(4,477)
|
(129,503)
|
(2,498)
|
(148)
|
(2,639)
|
(305)
|
(56,842)
|
(196,411)
|
|
Less zinc
credit
|
b2
|
(37,967)
|
—
|
—
|
(46,080)
|
(39,402)
|
(10,522)
|
—
|
(133,972)
|
|
Less lead
credit
|
b3
|
(18,994)
|
—
|
—
|
(19,039)
|
(7,573)
|
(672)
|
—
|
(46,278)
|
|
Less copper
credit
|
b4
|
—
|
—
|
(46)
|
(32,059)
|
(38,315)
|
(3,533)
|
—
|
(73,952)
|
Sub-total
by-product
credits
|
B=( b1+
b2+ b3+
b4)
|
$
|
(61,438)
|
$
|
(129,503)
|
$
|
(2,544)
|
$
|
(97,327)
|
$
|
(87,929)
|
$
|
(15,032)
|
$
|
(56,842)
|
$
|
(450,614)
|
Cash Costs net of
by-
product credits
|
C=(A+B)
|
$
|
13,970
|
$
|
(6,971)
|
$
|
10,123
|
$
|
4,261
|
$
|
(11,844)
|
$
|
40,254
|
$
|
56,884
|
$
|
106,677
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of
silver
(thousand)
|
D
|
6,709
|
4,225
|
614
|
3,164
|
2,219
|
3,396
|
3,117
|
23,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost per
ounce net
of by-products
|
C/D
|
$
|
2.08
|
$
|
(1.65)
|
$
|
16.49
|
$
|
1.35
|
$
|
(5.34)
|
$
|
11.85
|
$
|
18.25
|
$
|
4.55
|
(1)
|
Totals may not add
due to rounding.
|
|
Three months ended
December 31, 2016(1)
(in thousands of
USD except as noted)
|
|
|
La Colorada
|
Dolores
|
Alamo
Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial
Espejo
|
Consolidated Total
|
Cash Costs before
by-
product credits
|
A
|
$
|
19,118
|
29,875
|
$
|
10,704
|
$
|
25,766
|
$
|
19,496
|
$
|
14,034
|
$
|
26,259
|
$
|
145,251
|
|
Less gold
credit
|
b1
|
(841)
|
(35,183)
|
(1,690)
|
—
|
(165)
|
(86)
|
(14,905)
|
(52,870)
|
|
Less zinc
credit
|
b2
|
(7,801)
|
—
|
—
|
(11,056)
|
(7,361)
|
(1,568)
|
—
|
(27,787)
|
|
Less lead
credit
|
b3
|
(3,513)
|
—
|
—
|
(6,005)
|
(1,444)
|
(136)
|
—
|
(11,098)
|
|
Less copper
credit
|
b4
|
—
|
—
|
31
|
(5,122)
|
(7,849)
|
(1,095)
|
—
|
(14,035)
|
Sub-total
by-product credits
|
B=( b1+
b2+ b3+
b4)
|
$
|
(12,155)
|
$
|
(35,183)
|
$
|
(1,659)
|
$
|
(22,183)
|
$
|
(16,819)
|
$
|
(2,885)
|
$
|
(14,905)
|
$
|
(105,790)
|
Cash Costs net of
by-
product credits
|
C=(A+B)
|
$
|
6,962
|
$
|
(5,308)
|
$
|
9,046
|
$
|
3,583
|
$
|
2,676
|
$
|
11,149
|
$
|
11,354
|
$
|
39,462
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of
silver
(thousand)
|
D
|
1,588
|
895
|
397
|
789
|
485
|
994
|
777
|
5,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost per
ounce net
of by-products
|
C/D
|
$
|
4.38
|
$
|
(5.93)
|
$
|
22.80
|
$
|
4.54
|
$
|
5.52
|
$
|
11.22
|
$
|
14.61
|
$
|
6.66
|
(1)
|
Totals may not add
due to rounding.
|
|
Year ended
December 31, 2016(1)
(in thousands of
USD except as noted)
|
|
|
La Colorada
|
Dolores
|
Alamo
Dorado
|
Huaron
|
Morococha
|
San Vicente
|
Manantial
Espejo
|
Consolidated Total
|
Cash Costs before
by-
product credits
|
A
|
$
|
68,057
|
124,570
|
$
|
39,891
|
$
|
96,284
|
$
|
75,586
|
$
|
61,779
|
$
|
97,388
|
$
|
563,555
|
|
Less gold
credit
|
b1
|
(2,929)
|
(128,696)
|
(10,251)
|
(2)
|
(897)
|
(335)
|
(83,992)
|
(227,103)
|
|
Less zinc
credit
|
b2
|
(20,636)
|
—
|
—
|
(34,638)
|
(26,841)
|
(8,611)
|
—
|
(90,726)
|
|
Less lead
credit
|
b3
|
(10,487)
|
—
|
—
|
(18,967)
|
(5,166)
|
(795)
|
—
|
(35,415)
|
|
Less copper
credit
|
b4
|
—
|
—
|
(100)
|
(24,113)
|
(33,701)
|
(2,534)
|
—
|
(60,448)
|
Sub-total
by-product
credits
|
B=(b1+
b2+ b3+
b4)
|
$
|
(34,052)
|
$
|
(128,696)
|
$
|
(10,351)
|
$
|
(77,720)
|
$
|
(66,605)
|
$
|
(12,275)
|
$
|
(83,992)
|
$
|
(413,692)
|
Cash Costs net of
by-
product credits
|
C=(A+B)
|
$
|
34,004
|
$
|
(4,126)
|
$
|
29,539
|
$
|
18,565
|
$
|
8,981
|
$
|
49,504
|
$
|
13,396
|
$
|
149,862
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of
silver
(thousand)
|
D
|
5,531
|
3,831
|
1,844
|
3,208
|
2,132
|
4,143
|
3,130
|
23,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost per
ounce net
of by-products
|
C/D
|
$
|
6.15
|
$
|
(1.08)
|
$
|
16.02
|
$
|
5.79
|
$
|
4.21
|
$
|
11.95
|
$
|
4.28
|
$
|
6.29
|
(1)
|
Totals may not add
due to rounding.
|
- Adjusted Earnings and Basic Adjusted Earnings Per
Share
Adjusted earnings and basic adjusted earnings per share are
non-GAAP measures that the Company considers to better reflect
normalized earnings as it eliminates 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. Certain items that become applicable
in a period may be adjusted for, with the Company retroactively
presenting comparable periods with an adjustment for such items and
conversely, items no longer applicable may be removed from the
calculation. The Company adjusts certain items in the periods that
they occurred but does not reverse or otherwise unwind the effect
of such items in future periods. Neither adjusted earnings nor
basic adjusted earnings per share have any standardized meaning
prescribed by GAAP and are therefore unlikely to be comparable to
similar measures presented by other companies.
The following table shows a reconciliation of adjusted loss and
earnings for the year and three months ended December 31, 2017 and 2016, to the net earnings
for each period.
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
Year ended
December 31,
|
(In thousands of
USD, except as noted)
|
|
2017
|
2016
|
2017
|
2016
|
Net earnings for the
period
|
|
$
|
49,664
|
$
|
22,284
|
$
|
123,451
|
$
|
101,825
|
Adjust
for:
|
|
|
|
|
|
|
Derivative
gains
|
|
(64)
|
—
|
(64)
|
—
|
|
Impairment
reversals
|
|
(61,554)
|
—
|
(61,554)
|
—
|
|
Write-down of project
development costs
|
|
—
|
—
|
1,898
|
—
|
|
Unrealized foreign
exchange losses (gains)
|
|
362
|
4,139
|
(383)
|
5,759
|
|
Net realizable value
adjustments to heap inventory
|
|
4,936
|
(6,619)
|
10,060
|
(14,110)
|
|
Unrealized losses (gains) on commodity
contracts
|
|
2,190
|
(435)
|
(909)
|
(21)
|
|
Share of loss from
associate and dilution gain
|
|
(259)
|
(8,484)
|
(2,052)
|
(7,946)
|
|
Mine operation
severance costs
|
|
—
|
—
|
3,509
|
—
|
|
Reversal of
previously accrued tax liabilities
|
|
—
|
—
|
(2,793)
|
—
|
|
Gain (loss) on sale
of assets
|
|
794
|
(157)
|
(191)
|
(25,100)
|
Closure and
decommissioning liability adjustment
|
|
4,515
|
—
|
8,388
|
—
|
Adjust for effect of
taxes relating to the above
|
|
$
|
6,046
|
$
|
2,180
|
$
|
2,273
|
$
|
11,870
|
Adjust for effect of
foreign exchange on taxes
|
|
12,589
|
6,057
|
(3,928)
|
14,323
|
Adjusted earnings
for the period
|
|
$
|
19,219
|
$
|
18,965
|
$
|
77,705
|
$
|
86,600
|
Weighted
average shares for the period
|
|
153,207
|
152,118
|
153,070
|
152,118
|
Adjusted earnings
per share for the period
|
|
$
|
0.13
|
$
|
0.12
|
$
|
0.51
|
$
|
0.57
|
INDIVIDUAL MINE OPERATION HIGHLIGHTS
La Colorada mine
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Tonnes milled -
kt
|
|
170.7
|
154.6
|
655.3
|
528.8
|
Average silver grade
– grams per tonne
|
|
374
|
370
|
368
|
377
|
Average zinc grade -
%
|
|
2.88
|
2.79
|
2.81
|
2.63
|
Average lead grade -
%
|
|
1.54
|
1.31
|
1.54
|
1.31
|
Average silver
recovery - %
|
|
91.1
|
90.5
|
91.1
|
90.3
|
Average zinc recovery
- %
|
|
84.1
|
84.5
|
83.7
|
82.2
|
Average lead recovery
- %
|
|
86.2
|
86.7
|
86.9
|
86.5
|
Production:
|
|
|
|
|
|
|
Silver –
koz
|
|
1,870
|
1,665
|
7,056
|
5,795
|
|
Gold – koz
|
|
1.26
|
0.86
|
4.29
|
2.93
|
|
Zinc – kt
|
|
4.14
|
3.64
|
15.44
|
11.40
|
|
Lead –
kt
|
|
2.26
|
1.76
|
8.80
|
6.00
|
|
|
|
|
|
|
|
|
|
|
Cash cost per
ounce net of by-products
|
|
$
|
0.43
|
$
|
4.38
|
$
|
2.08
|
$
|
6.15
|
|
|
|
|
|
|
|
|
|
|
AISCSOS
|
|
$
|
2.81
|
$
|
5.52
|
$
|
4.44
|
$
|
7.49
|
|
|
|
|
|
|
Payable silver
sold - koz
|
|
1,847
|
1,561
|
6,853
|
5,486
|
|
|
|
|
|
|
|
|
|
|
Sustaining capital
- ('000s)
|
|
$
|
2,576
|
$
|
2,229
|
$
|
13,970
|
$
|
10,545
|
Dolores mine
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
2017
|
2016
|
2017
|
2016
|
Tonnes placed -
kt
|
1,785.1
|
1,650.5
|
9,288.7
|
6,306.5
|
Average silver grade
– grams per tonne
|
39
|
43
|
38
|
37
|
Average gold grade –
grams per tonne
|
0.76
|
0.79
|
0.66
|
0.75
|
Average silver
produced to placed ratio - %
|
55.5
|
39.2
|
51.7
|
50.8
|
Average gold produced
to placed ratio - %
|
71.8
|
69.1
|
70.7
|
67.7
|
Production:
|
|
|
|
|
|
Silver –
koz
|
1,256
|
897
|
4,232
|
3,838
|
|
Gold –
koz
|
31.2
|
28.8
|
103.0
|
102.8
|
|
|
|
|
|
Cash cost per
ounce net of by-products
|
(3.93)
|
(5.93)
|
(1.65)
|
(1.08)
|
|
|
|
|
|
AISCSOS
|
13.62
|
2.96
|
10.00
|
8.29
|
|
|
|
|
|
Payable silver
sold - koz
|
1,225
|
895
|
4,089
|
3,839
|
|
|
|
|
|
Sustaining capital
- ('000s)
|
$
|
13,303
|
$
|
10,772
|
$
|
36,071
|
$
|
48,079
|
Alamo Dorado mine
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Tonnes milled -
kt
|
|
—
|
448.6
|
451.8
|
1,833.1
|
Average silver grade
– grams per tonne
|
|
NA
|
40
|
43
|
45
|
Average gold grade –
grams per tonne
|
|
NA
|
0.14
|
0.17
|
0.18
|
Average silver
recovery - %
|
|
NA
|
65.2
|
67.6
|
68.8
|
Production:
|
|
|
|
|
|
Silver –
koz
|
|
32.7
|
401.0
|
640.7
|
1,864.0
|
|
Gold – koz
|
|
0.1
|
1.4
|
2.1
|
8.4
|
|
Copper –
tonnes
|
|
0
|
0
|
13
|
30
|
|
|
|
|
|
|
Cash cost per
ounce net of by-products
|
|
2.09
|
22.80
|
16.49
|
16.02
|
|
|
|
|
|
|
AISCSOS
|
|
17.45
|
28.44
|
17.69
|
14.85
|
|
|
|
|
|
|
Payable silver
sold - koz
|
|
133
|
286
|
867
|
1,967
|
|
|
|
|
|
|
Sustaining capital
- ('000s)
|
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
Huaron mine
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Tonnes milled -
kt
|
|
231.5
|
229.9
|
928.1
|
904.4
|
Average silver grade
– grams per tonne
|
|
152
|
149
|
146
|
157
|
Average zinc grade -
%
|
|
2.58
|
3.12
|
2.70
|
3.01
|
Average lead grade -
%
|
|
1.15
|
1.59
|
1.23
|
1.51
|
Average copper grade
- %
|
|
0.70
|
0.78
|
0.84
|
0.90
|
Average silver
recovery - %
|
|
84.1
|
85.3
|
85.2
|
84.1
|
Average zinc recovery
- %
|
|
77.8
|
74.6
|
77.6
|
74.3
|
Average lead recovery
- %
|
|
76.6
|
81.4
|
77.7
|
79.4
|
Average copper
recovery - %
|
|
74.5
|
72.1
|
78.5
|
75.5
|
Production:
|
|
|
|
|
|
|
Silver –
koz
|
|
951
|
935
|
3,684
|
3,812
|
|
Gold – koz
|
|
0.19
|
0.20
|
1.15
|
0.81
|
|
Zinc – kt
|
|
4.64
|
5.31
|
19.37
|
19.94
|
|
Lead – kt
|
|
2.03
|
2.97
|
8.77
|
10.72
|
|
Copper –
kt
|
|
1.21
|
1.27
|
6.09
|
6.07
|
|
|
|
|
|
|
Cash cost per
ounce net of by-products
|
|
$
|
2.08
|
$
|
4.54
|
$
|
1.35
|
$
|
5.79
|
|
|
|
|
|
|
AISCSOS
|
|
$
|
7.00
|
$
|
12.62
|
$
|
5.25
|
$
|
11.11
|
|
|
|
|
|
|
Payable silver
sold – koz
|
|
813
|
759
|
3,181
|
3,233
|
|
|
|
|
|
|
Sustaining capital
- ('000s)
|
|
$
|
3,548
|
$
|
4,355
|
$
|
10,267
|
$
|
11,994
|
Morococha mine(1)
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Tonnes milled –
kt
|
|
170.6
|
164.2
|
676.9
|
672.8
|
Average silver grade
– grams per tonne
|
|
145
|
126
|
137
|
135
|
Average zinc grade
- %
|
|
3.25
|
2.81
|
3.01
|
3.15
|
Average lead grade
- %
|
|
0.84
|
0.71
|
0.78
|
0.75
|
Average copper grade
- %
|
|
1.07
|
1.23
|
1.20
|
1.44
|
Average silver
recovery - %
|
|
91.0
|
88.6
|
89.2
|
88.4
|
Average zinc recovery
- %
|
|
81.2
|
76.2
|
79.6
|
73.2
|
Average lead recovery
- %
|
|
71.0
|
62.9
|
66.6
|
60.0
|
Average copper
recovery - %
|
|
83.4
|
82.6
|
83.9
|
82.6
|
Production:
|
|
|
|
|
|
|
Silver –
koz
|
|
721
|
578
|
2,634
|
2,541
|
|
Gold – koz
|
|
0.82
|
0.43
|
3.53
|
2.14
|
|
Zinc – kt
|
|
4.49
|
3.48
|
16.13
|
15.46
|
|
Lead – kt
|
|
1.00
|
0.72
|
3.46
|
2.94
|
|
Copper –
kt
|
|
1.49
|
1.60
|
6.64
|
7.74
|
|
|
|
|
|
|
Cash cost per
ounce net of by-products
|
|
$
|
(7.42)
|
$
|
5.52
|
$
|
(5.34)
|
$
|
4.21
|
|
|
|
|
|
|
AISCSOS
|
|
$
|
(1.54)
|
$
|
15.02
|
$
|
1.22
|
$
|
9.32
|
|
|
|
|
|
|
Payable silver
sold (100%) - koz
|
|
658
|
526
|
2,448
|
2,377
|
|
|
|
|
|
|
Sustaining capital
(100%) - ('000s)
|
|
$
|
3,162
|
$
|
4,892
|
$
|
12,428
|
$
|
10,945
|
(1)
|
Production figures
are for Pan American's 92.3% share only, unless otherwise
noted.
|
San Vicente mine
(1)
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Tonnes milled –
kt
|
|
89.5
|
81.5
|
328.1
|
338.9
|
Average silver grade
– grams per tonne
|
|
406
|
431
|
374
|
443
|
Average zinc grade -
%
|
|
2.01
|
1.41
|
1.94
|
2.05
|
Average lead grade -
%
|
|
0.25
|
0.29
|
0.29
|
0.32
|
Average silver
recovery - %
|
|
93.9
|
93.9
|
92.6
|
93.2
|
Average zinc recovery
- %
|
|
77.7
|
64.3
|
68.7
|
73.0
|
Average lead recovery
- %
|
|
79.1
|
87.8
|
80.1
|
84.2
|
Production:
|
|
|
|
|
|
|
Silver –
koz
|
|
1,102
|
1,050
|
3,610
|
4,433
|
|
Gold – koz
|
|
0.14
|
|
0.51
|
|
|
Zinc – kt
|
|
1.40
|
0.75
|
4.36
|
5.08
|
|
Lead – kt
|
|
0.11
|
0.09
|
0.47
|
0.59
|
|
Copper –
kt
|
|
0.33
|
0.23
|
0.63
|
0.55
|
|
|
|
|
|
|
Cash cost per
ounce net of by-products
|
|
$
|
9.04
|
$
|
11.22
|
$
|
11.85
|
$
|
11.95
|
|
|
|
|
|
|
AISCSOS
|
|
$
|
12.31
|
$
|
12.43
|
$
|
14.40
|
$
|
14.30
|
|
|
|
|
|
|
Payable silver
sold (100%) - koz
|
|
1,218
|
1,332
|
3,603
|
4,264
|
|
|
|
|
|
|
Sustaining capital
(100%) - ('000s)
|
|
$
|
1,939
|
$
|
1,631
|
$
|
8,146
|
$
|
4,963
|
(1)
|
Production figures
are for Pan American's 95.0% share only, unless otherwise
noted.
|
Manantial Espejo mine
|
|
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Tonnes milled -
kt
|
|
205.1
|
205.0
|
793.5
|
753.6
|
Average silver grade
– grams per tonne
|
|
107
|
130
|
134
|
143
|
Average gold grade –
grams per tonne
|
|
1.62
|
2.00
|
1.88
|
2.94
|
Average silver
recovery - %
|
|
89.7
|
91.1
|
90.6
|
90.2
|
Average gold recovery
- %
|
|
93.5
|
92.8
|
93.8
|
93.8
|
Production:
|
|
|
|
|
|
Silver –
koz
|
|
646
|
779
|
3,123
|
3,136
|
Gold – koz
|
|
9.98
|
12.21
|
45.34
|
66.89
|
|
|
|
|
|
|
Cash cost per
ounce net of by-products
|
|
$
|
26.52
|
$
|
14.61
|
$
|
18.25
|
$
|
4.28
|
|
|
|
|
|
|
AISCSOS
|
|
$
|
28.63
|
$
|
3.77
|
$
|
23.42
|
$
|
(2.08)
|
|
|
|
|
|
|
Payable silver
sold - koz
|
|
766
|
779
|
3,171
|
3,033
|
|
|
|
|
|
|
Sustaining capital
- ('000s)
|
|
$
|
1,045
|
$
|
1,097
|
$
|
3,333
|
$
|
2,868
|
SOURCE Pan American Silver Corp.