(Unaudited Results. All amounts in US$ unless
otherwise stated. Approximate production figures.)
VANCOUVER, Nov. 13, 2014 /CNW/ - Pan American Silver
Corp. (NASDAQ: PAAS; TSX: PAA) (the "Company", or "Pan
American") today announced its unaudited financial and operating
results for the three and nine months ended September 30, 2014. The Company also announced
that its Board of Directors has approved its fourth quarterly cash
dividend of 2014 in the amount of $0.125 per common share, which will be payable on
or about Monday, December 8, 2014 to
holders of record of common shares as of Tuesday, November 25, 2014.
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Third Quarter 2014
Highlights (unaudited)(1)
|
- Silver production
of 6.19 million ounces
- Gold production of
34,100 ounces
- Cash
Costs(2) per ounce of $12.29, net of
by-product credits
- AISCSOS(3) of $20.50, including
an unfavorable net realizable value ("NRV") adjustment on
inventories of $2.47 per ounce
- Revenue of $178.3
million
- Mine operating
loss(4) of $12.4 million, including an
unfavorable NRV adjustment on inventories of $15.4
million
- Net loss of $20.2
million or $0.13 per share
- Adjusted
loss(5) of $14.3 million or $0.09 per
share
- Net cash generated
from operating activities of $38.3 million, or $0.25 per
share
- Total dividends
paid to common shareholders of $18.9 million
|
Financial Position
at September 30, 2014
|
- Cash and short term
investments of $377.5 million
- Working capital of
$606.9 million
- Total debt of $57.3
million
|
(1)
|
Financial information
in this news release is based on International Financial Reporting
Standards ("IFRS"); results are unaudited; percentages compare the
third quarter of 2014 against the third quarter of 2013.
|
(2)
|
Cash costs per
payable ounce of silver produced, net of by-product credits ("Cash
Costs"), is a non-GAAP measure. Cash Costs does not have a
standardized meaning prescribed by IFRS as an indicator of
performance. Investors are cautioned that Cash Costs per ounce
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. 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. This measure is a non-GAAP measure and readers should
refer to the information under the heading "Non-GAAP Measure – Cash
Costs Per Ounce, Net of By Product Credits" at the end of this news
release for more information and to the table in the Alternative
Performance (Non-GAAP) Measures section of the MD&A for the
period ending September 30, 2014 for a reconciliation of this
measure to the unaudited condensed interim consolidated financial
statements.
|
(3)
|
All-in sustaining
costs per silver ounce sold ("AISCSOS") is a non-GAAP measure. The
Company has adopted the reporting of AISCSOS as a measure of a
silver mining company's consolidated operating performance and the
ability to generate cash flow from all operations
collectively. We believe it is a more comprehensive measure
of the cost of operating our consolidated business than traditional
cash and total costs per 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. This measure including its subcomponent Sustaining
Capital are non – GAAP measures and readers should refer to the
table in the Alternative Performance (Non-GAAP) Measures section of
the Managements Discussion & Analysis ("MD&A") for the
period ending September 30, 2014 for a reconciliation of this
measure to the unaudited condensed interim consolidated financial
statements.
|
(4)
|
Mine operating
(loss)/earnings is a non-GAAP measure used by the Company to assess
the performance of its silver mining operations. Mine operating
earnings is calculated as revenue less production costs,
depreciation and amortization and royalties. The Company and
certain investors use this information to evaluate the Company's
performance.
|
(5)
|
Adjusted
earnings/(loss) and adjusted earnings/(loss) per share attributable
to common shareholders are Non-GAAP measures. Adjusted
earnings/(loss) is calculated as net earnings/(loss) for the period
adjusting for the gains or losses recorded on fair market value
adjustments on the Company's outstanding derivative instruments,
impairment of mineral property, unrealized foreign exchange gains
or losses, unrealized gain or loss on commodity contracts, net
realizable value adjustment to long-term heap inventory, gain or
loss on sale of assets and the effect of taxes on the above items.
The Company considers this measure to better reflect normalized
earnings as it does not include items which may be volatile from
period to period.
|
Commenting on the Company's third quarter results, Geoff Burns, President & CEO said,
"Considering the heavy rains in Mexico that hampered production from our
Dolores mine and the strike we
experienced at San Vicente, we had
a very respectable production quarter, which has kept us on track
to deliver on our full year guidance for both silver production and
Cash Costs. I was particularly pleased to see the progress we've
made at our Huaron and Morococha mines in Peru where Cash Costs for the third quarter
declined to $7.63 per ounce and
$6.86 per ounce, respectively, on the
strength of increased throughput and higher base metal by-product
production." Burns continued, "While our quarterly earnings were
hurt by significant non-cash NRV adjustments to our inventories and
negative pricing adjustments on concentrates we sold in previous
periods as a consequence of the slide in silver and gold prices, we
still generated over $38 million in
operating cash flow. This was more than sufficient to cover our
on-going sustaining capital needs, as well as fund the major part
of the third dividend payment of 2014."
Financial Results
During the third quarter of 2014, Pan American generated
$178.3 million in revenue, a 16%
decline in comparison to the third quarter of 2013. The lower
revenue resulted primarily from less quantities of silver and gold
sold, lower realized prices obtained for silver, gold and copper,
and a negative price adjustment of $8.2
million on concentrates sold during prior periods. Compared
to the third quarter of 2013, during the three months ended
September 30, 2014 the prices of
silver, gold and copper declined 7%, 3% and 1%, respectively.
Conversely, zinc and lead appreciated 24% and 5%, respectively.
Average realized prices were $18.82
per ounce of silver and $1,284 per
ounce of gold. During the current reporting quarter, silver and
gold contributed 56% and 25% respectively to the Company's
consolidated revenue, while revenue from base metals rose to 19%
from 14% a year ago.
Pan American generated a net loss of $20.2 million, or $0.13 per, share during the third quarter of
2014, compared to earnings of $14.2
million in the same quarter of 2013. The loss was mainly due
to a negative non-cash adjustment of $15.4
million on the NRV of inventories, in particular at
Dolores and Manantial Espejo, a
$9.8 million negative pricing and
quantity settlement adjustment on concentrate sales from prior
periods, and a $6.7 million foreign
exchange loss, mainly on Canadian dollar denominated cash
balances.
The Company reported an adjusted loss of $14.3 million, or $0.09 per share, for the third quarter of 2014,
after adjusting for an $8.5 million
unrealized loss on the value of heap leach inventories and a
$2.6 million unrealized loss on
foreign exchange, partially offset by a $2.2
million gain on derivatives.
Pan American posted a mine operating loss of $12.4 million during the third quarter of 2014,
compared to mine operating earnings of $33.9
million in the same period of 2013. The loss resulted from
lower revenues and a $20.8 million
increase in production costs, mainly due to the previously
discussed NRV adjustments, offset by lower depreciation
expense.
The Company's cash flow from operating activities during the
third quarter of 2014 was $38.3
million, or $0.25 per share,
compared to $40.7 million generated
in the third quarter of 2013. The decline was primarily the result
of realizing lower prices for silver and gold sales, in addition to
selling lower volumes of silver during the current quarter.
AISCSOS for the third quarter of 2014 were $20.50, and $18.02
for the nine months ended September 30,
2014. AISCSOS were negatively affected by the non-cash
NRV adjustments previously described. Excluding the NRV adjustments
of $2.47 per ounce for the third
quarter and $1.45 per ounce for the
nine months ended September 30, 2014,
AISCSOS were $18.03 for the third
quarter and $16.57 year-to-date. For
a full reconciliation of the calculation of AISCSOS, please refer
to the section "Alternative Performance (Non-GAAP) Measures" of the
Company's MD&A for the period ended September 30, 2014.
During the third quarter of 2014, the Company paid a total of
$18.9 million in cash dividends to
common shareholders. Year-to-date, Pan American's shareholders have
received a total of $56.8 million in
cash dividends.
At September 30, 2014 the Company
had $377.5 million in cash and short
term investments and working capital of $606.9 million, a decrease of $4.1 million and $40.6
million from June 30, 2014,
respectively. At the end of the reporting quarter, Pan American's
total debt was $57.3 million.
Operating Results
During the third quarter of 2014 Pan American produced 6.19
million ounces of silver, 8% less than in the same period of last
year, due to the anticipated decline in silver production at Alamo
Dorado as the mine processes a greater quantity of lower grade ores
and stockpiles, coupled with the negative effect of a two-week work
stoppage at San Vicente, and the
diluting effects of heavier than usual rains on the leaching
solutions at Dolores. These
production declines were partially offset by production gains at
La Colorada, Huaron and Manantial
Espejo.
The Company also produced 34,100 ounces of gold during the third
quarter of 2014, 18% less than in the same period of 2013.
Consolidated gold production declined due to 29% less ounces
produced at Dolores due to the
heavy rains previously mentioned, and 21% less ounces produced at
Alamo Dorado on account of expected lower grades and
recoveries.
Pan American's quarterly consolidated zinc and lead production
for the third quarter of 2014 was similar to the third quarter of
2013; however, copper production rose by 60% to 2,400 tonnes on
account of higher grades at the Company's Peruvian operations.
Mexico
During the third quarter of 2014, silver production at
La Colorada rose 19% from the same
quarter of 2013 to 1.25 million ounces. The increase was due to
higher grades and throughput from improved development rates
achieved during 2014 as part of the four-year mine expansion effort
that is underway.
Silver production at Dolores
during the third quarter of 2014 was 0.97 million ounces, 3% less
than in the same period of 2013. The decline was due to lower
throughput, slightly lower silver grades, as well as the diluting
effect of heavier than usual rains on the concentration of the
leaching solutions. These losses were offset by higher silver
recoveries due to the benefit of the longer leach times on the
larger area of heap leach pad 3. The heavy rains had a greater
impact on gold production, which declined from 21,600 ounces in the
third quarter of 2013 to 15,400 ounces in the third quarter of
2014. With the end of the rainy season, the Company expects that
leaching solutions will return to normal concentrations and silver
and gold ounces not produced from the heaps during the third
quarter will slowly start to be recovered in the fourth
quarter.
As planned, Alamo Dorado has increased processing rates of lower
grade ores and stockpiles as availability and access to higher
grade ores diminishes. During the third quarter of 2014, the mine
produced 0.67 million ounces of silver and 3,600 ounces of gold,
46% and 21% less than in the third quarter of 2013,
respectively.
Peru
The Company's Peruvian operations had a very good third quarter
and continue to benefit from the multi-year mechanization effort
that is improving overall productivity. During the three months
ended September 30, 2014, Huaron
produced 0.93 million ounces of silver, 7% more than in the
comparable period of 2013 on account of higher throughput and
recoveries. The mine also saw a significant increase in copper
production, which rose from 990 tonnes a year ago to 1,550 tonnes
in the reporting quarter, on account of mine sequencing into higher
copper grade stopes. More importantly, Cash Costs at Huaron
declined to $7.63 per ounce during
the current quarter as a direct result of increased silver
production and increased by-product copper production.
Morococha produced 0.64 million ounces of silver during the
third quarter of 2014, 6% less than in the same period of 2013 due
to lower silver grades and recoveries. However, the mine saw a
significant increase in base metals production, with zinc, lead and
copper production up 15%, 31% and 71%, respectively, due to mine
sequencing that has shifted focus to ores of higher overall metal
value. As a consequence, Cash Costs at Morococha declined to
$6.86 per ounce for the current
quarter, down more than 50% from the comparable quarter in
2013.
Bolivia
Production at San Vicente was
negatively affected by a two-week work stoppage reported in July.
During the third quarter of 2014, the mine produced 0.76 million
ounces of silver, a 29% decline compared to the third quarter of
2013. Silver production was also affected by a negative
adjustment on the reconciliation of final sales to production from
prior reporting periods.
Argentina
During the third quarter of 2014, Manantial Espejo's silver
production rose 24% from the third quarter of 2013 to 0.97 million
ounces. The increase was due to higher throughput, grades and
recoveries. As anticipated, lower gold grades mined during the
reporting quarter affected gold production, which declined to
13,200 ounces, 5% less than in the comparable quarter of 2013.
Consolidated Cash Costs Per Ounce
During the three months ended September
30, 2014, Pan American reported consolidated Cash Costs of
$12.29 per ounce, 18% higher than in
the same period of last year. The increase was mainly due to lower
by-product gold credits at Dolores
and Manantial Espejo, the effects of the production interruptions
at San Vicente, and the processing
of greater quantities of lower grade ores at Alamo Dorado. These
increases were partially offset by lower Cash Costs at La Colorada and the significantly lower Cash
Costs at the Company's Peruvian operations, where improved
productivities and higher by-product credits helped push costs
down. Please refer to the note under the heading "Non-GAAP Measure
– Cash Costs per Ounce, Net of By-Product Credits" at the end of
this news release and to the section "Alternative Performance
(Non-GAAP) Measures" of the Company's MD&A for the period ended
September 30, 2014, for a full
description of this Non-GAAP measure.
Sustaining Capital
During the third quarter of 2014, Pan American spent
$25.8 million in sustaining capital
at its seven operating mines. The expenditures were incurred mainly
on pre-stripping at Manantial Espejo and Dolores, tailings facility expansions at
La Colorada and Huaron, mine
development advances and equipment upgrades at Huaron and Morococha
and exploration activities at Huaron, Morococha and Dolores. Sustaining capital expenditures
remained as expected and on forecast for 2014. The Company also
invested a total of $2.9 million on
the La Colorada expansion project
and $0.1 million for the power line
project at Dolores.
Third Quarter 2014
Capital Expenditures
|
$
Million
|
La Colorada
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4.2
|
Dolores
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6.8
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Alamo
Dorado
|
0.0
|
Huaron
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4.1
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Morococha
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2.2
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San Vicente
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0.8
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Manantial
Espejo
|
7.7
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Total Sustaining
Capital Expenditures
|
$25.8
|
La Colorada Expansion
Project
|
2.9
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Dolores
Project
|
0.1
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Total Project
Capital Expenditures
|
$3.0
|
Total Third Quarter
2014 Capital Expenditures
|
$28.8
|
Project Development
La Colorada Expansion
Year-to-date, the Company has invested $10.4 million on the La
Colorada expansion project. During the third quarter of
2014, activities focused on civil works to prepare the future shaft
location and the request for detailed proposals and cost estimates
for the shaft sinking and infrastructure works, as well as for
completion of basic engineering for the new plant site. Management
expects to award contracts for key components of the project in the
fourth quarter, such as the raise boring for the new shaft,
construction of the new hoist, equipment orders for the plant and
overall expansion detailed engineering efforts.
Dolores
Year-to date, Pan American has invested $18.7 million on Dolores' projects. During the third quarter of
2014, work on the expansion of leach pad 3 was suspended due to the
rainy season with project work concentrating on successfully
securing the right of way agreements for the mine's new power line,
which will allow filing of the permit applications during the
fourth quarter of 2014. During the three months ended September 30, 2014, the Company spent
$0.1 million on Dolores' projects.
2014 Outlook
Year-to-date, Pan American's consolidated production was 19.4
million ounces of silver and 117,600 ounces of gold, which is
within the Company's forecast for the first three quarters of 2014.
Management is confident that Pan American will achieve its original
annual production guidance of 25.75 to 26.75 million ounces of
silver and 155,000 to 165,000 ounces of gold. In addition,
year-to-date base metals production is ahead of schedule and as a
result, management is increasing its annual production guidance to
approximately 44,000 tonnes of zinc, 15,000 tonnes of lead and
8,000 tonnes of copper, which represents increases of 7%, 14% and
47% respectively to the original guidance provided for the
year.
Consolidated AISCSOS and Cash Costs per ounce year-to-date were
$18.02 and $10.83, respectively. Through September 2014, AISCSOS were slightly ahead of
management's full year forecast of $17.00 to
$18.00, but include $1.46 per
ounce in unexpected NRV adjustments, while Cash Costs were well
below management's 2014 full year forecast of $11.70 to $12.70 per ounce. Management remains
confident that it will achieve its guidance for 2014 AISCSOS of
$17.00 to $18.00 (assuming no further
NRV adjustments in the fourth quarter) and that full-year 2014
consolidated Cash Costs are likely to be at the lower end of
guidance of $11.70 to $12.70 per
ounce.
Year-to-date sustaining capital spending at September 30, 2014, was $75.6 million, in line with Pan American's
guidance of $95.5 million for the
full year. Project spending for the six months ended September 30, 2014 was $32.0 million and management now estimates that
total project spending in 2014 will be approximately $50.0 million, which is $17.0 million less than originally estimated,
primarily due to timing differences in mobilizing the La Colorada expansion and Dolores power line projects.
In closing, Geoff Burns added,
"Since the end of the third quarter we have seen silver and gold
prices continue to decline. While in the long term I remain
staunchly optimistic that precious metal prices will recover to
their previous highs and more, we are and we will continue to
respond to the current price environment. As we move through our
2015 planning and budgeting process we will again be looking for
opportunities to further reduce our costs, increase our
productivities, eliminate the processing of uneconomic material and
focus on cash generation at each and every one of our mines. Our
success in reducing costs in Peru
is a clear indicator of what Pan American can accomplish when faced
with adversity. While the task ahead is difficult, I am confident
we have the experience, the flexibility, the financial strength,
and the team to weather and excel during this difficult
period."
Fourth Dividend of 2014 Approved by the Board
The Company's Board of Directors has approved the fourth
quarterly cash dividend of 2014 in the amount of $0.125 per common share.
The cash dividend will be distributed on or about Monday, December 8, 2014 to holders of record of
common shares as of the close of business on Tuesday, November 25, 2014. Specific distribution
dates and amounts of future dividends will be determined by the
Company's Board of Directors on an ongoing basis.
Pan American's dividends are designated as eligible dividends
for the purposes of the Income Tax Act (Canada).
About Pan American
Pan American Silver's mission is to be the world's pre-eminent
silver producer, with a reputation for excellence in discovery,
engineering, innovation and sustainable development. The Company
has seven operating mines located in Mexico, Peru,
Argentina and Bolivia. Pan American also owns several
development projects in the USA,
Mexico, Peru and Argentina.
Technical information contained in this news release with
respect to Pan American has been reviewed by Michael Steinmann, P.Geo., Executive VP
Corporate Development & Geology, and Martin Wafforn, P.Eng., VP
Technical Services, who are the Company's Qualified Persons for the
purposes of NI 43-101.
Pan American will
host a conference call to discuss these results on Friday, November
14, 2014 at 1:00 pm EST (10:00 am PST). To participate in the
conference please dial toll number 1+ 604-638-5340. A live audio
webcast and presentation will be available at
http://services.choruscall.ca/links/pan141114.html. The call
and webcast will also be available for replay for one week after
the call by dialing 1-604-638-9010 and entering code # 6218
followed by the # sign.
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NON-GAAP MEASURE – CASH COSTS PER OUNCE, NET OF BY-PRODUCT
CREDITS
THIS NEWS RELEASE PRESENTS INFORMATION ABOUT OUR CASH COSTS
OF PRODUCTION OF AN OUNCE OF SILVER FOR OUR OPERATING MINES. CASH
COSTS PER OUNCE OF SILVER PRODUCED, NET OF BY-PRODUCT CREDITS IS
CALCULATED AS FOLLOWS:
- EXCEPT AS OTHERWISE NOTED, CASH COSTS PER OUNCE PRODUCED IS
CALCULATED BY DIVIDING TOTAL CASH COSTS, NET OF BY-PRODUCT CREDITS
BY TOTAL SILVER OUNCES PRODUCED AT THE RELEVANT MINE OR
MINES.
- TOTAL CASH COSTS INCLUDE MINE OPERATING COSTS SUCH AS
MINING, PROCESSING, ADMINISTRATION, ROYALTIES AND OPERATING TAXES,
BUT EXCLUDE AMORTIZATION, RECLAMATION COSTS, FINANCING COSTS AND
CAPITAL DEVELOPMENT AND EXPLORATION. CERTAIN AMOUNTS OF STOCK-BASED
COMPENSATION ARE EXCLUDED AS WELL.
CASH COST PER OUNCE OF SILVER PRODUCED, NET OF BY-PRODUCT
CREDITS IS INCLUDED IN THIS NEWS RELEASE BECAUSE CERTAIN INVESTORS
USE THIS INFORMATION TO ASSESS OUR PERFORMANCE AND ALSO TO
DETERMINE OUR ABILITY TO GENERATE CASH FLOW FOR USE IN INVESTING
AND OTHER ACTIVITIES. THE INCLUSION OF CASH COSTS PER OUNCE
PRODUCED MAY ENABLE INVESTORS TO BETTER UNDERSTAND YEAR-OVER-YEAR
CHANGES IN OUR PRODUCTION COSTS, WHICH IN TURN AFFECT PROFITABILITY
AND CASH FLOW. CASH COSTS PER OUNCE, NET OF BY-PRODUCT CREDITS DOES
NOT HAVE A STANDARDIZED MEANING OR A CONSISTENT BASIS OF
CALCULATION PRESCRIBED BY CANADIAN ACCOUNTING STANDARDS.
INVESTORS ARE CAUTIONED THAT CASH COSTS PER OUNCE PRODUCED,
NET OF BY-PRODUCT CREDITS SHOULD NOT BE
CONSIDERED IN ISOLATION OR CONSTRUED AS A SUBSTITUTE TO COSTS
DETERMINED IN ACCORDANCE WITH CANADIAN ACCOUNTING STANDARDS AS
PRESCRIBED UNDER IFRS AS AN INDICATOR OF PERFORMANCE. OUR METHOD OF
CALCULATING CASH COSTS PER OUNCE PRODUCED, NET OF BY-PRODUCT
CREDITS MAY DIFFER FROM THE METHODS USED BY OTHER ENTITIES AND,
ACCORDINGLY, OUR CASH COSTS PER OUNCE PRODUCED MAY NOT BE
COMPARABLE TO SIMILARLY TITLED MEASURED USED BY OTHER
ENTITIES.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
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: OUR ESTIMATED PRODUCTION OF SILVER,
GOLD AND OTHER METALS IN 2014; OUR FORECAST CASH COSTS PER OUNCE OF
SILVER IN 2014; OUR ESTIMATED AISCSOS FOR 2014; OUR ANTICIPATED
CAPITAL INVESTMENTS FOR 2014; THE ABILITY OF THE COMPANY TO
SUCCESSFULLY COMPLETE ANY CAPITAL INVESTMENT PROGRAMS AND
PROJECTS AND THE IMPACTS OF ANY SUCH PROGRAMS AND PROJECTS ON THE
COMPANY; STATEMENTS AS TO ANY FUTURE DIVIDENDS; AND ANY ANTICIPATED
LEVEL OF FINANCIAL AND OPERATIONAL SUCCESS IN 2014.
THESE STATEMENTS 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; 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 IN OR INTERRUPTIONS IN
SCHEDULED PRODUCTION; ALL NECESSARY PERMITS, LICENCES 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 METALS
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 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; 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. 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 AND 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 AND INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION,
CHANGES IN ASSUMPTIONS, FUTURE EVENTS OR OTHERWISE, EXCEPT TO THE
EXTENT REQUIRED BY APPLICABLE LAW.
Pan American
Silver Corp.
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Financial &
Operating Highlights
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Three months
ended
September 30,
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Nine months
ended
September 30,
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2014
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2013
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2014
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2013
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Consolidated
Financial Highlights
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(Unaudited in
thousands of U.S. Dollars, except per share
amounts)
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Net (loss) earnings
for the period
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$
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(20,177)
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$
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14,236
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$
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(19,096)
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$
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(152,783)
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(Loss) earnings per
share attributable to common shareholders (basic)
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$
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(0.13)
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$
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0.09
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$
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(0.12)
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$
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(1.00)
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Adjusted (loss)
earnings for the period(1)
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$
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(14,262)
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$
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12,154
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$
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382
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$
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32,127
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Adjusted (loss)
earnings per share attributable to common shareholders (basic)
(1)
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$
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(0.09)
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$
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0.08
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$
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0.00
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$
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0.21
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Mine operating (loss)
earnings
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$
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(12,378)
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$
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33,934
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$
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29,443
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$
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112,564
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Mine operating
earnings (Excludes NRV Adj.) (2)
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$
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3,036
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$
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25,262
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$
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57,184
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$
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108,007
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Net cash generated
from operating activities
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$
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38,345
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$
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40,730
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$
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123,365
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$
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73,450
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Net cash generated
from operating activities per share
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$
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0.25
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$
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0.27
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$
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0.81
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$
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0.48
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Capital
spending
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$
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27,925
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$
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41,708
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$
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101,630
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$
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125,732
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Dividends
paid
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$
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18,939
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$
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18,926
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$
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56,817
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$
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56,874
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Shares
repurchased
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$
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-
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$
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-
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$
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-
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$
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6,740
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Cash and short-term
investments
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$
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377,488
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$
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421,014
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$
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377,488
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$
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421,014
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Working
capital(3)
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$
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606,923
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$
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699,344
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$
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606,923
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$
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699,344
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Consolidated Metal
Production
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Silver metal –
million ounces
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6.19
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6.70
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19.37
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19.16
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Gold metal – thousand
ounces
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34.1
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41.6
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117.6
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103.6
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Zinc metal – thousand
tonnes
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10.5
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10.6
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33.3
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30.9
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Lead metal – thousand
tonnes
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3.5
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3.4
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11.1
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10.0
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Copper metal –
thousand tonnes
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2.4
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1.5
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6.0
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3.9
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Average Realized
Price
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Silver metal
($/oz)
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$
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18.82
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$
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20.52
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$
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19.47
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$
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24.31
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Gold metal
($/oz)
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$
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1,284
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$
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1,319
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$
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1,286
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$
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1,443
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Consolidated Cost
per Ounce of Silver (net of by-product credits)
(4)
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Cash cost per
ounce
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$
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12.29
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$
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10.40
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$
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10.83
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$
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11.25
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Total production cost
per ounce
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$
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17.55
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$
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16.85
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$
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17.05
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$
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17.27
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All-in Sustaining
Cost per Silver Ounce Sold (net of by-product
credits)
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$
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20.50
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$
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16.26
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$
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18.02
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$
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18.86
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All-in Sustaining
Cost per Silver Ounce Sold (Excludes NRV Adjustment)
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$
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18.03
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$
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17.51
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$
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16.57
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$
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18.62
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Payable ounces of
silver (used in cost per ounce calculations) – million
ounces
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5.84
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6.35
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18.33
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18.17
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(1)
Adjusted (loss) earnings and adjusted (loss) earnings per share
attributable to common shareholders are Non-GAAP measures. Adjusted
(loss) earnings
is calculated as net (loss) earnings for the period adjusting for
the gains or losses recorded on fair market value adjustments on
the Company's outstanding
derivative instruments, impairment of mineral property, unrealized
foreign exchange gains or losses, unrealized gain or loss on
commodity contracts, net
realizable value adjustment to long term heap inventory, gain or
loss on sale of assets and the effect for taxes on the above items.
The Company considers
this measure to better reflect normalized earnings as it does not
include items which may be volatile from period to
period.
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Three months
ended
September
30,
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Nine months
ended
September 30,
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Adjusted (loss)
Earnings Reconciliation
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2014
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2013
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2014
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2013
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Net (loss) earnings
for the period
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$
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(20,177)
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$
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14,236
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$
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(19,096)
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$
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(152,783)
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Adjust derivative
gain
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(2,242)
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(1,333)
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(1,600)
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(15,466)
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Adjust impairment of
mineral property
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-
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-
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-
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203,443
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Adjust unrealized
foreign exchange losses
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2,577
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(7,830)
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4,652
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(266)
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Adjust net realizable
value of inventory
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8,482
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-
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25,596
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Adjust unrealized
gain on commodity contracts
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-
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388
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(235)
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Adjust loss on silver
and gold forward contract
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-
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6,254
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-
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6,254
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Adjust severance
expense
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-
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617
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-
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617
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Adjust gain on sale
of assets
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129
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(135)
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(200)
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(8,099)
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Adjust for effect of
taxes
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(3,031)
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(43)
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(8,970)
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(1,338)
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Adjusted (loss)
earnings for the period
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$
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(14,262)
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$
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12,154
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$
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382
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$
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32,127
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Weighted average
shares for the period
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151,506
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151,411
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151,503
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151,525
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Adjusted (loss)
earnings per share for the period
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$
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(0.09)
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$
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0.08
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$
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0.00
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$
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0.21
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(2) Mine
operating (loss) earnings – excluding NRV Adjustment is a Non-GAAP
measure. The Company uses this measure to reflect the real cost of
production by removing
the effects of short term and volatile commodity price
fluctuations.
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(3)
Working capital is a Non-GAAP measure calculated as current assets
less current liabilities. The Company and certain investors use
this information to evaluate
whether the Company is able to meet its current obligations using
its current assets.
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(4)
Consolidated cost per ounce of silver is a Non-GAAP measure. The
Company believes that in addition to production costs, depreciation
and amortization, and royalties,
cash cost per ounce is a useful and complementary benchmark that
investors use to evaluate the Company's performance and ability to
generate cash flows and is well
understood and widely reported in the silver mining industry.
However, cash cost per ounce does not have a standardized meaning
prescribed by IFRS as an indicator of
performance. Investors are cautioned that cash costs per ounce
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.
The Company's method of calculating cash costs per ounce may differ
from the methods used by
other entities.
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SOURCE Pan American Silver Corp.