(All amounts in US$ unless otherwise indicated)
VANCOUVER, Aug. 13, 2015 /PRNewswire/ - Pan American
Silver Corp. (NASDAQ: PAAS; TSX: PAA) ("Pan American", or the
"Company") today reported unaudited results for the three months
and six months ended June 30, 2015.
The following table displays the key operational and financial
highlights.
This news release should be read in conjunction with the
Company's Financial Statements, Notes to the Financial Statements
and Management's Discussion & Analysis ("MD&A") for the
three and six months ended June 30,
2015, which have been filed on SEDAR and are available at
www.sedar.com and on the Company's website at
www.panamericansilver.com.
Second Quarter
2015 Highlights (unaudited) (1)
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- Silver production
of 6.65 million ounces, 1% higher than a year ago and 9% higher
than in the first quarter of 2015
- Gold production of
44,400 ounces, 18% higher than both a year ago and the first
quarter of 2015
- Consolidated All-in
Sustaining Costs per Silver Ounce Sold, net of by-product credits
("AISCSOS")(2) of $14.46, 20% lower than a year
ago
- Consolidated cash
costs(3) of $9.44 per silver ounce net of by-product
credits, 25% lower than a year ago
- Revenue of $174.2
million
- Cash flow generated
by operating activities of $20.6 million, or $0.14 per
share
- Net loss of $7.3
million or ($0.05) per share
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Financial Position
at June 30, 2015
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- Cash and short term
investments of $274.9 million
- Working
capital(4) of $469.8 million
- Total debt of $61.8
million
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(1)
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Financial information
in this news release is based on International Financial Reporting
Standards ("IFRS"); results are unaudited.
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(2)
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All-In Sustaining
Costs per Silver Ounce Sold ("AISCSOS") is non-Generally Accepted
Accounting Principles ("GAAP") measure. AISCSOS is a measure of a
silver mining company's consolidated operating performance and the
ability to generate cash flow from all operations collectively. The
Company and certain investors believe AISCSOS 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. AISCSOS does not
have a standardized meaning prescribed by GAAP, and the Company's
method of calculating AISCSOS as described in the Alternative
Performance (Non-GAAP) Measures section of the Q2 2015 MD&A may
differ from the methods used by other entities. In 2014 it was
determined that certain charges to metal sales were being treated
differently in the quantification of AISCSOS for the Company's San
Vicente mine compared to the Company's other operations. As such
previously reported AISCSOS for the San Vicente mine have been
revised to quantify AISCSOS with a methodology consistent with that
used by Company's other operations. The effect of this revision on
previously reported consolidated AISCSOS for the three and six
months ended June 30, 2014 was $0.25 and $0.37 decrease,
respectively.
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(3)
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Cash cost per ounce
of silver, net of by-product credits ("cash costs per ounce") is a
non-GAAP measure. The Company believes that cash costs per
ounce is a useful measure for investors to evaluate the Company's
performance and ability to generate cash flows, and to facilitate
comparisons on a mine by mine basis. Cash costs per ounce is a
measure conceptually understood and widely reported in the silver
mining industry. However, cash cost per ounce does not have a
standardized meaning prescribed by GAAP and the Company's method of
calculating cash costs, as described in the Alternative Performance
(Non-GAAP) Measures section of the Q2 2015 MD&A, may differ
from the methods used by other entities. Cash costs per ounce
should not be construed as an alternative indicator of performance
to production costs, depreciation and amortization, and royalties
determined in accordance with GAAP. Previously reported cash
costs for the Company's Peruvian operations overstated copper
by-product credits. Consolidated cash costs for 2014 have
been adjusted to correct for this overstatement. The effect of
these corrections for three and six months ended June 30, 2014 was
a $0.45 and $0.43 per ounce increase, respectively.
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(4)
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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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Commenting on the Company's 2015 second quarter results,
Geoff Burns, Chief Executive
Officer, said, "We had a very strong production quarter,
meaningfully increasing our silver and gold production as compared
to both the second quarter of 2014 and the first quarter of 2015.
At the same time, we were able to significantly reduce our cash
costs and AISCSOS (by 25% and 20%, respectively, as compared to a
year ago)." Burns continued, "Even in the face of declining
precious metal prices, we increased our cash flow from operations
by 75% to $20.6 million, or
$0.14 per share as compared to the
first quarter of this year. But for the tragic accident at
Manantial Espejo, I would consider this to be an all-around solid
quarter, even though we posted a net loss of $7.3 million, almost exclusively as a result of a
total of $6.0 million in negative net
realizable value and concentrate settlement adjustments in
recognition of lower metal prices as compared to the end of the
previous quarter."
Financial Results
During the second quarter of 2015, Pan American generated
$174.2 million in revenue, 13% less
than in the comparable quarter of 2014. Lower revenue was due
primarily to a marked decline in metal prices (with the exception
of zinc), negative settlement adjustments on concentrate sales,
lower quantities of zinc, lead and gold sold, and higher treatment
and refining charges. These factors were partially offset by higher
quantities of silver and copper sold and higher zinc prices. During
the first half of 2015, Pan American generated $352.3 million in revenue, compared to
$410.6 million generated in the first
half of 2014.
Inclusive of negative settlement adjustments on concentrate
sales of $4.5 million dollars, the
Company realized average prices of $16.36 per silver ounce and $1,194 per gold ounce during the second quarter
of 2015, which were 16% and 7% lower than prices realized in the
same quarter of 2014, respectively. The average realized price per
lead tonne declined slightly from $2,070 in the second quarter of 2014 to
$2,023 in the reporting quarter,
while copper registered the biggest decline from $6,790 per tonne in the second quarter of 2014 to
$5,848 per tonne in the reporting
quarter. Contrary to the negative trend, the average price per zinc
tonne appreciated from $2,064 a year
ago to $2,228 in the reporting
quarter.
During the second quarter of 2015, Pan American generated a net
loss of $7.3 million, or $(0.05) per share, compared to a net loss of
$5.7 million, or $(0.04) per share in the comparable quarter of
2014. The net loss generated in the reporting quarter resulted
primarily from lower mine operating earnings due to lower revenues,
partially offset by lower production costs, lower income taxes, and
gains on the sale of commodities contracts and derivatives. The net
loss for the current quarter also included $1.5 million in net realizable value ("NRV")
adjustments. The Company generated a net loss of $27.1 million, or $(0.18) per share, in the first six months of
2015, compared to net earnings of $1.1
million, or $0.01 per share,
in the first half of 2014.
Pan American generated a mine operating loss of $1.0 million during the second quarter of 2015,
compared to mine operating earnings of $10.2
million generated in the comparable quarter of 2014. The
loss was directly attributable to the decline in revenues and was
partially offset by lower production costs and lower depreciation
and amortization expense. In the six months ended June 30, 2015, the Company generated mine
operating earnings of $1.7 million,
compared to mine operating earnings of $41.8
million in the comparable period of 2014.
Cash flow from operations generated during the second quarter of
2015 was $20.6 million or
$0.14 per share, compared to
$48.7 million or $0.32 per share generated in the second quarter
of 2014. Cash flow during the reporting quarter was negatively
affected by the decline in revenue previously described, as well as
higher income taxes and interest paid, as compared to the same
quarter of 2014. Cash flow from operations generated in the first
half of 2015 was $32.4 million,
compared to $84.9 million generated
in the first half of 2014.
Pan American's AISCSOS for the second quarter of 2015 was
$14.46, net of by-product credits, a
decline of 20% compared to AISCSOS posted for the same quarter of
2014, and well below the Company's 2015 full-year forecast of
$15.50 to $16.50. AISCSOS for the
reporting quarter declined mainly on account of more payable silver
ounces sold, less NRV adjustments to inventories, lower sustaining
capital expenses, and lower direct operating costs, partially
offset by higher smelting and refining and sales charges. AISCSOS
for the six months ended June 30,
2015 were $14.35, compared to
$16.45 for the same period of
2014.
At June 30, 2015, Pan American had
$274.9 million in cash and short-term
investments and working capital of $469.8
million, a decline of $17.5
million and $18.7 million,
respectively, as compared to March 31,
2015. During the second quarter of 2015, the Company paid
$7.6 million in cash dividends to its
shareholders. Year-to-date, Pan American has paid $26.5 million in cash dividends to its
shareholders.
As announced on April 15, 2015,
Pan American entered into a senior secured revolving credit
facility (the "Facility") with a syndicate of eight lenders. The
Facility is a $300 million secured
revolving line of credit that matures on April 15, 2019 and is available for general
corporate purposes, including organic growth opportunities and
acquisitions. The terms of the Facility provide the Company with
the flexibility of various borrowing and letter of credit
options. To date, no drawings have been made under the
Facility.
Operational Results
During the second quarter of 2015 Pan American produced 6.65
million silver ounces and 44,400 gold ounces. Silver production was
similar to the 6.56 million silver ounces produced a year ago as a
0.25 million ounce production decline at Alamo Dorado was offset by
production increases at the Company's other mines. Gold production
rose 18% from the second quarter of 2014, boosted by more ounces
produced at Manantial Espejo and Dolores. During the first half of 2015, Pan
American produced 12.72 million silver ounces and 81,900 gold
ounces at cash costs of $10.53 per
silver ounce, net of by-product credits.
During the second quarter of 2015, Pan American produced 4,300
copper tonnes, 126% more than in the second quarter of 2014, on
account of significant increases in copper production at the
Company's Peruvian operations. At Morococha, copper production rose
more than five times from the comparable period of 2014 on
account of higher grades and recoveries, while Huaron produced 31%
more copper than a year ago due to higher grades. The Company's
consolidated lead production during the second quarter of 2015 was
3,500 tonnes, 12% less than in the same quarter of 2014 due to
lower production at Morococha, partially offset by production gains
at La Colorada, Huaron and
San Vicente. During the first half
of 2015, the Company produced approximately 18,500 zinc tonnes,
7,000 lead tonnes and 7,400 copper tonnes.
Mexico
La Colorada produced 1.32
million silver ounces during the second quarter of 2015 at cash
costs per ounce of $7.85. Silver
production rose 6% from the second quarter of 2014 on account of
higher throughput and grades. This had a positive effect on cash
costs, which were 5% lower than in the second quarter of 2014 due
to more silver and by-products produced along with higher zinc
prices, which were partially offset by lower lead and gold prices,
as well as to relatively flat unit operating costs per tonne
year-over-year.
During the second quarter of 2015, Dolores produced 1.11 million silver ounces at
cash costs per ounce of $8.34. Silver
production increased 6% from the same quarter of 2014 on account of
higher grades and throughput. Cash costs per ounce for the
reporting quarter were 33% lower than in the second quarter of 2014
on account of lower operating costs due to costs savings for some
consumables, the depreciation of the Mexican Peso against the US
Dollar, and higher by-product credits on more gold ounces. During
the reporting quarter, Dolores
produced 20,200 gold ounces, which represented a 19% increase over
the comparable quarter of 2014.
Alamo Dorado produced 0.77 million silver ounces during the
second quarter of 2015 at cash costs per ounce of $15.25. As expected, silver production declined
24% compared to the second quarter of 2014 as the mine exhausts
reserves and relies more on low-grade stockpiles to feed the
processing plant. Cash costs increased 37% from the second quarter
of 2014, due to the negative effect of lower silver production and
lower gold by-product credits. Alamo Dorado produced 2,800 gold
ounces during the reporting period, an expected 41% decline from
the second quarter of 2014.
Peru
Huaron produced 0.94 million silver ounces during the second
quarter of 2015 at cash costs per ounce of $8.96. Silver production was 2% higher than in
the second quarter of 2014 as a result of higher throughput,
partially offset by a slight decline in recoveries. Cash costs
during the reporting quarter declined 21% from the second quarter
of 2014 on account of lower production costs due to the combined
effects of the successful multi-year mechanization program still
ongoing and the devaluation of the Peruvian Sol against the US
Dollar. Huaron also produced approximately 3,200 zinc tonnes, 1,900
copper tonnes and 1,700 lead tonnes during the second quarter of
2015, which represents 19% less zinc, 31% more copper, and 7% more
lead compared to the second quarter of 2014.
During the second quarter of 2015, Morococha produced 0.56
million silver ounces at cash costs per ounce of $9.78. Silver production rose 4% compared to the
second quarter of 2014 on account of significantly higher
throughput rates that were partially offset by lower grades due to
the previously announced transition of mining activities into the
copper-rich Esperanza area. Cash
costs declined 45% from the second quarter of 2014 primarily as a
result of a substantial increase in copper by-product credits and
lower operating costs that resulted from mine mechanization
initiatives. During the reporting quarter, Morococha also produced
approximately 2,400 copper tonnes, 2,400 zinc tonnes and 500 lead
tonnes, which represents 448% more copper, 42% less zinc and 60%
less lead compared to the second quarter of 2014.
Bolivia
During the second quarter of 2015 San Vicente produced 1.04
million silver ounces at cash costs per ounce of $11.44. Silver production rose 6% from the second
quarter of 2014 as a result of higher grades due to mine
sequencing, partially offset by lower throughput rates. Cash costs
declined 12% from the comparable period of 2014 as a result of
lower operating costs, lower royalties, and higher by-product
credits due to higher zinc and lead production. During the
reporting quarter San Vicente
produced approximately 1,700 zinc tonnes and 300 lead tonnes, which
represents 9% and 67% increases, respectively over the comparable
quarter in 2014.
Argentina
Manantial Espejo produced 0.90 million silver ounces during the
second quarter of 2015 at cash costs per ounce of of $6.18. Silver production rose 11% from the second
quarter of 2014 on account of higher grades due to mine sequencing,
partially offset by lower throughput. Throughput rates during the
reporting quarter were negatively affected by a 10-day work
stoppage as a consequence of a tragic accident that occurred late
in the quarter. Cash costs decreased 66% from the comparable
quarter of 2014 as a result of lower waste tonnes mined, higher
silver production and higher gold by-product credits. During the
reporting quarter, Manantial Espejo produced approximately 19,500
gold ounces, which was 34% more than in the second quarter of
2014.
Consolidated Cash Costs
Pan American's consolidated cash costs per ounce declined 25%
from $12.51, in the second quarter of
2014 to $9.44 in the reporting
quarter. The reduction in cash costs resulted from lower operating
costs at all operations, with the exception of La Colorada, and higher by-product credits
from copper and gold. Cash costs per ounce for the six months ended
June 30, 2015 were $10.53, slightly lower than the $10.58 recorded in the first half of 2014.
Cash costs is a non-GAAP measure. Please refer to Note 3 under
the highlights table at the beginning of this press release for a
further description of this measure.
Capital Spending
During the second quarter of 2015, Pan American spent
$17.7 million on sustaining capital.
At Dolores, the Company spent
$6.1 million, mainly on pre-stripping
activities, exploration drilling, mine equipment and site
infrastructure. At Manantial Espejo, expenditures during the second
quarter totaled $4.5 million
primarily on capitalized open pit pre-stripping and exploration
drilling. In addition, $2.1 million
were spent at La Colorada,
$2.6 million were spent on Huaron,
$1.4 million were spent at Morococha,
and $1 million was spent at
San Vicente.
Pan American also spent $11.8
million in long term project capital to advance the
La Colorada and Dolores mine expansions, further described in
the Project Development section below.
Project Development
Michael Steinmann, President,
commented on the Company's organic growth projects, "I am pleased
with the advances our project development team achieved during the
second quarter. In the current market environment it is more
important than ever to add high quality, low cost production. We
have responded to this difficult task with the expansions at
La Colorada and Dolores which will add nearly 5 million silver
ounces and over 128,000 gold ounces of annual production, which
will more than replace the production loss when Alamo Dorado will
reach the end of its mine life in 2016. But more importantly,
La Colorada and Dolores will be our lowest cost producers,
substantially reducing our overall cash costs when the expansions
are completed, which we expect in 2017".
Pan American invested $7.1 million
at the La Colorada expansion
project during the second quarter of 2015, mainly on equipment
procurement, the start of construction of the new sulphide
processing plant, the completion of the pilot hole for the new
shaft, detailed engineering for the new shaft, underground
development, and further work on project site infrastructure. The
project continues to progress as planned.
At Dolores, Pan American
invested $4.7 million during the
second quarter of 2015, $2.9 million
of which was for the construction of the new power line and the
balance on the Dolores pulp
agglomeration expansion project. Completion of the power line is
scheduled in mid-2016 and will help significantly reduce the mine's
annual energy cost by replacing expensive diesel generated power.
Work for the new pulp agglomeration plant commenced with basic
engineering and geotechnical work. In addition, advance on the new
underground ramp development progressed with 170 meters completed
during the reporting quarter, for a total of 282 meters since the
project was initiated at the beginning of the year.
Year-to-date, Pan American has spent $24.4 million on project development at
La Colorada and Dolores.
Current and Future Dividends
The Board of Directors today approved the third quarterly cash
dividend of 2015 in the amount of $0.05 per common share. The cash dividend will be
payable on or about Tuesday, September 8,
2015, to holders of record of common shares as of the close
of Tuesday, August 25, 2015. 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.
Outlook
Pan American reaffirms its annual precious metals production
forecast of between 25.50 million and 26.50 million silver ounces,
and between 165,000 ounces and 175,000 ounces of gold. With the
revised mine sequencing at Morococha, the Company increases the
annual production forecast for copper in 2015 to between 14,000 to
15,000 tonnes, an 81% increase from the low end of the 8,000 t to
8,500 tonnes originally forecasted for the year. Conversely, the
Company is reducing its full year 2015 consolidated zinc and lead
production forecast to 37,000 to 39,000 tonnes and 13,000 to 13,500
tonnes, respectively from 41,000 to 43,000 tonnes of zinc and
14,500 to 15,000 tonnes of lead.
Provided metal prices remain at or near current levels, the
Company also believes that it will be at the low end or below its
annual guidance for AISCSOS of between $15.50 and $16.60, net of by-product credits and
similarly at the low end or below its annual consolidated cash
costs guidance of between $10.80 and
$11.80 per silver ounce, net of by-product
credits.
In addition, the Company reaffirms its forecast for 2015 annual
sustaining capital of between $71.0 and
$84.0 million. With the addition of the Dolores expansion project, the Company now
expects to invest between $90.0 million and
$100.0 million in project development in 2015.
Technical information contained in this news release with
respect to Pan American has been reviewed and approved by
Michael Steinmann, P.Geo.,
President, and Martin Wafforn, P.Eng., VP Technical Services, who
are the Company's Qualified Persons for the purposes of NI
43-101.
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Pan American will
host a conference call to discuss these results on Friday, August
14, 2015 at 1:00 pm EST (10:00 am PST). To participate in the
conference, please dial toll number 1-604-638-5340.
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A live audio webcast
and Power Point presentation will be available at
http://services.choruscall.ca/links/pan150814.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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About Pan American Silver
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 in Mexico, Peru,
Argentina and Bolivia. Pan American also owns several
development projects in Mexico,
USA, Peru and Argentina.
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: THE APPROVAL OF ANY FUTURE DIVIDENDS
AND THE AMOUNT AND TIMING FOR THE SAME; OUR FORECAST PRODUCTION OF
SILVER, GOLD AND OTHER METALS IN 2015; OUR FORECAST CASH COSTS PER
OUNCE OF SILVER IN 2015; OUR ESTIMATED AISCSOS FOR 2015; OUR
ANTICIPATED CAPITAL INVESTMENTS FOR 2015; THE ABILITY OF THE
COMPANY TO SUCCESSFULLY COMPLETE ANY CAPITAL INVESTMENT PROGRAMS
AND PROJECTS, INCLUDING THE DOLORES EXPANSION PROJECT, AND THE IMPACTS OF
ANY SUCH PROGRAMS AND PROJECTS ON THE COMPANY; AND ANY ANTICIPATED
LEVEL OF FINANCIAL AND OPERATIONAL SUCCESS IN 2015.
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; 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, 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 LABOUR, ENVIRONMENTAL, IMPORT AND EXPORT LAWS
AND REGULATIONS, AND TAX; 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
June
30,
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Six months
ended
June
30,
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(Unaudited in
thousands of U.S. Dollars, except as noted)
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2015
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2014
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2015
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2014
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Consolidated Metal
Production
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Silver metal –
million ounces
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6.65
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6.56
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12.72
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13.18
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Gold metal – thousand
ounces
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44.4
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37.7
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81.9
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83.6
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Zinc metal – thousand
tonnes
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9.2
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11.4
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18.5
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22.8
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Lead metal – thousand
tonnes
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3.5
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4.0
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7.0
|
|
7.6
|
Copper metal –
thousand tonnes
|
|
4.3
|
|
1.9
|
|
7.4
|
|
3.6
|
|
|
|
|
|
|
|
|
|
Consolidated Costs
per Ounce of Silver (net of by-product credits)
|
|
|
|
|
|
|
|
|
Cash cost per payable
ounce produced (1)
|
$
|
9.44
|
$
|
12.51
|
$
|
10.53
|
$
|
10.58
|
All-in sustaining
cost per silver ounce sold (2)
|
$
|
14.46
|
$
|
17.98
|
$
|
14.35
|
$
|
16.45
|
Payable ounces of
silver sold – million ounces
|
|
6.54
|
|
6.11
|
|
12.41
|
|
12.85
|
|
|
|
|
|
|
|
|
|
Consolidated
Financial Highlights
|
|
|
|
|
|
|
|
|
Net cash generated
from operating activities
|
$
|
20,577
|
$
|
48,737
|
$
|
32,425
|
$
|
84,862
|
Net cash generated
from operating activities per share
|
$
|
0.14
|
$
|
0.32
|
$
|
0.21
|
$
|
0.56
|
Net (loss) earnings
for the period
|
$
|
(7,299)
|
$
|
(5,679)
|
$
|
(27,084)
|
$
|
1,081
|
Basic (loss) earnings
per share attributable to common shareholders
|
$
|
(0.05)
|
$
|
(0.04)
|
$
|
(0.18)
|
$
|
0.01
|
Adjusted (loss)
earnings for the period (3)
|
$
|
(11,239)
|
$
|
1,817
|
$
|
(31,145)
|
$
|
14,644
|
Adjusted (loss)
earnings per share attributable to common shareholders (basic)
(3)
|
$
|
(0.07)
|
$
|
0.01
|
$
|
(0.21)
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
Sustaining Capital
for mineral properties, plant and equipment
|
$
|
17,746
|
$
|
24,411
|
$
|
34,273
|
$
|
49,109
|
Project Capital for
mineral properties, plant and equipment
|
$
|
11,812
|
$
|
13,018
|
$
|
28,651
|
$
|
26,310
|
Dividends
paid
|
$
|
7,583
|
$
|
18,938
|
$
|
26,538
|
$
|
37,878
|
Cash and short-term
investments
|
$
|
274,909
|
$
|
381,643
|
$
|
274,909
|
$
|
381,643
|
Working capital
(4)
|
$
|
469,782
|
$
|
647,475
|
$
|
469,782
|
$
|
647,475
|
|
|
|
|
|
|
|
|
|
Average Market
Metal Prices
|
|
|
|
|
|
|
|
|
Silver metal
($/oz)
|
$
|
16.39
|
$
|
19.62
|
$
|
16.55
|
$
|
20.05
|
Gold metal
($/oz)
|
$
|
1,192
|
$
|
1,288
|
$
|
1,206
|
$
|
1,291
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Cash cost per ounce
of silver, net of by-product credits ("cash costs per ounce") is a
non-Generally Accepted Accounting Principles ("non-GAAP" measure).
The Company believes that cash costs per ounce is a useful measure
for investors to evaluate the Company's performance and ability to
generate cash flows, and to facilitate comparisons on a mine by
mine basis. Cash costs per ounce is a measure conceptually
understood and widely reported in the silver mining industry.
However, cash cost per ounce does not have a standardized meaning
prescribed by GAAP and the Company's method of calculating cash
costs, as described in the Alternative Performance (Non-GAAP)
Measures section of the Q2 2015 MD&A, may differ from the
methods used by other entities. Cash costs per ounce should not be
construed as an alternative indicator of performance to production
costs, depreciation and amortization, and royalties determined in
accordance with GAAP.
|
|
Previously reported
cash costs for the Company's Peruvian operations overstated copper
by-product credits. Consolidated cash costs for 2014 have been
adjusted to correct for this overstatement. The effect of these
corrections for three and six months ended June 30, 2014 was a
$0.45 and $0.43 per ounce increase, respectively.
|
(2)
|
All-In Sustaining
Costs per Silver Ounce Sold ("AISCSOS") is non-GAAP measure.
AISCSOS Is a measure of a silver mining company's consolidated
operating performance and the ability to generate cash flow from
all operations collectively. The Company and certain investors
believe AISCSOS 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. AISCSOS does not have a standardized meaning prescribed by
GAAP, and the Company's method of calculating AISCSOS as described
in the Alternative Performance (Non-GAAP) Measures section of the
Q2 2015 MD&A may differ from the methods used by other
entities.
|
|
In 2014 it was
determined that certain charges to metal sales were being treated
differently in the quantification of AISCSOS for the Company's San
Vicente mine compared to the Company's other operations. As such
previously reported AISCSOS for the San Vicente mine have been
revised to quantify AISCSOS with a methodology consistent with that
used by Company's other operations. The effect of this revision on
previously reported consolidated AISCSOS for the three and six
months ended June 30, 2014 was $0.25 and $0.37 decrease,
respectively
|
(3)
|
Adjusted (loss)
earnings, and adjusted (loss) earnings per share attributable to
common shareholders, are a non-GAAP measure that the Company
considers to better reflect normalized earnings as it eliminates
items that may be volatile from period to period relating to
positions which will settle in future periods, and items that are
non-recurring. To facilitate a better understanding of these
non-GAAP measures, as calculated by the Company, additional
information has been provided in the Alternative Performance
(Non-GAAP) Measures section of the Management Discussion and
Analysis for the three and six months ended June 30, 2015 (the "Q2
2015 MD&A").
|
(4)
|
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.
|
SOURCE Pan American Silver Corp.