VANCOUVER, Jan. 21, 2019 /PRNewswire/ -
All amounts are
expressed in US$ unless otherwise indicated. Results are unaudited
and could change based on final audited financial results. This
news release contains forward-looking information about expected
future events and financial and operating performance of the
Company. Readers should refer to the risks and assumptions set out
in the "Cautionary Note Regarding Forward-Looking Statements and
Information" at the end of this news release.
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This news release
refers to measures that are not generally accepted accounting
principle ("non-GAAP") financial measures, including cash costs per
payable ounce of silver ("Cash Costs") and all-in sustaining costs
per silver ounce sold ("AISCSOS"). Please refer to the section
titled "Alternative Performance (non-GAAP) Measures" at the end of
this news release for further information on these
measures.
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Preliminary operating
results for 2018 and guidance for 2019 are only for Pan American's
operations and do not reflect the plan of arrangement (the
"Arrangement") whereby Pan American will acquire all of the issued
and outstanding common shares of Tahoe Resources Inc. ("Tahoe"),
announced on November 14, 2018. Pan American currently expects the
Arrangement to be completed on or about February 26,
2019.
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Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS)
("Pan American") today announced preliminary operating results for
the fourth quarter and full year 2018, and provided guidance for
2019.
"2018 was a pivotal year for Pan American with low cash costs,
strong cash flow, continued improvements at Morococha and Huaron,
and positive impact to the bottom line from our La Colorada and Dolores expansions," said Michael Steinmann, President and Chief Executive
Officer of Pan American. "In addition, we made an important skarn
discovery at La Colorada and
announced the transformational acquisition of Tahoe. The
acquisition is expected to close at the end of February, and we are
looking forward to updating our forecast for 2019 in the second
quarter to include the Tahoe assets."
Consolidated Preliminary 2018 Operating Results
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2018
Guidance(1)
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2018 Revised
Guidance(2)
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2018
Actual
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Q4
2018
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Production
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Silver (million
ounces)
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25.0 -
26.5
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no change
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24.8
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6.1
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Gold (thousand
ounces)
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175.0 -
185.0
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no change
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178.9
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37.2
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Zinc (thousand
tonnes)
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60.0 -
62.0
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no change
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64.8
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18.5
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Lead (thousand
tonnes)
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21.0 -
22.0
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no change
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22.4
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6.3
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Copper (thousand
tonnes)
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12.0 -
12.5
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9.0 - 10.4
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9.8
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2.2
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Cash
Costs(3) ($/ounce)
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3.60 -
4.60
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2.80 -
3.80
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3.35
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6.12
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(1)
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Guidance provided in
the Company's news release dated January 11, 2018.
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(2)
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Revised Guidance
provided in the Company's news release dated August 8,
2018.
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(3)
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Preliminary Cash
Costs per payable ounce of silver, net of by-product credits.
Average metal prices for the full 2018 year were: Ag $15.71/oz, Au
$1,268/oz, Zn $2,922/tonne, Pb $2,242/tonne, and Cu $6,523/tonne.
Average metal prices for Q4 2018 were: Ag $14.54/oz, Au $1,226/oz,
Zn $2,631/tonne, Pb $1,964/tonne, and Cu $6,172/tonne.
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Cash Costs is a
non-GAAP measure and readers should refer to the information under
the heading "Alternative Performance (non-GAAP) Measures" at the
end of this news release for more information.
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2018 Consolidated Operating Highlights:
- Silver production of 24.8 million ounces was modestly below the
original guidance range provided in January
2018 (the "Original Guidance") of 25.0 million to 26.5
million ounces, primarily due to shortfalls at Dolores and San
Vicente, partially offset by higher-than-forecast production
at La Colorada and Morococha, both
of which set annual records. At Dolores, above average rainfalls during the
third quarter hampered our ability to make-up open pit tonnages
following the security-related road closures in June, resulting in
a shortfall of tonnes placed on the heap. In addition, slower
cement deliveries due to logistical challenges required lower
solution application and reduced leach rates. At San Vicente, narrow vein mechanization efforts
required additional operator training, resulting in lower
throughput and increased dilution.
- Gold production of 178.9 thousand ounces was within the
Original Guidance range. An annual record was set for gold
production at Dolores.
- Record zinc and lead production exceeded the Original Guidance
range, with annual zinc production records set at La Colorada, Morococha and San Vicente. La
Colorada also set an annual record for lead production.
Copper production was within the revised range provided on
August 8, 2018 (the "Revised
Guidance").
- Cash costs of $3.35 per ounce of
silver were within Revised Guidance. A record low annual cash cost
of $2.02 per ounce was set at
La Colorada.
PRELIMINARY 2018 MINE OPERATING RESULTS
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Mine
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Silver
Production
(million ounces)
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Gold
Production
(thousand ounces)
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Cash Costs
($/ounce)(1)
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La
Colorada
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7.6
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4.4
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2.02
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Dolores
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4.1
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136.6
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(1.87)
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Huaron
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3.6
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0.8
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1.63
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Morococha
(92.3%)(2)
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2.9
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2.1
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(4.34)
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San Vicente
(95%)(2)
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3.5
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0.5
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10.12
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Manantial
Espejo
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3.1
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34.6
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13.91
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Total(3)
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24.8
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178.9
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3.35
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(1)
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Cash Costs is a
non-GAAP measure. Please refer to the "Alternative Performance
(non-GAAP) Measures" section of this news release for further
information on this measure.
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(2)
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Reflects Pan
American's ownership in the operation.
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(3)
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Totals may not add up
due to rounding.
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2019 GUIDANCE
The guidance provided below is Pan American's initial guidance
for 2019, and excludes the assets to be acquired under the
Arrangement with Tahoe. We intend to update the guidance to include
the Tahoe assets and allocation of new general and administrative
costs following close of the transaction, which is currently
expected to be on or about February 26,
2019. The timing for providing updated guidance is currently
anticipated to be in the second quarter of 2019. We may also revise
guidance during the year to reflect actual and anticipated
results.
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2019 Guidance as
at January 21, 2019
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Production
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Silver (million
ounces)
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26.5 -
27.5
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Gold (thousand
ounces)
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162.5 -
172.5
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Zinc (thousand
tonnes)
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65.0 -
67.0
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Lead (thousand
tonnes)
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24.0 -
25.0
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Copper (thousand
tonnes)
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9.8 - 10.3
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Cash
Costs(1)($/ounce)
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6.50 -
7.50
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AISCSOS(1) ($)
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10.80 -
12.30
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Sustaining capital
($millions)
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85 - 90
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Project capital
($millions)
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30
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Assumptions used
to forecast cash costs and AISCSOS for 2019
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Metal
prices
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Silver
($/ounce)
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14.50
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Gold
($/ounce)
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1,250
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Zinc
($/tonne)
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2,600
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Lead
($/tonne)
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1,950
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Copper
($/tonne)
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6,150
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Average annual
exchange rates relative to 1.00 U.S. dollar
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Mexican
peso
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19.50
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Peruvian
sol
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3.33
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Argentine
peso
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41.80
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Bolivian
boliviano
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6.91
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Canadian
dollar
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1.30
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(1)
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Cash Costs and
AISCSOS are non-GAAP measures. Please refer to the
"Alternative Performance (non-GAAP) Measures" section of this news
release for further information on these measures.
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The 2019 Guidance reflects certain adjustments from the outlook
provided for 2019 in our news release dated January 11, 2018. The anticipated increase in
AISCSOS is mainly due to: lower by-product base metal prices,
higher treatment and refining costs for flotation concentrates, new
export tax payments in Argentina,
increased electricity costs in Mexico, and wage inflation; partially offset
by lower sustaining capital. The anticipated decrease in silver and
gold production is due to a later startup of COSE production
related to a change in the mining method. The modification takes
into account the current ground conditions and directly transfers
the existing miner expertise from the Manantial Espejo operation.
The change requires additional upfront development, which is
expected to result in an approximate six-month delay in commencing
production at COSE, rescheduling some of the ounces originally
planned for 2019 into 2020.
2019 GUIDANCE BY MINE
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Mine
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Silver
Production
(million ounces)
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Gold
Production
(thousand ounces)
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Cash Costs
($/ounce)(1)
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La
Colorada
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8.0 - 8.2
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4.1 - 4.8
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2.50 -
3.50
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Dolores
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5.2 - 5.5
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114.5 -
120.0
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4.50 -
5.50
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Huaron
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3.6 - 3.7
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0.5
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6.00 -
7.00
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Morococha
(92.3%)(2)
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2.8 - 2.9
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1.2 - 1.5
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3.10 -
4.00
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San Vicente
(95%)(2)
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3.5 - 3.7
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0.3
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10.60 -
11.50
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Manantial
Espejo
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3.4 - 3.6
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42.0 -
45.0
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17.00 -
18.50
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Total(3)
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26.5 -
27.5
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162.5 -
172.5
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6.50 -
7.50
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(1)
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Cash costs is a
non-GAAP measure and readers should refer to the information under
the heading "Alternative Performance (non-GAAP) Measures" at the
end of this news release for more information.
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(2)
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Reflects Pan
American's ownership in the operation.
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(3)
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Totals may not add up
due to rounding.
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2019 Guidance Highlights:
Pan American is focused on achieving the following objectives
during 2019:
La Colorada
- Sustain throughput rates of slightly above 2,000 tonnes per
day, exceeding original design capacity rates.
- Continue to investigate additional debottlenecking
opportunities, mine mechanizations and infrastructure upgrades,
aimed at maintaining unit costs at 2018 levels despite expected
modest increases in input costs.
- Continue to explore and define the potential of the significant
skarn deposit discovered in 2018.
Dolores
- Accelerate mine pre-stripping rates to overcome the shortfalls
incurred in 2018.
- Establish new waste storage facility to reduce haulage
costs.
- Ramp-up underground mining rates to 1,500 tonnes per day.
- Sustain overall throughput rates to the heap leach pad of
20,000 tonnes per day, while maximizing the pulp agglomeration
plant throughput.
- Improve and stabilize cement delivery logistics to support
optimal leach recovery.
Huaron and Morococha
- Maintain steady-state production rates and exploration
efforts.
- Continue efforts towards defining additional productivity
enhancements and improve site ancillary facilities and
infrastructure.
- Continue to investigate opportunities to enhance mill
productivities and efficiencies at Morococha while designing for
the eventual relocation of the mill.
San Vicente
- Continue efforts towards gradually enhancing productivities
over the next few years through additional mechanization efforts,
enhanced mine dilution controls and improving site infrastructure
and ancillary facilities.
Manantial Espejo/COSE/Joaquin
- Bring the COSE and Joaquin mine projects on-stream to
supplement the Manantial Espejo underground mine and stockpile ore,
thereby increasing overall production rates over the next few
years. Production from COSE and Joaquin is expected to commence in
the third quarter of 2019 with a life of mine of approximately 18
months for COSE and approximately three years for Joaquin.
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, please refer to
the Company's Annual Information Form dated March 22, 2018, filed at www.sedar.com.
Q4 and Full Year 2018 Unaudited Results
Pan American plans to release its unaudited financial results
for Q4 and full year 2018 on February 20,
2019.
Conference Call and Webcast
Date:
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February 21,
2019
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Time:
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11:00 am ET (8:00 am
PT)
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Dial-in
numbers:
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1-800-319-4610
(toll-free in Canada and the U.S.)
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+1-604-638-5340
(international participants)
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Webcast:
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www.panamericansilver.com
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Callers should dial in 5 to 10 minutes prior to the scheduled
start time. The live webcast and presentation slides will be
available on the Company's website
at www.panamericansilver.com. An archive of the webcast will
also be available for three months.
About Pan American Silver
Pan American Silver Corp. is the world's second largest primary
silver producer, providing enhanced exposure to silver through a
diversified portfolio of assets, large reserves and growing
production. We own and operate six mines in Mexico, Peru,
Argentina and Bolivia. Pan American maintains a strong
balance sheet, has an established management team with proven
operating expertise, and is committed to responsible development.
Founded in 1994, the Company is headquartered in Vancouver, B.C. and 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 news release we refer to measures that are not generally
accepted accounting principle ("non-GAAP") financial
measures. These measures are widely used in the mining
industry as a benchmark for performance, but do not have a
standardized meaning as prescribed by IFRS as an indicator of
performance, and may differ from methods used by other companies
with similar descriptions. These non-GAAP financial measures
include:
- Cash Costs per payable ounce of silver, net of by-product
credits ("Cash Costs"). Cash Costs does not have a standardized
meaning prescribed by 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. 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.
- 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.
Readers should refer to the "Alternative Performance (non-GAAP)
Measures" section of the Company's management's discussion and
analysis for the three and nine months ended September 30, 2018 (the "Q3 2018 MD&A") for a
more detailed discussion of these and other non-GAAP measures and
their calculation.
Cautionary Note Regarding Forward-Looking Statements and
Information
Certain of the statements and information in
this news release constitute "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and "forward-looking information" within the
meaning of applicable Canadian provincial securities laws, and may
include future-oriented financial information. All statements,
other than statements of historical fact, are forward-looking
statements or information. Forward-looking statements or
information in this news release relate to, among other things:
future financial or operational performance; the anticipated timing
and announcement of our 2019 forecast and any further revisions
thereto from time to time; the expected timing and completion of
the Arrangement; the anticipated timing and commencement of
production at COSE and Joaquin, as well as the impact on production
anticipated for 2019; our estimated production of silver, gold and
other metals in 2019; our expectations with respect to future metal
prices and exchange rates; our estimated Cash Costs and AISCSOS in
2019; the expenditures and success related to any future
exploration or development programs; and the successful completion
of the Arrangement with Tahoe Resources and the timing for such
completion.
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, and such uncertainty generally
increases with longer-term forecasts and outlook. These assumptions
include: tonnage of ore to be mined and processed; ore grades and
recoveries; prices for silver, gold and base metals remaining as
estimated; the Company's development projects are completed and
perform in accordance with current expectations; currency exchange
rates remaining as estimated; availability of funds for the
Company's projects and future cash requirements; capital,
decommissioning and reclamation estimates; our mineral reserve and
resource estimates and the assumptions upon which they are based;
prices for energy inputs, labour, materials, supplies and services
(including transportation); no labour-related disruptions; no
unplanned delays or interruptions in scheduled development and
production; all necessary permits, licenses and regulatory
approvals are received in a timely manner; 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 and gold prices; fluctuations in
prices for energy inputs, labour, materials, supplies and services
(including transportation); fluctuations in currency markets (such
as the Canadian dollar, Peruvian sol, Mexican peso, Argentine peso
and Bolivian boliviano versus the U.S. dollar); operational risks
and hazards inherent with the business of mining (including
environmental accidents and hazards, industrial accidents,
equipment breakdown, unusual or unexpected geological or structural
formations, cave-ins, flooding and severe weather); inadequate
insurance, or inability to obtain insurance, to cover these risks
and hazards; employee relations; relationships with, and claims by,
local communities and indigenous populations; our ability to obtain
all necessary permits, licenses and regulatory approvals in a
timely manner; changes in laws, regulations and government
practices, including environmental, export and import laws and
regulations; legal restrictions relating to mining; risks relating
to expropriation; 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.
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SOURCE Pan American Silver Corp.