All amounts are expressed in US$ unless otherwise indicated.
Results are unaudited and could change based on final audited
financial results. This news release contains forward-looking
information about expected future events and financial and
operating performance of Pan American. Readers should refer to the
risks and assumptions set out in the "Cautionary Note Regarding
Forward-Looking Statements and Information" at the end of this news
release.
VANCOUVER, BC, Jan. 19, 2021 /CNW/ - Pan American Silver
Corp. (NASDAQ: PAAS) (TSX: PAAS) ("Pan American") today
announced its preliminary production results for the fourth quarter
("Q4 2020") and full year 2020 ("FY 2020"), and provided its
guidance for production, costs and certain expenditures in
2021.
"We are expecting a 35% increase in silver production relative
to 2020 and record gold production in 2021, despite our assumption
that COVID-19 will continue to have an impact on operations," said
Michael Steinmann, President and
Chief Executive Officer of Pan American. "Under our 2021 guidance
assumptions, we expect to be generating robust levels of free cash
flow. Our ability to overcome the extraordinary challenges over the
past year while managing our nine operations, generating
substantial free cash flow, advancing our La Colorada skarn project, and re-paying all
our bank debt is a testament to our team and the benefit of having
a diversified portfolio of quality assets. I anticipate 2021 being
a much stronger year across all our operations."
During 2020, Pan American repaid the remaining $275.0 million outstanding on its corporate
credit facility and distributed $46.2
million in dividends to shareholders, with the quarterly
dividend being increased twice during the year. As at December 31, 2020, Pan American had no bank debt,
while the cash and short-term investment balances increased to
approximately $279.1 million.
Preliminary 2020 Production Results
Figures are preliminary and subject to final adjustment. The
final figures will be provided in Pan American's financial results
for Q4 and year ended December 31,
2020. Pan American plans to release its audited financial
results for Q4 2020 and FY 2020 after market close on February 17, 2021.
|
Silver
Production
(thousand ounces)
|
Gold
Production
(thousand ounces)
|
|
Q4
2020
|
FY
2020
|
Q4
2020
|
FY
2020
|
La
Colorada
|
1,186
|
5,025
|
0.8
|
3.5
|
Huaron
|
892
|
2,148
|
0.3
|
0.5
|
Morococha(1)
|
527
|
1,173
|
0.2
|
0.6
|
San
Vicente(2)
|
663
|
2,320
|
0.1
|
0.3
|
Manantial
Espejo
|
742
|
2,547
|
8.0
|
23.4
|
Dolores
|
764
|
3,779
|
30.5
|
98.0
|
Shahuindo
|
83
|
268
|
33.6
|
142.4
|
La Arena
|
11
|
33
|
41.4
|
105.4
|
Timmins
|
4
|
18
|
38.1
|
148.4
|
Total
(3)
|
4,872
|
17,312
|
152.9
|
522.4
|
(1)
|
Morococha data
represents Pan American's 92.3% interest in the mine's
production.
|
(2)
|
San Vicente data
represents Pan American's 95.0% interest in the mine's
production.
|
(3)
|
Totals may not add
due to rounding.
|
|
Consolidated Base
Metal Production (thousand tonnes)
|
Q4
2020
|
FY
2020
|
Zinc
|
14.2
|
40.2
|
Lead
|
5.4
|
15.7
|
Copper
|
2.3
|
5.2
|
2020 Production Summary and Notes:
- FY 2020 consolidated silver production was 17.3 million ounces
compared with the guidance range(1) of 18.0 million to
19.0 million ounces.
- FY 2020 consolidated gold production was 522.4 thousand ounces
compared with the guidance range(1) of 525.0 thousand to
575.0 thousand ounces.
- FY 2020 consolidated zinc, lead and copper production was 40.2,
15.7 and 5.2 thousand tonnes, respectively, compared with
guidance(1) of 40.0 - 43.0, 17.0 - 18.0 and 4.3 - 4.9
thousand tonnes, respectively.
- Due to government measures in response to the COVID-19
pandemic, all of Pan American's Latin American operations were
placed in care and maintenance for an average duration of
approximately two months during the first half of 2020. The Huaron
and Morococha operations were suspended for another approximately
three months through the third quarter of 2020. Our Timmins operation in Canada continued to operate throughout 2020 at
reduced rates to accommodate COVID-19 related protocols.
- Production at La Colorada was
impacted by an inability to access high-grade ore due to the
COVID-19 related delay in completing an underground ventilation
raise and the loss of a ventilation raise from surface in late Q4
2020.
- In Q4 2020, the Mining Secretary in the Province of
Santa Cruz, Argentina, imposed a suspension of mining
operations during the holiday period to help curb the spread of
COVID-19, which caused production at Manantial Espejo to be
suspended between December 21, 2020
and January 7, 2021.
- Production and costs in 2020 were further impacted by
operations running below normal capacity levels to accommodate
comprehensive protocols to protect health and safety during the
COVID-19 pandemic.
(1) On May 6,
2020, Pan American withdrew its 2020 annual production, Cash Costs,
AISC and capital expenditure forecasts, originally provided in the
2019 annual MD&A dated March 12, 2020. The decision to
withdraw the 2020 guidance was based on the uncertainties regarding
the impact of the COVID-19 pandemic on our operations. Pan American
subsequently revised its 2020 annual production, Cash Costs, AISC
and capital expenditure forecasts on August 5, 2020. On November 4,
2020, Pan American reduced its estimate for 2020 silver production
and maintained the rest of the guidance provided on August 5,
2020.
|
2021 GUIDANCE
The estimates below are forward-looking in nature. Please refer
to the cautionary note at the end of this news release. Management
may revise guidance during the year to reflect actual and
anticipated results.
Please note that the Dolores
operation has been moved from the Silver Segment to the Gold
Segment.
|
Silver
Production
|
Gold
Production
|
Cash
Costs
|
AISC
|
|
(million
ounces)
|
(thousand
ounces)
|
($ per
ounce)(1)
|
($ per
ounce)(1)
|
Silver
Segment:
|
|
|
|
|
La
Colorada
|
7.16 -
7.44
|
4.0 - 4.2
|
4.00 -
5.00
|
8.50 -
9.50
|
Huaron
|
3.61 -
3.86
|
0.5
|
4.80 -
7.90
|
9.50 -
12.50
|
Morococha
(92.3%)(2)
|
2.25 -
2.42
|
0.8 - 0.9
|
10.00 -
14.20
|
13.50 -
17.50
|
San Vicente
(95.0%)(3)
|
3.23 -
3.37
|
0.5
|
12.30 -
13.50
|
16.75 -
17.75
|
Manantial
Espejo
|
3.18 -
3.46
|
33.2 -
35.3
|
16.30 -
17.30
|
19.00
-20.00
|
Silver Segment
Consolidated(4,5)
|
19.43 -
20.55
|
39.0 -
41.4
|
8.50 -
10.00
|
12.50 -
14.00
|
Gold
Segment:
|
|
|
|
|
Dolores
|
2.73 -
2.97
|
160.8 -
179.3
|
665 - 820
|
850 -
1,000
|
Shahuindo
|
0.29 -
0.43
|
153.9 -
165.0
|
715 - 795
|
1,125 -
1,250
|
La Arena
|
0.03
|
102.9 -
110.9
|
870 - 940
|
1,275 -
1,400
|
Timmins
|
0.02
|
148.4 -
158.5
|
1,085 -
1,160
|
1,375 -
1,450
|
Gold Segment
Consolidated(4,5)
|
3.07 -
3.45
|
566.0 -
613.7
|
825 -
925
|
1,135 -
1,250
|
Total
Production(4,5)
|
22.5 -
24.0
|
605.0 -
655.1
|
n/a
|
n/a
|
Consolidated AISC
- Silver Basis(6)
|
(2.80) -
2.70
|
(1)
|
Cash Costs and AISC
are non-GAAP measures. Please refer to the "Alternative Performance
(Non-GAAP) Measures" section of this news release for further
information on these measures.
|
(2)
|
Morococha data
represents Pan American's 92.3% interest in the mine's
production.
|
(3)
|
San Vicente data
represents Pan American's 95.0% interest in the mine's
production.
|
(4)
|
Silver Segment Cash
Costs and AISC are calculated net of credits for realized revenues
from all metals other than silver and are calculated per ounce of
silver sold. Gold Segment Cash Costs and AISC are calculated net of
credits for realized silver revenues and are calculated per ounce
of gold sold.
|
(5)
|
Totals may not add
due to rounding.
|
(6)
|
Consolidated AISC is
calculated per silver ounce sold with total gold revenues included
within by-product credits. General and administrative ("G&A")
and greenfield exploration costs are included in the consolidated
AISC, but not allocated in calculating AISC for each
operation.
|
2021 Guidance Assumptions
- Dolores will be reported as a
Gold Segment operation in 2021 given the higher gold and lower
silver grades in the expected mine sequencing.
- We assume operations will continue to be impacted by
comprehensive COVID-19 protocols, which increase costs and restrict
throughput levels, especially at our underground mines. The impact
of COVID-19 on operations is expected to diminish over the course
of 2021, as vaccinations are deployed throughout our operating
jurisdictions later in the year. For the first quarter of 2021, we
assume operations will experience the full effect of COVID-19
restrictions, similar to Q4 2020. We assume the impact of
restrictions declines to 75% in the second quarter, 50% in the
third quarter and 25% in the fourth quarter of 2021. The first
quarter of 2022 is assumed to be the first period that will be free
of COVID-19 restrictions, allowing operations to run at full
capacity. The impact regarding the restrictions could improve or
worsen relative to our assumptions, depending on how each
jurisdiction manages potential outbreaks of COVID-19, the
development and supply of vaccines, and the roll-out of vaccination
programs in each jurisdiction.
- The silver production guidance for 2021 reflects: the decline
in silver grades and increase in gold grades at Dolores from mine sequencing; restricted
mining rates at La Colorada during
the first half of the year due to the replacement of ventilation
infrastructure; and a continued scarcity of qualified underground
mining personnel in southern Argentina due to inter-provincial travel
restrictions, which results in reduced production rates at
Manantial Espejo, COSE and Joaquin while extending the mine lives
by approximately one year.
- At La Colorada, Pan American
plans to advance three ventilation raises to support current
production, mine expansions and development of the La Colorada skarn. These raises are in
addition to the underground ventilation raise completed in the
third quarter of 2020 and the ventilation raise from surface to the
345 level, which was completed in early January 2021, and is now being prepared for
commissioning.
- The cash costs and AISC forecasts assume average metal prices
of $23.50/oz for silver, $1,825/oz for gold, $2,700/tonne ($1.22/lb) for zinc, $1,900/tonne ($0.86/lb) for lead, and $7,400/tonne ($3.36/lb) for copper; and average annual exchange
rates relative to 1 USD of 20.00 for
the Mexican peso ("MXN"), 3.50 for the Peruvian sol ("PEN"), 96.67
for the Argentine peso ("ARS"), 7.00 for the Bolivian boliviano
("BOB"), and $1.30 for the Canadian
dollar ("CAD").
- The Escobal mine is assumed to remain in care and maintenance
during 2021, as Guatemala's
Ministry of Energy and Mines conducts the court-mandated ILO 169
consultation.
|
Expenditures ($
millions)
|
Sustaining
Capital
|
|
La
Colorada
|
27.0 -
29.5
|
Huaron
|
14.5 -
15.5
|
Morococha
|
6.0 - 7.0
|
San
Vicente
|
13.5 -
14.5
|
Manantial
Espejo
|
6.5 - 7.5
|
Dolores
|
26.0 -
30.0
|
Shahuindo
|
66.5 -
68.0
|
La Arena
|
44.5 -
45.0
|
Timmins
|
40.5 -
43.0
|
Sustaining Capital
Sub-total
|
245.0 -
260.0
|
Project
Capital
|
|
La Colorada
skarn
|
50.0 -
55.0
|
Timmins Wetmore
exploration
|
5.0
|
Project Capital
Sub-total
|
55.0 -
60.0
|
Total
Capital
|
300.0 -
320.0
|
Care &
Maintenance
|
|
Escobal
|
20.0 -
21.0
|
Navidad
|
2.0 - 2.5
|
Total Care &
Maintenance
|
22.0 -
23.5
|
Corporate General
& Administrative(1)
|
39.0 -
42.0
|
(1) Includes
stock-based compensation.
|
Exploration expenditures are expected to total
approximately $42 million, of which
$22 million is included in project
capital for drilling of the La
Colorada skarn and the Wetmore project.
2021 Guidance and Preliminary 2020 Production Conference Call
and Webcast
Pan American will hold a conference call and webcast to discuss
the 2021 guidance and preliminary 2020 production results.
Date:
|
Tuesday, January 19,
2021
|
Time:
|
11:00 am ET (8:00 am
PT)
|
Dial-in
numbers:
|
1-800-319-4610
(toll-free in Canada and the U.S.)
|
|
+1-604-638-5340
(international participants)
|
Webcast:
|
panamericansilver.com
|
Q4 and FY 2020 Audited Results
Pan American plans to release its audited results for Q4 and FY
2020 on February 17, 2021, after
market close. A conference call and webcast will be held on
February 18, 2021.
Conference call and webcast details:
Date:
|
Thursday, February
18, 2021
|
Time:
|
11:00 am ET (8:00 am
PT)
|
Dial-in
numbers:
|
1-800-319-4610
(toll-free in Canada and the U.S.)
|
|
+1-604-638-5340
(international participants)
|
Webcast:
|
panamericansilver.com
|
Technical Information
Scientific and technical information contained in this news
release have been reviewed and approved by Martin Wafforn, P.Eng.,
Senior Vice President Technical Services and Process Optimization,
and Christopher Emerson, FAusIMM,
Vice President Business Development and Geology, each of whom are
Qualified Persons, as the term is defined in Canadian National
Instrument 43-101 - Standards of Disclosure of Mineral
Projects.
For additional information about Pan American's material mineral
properties, please refer to Pan American's Annual Information Form
dated March 12, 2020, filed at
www.sedar.com, or Pan American's most recent Form 40-F furnished to
the SEC.
About Pan American Silver
Pan American owns and operates silver and gold mines located in
Mexico, Peru, Canada,
Argentina and Bolivia. We also own the Escobal mine in
Guatemala that is currently not
operating. As the world's second largest primary silver producer
with the largest silver reserve base globally, we provide enhanced
exposure to silver in addition to a diversified portfolio of gold
producing assets. Pan American has a 27-year history of operating
in Latin America, earning an
industry-leading reputation for corporate social responsibility,
operational excellence and prudent financial management. We are
headquartered in Vancouver, B.C.
and our shares trade on NASDAQ and the Toronto Stock Exchange under
the symbol "PAAS".
Learn more at panamericansilver.com.
Alternative Performance (Non-GAAP) Measures
In this news release, we refer to measures that are not
generally accepted accounting principle ("non-GAAP") financial
measures. These measures are widely used in the mining
industry as a benchmark for performance, but do not have a
standardized meaning as prescribed by IFRS as an indicator of
performance, and may differ from methods used by other companies
with similar descriptions. These non-GAAP financial measures
include:
- Cash Costs. Pan American's method of calculating cash costs may
differ from the methods used by other entities and, accordingly,
Pan American's Cash Costs may not be comparable to similarly titled
measures used by other entities. Investors are cautioned that Cash
Costs should not be construed as an alternative to production
costs, depreciation and amortization, and royalties determined in
accordance with IFRS as an indicator of performance.
- Adjusted earnings and basic adjusted earnings per share. Pan
American believes that these measures better reflect normalized
earnings as they eliminate items that in management's judgment are
subject to volatility as a result of factors, which are unrelated
to operations in the period, and/or relate to items that will
settle in future periods.
- All-in Sustaining Costs per silver or gold ounce sold, net of
by-product credits ("AISC"). Pan American has adopted AISC as a
measure of its consolidated operating performance and its ability
to generate cash from all operations collectively, and Pan American
believes it is a more comprehensive measure of the cost of
operating our consolidated business than traditional cash costs per
payable ounce, as it includes the cost of replacing ounces through
exploration, the cost of ongoing capital investments (sustaining
capital), general and administrative expenses, as well as other
items that affect Pan American's consolidated earnings and cash
flow.
- Total debt is calculated as the total current and non-current
portions of: long-term debt, finance lease liabilities and loans
payable. Total debt does not have any standardized meaning
prescribed by GAAP and is therefore unlikely to be comparable to
similar measures presented by other companies. Pan American and
certain investors use this information to evaluate the financial
debt leverage of Pan American.
- Working capital is calculated as current assets less current
liabilities. Working capital does not have any standardized meaning
prescribed by GAAP and is therefore unlikely to be comparable to
similar measures presented by other companies. Pan American and
certain investors use this information to evaluate whether Pan
American is able to meet its current obligations using its current
assets.
- Total available liquidity is calculated as the sum of Cash and
cash equivalents, Short-term Investments, and the amount available
on the Credit Facility. Total available liquidity does not have any
standardized meaning prescribed by GAAP and is therefore unlikely
to be comparable to similar measures presented by other companies.
Pan American and certain investors use this information to evaluate
the liquid assets available to Pan American.
Readers should refer to the "Alternative Performance (non-GAAP)
Measures" section of Pan American's Management's Discussion and
Analysis for the period ended December 31,
2019, for a more detailed discussion of these and other
non-GAAP measures and their calculation.
Cautionary Note Regarding Forward-Looking Statements and
Information
Certain of the statements and information in this news release
constitute "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
"forward-looking information" within the meaning of applicable
Canadian provincial securities laws. 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, and estimates of current production levels
that remain subject to verification and adjustment, including our
estimated production of silver, gold and other metals in 2020 and
forecasted for 2021, our estimated Cash Costs, AISC and
expenditures in 2021; future anticipated prices for gold, silver
and other metals and assumed foreign exchange rates; expectations
with respect to the future anticipated impact of COVID-19 on our
operations, the assumptions related to the global supply of
COVID-19 vaccines and the roll-out in each country, and the
effectiveness and results of any vaccines, the lessening or
increase in pandemic-related restrictions, and the anticipated rate
and timing for the same; the effect that the COVID-19 pandemic may
have on our financial and operational results; the ability of Pan
American to continue with its operations, or to successfully
maintain our operations on care and maintenance, should the
situation related to COVID-19 not be as anticipated; whether Pan
American is able to maintain a strong financial condition and have
sufficient capital, or have access to capital through our corporate
credit facility or otherwise, to sustain our business and
operations; the presence and impact of COVID-19 and COVID-19
related restrictions on our workforce, suppliers and other
essential resources and what effect those impacts, if they change,
would have on our business; the timing and impact of the
replacement of ventilation infrastructure at the La Colorada mine; the effect of scarcity of
qualified mining personnel in Argentina and whether such scarcity continues,
lessens or increases; the anticipated metals grades at the
Dolores operations and their
effect on anticipated production; the ability of Pan American to
successfully complete any capital projects, the expected economic
or operational results derived from those projects, and the impacts
of any such projects on Pan American; the ongoing impact and timing
of the court-mandated ILO 169 consultation process in Guatemala; the future results of exploration
activities, including with respect to the skarn exploration program
at La Colorada; and the ability of
Pan American to complete a preliminary economic assessment with
respect to the La Colorada skarn
project, the timing for the same, and the results of any such
preliminary economic assessment.
These forward-looking statements and information reflect Pan
American's current views with respect to future events and are
necessarily based upon a number of assumptions that, while
considered reasonable by Pan American, are inherently subject to
significant operational, business, economic and regulatory
uncertainties and contingencies. These assumptions include: the
world-wide economic and social impact of COVID-19 and the duration
and extent of the COVID-19 pandemic and related restrictions;
continuation of operations following shutdowns or reductions in
production, our ability to manage reduced operations efficiently
and economically, including to maintain necessary staffing; tonnage
of ore to be mined and processed; ore grades and recoveries; prices
for silver, gold and base metals remaining as estimated; currency
exchange rates remaining as estimated; capital, decommissioning and
reclamation estimates; our mineral reserve and resource estimates
and the assumptions upon which they are based; prices for energy
inputs, labour, materials, supplies and services (including
transportation); no labour-related disruptions at any of our
operations; no unplanned delays or interruptions in scheduled
production; all necessary permits, licenses and regulatory
approvals for our operations are received in a timely manner; our
ability to secure and maintain title and ownership to properties
and the surface rights necessary for our operations; and our
ability to comply with environmental, health and safety laws. The
foregoing list of assumptions is not exhaustive.
Pan American cautions the reader that forward-looking statements
and information involve known and unknown risks, uncertainties and
other factors that may cause actual results and developments to
differ materially from those expressed or implied by such
forward-looking statements or information contained in this news
release and Pan American has made assumptions and estimates based
on or related to many of these factors. Such factors include,
without limitation: the duration and effects of COVID-19, and any
other pandemics on our operations and workforce, and the effects on
global economies and society; fluctuations in silver, gold and base
metal prices; fluctuations in prices for energy inputs, labour,
materials, supplies and services (including transportation);
fluctuations in currency markets (such as the PEN, MXN, ARS, BOB,
GTQ and CAD versus the USD); operational risks and hazards inherent
with the business of mining (including environmental accidents and
hazards, industrial accidents, equipment breakdown, unusual or
unexpected geological or structural formations, cave-ins, flooding
and severe weather); risks relating to the credit worthiness or
financial condition of suppliers, refiners and other parties with
whom Pan American does business; inadequate insurance, or inability
to obtain insurance, to cover these risks and hazards; employee
relations; relationships with, and claims by, local communities and
indigenous populations; our ability to obtain all necessary
permits, licenses and regulatory approvals in a timely manner;
changes in laws, regulations and government practices in the
jurisdictions where we operate, including environmental, export and
import laws and regulations; changes in national and local
government, legislation, taxation, controls or regulations and
political, legal or economic developments in Canada, the United
States, Mexico,
Peru, Argentina, Bolivia, Guatemala or other countries where Pan
American may carry on business, including legal restrictions
relating to mining, including in Chubut, Argentina, risks relating to expropriation,
and risks relating to the constitutional court-mandated ILO 169
consultation process in Guatemala;
diminishing quantities or grades of mineral reserves as properties
are mined; increased competition in the mining industry for
equipment and qualified personnel; and those factors identified
under the caption "Risks Related to Pan American's Business" in Pan
American's most recent form 40-F and Annual Information Form filed
with the United States Securities and Exchange Commission and
Canadian provincial securities regulatory authorities,
respectively. Although Pan American has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be
as anticipated, estimated, described or intended. Investors are
cautioned against undue reliance on forward-looking statements or
information. Forward-looking statements and information are
designed to help readers understand management's current views of
our near and longer term prospects and may not be appropriate for
other purposes. Pan American does not intend, nor does it assume
any obligation to update or revise forward-looking statements or
information, whether as a result of new information, changes in
assumptions, future events or otherwise, except to the extent
required by applicable law.
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SOURCE Pan American Silver Corp.