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Pan American Silver (PAAS)

Filed: 10 Aug 22, 6:54pm


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Unaudited Condensed Interim Consolidated Financial Statements and Notes
 
FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2022

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Condensed Interim Consolidated Statements of Financial Position
(unaudited, in thousands of U.S. dollars)
June 30,December 31,
20222021
Assets  
Current assets  
Cash and cash equivalents (Note 21)$194,829 $283,550 
Short-term investments (Note 5)46,430 51,723 
Trade and other receivables135,233 128,150 
Income tax receivables42,736 20,282 
Inventories (Note 6)435,362 500,462 
Derivative assets (Note 4a)6,905 3,995 
Prepaid expenses and other current assets10,805 13,007 
 872,300 1,001,169 
Non-current assets 
Mineral properties, plant and equipment (Note 7)2,243,142 2,344,551 
Long-term inventories (Note 6)26,773 25,644 
Long-term tax receivables8,809 8,711 
Deferred tax assets54,740 55,953 
Long-term investment (Note 9)112,472 77,410 
Goodwill & other assets5,332 5,146 
Total assets$3,323,568 $3,518,584 
Liabilities  
Current liabilities  
Accounts payable and accrued liabilities (Note 10)$301,692 $306,087 
Derivative liabilities (Note 4a)245 351 
Provisions (Note 11)12,132 8,041 
Lease obligations (Note 12)13,555 10,663 
Debt (Note 13)7,371 3,400 
Income tax payables23,384 59,133 
 358,379 387,675 
Non-current liabilities  
Long-term provisions (Note 11)244,690 240,111 
Deferred tax liabilities159,665 184,785 
Long-term lease obligations (Note 12)18,968 19,898 
Long-term debt (Note 13)23,329 11,900 
Deferred revenue (Note 14)14,637 12,516 
Other long-term liabilities (Note 15)26,280 25,691 
Total liabilities845,948 882,576 
Equity (Note 16)  
Issued capital3,137,457 3,136,214 
Share option reserve93,266 93,375 
Investment revaluation reserve (Note 4c)(12,205)— 
Deficit(746,016)(598,035)
Total equity attributable to Company shareholders2,472,502 2,631,554 
Non-controlling interests5,118 4,454 
Total equity2,477,620 2,636,008 
Total liabilities and equity$3,323,568 $3,518,584 
Contingencies (Note 24)
See accompanying notes to the condensed interim consolidated financial statements
APPROVED BY THE BOARD ON AUGUST 10, 2022
"signed"Gillian Winckler, Director"signed"Michael Steinmann, Director
PAN AMERICAN SILVER CORP.1

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Condensed Interim Consolidated Statements of
Earnings and Comprehensive Earnings
(unaudited, in thousands of U.S. dollars)
Three months ended
June 30,
Six months ended
June 30,
 2022202120222021
Revenue (Note 22)$340,469 $382,132 $780,357 $750,231 
Cost of sales (Note 22)  
Production costs (Note 17)(288,282)(199,429)(567,110)(392,609)
Depreciation and amortization(74,327)(68,540)(158,853)(143,633)
Royalties(9,512)(11,115)(19,291)(20,977)
 (372,121)(279,084)(745,254)(557,219)
Mine operating (loss) earnings (Note 22)(31,652)103,048 35,103 193,012 
General and administrative(8,315)(9,465)(19,208)(17,517)
Exploration and project development(4,175)(2,103)(6,974)(4,583)
Mine care and maintenance (Note 18)(12,291)(7,757)(21,959)(15,023)
Foreign exchange losses(5,135)(2,241)(8,189)(4,650)
Impairment charges (Note 8)(99,064)— (99,064)— 
Gains on derivatives (Note 4d)3,693 3,120 8,055 5,490 
(Losses) gains on sale of mineral properties, plant and equipment(522)4,146 (699)4,256 
Gains and income from associates (Note 9) 3,320 45,033 3,518 
Other income3,650 1,704 4,731 2,558 
(Loss) earnings from operations(153,811)93,772 (63,171)167,061 
Investment (loss) income (Note 4b)(7,654)10,644 (4,828)(28,389)
Interest and finance expense (Note 19)(5,299)(3,579)(10,494)(7,420)
(Loss) earnings before income taxes(166,764)100,837 (78,493)131,252 
Income tax expense (Note 23)(6,868)(29,596)(18,308)(67,573)
Net (loss) earnings$(173,632)$71,241 $(96,801)$63,679 
Net (loss) earnings attributable to:  
Equity holders of the Company$(173,982)$70,939 $(97,465)$63,141 
Non-controlling interests350 302 664 538 
 $(173,632)$71,241 $(96,801)$63,679 
Other comprehensive (loss) earnings, net of taxes
Items that will not be reclassified to net earnings:
Unrealized loss on long-term investment (Note 4c)$(12,205)$— $(12,205)$— 
Total comprehensive (loss) earnings$(185,837)$71,241 $(109,006)$63,679 
Total comprehensive (loss) earnings attributable to:
Equity holders of the Company$(186,187)$70,939 $(109,670)$63,141 
Non-controlling interests350 302 664 538 
$(185,837)$71,241 $(109,006)$63,679 
(Loss) earnings per share attributable to common shareholders (Note 20)  
Basic (loss) earnings per share$(0.83)$0.34 $(0.46)$0.30 
Diluted (loss) earnings per share$(0.83)$0.34 $(0.46)$0.30 
Weighted average shares outstanding (in 000’s) Basic210,514 210,284 210,489 210,273 
Weighted average shares outstanding (in 000’s) Diluted210,514 210,438 210,489 210,436 
See accompanying notes to the condensed interim consolidated financial statements.
PAN AMERICAN SILVER CORP.2

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Condensed Interim Consolidated Statements of Cash Flows
(unaudited, in thousands of U.S. dollars)
Three months ended
June 30,
Six months ended
June 30,
 2022202120222021
Operating activities  
Net (loss) earnings for the period$(173,632)$71,241 $(96,801)$63,679 
Income tax expense (Note 23)6,868 29,596 18,308 67,573 
Depreciation and amortization74,327 68,540 158,853 143,633 
Gains and income from associates (Note 9) (3,320)(45,033)(3,518)
Impairment charges (Note 8)99,064 — 99,064 — 
Accretion on closure and decommissioning provision (Notes 11,19)3,710 1,869 7,420 3,738 
Unrealized foreign exchange losses3,544 1,608 5,872 3,775 
Interest expense (Note 19)1,014 782 1,909 1,825 
Investment income (loss) (Note 4b)7,654 (10,644)4,828 28,389 
Interest paid(1,389)(1,245)(2,759)(2,460)
Interest received722 12 740 129 
Income taxes paid(42,446)(21,019)(100,719)(82,352)
Other operating activities (Note 21)60,910 (13,262)72,480 (23,005)
Net change in non-cash working capital items (Note 21)(19,511)(37,015)(34,569)(84,413)
$20,835 $87,143 $89,593 $116,993 
Investing activities  
Payments for mineral properties, plant and equipment$(71,800)$(63,170)$(133,253)$(111,141)
Proceeds from disposition of mineral properties, plant and equipment65 14,026 7,764 14,796 
Proceeds from short-term investments315 633 1,019 888 
Net proceeds from derivatives3,062 2,584 5,040 5,068 
$(68,358)$(45,927)$(119,430)$(90,389)
Financing activities  
Proceeds from common shares issued$361 $296 $684 $335 
Distributions to non-controlling interests (322) (635)
Dividends paid(25,261)(14,720)(50,516)(29,438)
Proceeds from debt (Note 13)800 — 800 — 
Repayment of debt (Note 13)(1,111)— (1,961)— 
Payment of equipment leases(3,471)(2,853)(6,890)(5,835)
$(28,682)$(17,599)$(57,883)$(35,573)
Effects of exchange rate changes on cash and cash equivalents(842)11 (1,001)(1,019)
(Decrease) increase in cash and cash equivalents(77,047)23,628 (88,721)(9,988)
Cash and cash equivalents at the beginning of the period271,876 133,497 283,550 167,113 
Cash and cash equivalents at the end of the period$194,829 $157,125 $194,829 $157,125 
Supplemental cash flow information (Note 21).
See accompanying notes to the condensed interim consolidated financial statements.
PAN AMERICAN SILVER CORP.3

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Condensed Interim Consolidated Statements of Changes in Equity
(unaudited, in thousands of U.S. dollars, except for number of shares)
 Attributable to equity holders of the Company  
 Issued
shares
Issued
capital
Share option reserveInvestment
revaluation
reserve
DeficitTotalNon-
controlling
interests
Total
equity
Balance, December 31, 2020210,258,667 $3,132,140 $93,409 $ $(623,030)$2,602,519 $3,320 $2,605,839 
Total comprehensive earnings  
Net earnings for the year— — — — 97,428 97,428 1,134 98,562 
Shares issued on the exercise of stock options65,780 762 (143)— — 619 — 619 
Shares issued as compensation133,077 3,312 — — — 3,312 — 3,312 
Share-based compensation on option grants— — 109 — — 109 — 109 
Distributions by subsidiaries to non-controlling interests— — — — (933)(933)— (933)
Dividends paid— — — — (71,500)(71,500)— (71,500)
Balance, December 31, 2021210,457,524 $3,136,214 $93,375 $ $(598,035)$2,631,554 $4,454 $2,636,008 
Total comprehensive loss        
Net loss for the period— — — — (97,465)(97,465)664 (96,801)
Other comprehensive loss— — — (12,205)— (12,205)— (12,205)
 — — — (12,205)(97,465)(109,670)664 (109,006)
Shares issued on the exercise of stock options53,695 916 (232)— — 684 — 684 
Shares issued as compensation14,745 327 — — — 327 — 327 
Share-based compensation on option grants— — 123 — — 123 — 123 
Dividends paid— — — — (50,516)(50,516)— (50,516)
Balance, June 30, 2022210,525,964 $3,137,457 $93,266 $(12,205)$(746,016)$2,472,502 $5,118 $2,477,620 
 Attributable to equity holders of the Company  
 Issued
shares
Issued
capital
Share option reserveInvestment
revaluation
reserve
DeficitTotalNon-
controlling
interests
Total
equity
Balance, December 31, 2020210,258,667 $3,132,140 $93,409 $ $(623,030)$2,602,519 $3,320 $2,605,839 
Total comprehensive earnings  
Net earnings for the period— — — — 63,141 63,141 538 63,679 
Shares issued on the exercise of stock options31,072 405 (70)— — 335 — 335 
Shares issued as compensation9,646 325 — — — 325 — 325 
Share-based compensation on option grants— — 54 — — 54 — 54 
Distributions by subsidiaries to non-controlling interests— — — — (635)(635)— (635)
Dividends paid— — — — (29,438)(29,438)— (29,438)
Balance, June 30 2021210,299,385 $3,132,870 $93,393 $ $(589,962)$2,636,301 $3,858 $2,640,159 
See accompanying notes to the condensed interim consolidated financial statements.
PAN AMERICAN SILVER CORP.4

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
1. NATURE OF OPERATIONS
Pan American Silver Corp. is the ultimate parent company of its subsidiary group (collectively, the “Company”, or “Pan American”). Pan American is a British Columbia corporation domiciled in Canada, and its office is at Suite 1440 – 625 Howe Street, Vancouver, British Columbia, V6C 2T6.
The Company is engaged in the production and sale of silver, gold, zinc, lead and copper as well as other related activities, including exploration, extraction, processing, refining and reclamation. The Company’s major products are produced from mines in Canada, Peru, Mexico, Argentina and Bolivia. Additionally, the Company has project development activities in Canada, Peru, Mexico and Argentina, and exploration activities throughout South America, Canada and Mexico. As at June 30, 2022, the Company's Escobal mine in Guatemala continues to be on care and maintenance pending satisfactory completion of a consultation process led by the Ministry of Energy and Mines in Guatemala. In late February 2022, the Company's Morococha mine in Peru was placed on care and maintenance due to a requirement to move the processing facilities to allow for the expansion of a neighboring mine.
Principal subsidiaries:
The principal subsidiaries of the Company and their geographic locations at June 30, 2022 were as follows:
LocationSubsidiaryOwnership
Interest
AccountingOperations and Development
Projects Owned
CanadaLake Shore Gold Corp.100%ConsolidatedBell Creek and Timmins West mines (together "Timmins mine"
MexicoPlata Panamericana S.A. de C.V.100%ConsolidatedLa Colorada mine
Compañía Minera Dolores S.A. de C.V.100%ConsolidatedDolores mine
PeruPan American Silver Huaron S.A.100%ConsolidatedHuaron mine
Compañía Minera Argentum S.A.92%ConsolidatedMorococha mine
Shahuindo S.A.C.100%ConsolidatedShahuindo mine
La Arena S.A.100%ConsolidatedLa Arena mine
BoliviaPan American Silver (Bolivia) S.A.95%ConsolidatedSan Vicente mine
GuatemalaPan American Silver Guatemala S.A.100%ConsolidatedEscobal mine
ArgentinaMinera Tritón Argentina S.A.100%ConsolidatedManantial Espejo & Cap-Oeste Sur Este mines
Minera Joaquin S.R.L.100%ConsolidatedJoaquin mine
Minera Argenta S.A.100%ConsolidatedNavidad project
2. BASIS OF PREPARATION
These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”) and have been condensed with certain disclosures from the Company's audited consolidated financial statements for the year ended December 31, 2021 (the "2021 Annual Financial Statements") omitted. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the 2021 Annual Financial Statements.
PAN AMERICAN SILVER CORP.5

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, STANDARDS, AND JUDGEMENTS
a)Changes in accounting policies
The accounting policies applied in the preparation of these unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in the 2021 Annual Financial Statements.
b)Future changes in accounting standards
Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. Management is still evaluating and does not expect any such pronouncements to have a material impact on the Company’s consolidated financial statements upon adoption.
c)Significant judgements
In preparing the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2022, the Company applied the critical judgements and estimates disclosed in Note 5 of its 2021 Annual Financial Statements.
4. FINANCIAL INSTRUMENTS
a)Financial assets and liabilities by categories
June 30, 2022Amortized costFVTPLFVTOCITotal
Financial Assets:  
Cash and cash equivalents$194,829 $ $ $194,829 
Trade receivables from provisional concentrates sales(1)
 31,423  31,423 
Receivables not arising from sale of metal concentrates(1)
86,859   86,859 
Short-term investments 46,430  46,430 
Long-term investment(2)
  112,472 112,472 
Derivative assets 6,905  6,905 
$281,688 $84,758 $112,472 $478,918 
Financial Liabilities:
Derivative liabilities$ $245 $ $245 
Debt$30,700 $ $ $30,700 
(1)Included in Trade and other receivables.
(2)Comprised of the Company's investment in Maverix Metals Inc. ("Maverix") (Note 9).
December 31, 2021Amortized costFVTPLFVTOCITotal
Financial Assets:  
Cash and cash equivalents$283,550 $— $— $283,550 
Trade receivables from provisional concentrates sales(1)
— 40,020 — 40,020 
Receivables not arising from sale of metal concentrates(1)
76,902 — — 76,902 
Short-term investments— 51,723 — 51,723 
Derivative assets— 3,995 — 3,995 
$360,452 $95,738 $— $456,190 
Financial Liabilities:
Derivative liabilities$— $351 $— $351 
Debt$15,300 $— $— $15,300 
(1)Included in Trade and other receivables.
PAN AMERICAN SILVER CORP.6

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
b)Short-term investments recorded at fair value through profit or loss ("FVTPL")
The Company’s short-term investments are recorded at FVTPL. The (losses) gains from short-term investments for the three and six months ended June 30, 2022 and 2021 were as follows:
 Three months ended
June 30,
Six months ended
June 30,
 2022202120222021
Unrealized (losses) gains on short-term investments$(7,981)$10,329 $(5,524)$(28,704)
Realized gains on short-term investments327 315 696 315 
 $(7,654)$10,644 $(4,828)$(28,389)
c)Financial assets recorded at fair value through other comprehensive income ("FVTOCI")
The Company’s long-term investments are recorded at fair value through other comprehensive income. The (losses) gains from long-term investments for the three and six months ended June 30, 2022 and 2021 were as follows:
 Three months ended
June 30,
Six months ended
June 30,
 2022202120222021
Unrealized loss on long-term investment$(12,205)$— $(12,205)$— 
d)Derivative instruments
The Company's derivatives are comprised of foreign currency and commodity contracts. The gains on derivatives for the three and six months ended June 30, 2022 and 2021 were comprised of the following:
Three months ended
June 30,
Six months ended
June 30,
 2022202120222021
Gains on derivatives  
Realized gains on derivatives$3,061 $2,591 $5,040 $5,068 
Unrealized gains on derivatives632 529 3,015 422 
 $3,693 $3,120 $8,055 $5,490 
e)Fair value information
i) Fair Value Measurement
The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3: Inputs for the asset or liability based on unobservable market data.
PAN AMERICAN SILVER CORP.7

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the Consolidated Statements of Financial Position at fair value on a recurring basis were categorized as follows:
 At June 30, 2022At December 31, 2021
 Level 1Level 2Level 1Level 2
Assets and Liabilities:    
Short-term investments$46,430 $ $51,723 $— 
Long-term investment(1)
112,472  — — 
Trade receivables from provisional concentrate sales 31,423 — 40,020 
Derivative assets 6,905 — 3,995 
Derivative liabilities (245)— (351)
 $158,902 $38,083 $51,723 $43,664 
(1)Comprised of the Company's investment in Maverix (Note 9).
The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remains unchanged from that at December 31, 2021.
ii) Valuation Techniques
Short-term and long-term investments
The Company’s short-term and long-term investments are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy and are primarily equity securities. The fair value of the equity securities is calculated using the quoted market price multiplied by the quantity of shares held by the Company.
Derivative assets and liabilities
The Company’s derivative assets and liabilities were comprised of foreign currency and commodity contracts which are valued using observable market prices.
Receivables from provisional concentrate sales
A portion of the Company’s trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for copper, zinc and lead and the London Bullion Market Association P.M. fix for gold and silver.
f)Financial Instruments and related risks
The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The principal financial risks to which the Company is exposed are:
i)Credit risk
ii)Liquidity risk
iii)Market risk
1. Currency risk
2. Interest rate risk
3. Price risk
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.
i) Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s trade receivables. The carrying value of trade receivables represents the maximum credit exposure. 
PAN AMERICAN SILVER CORP.8

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
The Company has concentrate contracts to sell the zinc, lead, copper and silver concentrates produced by the Huaron, San Vicente and La Colorada mines. Concentrate contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent, the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have a market for its concentrates and therefore its future operating results may be materially adversely impacted. At June 30, 2022, the Company had receivable balances associated with buyers of its concentrates of $31.4 million (December 31, 2021 - $40.0 million). The vast majority of the Company’s concentrate is sold to a limited number of concentrate buyers.
Doré production from La Colorada, Dolores, Manantial Espejo, Shahuindo, La Arena, and Timmins is refined under long-term agreements with fixed refining terms at seven separate refineries worldwide. The Company generally retains the risk and title to the precious metals throughout the process of refining and therefore is exposed to the risk that the refineries will not be able to perform in accordance with the refining contract and that the Company may not be able to fully recover precious metals in such circumstances. At June 30, 2022, the Company had approximately $25.6 million (December 31, 2021 - $52.3 million) of value contained in precious metal inventory at refineries. The Company maintains insurance coverage against the loss of precious metals at the Company’s mine sites, in-transit to refineries and while at the refineries. Risk is transferred to the refineries upon delivery.
The Company maintains trading facilities with several banks and bullion dealers for the purposes of transacting the Company’s metal sales. None of these facilities are subject to margin arrangements. The Company’s trading activities can expose the Company to the credit risk of its counterparties to the extent that the trading positions have a positive mark-to-market value. However, the Company maintains an active credit management and monitoring program to minimize the risk of excessive credit risk concentration with any single counterparty.
Refined silver and gold are sold in the spot market to various bullion traders and banks. Credit risk may arise from these activities if the Company is not paid for metal at the time it is delivered, as required by spot sale contracts.
Supplier advances for products and services yet to be provided are a common practice in some jurisdictions in which we operate. These advances represent a credit risk to us to the extent that suppliers do not deliver products or perform services as expected. As at June 30, 2022, we had made $17.0 million of supplier advances (December 31, 2021 - $11.2 million), which are reflected in “Trade and other receivables” on the consolidated statements of financial position.
Management constantly monitors and assesses the credit risk resulting from its refining arrangements, concentrate sales and commodity contracts with its refiners, trading counterparties and customers. Furthermore, management carefully considers credit risk when allocating prospective sales and refining business to counterparties. In making allocation decisions, management attempts to avoid unacceptable concentration of credit risk to any single counterparty.
The Company invests its cash and cash equivalents, which also has credit risk, with the objective of maintaining safety of principal and providing adequate liquidity to meet all current payment obligations. 
ii) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking
PAN AMERICAN SILVER CORP.9

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
into account its anticipated cash flows from operations, its holdings of cash and short-term investments, and its committed loan facilities.
There was no significant change to the Company’s exposure to liquidity risk during the three and six months ended June 30, 2022.
iii) Market Risk
1.Currency Risk
The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse. 
At June 30, 2022, the Company had outstanding positions on its foreign currency exposure of Mexican peso ("MXN"), Peruvian sol ("PEN") and Canadian dollar ("CAD") purchases. The Company recorded losses of $0.1 million, $0.4 million, and $0.6 million, respectively, on MXN, PEN and CAD derivative contracts for the three months ended June 30, 2022 (2021 - gains of $0.8 million, losses of $1.3 million and gains of $0.4 million, respectively). The Company recorded gains of $0.4 million, gains of $1.7 million, and losses of $0.4, respectively, on MXN, PEN and CAD derivative contracts for the six months ended June 30, 2022 (2021 - losses of $0.1 million, losses of $2.2 million and gains of $0.9 million, respectively).
2.Interest Rate Risk
Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The average interest rate earned by the Company during the three and six months ended June 30, 2022 on its cash and short-term investments was 0.55% and 0.23% (2021 - 0.37% and 0.16%, respectively).
On August 10, 2021 the Company entered into a Sustainability-Linked Credit Facility which replaced the Company's revolving credit facility (the "Credit Facility") (Note 13). There were no amounts drawn during the three and six months ended June 30, 2022 and June 30, 2021 on either the Sustainability-Linked Credit Facility or the Credit Facility.
In June 2021 and May 2022, a wholly-owned Peruvian subsidiary of the Company entered into loan agreements (the "Loans") for the purpose of certain construction financing (Note 13). The Loans incurred an average interest rate of 3.5% during the three and six months ended June 30, 2022 (2021 - 3.6%).
At June 30, 2022, the Company had $32.5 million in lease obligations (December 31, 2021 - $30.6 million) that are subject to an annualized interest rate of 10.7% (2021 - 10.8%).
3.Price Risk
Metal price risk is the risk that changes in metal prices will affect the Company’s income or the value of its related financial instruments. The Company derives its revenue from the sale of silver, gold, lead, copper, and zinc. The Company’s sales are directly dependent on metal prices that have shown significant volatility and are beyond the Company’s control. Consistent with the Company’s mission to provide equity investors with exposure to changes in precious metal prices, the Company’s current policy is to not hedge the price of precious metals.
The Company mitigates the price risk associated with its base metal production by committing some of its forecasted base metal production from time to time under forward sales and option contracts. The
PAN AMERICAN SILVER CORP.10

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
Board of Directors continually assesses the Company’s strategy towards its base metal exposure, depending on market conditions.
At June 30, 2022, the Company had outstanding zinc sales contracts to manage exposure to fluctuation in prices. The Company recorded gains of $2.9 million and $1.8 million on these positions during the three and six months ended June 30, 2022. The Company did not enter into zinc contracts during the comparable periods in 2021.
During the three and six months ended June 30, 2021, the Company entered into collars made up of put and call contracts for its exposure to copper but did not enter into copper contracts during the comparable periods in 2022. The Company recorded losses of $0.6 million and $1.2 million during the three and six months ended June 30, 2021.
At June 30, 2022, the Company had outstanding positions of diesel swap contracts designated to fix or limit the Company’s exposure to higher fuel prices (the “Diesel fuel swaps”). The Company recorded gains of $2.0 million and $4.8 million on Diesel fuel swaps during the three and six months ended June 30, 2022 (2021 - gains of $3.8 million and $8.0 million, respectively).
5. SHORT-TERM INVESTMENTS
 June 30, 2022December 31, 2021
Fair
Value
CostAccumulated
unrealized
holding gains
Fair ValueCostAccumulated
unrealized
holding gains
Short-term investments$46,430 $20,781 $25,649 $51,723 $20,419 $31,304 

6. INVENTORIES
Inventories consist of:
 June 30,
2022
December 31,
2021
Concentrate inventory$26,932 $30,647 
Stockpile ore31,111 43,216 
Heap leach inventory and in process241,578 286,266 
Doré and finished inventory69,540 81,448 
Materials and supplies92,974 84,529 
Total inventories$462,135 $526,106 
Less: current portion of inventories$(435,362)$(500,462)
Non-current portion of inventories(1)
$26,773 $25,644 
(1)Inventories at Escobal mine, which include $19.5 million (December 31, 2021 - $18.3 million) in supplies with the remainder attributable to metals, have been classified as non-current pending the restart of operations.
Total inventories held at net realizable value amounted to $156.7 million at June 30, 2022 (December 31, 2021 – $203.7 million). The Company recorded write-downs of $62.8 million and $77.2 million for the three and six months ended June 30, 2022 (2021 – recoveries of $7.2 million and $15.4 million, respectively) and were included in cost of sales.
PAN AMERICAN SILVER CORP.11

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
7. MINERAL PROPERTIES, PLANT AND EQUIPMENT
Mineral properties, plant and equipment consist of:
 June 30, 2022December 31, 2021
 CostAccumulated
Depreciation 
and 
Impairment
Carrying
Value
CostAccumulated
Depreciation 
and 
Impairment
Carrying
 Value
Producing properties:
Huaron, Peru$227,490 $(143,068)$84,422 $224,700 $(141,902)$82,798 
Morococha, Peru (4)
256,126 (175,852)80,274 277,105 (188,821)88,284 
Shahuindo, Peru606,268 (150,768)455,500 590,096 (132,727)457,369 
La Arena, Peru235,258 (121,360)113,898 208,306 (105,006)103,300 
La Colorada, Mexico386,125 (195,864)190,261 355,471 (185,684)169,787 
Dolores, Mexico(1)
1,764,127 (1,512,905)251,222 1,738,040 (1,350,908)387,132 
Manantial Espejo, Argentina (2)
522,484 (511,574)10,910 518,931 (500,244)18,687 
San Vicente, Bolivia155,879 (115,064)40,815 151,045 (110,829)40,216 
Timmins, Canada346,926 (118,460)228,466 335,488 (103,903)231,585 
Other29,542 (20,554)8,988 29,804 (19,664)10,140 
$4,530,225 $(3,065,469)$1,464,756 $4,428,986 $(2,839,688)$1,589,298 
Non-Producing Properties:     
Land$6,373 $(871)$5,502 $6,373 $(871)$5,502 
Navidad, Argentina(3)
566,577 (376,101)190,476 566,577 (376,101)190,476 
Escobal, Guatemala260,103 (2,542)257,561 257,390 (1,842)255,548 
Timmins, Canada64,508  64,508 63,018 — 63,018 
Shahuindo, Peru3,549  3,549 3,549 — 3,549 
La Arena, Peru117,000  117,000 117,005 — 117,005 
Minefinders, Mexico76,449 (37,453)38,996 78,443 (36,975)41,468 
La Colorada, Mexico77,504  77,504 55,370 — 55,370 
Morococha, Peru (4)
2,981  2,981 2,981 — 2,981 
Other32,690 (12,381)20,309 32,426 (12,090)20,336 
$1,207,734 $(429,348)$778,386 $1,183,132 $(427,879)$755,253 
Total$5,737,959 $(3,494,817)$2,243,142 $5,612,118 $(3,267,567)$2,344,551 
(1)Includes previously recorded impairment charges of $672.3 million at June 30, 2022 (December 31, 2021 - $573.3 million).
(2)Includes previously recorded impairment charges of $173.3 million at June 30, 2022 (December 31, 2021 - $173.3 million).
(3)Includes previously recorded impairment charges of $376.1 million at June 30, 2022 (December 31, 2021 - $376.1 million).
(4)Morococha was placed on care and maintenance in February 2022.
Dispositions
On March 29, 2022, the Company received a $7.0 million payment from an arm's length party to be applied to certain costs associated with the closure and reclamation of the Morococha mine processing facility. This payment was included in proceeds from disposition of mineral properties, plant and equipment.
PAN AMERICAN SILVER CORP.12

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
8. IMPAIRMENT
The Company's impairment expense in respect of the following CGUs for the three and six months ended June 30, 2022 were as follows:
 Three months ended
June 30,
Six months ended
June 30,
 2022202120222021
Dolores impairment expense$99,064 $— $99,064 $— 
Impairment testing
The Company reviews each of its cash generating units ("CGU"), represented by its principal producing mining properties and significant development projects, for indicators of impairment each period end. The CGU carrying amount for purposes of this assessment includes the carrying value of the mineral properties plant and equipment and goodwill less deferred tax liabilities and closure and decommissioning liabilities related to each CGU.
As at June 30, 2022 the Company identified an impairment indicator in the Dolores Mine CGU due to the year-to-date 2022 silver and gold production being less than that expected by management driven by an ore reconciliation shortfall experienced in a recent higher-grade phase of the open pit which is expected to affect Dolores production for the remainder of the year combined with inflationary pressures which have particularly affected this short-life asset. Accordingly, management completed a recoverable value assessment of the Dolores Mine CGU. As a result, the Company recognized an impairment expense of $99.1 million, against the carrying value of the CGU at June 30, 2022, and recorded an NRV adjustment of $55.4 million (Note 6) (Collectively, the "Dolores Impairment").
The recoverable amount was determined applying a fair value less cost to sell methodology based on future after-tax cash flows expected to be derived from Dolores Mine discounted with a 6% weighted average cost of capital, a Level 3 fair value measurement. The projected cash flows used in impairment testing are significantly affected by changes in assumptions for metal prices, changes in the amount of recoverable reserves, production costs estimates and capital expenditures estimates. For the three and six months ended June 30, 2022, the Company's impairment testing incorporated the following key assumptions:
a)Pricing Assumptions
Metal pricing included in the cash flow projections is based on consensus analyst pricing. The metal price assumptions used in the impairment assessment was the following:
 At June 30, 2022
 2022-2025
Average
2026 and
long-term
Gold (per ounce)$1,802 $1,651 
Silver (per ounce)23.56 21.77 
b)Additional Dolores-specific assumptions affecting the recoverable amount assessment
In 2022, the recoverable amount of the Dolores Mine CGU was negatively impacted by the following:
i) the updated mineral resource and remaining life of mine plan has a reduction in the assumed grades for a certain phase to be mined in 2022, this was informed by 2022 year-to-date silver and gold production being less than expected due to lower than expected grades encountered in this certain section of the open pit;
ii) inflationary pressures, which have particularly affected this shorter-life asset where most of the mining will be completed in the next two years;
iii) the suspension of underground mining operations in Q2 2022 due to inflationary cost pressures, and the subsequent reclassification of underground mineral reserves to mineral resources; and,
iv) a reduction in the expected duration of economic leaching to the year 2030.
PAN AMERICAN SILVER CORP.13

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
9. LONG-TERM INVESTMENT
The following table shows a continuity of the Company's long-term investment, classified as financial assets measured at FVTOCI and equity investees:
FVTOCIInvestment in Associate
MaverixMaverixTotal
At December 31, 2020$ $71,560 $71,560 
Acquisition of shares in associate— 2,616 2,616 
Equity pick-up from equity investees— 4,510 4,510 
Dilution losses— (34)(34)
Adjustment for change in ownership interest— (22)(22)
Dividends received— (1,220)(1,220)
At December 31, 2021$ $77,410 $77,410 
Equity pick-up from equity investees$— $413 $413 
Dividends received— (325)(325)
Loss of significant influence124,677 (77,498)47,179 
Investment revaluation reserve fair value adjustment(12,205)— (12,205)
At June 30, 2022$112,472 $ $112,472 
Investment in Maverix:
On March 31, 2022, the Company determined that it no longer held significant influence over Maverix due to declining to exercise its right to nominate a representative to serve as a director on Maverix’s Board of Directors and accordingly the Company no longer has the power to participate in the financial and operating policy decisions of Maverix. As a result, the Company recorded a $44.6 million gain concurrent with the redesignation of its investment in Maverix from Investment in Associate, accounted using the "equity method" whereby the Company's recorded into income its ownership proportion of Maverix estimated earnings, into a long-term financial asset recorded at FVTOCI.
The Company's share of Maverix income or loss was recorded based on its 17% interest up until March 31, 2022, representing the Company’s fully diluted ownership.
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of: 
June 30,
2022
December 31,
2021
Trade account payables(1)
$65,079 $77,461 
Royalty payables27,911 24,113 
Other accounts payable and accrued liabilities134,207 107,207 
Payroll and severance liabilities53,809 64,968 
Value added tax liabilities9,583 12,006 
Other tax payables11,103 20,332 
$301,692 $306,087 
(1)No interest is charged on the trade accounts payable ranging from 30 to 60 days from the invoice date. The Company has policies in place to ensure that all payables are paid within the credit terms.
PAN AMERICAN SILVER CORP.14

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
11. PROVISIONS
2022
Closure and decommissioning, December 31, 2021$242,861 
Revisions in estimates and obligations incurred2,437 
Reclamation expenditures(1,768)
Accretion expense (Note 19)7,420 
Closure and decommissioning, June 30, 2022$250,950 
Litigation5,872 
Total provisions, June 30, 2022$256,822 
Provision classification:June 30,
2022
December 31,
2021
Current$12,132 $8,041 
Non-Current244,690 240,111 
$256,822 $248,152 
12. LEASES
Right-of-use Assets ("ROU")
The following table summarizes changes in ROU Assets for the six months ended June 30, 2022 which have been recorded in mineral properties, plant and equipment on the condensed interim consolidated statements of financial position:
Six months ended June 30, 2022
Opening net book value$29,496 
Additions8,962 
Depreciation(6,824)
Other(1,187)
Closing net book value$30,447 
Lease obligations
The following table presents a reconciliation of the Company's undiscounted cash flows at June 30, 2022 and December 31, 2021 to their present value for the Company's lease obligations:
June 30,
2022
December 31,
2021
Within one year$14,400 $11,690 
Between one and five years16,743 16,676 
Beyond five years15,622 16,934 
Total undiscounted lease obligations46,765 45,300 
Less future interest charges(14,242)(14,739)
Total discounted lease obligations32,523 30,561 
Less current portion of lease obligations(13,555)(10,663)
Non-current portion of lease obligations$18,968 $19,898 
PAN AMERICAN SILVER CORP.15

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
13. DEBT
Debt consists of:
 June 30,
2022
December 31,
2021
Loans$30,700 $15,300 
Less: current portion of Loans(7,371)(3,400)
Non-current portion of Loans$23,329 $11,900 
In June 2021 and May 2022, a wholly-owned Peruvian subsidiary of the Company entered into five-year, USD denominated, term Loans with a local financial institution for the purpose of certain construction financing. The June 2021 loan bears a 3.6% interest rate per annum and requires quarterly repayments while the May 2022 loan bears 2.2% interest per annum and requires monthly repayments.
On August 10, 2021, Pan American entered into an amendment agreement to amend and extend its $500 million Credit Facility, with a maturity date of February 1, 2023, into a $500 million Sustainability-Linked Credit Facility. The Sustainability-Linked Credit Facility features a pricing mechanism allowing for pricing adjustments on drawn and undrawn balances based on the Company's sustainability performance ratings and scores published by MSCI and S&P Global, leaders in ESG and Corporate Governance research and ratings. The Sustainability-Linked Credit Facility matures on August 8, 2025. In addition, the financial covenants include the requirement for the Company to maintain: (i) a leverage ratio less than or equal to 3.5:1; and (ii) an interest coverage ratio more than or equal to 3.0:1. The Sustainability-Linked Credit Facility and Credit Facility, respectively, were undrawn at June 30, 2022 and December 31, 2021. As of June 30, 2022, the Company was in compliance with all covenants required by the Sustainability-Linked Credit Facility.
The Sustainability-Linked Credit Facility can be drawn down at any time to finance the Company’s working capital requirements, acquisitions, investments and for general corporate purposes. Subject to pricing adjustment based on sustainability performance ratings and scores, any amounts drawn under the Sustainability-Linked Credit Facility will incur interest at LIBOR plus 1.825% to 2.80%. Undrawn amounts are subject to a stand-by fee of 0.41% to 0.63% per annum, dependent on the Company's leverage ratio and subject to pricing adjustments based on sustainability performance ratings and scores.
The Company did not draw from these credit facilities during the three and six months ended June 30, 2022 and 2021 and incurred $0.5 million and $1.1 million for the three and six months ended June 30, 2022 (2021 - $0.5 million and $1.0 million, respectively) in standby charges on undrawn amounts.
14. DEFERRED REVENUE
On July 11, 2016 the Company recognized a deferred revenue liability after it sold precious metal streams to Maverix whereby the Company will sell 100% of the future gold production from La Colorada and 5% of the future gold production from La Bolsa, which is in the exploration stage, respectively (the "Streams").
The deferred revenue related to the Streams will be recognized as revenue by Pan American as the gold ounces are delivered to Maverix and increased by $2.5 million during the three months ended March 31, 2022 to record the deferred revenue previously not recognized while using the equity method of accounting after concluding that it no longer held significant influence of Maverix. The deferred revenue liability was $14.6 million at June 30, 2022 (December 31, 2021 - $12.5 million).
PAN AMERICAN SILVER CORP.16

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
15. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of: 
 June 30,
2022
December 31,
2021
Deferred credit(1)
$20,788 $20,788 
Other tax payables13 16 
Severance liabilities5,479 4,887 
 $26,280 $25,691 
(1)Represents the obligation to deliver future silver production of Navidad pursuant to a silver stream contract.
16. SHARE CAPITAL AND EMPLOYEE COMPENSATION PLANS
a.Stock options and common shares issued as compensation ("Compensation Shares")
For the three and six months ended June 30, 2022, the total share-based compensation expense relating to stock options and compensation shares was $1.3 million and $2.6 million (2021 - $1.3 million and $2.1 million, respectively) and is presented as a component of general and administrative expense.
Stock options
The Company did not grant any stock options during the three and six months ended June 30, 2022 or the comparative periods in 2021.
During the three and six months ended June 30, 2022, the Company issued 26,765 and 53,695 common shares in connection with the exercise of options (2021 – 28,204 and 31,072 common shares, respectively).
Compensation Shares
During the three and six months ended June 30, 2022, The Company issued 14,745 common shares to Directors in lieu of Directors’ fees of $0.3 million (2021 – 9,646 common shares in lieu of fees of $0.3 million).
The following table summarizes changes in stock options for the six months ended June 30, 2022 and year ended December 31, 2021:
 Stock Options
 OptionsWeighted
Average Exercise
Price CAD$
As at December 31, 2020317,417 $18.78 
Granted53,115 30.70 
Exercised(65,780)11.77 
Expired(2,162)41.62 
Forfeited(23,587)32.27 
As at December 31, 2021279,003 $21.38 
Exercised(53,695)16.05 
Expired(4,324)41.62 
Forfeited(697)39.48 
As at June 30, 2022220,287 $22.23 
PAN AMERICAN SILVER CORP.17

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
The following table summarizes information about the Company's stock options outstanding at June 30, 2022:
 Options OutstandingOptions Exercisable
Range of Exercise Prices
CAD$
Number Outstanding as at June 30, 2022Weighted Average
Remaining
Contractual Life
(years)
Weighted
Average
Exercise Price
CAD$
Number Outstanding as at June 30, 2022Weighted
Average
Exercise
Price CAD$
$9.76 - $17.1125,847 0.3 $13.20 25,847 $13.20 
$17.12 - $24.46113,367 3.0 $18.47 113,367 $18.47 
$24.47 - $31.8174,165 5.9 $29.52 21,050 $26.54 
$31.82 - $39.486,908 5.4 $39.48 3,455 $39.48 
 220,287 3.7 $22.23 163,719 $19.12 
b.PSUs
The Company recorded a recovery of $0.2 million and an expense of $0.5 million for PSUs for the three and six months ended June 30, 2022 (2021 - $0.4 million and $0.6 million, respectively) and is presented as a component of general and administrative expense. 
At June 30, 2022, the following PSUs were outstanding:
PSUNumber OutstandingFair Value
As at December 31, 2020255,559 $8,870 
Granted79,417 2,049 
Paid out(117,328)(4,539)
Change in value— (901)
As at December 31, 2021217,648 $5,479 
Granted11,614 228 
Change in value (1,085)
As at June 30, 2022229,262 $4,622 
c.RSUs
The Company recorded a recovery of $0.2 million and an expense of $1.1 million for RSUs for the three and six months ended June 30, 2022 (2021 - $0.8 million and $1.4 million, respectively) and is presented as a component of general and administrative expense.
At June 30, 2022, the following RSUs were outstanding:
RSUNumber OutstandingFair Value
As at December 31, 2020396,572 $13,730 
Granted240,366 5,818 
Paid out(197,320)(4,829)
Forfeited(13,218)(329)
Change in value— (3,699)
As at December 31, 2021426,400 $10,691 
Forfeited(8,308)(164)
Change in value (2,144)
As at June 30, 2022418,092 $8,383 
d.Issued share capital
The Company is authorized to issue 400,000,000 common shares without par value.
PAN AMERICAN SILVER CORP.18

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
e.Dividends
The Company declared the following dividends for August 10, 2022 and the six months ended June 30, 2022 and 2021:
Declaration DateRecord DateDividend per common share
August 10, 2022(1)
August 22, 2022$0.11 
May 11, 2022May 24, 2022$0.12 
February 23, 2022March 7, 2022$0.12 
November 9, 2021November 22, 2021$0.10 
August 10, 2021August 23, 2021$0.10 
May 12, 2021May 25, 2021$0.07 
February 17, 2021March 1, 2021$0.07 
(1)These dividends were declared subsequent to the quarter ended June 30, 2022 and have not been recognized as distributions to owners during the period presented.
f.CVRs
As part of the acquisition of Tahoe Resources Inc. on February 22, 2019, the Company issued 313,887,490 Contingent Value Rights ("CVRs"), with a term of 10 years, which are convertible into 15,600,208 common shares upon the first commercial shipment of concentrate following the restart of operations at the Escobal mine. As of June 30, 2022, there were 313,883,990 CVRs outstanding which were convertible into 15,600,034 common shares (December 31, 2021 - 313,883,990 CVRs convertible into 15,600,034 common shares).
17. PRODUCTION COSTS
Production costs are comprised of the following: 
Three months ended
June 30,
Six months ended
June 30,
2022202120222021
Materials and consumables$104,792 $95,376 $199,867 $183,440 
Salaries and employee benefits72,459 83,581 152,463 165,442 
Contractors52,997 46,408 107,541 93,251 
Utilities13,981 11,165 30,041 22,975 
Other expense4,126 13,630 8,897 25,650 
Changes in inventories39,927 (50,731)68,301 (98,149)
 $288,282 $199,429 $567,110 $392,609 
18. MINE CARE AND MAINTENANCE
Three months ended
June 30,
Six months ended
June 30,
2022202120222021
Escobal$6,205 $6,012 $12,917 $11,874 
Morococha$4,877 $— $6,889 $— 
Navidad$1,209 $1,745 $2,153 $3,149 
 $12,291 $7,757 $21,959 $15,023 
PAN AMERICAN SILVER CORP.19

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
19. INTEREST AND FINANCE EXPENSE
Three months ended
June 30,
Six months ended
June 30,
2022202120222021
Interest expense$1,014 $782 $1,909 $1,825 
Finance fees575 928 1,165 1,857 
Accretion expense (Note 11)3,710 1,869 7,420 3,738 
 $5,299 $3,579 $10,494 $7,420 
20. EARNINGS PER SHARE (BASIC AND DILUTED)
For the three months ended June 30,20222021
 
Earnings(1)
(Numerator)
Shares (000’s)
(Denominator)
Per-Share
Amount
Earnings(1)
(Numerator)
Shares (000’s)
(Denominator)
Per-Share
Amount
Net (loss) earnings for the period$(173,982)$70,939 
Basic (loss) earnings per share$(173,982)210,514 $(0.83)$70,939 210,284 $0.34 
Effect of Dilutive Securities:
Stock Options  — 154 
Diluted (loss) earnings per share$(173,982)210,514 $(0.83)$70,939 210,438 $0.34 
(1)Net earnings attributable to equity holders of the Company.
For the six months ended June 30,20222021
 
Earnings(1)
(Numerator)
Shares (000’s)
(Denominator)
Per-Share
Amount
Earnings(1)
(Numerator)
Shares (000’s)
(Denominator)
Per-Share
Amount
Net earnings for the period$(97,465)$63,141 
Basic earnings per share$(97,465)210,489 $(0.46)$63,141 210,273 $0.30 
Effect of Dilutive Securities:
Stock Options  — 163 
Diluted earnings per share$(97,465)210,489 $(0.46)$63,141 210,436 $0.30 
(1)Net earnings attributable to equity holders of the Company.
Potentially dilutive securities excluded in the diluted earnings per share calculation for the three and six months ended June 30, 2022 were 60,023 out-of-the-money options and CVRs potentially convertible into 15,600,034 common shares (2021 – 11,929 out-of-the-money options and CVRs potentially convertible into 15,600,034 common shares).
Antidilutive securities which are potentially dilutive in the future but were excluded from diluted earnings per share included 160,264 options for the three months ended June 30, 2022 with no securities excluded for the six months ended June 30, 2022.
21. SUPPLEMENTAL CASH FLOW INFORMATION
The following tables summarize other adjustments for non-cash income statement items, changes in operating working capital items and significant non-cash items: 
Three months ended
June 30,
Six months ended
June 30,
Other operating activities2022202120222021
Adjustments for non-cash income statement items:
Net realizable value adjustment for inventories$62,770 $(7,246)$77,213 $(15,389)
Gains on derivatives (Note 4d)(3,693)(3,120)(8,055)(5,490)
Share-based compensation expense1,311 1,250 2,623 2,130 
Losses (gains) on sale of mineral properties, plant and equipment522 (4,146)699 (4,256)
$60,910 $(13,262)$72,480 $(23,005)
PAN AMERICAN SILVER CORP.20

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
Three months ended
June 30,
Six months ended
June 30,
Changes in non-cash operating working capital items:2022202120222021
Trade and other receivables$3,817 $(9,793)$(8,560)$(8,570)
Inventories(26,420)(38,429)(16,085)(78,363)
Prepaid expenses3,625 4,426 2,631 2,246 
Accounts payable and accrued liabilities360 7,548 (11,368)1,133 
Provisions(893)(767)(1,187)(859)
 $(19,511)$(37,015)$(34,569)$(84,413)
Cash and Cash EquivalentsJune 30,
2022
December 31,
2021
Cash in banks$194,829 $283,550 
22. SEGMENTED INFORMATION
The Company reviews its segment reporting to ensure it reflects the operational structure of the Company and enables the Company's Chief Operating Decision Maker ("CODM") to review operating segment performance. We have determined that each producing mine and significant development property represents an operating segment. The Company has organized its reportable and operating segments by significant revenue streams and geographic regions.
Significant information relating to the Company’s reportable operating segments is summarized in the table below:
For the three months ended June 30, 2022
Segment/CountryOperationRevenueProduction costs and royaltiesDepreciationMine operating earnings
Capital expenditures(1)
Silver Segment:
MexicoLa Colorada$34,626 $21,953 $4,869 $7,804 $22,678 
PeruHuaron30,522 23,175 2,818 4,529 3,085 
Morococha (2)
(339)(1,024)24 661 309 
BoliviaSan Vicente26,071 20,168 3,112 2,791 3,376 
ArgentinaManantial Espejo27,428 32,546 6,957 (12,075)1,562 
GuatemalaEscobal    517 
Total Silver Segment118,308 96,818 17,780 3,710 31,527 
Gold Segment:
MexicoDolores74,884 107,854 31,716 (64,686)11,575 
PeruShahuindo57,196 32,511 9,231 15,454 7,463 
La Arena25,197 15,843 5,204 4,150 13,942 
CanadaTimmins64,884 44,768 9,795 10,321 10,127 
Total Gold Segment222,161 200,976 55,946 (34,761)43,107 
Other segment:
CanadaPas Corp  105 (105)89 
ArgentinaNavidad    14 
OtherOther 496 (496)534 
Total$340,469 $297,794 $74,327 $(31,652)$75,271 
(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.
(2)Morococha was placed on care and maintenance in February 2022.
PAN AMERICAN SILVER CORP.21

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
For the three months ended June 30, 2021
Segment/CountryOperationRevenueProduction costs and royaltiesDepreciationMine operating earnings
Capital expenditures(1)
Silver Segment:
MexicoLa Colorada$34,441 $15,506 $5,026 $13,909 $14,383 
PeruHuaron35,672 20,805 2,564 12,303 2,549 
Morococha28,805 19,612 3,449 5,744 2,365 
BoliviaSan Vicente22,393 16,778 2,421 3,194 833 
Argentina
Manantial Espejo (2)
23,425 19,642 2,388 1,395 2,271 
GuatemalaEscobal— — — — 264 
Total Silver Segment144,736 92,343 15,848 36,545 22,665 
Gold Segment:
MexicoDolores92,994 37,859 25,843 29,292 8,337 
PeruShahuindo42,459 18,739 6,921 16,799 8,889 
La Arena43,158 17,595 9,653 15,910 12,507 
CanadaTimmins58,785 44,008 9,911 4,866 13,312 
Total Gold Segment237,396 118,201 52,328 66,867 43,045 
Other segment:
CanadaPas Corp— — 119 (119)84 
ArgentinaNavidad— — — — 18 
Other
Other (2)
— — 245 (245)211 
Total$382,132 $210,544 $68,540 $103,048 $66,023 
(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.
(2)Recast comparative to be consistent with current presentation.
For the six months ended June 30, 2022
Segment/CountryOperationRevenueProduction costs and royaltiesDepreciationMine operating earnings
Capital expenditures(1)
Silver Segment:
MexicoLa Colorada$79,348 $46,416 $10,145 $22,787 $35,093 
PeruHuaron73,655 46,051 5,849 21,755 6,234 
Morococha (2)
21,966 21,157 2,332 (1,523)660 
BoliviaSan Vicente42,973 33,008 5,099 4,866 6,277 
ArgentinaManantial Espejo60,578 59,295 12,621 (11,338)2,651 
GuatemalaEscobal    821 
Total Silver Segment278,520 205,927 36,046 36,547 51,736 
Gold Segment:
MexicoDolores167,002 175,362 66,205 (74,565)25,928 
PeruShahuindo123,336 65,556 19,850 37,930 14,150 
La Arena80,215 44,679 15,566 19,970 26,901 
CanadaTimmins131,284 94,877 20,065 16,342 20,452 
Total Gold Segment501,837 380,474 121,686 (323)87,431 
Other segment:
CanadaPas Corp  210 (210)175 
ArgentinaNavidad    29 
OtherOther  911 (911)772 
Total$780,357 $586,401 $158,853 $35,103 $140,143 
(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.
(2)Morococha was placed on care and maintenance in February 2022.
PAN AMERICAN SILVER CORP.22

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
For the six months ended June 30, 2021
Segment/CountryOperationRevenueProduction costs and royaltiesDepreciationMine operating earnings
Capital expenditures(1)
Silver Segment:
MexicoLa Colorada$39,771 $19,710 $7,390 $12,671 $23,851 
PeruHuaron74,174 42,511 5,439 26,224 4,161 
Morococha53,162 37,776 6,999 8,387 4,756 
BoliviaSan Vicente47,044 32,687 5,357 9,000 1,391 
Argentina
Manantial Espejo (2)
52,527 46,038 6,361 128 3,649 
GuatemalaEscobal— — — — 296 
Total Silver Segment266,678 178,722 31,546 56,410 38,104 
Gold Segment:
MexicoDolores165,487 66,699 54,424 44,364 17,255 
PeruShahuindo100,796 44,511 16,079 40,206 11,711 
La Arena99,111 36,658 20,904 41,549 27,226 
CanadaTimmins118,159 86,996 19,951 11,212 22,178 
Total Gold Segment483,553 234,864 111,358 137,331 78,370 
Other segment:
CanadaPas Corp— — 238 (238)165 
ArgentinaNavidad— — — — 79 
Other
Other (2)
— — 491 (491)258 
Total$750,231 $413,586 $143,633 $193,012 $116,976 
(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.
(2)Recast comparative to be consistent with current presentation.
At June 30, 2022
Segment/CountryOperationAssetsLiabilitiesNet assets
Silver Segment:
MexicoLa Colorada$345,413 $63,244 $282,169 
PeruHuaron124,021 52,277 71,744 
Morococha112,440 35,712 76,728 
BoliviaSan Vicente85,556 47,604 37,952 
ArgentinaManantial Espejo55,651 26,318 29,333 
GuatemalaEscobal292,097 21,097 271,000 
Total Silver Segment1,015,178 246,252 768,926 
Gold Segment:
MexicoDolores491,066 155,405 335,661 
PeruShahuindo601,263 196,783 404,480 
La Arena320,869 109,075 211,794 
CanadaTimmins409,161 69,396 339,765 
Total Gold Segment1,822,359 530,659 1,291,700 
Other segment:
CanadaPas Corp202,843 20,599 182,244 
ArgentinaNavidad194,784 2,529 192,255 
Other88,404 45,909 42,495 
Total$3,323,568 $845,948 $2,477,620 
PAN AMERICAN SILVER CORP.23

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
At December 31, 2021
Segment/CountryOperationAssetsLiabilitiesNet assets
Silver Segment:
MexicoLa Colorada$299,038 $52,934 $246,104 
PeruHuaron117,514 59,975 57,539 
Morococha124,607 40,494 84,113 
BoliviaSan Vicente88,924 53,264 35,660 
Argentina
Manantial Espejo (1)
78,240 29,155 49,085 
GuatemalaEscobal287,811 19,833 267,978 
Total Silver Segment996,134 255,655 740,479 
Gold Segment:
MexicoDolores750,220 193,638 556,582 
PeruShahuindo591,164 199,450 391,714 
La Arena317,371 106,799 210,572 
CanadaTimmins419,106 62,196 356,910 
Total Gold Segment2,077,861 562,083 1,515,778 
Other segment:
CanadaPas Corp176,006 16,492 159,514 
ArgentinaNavidad193,077 — 193,077 
Other (1)
75,506 48,346 27,160 
Total$3,518,584 $882,576 $2,636,008 
(1)Recast comparative to be consistent with current presentation.
 Three months ended
June 30,
Six months ended
June 30,
Product Revenue2022202120222021
Refined silver and gold$250,007 $264,579 $567,404 $543,504 
Zinc concentrate28,203 33,216 56,484 58,501 
Lead concentrate36,402 35,878 85,324 53,735 
Copper concentrate11,648 29,613 40,053 59,447 
Silver concentrate14,209 18,846 31,092 35,044 
Total$340,469 $382,132 $780,357 $750,231 
23. INCOME TAXES
Components of Income Tax Expense
Three months ended
June 30,
Six months ended
June 30,
2022202120222021
Current income tax expense$11,738 $25,893 $42,224 $52,469 
Deferred income tax (recovery) expense(4,870)3,703 (23,916)15,104 
Income tax expense$6,868 $29,596 $18,308 $67,573 
Income tax expense differs from the amounts that would result from applying the Canadian federal and provincial income tax rates to earnings before income taxes. These differences result from the items shown on the following table, which results in effective tax rates that vary considerably from the comparable period. The main factors that impacted the effective tax rate for the three and six months ended June 30, 2022 and the comparable periods for 2021 were changes in the recognition of certain deferred tax assets primarily due to the Dolores impairment, foreign exchange rate fluctuations, mining taxes paid, and withholding taxes remitted on payments from foreign subsidiaries. The Company expects that these and other factors will continue to cause fluctuations in effective tax rates in the future.
PAN AMERICAN SILVER CORP.24

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Notes to the Condensed Interim Consolidated Financial Statements
As at June 30, 2022 and December 31, 2021, and for the
three and six months ended June 30, 2022 and 2021
(unaudited with tabular amounts in thousands of U.S. dollars except number of
shares, options, warrants, and per share amounts, unless otherwise noted)
Reconciliation of Effective Income Tax Rate
Three months ended
June 30,
Six months ended
June 30,
2022202120222021
Earnings (loss) before taxes and non-controlling interest$(166,764)$100,837 $(78,493)$131,252 
Statutory Canadian income tax rate27.00 %27.00 %27.00 %27.00 %
Income tax (recovery) expense based on above rates$(45,026)$27,226 $(21,193)$35,438 
Increase (decrease) due to:
Non-deductible expenditures605 1,380 2,611 2,747 
Foreign tax rate differences(11,143)3,921 (9,642)7,836 
Change in net deferred tax assets not recognized8,877 (7,296)(2,808)7,294 
Derecognition of deferred tax assets previously recognized (1)
50,356 — 50,356 — 
Effect of other taxes paid (mining and withholding)3,196 5,633 7,811 14,007 
Effect of foreign exchange on tax expense(134)(5,179)(11,596)2,483 
Non-taxable impact of foreign exchange1,186 4,043 3,679 1,497 
Change in non-deductible portion of reclamation liabilities(787)1,802 596 (1,441)
Other(262)(1,934)(1,506)(2,288)
Income tax expense$6,868 $29,596 $18,308 $67,573 
(1)Attributable to the loss of tax attributes as a result of the Dolores Impairment (Note 8).
24. CONTINGENCIES
The Company is subject to various legal, tax, environmental and regulatory matters that arise in the ordinary course of business activities. Each of these matters is subject to various uncertainties and it is possible that some of these matters may be resolved unfavorably to the Company. In the opinion of management none of these matters are expected to have a material adverse effect on the results of operations or financial conditions of the Company. Since December 31, 2021, there have been no significant changes to these contractual obligations and commitments.
25. RELATED PARTY TRANSACTIONS
The Company’s related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel. Transactions with the Company's subsidiaries have been eliminated on consolidation. Maverix ceased to be a related party after March 31, 2022 after the Company determined that it no longer held significant influence (Note 9). There were no other related party transactions for the three and six months ended June 30, 2022 and 2021.
PAN AMERICAN SILVER CORP.25