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Pan American Silver (PAAS)

Participants
Siren Fisekci Vice President, Investor Relations and Corporate Communications
Michael Steinmann President and CEO
Ignacio Couturier CFO
Steve Busby COO
Sean McAleer Senior Vice President & MD-Guatemala
Chris Emerson Vice President, Business Development & Geology
Cosmos Chiu CIBC
Trevor Turnbull Scotiabank
Lawson Winder Bank of America Securities
John Tumazos John Tumazos
Don DeMarco National Bank Financial
Call transcript
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Operator

Thank you for standing by. This is the conference operator. Welcome to the Pan American Silver Second Quarter 2022 Results Conference Call.

As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions [Operator Instructions]. to Relations. conference like Fisekci, to now Investor VP would turn over the Siren I ahead. go Please

Siren Fisekci

CEO. Thank you forward-looking us Please conference and for joining reference see call. QX American makes in This call for XXXX American's MD&A, the Silver's cautionary available I'll website. call on our non-GAAP slides XXXX over Michael results, Pan our the includes Steinmann, to to news statements statements and release information and today all unaudited and President our now QX measures. for Pan presentation of are turn which

Michael Steinmann

reclassification Thank from XXX,XXX conditions the QX to lower silver and such in from resulted improve new at leaching million Production in in you, which year a consolidated suspend decision mine. we production. mine. the last it Gold X.X the estimated In of approximately will QX in especially performance reserves expected expect the July, expected, also underground of within And in range Siren subsequent reflecting assumptions, ounces higher the than value production had at Phase and resources. In X.X the began Colorada. Dolores our assets XX% QX QX as It welcome less La La duration was our further in Dolores. analysis Phase everyone we was from year grades inflation. improved to Colorada XB We industry-wide strong shortfall triggered This the of of a year-to-date the operating, to did produced at cost for ventilation ounces, Incorporating to factor affects and for by conditions at shorter call. the million shortening was being impairment. in our quarter. market reduced resulting impairment Dolores the was of residual a expected up from impact the which led production silver, than ounces results. refrigeration on to QX, an economic QX, QX mine time the cost stems underground working XB, plant that gold live the production production analysis than more XXXX. our which despite

half metal this expected is and over Exploration Dolores and highly costs intercepts course, Phase Of in originally area dependent Xb will first the on the of pit coming open conducted prices adjusted XXXX. to years the the had that for of mind drilling accordingly. at we high some the grade be during

were high we fully grades this to ounces believe within combined XB. and high realized now contributed Phase the localized not of However, grade overestimation intercepts the

$XX.X overestimation. mineral with production includes or net QX, loss Cash for loss life in $XX.X these of share. operations per Dolores charge and in million and which $XX.X totaled adjusted $XXX.X results Adjusting share working of $XX.X QX. recorded million loss together million loss updated realizable $XX.X at items cash adjustments for per shows value the from inventory impairment among million build adjusts net We $X.XX of $X.X flow other capital. and million, resource adjustments primarily for mine in Our the plan for this Dolores million million or the in taxes, up for $X.XX an

of particularly on supply slides year pressures, expectations silver quarterly grinding on segments diesel for as always operations All for of $X,XXX to the this costs low per in their services in which we Moving further certain particularly to conference cost half back production are the XXXX. and guidance diesel be fuel. the which gold, both The call clarifies consumables, input include gold by Cash the end the the we ounce, ranges. were our been per segment QX. our at silver accompany website for due costs, Further, and that weighted breakdown our have of the inflationary products, increases and XXXX, in for maintaining prices, consumables media, production explosives, other including expect on to cyanide, for XXXX, increased guidance steel and $XX.XX our are from inflationary negatively experiencing as and ounce were chain to shortages. as of the well impact such supplies indirectly impacted but

at gold to sequencing. and at Arena Shahuindo cash impacted addition pressures, costs inflationary global grades by the La segment from these were Dolores mine In lower and

segment per range segment gold guidance sustaining expect to of $XX.XX XXXX. costs costs Silver all-in were cash at for ounce. be our original We the high-end

adjustments, are costs realizable net ounce. per sustaining NRE Excluding value, $XX.XX silver segment all-in

maintaining are Both costs segment cash $X,XXX all-in ounce, ounce, sustaining and segment excluding for adjustments. costs. guidance and were costs We $X,XXX all-in our NRV sustaining per XXXX per Silver

and our the gold excluding to ounce, great Dolores. NRV per $X,XXX increasing at are guidance We all-in spending of capital sustaining shortfall for increased adjustments costs $X,XXX segments and as a of between result inventory

in funding investments sustaining construction and open we capital obligations. between million the had $XXX in originally expected we these as through million will the projects fund estimate which change mines to certain cash cash for our be for them flows by sustaining a through increased intended, offset Rather loans will future flow, to loan pit plant have decrease directly We than capital at due strategy $XXX in a and financing Peru.

slightly We to XXXX, for projects. La expected be Skarn Timmins million. major is expected original have is at are spending estimate to of bulk Skarn $XXX the to developments Colorada both $XX from now access highly decrease and project capital at for to with The on delay considered. alignments design now ramp La mining Colorada between being in based The progressing the million of to $XX spending well. initiation designs to our capital million capital the La million Total current the due projects optimize in and project between $XXX our method Colorada at guidance in to million efficient $XXX decreased delays up million $XXX

next scheduled will a at ounces of XX% mine of new set Skarn, the before inferred timing has the quarter, included the have the to grams intercepts for of closing, process. to at about call the and At Shahuindo to to be most Skarn. the tonne we shaft. for a an In consultation veins will provided depth look impacted an XXX% Yesterday ILO-XXX coal on line consultation track and we the mine off mineral September XXX XX.XX% the areas estimates Escobal, for which the we drilled the June of in XX, last start People replaced was consolidated This ounces at and key per reserve XX to improvement. goals mine. at the sinking phase results replaced when their zinc. consultation XXXX. on on next the to XXnd, of and this results to Escobal We're now At our information looking for XX% lead are to for of open, we in silver frame annual cut date In Arena. phase advance annual the We're respectful third our XX. of estimate. listening the progress, highest the aim production and ESG provide grade of update Timmins inclusive production we gold plant, most by hosting set of year-end La underground we the the achieve more mines. declared July August time We're of Gold forward employees the regarding silver, to consultation Skarn in reclassification mineral Timmins Xinka because year. with $X.XX per they we We addition now inferred I XXX dividend La and replaced the further would Huaron, our And as dividend XXXX, of reserves your line remain resource million, for by concrete XX.X Dolores perceptions most during West. our pre XXX% our investment solid from recent undrawn structure La resource $XXX.X credit next recent questions. line position the will to the now for of updating progressed short-term meters demonstrated year. and with Galloway above the at take and added replaced a which the meter and resources shaft to another to replacement the an They reserves resources happy later the XX, be the at for were La and Colorada's forward to share resources drill not announced silver Colorada and reserves the and in XX.XX% the included, XX,XXX On meeting participating resources policy. to of head installing process, added ventilation of this significant the We completion refrigeration million after silver with We Colorada and most million. XX% financial in cash of quarter. $XXX

Operator

CIBC. first from [Operator Instructions] Chiu is from Cosmos The question

Cosmos Chiu

first write down, some Thanks, Dolores. a and changes. my you've team. Maybe with Michael around is question made Certainly,

residual I two year from previous you mentioned, the another of how sounds your sort in me is XXXX. leaching you and maybe it of As Could that's new mining think years, plan wrap terms mine until for last and what off that will like likely changed assumptions?

Michael Steinmann

mine to leach, over plan some years. XXXX. the more the general we was open did start change into pit go Actually, and it just cut We moment Steve Afterwards, not and -- term and at I'll that the at longer detail. the there. the it mine for the two timing pass residual

metal further on mentioned right, cetera 'XX be that go cycle in economic every I that the going an and continue. obviously I'll details. depending is But pass whatever leach year, long you et will XXXX, to cost XXXX, analysis it to happens for Steve As call, on how that when prices, to

Steve Busby

we after Cosmos estimated thing couple the original had I we stockpiles were open we for the plant mining a only -- initially think of the pit through Yeah, ended, plan to it some would for was had is run add I going years. that

tons our the says out shortened years Michael mine much then duration handle. If stockpile plan, you look hasn't all. residual at as of pit but well. only of we've that's we current really And as the at are The fallen of ore changed leaching life extra of thing open two

Cosmos Chiu

write higher now it it are the in is keeping restart how the a hopefully, in for to sure How one, value you suspended, metal maybe based And after meantime, prices, And -- two, down, the easy underground Number prices asset? on you're dewatering Dolores easy what's then the it at later keeping state? maybe make again. follow-up the it book metal current on. said as it your is, you running good And two been number questions. pumps has to

Ignacio Couturier

The current and $XXX million, Ignacio. is both the pads. includes this leach that book value the Cosmos, PP&E is morning, Good around and

Steve Busby

And underground, in then relative systems the does keeping the to dewatering the because in we ground And pit the are well. keeping open help pumps are yes, control and as the all place. ventilation that running we

would in, good that leach a the done So the we bit of open would have But ore back pit from work could moved to in development to resources. up be go to everything's them. additional reserves shape be to there that apart open that, towards

Cosmos Chiu

a switching Maybe And in entails? details made going it financial specific extent you either with us more at the of pre in that or that share of they elaborate be with the negotiations consultation, have positive to or in can can Michael, next sounds bit terms there's positive gears made give like on certainly can you onto any then sort consultation requests social that what any Xinka, us? Escobal. progress you consultation from little To being news, stage

Michael Steinmann

we in itself. are the Definitely, X, as the it's is locally we to moved is described which release the there now defined, change that as Phase press consultation

process. and define obviously American and of Mines, participating is During conditions, possible clarify a which potential aim that impact of are a form are the process baseline Pan Pan mitigation dialogue process, so. -- Mines subsidiary to in American phase, the communities, Guatemalan of this and impacts Guatemala Ministry Silver, identify of and The describe Xinka Energy stated that indigenous that the Ministry leads

far. of lot so the so process, and link, far what's will a description and of and everybody government Escobal that would a there's Guatemala So website, happened our section details what links so website. videos refer I happened to meetings to on see that. come on There in on I and on the There's American how believe on Pan and process the you the our went MEM,

Cosmos Chiu

understandable $X.X one million in that maybe given for here. again, And which the else a the think, question in I Provisional metal negative last I adjustment, something quarter pricing, is decrease was price your there read base prices. MD&A just

to copper, per realized that pound was reconcile I per because is pound zinc, trying not the that X.XX for prices which saw quarter that I'm the So X.XX bad.

bigger how QX on question should and calculate I my How impact for we should it? So is, we there forward go is guess And then potential it look basis? onwards? at a a bigger

Ignacio Couturier

so are the And given vary Yes, opened amount the silver of to were didn’t quarter. ounces declare. contract end and the adjustments end the ounces the metal that a of At of of price is approximately clients QPs It that have thing times at open around give X.X that the just we ounces that have. some of the about of a does to ones zinc. the and But provisional QX, has we prices copper it they that the had QP’s thousand lot just -- you depending quotational numbers. every the are of prices on of approximate model options function around on that million a difficult X,XXX

So do and what gives monitor impacts an it, it prices, does we quarter-to-quarter given in it. estimate. obviously drops that’s that vary you But

Operator

question is from Turnbull Scotiabank. next The Trevor from

Trevor Turnbull

I not clearly kind one Cosmos Dolores margins what forward it labor too guess, grade of the of I'm trying just bring point? rates? let I of can the need the asked. to going tipping just were operating change I But wanted level at, what to would would that on But issue. matter to know going of question much was you discuss to profile to scale online. just trying it you get that a what the Was ask suspension. Hopefully, is what aspect just I'm And the or understand operation, repeat back high

Steve Busby

underground suspension Alright, talking at Trevor, Dolores, mine you're specifically. I assume the

Trevor Turnbull

Sorry Yes. about that, Steve.

Steve Busby

Yeah.

needs. so it's a enough. was of costs Fair function development Yeah, it Okay. truly really, and

was talked residual, the books to mine. around the in quarters, open pit remaining be that in previous think I reserves that the mined, we've on had the we and

Phase the was now there mining of any had we open So we X depth some A interference didn't underground are challenges to want and sequencing kind the and really pit. between as have in of we're Phase we that mining the that

develop that what So we just it worth now last back as always there, it takes the the kind over from pursuing. of current backed cost in feel And few costs we were away these at with and development increased didn't quarters. at we look to margins these levels,

if would if of means So structure changes, moved cost get we prices resources. and residual get the metal those get changes, can there all by that open back part reserves and up to in

Operator

question Winder Securities. from of Bank America next from is Lawson The

Lawson Winder

really, acquisition. question of level Dolores wanted picture I sort big a Minefinders about to ask high like, and the really

in wrong expectations I we to it's back XXXX. What as think approach that fair of -- acquisition So you of I or at pretty end mean, excited it's got life acquisition? that I would on your say Pan the Dolores, that how American Because love about underperformed the kind the chalk and quite Minefinders since know Yeah, both the kind analysts what point explain I'd everybody hear time. thoughts to of that. were would at that at you of

Michael Steinmann

Well, I did of of remember, much prices at We and we the to $XX. account dropping different between is differences metal metal in obviously around that $XX $XX. in acquisition analysis think didn't low while major I silver then when price for probably probably believe to prices, now in was happened silver was lot the we substantially the time time, one that at didn't and that at much, -- -- what a higher XXXX

for see obviously, we underground. will Steve, big we as to want add But changes big see. it's some restart need but course, or still know, prices anything? you Steve quite cost to much left, that. So higher driver now, life if said some -- time that in of Definitely, was there's a one cost metal and the of that now I shorter like, one to probably don't to example,

Steve Busby

pads just the the for cost back as used Lawson, than Yeah, weren't as and then other are we said, kind basis resource mine high squeezed we acquisition metal given margins clearly at XXXX. to And the greater facing Michael But the in were what prices the what open the thought, the we're on most not in squeezed of today too, given overall the was overall, what side mine so factors. margins some areas construction despite this of performed prescribed pit, Xb I issue add as found the in -- felt margin area greater in. costs. was in leach going the pretty other squeeze underestimated apart all was we it The reliable we thought on where only leach that building But That the topography challenges probably leach and from really close think pad to the pad the price at expectations complexities based Dolores on area and that, we construction cost. was all. of in we than and the

Lawson Winder

already about wanted assets. We've lot of I to talked ask just about few other the a a Dolores,

levels to La any with oxide? So of material sulphide you mixed the Arena, at starting increased are see in

Steve Busby

No, recover any We we don't we're above our know still down. outside we that. we're zone. pretty we're know on close pads. know where drilling, I when strictly that is, boundary we zones. the going above still limits We're it. leach to depth were mining zone really on to think in really it that ore, where be that all sulphide the well We get going is. Currently, of that mine And doesn't We economic the and based are pretty of and pit well modeling that think we oxide

Michael Steinmann

of that release was in Just we you that you to in be also will it mined. astonishing when assumed that mid-XXXX. But believe Arena La probably call XX% Arena and be in to the gold ounces the will offsets we mined mentioned, add out, think again out, heard purchasing model, press La mined the our just something replaced the I I

we into update still With there a and quite for -- come. some go the new which upside, XXXX more to think I reserve update, I still good think there's drilling chance well we're probably

to least life up another very in with So at years upside, there. now five mine added more story so positive

Lawson Winder

that’s more also couldn't very -- I thing. wanted ask been agree about there, to Huaron. a certainly I

you wanted split strong silver bit of see kind the for and lead an really into production QX, second a that in lower So little had production. how half. just I get then moving to you idea really,

So reverse? be to would that expected

Chris Emerson

amount copper, we've [Traviata], have lead as these all the different high lead, got from structures silver copper, which Certainly, the of we've veins predominant, silver, is and got we zinc, the et cetera. different with or more

So all of I certainly And of so our budget. to in. can come really think that to we is a potentially performing and different reverting would us be you budget those and back mix veins forecast, expect

Steve Busby

would NSR and mine is or related And quite really Chris to we to add is, into be just develop copper really has from said, Lawson, perspective, on drive a and these variable lead the sequencing that to the different are between team I the the that what here opportunities Steve plan honest zones. to zones corporate planning high development zinc. or

I'd think half, a we going but of bit same into it's to materially see sense maybe different. what's degree in happen copper little hard but us gut generally the I second not for will probably So half, second general lead, to not going my predict more exactly is say the the

Michael Steinmann

here Huaron most ounces. following XXX% -- believe at Huaron a the theme we with having probably just probably the the at will two is reserve Huaron. silver time at -- soon replacement long company, replacement then I of looking of And soon decades be same reserves,

how And bound how just pit to shows you're in is. than reserves easier, pitch ground deposits much in open where large that vein stands of so course, the out. replace an to your that and And you that prospective

Lawson Winder

by you I production is obviously that's there asking guess helpful. you about undermined Yeah, metal production no have for guidance. were silver guidance the base mine, level, lead, but each mind

for Thank very is That's helpful. color you. me. that it So

Operator

John is question from Tumazos. next of The Tumazos John

John Tumazos

where the another Guatemala. people language mean trying consultation a business Mine, manage in? does XXX% profit local the called and involves you can it in that large contemporary Are control ago I been that. stray and years the a years going like the where consultation language where the of the the operates? Am local mine might Would say people country the understand to scalps, spoke What the Pan XXXXs, on Catholic spoke by paid Gold how East might time where or represented that not or the to Qʼeqchiʼ? nickel I'm a things issues to Church what social mine the going consultation Marlin Inca’s to the government the imagine or bounties And things able in consultations And a last held is XXX fraction people Xinka of Mam. have are the people Xinka of seeking recall

Michael Steinmann

the pass Country on Sean as here. John, in I'll McAleer who’s participating Manager He's Thanks the consultations. in to Guatemala

Sean. So please,

Sean McAleer

Yeah. morning, held The the in right John. language, but Good are there's Xinka meetings are meetings a right Spanish. held now. in now And Spanish

done in And the all presentations are transcripts, all discussions, so the Spanish. the

So issues And expect that Xinka may those be at that's and going what that will be there with time. language dealt we the arise with forward.

be project the a as company Health, in going providing expect that the & about We well few to Mines of will months. as company, and as information the Culture, Environment, the presenting Ministries information we're Energy next be

concerns, months. that what going then to are at about that government news you developing be the for possible, we’ll have what asking time, might expect so and the the probably is do the we will few specifics in next in the to company think the to address coming the be I mitigations hear will up be and

John Tumazos

control? broader political Does relate possibly outside or Escobal to and the dialogue specifically the project issues to social your

Sean McAleer

raised about meetings that really you're that the the of we'll information are asking the kind as things over I issues concerns that's those point, presented, expect resolved. process into months, then been that discussed this itself. and about again, is get have the coming the are to And we up the So details

that towards year the the more update. expect probably about information next I and end we'll to So -- quarter of have

John Tumazos

consultation detailed of means the don't the I in for just what know questions. Sorry Guatemala. nature

Operator

[Operator Instructions] DeMarco question from The Financial. Bank next Don National from is

Don DeMarco

So on cost also Espejo, elevated that fare Arena other and at and the testing asset? And if assets? mines despite somewhat we cost Manantial impairment saw La the QX saw how outlook you did unchanged did in the perform what's on is these short-lived, the and also so, and QX? focusing They're they so

Steve Busby

higher Yes, no, I to start, it those were hasn't QX Ignacio. could to at and changed. turn to of in Basically, what they then we results Ignacio, it I'll outlook kind those costs. add. line We much analysis to were the think lead over you pretty were with of the The kind if there don't some any mines want for know expected didn't where even to really though in range any do assets. I trigger impairment for

Ignacio Couturier

different much add, impairment Yes, there were more to from Dolores. not indicators Yes, Steve. no

So therefore, sort testing. of do we didn't any

Don DeMarco

in replacing and or And short-lived, gold strategy a mines are level with to does Okay. the segments targeted in for a company of end of assets the maintain? view silver perhaps that Dolores have and production other

Michael Steinmann

So always to very one exploration. Don, the as business are you development There's active on is different do ways that, know, side. we

was As of our of reserves many many, we decades flagship past. I over in assets. here the that in of And strong did a mentioned years or lot many our replacement before, there

I expand. gave several example the one obviously Arena, for give can La Like example, way to I that's at mines that So here.

like the add discovery. really to one there, bigger And I Skarn other The is success. would exploration

and big a when we discovery. the really is you last at really, results published, becoming think this I looked

would We the a will or say resource Skarn, so. publish month new at probably time I within update

point. million that grow. that currently So I on expect very number have be we imagine, will interesting already, would to you But tonnes. our is as that the books data a old XXX can resource And

that's new the we to later other way there always have earlier adding third stage. is way is project to that stage our to or an the what a see completely then which there obviously look either reserves Skarn. acquisitions, by So out replace like project And

because X -- are of I looking shown And years picky we we're that have. And are acquisition stated, As the to for can impact I positive always that back. on that we acquisitions want with think that the very Tahoe accretive. we've

company, other those X would So for financial it's a very strong say, any than really mining I different we're position. pillars, in not

So our that something our consolidate over exploration years acquisitions with on in Skarn discovery have our success, La got now and really years topped mean I that we well the and and think space said, is But and lies obviously means. Colorada. I as doing at I years shown

Don DeMarco

Okay.

Okay. Fair you expect And enough. That over both Do further well, to the to quarters? in performed color. see resumed, in ventilation. coming the gives La to the some I or Colorada, terms we zones and of Shifting incremental high-grade some of gains to to that access thanks good continue? would that expect grade throughput see

Steve Busby

Steve refrigeration really Certainly, helping this lot. the the Don, lot and plant Yes, is also here. on side, throughput a ventilation is really, helping us a

development you if couple a mine of control the up, originally catch back. will, to on us that and to allowing into ground were areas is it scheduled So years

We we reserve to long-term really the kind anticipate maintain this forward. seeing of grades as it will do asset, reserve up, periods come throughput we'd think but at to see this. very consistently the a We're mine do grade of and like around as deposit. So targeting we we and go in mine

Don DeMarco

Okay.

bit? Just to a there segue into forward reason the Skarn any just resources. Was all we're was excited why little it see the then, pushed to

Michael Steinmann

you we lot just large mining it as imagine, -- and right I is a in a now mean lot it so method. can going is always was it's decisions on, as announced work of of kind on QX, the of a Well, ready? There's it

QX will So publish we're those and talking new about a well few that within weeks a here, we resources. change major not

Steve Busby

In terms of the resource.

making is a great I to about mining quite deep mining bulk we is talked quarters couple mean, complex a are we but method exciting it it of this method, This terms that In And the in look does ago. progress mine. of method. a us, evaluating

in time So kind of cave mine at days unique plan. it for taking and of of mining applying options looking couple technologies a to lot it these leading-edge a is build here. this And we're

we things the sure look we've really got these make have So consultants And at we that lot high who a developed world. talented correctly, around of to want right.

work things start need that mining we before through mining plans, to of comfortable time we So some costs, nature. coming and out be with that

Don DeMarco

Okay. Great. We'll look forward to that.

Operator

concludes any session. Steinmann back turn This Michael would over remarks. the question-and-answer conference closing to the to for like I

Michael Steinmann

Have operator, us everyone, you on in the summer. for this Thank share again results. rest you, call. to November good our thank Thanks, of We'll joining and very talk QX much. a

Operator

conference today's concludes call. This

have lines. and You may disconnect for your a pleasant day. Thank participating, you