The Company Generated Annual Adjusted Earnings of $1.26 per Share
(Unaudited Results - All amounts in US dollars unless otherwise stated
and all production figures are approximate)
VANCOUVER, Feb. 20, 2013 /CNW/ - Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) (the "Company", or "Pan American"), posted a
net loss of $29.4 million during the fourth quarter of 2012, including
a non-cash after-tax $100 million impairment charge on the carrying
value of the Navidad deposit. Excluding the impairment charge and a
$14.2 million gain on derivatives, the Company generated adjusted
earnings(1) for the quarter of $55.8 million, or $0.37 per share. For the full year
2012, adjusted earnings were $177.9 million or $1.26 per share.
Fourth Quarter 2012 Highlights (unaudited) (2)
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• Silver production of 6.9 million ounces, an increase of 29%.
• Gold production of 32,400 ounces, an increase of 88%.
• Consolidated cash costs(3) of $11.75 per ounce of silver, net of by-product credits.
• Mine operating earnings(4) of $85 million.
• Recorded a $100 million non-cash impairment charge on the carrying
value of the Navidad project.
• Net loss of ($29.4) million or ($0.19) per share.
• Adjusted earnings(1) of $55.8 million or $0.37 per share.
• Operating cash flows before changes in non-cash operating working
capital(5) of $86.1 million or $0.57 per share.
• Revenue of $247.3 million.
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2012 Year-End Highlights (unaudited) (2)
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• Record silver production of 25.1 million ounces.
• Record gold production of 112,300 ounces.
• Record revenue of $928.6 million.
• Consolidated cash costs(3) of $12.03 per ounce of silver, net of by-product credits.
• Mine operating earnings(4) of $311.4 million.
• Net earnings of $87.5 million, or $0.62 per share.
• Adjusted earnings(1) of $177.9 million, or $1.26 per share.
• Operating cash flows before changes in non-cash operating working
capital(5) of $215.5 million or $1.53 per share.
• Cash and short term investments of $542.3 million at December 31,
2012.
• Working capital of $779 million at December 31, 2012.
• Invested $41.7 million to repurchase approximately 2.4 million
shares of the Company under the Company's normal course issuer bid.
• Paid total cash dividends of $24.9 million, or $0.20 per common
share.
• Completed the acquisition of Minefinders Corporation Ltd.
("Minefinders") and integrated the Dolores mine into our portfolio of
assets.
• Divested the high-cost Quiruvilca mine in Peru.
• Produced the best safety record in the Company's history.
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2013 Forecast and Plans
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• Produce 25.0 to 26.0 million ounces of silver at cash costs of
$11.80 to $12.80 per ounce, net of by-product credits.
• Complete a mill development study for the Dolores mine.
• Complete a Preliminary Economic Assessment for an expansion of the
La Colorada mine.
• Complete confirmation drilling campaign and publish a new Mineral
Resource estimate for the Waterloo deposit.
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(1) Adjusted earnings is a non-GAAP measure calculated as net earnings for
the period adjusting for the gain or loss recorded on fair market value
adjustments on the Company's outstanding warrants. The Company
considers this measure to better reflect normalized earnings as it does
not include unrealized gains or losses from outstanding warrants, which
may be volatile from period to period.
(2) Financial information in this news release is based on International
Financial Reporting Standards ("IFRS"); results are unaudited;
percentages compare period-on-period.
(3) Cash costs per payable ounce of silver is a non-GAAP measure. The
Company believes that in addition to production costs, depreciation and
amortization, and royalties, cash costs per ounce is a useful and
complementary benchmark that investors use to evaluate the Company's
performance and ability to generate cash flow and is well understood
and widely reported in the silver mining industry. However, cash costs
per ounce does not have a standardized meaning prescribed by IFRS as an
indicator of performance. Investors are cautioned that cash costs per
ounce should not be construed as an alternative to production costs,
depreciation and amortization, and royalties determined in accordance
with IFRS as an indicator of performance. The Company's method of
calculating cash costs per ounce may differ from the methods used by
other entities and, accordingly, the Company's cash costs per ounce may
not be comparable to similarly titled measures used by other entities.
See "Financial and Operating Highlights" below for a reconciliation of
this measure to the Company's production costs, depreciation and
amortization, and royalties.
(4) Mine operating earnings is a non-GAAP measure used by the Company to
assess the performance of its silver mining operations. Mine operating
earnings is calculated as revenue less production costs, depreciation
and amortization and royalties. The Company and certain investors use
this information to evaluate the Company's performance.
(5) Operating cash flows before changes in non-cash operating working
capital is a non-GAAP measure. This non-GAAP measure is used by the
Company to manage and evaluate operating performance and the Company
considers this measure to better reflect normalized cash flow generated
by operations. Cash flow from operations per share is a non-GAAP
measure. Cash flow from operations before changes in working capital
per share is used as a measure of return on capital and is calculated
using cash flow from operations, before working capital changes,
divided by basic weighted average shares outstanding.
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Geoff Burns, President & CEO commented on the fourth quarter and fiscal
2012 results; "As I said when we released our production results
several weeks ago, 2012 was an excellent production year. We met our
targets for silver production and cash costs during the fourth quarter
for the full year, and in the process we set new quarterly and annual
production records for silver and gold. It is rewarding to deliver
financial results that echo our production performance. Adjusted
earnings for the year were a very healthy $1.26 per share and operating
cash flow was also robust at $1.53 per share. As a consequence of our
expected continued excellent financial performance, the Board has
agreed to decisively increase our quarterly dividend from $0.05 to
$0.125 per share, a clear testament to the strength and profitability
of Pan American. We are expecting 2013 to be even better, as we are
forecasting increases in both our silver and gold production, while our
cash costs per ounce should remain basically unchanged".
Financial Results
Pan American generated revenue of $247.3 million during the fourth
quarter of 2012, which was 16% higher year-on-year. The increase
resulted primarily from higher quantities of silver and gold sold,
combined with modest price increases for all the metals produced by the
Company. Annual revenue for 2012 rose 9% from the previous year to a
record $928.6 million, driven by significantly higher quantities of
precious metals sold, partially offset by lower realized prices for all
metals produced by the Company, with the exception of gold.
In 2012, Pan American realized average prices for silver and gold of
$31.26 per ounce and $1,672.30 per ounce, respectively. Average
realized prices for zinc, lead and copper were $1,971 per tonne, $2,071
per tonne and $7,879 per tonne, respectively. On an annualized basis,
silver accounted for 71% and gold accounted for 18% of the Company's
revenue, while zinc, lead and copper contributed 6%, 2% and 3% of total
revenue, respectively.
During the fourth quarter of 2012, Pan American recorded a net loss of
($29.4) million or ($0.19) per share, primarily due to the Company's
decision to incur a $100 million non-cash impairment charge on the
Navidad deposit, thereby decreasing the carrying value from $570
million to $470 million. The impairment charge was taken in
recognition of the deterioration of business conditions in Argentina
and the uncertainty the current environment has created. The Company
remains committed to the development of Navidad; however, as previously
disclosed, the project will remain on care and maintenance until
conditions improve.
Adjusted earnings for the fourth quarter of 2012 were $55.8 million or
$0.37 per share, after adjusting for the $100 million impairment
charge, a $14.2 million non-cash gain on the valuation of the Company's
derivatives, and a $0.6 million unrealized gain on foreign exchange.
Quarterly adjusted earnings further benefited from a $2.5 million gain
on the sale of investment shares in Orko Silver, $2.5 million realized
from option payments on the company's Peruvian exploration properties,
and $0.8 million in silver option payments from the Quiruvilca
property. For the full year 2012, Pan American generated consolidated
net earnings of $87.5 million or $0.62 per share, and adjusted earnings
of $177.9 million or $1.26 per share.
Mine operating earnings generated during the last quarter of 2012 were
$85 million, 4% lower year-on-year. The decline was mainly the result
of higher operating costs resulting from higher labour, consumables and
energy expenses at the Peruvian, Argentinean and Bolivian operations.
Mine operating earnings for the year 2012 were $311.4 million, a
decline of 24% as compared to 2011, predominantly due to lower realized
metal prices in 2012.
Operating cash flows before changes in non-cash operating working
capital during the fourth quarter of 2012 was $86.1 million, or $0.57
per share, 11% less than in the same period of 2011. Operating cash
flows before changes in non-cash operating working capital for the year
2012 was $215.5 million, or $1.53 per share, a decline of 46% from the
previous year.
Cash and short term investments at December 31, 2012 rose to $542.3
million from $491.2 million at year-end 2011. The Company's working
capital rose to $779 million, 37% more than at year-end 2011. The
Company maintains one of the cleanest balance sheets in the industry,
with minimal debt consisting of $36.9 million in capital lease
obligations and $41.1 million in convertible notes acquired in
connection with the Minefinders' transaction.
During the last quarter of 2012 the Company repurchased approximately
598,000 shares under the current normal course issuer bid for total
consideration of approximately $10.7 million. In 2012, the Company
spent $41.7 million to purchase approximately 2.4 million shares. At
December 31, 2012, Pan American had 151,820,635 issued and outstanding
common shares. In addition, Pan American distributed a total of $7.6
million and $24.9 million in cash dividends to shareholders during the
fourth quarter of and full year 2012, respectively.
The Company's effective tax rates for the fourth quarter and full year
2012 were 25% and 34%, respectively using adjusted earnings. Effective
rates vary considerably between periods and from the amounts that would
result from applying the Canadian statutory income tax rates to
earnings before income taxes. The main factors that have affected the
effective tax rate for 2012 and the comparable period were the
non-taxable portion of unrealized gains and losses on the Company's
derivatives, foreign income tax rate differentials, foreign exchange
and non-recognition of certain deferred tax assets. In addition, the
Company took a non-cash impairment charge on its Navidad asset. The
Company expects that these and other factors will continue to cause
volatility in effective tax rates in the future and that the effective
tax rate for 2013 would be 30% to 35%.
Production and Operations
During the last quarter of 2012, the Company produced a record 6.9
million ounces of silver and 32,400 ounces of gold, an increase of 29%
and 88%, respectively year-on-year. The production increase resulted
from the addition of silver and gold production from Dolores, and
higher silver production at Alamo Dorado, Manantial Espejo, Morococha
and San Vicente due to higher throughput and grades. Annual
consolidated silver production in 2012 was also a record at 25.1
million ounces, as expected.
Over half of the Company's silver is now being produced at its three
Mexican operations. During the fourth quarter of 2012, La Colorada
produced 1.1 million ounces, 3% higher year-on-year primarily due to
higher grades. Alamo Dorado produced 1.6 million ounces of silver,
which was 26% higher than in the fourth quarter of 2011 due to higher
grades and recoveries. In addition, Dolores produced 0.9 million
ounces of silver, a 16% improvement from the previous quarter. During
the full year 2012, La Colorada produced a total of 4.4 million ounces
of silver and Alamo Dorado produced 5.4 million ounces of silver, while
Dolores contributed 2.7 million ounces of silver from April 1 until
December 31, 2012.
Pan American's Peruvian operations had a good fourth quarter of 2012
with Huaron and Morococha producing 0.8 million ounces and 0.6 million
ounces of silver, respectively. Huaron's production was slightly lower
year-on-year on lower grades; whereas Morococha's silver production
rose 38% year-on-year on higher throughput and grades. For the full
year 2012, the Company's Peruvian operations produced a combined total
of 5.3 million ounces of silver: 2.9 million at Huaron, 2.1 million at
Morococha, and 0.3 million at Quiruvilca before the Company divested
the mine effective June 1, 2012.
In Bolivia, higher throughput and grades at San Vicente boosted
production to 1 million ounces of silver during the last quarter of
2012, 15% higher year-on-year and to 3.7 million ounces during the full
year 2012, or 19% greater than the previous year.
In Argentina, better throughput, grades and recoveries at Manantial
Espejo drove a 25% increase in quarterly silver production compared to
the last quarter of 2011 to 1 million ounces. Silver production for
the year was 3.6 million ounces, slightly lower than the 3.8 million
ounces produced in 2011.
Pan American's consolidated 2012 gold production was a record 112,300
ounces, a 43% increase from 2011 due to the addition of production from
Dolores, which contributed 43,500 ounces and more gold ounces produced
at Alamo Dorado and Morococha, partially offset by less ounces produced
at Manantial Espejo and La Colorada and the divestiture of Quiruvilca.
At 36,900 tonnes of zinc, 12,300 tonnes of lead and 4,200 tonnes of
copper, the Company's annual consolidated base metals production
exceeded our expectations.
Pan American posted consolidated cash costs of $11.75 per ounce of
silver, net of by-product credits, during the last quarter of 2012, a
5% increase year-on-year. 2012 annual consolidated cash costs of
$12.03 per ounce of silver, net of by-product credits were well within
Company guidance and represent an increase of 28% compared to 2011.
The cash costs escalation was driven mainly by industry-wide escalation
for the cost of supplies and consumables like cyanide, labour cost
increases in all jurisdictions where Pan American operates, higher
underground mine development rates at the Company's Peruvian
operations, the strengthening of the Peruvian Sol against the US
Dollar, higher smelting and refining costs and the increase in
royalties paid to COMIBOL, Pan American's joint venture partner at the
San Vicente mine in Bolivia.
In 2012, Pan American spent $129 million in sustaining capital at its
seven operations primarily for exploration activities, particularly at
La Colorada; open pit mine pre-stripping at Dolores, Manantial Espejo
and Alamo Dorado; underground mine development at Morococha and Huaron;
mobile mine equipment repair and replacements across all mines;
significant tailings dam expansions at Huaron and La Colorada; and
ancillary facility and infrastructure upgrades across all mines.
In 2012, Pan American spent $50 million on major projects, $21 million
were spent for advancing the Navidad project engineering and design,
including preparation of an Environmental Impact Assessment; $5.6
million to complete the Morococha ancillary facility relocation
project; and $23.5 million at the Dolores mine to conduct preliminary
studies to assess the potential to enhance long-term value with the
addition of a milling circuit and/or underground mine and to advance
leach pad stabilization and construction efforts to insure
sustainability of heap leach production. In addition, Pan American
spent a total of $25 million in its exploration programs, including
$16.3 million in mine-site exploration at its seven operations and $8.7
million in greenfield exploration activities at selected properties.
2013 Outlook
As indicated in the news release dated January 22, 2013, the Company
plans to make $157 million in capital investments this year. Of this,
approximately $127 million will be invested in sustaining capital for
the seven operating mines, primarily for near-mine exploration
activities; open pit mine pre-stripping at Dolores, Manantial Espejo
and Alamo Dorado; underground mine development at Morococha and Huaron;
and mobile mine equipment repair and replacements across all mines.
In addition, the Company plans to invest $30 million at the Dolores mine
on leach pad stabilization, expansion and construction, to complete a
mill scoping analysis and to initiate a power line project to connect
the mine to the national power grid. Pan American is examining the
potential economic benefits of increasing Dolores' production with the
installation of a grinding circuit to treat part of the higher grade
ore currently being mined and treated. The Company has launched
preliminary engineering, as well as capital and operating cost studies
required to construct and operate a high grade ore grinding and
treatment circuit, which will culminate in a scoping study to be
completed during the third quarter of 2013.
At La Colorada, given the mine's enormous exploration discovery success
over the last few years and the favorable geometry of the mineral
distribution of those discoveries, the Company has initiated
engineering studies to determine the viability of expanding the mine's
production and expects to complete a Preliminary Economic Assessment by
year-end 2013 to define the magnitude, the capital investment and the
economic benefit of a potential expansion.
The Company also plans to spend $3.6 million to complete a confirmation
drilling campaign at the Waterloo deposit in San Bernardino County,
California, and to conduct additional metallurgical evaluations,
project scoping and a Mineral Resource estimate.
A further $14.7 million is expected to be spent in selected greenfield
exploration activities and another $6.5 million in holding costs for
other exploration properties.
Commenting on the Company's operating results, Steve Busby, Chief
Operating Officer, said; "Without a doubt, our greatest accomplishment
during 2012 for Pan American was our excellent safety performance, the
prevention of lost time accidents and a reduction in accident severity
among all of our employees and contractors. In addition, in 2012, we
completed the Minefinder's acquisition providing a significant boost of
low-cost silver and gold production from the Dolores mine in Mexico.
We look forward to having an excellent year in 2013 and are excited to
advance the evaluation of the milling circuit at Dolores and the
potential expansion of our La Colorada mine in Mexico with the goal of
increasing the Company's consolidated silver production. I'd like to
extend my personal thanks to all of our dedicated and hardworking
employees and contractors throughout the Company who have again proven
their superior ability to successfully overcome the challenges we face
in running our business and achieving consolidated operating
performance firmly within our production and cost guidance for 2012.
Thanks to these efforts, our business is exceptionally strong and
sustainable and I see 2013 shaping-up to be another good year."
***
About Pan American
Pan American's mission is to be the world's pre-eminent silver producer,
with a reputation for excellence in discovery, engineering, innovation
and sustainable development. The Company has seven operating mines in
Mexico, Peru, Argentina and Bolivia, including the recently acquired
Dolores gold/silver mine in Chihuahua, Mexico. Pan American also owns
the La Virginia development project in Sonora, Mexico, the Waterloo
silver project in California, USA as well as both the Navidad silver
project and Calcatreu gold project in Argentina.
Technical information contained in this news release with respect to Pan
American has been reviewed by Michael Steinmann, P.Geo., Executive VP
Corporate Development & Geology, and Martin Wafforn, P.Eng., VP
Technical Services, who are the Company's Qualified Persons for the purposes of NI 43-101.
Pan American will host a conference call to discuss the results on
Thursday, February 21, 2013 at 11:00 am ET (08:00 am PT). To access
the conference, North American participants dial toll free
1-888-390-0546. International participants dial 1-416-764-8688, or
778-383-7413. A live audio webcast can be accessed at http://www.newswire.ca/en/webcast/detail/1098699/1197127 Listeners may also gain access by logging on at http://www.panamericansilver.com/category/events/. The call will be available for replay for one week after the call by
dialing 1-416-764-8677, or 1-888-390-0541 and entering PIN # 638671.
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CAUTIONARY NOTE REGARDING NON-IFRS MEASURE - CASH COSTS PER OUNCE
THIS NEWS RELEASE PRESENTS INFORMATION ABOUT OUR CASH COSTS OF
PRODUCTION OF AN OUNCE OF SILVER FOR OUR OPERATING MINES. CASH COSTS
PER OUNCE PRODUCED IS CALCULATED AS FOLLOWS:
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EXCEPT AS OTHERWISE NOTED, CASH COSTS PER OUNCE PRODUCED IS CALCULATED
BY DIVIDING TOTAL CASH COSTS BY TOTAL SILVER OUNCES PRODUCED AT THE
RELEVANT MINE OR MINES
-
TOTAL CASH COSTS INCLUDE MINE OPERATING COSTS SUCH AS MINING,
PROCESSING, ADMINISTRATION, ROYALTIES AND OPERATING TAXES, BUT EXCLUDE
AMORTIZATION, RECLAMATION COSTS, FINANCING COSTS AND CAPITAL
DEVELOPMENT AND EXPLORATION. CERTAIN AMOUNTS OF STOCK-BASED
COMPENSATION ARE EXCLUDED AS WELL
CASH COST PER OUNCE OF SILVER PRODUCED IS INCLUDED IN THIS NEWS RELEASE
BECAUSE CERTAIN INVESTORS USE THIS INFORMATION TO ASSESS OUR
PERFORMANCE AND ALSO TO DETERMINE OUR ABILITY TO GENERATE CASH FLOW FOR
USE IN INVESTING AND OTHER ACTIVITIES. THE INCLUSION OF CASH COSTS PER
OUNCE PRODUCED MAY ENABLE INVESTORS TO BETTER UNDERSTAND YEAR-OVER-YEAR
CHANGES IN OUR PRODUCTION COSTS, WHICH IN TURN AFFECT PROFITABILITY AND
CASH FLOW.
CASH COSTS PER OUNCE PRODUCED DOES NOT HAVE A STANDARDIZED MEANING OR A
CONSISTENT BASIS OF CALCULATION PRESCRIBED BY CANADIAN ACCOUNTING
STANDARDS. INVESTORS ARE CAUTIONED THAT CASH COSTS PER OUNCE PRODUCED
SHOULD NOT BE CONSIDERED IN ISOLATION OR CONSTRUED AS A SUBSTITUTE TO
COSTS DETERMINED IN ACCORDANCE WITH CANADIAN ACCOUNTING STANDARDS AS
PRESCRIBED UNDER IFRS AS AN INDICATOR OF PERFORMANCE. OUR METHOD OF
CALCULATING CASH COSTS PER OUNCE PRODUCED MAY DIFFER FROM THE METHODS
USED BY OTHER ENTITIES AND, ACCORDINGLY, OUR CASH COSTS PER OUNCE
PRODUCED MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURES USED BY
OTHER ENTITIES. SEE OUR MD&A FOR THE YEAR ENDED DECEMBER 31, 2011
FILED ON SEDAR AT WWW.SEDAR.COM FOR A RECONCILIATION OF CASH COSTS PER
OUNCE PRODUCED TO THE MOST DIRECTLY COMPARABLE ACCOUNTING MEASURE UNDER
IFRS.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE STATEMENTS AND INFORMATION IN THIS NEWS RELEASE
CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
"FORWARD-LOOKING INFORMATION" WITHIN THE MEANING OF APPLICABLE CANADIAN
PROVINCIAL SECURITIES LAWS. ALL STATEMENTS, OTHER THAN STATEMENTS OF
HISTORICAL FACT, ARE FORWARD-LOOKING STATEMENTS. WHEN USED IN THIS
NEWS RELEASE THE WORDS, "BELIEVES", "EXPECTS", "INTENDS", "PLANS",
"FORECAST", "OBJECTIVE", "OUTLOOK", "POSITIONING", "POTENTIAL",
"ANTICIPATED", "BUDGET", AND OTHER SIMILAR WORDS AND EXPRESSIONS,
IDENTIFY FORWARD-LOOKING STATEMENTS OR INFORMATION. THESE
FORWARD-LOOKING STATEMENTS OR INFORMATION RELATE TO, AMONG OTHER
THINGS: FUTURE PRODUCTION OF SILVER, GOLD AND OTHER METALS AND THE
TIMING OF SUCH PRODUCTION; FUTURE CASH COSTS PER OUNCE OF SILVER; THE
PRICE OF SILVER AND OTHER METALS; THE EFFECTS OF LAWS, REGULATIONS AND
GOVERNMENT POLICIES AFFECTING PAN AMERICAN'S OPERATIONS OR POTENTIAL
FUTURE OPERATIONS INCLUDING, BUT NOT LIMITED TO, THE LAWS IN THE
PROVINCE OF CHUBUT, ARGENTINA, WHICH CURRENTLY HAVE SIGNIFICANT
RESTRICTIONS ON MINING, AND RECENT AMENDMENTS TO THE LABOUR LAWS IN
MEXICO; THE CONTINUING NATURE OF HIGH INFLATION, RISING CAPITAL AND
OPERATING COSTS, CAPITAL RESTRICTIONS AND RISKS OF EXPROPRIATION IN
ARGENTINA AND, IN PARTICULAR, IN THE PROVINCE OF CHUBUT AND THEIR
EFFECTS ON THE COMPANY AND ITS ASSETS; THE DEVELOPMENT OF THE NAVIDAD
PROJECT AND OTHER DEVELOPMENT PROJECTS OF THE COMPANY; THE TIMING OF
PRODUCTION AND THE CASH AND TOTAL COSTS OF PRODUCTION AT EACH OF THE
COMPANY'S PROPERTIES; THE SUFFICIENCY OF THE COMPANY'S CURRENT WORKING
CAPITAL, ANTICIPATED OPERATING CASH FLOW OR ITS ABILITY TO RAISE
NECESSARY FUNDS; TIMING OF RELEASE OF TECHNICAL OR OTHER REPORTS,
INCLUDING ENVIRONMENTAL IMPACT ASSESSMENTS; THE ABILITY OF THE COMPANY
TO ACHIEVE ANY PLANNED EXPANSIONS AND DEVELOPMENT, INCLUDING BUT NOT
LIMITED TO, POTENTIAL OPPORTUNITIES AND ADVANCEMENTS AT THE DOLORES
MINE, AND THE TIMING FOR THE SAME; THE ESTIMATES OF EXPECTED OR
ANTICIPATED ECONOMIC RETURNS FROM THE COMPANY'S MINING PROJECTS;
FORECAST CAPITAL AND NON-OPERATING SPENDING; FUTURE SALES OF THE
METALS, CONCENTRATES OR OTHER PRODUCTS PRODUCED BY THE COMPANY; AND THE
COMPANY'S PLANS AND EXPECTATIONS FOR ITS PROPERTIES AND OPERATIONS.
THESE STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO
FUTURE EVENTS AND ARE NECESSARILY BASED UPON A NUMBER OF ASSUMPTIONS
AND ESTIMATES THAT, WHILE CONSIDERED REASONABLE BY THE COMPANY, ARE
INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE,
POLITICAL AND SOCIAL UNCERTAINTIES AND CONTINGENCIES. MANY FACTORS,
BOTH KNOWN AND UNKNOWN, COULD CAUSE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM THE RESULTS, PERFORMANCE
OR ACHIEVEMENTS THAT ARE OR MAY BE EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS NEWS RELEASE AND THE
COMPANY HAS MADE ASSUMPTIONS AND ESTIMATES BASED ON OR RELATED TO MANY
OF THESE FACTORS. SUCH FACTORS INCLUDE, WITHOUT LIMITATION:
FLUCTUATIONS IN SPOT AND FORWARD MARKETS FOR SILVER, GOLD, BASE METALS
AND CERTAIN OTHER COMMODITIES (SUCH AS NATURAL GAS, FUEL OIL AND
ELECTRICITY); FLUCTUATIONS IN CURRENCY MARKETS (SUCH AS THE CANADIAN
DOLLAR, PERUVIAN SOL, MEXICAN PESO, ARGENTINE PESO AND BOLIVIAN
BOLIVIANO VERSUS THE U.S. DOLLAR); RISKS RELATED TO THE TECHNOLOGICAL
AND OPERATIONAL NATURE OF THE COMPANY'S BUSINESS; CHANGES IN NATIONAL
AND LOCAL GOVERNMENT, LEGISLATION, TAXATION, CONTROLS OR REGULATIONS
INCLUDING AMONG OTHERS, CHANGES TO IMPORT AND EXPORT REGULATIONS AND
LAWS RELATING TO THE REPATRIATION OF CAPITAL AND FOREIGN CURRENCY
CONTROLS; POLITICAL OR ECONOMIC DEVELOPMENTS IN CANADA, THE UNITED
STATES, MEXICO, PERU, ARGENTINA, BOLIVIA OR OTHER COUNTRIES WHERE THE
COMPANY MAY CARRY ON BUSINESS IN THE FUTURE; RISKS AND HAZARDS
ASSOCIATED WITH THE BUSINESS OF MINERAL EXPLORATION, DEVELOPMENT AND
MINING (INCLUDING ENVIRONMENTAL HAZARDS, INDUSTRIAL ACCIDENTS, UNUSUAL
OR UNEXPECTED GEOLOGICAL OR STRUCTURAL FORMATIONS, PRESSURES, CAVE-INS
AND FLOODING); RISKS RELATING TO THE CREDIT WORTHINESS OR FINANCIAL
CONDITION OF SUPPLIERS, REFINERS AND OTHER PARTIES WITH WHOM THE
COMPANY DOES BUSINESS; INADEQUATE INSURANCE, OR INABILITY TO OBTAIN
INSURANCE, TO COVER THESE RISKS AND HAZARDS; EMPLOYEE RELATIONS AND THE
EFFECTS OF LABOUR LAWS IN THOSE COUNTRIES IN WHICH THE COMPANY
OPERATES; RELATIONSHIPS WITH AND CLAIMS BY LOCAL COMMUNITIES AND
INDIGENOUS POPULATIONS; AVAILABILITY AND INCREASING COSTS ASSOCIATED
WITH MINING INPUTS AND LABOUR; THE SPECULATIVE NATURE OF MINERAL
EXPLORATION AND DEVELOPMENT, INCLUDING THE RISKS OF OBTAINING NECESSARY
LICENSES AND PERMITS AND THE PRESENCE OF LAWS AND REGULATIONS THAT MAY
IMPOSE RESTRICTIONS ON MINING, INCLUDING THOSE CURRENTLY IN THE
PROVINCE OF CHUBUT, ARGENTINA; DIMINISHING QUANTITIES OR GRADES OF
MINERAL RESERVES AS PROPERTIES ARE MINED; GLOBAL FINANCIAL CONDITIONS;
THE COMPANY'S ABILITY TO COMPLETE AND SUCCESSFULLY INTEGRATE
ACQUISITIONS AND TO MITIGATE OTHER BUSINESS COMBINATION RISKS;
CHALLENGES TO, OR DIFFICULTY IN MAINTAINING, THE COMPANY'S TITLE TO
PROPERTIES AND CONTINUED OWNERSHIP THEREOF; THE ACTUAL RESULTS OF
CURRENT EXPLORATION ACTIVITIES, CONCLUSIONS OF ECONOMIC EVALUATIONS,
AND CHANGES IN PROJECT PARAMETERS TO DEAL WITH UNANTICIPATED ECONOMIC
OR OTHER FACTORS; INCREASED COMPETITION IN THE MINING INDUSTRY FOR
PROPERTIES, EQUIPMENT, QUALIFIED PERSONNEL, AND THEIR COSTS; AND THOSE
FACTORS IDENTIFIED UNDER THE CAPTION "RISKS RELATED TO PAN AMERICAN'S
BUSINESS" IN THE COMPANY'S MOST RECENT FORM 40-F AND ANNUAL INFORMATION
FORM FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
AND CANADIAN PROVINCIAL SECURITIES REGULATORY AUTHORITIES. INVESTORS
ARE CAUTIONED AGAINST ATTRIBUTING UNDUE CERTAINTY OR RELIANCE ON
FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY HAS ATTEMPTED TO
IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, THERE MAY BE OTHER FACTORS THAT CAUSE RESULTS NOT TO BE AS
ANTICIPATED, ESTIMATED, DESCRIBED OR INTENDED. THE COMPANY DOES NOT
INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE THESE
FORWARD-LOOKING STATEMENTS OR INFORMATION TO REFLECT CHANGES IN
ASSUMPTIONS OR CHANGES IN CIRCUMSTANCES OR ANY OTHER EVENTS AFFECTING
SUCH STATEMENTS OR INFORMATION, OTHER THAN AS REQUIRED BY APPLICABLE
LAW.
Pan American Silver Corp.
|
Financial & Operating Highlights
|
|
|
Three months ended
|
|
Twelve months ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Consolidated Financial Highlights
|
|
|
|
|
|
|
|
|
(Unaudited in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings for the period
|
$
|
(29,411)
|
$
|
95,467
|
$
|
87,513
|
$
|
354,146
|
(Loss) earnings per share attributable to common shareholders (basic)
|
$
|
(0.19)
|
$
|
0.89
|
$
|
0.62
|
$
|
3.31
|
Adjusted earnings for the period(1)
|
$
|
55,777
|
$
|
55,775
|
$
|
177,859
|
$
|
251,247
|
Adjusted earnings per share attributable to common shareholders (basic)
|
$
|
0.37
|
$
|
0.52
|
$
|
1.26
|
$
|
2.36
|
Mine operating earnings
|
$
|
85,011
|
$
|
88,270
|
$
|
311,363
|
$
|
409,125
|
Net cash generated from operating activities
|
$
|
81,603
|
$
|
104,967
|
$
|
193,305
|
$
|
359,455
|
Operating cash flows before changes in non-cash operating working
capital(2)
|
$
|
86,076
|
$
|
96,485
|
$
|
215,529
|
$
|
398,890
|
Capital spending
|
$
|
(65,269)
|
$
|
(38,788)
|
$
|
(159,915)
|
$
|
(118,933)
|
Dividends Paid
|
$
|
7,618
|
$
|
2,639
|
$
|
24,919
|
$
|
10,732
|
Shares repurchased
|
$
|
10,719
|
$
|
66,093
|
$
|
41,749
|
$
|
94,034
|
Cash and short-term investments
|
$
|
542,324
|
$
|
491,222
|
$
|
542,324
|
$
|
491,222
|
Working capital(3)
|
$
|
778,669
|
$
|
566,430
|
$
|
778,669
|
$
|
566,430
|
|
|
|
|
|
|
|
|
|
Consolidated Metals Recovered (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver metal - ounces
|
|
6,894,166
|
|
5,334,537
|
|
25,075,298
|
|
21,853,582
|
Gold metal - ounces
|
|
32,381
|
|
17,239
|
|
112,283
|
|
78,426
|
Zinc metal - tonnes
|
|
8,886
|
|
10,730
|
|
36,848
|
|
37,234
|
Lead metal - tonnes
|
|
2,805
|
|
3,400
|
|
12,266
|
|
12,701
|
Copper metal - tonnes
|
|
1,137
|
|
1,173
|
|
4,162
|
|
4,544
|
|
|
|
|
|
|
|
|
|
Average Price Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver metal ($/oz)
|
$
|
33.41
|
$
|
32.49
|
$
|
31.26
|
$
|
35.03
|
Gold metal ($/oz)
|
$
|
1,728
|
$
|
1,683
|
$
|
1,672
|
$
|
1,567
|
Consolidated Cost per Ounce of Silver (net of by-product credits) (4),(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce
|
$
|
11.75
|
$
|
11.18
|
$
|
12.03
|
$
|
9.44
|
Total production cost per ounce
|
$
|
16.12
|
$
|
16.74
|
$
|
16.88
|
$
|
13.51
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver (used in cost per ounce calculations)
|
|
6,558,268
|
|
5,020,804
|
|
23,746,108
|
|
20,753,040
|
(1)
|
Adjusted earnings and adjusted earnings per share attributable to
common shareholders are non-GAAP measures. Adjusted earnings is
calculated as net earnings
for the period adjusting for the gains or losses recorded on fair market
value adjustments on the Company's outstanding derivative instruments,
unrealized foreign
exchange gains or losses, unrealized gain or loss on commodity
contracts, the transaction costs arising from the Minefinders
transaction, write-down of mining assets,
and gains on the disposition of mineral interests. The Company
considers this measure to better reflect normalized earnings as it does
not include items which may
be volatile from period to period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Twelve months ended
|
December 31,
|
December 31,
|
|
Adjusted Earnings Reconciliation
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Net (loss) earnings for the period
|
$
|
(29,411)
|
$
|
95,467
|
$
|
87,513
|
$
|
354,146
|
|
Adjust derivative (gains) losses
|
|
(14,203)
|
|
(30,994)
|
|
(24,159)
|
|
(101,828)
|
|
Adjust unrealized foreign exchange (gains) losses
|
|
(584)
|
|
(9,627)
|
|
6,124
|
|
(1,071)
|
|
Adjust unrealized (gains) losses of commodity contracts
|
|
(34)
|
|
929
|
|
(25)
|
|
-
|
|
Adjust acquisition costs
|
|
-
|
|
-
|
|
16,162
|
|
-
|
|
Adjust gain on sale of mineral property
|
|
-
|
|
-
|
|
(7,765)
|
|
-
|
|
Adjust write-down of mining assets
|
|
100,009
|
|
-
|
|
100,009
|
|
-
|
|
Adjusted earnings for the period
|
$
|
55,777
|
$
|
55,775
|
$
|
177,859
|
$
|
251,247
|
|
|
(2)
|
Operating cash flows before changes in non-cash operating working
capital is a non-GAAP measure used by the Company to manage and
evaluate operating
performance. The Company considers this measure to better reflect
normalized cash flow generated by operations.
|
(3)
|
Working capital is a non-GAAP measure calculated as current assets less
current liabilities. The Company and certain investors use this
information to evaluate
whether the Company is able to meet its current obligations using its
current assets.
|
(4)
|
Includes Quiruvilca mine operating results through May 2012.
|
(5)
|
Consolidated cost per ounce of silver is a non-GAAP measure. The
Company believes that in addition to production costs, depreciation and
amortization, and
royalties, cash cost per ounce is a useful and complementary benchmark
that investors use to evaluate the Company's performance and ability to
generate cash
flows and is well understood and widely reported in the silver mining
industry. However, cash cost per ounce does not have a standardized
meaning prescribed
by IFRS as an indicator of performance. Investors are cautioned that
cash costs per ounce should not be construed as an alternative to
production costs,
depreciation and amortization, and royalties determined in accordance
with IFRS as an indicator of performance. The Company's method of
calculating cash
costs per ounce may differ from the methods used by other entities. See
"Cash Costs and Total Operating Costs per Ounce of Payable Silver"
below for a
reconciliation of this measure to the Company's production costs,
depreciation and amortization and royalties.
|
Mine Operations Highlights
|
|
|
|
|
Three months ended
|
Twelve months ended
|
|
|
December 31,
|
December 31,
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
La Colorada Mine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled
|
|
106,396
|
|
|
105,500
|
|
|
419,591
|
|
|
404,533
|
|
Average silver grade - grams per tonne
|
|
377
|
|
|
352
|
|
|
374
|
|
|
369
|
|
Average silver recovery - percent
|
|
90.0
|
%
|
|
89.6
|
%
|
|
89.6
|
%
|
|
89.5
|
%
|
Silver - ounces
|
|
1,096,603
|
|
|
1,068,800
|
|
|
4,431,111
|
|
|
4,295,783
|
|
Gold - ounces
|
|
737
|
|
|
1,043
|
|
|
3,578
|
|
|
4,104
|
|
Zinc - tonnes
|
|
1,511
|
|
|
1,129
|
|
|
5,599
|
|
|
4,466
|
|
Lead - tonnes
|
|
726
|
|
|
610
|
|
|
2,766
|
|
|
2,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce (1)
|
$
|
8.50
|
|
$
|
9.26
|
|
$
|
8.64
|
|
$
|
7.74
|
|
Total production cost per ounce (1)
|
$
|
9.94
|
|
$
|
11.45
|
|
$
|
9.96
|
|
$
|
8.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver
|
|
1,043,125
|
|
|
1,018,608
|
|
|
4,215,075
|
|
|
4,093,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
Twelve months ended
|
|
|
December 31,
|
December 31,
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alamo Dorado Mine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled
|
|
429,544
|
|
|
436,251
|
|
|
1,697,941
|
|
|
1,848,230
|
|
Average silver grade - grams per tonne
|
|
128
|
|
|
102
|
|
|
116
|
|
|
105
|
|
Average gold grade - grams per tonne
|
|
0.35
|
|
|
0.34
|
|
|
0.38
|
|
|
0.33
|
|
Average silver recovery - percent
|
|
87.2
|
%
|
|
83.8
|
%
|
|
85.6
|
%
|
|
83.6
|
%
|
Silver - ounces
|
|
1,556,689
|
|
|
1,233,181
|
|
|
5,364,011
|
|
|
5,299,841
|
|
Gold - ounces
|
|
4,564
|
|
|
3,966
|
|
|
17,966
|
|
|
16,607
|
|
Copper - tonnes
|
|
49
|
|
|
8
|
|
|
117
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce (1)
|
$
|
4.67
|
|
$
|
5.45
|
|
$
|
5.05
|
|
$
|
4.80
|
|
Total production cost per ounce (1)
|
$
|
7.65
|
|
$
|
8.76
|
|
$
|
7.95
|
|
$
|
8.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver
|
|
1,551,171
|
|
|
1,229,021
|
|
|
5,345,677
|
|
|
5,278,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2012
|
|
|
2011
|
|
2012
|
|
|
2011
|
Dolores Mine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes processed
|
|
1,508,506
|
|
|
-
|
|
4,346,595
|
|
|
-
|
Average silver grade - grams per tonne
|
|
46
|
|
|
-
|
|
42
|
|
|
-
|
Average gold grade - grams per tonne
|
|
0.38
|
|
|
-
|
|
0.40
|
|
|
-
|
Average silver recovery - percent
|
|
41.4
|
%
|
|
-
|
|
45.7
|
%
|
|
-
|
Average gold recovery - percent
|
|
80.2
|
%
|
|
-
|
|
78.0
|
%
|
|
-
|
Silver - ounces
|
|
930,113
|
|
|
-
|
|
2,652,851
|
|
|
-
|
Gold - ounces
|
|
14,698
|
|
|
-
|
|
43,476
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce (1)
|
$
|
3.78
|
|
$
|
-
|
$
|
4.05
|
|
$
|
-
|
Total production cost per ounce (1)
|
$
|
10.80
|
|
$
|
-
|
$
|
16.88
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver
|
|
927,788
|
|
|
-
|
|
2,646,219
|
|
|
-
|
* Production and cost figures represent nine months in Pan American
ownership in 2012.
|
|
|
Three months ended
|
|
|
Twelve months ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huaron Mine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled
|
|
173,895
|
|
|
166,544
|
|
|
683,483
|
|
|
614,437
|
|
Average silver grade - grams per tonne
|
|
163
|
|
|
179
|
|
|
162
|
|
|
177
|
|
Average zinc grade - percent
|
|
2.46
|
%
|
|
2.67
|
%
|
|
2.54
|
%
|
|
2.46
|
%
|
Average silver recovery - percent
|
|
83.4
|
%
|
|
80.4
|
%
|
|
81.7
|
%
|
|
79.1
|
%
|
Silver - ounces
|
|
753,373
|
|
|
770,128
|
|
|
2,909,890
|
|
|
2,768,768
|
|
Gold - ounces
|
|
185
|
|
|
280
|
|
|
655
|
|
|
1,339
|
|
Zinc - tonnes
|
|
2,990
|
|
|
2,947
|
|
|
11,824
|
|
|
9,555
|
|
Lead - tonnes
|
|
1,127
|
|
|
1,548
|
|
|
4,727
|
|
|
4,865
|
|
Copper - tonnes
|
|
622
|
|
|
355
|
|
|
2,257
|
|
|
1,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce (1)
|
$
|
21.81
|
|
$
|
14.84
|
|
$
|
17.51
|
|
$
|
14.03
|
|
Total production cost per ounce (1)
|
$
|
24.74
|
|
$
|
21.01
|
|
$
|
21.02
|
|
$
|
16.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver
|
|
643,351
|
|
|
688,276
|
|
|
2,506,481
|
|
|
2,491,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Twelve months ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Morococha Mine*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled
|
|
141,954
|
|
|
122,834
|
|
|
535,086
|
|
|
483,104
|
|
Average silver grade - grams per tonne
|
|
141
|
|
|
118
|
|
|
143
|
|
|
128
|
|
Average zinc grade - percent
|
|
2.69
|
%
|
|
3.31
|
%
|
|
2.83
|
%
|
|
2.74
|
%
|
Average silver recovery - percent
|
|
86.9
|
%
|
|
86.1
|
%
|
|
84.9
|
%
|
|
86.1
|
%
|
Silver - ounces
|
|
551,760
|
|
|
401,354
|
|
|
2,083,726
|
|
|
1,711,668
|
|
Gold - ounces
|
|
694
|
|
|
445
|
|
|
2,840
|
|
|
1,691
|
|
Zinc - tonnes
|
|
3,089
|
|
|
3,244
|
|
|
11,925
|
|
|
10,676
|
|
Lead - tonnes
|
|
859
|
|
|
641
|
|
|
3,601
|
|
|
3,050
|
|
Copper - tonnes
|
|
467
|
|
|
377
|
|
|
1,502
|
|
|
1,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce (1)
|
$
|
25.96
|
|
$
|
24.92
|
|
$
|
23.48
|
|
$
|
16.11
|
|
Total production cost per ounce (1)
|
$
|
32.01
|
|
$
|
40.07
|
|
$
|
29.75
|
|
$
|
22.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver
|
|
472,490
|
|
|
349,617
|
|
|
1,776,333
|
|
|
1,520,702
|
|
* Production and cost figures are of Pan American's share only. Pan
American's ownership is 92.2%
|
|
|
Three months ended
|
|
|
Twelve months ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Vicente Mine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled
|
|
79,613
|
|
|
77,760
|
|
|
306,063
|
|
|
282,960
|
|
Average silver grade - grams per tonne
|
|
422
|
|
|
368
|
|
|
419
|
|
|
382
|
|
Average zinc grade - percent
|
|
2.23
|
%
|
|
2.44
|
%
|
|
2.15
|
%
|
|
2.26
|
%
|
Average silver recovery - percent
|
|
91.1
|
%
|
|
91.5
|
%
|
|
90.7
|
%
|
|
90.1
|
%
|
Silver - ounces
|
|
971,031
|
|
|
842,157
|
|
|
3,726,024
|
|
|
3,130,145
|
|
Zinc - tonnes
|
|
1,296
|
|
|
1,501
|
|
|
4,918
|
|
|
4,792
|
|
Copper - tonnes
|
|
-
|
|
|
210
|
|
|
-
|
|
|
649
|
|
Lead - tonnes
|
|
93
|
|
|
-
|
|
|
432
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce (1)
|
$
|
19.84
|
|
$
|
13.35
|
|
$
|
18.92
|
|
$
|
13.48
|
|
Total production cost per ounce (1)
|
$
|
22.86
|
|
$
|
15.67
|
|
$
|
22.05
|
|
$
|
17.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver
|
|
887,816
|
|
|
752,514
|
|
|
3,390,683
|
|
|
2,849,243
|
|
* Production and cost figures are of Pan American's share only. Pan
American's ownership is 95%
|
|
|
Three months ended
|
Twelve months ended
|
|
|
|
December 31,
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manantial Espejo Mine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled
|
|
187,790
|
|
|
166,567
|
|
734,335
|
|
|
697,205
|
|
Average silver grade - grams per tonne
|
|
182
|
|
|
167
|
|
170
|
|
|
185
|
|
Average gold grade - grams per tonne
|
|
2.09
|
|
|
2.27
|
|
1.94
|
|
|
2.48
|
|
Average silver recovery - percent
|
|
91.9
|
%
|
|
89.3%
|
|
89.8
|
%
|
|
90.2
|
%
|
Average gold recovery - percent
|
|
95.0
|
%
|
|
94.6%
|
|
94.2
|
%
|
|
95.1
|
%
|
Silver - ounces
|
|
1,034,596
|
|
|
829,553
|
|
3,632,550
|
|
|
3,766,504
|
|
Gold - ounces
|
|
11,503
|
|
|
11,114
|
|
43,339
|
|
|
52,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost per ounce (1)
|
$
|
13.08
|
|
$
|
7.85
|
$
|
14.65
|
|
$
|
7.36
|
|
Total production cost per ounce (1)
|
$
|
21.41
|
|
$
|
18.34
|
$
|
22.73
|
|
$
|
15.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable ounces of silver
|
|
1,032,527
|
|
|
827,894
|
|
3,625,285
|
|
|
3,758,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Cash costs per payable ounce of silver is a non-GAAP measure. The
Company believes that, in addition to production costs,
depreciation and amortization and royalties, cash cost per ounce is a
useful and complementary benchmark that investors use
to evaluate the Company's performance and ability to generate cash flow
and is well understood and widely reported in the
silver mining industry. However, cash costs per ounce does not have a
standardized meaning prescribed by IFRS ("International
Financial Reporting Standards") as an indicator of performance. A
reconciliation is shown below.
|
Cash Costs and Total Operating Costs per Ounce of Payable Silver
|
(Unaudited in thousands of U.S. dollars)
|
|
|
|
Three months ended
December 31,
|
Twelve months ended
December 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Production costs
|
|
$
|
124,389
|
$
|
94,818
|
$
|
474,001
|
$
|
341,363
|
Add/(Subtract)
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
|
5,693
|
|
5,810
|
|
35,077
|
|
22,031
|
Smelting, refining, and transportation charges
|
|
|
18,746
|
|
16,076
|
|
68,097
|
|
64,132
|
By-product credits
|
|
|
(84,652)
|
|
(59,437)
|
|
(303,035)
|
|
(255,820)
|
Worker's participation and voluntary payments
|
|
|
(407)
|
|
(181)
|
|
(1,573)
|
|
(5,632)
|
Change in inventories
|
|
|
13,758
|
|
(4,698)
|
|
22,521
|
|
30,103
|
Other
|
|
|
1,479
|
|
4,993
|
|
(2,475)
|
|
3,765
|
Not controlling interests
|
|
|
(1,968)
|
|
(1,268)
|
|
(6,914)
|
|
(4,099)
|
Cash Operating Costs
|
A
|
|
77,038
|
|
56,113
|
|
285,699
|
|
195,843
|
|
|
|
|
|
|
|
|
|
|
Add/(Subtract)
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
32,242
|
|
23,463
|
|
108,153
|
|
82,756
|
Closure and decommissioning provision
|
|
|
655
|
|
896
|
|
2,999
|
|
3,268
|
Change in inventories
|
|
|
(3,857)
|
|
4,361
|
|
6,273
|
|
659
|
Other
|
|
|
-
|
|
(240)
|
|
(746)
|
|
(815)
|
Not-controlling interests
|
|
|
(384)
|
|
(541)
|
|
(1,504)
|
|
(1,334)
|
Production Costs
|
B
|
|
105,694
|
|
84,052
|
|
400,874
|
|
280,377
|
|
|
|
|
|
|
|
|
|
|
Payable Silver Production (oz)
|
C
|
|
6,558,268
|
|
5,020,804
|
|
23,746,108
|
|
20,753,040
|
Total Cash costs per ounce
|
(A*$1000)/C
|
$
|
11.75
|
$
|
11.18
|
$
|
12.03
|
|
9.44
|
Total Production Costs per ounce
|
(B*$1000)/C
|
$
|
16.12
|
$
|
16.74
|
$
|
16.88
|
|
13.51
|
Pan American Silver Corp.
|
|
|
|
Consolidated Statements of Financial Position
|
|
|
|
As at December 31, 2012 and 2011
(Unaudited in thousands of U.S. dollars)
|
|
|
|
|
|
December 31,
2012
|
|
December 31,
2011
|
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash
|
$
|
346,208
|
$
|
262,901
|
Short-term investments
|
|
196,116
|
|
228,321
|
Trade and other receivables
|
|
134,612
|
|
103,433
|
Income taxes receivable
|
|
18,671
|
|
2,542
|
Inventories
|
|
270,089
|
|
135,696
|
Derivative financial instruments
|
|
25
|
|
-
|
Prepaids and other current assets
|
|
9,546
|
|
9,343
|
|
|
975,267
|
|
742,236
|
Non-current assets
|
|
|
|
|
Mineral property, plant and equipment, net
|
|
2,182,742
|
|
1,189,708
|
Long-term refundable tax
|
|
9,937
|
|
10,253
|
Deferred tax assets
|
|
1,450
|
|
4,170
|
Other assets
|
|
7,291
|
|
5,429
|
Goodwill
|
|
211,292
|
|
-
|
Total Assets
|
$
|
3,387,979
|
$
|
1,951,796
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
136,757
|
$
|
78,258
|
Provisions
|
|
7,022
|
|
2,341
|
Current portion of finance lease
|
|
12,473
|
|
20,841
|
Current income tax liabilities
|
|
40,346
|
|
74,366
|
|
|
196,598
|
|
175,806
|
Non-current liabilities
|
|
|
|
|
Provisions
|
|
45,661
|
|
59,052
|
Deferred tax liabilities
|
|
321,630
|
|
54,919
|
Share purchase warrants
|
|
8,594
|
|
23,651
|
Long-term portion of finance lease
|
|
24,377
|
|
10,824
|
Long-term debt
|
|
41,134
|
|
-
|
Other long-term liabilities
|
|
23,256
|
|
25,457
|
Total Liabilities
|
|
661,250
|
|
349,709
|
|
|
|
|
|
Equity
|
|
|
|
|
Capital and reserves
|
|
|
|
|
Issued capital
|
|
2,300,517
|
|
1,243,241
|
Share option reserve
|
|
20,560
|
|
8,631
|
Investment revaluation reserve
|
|
964
|
|
2,146
|
Retained earnings
|
|
397,360
|
|
339,821
|
Total Equity attributable to equity holders of the Company
|
|
2,719,401
|
|
1,593,839
|
Non-controlling interests
|
|
7,328
|
|
8,248
|
Total Equity
|
|
2,726,279
|
|
1,602,087
|
Total Liabilities and Equity
|
$
|
3,387,979
|
$
|
1,951,796
|
|
|
Pan American Silver Corp.
Consolidated Income Statements
|
|
(Unaudited in thousands of U.S. dollars, except for share and per share
amounts)
|
|
|
Three months ended
December 31,
|
Twelve months ended
December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenue
|
$
|
247,335
|
$
|
212,361
|
$
|
928,594
|
$
|
855,275
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
Production costs
|
|
(124,389)
|
|
(94,818)
|
|
(474,001)
|
|
(341,363)
|
|
Depreciation and amortization
|
|
(32,242)
|
|
(23,463)
|
|
(108,153)
|
|
(82,756)
|
|
Royalties
|
|
(5,693)
|
|
(5,810)
|
|
(35,077)
|
|
(22,031)
|
|
|
(162,324)
|
|
(124,091)
|
|
(617,231)
|
|
(446,150)
|
Mine operating earnings
|
$
|
85,011
|
$
|
88,270
|
$
|
311,363
|
$
|
409,125
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
(4,638)
|
|
(5,068)
|
|
(20,790)
|
|
(18,291)
|
Exploration and project development
|
|
(10,405)
|
|
(8,804)
|
|
(36,746)
|
|
(27,727)
|
Impairment charge
|
|
(100,009)
|
|
-
|
|
(100,009)
|
|
-
|
Acquisition costs
|
|
-
|
|
-
|
|
(16,162)
|
|
-
|
Foreign exchange gains (losses)
|
|
4,883
|
|
2,366
|
|
5,577
|
|
(8,126)
|
Gains (losses) on commodity and foreign currency contracts
|
|
279
|
|
(272)
|
|
421
|
|
681
|
Gain on sale of assets
|
|
1,466
|
|
136
|
|
9,652
|
|
1,190
|
Other income
|
|
-
|
|
10,079
|
|
5,370
|
|
15,728
|
(Loss) earnings from continuing operations
|
|
(23,413)
|
|
86,707
|
|
158,676
|
|
372,580
|
|
|
|
|
|
|
|
|
|
Gain on derivatives
|
|
14,203
|
|
30,994
|
|
24,159
|
|
101,828
|
Investment income
|
|
3,032
|
|
936
|
|
6,178
|
|
3,055
|
Interest and finance expense
|
|
(3,326)
|
|
(1,920)
|
|
(7,678)
|
|
(6,199)
|
(Loss) earnings before income taxes
|
|
(9,504)
|
|
116,717
|
|
181,335
|
|
471,264
|
Income tax expense
|
|
(19,907)
|
|
(21,250)
|
|
(93,822)
|
|
(117,118)
|
Net (loss) earnings for the period
|
$
|
(29,411)
|
$
|
95,467
|
$
|
87,513
|
$
|
354,146
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
Equity holders of the Company
|
$
|
(29,060)
|
$
|
95,356
|
$
|
87,359
|
$
|
352,494
|
|
Non-controlling interests
|
|
(351)
|
|
111
|
|
154
|
|
1,652
|
|
$
|
(29,411)
|
$
|
95,467
|
$
|
87,513
|
$
|
354,146
|
Earnings per share attributable to common shareholders
|
|
|
Basic earnings per share
|
$
|
(0.19)
|
$
|
0.89
|
|
0.62
|
|
3.31
|
Diluted earnings per share
|
$
|
(0.24)
|
$
|
0.89
|
|
0.55
|
|
3.31
|
Weighted average shares outstanding (in 000's) Basic
|
|
152,332
|
|
106,563
|
|
140,883
|
|
106,434
|
Weighted average shares outstanding (in 000's) Diluted
|
|
154,259
|
|
106,679
|
|
142,442
|
|
106,598
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income
|
(unaudited in thousands of U.S. dollars)
|
|
|
Three months ended
December 31,
|
|
Twelve months ended
December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net (loss) earnings for the period
|
$
|
(29,411)
|
$
|
95,467
|
$
|
87,513
|
$
|
354,146
|
|
|
|
|
|
|
|
|
|
Unrealized net gains (loss) on available for sale securities
(net of zero dollars tax)
|
|
1,298
|
|
(196)
|
|
2,452
|
|
(3,979)
|
Reclassification adjustment for net loss included in earnings
|
|
(2,570)
|
|
(386)
|
|
(3,634)
|
|
(1,573)
|
Total comprehensive (loss) income for the period
|
$
|
(30,683)
|
$
|
94,885
|
$
|
86,331
|
$
|
348,594
|
|
|
|
|
|
|
|
|
|
Total comprehensive (loss) income attributable to:
|
|
|
|
|
|
|
|
|
Equity holders of the Company
|
$
|
(30,332)
|
$
|
94,774
|
$
|
86,177
|
$
|
346,942
|
Non-controlling interests
|
|
(351)
|
|
111
|
|
154
|
|
1,652
|
|
$
|
(30,683)
|
$
|
94,885
|
$
|
86,331
|
$
|
348,594
|
Pan American Silver Corp.
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
(Unaudited in thousands of U.S. dollars)
|
|
|
|
|
|
Three months ended
|
Twelve months ended
|
|
|
December 31,
|
December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Cash flow from operating activities
|
|
|
|
|
|
|
|
|
Net (loss) earnings for the year
|
$
|
(29,411)
|
$
|
95,467
|
$
|
87,513
|
$
|
354,146
|
|
|
|
|
|
|
|
|
|
Current income tax expense
|
|
34,270
|
|
22,521
|
|
93,689
|
|
109,347
|
Deferred income tax (recovery) expense
|
|
(14,363)
|
|
(1,271)
|
|
133
|
|
7,771
|
Depreciation and amortization
|
|
32,242
|
|
23,463
|
|
108,153
|
|
82,756
|
Impairment charge
|
|
100,009
|
|
-
|
|
100,009
|
|
-
|
Accretion on closure and decommissioning provision
|
|
655
|
|
897
|
|
2,999
|
|
3,268
|
Unrealized (gains) losses on foreign exchange
|
|
(584)
|
|
(9,627)
|
|
6,124
|
|
(1,071)
|
Stock-based compensation expense
|
|
(574)
|
|
430
|
|
4,142
|
|
3,502
|
Unrealized (gains) losses on commodity contracts
|
|
(34)
|
|
929
|
|
(25)
|
|
-
|
Gain on derivatives
|
|
(14,203)
|
|
(30,994)
|
|
(24,159)
|
|
(101,828)
|
Gain on sale of assets
|
|
(1,466)
|
|
(136)
|
|
(9,652)
|
|
(1,190)
|
Changes in non-cash operating working capital
|
|
(4,473)
|
|
8,482
|
|
(22,224)
|
|
(39,435)
|
Operating cash flows before interest and income taxes
|
|
102,068
|
|
110,161
|
|
346,702
|
|
417,266
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
(1,890)
|
|
(233)
|
|
(3,639)
|
|
(557)
|
Interest received
|
|
591
|
|
545
|
|
2,575
|
|
1,482
|
Income taxes paid
|
|
(19,166)
|
|
(5,506)
|
|
(152,333)
|
|
(58,736)
|
Net cash generated from operating activities
|
|
81,603
|
|
104,967
|
|
193,305
|
|
359,455
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
|
|
|
Payments for mineral property, plant and equipment
|
|
(65,269)
|
|
(38,788)
|
|
(159,915)
|
|
(118,933)
|
(Purchase) maturity of short term investments
|
|
(77,083)
|
|
(36,583)
|
|
30,383
|
|
(51,071)
|
Acquisition of Minefinders, net of cash acquired
|
|
-
|
|
-
|
|
86,528
|
|
-
|
Proceeds from sale of mineral property, plant and equipment
|
|
410
|
|
152
|
|
1,692
|
|
1,297
|
Net refundable tax and other asset expenditures
|
|
1,072
|
|
3,859
|
|
1,989
|
|
(3,915)
|
Net cash used in investing activities
|
|
(140,870)
|
|
(71,360)
|
|
(39,323)
|
|
(172,622)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issue of equity shares
|
|
514
|
|
1,047
|
|
3,195
|
|
4,453
|
Shares repurchased and cancelled
|
|
(10,719)
|
|
(66,093)
|
|
(41,749)
|
|
(94,034)
|
Dividends paid
|
|
(7,618)
|
|
(2,639)
|
|
(24,919)
|
|
(10,732)
|
Payments of construction and equipment leases
|
|
(1,745)
|
|
(3,102)
|
|
(6,213)
|
|
(4,646)
|
Net (distributions to)/contributions from non-controlling interests
|
|
(530)
|
|
(357)
|
|
(1,074)
|
|
904
|
Net cash used in financing activities
|
|
(20,098)
|
|
(71,144)
|
|
(70,760)
|
|
(104,055)
|
Effects of exchange rate changes on cash
|
|
(828)
|
|
950
|
|
85
|
|
202
|
Net (decrease) increase in cash
|
|
(80,193)
|
|
(36,587)
|
|
83,307
|
|
82,980
|
Cash at the beginning of the period
|
|
426,401
|
|
299,488
|
|
262,901
|
|
179,921
|
Cash at the end of the period
|
$
|
346,208
|
$
|
262,901
|
$
|
346,208
|
$
|
262,901
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
Significant Non-Cash Items
|
|
|
|
|
|
|
|
|
Fair value of shares issued as part of Minefinders acquisition
|
$
|
-
|
$
|
-
|
$
|
1,088,104
|
$
|
-
|
Replacement options issued as part of Minefinders acquisition
|
$
|
-
|
$
|
-
|
$
|
10,739
|
$
|
-
|
Post acquisition - expenditures associated with the replacement options
|
$
|
-
|
$
|
-
|
$
|
699
|
$
|
-
|
Fair value adjustment of warrants exercised
|
$
|
-
|
$
|
1,972
|
$
|
-
|
$
|
2,411
|
Advances received for construction and equipment leases
|
$
|
4,021
|
$
|
9,462
|
$
|
11,538
|
$
|
26,757
|
Stock compensation issued to employees and directors
|
$
|
929
|
$
|
1,265
|
$
|
1,060
|
$
|
1,329
|
SOURCE: Pan American Silver Corp.