Consolidated Cash Costs Were $11.33 per Ounce of Silver; Well Below
Company Guidance
(Unaudited Results - All amounts in US dollars unless otherwise stated
and all production figures are approximate)
VANCOUVER, May 14, 2013 /CNW/ - Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) (the "Company", or "Pan American"), reported
that its first quarter silver production increased 14% to 6.3 million
ounces, while gold production increased 65% to 32,100 ounces as
compared to the same period in 2012. The silver and gold production
increases were largely the result of the addition of low-cost
production from the Dolores mine, which was acquired on March 30,
2012. Total cash costs for the first quarter were $11.33 per ounce of
silver, net of by-product credits, which was well below the Company's
guidance for 2013 of $11.80 to $12.80 per ounce of silver.
First Quarter 2013 Highlights (unaudited) (2)
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-
Silver production of 6.3 million ounces, an increase of 14% as compared
to the same quarter in 2012.
-
Gold production of 32,100 ounces, an increase of 65% as compared to the
same quarter of 2012.
-
Consolidated cash costs(3) of $11.33 per ounce of silver, net of by-product credits.
-
Mine operating earnings(4) of $74.8 million.
-
Net earnings of $20.1 million or $0.13 per share.
-
Adjusted earnings(1) of $40.0 million or $0.26 per share.
-
Operating cash flows before changes in non-cash operating working
capital(5) of $45.3 million or $0.30 per share.
-
Revenue of $243.0 million.
-
Returned $24.4 million to shareholders (cash dividends of $19.0 million
and repurchased 335,000 common shares for $5.4 million).
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Financial Position (at March 31, 2013)
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-
Cash and short term investments of $490.1 million.
-
Working capital of $738.4 million.
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Corporate Development
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-
Entered an agreement with Esperanza Resources Corp. ("Esperanza") to
sell three small gold development assets in exchange for Esperanza
common shares and warrants.
-
Entered an agreement to sell part of certain of its interest non-core
Mexican exploration properties for $4 million in cash.
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(1)Adjusted earnings is a non-GAAP measure calculated as net earnings for
the period adjusting for unrealized gains recorded on fair market value
adjustments on the Company's outstanding warrants, unrealized losses on
foreign exchange, unrealized gains on commodity contracts and net
losses or gains on the sale of non-core exploration or development
projects. 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 toperiod.
(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.
Geoff Burns, President & CEO commented on the Company's first quarter
results, "We had a solid first quarter. Our silver and gold production
was basically right on our forecast, while our cash costs were slightly
lower as a result of better-than-expected base metal by-product
production and some operating cost savings. Consequently, our
operating cash flows and adjusted earnings were in line with our
expectations. These strong financial results, have allowed us to
continue to deliver sector-leading cash returns directly to our
shareholders, paying $19 million in dividends and repurchasing and
cancelling another 335,000 shares in the first quarter." Mr. Burns
continued, "Moving forward, we will be modestly adjusting our
short-term plans over the balance of the year in response to the
decline in the price of silver we witnessed in early April. I don't
envision any significant changes to our capital programs this year, as
we are not engaged in any major construction projects, but we will be
diligently looking for additional opportunities to trim our ongoing
operating, exploration and G&A expenditures to try to offset some of
the price decline. I am comforted to know that Pan American enters this
period of lower prices with one of the strongest balance sheets in the
sector, which puts us in a good position to weather lower prices and
look aggressively for opportunities to strengthen our asset portfolio
while asset valuations are depressed."
Financial Results
During the first quarter of 2013, Pan American generated revenue of
$243.0 million, up 6% from revenue recorded in the first quarter of
2012. The increase in revenue resulted from higher quantities of
metals sold with the exception of zinc and lead, but was partially
offset by lower realized prices for silver, gold and copper. During
the first three months of 2013, Pan American realized average prices of
$30.11 per ounce of silver, $1,630 per ounce of gold and $7,200 per
tonne of copper, down 8%, 4% and 9%, respectively, as compared to the
same period of 2012. In contrast, Pan American realized average prices
of $2,039 per tonne of zinc and $2,300 per tonne of lead, up 1% and
11%, respectively from the first quarter of 2012. Revenue from silver
and gold sales contributed 70% and 18%, respectively to the Company's
consolidated quarterly revenue. Sales from base metals continue to
decline in relative importance with zinc contributing 7%, lead
contributing 3% and copper contributing only 2% to our consolidate
revenues.
Pan American generated net earnings of $20.1 million or $0.13 per share
during the first quarter of 2013. Net earnings were negatively impacted
by lower mine operating earnings on higher costs of sales due to higher
depreciation and amortization at the Dolores mine, and a net non-cash
impairment loss of $31.8 million on account of the proposed sale of
non-core late-stage gold development assets to Esperanza, offset in
part by a $4.0 million cash gain on the sale of interests in non-core
exploration properties during the quarter.
Adjusted earnings for the first three months of 2013 were $40.0 million
or $0.26 per share, after adjusting for a non-cash $27.7 million net
loss on the sale of several non-core late-stage gold exploration
assets, a $10.9 million unrealized mark to market derivative gain on
the Company's outstanding warrants, a $4.3 million unrealized loss on
foreign exchange, and a $1.3 million unrealized gain on commodity
contracts.
Mine operating earnings generated during the quarter ended March 31,
2013 were $74.8 million, 27% lower year-on-year due to higher cost of
sales, which outweighed higher revenues.
Operating cash flows before changes in non-cash operating working
capital during the first quarter of 2013 was $45.3 million, or $0.30
per share, 62% higher than in the comparable quarter of 2012. The
increase was attributable to lower taxes paid during the quarter.
At March 31, 2013, Pan American had $490.1 million in cash and
short-term investments and working capital of $738.4 million, 10% and
6% less than at year-end 2012, respectively. The Company maintains its
robust financial position, with minimal debt consisting of $8.8 million
in long-term capital lease obligations and $36.8 million in convertible
notes acquired in connection with the Minefinders transaction.
During the first three months of 2013, Pan American invested
approximately $5.4 million to repurchase and cancel approximately
335,000 shares under the current normal course issuer bid. At March
31, 2013, Pan American had 151.5 million common shares issued and
outstanding. In addition, Pan American distributed a total of $19.0
million in cash dividends to shareholders during the first quarter of
2013.
The Company's effective tax rate for the first quarter of 2013 was 49%,
calculated on the base of adjusted earnings. Adjusting for the
non-cash impact of the loss on derivatives and the impairment charge,
the effective tax rate would have been 28% for the quarter. 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 affected the
effective tax rate for the current quarter were unrealized gains and
losses on the Company's derivatives, foreign income tax rate
differentials, foreign exchange and non-recognition of certain deferred
tax assets. Additionally, the Company took a non-cash impairment
charge on non-current assets held for sale. The Company expects that
this 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 first three months of 2013, Pan American's silver production
rose 14% year-on-year to 6.2 million ounces and gold production surged
65% year-on-year to 32,100 ounces. The increases were directly
attributable to new production from Dolores, which was acquired at the
end of March 2012 slightly offset by lower gold production at Alamo
Dorado and from the sale of the Quiruvilca mine in June 2012.
During the first quarter of 2013, 51% of the Company's silver production
originated at our three Mexican operations. La Colorada produced 1.1
million ounces of silver, practically flat year-on-year, as lower
grades were offset by higher throughput and recoveries. Alamo Dorado
delivered another solid operational quarter and contributed 1.3 million
ounces of silver, as lower throughput was more than compensated by
higher grades and recoveries. Finally, Dolores produced 0.8 million
ounces of silver reasonably in-line with management's expectations.
The Company's Peruvian operations had a decent operational quarter
during the first three months of 2013, achieving the same production
levels of a year ago. Huaron produced 0.8 million and Morococha
produced 0.5 million ounces of silver, both offsetting marginally lower
grades and recoveries with increased throughput.
In Bolivia, San Vicente delivered another strong performance by boosting
silver production 13% during the first quarter of 2013 to 1 million
ounces of silver on account of increases in throughput and recoveries.
In Argentina, Manantial Espejo saw a small decline in silver production
year-on-year to 0.8 million ounces due to lower throughput caused by
low equipment availabilities compounded by road blockages disrupting
employee shift changes.
The Company's consolidated gold production surged 65% during the first
three months of 2013 in comparison to the first quarter of 2012, thanks
to the positive effect of production from the Dolores mine, which was
incorporated into our portfolio of assets at the end of March 2012, and
from increased gold production at Manantial Espejo on account of higher
grades and recoveries. Dolores produced 14,500 ounces of gold during
the quarter, which was below management's expectations as the mine
sequencing did not encounter the higher gold zones during the quarter
as expected.
During the first quarter of 2013, Pan American produced 9,700 tonnes of
zinc, 3,100 tonnes of lead and 1,100 tonnes of copper. Year-on-year,
zinc and lead production were negatively affected by the sale of
Quiruvilca, with zinc and lead production declining by 12% and 22%,
respectively. In contrast, copper production increased slightly
irrespective of Quiruvilca's sale due to higher copper grades achieved
at Huaron as expected.
Pan American's consolidated cash costs during the first quarter of 2013
were $11.33 per ounce of silver, net of by-product credits, an increase
of 8% from the first quarter of 2012, but well below our guidance for
the full year 2013. Cash costs increased from last year due to lower
by-product credits on lower gold and copper prices, lower gold
production at Alamo Dorado, largely due to an increase of in-process
gold inventory, and less production of zinc and lead, as well as
general costs inflation in Mexico and Peru. In contrast, cash costs at
both San Vicente and Manantial Espejo decreased year-on-year. At San
Vicente, cash costs declined on account of more silver ounces produced
and at Manantial Espejo cash costs declined due to lower operating
costs fueled by currency devaluation and refocusing some of the open
pit mining to a new phase of the Maria deposit, which is carried as
capitalized pre-stripping. Notably at Huaron, cash costs declined 28%
from the last quarter of 2012 to $15.76 per ounce of silver, net of
by-product credits, on account of some of the underground mining
mechanization efficiencies being realized. The underground mine
mechanization undertaken at both Huaron and Morococha is beginning to
provide the improved productivities expected.
Pan American spent $39.7 million in sustaining capital at its seven
operations during the first quarter of 2013, mainly for pre-stripping
and the leach pad expansions at Dolores and the tailings dam expansion
at Huaron.
Project Development
Leach pad construction at Dolores is progressing well with an extension
of leach pad two nearing completion. The extension is designed to
provide sufficient capacity to allow crushed ore placement through the
approaching rainy season that is expected to slow down earthworks and
liner placements on the leach pad three area.
With the assistance of a third party engineering firm, layouts and
preliminary designs for the addition of a crushing, milling, and
agglomeration facility has been developed and efforts are underway to
complete capital and operating cost estimates that will be used in the
scoping study, which is expected to be completed in the third quarter.
Similarly at La Colorada, a third party engineering firm completed a
scoping study for the addition of a new primary shaft and hoist
conveyance system capable of enhancing access to both the Candelaria
and Amolillo ore-bearing structures at depth, which will lead to a
production expansion plan. The Company remains on-track to produce a
Preliminary Economic Assessment of La Colorada's expansion concept by
year-end.
2013 Outlook
Commenting on the Company's operating results, Steve Busby, Chief
Operating Officer, said; "From an operating point of view, the first
quarter's results were a good start to the year, with production
largely in line and costs below expectations. I am confident that we
will meet or exceed the full year guidance we previously provided.
Late in the quarter, we initiated a number of focused programs aimed at
finding additional operating cost and capital expenditure reductions as
well as productivity enhancements to offset the effects of the recent
fall in precious metal prices. Several of these programs have already
begun to provide meaningful benefits, particularly at our Peruvian
operations. We are focused on finding sustainable ways to further
bolster our business in a reduced metal price environment, while at the
same time advancing our high-return mine-site projects. I look forward
to providing additional detail and more thoroughly quantifying the
results of these initiatives during our second quarter earnings report
in August."
***
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 the Navidad silver 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
Tuesday, May 14, 2013 at 1:00 pm ET (10:00 am PT). To access the
conference, North American and International participants dial toll
1-604-638-5340. A live audio webcast can be accessed at https://services.choruscall.ca/links/pan130514.html. 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 1-604-638-9010 and entering PIN # 6218.
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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:
-
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, 2012
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 SUCCESSFUL
COMPLETION OF TRANSACTIONS, INCLUDING THE TRANSACTION WITH ESPERANZA
RESOURCES CORP.; 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; 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 EXPANSION OF THE LA COLORADA MINE,AND THE TIMING FOR THE SAME;
THE ABILITY OF THE COMPANY TO REDUCE CAPITAL COSTS AND THE EFFECTS OF
SUCH REDUCTION MEASURES ON THE COMPANY; 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.
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Financial & Operating Highlights
|
|
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|
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Three months ended
|
|
|
March 31,
|
|
|
2013
|
|
2012
|
Consolidated Financial Highlights
|
|
|
|
|
(Unaudited in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
Net earnings for the period
|
$
|
20,076
|
$
|
50,245
|
Earnings per share attributable to common shareholders (basic)
|
$
|
0.13
|
$
|
0.47
|
Adjusted earnings for the period(1) |
$
|
39,972
|
$
|
69,143
|
Adjusted earnings per share attributable to common shareholders (basic)
|
$
|
0.26
|
$
|
0.66
|
Mine operating earnings
|
$
|
74,816
|
$
|
101,896
|
Net cash generated from operating activities
|
$
|
32,251
|
$
|
37,395
|
Operating cash flows before changes in non-cash operating working
capital(2) |
$
|
45,297
|
$
|
27,991
|
Capital spending
|
$
|
39,693
|
$
|
20,016
|
Dividends paid
|
$
|
19,021
|
$
|
3,919
|
Shares repurchased
|
$
|
5,442
|
$
|
-
|
Cash and short-term investments
|
$
|
490,146
|
$
|
594,205
|
Working capital(3) |
$
|
738,379
|
$
|
781,908
|
|
|
|
|
|
Consolidated Ore Milled & Metals Recovered to Concentrate
|
|
|
|
|
|
|
|
|
|
Tonnes milled
|
|
2,471,586
|
|
1,156,049
|
Silver metal - ounces
|
|
6,278,223
|
|
5,502,958
|
Gold metal - ounces
|
|
32,120
|
|
19,496
|
Zinc metal - tonnes
|
|
9,694
|
|
11,032
|
Lead metal - tonnes
|
|
3,148
|
|
4,015
|
Copper metal - tonnes
|
|
1,062
|
|
980
|
|
|
|
|
|
Consolidated Cost per Ounce of Silver (net of by-product credits)(4) |
|
|
|
|
|
|
|
|
|
Total cash cost per ounce
|
$
|
11.33
|
$
|
10.49
|
Total production cost per ounce
|
$
|
17.29
|
$
|
14.15
|
|
|
|
|
|
Payable ounces of silver (used in cost per ounce calculations)
|
|
5,958,550
|
|
5,172,994
|
|
|
|
|
|
(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, impairment of mineral property, unrealized
foreign exchange gains or losses, unrealized gain or loss on commodity
contracts, the transaction costs arising from the Minefinders
transaction and gain or loss on sale of assets. 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 March 31,
|
Adjusted Earnings Reconciliation
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
Net earnings for the period
|
|
|
|
|
$
|
20,076
|
$
|
50,245
|
|
|
|
Adjust derivative loss (gain)
|
|
|
|
|
|
2,649
|
|
(2,660)
|
|
|
|
Adjust impairment of mineral property
|
|
|
|
|
|
18,256
|
|
-
|
|
|
|
Adjust unrealized foreign exchange losses
|
|
|
|
|
|
4,327
|
|
7,847
|
|
|
|
Adjust unrealized gains on commodity contracts
|
|
|
|
|
|
(1,268)
|
|
-
|
|
|
|
Adjust gain on sale of assets
|
|
|
|
|
|
(4,068)
|
|
(88)
|
|
|
|
Adjust acquisition costs
|
|
|
|
|
|
-
|
|
13,799
|
|
|
|
Adjusted earnings for the period
|
|
|
|
|
$
|
39,972
|
$
|
69,143
|
(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) |
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.
|
SOURCE: Pan American Silver Corp.
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