(Unaudited Results. All amounts in US$ unless otherwise stated. Approximate production figures.)
VANCOUVER, Feb. 20, 2014 /PRNewswire/ – Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) (the “Company”, or “Pan American”), posted a net loss of $293.1 million, or $1.94 per share during the fourth quarter of 2013, which included a non-cash impairment charge of $218.1 million (net of tax) on the carrying value of the Dolores mine, due to lower assumed long-term metal prices and increased taxes, and a non-cash deferred tax charge of $86.0 million, due to the recent tax changes in Mexico. Net cash flow from operating activities during the current quarter was $46.2 million or $0.30 per share, reflecting the excellent fourth quarter production results and continued cost control efforts. Cash and short term investments increased over the previous quarter to $422.7 million at December 31, 2013 even after the payment of our normal quarterly dividend of $18.9 million in early December, clearly exhibiting Pan American’s ability to continue to generate positive cash flows at current silver prices.
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|
| | Fourth Quarter 2013 Highlights (unaudited)^(1) | |-----------------------------------------------------------------------------|
|
* Silver production of 6.8 million ounces | |
* Record gold production of 46,200 ounces | |
* Consolidated cash costs^(2) of $9.56 per silver ounce, net of | |
by-product credits, down 19% year-on-year | |
* All-in sustaining costs per silver ounce sold ("AISCSOS")^(3) of | |
$17.03, net of by-product credits, 33% down year-on-year | |
* Revenue of $192.4 million | |
* Mine operating earnings^(4) of $19.0 million | |
* Net loss of $293.1 million or $1.94 per share, including a non-cash | |
impairment charge of $218.1 million (net of tax) on the Dolores mine and | |
a $86 million deferred tax charge due to tax rate changes in Mexico | |
* Net cash generated from operating activities was $46.2 million, or | |
$0.30 per share | |
* Quarterly dividend of $0.125 per share maintained |
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| | Full-year 2013 Highlights (unaudited)^(1) | |-----------------------------------------------------------------------------|
|
* Record silver production of 26 million ounces | |
* Record gold production of 149,800 ounces | |
* Consolidated cash costs^(2) of $10.81 per silver ounce, net of | |
by-product credits, down 10% year-on-year | |
* AISCSOS^(3) of $18.33, net of by-product credits, down 18% | |
year-on-year | |
* Revenue of $824.5 million | |
* Mine operating earnings^(4) of $131.5 million | |
* Net loss^(5) of $445.8 million, including non-cash impairment | |
charges of $420.4 million for Dolores (net of taxes) and a non-cash $86.8| |
million deferred tax charge due to tax rate change in Mexico | |
* Net cash generated from operating activities of $119.6 million or | |
$0.79 per share | |
* Completed construction and commissioned the phase 1 of the leach pad| |
3 at the Dolores mine | |
* Approved the La Colorada production expansion project | |
* Total dividends paid to common shareholders of $75.8 million, | |
representing $0.50 per share annually | |
* Total share repurchases of $6.7 million | |
* Achieved the best annual safety record in the Company's history | |
| |
|
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| | Financial Position at December 31, 2013 | |-----------------------------------------------------|
|
* Cash and short term investments of $422.7 | |
million | |
* Working capital of $689.0 million | |
* Long term debt of $40.0 million | |
| |
|
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(1) Financial information in this news release is based on International
Financial Reporting Standards ("IFRS"); results are unaudited; percentages
compare period-on-period.
(2) Cash costs per payable ounce of silver, net of by-product credits, 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.
(3) (1) All-in sustaining costs per silver ounce sold ("AISCSOS") is a
non-GAAP measure. The Company has adopted the reporting of AISCSOS as a
measure of a silver mining company's consolidated operating performance and
the ability to generate cash flow from all operations collectively. We
believe it is a more comprehensive measure of the cost of operating our
consolidated business than traditional cash and total costs per ounce as it
includes the cost of replacing ounces through exploration, the cost of
ongoing capital investments (sustaining capital), general and
administrative expenses, as well as other items that affect the Company's
consolidated earnings and cash flow. This measure including its
subcomponent Sustaining Capital are non - GAAP measures and readers should
refer to the attached table in the section under Sustaining Capital for a
reconciliation of this measure to the unaudited condensed interim
consolidated financial statements.
(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.
Commenting on the Company’s fourth quarter and full year 2013 performance, Geoff Burns, President & CEO said, “With the rapid decline in the price of silver and gold, 2013 became one of the most challenging years Pan American has faced. But I am proud of how we responded. We reduced our cash costs by 10% and our all-in sustaining costs by 18% year over year. We reduced our G&A expenses and our exploration expenditures, while at the same time completing critical long-term projects and recording new company records for silver and gold production. In short, we rebuilt Pan American to be a stronger company, able to continue to generate positive cash flows and pay meaningful dividends at current silver price levels”. Burns continued, “Our fourth quarter financials were blemished by the need to recognize an impairment on our Dolores mine and non-cash deferred tax charges related to increased tax rates in Mexico. However, thanks to our excellent production and lower cost base we generated strong net operating cash flows of $0.40 per share during the quarter and were able to increase our year-end cash position to over $422 million, even after paying our industry-leading dividend. Our focus for 2014 is to again grow our silver and gold production, sustain the new cost levels we have achieved and to advance the expansion of the La Colorada mine, setting the stage for yet another leg of production growth.”
Financial Results
During the fourth quarter of 2013 Pan American generated revenue of $192.4 million, 22% lower than in the last quarter of 2012, due mainly to sharply lower realized prices for silver and gold, partially offset by greater quantities of metals sold. For the full-year 2013, the Company generated $824.5 million in revenue, or 11% less than in 2012. During 2013, the average realized price of silver declined 25% to $23.29 per ounce compared to the previous year and the average realized price of gold declined 16% to $1,398 per ounce. The annual average prices of zinc, lead and copper declined as well to $1,909 per tonne, $2,141 per tonne and $7,251 per tonne, respectively. For the full year 2013, silver and gold contributed 71% and 19% of total revenue, respectively.
In the last quarter of 2013, Pan American recorded a net loss of $293.1 million, or $1.94 per share, due mainly to an impairment charge of $218.1 million (net of tax impact) reducing the book value of the Dolores mine and a deferred tax charge of $86.8 million relating to Mexican tax reforms that included new taxes and changes to income tax rates. The impairment charge at Dolores was primarily driven by lower long-term precious metals price assumptions of $22 per ounce of silver and $1,300 per ounce of gold used in the impairment test. For the full-year 2013, Pan American generated a net loss of $445.8 million, or $2.94 per share. The net loss was mainly attributable to non-cash impairment charges totaling $420.4 million (net of tax impact) on Dolores and a non-cash deferred tax charge of $86.8 million relating to Mexican tax reforms that included new taxes and changes to income tax rates. Also included in the fourth quarter were realized foreign exchange losses of $6.0 million on our treasury position due to the relative strengthening of the US dollar, offset by a gain of $6.0 million on the sale of other assets.
Mine operating earnings generated in the fourth quarter of 2013 declined to $19.0 million, which included a negative adjustment of $8.4 million for the net realizable value of in-process inventories. For the full-year 2013, Pan American generated $131.5 million in mine operating earnings, 58% lower than in 2012. The decline in annual and quarterly mine operating earnings was directly attributable to lower realized prices for silver and gold described above, partially offset by increased volumes of silver and gold sold. Operating cash flows during the fourth quarter of 2013 were $46.2 million or $0.30 per share, 43% lower year-on-year. Operating cash flows for the full-year 2013 were $119.6 million, or $0.79 per share, 38% lower than in 2012.
At December 31, 2013, Pan American had $422.7 million in cash and short-term investments, an increase from the previous quarter, and working capital of $689.0 million.
During the fourth quarter of 2013, Pan American paid $18.9 million in cash dividends to holders of common shares. In 2013, the Company returned a total of $75.8 million in cash dividends to its shareholders.
Production and Operations
During the fourth quarter of 2013, Pan American produced 6.8 million ounces of silver and a record 46,200 ounces of gold. For the full year 2013, Pan American achieved production records of 26 million ounces of silver and 149,800 ounces of gold, 4% and 33% more than in 2012, respectively. The new silver production record was accomplished due to production gains at La Colorada, Huaron, Morococha and San Vicente, partially offset by a decline in silver ounces produced at Alamo Dorado and Manantial Espejo due to lower grades and recoveries. As anticipated, gold production soared on account of significant production improvements at Dolores due to more tonnes processed and higher recoveries and at Manantial Espejo due to higher grades and recoveries.
During the three months ended December 31, 2013, Pan American’s operations performed as expected. In Mexico, silver production at La Colorada rose 14% to 1.2 million ounces due to higher throughput, while silver production at Alamo Dorado declined 20% due to mine sequencing, and production at Dolores was practically flat year-on-year. For the full year 2013, La Colorada’s silver production rose 3% to 4.6 million ounces on higher throughput, Alamo Dorado’s production declined 5% to 5.1 million ounces on lower grades and Dolores’ production increased 32% to 3.5 million based on a full year of production compared to three quarters in 2012.
The Company’s Peruvian operations produced a total of 1.5 million ounces of silver during the fourth quarter of 2013. At Huaron, higher milling rates boosted production by 17% year-on-year to 0.9 million ounces and at Morococha, production rose 16% year-on-year to 0.6 million ounces on better grades and recoveries. In 2013, Huaron produced 3.3 million ounces of silver and Morococha produced 2.4 million ounces of silver, 14% and 15% more than in 2012, respectively. The annual production growth was driven by increased mechanized mining rates at Huaron and higher grades and recoveries at Morococha from improved mine developments.
The San Vicente mine in Bolivia had another solid quarter and produced 1.0 million ounces of silver during the final three months of 2013. Production was slightly ahead compared to the last quarter of 2012 as better recoveries offset lower grades. For the full-year 2013, San Vicente contributed 4.0 million ounces to the Company’s consolidated silver production on account of higher mining and milling rates and better recoveries.
Silver production at the Manantial Espejo mine in Argentina fell 16% during the fourth quarter of 2013, to 0.9 million ounces. The production decline was in line with expectations due to the lower silver grade ore mined in accordance with the mine plan sequence. Manantial Espejo’s silver production for the full-year 2013 fell 13% to 3.1 million ounces on account of less tonnes processed and lower grades, partially offset by better recoveries.
Pan American’s consolidated 2013 full-year gold production rose 33% to 149,800 ounces compared to 2012 on account of 65,230 ounces produced at Dolores and 60,820 ounces produced at Manantial Espejo. Dolores’ production increase of 50% compared to the previous year was due to having only three quarters of ownership included in 2012, more tonnes processed, better grades, and better recoveries, while Manantial Espejo’s 40% increase compared to 2012 was due to higher grades and recoveries.
The Company’s full-year 2013 base metals production came in above guidance at 42,100 tonnes of zinc, 13,500 tonnes of lead and 5,500 tonnes of copper, which was 14%, 10% and 33% more than in 2012, respectively. The increases were mainly due to greater production from the Company’s Peruvian mines and from the La Colorada mine.
Consolidated cash costs during the fourth quarter of 2013 decreased 19% to $9.56 per ounce of silver, net of by-product credits, as compared to the same period in 2012. Cash costs for the full-year 2013 were $10.81 per ounce of silver, net of by-product credits, or 10% below cash costs in 2012. The Company’s cost savings measures implemented earlier in 2013 proved to have the greatest success at San Vicente and the Company’s Peruvian operations, where significant cost reductions were achieved. These reductions were partially offset by cost increases at Alamo Dorado, where lower grades had a negative effect on production and costs, and at Dolores, where costs rose mainly on pre-stripping expenditures.
AISCSOS for the three months ended December 31, 2013 were $17.03, net of by-products, 33% lower year-on-year. AISCSOS for the full-year 2013 were $18.33, net of by-products, which was 18% lower than in 2012. For a reconciliation of the calculation of AISCSOS, please refer to the table on the final page of this news release.
In 2013, Pan American spent $159.4 million in sustaining and longer-term capital at its seven operations, primarily for open pit pre-stripping at Dolores, Alamo Dorado and Manantial Espejo, in addition to underground developments at Manantial Espejo, Huaron and Morococha, tailings dam or leach pad expansions at La Colorada, Huaron and Dolores, and equipment replacements and rebuilds, infrastructure upgrades and mine-site exploration across all seven mines.
On December 18, 2013, Pan American announced its decision to proceed with the production expansion project at the La Colorada mine, based on the results of a positive preliminary economic assessment (“PEA”). The PEA demonstrates a solid, relatively low-risk expansion project that has the potential to provide robust after-tax economic returns using a long-term price of $19.00 per silver ounce. The expansion will increase the mine’s silver production rate to approximately 7.7 million ounces of silver annually by the end of 2017, for an incremental capital investment of $80 million, the majority of which will be spent from 2014 until 2017.
2014 Outlook
In 2014, Pan American expects to produce 25.75 to 26.75 million ounces of silver and 155,000 to 165,000 ounces of gold at consolidated cash costs of between $11.70 and $12.70 per ounce of silver, net of by-product credits. The Company also expects to produce 39,500 to 42,500 tonnes of zinc, 12,700 to 13,700 tonnes of lead and 5,200 to 5,700 tonnes of copper.
The Company also plans to invest $95.5 million in sustaining capital. The sustaining capital is primarily for open pit pre-stripping at Dolores and Manantial Espejo, tailings dam expansion at La Colorada, underground developments at Huaron and Morococha and mine-site exploration across all seven mines. The Company also expects to spend $67.0 million on long-term projects, primarily for advancing the La Colorada mine expansion, as well as for the expansion of leach pad 3, the power line project and some production expansion studies at Dolores.
For details of the Company’s 2014 forecast production and capital expenditures by mine, please refer to the news release dated January 20, 2014.
In 2014, Pan American expects AISCSOS in the range of $17.00 to $18.00, net of by-product credits. The Company has adopted the reporting of AISCSOS as a measure of a silver mining company’s consolidated operating performance and the ability to generate cash flow from all operations collectively. The Company believes it is a more comprehensive measure of the cost of operating our consolidated business than traditional cash and total costs per ounce as it includes the cost of replacing ounces through exploration, the cost of ongoing capital investments (sustaining capital), general and administrative expenses, as well as other items that affect the Company’s consolidated earnings and cash flow. The following table details Pan American’s expected range of AISCSOS for this year:
Guidance 2014
Low High
Cash cost of sales net of by-
products $ 298,000 $ 306,500
Sustaining capital 95,500 95,500
Exploration 15,750 15,750
Reclamation cost accretion 3,000 3,000
General & administrative
expense 19,600 19,600
All-in sustaining costs A $ 431,850 $ 440,350
Payable ounces sold B 25,400,000 24,460,000
All-in sustaining cost per
silver ounce sold, net of (A*$1000)
by-products /B $ 17.00 $ 18.00
***
About Pan American
Pan American Silver’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. Pan American also owns several development projects in the USA, Mexico, Peru and 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 these results on Thursday, February 20, 2014 at 1:00 pm EST (10:00 am PST). To participate in the conference, please dial toll number 1-604-638-5340.
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| | A live audio webcast and Power Point presentation will be available at http:/| | /services.choruscall.ca/links/pan140220.html. The call and webcast will also| | be available for replay for one week after the call by dialing 1-604-638-9010| | and entering code # 6218 followed by the # sign. | +-----------------------------------------------------------------------------+
NON-GAAP MEASURE – CASH COSTS PER OUNCE, NET OF BY-PRODUCT CREDITS
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, NET OF BY-PRODUCT CREDITS IS CALCULATED AS FOLLOWS:
* EXCEPT AS OTHERWISE NOTED, CASH COSTS PER OUNCE PRODUCED IS CALCULATED
BY DIVIDING TOTAL CASH COSTS, NET OF BY-PRODUCT CREDITS 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, NET OF BY-PRODUCT CREDITS 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, NET OF BY-PRODUCT CREDITS 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, NET OF BY-PRODUCT CREDITS 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, NET OF BY-PRODUCT CREDITS MAY DIFFER FROM THE METHODS USED BY OTHER ENTITIES AND, ACCORDINGLY, OUR CASH COSTS PER OUNCE PRODUCED MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURED USED BY OTHER ENTITIES.
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 OR INFORMATION. FORWARD-LOOKING STATEMENTS OR INFORMATION IN THIS NEWS RELEASE RELATE TO, AMONG OTHER THINGS: OUR PRODUCTION OF SILVER, GOLD AND OTHER METALS IN 2014; OUR ESTIMATED CASH COSTS PER OUNCE OF SILVER IN 2013 AND FORECAST CASH COSTS PER OUNCE OF SILVER IN 2014; OUR ESTIMATED AISCSOS FOR 2014; OUR ANTICIPATED CAPITAL INVESTMENTS FOR 2014; THE ABILITY OF THE COMPANY TO SUCCESSFULLY COMPLETE ANY CAPITAL INVESTMENT PROGRAMS AND PROJECTS AND THE IMPACTS OF ANY SUCH PROGRAMS AND PROJECTS ON THE COMPANY; AND ANY ANTICIPATED LEVEL OF FINANCIAL AND OPERATIONAL SUCCESS IN 2014.
THESE STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE NECESSARILY BASED UPON A NUMBER OF ASSUMPTIONS THAT, WHILE CONSIDERED REASONABLE BY THE COMPANY, ARE INHERENTLY SUBJECT TO SIGNIFICANT OPERATIONAL, BUSINESS, ECONOMIC AND REGULATORY UNCERTAINTIES AND CONTINGENCIES. THESE ASSUMPTIONS INCLUDE: TONNAGE OF ORE TO BE MINED AND PROCESSED; ORE GRADES AND RECOVERIES; PRICES FOR SILVER, GOLD AND BASE METALS; CAPITAL, DECOMMISSIONING AND RECLAMATION ESTIMATES; OUR MINERAL RESERVE AND RESOURCE ESTIMATES AND THE ASSUMPTIONS UPON WHICH THEY ARE BASED; PRICES FOR ENERGY INPUTS, LABOUR, MATERIALS, SUPPLIES AND SERVICES (INCLUDING TRANSPORTATION); NO LABOUR-RELATED DISRUPTIONS AT ANY OF OUR OPERATIONS: NO UNPLANNED DELAYS IN OR INTERRUPTIONS IN SCHEDULED PRODUCTION; ALL NECESSARY PERMITS, LICENCES AND REGULATORY APPROVALS FOR OUR OPERATIONS ARE RECEIVED IN A TIMELY MANNER; AND OUR ABILITY TO COMPLY WITH ENVIRONMENTAL, HEALTH AND SAFETY LAWS. THE FOREGOING LIST OF ASSUMPTIONS IS NOT EXHAUSTIVE.
THE COMPANY CAUTIONS THE READER THAT FORWARD-LOOKING STATEMENTS AND INFORMATION INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS AND DEVELOPMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS OR INFORMATION CONTAINED IN THIS NEWS RELEASE AND THE COMPANY HAS MADE ASSUMPTIONS AND ESTIMATES BASED ON OR RELATED TO MANY OF THESE FACTORS. SUCH FACTORS INCLUDE, WITHOUT LIMITATION: FLUCTUATIONS IN SILVER, GOLD AND BASE METALS PRICES; FLUCTUATIONS IN PRICES FOR ENERGY INPUTS, LABOUR, MATERIALS, SUPPLIES AND SERVICES (INCLUDING TRANSPORTATION); FLUCTUATIONS IN CURRENCY MARKETS (SUCH AS THE CANADIAN DOLLAR, PERUVIAN SOL, MEXICAN PESO AND BOLIVIAN BOLIVIANO VERSUS THE U.S. DOLLAR); OPERATIONAL RISKS AND HAZARDS INHERENT WITH THE BUSINESS OF MINING (INCLUDING ENVIRONMENTAL ACCIDENTS AND HAZARDS, INDUSTRIAL ACCIDENTS, EQUIPMENT BREAKDOWN, UNUSUAL OR UNEXPECTED GEOLOGICAL OR STRUCTURAL FORMATIONS, CAVE-INS, FLOODING AND SEVERE WEATHER); RISKS RELATING TO THE CREDIT WORTHINESS OR FINANCIAL CONDITION OF SUPPLIERS, REFINERS AND OTHER PARTIES WITH WHOM THE COMPANY DOES BUSINESS; INADEQUATE INSURANCE, OR INABILITY TO OBTAIN INSURANCE, TO COVER THESE RISKS AND HAZARDS; EMPLOYEE RELATIONS; RELATIONSHIPS WITH, AND CLAIMS BY, LOCAL COMMUNITIES AND INDIGENOUS POPULATIONS; OUR ABILITY TO OBTAIN ALL NECESSARY PERMITS, LICENSES AND REGULATORY APPROVALS IN A TIMELY MANNER;CHANGES IN LAWS, REGULATIONS AND GOVERNMENT PRACTICES IN THE JURISDICTIONS WHERE WE OPERATE, INCLUDING ENVIRONMENTAL, EXPORT AND IMPORT LAWS AND REGULATIONS; DIMINISHING QUANTITIES OR GRADES OF MINERAL RESERVES AS PROPERTIES ARE MINED; INCREASED COMPETITION IN THE MINING INDUSTRY FOR EQUIPMENT AND QUALIFIED PERSONNEL; AND THOSE FACTORS IDENTIFIED UNDER THE CAPTION “RISKS RELATED TO PAN AMERICAN’S BUSINESS” IN 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. 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. INVESTORS ARE CAUTIONED AGAINST UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS AND INFORMATION. FORWARD-LOOKING STATEMENTS AND INFORMATION ARE DESIGNED TO HELP READERS UNDERSTAND MANAGEMENT’S CURRENT VIEWS OF OUR NEAR AND LONGER TERM PROSPECTS AND MAY NOT BE APPROPRIATE FOR OTHER PURPOSES. THE COMPANY DOES NOT INTEND, NOR DOES IT ASSUME ANY OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS AND INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, CHANGES IN ASSUMPTIONS, FUTURE EVENTS OR OTHERWISE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE LAW.
Pan American Silver Corp. Financial & Operating Highlights
Three months ended Twelve months ended
December 31, December 31,
2013 2012^(1) 2013 2012^(1)
Consolidated Financial
Highlights
(Unaudited in thousands of
U.S. Dollars)
Net (loss) earnings for the $ (293,064) $ (31,535) $ (445,846) $ 78,355
period
(Loss) earnings per share $ (1.94) $ (0.18) $ (2.94) $ 0.56
attributable to common
shareholders (basic)
Adjusted (loss) earnings for
the period^(2) $ (84,306) $ 55,119 $ (49,502) $ 166,814
Mine operating earnings $ 18,955 $ 85,091 $ 131,519 $ 303,945
Net cash generated from $ 46,156 $ 81,603 $ 119,606 $ 193,305
operating activities
Capital spending $ (33,669) $ (65,269) $ (159,401) $ (159,915)
Dividends paid $ (18,881) $ (7,618) $ (75,755) $
(24,919)
Shares repurchased $ - $ (10,719) $ (6,740) $
(41,749)
Cash and short-term $ 422,722 $ 542,324 $ 422,722 $ 542,324
investments
Working capital^(3) $ 689,032 $ 763,980 $ 689,032 $ 763,980
Consolidated Metals Recovered
Silver metal - ounces 6,799,911 6,894,166 25,959,338 25,075,298
Gold metal - ounces 46,227 32,381 149,815 112,283
Zinc metal - tonnes 11,271 8,886 42,141 36,848
Lead metal - tonnes 3,465 2,805 13,499 12,266
Copper metal - tonnes 1,688 1,137 5,543 4,162
Average Price Realized
Silver metal ($/oz) $ 20.28 $ 33.41 $ 23.29 $ 31.26
Gold metal ($/oz) $ 1,285 $ 1,729 $ 1,398 $ 1,672
Consolidated Cost per Ounce of Silver
(net of by-product credits)^ (4)
Total cash cost per ounce $ 9.56 $ 11.75 $ 10.81 $ 12.03
Total production cost per $ 14.57 $ 16.12 $ 16.56 $ 16.88
ounce
All-in Sustaining Cost per
Silver Ounce Sold (net of
by-product credits)^(5) $ 17.03 $ 25.54 $ 18.33 $ 22.26
Payable ounces of silver 6,421,156 6,558,268 24,586,527 23,746,108
(used in cost per ounce
calculations)
^ Certain 2012 balances have been recast to reflect the effects of finalizing
(1) the purchase price allocation of the Minefinders transaction during the
2013 first quarter.
^ Adjusted earnings (loss) is a non-GAAP measure. Adjusted earnings (loss)
(2) is calculated as net (loss) 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, realized and unrealized losses on silver and gold
forward contracts, severance expense, the transaction costs arising from
the Minefinders transaction, gain or loss on sale of assets, and the effect
for taxes on the above items. 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 2013 2012 2013 2012
Reconciliation
Net (loss) earnings for $ (293,064) $ (31,535) $ (445,846) $ 78,355
the period
Adjust derivative gains (1,249) (14,203) (16,715) (24,159)
Adjust unrealized (656) (584) (922) 6,124
foreign exchange
(gains) losses
Adjust realized (gains)
losses on silver and
gold hedge program (1,127) - 5,127 -
Adjust realized and
unrealized (gains)
losses on commodity
contracts 260 (34) 25 (25)
Adjust severance and - - 617 16,162
acquisition costs
Adjust gain on sale of (5,969) 1,466 (14,068) (9,652)
mineral properties
Adjust write-down of 336,785 100,009 540,228 100,009
mining assets
Adjust for effect of (119,286) - (117,948) -
taxes on above items
Adjusted (loss) $ (84,306) $ 55,119 $ (49,502) $ 166,814
earnings for the period
^ Working capital is a non-GAAP measure calculated as current assets less
(3) 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.
^ Consolidated cost per ounce of silver is a non-GAAP measure. The Company
(4) 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.
^ The Company has adopted the reporting of All-In Sustaining Costs per Silver
(5) Ounce Sold ("AISCSOS") as a measure of a silver mining company's
consolidated operating performance and the ability to generate cash flow
from all operations collectively. We believe it is a more comprehensive
measure of the cost of operating our consolidated business than traditional
cash and total costs per ounce as it includes the cost of replacing ounces
through exploration, the cost of ongoing capital investments (sustaining
capital), general and administrative expenses, as well as other items that
affect the Company's consolidated earnings and cash flow.
Pan American Silver Corp.
Consolidated Statements of Financial
Position
As at December 31, 2013 and 2012
(Unaudited in thousands of U.S. dollars)
December 31, December 31,
2013 2012 (Recast)
Assets
Current assets
Cash and cash equivalents $ 249,937 $ 346,208
Short-term investments 172,785 196,116
Trade and other receivables 114,782 134,612
Income taxes receivable 40,685 18,671
Inventories 284,352 266,663
Derivative financial instruments - 25
Prepaids and other current assets 9,123 9,546
871,664 971,841
Non-current assets
Mineral property, plant and equipment 1,870,678 2,205,252
Long-term refundable tax 9,801 9,937
Deferred tax assets 165 1,358
Other assets 8,014 7,291
Goodwill 7,134 198,946
Total Assets $ 2,767,456 $ 3,394,625
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 125,609 $ 136,149
Loan payable 20,095 -
Provisions 3,172 7,022
Current portion of finance lease 4,437 12,473
Current income tax liabilities 29,319 52,217
182,632 207,861
Non-current liabilities
Provisions 43,817 45,661
Deferred tax liabilities 285,947 326,171
Share purchase warrants 207 8,594
Long-term portion of finance lease 5,717 24,377
Long-term debt 34,302 41,134
Other long-term liabilities 26,045 23,256
Total Liabilities 578,667 677,054
Equity
Capital and reserves
Issued capital 2,295,208 2,300,517
Share option reserve 21,110 20,560
Investment revaluation reserve (137) 964
Retained (deficit) earnings (133,847) 388,202
Total Equity attributable to equity
holders of the Company 2,182,334 2,710,243
Non-controlling interests 6,455 7,328
Total Equity 2,188,789 2,717,571
Total Liabilities and Equity $ 2,767,456 $ 3,394,625
Pan American Silver Corp.
Consolidated Income Statements (Unaudited in thousands of U.S. dollars, except for share and per share
amounts)
Three months ended Twelve months ended
December 31, December 31,
2012 2012
2013 (Recast) 2013 (Recast)
Revenue $ 192,360 $ 247,335 $ 824,504 $ 928,594
Cost of sales
Production (136,223) (126,654) (530,613) (485,163)
costs
Depreciation (31,612) (29,897) (135,913) (104,409)
and
amortization
Royalties (5,570) (5,693) (26,459) (35,077)
(173,405) (162,244) (692,985) (624,649)
Mine operating earnings $ 18,955 $ 85,091 $ 131,519 $ 303,945
General and administrative (2,602) (4,638) (17,596) (20,790)
Exploration and project development (990) (10,405) (15,475) (36,746)
Impairment charge (336,785) (100,009) (540,228) (100,009)
Acquisition costs - - - (16,162)
Foreign exchange (losses) gains (5,958) 4,883 (14,637) 5,577
Gains (losses) on commodity and foreign currency contracts 1,049 279 (4,551) 421
Gain on sale of assets 5,969 1,466 14,068 9,652
Other income and expenses 10,210 - 8,287 5,370
(Loss) earnings from continuing operations (310,152) (23,333) (438,613) 151,258
Gain on derivatives 1,249 14,203 16,715 24,159
Investment (loss) income (592) 3,032 3,086 6,178
Interest and finance expense (2,902) (3,326) (10,277) (7,678)
(Loss) earnings before income taxes (312,397) (9,424) (429,089) 173,917
Income tax recovery (expense) 19,333 (22,111) (16,757) (95,562)
Net (loss) earnings for the period $ (293,064) $ (31,535) $ (445,846) $ 78,355
Attributable to:
Equity $ (293,615) $ (31,184) $ (445,851) $ 78,201
holders
of the
Company
Non-controlling 551 (351) 5 154
interests
$ (293,064) $ (31,535) $ (445,846) $ 78,355
Earnings per share attributable to common shareholders
Basic earnings per share $ (1.94) $ (0.18) $ (2.94) $ 0.56
Diluted earnings per share $ (1.94) $ (0.23) $ (2.96) $ 0.49
Weighted average shares outstanding (in 000's) Basic 151,428 152,332 151,501 140,883
Weighted average shares outstanding (in 000's) Diluted 151,428 154,259 153,430 142,442
Consolidated Statements of Comprehensive Income
(unaudited in thousands of U.S. dollars)
Three months ended Twelve months ended
December 31, December 31,
2012 2012
2013 (Recast) 2013 (Recast)
Net (loss) earnings for the period $ (293,064) $ (31,535) $ (445,846) $ 78,355
Unrealized net gains (loss) on available for sale
securities
(net of zero dollars tax) 171 1,298 (39) 2,452
Reclassification adjustment for net loss included in 651 (2,570) (1,062) (3,634)
earnings
Total comprehensive (loss) income for the period $ (292,242) $ (32,807) $ (446,947) $ 77,173
Total comprehensive (loss) income attributable to:
Equity holders of the Company $ (292,793) $ (32,456) $ (446,952) $ 77,019
Non-controlling interests 551 (351) 5 154
$ (291,242) $ (33,807) $ (446,947) $ 77,173
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,
2013 2012 2013 2012
Cash flow from operating
activities
Net (loss) earnings for $ (293,064) $ (31,535) $ (445,846) $ 78,355
the year
Current income tax 12,523 33,549 55,691 101,050
expense
Deferred income tax (31,856) (11,438) (38,934) (5,488)
(recovery) expense
Depreciation and 31,612 29,897 135,913 104,408
amortization
Impairment charge 336,785 100,009 540,228 100,009
Accretion on closure and 757 655 3,030 2,999
decommissioning provision
Unrealized (gains) losses (656) (584) (922) 6,124
on foreign exchange
Stock-based compensation 67 (574) 2,173 4,142
expense
Unrealized (gains) losses (1,800) (34) 25 (25)
on commodity contracts
Gain on derivatives (1,249) (14,203) (16,715) (24,159)
Gain on sale of assets (5,969) (1,466) (14,068) (9,652)
Changes in non-cash 21,366 (2,208) (1,673) (11,061)
operating working capital
Operating cash flows 68,516 102,068 218,902 346,702
before interest and
income taxes
Interest paid (309) (1,890) (3,425) (3,639)
Interest received 80 591 2,138 2,575
Income taxes paid (22,131) (19,166) (98,009) (152,333)
Net cash generated from 46,156 81,603 119,606 193,305
operating activities
Cash flow from investing
activities
Payments for mineral (33,669) (65,269) (159,401) (159,915)
property, plant and
equipment
(Purchase) maturity of 41,187 (77,083) 19,920 30,383
short term investments
Acquisition of - - - 86,528
Minefinders, net of cash
acquired
Proceeds from sale of 5,476 410 13,681 1,692
mineral property, plant
and equipment
Net refundable tax and 371 1,072 452 1,989
other asset expenditures
Net cash used in 13,365 (140,870) (125,348) (39,323)
investing activities
Cash flow from financing
activities
Proceeds from issue of - 514 - 3,195
equity shares
Shares repurchased and - (10,719) (6,740) (41,749)
cancelled
Dividends paid (18,881) (7,618) (75,755) (24,919)
Proceeds from short term 4,870 - 23,494 -
loan
Payments of construction (2,554) (1,745) (30,238) (6,213)
and equipment leases Net (distributions to)/ (621) (530) (923) (1,074)
contributions from
non-controlling interests
Net cash used in (17,186) (20,098) (90,162) (70,760)
financing activities
Effects of exchange rate (24) (828) (367) 85
changes on cash
Net (decrease) increase 42,311 (80,193) (96,271) 83,307
in cash
Cash at the beginning of 207,626 426,401 346,208 262,901
the period
Cash at the end of the $ 249,937 $ 346,208 $ 249,937 $ 346,208
period
Supplemental Cash Flow
Information
Significant Non-Cash
Items
Fair value of shares $ - $ - $ - $ 1,088,104
issued as part of
Minefinders acquisition
Replacement options $ - $ - $ - $ 10,739
issued as part of
Minefinders acquisition
Post acquisition $ - $ - $ - $ 699
expenditures associated
with the replacement
options
Advances received for $ 331 $ 4,021 $ 3,331 $ 11,538
construction and
equipment leases
Stock compensation issued $ 971 $ 929 $ 1,035 $ 1,060
to employees and
directors
Mine Operations
Highlights
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
La Colorada Mine
Tonnes milled 117,661 106,396 448,659 419,591
Average silver grade -
grams per tonne 366 377 352 374
Average silver recovery
- % 89.9 90.3 89.9 89.6
Silver ^(1) - ounces 1,246,193 1,096,603 4,566,377 4,431,111
Gold - ounces 682 737 2,579 3,578
Zinc - tonnes 1,858 1,511 6,759 5,599
Lead - tonnes 869 726 3,324 2,766
Payable ounces of
silver 1,191,274 1,043,125 4,364,727 4,215,075
Cash cost per ounce of
silver net of
by-product credits
Cash cost per ounce net
of by-products^(2) $ 8.20 $ 8.50 $ 9.43 $ 8.64
Total cost per ounce
net of by-products^(2) $ 10.09 $ 9.94 $ 11.27 $ 9.96
Capital Expenditures -
thousands $ 2,250 $ 8,689 $ 13,574 $ 21,700
^(1) Reported metals figures in the tables in this section are quantities
of metal produced.
^(2) Cash costs per ounce and total costs per ounce are non-GAAP
measurements.
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
Alamo Dorado Mine
Tonnes milled 460,004 429,544 1,790,317 1,697,941
Average silver grade -
grams per tonne 98 128 101 116
Average gold grade -
grams per tonne 0.41 0.35 0.36 0.38
Average silver recovery
- % 83.8 87.2 87.1 85.6
Silver ^(1) - ounces 1,238,670 1,556,689 5,078,807 5,364,011
Gold - ounces 5,943 4,564 17,600 17,966
Copper - tonnes 49 49 123 117
Payable ounces of
silver 1,228,465 1,551,171 5,042,779 5,345,677
Cash cost per ounce of
silver net of
by-product credits
Cash cost per ounce net
of by-products^(2) $ 8.81 $ 4.67 $ 7.45 $ 5.05
Total cost per ounce
net of by-products^(2) $ 11.81 $ 7.65 $ 10.98 $ 7.95
Capital Expenditures -
thousands $ 542 $ 4,405 $ 7,621 $ 10,936
^(1) Reported metals figures in the tables in this section are quantities
of metal produced.
^(2) Cash costs per ounce and total costs per ounce are non-GAAP
measurements.
Three months Twelve Nine months
months
ended ended ended
December 31, December December
31, 31,*
2013 2012 2013 2012
Dolores Mine
Tonnes processed 1,223,153 1,508,506 5,351,851 4,346,595
Average silver grade - grams 45 46 48 42
per tonne
Average gold grade - grams per 0.43 0.38 0.46 0.40
tonne
Average silver recovery - % 51.9 41.4 42.7 45.7
Average gold recovery - % 91.4 80.2 82.1 78.0
Silver^(1) - ounces 922,442 930,113 3,502,522 2,652,851
Gold - ounces 15,604 14,698 65,230 43,476
Payable ounces of silver 920,136 927,788 3,493,766 2,646,219
Cash cost per ounce of silver
net of by-product credits
Cash cost per ounce net of $ 13.77 $ 3.78 $ 7.47 $ 4.05
by-products^(2)
Total cost per ounce net of $ 23.57 $ 10.8 $ 20.12 $ 16.88
by-products^(2)
Capital Expenditures^(3) - $ 10,411 $ 18,972 $ 36,159 $ 35,352
thousands
* The Dolores mine was acquired with effect from April 1, 2012 and therefore
the operations under Pan American's ownership
as only for the nine months ended December 31, 2012.
^ Reported metals figures in the tables in this section are quantities of
(1) metal produced.
^ Cash costs per ounce and total costs per ounce are non-GAAP measurements.
(2)
^ Sustaining capital expenditures excluding $8,702, $11,749, $50,482 and
(3) $21,766 for the periods presented, respectively, in
capital incurred on the leach pad projects and other expansion projects.
Three months Twelve months ended
ended
December 31, December 31,
2013 2012 2013 2012
Huaron Mine
Tonnes milled 218,731 173,895 802,300 683,483
Average silver grade - grams per 154 163 158 162
tonne
Average zinc grade - % 2.4 2.5 2.5 2.5
Average silver recovery - % 81.8 83.4 81.8 81.7
Silver ^(1) - ounces 885,178 753,373 3,303,595 2,909,890
Gold - ounces 263 185 936 655
Zinc - tonnes 3,511 2,990 14,017 11,824
Lead - tonnes 1,486 1,127 5,842 4,727
Copper - tonnes 988 622 3,395 2,257
Payable ounces of silver 761,228 643,351 2,883,758 2,506,481
Cash cost per ounce of silver net
of by-product credits
Cash cost per ounce net of $ 12.91 $ 21.81 $ 14.61 $ 17.51
by-products^(2)
Total cost per ounce net of $ 17.02 $ 24.74 $ 18.65 $ 21.02
by-products^(2)
Capital Expenditures - thousands $ 3,019 $ 10,810 $ 15,474 $ 22,936
^(1) Reported metals figures in the tables in this section are quantities of
metal produced.
^(2) Cash costs per ounce and total costs per ounce are non-GAAP measurements.
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
Morococha Mine*
Tonnes milled 143,000 141,954 573,295 535,086
Average silver grade - grams per tonne 161 141 149 143
Average zinc grade - % 3.7 2.7 3.2 2.8
Average silver recovery - % 88.1 86.9 87.9 84.9
Silver^(1) - ounces 642,681 551,760 2,396,767 2,083,726
Gold - ounces 906 694 2,650 2,840
Zinc - tonnes 4,313 3,089 15,165 11,925
Lead - tonnes 945 859 3,769 3,601
Copper - tonnes 650 467 2,026 1,502
Payable ounces of silver 543,937 472,490 2,049,487 1,776,333
Cash cost per ounce of silver net of by-product credits
Cash cost per ounce net of by-products^(2) $ 11.95 $ 25.96 $ 17.56 $ 23.48
Total cost per ounce net of by-products^(2) $ 20.45 $ 32.01 $ 26.17 $ 29.75
Capital Expenditures - thousands^(3) $ 2,822 $ 6,585 $ 18,652 $ 20,805
* Production figures are Pan American's share only. Pan American's ownership is
92.3%
^(1) Reported metals figures in the tables in this section are quantities of
metal produced.
^(2) Cash costs per ounce and total costs per ounce are non-GAAP measurements.
^(3) Sustaining capital expenditures excluding $837 and $6,389 for the 2012
period presented, respectively,
in capital incurred on the Morococha relocation project.
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
San Vicente Mine*
Tonnes milled 79,714 79,613 319,433 306,063
Average silver grade - grams per tonne 415 422 412 419
Average zinc grade - % 2.6 2.2 2.5 2.2
Average silver recovery - % 93.4 91.1 93.8 90.7
Silver^(1) - ounces 993,624 971,031 3,967,263 3,726,024
Zinc - tonnes 1,588 1,296 6,201 4,918
Lead - tonnes 166 93 564 432
Payable ounces of silver 906,736 887,816 3,614,290 3,390,683
Cash cost per ounce of silver net of by-product credits
Cash cost per ounce net of by-products^(2) $ 14.53 $ 19.84 $ 15.51 $ 18.92
Total cost per ounce net of by-products^(2) $ 17.05 $ 22.86 $ 18.07 $ 22.05
Capital Expenditures - thousands $ 1,864 $ 810 $ 8,165 $ 3,053
* Production figures are Pan American's share only. Pan American's ownership is
95%
^(1) Reported metals figures in the tables in this section are quantities of
metal produced.
^(2) Cash costs per ounce and total costs per ounce are non-GAAP
measurements.
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
Manantial Espejo Mine
Tonnes milled 191,375 187,790 719,607 734,335
Average silver grade - grams per 159 182 150 170
tonne
Average gold grade - grams per 4.16 2.09 2.81 1.94
tonne
Average silver recovery - % 91.6 91.9 91.3 89.8
Average gold recovery - % 96.2 95.0 95.4 94.2
Silver ^(1) - ounces 871,123 1,034,596 3,144,008 3,632,550
Gold - ounces 22,829 11,503 60,820 43,339
Payable ounces of silver 869,381 1,032,527 3,137,720 3,625,285
Cash cost per ounce of silver net
of by-product credits
Cash cost per ounce net of $ (1.58) $ 13.08 $ 8.55 $ 14.65
by-products^(2)
Total cost per ounce net of $ 6.67 $ 21.41 $ 19.03 $ 22.73
by-products^(2)
Capital Expenditures - thousands $ 4,362 $ 4,277 $ 12,002 $ 15,858
^(1) Reported metals figures in the tables in this section are quantities
of metal produced.
^(2) Cash costs per ounce and total costs per ounce are non-GAAP
measurements.
Total Cash Costs and Total Production Costs per Ounce of Payable Silver, net
of by-product credits
(Unaudited in thousands of U.S. dollars)
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
Production costs $ 136,223 $ 126,654 $ 530,613 $ 485,163
Add/(Subtract)
Royalties 5,570 5,693 26,459 35,077
Smelting,
refining, and 19,902 18,746 76,837 68,098
transportation
charges
Worker's
participation and (531) (407) (1,067) (1,573)
voluntary payments
Change in 4,050 11,491 (625) 11,358
inventories
Other 1,311 1,480 (5,408) (2,475)
Non-controlling (1,207) (1,968) (5,967) (6,914)
interests^(2)
Metal Inventory (8,411) - (12,967) -
writedown
Cash Operating
Costs before 156,907 161,689 607,875 588,734
by-product credits
Less gold credit (57,880) (54,822) (205,207) (184,300)
Less zinc credit (18,683) (15,058) (69,776) (62,155)
Less lead credit (7,090) (6,030) (27,757) (24,676)
Less copper (11,851) (8,741) (39,341) (31,904)
credit
Cash Operating
Costs net of A 61,403 77,038 265,794 285,699
by-product credits
Add/(Subtract)
Depreciation and 31,612 29,897 135,913 104,409
amortization
Closure and
decommissioning 758 655 3,030 2,999
provision
Change in 525 (1,512) 5,451 10,017
inventories
Other (248) - (971) (746)
Non-controlling (494) (384) (1,964) (1,504)
interests^(2)
Total Production
Costs net of B 93,556 105,694 407,254 400,874
by-product credits^
(1)
Payable Silver C
Production (oz.) 6,421,156 6,558,268 24,586,527 23,746,108
Total Cash Costs
per ounce net of (A*$1000) $ 9.56 $ 11.75 $ 10.81 $ 12.03
by-product credits /C
Total Production
Costs per ounce net (B*$1000) $ 14.57 $ 16.12 $ 16.56 $ 16.88
of by-product /C
credits
(1) Figures in this table and in the associated tables below may not add due to
rounding.
(2) Figures presented in the reconciliation table above are on a 100% basis as
presented in the statements with an adjustment line item to account for the
portion of the Morococha and San Vicente mines owned by non-controlling
interests, an expense item not included in operating cash costs. The
associated tables below are for the Company's share of ownership only.
Three months ended December 31, 2013
La Alamo San Manantial Consolidated
Colorada Dorado Dolores Huaron Morococha Quiruvilca Vicente Espejo Total
Cash Costs
before
by-product
credits A $ 15,161 $ 18,634 $ 32,484 $ 25,266 $ 20,491 $ - $ 16,116 $ 27,464 $ 155,616
Less gold
credit b1 $ (690) $ (7,527) $ (19,818) $ (86) $ (856) $ - $ - $ (28,836) $ (57,812)
Less zinc
credit b2 $ (3,001) $ - -$ - $ (5,595) $ (6,863) $ - $ (2,536) $ - $ (17,995)
Less lead
credit b3 $ (1,697) $ - $ - $ (2,944) $ (1,874) $ - $ (402) $ - $ (6,917)
Less copper
credit b4 $ - $ (281) $ - $ (6,816) $ (4,397) $ - $ - $ - $ (11,494)
Sub-total
by-product B=( b1+ b2+
credits b3+ b4) $ (5,388) $ (7,807) $ (19,818) $ (15,441) $ (13,990) $ - $ (2,938) $ (28,836) $ (94,218)
Cash Costs
net of
by-product
credits C=(A+B) $ 9,773 $ 10,827 $ 12,666 $ 9,825 $ 6,501 $ - $ 13,178 $ (1,372) $ 61,398
Depreciation,
amortization
& reclamation D $ 2,245 $ 3,676 $ 9,022 $ 3,132 $ 4,621 $ - $ 2,285 $ 7,173 $ 32,153
Total
production
costs net of
by-product
credits E=(C+D) $ 12,018 $ 14,503 $ 21,688 $ 12,956 $ 11,122 $ - $ 15,463 $ 5,801 $ 93,551
Payable
ounces of
silver F 1,191,274 1,228,465 920,136 761,228 543,937 906,736 869,381 6,421,156
Cash cost per
Ounce of
Silver net of
by-product
credits
Total cash
cost per
ounce net of
by-products =C*1000/F $ 8.20 $ 8.81 $ 13.77 $ 12.91 $ 11.95 $ - $ 14.53 $ (1.58) $ 9.56
Total
production
cost per
ounce net of
by-products =E *1000/F $ 10.09 $ 11.81 $ 23.57 $ 17.02 $ 20.45 $ - $ 17.05 $ 6.67 $ 14.57
Twelve months ended December 31, 2013
La Alamo San Manantial Consolidated
Colorada Dorado Dolores Huaron Morococha Quiruvilca Vicente Espejo Total
Cash Costs
before
by-product
credits A $ 61,554 $ 62,454 $ 117,203 $ 99,909 $ 84,203 $ - $ 67,123 $ 110,810 $ 603,256
Less gold
credit b1 $ (2,894) $ (24,194) $ (91,113) $ (178) $ (2,614) $ - $ - $ (83,995) $ (204,988)
Less zinc
credit b2 $ (10,895) $ - -$ - $ (22,285) $ (24,154) $ - $ (9,898) $ - $ (67,232)
Less lead credit b3 $ (6,605) $ - $ - $ (11,722) $ (7,577) $ - $ (1,157) $ - $ (27,061)
Less copper
credit b4 $ - $ (712) $ - $ (23,605) $ (13,862) $ - $ - $ - $ (38,179)
Sub-total
by-product B=( b1+ b2+
credits b3+ b4) $ (20,394) $ (24,906) $ (91,113) $ (57,790) $ (48,207) $ - $ (11,055) $ (83,995) $ (337,460)
Cash Costs
net of
by-product
credits C=(A+B) $ 41,160 $ 37,548 $ 26,090 $ 42,119 $ 35,996 $ - $ 56,068 $ 26,815 $ 265,796
Depreciation,
amortization
& reclamation D $ 8,010 $ 17,813 $ 44,211 $ 11,667 $ 17,649 $ - $ 9,226 $ 32,885 $ 141,461
Total
production
costs net of
by-product
credits E=(C+D) $ 49,170 $ 55,361 $ 70,301 $ 53,786 $ 53,645 $ - $ 65,294 $ 59,700 $ 407,257
Payable
ounces of
silver F 4,364,727 5,042,779 3,493,766 2,883,758 2,049,487 3,614,290 3,137,720 24,586,527
Cash cost per
Ounce of
Silver net of
by-product
credits
Total cash
cost per
ounce net of
by-products =C*1000/F $ 9.43 $ 7.45 $ 7.47 $ 14.61 $ 17.56 $ - $ 15.51 $ 8.55 $ 10.81
Total
production
cost per
ounce net of
by-products =E *1000/F $ 11.27 $ 10.98 $ 20.12 $ 18.65 $ 26.17 $ - $ 18.07 $ 19.03 $ 16.56
Three months ended December 31, 2012
La Alamo San Manantial Consolidated
Colorada Dorado Dolores Huaron Morococha Quiruvilca Vicente Espejo Total
Cash Costs
before
by-product 160,613
credits A $ 13,920 $ 15,368 $ 28,734 $ 25,912 $ 23,463 $ - $ 20,009 $ 33,207 $
Less gold
credit b1 $ (1,063) $ (7,810) $ (25,225) $ (20) $ (922) $ - $ - $ (19,706) $ (54,746)
Less zinc
credit b2 $ (2,507) $ - -$ - $ (4,837) $ (5,048) $ - $ (2,126) $ - $ (14,518)
Less lead
credit b3 $ (1,479) $ - $ - $ (2,336) $ (1,777) $ - $ (273) $ - $ (5,865)
Less copper
credit b4 $ - $ (310) $ - $ (4,690) $ (3,448) $ - $ - $ - $ (8,448)
Sub-total
by-product B=( b1+ b2+
credits b3+ b4) $ (5,048) $ (8,120) $ (25,225) $ (11,882) $ (11,195) $ - $ (2,399) $ (19,706) $ (83,575)
Cash Costs
net of
by-product
credits C=(A+B) $ 8,872 $ 7,248 $ 3,509 $ 14,030 $ 12,268 $ - $ 17,610 $ 13,501 $ 77,038
Depreciation,
amortization
& reclamation D $ 1,493 $ 4,613 $ 6,515 $ 1,886 $ 2,854 $ - $ 2,688 $ 8,607 $ 28,656
Total
production
costs net of
by-product
credits E=(C+D) $ 10,365 $ 11,861 $ 10,024 $ 15,916 $ 15,122 $ - $ 20,298 $ 22,108 $ 105,694
Payable
ounces of
silver F 1,043,125 1,551,171 927,788 643,351 472,490 887,816 1,032,527 6,558,268
Cash cost per
Ounce of
Silver net of
by-product
credits
Total cash
cost per
ounce net of
by-products =C*1000/F $ 8.50 $ 4.67 $ 3.78 $ 21.81 $ 25.96 $ - $ 19.84 $ 13.08 $ 11.75
Total
production
cost per
ounce net of
by-products =E *1000/F $ 9.94 $ 7.65 $ 10.80 $ 24.74 $ 32.01 $ - $ 22.86 $ 21.41 $ 16.12
Twelve months ended December 31, 2012
La Alamo San Manantial Consolidated
Colorada Dorado Dolores* Huaron Morococha Quiruvilca Vicente Espejo Total
Cash Costs
before
by-product
credits A $ 56,228 $ 57,536 $ 82,926 $ 89,341 $ 82,958 $ 17,219 $ 73,311 $ 125,233 $ 584,752
Less gold
credit b1 $ (5,240) $ (29,809) $ (72,199) $ (197) $ (3,840) $ (550) $ - $ (72,139) $ (183,974)
Less zinc
credit b2 $ (9,270) $ - -$ - $ (19,096) $ (19,281) $ (4,391) $ (8,057) $ - $ (60,096)
Less lead
credit b3 $ (5,304) $ - $ - $ (9,215) $ (6,956) $ (1,448) $ (1,104) $ - $ (24,027)
Less copper
credit b4 $ - $ (746) $ - $ (16,939) $ (11,174) $ (2,097) $ - $ - $ (30,956)
Sub-total
by-product B=( b1+ b2+
credits b3+ b4) $ (19,814) $ (30,555) $ (72,199) $ (45,448) $ (41,250) $ (8,486) $ (9,162) $ (72,139) $ (299,053)
Cash Costs
net of
by-product
credits C=(A+B) $ 36,414 $ 26,981 $ 10,728 $ 43,894 $ 41,707 $ 8,733 $ 64,149 $ 53,093 $ 285,699
Depreciation,
amortization
& reclamation D $ 5,571 $ 15,536 $ 33,931 $ 8,790 $ 11,145 $ 271 $ 10,614 $ 29,317 $ 115,175
Total
production
costs net of
by-product
credits E=(C+D) $ 41,985 $ 42,518 $ 44,659 $ 52,684 $ 52,852 $ 9,004 $ 74,763 $ 82,410 $ 400,874
Payable
ounces of
silver F 4,215,075 5,345,677 2,646,219 2,506,481 1,776,333 240,354 3,390,683 3,625,285 23,746,108
Cash cost per
Ounce of
Silver net of
by-product
credits
Total cash
cost per
ounce net of
by-products =C*1000/F $ 8.64 $ 5.05 $ 4.05 $ 17.51 $ 23.48 $ 36.33 $ 18.92 $ 14.65 $ 12.03
Total
production
cost per
ounce net of
by-products =E *1000/F $ 9.96 $ 7.95 $ 16.88 $ 21.02 $ 29.75 $ 37.46 $ 22.05 $ 22.73 $ 16.88 * The Dolores mine was acquired with effect from March 30, 2012 and therefore the operations under Pan American’s ownership are only for the nine months ended December 31, 2012.
** The Quiruvilca mine was sold to a private company effective June 1, 2012.
All-In Sustaining Cost per Silver Ounce Sold
Three months ended Twelve months ended
December 31, December 31,
2013 2012 2013 2012
Production costs $ 136,223 $ 126,654 $ 530,614 $ 485,163
Royalties $ 5,570 $ 5,693 $ 26,459 $ 35,077
Smelting,
refining and
transportation
charges^(1) $ 24,076 $ 21,900 $ 93,926 $ 94,438
Less by-product
credits^(1) $ (85,695) $ (79,321) $ (331,809) $ (293,208)
Cash cost of
sales net of by-
products $ 80,174 $ 74,926 $ 319,190 $ 321,470
Sustaining
capital^(2) $ 25,085 $ 54,394 $ 111,647 $ 130,721
Exploration $ 990 $ 10,405 $ 15,475 $ 36,746
Reclamation cost
accretion $ 757 $ 655 $ 3,030 $ 2,999
General &
administrative
expense $ 2,602 $ 4,638 $ 17,596 $ 20,790
All-in
sustaining costs A $ 109,608 $ 145,018 $ 466,937 $ 512,726
Payable ounces
sold B 6,436,002 5,678,802 25,478,014 23,037,493
All-in
sustaining cost
per silver ounce
sold, net of
by-products (A*$1000)/B $ 17.03 $ 25.54 $ 18.33 $ 22.26
Sustaining
Capital
Reconciliation
of payments for
mineral
property, plant
and equipment
and sustaining Three months ended Twelve months ended
capital December 31, December 31,
(in thousands of
USD) 2013 2012 2013 2012
Payments for
mineral
property, plant
and equipment^
(3) $ 33,669 $ 65,269 $ 159,401 $ 159,915
Add/(Subtract)
Advances
received for
leases^(3) $ 331 $ 4,021 $ 3,331 $ 11,538
Morococha
relocation
project capital $ - $ (837) $ - $ (6,389)
Navidad project
capital $ (89) $ (1,815) $ (246) $ (11,318)
Dolores leach
pads & other
expansion
projects $ (8,702) $ (11,749) $ (50,482) $ (21,766)
Other
non-operating
capital $ (124) $ (495) $ (358) $ (1,259)
Sustaining
Capital $ 25,085 $ 54,394 $ 111,647 $ 130,721
^(1) Included in the revenue line of the unaudited condensed interim
consolidated income statements and are reflective of realized metal
prices for the applicable periods.
^(2) Non - GAAP measure: see sustaining capital reconciliation.
^(3) As presented in the unaudited condensed consolidated statements of cash
flows. SOURCE Pan American Silver Corp.
/CONTACT:
Kettina Cordero
Manager, Investor Relations
(604) 684-1175
[email protected]
www.panamericansilver.com
