PR Newswire
VANCOUVER, Nov. 14, 2016
All amounts are expressed in US$ unless otherwise indicated. Financial information is based on International Financial Reporting Standards ("IFRS"). Results are unaudited.
This news release refers to measures that are not generally accepted accounting principle ("Non-GAAP") financial measures, including cash costs per payable ounce of silver, all-in sustaining costs per silver ounce sold, and adjusted earnings (losses). Please refer to the section titled "Alternative Performance (non-GAAP) Measures" contained in this news release for further information on these measures.
This news release should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2016 and 2015, and related notes contained therein, and the related management's discussion and analysis, which have been filed on SEDAR and are available at www.sedar.com and on the Company's website at www.panamericansilver.com.
VANCOUVER, Nov. 14, 2016 /PRNewswire/ - Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) ("Pan American", or the "Company") today reported unaudited results for the third quarter ended September 30, 2016 ("Q3 2016"). Net earnings were $43.4 million ($0.28 basic earnings per share) compared with a net loss of $67.5 million ($0.44 basic net loss per share) recorded in the third quarter of 2015 ("Q3 2015").
"Cash costs of $4.89 per payable ounce of silver in the third quarter helped generate impressive mine operating earnings of $88.5 million - almost double the earnings generated last quarter," said Michael Steinmann, President and Chief Executive Officer of the Company. "Cash flow from operations of over $102 million exceeded our funding requirements for our growth projects, sustaining capital and dividend, which enabled us to reduce our modest debt and increase our cash and short term investment position to over $245 million. With an exceptionally strong balance sheet, we are well positioned to take advantage of growth opportunities, both within our suite of assets and outside our portfolio."
"Operations continue to perform well across all of our mines, leading us to increase our production outlook and further reduce our cost estimates for the year. We now expect to produce 25 to 25.7 million ounces of silver in 2016 at a cash cost of $6.25 to $7.00 per ounce."
Highlights for the three and nine-month periods ended September 30, 2016:
Consolidated Financial Results
Three months ended September 30, |
Nine months ended September 30, | |||
(Unaudited in thousands of U.S. Dollars, except as noted) |
2016 |
2015 |
2016 |
2015 |
Revenue |
233,646 |
159,414 |
584,179 |
511,728 |
Mine operating earnings (loss) |
88,495 |
(25,996) |
149,923 |
(24,318) |
Net earnings (loss) for the period |
43,440 |
(67,514) |
79,541 |
(94,598) |
Adjusted earnings (loss) for the period(1) |
36,961 |
(9,306) |
60,346 |
(40,451) |
Net cash generated from operating activities |
102,346 |
32,866 |
169,136 |
65,291 |
All-in sustaining cost per silver ounce sold(1) |
6.34 |
16.29 |
10.10 |
14.99 |
Net earnings (loss) per share attributable to common shareholders (basic) |
0.28 |
(0.44) |
0.51 |
(0.62) |
Adjusted earnings (loss) per share attributable to common shareholders (basic)(1) |
0.24 |
(0.06) |
0.40 |
(0.27) |
(1) |
Adjusted earnings (loss) and all-in sustaining costs per silver ounce sold are non-GAAP measures. Please refer to the section titled "Alternative Performance (non-GAAP) Measures" contained in this news release for further information on these measures. |
Consolidated Operational Results
Three months ended September 30, 2016 |
Three months ended September 30, 2015 | |||||
Production |
Cash Costs(1) $ |
Production |
Cash Costs(1) $ | |||
Ag (Moz) |
Au (koz) |
Ag (Moz) |
Au (koz) | |||
La Colorada |
1.39 |
0.72 |
6.58 |
1.32 |
0.70 |
6.76 |
Dolores |
0.90 |
27.14 |
(5.26) |
1.20 |
22.58 |
8.70 |
Alamo Dorado |
0.37 |
1.36 |
18.55 |
0.69 |
6.59 |
9.58 |
Huaron |
0.97 |
0.20 |
4.92 |
0.88 |
0.20 |
11.51 |
Morococha |
0.69 |
0.41 |
4.41 |
0.56 |
0.83 |
12.59 |
San Vicente |
1.15 |
n/a |
12.40 |
1.03 |
n/a |
11.23 |
Manantial Espejo |
0.90 |
20.59 |
(1.75) |
0.93 |
22.72 |
4.16 |
TOTAL |
6.36 |
50.42 |
4.89 |
6.61 |
53.62 |
8.74 |
Nine months ended September 30, 2016 |
Nine months ended September 30, 2015 | |||||
Production |
Cash Costs(1) $ |
Production |
Cash Costs(1) $ | |||
Ag (Moz) |
Au (koz) |
Ag (Moz) |
Au (koz) | |||
La Colorada |
4.13 |
2.07 |
6.86 |
3.90 |
1.98 |
7.45 |
Dolores |
2.94 |
73.94 |
0.40 |
3.30 |
60.93 |
8.61 |
Alamo Dorado |
1.46 |
6.97 |
14.16 |
2.15 |
12.45 |
13.66 |
Huaron |
2.88 |
0.61 |
6.19 |
2.72 |
0.81 |
10.75 |
Morococha |
1.96 |
1.70 |
3.83 |
1.64 |
2.45 |
13.04 |
San Vicente |
3.38 |
n/a |
12.18 |
3.04 |
n/a |
11.73 |
Manantial Espejo |
2.36 |
54.68 |
0.87 |
2.60 |
56.86 |
7.66 |
TOTAL |
19.11 |
139.97 |
6.17 |
19.34 |
135.48 |
9.92 |
Totals may not add up due to rounding. | |
(1) |
Cash costs are a non-GAAP measure. Please refer to the section titled "Alternative Performance (non-GAAP) Measures" contained in this news release for further information on these measures. |
By-Product Results
Production |
Three months ended September 30 |
Nine months ended September 30 | ||
2016 |
2015 |
2016 |
2015 | |
Gold - ounces '000s ("koz") |
50.4 |
53.6 |
140.0 |
135.5 |
Zinc - tonnes '000s ("kt") |
13.1 |
10.7 |
38.7 |
29.2 |
Lead - kt |
5.0 |
3.5 |
14.9 |
10.5 |
Copper - kt |
3.2 |
3.6 |
11.4 |
11.0 |
Prices |
Three months ended September 30 |
Nine months ended September 30 | ||
2016 |
2015 |
2016 |
2015 | |
Gold $/ounce |
1,335 |
1,124 |
1,260 |
1,178 |
Zinc $/tonne |
2,255 |
1,847 |
1,955 |
2,035 |
Lead $/tonne |
1,873 |
1,714 |
1,780 |
1,818 |
Copper $/tonne |
4,772 |
5,259 |
4,725 |
5,699 |
Mine expansions in Mexico achieve new milestones
Major milestones were achieved at both of Pan American's mine expansions in Mexico during Q3 2016. At La Colorada, the new sulphide ore processing plant began full production in early August. As well, the new 618-metre deep mine shaft was fully commissioned in early September, ahead of schedule. We expect ore production to ramp up in Q4 2016 and into 2017, as development of the underground mine progresses. By the end of 2017 when the project is scheduled to be completed, processing rates are expected to increase to 1,800 tonnes per day, resulting in annual silver production increasing to approximately 7.7 million ounces. The La Colorada project is expected to be completed approximately 5% to 10% under budget.
At Dolores, the new 98 kilometre, 115 kV power line that connects the mine to the national power grid was energized in early September. The power line was completed on budget and is expected to result in annual savings of about $9 million. Significant progress was achieved on development of the underground mine, with a total of 866 metres of development advanced in Q3 2016. At the new pulp agglomeration plant site, civil earthworks were completed and concrete forming and pouring has commenced. When fully commissioned before the end of 2017, average annual production from Dolores is estimated to increase 40% for silver and 52% for gold during the first 5 years, while associated operational efficiencies help reduce cash costs.
2016 Full Year Forecast
Pan American has made the following revisions to its guidance for 2016:
The Company is reaffirming its outlook for gold production of 175.0 to 185.0 thousand ounces in 2016.
Technical information contained in this news release with respect to Pan American has been reviewed and approved by Martin Wafforn, P.Eng., SVP Technical Services & Process Optimization, who is the Company's Qualified Person for the purposes of National Instrument 43-101. For additional information about the Company's material mineral properties, please refer to the Company's Annual Information Form dated March 24, 2016, filed at www.sedar.com. For further technical information relating to the La Colorada and Dolores expansion projects, please refer to the National Instrument 43-101 technical reports entitled "Technical Report - Preliminary Economic Analysis for the Expansion of the La Colorada Mine, Zacatecas, Mexico," with an effective date of December 31, 2013, and "Technical Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option", with an effective date of May 31, 2014, both of which are filed on SEDAR at www.sedar.com. The results of preliminary economic assessments are preliminary in nature, in that they include inferred mineral resources that are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the assessment will be realized. Mineral resources that are not mineral reserves have no demonstrated economic viability.
Conference Call on Tuesday, November 15 Pan American will host a conference call to discuss the third quarter 2016 results on Tuesday, November 15 at 10:00 am ET (7:00 am PT). To participate in the conference, please dial 604-638-5340. A live audio webcast and PowerPoint presentation will be available on the Company's website at www.panamericansilver.com. A replay of the webcast will also be available shortly after the call on the website. |
About Pan American Silver
Pan American Silver Corp. is one of the largest primary silver producers in the world. We own and operate seven mines in Mexico, Peru, Argentina and Bolivia. Pan American also owns several development projects in the USA, Mexico, Peru and Argentina. Our 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 is headquartered in Vancouver, B.C. and our shares trade on NASDAQ (PAAS) and the Toronto Stock Exchange (PAA).
For more information, visit: www.panamericansilver.com
Alternative Performance (Non-GAAP) Measures
In this press release we refer to measures that are not generally accepted accounting principle ("non-GAAP") financial measures. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning as prescribed by IFRS as an indicator of performance, and may differ from methods used by other companies with similar descriptions. These non-GAAP financial measures include:
Readers should refer to the "Alternative Performance (non-GAAP) Measures" section of the Company's management's discussion and analysis for the three and nine months ended September 30, 2016 (the "Q3 2016 MD&A") for a more detailed discussion of these and other non-GAAP measures and their calculation.
Cautionary Note Regarding Forward-Looking Statements and Information
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: future financial or operational performance, including our estimated production of silver, gold and other metals in 2016, and our estimated cash costs and AISCSOS in 2016; 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, including with respect to margins and production; the realization of benefits from any transactions and the financial and operational impacts of any such transactions on the Company; and the approval or the amount of any future cash dividends.
These forward-looking statements and information 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 remaining as estimated; currency exchange rates remaining as estimated; capital, decommissioning and reclamation estimates; our mineral reserve and recourse 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 or interruptions in scheduled production; all necessary permits, licenses 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 metal 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, Argentine 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; legal restrictions relating to mining, including in Chubut, Argentina; risks relating to expropriation; 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, respectively. 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 or 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 or information, whether as a result of new information, changes in assumptions, future events or otherwise, except to the extent required by applicable law.
SOURCE Pan American Silver Corp.