Pan American Silver Posts Q3 Results

Pan American Silver Corp. (TSX:PAAS,NASDAQ: PAAS) announced its unaudited results for the third quarter ended September 30, 2018.

Highlights are as follows:

• Decreased metal prices, including their effect on net realizable value (NRV) inventory adjustments, impacted financial results in Q3 2018
• Revenue of US$187.7 million, which was reduced approximately US$9.8 million by negative settlement adjustments on concentrate shipments
• Cash from operating activities of US$41.7 million
• Net loss of US$9.2 million, equivalent to US$0.06 basic loss per share
• Adjusted loss of US$4.7 million, equivalent to US$0.03 basic adjusted loss per share, impacted by approximately US$23.4 million in negative NRV inventory adjustments
• Cash and short-term investment balance of US$252.7 million, up US$2.4 million from June 30, 2018
• Production on track – Silver production was 6.3 million ounces and gold production was 42.1 thousand ounces. Zinc, lead and copper production were 16.7 thousand tonnes, 5.7 thousand tonnes, and 2.6 thousand tonnes, respectively. The Company is on track to achieve the annual 2018 production guidance..
• Cash costs per payable ounce of silver, net of by-product credits, (cash costs) were US$5.24 per ounce and reflect lower by-product credits, primarily from decreased base metal prices, and higher operating costs, primarily due to the expanded operations at our Mexican mines. Partially offsetting the increases to cash costs were lower direct selling costs from improved contract terms for concentrate treatment and refining.
• All-in sustaining costs per silver ounce sold (AISCSOS) were US$13.73. Excluding non-cash NRV inventory adjustments, AISCSOS were US$10.05. Based on YTD 2018 cash costs and AISCSOS, the Company is on track to achieve the annual 2018 cash costs and AISCSOS guidance, as previously lowered on August 8, 2018.
• Solid balance sheet – At September 30, 2018, the Company had a cash and short-term investment balance of US$252.7 million, working capital of US$443.6 million, and US$300.0 million available under its undrawn revolving credit facility. Total debt of US$8.4 million was related entirely to finance lease liabilities.
• COSE and Joaquin projects – Both projects remain on budget with US$5.3 million invested during Q3 2018. The COSE project is progressing on schedule. At Joaquin, development of the decline has returned to planned levels after successfully negotiating an area of unexpectedly difficult ground conditions. The delay may result in extending completion of the project by approximately two months.
• Quarterly cash dividend – The Board of Directors has approved a cash dividend of US$0.035 per common share, or approximately US$5.4 million in aggregate cash dividends, payable on or about November 30, 2018, to holders of record of Pan American Silver’s common shares as of the close on November 19, 2018. Pan American Silver’s dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada). As is standard practice, the amounts and specific distribution dates of any future dividends will be evaluated and determined by the Board of Directors on an ongoing basis.

Michael Steinmann, president and CEO, commented:

We continue to generate strong cash flow, which increased our cash and short-term investment balance at the end of the quarter to US$252.7 million, despite realizing the lowest metal prices of the year. The depressed metal prices had a significant impact on both settlement adjustments on concentrate shipments and NRV inventory adjustments, which together reduced earnings in the quarter by approximately US$33.2 million.