Pan American Silver Corp. reported unaudited results for the third quarter ended September 30, 2018. Pan American Silver’s unaudited condensed interim consolidated financial statements and notes (“financial statements”), as well as Pan American Silver’s Management’s Discussion and Analysis as at and for the three and nine months ended September 30, 2018, are available on Pan American Silver’s website at www.panamericansilver.com and on SEDAR at www.sedar.com
Decreased metal prices, including their effect on net realizable value (“NRV”) inventory adjustments, impacted financial results in Q3 2018
Revenue of $187.7 million, which was reduced approximately $9.8 million by negative settlement adjustments on concentrate shipments
Cash from operating activities of $41.7 million
Net loss of $9.2 million, equivalent to $0.06 basic loss per share
Adjusted loss of $4.7 million, equivalent to $0.03 basic adjusted loss per share, impacted by approximately $23.4 million in negative NRV inventory adjustments
Cash and short-term investment balance of $252.7 million, up $2.4 million from June 30, 2018
“We continue to generate strong cash flow, which increased our cash and short-term investment balance at the end of the quarter to $252.7 million, despite realizing the lowest metal prices of the year,” said Michael Steinmann, President and Chief Executive Officer of the Company. “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 $33.2 million.”
Added Mr. Steinmann: “Operationally, our La Colorada asset is exceeding expectations. The expansion is performing above design capacity, achieving record quarterly silver production of two million ounces in Q3 2018. We are also excited by the recent exploration discovery, which will very positively impact the future of this mine.”
Consolidated Q3 2018 Highlights:
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 $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 $13.73. Excluding non-cash NRV inventory adjustments, AISCSOS were $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 $252.7 million, working capital of $443.6 million, and $300.0 million available under its undrawn revolving credit facility. Total debt of $8.4 million was related entirely to finance lease liabilities.
COSE and Joaquin projects – Both projects remain on budget with $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 $0.035 per common share, or approximately $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.
Cash costs, AISCSOS, adjusted earnings, basic adjusted earnings per share, and working capital are not generally accepted accounting principle (“non-GAAP”) financial measures. Please refer to the “Alternative Performance (non-GAAP) Measures” section of this news release for further information on these measures.
About Pan American Silver
Pan American Silver Corp. is the world’s second largest primary silver producer, providing enhanced exposure to silver through a diversified portfolio of assets, large reserves and growing production. We own and operate six mines in Mexico, Peru, Argentina and Bolivia. Pan American Silver maintains a strong balance sheet, has an established management team with proven operating expertise, and is committed to responsible development. Founded in 1994, the Company is headquartered in Vancouver, B.C. and our shares trade on NASDAQ and the Toronto Stock Exchange under the symbol “PAAS”.