Q3 2021 Pan American Silver Corp Earnings Call
Overall mine ventilation air volumes now exceed pre 2019 rates by 44% successfully lowering temperatures and humidity in many parts of the mine.
We expect mine developments of mining rates at Luckily or rather to continue increasing over the coming quarters steadily ramping up to the throughput rates of approximately 2000 tonnes per day by mid 2022.
The improvement in ventilation will also allow us to increase underground exploration drilling rates, particularly for this current deposit.
We produced 142600 ounces of gold in Q3.
At the 10 minutes, we continue to mine at lower rates and grades as we adjust the mining methods and upgrade ground support systems to adapt to the wider or expansions in this section of the mine plan.
We will be debottlenecking and increasing the capacity of our new cement Rockville plant during Q4, 2021 which has been limiting our mining rates in the wider ore zones.
Greater extent than expected.
At Dolores, we had and in heap gold inventory buildup of 8100 ounces during the quarter and 37000 ounces year to date.
Inventory build as a result of heap sequencing necessary to accommodate a delay in completing construction of leach pad, one style, which result in lead sequencing into relatively deeper sections of the heap.
For longer periods than originally expected.
We will be loading ore on the new pad one south by the end of November which will benefit the heap kinetics in late 'twenty or 'twenty, one and moving into early 2022.
That's a window, we had an increase in pad inventories of 5900 ounces in Q3 for a total of 16100 ounces for the year to date 2021.
He had been stockpiling fine grain material until they could mine, the coarser grind or for mixing and placing on the heat.
<unk> adjusted our mine sequencing and they're now accessing coarser or which is allowing greater blending for the final brand door, including blending in some after previously stockpiled ores.
Silver cash cost in Q3, or $11 92 science and all in sustaining costs were $16 30 per silver ounce sold.
Spending was elevated at laclede, rather for the ventilation work extensive shocker it support and for mine mechanization towards greater long hole stoping production rates.
We believe the investment in mine mechanization will benefit benefit safety productivity and costs over the next few years as we accelerate developments to capture the full benefits of the long hole stope mining methods.
All in sustaining costs of luck lead out I should come down a throughput rates rise over the coming quarters.
Excluding net realizable value inventory adjustments.
Silver all in sustaining costs were $16 per silver ounce sold.
Coal segment cash cost in Q3 with $922 and all in sustaining costs were $1176 per gold ounce sold.
Excluding not realizable value inventory adjustments gold all in sustaining costs were $1168 per gold ounce sold.
Overall, our operating performance is being impacted by qualified labor and supervision shortages.
Additional costs related to coffee protocols and cost inflation pressures, particularly for fuels in logistics.
Based on operating results year to date and expectations for the reminder of the year, we have revised our guidance for 2021.
We now expect to produce 19 to 20 million ounces of silver rich.
The reduction from the guidance provided on May 12 is due to lowered unexpected celebrates autonomy Santa G. T narrowing vein structure, resulting in reduced productivity and increased dilution.
The extensive shot credit support and development advances at La Colorado.
Lower heap Leach kinetics, given the delay in completing construction of pad, one south leach pad at Dolores.
We now expect to produce 560 to 588000 ounces of gold in 2021.
The reduced estimate is primarily due to lower than expected production had a window in Bell Creek.
That's a window to find grant or resulted in reduced solution application rates.
Which in turn led to a buildup in gold inventory and the heaps heap Leach pads.
<unk> to revision to the mine sequence and lower grades.
To encounter more course material for planting.
Bell Creek additional ground support and increased cement Rockville, that's required in the vital areas of the ore body.
Silver segment cash costs are estimated to between $11 60, and 12 50 per ounce and all in sustaining cost between 50, and 75 and 16 75.
Coal segment cash costs are estimated to between 825 to $925 per ounce and all in sustaining cost between 1135 to $1250.
The impact of a lower gold production estimates is offset by deferred spending on capital projects and timing on some discretionary spending within operating costs.
We have also reduced our estimate for total capital spending.
Range between 261, and $271 million, including project spending of $43 $5 million to $45 million.
Project capital is largely directed advancing the exploration and development studies for their luck, let us corn project.
Advancing construction of the new concrete line ventilation shaft and reference duration planned with local at ATA and divert more exploration project in Timmins.
Details of our revised guidance are provided in our Q3 MD&A.
And America is in a strong financial position, we have with total available liquidity of $815 million comprised of a fully undrawn $500 million.
Under our revolving credit facility and $315 $4 million in cash and short term investments at the end of Q3.
Operations are generating strong levels of free cash flow and we expect a meaningful improvement in operating performance in Q4 in line with our revised guidance.
Our capital allocation priorities remain on investing in high return projects and returning cash to shareholders through dividends.
Past 18 months, we have increased the dividend three times.
Turning $86 $2 million to shareholders during that period.
Yesterday, we announced a quarterly dividend of 10 cents per share.
We will continue to evaluate dividend payout levels in light of a requirement to fund growth projects.
Deliver high returns to our shareholders.
Yesterday, we also announced through results from 39, new infill and step out holes at <unk> com.
The expansion of the current con mineralization footprint is highlighted by the exceptional grade and thickness of S 62 21.
70, 121 on the eastern side of the deposit.
200 meters from the nearest drill hole.
Exploration hole S 70, 121 returned 77.1 meters.
119 grams per ton silver, 7.7% lead and $13 six 2% zinc.
Also thrilled hold use 67 21 thrilled to divest of the Bradshaw expanded the resource 200 meters with 115 meter interval at 133 grams, silver three 6% lead and 483% zinc.
It remains open to the west to the east and southeast.
In consideration of the expanded footprint of the mineral resource at the high grades in some of the step out holes Pan American has decided to expand the scope of the preliminary economic assessment and not release a technical report at year end as anticipated. These studies will include additional drilling.
The deposit and review of larger scale mining methods, such as sub level caving versus long haul open stoping.
At the Escobar approach Act the third pre consultation meeting was held in October and the next one is set for November 27th.
The Ministry of energy and mines is resuming monthly meetings following a lengthy delay in holding the third meeting due to a resurgence in COVID-19 cases in Guatemala.
The Ministry of energy and mines, who is leading these consultation have setup of upside that's a repository for information related to the consultation.
The link to that upside is provided on the slides that accompany this call.
At the beginning of this year, we estimate that the impact of Covid on our operations will steadily reduced over the course of the year with no impact starting in Q1 2022.
Well vaccination rates have substantially improved in Latin America over the past few months, we are still experiencing COVID-19 related impacts in terms of lower workforce deployment levels shipment delays supply chain interruptions and related cost pressures.
These headwinds will continue at least through the first part of 2022 and will be taken into account in our budget and forecast for the next year.
Before we open the call to questions I would like to thank Rob Doyle for his 18 years of service to the company.
As we announced yesterday of Ralph has informed us of his plans to retire as chief financial officer of the company.
If March 31 2022.
Rob has been an integral part of our team and have greatly appreciate that these efforts, which have their own pan American reputation for prudent financial management.
We are following our succession plan to ensure an orderly transition.
And with that I would like to open the call for questions.
Thank you well now begin the question and answer session.
The question queue, you May Press Star then one on your telephone keypad.
Phone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any key.
To withdraw your question. Please press Star then two.
Our first question is from Tyler Langton with Jpmorgan. Please go ahead.
Good morning, Thanks for taking my question and our best wishes for your retirement Rob.
Yeah, I guess just to start with with costs at La Colorado I think you mentioned they were impacted by our you know the ventilation upgrades the shot creek in there the long hole mining investments.
Do you have a rough sense how much.
Those are added to cost in the quarter and then you know should we expect those to sort of.
Ease over the next several quarters or will some costs you know still remain sort of throughout the balance of 2022.
Yeah, Hi, Tyler Steve here one.
Good morning, currently we're we're kind of still putting our our thoughts together for next year in our budgets for next year and trying to roll in our current understanding of some of the inflationary factors on some of our inputs.
From a standpoint of catching up on the shot creating we should be.
Seeing that start to taper off during Q1, and Q2 of next year and where our investments on the long haul mining nuts really pushing ramps out ahead, because it allows us to go basically three sub levels for each stope versus what we've been doing with the cut and fill mining.
So that's going to take US most of 2022 to keep those ramps pushed out ahead on an accelerated basis.
So it's not we're not prepared to give an indication yet of what our costs are going to be next year. We will do that in January but those are some of the factors, we'll see and it's just how much of that inflation is going to hit US overall, we'll see that come January we will give some numbers.
Okay. That's helpful. And then just sort of sticking with coffee do you have a rough Santander, it's hard to quantify but it's sort of the higher cost that you continue to see is that right. Now at least is that more from COVID-19 related restrictions or is it also a sort of any impact from inflationary pressures.
Yeah, I'd say COVID-19 related restrictions that are really it's the protocols the cost of doing the testing of that that is just starting to come off we do anticipate that to drop off early part of next year pretty substantially from the levels. We're at now so it's really mostly inflationary in these.
Just kind of catch up projects, if you will on the sharp reading in their ramp with Barrington.
Uh huh.
Sorry to Michael just just in general for sure we do like the whole world will see some pressure on wages.
Call it COVID-19 related or after COVID-19 related recovery.
But we definitely we definitely see that and.
Just as a reminder to everyone our exposure to foreign currencies as a big driver for cost up and down obviously, depending where they go.
Foreign currency for US includes Canadian dollars as we report in U S dollars and then the other two big ones are Mexican peso, improving so so you know moving up and down with those currencies have an impact on our costs.
We see some devaluation right now in Peru, which.
Which gives us some tailwind on the cost side with the Peruvian Sol.
Of course, if there's kind of devaluation stay longer and are not just transitory done I mean normally see kind of a call back later on and especially on the wage side. So just keep that in mind when you look at the cost.
Perfect. Thanks, so much.
The next question is from Cosmos <unk> with CIBC. Please go ahead.
Hi, Thanks, Michael and team and congrats Rob hopefully we can stay in touch.
Thanks, Rob maybe my first question is on <unk>.
You talked about.
Yeah currently in the process of budgeting it sounds like Youre, putting out guidance in January 2022.
Michael are you anticipating potentially giving a three year guidance.
<unk> term guidance as well.
I know, it's more challenging given you know costs.
Nation and.
COVID-19 impacts, but is that something that you're considering.
I think once everything normalizes with coverage, we can start looking at that again I mean as you remember at the beginning of this year. If we kind of had a straight line. We didn't really know in January 2021, where the pandemic is going like nobody knows and and.
We assumed.
Improvements constant improvements during the year of course, that's happened in a certain way, but not in a straight line for sure and I'm, probably not as fast as we as we all hoped for we see now really big catch up on the vaccination rates in Latin America. So I really hope that you know.
After the first couple of quarters or so next year.
We are at that time.
New spot, where you know, where we have less or nearly no impact from COVID-19, but I really don't know right now, where it's where it's going so well keep it really close eye on that but I think we really have to.
I have a normalized situation again from from the pandemic before we can go to a lower longer guidance.
Of course, and then all.
In terms of inflation Michael.
You're in a unique position you have operations underground open pit.
In Latin America and Canada.
To the extent possible could you maybe talk about inflationary pressures where are you seeing it is it underground versus open pit or is it Canada versus.
Same in Mexico any comment you can make.
I will make some general commentary and then pass it on to Steve as well, but you know as I said.
Before I mean for sure see some.
Inflationary pressure on wages.
Yeah.
You know, it's just a shortage of people as you experience as everybody is experiencing the world.
Not immune to that and that puts.
Pressure on wages as we come out of this.
Of this pandemic and with the recovery does obviously, obviously going to be shortage.
A lot of a lot of activity in lots of countries, where we are working while there's still a lot of restrictions in many countries. We are working so is this you know kind of difficult situations, where there's a lot of demand for people and theres a lot of restrictions still in place. So as I said I really hope that.
And Q2 or somewhere middle of next year that that starts to normalize but that's what we that's what we all learned over the last two years. This that this pandemic has been very unpredictable and it's new to all of us. So.
When we make predictions and then and then.
Adapt to the reality of the advancement of the virus, but that's outside a vaccination rates are advancing really strongly now in Latin America. So that's very encouraging and.
I would I really believe that we're going to see a strong improvements here, but then we see large disruptions in the world are supply chain disruptions transport disruption shortage of shipping our ships and containers et cetera et cetera.
You know I would say this is probably more of a transitory I think when that normalizes.
That's our.
Hopefully normalizing with.
And with the with the recovery from the pandemic and I don't think so that that will be a longer term issue wage inflation, there's obviously a bit more difficult right. Once a month here or there it's not not not very easy to do.
Come back from it.
When we look at the other goods.
Pass it onto Steve what he sees in our let's say cyanide or other auto suppliers that we need I mean next to labor materials fuel and energy would be our next highest cost input for the company and in generally speaking kind of the global fuel and energy costs are going up pretty dramatically.
Radically now we do see some offsets to that in some of our jurisdictions. We do have some subsidies that come in and kind of dilute the increase.
And then beyond that yeah, some of our consumables some of our reagents.
Particularly the transport to get reagents to the site that cost is going up.
We've seen some in the neighborhood of as high as I'll say, 10% is kind of the projection for next year, probably on average it's more like.
Six or 7% for a lot of them are input spare parts and lime and cyanide and things like that.
Steve It's probably worth mentioning that we are partially hedged on our diesel consumption. We put in a 24 month program in 2020, So we do have some coverage.
On our diesel needs through this the balance of this year and and costs 2022 as well and so so we do have an offset that sits in the derivative line.
Great.
Thanks, maybe I'm switching gears a little bit here.
Having deeper into Dolores in Q3.
There was a continued build in inventory.
As he said in Q2 I thought you know some of that was going to be recognized as production in the second half, but it seems like it's been delayed.
Due to the pilot one south construction.
Could you walk me through that again in terms of how that works is it you know you're now expecting it to be recognized as production in 2022 is it.
More based on stocking of the part one south and so the leach.
Time is going to be quicker or is it waiting for what <unk> been stacking or the old pod and waiting for that to come out in 2022 and in due time.
Could you maybe give me a bit more color.
Yeah sure Cosmos, it's a combination of the two obviously when we go to stocking on the on the new pad directly on the liner will put our highest grade or where you can find on that so we get pretty quick recovery compared to where we are stacking now in pad three were up stocking kind of the.
Final lifts of that pad, so we've got depths.
<unk> is 120 830 meters of ore that we have to soak through to recover that at the bottom of the the pad on that area, but what happens to us as we're stacking up pad three another final lifts those those cells that were loading are fairly small and surface area. So we have to reduce.
Our primary leach cycle time, and what happens is we lowered restart to leach we up to we have to stop that leaching early because we don't have enough area and lead a drain before we start another load on so we've got multiple of layoffs that have been partially leach. So as we start to stock on pad one saw will be able to keep it.
Irrigation on full time on that pad three that'll start to release all those ounces that we built during the year. In addition to getting there quicker ounces all powered ones though.
Uh-huh, Okay I get it now it's always a combination of both.
And maybe one last question you know bigger picture.
Michael we've seen sort of M&A pick up in the gold space.
To the extent that you have any comments.
Do you think that's going to translate and do you think it's going to happen in the silver space as well.
Well look I mean.
I'm a strong believer on them on a stronger companies are I think we have proven that with the acquisition of Tahoe and on what happened to two Pan American I would refer everybody to the slides that are attached to that call on Thursday.
The slide in there with total net cash position and what happened since the acquisition of tower, where we improved our net position.
$559 million, while paying to our shareholders $119 million dividend and put about $100 million into new projects, mostly exploration of of this garnered local thereafter so.
Of course, you have you'll have less overhead you usually you save a lot of money on their T N day.
When you build a bigger and stronger company you have to find the right targets of course [laughter] if not it doesn't make any sense you have to find a target that that gives you that you know that that's strong consolidation in an unsafe inks. So before roughly and you know similar preferably in similar or close by jurisdictions et cetera.
Central So there's not just a blanket answer to that that's you know it's very complicated.
The timing, but in general I I think that's what'll happen Yeah, I think in the future we are going to see the trend to larger and stronger company not only on the bolt up on the silver side as well.
Great. Thanks, again, Michael Steve Robinson.
Those are all the questions I have.
Thanks Cosmos.
The next question is from Trevor Turnbull with Scotiabank. Please go ahead.
Yeah. Thank you.
My first question I guess, just related to la Colorado scarring and the update.
You were talking about a potentially larger scope project and investigation of bulk mining with sub level caving and I just wondered what this means in terms of the processing plant. If there's upgrades in terms of capacity that you are considering or just general upgrades to the facilities that would have to go hand in hand with this.
So, yes, whatever you could tell us a bit about that please sure driver on.
They put out the press release this morning before market opened with trauma.
No really astonishing drill holes I think I mean, if you look at the way the grades of this drill holes, it's amazing in and some of them are to them to meet their stockpile. So he decided to the northeast and southwest So theres, a large potential to increase that resource and kind of all we need to drill more right now.
And redo the resource them and basically look at even bigger bulk mineable ore bodies. So that's that's really what what what happened. So all good news there it's.
The infill drilling so its very good continuity of the of the main ore body, so very very encouraging.
To be clear are you know this is gonna be if you look at the size of the ore body not just an expansion of the current plant that's.
But that's going to require at one point the much much larger plant to treat that or so.
While we maybe can look at it.
The shorter time charter timeline here.
Panic, when we get the access to the ore, but you know if you look at this large bulk mineable ore bodies.
We cannot just increase the current plant by mid <unk> percentage jumped on treatment there.
They require a new a new facility and maybe Martin you want to weigh in here no. That's.
And Michael I completely agree with your comments see.
It's a blank page in terms of looking at new plant new infrastructure for a project of this magnitude and and it just keeps getting bigger, which which is leading us to look at these different alternatives in terms of the mining methods, but.
But definitely much larger scale than we're doing now the existing la Colorado mine, where mining these fairly small veins and where you know where 2000 tons a day kind of size frame. We're looking at are significantly larger than that for either either long haul long haul stoping ore as it continues to.
Grow and continues to expand and get bigger and bigger even even more a larger or more bulk here less selective type mining methods like sub sub level cave would require another another incremented gain and the and the size of that the processing of the infrastructure that we would need to put in place to deal with it.
Yeah.
Sure.
But we really feel right now is focus on drilling to see if you have I think we have 16 rigs on site.
A lot of drilling going honestly, they're in our numbers in the press release and a lot of floating plan for next year as well, which obviously will get further step out some more information to the engineers.
And for Martin's group to you know two of them.
So to answer all those questions.
No I appreciate that Michael I was trying to get a sense also kind of thinking about the M&A question that was asked.
If something like this would transform la Colorado.
To such a degree that potentially are.
It would help to it would help with sustainability across the board with with your assets. Maybe one last question just on La Colorado, you talked about the twin ramps coming down to the top of the ore body.
Do you have a timeline for how long that might take to get down there and or any cost scoped out just for those declines.
Hi, Trevor Steve you're we're still working on those plans. So we're not prepared to put timelines out yeah were kind of developing that and as Martin said, we're looking at different <unk>.
Yeah.
[noise] ways to approach that mine that mining method may dictate how old were you actually enter into a true. So how long those rents will be wherever you want to access the ore body is still kind of up in the air. So we don't want to put any time lines.
But the.
To be clear, we know where we want to start with the ramps theres, a very clear clear starting point and as you can imagine this is gonna be a long term project to bring this ramps down there so the sooner we start to.
You know the deferred or had we got with the approach and so that's really the thinking here.
And I guess, we would see at least some capex starting to get allocated as early as next year's budget for forgetting. These these getting moving on this well the ramp and also the advantage patients shaft concrete jobs that we discussed last quarter. If you remember right.
Then I only have one last question and and that's about Escobar in that consultation process you talked about in the MD&A that there I think it's been there's been three meetings and I think they are referred to as pre consultations.
Wondering what the difference between the pre consultation meetings and what I assume are the full consultation meetings are and if you have any.
How many of each of those type of meetings need to happen before that process is concluded.
Yeah. So on the Ilo 169, and what happens is you have a pre consultation phase.
Come to certain agreements like in our case a definition, how the consultation will be around exactly on the timelines etcetera.
And Theres no Anthony go into the consultations that Theres no preset amount of meetings for for either a pre consultation order consultation that's really you know depending how that advances.
It's run by the Ministry of mines, and nobody else I as I sat that I can't give you a timing or a number of meetings that are required Oh I'm encouraged as we continue these meetings helplessly.
Mentioned, we had one in October November 27th will be there will be an excellent. So it looks like we are back on kind of a amongst lease schedule here there was definitely a lengthy.
A lengthy delay because of Covid, there's meetings are in person and in large groups. So.
There was an obvious delayed because of COVID-19, but I think we are you know back when its monthly sketch Alonso. So looking forward to continue with this very inclusive meetings.
Porting them for sure.
And so I'm, just trying to understand a bit better with the pre consultations. It sounds like you mentioned these are kind of a chance to set out the parameters with I guess the leadership of the of the zinc of communities and and then the consultations will be what more of a public forum, where where people.
Then can come in using the guidelines that have been agreed to to to voice their concerns or to ask questions.
I think no I think it's it's you know, it's the same people or in Washington, and in the pre consultation that consultation a group that then the group. The group is defined and has meetings together, it's more like 200 meetings.
And you know it would encourage everyone to go on the website that actually set up already got all the details on each of the meetings.
You know definition of who is doing what kind of technical reports delivered for.
For the future meetings who's doing that when they will be delivered etcetera and in what form.
And that will all form part of the you know obtain formation that will be provided for the for the consultation meetings. So it's more just kind of a.
Definition of structure around.
And then timing.
Okay I'll leave it there. Thank you very much Michael Thank you.
Our next question is from John Tumazos with John Tumazos very independent research. Please go ahead.
So Rob I hope to Mike paying you enough and you made enough on the Pan am stock.
Ride your bike with a police escorts or some motor is frozen and wiped out good luck.
Thank you Josh.
And my God.
Some of these earlier questions about M&A stuff upset me I'm a shareholder.
And I hope that you don't have a minute to look at M&A, because there's nothing better.
And building, a Colorado scarring getting your assets up to capacity restarting Escobar.
And.
Building off of that.
So you know those guys was the M&A fees, you don't have to listen.
[laughter] well show them Theres all you Gotta do is run your own business.
And everybody is going to be so happy.
There's obviously a reason why we didn't do anything because I agree with you that we have a very strong pipeline.
There's questions I mean determine day questions are always very general because of course, even if I would look at something I would not I would not talk about it in this and it is farm shows interaction.
I see I, just seen China rolled up.
Lots of single asset companies out there or let's call. It companies that need more help on that on the financial side and you know in general I see that there will be consolidation in one form or the other in the industry just to find a home for those assets and build bigger companies that that was really my comment.
<unk>.
Concerning the delayed technical study on Colorado scarring.
Is it purely a third resource statement.
To upgrade 100.4 million metric tonnes of inferred so that you have to understand design and understand the mining method or would it be.
A P a or pre fees too.
Well, yes, we need more information definitely I mean, I think the current resource we have out there is 100 million tonnes I think are pretty easy when you look at the drill results drill results there too.
Do see the potential for further growth of that of that resource and that's really where you know when you look at the results on the wide intercepts into really very high grades that we hit over the last few months.
That you know want us to focus on some of those areas of expansion and I'm thrilled more holes and definitely move some of that resource or as much as we can into higher until electrical categories.
So is it too early to try to guess how many tons per day in the mining method and do a pea or definitive fees until you get the surge resource out.
It's I mean.
When we do more drilling we can release, a new resource for sure, but it's definitely too early right now to put a pay down on the mining method. That's exactly one of the reasons why it got so backend as Martin mentioned, we can really look at much bigger much more bulk mining mining methods like sub level caving and see what that would do how that would work.
So it's just too early you're right to you.
Depending on that.
Should we be putting.
The la Colorado scar and mine into our models as first output 2025.
Because it's so big and require so much study and the bigger it is the more drilling and infill drilling and ramping you have to do.
What year.
Well, that's that's all part of the after studies funded 25 will come pretty quick care about that.
Give us some time next year to drill for to come out with a new resource.
I think that's really well defined much by the size of this ore body and gets a bit more time to market and to come up with the mining method that will dictate how much development, we have to do underground and how we buy stocks as that or do we need to access it first to actually define a mining matador.
We do that without without access and then Oh go strides we surround it with the right partner and start to underground development. So there's a lot of open questions. As you can see and I think a lot of time kind of answer that in plenty of 'twenty two.
I have a.
Real simple algebra question about $19 5 million ounce guidance.
That midpoint that implies 5.6 million ounces for the fourth quarter and.
And we just came in at 483 in the September quarter.
So I guess, we're going to get almost a three quarter of million ounce bump. This quarter is it going to come mostly from Dolores La Colorado are.
Usually you got to stick your neck out that far Mike, but you're saying this quarter's going to be a lot better.
Yeah. John This is Steve just to add onto that I mean, we have seen October numbers.
In September was pretty strong for us. So we are predicting a strong quarter in Q4.
Think the location of where that silver is going to come from is fairly spread through the organization through our asset our silver assets La Colorado, we're anticipating.
You know it had a great ramp.
Wrap up in Q3 from Q2, we think we got a little bit more to go in Q4, there Dolores certainly with the Leach pad, we will start to see that released from that inventory build that we have silvers as slow leach there. So it takes some time.
Most of that will come in 2022, but we will see a little bit there.
And we're having some pretty good runs in a more coaching more on as well. So I think and Menotti. All included I think we will see a spread of those additional allowances in Q4.
I can ask one last one.
In these tough years, 'twenty to 'twenty, and 2020 one.
Matt Shao Sparrow.
There's been no one mine that produced more.
So that's the one that has the least documented life with satellites.
What are the odds that we continue in 2020 456, and find a little more in Argentina.
But you're right. This minute Martel did quite well into production so that because of the high grades that we mine, especially at COSE.
We added in the mine plan, we knew that the satellites are high grade that's why.
We were able to mine them on truck them to do the mine that relatively small ore bodies and our reserves are up to stay out there.
Manav Seattle.
You know we.
We're still exploring in some places and see what we can do to expand it at the moment that you said it is a pretty short mine life.
Thank you and thanks for letting me kid around a little bit Mike.
Thank you have a good day.
Yeah.
Our next question is from Lawson Winder with Bank of America. Please go ahead.
Hello, Good morning, and thank you for the update Rob Congratulations on an outstanding career with Pan American definitely I'll get back in the future.
Hassan.
Yeah, if I might I would like to turn back to the my Colorado Darn and just yeah.
Maybe follow up on anything you've learned from the 36000 meters of additional infill drilling that you got.
I have done for example.
Have you learned any more of a continuity.
Is it more connective and everybody than you thought or perhaps less.
Yeah, absolutely so it's Chris here.
Yeah, it's already through last couple of years and the results that came out in 2020.
The the infill drilling as we were driving towards the the.
A new resource and PAA, but obviously with extended step out drilling of the exploration.
We have seen that the continuity is there a model works, which is really pleasing as a geologist.
And obviously, it's a really pleasing is the the western portion of this deposit as it as it builds out from the breccia going west.
And now.
Now, we're seeing more scone and and these higher grades which potentially gives us another center. So all to play for them and certainly we were.
We're looking forward to next year and continue the drilling.
Okay.
And also thanks very much to that Chris.
Could you maybe give us an idea of like what percent of the.
Ore body is going to be breccia, and what percent is going to be sort of more company scarring.
Yes, absolutely I mean, obviously.
It's an inferred resource at the moment and the infill drilling as we drill through that center towards the Scone area to that east.
We could certainly be looking at a potential split of around <unk>.
50 ish at the moment, 50% either way, but of course with this listing drilling that's going to change completely and that's something that we'll be working towards as we as we build it out.
But in general yes.
Gone, obviously mineralized high grade breccia mineralized.
You know that they are both fairly competent rocks found there we're not in a in the dacite anymore foreign down into the limestones. So it doesn't really I mean, if your question is yes.
Our branch or or or.
What has gone on competency of the rock Guy you know, there's there's not a big that's not a big difference.
Absolutely Yeah as you mentioned.
Its really down to two that grade and certainly from the recent drilling.
<unk> seen that really high grade, which which is that strong.
Yeah. That's super helpful guys. Thank you and then.
Maybe just a quick quick one on <unk>.
Obviously, it's been impacted by the the ground conditions. So you had to spend more money on support you mentioned that.
How do you use a lot more consolidated.
Are cemented rock fill.
With the increased spending do you see the scope for the the greatest start to pick up in the fourth quarter, whereas the Greg and it continue to trend sort of where it's been trading for the first.
Nine months of the year.
Yeah Awesome, Steve here we're.
We're not we're not expecting to see a great increase or it's pretty flat and our mine plans are truly tonnage that we're after and the tons are being hampered by the.
Cemented rock fill as you mentioned and trying to get that plant up to full capacity. So that's really where we're focused.
Okay. So then that begs the question then.
Expect in the fourth quarter, you can start to see a pickup in that tonnage or is that something we would expect to happen more in 2022.
Right now, we're kind of pushing that off into 2022.
We're look we're actually looking at bringing a second rockville cemented rock fill plant into to help boost production there that's going to take us a little bit more time, so we're not expecting a big change in Q4 of them.
Okay, Great. Yeah. That's that's helpful. Steve and then finally I just wanted to follow up on one comment you made about ESG and your greenhouse gas emission reduction targets. You mentioned there was a policy change at the federal government level in Mexico can you maybe just elaborate on what that policy change was and also.
How that actually impacts the tiny so now when you expect to hit those.
Greenhouse gas emission reductions that's it for me thanks.
Oh, Yeah, I think youre, referring to the potential law change on.
T S E T F E. R. If it's if it's stuff that can give you an update on update on that.
It's actually not mcdonalds is not approved so it's a there's no final change or law that we can discuss I think at the moment the government is.
Is trying to get.
Give more control to the to the government owned.
Our company's Cfe and everything would run through there while at the moment do you actually have a private provide yourself most renewable power as well that it that he can purchase.
That'd be purchase are attractive purchase obviously as well.
So it will have to wait and see how that law changes and then what the change is gonna be.
To purchase that renewable power true cfe or if it continues that it can purchases from private provider. So it's a bit too early we don't know yet.
La change if it's gonna change to where it's going.
But I would guess over the next quarter or two we should have more clarity.
On that side from the government and then we'll update.
Yes, that's what I was referring to thanks very much guys.
Thank you.
Yeah.
Our next question is from Don Demarco with National Bank Financial. Please go ahead.
Well, thank you operator, and good morning, Michael and team.
Well.
I think I'll ask a couple of questions on the scarring, if I may I mean, it's.
All my other questions have been answered already.
Hey, guys.
Can you provide some indication on the timing of the release of the scar NPA and I apologize if you've answered this previously.
I know I didn't answer it because right now I'm I don't have a.
Final answer to that.
As you saw in the press release, just this is growing.
So quickly and on and on.
So much on the especially on the grain side, the really really big improvement that we need to drill quite a bit.
Next year too.
You got the new understanding of making new resource and then kind of do the decided on the mining method. So it will take a bit more time, but there will be of course information coming out during the year advancing that project. Its you know its one.
Sure the biggest the most important project one of the most important projects, we have and that.
You know all eyes are on.
On that exploration in deferred engineering team on an definition on mining methods and accessories et cetera. So it's a little bit early to give you the timing right now.
Fair enough.
Well, we look forward to those updates in an updated resource and I think just the number of questions. On this just reflects our curiosity and we're looking forward to details on the Ta, but certainly the reason to postpone.
Certainly valid.
But just in an attempt to maybe get a little color is there any other mining projects across the current landscape that you might consider as an analog to the scarring like for example, I look to the Arizona mining tailored appalled at similar large tonnage sub level open stoping as Don Juan Carlos proposed mining method and I see.
The Capex there was about 500 million or so but this goes back a few years ago.
Are there analogs and are we kind of in terms of capex like that order of magnitude is there any at this early stage.
Can you provide color on.
As we await further details to be confirmed later.
Well there you know, it's it's tough to give you an analog because theres no money deposits in that size and.
Great.
Look at in the World. It's also deep seated deposits like black money annuity policies are deep seated of course over the last you know on the year to be you know other mining as a mining industry in mind, a lot of the deposits closer to surface and as we go deeper and deeper down so that changes and uncomplicated, obviously situations for for all the people.
It's kind of a bit difficult to just to compare one with the other because they are so different situations off the geology of the ground conditions.
The size.
So I think I really would look at you know each separate tie you know I don't have all the details on the Taylor deposit for sure.
We're looking at it you know.
With let alone on size on it.
Right.
If you look at size of Softish kind of deposits.
And I don't want to jump out here for Martin, but I'm pretty sure that $500 million round not due to develop any of this kind of deposits five thus far north of that but we don't have a number yet to share with you.
Okay.
Okay gentlemen, that's all for me. Thank you very much. Thank you.
Yeah.
Our next question is from Craig Hutchison with TD Securities. Please go ahead.
Hey, good morning, guys good morning.
Just in terms of the lower than expected silver grades you have standards that they obviously I was due to narrowing vein structures.
This is a very high grade resource when do you guys expect to kind of get back into more higher grade material or just narrow vein structure is expected to persist through Q4 and kind of enter into next year.
Yeah. Good question Craig.
As we mentioned in the release the ore deposits are narrowing and right now we're looking at right.
We have deployed at San Vicente was really designed for the larger you know even plus five meter wide beams and so we're looking at some alternative mining methods.
Hum.
I hate to use the word potentially resuming mining methods shimon to try to bring not grade back from what we've seen over the last quarter or two we're not ready to predict what that may.
Turn out for us yet.
Come out with our projections for 2022 and January you'll get a better feel for that and we'll have a better sense, but right now it's.
It's it's coming down to how can we mind that best given the equipment that we got in Florida.
Okay. Thanks, and then just turning to La Colorado.
Beating a dead horse here, but just.
So some of the best show results, you've had or you reported this morning are kind of 200 meter step outs.
How long is it going to sort of take to get a resource update should we expect it to be towards the back half next year, just given how much drilling you plan for 2022.
Yeah look a lot of them in January normally would come out mid January with the forecast for the year, we will have all our box with all of the thrilling Oh for sure a big program again.
Willing at La Colorado.
You're not beating a dead horse here.
Really really alive for some time now.
Unbelievable.
Unbelievable discovery on deposits as you know.
We you know we published the first hole in that I mean, what was it three and a half years ago, probably so when.
When we discovered with the first of all that's gone so and it goes beyond our imagination on size.
And now on grades that were hit as well so it will take it will take awhile to thrilled at out.
But I definitely plan to you know to give to give you a kind of an updated resource at some point next year on that will just be another point in time I'm sure that that deposit dwell just continues to surprise us on.
Anvil grow bigger because that's we don't unless we know and as I mentioned in the call. It's still open on most sites.
Even after those step outs that we've got a fall ill follow up with that with the current program.
Okay great.
And maybe just one last question you guys were planning to put the P. A L sort of kind of Q4 here can.
Can you give us a sense of what throughput you were looking at originally and that P. A.
Well that's it.
Again that will change again.
To really be paying down our debt at the tonnage but.
It's multiple of what we do now.
Probably somewhere you know, let's call it as a starting point at the maybe eight to 10000 tons somewhere in that grade range, but as I sat is resolved.
Subject to change that because we were looking at are bigger and potentially high grade deposit and different mining method. So.
You know that that will all change next year.
I appreciate the color and great results. This morning on the Wisconsin.
Thank you very much.
Okay.
This concludes the question and answer session I'd like to turn the conference back over to Michael Steinmann for closing remarks.
Thank you everyone for calling in looking forward too.
Well that topic Q4, and next year, so have a good.
A good end of the year stay safe and stay healthy. Thank you everyone.
Yep.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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