Q4 2023 Pan American Silver Corp Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to Pan American Silver's 4th Quarter 2023 Unaudited Results Conference Call and Webcast. At this time, all lines are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Pan American Silver fourth quarter 2020 date Unaudited results conference call and webcast. At this time all lines are in a listen only mode. Following the presentation, we will conduct a.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 22nd, 2024. I would now like to turn the conference over to Siren. Thank you.

A question and answer session.

I'm joined this call you require immediate assistance. Please press star zero for the operator.

Call is being recorded on Thursday February 22nd 2024, I would now like to turn the conference over to Steven. Thank you. Please go ahead.

Siren: Thank you for joining us today for Pan American Silver's Q4 and full year 2023 conference call. This call includes forward-looking statements and information and makes reference to non-GAAP financial measures. Please see the cautionary statements in our MD&A news release and presentation slides for our Q4 2023 audited results, all of which are available on our website. I'll now turn the call over to Michael Steinman, Pan American's President and CEO. Thanks, Hiram, and thank you, everyone, for joining our call today.

For joining us today for Pan American Silver's Q4, and full year 2023 conference call. This call includes forward looking statements and information and makes reference to non-GAAP measures. Please see the cautionary statements in our MD&A news release and presentation slides for our Q4 2023 audited results all.

Of which are available on our website.

I'll now turn the call over to Michael Steinmann Pan American's, President and CEO.

Thanks, Sarah and thank you everyone for joining our call today.

Michael Steinman: The past year was a dynamic period of growth and change for Pan American. We added four new mines in two new jurisdictions. We streamlined our portfolio through the sale of non-core assets.

The past year was a dynamic period of growth unchanged for Pan American.

We added four new mines into new jurisdictions, we streamlined our portfolio through the sale of noncore assets, and we announced the preliminary economic assessment for the <unk> com.

Michael Steinman: And we announced the preliminary economic assessment for La Corada's car. With the integration of the assets we acquired from Yamana now complete, we continue our focus on improving margins through safe, cost-efficient operations, harvesting synergies, and further portfolio optimization. In 2023, the nine-month contribution of the assets we acquired drove an 11% increase in silver production and a 60% increase in gold production over 2022 and resulted in record revenue for both Q4 and for the full year. Operating cash flow for Q4 was $167.4 million, net of $32.4 million in taxes paid, and inclusive of $56.1 million of cash from working capital. The company recorded a net loss of 19 cents per share in Q4, driven by three non-cash charges, the first relating to the final purchase price allocation for the acquired Yemana assets.

The integration of the assets, we acquired from Yamana now complete we continue our focus on improving margins through safe cost efficient operations harvesting sandwiches.

Further portfolio optimization.

In 2023, the nine month's contribution of the assets, we acquired drove an 11% increase in silver production and a 60% increase in gold production over 2022 and resulted in record revenue for both Q4 and for the full year.

Operating cash flow for Q4 was 167.

$4 million net.

Net of $30 million to $40 million in taxes paid and inclusive of $56 1 billion of.

Cash from working capital.

We recorded a net loss of <unk> 19 per share in Q4, driven by three non cash charges.

First relates to the final purchase price allocation for the acquired Yamana assets.

Michael Steinman: Pan American finalized the Purchase Price Allocation, or PPA, asset values for the Amana Gold acquisition in Q4 2023, resulting in a $16.5 million improvement to previously reported Q2 2023 and Q3 2020. FRS accounting standard reporting rules for business acquisitions require that all accounting impacts to earnings from the finalization of PPA asset values be retrospectively recast to the prior quarter. The additional $16.5 million or $0.05 per share in earnings for the year related to revised depreciation charges for the final PPA asset values must be retroactively applied to Q2 and Q3 rather than applied to Q4 2023 earnings. Hence there's no impact on full year 2023 or. The second factor impacting Q4 earnings was the $36.2 million impairment charge for the crushing and agglomeration plant of Sawin.

American finalized the purchase price allocation or PPA.

Asset values for the amount of gold acquisition in Q4 2023.

Resulting in a $16 $5 million improvement to previously reported Q2, 2023 and Q3 2023.

S accounting standards reporting rules for <unk>.

This acquisition is required at all accounting impacts to earnings from the Finalization of PPA asset values.

Retrospectively recast prior quarters.

As a result, the additional $16 $5 million or <unk> <unk> per share in earnings for the year related to revised depreciation charges for the final PPA asset values must.

Must be retroactively applied to Q2 and Q3, rather than applied to Q4 2023 earnings.

There is no impact on full year 2023 earnings.

The second factor impacting Q4 earnings.

The $36 $2 million impairment charge for the crushing and agglomeration plant offset window.

Michael Steinman: The plant was constructed prior to Pan America's purchase of the mine in 2019, and we have never operated it. The third factor was a $13.8 million closure and decommissioning expense, largely due to the revised reclamation estimate at Alamodorado in order to withstand high-intensity rainfall events, the proper installation of impermeable barriers for the waste dump, and enhanced site drainage systems. The closure of the tailing storage facility at Alamodorado has been successfully completed. The impact of the impairment and the closure of the commissioning liability was removed from the just adjournment.

The plant was constructed prior to Pan-american purchased the mine in 2019, and we have never operated.

The third factor was a $13 8 million closer and decommissioning expense largely due to the revised reclamation estimate at Alamo Dorado in order to withstand high intensity rainfall events.

Installation of impairment both barriers for the waste dump and enhanced site training systems.

Closer of the tailings storage facility at Alamo Dorado has been successfully completed.

The impact of the impairment and the closer of decommissioning liability was removed from adjusted earnings.

Michael Steinman: Production for 2023 was pre-released on January 17, 2024, and largely in line with our expectations. Silver was slightly below our guidance range at 20.4 million ounces, while gold was within our guidance range at 882.9 thousand. The fall in silver production was largely due to the ventilation constraints at La Colorado together with the temporary suspension of operations in October 2020. We're looking forward to the completion of the new ventilation system in mid-2024 in order to access the higher-grade mine zones to the north. Excavation of the new 5.5 meter concrete liner for ventilation was completed.

Production in 2023 versus pre released on January 17, 2024, and largely in line with our expectations.

So we have a slightly below our guidance range at $20 4 million ounces, while gold was within guidance range at $882 $9000.

Shortfall in silver production was largely due to the ventilation constraints.

At La Colorado, together with the temporary suspension of operations in October 2023.

We're looking forward to the completion of the new ventilation system mid 2024 in order to access the higher grade mine zones for the northeast.

Excavation of the new five five meter concrete line ventilation shaft.

Fleet at <unk>.

Michael Steinman: The final depth of 581 meters is on schedule in December 2023, and the remaining key pieces of infrastructure, two large exhaust fans to draw the hot, humid air out of the mine, are expected to be installed by the end of Q2. In the first two quarters of this year, we'll continue to reflect the challenging operating conditions. Expect significant improvement in the second half of the year with high throughput and lower costs thereof. The production shortfall at La Clorada and higher mining costs at both La Clorada and Varun resulted in cash costs and unsustaining costs for our silver segment operations coming in above our guidance range for 2020. However, these increases were partially offset by lower costs at Cerro Moro from higher than expected gold by-product credits and at San Vicente from lower costs and higher silver production All production and gold segment all-in sustaining costs were within our guidance range for 2023. However, our cash costs for the gold segment came in above the guidance range, largely due to lower gold production at Elton.

Final depth of 581 meters on schedule in December 2023.

Remaining key pieces of infrastructure.

<unk> funds to draw the hot humid air out of the mine are expected to be installed by the end of Q2.

The first two quarters of this year will continue to reflect the challenging operational conditions.

Expect significant improvement in the second half of the year with high throughput and lower costs thereafter.

The production shortfall at Lacma, rather than higher mining costs at both Lacovara in Guangdong resulted in cash cost and all in sustaining costs for our silver segment operations coming in above our guidance range for 2023.

The increase partially offset by lower cost of Cerro Moro from Hyatt unexpected gold byproduct credits and Thats Sandwich center from lower costs and higher silver production.

Coal production and coal segment, the all in sustaining costs were within our guidance range for 2023.

Cash costs for the gold segment came in above the guidance range largely due to the lower gold production at that opinion.

Michael Steinman: As disclosed in the third quarter of 2023, coal grades mined at El Peon were lower than we had anticipated in certain high-grade sections of the mine. We are increasing the drill density at El Peon after drilling fell behind late in 2022 and early 2023 due to a change in a contract by Yamaha. We expect to provide more information on El Peon with the Mid-Year Reserve Update, released our guidance for 2024 on January 7. In 2024, we expect to produce between 21 and 23 million ounces of silver and between 880,000 and 1 million ounces of gold. All sustaining costs for the silver segment are expected to be between $16 and $18.50 per ounce and between $14.75 and $15.75 per ounce for the gold set.

As disclosed in the third quarter of 2023 cold grades mined at helping Jan were lower than we had anticipated in certain high grade sections of the mine.

We are increasing the drill density it opened after drilling fell behind late in 2022, and the early 2023 due to a change of our contracted by Yamana.

We expect to provide more information on <unk> with the midyear reserve update.

At least our guidance for 2024 on January 17.

In 2024, we expect to produce between 21 of 23 million ounces of silver and between 880000.

And 1 million ounces of gold.

All in sustaining costs for the silver segment are expected to be between 16 and $18 50 per ounce.

Between $14 75, and $50 75 per ounce vertical segment.

Michael Steinman: At Jacobina, we are expecting processing rates of approximately 8,500 tons per day, with stable gold recovery rates around 96%. The new carbon-impulsed tanks were mechanically completed, and the new concentrate leach system began operating in late 2020. We are undertaking a comprehensive optimization study of Jacobina to evaluate alternative mining methods and enhancements to the processing facility to optimize the long-term throughput and economics of that facility.

Chuck Obinna, we're expecting processing rates of approximately 8500 tonnes per day staple gold recovery rates around 96%.

The new carbon in pulp tanks for mechanically completed and the new concentrate Leach system began operating late 2023.

We are undertaking a comprehensive optimization study of Chuck Obinna reevaluate alternative mining methods and the enhancements to the processing facility to optimize the long term throughput and economics of that mine.

Michael Steinman: At El Peon, we are assuming that grades and throughput rates will be similar to what we realized in the second half of 2023, pending the new infill drilling results. We expect to complete mining at Dolores by Q3 2024 with residual leaching to follow for several years thereafter. Silver production is expected to be largely back and loaded from improved ventilation conditions at La Colorado and an expected improvement in grades at Cerro Moro as we access and bring into production the Natty Satellite Deposit, which is located 25 kilometers from the plant. Costs will reflect that production profile being heavily weighted to the first two quarters and significantly decreasing in the back half of 2024, as shown in the quarterly operating outlook provided with our Q4 disclosure.

At <unk>, we are assuming that grade and throughput rates will be similar to what we realized in the second half of 2023 pending the new infill drilling results.

Expect a complete mining at Dolores by Q3, 2024 with residual leaching to follow for several years thereafter.

Silver production is expected to be largely back end loaded from improved ventilation conditions that lack of that order.

And an expected improvement in grades et cetera model as we access and bring into production. The <unk> satellite deposit, which is located 25 kilometers from the plant side.

Costs will reflect our production profile being heavily weighted to the first two quarters and significantly decreasing in the back half of 2024.

Shown in the quarterly operating outlook provided with our Q4 disclosure.

Michael Steinman: We also expect to spend between $295 to $310 million on sustaining capital and another $80 to $85 million on growth projects, primarily for advancing the Lackawanna Scarn, completing the tailing filtration project at Varon, finishing the Pace backfill facility at Bell Creek, and completing some plant upgrade projects initiated by Yamana Chakotay. Sustaining capital is largely needed to expand tailings dams and leach pads, to expand underground mine ventilation systems, and open pit mine waste dumps, for their cooperation to replace and overhaul mobile equipment, and for certain operating lease payments.

We also expect to spend between $295 million to $310 million on sustaining capital and another $80 million to $85 million on growth projects, primarily for advancing the <unk> con completing the tailings filtration project that we're on finishing the paste backfill facility.

Bell Creek and completing some plant upgrade project initiated by Yamana Chuckle theater.

Sustaining capital is largely to expand tailings dams and leach pads.

Underground mine ventilation systems.

And open pit mine based pumps for exploration to replace an overhaul of mobile equipment and for certain operating lease payments.

Michael Steinman: Turning now to our strategic initiatives, in January, we filed an updated technical report for our La Colorada property, which included the preliminary economic assessment for the La Colorada current project. Our objective is to provide investors with exposure to silver, and Tascarn provides that exposure in scale.

Turning now to our strategic initiatives in January we filed an updated technical report for <unk>.

Luckily our other property, which included the preliminary economic assessment for the local allowed us corn project.

Our objective is to provide investors with exposure to silver and discount provides that exposure and scale.

Michael Steinman: Annual silver production is estimated to average 17.2 million ounces during the first 10 years. It is also expected to produce 427,000 pounds of zinc annually during that period. Given the volume of base metals in the deposit, we are assessing interest from base metal producers and other capable parties to explore long-term partnerships to develop this polymetallic project. They are focused on the large amount of anticipated silver production from this deposit. Turning to Escobar, a new government took office in Guatemala in January 2024, and we had our first meeting with the new Ministry of Energy and Mines, or MEM, on February 7th, 2024. The meeting for the ILO 169 consultation was held yesterday, on February 21st, with the newly appointed Vice Minister of Energy and Mines and Chinco representatives, during which a presentation on the observations of the SINCUS-appointed consultants

And while silver production is estimated to average $17 2 million ounces during the first 10 years.

It is also expected to produce 427000 pounds of zinc annually during that period.

Given the volume of base metals and the deposit we are assessing interest from base metal producers and other capable parties to explore long term partnerships to develop this poly metallic Chad.

We are focused on the large amount of anticipated silver production from this deposit.

Turning to ask about.

The new government took office in Guatemala in January 2024, and we had our first meeting with the new Ministry of energy and mines. So men on February seven 2024.

The meeting for the Ilo 169 consultation was held yesterday on February 21.

The newly appointed Vice Minister of energy and mines unchanged Representatives.

Enrich presentation on the observations of the sink is appointed consultants was communicated.

Michael Steinman: We look forward to receiving the reports and working with the MAM to ensure accurate information is communicated to the SHINCA participants in the consultation process. As usual, we are not providing a time frame for completion of the consultation or the potential restart of, and America's financial position strengthened over 2023. At year end, our cash and short-term investments reached a record of $440.9 million, and we have the full $750 million available under our UNDRAWN revolving sustainability-linked credit facility. The total debt of $801.6 million was mostly related to two senior notes we acquired through the Yamana acquisition.

We look forward to receiving the reports and working with demand to ensure accurate information is communicated to the schenker participating in the consultation process.

As usual, we are not providing a timeframe for completion of that consultation or the potential restart of the mine.

And America's financial position strengthened over 2023.

At year end, our cash and short term investments reached a record of $440 $90 million.

And we had the full $750 million available under our Undrawn revolving sustainability linked credit facility.

Total debt of $801 $6 million was mostly related to two senior notes.

Acquired through the Humana acquisition.

Michael Steinman: We expect cash flow generation to improve in 2024 as we realize the contribution of a full year of the four new mines and cost savings through synergies and lower care maintenance costs. However, we expect cash flow to be back-end weighted given the production and associated cost profile I previously outlined. As well, we expect approximately half of the estimated $95 to $100 million in tax payments will be paid in the first quarter of 2020.

We expect cash flow generation to improve in 2024 actually realize the contribution of a full year of the four new mines and cost savings through synergies and lower maintenance costs.

However, we expect cash flow to be back end weighted given the production and associated cost profile I previously outlined.

As well, we expect approximately half of the estimated $95 million to $100 million of <unk>.

<unk> payments will be paid in the first quarter of 2024.

Michael Steinman: Yesterday, we announced our intention to begin buying back some of our shares. You have been opportunistic in the past in making acquisitions. With the current market dislocation between our equity and asset valuations, we believe that share buyback is a prudent and accretive use of capital, and we will apply the same opportunistic approach to repurchasing Pan American shares. We also announced yesterday a cash dividend of $0.10 per common share in line with our policy. In 2023, dividends paid totaled $130.4 million.

Yesterday, we announced our intention to begin buying back some of our shares we have been opportunistic in the past and making acquisitions.

Current market dislocation between our equity and asset valuations, we believe that share buyback is a prudent and accretive use of capital and we will apply the same opportunistic approach and repurchasing Panama and chairs.

We also announced yesterday, a cash dividend of <unk> 10 per common share in line with our policy.

In 2023 dividends paid totaled $130 4 million.

Michael Steinman: Before opening up for questions, I would like to welcome Scott Campbell, who is coming back to join the company in April. Scott will help oversee the company's operations and lead the corporate projects group, reporting to our Chief Operating Officer, Steve Paz. The senior operational expertise will be very valuable as we work to optimize our portfolio and advance our growth project. On behalf of the entire team at Pan American, I would also like to thank George Greer for his contributions to the company over the past 17 years. George, we wish you all the best for your retirement coming up later this year. Together with the other members of our management team, we would now be happy to take your questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Did you have a question? Please press the star followed by the 1 on your telephone keypad.

Before opening up for questions I would like to welcome Scott Campbell with coming back to join the company in April sculptural help oversee the company's operations.

Fleet, the corporate projects group reporting to our Chief operating Officer, Steve Busby.

The senior operational expertise will be very valuable as we work to optimize our portfolio and advanced our growth projects.

On behalf of the entire team at Pan American I would also like to thank George career for his contributions to the company over the past 17 years.

Of course, we wish you all the best for your retirement coming up later in this year.

Together with the other members of our management team, we would now be happy to take your questions.

Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your <unk>.

Olaf will keep Ed if you will.

Operator: You will receive a three-tone prompt acknowledging your request. Questions will be taken in order. Should you wish to cancel your request, please press the star followed by the number 0. If you are using a speakerphone, please leave the handset before pressing.

Don Kwong acknowledging your request questions will be taken in the order received and should you wish to cancel your request. Please press the star followed later too.

Thank you speaker phone. Please keep your handset before pressing any Keith once again that is star and wanted to ask a question.

Operator: Once again, that is a star and one to ask a question. Your first question comes from the line of Cosmos Stu from CIBC. Thank you. Thank you. Thanks, Michael and team. And thanks, George as well.

Your first question comes from the line of Cosmos <unk> from CIBC. Please proceed.

Thanks, Michael and team.

Thanks, George as well happy retirement.

Cosmos Stu: Happy retirement. Maybe my first question is on your quarterly guidance. Thanks Michael for providing us with quarterly guidance. As we can see, it improves quarter over quarter. My question is, you know, I understand the second half is going to be better than the first half, but I do see a big drop or improvement in terms of silver costs in Q4. Just wondering how you're going to get there.

Maybe my first question is on your quarterly guidance, Thanks, Mike local providing us with quarterly guidance as we can see it improves quarter over quarter. My question is.

I understand the second half was going to be better than first half, but do you see a big drop or improvement in terms of silver costs in Q4.

Just wondering how youre going to get I think it's a fairly big drop even from Q3 into Q4 in terms of all in sustaining costs for silver.

Michael Steinman: I think it's a fairly big drop, even from Q3 into Q4 in terms of all sustaining costs. Yeah, Cosmos, thanks. And yeah, that's a big, big drop. Of course, heavily impacted by La Colorado's changes to, you know, back to bigger production, more ounces after the ventilation circuit is back working. Of course, that was the reason for the high cost last quarter. So that big impact will be reversed. And that's why it's so big. But I'll hand it over to Steve to give us a bit more call around the cost side. Yeah, Cosmos, I think I would add the other thing to look at is Cerro Moro.

Yes Cosmos.

Yes, that's a big big drop of course heavily impacted by La Colorado.

Changes to.

Back to two Baker production more ounces. After depopulation circuit is back working of course that was the reason for the high cost last quarter. So that's a big impact.

There'll be reversed and Thats why its so based on one hand, it over to Steve to give us a bit more color on the cost side, Yes, Cosmos I think I would add the other thing to look at it is on Cerro Moro, we have backend loaded gold production in Q4, it's quite high and Thats the byproduct credit.

Steve: We have a back-end loaded gold production in Q4. It's quite high, and that's a byproduct credit there. So that's really driving a big part of the Q4 change. Great, thank you. And then, Michael, as you mentioned, there were a number of one-time items in your earnings in Q4, including Shawindo, the crushing agglomeration plant, $36.2 million write-down. I'm just wondering, was that something that you could have sold, that no one wanted, or did you try to sell it?

So thats really driving a big part of the Q4 change as well.

Great. Thank you.

And then Michael as you mentioned.

There were a number of one time items in your earnings in Q4 include.

Including show window, the crushing and agglomeration plant $36 $2 million write down.

I'm just wondering was that something that you could have sold it.

Yeah, No one wanted or did you try to sell it.

Michael Steinman: Again, I will start and Steve will have more color on this. This plant was built by Tahoe before we actually purchased the company. We had obviously looked at that plant during operation, but we opted for a solution of blending between coarse and fine grain material as a way more economical solution than using the plant. So the plant is now, let me just think, probably seven years old, eight years old.

Again, I will start and then Steve will have more call introduced at this plant has been built by Tahoe before we actually purchased the company.

We obviously looked at that at that plant during operation.

That's for a solution of blending between coarse and fine grained material.

More economic solution and using the plants. So the plant is now let.

Let me just thank.

Probably seven years old to 80 years old.

Michael Steinman: We have never used it, and I think where we stand right now and with the blending solutions that we found, we have come to the conclusion that it's not something that we will turn on looking forward, but Steve may be able to give us more detail. Yeah, Cosmos, Michael's precisely right, and really, the issue was we were trying to decide. We were trying to look at all the alternatives for treating the high-clay ores of Chewindo and looking at the blends, looking at the rock availability, and so we kind of kept that plant in check just in case we didn't have enough rock. That may have been the alternative to go to.

They have never used it.

I think where we stand right now on Victor blending solutions that we found we come to the conclusion that it's that we will not turn it on.

Looking forward with up Steve might be able to further our data Cosmos Michaels precisely right.

Really the issue was we were trying to decide we're trying to look at all the alternatives of treating the high.

<unk> <unk> window and looking at the blend is looking at the rock availability.

And so we kind of kept the plant in check just in case, we didn't have enough rock that may have been the alternative to go to now we're more confident with our blending capabilities, we understand the percolation characteristics on the heap. So we've made the decision we didn't need that plant anymore.

Steve: Now we're more confident with our blending capabilities. We understand the percolation characteristics of the heap, so we've made the decision we didn't need that plant anymore. Yeah, okay. I'm just wondering. I know I used to cover Tahoe as well. I know it was no longer needed.

Yeah. Okay, I'm, just wondering I know I used to cover Tahoe as well I know it was no longer need I'm just wondering if it's something that your cash and just monetize.

Cosmos Stu: I'm just wondering if it's something that you can actually just monitor, you know, in terms of what we do plan to market that equipment. There's some of it we want to keep for other developments we have internally, but there's, you know, large pieces of crushing and agglomeration equipment that we will try to market over the next year. And then maybe one last question on Dolores, you know, mining will likely come to an end soon. This is going to be a residual leach sort of operation. Can you maybe talk about the ongoing, what would you call it, maintenance costs or closure costs that you will need to spend? And then, as you enter the closure period, you know, what would you need to do in terms of ensuring the safety of the site, the structural integrity of the leach pads, and making sure that, you know, there are no accidents. Yeah, Cosmos, that's a great question.

In terms of yes.

Got it.

So if I could add cosmos, we do plan to market that equipment.

There is some of it we want to keep for other developments, we have internally, but theirs.

Large pieces of crushing and agglomeration equipment that we will try to market over the next year or so.

And then maybe one last question on Dolores as you mentioned.

<unk> will likely come to an end soon.

This is going to be a residual leach sort of operation can you maybe talk about the ongoing what would you call maintenance cost of closure costs.

You will you will need to spend and then as you enter the closure period.

What do you need to do in terms of ensuring the safety of site.

The structural integrity of the leach pads and making sure that.

No accidents kind of hassle.

Yes Cosmos.

Great question, Mike I can tell you we're focused on trying to structure the operation wanted some.

Steve: I can tell you we're focused on trying to structure the operation when it's in this residual leaching as efficiently as we can. We will absolutely maintain all of the monitoring systems, all of the geotechnical monitoring, and elaborate monitoring that we have on the heaps and the dumps during the residual leaching. Those aren't expensive items to run.

Dual leaching as efficiently as we can we will absolutely maintain all of the.

Monitoring systems all of the geotechnical monitoring elaborate monitoring that we have on the heaps in the dumps during the during the residual leaching those arent expensive items to instruments that are run.

Steve: The real cost is going to be just circulating solutions through the heap. And then the big question is going to be cyanide concentration for the solubility of the silver. The gold's pretty well solubilized, so it comes out as you rinse.

The real cost is going to be on just circulating solutions through the heap.

And then the big question is going to be cyanide concentration for the solubility of the silver the gold's pretty well solubilized. So it comes out as you as your rents, but the silver you've got to you got to keep the cyanide concentrations.

Steve: But the silver, you've got to keep the cyanide concentrations at a critical level. So that's really going to be what we monitor, and how we operate. We'll do it as streamlined as we can. We've made some estimates in this guidance, particularly in Q4, where it's all residual leaching at that time. But until we get there and we actually structure it and see how it goes, it may change from that point. Thanks, Michael and Steve. Those are the questions. Thanks once again, and your next question comes from the line of Jan Tumazos from Jan Tumazos Independent Research. Thank you for all the explanations. Michael.

Critical level, so that's really going to be what we what we monitor what we what we operate we'll do it as streamlined as we can we've made some estimates in this guidance, particularly in Q4 works all residual leaching at that time, but until we get there we actually structure and see how it goes.

It may change from that point.

Great. Thanks, Michael and Steve those are all my questions.

Thanks once again.

Thank you and your next question comes from the line of John Tumazos from Jensen Masses Independent research. Please proceed.

Okay.

Thank you for all the explanations.

Michael.

John Charles Tumazos: Love of Colorado, SCAR, and PEA with 2.8 billion as capital if you go to, to your point. $6 billion if you stop at 30,000 tons a day, future, the share buyback, and potentially in 2024. Maybe you have a lot of time to earn money, 3, 4, 5 years from now. Should we take this, essentially, as your expression of confidence that you're going to complete a JV with a base number of partners and that your share of the capital might be less than half of the PEA number? Subsequent study.

Colorado scarring.

With $2 8 billion of capital if you go to 50000 tons.

Two points.

6 billion, if you stop at 30000 tonnes a day is a big.

Future item.

The share buyback and potentially in 2024.

Okay.

<unk>.

Maybe you have a lot of time to earn money in.

345 years from now you have the end of the construction of La Colorado discard.

Should we take this risk.

Surely.

As your expression of confidence that youre going to complete a JV with a piece of.

Not at all.

Partner.

And your share of the capital.

Might be less than half of the P. A number or the subsequent studies you are going to reduce that.

Michael Steinman: Yes, thanks for the question. Absolutely. I think I made it very clear from the first column that the focus now is to find the right partner for that project. As you can imagine, for such a large, We'll call it the Silver Sink Deposit, perhaps the largest in the world.

Capex number and reduce your capital call.

Yes. Thanks for the question absolutely I think I've made it very clear from the first call on that.

The focus now.

To find the right partner for that project as you can imagine for such a large.

I will call it silver zinc deposit.

The largest in the world.

Michael Steinman: There is quite some interest from the base metal side, just because of the long life, the underground nature, and the big, big, big sink production. So, yes, that's absolutely my confidence to work on that, and that's kind of an agreement that obviously will reduce our share on the. The Capital but always stay focused on that very large silver production. As you remember, there are about fifty thousand and about 17 million ounces for the first 10 years of average silver production, which really will be our focus in any kind of agreement that, hopefully, we come to. Should we also take this perhaps as an expectation that silver or zinc prices might rebound, or that? Escobar, restart it.

There is quite some interest from the base metal side, just because of the long lives.

The underground nature.

And <unk> expect <unk> production. So yes, that's absolutely my confidence to work on that.

Such kind of an agreement.

Obviously, well we'll reduce.

Our share on the on.

On the capital, but always stay focused on that very large silver production. So remember it was about a 50000 ton about 17 million ounces for the first 10 years average silver production, which really will be our focus in any kind of agreement.

But hopefully come to.

Should we also take this.

<unk> is an expectation.

The.

Sure.

The silver zinc prices rebound to help your economics.

Or is it.

Escobar restarts and.

Michael Steinman: Well, you know, I don't have control, obviously, where the silver and zinc prices are going. I think, you know, all the listeners have their views on that. I have my view.

Mala.

Hello.

I don't have control, obviously, you've got a silver and zinc prices are going I think.

All of the listeners have their view on that.

My view of it.

Michael Steinman: I think once we see interest rates move the other way, we will see a strong rebound in precious metals for sure. You know, I don't know when that will happen this year because of the different views out there. But just to remind everyone, like last year, we repaid about four hundred million dollars in debt, and we paid about one hundred and over one hundred and thirty million dollars in dividends. And we ended the year with a record cash and short-term investment balance of over four hundred forty million dollars. So those are very important numbers here. And obviously, one of the reasons why we decided at this point in the market, where we believe there are a lot of values, you know, luck is one of them that is not fully included in our share price.

I think once we see.

Interest rates move the other direction level see a strong rebound on <unk> for sure.

I don't know when that will happen this year to us the different views out there, but just to remind everyone.

Last year we.

We have repaid $400 million debt and we paid about 100 or $130 million in dividends, while we ended the year with a.

Record cash and short term investment balance of $440 million.

So those are very important numbers here and obviously one of the reasons why we decided at this point in the market, but we believe.

There's a lot of value as local it out as one of them that are not fully included in our share price, but it's a good time on that accretive time.

Michael Steinman: But it's a good time and an accretive time to buy back some of our shares. Of course, we're looking forward, as you saw in the quarterly guidance, to a stronger and strong 2024, especially the second half when costs come up, as we explained with Cosmos earlier in the call.

To buy back some of our shares.

Of course, we are looking forward as you saw during the quarterly guidance too.

Less stronger and strong 2020 for especially the second half on costs come off as we explained.

Cosmos earlier in the call. So all that combination and obviously last but not least we will continue to work on divestments.

Michael Steinman: So, all that combination, and, obviously, last but not least, we will continue to work on divestments. We were, I think, very successful last year in the divestments, and we will continue to work on that. So, all that together, and the fact that we probably created dividends, sorry, royalties, out of those divestments that we did last year, which, you know, I will probably value somewhere in the $150 to $200 million range at today's prices. So another kind of big value bucket that we have under our control. So I think it's a very prudent approach for us to obviously pay the dividend and come out with that share buyback at this point. And your next question?

I think very successful last year on the divestments and will continue to work on that so all of that together and.

And the fact that we probably created last year dividend sorry.

Royalties.

Out of those divestments that we did which I will property values on marine.

The $50 million to $200 million range at today's prices. So another kind of big value bucket that we have.

Under our control so I think it's a very prudent approach for us to do obviously pay the dividend.

And come out with that share buyback at this time.

Okay.

Thank you and your next question.

Operator: Thank you, and your next question comes from the line of Greg Hutchinson from, Hi, good morning, guys. On a lot of Colorado, can you give us a sense of what the grades will be in the second half of this year? Obviously, there's going to be a big inflection point. And how durable are those higher grades kind of going forward? Is it more of a year or two? Or is it a very short period of time? Yeah, good morning, Greg. This is Steve.

Thank you and your next question comes from the line of Blake Hutchinson from TD. Please proceed.

Hi, good morning, guys.

Just looking like Colorado.

Can you just give us a sense of what the grades will be in the second half of this year, obviously, there's going to be a big inflection point.

And then how durable are those higher grades kind of going forward is it more of a.

A year or two or is it a very short period of time.

Yes, good morning, Greg This is Steve.

Greg Hutchinson: Fortunately, we are seeing the grades of lower Colorado that we expect. During Q4, we were about 288 grams silver. That's close to the reserve grade.

Fortunately, we are seeing the grades at La Colorado that we expect during Q4, we were about 288 Gram silver.

That's close to the reserve grade that's what we expect going into next year, it's really a matter of tonnage we got to get our tonnage up and the tonnage that we got and increases in the in the higher grade portion of the candle or deep zones, so that slips ventilation shaft.

Steve: It's what we expect going into next year. It's really a matter of tonnage. We have to get our tonnage up. And the tonnage that we have to increase is in the higher grade portion of the Candelaria deep zone. So that's what the ventilation shaft and the vent fans will give us access to increase that tonnage. But we're pretty happy with the grades where they are.

Fans will give us access to to get the tonnage up but we're pretty we're pretty.

Happy with the grades where they are we're pretty confident that those grades are going to sustain over a long period of time.

Steve: We're pretty confident those grades are going to sustain over a long period of time. We see potential to continue to add as we drill out more and look. Yeah, we have at the moment probably about nine, eight, or nine years of proven and proven reserves with this kind of throughput. So yes, they can sustain a long time. Obviously, there will be advances in the SCARN during that time period. But yeah, I think there's a long reserve in the veins. Later on, those veins will show enough with the SCARN deeper down.

Potential to continue to add.

We drill more.

Yes, we have.

At the moment, probably about nine Nathan nine years of proven and probable reserves.

It's kind of throughput so yes that can sustain a long time, obviously that will be.

I'll answer some of those con Julien.

That time period.

I think thats, a long reserve into vein place around those things will certainly know pick the scar and deeper down.

Steve: Okay, so the plan, from a throughput perspective, is around 2,000 tons a day. Is that what we should be modeling next year? Yeah, once we get the ventilation up and running, that's kind of our target to get above 2,000 tons a day. So once the ventilation fans are running, we do have some development acceleration that we have to do in that Candelaria zone. So, you'll see it start to ramp up from the current kind of 1300 ton a day range. It'll take us a couple months, two, three months to ramp up from there to the 2000 tons a day once the vent fan is running.

Okay. So the plan from throughput perspective is around 2000 tonnes. A day is that we should be modeling that's here.

Yes, once we get the ventilation up and running that's kind of our target is to get above the 2000 tonnes. A day. So once the ventilation fans are running we do have some development.

Acceleration that we have to do in that Candler East zone below you know you'll see it start to ramp up from the current kind of 1300 ton a day range.

It'll take US a couple of months to three months to ramp up from there to the 2000 tonnes a day once the plan was running.

Steve: Okay, great. And just in terms of, you know, I guess the sort of free cash flow you guys are going to generate here. Do you guys anticipate being free cash flow positive in the first half of this year, given the higher taxes you have to pay that are usually weighted to the first half? Or is it sort of a do you anticipate free cash flows are more of a second half? Hi Craig, this is Ignacio. That's a great question.

Okay great.

And just in terms of the I.

I guess.

Free cash flow you guys are going to generate here do you guys anticipate being free cash flow positive in the first half of this year, given the higher taxes and you have to pay.

Usually weighted to the first half or is it sort of are you anticipate free cash flow sort of more of a second half story.

Hi, Craig This is Ignacio that's a great question just following up on what Steve just said our forecast is for it to be backend loaded and as usual there.

Ignacio: And just following up on what Steve just said, our forecast is for it to be back-end loaded. And, as usual, there are heavy taxes being paid in the first half of the year plus some extra capital. So we are confident we will be able to pay our dividends in the first half of the year without drawing from our credit facility, but the bulk of the free cash flow does come in the second half of the year. Okay, great. Thanks, guys. Thank you. Thank you. Once again, should you have a question, please press the star followed by the number on your telephone keypad. And your next question comes from Don DeMarco from National Bank Financial. Please go ahead.

As heavy taxes being paid in the first half of the year plus some extra capital.

So we are we will be able to pay our dividends in the first half of the year without drawing from our credit facility, but the bulk of the free cash flow does come in the second half of the year.

Okay, great. Thanks, guys.

Thank you.

Thank you once again should you have a question. Please press the star followed by the one on your telephone keypad and your next question comes from the line of Don Demarco from National Bank Financial. Please go ahead.

Greg Hutchinson: Thank you, operator. And good morning, Michael and team. So first question, you had some strong cost performance in Q4 at a couple of your flagship mines, both quarter to quarter and relative to 2024 guidance. So I'm referring to El Pinyon, Q4 ASIC 1178, midpoint, and 2024 guidance is 1250. Jacobina 1022, and the midpoint of 24 guidance is 1300. So, in light of this Q4, are you feeling more confident on guidance at these mines, and maybe even? Tracking the lower end of the range.

Thank you operator, and good morning, Michael and team.

So first question.

You had some strong cost performance in Q4, and a couple of your flagship mines, both quarter over quarter and relative to 2020 for guidance.

I'm, referring to helping on Q4 ethic 11 kind of midpoint guidance is 12 50.

Jacobean account 22 in the mid point of 24 <unk> hundred.

In light of this Q4 are you feeling more comfortable confident on guidance at these mines and maybe even track.

Tracking the lower end of the ranges.

Don Demarco: Yeah, thanks Don. I mean, we feel very confident with the guidance we put out for those mines, which shows a modest inflation rate that we'll absorb, like five to seven percent. We've got some wage adjustments that we believe need to be made in Brazil and some added payroll costs that we have to look at there. So I think what we forecasted out, we're quite confident of. There is some potential upside to those things, but it's really driven by productivity.

Thanks Dawn.

We feel very confident with the guidance, we put out for those mines, which does show a modest.

Inflation rate that will absorb.

The 5% to 7% we've got some wage adjustments that we believe need to be made in Brazil and some.

<unk> added payroll costs that we have to look out there. So I think what we forecasted out we're quite we're required coughing.

Confident.

There is some potential upside to those things.

But it's really driven on productivity. So that's really where we're focusing our efforts there, but I think from a cost side, we're pretty confident in your guidance right.

Steve: That's really where we're focusing our efforts there. But I think from the cost side, we're pretty confident in our guidance. Just want to add here, don't forget that the big impact on our costs if we have more than one product at the mine is the byproduct credit from the byproduct metal. So that metal price has a big impact. And last but not least, currencies. So foreign currencies can have a big impact. You saw that in Mexico, where obviously, with the Trump case, that was kind of a headwind on the cost side for us. But you know, it can be very strong tailwinds as well.

Sorry to add here don't forget that big impacts our costs.

More than one product at the mine is the byproduct credit from.

Our pipe product model, so thats metal process.

And last but not least currencies so foreign currencies.

Have the big impact you saw that in Mexico are opposite of it.

Strong peso.

That was kind of a headwind on the cost side for us.

It can be very strong tailwind as well. So those are the things that we have no control over but yes.

Michael Steinman: So those are the things that we have no control over. But yeah, we are very confident with our guidance over the items that we control. Okay, thank you. So just shifting to Escobar, then, the ILO consultation meetings have resumed, and a meeting was held yesterday. It's good to hear that the new minister was present. Is there any feedback from this initial meeting or insight into the next meeting or any next steps? It was the Vice Minister that was present yesterday. It was the first meeting after a few weeks of transition with the new government. The government has indicated to us that it is committed to the ILO 169 process. Of course, there was some time needed to transition and integrate the new government. That's absolutely normal, and you're correct.

<unk> EBITDA guidance over the items that right that we're controlling.

Okay. Thank you.

So just shifting to ask them all then.

The Ilo complication meetings resumed and meeting was held yesterday.

To hear the new Minister was present is there any feedback from this initial meeting or insight into.

The next meeting or in any next steps.

Yes. It was the vice Minister desktop presence yesterday was the first meeting after a.

A few weeks of transition with the new government.

The government that has indicated to us to be committed to the Ilo 169 process of course for us some time needed to do.

To transition and integrate the new government, that's absolutely normal and yen and you're correct me at the last meeting was yesterday.

Michael Steinman: The last meeting was yesterday. I think there are some working meetings planned here for the future. We're looking forward to continuing the process with all the parties involved. There will be, for sure, I guess, from time to time, updates on the MEM website for the consultation, so just have a look at there for updates from the MEM director. Okay, fair enough.

There are some work and meetings planned here for the for the future.

For us really looking forward to continue the process with all the parties involved Thunder.

That will be for store I guess from time to time updates on demand have upside for the consultation so.

Just top of local therefore updates from demand directly.

Okay fair enough.

Don Demarco: And final question then, with producer valuations, uh... where they are in the market right now, call it depressed, are your plans for asset divestment maybe deprioritized until uh... Valuations Recovery? Not really.

And final question then.

With producer valuations.

Where they are in the market right now call it depressed or your plans for asset divestment, maybe prioritize until.

Valuations recover.

Michael Steinman: I mean, it depends, obviously, on the valuation and prices we get. I think we were very successful divesting assets last year at very, very good prices and royalties, I think. And, you know, most of these projects are, especially like last year when you looked at Marat, are long-term projects. Big buyers, big companies, they look at a very, very long or much longer timeframe than just current metal prices. So I don't think that it really impacts their valuation when they look at assets. And I see that continuing into this year.

No not really I mean, it depends obviously on the undervaluation that process rigor I think.

I have been very successful divesting assets last year at the very very successful prices.

And royalties.

Yes, most most of these projects are especially like last year. When you looked at tomorrow. There is a long term project.

Big buyers big companies. They look at very very long much longer timeframe than just current metal prices.

So I don't think so that it really impacts their valuation when they look at assets.

I see that continuing and today see yourself all depends on.

Michael Steinman: So it all depends on the prices, on the valuations we get from potential buyers this year. But now I'm very confident that we can continue that road down and divest Tumazos this year. Okay, and just as a follow-up to that, I think Lorraine, too, the Sulfide Project has been mentioned as a candidate. Others certainly are. Can you share any color on what might be the sort of top candidates for divestment considerations? I mean, I think we talked about Lorena too.

On the prices on the valuations we got from potential buyers. This year, but now im very confident that we can continue that dropdown and diverse from a subsequent year.

Okay, and just as a follow up to that I think Lorraine asked to the sulfide project has been mentioned as a candidate others. Certainly are can you share any color on what might be the sort of top candidate for divestment considerations.

Yeah.

I mean, I think we've talked about La arena, two obviously lora in nylon in our oxide minus producing so very strong producer for us.

Michael Steinman: Obviously, Lorena 1, our oxide mine, is producing. It's a very strong producer for us. I think everybody knows we extended that oxide life from probably when we purchased our asset, like 2021 to 2026. A very successful exploration program on that asset as well. The deep sulphides, the deeper sulphides, the copper deposit, obviously, in a similar kind of bucket for us than Mara was. You know, it's not our commodity really to build out copper deposits.

I think everybody knows we extended actually that oxide life from probably when we purchased our like plenty plenty of 1% to 2026, so very successful exploration program on that asset as well.

Bob.

The deep sulfides, a deeper sulfide copper deposit.

Like a similar kind of bucket for us tomorrow.

So it's not our commodity ready to build out corporate deposits.

Michael Steinman: But the rest of the diversions, look, we are very actively working on them. We are very active in the search for a partner for La Colorado, and I would like to leave it at that moment. Obviously, we'll inform the market as soon as anything is ready to share. Okay.

But the rest of the divestments look we're very active working on it we are very active working on the search for a partner.

Luckily it out and I would like to leave it with that with that at the moment.

We will inform the market as soon as anything is Friday to chair.

Okay.

Don Demarco: Thank you, Michael, and good luck with the rest of Q1. Thank you. Thank you. There are no further questions at this time, Mr. Stainman.

Thank you Michael and good luck with the rest of Q1.

Thank you.

Thank you there are no further question at this time Mr. Steinman. Please proceed.

Michael Steinman: Yeah, thanks, operator. And thanks, everyone, for being on the call. It has been a very dynamic year, last year, as we indicated, with the close of the transaction, integration of the asset, selling multiple assets, retaining not only good cash values for that but also strong royalties. And last but not least, coming out and publishing that really exciting TA on Lakhlar Araskar.

Yes, thanks, operator, and thanks, everyone.

Being on the call. It has been a very dynamic year last year as we indicated with the close of the transaction and integration of the assets selling multiple assets retaining not only good cash values for that but also strong royalties and.

<unk>.

And last but not least.

Coming out in publishing.

That's really exciting.

Ta.

Luckily <unk>, so very active active year.

Michael Steinman: It's been a very active year. There have been a lot of cash movements in our portfolio over the year. As I mentioned, strong repayment of debt. We don't have short-term debt anymore. Very strong cash balance, but not in the fortunate situation to be able to use that cash for further growth and keep investing in our project. Not only sustaining capital but also project capital on something like La Colorado to advance that project but still be, obviously, in the position to maintain our dividend and to buy back some of our shares at this, you know, what I would think, very low valuation.

A lot of a lot of cash movements in our in our portfolio over the year as I mentioned strong repayment of debt, we don't have short term debt anymore.

Very strong cash balanced.

Now being the fortunate situation to be able to use that cash for further growth and keep investing in our project.

Not only sustaining capital, but also a project capital on something like La Colorado to advance that project, but still be obviously in the position.

To maintain our dividend and to buy back some of our SaaS up this.

Very low valuation so when you're looking forward to 2024 and looking forward to keep you update that in May of our Q1 results until then thank you very much.

Michael Steinman: So we're looking forward to 2024 and looking forward to keeping you updated on our Q1 results. Until then, thank you very much. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating, www.thevenusproject.com

Thank you, ladies and gentlemen that does conclude our conference for today. Thank you all for participating you may all disconnect.

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