Q1 2024 Pan American Silver Corp Earnings Call

Don DeMarco: Okay.

Speaker Change: Good morning, ladies and gentlemen, and welcome to the Pan American Silver first quarter 2024, Unaudited results conference call and webcast. At this time on lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.

Michael Steinmann: So I see the ILO process has experienced some delays. I guess we should take it as encouraging that MEM confirmed its commitment to complete the process. But three questions here. Did they provide a timeline to complete it? And is a replacement for that vacant post required to get the process back on track? And is the next meeting scheduled at this point?

Michael Steinmann: If at any time during this call you require immediate assistance. Please press star zero for the operator.

Speaker Change: Also note that this call is being recorded on Thursday may nine 2024, and I would like to turn the conference over to surrounds <unk> VP Investor Relations. Please go ahead.

Michael Steinmann: I'll start, and I'll hand it over afterwards to Sean McAleer, who is running our affairs in Guatemala. Sorry, I just lost my way on the first question. Yeah, the timeline. Yeah, no, as we said, look, that transaction, the transition, sorry, of the new government took really longer, I think, longer than expected. You're right; it's encouraging, obviously, that the government is committed to completing ILO 169. But I also would like to remind everyone that that's a court-ordered process that we all have to go through. So, you know, that's just part of ILO 169 that orders that it has to be finished. I think there's no choice, really.

Speaker Change: Thank you for joining us today for Pan American Silver's Q1, 2024 conference call.

Michael Steinmann: There's just no timeline for it, so the process is very prescribed, and the government is working on it. The former government, with good strides forward last year, definitely a slowdown with the change of government here. And as you said, this vacant post that, in the past, was really another person that was running for the Ministry of Mines, that process, just to remind everyone, this is a process between the Ministry of Mines and the Indigenous Inka Group, and we are just a party to it. So we have no control over timelines here. So the post was very important in the past.

Michael Steinmann: 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 Q1 2024 unaudited results.

Michael Steinmann: All of which are available on our website.

Michael Steinmann: I can't speak for MAM to see if in the future when they're assigning a new person, if that will be the person in charge of the process, or if they want to use another person for the process. And I think with that, I'll hand it over to Sean. Sean, you're way closer to it.

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

Sean McAleer: Yeah, not a lot to add, Michael. You know, we're obviously waiting for the new appointment there, and that'll be key for us. And we're in regular contact with the government and with MEMS specifically to get updates, but there's no updated timeline. The published timeline on the MEMS website was tentatively for March 31st, and that's come and gone. But, you know, we're hoping to hear some news in the next few weeks and months as things develop. But unfortunately, we don't have it to provide as an update, and there are no future meetings.

Sean: Thank you Ron and thank you everyone for joining us today.

Don DeMarco: Okay, thanks for the latter point then. What about some of the key issues that have been raised over the previous sessions? I think there might have been some discussion about water, maybe noise, maybe others. What's the status of those, and the dialogue on those items at this point?

Sean McAleer: Our Q1 operating results were in line or better than expected silver.

Sean McAleer: Yeah, and that was the meeting on February 21st. There hasn't been any follow-up and any working meetings around those those concerns, but they're consistent with what we heard during the visits and during the interactions that we had last year. So not a lot of new developments there, but again, the dialogue in the process. You know, awaiting them to take charge and set the next meeting dates and times.

Don DeMarco: Okay, and are those issues or others viewed as resolvable? Like, do you see a path toward parties agreeing on whatever the topics of discussions might have been underway at the last meeting?

Sean McAleer: Silver and gold production well within our guided ranges.

Sean McAleer: Yeah, it's hard to say. For us, we're just continuing the dialogue, and when we sit at the table and discuss in more detail the issues, I, you know, I feel confident that we've got mitigations or other things we could do to alleviate the concerns, but I think that's just part of the process. And so we'll wait and see how that develops.

Don DeMarco: Okay, great. And maybe just one other question. Michael, you mentioned your growing royalty portfolio, but perhaps you could share with us what your intentions are with this portfolio? Do you see it as a long-term hold, or would you potentially divest it to fund development in your pipeline?

Sean McAleer: Yeah, I'm, particularly pleased with our strong performance on controlling costs.

Don DeMarco: Cash costs and all in sustaining costs, excluding net realizable value inventory adjustments for both silver and gold segments were lower than our quarterly guidance.

Michael Steinmann: Well, if you recall, last time we created a sizeable royalty portfolio that, you know, when I was in charge of business development before I became CEO, generally most of those royalties, we spun those out into Mavericks at that point. And you know, we got a really handsome return on those royalties through the sale of Mavericks to Triple Flags at the end.

Don DeMarco: Operations generated $133 $2 million of cash flow before working capital changes in Q1.

Don DeMarco: I think there has been a lot of change since then; you know, when we started that, I think it was 2015, there were not many royalty companies. I think there's a large group of very strong royalty companies now available in the world, and I'm pretty sure if we ever decide to sell these royalties, we will find very competitive bids from different companies. So there's no need to basically start our own royalty company again. That's my point.

Don DeMarco: I think if we decide to divest those royalties, we should, you know, for sure have enough offers from very sizable royalty companies here. So, you know, it's a big amount of potential cash sitting there for us, but at the moment, I think we are in no hurry to divest those right away. Okay.

Don DeMarco: This includes $41 $1 million in cash taxes paid.

Don DeMarco: Q1, typically being the quarter with the highest cash tax payments.

Don DeMarco: Okay, okay. Good to hear. That's all for me, and good luck with the rest of Q2. Thank you.

Don DeMarco: We recorded a $38 million net loss, our eight cents loss per share in Q1, which includes $34 4 million tax expense of which $15 2 million dollar is related to an inflation adjustment in Argentina.

Operator: The next question will be from Gary Chiu at Cosmos. Please go ahead.

Cosmos Chiu: [inaudible] I'm at Cosmos here. But maybe I should call myself Gary. Maybe I would have been more successful in life. I don't know. Maybe my first question is on the...

Cosmos Chiu: $14 4 million of Smiths realizable value inventory expense.

Cosmos Chiu: A $10 $8 million noncash investment loss.

Cosmos Chiu: Largely due to the decrease of the new Pacific Metals Corp share price.

Cosmos Chiu: Adjusted earnings were $4 $7 million or one cent per share.

Cosmos Chiu: We exited Q1 in a strong financial position cash and investments.

Cosmos Chiu: $331 $4 million and we have the full $750 million available under our Undrawn credit facility.

Cosmos Chiu: Total available liquidity is $1 1 billion.

Cosmos Chiu: This strong financial position allowed us to return $58 million of capital to shareholders in Q1.

Cosmos Chiu: $36 5 million in total cash dividends paid and $21 5 million in share buybacks.

Cosmos Chiu: Following the approval of our share buyback program on March four 2024, we have repurchased approximately one 7 million shares at an average price of $14 16 per share for cancellation.

Cosmos Chiu: We intend to continue to take an opportunistic approach to future share buybacks.

Cosmos Chiu: We maintained the dividend announcing yesterday, a cash dividend of 10 cents per common shares.

Cosmos Chiu: In addition to maintaining a robust shareholder returns framework.

Cosmos Chiu: And our operations for safe and efficient improvements in performance.

Cosmos Chiu: Operations performed largely in line with expectations.

Cosmos Chiu: The Dolores was weaker than expected due to lower grades some heavy rains that required us to reduce irrigation rates, resulting in a lower ratio of ounces recovered two ounces stacked.

Cosmos Chiu: And the readjustments at Dolores also increased all in sustaining costs by $838 per ounce.

Cosmos Chiu: Excluding and there'll be adjustments Dolores all in sustaining costs were $1529 per ounce.

Cosmos Chiu: At Blackwater out that the new ventilation infrastructure is on track for completion in mid 2024.

Cosmos Chiu: We expect this will lead to significant improvement and the ventilation conditions in the mine.

Cosmos Chiu: It will allow us to accelerate the development rates by opening more areas for production.

Cosmos Chiu: This is expected to lead to higher mining rates returning to approximately 2000 tonnes per day by the end of the year from the roughly 1300 to 1400 tonnes per day rate currently.

Cosmos Chiu: We're also advancing the <unk> project on April seven 2024, we announced additional drill results from our ongoing exploration program at the Con.

Cosmos Chiu: These drill results returned some of the highest grade intercepts to date.

Cosmos Chiu: Including a stunning 22 five meters at 1435 grams per ton silver 31, 9% lead and 25% zinc.

Cosmos Chiu: We will provide an updated mineral resource estimate for this con in August together with our mid year corporate mineral reserve and resource report.

Cosmos Chiu: We continue to engage in discussions with parties, who have expressed an interest in a potential partnership in this corn.

Cosmos Chiu: Ideally, we'd like to structure partnerships that will enable us to retain exposure to the silver with an estimated annual production of $17 2 million ounces in the first 10 years.

Cosmos Chiu: And the partner would retain exposure to the St.

Cosmos Chiu: We're also excited by the potential at Jacobina.

Cosmos Chiu: The study is underway to evaluate alternative mining methods and upgrades to the processing facilities.

Cosmos Chiu: The aim is to identify opportunities to optimize the long term economics of the mine.

Cosmos Chiu: If you ask about mining Guatemala, the Ilo 169 consultation process has experienced delay since the new government took office in January 2024.

Cosmos Chiu: Meetings held in Q1 2024 between Pan-american, the Ministry of energy and mines are men and other institutions. The government confirmed its commitment to completing the ESCO ball Ilo 169 consultation process.

Cosmos Chiu: Has not provided an update on the timeline.

Cosmos Chiu: On April 29, 2024 demand released device Minister of sustainable development, who was responsible for overseeing and coordinating the basketball Ilo 169 consultation process.

Cosmos Chiu: Demand has not yet designated a replacement for his post.

Cosmos Chiu: On May one 2024, we announced that we have agreed to sell a lot of in a gold mine as well as <unk> two project in Peru, the subsidiary of seats in mining group.

Cosmos Chiu: Under the terms of the agreement at closing the change will pay $245 million in cash and we will grant Pan-american a life of mine gold net smelter return royalty of one 5% for the La Arena two project.

Cosmos Chiu: Additionally, upon commencement of commercial production from the <unk> project agreement provides for an additional payment from the churn of $50 million in cash.

Cosmos Chiu: We expect a lot of in that transaction to close in Q3 pending satisfaction of the customary conditions and regulatory approvals.

Cosmos Chiu: The divestment is aligned with our commitment after the amount of transaction to divest properties that are not aligned with our long term strategy, while strengthening our financial position to invest in high quality growth opportunities to reduce debt and to return capital to our shareholders.

Cosmos Chiu: Do you expect to close after a lot of in that transaction, we will have generated $837 million and cash from asset sales following the acquisition of Yamana.

Cosmos Chiu: Addition, we will have retained for high quality royalties with industry, leading partners as well as contingent payments of $50 million.

Cosmos Chiu: Last but not least the divestments also expect to reduce our animal care and maintenance costs by over $17 million.

Cosmos Chiu: In closing Pan-american delivered strong performance in Q1, and we are on track to achieve our operating outlook for the year.

Steve: Yeah, thanks, Cosmos. Steve here, or Gary, if you prefer.

Steve: We expect free cash flow to increase through 2024, particularly in the second half of the year based on our review of higher production and lower cost weighted towards the second half of 2024.

Steve: Supportive metal prices.

Speaker Change: Look forward to providing our customary mid year update on our mineral reserves and resources in August and.

Steve: And with that I would like to open the call for questions.

Steve: Yeah, thank you. Just to give you an update of where we're at. We have the main duct in the top of the shaft that does a 90-degree elbow, and we're starting to put the horizontal sections in.

Steve: Thank you, ladies and gentlemen, if you would like to ask a question at this time. Please press star followed by one on your Touchtone phone you will then hear a sweet home prompt acknowledging thank you Rick.

Steve: We got the bases poured, and we're starting to put the mechanical equipment for the fans, the base fans, in. These are quite large fans. There are two of them.

Steve: If you would like to withdraw from the question queue simply press Star followed by two and also if you're using a speakerphone. We ask that you. Please lift your handset before pressing Andy Keith. Please go ahead and press Star one now if you have a question.

Steve: And your first question will be from <unk> Habib at Scotia Bank. Please go ahead.

Speaker Change: Thank you operator, good morning, Michael and Pan American team.

Steve: They're 2,000 horsepower each, and our intention is to have the first one operational by the start of Q3, and we're on track for that. It looks really good. There was a lot of effort, a lot of logistical expediting going on, particularly around some of the electrical components, the VFDs and things like that. So, that's coming our way. It looks good.

Steve: That's all coming together well. In the meantime, we're laying out our plans for when we get that ventilation going. We do know we've got rehabilitation work to do in the area of Candelaria East and the deeps. We got to get back in there and rehabilitate some of the ground control systems that were there that were eroded or damaged through the years of this hot, humid air going through those areas. So we're starting to see some of that already because we do have a bit of flow going through the shaft now, so it is getting us into that area. We can see it.

Speaker Change: Congrats to a strong start to the year.

Speaker Change: Just a couple of questions from me.

Steve: Just starting off.

Steve: Just had a great start to our quarter as costs, both silver and gold segments outperformed the quarterly guidance that was provided.

Steve: At the silver segment, particularly total cash cost and <unk>.

Steve: Is down 34, and 40%, respectively, that's quarter over quarter could.

Speaker Change: Could you please give us or help us understand what are the drivers here are.

Steve: Are you seeing these declining crush cost pressures across the board maybe some color there Michael.

Steve: There is a lot of rehabilitation work that has to be done. There is a lot of development work that we have to start advancing. So as that air comes in, we'll start advancing the development, and you'll slowly see the tonnages creep up. Our goal is to get back to 2,000 plus tons a day by year end. So it'll be a slow, gradual increase from our kind of 1,300, 1,400 tons a day that we currently have. In reality, we don't, we're not forecasting an increase in grade as that happens. We're, you know, Q1 was a pretty decent grade, I'd say, at 300 plus grams per ton.

Speaker Change: Yes, I will start with that and hand, it over to Steve to give us a bit more.

Steve: We might see a little bit of a tweak upwards on that as we start that development work, but we do want to balance that. Again, what we do, what we'd like to do is mine lock Colorado at its reserve grade. So that's really our objective. We're not going to go in and try to over grade it.

Steve: Directly from from the operations.

Steve: No.

Steve: It's like always on our costs when you look at it like this our costs net of byproduct credits. So one part is obviously our production.

Steve: We want to get the tonnage up, and we want to run at reserve grades in the steady state condition for as long as we can. So that's kind of, you know; we stand behind our quarterly guidance of ramping that up. That's a big driver for our increased production in the latter half of the year. Things are, you know; we have our challenges. We got rehabilitation challenges. We got development and advancement challenges. But we're getting the air there, and things are looking good. So we're feeling good about the project, and we're on schedule to get that fan running and start this effort to start ramping up the tonnage.

Steve: Cost, which are the team did a great job on cost control here.

Steve: The second part that are the big impacts are.

Steve: Base metal prices on the silver side, and then the gold segment, sometimes start a bit silver in it as well as a byproduct credit so when metal prices go up of course, that's that's a tailwind for us as well on the cost side and then the last one is I often mentioned as our currencies, but we have a lot of it.

Steve: Expenses in local currencies and it always depends what as currencies trade. So in Mexico right now very strong currency of course, that's a headwind to our cost.

Steve: In other places like for example, the Canadian dollar quite weak dollar right now of course that helps us on the cost side as we report in U S dollars.

Steve: Even though we are based in Canada, that's a foreign currency for us, but maybe Steve do you have some more detail I don't have a lot to add.

Cosmos Chiu: That sounds great, Steve. Maybe switch gears a little bit, El Pino. I noticed that grades have also improved in Q1 quarter over quarter by a little bit. Gold went up 3.24 last quarter to 3.38, kind of the same degree for silver. I know there's been some issues in the past in terms of grades at El Pano. But are we trending in the right direction? I understand that you're drilling it, you're still waiting on some of the drilling results, but could you maybe comment on El Pano?

Cosmos Chiu: I mean in the currencies did play a key role, particularly down in Argentina, we didn't quite see the.

Cosmos Chiu: Effective U S inflation quite I mean, it was <unk>.

Cosmos Chiu: But heavy but it wasn't quite to the degree we anticipated in our planning Likewise in Chile was pretty good on the FX side.

Speaker Change: I would say our consumables.

Speaker Change: We're generally seeing a little bit better usage lower usage of our consumables and what we had planned.

El Pino: We're still evaluating that so we don't want to change the year. The full year guidance are the future quarter guidance. We think those are still a valid guidance going forward, but we are looking at it we did see some reductions in usage is in Q1, and we're just not sure if thats order type related or not.

Cosmos Chiu: So you are not changing guidance, but there could be some possible upside in terms of.

Cosmos Chiu: Cost improvements.

Speaker Change: Yes, we don't hold me to that.

Cosmos Chiu: If everything is the mansion stays the same.

Speaker Change: I think that's fair to say, yes.

Speaker Change: Okay sounds good.

Cosmos Chiu: And just in terms of selling of the non core assets I mean, Michael you and your team have done a fantastic job over the last couple of months in terms of selling these assets.

Cosmos Chiu: Or is there more to come and any color that you can provide on the on some other assets that might be also be non core that youre looking to sell down the road.

Speaker Change: Yes, I really want to congratulate the team here on that that's amazing what to do for transactions in one year.

Chris: Yeah, hi, Cosmos, aka Gary. This is Chris.

Chris: We've really hit the ground running this year. Last year, we did have an issue with the drilling, so we got a new drill contractor. It took a while to ramp up, but it certainly hit Q1 running, and we certainly see a lot of that drilling now coming into the information for the mid-year reserve and resources update for El Peon. I would certainly like to believe that we would be keeping these grades. As you drill through these blocks, you get some good results, but generally, we're seeing that reserve grade panning out in the in the drilling. You know, like I said, there's going to be ebbs and flows as to how this turns out in that mid-year update, and we're looking forward to updating everyone in August.

Cosmos Chiu: Great, thanks. And maybe one last question on Haron.

Cosmos Chiu: As you mentioned, the dry stack tailings project is, you know, well underway and should be completed in 2024. Could you remind us in terms of the benefits of this dry stack tailings project? Is it, you know, an extension of my life? You know, is there going to be more capacity in terms of tailings? What are some of the key benefits?

Cosmos Chiu: After the big game on a transaction.

Cosmos Chiu: And really no selling some of those assets that are just really not core to us and I would say selling them for a good good price on not only a good prospect for cash and mostly cash on that.

Cosmos Chiu: And some royalties so when you look at the quality of the royalties that we retained on each of them with very high quality mining bake large mining companies. That's a very valuable royalty portfolio that we that we have in our ownership now now again, so I'm very happy about that that will allow us to part.

Cosmos Chiu: Dissipate, obviously in future increased metal prices.

Cosmos Chiu: When that happens and dose dose projects get developed.

Cosmos Chiu: We still have we have a lot of ground a lot of exploration ground a lot of.

Cosmos Chiu: Advanced exploration projects have let's say that that sounds really fit that came in from from Yamana somebody had before.

Cosmos Chiu: Sure.

Cosmos Chiu: In Argentina.

Cosmos Chiu: We returned the coffee project. So there is a lot of smaller things.

Cosmos Chiu: Not big dollar numbers, but it's it all it takes time for management.

Cosmos Chiu: And cleaning that up and streamlining the portfolio.

Cosmos Chiu: Everybody have a more focused on that.

Speaker Change: Helps helps a lot for the future. So we will continue.

Cosmos Chiu: To go with a with a.

Cosmos Chiu: With the smaller assets from now on and still streamlined our portfolio, but at the moment like like <unk> scales like we've seen last year.

Cosmos Chiu: Tomorrow.

Cosmos Chiu: And.

Cosmos Chiu: And that's off the world's those those were really the big ones that we wanted to divest.

Speaker Change: Okay. Thanks for that color Michael.

Speaker Change: Two questions on that for a while but maybe I'm going to come back into the queue.

Cosmos Chiu: And that some other people ask some questions as well thank you.

Speaker Change: Okay. Thank you.

Cosmos Chiu: Once again, ladies and gentlemen, please press star one if you have any questions.

Cosmos Chiu: And your next question will be from Don Demarco of National Bank Financial. Please go ahead.

Speaker Change: Thank you operator, and good morning, Michael and team.

Cosmos Chiu: I think I'll just pick up where it makes a lot of talk I'll ask some questions on askable. So I see the Ilo presses has experienced some delays.

Cosmos Chiu: I guess, we've taken is encouraging ma'am confirmed commitment to complete the process. The three questions here did they provide a timeline to complete.

Cosmos Chiu: And is a replacement for that vacant posts required to get the process back on track.

Cosmos Chiu: And is the next meeting scheduled at this point.

Speaker Change: Yeah Yeah.

Speaker Change: I'll start and I'll hand, it over after it's due to some macro here who is running our affairs in Guatemala.

Cosmos Chiu: <unk>.

Speaker Change: So sorry, I just lost my truck.

Speaker Change: The first question.

Speaker Change: Yes, hi.

Speaker Change: Yes, hi.

Speaker Change: No as we said look that transaction that transition sorry Alastair.

Cosmos Chiu: New government took.

Cosmos Chiu: Took took really longer I think longer than expected.

Speaker Change: Yeah, you're right, it's encouraging I would say that the government is committed to complete the Ilo 169, now, but I also would like to remind everyone. The circuit that's a court ordered.

Cosmos Chiu: Process.

Cosmos Chiu: We all have to go through so.

Cosmos Chiu: That's just part of the Ilo 169 that has ordered that it has to be finished.

Cosmos Chiu: This does no choice video thanks.

Cosmos Chiu: There's just no timeline to it so the process is very prescribed and undergone.

Cosmos Chiu: The government is working on it but the former government with with good strides forward last year.

Cosmos Chiu: They're slow down with the change of the government here.

Cosmos Chiu: Yeah.

Cosmos Chiu: And as you set this vacant posts that in the past that was related and another person that was running for the ministry of mines that process just to remind everyone. This is a process between ministry of mines.

Cosmos Chiu: And it's in a single group.

Speaker Change: And we are just a party to it.

Cosmos Chiu: So we have no control over all over timeline.

Speaker Change: Yeah. So the post was a very important in the past I cant speak for Matt to see if in the future when there.

Cosmos Chiu: Yes.

Cosmos Chiu: Reassign, a new person that's that will be the person in charge of the process are already Dave on the use and other person for the process.

Cosmos Chiu: I think with that I'll hand, it over to Sean Sean your way closer to it so now I'd like to add Michael.

Cosmos Chiu: We're obviously waiting for the new appointment there and that'll be key for us and we're in regular contact with with the government and with men's specifically to get updates, but theres no no updated timeline published timeline on the men with website was tentatively for March 31, and that's come and gone.

Cosmos Chiu: But we're hoping to hear some news in the next few weeks and months as things as things develop but.

Speaker Change: They didn't have any.

Cosmos Chiu: I think that provide us an update and no future meeting dates.

Speaker Change: Okay. Thanks to that latter point then.

Cosmos Chiu: What about.

Cosmos Chiu: Some of the key issues that had been raised over the previous sessions I think there might have been some discussion on water maybe noise.

Cosmos Chiu: Maybe others, what's the status of those the dialogue on those items at this point.

Speaker Change: Yeah and that was the meeting on February 21st there Hasnt been any follow up and any working meetings around.

Cosmos Chiu: Around those those concerns, but they are consistent with what.

Cosmos Chiu: We've heard during the visits during the interactions that we had last year. So.

Cosmos Chiu: Not a lot of new developments, there, but again the dialogue and the processes waiting the mem to take charge and set the next meeting dates in that timeline.

Cosmos Chiu: Okay and are those issues or are others are are they viewed as a resolvable.

Cosmos Chiu: Do you see a path toward parties agreeing on whatever they whatever topics discussions might be underway at the last meeting.

Speaker Change: Yes, it's hard to say I mean.

Cosmos Chiu: For Us I mean, we're just continuing the dialogue and when we sit at the table and discussing more detailed issues.

Cosmos Chiu: I feel confident that we've got and mitigation or other things we could do too.

Cosmos Chiu: The concerns, but I think that's just part of the process until wait and see how that develops.

Speaker Change: Okay great.

Cosmos Chiu: And maybe just one other question, Michael you mentioned Youre growing ROI at royalty portfolio.

Cosmos Chiu: But perhaps you could share with us what are your intentions with this portfolio do you see it as a long term hold or would you potentially diagnostic on development in your pipeline.

Cosmos Chiu: Well if you recall last time, we created a sizable a royalty portfolio.

Cosmos Chiu: That's when I was in charge and business to business development before I ever CEO.

Cosmos Chiu: Generally most of those royalties, we spun those out into Mavericks at that point.

Cosmos Chiu: <unk> got a very handsome return.

Cosmos Chiu: On those royalties through the sale of maverick's to Triple flag.

Cosmos Chiu: I think that has a lot changed since then.

Cosmos Chiu: When they started that I think it was 2015 there were not many royalty companies I think there is.

Cosmos Chiu: As a large group of very strong royalty companies now available in the world.

Cosmos Chiu: I'm pretty sure if we ever decide to sell this royalties, we will find very competitive bids from different companies. So there is now no need to basically start our own royalty company again thats much my point I think if you decide to divest those royalties.

Cosmos Chiu: It should it should.

Cosmos Chiu: For sure have enough offers from from very sizeable royalty companies here. So.

Cosmos Chiu: You know, it's it's it's a big amount.

Cosmos Chiu: The potential cash sitting there for us.

Cosmos Chiu: But at.

Cosmos Chiu: At the moment I think we're not in no hurry to divest those right away.

Speaker Change: Okay. Okay. Good to hear that's all for me and good luck with the rest of Q2. Thank you.

Speaker Change: Thank you Don.

Cosmos Chiu: Next question will be from Gary.

Cosmos Chiu: Cosmos. Please go ahead.

Cosmos Chiu: Hi.

Cosmos Chiu: Cosmos here, but maybe I should call myself Gary.

Cosmos Chiu: And more successful.

Speaker Change: [laughter] well, maybe my first question is on <unk>.

Cosmos Chiu: La Colorado.

Cosmos Chiu: Michael and Steve.

Cosmos Chiu: As you mentioned.

Cosmos Chiu: We will complete.

Cosmos Chiu: By mid 2024.

Cosmos Chiu: Almost there so could you maybe remind us in terms of what still needs to get done and then Michael as you've mentioned one steam ventilation completed.

Cosmos Chiu: Throughput is going to go up since you're going to open up more mining areas.

Speaker Change: But as great I'll sort of go up as well and if that's the case.

Cosmos Chiu: Happened pretty much right away.

Cosmos Chiu: When the ventilation shaft is commissioned.

Cosmos Chiu: We're gonna be a lag of like a month or two.

Speaker Change: Yes, Thanks Cosmos, Steve here.

Steve: Yeah, Cosmos Steve here. Yeah, our tailings dam five or conventional tailings we're currently using will reach their ultimate capacity, and in kind of mid-Q1 of 2025 is the current schedule. So this is the next stage of tailings for the current reserves and life of mine that we see that we're on is moving away from conventional tailings gives us an ability to open up new areas for tailings deposition that are easier to manage that don't require quite the extensive dam development and empowerment development.

Steve: Prefer.

Speaker Change: Thank you John.

Speaker Change: Yes. Thank you just to give you an update on where we're at we are currently putting in the ducting on for the fans. We got the main duct and the top of the shaft does a 90 degree all born we're starting to put the horizontal sections and we got the basis poured we're starting to put the mechanical.

Steve: Equipment for the fans the base spans and these are quite large fans. Each there's two of them. They're 2000 horsepower. Each so our intention is to have the first one operational by the start of Q3 and we're on track for that and it looks really good there was a lot of effort a lot of logistics.

Steve: Will expedite didn't going on particularly around some of the electrical components.

Steve: The <unk> and things like that so that's coming our way it looks good thats all coming together well in the meantime, we're we're laying out our plans for when we get that ventilation going we do know we've got rehabilitation works to do in the area of Campbell area Eastern the deep so we got to get back in there and rehabilitate some of the.

Steve: Some of the ground control systems that were there that were eroded or damage through the years of this hot humid.

Steve: They're going through those areas. So we're starting to see some of that already because we do have a better flow of growing through the sheriff narrow. So it is getting us into that area, where you can see it.

Steve: There is a lot of rehabilitation work that has to be done. There is a lot of development work that we have to start advancing tso is as that air comes on we'll start advancing the development and <unk>.

Steve: You'll slowly see the tonnage is creep up our goal is to get back to the 2000 plus tons a day by year end, so it'll be a slow gradual increase from our kind of 13 1400 ton a day that we currently have.

Steve: In reality, we don't we're not forecasting a.

Steve: An increasing grade as that happens, where Q1 was a pretty decent grade I'd say, a 300 plus gram per ton, we might see a little bit of tweak upwards on that as we start that development work, but we do want a balance again, what we do what we'd like to do is mine large Colorado had its reserve.

Steve: <unk> grade so that's really our objective we're not going to go in and try to high grade.

Steve: We wanted to get the tonnage up and we want to run a reserve grades in the steady state condition.

Steve: For as long as we can so that's kind of where we stand behind our quarterly guidance of ramping that up that's a big driver into our increased production in the latter half of the year things are things are you know we have our challenges we got rehabilitation challenges we got that.

Steve: Development advanced challenges, but we're getting the ore there and things are looking good so were feeling good about the project and we're on schedule to get that fan running and start to suffered to start ramping the temperature.

Steve: That sounds great.

Speaker Change: Switching gears a little bit.

Steve: I noticed that our grades has also improved in Q1 quarter over quarter, but a little bit.

Steve: Gold went up three to four last quarter to three eight.

Steve: Same degree four where silver I know theres, some theres been some issues in the past in terms of grades at alpine yield are we trending in the right direction I understand that you're drilling yet you are still waiting on some of the drilling results, but could you maybe comment on that.

Steve: As well.

Gary: Yes, Hi, Cosmos Gary.

Chris: This is Chris.

Steve: Thanks.

Steve: We've really hit the ground running this year and last year, we had a we did have an issue with the drilling.

Steve: Getting unusual contract says it took a while to ramp up but certainly hit that hit Q1 running and we.

Steve: We certainly see a lot of that drilling now coming into the information for the mid year reserve and resources update for El Pen Jan.

Steve: I would certainly like to believe that we would be keeping these grades and we've yes.

Steve: As you drill through these blocks you get some some good results.

Steve: Generally we're seeing that that reserve grade.

Steve: Panning out in India.

Steve: And the drilling.

Speaker Change: Yes. It does like you say, there's going to be ebbs and flows as to how this turns out in that mid year update and we'll we're looking forward to updating everyone in it.

Steve: <unk>.

Steve: Great. Thanks, and maybe one last question on the whole loan.

Steve: As you mentioned the dry stack tailings project is well underway and should be completed in.

Steve: In 2020 could you remind us in terms of the benefits of the dry stack tailings project is it.

Steve: The extension of mine life.

Steve: To be more sort of capacity in terms of tailings what are some of the key benefits.

Cosmos Chiu: Yeah cause more Steve here.

Steve: Yeah, our tailings dam fiverr conventional tailings recurrent using will reach its ultimate capacity.

Steve: Kind of mid <unk> in Q1 of 2025 is the current schedule. So this is the next stage of tailings for the current reserves and life of mine that we see are on is moving away from conventional tails gives us an ability to open up new areas for tailings depositions that or.

Steve: <unk> to manage that don't require quite the.

Steve: The extensive.

Steve: Damn development and empowerment is development. So it allows us to open up more areas that we need for the life of mine reserves and resources that we intend to mine that we're on so it's really just a shift from methodologies to something more robust and more.

Steve: So it allows us to open up more area that we need for the life of mine reserves and resources that we intend to mine that we're on. So it's really just a shift from methodologies to something more robust and with more capacity as we look into the future.

Steve: Pasty as we look into the future.

Steve: Great.

Cosmos Chiu: Great. Thanks, Michael, Steve, Kristen, and Siren. Those are all the questions I have.

Speaker Change: Thanks, Michael Steve Chris answered those are all the questions. Congrats on a very strong Q1.

Cosmos Chiu: Congratulations on a very strong Q1. Thanks, guys.

Speaker Change: Thanks Scott.

Operator: Thank you. Once again, ladies and gentlemen, if you do have any questions at this time, please press star 1 on your touchtone phone. And at this time, we have no questions registered. Please proceed.

Speaker Change: Thank you.

Operator: Once again, ladies and gentlemen, if you do have any questions. At this time. Please press star one on your Touchtone phone.

Operator: And at this time, we have no questions registered please proceed.

Michael Steinmann: Yes, thanks Albrecht and thanks everyone on the call today. That was a, you know, great quarter.

Speaker Change: Yes, thanks, operator, and thanks, everyone on the call today that was a great quarter I think we delivered across our across the board were delivered on production on cost on further divestment of assets as we indicated last year and I think that advanced at a very high speed at very good results on that.

Michael Steinmann: I think we delivered across the board. We delivered on production and cost, on further divestment of assets, as we indicated last year. And I think that advanced at a very high speed with very good results.

Michael Steinmann: And we returned, uh increased our returns to shareholders, so you saw it was a combination of share buybacks and and and dividends. Uh, strong balance sheet, and there's a lot to really be positive about and looking forward to this year in combination with what we see now at the moment, way higher metal prices than what we experienced as an average in Q1. So I'm really looking forward to updating everybody in Q1, in August again.

Speaker Change: And we returned.

Michael Steinmann: <unk> increased our returns to shareholders are so so there is a combination of share buybacks.

Michael Steinmann: Evidence.

Michael Steinmann: Strong balance sheet and there is a lot of very very positive and looking forward to this year.

Michael Steinmann: In combination with what we see now at the moment the way.

Michael Steinmann: Way higher metal prices than what we experienced as an average in Q1, so already for looking forward to update everybody in.

Michael Steinmann: In August again, but just to remind everyone behalf hosting an investor day on June 18th. So please if you want to participate and Colin there, let us know reach out to IR at Pan American Silver Dot Com. Please under.

Michael Steinmann: But just to remind everyone, we have a hosting investor day on June 18. So please, if you want to participate and call in there, let us know. Reach out to IR at panamericansilver.com, please, and we'll make sure that he can participate and call in to that investor day. And if we don't speak then, I'm looking forward to talking in August when we discuss our Q2 results. Thank you, everyone. Have a good weekend!

Speaker Change: I will.

Michael Steinmann: We'll make sure that the datacom participate on call in to that Investor day, and if that if we don't speak dundon looking forward to talk in August when we discuss our Q2 results. Thank you everyone have a good weekend.

Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending, and at this time, we do ask that you please disconnect your lines.

Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.

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