Q2 2024 Pan American Silver Corp Earnings Call

August 8, 2024

Operator: Good morning, ladies and gentlemen, and welcome to the Pan American Silver Second Quarter 2024 Unaudited Results Conference Call-In Webcast. At this time, all lines are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Pan American Silver second quarter 2024 unaudited results conference call-in webcast.

Operator: 2nd Quarter 2024 Unaudited Results Conference Call-in Webcast. At this time, all lines are in a listen-only mode.

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, August 8, 2024. I would now like to turn the conference over to Siren Fisekci, VP of Investor Relations. Please go ahead.

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, August 8, 2024. I would now like to turn the conference over to Siren Fisekci, VP of Investor Relations. Please go ahead.

Speaker Change: At this time, all lines are in a listen-only mode.

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.

Operator: This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Siren Fisekci, VP Investor Relations. Please go ahead.

Siren Fisekci: Thank you for joining us today for Pan American Silver's Q2 2024 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 Q2 2024 unaudited 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.

Siren Fisekci: Please see the cautionary statements in our MD&A news release and presentation slides for our Q2 2024 unaudited 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 .

Michael Steinmann: Thanks, Siren, and thank you everyone for joining the call. Our operations generated record cash flow before changes in working capital of $203.3 million in Q2. The cash balance is rising to $337.2 million at June 30th, an increase of $36.1 million from the previous quarter. This strong financial performance was impacted by an unusual income tax expense, driven primarily by foreign currency exchange rate fluctuations in the quarter. The adjusted earnings were $40 million, or $0.11 per share. However, the impact of the inflation-driven Argentine income tax, which was not adjusted, reduced adjusted earnings by three cents per share.

Michael Steinmann: Thanks, Siren, and thank you everyone for joining the call. Our operations generated record cash flow before changes in working capital of $203.3 million in Q2. This results in $102.1 million in free cash flowing. The balance sheet, and strength further improved. The cash balance is rising to $337.2 million at June 30th, an increase of $36.1 million from the previous quarter. This strong financial performance was impacted by an unusual income tax expense, driven primarily by foreign currency exchange rate fluctuations in the quarter, namely evaluations of the Brazilian Real and the Mexican Peso, which reduced foreign-dominated deductible tax attributes as well as inflation adjustments on monetary liabilities in Argentina.

Speaker Change: Thanks Siren and thank you everyone for joining the call.

Michael Steinmann: Our operations generated record cash flow before changes in working capital of $203.3 million in Q2.

Michael Steinmann: This results in $102.1 million free cash flow in Q2.

Michael Steinmann: Balance Sheet, Strunk Further Improved

Michael Steinmann: with cash balances rising to $337.2 million at June 30th, an increase of $36.1 million from the previous quarter.

Michael Steinmann: The reported net loss in Q2 of $21.4 million, or $0.06 per share, was significantly impacted by the $93.1 million in income tax expense and the $26.7 million net realizable value inventory expense. Adjusted earnings were $40 million, or $0.11 per share. However, the impact of the inflation-driven Argentine income tax, which was not adjusted, reduced adjusted earnings by three cents per share.

Michael Steinmann: This strong financial performance was impacted by an unusual income tax expense, driven primarily by foreign currency exchange rate fluctuations in the quarter.

Michael Steinmann: Namely, evaluations of the Brazilian Real and the Mexican Peso, which reduced foreign-dominated deductible tax attributes, as well as inflation adjustments on monetary liabilities in Argentina.

Michael Steinmann: The reported net loss in Q2 of $21.4 million or $0.06 per share was significantly impacted by the $93.1 million in income tax expense and the $26.7 million net realizable value inventory expense.

Michael Steinmann: The Trusted Earnings were $40 million or $0.11 per share.

Michael Steinmann: The impact of the inflation-driven Argentine income tax, which was not adjusted, reduced adjusted earnings by $0.03 per share.

Michael Steinmann: Turning to operations, silver production of 4.57 million ounces in Q2 was below our expected range of 5.36 to 5.78 million ounces per quarter, as continued ventilation constraints at La Colorado affected silver grades and throughput. We are currently accelerating mine reorientation and development right now, which has steadily increased access to the higher-grade Deep Eastern Candelaria production area. Fully Concrete Lined 5.5 Meter Diameter by 580 Meter Deep Guadalupe Ventilation Shaft That was completed last December. At Cerro Moro, heavy precipitation in southern Argentina restricted access to the satellite NATI zone, impacting throughput and grade.

Michael Steinmann: Turning to operations, silver production of 4.57 million ounces in Q2 was below our expected range of 5.36 to 5.78 million ounces per quarter, as continued ventilation constraints at La Colorado affected silver grades and throughput. I'm very pleased to report that the new ventilation infrastructure was completed at the end of June, and commissioning and start-up of the new fans started on July 11th, 2024. As scheduled, and ventilation conditions in the deeper eastern areas of the mine have improved significantly.

Michael Steinmann: Turning to operations, silver production of 4.57 million ounces in Q2 was below our expected range of 5.36.

Michael Steinmann: to 5.78 million ounces for the quarter has continued ventilation constraints at La Colorado affected silver grades and throughput.

Michael Steinmann: I'm very pleased to report that the new ventilation infrastructure

Michael Steinmann: was completed at the end of june and commissioning and startup of the new fans started on july eleven two thousand and twenty-four as scheduled and regculation conditions in a deeper eastern areriage of the mine have improved significantly

Michael Steinmann: We are currently accelerating mine reorientation and development rates, which has steadily increased access to the higher-grade Deep Eastern Candelaria production area. As a result, we are expecting to achieve higher throughput and grades in the second half of 2024, as planned. The slides that accompany this call, available on our website, include a brief video that shows the operations of the new activation fans that were installed at the surface of the shaft, fully concrete lined 5.5 meter diameter by 580 meter deep by the group of ventilation shafts that was completed last December.

Michael Steinmann: We are currently accelerating mine reorientation and development rates.

Michael Steinmann: which has steadily increased access to the higher grade deep eastern candelaria production areas.

Michael Steinmann: As a result, we are expecting to achieve high-frequency grids in the second half of 2024 as planned.

Michael Steinmann: The slides that accompany this call, available on our website, include a brief video that shows the operations of the new ventilation fans that were installed at the surface of the shaft.

Michael Steinmann: A fully concrete lined 5.5 meter diameter by 580 meter deep water loop of ventilation shaft that was completed last December .

Michael Steinmann: I'd like to congratulate the team on the successful completion of this large, complex project. However, silver production was also impacted by weather-related disruptions at Dolores and Salamoro. At Dolores, open-pit geotechnical challenges hampered ore tons mined and unusually prolonged fire conditions limited water availability, which impacted the leaching site. This resulted in lower grades and a low ratio of ounces recovered to ounces stacked during the quarter.

Speaker Change: i'd like to congratulate the team month of successful completion of this large complex project

Michael Steinmann: Silver production was also impacted by weather-related disruptions at Dolores and San Amaro. At Dolores, open pits, geotechnical challenges, hampered ore tons, mines, and unusually prolonged fire conditions

Michael Steinmann: Limits of water availability, which impacts the collegiate cycle.

Michael Steinmann: This resulted in lower grades and low ratio of ounces recovered to ounces stacked during the quarter.

Michael Steinmann: We now expect to extend over-stacking activities and increase heat irrigation rates throughout Q3, including some stockpile processing at the start of the range. At Cerro Moro, heavy precipitation in southern Argentina restricted access to the satellite NautiZone, impacting throughput and grade. We have regained access to NATI and expect to make up the Q2 shortfall in production during the remainder of the year. However, in Minera, Florida, unusual heavy rains restricted access to the site and resulted in a 10-day suspension of all processing during the quarter.

Michael Steinmann: We now expect to expand ore stacking activities and increase heap irrigation rates throughout Q3, even some stockpile processing at the start of the rainy season.

Michael Steinmann: At Cerro Moro, heavy precipitation in southern Argentina restricted access to the satellite NATI zone, impacting throughput and grades. We have regained access to NATI and expect to make up the Q2 shortfall in production during the remainder of the year.

Michael Steinmann: a media florida unusual heavy rained to restric ve access to decide and resulted in a ten days suspension or processing during the quarter

Michael Steinmann: We have now upgraded the road access to both Cerro Moro and Minera Florida, which will reduce the impact of heavy rainfall events in the future. We produced 220.4 thousand ounces of gold in Q2, slightly below our expected range of 221 to 252,000 hours.

Michael Steinmann: We have now upgraded the road access to both Cerro Moro and Minera Florida, which will reduce the impact of heavy rainfall events in the future. Gold segment oil in sustaining costs of $1,465 per ounce, including NRV adjustments that increased costs by $119 per hour. In total, $26.7 million of NRV adjustments were included in Q2 production costs. The NRV adjustments are primarily related to projections of higher future unit costs at Dolores to extract the in-heat inventories once all stacking activities have been completed.

Michael Steinmann: We have now upgraded the road access to both Cerro Moro and Minera Florida, which will reduce the impact of heavy rainfall events in the future.

Michael Steinmann: We produced 220.4 thousand ounces of gold in Q2.

Michael Steinmann: Slightly below our expected range of 221 to 252,000 ounces.

Michael Steinmann: Continued strong performance at Jacobina and higher growth rates and recoveries at El Peon helped offset the weather-related impacts at Cerro Moro, Dolores, and Minera Florida. Costs in Q2 came in better than expected, with all in sustaining costs, excluding a readjustment for both the silver and gold segments below our guidance ranges for the quarter. Silver segment oil sustaining costs were $18,000 per ounce, excluding an annual readjustment that increased costs by $0.95 per ounce. Gold segment oil sustaining costs were $1,465 per ounce, including NRV adjustments which increased costs by $119 per hour.

Michael Steinmann: Continued strong performance at Jacobina, and higher gold grades and recoveries at El Peñon helped offset the weather-related impacts at Cerro Moro, Dolores, and Minera Florida.

Michael Steinmann: Costs in Q2 came in better than expected, with all in sustaining costs, excluding energy adjustments for both the silver and gold segments below our guidance ranges for the quarter.

Michael Steinmann: Silver segment oil sustaining costs were $18,000 per ounce, excluding an NRV adjustment that increased costs by $0.95 per ounce.

Michael Steinmann: Gold Segment Oil and Sustaining Costs were $1,465 per ounce, excluding NRV adjustments that increased costs by $119 per ounce.

Michael Steinmann: In total, $26.7 million of NRV adjustments were included in Q2 production costs. The NRV adjustments are primarily related to projections of higher future unit costs at Dolores to extract the in-heat inventories once ore stacking activities have been completed. They're on track with our major projects for the year. The news rise, fact-saving storage facility at Wadon is on schedule to be completed in the second half of 2024 and will be commissioned thereafter.

Michael Steinmann: In total, $26.7 million of NRV adjustments were included in Q2 production costs.

Michael Steinmann: The energy adjustments are primarily related to projections of higher future unit costs at Dolores to extract the in-heat inventories once all stacking activities have been completed.

Michael Steinmann: We are on track with our major projects for the year. The new dry stack tailing storage facility at Varun is on schedule to be completed in the second half of 2024 and will be commissioned thereafter.

Michael Steinmann: The construction of the PACE plant project at Timmins is on schedule to be completed in Q3 2024. This will enhance ore extraction and improve mine stability at the Belgrade mine. At Chacovina, we continue to advance plant upgrades aimed at stabilizing throughput at 8,400 tons per day and recoveries at 96%. They're also progressing the optimization study to optimize the long-term economic and growth potential of Jekyll Beach. At Escobar, we met with several Guatemalan government institutions to support the LL169 consultation process in Q2 and into Q3.

Michael Steinmann: The construction of the Pace Plant Project Attainment is on schedule to be completed in Q3 2024.

Michael Steinmann: This will enhance ore extraction and improve mine stability at the Belgrade mine. At Chacovina, we continue to advance plant upgrades aimed at stabilizing throughput at 8,400 tons per day and recoveries at 96%. They're also progressing the optimization study to optimize the long-term economic and growth potential of Jekyll Beach. At Escobar, we met with several Guatemalan government institutions to support the LL169 consultation process over Q2 and into Q3. During this period, we also hosted compliance visits by the Ministry of Energy and Mines and the Ministry of Environment under the CARE Maintenance Program for Escobar. However, the appointment of the Vice Minister of Sustainable Development, who will assume responsibility for overseeing the consultation process, remains outstanding.

Michael Steinmann: This will enhance ore extraction and improve mine stability at the Bell Creek mine.

Michael Steinmann: At Chaco Bina, we continue to advance plant upgrades aimed at stabilizing throughput at 8,400 tons per day and recoveries at 96%.

Michael Steinmann: They are also progressing the optimization study to optimize the long-term economic and growth potential in Jacobin.

Michael Steinmann: At Escobar we met with several Guatemalan government institutions to support the LL169 consultation process over Q2 and into Q3.

Michael Steinmann: During this period, we also hosted compliance visits by the Ministry of Energy and Mines and the Ministry of Environment under the CARE Maintenance Program for Escobar. However, the appointment of the Vice Minister of Sustainable Development, who will assume responsibility for overseeing the consultation process, remains outstanding.

Michael Steinmann: During this period, we also hosted compliance visits by the Ministry of Energy and Mines and Ministry of Environment under the CARE Maintenance Program for Escobar.

Michael Steinmann: The appointment of the Vice Minister of Sustainable Development, who will assume responsibility for overseeing the consultation process, remains standing.

Michael Steinmann: Given the successful commissioning of the substantial Laguarda Ventilation System upgrade in July, we are maintaining our operating outlook for production, cash costs, law and sustaining costs, and capital expenditures in 2020. While we anticipate silver and gold production to fall within our original guidance range, we expect production for both to be more heavily weighted to the fourth quarter of 2024 than originally indicated in our quarterly operating outlook, and for annual silver production to be towards the low end of the annual guidance.

Michael Steinmann: Given the successful commissioning of the substantial Laguarda Ventilation System upgrade in July, we are maintaining our operating outlook for production, cash costs, law, and sustaining costs, and capital expenditures in 2020. With improvements in our balance sheet, WQ2, next up, declines to $472.3 million. We maintain our base cash dividend at $0.10 per common share, and we look forward to increasing levels of free cash flow from back half-weighted production in 2024. Together with the other members of our management team, we would now be happy to take your questions.

Speaker Change: let we anticipate children and coal production to fall within our original guidance range they expect production for both to more haveavilyanyued

Speaker Change: to the fourth quarter of 2024, then originally indicated in our quarterly operating outlook and for animal silver production to be towards the low end of the annual guidance range.

Michael Steinmann: With improvements in our balance sheet in WQ2, net debt declined to $472.3 million. We maintain our base cash dividend at $0.10 per common share. We look forward to increasing levels of free cash flow from back cost weighted production in 2024. Together with the other members of our management team, we would now be happy to take your questions.

Michael Steinmann: With improvements in our balance sheet WQ2, net debt declined to $472.3 million.

Michael Steinmann: We maintain our base cash dividend at $0.10 per common share. We look forward to increasing levels of free cash flow from back half-weighted production in 2024.

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

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be answered in the order they are received. Should you wish to decline from the polling process, please press star followed by the one on your touchtone phone. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. The first question comes from Cosmos Chiu with CIBC. Your line is now open.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number on your touchtone phone; you will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the number. If you are using a speaker phone, please lift your hands up before pressing any keys. One moment, please for your first question. Your first question comes from Cosmos Chiu with CIBC. Your line is now open.

Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session.

Operator: Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two.

Operator: If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question.

Operator: Your first question comes from Cosmos Chiu with CIBC. Your line is now open.

Cosmos Chiu: Hi, thanks Michael. Um, maybe my first question is about La Colorado. Michael, you kind of touched on that.

Cosmos Chiu: Hi, thanks, Michael. Um, maybe my first question is on La Colorado. Michael you kind of touched on it. The La Colorado ventilation shaft is now in place, and it sounds like it's going pretty well. Could you maybe elaborate? Is it functioning as expected?

Cosmos Chiu: Uh, how does that, you know, sort of help air flow? And ultimately, I guess what I'm trying to get to is, um, in terms of getting to 2000 times per day, you said you're going to get to it by year and, along with higher grades. Is it going to be more of a straight line sort of increase from now? Until then, is that going to be some kind of step change? And is that going to be part of the fact, as you mentioned, overall, Q4 is going to be stronger than Q?

Cosmos Chiu: Hi, thanks, Michael and team.

Cosmos Chiu: Maybe my first question is on La Colorada. Michael, you kind of touched on it.

Cosmos Chiu: La Colorado, the ventilation shaft is now in place. Sounds like it's going pretty well. Um, could you maybe elaborate? Is it functioning as expected? Uh, how has that, you know, sort of helped airflow?

Cosmos Chiu: La Colorada Ventilation Shaft is now in place. Sounds like it's going pretty well. Could you maybe elaborate, is it functioning as expected? How has that, you know, sort of helped airflow? And ultimately, I guess what I'm trying to get to is.

Cosmos Chiu: And, and ultimately, I guess what I'm trying to get to is, um, in terms of getting to 2,000 tons per day, you said you were going to get to it by year end along with higher grades. Is it going to be more of a straight line sort of increase from now until then? Or is there going to be some kind of step change? And is that going to be part of the fact that, uh, as you mentioned, overall, Q4 is going to be stronger than Q?

Cosmos Chiu: In terms of getting to 2,000 tons per day, you said you're going to get to it by year-end, along with higher grades.

Cosmos Chiu: Is it going to be more a straight line sort of increase from now until then or is there going to be some kind of step change and is that going to be part of the fact that as you mentioned overall Q4 is going to be stronger than Q3?

Michael Steinmann: Yes, thanks, Cosmos. Yeah, the shaft completion and the installation and startup of the fence were right on time, as we indicated for, you know, since the beginning of the year. That will happen mid-year. It happened mid-year ago. It looks very exciting what we see on the result side, on the impact on the mine of that shaft, which, as you know, was a multi-year project, really, to kind of bring us back on track here with the production in La Plata. But Steve, maybe you could give some more details.

Steve: Thanks, Cosmos.

Steve: Yeah, the shaft completion and the installation and startup of the fans was right on time as we indicated for the, you know, since beginning of the year. It will happen mid-year. It happened mid-year. It looks very exciting what we see on the result side, on the impact to the mine of the shaft.

Michael Steinmann: which as you know was a multi-year project really to...

Michael Steinmann: kind of bring us back on track here with better the production lackck what other about statement

Steven Busby: Sure. And good morning, Cosmos. Thanks for the question.

Steve: Sure, and good morning, Cosmos. Thanks for the question. I have to say, we're incredibly happy with the results of this new shaft. Immediately when we turned the fans on, on July 11th, we increased overall flow rates into the mine by about 200,000, 300,000 cubic feet per second of airflow, or feet per minute, sorry. And immediately, we saw temperatures drop in the Candelaria East Zone by three degrees Celsius.

Speaker Change: some much y sure and good morning cosmo slakes for the clouching i have to say

Steven Busby: I have to say, we're incredibly happy with the results of this new shaft. Immediately when we turned on the fans on July 11, we increased overall flow rates into the mine by about 200,000, 300,000 cubic feet per second of airflow, or feet per minute, sorry. And immediately, we saw temperatures drop in the Candelaria East Zone by three degrees Celsius.

Steven Busby: or

Steven Busby: Incredibly happy with the results of this new shaft. Immediately when we turned the fans on, on July 11th, we increased overall flow rates into the mine by about 200,000, 300,000 cubic feet per second.

Steven Busby: of Airflow, received per minute, sorry.

Steven Busby: and immediately we saw temperatures drop in the Candelaria East Zone by three degree wetfall Celsius.

Steve: So, a substantial improvement, which led immediately to a bump in tonnage of 25 percent over what we'd been seeing up until that point in the year. We were about 1,400 tons a day going in for the year before we started that fan. We're now up at around 17, a little over 1,700 tons a day. So, between now and the end of the year, the other thing I wanted to mention is that we have also bumped our development up 10 percent from where we were prior to when that fan started up.

Steven Busby: So, a substantial improvement, which led immediately to a bump in tonnage of 25 percent over what we'd been seeing up until that point in the year. We were about 1,400 tons a day going in for the year before we started that fan. We're now up at around 17, a little over 1,700 tons a day. So, between now and the end of the year, the other thing I wanted to mention is that we have also bumped our development up 10 percent from where we were prior to when that fan started up.

Steven Busby: So a substantial improvement.

Steven Busby: which led immediately, we saw a bump in tonnage.

Steven Busby: of 25% over what we've been seeing up until that point through the year. We were about 1,400 tons a day going in for the year before we started that fam. We're now up at around 17, a little over 1,700 tons a day.

Steven Busby: So between now and the end of the year, the other thing I wanted to mention is that we also bumped our development up.

Steven Busby: 10% from where we were prior to when that fan started up. So within the two and a half, three weeks of running the fan, we've seen incredible boost of production and development rates.

Steve: So, within the two and a half, three weeks of running the fan, we've seen an incredible boost in production and development rates, and that'll continue to ramp up. You know, I think for purposes of quarterly reporting, it'll be a bit of a straight line wrap-up. Obviously, day-to-day, there are fluctuations that take place, but we're feeling good that we're starting from a good base and we'll wrap up through the rest.

Steven Busby: So, within the two and a half, three weeks of running the fan, we've seen an incredible boost in production and development rates, and that will continue to ramp up. You know, I think for purposes of quarterly reporting, it'll be a bit of a straight line ramp up. Obviously, day-to-day, there are fluctuations that take place. But we're feeling good that we're starting from a good base, and we'll ramp up through the rest.

Steven Busby: That will continue to ramp up.

Steven Busby: You know, I think for purposes of quarterly reporting, it'll be a bit of a straight, you know, line wrap-up. Obviously, day-to-day, there's fluctuations that take place, but we're feeling good that we're starting from a good base and we'll wrap up through the rest of the year.

Cosmos Chiu: Yeah, that's great to hear. And then maybe on the quarterly guidance as well. Michael, as you mentioned, Q2 due to weather-related issues, silver production was lower than your quarterly guidance. However, I do see that your costs, non-sustaining costs, were also lower or better than your quarterly guidance. So how would we achieve that lower cost despite lower production, and ultimately, what's your ability to sustain those lower costs on a go-for basis? Can we see that once again, in terms of that, you know, better cost once again in Q3 and Q4?

Cosmos Chiu: Yeah, that's great to hear. And then maybe on the quarterly guidance as well. Michael, as you mentioned, due to weather-related issues, silver production was lower than your quarterly guidance. However, I do see that your cost on sustaining costs was also lower or better than your quarterly guidance. So how will you achieve that lower cost despite lower production? And ultimately, what is your ability to sustain those lower costs on a go-for basis? Can we see that once again in terms of that, you know, better cost once again in Q3 and Q4?

Cosmos Chiu: Yeah, that's that's great to hear. And then maybe on the quarterly guidance as well, Michael, as you mentioned.

Speaker Change: Q2, due to weather-related issues, silver production was lower than your quarterly guidance. However, I do see that your cost, non-sustaining costs, was also lower.

Speaker Change: or better than you quarterly diid so how you want achieve that lower cost is byite lower production and and ultimately what's the

Cosmos Chiu: your ability to sustain those lower costs on a go for basis. Can we see that once again in terms of that, you know, better cost once again in Q3 and Q4?

Michael Steinmann: Well, don't forget that, especially at La Palada and other places with increased production later in the year, and La Palada's the best example of that. We obviously have a fixed cost there, and having a larger denominator will bring the cost barons right down. That's really the reason why we forecast those lower costs of La Palada going forward, really based on that ramping up of production. So that's, of course, still there, still there for us.

Michael Steinmann: Well, don't forget that, especially at La Colorado and other places with increased production later in the year, and La Colorado is the best example of that, we obviously have a fixed cost there, and having a larger denominator will bring the cost per ounce right down. And that's really the reason why we forecast those lower costs at La Colorado going into the year, really based on that ramp-up of production. So that's, of course, still there, still there for us.

Speaker Change: Well, don't forget that, especially at La Colada and other places with increased production.

Michael Steinmann: Later in the year, and Lackawanna is the best example of that, we obviously have a fixed cost there, and having a larger denominator will bring the cost per ounce right down. That's really the reason why we...

Michael Steinmann: Forecast those lower costs of La Corada go into the year really based on that on that ramp up of the production So that's that's of course still there still there for us

Michael Steinmann: Yeah, just to add, Cosmos, I think in the first half of the year, some of the lower costs we've seen have been related to the timing of our inventory of byproduct credit sales relative to what we're producing. We sold a bit more byproduct than we produced during that period. So that loss, as we look to the second half of the year, as Michael says, we do anticipate substantially reduced unit costs per ton at La Colorado.

Michael Steinmann: Yeah, just to add, Cosmos, I think in the first half of the year, some of the lower costs we've seen has been related to the timing of our inventory of byproduct credit sales relative to what we're producing. We sold a bit more byproduct than what we produced.

Michael Steinmann: We are seeing some improvements that we've made at Cerro Moro and Jacobina; they're coming in at a pretty good cost per ton. So we've kind of projected that out with the actual byproduct credits, and that's where we're saying that we feel will come in in line with what we guided for our cash and East Coast costs. And one last point: Cosmos.

Michael Steinmann: during that period. So that, that'll offset as we look.

Michael Steinmann: to the second half of the year, as Michael says, we do anticipate reduced, you know, unit cost per ton substantially at La Colorado.

Michael Steinmann: We are seeing some improvements that we've made at Cerro Moro and Jacobina, they're coming in at a pretty good cost per ton. So we've kind of projected that out with the actual...

Michael Steinmann: byproduct credits, and that's where we're saying that we feel will come in in line with what we guided for our cash and East Coast costs for the year.

Steve: As I always mention, on the cost side, currency fluctuations have a big impact on our costs. We saw a devaluation in the quarter, especially in the Mexican peso and the Brazilian real, and that had a positive impact on our costs and will continue to do so if that continues down the road. Just on the flip side of that, obviously, when you have a devaluation of the currency, we see kind of an increase in our non-cash tax expense due to those currency fluctuations. So you see that in our earnings numbers, but as I said, that's a non-cash tax expense there.

Michael Steinmann: As I always mention, on the cost side, currency fluctuations have a big impact on our costs. We saw a devaluation in the quarter, especially in the Mexican peso and the Brazilian real, and that had a positive impact on our costs and will continue to do so if that continues down the road. Just on the flip side of that, obviously, when you have a devaluation of the currency, we see kind of an increase in our non-cash tax expense due to those currency fluctuations.

Speaker Change: one on last point conerce

Michael Steinmann: As I always mention, on the cost side, currency fluctuations have a big impact on our cost. We saw a devaluation in the quarter, especially on the Mexican peso and the Brazilian real.

Speaker Change: And that's how the, you know.

Speaker Change: arez But there is no positive impact on our costs and we will continue to do so as that continues down the road. got obviously when you have the valuation of the currency, we see an increase of our non-cash expanse.

Michael Steinmann: So you see that in our earnings numbers, but as I said, that's a non-cash tax expense there. And I really like to see the positive impact on our costs that we have now. It's a very, very exciting combination of lower cost and higher level projects, which obviously was a reflection of that obviously was the record cash flow.

Michael Steinmann: due to those currency fluctuation so you see that in our our earnings numbers so but that' a sub that's a noncash

Michael Steinmann: And I really like to see the positive impact on our costs that we have now. It's a very, very exciting combination of lower cost and higher level projects, which obviously was my reflection of that obviously was the record cast.

Michael Steinmann: tax expense there and I you know I really like to see that the positive impact to our costs that we have now and

Michael Steinmann: It's a very, very exciting combination of lower cost and higher metal prices, which obviously must reflect the reflection of that, obviously, must the record cast for.

Cosmos Chiu: I agree. And maybe one last question on Escobar. It seems like your MD&A meetings are still continuing into Q3, despite the fact that the appointment of the Vice Minister of Sustainable Development is still pending. Is that, am I reading that correctly? And are there any more updates in terms of Guatemala and Escobar?

Cosmos Chiu: And maybe one last question on Escobar. It seems from your MD&A meetings are still continuing into Q3, despite the fact that the appointment of the Vice Minister of Sustainable Development is still pending. Am I reading that correctly?

Cosmos Chiu: I agree. And maybe one last question on Escobar. It seems like from your MD&A meetings are still continuing into Q3.

Speaker Change: despite the fact that the appointment of the f minister of sustainable development still hending is that in my reading that correctly and res there any more update in terms of gualmal and the

Michael Steinmann: And are there any more updates in terms of Guatemala and Escobar? Yeah, we had actually quite a number of meetings with government officials during the quarter, and I think, you know, after a bit of a slow startup, I think, of the new government, they have most of the people in place. There are still a few people missing to be put there, but I think, yeah, the meeting schedule between us and government officials has definitely improved. Looking forward to continuing and going back into the full consultation meetings that we need to have to advance this.

Michael Steinmann: Yeah, we actually had quite a large number of meetings with government officials during the quarter. And I think, you know, after a bit of a slow startup, I think of the new government. They have most of the people in place. There's still a few people missing to be put there, but I think the other meeting schedule between us and government officials has definitely improved. I am looking forward to continuing and going back into the full consultation meetings that we need to have to advance this.

Michael Steinmann: Yeah, we had actually quite a large number of meetings with government officials during the quarter and I think, you know, after a bit of slow start-up, I think, of the new government, they have most of the people in place, there's still a few people missing to be put there, but I think, yeah, the meeting schedule

Michael Steinmann: between us and government officials has definitely improved and looking forward to continue and go back into the full consultation meetings that we need to have to advance this.

Cosmos Chiu: Great. That's great to hear. And thanks again, Michael, Steve, and Jorin and the team for answering those other questions I have.

Speaker Change: Great, that's great to hear and thanks again Michael, Steve, and Joanne and team and those are all the questions I have.

Operator: Your next question comes from Don DeMarco with National Bank Financial. Your line is now open.

Don Demarco: Thanks, Cosmos.

Speaker Change: Your next question comes from Don DeMarco with National Bank Financial. Your line is now open.

Don Demarco: Thank you, operator, and I think Michael and Keane. Maybe first, but I'll just continue on with that scaball. I've been looking at the price of the contingent value rights, and they've eased a little bit over the recent months. Do you think this is a fair indicator of the likelihood of a restart or just the tenor of activities at Escobar related to the consultation process?

Don Demarco: Thank you, Operator, and Michael and team. Maybe my first question, just continuing on with Eskimo. I've been looking at the price of the contingent value rights, and they've eased a little bit over the recent months. Do you think this is a fair indicator of the likelihood of a restart or just the tenor of activities at Escobar related to the consultation process?

Don Demarco: Thank you, Operator, and Michael and team. Maybe first question, just continuing on with Escobol.

Don Demarco: I've been looking at the price of the contingent value rights and they've eased a little bit over the recent months. Do you think this is a fair indicator of the likelihood of a restart or just the tenor of activities at Escobar related to the consultation process?

Michael Steinmann: I will be careful when you look at the price of the contingent value, right, because you know there is a 300 and... There are 30 million CVRs out there, so a large number, and when you look at the trading numbers, this is a very limited trading on those CVRs. You know, they obviously follow the Pan American share price, of course, and then I think, you know, the fact that the new government needed a bit longer to set everything up here could have had an impact on that, but I will not read too much into it. As I said, it is a very, very limited trading of those CBRs.

Michael Steinmann: I will be careful when you look at the price of the contingent value, right, as you know there is a $300, and there are 30 million CVRs out there, so a large number, and when you look at the trading numbers, this is a very limited trading on those CVRs. You know, they obviously follow the Pan American share price, of course, and then I think, you know, the fact that the new government needed a bit longer to set everything up here could have had an impact on that, but I will not read too much into it. As I said, it is a very, very limited trading of those CBRs.

Michael Steinmann: I will be careful when you look at the price of the contingent value, right? As you know, there is a 300 and...

Speaker Change: think you did thirty million cbchild there are so larges number and and when you look at the trading numm this is a very limititedthe trading on those on those cv so i

Michael Steinmann: You know, they obviously follow Pan American share price, of course, and then I think, you know, the fact that the new government needed a bit longer to set everything up here could have had an impact to that, but I will not read too much into it. As I said, it is a very, very limited trading of those CBRs.

Don Demarco: Okay. And then just, I mean, it's encouraging to hear that there are a number of meetings that have been held. But is there any visibility for next meetings or the filling of that vacancy? This is just kind of maybe repeating some of the questions that were asked by the last caller. But just wondering what we might anticipate in the coming months in this process.

Don Demarco: Okay and then just I mean it's encouraging to hear that there's a number of meetings that have been held but is there any

Speaker Change: you knowvisibility for next meetings or the filling of that vacancy this is just kind of maybe repeating some of the questions you were asked on by the last callller but 're just wondering what we might anticipate in the coming months on this process

Michael Steinmann: Look, I mean, we anticipate that that role will obviously be filled by the government in time, and we will pick up, I think, with that, the kind of style of meetings we had before. As I said, at the moment, all I can say is that, you know, there has been quite an impressive number of meetings with government officials between the company and us. And, you know, it was really quite a slow start to the year with the new government, which Obviously, a new government, as you can imagine, a lot of new officials in place, brought up to speed who, you know, have other issues to deal with in the country than just us. And, you know, now they're in place most of the time, probably five, six months now. So I think I think we see kind of a normalized, normalizing meeting schedule here in the.

Michael Steinmann: Look, I mean, we anticipate that that role will obviously be filled by the government in time, and we will pick up, I think, with that, the kind of style of meetings we had before. As I said, at the moment, all I can say is that, you know, there has been quite an impressive number of meetings with government officials between the company and us. And, you know, it was really quite a slow start to the year with the new government, which Obviously, a new government, as you can imagine, a lot of new officials in place, brought up to speed, that, you know, have other issues to deal with in the country than just Escobar. As you can imagine, and, and, you know, now they're in place most of the time, probably five, six months now. So I think we see kind of a normalized, normalizing meeting schedule here in the

Michael Steinmann: lo i mean we anticipate at that role will obviously be filled by the government in time and we will pick up

Michael Steinmann: I think with that...

Michael Steinmann: The kind of the style of meetings we had before, as I said, at the moment, all I can say is that, you know, there has been quite an impressive number of meetings with government officials between the company and us.

Speaker Change: Thank you

Michael Steinmann: It was really like quite a slow start of the year with the new government, which kind of has to be expected, obviously. A new government, as you can imagine, a lot of new officials in place that need to...

Michael Steinmann: product to speed that how other issues to al it in the country done done just as coabbasy can imagine and

Michael Steinmann: and you know, now there are...

Michael Steinmann: in place most of them probably five six months now so I think I think we see kind of a normalized normalizing meeting schedule here in the future.

Don Demarco: Okay, okay, we'll look forward to that. And so next question: like the quarter, do we see a true portfolio effect here? You got lower costs offsetting higher costs at different operations. The cornerstone mines look strong, Jacobean in particular. Now you've got this optimization work that's underway. The mines are running seemingly great at 8,400 tons per day. Are you still, is the optimization still looking at maybe trying to increase that throughput, or what are some of the areas of focus that we can look forward to whenever?

Don Demarco: Okay, okay, we'll look forward to that. And so next question: like the quarter, do we see a true portfolio effect here? You got lower costs offsetting higher costs at different operations. The cornerstone mines look strong, Jacobine in particular. Now you've got this optimization work that's underway. The mines are running seemingly great at 8,400 tons per day. Are you still, is the optimization still looking at maybe trying to increase that throughput, or what are some of the areas of focus that we can look for?

Don Demarco: Okay.

Don Demarco: Okay, we'll look forward to that and so next question, the quarter we see a true portfolio effect here. You've got lower costs offsetting higher costs with different operations.

Don Demarco: the cornerstone mind look strong jacobbeine in particular

Speaker Change: and now you've got this optimization work that's underway the mind's running seemingly greatater at eighty four hundred tontimess per day are you still is the optimization still looking at maybe trying to increase that through put or what are some of the areas the focus that we can look forward to whenever that report will be released

Michael Steinmann: Yeah, we're very excited about Jacobina. It's a very, very strong cash flower for us, very strong production, you know, very, very long mine life.

Michael Steinmann: we are very excited about kvena as see very very strong coash flow for us very strong production in a very very long m life so

Michael Steinmann: So, yes, we're still working on the optimization. I think there's much more to do at Jacobina, but maybe, Steve, you want to... I know you're not ready yet.

Michael Steinmann: Yes, we're still working on the optimization. I think there's much more to do at Jacobino, but maybe, Steve, you want to...

Steven Busby: We're just starting to release everything, but maybe a few little points. Sure. Thanks for the question, Don. Yeah, the optimization work is proceeding at full bore. We are seeing benefits to changing some of the mining methods, particularly at depth, as we've talked about in the past, that would allow us to capture more of the resource recovery, reserve recovery, with the same development.

Speaker Change: if that an eion ready yet to stud or anything anything about that may you on sir thanks for the question on yeah the optimization work is proceding that full bor we are seeing benefits to changing them some of the mining method's particularly depth as we've talked andasked

Steve: Sure. Thanks for the question, Don.

Steve: Yeah, the optimization work is proceeding at full bore. We are seeing benefits to changing some of the mining methods, particularly at depth, as we've talked about in the past, that would allow us to capture more of the resource recovery, and reserve recovery with the same development. That could lead to higher throughput. You kind of said it well.

Steven Busby: That would allow us to capture more of the resource recovery, reserve recovery with the same development.

Operator: Unknown Executive, Lawson Winder, Cosmos Chiu, Don DeMarco, Ignacio Couturier, Siddharth Samarth, Pan American Silver Corp., Steven Busby, Craig Hutchison, Martin Wafforn, Siren

Steve: We're really happy running 8,400 tons a day. We've got a throttle pair. Everything's coming in line. We're making a few upgrades, circuits in the process plan, a few upgrades in some of the systems in the mine. We're very happy with where it's running there, and we want to make sure that the optimization study is done in a way that will achieve that same kind of stable, steady-state run at a higher throughput, with an understanding of all aspects of that.

Operator: that couldin lead to the higher throughput you kind of you kind of said it well we're really happening running eight four hundred ton today we got a tronggt there everything's coming in line we're making a few upgrades to

Operator: circuits in the process plan, a few upgrades in some of the systems in the mine. We're very happy with where it's running there and we want to make sure that the optimization study is done in a way that will will achieve the same kind of stable steady state run.

Operator: At a higher throughput with understanding all aspects of that. So there's still a lot of work to do. We're still talking, you know, sometime in the first half of next year to come out with the results.

Steve: So there's still a lot of work to do. We're still talking, you know, sometime in the first half of next year to come out with the results. We do, I would say, tend to think it's going to show us higher throughput, but I don't really want to give any numbers on that.

Speaker Change: we do i would say tend to think it's going to show us hard through quip but i don't really want to give any numbers on that right now

Don Demarco: Okay, thanks for that, Steve. And well, in the meantime, it's looking great. So last question. Looking to the Mexican administration, Claudio has been in the seat now for a few months. Have you had a chance to meet with the new administration and, Are there any concerns or issues that might potentially develop into concerns in the quarters ahead with this change?

Speaker Change: Okay, thanks for that, Steve. And, well, in the meantime, it's looking great. So, last question.

Don Demarco: Looking to the Mexican administration, Claudio has been in the seat now for a few months. Have you had a chance to meet with the new administration, and are there any concerns or issues that might potentially develop into concerns in the quarters ahead? with this change.

Don Demarco: Looking to the Mexican administration, Claudio has been in the seat now for a few months. Have you had a chance to meet with the new administration?

Don Demarco: are there any concerns or issues that might potentially develop a concerns in the quarters ahead with this change

Michael Steinmann: Yeah, the new administration has been elected, you're right, but they are not, they did not take office, yes? Yes. Thank you, for the U.S. year 2016-17. Thank you.

Michael Steinmann: Yeah, the new administration has been elected, you're right, but they are not, they did not take office, yes, thank you. September 1st, the change happened. So it's a bit early to answer your question.

Michael Steinmann: Yeah, the new administration has been elected, you're right, but they did not take office yet. Thank you.

Speaker Change: september first developed how the change happ and so a bit early to to w question ok ay i think we will continue to do happily work with to be govern mexicical xico i always been a good good place for us to work we have very strong operations in muchxso comes

Michael Steinmann: Look, I think we will continue to happily work with the government of Mexico. Mexico has always been a good place for us to work. We have very strong operations in Mexico. October 1st. Oh, sorry, sorry. October 1st.

Speaker Change: Oh, sorry. Sorry. October 1st. Sorry. Okay. That will be the change of government. So, as I said a bit earlier, but I, you know, I don't foresee any big changes how we work with the government in Mexico.

Don Demarco: Sorry, but I don't foresee any big changes in how we work with the government in Mexico. Governments, as you know, change every country we work in over time, and we are dealing with very long reserve lives in some of our assets, especially when you look at the La Corada scar. You know, there will be many, many administrations passing while we produce for decades and decades on that asset in the future. So I'm very happy to work in Mexico. I don't see any issues at this point. Okay, Michael, thanks so much for that, and good luck with Q3. Thank you.

Don Demarco: Okay.... There will be a change of government. So, as I said a bit earlier, but I, you know, I don't foresee any big changes in how we work with the government in Mexico. Governments, as you know, change in every country we work in over time, and we are dealing with very long reserve lives in some of our assets, especially when you look at La Corada's car. You know, there will be many, many administrations passing while we produce for decades and decades on that asset in the future. So, I'm very happy to work in Mexico. I don't see any issue at this point. Okay, Michael, thanks so much for that, and good luck with Q3. Thank you.

Don Demarco: the governmentments as you know change c a change have a contribute working over time and we are dealing with very long reserve flilights in some of our assets pecially run you look at a lot lot car

Don Demarco: There will be many, many administrations passing what we produced for decades and decades on that asset in the future. So I'm very happy to work in Mexico. I don't see any issue at this point.

Don Demarco: Okay Michael, thanks so much for that, and good luck with Q3.

Speaker Change: Okay Michael, thanks so much for that and good luck with Q3.

Michael Steinmann: Thank you.

Don Demarco: Operator.

Don Demarco: hello

Speaker Change: ap perana

Operator: Nicholas, if you can hear us, you're in the queue to ask a question.

Speaker Change: Nicholas, if you can hear us, you're in the queue to ask a question.

Nicholas: Thanks, Michael, for taking my question here. I just had a question about Sarah Morrow. I understand that grades have been a little bit variable here for the previous two quarters, and that's been due to some weather-related impacts, but I was hoping you guys could provide some color on what the next quarter or two might look like there with respect to grades.

Nicholas Clarke: Thanks, Michael, for taking my question here. I just had a question on Saramoro. I understand that grades have been a little bit variable here for the previous two quarters, and that's been due to some weather-related impacts, but I was hoping you guys could provide some color on what the next quarter or two might look like there with respect to grades and throughput.

Michael Steinmann: Thanks, Michael.

Speaker Change: I just have a question on Sarah Morrow, if I could. I understand that...

Speaker Change: Grades have been a little bit variable here for the previous two quarters, and that's been due to some regulated impacts. But I was hoping to be able to provide some color on what the next quarter or two might look like there with respect to grades and throughput. Thank you.

Michael Steinmann: Yeah, and it's really hinging on that knotty zone that we are mining that is probably 25 kilometers away from Cerro Moro, the high-grade satellite. And we couldn't really access that site all the time during QE2 because of the really, really strong rains and snowfalls during winter. We are obviously getting now into springtime soon, and access has been re-established. So that's why we're maintaining our output for the production there. Let's see if you want to get some details. Yeah, sure, Nicholas.

Michael Steinmann: Yeah, and it's really hinging on that knotty zone that we're mining that is probably 25 kilometers away from Cerro Moro, the high-grade satellite. And we couldn't really access that site all the time during Q2 because of the really, really strong rains and snowfalls during winter. We are getting into springtime soon, and access has been re-established. So that's why we're maintaining our outlook for production there. Let's see if you want to give some details.

Speaker Change: Yeah, and it's really interesting on that Na'vi song that...

Michael Steinmann: that we are mining, that...

Nicholas: This is about 25 kilometers away from Cerro Moro, a high-grade satellite. And we couldn't really access that site all the time during Q2 because of the really, really strong rains and snowfalls.

Michael Steinmann: During winter we are obviously getting now into springtime soon and access has been re-established.

Nicholas: So that's why I've been, you know, maintaining, obviously, our output of production there. Let's see if you want to get some details. Yeah, sure, Nicholas. And, you know, we were pushing pretty hard to get Nadia online towards the end of last year. We talked about it. It was kind of the next...

Steven Busby: And we were pushing pretty hard to get knotty online towards the end of last year. We talked about it. It was kind of the next grade zone, if you will. We were going to open it up after mining out the higher-grade portions of the ZOE deposit. It was very important to us, so we pushed out there and got that up and running quite well early in Q1. And it was starting to deliver pretty well.

Michael Steinmann: Yeah, sure, Nicholas. And we were pushing pretty hard to get knotty online towards the end of last year. We talked about it. It was kind of the next grade level, if you will. We were going to open it up after mining out the higher-grade portions of the soil deposit. It was very important to us. So we pushed out there, got that up and running quite well early in Q1, and it was starting to deliver pretty well.

Steven Busby: a grade zone, if you will, we were going to open up after mining out the higher grade portions of the soil deposit. It was very important to us.

Steven Busby: So we pushed out there, got that up and running quite well early in Q1, and it was starting to deliver pretty well.

Steven Busby: I have to admit, yeah, we had some pretty good rains there, higher than normal. But we also, our road wasn't really built to the kind of standards we would have liked to have seen. So the combination of the two definitely limited our ability to access the pit. We didn't really have dewatering systems in place to the degree that we should have to dewater the pit in these kinds of rainstorms.

Steven Busby: You know, I have to admit, yeah, we had some pretty good range there, you know, higher than normal. But we also, our road wasn't really built to the kind of standards we would have liked to have seen. So the combination of the two

Michael Steinmann: I have to admit, yeah, we had some pretty good rains there, higher than normal. But we also, our road wasn't really built to the kind of standards we would have liked to have seen. So the combination of the two definitely limited our ability to access the pit. We didn't really have dewatering systems in place to the degree that we should have to dewater the pit in these kinds of rainstorms.

Steven Busby: Definitely limited, restricted our ability to access the pit.

Steven Busby: we didn't really have key water and systems in place

Steve: So we've been, as we've regained access and now we are mining back in Knotty at the rates we like to mine, upgrading those roads, upgrading those dewatering systems so that we can face these storms in the future. And we're also looking at plans now to accelerate production in Knotty to kind of claw back what we missed in Q2 there. We feel pretty good that we have a good plan in place to be able to do that.

Steven Busby: to the degree that we should have.

Speaker Change: to the water that thatip went in these kind of range storms so we've been as we regaining access and now we are remining back in naughty at the rates relength of mindine we're upgrading those roads we're upgrading those y baring

Steven Busby: So we've been, as we've regained access, and now we are mining back in Knotty at the rates we like to mine, upgrading those roads, upgrading those dewatering systems so that we can face these storms in the future. And we're also looking at plans now to accelerate production in Knotty to kind of claw back what we missed in Q2 there. We feel pretty good that we have a good plan in place to be able to do that.

Steven Busby: So that we can face these storms.

Steven Busby: in the future.

Steven Busby: And we're also looking at plans now to accelerate production in NADI.

Steven Busby: to kind of claw back what we missed in Q2 there. We feel pretty good that we got a good plan in place to be able to do that, but that's going to load up Q4 more so you won't see as much coming on Q3. So when you look at the distribution at Cerro Moro, it's going to be stronger in Q4 than Q4.

Steven Busby: But that's going to load up Q4 more so. You won't see as much coming in Q3. So when you look at the distribution at Cerro Moro, it's going to be stronger in Q4.

Steve: But that's going to load up Q4 more so. You won't see as much coming out in Q3. So when you look at the distribution at Cerro Moro, it's going to be stronger in Q4.

Nicholas Clarke: Got it. Okay, that's helpful. Thanks, Steve. Just if I could sneak in one more. We're almost halfway through the quarter's year, and I understand that the La Arena 2 transaction is still expected to close sometime this quarter. I was just wondering if you guys could provide any updates or color on when you see that happening, and if there's anything with respect to approvals that you're still waiting for. Yeah, I think that's right.

Speaker Change: gotd okay that's helpful fuxes

Speaker Change: I'm just a...

Speaker Change: speakking one more we're almost halfway through

Speaker Change: I understand that the Atlanta 2 transaction is still expected to close sometime this quarter, I was just wondering if you guys could provide any updates or color on when you see that happening and if there's any

Speaker Change: anything out with respect to afprobbal that and there're so anyimportant

Michael Steinmann: Yes, Nicholas, that's right. And at the moment, we're still waiting for some regulatory approvals. And, you know, at the moment, it's still planned for Q3.

Michael Steinmann: Yes, that's right. And at the moment, we're still waiting for some regulatory approvals. And, you know, at the moment, it's still planned for Q3.

Michael Steinmann: That's right and at the moment we're still waiting for some regulatory approvals and you know at the moment it's still planned for Q3.

Speaker Change: Great. Thanks, Michael.

Operator: There are no further questions at this time. I will now turn the call over to Michael for his closing remarks.

Michael Steinmann: thankay

Michael Steinmann: There are no further questions at this time. I will now turn the call over to Michael for closing remarks.

Operator: Thank you, Operator, and thanks, everyone, for tuning in to the call today. Very exciting, very exciting times coming here for Pan America. You've got a glimpse here when you look at the record revenues, record cash flow, free cash flow, costs below guidance. Obviously, a very nice combination here when you go into a high metal price environment.

Michael Steinmann: Thank you, Operator, and thanks, everyone, for joining the call today. Very exciting, very exciting times are coming here for Pan American. You've got a glimpse here when you look at the record revenues, record cash flow, free cash flow, and costs below guidance. Obviously, a very nice combination here when you go into a high metal price environment. At the same time, we finalized the ventilation system at La Corada after quite a few years of very, very hard work to get there.

Operator: Thank you operator and thanks everyone for tuning in to call today.

Operator: Very exciting, very exciting times coming here for Panama, at least you got a glimpse here when you look at the record.

Operator: Record Revenues, Record Cost Flow, Free Cost Flow

Operator: cost below guidance, obviously a very nice combination here when you go into a high metal price environment. At the same time...

Michael Steinmann: At the same time, we finalized the ventilation system at La Corada after quite a few years of very, very hard work to get there. So, as Steve explained, we already see an increase in not only production numbers but also development meters. We are nearly back on development meters on track where we want to be at about 2,000 meters a month, I believe.

Michael Steinmann: finalized the

Michael Steinmann: So, as Steve explained, we already see an increase in not only production numbers but also development meters. We are nearly back on development meters on track where we want to be at about 2,000 meters a month, I believe. That, you know, will lead to a ramp-up at La Colorado, as I explained, that will lead to lower costs at La Colorado, and, you know, a very exciting combination. While we still obviously work on our exciting SCARN deposit, there is no doubt that this is one of the largest, worldwide largest discoveries of silver and base metals over the last decade.

Michael Steinmann: The ventilation system at La Colorado after quite a few years of very very hard work to get there so as Steve explained we already see an increase in not only production number but also development meters. We are nearly back on development meter on track where we want to be at about 2,000 meters a month I believe. So

Steve: That will lead to a ramp-up.

Speaker Change: at La Colorado, as I explained, that will lead to lower costs at La Colorado.

Speaker Change: and, you know, a very exciting combination. Well, we still obviously work on our exciting SCARN deposit.

Speaker Change: No doubt, this is one of the largest, worldwide largest discovery of silver and base metals over the last decade, and we'll continue working that, and of course, they'll have the optionality on Escobar. So, lots of exciting projects ahead of us.

Michael Steinmann: And we'll continue to work on that, and of course, they'll have the optionality on Escobar. So, lots of exciting projects ahead of us, and right out there to harvest the fruits of high metal prices with a combination of lower costs.

Speaker Change: Right out there to harvest the fruits of high-level prices with a combination of lower costs. I'm looking forward to report on Q3 later this year. Until then, have a good time. Thanks, everyone.

Michael Steinmann: Yeah, very, very excited about Jocobina, another very, very strong cash flow for us, very strong production, you know, very, very long line life. So, yes, we're still working on the optimization. I think there is much more to do with Jocobina, but maybe Steve, you want to give that, I know you're not ready yet, we're just starting to release anything, but maybe...

Michael Steinmann: So, I'm looking forward to reporting on Q3 later this year. Until then, have a good time. Thanks, everyone.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

unknown: Who Would Have Thought? by Retrocrier

Operator: ohmem

Steve: Yeah, just add Cosmos. I think being the first half of the year, some of the lower cost we've seen has been related to the timing of our inventory of byproduct credit sales relative to what we're producing. We sold a bit more byproduct than we produced during that period. So that's a lot said as we look to the second half of the year. As Michael says, we do anticipate a reduced, you know, unit cost. We're done substantially at La Palada.

John Tumazos: John Tumazos, John Tumazos, John Tumazos, John Tumazos, John John Tumazos, John Tumazos, John Tumazos, John Tumazos, [inaudible] Tumazos, John Tumazos, John Thank you.

Steve: We are seeing some improvements that we've made at Sarah Moral and Jack Abina; they're coming in at a pretty good cost per ton. So we've kind of projected that out with the actual byproduct credits. And that's where we're saying that we feel will come in in line with what we guided for our cash and East Coast costs. And one last point: Cosmos.

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