Q4 2024 Pan American Silver Corp Earnings Call
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Speaker Change: Thank you Sharon and Hello, everyone I'm glad you could join us to discuss Pan American's 2024 results and our outlook for 'twenty to 'twenty five.
Speaker Change: We are very pleased with the company's performance over the past year.
Speaker Change: Revenue was a record $815 $1 million in Q4, and $2 $8 billion in 2024, reflecting the contribution of a full year of production from the acquired Yamana mines and strong about surprises.
We achieved our production guidance for 2020 for silver production totaled $21 1 million ounces and gold production was a company record of 892000 ounces.
Speaker Change: All in sustaining costs for silver segment, excluding inventory adjustments or $18.98 per ounce in 2024 slightly above the guidance.
Speaker Change: Segment, the all in sustaining costs, excluding inventory adjustments in 2024 or $1501 per ounce and were within the guidance.
Speaker Change: In 2024, we completed several major projects, notably the new ventilation infrastructure.
Speaker Change: We are now seeing the benefits in terms of higher throughput at La Colorado.
Speaker Change: Achieving our target 2000 tons at the end of last year and lower per ounce operating costs.
Speaker Change: We finished construction of the new filtration plant and filter stock tailings storage facility at firearm Hunter paste backfill plant at Timmins.
These investments have set those assets up well for the future, but today our operations are generating record cash flows.
Speaker Change: Cash flow generated from operations was a record $274 $1 billion in Q4, and also a record of $724 $1 million for the full year, reflecting strong margins.
Speaker Change: We also achieved record free cash flow of $196 2 million in Q4 were $445 $1 million for the full year.
Speaker Change: We recorded net earnings of $178 million or <unk> 30 per share in Q4.
Speaker Change: Net earnings were 112, and $7 million or <unk> 31 cents per share in 2024.
Speaker Change: Net earnings in Q4 reflect the gain from the sale of a lot of end up being almost entirely offset by adjustments at Dolores to that.
Speaker Change: Closer and decommissioning liability and to the net realizable value of the inventory.
Speaker Change: Adjustments at Dolores reflect the completion of mining and to transition to the residual leaching face and active reclamation.
Speaker Change: Based on our most recent estimates for residual heap leaching into post mining phase, we expect economic production to continue.
Speaker Change: Decreasing rates through mid to late 2026.
Speaker Change: The gain from the lot of NSA and the adjustments at Dolores were adjusted from earnings. This resulted in adjusted earnings of $126 $9 million 35 per share in Q4.
Full year adjusted earnings were $286 $7 million or <unk> 79 per share.
Speaker Change: But American is entering 2025, and a strong financial position.
Speaker Change: We are now in a net cash position with $887 million cash and short term investments against roughly $800 million of debt largely related to the two long term bonds, we acquired to the amount of transactions.
Speaker Change: Our credit facility remains undrawn, giving us $1 6 billion of total available liquidity.
Speaker Change: This is a great position to be able to pursue our growth objectives, while returning capital to shareholders.
Yesterday, we announced a 10% dividend with respect to Q4.
Speaker Change: In the first quarter of 2025, we also repurchased approximately $20 million of roughly 900000 shares under the share buyback plan.
Speaker Change: That brings total share repurchases since introducing the share buyback planned last March to roughly two 6 million shares total dividends paid over 'twenty 'twenty four for $145 $4 million.
Speaker Change: I'm very proud that we have been able to return over $1 billion in dividends and share buybacks to investors since 2010, while investing in growth maintaining a strong balance sheet.
Speaker Change: Not issuing any equity through public offerings.
Speaker Change: Moving on to our guidance for this year.
Speaker Change: In 2025, we are expecting largely steady state operations with the notable changes relative to 2024 being the sale of La Arena, the lower centre and the residual leach face and improved operations at La Colorado following the ventilation upgrade.
Speaker Change: We are expecting to produce between 20 to 21 million ounces of silver and 735 to 800000 ounces of gold in 2025.
Speaker Change: We expect both silver and gold production to be weighted to the second half of the year, the corresponding effects of lower per unit costs over that period.
Speaker Change: Please see our Q4 news release and MD&A for quarterly production and cost estimates.
Speaker Change: Average all in sustaining costs for silver segment in 2025 are expected to be between 16, 25, and $8 25 per ounce.
Speaker Change: For the gold segment, we expect all in sustaining costs of between 1525 to $1625 per ounce in 2025.
Speaker Change: Sustaining capital is forecasted to be between $270 million to $285 million and project capital of between $90 million to $100 million.
Speaker Change: So it's a capital includes investment that luckily rather than the current vein mine operation aimed at opening production access to 13, new veins. These discoveries will expand high grade zones in the eastern part of the mine and were highlighted in our December nine 2024 annual exploration update user.
Speaker Change: Yes.
Speaker Change: But luckily Rados current project, we plan to invest $39 million to $42 million in exploration and infill drilling and to advance the technical studies to determine the optimum development scenario for the company.
Speaker Change: They're also investing project capital attainment for the construction of the stage six tailing storage facility and exploration of satellite deposits.
Speaker Change: A check Obinna, we are directing project capital to advance the comprehensive mine and plant optimization study expect him to describe some initial value enhancement projects by midyear.
Speaker Change: That's about all we have some residual project capital related to the new tailings filtration plant and filter stack tailing storage.
Speaker Change: Which have been successfully commissioning and ramping up to full operation.
We plan to invest about $80 million on exploration in 2025, mostly for reserve replacement.
Speaker Change: We are forecasting cash taxes of $240 million to $260 million with approximately one third to be paid in the first quarter of 2025.
Speaker Change: Kind of maintenance costs are estimated to total between $25 million to $24 million.
Speaker Change: Mostly related to Escobar.
Speaker Change: Well it can meetings amongst the participants in the consultation process for Escobar resumed in late January after the Christmas break.
Speaker Change: We'll continue to work with the government of Guatemala, and the zinc. It represented this to advance the consultation process.
Speaker Change: Government has not yet published timeline for completion of the consultation and there is no date for restart of the operation.
Speaker Change: Heading into 2025 Pan American is well positioned to benefit from the strong metal price environment. We are in.
Speaker Change: The mines, we acquired through the amount of transaction and the strong operating teams managing them I'm now well integrated in our organization we've.
Speaker Change: We've made significant strides in restaurant analyzing the portfolio and we will continue with a focus on safe efficient and sustainable mining operations.
Speaker Change: We will continue to build an even better and stronger company that offers investors a unique upside to silver with expanding margins and a rising metal price environment.
Speaker Change: Well on track with that goal and I look forward to keeping you informed of our progress.
Speaker Change: I will be happy now to take your questions.
Speaker Change: Thank you Chris will now begin the question and answer session.
Speaker Change: And the question queue you May Press Star then one on your telephone keypad, you'll hear tone Allergan your request.
Speaker Change: Using a speakerphone please pick up your handset before pressing any key.
Speaker Change: Jay a question. Please press Star then two.
Speaker Change: The first question comes from Cosmos Shue G.
Speaker Change: CIBC. Please go ahead.
Speaker Change: Thanks, Michael and T. Oh, maybe my first question is la Colorado.
Speaker Change: I see that your 2025 guidance is five and a half to $5 8 million ounces.
Speaker Change: I would've thought that could have been slightly higher just given that you produce one 6 million ounces in Q4.
Speaker Change: But I guess not everything's on a straight line. So could you maybe comment on the job on 2025 guidance call about Colorado.
Cosmos: Sure Cosmos.
Speaker Change: Morning.
Speaker Change: I'll, let Steve answer that question.
Speaker Change: Good morning Cosmos. Thank you.
Speaker Change:
Speaker Change: If you recall in December we put out a press release that highlighted some of the really significant exploration remember so for sending off to the east side about area on Campbell area.
Speaker Change: What we decided to do is there's a bit of a balancing going on.
Speaker Change: We're trying to you know.
Speaker Change: Reduced a little bit the burden, we've got our capacity burden in the system on waste movement, and we want to develop out into this new area to bring long term value to through that operation. So we're balancing you know what kind of impacts do we want to see next year compared to trying to get out aggressively.
Speaker Change: Opening up that new area in understanding better the potential reserves out in that area. So it was kind of a happy medium we chose from 'twenty to 'twenty five take a little bit of short term pain.
Speaker Change: Paying for long term gain there.
Speaker Change: I'll, let Chris talk a little bit about what we're seeing out there and why we're doing it but before that I. Just also want to mention that along the way going out to that east. We do cross section of concession that belongs to one of our neighbors. So we won't be mining through a concession there and there seems to be some more of their burden.
Chris: We'll share some of the profits without concession owner as we pass through there. So that has a bit of an impact on the cost and the production as well, but it's really the waste constrained we wanted to develop that area. We only have so much capacity to move ore and waste. So something's got to give us where you open up that area and we think long term, it's going to be.
Speaker Change: Brings substantial additional value to the company and I'll, let Chris kind of highlight Omar Yeah, Hi.
Chris: This is Chris here.
Chris: As Mike mentioned.
Chris: As Mike mentioned, Joe 30, new structures, which was highlighted in the December exploration press release.
Chris: Been alluding to this over the last year, we've put a lot of effort into just sort of moving a lot of the exploration overtime each portion.
Chris: Have some of the major structures, the NC, two et cetera, but if you remember the lack Colorado mine has been deepening and you know as we we know that through the system as it becomes more poly metallic rates, so finding new structures.
Chris: Finding new areas higher up in the system is obviously beneficial and that's why we're really concentrating on that eastern portion and southeast of the skull and area, which is a depth as well, but we've had some great results as you can see in that press release, and that's certainly something to look forward to for the future of the company.
Chris: Great.
Speaker Change: And maybe you know same type of question for Jacobina as well Youre guiding to 180 595000 ounces in 2025.
Speaker Change: I thought that could have gone higher potentially as well just given that you you did a record 52 part of core.
Speaker Change: In Q4 2024.
Speaker Change: Could you maybe comment on that and also maybe comment on.
Speaker Change: I believe there's some optimization studies ongoing at jacobina, how that's going so far as well.
Speaker Change: Yes, Cosmos stinker them.
Jack: Yeah, we had a remarkable year in a remarkable Q4, Jack can be and we're very very happy with the way that operation.
Jack: As Debottlenecking continues to Debottleneck with that said there were some projects that are underway during 2025.
Jack: Outside of the optimization study to try to firm up the plant.
Jack: And give us stability, we got some screens that are undersized, where a portion of them too hard. So we're replacing some screens in the crushing plant as well as the grinding circuit, we're doing some upgrades on our CIP carbon in pulp tanks.
Jack: To give us a sustainable run rate, but those projects won't be done until late in the year. So we didn't want to we didn't want to forecast the kind of production to reports we had during during Q4 for the whole first nine months given those projects once those projects are done and we're quite confident.
Jack: And as part of the optimization work, but I'll talk about next we're quite confident mid year, we'll be able to come out with some you know looking forward beyond <unk> five as to how we can push that plant up a little bit relative to the optimization studies that work, it's going really well there's a few.
<unk> or that are going to come out and we're going to be announcing them later in 'twenty five mid year that deals with our handling of this this concept of this paste plant that we've been talking about for the underground mine that allow us to get a better recovery of the reserve and resources that exists there.
Jack: But also in the longer term picture, we got to change the way we're handling some of the tailings. So we're looking at it filter plant there too. So the optimization studies is kind of starting to break up into different phases. The first phase will focus on getting those projects out along with with getting this mill sustain that.
Jack: Kind of throughput we saw in Q4, and then we see.
Jack: Future potential is really starting to get excited in there as well too as to what we can do during 'twenty six 'twenty seven.
Jack: Mhm.
Jack: And maybe one last question.
Jack: Sort of a bigger picture.
Speaker Change: Michael I'm sure you've noticed that Newmont has now sold the Timmins assets.
Speaker Change: Does this now change how you view the Timmins assets.
Speaker Change: And then also can you remind us of the book value you have for these assets.
Speaker Change: Look there's all sorts of doing really really well as you can imagine.
Speaker Change: But I think we talked about that.
Speaker Change: In the past.
Speaker Change: I am a strong believer and we are strong believers.
Speaker Change: That district Entitlements district.
Speaker Change: On the right way more value.
Speaker Change: And are you know, maybe maybe a bit of difference for looking at Uh huh.
Speaker Change: I don't know yet how that will look like but working working together on many fronts. There are lots of trucks and transportation going all different directions, but win.
Speaker Change: New months are all soon discover yourself around ourselves. So I think there's a lot to optimize.
Speaker Change: What would it be the early too.
Speaker Change: We did talk about that but I think there's a lot we can do that.
Speaker Change: The Dino helps helps our shareholders and probably helps discovery shareholders as well.
Speaker Change: Obviously the reason why they did the deal with Newmont I think that's a great district in Canada, great producer of coal.
Speaker Change: Yeah.
Speaker Change: Forget it it's not only it's not only our.
Speaker Change: Two operations, there, but I think the VSAT in the past some results from some of the more satellite exploration programs that Chris is doing that at Whitney.
Speaker Change: And gold River rehab as well. So there are some very very interesting additional southern lights, and I think everything will play and then dose decision. So I think it's a very exciting time for tenants.
Speaker Change: Great.
Speaker Change: Thanks, again, Michael Steve Crystal in and team those are all the questions I had thank you.
Speaker Change: Thanks Cosmos.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: Next question comes from Don Demarco with National Bank Financial Please go ahead.
Don Demarco: Thank you operator, and good morning, Michael and team got.
Speaker Change: You got contracted Guy really showed some stability in the ops.
Speaker Change: Okay. So a few questions can you hear me okay.
Speaker Change: I mean do you go ahead, okay, great. So.
Speaker Change: I jumped on a little bit late you may have talked a bit about jacobina, but what is the timing of the optimization study and what details can you share now about.
Speaker Change: The throughput increases or mine life extensions things like that that had been talked about at one point.
Steve: Yeah, Hi, Dawn Steve here.
Speaker Change: Yeah, we had a great Q4 start to being though we were able to accomplish.
Speaker Change: The target, we set ourselves of trying to get the throughput through.
Speaker Change: Through the mine and the plant.
Speaker Change: 275000 tons.
Speaker Change: To stay up 9000 tons a day, we accomplish that we were very pleased with that.
Speaker Change: But we do have some projects. So we have to complete them to play out we're changing some screens in the crusher, we're changing some screens in the grinding circuit, we're upgrading some of the tanks and some of the tailings pumping that will give us stability and sustainability of that kind of throughput is what we're seeing so a big part of the optimization.
Speaker Change: As those projects are done it will capture those values and give us a sustainability.
Speaker Change: Late in the 25, and certainly into 2026 and will kind of disclose what those numbers are looking like mid year now mid year. The optimization study is starting to split off and the different phases, and we are seeing phase one.
Speaker Change: We're looking at those paste plant that we've talked about over the last year or so bringing that in to allow us to recover more of the reserves.
Speaker Change: And also we got a longer term tailings disposal alternatives, which the paste plant helps us with but also we're looking at Oh filter Platt for tailings disposal too so that will kind of be the phase one optimization will we will announce some projects around that and what the.
Speaker Change: Returns on our investments are were.
Speaker Change: We're targeting mid year.
Speaker Change: This year the theory, though and then beyond that we will move into phase two which once we understand how those three Dan we got some really interesting optimizations that we're going to be continuing on that will bring value went into 26 27 28 will be a phase III program later.
Speaker Change: Okay.
Speaker Change: Thank you for that.
Speaker Change: Well I have your your ear here enel coming on.
Speaker Change: Stable production year over year costs are stable and attractive ASIC midpoint of call. It 35, actually even slightly lower year over year. It's does this mean that there's sort of initial integration hiccups are really in the rearview mirror and you feel uncomfortable with this asset now.
Don Demarco: Absolutely Yeah, Great question, Don and Yeah, we're very pleased with the stability that we're focusing a lot of effort on exploration, we want to extend that mine life. That's a great cash flowing asset for us costs are stable the operations stable.
Don Demarco: I'll remind you it's it's out of 130 kind of thousand ounces year gold production levels.
Don Demarco: You know it was a little less than what we aggressively pursued in 'twenty, three but that that kind of dialing that in we feel very comfortable with that operation and that's performing incredibly well.
Don Demarco: Okay.
Don Demarco: If you recall it was really it was really the spacing of some of those drilling in some of the stopes.
Speaker Change: Doug do you know that.
Don Demarco: But we saw that the impact at the beginning of it.
Don Demarco: I wouldn't call it an integration hiccup I think the team at Pantheon is doing an unbelievable job in and integrate it very easily into our company and our system. So that the other yamana assets.
Don Demarco: So not really an issue on the on the integration, but really that space drilling on.
Chris and his team did a lot of work drilling drilling that out and nothing were seeing the result of that now.
Don Demarco: Okay.
Don Demarco: We could see in for.
Speaker Change: So Michael last question on Askable. So you mentioned that the government hasn't published timeline for completion of the complication Patrick.
What is your sense here, it's been a stalemate for about a year now.
Don Demarco: Right.
Don Demarco: There's probably other means going on are there reasons to be optimistic for 25 or what are your thoughts on basketball.
Don Demarco: Yeah, I wouldn't call it the stalemate and there's a lot of meetings going on.
Don Demarco: As you recall with the new government coming in just about a year ago that I was kind of Hello, a slow start up last year to get there, but there's a lot of work going on in the background between the actor So I wouldn't call it a stalemate.
Don Demarco: I mean, you know we had to kind of some some timings for meetings published years ago by the government and I think Thats you know really.
Don Demarco: It didn't really bring that much as you just put pressure on us.
Don Demarco: An actor Cessna unnecessary so we'd rather just continue with its many meetings with money.
Don Demarco: Discussions we can.
Don Demarco: Way too you know to hopefully a positive solution here so yeah.
Don Demarco: Yeah, I wouldn't call it the stalemate I think there's probably.
Don Demarco: Yeah, Let me, let me have Sean, giving an update quick update here.
Don Demarco: Quite a lot going on yeah.
Michael: Michael There was there was a change in government last year and so they did change out the vice Minister sustainable development, who leads the process. So that was a.
Michael: A key in some of the delays last year, but the meetings are ongoing into Q4, we had several meetings with the government as well as sugar Parliament has meetings with the government. So those were good and then things always slowdown over the holidays and into early January and then we've just started picking up again with some meetings with the government. So I feel like there's going to be.
Michael: A lot more activity in the coming weeks and months and hopefully we're able to provide a more meaningful update us on the developments. After the Q1 results today, so looking forward to that okay.
Michael: Okay excellent. Thank you for that.
Michael: That's all for me good luck with Q1 and the rest of the year.
Michael: Thank you.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Michael Steinmann for any closing remarks. Please go ahead.
Michael: Yeah.
Speaker Change: Sorry, operator, I just see that a question came in country could be answer that please.
Speaker Change: Yes of course, the next question comes from Obs Habib with Scotiabank. Please go ahead.
Speaker Change: Hey, Michael on the Panama <unk>.
Obs Habib: Couple of questions I mean, sorry.
Speaker Change: You've already touched upon some of these that I've been bouncing between a couple of calls.
Speaker Change: Michael just a quick question in regards to the guidance I believe production and cost of second half weighted.
Speaker Change: Any kind of color that you can provide in terms of what athletes will drive the split between the first and second half.
Speaker Change: Yeah, I will let Steve stood up but just in general for the listener. That's obviously, a reoccurring theme they pan American and its largely driven partially driven by by the weather. So by the seasons rainy seasons for IC since cold winters in the far South as you remember we are in all different kind of class.
Speaker Change: You saw the same last year, obviously in the year before and so you know it's a very strong production we had in Q4.
Speaker Change: Nothing obviously, if we can do that with the climate. There. That's just that's just.
Speaker Change: But what are what it is for the assets that are distributed widely over different climate songs, but I'll I'll have Steve give me a bit more detail yeah. Thanks to all of us.
Speaker Change: One of the bigger drivers of the Cerro Moro matches mine sequencing as we're opening up the the Naughty open pit where getting the hard grade later in the year, that's really driving a big part of it she window as Michael mentioned is very very weather dependent so we generally see better production.
Speaker Change: Born in late in the year, there as well.
Speaker Change: I think those are probably the two bigger drivers, there's a bit of that adult opinion, but it's again, it's just martin sequence.
Speaker Change: Perfect, Thanks for that Steven and Michael as well.
And my just my next question.
Speaker Change: It's more the fact that you know again you had a great Q4 generated lot of free cash flow in Q4.
Speaker Change: Based on operation was kind of it looks like they are stabilizing going into into 2025 as well. So that's really good to see.
Speaker Change: Now that you know kind of integrated all of those the amount of assets.
Speaker Change: Done a great job on the noncore as well is it time now to start focusing on more on exploration side or how should we look at that from 25 in terms of exploration.
Speaker Change: Well, we never really slowed down on exploration.
Speaker Change: You see that as a substantial budget for exploration.
Speaker Change: They tend to even increase that budget during the year it really depends on the results.
Speaker Change: As you know I said I'm, a geologist by training and a strong exploration results all this.
Speaker Change: We'll be rewarded with more investments there.
Speaker Change: This is really the bread and butter of our business.
Speaker Change: Obviously, you'll have to plant already building and and the mine has already developed largely so in each place replacing that reserve is incredibly important for it generates a lot of value. So exploration all of it is a very big focus, but our exploration as you know as we refocus some brownfield so close to our sites.
Speaker Change: Reserve addition, maybe some truck opal.
Speaker Change: So are we looking at some truck both satellites in some places I think Cerro Moro comes to mind, where we're actually mining that zone right. Now we are just discovered another one.
Speaker Change: Chris and his team are drilling now so exploration is always a really core to us. If you look back they have been incredibly successful.
Speaker Change: Replacing hundreds of millions of ounces of silver over the last lets say 15 years with brownfield exploration onsite to exploration and don't forget our exploration program.
Speaker Change: This covered discount deposit so.
Speaker Change: This does start there will always be a big focus on that.
Speaker Change: That's perfect. Thanks, Michael for that and thanks for taking my questions and looking forward to seeing you during <unk>.
Speaker Change: Thank you see you then.
Speaker Change: Okay.
Speaker Change: The next question comes from Adrian Day, with Adrian Day asset management. Please go ahead.
Adrian Day: Yes. Good morning, just a follow up if I may on that's gabel, but taking a different direction.
Speaker Change: Once you get the approval to reopen and Nicole Youll obviously.
Speaker Change: You know getting indication, that's coming probably before it actually happens, but how soon before youre producing again and how soon before its fully ramped back up.
Adrian Day: Oh, Yeah, Hi, Adrian look.
Adrian Day: They could put take probably probably is a good quarter to two to start up the first stope.
Adrian Day: As you know or probably remember from the time that the power when they ask that wasn't production those folks are very sizable produce a lot of silver.
Adrian Day: So.
Adrian Day: That would start I guess, one stope at basketball should be equivalent to about five to 6 million ounces of silver per year. So that's already has a strong startup I think thereafter, probably about about the part of the year to bring it.
Adrian Day: It would take to bring it back to full production.
Adrian Day: Which was somewhere in a range of 20 to 22 million ounces a year.
Okay. Okay. That's helpful and then just.
Adrian Day: Once the approval is granted all year with it.
Speaker Change: Company are you ready to you know.
Speaker Change: Ready to start or would you say well, we've got other things going on and we'll leave it a few months now.
Speaker Change: [laughter].
Speaker Change: Lee are incredible.
Speaker Change: Mine and and protect so of course, all our focus on our on this there's always a lot going on in all we have a very accomplished team that can handle money assets at the same time I think that we have shown that our year over year over year, So but of course that will be our number one focus.
Speaker Change: Probably no other starwood.
Speaker Change: Over the past year stuff Vietnamese band is probably as much as $24 million in the past may be now more between 18 and $20 million in care and maintenance at that asset well make sure that everything is in top shape on the restart can happen all caught up on that as quickly as possible.
Speaker Change: Okay I appreciate that thank you.
Speaker Change: Thank you.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Michael Steinmann for any closing remarks.
Michael Steinmann: Thank you operator, and thanks for everyone calling in today. Yeah. These are exciting times for Pan American silver jewelry high metal prices very strong cash flow generation.
Michael Steinmann: And great returns to our shareholders.
Michael Steinmann: So you know they will really really focus on maintaining a rigorous controlling our costs.
Michael Steinmann: To maintain those great margins that definitely I'm, drawing right now and I'm really looking forward to update you in our Q1 call in May until then have a good day and thank you everyone.
Speaker Change: This brings to close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker Change: [music].
Speaker Change: Uh huh.
Speaker Change: Yeah.
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