Q1 2025 Pan American Silver Corp Earnings Call
Yes.
Operator: Thank you for standing by.
Speaker Change: Thank you for standing by this is the conference operator, welcome to the Pan American Silver first quarter 2025 results conference call.
Operator: This is the conference operator. Welcome to the Pan American Silver first quarter 2025 results conference call. As a reminder, all participants are in listen only mode. The conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero.
Speaker Change: As a reminder, all participants are in listen only mode. The conference is being recorded after the presentation, there will be an opportunity to ask questions.
Speaker Change: I joined the question queue, you May Press Star then one on your telephone keypad.
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Siren Fisekci: I would now like to turn the conference over to Siren Fisekci, VP, Investor Relations.
Speaker Change: I would now like to turn the conference over to Becky VP Investor Relations. Please go ahead Ms. Becky.
Siren Fisekci: Please go ahead, Ms. Fisekci.
Michael Steinmann: Thank you for joining us today for Pan American Silver's conference call and webcast to discuss our results for the first quarter of 2020. This call includes forward-looking statements and information and makes reference to non-GAAP measures.
Speaker Change: Thank you for joining us today for Pan American Silver's conference call and webcast to discuss our results for the first quarter of 2025.
Speaker Change: This call includes forward looking statements and information and makes reference to non-GAAP measures.
Michael Steinmann: Please see the cautionary statements in our MD&A news release and presentation slides for Q1 2025 results, all of which are available on our website.
Speaker Change: Please see the cautionary statements in our MD&A news release and presentation slides for Q1, 'twenty twenty-five results all of which are available on our website.
Michael Steinmann: I'll now turn the call over to Michael Steinmann, Pan American's President and CEO. Hello, everyone. I'm glad you could join us to discuss our Q1 results. 2025 is off to a strong start, with Pan American posting another quarter of solid operating performance, building on the momentum from last year. Mine operating earnings have been increasing over each quarter in 2024 and this trend continued for the first quarter of 2025 reaching a record of 250.8 million dollars in mine operating earnings. The improvements in metal prices have certainly contributed to margin expansions, but I would like to acknowledge the work of our teams in not only maintaining a focus on safe, efficient operations, but also carefully managing costs in order to deliver the margin improvements that resulted in the record mine operating earnings for the quarter.
Speaker Change: Now I'll turn the call over to Michael Steinmann Pan American's, President and CEO.
Speaker Change: Hello, everyone I'm glad you could join us to discuss our Q1 results.
Speaker Change: 2025 is off to a strong start.
Speaker Change: Pan-american posting another quarter of solid operating performance building on the momentum from last year.
Speaker Change: Mine operating earnings have been increasing over each quarter in 2024, and this trend continued for the first quarter of 2025, reaching a record of $258 million in mine operating earnings.
Speaker Change: Improvements in metal prices sub certainly contributed to margin expansion.
Speaker Change: I would like to acknowledge the work of our teams in not only maintaining our focus on safe efficient operations.
Speaker Change: So carefully managing costs in order to deliver the margin improvements that resulted in the record mine operating earnings for the quarter.
Michael Steinmann: La Colorada is contributing strongly to this result. Improvement in mine ventilation conditions has allowed us to accelerate development rates and increase the number of production areas, which is leading to higher throughput and lower per unit cost. In Q1, we produced just over 5 million ounces of silver production, slightly above our guidance range for the quarter. On cost, the performance was even better, lower than anticipated production costs across the silver segment, contributed to all-in sustaining costs of $13.94 per ounce. well below our guided rank. The low silver segment, all in sustaining costs, also benefited from higher than expected byproduct credits, from higher gold production at Cerro Moro, and higher zinc and lead production across our polymetallic operations, as well as some lower capital expenditure.
Speaker Change: Luckily it is contributing strongly to this result.
Speaker Change: <unk> and mine ventilation conditions has allowed us to accelerate development rates and increased the number of production areas.
Speaker Change: Which is leading to higher throughput and lower per unit costs.
In Q1, we produced just over 5 million ounces of silver production slightly above our guidance range for the quarter.
Speaker Change: On costs the performance was even better.
Speaker Change: Lower than anticipated production costs across the silver segment contributed to all in sustaining costs of $13 94 per ounce well below our guided range.
Hello, Silver segment, all in sustaining costs also benefited from higher than expected byproduct credits from higher gold production at Cerro Moro and higher zinc and lead production that cross sell a poly metallic operations as well as some lower capital expenditures.
Michael Steinmann: Gold production in Q1 of 182,200 ounces was in line with our guidance, while gold segment, all in sustaining costs, excluding NRV adjustments of $1,485 per ounce, were better than expected. The main drivers of strong cost performance in the gold segment were high unexpected gold and silver production from residual leaching at Dolores and high silver byproduct credits at El PeƱon. Revenue in Q1 was $773 million, while net earnings in Q1 totaled $169 million, or $0.47 per share. Adjusted earnings were $153 million, or $0.42 per share. Operating cash flow before non-cash working capital changes was $240 million, including $95 million cash tax.
Speaker Change: Gold production in Q1 of 182002 on the downturn most.
Speaker Change: In line with our guidance, while gold segment, all in sustaining costs six quoting on a readjustment of $1485 per ounce for better than unexpected.
Speaker Change: The main drivers of strong cost performance in the gold segment were hired unexpected gold and silver production from residual leaching at Dolores and highest silver byproduct credits.
Speaker Change: Revenue in Q1 was $773 million, while net earnings in Q1 totaled $169 million or <unk> 47 per share.
Speaker Change: Adjusted earnings were $163 million or <unk> 42 per share.
Speaker Change: Operating cash flow before noncash working capital changes was $240 million, including $95 million cash taxes the <unk>.
Michael Steinmann: The taxes paid in Q1 represent roughly one-third of the cash tax we expect to pay in 2025. After working capital changes, operating cash flow totaled approximately $175 million. At the end of Q1, our cash and short-term investments increased to a record balance of $923 million and free cash flow for the quarter was $112.6 million. Keep in mind that this increase in cash over the quarter is net of the $95 million in taxes paid, $81 million invested in our sustaining and growth projects, inclusive of lease and loan payments, and $56 million will return to shareholders through dividends and the share buyback.
Speaker Change: Taxes paid in Q1 represents roughly one third of the cash tax we expect to pay in 2025.
Speaker Change: After working capital changes operating cash flow totaled approximately $175 million.
Speaker Change: At the end of Q1, our cash and short term investments increased to a record balance of $923 million and free cash flow for the quarter plus $112 6 million.
Speaker Change: Keep in mind that this increase in cash over the quarter is net after $95 million in taxes paid $81 million invested in our sustaining and growth projects inclusive of police and loan payments and $56 million, we returned to shareholders through dividends and share buybacks.
Speaker Change: Yeah.
Michael Steinmann: The cash generated by our operations fully funded our business needs, provided returns to shareholders, and further improved our balance. Including our under-owned line of credit, we have approximately $1.7 billion of total available liquidity, which gives us plenty of capacity to pursue our growth objectives. Our largest organic growth opportunity, the La Cuerada Scarn project, continues to move ahead. Over Q1, we advanced engineering work and continued with exploration and infill drilling. We are also continuing to discuss potential partnerships for development of the project. We expect those discussions to take several quarters, given the size and long-life nature of the project.
Speaker Change: The cash generated by our operations fully funded our business needs provided returns to shareholders and further improve our balance sheet.
Speaker Change: Including our Undrawn line of credit we have approximately $1 7 billion of total available liquidity, which gives us plenty of capacity.
Speaker Change: Pursue our growth objectives.
Speaker Change: Our largest organic growth opportunity the luck what others can't project continues to move ahead over Q1, we advanced engineering work and continued with exploration and infill drilling.
Speaker Change: We're also continuing to discuss potential partnerships for development of the project. We expect those discussions to take several quarters given the size of long life nature of the project.
Michael Steinmann: Our aim is to retain maximum exposure to the silver in this deposit. We're also investing at the La Corada vein mine operations to explore extensions to the mineral resource in the higher grade candelaria zone to the east and southeast of our current operation.
Speaker Change: Our aim is to retain maximum exposure to the silver in this deposit.
Speaker Change: They're also investing at the local or other vein mine operations to explore extensions to the mineral resource in the higher grade Candelaria zone to the east and southeast of our current operation.
Michael Steinmann: At Escobar, Pan American had four working meetings with the Guatemalan government during Q1 2025 as part of the ILO 169 consultation process.
Speaker Change: Escobar Pan American had four working meetings with the Guatemalan government. During Q1 2025 as part of the Ilo 169 consultation process.
Michael Steinmann: Currently, there is no date for the completion of the consultation process or the potential restart of operations at Escobar. The Comprehensive Mine and Plant Optimization Studies at Jacobina are progressing well and we expect to include the findings of the first phase in early August 2025. The initial findings will include evaluations of modifying mining and tailings disposal methods to maximize the long-term value for this flagship asset.
Speaker Change: Currently there is no date for the completion of the consultation process or the potential restart of operations at basketball.
Speaker Change: The comprehensive mine and plant optimization studies kubena are progressing well and we expect to include the findings of the first phase in early August 2025.
Speaker Change: The initial findings will include evaluation of modifying mining on tailings disposal methods to maximize the long term value for this flagship asset.
Michael Steinmann: In closing, 2025 is off to a very strong start. Operating performance is in line or better than expected and our forecast shows higher production over the balance of 2025 as per the quarterly guidance we provided in February. We are maintaining the guidance we provided in February for consolidated production, cost, and annual expenditure. That outlook, combined with today's favorable precious metal prices, points to the potential of generating very strong profit margins this year. We generated $112.6 million of free cash flow in Q1 alone and gold prices are currently trading substantially higher than the average in Q1.
Speaker Change: In closing 2025 is off to a very strong stock operating performance is in line or better than expected and our forecast shows higher production over the balance of 2025 as per the quarterly guidance we provided in February.
Speaker Change: Government painting the guidance, we provided in February for consolidated production cost in Dynamo expenditures.
Speaker Change: That outlook combined with today's favorable precious metal prizes points to the potential of generating very strong profit margins. This year.
Speaker Change: Generated $112 6 million of free cash flow in Q1 alone and coal prices are currently trading substantially higher than the average in Q1.
Michael Steinmann: This is an incredible, exciting time to be in precious metals and invested in Pan Amer.
Speaker Change: This is an incredible exciting time to be in precious metals and investments in pan-american.
Operator: I would now be happy to take your questions together with the other members of our management team. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2.
Speaker Change: I would now be happy to take your questions together with the other members of our management team.
Speaker Change: We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear talent acknowledging your classes.
Speaker Change: If you have anything on speakerphone, please pick up your handset before pressing any key.
Speaker Change: Cause Italia question. Please press Star then two.
Ovais Habib: The first question comes from Ovais Habib with Kosher Bank. Please go ahead. Thank you, operator. Good morning, Michael and the Pan American team. Congrats to a strong start to the year, especially on cost. Michael, a couple of questions for me, just starting off with just remaining on the cost side. So costs, both at the silver and the gold segments really outperformed the quarterly guidance that was provided.
Speaker Change: Our first question comes from always debate with Scotia Bank.
Speaker Change: Go ahead.
Speaker Change: Thank you operator.
Speaker Change: Good morning, Michael and that Pan American team.
Speaker Change: Congrats to a strong start to the year, especially on cost.
Speaker Change: Mike a couple of questions for me just starting off with <unk>.
Speaker Change: Just remaining on the cost side.
Speaker Change: So cost both at the silver and the gold segment really outperformed.
Speaker Change: Quarterly guidance that was provided now with Q1 trending ahead of guidance should we expect subsequent quarters to adjust for this cost improvement.
Ovais Habib: Now, with Q1 trending ahead of guidance, should we expect subsequent quarters to adjust for this cost improvement? How should we be looking at costs going into Q2 and beyond?
Speaker Change: How should we be looking at costs kind of going into Q2 and kind of beyond.
Speaker Change: Okay.
Michael Steinmann: Good morning, Ovais. I'll have Scott answering the question. But just in general, obviously, you know, great performance on the cost, as you mentioned.
Speaker Change: Yes, good morning, always Oh I'll have to ask Scott to answer the question, but just in general are obviously great.
Speaker Change: Great performance on the cost.
Scott Campbell: You know, we normally don't make adjustments after one quarter, but we're pretty happy with what we're seeing. But I'll let Scott answer the rest of the question, please.
Speaker Change: You mentioned, we normally don't make adjustments after one quarter, but we're pretty happy what we are saying, but that's called answer the rest of the question. Please yes. Good morning, Scott Cowboy here, Yes, we're very encouraged by the strong cost performance in both silver and gold segment operations.
Scott Campbell: Yes, good morning.
Scott Campbell: Scott Campbell here. Yeah, we're very encouraged by the strong cost performance in both silver and gold segment operations. That's, in large part, a function of our commitment to cost control, the high byproduct metal prices, and in some cases, favorable exchange rates in the countries where we operate. We're maintaining our cost guidance for the year. And as Michael said, we don't usually make an adjustment after only one quarter. But we're encouraged by our cost performance so far this year. And we think this will continue, provided metal prices and exchange rates maintain their levels.
Speaker Change: In large part a function of our commitment to cost control the higher byproduct metal prices in some cases favorable exchange rates in the countries, where we operate we're maintaining our cost guidance for the year.
Speaker Change: Michael said, we don't usually make an adjustment after only one quarter, but we are encouraged by our cost performance. So far this year and we think this all this will continue.
Speaker Change: I'll provide the metal prices and exchange rates maintain their levels.
Scott Campbell: Where we're on, we'll see a cost increase on a per ounce basis as we get into the placement and compaction of our thickened tailings from our new tailings filtration plant.
Speaker Change: Well, Ron will see a cost increase on a per ounce basis as we get into the.
Placement the departure of our thickened tailings from our new tailings filtration plant.
Scott Campbell: And sustaining capital spending will also increase at several operations, specifically Shewindow, as we get into the dry season and large capital projects begin.
Speaker Change: Sustaining capital spending will also increase several operations since we shall window as we get into the dry season, and our large capital projects.
Speaker Change: Yeah.
Michael Steinmann: And thanks for that Scott. So essentially, we get a little bit of an uptick in Q2, but as kind of production increases going to the second half, you know, your per ounce cost essentially should come down in the second half. Is that how we should look at it? I think if, you know, as Scott said, if everything stays the same, right, as you know, our costs have different important inputs. One, of course, is our operation and how we perform there. The other one, because this is not a byproduct credit, the other big input is byproduct metal prices, which we all know are really high right now.
Speaker Change: Thanks for that thoughtful so essentially I think we would get a little bit of an uptick in Q2, but it's kind of production increase is going to the second half.
Speaker Change: <unk> per ounce cost essentially says it should come down in the second half is that is that how we should be better.
Speaker Change: I think it's exactly.
Speaker Change: If everything stays the same right as you know our cost.
Speaker Change: Different different important inputs one of course is our operation and now are we performed there.
Speaker Change: One because there's just not a byproduct credits the other big input this byproduct metal prices, which we all know already high right. Now. So if that continues of course it has a positive impact to our cost and the last big one is exchange rates and thus we have some favorable exchange rates and some of the countries at the moment.
Michael Steinmann: So if that continues, of course, it has a positive impact to our costs. And the last big one is exchange rates. And as we have some favorable exchange rates in some of the countries at the moment, that helps us as well. So if those inputs that are out of our control maintain, you know, their position, and of course, we will continue to have very strong control of our cost on site, then you're right, Ovais.
Helps us as well so if dose.
Speaker Change: Those are important.
Speaker Change: Out of our control maintain their.
Speaker Change: Their position.
Speaker Change: And of course, we will continue to have very strong.
Speaker Change: Control of our costs onsite done on time.
Speaker Change: Youre right of ways.
Ovais Habib: Perfect.
Michael Steinmann: Perfect. Thanks for that Michael.
Ovais Habib: Thanks for that, Michael and Scott.
Speaker Change: Scott.
Ovais Habib: Just then just moving on to in terms of gold and silver sold, that seemed to be the high this quarter as compared to previous quarters. Are you able to give any sort of information on what the drivers were on that?
Speaker Change: Just then just moving onto.
Speaker Change: In terms of a golden silver sword that seem to be the high this quarter as compared to previous quarters, our youll be able to give better you sort of information on what the drag would dwell on that.
Ignacio: Hi Ovais, this is Ignacio speaking. Yes, the main driver there was, as you remember, we had a very strong Q4 production and a lot of that production came in late in December. So we did sell in January that extra production from December, and you'll see in some of our slides, I think it's over 445,000 ounces of gold inventory that we sold in Q1. Really, just, you know, timing of shipment, which happens many quarters, sometimes there's an increase of inventory, sometimes a decrease, depending on how the production ends at the end of the month. Obviously, a little bit easier to control timing on the dore shipment, a bit harder sometimes with the concentrate that we sell, where we, you know, have to wait for ships and ports to be ready.
Speaker Change: Hi, Amit this is Ignacio speaking, yes. The main driver there was as you remember we had a very strong Q4 production and a lot of that production came in late in December.
Speaker Change: So we did sell in January that extra production from from December and you'll see in some of our slides I think it's over 445000 ounces of gold inventory that we sold in Q1.
Speaker Change: Really just timing.
Speaker Change: Timing of shipment, which happens many quarters, sometimes stars and increase.
Speaker Change: Inventory, sometimes a decrease depending on.
Speaker Change: The production and so at the end of the month, obviously, a little bit easier to control the timing on the duration a bit harder sometimes with the concentrate that we sell that or we have to wait for four ships on ports to be ready. So that's just the kind of the normal course of business out there.
Michael Steinmann: So that's just kind of the normal course of business at the end of each quarter. And as I said, sometimes it's a bit more, sometimes a less. But as Ignacio said, after a very strong Q4, that's kind of the rest of selling that went on there in January.
Speaker Change: At the end of each quarter and as I said, sometimes it's a bit more sometimes less.
Speaker Change: But as Ignacio said after a very strong Q4.
Speaker Change: The the.
Speaker Change: The rest up selling that went on there in January.
Ovais Habib: That's great. Thanks for that.
Speaker Change: That's great. Thanks for that and just one more question at Minera, Florida.
Ovais Habib: And just one more question.
Ovais Habib: At Minerai, Florida, you're talking about, you know, costs that were, you know, high, and you noted that absenteeism as one of the causes are, are you able to kind of shed some more light on what's happening there? And how should we kind of position ourselves going into Q2?
Speaker Change: You were talking about costs that were high and you noted that absenteeism as one of the causes are you open to kind of shed some more light on whats happening there and how should we kind of position ourselves going into Q2.
Michael Steinmann: Yes, Manara, Florida had a rough quarter. Certainly, we were affected by mine sequencing, some lower grades than expected, some absenteeism at our operation there, and delays regarding plant and equipment delivery, mobile equipment delivery. We expect to claw that loss of production back and get those costs per ounce back in line in Q3 and Q4.
Speaker Change: Yes.
Speaker Change: Florida had a rough quarter, certainly we reflected by mine sequencing some lower grade than expected.
Speaker Change: Absent to use the matter of operation there delays regarding plant equipment delivery mobile agreement delivery, we expect to call that that loss of production back and get those cost per ounce back in line in Q3 Q4.
Steven Busby: Yeah, Ovas, this is Steve. If I can just add on the absenteeism, um, January is the big month for holidays in Chile. And this year, it was a particularly hard hit month in terms of the number of holidays that we had our people out on. That's really what affected us in Q1 at Florida.
Speaker Change: Yes.
Speaker Change: Two if I can just add on the option.
Speaker Change: January is the big month for holidays in Chile, and this year. It was a particularly hard hit month in terms of the number of holidays that we have our people out or not.
Speaker Change: That's really what affected us in Q1 was a quarter ago.
Ovais Habib: That's great color. And maybe that's it for me, guys. Again, congrats on a great quarter. And thanks for taking my question. Thanks, everybody.
Speaker Change: Got it that's great color.
Speaker Change: And maybe that's it for me guys again, congrats on a great quarter and thanks for taking my questions.
Speaker Change: Thanks Louis.
Speaker Change: Yeah.
Cosmos Chiu: The next question comes from Cosmos Chiu with CIBC, please go ahead. Hi, thanks Michael and team. Congrats on the, I agree, very strong start, very strong Q1.
Speaker Change: The next question comes from Cosmos <unk> with CIBC. Please go ahead.
Speaker Change: Hi, Thanks, Michael and Jim.
Speaker Change: Brad.
Speaker Change: I agree very strong start very strong Q1.
Cosmos Chiu: Maybe if I can ask about Bell Creek. I read that there were some geotechnical challenges at Bell Creek in the quarter. And then I actually went back to the commentary in Q1 2024. And there were some challenging ground conditions at that time as well. So is this a continuing kind of issue? Could you maybe give us a bit more color in terms of what's happening? I know it's not your largest asset, but I'm just wondering if you can give us a bit more color.
Speaker Change: Maybe if I can ask a about Bell Creek.
Speaker Change: I read that you know there were some geo technical challenges at Bell Creek in the quarter.
Speaker Change: And then I actually went back to the commentary in Q1 2024, and there were some challenging ground conditions at that time as well. So is this a continuing kind of.
Speaker Change: Issue.
Speaker Change: Could you maybe give us a bit more color in terms of what's happening I know, it's not yet largest assets, but I'm. Just wondering if you can give us a bit more color.
Speaker Change: Yeah.
Michael Steinmann: Yeah, I'll start. Maybe Martin can add in a little bit as well, Cosmo. But yeah, that central zone of Bell Creek, which is where our high grade and our little bit bigger stopes are for the Bell Creek mine. It's been challenging. We've been seeing some seismicity there. We have to manage that carefully as we mine. And we put in some dynamic support as we enter into that area. And it's just a more challenging area than we expected. We thought we were putting in some programs. We did see some benefits last year. Last year, what we were seeing was a lot of hole squeezing.
Speaker Change: Yeah, I'll start maybe Martin you can now there's a little bit as well Cosmo, but yeah that central zone of Bell Creek, which is we're a high graded and are a little bit bigger stopes are for the boat creekmore and it's been it's been challenging we've been seeing some seismicity, there and we have to manage that carefully.
Speaker Change: Laurie.
Speaker Change: And we put in some dynamics support as we enter into that area and it is just a more challenging area. Then we would expect we thought we were we were putting on some programs that we did see some benefits last year last year. What we were seeing was a lot of whole squeezing we're reporting hold squeezing on a drill hole.
Steven Busby: We were reporting hole squeezing on our drill holes. We have gotten some additives and things we're doing there that has helped a lot. But we're still facing some ground movements, ground seismicity in the area that we have to manage very carefully, and it has slowed us down more than we expected in Q1.
Speaker Change: We have gotten some additives and things we're doing there that has helped the law, but we're still facing some ground.
Speaker Change: <unk> grown seismicity in the area that we have to manage very carefully and that has slowed us down more than we expected in Q1, I don't know Martin if you add any more.
Steven Busby: I don't know, Martin, if you had any more you want to add. No, that's a great answer, Steve. As we get deeper in the mine, certainly seismicity is there. It's sort of with us all the time. The guys do a fantastic job of managing that and getting with it. We've had to increase our support in some areas. But it's with us, and it does cause us at times to change our production plans during the quarter when you see that with the grades going up and down a bit as we have to change out some things in our plan.
Martin Cosmo: No that's a that's a great answer Steve.
Martin Cosmo: As we as we get deeper in the mine.
Speaker Change: Certainly seismicity is there.
Martin Cosmo: With us all the.
Martin Cosmo: Time, the guys do a fantastic job of managing that.
Martin Cosmo: And and getting with it we've had to increase our support in some areas, but but it's with us and it does cause us at times to change our production plans during the quarter when you see that.
Martin Cosmo: With the grades going up and down a bit as we have to change out some things that are in.
Martin Cosmo: In our plan, but.
Steven Busby: But we're sort of used to it now and we've got systems in place to deal with it as it happens and it's part of our mining process there at the moment.
Martin Cosmo: Sort of.
Martin Cosmo: Used to it now and we've got systems in place to deal with it as it happens.
Martin Cosmo: And it is part of.
Martin Cosmo: About 19 process.
Martin Cosmo: Mhm.
Michael Steinmann: Maybe switching gears to Escobar. Michael, as you mentioned, there were four working meetings with the Guatemalan government in the quarter. Is that what you had expected? Are you happy with that progress? I know you can't give us any kind of timing at this point in time, but I'm just wondering, you know, were you happy with what happened in Q1?
Martin Cosmo: Thanks, maybe switching gears to our basketball.
Martin Cosmo: You mentioned there were four <unk> meetings, whether it's water them all and government.
Martin Cosmo: In the quarter is that what you had expected are you happy with that progress I know you can't give us any kind of timing at this point in time, but I'm just wondering.
Martin Cosmo: Were you happy with what happened in Q1.
Sean McAleer: Yeah, good morning. This is Sean. We had those meetings, they were, yeah, it's good to talk to you.
Martin Cosmo: Yeah. Good morning. This is Sean so we had that meeting so they were yeah. That's good it's good to talk to you.
Sean McAleer: Yeah, we had those meetings during the quarter, you know, things have been moving very slowly. And it's always been hard to predict the rhythm of the meetings and the larger meetings, but they were, they were good, good meetings, lots of dialogue around the main concerns in the, in the process, which again, focus around water, environmental health concerns and blasting vibrations from the mind.
Speaker Change: We had those meetings during the quarter you know things have been moving very slowly and it's always been hard to predict.
Speaker Change: The rhythm of the meetings and the larger meetings, but they were they were good good meetings lots of dialogue around the main concerns in the in the <unk>.
Speaker Change: <unk>, which again focus around water.
Speaker Change: Environmental health concerns and blasting vibrations in the mine. So we expect to have some more working meetings in the coming weeks and months and provide.
Sean McAleer: So, you know, we expect to have some more working meetings in the coming weeks and months and provide an update that the next results, results call. Great.
Speaker Change: Provide an update at the next results results call.
Speaker Change: Right.
Speaker Change: And then.
Speaker Change: Tony side.
Cosmos Chiu: some questions here. Number one, I know that when you talk about unsustaining costs, you still talk about the NRV adjustment, but just to confirm, that should be, that is going to become less and less important as Dolores comes off. And at some point in time, will you stop talking about the NRV adjustment?
Speaker Change: Some questions here number one.
Speaker Change: I know that when you talked a lot on our sustaining costs you still talk about the <unk> adjustment, but.
Speaker Change: Just to confirm that should be that.
Speaker Change: It's going to become less and less important.
Speaker Change: Dolores comes off.
Speaker Change: At some point in time will you stop talking about the <unk> adjustment.
Speaker Change: Yeah.
Speaker Change: Okay.
Ignacio: Hi, Cosmos. It's Ignacio here. Yeah, no, I think you've got that right. Obviously, if you look at our previous results, a lot of the NRV adjustments that we had were due to Dolores. Now that Dolores is in full leach mode, that will become less of an issue. So we should see those numbers disappear.
Speaker Change: Hi, Cosmos as Ignacio here, Yeah, No I think you've got that right. Obviously, if you look at our previous results a lot of the NR be adjustments that we had were due to Dolores now that Laura is in full leach mode that will become less of the less of an issue. So we should see that those numbers because of your however, we do have other mines that have large heap leaches in la.
Ignacio: However, we do have other mines that have large heap leaches and large inventories in heap leaches like Shawindo. So now Shawindo has very good margins, but yeah, in theory that we could see NRV adjustments in Shawindo in the future. But yeah, now that Dolores is winding down and in leach, those numbers should taper as well.
Speaker Change: Inventories and heap leaches linked to the window.
Speaker Change: So so not sure when those very good margins, but yeah in theory that we could see him and RV adjustments and she'll window in the future, but yes now that Dolores is winding down and then Lee chart those numbers should taper as Paul.
Speaker Change: Great and then maybe one last question following up on my Buddy of basis question here and I'll ask a different way in terms of guidance I know you've maintained full year guidance.
Cosmos Chiu: And then maybe one last question following up on my buddy Ovais' question here, you know, asked a different way in terms of guidance. I know you've maintained four-year guidance, but my question is, you know, previously you had guided in Q2 to 1950 to 2125 an ounce, in Q3 you've guided to 1425 to 1625 an ounce on sustaining cost. At this point in time, are those still good goalposts to use in terms of, you know, us modeling Q2 and Q3?
Speaker Change: But my question is previously you had guided in Q2 to 19, 5% to 21 25, an ounce in Q3 and you've guided to 14, 25% to 16 25 announced our sustaining costs.
Speaker Change: At this point in time are those still good goalpost for us in terms of us model in Q2.
Steve: Hi Cosmos, Steve here. Yeah, we feel we feel that that guidance is still in line, our quarterly guidance. So I think that's a good gauge. You know, as we mentioned, there's some sustaining capital projects that start picking up steam, things like that. We've got some, you know, the tailings compaction that we're on, some developments picking up steam. So those are good guidance as we look forward.
Speaker Change: Hi, Cosmos, Steve here, Yeah, we feel we feel that that guidance is still in line.
Speaker Change: Really guidance, so I think that's a good gauge.
Speaker Change: As we mentioned there are some sustaining capital projects will start picking up steam things like that we've got some and all that.
Speaker Change: <unk> compaction that were on some developments picking up steam. So those are good guidance as we look forward and as production comes up in their costs come down we think that quarterly guidance.
Ignacio: Yeah, and maybe if I just do a Sorry, Michael, but most obviously, just to reiterate here, of course, that all depends where metal prices and exchange rates stand, right? I mean, because those cost guidance have been calculated with the metal prices that we used at the time in our guidance, so you have to look at that. And of course, when we have higher by-product metal prices, a more favorable exchange rate, that will be, and has right now, a positive impact to our cost. So when you look at the guidance, just have a look at the metal prices and exchange rates that we used for that guidance as well.
Speaker Change: Yeah, and maybe if I just do it.
Speaker Change: Sorry, Mike what was most obviously just just to reiterate here.
Speaker Change: Of course that all depends.
Speaker Change: Metal prices and exchange rates stand Latam anyway because.
Speaker Change: Those cost guidance I've been calculated with the metal prices that we used at the time in our guidance. So you have to look at that.
Speaker Change: Of course, when you have higher byproduct metal prices, a more favorable exchange rate that's about beef in house right now a positive impact to our cost. So when you look at the guidance just have a look at the model prices and exchange rates that we used for that guidance as well.
Ignacio: Of course, we'll definitely adjust for those different input factors here.
Speaker Change: Of course, we will definitely adjust for those different input factors here.
Cosmos Chiu: And then, Michael, since you have you here, maybe if I can slip in one more question.
John: And then Michael This is John I have you here, maybe air pockets slip in one more question.
Cosmos Chiu: In the MD&A, you don't talk much about Navidad. I know there's still a lot of questions about, you know, the province of Chibut. But from my industry sources, it does seem like Argentina is becoming a better place to do business.
Speaker Change: In the MD&A you don't talk much about the half of that I know theres still a lot of questions about you know the province attribute but from our industry sources. It does seem like Argentina is becoming a better place to do business and so any comments that you can make on navidad.
Michael Steinmann: And so any comments that you can make on Navidad? Yeah, look, I mean, we are a long time working in Argentina, many decades. And of course, we have operations in Santa Cruz and had operations in Santa Cruz for a long time. So things are changing in Argentina on many fronts.
John: Yes.
John: I mean, we had a long time working in Argentina, mainly in decades.
John: Of course, we have operations in Santa Cruz and had a presence in terms of accruals for a long time, so things are changing in Argentina on many many fronts.
Michael Steinmann: But I think it's still too early to talk about Navidad. Obviously, we will see hopefully continue positive changes here over the years under the new administration. We see the positive impact already on Cerro Moro. And, you know, hopefully that will continue. We are very happy to have kind of some long term pipeline projects with us that are there. And, you know, there's very little cost to hold on on this project, and one of the largest resource on the planet. So we'll just monitor and watch and see how Argentina evolves over the next, I would say 12 to 24 months.
John: But I think it's it's it's it's still too early to talk about <unk>. Obviously, we will see hopefully continued positive changes here over the over the years under the New administration, we see the positive impact already on set a model and you know.
John: Hopefully that will continue we are very happy to have kind of some long term pipeline project with us.
John: But aren't there.
John: There's very little cost to hold on on this too on this project.
John: On the.
John: One of the largest solar resource on the planet. So, we'll just monitor and watch and see you have Argentina evolves over the next let's say 12 months to 24 months.
Cosmos Chiu: Great, thanks Michael and Dean for all the questions I have. Congrats once again on a strong Q1 and we look forward to that continuing for the rest of 2025. Thanks, Cosmos.
Speaker Change: Great. Thanks, Michael I think those are all the questions I have Ah congrats once again on a strong Q1 that we look forward to that continuing for the rest of 2025.
Martin Cosmo: Thanks Cosmos.
Operator: Once again, if you have a question, please press star then one.
Speaker Change: Once again, if you have a question. Please press Star then one the next question comes from Don Demarco with National Bank. Please go ahead.
Don Demarco: The next question comes from Don DeMarco with National Bank. Please go ahead. Thank you, operator. And good morning, Michael and team. Great quarter, certainly on cost. On cost, and I'll start off with that. In response to a previous question, you mentioned a few drivers, the commitment to cost control, favorable FX rates, strong byproduct price.
Don Demarco: Thank you operator and good morning.
Speaker Change: Micron team had a great quarter certainly on costs.
Speaker Change: On costs and I'll start off with that in response to a previous question you mentioned a few drivers that commitment to cost control favorable FX rates strong byproduct credits do you have a sense of the approximate benefit of each of these categories on.
Michael Steinmann: Do you have a sense of the approximate benefit of each of these categories on the aggregate outperformance in Q1? quite complicated to answer, Don, because just on the exchange rate, for example, right, there is a lot of different pieces depending where we buy. different services and products and equipment from, from which country that comes in, etc. So I don't, I don't have a detailed number on that. Obviously, the the byproduct credit is a bit easier. I think if you just look at the set, you look at the metal prices that we used and our cost calculation for the guidance at the beginning of the year, and then Looking at the result with that with the higher metal prices now, but as I said, that kind of get those exchange rates and obviously cost control at the side are all very tightly intertwined.
Speaker Change: On the aggregate outperformance in Q1.
Speaker Change: Uh huh.
Speaker Change: Quite complicated to do answer Don because.
Speaker Change: Just on the exchange rate for example that there's a lot of different pieces, depending where we buy.
Speaker Change: But from services on production equipment from from which country Dot com, saying.
Speaker Change: So I don't I don't have the detailed number on that obviously, the the byproduct credit.
Speaker Change: With easier I think if you just look at so you look at the metal prices that we used.
Speaker Change: And our cost calculation for the guidance at the beginning of the year.
Speaker Change: No.
Speaker Change: Looking at the resolved with that with that with the higher metal process now.
Speaker Change: That kind of get those exchange rates and obviously cost control on the side are all very tightly intertwined. So it's I think it's quite difficult.
Don Demarco: So it's I think it's quite difficult to get the exact numbers on how much is coming from which side. Okay, okay, well, that's helpful, nonetheless.
Speaker Change: Got your exact numbers on how much is coming from each side.
Speaker Change: Okay.
Speaker Change: Okay, well that's helpful. Nonetheless them, but then maybe shifting to my next question is on capital allocation. So your balance sheets continue to improve you got cash over 900 million you mentioned $1 7 billion in liquidity. So what are your priorities on capital allocation like considering the different range of off you've got debt repayment do you see opportunity to increase the N CIB your dividend.
Michael Steinmann: But then maybe shifting to my next question, it's on capital allocation. So your balance sheets continue to improve, you got cash over 900 million, you mentioned 1.7 billion in liquidity. So what are your priorities on capital allocation? Like considering the different range of options, you got debt repayment, do you see opportunity to increase the NCIB or dividends or maybe see a better ROI by deploying cash into pending SCARN development that's pending? Most of them, what you just mentioned, probably debt repayment is not really urgent for us. Just for everybody to remember, we have two bonds, they're very, very favorable bonds on their interest rates.
Speaker Change: Or maybe see a better ROI by deploying cash and depending scarring development that's pending.
Speaker Change: Most of them. What you just mentioned are probably in debt repayment, there's not really a chance for us just to.
Speaker Change: For everybody to remember we have two bonds.
Speaker Change: They're very very favorable bonds under our interest rates are I think the $500 million bond us about that two to six 5%.
Michael Steinmann: I think the $500 million bond is about 2.65%, and then the rest up to the 800, so that's about $280 million. Some are sitting around 4.6%. So it's a very favorable bond, so I don't think there's no hurry to pay those back. By the way, the larger one, the $500 million bond, only matures in 2031, so 2.65% interest rates until. I think we can obviously with that money provide better return to shareholders than buying back that debt. So that leads us to the rest of the buckets that you mentioned. And yes, shareholder return is always on our radar.
Speaker Change: The rust off debate hundreds so that's about $280 million.
Speaker Change: Some are sitting around four 6% so there's a very favorable bonds, there's no hurry to.
Speaker Change: To pay those back by the way the larger $1 million to $500 million bond matures in 2031 to six 5% interest rates until.
Speaker Change: <unk> 31, Oh, I think become obviously with the money.
Speaker Change: Provide better return to shareholders by buying.
Speaker Change: Buying back debt.
Speaker Change: So that leaves us to the room.
Speaker Change: Most of the buckets that you mentioned and yes shareholder return is always on our radar.
Michael Steinmann: You know, it's close to, as you know, we have a policy in place that adds a special or additional dividend to our base dividend of 10 cents per share per quarter, depending on our net cash. We're very close there. I think it starts kicking in at $100 million net cash. We're just a little bit shy of that. I would expect, you know, to cross that threshold here pretty soon. And then our dividend will automatically increase. There's a graph and a table in our MD&A explaining that. I think it goes as high as about 18 cents, depending on how much net cash we have.
Speaker Change: Mitch it's close to it as you know we have a policy in place.
Speaker Change: A special or additional dividend, so our base dividend of <unk> per share per quarter, depending on our net cash we're very close there I think it starts kicking in at $100 million not cash out of it just a little bit shy of that tie with Xbox and hope to cross that threshold here pretty soon.
Speaker Change: And then our dividends will automatically increase.
Speaker Change: Especially a graph on the table in our MD&A explaining that.
Speaker Change: I think it goes as high as about 18, depending on how much not cashed in behalf. So automatically the dividend will increase you saw that we were buying back Saracen.
Michael Steinmann: So automatically the dividend will increase. You saw that we were buying back shares in January. Now we will continue that thing during the year. We just extended or renewed our NCIB and we'll continue the same thing to be. Very opportunistic in buying back stock. There's always pullbacks and opportunities to do that, and we'll jump in the market and do that. So very strong return in total to shareholders of $56 million in Q1. And then, of course, the best return is investment in our business. And that goes from strong exploration results, investment exploration to replace our reserves or add new resources to our assets.
Speaker Change: And in China right now we will continue that theme during the year, we just.
Speaker Change: Extended or renewed our and CIB.
Speaker Change: We will continue the same theme to be.
Speaker Change: Very opportunistic in buying back stock and.
Speaker Change: There is always pull backs in the opportunities to do that then we will jump into market and do that so very strong return in total to shareholders of $56 million in Q1, and then of course the best return on this investment in our business Center that goes from strong exploration results investing in exploration to replace our research.
Speaker Change: So add new resources to our to our assets.
Michael Steinmann: Continued development of the SCARN obviously comes to mind, which is a gigantic, a very big, very interesting, long-life asset for the company. Those kind of projects, of course, will provide the best return to our shareholders. But kind of the combination is obviously what makes it so interesting, I think, to be a shareholder in Pan American, where you have all of this taken care of. It's such a strong business on this side in Q1, where we can not only obviously pay for our sustaining capital, but invest money in special projects. And there's a whole list in the press release that we are taking care of.
Speaker Change: Continued development of this car and obviously comes to mind, which is gigantic the very big very very interesting life long life asset for for the company.
Speaker Change: No no those those kind of approach acts of course.
Speaker Change: We will provide the best return to our shareholders, but kind of the combination is obviously what makes it so interesting.
Speaker Change: To be a shareholder in Pan American I've already have all of this taken care off right to such and such a strong business and you saw it in Q1.
But we can not only obviously pay for our sustaining capital, but invest money in special projects and Thats, a whole list and in the press release.
Speaker Change: We have taken care off.
Michael Steinmann: A lot of exploration, normally spent during the year, mostly close to site, I would call it exploration, but probably close to $100 million, which, of course, the SCARN is one result of that, a very strong result. and still have sufficient funds to return it to shareholders and have quite a big cash balance, which, you know, can only always come very handy when opportunities arise in the market.
Speaker Change: So a lot of exploration.
Speaker Change: And normally spend during the year, mostly close to site I'll call it exploration, but.
Speaker Change: Probably close to $100 million of.
Speaker Change: Which of course, the communists, one resolved I'll start.
Speaker Change: Very strong result.
Speaker Change: And still have sufficient funds to return it to shareholders and that's quite a big cash balance which are you know.
Speaker Change: <unk> always come in very handy when opportunities arise and to market.
Michael Steinmann: Okay, well, thanks for that. And then you mentioned the SCARN and with that, the negotiations, you're looking to maintain maximum silver. Are you happy with the level of silver in your portfolio right now as relative to gold? And can you share your thoughts on the different levers that you have to increase silver, the SCARN being on Escobol? You know, with Cosmos' question, you touched on Navidad, maybe this potential M&A. So how do you feel about that level right now where it is? No, look, I mean, this is our silver gold, let's call it our silver gold ratio within Pan American, not the gold ratio that people normally talk about on prices, you know, varies goes up and down depending on the constellation of our assets.
Speaker Change: Mhm, certainly okay, well, thanks for that and.
Speaker Change: And then you mentioned the scarring.
Speaker Change: And with that the negotiations youre looking to maintain maximum silver.
Speaker Change: Are you happy with the level of silver in your portfolio right now that's relative to gold and can you share your thoughts on the different levers that you have to increase silver scarring being on ask a ball.
Speaker Change: You know with Cosmos as question you touched on Navidad, maybe there's potential M&A. So how do you feel about that level right now where it is.
Speaker Change: Well look I mean, this is our silver gold, let's call it our silver gold ratio within Pan-american not not the boldface staple normally talk about on prices.
Speaker Change: Various goes up and down depending on the constellation of our assets. So you know I remember back might be.
Michael Steinmann: So, you know, I remember back maybe quite a few years, maybe 15 years, we had a very, very large zinc production when we still had Motokocha in our portfolio, and zinc was a very important metal, and, you know, silver went back to probably around 50-55% of revenue. Of course, now silver is less, and again, for several reasons, once we purchased together with some interesting silver production, obviously, in Argentina and Chile, also some very strong gold production, and the gold prices are performing at the moment, the silver price strongly, and that's obviously skewing the kind of the percentages of the two of the, of all the four metals or five metals we produce on our revenue.
Speaker Change: Quite a few years, maybe 15 years, we had a very very large zinc production when we still had the modal culture.
Speaker Change: In our portfolio I think was very important module.
Speaker Change: Silver became ramped back to probably around 50%, 55% of revenue and of course now silver.
Speaker Change: It's less again for its travel reasons once.
Speaker Change: We purchased together with some interesting silver production, obviously in Argentina, and Chile also some very strong gold production and the gold price is outperforming at the moment the silver price strongly.
Speaker Change: That's obviously skewing.
Speaker Change: The kind of the percentage yourself, but two of the of all the four models of five metals with produce on our revenue. So it is just the picture in time, but you mentioned look we have the largest resort from the largest resource of silver in the world in our in our portfolio. That's our large number of big projects.
Michael Steinmann: So it's just a picture in time, but you mentioned, look, we have the largest reserve and the largest resource of silver in the world in our, in our portfolio, that's a large number of big projects, you know, just as gone, probably an average of about 17 million ounces of silver a year. Of course, Escobar has the potential to produce 20 to 22 million ounces a year. As I mentioned, now we've got the largest silver resource in the world, or one of the largest, and, you know, probably not right now ready, but a very interesting resource there.
Speaker Change: And I'll, just just us gone probably an average of about 17 million ounces of silver a year of course ethical ball has the potential to produce 20 to 22 million ounces a year as I've mentioned now without the largest silver resource in the world of one of the largest thunder.
Speaker Change: Probably not right right now ready, but a very interesting resource there. So there's plenty of opportunity and you mentioned on Monday as well, so there's plenty of opportunity for us.
Michael Steinmann: So there's plenty of opportunity, and you mentioned Amendea as well, so there's plenty of opportunity for us, you know, to change in the future that silver gold ratio that we have internally. So lots of silver projects there, but at the moment, of course, very strong cash flow generations from our performing gold.
Speaker Change: To change in the future that silver gold ratio that we have internally so lots of silver projects there, but at the moment of course with very strong cash flow generations from outperforming bolt.
Michael Steinmann: Okay, great. Thank you for your thoughts on that.
Speaker Change: Okay great.
Don Demarco: And well, that's all for me and good luck with the rest of Q2. Thank you.
Speaker Change: Thank you for your thoughts on that and that's all for me and good luck with the rest of Q2.
Speaker Change: Thank you dawn.
Michael Steinmann: This concludes the question and answer session.
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 Steinmann: I would like to turn the conference back over to Michael Steinmann for any closing remarks. Please go ahead. Yeah, thanks, everyone, for calling in today. Great result, great quarter, great start of the year. Really looking forward to Q2 and beyond.
Speaker Change: Yeah, Thanks, everyone for calling in today, Great result, great quarter, great start of the year.
Speaker Change: When you're looking forward to Q2 and.
Speaker Change: And and beyond.
Michael Steinmann: Just one item I would like to mention here. At the end of this month, we will release our 2024 Sustainability Report. So our ESG performance is core to our business and really look forward to updating you on our progress in that area with our report. That's out there annually. You can look at probably the last 12 years of report on our website and get a very good idea of what we are doing on this really important project that we do on the ESG side.
Speaker Change: Just one item I would like to mention here at the end of this month, we will release, our 'twenty 'twenty four sustainability report so our ESG performance as core to our business and really look forward to updating you on our progress in that area with our report that's.
Speaker Change: That's out there I know that you kind of look at probably the last 12 years a report on our website.
Speaker Change: <unk> got a very good idea of what we're doing on this really important.
Speaker Change: Projects like we do on the ESG side. It does thanks, everyone for calling in and looking forward to talk to you in August for Q2. Thank you everyone.
Michael Steinmann: Thanks, everyone, for calling in and looking forward to talk to you in August for Q2. Thank you, everyone.
Operator: This brings to a close today's conference call, you may disconnect your lines.
Speaker Change: This call close today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Operator: Thank you for participating and have a pleasant day.
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Unknown Executive: Don Zimmer, Big Short, Sargent Bros.
Speaker Change: Yeah.
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