Q3 2025 Pan American Silver Corp Earnings Call

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the Pan American Silver Q3, 2025 results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded.

Speaker #1: After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad.

Speaker #1: the conference call, you may reach an Should you need assistance during operator by pressing star then zero. I would now like to turn the conference over to Siren Fisekci, Vice President, Industrial Relations.

Speaker #1: Please go ahead, Ms. Fisekci.

Speaker #2: Thank you for joining us today for Pan American Silver's conference call and webcast to discuss our Q3, 2025 results. This call includes forward-looking statements and information and references non-GAAP measures.

Speaker #2: Please see the cautionary statements in our MD&A news release and presentation slides for the Q3, 2025 results. All of which are available on our website.

Speaker #2: I'll now turn the call over to Michael Steinmann, Pan American's President and CEO.

Speaker #3: Good Good morning, everyone. I'm glad you could join us to discuss Pan American's Q3, 2025 results. Over the past quarter and into Q4, we have benefited from the increase in silver and gold prices and a solid performance on cost.

Speaker #3: As a result, we achieved record attributable free cash flow of $251.7 million in Q3. On September 4th, we completed our acquisition of MagSilver. While we have had only a one-month contribution from our 44% interest in the Juanicipio mine in Mexico, there are already seeing the impact on lowering costs and improving margins underscoring the strategic rationale for this transaction.

Speaker #3: We account for Juanicipio using the equity method, but the report production cash cost all in sustaining costs and capital expenditures on an attributable base to reflect our 44% interest.

Speaker #3: I am pleased to say that we have delivered another quarter of strong financial results. Attributable revenue in Q3 was a record $884.4 million. Net earnings were $169.2 million, or 45 cents basic earnings per share.

Speaker #3: This includes a $21.7 million loss from the sale of a subsidiary, and $16.3 million of income from Juanicipio. The loss from the sale of a subsidiary is primarily due to a $28.6 million reduction to the $137.4 million gain we had previously booked on December 2024 of the sale of Larena-related to networking capital adjustments.

Speaker #3: This was partially offset by a $6.8 million gain on the sale of our 80% interest in La Pepa, a non-core development stage project in Chile, which we've sold for $40 million in cash proceeds in September 2025.

Speaker #3: Adjusted earnings were $181 million or 48 cents basic adjusted earnings per share. Attributable cash flow from operations was a record of $323.6 million. Cash and short-term investments at the end of Q3 totaled $910.8 million plus $85.8 million of cash at Juanicipio for our 44% interest.

Speaker #3: This is after spending a net of $409.3 million on the Mag acquisition, including transaction costs. With $1.7 billion of total available liquidity, we remain in a very strong financial position.

Speaker #3: Given this strong financial position and cash flow generation, I'm happy to report that the board has approved an increase to the dividend to 14 cents per common share with respect to Q3, 2025.

Speaker #3: Despite the cash balance at the end of the quarter reflecting the impact of the cash paid for the Mag acquisition, the board exercised discretion with respect to the dividend this quarter given the strong cash flow being generated.

Speaker #3: While we did not repurchase any shares in Q3, due in part to the blackout associated with the Mag acquisition, we remain prepared to act opportunistically.

Speaker #3: During the first nine months of 2025, we have returned $146.9 million in dividends and share repurchase to shareholders, and we will add another $59.1 million with the dividend payment approved yesterday.

Speaker #3: Turning now to operations. Attributable silver production in Q3 was 5.5 million ounces, including 580,000 ounces from Juanicipio's one-month contribution. We continue to be pleased with the performance at La Quereda, where the improved ventilation conditions are allowing mine rehabilitation and development rates to accelerate.

Speaker #3: Thereby increasing the number of production areas, particularly in the deep, high-grade zones of Candelaria East. Silver production was impacted by lower silver grades at Warón.

Speaker #3: development and reduced stope ore mining rates in order to Reflecting increased grow the inventory of prepared high-grade stopes which are expected to enhance future production stability and reliability beginning in mid-2027.

Speaker #3: Silver segment cash costs were $10.41 per ounce and all in sustaining costs were $15.43 per ounce. These costs are lower than Q2, 2025, already demonstrating the positive impact Juanicipio is having on reducing silver costs and improving margins even though it has only been in our portfolio since early September.

Speaker #3: The quarter also benefited from low all in sustaining costs at Cerro Moro due to high byproduct gold production and prices compared to Q2. Partially offsetting these factors, as the lower silver production at Warón and the royalty expense at La Querada of $8.3 million in Q3, largely payable to a third party as part of a profit sharing agreement for mining on an adjacent concession.

Speaker #3: Attributable gold production was $183,500 ounces. As we mentioned during our Q2 call, various technical issues at Cerro Moro, Peñón Timons, and Minera Florida as described in our MD&A were expected to linger into Q3.

Speaker #3: Consistent with our expectation of a back-end weighted gold production. The technical issues at Cerro Moro and El Peñón also reduced silver production in segment cash costs were Q3.

Speaker #3: $1,325 per ounce and all in sustaining costs excluding NRV inventory adjustments were Gold $1,697 per costs across both the silver and gold segments remain in line with our ounce.

Speaker #3: outlook. However, we 2025 operating have raised our attributable silver production guidance to 22% to 22.5 Overall production and million ounces and lowered silver segment all in sustaining costs to $14.50 to $16 per ounce to incorporate Juanicipio's contribution.

Speaker #3: All other costs and production guidance remain unchanged. We invested $35.3 million in capital projects this quarter, mainly at La Querada and Jacobina. At La Querada, we continued exploration and equipment investments to further expand access to high-grade zones in the deeper, eastern extents of the Candelaria ore zone.

Speaker #3: In September, we announced new high-grade raw results and added 52.7 million ounces of silver to inferred mineral resource. Which substantially extend resource potential to the east and southeast beyond our current mining areas.

Speaker #3: This is an exciting development that offers significant synergies through a potential two-phase development approach to our large La Querada scarn project. The first phase would combine development of the scarn with the vein mine which is expected to result in a higher grade lower tonnage and less capital intensive development to what was described in our 2024 PEA.

Speaker #3: The second phase would involve the cave mine expansion. This phased development approach allows an enhanced vein mine to operate in parallel utilizing shared infrastructures synergies and enhancing overall project value.

Speaker #3: A PEA for these two-phase development approach combined with enhanced vein mining is underway and is expected to be issued in Q2, 2026. Furthermore, we are well advanced on partnership discussions that consider this enhanced development approach.

Speaker #3: At Jacobina, results from the extensive optimization study have identified a number of opportunities to relieve constraints that could potentially benefit mine life, production, and operational efficiencies.

Speaker #3: These opportunities include, but are not limited to: a tailings filtration and filter stack project to relieve existing long-term tailings capacity limitations; a mine paste backfill plant project to take advantage of the tailings filtration circuit, thereby enabling an increase in ore recovery in selective high-grade ore zones; and a significant process plant streamlining project to improve reliability and release throughput recovery.

Speaker #3: These opportunities include but are not limited to: a tailings filtration and filter stack project to relieve existing long-term tailings capacity limitations, mine pastebackfill plant project to take advantage of the tailings filtration circuit thereby enabling an increase in ore recovery in selective high-grade ore zones, and a significant process plant streamlining project to improve reliability, release throughput recovery. costs, and enhance gold constraints, reduce mine operating We have recently commissioned the pilot plant on site to demonstrate the benefits that can be obtained by streamlining a plant flow sheet which has been defined through bench scale metallurgical laboratory testing.

Speaker #3: We have also engaged a leading engineering firm to develop detailed designs, schedules, and cost estimates for completing these optimization projects. We will continue to provide updates on implementing these exciting projects as this engineering efforts advance over the next year.

Speaker #3: At Escobal, the Guatemalan Ministry of Energy and Mines has held several separate working meetings with the ministries involved in the ILO 169 consultation process, representatives from the Shinca Parliament and the company.

Speaker #3: The Ministry of Mines has also made several appointments of key personnel to oversee and continue activities for the Escobal consultation process. The ministry has not provided a timeline for the completion of the ILO 169 consultation, but discussions remain active and respectful.

Speaker #3: Before closing, I would like to recognize Steve Busby for his remarkable contributions to Pan American Silver over the past 22 years, with 17 years spent as chief operating officer.

Speaker #3: Steve is transitioning to the role of special advisor to the CEO and I'm grateful we will continue to benefit from his deep technical expertise.

Speaker #3: I also want to welcome Scott Campbell as our new chief operating officer. Scott brings 25 years of operational experience in Latin America and I look forward to continuing to work closely with him as we advance our strategy.

Speaker #3: I would now be happy to take your questions together with the other members of our management

Speaker #3: team. Thank you.

Speaker #2: We'll 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 a tone acknowledging your request.

Speaker #2: If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. First question is from Wayne Lam with TD Securities.

Speaker #2: Please go

Speaker #2: ahead.

Speaker #3: Oh yeah, I think morning

Speaker #3: guys. Just curious on the guidance increase. Would it be safe to assume that the prior guidance for Juanicipio has remained the same as under MAG previously?

Speaker #3: And just wondering if there's been some modest tweaks lower within the silver segment on the guidance. Just given the deal closing in September, I would have thought the pro forma silver guide would have been slightly higher.

Speaker #3: So just wondering if there are any other offsets from the other operations in the

Speaker #3: portfolio. Hi, good morning.

Speaker #4: No, it's a pretty similar to what MAG had. Obviously, as you can imagine, this is we're only in the second month really of having that operation with us.

Speaker #4: But we assumed that the production should be September for the remaining months pretty similar to what we've seen in of the

Speaker #4: year. Okay, great, thanks.

Speaker #3: And then maybe at Horon, just on the grades and the increase in the development ore being processed, it's been a couple of quarters now where you've encountered a bit higher dilution on the mining front.

Speaker #3: And just wondering if that maybe has also been a function of the reduction in the cutoff grades, just in terms of the process grades come down a bit.

Speaker #3: And just curious if we should expect a bounce back in grades over the coming quarters or if that's more of an active strategy that you guys are employing to lower the cutoffs to bring in a bit more economic material.

Speaker #4: is Steve. I can address that one. Yeah, the initiative we started last quarter was to accelerate developments, trying to get ahead, trying to get some high-grade stoves prepared and develop an inventory of stoves to give us more reliability on production this initiative is going to take us through all of '26 into '27.

Speaker #4: And so what you're seeing is a lot more contribution of ore from development, which is more diluted than from stove mining. And it's really an initiative to try to build inventory of stoves in the mine that'll give us more flexibility in the future once we get all this development ahead of ourselves.

Speaker #4: That's what you're

Speaker #4: assuming.

Speaker #3: Okay, great, thank

Speaker #3: You. And then maybe just last one, just on Jacopina. On the optimization studies that are being undertaken, can you give us a bit more detail on what's being optimized at the mine or at the plant and how that might impact future operations?

Speaker #3: If that will be on additional tonnage or lower costs and when we might be able to see the results of that.

Speaker #4: Yeah, yeah, great question. And there's a lot of work going on at Jacopina. I will pass it on to Steve as you heard there, Steve will retire here as the COO, but he will stick around with us with his incredible wealth of knowledge.

Speaker #4: Steve will be very important for that kind of expansion work at Jacopina. So Steve, maybe if you want to answer the question. Sure, yeah, I'd be happy to, Wayne, and great question.

Speaker #4: It's very exciting what we're seeing there. The mine itself, it's pretty flexible because we're really mining seven, we'll be bringing on an eighth mining area with Maracota.

Speaker #4: And it gives us a lot of flexibility in terms of how the mine delivers ore to the plant in terms of throughput expansion, tonnage, and that sort of thing.

Speaker #4: The main focus of the optimization is around the plant itself. This is an old plant. It was originally built in the '80s as a less than 4,000 ton a day plant.

Speaker #4: And it's been piecemealed over the years; a lot of components have been added. A lot of circuits have been added to the flow sheet, and it's kind of a complex network of flow, if you will.

Speaker #4: So we see an opportunity to go into the plant and streamline that plant, remove some of the circuits we don't need, clean up some of the circuitry, try to go to bigger machines, less numbers of them, reduce maintenance costs, improve reliability, improve efficiencies.

Speaker #4: And reduce costs overall, coupled with when we look long term at Jacopina, we really see an opportunity to go to a filter stack tailings facility that opens up a lot of disposal

Speaker #1: mid In the 2030s , we want so to bring a filter plant flow into this sheet . We've been working hard . looking at We're vacuum filters like we run at El They look quite Penon .

Speaker #1: favorable and we're kind of proposing a vacuum filter plant . That down at situated tailings the facility . And allow put a us to stack that we're designing below the down B2 dam .

Speaker #1: favorable and we're kind of proposing a vacuum filter plant . That down at situated tailings the facility . And allow put a us to stack that we're designing below the down B2 dam . call it .

Speaker #1: And the We location of this also provides benefits to because we us , add a can modular temporary paste plant and use some of the tales to build cemented paste that we can pump into the north part of the mine , where some of our higher mining areas grade are , and it allows higher some of the recovery of higher grade stopes that we us wouldn't get without some type of cemented backfill .

Speaker #1: So that's this optimisation is coming where all together . you can I hope appreciate it . It's a significant brownfield in and around project the plant , so it's going to be it's going to require some careful planning , very careful sequencing of how we make these modifications .

Speaker #1: that's where we're And working intensely with an engineering company . And as we start to get the designs and the sequencing and the costing sorted out , we'll start to deliver , you know , truly what the value of this project is going to be overall .

Speaker #1: But we're very excited about it .

Speaker #2: great . Thanks , that's a Okay , lot of good detail . Thanks for taking my questions and best of luck to you , Steve .

Speaker #1: Thank you very .

Speaker #3: question The next is from Fahad Tariq with Jefferies . go Please ahead .

Speaker #4: Hi . Thanks for taking my question . Maybe just on the gold guidance , which didn't change . Can you talk about how you're thinking about the fourth quarter in the context of some of the dilution that you cited at Timmins , Alpinean , some of the development you cited delays at Minera Florida and just trying to get a sense of kind of the confidence in the fourth quarter on the gold side .

Speaker #4: Thanks .

Speaker #5: Yeah . Good morning , Scott Campbell here . We had our challenges certainly in Q3 , but we're maintaining the guidance for for Q4 .

Speaker #5: And we're confident that that will be achieved . We did have some dilution in Pinon , and we had some challenges and slight delays when it comes ground to support at both of our mines in But we're Chile .

Speaker #5: maintaining guidance and things in November have already started to look up for for gold production in the southern countries .

Speaker #4: maybe Okay . And then just switching gears to the the updated development approach that LA Colorado Skarn just in the opening remarks , you talked about the partnership discussions are well advanced .

Speaker #4: Maybe just any detail you can provide would be helpful . Thanks . Yeah .

Speaker #6: Good morning . Look , it's a bit well that the very discussions are advanced , but it's too early to share them . I hear publicly , you know , it's looking very interesting .

Speaker #6: I think that new approach , which we had an eye on obviously for a long time to see how we can advance the really high grade part of our bodies .

Speaker #6: You recall we published a few press releases over the last couple of years with some very impressive long , very wide , high grade intercepts of in two of the three corner bodies that we discovered .

Speaker #6: Really , the discovery of those high grade structures . In that we found addition , during 2025 . And we published in September and increased our resource there by I think , about 53,000,000oz already .

Speaker #6: Really , that that high grade combination of discovery surface , close to together with the high grade wide intersects of the core part of the Skarn , really allow us to go to this phased approach and look forward here to two phases .

Speaker #6: As we said , a smaller will tonnage still be an impressive mine , very similar silver output than than the original plan . We had envision .

Speaker #6: But obviously higher grade , less tonnage , less capital and then go to the larger cave mine later on in time . So very interesting advances as we indicated .

Speaker #6: We'll come out with the PA in Q2 next year , but very positive advance on on La Colorada . And you know , looking forward here to look at at those partnership agreement and involve , you know , a very strong partner for , for very exciting project as well .

Speaker #4: And then Okay , great . maybe just it fair to say lastly , is that the partner would only be really for phase two ?

Speaker #4: Or are you envisioning them also contributing to the CapEx and being involved in phase one ? Thanks .

Speaker #6: I could very well envision a phased approach there to with with a , you know , more reduced partnership option in phase one and a larger one in phase two .

Speaker #6: But still remains to be determined .

Speaker #4: Okay . Thank you .

Speaker #3: The next question is from John Tumazos with John Tomaso . Very independent research . Please go ahead .

Speaker #1: Thank you .

Speaker #7: taking For my question . We know that you produce a little bit of base metals to and a large differential exists with zinc at a dollar $0.44 and led at $0.93 .

Speaker #7: Why do you think the zinc price outperforms where world steel output is down a couple percent this year ? And why do you think lead lags when World Auto output is strong ?

Speaker #7: China trending toward 33 million cars record , etc. .

Speaker #6: Yeah . Good morning John . Look obviously the base metals . And by the way , I think at the moment only about 8% of our revenue that will for sure once increase we have the others gone in production .

Speaker #6: But it's a small part of our revenue . When you look at the base metal , I'm sure zinc , it's posting outperforming as being in several countries included in their list of critical minerals .

Speaker #6: By the way , I'm sure you have noticed that silver got included in the US as well on that list . But as you know , the base metal price is really reflect the outlook on the world economy and where that's moving .

Speaker #6: And I guess there's still some some people worried about where this is going over the next few years . that's And reflected in those prices .

Speaker #6: for But sure , the , you know , the of zinc inclusion critical minerals helped helps the price .

Speaker #7: you Thank .

Speaker #3: next question The is from Ovais Habib with Scotiabank . Please go ahead .

Speaker #8: Operator . Hi , Michael . And Pan American team , congrats on a good Thank you . quarter . Leading to a good free cash flow as well congrats to you .

Speaker #8: Scott , on your new appointment as well . Michael , a lot of my questions have already been answered , but some follow ups to those questions starting off with , you know , the question on .

Speaker #8: Timmins and I think Florida as well , obviously , they've had some issues in terms of reconciliation , geotech issues . Do you see these issues lingering into Q4 or have most of these issues now been resolved ?

Speaker #8: Just a clarify on that front .

Speaker #6: Yeah . Good morning always . And you recall in Q2 and actually there was some of those technical issues started with already , you know , mentioned that they will linger into we see .

Speaker #6: So Q3 , which that's obviously the reason why our production profile , especially on the gold , is more back end loaded . As Scott mentioned , we see already an uptick on those grades .

Speaker #6: So , you know , looking forward to meet to meet those guidance that we goals have . Or maybe Scott , you want to add a bit more color .

Speaker #5: To this . Thanks for the kind , sincere words regarding Timmins . Some of the issues , some of the geo challenges we have involve the the squeezing of our production drill holes in the deep central mining zone at the Bell Creek operation .

Speaker #5: We've been mitigating that through the use of casings , PVC casings and in some , some cases , we use a sealant or a polymer .

Speaker #5: And we've had some success with that . We're also installing additional ground support in developing development headings as we pass through high strain and stress areas using dynamic support , the pace system at Bell Creek recently commissioned , is also , you know , becoming more and more utilized .

Speaker #5: We're getting better utilization in the learning curve is flattened is really out on that on that facility . And so we're getting some we're seeing a lot of success .

Speaker #5: And again the numbers are looking favorable as we head into November sort of halfway through Q4 .

Speaker #8: Thanks for that , Scott . And just going into 2026 , I mean , is this more in terms of getting obviously getting ahead of production and developing , accelerating development going into 2026 ?

Speaker #5: Yes , generally , yes . At several of our operations , we've initiated additional development programs in Q4 to really give us more optionality as we head into 2026 .

Speaker #5: You know , in a couple of cases , we got behind in our development . So we had to acquire new equipment in some cases , hire external third party contractors to do that .

Speaker #5: We're on and Tim is included . But yes , it's all in our best interest to really ensure our success coming up in later and at the end of 2025 and really into 2026 .

Speaker #8: Yeah , thanks . Thanks for that . Scott . And then just moving on to , you know , on the closing of the transaction , Michael , is everything progressing according to your expectations ?

Speaker #8: I mean , are you looking you know , how involved are you with operations and is there a push to get more exploration started around the area ?

Speaker #6: You know , I'm incredibly happy where it stands . I think , you know , we all saw a glimpse here . What CPO will do for us with only one month in Q3 .

Speaker #6: And you see just , you know , the strong production , strong cash coming out flow of that operation , you can imagine that even higher metal prices right now , how well that asset is doing .

Speaker #6: Actually , I was just like last week and it's just , again , an impressive , impressive operation . And and , a lot , lot of involvement , involvement on the operational teams here and on all levels really from operation to metallurgy to , to , to geology to exploration .

Speaker #6: A lot of exploration going on as well . So I'm really , really happy how this has worked out so far . I'm really looking forward to see a full quarter of municipio in Q4 .

Speaker #6: As I said , with a combination of very favorable metal prices as well . Obviously we come out in early January , mid January , normally mid to late January with the forecast for next year , which will include also our in our budget , our exploration spending .

Speaker #6: So you will see all the details of how it looks like for the production profile . But yeah , it's I would guess it's I would say it's at least met or quite a bit exceeded my , my expectations at 20 CPM .

Speaker #8: Thanks for that Michael . And my last question is on . You're looking to announce the in Q2 of next year . Is the of the partnership exclusive of this event or you would need to see the PA before you kind of come to some sort of terms with the partner .

Speaker #6: No , I will be able to think we announce the partnership earlier . I think soon as we have a as document executed on that , we will we will release that information .

Speaker #8: Okay . That's it for me . Michael , and thanks for taking my questions .

Speaker #6: always Thanks .

Speaker #3: The next question is from Cosmos Chiu with CIBC . Please go ahead .

Speaker #9: Thanks , Michael . And thank you , Steve as well . And congratulations Scott . Maybe my first question is also on scar technical report .

Speaker #9: That's potentially coming out next year . I'm not potentially it is coming out next year . As you mentioned Michael you had to take a phased approach .

Speaker #9: Now with a higher grade . The tonnage lower deposit up front , I seem to remember the scarring deposit is centered around some high grade centers .

Speaker #9: The 901 zone , 902 , 903 . So is there one particular zone that is higher grade ? I don't know if you have that answer yet .

Speaker #9: Or are we looking at , you higher portions grade from all three areas , or are we looking at the upper portions of all three areas ?

Speaker #9: should we How incorporate what I know about I know 1902 and 903 into what we can see next year .

Speaker #6: Yeah . Cosmos , the higher high grade core zones are mostly 901 and 902 . are actually doing quite a bit of We drilling .

Speaker #6: Still on 903 and some some pretty interesting success here . This seems to car even further extend by by quite a good distance .

Speaker #6: So I think 903 it's still out there to see if if there is a high grade zone as well . But there when you look at the press releases out over the last two years on those we put high grade intercepts of the Skarn there , there , all of them in 901 and 902 .

Speaker #6: But located as I said , it's really the combination together with high those grade closer to surface structures that we published in September .

Speaker #6: And then, you after know, showed in a big increase in resources with our reserve and resource update. It's really that combination that has allowed this phased approach.

Speaker #6: As you can imagine , we were trying for a phased approach from the beginning on it , but obviously , obviously stronger way project .

Speaker #6: If you can do it phased in a less capital approach , upfront and later when increase you really understand underground and and you know , the body well .

Speaker #6: And as I said earlier on , that that doesn't mean our silver will be much production profile of what we had envisioned in the full , large option .

Speaker #6: cave So there's less execution risk , less capital , probably faster in bringing the project on . And overall , just just just an exciting development that has gone

Speaker #6: . that

Speaker #9: sounds great Yeah , . Maybe a follow up then , you know , Michael , as you mentioned , with this phased approach , the possibility is that the vein mine could run parallel with both phases .

Speaker #9: So is there some thinking in terms of some of that, or from actually scoring, could go through the current mill?

Speaker #6: No , no . The production . Capacity is around 2000 2500 tons a day . I mean , we're here talking about . A multiple of that .

Speaker #6: will build So we a new metal , much larger and then have that mill built with the potential to expand down the road way bigger to the phase two .

Speaker #6: But yeah , the current operation , the current small , mill is too but the metallurgy is very , very similar the . Optimization of skarn and the vein .

Speaker #6: So it's a easy project really for us to , to kind of commingle the veins and , and the skarn and put that through the same mill .

Speaker #6: So it's not a metallurgical difference , it's just the current mill is too small for that .

Speaker #9: Okay , okay . Sounds good . it's going to So mill be a new from day one for the skarn . But it could still run in parallel with a potential expansion later on .

Speaker #9: Cool .

Speaker #6: Yeah . That's really , you know , the exciting the advance here is that obviously putting the cave mining a bit later allows us to to continue to mine those high grade veins , of which it like the exploration we keep finding more and more of it .

Speaker #9: Yeah , maybe I do apologize . I do have a long accounting question here . I just wanted to get a better understanding of the equity method of accounting for Scipio .

Speaker #9: I was looking at note number nine, and I could kind of follow through. My understanding is that it's 44% of what Scipio reports, 100%.

Speaker #9: So I can understand the $72 million in revenue , $11.9 million in production costs , $15.1 million in depreciation . So 45.1 in mine operating earnings .

Speaker #9: But then it jumps to $37.1 million in net income . And comprehensive income . And that's a gap that I don't really fully understand , which drives the $16 million pickup for for Pan American Silver Corp consolidated level .

Speaker #9: So could you maybe help me out in terms of that gap little ?

Speaker #6: Hey cosmos , it's Ignacio here .

Speaker #10: if you want , And we can take this offline as well . Hi . Yes . Yeah . If you want , we can take this offline because there's a lot of but detail , basically we in , you know , this is the , the requirements reporting are don't don't require us to put all the detail in there .

Speaker #10: But some of the lines that are missing are taxes and other and other items that are , that are material . But yeah , there's a whole basically other stuff there that's not included in the in the net income .

Speaker #10: And comprehensive income .

Speaker #9: So I work it out to about 18% . Is that a good number to kind of use in terms of that difference or each quarter is a bit different .

Speaker #10: I think . it a Let's give couple of quarters here because , you know , this is only one month of of I would results .

Speaker #10: say So let's let's see let's see what the next quarter looks like . And as I take this said I'm with you . We happy to can we can we can talk about bit some of .

Speaker #9: The stuff that Ignacio , before asking you the question . So I knew it'd be a .

Speaker #4: Little .

Speaker #9: Any complicated accounting nuances that we should be aware of in terms of Scipio?

Speaker #10: No , say I would I would this say , look , is the same method that mag used to . Scipio . And it's a little yeah , bit tricky because we haven't had this before and it is difficult to talk about the company performance .

Speaker #10: Now , given that the performance of quantity is buried into that equity line or the investment in quantum CPU line , both in the income statement and the in the and the balance sheet .

Speaker #10: So we've introduced a few new non-GAAP including metrics , revenue attributable attributable free cash flow , attributable operating cash flow to help us better understand and talk about the company performance , including Juan Ekpo .

Speaker #10: And another thing to keep in mind is really the cash from Scipio doesn't that's sitting at the JV level , is buried in the interest in Scipio , investment in line in our balance sheet that only once Juan Scipio JV dividends will that distributes appear in our the in cash the cash and equivalent lines cash and cash in balance sheet .

Speaker #10: .

Speaker #9: that cash distribution is And somewhat discretionary , correct ?

Speaker #10: Yeah, no, they're on a schedule given the transition and between Mag ourselves. It's been a little bit delayed, so it's been a couple of quarters since.

Speaker #10: They haven't since the JV has not issued dividends. But there should be a catch-up in Q4 on that.

Speaker #9: Great Okay . . And then maybe lastly , on the dividend . Great to see that you've increased it again The . second consecutive quarter in terms of the increase .

Speaker #9: But in terms of the calculation of $0.14 is a bit of a detour away from the matrix that you've given to us in the past .

Speaker #9: terms In dividend , based on net cash . So I guess my question is . How should we not predict , but what should we expect for the next quarter ?

Speaker #9: That's number one . And number two , how much of the fact that you were not able to use your NCIB in Q3 did that factor into you ?

Speaker #9: You know , increasing on the discretionary basis , your dividend in Q3 ? And will you use the NCIB again in the future ?

Speaker #6: Yes . Look , regarding the dividend , great news . And that's really it is a kind of a departure from our dividend policy for this quarter .

Speaker #6: And this quarter And the reason for it only . is very simple . One very strong cash flow generation . You see , you know , nearly recovered already .

Speaker #6: Large part of the $500 million that that we used know , the , you portion that we use for the cash acquisition of MCC .

Speaker #6: So it was the board's view that with this incredibly strong cash flow generation , it's just the right thing to depart from the dividend policy for one quarter and half the shareholders participate in that a bit earlier .

Speaker #6: It has to do with , you the we know , were in blackout the closed on the transaction NCIB . We will look again obviously at the NCIB from now on .

Speaker #6: And like before , you know , make , make sure purchases on opportunistic way so that that is not the reason for the increase , the reason for the increase is that we look at our cash forecast .

Speaker #6: We look at a strong Q4 and , you know , it was just the right to thing have our shareholders to participate . A earlier in that really , really bit strong quarter .

Speaker #9: Thanks , Michael . I as well agree . Those are the questions I have . again Congrats on a very good Q3 , and I look forward to the rest of 2025 .

Speaker #6: Thank you .

Speaker #3: next The question is from Don DeMarco with National Bank . Please go ahead .

Speaker #11: Oh thank you . Operator . And good morning , Michael and team . Thanks for taking my questions . First off , you know , we saw consolidated ASIC guidance lowered substantially .

Speaker #11: Was there any other contributors to this other than the addition of one of Scipio ?

Speaker #6: Now it's it's the strong impact of CP . I mean , we would be on track with what we had in our original guidance .

Speaker #6: Like we are on the gold side , but as we , you know as , alluded to when we when we announced the transaction that this transaction will have a meaningful positive impact to , to our cash cost on the silver side .

Speaker #6: And that's really the result that you've seen on the , on the with one month on it , you already see that result .

Speaker #6: And and you know , calculating in the , the advantage of having CP for a full quarter in Q4 led us to the to the lower guidance on our costs .

Speaker #1: Yeah , I was just going to add , Don , this is Steve , just to a lesser extent . We are enjoying the benefit of the higher gold prices as well relative to what we use for guidance .

Speaker #1: So that is helping to offset some of the cost increases we're seeing . Is that byproduct gold price .

Speaker #6: And just to remind everybody again , I say that probably every every call , there's a lot of factors , important factors on our cost that can be tailwinds or headwinds that are out of our control .

Speaker #6: And one is exchange rates. Of course, when the U.S. dollar declines, normally our local currency increases, and that automatically is a headwind on our cost.

Speaker #6: But as the . Added benefit with a lower dollar that we see higher precious metal prices . So that's kind of the , you know , the system , how it plays .

Speaker #6: When we see a strong dollar , we see pressure on the metal price , but we see a tailwind on our costs in local currencies and vice versa .

Speaker #6: So just keep always in mind that exchange rates are an important part of this as well .

Speaker #11: Okay . Thank you for that . And we look at Monero Florida and Timmins costs elevated are a bit in the quarter . But of course the margins are still good .

Speaker #11: Do you have any performance criteria to identify potential divestment candidates and can you walk us through your potential divestment pecking order ?

Speaker #6: I mean , Look , we are we did a lot of divestments over the last few years . You probably saw we we divested a project in Chile , Pepper as well for 40 million cash in the quarter .

Speaker #6: And there's quite a few other smaller projects are that in the pipeline in the works right now by our business development team . I'm pretty happy with what we have right now and our operational side in our portfolio .

Speaker #6: So, you know, looking forward to continue with those assets.

Speaker #11: Okay . And then on the flip side of that , after Mag and previously the Amana , what's a good long term silver or gold production level that you'd like to achieve or maintain or .

Speaker #6: I think we need see the final budget on on the site before I can answer that question . As you can imagine , it's a very large and important part of our of our silver production going forward .

Speaker #6: Here .

Speaker #11: Okay , great . Well , we'll keep an eye out for guidance next year on that . Then . That's all for me .

Speaker #11: Thanks for taking my questions, and good luck for the end of the quarter.

Speaker #11: .

Speaker #6: Thank .

Speaker #6: you

Speaker #3: This concludes the question and answer session. I'd like to turn the conference back over to Michael Steinmann for any closing remarks.

Speaker #6: Thank you, Operator, and thanks, everyone, for calling in. Another great quarter: record revenue of nearly $890 million and record operational cash flows of $323 million.

Speaker #6: Record attributable free cash flow of nearly $252 million. Very strong numbers that obviously led us to increase, for the second time in a row now since Q2, to increase the dividend.

Speaker #6: It's great to have our shareholders participate not only in an increase of our share price, but also in our additional dividend policy.

Speaker #6: So great quarter . I'm really happy where it stands . As I said , we saw the first glimpse what of CPO is able to do here in the fourth quarter , which will be the first full quarter in We only had one month of the Q4 .

Speaker #6: in Q3 , and we see already a very positive impact . And just to the last question there from Dan , we will see an important impact to our silver production from CP are looking forward .

Speaker #6: So I'm really happy where we stand , looking forward to and a great strong Q4 and report that early next year , but also report our outlooks for 26 and and so show you in detail how our guidance for that cost guidance and guidance production looks like .

Speaker #6: So everyone for calling in and have a good rest of the year . And we'll talk in I guess early year , February or so for for our Q4 results .

Speaker #6: Thanks everyone .

Speaker #3: This brings to a close today's conference call . You may disconnect your lines . you for Thank participating and have a pleasant day .