Pan American Silver(PAAS) - 2022 Q3 - Quarterly Report

Introduction This section clarifies the purpose of the Management's Discussion and Analysis, outlining the financial reporting standards and the use of non-GAAP measures for performance evaluation - This Management's Discussion and Analysis (MD&A) aims to clarify significant factors influencing Pan American Silver Corp.'s performance and future outlook, and should be read with the Company's 2021 Annual Financial Statements and Q3 2022 unaudited interim consolidated financial statements, with all amounts in USD and financial reporting adhering to IFRS[4] - The MD&A refers to non-GAAP measures like 'all-in sustaining costs per ounce sold', 'cash costs per ounce sold', 'adjusted earnings', 'basic adjusted earnings per share', 'total debt', 'capital', and 'working capital', which are used for internal evaluation and industry benchmarking, but do not have standardized IFRS meanings and are reconciled within the document[5][6] Core Business and Strategy Pan American Silver Corp. is a leading silver and gold mining company operating across the Americas, committed to sustainable development and generating superior returns - Pan American Silver Corp. is engaged in silver and gold mining and related activities, including exploration, mine development, extraction, processing, refining, and reclamation, operating mines in Peru, Mexico, Argentina, Bolivia, and Canada, and exploring new silver deposits across the Americas, with the Escobal mine in Guatemala currently not operating[8] - The Company's vision is to be the world's premier silver mining company, known for excellence in discovery, engineering, innovation, and sustainable development, with a strategy focused on generating sustainable profits and superior returns, growing mineral reserves and resources, fostering positive relationships with stakeholders, continually improving asset quality, and encouraging employee innovation[9][10] Q3 2022 Highlights Q3 2022 saw decreased silver and gold production, significant financial losses, and increased operating costs across segments due to inflationary pressures Operations Highlights Consolidated silver and gold production decreased in Q3 2022, leading to a downward revision of the 2022 silver production forecast while other metal outlooks were reaffirmed Q3 2022 Production (koz/kt) | Metal | Q3 2022 Production (koz/kt) | Q3 2021 Production (koz/kt) | Change (koz/kt) | % Change | | :---- | :-------------------------- | :-------------------------- | :-------------- | :------- | | Silver | 4,540 koz | 4,830 koz | (290) koz | -6.0% | | Gold | 128.8 koz | 142.6 koz | (13.8) koz | -9.7% | | Zinc | 8.9 kt | 12.7 kt | (3.8) kt | -29.9% | | Lead | 4.4 kt | 4.2 kt | 0.2 kt | 4.8% | | Copper| 0.9 kt | 2.1 kt | (1.2) kt | -57.1% | - Management revised its 2022 silver production forecast to between 18.0 to 18.5 million ounces due to expected shortfalls at La Colorada (mine sequencing to lower silver grade stopes) and Dolores (Phase 9B reserve grade shortfalls)[12] - The Company reaffirmed its 2022 Original Operating Outlook for gold, zinc, lead, and copper production[14][16] Financial Highlights Q3 2022 revenue declined by 26% to $338.9 million, resulting in a net loss of $71.2 million and a $102.6 million decrease in operating cash flow Q3 2022 Financial Highlights | Metric | Q3 2022 (USD millions) | Q3 2021 (USD millions) | Change (USD millions) | % Change | | :----- | :--------------------- | :--------------------- | :-------------------- | :------- | | Revenue| 338.9 | 460.3 | (121.4) | -26.4% | | Net Income (Loss) | (71.2) | 20.2 | (91.4) | -452.5% | | Basic EPS (Loss) | (0.34) | 0.10 | (0.44) | -440.0% | | Adjusted Earnings (Loss) | (2.8) | 37.8 | (40.6) | -107.4% | | Adjusted EPS (Loss) | (0.01) | 0.18 | (0.19) | -105.6% | | Cash Flow from Operations | 54.4 | 157.0 | (102.6) | -65.4% | - The decrease in revenue was mainly due to a $96.4 million decrease in quantities of metal sold and a $33.9 million decrease in precious metals prices, with lower quantities sold reflecting reduced gold dore inventory draw-downs, lower silver and base metal production from Morococha (care and maintenance), and lower gold quantities from other operations due to lower grades and sequencing[17][18] - As of September 30, 2022, the Company had working capital of $422.1 million, including $187.2 million in cash and short-term investments, and $500.0 million available under its revolving Sustainability-Linked Credit Facility, with total debt at $68.5 million[21] Cash Costs and AISC Highlights Inflationary pressures and supply chain shortages significantly increased Q3 2022 Cash Costs and All-In Sustaining Costs for both silver and gold segments - All operations were negatively impacted by inflationary pressures (increased prices for diesel, cyanide, explosives, steel products) and supply-chain shortages, collectively referred to as 'Inflationary and Supply Chain Cost Increases'[22] Q3 2022 Cash Costs and AISC per Ounce | Metric | Q3 2022 | Q3 2021 | Change | | :----- | :------ | :------ | :----- | | Silver Segment Cash Costs/oz | $14.62 | $11.92 | +$2.70 | | Silver Segment AISC/oz | $17.97 | $16.30 | +$1.67 | | Gold Segment Cash Costs/oz | $1,184 | $922 | +$262 | | Gold Segment AISC/oz | $1,614 | $1,176 | +$438 | - Silver Segment Cash Costs increased primarily due to a $1.63/ounce increase from Huaron (inflationary costs, lower silver ounces sold) and a $0.88/ounce increase from Manantial Espejo (decreased by-product credits), while Gold Segment Cash Costs increased due to lower mined grades at Timmins and Dolores, and Inflationary and Supply Chain Cost Increases[23][25][26] Environmental, Social, and Governance (ESG) Pan American is committed to sustainable practices, on track for most 2022 ESG goals, and maintains strong performance ratings from S&P Global, Sustainalytics, and MSCI - Pan American is committed to responsible and sustainable business practices, focusing on environmental care, community development, safe workplaces, and transparent operations, and is on track to meet 16 of its 20 ESG goals for 2022, but will not meet targets for zero fatalities (two fatal accidents occurred), environmental audits, biodiversity, and waste recycling[30][31] ESG Performance Ratings | Rating Body | Score/Ranking | Comparison/Details | | :---------- | :------------ | :----------------- | | S&P Global ESG Score | 68 (out of 100) | +12 points over 2021; Top 7% in Metals & Mining industry | | Sustainalytics | 3 in Precious Metals Mining subindustry | - | | MSCI ESG Rating | BBB | - | Operating Performance This section details Q3 2022 production volumes, grades, and cost metrics for silver, gold, and base metals, including a mine-by-mine performance analysis Silver and Gold Production Consolidated silver production decreased to 4.54 million ounces and gold production to 128.8 thousand ounces in Q3 2022, reflecting year-over-year declines Silver and Gold Production (000s ounces) | Operation | Q3 2022 Silver | Q3 2021 Silver | YTD 2022 Silver | YTD 2021 Silver | Q3 2022 Gold | Q3 2021 Gold | YTD 2022 Gold | YTD 2021 Gold | | :-------- | :------------- | :------------- | :-------------- | :-------------- | :----------- | :----------- | :------------ | :------------ | | La Colorada | 1,494 | 1,424 | 4,589 | 3,588 | 1.0 | 0.7 | 2.6 | 1.9 | | Huaron | 855 | 888 | 2,635 | 2,675 | 0.3 | 0.2 | 0.7 | 0.8 | | Morococha | — | 547 | 324 | 1,635 | — | 0.3 | 0.1 | 0.8 | | San Vicente | 701 | 606 | 1,823 | 1,908 | — | 0.1 | 0.1 | 0.2 | | Manantial Espejo | 857 | 813 | 2,453 | 2,145 | 6.4 | 8.4 | 17.7 | 22.4 | | Dolores | 560 | 486 | 1,651 | 1,732 | 32.5 | 39.6 | 102.3 | 120.0 | | Shahuindo | 59 | 55 | 184 | 174 | 35.9 | 37.3 | 101.7 | 97.1 | | La Arena | 7 | 9 | 23 | 29 | 21.5 | 22.9 | 62.3 | 79.8 | | Timmins | 3 | 4 | 12 | 12 | 31.1 | 33.0 | 100.7 | 99.6 | | Total | 4,537 | 4,831 | 13,692 | 13,898 | 128.8 | 142.6 | 388.1 | 422.6 | | Total Payable Production | 4,265 | 4,508 | 12,832 | 12,921 | 128.2 | 141.9 | 386.6 | 420.4 | - Morococha was placed on care and maintenance in February 2022, significantly impacting silver and gold production figures[35] Base Metal Production Q3 2022 base metal production saw decreases in zinc and copper, while lead production remained comparable to Q3 2021 Base Metal Production (kt) | Metal | Q3 2022 Production | Q3 2021 Production | YTD 2022 Production | YTD 2021 Production | | :---- | :----------------- | :----------------- | :------------------ | :------------------ | | Zinc | 8.9 | 12.7 | 28.1 | 38.2 | | Lead | 4.4 | 4.2 | 13.7 | 14.0 | | Copper| 0.9 | 2.1 | 4.0 | 6.3 | | Payable Production: | | | | | | Zinc | 7.5 | 10.6 | 23.5 | 31.9 | | Lead | 4.1 | 3.9 | 12.8 | 13.1 | | Copper| 0.7 | 1.9 | 3.4 | 5.3 | Cash Costs and AISC Consolidated Silver Segment Cash Costs increased to $14.62/ounce and AISC to $17.97/ounce, while Gold Segment Cash Costs rose to $1,184/ounce and AISC to $1,614/ounce in Q3 2022 Consolidated Cash Costs and AISC ($ per ounce) | Segment | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :------ | :----- | :------ | :------ | :------- | :------- | | Silver | Cash Costs | $14.62 | $11.92 | $12.21 | $12.28 | | Silver | AISC | $17.97 | $16.30 | $16.09 | $16.51 | | Gold | Cash Costs | $1,184 | $922 | $1,127 | $879 | | Gold | AISC | $1,614 | $1,176 | $1,703 | $1,135 | - Cash Costs and AISC are non-GAAP measures, with detailed descriptions and reconciliations provided in the 'Alternative Performance (Non-GAAP) Measures' section[38][39] Individual Mine Performance This section analyzes Q3 2022 individual mine performance, highlighting production changes, increased Cash Costs and AISC due to inflation and sequencing, and shifts in sustaining capital La Colorada Operation La Colorada's silver production increased by 5% in Q3 2022 due to higher throughput, while Cash Costs slightly decreased and AISC remained comparable La Colorada Key Performance Indicators | Metric | Q3 2022 | Q3 2021 | Change | | :----- | :------ | :------ | :----- | | Silver Production (koz) | 1,494 | 1,424 | +5% | | Zinc Production (kt) | 2.54 | 2.70 | -6% | | Cash Costs ($/silver oz) | $12.43 | $12.65 | -$0.22 | | AISC ($/silver oz) | $18.50 | $18.48 | +$0.02 | | Sustaining Capital ($ thousands) | 8,452 | 7,992 | +$460 | Huaron Operation Huaron's silver production decreased by 4% in Q3 2022, while Cash Costs surged by $6.24/ounce and AISC increased by $8.46/ounce due to inflation and lower payable silver Huaron Key Performance Indicators | Metric | Q3 2022 | Q3 2021 | Change | | :----- | :------ | :------ | :----- | | Silver Production (koz) | 855 | 888 | -4% | | Lead Production (kt) | 2.76 | 1.54 | +79% | | Zinc Production (kt) | 4.09 | 3.49 | +17% | | Copper Production (kt) | 0.78 | 1.44 | -46% | | Cash Costs ($/silver oz) | $10.93 | $4.69 | +$6.24 | | AISC ($/silver oz) | $16.09 | $7.63 | +$8.46 | | Sustaining Capital ($ thousands) | 3,753 | 2,744 | +$1,009| Dolores Operation Dolores saw a 15% increase in silver production but an 18% decrease in gold production in Q3 2022, with Cash Costs rising by $426/ounce and AISC by $873/ounce due to grade and cost issues Dolores Key Performance Indicators | Metric | Q3 2022 | Q3 2021 | Change | | :----- | :------ | :------ | :----- | | Silver Production (koz) | 560 | 486 | +15% | | Gold Production (koz) | 32.5 | 39.6 | -18% | | Cash Costs ($/gold oz) | $1,193 | $767 | +$426 | | AISC ($/gold oz) | $1,899 | $1,026 | +$873 | | Sustaining Capital ($ thousands) | 5,310 | 11,214 | -$5,904| Shahuindo Operation Shahuindo's gold production decreased by 4% in Q3 2022, with Cash Costs increasing by $260/ounce and AISC by $434/ounce due to inflationary pressures and higher capital spending Shahuindo Key Performance Indicators | Metric | Q3 2022 | Q3 2021 | Change | | :----- | :------ | :------ | :----- | | Gold Production (koz) | 35.9 | 37.3 | -4% | | Cash Costs ($/gold oz) | $1,023 | $763 | +$260 | | AISC ($/gold oz) | $1,385 | $951 | +$434 | | Sustaining Capital ($ thousands) | 12,027 | 8,269 | +$3,758| La Arena Operation La Arena's gold production decreased by 6% in Q3 2022, while Cash Costs increased by $198/ounce and AISC by $302/ounce due to inflationary pressures and higher sustaining capital La Arena Key Performance Indicators | Metric | Q3 2022 | Q3 2021 | Change | | :----- | :------ | :------ | :----- | | Gold Production (koz) | 21.5 | 22.9 | -6% | | Cash Costs ($/gold oz) | $1,128 | $930 | +$198 | | AISC ($/gold oz) | $1,542 | $1,240 | +$302 | | Sustaining Capital ($ thousands) | 9,679 | 8,258 | +$1,421| Timmins Operation Timmins' gold production decreased by 6% in Q3 2022 due to lower grades, with Cash Costs increasing by $51/ounce and AISC by $7/ounce, partially offset by productivity gains Timmins Key Performance Indicators | Metric | Q3 2022 | Q3 2021 | Change | | :----- | :------ | :------ | :----- | | Gold Production (koz) | 31.1 | 33.0 | -6% | | Cash Costs ($/gold oz) | $1,382 | $1,331 | +$51 | | AISC ($/gold oz) | $1,625 | $1,618 | +$7 | | Sustaining Capital ($ thousands) | 8,249 | 9,634 | -$1,385| Other Operations (Morococha, San Vicente, Manantial Espejo) Morococha was placed on care and maintenance, San Vicente improved cost performance, and Manantial Espejo saw decreased gold but increased silver production - Morococha mine was placed on care and maintenance in February 2022 to complete the closure of the Amistad processing plant, while strategic alternatives are evaluated[77] - San Vicente's Q3 2022 performance improved with higher silver and lead grades and reduced sustaining capital expenditures compared to Q3 2021[77] - Manantial Espejo saw decreased gold production due to lower gold grade ores after COSE mining completion in April 2022, but silver production increased from higher ore mining rates at the underground operation and Joaquin mine[78] 2022 Annual Operating Outlook This section compares year-to-date performance against the revised 2022 operating outlook, detailing production, costs, and capital expenditure forecasts Actual Relative to August 2022 Revised Operating Outlook YTD 2022 silver production is below the revised outlook, while Gold Segment Cash Costs are above the high-end, and Gold Segment AISC (excl. NRV) is within the revised outlook YTD 2022 Actual vs. August 2022 Revised Operating Outlook | Metric | August 2022 Revised Operating Outlook | YTD 2022 Actual | | :----- | :------------------------------------ | :-------------- | | Silver – Moz | 19.00 - 20.50 | 13.69 | | Gold – koz | 550.0 - 605.0 | 388.1 | | Zinc – kt | 35.0 - 40.0 | 28.1 | | Lead – kt | 15.0 - 17.0 | 13.7 | | Copper – kt | 5.5 - 6.5 | 4.0 | | Silver Segment Cash Costs | 10.70 - 12.20 | 12.21 | | Silver Segment AISC | 14.50 - 16.00 | 16.09 | | Gold Segment Cash Costs | 970 - 1,070 | 1,127 | | Gold Segment AISC (excl. NRV) | 1,450 - 1,550 | 1,472 | - Q3 2022 production results were below the low end of quarterly guidance due to mine sequencing at La Colorada (silver) and open pit mine/leach sequencing at Shahuindo and La Arena (gold)[83] - Management revised full-year silver production to 18.0-18.5 million ounces due to lower production at Dolores and mine sequencing at La Colorada, while the gold production outlook for 2022 was reaffirmed[84][86][87] 2022 Original Operating Outlook for Silver & Gold Production The original 2022 quarterly expectations outlined projected ranges for silver and gold production, Cash Costs, and AISC, based on specific metal price and exchange rate assumptions 2022 Original Quarterly Expectations | Metric | Q1 | Q2 | Q3 | Q4 | FY 2022 | | :----- | :------------- | :------------- | :------------- | :------------- | :-------------- | | Silver Production (Moz) | 4.49 - 4.87 | 4.69 - 5.07 | 4.89 - 5.27 | 4.94 - 5.30 | 19.00 - 20.50 | | Gold Production (koz) | 133.0 - 146.4 | 124.9 - 137.7 | 135.2 - 148.8 | 157.0 - 172.2 | 550.0 - 605.0 | | Silver Segment Cash Costs | 11.10 - 12.75 | 11.20 - 12.80 | 10.55 - 12.00 | 9.80 - 11.30 | 10.70 - 12.20 | | Silver Segment AISC | 17.00 - 18.50 | 16.00 - 17.50 | 13.00 - 14.50 | 12.00 - 13.50 | 14.50 - 16.00 | | Gold Segment Cash Costs | 980 - 1,080 | 990 - 1,090 | 995 - 1,095 | 915 - 1,005 | 970 - 1,070 | | Gold Segment AISC | 1,365 - 1,465 | 1390 - 1,490 | 1,240 - 1,340 | 1,025 - 1,115 | 1,240 - 1,365 | - Forecasts were based on assumptions including silver at $22.50/oz, gold at $1,750/oz, and specific exchange rates for MXN, PEN, ARS, BOB, and CAD[82] Capital Expenditures Relative to Forecast YTD 2022 sustaining capital expenditures are below the revised outlook, while project capital is above due to accelerated progress on the La Colorada Skarn project 2022 Capital Expenditures ($ millions) | Category | August 2022 Revised Operating Outlook | YTD 2022 Actual | | :------- | :------------------------------------ | :-------------- | | Sustaining Capital Sub-total | 240.0 - 250.0 | 161.2 | | Project Capital Sub-total | 55.0 - 60.0 | 52.1 | | Total Capital | 295.0 - 310.0 | 213.3 | - Sustaining capital for Shahuindo and La Arena is expected to be below the revised outlook due to securing lease-like construction loan financing for heap leach facility expansions[90] Project Development Update In Q3 2022, the Company invested $24.6 million in project development, primarily advancing the La Colorada Skarn project and exploration activities Project Development Capital (thousands of USD) | Project | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :------ | :------ | :------ | :------- | :------- | | La Colorada projects | 23,986 | 10,759 | 49,946 | 22,942 | | Timmins projects | 465 | 1,827 | 1,725 | 6,160 | | Other projects | 156 | 164 | 468 | 477 | | Total | $24,607 | $12,750 | $52,139 | $29,579 | - During Q3 2022, the Company invested $24.6 million in project development, primarily focused on exploration and advancing the La Colorada Skarn project, including the construction of a new concrete-lined ventilation shaft[92] Overview of Q3 2022 Financial Results This section provides a comprehensive overview of Q3 2022 and YTD 2022 financial performance, highlighting revenue, net earnings, cash flows, and adjusted earnings Selected Annual and Quarterly Information Q3 2022 financial results show declining revenue, a net loss, decreased operating cash flow, and reductions in total assets and shareholders' equity compared to prior periods Selected Quarterly Financial Results (USD thousands, except per share) | Metric | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2021 | FY 2021 | | :----- | :------ | :------ | :------ | :------ | :------ | | Revenue | $439,888 | $340,469 | $338,889 | $422,170 | $1,632,750 | | Mine operating earnings (loss) | $66,755 | $(31,652) | $(21,788) | $76,039 | $367,938 | | Earnings (loss) for the period attributable to equity holders | $76,517 | $(173,982) | $(71,527) | $14,036 | $97,428 | | Basic (loss) earnings per share | $0.36 | $(0.83) | $(0.34) | $0.06 | $0.46 | | Cash flow from operating activities | $68,758 | $20,835 | $54,418 | $118,098 | $392,108 | | Total assets | $3,540,297 | $3,323,568 | $3,199,559 | $3,518,584 | $3,518,584 | | Total attributable shareholders' equity | $2,683,201 | $2,472,502 | $2,357,600 | $2,631,554 | $2,631,554 | Income Statement: Q3 2022 vs. Q3 2021 Pan American reported a $71.2 million net loss in Q3 2022, a $91.4 million decline from Q3 2021, primarily due to $121.5 million lower revenue and increased production costs Q3 2022 vs. Q3 2021 Net Earnings Variance (USD thousands) | Factor | Impact on Net Earnings | | :----- | :--------------------- | | Net earnings, Q3 2021 | $20,219 | | Total decrease in revenue | $(121,460) | | Total decrease in cost of sales | $785 | | Decreased income tax expense | $48,465 | | Decreased investment loss | $12,610 | | Increased other income | $7,373 | | Decreased gains on sale of mineral properties, plant and equipment | $(29,068) | | Increased care and maintenance costs | $(5,195) | | Increased losses on derivatives | $(4,802) | | Other | $(129) | | Net loss, Q3 2022 | $(71,202) | - Revenue decreased by $121.5 million, with $96.4 million from lower metal quantities sold (gold -21%, silver -12%, copper -66%) and $33.9 million from lower precious metals prices (silver -22%, gold -4%), partially offset by lower direct selling costs and positive settlement adjustments[102][103] - Production and royalty costs increased by $4.5 million, mainly due to $12.6 million from NRV inventory adjustments (increased heap inventory write-downs at Dolores) and $11.0 million from Silver Segment mines (severance provisions, higher quantities sold), partially offset by an $18.7 million reduction in Morococha production costs due to care and maintenance[107] Statement of Cash Flows: Q3 2022 vs. Q3 2021 Q3 2022 operating cash flow decreased by $102.6 million to $54.4 million, while investing activities used $67.7 million and financing activities used $26.4 million Q3 Cash Flow Summary (USD millions) | Activity | Q3 2022 | Q3 2021 | Change | | :------- | :------ | :------ | :----- | | Cash flow from operations | $54.4 | $157.0 | $(102.6) | | Changes in working capital (excl. cash) | $21.6 | $23.0 | $(1.4) | | Investing activities | $(67.7) | $(29.9) | $(37.8) | | Financing activities | $(26.4) | $(25.3) | $(1.1) | - The decrease in operating cash flow was mainly due to a $121.5 million decrease in revenue and a $5.2 million increase in care and maintenance costs for Morococha[108] - Investing activities included $24.6 million in project development capital and $69.1 million spent on mineral properties, plant and equipment (MPP&E)[110] Adjusted Earnings: Q3 2022 vs Q3 2021 Adjusted earnings shifted from a $37.8 million profit in Q3 2021 to a $2.8 million loss in Q3 2022, reflecting a significant decline in operational profitability Adjusted Earnings (Loss) (USD thousands) | Metric | Q3 2022 | Q3 2021 | | :----- | :------ | :------ | | Adjusted (loss) earnings for the period | $(2,755) | $37,780 | | Adjusted (loss) earnings per share | $(0.01) | $0.18 | Income Statement: YTD 2022 vs. YTD 2021 YTD 2022 saw a net loss of $168.0 million, a substantial decline from YTD 2021 earnings, driven by lower revenue, increased production costs, and a $99.1 million impairment charge YTD 2022 vs. YTD 2021 Net Earnings Variance (USD thousands) | Factor | Impact on Net Earnings | | :----- | :--------------------- | | Net earnings, YTD 2021 | $83,898 | | Total decrease in revenue | $(91,334) | | Total decrease in cost of sales | $(187,250) | | Decreased income tax expense | $97,730 | | Increased gains and income from associates | $40,975 | | Decreased investment loss | $36,171 | | Increased impairment charges | $(99,064) | | Decreased gains on sale of mineral properties, plant and equipment | $(34,023) | | Increased care and maintenance costs | $(12,131) | | Increased foreign exchange loss | $(4,781) | | Other | $1,806 | | Net loss, YTD 2022 | $(168,003) | - Revenue decreased by $91.3 million, driven by lower metal quantities sold (gold -7%, zinc -25%, copper -37%) and a 15% decline in silver prices, partially offset by increased silver sales (+8%) and appreciation in zinc and gold prices[119][120] - Production and royalty costs increased by $177.3 million, largely due to $105.2 million from NRV inventory adjustments (Dolores heap inventory write-downs), $59.8 million from Gold Segment mines (higher waste-to-ore rates, grade-driven production decreases), and $36.7 million from Silver Segment mines (higher quantities sold, mine closure severances), partially offset by a $41.1 million reduction from Morococha being on care and maintenance[124] Statement of Cash Flows: YTD 2022 vs. YTD 2021 YTD 2022 operating cash flow decreased by $130.0 million to $144.0 million, with investing activities utilizing $187.2 million and financing activities using $84.3 million YTD Cash Flow Summary (USD millions) | Activity | YTD 2022 | YTD 2021 | Change | | :------- | :------- | :------- | :----- | | Cash flow from operations | $144.0 | $274.0 | $(130.0) | | Changes in working capital (excl. cash) | $(13.0) | $(61.4) | $48.4 | | Investing activities | $(187.2) | $(120.3) | $(66.9) | | Financing activities | $(84.3) | $(60.9) | $(23.4) | - The decrease in operating cash flow was mostly related to a $91.3 million decrease in revenue, a $55.4 million increase in production costs (excluding NRVs), $17.4 million in mine closure severances, and a $14.7 million increase in income taxes paid[126] - Investing activities included $52.1 million of project development capital and $202.3 million spent on mineral properties, plant and equipment[128] Adjusted Earnings: YTD 2022 vs YTD 2021 YTD 2022 adjusted earnings significantly decreased to $22.7 million ($0.11 basic adjusted EPS) from $121.8 million in YTD 2021, reflecting reduced normalized profitability Adjusted Earnings (Loss) (USD thousands) | Metric | YTD 2022 | YTD 2021 | | :----- | :------- | :------- | | Adjusted earnings for the period | $22,734 | $121,839 | | Adjusted earnings per share | $0.11 | $0.58 | Liquidity Position and Capital Resources This section assesses the Company's liquidity, capital resources, and share structure, highlighting changes in cash, working capital, and debt Liquidity and Capital Measures Cash and short-term investments decreased by $54.1 million in Q3 2022, and working capital by $191.4 million YTD, though the Company remains compliant with its undrawn $500 million credit facility Liquidity and Capital Measures (USD thousands) | Metric | Sep 30, 2022 | Jun 30, 2022 | Dec 31, 2021 | Q3 2022 Change | YTD 2022 Change | | :----- | :----------- | :----------- | :----------- | :------------- | :-------------- | | Cash and cash equivalents | $153,079 | $194,829 | $283,550 | $(41,750) | $(130,471) | | Short-term Investments | $34,091 | $46,430 | $51,723 | $(12,339) | $(17,632) | | Cash and Short-term investments | $187,170 | $241,259 | $335,273 | $(54,089) | $(148,103) | | Working Capital | $422,097 | $513,921 | $613,494 | $(91,824) | $(191,397) | | SL-Credit Facility committed amount | $500,000 | $500,000 | $500,000 | — | — | | Shareholders' equity | $2,357,600 | $2,472,502 | $2,631,554 | $(114,902) | $(273,954) | | Total debt | $68,465 | $63,223 | $45,861 | $5,242 | $22,604 | | Capital | $2,238,895 | $2,294,466 | $2,342,142 | $(55,571) | $(103,247) | - The Company's investment objectives for cash balances are capital preservation, liquidity, and maximizing returns, achieved by investing in fixed income instruments and diversifying currencies[134][135] - As of September 30, 2022, the Company was in compliance with all financial covenants under its $500 million revolving SL-Credit Facility, which was undrawn[137] Outstanding Share Amounts As of November 9, 2022, 210.5 million common shares and 0.2 million stock options were outstanding, alongside 313.9 million CVRs convertible into 15.6 million common shares Outstanding Shares and Options as at November 9, 2022 | Instrument | Amount | | :--------- | :----- | | Common shares | 210,538,209 | | Options | 201,774 | | Total | 210,739,983 | - Approximately 0.2 million stock options were outstanding, with exercise prices ranging from CAD $9.76 to CAD $39.48 and a weighted average life of 3.6 years, with 0.2 million options vested and exercisable at an average weighted exercise price of CAD $19.29[142] - 313,883,990 CVRs were outstanding as of September 30, 2022, convertible into 15,600,034 common shares upon the first commercial shipment from the Escobal mine[143] Closure and Decommissioning Cost Provision Estimated future closure and decommissioning costs are based on regulatory requirements and environmental policies, with Q3 2022 revisions driven by inflation, discount rates, and site disturbance - The estimated future closure and decommissioning costs are based on regulatory requirements and the Company's environmental policies, measured using management's assumptions and estimates for future cash outflows, discounted using specific rates[144] Closure and Decommissioning Cost Provision (USD millions) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :----- | :----------- | :----------- | | Total inflated and undiscounted amount | $508.1 | $413.0 | | Inflated and discounted provision (statement of financial position) | $238.0 | $242.9 | - Revisions in Q3 2022 were primarily due to increased inflation rates, higher discount rates from government debt yields, increased site disturbance, and updated estimates from periodic reviews, with accretion of the discount charged as finance expense being $3.7 million in Q3 2022 and $11.1 million YTD 2022[145][146] Related Party Transactions Maverix Metals Inc. ceased to be a related party after March 31, 2022, with no other related party transactions reported for the periods - Maverix Metals Inc. ceased to be a related party after March 31, 2022, as the Company no longer held significant influence, and there were no other related party transactions for the three and nine months ended September 30, 2022 and 2021[147] Alternative Performance Measures (Non-GAAP) This section defines and reconciles various non-GAAP measures, including Cash Costs, AISC, adjusted earnings, total debt, capital, and working capital, providing detailed segment and mine-level breakdowns Per Ounce Measures (Cash Costs and AISC) Cash Costs and AISC are non-GAAP measures used for performance evaluation and industry benchmarking, calculated net of by-product credits, with AISC reflecting the full cost of operating - Cash Costs and AISC are non-GAAP measures without standardized IFRS meanings, used for internal decision-making and industry comparison[148][151] - Silver segment Cash Costs and AISC are calculated net of realized revenues from all metals other than silver, per ounce of silver sold, while Gold segment Cash Costs and AISC are calculated net of realized silver revenues, per ounce of gold sold[150] - AISC is considered a comprehensive measure of the full cost of operating, including exploration and sustaining capital, reflecting the cost of replacing silver and gold ounces[152] Reconciliation of Cash Costs and AISC (Q3 2022 vs Q3 2021) Q3 2022 Silver Segment Cash Costs were $53.1 million ($14.62/oz) and AISC $65.3 million ($17.97/oz), while Gold Segment Cash Costs were $151.5 million ($1,184/oz) and AISC $206.4 million ($1,614/oz) Q3 2022 vs Q3 2021 Cash Costs and AISC Reconciliation (USD thousands, except per ounce) | Metric | Silver Segment Q3 2022 | Silver Segment Q3 2021 | Gold Segment Q3 2022 | Gold Segment Q3 2021 | | :----- | :--------------------- | :--------------------- | :------------------- | :------------------- | | Production costs | $89,271 | $110,733 | $176,475 | $158,695 | | On-site direct operating costs | $91,058 | $109,462 | $159,592 | $157,392 | | Royalties | $3,842 | $3,379 | $3,883 | $5,471 | | Smelting, refining and direct selling charges | $11,595 | $17,149 | $75 | $40 | | Cash Costs before by-product credits | $106,496 | $129,990 | $163,550 | $162,903 | | By-product credits | $(53,367) | $(79,789) | $(12,065) | $(15,859) | | Cash Costs | $53,129 | $50,201 | $151,485 | $147,044 | | NRV inventory adjustments | $(1,787) | $1,270 | $16,883 | $1,185 | | Sustaining capital | $13,444 | $15,532 | $35,266 | $37,376 | | Exploration and project development | — | $1,136 | — | $773 | | Reclamation cost accretion | $528 | $504 | $2,812 | $1,129 | | All-in sustaining costs | $65,314 | $68,643 | $206,445 | $187,507 | | Silver ounces sold (koz) | 3,634 | 4,211 | — | — | | Gold ounces sold (koz) | — | — | 128 | 160 | | Cash costs per ounce sold | $14.62 | $11.92 | $1,184 | $922 | | AISC per ounce sold | $17.97 | $16.30 | $1,614 | $1,176 | Reconciliation of Cash Costs and AISC (YTD 2022 vs YTD 2021) YTD 2022 Silver Segment Cash Costs were $140.1 million ($12.21/oz) and AISC $184.5 million ($16.09/oz), while Gold Segment Cash Costs were $428.8 million ($1,127/oz) and AISC $647.9 million ($1,703/oz) YTD 2022 vs YTD 2021 Cash Costs and AISC Reconciliation (USD thousands, except per ounce) | Metric | Silver Segment YTD 2022 | Silver Segment YTD 2021 | Gold Segment YTD 2022 | Gold Segment YTD 2021 | | :----- | :---------------------- | :---------------------- | :-------------------- | :-------------------- | | Production costs | $279,665 | $277,552 | $545,239 | $384,486 | | On-site direct operating costs | $275,006 | $277,730 | $457,588 | $396,692 | | Royalties | $13,543 | $15,280 | $13,472 | $14,547 | | Smelting, refining and direct selling charges | $41,529 | $52,317 | $153 | $138 | | Cash Costs before by-product credits | $330,079 | $345,327 | $471,214 | $411,376 | | By-product credits | $(190,009) | $(218,123) | $(42,461) | $(52,574) | | Cash Costs | $140,069 | $127,204 | $428,752 | $358,802 | | NRV inventory adjustments | $4,659 | $(179) | $87,651 | $(12,755) | | Sustaining capital | $38,084 | $40,211 | $123,094 | $111,132 | | Exploration and project development | — | $2,289 | — | $2,756 | | Reclamation cost accretion | $1,706 | $1,513 | $8,435 | $3,387 | | All-in sustaining costs | $184,519 | $171,037 | $647,932 | $463,323 | | Silver ounces sold (koz) | 11,469 | 10,361 | — | — | | Gold ounces sold (koz) | — | — | 381 | 408 | | Cash costs per ounce sold | $12.21 | $12.28 | $1,127 | $879 | | AISC per ounce sold | $16.09 | $16.51 | $1,703 | $1,135 | Reconciliation of Payments for Mineral Properties, Plant and Equipment and Sustaining Capital This section reconciles MPP&E payments to sustaining capital, which was $48.7 million for Q3 2022 and $161.2 million for YTD 2022 Reconciliation of MPP&E Payments to Sustaining Capital (USD thousands) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :----- | :------ | :------ | :------- | :------- | | Payments for mineral properties, plant and equipment | $69,073 | $62,190 | $202,326 | $173,331 | | Lease Payments | $4,240 | $3,145 | $11,130 | $8,980 | | Repayment of loans | $1,635 | $850 | $3,596 | $850 | | Investment (non-sustaining) capital | $(26,239) | $(13,277) | $(55,874) | $(31,819) | | Sustaining Capital | $48,710 | $52,908 | $161,178 | $151,342 | - Sustaining capital is included in AISC, while capital related to growth projects or acquisitions (project or investment capital) is excluded, as it is expected to increase future production[164] Silver Segment Cash Costs and AISC by mine (Q3 2022 vs Q3 2021) Q3 2022 Silver Segment mine-by-mine Cash Costs and AISC show decreases at La Colorada and San Vicente, but increases at Huaron and Manantial Espejo Silver Segment Cash Costs and AISC by Mine (Q3 2022 vs Q3 2021) | Mine | Q3 2022 Cash Cost/oz | Q3 2021 Cash Cost/oz | Q3 2022 AISC/oz | Q3 2021 AISC/oz | | :--- | :------------------- | :------------------- | :-------------- | :-------------- | | La Colorada | $12.43 | $12.65 | $18.50 | $18.48 | | Huaron | $10.93 | $4.69 | $16.09 | $7.63 | | Morococha | N/A | $8.41 | N/A | $12.76 | | San Vicente | $12.98 | $16.84 | $13.49 | $21.16 | | Manantial Espejo | $23.69 | $19.33 | $22.80 | $22.71 | | Consolidated Silver Segment | $14.62 | $11.92 | $17.97 | $16.30 | Silver Segment Cash Costs and AISC by mine (YTD 2022 vs YTD 2021) YTD 2022 Silver Segment mine-by-mine Cash Costs and AISC show improvements at Huaron, Morococha, and San Vicente, but increases at La Colorada and Manantial Espejo Silver Segment Cash Costs and AISC by Mine (YTD 2022 vs YTD 2021) | Mine | YTD 2022 Cash Cost/oz | YTD 2021 Cash Cost/oz | YTD 2022 AISC/oz | YTD 2021 AISC/oz | | :--- | :-------------------- | :-------------------- | :--------------- | :--------------- | | La Colorada | $10.49 | $10.20 | $14.57 | $18.50 | | Huaron | $4.97 | $4.08 | $9.84 | $7.26 | | Morococha | $5.68 | $11.22 | $7.08 | $15.22 | | San Vicente | $14.65 | $16.54 | $17.92 | $18.26 | | Manantial Espejo | $20.43 | $21.25 | $23.91 | $23.76 | | Consolidated Silver Segment | $12.21 | $12.28 | $16.09 | $16.51 | Gold Segment Cash Costs and AISC by mine (Q3 2022 vs Q3 2021) All Gold Segment mines experienced increases in both Cash Costs and AISC per ounce in Q3 2022 compared to Q3 2021 Gold Segment Cash Costs and AISC by Mine (Q3 2022 vs Q3 2021) | Mine | Q3 2022 Cash Cost/oz | Q3 2021 Cash Cost/oz | Q3 2022 AISC/oz | Q3 2021 AISC/oz | | :--- | :------------------- | :------------------- | :-------------- | :-------------- | | Dolores | $1,193 | $767 | $1,899 | $1,026 | | Shahuindo | $1,023 | $763 | $1,385 | $951 | | La Arena | $1,128 | $930 | $1,542 | $1,240 | | Timmins | $1,382 | $1,331 | $1,625 | $1,618 | | Consolidated Gold Segment | $1,184 | $922 | $1,614 | $1,176 | Gold Segment Cash Costs and AISC by mine (YTD 2022 vs YTD 2021) All Gold Segment mines experienced increases in both Cash Costs and AISC per ounce in YTD 2022 compared to YTD 2021 Gold Segment Cash Costs and AISC by Mine (YTD 2022 vs YTD 2021) | Mine | YTD 2022 Cash Cost/oz | YTD 2021 Cash Cost/oz | YTD 2022 AISC/oz | YTD 2021 AISC/oz | | :--- | :-------------------- | :-------------------- | :--------------- | :--------------- | | Dolores | $1,071 | $699 | $2,207 | $844 | | Shahuindo | $989 | $759 | $1,289 | $964 | | La Arena | $1,056 | $742 | $1,620 | $1,178 | | Timmins | $1,362 | $1,325 | $1,626 | $1,620 | | Consolidated Gold Segment | $1,127 | $879 | $1,703 | $1,135 | Adjusted Earnings Adjusted earnings, a non-GAAP measure, shifted to a $2.8 million loss in Q3 2022 and decreased to $22.7 million for YTD 2022, reflecting reduced normalized profitability - Adjusted earnings and basic adjusted earnings per share are non-GAAP measures that eliminate items subject to volatility or unrelated to current period operations to better reflect normalized earnings[179] Adjusted Earnings Reconciliation (USD thousands, except per share) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :----- | :------ | :------ | :------- | :------- | | Net (loss) earnings for the period | $(71,202) | $20,219 | $(168,003) | $83,898 | | Total adjustments | $68,447 | $17,561 | $190,737 | $37,941 | | Adjusted (loss) earnings for the period | $(2,755) | $37,780 | $22,734 | $121,839 | | Adjusted (loss) earnings per share | $(0.01) | $0.18 | $0.11 | $0.58 | Total Debt Total debt is a non-GAAP measure used to assess financial leverage, encompassing long-term debt, lease liabilities, and loans payable - Total debt is a non-GAAP measure calculated as the total current and non-current portions of long-term debt (including amounts drawn on the SL-Credit Facility), lease liabilities, and loans payable[182] Capital Capital is a non-GAAP measure calculated as total equity plus total debt less cash and short-term investments, used to evaluate enterprise value - Capital is a non-GAAP measure calculated as total equity plus total debt less cash and cash equivalents and short-term investments, used to evaluate the Company's enterprise value[183] Working Capital Working capital is a non-GAAP measure defined as current assets less current liabilities, used to assess the Company's ability to meet current obligations - Working capital is a non-GAAP measure calculated as current assets less current liabilities, used to evaluate the Company's ability to meet current obligations[184] Risks and Uncertainties This section outlines the Company's exposure to various financial, operational, and external risks, including metal price volatility, legal proceedings, and climate change impacts Financial Risk Exposure The Company is exposed to metal price, credit, interest rate, foreign currency, and liquidity risks, managed through strategies detailed in its 2021 Annual Financial Statements - Pan American is exposed to metal price risk, credit risk, interest rate risk, foreign currency exchange rate risk, and liquidity risk[186] - The Company's exposures and management of these risks are described in Note 8 'Financial Instruments' of the 2021 Annual Financial Statements, with no significant changes during Q3 2022[186] Price Risk Fluctuations in metal and consumable prices impact profitability, with the Company mitigating risk through hedging contracts, resulting in a $1.56 million net derivative loss in Q3 2022 - A decrease in market prices for silver, gold, and other metals, or an increase in consumable prices, could affect profitability and mine viability[187] - The Company uses forward sales or option contracts for base metals and diesel swap contracts to mitigate price risk, and as of September 30, 2022, it had outstanding collars and forward contracts for zinc and diesel[187][188][189] Derivative Gains and Losses on Commodities (USD thousands) | Commodity | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :-------- | :------ | :------ | :------- | :------- | | Zinc (losses) gains | $(23) | — | $1,760 | — | | Copper gains (losses) | — | $261 | — | $(896) | | Diesel gains (losses) | $(624) | $1,149 | $4,214 | $9,126 | | Other | $(913) | — | $(1,129) | — | | Total | $(1,560) | $1,410 | $4,845 | $8,230 | Trading Activities and Credit Risk The Company faces credit risk from concentrate sales, doré refining, spot market sales, and supplier advances, which management actively monitors to avoid concentration - Credit risk arises from concentrate sales (receivable balances of $26.5 million as of Sep 30, 2022), doré refining (precious metal inventory at refineries of $11.6 million), spot market sales, and supplier advances ($16.3 million)[193][194][195][196][198] - Management monitors and assesses credit risk from refining arrangements, concentrate sales, commodity contracts, supplier advances, and customers, and aims to avoid concentration of credit risk[199] Foreign currency exchange rate risk Financial results are exposed to foreign currency fluctuations, mitigated by local currency accumulation and hedging contracts, resulting in a $4.98 million net derivative loss in Q3 2022 - Financial results are subject to changes in the USD value relative to local currencies (PEN, MXN, ARS, BOB, CAD), negatively impacted by strengthening local currencies[201] - The Company mitigates currency exposure by accumulating local currencies and entering into hedging contracts for MXN, PEN, and CAD, with outstanding positions for MXN ($27.0 million), PEN ($39.0 million), and CAD ($114.0 million) as of Sep 30, 2022[201][202][203][204] Derivative Gains and Losses on Currencies (USD thousands) | Currency | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :------- | :------ | :------ | :------- | :------- | | Mexican peso (losses) gains | $394 | $(517) | $750 | $(574) | | Peruvian sol gains (losses) | $(743) | $(1,812) | $961 | $(3,999) | | Canadian dollar gains (losses) | $(4,628) | $(816) | $(5,038) | $98 | | Total | $(4,977) | $(3,145) | $(3,327) | $(4,475) | Claims and Legal Proceedings Pan American is involved in legal proceedings concerning the Escobal mine, La Colorada land ownership, and class action lawsuits against Tahoe Resources, with uncertain outcomes that could materially impact operations - Legal proceedings include claims against PAS Guatemala and the Ministry of Energy and Mines of Guatemala regarding alleged land damage and injunctive relief to prevent future mining activities at the Escobal mine, which is currently suspended[207][208] - Claims in Mexico involve community rights and land ownership over a portion of La Colorada mine's surface lands and a petition to suspend exploration/exploitation work on mining concessions, with the Company confident in its title but acknowledging potential adverse impacts[209] - Ongoing class action lawsuits in the U.S. and Canada against Tahoe Resources Inc. (acquired by Pan American) and its former management allege misrepresentations and seek significant damages[210] COVID-19 and Other Pandemics COVID-19 has significantly impacted operations, workforce, and supply chain, leading to increased costs and uncertain future disruptions, market volatility, and financing challenges - COVID-19 has caused temporary suspensions of operations in Mexico, Peru, Argentina, and Bolivia, and reduced throughput in Canada, impacting employees, contractors, and suppliers[212] - The extent of future impacts is highly uncertain, depending on the duration of outbreaks, severity of variants, and effectiveness of containment actions, with comprehensive COVID-19 protocols expected to continue increasing costs and restricting throughput[213] - Continued spread of COVID-19 could lead to material adverse effects on global/regional economies, the Company's business, supply chain, demand for products, stock markets, ability to raise capital, and financing costs[214] Climate Change Climate change poses significant risks, including increased regulatory costs, negative market perception, and physical risks like extreme weather, which could disrupt operations - Climate change can impact the business through current and emerging policies and regulations on GHG emissions and energy efficiency, leading to additional transition costs and regulatory complexity[215] - Concerns about climate change may negatively affect the Company's share price and reputation, as institutional investors may divest from industries with perceived environmental impacts[216] - Physical risks of climate change, such as extreme weather, resource shortages, and changes in rainfall, could damage facilities, disrupt access/shipping, impact personnel safety, cause supply shortages, and lead to temporary or permanent cessation of operations[217][218] Summary of Significant Accounting Policies, Standards and Judgements This section confirms consistency of accounting policies, evaluates new standards, and highlights the reliance on critical accounting estimates and assumptions - The accounting policies used for the unaudited condensed interim consolidated financial statements are consistent with those in the Company's 2021 Annual Financial Statements[219] - Management is evaluating new accounting standards and interpretations but does not expect them to have a material impact on the consolidated financial statements upon adoption[220] - The preparation of financial statements requires management to make critical accounting estimates and assumptions that are uncertain and could materially impact the financial statements, with these estimates continuously reviewed using the most current information[221] Subsequent Events Pan American announced a definitive offer to acquire Yamana Gold Inc. on November 4, 2022, a transaction expected to significantly boost production and financial position - On November 4, 2022, Pan American and Agnico Eagle Limited announced a definitive binding offer to acquire Yamana Gold Inc., with Yamana selling its Canadian assets to Agnico Eagle, and Yamana subsequently terminated its agreement with Gold Fields and entered into an arrangement agreement with Pan American and Agnico Eagle on November 8, 2022[223] - The Pan American – Agnico Proposed Transaction involves Pan American acquiring Yamana shares, $1.0 billion in cash from Agnico Eagle, and approximately 36.1 million Agnico Eagle common shares, with Pan American providing Yamana with $150 million towards a $300 million termination fee to Gold Fields[223][230] - If completed, the transaction is expected to contribute low-cost production growth, long-life mineral reserves, increase silver production by ~50% and gold production by ~100%, and enhance Pan American's financial position, with Pan American having secured a commitment to increase its credit facilities from $500 million to $1,250 million to support potential financial requirements[225][226] Disclosure Controls and Procedures and Technical Information This section addresses the effectiveness of disclosure controls and internal control over financial reporting, acknowledges inherent limitations, and confirms the review of technical information by Qualified Persons Disclosure controls and procedures (DC&P) The CEO and CFO concluded that the Company's Disclosure Controls and Procedures were effective as of December 31, 2021, ensuring timely and accurate information disclosure - The CEO and CFO are responsible for establishing and maintaining adequate DC&P[229] - As of December 31, 2021, the CEO and CFO concluded that the Company's DC&P were effective in ensuring information required for reports is recorded, processed, summarized, and reported timely and communicated to management[230] Internal control over financial reporting (ICFR) The CEO and CFO concluded that Internal Control over Financial Reporting was effective as of December 31, 2021, with no material changes during Q3 or YTD 2022 - The CEO and CFO are responsible for establishing and maintaining adequate ICFR[232] - Based on their evaluation, the CEO and CFO concluded that the Company's ICFR was effective as of December 31, 2021[232] - There has been no material change in the Company's ICFR during the three and nine months ended September 30, 2022[234] Inherent limitations of controls and procedures All internal control systems have inherent limitations, providing only reasonable assurance that control objectives are met and may not always prevent or detect misstatements - All internal control systems have inherent limitations, meaning even effective systems may not prevent or detect misstatements on a timely basis, providing only reasonable assurance[235] Technical Information Scientific and technical information in this MD&A has been reviewed and approved by Qualified Persons, with further details available in the Company's Annual Information Form and Form 40-F - Scientific and technical information in this MD&A has been reviewed and approved by Martin Wafforn, P.Eng., and Christopher Emerson, FAusIMM, both Qualified Persons as defined in NI 43-101[236] - More detailed technical information on the Company's material mineral properties is available in its Annual Information Form and Form 40-F[237] Cautionary Note This section provides cautionary notes regarding forward-looking statements and the differences in mineral reserve and resource reporting for U.S. investors Cautionary Note Regarding Forward-Looking Statements and Information The MD&A contains forward-looking statements based on current assumptions, subject to significant operational, economic, and regulatory uncertainties, cautioning against undue reliance due to inherent risks - The MD&A contains 'forward-looking statements' and 'forward-looking information' related to future financial/operational performance, production forecasts, costs, capital expenditures, metal prices, foreign exchange rates, impacts of COVID-19, legal proceedings, project development, and ESG goals[240] - These statements are based on assumptions and estimates, including the impact of inflation, COVID-19 management, mineral grades, metal prices, currency exchange rates, and regulatory approvals, which are subject to significant uncertainties[241][242] - Known and unknown risks, such as fluctuations in metal prices, currency markets, technological/operational risks, government changes, environmental hazards, and creditworthiness of counterparties, may cause actual results to differ materially[243] Cautionary Note to U.S. Investors Concerning Estimates of Mineral Reserves and Mineral Resources U.S. investors are cautioned that mineral reserve and resource estimates adhere to Canadian NI 43-101 standards, which differ significantly from U.S. SEC requirements and may not be comparable - Mineral reserve and resource estimates are disclosed in accordance with Canadian NI 43-101 standards, which differ significantly from U.S. SEC requirements[244] - Information concerning mineralization, deposits, mineral reserve, and mineral resource information may not be comparable to similar information disclosed by U.S. companies[244]