Pan American Silver(US:PAAS)2023-05-11 18:16Financial Data and Key Metrics Changes - Revenue in Q1 2023 was $390.3 million, with net earnings of $16.5 million or $0.08 per share, and adjusted earnings of $21.2 million or $0.10 per share [13][38] - Cash flow from operations totaled $51.3 million, with a cash and short-term investment balance of $513 million [13][38] - The company assumed two senior notes totaling $783 million as part of the Yamana acquisition, with $325 million drawn on its credit facility [5] Business Line Data and Key Metrics Changes - Silver segment production costs were impacted by restricted mining rates in the high-grade zone of the La Colorada mine, with all-in sustaining costs at $14.13 per ounce [38] - Gold segment production costs were $1,196 per ounce, with a significant decrease in all-in sustaining costs due to a large net realizable value (NRV) inventory adjustment at Dolores [39] Market Data and Key Metrics Changes - The company expects to produce between 21 million to 23 million ounces of silver and 870,000 to 970,000 ounces of gold in 2023 [41] - All-in sustaining costs for silver are projected to be between $14 to $16 per ounce, and for gold between $1,275 to $1,425 per ounce [41] Company Strategy and Development Direction - The company is focused on integrating the Yamana assets and is on track to realize $40 million to $60 million in annual synergies [7] - Capital allocation priorities include reducing debt, investing in growth, and providing dividends to shareholders, with a dividend of $0.10 per share announced for Q1 [5][13] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing inflationary pressures but emphasized operational excellence leading to results ahead of expectations [38] - The integration of Yamana assets is progressing well, and the company is optimistic about future cash flow generation from the expanded portfolio [3][7] Other Important Information - The company is planning to release its 2022 sustainability report later in Q2, which will include performance metrics for both original and acquired assets [15] - The consultation process for the Escobal project is ongoing, with meetings scheduled to continue through the summer [82] Q&A Session Summary Question: Impact of Mexican peso on costs - Management acknowledged the strong performance of the Mexican peso and its impact on costs, with a hedge program in place covering approximately 24% of Mexican peso costs [20][21] Question: Federal mining market changes in Mexico - Management is monitoring the recent amendments to federal mining laws, noting that they primarily apply to new concessions and will not significantly impact existing operations like La Colorada Skarn [22][23] Question: Back-end weighted production guidance - Management explained that production is back-end weighted due to mine sequencing, with higher ore flow expected in Q4 [24][26] Question: Cash costs and NRV adjustments - Cash costs for the silver segment were $12.19 and for the gold segment were $1,120, with NRV adjustments positively impacting costs [83] Question: Asset disposals post-Yamana acquisition - Management confirmed that there will be disposals of properties as part of the ongoing review of the newly acquired assets [84] Question: Care and maintenance costs visibility - Management indicated that care and maintenance costs are necessary for projects like Escobal and MARA, with potential for adjustments as projects progress [92]