Pan American Silver(US:PAAS)2021-11-10 20:27Financial Data and Key Metrics Changes - Revenue in Q3 reached a record $460.3 million, with a realized price of $24.15 per ounce of silver and $1,782 per ounce of gold [5][6] - Net earnings were $20.2 million or $0.10 per share, impacted by non-cash mark-to-market losses of $25.3 million and income tax expense of $50.4 million [5][6] - Adjusted earnings were $37.8 million or $0.18 per share, with cash flow from operations of $157 million [6][17] Business Line Data and Key Metrics Changes - Silver production was 4.8 million ounces in Q3, with gold production at 142,600 ounces [7][9] - Silver segment cash costs were $11.92 per ounce, with all-in sustaining costs at $16.30 per ounce sold [11][12] - Gold segment cash costs were estimated between $825 to $925 per ounce, with all-in sustaining costs between $1,135 to $1,250 [15] Market Data and Key Metrics Changes - The company revised its 2021 guidance to produce 19 million to 20 million ounces of silver and 560,000 to 588,000 ounces of gold due to lower-than-expected grades and production [13][14] - Total available liquidity was $815 million, including $500 million under a credit facility and $315.4 million in cash and short-term investments [17] Company Strategy and Development Direction - The company is focusing on high-return projects and returning cash to shareholders through dividends, having increased dividends three times over the past 18 months [17] - Plans to expand the scope of the preliminary economic assessment for the La Colorada Skarn project due to exceptional drill results [18][19] - The company is exploring larger-scale mining methods, such as sub-level caving, to enhance production capabilities [56][59] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges from COVID-19, including labor shortages and cost inflation, but expects improvements in operating performance in Q4 [13][21] - The company anticipates a meaningful recovery in production and operational efficiency as COVID-related impacts diminish [21] - Management expressed optimism about the potential for M&A activity in the silver space, similar to trends seen in the gold sector [49][51] Other Important Information - The company announced a quarterly dividend of $0.10 per share and plans to evaluate future dividend levels based on growth project funding requirements [17][18] - The CFO, Rob Doyle, announced plans to retire effective March 31, 2022, with a succession plan in place [22] Q&A Session Summary Question: Impact of ventilation upgrades on costs at La Colorada - Management indicated that costs were impacted by ventilation upgrades and long-haul mining investments, with expectations for costs to ease in the coming quarters [25][28] Question: Guidance for 2022 and inflationary pressures - Management is currently budgeting for 2022 and expects to provide guidance in January, noting that inflationary pressures are primarily from labor and COVID-related costs [35][39] Question: Update on Dolores and inventory recognition - Management explained that inventory build-up at Dolores is due to construction delays, with expectations for recognition of production in 2022 [44][46] Question: M&A activity in the silver space - Management believes there will be consolidation in the industry, with a focus on finding strong targets for acquisition [49][51] Question: Timing for La Colorada Skarn project - Management stated that further drilling is needed to understand the resource better, and timing for the release of the current preliminary assessment is uncertain [109]