Pan American Silver(US:PAAS)2021-10-29 18:05Financial Data and Key Metrics Changes - The company recorded net earnings of $27 million or $0.03 per share, and on an adjusted basis, $69.7 million or $0.07 per share, with a significant increase in cash flows quarter-over-quarter [17][23] - Free cash flow increased by 59% to $81.6 million compared to Q2 [23] - The company expects Q4 production to exceed 270,000 GEO, positioning it to achieve its annual guidance of 1 million GEO production for the year [18] Business Line Data and Key Metrics Changes - Canadian Malartic continued strong performance with higher-grade and recoveries compared to last year [20] - Jacobina achieved significant progress on Phase 2 expansion, with a new daily throughput of over 8,800 tons per day [11] - Cerro Moro's GEO production increased by 50% from the second quarter, with expectations for continued strong performance in Q4 [21] - El Peñon saw a 19% increase in GEO production quarter-over-quarter [22] Market Data and Key Metrics Changes - The company reported that September was the lowest cost month of the quarter, with expectations for lower costs to continue into Q4 [19] - Inflationary pressures from consumables were noted, with an impact of approximately $20 per ounce above planning assumptions [18][30] Company Strategy and Development Direction - The company is focused on advancing its projects, including the Odyssey project and the Jacobina expansion, with a long-term vision for growth [10][12] - The company aims to maintain high inventory levels to mitigate supply chain disruptions and inflation impacts [66] - The MARA project is highlighted as a low capital intensity copper project with significant potential value [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving production guidance and noted that inflationary pressures are being managed effectively [18][30] - The company is optimistic about the future, with plans for further exploration and development updates expected in early 2022 [50][51] Other Important Information - The company has implemented a climate strategy and human rights risk assessments at all sites [6][8] - The company repaid $720 million of existing debt and completed a $500 million senior notes offering, reducing gross debt by about $220 million [23] Q&A Session Summary Question: Confirmation of ASIC reduction in Q4 - Management confirmed that ASIC is expected to be 5% to 10% lower quarter-over-quarter in Q4 [27] Question: Inflation impact on 2022 - Management indicated that inflation impacts will carry over into 2022, but efforts are being made to mitigate these effects [28][29] Question: Measures to mitigate inflation - The company has increased inventory and is reviewing contracts to manage costs effectively [30][31][32] Question: Value of Cerro Moro - Management discussed the potential value of the MARA project and the steps being taken to enhance its value [36][38][39] Question: London listing performance - Management acknowledged that establishing a presence in London is a long-term commitment and they are actively engaging with potential investors [42][43] Question: Inflationary pressures in 2022 - Management confirmed that inflationary pressures are expected to come from fuel and consumables, but they are well-positioned to manage these costs [46][48] Question: Future exploration updates - The next major updates are expected in February, including exploration results and project advancements [50][51] Question: Inventory management going into 2022 - The company plans to maintain high inventory levels for the foreseeable future [66] Question: Labor market pressures - Management reported no significant labor pressures at current operations, with successful recruitment efforts [70][71] Question: COVID-19 impact on employee availability - The company noted improved employee availability and vaccination rates, supporting strong operational performance [72] Question: Jacobina Phase 3 permitting - Management is optimistic about obtaining permits for Phase 3 and has requested permits for 10,000 tons per day [77] Question: Canadian Malartic investment strategy - Management confirmed that the balance sheet is strong, allowing for continued investment and shareholder returns [78][79]