Pan American Silver(PAAS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Record attributable free cash flow of $251.7 million in Q3 2025, benefiting from increased silver and gold prices and solid cost performance [4] - Attributable revenue reached a record of $884.4 million, with net earnings of $169.2 million or $0.45 basic earnings per share [5] - Adjusted earnings were $181 million or $0.48 basic adjusted earnings per share, with attributable cash flow from operations at a record of $323.6 million [5][6] - Cash and short-term investments totaled $910.8 million, with total available liquidity of $1.7 billion [6] Business Line Data and Key Metrics Changes - Attributable silver production in Q3 was 5.5 million ounces, including 580,000 ounces from Juanicipio's one-month contribution [7] - Silver segment cash costs were $10.41 per ounce, and all-in sustaining costs were $15.43 per ounce, lower than Q2 2025 [9] - Attributable gold production was 183,500 ounces, with gold segment cash costs at $1,325 per ounce and all-in sustaining costs at $1,697 per ounce [10] Market Data and Key Metrics Changes - The company raised its attributable silver production guidance to 22-22.5 million ounces and lowered silver segment all-in sustaining costs to $14.50-$16 per ounce [11] - The quarter benefited from high byproduct gold production and prices, contributing to lower costs [9] Company Strategy and Development Direction - The acquisition of MagSilver is expected to lower costs and improve margins, with a strategic focus on the Juanicipio mine [4] - Development plans at La Colorada include a phased approach to enhance project value, with a PEA expected in Q2 2026 [12][28] - Optimization studies at Jacobina aim to improve operational efficiencies and mine life, with several projects underway [13][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving Q4 guidance despite challenges in Q3, with expectations for improved gold production [25][31] - The company anticipates a strong Q4 report and plans to provide detailed guidance for 2026 early next year [55] Other Important Information - The board approved an increase in the dividend to $0.14 per common share for Q3 2025, reflecting strong cash flow generation [6][48] - The company is actively engaged in partnership discussions for the La Colorada Scarn project, with significant resource potential identified [12][26] Q&A Session Summary Question: Guidance increase related to Juanicipio - Management confirmed that the guidance for Juanicipio remains similar to what MagSilver had previously, with no significant changes expected [16] Question: Silver grades and mining strategy at Huarón - Management explained that the current strategy involves increasing development to prepare high-grade stopes, which may lead to more diluted ore in the short term [17][18] Question: Optimization studies at Jacobina - Management detailed ongoing optimization efforts at Jacobina, focusing on plant efficiency and tailings management to enhance production and reduce costs [19][20] Question: Gold production challenges and guidance - Management maintained confidence in achieving gold production guidance for Q4 despite challenges faced in Q3 [25] Question: Partnership discussions for La Colorada Scarn - Management indicated that discussions are advanced but too early to share specific details publicly [26] Question: Zinc and lead price performance - Management discussed the factors influencing base metal prices, noting that zinc is included in critical minerals lists, which supports its price [29] Question: Technical issues at various mines - Management acknowledged ongoing technical issues but expressed optimism about resolving them and improving production in Q4 [31][33] Question: Accounting for Juanicipio - Management offered to discuss the accounting details for Juanicipio offline, noting complexities in reporting [42][43] Question: Dividend policy and future expectations - Management clarified that the recent dividend increase was a one-time decision based on strong cash flow, with future dividends to be evaluated based on performance [48][49]