Pan American Silver Corp. (PAAS) Earnings

Management highlights

- Financial and Shareholder Return Performance * Generated $344 million in attributable free cash flow in Q2 2026 * Returned a record $300 million to shareholders in Q2 via share repurchases and dividends, bringing 2026 year-to-date repurchases to over 7 million shares under the normal course issuer bid * Declared a Q2 dividend of 18.4 cents per common share, and remains on track to meet the full-year target of returning up to $1 billion to shareholders * Renewed and expanded the 5-year senior unsecured revolving credit facility, doubling its size to $1.5 billion and adding a $750 million accordion feature; the facility remains undrawn, supporting $3.2 billion in total available liquidity - Operational Performance and Project Progress * Silver production hit the high end of Q2 guidance, driven by strong performance at La Clarada and Juanicipio * Reached the key milestone of the first cut of the 588m decline at La Colorado in early August to access the SCARN deposit, with engineering for material handling and ventilation systems progressing, expected to be finalized before year-end * Advancing the first phase of the Timmins Camp project, including the Bell Creek shaft extension and exploration drifts; updated mineral resource/reserve estimates will be released in Q3 2026, with a Preliminary Economic Assessment (PEA) planned for H1 2027 * At Jacobina, implemented new safety measures to address long-term seismic risk from legacy open stoping mining, including leaving larger pillars, reducing production in high-grade areas, and accelerating development of new mining zones; ongoing evaluation of Avoca-type mining with backfill, and process plant upgrades are on track for commissioning in 2026 * The ILO 169 consultation process for Escobar continues with multiple government and stakeholder meetings held, but no timeline for conclusion or restart has been set * Actively managing El Nino-related extreme rain impacts at operations in Chile and Argentina, with safety as the top priority, and has implemented mitigation for disrupted transport and site access

Guidance

- Full-year 2026 silver production guidance of 25 to 27 million ounces is reaffirmed - Full-year 2026 gold production guidance range of 700,000 to 750,000 ounces is retained, but full-year production is now expected to land at the low end of the range; the update reflects 10,000 ounces lower expected production at both Jacobina (due to mining sequencing changes for seismic risk management) and El Peñon (due to lower mineral continuity in secondary gold-rich structures) - Q3 2026 gold production guidance is revised 13,000 to 18,000 ounces lower than the prior low-end range of 178,500 to 192,000 ounces - Full-year 2026 silver and gold AISC guidance and sustaining capital guidance are reaffirmed - El Peñon 2026 silver production guidance of 3.65 to 3.95 million ounces is reaffirmed - 2026 income tax paid guidance is revised upward to a range of $585 million to $635 million, due to higher 2025 profitability and higher 2026 metal prices - 2026 total sustaining capital guidance of 240 to 255 million is maintained; lower first half spending is attributed to timing delays from weather and contractor mobilization issues, with spending expected to pick up in the second half

Segment performance

Silver segment: Attributable Q2 2026 silver production was 6.5 million ounces, at the high end of quarterly guidance. All-in sustaining costs (AISC) were $17.80 per ounce, driven by inventory drawdown at La Clarada, higher royalties at LaGuardia, unfavorable exchange rates, and higher labor costs. For the first half of 2026, silver AISC was below the low end of the full-year guidance range. Gold segment: Attributable Q2 2026 gold production was ~166,000 ounces, below the February quarterly outlook. AISC was $1,984 per ounce, slightly above quarterly outlook due to lower production and labor/materials inflation. For the first half of 2026, gold AISC was in line with the full-year guidance range. Overall firm financials: Total revenue was $1.1 billion; total attributable revenue (including 44% interest in Juanicipio) was $1.3 billion. Net earnings were $305 million ($0.72 per share), adjusted earnings were $0.73 per share. Operating cash flow was $320 million; attributable operating cash flow was $418 million, and attributable free cash flow was $344 million. End-of-quarter cash and short-term investments totaled $1.8 billion, with total available liquidity of ~$3.2 billion.

Risks & headwinds

- Seismic risk at Jacobina: Long-term open stoping mining without backfill has resulted in ongoing seismic activity; while no injuries or infrastructure damage have occurred, management implemented production adjustments to reduce risk, leading to lower near-term production - El Nino-related weather disruption: Extreme rainstorms in Chile and Argentina have disrupted site access and transport routes, particularly at El Peñon, with potential for further disruptions across the region through the end of 2026 - Regulatory and stakeholder risk at Escobar: The ILO 169 consultation process remains ongoing with no set timeline for conclusion, leaving the mine restart date uncertain - Commodity price volatility: Metal prices directly impact byproduct credits and overall cost levels, creating uncertainty around full-year AISC performance - Foreign exchange volatility: Most operating costs are denominated in local currencies, so strengthening of local currencies relative to the US dollar increases reported production costs - Macroeconomic and labor disruptions: National strikes in Bolivia and competitive contractor markets in Peru and Mexico have caused capital spending delays, and labor and materials inflation has pushed up production costs across operations - Geological uncertainty: Lower than expected mineral continuity in secondary gold-rich structures at El Peñon reduced 2026 gold production guidance

Analyst Q&A

• Q: The 2026 gold guidance has been cut due to Jacobina's seismic issues. What is the long-term impact on Jacobina's sustaining production around 200,000 ounces per year, and will this impact 2027 output? /

  A: Management notes that the seismic activity has not caused infrastructure damage or injuries, and the production cut is purely a short-term, precautionary adjustment. Seismic risk has built up over 40 years of open stoping mining, and management is accelerating the pre-planned transition to backfill mining, which will let the company recover pillar ore long-term. Reserves are not lost, production is just postponed, and there is no material long-term impact: Jacobina has a reserve life extending into the 2050s with ongoing exploration success.

• Q: Can management confirm that the 2026 target of returning up to $1 billion to shareholders via buybacks and dividends remains in place? /

  A: The target remains fully in place, and the company is currently ahead of plan after catching up on slow Q1 buyback activity. The company bought back more than 7 million shares year-to-date, with 2 million additional shares repurchased in July. The final total will vary slightly with share price, but the program is stronger than ever, aligned with the company's enhanced shareholder return framework.

• Q: Was there a specific recent seismic event that prompted the Jacobina mining method re-evaluation, and does the long-term potential for production scaling at Jacobina remain intact? /

  A: Seismic activity is ongoing at the mine, and the adjustment was a precautionary update to improve safety. There is no change to the long-term expansion plan: the team is continuing optimization work, including plant upgrades, a transition to filtered tailings, and backfill implementation. Test work for backfill is complete, and the team is evaluating options to either upgrade the existing maxed-out plant or build a new larger state-of-the-art facility to support future production increases, with all work progressing as planned.

• Q: The Q2 effective tax rate was 37%, higher than the first half 32% average. Is 37% the new normal, and could taxes be even higher than the revised guidance if commodity prices remain elevated? /

  A: Quarter-over-quarter tax rate variability is normal, driven by true-ups for prior periods; the full-year effective tax rate is still tracking to the expected low 30s, which remains the baseline expectation. The higher Q2 tax payments are driven by 2025's Q4 profit spike and withholding taxes on repatriated foreign cash, which are already reflected in the revised $585-$635 million 2026 tax paid guidance. If commodity prices stay elevated, taxes could move higher, but the current range accounts for current spot prices.

• Q: Why has El Peñon's gold guidance been cut but silver guidance maintained, given historically consistent gold-silver grading at the mine? /

  A: El Peñon has distinct silver-rich and gold-rich ore lanes that are blended for production. Lower than expected continuity in secondary gold-rich structures led management to remove those structures from the near-term mine plan for additional drilling. To replace that production, the company is currently mining more silver-rich, lower-gold ore, so silver output remains on track while gold output is lower for 2026. Exploration drilling will continue to evaluate the secondary structures, and any successful results will add them back to reserves.