Pan American Silver Corp. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Record top line revenue of $811.9 million, net earnings $189.6 million ($0.52 per share), record mine operating earnings $273.3 million, adjusted earnings $155.4 million ($0.43 per share), record cash flow from operations before noncash working capital changes $287.9 million, operating cash flow $293.4 million, free cash flow $233 million, cash balance at $1.1 billion at end of Q2.
• Acquisition of MAG Silver: Proposed acquisition of MAG Silver approved by shareholders, awaiting Mexican antitrust clearance, expected to close in H2 2025. Juanicipio silver asset to boost production, free cash flow, and reduce consolidated Silver segment costs.
• Capital Allocation: Focus on growing business, investing $73.7 million in sustaining and project capital in Q2. Returning capital to shareholders with 20% dividend increase to $0.12 per common share and repurchasing ~0.5 million common shares in Q2.
• Operations: La Colorada improved with new infrastructure. Jacobina invested in optimization, plant availability. Skarn project partnerships progressing. Escobal consultation process ongoing between Guatemalan Ministry of Energy and Mines and Xinka Parliament.

Segment Performance

• Silver Segment: Produced 5.1 million ounces in Q2. All-in sustaining costs were $19.69 per ounce (low end of guidance). La Colorada led with improved throughput (average 2,130 tonnes per day vs target 2,000 tonnes per day) and lower cash costs. Revenue contribution from Silver segment is significant due to high production and favorable pricing.
• Gold Segment: Produced 178,700 ounces in Q2 (slightly below guidance). Impacted by lower throughput and grades at Timmins, El Peñon. Shahuindo and Dolores partially offset impacts. First half gold production in line with guidance, with more weighted to Q4 2025.

Guidance

• Maintained 2025 guidance for silver production and costs. Gold production initially slightly below guidance, now more weighted to Q4 2025. Anticipate gold production to come in within guidance. Confident in meeting silver and cost targets. Acquisition of MAG Silver expected to boost production and free cash flow immediately.

Risks

• Geotechnical issues and grade reconciliation swings in gold operations (Timmins, El Peñon, etc.) lingering into Q3 but expected to improve. Consultation process at Escobal could have potential impacts if not resolved smoothly.

Question and Answer

Q: Ovais Habib asked about issues in Q2 with Cerro Moro, El Peñon, Timmins, Minera Florida and confidence in meeting gold guidance.

A: Steven Luis Busby said issues are being addressed, some linger into Q3, but confident in meeting guidance as swings are quarterly and drill data supports reserves.

Q: Ovais Habib asked about noncore asset sales and types of assets.

A: Michael Steinmann said working on smaller noncore assets, mostly exploration assets, with a few expected to close by year-end.

Q: Fahad Tariq asked about Escobal consultation process details and Pan American's involvement.

A: Sean McAleer said government meetings with Xinka Parliament ongoing, Pan American will participate in future meetings.

Q: Lawson Winder asked about Skarn update timing, monetization potential.

A: Michael Steinmann said reserve and resource updates coming soon, including high-grade veins, with partnerships and monetization discussions ongoing.

Q: Cosmos Chiu asked about sustaining CapEx budget and where to spend more.

A: Scott Campbell said major projects had delays but will be in line with forecast, full speed ahead.

Q: Cosmos Chiu asked about dividend mechanics and MAG transaction impact; antitrust clearance status.

A: Michael Steinmann said dividend policy remains, MAG transaction awaiting Mexican antitrust clearance, expected to close soon.