VANCOUVER, Jan. 11, 2018 /CNW/ - Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAAS) ("Pan American Silver", or the "Company") today announced preliminary operating results for the fourth quarter ("Q4") and full year 2017, with annual silver production within the targeted range and consolidated cash costs per payable ounce of silver, net of by-product credits, ("Cash Costs") below guidance. Today, the Company also provided its 2018 guidance and three-year outlook for production and costs.
"The Company achieved decade-low consolidated cash costs of $4.55 per ounce in 2017, with silver production as targeted of 25 million ounces, exemplifying the high quality of our silver mining assets. With the completion of our mine expansions in Mexico in 2017, we are now focused on ramping up production from these long-life mines to design capacity rates. Over the next three years, we expect silver production to grow at an annual compounded rate of 8%, reaching 30.5 to 33.0 million ounces by 2020," said Michael Steinmann, President and Chief Executive Officer of the Company.
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All amounts are expressed in US$ unless otherwise indicated. Results are unaudited and could change based on final audited financial results. This news release contains forward-looking information about expected future events and financial and operating performance of the Company. Readers should refer to the risks and assumptions set out in the "Cautionary Note Regarding Forward-Looking Statements and Information" at the end of this news release.
This news release refers to measures that are not generally accepted accounting principle ("non-GAAP") financial measures, including cash costs per payable ounce of silver ("Cash Costs") and all-in sustaining costs per silver ounce sold ("AISCSOS"). Please refer to the section titled "Alternative Performance (non-GAAP) Measures" at the end of this news release for further information on these measures.
Consolidated Preliminary 2017 Operating Results
|
2017 Guidance(1) |
2017 Actual |
Fourth Quarter 2017 |
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Production |
|||||
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Silver (million ounces) |
24.5 - 26.0 |
25.0 |
6.6 |
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Gold (thousand ounces) |
155.0 - 165.0 |
160.0 |
43.7 |
||
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Zinc (thousand tonnes) |
56.5 - 58.5 |
55.3 |
14.7 |
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Lead (thousand tonnes) |
19.0 - 20.0 |
21.5 |
5.4 |
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Copper (thousand tonnes) |
8.8 - 9.3 |
13.4 |
3.0 |
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Cash Costs(2) ($/ounce) |
6.45 - 7.45 |
4.55 |
3.18 |
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(1) |
Guidance provided in the Company's news release dated January 12, 2017. During 2017, Pan American revised its guidance for 2017 Cash Costs, Consolidated All-In Sustaining Costs per Silver Ounce Sold ("AISCSOS") and project capital in its news release dated August 9, 2017. On November 8, 2017, the Company revised its guidance for 2017 base metal production and further reduced its estimate for Cash Costs. |
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(2) |
Preliminary Cash Costs per payable ounce of silver, net of by-product credits. Average by-product metal prices for 2017 were: Au $1,257/oz, Zn $2,896/tonne, Pb $2,317/tonne, and Cu $6,166/tonne. Cash Costs is a non-GAAP measure and readers should refer to the information under the heading "Alternative Performance (non-GAAP) Measures" at the end of this news release for more information. |
Preliminary 2017 Operating Results by Mine
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Mine |
Silver Production |
Gold Production |
Cash Costs ($/ounce)(1) |
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La Colorada |
7.1 |
4.3 |
2.08 |
||||
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Dolores |
4.2 |
103.0 |
(1.65) |
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Alamo Dorado |
0.6 |
2.1 |
16.49 |
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Huaron |
3.7 |
1.1 |
1.35 |
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Morococha (92.3%)(2) |
2.6 |
3.5 |
(5.34) |
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San Vicente (95%)(2) |
3.6 |
0.5 |
11.85 |
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Manantial Espejo |
3.1 |
45.3 |
18.25 |
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Total(3) |
25.0 |
160.0 |
4.55 |
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(1) Cash Costs is a non-GAAP measure and readers should refer to the information under the heading "Alternative Performance (non-GAAP) Measures" at the end of this news release for more information. |
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(2) Reflects Pan American's ownership in the operation. |
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(3) Totals may not add up due to rounding. |
2017 Operating Highlights:
- Consolidated silver production of 25.0 million ounces was within the original guidance range provided in January 2017 (the "Original Guidance") of 24.5 million to 26.0 million ounces.
- Consolidated gold production of 160 thousand ounces was within the Original Guidance range of 155 thousand to 165 thousand ounces. Annual record set for gold production at Dolores.
- Record zinc and lead production with lead production beating the Company's Original Guidance and zinc production slightly below the Original Guidance. Copper production beat the Company's Original Guidance. Zinc and copper production were within the revised range provided on November 8, 2017 (the "Revised Guidance") while lead production was slightly above the Revised Guidance. Annual production records were set for zinc and lead at La Colorada.
- Decade-low annual consolidated Cash Costs of $4.55 were 35% below the midpoint of the Original Guidance of $6.45 to $7.45, and at the low end of the Revised Guidance, largely due to improved productivity at our mines in Peru and Mexico, higher by-product credits from strong base metal production and base metal prices, and improved concentrate treatment costs. Annual Cash Costs records were set at La Colorada, Huaron, Morococha, and Dolores.
- Construction of the La Colorada mine expansion was completed. Full design processing rates of 1,800 tonnes per day were achieved in mid-2017, about six months ahead of schedule. Average throughput exceeded design rates by about 5% during the last six months of 2017.
- Construction of the Dolores pulp agglomeration plant was completed and commissioning commenced. Heap leach pad stacking rates achieved 97% of the expanded capacity of 20,000 tonnes per day during the last four months of 2017.
- Implementation of "Towards Sustainable Mining" ("TSM") was initiated. TSM is a three-year initiative designed to enhance our community engagement processes, drive world-leading environmental practices and reinforce our commitment to the safety and health of our employees and surrounding communities.
2018 Guidance and Three-Year Outlook
Pan American's guidance for 2018 as at January 11, 2018, is provided below. We may revise guidance during the year to reflect actual and anticipated results. We also provide a three-year outlook of our production, Cash Costs, sustaining capital and AISCSOS on a consolidated basis, which we update only on an annual basis.
2018 Guidance by Mine
|
Mine |
Silver Production |
Gold Production |
Cash Costs ($/ounce)(1) |
|
|
La Colorada |
7.4 - 7.7 |
4.2 - 4.3 |
1.35 - 1.70 |
|
|
Dolores |
4.5 - 4.9 |
138.9 - 147.7 |
(1.25) - 0.45 |
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|
Huaron |
3.6 - 3.8 |
1.0 |
0.75 - 1.50 |
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|
Morococha (92.3%)(2) |
2.5 - 2.7 |
2.2 - 2.3 |
(5.80) - (4.30) |
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San Vicente (95%)(2) |
3.9 - 4.1 |
0.2 |
10.00 - 10.50 |
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|
Manantial Espejo |
3.2 - 3.3 |
28.5 - 29.5 |
17.60 - 19.00 |
|
|
Total(3) |
25.0 - 26.5 |
175.0 - 185.0 |
3.60 - 4.60 |
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(1) Cash Costs is a non-GAAP measure and readers should refer to the information under the heading "Alternative Performance (non-GAAP) Measures" at the end of this news release for more information. |
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(2) Reflects Pan American's ownership in the operation. |
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(3) Totals may not add up due to rounding. |
Three-year Outlook
The following table provides Pan American's guidance and outlook for the years 2018 to 2020 (the "Three-year Outlook"):
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2018 Guidance |
2019 Outlook |
2020 Outlook |
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|
Production |
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|
Silver (million ounces) |
25.0 - 26.5 |
27.7 - 29.7 |
30.5 - 33.0 |
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Gold (thousand ounces) |
175 - 185 |
183 - 193 |
165 - 179 |
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Zinc (thousand tonnes) |
60.0 - 62.0 |
55.5 - 59.5 |
60.5 - 64.5 |
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Lead (thousand tonnes) |
21.0 - 22.0 |
21.0 - 23.0 |
23.0 - 26.0 |
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Copper (thousand tonnes) |
12.0 - 12.5 |
10.5 - 12.5 |
11.5 - 13.5 |
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Cash Costs(1)($/ounce) |
3.60 - 4.60 |
4.50 - 6.00 |
4.75 - 6.75 |
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Sustaining capital ($ millions) |
100 - 105 |
100 - 110 |
75 - 90 |
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AISCSOS(1) ($/ounce) |
9.30 - 10.80 |
9.50 - 11.50 |
8.50 - 11.00 |
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(1) Cash Costs and AISCSOS are non-GAAP measures. Please refer to the section titled "Alternative Performance (non-GAAP) Measures" at the end of this news release for further information on these measures. |
The following table provides the price and foreign exchange rate assumptions used to forecast total Cash Costs and AISCSOS in the Three-year Outlook:
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Years 2018 to 2020 |
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|
Metal prices |
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Silver ($/ounce) |
16.50 |
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Gold ($/ounce) |
1,250 |
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Zinc ($/tonne) |
3,100 |
|
|
Lead ($/tonne) |
2,350 |
|
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Copper ($/tonne) |
6,500 |
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Average annual exchange rates relative to 1 USD |
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Mexican peso |
18.50 |
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Peruvian sol |
3.23 |
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Argentine peso |
19.59 |
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Bolivian boliviano |
7.1 |
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2018 Guidance Highlights:
Pan American's 2018 capital budget is targeting a total spend of $150 to $155 million, comprised of $100 to $105 million in sustaining capital and $50 million in project capital. We anticipate spending approximately $21 million on near-mine and regional exploration in 2018, drilling a total of approximately 115,000 metres.
The Company is focused on achieving the following objectives at each of its mines during 2018:
La Colorada
- Sustain expanded throughput rates of 1,800 tonnes per day or greater while implementing further productivity enhancements, particularly in additional mine mechanizations and infrastructure upgrades.
- Complete upgrades to the mine backfill plant to enable mine re-sequencing to reduce grade variability and achieve average mineral reserve grades.
- Execute an innovative tailings storage facility expansion for substantial savings in future tailings management costs.
Dolores
- Complete commissioning of the pulp agglomeration plant.
- Ramp-up underground mining rates to 1,500 tonnes per day.
- Sustain overall throughput rates to the heap leach pad of 20,000 tonnes per day.
- Accelerate open-pit mine pre-stripping rates to provide optimized mine scheduling efficiencies into 2019, after which waste movement rates decrease substantially.
- Adapt leach pad construction rates according to the requirements of the expanded ore production rates, while seeking to optimize open-pit waste handling with modifications to permits and land acquisition opportunities.
Huaron and Morococha
- Maintain production rates at current levels.
- Take advantage of continued exploration successes.
- Strive to define additional productivity enhancement initiatives and improve site ancillary facilities and infrastructure.
- Expand the Huaron tailings storage facility according to the increased throughput rates achieved during 2017.
- Investigate opportunities to enhance mill productivities and efficiencies at Morococha while designing for the eventual relocation of the mill.
San Vicente
- Gradually enhance productivities over the next three years through additional mechanization efforts, enhanced mine dilution controls and improved site infrastructure and ancillary facilities.
Manantial Espejo
- Bring the approved COSE and Joaquin mine projects on-stream to supplement the Manantial Espejo underground mine and stockpile ore, thereby increasing overall production rates over the next three years. Production from COSE and Joaquin is expected to commence in 2019 with a life of mine of approximately 18 months for COSE and approximately three years for Joaquin.
Technical information contained in this news release with respect to Pan American has been reviewed and approved by Martin Wafforn, P.Eng., Senior Vice President, Technical Services & Process Optimization, who is the Company's Qualified Person for the purposes of National Instrument 43-101. For additional information about the Company's material mineral properties, please refer to the Company's Annual Information Form dated March 22, 2017, filed at www.sedar.com.
Q4 and Full Year 2017 Unaudited Results
Pan American plans to release its unaudited financial results for Q4 and full year 2017 on February 20, 2018. Details for the conference call and webcast are as follows:
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Date: |
February 21, 2018 |
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Time: |
11:00 am ET (8:00 am PT) |
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Dial-in numbers: |
1-800-319-4610 (toll-free in Canada and the U.S.) |
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+1-604-638-5340 (international participants) |
A live and archived webcast and presentation slides will be available on the Company's website at www.panamericansilver.com/investors/events.
About Pan American Silver
Pan American Silver is one of the world's largest primary silver producers, providing investors with enhanced exposure to silver through low-cost operations. Founded in 1994, Pan American Silver is recognized for its operating expertise, prudent financial management and commitment to responsible development. The Company is headquartered in Vancouver, B.C. and owns and operates six mines in Mexico, Peru, Argentina and Bolivia. Our shares trade on NASDAQ and the Toronto Stock Exchange under the symbol "PAAS".
For more information, visit: www.panamericansilver.com.
