• Revenue: $716.1 million, excluding $30 million from unsold inventories.
• Cash Flow from Operations: $235.8 million before working capital changes.
• Free Cash Flow: $151.5 million.
• Cash and Short-term Investments: $469.9 million, an increase of $101.3 million from Q2 2024.
• Net Debt: Decreased to $376.2 million.
• Available Liquidity: $1.2 billion.
• Dividend: $0.10 per share for Q3; year-to-date payments totaled $109.1 million.
• Share Buyback: $24.3 million in shares repurchased and canceled.
• Net Earnings: $57.1 million or $0.16 per share.
• Adjusted Earnings: $115.1 million or $0.32 per share.
• Silver Production: 5.5 million ounces in Q3.
• Gold Production: 225,000 ounces in Q3.
• Gold Segment Cash Costs: $1,195 per ounce.
• Gold Segment All-in Sustaining Costs: $1,516 per ounce.
• Silver Segment Cash Costs: $15.88 per ounce.
• Silver Segment All-in Sustaining Costs: $20.90 per ounce.

• Warning! GuruFocus has detected 7 Warning Signs with PAAS.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pan American Silver Corp (NYSE:PAAS) reported record revenue of $716.1 million for Q3 2024, excluding $30 million in finished goods and concentrate inventories.
• The company achieved record cash flow from operations before working capital changes at $235.8 million and free cash flow of $151.5 million.
• Net debt decreased to $376.2 million, strengthening the balance sheet with $1.2 billion of available liquidity.
• A $0.10 per share dividend was announced for Q3, with year-to-date dividend payments totaling $109.1 million.
• The company received regulatory approval for the sale of La Arena in Peru, expected to close in Q4, with proceeds of $245 million to further strengthen the balance sheet.

Negative Points

• Net earnings in Q3 were impacted by a one-time tax expense related to settlements with Mexican and Argentine tax authorities.
• Silver production costs were higher than expected due to lower gold by-product credits and increased royalty costs.
• Gold production at several mines was affected by severe weather conditions and higher-than-planned dilution in underground mines.
• The Escobal mine in Guatemala remains on care and maintenance with no restart date, pending consultation processes.
• Silver production is expected to be at the low end of the 21 million to 23 million-ounce guidance range for 2024.

Q & A Highlights

Q: Can you provide any implications on the cash or contingent element of the consideration of the NSR royalty with the La Arena sale? A: Michael Steinmann, President and CEO, stated that there are no changes to the consideration, neither on the cash nor on the NSR. The transaction is expected to close later this quarter, and it is seen as a positive outcome for all parties involved.

Q: With silver production at the lower end of guidance, is gold production also expected to be at the low end? A: Steven Busby, Chief Operating Officer, mentioned that several assets, particularly Cerro Moro and La Arena, are expected to have a strong finish to the year. They are cautiously optimistic about reaching closer to the midpoint of guidance, depending on the closing of the La Arena deal.

Q: How should we think about gold and silver grades going into Q4? A: Steven Busby noted that while silver production increases are expected in the future, gold grades are variable. They anticipate stronger gold grades in Q4 compared to Q3, but there are uncertainties due to the deposit's variability.

Q: Any updates on partnership discussions at La Colorada? A: Michael Steinmann indicated that several large companies are interested in the project, and while it may take time to structure a partnership agreement, he is optimistic about the interest shown.

Q: What is the expected ASIC range for La Colorada once it reaches 2,000 tonnes per day? A: Steven Busby explained that they are still working on the budget for next year, so they cannot forecast the ASIC yet. Exchange rates and inflation will significantly impact cost structures.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.