Pan American Silver Corp.

Good morning, ladies and gentlemen, and welcome to the PEN American Silver Third Quarter 2024 Unaudited Results Conference Call and Webcast. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 6, 2024. I would now like to turn the conference over to Soren Sesecki, VP Investor Relations. Please go ahead.

Thank you for joining us today for Pan American Silver's Q3 2024 conference call. This call includes forward-looking statements and information and makes reference to non-GAAP measures. Please see the cautionary statements in our MD&A news release and presentation slides for our Q3 2024 unaudited results, all of which are available online. on our website. I'll now turn the call over to Michael Steinman, Pan American's President and CEO.

Thanks, Erin, and thank you, everyone, for joining today's call. Pan American delivered strong financial performance in Q3. Revenue was a record $716.1 million, which, due to timing of sales, excluded the sale of finished goods and concentrated inventories with a value of approximately $30 million. Cash flow from operations before working capital changes was a record $235.8 million. Free cash flow also reached a record of $151.5 million. At the end of Q3, cash and short-term investments of $469.9 million had increased by $101.3 million compared to Q2 2024. Net debt decreased to $376.2 million. These record financial results further strengthened the balance sheet. At the end of Q3, we had $1.2 billion of available liquidity to invest in future growth and provide returns to shareholders. Yesterday, we announced the 10 cents per share dividend with respect to Q3. Year-to-date dividend payments totaled $109.1 million In addition, we also repurchased and canceled shares for $24.3 million under our share buyback plan. Net earnings in Q3 were $57.1 million, or 16 cents per share. This includes a one-time tax expense for a settlement with the Mexican tax authorities and an amendment of certain Argentine income tax filings, both of which relate to prior year's tax filings. Futury tax expense was partially offset by reversal of the inflation-driven tax expense in Argentina that we recorded in the first half of 2024. Adjusted earnings were $115.1 million, or 32 cents adjusted earnings per share. Yesterday, we announced that we have received regulatory approval from the Government of Canada for the sale of Lorena in Peru. We expect the transaction to close later in Q4. Proceeds from the sale of $245 million will further strengthen our balance sheet. The agreement also grants Pan American a life of mine gold net smelter return royalty of 1.5% for the Larena II project and an additional contingent payment of $50 million when commercial production starts from the project. Turning to the operations, we produced 5.5 million ounces of silver in Q3, led by La Colorado, where silver production was up 59% and cash costs down 26% compared with Q2. Since completing the new ventilation infrastructure in mid-July, we have seen substantial improvements in mine operations. Throughput rates have been rising, averaging over 1,800 tons per day in October, and we expect throughput to reach 2,000 tons per day by year end. Improving performance at La Corada will further increase silver production and lower cash costs. We produced 225,000 ounces of gold in Q3. Chacovinas' strong results led to gold operations delivering robust margins with production of 50,400 ounces of gold at an all-in sustaining cost of $1,195 per ounce at that mine. At Serra Moura, gold production was reduced by delayed development due to severe winter weather in Q2 that reduced access to the site and portals, and due to hired and planned dilution in the underground mines. Weather in Q2 also restricted access to the Natti Zone, which is 30 kilometers from the mill, resulting in delayed development thereby reducing mining and processing of gold ores from this zone. We are now catching up on production at Cerro Moro by increasing production from the Nati zone and increasing the development meters at the underground mines, focusing on higher grade areas. At Minera, Florida, surface access to some of the mine portals was affected by heavy rainfall, which delayed the development of higher gold grade zones, which is now underway. As planned, we completed mining at the lowest in Q3 and have been processing lower-grade stockpiles since July. Gold segment cash costs were within expectations in Q3. Cash costs for the gold segment in Q3 were $1,195 per ounce, and all in sustaining costs were $1,516 per ounce, excluding NRV adjustments. Silver segment cash costs in Q3 were $15.88 per ounce. All in-sustaining costs were $20.90 per ounce, excluding an not-realizable value inventory adjustment that decreased costs by $1.27 per ounce. Costs for silver segment in Q3 were higher than expected, largely due to lower gold byproduct credits from Cerro Moro, the catch-up of sustaining capital spending at La Clarada and Guarón, and high royalty costs at San Vicente from higher metal prices. We are on track to achieve our guidance for 2024. As indicated previously, we expect silver production to come in at the low end of the 21 to 23 million ounce range. We are very pleased with the progress we have made in our capital projects. The new filter plant and filter tailing storage facility at Varon is on schedule to be in full operation by the end of Q1 2025. At our Bell Creek Mine in Timmins, commissioning of the new PACE plant project is underway. At Jacobina, we are investing in upgrading the plant facility infrastructure and in a study to maximize Jacobina's long-term economic and growth potential. We expect to release this optimization study in the first half of 2025. We are excited by the potential of our Jacobin asset. In our most recent mineral resource update as of June 30, 2024, which we released in early September, we more than replaced mine production with new mineral reserves for the eighth year in a row. In addition, exploration added 1.2 million ounces of new gold-inferred mineral resource. This is a long-life mine with excellent exploration potential and we believe there's opportunity to capture more value from this high margin operation. Our reserve and resource update also highlighted the potential for LaGuardia's corn project. The estimate for indicated mineral resource increased by 53% to 265 million tons and grades improved by 10% for silver, 2% for zinc, and 4% for lead. An estimated 309 million ounces of silver are contained in the indicated mineral resource category in addition to 59 million ounces in inferred mineral resource. There is significant interest in this large, long-life silver and zinc project from potential partners, and we continue to evaluate future agreements. At Escobar, the Guatemalan Ministry of Energy and Mines appointed Mr. Luis Pacheco as Vice Minister of Sustainable Development in August. His position, responsible for overseeing the ILO 169 consultation process for the mine, had been vacant since April 29th, 2024. During Q3 2024, Mr. Pacheco visited the mine along with other members of MEM and held working meetings regarding the consultation process. The MEM has communicated to the company that the Schenker Parliament is in the process of conducting meetings in their communities, but no new timeline has been published yet for plenary consultation meetings. The Escobar mine remains on care and maintenance and there is no date for a restart of the operation. That completes my brief recap of Q3. I'm pleased with the progress we have made year to date, particularly at La Querada and and on our capital projects. We are focused on achieving our production targets and managing costs to deliver margin expansion. Current metal prices are improving profitability, and we are expecting a strong finish to the year from a back-end loaded production profile. I would now be happy to open the call for your questions.