Pan American Silver Corp.

Thank you for standing by. This is the conference operator. Welcome to the Pan American Silver second quarter 2025 results conference call. As a reminder, all participants are in listen only mode and the conference is being recorded. After presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Sue Ann Tesecki, Vice President, Investor Relations. Please go ahead, Ms. Tesecki.

Thank you for joining us today for Pan American Silver's conference call and webcast to discuss our second quarter 2025 results. This call includes forward-looking statements and information and references to non-GAAP measures. Please see the cautionary statements in our MD&A news release and presentation slides for the Q2 2025 results, all of which are available on our website. I'll now turn the call over to Michael Steinman, Pan American's President and CEO.

Thank you, and good morning, everyone. I'm glad you could join us to discuss Pan American's Q2 2025 results. Today, I'm pleased to report another quarter of record-setting results. Top line revenue of $811.9 million reflects solid operating performance and the benefit of supportive price environment. Net earnings were a record of $189.6 million or 52 cents per share, largely driven by record mine operating earnings of $273.3 million. Adjusted earnings were $155.4 million, or 43 cents per share. Cash flow from operations before non-cash working capital changes was also a record of $287.9 million after $68.3 million in cash taxes paid. After non-cash working capital changes, operating cash flow totaled $293.4 million. Free cash flow was a record of $233 million, increasing our cash balance to a record high of $1.1 billion at the end of Q2. Our capital allocation framework remained unchanged. Maintain our strong balance sheet, sustain and grow the business, and return capital to shareholders. Given our strong balance sheets, we are focused on growing the business, and in Q2, we significantly advanced that objective with our proposed acquisition of MAC Silver. The top-tier 20-CPO silver asset is expected to provide an immediate uplift to Pan American silver production and free cash flow generation, while meaningfully reducing our consolidated silver segment costs. It also represents further opportunities to grow our silver production through the exploration potential of the asset. MAC shareholders approved the transaction in July, and we are now awaiting the clearance under Mexican antitrust laws. The transaction is expected to close in the second half of 2025. In addition to the acquisition, we invested $73.7 million in sustaining and project capital in Q2. Project capital was invested in the La Clarada mine and the SCARM project and the Varon, Timmins and Jacobina mines. At Jacobina, in addition to advancing mine and plant optimization studies, we have invested in improvements to plant availability and equipment reliability. In terms of the La Clarada SCARM project, our discussions around potential partnerships for the development are progressing well, and we expect to share more on our plans for this time in the coming month. We have also delivered on the third priority of our capital allocation approach, returning capital to shareholders. Yesterday, we announced a 20% dividend increase from 10 cents to 12 cents per common shares with respect to Q2 2025. We also repurchased just under half a million common shares at an average price of $24.22 per share for a total consideration of $11.1 million in Q2. During the first half of this year, we have returned approximately $103.5 million in dividends and share buybacks to our shareholders. Total available liquidity at the end of Q2 was roughly $1.9 billion affording us ample flexibility to pursue our organic and inorganic growth opportunities, even after accounting for the $500 million of cash that will be paid as part of the consideration for MAG silver. Turning now to operations, we produced 5.1 million ounces of silver in Q2 within our guidance range for the quarter. Our silver segment achieved all in sustaining costs of $19.69 per ounce, excluding NRV adjustments, which was at the low end of our guidance range. La Clorada once again led the performance in the silver segment, following the improvement to ventilation from the new infrastructure installed in mid-2024. Throughput reached an average of 2,130 tons per day in Q2, relative to the 2,000 tons per day that we were targeting. As a result, silver production at La Querada was up nearly 50% and cash costs per silver ounce down by nearly 25% compared with the first half of 2024. We are maintaining our guidance for silver production and costs in 2025. Gold production of 178,700 ounces in Q2 was slightly below our guidance range, while gold segment all-in sustaining costs, excluding NRV adjustments, of $1,611 were within guidance. The gold segment was impacted by lower throughput upgrades at Timmins, primarily as a result of additional backfill and hanging wall dilution. At El Peñon, production was impacted by mine and development sequencing into lower gold and higher silver grades. These impacts were partially offset by stronger performance at Chavinda from higher gold grades and positive mine grade reconciliations, and at Dolores, with the leach cycle delivering more production than originally planned in Q2. Gold production in the first half of 2025 was in line with our guidance. and we are maintaining our outlook for gold production and all in sustaining costs. However, we now expect gold production to be more heavily weighted to the fourth quarter of 2025 than originally indicated in our 2025 quarterly operating outlook. At Escobar, the SINCA Parliament issued a statement in May 2025 with respect to the ILO 169 consultation process. The Guatemalan Ministry of Energy and Mines, or MEM, has now delivered a response to that statement describing the proposals to address the concerns the Schenker Parliament had raised. These documents can be reviewed on the MEM website. The MEM has indicated that they will continue to hold working meetings and maintain dialogue with the Schenker Parliament as they work towards completing the ILO 169 consultation, although a date for completing the consultation has not been specified. As we consider the global backdrop for precious metals, we see very supportive environment for gold and silver prices. Global photovoltaic installations and electronic applications continue to drive industrial demand growth for silver, while mine supply is largely flat. The silver market is in its fifth consecutive year of structural deficit, and this deficit is expected to persist in the coming years, depleting above-ground stocks further, a very supportive backdrop for silver prices. We view the MAG silver acquisition as a high-quality addition to our portfolio to capitalize on this outlook for silver. In summary, Pan American Silver has delivered record financial results in the first half of 2025. Our operating teams have focused on meeting our production targets and maintaining strong control over costs. We are on track to achieve our guidance for 2025. We look forward to continuing to deliver robust free cash flow and returning capital to our shareholders. I will now be happy to take your questions together with other members of our management team.