Unaudited tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts
Pan American Silver Reports Unaudited 2018 Annual and Fourth Quarter Results
All financial figures are in U.S. dollars unless otherwise indicated.
Vancouver, B.C. - February 20, 2019 - Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) today reported unaudited financial results for the year-ended December 31, 2018 ("YE 2018") and the fourth quarter ("Q4 2018"). These results are preliminary and could change based on final audited results. Preliminary operating results were previously reported on January 21, 2019.
- Annual revenue totaled $784.5 million, and net cash generated from operating activities was $155.0 million.
- Annual net earnings of $12.0 million ($0.07 basic earnings per share), and adjusted annual earnings of $59.4 million ($0.39 basic adjusted earnings per share).
- Annual silver production totaled 24.8 million ounces with all-in sustaining costs per silver ounce sold (“AISCSOS”) of $10.73, or $9.68 excluding net realizable value ("NRV") inventory adjustments.
- Cash costs per payable ounce of silver, net of by-product credits ("cash costs") of $3.35 per ounce in 2018.
- Advanced the COSE and Joaquin mine developments for initial production in 2019.
- At December 31, 2018, the Company had cash and short-term investment balances of $212.5 million and working capital of $397.8 million. Year-end debt of $6.7 million related entirely to lease liabilities.
“Pan American's operations demonstrated solid performance in 2018, highlighted by the lowest cash costs on record since 2006. This performance resulted in strong cash flow generation and a healthy financial position at year end," said Michael Steinmann, President and Chief Executive Officer of the Company. "Importantly, we advanced our strategy of developing new catalysts to generate value for shareholders. Our acquisition of Tahoe Resources will result in a more diversified Pan American with a strong portfolio of cash-generating assets and superior growth opportunities. In addition, our major exploration discovery at La Colorada demonstrates a significant opportunity for long-term organic growth."
Consolidated Q4 2018 Highlights:
- Revenue in Q4 2018 was $173.4 million, reflecting lower prices for all metals and lower quantities of silver, gold, and copper sold due to a build in inventories at San Vicente and La Colorada (approximate revenue impact of $8.4 million), as well as lower production at Dolores.
- Net cash generated from operating activities was $11.9 million.
- Net loss was $63.6 million ($0.42 basic loss per share), which included a $27.8 million impairment charge related to the Manantial Espejo/COSE/Joaquin assets, a $13.3 million reduction from NRV inventory adjustments, $10.2 million in costs related to the Tahoe Resources Inc. ("Tahoe") transaction, $8.2 million in tax expense from changes in foreign exchange rates, and a $4.7 million credit loss related to a third party refinery.
- The impairment of the Manantial Espejo/COSE/Joaquin assets reflects the impact of the new export tax introduced in Argentina in late 2018, and the decline in short-term consensus metal prices.
- Adjusted loss was $2.0 million ($0.01 basic adjusted loss per share).
- Silver production was 6.1 million ounces at cash costs of $6.12 per ounce. Q4 2018 cash costs were impacted by lower by-product metal prices and reduced gold production.
- AISCSOS were $15.86 in Q4 2018, or $13.36 excluding NRV inventory adjustments. AISCSOS were impacted by less silver ounces sold, lower by-product metal prices and higher sustaining capital expenditures.
- The Board of Directors has approved a cash dividend of $0.035 per common share, or approximately $5.4 million in aggregate cash dividends, payable on or about March 15, 2019, to holders of record of Pan American Silver's common shares as of the close on March 4, 2019. Pan American Silver's dividends are
PAN AMERICAN SILVER CORP. 1
designated as eligible dividends for the purposes of the Income Tax Act (Canada). As is standard practice, the amounts and specific distribution dates of any future dividends will be evaluated and determined by the Board of Directors on an ongoing basis.
The foregoing contains measures that are not generally accepted accounting principle ("non-GAAP") financial measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.
Amended and Restated Credit Agreement
On February 1, 2019, the Company entered into an Amending and Restating Credit Agreement with a syndicate of banks to extend and increase its existing credit facility. In conjunction with the closing of the Tahoe transaction, the credit facility is expected to increase to $500 million and would mature on February 1, 2023.
Tahoe transaction
All required regulatory, shareholder and court approvals have been received for the plan of arrangement (the "Arrangement"), whereby Pan American will acquire all of the outstanding shares of Tahoe. The Arrangement is anticipated to be completed on or about February 22, 2019.
Pan American receives award for social and environmental responsibility
Pan American is pleased to announce that Matt Andrews, Vice President Environment and Sustainability, and Monica Moretto, Director Sustainability, are the 2018 recipients of the Robert R. Hedley Award for Excellence in Social and Environmental Responsibility from the Association for Mineral Exploration (AME). In the AME's news release, dated December 6, 2018, announcing the 2018 winners, the organization states that Mr. Andrews' and Ms. Moretto's leadership "has created an environment within Pan American Silver Corp. of respect for social and environmental principles on all its projects".
PAN AMERICAN SILVER CORP. 2
CONSOLIDATED RESULTS
December 31, December 31, 2018 2017 Shares outstanding (millions) 153,448 153,303
Three months ended Year ended December 31, December 31,
| 2018 | 2017 | 2018 | 2017 | |
| FINANCIAL Revenue Mine operating (loss) earnings Net (loss) earnings Per share (1) Adjusted (loss) earnings (2) Per share (1) Net cash generated from operating activities Net cash generated from operating activities before changes in working capital (2) Sustaining capital expenditures Project capital expenditures Dividend per share | $ 226,031 $ 43,285 $ 49,664 $ 0.32 $ 19,219 $ 0.13 $ 79,291 $ 64,098 $ 28,668 $ 13,650 $ 0.025 | $ 816,828 $ 168,760 $ 123,451 $ 0.79 $ 77,705 $ 0.51 $ 224,559 $ 212,850 $ 84,420 $ 61,429 $ 0.10 | ||
| $ 173,357 | $ 784,495 | |||
| $ (4,666) | $ 100,897 | |||
| $ (63,577) | $ 12,041 | |||
| $ (0.42) | $ 0.07 | |||
| $ (2,022) | $ 59,434 | |||
| $ (0.01) | $ 0.39 | |||
| $ 11,930 | $ 154,978 | |||
| $ 16,827 | $ 159,239 | |||
| $ 31,329 | $ 105,229 | |||
| $ 11,849 | $ 41,292 | |||
| $ 0.035 | $ 0.14 | |||
| OPERATIONAL Production Silver (thousand ounces) Gold (thousand ounces) Zinc (thousand tonnes) Lead (thousand tonnes) Copper (thousand tonnes) Average realized prices Silver ($/ounce) Gold ($/ounce) Zinc ($/tonne) Lead ($/tonne) Copper ($/tonne) Cash costs (per payable ounce of silver, net of by-product credits)(2) All-in sustaining costs per silver ounce sold(2) All-in sustaining costs per silver ounce sold, excluding NRV inventory adjustments(2) | 6,579 43.7 14.7 5.4 3.0 $ 16.65 $ 1,276 $ 3,282 $ 2,472 $ 6,811 $ 3.18 $ 10.86 $ 10.03 | 24,979 160.0 55.3 21.5 13.4 $ 16.99 $ 1,257 $ 2,929 $ 2,351 $ 6,174 $ 4.55 $ 10.79 $ 10.28 | ||
| 6,128 | 24,776 | |||
| 37.2 | 178.9 | |||
| 18.5 | 64.8 | |||
| 6.3 | 22.4 | |||
| 2.2 | 9.8 | |||
| $ 14.35 | $ 15.61 | |||
| $ 1,232 | $ 1,272 | |||
| $ 2,508 | $ 2,846 | |||
| $ 1,914 | $ 2,189 | |||
| $ 6,098 | $ 6,519 | |||
| $ 6.12 | $ 3.35 | |||
| $ 15.86 | $ 10.73 | |||
| $ 13.36 | $ 9.68 |
(1) Per share amounts are based on basic weighted average common shares.
(2) Non-GAAP measures: adjusted (loss) earnings, basic adjusted (loss) earnings per share, net cash generated from operating activities before changes in working capital, cash costs, and all-in sustaining costs per silver ounce sold (inclusive and exclusive of NRV inventory adjustments) are not generally accepted accounting principle ("non-GAAP") financial measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.
PAN AMERICAN SILVER CORP. 3
MINE OPERATING RESULTS
| Three Months Ended December 31, 2018 | ||
|---|---|---|
| Production | Cash Costs(1) | |
| Ag (Moz) | Au (koz) | |
| 2.1 | 1.2 | $1.73 |
| 0.8 | 29.4 | $7.06 |
| — | — | NA |
| 1.0 | 0.2 | $2.82 |
| 0.7 | 0.2 | $0.61 |
| 0.9 | 0.1 | $9.23 |
| 0.6 | 6.2 | $25.53 |
| 6.1 | 37.2 | $6.12 |
Three Months Ended December 31, 2017 Production
| Ag (Moz) Au (koz) | Cash Costs(1) | ||
|---|---|---|---|
| La Colorada | 1.9 | 1.3 | $0.43 |
| Dolores | 1.3 | 31.2 | ($3.93) |
| Alamo Dorado | — | 0.1 | $2.09 |
| Huaron | 1.0 | 0.2 | $2.08 |
| Morococha(2) | 0.7 | 0.8 | ($7.42) |
| San Vicente(3) | 1.1 | 0.1 | $9.04 |
| Manantial Espejo | 0.6 | 10.0 | $26.52 |
| TOTAL | 6.6 | 43.7 | $3.18 |
| Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||
|---|---|---|---|---|
| Production | Cash Costs(1) | Production Ag (Moz) Au (koz) Cash Costs(1) | ||
| Ag (Moz) | Au (koz) | |||
| La Colorada Dolores Alamo Dorado Huaron Morococha(2) San Vicente(3) Manantial Espejo | 7.6 | 4.4 | $2.02 | 7.1 4.3 $2.08 4.2 103.0 ($1.65) 0.6 2.1 $16.49 3.7 1.1 $1.35 2.6 3.5 ($5.34) 3.6 0.5 $11.85 3.1 45.3 $18.25 |
| 4.1 | 136.6 | ($1.87) | ||
| — | — | NA | ||
| 3.6 | 0.8 | $1.63 | ||
| 2.9 | 2.1 | ($4.34) | ||
| 3.5 | 0.5 | $10.12 | ||
| 3.1 | 34.6 | $13.91 | ||
| TOTAL | 24.8 | 178.9 | $3.35 | 25.0 160.0 $4.55 |
Totals may not add up due to rounding.
(1) Cash costs is a non-GAAP measure. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on this measure.
(2) Morococha data represents Pan American Silver's 92.3% interest in the mine's production.
(3) San Vicente data represents Pan American Silver's 95.0% interest in the mine's production.
PAN AMERICAN SILVER CORP. 4
CAPITAL EXPENDITURES(1)
Annual Year ended Forecast(2) December 31,
| (in millions of USD) | 2018 | 2018 | 2017 |
| La Colorada | 17.5 – 18.5 | 16.9 | 13.3 |
| Dolores | 42.0 – 44.0 | 48.5 | 38.4 |
| Huaron | 17.0 – 17.5 | 15.9 | 8.8 |
| Morococha | 14.5 – 15.0 | 14.1 | 12.5 |
| San Vicente | 6.5 – 7.0 | 7.0 | 8.1 |
| Manantial Espejo | 2.5 – 3.0 | 2.8 | 3.3 |
| Sustaining Capital Total(1) | 100.0 - 105.0 | 105.2 | 84.4 |
| Mexico project capital | 15.5 | 15.9 | 56.8 |
| Joaquin and COSE projects(3) | 24.5 | 25.4 | 4.7 |
| Project Capital Total(1) | 40.0 | 41.3 | 61.5 |
| Consolidated Total | 140.0 – 145.0 | 146.5 | 145.9 |
(1) The total sustaining capital amounts capitalized in 2018 were $0.8 million less than the $106.0 million of 2018 sustaining capital cash outflows. Project capital amounts capitalized in 2018 were $3.4 million less than the $44.7 million of 2018 project capital cash outflows. The sustaining capital cash outflows are included in the 2018 AISCSOS calculation, shown in the “Alternative Performance (non-GAAP) Measures” section of this news release, and in the tables included for the individual mines in the "Mine Operating Results" section of this news release; these amounts are different than the amounts capitalized in the period, which are provided in the table above. These differences are due to the timing difference between the cash payment of capital investments compared with the period in which investments are capitalized.
(2) Forecast amount per Q3 2018 MD&A dated November 6, 2018.
(3) Total expenditures of $9.7 million were incurred in 2017 for the Joaquin and COSE projects, of which $5.0 million was expensed as part of 2017 exploration and project development expenses, and the remaining $4.7 million was capitalized. All Joaquin and COSE project expenditures were capitalized in 2018.
Sustaining capital of $105.2 million in 2018 was slightly above our forecast range of $100 to $105 million, reflecting higher pre-stripping and leach pad expansionary activities at Dolores, largely offset with savings on the tailings storage facility expansion at Huaron and deferral of certain exploration spending, infrastructure upgrades and equipment procurements.
Project capital of $41.3 million, compared with a forecast of $40 million, was directed at the COSE and Joaquin mine developments in Argentina, as well as investments at Dolores and La Colorada.
PAN AMERICAN SILVER CORP. 5
2019 GUIDANCE
There are no revisions to the guidance for 2019 that Pan American provided in its news release dated January 21, 2019, as provided in the table below. The guidance does not include the assets to be acquired under the Arrangement with Tahoe. Management intends to update the guidance to include these assets and allocation of new general and administrative costs in the second quarter of 2019. We may also revise guidance during the year to reflect actual results to date and those anticipated for the remainder of the year.
2019 Guidance
Production
Silver (million ounces) 26.5 - 27.5 Gold (thousand ounces) 162.5 - 172.5 Zinc (thousand tonnes) 65.0 - 67.0 Lead (thousand tonnes) 24.0 - 25.0 Copper (thousand tonnes) 9.8 - 10.3 Cash Costs(1)($/ounce) 6.50 - 7.50 AISCSOS(1) ($) 10.80 - 12.30 Sustaining capital ($millions) 85 - 90 Project capital ($millions) 30
Assumptions used to forecast total cash costs and AISCSOS for 2019
Metal prices Silver ($/ounce) 14.50 Gold ($/ounce) 1,250 Zinc ($/tonne) 2,600 Lead ($/tonne) 1,950 Copper ($/tonne) 6,150 Average annual exchange rates relative to 1.00 U.S. dollar Mexican peso 19.50 Peruvian sol 3.33 Argentine peso 41.80 Bolivian boliviano 6.91
(1) Cash Costs and AISCSOS are non-GAAP measures. Please refer to the “Alternative Performance (non-GAAP) Measures” section of this news release for further information on these measures.
Additional details on the Company's 2019 guidance can be found in the January 21, 2019 news release entitled, "Pan American Silver Announces Preliminary 2018 Operating Results and Guidance for 2019" available at www.panamericansilver.com and as filed on SEDAR at www.sedar.com.
PAN AMERICAN SILVER CORP. 6
Fourth Quarter and Year End 2018 Unaudited Results Conference Call and Webcast
Date: February 21, 2019 Time: 11:00 am ET (8:00 am PT)
Dial-in numbers: 1-800-319-4610 (toll-free in Canada and the U.S.)
+1-604-638-5340 (international participants)
Webcast: www.panamericansilver.com
Callers should dial in 5 to 10 minutes prior to the scheduled start time. The live webcast and presentation slides will be available on the Company's website at www.panamericansilver.com. An archive of the webcast will also be available for three months.
Corporate Office:
625 Howe Street, Suite 1440 Vancouver, British Columbia V6C 2T6 Canada
Tel: +1 604 684-1175 Fax: +1 604 684-0147
About Pan American Silver
Pan American Silver Corp. is the world’s second largest primary silver producer, providing enhanced exposure to silver through a diversified portfolio of assets, large reserves and growing production. We own and operate six mines in Mexico, Peru, Argentina and Bolivia. Pan American Silver maintains a strong balance sheet, has an established management team with proven operating expertise, and is committed to responsible development. Founded in 1994, the Company is headquartered in Vancouver, B.C. and our shares trade on NASDAQ and the Toronto Stock Exchange under the symbol "PAAS".
For more information, visit: www.panamericansilver.com.
For more information contact:
Siren Fisekci VP, Investor Relations & Corporate Communications Ph: 604-806-3191 Email: [email protected]
Alternative Performance (Non-GAAP) Measures
In this news release we refer to measures that are not generally accepted accounting principle ("non-GAAP") financial measures. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning as prescribed by IFRS as an indicator of performance, and may differ from methods used by other companies with similar descriptions. These non-GAAP financial measures include:
- Cash costs per payable ounce of silver, net of by-product credits ("cash costs"). The Company's method of calculating cash costs may differ from the methods used by other entities and, accordingly, the Company's cash costs may not be comparable to similarly titled measures used by other entities. Investors are cautioned that cash costs should not be construed as an alternative to production costs, depreciation and amortization, and royalties determined in accordance with IFRS as an indicator of performance.
- Adjusted earnings (loss) and adjusted earnings (loss) per share. The Company believes that these measures better reflect normalized earnings as they eliminate items that in management's judgment are subject to volatility as a result of factors which are unrelated to operations in the period, and/or relate to items that will settle in future periods.
PAN AMERICAN SILVER CORP. 7
- All-in sustaining costs per silver ounce sold ("AISCSOS"). The Company has adopted AISCSOS as a measure of its consolidated operating performance and its ability to generate cash from all operations collectively, and the Company believes it is a more comprehensive measure of the cost of operating our consolidated business than traditional cash costs per payable ounce, as it includes the cost of replacing ounces through exploration, the cost of ongoing capital investments (sustaining capital), general and administrative expenses, as well as other items that affect the Company's consolidated earnings and cash flow.
- Net cash generated from operating activities before changes in working capital is calculated as "Net cash generated from operating activities" less "Changes in non-cash operating working capital", as shown on the Consolidated Statements of Cash Flows. The Company believes the exclusion of changes in non-cash operating working capital better reflects the cash from operating activities generated in the period. Net cash generated from operating activities before changes in working capital does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other companies.
Readers should refer to the "Alternative Performance (non-GAAP) Measures" section following the Consolidated Statements of Cash Flows included in this news release for a more detailed discussion of these and other non-GAAP measures and their calculation.
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, other than the Joaquin property, please refer to the Company's Annual Information Form dated March 22, 2018, filed at www.sedar.com. Mineral resources that are not mineral reserves have no demonstrated economic viability.
Cautionary Note Regarding Forward-Looking Statements and Information
Certain of the statements and information in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian provincial securities laws. All statements, other than statements of historical fact, are forward-looking statements or information. Forward-looking statements or information in this news release relate to, among other things: future financial or operational performance, including our estimated production of silver, gold and other metals in 2019, our estimated Cash Costs and AISCSOS in 2019, and our expectations with respect to future metal prices and exchange rates; the ability of the Company to successfully complete any capital projects, the expected economic or operational results derived from those projects, and the impacts of any such projects on the Company, the approval or the amount of any future cash dividends; our growth profile and opportunities as results of the Arrangement; the increase of our credit facility and the timing thereof; the anticipated completion date of the Arrangement; and any update of our guidance subsequent to completion of the Arrangement, and the disclosure and timing of any such update.
These forward-looking statements and information reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include: the completion date of the Arrangement; the ability of the Company to realize the anticipated benefits and opportunities as a result of the Arrangement; access to capital and other financing, if required; tonnage of ore to be mined and processed; ore grades and recoveries; prices for silver, gold and base metals remaining as estimated; currency exchange rates remaining as estimated; capital, decommissioning and reclamation estimates; our mineral reserve and resource estimates and the assumptions upon which they are based; prices for energy inputs, labour, materials, supplies and services (including transportation); no labour-related disruptions at any of our operations; no unplanned delays or interruptions in scheduled production; all necessary permits, licenses and regulatory approvals for our operations are received in a timely manner; and our ability to comply with environmental, health and safety laws. The foregoing list of assumptions is not exhaustive.
The Company cautions the reader that forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from those
PAN AMERICAN SILVER CORP. 8
expressed or implied by such forward-looking statements or information contained in this news release and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: fluctuations in silver, gold and base metal prices; fluctuations in prices for energy inputs, labour, materials, supplies and services (including transportation); fluctuations in currency markets (such as the Canadian dollar, Peruvian sol, Mexican peso, Argentine peso and Bolivian boliviano versus the U.S. dollar); operational risks and hazards inherent with the business of mining (including environmental accidents and hazards, industrial accidents, equipment breakdown, unusual or unexpected geological or structural formations, cave-ins, flooding and severe weather); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the Company does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards; employee relations; relationships with, and claims by, local communities and indigenous populations; our ability to obtain all necessary permits, licenses and regulatory approvals in a timely manner; changes in laws, regulations and government practices in the jurisdictions where we operate, including environmental, export and import laws and regulations; legal restrictions relating to mining, including in Chubut, Argentina; risks relating to expropriation; diminishing quantities or grades of mineral reserves as properties are mined; increased competition in the mining industry for equipment and qualified personnel; and those factors identified under the caption "Risks Related to Pan American's Business" in the Company's most recent form 40-F and Annual Information Form, as well as those factors identified in the section entitled “Risk Factors” in the Company’s management information circular dated December 4, 2018 with respect to the Arrangement, each filed with the United States Securities and Exchange Commission and Canadian provincial securities regulatory authorities, respectively. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Investors are cautioned against undue reliance on forward-looking statements or information. Forward-looking statements and information are designed to help readers understand management's current views of our near and longer term prospects and may not be appropriate for other purposes. The Company does not intend, nor does it assume any obligation to update or revise forward-looking statements or information, whether as a result of new information, changes in assumptions, future events or otherwise, except to the extent required by applicable law.
PAN AMERICAN SILVER CORP. 9
Consolidated Statements of Financial Position
| December 31, 2018 | December 31, 2017 | |
|---|---|---|
| Assets Current assets Cash and cash equivalents Short-term investments Trade and other receivables Income taxes receivable Inventories Derivative financial instruments Assets held for sale Prepaid expenses and other current assets | $ 175,953 51,590 109,746 16,991 218,715 1,092 7,949 13,434 | |
| $ 138,510 | ||
| 74,004 | ||
| 96,091 | ||
| 13,108 | ||
| 214,465 | ||
| 640 | ||
| — | ||
| 11,556 | ||
| Non-current assets Mineral properties, plant and equipment Long-term refundable tax Deferred tax assets Investment in associates Other assets Goodwill | 548,374 | 595,470 1,336,683 80 2,679 55,017 346 3,057 |
| 1,301,002 | ||
| 70 | ||
| 12,244 | ||
| 70,566 | ||
| 2,163 | ||
| 3,057 | ||
| Total Assets | $ 1,937,476 | $ 1,993,332 |
| Liabilities Current liabilities Accounts payable and accrued liabilities Loans payable Derivative financial instruments Current portion of provisions Current portion of finance lease Income tax payable | $ 139,698 3,000 1,906 8,245 5,734 26,131 | |
| $ 131,743 | ||
| — | ||
| 51 | ||
| 5,072 | ||
| 5,356 | ||
| 8,306 | ||
| Non-current liabilities Long-term portion of provisions Deferred tax liabilities Long-term portion of finance lease Deferred revenue Other long-term liabilities Share purchase warrants | 150,528 | 184,714 61,248 171,228 1,825 12,017 26,954 14,295 |
| 70,083 | ||
| 148,819 | ||
| 1,320 | ||
| 13,288 | ||
| 25,425 | ||
| 14,664 | ||
| Total Liabilities | 424,127 | 472,281 |
| Equity Capital and reserves Issued capital Share option reserve Investment revaluation reserve Deficit | 2,318,252 22,463 1,605 (825,470) | |
| 2,321,498 | ||
| 22,573 | ||
| 208 | ||
| (836,067) | ||
| Total Equity attributable to equity holders of the Company | 1,508,212 | 1,516,850 |
| Non-controlling interests | 5,137 | 4,201 |
| Total Equity | 1,513,349 | 1,521,051 |
| Total Liabilities and Equity | $ 1,937,476 | $ 1,993,332 |
PAN AMERICAN SILVER CORP. 10
Consolidated Income Statements (Unaudited in thousands of U.S. dollars except per share amounts)
Three months ended Year ended December 31, December 31,
| 2018 | 2017 | 2018 | 2017 | |
| Revenue | $ 173,357 | $ 226,031 | $ 784,495 | $ 816,828 |
| Cost of sales Production costs Metal inventory loss(1) Depreciation and amortization Royalties | (139,697) — (34,240) (8,809) | (500,670) — (122,888) (24,510) | ||
| (132,334) | (511,793) | |||
| (4,670) | (4,670) | |||
| (36,418) | (146,462) | |||
| (4,601) | (20,673) | |||
| (178,023) | (182,746) | (683,598) | (648,068) | |
| Mine operating (loss) earnings General and administrative Exploration and project development Foreign exchange gains (losses) Impairment (charges) reversals Gains (losses) on commodity and foreign currency contracts (Losses) gains on sale of mineral properties, plant and equipment Share of (loss) income from associate and dilution gain Transaction costs Other expense | (4,666) | 43,285 (4,732) (4,269) 1,052 61,554 (1,841) (794) 259 — (4,011) | 100,897 | 168,760 (21,397) (19,755) 1,823 61,554 606 191 2,052 — (5,505) |
| (5,450) | (22,649) | |||
| (3,509) | (11,138) | |||
| 406 | (9,326) | |||
| (27,789) | (27,789) | |||
| 524 | 4,930 | |||
| (56) | 7,973 | |||
| (182) | 13,679 | |||
| (10,229) | (10,229) | |||
| (2,795) | (3,659) | |||
| (Loss) earnings from operations (Loss) gain on derivatives Investment (loss) income Interest and finance expense | (53,746) | 90,503 64 658 (2,353) | 42,689 | 188,329 64 1,277 (7,185) |
| (60) | (1,078) | |||
| (1,428) | (284) | |||
| (2,305) | (8,139) | |||
| (Loss) earnings before income taxes Income tax expense | (57,539) | 88,872 (39,208) | 33,188 | 182,485 (59,034) |
| (6,038) | (21,147) | |||
| Net (loss) earnings for the period Attributable to: Equity holders of the Company Non-controlling interests | $ (63,577) | $ 49,664 $ 48,892 772 | $ 12,041 | $ 123,451 $ 120,991 2,460 |
| $ (63,809) | $ 10,294 | |||
| 232 | 1,747 | |||
| $ (63,577) | $ 49,664 | $ 12,041 | $ 123,451 | |
| (Loss) earnings per share attributable to common shareholders Basic (loss) earnings per share Diluted (loss) earnings per share Weighted average shares outstanding (in 000’s) Basic Weighted average shares outstanding (in 000’s) Diluted | $ 0.32 $ 0.32 153,207 153,434 | $ 0.79 $ 0.79 153,070 153,353 | ||
| $ (0.42) | $ 0.07 | |||
| $ (0.42) | $ 0.07 | |||
| 153,352 | 153,315 | |||
| 153,504 | 153,522 |
(1) Relates to certain doré metal inventory held at a refinery used by the Company that filed for bankruptcy in November, 2018. The inventory write-down was comprised of $3.9 million of production costs and $0.8 million of depreciation and amortization.
PAN AMERICAN SILVER CORP. 11
Consolidated Statements of Comprehensive Income
Three months ended Year ended December 31, December 31,
| 2018 | 2017 | 2018 |
| $ (63,577) | $ 49,664 1,376 250 | $ 12,041 |
| 332 | 993 | |
| (294) | (788) | |
| $ (63,539) | $ 51,290 | $ 12,246 |
| $ 50,518 772 | ||
| $ (63,771) | $ 10,499 | |
| 232 | 1,747 | |
| $ (63,539) | $ 51,290 | $ 12,246 |
2017 Net (loss) earnings for the period $ 123,451 Items that may be reclassified subsequently to net earnings:
Unrealized net gains on short-term investments (net of $nil tax in 2018 and 2017)
Reclassification adjustment for realized (gains) losses on shortterm investments to earnings Total comprehensive (loss) earnings for the period $ 124,622
Total comprehensive (loss) earnings attributable to:
Equity holders of the Company $ 122,162 Non-controlling interests 2,460 $ 124,622
PAN AMERICAN SILVER CORP. 12