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Pan American Silver increases silver and gold production in Q3, cuts net loss

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(Kitco News) - Pan American Silver (NYSE: PAAS) (TSX: PAAS) yesterday reported consolidated silver production of 5.69 million ounces in Q3 2023, up 25% compared to 4.54 million ounces in Q3 2022.

The company’s consolidated gold production for Q3 2023 was 244.2 thousand ounces, up 90% compared to 128.8 thousand ounces in Q3 2022.

PAAS said the increase in silver and gold production in Q3 2023 was driven by the mines acquired as part of the Yamana deal.

However, the company noted that silver production was at the low end and gold production was slightly below management's guidance ranges for Q3 2023.

The company’s zinc, lead and copper production in Q3 2023 was 9.5 thousand tonnes (Q3 2022: 8.9 thousand tonnes), 4.9 thousand tonnes (Q3 2022: 4.4 thousand tonnes), and 1.2 thousand tonnes (Q3 2022: 0.9 thousand tonnes), respectively.

The company said that its silver segment cash costs per ounce in Q3 2023 of $13.13 were $1.49 lower than the $14.62 in Q3 2022, primarily due to higher gold by-product credits from the acquisition of Cerro Moro and lower direct operating costs at Manantial Espejo.

The company’s Q3 2023 revenue was $616.3 million, an increase of 82% compared to Q3 2022 ($338.9 million), driven by the Yamana acquisition. The company said it generated cash flow from operations of $114.6 million in Q3 2023, compared to $54.4 million generated in Q3 2022.  

PAAS also reported Q3 2023 net loss of $22.7 million or $0.06 basic loss per share (Q3 2022: net loss of $71.2 million or $0.34 basic loss per share), impacted by higher taxes; while adjusted earnings were $3.1 million or $0.01 adjusted earnings per share (Q3 2022: adjusted loss of $2.8 million or $0.01 basic adjusted loss per share).

The company said it is reaffirming its annual 2023 guidance ranges for silver and gold production with the expectation that production for both will come in at the low end of the ranges.

President and CEO Michael Steinmann commented, "While mine operating performance was broadly in line with the plan across the portfolio, ventilation constraints at La Colorada and lower grades at El Peñon weighed on silver and gold production.

“We expect to save approximately $90 million in cash annually, primarily from the elimination of care and maintenance, project development and reclamation costs associated with MARA and Morococha, in addition to interest expense from having repaid the $280 million that was drawn on our credit facility at the end of June 30, 2023.

"We expect to capture a further $40 million to $60 million in annual savings through synergies associated with integrating the Yamana assets. The integration is progressing well, and we are currently evaluating optimization and exploration plans for the newly acquired mines. We will also continue to evaluate ways to further rationalize our overall portfolio."

Pan American Silver is a leading producer of precious metals in the Americas, operating silver and gold mines in Canada, Mexico, Peru, Bolivia, Argentina, Chile and Brazil. The company also owns the Escobal mine in Guatemala that is currently not operating, and holds interests in exploration and development projects.

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