Pan American Silver Corp.

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Michael will be doing a corporate presentation. Welcome, Michael. Yes, good morning everyone. A pleasure to be here again in Zurich and give you an update on Pan American to see if we can get. Presentation going and a lot has changed with Pan Am over the last 1224 months. Of course last year we did the acquisition of Mac. I would probably call it a very timely acquisition. When silver was still somewhere around $30 that worked out very well for us, and now we own 44% of one of the best silver mines in the world, which is Juan E Scipio. But we also announced an updated PA for our discovery at La Colorado des Can which actually will become the largest and lowest cost silver mine in the world here over the next few years, and I want to spend quite a bit of time. with you to explain what has changed there and how we see that project developing and how we're gonna add another, about 20 million ounces of silver production, at La Colorado to our portfolio. you see there, where we, where we work, it's all in the Americas. the reason we are there is really a geological reason. When you want to be a silver producer, you have to work in the cordillera. That's where the silver is. Mexico, the biggest silver producer in the world. of course, closely followed by Peru, lots of silver production in, in Bolivia historically and of course Argentina even has it in its name. So if you want to be a big silver producer, that's where you have to be. That's where we are working and that's where we are always growing and look at. So I'm not really interested to go to many other different places. That's really where the silver is. That's the places we know and where we're working and me personally already. for, over 35, years, but let's spend a little bit more time on La Colorado because La Colorado, it's with Pan Am for, for quite a while now actually. I joined the company 23 years ago and. The project was already there. I think Ross Beatty at that time bought it about 2 years before it was a small silver mine. The whole system now obviously we understand now the geology is in place. You have very narrow veins, high grade on the top, all the way down to a porphyry which is very deep down and was feeding the whole system. We had the Discovery hole in 2018. And just think about La Colorado. What we are mining right now are narrow structures, high grade veins that may be 2 or 3 m wide. Our discovery hole hit 372 m as an intercept of high grade or relatively high grade zinc, lead, and silver mineralization and turned out to be one of the biggest base metal discoveries in the world that we drilled out over the years. And when we put out the first PA. It was a very, very large base metal development program. It would have been the biggest zinc mine in the world, still producing a lot of silver at that time, but the idea at that time, what we knew about the project was to build first a sublevel cave, then a block cave later on, 50,000 tons a day, very large zinc production. Probably about in the 15 million ounces silver range somewhere around there. It's a very large project in the mining method that we are not really familiar with. Now. Fast forward over the years, we kept drilling. We have probably about 18 rigs drilling at La Corrada right now. We probably have at any time in all our active sites and projects about 85 to 90 drill rigs. Drilling, we're drilling over 600,000 m a year in exploration, and this is obviously one of the results of this exploration effort. And you see there are just the big numbers where it's going to go. There's like Lorado the vein mine. Over the years it will become smaller. Right now we're still producing over 6 million ounces there, but it will go down as an average to about 3.3 just from the veins. And then we're going to add an average of nearly 16 million ounces to that from this car mineralization. And then you see there in the sink it's still going to be a big zinc producer as well, together about 250,000 tons. And as a result it's going to be about negative $20 for our silver per ounce production cost, but it will be about 52% or 53% of revenue will come from silver, so it's going to be clearly a very, very big. Silver mine, just a few numbers there, so it has changed now. So with the exploration over the last few years we have discovered, and I will show later on this section, we have discovered a lot of more high grade structures. We have discovered a high grade core inside this kn and that brought us to a place where we can go into we call it phase one where we go for the high grade structures and the high grade part of the. Phase one is pretty long, you see. There are 37 years. I think there's always the chance to go bigger later on and do that blockade for the big deposit. I think this deposit has a chance to be in production for 50+ years, but at the moment those economics are just for the 1st 37 years. I think that's long enough to start with. It will be only 15,000 tons a day underground, so similar, a little bit bigger than our Chacobina mine in Brazil, and it's the normal mining method that we apply everywhere else as a long haul open stock mine, and you see there the return at two different metal prices. One is Analyst Consensus, 17% return, $2.6 billion NPV, and then at more current prices about $5.2 billion. And a 25% return. So very strong, very strong project. The capital now has been reduced from the big project, which was close to $3 billion to $1.9 billion that we can fully fund from our cash flow and cash on hand. And that's how the production profile looks like when you look at the top is silver production. You see the red. Bars, the hatch, that's the current La Colorado production. It's obviously winding down over the years. We discovered new high grade structures which are the green ones and then the blue is the added production from this car. You see there the core production just around 20 million ounces a year. We at the moment have about 60,000 m of new drilling that we didn't publish yet. It's not yet in our reserve and resource update. So there's continuously data coming in. We just put the press release out about a month ago with some really stunning high grade additional veins that we discovered at La Colorado with silver rates around 10 kg per ton. So that's still to come in, and I think we'll obviously smoothen out the production at the beginning and increase our production faster. And then we keep finding more carbonization as well, which will continue that big production further into the future. But you see there are 37 years and you see below the zinc production, very strong zinc production as well that comes. By the way, La Colorado is producing one of the world's best zinc concentrates right now. It's running about 61%. It's a very clean concentrate with no iron in it, and this will produce a very similar product, very easy metallurgy. We already produce obviously for decades that concentrate and nothing new to us on the metallurgy. Nonst is in the concentrate, so great product, a lot of interest as you can imagine from the traders in the world when you can produce about a quarter million tons a year of that kind of quality of concentrate. It's getting a bit technical here, but just to show you see on your left side the map you see those big red circles that's the scar in the plan view you see some of the main structure and then on this side you see a cut through the mountain you see on top gray is the surface. You see the blue block which is our current La Colorado vein mine, and then you see in red scar. below and you see here the new discoveries which are some of this new very high grade veins that helped us to go into this mix of high grade structures, high grade part of the scarn which will bring us to that first phase 37 year production increase at La Colorada. So pretty straightforward. We're going to run a ramp from the existing mine down to the scar and we're going to start doing that probably in the next 2 months and then we have to sink two shafts. It's pretty deep there, but there's already two shafts that we built at La Colorado in the past, 2 shafts, one for ventilation and one for extraction of the 15,000 tons in the future. So great project that we're going to start here. And that's how it's going to look like right now when you look at the silver mines in the world, that's looking at the resource and reserves. Fresn is still a bit bigger, but as I said, we still have a lot of drilling that we are doing and a lot of drilling that will be included here, and I think La Colorado will grow bigger and will be one of the biggest silver deposits in the world. And when you look at production, it's going to be the biggest silver mine in the world. You have to add the two up La Colorado vein and. And it will just be closely followed by Juancia, which is obviously the addition to our portfolio from last year. So great place to be and a huge leap that La Colorado is going to make from the current 6 million ounces all the way in front of the biggest silver mines in the world and as I said, it's going to be the lowest cost one and you can see that here Juan Icipi is a very low cost producer, very happy to have that in our portfolio, as you know, we own 44%. The mine is run by Friso. But Colorada with the expansion and then the addition of the high grade structure will leapfrog one is CPO and will be a bigger and lower cost producer of all these big names of silver producers there in the world, so great place to be. We have discovered that in our portfolio, Brownville Discovery. and a great project for us to build out over the next few years. So you add to that Juanicipia just a few words. Obviously I think most of you are familiar with it. We added that last year to 44% by buying mag silver, and that was before La Colorado was out with the study, you see that Guanicipia was the lowest producing silver mine in the world and largest one as well. So now we have the two biggest, biggest ones in the world, so great, great spot to be when you want to be the biggest silver producer in the world and. We are definitely on the way on the way and there. There's other projects as well that we're working on. We're working on an expansion and optimization of our biggest gold producing mine, which is Jacobina that came to us through the acquisition of Yama Gold. Actually up to now that's still the biggest cash flow we have in the company that will be replaced with our big silver production in the future, but a great asset to have again, a very long life asset at the moment we have a mine plan until 2053. That Jaco and we're looking to increase our production here. We started at 8000 tons a day when we bought it. We surpassed 99,000 tons a day and we tried to get to 10,000 as a first step and then with the optimization, see how much further we can push that, get a new permit because our current permit allows us only to mine 10,000 tons a day. And another like multi-decade operation that we have in our portfolio in in Brazil in this case. Just a few words on Escobar. Obviously there's a few other projects we have and Escobar, we're working quite a while on this, on the consultation. I think we are at a spot now where we exchanged all the information. Everything has passed on, and we are obviously very open to discuss any kind of participation on that project. Together with the indigenous group and the government, you see this very, very small footprint. That's the entire mine, by the way, and Escobal produced 21 million ounces of silver when it was in production. The mine is ready to go. We would need about 80 to $100 million working capital to start it up, about 6 months to bring it back into production, and obviously I couldn't think in a better metal price environment. To start up a big silver mine in the world, and if you look at having communities and governments participating in a project at this metal price, obviously will make a lot of sense. That would be the other 20+ million ounce producing asset for us that is already there doesn't need a lot of capital, but it's obviously not under our control right now because the consultation is done between the indigenous group and the government of Guatemala. So thanks to the addition of of of Juan Ecipio we see a nice increase in our silver production. We got a 25 to 27 million ounces and still very strong gold production as well, up to 750,000 ounces, at a, at, at very good, cost, cost profile. I just want to show this quickly because a lot of people, you know, especially like the generations a bit older like me that remember very well earlier, earlier, runs in medal price and remember 2010, 2009 where we had a huge regeneration. The huge inflation in the mining space and the metal prices were running a while and then the cost curve actually crossed over and it ended in a big disappointment. I just want to show you when you look at silver on the left side and gold on the right side and you see here the metal prices for the last 8 quarters that we achieved for each of these metals and in green are all in sustaining costs and you see how actually remarkably flat those costs stayed. Especially on the gold side because we don't have a lot of byproduct credits, silver is a bit more variable, but you see actually our costs are coming down, and that is the effect of the addition of Juanicippi, a really low cost producer. So you can imagine when we add La Colorada to that with this. cost of about $20 and nearly doubling our output of silver is going to look very, very interesting, but obviously very, very large margins that we generated hence in Q4 alone about $553 million free cash flow. Generation metal prices are way higher in Cuba, as you can imagine. We have over $2 billion liquidity at the moment. We're returning about $100 million a quarter to shareholders between share buybacks and dividend, and there's, together with the cash in Juancipi over $1.4 billion of cash. And our balance sheet at the end of 2025. So there's enough money here to obviously build the big expansion at La Colorada, and there will be more money coming in as we speak to do that. So no problem on the financial side with very little debt. There is a very, very, very cheap money that we have. So we're paying dividends. Since 2010. We've returned off the free cash flow about 36-35% between dividend and share buybacks. We increased the dividend every quarter over the last three quarters, and this is not the reason we're not giving more money back to shareholders because we don't have anything else to do with it. I just showed you the big projects we have, but there's just so much excess cash that we are happy giving dividend and share buybacks back to our shareholders as part of this big. Bull run in metal prices. And then when you look at per share, it's really interesting when you look at earnings, you look at return on investor capital, you look at margins on cash flow, of course huge increases over the last that's like I think 10 years. per share base, part is obviously metal prices, and the other part is just the increased quality of assets that we purchased and then we tend to sell off the smaller the smaller assets. At the end of, at the end of the other end of our of our portfolio. Obviously, you know, very, very strong commitment to sustainable production. It always has been. It was always part of Pan American. And maybe just to end quickly because silver is a very complex story, much more complex than gold, because silver has two uses and the use right now on the industrial side is growing so fast that we are already at about 65% of the world's silver production that is used up, and you can imagine with further electrification. Not only with clean energy production alone, but self-driving cars, data centers, AI, the use of silver is increasing very, very fast, but we can't really produce much more silver. We have the biggest projects. We have the biggest reserve, the biggest resource in the world of silver already. But 75% of the production comes as a byproduct from copper production, and copper is already at an all-time high, nearly, and so there's not many big copper mines coming on in the next few years, so hence not much more silver production, and I really can see only like La Colorado and Escobal as kind of meaningful addition to the silver, but until then we see a big deficit. You see there in green the production is actually declining. But we see increased demand on the silver side now from both sides, obviously from the industrial side and from the investment side, hence the silver price where it sits right now. so with that I'm, I'm at my end, so open for a question if you have time. are there any questions from the audience? Gentlemen over here. That $283 million of debt that's due at the end of next year, will you be paying that off entirely or or reprice it? Yeah, that's, so it's one part of the two bonds that came to us from from the Hua acquisition. You see the big 1 $500 million is only due in 2031. That one runs at about 2.6% interest. So the one that is due, yeah, I think we're we're just going to pay that back. At the moment we don't need, we don't need additional money. As I said, there's enough cash coming in. So that will be due in like a bit less than 2 years. If there aren't any questions maybe Michael I can ask, and I always ask this, I have to come back to Esquibal and you know what's happening with the indigenous consultations maybe just give us an update on where are we exactly with that. Did the indigenous people want something from you and you know, does it look like we can resolve this this year? Well, look, I never, I never, I mean I never gave you like a, you know, a timing or whenever that will happen. I always maintained the mine in, in, in great shape so when it comes back we can restart it quickly, as I said, within 6 months we could have, production. I think I've been made very clearly that we are very open and, you know, sharing wealth from that project, with communities but also with the government, of Guatemala which obviously. Jobs are very important, especially now as a lot of kind of jobs getting brought back from the US to Guatemala. Look, as you said, the, the transfer of information on the on the on the consultation is is finalized now and that kind of decision how we split this up, will, will be the next part of it. OK. And then if I could, you know, listening to you talk about La Colorado, you know, you've got your 1.9 billion CE. You showed us you don't need money to build it, but do you have within your portfolio non-core assets? I thought Timmons might be non-core. You've got a royalty portfolio. Maybe just share your thoughts on that. Yeah, and look, we, we, we sold assets for probably about $1.4 billion cash over the last few years. And I will definitely continue. I'd like to have, as I said, something big on one side before I sell the other ones. But when you look at selling assets right now because it's such a short time frame that we saw so far with these very high metal prices, there's quite a difference between the buyer's expectation and the seller's expectation on metal prices, and I think we have to get a bit closer before we can look at divesting an asset. To get there I guess later this year if we have you know another 10 months of more stable prices then I think we will find better a spot that works for both of us. OK, thank you so much we've run out of time. Thank you.