Pan American Silver
Annual Report 2022

Plain-text annual report

2022 ANNUAL REPORT PAN AMERICAN SILVER owns and operates silver and gold mines located in Mexico, Peru, Canada, Argentina and Bolivia. We offer the potential for significant growth in production through the Escobal mine in Guatemala, currently on care and maintenance, and our La Colorada Skarn development stage project. Dolores La Colorada Skarn Deposit Escobal* (Currently on care and maintenance) Shahuindo La Arena 2022 OPERATING PERFORMANCE Ag 18.5 MOZ consolidated production $16.56/OZ silver segment all-in sustaining costs(1) Au 552.5 KOZ consolidated production $1,459/OZ gold segment all-in sustaining costs(1) Huaron Morococha (Currently on care and maintenance) San Vicente 514.9 MOZ proven + probable reserves(2) 3.6 MOZ proven + probable reserves(2) Timmins Silver Segment Mining Operations Gold Segment Mining Operations Development and Advanced Stage Exploration Projects Navidad Manantial Espejo (Currently on care and maintenance) 2022 REVENUE GENERATED BY METAL 2022 RESERVES BY METAL (2) Zinc 7% Lead 2% Copper 3% Silver 24% Gold 64% Zinc 15% Lead 6% Copper 3% Gold 27% Silver 49% Revenue by metal in 2022 is based on the average realized metal prices for 2022 of: $21.59/oz for silver, $1,792/oz for gold, $3,472/ tonne for zinc, $2,148/tonne for lead and $8,979/tonne for copper. The mineral reserves by metal reflect the Company's mineral reserve estimates as of June 30, 2022, announced in the news release dated August 10, 2022, and metal price assumptions of $19.00/oz for silver, $1,500/oz for gold, $2,600/tonne for zinc, $2,000/tonne for lead, and $7,000/tonne for copper. (1) Excluding net realizable value inventory adjustments. (2) See the mineral reserves and mineral resources on page 57 for further information. Certain of the statements and information in this annual report 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. Please refer to pages 119 to 120 at the end of this annual report for an important note to readers regarding forward-looking statements and information. LETTER FROM THE BOARD CHAIR GILLIAN WINCKLER // BOARD CHAIR The past year marks a transformative point in Pan American’s history, and reflects the Company’s efforts to deliver on its key strategic initiatives. Pan American is well positioned for strong, long-term growth that should benefit our employees, communities and shareholders. Significant advances have been made in many areas, all the while keeping focused on our values and capital allocation priorities. Pan American’s most important value is the health and safety of our people, and I am deeply saddened to report that in 2022 our performance in this critical area did not reflect our commitment, nor the efforts of the Company. We tragically suffered three fatalities, one each at Dolores, Huaron and La Arena. On behalf of the Board, I extend my deepest sympathies to the families, friends and co-workers of our lost colleagues. The Health, Safety and Environment Committee, as well as the full Board, conducted in-depth sessions with management to review these fatalities and the programs focused on safety across all our sites to determine where improvements could be made. We are advancing several additional safety initiatives, including working with a third-party consultant to The past year marks a transformative point in Pan American’s history, and reflects the Company’s efforts to deliver on its key strategic initiatives. incorporate the “do safety differently” concept, the expansion of our training and the technical abilities of our workforce, focusing on the development of leadership skills, and raising even Our values have people at the heart. The Company is committed to attracting and retaining a diverse workforce, having an environment that is welcoming and respectful, and upholding human rights. I am pleased to report that in 2022, Pan American reaffirmed its support for the 10 United Nations Global Compact Principles, which cover not only the area of human rights, but also labour, environment and anti-corruption. Our annual Sustainability Report describes our actions to continually improve the integration of these principles into our business, culture and daily operations. We have seen the lingering impacts from COVID-19 in the communities where we operate and have noticed that society at large seems to have lost the ability to connect with each other and access the institutions and services to provide the necessary support programs. In the past year, we increased our collaborative engagement with communities and focused our teams on the ground to support and facilitate social and economic opportunities, working with local governments where possible. We focused on environmental concerns, specifically water conservation and management, as well as reforestation efforts. In 2022, we continued our “Building Respect Together” program that aims to bring conversations around diversity, inclusion, and equity to our workforce at large. We completed the second module of the program, focused on training around harassment for supervisors and management. greater awareness and prioritization of safety. We are taking the steps necessary to learn from these tragic events and we are committed to seeing strong improvement in safety performance. While we have seen increased levels of participation in our workforce from both women and under- represented minorities, we know that more work needs to be done to achieve the representation we are PAN AMERICAN SILVER CORP. 1 aiming for. I am particularly excited about an initiative underway at La Colorada that aims to familiarize women in local communities with the potential for job opportunities within our operations. The mine has piloted a program under which local women are trained on a mobile equipment simulator to qualify them to operate heavy mining machinery. We see the potential of rolling out similar training to our other sites. We constantly strive to improve our stewardship of the environment and work towards achieving our short and medium-term climate goals. In 2022, we made progress on reducing our carbon footprint by commencing the use of renewable electricity supply at both our Mexican operations. This important step, combined with energy efficiency improvements across our portfolio, will keep us on track to meet our 2030 goal of a 30% reduction in greenhouse gas emissions compared to our 2019 baseline. We successfully completed the year with no significant environmental incidents and achieved six of our nine annual environmental goals, which cover water, waste, biodiversity, energy and emissions, incidents, auditing and mine closure. These achievements demonstrate the commitment of our team to continual improvement beyond good practice and compliance. We remain committed to implementing the Mining Association of Canada’s Towards Sustainable Mining (“TSM”) standard. In 2022, all our operations achieved level A in all TSM protocols, except for the Safety and Health protocol at Dolores, La Arena and Huaron due to the fatalities at each of those mines. Pan American was included in the S&P Global Sustainability Yearbook 2023, recognizing our efforts in ESG performance. This Yearbook aims to distinguish individual companies, within their industries, that have demonstrated strengths in corporate sustainability. Pan American was placed in the top 10% in the Metals & Mining industry in 2022. Pan American’s business strategy aims to maintain low debt, invest in growth, and provide returns to shareholders. We entered 2022 with no long-term debt, which enabled us to leverage the strength of our balance sheet to enter a transaction with Yamana Gold Inc. (“Yamana”) and Agnico Eagle Mines Limited (the “Yamana Transaction”) under which Pan American would acquire Yamana’s Latin American assets and Agnico Eagle Mines Limited would acquire the Canadian assets. Upon the completion of the Yamana Transaction, the scale of Pan American’s operations in Latin America will expand significantly, silver and gold production and reserves will increase, and we will add numerous growth options for the future. These growth options will complement the growth opportunities in Pan American’s portfolio, including our La Colorada Skarn discovery, which has the potential to deliver decades of production, and the potential restart of operations at the Escobal mine in Guatemala, one of the best silver mines in the world. Pan American reported revenues of $1.5 billion in 2022, with operational cash flow of approximately $74 million before working capital changes. We reinvested approximately $295 million in the business, paid $176 million in royalties and taxes to local and federal governments and returned just under $95 million in total dividends to shareholders. Looking ahead, Pan American is very well positioned, with a strong balance sheet and several growth projects. We remain committed to our capital allocation approach, our core values and delivering benefits to all our stakeholders. Pan American is further strengthened by the team joining us from Yamana. The team contributes operating expertise in two new jurisdictions for Pan American – Brazil and Chile – and a commitment to high standards of ESG performance. The business combination is not just about the integration of new operating assets, it is about bringing together two teams whose efforts and commitment are key to the future success of Pan American. I extend a warm welcome to all employees and contractors joining us from Yamana, as we forge a dynamic future for the Company together. Michael Carroll has decided to retire from Pan American’s Board of Directors and will not stand for re-election in 2023. Mike joined the Board in 2011, and has made invaluable contributions both as a director and in stewarding the financial management of the Company as Chair of the Audit Committee. We wish him well on his retirement and thank him for his outstanding service. On behalf of the Board, I would like to thank every employee and contractor for their unwavering efforts and commitment, as well as our communities, suppliers, and shareholders for their ongoing support. Gillian Winckler, Chair of the Board of Directors March 15, 2023 PAN AMERICAN SILVER CORP. 2 LETTER FROM THE CEO MICHAEL STEINMANN // PRESIDENT AND CEO 2022 has been an eventful year for Pan American Silver, culminating in the announcement in November 2022 of the Yamana Transaction, which is expected to close in the first quarter of 2023. In addition, we advanced other strategic initiatives during the year, including making progress on the ILO 169 consultation process for the Escobal mine in Guatemala and completing a resource update for our La Colorada Skarn project. These exciting developments position Pan American as one of the leading silver and gold producers in the Americas, offering long-term growth and value creation for our stakeholders. The Yamana Transaction will add four producing mines in Latin America to our portfolio, plus a suite of highly promising development projects and exploration properties, with Yamana’s Canadian assets being acquired by Agnico Eagle Mines Limited. It also enhances our diversification in Latin America through the addition of low-cost producing mines in Brazil and Chile. We expect a significant increase in silver and gold production, contributing to robust revenue generation, as well as improved operating margins through $40 million to $60 million in synergies that can be captured annually. The new Pan American will be a stronger, larger and more diversified company, better able to internally fund and advance growth projects. This is truly a transformative and strategic transaction that builds on Pan American’s core operating strengths in a region where we have been active for nearly three decades. Over the past year, we also made progress on our La Colorada Skarn project in Mexico. Following exploration and infill drilling, we reported an updated mineral resource estimate in 2022, based on a sub-level caving mining method, which reflects contained silver ounces of 94.4 million ounces and 2.7 million tonnes of zinc in the indicated mineral resource category, and 132.9 million ounces of silver and 3.4 million tonnes of zinc in the inferred mineral resource category. This estimate does not include a zone of high-grade silver and base metal mineralization discovered in mid-2022, which contains some of the highest-grade intercepts drilled to date on the Skarn. The ILO 169 consultation process for the Escobal mine in Guatemala made important advances in 2022. The pre-consultation phase that began in May 2021 concluded in July 2022. In December 2022, the Ministry of Energy and Mines, who are leading the consultation process, and Xinka representatives delivered a progress report on the ILO 169 process to the Guatemalan Supreme Court of Justice. The next phase of the consultation is now underway. We are unable to provide timing for completion of the consultation process, but we believe the comprehensive, inclusive and good faith consultation that is taking place is the best path to the potential re-opening of this mine. We appreciate that it is important for the local communities to understand the Escobal mining operations, and we have an open- door policy that has welcomed over 1,900 mine visits by local community members during 2022. The new Pan American will be a stronger, larger and more diversified company, better able to internally fund and advance growth projects. Our operations overcame several challenges in 2022, starting with the surge of the Omicron variant of COVID-19 in early 2022. We recorded high levels of workforce absenteeism across all our mine sites during PAN AMERICAN SILVER CORP. 3 the first two months of the year, affecting production, costs and progress on capital projects. The situation improved over the year, allowing us to begin easing off the stringent protocols we had implemented at the beginning of the pandemic to protect the health and safety of our workforce and communities. Late in February 2022, we placed our Morococha operation on care and maintenance. Under an agreement with Aluminum Corporation of China (“Chinalco”) dating back to 2010, we were required to eventually relocate the core Morococha facilities, including the processing plant, to enable the expansion of Chinalco’s copper mine. We are currently evaluating opportunities for the Morococha asset. At our Dolores mine in Mexico, phase 9-B of the open pit did not contain the grades we were expecting, resulting in the determination that recoverable ounces from this phase were less than estimated and that an impairment of the mine was required, which also impacted results in 2022. Despite these challenges, combined with global inflationary cost pressures, we posted solid performance in 2022, producing 18.5 million ounces of silver and 552.5 thousand ounces of gold. Excluding net realizable value inventory adjustments, Silver Segment all-in sustaining costs were $16.56 per ounce and Gold Segment all-in sustaining costs were $1,459 per ounce(1). In January 2023, we sold our remaining interest in Maverix Metals Inc. ("MMX"), following the acquisition by Triple Flag Precious Metals Corp. of all the outstanding common shares of MMX for share and cash consideration. In total, Pan American has realized $150.7 million for its interest in MMX, crystallizing value for assets in our portfolio and marking a profitable outcome for our shareholders. As we look forward to 2023 and beyond, our focus continues to be on delivering strong operational and ESG performance. We met most of the goals we had set for 2022, but we did not meet our most important goal of zero fatalities. We are deeply saddened to have suffered three fatalities in 2022, one each at Huaron, Dolores and La Arena. While we support and provide comfort to the families and co-workers of these individuals, the loss of a loved one is irreparable, and we must take all the actions we can to prevent tragic safety incidents and injuries. Management and the Board are implementing new measures to help protect the safety of every employee and contractor at our sites. On the environmental front, we exceeded our goals in key metrics, including reduction of greenhouse gas emissions and energy use. We also met all our human capital, inclusion and diversity, and governance goals. We fell short in one – grievance closed – of our four social goals. We remain committed to engaging and working collaboratively with the communities and other stakeholders near our mines. At our Manantial Espejo operation in Argentina, we completed mining activities at the end of 2022, and we are actioning the closure plan that was developed through a collaborative effort with local stakeholders and community members. As Pan American approaches 30 years in business, we have never been better positioned for the future. Following the completion of the Yamana Transaction, our portfolio of operating assets and growth projects will make us one of the leading producers of silver and gold in the Americas. Our operational expertise in this region is further strengthened by the talented team that will be joining us from Yamana. This competitive platform in the Americas will enhance our capacity to deliver on sustainability initiatives, thereby making us a more attractive partner of choice for government and communities. The increase in our market capitalization resulting from the Yamana Transaction will also enhance our investment appeal as a highly liquid, widely held, silver-focused producer. I am grateful for the efforts and support of our employees and contractors, our communities, our board of directors, and our shareholders. Together with the team joining us from Yamana, we look forward to building an exciting future for the Company and our stakeholders. Michael Steinmann, President and CEO March 15, 2023 (1) All-in sustaining costs is a non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of the Management’s Disclosure & Analysis for the year ended December 31, 2022 for a detailed description of these measures and, where appropriate, a reconciliation of the measure to the 2022 Annual Financial Statements. PAN AMERICAN SILVER CORP. 4 All financial data in this report is stated in US dollars ("USD") unless otherwise noted. CONSOLIDATED RESULTS Weighted average shares during period (millions) Shares outstanding end of period (millions) FINANCIAL (in thousands USD, except per share amounts) Revenue Mine operating earnings Net (loss) earnings Basic (loss) earnings per share(1) Adjusted earnings(2) Basic adjusted earnings per share(1) Net cash generated from operating activities Net cash generated from operating activities before changes in working capital(2) Sustaining capital expenditures(2) Non-sustaining capital expenditures(2) Cash dividend per share PRODUCTION Silver (thousand ounces) Gold (thousand ounces) Zinc (thousand tonnes) Lead (thousand tonnes) Copper (thousand tonnes) CASH COSTS(2) ($/ounce) Silver Segment(3) Gold Segment(4) AISC(2) ($/ounce) Silver Segment(3) Gold Segment(3)(4) AVERAGE REALIZED PRICES(5) Silver ($/ounce) Gold ($/ounce) Zinc ($/tonne) Lead ($/tonne) Copper ($/tonne) December 31, 2022 December 31, 2021 210.5 210.7 210.3 210.5 Year ended December 31, 2022 2021 $ $ $ $ $ $ $ $ $ $ $ 1,494,718 $ 48,362 $ (340,063) $ (1.62) $ 17,936 $ 0.09 $ 31,909 $ 73,946 $ 223,760 $ 71,000 $ 0.45 $ 1,632,750 367,938 98,562 0.46 161,782 0.77 392,108 463,177 207,623 49,951 0.34 18,455 552.5 38.6 18.7 5.3 12.72 1,113 16.48 1,649 21.59 1,792 3,472 2,148 8,979 19,174 579.3 49.4 18.1 8.7 11.51 899 15.62 1,214 25.00 1,792 2,997 2,206 9,297 Per share amounts are based on basic weighted average common shares. (1) (2) Non-GAAP measure; please refer to the "Alternative Performance (non-GAAP) Measures" section on page 119 of this annual report for further (3) information on these measures. Silver Segment Cash Costs and AISC are calculated net of credits for realized revenues from all metals other than silver ("silver segment by-product credits"), and are calculated per ounce of silver sold. Gold segment Cash Costs and AISC are calculated net of credits for realized silver revenues ("gold segment by-product credits"), and are calculated per ounce of gold sold. (4) Gold Segment AISC was impacted by the Q2 2022 impairment of the Dolores mine, which added a $190 per ounce of NRV adjustments to the 2022 Gold Segment AISC. (5) Metal prices stated are inclusive of final settlement adjustments on concentrate sales. For historical financial and operating data, please see the Interactive Analyst Centre at panamericansilver.com PAN AMERICAN SILVER CORP. 5 Management’s Discussion and Analysis FOR THE YEAR ENDED DECEMBER 31, 2022 February 22, 2023 TABLE OF CONTENTS Introduction ........................................................................................................................................................ 7 Core Business and Strategy ................................................................................................................................. 8 Yamana Transaction ............................................................................................................................................ 8 2022 Highlights ................................................................................................................................................... 9 Environmental, Social, and Governance ............................................................................................................. 11 Operating Performance ...................................................................................................................................... 12 Project Development Update ............................................................................................................................ 24 Overview of 2022 Financial Results .................................................................................................................... 24 Liquidity and Capital Position ............................................................................................................................. 33 Closure and Decommissioning Provision ............................................................................................................ 36 Related Party Transactions ................................................................................................................................. 36 Alternative Performance (Non-GAAP) Measures ............................................................................................... 37 Risks and Uncertainties ....................................................................................................................................... 46 Significant Accounting Policies, Standards and Judgements .............................................................................. 54 Subsequent Events .............................................................................................................................................. 55 Disclosure and Internal Control Procedures ....................................................................................................... 56 Mineral Reserves and Resources ........................................................................................................................ 57 Cautionary Note .................................................................................................................................................. 60 PAN AMERICAN SILVER CORP. 6 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION This Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the significant factors that influence the performance of Pan American Silver Corp. and its subsidiaries (collectively “Pan American”, “we”, “us”, “our” or the “Company”) and such factors that may affect its future performance. This MD&A should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022 (the “2022 Annual Financial Statements”), and the related notes contained therein. All amounts in this MD&A and the 2022 Annual Financial Statements are expressed in United States dollars (“USD”) unless identified otherwise. The Company reports its financial position, financial performance and cash flows in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). Pan American’s significant accounting policies are set out in Note 3 of the 2022 Annual Financial Statements. This MD&A refers to various non-Generally Accepted Accounting Principles (“non-GAAP”) measures, such as “all-in sustaining costs per ounce sold”, “Cash Costs per ounce sold”, “adjusted earnings” and “basic adjusted earnings per share”, “total debt”, “capital”, and “working capital”, which are used by the Company to manage and evaluate operating performance at each of the Company’s mines and are widely reported in the mining industry as benchmarks for performance, do not have standardized meanings under IFRS, and the methodology by which these measures are calculated may differ from similar measures reported by other companies. To facilitate a better understanding of these non-GAAP measures as calculated by the Company, additional information has been provided in this MD&A. Please refer to the section of this MD&A entitled “Alternative Performance (Non-GAAP) Measures” for a detailed description of “all-in sustaining cost per ounce sold”, “Cash Costs per ounce sold”, “adjusted earnings” and “basic adjusted earnings per share”, “total debt”, “capital”, and “working capital” as well as details of the Company’s by-product credits and a reconciliation, where appropriate, of these measures to the 2022 Annual Financial Statements. Any reference to “Cash Costs” in this MD&A should be understood to mean Cash Costs per ounce of silver or gold sold, net of by-product credits. Any reference to “AISC” in this MD&A should be understood to mean all-in sustaining costs per silver or gold ounce sold, net of by-product credits. Except for historical information contained in this MD&A, the following disclosures are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian provincial securities laws, or are future oriented financial information and as such, are based on an assumed set of economic conditions and courses of action. Please refer to the cautionary note regarding forward-looking statements and information at the back of this MD&A and the “Risks Related to Pan American’s Business” contained in the Company’s most recent Annual Information Form on file with the Canadian provincial securities regulatory authorities and Form 40-F on file with the U.S. Securities and Exchange Commission (the “SEC”). Additional information about Pan American and its business activities, including its Annual Information Form, is available on SEDAR at www.sedar.com. PAN AMERICAN SILVER CORP. 7 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) CORE BUSINESS AND STRATEGY Pan American engages in silver and gold mining and related activities, including exploration, mine development, extraction, processing, refining and reclamation. The Company owns and operates silver and gold mines located in Peru, Mexico, Argentina, Bolivia, and Canada. We also own the Escobal mine in Guatemala that is currently not operating. In addition, the Company is exploring for new silver deposits and opportunities throughout the Americas. The Company is listed on the Toronto Stock Exchange (Symbol: PAAS) and on the Nasdaq Global Select Market in New York (Symbol: PAAS). Pan American’s vision is to be the world’s premier silver mining company, with a reputation for excellence in discovery, engineering, innovation and sustainable development. To achieve this vision, we base our business on the following strategy: • Generate sustainable profits and superior returns on investments through the safe, efficient and • • • • environmentally sound development and operation of our assets. Constantly replace and grow our mineral reserves and mineral resources through targeted near-mine exploration and global business development. Foster positive long-term relationships with our employees, shareholders, communities and governments through open and honest communication and ethical and sustainable business practices. Continually search for opportunities to upgrade and improve the quality of our assets, both internally and through acquisition. Encourage our employees to be innovative, responsive and entrepreneurial throughout our entire organization. local To execute this strategy, Pan American has assembled a sector-leading team of mining professionals with a depth of knowledge and experience in all aspects of our business, which enables the Company to confidently advance early stage projects through construction and into operation. YAMANA GOLD INC. TRANSACTION The Company, Agnico Eagle Mines Limited (“Agnico Eagle”) and Yamana Gold Inc. (“Yamana”) entered into an arrangement agreement dated November 4, 2022, whereby the Company agreed to acquire all of the issued and outstanding common shares of Yamana following the sale by Yamana of its Canadian assets, including certain subsidiaries and partnerships which hold Yamana’s interests in the Canadian Malartic mine, to Agnico Eagle, by way of a plan of arrangement under the Canada Business Corporations Act (the “Transaction”). The Transaction is expected to close in the first quarter of 2023, subject to receipt of approval from the Mexican Federal Economic Competition Commission and satisfaction or waiver of certain other closing conditions. Please refer to the "Subsequent Events" section of the MD&A. The Transaction would establish Pan American as a major precious metals producer in Latin America. The combined portfolio will consist of 11 operations concentrated in Latin America, a region where Pan American has over 29 years of proven expertise and experience operating mines. With the addition of four operating mines expected to generate strong free cash flow, the Transaction should enhance Pan American’s overall financial position and improve its ability to internally fund its growth projects. PAN AMERICAN SILVER CORP. 8 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) 2022 HIGHLIGHTS Operations Silver production of 18.5 million ounces Consolidated 2022 silver production of 18.5 million ounces was 0.7 million ounces lower than we produced in 2021. This was primarily due to Morococha being placed on care and maintenance in February 2022, partially offset by an increase in production at La Colorada driven by higher throughput from improved ventilation rates. 2022 silver production was within the November 2022 Revised Operating Outlook range of 18.0 to 18.5 million ounces as provided in the Q3 2022 MD&A dated November 9, 2022. Gold production of 552.5 thousand ounces Consolidated 2022 gold production of 552.5 thousand ounces was 26.8 thousand ounces lower than we produced in 2021. This was largely the result of lower gold production at Dolores due to mine sequencing and a reserve grade shortfall in Phase 9B of the open pit. The decrease at Dolores was partially offset by higher production at Shahuindo from higher gold grades due to mine sequencing. 2022 gold production was within our 2022 Original Operating Outlook range of 550.0 to 605.0 thousand ounces. Base metal production Consolidated 2022 lead production of 18.7 thousand tonnes was 0.6 thousand tonnes higher than we produced in 2021. Consolidated 2022 zinc production of 38.6 thousand tonnes and copper production of 5.3 thousand tonnes were 10.7 thousand tonnes and 3.4 thousand tonnes lower than we produced in 2021, respectively. The changes in year-over-year base metal production were primarily the result of Morococha being placed on care and maintenance in February 2022, and mining at Huaron sequencing into higher lead grade ore zones. Zinc production was within the 2022 Original Operating Outlook range of 35.0 to 40.0 thousand tonnes, while lead production was above the 2022 Original Operating Outlook range of 15.0 to 17.0 thousand tonnes, and copper production was below the 2022 Original Operating Outlook range of 5.5 to 6.5 thousand tonnes. Financial Revenue in 2022 of $1.5 billion was 8% lower than the $1.6 billion recorded in 2021, reflecting an estimated $111.3 million in lower revenues attributable to lower quantities of metal sold, largely due to Morococha being placed on care and maintenance in February 2022, and $47.6 million attributable to lower silver prices offset partially by higher zinc prices. Net loss of $340.1 million, or $1.62 basic loss per share, was recorded for 2022, compared with net earnings of $98.6 million, or $0.46 basic earnings per share in 2021. The $438.6 million year-over-year decrease was mainly due to a combination of: the Transaction costs primarily attributable to the Company agreeing to provide Yamana with $150 million toward a termination fee payable to Gold Fields Limited ("Gold Fields"); the $154.5 million Q2 2022 impairment and associated net realizable value ("NRV") charge of the Dolores mine; increased production costs; and lower revenues. The Dolores Q2 2022 impairment and NRV adjustment was related to the following indicators: (i) The updated mineral resource and production plan for the life of mine which adjusted for the overestimation on Phase 9B of the open pit resource from the original exploration drilling conducted; (ii) inflationary pressures, which have particularly affected this shorter-life asset where most of the mining will be completed in the next two years, including the suspension of underground mining operations; and, (iv) a reduction in the expected duration of economic leaching to the year 2030. See the "Overview of 2022 Financial Results" section of this MD&A for further information. Adjusted earnings(1) was $17.9 million, or $0.09 adjusted earnings per share, in 2022, compared to adjusted earnings of $161.8 million, or $0.77 basic adjusted earnings per share in 2021. The decrease is related to the revenue and production cost factors described above. PAN AMERICAN SILVER CORP. 9 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Cash flow, liquidity and working capital position Cash flow from operations: The Company generated $31.9 million in 2022, which was a $360.2 million decrease compared to the $392.1 million generated in 2021. The decrease was primarily driven by Transaction costs related to the proposed acquisition of Yamana and lower revenues. In addition, inflationary pressures across the asset portfolio offset the lower production costs at Morococha due to the mine being placed on care and maintenance. See the "Overview of 2022 Financial Results" section of this MD&A for further information. As at December 31, 2022, the Company had working capital of $423.5 million, inclusive of cash and short-term investments of $142.3 million (excluding long term investments); and $340.0 million available under its revolving Sustainability-Linked Credit Facility ("SL-Credit Facility"). Total debt(1) of $226.8 million was related to the SL-Credit Facility, lease liabilities and construction loans in Peru. In January 2023, the Company sold its long-term investment in Maverix Metals Inc. ("Maverix") for $105.3 million net of transaction costs further improving liquidity. Please refer to the "Subsequent Events" section of the MD&A. Cash Costs(1) During 2022, all operations were negatively impacted by inflationary pressures, mainly reflecting increased prices for diesel and certain consumables, including cyanide, explosives, and steel products (such as grinding media), as well as facing supply-chain shortages and delayed logistics. We also experienced indirect cost increases in other supplies and services due to the inflationary impact of diesel and consumable prices on third-party suppliers. These challenges are collectively referred to as "Inflationary and Supply Chain Cost Increases" throughout this MD&A. Silver Segment Cash Costs per ounce in 2022 of $12.72 were $1.21 higher than the $11.51 in 2021. The increase in year-over-year Cash Costs is driven primarily by: i. a $2.20 per ounce increase from Huaron, where Inflationary and Supply Chain Cost increases were partially offset by higher by-product credits from higher realized zinc prices; ii. a $1.31 per ounce increase from Manantial Espejo due to a decrease in by-product credits from lower gold production, partially offset by lower production costs per ounce, both due to the completion of mining at COSE in April 2022; and, iii. an $0.81 per ounce increase from La Colorada due to a decrease in by-product credits from lower base metal grades, partially offset by higher silver grade material sold. These increases were partially offset by a $1.28 per ounce decrease to Silver Segment Cash Costs attributable to lower direct selling costs from lower treatment and refining charges in 2022. Silver Segment Cash Costs were above the 2022 Original Operating Outlook range of $10.70 to $12.20 per ounce. Gold Segment Cash Costs per ounce in 2022 were $1,113, $214 higher than in 2021, reflecting increases at all Gold Segment mines. This was largely driven by the previously described Inflationary and Supply Chain Cost Increases, lower mined grades due to mine sequencing at La Arena, Dolores and Timmins, as well as grade reconciliation shortfalls at Dolores in Phase 9B. Gold Segment Cash Costs were above the 2022 Original Operating Outlook range of $970 to $1,070 per ounce. All-In Sustaining Costs (“AISC”)(1) Silver Segment AISC for 2022 of $16.48 per ounce were $0.86 higher than 2021. The increase primarily reflects the previously described factors increasing Cash Costs, partially offset by lower exploration expenditures allocated to the Silver Segment mines and lower sustaining capital expenditures at Morococha and Manantial Espejo, which led to a $0.22 and $0.13 per ounce decrease in year-over-year Silver Segment AISC, respectively. Silver Segment AISC were above the 2022 Original Operating Outlook range of $14.50 to $16.00 per ounce. PAN AMERICAN SILVER CORP. 10 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Gold Segment AISC for 2022 of $1,649 per ounce were $435 higher than 2021. This largely reflects the previously described factors increasing Cash Costs, an increase in sustaining capital expenditures at Shahuindo and La Arena, and the impact of $98.9 million in NRV adjustments to inventories at Dolores, which led to a $172 per ounce increase in year-over-year Gold Segment AISC. Gold Segment AISC excluding NRV inventory adjustments for 2022 of $1,459 were within the August 2022 Revised Operating Outlook range of $1,450 to $1,550 per ounce provided in the Q2 2022 MD&A dated August 10, 2022. (1) Adjusted earnings, Total Debt, Cash Costs, and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed description of these measures and, where appropriate, a reconciliation of the measure to the 2022 Annual Financial Statements. ENVIRONMENTAL, SOCIAL, AND GOVERNANCE Pan American is committed to conducting its business in a responsible and sustainable manner. Our ESG values include: caring for the environment in which we operate; contributing to the long-term development of our host communities; ensuring safe and secure workplaces for our employees; contributing to the welfare of our employees, local communities and governments; and, operating transparently. In 2022, we met 14 of our 20 ESG goals described in the “Goals and Performance” section of the Company’s 2021 Sustainability Report, which is available on the Company’s website at www.panamericansilver.com. We are deeply saddened to report that there were three fatal accidents at our operations in 2022. The Company extends our sincere condolences to the families, friends, and colleagues of these individuals. We have conducted full accident investigations with assistance from our local safety committees and relevant authorities and seek to use these accidents as learning tools to prevent recurrences in accordance with our commitment to improving safety performance. We intend to increase emphasis on ensuring that best available controls are in place to manage the most critical risks in our business. On our key environmental metrics, we exceeded our goals, including reduction of greenhouse gas emissions, energy use and water use compared to the 2022 base case. We also met all of our human capital, inclusion and diversity, and governance goals. However, we did not meet our social goal regarding grievances closed, or our environmental audit, biodiversity and recycling targets. Our environmental audit performance did not improve due to individual site performance and changes in audit methodology. We were unable to meet our biodiversity target since a planned revegetation project in La Colorada was placed on hold due to uncertainty over the future Skarn mine layout, and we recycled less than expected partially due to less generation of recyclable waste at our mines in 2022. We will provide complete details on our performance against our 2022 ESG goals in the Company’s 2022 Sustainability Report to be published in May 2023. Pan American Silver was included in the S&P Global Sustainability Yearbook 2023 recognizing our improvement in ESG performance. S&P Global’s annual Sustainability Yearbook aims to distinguish individual companies, within their industries, that have demonstrated strengths in corporate sustainability. We placed in the S&P top 10% in the Metals & Mining industry in 2022. PAN AMERICAN SILVER CORP. 11 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) 2022 OPERATING PERFORMANCE Consolidated 2022 Operating Results Silver and Gold Production The following table provides silver and gold production at each of Pan American’s operations for the three and twelve month periods ended December 31, 2022 and 2021. Each operation’s production variances are further discussed in the “Individual Mine Performance” section of this MD&A. Silver Production (ounces ‘000s) Gold Production (ounces ‘000s) Three months ended December 31, Year ended December 31, Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 2022 2021 2022 2021 1,339 1,025 — 703 1,010 591 77 14 4 4,763 4,465 1,584 838 540 641 1,090 507 61 11 4 5,927 3,660 324 2,526 3,463 2,242 260 38 15 5,171 3,513 2,175 2,548 3,236 2,240 235 40 16 0.7 0.2 — — 8.9 34.6 49.7 36.2 34.0 0.8 0.3 0.4 0.1 11.3 40.1 37.0 32.6 34.2 5,276 18,455 4,937 17,297 19,174 17,858 164.4 163.8 156.7 155.9 3.3 0.9 0.1 0.1 26.6 136.9 151.4 98.5 134.6 552.5 550.4 2.7 1.1 1.1 0.3 33.8 160.1 134.0 112.4 133.8 579.3 576.4 La Colorada Huaron Morococha(1) San Vicente(2) Manantial Espejo Dolores Shahuindo La Arena Timmins Total Total Payable Production(3) (1) Morococha data represents Pan American's 92.3% interest in the mine's production. (2) San Vicente data represents Pan American's 95.0% interest in the mine's production. (3) Payable production reflects sellable metal after deducting commercial contract metal payable deductions. Base Metal Production The following table provides the Company’s base metal production for the three and twelve months ended December 31, 2022 and 2021: Zinc – kt Lead – kt Copper – kt Zinc – kt Lead – kt Copper – kt Base Metal Production Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 10.5 5.0 1.3 11.2 4.1 2.4 38.6 18.7 5.3 49.4 18.1 8.7 Base Metal Payable Production Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 8.8 4.6 1.1 9.4 3.9 2.1 32.3 17.4 4.5 41.3 17.0 7.4 PAN AMERICAN SILVER CORP. 12 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Cash Costs and AISC The quantification of both Cash Costs and AISC measures is described in detail, and where appropriate reconciled to the 2022 Annual Financial Statements, in the "Alternative (Non-GAAP) Performance Measures" section of this MD&A. The following table reflects the Cash Costs and AISC, net of by-product credits, at each of Pan American’s operations for the three and twelve months ended December 31, 2022, as compared to the same periods in 2021: Cash Costs(1) ($ per ounce) AISC(1) ($ per ounce) Three months ended December 31, Year ended December 31, Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 2022 2021 2022 2021 15.19 11.64 11.57 10.76 24.24 15.93 16.78 17.51 9.20 N/A 3.49 4.57 6.15 5.68 3.95 14.12 9.63 11.04 9.63 N/A 7.98 7.08 17.11 16.93 14.41 14.41 1,064 911 997 1,417 1,077 1,077 10.87 15.22 14.98 18.24 14.59 17.99 12.50 19.68 18.37 9.50 14.35 20.82 9.74 12.72 11.51 17.79 13.57 16.48 9.74 12.72 11.51 19.47 13.75 16.56 931 1,070 749 1,592 1,959 2,065 832 964 780 1,388 1,091 1,321 819 1,038 761 1,393 1,197 1,550 1,298 1,374 1,319 1,685 1,614 1,639 963 1,113 899 1,502 1,461 1,649 963 1,113 899 1,422 1,289 1,459 7.79 13.49 17.25 20.67 15.62 15.68 1,087 1,000 1,182 1,619 1,214 1,196 La Colorada Huaron Morococha San Vicente Manantial Espejo Silver Segment Consolidated(2) Silver Segment Consolidated (Excl. NRV Adjustments) Dolores(3) Shahuindo La Arena Timmins Gold Segment Consolidated(2) Gold Segment Consolidated (Excl. NRV Adjustments) (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed description of these measures and, where appropriate, a reconciliation of the measure to the 2022 Annual Financial Statements. (2) Silver Segment Cash Costs and AISC are calculated net of credits for realized revenues from all metals other than silver ("silver segment by-product credits"), and are calculated per ounce of silver sold. Gold segment Cash Costs and AISC are calculated net of credits for realized silver revenues ("gold segment by-product credits"), and are calculated per ounce of gold sold. (3) AISC for Dolores, excluding NRV Adjustments, was $1,248 and $1,363 per ounce for Q4 2022 and full year 2022, respectively, (Q4 2021 and full year 2021: $1,305 and $1,025, respectively). NRV adjustments included in AISC increased costs by $344 and $702 for Q4 2022 and full year 2022, respectively, (Q4 2021 and full year 2021: increased by $654 and $62, respectively). PAN AMERICAN SILVER CORP. 13 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) 2022 Operating Results versus 2022 Operating Outlook The following table sets out the actual 2022 annual metal production, Cash Costs, AISC and capital expenditures compared to those forecast by management throughout the year. The 2022 original forecast was provided in our Annual 2021 MD&A dated February 23, 2022 (the "2022 Original Operating Outlook"). Management subsequently revised the forecasts in its Q2 2022 MD&A dated August 10, 2022 and Q3 2022 MD&A dated November 9, 2022 (the "August 2022 Revised Operating Outlook" and "November 2022 Revised Operating Outlook", respectively). In the table below "NC" denotes no changes to the previously provided forecast. Silver Production - Moz Gold Production - koz Zinc Production - kt Lead Production - kt Copper Production - kt Silver Segment Cash Costs ($ per ounce) Gold Segment Cash Costs ($ per ounce) Silver Segment AISC ($ per ounce) Gold Segment AISC (Excl. NRV) ($ per ounce)(1) Sustaining Capital ($ millions) Project Capital ($ millions) 2022 Original Operating Outlook August 2022 Revised Operating Outlook 19.0 - 20.5 550.0 - 605.0 35.0 - 40.0 15.0 - 17.0 5.5 - 6.5 10.70 - 12.20 970 - 1,070 14.50 - 16.00 1,240 - 1,365 200.0 - 210.0 80.0 - 95.0 NC NC NC NC NC NC NC NC 1,450 - 1,550 240.0 - 250.0 55.0 - 60.0 November 2022 Revised Operating Outlook 18.0 - 18.5 NC NC NC NC NC NC NC NC NC NC 2022 Actual 18.5 552.5 38.6 18.7 5.3 12.72 1,113 16.48 1,459 223.8 66.6 (1) The August 2022 Revised Operating Outlook for Gold Segment AISC excludes NRV adjustments of $98.9 million in 2022 related to heap inventory at Dolores, driven by the updated life of mine plan and reserves, which also resulted in an impairment of the Dolores operation in Q2 2022. Silver and Gold Production versus the 2022 Original Operating Outlook Silver Segment: La Colorada Huaron Morococha(2) San Vicente(2) Manantial Espejo Silver Segment Total Gold Segment: Dolores Shahuindo La Arena Timmins Gold Segment Total Total 2022 Silver Production (million ounces) 2022 Gold Production (thousand ounces) Forecast(1) Actual Forecast(1) Actual 6.85 - 7.10 3.70 - 3.95 — 2.35 - 2.50 3.00 - 3.50 5.93 3.66 0.32 2.53 3.46 15.90 - 17.05 15.90 2.85 - 3.15 0.21 - 0.26 0.03 0.01 3.10 - 3.45 19.0 - 20.5 2.24 0.26 0.04 0.02 2.56 18.45 2.8 - 3.0 0.5 — 0.2 20.0 - 25.0 23.5 - 28.7 157.5 - 179.0 136.0 - 150.8 98.0 - 103.5 135.0 - 143.0 526.5 - 576.3 550.0 - 605.0 3.3 0.9 0.1 0.1 26.6 31.2 136.9 151.4 98.5 134.6 521.3 552.5 (1) Forecast as per the 2022 Original Operating Outlook. (2) Production figures are only for Pan American’s ownership share of Morococha (92.3%), and San Vicente (95.0%). PAN AMERICAN SILVER CORP. 14 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Silver Production Consolidated 2022 silver production of 18.5 million ounces was below Management's 2022 Original Operating Outlook due to lower silver production at Dolores related to reserve grade shortfalls in Phase 9B of the open pit and La Colorada where ventilation constraints in 2021 hindered development into higher grade zones and necessitated mine sequencing into lower silver grade stopes in the second half of 2022. Gold Production Consolidated 2022 gold production of 552.5 thousand ounces was within Management's 2022 Original Operating Outlook as lower gold production at Dolores, related to reserve grade shortfalls in Phase 9B of the open pit, was offset by higher gold production at Manantial Espejo and Shahuindo, due to higher grades processed in Q4 2022 at both operations. Base Metal Production versus the 2022 Original Operating Outlook Consolidated 2022 Zinc Production (thousand tonnes) 2022 Lead Production (thousand tonnes) 2022 Copper Production (thousand tonnes) Forecast(1) 35.0 - 40.0 Actual 38.6 Forecast(1) 15.0 - 17.0 Actual 18.7 Forecast(1) 5.5 - 6.5 Actual 5.3 (1) Forecast as per the 2022 Original Operating Outlook. Consolidated 2022 base metal production was generally as expected, with zinc production meeting forecast, and lead production exceeding forecast negatively impacting copper production which was slightly lower than forecast, largely due to mine sequencing at Huaron. Cash Costs and AISC versus the 2022 Original Operating Outlook The following table summarizes 2022 Cash Costs and AISC compared to the 2022 Original Operating Outlook on a per ounce basis, net of by-product credits. Silver Segment: La Colorada Huaron Morococha San Vicente Manantial Espejo Total Gold Segment(3): Dolores Shahuindo La Arena Timmins Total 2022 Cash Costs(1) ($ per ounce) 2022 AISC(1) ($ per ounce) Forecast(2) Actual Forecast(2) Actual 8.00 - 9.00 1.80 - 4.50 — 15.30 - 16.55 21.00 - 24.00 10.70 - 12.20 715 - 840 910 - 995 990 - 1,070 1,340 - 1,415 970 - 1,070 11.57 6.15 5.68 15.22 19.68 12.72 1,070 964 1,038 1,374 1,113 12.40 - 13.40 7.80 - 9.90 — 18.70 - 19.70 22.00 - 24.80 14.50 - 16.00 925 - 1,070 1,170 - 1,275 1,380 - 1,475 1,615 - 1,695 1,240 - 1,365 16.78 11.04 7.08 17.99 20.82 16.48 1,363 1,321 1,550 1,639 1,459 (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed description of these calculations and a reconciliation of these measures to the 2022 Annual Financial Statements. The Cash Costs and AISC forecasts assumed realized prices and exchange rates of $22.50/oz for silver, $1,750/oz for gold, $3,000/tonne ($1.36/lb) for zinc, $2,200/tonne ($1.00/lb) for lead, and $9,200/tonne ($4.17/lb) for copper; and average exchange rates relative to 1 USD of 20.00 for the MXN, 4.10 for the PEN, 122.17 for the ARS, 7.00 for the BOB, and 1.25 for the CAD. (2) Forecast as per the 2022 Original Operating Outlook. (3) Full year 2022 Gold Segment AISC excludes NRV adjustments of $98.9 million in 2022 related to heap inventory at Dolores, driven by the updated life of mine plan and reserves, which also resulted in an impairment of the Dolores operation in Q2 2022. PAN AMERICAN SILVER CORP. 15 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Cash Costs All operations were affected by higher than expected Inflationary and Supply Chain Cost Increases in 2022. In addition, Silver Segment Cash Costs of $12.72 per ounce were affected by production shortfalls at La Colorada as previously described, which were partially offset by higher than expected by-product credits from Manantial Espejo due to higher grades processed in Q4 2022. Gold Segment Cash Costs of $1,113 per ounce were impacted by Inflationary and Supply Chain Cost Increases as well as production shortfalls at Dolores, related to the Phase 9B mineral reserve grade shortfall. AISC Silver Segment AISC of $16.48 per silver ounce were affected by the same factors driving Cash Costs. Gold Segment AISC of $1,649 per gold ounce were affected by the same factors driving Cash Costs, in addition to higher sustaining capital expenditures at Shahuindo and La Arena, as a result of funding mine infrastructure projects at those operations directly rather than through originally planned for construction loans. Capital Expenditures versus the 2022 Original Operating Outlook The following table summarizes the 2022 capital expenditures compared to the 2022 Original Operating Outlook. La Colorada Huaron Morococha San Vicente Manantial Espejo Dolores Shahuindo La Arena Timmins Sustaining Capital Sub-total La Colorada Skarn Timmins Other Project Capital Sub-total Total Capital 2022 Capital Expenditures ($ millions) Forecast(1) 28.0 - 29.0 Actual 29.3 16.0 - 19.0 — 7.0 - 8.0 2.0 - 3.0 33.0 - 34.0 37.0 - 38.0 39.0 - 40.0 38.0 - 39.0 200.0 - 210.0 68.0 - 81.0 12.0 - 14.0 - 80.0 - 95.0 280.0 - 305.0 13.9 0.3 7.2 4.3 35.9 49.2 48.0 35.7 223.8 62.4 1.9 2.2 66.6 290.3 (1) Forecast as per the 2022 Original Operating Outlook. Sustaining capital expenditures were $13.8 million higher than the top end of the range provided in the 2022 Original Operating Outlook. This was primarily driven by the necessity to directly fund construction of leach pads, waste dumps and other infrastructure at Shahuindo and La Arena, rather than through construction loans that would have amortized the cost over the life of the assets. In 2022, Pan American experienced delays in obtaining the required documentation to secure the financing arrangements for these projects ahead of beginning earthworks. Project capital in 2022 was below the 2022 Original Operating Outlook range, primarily due to additional time used to optimize the design and construction plans for the paste fill plant at Bell Creek, which is now scheduled to be constructed in 2023 and 2024. Furthermore, initiation of advancing access ramps to our La Colorada skarn deposit was deferred in 2022 to investigate potential bulk mining opportunities and ensure access infrastructure does not interfere with the optimal mine design. PAN AMERICAN SILVER CORP. 16 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Individual Mine Operation Performance An analysis of performance at each operation in 2022 compared with 2021 follows. The project capital amounts invested in 2022 are further discussed in the "Project Development Update" section of this MD&A. La Colorada Operation Ore tonnes mined - kt Tonnes milled - kt Average silver grade – grams per tonne Average zinc grade - % Average lead grade - % Production: Silver – koz Gold – koz Zinc – kt Lead – kt Copper - kt Payable Production: Silver – koz Gold – koz Zinc – kt Lead – kt Copper - kt Cash Costs - $ per ounce(1) Sustaining capital - $ thousands(2) AISC - $ per ounce(1) Payable silver sold - koz Three months ended December 31, Year ended December 31, 2022 171.0 162.8 283 1.86 1.09 1,339 0.74 2.55 1.51 0.01 1,270 0.54 2.16 1.39 0.01 15.19 11,689 24.24 1,306 2021 159.6 159.9 343 1.71 0.95 1,584 0.79 2.26 1.22 — 1,510 0.65 1.93 1.13 — 11.64 6,410 15.93 1,669 2022 649.2 641.1 316 1.85 1.05 5,927 3.33 10.02 5.65 0.01 5,625 2.68 8.51 5.23 0.01 11.57 29,275 16.78 5,712 2021 566.8 572.5 312 2.05 1.09 5,171 2.71 9.98 5.19 — 4,902 2.21 8.49 4.83 — 10.76 26,069 17.51 4,321 (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to cost of sales. (2) Sustaining capital expenditures exclude $12.5 million and $62.4 million investing activity cash outflows for Q4 2022 and full year 2022, respectively (Q4 2021 and full year 2021: $16.5 million and $39.5 million, respectively) related to investment capital incurred on the La Colorada projects, as disclosed in the “Project Development Update” section of this MD&A. 2022 versus 2021 Production: • • Silver: 15% increase primarily driven by higher throughput, which benefited from improved primary ventilation rates that allowed an increase in mining rates. By-products: 9% increase in lead production as a result of increased throughput, partially offset by mine sequencing into lower base metal grade areas of the mine. Cash Costs: were $0.81 higher than in 2021, primarily driven by lower by-product credits per ounce from lower base metal grades, partially offset by higher payable silver ounces sold. Sustaining Capital: increased spending in 2022 primarily related to secondary ventilation infrastructure and ground control improvements, tailings storage facility expansions and accelerated mine deepening to advance the mine transition towards more mechanized long-hole open stoping mining methods. This was partially offset by reduced investments in mine equipment replacements and raise-bore primary ventilation infrastructure. AISC: was $0.73 lower than in 2021, as a result of lower sustaining capital per ounce and greenfield exploration expenditures allocated in 2022, partially offset by the factors increasing year-over-year Cash Costs. PAN AMERICAN SILVER CORP. 17 Huaron Operation Ore tonnes mined - kt Tonnes milled - kt Average silver grade – grams per tonne Average zinc grade - % Average lead grade - % Average copper grade - % Production: Silver – koz Gold – koz Zinc – kt Lead – kt Copper – kt Payable Production: Silver – koz Gold – koz Zinc – kt Lead – kt Copper – kt Cash Costs - $ per ounce(1) Sustaining capital - $ thousands(2) AISC - $ per ounce(1) Payable silver sold – koz Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Three months ended December 31, Year ended December 31, 2022 231.1 232.6 162 2.46 1.71 0.68 1,025 0.24 4.50 3.21 1.20 866 0.06 3.71 3.02 1.06 9.20 3,952 14.12 844 2021 233.1 233.1 137 1.79 1.02 0.86 838 0.27 3.06 1.63 1.55 688 0.03 2.51 1.53 1.35 3.49 3,991 9.63 672 2022 937.2 938.4 146 2.25 1.52 0.63 3,660 0.95 16.43 11.44 4.30 3,068 0.28 13.52 10.78 3.84 6.15 13,940 11.04 3,014 2021 939.3 940.3 141 2.14 1.11 0.82 3,513 1.09 15.37 7.48 5.85 2,930 0.12 12.63 7.02 4.94 3.95 10,897 7.79 2,976 (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to cost of sales. (2) Sustaining capital expenditures exclude $1.6 million and $1.6 million investing activity cash outflows for Q4 2022 and full year 2022, respectively (Q4 2021 and full year 2021: $nil and $nil, respectively) related to engineering for a new filtered tailings plant and an exploration program related to zones outside the mine plan; this expenditure is included in Other Projects, as disclosed in the “Project Development Update” section of this MD&A. 2022 versus 2021 Production: • • Silver: 4% higher, primarily from higher grades due to mine sequencing. By-products: zinc and lead production increased 7% and 53%, respectively, while copper production was 27% lower, all due to mine sequencing. Cash Costs: increased $2.20 per ounce, primarily due to Inflationary and Supply Chain Cost Increases, which were partially offset by higher by-product credits per ounce due to higher zinc prices. Sustaining Capital: higher spending in 2022 was primarily related to equipment replacements and refurbishments, and mine deepening, partially offset by lower investments on tailings storage facility expansions. The balance of 2022 capital spending related to equipment and facility leases, mine ventilation infrastructure and near-mine exploration. AISC: an increase of $3.25 per ounce due to the same factors affecting year-over-year Cash Costs and higher sustaining capital investments. PAN AMERICAN SILVER CORP. 18 Dolores Operation Ore tonnes mined - kt Waste tonnes mined - kt Tonnes placed - kt Average silver grade – grams per tonne Average gold grade – grams per tonne Production: Silver – koz Gold – koz Payable Production: Silver – koz Gold – koz Cash Costs - $ per ounce(1) Sustaining capital - $ thousands AISC - $ per ounce(1) Payable gold sold - koz Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Three months ended December 31, Year ended December 31, 2022 2,591.3 6,166.8 2,075.0 20 0.67 591 34.6 590 34.5 1,064 4,616 1,592 32.62 2021 1,238.9 7,043.5 2,057.0 14 0.66 507 40.1 507 40.1 931 12,097 1,959 34.34 2022 7,303.3 26,227.2 7,956.6 18 0.64 2,242 136.9 2,238 136.6 1,070 35,855 2,065 140.97 2021 7,668.3 24,374.9 7,774.4 16 0.95 2,240 160.1 2,236 159.8 749 40,566 1,087 158.07 (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to cost of sales. AISC excluding NRV Adjustments is $1,248 and $1,363 per ounce for Q4 2022 and full year 2022, respectively, (Q4 2021 and full year 2021: $1,305 and $1,025, respectively). NRV adjustments included in AISC increased costs by $344 and $702 for Q4 2022 and full year 2022, respectively, (Q4 2021 and full year 2021: $654 increase and $62 increase, respectively). 2022 versus 2021 Production: • Silver: comparable year-over-year due to mine sequencing into higher silver grade ores in the second half of 2022, partially offset by a lower ratio of silver ounces produced to ounces stacked from leach sequencing. • Gold: the 15% decrease is primarily due to mine sequencing into lower gold grade ores and a negative grade reconciliation related to Phase 9B of the open pit, partially offset by a higher ratio of gold ounces recovered to stacked from leach sequencing. Cash Costs: increased $321 per ounce, primarily from the lower gold grades due to mine sequencing and the impact of negative grade reconciliation in Phase 9B, Inflationary and Supply Chain Cost Increases and lower silver by-product credits per ounce. Sustaining Capital: reduced year-over-year, primarily due to lower spending on heap leach pad expansions and plant and facility upgrades, partially offset by greater capitalized spending on waste mining for Phase 10 of the open-pit. AISC: increased $978 per ounce, primarily due to the impact of NRV inventory adjustments, in addition to the same factors affecting Cash Costs. The NRV inventory adjustments increased costs by $89.2 million, or $640 per ounce, in 2022 relative to 2021. PAN AMERICAN SILVER CORP. 19 Shahuindo operation Ore tonnes mined - kt Waste tonnes mined - kt Tonnes placed - kt Average silver grade – grams per tonne Average gold grade – grams per tonne Production: Silver – koz Gold – koz Payable Production: Silver – koz Gold – koz Cash Costs - $ per ounce(1) Sustaining capital - $ thousands(2) AISC - $ per ounce(1) Payable gold sold - koz Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Three months ended December 31, Year ended December 31, 2022 3,083.2 3,711.6 2,970.3 10 0.67 76.51 49.70 75.94 49.65 911 21,412 1,388 46.29 2021 3,831.1 3,641.8 3,617.1 6 0.43 60.54 36.95 60.08 36.92 832 9,146 1,091 39.53 2022 13,644.2 18,922.9 13,754.8 6 0.50 260.33 151.37 258.38 151.24 964 49,246 1,321 145.32 2021 15,114.6 16,717.4 13,149.3 6 0.47 234.69 134.04 232.93 133.93 780 28,846 1,000 139.46 (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to cost of sales. (2) Sustaining capital expenditures exclude $0.1 million and $0.6 million of investing activity cash outflows for Q4 2022 and full year 2022, respectively, (Q4 2021 and full year 2021: $0.1 million and $0.5 million, respectively) related to lease payments for the crushing and agglomeration plant, and is included in Other Projects, as disclosed in the “Project Development Update” section of this MD&A. 2022 versus 2021 Production: • Gold: increased 13%, primarily as a result of higher gold grades from mine sequencing and higher tonnes stacked from improved ore blending availabilities between fine and course ores. Cash Costs: increased $184 per ounce, primarily as a result of Inflationary and Supply Chain Cost Increases and higher waste-to-ore mining rates. Sustaining Capital: increased relative to 2021, primarily driven by construction of a mine water treatment plant, waste storage facility preparation, and mine equipment replacements, partially offset by lower expenditures for heap leach pad expansions due to the timing of payments on construction loan facilities. AISC: increased $321 per ounce, due to the same factors affecting year-over-year Cash Costs, in addition to higher sustaining capital expenditures per ounce. PAN AMERICAN SILVER CORP. 20 La Arena operation Ore tonnes mined - kt Waste tonnes mined - kt Tonnes placed - kt Average silver grade – grams per tonne Average gold grade – grams per tonne Production: Silver – koz Gold – koz Payable Production: Silver – koz Gold – koz Cash Costs - $ per ounce(1) Sustaining capital - $ thousands AISC - $ per ounce(1) Payable gold sold - koz Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Three months ended December 31, Year ended December 31, 2022 3,735.7 3,904.7 3,746.6 1 0.32 14.19 36.18 14.14 36.15 997 11,390 1,393 30.62 2021 4,037.6 5,372.8 4,037.6 1 0.35 11.11 32.59 11.08 32.57 819 9,996 1,197 26.87 2022 11,423.4 22,683.7 11,486.1 1 0.33 37.62 98.46 37.50 98.39 1,038 47,970 1,550 99.37 2021 10,855.2 27,007.5 10,855.2 1 0.36 39.75 112.35 39.63 112.27 761 45,479 1,182 109.43 (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to cost of sales. 2022 versus 2021 Production: • Gold: decreased 12% as a result of lower grades due to mine sequencing and a decrease in the ratio of ounces recovered to stacked due to the timing of leach sequencing. Cash Costs: increased $277 per ounce, primarily due to Inflationary and Supply Chain Cost Increases and lower grade ore mined, partially offset by a lower ratio of waste-to-ore mining. Sustaining Capital: higher than 2021, largely as a result of higher expenditures on heap leach pad expansions, waste storage facility expansions and mine equipment replacements, offset by lower capitalized deferred stripping. AISC: increased by $368 per ounce, due to the same factors affecting year-over-year Cash Costs, as well as an increase in sustaining capital and reclamation cost accretion per ounce. PAN AMERICAN SILVER CORP. 21 Timmins operation Ore tonnes mined - kt Tonnes milled - kt Average gold grade – grams per tonne Production: Silver – koz Gold – koz Payable Production: Silver – koz Gold – koz Cash Costs - $ per ounce(1) Sustaining capital - $ thousands(2) AISC - $ per ounce(1) Payable gold sold - koz Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Three months ended December 31, Year ended December 31, 2022 455.3 447.9 2.52 3.64 33.96 3.61 33.94 1,417 8,269 1,685 31.00 2021 392.6 391.4 2.83 4.03 34.25 3.99 34.22 1,298 8,415 1,614 30.00 2022 1,717.9 1,694.3 2.60 15.30 134.64 15.01 134.53 1,374 35,711 1,639 135.40 2021 1,580.9 1,593.1 2.70 16.16 133.85 16.00 133.75 1,319 35,894 1,619 132.00 (1) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to cost of sales. (2) Sustaining capital expenditures exclude $0.2 million and $1.9 million investing activity cash outflows for Q4 2022 and full year 2022, respectively (Q4 2021 and full year 2021: $0.2 million and $6.4 million, respectively) related to investment capital incurred on the Timmins projects, as disclosed in the “Project Development Update” section of this MD&A. 2022 versus 2021 Production: • Gold: comparable year-over-year, as higher mining rates were offset by lower grades during the second half of 2022. Cash Costs: increased $55 per ounce, primarily as a result of the lower grades and higher operating costs from Inflationary and Supply Chain Cost Increases, which were largely offset by improved productivity from additional ground control measures at Bell Creek and the depreciation of the Canadian Dollar. Sustaining Capital: was comparable year-over-year with expenditures primarily comprised of mine equipment refurbishments and replacements, mine infrastructure upgrades, a tailings storage facility expansion, near-mine exploration, and lease payments for mining equipment. AISC: increased by $20 per ounce due to the same factors impacting Cash Costs, offset by lower exploration expenditures allocated in 2022. PAN AMERICAN SILVER CORP. 22 Other Operations(1) Tonnes milled – kt Average silver grade – grams per tonne Average gold grade – grams per tonne Average zinc grade - % Average lead grade - % Average copper grade - % Production: Silver – koz Gold – koz Zinc – kt Lead – kt Copper – kt Cash Costs - $ per silver ounce(2) AISC - $ per silver ounce(2) Tonnes milled – kt Average silver grade – grams per tonne Average gold grade – grams per tonne Average zinc grade - % Average lead grade - % Average copper grade - % Production: Silver – koz Gold – koz Zinc – kt Lead – kt Copper – kt Cash Costs - $ per silver ounce(2) AISC - $ per silver ounce(2) Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 Morococha San Vicente Manantial Espejo Morococha San Vicente Manantial Espejo — — — — — — — — — — — N/A N/A 97.4 243 — 4.05 0.32 0.14 703 0.03 3.43 0.27 0.10 17.11 18.24 159.9 249 2.05 — — — 1,010 8.95 — — — 16.93 9.50 158.9 118 — 2.97 1.02 0.54 540 0.35 3.93 1.27 0.67 4.57 7.98 90.1 246 — 2.63 0.03 0.24 641 0.06 1.93 0.02 0.18 10.87 14.59 170.8 230 2.25 — — — 1,090 11.35 — — — 12.50 14.35 Year ended December 31, 2022 Year ended December 31, 2021 Morococha San Vicente Manantial Espejo Morococha San Vicente Manantial Espejo 100.5 112 — 3.12 0.96 0.60 324 0.15 2.67 0.73 0.47 5.68 7.08 346.0 250 — 3.29 0.30 0.18 2,526 0.11 9.51 0.89 0.48 15.22 17.99 642.6 195 1.47 — — — 3,463 26.63 — — — 19.68 20.82 617.5 122 — 2.98 1.04 0.48 2,175 1.11 15.64 5.15 2.17 9.63 13.49 356.3 244 — 2.81 0.10 0.24 2,548 0.28 8.36 0.32 0.66 14.98 17.25 657.1 177 1.75 — — — 3,236 33.76 — — — 18.37 20.67 (1) Production figures reflect Pan American’s 92.3% share of Morococha and 95% share of San Vicente, unless otherwise noted. Morococha was placed on care and maintenance in February 2022. (2) Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to cost of sales. 2022 versus 2021 Morococha: production reflects the mine being placed in care and maintenance in February 2022 to complete the previously agreed closure of the processing plant while the Company evaluates strategic alternatives for the future of the operation. San Vicente: operating results were generally consistent with the prior year, as higher zinc and lead grades were offset by timing of zinc concentrate shipments. Higher sustaining capital expenditures year-over-year led to marginally higher AISC in 2022. Manantial Espejo: the year-over-year gold production decrease is due to the lower gold grade ores processed, reflecting the completion of mining operations at COSE in April 2022, whereas the increase in silver production reflects higher grades and ore mining at the Manantial Espejo underground operation and the Joaquin mine in 2022. Mining and processing activities at Manantial Espejo concluded in January 2023. PAN AMERICAN SILVER CORP. 23 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) 2023 OPERATING OUTLOOK Pan American plans to provide its 2023 operating outlook and guidance following the completion of the Transaction, which is expected to occur later in the first quarter of 2023. Management intends to provide a 2023 operating outlook inclusive of the Latin American assets acquired through the Transaction, as well as a consolidated forecast for annual general and administrative, exploration and project development costs. The 2023 operating outlook will reflect the end-of-mine life at Pan American's Manantial Espejo operation in Argentina, with the asset being placed on care and maintenance at the end of 2022. PROJECT DEVELOPMENT UPDATE The following table reflects the amounts spent at each of Pan American’s major projects in 2022 as compared to 2021. Project Development Investment (thousands of USD) La Colorada projects Timmins projects Other Total Three months ended December 31, Year ended December 31, 2022 12,462 217 1,770 14,449 2021 16,521 244 134 16,899 2022 62,408 1,941 2,238 66,587 2021 39,462 6,403 611 46,476 During 2022, the Company invested $66.6 million, largely on exploration and development of the La Colorada Skarn project, including advancing construction of the new concrete-lined shaft and completion of the refrigeration plant that will also provide benefits to the existing operation. OVERVIEW OF 2022 FINANCIAL RESULTS Selected Annual and Quarterly Information The following tables set out selected quarterly results for the past twelve quarters as well as selected annual results for the past three years. The dominant factors affecting results in the quarters and years presented below are the volatility of realized metal prices and the timing of sales, which vary with the timing of shipments and impairment charges. 2022 (In thousands of USD, other than per share amounts) Revenue $ Mine operating earnings (loss) $ Earnings (loss) for the period attributable to equity holders $ Basic (loss) earnings per share $ Diluted (loss) earnings per share $ Cash flow from operating activities(1) $ $ Cash dividends paid per share Other financial information Total assets Total long-term financial liabilities(2) Total attributable shareholders’ equity Quarter Ended Mar 31 Jun 30 Sep 30 Dec 31 Year Ended Dec 31 439,888 $ 66,755 $ 76,517 $ 0.36 $ 0.36 $ 68,758 $ 0.12 $ 340,469 $ (31,652) $ (173,982) $ (0.83) $ (0.83) $ 20,835 $ 0.12 $ 338,889 $ (21,788) $ (71,527) $ (0.34) $ (0.34) $ 54,418 $ 0.11 $ 375,472 $ 1,494,718 48,362 (341,748) (1.62) (1.62) 31,909 0.45 35,047 $ (172,756) $ (0.81) $ (0.81) $ (112,102) $ 0.10 $ $ 3,248,498 $ 511,803 $ 2,195,479 (1) Cash flow from operating activities includes $157.3 million of transaction and integration costs related to the Yamana Transaction. (2) Total long-term financial liabilities are comprised of non-current liabilities excluding deferred tax liabilities and deferred revenue. PAN AMERICAN SILVER CORP. 24 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) 2021 (In thousands of USD, other than per share amounts) Revenue $ Mine operating earnings $ (Loss) earnings for the period attributable to equity holders $ Basic (loss) earnings per share $ Diluted (loss) earnings per share $ Cash flow from operating activities $ Cash dividends paid per share $ Other financial information Total assets Total long-term financial liabilities(1) Total attributable shareholders’ equity Quarter Ended Mar 31 Jun 30 Sep 30 Dec 31 Year Ended Dec 31 368,099 $ 89,964 $ (7,798) $ (0.04) $ (0.04) $ 29,850 $ 0.07 $ 382,132 $ 103,048 $ 70,939 $ 0.34 $ 0.34 $ 87,143 $ 0.07 $ 460,349 $ 98,887 $ 20,251 $ 0.10 $ 0.10 $ 157,017 $ 0.10 $ 422,170 $ 1,632,750 367,938 76,039 $ 97,428 14,036 $ 0.46 0.06 $ 0.46 0.06 $ 392,108 118,098 $ 0.34 0.10 $ $ 3,518,584 297,600 $ $ 2,631,554 (1) Total long-term financial liabilities are comprised of non-current liabilities excluding deferred tax liabilities and deferred revenue. 2020 (In thousands of USD, other than per share amounts) Revenue $ Mine operating earnings $ (Loss) earnings for the period attributable to equity holders $ Basic (loss) earnings per share $ Diluted (loss) earnings per share $ Cash flow from operating activities $ Cash dividends paid per share $ Other financial information Total assets Total long-term financial liabilities(1) Total attributable shareholders’ equity Quarter Ended Mar 31 Jun 30 Sep 30 Dec 31 Year Ended Dec 31 358,428 $ 50,058 $ (76,807) $ (0.37) $ (0.37) $ 114,051 $ 0.05 $ 249,509 $ 48,386 $ 20,063 $ 0.10 $ 0.10 $ 62,750 $ 0.05 $ 300,414 $ 124,561 $ 65,741 $ 0.31 $ 0.31 $ 114,943 $ 0.05 $ 430,461 $ 1,338,812 360,177 137,172 $ 177,882 168,885 $ 0.85 0.80 $ 0.85 0.80 $ 462,315 170,571 $ 0.22 0.07 $ $ 3,433,875 277,696 $ $ 2,602,519 (1) Total long-term financial liabilities are comprised of non-current liabilities excluding deferred tax liabilities and deferred revenue. PAN AMERICAN SILVER CORP. 25 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Income Statement: 2022 versus 2021 Net loss of $340.1 million were recorded in 2022 compared to net earnings of $98.6 million in 2021, which corresponds to basic (loss) earnings per share of $(1.62) and $0.46, respectively. The following table highlights the difference between net earnings in 2022 compared with 2021: Net earnings, year ended December 31, 2021 Decreased revenue: $ 98,562 Note Lower quantities of metal sold Decreased realized metal prices Decreased direct selling costs Decreased negative settlement adjustments Total decrease in revenue Increased cost of sales: Increased production costs Increased NRV adjustments to inventories Decreased royalty charges Increased production costs and decreased royalty charges Increased depreciation and amortization Total increase in cost of sales Decreased income tax expense Decreased investment loss Increased gain and income from associates Decreased general and administrative expense Increased gains on derivatives Decreased foreign exchange loss Increased transaction and integration costs Increased impairment charges Decreased gains on sales of mineral properties, plant and equipment Increased mine care and maintenance costs Increased exploration and project development expense Increased interest and finance expense Increased other expense $ (111,296) (47,622) 18,916 1,970 $ (138,032) (1) $ (79,929) (89,023) 486 $ (168,466) (13,078) $ (2) (3) (5) (7) (8) (4) (6) (9) (10) (181,544) 107,311 43,501 40,686 5,877 1,943 1,660 (157,334) (99,064) (34,606) (13,343) (7,264) (6,265) (2,151) (340,063) Net loss, year ended December 31, 2022 $ 1) Revenue for 2022 was $138.0 million lower than in 2021, from decreased quantities of metal sold and lower metal prices. The year-over-year decrease in metal quantities sold was driven primarily by gold, zinc and copper decreases of 5%, 30%, and 39%, respectively. The lower quantities sold were mainly driven by lower production from the cessation of mining activities at Morococha in February 2022 and lower gold sales from grade-driven production decreases at Dolores and La Arena. These were partially offset by increased quantities of metal sold at La Colorada due to improved ventilation rates. The lower metal prices were due to a 14% decline in silver prices, partially offset by a 16% increase in zinc prices. PAN AMERICAN SILVER CORP. 26 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) The following table reflects yearly realized metal prices and quantities sold: Silver Gold Zinc Lead Copper Realized Metal Prices (1) Year ended December 31, 2022 2021 Quantities of Metal Sold (2) Year ended December 31, 2022 2021 $ $ $ $ $ 21.59 $ 1,792 $ 3,472 $ 2,148 $ 8,979 $ 25.00 1,792 2,997 2,206 9,297 17,486 548.8 29.9 17.6 4.7 17,470 574.9 42.7 17.0 7.8 (1) Metal price stated as dollars per ounce for silver and gold, and dollars per tonne for zinc, lead and copper, inclusive of final settlement adjustments on concentrate sales. (2) Metal quantities stated as koz for silver and gold and kt for zinc, lead and copper. 2) Production and royalty costs in 2022 were $168.5 million, or 18%, higher than in 2021. All operations were affected by Inflationary and Supply Chain Cost Increases. The largest factors that increased year-over-year production costs, which included this inflationary impact, are described below: i. $89.0 million from NRV inventory adjustments, which increased costs by $97.7 million in 2022 compared to $8.7 million in 2021. The increase in NRV inventory adjustments largely reflects increased heap inventory write-downs at Dolores, which resulted from the updates to the life of mine plan in Q2 2022, as well as the general inflationary pressures; ii. $86.6 million from Gold Segment mines (exclusive of NRV inventory adjustments), also reflecting higher waste-to-ore mining rates at Dolores and Shahuindo; iii. $29.7 million from Silver Segment mines (exclusive of Morococha and NRV inventory adjustments), also reflecting higher quantities of metal sold given prior year inventory build-ups ; iv. $23.9 million of mine closure severance provisions at Manantial Espejo, Morococha and Dolores; partially offset by, v. $59.9 million reduction in costs from Morococha being placed on care and maintenance in February 2022. 3) D&A expense was $13.1 million higher than 2021, primarily from Dolores where depreciation is calculated on a per tonne stacked basis and lower grades in 2022 resulted in comparatively higher depreciation, and from Manantial Espejo from accelerated depreciation due to decreasing mine life. Lower depreciation from Morococha being placed on care and maintenance in February 2022 partially offset these amounts. 4) Transaction and integration costs of $157.3 million in 2022 were incurred pursuant to the Transaction in which the Company agreed to provide Yamana with $150 million toward a termination fee payable to Gold Fields. The Transaction is discussed in further detail in the "Core Business and Strategy" and "Subsequent Events" sections of this MD&A. No such costs were incurred in 2021. 5) 6) 7) Income tax expense of $39.1 million in 2022 was $107.3 million lower than the $146.4 million in 2021, largely as a result of the $319.6 million decrease in mine operating earnings. The 2022 tax expense was further reduced by the appreciation of the Mexico Peso and Peruvian Sol, which increased the foreign denominated deductible tax attributes in those countries (largely comprised of mineral properties, plant and equipment). Impairment charge of $99.1 million ($114.8 million net of tax) was recorded on the Dolores mine in Q2 2022, with no such impairments recorded in 2021. The 2022 impairment related to the impairment of the Dolores mine assets disclosed in the Company's Q2 2022 MD&A. Investment losses were $16.2 million in 2022, a $43.5 million positive variance relative to 2021 investment losses of $59.7 million, both driven primarily by fair value mark-to-market adjustments on the Company's equity investment in New Pacific Metals Corp. PAN AMERICAN SILVER CORP. 27 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) 8) Gains and income from associates in 2022 was $45.0 million compared to gains of $4.3 million in 2021. The 2022 gains and income resulted from the March 21, 2022 re-designation of the Company's investment in Maverix from an "Investment in Associate" accounted for using the "equity method" (the Company's ownership proportion of Maverix's estimated earnings was recorded in income) to a "long-term financial asset" recorded at fair value beginning on March 31, 2022. The 2021 gains were attributable to the Company accounting for Maverix using the equity method. 9) Mineral properties, plant and equipment gains were $34.6 million less in 2021 because the comparative period included the sale of the Waterloo exploration stage asset. 10) Care and maintenance expenses increased in 2022 by $13.3 million, primarily due to Morococha being placed on care and maintenance in February 2022. Statement of Cash Flows: 2022 versus 2021 Cash flow from operations in 2022 totaled $31.9 million, $360.2 million less than the $392.1 million generated in 2021. The decrease was mostly related to a $138.0 million decline in revenue, as previously described, a $150.0 million termination fee paid pursuant to the Transaction, a $79.9 million increase in production costs excluding NRVs and an $8.6 million increase in income taxes paid. These were partially offset by a $29.0 million decrease in cash used from working capital changes. Changes in working capital, other than cash, used $42.0 million of cash in 2022 compared to $71.1 million used in 2021. The $29.0 million year-over-year decreased use of cash resulted largely from $32.9 million in lower inventory build-ups, mainly from La Colorada shipping its 2022 concentrate production compared to 2021 when it experienced shipping delays, and $4.5 million provided by increases in accounts payable and provisions. These were partially offset by $8.3 million used from increased trade receivables and prepaid expenses. Investing activities utilized $255.4 million in 2022, primarily from $274.7 million spent on mineral properties, plant and equipment at the Company’s mines and projects, which was partially offset by $8.7 million in proceeds from the disposition of mineral properties, plant and equipment, which included $7.0 million received from a third- party as partial compensation for the closure and reclamation of the Morococha mine processing facility. In 2021, investing activities utilized $186.7 million, largely from the $243.5 million spent on mineral properties, plant and equipment at the Company’s mines and projects, which was partially offset by $45.8 million in proceeds from the disposition of certain royalty assets and the deposits on the Waterloo sale. Financing activities in 2022 provided $53.0 million compared to $85.9 million used in the comparative year. In 2022, the source of cash largely reflects $167.1 million drawn, primarily from the SL-Credit Facility, to fund the $150 million termination fee pursuant to the Transaction. In 2022, financing activities also included $94.7 million in dividend payments, $14.8 million in lease repayments, and $5.2 million in Peruvian construction loan repayments. In 2021, the Company paid $71.5 million in dividends, $12.4 million in lease repayments, and $1.7 million in Peruvian construction loan repayments. Adjusted Earnings: 2022 versus 2021 Adjusted earnings and basic adjusted earnings per share are non-GAAP measures that the Company considers to better reflect normalized earnings, as it eliminates items that in Management's judgment are subject to volatility as a result of factors that are unrelated to operations in the period, and/or relate to items that will settle in future periods. Neither adjusted earnings nor basic adjusted earnings per share have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Please refer to the section of this MD&A entitled “Alternative Performance (Non-GAAP) Measures” for a detailed description, and a reconciliation of these measures to the 2022 Annual Financial Statements. PAN AMERICAN SILVER CORP. 28 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Adjusted Earnings in 2022 were $17.9 million, representing a basic adjusted earnings per share of $0.09, which was $143.8 million, or $0.68 per share, lower than 2021 adjusted earnings of $161.8 million, and basic adjusted earnings per share of $0.77, respectively. The following chart illustrates the key factors leading to the change in adjusted earnings from 2021 to 2022: Adjusted Earnings Reconciliation - 2021 to 2022 ($ millions) $30.4 $161.8 $(111.3) $(26.7) $(18.6) $(13.3) $(1.8) YTD 2021 adjusted earnings Decreased taxes Decreased revenue, quantities sold Decreased revenue, lower prices net of concentrate settlements Increased cost of sales Increased C&M Increased exploration and project development $(2.6) Other $17.9 YTD 2022 adjusted earnings PAN AMERICAN SILVER CORP. 29 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Income Statement: Q4 2022 vs. Q4 2021 Net loss of $172.1 million, or a basic loss per share of $0.82, was recorded in Q4 2022 compared to net earnings of $14.7 million, or basic earnings per share of $0.07. The following table highlights the differences between the Q4 2022 net loss and Q4 2021 net earnings: Net earnings, three months ended December 31, 2021 Decreased revenue: $ 14,664 Note Decreased realized metal prices Lower quantities of metal sold Decreased negative settlement adjustments Decreased direct selling costs Total decrease in revenue Decreased cost of sales: Increased production costs Decreased NRV adjustments to inventories Increased royalty charges Decreased production costs and increased royalty charges Increased depreciation and amortization Total decrease in cost of sales Increased transaction and integration costs Increased other expense Increased exploration and project development expense Increased interest and finance expense Increased mine care and maintenance costs Decreased gains on sales of mineral properties, plant and equipment Decreased gain and income from associates Decreased income tax expense Decreased investment loss Decreased foreign exchange loss Decreased general and administrative expense Increased gains on derivatives $ (22,498) (38,730) 6,387 8,143 $ (46,698) (1) $ (5,048) 16,219 (2,325) $ 8,846 (3,140) $ (2) (3) (4) (5) (6) 5,706 (157,334) (11,697) (4,484) (2,918) (1,212) (583) (289) 9,581 7,330 6,441 5,253 4,180 (172,060) Net earnings, three months ended December 31, 2022 $ 1) Revenue for Q4 2022 was $46.7 million lower than Q4 2021 from decreased quantities of metal sold and lower metal prices. The quarter-over-quarter decrease in metal quantities sold reflects decreases in silver, zinc and copper sales, which decreased 19%, 45% and 44%, respectively (see table below). The lower quantities sold in Q4 2022 reflects the following: (i) lower production from the cessation of mining activities at Morococha; (ii) silver production shortfalls at La Colorada from lower grades in Q4 2022; (iii) an increase in dore inventories at Manantial Espejo; and, (iv) a build-up in zinc inventories at San Vicente due to the timing of shipments. These factors were partially offset by increased quantities sold at Shahuindo and La Arena due to the timing of mine and leach sequencing. These impacts are described in the "2022 Highlights" and the "Operating Performance" sections of this MD&A. The lower metal prices were largely due to a 9%, 3%, and 14% decrease in realized metal prices for silver, gold, and zinc, respectively. The decrease in metal prices was partially offset by a $6.4 million improvement in settlement price adjustments on open concentrate shipments and an $8.1 million decrease in net selling costs, primarily due to Morococha being placed on care and maintenance in February 2022. PAN AMERICAN SILVER CORP. 30 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) The following table reflects quarterly realized metal prices and quantities sold: Silver Gold Zinc Lead Copper Realized Metal Prices (1) Three months ended December 31, 2022 2021 Quantities of Metal Sold (2) Three months ended December 31, 2022 2021 $ $ $ $ $ 21.17 $ 1,736 $ 2,878 $ 2,111 $ 7,957 $ 23.33 1,792 3,352 2,333 9,545 4,080 146.6 5.4 4.6 1.2 5,067 142.6 9.9 4.1 2.1 (1) Metal price stated as dollars per ounce for silver and gold, and dollars per tonne for zinc, lead and copper, inclusive of final settlement adjustments on concentrate sales. (2) Metal quantities stated as koz for silver and gold and kt for zinc, lead and copper. 2) Production and royalty costs were $8.8 million lower than those in Q4 2021 as a result of an $11.2 million or 4% decrease in production costs, marginally offset by a $2.3 million increase in royalty costs. All operations were affected by Inflationary and Supply Chain Cost Increases, as noted in the "Operating Performance" section of this MD&A. The largest factors that decreased quarter-over-quarter production costs are described below: i) $18.7 million reduction in Morococha production costs in Q4 2022, with the mine having been placed on care and maintenance in February 2022; ii) $16.2 million in reduced NRV inventory adjustments were largely related to the Dolores mine which increased costs by $5.4 million in Q4 2022 compared to an increase of $21.7 million in Q4 2021; and, iii) $7.0 million decrease at the Silver Segment mines (exclusive of Morococha and NRV inventory adjustments), largely reflecting decreased sales due to timing and lower costs at Manantial Espejo since the cessation of mining at COSE in April 2022; These decreases were only partially offset by the following factors that increased quarter-over-quarter costs: i) $26.8 million increase at the Gold Segment mines (exclusive of NRV inventory adjustments), largely from reduced inventory build-ups at Dolores and increased production rates at the remaining Gold Segment mines; and, ii) $6.5 million of mine closure severance provisions, largely at Manantial Espejo. 3) Transaction and integration costs of $157.3 million in Q4 2022 were incurred pursuant to the Transaction in which the Company agreed to provide Yamana with $150 million toward a termination fee payable to Gold Fields. The Transaction is discussed in further detail in the "Core Business and Strategy" and "Subsequent Events" sections of this MD&A. No such costs were incurred in the same quarter of 2021. 4) Other expenses of $9.2 million in Q4 2022 resulted in $11.7 million of increased expense compared to $2.5 million of other income in Q4 2021. In Q4 2022, the Company recorded $4.7 million in other expense for revisions in estimates of its closure and decommissioning obligation and a $4.0 million in increased provisions for value added tax receivables, both related to Manantial Espejo. Q4 2021 other income reflected changes in supplies inventory provisions for our non-operating subsidiaries. 5) 6) Income tax expense in Q4 2022 was $18.9 million compared to $28.5 million expense in Q4 2021. The $9.6 million reduction in expense is primarily due to a $41.0 million decrease in mine operating earnings. Investment gain of $1.2 million in Q4 2022 compared to a $6.1 million loss in Q4 2021, primarily driven by fair value mark to market adjustments on the Company's equity investment in New Pacific Metals Corp. PAN AMERICAN SILVER CORP. 31 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Statement of Cash Flows: Q4 2022 versus Q4 2021 Cash flows used in operations in Q4 2022 totaled $112.1 million, a $230.2 million quarter-over-quarter decrease relative to the $118.1 million generated in Q4 2021. The decrease was primarily driven by $157.3 million of transaction and integration costs, a $46.7 million decrease in revenue described above, $19.4 million in additional cash used for working capital, and a $5.0 million increase in production costs excluding NRVs. This was partially offset by a $6.1 million decrease in income tax paid. Changes in working capital, other than cash, used $29.1 million of cash in Q4 2022 compared to $9.7 million used in Q4 2021. The $19.4 million quarter-over-quarter increased use of cash resulted largely from $22.1 million build- up in trade receivables and a $6.4 million increase in inventory build-ups, partially offset by $9.0 million provided from increases in accounts payable and provisions. Investing activities utilized $68.2 million of cash in Q4 2022, comprised mostly of $72.4 million spent on mineral property, plant and equipment additions at the Company’s mines and projects, which was partially offset by cash inflows from derivative contracts and non-core asset sales. In Q4 2021, investing activities utilized $66.3 million, largely reflecting spending of $70.1 million on mineral property, plant and equipment at the Company’s mines and projects, partially offset by cash inflows from derivative contracts and non-core asset sales. Financing activities in Q4 2022 generated $137.3 million, largely reflecting the drawdown on the Company's SL- Credit Facility of $160.0 million largely to pay the termination fee pursuant to the Transaction. In Q4 2022, the Company paid $21.0 million in dividends to shareholders and $3.7 million in lease repayments. In Q4 2021, $25.1 million was used in financing activities, which consisted of $21.0 million in dividends to shareholders and $3.4 million in lease repayments. Adjusted Earnings: Q4 2022 versus Q4 2021 Please refer to the section of this MD&A entitled “Alternative Performance (Non-GAAP) Measures” for a detailed description of “adjusted earnings”, and a reconciliation of these measures to the 2022 Annual Financial Statements. Adjusted loss in Q4 2022 was $4.8 million, representing a basic adjusted loss per share of $0.02, which was $44.7 million, or $0.21 per share, lower than Q4 2021 adjusted earnings of $39.9 million, and $0.19 of basic adjusted earnings per share. PAN AMERICAN SILVER CORP. 32 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) The following chart illustrates the key factors leading to the change in adjusted earnings from Q4 2021 to Q4 2022: Adjusted Earnings Reconciliation - Q4 2021 to Q4 2022 ($ millions) $24.4 $39.9 $(38.7) $(23.7) $0.9 0.4 Q4 2021 adjusted earnings Decreased cost of sales Decreased revenue, quantities sold Increased taxes $(4.8) Q4 2022 adjusted loss Other Increased exploration and project development $(8.0) Decreased revenue, lower prices net of concentrate settlements LIQUIDITY AND CAPITAL POSITION Liquidity and Capital Measures Cash and cash equivalents ("Cash") Short-term Investments Cash and Short-term investments Working Capital(1) SL-Credit Facility undrawn amount Shareholders' equity Total debt (1) Capital (1) December 31, 2022 September 30, 2022 December 31, 2021 Q4 2022 Change 2022 Change 107,005 35,337 142,342 423,540 340,000 2,195,479 226,836 2,279,973 153,079 34,091 187,170 422,097 500,000 2,357,600 68,465 2,238,895 283,550 51,723 335,273 613,494 500,000 2,631,554 45,861 2,342,142 (46,074) 1,246 (44,828) 1,443 (160,000) (162,121) 158,371 41,078 (176,545) (16,386) (192,931) (189,954) (160,000) (436,075) 180,975 (62,169) (1) Total debt is a non-GAAP measure calculated as the total of amounts drawn on the SL-Credit Facility, finance lease liabilities and loans payable. Capital is a non-GAAP measure and consists of shareholders’ equity and debt net of cash and cash equivalents and short term investments. Working Capital is a non-GAAP measure calculated as current assets less current liabilities. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed description of the calculations. Liquidity and Capital Resources The Company's cash and short-term investments decreased by $44.8 million during Q4 2022. The decrease was largely driven by the $72.4 million in investments in mineral properties, plant and equipment and $21.0 million in dividends paid, as cash flow from operations of $45.3 million before transaction and integration costs was insufficient to cover these in part due to a $29.1 million in build-up of non-cash working capital, primarily inventories. Pan American’s investment objectives for its cash balances are to preserve capital, to provide liquidity and to maximize returns. The Company’s strategy to achieve these objectives is to invest excess cash balances in a PAN AMERICAN SILVER CORP. 33 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) portfolio of primarily fixed income instruments with specified credit rating targets established by the Board of Directors, and by diversifying the currencies in which it maintains its cash balances. The Company does not own any asset-backed commercial paper or other similar, known, at-risk investments in its investment portfolio. Working capital of $423.5 million at December 31, 2022 was $190.0 million lower than working capital of $613.5 million at December 31, 2021. The Company also maintained a long-term investment in Maverix which was sold in January 2023 for $105.3 million net of transaction costs, and is not included in cash and short-term investments. Please refer to the "Subsequent Events" section of the MD&A. As of December 31, 2022, the Company was in compliance with all financial covenants under the $500 million revolving SL-Credit Facility, which was drawn by $160.0 million in December 2022 to fund the termination fee and other costs related to the Transaction. The borrowing costs under the SL-Credit Facility are based on the Company's leverage ratio subject to pricing adjustments based on the Company's sustainability performance ratings and scores at either (i) LIBOR plus 1.825% to 2.80% or; (ii) The Bank of Nova Scotia's Base Rate on U.S. dollar denominated commercial loans plus 0.825% to 1.80%. Undrawn amounts under the SL-Credit Facility are subject to a stand-by fee of 0.41% to 0.63% per annum, dependent on the Company's leverage ratio and subject to pricing adjustments based on sustainability performance ratings and scores. The SL-Credit Facility matures on August 8, 2025. The net cash generated from the sales of metal production provides our primary source of cash flows, and we do not currently expect to experience payment delinquencies from our metal sales counterparties. The Company’s financial position at December 31, 2022, and the operating cash flows that are expected over the next 12 months, lead Management to believe that the Company’s liquid assets and available credit from the revolving SL-Credit Facility are sufficient to satisfy our 2023 working capital requirements, fund currently planned capital expenditures, and to discharge liabilities as they come due. The Company remains well positioned to take advantage of strategic opportunities as they become available. Liquidity risks are discussed further in the “Risks and Uncertainties” section of this MD&A. In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments, details of which are described in Note 8(f)(ii) of the 2022 Annual Financial Statements, and in the "Liquidity and Capital Position" section of this MD&A. Since December 31, 2021, there have been no significant changes to these contractual obligations and commitments. The impact of inflation on the Company’s financial position, operational performance, or cash flows over the next 12 months cannot be determined with any degree of certainty due to a number of uncertainties, including those related to the COVID-19 pandemic. PAN AMERICAN SILVER CORP. 34 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Commitments In the normal course of business, the Company enters into contracts that give rise to commitments which are described in Note 8(f)(ii) of the 2022 Annual Financial Statements, and in the "Liquidity and Capital Position" section of this MD&A. The following table summarizes the remaining contractual maturities of the Company's financial liabilities and operating and capital commitments on an undiscounted basis: Payments due by period 2022 Accounts payable and accrued liabilities other than: Severance liabilities Payroll liabilities Total accounts payable and accrued liabilities Income tax payables Derivative liabilities Debt Repayment of principal Interest and standby fees Provisions (1)(2) Future payroll liabilities Total contractual obligations (2) $ $ Within 1 year 291,436 $ 13,860 2,758 308,054 25,833 1,780 2 - 3 years 4- 5 years After 5 years — $ — $ — $ 1,039 — 1,039 — — 645 — 645 — — 4,489 — 4,489 — — Total 291,436 20,033 2,758 314,227 25,833 1,780 13,712 11,222 3,448 2,465 366,514 $ 173,435 17,681 2,423 8,659 203,237 $ 6,575 125 — — 7,345 $ — — 1,081 — 5,570 $ 193,722 29,028 6,952 11,124 582,666 (1) Total litigation provision (Note 16 of the 2022 Annual Financial Statements). (2) Amounts above do not include payments related to closure and decommissioning (current $14.4 million, long-term $281.8 million) discussed in Note 16 of the 2022 Annual Financial Statements, the lease obligations discussed in Note 17 of the 2022 Annual Financial Statements, the $20.8 million deferred credit arising from the Navidad acquisition discussed in Note 20 of the 2022 Annual Financial Statements, and deferred tax liabilities of $140.3 million in Note 30 of the 2022 Annual Financial Statements. Outstanding Share Amounts As at December 31, 2022, the Company had approximately 377 thousand stock options outstanding (each exercisable for one common share of the Company), with exercise prices in the range of CAD $21.17 to CAD $39.48 and a weighted average life of 5.3 years. Approximately 156 thousand of the stock options were vested and exercisable at December 31, 2022, with an average weighted exercise price of CAD $21.64 per share. The following table sets out the common shares and options outstanding as at the date of this MD&A: Common shares Options Total Outstanding as at February 17, 2023 210,680,834 376,967 211,057,801 As part of the acquisition of Tahoe Resources Inc., on February 22, 2019, the Company issued 313,887,490 Contingent Value Rights ("CVRs"), with a term of 10 years, which were convertible into 15,600,208 common shares upon the first commercial shipment of concentrate following the restart of operations at the Escobal mine. As of December 31, 2022, there were 313,883,990 CVRs outstanding, which were convertible into 15,600,034 common shares. PAN AMERICAN SILVER CORP. 35 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) CLOSURE AND DECOMMISSIONING PROVISION The estimated future closure and decommissioning costs are based principally on the requirements of relevant authorities and the Company’s environmental policies. The provision is measured using management’s assumptions and estimates for future cash outflows. The Company accrues these costs, which are determined by discounting costs using rates specific to the underlying obligation. Upon recognition of a liability for the closure and decommissioning costs, the Company capitalizes these costs to the related mine and amortizes such amounts over the life of each mine on a unit-of-production basis, except in the case of exploration projects for which the offset to the liability is expensed. The accretion of the discount due to the passage of time is recognized as an increase in the liability and a finance expense. The inflated and discounted provision on the statement of financial position as at December 31, 2022, using inflation rates of between 2% and 6% (December 31, 2021 - between 1% and 5%) and discount rates between 3% and 11% (December 31, 2021 - between 1% and 9%), was $296.2 million (December 31, 2021 - $242.9 million). Decommissioning obligations are expected to be paid through 2052, with water quality management costs expected to be paid through 2075, or later if mine life is extended. Revisions made to the reclamation obligations in 2022 were primarily a result of increased inflation rates, increased discount rates from higher government debt yields, increased site disturbance from the ordinary course of operations at the mines, reclamation activities, and revisions to the estimates based on periodic reviews of closure plans and related costs, actual expenditures incurred, and closure activities completed. These obligations will be funded from operating cash flows, reclamation deposits, and cash on hand. The accretion of the discount charged in Q4 2022 and 2022 earnings as finance expense were $3.7 million and $14.8 million, respectively (Q4 2021 and 2021 - $1.9 million and $7.5 million, respectively). Reclamation expenditures incurred during Q4 2022 and 2022 were $1.7 million and $4.2 million, respectively (Q4 2021 and 2021 - $1.7 million and $6.0 million, respectively). RELATED PARTY TRANSACTIONS The Company’s related parties include its subsidiaries, associates over which it exercises significant influence and key management personnel. Transactions with the Company's subsidiaries have been eliminated on consolidation. Maverix ceased to be a related party after March 31, 2022 after the Company determined that it no longer held significant influence over Maverix. There were no other related party transactions for the years ended December 31, 2022 and 2021. PAN AMERICAN SILVER CORP. 36 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES Per Ounce Measures Cash Costs and AISC are non-GAAP financial measures that do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Pan American produces by-product metals incidentally to our silver and gold mining activities. We have adopted the practice of calculating a performance measure with the net cost of producing an ounce of silver and gold, our primary payable metals, after deducting revenues gained from incidental by-product production. This performance measurement has been commonly used in the mining industry for many years and was developed as a relatively simple way of comparing the net production costs of the primary metal for a specific period against the prevailing market price of that metal. Silver segment Cash Costs and AISC are calculated net of credits for realized revenues from all metals other than silver ("silver segment by-product credits"), and are calculated per ounce of silver sold. Gold segment Cash Costs and AISC are calculated net of credits for realized silver revenues ("gold segment by-product credits"), and are calculated per ounce of gold sold. Cash Costs per ounce metrics, net of by-product credits, is used extensively in our internal decision making processes. We believe the metric is also useful to investors because it facilitates comparison, on a mine-by-mine basis, notwithstanding the unique mix of incidental by-product production at each mine, of our operations’ relative performance on a period-by-period basis, and against the operations of our peers in the silver industry. Cash Costs per ounce is conceptually understood and widely reported in the mining industry. We believe that AISC, also calculated net of by-products, is a comprehensive measure of the full cost of operating our consolidated business, given it includes the cost of replacing silver and gold ounces through exploration, the cost of ongoing capital investments (sustaining capital), as well as other items that affect the Company’s consolidated cash flow. To facilitate a better understanding of these measure as calculated by the Company, the following table provides the detailed reconciliation of these measure to the applicable cost items, as reported in the consolidated financial statements for the respective periods. PAN AMERICAN SILVER CORP. 37 Silver Segment and Gold Segment Cash Costs and AISC: (In thousands of USD, except as noted) Production costs(1) Purchase Price Allocation Inventory Fair Value Adjustment NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining and direct selling charges(2) Cash cost of sales before by-product credits Silver segment by-product credits(2) Gold segment by-product credits(2) Cash Costs NRV inventory adjustments Sustaining capital Exploration and project development(3) Reclamation cost accretion(4) All-in sustaining costs Silver segment silver ounces sold (koz) Gold segment gold ounces sold (koz) Cash Costs per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) Three Months Ended December 31, 2022 $ 73,707 $ — 5,791 79,498 4,698 10,465 94,661 (45,035) $ $ $ $ $ — 49,627 $ (5,791) 16,894 — 528 61,258 $ 3,444 — 14.41 $ 17.79 $ 19.47 $ Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Silver Segment Gold Segment Three Months Ended December 31, 2021 Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 106,908 $ 172,215 $ — 814 107,722 2,204 18,604 128,530 (84,497) — 44,033 $ (814) 16,627 1,040 494 61,381 $ 4,522 — 9.74 $ 13.57 $ 13.75 $ — (11,223) 160,992 4,176 39 165,207 — (13,889) 151,318 $ 11,223 45,688 — 2,812 211,040 $ — 141 1,077 $ 1,502 $ 1,422 $ 156,533 (55) (22,466) 134,012 4,345 43 138,400 — (12,561) 125,839 22,466 39,654 1,926 1,129 191,014 — 131 963 1,461 1,289 PAN AMERICAN SILVER CORP. 38 Silver Segment and Gold Segment Cash Costs and AISC: (In thousands of USD, except as noted) Production costs(1) Purchase Price Allocation Inventory Fair Value Adjustment NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining and direct selling charges(2) Cash cost of sales before by-product credits Silver segment by-product credits(2) Gold segment by-product credits(2) Cash Costs NRV inventory adjustments Sustaining capital Exploration and project development(3) Reclamation cost accretion(4) All-in sustaining costs Silver segment silver ounces sold (koz) Gold segment gold ounces sold (koz) Cash Costs per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Silver Segment Gold Segment Year ended December 31, 2022 $ 353,372 $ Year ended December 31, 2021 Year ended December 31, 2022 Year ended December 31, 2021 384,460 $ 717,454 $ — 1,132 354,505 18,241 51,994 424,740 (235,044) — 189,696 $ (1,132) 54,978 — 2,234 245,776 $ 14,914 — 12.72 $ 16.48 $ 16.56 $ 992 385,452 17,483 70,921 473,857 (302,620) — 171,237 $ (992) 56,837 3,329 2,008 232,418 $ 14,883 — 11.51 $ 15.62 $ 15.68 $ — (98,874) 618,580 17,648 192 636,420 — (56,350) 580,070 $ 98,874 168,782 — 11,246 858,972 $ — 521 1,113 $ 1,649 $ 1,459 $ $ $ $ $ $ 541,019 (604) (9,712) 530,704 18,892 181 549,776 — (65,135) 484,642 9,712 150,785 4,681 4,516 654,336 — 539 899 1,214 1,196 (1) Silver Segment production costs exclude amounts relating to mine operation severance payments and other accruals at Morococha and Manantial Espejo, which increased Production Costs by $5.9 million and $21.4 million for Q4 2022 and full year 2022, respectively. Gold Segment production costs exclude amounts relating to mine operations severance payments and other accruals at Dolores related to the closure of the underground mine, which increased production costs by $0.6 million and $2.8 million in Q4 2022 and full year 2022, respectively. Included in the revenue line of the consolidated income statements. By-product credits are reflective of realized metal prices for the applicable periods. (2) (3) Exploration and project development expenditures exclude $8.6 million and $18.3 million for Q4 2022 and full year 2022, respectively, (Q4 2021 and full year 2021: $1.1 million and $3.1 million, respectively) of exploration expenditures related to non-operating properties and non-cash project development write-downs. (4) Reclamation cost accretion excludes $0.4 million and $1.4 million for Q4 2022 and full year 2022, respectively, (Q4 2021 and full year 2021: $0.2 million and $0.9 million, respectively) of accretion related to non-operating properties. PAN AMERICAN SILVER CORP. 39 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Sustaining capital is included in AISC, while capital related to growth projects or acquisitions (referred to by the Company as project or investment capital) is not. Inclusion of only sustaining capital in the AISC measure reflects the capital costs associated with current ounces sold as opposed to project capital, which is expected to increase future production. The project capital excluded in the reconciliation below is further described in the "Project Development Update" section of this MD&A. Reconciliation of payments for mineral properties, plant and equipment and sustaining capital (in thousands of USD) Payments for mineral properties, plant and equipment(1) Add/(Subtract) Lease Payments(1) Repayment of loans(2) Investment (non-sustaining) capital Sustaining Capital Three Months Ended December 31, Year ended December 31, 2022 72,362 $ 2021 70,146 $ 2022 274,688 $ 2021 243,478 3,703 1,642 (15,126) 62,581 $ 3,417 850 (18,132) 56,280 $ 14,833 5,239 (71,000) 223,760 $ 12,396 1,700 (49,951) 207,623 $ $ (1) As presented on the consolidated statements of cash flows. (2) As presented on the consolidated statements of cash flows. Related to repayments of construction loans for leach pad expansions in Peru. PAN AMERICAN SILVER CORP. 40 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Silver Segment Cash Costs and AISC by mine: SILVER SEGMENT Three Months Ended December 31, 2022 (In thousands of USD, except as noted) Production Costs NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Silver segment by-product credits Cash Costs NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Silver segment silver ounces sold (koz) Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) La Colorada Huaron Morococha San Vicente Manantial Espejo Consolidated Silver Segment $ $ $ $ $ $ 27,880 $ — 27,880 149 2,932 30,961 (11,118) 19,843 $ — 11,689 — 127 31,659 $ 1,306 15.19 $ 24.24 $ 26,866 $ — 26,866 — 4,938 31,804 (24,042) 7,761 $ — 3,952 — 199 11,912 $ 844 9.20 14.12 — $ — — — — — — — $ — — — — — $ — N/A $ N/A $ 7,220 $ — 7,220 3,535 774 11,529 (969) 10,560 $ — 614 — 80 11,254 $ 617 17.11 $ 18.24 $ 11,741 $ 5,791 17,532 1,015 1,821 20,368 (8,906) 11,462 $ (5,791) 639 — 122 6,432 $ 677 16.93 $ 9.50 $ 73,707 5,791 79,498 4,698 10,465 94,661 (45,035) 49,627 (5,791) 16,894 — 528 61,258 3,444 14.41 17.79 24.24 $ 14.12 N/A $ 18.24 $ 18.05 $ 19.47 SILVER SEGMENT Three Months Ended December 31, 2021 (In thousands of USD, except as noted) Production Costs NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Silver segment by-product credits Cash Costs NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Silver segment silver ounces sold (koz) Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) La Colorada Huaron Morococha San Vicente Manantial Espejo Consolidated Silver Segment $ $ $ $ $ $ 27,142 $ — 27,142 68 3,461 30,671 (11,242) 19,430 $ — 6,410 626 113 26,578 $ 1,669 11.64 $ 15.93 $ 21,913 $ — 21,913 — 4,792 26,705 (24,360) 2,345 $ — 3,991 — 139 6,476 $ 672 3.49 $ 9.63 $ 18,720 $ — 18,720 — 4,611 23,331 (21,084) 2,247 $ — 1,184 414 75 3,919 $ 491 4.57 $ 7.98 $ 11,567 $ — 11,567 1,119 2,807 15,493 (8,075) 7,418 $ — 2,469 — 65 9,952 $ 682 10.87 $ 14.59 $ 27,566 $ 814 28,380 1,017 2,933 32,329 (19,736) 12,593 $ (814) 2,573 — 102 14,455 $ 1,007 12.50 $ 14.35 $ 106,908 814 107,722 2,204 18,604 128,530 (84,497) 44,033 (814) 16,627 1,040 494 61,381 4,522 9.74 13.57 15.93 $ 9.63 $ 7.98 $ 14.59 $ 15.16 $ 13.75 PAN AMERICAN SILVER CORP. 41 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) SILVER SEGMENT Year ended December 31, 2022 (In thousands of USD, except as noted) Production Costs NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Silver segment by-product credits Cash Costs NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Silver segment silver ounces sold (koz) Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) La Colorada Huaron Morococha San Vicente Manantial Espejo Consolidated Silver Segment $ $ $ $ $ $ 98,260 $ — 98,260 733 12,655 111,648 (45,578) 66,069 $ — 29,275 510 95,854 $ 5,712 11.57 $ 16.78 $ 100,511 $ — 100,511 — 20,988 121,499 (102,962) 18,537 $ — 13,940 796 33,272 $ 3,014 6.15 $ 11.04 $ 15,325 $ — 15,325 — 3,575 18,900 (17,005) 1,895 $ — 345 122 2,363 $ 334 5.68 $ 7.08 $ 45,746 $ — 45,746 13,851 7,051 66,648 (25,689) 40,959 $ — 7,156 320 48,435 $ 2,692 15.22 $ 17.99 $ 93,530 $ 1,132 94,663 3,658 7,725 106,045 (43,810) 62,235 $ (1,132) 4,263 487 65,853 $ 3,162 19.68 $ 20.82 $ 353,372 1,132 354,505 18,241 51,994 424,740 (235,044) 189,696 (1,132) 54,978 — 2,234 245,776 14,914 12.72 16.48 16.78 $ 11.04 $ 7.08 $ 17.99 $ 21.18 $ 16.56 SILVER SEGMENT Year ended December 31, 2021 (In thousands of USD, except as noted) Production Costs NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Silver segment by-product credits Cash Costs NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Silver segment silver ounces sold (koz) Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) La Colorada Huaron Morococha San Vicente Manantial Espejo Consolidated Silver Segment $ $ $ $ $ $ 74,874 $ — 74,874 319 10,883 86,075 (39,586) 46,490 $ — 26,069 2,643 452 75,654 $ 4,321 10.76 $ 17.51 $ 90,126 $ — 90,126 — 21,925 112,051 (100,306) 11,745 $ — 10,897 — 557 23,199 $ 2,976 3.95 $ 7.79 $ 75,182 $ — 75,182 — 20,140 95,322 (75,491) 19,831 $ — 6,957 686 298 27,772 $ 2,059 9.63 $ 13.49 $ 40,404 $ — 40,404 14,165 9,612 64,181 (27,265) 36,917 $ — 5,340 — 261 42,518 $ 2,465 14.98 $ 17.25 $ 103,874 $ 992 104,866 3,000 8,361 116,227 (59,973) 56,254 $ (992) 7,575 — 439 63,275 $ 3,062 18.37 $ 20.67 $ 384,460 992 385,452 17,483 70,921 473,857 (302,620) 171,237 (992) 56,837 3,329 2,008 232,418 14,883 11.51 15.62 17.51 $ 7.79 $ 13.49 $ 17.25 $ 20.99 $ 15.68 PAN AMERICAN SILVER CORP. 42 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Gold Segment Cash Costs and AISC by mine: GOLD SEGMENT Three Months Ended December 31, 2022 (In thousands of USD, except as noted) Production Costs Purchase Price Allocation Inventory Fair Value Adjustment NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Gold segment by-product credits Cash Costs of Sales NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Gold segment gold ounces sold Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) GOLD SEGMENT (In thousands of USD, except as noted) Production Costs Purchase Price Allocation Inventory Fair Value Adjustment NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Gold segment by-product credits Cash Costs of Sales NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Gold segment gold ounces sold Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) Dolores Shahuindo La Arena Timmins Consolidated Gold Segment 55,099 $ — (11,223) 43,875 2,421 9 46,305 (11,593) 34,712 $ 11,223 4,616 — 1,382 51,934 $ 44,100 $ — — 44,100 — — 44,100 (1,931) 42,169 $ — 21,412 — 645 64,227 $ 30,685 $ — — 30,685 — — 30,685 (162) 30,523 $ — 11,390 — 741 42,654 $ 42,332 $ — — 42,332 1,755 31 44,118 (204) 43,914 $ — 8,269 — 43 52,226 $ 32,615 46,287 30,623 31,000 1,064 $ 1,592 $ 1,248 $ 911 $ 1,388 $ 1,388 $ 997 $ 1,393 $ 1,393 $ 1,417 $ 1,685 $ 1,685 $ 172,215 — (11,223) 160,992 4,176 39 165,207 (13,889) 151,318 11,223 45,688 — 2,812 211,040 140,525 1,077 1,502 1,422 Three Months Ended December 31, 2021 Dolores Shahuindo La Arena Timmins Consolidated Gold Segment 62,850 $ — (22,466) 40,384 2,599 7 42,990 (11,001) 31,989 $ 22,466 12,097 36 701 67,289 $ 34,233 $ (55) — 34,179 — — 34,179 (1,276) 32,902 $ — 9,146 828 263 43,139 $ 22,204 $ — — 22,204 — — 22,204 (190) 22,014 $ — 9,996 — 150 32,160 $ 37,245 $ — — 37,245 1,746 36 39,027 (94) 38,933 $ — 8,415 1,062 15 48,425 $ 34,343 39,531 26,867 30,000 931 $ 1,959 $ 1,305 $ 832 $ 1,091 $ 1,091 $ 819 $ 1,197 $ 1,197 $ 1,298 $ 1,614 $ 1,614 $ 156,533 (55) (22,466) 134,012 4,345 43 138,400 (12,561) 125,839 22,466 39,654 1,926 1,129 191,014 130,740 963 1,461 1,289 $ $ $ $ $ $ $ $ $ $ $ $ PAN AMERICAN SILVER CORP. 43 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) GOLD SEGMENT Year ended December 31, 2022 (In thousands of USD, except as noted) Production Costs Purchase Price Allocation Inventory Fair Value Adjustment NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Gold segment by-product credits Cash Costs of Sales NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Gold segment gold ounces sold Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) Dolores Shahuindo La Arena Timmins Consolidated Gold Segment $ 288,039 $ 146,179 $ 103,869 $ 179,368 $ — (98,874) 189,165 10,751 31 199,947 (49,147) 150,799 $ — — 146,179 — — 146,179 — — 103,869 — — 103,869 — — 179,368 6,898 161 186,426 (6,079) 140,100 $ (773) 103,095 $ (350) 186,076 $ 98,874 35,855 — 49,246 — 47,970 — 35,711 5,529 291,057 $ 2,581 191,926 $ 2,963 154,029 $ 173 221,960 $ 140,973 145,320 99,367 135,400 1,070 $ 2,065 $ 1,363 $ 964 $ 1,321 $ 1,321 $ 1,038 $ 1,550 $ 1,550 $ 1,374 $ 1,639 $ 1,639 $ $ $ $ $ $ 717,454 — (98,874) 618,580 17,648 192 636,420 (56,350) 580,070 98,874 168,782 — 11,246 858,972 521,061 1,113 1,649 1,459 GOLD SEGMENT Year ended December 31, 2021 (In thousands of USD, except as noted) Production Costs Purchase Price Allocation Inventory Fair Value Adjustment NRV inventory adjustments On-site direct operating costs Royalties Smelting, refining & direct selling costs Cash Costs before by-product credits Gold segment by-product credits Cash Costs of Sales NRV inventory adjustments Sustaining capital Exploration and project development Reclamation cost accretion All-in sustaining costs Gold segment gold ounces sold Cash cost per ounce sold AISC per ounce sold AISC per ounce sold (excluding NRV inventory adjustments) $ 174,219 $ Dolores Shahuindo La Arena Timmins Consolidated Gold Segment — (9,712) 164,507 12,067 40 176,613 (58,154) 118,460 $ 9,712 40,566 225 2,804 171,766 $ 115,009 $ (598) — 114,411 — — 114,411 (5,643) 108,768 $ — 28,846 828 1,052 139,494 $ 84,243 $ 167,549 $ (6) — 84,237 — — 84,237 — — 167,549 6,825 141 174,515 (927) 83,310 $ (411) 174,104 $ — 45,479 — 599 129,389 $ — 35,894 3,628 61 213,688 $ 158,071 139,456 109,432 132,000 749 $ 1,087 $ 1,025 $ 780 $ 1,000 $ 1,000 $ 761 $ 1,182 $ 1,182 $ 1,319 $ 1,619 $ 1,619 $ 541,019 (604) (9,712) 530,704 18,892 181 549,776 (65,135) 484,642 9,712 150,785 4,681 4,516 654,336 538,960 899 1,214 1,196 $ $ $ $ $ PAN AMERICAN SILVER CORP. 44 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Adjusted Earnings and Basic Adjusted Earnings Per Share Adjusted earnings and basic adjusted earnings per share are non-GAAP measures that the Company considers to better reflect normalized earnings as it eliminates 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. Certain items that become applicable in a period may be adjusted for, with the Company retroactively presenting comparable periods with an adjustment for such items and conversely, items no longer applicable may be removed from the calculation. The Company adjusts certain items in the periods that they occurred, but does not reverse or otherwise unwind the effect of such items in future periods. Neither adjusted earnings nor basic adjusted earnings per share have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. The following table shows a reconciliation of adjusted earnings for the year ended December 31, 2022 and 2021, to the net earnings for each period. (In thousands of USD, except as noted) Net (loss) earnings for the period Adjust for: Impairment charges Exploration and project development impairment charges Unrealized foreign exchange losses Net realizable value heap inventory expense Derivative unrealized (gains) losses Gains and income from associates Severance provisions Mineral property, plant and equipment losses (gains) on sale Transaction and integration costs Investment (income) loss Closure and decommissioning liability adjustment Effect of taxes on adjusting items Effect of foreign exchange on taxes Total adjustments Adjusted (loss) earnings Adjusted (loss) earnings per share attributable to common shareholders Adjusted (loss) earnings per share Weighted average shares outstanding (in 000's) Basic Three Months Ended December 31, Year ended December 31, 2022 (172,060) $ $ 2021(1) 14,664 $ 2022 (340,063) $ 2021(1) 98,562 — 5,432 3,162 29,541 (2,201) — 6,478 1,134 157,334 (1,245) 4,662 (17,886) (19,149) 167,262 $ (4,798) $ — — 1,643 20,421 662 (289) — 551 — 6,083 — (7,353) 3,561 25,279 $ 39,943 $ 99,064 5,432 12,840 137,771 2,541 (45,033) 23,884 2,439 157,334 16,221 4,662 (37,615) (21,541) 357,999 $ 17,936 $ — — 6,703 11,831 3,764 (4,347) — (32,167) — 59,722 — 3,377 14,337 63,220 161,782 (0.02) $ 0.19 $ 0.09 $ 210,573 210,348 210,521 0.77 210,298 $ $ $ (1) Commencing in Q1 2021 gains and losses recognized in relation to certain equity investments owned by the Company, and included in Investment (loss) income in the Company's financial statements, are being excluded from adjusted earnings. This change was based on the increase in both the magnitude and volatility of these investments having a larger impact to the Company’s net income in recent years, and Management’s belief that these fair-market-values are neither under the control of Management nor representative of normal course operating results. The comparative period's adjusted earnings have been revised to conform to this change and thus differ from that previously reported. Total Debt Total debt is a non-GAAP measure calculated as the total current and non-current portions of: long-term debt (including amounts drawn on the SL-Credit Facility), lease liabilities, and loans payable. Total debt does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. The Company and certain investors use this information to evaluate the financial debt leverage of the Company. PAN AMERICAN SILVER CORP. 45 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Capital Capital is a non-GAAP measure and is calculated as total equity plus total debt less cash and cash equivalents and short term investments. Capital does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. The Company and certain investors use this information to evaluate the enterprise value of the Company. Working Capital Working capital is a non-GAAP measure calculated as current assets less current liabilities. 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. The Company and certain investors use this information to evaluate whether the Company is able to meet its current obligations using its current assets. RISKS AND UNCERTAINTIES The Company is exposed to many risks in conducting its business, including but not limited to: metal price risk as the Company derives its revenue from the sale of silver, gold, zinc, lead, and copper; trading and credit risk in the normal course of dealing with other companies; foreign exchange risk as the Company reports its financial statements in USD whereas the Company operates in jurisdictions that utilize other currencies; risks relating to cyber security; the inherent risk of uncertainties in estimating mineral reserves and mineral resources; political, economic and social risks related to conducting business in jurisdictions such as Canada, Peru, Mexico, Argentina, Bolivia and Guatemala; environmental risks; risks related to its relations with employees and local communities where we operate; risks related to the Transaction; and risks relating to the spread of COVID-19, which has to date resulted in profound health and economic impacts globally and which presents future risks and uncertainties that are largely unknown at this time. Certain of these risks, and additional risks and uncertainties, are described below, and are more fully described in Pan American’s Annual Information Form dated February 22, 2023 (available on SEDAR at www.sedar.com) and Form 40-F filed with the SEC, and in the Financial Instruments section of the 2022 Annual Financial Statements. Readers are encouraged to refer to these documents for a more detailed description of some of the risks and uncertainties inherent to Pan American’s business. Financial Instruments and Related Risks The Company is exposed to financial risks, including metal price risk, credit risk, interest rate risk, foreign currency exchange rate risk, and liquidity risk. The Company's exposures and management of each of those risks is described in the 2022 Annual Financial Statements under Note 8 "Financial Instruments", along with the financial statement classification, the significant assumptions made in determining the fair value, and amounts of income, expenses, gains and losses associated with financial instruments. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. There were no significant changes to those risks or to the Company's management of exposure to those risks during the year ended December 31, 2022. The following provides a description of the risks related to financial instruments and how management manages these risks: Price Risk The majority of our revenue is derived from the sale of silver, gold, zinc, copper and lead, and therefore fluctuations in the price of these metals significantly affect our operations and profitability. Our sales are directly dependent on metal prices, and metal prices have historically shown significant volatility and are beyond our control. The Board of Directors continually assesses Pan American’s strategy towards our metal exposure, depending on market conditions. The table below illustrates the effect of changes in silver and gold prices on PAN AMERICAN SILVER CORP. 46 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) anticipated revenues, excluding Yamana operations, for 2023, expressed in percentage terms. This analysis assumes that quantities of silver and gold produced and sold remain constant under all price scenarios presented. 2023 Revenue Metal Price Sensitivity Silver Price $16.50 $18.00 $19.50 $21.00 $22.50 $24.00 $25.50 $1,450 83% 85% 87% 89% 90% 92% 94% $1,550 87% 89% 91% 92% 94% 96% 98% $1,650 91% 93% 94% 96% 98% 100% 101% Gold Price $1,750 95% 97% 98% 100% 102% 103% 105% $1,850 99% 100% 102% 104% 106% 107% 109% $1,950 102% 104% 106% 108% 109% 111% 113% $2,050 106% 108% 110% 111% 113% 115% 117% Since base metal and gold revenue are treated as a by-product credit for purposes of calculating Silver Segment Cash Costs and AISC per ounce of silver sold, and silver revenue is treated as a by-product credit for purposes of calculating Gold Segment Cash Costs and AISC per ounce of gold sold, these non-GAAP measures are highly sensitive to metal prices. The tables below illustrate this point by plotting the expected 2023 Silver Segment AISC per silver ounce, excluding Yamana operations, against various price assumptions for the Silver Segment’s two main by-product credits, zinc and gold, and plotting the expected 2023 Gold Segment AISC per gold ounce, excluding Yamana operations, against various price assumptions for the Gold Segment's main by-product credit, Silver, expressed in percentage terms: 2023 Silver Segment AISC Metal Price Sensitivity Zinc Price $2,400 $2,600 $2,800 $3,000 $3,200 $3,400 $3,600 $1,700 111% 108% 105% 103% 100% 98% 96% $1,800 110% 107% 104% 102% 100% 98% 95% $1,900 109% 106% 103% 101% 99% 97% 95% 2023 Gold Segment AISC Metal Price Sensitivity Gold Price $1,750 $16.50 102% $18.00 101% $19.50 101% Lead Price $2,000 108% 105% 103% 100% 98% 96% 94% Silver Price $21.00 100% $2,100 107% 105% 102% 99% 97% 95% 93% $2,200 107% 104% 101% 99% 96% 94% 92% $2,300 106% 103% 100% 98% 96% 94% 92% $22.50 99% $24.00 99% $25.50 98% The price of silver and other metals are affected by numerous factors beyond our control, including: global and regional levels of supply and demand; • • sales by government holders and other third parties; • metal stock levels maintained by producers and others; • • • • • • increased production due to new mine developments and improved mining and production methods; speculative activities; inventory carrying costs; availability, demand and costs of metal substitutes; international economic and political conditions; interest rates, inflation and currency values; PAN AMERICAN SILVER CORP. 47 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) • • increased demand for silver or other metals for new technologies; and reduced demand resulting from obsolescence of technologies and processes utilizing silver and other metals. In addition to general global economic conditions that can have a significant impact on our business in many ways, declining market prices for metals could materially adversely affect our operations and profitability. A decrease in the market price of silver, gold and other metals could affect the commercial viability of our mines and production at some of our mining properties. Lower prices could also adversely affect future exploration and our ability to develop mineral properties and mines, including the development of capital intensive projects such as Navidad, all of which would have a material adverse impact on our financial condition, results of operations and future prospects. There can be no assurance that the market prices will remain at sustainable levels. If market prices of gold and silver remain below levels used in Pan American’s impairment testing and reserve prices for an extended period of time, Pan American may need to reassess its long-term price assumptions, and a significant decrease in the long-term price assumptions would be an indicator of potential impairment, requiring Pan American to perform an impairment assessment on related assets. Due to the sensitivity of the recoverable amounts to long term metal prices, as well as to other factors including changes to mine plans and cost escalations, any significant change in these key assumptions and inputs could result in impairment charges in future periods. The Board of Directors continually assesses Pan American’s strategy towards our base metal exposure, depending on market conditions. From time to time, we mitigate the market price risk associated with our base metal production by committing some of our forecast base metal production to forward sales and options contracts. However, decisions relating to hedging may have material adverse effects on our financial performance, financial position, and results of operations. During the year ended December 31, 2022, the Company entered into collars made up of put and call contracts and forward swap contracts for its exposure to zinc. The Company did not enter into zinc contracts during the comparable periods in 2021, and had no contracts outstanding as at December 31, 2022. During the year ended December 31, 2021, the Company entered into collars made up of put and call contracts for its exposure to copper. The Company did not enter into copper contracts during the comparable periods in 2022, and had no contracts outstanding as at December 31, 2022. During 2020, the Company entered into diesel swap contracts designed to fix or limit the Company’s exposure to higher fuel prices. At December 31, 2022, the Company had no outstanding positions on its diesel exposure. The Company recorded the following derivative gains and losses on commodities for the three and twelve months ended December 31, 2022 and 2021: Zinc (losses) gains Copper losses Diesel gains Other Three Months Ended December 31, Year ended December 31, 2022 (59) — 285 231 $ 457 $ 2021 137 (243) 271 94 $ 259 $ 2022 1,701 — 4,499 (898) $ 5,302 $ 2021 137 (1,139) 9,397 94 8,489 $ $ We take the view that our precious metals production should not be hedged, thereby allowing the maximum exposure to precious metal prices. However, in extreme circumstances, the Board of Directors may make exceptions to this approach. Such decisions could have material adverse effects upon our financial performance, financial position, and results of operations. PAN AMERICAN SILVER CORP. 48 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Credit Risk The zinc, lead, copper, and silver concentrates produced by us are sold through long-term supply arrangements to metal traders or integrated mining and smelting companies. The terms of the concentrate contracts may require us to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing us to credit risk of the buyers of our concentrates. Should any of these counterparties not honour our contractual arrangements, or should any of them become insolvent, we may incur losses for products already shipped and be forced to sell our concentrates in the spot market or we may not have a market for our concentrates and therefore our future operating results may be materially adversely impacted. As at December 31, 2022, we had receivable balances associated with buyers of our concentrates of $50.3 million (2021 - $40.0 million). The vast majority of our concentrate is sold to a limited number of concentrate buyers. Doré production is refined under long term agreements with fixed refining terms at seven separate refineries worldwide. We generally retain the risk and title to the precious metals throughout the process of refining and therefore are exposed to the risk that the refineries will not be able to perform in accordance with the refining contract and that we may not be able to fully recover our precious metals in such circumstances. For example, in November 2018, Republic, a refinery used by us, filed for bankruptcy. At the time of the bankruptcy, Republic had possession of approximately $4.9 million of our metal and we pursued a claim to collect damages. As at December 31, 2022, we had approximately $37.0 million (2021 - $52.3 million) contained in precious metal inventory at refineries. We maintain insurance coverage against the loss of precious metals at our mine sites and in-transit to refineries. The refineries bear the risk of loss after metal inventories have been delivered to them. Refined silver and gold is sold in the spot market to various bullion traders and banks. Credit risk may arise from these activities if we are not paid for metal at the time it is delivered, as required by spot sale contracts. We maintain trading facilities with several banks and bullion dealers for the purposes of transacting our trading activities. None of these facilities are subject to margin arrangements. Our trading activities can expose us to our counterparties’ credit risk to the extent that our trading positions have a positive mark-to-market value. Supplier advances for products and services yet to be provided are a common practice in some jurisdictions in which we operate. These advances represent a credit risk to us to the extent that suppliers do not deliver products or perform services as expected. As at December 31, 2022, we had made $8.9 million of supplier advances (2021 - $11.2 million), which are reflected in “Trade and other receivables” on the consolidated statements of financial position. Management constantly monitors and assesses the credit risk resulting from our concentrate sales, refining arrangements and commodity contracts. Furthermore, management carefully considers credit risk when allocating prospective sales and refining business to counterparties. In making allocation decisions, management attempts to avoid unacceptable concentration of credit risk to any single counterparty. From time to time, we may invest in equity securities of other companies. Just as investing in Pan American is inherent with risks such as those set out in this MD&A, by investing in other companies we will be exposed to the risks associated with owning equity securities and those risks inherent in the investee companies. Currency and Interest Rate Risk We report our financial statements in USD; however we operate in jurisdictions that utilize other currencies. As a consequence, the financial results of our operations, as reported in USD, are subject to changes in the value of the USD relative to local currencies. Since our sales are denominated in USD and a portion of our operating costs and capital spending are in local currencies, we are negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse. From time to time, we mitigate part of this currency exposure by accumulating local currencies, entering into contracts designed to fix or limit our exposure to changes in the value of local currencies relative to the USD, or assuming liability positions to offset financial assets subject to currency risk. PAN AMERICAN SILVER CORP. 49 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Pan American held cash and short-term investments of $40.9 million in CAD, $3.1 million in MXN, $3.2 million in PEN, $9.3 million in ARS, $4.8 million in BOB, and $0.1 million in Guatemalan quetzales as at December 31, 2022. At December 31, 2022, Pan American had outstanding positions on $18.0 million in foreign currency exposure of MXN purchases. The MXN positions had weighted average USD put and call exchange rates of $21.00 and $24.35, respectively, expiring between January 2023 and December 2023. At December 31, 2022, Pan American had outstanding positions on $45.6 million in foreign currency exposure of PEN purchases. The PEN positions had a weighted average USD fixed exchange rate of $4.02, expiring between January 2023 and December 2023. At December 31, 2022, Pan American had outstanding positions on $108.0 million in foreign currency exposure of CAD purchases. The CAD collar positions ($84.0 million of CAD purchases) had weighted average USD put and call exchange rates of $1.30 and 1.34, respectively, expiring between January 2023 and December 2023. The CAD forward contracts ($24.0 million of CAD purchases) had a weighted average USD fixed exchange rate of $1.33, expiring between January 2023 and December 2023. The Company recorded the following derivative gains and losses on currencies for the three and twelve months ended December 31, 2022 and 2021: Mexican peso gains (losses) Peruvian sol gains (losses) Canadian dollar gains (losses) Three Months Ended December 31, 2022 757 $ 2,510 2,094 5,361 $ 2021 372 $ 255 753 1,380 $ $ $ Year ended December 31, 2022 1,507 $ 3,471 (2,944) 2,034 $ 2021 (202) (3,744) 851 (3,095) The following table illustrates the effect of changes in the exchange rate of PEN and CAD against the USD on anticipated cost of sales for 2023, excluding Yamana operations, expressed in percentage terms: 2023 Cost of Sales Exchange Rate Sensitivity PEN/ USD $3.30 $3.50 $3.70 $3.90 $4.10 $4.30 $4.50 $1.09 107% 106% 105% 104% 103% 102% 102% $1.16 105% 104% 103% 102% 102% 101% 100% $1.23 104% 103% 102% 101% 100% 100% 99% CAD/USD $1.30 103% 102% 101% 100% 99% 98% 98% $1.37 102% 101% 100% 99% 98% 97% 97% $1.44 101% 100% 99% 98% 97% 97% 96% $1.51 100% 99% 98% 97% 96% 96% 95% Our balance sheet contains various monetary assets and liabilities, some of which are denominated in foreign currencies. Accounting convention dictates that these balances are translated at the end of each period, with resulting adjustments being reflected as foreign exchange gains or losses on our income statement. In addition to the foregoing, governmental restrictions and controls relating to exchange rates also impact our operations. In Argentina, for example, the government has at times established official exchange rates that were significantly different from the unofficial exchange rates more readily utilized locally to determine prices and value. Our investments in Argentina are primarily funded from outside of the country, and therefore conversion of foreign currencies, like USD, at the official exchange rate has had the effect of reducing purchasing power and substantially increasing relative costs in an already high inflationary market. Maintaining monetary assets in ARS also exposes us to the risks of ARS devaluation and high domestic inflation. Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. As previously discussed in the “Liquidity and Capital Resource” section of this PAN AMERICAN SILVER CORP. 50 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) MD&A , the borrowing costs under the SL-Credit Facility are based on the Company's leverage ratio subject to pricing adjustments based on the Company's sustainability performance scores at various interest rates. The following table illustrates the effect of changes in interest rate against our outstanding SL-Credit Facility debt: 2023 Interest Rate Sensitivity 1% $1,000 $2,000 $3,000 2% $2,000 $4,000 $6,000 3% $3,000 $6,000 $9,000 Interest Rate 4% $4,000 $8,000 $12,000 5% $5,000 $10,000 $15,000 6% $6,000 $12,000 $18,000 7% $7,000 $14,000 $21,000 Outstanding SL-Credit Facility Debt $100,000 $200,000 $300,000 Liquidity Risk Liquidity risk is the risk that we will not be able to meet our financial obligations as they come due. The volatility of the metals markets can impact our ability to forecast cash flow from operations. We must maintain sufficient liquidity to meet our short-term business requirements, taking into account our anticipated cash flows from operations, our holdings of cash and cash equivalents, and committed loan facilities. We manage our liquidity risk by continuously monitoring forecasted and actual cash flows. We have in place a rigorous reporting, planning and budgeting process to help determine the funds required to support our normal operating requirements on an ongoing basis and our expansion plans. We continually evaluate and review capital and operating expenditures in order to identify, decrease, and limit all non-essential expenditures. We are required to use a portion of our cash flow to service principal and interest on debt, which will limit the cash flow available for other business opportunities. We also maintain and enter into intercompany credit arrangements with our subsidiaries in the normal course. Our ability to make scheduled principal payments, pay interest on or refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Unexpected delays in production, the suspension of our mining licenses, or other operational problems could impact our ability to service the debt and make necessary capital expenditures when the debt becomes due. If we are unable to generate such cash flow to timely repay any debt outstanding, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. While we have paid dividends to our shareholders for many years, the payment of dividends is impacted by our cash flows and liquidity situation. The payment of any future dividends is at the discretion of our Board of Directors after taking into account many factors, including availability of and sources of cash, future anticipated funding needs, our debt position, general and regional economic conditions, and expectations with respect to operational matters such as anticipated metals production and metals prices. There can be no assurance that dividends will continue to be paid in the future or on the same terms as are currently paid by Pan American. Claims and Legal Proceedings Pan American is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of business activities. The nature, assessment and management of such claims are described in this section, and in Note 31 to the Company's 2022 Annual Financial Statements. There were no significant changes to those risks or to the Company's management of exposure to those risks during the three months ended December 31, 2022. Many of these claims are from current or ex-employees, or employees of former or current owners of our operations such as the Quiruvilca-related claims in Peru, which could in the aggregate, be of significant value, and include alleged improper dismissals, workplace illnesses, such as silicosis, and claims for additional profit-sharing PAN AMERICAN SILVER CORP. 51 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) and bonuses in prior years. In some cases, we may also be subject to collective settlement obligations with our employees and contractors relating to closures of our operations, and such obligations may be significant. We may also become subject to class action lawsuits. For example, in mid-2017, Tahoe, which was acquired by us in late February 2019, and certain of its former directors and officers became the subject of three purported class action lawsuits filed in the United States that center primarily around alleged misrepresentations. These U.S. class action lawsuits were later consolidated into one class action suit that is ongoing in Nevada. In October 2018, Tahoe learned that a similar proposed class action lawsuit had been filed against Tahoe and its former chief executive officer in the Superior Court of Ontario. These lawsuits seek significant damages. We have disputed the allegations made in these suits, however, and while a successful resolution of these lawsuits is anticipated, the outcomes are not determinable at this time. In early May 2021, PAS Guatemala and the Guatemala Ministry of Energy and Mines were served with legal proceedings that were originated in the Constitutional Court of Guatemala by a small group of residents and landowners, or alleged residents and landowners, from the La Cuchilla community near the Escobal mine claiming that prior mining activities damaged their lands. Currently, operations at Escobal are suspended pending the completion of the government-led ILO 169 consultation process. Nevertheless, the action seeks injunctive relief to prevent future mining activities at Escobal. The claim against the Guatemala Ministry of Energy and Mines has subsequently been denied and the claims against PAS Guatemala is pending determination by the Constitutional Court. While we believe that the claims against PAS Guatemala are procedurally and substantively flawed and without merit, the outcome of this proceeding cannot be determined at this time. As reported in our Annual Information Form dated February 22, 2023, certain individuals have asserted community rights and land ownership over a portion of the La Colorada mine’s surface lands in the Agrarian Courts of Mexico. They have also initiated a process before the Secretariat of Agrarian, Territorial and Urban Development (“SEDATU”) in Zacatecas to declare such lands as national property. In 2019, we filed a legal challenge (amparo) against this process and obtained an injunction to protect our ownership of these surface rights pending the outcome of the challenge and a further review by SEDATU. Our challenge was dismissed on October 25, 2021, primarily on the basis that no final declaration of national lands had yet been made by SEDATU that would affect our property rights. We have appealed this dismissal and we will continue to oppose the SEDATU process. While we believe that we hold proper title to the surface lands in question, if we are unable to maintain, or maintain access to, those surface rights, there could be material adverse impacts on the La Colorada mine’s future mining operations. We may also be subject to proceedings in our commercial relationships. While we would, where available and appropriate to do so, defend against any such allegations, if we are unsuccessful in our defense of these claims, we may be subject to significant losses. Each of these matters is subject to various uncertainties and it is possible that some of these matters may be resolved unfavourably against us. We establish provisions for matters that are probable and can be reasonably estimated. We also carry liability insurance coverage, however, such insurance does not cover all risks to which we might be exposed and in other cases, may only partially cover losses incurred by us. In addition, we may be involved in disputes with other parties in the future that may result in litigation, which could have a material adverse effect on our financial or operating position, cash flow and results of operations. COVID-19 and Other Pandemics Since the outbreak of the coronavirus (COVID-19) in late 2019, it has spread into areas where we have operations and where our offices are located. In 2020, government efforts to curtail the spread of COVID-19 resulted in the temporary suspensions of our operations in Mexico, Peru, Argentina and Bolivia, and in response we reduced throughput at our operations in order to enhance physical distancing and protect our personnel and the community. The spread of COVID-19 impacted our employees and contractors, not only as it related to potential health concerns, but also in terms of limitations on movement, availability of food and other goods, and personal well-being, among others. Our suppliers and service providers were also impacted. PAN AMERICAN SILVER CORP. 52 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) While COVID-19 had significant, direct impacts on our operations, our business, our workforce, and our production, the extent to which COVID-19 will continue to impact our operations will depend on future developments which are highly uncertain and cannot be predicted with confidence. These future developments include, but are not limited to, the duration of any outbreak, new information that may emerge concerning the severity of COVID-19, including variants of the disease, and the actions taken to contain COVID-19 or treat it. The imposition of future governmental restrictions and health and safety protocols could improve or worsen relative to our assumptions, depending on how each jurisdiction manages potential outbreaks of COVID-19, the development and adequate supply of vaccines, and the effectiveness of such vaccines. Moreover, the continued presence of, or spread, of COVID-19, and any future emergence and spread of COVID-19 mutations or other pathogens, globally may have material adverse effects on the economies and financial markets of many countries, including those we operate in, resulting in an economic downturn that could have significant impacts on commodity prices, demand for metals, investor confidence, and general financial market liquidity, all of which may adversely affect our business and the market price of our Common Shares. In addition, such a pandemic could also impact our ability to raise capital, cause continued interest rate volatility that could make obtaining financing or refinancing our debt obligations more challenging or more expensive (if such financing is available at all), and result in any operations affected by coronavirus or other pathogens becoming subject to quarantine or shut down. Such effects would not only affect our business and results of operations, but also the operations of our suppliers, contractors and service providers, including smelter and refining service providers, and the demand for our production. Inflationary pressures relating to COVID-19 global financial support measures and current supply chain challenges continue to have both direct and indirect impacts on our costs to operate, which could have a material impact on our financial results. Any of these developments, and others, could have a material adverse effect on our business and results of operations. Climate Change There is significant evidence of the effects of climate change on our planet and an intensifying focus on addressing these issues. The Company recognizes that climate change is a global challenge that may have both favorable and adverse effects on our business in a range of possible ways. Mining and processing operations are energy intensive and result in a carbon footprint either directly or through the purchase of fossil-fuel based electricity. As such, the Company is impacted by current and emerging policy and regulation relating to greenhouse gas emission levels, energy efficiency, and reporting of climate change related risks. While some of the costs associated with reducing emissions may be offset by increased energy efficiency, technological innovation, or the increased demand for our metals as part of technological innovations, the current regulatory trend may result in additional transition costs at some of our operations. Governments are introducing climate change legislation and treaties at the international, national, and local levels, and regulations relating to emission levels and energy efficiency are evolving and becoming more rigorous. Current laws and regulatory requirements are not consistent across the jurisdictions in which we operate, and regulatory uncertainty is likely to result in additional complexity and cost in our compliance efforts. Public perception of mining is, in some respects, negative and there is increasing pressure to curtail mining in many jurisdictions as a result, in part, of perceived adverse effects of mining on the environment. Concerns around climate change may also affect the market price of our shares as institutional investors and others may divest interests in industries that are thought to have more environmental impacts. While we are committed to operating responsibly and reducing the negative effects of our operations on the environment, our ability to reduce emissions, energy and water usage by increasing efficiency and by adopting new innovation is constrained by technological advancement, operational factors and economics. Adoption of new technologies, the use of renewable energy, and infrastructure and operational changes necessary to reduce water usage may also increase our costs significantly. Concerns over climate change, and our ability to respond to regulatory requirements and societal expectations, may have significant impacts on our operations and on our reputation, and may even result in reduced demand for our products. PAN AMERICAN SILVER CORP. 53 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) The physical risks of climate change could also adversely impact our operations. These risks include, among other things, extreme weather events, resource shortages, changes in rainfall and in storm patterns and intensities, water shortages, changing sea levels and extreme temperatures. Climate-related events such as mudslides, floods, droughts and fires can have significant impacts, directly and indirectly, on our operations and could result in damage to our facilities, disruptions in accessing our sites with labour and essential materials or in shipping products from our mines, risks to the safety and security of our personnel and to communities, shortages of required supplies such as fuel and chemicals, inability to source enough water to supply our operations, and the temporary or permanent cessation of one or more of our operations. There is no assurance that we will be able to successfully anticipate, respond to, or manage the risks associated with physical climate change events and impacts, and this may result in material adverse consequences to our business and to our financial results. SIGNIFICANT ACCOUNTING POLICIES, STANDARDS AND JUDGEMENTS In preparing financial statements in accordance with IFRS, management is required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. These critical accounting estimates represent management estimates and judgments that are uncertain, and any changes in these could materially impact the Company’s financial statements. Management continuously reviews its estimates, judgments and assumptions using the most current information available. The significant judgments and key sources of estimation uncertainty in the application of accounting policies are described in Note 5 and Note 6 of the 2022 Annual Financial Statements, respectively. Readers should also refer to Note 3 of the 2022 Annual Financial Statements, for the Company’s summary of significant accounting policies. Changes in Accounting Standards Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. Presentation of Financial Statements (Amendment to IAS 1) The amendments to IAS 1, clarifies the presentation of liabilities. The classification of liabilities as current or non- current is based on contractual rights that are in existence at the end of the reporting period and is affected by expectations about whether an entity will exercise its right to defer settlement. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment also introduces a definition of ‘settlement’ to make clear that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. The amendment issued in October 2022 also clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The implementation of this amendment is not expected to have a material impact on the Company. Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) The amendment clarifies that the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendment is effective for annual reporting periods beginning on or after January 1, 2023. Early application is permitted. This amendment is not expected to have a material impact on the Company. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) The amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments are effective for annual reporting periods PAN AMERICAN SILVER CORP. 54 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) beginning on or after January 1, 2023. The Company is currently evaluating the impact of the amendment on its financial statements. SUBSEQUENT EVENTS Acquisition of Yamana The Company has agreed to acquire of all of the issued and outstanding common shares of Yamana ("Yamana Shares") following the sale by Yamana of its Canadian assets, including certain subsidiaries and partnerships which hold Yamana’s interests in the Canadian Malartic mine, to Agnico Eagle. Please refer to the "Yamana Gold Inc. Transaction" section of the MD&A. Pursuant to the Transaction, shareholders of Yamana will receive for each Yamana Share held: (i) 0.1598 of a common share of the Company; (ii) 0.0376 of a common share of Agnico Eagle; and (iii) $1.0406 in cash to be paid by Agnico Eagle. The aggregate consideration payable to Yamana shareholders consists of up to approximately 156.9 million common shares of the Company; approximately 36.6 million common shares of Agnico Eagle; and $1.0 billion in cash contributed by Agnico Eagle. The aggregate consideration represents a value of $4.8 billion or $5.02 per Yamana Share, based on the closing price of Pan American’s and Agnico Eagle’s shares on November 3, 2022, the day prior to the announcement of the proposed Transaction. Under the terms of the Transaction, the Company funded $150 million in cash to Yamana to pay a portion of a termination fee payable to Gold Fields Limited ("Gold Fields") in connection with the now terminated arrangement agreement between Yamana and Gold Fields. To fund this payment and other transaction and integration costs during the fourth quarter of 2022, the Company drew proceeds of $160 million from its SL-Credit Facility. The Transaction received shareholder approval from the Company’s shareholders and Yamana’s shareholders on January 31, 2023. In addition, on February 6, 2023 the Company received the required court order with respect to the Transaction from the Ontario Superior Court of Justice. The Transaction remains subject to approval from the Mexican Federal Economic Competition Commission and satisfaction or waiver of certain other closing conditions. The Transaction is expected to close in the first quarter of 2023. The Transaction would, if completed, contribute low-cost production growth and long-life mineral reserves, and result in the Company increasing its portfolio of assets to 11 operating mines. The Transaction would be estimated to meaningfully increase silver and gold production and would be expected to enhance the Company’s overall financial position and improve its ability to internally fund its growth projects. Pan American would assume Yamana’s obligations with respect to its August 2021 senior notes with an outstanding balance of $500 million and interest rate of 2.63% due in August 2031 and the December 2017 senior notes with an outstanding balance of $282.9 million and interest rate of 4.625% due in December 2027 (the “Notes”). The Notes contain certain change of control provisions, the triggering of which would result in a mandatory repurchase of the Notes in accordance with their terms. The Company does not currently expect that the change of control provisions would be triggered. However, to support the Company’s potential financial requirements and provide financial flexibility and liquidity in connection with the Transaction, the Company has, nonetheless, obtained a commitment from a Canadian chartered bank to provide, on a fully underwritten basis, an increase to the total committed credit available to the Company from $500.0 million to $1,250.0 million. There can be no assurance as to the completion of the Transaction. Disposal of Maverix On January 19, 2023, Triple Flag Precious Metals Corp. ("Triple Flag") and Maverix completed a plan of arrangement in which Triple Flag issued a total of 45.1 million common shares and $86.7 million in cash to former Maverix shareholders. As a result, the Company received $58.8 million in cash and 3,954,471 Triple Flag shares in exchange for its interest in Maverix comprised of 25,974,571 common shares. On January 26, 2023, the Company sold its entire interest in Triple Flag for net proceeds of $46.5 million after $1.3 million in commission fees. PAN AMERICAN SILVER CORP. 55 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) DISCLOSURE AND INTERNAL CONTROL PROCEDURES Pan American’s management considers the meaning of internal control to be the processes established by management to provide reasonable assurance about the achievement of the Company’s objectives regarding operations, reporting and compliance. Internal control is designed to address identified risks that threaten any of these objectives. Disclosure controls and procedures (“DC&P”) Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are responsible for establishing and maintaining adequate DC&P. Under the supervision and with the participation of our CEO and CFO, we evaluated the effectiveness of the design and operation of our DC&P in accordance with requirements of National Instrument 52-109 of the Canadian Securities Commission (“NI 52-109”) and the Sarbanes Oxley Act of 2002 (as adopted by the Securities and Exchange Commission ("SEC")). As of December 31, 2022, based on the evaluation, our CEO and CFO concluded that our DC&P were effective to ensure that information required to be disclosed by us in reports we file or submit is recorded, processed, summarized and reported within the time periods specified in securities legislation and is accumulated and communicated to our management, including our CEO and CFO. Internal control over financial reporting (“ICFR”) Our CEO and CFO are responsible for establishing and maintaining adequate ICFR. Under the supervision and with the participation of our CEO and CFO, we evaluated the effectiveness of our ICFR as of December 31, 2022 based upon the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation, our CEO and CFO concluded that our ICFR was effective as of December 31, 2022. Management reviewed the results of management’s evaluation with the Audit Committee of the Board. The effectiveness of the Company’s ICFR as of December 31, 2022 has been audited by Deloitte LLP, Independent Registered Public Accounting Firm as stated in their report immediately preceding the Company’s 2022 Annual Financial Statements. Changes in ICFR There has been no change in the Company’s ICFR during the three and twelve month periods ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, its ICFR. Inherent limitations of controls and procedures All internal control systems, no matter how well designed, have inherent limitations. As a result, even systems determined to be effective may not prevent or detect misstatements on a timely basis, as systems can provide only reasonable assurance that the objectives of the control system are met. In addition, projections of any evaluation of the effectiveness of ICFR to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may change. PAN AMERICAN SILVER CORP. 56 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) MINERAL RESERVES AND MINERAL RESOURCES Pan American Silver Corporation Mineral Reserves as of June 30, 2022(1,2) Property Classification Location Tonnes (Mt) Ag (g/t) Contained Ag (Moz) Au (g/t) Contained Cu (%) Pb (%) Zn (%) Au (koz) Silver Segment Huaron Peru Morococha (92.3%)(3) Peru La Colorada Mexico Manantial Espejo Argentina San Vicente (95%)(3) Bolivia Proven Probable Proven Probable Proven Probable Proven Probable Proven Probable Proven Probable Joaquin Escobal Argentina Guatemala Proven Probable Total Silver Segment(4) Gold Segment La Arena Peru Dolores Mexico Shahuindo(5) Peru Timmins Canada Total Gold Segment(4) Total Gold and Silver Segments(4) Proven Probable Proven Probable Proven Probable Proven Probable Proven + Probable 7.0 3.9 3.3 3.3 3.8 6.2 0.3 0.1 1.1 0.6 0.1 — 2.5 22.1 54.3 20.5 21.8 12.9 4.1 58.9 45.3 5.3 4.9 173.6 228.0 169 167 156 158 340 303 250 246 314 289 401 575 486 316 275 21 18 8 6 9 91 0.54 0.30 0.44 0.32 0.25 0.25 0.41 1.51 1.63 1.31 1.43 1.13 1.12 0.29 0.32 1.02 0.77 1.06 2.97 2.97 3.95 3.78 2.02 1.97 3.55 2.98 1.75 1.25 2.14 38.1 21.1 16.6 16.6 41.5 59.9 2.4 0.9 10.8 5.2 1.6 0.6 39.5 225.0 0.23 0.18 2.35 3.06 0.24 0.31 0.42 0.34 479.7 0.33 0.38 0.27 0.57 0.6 0.51 0.41 2.89 2.74 0.58 8.6 2.4 15.3 8.8 35.1 27.5 36.0 22.8 10.8 1.0 0.3 34.2 243.8 376.3 251.4 191.8 235.4 77.7 971.3 604.2 491.0 432.5 3,255.2 514.9 0.54 3,631.5 0.41 1.06 2.14 (1) See table below entitled “Metal price assumptions used to estimate mineral reserves and resources as at June 30, 2022”. (2) Mineral reserve estimates were prepared under the supervision of, or were reviewed by, Christopher Emerson, FAusIMM, Vice President Business Development and Geology, and Martin G. Wafforn, P.Eng., Senior Vice President Technical Services and Process Optimization, each of whom are Qualified Persons as that term is defined in NI 43-101. (3) This information represents the portion of mineral reserves attributable to Pan American based on its ownership interest in the operating entity as indicated. (4) Totals may not add up due to rounding. Total average grades of each element are with respect to those mines that produce the element. (5) Effective date for the Shahuindo mineral reserve estimate is November 30, 2022. PAN AMERICAN SILVER CORP. 57 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Pan American Silver Corporation Measured and Indicated Mineral Resources as of June 30, 2022(1,2) Property Classification Location Au (g/t) Contained Tonnes (Mt) Ag (g/t) Contained Ag (Moz) Peru Mexico Measured Indicated Measured Indicated Measured Indicated Indicated Argentina Measured Indicated Indicated Indicated Measured Indicated Argentina Measured Indicated Guatemala Measured Indicated Argentina Argentina Bolivia Silver Segment Huaron Morococha (92.3%)(3) Peru La Colorada La Colorada Skarn(4) Mexico Manantial Espejo COSE Joaquin San Vicente (95%)(3) Navidad Escobal Total Silver Segment(5) Gold Segment Dolores La Bolsa Pico Machay La Arena Shahuindo(6) Mexico Mexico Peru Peru Peru Timmins Canada La Arena II Peru Whitney (82.84%)(3) Canada Gold River Marlhill Vogel Canada Canada Canada Total Gold Segment(5) Measured Indicated Measured Indicated Measured Indicated Measured Indicated Measured Indicated Measured Indicated Measured Indicated Measured Indicated Indicated Indicated Indicated 2.1 2.4 0.6 0.7 1.9 3.4 95.9 0.2 0.7 0.1 0.4 0.9 0.3 15.4 139.8 2.3 14.2 281.3 2.1 0.8 10.8 10.6 4.7 5.9 0.8 2.1 8.3 13.2 3.4 4.5 148.9 547.5 0.8 1.9 0.7 0.4 2.2 769.7 163 166 130 124 216 191 31 158 264 349 329 191 188 137 126 251 201 102 30 57 10 8 5 4 9 89 Cu (%) Pb (%) Zn (%) Au (koz) 8.2 18.0 11.9 63.9 1.0 3.3 16.7 93.0 0.42 0.40 0.64 0.61 0.20 0.20 0.10 0.04 1.58 1.71 0.79 0.74 0.76 0.95 1.28 0.22 0.21 1.44 0.79 0.31 0.38 216.2 0.06 0.98 3.05 2.92 2.59 2.37 1.30 1.65 2.77 2.35 2.60 0.59 0.66 2.44 36.5 29.7 242.8 184.3 137.5 127.1 4 11.9 76.7 98.1 357.6 449.6 1209.7 4070 180.7 406.3 117.4 57.4 125.0 0.39 0.37 7,922.2 0.38 10.9 12.7 2.7 3.0 13.0 20.8 94.4 1.1 5.8 1.3 4.2 5.7 2.1 67.8 564.5 18.6 91.6 920.1 2.1 1.5 3.5 2.7 1.3 1.8 12.9 0.14 0.17 1.79 2.94 0.29 0.26 0.23 0.20 0.29 0.53 1.13 0.70 0.54 0.91 0.67 0.16 0.17 0.29 0.23 3.32 3.08 0.25 0.23 7.02 6.77 5.29 4.52 1.75 0.32 Total Gold and Silver Segments(5) Measured + Indicated 1,051.1 933.0 0.32 8,138.4 0.32 0.98 2.44 (1) See table below entitled “Metal price assumptions used to estimate mineral reserves and resources as at June 30, 2022”. (2) Mineral reserve estimates were prepared under the supervision of, or were reviewed by, Christopher Emerson, FAusIMM, Vice President Business Development and Geology, and Martin G. Wafforn, P.Eng., Senior Vice President Technical Services and Process Optimization, each of whom are Qualified Persons as that term is defined in NI 43-101. (3) This information represents the portion of mineral reserves attributable to Pan American based on its ownership interest in the operating entity as indicated. (4) Effective date for the La Colorada Skarn mineral resource estimate is September 13, 2022. PAN AMERICAN SILVER CORP. 58 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) (5) Totals may not add up due to rounding. Total average grades of each element are with respect to those mines that produce the element. (6) Effective date for the Shahuindo mineral reserve estimate is November 30, 2022. Pan American Silver Corporation Inferred Mineral Resources as of June 30, 2022(1,2) Contained Classification Property Ag (Moz) Tonnes (Mt) Ag (g/t) Location Au (g/t) Contained Au (koz) Cu (%) Pb (%) Zn (%) Silver Segment Huaron Peru Morococha (92.3%)(3) Peru La Colorada Mexico La Colorada Skarn(4) Mexico Manantial Espejo San Vicente (95%)(3) Navidad Joaquin Escobal Inferred Inferred Inferred Inferred Inferred Argentina Inferred Bolivia Inferred Argentina Argentina Inferred Guatemala Inferred Total Silver Segment(5) Gold Segment Dolores La Bolsa Pico Machay La Arena Shahuindo(6) Timmins La Arena II Whitney (82.84%) Gold River Vogel Total Gold Segment(5) Mexico Mexico Peru Peru Peru Canada Peru Canada Canada Canada Inferred Inferred Inferred Inferred Inferred Inferred Inferred Inferred Inferred Inferred Total Gold and Silver Segments(5) Inferred 7.2 5.2 14.9 147.8 0.5 2.9 45.9 0.2 1.9 226.6 2.5 13.7 23.9 6.0 14.6 4.4 54.7 0.8 5.3 1.5 127.4 354.0 155 143 195 28 180 249 81 282 180 61 29 8 8 10 55 1.47 1.28 1.05 1.04 0.29 0.57 0.22 0.95 2.73 3.74 1.89 2.29 2.65 0.42 2.31 36.1 24.0 93.9 132.9 3.1 23.3 119.4 1.6 10.7 445.1 2.4 3.3 3.7 9.5 0.20 98.4 1.71 29.4 0.26 0.35 0.21 0.02 0.23 0.90 0.32 0.92 0.51 0.58 0.22 0.41 3.11 0.23 5.34 6.06 3.60 0.77 1.3 53.7 182.7 0.09 74.4 224.6 445.7 42.3 194.5 436.5 413.2 141.4 1027.4 168.8 0.29 3,168.9 0.29 454.5 0.72 3,351.6 0.18 0.95 2.31 (1) See table below entitled “Metal price assumptions used to estimate mineral reserves and resources as at June 30, 2022”. (2) Mineral reserve estimates were prepared under the supervision of, or were reviewed by, Christopher Emerson, FAusIMM, Vice President Business Development and Geology, and Martin G. Wafforn, P.Eng., Senior Vice President Technical Services and Process Optimization, each of whom are Qualified Persons as that term is defined in NI 43-101. (3) This information represents the portion of mineral reserves attributable to Pan American based on its ownership interest in the operating entity as indicated. (4) Effective date for the La Colorada Skarn mineral resource estimate is September 13, 2022. (5) Totals may not add up due to rounding. Total average grades of each element are with respect to those mines that produce the element. (6) Effective date for the Shahuindo mineral reserve estimate is November 30, 2022. PAN AMERICAN SILVER CORP. 59 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) Metal Price Assumptions Used to Estimate Mineral Reserves and Mineral Resources as of June 30, 2022 Property Ag US$/oz Au US$/oz Cu US$/t Category Pb US$/t Zn US$/t Huaron Morococha La Colorada La Colorada Skarn Dolores La Bolsa Manantial Espejo San Vicente Navidad Pico Machay Joaquin Escobal Shahuindo La Arena La Arena II Timmins Whitney Gold River Marlhill Vogel All categories All categories All categories All categories Reserves Resources All categories Reserves Resources All categories All categories All categories Reserves Resources All categories Reserves Resources Reserves Resources All categories All categories All categories All categories All categories Inside pit Below pit 19.00 19.00 19.00 22.00 19.00 22.00 14.00 19.00 22.00 19.00 12.52 19.00 22.00 20.00 19.00 22.00 19.00 22.00 1,300 1,300 1,300 1,600 1,700 825 1,500 1,700 1,300 700 1,500 1,700 1,300 1,500 1,700 1,500 1,700 1,500 1,500 1,200 1,200 1,125 1,150 1,150 7,000 7,000 7,000 7,000 2,000 2,000 2,000 2,200 2,600 2,600 2,600 2,800 7,000 2,000 1,100 2,600 2,204 2,424 8,816 General Notes Applicable to the Foregoing Tables: Mineral reserves and resources are as defined by the Canadian Institute of Mining, Metallurgy and Petroleum. Pan American reports mineral resources and mineral reserves separately. Reported mineral resources do not include amounts identified as mineral reserves. Mineral resources that are not mineral reserves have no demonstrated economic viability. Pan American does not expect these mineral reserve and resource estimates to be materially affected by metallurgical, environmental, permitting, legal, taxation, socio-economic, political, and marketing or other relevant issues. See the Company's Annual Information Form dated February 22, 2023, available at www.sedar.com for further information on the Company's material mineral properties, including information concerning associated QA/QC and data verification matters, the key assumptions, parameters and methods used by the Company to estimate mineral reserves and mineral resources, and for a detailed description of known legal, political, environmental, and other risks that could materially affect the Company's business and the potential development of the Company's mineral reserves and resources. Quantities of contained metal are shown before metallurgical recoveries. Scientific and technical information contained in this MD&A has been reviewed and approved by Martin Wafforn, P.Eng., Senior Vice President Technical Services and Processing Optimization, and Christopher Emerson, FAusIMM, Vice President Business Development and Geology, each of whom are Qualified Persons, as the term is defined in NI 43-101. For more detailed information regarding the Company’s material mineral properties and technical information related thereto, including a complete list of current technical reports applicable to such properties, please refer to the Company’s Annual Information Form dated February 22, 2023, filed at www.sedar.com or the Company’s most recent Form 40-F filed with the SEC. Cautionary Note Regarding Forward-Looking Statements and Information Certain of the statements and information in this MD&A 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 PAN AMERICAN SILVER CORP. 60 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) securities laws relating to the Company and its operations. All statements, other than statements of historical fact, are forward-looking statements. When used in this MD&A, the words, “will”, “believes”, “expects”, “intents”, “plans”, “forecast”, “objective”, “guidance”, “outlook”, “potential”, “anticipated”, “budget”, and other similar words and expressions, identify forward-looking statements or information. These forward-looking statements or information relate to, among other things: future financial or operational performance; the expected timing for release of forecasts for 2023, including our estimated production of silver, gold and other metals forecasted, and for our estimated Cash Costs, AISC, capital and exploration, mine operation, general and administrative, care and maintenance expenditures; future anticipated prices for gold, silver and other metals and assumed foreign exchange rates; the impacts of inflation on Pan American and its operations; the closing of the Yamana Transaction in the first quarter of 2023; whether Pan American is able to maintain a strong financial condition and have sufficient capital, or have access to capital through the SL-Credit Facility or otherwise, to sustain our business and operations; the timing and outcome with respect to Pan American's environmental, social and governance activities, and Pan American's corporate social responsibility activities and our reporting in respect thereof; the anticipated completion of the Transaction, the timing for the same, and any expected benefit there from; the acquisition of additional assets upon completion of the Transaction; the duration and effect of the suspensions of operations of the Escobal mine, as well as the nature of and continuation of the constitutional court-mandated ILO 169 consultation process in Guatemala, and the timing and, if applicable, completion thereof; certain legal proceedings that were originated in the Constitutional Court of Guatemala relating to the Escobal mine; the SEDATU process with respect to a portion of the La Colorada mine’s surface lands; the timing and success of site infrastructure upgrades at the La Colorada mine; the ability of Pan American to successfully complete any capital projects, the expected economic or operational results derived from those projects, and the impacts of any such projects on Pan American; the future results of our exploration activities, including with respect to the skarn exploration program at La Colorada; anticipated mineral reserves and mineral resources; the costs associated with the Company's decommissioning obligations; the Company’s plans and expectations for its properties and operations; and expectations with respect to the future anticipated impact of COVID-19 on our operations. 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 and estimates that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic, competitive, political, regulatory, and social uncertainties and contingencies. These assumptions, some of which are described in the “Risks and Uncertainties” section of this MD&A, include: our ability to receive all required regulatory approvals and then close the Transaction; our ability to implement environmental, social and governance activities; 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 mineral 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; protection of our interests against claims and legal proceedings; all necessary permits, licenses and regulatory approvals for our operations are received in a timely manner and can be maintained; the world-wide economic and social impact of COVID-19 is managed and the duration and extent of the coronavirus pandemic is minimized or not long-term; the management of COVID-19 in each jurisdiction; and our ability to comply with environmental, health and safety laws, particularly given the potential for modifications and expansion of such 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 expressed or implied by such forward-looking statements or information contained in this MD&A 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; fluctuations in currency markets (such as the PEN, MXN, ARS, BOL, GTQ and CAD versus the USD); risks related to the technological and operational nature of the Company’s business; changes in national and local government, legislation, taxation, controls or regulations and political, legal or economic developments in Canada, the United States, Mexico, Peru, Argentina, Bolivia, Guatemala or other countries where the Company may carry on business, some of which might prevent or cause the suspension or discontinuation of mining activities, including the risk of expropriation related to certain of our operations, particularly in Argentina and Bolivia and risks related to the constitutional court-mandated ILO 169 consultation process in Guatemala; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological or structural formations, pressures, cave-ins and flooding); 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 the local communities and indigenous populations; availability and increasing costs associated with mining inputs and labour; the Company’s ability to secure our mine sites or maintain access to our mine sites due to criminal activity, violence, or civil and labour unrest; the speculative nature of mineral exploration and development, including the risk of obtaining or retaining necessary licenses and permits; challenges to, or difficulty in maintaining, the Company’s title to properties and continued ownership thereof; diminishing quantities or grades of mineral reserves as properties are mined; global financial conditions; the Company’s ability to complete and successfully integrate acquisitions, including in connection with the Transaction, and to mitigate other business combination risks; the actual results of current exploration activities, conclusions of economic evaluations, and changes in project parameters to deal with unanticipated economic or other factors; increased competition in the mining industry for properties, equipment, qualified personnel, and their costs; having sufficient cash to pay obligations as they come due; the duration and effects of the coronavirus and COVID-19 variants, and any other epidemics or pandemics on our operations and workforce, and their effects on global economies and society; 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 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 PAN AMERICAN SILVER CORP. 61 Management Discussion and Analysis For the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted) materially, there may be other factors that cause results not to be as anticipated, estimated, described, or intended. Investors are cautioned against attributing undue certainty or 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, and does not assume any obligation, to update or revise forward-looking statements or information to reflect changes in assumptions or in circumstances or any other events affecting such statements or information, other than as required by applicable law. Cautionary Note to US Investors Regarding References to Mineral Reserves and Mineral Resources Unless otherwise indicated, all reserve and resource estimates included in this MD&A have been prepared in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) — CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Standards”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”), and reserve and resource information included herein may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, this MD&A use the terms “measured resources,” “indicated resources” and “inferred resources” as defined in accordance with NI 43-101 and the CIM Standards. Further to recent amendments, mineral property disclosure requirements in the United States (the “U.S. Rules”) are governed by subpart 1300 of Regulation S-K of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) which differ from the CIM Standards. As a foreign private issuer that is eligible to file reports with the SEC pursuant to the multi-jurisdictional disclosure system (the “MJDS”), the Company is not required to provide disclosure on its mineral properties under the U.S. Rules and will continue to provide disclosure under NI 43-101 and the CIM Standards. If the Company ceases to be a foreign private issuer or loses its eligibility to file its annual report on Form 40-F pursuant to the MJDS, then the Company will be subject to the U.S. Rules, which differ from the requirements of NI 43-101 and the CIM Standards. Pursuant to the new U.S. Rules, the SEC recognizes estimates of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources.” In addition, the definitions of “proven mineral reserves” and “probable mineral reserves” under the U.S. Rules are now “substantially similar” to the corresponding standards under NI 43-101. Mineralization described using these terms has a greater amount of uncertainty as to its existence and feasibility than mineralization that has been characterized as reserves. Accordingly, U.S. investors are cautioned not to assume that any measured mineral resources, indicated mineral resources, or inferred mineral resources that the Company reports are or will be economically or legally mineable. Further, “inferred mineral resources” have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies, except in rare cases. While the above terms under the U.S. Rules are “substantially similar” to the standards under NI 43-101 and CIM Standards, there are differences in the definitions under the U.S. Rules and CIM Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had the Company prepared the reserve or resource estimates under the standards adopted under the U.S. Rules. PAN AMERICAN SILVER CORP. 62 Consolidated Financial Statements and Notes FOR THE YEARS ENDED DECEMBER 31, 2022 AND DECEMBER 31, 2021 PAN AMERICAN SILVER CORP. 63 Management’s Responsibility For Financial Reporting The accompanying consolidated financial statements of Pan American Silver Corp. ("Pan American" or the "Company") have been prepared by and are the responsibility of management and have been approved by the Board of Directors (the "Board"). These Consolidated Financial Statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and include managements best estimates and judgements. Pan American has developed and maintains a system of internal controls designed to ensure the reliability of its financial information. Deloitte LLP, an Independent Registered Public Accounting Firm, has audited these Consolidated Financial Statements. Their report outlines the scope of their examination and opinion on the consolidated financial statements. "signed" Michael Steinmann Chief Executive Officer February 22, 2023 "signed" Ignacio Couturier Chief Financial Officer Management’s Report on Internal Control over Financial Reporting Management of Pan American is responsible for establishing and maintaining adequate internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Pan American's management assessed the effectiveness of the Company's Internal control over financial reporting as of December 31, 2022, in accordance with the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2022, Pan American’s internal control over financial reporting was effective. Deloitte LLP, an Independent Registered Public Accounting Firm, has audited the Company’s Consolidated financial statements for the year ended December 31, 2022, and as stated in the Report of Independent Registered Public Accounting Firm, they have expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. PAN AMERICAN SILVER CORP. 64 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Pan American Silver Corp. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of Pan American Silver Corp. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of earnings and comprehensive earnings, cash flows, and changes in equity, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for each of the two years in the period ended December 31, 2022, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Impairment - Assessment of Whether Indicators of Impairment or Impairment Reversal Exist within the Mineral Properties, Plant and Equipment - Refer to Note 3 o), 5 e), and 12 to the financial statements Critical Audit Matter Description The Company’s determination of whether or not an indicator of impairment or impairment reversal exists at the cash generating unit (“CGU”) level requires significant management judgment. Changes in metal price forecasts or discount rates, increases or decreases in estimated future costs of production, increases or decreases in estimated future capital costs, reductions or increases in the amount of recoverable mineral reserves and mineral resources and/or adverse or favorable political or regulatory developments can result in a write-down or write-up of the carrying amounts of the Company’s mineral properties, plant and equipment. PAN AMERICAN SILVER CORP. 65 While there are several factors that are required to determine whether or not an indicator of impairment or impairment reversal exists, the judgments with the highest degree of subjectivity are future metal prices (for both gold and silver), discount rates and the Company’s ability or expected timing to restart the Escobal Mine. Auditing these estimates and factors required a high degree of subjectivity in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit effort, including the involvement of fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the future metal prices (for both gold and silver), discount rates and the Company's ability or expected timing to restart the Escobal mine considered in the assessment of indicators of impairment or impairment reversal included the following, among others: • • Evaluated the effectiveness of the Company’s controls over management’s assessment of indicators of impairment or impairment reversal. Performed independent research to assess if there have been any substantive local, political, or regulatory changes negatively impacting the ability or expected timing to restart the Escobal mine. • With the assistance of fair value specialists: ◦ ◦ Evaluated the future metal prices (gold and silver) by comparing management forecasts to third party forecasts, and Evaluated the reasonableness of the change in discount rate by testing the source information underlying the determination of the discount rate. Impairment —Dolores Mine CGU – Refer to Notes 3 o) and 12 to the financial statements Critical Audit Matter Description The Company identified an indicator of impairment for the Dolores Mine CGU as a result of gold and silver production being less than expected and inflationary pressures which have affected this shorter-life mine. The Company determined that the recoverable amount of the CGU corresponded to its fair value less costs to sell. It was determined that the recoverable amount of the Dolores Mine CGU was lower than its carrying value, causing the Company to recognize an impairment loss. While there are several assumptions that go into determining the recoverable amount of the Dolores Mine CGU, the judgments with the highest degree of subjectivity are future metal prices (for both gold and silver). Auditing these estimates required a high degree of subjectivity in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit effort, including the involvement of fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to future metal prices (for both gold and silver) used to determine the recoverable amount of the Dolores Mine CGU included the following, among others: • Evaluated the effectiveness of the controls surrounding the future metal prices (for both gold and silver), and • With the assistance of fair value specialists, evaluated the future metal prices (for both gold and silver) by comparing management forecasts to third party forecasts. /s/ Deloitte LLP Chartered Professional Accountants Vancouver, Canada February 22, 2023 We have served as the Company's auditor since 1993. PAN AMERICAN SILVER CORP. 66 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Pan American Silver Corp. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Pan American Silver Corp. and subsidiaries (the “Company") as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 22, 2023, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte LLP Chartered Professional Accountants Vancouver, Canada February 22, 2023 PAN AMERICAN SILVER CORP. 67 Assets Current assets Cash and cash equivalents (Note 27) Short-term investments (Note 9) Trade and other receivables Income tax receivables Inventories (Note 10) Derivative assets (Note 8) Prepaid expenses and other current assets Non-current assets Mineral properties, plant and equipment (Note 11) Long-term inventories (Note 10) Long-term tax receivables Deferred tax assets (Note 30) Long-term investment and associate (Note 13) Goodwill and other assets (Note 14) Total assets Liabilities Current liabilities Accounts payable and accrued liabilities (Note 15) Derivative liabilities (Note 8) Provisions (Note 16) Lease obligations (Note 17) Debt (Note 18) Income tax payables Non-current liabilities Long-term provisions (Note 16) Deferred tax liabilities (Note 30) Long-term lease obligations (Note 17) Long-term debt (Note 18) Deferred revenue (Note 19) Other long-term liabilities (Note 20) Total liabilities Equity (Note 21) Issued capital Share option reserve Investment revaluation reserve Deficit Total equity attributable to Company shareholders Non-controlling interests Total equity Total liabilities and equity Consolidated Statements of Financial Position (in thousands of U.S. dollars) December 31, 2022 December 31, 2021 $ $ $ 107,005 $ 35,337 136,614 40,020 471,630 2,883 10,891 804,380 2,226,354 26,300 8,476 55,879 121,200 5,909 3,248,498 $ 308,054 $ 1,780 17,853 13,608 13,712 25,833 380,840 285,327 140,337 19,506 180,010 13,900 26,960 1,046,880 283,550 51,723 128,150 20,282 500,462 3,995 13,007 1,001,169 2,344,551 25,644 8,711 55,953 77,410 5,146 3,518,584 306,087 351 8,041 10,663 3,400 59,133 387,675 240,111 184,785 19,898 11,900 12,516 25,691 882,576 3,139,994 93,273 (3,008) (1,034,780) 2,195,479 6,139 2,201,618 3,248,498 $ 3,136,214 93,375 — (598,035) 2,631,554 4,454 2,636,008 3,518,584 $ Commitments and contingencies (Notes 8, 31); subsequent events (Notes 13, 33) See accompanying notes to the consolidated financial statements APPROVED BY THE BOARD ON FEBRUARY 22, 2023 "signed" Gillian Winckler, Director "signed" Michael Steinmann, Director PAN AMERICAN SILVER CORP. 68 Consolidated Statements of Earnings and Comprehensive Earnings (in thousands of U.S. dollars except per share amounts) Revenue (Note 28) Cost of sales Production costs (Note 22) Depreciation and amortization (Note 11) Royalties Mine operating earnings (Note 28) General and administrative Exploration and project development Mine care and maintenance (Note 23) Foreign exchange losses Impairment charges (Note 12) Derivative gains (Note 8(d)) Mineral properties, plant and equipment (losses) gains (Note 11) Gains and income from associates (Note 13) Transaction and integration costs (Note 24) Other (expense) income (Note 29) (Loss) earnings from operations Investment loss (Note 8(b)) Interest and finance expense (Note 25) (Loss) earnings before income taxes Income tax expense (Note 30) Net (loss) earnings Net (loss) earnings attributable to: Equity holders of the Company Non-controlling interests Other comprehensive (loss) earnings, net of taxes Items that will not be reclassified to net (loss) earnings: Unrealized loss on long-term investment (Note 8(c)) Income tax recovery related to long-term investments (Note 30) Total other comprehensive loss Total comprehensive (loss) earnings Total comprehensive (loss) earnings attributable to: Equity holders of the Company Non-controlling interests (Loss) earnings per share attributable to common shareholders (Note 26) 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 See accompanying notes to the consolidated financial statements. 2022 1,494,718 $ 2021 1,632,750 $ (1,094,431) (316,036) (35,889) (1,446,356) 48,362 (925,479) (302,958) (36,375) (1,264,812) 367,938 (28,975) (18,335) (45,123) (9,607) (99,064) 7,336 (2,439) 45,033 (157,334) (2,115) (262,261) (16,221) (22,463) (300,945) (39,118) (340,063) $ (341,748) 1,685 (340,063) $ (3,477) 469 (3,008) $ (343,071) $ (344,756) 1,685 (343,071) $ (1.62) $ (1.62) $ 210,521 210,521 (34,852) (11,071) (31,780) (11,267) — 5,393 32,167 4,347 — 36 320,911 (59,722) (16,198) 244,991 (146,429) 98,562 97,428 1,134 98,562 — — — 98,562 97,428 1,134 98,562 0.46 0.46 210,298 210,435 $ $ $ $ $ $ $ PAN AMERICAN SILVER CORP. 69 Operating activities Net (loss) earnings for the year Income tax expense (Note 30) Depreciation and amortization (Note 11) Impairment charges (Note 12) Net realizable value inventory charge (Note 22) Gains and income from associates (Note 13) Accretion on closure and decommissioning provision (Note 16) Investment loss Interest paid Interest received Income taxes paid Other operating activities (Note 27) Net change in non-cash working capital items (Note 27) Investing activities Payments for mineral properties, plant and equipment Proceeds from disposition of mineral properties, plant and equipment Proceeds from short-term investments Proceeds from derivatives Financing activities Proceeds from common shares issued Distributions to non-controlling interests Dividends paid Proceeds from debt (Note 18) Repayment of debt (Note 18) Payment of equipment leases Effects of exchange rate changes on cash and cash equivalents (Decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Supplemental cash flow information (Note 27). See accompanying notes to the consolidated financial statements. Consolidated Statements of Cash Flows (in thousands of U.S. dollars) 2022 2021 $ $ $ $ $ $ $ (340,063) $ 39,118 316,036 99,064 97,742 (45,033) 14,841 16,221 (6,584) 3,176 (137,762) 17,190 (42,037) 31,909 $ (274,688) $ 8,713 694 9,877 (255,404) $ 940 $ (269) (94,728) 167,100 (5,239) (14,833) 52,971 $ (6,021) (176,545) 283,550 107,005 $ 98,562 146,429 302,958 — 8,719 (4,347) 7,470 59,722 (5,234) 172 (129,205) (22,069) (71,069) 392,108 (243,478) 45,798 1,861 9,157 (186,662) 619 (933) (71,500) — (1,700) (12,396) (85,910) (3,099) 116,437 167,113 283,550 PAN AMERICAN SILVER CORP. 70 Consolidated Statements of Changes in Equity (in thousands of U.S. dollars except for number of shares) Attributable to equity holders of the Company Issued shares Issued capital Balance, December 31, 2020 210,258,667 $ 3,132,140 $ Total comprehensive earnings Net earnings for the year Shares issued on the exercise of stock options Shares issued as compensation Share-based compensation on option grants Distributions by subsidiaries to non- controlling interests Dividends paid — 65,780 — 762 133,077 3,312 — — — — — — Balance, December 31, 2021 210,457,524 $ 3,136,214 $ Total comprehensive loss Net loss for the year Other comprehensive loss — — — — — — Share option reserve Investment revaluation reserve 93,409 $ — $ Deficit (623,030) $ 2,602,519 $ Total Non- controlling interests Total equity 3,320 $ 2,605,839 — (143) — 109 — — — — 97,428 97,428 1,134 98,562 — — — 619 3,312 109 — — — 619 3,312 109 — — 93,375 $ — — — $ (933) (71,500) (933) (71,500) (598,035) $ 2,631,554 $ — — (933) (71,500) 4,454 $ 2,636,008 — — — — (3,008) (3,008) (341,748) — (341,748) (341,748) (3,008) (344,756) 1,685 — 1,685 (340,063) (3,008) (343,071) 79,542 1,283 (343) Shares issued on the exercise of stock options Shares issued as compensation Share-based compensation on option grants Distributions by subsidiaries to non- controlling interests Dividends paid 143,768 2,497 — — — — — — Balance, December 31, 2022 210,680,834 $ 3,139,994 $ — — — — — — 940 2,497 241 — — — 940 2,497 241 — — (269) (94,728) (3,008) $ (1,034,780) $ 2,195,479 $ (269) (94,728) — — (269) (94,728) 6,139 $ 2,201,618 — 241 — — 93,273 $ See accompanying notes to the consolidated financial statements. PAN AMERICAN SILVER CORP. 71 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) 1. NATURE OF OPERATIONS Pan American Silver Corp. is the ultimate parent company of its subsidiary group (collectively, the “Company”, or “Pan American”). Pan American is a British Columbia corporation domiciled in Canada, and its office is at Suite 1440 – 625 Howe Street, Vancouver, British Columbia, V6C 2T6. The Company is engaged in the production and sale of silver, gold, zinc, lead and copper as well as other related activities, including exploration, extraction, processing, refining and reclamation. The Company’s major products are produced from mines in Canada, Peru, Mexico, Argentina and Bolivia. Additionally, the Company has project development activities in Canada, Peru, Mexico and Argentina, and exploration activities throughout South America, Canada and Mexico. As at December 31, 2022, the Company's Escobal mine in Guatemala continues to be on care and maintenance pending satisfactory completion of a consultation process led by the Ministry of Energy and Mines ("MEM") in Guatemala. The Company, Agnico Eagle Mines Limited (“Agnico Eagle”) and Yamana Gold Inc. (“Yamana”) entered into an arrangement agreement dated November 4, 2022 ( the "Arrangement Agreement"), whereby the Company agreed to acquire all of the issued and outstanding common shares of Yamana following the sale by Yamana of its Canadian assets, including certain subsidiaries and partnerships which hold Yamana’s interests in the Canadian Malartic mine, to Agnico Eagle, by way of a plan of arrangement under the Canada Business Corporations Act (the “Transaction”). The Transaction is expected to close in the first quarter of 2023, subject to certain regulatory approvals and other closing conditions. As a result, the Company expects to add to its portfolio the Jacobina mine in Brazil; the El Penon and Minera Florida mines in Chile; and the Cerro Morro mine in Argentina as well as two development projects in Argentina. Please refer to Note 33 for further details. 2. BASIS OF PREPARATION These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), effective as of December 31, 2022. These consolidated financial statements were approved for issuance by the Board of Directors on February 22, 2023. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies used in the preparation of these consolidated financial statements are as follows: a) Presentation currency The functional and presentation currency of the Company and each of its subsidiaries is the United States dollar ("USD"). b) Basis of measurement These consolidated financial statements have been prepared on an historical cost basis, except for those assets and liabilities that are measured at revalued amounts or fair values at the end of each reporting period. PAN AMERICAN SILVER CORP. 72 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) c) Basis of consolidation The accounts of the Company and its subsidiaries, which are controlled by the Company, have been included in these consolidated financial statements. Control is achieved when the Company is exposed, or has rights, to variable returns from the investee and when the Company has the ability to affect those returns through its power over the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. The principal subsidiaries of the Company and their geographic locations at December 31, 2022 were as follows: Location Subsidiary Ownership Interest Accounting Canada Mexico Peru Lake Shore Gold Corp. Plata Panamericana S.A. de C.V. Compañía Minera Dolores S.A. de C.V. Pan American Silver Huaron S.A. Compañía Minera Argentum S.A. Shahuindo S.A.C. La Arena S.A. Pan American Silver (Bolivia) S.A. Pan American Silver Guatemala S.A. Bolivia Guatemala Argentina Minera Tritón Argentina S.A. Minera Joaquin S.R.L. Minera Argenta S.A. d) Investments in associates 100% 100% 100% 100% 92% 100% 100% 95% 100% 100% 100% 100% Operations and Development Projects Owned Bell Creek and Timmins West mines, together "Timmins mine" Consolidated Consolidated La Colorada mine Consolidated Dolores mine Consolidated Huaron mine Consolidated Morococha mine Consolidated Shahuindo mine Consolidated La Arena mine Consolidated San Vicente mine Consolidated Escobal mine Consolidated Manantial Espejo & Cap-Oeste Sur Este mines Consolidated Joaquin mine Consolidated Navidad project An associate is an entity over which the investor has significant influence but not control and that is neither a subsidiary nor an interest in a joint venture. Significant influence is presumed to exist where the Company has between 20% and 50% of the voting rights, but can also arise where the Company has less than 20%, if the Company has the power to participate in the financial and operating policy decisions affecting the entity. The Company’s share of the net assets and net earnings or loss is accounted for in the consolidated financial statements using the equity method of accounting. e) Business combinations Upon the acquisition of a business, the acquisition method of accounting is used, whereby the purchase consideration is allocated to the identifiable assets, liabilities and contingent liabilities (identifiable net assets) acquired on the basis of fair value at the date of acquisition. When the cost of the acquisition exceeds the fair value attributable to the Company’s share of the identifiable net assets, the difference is treated as goodwill, which is not amortized and is reviewed for impairment annually or more frequently when there is an indication of impairment. If the fair value attributable to the Company’s share of the identifiable net assets exceeds the cost of acquisition, the difference is immediately recognized in the consolidated statement of earnings. Acquisition related costs, other than costs to issue debt or equity securities of the acquirer, including investment banking fees, legal fees, accounting fees, valuation fees, and other professional or consulting fees are expensed as incurred. The costs to issue equity securities of the Company as consideration for the acquisition are reduced from share capital as share issuance costs. The costs to issue debt securities are capitalized and amortized using the effective interest method. Non-controlling interests are measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquirers’ identifiable net assets as at the date of acquisition. The choice of measurement basis is made on a transaction by transaction basis. Control of a business may be achieved in stages. Upon the acquisition of control, any previously held interest is re-measured to fair value at the date control is obtained resulting in a gain or loss upon the acquisition of control. PAN AMERICAN SILVER CORP. 73 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. f) Revenue recognition Revenue associated with the sale of commodities is recognized when control of the asset sold is transferred to the customer. Indicators of control transferring include an unconditional obligation to pay, legal title, physical possession, transfer of risk and rewards and customer acceptance. This generally occurs when the goods are delivered to a loading port, warehouse, vessel or metal account as contractually agreed with the buyer; at which point the buyer controls the goods. In cases where the Company is responsible for the cost of shipping and certain other services after the date on which control of the goods transfers to the customer, these other services are considered separate performance obligations and thus a portion of revenue earned under the contract is allocated and recognized as these performance obligations are satisfied. The Company’s concentrate sales contracts with third-party buyers, in general, provide for a provisional payment based upon provisional assays and quoted metal prices. Final settlement is based on applicable commodity prices set on specified quotational periods, typically ranging from one month prior to shipment, and can extend to three months after the shipment arrives at the smelter and is based on average market metal prices. For this purpose, the transaction price can be measured reliably for those products, such as silver, gold, zinc, lead and copper, for which there exists an active and freely traded commodity market such as the London Metals Exchange and the value of product sold by the Company is directly linked to the form in which it is traded on that market. Sales revenue is commonly subject to adjustments based on an inspection of the product by the customer. In such cases, sales revenue is initially recognized on a provisional basis using the Company’s best estimate of contained metal, and adjusted subsequently. Revenues are recorded under these contracts at the time control passes to the buyer based on the expected settlement period. Revenue on provisionally priced sales is recognized based on estimates of the fair value of the consideration receivable based on forward market prices and estimated quantities. At each reporting date provisionally priced metal is marked to market based on the forward selling price for the quotational period stipulated in the contract. Variations between the price recorded at the date when control is transferred to the buyer and the actual final price set under the smelting contracts are caused by changes in metal prices resulting in the receivable being recorded at fair value through profit or loss ("FVTPL"). IFRS 15 - Revenue from Contracts with Customers ("IFRS 15") requires that variable consideration should only be recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company concluded that the adjustments relating to the final assay results for the quantity and quality of concentrate sold are not significant and do not constrain the recognition of revenue. Refining and treatment charges under the sales contracts are netted against revenue for sales of metal concentrate. The Company recognizes deferred revenue in the event it receives payments from customers in consideration for future commitments to deliver metals and before such sale meets the criteria for revenue recognition. The Company recognizes amounts in revenue as the metals are delivered to the customer. Specifically, for the metal agreements entered into with Maverix Metals Inc. ("Maverix"), the Company determines the amortization of deferred revenue to the consolidated statement of earnings on a per unit basis using the estimated total quantity of metal expected to be delivered to Maverix over the terms of the contract. The Company estimates the current portion of deferred revenue based on quantities anticipated to be delivered over the next twelve months. PAN AMERICAN SILVER CORP. 74 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) g) Financial instruments Financial assets and financial liabilities are recognized in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument. i) Financial assets On initial recognition, a financial asset is classified as measured at: amortized cost, fair value through other comprehensive income ("FVTOCI"), or FVTPL. Financial assets at FVTPL are initially measured at fair value and those at amortized cost or FVTOCI are initially measured at fair value plus transaction costs. Subsequent measurement of financial assets and liabilities depends on the classifications of such assets and liabilities. Amortized cost: Financial assets that meet the following conditions are measured subsequently at amortized cost: • • The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. Interest income is recognized using the effective interest method. Interest income is recognized in Investment loss in the consolidated statement of earnings. The Company's financial assets at amortized cost primarily include cash and cash equivalents, receivables not arising from sale of metal concentrates included in Trade and other receivables in the Consolidated Statement of Financial Position (Note 8(a)). FVTOCI: Financial assets that meet the following conditions are measured at FVTOCI: • • • The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding; or The Company may make an irrevocable election at initial recognition for particular investments in equity instruments that would otherwise be measured at FVTPL to present subsequent changes in fair value in other comprehensive income. At initial recognition, the Company's made an irrevocable election to measure its Long-term investment at FVTOCI (Note 8(c)). FVTPL: By default, all other financial assets are measured subsequently at FVTPL. The Company, at initial recognition, may also irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are not part of a designated PAN AMERICAN SILVER CORP. 75 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) hedging relationship. Fair value is determined in the manner described in Note 8(e)(ii). The Company's financial assets at FVTPL include its trade receivables from provisional concentrate sales, short-term investments in equity securities, and derivative assets not designated as hedging instruments. ii) Financial liabilities and equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Classification of financial liabilities Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for trading or designated as at FVTPL, are measured at amortized cost using effective interest method. Derivatives When the Company enters into derivative contracts, these transactions are designed to reduce exposures related to assets and liabilities, firm commitments or anticipated transactions. The Company does not have derivative instruments that qualify as cash flow hedges and consequently all derivatives are recorded at fair value with changes in fair value recognized in net earnings. h) Derivative Financial Instruments The Company utilizes foreign currency and commodity contracts, including forward contracts to manage exposure to fluctuations in metal prices and foreign currency exchange rates. For metals production, these contracts are intended to reduce the risk of falling prices on the Company’s future sales. Foreign currency derivative financial instruments, such as forward contracts, are used to manage the effects of exchange rate changes on foreign currency cost exposures. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative and any gains or losses arising from changes in fair value on derivatives are taken directly to earnings for the year. The fair value of forward currency and commodity contracts is calculated by reference to current forward exchange rates and prices for contracts with similar maturity profiles. Derivatives, including certain conversion options and warrants with exercise prices in a currency other than the functional currency, are recognized at fair value with changes in fair value recognized in profit or loss. PAN AMERICAN SILVER CORP. 76 i) Inventories Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Inventories include work in progress, concentrate, doré, processed silver and gold, heap leach inventory, and operating materials and supplies. Work in progress inventory includes ore stockpiles and other partly processed material. Stockpiles represent ore that has been extracted and is available for further processing. The classification of inventory is determined by the stage at which the ore is in the production process. Inventories of ore are sampled for metal content and are valued based on the lower of cost or estimated net realizable value ("NRV") based upon the period ending prices of contained metal. Cost is determined on a weighted average basis or using a first-in-first-out basis and includes all costs incurred in the normal course of business including direct material and direct labour costs and an allocation of production overheads, depreciation and amortization, and other costs, based on normal production capacity, incurred in bringing each product to its present location and condition. Material that does not contain a minimum quantity of metal to cover estimated processing expenses to recover the contained metal is not classified as inventory and is assigned no value. The work in progress inventory is considered part of the operating cycle which the Company classifies as current inventory and hence heap leach and stockpiles are included in current inventory for our operations. Quantities are assessed primarily through surveys and assays. The costs incurred in the construction of heap leach pads are capitalized to mineral properties, plant and equipment. Heap leach inventory represents silver and gold contained in ore that has been placed on the leach pad for cyanide irrigation. The heap leach process is a process of extracting silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which is then recovered during the metallurgical process. When the ore is placed on the pad, an estimate of the recoverable ounces is made based on tonnage, ore grade and estimated recoveries of the ore type placed on the pad. The estimated recoverable ounces on the pad are used to compile the inventory cost. The Company uses several integrated steps to scientifically measure the metal content of the ore placed on the leach pads. The tonnage, grade, and ore type to be mined in a period was first estimated using the Mineral Reserve model. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue, which is assayed to determine their metal content and quantities of contained metal. The estimated recoverable ounces carried in the leach pad inventory are adjusted based on actual recoveries being experienced. Actual and estimated recoveries achieved are measured to the extent possible using various indicators including, but not limited to, individual cell recoveries, the use of leach curve recovery and trends in the levels of carried ounces depending on the circumstances or cumulative pad recoveries. The Company then processes the ore through the crushing facility where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. The crushed ore is then transported to the leach pad for application of the leaching solution. The samples from the automated sampler are assayed each shift and used for process control. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. The pregnant solution from the heap leach is collected and passed through the processing circuit to produce precipitate, which is retorted and then smelted to produce doré bars. The Company allocates direct and indirect production costs to by-products on a systematic and rational basis. With respect to concentrate and doré inventory, production costs are allocated based on the silver equivalent ounces contained within the respective concentrate and doré. The inventory is stated at lower of cost or NRV, with cost being determined using a weighted average cost method. The ending inventory value of ounces associated with the leach pad is equal to opening recoverable ounces plus recoverable ounces placed less ounces produced plus or minus ounce adjustments. The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates, which rely upon laboratory test work and estimated models of the leaching kinetics in the heap leach pads. Test work consists of leach columns of up to 400 days duration with 150 days being the average, from which the Company PAN AMERICAN SILVER CORP. 77 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) projects metal recoveries up to three years in the future. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory column tests and actual experience. The assumptions used by the Company to measure metal content during each stage of the inventory conversion process include estimated recovery rates based on laboratory testing and assaying. The Company periodically reviews its estimates compared to actual experience and revises its estimates when appropriate. The ultimate recovery will not be known until the leaching operations cease. Supplies inventories are valued at the lower of average cost and NRV using replacement cost plus cost to dispose, net of obsolescence. Concentrate and doré inventory includes product at the mine site, the port warehouse and product held by refineries. At times, the Company has a limited amount of finished silver at a minting operation where coins depicting Pan American’s emblem are stamped. j) Mineral properties, plant and equipment ("MPPE") On initial acquisition, MPPE are valued at cost, being the purchase price and the directly attributable costs of acquisition or construction required to bring the asset to the location and condition necessary for the asset to be capable of operating in the manner intended by management. When provisions for closure and decommissioning are recognized, the corresponding cost is capitalized as part of the cost of the related assets, representing part of the cost of acquiring the future economic benefits of the operation. The capitalized cost of closure and decommissioning activities is recognized in MPPE and depreciated accordingly. In subsequent periods, buildings, plant and equipment are stated at cost less accumulated depreciation and any impairment in value, whilst land is stated at cost less any impairment in value and is not depreciated. Each asset's or part’s estimated useful life has due regard to both its own physical life limitations and the present assessment of economically recoverable reserves of the mine property at which the item is located, and to possible future variations in those assessments. Estimates of remaining useful lives and residual values are reviewed annually. Changes in estimates are accounted for prospectively. The expected useful lives are included below in the accounting policy for depreciation of MPPE. The net carrying amounts of MPPE are reviewed for impairment either individually or at the cash-generating unit ("CGU") level when events and changes in circumstances indicate that the carrying amounts may not be recoverable. To the extent that these values exceed their recoverable amounts, that excess is recorded as an impairment provision. In countries where the Company paid Value Added Tax (“VAT”) and where there is uncertainty of its recoverability, the VAT payments have either been deferred with mineral property costs relating to the property or expensed if it relates to mineral exploration. If the Company ultimately recovers previously deferred amounts, the amount received will be applied to reduce mineral property costs or taken as a credit against current expenses depending on the prior treatment. Expenditure on major maintenance or repairs includes the cost of the replacement of parts of assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that future economic benefits associated with the item will be available to the Company, the expenditure is capitalized and the carrying amount of the item replaced derecognized. Similarly, overhaul costs associated with major maintenance are capitalized and depreciated over their useful lives where it is probable that future economic benefits will be available and any remaining carrying amounts of the cost of previous overhauls are derecognized. All other costs are expensed as incurred. Where an item of MPPE is disposed of, it is derecognized and the difference between its carrying value and net sales proceeds is disclosed as earnings or loss on disposal in the statement of earnings. Any items of mineral property, plant or equipment that cease to have future economic benefits are derecognized with any gain or loss included in the financial year in which the item is derecognized. PAN AMERICAN SILVER CORP. 78 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) k) Operational mining properties and mine development When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves (which occurs upon completion of a positive economic analysis of the mineral deposit), the costs incurred to develop such property including costs to further delineate the ore body and remove overburden to initially expose the ore body prior to the start of mining operations, are also capitalized. Costs associated with commissioning activities on constructed plants are deferred from the date of mechanical completion of the facilities until the date the Company is ready to commence commercial production. These costs are amortized using the units-of-production method (described below) over the life of the mine, commencing on the date of commercial production. Acquisition costs related to the acquisition of land and mineral rights are capitalized as incurred. Prior to acquiring such land or mineral rights, the Company makes a preliminary evaluation to determine that the property has significant potential to economically develop the deposit. The time between initial acquisition and full evaluation of a property’s potential is dependent on many factors including: location relative to existing infrastructure, the property’s stage of development, geological controls and metal prices. If a mineable deposit is discovered, such costs are amortized when production begins. If no mineable deposit is discovered, such costs are expensed in the period in which it is determined the property has no future economic value. Major development expenditures on producing properties incurred to increase production or extend the life of the mine are capitalized while ongoing mining expenditures on producing properties are charged against earnings as incurred. Gains or losses from sales or retirements of assets are included in gain or loss on sale of assets. l) Depreciation of MPPE The carrying amounts of MPPE (including initial and any subsequent capital expenditure) are depreciated to their estimated residual value over the estimated useful lives of the specific assets concerned, or the estimated life of the associated mine or mineral lease, if shorter. Estimates of residual values and useful lives are reviewed annually and any change in estimate is taken into account in the determination of remaining depreciation charges, and adjusted if appropriate, at each statement of financial position date. Changes to the estimated residual values or useful lives are accounted for prospectively. Depreciation commences on the date when the asset is available for use as intended by management. i) Units of production basis For mining properties and leases and certain mining equipment, the economic benefits from the asset are consumed in a pattern which is linked to the production level. Except as noted below, such assets are depreciated on a units of production basis. In applying the units of production method, depreciation is normally calculated using the quantity of material extracted from the mine in the period as a percentage of the total quantity of material to be extracted in current and future periods based on proven and probable reserves. ii) Straight line basis Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight line basis. PAN AMERICAN SILVER CORP. 79 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) MPPE are depreciated over their useful life, or over the remaining life of the mine if shorter. The major categories of property, plant and equipment are depreciated on a unit of production and/or straight-line basis as follows: Land – not depreciated • • Mobile equipment – 3 to 7 years • • Mining properties and leases including capitalized evaluation and development expenditures – Buildings and plant facilities – 25 to 50 years based on applicable reserves on a unit of production basis. Exploration and evaluation – not depreciated until mine goes into production • • Assets under construction – not depreciated until assets are ready for their intended use m) Exploration and evaluation Exploration expenditures are incurred in the search for economic mineral deposits or the process of obtaining more information about existing mineral deposits and typically include costs associated with drilling, sampling, mapping and other activity related to the search for ore. Evaluation expenditures are incurred to establish the technical and commercial viability of mineral deposits and typically include costs associated with determining optimal methods of extraction and metallurgical and treatment processes, permitting, and preparing economic evaluations. Evaluation expenditures are capitalized when Exploration expenditures are expensed as management determines there is a high degree of confidence that future economic benefits will flow to the Company. Acquired exploration and evaluation projects and acquired exploration rights are recognized as assets at their cost of acquisition or at fair value if purchased as part of a business combination. incurred. Capitalized exploration and evaluation expenditures are reclassified to MPPE, in accordance with Note 3(j), once the technical feasibility and commercial viability are demonstrated. n) Deferred stripping costs In open pit mining operations, it is necessary to remove overburden and other waste in order to access the ore body. During the preproduction phase, these costs are capitalized as part of the cost of the mine property and subsequently amortized over the life of the mine (or pit) on a units of production basis. The costs of removal of the waste material during a mine’s production phase are deferred where they give rise to future benefits. These capitalized costs are subsequently amortized on a unit of production basis over the reserves that directly benefit from the specific stripping activity. o) Impairment (and reversals of impairment) of non-current assets The Company reviews and tests the carrying amount of MPPE and intangible assets with finite lives when there is an indication of impairment or impairment reversal. Additionally, disposal groups held for sale are tested for impairment upon classification as a disposal group held for sale. Impairment assessments on MPPE and intangible assets are conducted at the level of the CGU. The recoverable amount of a CGU is the higher of value in use ("VIU") and fair value less cost to sell. VIU is the net present value of expected future cash flows. Impairments are recognized for any excess of carrying value over the recoverable amount. Where the recoverable amount is assessed using discounted cash flow techniques, the resulting estimates are based on detailed mine and/or production plans. The cash flow forecasts are based on best estimates of expected future revenues and costs, including the future cash costs of production, capital expenditure, closure, restoration and environmental clean-up. These may include net cash flows expected to be realized from extraction, processing and sale of mineral resources that do not currently qualify for inclusion in proven or probable ore reserves. Such non-reserve material is included where there is a high degree of confidence in its economic extraction. This expectation is usually based on preliminary drilling and sampling of areas of PAN AMERICAN SILVER CORP. 80 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) mineralization that are contiguous with existing reserves. Typically, the additional evaluation to achieve reserve status for such material has not yet been done because this would involve incurring costs earlier than is required for the efficient planning and operation of the mine. Where the recoverable amount of a CGU is dependent on the life of its associated ore, expected future cash flows reflect long term mine plans, which are based on detailed research, analysis and iterative modeling to optimize the level of return from investment, output and sequence of extraction. The mine plan takes account of all relevant characteristics of the ore, including waste to ore ratios, ore grades, haul distances, chemical and metallurgical properties of the ore affecting process recoveries and capacities of processing equipment that can be used. The mine plan is therefore the basis for forecasting production output in each future year and for forecasting production costs. The Company’s cash flow forecasts are based on estimates of future commodity prices, which assume market prices will revert to the Company’s assessment of the long-term average price, generally over a period of three to five years. These assessments often differ from current price levels and are updated periodically. The discount rates applied to the future cash flow forecasts represent an estimate of the rate the market would apply having regard to the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted, including appropriate adjustments for the risk profile of the countries in which the individual CGU operate. The great majority of the Company’s sales are based on prices denominated in USD. To the extent that the currencies of countries in which the Company produces commodities strengthen against the USD without commodity price offset, cash flows and, therefore, net present values are reduced. Non-financial assets other than goodwill that have suffered impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. p) Closure and decommissioning costs The mining, extraction and processing activities of the Company normally give rise to obligations for site closure or rehabilitation. Closure and decommissioning works can include facility decommissioning and dismantling; removal or treatment of waste materials; site and land rehabilitation. The extent of work required and the associated costs are dependent on the requirements of relevant authorities and the Company’s environmental policies. Provisions for the cost of each closure and rehabilitation program are recognized at the time that environmental disturbance occurs. When the extent of disturbance increases over the life of an operation, the provision is increased accordingly. Costs included in the provision encompass all closure and decommissioning activity expected to occur progressively over the life of the operation and at the time of closure in connection with disturbances at the reporting date. Routine operating costs that may impact the ultimate closure and decommissioning activities, such as waste material handling conducted as an integral part of a mining or production process, are not included in the provision. Costs arising from unforeseen circumstances, such as the contamination caused by unplanned discharges, are recognized as an expense and liability when the event gives rise to an obligation which is probable and capable of reliable estimation. The timing of the actual closure and decommissioning expenditure is dependent upon a number of factors such as the life and nature of the asset, the operating license conditions, and the environment in which the mine operates. Expenditures may occur before and after closure and can continue for an extended period of time dependent on closure and decommissioning requirements. Closure and decommissioning provisions are measured at the expected value of future cash flows, discounted to their present value and determined according to the probability of alternative estimates of cash flows occurring for each operation. Discount rates used are specific to the underlying obligation. Significant judgments and estimates are involved in forming expectations of future activities and the amount and timing of the associated cash flows. Those expectations are formed based on existing environmental and regulatory requirements which give rise to a constructive or legal obligation. When provisions for closure and decommissioning are initially recognized, the corresponding cost is capitalized as a component of the cost of the related asset, representing part of the cost of acquiring the PAN AMERICAN SILVER CORP. 81 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) future economic benefits of the operation. The capitalized cost of closure and decommissioning activities is recognized in property, plant and equipment and depreciated accordingly. The value of the provision is progressively increased over time as the effect of discounting unwinds, creating an expense recognized in finance expenses. Closure and decommissioning provisions are also adjusted for changes in estimates. Those adjustments are accounted for as a change in the corresponding capitalized cost, except where a reduction in the provision is greater than the un-depreciated capitalized cost of the related assets, in which case the capitalized cost is reduced to nil and the remaining adjustment is recognized in the statement of earnings. In the case of closed sites, changes to estimated costs are recognized immediately in the statement of earnings. Changes to the capitalized cost result in an adjustment to future depreciation and finance charges. Adjustments to the estimated amount and timing of future closure and decommissioning cash flows are a normal occurrence in light of the significant judgments and estimates involved. The provision is reviewed at the end of each reporting period for changes to obligations, legislation or discount rates that impact estimated costs or lives of operations and adjusted to reflect current best estimate. The cost of the related asset is adjusted for changes in the provision resulting from changes in the estimated cash flows or discount rate and the adjusted cost of the asset is depreciated prospectively. q) Foreign currency translation The Company’s functional currency and that of its subsidiaries is the USD, as this is the principal currency of the economic environments in which they operate. Transaction amounts denominated in foreign currencies (currencies other than USD) are translated into USD at exchange rates prevailing at the transaction dates. Carrying values of foreign currency monetary assets and liabilities are re-translated at each statement of financial position date to reflect the U.S. exchange rate prevailing at that date. Gains and losses arising from translation of foreign currency monetary assets and liabilities at each period end are included in earnings except for differences arising on decommissioning provisions which are capitalized for operating mines. r) Share-based payments The Company makes share-based awards, including restricted share units ("RSUs"), performance share units ("PSUs"), shares and options, to certain employees. For equity-settled awards, the fair value is charged to the statement of earnings and credited to equity, on a straight-line basis over the vesting period, after adjusting for the estimated number of awards that are expected to vest. The fair value of the equity-settled awards is determined at the date of grant. Non-vesting conditions and market conditions, such as target share price upon which vesting is conditioned, are factored into the determination of fair value at the date of grant. All other vesting conditions are excluded from the determination of fair value and included in management’s estimate of the number of awards ultimately expected to vest. The fair value is determined by using option pricing models. At each statement of financial position date prior to vesting, the cumulative expense representing the extent to which the vesting period has expired and management’s best estimate of the awards that are ultimately expected to vest is computed (after adjusting for non-market performance conditions). The movement in cumulative expense is recognized in the statement of earnings with a corresponding entry within equity. No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the terms had not been modified over the original vesting period. In addition, an expense is recognized for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification, over the remainder of the new vesting period. PAN AMERICAN SILVER CORP. 82 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. Any compensation paid up to the fair value of the awards at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the statement of earnings. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the new awards are treated as if they are a modification of the original award, as described in the previous paragraph. s) Leases Lease Definition At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. An identified asset may be implicitly or explicitly specified in a contract, but must be physically distinct, and must not have the ability for substitution by a lessor. The Company has the right to control an identified asset if it obtains substantially all of its economic benefits and either pre-determines, or directs how and for what purpose the asset is used. Measurement of Right-of-use ("ROU") Assets and Lease Obligations At lease commencement, the Company recognizes a ROU assets and a lease obligation. The ROU assets is initially measured at cost, which comprises the initial amount of the lease obligation adjusted for any lease payments made at, or before, the commencement date, plus any initial direct costs incurred, less any lease incentives received. The ROU assets is subsequently amortized on a straight-line basis over the shorter of the term of the lease, or the useful life of the asset determined on the same basis as the Company’s property, plant and equipment. The ROU assets is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease obligation. The lease obligation is initially measured at the present value of lease payments remaining at the lease commencement date, discounted using the Company’s incremental borrowing rate. Lease payments included in the measurement of the lease obligation, when applicable, may comprise fixed payments, variable payments that depend on an index or rate, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase, extension or termination option that the Company is reasonably certain to exercise. The lease obligation is subsequently measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease obligation is remeasured, a corresponding adjustment is made to the carrying amount of the ROU assets . Recognition Exemptions The Company has elected not to recognize ROU assets and lease obligations for short-term leases that have a lease term of twelve months or less or for leases of low-value assets. Payments associated with these leases are recognized as an operating expense on a straight-line basis over the lease term within costs and expenses on the consolidated statement of earnings. t) Income taxes Taxation on the earnings or loss for the year comprises current and deferred tax. Taxation is recognized in the statement of earnings except to the extent that it relates to items recognized in other comprehensive income or directly in equity, in which case the tax is recognized in other comprehensive income or equity. PAN AMERICAN SILVER CORP. 83 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Current tax is the expected tax payable on the taxable income for the year using rates enacted or substantively enacted at the year end, and includes any adjustment to tax payable in respect of previous years. Deferred tax is provided using the statement of financial position liability method, providing for the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax assessment or deduction purposes. Where an asset has no deductible or depreciable amount for income tax purposes, but has a deductible amount on sale or abandonment for capital gains tax purposes, that amount is included in the determination of temporary differences. The tax effect of certain temporary differences is not recognized, principally with respect to goodwill; temporary differences arising on the initial recognition of assets or liabilities (other than those arising in a business combination or in a manner that initially impacted accounting or taxable earnings); and temporary differences relating to investments in subsidiaries, jointly controlled entities and associates to the extent that the Company is able to control the reversal of the temporary difference and the temporary difference is not expected to reverse in the foreseeable future. The amount of deferred tax recognized is based on the expected manner and timing of realization or settlement of the carrying amount of assets and liabilities, with the exception of items that have a tax base solely derived under capital gains tax legislation, using tax rates enacted or substantively enacted at period end. To the extent that an item’s tax base is solely derived from the amount deductible under capital gains tax legislation, deferred tax is determined as if such amounts are deductible in determining future assessable income. The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the deferred income tax asset to be utilized. To the extent that an asset not previously recognized fulfils the criteria for recognition, a deferred income tax asset is recorded. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realized or the liability is settled, based on tax rates and tax laws enacted or substantively enacted at the statement of financial position date. Current and deferred taxes relating to items recognized in other comprehensive income or directly in equity are recognized in other comprehensive income or equity and not in the statement of earnings. Mining taxes and royalties are treated and disclosed as current and deferred taxes if they have the characteristics of an income tax. Judgments are required about the application of income tax legislation. These judgments and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognized on the statement of financial position and the amount of other tax losses and temporary differences not yet recognized. In such circumstances, some or the entire carrying amount of recognized deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the statement of earnings. Deferred tax assets, including those arising from tax losses, capital losses and temporary differences, are recognized only where it is probable that taxable earnings will be available against which the losses or deductible temporary differences can be utilized. Assumptions about the generation of future taxable earnings and repatriation of retained earnings depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volumes, commodity prices, reserves, operating costs, closure and decommissioning costs, capital expenditures, dividends and other capital management transactions. u) Earnings (loss) per share Basic earnings (loss) per share is calculated by dividing earnings attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the period. The diluted earnings per share calculation is based on the earnings attributable to ordinary equity holders and the weighted average number of shares outstanding after adjusting for the effects of all potential ordinary shares. This method requires that the number of shares used in the calculation be the weighted average number of shares that would be issued on the conversion of all the dilutive potential ordinary shares into PAN AMERICAN SILVER CORP. 84 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) ordinary shares. This method assumes that the potential ordinary shares converted into ordinary shares at the beginning of the period (or at the time of issuance, if not in existence at beginning of the period). The number of dilutive potential ordinary shares is determined independently for each period presented. For convertible securities that may be settled in cash or shares at the holder’s option, returns to preference shareholders and income charges are added back to net earnings used for basic EPS and the maximum number of ordinary shares that could be issued on conversion is used in computing diluted earnings per share. v) Borrowing costs and upfront costs Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized. Qualifying assets are assets that require a substantial amount of time to prepare for their intended use, including mineral properties in the evaluation stage where there is a high likelihood of commercial exploitation. Qualifying assets also include significant expansion projects at the operating mines. Borrowing costs are considered an element of the historical cost of the qualifying asset. Capitalization ceases when the asset is substantially complete or if construction is interrupted for an extended period. Where the funds used to finance a qualifying asset form part of general borrowings, the amount capitalized is calculated using a weighted average of rates applicable to the relevant borrowings during the period. Where funds borrowed are directly attributable to a qualifying asset, the amount capitalized represents the borrowing costs specific to those borrowings. Where surplus funds available out of money borrowed specifically to finance a project are temporarily invested, the total borrowing cost is reduced by income generated from short-term investments of such funds. Upfront costs incurred in connection with entering new credit facilities are recorded as Other assets and are amortized over the life of the respective credit facilities. 4. CHANGES IN ACCOUNTING STANDARDS Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. Presentation of Financial Statements (Amendment to IAS 1) The amendments to IAS 1, clarifies the presentation of liabilities. The classification of liabilities as current or non- current is based on contractual rights that are in existence at the end of the reporting period and is affected by expectations about whether an entity will exercise its right to defer settlement. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment also introduces a definition of ‘settlement’ to make clear that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. The amendment issued in October 2022 also clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. Covenants to be compiled with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The implementation of this amendment is not expected to have a material impact on the Company. Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) The amendment clarifies that the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendment is effective for annual reporting periods beginning on or after January 1, 2023. Early application is permitted. This amendment is not expected to have a material impact on the Company. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) The amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the IASB has PAN AMERICAN SILVER CORP. 85 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments are effective for annual reporting periods beginning on or after January 1, 2023. The Company is currently evaluating the impact of the amendment on its financial statements. 5. SIGNIFICANT JUDGMENTS IN APPLYING ACCOUNTING POLICIES Judgments that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows: a) Capitalization of evaluation costs The Company has determined that evaluation costs capitalized during the year relating to the operating mines and certain other exploration interests have potential future economic benefits and are potentially economically recoverable. In making this judgment, the Company has assessed various sources of information including but not limited to the geologic and metallurgic information, history of conversion of mineral deposits to proven and probable mineral reserves, scoping and feasibility studies, proximity to existing ore bodies, operating management expertise and required environmental, operating and other permits. b) Functional currency The functional currency for the Company and its subsidiaries is the currency of the primary economic environment in which each operates. The Company has determined that its functional currency and that of its subsidiaries is the USD. The determination of functional currency may require certain judgments to determine the primary economic environment. The Company reconsiders the functional currency used when there is a change in events and conditions which determined the primary economic environment. c) Determination of significant influence of associates Determination of whether the Company has significant influence with respect to its associates requires an assessment of whether the Company has power to participate in the financial and operating policy decisions of the investee but does not have control or joint control of those policies. On March 31, 2022, the Company determined that it no longer held significant influence over its investment in Maverix after declining to nominate a representative to serve as a director on the Maverix board of directors and given an ownership interest of less than 20%. As a result, the Company redesignated its investment in Maverix into a long-term financial asset recorded at FVTOCI (Note 13). d) Deferral of stripping costs In determining whether stripping costs incurred during the production phase of a mining property relate to mineral reserves that will be mined in a future period and therefore should be capitalized, the Company treats the costs of removal of the waste material during a mine’s production phase as deferred, where it gives rise to future benefits. These capitalized costs are subsequently amortized on a unit of production basis over the reserves that directly benefit from the specific stripping activity. As at December 31, 2022, the carrying amount of Dolores and La Arena capitalized stripping costs was $20.0 million and $42.2 million, respectively (2021 - $23.5 million and $41.0 million, respectively). PAN AMERICAN SILVER CORP. 86 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) e) Impairment, or impairment reversal, of mining interests There is significant judgment involved in assessing whether any indications of impairment, or impairment reversal, exist for mining interests, with consideration given to both external and internal sources of information. Information the Company considers include changes in the market, economic and legal environment in which the Company operates that are not within its control that affect the recoverable amount of mining interests. Internal sources of information include the manner in which mineral property, plant and equipment are being used or are expected to be used and indications of the economic performance of the assets. Estimates include but are not limited to estimates of the discounted future after-tax cash flows expected to be derived from the Company’s mining properties, costs to sell the mining properties and the appropriate discount rate. Changes in metal price forecasts, increases or decreases in estimated future costs of production, increases or decreases in estimated future capital costs, reductions or increases in the amount of recoverable mineral reserves and mineral resources and/or adverse or favorable current economics can result in a write-down or write-up of the carrying amounts of the Company’s mining interests. In the year ended December 31, 2022, the Company identified an indicator of impairment at the Dolores Mine (Note 12) and recorded an impairment expense of $99.1 million (2021 - $nil). f) Coronavirus disease ("COVID-19") pandemic impact In March 2020, the World Health Organization declared a global pandemic following the emergence and rapid spread of a novel strain of the coronavirus. Since the outbreak of COVID-19, it has spread to areas where we have operations and offices. The outbreak and subsequent Government measures intended to limit the pandemic had significant effects on commodity prices and capital markets. The spread of COVID-19 has impacted our employees and contractors, not only as it relates to potential health concerns, but also in terms of limitations on movement, availability of food and other goods, and personal well-being, among others. Our suppliers and service providers have also been impacted. During 2020, Government efforts to curtail the spread of COVID-19 resulted in temporary suspensions of our operations in Mexico, Peru, Argentina and Bolivia (see Note 23), and we reduced throughput at our Timmins operation in Canada in order to enhance physical distancing and protect our personnel and the community. During 2021, there were no Government mandated suspensions but operations have continued to be impacted by COVID-19 protocols, which have increased costs and restricted throughput levels, especially at our underground mines. The extent to which COVID-19 will continue to impact our operations will depend on future developments which are highly uncertain and cannot be predicted with confidence. These future developments include, but are not limited to, the continued presence of, or spread, of COVID-19, and any future emergence and spread of similar pathogens, the duration of the outbreak, new information that may emerge concerning the severity of COVID-19, and the actions taken to contain COVID-19 or treat it. The impact of governmental restrictions and health and safety protocols could improve or worsen relative to our assumptions, depending on how each jurisdiction manages potential outbreaks of COVID-19, the efficacy and availability of adequate supplies of vaccines, and the roll-out of vaccination programs in each jurisdiction. As of December 31, 2022 and 2021, no operations were suspended as a result of COVID-19. Based on management analysis, the Company has concluded that the impacts to date including increased costs and deferral of production due to reduced throughput do not represent indicators of impairment for any of the Company's assets as at December 31, 2022 and 2021. PAN AMERICAN SILVER CORP. 87 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) 6. KEY SOURCES OF ESTIMATION UNCERTAINTY IN THE APPLICATION OF ACCOUNTING POLICIES Key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are: • Revenue recognition: Revenue from the sale of concentrate to independent smelters is recognized when control of the asset sold is transferred to the customer. The Company's concentrate sales contracts with third- party buyers, in general, provide for a provisional payment based upon provisional assays and quoted metal prices. Final settlement is based on applicable commodity prices set on specified quotational periods, typically ranging from one month prior to shipment, and can extend to three months after the shipment arrives at the smelter and is based on average market metal prices. Sales revenue is commonly subject to adjustments based on an inspection of the product by the customer. In such cases, sales revenue is initially recognized on a provisional basis using the Company’s best estimate of contained metal, and adjusted subsequently. Revenues are recorded under these contracts at the time control passes to the buyer based on the expected settlement period. Revenue on provisionally priced sales is recognized based on estimates of the fair value of the consideration receivable based on forward market prices and estimated quantities. At each reporting date provisionally priced metal is marked to market based on the forward selling price for the quotational period stipulated in the contract. Variations between the price recorded at the date when control is transferred to the buyer and the actual final price set under the smelting contracts are caused by changes in metal prices resulting in the receivable being recorded at FVTPL. In a period of high price volatility, as experienced under current economic conditions, the effect of mark-to-market price adjustments related to the quantity of metal which remains to be settled with independent smelters could be significant. For changes in metal quantities upon receipt of new information and assay, the provisional sales quantities are adjusted. • Estimated recoverable ounces: The carrying amounts of the Company’s mining properties are depleted based on recoverable ounces. Changes to estimates of recoverable ounces and depletable costs including changes resulting from revisions to the Company’s mine plans and changes in metal price forecasts can result in a change to future depletion rates. • Mineral reserve estimates: The figures for mineral reserves and mineral resources are disclosed in accordance with National Instrument 43 - 101, “Standards of Disclosure for Mineral Projects”, issued by the Canadian Securities Administrators and in accordance with “Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines – adopted November 29, 2019 ”, prepared by the Canadian Institute of Mining, Metallurgy and Petroleum Mineral Resource and Mineral Reserve Committee. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Company’s control. Such estimation is a subjective process, and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological including economic assumptions such as metal prices and market conditions could have a material effect in the future on the Company’s financial position and results of operation. interpretation. Differences between management’s assumptions • Valuation of Inventory: In determining mine production costs recognized in the consolidated statement of earnings, the Company makes estimates of quantities of ore stacked in stockpiles, placed on the heap leach pad and in process and the recoverable silver in this material to determine the average costs of finished goods sold during the period. Changes in these estimates can result in a change in mine operating costs of future periods and carrying amounts of inventories. Refer to Note 10 for details. • Depreciation and amortization rates for MPPE and mineral interests: Depreciation and amortization expenses are allocated based on assumed asset lives and depreciation and amortization rates. Should the asset life or depreciation rate differ from the initial estimate, an adjustment would be made in the consolidated statement PAN AMERICAN SILVER CORP. 88 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) • • of earnings prospectively. A change in the mineral reserve estimate for assets depreciated using the units of production method would impact depreciation expense prospectively. Estimation of decommissioning and reclamation costs and the timing of expenditures: The cost estimates are updated annually during the life of a mine to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations), and are subject to review at regular intervals. Decommissioning, restoration and similar liabilities are estimated based on the Company’s interpretation of current regulatory requirements, constructive obligations and are measured at the best estimate of expenditures required to settle the present obligation of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine at the end of its productive life. The carrying amount is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities. Refer to Note 16 for details on decommissioning and restoration costs. Income taxes and recoverability of deferred tax assets: In assessing the probability of realizing income tax assets recognized, the Company makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, the Company gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The Company considers relevant tax planning opportunities that are within the Company’s control, are feasible and within management’s ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period. Refer to Note 30 for further discussion on income taxes. • Provisions and contingencies: Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time. In the event the Company’s estimates of the future resolution of these matters change, the Company will recognize the effects of the changes in its consolidated financial statements on the date such changes occur. Refer to Note 31 for further discussion on contingencies. 7. MANAGEMENT OF CAPITAL The Company’s objective when managing its capital is to maintain its ability to continue as a going concern while at the same time maximizing the growth of its business and providing returns to its shareholders. The Company’s capital structure consists of shareholders’ equity (comprising issued capital plus share option reserve plus deficit, plus investment revaluation reserve) with a balance of $2.2 billion as at December 31, 2022 (2021 - $2.6 billion). The Company manages its capital structure and makes adjustments based on changes to its economic environment and the risk characteristics of the Company’s assets. The Company’s capital requirements are effectively managed based on the Company having a thorough reporting, planning and forecasting process to help identify the funds required to ensure the Company is able to meet its operating and growth objectives. The Company is not subject to externally imposed capital requirements and the Company’s overall objective with respect to capital risk management remains unchanged from the year ended December 31, 2021. PAN AMERICAN SILVER CORP. 89 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Amortized cost FVTPL FVTOCI Total $ 107,005 $ — $ — 50,258 77,442 — — — 184,447 $ 35,337 — 2,883 88,478 $ — $ — — — 121,200 — 121,200 $ 107,005 50,258 77,442 35,337 121,200 2,883 394,125 $ $ $ — $ 193,722 $ 1,780 $ — $ — $ — $ 1,780 193,722 Amortized cost FVTPL Total $ 283,550 $ — 76,902 — — 360,452 $ — $ 15,300 $ $ $ $ — $ 40,020 — 51,723 3,995 95,738 $ 283,550 40,020 76,902 51,723 3,995 456,190 351 $ — $ 351 15,300 8. FINANCIAL INSTRUMENTS a) Financial assets and liabilities by categories: December 31, 2022 Financial Assets: Cash and cash equivalents Trade receivables from provisional concentrates sales (1) Receivable not arising from sale of metal concentrates (1) Short-term investments Long-term investment (2) Derivative assets Financial Liabilities: Derivative liabilities Debt Included in Trade and other receivables. (1) (2) The Company's investment in Maverix (Note 13). December 31, 2021 Financial Assets: Cash and cash equivalents Trade receivables from provisional concentrates sales (1) Receivable not arising from sale of metal concentrates (1) Short-term investments Derivative assets Financial Liabilities: Derivative liabilities Debt (1) Included in Trade and other receivables. b) Short-term investments recorded at FVTPL The losses from short-term investments recorded at FVTPL for the year ended December 31, 2022 and 2021 were as follows: Unrealized losses on short-term investments Realized gains on short-term investments c) Long-term investment recorded at FVTOCI 2022 2021 $ $ (16,615) $ 394 (16,221) $ (60,355) 633 (59,722) The losses from the Company's long-term investment (Note 13) recorded at FVTOCI for the year ended December 31, 2022 and 2021 were as follows: Unrealized loss on long-term investment 2022 (3,477) $ $ 2021 — PAN AMERICAN SILVER CORP. 90 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) d) Derivatives The Company's derivatives are comprised of foreign currency and commodity contracts. The gains (losses) on derivatives for the year ended December 31, 2022 and 2021 were comprised of the following: Realized gains on derivatives Unrealized losses on derivatives e) Fair value information i) Fair Value Measurement 2022 2021 $ $ 9,877 $ (2,541) 7,336 $ 9,156 (3,763) 5,393 The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Inputs for the asset or liability based on unobservable market data The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the Consolidated Statements of Financial Position at fair value on a recurring basis were categorized as follows: Assets and Liabilities: Short-term investments Long-term investment Trade receivables from provisional concentrate sales Derivative assets Derivative liabilities At December 31, 2022 Level 2 Level 1 At December 31, 2021 Level 2 Level 1 $ 35,337 $ 121,200 — — — $ 156,537 $ — $ — 50,258 2,883 (1,780) 51,361 $ 51,723 $ — — — — 51,723 $ — — 40,020 3,995 (351) 43,664 The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remain unchanged from that at December 31, 2021. ii) Valuation Techniques Short-term and long-term investments The Company’s short-term and long-term investments are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy and are primarily equity securities. The fair value of the equity securities is calculated using the quoted market price multiplied by the quantity of shares held by the Company. Derivative assets and liabilities The Company’s derivative assets and liabilities were comprised of foreign currency and commodity contracts which are valued using observable market prices. Receivables from provisional concentrate sales A portion of the Company’s trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for copper, zinc and lead and the London Bullion Market Association P.M. fix for gold and silver. PAN AMERICAN SILVER CORP. 91 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) f) Financial Instruments and related risks The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The principle financial risks to which the Company is exposed are: i) Credit risk ii) Liquidity risk iii) Market risk 1. Currency risk 2. Interest rate risk 3. Price risk The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis. i) Credit Risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s trade receivables. The carrying value of trade receivables represents the maximum credit exposure. The Company has concentrate contracts to sell the zinc, lead, copper and silver concentrates produced by the Huaron, San Vicente and La Colorada mines. Concentrate contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent, the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have a market for its concentrates and therefore its future operating results may be materially adversely impacted. At December 31, 2022, the Company had receivable balances associated with buyers of its concentrates of $50.3 million (2021 - $40.0 million). The vast majority of the Company’s concentrate is sold to a limited number of concentrate buyers. Doré production from La Colorada, Dolores, Manantial Espejo, Shahuindo, La Arena, and Timmins is refined under long-term agreements with fixed refining terms at seven separate refineries worldwide. The Company generally retains the risk and title to the precious metals throughout the process of refining and therefore is exposed to the risk that the refineries will not be able to perform in accordance with the refining contract and that the Company may not be able to fully recover precious metals in such circumstances. At December 31, 2022, the Company had approximately $37.0 million (2021 - $52.3 million) of value contained in precious metal inventory at refineries. The Company maintains insurance coverage against the loss of precious metals at the Company’s mine sites, in-transit to refineries and while at the refineries. The refineries bear the risk of loss after metal inventories have been delivered to them. The Company maintains trading facilities with several banks and bullion dealers for the purposes of transacting the Company’s metal sales. None of these facilities are subject to margin arrangements. The Company’s trading activities can expose the Company to the credit risk of its counterparties to the extent that the trading positions have a positive mark-to-market value. However, the Company maintains an active credit management and monitoring program to minimize the risk of excessive credit risk concentration with any single counterparty. Refined silver and gold are sold in the spot market to various bullion traders and banks. Credit risk may arise from these activities if the Company is not paid for metal at the time it is delivered, as required by spot sale contracts. Supplier advances for products and services yet to be provided are a common practice in some jurisdictions in which we operate. These advances represent a credit risk to us to the extent that suppliers PAN AMERICAN SILVER CORP. 92 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) do not deliver products or perform services as expected. As at December 31, 2022, we had made $8.9 million of supplier advances (2021 - $11.2 million), which are reflected in “Trade and other receivables” on the consolidated statements of financial position. Management constantly monitors and assesses the credit risk resulting from its refining arrangements, concentrate sales and commodity contracts with its refiners, supplier advances, trading counterparties and customers. Furthermore, management carefully considers credit risk when allocating prospective sales and refining business to counterparties. In making allocation decisions, management attempts to avoid unacceptable concentration of credit risk to any single counterparty. Cash and cash equivalents, trade accounts receivable and other receivables that represent the maximum credit risk to the Company consist of the following: Cash and cash equivalents Trade accounts receivable (1) Supplier advances (1) Employee loans (1) (1) Included in Trade and other receivables. $ December 31, 2022 107,005 $ 50,258 8,914 338 December 31, 2021 283,550 40,020 11,228 667 The Company invests its cash and cash equivalents, which also has credit risk, with the objective of maintaining safety of principal and providing adequate liquidity to meet all current payment obligations. ii) Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and short-term investments, and its committed loan facilities. There was no material change to the Company's exposure to liquidity risk for the year ended December 31, 2022 and 2021. In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following tables summarize the remaining contractual maturities of the Company's financial liabilities and operating and capital commitments on an undiscounted basis: Payments due by period 2022 Accounts payable and accrued liabilities other than: Severance liabilities Payroll liabilities Total accounts payable and accrued liabilities Income tax payables Derivative liabilities Debt Repayment of principal Interest and standby fees Provisions (1)(2) Future payroll liabilities Total contractual obligations (2) (1) Total litigation provision (Note 16). $ $ Within 1 year 291,436 $ 13,860 2,758 308,054 25,833 1,780 2 - 3 years 4- 5 years After 5 years — $ — $ — $ 1,039 — 1,039 — — 645 — 645 — — 4,489 — 4,489 — — Total 291,436 20,033 2,758 314,227 25,833 1,780 13,712 11,222 3,448 2,465 366,514 $ 173,435 17,681 2,423 8,659 203,237 $ 6,575 125 — — 7,345 $ — — 1,081 — 5,570 $ 193,722 29,028 6,952 11,124 582,666 PAN AMERICAN SILVER CORP. 93 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) (2) Amounts above do not include payments related to closure and decommissioning (current $14.4 million, long-term $281.8 million) discussed in Note 16, lease obligations discussed in Note 17, the $20.8 million deferred credit arising from the Navidad acquisition discussed in Note 20, and deferred tax liabilities of $140.3 million in Note 30. Payments due by period 2021 Accounts payable and accrued liabilities other than: Severance liabilities Payroll liabilities Total accounts payable and accrued liabilities Income tax payables Derivative liabilities Debt Repayment of principal Interest and standby fees Provisions (1)(2) Future payroll liabilities Total contractual obligations (2) $ $ Within 1 year 275,629 $ 26,695 3,763 306,087 59,133 351 3,400 2,613 2,738 3,352 377,674 $ 2 - 3 years 4- 5 years After 5 years — $ 404 — 404 — — — $ 33 — 33 — — — $ 4,450 — 4,450 — — Total 275,629 31,582 3,763 310,974 59,133 351 6,800 4,867 2,553 9,058 23,682 $ 5,100 1,432 — — 6,565 $ — — — — 4,450 $ 15,300 8,912 5,291 12,410 412,371 (1) Total litigation provision (Note 16). (2) Amounts above do not include payments related to closure and decommissioning (current $5.3 million, long-term $237.6 million) discussed in Note 16, lease obligations discussed in Note 17, the $20.8 million deferred credit arising from the Navidad acquisition discussed in Note 20, and deferred tax liabilities of $184.8 million in Note 30. iii) Market Risk 1. Currency Risk The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse. The Company’s net earnings are affected by the revaluation of its monetary assets and monetary liabilities at each balance sheet date. The Company has reviewed its monetary assets and monetary liabilities and is exposed to foreign exchange risk through financial assets and liabilities and deferred tax assets and liabilities denominated in currencies other than USD, as shown in the table below. The Company estimates that a 10% change in the exchange rate of the foreign currencies in which its December 31, 2022 non-USD net monetary liabilities were denominated would result in an income before taxes change of about $10.7 million (2021 - $19.3 million). PAN AMERICAN SILVER CORP. 94 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) The Company is exposed to currency risk through the following financial assets and liabilities, and deferred tax assets and liabilities denominated in foreign currencies: At December 31, 2022 Canadian Dollar Mexican Peso Argentine Peso Bolivian Boliviano European Euro Peruvian Sol Guatemala quetzal At December 31, 2021 Canadian Dollar Mexican Peso Argentine Peso Bolivian Boliviano European Euro Peruvian Sol Guatemala quetzal Cash and short-term investments Other current and non-current assets Income taxes receivable (payable), current and non- current Accounts payable and accrued liabilities and non- current liabilities Deferred tax assets and liabilities 40,904 $ 3,082 9,348 4,849 40 3,183 59 61,465 $ 2,602 $ 32,587 9,339 6,645 — 20,233 105 71,511 $ — $ 12,649 856 (5,154) — (523) (63) 7,765 $ (42,345) $ (42,992) (33,479) (8,655) — (28,873) (7,265) (163,609) $ 24,048 (16,295) — (4,492) — (87,719) — (84,458) Cash and short-term investments Other current and non-current assets Income taxes receivable (payable), current and non- current Accounts payable and accrued liabilities and non- current liabilities Deferred tax assets and liabilities(1) 60,507 $ 1,159 12,488 8,397 49 8,585 169 91,354 $ 3,389 $ 7,681 20,358 499 — 17,295 539 49,761 $ — $ (14,633) 1,502 (7,943) — (22,234) (91) (43,399) $ (27,448) $ (25,985) (19,525) (23,914) — (54,953) (9,919) (161,744) $ 36,799 (64,297) (13) (6,954) — (94,367) — (128,832) $ $ $ $ At December 31, 2022, the Company had outstanding positions on its foreign currency exposure of Mexican peso ("MXN"), Peruvian sol ("PEN") and Canadian dollar ("CAD") purchases. The Company recorded the following derivative gains and losses on currencies for the year ended December 31, 2022 and 2021: Mexican peso gains (losses) Peruvian sol gains (losses) Canadian dollar (losses) gains 2. Interest Rate Risk 2022 2021 $ $ 1,507 $ 3,471 (2,944) 2,034 $ (202) (3,744) 851 (3,095) Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The average interest rate earned by the Company during the year ended December 31, 2022 on its cash and short-term investments was 1.4% (2021 - 0.7%). A 10% increase or decrease in the interest earned from financial institutions on cash and short-term investments would not result in a material change in the Company’s earnings before income taxes (2021 – nil). On August 10, 2021 the Company entered into a $500 million Sustainability-Linked Credit Facility (“SL- Credit Facility”), with a maturity date of August 8, 2025 (Note 18). The SL-Credit Facility incurred a weighted average interest rate of 5.7% during the year ended December 31, 2022 on amounts drawn. There were no amounts drawn on the SL-Credit Facility during the year ended December 31, 2021. PAN AMERICAN SILVER CORP. 95 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) At December 31, 2022, the Company had $33.1 million in lease obligations (2021 - $30.6 million), that are subject to an annualized interest rate of 9.7% (2021 - 10.6%). 3. Price Risk Metal price risk is the risk that changes in metal prices will affect the Company’s income or the value of its related financial instruments. The Company derives its revenue from the sale of silver, gold, lead, copper, and zinc. The Company’s sales are directly dependent on metal prices that have shown significant volatility and are beyond the Company’s control. Consistent with the Company’s mission to provide equity investors with exposure to changes in precious metal prices, the Company’s current policy is to not hedge the price of precious metals. A 10% increase in all metal prices as at December 31, 2022, would result in an increase of approximately $149.9 million (2021 – $165.1 million) in the Company’s revenues. A 10% decrease in all metal prices as at the same period would result in a decrease of approximately $151.6 million (2021 - $166.4 million) in the Company’s revenues. The Company also enters into provisional concentrate contracts to sell the zinc, lead and copper concentrates. We have provisionally priced sales for which price finalization, referenced to the relevant zinc, lead, copper and silver index, is outstanding at the balance sheet date. A 10% increase in metals prices on open positions of zinc, lead, copper and silver for provisional concentrate contracts for the year ended December 31, 2022 would result in an increase of approximately $4.9 million (2021 - $7.2 million) in the Company’s before tax earnings, which would be reflected in 2022 results. A 10% decrease in metal prices for the same period would result in a decrease of approximately $4.9 million (2021 - $7.2 million) in the Company’s before tax earnings. The Company mitigates the price risk associated with its base metal production by committing some of its forecasted base metal production from time to time under forward sales and option contracts. The Board of Directors continually assesses the Company’s strategy towards its base metal exposure, depending on market conditions. At December 31, 2022, the Company had outstanding derivative positions on its exposure to zinc and diesel. The Company recorded the following derivative gains and losses on commodities for the year ended December 31, 2022 and 2021: Zinc gains Copper losses Diesel gains Other 9. SHORT-TERM INVESTMENTS 2022 1,701 $ — 4,499 (898) 5,302 $ 2021 137 (1,139) 9,397 94 8,489 $ $ December 31, 2022 December 31, 2021 Fair Value Cost Accumulated unrealized holding gains Fair Value Cost Accumulated unrealized holding gains Short-term investments $ 35,337 $ 20,781 $ 14,556 $ 51,723 $ 20,419 $ 31,304 PAN AMERICAN SILVER CORP. 96 10. INVENTORIES Inventories consist of: Concentrate Stockpile Heap leach and in process Doré and finished Materials and supplies Total inventories Less: current inventories Non-current inventories(1) Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) December 31, 2022 31,380 $ 31,309 258,750 86,776 89,715 497,930 $ (471,630) $ 26,300 $ December 31, 2021 30,647 43,216 286,266 81,448 84,529 526,106 (500,462) 25,644 $ $ $ $ (1) Inventories at Escobal mine, which include $19.0 million (2021 - $18.3 million) in supplies with the remainder attributable to metals, have been classified as non-current pending the restart of operations. Total inventories held at net realizable value amounted to $135.8 million at December 31, 2022 (December 31, 2021 – $203.7 million). The Company recorded write-downs of $97.7 million for the year ended December 31, 2022 (2021 – write-downs of $8.7 million) which were related primarily to heap leach inventories and were included in cost of sales (Note 22). A portion of the stockpile ore amounting to $0.9 million (2021 - $4.4 million) and a portion of the heap leach inventory amounting to $53.9 million (2021 - $92.1 million) are expected to be recovered or settled after more than twelve months. 11. MINERAL PROPERTIES, PLANT AND EQUIPMENT Mineral properties, plant and equipment consist of: Carrying value As at January 1, 2022 Net of accumulated depreciation Additions Disposals Depreciation and amortization (1) Depreciation charge captured in inventory Impairment charge Transfers Closure and decommissioning – changes in estimate (Note 16) As at December 31, 2022 Cost as at December 31, 2022 Accumulated depreciation and impairments Carrying value – December 31, 2022 Mining Properties Depletable Non-depletable Reserves and Resources Reserves and Resources Exploration and Evaluation Plant and Equipment Total $ $ $ $ 1,115,905 $ 237,339 (11,339) (201,277) (19,470) (73,723) (122,720) 37,998 962,713 $ 3,123,604 $ (2,160,891) 962,713 $ 327,424 $ 42,808 — (6,494) — (478) 78,860 — 442,120 $ 617,364 $ (175,244) 442,120 $ 426,495 $ — — — — — 2,043 — 428,538 $ 841,344 $ (412,806) 428,538 $ 474,727 $ 20,470 (5,785) (113,383) — (24,863) 41,817 2,344,551 300,617 (17,124) (321,154) (19,470) (99,064) — — 392,983 $ 1,281,366 $ (888,383) 392,983 $ 37,998 2,226,354 5,863,678 (3,637,324) 2,226,354 (1) Includes $5.1 million of depreciation and amortization included in mine care and maintenance for the year ended December 31, 2022. PAN AMERICAN SILVER CORP. 97 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Mining Properties Depletable Non-depletable Reserves and Resources Reserves and Resources Exploration and Evaluation Plant and Equipment Total $ $ $ $ 996,745 $ 210,484 (1,435) (166,116) (21,249) 90,571 6,905 1,115,905 $ 3,140,594 $ (2,024,689) 1,115,905 $ 307,080 $ 31,971 — (2,105) — (9,522) — 431,650 $ 7,253 (12,315) — — (93) — 679,531 $ 16,766 (4,542) (136,072) — (80,956) — 327,424 $ 426,495 $ 474,727 $ 2,415,006 266,474 (18,292) (304,293) (21,249) — 6,905 2,344,551 343,705 $ (16,281) 327,424 $ 839,427 $ (412,932) 426,495 $ 1,288,392 $ (813,665) 474,727 $ 5,612,118 (3,267,567) 2,344,551 Carrying value As at January 1, 2021 Net of accumulated depreciation Additions Disposals Depreciation and amortization (1) Depreciation charge captured in inventory Transfers Closure and decommissioning – changes in estimate (Note 16) As at December 31, 2021 Cost as at December 31, 2021 Accumulated depreciation and impairments Carrying value – December 31, 2021 (1) Includes $1.3 million of depreciation and amortization included in mine care and maintenance for the year ended December 31, 2021. December 31, 2022 December 31, 2021 Cost Accumulated Depreciation (4) Carrying Value Cost Accumulated Depreciation (4) Carrying Value Producing properties: Huaron, Peru Morococha, Peru (1) Shahuindo, Peru La Arena, Peru La Colorada, Mexico Dolores, Mexico (1) Manantial Espejo, Argentina (1) (3) San Vicente, Bolivia Timmins, Canada Other Non-Producing Properties: Land Navidad, Argentina (1) Escobal, Guatemala Timmins, Canada Shahuindo, Peru La Arena, Peru Minefinders, Mexico (1) La Colorada, Mexico Morococha, Peru (2) Other Total $ $ $ $ $ 231,282 $ (143,171) $ — 636,466 286,235 403,698 1,783,711 518,374 156,260 359,414 29,530 4,404,970 $ — (179,389) (142,979) (205,054) (1,586,424) (518,374) (119,336) (133,120) (21,427) (3,049,274) $ 88,111 $ — 457,077 143,256 198,644 197,287 — 36,924 226,294 8,103 1,355,696 $ 224,700 $ 277,105 590,096 208,306 355,471 1,738,040 518,931 151,045 335,488 29,804 4,428,986 $ (141,902) $ (188,821) (132,727) (105,006) (185,684) (1,350,908) (500,244) (110,829) (103,903) (18,330) (2,838,354) $ 6,879 $ (1,011) $ 5,868 $ 6,373 $ (871) $ 566,577 260,390 63,043 1,376 117,000 77,210 94,672 238,827 32,734 1,458,708 $ 5,863,678 $ (376,141) (3,078) — — — (37,453) — (158,101) (12,266) (588,050) $ (3,637,324) $ 190,436 257,312 63,043 1,376 117,000 39,757 94,672 80,726 20,468 870,658 $ 2,226,354 $ 566,577 257,390 63,018 3,549 117,005 78,443 55,370 2,981 32,426 1,183,132 $ 5,612,118 $ (376,101) (1,842) — — — (36,975) — — (13,424) (429,213) $ (3,267,567) $ 82,798 88,284 457,369 103,300 169,787 387,132 18,687 40,216 231,585 11,474 1,590,632 5,502 190,476 255,548 63,018 3,549 117,005 41,468 55,370 2,981 19,002 753,919 2,344,551 (1) Includes previously recorded impairment charges at December 31, 2022 of $635.5 million (2021 - $536.4 million) at Dolores, $173.4 million (2021 - $173.4 million) at Manantial Espejo, $386.1 million (2021 - $386.1 million) at Navidad, and $37.0 million (2021 - $37.0 million) at Minefinders. (2) Morococha was placed on care and maintenance in February 2022. (3) Manantial Espejo ceased production subsequent to year end. (4) Includes impairments. PAN AMERICAN SILVER CORP. 98 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Dispositions On March 29, 2022, the Company received a $7.0 million payment from an arm's length party to be applied to certain costs associated with the closure and reclamation of the Morococha mine processing facility. This payment was included in proceeds from disposition of mineral properties, plant and equipment. On June 28, 2021, the Company completed the sale of a portfolio of six precious metals royalties to Maverix and another counterparty for total consideration of $9.5 million in cash and 491,071 common shares in Maverix valued ?.at $2.6 million (Note 13). As a result, the Company recorded a gain of $0.8 million during the year ended December 31, 2021 in gains on sale of mineral properties, plant and equipment. On July 12, 2021, the Company completed the sale of 100% of its interest in the Waterloo silver-barite project for consideration of $33.5 million in cash and the retention of a 2% net smelter royalty on any future production of minerals from this project. The Company realized a gain on disposal of $32.5 million for the year ended December 31, 2021. 12. IMPAIRMENT As at December 31, 2022, the Company reviewed its CGUs, represented by its principal producing mining properties and significant development projects, for indicators of impairment or impairment reversal. The CGU carrying amount for purposes of this assessment includes the carrying value of the mineral properties plant and equipment and goodwill less deferred tax liabilities and closure and decommissioning liabilities related to each CGU. The Company did not identify any indicators of impairment or impairment reversal at any of its CGUs. The Company's impairment expense in respect of the following CGUs for the year ended December 31, 2022 were as follows: Dolores impairment expense Dolores 2022 99,064 $ $ 2021 — On June 30, 2022 the Company identified an impairment indicator in the Dolores Mine CGU due to the year-to- date 2022 silver and gold production being less than that expected by management, driven by an ore reconciliation shortfall experienced in a recent higher grade phase of the Dolores open pit mined in 2022, which was expected to affect production for the remainder of the year combined with the impact of inflationary pressures on this asset which has a shorter remaining mine life. Accordingly, management completed a recoverable value assessment of the Dolores Mine CGU, with, the Company recognizing an impairment expense of $99.1 million, against the carrying value of the Dolores Mine CGU at June 30, 2022, and recorded an NRV adjustment of $55.4 million (Note 10) (Collectively, the "Dolores Impairment"). The recoverable amount was determined applying a fair value less cost to sell methodology based on future after- tax cash flows expected to be derived from Dolores Mine discounted with a 6% weighted average cost of capital, a Level 3 fair value measurement. The projected cash flows used in impairment testing are significantly affected by changes in assumptions for metal prices, changes in the amount of recoverable reserves, production costs estimates and capital expenditures estimates. For the year ended December 31, 2022, the Company's impairment testing incorporated the following key assumptions: a) Pricing Assumptions Metal pricing included in the cash flow projections is based on consensus analyst pricing. The metal price assumptions used in the impairment assessment were the following: PAN AMERICAN SILVER CORP. 99 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) At June 30, 2022 2022-2025 Average $ 1,802 $ 23.56 2026 and long-term 1,651 21.77 Gold (per ounce) Silver (per ounce) b) Additional Dolores-specific assumptions affecting the recoverable amount assessment In 2022, the recoverable amount of the Dolores Mine CGU was negatively impacted by the following: i) the updated mineral resource and remaining life of mine plan indicates a reduction in the assumed grades for a phase to be mined in 2022, following 2022 year-to-date silver and gold production being less than expected due to lower than expected grades encountered in this section of the open pit; inflationary pressures, which have particularly affected this shorter-life asset where most of the mining will be completed in the next two years; the suspension of underground mining operations in the first half of 2022 due to inflationary cost pressures, and the subsequent reclassification of underground mineral reserves to mineral resources; and, ii) iii) iv) a reduction in the expected duration of leaching to the year 2030. 13. LONG-TERM INVESTMENT The following table shows a continuity of the Company's investment in Maverix which was initially classified as an equity investee and subsequently as a long-term investment recorded at FVTOCI: At December 31, 2020 Acquisition of shares in associate Equity pick-up from equity investees Dilution losses Adjustment for change in ownership interest Dividends received At December 31, 2021 Equity pick-up from equity investees Dividends received Loss of significant influence Investment revaluation reserve fair value adjustment At December 31, 2022 Long-term investment Investment in Associate $ $ $ — $ — — — — — — $ — — 124,677 (3,477) 121,200 $ 71,560 $ 2,616 4,510 (34) (22) (1,220) 77,410 $ 413 (325) (77,498) — — $ 71,560 2,616 4,510 (34) (22) (1,220) 77,410 413 (325) 47,179 (3,477) 121,200 On January 19, 2023, Triple Flag Precious Metals Corp. ("Triple Flag") and Maverix completed a plan of arrangement in which Triple Flag issued a total of 45.1 million common shares and $86.7 million in cash to former Maverix shareholders (the "Maverix Sale"). As a result, the Company received $58.8 million in cash and 3,954,471 Triple Flag shares in exchange for its interest in Maverix comprised of 25,974,571 common shares. On January 26, 2023, the Company sold its entire interest in Triple Flag for net proceeds of $46.5 million after $1.3 million in commission fees. On March 31, 2022, the Company determined that it no longer held significant influence over Maverix due to declining to exercise its right to nominate a representative to serve as a director on Maverix’s Board of Directors and accordingly the Company no longer has the power to participate in the financial and operating policy decisions of Maverix. As a result, the Company recorded a $44.6 million gain concurrent with the redesignation of its investment in Maverix from Investment in Associate, accounted using the "equity method" whereby the Company recorded in income its ownership proportion of Maverix estimated earnings, into a long-term financial asset recorded at FVTOCI. PAN AMERICAN SILVER CORP. 100 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) The Company's share of Maverix income or loss was recorded based on its 17% interest up until March 31, 2022, representing the Company’s fully diluted ownership. 14. GOODWILL AND OTHER ASSETS Other assets consist of: Goodwill Equity investments Other assets 15. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of: Trade accounts payable(1) Royalty payables Other accounts payable and accrued liabilities Payroll and severance liabilities Value added tax liabilities Other tax payables December 31, 2022 December 31, 2021 $ $ 2,775 $ 2,059 1,075 5,909 $ 2,775 1,247 1,124 5,146 December 31, 2022 88,808 $ 20,886 111,282 66,608 8,508 11,962 308,054 $ December 31, 2021 77,461 24,113 107,207 64,968 12,006 20,332 306,087 $ $ (1) No interest is charged on the trade accounts payable ranging from 30 to 60 days from the invoice date. The Company has policies in place to ensure that all payables are paid within the credit terms. 16. PROVISIONS Closure and decommissioning, opening balance Revisions in estimates and obligations incurred Reclamation expenditures Accretion expense (Note 25) Closure and decommissioning, closing balance Litigation Total provisions Provision classification: Current Non-current 2022 242,861 $ 42,754 (4,228) 14,841 296,228 $ 6,952 303,180 $ 2021 235,110 6,278 (5,997) 7,470 242,861 5,291 248,152 December 31, 2022 17,853 $ 285,327 303,180 $ December 31, 2021 8,041 240,111 248,152 $ $ $ $ $ PAN AMERICAN SILVER CORP. 101 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Closure and Decommissioning Cost Provision The inflated and discounted provisions on the statement of financial position as at December 31, 2022, using inflation rates of between 2% and 6% (2021 – between 1% and 5%) and discount rates of between 3% and 11% (2021 - between 1% and 9%), was $296.2 million (2021 - $242.9 million). Revisions made to the reclamation obligations in 2022 were primarily a result of increased site disturbance at the mines as well as revisions to the estimate based on periodic reviews of closure plans, actual expenditures incurred and concurrent closure activities completed. These obligations will be funded from operating cash flows, reclamation deposits and cash on hand. The accretion expense charged to 2022 earnings as finance expense was $14.8 million (2021 - $7.5 million). Reclamation expenditures paid during the current year were $4.2 million (2021 - $6.0 million). Litigation Provision The litigation provision, as at December 31, 2022 and 2021, consists primarily of amounts accrued for labour claims at several of the Company’s mine operations. The balance of $7.0 million at December 31, 2022 (2021 - $5.3 million) represents the Company’s best estimate for all known and anticipated future obligations related to the above claims. The amount and timing of any expected payments are uncertain as their determination is outside the control of the Company. 17. LEASES a. ROU assets The following table summarizes changes in ROU assets for the year ended December 31, 2022, which have been recorded in mineral properties, plant and equipment on the consolidated statements of financial position: Opening net book value Additions Depreciation Other Closing net book value b. Lease obligations December 31, 2022 29,496 $ 18,977 (14,961) (3,249) 30,263 $ December 31, 2021 33,543 9,924 (12,444) (1,527) 29,496 $ $ The following table presents a reconciliation of the Company's undiscounted cash flows at December 31, 2022 and December 31, 2021 to their present value for the Company's lease obligations: Within one year Between one and five years Beyond five years Total undiscounted lease obligations Less future interest charges Total discounted lease obligations Less: current portion of lease obligations Non-current portion of lease obligations December 31, 2022 14,139 $ 17,592 14,412 46,143 (13,029) 33,114 (13,608) 19,506 $ December 31, 2021 11,690 16,676 16,934 45,300 (14,739) 30,561 (10,663) 19,898 $ $ PAN AMERICAN SILVER CORP. 102 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) December 31, 2021 Proceeds Repayments December 31, 2022 — $ 15,300 (3,400) $ 11,900 $ 160,000 $ 23,661 — $ 183,661 $ — $ 5,239 — $ 5,239 $ 160,000 33,722 (13,712) 180,010 December 31, 2020 Proceeds Repayments December 31, 2021 — $ — — $ — $ — $ 17,000 — $ 17,000 $ — $ 1,700 — $ 1,700 $ — 15,300 (3,400) 11,900 $ $ $ $ $ $ 18. DEBT SL-Credit Facility Other Less: current portion Non-current SL-Credit Facility Other Less: current portion Non-current SL-Credit Facility In November 2022, as agreed under the terms of the Transaction (Note 1), the Company provided Yamana $150 million towards a termination fee payable to Gold Fields Limited (“Gold Fields) in connection with the now terminated acquisition proposal of Yamana by Gold Fields (Note 24). To fund this payment and other transaction and integration costs during the fourth quarter of 2022, the Company drew proceeds of $160 million from its SL- Credit Facility. Please refer to Note 33 for further details. On August 10, 2021, Pan American entered into an amendment agreement to amend and extend its $500 million Credit Facility, with a maturity date of February 1, 2023, into a $500 million SL-Credit Facility that matures on August 8, 2025. The SL-Credit Facility features a mechanism that allows for pricing adjustments on drawn and undrawn balances based on the Company's sustainability performance ratings and scores published by MSCI and S&P Global. In addition, the financial covenants include the requirement for the Company to maintain: (i) a leverage ratio less than or equal to 3.5:1; and (ii) an interest coverage ratio more than or equal to 3.0:1. The Company was in compliance with all covenants required by the SL-Credit Facility. The SL-Credit Facility can be drawn down at any time to finance the Company’s working capital requirements, acquisitions, investments and for general corporate purposes. The borrowing costs under the Company's SL-Credit Facility are based on the Company's leverage ratio subject to pricing adjustments based on the Company's sustainability performance ratings and scores at either (i) LIBOR plus 1.825% to 2.80% or; (ii) The Bank of Nova Scotia's Base Rate on U.S. dollar denominated commercial loans plus 0.825% to 1.80%. Undrawn amounts under the SL-Credit Facility are subject to a stand-by fee of 0.41% to 0.63% per annum, dependent on the Company's leverage ratio and subject to pricing adjustments based on sustainability performance ratings and scores. Other loans From May 2022 to December 2022, the Company entered into Peruvian USD denominated promissory notes with a local financial institution in Peru, maturing in under 30 days, to provide short-term funding for the purpose of certain construction activities in advance of entering into term loans. In June 2021 and May 2022, the Company entered into Peruvian USD denominated five-year Loans with that same local financial institution for construction financing. The promissory notes bear a 5.6% interest rate per annum and the June 2021 loan bears a 3.6% interest rate per annum and requires quarterly repayments while the May 2022 loan bears 2.2% interest per annum and requires monthly repayments. 19. DEFERRED REVENUE On July 11, 2016, the Company recognized a deferred revenue liability from its sale of precious metal streams to Maverix whereby the Company will sell 100% of the future gold production from La Colorada and 5% of the future PAN AMERICAN SILVER CORP. 103 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) gold production from La Bolsa, which is in the exploration stage, respectively (the "Streams"). The obligation for the Streams was not impacted by the Maverix Sale (Note 13). The deferred revenue related to the Streams will be recognized as revenue by Pan American as the gold ounces are delivered to Maverix and increased by $2.5 million during the three months ended March 31, 2022 to record the deferred revenue previously not recognized while using the equity method of accounting after concluding that it no longer held significant influence of Maverix. The deferred revenue liability was $13.9 million at December 31, 2022 (December 31, 2021 - $12.5 million). 20. OTHER LONG-TERM LIABILITIES Other long term liabilities consist of: Deferred credit(1) Other tax payables Severance liabilities December 31, 2022 20,788 $ — 6,172 26,960 $ December 31, 2021 20,788 16 4,887 25,691 $ $ (1) Represents the obligation to deliver future silver production of Navidad pursuant to a silver stream contract. 21. SHARE CAPITAL AND EMPLOYEE COMPENSATION PLANS a. Stock options and compensation shares For the year ended December 31, 2022, the total share-based compensation expense relating to stock options and compensation shares was $3.9 million (2021 - $5.1 million) and is presented as a component of general and administrative expense. • Stock options During the year ended December 31, 2022, the Company granted 191,649 (2021 – 53,115) stock options. During the year ended December 31, 2022, the Company issued 79,542 (2021 – 65,780) common shares in connection with the exercise of stock options. • Compensation shares During the year ended December 31, 2022, the Company issued 14,745 (2021 - 9,646) common shares to the Board of Directors in lieu of Directors' fees of $0.3 million (2021 - $0.3 million). PAN AMERICAN SILVER CORP. 104 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) The following table summarizes changes in stock options for the years ended December 31,: As at December 31, 2020 Granted Exercised Expired Forfeited As at December 31, 2021 Granted Exercised Expired Forfeited As at December 31, 2022 Stock Options Outstanding Weighted Average Exercise Price CAD$ 18.78 30.70 11.77 41.62 32.27 21.38 22.95 15.12 41.62 31.32 23.01 Shares 317,417 $ 53,115 (65,780) (2,162) (23,587) 279,003 $ 191,649 (79,542) (4,324) (9,819) 376,967 $ The following table summarizes information about the Company's stock options outstanding at December 31, 2022: Range of Exercise Prices CAD$ $17.53 - $23.03 $23.04 - $28.54 $28.55 - $34.04 $34.05 - $39.48 Options Outstanding Options Exercisable Number Outstanding as at December 31, 2022 290,657 35,409 43,993 6,908 376,967 Weighted Average Remaining Contractual Life (years) 5.6 $ 2.7 $ 5.9 $ 4.9 $ 5.3 $ Weighted Average Exercise Price CAD$ 21.17 25.35 30.70 39.48 23.01 Number Outstanding as at December 31, 2022 99,008 $ 35,409 $ 14,668 $ 6,908 $ 155,993 $ Weighted Average Exercise Price CAD$ 17.72 25.35 30.70 39.48 21.64 The following assumptions were used in the Black-Scholes option pricing model in determining the fair value of options granted during the years ended December 31,: Expected life (years) Expected volatility Expected dividend yield Risk-free interest rate Weighted average exercise price (CAD$) Weighted average fair value (CAD$) b. PSUs 2022 2021 4.5 44.3 % 2.7 % 3.4 % $ $ 22.95 7.69 $ $ 4.0 44.0 % 2.4 % 1.9 % 30.70 9.39 PSUs are notional share units that mirror the market value of the Company’s common shares. Each vested PSU entitles the participant to a cash payment equal to the value of an underlying share, less applicable taxes, at the end of the term, plus the cash equivalent of any dividends distributed by the Company during the three- year performance period. PSU grants will vest on the date that is three years from the date of grant subject to certain exceptions. Performance results at the end of the performance period relative to predetermined performance criteria and the application of the corresponding performance multiplier determine how many PSUs vest for each participant. The Board of Directors approved the issuance of 150,469 PSUs for 2022 with a share price of CAD $21.16 (2021 - 79,417 PSUs approved at a share price of CAD $32.72). The Company recorded a $nil and $1.9 million expense, respectively, in general and administrative expense for PSUs for the years ended December 31, 2022 and 2021. PAN AMERICAN SILVER CORP. 105 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) The following table summarizes changes in PSUs for the years ended December 31, 2022 and 2021: PSU As at December 31, 2020 Granted Paid out Change in value As at December 31, 2021 Granted Paid out Change in value As at December 31, 2022 c. RSUs Number Outstanding 255,559 $ 79,417 (117,328) — 217,648 $ 150,469 (80,159) — 287,958 $ Fair Value 8,870 2,049 (4,539) (901) 5,479 2,456 (828) (2,319) 4,788 Under the Company’s RSU plan, selected employees are granted RSUs where each RSU has a value equivalent to one Pan American common share. At the time of settlement, the Board of Directors has the discretion to settle the RSUs with cash or common shares. The RSUs vest in three installments, the first 33.3% vest on the first anniversary date of the grant, the second 33.3% vest on the second anniversary date of the grant, and a further 33.3% vest on the third anniversary date of the grant. Additionally, RSU value is adjusted to reflect dividends paid on common shares over the vesting period. The Company recorded a $1.5 million and $1.8 million expense, respectively, in general and administrative expense for RSUs for the years ended December 31, 2022 and 2021. The following table summarizes changes in RSUs for the years ended December 31, 2022 and 2021: RSU As at December 31, 2020 Granted Paid out Forfeited Change in value As at December 31, 2021 Granted Paid out Forfeited Change in value As at December 31, 2022 Number Outstanding 396,572 $ 240,366 (197,320) (13,218) — 426,400 $ 341,060 (198,344) (17,324) — 551,792 $ Fair Value 13,730 5,818 (4,829) (329) (3,699) 10,691 5,567 (3,402) (283) (3,453) 9,120 PAN AMERICAN SILVER CORP. 106 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) d. Authorized share capital The Company is authorized to issue 400,000,000 common shares without par value. e. Dividends The Company declared the following dividends for the years ended December 31, 2022 and 2021: Declaration date February 22, 2023 (1) November 9, 2022 August 10, 2022 May 11, 2022 February 23, 2022 November 9, 2021 August 10, 2021 May 12, 2021 February 17, 2021 Record date March 6, 2023 November 21, 2022 August 22, 2022 May 24, 2022 March 7, 2022 November 22, 2021 August 23, 2021 May 25, 2021 March 1, 2021 Dividend per common share 0.10 0.10 0.11 0.12 0.12 0.10 0.10 0.07 0.07 $ $ $ $ $ $ $ $ $ (1) These dividends were declared subsequent to the year end and have not been recognized as distributions to owners during the period presented. f. CVRs As part of the acquisition of Tahoe Resources Inc ("Tahoe"), on February 22, 2019, the Company issued 313,887,490 Contingent Value Rights ("CVRs"), with a term of 10 years, which were convertible into 15,600,208 common shares upon the first commercial shipment of concentrate following the restart of operations at the Escobal mine. As of December 31, 2022 and 2021, there were 313,883,990 CVRs outstanding which are convertible into 15,600,034 common shares. 22. PRODUCTION COSTS Production costs are comprised of the following: Materials and consumables Salaries and employee benefits (1) Contractors Utilities Other expenses Changes in inventories (2) (1) Salaries and employee benefits is comprised of: Wages, salaries and bonuses Severances (3) Share-based compensation Total employee compensation and benefit expenses Less: Expensed within General and Administrative expenses Less: Expensed within Care and Maintenance expenses Less: Expensed within Exploration expenses Employee compensation and benefits expenses included in production costs 2022 414,302 $ 310,715 232,096 56,204 30,843 50,271 1,094,431 $ 2022 328,384 $ 23,884 3,936 356,204 (26,179) (11,721) (7,589) 310,715 $ $ $ $ $ 2021 381,446 317,081 226,095 48,675 34,165 (81,983) 925,479 2021 352,736 — 5,128 357,864 (31,230) (4,310) (5,243) 317,081 (2) (3) Includes NRV adjustments to inventory to increase production costs by $97.7 million for the year ended December 31, 2022 (2021 - increase by $8.7 million). Includes $15.5 million, $5.6 million and $2.8 million of severances at Manantial Espejo, Morococha and Dolores respectively for the year ended December 31, 2022 (2021 - $nil). PAN AMERICAN SILVER CORP. 107 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) 23. MINE CARE AND MAINTENANCE Escobal Morococha(1) Navidad (1) Morococha was placed on care and maintenance in February 2022. 24. TRANSACTION AND INTEGRATION COSTS 2022 24,594 $ 15,533 4,996 45,123 $ 2021 24,357 — 7,423 31,780 $ $ Pursuant to the Transaction (Note 1), during the fourth quarter of 2022, the Company provided $150.0 million to Yamana towards a termination fee payable to Gold Fields Limited ("Gold Fields"). Please refer to Note 33 for further details. Termination fee Legal and advisory fees Other 25. INTEREST AND FINANCE EXPENSE Interest expense Finance fees Accretion expense (Note 16) 26. EARNINGS PER SHARE ("EPS") For the year ended December 31, 2022 2022 150,000 $ 6,814 520 157,334 $ 2021 — — — — 2022 5,311 $ 2,311 14,841 22,463 $ 2021 3,660 5,068 7,470 16,198 $ $ $ $ Net (loss) earnings Basic (loss) earnings per share Effect of dilutive securities: Stock options Diluted (loss) earnings per share Earnings (1) Shares (000’s) EPS Earnings $ $ (341,748) (341,748) 210,521 $ $ (1.62) $ 97,428 97,428 2021 Shares (000’s) EPS 210,298 $ 0.46 — — — 137 $ (341,748) 210,521 $ (1.62) $ 97,428 210,435 $ 0.46 (1) Net earnings attributable to equity holders of the Company. The following securities were excluded in the computation of diluted earnings per share because they were anti- dilutive but they have the potential to dilute basic earnings per share in the future: Potential dilutive securities: Share options Potential shares from CVR conversion (1) (1) There were 313,883,990 CVRs outstanding at December 31, 2022 (2021 - 313,883,990) 2022 2021 376,967 15,600,034 65,044 15,600,034 15,977,001 15,665,078 PAN AMERICAN SILVER CORP. 108 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) 27. SUPPLEMENTAL CASH FLOW INFORMATION The following tables summarize other adjustments for non-cash statement of earnings items, changes in operating working capital items and significant non-cash items: Other operating activities Adjustments for non-cash statement of earnings items: 2022 2021 Unrealized foreign exchange losses Interest expense (Note 25) Gains on derivatives (Note 8(d)) Share-based compensation expense Losses (gains) on disposition of mineral properties, plant and equipment (Note 11) $ $ 12,840 $ 5,311 (7,336) 3,936 2,439 17,190 $ 6,703 3,660 (5,393) 5,128 (32,167) (22,069) The following tables summarize other adjustments for non-cash statement of earnings items, changes in operating working capital items and significant non-cash items: Changes in non-cash operating working capital items: Trade and other receivables Inventories Prepaid expenses Accounts payable and accrued liabilities Provisions $ 2022 (12,692) $ (50,035) 2,546 20,711 (2,567) (42,037) $ 2021 (2,874) (82,885) 1,049 18,086 (4,445) (71,069) $ Cash and Cash Equivalents Cash in banks 28. SEGMENTED INFORMATION December 31, 2022 107,005 $ December 31, 2021 283,550 $ The Company reviews its segment reporting to ensure it reflects the operational structure of the Company and enables the Company's Chief Operating Decision Maker to review operating segment performance. We have determined that each producing mine and significant development property represents an operating segment. The Company has organized its reportable and operating segments by significant revenue streams and geographic regions. PAN AMERICAN SILVER CORP. 109 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Significant information relating to the Company’s reportable operating segments is summarized in the table below: For the year ended December 31, 2022 Mine Revenue Production costs and royalties Depreciation Mine operating earnings Capital expenditures(1) La Colorada Huaron Morococha (2) San Vicente Manantial Espejo (3) Escobal Segment/ Country Silver Segment: Mexico Peru Bolivia Argentina Guatemala Total Silver Segment Gold Segment: Mexico Peru Dolores Shahuindo La Arena Timmins Canada Total Gold Segment Other segment: Canada Argentina Other Total Pas Corp Navidad Other La Colorada Huaron Morococha San Vicente Manantial Espejo Escobal Segment/ Country Silver Segment: Mexico Peru Bolivia Argentina Guatemala Total Silver Segment Gold Segment: Mexico Peru Dolores Shahuindo La Arena Timmins Canada Total Gold Segment Other segment: Canada Argentina Other Total Pas Corp Navidad Other $ 155,039 $ 145,730 22,059 76,935 105,073 — 504,836 303,934 266,375 175,865 243,708 989,882 — — — 98,695 $ 100,511 20,642 59,596 112,670 — 392,114 301,892 146,179 103,869 186,266 738,206 — — — $ 1,494,718 $ 1,130,320 $ 20,249 $ 11,836 2,332 8,744 23,050 — 66,211 129,803 44,503 34,674 38,640 247,620 36,095 $ 33,383 (915) 8,595 (30,647) — 46,511 (127,761) 75,693 37,322 18,802 4,056 439 — 1,766 316,036 $ (439) — (1,766) 48,362 $ 91,682 15,574 1,252 7,156 4,263 1,606 121,533 35,855 44,604 47,970 37,652 166,081 348 50 1,509 289,521 $ 130,112 $ 154,634 108,699 80,446 127,445 — 601,336 342,556 255,771 194,582 238,505 1,031,414 — — — 75,192 $ 90,126 75,182 54,569 106,874 — 401,943 186,285 115,009 84,243 174,374 559,911 — — — $ 1,632,750 $ 961,854 $ 20,505 $ 11,564 13,738 9,276 16,031 — 71,114 106,397 42,600 41,362 39,768 230,127 34,415 $ 52,944 19,779 16,601 4,540 — 128,279 49,874 98,162 68,977 24,363 241,376 407 — 1,310 302,958 $ (407) — (1,310) 367,938 $ 65,532 10,897 8,329 5,340 7,575 778 98,451 40,566 27,678 45,479 42,298 156,021 332 90 980 255,874 Includes payments for mineral properties, plant and equipment and payment of equipment leases. (1) (2) Morococha was placed on care and maintenance in February 2022. (3) Manantial Espejo ceased production subsequent to year end. For the year ended December 31, 2021 Mine Revenue Production costs and royalties Depreciation Mine operating earnings Capital expenditures(1) (1) Includes payments for mineral properties, plant and equipment and payment of equipment leases. PAN AMERICAN SILVER CORP. 110 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) At December 31, 2022 Segment/Country Silver Segment: Mexico Peru Bolivia Argentina Guatemala Total Silver Segment Gold Segment: Mexico Peru Canada Total Gold Segment Other segment: Canada Argentina Total Mine La Colorada Huaron Morococha (1) San Vicente Manantial Espejo (2) Escobal Dolores Shahuindo La Arena Timmins Pas Corp Navidad Other (1) Morococha was placed on care and maintenance in February 2022. (2) Manantial Espejo ceased production subsequent to year end. At December 31, 2021 Segment/Country Silver Segment: Mexico Peru Mine La Colorada Huaron Morococha San Vicente Manantial Espejo Escobal Dolores Shahuindo La Arena Timmins Pas Corp Navidad Other Bolivia Argentina Guatemala Total Silver Segment Gold Segment: Mexico Peru Canada Total Gold Segment Other segment: Canada Argentina Product Revenue Refined silver and gold Zinc concentrate Lead concentrate Copper concentrate Silver concentrate Total Assets Liabilities Net assets 375,381 $ 122,535 102,193 82,509 47,772 291,118 1,021,508 415,143 602,443 368,277 382,043 1,767,906 52,018 $ 51,486 31,240 47,380 40,477 19,374 241,975 155,772 199,560 155,120 67,971 578,423 323,363 71,049 70,953 35,129 7,295 271,744 779,533 259,371 402,883 213,157 314,072 1,189,483 178,986 193,923 86,175 3,248,498 $ 182,920 2,600 40,962 1,046,880 $ (3,934) 191,323 45,213 2,201,618 Assets Liabilities Net assets $ $ $ 299,038 $ 117,514 124,607 88,924 71,012 287,811 988,906 750,220 591,164 317,371 419,106 2,077,861 176,006 193,077 82,734 3,518,584 $ $ 52,934 $ 59,975 40,494 53,264 29,017 19,833 255,517 193,638 199,450 106,799 62,196 562,083 16,492 — 48,484 882,576 $ 2022 1,106,793 $ 98,341 167,673 65,096 56,815 1,494,718 $ $ $ 246,104 57,539 84,113 35,660 41,995 267,978 733,389 556,582 391,714 210,572 356,910 1,515,778 159,514 193,077 34,250 2,636,008 2021 1,177,388 119,059 145,524 133,025 57,754 1,632,750 PAN AMERICAN SILVER CORP. 111 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) The Company has 26 customers that account for 100% of the concentrate and silver and gold sales revenue. The Company has 3 customers that accounted for 28%, 14% and 12% of total sales in 2022, and 4 customers that accounted for 21%, 13%, 12%, and 11% of total sales in 2021. The loss of certain of these customers or curtailment of purchases by such customers could have a material adverse effect on the Company’s financial performance, financial position, and cash flows. 29. OTHER EXPENSE (INCOME) Change in closure and decommissioning estimates (1) Change in provisions Investment income Other income Total (1) Relates to changes in estimates after the completion of mining activities. 30. INCOME TAXES Components of Income Tax Expense Current tax expense (recovery) Recognized in profit or loss in current year Adjustments recognized in the current year with respect to prior years Deferred tax expense (recovery) Deferred tax expense (recovery) recognized in the current year Adjustments recognized in the current year with respect to prior years Derecognition of previously unrecognized deferred tax assets Benefit from previously unrecognized losses, and other temporary differences Impact of impairments on deferred tax assets and liabilities Decrease in deferred tax liabilities due to tax impact of NRV charge to inventory Income tax expense 2022 4,694 $ 5,011 (5,371) (2,219) 2,115 $ 2021 246 1,323 (484) (1,121) (36) 2022 2021 85,325 $ (2,308) 83,017 (34,184) 366 9,065 — (3,825) (15,321) (43,899) 39,118 $ 134,947 147 135,094 14,194 56 — 508 — (3,423) 11,335 146,429 $ $ $ $ Income tax expense differs from the amounts that would result from applying the Canadian federal and provincial income tax rates to earnings before income tax. These differences result from the items shown on the following table, which result in an effective tax rate that varies considerably from the comparable period. The factors which have affected the effective tax rate for the year ended December 31, 2022 and the comparable period of 2021 were changes in the recognition of certain deferred tax assets primarily due to the Dolores impairment, foreign exchange fluctuations, mining taxes paid, and withholding taxes on payments from foreign subsidiaries. In the year ended December 31, 2022, as a result of terminating its arrangement agreement with Gold Fields Limited, Yamana was required to pay Gold Fields Limited a termination fee of $300 million. One-half of this amount was funded by the Company. The Company has treated this as a capital cost of acquiring Yamana Gold Inc., pursuant to the applicable Canadian income tax legislation. Since the Company controls the timing of the reversal of this deductible temporary difference, no deferred tax benefit could be recorded for this amount. The tax impact caused by this treatment effectively increased tax expense by $39.8 million in the current quarter. The Company continues to expect that these and other factors will continue to cause volatility in effective tax rates in the future. PAN AMERICAN SILVER CORP. 112 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Reconciliation of Effective Income Tax Rate Earnings (loss) before taxes and non-controlling interest Statutory Canadian income tax rate Income tax expense (recovery) based on above rates Increase (decrease) due to: Non-deductible expenditures Foreign tax rate differences Change in net deferred tax assets not recognized (1) Derecognition of deferred tax assets previously recognized (2) Effect of other taxes paid (mining and withholding) Effect of foreign exchange on tax expense Non-taxable impact of foreign exchange Change in non-deductible portion of reclamation liabilities Unrecognized tax benefit on termination fee related to the Yamana acquisition Other Income tax expense Effective income tax rate 2022 $ $ (300,945) $ 27.00 % (81,255) $ 2021 244,991 27.00 % 66,148 7,465 (11,717) 22,296 50,356 15,658 (21,541) 6,310 12,157 39,750 (361) 39,118 (13.00) % $ 6,192 15,969 20,574 — 25,846 14,337 (1,203) 2,380 — (3,814) 146,429 59.77 % $ (1) Includes deferred taxes related to amounts recorded in other comprehensive income for the year-end December 31, 2022 of $0.5 million with no amounts recognized in the comparative period. (2) Attributable to the loss of attributes resulting from the Dolores impairment in Q2 2022 (Note 12). Deferred tax assets and liabilities The following is the analysis of the deferred tax assets (liabilities) presented in the consolidated financial statements: Net deferred tax liabilities, beginning of year Recognized in net earnings in the year Recognized in other comprehensive income (loss) in year (1) Other Net deferred liabilities, end of year Deferred tax assets Deferred tax liabilities Net deferred tax liabilities $ 2022 (128,832) $ 43,899 469 6 (84,458) 55,879 (140,337) $ (84,458) $ 2021 (117,461) (11,335) — (36) (128,832) 55,953 (184,785) (128,832) (1) Deferred tax impact related to unrealized loss on long-term investment (see Note 13). Components of deferred tax assets and liabilities The deferred tax assets (liabilities) are comprised of the various temporary differences, as detailed below: Deferred tax assets (liabilities) arising from: Closure and decommissioning costs Tax losses, resource pools and mining tax credits Deductible Mexican mining taxes Accounts payable and accrued liabilities Trade and other receivables Provision for doubtful debts and inventory adjustments Short-term investments Mineral properties, plant, and equipment Estimated sales provisions Other temporary differences and provisions Net deferred tax liabilities 2022 2021 $ $ 23,482 $ 83,819 3,974 26,920 17,634 3,136 (11,665) (217,255) (19,263) 4,760 (84,458) $ 27,742 92,928 4,682 22,119 29,163 (28,153) (7,941) (245,126) (30,466) 6,220 (128,832) PAN AMERICAN SILVER CORP. 113 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) At December 31, 2022, the net deferred tax liability above included the deferred tax asset of $83.8 million, which includes the benefits from tax losses ($28.1 million) and resource pools ($55.7 million). The decrease of $9.1 million in this deferred tax asset is mainly due to the slower than expected utilization of tax attributes against income from Timmins West and Bell Creek, which resulted in the de-recognition of the benefits associated with resource pools for these mines. The losses will begin to expire after the 2024 year end, if unused. At December 31, 2021, the net deferred tax liability above included the deferred tax asset of $92.9 million, which includes the benefits from tax losses ($26.4 million) and resource pools ($66.5 million). The decrease in this deferred tax asset is mainly due to the unrealized losses on short-term investments. In prior years, the accumulated unrealized gains on short-term investments necessitated the recognition of this offsetting deferred tax asset. The current year's decrease in accumulated unrealized gains has resulted in a consequential reduction to this offsetting deferred tax asset. Since the accumulated unrealized gains decreased during 2021, the benefit associated with the offsetting losses was de-recognized. The losses will begin to expire after the 2024 year end, if unused. Unrecognized deductible temporary differences, unused tax losses and unused tax credits Deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets have been recognized are attributable to the following: Operating tax loss Net capital tax loss Resource pools and other tax credits (1) Financing fees Mineral properties, plant, and equipment Closure and decommissioning costs Exploration and other expenses not currently deductible Intercompany debt Doubtful debt and inventory Payroll and vacation accruals Other temporary differences 2022 383,231 $ 36,817 87,012 1,368 207,182 207,261 26,300 23,449 18,631 35,799 14,057 1,041,107 $ $ $ (1) Includes tax credits which will begin to expire after 2027 year end, if unused. Included in the above amounts are operating tax losses, which if not utilized will expire as follows: At December 31, 2022 2023 2024 2025 – and after Total tax losses At December 31, 2021 2022 2023 2024 – and after Total tax losses $ $ $ $ Canada US Peru Mexico Barbados Argentina — $ — 342,244 342,244 $ 360 $ 419 10,980 11,759 $ — $ 275 271 546 $ 289 $ 312 2,320 2,921 $ 70 $ 30 318 418 $ 4 $ 10 25,329 25,343 Canada US Peru Mexico Barbados Argentina — $ — 330,799 330,799 $ 529 $ 360 11,399 12,288 $ 156 $ — 593 749 $ — $ 207 2,092 2,299 $ 15 $ 60 168 243 $ 3 $ 5 19,965 19,973 $ 2021 366,351 35,801 49,230 1,050 127,945 143,080 33,837 17,956 24,624 6,168 6,154 812,196 Total 723 1,046 381,462 383,231 Total 703 632 365,016 366,351 Taxable temporary differences associated with investment in subsidiaries As at December 31, 2022, taxable temporary differences of $286.0 million (2021 – $282.0 million) associated with the investments in subsidiaries have not been recognized as the Company is able to control the timing of the reversal of these differences which are not expected to reverse in the foreseeable future. PAN AMERICAN SILVER CORP. 114 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) 31. CONTINGENCIES The following is a summary of the contingent matters and obligations relating to the Company as at December 31, 2022. General The Company is subject to various investigations, claims and legal and tax proceedings covering matters that arise in the ordinary course of business activities. Each of these matters is subject to various uncertainties and it is possible that some of these matters may be resolved unfavorably to the Company. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company. In the opinion of management none of these matters are expected to have a material effect on the results of operations or financial conditions of the Company. Environment The Company’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are in compliance with applicable laws and regulations in all material respects. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. Estimated future reclamation costs are based on the extent of work required and the associated costs are dependent on the requirements of relevant authorities and the Company’s environmental policies. As of December 31, 2022, $296.2 million (2021 - $242.9 million) was accrued for reclamation costs relating to mineral properties (Note 16). Tax The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and to pay the taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time, the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved. Title The validity of our mining or exploration titles or claims or rights, which constitute most of our property holdings, can be uncertain and may be contested. Although the Company has taken steps to verify title to properties in which it has an interest, these procedures do not guarantee the Company’s title. Property title may be subject to, among other things, unregistered prior agreements or transfers, Indigenous land claims, or undetected title defects. In some cases, we do not own or hold rights to the mineral concessions we mine, and our rights may be contractual in nature. We have not conducted surveys of all the claims in which we hold direct or indirect interests and therefore, the precise area and location of such claims may be in doubt. The land title system is also not well developed in some countries and may rely on informal, hereditary or possessory rights. Such informal systems can create significant uncertainty in obtaining and maintaining ownership or rights of access, in defining precise locations or clear boundaries to properties, and substantiating rights if challenged. No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining titles or claims, or that such exploration and mining titles or claims will not be challenged or impugned by PAN AMERICAN SILVER CORP. 115 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) third parties. Any defects in title to our properties, or the revocation of or challenges to our rights to mine, could have a material adverse effect on our operations and financial condition. Legal Proceedings We are subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of business activities. Many of these claims are from current or ex-employees, or employees of former or current owners of our operations, such as the Quiruvilca-related claims in Peru, which could, in the aggregate, be of significant value, and include alleged improper dismissals, workplace illnesses, such as silicosis, and claims for additional profit-sharing and bonuses in prior years. We may become subject to class action lawsuits. For example, in mid-2017, Tahoe, which was acquired by us in late February 2019, and certain of its former directors and officers became the subject of three purported class action lawsuits filed in the United States that center primarily around alleged misrepresentations. These U.S. class action lawsuits were later consolidated into one class action suit that is ongoing. In October 2018, Tahoe learned that a similar proposed class action lawsuit had been filed in the Superior Court of Ontario. These lawsuits seek significant damages. Tahoe has disputed the allegations made in these suits, however the outcomes are not determinable at this time. We may also be subject to proceedings in our commercial relationships. While we would, where available and appropriate to do so, defend against any such allegations, if we are unsuccessful in our defense of these claims, we may be subject to significant losses. Furthermore, we are in some cases subject to claims or other legal processes, which may be direct or indirect, by individuals, local communities, Indigenous peoples, private land owners or non-governmental organizations relating to land and mineral rights and tenure, or alleged environmental or social damage. Such claimants may seek sizeable monetary damages against us and/or the return or relinquishment of surface or mineral rights or revocation of permits and licenses that are valuable to us. Each of these matters is subject to various uncertainties and it is possible that some of these matters may be resolved unfavourably to us. We establish provisions for matters that are probable and can be reasonably estimated. We also carry liability insurance coverage, however such insurance does not cover all risks to which we might be exposed and in other cases, may only partially cover losses incurred by us. In addition, we may be involved in disputes with other parties in the future that may result in litigation, which could have a material adverse effect on our financial or operating position, cash flow and results of operations. Country Argentina Unanticipated or drastic changes in laws and regulations have affected our operations in the past. For example, previous governments implemented severe price, foreign exchange, and import controls which included informal restrictions on dividend, interest, and service payments abroad and limitations on the ability to convert ARS into USD, which exposed the Company to additional risks of ARS devaluation and high domestic inflation. The current government in Argentina maintains unfavorable economic policies, such as strict currency controls and the imposition of export duties. The Company has suspended project development activities at Navidad as a result of uncertainty over the zoning, regulatory and tax laws. The Company remains committed to the development of Navidad and to contributing to the positive economic and social development of the province of Chubut upon the adoption of a favorable legislative framework. PAN AMERICAN SILVER CORP. 116 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Bolivia On May 28, 2014, the Bolivian government enacted the New Mining Law. Among other things, the New Mining Law provided that all pre-existing contracts were to migrate to one of several new forms of agreement within a prescribed period of time. The Company currently has a joint venture agreement with COMIBOL (the "COMIBOL Joint Venture"), a Bolivian state mining company, relating to the San Vicente mine. As a result, we anticipate that the COMIBOL Joint Venture will be subject to such migration and possible renegotiation of key terms. The migration process has been delayed by COMIBOL and has not been completed. The primary effects on the San Vicente operation and our interest therein will not be known until such time as we have, if required to do so, renegotiated the COMIBOL Joint Venture, and the full impact may only be realized over time. We will take appropriate steps to protect and, if necessary, enforce our rights under the COMIBOL Joint Venture. There is, however, no guarantee that governmental actions, including possible expropriation or additional changes in the law, and the migration of the COMIBOL Joint Venture will not impact our involvement in the San Vicente operation in an adverse way and such actions could have a material adverse effect on us and our business. The Company's San Vicente mine, pursuant to the COMIBOL Joint Venture, is obligated to pay COMIBOL a participation fee of 37.5% of the operation’s cash flow. For the year ended December 31, 2022, the Company incurred approximately $7.5 million in COMIBOL royalties (2021 - incurred $7.7 million). Guatemala Some communities and non-governmental organizations ("NGOs") have been vocal and active in their opposition to mining and exploration activities in Guatemala. In July 2017, the Escobal mining license was suspended as a result of a court proceeding initiated by an NGO in Guatemala, based upon the allegation that the Guatemala MEM violated the Xinka Indigenous people’s right of consultation. After several decisions and appeals on the matter, a decision of the Constitutional Court of Guatemala was rendered on September 3, 2018, determining that the Escobal mining license would remain suspended until the Guatemala MEM completes an ILO 169 consultation. During 2022, the ILO 169 consultation process for the Escobal mine in Guatemala advanced with the conclusion of Phase 1 of the process in July 2022. The process is being led by the Guatemala MEM with representatives of the Xinka Indigenous people and PAS Guatemala, Pan American's subsidiary in Guatemala, as participants in the process. Additionally, two meetings were held in October 2022 to provide information related to the project. Jointly with the representatives of the Xinka Indigenous community, MEM submitted an update to the Guatemalan Supreme Court of Justice in December 2022. Operations at the Escobal mine have been on care and maintenance, since July 2017, and the Constitutional Court of Guatemala has ordered the continued suspension of the mining license while the MEM conducts the ILO 169 consultation with the Xinka Indigenous people residing in the area of influence. The process, timing, and outcome of the ILO 169 consultation remains uncertain. 32. RELATED PARTY TRANSACTIONS The Company’s related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel. Transactions with the Company's subsidiaries have been eliminated on consolidation. Maverix ceased to be a related party after March 31, 2022 when the Company determined that it no longer held significant influence (Note 13). There were no other related party transactions for the years ended December 31, 2022 and 2021. PAN AMERICAN SILVER CORP. 117 Notes to the Consolidated Financial Statements As at December 31, 2022 and December 31, 2021, and for the years ended December 31, 2022 and 2021 (tabular amounts are in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted) Compensation of key management personnel Key management personnel compensation is comprised of: Short-term employee benefits (1) Post-employment benefits (2) Share-based payments (3) (1) (2) (3) Includes annual salary and short-term incentives, RSUs, and PSUs paid by the Company. Includes annual contributions to retirement savings plans made by the Company. Includes annual stock option, and common share grants. 33. SUBSEQUENT EVENTS Acquisition of Yamana 2022 11,702 $ 1,020 2,286 15,008 $ 2021 18,592 1,130 2,281 22,003 $ $ The Company has agreed to acquire of all of the issued and outstanding common shares of Yamana ("Yamana Shares") following the sale by Yamana of its Canadian assets, including certain subsidiaries and partnerships which hold Yamana’s interests in the Canadian Malartic mine, to Agnico Eagle (Note 1). Pursuant to the Transaction, shareholders of Yamana will receive for each Yamana Share held: (i) 0.1598 of a common share of the Company; (ii) 0.0376 of a common share of Agnico Eagle; and (iii) $1.0406 in cash to be paid by Agnico Eagle. The aggregate consideration payable to Yamana shareholders consists of up to approximately 156.9 million common shares of the Company; approximately 36.6 million common shares of Agnico Eagle; and $1.0 billion in cash contributed by Agnico Eagle. The aggregate consideration represents a value of $4.8 billion or $5.02 per Yamana Share, based on the closing price of Pan American’s and Agnico Eagle’s shares on November 3, 2022, the day prior to the announcement of the proposed Transaction. Under the terms of the Transaction, the Company funded $150 million in cash to Yamana to pay a portion of a termination fee payable to Gold Fields in connection with the now terminated arrangement agreement between Yamana and Gold Fields. To fund this payment and other transaction and integration costs during the fourth quarter of 2022, the Company drew proceeds of $160 million from its SL-Credit Facility (Note 24). The Transaction received shareholder approval from the Company’s shareholders and Yamana’s shareholders on January 31, 2023. In addition, on February 6, 2023 the Company received the required court order with respect to the Transaction from the Ontario Superior Court of Justice. The Transaction remains subject to approval from the Mexican Federal Economic Competition Commission and satisfaction or waiver of certain other closing conditions. The Transaction is expected to close in the first quarter of 2023. There can be no assurance as to the completion of the Transaction. Pan American would assume Yamana’s obligations with respect to its August 2021 senior notes with an outstanding balance of $500 million and interest rate of 2.63% due in August 2031 and the December 2017 senior notes with an outstanding balance of $282.9 million and interest rate of 4.625% due in December 2027 (the “Notes”). The Notes contain certain change of control provisions, the triggering of which would result in a mandatory repurchase of the Notes in accordance with their terms. The Company does not currently expect that the change of control provisions would be triggered. However, to support the Company’s potential financial requirements and provide financial flexibility and liquidity in connection with the Transaction, the Company has, nonetheless, obtained a commitment from a Canadian chartered bank to provide, on a fully underwritten basis, an increase to the total committed credit available to the Company from $500.0 million to $1,250.0 million. PAN AMERICAN SILVER CORP. 118 CAUTIONARY NOTE Non-GAAP Measures This Annual Report of Pan American Silver Corp. and its subsidiaries (collectively, “Pan American”, “Pan American Silver”, the “Company”, “we” or “our”) refers to various non-GAAP measures, such as “all- in sustaining costs per ounce sold", “cash costs per ounce sold”, “adjusted earnings” and “basic adjusted earnings per share”, "net cash generated from operating activities before changes in working capital", "net cash", "total debt", "capital", “working capital", and "free cash flow". These measures do not have a standardized meaning prescribed by IFRS as an indicator of performance, and may differ from methods used by other companies. Any reference to “Cash Costs” in this annual report should be understood to mean cash costs per ounce of silver or gold sold, net of by-product credits. Any reference to “AISC” in this annual report should be understood to mean all-in sustaining costs per silver or gold ounce sold, net of by-product credits. Readers should refer to the “Alternative Performance (Non-GAAP) Measures” section of the Company’s Management’s Discussion and Analysis (“MD&A”) for the period ended December 31, 2022, contained within this Annual Report and available at www.sedar.com. Reporting Currency and Financial Information Unless we have specified otherwise, all references to dollar amounts or $ are to United States dollars. Cautionary Note Regarding Forward-Looking Statements and Information Certain of the statements and information in this Annual Report 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 annual report relate to, among other things: future financial or operational performance; the closing of the Yamana Transaction in the first quarter of 2023; the addition of mines and projects following completion of the Yamana Transaction; the potential benefits, diversification and synergies following the completion of the Yamana Transaction, including an increase in our market capitalization; whether Pan American is able to maintain a strong financial condition and have sufficient capital, or have access to capital through our corporate credit facility or otherwise, to sustain our business and operations; our plans for exploration and other developments for the La Colorada Skarn project and related infrastructure projects, and the timing of such developments; the duration and effect of the suspensions of operations of the Escobal mine, as well as the nature of and continuation of the constitutional court-mandated ILO 169 consultation process in Guatemala; the successful implementation of our climate strategy, including a reduction in greenhouse gas emissions; the expected results of exploration and development, including our ability to discover or define new mineral reserves and mineral resources; the expected increase in industrial demand for silver; the ability of Pan American to successfully complete any capital and development projects and the expected economic or operational results derived from those projects, such as the exploration, engineering, and infrastructure projects at the La Colorada mine; and the successful generation of growth in our businesses and returns to shareholders. These forward-looking statements and information reflect Pan American’s current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by Pan American, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include: our ability to receive all required regulatory approvals and then close the Yamana Transaction; the ability of Pan American to continue with its operations, including our ability to successfully maintain our operations on care and maintenance where required and to manage reduced operations efficiently and economically; future anticipated prices for gold, silver and other metals and assumed foreign exchange rates; the timing and impact of the capital and development projects at La Colorada; the ongoing impact and timing of the government-led ILO 169 consultation process in connection with Escobal; 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; our ability to secure and maintain title and ownership to properties and the surface rights necessary for our operations; the world-wide economic and social impact of COVID-19 and any other pandemics are managed and the duration and extent of the such pandemics are minimized or not long- term. The foregoing list of assumptions is not exhaustive. Pan American 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 expressed or implied by such forward-looking statements or information contained in this Annual Report and Pan American 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 PEN, MXN, ARS, BOL, GTQ and CAD versus the USD); risks related to the technological and operational nature of the Company’s business (including environmental accidents and hazards, industrial accidents, equipment breakdown, unusual or unexpected geological or structural formations, cave-ins, flooding and severe weather); changes in national and local government, legislation, taxation, controls or regulations and political, legal or economic developments in Canada, the United States, Mexico, Peru, Argentina, Bolivia, Guatemala or other countries where the Company may carry on business (such as Chile and Brazil), some of which might prevent or cause the suspension or discontinuation of mining activities, including the risk of expropriation related to certain of our operations, particularly in Argentina and Bolivia and risks related to the constitutional court-mandated ILO 169 consultation process in Guatemala; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological or structural formations, pressures, cave- ins and flooding); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the PAN AMERICAN SILVER CORP. 119 Company does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards; employee relations; relationships with and claims by the local communities and indigenous populations; availability and increasing costs associated with mining inputs and labour; the Company’s ability to secure our mine sites or maintain access to our mine sites due to criminal activity, violence, or civil and labour unrest; the speculative nature of mineral exploration and development, including the risk of obtaining or retaining necessary licenses and permits; challenges to, or difficulty in maintaining, the Company’s title to properties and continued ownership thereof; diminishing quantities or grades of mineral reserves as properties are mined; global financial conditions; the Company’s ability to complete and successfully integrate acquisitions, including in connection with the Yamana Transaction, and to mitigate other business combination risks; the actual results of current exploration activities, conclusions of economic evaluations, and changes in project parameters to deal with unanticipated economic or other factors; increased competition in the mining industry for properties, equipment, qualified personnel, and their costs; having sufficient cash to pay obligations as they come due; the duration and effects of the coronavirus and COVID-19 variants, and any other epidemics or pandemics on our operations and workforce, and their effects on global economies and society; and those factors identified under the caption "Risks Related to Pan American's Business" in Pan American's most recent form 40-F and Annual Information Form filed with the United States Securities and Exchange Commission and Canadian provincial securities regulatory authorities, respectively. Although Pan American 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. Pan American 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. Technical Information Technical information contained in this annual report with respect to Pan American Silver Corp. has been reviewed and approved by Martin Wafforn, P.Eng., SVP Technical Services and Process Optimization, and Chris Emerson, FAusIMM, VP Business Development and Geology, who are Pan American’s qualified persons for the purposes of National Instrument 43-101 (“NI 43-101”). Mineral reserves in this annual report were prepared under the supervision of, or were reviewed by, Martin Wafforn and Chris Emerson. See Pan American’s Annual Information Form dated February 22, 2023, available at www.sedar.com for further information on Pan American’s material mineral properties as at December 31, 2022, including information concerning associated QA/QC and data verification matters, the key assumptions, parameters and methods used by the Pan American to estimate mineral reserves and mineral resources, and for a detailed description of known legal, political, environmental, and other risks that could materially affect Pan American’s business and the potential development of Pan American’s mineral reserves and resources. The mineral reserves and resources of Pan American in this annual report reflect our mineral reserves and resources estimates as at June 30, 2022. Cautionary Note to U.S. Investors Concerning Estimates of Mineral Reserves and Mineral Resources Unless otherwise indicated, all reserve and resource estimates included in this Annual Report have been prepared in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) — CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Standards”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”), and reserve and resource information included herein may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, this Annual Report uses the terms “measured resources,” “indicated resources” and “inferred resources” as defined in accordance with NI 43-101 and the CIM Standards. Further to recent amendments, mineral property disclosure requirements in the United States (the “U.S. Rules”) are governed by subpart 1300 of Regulation S-K of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) which differ from the CIM Standards. As a foreign private issuer that is eligible to file reports with the SEC pursuant to the multi-jurisdictional disclosure system (the “MJDS”), Pan American is not required to provide disclosure on its mineral properties under the U.S. Rules and will continue to provide disclosure under NI 43-101 and the CIM Standards. If Pan American ceases to be a foreign private issuer or loses its eligibility to file its annual report on Form 40-F pursuant to the MJDS, then Pan American will be subject to the U.S. Rules, which differ from the requirements of NI 43-101 and the CIM Standards. Pursuant to the new U.S. Rules, the SEC recognizes estimates of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources.” In addition, the definitions of “proven mineral reserves” and “probable mineral reserves” under the U.S. Rules are now “substantially similar” to the corresponding standards under NI 43-101. Mineralization described using these terms has a greater amount of uncertainty as to its existence and feasibility than mineralization that has been characterized as reserves. Accordingly, U.S. investors are cautioned not to assume that any measured mineral resources, indicated mineral resources, or inferred mineral resources that Pan American reports are or will be economically or legally mineable. Further, “inferred mineral resources” have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies, except in rare cases. While the above terms under the U.S. Rules are “substantially similar” to the standards under NI 43-101 and CIM Standards, there are differences in the definitions under the U.S. Rules and CIM Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that Pan American may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had Pan American prepared the reserve or resource estimates under the standards adopted under the U.S. Rules. All trade names, trademarks, and logos displayed in this Annual Report that are not owned by Pan American Silver are the property of their respective owners. PAN AMERICAN SILVER CORP. 120 SHAREHOLDER INFORMATION CORPORATE OFFICE 1440 - 625 Howe Street Vancouver, BC Canada V6C 2T6 604-684-1175 info@panamericansilver.com BOARD OF DIRECTORS (As at December 31, 2022) Gillian Winckler(3) – Chair Michael Carroll(1,2) – Director Neil de Gelder(1,2,3) – Director Charles Jeannes(2,4,5) – Director Jennifer Maki(1,5) – Director Walter Segsworth(2,3,4) – Director Kathleen Sendall(4,5) – Director Michael Steinmann(4,5) – Director Notes: (1)  Member of the Audit Committee. (2)  Member of the Human Resources and Compensation Committee. (3)  Member of the Nominating and Governance Committee. (4)  Member of the Health, Safety and Environment Committee. (5)  Member of Communities and Sustainable Development Committee. EXECUTIVE OFFICERS (As at December 31, 2022) Michael Steinmann – President & Chief Executive Officer Steve Busby – Chief Operating Officer Ignacio Couturier – Chief Financial Officer Brent Bergeron – SVP, Corporate Affairs & Sustainability Christopher Emerson - VP Corporate Development & Geology Delaney Fisher – SVP, Associate General Counsel & Corporate Secretary George Greer – SVP, Project Development Christopher Lemon – General Counsel Sean McAleer – SVP & Managing Director, Guatemala Cameron Paterson – SVP, Finance and IT Martin Wafforn – SVP, Technical Services & Process Optimization AUDITORS Deloitte LLP, Chartered Professional Accountants 2800 – 1055 Dunsmuir Street Vancouver, BC Canada V7X 1P4 EXTERNAL LEGAL COUNSEL Borden Ladner Gervais LLP 1200 – 200 Burrard Street Vancouver, BC Canada V7X 1T2 SHARE INFORMATION NASDAQ: PAAS TSX: PAAS Common shares outstanding at December 31, 2022: 210.7 million SHAREHOLDER SERVICES For information regarding your shareholdings, dividend payments, or to change your address etc., please contact Computershare Investor Services Inc. If your shares are held by a broker, please contact your broker. REGISTRAR AND TRANSFER AGENT Computershare Investor Services Inc. 510 Burrard Street, 3rd Floor Vancouver, BC V6C 3B9 100 University Avenue, 8th Floor Toronto, ON M5J 2Y1 1-800-564-6253 International: 1-514-982-7555 Broker Queries: 1-888-838-1405 E: service@computershare.com INVESTOR RELATIONS Siren Fisekci VP, Investor Relations & Corporate Communications T: 604-684-1175 E: ir@panamericansilver.com PANAMERICANSILVER.COM ANNUAL GENERAL AND SPECIAL MEETING Wednesday, May 10, 2023 – 3:00pm (PST) 1200 Waterfront Centre 200 Burrard Street Vancouver, British Columbia, Canada PAN AMERICAN SILVER CORP. 121 PROVIDING ENHANCED EXPOSURE TO SILVER Pan American Silver provides investors with enhanced exposure to silver through a large base of silver reserves and resources, as well as major catalysts to grow silver production. We believe silver is a critical metal, as the world moves towards decarbonization and electrification. Our diversified portfolio includes gold assets that contribute to strong cash flow and shareholder returns. We have been operating in the Americas for 29 years with a demonstrated commitment to sustainable mining – creating safe, healthy and prosperous environments for our workforce and communities. WWW.PANAMERICANSILVER.COM COMMITTED TO BEST-IN-CLASS ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) PERFORMANCE REPORTING FRAMEWORKS & STANDARDS MEMBERSHIPS AND COMMITMENTS 

Continue reading text version or see original annual report in PDF format above