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.
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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.
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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.
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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.
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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.
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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.
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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
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