Pan American Silver Corp. (NYSE:PAAS) Q1 2022 Earnings Conference Call May 12, 2022 11:00 AM ET

Company Participants

Siren Fisekci - Vice President, Investor Relations and Corporate Communications

Michael Steinmann - President and CEO

Steve Busby - COO

Conference Call Participants

Trevor Turnbull - Scotiabank

Don DeMarco - National Bank Financial

Operator

Thank you for standing by. This is the conference operator. Welcome to the Pan American Silver First Quarter 2022 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions [Operator Instructions].

I would now like to turn the conference over to Siren Fisekci, Vice President, Investor Relations and Corporate Communications. Please go ahead, Ms. Fisekci.

Siren Fisekci

Thank you for joining us today for Pan American Silver's Q1 2022 conference call. This call includes forward-looking statements and information and makes reference to non-GAAP measures. Please see the cautionary statements in our MD&A, news release and presentation slides for our Q1 2022 unaudited results, all of which are available on our Web site. I'll now turn the call over to Michael Steinmann, Pan American's President and CEO.

Michael Steinmann

Thanks, Siren. The start of the first quarter was heavily impacted by the Omicron variant that was spreading quickly around the world. Throughout our operations, we experienced significant reductions in workforce deployments during January and early February. Fortunately, this was largely due to our COVID screening process and the government mandated isolation periods, and not because of serious illness. With the lack of visibility on how Omicron would play out, we delayed issuing our 2022 guidance until late February. By that time, the Omicron surge was subsiding and our workforce deployment levels were rising. I'm pleased to say that we are on track to achieve our production guidance for 2022 back and weighted to the second half of the year. This view reflects the large [Technical Difficulty] less impactful on workforce deployment levels going forward, demand sequencing at La Arena and Dolores and continued to operational improvements at La Colorada. We're also maintaining our cost guidance for 2022. However, we are currently experiencing higher than expected overall inflationary pressure, particularly for diesel uncertain consumables, as well as supply chain driven cost pressures and shortages. We're carefully monitoring this largely global inflationary pressures and we'll adjust our cost estimates if necessary.

In Q1, we produced 4.6 million ounces of silver. Silver segment all in sustaining costs were $13.41 per ounce. Cash costs for the silver segment were $10.23 per ounce. Despite the impact of Omicron and inflationary cost pressures, higher byproducts metal prices contributed to the decrease in costs that were on at Morococha. As well higher byproduct metal prices and silver grades led to lower cost at La Colorada despite a 13% decline in throughput from Q4 because of Omicron. Manantial Espejo recorded strong performance in Q1 due to the contribution of high grade ore from COSE and Joaquin. Mining operations are now running down at COSE as anticipated in our 2022 guidance. Silver production and costs in Q1 were negatively impacted by a decrease in grades at San Vicente from greater dilution due to the expected narrowing of the vein structures at DAP.