february investor presentation - pan american silver
TRANSCRIPT
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InvestorPresentationFebruary2017
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CautionaryNoteNon-GAAPMeasuresThispresentationofPanAmericanSilverCorp.(the“Company”)referstovariousnon-GAAPmeasures,suchascashcostsperpayableounceofsilver,netofby-productcredits(“CashCosts”),all-insustainingcostpersilverouncesold(“AISCSOS”)andworkingcapital.ThesemeasuresdonothaveastandardizedmeaningprescribedbyIFRSasanindicatorofperformance,andmaydifferfrommethodsusedbyothercompanies.Readersshouldrefertothe“AlternativePerformance(non-GAAP)Measures”sectionintheCompany’sManagement’sDiscussionandAnalysisfortheperiodendedSeptember30,2016,availableatwww.sedar.com.ReportingCurrencyandFinancialInformationUnlesswehavespecifiedotherwise,allreferencestodollaramountsor$aretoUnitedStatesdollars.CautionaryNoteRegardingForwardLookingStatementsandInformationCertainofthestatementsandinformationinthispresentationconstitute“forward-lookingstatements”withinthemeaningofthe UnitedStatesPrivateSecuritiesLitigationReformActof1995and“forward-lookinginformation”withinthemeaningofapplicableCanadianprovincialsecuritieslaws.Allstatements,otherthanstatementsofhistoricalfact,areforward-lookingstatementsorinformation.Forward-lookingstatementsorinformationinthispresentationrelateto,amongotherthings:ourestimatedproductionofsilver,goldandothermetalsin2017,2018and2019;ourestimatedcashcostsperpayableounceofsilverandAISCSOSin2017,2018and2019;ourestimatedoperatingmarginsfor2017,2018and2019;ourestimatedcapitalinvestments,andsustainingcapitalfor2017,2018and2019;theabilityoftheCompanytosuccessfullycompleteanycapitalinvestmentprogramsandprojects,andtheimpactsofanysuchprogramsandprojectsontheCompany;theabilityoftheCompanytorealizevaluefromtransactions,includingwithrespecttotheJoaquinProjectandMaverix MetalsInc.;expectationswithrespecttofuturepricesofsilverorotherpreciousmetals,world-widesilverproduction,orglobaldemandonsilver,orothersimilarmetricsrelatingtosilver; andanyanticipatedleveloffinancialandoperationalsuccessin2017.ThesestatementsandinformationreflecttheCompany’scurrentviewswithrespecttofutureeventsandarenecessarilybaseduponanumberofassumptionsthat,whileconsideredreasonablebytheCompany,areinherentlysubjecttosignificantoperational,business,economicandregulatoryuncertaintiesandcontingencies.Theseassumptionsinclude:tonnageoforetobeminedandprocessed;oregradesandrecoveries;pricesforsilver,goldandbasemetalsremainingasestimated;currencyexchangerates remainingasestimated;capital,decommissioningandreclamationestimates;ourmineralreserveandrecourseestimatesandtheassumptionsuponwhichtheyarebased;pricesforenergyinputs,labour,materials,suppliesandservices(includingtransportation);nolabour-relateddisruptionsatanyofouroperations;nounplanneddelaysorinterruptionsinscheduledproduction;allnecessarypermits,licensesandregulatoryapprovalsforouroperationsarereceivedinatimelymanner;andourabilitytocomplywithenvironmental,healthandsafetylaws.Theforegoinglistofassumptionsisnotexhaustive.TheCompanycautionsthereaderthatforward-lookingstatementsandinformationinvolveknownandunknownrisks,uncertaintiesandotherfactorsthatmaycauseactualresultsanddevelopmentstodiffermateriallyfromthoseexpressedorimpliedbysuchforward-lookingstatementsorinformationcontainedin thispresentationandtheCompanyhasmadeassumptionsandestimatesbasedonorrelatedtomanyofthesefactors.Suchfactorsinclude,withoutlimitation:fluctuationsinsilver,goldandbasemetalprices;fluctuationsinpricesforenergyinputs,labour,materials,suppliesandservices(includingtransportation);fluctuationsincurrencymarkets(suchastheCanadiandollar,Peruviansol,Mexicanpeso,ArgentinepesoandBolivianbolivianoversustheU.S.dollar);operationalrisksandhazardsinherentwiththebusinessofmining(includingenvironmentalaccidentsandhazards,industrial accidents,equipmentbreakdown,unusualorunexpectedgeologicalorstructuralformations,cave-ins,floodingandsevereweather);risksrelatingtothecreditworthinessorfinancialconditionofsuppliers,refinersandotherpartieswithwhomtheCompanydoesbusiness;inadequateinsurance,orinabilitytoobtaininsurance,tocovertheserisksandhazards;employeerelations;relationshipswith,andclaimsby,localcommunitiesandindigenouspopulations;ourabilitytoobtainallnecessarypermits,licensesandregulatoryapprovalsinatimelymanner;changesinlaws,regulationsandgovernmentpracticesinthejurisdictionswhereweoperate,includingenvironmental,exportandimportlawsandregulations;diminishingquantitiesorgradesofmineralreservesaspropertiesaremined;increasedcompetitionintheminingindustryforequipmentandqualifiedpersonnel;andthosefactorsidentifiedunderthecaption“RisksRelatedtoPanAmerican’sBusiness”intheCompany’smostrecentform40-FandAnnualInformationFormfiledwiththeUnitedStatesSecuritiesandExchangeCommissionandCanadianprovincialsecuritiesregulatoryauthorities.AlthoughtheCompanyhasattemptedtoidentifyimportantfactorsthatcouldcauseactualresultstodiffermaterially,theremaybeotherfactorsthatcauseresultsnottobeasanticipated,estimated,describedorintended.Investorsarecautionedagainstunduerelianceonforward-lookingstatementsorinformation.Forward-lookingstatementsandinformationaredesignedtohelpreadersunderstandmanagement’scurrentviewsofournearandlongertermprospectsandmaynotbeappropriateforotherpurposes.TheCompanydoes notintend,nordoesitassumeanyobligationtoupdateorreviseforward-lookingstatementsorinformation,whetherasaresultofnewinformation,changesinassumptions,futureeventsorotherwise,excepttotheextentrequiredbyapplicablelaw.TechnicalInformationTechnicalinformationcontainedinthispresentationwithrespecttoPanAmericanSilverCorp.hasbeenreviewedandapprovedbyMartinWafforn,P.Eng.,SVPTechnicalServicesandProcessOptimization,andChrisEmerson,FAusIMM,VPBusinessDevelopmentandGeology,whoaretheCompany’squalifiedpersonsforthepurposesofNationalInstrument43-101.Mineralreservesinthispresentationwerepreparedunderthesupervisionof,orwerereviewedby,MartinWafforn andChrisEmerson.ForadditionalinformationabouttheCompany’smaterialmineralproperties,pleaserefertotheCompany’sAnnualInformationFormdatedMarch24,2016,filedatwww.sedar.com.
2 February27,2017
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CautionaryNoteAboutMineralReservesandResources
3 February27,2017
CautionaryNotetoUSInvestorsConcerningEstimatesofMineralReservesandResources
Thispresentationhasbeenprepared inaccordancewiththerequirementsofCanadiansecuritieslaws,whichdifferfromtherequirementsofU.S.securitieslaws.Unlessotherwise indicated,allmineral reserveandresourceestimatesincludedinthispresentationhavebeenprepared inaccordancewithCanadianNationalInstrument43-101–StandardsofDisclosureforMineralProjects (‘‘NI43-101’’)andtheCanadianInstituteofMining,MetallurgyandPetroleumclassificationsystem.NI43-101isaruledevelopedbytheCanadianSecuritiesAdministratorsthatestablishesstandardsforallpublicdisclosureanissuermakesofscientificand technicalinformationconcerningmineralprojects.
Canadianstandards,includingNI43-101,differsignificantlyfromtherequirementsoftheUnitedStatesSecuritiesandExchangeCommission(the“SEC”),andinformationconcerningmineralization,deposits,mineral reserveandresourceinformationcontainedorreferredtohereinmaynotbecomparable tosimilarinformationdisclosedbyU.S.companies.Inparticular,andwithoutlimiting thegenerality oftheforegoing,thispresentationusestheterms‘‘measuredresources’’, ‘‘indicatedresources’’and‘‘inferredresources’’.U.S. investorsareadvisedthat,while suchtermsarerecognizedandrequiredbyCanadiansecuritieslaws, theSECdoesnotrecognizethem.The requirementsofNI 43-101foridentificationof‘‘reserves’’arenotthesameasthoseoftheSEC,andreservesreportedbyPanAmericanincompliancewithNI 43-101maynotqualifyas‘‘reserves’’ underSECstandards.UnderU.S.standards,mineralizationmaynotbeclassifiedasa‘‘reserve’’unlessthedeterminationhasbeenmadethatthemineralizationcouldbeeconomicallyandlegallyproducedorextractedatthetime thereserve determination ismade.U.S. investorsarecautionednottoassumethatanypartofa“measuredresource”or“indicatedresource”willever beconvertedintoa“reserve”.U.S.investorsshouldalsounderstandthat“inferredresources”haveagreatamountofuncertaintyastotheirexistenceandgreatuncertaintyastotheireconomicandlegalfeasibility. Itcannotbeassumedthat alloranypartof“inferredresources”exist,areeconomicallyorlegally mineableorwilleverbeupgradedtoahighercategory.UnderCanadiansecuritieslaws,estimated“inferredresources”maynotformthebasisoffeasibilityorpre-feasibility studiesexceptinrarecases.Disclosureof“containedounces”inamineralresourceispermitted disclosureunderCanadiansecuritieslaws.However,theSECnormallyonlypermitsissuerstoreportmineralizationthatdoesnotconstitute“reserves”bySECstandardsasinplacetonnageandgrade,withoutreference tounitmeasures.Accordingly,informationconcerningmineraldepositssetforthhereinmaynotbecomparablewithinformationmadepublicbycompaniesthatreportinaccordancewithU.S. standards.
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PAAS– aninvestmentinsilver
ü 2ndlargestprimarysilverproducerintheworldü Portfolioofhigh-qualityassetsintheAmericasü Largereserves:provenandprobableof286Moz silver(1)
ü Growing,low-costproductionprofileü Significantexplorationpotentialü Experiencedminebuilderandoperatorü Strongbalancesheet
Ourstrategyisfocusedonextractingvaluefromourportfolioofassets,improvingoperatingmarginsanddeployingprovenexpertisetopursue
profitablegrowth.
4 February27,2017(1) Pleaserefer totheAppendix formoredetailedinformation ontheCompany’sreserves.
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Ouroperations
5 February27,2017
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MillionSilverOuncesProduced
Trackrecordofbuildingminesandgrowingproduction
6 February27,2017Pleaserefer totheCompany’snewsreleasedatedFeb.14,2017formoreinformation onthe2016operating resultsandthethree-yearoutlook.
0
5
10
15
20
25
30
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017F2018F2019F
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Weightedtosilverexposure
5%5%
15%
24%
51%silver
Copper
Lead
Zinc
Gold
Silver
7 February27,2017
Basedon2017estimatedmetalsalesandprices:Ag$17.00/oz, Au$1,200/oz, Zn$2,500/tonne, Cu$5,400/tonne, Pb $2,100/tonne
Pleaserefer totheCompany’snewsreleasedatedFeb.14,2017formoreinformation onthe2016operating resultsandthethree-yearoutlook.
2017estimateofrevenuegeneratedbyproduct
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Strongoperatingperformance
8
35%decreaseincashcosts(1) from2015
32%decreaseinAISCSOS(1)from2015(All-inSustainingCostsPerSilverOunceSold)
to$6.29/ounceof silver(netofby-productcredits)
25.4millionouncesofsilver
to$10.17(netofby-productcredits)
183,900ouncesofgold
(1)Thispresentationreferstomeasuresthatarenotgenerally acceptedaccountingprinciple(“non-GAAP”)financialmeasures,includingcashcostperpayableounceofsilver,netofby-productcredits(“CashCosts”),andall-insustainingcostspersilverouncesold(“AISCSOS”).Pleaserefer to“AlternativePerformance (non-GAAP)Measures”sectionoftheCompany’snewsreleasedatedFeb.14,2017forfurtherinformation.
Consolidated resultsfor2016
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Progressoncostreductions(1)
9 February27,2017
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
2012 2013 2014 2015 2016
CashCosts AISCSOS
ConsolidatedCashCostsperpayableounceofsilver,netofby-products(“CashCosts”)ConsolidatedAll-inSustainingCostsperSilverOunceSold(“AISCSOS”)
(1) CashCostsandAISCSOSarenon-GAAPfinancialmeasures;pleasereferto“AlternativePerformance (non-GAAP)Measures”sectionof theCompany’snewsreleasedatedFeb.14,2017forfurther information.
Maindriversof2016costreduction:
• Improvedproductivity~45%
• FXgains~30%
• Higherby-productprices~15%
• Generallylowerinputcostsandexportcredits~10%
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Financialstrength
10 February27,2017
AtDec.31,2016 USDMillions
Cashandcashequivalentsandshort-term investments 217.6
Working capital(1) 428.6
Total debt(2) 43.3
Totalavailableliquidity (3) 481.4
(1) Workingcapitalisanon-GAAPmeasurecalculated ascurrent assetslesscurrent liabilities. TheCompanyandcertain investorsusethisinformation toevaluatewhether theCompanyisabletomeetitscurrent obligationsusingitscurrent assets.(2) Inclusiveof$7.1million incapitalleases.(3) Includescashandcashequivalents, short-term investments, andtheundrawn portion oftheCompany’ssecuredlineofcredit.
Netincomeof$101.8Min2016($0.66pershare) from2015
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2016ConsolidatedCashFlows
Totalsustainingcapital,majorprojectsinvestment,anddividendswerefully coveredbycashflowgeneratedin2016.
11 February27,2017
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Improvingoperatingmargins
12 February27,2017
45%cashcostreductionfrom2014to2016
CashCostsisanon-GAAPfinancialmeasures;pleasereferto“AlternativePerformance (non-GAAP)Measures”sectionoftheCompany’snewsreleasedatedFeb.14,2017forfurther information.By-product metalprices assumptionsusedforforecastCashCostscalculation: Au$1,200/oz, Zn$2,500/tonne, Pb$2,100/tonne, Cu$5,400/tonne. Exchangerates relative toUS$assumed:Mexican peso20:1,Peruvian sol3.3:1,Argentine peso17.05:1,Bolivian boliviano7:1.
CashCosts
26.5
29.5
28.0
26.0
24.5
26.0
25.426.126.1
$6.29
$7.45$7.10 $6.80
$5.20$5.60
$6.45
$9.70
$11.46
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Capitalexpenditureprofile(1)
13 February27,2017
(1) Guidance asprovidedinPanAmerican’snewsreleasedatedFeb.14,2017.
(inmillionsofUSD)
2017Guidance
2018Outlook
2019Outlook
Sustainingcapitaltotal 82- 88 75- 85 75- 90
ProjectcapitaltotalLaColorada andDolores
58- 62 0 0
Consolidated total 140 - 150 75 - 85 75- 90
2017isexpectedtobethefinalyearofspendingonthecurrentcapitalprojects.
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Capitalallocationpriorities
14 February27,2017
$361
$491
$542
$423
$330
$227 $218
$0
$100
$200
$300
$400
$500
$600
2010 2011 2012 2013 2014 2015 2016
MillionsUS$ Cash&STI
Financialdebt
Cumulativereturntoshareholders
$387Mintotalcumulativecashreturned toshareholders (dividends andsharebuy-backs)since2010inadditiontoinvesting$410M inprojectandexpansion capital.
PanAmerican’sapproachtocapitalmanagementprioritizesinvestmentinprojectsthatgenerateahigh-rateofreturn,maintainingastrongbalancesheetandreturningcashtoshareholders.
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2016reservesreplacement(1)
15 February27,2017
Overlast13yearsPAASadded332millionouncesofcontainedsilvertomineralreservesthroughmine-siteexploration,fullyreplacing324millionouncesdepletedinthesameperiod.
Millionouncessilvermineralreserves
Forcompletemineral reservedetails, pleaseseeAppendix.
-32.4Moz
38.1Moz
SilverreservesDec2015 ReservesDepleted 2016 ReservesReplaced2016 TotalReservesDec2016
280Moz 285.8 Moz
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0
50
100
150
200
250
300
350
400
450
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2010 2011 2012 2013 2014 2015 2016 2017
SilverGrade(g
/tonnes)
MillionTonnes
Probable (Mt)
Proven(Mt)
SilverGrade(g/t)
LaColoradareservesincrease>200%
16 February27,2017
30.4Moz Ag
38.3Moz Ag
44.1Moz Ag
64.8Moz Ag
81.4Moz Ag86Moz Ag
91.2Moz Ag
ForLaColorada’s complete mineralreservedetails, pleaseseeAppendix.
98.1Moz Ag
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Organicgrowth– LaColoradaexpansion
17 February27,2017
AtDec31,2016P&P4.5Mt*Ag 418g/t(60.3Moz)
Au0.34g/tPb 1.85%Zn3.35%
AtDec31,2016P&P2.7Mt*Ag 372g/t(32.7.0Moz)
Au0.29g/tPb 0.89%Zn1.42%
AtDec31,2016P&P0.5Mt*Ag 321g/t(5.1Moz)
Au0.34g/tPb 1.17%Zn1.51%
*ForLaColorada’s complete mineralreservedetails, pleaseseeAppendix.
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LaColorada expansion(1)
18 February27,2017
Highlights• 69%increaseexpectedinaverageannual
silverproductionto7.7Moz by2018• 137%and185%increaseexpectedinzinc
andleadproduction,respectively, by2018ProjectScope• New618-metredeepmineshaft– fully
commissionedinQ32016• Newsulphide processingplant– began
operatingQ32016• Undergrounddevelopmenttoopennew
productionareas– advancingonscheduleforcompletionin2017
• New115kVpowerline- targetedforcompletionin2017
(1) Foradditionalinformation,pleaserefertotheCompany’stechnicalreportentitled“TechnicalReport– PreliminaryEconomicAnalysisfortheExpansionoftheLaColorada Mine,Zacatecas,Mexico”,withaneffectivedateofDec.31,2013availableatwww.SEDAR.com.Theresultsofthispreliminaryeconomicassessmentarepreliminaryinnature,inthatitincludesinferredmineralresources thatareconsidered toogeologicallyspeculativetohavetheeconomicconsiderationsappliedtothemthatwouldenablethemtobecategorizedasmineralreserves,andthereisnocertaintythattheassessmentwillberealized.Mineralresourcesthatarenotmineralreserveshavenodemonstratedeconomicviability.
Original investmentof$163.8M,including sustainingcapital,generatedanIRRof22%atAg$19/ozNowexpectedtobe~5%under budget
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Organicgrowth– Doloresexpansion
19 February27,2017
Undergroundreserves
Tonnes(Mt) Agg/t Agcontained
(Moz) Aug/t Aucontained(koz)
Proven 1.1 81 2.8 1.28 44.3
Probable 3.0 58 5.6 1.73 167.2
Proven+Probable 4.1 64 8.4 1.61 211.5
Notes:1 Mineralreserveswereestimatedusingapriceof$18.50perounceofsilverand$1,300perounceofgold.Mineralresourcesareinadditiontomineralreservesandwereestimatedusingmetal
pricesof $25.00perounceof silverand$1,400perouncegold.2 MineralresourceandreserveestimatesforDoloreswerepreparedunderthesupervisionof,orwerereviewedby,ChristopherEmerson,FAusIMM,andMartinG.Wafforn,P.Eng.,asQualified
PersonsasthattermisdefinedinNI43-101.
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Doloresexpansion(1)
20 February27,2017
Highlights
• Duringfirst5years,estimatedincreasesinaverageannualproductionof:
• Silverup40%• Goldup52%
• ReduceCashCosts throughoperationalefficiencies andhighergoldproduction
ProjectScope• New5,600tpd pulpagglomerationplant-
scheduled forstart-upinmid2017
• Newundergroundmine- scheduled toreach1,500tpd byendof2017
• New115kVpowerline- energizedinSeptember2016
(1) Foradditionalinformation,pleaserefertotheCompany’stechnicalreportentitled“TechnicalReportfortheDoloresProperty,Chihuahua,Mexico- PreliminaryEconomicAssessmentof aPulpAgglomerationTreatmentandUndergroundOption”,withaneffectivedateofMay31,2014availableatwww.SEDAR.com.Theresultsofthispreliminaryeconomicassessmentarepreliminaryinnature,inthatitincludesinferredmineralresourcesthatareconsideredtoogeologicallyspeculativetohavetheeconomicconsiderationsappliedtothemthatwouldenablethemtobecategorizedasmineralreserves,andthereisnocertaintythattheassessmentwillberealized.Mineralresourcesthatarenotmineralreserveshavenodemonstratedeconomicviability.
Estimatedcapitalinvestment~$132.4M(incl.powerline)IRR27%atAg$19/oz &Au$1,200/ozOnbudget
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Doloresagglomerationplantconstruction
21 February27,2017
AgglomeratorDrum RodMill
FilterBuilding
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Explorationandproductiongrowth
22 February27,2017
• 2017explorationbudgetofUS$21M,up45%from2016
• Solidperformanceonreplacing2016production withnewsilverreserves
• LaColorada continuestodeliverbothnewreservesandextensiontominelife
• HighpotentialatPeruoperations;nearsiteandgreenfieldexploration
• LaNegra (KootenaySilverInc.)andJoaquinbringadvancedsilverexplorationprojectsintothepipelinewithexcellentregionalexplorationpotential
• 100%ownerofNavidad,oneofthelargestundeveloped silverdeposit intheworld:
Navidad Silver Resources(1) ContainedAg(Moz)
Tonnes(Mt)
Ag(g/t)
Measured(containedMoz) 67.8 15.4 137
Indicated(containedMoz) 564.5 139.8 126
Inferred(containedMoz) 119.4 45.9 81
(1) Estimatedusingapriceof$12.52/oz ofsilver
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Kootenayoptionagreement
23 February27,2017
• KootenaySilverInc.,apublicly-tradedsilverexplorationcompany,discoveredtwodeposits inSonora:LaNegra andPromontorio
• PanAmericanhasenteredintoanoptionagreementtoearn75%interestintheentirePromontoriomineralbelt,includingLaNegra andPromontorio
• PanAmericancurrentlyownsapproximately10%ofKootenaySilverInc.
• Projectlocated200kmNWofPanAmerican’sAlamoDoradomine
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JoaquinProject(Argentina)
24 February27,2017
• PanAmericanacquired100%ofCoeurMining’s Joaquinproject:
• US$25M(US$15McashandUS$10MinPAASshares)plus a2%NSR
• SynergieswithPanAmerican’sManantial Espejo operation
• Processing capacityavailableatManantial Espejo plant
• Joaquinwithintruckingdistance
• Potentialforfurtherexplorationsuccess
Joaquinislocatedabout145KmfromourManantial Espejomine
Addinghigh-gradesatellitedepositstorealizefurthervalueatManantial EspejoFormoreinformation seethepressreleasedatedJan.17,2017
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StrategicinitiativestosurfacevalueMaverix (1)
• PanAmericanrealizedvalueforassetshiddenwithinitsportfoliothroughsaletoMaverixMetalsInc.(royalties,preciousmetalsstreams)
• Providesadditionalleveragetogoldandsilverprices• Maverix successfulinattractingnewgrowthprospects,suchasrecentacquisitionof
additionalroyaltiesfromGoldFieldsNetherlandsServicesBV• Maverix hasamarketcapofaboutCAD$187Mandisup100%sincetheacquisitionof
PanAmericanassetsclosed(2)
• AsatDec.31,2016,PanAmericanheldapproximately40%ofMaverix (43%fully-diluted)
Milpo Shalipayco JointVenture• PanAmericansold75%ofitssharesinCompania Minera Shalipayco SACtoVotorantim
Metais – Cajamarquilla SAforUS$15Mcashand1%NetSmelterReturn(soldtoMaverix)• PanAmericanreceivesfreecarryofitsremaining25%interesttocommercialproductionin
thislargezincdevelopmentprojectlocatedinPeru
25 February27,2017
(1) SeepressreleasesdatedJuly11,2016andDec.27,2016,availableatwww.sedar.com(2) BasedonMaverix (MMX)openingprice onTSX-VonJuly12,2016ofCAD$0.70/sharecomparedtoclosingprice onFeb.17,2017ofCAD$1.41/share
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WhyinvestinPAASnow
26 February27,2017
1. Strong leveragetosilverprices– acommoditywithdemandforindustrialusesandasa“safe-haven”investment
2. Low-costsilverproducerwithgrowing production overthenext3years
3. Advancedexplorationprojectpipeline– LaNegra,Joaquin
4. Increasingfreecashflowpotentialfollowing completionofexpansionsatLaColoradaandDolores
5. OptionalityofNavidad,oneoftheworld’s largestsilverdeposits
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Appendix
27
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Companyoverview
• Listings:NASDAQ (PAAS)andTSX (PAAS)
• Marketcap:US$3.0B(1)
• Sharesoutstanding: approx.152.3M
• Averagedailyvolumesharestraded:2.1M(1)
• Dividendssince2010- Currentyield0.5%(2)
28 February27,2017
52%46%
2%
Ownership(3)
ReportedInstitutional Impliedretail Insiders
AlldataasofcloseFeb.17,2017(1)BasedonNasdaqexchange(2)Basedonclosingshareprice atFeb.17,2017anddividenddeclared Feb.14,2017,annualized(3)Source:IPREO
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Productionbymine2017Guidance
20%
1%
24%
18%
14%
11%
12%
29 February27,2017
26%
1%
17%
15%
10%
18%
13%
SilverOunces SilverEquivalentOunces
Basedonthemid-point ofproduction estimatesfor2017(Agof24.5M– 26.0Mounces,Auof155,000 - 165,000ounces, Znof56,500tonnes- 58,500 tonnes,Pb of19,000tonnes - 20,000 tonnes, andCuof8,750 tonnes - 9,250tonnes).Silverequivalentounceshavebeencalculatedforgoldandthebasemetalby-products usingthefollowing metalprices:Ag$17.00/oz,Au$1,200/oz, Zn$2,500/tonne, Cu$5,400/tonne,andPb $2,100/tonne.
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Sustainabilityleadership
30 February27,2017
Recognizedasaleaderinsustainabilityintheminingindustry
Plan
• Toolkits• Program
development
Engage
• StakeholderEngagement
• GrievanceMechanisms
Environmental&SocialAudits
SustainabilityReporting
InternalCapacityBuilding
EvaluatePerformanceMetrics
Implement
• Programsandprojectscoveringsustainabilitypillars
SustainabilityReport&Pillars
Education&Health
SustainableDevelopmentPrograms
LocalProcurementDevelopment
Infrastructure&UrbanFootprint
WaterandEnergy
Stewardship
TailingsFacilitySafety
EmergencyResponse
PreparednessMineClosure
Policy
• CSR• Environmental• Healthand
Safety• Governance
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Sustainabilityawards&recognitions
Corporate
• CorporateKnightsrankedPanAmericanSilver36thontheirFuture40ResponsibleCorporateLeadersinCanada.
• ThePeruvian-CanadianChamberofCommerceawardedPanAmericanSilverthe“BusinessoftheYear2015”awardforourcontributionstosustainabledevelopmentthroughourUQLLU/Alpacadelos Andesweavingproject.
Mexico
• AllmineswereawardedwiththeSociallyResponsibleCompany(ESR)AwardpresentedbytheCentroMexicano paralaFilantropía (CEMEFI).
• AllminesmaintainedtheCleanIndustryindependentenvironmentalcertificationbytheMexicanEnvironmentProtectionAgency(PROFEPA).
31 February27,2017
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Viewsonthesilvermarket(1)• RealinterestratesintheU.S.likelytoremainlowin2017,despite expectedmonetarytightening
• USGDPgrowthconstrainedbyhighgovernmentdebt,limitinggovernment’s scopefornewroundoffiscalstimulus
• Europe’s bankingsectorremainsvulnerable
• Inflationarypressures arestartingtobuild
• Industrialdemandrepresentsjustunderhalfofthetotaldemandforsilver• Growingdemandthroughtheuseoftechnology, electronicsandrenewablesourcesofpower• Silverdemandfromthephotovoltaics industry nowrepresents14%ofsilver’s industrial demand,
upfromonly 1%adecadeago.• Emergingmarketeconomies, especiallyinChina, arestabilizing,liftingindustrialcommodity
demand
• Littletonogrowthinsilver supply becausemanyexplorationcompanies havenotbeeninvestinginexplorationandnewprojects
• Silversupply deficitexpectedin2017
32 February27,2017
(1)Sourcesinclude: BloombergMetalsFocusDecember, 2016andGFMS,ThomsonReuters /TheSilverInstitute2016
Factorssupportcontinueddemandforsilverforbothindustrialapplicationsandasasafe-havenasset.
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Q4andFY2016OperatingResultsConsolidated Q42016 FY2016
Silverproduction (million ounces) 6.3 25.4
Goldproduction (thousandounces) 43.9 183.9
Zincproduction (thousand tonnes) 13.2 51.9
Leadproduction (thousand tonnes) 5.5 20.2
Copper production (thousand tonnes) 3.1 14.4
CashCosts(1) ($/ounce) 6.66 6.29
All-in SustainingCosts perSilverOunceSold (AISCSOS) (1) 10.38 10.17
33 February27,2017
(1) CashCostsandAISCSOSarenon-GAAPmeasures;pleaserefertothe“AlternativePerformance (non-GAAP)Measures"sectionofPanAmerican’spressreleasedatedFeb.14,2017formoreinformation.Averageby-product metalprices forQ42016were:Au$1,222/oz, Zn$2,517/tonne, Pb $2,149/tonne, andCu$5,277/tonne. Averageby-productmetalpricesfor2016were:Au$1,251/oz, Zn$2,095/tonne, Pb $1,872/tonne, andCu$4,860/tonne. CashCostsisanon-GAAPmeasure; pleaserefertothe“AlternativePerformance (non-GAAP)Measures"sectionofPanAmerican’s pressreleasedatedFeb.14,2017formoreinformation.
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2016operatingresultsbymine
Mine SilverProduction (millionounces)
GoldProduction (thousand ounces)
CashCosts($/ounce)(1)
LaColorada 5.80 2.93 6.15
Dolores 3.84 102.76 -1.08
AlamoDorado 1.86 8.38 16.02
Huaron 3.81 0.81 5.79
Morococha (92.3%)(2) 2.54 2.14 4.21
SanVicente(95%)(2) 4.43 n/a 11.95
Manantial Espejo 3.14 66.89 4.28
Total(3) 25.42 183.92 6.29
34 February27,2017
(1) CashCostsisanon-GAAPmeasure;pleaserefer tothe“Alternative Performance (non-GAAP)Measures"sectionofPanAmerican’spressreleasedatedFeb.14,2017formoreinformation.
(2) Represents theCompany’spartialownership interest.(3) Totalsmaynotaddupduetorounding.
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2017GuidancebymineMine
SilverProduction (millionounces)
GoldProduction(thousand ounces)
CashCosts($/ounce)(1)
La Colorada 6.4- 6.9 3.3- 3.5 3.35- 3.95
Dolores 4.0- 4.5 109.1- 115.0 1.25- 2.25
AlamoDorado 0.3 1.4- 1.5 18.00- 20.00
Huaron 3.7- 3.8 0.3- 0.4 5.95- 6.95
Morococha (92.3%)(2) 2.5- 2.6 2.9- 3.1 3.15- 4.15
SanVicente (95%)(2) 4.4- 4.5 0.5- 0.6 10.90- 11.90
Manantial Espejo 3.3- 3.4 37.5- 41.0 15.35- 16.25
Total(3) 24.5- 26.0 155.0- 165.0 6.45- 7.45
35 February27,2017
(1)CashCostsisanon-GAAPmeasure;pleaserefertothe“AlternativePerformance (non-GAAP)Measures"sectionofPanAmerican’s pressreleasedatedFeb.14,2017formoreinformation.(2)Reflects PanAmerican’s ownership intheoperation.(3)Totalsmaynotaddupduetorounding.
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Three-yearoutlookConsolidated 2017Guidance 2018Outlook 2019Outlook
Silver production (millionounces) 24.5– 26.0 26.0- 28.0 26.5– 29.5
Gold production (thousand ounces) 155- 165 170- 185 175- 200
Zinc production (thousand tonnes) 56.5- 58.5 59.0- 63.0 55.0- 65.0
Lead production (thousand tonnes) 19.0- 20.0 23.0- 26.0 23.0- 27.0
Copper production (thousand tonnes) 8.75- 9.25 6.00- 8.00 4.00- 4.20
Cash Costs(1)($/ounce) 6.45- 7.45 5.60- 7.10 5.20– 6.80
Sustaining capital ($millions) 82- 88 75- 85 75- 90
Project Capital ($millions) (2) 58- 62 - -
AISCSOS(1) ($/ounce) 11.50- 12.90 10.00- 12.20 9.30- 11.60
36 February27,2017
(1) CashCostsandAISCSOSarenon-GAAPmeasures;pleaserefer tothe“Alternative Performance (non-GAAP)Measures"section ofPanAmerican’spressreleasedatedFeb.14,2017formoreinformation.
(2) Project capitalrelatestothecurrent mineexpansions atLaColorada andDolores;2017isexpectedtobethefinalyearofproject capitalrelated totheseexpansions.
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PanAmericanSilverProvenandProbableReservesatDecember31,2016(1)(2)
Property Location Category Tonnes(Mt)
Agg/t
ContainedAg(Moz)
Aug/t
ContainedAu (000’soz)
Cu%
Pb%
Zn%
Huaron Peru Proven 5.7 169 30.8 N/A 0.37 1.46 3.02Probable 3.8 167 20.6 N/A 0.38 1.62 3.10
Morococha (92.3%) (3) Peru Proven 2.6 173 14.6 N/A 0.58 1.18 3.78Probable 2.2 181 12.8 N/A 0.44 1.64 4.21
La Colorada Mexico Proven 3.7 432 51.3 0.33 39.1 1.72 3.08Probable 4.0 362 46.8 0.32 41.2 1.24 2.06
Dolores Mexico Proven 41.6 27 36.1 0.77 1,034.9Probable 22.5 25 17.9 0.65 472.4
La Bolsa Mexico Proven 9.5 10 3.1 0.67 203.0Probable 6.2 7 1.4 0.57 113.1
Manantial Espejo Argentina Proven 2.2 111 8.0 1.17 84.4Probable 0.5 244 3.8 3.32 52.2
SanVicente(95%)(3) Bolivia Proven 2.0 464 29.4 N/A 0.46 0.39 3.00Probable 0.5 531 9.2 N/A 0.56 0.45 2.52
Total (4) Proven+Probable 107.0 83 285.8 0.70 2,040.3 0.43 1.36 3.06
37 February27,2017
(1) Pricesusedtoestimatemineralreservesfor2016were$18.50perounce ofsilver,$1,300 perounceofgold, $2,200pertonne ofzinc,$2,000 pertonne oflead,and$5,000pertonne ofcopper, except atManantialEspejowhere$17.00perounceofsilverand$1,200perounceofgoldwereusedforplanned2017production, reverting to$18.50perounceofsilverand$1,300perounce ofgoldthereafter.Metalprices usedforLaBolsa were$14.00perounceofsilverand$825perounceofgold.
(2) Mineralreserveestimateswereprepared underthesupervision of,orwerereviewedby,Christopher Emerson, FAusIMM,VicePresidentBusinessDevelopmentandGeologyandMartinG.Wafforn,P.Eng.,SeniorVicePresident Technical ServicesandProcessOptimization, eachofwhomareQualifiedPersonsasthattermisdefinedinNationalInstrument 43-101(“NI43-101).
(3) Thisinformation represents theportion ofmineralreservesattributable toPanAmericanbasedonitsownership interest intheoperatingentityasindicated.(4) Totalsmaynotaddupduetorounding.
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38
AllPanAmericanSilverMeasuredandIndicatedResources(1)(2)
Property Location Category Tonnes (Mt) Agg/t Aug/t Zn% Pb% Cu%Huaron Peru Measured 2.2 165 2.93 1.57 0.27
Indicated 1.7 164 2.99 1.56 0.33Morococha (92.3%) (3) Peru Measured 0.4 161 3.31 1.09 0.25
Indicated 1.1 127 3.26 0.93 0.56La Colorada Mexico Measured 0.5 206 0.31 0.85 0.45
Indicated 2.0 200 0.18 0.63 0.39Dolores Mexico Measured 1.9 13 0.22
Indicated 3.2 24 0.43La Bolsa Mexico Measured 1.4 11 0.90
Indicated 4.5 9 0.50Manantial Espejo Argentina Measured 0.1 125 1.65
Indicated 0.4 207 2.04San Vicente (95%) (3) Bolivia Measured 0.8 202 2.45 0.14 0.30
Indicated 0.1 194 2.30 0.17 0.33Navidad Argentina Measured 15.4 137 1.44 0.10
Indicated 139.8 126 0.79 0.04Pico Machay Argentina Measured 4.7 0.91
Indicated 5.9 0.67Calcatreu Argentina Measured
Indicated 8.0 26 2.63
Total (4) Measured+Indicated 194.0 118 1.11 2.32 0.86 0.06
Notes:(1) Prices used to estimate mineral resources for 2016 were $18.50 per ounce of silver, $1,300 per ounce of gold, $2,200 per tonne of zinc, $2,000 per tonne of lead, and
$5,000 per tonne of copper, except at Dolores and Manantial Espejo, where $25.00 per ounce of silver and $1,400 per ounce of gold were used. Metal prices used for LaBolsa were $14.00 per ounce of silver and $825 per ounce of gold. Metal prices for Navidad were $12.52 per ounce of silver and $1,100 per tonne of lead. Metal pricesused for Calcatreu were $12.50 per ounce of silver and $650 per ounce of gold.
(2) Mineral resource estimates were prepared under the supervision of, or were rev iewed by, Christopher Emerson, FAusIMM, Vice President Business Development andGeology and Martin G. Wafforn, P.Eng., Senior Vice President Technical Servic es and Process Optimization, each of whom areQualified Persons as that term is defin ed inNational Instrument 43-101 (“NI 43-101).
(3) This information represents the portion of mineral resources attributable to Pan American based on its ownership interest in the operating entity as indicated.(4) Totals may not add up due to rounding.
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AllPanAmericanSilverInferredResources(1)(2)
39
Property Location Category Tonnes (Mt) Agg/t Aug/t Zn% Pb% Cu%Huaron Peru Inferred 6.2 164 2.81 1.56 0.34
Morococha (92.3%) (3) Peru Inferred 3.9 214 3.58 1.30 0.29
La Colorada Mexico Inferred 1.8 313 0.35 4.58 2.65
Dolores Mexico Inferred 1.7 37 1.01
La Bolsa Mexico Inferred 13.7 8 0.51
Manantial Espejo Argentina Inferred 0.5 211 2.60
San Vicente (95%) (3) Bolivia Inferred 2.8 330 2.42 0.33 0.28
Navidad Argentina Inferred 45.9 81 0.57 0.02
Pico Machay Argentina Inferred 23.9 0.58
Calcatreu Argentina Inferred 3.4 17 2.06
Total (4) Inferred 103.7 92 0.70 2.83 0.77 0.08
Notes:(1) Prices used to estimate mineral resources for 2016 were $18.50 per ounce of silver, $1,300 per ounce of gold, $2,000 per tonne of lead, $2,200 per tonne of zinc, and
$5,000 per tonne of copper, except at Dolores and Manantial Espejo, where $25.00 per ounce of silver and $1,400 per ounce of gold were used. Metal prices used for LaBolsa were $14.00 per ounce of silver and $825 per ounce of gold. Metal prices for Navidad were $12.52 per ounce of silver and $1,100 per tonne of lead. Metal pricesused for Calcatreu were $12.50 per ounce of silver and $650 per ounce of gold.
(2) Mineral resource estimates were prepared under the supervision of, or were rev iewed by, Christopher Emerson, FAusIMM, Vice President Business Development andGeology and Martin G. Wafforn, P.Eng., Senior Vice President Technical Servic es and Process Optimization, each of whom areQualified Persons as that term is defin ed inNational Instrument 43-101 (“NI 43-101).
(3) This information represents the portion of mineral resources attributable to Pan American based on its ownership interest in the operating entity as indicated.(4) Totals may not add up due to rounding.
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40 February27,2017
Suite1440,625HoweStreet,V6C2T6– Vancouver,BCPanamericansilver.com