Pan American Silver Announces its Unaudited Fourth Quarter and Full Year 2014 Financial Results

The Company declares the first dividend of 2015 in the amount of $0.125

(All amounts in US$ unless otherwise stated. Approximate production figures.)

VANCOUVER, Feb. 19, 2015 /CNW/ - Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) (the "Company", or "Pan American"), today reported unaudited financial results for the quarter and year ended December 31, 2014 to accompany production figures already reported for the same period on January 19, 2015.  

The Company also announced today that its Board of Directors has approved its first quarterly cash dividend of 2015 in the amount of $0.125 per common share. Should the Company's Board of Directors continue to approve future quarterly dividends in the same amount, the annual cash dividend paid by Pan American would be $0.50 per common share, which represents a yield of approximately 4.4% based on the Company's closing share price on NASDAQ on February 18, 2015. The cash dividend will be payable on or about Friday, March 13, 2015 to holders of record of common shares as of the close of Monday, March 2, 2015. Specific distribution dates and amounts of future dividends will be determined by the Board of Director on an ongoing basis. Pan American's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada).

Commenting on the Company's fourth quarter and full-year 2014 results, Geoff Burns, President & CEO said, "The price of silver on December 31st, 2014 was $15.97 per ounce and in concert with a strengthening US Dollar required us to record significant asset impairment charges, negative net realizable value adjustments, negative concentrate pricing adjustments and a significant foreign exchange loss on our Canadian Dollar and Mexican Pesos holdings. Together, these items have overshadowed what was a very respectable fourth quarter operating performance from both a production and cost perspective." Burns continued, "In 2014 we achieved annual records for silver and gold production and we did this below our guidance for cash costs. Our AISCSOS were as forecasted and we generated net cash from operating activities of $124.2 million or $0.82 per common share, while returning an industry-leading dividend to our shareholders. We have maintained the strength of our balance sheet and I look forward to 2015 where we expect similar silver production, higher gold production and a marked reduction in our AISCOS."

Financial Results   

During the fourth quarter of 2014, Pan American generated $163.1 million in revenue, 15% less than in the same period of 2013, driven by lower volumes of metal sold and reduced metal prices. At the end of the current quarter the Company decided to defer the sale of approximately 7,000 ounces of gold and 150,000 ounces of silver produced at Manantial Espejo mine until the first quarter of 2015.  While this negatively impacted fourth quarter revenues and operating cash flows, the Company did receive approximately $0.8 million of additional revenue when this production was sold. The Company's revenue for the full year 2014 was $751.9 million, 9% lower than in 2013. Lower revenues for the year ended December 31, 2014 were mainly due to significantly lower realized precious metal prices, partly offset by greater quantities of gold and base metals sold. In 2014, silver sales volumes remained consistent with the prior year and gold sales volumes increased significantly; however, the average realized price of silver declined 20% to $18.53 per ounce and the average realized price of gold declined 9% to $1,268 per ounce. During the same period, the average realized price of copper declined 6% to $6,825 per tonne and the average price of lead declined 3% to $2,085 per tonne. Zinc was the only exception to the downward trend as the metal's average price appreciated during the year to $2,160 per tonne.

Pan American incurred a net loss of $525.7 million during the fourth quarter of 2014, or a loss per share of $(3.48), compared to a net loss of $293.1 million during the fourth quarter of 2013 (loss per share of $1.94). The loss was primarily due to impairment charges that totaled $498.7 million after-tax.

The decrease in metal prices that occurred in the second half of 2014, led the Company to lower the silver and gold prices used to estimate reserves, as well as the prices used in the discounted life of mine cash flow models, which were utilized to test for asset impairment. The Company assumed long term silver and gold prices of $18.50 and $1,250 per ounce, respectively, substantially lower than the prices used at the end of 2013.

As a consequence, the Company recognized impairments on several of its assets. The largest impairment was on the Navidad property, where lower prices and a relatively high discount rate combined to significantly reduce the Company's carrying value of this asset.

The total impairment charges incurred at December 31, 2014 were as follows:

The financial results for the fourth quarter of 2014 were also impacted by negative sales adjustments to previously reported provisional sales of $4.4 million, by foreign exchange losses of $4.5 million on holding Canadian Dollars and Mexican Pesos and by net realizable value adjustments of $2.2 million.

For the full year 2014, Pan American generated a net loss of $544.8 million, compared to a net loss of $445.8 million generated in 2013. The 2014 loss was directly attributable to the previously described impairment charges, in addition to $30.0 million of negative net realizable value adjustments and foreign exchange losses of $13.3 million.

Adjusting for the impairments and other non-cash, unrealized items, Pan American generated an adjusted loss of $21.2 million, or $(0.14) per share in the fourth quarter and an adjusted loss of $20.8 million or $(0.14) per share for the full-year of 2014.

Pan American posted $0.8 million in net cash generated from operating activities during the last quarter of 2014, compared to net cash of $46.2 million generated during the final quarter of 2013. However, net cash generated from operating activities for the full year 2014 rose slightly to $124.2 million, compared to $119.6 million generated in 2013, as lower cash operating margins were more than offset by lower income taxes paid and working capital movements.

At December 31, 2014, Pan American had $330.4 million in cash and short term investments and working capital of $522.7 million, with total debt of $60.4 million, including capital leases of $8.0 million.

Production and Operations

During the fourth quarter of 2014, Pan American's mines performed within management's expectations and produced 6.75 million ounces of silver and 43,900 ounces of gold.

The Company also produced 10,200 tonnes of zinc, 3,900 tonnes of lead and a record 3,000 tonnes of copper on account of quarterly record zinc and lead production at La Colorada and quarterly record copper production at both Huaron and Morococha.

Consolidated silver production for the full year 2014 was a record 26.11 million ounces, slightly higher than 2013 silver production and well within management's expectations. The new record was achieved due to production gains at La Colorada, Manantial Espejo, Dolores and Huaron and despite the expected decline of silver production at Alamo Dorado.

As anticipated, Pan American also achieved record consolidated gold production of 161,500 ounces in 2014, 8% greater than 2013 gold production, as a result of more ounces produced at Dolores and Manantial Espejo.

In addition, Pan American's 2014 full year base metals production rose significantly. Consolidated zinc production rose 3% from 2013 to 43,500 tonnes, primarily on account of higher production at La Colorada. Consolidated lead production increased 11% compared to 2013 to 15,000 tonnes, with higher production achieved at La Colorada and Morococha, partially offset by lower production at San Vicente. Consolidated copper production rose to a record 9,000 tonnes, 62% greater than in 2013, due to significant production increases at Huaron and Morococha. 

Mexico

During the quarter ended December 31, 2014, silver production at La Colorada was a record 1.29 million ounces, slightly more than silver produced in the fourth quarter of 2013, mainly due to record throughput and higher grades. La Colorada also produced a record 2,200 tonnes of zinc and 1,000 tonnes of lead during the quarter, 18% and 17% greater than during the fourth quarter of 2013, respectively. The production gains were achieved due to record zinc grades and zinc and lead recoveries, further enhanced by higher quantities of sulfide ore mined.

At Dolores, higher throughput pushed silver production to 0.95 million ounces, 3% more than in the last quarter of 2013, while gold production rose 15% to 18,000 ounces due to higher throughput and higher grades, which were partially offset by lower recoveries.

As anticipated, Alamo Dorado's silver production declined 31% from the fourth quarter of 2013 to 0.87 million ounces as a result of treating greater amounts of low-grade stockpiled ore as the open pit mine reaches its final stages.

For the full year 2014, the Company produced 12.43 million silver ounces in Mexico. With its new annual production record, La Colorada has become the Company's largest silver producer at 4.98 million ounces, followed by Dolores with 3.98 million ounces of silver produced. Increased silver production at La Colorada was due to higher throughput of higher-grade sulfide ores mined using the additional equipment that has been acquired as part of the mine's expansion project. Increased sulfide ore throughput also had a positive effect on base metal grades and recoveries, yielding records in annual zinc production of 7,700 tonnes and lead production of 3,700 tonnes, 14% and 12% greater than 2013 production, respectively. 

Dolores' 2014 production of 3.98 million ounces of silver and 66,800 ounces of gold benefited from the commissioning in late 2013 of the new leach pad 3. This provided unconstrained crushing output and increased leaching surface during 2014 and resulted in higher silver recoveries.  

As expected, Alamo Dorado's annual silver production declined 32% from 2013 to 3.47 million ounces, primarily due to the expected processing of lower grade ores and lower metal recoveries.

Peru

During the fourth quarter of 2014, the Company's Peruvian mines produced a total of 1.55 million ounces of silver, practically flat year-on-year. At Huaron, silver production increased 8% from the fourth quarter of 2013 to 0.95 million ounces primarily due to increased throughputs.

In 2014, Huaron's silver production rose 10% from the previous year to a record 3.63 million ounces due to increased throughput as a result of a multi-year mine mechanization effort. The mechanization efforts at the mine focused largely on high-grade copper ore zones that lead to a 73% increase in copper production to a record 5,900 tonnes, along with a 3% increase in lead production to a record 6,000 tonnes, and zinc production of 14,200 tonnes, similar to 2013 production.

Morococha's silver production during the fourth quarter of 2014 fell 6% from the last quarter of 2013, as a result of lower grades and recoveries, partially offset by increased throughput rates.

Morococha produced 2.37 million ounces of silver in 2014, slightly less than in 2013, largely due to mine sequencing into higher-grade lead and copper ores. This resulted in a 26% increase in lead production to 4,700 tonnes, a 52% increase in copper production to a record 3,100 tonnes and a 4% increase in zinc production to 15,800 tonnes in comparison to 2013 production.

Bolivia

During the quarter ended December 31, 2014, San Vicente's silver production rose 18% from the same quarter of 2013 to a record 1.17 million ounces, as a result of increased throughputs, higher grades and increased recoveries. In contrast, zinc and lead production fell 13% and 5%, respectively, primarily due to lower grades driven by mine sequencing.

For the full year 2014, San Vicente produced 3.95 million ounces of silver, similar to 2013's production, along with a 6% reduction in zinc production to 5,800 tonnes and an 11% reduction in lead production to 500 tonnes due to mine sequencing. 

Argentina

Silver production at Manantial Espejo rose 5% during the fourth quarter of 2014, to 0.91 million ounces. The production increase was achieved due to higher throughput as a result of successful debottlenecking, partially offset by lower grades. Quarterly gold production fell 20% from the fourth quarter of 2013 due to lower grades, partially offset by higher throughput.

For the full year 2014, Manantial Espejo's silver production rose 19% from 2013 to 3.72 million ounces and gold production rose 16% to 70,500 ounces due to record mill throughput.

Cash Costs and All-in Sustaining Costs Per Silver Ounce Sold

Pan American's consolidated cash costs for the fourth quarter of 2014 were $11.92 per silver ounce, net of by-product credits and consolidated cash costs for the full year 2014 were $11.46 per silver ounce, net of by-product credits. This compares to adjusted cash costs of $9.85 per ounce of silver during the fourth quarter of 2013 and $10.96 per ounce of silver, net of by-product credits for the full year 2013. Previously reported cash costs for the Company's Peruvian operations overstated copper by-product credits and both consolidated annual cash costs for 2014 and 2013, and fourth quarter 2013 cash costs have been adjusted to correct for this overstatement. Please refer to Note 6 under the table "Financial and Operating Highlights" attached to this news release for further details.

As expected, cash costs during the fourth quarter of 2014 rose primarily on reduced grades at Alamo Dorado, lower gold production at Manantial Espejo and lower by-product credits due to lower by-product prices except for zinc. Consolidated cash costs for the full year 2014 of $11.46 per silver ounce, were well below management's full year 2014 guidance of $11.80 to $12.80 per ounce, net of by-product credits, on account of better than expected performances at La Colorada, Huaron and Morococha, partly offset by slightly higher than expected cash costs at San Vicente and Manantial Espejo.

AISCSOS for the quarter and year-ended December 31, 2014 were $18.62 and $17.88, respectively, compared to $16.72 and $17.91 per ounce in the respective periods of 2013. AISCSOS for 2014 remained similar to 2013 as lower sustaining capital and exploration expense were offset by higher cash cost of sales, net of by-product credits.

AISCSOS and cash costs are non-GAAP measures. Please refer to Notes 4 and 5 under the table "Financial and Operating Highlights" attached to this news release for further discussion of these measures.

Sustaining and Project Capital

In 2014, Pan American spent $99.1 million in sustaining capital at its seven mining operations. At La Colorada, the Company spent $13.5 million, primarily on a tailings dam raise, mine ventilation and infrastructure, and mine site exploration.

At Dolores, the Company spent $27.6 million, mainly on open pit pre-stripping, mine site exploration, access roads and camp upgrades, and on mining equipment replacements.

At Huaron, Pan American spent $17.3 million to upgrade the underground 250-level primary drainage and haulage level, to upgrade the shaft loading pockets, mine site exploration and on a tailings dam raise.

At Morococha, the Company spent $10.2 million mainly on mine development and infrastructure, mine site exploration, plant upgrades and equipment overhauls.

At San Vicente, the Company spent $3.4 million primarily on mine infrastructure, equipment overhauls and mine site exploration.

Finally, at Manantial Espejo, Pan American spent $26.7 million primarily for open pit pre-stripping as well as a tailings dam expansion and mine site exploration.

In terms of project capital, Pan American invested $17.3 million on the La Colorada expansion of which $5.6 million were used to purchase new underground mobile mining equipment and to advance project-related underground mine lateral development. $5.1 million were spent on engineering work and equipment purchases for the plant expansion, $3.4 million were spent on new community infrastructure, $1.5 million were spent on procurement of the new production hoist, $0.9 million were used in camp expansions and expanded site infrastructure, and the remainder was required to fund indirect costs.

The Company also invested $17.3 million on completing the second phase of Dolores' pad 3 expansion. Approximately $2.0 million remain for the installation of a lime silo and conveyor belt, which has been carried over into 2015. In addition, $1.4 million were spent on advancing the new power line design and right-of-way acquisitions, and another $1.0 million were spent on advancing engineering on the pulp agglomeration and underground Preliminary Economic Assessment that was disclosed in August 2014.

2015 Outlook

As announced on January 19, 2015, Pan American expects to maintain current production levels of between 25.50 and 26.50 million ounces of silver at cash costs of between $10.80 and $11.80 per ounce of silver, net of by-product credits. In addition, higher gold grades at Dolores are expected to contribute to an increase in consolidated gold production to between 165,000 and 175,000 ounces, (between 2% and 8% higher than in 2014).

The Company's consolidated 2015 base metals production is expected to total 41,000 to 43,000 tonnes of zinc, 14,500 to 15,000 tonnes of lead and 8,000 to 8,500 tonnes of copper.

Pan American also expects to spend between $71 to $84 million on sustaining capital in 2015, while investing $98 to $109 million in long term projects, primarily for the expansion project at La Colorada.

Perhaps most importantly, consolidated AISCSOS are expected to decline from $17.88 in 2014 to between $15.50 and $16.50, net of by-product credits in 2015, mainly on lower sustaining capital expenditures and due to the above-mentioned decline in silver cash costs. The Company's AISCSOS guidance for 2015 is based on assumptions of exploration expenses increasing to $16.50 million, while G&A costs and reclamation cost accretion are expected to remain steady at $17.50 million and $3.00 million, respectively. For the purposes of providing AISCSOS guidance for 2015, we have assumed that payable silver sold in 2015 will be between 24.10 million and 25.10 million ounces.

About Pan American

Pan American Silver's mission is to be the world's pre-eminent silver producer, with a reputation for excellence in discovery, engineering, innovation and sustainable development. The Company has seven operating mines in Mexico, Peru, Argentina and Bolivia. Pan American also owns several development projects in the USA, Mexico, Peru and Argentina.

Technical information contained in this news release with respect to Pan American has been reviewed by Michael Steinmann, P.Geo., Executive VP Corporate Development & Geology, and Martin Wafforn, P.Eng., VP Technical Services, who are the Company's Qualified Persons for the purposes of NI 43-101.

Pan American will host a conference call to discuss these results on Thursday, February 19, 2015 at 1:00 pm EST (10:00 am PST). To participate in the conference, please dial toll number 1-604-638-5340.

NON-GAAP MEASURE – CASH COSTS PER PAYABLE OUNCE, NET OF BY-PRODUCT CREDITS

THIS NEWS RELEASE PRESENTS INFORMATION ABOUT OUR CASH COSTS OF A PAYABLE OUNCE OF SILVER FOR OUR OPERATING MINES. CASH COSTS PER PAYABLE OUNCE PRODUCED, NET OF BY-PRODUCT CREDITS IS CALCULATED AS FOLLOWS:

• EXCEPT AS OTHERWISE NOTED, CASH COSTS PER PAYABLE OUNCE PRODUCED IS CALCULATED BY DIVIDING TOTAL CASH COSTS, NET OF BY-PRODUCT CREDITS BY TOTAL PAYABLE SILVER OUNCES PRODUCED AT THE RELEVANT MINE OR MINES. 
  
  
• TOTAL CASH COSTS INCLUDE MINE OPERATING COSTS SUCH AS MINING, PROCESSING, ADMINISTRATION, ROYALTIES AND OPERATING TAXES, BUT EXCLUDE AMORTIZATION, RECLAMATION COSTS, FINANCING COSTS AND CAPITAL DEVELOPMENT AND EXPLORATION.  CERTAIN AMOUNTS OF STOCK-BASED COMPENSATION ARE EXCLUDED AS WELL. 

CASH COST PER PAYABLE OUNCE OF SILVER PRODUCED, NET OF BY-PRODUCT CREDITS IS INCLUDED IN THIS NEWS RELEASE BECAUSE CERTAIN INVESTORS USE THIS INFORMATION TO ASSESS OUR PERFORMANCE AND ALSO TO DETERMINE OUR ABILITY TO GENERATE CASH FLOW FOR USE IN INVESTING AND OTHER ACTIVITIES. THE INCLUSION OF CASH COSTS PER PAYABLE OUNCE PRODUCED MAY ENABLE INVESTORS TO BETTER UNDERSTAND YEAR-OVER-YEAR CHANGES IN OUR PRODUCTION COSTS, WHICH IN TURN AFFECT PROFITABILITY AND CASH FLOW. CASH COSTS PER PAYABLE OUNCE, NET OF BY-PRODUCT CREDITS DOES NOT HAVE A STANDARDIZED MEANING OR A CONSISTENT BASIS OF CALCULATION PRESCRIBED BY CANADIAN ACCOUNTING STANDARDS. INVESTORS ARE CAUTIONED THAT CASH COSTS PER PAYABLE OUNCE PRODUCED, NET OF BY-PRODUCT CREDITS SHOULD NOT BE CONSIDERED IN ISOLATION OR CONSTRUED AS A SUBSTITUTE TO COSTS DETERMINED IN ACCORDANCE WITH CANADIAN ACCOUNTING STANDARDS AS PRESCRIBED UNDER IFRS AS AN INDICATOR OF PERFORMANCE. OUR METHOD OF CALCULATING CASH COSTS PER PAYABLE OUNCE PRODUCED, NET OF BY-PRODUCT CREDITS MAY DIFFER FROM THE METHODS USED BY OTHER ENTITIES AND, ACCORDINGLY, OUR CASH COSTS PER PAYABLE OUNCE PRODUCED MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURED USED BY OTHER ENTITIES.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN OF THE STATEMENTS AND INFORMATION IN THIS NEWS RELEASE 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 NEWS RELEASE RELATE TO, AMONG OTHER THINGS: OUR FORECAST PRODUCTION OF SILVER, GOLD AND OTHER METALS IN 2015; OUR ESTIMATED CASH COSTS PER OUNCE OF SILVER IN 2014 AND FORECAST CASH COSTS PER OUNCE OF SILVER IN 2015; OUR ESTIMATED AISCSOS FOR 2015; OUR ANTICIPATED CAPITAL INVESTMENTS FOR 2015; THE ABILITY OF THE COMPANY TO SUCCESSFULLY COMPLETE ANY CAPITAL INVESTMENT PROGRAMS AND PROJECTS AND THE IMPACTS OF ANY SUCH PROGRAMS AND PROJECTS ON THE COMPANY;  AND ANY ANTICIPATED LEVEL OF FINANCIAL AND OPERATIONAL SUCCESS IN 2015.

THESE STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE NECESSARILY BASED UPON A NUMBER OF ASSUMPTIONS THAT, WHILE CONSIDERED REASONABLE BY THE COMPANY, ARE INHERENTLY SUBJECT TO SIGNIFICANT OPERATIONAL, BUSINESS, ECONOMIC AND REGULATORY UNCERTAINTIES AND CONTINGENCIES.  THESE ASSUMPTIONS INCLUDE: TONNAGE OF ORE TO BE MINED AND PROCESSED; ORE GRADES AND RECOVERIES; PRICES FOR SILVER, GOLD AND BASE METALS; 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 IN OR INTERRUPTIONS IN SCHEDULED PRODUCTION; ALL NECESSARY PERMITS, LICENCES AND REGULATORY APPROVALS FOR OUR OPERATIONS ARE RECEIVED IN A TIMELY MANNER; AND OUR ABILITY TO COMPLY WITH ENVIRONMENTAL, HEALTH AND SAFETY 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 NEWS RELEASE 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 METALS PRICES; FLUCTUATIONS IN PRICES FOR ENERGY INPUTS, LABOUR, MATERIALS, SUPPLIES AND SERVICES (INCLUDING TRANSPORTATION); FLUCTUATIONS IN CURRENCY MARKETS (SUCH AS THE CANADIAN DOLLAR, PERUVIAN SOL, MEXICAN PESO AND BOLIVIAN BOLIVIANO VERSUS THE U.S. DOLLAR); OPERATIONAL RISKS AND HAZARDS INHERENT WITH THE BUSINESS OF MINING (INCLUDING ENVIRONMENTAL ACCIDENTS AND HAZARDS, INDUSTRIAL ACCIDENTS, EQUIPMENT BREAKDOWN, UNUSUAL OR UNEXPECTED GEOLOGICAL OR STRUCTURAL FORMATIONS, CAVE-INS, FLOODING AND SEVERE WEATHER); 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, LOCAL COMMUNITIES AND INDIGENOUS POPULATIONS; OUR ABILITY TO OBTAIN ALL NECESSARY PERMITS, LICENSES AND REGULATORY APPROVALS IN A TIMELY MANNER;CHANGES IN LAWS, REGULATIONS AND GOVERNMENT PRACTICES IN THE JURISDICTIONS WHERE WE OPERATE, INCLUDING ENVIRONMENTAL, EXPORT AND IMPORT LAWS AND REGULATIONS; DIMINISHING QUANTITIES OR GRADES OF MINERAL RESERVES AS PROPERTIES ARE MINED; INCREASED COMPETITION IN THE MINING INDUSTRY FOR EQUIPMENT AND QUALIFIED PERSONNEL; 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. ALTHOUGH THE COMPANY 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 AND 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, NOR DOES IT ASSUME ANY OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS AND INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, CHANGES IN ASSUMPTIONS, FUTURE EVENTS OR OTHERWISE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE LAW.