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Pan American Silver's (PAAS) Q4 Silver Production Dips 10%

Pan American Silver PAAS recently announced preliminary production results for the fourth quarter of 2022 and full year. Silver production in the fourth quarter came in at 4.76 million ounces, lower than the 5.3 million ounces reported in the last year’s quarter. Gold production was reported at 164.4 thousand ounces, higher than the 156.7 thousand ounces in the fourth quarter of 2021. The performance was led by strong production at Shahuindo and La Arena.

2022 Production Numbers

Consolidated silver production in 2022 was 18.5 million ounces which marked a 4% decline from the 19.2 million ounces of silver produced in 2021. The figure however came within the company’s last provided guidance range of 18.0 to 18.5 million ounces.

PAAS’s consolidated gold production for 2022 was 552.5 thousand ounces, which also came within the company’s provided range of 550.0 to 605.0 thousand ounces. The figure however was lower than 2021’s gold output of 579.3 thousand ounces.

Consolidated zinc production in 2022 was 38 thousand tons, within the guidance of 35- 40 thousand tons. Lead production was around 18 thousand tons in 2022, above the guidance of 15 - 17 thousand tons. The company produced 5 thousand tons of copper, below the expected range of 5.5 to 6.5 thousand tons.

PAAS’s peer First Majestic Silver Corp. AG also recently announced its production numbers for the fourth quarter of 2022. Production reached 7.6 million silver equivalent ("AgEq") ounces in the fourth quarter of 2022 which consisted of 2.4 million silver ounces and 63,039 gold ounces. On a year-over-year basis, silver production was down 29%, whereas gold production decreased 6.5%. Overall silver equivalent ounces declined 14% year over year in the quarter under review.

First Majestic reported a record annual total production of 31.3 million AgEq ounces for 2022, up 16% from 2021. Annual silver production reached 10.5 million ounces. This compares to 12.8 million ounces in 2021. The output came in below AG’s guidance of 11.2-11.9 million ounces of silver. Annual gold production increased about 29% to a record 248,394 ounces but missed the guidance of 256,000-273,000 ounces.

Update on Yamana Acquisition

On November 8, 2022, Pan American and Agnico Eagle Mines AEM announced an arrangement agreement with Yamana Gold Inc. AUY whereby PAAS would acquire all the issued and outstanding common shares of AUY. Also per the agreement, AUY would sell its Canadian assets, including certain subsidiaries and partnerships which hold interests in the Canadian Malartic mine, to AEM.

This is a transformational and strategic transaction for Pan American which will strengthen its position as the leader in silver and gold production in Latin America. This deal will add long-life, low-cost assets and boost PAAS’ portfolio to 12 operating mines. Its silver production is expected to increase approximately 50% while gold production will double. Considering the strong cash flow generating abilities of these assets, the deal would strengthen PAAS’ financial position.

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