Pan American Silver Corp.

Yeah, perfect. Thanks, Kos. And welcome, everybody. Pleasure to be here and give you a quick intro here. I think most of you obviously know the company. Lots of impressive changes to the company over the last few years. Obviously, first on the M&A side, which I would call very timely M&A activity over the last few years, which obviously allow us now to take advantage of these high metal prices. And you see there our assets that we have and projects. That’s the Q2 numbers there, $1.3 billion of revenue from those assets. They will go for a long time, many of those.

We have a lot of big builds ahead of us, very exciting projects, and I’m sure Rick Kosmos will talk about that. We just updated our reserve, 511 million ounces of silver reserve. It’s the biggest reserve in the world, and it will continue to grow. It does not include yet the incredible discoveries that we made at La Colorada. And I’ll sure have time to talk a bit later about that skarn development of La Colorada, which actually now will become our biggest silver mine, even being ahead of Juanicipio, the 44% project we purchased from MAG Silver last year. And La Colorada, once it’s dusted and done, will produce over 19 million ounces of silver in a long, long period. The first phase of that expansion or new project of the skarn will run for 37 years, and that’s only about half of the current resources that we discovered at that deposit. So really an amazing discovery.

I thought I’d just show a few slides here, and I’m sure everybody’s interested in cost. And I show you here the cost, how they evolved over the years. So you see quarter by quarter there, the gray bars are our silver mines. Remember, we always show silver and gold separate. We don’t use equivalencies. I can’t sell an equivalent ounce of silver. There’s no market for that. So these are pure silver ounces and pure gold ounces. The price we achieved, the average price for a given quarter, and in blue you see the all-in sustaining costs and their net of byproduct credit.

So you will obviously see that on the silver side, there’s a lot of up and downs, and that’s really driven by those byproducts. Silver does not occur on its own. It always comes with byproducts, any kind of gold and base metals you can imagine that we have there. And of course, like Q1, very, very low cost because of the very high metal prices that we all enjoyed in Q1. So that will normalize again. I think our cost will be somewhere in the $17 to $18 range, I guess, for the year.

When you look at the gold side, it’s a clear picture because gold has normally less byproducts. And you see there a slight increase in cost over the last two years and really driven by the worldwide inflation we see right now. Of course, big, big driver is the oil price right now. And you always should keep in mind that although Pan American is an underground operator, we only have really one large open pit, and as a lot is electrified, diesel fuel is only 5% of our production cost. Higher oil price is obviously rolling through everything. Higher oil price will impact every and any cost we see. So the total increase is way more than just an increase on that 5%. And we all see that when we go out and do our shopping or do our businesses, and that’s what you see.

But overall, still a very, very well-controlled cost increases here. This is not looking like 2010, if you now remember that big cost inflation we had in the mining space. This is well managed, obviously, because there’s a lot of goods and services available now in the mining space, and that’s the reason why we all enjoy these huge margins.

What do we do with these margins? Well, we sit on incredible strong balance sheet. We have about $1.8 billion in cash. We have about $3.5 billion of liquidity available to us, and we still generate obviously a lot of free cash flow. And we decided this year to return 35% to 40% of that free cash flow. When we announced that was equivalent to about a billion dollars, to shareholders, that will still leave us well sufficient money to build the big expansions at La Colorada and expansions at other projects.

So we see there historically, we paid dividends since 2010, but share buybacks have been few and far apart there. And now there’s actually enough cash available to really make a difference to our share count. And we decided to fix our dividend at $305 million as a fixed number per year. And when we buy back shares, your dividend will increase every quarter a little bit because there’s less shares outstanding. And then put about the other around $700 million into share buybacks. And we’re well on track with that program to go through this for the year. So great return to shareholders from all those big cash flows.

And then there’s a lot of upside, and I’m sure Kos we can talk about a few of them. Obviously La Colorada being the biggest one, Chaco being our biggest cash flow right now with a very exciting long-term project. Timmins also very, very exciting what we see there, what’s coming. And of course, Juanicipio that we purchased at 44% last year, which is doing exceedingly well. And I think with that overview, I come over, Kos, and we can go through some Q&A.

Great. Thanks, Michael. You touched on a number of very good points here, but let’s take a step back. As you mentioned, the first half, strong production performance. But if I look at your portfolio, which operations were you pleased with in terms of first half performance? And which assets can we expect improvement into Q3 and Q4?

Yeah, look, I’m pretty much on track, so I’m pleased with the whole progress for the first six months. It’s just our production is not evenly distributed through the year, right? Our production is always back-end loaded. The biggest reason is really difference between dry seasons and rainy seasons with some of our, the Sarhuindo mine in Peru. So Q4 is always our biggest production quarter that will be no difference this year. So when you look at that, that obviously has impacts to cost. The cost will be lower in Q4 because we produce more ounces, et cetera. So when you look quarter to quarter, there’s quite a bit of difference. And actually, we try to help you as an analyst and help the shareholders and show kind of ideas how these quarters look like so that people don’t just divide them because they are so different year into year.

But look, I’m very happy how the first six months evolved here. Cost side looked really good. Silver side right on track. A bit harder sometimes on the gold side. We got a bit harder hit on some of the mines with the weather, starting in Chile. You all saw that the impact to some of the copper producers, obviously same to us. That El Niño event will now move up further north and will get closer to Sarhuindo or Huaron in Peru. Normally hits Peru right in November or December, so we’ll see what the impact will be for that. But so far so good, yeah.

Great. That’s great to hear. And then, Michael, ahead of the Mining Forum Americas, early in September, you actually released your updated reserves and mineral resources as of June 30, 2026, pointing to substantial silver and gold reserves in terms of inventory, 511 million ounces of silver, 6.3 million ounces of gold. Can you remind us some of the key highlights, such as the discovery of the four new veins at La Colorada?

Yeah, sure. And look, more than replacement again of all the silver production. This is now going on for nearly 20 years. It’s not every year exactly a full replacement, but most. I think when you look at the 20 year, we replace probably around 85% of what we produce. And our replacement cost is $1.11 if you divide what it costs us to find those ounces. Of course, there’s no way that I can purchase an ounce of silver for $1.11. Never has been probably in the past neither. Brownfield exploration success is the best value driver you can have.

And obviously the biggest one and most exciting one is La Colorada. I joined Pan American in 2004. La Colorada was a very small mine and a very small reserve. And when you fast-forward, still a big reserve on the structures, on the veins that we’re mining right now. But La Colorada is producing right now six million ounces. But the big discovery of the skarn, which sits right below the veins, at the moment we have about 450 million tons. By the way, that’s not in the reserve, it’s in the resource at the moment. We just showed an updated PEA increasing the production at La Colorada from currently about 2,200 tons to 15,000 tons a day.

And La Colorada will be producing somewhere between 19 and 20 million ounces of silver for a very long time. I mentioned that before. The first phase of that expansion will run for 37 years. There’s a lot of more upside. We keep finding more veins. We keep finding more skarn ore bodies. Of course, this is gonna go way beyond my lifetime, and I’m really excited about that discovery. And again, we didn’t have to buy this discovery. We have far enough cash to build this with cash on hand. So definitely when you replace your reserve or make discoveries like that, the value generation is unmatched.

And that segues well into my next question on La Colorada skarn. And you forgot to mention that it is gonna have a mine life of at least 30 years, so it’s not gonna be beyond your lifetime, Michael. [laughs] You’ll be fine. But based on the PEA, could you maybe touch on some of the priorities for the remainder of the year, in terms of developing the 588 level access to the skarn or anything else that you wanna touch on?

Right. And obviously for sure beyond my lifetime as CEO. [laughs] If you look at, with the development pipeline and everything, we’re looking about 41 years here for phase one. I’m sure somebody will over time build this even bigger. I have no doubt there is so much optionality on that. But that’s what we locked in in the PEA. It’s about a $2 billion capital spend over the next four and a half to five years. Easy to do with our cash generation. We probably, if everything stays the same, we not even need to tap into our cash holding on the balance sheet to do this.

The board approved the first part of that, which is about a 12-kilometer underground development starting at the bottom of our current mine. It’s a big ramp, six-by-six-and-a-half meter ramp for that big production. It will go all the way down to the bottom of the, or close to the bottom of the scan and then go over to the east where it will connect with two big shafts that we’re gonna approve later this year and then start building next year. They’re about eight-meter diameter, conventional sunk, fully concrete-lined shafts. One is for ventilation and one will be for production. Those are the longest lead items for this development. That’s why we wanted to start right away. The new tailings impoundment and the bigger plant can be built later on, obviously, be ready for production somewhere in 2030 to ’31.

So crazy incredible project, depending what metal price, of course, you use. But IRR somewhere between 17% and 25%. As we all know, this long lead and very long dated projects are kind of tough to get a big IRR. So having that kind of number and return on a project like that is pretty amazing. MPV somewhere between three and five and a half or $6 billion on this project here. And as I said, capital around $2 billion, so well in our means to build, but definitely the biggest project that we ever built. So really exciting project and, as I said, really excited to see. We’ll release more exploration results later this year, but we have about 18 drill rigs still going at La Colorada and new discoveries just keep coming in.

Great. Maybe switching gears a little bit, Michael. I think one operation that does not get the attention that it deserves is the Timmins operations. You did bring it up in your slides. Can we maybe talk a bit more about the Timmins operations? In June, you had highlighted key exploration results that supported an expansion plan. So could you remind investors what’s the value proposition here?

Right. And obviously, there’s two things, but higher metal price of course helped here and Timmins, as it is a big, big underground operation, quite deep. We decided to extend the shaft in Bell Creek. We approved that project a few weeks ago, and that will obviously continue the production at Timmins here for quite a bit longer. When we actually purchased this as part of Tau, Timmins came to us. We kind of assumed that it will be mined out and done pretty much about 2025 or 2026. So it should be done by now. We didn’t show yet the final PA. It will come out in the first six months of next year. But we showed actually an idea how this is actually moving forward with all the additional satellites that we discovered and how we integrate them in the Timmins operation. Bringing this now to a mine that will run way into the mid-2040s or more. So that’s another 20 years life at least.

And there is a plan obviously over that time to increase gold production as well. So I have to be a bit more patient to get all the details on the capital side and how the cost structure will look at and the production profile for the gold. I’m very excited to have a Canadian platform really. All the rest of our operations are in Latin America, which I’m very familiar and very happy to have too, but I’m also excited to have a Canadian platform here that is to extend life and is to grow. So good to have.

Another 20 years. That’s again beyond your lifetime as CEO or maybe not. [laughs] Luckily... With all these long mine lives... if I retire at the same time, then luckily not. [laughs]

Maybe talk about Juanicipio. In hindsight, you made that acquisition at a very good time. And since then, year to date at least, you’ve realized silver grades that are higher than reserve, even beyond Fresnillo’s guidance in terms of grade profile. Maybe talk about Juanicipio a little bit. Maybe also touch on the exploration program that... Sure... the joint venture partnership has put in place in terms of upside potential at Juanicipio.

Yeah. Look, this was last year was new to us, and we had some discussions about that. And look, we’re very happy obviously to be in a joint venture here with Fresnillo. I think there was a lot of questions a year of when we did the deal or two years ago about that. I think by now probably everybody’s very comfortable. I’m very comfortable. I’m pretty sure Fresnillo is very comfortable with it. A great operation. The newest operation Fresnillo has, very well-run. We own 44%. That came to the purchase of MAG Silver that we did. And as you said, very, very timely. I think silver just hit about $30 or so when we did that transaction and started running right just when we closed the transaction.

The grade has been quite a bit higher. You know what happened? This is the same district in La Colorada, right? As the crow flies, that’s about 60 kilometers away. Geology is very similar, just no scan yet discovered below, but the veins are very similar. Obviously, for the geologists in the room, there’s a clear zonification, with precious metals higher up going into lead, zinc, and copper deeper down. So when you mine deeper down, that’s the same at La Colorada, it’s the same at Juanicipio. You get into higher base metal and lower silver grades. And the same will happen obviously when we keep going deeper at Juanicipio.

So while we have a positive kind of reconciliation when we look right now, and I would expect that to continue. But the grade itself will come down, and we will get into more base metal. So don’t account. And obviously, you can look at the PA where this is going or, sorry, at the feasibility of Juanicipio. Those grades are coming up and the zinc and lead grades are increasing. How do you keep the silver production up? Well, the same than at La Colorada. You do a lot of exploration, you find additional structures which we already know are there. And you start mining them a bit higher at the surface again, and you are starting higher silver grades again. And with that mix, you keep that silver grade and the silver production very stable. We do that at La Colorada now for over 25 years.

So for that, you need to do a lot of exploration obviously, and this year we more than doubled the exploration program between Fresnillo and ourselves. Of course, there’s no financial limitations to do that. And I would be happy to increase it significantly again next year and replace the reserves as well there. Some of the drilling was a bit deeper, so it was replaced with a bit more base metal rich ore as well, but some very exciting veins that are parallel to the main structure. So the geology is very clear. I think it’s just a matter of drilling more holes and then developing those higher grade silver structures on the top. So I don’t see a big challenge here on the geology. It’s very similar to what we’re working in already for many decades.

Great. Thanks, Michael. I think that’s all the time we have, but certainly a very exciting story here at Pan American Silver. We can certainly see how Pan American Silver stands out in a group of silver producers. So thanks a lot... Thanks. Thank you very much, Matt... again, Michael.