Pan American Silver Corp. (NASDAQ:PAAS) Q2 2019 Earnings Conference Call - Final Transcript

Aug 08, 2019 • 11:00 am ET

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Pan American Silver Corp. (NASDAQ:PAAS) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Pan American Silver Second Quarter 2019 Results Conference Call. [Operator Instructions] 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, VP, Investor Relations. Please go ahead.

Executive
Siren Fisekci

Thank you, operator, and welcome everyone to Pan American Silver's second quarter 2019 conference call. We released our results after yesterday's market close, and a copy of the news release and presentation slides for today's call are available on our website.

In a few moments, I will turn the call over to Pan American's President and CEO, Michael Steinmann who will provide a brief review of our results. We will then open up the call to questions and answers. Joining us for the Q&A portion are Pan American's Chief Operating Officer, Steve Busby; Chief Financial Officer, Rob Doyle; Senior VP, Project Development, George Greer; Senior VP, Technical Services & Process Optimization, Martin Wafforn; and VP of Business Development and Geology, Chris Emerson.

I'd like to remind everyone that our news release and certain statements and information in this call constitute forward-looking statements and information. Please review the cautionary statements included in our news release and presentation, as well as the risk factors described in our most recent Form 40-F and annual information form.

Media and other participants on the call are invited to participate in listen-only mode. I will now turn the call over to Michael.

Executive
Michael Steinmann

Thank you, Siren. Welcome everyone joining us today to discuss our results for the second quarter of 2019. Revenue in Q2 2019 was roughly $283 million, up 31% from Q2 2018, driven by higher quantities of metal sold except for copper. This number excludes revenue of $57.5 million from our Timmins mines, which are classified as assets held for sale.

Gold volumes more than doubled quarter-over-quarter reflecting the strong contribution from our new La Arena and Shahuindo mines in Peru, as well as The Bell Creek and Timmins West mines in Canada. Partially offsetting the higher quantity sold were lower metal prices for silver and base compared to Q2 2018, and increased higher direct selling costs due to increased treatment and refining costs for concentrate, and the temporary export tax in Argentina.

Net earnings for the quarter were $18.5 million or $0.09 per share. Adjusted earnings were $9 million or $0.04 per share. The primary adjustments made to earnings where the removal of earnings from the Timmins Mines and removal of NRV adjustments at Dolores. Net cash generated from operations in Q2 was $83.5 million. Strong operational cash flow was more than sufficient to cover our sustaining capital taxes, interests, dividends, and project capital while adding $17 million to our cash and short-term investment balance, which was about $139 million at June 30. Working capital at the end of Q2 was $793 million, which includes $376 million relating to the Timmins Mines.

Total debt was $378.8 million comprised of $43.8 million of these liabilities at $335 million drawn on our