Pan American Silver Corp. (NASDAQ:PAAS) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 11:00 am ET

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Pan American Silver Corp. (NASDAQ:PAAS) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Chris Terry of Deutsche Bank. Please go ahead.

Analyst
Chris Terry

Hi, Michael. How's it going? Well, a few questions from me. Just wanted to start on the balance sheet. You're obviously in a really strong position after that quarter, particularly with the asset sales. So just wondered if you could talk through how you plan to allocate some of the capital, maybe in the context of dividends. Thank you.

Executive
Michael Steinmann

Well. Good morning, Chris. Look really nothing has changed in our capital allocation plan here. As I always said, number one is always our balance sheet. It's very dearly important to us. So we will keep aggressively paying back debt. I'm sure you've seen that we obviously paid back the $80 million that we took from our line of credit at the very beginning of the pandemic as a precautionary matter. We did not need their money. We also paid back an additional $60 million during the quarter on the line of credit. And actually, we're able to pay already another $40 million on our line of credit after the quarter here, just last week or early this week. So our draw on the line of credit is down, right now, as of today, to $160 million. And we will continue to focus on that over the next months and quarters, for sure.

Number two, always important to us are high-quality accretive projects. We have a few in our portfolio. I'm sure you saw incredible resource update on our discovery at La Colorada with over 100 million tons now in our skarn polymetallic discovery there. So high-quality projects that will require capital. That's where we assign the second bucket on -- from our free cash and capital available to us.

And then number three, as you mentioned, is dividend. And if you look at it, we increased the dividend actually just at the beginning of the year. We actually did that probably the last three years at the beginning of the year. And we'll definitely look at that again. We're very happy to return money to shareholders. We're paying dividends since 2010. We have been returning to shareholders, I think, since time over $470 million, and we'll definitely continue to do so.

Analyst
Chris Terry

Thanks Michael. And then just in terms of the operations that are on care and maintenance. Huaron and Morococha, can you just give an update maybe on thoughts around what you -- what has to change to get those back online? Just wondering, I know it's uncertain, but anything you can provide on those?

Executive
Michael Steinmann

Yes. It's definitely uncertain right now. I mean, we see -- like in many, many, many countries in the world, we've seen an increase of cases in Peru, especially in Central Peru as well around the operations. There may be additional restrictions as well from the government in the future. We don't know. So it's really uncertain. But we just defined it