Pan American Silver Corp. (NASDAQ:PAAS) Q2 2020 Earnings Conference Call - Final Transcript
Aug 06, 2020 • 11:00 am ET
partially offset by higher realized precious metal prices. Mine operating earnings of $48.4 million were similar to last year's Q2 as lower cost of sales largely offset lower revenues, both on account of COVID-19 suspensions in Q2 as well production costs in Q2 2020 benefited from devaluation of local currencies and lower energy costs.
Net incoming in Q2 was $19.4 million, or $0.10 per share, which includes $52.2 million in care and maintenance costs and $47.5 million in investment income. Investment income largely reflects the realized gains on the partial sales of our interests in Maverix Metals and New Pacific Metals and the mark-to-market fair value adjustment and our remaining interest in New Pacific. We continue using the equity method to account for our remaining interest in Maverix and thus a mark-to-market adjustment for Maverix is not included in our net income.
Adjusted earnings in Q2 were $58.4 million, or $0.28 per share. The investment income is included in adjusted earnings while $46.5 million of COVID-19 related care and maintenance costs were removed. Cash flow from operations in Q2 totaled $62.8 million. Working capital changes in the quarter provided roughly $31 million source of cash, which is mostly due to the release of inventories from the continued leaching at our three heap leach operations. We are now replenishing these inventories and as such expect to draw down in Q2 to be reflected in a larger use of cash working capital adjustment in Q3.
Excluding working capital changes, Q2 cash flow was more than sufficient to cover sustaining CapEx, taxes and dividends and the net $60 million repayment on our credit facility. At the end of the quarter, our cash and short-term investment balance increased by about $22 million to $262 million. We made a further repayment of $40 million in our credit facility in August, reducing the amount currently drawn to just $160 million.
During Q2, we sold 10.35 million shares of Maverix and 10 million shares of New Pacific. We also exercised 8.25 million Maverix warrants, which added to our share position. We now hold an approximately 19.9% undiluted interest in Maverix, and then approximately 9.96% undiluted interest in New Pacific. The other notable divestment we made in the quarter plus the sale of the Juby and Knight exploration properties in Ontario that we had acquired as part of the Tahoe transaction. We sold those properties for $10 million and retained 1% NSR royalty.
These transactions largely accounted for the $81.1 million in cash proceeds we realized from divestitures in the quarter. The partial sales of our interest in Maverix and New Pacific do not change our view of those companies. It was simply a timely opportunity for us to further strengthen our balance sheet. We retain exposure to further growth at Maverix while remain committed to the future of New Pacific's exciting Silver Sand discovery. Juby is in early exploration stage property, which was not a fit with our portfolio.
We will continue to look for opportunities to