VANCOUVER, Aug. 7, 2019 /CNW/ - Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) today reported unaudited results for the second quarter ended June 30, 2019 ("Q2 2019"). Pan American's unaudited condensed interim consolidated financial statements and notes ("financial statements"), as well as Pan American's Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2019, are available on Pan American's website at panamericansilver.com and on SEDAR at www.sedar.com.

Pan American's Q2 2019 results include the performance of the mines acquired (the "Acquired Mines") from Tahoe Resources Inc. ("Tahoe"), following the completion of that transaction on February 22, 2019 (the "Completion Date"). The Bell Creek and Timmins mines (together, "Timmins") acquired from Tahoe remain classified as assets held for sale and discontinued operations, and thus are not included in Pan American's revenue or mine operating earnings for Q2 2019.

"We delivered strong operating performance in Q2, resulting in cash flow from operations of $83.5 million," said Michael Steinmann, President and Chief Executive Officer. "The integration of the Tahoe assets is progressing well, and the associated transaction costs are now substantially behind us. Combined with the recent strengthening in precious metal prices and an outlook for lower costs, we should see operating margins improve over the remainder of the year."

Consolidated Q2 2019 Highlights:
•Net income of $18.5 million, equivalent to $0.09 basic earnings per share.
•Adjusted income of $9.0 million, equivalent to $0.04 basic adjusted income per share.
•Revenue of $282.9 million (excluding $57.5 million of revenue from the Timmins mines).
•Net cash generated from operations of $83.5 million.
•Silver production of 6.5 million ounces and gold production of 154.6 thousand ounces.
•Zinc, lead and copper production of 17.4 thousand tonnes, 6.8 thousand tonnes, and 2.1 thousand tonnes, respectively.
•Silver Segment Cash Costs and All-in Sustaining Costs ("AISC") were $6.67 and $10.67 per silver ounce sold, respectively, and relate to the Company's operations other than the Acquired Mines.
•Gold Segment Cash Costs and AISC were $700 and $980 per gold ounce sold, respectively, and relate to the Acquired Mines.
•Consolidated Cash Costs and AISC were ($4.19) and $6.12 per silver ounce sold, respectively, which include by-product credits from the Acquired Mines' gold production.
•Guidance for 2019 annual Cash Costs and AISC on a consolidated silver basis has been reduced to between ($3.30) and ($1.80) per ounce and between $7.00 and $9.00 per ounce, respectively.
•Guidance for 2019 annual consolidated silver and gold production has been slightly reduced to between 25.3 and 26.3 million ounces and between 550.0 and 600.0 thousand ounces, respectively, primarily due to postponement of commercial production from the COSE and Joaquin projects by about three months. The revision is not expected to have a significant adverse impact on 2019 financial results.
•Guidance for project capital expenditures has been slightly increased to $45 million, primarily as a result of the delay in development of the COSE and Joaquin projects.
•At June 30, 2019, the Company had a cash and short-term investment balance of $138.8 million and working capital of $793.1 million. Total debt was $378.8 million (including $43.8 million of lease liabilities).
•Drilling at the La Colorada mine has further defined the skarn mineralization, indicating a high concentration of base metal and silver mineralization over large widths, as reported in Pan American's news release dated August 1, 2019.
•The Board of Directors has approved a cash dividend of $0.035 per common share, or approximately $7.3 million in aggregate cash dividends, payable on or about August 30, 2019, to holders of record of Pan American's common shares as of the close on August 19, 2019. Pan American's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada). As is standard practice, the amounts and specific distribution dates of any future dividends will be evaluated and determined by the Board of Directors on an ongoing basis.

Cash Costs, AISC, adjusted earnings, basic adjusted earnings per share, working capital and total debt are not generally accepted accounting principle ("non-GAAP") financial measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.

CONSOLIDATED FINANCIAL RESULTS
June 30,2019 December 31, 2018
Weighted average shares during period (millions) 209.5 153.3
Shares outstanding end of period (millions) 209.5 153.4

Three months ended June 30, 2019 2018
Revenu $282,948 $216,460
Mine operating earnings $36,140 $54,851
Net earnings $18,499 $36,696

Basic earnings per share (1) $0.09 $0.24
Adjusted earnings (2) $9,037 $35,427

Basic adjusted earnings per share (1) $0.04 $0.23
Net cash generated from operating activities $83,518 $66,949

Net cash generated from operating activities before changes in working capital (2) $63,378 $59,177
Sustaining capital expenditures $55,911 $25,000

Project capital expenditures $13,455 $12,675
Cash dividend per share $0.035 $0.035

Average realized prices
Silver ($/ounce) (3) 14.90 16.40
Gold ($/ounce) (3) 1,314 1,304
Zinc ($/tonne) (3) 2,783 3,045
Lead ($/tonne) (3) 1,875 2,378
Copper ($/tonne) (3) 6,100 6,840

(1)
Per share amounts are based on basic weighted average common shares.
(2)
Non- GAAP measures: adjusted earnings, basic adjusted earnings per share, net cash generated from operating activities before changes in working capital are non-GAAP financial measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.
(3)
Metal prices stated are inclusive of final settlement adjustments on concentrate sales.

OPERATING PERFORMANCE

Silver and Gold Production
The following table provides silver and gold production at each of Pan American's operations for Q2 2019 and Q2 2018:

Three months ended June 30, Three months ended June 30, 2019 2018 2019 2018

Silver Segment:
La Colorada 2,045 1,873 1.1 1.1
Dolores 1,226 1,088 28.5 39.8
Huaron 948 742 0.2 0.1
Morococha(1) 615 652 0.3 0.7
San Vicente(2) 948 976 0.1 0.1
Manantial Espejo 652 962 5.4 11.6

Gold Segment:
La Arena 6 — 28.4 —
Shahuindo 35 — 46.8 —

Assets held for sale:
Timmins(3) 5 — 43.8 —
Total(4) 6,474 6,294 154.6 53.4

(1)
Morococha data represents Pan American 92.3% interest in the mine's production.
(2)
San Vicente data represents Pan American 95.0% interest in the mine's production.
(3)
Reflects production results subsequent to the February 22, 2019 closing date of the Acquisition as described in the "Acquisition of Tahoe" section of the MD&A for the period ended June 30, 2019. The Timmins mines are classified as assets held for sale in the Company's Q2 2019 Financial Statements, as described in the Note 4 of the Company's Q2 2019 Financial Statements, and in the "Acquisition of Tahoe" section of the MD&A for the period ended June 30, 2019.
(4)
Totals may not add due to rounding.

Base Metal Production
The following table provides consolidated base metal production at Pan American Silver's operations for Q2 2019 and Q2 2018:

Base Metal Production (tonnes '000s)

Three months ended June 30, 2019 2018
Zinc 17.4 14.9
Lead 6.8 5.1
Copper 2.1 2.0

Cash Costs and AISC
The following table reflects the Cash Costs and AISC, net of by-product credits, at each of Pan American's operations for Q2 2019 compared with Q2 2018:

Cash Costs(1)
($ per ounce) AISC(1) ($ per ounce)
Three months ended
June 30, Three months ended June 30, 2019 2018(2) 2019 2018(3)
La Colorada 2.82 1.13 5.07 3.46
Dolores 6.87 (6.70) 22.30 1.18
Huaron 1.64 2.27 4.45 7.88
Morococha 3.69 (6.19) 10.47 0.57
San Vicente 10.18 10.69 10.60 13.16
Manantial Espejo 18.35 9.46 14.01 7.08
Silver Segment Consolidated 6.67 1.84 10.67 5.33
Shahuindo 546 — 719 —
La Arena 652 — 1,441 —
Timmins(4) 884 — 946 —
Gold Segment Consolidated(5) 700 — 980 —

Consolidated metrics per silver ounce sold(6):
All Operations (4.19) 1.84 6.12 6.50
All Operations before NRV inventory adjustments (4.19) 1.84 6.46 7.72

Cash Costs and AISC are non-GAAP measures. Please refer to the section "Alternative Performance (Non-GAAP) Measures" of the MD&A for the period ended June 30, 2019 for a detailed description of these measures and where appropriate a reconciliation of the measures to the Q2 2019 Financial Statements.

Silver Segment Cash Costs and AISC are calculated net of credits for realized revenues from all metals other than silver ("by-product credits"), divided by per ounce of silver sold. Cash Costs are therefore different from previously reported Q2 2018 "Cash Costs", which were calculated based on Cash Costs net of by-product credits divided by payable silver ounces produced. The Q2 2018 Cash Costs per ounce sold included in the table above have been calculated and presented as comparative amounts to conform to the methodology used by the Company to calculate the Q2 2019 Cash Costs per ounce sold.

2018 AISC per ounce sold in the table above have been calculated and presented as comparative amounts to conform to the methodology used by the Company to calculate the 2019 AISC per ounce sold. The change in methodology relates to the sustaining capital calculation to account for the adoption of IFRS 16, with sustaining capital now including lease payments. Previously, leased assets were included as sustaining capital in the period of acquisition, while future related lease payments were excluded.

The Timmins mines are classified as assets held for sale in the Company's Q2 2019 Financial Statements, as described in the Note 4 of the Company's Q2 2019 Financial Statements, and in the "Acquisition of Tahoe" section of the MD&A for the period ended June 30, 2019.

Gold Segment Cash Costs and AISC are calculated net of credits for realized silver revenues divided by per ounce of gold sold.

Calculated per silver ounce sold with gold revenues included within by-product credits. G&A costs are included in the consolidated AISC, but are not allocated in calculating AISC for each operation.

2019 GUIDANCE
The following tables provides our guidance for 2019, revised as at August 7, 2019. Relative to the guidance provided on May 8, 2019, management has reduced the estimate for consolidated Cash Costs and AISC to between ($3.30) and ($1.80) per ounce and between $7.00 and $9.00 per ounce, respectively, reflecting actual Cash Costs and AISC for the six months ended June 30, 2019 ("H1 2019"), a higher gold price assumption and the expected results for the remainder of 2019.

Management has also revised its guidance for consolidated silver production slightly to between 25.3 to 26.3 million ounces and gold production to between 550.0 and 600.0 thousand ounces, reflecting the postponement of commercial production from the COSE and Joaquin projects by about three months, mine scheduling adjustments at Morococha and better than expected performance at Shahuindo during H1 2019. The production in 2019 reflects a full year of production for the Silver Segment mines and from February 22, 2019, to December 31, 2019, for the Gold Segment mines.

These estimates are forward-looking statements and information that are subject to the cautionary note associated with forward-looking statements and information at the end of this news release.

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