Pan American Silver Q2 2026 Earnings Report

Pan American Silver EPS Results

• Actual EPS: $0.73
• Consensus EPS: $0.84
• Beat/Miss: Missed by -$0.11
• One Year Ago EPS: $0.43

Pan American Silver Revenue Results

• Actual Revenue: $1.12 billion
• Expected Revenue: $1.16 billion
• Beat/Miss: Missed by -$39.05 million
• YoY Revenue Growth: +38.40%

Pan American Silver Announcement Details

• Quarter: Q2 2026
• Date: 8/12/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 11:00AM ET

Pan American Silver (NYSE:PAAS) (NYSE: PAAS) is a Vancouver-based mining company and one of the world’s largest primary silver producers. The company’s core activities encompass the exploration, development, extraction and processing of silver, with significant by-product production of gold, zinc and lead. Pan American Silver maintains a vertically integrated operating model, covering the full mining value chain from resource discovery through to refined metal production.

With a geographic footprint concentrated across the Americas, Pan American Silver operates multiple mines in Mexico, Peru, Argentina and Bolivia, and is advancing several development and exploration projects in Chile and Ecuador. Its diversified asset base includes a mix of open-pit and underground operations, supported by on-site processing facilities and extensive reserve and resource inventories. The company also invests in exploration programs to extend the life of its operations and to identify new high-quality deposits.

Founded in 1994, Pan American Silver has grown through strategic acquisitions and organic development, positioning itself as a leading low-cost silver producer. Over the years, the company has expanded from a single-mine operator to a multi-asset producer, building a portfolio that balances mature mines with projects in various stages of advancement. Pan American Silver is listed on the New York Stock Exchange and the Toronto Stock Exchange, reflecting its global presence and access to international capital markets.

The company is led by President and Chief Executive Officer Michael Steinmann, whose leadership team brings deep technical expertise in mine development, finance and environmental management. Pan American Silver places a strong emphasis on sustainable mining practices, community engagement and environmental stewardship, aiming to deliver long-term value to shareholders while upholding responsible operations across its regions of activity.

Pan American Silver Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong cash generation and shareholder returns: Attributable free cash flow reached $344 million in Q2, while the company returned a record $300 million through dividends and buybacks. Pan American said its enhanced return framework remains on track, with more than 7 million shares repurchased year to date.
• Positive Sentiment: Silver performance and full-year outlook reaffirmed: Attributable silver production was 6.5 million ounces, near the high end of guidance, and the company maintained its 2026 silver production, cost and sustaining-capital ranges. Silver costs were below the low end of guidance in the first half.
• Negative Sentiment: Gold production is trending toward the low end of guidance: Pan American expects full-year gold production of 700,000–750,000 ounces to come in at the low end, with Q3 guidance reduced and Jacobina and El Peñón each expected to produce about 10,000 fewer ounces than originally forecast. Jacobina is changing mining practices to address seismicity, while El Peñón is seeing weaker continuity in secondary structures.
• Positive Sentiment: Balance sheet and growth pipeline remain robust: The company ended Q2 with $1.8 billion of cash and short-term investments, approximately $3.2 billion of total liquidity, and an undrawn $1.5 billion revolving credit facility. Development advanced at La Colorada, Timmins and Jacobina, although Escobal still has no restart timeline.
• Negative Sentiment: Higher taxes and operational uncertainties may weigh on near-term results: 2026 income taxes paid guidance was raised to $585 million–$635 million due to higher metal prices and profitability. El Niño-related weather has also disrupted access and logistics at Chilean and Argentine operations, though management said impacts have been manageable so far.

Presentation

[Operator]

I would now like to return the conference over to Siren Fisekci, VP, Investor Relations. Please go ahead, Ms. Fisekci.

[Siren Fisekci, VP of Investor Relations at Pan American Silver]

Thank you for joining us today for Pan American Silver's conference call and webcast to discuss our second quarter 2026 results. This call includes forward-looking statements and information and references non-GAAP measures. Please see the cautionary statements in our MD&A, Q2 news release, and presentation slides for the period ended June 30, 2026, all of which are available on our website. I will now turn the call over to Michael Steinmann, Pan American's president and CEO.

[Michael Steinmann, President and CEO at Pan American Silver]

Good morning, everyone, and thank you for joining us today for our Q2 2026 conference call. Q2 delivered strong financial results, strong silver production, and meaningful progress on our growth projects. We generated $344 million of attributable free cash flow, returned a record of $300 million to shareholders, and reached an important milestone at La Colorada in early August with the first cut of the 588 decline to access the skarn deposit. Attributable silver production of 6.5 million ounces in Q2 was at the high end of our quarterly guidance range, driven by continued strong performance at La Colorada and Juanicipio. We remain on track to achieve ourfull-yearr silver production guidance of 25 million-27 million ounces. Q2 silver segment all-in sustaining costs were $17.80 per ounce, primarily reflecting higher cost ounces from the inventory drawdown that had accumulated at La Colorada in the first quarter of 2026.

[Michael Steinmann, President and CEO at Pan American Silver]

Higher royalties at La Colorada from mining more tons than initially planned from the adjacent third-party concession, unfavorable currency exchange rates, and higher labor-related costs. Attributable gold production was approximately 166,000 ounces, which was below the quarterly outlook issued in February. We expect Q2 to be the weakest gold production quarter of the year, with production more heavily weighted to the fourth quarter, as we indicated in Q1. Gold segment all-in sustaining costs were $1,984 per ounce in Q2, slightly above our quarterly outlook due to the lower-than-forecasted production as well as labor and materials inflation. Importantly, for the first half of the year, all-in sustaining costs were below the low end of our guidance range for silver and in line with our guidance range for gold.

[Michael Steinmann, President and CEO at Pan American Silver]

Based on performance to date, we are reaffirming our full-year 2026 operating outlook ranges for silver and gold production, silver segment, and gold segment, all-in sustaining costs and sustaining capital. Within that outlook, we now expect full-year gold production to be at the low end of the 700,000-750,000 ounce guidance range. We have also revised our third quarter gold outlook to approximately 3,000-6,000 ounces below the low end of the quarterly guidance range of 178,500-192,000 ounces of gold. The change in our near-term gold outlook primarily reflects lower-than-expected production at Jacobina and El Peñón. At Jacobina, gold production is now expected to be approximately 10,000 ounces below the low end of the original annual guidance range of 181,000-191,000 ounces, reflecting changes to mining sequencing.

[Michael Steinmann, President and CEO at Pan American Silver]

The mining method employed at Jacobina over the last 40 years has been open-stoping, with very few of the stopes backfilled. Over the last several years, Jacobina has experienced seismic events. While these events have not resulted in any injuries or infrastructure damage, after reassessing the risk associated with seismicity, we have implemented measures in Q2 that include leaving larger pillars, reducing production rates in some higher-grade areas, and increasing development rates to open more mining zones. These measures will result in overall mining grades coming in closer to average mineral reserve grade. Longer term, we are evaluating alternative Avoca-type mining methods in certain areas with waste rock backfill and cemented backfill as part of the optimization of the Jacobina operation. Jacobina continues to be a standout performer in generating cash flow with a long reserve life and significant optimization potential.

[Michael Steinmann, President and CEO at Pan American Silver]

We are advancing several process plant upgrades, including installation of new carbon-in-pulp tanks and electrical control systems, both of which are expected to be commissioned this year. We are also advancing conceptual engineering to streamline and simplify the process plant flow sheet, which will feed into a trade-off study to evaluate whether upgrading the existing process plant circuitry and removing obsolete equipment or building a new state-of-the-art processing facility is the optimal choice for this long-life asset. At El Peñón, silver production is expected to remain within the original annual guidance range of 3.65-3.95 million ounces. Gold production is now expected to be approximately 10,000 ounces below the low end of the original annual guidance range of 104,000-111,000 ounces, reflecting lower-than-expected continuity in certain secondary structures.

[Michael Steinmann, President and CEO at Pan American Silver]

Across the portfolio, we expect gold production to improve over the balance of the year, weighted to the fourth quarter, as previously indicated. Second half production is expected to benefit from higher gold grades and higher throughput at Timmins and Shahuindo. We are also managing the effects of El Niño at our operations in Chile and Argentina. Extreme rainstorms have affected site access for key personnel in July and into August. Our teams are actively managing these conditions, with safety remaining the top priority. Turning to our financial results. Revenue was $1.1 billion, and attributable revenue, including our 44% interest in Juanicipio, was $1.3 billion. Net earnings were $305 million, or $0.72 per share, which includes a tax expense of $179 million. Adjusted earnings were $0.73 per share. Cash flow from operations was $320 million, after $205 million of income tax paid and $17 million used for working capital.

[Michael Steinmann, President and CEO at Pan American Silver]

Attributable cash flow from operations was $418 million, and attributable free cash flow was $344 million, including our share from Juanicipio. Q2 is expected to be the highest period for taxes paid in 2026, due to final settlement of taxes for 2025. Higher metal prices have increased profitability and tax payments. As a result, we have increased our 2026 guidance range for income taxes paid to be between $585 million-$635 million. Our financial position remains very strong. We ended the quarter with $1.8 billion of cash and short-term investments, including cash attributable to Juanicipio. In July, we renewed and amended our five-year senior unsecured revolving credit facility, doubling its size to $1.5 billion and adding a $750 million accordion feature. The facility remains undrawn, and our total available liquidity is approximately $3.2 billion.

[Michael Steinmann, President and CEO at Pan American Silver]

This financial strength gives us substantial flexibility to invest in our operations, advance organic growth projects, and return capital to shareholders. At La Colorada, development of the 588 decline to access the skarn deposit is underway. This is a key step in advancing the planned expansion outlined in the revised PEA released in March. Engineering for the material handling system and ventilation shaft is also progressing, with the design, cost, schedule, and recommendation expected before year-end. At Timmins, we are advancing the first phase of the Timmins Camp project, including the Bell Creek shaft extension and two exploration drifts to access Vogel and Samson deposits. We plan to release updated mineral resource and mineral reserve estimates in the third quarter and a preliminary economic assessment for the Timmins Camp project in the first half of 2027. At Escobal, the ILO Convention 169 consultation process continues.

[Michael Steinmann, President and CEO at Pan American Silver]

Government representatives visited the mine in May. We met with representatives of the Ministry of Energy and Mines and the Vice Minister of Sustainable Development in June, and a bilateral meeting between the government and the Xinka representatives was held in July. There remains no timeline for conclusion of the consultation process and no date for the restart of Escobal. Our strong free cash flow is translating into meaningful shareholder returns. In Q2, we returned a record of $300 million in share repurchases and dividends. To date, in 2026, we have repurchased over 7 million shares under our normal course issuer bid. We have also declared a Q2 dividend of $0.184 per common shares. The enhanced shareholder return framework we announced in May is operating as intended.

[Michael Steinmann, President and CEO at Pan American Silver]

Repurchases reduce the share count, increasing dividends per share and each shareholder's exposure to our asset base and future free cash flow generation. That free cash flow generation remains robust, and we will continue to balance shareholder returns with investments in our growth portfolio. With that, I will turn over for questions.

[Operator]

We will now begin the question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Lawson Winder with Bank of America Merrill Lynch. Please go ahead.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Thank you, operator. Good morning, Michael and team. Thanks for today's update. I would like to start, I guess, with the elephant in the room, which is Jacobina and the production issues at that asset and what that has meant for 2026 guidance, your expectation to now be at the lower end of the gold production range. When you think about what has happened and what you have provided the market with today, what does it mean for sustaining gold production at that mine into 2027 and beyond at that just under 200,000 ounce per year range? Does it impact 2027 at all?

[Michael Steinmann, President and CEO at Pan American Silver]

Well, good morning, Lawson. Look, when you look at Jacobina and, of course, this seismic activity, you just want to make it very clear this seismic activity has not created any damage to our infrastructure or anything like that. But this is something that has been going on for many years at Jacobina, as the mining is an open-stoping method with pillars. And of course, if you go on mining for a long time, you see activity, and that was, if you recall, always our plan to put as part of our optimization study a backfill plant in place. For several reasons, obviously, we want to move over this tailings dam, the conventional tailings dam, into a dry stack tailings dam over time, and then use some of that tailings as backfill in the mine. So that was always the plan.

[Michael Steinmann, President and CEO at Pan American Silver]

Consulting with a lot of our specialists and our systems we have in place, we decided to move on this faster, relieve a little bit the main zones, and develop faster into other zones that we have in the mine. So that requires a bit more development right now, obviously. And as you saw, impact at that gold production, I think we guided down about 10,000 ounces less production. So not a massive impact to it this year. There is a lot of mitigation that we have. As we described, we leave larger pillars at the moment as a short-term mitigation. Do not forget, once we have the paste backfill in place, we will be able to recover large part of those pillars. So these reserves are not lost. We just go into some other areas.

[Michael Steinmann, President and CEO at Pan American Silver]

Some of them have a little bit lower grade gold than what we mined right now, hence the difference. This is really just a postponement of the production in the future and an investment in the future, a stronger and larger Jacobina. Really part of the program coming in a bit quicker because we just want to really be on the safe side. I do not see any impact really over the long-term program. Jacobina has a reserve life that goes way into the 2050s right now. And we have continued strong success in exploration. When you look at the big picture here at Jacobina, I do not see really a major impact of that, but for sure in the short term, that is what we just reported with that about 10,000 ounces lower production this year.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Okay. Thank you for that perspective on the short-term nature of these issues. You also described in the MD&A that El Niño impacts may continue to cause disruptions through the remainder of 2026. Will those potential impacts have been factored into the updated language around the gold production guidance?

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah, look, the El Niño impact we have seen mostly in Chile so far. I am sure most of the people on the phone have heard about the big impact to some of the copper production in Chile. We had very strong rains, especially in the south, in Florida, and actually carried over all the way to Cerro Moro, where we have lots of rains. Obviously, when it gets very wet, there is some daily challenges in moving your ore to the plant and pushing it through the plant when it is very wet, but nothing of major impact there. I think the biggest impact we have seen was not actually rain-related to our operation because the biggest impact was at El Peñón. Obviously, we are far in the north.

[Michael Steinmann, President and CEO at Pan American Silver]

It is a very dry area, but a lot of the roads, major highways in Chile have been interrupted, which made it quite challenging to fulfill at 100% our shift changes and bring all the people in. So we are mitigating that with different transport routes, with flying people in and out to Antofagasta, et cetera. So that is all included in our plan. Well, it remains to be seen how the El Niño effect advances this year. It looks like it is going to be quite a strong phenomenon this year. Temperatures are quite high in the water. And that will move up further north, obviously, and will normally affect closer around Christmas or so Peru, hence the name El Niño. It actually comes from there that it is happening normally closer to Christmas. And so we would expect more rains in this area.

[Michael Steinmann, President and CEO at Pan American Silver]

Later on, the effect of El Niño obviously goes all around the globe. We are going to see effects in Australia and Europe, et cetera. We are preparing and are prepared and preparing further at our operation, making sure that all our diversion channels and holding ponds are ready for bigger rain events at the moment. We will see how that advances. Obviously, if it has a bigger impact, then we will inform the market. But at the moment, as I said, it was more a secondary impact so far at El Peñón, just due to a lot of infrastructure damage in the road system of Central and South Chile.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Okay, great. It sounds like that is well factored in. Then just finally, not a lot of direct discussion about the plan to return up to $1 billion of cash to shareholders this year through both buybacks and dividends. Can you just confirm that remains the target, despite that it has not been really clearly highlighted this quarter the way it was last quarter?

[Michael Steinmann, President and CEO at Pan American Silver]

Well, we put out the press release last quarter with the plan, and I think it is very clear that we are following on that plan. Actually, you probably saw we returned $300 million this quarter. Obviously, that puts us kind of ahead in the plan. But you recall we put the plan in place really after Q1, so we had to catch up some on Q1, where we paid obviously the normal dividend, but I think we only spent about $25 million in share buybacks in Q1. Hence the catch-up. We are right on track, obviously right now. I think the idea that we published was about 35%-40% of cash to be distributed to our shareholders. That is still absolutely still in place. I think we continued, maybe Ignacio, how many shares did we buy back so far this year?

[Ignacio Couturier, CFO at Pan American Silver]

Above 7 million.

[Michael Steinmann, President and CEO at Pan American Silver]

How much is there already now, again? We continue, obviously, in June to buy back shares. Oh, sorry, in July.

[Ignacio Couturier, CFO at Pan American Silver]

In July, I think it's over 2 million shares.

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah. So we continue, obviously, that program very strong. Obviously, the total amount, Lawson, if it's exactly $1 billion or less, that depends on the share price of our buyback. I'm really focused on the amount of shares and number of shares that we're buying back. Absolutely, that program is stronger than ever. If you look, we're quite a bit ahead of the plan.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Thank you very much.

[Operator]

The next question comes from Wayne Lam with TD Securities. Please go ahead.

[Wayne Lam, Analyst at TD Securities]

Yeah. Thanks. Morning, guys.

[Michael Steinmann, President and CEO at Pan American Silver]

Morning.

[Wayne Lam, Analyst at TD Securities]

Maybe just following up at Jacobina. Back a couple of months ago at the Investor Day, the discussion had still centered around the potential to increase production and the efficiencies at Jacobina. I was just curious: was there a seismic event that occurred in the past couple of months to kind of prompt this reevaluation of the mining method underground? In light of changes here, in potentially moving to more selective mining, is there still potential to scale that production at Jacobina going forward as per some of the optimization work that you're undertaking?

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah. Absolutely. As I said before, this is, as I see, more a short-term impact. There's ongoing activity on the seismic side. As I said, it's really a precaution we wanted to do when we looked at this with our microseismic system to make sure that everything is safe for our people, for our infrastructure. As we pointed out, there has been no damage to it. Over mid- and long-term, absolutely, the potential for expansion of Jacobina is exactly the same. We are working at full speed on the optimization. You probably heard during the call that we did quite some investment in the plant and are actually looking at alternatives there as well. Let me pass it on to Martin, who will give us a bit more details on that plan.

[Martin Wafforn, SVP of Technical Services and Process Optimization at Pan American Silver]

Yeah. Hi, Wayne. Yeah, absolutely. As we look at this optimization project going forward, we're looking at really completely revamping the plant as one thing, and the tailings facility, as Michael mentioned, we need to go over the filter tailings there, and we've been looking for some time at the paste backfill underground, and we've completed a lot of the test work that we need to do on that in terms of the strength and the rheology of the paste backfill. All of these things are advancing. The plant is going to take a bit of time. The current facility is maxed out. But yeah, we'll be looking at increases to the size of that plant as we go forward. We haven't really arrived at what can the mine do to provide the plant in the future.

[Martin Wafforn, SVP of Technical Services and Process Optimization at Pan American Silver]

That's some of the things that we're working on as we advance this study. We do expect, because of this, that we'll go backwards a bit towards the mine reserve average grade as we open up new areas in the mine.

[Wayne Lam, Analyst at TD Securities]

Okay. It sounds like there's work being done to increase the mill capacity, but you haven't quite done all the work to see whether the mine can sustain the expanded mill capacity.

[Michael Steinmann, President and CEO at Pan American Silver]

Well, nothing has changed on that program and what we showed, obviously, at the Investor Day. This is ongoing work, and it's not completed yet. But yes, we are obviously still working on that optimum size of mill. As you saw there in the press release, we're looking at either increasing productivity in our current mill, and we're working right now on that, on increasing recoveries, or looking at a completely new mill in the future. As I mentioned before, we're looking at a mine plan here way into the 2050s and with probably strong reserve replacement for many, many years to come. At one point, having a larger state-of-the-art plant at Jacobina would probably make a lot of sense. But Martin and his team are still working on the technical side of that.

[Michael Steinmann, President and CEO at Pan American Silver]

But yeah, all going ahead as planned on that side and going ahead at full speed.

[Wayne Lam, Analyst at TD Securities]

Okay. Thanks. Got it. Okay. Maybe moving to El Peñón. We have discussed in the past the fact that the mine has always had a pretty short reserve life that has been continually extended out. With the depletion of the stockpiles, I was just curious what the proportion of production that had been historically, and then do you see this phase of lower continuity mineralization as transitory, or is that something we should be kind of modeling on a go-forward basis, and is that going to be reflected in the upcoming reserve update? Just want to better understand how we should think about it going forward.

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah, of course. We are going to put our reserve update out early September for the mid-year reserve. Of course, all these changes and discoveries on the exploration side, et cetera, will be included in that reserve update. When you look at those smaller structures, they are smaller parallel structures to the main structures that have less continuity and need more drilling. So we removed them from the reserves for the time being. Some of them have follow-up programs with Chris and his team on exploration to add in additional drilling. And we replaced them with material from other structures that, in this case, have been higher silver grade and lower gold grade; hence, we are right on track on the silver production, but we are tracking a bit lower on the gold production. So there are still enough places, obviously, to go.

[Michael Steinmann, President and CEO at Pan American Silver]

We are still drilling and exploring a lot at El Peñón that has been, and this still is, a very, very large cash flow for us and has been an amazing deposit over the years. And there is still a lot to discover there. But at the moment, as I said, that move into higher-grade silver will probably continue for the foreseeable future this year. Hence, we made that cut back a little bit on the gold and confirmed the silver production for the year.

[Wayne Lam, Analyst at TD Securities]

Okay, great. Thanks. Maybe just the last one, just at Timmins. Can you give us a bit of context or a bit more color on the guide increase in production in the second half? Just with the planned increase in the mining rates, can you give us an update on the ground condition issues that you had encountered last year?

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah, sure. Things are going quite well at Timmins. Right now we have had some ups and downs in our production rates. But, in terms of the geotechnical seismicity, we are not getting any real big events recently. The paste backfill that we implemented at Bell Creek is really helpful in that regard in terms of the ore body recovery and controlling things. Obviously, still the same plan, probably early or latest mid next year, we will present a new PEA on Timmins with the, as we call, the new Timmins, with all the additional satellites that we are developing right now towards exploration.

[Michael Steinmann, President and CEO at Pan American Silver]

We will have the new plan for Timmins, something that we gave you an idea at the Investor Day, but, obviously, the PEA will have all the details in there done with updated reserves, resources, updated mine plans, cost, capital requirements, et cetera, to add a probably substantial mine life to our Timmins deposits.

[Wayne Lam, Analyst at TD Securities]

Okay, great. Okay, thanks for taking my questions.

[Michael Steinmann, President and CEO at Pan American Silver]

Thank you.

[Operator]

The next question comes from Cosmos Chiu with CIBC. Please go ahead.

[Cosmos Chiu, Analyst at CIBC]

Thanks, Michael and team, for taking my questions. My first question is on the financial side. You missed earnings compared to consensus this quarter in part due to higher taxes. Could we maybe talk about higher taxes? I noticed that the tax rate turned out to be about 37% in Q2, higher than the 32% in your first half. With commodity prices where they are today, is 37% the new normal? In the MD&A, you also talked about the fact that more taxes resulting from higher commodity prices. However, for the second half of the year, for tax purposes, you're forecasting $60 an ounce and $4,000 an ounce, which is slightly lower than where spot is today. If commodity prices are to stay at the more elevated levels compared to what you're expecting, could taxes come in even higher than your revised guidance?

[Ignacio Couturier, CFO at Pan American Silver]

Good morning, Cosmos. It's Ignacio here.

[Cosmos Chiu, Analyst at CIBC]

Hi.

[Ignacio Couturier, CFO at Pan American Silver]

Hi, Cosmos. In terms of the taxes, yes, we definitely see variability quarter to quarter on the effective tax rate. As you mentioned, in Q2, we saw the high 30%. However, in Q1, we did see high 20%. If we look at the year as a whole so far, we are in the low 30%, which is more or less where we expected it to be. Yes, unfortunately, there is some variability in Q2. We did see some true-ups related to previous quarters, so some adjustments. But in terms of the overall year, we are tracking in that low 30% area, and that is more or less where we expect to be.

[Ignacio Couturier, CFO at Pan American Silver]

So do keep in mind that unfortunately, on the tax expense side, there is some variability. You will see that in previous years as well, there was quite a bit of variability what that effective tax rate is.

[Ignacio Couturier, CFO at Pan American Silver]

But when you see the year as a whole, it is more or less where we expect. In terms of the actual taxes paid, yes, we have always guided that typically in the first half of the year, there are higher payments than the second half of the year, and that is to do with the true-ups that we have to pay in typically at the end of Q1 or early Q2. A lot of it has to do with the profitability of the previous year. Specifically in 2025, we saw a spike in profitability just in Q4. So that has been the big driver for these larger installments, or sorry, larger true-ups that we saw at the end of Q1 and into Q2. That is what is driving the higher tax payments that we have posted for the first half of the year.

[Ignacio Couturier, CFO at Pan American Silver]

In terms of the rest of the year, yes, we have re-guided to a range of $585 million-$635 million. That is more or less where we expect metal prices are today. Higher profitability is driving that. The other factor, too, is that with our strong cash flows at the operations level, we are generating quite a bit of cash at the sites, and that cash has to be repatriated. A lot of that cash that is repatriated has withholding tax attached to it. So that is just frictional cost of moving money around the company. So that is another factor that is affecting the overall range of $585 million-$635 million.

[Cosmos Chiu, Analyst at CIBC]

Great. Maybe at the operational level, maybe a question on El Peñón. As you mentioned in the prepared remarks and also in the MD&A, there were some lower than expected certain secondary structures. But you were able to maintain your silver guidance, but you had to bring down your gold guidance. I am just wondering, do these secondary structures impact gold grades more or gold production more versus silver? I thought at El Peñón it is pretty consistent in terms of gold and silver grades coming together.

[Michael Steinmann, President and CEO at Pan American Silver]

It is correct when you put it together that it was quite consistent, but they are actually very silver-rich veins and then very gold-rich veins at El Peñón, and obviously we are blending them in the production. But what happened in the secondary structures is that some of them, as I mentioned, we took out of the mine plan because the continuity was not there. In many of them, it is just still additional drilling needed, so the exploration is actually back in. While that is drilled, we move those structures into resources, and if drilling is positive, they will go back from resources into the reserves. But to replace that production, we went into more silver-rich and less gold-rich areas. As I said, they are really both. They are not just always coming together.

[Michael Steinmann, President and CEO at Pan American Silver]

That is the main result: we have no problem delivering on the silver, but there is a bit less gold in those structures right now that are developed. So it is a constant play, really, on the blending at El Peñón between the gold rich and the silver rich. At the moment, that is just what we have developed, and so hence, more silver production right now and a bit less gold production at El Peñón.

[Cosmos Chiu, Analyst at CIBC]

Mm-hmm. Great. Then, maybe one last question on project capital. I see that you were slightly below your expectations in the first half. You came in at about $84 million. You had been expecting $103 million-$110 million. You have maintained your guidance for the year, $240 million-$255 million. Is that just timing? Where are you going to catch up on spending on the second half, if you can just quickly talk about that?

[Michael Steinmann, President and CEO at Pan American Silver]

Sure. I'll just start on the big picture and then hand it over to Scott. That's definitely timing in here. Weather plays a big role, obviously. Besides the El Niño events this year, obviously there are dry seasons and wet seasons, and they're quite different in different places. You can imagine we stretch with operations from deep winters right now in South Argentina all the way up to summer in Mexico. So you have different timing there, different parts of the year where we have the ideal time to spend that capital. I'll pass it on to Scott, but I think that's just timing of spending.

[Scott Campbell, COO at Pan American Silver]

Yes, exactly. Hello, Cosmos, it's Scott here.

[Cosmos Chiu, Analyst at CIBC]

Hi, Scott.

[Scott Campbell, COO at Pan American Silver]

Good morning, Cosmos. We had a national strike in Bolivia, which delayed the mobilization of our key tailings expansion contractor. There was a bit of a lag there, and the market for large contractors in both Peru and Mexico is very competitive, and there were some delays associated with their mobilization too. No, nothing's been postponed. There's just a bit of a lag there, and we'll pick that up later in the year.

[Michael Steinmann, President and CEO at Pan American Silver]

Just to make clear here to the listeners, Bolivia strikes on that, so it has nothing to do with the mine, obviously. It strikes on the roads in the country, and obviously that affected us with mobilization. So no issue on our side.

[Cosmos Chiu, Analyst at CIBC]

That's good to hear. Thanks again, Michael, Ignacio, and Scott, for answering all my questions. That's all I have. Thank you.

[Michael Steinmann, President and CEO at Pan American Silver]

Thanks, Cosmos.

[Operator]

Once again, if you have a question, please press star then one. The next question comes from Carey MacRury with Canaccord Genuity. Please go ahead.

[Carey MacRury, Analyst at Canaccord Genuity]

Hi, good morning, guys. Just on the royalties out in La Colorada, you are operating on that adjacent ground. Just wondering if you can give some guidance on what we should expect for that in the back half of this year and into 2027.

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah. It is a little bit higher, but a little bit higher during Q2 that will even out during the year. There is probably a bit less tonnage coming from there later this year. It is really just in our mine plan, basically, to get to the other side of those claims back into structures that are fully on our claim where we operate. So it is just a short-term variability really on those royalties that were a bit higher this quarter than they will be in the future. But I think in general, this year, I think we said about what, 30%-35%?

[Scott Campbell, COO at Pan American Silver]

30%-40%.

[Michael Steinmann, President and CEO at Pan American Silver]

30%-40% of the production from there, and then that will, over the years, come off. We show the mine plan as part of the PEA, and all the details are in there. Just to be very clear, 100% of all the resources of the skarn are obviously on our claims, and all the new discoveries of the veins that we continuously discuss and drill are all on our claims. This is really more a short-term variability here in those tons coming from there.

[Carey MacRury, Analyst at Canaccord Genuity]

Great. Then maybe it's a question on the credit facility. You have a ton of cash on the balance sheet, you're generating all the cash, and you've doubled the credit facility with not a lot of near-term capital spend. Just wondering what the thinking is on the credit facility.

[Ignacio Couturier, CFO at Pan American Silver]

Hi, Carey. This is Ignacio. Generally, this is just to make sure that the company has the financial flexibility that we need. Also, the market conditions have been quite favorable towards investment-grade issuers like Pan American Silver. So we figured it'd be a good time to take advantage of those favorable market conditions. Plus, we've learned from the past that having that financial flexibility can be very positive for the company. So when opportunities come up, we can react quickly to those.

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah. Of course, we have a very strong balance sheet. You saw their liquidity of about $3.2 billion right now. We have a lot of big projects on the go. Just mentioned the three main ones, which is obviously the La Colorada skarn, the optimization study at Jacobina, and all the work we do in our Timmins camp. This is a way bigger company than it was before, and it was, as Ignacio said, an opportune time and very favorable conditions to basically double our line of credit, which is undrawn but available to us in our liquidity to be able to react to any opportunity that may arise. But at the moment, it's just sitting there as we had it before, and it's great to have.

[Carey MacRury, Analyst at Canaccord Genuity]

Great. That's it for me. Thanks, guys.

[Michael Steinmann, President and CEO at Pan American Silver]

Thank you.

[Operator]

The next question comes from Don DeMarco with National Bank Financial. Please go ahead.

[Don DeMarco, Analyst at National Bank Financial]

Thank you, operator. Good morning, Michael and team. Thanks for taking my question.

[Michael Steinmann, President and CEO at Pan American Silver]

Good morning.

[Don DeMarco, Analyst at National Bank Financial]

I'll start off with a question on Escobal. I see you hosted the government officials at the mine during the quarter. Can you share any incremental color on this meeting? For example, was this the first time that these particular officials visited the mine? Was there a specific purpose to the visit?

[Michael Steinmann, President and CEO at Pan American Silver]

No, that's not the first time. There are continuous visits by authorities to the mine. That can be just the authorities or together with representatives from the Xinka. There have been many visits from communities around, et cetera. This is not the first one. Normally, we hosted a lot of visits. The mine obviously shows very well. It's in great shape, and you can go through the plant, you can go underground, and you can look at the dry stack tailings facility and all the environmental work we do day to day. Just great to have them there; great to have reviews and discussions with them. But no additional reason for that. That's normal course.

[Don DeMarco, Analyst at National Bank Financial]

Okay. Thank you. Shifting to Jacobina, is there any preemptive mining support or other work that requires additional CapEx? Would anything extra that's needed be covered within the existing sustaining CapEx budgets? Is the measurable impact from this decision just limited to the 10K reduction in production? Thank you.

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah. It's really that. Obviously, we are working on that optimization study and the additional capital that will be required for the plant and the paste backfill plant; that's all in the engineering phase right now. Once we have all the details ready, we will share that with everyone. But at the moment, yeah, the impact is really on that small reduction on the production. But once we have all the numbers together, the engineering is done, we made the final decision on size, location, et cetera of the paste backfill plant, we will share that with everybody, of course.

[Don DeMarco, Analyst at National Bank Financial]

Okay. A question there. Year-to-date silver costs, you are tracking below the low end of the guidance range. I see you have reaffirmed guidance. Is that a measure of conservatism, or is there anything in H2 that would suggest that silver costs might rebound higher to end it closer to the midpoint of the range?

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah. Very good question. Look, if you look at H1, so look at the first two quarters, we are tracking very well on production. We are tracking very well on cost on both metal silver and gold. There are variations that we see in the quarters. You recall really low costs on the silver side in Q1, higher costs now. There is impact quarter by quarter that are not always there. There are some special bonuses, special payments, true ups of taxes, et cetera, in some of the quarters. But when you look at the cost increases that we see, and that's for both silver and gold, there are lots of different impacts. Obviously, by-product credits have a huge impact to our cost. So when you look at Q1 with way higher metal prices, those by-product credits helped us bringing that cost down.

[Michael Steinmann, President and CEO at Pan American Silver]

Obviously, there is quite a reduction in metal prices in Q2; hence, the costs are going up. I do not really have a crystal ball here to look forward to where the metal price is going to go. The next biggest impact is foreign exchange impacts, which can be very large because most of our jurisdictions, actually all of our jurisdictions, are in foreign currency, even in Canada, because we are reporting in US.. So strengthening those currencies, actually, that we see right now, obviously, has a big impact to our cost. So when you put that all together, there is a large part of cost variations that we do not really have control over because, as I said, it's foreign exchange, it's metal prices, and then to a lesser extent, obviously, energy and diesel costs.

[Michael Steinmann, President and CEO at Pan American Silver]

We just want to leave the guidance right there at the moment and see how it goes in Q3. Obviously, we will give an update there, but very happy with our cost tracking for the first six months for both gold and silver.

[Don DeMarco, Analyst at National Bank Financial]

Okay. That is all for me. Thank you again for taking my question.

[Operator]

We have a follow-up question from Lawson Winder with Bank of America. Please go ahead.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Yeah, thank you, operator. Thank you, guys, for taking the follow-up. Wanted to ask about Escobal, and just note that since the approval of the construction permits for the Era Dorada mine in Guatemala, several indications have pointed to a much more forceful level of government support for mining generally in the country. I would be curious to hear your thoughts on whether or not you agree with that. Further to that, Era Dorada was able to touch on a real hot button issue at the mine, which was water purification from volcanic ash and issues from the past that had nothing to do with mining. Nevertheless, they were able to generate a lot of community support through their efforts to help purify river water. I am just curious if there is something like that at Escobal that might be one particular key issue.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Ultimately what I am trying to get at is, what are the key issues being discussed between the government and the Xinka at the current moment? Thank you.

[Michael Steinmann, President and CEO at Pan American Silver]

Yeah, sure. Look, I do not think you should draw lines here between different projects and well, that is operation and not many operations in Guatemala. They are all in different areas, different communities, and very different realities where they stand. Obviously, we have to go through that ILO 169 consultation, which is a court-ordered process that goes years back now and has been a long process. But I do not think that you can just draw conclusions from other projects to this one, as every project in Guatemala is quite a different reality. Discussions are still around very similar topics, of course, like any mining project, it is water, it is normally, it is kind of dust in many places, obviously, not a big topic in an underground mine except our tailings. It is vibration from blasting and other typical impacts that you would see from a mine operation.

[Michael Steinmann, President and CEO at Pan American Silver]

Those are really the main discussion items, but yeah, do not just draw lines from one project to the other. We really have to focus on each project in the country separate.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Okay, Michael, thanks for those comments. Then with respect to your reserve and resource and exploration update timing, you mentioned third quarter. Could we maybe try to put a bit of a finer point on it? Is it possible it could be out later in August, or would this be sort of a mid-September event?

[Michael Steinmann, President and CEO at Pan American Silver]

It will be a September event, early September, but yeah, just a few weeks away.

[Lawson Winder, Analyst at Bank of America Merrill Lynch]

Thank you very much.

[Michael Steinmann, President and CEO at Pan American Silver]

Thank you.

[Operator]

This concludes the question and answer session. I would like to turn the conference back over to Michael Steinmann for closing remarks. Please go ahead.

[Michael Steinmann, President and CEO at Pan American Silver]

Thank you, operator, and thanks everyone for calling in today. Strong silver production and strong financial results bolstered our already robust balance sheet even further and allowed us to return, as you saw, $300 million to shareholders between share buybacks and dividends. Very strong result on that plan. Our capital allocation priorities remain the same. We maintain a solid balance sheet, $3.2 billion of liquidity right now together with our line of credit undrawn. Invest in our high return projects, I mentioned them, La Colorada, Escobal, of course, Jacobina optimization and our Timmins project. Continue to deliver solid returns to our shareholders in form of share buybacks and dividends. We already see metal prices recovering. I hope that will continue, obviously, from their typical summer low.

[Michael Steinmann, President and CEO at Pan American Silver]

As I mentioned just now in the last question, we plan to release our mineral reserve and resource update in September and looking forward to giving an update on all that efforts and very nice results we had during the year on many exploration projects in the company. I will give you an update on that in early September. Until then, thanks everybody for calling in.

[Operator]

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Participants

Executives

• Siren Fisekci, VP of Investor Relations
• Michael Steinmann, President and CEO
• Ignacio Couturier, CFO
• Martin Wafforn, SVP of Technical Services and Process Optimization
• Scott Campbell, COO

Analysts

• Lawson Winder, Analyst at Bank of America Merrill Lynch
• Wayne Lam, Analyst at TD Securities
• Cosmos Chiu, Analyst at CIBC
• Carey MacRury, Analyst at Canaccord Genuity
• Don DeMarco, Analyst at National Bank Financial