Pan American Silver Q3 2025 Earnings Call - Strong Cash Flow, Juanicipio Acquisition Boosts Silver Production and Lowers Costs

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the Pan American Silver Third Quarter 2025 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Siren Fisekci, Vice President, Investor Relations. Please go ahead, Ms. Fisekci.

Siren Fisekci, Vice President, Investor Relations, Pan American Silver: Thank you for joining us today for Pan American Silver’s conference call and webcast to discuss our third quarter 2025 results. This call includes forward-looking statements and information and references non-GAAP measures. Please see the cautionary statements in our MD&A news release and presentation slides for the Q3 2025 results, all of which are available on our website. I’ll now turn the call over to Michael Steinmann, Pan American’s President and CEO.

Michael Steinmann, President and CEO, Pan American Silver: Good morning, everyone. I’m glad you could join us to discuss Pan American’s Q3 2025 results. Over the past quarter and into Q4, we have benefited from the increase in silver and gold prices and a solid performance on cost. As a result, we achieved record attributable free cash flow of $251.7 million in Q3. On September 4, we completed our acquisition of MagSilver. While we have had only a one-month contribution from our 44% interest in the Juanicipio mine in Mexico, we’re already seeing the impact on lowering costs and improving margins, underscoring the strategic rationale for this transaction. We account for Juanicipio using the equity method, but report production, cash costs, all-in sustaining costs and capital expenditures on an attributable base to reflect our 44% interest. I’m pleased to say that we have delivered another quarter of strong financial results.

Attributable revenue in Q3 was a record of $884.4 million. Net earnings were $169.2 million or $0.45 basic earnings per share. This includes a $21.7 million loss from the sale of a subsidiary and $16.3 million of income from Juanicipio. The loss from the sale of a subsidiary is primarily due to a $28.6 million reduction to the $137.4 million gain we had previously booked on December 2024 of the sale of La Arena related to networking capital adjustments. This was partially offset by a $6.8 million gain on the sale of our 80% interest in La Pepa, a non-core development stage project in Chile, which we’ve sold for $40 million in cash proceeds in September 2025. Adjusted earnings were $181 million or $0.48 basic adjusted earnings per share. Attributable cash flow from operations was a record of $323.6 million.

Cash and short-term investments at the end of Q3 totaled $910.8 million, plus $85.8 million of cash at Juanicipio for our 44% interest. This is after spending a net of $409.3 million on the MagSilver acquisition, including transaction costs. With $1.7 billion of total available liquidity, we remain in a very strong financial position. Given this strong financial position and cash flow generation, I’m happy to report that the board has approved an increase to the dividend to $0.14 per common share with respect to Q3 2025. Despite the cash balance at the end of the quarter reflecting the impact of the cash paid for the MagSilver acquisition, the board exercised its discretion with respect to the dividend this quarter, given the strong cash flow being generated.

While we did not repurchase any shares in Q3 due in part to the blackout associated with the MAG acquisition, we remain prepared to act opportunistically. During the first nine months of 2025, we have returned $146.9 million in dividends and share repurchases to shareholders, and we will add another $59.1 million with the dividend payment approved yesterday. Turning now to operations, attributable silver production in Q3 was 5.5 million ounces, including 580,000 ounces from Juanicipio’s one-month contribution. We continue to be pleased by the performance at La Colorada, where the improved ventilation conditions are allowing mine rehabilitation and development rates to accelerate, thereby increasing the number of production areas, particularly in the deep high-grade zones of Candelaria East.

Silver production was impacted by lower silver grades at Huarón, reflecting increased development and reduced stope or mining rates in order to grow the inventory of prepared high-grade stopes, which are expected to enhance future production stability and reliability beginning in mid-2027. Silver segment cash costs were $10.41 per ounce, and all-in sustaining costs were $15.43 per ounce. These costs are lower than Q2 2025, already demonstrating the positive impact Juanicipio is having on reducing silver costs and improving margins, even though it has only been in our portfolio since early September. The quarter also benefited from low all-in sustaining costs at Cerro Moro due to high byproduct gold production and prices compared to Q2.

Partially offsetting these factors was the lower silver production at Huarón and the royalty expense at La Colorada of $8.3 million in Q3, largely payable to a third party as part of a profit-sharing agreement for mining on an adjacent concession. Attributable gold production was 183,500 ounces. As we mentioned during our Q2 call, various technical issues at Cerro Moro, El Peñón, Timmins, and Minera Florida, as described in our MD&A, were expected to linger into Q3, consistent with our expectation of a back-end weighted gold production. The technical issues at Cerro Moro and El Peñón also reduced silver production in Q3. Gold segment cash costs were $1,325 per ounce, and all-in sustaining costs, excluding NRV inventory adjustments, were $1,697 per ounce. Overall production and cost across both the silver and gold segments remain in line with our 2025 operating outlook.

However, we have raised our attributable silver production guidance to 22-22.5 million ounces and lowered silver segment all-in sustaining costs to $14.50-$16 per ounce to incorporate Juanicipio’s contribution. All other costs and production guidance remain unchanged. We invested $35.3 million in capital projects this quarter, mainly at La Colorada and Jacobina. At La Colorada, we continued exploration and equipment investments to further expand access to high-grade zones in the deeper eastern extents of the Candelaria Ore Zone. In September, we announced new high-grade drill results and added 52.7 million ounces of silver to inferred mineral resource, which substantially extends resource potential to the east and southeast beyond our current mining areas. This is an exciting development that offers significant synergies through a potential two-phase development approach to our large La Colorada Scarn project.

The first phase would combine development of the Scarn with the Vein Mine, which is expected to result in a higher grade, lower tonnage, and less capital-intensive development to what was described in our 2024 PEA. The second phase would involve the cave mine expansion. This phased development approach allows an enhanced Vein Mine to operate in parallel, utilizing shared infrastructure synergies and enhancing overall project value. A PEA for this two-phase development approach, combined with enhanced vein mining, is underway and is expected to be issued in Q2 2026. Furthermore, we are well advanced on partnership discussions that consider this enhanced development approach. At Jacobina, results from the extensive optimization study have identified a number of opportunities to relieve constraints that could potentially benefit mine life, production, and operational efficiencies.

These opportunities include, but are not limited to, a tailings filtration and filter stack project to relieve existing long-term tailings capacity limitations, a mine paced backfill plant project to take advantage of the tailings filtration circuit, thereby enabling an increase in ore recovery in selective high-grade ore zones, and a significant process plant streamlining project to improve reliability, reduce throughput constraints, reduce mine operating costs, and enhance gold recovery. We have recently commissioned a pilot plant on site to demonstrate the benefits that can be obtained by streamlining a plant flow sheet, which has been defined through bench-scale metallurgical laboratory testing. We have also engaged a leading engineering firm to develop detailed designs, schedules, and cost estimates for completing these optimization projects. We will continue to provide updates on implementing these exciting projects as these engineering efforts advance over the next year.

At Escobal, the Guatemalan Ministry of Energy and Mines has held several separate working meetings with the ministries involved in the ILO 169 consultation process, representatives from the SINCA Parliament, and the company. The Ministry of Mines has also made several appointments of key personnel to oversee and continue activities for the Escobal consultation process. The ministry has not provided a timeline for the completion of the ILO 169 consultation, but discussions remain active and respectful. Before closing, I would like to recognize Steve Busby for his remarkable contributions to Pan American Silver over the past 22 years, with 17 years spent as Chief Operating Officer. Steve is transitioning to the role of Special Advisor to the CEO, and I’m grateful we will continue to benefit from his deep technical expertise. I also want to welcome Scott Campbell as our new Chief Operating Officer.

Scott brings 25 years of operational experience in Latin America, and I look forward to continuing to work closely with him as we advance our strategy. I would now be happy to take your questions together with the other members of our management team. Thank you. We’ll now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You’ll hear a tone acknowledging your request. If you’re using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. First question is from Wayne Lam with TD Security. Please go ahead. Oh, yeah. Thanks. Morning, guys. Just curious on the guidance increase. Would it be safe to assume that the prior guidance for Juanicipio has remained the same as under MAG previously?

Just wondering if there’s been some modest tweaks, Laura, within the silver segment on the guidance. Just given the deal closing in September, I would have thought the pro forma silver guide would have been slightly higher. Just wondering if there are any other offsets from the other operations in the portfolio. Hi, good morning. No, it’s pretty similar to what MagSilver had. Obviously, as you can imagine, we’re only in the second month, really, of having that operation with us, but we assumed that the production should be pretty similar to what we’ve seen in September for the remaining months of the year. Okay, great. Thanks.

At Huarón, just on the grades and the increase in the development ore being processed, it’s been a couple of quarters now where you’ve encountered a bit higher dilution on the mining front, and just wondering if that maybe has also been a function of the reduction in the cutoff grades, just in terms of the process grades coming down a bit. Just curious if we should expect a bounce back in grades over the coming quarters, or if that’s more of an active strategy that you guys are employing to lower the cutoffs to bring in a bit more economic material. Hi, Wayne. This is Steve. I can address that one. Yeah.

The initiative we started last quarter was to accelerate developments, trying to get ahead, trying to get some high-grade stopes prepared and develop an inventory of stopes to give us more reliability on production. This initiative is going to take us through all of 2026 into 2027. What you are seeing is a lot more contribution of ore from development, which is more diluted than from stope mining. It is really an initiative to try to build inventory of stopes in the mine that will give us more flexibility in the future once we get all this development ahead of ourselves. That is what you are assuming. Okay, great. Thank you.

And then maybe just last one, just at Jacobina, on the optimization studies that are being undertaken, can you give us a bit more detail on what’s being optimized on the mine or at the plant and how that might impact the future operations, if that will be on additional tonnage or lower costs, and when we might be able to see the results of that? Yeah, great question. There’s a lot of work going on at Jacobina. I will pass it on to Steve. As you heard there, Steve will retire here as the COO, but he will stick around with us with his incredible wealth of knowledge. Steve will be very important for that kind of expansion work at Jacobina. Steve, maybe if you want to answer the question. Sure. Yeah, I’d be happy to, Wayne. And great question. It’s very exciting what we’re seeing there.

The mine itself, it’s pretty flexible because we’re really mining seven. We’ll be bringing on an eighth mining area with Maracota, and it gives us a lot of flexibility in terms of how the mine delivers ore to the plant in terms of throughput, expansion, tonnage, and that sort of thing. The main focus of the optimization is around the plant itself. This is an old plant. It was originally built in the 1980s as a less than 4,000-ton-a-day plant, and it’s been piecemealed over the years. A lot of components have been added. A lot of circuits have been added to the flow sheet, and it’s kind of a complex network of flow, if you will.

We see an opportunity to go into the plant and streamline that plant, remove some of the circuits we do not need, clean up some of the circuitry, try to go to bigger machines, fewer numbers of them, reduce maintenance costs, improve reliability, improve efficiencies, and reduce costs overall, coupled with when we look long-term at Jacobina, we really see an opportunity to go to a filter stack tailings facility. That opens up a lot of disposal space for us. Conventional tailings, we are going to run out of capacity here probably in the mid-2030s. We want to bring a filter plant into this flow sheet. We have been working hard. We are looking at vacuum filters like we run at El Peñón.

They look quite favorable, and we’re kind of proposing a vacuum filter plant that would be situated down at the tailings facility, and it’d allow us to put a stack that we’re designing down below the B2 dam, we call it. The location of this also provides benefits to us because we can add a modular temporary paste plant and use some of the tails to build cemented paste that we can pump into the north part of the mine where some of our higher-grade mining areas are, and it allows us higher recovery of some of the higher-grade stopes that we wouldn’t get without some type of cemented backfill. That’s where all this optimization is coming together. I hope you can appreciate it. It’s a significant brownfield project in and around the plant.

It’s going to require some very careful planning, very careful sequencing of how we make these modifications. That’s where we’re working intensely with an engineering company. As we start to get the designs and the sequencing and the costing sorted out, we’ll start to deliver truly what the value of this project is going to be overall. We’re very excited about it. Okay, great. Thanks, Matt. That’s a lot of good detail. Thanks for taking my questions, and best of luck to you, Steve. Thank you, Wayne. The next question is from Fahad Tariq with Jefferies. Please go ahead. Hi, thanks for taking my question.

Maybe just on the gold guidance, which did not change, can you talk about how you are thinking about the fourth quarter in the context of some of the dilution that you cited at Timmins, El Peñón, some of the development delays you cited at Minera Florida? I am just trying to get a sense of the confidence in the fourth quarter on the gold side. Thanks. Yeah. Good morning, Scott Campbell here. We had our challenges, certainly, in Q3, but we are maintaining the guidance for Q4, and we are confident that that will be achieved. We did have some dilution in Peñón, and we had some challenges and slight delays when it comes to ground support at both of our mines in Chile, but we are maintaining guidance, and things in November have already started to look up for gold production in the southern countries. Okay.

Maybe just switching gears to the updated development approach at La Colorada Scarn. Just in the opening remarks, you talked about the partnership discussions are well advanced. Maybe just any detail you can provide would be helpful. Thanks. Yeah. Good morning. Look, it’s a bit, the discussions are very advanced, but it’s too early to share them here publicly. It’s looking very interesting. I think that new approach, which we had an eye on, obviously, for a long time to see how we can advance the really high-grade part of our Scarn ore bodies. If you recall, we published a few press releases over the last couple of years with some very impressive, long, very wide high-grade intercepts in two of the three Scarn ore bodies that we discovered.

Really, the discovery of those high-grade structures, in addition, that we found during 2025, and we published in September and increased our resource thereby, I think about 53 million ounces already. Really, that combination of that high-grade discovery close to surface together with the high-grade wide intercepts of the core part of the scarn really allow us to go to this phased approach and look forward here to two phases, as we said, small tonnages, but still being impressive mine, very similar silver output than the original plan we had envisioned, but obviously higher grade, less tonnage, less capital, and then go to the larger cave mine later on in time. Very interesting advances.

As we indicated, we’ll come out with a PEA in Q2 next year, but a very positive advance on La Colorada, and looking forward here to look at those partnership agreements and involve a very strong partner for this really exciting project as well. Okay, great. And then maybe just lastly, is it fair to say that the partner would only be really for phase two, or are you envisioning them also contributing to the CapEx and being involved in phase one? Thanks. I could very well envision a phased approach there too with a more reduced partnership option in phase one and a larger one in phase two, but that still remains to be determined. Okay. Thank you. The next question is from John Tomasos with John Tomasos Very Independent Research. Please go ahead. Thank you for taking my question.

We know that you produce a little bit of base metals too, and a large differential exists with zinc at $1.44 and lead at $0.93. Why do you think the zinc price outperforms where world steel output is down a couple % this year? Why do you think lead lags when world auto output is strong, China trending toward 33 million cars record, etc.? Yeah. Good morning, John. Look, obviously, the base metals, and by the way, it’s, I think, at the moment only about 8% of our revenue. That will for sure increase once we have the La Colorada Scarn in production, but it’s a small part of our revenue. When you look at the base metal, I’m sure zinc is pushed and outperforming as being included in several countries in their list of critical minerals.

By the way, I’m sure you have noticed that silver got included in the U.S. as well on that list. As you know, the base metal prices really reflect the outlook on the world economy and where that’s moving. I guess there’s still some people worried about where this is going over the next few years, and that’s reflected in those prices. For sure, the inclusion of zinc and critical minerals helps the price. Thank you. The next question is from Ovais Habib with Scotiabank. Please go ahead. Thank you, Operator. Hi, Michael and Pan American Team. Congrats on a good quarter leading to a good free cash flow as well. Scott, congrats to you on your new appointment as well. Michael, a lot of my questions have already been answered, but some follow-ups to those questions.

Starting off with the question on Cerro Moro, El Peñón, Timmins, and I think Minera Florida as well. Obviously, they’ve had some issues in terms of reconciliation, geotech issues. Do you see these issues lingering into Q4, or have most of these issues now been resolved? Just to clarify on that front. Yeah. Good morning, Ovais. And you’re recalling Q2, and actually, some of those technical issues started with already mentioned that they will linger into Q3, which we see. That’s obviously the reason why our production profile, especially on the gold, is more back-end loaded. As Scott mentioned, we see already an uptake on those grades. Looking forward to meet those guidance goals that we have. Maybe Scott, do you want to add a bit more comment to this? Yeah. Thanks for the kind and sincere words.

Regarding Timmins, some of the geotechnical challenges we have involve the squeezing of our production drill holes in the deep central mining zone at the Bell Creek operation. We’ve been mitigating that through the use of casings, PVC casings, and in some cases, we use a sealant or a polymer, and we’ve had some success with that. We’re also installing additional ground support in development headings as we pass through high strain and stress areas using dynamic support. The paste backfill system at Bell Creek recently commissioned is also becoming more and more utilized. We’re getting better utilization, and the learning curve has really flattened out on that facility. We’re seeing a lot of success. The numbers are looking favorable as we head into November, sort of halfway through Q4. Thanks for that, Scott.

Just going into 2026, I mean, is this more in terms of obviously getting ahead of production and accelerating development going into 2026? Yes. Generally, yes. At several of our operations, we’ve initiated additional development programs in Q4 to really give us more optionalities as we head into 2026. In a couple of cases, we got behind on our development, so we had to acquire new equipment, in some cases, hire external third-party contractors to do that. We’re on, and Timmins included. Yes, it’s all in our best interest to really ensure our success coming up later at the end of 2025 and really into 2026. Yeah. Thanks for that, Scott. Then just moving on to one sip here on the closing of the MagSilver transaction. Michael, is everything progressing according to your expectations?

I mean, are you looking, how involved are you with operations, and is there a push to get more exploration started around the area? Yeah. I’m incredibly happy where it stands. I think we all saw a glimpse here of what Juanicipio will do for us with only one month in Q3, and you see just the strong production, strong cash flow coming out of that operation. You can imagine that even higher metal prices right now, how well that asset is doing. Actually, I was just there last week, and it’s just, again, an impressive operation. A lot of involvement on the operational teams here on all levels, really from operation to metallurgy to geology to exploration. A lot of exploration going on as well. I’m really, really happy how this has worked out so far.

I’m really looking forward to see a full quarter of Juanicipio in Q4, as I said, with a combination of very favorable metal prices as well. Obviously, we come out in early January or mid-January, normally mid to late of January with the forecast for next year, which will include also in our budget our exploration spending. You will see all the details then of how it looks like for the production profile. Yeah, I would guess it’s, I would say it’s at least met or quite a bit exceeded my expectations at Juanicipio. Yeah. Thanks for that, Michael. My last question is on La Colorada Scarn. You’re looking to announce the PEA in Q2 of next year.

Is the announcement of the partnership exclusive of this event, or you will need to see the PEA before you kind of come to some sort of terms with the partner? No, I think we will be able to announce the partnership early. I think as soon as we have a document executed on that, we will release that information. Okay. Thanks. That’s it for me, Michael, and thanks for taking my questions. Thanks, Ovais. The next question is from Cosmos Chiu with CIBC. Please go ahead. Thanks, Michael, and thank you, Steve as well, and congratulations, Scott. Maybe my first question is also on the Scarn technical report that’s potentially coming out next year, or not potentially, it is coming out next year. As you mentioned, Michael, you’re going to take a phased approach now with a higher grade, lower tonnage deposit upfront.

I seem to remember the Scarn deposit is centered around some high-grade centers, the 901 zone, 902, 903. Is there one particular zone that is higher grade? I do not know if you have that answer yet. Are we looking at higher grade portions from all three areas? Are we looking at the upper portions of all three areas? How should we incorporate what I know about 901, 902, and 903 into what we can see next year? Yeah, Cosmos. The high-grade core zones are mostly 901 and 902. We are actually doing quite a bit of drilling still on 903, and some pretty interesting success here where the Scarn seems to even further extend by quite a good distance. I think on 903, it is still out there to see if there is a high-grade zone there as well.

When you look at the press releases we put out over the last two years on those high-grade intercepts of the Scarn, they’re all of them located in 901 and 902. As I said, it’s really the combination together with those high-grade, closer to surface structures that we published in September. After that, it showed a big increase in resources with our reserve and resource update. It’s really that combination that allowed us this phased approach. As you can imagine, we were trying for a phased approach from the beginning on it, but obviously, it’s a way stronger project if you can do it in a phased approach, less capital upfront, and increase later when you really understand underground and you know the ore body well.

As I said earlier on, that does not mean that our production profile of silver will be much lower than what we had envisioned in the full large cave option. There is less execution risk, less capital, probably faster in bringing the project on. Overall, it is just an exciting development at La Colorada Scarn. Yeah, that sounds great. Maybe a follow-up then. Michael, as you mentioned, with this phased approach, the possibility is that the vein line could run parallel with both Scarn phases. Is there some thinking in terms of some of that ore from the Scarn could actually go through the current mill? No, the current production mill capacity is around 2,000-2,500 tons a day. I mean, we are talking here about a multiple of that.

We will build a new mill, much larger, and then have that mill built with the potential to expand down the road way bigger to phase two. Yeah, the current operation, the current mill is too small. The metallurgy is very, very similar of the mineralization of the Scarn and the veins. It is an easy project really for us to kind of commingle the veins and the Scarn and put that through the same mill. It is not a metallurgical difference, it is just the current mill is too small for that. Okay. Okay. Sounds good. It is going to be a new mill from day one for the Scarn, but it could still run in parallel with a potential expansion later on. Cool. Yeah.

That’s really the exciting advance here is that obviously putting the cave mining a bit later allows us to continue to mine those high-grade veins, which it seems like with the exploration we keep finding more and more of it. Yeah. Maybe I do apologize. I do have a long accounting question here. I just want to get a better understanding of the equity method of accounting for Juanicipio. I was looking at note number nine, and I could kind of follow through. My understanding is that it’s 44% of what Juanicipio reports, 100%. So I can understand the $72 million in revenue, $11.9 million in production costs, $15.1 million in depreciation. So 45.1 in mine operating earnings. But then it jumps to $37.1 million in net income and comprehensive income.

That’s a gap that I do not really fully understand, which drives the $16 million pickup for Pan American Silver at the consolidated level. Could you maybe help me out in terms of that little gap? Hey, Cosmos, it’s Ignacio here. If you want, we can take this offline as well. Hi. Yes. If you want, we can take this offline because there’s a lot of detail. Basically, the reporting requirements do not require us to put all the detail in there. Some of the lines that are missing are taxes and other items that are material. Basically, there’s a whole bunch of other stuff there that’s not included in the net income and comprehensive income. I work it out to about 18%.

Is that a good number to kind of use in terms of that difference, or each quarter is a bit different? I think let’s give it a couple of quarters here because this is only one month of results. I would say let’s see what the next quarter looks like. As I said, I’m happy to take this offline with you, and we can talk a little bit about some of the stuff. I did apologize, Ignacio, before asking the question, so I knew it’d be a little bit complicated. Any other accounting nuances that we should be aware of in terms of Juanicipio? No, I would say, look, this is the same method that MagSilver used to report Juanicipio. Yeah, it’s a little bit tricky because we haven’t had this before.

It is difficult to talk about the company performance now, given that the performance of Juanicipio is buried into that equity line or the investment in Juanicipio line, both in the income statement and the balance sheet. We have introduced a few new non-GAAP metrics, including attributable revenue, attributable free cash flow, and attributable operating cash flow to help us better understand and talk about the company performance, including Juanicipio. Another thing to keep in mind is really the cash from Juanicipio that is sitting at the JV level is buried in the interest in Juanicipio or investment in Juanicipio line in our balance sheet. Only once the Juanicipio JV distributes dividends will that cash appear in the cash and cash equivalent lines in our balance sheet. That cash distribution is somewhat discretionary, correct? Yeah. No, they are on a schedule.

Given the transition between MagSilver and ourselves, it’s been a little bit delayed. It’s been a couple of quarters since the JV has not issued dividends. There should be a catch-up in Q4 on that. Okay. Great. Maybe lastly on the dividend, great to see that you’ve increased it again, second consecutive quarter in terms of that increase. In terms of the calculation, the $0.14 is a bit of a detour away from the matrix that you’ve given to us in the past in terms of dividend based on net cash. I guess my question is, how should we not predict, but what should we expect for the next quarter? That’s number one.

Number two, how much of the fact that you were not able to use your NCIB in Q3 did that factor into you increasing on a discretionary basis your dividend in Q3? Will you use the NCIB again in the future? Yes. Look, regarding the dividends, great news. That is really kind of a departure from our dividend policy for this quarter and this quarter only. The reason for it is a very simple one, very strong cash flow generation. You see, we nearly recovered already a large part of the $500 million that we used, the cash portion that we used for the acquisition of MagSilver. It was the board’s view that with this incredible strong cash flow generation, it is just the right thing to depart from the dividend policy for one quarter and have the shareholders participate in that a bit earlier.

It has nothing to do with the blackout we were in until the transaction closed on the NCIB. We will obviously look again at the NCIB from now on and like before, make share purchases in an opportunistic way. That is not the reason for the increase. The reason for the increase is that we look at our cash forecast, we look at a strong Q4, and it was just the right thing to have our shareholders participate a bit earlier in that really, really strong quarter. Thanks, Michael. I agree as well. Those are the questions I have. Congrats again on a very good Q3, and I look forward to the rest of 2025. Thank you. The next question is from Don DeMarco with National Bank. Please go ahead. Oh, thank you, Operator, and good morning, Michael and team. Thanks for taking my questions.

First off, we saw consolidated AISC guidance lowered substantially. Was there any other contributors to this other than the addition of Juanicipio? No, it’s the strong impact of Juanicipio. I mean, we would be on track with what we had in our original guidance, like we are on the gold side. As we alluded to when we announced the transaction, this transaction will have a meaningful positive impact to our cash cost on the silver side. That’s really the result that you’ve seen. Only with one month on it, you already see that result. Calculating in the advantage of having Juanicipio for a full quarter in Q4 led us to the lower guidance on our costs. Yeah. I was just going to add, Don, this is Steve.

Just to a lesser extent, we are enjoying the benefit of the higher gold prices as well relative to what we use for guidance. That is helping to offset some of the cost increases we are seeing is that byproduct gold price. Yeah. Just to remind everybody again, I say that probably every call, there are a lot of factors, important factors on our cost. There can be tailwinds or headwinds that are out of our control, and one is exchange rates. Of course, when the US dollar declines, normally our local currency increases, and that automatically is a headwind on our cost. That is the added benefit with the lower dollar that we see higher precious metal prices. That is kind of the system how we play.

When we see a strong dollar, we see pressure on the metal price, but we see a tailwind on our costs in local currencies and vice versa. Just keep always in mind that exchange rates are an important part of this as well. Okay. Thank you for that. We look at Minera Florida and Timmins. Costs are a bit elevated in the quarter, but of course, the margins are still good. Do you have any performance criteria to identify potential divestment candidates? Can you walk us through your potential divestment pecking order? Look, I mean, we did a lot of divestments over the last few years. You probably saw we divested a project in Chile, La Pepa as well, for $40 million cash in the quarter.

There are quite a few other smaller projects that are in the pipeline, in the works right now by our business development team. I’m pretty happy with what we have right now on our operational side in our portfolio. I’m looking forward to continuing with those assets. On the flip side of that, after MAG and previously the Humana acquisition, what’s a good long-term silver or gold production level that you’d like to achieve or maintain? I think we need to see the final budget on the Juanicipio side before I can answer that question. As you can imagine, it’s a very large and important part of our silver production going forward here. Great. We’ll keep an eye out for guidance next year on that then. That’s all for me. Thanks for taking my questions and good luck with the rest of the quarter.

Thank you. This concludes the question and answer session. I’d like to turn the conference back over to Michael Steinmann for any closing remarks. Thank you, Operator, and thanks everyone for calling. Another great quarter, record revenue of nearly $890 million, record operational cash flows of $323 million, record attributable free cash flow of nearly $252 million. Very strong numbers. That obviously led us to increase for the second time in a row now since Q2 to increase the dividend. It’s great to have our shareholders participate, not only in increase of our share price, but also in additional return to our dividend policy. Great quarter. I’m really happy with its stance. As I said, we saw the first glimpse of what Juanicipio is able to do here in the full quarter, which will be the first full quarter in Q4.

We only had one month of the mine in Q3, and we see already a very positive impact. Just to the last question there from Don, we will see an important impact to our silver production here from Juanicipio looking forward. I’m really happy where we stand. Looking forward to a great and strong Q4 report early next year, but also report our outlooks for 2026 and show you in detail how our guidance for that, the cost guidance and production guidance looks like. Thanks everyone for calling in, and have a good rest of the year. We’ll talk in early year, I guess, February or so for our Q4 results. Thanks everyone. This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.