EX-99.1 2 paas09-30x2022financialsex.htm EX-99.1

Document

Unaudited Condensed Interim Consolidated Financial Statements and Notes

FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2022

Condensed Interim Consolidated Statements of Financial Position (unaudited, in thousands of U.S. dollars)

			September 30,			December 31,
			2022			2021
Assets
Current assets
Cash and cash equivalents (Note 21)			$	153,079		$	283,550
Short-term investments (Note 5)			34,091			51,723
Trade and other receivables			113,814			128,150
Income tax receivables			47,182			20,282
Inventories (Note 6)			438,207			500,462
Derivative assets (Note 4a)			3,819			3,995
Prepaid expenses and other current assets			7,802			13,007
			797,994			1,001,169
Non-current assets
Mineral properties, plant and equipment (Note 7)			2,215,715			2,344,551
Long-term inventories (Note 6)			26,743			25,644
Long-term tax receivables			8,723			8,711
Deferred tax assets			57,409			55,953
Long-term investment (Note 9)			86,985			77,410
Goodwill & other assets			5,990			5,146
Total assets			$	3,199,559		$	3,518,584
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 10)			$	311,026		$	306,087
Derivative liabilities (Note 4a)			4,917			351
Provisions (Note 11)			12,211			8,041
Lease obligations (Note 12)			15,201			10,663
Debt (Note 13)			9,895			3,400
Income tax payables			22,647			59,133
			375,897			387,675
Non-current liabilities
Long-term provisions (Note 11)			232,731			240,111
Deferred tax liabilities			144,123			184,785
Long-term lease obligations (Note 12)			21,700			19,898
Long-term debt (Note 13)			21,669			11,900
Deferred revenue (Note 14)			14,031			12,516
Other long-term liabilities (Note 15)			26,365			25,691
Total liabilities			836,516			882,576
Equity (Note 16)
Issued capital			3,137,700			3,136,214
Share option reserve			93,227			93,375
Investment revaluation reserve (Note 4c)			(32,604)			—
Deficit			(840,723)			(598,035)
Total equity attributable to Company shareholders			2,357,600			2,631,554
Non-controlling interests			5,443			4,454
Total equity			2,363,043			2,636,008
Total liabilities and equity			$	3,199,559		$	3,518,584

Contingencies (Note 24); subsequent events (Note 26)

See accompanying notes to the condensed interim consolidated financial statements

APPROVED BY THE BOARD ON NOVEMBER 9, 2022

"signed" Gillian Winckler, Director "signed" Michael Steinmann, Director

PAN AMERICAN SILVER CORP. 1

Condensed Interim Consolidated Statements of Earnings and Comprehensive Earnings (unaudited, in thousands of U.S. dollars)

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Revenue (Note 22)			$	338,889		$	460,349		$	1,119,246		$	1,210,580
Cost of sales (Note 22)
Production costs (Note 17)			(275,050)			(269,428)			(842,160)			(662,037)
Depreciation and amortization			(77,902)			(83,184)			(236,755)			(226,817)
Royalties			(7,725)			(8,850)			(27,016)			(29,827)
			(360,677)			(361,462)			(1,105,931)			(918,681)
Mine operating (loss) earnings (Note 22)			(21,788)			98,887			13,315			291,899
General and administrative			(6,765)			(9,080)			(25,973)			(26,597)
Exploration and project development			(2,801)			(2,412)			(9,775)			(6,995)
Mine care and maintenance (Note 18)			(12,686)			(7,491)			(34,645)			(22,514)
Foreign exchange losses			(2,213)			(971)			(10,402)			(5,621)
Impairment charges (Note 8)			—			—			(99,064)
Derivative (losses) gains (Note 4d)			(6,537)			(1,735)			1,518			3,755
Mineral properties, plant and equipment (losses) gains			(606)			28,462			(1,305)			32,718
Gains and income from associates (Note 9)			—			540			45,033			4,058
Other income (expense)			2,321			(5,052)			7,052			(2,494)
(Loss) earnings from operations			(51,075)			101,148			(114,246)			268,209
Investment loss (Note 4b)			(12,640)			(25,250)			(17,468)			(53,639)
Interest and finance expense (Note 19)			(5,567)			(5,294)			(16,061)			(12,714)
(Loss) earnings before income taxes			(69,282)			70,604			(147,775)			201,856
Income tax expense (Note 23)			(1,920)			(50,385)			(20,228)			(117,958)
Net (loss) earnings			$	(71,202)		$	20,219		$	(168,003)		$	83,898
Net (loss) earnings attributable to:
Equity holders of the Company			$	(71,527)		$	20,251		$	(168,992)		$	83,392
Non-controlling interests			325			(32)			989			506
			$	(71,202)		$	20,219		$	(168,003)		$	83,898
Other comprehensive (loss) earnings, net of taxes
Items that will not be reclassified to net earnings:
Unrealized loss on long-term investment (Note 4c)			$	(25,487)		$	—		$	(37,692)		$	—
Income tax recovery related to long-term investments (Note 23)			5,088			—			5,088			—
Total other comprehensive loss			$	(20,399)		$	—		$	(32,604)		$	—
Total comprehensive (loss) earnings			$	(91,601)		$	20,219		$	(200,607)		$	83,898
Total comprehensive (loss) earnings attributable to:
Equity holders of the Company			$	(91,926)		$	20,251		$	(201,596)		$	83,392
Non-controlling interests			325			(32)			989			506
			$	(91,601)		$	20,219		$	(200,607)		$	83,898
(Loss) earnings per share attributable to common shareholders (Note 20)
Basic (loss) earnings per share			$	(0.34)		$	0.10		$	(0.80)		$	0.40
Diluted (loss) earnings per share			$	(0.34)		$	0.10		$	(0.80)		$	0.40
Weighted average shares outstanding (in 000’s) Basic			210,531			210,299			210,503			210,282
Weighted average shares outstanding (in 000’s) Diluted			210,531			210,419			210,503			210,431

See accompanying notes to the condensed interim consolidated financial statements.

PAN AMERICAN SILVER CORP. 2

Condensed Interim Consolidated Statements of Cash Flows (unaudited, in thousands of U.S. dollars)

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Operating activities
Net (loss) earnings for the period			$	(71,202)		$	20,219		$	(168,003)		$	83,898
Income tax expense (Note 23)			1,920			50,385			20,228			117,958
Depreciation and amortization			77,902			83,184			236,755			226,817
Gains and income from associates (Note 9)			—			(540)			(45,033)			(4,058)
Impairment charges (Note 8)			—			—			99,064			—
Net realizable value inventory expense (recovery)			15,096			2,456			92,309			(12,933)
Accretion on closure and decommissioning provision (Notes 11,19)			3,711			1,868			11,131			5,606
Investment loss (Note 4b)			12,640			25,250			17,468			53,639
Interest paid			(1,612)			(1,251)			(4,371)			(3,711)
Interest received			1,279			16			2,019			145
Income taxes paid			(20,365)			(24,043)			(121,084)			(106,395)
Other operating activities (Note 21)			13,445			(23,534)			16,493			(25,550)
Net change in non-cash working capital items (Note 21)			21,604			23,007			(12,965)			(61,406)
			$	54,418		$	157,017		$	144,011		$	274,010
Investing activities
Payments for mineral properties, plant and equipment			$	(69,073)		$	(62,190)		$	(202,326)		$	(173,331)
Proceeds from disposition of mineral properties, plant and equipment			445			29,935			8,209			44,731
(Purchase of) proceeds from short-term investments			(325)			518			694			1,406
Net proceeds from derivatives			1,220			1,789			6,260			6,857
			$	(67,733)		$	(29,948)		$	(187,163)		$	(120,337)
Financing activities
Proceeds from common shares issued			$	159		$	—		$	843		$	335
Distributions to non-controlling interests			—			(255)			—			(890)
Dividends paid			(23,180)			(21,030)			(73,696)			(50,468)
Proceeds from debt (Note 13)			2,500			—			3,300			—
Repayment of debt (Note 13)			(1,635)			(850)			(3,596)			(850)
Payment of equipment leases			(4,240)			(3,145)			(11,130)			(8,980)
			$	(26,396)		$	(25,280)		$	(84,279)		$	(60,853)
Effects of exchange rate changes on cash and cash equivalents			(2,039)			(1,405)			(3,040)			(2,424)
(Decrease) increase in cash and cash equivalents			(41,750)			100,384			(130,471)			90,396
Cash and cash equivalents at the beginning of the period			194,829			157,125			283,550			167,113
Cash and cash equivalents at the end of the period			$	153,079		$	257,509		$	153,079		$	257,509

Supplemental cash flow information (Note 21).

See accompanying notes to the condensed interim consolidated financial statements.

PAN AMERICAN SILVER CORP. 3

Condensed Interim Consolidated Statements of Changes in Equity (unaudited, in thousands of U.S. dollars, except for number of shares)

			Attributable to equity holders of the Company
			Issued shares			Issued capital			Share option reserve			Investment revaluation reserve			Deficit			Total			Non- controlling interests			Total equity
Balance, December 31, 2020			210,258,667			$	3,132,140		$	93,409		$	—		$	(623,030)		$	2,602,519		$	3,320		$	2,605,839
Total comprehensive earnings
Net earnings for the year			—			—			—			—			97,428			97,428			1,134			98,562
Shares issued on the exercise of stock options			65,780			762			(143)			—			—			619			—			619
Shares issued as compensation			133,077			3,312			—			—			—			3,312			—			3,312
Share-based compensation on option grants			—			—			109			—			—			109			—			109
Distributions by subsidiaries to non-controlling interests			—			—			—			—			(933)			(933)			—			(933)
Dividends paid			—			—			—			—			(71,500)			(71,500)			—			(71,500)
Balance, December 31, 2021			210,457,524			$	3,136,214		$	93,375		$	—		$	(598,035)		$	2,631,554		$	4,454		$	2,636,008
Total comprehensive loss
Net loss for the period			—			—			—			—			(168,992)			(168,992)			989			(168,003)
Other comprehensive loss			—			—			—			(32,604)			—			(32,604)			—			(32,604)
			—			—			—			(32,604)			(168,992)			(201,596)			989			(200,607)
Shares issued on the exercise of stock options			65,940			1,158			(315)			—			—			843			—			843
Shares issued as compensation			14,745			328			—			—			—			328			—			328
Share-based compensation on option grants			—			—			167			—			—			167			—			167
Dividends paid			—			—			—			—			(73,696)			(73,696)			—			(73,696)
Balance, September 30, 2022			210,538,209			$	3,137,700		$	93,227		$	(32,604)		$	(840,723)		$	2,357,600		$	5,443		$	2,363,043

			Attributable to equity holders of the Company
			Issued shares			Issued capital			Share option reserve			Investment revaluation reserve			Deficit			Total			Non- controlling interests			Total equity
Balance, December 31, 2020			210,258,667			$	3,132,140		$	93,409		$	—		$	(623,030)		$	2,602,519		$	3,320		$	2,605,839
Total comprehensive earnings
Net earnings for the period			—			—			—			—			83,392			83,392			506			83,898
Shares issued on the exercise of stock options			31,072			405			(70)			—			—			335			—			335
Shares issued as compensation			9,646			325			—			—			—			325			—			325
Share-based compensation on option grants			—			—			75			—			—			75			—			75
Distributions by subsidiaries to non-controlling interests			—			—			—			—			(890)			(890)			—			(890)
Dividends paid			—			—			—			—			(50,468)			(50,468)			—			(50,468)
Balance, September 30 2021			210,299,385			$	3,132,870		$	93,414		$	—		$	(590,996)		$	2,635,288		$	3,826		$	2,639,114

See accompanying notes to the condensed interim consolidated financial statements.

PAN AMERICAN SILVER CORP. 4

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

1. NATURE OF OPERATIONS

Pan American Silver Corp. is the ultimate parent company of its subsidiary group (collectively, the “Company”, or “Pan American”). Pan American is a British Columbia corporation domiciled in Canada, and its office is at Suite 1440 – 625 Howe Street, Vancouver, British Columbia, V6C 2T6.

The Company is engaged in the production and sale of silver, gold, zinc, lead and copper as well as other related activities, including exploration, extraction, processing, refining and reclamation. The Company’s major products are produced from mines in Canada, Peru, Mexico, Argentina and Bolivia. Additionally, the Company has project development activities in Canada, Peru, Mexico and Argentina, and exploration activities throughout South America, Canada and Mexico. As at September 30, 2022, the Company's Escobal mine in Guatemala continues to be on care and maintenance pending satisfactory completion of a consultation process led by the Ministry of Energy and Mines in Guatemala. In late February 2022, the Company's Morococha mine in Peru was placed on care and maintenance due to a requirement to move the processing facilities to allow for the expansion of a neighboring mine.

Principal subsidiaries:

The principal subsidiaries of the Company and their geographic locations at September 30, 2022 were as follows:

Location

Subsidiary

Ownership Interest

Accounting

Operations and Development Projects Owned

Canada

Lake Shore Gold Corp.

100%

Consolidated

Bell Creek and Timmins West mines (together "Timmins mine"

Mexico

Plata Panamericana S.A. de C.V.

100%

Consolidated

La Colorada mine

Compañía Minera Dolores S.A. de C.V.

100%

Consolidated

Dolores mine

Peru

Pan American Silver Huaron S.A.

100%

Consolidated

Huaron mine

Compañía Minera Argentum S.A.

92%

Consolidated

Morococha mine

Shahuindo S.A.C.

100%

Consolidated

Shahuindo mine

La Arena S.A.

100%

Consolidated

La Arena mine

Bolivia

Pan American Silver (Bolivia) S.A.

95%

Consolidated

San Vicente mine

Guatemala

Pan American Silver Guatemala S.A.

100%

Consolidated

Escobal mine

Argentina

Minera Tritón Argentina S.A.

100%

Consolidated

Manantial Espejo & Cap-Oeste Sur Este mines

Minera Joaquin S.R.L.

100%

Consolidated

Joaquin mine

Minera Argenta S.A.

100%

Consolidated

Navidad project

2. BASIS OF PREPARATION

These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”) and have been condensed with certain disclosures from the Company's audited consolidated financial statements for the year ended December 31, 2021 (the "2021 Annual Financial Statements") omitted. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the 2021 Annual Financial Statements.

PAN AMERICAN SILVER CORP. 5

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, STANDARDS, AND JUDGEMENTS

a)Changes in accounting policies

The accounting policies applied in the preparation of these unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in the 2021 Annual Financial Statements.

b)Future changes in accounting standards

Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. Management is still evaluating and does not expect any such pronouncements to have a material impact on the Company’s consolidated financial statements upon adoption.

c)Significant judgements

In preparing the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2022, the Company applied the critical judgements and estimates disclosed in Note 5 of its 2021 Annual Financial Statements.

4. FINANCIAL INSTRUMENTS

a)Financial assets and liabilities by categories

September 30, 2022			Amortized cost			FVTPL			FVTOCI			Total
Financial Assets:
Cash and cash equivalents			$	153,079		$	—		$	—		$	153,079
Trade receivables from provisional concentrates sales(1)			—			26,539			—			26,539
Receivables not arising from sale of metal concentrates(1)			70,953			—			—			70,953
Short-term investments			—			34,091			—			34,091
Long-term investment(2)			—			—			86,985			86,985
Derivative assets			—			3,819			—			3,819
			$	224,032		$	64,449		$	86,985		$	375,466
Financial Liabilities:
Derivative liabilities			$	—		$	4,917		$	—		$	4,917
Debt			$	31,564		$	—		$	—		$	31,564

(1)Included in Trade and other receivables.

(2)Comprised of the Company's investment in Maverix Metals Inc. ("Maverix") (Note 9).

December 31, 2021			Amortized cost			FVTPL			FVTOCI			Total
Financial Assets:
Cash and cash equivalents			$	283,550		$	—		$	—		$	283,550
Trade receivables from provisional concentrates sales(1)			—			40,020			—			40,020
Receivables not arising from sale of metal concentrates(1)			76,902			—			—			76,902
Short-term investments			—			51,723			—			51,723
Derivative assets			—			3,995			—			3,995
			$	360,452		$	95,738		$	—		$	456,190
Financial Liabilities:
Derivative liabilities			$	—		$	351		$	—		$	351
Debt			$	15,300		$	—		$	—		$	15,300

(1)Included in Trade and other receivables.

PAN AMERICAN SILVER CORP. 6

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

b)Short-term investments recorded at fair value through profit or loss ("FVTPL")

The Company’s short-term investments are recorded at FVTPL. The losses from short-term investments for the three and nine months ended September 30, 2022 and 2021 were as follows:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Unrealized losses on short-term investments			$	(12,339)		$	(25,443)		$	(17,862)		$	(54,147)
Realized (losses) gains on short-term investments			(301)			193			394			508
			$	(12,640)		$	(25,250)		$	(17,468)		$	(53,639)

c)Financial assets recorded at fair value through other comprehensive income ("FVTOCI")

The Company’s long-term investments are recorded at fair value through other comprehensive income ("OCI"). The losses from long-term investments for the three and nine months ended September 30, 2022 and 2021 were as follows:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Unrealized loss on long-term investment(1)			$	(25,487)		$	—		$	(37,692)		$	—

(1)Excludes income tax recovery, recorded through OCI, related to long-term investments of $5.1 million and $5.1 million for the three and nine months ended September 30, 2022, respectively. There were no amounts recorded in the comparative periods.

d)Derivative instruments

The Company's derivatives are comprised of foreign currency and commodity contracts. The (losses) gains on derivatives for the three and nine months ended September 30, 2022 and 2021 were comprised of the following:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Realized gains on derivatives			$	1,220		$	1,789		$	6,260		$	6,857
Unrealized losses on derivatives			(7,757)			(3,524)			(4,742)			(3,102)
			$	(6,537)		$	(1,735)		$	1,518		$	3,755

e)Fair value information

i) Fair Value Measurement

The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3: Inputs for the asset or liability based on unobservable market data.

PAN AMERICAN SILVER CORP. 7

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the Consolidated Statements of Financial Position at fair value on a recurring basis were categorized as follows:

			At September 30, 2022						At December 31, 2021
			Level 1			Level 2			Level 1			Level 2
Assets and Liabilities:
Short-term investments			$	34,091		$	—		$	51,723		$	—
Long-term investment(1)			86,985			—			—			—
Trade receivables from provisional concentrate sales			—			26,539			—			40,020
Derivative assets			—			3,819			—			3,995
Derivative liabilities			—			(4,917)			—			(351)
			$	121,076		$	25,441		$	51,723		$	43,664

(1)Comprised of the Company's investment in Maverix Metals Inc. ("Maverix") (Note 9).

The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remains unchanged from that at December 31, 2021.

ii) Valuation Techniques

Short-term and long-term investments

The Company’s short-term and long-term investments are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy and are primarily equity securities. The fair value of the equity securities is calculated using the quoted market price multiplied by the quantity of shares held by the Company.

Derivative assets and liabilities

The Company’s derivative assets and liabilities were comprised of foreign currency and commodity contracts which are valued using observable market prices.

Receivables from provisional concentrate sales

A portion of the Company’s trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for copper, zinc and lead and the London Bullion Market Association P.M. fix for gold and silver.

f)Financial Instruments and related risks

The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The principal financial risks to which the Company is exposed are:

i)Credit risk

ii)Liquidity risk

iii)Market risk

1. Currency risk

2. Interest rate risk

3. Price risk

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.

i) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s trade receivables. The carrying value of trade receivables represents the maximum credit exposure. 

PAN AMERICAN SILVER CORP. 8

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

The Company has concentrate contracts to sell the zinc, lead, copper and silver concentrates produced by the Huaron, San Vicente and La Colorada mines. Concentrate contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent, the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have a market for its concentrates and therefore its future operating results may be materially adversely impacted. At September 30, 2022, the Company had receivable balances associated with buyers of its concentrates of $26.5 million (December 31, 2021 - $40.0 million). The vast majority of the Company’s concentrate is sold to a limited number of concentrate buyers.

Doré production from La Colorada, Dolores, Manantial Espejo, Shahuindo, La Arena, and Timmins is refined under long-term agreements with fixed refining terms at seven separate refineries worldwide. The Company generally retains the risk and title to the precious metals throughout the process of refining and therefore is exposed to the risk that the refineries will not be able to perform in accordance with the refining contract and that the Company may not be able to fully recover precious metals in such circumstances. At September 30, 2022, the Company had approximately $11.6 million (December 31, 2021 - $52.3 million) of value contained in precious metal inventory at refineries. The Company maintains insurance coverage against the loss of precious metals at the Company’s mine sites, in-transit to refineries and while at the refineries. Risk is transferred to the refineries upon delivery.

The Company maintains trading facilities with several banks and bullion dealers for the purposes of transacting the Company’s metal sales. None of these facilities are subject to margin arrangements. The Company’s trading activities can expose the Company to the credit risk of its counterparties to the extent that the trading positions have a positive mark-to-market value. However, the Company maintains an active credit management and monitoring program to minimize the risk of excessive credit risk concentration with any single counterparty.

Refined silver and gold are sold in the spot market to various bullion traders and banks. Credit risk may arise from these activities if the Company is not paid for metal at the time it is delivered, as required by spot sale contracts.

Supplier advances for products and services yet to be provided are a common practice in some jurisdictions in which we operate. These advances represent a credit risk to us to the extent that suppliers do not deliver products or perform services as expected. As at September 30, 2022, we had made $16.3 million of supplier advances (December 31, 2021 - $11.2 million), which are reflected in “Trade and other receivables” on the consolidated statements of financial position.

Management constantly monitors and assesses the credit risk resulting from its refining arrangements, concentrate sales and commodity contracts with its refiners, supplier advances, trading counterparties and customers. Furthermore, management carefully considers credit risk when allocating prospective sales and refining business to counterparties. In making allocation decisions, management attempts to avoid unacceptable concentration of credit risk to any single counterparty.

The Company invests its cash and cash equivalents, which also has credit risk, with the objective of maintaining safety of principal and providing adequate liquidity to meet all current payment obligations.

ii) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking

PAN AMERICAN SILVER CORP. 9

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

into account its anticipated cash flows from operations, its holdings of cash and short-term investments, and its committed loan facilities.

There was no significant change to the Company’s exposure to liquidity risk during the three and nine months ended September 30, 2022.

iii) Market Risk

1.Currency Risk

The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse. 

At September 30, 2022, the Company had outstanding positions on its foreign currency exposure of Mexican peso ("MXN"), Peruvian sol ("PEN") and Canadian dollar ("CAD") purchases. The Company recorded the following derivative gains and losses on currencies for the three and nine months ended September 30, 2022:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Mexican peso gains (losses)			$	394		$	(517)		$	750		$	(574)
Peruvian sol (losses) gains			(743)			(1,812)			961			(3,999)
Canadian dollar (losses) gains			(4,628)			(816)			(5,038)			98
			$	(4,977)		$	(3,145)		$	(3,327)		$	(4,475)

2.Interest Rate Risk

Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The average interest rate earned by the Company during the three and nine months ended September 30, 2022 on its cash and short-term investments was 3.92% and 3.85% (2021 - 1.37% and 0.69%, respectively).

On August 10, 2021 the Company entered into a Sustainability-Linked Credit Facility ("SL-Credit Facility") (Note 13). There were no amounts drawn during the three and nine months ended September 30, 2022 and 2021 on the SL-Credit Facility.

From May 2022 to September 2022, the Company entered into USD denominated promissory notes which incurred an average interest rate of 5.6% during the three and nine months ended September 30, 2022. In June 2021 and May 2022, the Company entered into term loans (the "Loans") for the purpose of certain construction financing (Note 13). The Loans incurred an average interest rate of 2.8% during the three and nine months ended September 30, 2022 (2021 - 3.6%).

At September 30, 2022, the Company had $36.9 million in lease obligations (December 31, 2021 - $30.6 million) that are subject to an annualized interest rate of 9.7% (2021 - 10.6%).

3.Price Risk

Metal price risk is the risk that changes in metal prices will affect the Company’s income or the value of its related financial instruments. The Company derives its revenue from the sale of silver, gold, lead, copper, and zinc. The Company’s sales are directly dependent on metal prices that have shown significant volatility and are beyond the Company’s control. Consistent with the Company’s mission to provide equity investors with exposure to changes in precious metal prices, the Company’s current policy is to not hedge the price of precious metals.

PAN AMERICAN SILVER CORP. 10

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

The Company mitigates the price risk associated with its base metal production by committing some of its forecasted base metal production from time to time under forward sales and option contracts. The Board of Directors continually assesses the Company’s strategy towards its base metal exposure, depending on market conditions.

At September 30, 2022, the Company had outstanding derivative positions on its exposure to zinc and diesel. The Company recorded the following derivative gains and losses on commodities for the three and nine months ended September 30, 2022:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Zinc (losses) gains			(23)			—			1,760			—
Copper gains (losses)			—			261			—			(896)
Diesel gains (losses)			(624)			1,149			4,214			9,126
Other			$	(913)		$	—		$	(1,129)		$	—
			$	(1,560)		$	1,410		$	4,845		$	8,230

5. SHORT-TERM INVESTMENTS

			September 30, 2022									December 31, 2021
			Fair Value			Cost			Accumulated unrealized holding gains			Fair Value			Cost			Accumulated unrealized holding gains
Short-term investments			$	34,091		$	20,781		$	13,310		$	51,723		$	20,419		$	31,304

6. INVENTORIESInventories consist of:

			September 30, 2022			December 31, 2021
Concentrate inventory			$	27,052		$	30,647
Stockpile ore			28,055			43,216
Heap leach inventory and in process			257,977			286,266
Doré and finished inventory			57,588			81,448
Materials and supplies			94,278			84,529
Total inventories			$	464,950		$	526,106
Less: current portion of inventories			$	(438,207)		$	(500,462)
Non-current portion of inventories(1)			$	26,743		$	25,644

(1)Inventories at Escobal mine, which include $19.4 million (December 31, 2021 - $18.3 million) in supplies with the remainder attributable to metals, have been classified as non-current pending the restart of operations.

Total inventories held at net realizable value amounted to $142.9 million at September 30, 2022 (December 31, 2021 – $203.7 million).

PAN AMERICAN SILVER CORP. 11

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

7. MINERAL PROPERTIES, PLANT AND EQUIPMENT

Mineral properties, plant and equipment consist of:

			September 30, 2022									December 31, 2021
			Cost			Accumulated Depreciation  and  Impairment			Carrying Value			Cost			Accumulated Depreciation  and  Impairment			Carrying  Value
Producing properties:
Huaron, Peru			$	228,759		$	(145,963)		$	82,796		$	224,700		$	(141,902)		$	82,798
Morococha, Peru (5)			254,576			(174,758)			79,818			277,105			(188,821)			88,284
Shahuindo, Peru			622,161			(164,487)			457,674			590,096			(132,727)			457,369
La Arena, Peru			247,739			(132,429)			115,310			208,306			(105,006)			103,300
La Colorada, Mexico			395,625			(200,885)			194,740			355,471			(185,684)			169,787
Dolores, Mexico(1)			1,761,821			(1,545,344)			216,477			1,738,040			(1,350,908)			387,132
Manantial Espejo, Argentina (2)			521,812			(516,619)			5,193			518,931			(500,244)			18,687
San Vicente, Bolivia			155,286			(117,181)			38,105			151,045			(110,829)			40,216
Timmins, Canada			355,630			(126,874)			228,756			335,488			(103,903)			231,585
Other			29,542			(20,981)			8,561			29,804			(19,664)			10,140
			$	4,572,951		$	(3,145,521)		$	1,427,430		$	4,428,986		$	(2,839,688)		$	1,589,298
Non-Producing Properties:
Land			$	6,373		$	(871)		$	5,502		$	6,373		$	(871)		$	5,502
Navidad, Argentina(3)			566,577			(376,101)			190,476			566,577			(376,101)			190,476
Escobal, Guatemala			259,849			(2,800)			257,049			257,390			(1,842)			255,548
Timmins, Canada			63,019			—			63,019			63,018			—			63,018
Shahuindo, Peru			1,376			—			1,376			3,549			—			3,549
La Arena, Peru			117,000			—			117,000			117,005			—			117,005
Minefinders, Mexico(4)			77,210			(37,453)			39,757			78,443			(36,975)			41,468
La Colorada, Mexico			91,414			—			91,414			55,370			—			55,370
Morococha, Peru (5)			1,724			—			1,724			2,981			—			2,981
Other			33,295			(12,327)			20,968			32,426			(12,090)			20,336
			$	1,217,837		$	(429,552)		$	788,285		$	1,183,132		$	(427,879)		$	755,253
Total			$	5,790,788		$	(3,575,073)		$	2,215,715		$	5,612,118		$	(3,267,567)		$	2,344,551

(1)Includes previously recorded impairment charges of $635.5 million at September 30, 2022 (December 31, 2021 - $536.4 million).

(2)Includes previously recorded impairment charges of $173.4 million at September 30, 2022 (December 31, 2021 - $173.4 million).

(3)Includes previously recorded impairment charges of $386.1 million at September 30, 2022 (December 31, 2021 - $386.1 million).

(4)Includes previously recorded impairment charges of $37.0 million at September 30, 2022 (December 31, 2021 - $37.0 million).

(5)Morococha was placed on care and maintenance in February 2022.

Dispositions

On March 29, 2022, the Company received a $7.0 million payment from an arm's length party to be applied to certain costs associated with the closure and reclamation of the Morococha mine processing facility. This payment was included in proceeds from disposition of mineral properties, plant and equipment.

PAN AMERICAN SILVER CORP. 12

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

8. IMPAIRMENT

The Company's impairment expense in respect of the following CGUs for the three and nine months ended September 30, 2022 were as follows:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Dolores impairment expense			$	—		$	—		$	99,064		$	—

Impairment testing

The Company reviews each of its cash generating units ("CGU"), represented by its principal producing mining properties and significant development projects, for indicators of impairment each period end. The CGU carrying amount for purposes of this assessment includes the carrying value of the mineral properties plant and equipment and goodwill less deferred tax liabilities and closure and decommissioning liabilities related to each CGU.

On June 30, 2022 the Company identified an impairment indicator in the Dolores Mine CGU due to the year-to-date 2022 silver and gold production being less than that expected by management, driven by an ore reconciliation shortfall experienced in a recent higher grade phase of the Dolores open pit, which is expected to affect production for the remainder of the year combined with inflationary pressures that have particularly affected this short-life asset. Accordingly, management completed a recoverable value assessment of the Dolores Mine CGU. As a result, the Company recognized an impairment expense of $99.1 million, against the carrying value of the CGU at June 30, 2022, and recorded an NRV adjustment of $55.4 million (Note 6) (Collectively, the "Dolores Impairment").

The recoverable amount was determined applying a fair value less cost to sell methodology based on future after-tax cash flows expected to be derived from Dolores Mine discounted with a 6% weighted average cost of capital, a Level 3 fair value measurement. The projected cash flows used in impairment testing are significantly affected by changes in assumptions for metal prices, changes in the amount of recoverable reserves, production costs estimates and capital expenditures estimates. For the three and nine months ended September 30, 2022, the Company's impairment testing incorporated the following key assumptions:

a)Pricing Assumptions

Metal pricing included in the cash flow projections is based on consensus analyst pricing. The metal price assumptions used in the impairment assessment were the following:

			At June 30, 2022
			2022-2025 Average			2026 and long-term
Gold (per ounce)			$	1,802		$	1,651
Silver (per ounce)			23.56			21.77

b)Additional Dolores-specific assumptions affecting the recoverable amount assessment

In 2022, the recoverable amount of the Dolores Mine CGU was negatively impacted by the following:

i) the updated mineral resource and remaining life of mine plan has a reduction in the assumed grades for a certain phase to be mined in 2022, this was informed by 2022 year-to-date silver and gold production being less than expected due to lower than expected grades encountered in this certain section of the open pit;

ii) inflationary pressures, which have particularly affected this shorter-life asset where most of the mining will be completed in the next two years;

iii) the suspension of underground mining operations in Q2 2022 due to inflationary cost pressures, and the subsequent reclassification of underground mineral reserves to mineral resources; and,

iv) a reduction in the expected duration of economic leaching to the year 2030.

PAN AMERICAN SILVER CORP. 13

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

9. LONG-TERM INVESTMENT

The following table shows a continuity of the Company's long-term investment, classified as financial assets measured at FVTOCI and equity investees:

			FVTOCI			Investment in Associate
			Maverix			Maverix			Total
At December 31, 2020			$	—		$	71,560		$	71,560
Acquisition of shares in associate			—			2,616			2,616
Equity pick-up from equity investees			—			4,510			4,510
Dilution losses			—			(34)			(34)
Adjustment for change in ownership interest			—			(22)			(22)
Dividends received			—			(1,220)			(1,220)
At December 31, 2021			$	—		$	77,410		$	77,410
Equity pick-up from equity investees			—			413			413
Dividends received			—			(325)			(325)
Loss of significant influence			124,677			(77,498)			47,179
Investment revaluation reserve fair value adjustment			(37,692)			—			(37,692)
At September 30, 2022			$	86,985		$	—		$	86,985

Investment in Maverix:

On March 31, 2022, the Company determined that it no longer held significant influence over Maverix due to declining to exercise its right to nominate a representative to serve as a director on Maverix’s Board of Directors and accordingly the Company no longer has the power to participate in the financial and operating policy decisions of Maverix. As a result, the Company recorded a $44.6 million gain concurrent with the redesignation of its investment in Maverix from Investment in Associate, accounted using the "equity method" whereby the Company's recorded into income its ownership proportion of Maverix estimated earnings, into a long-term financial asset recorded at FVTOCI.

The Company's share of Maverix income or loss was recorded based on its 17% interest up until March 31, 2022, representing the Company’s fully diluted ownership.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of: 

			September 30, 2022			December 31, 2021
Trade account payables(1)			$	75,282		$	77,461
Royalty payables			25,369			24,113
Other accounts payable and accrued liabilities			122,731			107,207
Payroll and severance liabilities			66,898			64,968
Value added tax liabilities			9,319			12,006
Other tax payables			11,427			20,332
			$	311,026		$	306,087

(1)No interest is charged on the trade accounts payable ranging from 30 to 60 days from the invoice date. The Company has policies in place to ensure that all payables are paid within the credit terms.

PAN AMERICAN SILVER CORP. 14

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

11. PROVISIONS

			2022
Closure and decommissioning, December 31, 2021			$	242,861
Revisions in estimates and obligations incurred			(13,433)
Reclamation expenditures			(2,570)
Accretion expense (Note 19)			11,131
Closure and decommissioning, September 30, 2022			$	237,989
Litigation			6,953
Total provisions, September 30, 2022			$	244,942

Provision classification:			September 30, 2022			December 31, 2021
Current			$	12,211		$	8,041
Non-Current			232,731			240,111
			$	244,942		$	248,152

12. LEASES

Right-of-use Assets ("ROU")

The following table summarizes changes in ROU Assets for the nine months ended September 30, 2022, which have been recorded in mineral properties, plant and equipment on the condensed interim consolidated statements of financial position:

			Nine months ended September 30, 2022
Opening net book value			$	29,496
Additions			18,894
Depreciation			(11,166)
Other			(2,913)
Closing net book value			$	34,311

Lease obligations

The following table presents a reconciliation of the Company's undiscounted cash flows at September 30, 2022 and December 31, 2021 to their present value for the Company's lease obligations:

			September 30, 2022			December 31, 2021
Within one year			$	15,846		$	11,690
Between one and five years			19,861			16,676
Beyond five years			15,017			16,934
Total undiscounted lease obligations			50,724			45,300
Less future interest charges			(13,823)			(14,739)
Total discounted lease obligations			36,901			30,561
Less current portion of lease obligations			(15,201)			(10,663)
Non-current portion of lease obligations			$	21,700		$	19,898

PAN AMERICAN SILVER CORP. 15

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

13. DEBT

Debt consists of:

			September 30, 2022			December 31, 2021
Loans			$	28,264		$	15,300
Promissory notes			3,300			—
Total debt			31,564			15,300
Less: current portion of debt			(9,895)			(3,400)
Non-current portion of debt			$	21,669		$	11,900

From May 2022 to September 2022, the Company entered into Peruvian USD denominated promissory notes with a local financial institution in Peru, maturing in under 30 days, to provide short-term funding for the purpose of certain construction activities in advance of entering into term loans. In June 2021 and May 2022, the Company entered into Peruvian USD denominated five-year Loans with that same local financial institution for construction financing. The promissory notes bear a 5.6% interest rate per annum and the June 2021 loan bears a 3.6% interest rate per annum and requires quarterly repayments while the May 2022 loan bears 2.2% interest per annum and requires monthly repayments.

On August 10, 2021, Pan American entered into an amendment agreement to amend and extend its $500 million Credit Facility, with a maturity date of February 1, 2023, into a $500 million SL-Credit Facility. The SL-Credit Facility features a mechanism that allows for pricing adjustments on drawn and undrawn balances based on the Company's sustainability performance ratings and scores published by MSCI and S&P Global, leaders in ESG and Corporate Governance research and ratings. The SL-Credit Facility matures on August 8, 2025. In addition, the financial covenants include the requirement for the Company to maintain: (i) a leverage ratio less than or equal to 3.5:1; and (ii) an interest coverage ratio more than or equal to 3.0:1. The SL-Credit Facility were undrawn at September 30, 2022 and December 31, 2021. As of September 30, 2022, the Company was in compliance with all covenants required by the SL-Credit Facility.

The SL-Credit Facility can be drawn down at any time to finance the Company’s working capital requirements, acquisitions, investments and for general corporate purposes. The borrowing costs under the Company's SL-Credit Facility are based on the Company's leverage ratio subject to pricing adjustments based on the Company's sustainability performance ratings and scores at either (i) LIBOR plus 1.825% to 2.80% or; (ii) The Bank of Nova Scotia's Base Rate on U.S. dollar denominated commercial loans plus 0.825% to 1.80%. Undrawn amounts under the SL-Credit Facility are subject to a stand-by fee of 0.41% to 0.63% per annum, dependent on the Company's leverage ratio and subject to pricing adjustments based on sustainability performance ratings and scores.

The Company did not draw from the SL-Credit Facility during the three and nine months ended September 30, 2022 and 2021 and incurred $0.5 million and $1.6 million for the three and nine months ended September 30, 2022 (2021 - $0.5 million and $1.6 million, respectively) in standby charges on undrawn amounts included in interest and finance expense.

14. DEFERRED REVENUE

On July 11, 2016 the Company recognized a deferred revenue liability from its sale of precious metal streams to Maverix whereby the Company will sell 100% of the future gold production from La Colorada and 5% of the future gold production from La Bolsa, which is in the exploration stage, respectively (the "Streams").

The deferred revenue related to the Streams will be recognized as revenue by Pan American as the gold ounces are delivered to Maverix and increased by $2.5 million during the three months ended March 31, 2022 to record the deferred revenue previously not recognized while using the equity method of accounting after concluding that it no longer held significant influence of Maverix. The deferred revenue liability was $14.0 million at September 30, 2022 (December 31, 2021 - $12.5 million).

PAN AMERICAN SILVER CORP. 16

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

15. OTHER LONG-TERM LIABILITIES

Other long-term liabilities consist of: 

			September 30, 2022			December 31, 2021
Deferred credit(1)			$	20,788		$	20,788
Other tax payables			10			16
Severance liabilities			5,567			4,887
			$	26,365		$	25,691

(1)Represents the obligation to deliver future silver production of Navidad pursuant to a silver stream contract.

16. SHARE CAPITAL AND EMPLOYEE COMPENSATION PLANS

a.Stock options and common shares issued as compensation ("Compensation Shares")

For the three and nine months ended September 30, 2022, the total share-based compensation expense relating to stock options and compensation shares was $1.3 million and $3.9 million (2021 - $0.9 million and $3.0 million, respectively) and is presented as a component of general and administrative expense.

•Stock options

The Company did not grant any stock options during the three and nine months ended September 30, 2022 or the comparative periods in 2021.

During the three and nine months ended September 30, 2022, the Company issued 12,245 and 65,940 common shares in connection with the exercise of options (2021 – nil and 31,072 common shares, respectively).

•Compensation Shares

During the three and nine months ended September 30, 2022, the Company issued nil and 14,745 common shares, respectively, to Directors in lieu of Directors’ fees of $nil and $0.3 million (2021 – nil and 9,646 common shares in lieu of fees of $nil and $0.3 million, respectively).

The following table summarizes changes in stock options for the nine months ended September 30, 2022 and year ended December 31, 2021:

			Stock Options
			Options			Weighted Average Exercise Price CAD$
As at December 31, 2020			317,417			$	18.78
Granted			53,115			30.70
Exercised			(65,780)			11.77
Expired			(2,162)			41.62
Forfeited			(23,587)			32.27
As at December 31, 2021			279,003			$	21.38
Exercised			(65,940)			16.23
Expired			(4,324)			41.62
Forfeited			(6,073)			31.71
As at September 30, 2022			202,666			$	22.32

PAN AMERICAN SILVER CORP. 17

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

The following table summarizes information about the Company's stock options outstanding at September 30, 2022:

			Options Outstanding									Options Exercisable
Range of Exercise Prices CAD$			Number Outstanding as at September 30, 2022			Weighted Average Remaining Contractual Life (years)			Weighted Average Exercise Price CAD$			Number Outstanding as at September 30, 2022			Weighted Average Exercise Price CAD$
$9.76 - $17.11			13,602			0.2			$	9.76		13,602			$	9.76
$17.12 - $24.46			113,367			2.8			$	18.47		113,367			$	18.47
$24.47 - $31.81			68,789			5.6			$	29.43		21,050			$	26.54
$31.82 - $39.48			6,908			5.2			$	39.48		3,455			$	39.48
			202,666			3.6			$	22.32		151,474			$	19.29

b.PSUs

The Company recorded a $0.1 million recovery and a $0.4 million expense for PSUs for the three and nine months ended September 30, 2022 (2021 - a $0.3 million recovery and $0.3 million expense, respectively) and is presented as a component of general and administrative expense. 

At September 30, 2022, the following PSUs were outstanding:

PSU			Number Outstanding			Fair Value
As at December 31, 2020			255,559			$	8,870
Granted			79,417			2,049
Paid out			(117,328)			(4,539)
Change in value			—			(901)
As at December 31, 2021			217,648			$	5,479
Granted			11,614			186
Change in value			—			(1,844)
As at September 30, 2022			229,262			$	3,821

c.RSUs

The Company recorded a $0.1 million and $1.2 million expense for RSUs for the three and nine months ended September 30, 2022 (2021 - nil and $1.4 million, respectively) and is presented as a component of general and administrative expense.

At September 30, 2022, the following RSUs were outstanding:

RSU			Number Outstanding			Fair Value
As at December 31, 2020			396,572			$	13,730
Granted			240,366			5,818
Paid out			(197,320)			(4,829)
Forfeited			(13,218)			(329)
Change in value			—			(3,699)
As at December 31, 2021			426,400			$	10,691
Forfeited			(9,574)			(154)
Change in value			—			(3,638)
As at September 30, 2022			416,826			$	6,899

d.Issued share capital

The Company is authorized to issue 400,000,000 common shares without par value.

PAN AMERICAN SILVER CORP. 18

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

e.Dividends

The Company declared the following dividends for November 9, 2022 and the nine months ended September 30, 2022 and 2021:

Declaration Date			Record Date			Dividend per common share
November 9, 2022(1)			November 21, 2022			$	0.10
August 10, 2022			August 22, 2022			$	0.11
May 11, 2022			May 24, 2022			$	0.12
February 23, 2022			March 7, 2022			$	0.12
November 9, 2021			November 22, 2021			$	0.10
August 10, 2021			August 23, 2021			$	0.10
May 12, 2021			May 25, 2021			$	0.07
February 17, 2021			March 1, 2021			$	0.07

(1)These dividends were declared subsequent to the quarter ended September 30, 2022 and have not been recognized as distributions to owners during the period presented.

f.CVRs

As part of the acquisition of Tahoe Resources Inc. on February 22, 2019, the Company issued 313,887,490 Contingent Value Rights ("CVRs"), with a term of 10 years, which are convertible into 15,600,208 common shares upon the first commercial shipment of concentrate following the restart of operations at the Escobal mine. As of September 30, 2022, there were 313,883,990 CVRs outstanding which were convertible into 15,600,034 common shares (December 31, 2021 - 313,883,990 CVRs convertible into 15,600,034 common shares).

17. PRODUCTION COSTS

Production costs are comprised of the following: 

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Materials and consumables			$	108,939		$	106,428		$	308,806		$	289,868
Salaries and employee benefits(2)			77,552			77,427			230,015			242,869
Contractors			68,082			59,905			175,623			153,156
Utilities			12,639			11,258			42,680			34,233
Other expense (recovery)			2,489			(1,569)			11,386			24,081
Changes in inventories(1)			5,349			15,979			73,650			(82,170)
			$	275,050		$	269,428		$	842,160		$	662,037

(1)Includes write-downs of $15.1 million and $92.3 million for the three and nine months ended September 30, 2022 (2021 – write-downs of $2.5 million and recoveries of $12.9 million, respectively) and were included in cost of sales.

(2)Includes $9.4 million of mine closure severances at Manantial Espejo for the three and nine months ended September 30, 2022 with no amounts recorded during the comparative periods in 2021.

18. MINE CARE AND MAINTENANCE

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Escobal			$	5,826		$	5,711		$	18,743		$	17,585
Morococha			4,685			—			11,574			—
Navidad			2,175			1,780			4,328			4,929
			$	12,686		$	7,491		$	34,645		$	22,514

PAN AMERICAN SILVER CORP. 19

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

19. INTEREST AND FINANCE EXPENSE

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Interest expense			$	1,202		$	1,013		$	3,111		$	2,838
Finance fees			654			2,413			1,819			4,270
Accretion expense (Note 11)			3,711			1,868			11,131			5,606
			$	5,567		$	5,294		$	16,061		$	12,714

20. EARNINGS PER SHARE (BASIC AND DILUTED)

For the three months ended September 30,						2022						2021
			Earnings(1) (Numerator)			Shares (000’s) (Denominator)			Per-Share Amount			Earnings(1) (Numerator)			Shares (000’s) (Denominator)			Per-Share Amount
Net (loss) earnings for the period			$	(71,527)								$	20,251
Basic (loss) earnings per share			$	(71,527)		210,531			$	(0.34)		$	20,251		210,299			$	0.10
Effect of Dilutive Securities:
Stock Options			—			—						—			120
Diluted (loss) earnings per share			$	(71,527)		210,531			$	(0.34)		$	20,251		210,419			$	0.10

(1)Net earnings attributable to equity holders of the Company.

For the nine months ended September 30,						2022						2021
			Earnings(1) (Numerator)			Shares (000’s) (Denominator)			Per-Share Amount			Earnings(1) (Numerator)			Shares (000’s) (Denominator)			Per-Share Amount
Net earnings for the period			$	(168,992)								$	83,392
Basic earnings per share			$	(168,992)		210,503			$	(0.80)		$	83,392		210,282			$	0.40
Effect of Dilutive Securities:
Stock Options			—			—						—			149
Diluted earnings per share			$	(168,992)		210,503			$	(0.80)		$	83,392		210,431			$	0.40

(1)Net earnings attributable to equity holders of the Company.

Potentially dilutive securities excluded in the diluted earnings per share calculation were 210,688 and 234,406 out-of-the-money options (2021 – 11,929 for both periods), respectively, for the three and nine months ended September 30, 2022. Also excluded for the three and nine months ended September 30, 2022 were CVRs potentially convertible into 15,600,034 common shares (2021 – CVRs potentially convertible into 15,600,034 common shares for both periods).

21. SUPPLEMENTAL CASH FLOW INFORMATION

The following tables summarize other adjustments for non-cash income statement items, changes in operating working capital items and significant non-cash items: 

						Three months ended September 30,						Nine months ended September 30,
Other operating activities						2022			2021			2022			2021
Adjustments for non-cash income statement items:
			Unrealized foreign exchange losses			$	3,806		$	1,285		$	9,678		$	5,060
			Interest expense (Note 19)			1,202			1,013			3,111			2,838
			Losses (gains) on derivatives (Note 4d)			6,537			1,735			(1,518)			(3,755)
			Share-based compensation expense			1,294			895			3,917			3,025
			Losses (gains) on sale of mineral properties, plant and equipment			606			(28,462)			1,305			(32,718)
						$	13,445		$	(23,534)		$	16,493		$	(25,550)

PAN AMERICAN SILVER CORP. 20

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

			Three months ended September 30,						Nine months ended September 30,
Changes in non-cash operating working capital items:			2022			2021			2022			2021
Trade and other receivables			$	19,589		$	5,947		$	11,029		$	(2,623)
Inventories			(10,517)			12,561			(26,602)			(65,802)
Prepaid expenses			3,004			3,287			5,635			5,533
Accounts payable and accrued liabilities			9,250			8,615			(2,118)			9,748
Provisions			278			(7,403)			(909)			(8,262)
			$	21,604		$	23,007		$	(12,965)		$	(61,406)

Cash and Cash Equivalents			September 30, 2022			December 31, 2021
Cash in banks			$	153,079		$	283,550

22. SEGMENTED INFORMATION

The Company reviews its segment reporting to ensure it reflects the operational structure of the Company and enables the Company's Chief Operating Decision Maker ("CODM") to review operating segment performance. We have determined that each producing mine and significant development property represents an operating segment. The Company has organized its reportable and operating segments by significant revenue streams and geographic regions.

Significant information relating to the Company’s reportable operating segments is summarized in the table below:

For the three months ended September 30, 2022
Segment/Country			Operation			Revenue			Production costs and royalties			Depreciation			Mine operating earnings (losses)			Capital expenditures(1)
Silver Segment:
Mexico			La Colorada			$	33,517		$	24,548		$	4,882		$	4,087		$	32,439
Peru			Huaron			31,459			27,594			3,148			717			3,753
			Morococha (2)			93			(624)			—			717			364
Bolivia			San Vicente			20,360			15,833			2,323			2,204			265
Argentina			Manantial Espejo			23,475			34,959			5,662			(17,146)			973
Guatemala			Escobal			—			—			—			—			647
Total Silver Segment						108,904			102,310			16,015			(9,421)			38,441
Gold Segment:
Mexico			Dolores			68,503			68,136			32,395			(32,028)			5,310
Peru			Shahuindo			60,192			36,523			10,428			13,241			10,549
			La Arena			42,704			28,505			9,005			5,194			9,679
Canada			Timmins			58,586			47,301			9,560			1,725			8,715
Total Gold Segment						229,985			180,465			61,388			(11,868)			34,253
Other segment:
Canada			Pas Corp			—			—			92			(92)			88
Argentina			Navidad			—			—			—			—			16
Other			Other			—			—			407			(407)			515
Total						$	338,889		$	282,775		$	77,902		$	(21,788)		$	73,313

(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.

(2)Morococha was placed on care and maintenance in February 2022.

PAN AMERICAN SILVER CORP. 21

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

For the three months ended September 30, 2021
Segment/Country			Operation			Revenue			Production costs and royalties			Depreciation			Mine operating earnings (losses)			Capital expenditures(1)
Silver Segment:
Mexico			La Colorada			$	43,977		$	28,274		$	6,436		$	9,267		$	18,750
Peru			Huaron			43,448			25,701			3,264			14,483			2,744
			Morococha			26,499			18,686			3,441			4,372			2,142
Bolivia			San Vicente			11,302			9,196			1,423			683			1,480
Argentina			Manantial Espejo			35,009			32,253			3,503			(747)			1,353
Guatemala			Escobal			—			—			—			—			141
Total Silver Segment						160,235			114,110			18,067			28,058			26,610
Gold Segment:
Mexico			Dolores			104,494			54,138			27,962			22,394			11,214
Peru			Shahuindo			82,672			36,265			14,230			32,177			7,551
			La Arena			47,616			25,380			11,212			11,024			8,258
Canada			Timmins			65,332			48,385			11,229			5,718			11,461
Total Gold Segment						300,114			164,168			64,633			71,313			38,484
Other segment:
Canada			Pas Corp			—			—			113			(113)			83
Argentina			Navidad			—			—			—			—			5
Other			Other			—			—			371			(371)			153
Total						$	460,349		$	278,278		$	83,184		$	98,887		$	65,335

(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.

For the nine months ended September 30, 2022
Segment/Country			Operation			Revenue			Production costs and royalties			Depreciation			Mine operating earnings (losses)			Capital expenditures(1)
Silver Segment:
Mexico			La Colorada			$	112,865		$	70,964		$	15,027		$	26,874		$	67,532
Peru			Huaron			105,114			73,645			8,997			22,472			9,987
			Morococha (2)			22,059			20,533			2,332			(806)			1,024
Bolivia			San Vicente			63,333			48,841			7,422			7,070			6,542
Argentina			Manantial Espejo			84,053			94,254			18,283			(28,484)			3,624
Guatemala			Escobal			—			—			—			—			1,468
Total Silver Segment						387,424			308,237			52,061			27,126			90,177
Gold Segment:
Mexico			Dolores			235,505			243,498			98,600			(106,593)			31,238
Peru			Shahuindo			183,528			102,079			30,278			51,171			24,699
			La Arena			122,919			73,184			24,571			25,164			36,580
Canada			Timmins			189,870			142,178			29,625			18,067			29,167
Total Gold Segment						731,822			560,939			183,074			(12,191)			121,684
Other segment:
Canada			Pas Corp			—			—			302			(302)			263
Argentina			Navidad			—			—			—			—			45
Other			Other			—			—			1,318			(1,318)			1,287
Total						$	1,119,246		$	869,176		$	236,755		$	13,315		$	213,456

(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.

(2)Morococha was placed on care and maintenance in February 2022.

PAN AMERICAN SILVER CORP. 22

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

For the nine months ended September 30, 2021
Segment/Country			Operation			Revenue			Production costs and royalties			Depreciation			Mine operating earnings (losses)			Capital expenditures(1)
Silver Segment:
Mexico			La Colorada			$	83,748		$	47,984		$	13,826		$	21,938		$	42,601
Peru			Huaron			117,622			68,212			8,703			40,707			6,905
			Morococha			79,661			56,462			10,440			12,759			6,898
Bolivia			San Vicente			58,346			41,883			6,780			9,683			2,871
Argentina			Manantial Espejo			87,536			78,291			9,847			(602)			5,002
Guatemala			Escobal			—			—			—			—			437
Total Silver Segment						426,913			292,832			49,596			84,485			64,714
Gold Segment:
Mexico			Dolores			269,981			120,837			82,386			66,758			28,469
Peru			Shahuindo			183,468			80,776			30,309			72,383			19,262
			La Arena			146,727			62,038			32,116			52,573			35,484
Canada			Timmins			183,491			135,381			31,180			16,930			33,639
Total Gold Segment						783,667			399,032			175,991			208,644			116,854
Other segment:
Canada			Pas Corp			—			—			351			(351)			248
Argentina			Navidad			—			—			—			—			84
Other			Other			—			—			879			(879)			411
Total						$	1,210,580		$	691,864		$	226,817		$	291,899		$	182,311

(1)Includes payments for mineral properties, plant and equipment and payment of equipment leases.

At September 30, 2022
Segment/Country			Operation			Assets			Liabilities			Net assets
Silver Segment:
Mexico			La Colorada			$	357,785		$	60,683		$	297,102
Peru			Huaron			112,397			49,705			62,692
			Morococha			106,765			32,930			73,835
Bolivia			San Vicente			83,145			43,446			39,699
Argentina			Manantial Espejo			46,529			35,405			11,124
Guatemala			Escobal			290,986			19,638			271,348
Total Silver Segment						997,607			241,807			755,800
Gold Segment:
Mexico			Dolores			435,677			137,006			298,671
Peru			Shahuindo			610,704			200,525			410,179
			La Arena			324,125			109,848			214,277
Canada			Timmins			401,816			69,630			332,186
Total Gold Segment						1,772,322			517,009			1,255,313
Other segment:
Canada			Pas Corp			142,176			27,796			114,380
Argentina			Navidad			194,689			2,639			192,050
			Other			92,765			47,265			45,500
Total						$	3,199,559		$	836,516		$	2,363,043

PAN AMERICAN SILVER CORP. 23

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

At December 31, 2021
Segment/Country			Operation			Assets			Liabilities			Net assets
Silver Segment:
Mexico			La Colorada			$	299,038		$	52,934		$	246,104
Peru			Huaron			117,514			59,975			57,539
			Morococha			124,607			40,494			84,113
Bolivia			San Vicente			88,924			53,264			35,660
Argentina			Manantial Espejo (1)			78,240			29,155			49,085
Guatemala			Escobal			287,811			19,833			267,978
Total Silver Segment						996,134			255,655			740,479
Gold Segment:
Mexico			Dolores			750,220			193,638			556,582
Peru			Shahuindo			591,164			199,450			391,714
			La Arena			317,371			106,799			210,572
Canada			Timmins			419,106			62,196			356,910
Total Gold Segment						2,077,861			562,083			1,515,778
Other segment:
Canada			Pas Corp			176,006			16,492			159,514
Argentina			Navidad			193,077			—			193,077
			Other (1)			75,506			48,346			27,160
Total						$	3,518,584		$	882,576		$	2,636,008

(1)Recast comparative to be consistent with current presentation.

			Three months ended September 30,						Nine months ended September 30,
Product Revenue			2022			2021			2022			2021
Refined silver and gold			$	258,629		$	338,325		$	826,033		$	881,829
Zinc concentrate			25,979			22,733			82,463			81,234
Lead concentrate			33,938			52,098			119,262			105,833
Copper concentrate			8,402			39,683			48,455			99,130
Silver concentrate			11,941			7,510			43,033			42,554
Total			$	338,889		$	460,349		$	1,119,246		$	1,210,580

23. INCOME TAXES

Income tax recognized in net earnings is comprised of the following:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Current income tax expense			$	15,128		$	45,421		$	57,352		$	97,890
Deferred income tax (recovery) expense			(13,208)			4,964			(37,124)			20,068
Income tax expense			$	1,920		$	50,385		$	20,228		$	117,958

Income tax recognized as a component of the investment revaluation reserve is comprised of the following:

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Income tax recovery related to long-term investments			5,088			—			5,088			—

PAN AMERICAN SILVER CORP. 24

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

Income tax expense differs from the amounts that would result from applying the Canadian federal and provincial income tax rates to earnings before income taxes. These differences result from the items shown on the following table, which results in effective tax rates that vary considerably from the comparable period. The main factors that impacted the effective tax rate for the three and nine months ended September 30, 2022 and the comparable periods for 2021 were changes in the recognition of certain deferred tax assets primarily due to the Dolores impairment, foreign exchange rate fluctuations, mining taxes paid, and withholding taxes remitted on payments from foreign subsidiaries. The Company expects that these and other factors will continue to cause fluctuations in effective tax rates in the future.

Reconciliation of Effective Income Tax Rate

			Three months ended September 30,						Nine months ended September 30,
			2022			2021			2022			2021
Earnings (loss) before taxes and non-controlling interest			$	(69,282)		$	70,604		$	(147,775)		$	201,856
Statutory Canadian income tax rate			27.00		%	27.00		%	27.00		%	27.00		%
Income tax (recovery) expense based on above rates			$	(18,706)		$	19,063		$	(39,899)		$	54,501
Increase (decrease) due to:
Non-deductible expenditures			1,135			1,735			3,746			4,482
Foreign tax rate differences			(1,076)			6,539			(10,718)			14,375
Change in net deferred tax assets not recognized (1)			11,067			11,113			8,259			18,407
Derecognition of deferred tax assets previously recognized (2)			—			—			50,356			—
Effect of other taxes paid (mining and withholding)			2,936			5,977			10,747			19,984
Effect of foreign exchange on tax expense			9,204			8,293			(2,392)			10,776
Non-taxable impact of foreign exchange			9			(340)			3,688			1,157
Change in non-deductible portion of reclamation liabilities			(2,839)			(1,767)			(2,243)			(3,208)
Other			190			(228)			(1,316)			(2,516)
Income tax expense			$	1,920		$	50,385		$	20,228		$	117,958

(1)Includes deferred taxes related to amounts recorded in other comprehensive income for the three and nine months ended September 30, 2022 of $5.1 million with no amounts recognized in the comparative periods.

(2)Attributable to the loss of tax attributes as a result of the Dolores Impairment (Note 8).

24. CONTINGENCIES

The Company is subject to various legal, tax, environmental and regulatory matters that arise in the ordinary course of business activities. Each of these matters is subject to various uncertainties and it is possible that some of these matters may be resolved unfavorably to the Company. In the opinion of management none of these matters are expected to have a material adverse effect on the results of operations or financial conditions of the Company. Since December 31, 2021, there have been no significant changes to these contractual obligations and commitments.

25. RELATED PARTY TRANSACTIONS

The Company’s related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel. Transactions with the Company's subsidiaries have been eliminated on consolidation. Maverix ceased to be a related party after March 31, 2022 after the Company determined that it no longer held significant influence (Note 9). There were no other related party transactions for the three and nine months ended September 30, 2022 and 2021.

PAN AMERICAN SILVER CORP. 25

			Notes to the Condensed Interim Consolidated Financial Statements
			As at September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021 (unaudited with tabular amounts in thousands of U.S. dollars except number of shares, options, warrants, and per share amounts, unless otherwise noted)

26. SUBSEQUENT EVENTS

The following significant events occurs subsequent to September 30, 2022:

Announced Arrangement Agreement with Yamana Gold Inc.

On November 8, 2022, the Company and Agnico Eagle Limited ("Agnico Eagle") entered into an arrangement agreement with Yamana Gold Inc. ("Yamana") pursuant to which Pan American will acquire all of the issued and outstanding common shares of Yamana and Yamana would sell its Canadian assets, primarily the Canadian Malartic mine, to Agnico Eagle (the “Transaction”). The Transaction will be completed by way of plan of arrangement.

The consideration for the Transaction consists of:

a.Approximately 153.5 million common shares of the Company;

b.$1.0 billion in cash contributed by Agnico Eagle; and,

c.Approximately 36.1 million common shares of Agnico Eagle.

The Transaction remains subject to simple majority approval (i.e. 50% +1) by the Company’s shareholders, 66 2/3% approval of the Transaction by Yamana’s shareholders, certain regulatory approvals, and court-approval of the plan of arrangement, as well as satisfaction of customary closing conditions. Subject to satisfaction of these conditions, the Transaction is expected to close in the first quarter of 2023.

Under the terms of the Transaction, the Company agreed to provide Yamana with $150 million towards a termination fee payable to Gold Fields Limited (“Gold Fields) in connection with the now terminated acquisition proposal of Yamana by Gold Fields. The Company has drawn down on its $500 million revolving sustainability-linked credit facility to fund its obligation towards the Yamana termination fee payment to Gold Fields.

PAN AMERICAN SILVER CORP. 26