Which point to the forward looking information in the presentation. But I will leave those for our listeners to read on their own time. So, let's jump into who is Pan American Silver. We were formed to provide investors with exposure to silver and that remains our strategy today. We are the world's second largest primary silver producer and we have the largest silver reserves globally.
Our estimated proven and probable silver reserves total five fifty million ounces. And we have another 5,200,000 ounces of gold reserves. Pan American has several advantages that we believe make us a unique investment in precious metals and particularly in offering long term exposure to silver. We have a diversified portfolio of nine mining operations across five countries. And that excludes the Escobal mine in Guatemala that is currently not operating.
The locations of our mines are provided on this map here on the slide. I will walk through them quickly just so that, you get a good overview. Starting in the North in Canada, we own and operate the Timmons operation, which includes the Timmons West and Bell Creek mines. These are two gold mines, underground gold mines that we acquired as part of the TAVO transaction in 2019. And moving south to Mexico, Dolores is a gold silver mine.
It's currently entering its best years for gold production. And in Mexico we also own the La Colorada mine, which is currently our best silver producing mine. That's also the site of our Skarm discovery, which I'll discuss shortly. In Guatemala, we own the Escobal mine, which as I said is currently in care and maintenance. In Peru, we own four mines.
Showindo and La Arena are the two large gold mines that we acquired as part of the Tahoe transaction. We're on Amoracocha are silver rich mines with base metal credits for gold, lead, zinc and copper production. In Bolivia, our San Vicente mine is similarly a silver rich mine with base metal credits. And then moving south into Argentina, we have two mines, Cozi and Joaquin. They're not shown on the map but they're part of our Manantial Espejo operation.
They're two satellite underground mines which feed into our mill at Manantial Espejo and are co mingled from the stockpile door we have at Mananchelas Bayjo. In Argentina, you can also see the location of our Navadad project, which is in the neighboring province of Tribute. In addition to the solid cash generating base of those assets, we have three large caveats shown on this slide, any of which would have a material impact on shareholder value. We acquired the Esquivel Mine as part of our acquisition of Tahoe. It's an already built, very high quality mine that was producing about 20,000,000 ounces of silver at an average cost, all in sustaining cost of just below $10 per ounce when it was operating during the three years it was operating.
It's been suspended since 2017. So, that would nearly double our silver production. As I said, operations are currently suspended pending completion of an ILO one hundred and sixty nine consultation with an indigenous community. That process is being led by the Guatemalan government, the Ministry of Energy and Mines. And, that process actually started formally last month.
And the next meeting is scheduled to occur this Sunday on June twentieth. So, the process is now underway and progressing. But at this point, we don't have a timeline of when it may be concluded. So, we cannot provide a timeline or speculate when we may be able to restart that mine. In Mexico, we announced a major exploration discovery adjacent to our La Colorada mine in late twenty eighteen.
That's the Skarn discovery. And last year, we provided an update to the resource estimate for
the
discovery. The inferred mineral resource is estimated at 100,400,000 tonnes containing 141,000,000 ounces of silver. So, the size of that deposit indicates a large new mine that will deliver long term growth for Pan American. I will cover more of that in detail later in the presentation. Turning to NABADAD, we view that as the best and largest undeveloped silver project in the world.
There is a ban on open pit mining in the province of Chabot, Argentina where the deposit is located, But an amendment to the mining law has been proposed that would allow mining in certain zones of the province and that Navadat project would be in a permitted zone. So, we need to wait for the legislature to be able to approve an amendment to the mining law to allow us to proceed with that project. Moving on to the next slide here. Pan American has a solid track record of operating in Latin America now for twenty seven years. That long history of successful operations reflects our view that you have to create value for all of your stakeholders, your shareholders, your local communities, and your employees.
And these are the stakeholders that will help you in your future success. We are recognized as a strong operator, managing costs to deliver healthy margins and investing in projects that deliver strong returns. Since 2010, we've generated $1,500,000,000 in free cash flow. We also have a very strong financial position, currently with $2.00 $6,000,000 in cash and short term investments and no long term debt. Responsible Mining is at the core of our business and has been since the company was formed.
This slide provides some of the highlights of our ESG performance. I will point out that Latin America was hit particularly hard by the COVID-nineteen pandemic. So we have committed 2,000,000 to support communities with donations of food and sanitary supplies. And we have also committed a further 1,500,000.0 over three years to partner with UNICEF Canada to support children and their families affected by COVID-nineteen. Supporting and providing benefits to our host communities is very important to us.
About 99% of our employees are from the countries where we operate and over 80% of the economic value that our mines generate stays in the countries where we operate. The work we do in the areas of ESG is described more fully in our sustainability report, which we have been publishing since 2010. Beginning with our 2020 report, we are now aligning our disclosure with TCFD and SASB. And we are a member of the Mining Association of Canada and implementing their towards sustainable mining protocols across all of our operations. Moving on to our outlook for 2021, we expect to produce about 21,000,000 ounces of silver and 630,000 ounces of gold based on the midpoint of the ranges provided on this slide.
The expected gold production would represent record gold production for Pan American, while silver production is materially lower than we would normally produce. In a normal year, our silver production would be in the twenty five million to twenty eight million ounce range. And the main reason why that silver production is so much lower is the effect COVID-nineteen has on our underground silver producing mines. And because of some ventilation work that we are doing at La Colorada which is our largest silver producer. I'll go into more detail on those factors shortly here.
All in sustaining costs for silver are impacted by lower production with our guidance for 2021 being $15 per ounce of silver. Gold all in sustaining costs are estimated at $11.92 dollars per ounce, again both based on the midpoint of the ranges shown on this slide. It is important to point out that our all in sustaining costs are fully loaded. So, they contain all of our sustaining capital, our G and A and our exploration expenses. The only thing it does not include is project capital and we are estimating $55,000,000 to $60,000,000 of project capital in 2021.
However, you can see that given the current estimates for our all in sustaining costs and the prevailing costs and the prevailing metal prices, we expect to be generating attractive profit margins this year as well. As you can see from the reserves pie graph, our gold operations generate while our gold operations generate most of our revenue, with silver accounting for about 27% and our base metals accounting for 16%, it's flipped a bit on the reserve side, with 46% of our reserves being silver reserves, 32% in gold. And, so our future is clearly tied to silver. And those reserve figures do not include anything for the La Colorada Skarn or our NABADAD project. Both of those are in resources.
However, it does include the reserves for Esquivel.
So, Saran, we could paraphrase this chart and just say that the two gold deposits in Peru are shorter life.
Not Chwindo, but La Arena, Yes. So, Shawinda, we do not see as a shorter life project. We definitely see that having a longer future. The La Arena model So, this is something
that the Shawinda sulfides are likely to advance when the oxides are depleted or does that mean there's more oxide to come?
We've been pretty successful with the exploration there. So, we think there's a lot more potential for exploration at Shawondo.
Both oxide and the sulfide or just the sulfide?
On both the oxides and the sulfides.
Excuse me for interrupting. I was just trying
to
interject. And in Ontario, do you think the gold mines are longer live where the veins will continue to depth, but they're just not defined? Or how would you characterize the Timmins West and Bell Creek mines?
Yeah. So, when we acquired those from Tahoe, we did think they had a shorter life. You may remember that our initial plan was to divest those mines. We thought they didn't fit with our geographic profile, if you will. And because they were gold mines and, you know, our strategy is really to be the premier silver producer.
But, after having owned these assets now for over two years, we have actually been quite successful on the exploration side and we have two very interesting exploration projects underway called Whitney and Wetmore. So we think we're gonna be able to extend the lives at our Timmins operation as well.
Excuse me for interrupting.
Yeah. No. Please do. And you're right that La Reina has a bit of a shorter life. It's probably in the four to five year range right now given the exploration success we've had there too since acquiring that asset.
And then maybe a couple of years of leaching after we've completed the open pit mining at La Arena. So just to to summarize, we do see our future being in silver given the weighting of our reserves in that metal. And, we consider that to be a positive. That's where we wanna be. We think the demand for silver will be greater in the future given its uses in So, our operations generate strong cash flow, as this slide demonstrates.
Our free cash flow has nearly doubled annually over the past three years. In 2020, we generated record operating cash flow of $462,300,000 and that's despite the significant impact COVID has had on our operations. Importantly, we delivered that performance on a per share basis with our investors fully participating in the growth of that free cash flow. We have not issued equity as part of a public offering since 02/2009 and that reflects our aim to not dilute our shareholders. We would like to allow them to participate fully in rising precious metal prices.
So, moving up, sorry. Oh, these things go quickly sometimes. Looking at our operating performance, the COVID nineteen pandemic did have a significant impact on our operations in 2020 and continues to impact them today. Because we do have operating protocols that restrict the throughput rates. In 2020, all of our operations in Latin America were suspended for an average of two months.
And, our Laron and Mora coach operations in Peru were extended for, were suspended for about three months. The only operation that wasn't suspended was Timmins in Canada, which continued to run throughout the COVID pandemic, albeit at reduced throughput rates to accommodate those COVID protocols. As you can see from the graphs, silver production is impacted more than gold. And that's because the physical distancing requirements are more stringent in our underground mines and that's where we produce most of our silver. It's also more challenging to deploy the necessary workforce levels that we need.
They don't necessarily pass the screening process. And we can't hire contractors as easily to replace the employees that don't pass that screening process. There's also much more extensive safety training that they need to go through. So, our workforce levels are have been much more impacted by the COVID-nineteen pandemic. The other thing that's affected our silver production has been the ventilation work we've been doing at La Colorada.
That work is expected to be completed in Q3 twenty twenty one. And after that point, we'll be able to regain access to the higher grade areas of the mine and we will be able to increase our throughput rates. That work is going well, so we're on track to achieve that. As I said, we're expecting record gold production this year with our Dolores mine entering its best years for gold production. We have indicated that gold production and cash flow will be back end weighted towards this year as throughput rates improve based on the assumption that the impact of COVID-nineteen will diminish.
Throughput rates and grades will improve at, La Colorada as we complete the ventilation work. And as we get through some mine sequencing, in our other mines and the inventory bills that we pointed to in Q3. So, a back end weighted year in terms of production and cash flow. So, looking at free cash flow allocation, since 2010, Pan American has generated $1,500,000,000 in free cash flow. Our priorities for that free cash flow in order of importance are to first, maintain low to zero debt.
Mining is a cyclical business and we prefer to have low debt to no debt to manage and take advantage of opportunities at low points in the price cycle. That gives us the flexibility to do that. We did repay all of the amounts drawn on our credit facility in 2020. So, at the end of Q1, had no long term bank debt. The second priority for our free cash flow is to invest in high return projects.
Most recently, we did that with the highly accretive Tahoe acquisition, which closed in February 2019 and the expansion of our La Colorada and Dolores mines in Mexico about five years ago. And today, we are now investing and advancing the development of our La Colorada Skarn deposit. So, investments such as this help us to deliver the growth and the capital appreciation that our investors are seeking. Since 2010, we have invested nearly $600,000,000 in expansions. So it's a significant amount of investment in expansions and return to our shareholders.
Our third priority is to return cash to shareholders in the form of dividends. Since 2010, we have returned $514,000,000 to our shareholders in the form of both dividends and share buybacks. Our preference at this time is to return that cash in the form of dividends rather than share buybacks. So, we've been doing that since 2016 when Michael Steinman became the CEO. In 2020, we doubled the quarterly dividend to $0.07 per share.
Again, we haven't issued any public equity since 02/2009. Moving on to slide 12 in our La Colorada Skarn discovery. As I said, last year we provided an updated inferred mineral resource estimate for the Skarn Discovery. Based on a $60 per tonne cutoff, we estimate the deposit to contain about 100,000,000 tonnes of resource containing an estimated 141,000,000 ounces of silver. The grades are lower than the veins we are currently mining at La Colorada, but the zones are much larger.
So, mining of this Skarn deposit will be a bigger bulk mining project where the cost on a per tonne basis would be lower. So, we consider this to be a significant discovery for Pan American, supporting long term growth with the development of a large tonnage new underground mine for the company. Development of this mine combined with the vein deposit that we are currently mining indicates growing silver production at low cost, given that the deposit is also rich in base metals.
In our estimates of 15,000 tonnes a day, we estimate you'd produce 1% of world lead and 1% of world zinc demand.
Okay. Yep. Well, we will be, that was my next point. We're targeting, PEA by the end of this year. So, that will give you a better sense of the size of this project, the capital investment needed, and the timing.
So, we're continuing with the drilling. We announced some drilling results on May 12, which are available on our website. We continue to deliver wide zones. We're very pleased with the continued drilling on this deposit. And we're doing some metallurgical and engineering work to be able to provide that PEA by the end of the year.
In fact, I'd encourage you to take a look at our website. We have a page that's dedicated to the La Colorada Scarn discovery that includes a video as well. We do also have a number of other assets in our portfolio that have value. Mavericks is a company that we started nearly six years ago with 16 royalty assets that we have in our portfolio. We spun those out into a new royalty and streaming entity which allowed us to surface value for those assets.
And Mavericks has continued to grow over time with a current market value of $190,000,000 That's to our 18% interest in it. So, our 18% interest represents $190,000,000 of Canadian value. We also hold an approximately 10% interest in New Pacific. New Pacific owns the Silver Sands project in Bolivia, which is an early stage silver exploration project that looks very interesting and that we're watching closely. We have been operating our San Vicente mine in Bolivia for twenty years.
So, we do have experience in that country. And we hold our 25% interest in the Shelly Pico project. It's a zinc development project in Peru owned by Nexa Resources. We also have a JV agreement with Radius Gold to explore a smaller gold play in Mexico called AMELIA. So, just to remind our investors of some of the things that are value in our portfolio apart from our operating assets and our catalysts.
So, that actually wraps up my formal comments. In summary, I'd say Pan American is the preferred investment for exposure to silver. We operate a diversified portfolio of producing assets generating strong cash flow. We have a prudent approach to financial management and capital allocation and a very experienced management team. And in particular, we offer long term exposure to silver through our silver weighted reserves and three large catalysts, Esquivel, Navadat and the La Coloradis Garn, each of which offers optionality and material upside for investors.
So, I'd be happy to take any questions that you may have now.
Soren, the companies we study that have, of course, everyone has COVID impacts. Most of them manage to run their mills, but they might have four categories of problems, operating or delivering ore. Some defer waste stripping if they don't have enough trucks or truck drivers. Some defer underground development where usually the underground development's two years ahead of the current mining, so that's something they can stall or postpone. Some have trouble executing CapEx projects, which appears maybe a contributor with the ventilation in La Colorado.
Mhmm. And some of them defer exploration drilling where they can't move the geologists around. Generally, they're short people and move resources to current production as much as they can. In your case, is La Colorada ventilation the biggest impact? Are there other underground mines where the development might not be two years ahead and might have fallen months behind besides the Colorado?
So, the biggest impact that we saw related to COVID-nineteen, and I think that's what your question is about? Of course. Yeah, would be La Colorada and Manantia Las Beijo. And it really is a reflection of the fact that both are underground mines and that the incidence of COVID were higher in the regions where those mines were located. So, when we try to deploy people to those mines, they don't necessarily pass the screening process.
They've been identified as a close contact with someone who's been affected by COVID. And, we cannot bring them onto onto the site. So, we do several rounds of testing for COVID. And then again, for those mines, it's very challenging to be able to replace those workers who don't pass the screening process with contracted workforce. The contracted workers, it's just it requires a higher skill set.
And it's complicated further at Manancio Espejo because in Argentina where it's located, the Southern part of Argentina, most of the miners are coming from the skilled underground miners are coming from Northern Argentina. And there are travel restrictions, there's quarantining procedures that really extend how the duration of bringing people back and forth to our operation. We actually made the decision, we were able to get some of the workforce to relocate to the town of near our financial Space Station operation. So we're have we have that workforce relocated there, but it's in Q1 rather and you may have noticed that in our Q1 disclosure, we reduced our silver production guidance and that reflects the fact that, again, we were having lower workforce deployments at Manangio Astejo than we had anticipated. We do think that things will improve.
Vaccination programs are rolling out in Latin America. They are slowly rolling out. But we expect that that will occur over time. But it's not until Q1 twenty twenty two that we expect to be free of any impact from COVID-nineteen where our operations are running closer to full throughput rates. And again, it's really on the underground silver producing mines that we're seeing that impact.
Our gold produce open pit gold producing mines have not been affected to that degree. They're actually running very close to their design throughput capacities.
I may not be an expert in Peru, and maybe you aren't either, but I talked to Southern Copper, which runs some major projects in Peru. And they sent me some documentation that implied that the 30 person unicameral legislature is comprised of 10 parties, and five of them are to the right that won 66 seats. And three parties or centrists that won 22 seats, and the two left parties won only 42, the largest of which, Castillo's party holds 34 seats. So it appears unclear that he has a legislative mandate to enact any of his rhetoric. 10 parties are very unpredictable.
They might call less differently issue by issue. But it it seems like it's, he imitated some of the proposals in Chile. There might be a greater consensus in Chile where the constitution was written in 1980 by Pinochet's government.
Mhmm.
But in Peru, it seems to be a different situation. Do you think this is a good time to pick up projects in Peru when people might be scared?
No. I think there's a lot of uncertainty that would make people very hesitant about proceeding with any type of investment in Peru.
And how about Pan Am? You've been there a long time.
Yep. You know, I think the same would go. I think we have to get a little bit more clarity on what this looks like. You're right that the parliament, the congress appears very fragmented. So, it leaves, it to be known how much a new president will be able to accomplish with such a fragmented congress to to deal with.
But what you can infer is that there's going to be a real period of uncertainty and upheaval. And the voting patterns kind of show that the rural areas really were behind Castillo and the urban areas were for Fujimaro. And with where our operations are located, that means that those, the local communities are really the backers of Castillo. So, our inference from that is, you know, while he may not be able to push through a lot of legislative type changes. It probably would embolden the local communities and workforce to make higher demands, increase their demands.
So, there's just a lot to navigate through until we get some more clarity on, well, one, we don't even know who the president is. I mean, it certainly, at this point, looks like it's Castillo with very small margin of 50.14% of the vote. But, that would be the first thing is determine who is actually going to be the president and how long they're gonna be able to to be in that position.
So Southern Copper says that they would halt their Tia Maria project, which is halted anyway. They just haven't acknowledged it that, Castillo opposes it. But they would continue spending on the Michiquill and Los Chancas projects that add up to 700,000 tons of copper that are 2027, '20 '20 '8 target dates. So they would hope to complete those after he's out of power after five years. They're more confident.
You know, they're those are multibillion dollar projects.
Mhmm.
It's possible to interpret from the legislature that maybe the Peruvians had a tough choice like we Americans did in 2016 between Hillary and Donald or 2020 between Joe and Donald.
Mhmm.
Maybe they rejected Fujimori more than they embraced Castillo, given that Fujimori's parties did better in the legislature than she did in the general election. It also is hard to interpret when there were 18 candidates in the first round plus one that withdrew and four that were kicked out.
Yeah.
So it's, it's complicated.
Like, no candidate in the first round got more than 18% of the votes. So, that just tells you that there's no significant broad support for either of those two possible candidates for president, contenders at this point.
Four or five years ago, Tahoe published a PEA for La Reina Sulfides. Good night, ladies. And, sometimes, Saran, I don't believe a deposit exists, and I calculate different certain numbers. And sometimes I don't like to use coefficient of variation or standard deviation. Some of the investors went to Harvard or Yale where they did liberal arts and didn't do mathematics.
So we have a lot of smart clients that aren't numbers jocks. So one thing I calculate is total resources per assay. Sometimes I calculate total resources per ounce of gold resource, total ton, total out gold ounces per assay. Excuse me. So long range of sulfides is 5,400 tons per assay.
And Rosemont and Cubata Blanca, when their boards authorized them, were 14,000 or 15,000 tons per assay. Pebble is 185,000. So Tahoe, God bless them, drilled the hell out of La Reina sulfides even though they didn't have the money to build it. Maybe they spent too much money at the PEA stage. And it's a very well defined project.
Mhmm. And the copper sulfides have the benefit of pre stripping from the oxide gold. Mhmm. And you have a truck shop and a workforce and a mine manager and you know the cost per ton. Yeah.
So I like the copper sulfides best among copper projects. They're not up in the air like Pebble environmentally and CapEx. And Seabridge is a $5,000,000,000 CapEx. I know one is a lot, but 5 is more. Now that the company is rolling in cash, I'm exaggerating a little bit, but it's not 400,000,000 in debt.
And the copper price is over $4 and the gold price is much higher. Do you think Michael might have a weak moment where he retains one third or one half of the La Reina project? If you retain one third of it, it might only be 400,000,000 of capital, and some of it would be debt. Yeah. I think No.
I'm getting you in trouble, Sireann.
No. No. Well, this is a conversation. So you you can get his direct answer too at one point, I'm sure. But I I he's gotten this question and he's been pretty clear that it's just not a fit for, it's not a fit with our strategy.
They, we would look to divest of that, of that asset, that Larena two. And there are ways we could do that which may allow us to make it more attractive, like retain You
could keep a gold streak royalty. Yeah.
You know, to structure the transaction that way. But it's a large copper deposit, so it's really that's not where we would invest our capital. It's not always
Is it really about being Pan Am Silver or is it really about having NPV?
Well, we're always looking we're NPV is the bottom line, but we wanted to come from silver assets and silver projects. We believe that that
I'm a little more easy going in that regard. I just care about dividends.
Yeah.
NBB. Concerning so
we have to think about that too. I don't know if, while we do look to the divest of that asset, there's probably it's probably a window
that good time to divest it. You have two years to kill while you still have oxide leaching going on and maybe more if you find a little more at the bottom of the pit. Right. But you don't have to make a decision right now in the midst of the uncertainties. No.
You could sell it five years from now when, the guy's out of power if he's in power. Hopefully, he doesn't ruin the country in five years or create too many crazy taxes.
Mhmm.
Sir, I might have had an impression of the Escobar issues from the previous Tahoe management that, may not have understood it well in hindsight. And we try to read the Frenzel Libre daily newspaper in Guatemala. My Spanish isn't perfect, but Alicia that works for me is from Mexico. So she and the the translating software, you know, carry us a little bit.
K.
My impression is that the Zika ethnic group nationally is very small. That it's as little as one tenth of 1% of the population. But they have a congress and a legislature. Do you know what percent of the Guatemalan population they are? Or is it impossible to know because some are one eighth and some are one quarter and they all intermarry like we do in The US and Canada?
Yeah. I don't know what the number is and I'm not sure it matters. Because the point is they can identify as being, a Zinka, an indigenous member of that community. And this is exactly what got Escobar in trouble to begin with, was to say that there are no Zinka within the territory, within the location of the mine that would need to be consulted with.
And that was the Ministry of Mines. It wasn't Tata's process.
Yeah. It is the Ministry of Mines that is responsible for conducting the ILO one hundred and sixty nine consultation because Guatemala is a signatory to ILO one hundred and sixty nine. But both the government and the company were making the argument that there were insufficient numbers of Zinca within the area of interest, which turned out to be not the case.
Now there was a protest where one of the Tahoe Security Guards shot and killed someone. And there might have been other things where other other incidents that, where there wasn't a death, but, there were injuries.
Yeah. There wasn't a death in that case either. It was an injury. So
if you're speaking about about the LA Times immortalizing some teenage girl.
Oh, that was a different yeah. That was not the incident involving
Was that someone that was like a drive by shooting that was in an automobile driven by the father?
Young girl that was identified as being, part of the Escobar resistance who was shot, but it's not, that incident is not tied to our operation.
So, it was a random act of violence that somehow got written up associated with the company?
I don't think any conclusions have been made as to what it was. But, yeah, just to be clear, it's not it did not happen on our grounds. It was not part of the incident where there was an incident. I'll describe that shortly. But, no, this was inferred, I guess, by some media that, there was a relationship to the mine.
But there is no reason to believe that there is a relationship with mine other than they she was part of the resistance. So, back in 2013, there were some protesters at the gate of the Escobal Mine. And one of the security guards fired rubber bullets at these protesters. They did file a court claim in the BC courts. We settled that in the summer of twenty nineteen.
So, we used to It was rubber bullets.
But there were injuries that resulted from that. And we did apologize for that incident. It was not the way it should have been managed. It's not the way we would do things. In fact, after acquiring Escobar, we completely revamped and took a good look at how what our security procedures would be there.
We don't have armed guards patrolling the perimeter of the mine. We we just have a different approach to it.
There was a blockade, I believe it was at a town called Castillas, Sixteen, Eighteen miles towards the capital, around the time the mine was closed separate from the constitutional court decision. Mhmm. Is that a function of just frictions from the highway traffic delivering fuel and other supplies to the mines and taking concentrate out? Do you think there's a social friction in the transportation corridor?
I think that being one of the issues that's been raised is the traffic on the transport and those are the things that we are looking to discuss with the communities and work at mitigation measures as part of that consultation so that, we can work with them on those type of concerns. That roadblock still exists. It's not, you know, aggressively managed, if you will. There's vehicles that can travel on that. So, that's not an issue.
We can get access to the site. I'm sure, obviously, if we're transporting a truck full of concentrate, then we might be stopped. But that roadblock still exists. It will be, it will be one thing that we will need to sort out with the community. But I think as this consultation process progresses and we work through some of the issues and some of the concerns and perceptions that the local communities have, that we can overcome some of the objections and, be able to resolve those concerns.
During the blockade, Tahoe helicoptered fuel in, even when the mine was idle, they had to dewater to prevent damage. And they had a helicopter shot. It was a fuel helicopter. It made an emergency landing without exploding. It must have been a terrifying incident for the guys that were piloting the helicopter.
Was anyone ever prosecuted and convicted for shooting down the helicopter?
I do not have any information on that incident. No.
It was penetrated at the tail rotor. The bullets didn't, like, ignite the fuel tank. It was good luck. It just hit the tail rotor, and
then the
pilot was able to land the helicopter without exploding. So, there appeared to be a lack of goodwill on several sides.
Yes. That is one of the reasons why we were able to pick up this asset. I think the relationships with the local communities had really deteriorated. Trust in the company had really deteriorated. And that's why we were able to acquire this world class mine.
There are obviously still issues that we need to work through. But we think there is a path forward. We've made many changes since acquiring the assets. We've completely changed the team that's on the ground in Guatemala. We have a different approach.
So we are working to reestablish that trust and that dialogue by being transparent and by listening to what those concerns are. We do have a grievance mechanism that has been set up for the Escobar operation as well. I can say that the majority of the requests that are made to that grievance mechanism are for employment opportunities, people looking for jobs. So, I think the tone has really changed with the local communities and how they're interacting with the new owners, with Pan American, not the mine.
We in America see these news reports of people crossing our border, and a lot of them are supposed to be from Central American communities. I think Jim Voorhees told me, at the Denver Gold Forum in 2018 that by that point, at least 200 of the workers had left and gone to America. I'm just thinking where I vacation in Greece, there's a lot of empty houses from people that immigrated and went to America A Hundred Years ago or moved to Athens. And they just respect the property and it's in the title of whoever died a hundred years ago.
Mhmm.
What are the towns like in Guatemala where so many people have immigrated and gone to America? Are they half empty, semi ghost towns because of the migration depopulating to come to America?
Yeah. I I don't know, John.
Have you spent much time in Guatemala since the acquisition? No. I have been there.
I have been there. I have visited the operation. I have met the the new local team that's that's installed there. And actually, our country lead manager in Guatemala is a twenty year veteran from Pan American. So, he is leading the work there.
The migration issue is definitely an issue for a lot of countries in South And Central America. And The U. S. Has been trying to take steps to stop that migration. But it's a matter of economic circumstances.
And I think the solution to that is to be able to generate economic opportunities so that the people within those countries can stay in their towns and stay in their countries and be able to be where they probably prefer to be instead of being on the move looking for employment.
Surin, thirty years ago, I worked at a large investment firm that had an economist who was neither a Keynesian or a monetarist. He had a demographic model. And a demographic economist argues that GDP is a function of population growth plus productivity growth. It's a different model than m v times p y that was the fundamental monetarist equation. So if you follow that model and the population decays 5% a year, that's minus 5% GDP growth.
And just think of all the houses that aren't built and all the toothpaste that isn't bought.
Mhmm.
So it would seem to be, even without the virus, a grave economic condition when GDP falls because of out migration. So in that context, the Escapal episode is even more damaging to the citizens of Guatemala. It would seem rational to have dialogue and pre consultation and mitigation matters and get people to work and reduce the depopulation of regions. Do you know if the depopulation of Guatemala is more from the capital, more from the East, more Eastern Coastal Plains, more from the Western Highlands, or is it just universal?
Yeah. I don't know what to be able to tell you from what regions that migration is coming, but yeah.
It would seem to be a very challenging problem. If we were to think of ourselves, Syrah, or think of Pan Am Mhmm. Three years from now, it's possible that La Colorado is built or almost built. Mhmm. And it's possible that, Escobar's been restarted.
And it's possible they never get their act together in Shaboot. It's still on the table. Who knows?
Yeah.
But what would Michael and the team do with La Colorada done and Escobar running? And Escobar running at the recent prices would generate something like 300,000,000 more cash flow. Do you think that some of these investment projects, New Pacific or others might rise up or other projects will rise up from the development queue. Do you think the technical teams would have more time to study La Reina to depth, Shawondo to depth, and all these undeveloped resources in Ontario, not all right in Timmins. But, you know, there were all these Lakeshore gold pieces and these little juniors that Tony Makuch acquired when he was running Lakeshore before Tahoe bottomed out.
And I'm just thinking three years from now, I don't think Michael and your Geos are gonna play golf. What do what do you think they're gonna work on?
Yeah. Well, first of all, it'd be a be in a great that would be a great position to be in. LUT Colorado, the development of LUT Colorado, I'd be given the size of that deposit. I don't know
if that's going to be That's going to generate the kind of cash as much as Escobar.
Yeah. It could be well advanced. Escobar could be producing. That's we have to wait and see where that consultation process ends up. It needs to go back to the Supreme Court of Guatemala.
But it's definitely a priority for us. I think we focus on the exploration that's a fit with our company. So, it really is more directed at brownfield exploration to replace reserves and extend the mine life of current operations. We do continue to look at new M and A opportunities for sizable deposits, preference being for silver and things that would move the needle for Pan American. Obviously, accretive.
And then you'd have to think about what other, considerations you'd have for optimizing your portfolio of assets. At that point, if we have two very large silver producing mines, we may look at some of our other assets and determine if they are still a fit with Pan American, if they're delivering the returns for the effort that's required all in the context of, what other opportunities we might have identified as well.
So I was just thinking if there's 210,000,000 shares, Escobar would pay a buck or buck 50 dividend. La Coloradocskarn would be the same. So maybe the corporate dividend could be $34 a share. But I think that probably Michael and the team are gonna look at some of these projects in Ontario where Lakeshore had accumulated all these resources and Tahoe didn't advance any of them. Of course, the gold price is much higher today.
And then there's the depth extensions of Shaw window and the depth extensions Arena too. I know I'm speaking out of time out of out of line, but that's okay. I'm a shareholder, not an employee. Mhmm. So, there's a lot of opportunities.
I certainly hope that your management doesn't pull a barrack or a Newmont and act self important that they're too busy to manage a small project because those big mining companies sold all these things cheap. Now the second largest market cap company in Australia is Northern Star that bought four mines from Barrick and Newmont in twenty fourteen, fifteen. And at the bottom of the gold market, the cash flow paid off the acquisition in one year. And, sometimes the buyers have their own corporate ego. And if a gold deposit isn't a million ounces, they don't wanna pay much for it.
So I I just hope you don't you're not swimming in cash and you sell off the smaller mines for chump change and make a mistake.
I can say this management team is returns driven. So, if it's going to demonstrate the type of returns that are attractive for our shareholders, then those are the assets that we would invest in and continue to keep in the portfolio. But if they're skinny and they take up an inordinate amount of management time for relatively little return, then those could potentially be ones that, would
not It could turn out that between NaviDOT, Escobal and Colorado, if all three were producing, each of them could equal or exceed the current cash flow of Pan Am this year.
Oh, yeah.
They're big mines. Mhmm. I didn't think that it would be an alternative to get rid of the old faithful. So, of course, mines decline and become less profitable.
Yeah. Well, and that's not what I'm saying. I mean, there is that I I just, saying that you would look at your assets and see what return they're providing to the company, to your shareholders to determine which are a fit with your portfolio. And there's only so much time
words in your mouth that get you in trouble, Seren.
Yeah.
I'm not a fan of the small mine sell offs. SSR Mining is almost built on the Marigold acquisition from Goldcorp. Mhmm. Some of these sales that were done in 2013, '15 of the smaller mines. What would happen, some of these companies sold certainty to invest in farces.
Goldcorp sold Marigold, for example, to build Cuchenor that didn't exist. Now your your company is much one
I'm thinking of the smaller polymetallic mines like in Peru, but those can go on for decades still. Those veins extend DAPT. They've been already mined for eighty to one hundred years, but we just continue to replace reserves there. So, we do recognize the value of having those type of assets in our portfolio.
So I'm just giving an example is probably is not something you can respond to. Twenty, thirty years ago, there was a junior steel analyst, a Goldman named Alberto Arias, And he was very promising, so they took him out of steel and put him in private capital. And he has his own fund that he's run for twenty years or so. And he's Peruvian. And I think he's still the controlling shareholder with half or slightly over half of, Sierra Metals in one of his funds.
And three or four years ago, he wanted to wind up that fund. And they have a number of small underground mines that are polymetallic. And the big copper companies all want these porphyries. And they all want hundred thousand ton a day grinding mills and 400 ton trucks. And they love things just like La Arena too.
Yep. So there hasn't been a satisfactory bid for Sierra Metals. It might be the perfect thing for Pan Am to buy when everybody's scared of Peru. And before, Alberto has been trying to sell it for three or four or five years.
Yeah. And
now with this uncertainty, he must be gritting his teeth, but I'm sure he's very patient. So small mines can be fine. It's just that you don't get big Christmas cards from the suppliers because you're not doing the hundred thousand ton a day grinding mills and the 400 ton trucks.
Yeah.
So I'm just kidding around.
I know.
So I'm rooting for you to solve Alberto's problem and make a profit doing it. There's always something out there. It's all I I
just Yeah. I can say that
how rich these people got that bought the small mines that Newmont and Barrick and Goldcorp didn't want. That's all. Sir, I appreciate you putting up with me. You're very grateful.
No. I'm going to tell you.
I do my best to get you above your pay grade and into trouble.
Yeah. Well, hopefully, yeah, I didn't say anything that, crossed that line. But, no, I it's it's great to talk to you, John, and thank you for the opportunity.
Thank you. Good, Michael and Rob. My regards. I hope Rob's on his bicycle and avoiding all crashes.
I will pass that on to him. He's been safe so far. You know, safety is our priority too. So, yeah.
Have a good night. Thank you for your time. Thank you.
Thanks, John. Bye bye.