FOR THE THREE MONTHS ENDING MARCH 31, 2024

Contingencies (Note 23)

APPROVED BY THE BOARD ON MAY 8, 2024

Supplemental cash flow information (Note 20).

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 2100 – 733 Seymour Street, Vancouver, British Columbia, V6B 0S6. The Company is listed on the Toronto Stock Exchange (TSX: PAAS) and the New York Stock Exchange (NYSE: PAAS).

Pan American engages in silver and gold mining and related activities, including exploration, mine development, extraction, processing, refining and reclamation. The Company owns and operates mines located in Canada, Mexico, Peru, Bolivia, Argentina, Chile and Brazil. The Company also owns the Escobal mine in Guatemala that 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 addition, the Company is exploring for new silver and gold deposits and opportunities throughout the Americas.

The principal subsidiaries, all of which are consolidated, of the Company and their geographic locations at March 31, 2024 were as follows:

On March 31, 2023, the Company acquired Yamana Gold Inc. (“Yamana”) in exchange for 153.8 million common shares, which were valued at approximately $2.8 billion (the “Acquisition”). The Acquisition included the following principal mines: Jacobina in Brazil; El Peñon and Minera Florida in Chile; and Cerro Moro in Argentina.

These unaudited condensed interim consolidated financial statements ("Interim 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, 2023 (the "2023 Annual Financial Statements") omitted. Accordingly, these Interim Financial Statements should be read in conjunction with the 2023 Annual Financial Statements.

a)Changes in accounting policies

The accounting policies applied in the preparation of these Interim Financial Statements are consistent with those applied and disclosed in the 2023 Annual Financial Statements with the exception of the mandatory adoption of certain amendments noted below:

The amendments to IAS 1, clarify the presentation of liabilities. The classification of liabilities as current or non-current is based on contractual rights that are in existence at the end of the reporting period and is not affected by expectations about whether an entity will exercise its right to defer settlement. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment introduced a definition of 'settlement' to make clear that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. The amendments also clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. Covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. The amendments were implemented effective January 1, 2024. The implementation of this amendment did not have a material impact on the Company.

b)Future changes in accounting standards

In April 2024, the IASB released IFRS 18 Presentation and Disclosure in Financial Statements. IFRS 18 replaces IAS 1 Presentation of Financial Statements while carrying forward many of the requirements in IAS 1. IFRS 18 introduces new requirements to: i) present specified categories and defined subtotals in the statement of earnings, ii) provide disclosures on management-defined performance measures ("MPMs") in the notes to the financial statements, iii) improve aggregation and disaggregation. Some of the requirements in IAS 1 are moved to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7 Financial Instruments: Disclosures. The IASB also made minor amendments to IAS 7 Statement of Cash Flows and IAS 33 Earnings per Share in connection with the new standard. IFRS 18 requires retrospective application with specific transition provisions. The Company is required to apply IFRS 18 for annual reporting periods beginning on or after January 1, 2027 with early adoption permitted. The Company is currently evaluating the impact of IFRS 18 on its financial statements.

c)Significant Judgments and Estimates

In preparing the Company’s Interim Financial Statements for the three months ended March 31, 2024, the Company applied the significant judgments and estimates disclosed in Note 5 of its 2023 Annual Financial Statements.

a)Financial assets and liabilities by categories

(1)Included in Trade and other receivables.

(2)Included in Other assets and Other liabilities.

(1)Included in Trade and other receivables.

(2)Included in Other assets and Other liabilities.

b)Investments recorded at fair value through profit or loss ("FVTPL")

A portion of the Company’s investments are recorded at FVTPL. The (losses) gains from these investments for the three months ended March 31, 2024 and 2023 were as follows:

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

A portion of the Company's investments are recorded at FVTOCI. The losses from these investments for the three months ended March 31, 2024 and 2023 were as follows:

(1)Excludes income tax recovery of $0.4 million, recorded through OCI, related to investments for the three months ended March 31, 2023.

d)Derivative instruments

The Company's derivatives are comprised of foreign currency and commodity contracts. The (losses) gains on derivatives for the three months ended March 31, 2024 and 2023 were comprised of the following:

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.

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

(1)Included in Other assets and Other liabilities.

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, 2023.

ii) Valuation Techniques for Level 2 Financial Assets and Liabilities

The Company’s derivative assets and liabilities were comprised of foreign currency and commodity contracts, which are classified within Level 2 of the fair value hierarchy and valued using observable market prices.

A portion of the Company’s trade receivables arose from provisional concentrate sales and are classified within Level 2 of the fair value hierarchy and 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. 

The Company has concentrate contracts to sell the zinc, lead, copper and silver concentrates produced by the Minera Florida, 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 March 31, 2024, the Company had receivable balances associated with buyers of its concentrates of $21.5 million (December 31, 2023 - $17.5 million). The vast majority of the Company’s concentrate is sold to a limited number of concentrate buyers.

Doré production from Jacobina, El Peñon, Minera Florida, Cerro Moro, La Colorada, Dolores, Shahuindo, La Arena, and Timmins is refined under long-term agreements with fixed refining terms at 7 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 March 31, 2024, the Company had approximately $18.9 million (December 31, 2023 - $10.8 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 at various stages from mine site to refinery.

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, which is uncommon as payments are generally concurrent with the sale.

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 March 31, 2024, we had made $14.9 million of supplier advances (December 31, 2023 - $10.4 million), which are reflected in "Trade and other receivables” on the Interim Financial Statements.

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 an entity will not be able to meet its financial obligations as they come due. The Company has in place a rigorous planning, budgeting and forecasting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis, its growth plans and its dividend distributions. The Company ensures that sufficient committed loan facilities exist to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

As at March 31, 2024, the Company continues to maintain its ability to meet its financial obligations as they come due.

iii) Market Risk

1.Currency Risk

The Company reports its financial statements in U.S. dollars ("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 March 31, 2024, the Company had outstanding positions on its foreign currency exposure of Mexican peso ("MXN"), Peruvian sol ("PEN"), Canadian dollar ("CAD"), Chilean peso ("CLP") and Brazilian real ("BRL") purchases. The Company recorded the following derivative gains and losses on currencies for the three months ended March 31, 2024:

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 months ended March 31, 2024 on its cash and investments was 4.0% (2023 - 2.8%).

At March 31, 2024, the Company has $nil drawn under its $750.0 million Sustainability-Linked Credit Facility (“SL-Credit Facility”), with a maturity date of November 24, 2028 (Note 13).

The Company has two senior notes (see Note 13): senior notes with a fixed 4.625% coupon and maturing in December 2027; and senior notes with a fixed 2.63% coupon and maturing in August 2031 (collectively "Senior Notes"). As the Senior Notes bear interest at fixed rates, they are not subject to significant interest rate risk.

At March 31, 2024, the Company had $101.7 million in lease obligations (2023 - $97.9 million), that are subject to an annualized interest rate of 8.0% (2023 - 8.2%).

3.Price Risk

Metal price risk is the risk that changes in metal prices will affect the Company’s revenue 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.

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.

6. INVENTORIESInventories consist of:

			March 31, 2024			December 31, 2023
Concentrate inventory			$	27.0		$	21.3
Stockpile ore			65.2			67.2
Heap leach inventory and in process			364.6			338.6
Doré and finished inventory			121.3			121.1
Materials and supplies			195.2			191.2
Total inventories			$	773.3		$	739.4
Less: current portion of inventories			$	(744.9)		$	(711.6)
Non-current portion of inventories(1)			$	28.4		$	27.8

(1)Includes $21.1 million (December 31, 2023 - $20.5 million) in supplies at the Escobal mine, which have been classified as non-current pending the restart of operations.

Total inventories held at net realizable value amounted to $162.4 million at March 31, 2024 (December 31, 2023 – $170.0 million). The Company recorded net realizable value write-downs of $14.4 million for the three months ended March 31, 2024 (2023 - recoveries of $20.9 million).

7. OTHER ASSETSOther assets consist of:

			March 31, 2024			December 31, 2023
Insurance prepaids			$	7.2		$	7.4
Other prepaids			23.8			22.3
Derivative assets			2.7			6.9
			$	33.7		$	36.6

Mineral properties, plant and equipment consist of:

(1)Manantial Espejo was placed on care and maintenance in January 2023.

(2)Includes net smelter royalty interests on the MARA Project ($90 million) and the Jeronimo Project ($11.1 million).

(3)Includes a commitment to Sandstorm Gold Ltd. ("Sandstorm") to deliver, for 30% of the spot silver price, 20% of the silver produced by Cerro Moro up to a maximum of 1.2 million ounces annually until 7.0 million ounces have been delivered, after which the Company is committed to deliver to Sandstorm 9% of the remaining life of mine silver production for 30% of the spot silver price.

9. OTHER LONG-TERM ASSETSOther long-term assets consist of:

			March 31, 2024			December 31, 2023
Long-term prepaids			$	7.1		$	9.0
Escrow funds			8.9			9.9
Other			6.2			6.2
			$	22.2		$	25.1

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES A

Accounts payable and accrued liabilities consist of: 

(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.

The following table summarizes changes in ROU Assets for the three months ended March 31, 2024, which have been recorded in mineral properties, plant and equipment on the Interim Financial Statements:

The following table presents a reconciliation of the Company's undiscounted cash flows at March 31, 2024 and December 31, 2023 to their present value for the Company's lease obligations:

As part of the Acquisition, the Company acquired the following Senior Notes: $283 million in aggregate principal with a 4.625% coupon and maturing in December 2027; and $500 million in aggregate principal with a 2.63% coupon and maturing in August 2031 (collectively, "Senior Notes"). These Senior Notes are unsecured with interest payable semi-annually. Each series of Senior Notes is redeemable, in whole or in part, at the Company's option, at any time prior to maturity, subject to make-whole provisions. The Senior Notes are accreted to the face value over their respective terms and were recorded at fair value upon acquisition using an effective interest rate of 5.52%.

The SL-Credit Facility has a limit of $750.0 million plus an accordion feature for up to an additional $250.0 million, which is available at the discretion of the lenders. As of March 31, 2024, the Company was in compliance with all financial covenants under the SL-Credit Facility, which was undrawn. The borrowing costs under the SL-Credit Facility are based on the Company's credit ratings from Moody's and S&P Global's at either: (i) SOFR plus 1.25% to 2.40% or; (ii) The Bank of Nova Scotia's Base Rate on U.S. dollar denominated commercial loans plus 0.15% to 1.30%. Under the ratings based pricing, undrawn amounts under the SL-Credit Facility are subject to a stand-by fee

of 0.23% to 0.46% per annum, dependent on the Company's credit rating and subject to pricing adjustments based on sustainability performance ratings and scores. The SL-Credit Facility matures on November 24, 2028.

Construction loans

From May 2022 to December 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.

As at March 31, 2024 the carrying value of all construction loans was $18.4 million (2023 - $20.1 million).

For the three months ended March 31, 2024, the Company paid $0.2 million (2023 - $0.8 million) in standby charges on undrawn amounts related to the SL-Credit Facility and $8.8 million (2023 - $2.5 million) in interest, both included in interest and finance expense.

Other long-term liabilities consist of: 

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

(2)Represents the obligation to deliver 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.

(3)Includes $46.1 million of Chilean severances, required by local labour laws.

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

For the three months ended March 31, 2024, the total share-based compensation expense relating to stock options and compensation shares was $1.6 million (2023 - $1.2 million) and is presented as a component of general and administrative expense.

•Stock options

The Company did not grant any stock options during the three months ended March 31, 2024 and 2023.

During the three months ended March 31, 2024 and 2023, the Company did not issue any common shares in connection with the exercise of options.

The following table summarizes changes in stock options for the three months ended March 31, 2024 and year ended December 31, 2023:

The following table summarizes information about the Company's stock options outstanding at March 31, 2024:

b.PSUs

The Company recorded a $0.8 million expense for PSUs for the three months ended March 31, 2024 (2023 - $0.6 million expense) and is presented as a component of general and administrative expense. 

At March 31, 2024, the following PSUs were outstanding:

c.RSUs

The Company recorded a $1.1 million expense for RSUs for the three months ended March 31, 2024 (2023 - $1.1 million expense) and is presented as a component of general and administrative expense.

At March 31, 2024, the following RSUs were outstanding:

d.Issued share capital

The Company is authorized to issue 800 million common shares without par value.

e.Dividends

The Company declared the following dividends for the three months ended March 31, 2024 and year ended December 31, 2023:

(1)These dividends were declared subsequent to the quarter ended March 31, 2024 and have not been recognized as distributions to owners during the period presented.

f.Contingent Value Rights ("CVRs")

As part of the acquisition of Tahoe Resources Inc. on February 22, 2019, the Company issued 313.9 million CVRs, with a term of 10 years, which are convertible into 15.6 million common shares upon the first commercial shipment of concentrate following the restart of operations at the Escobal mine. As of March 31, 2024 and December 31, 2023, there were 313.9 million CVRs outstanding which were convertible into 15.6 million common shares.

g.Normal Course Issuer Bid ("NCIB")

On March 4, 2024, the Company obtained approval of its NCIB from the TSX and the NYSE to purchase for cancellation up to 18,232,990 common shares between March 6, 2024 and March 5, 2025. Daily purchases (other than pursuant to a block purchase exemption) on the TSX and NYSE under the NCIB are limited to a maximum of 151,485 common shares and 25% of the average trading volume for the Company's common shares in the four calendar weeks preceding the date of purchase, respectively.

For the three months ended March 31, 2024, 1,720,366 common shares were repurchased for cancellation under the NCIB at an average price of $14.16 per share for a total consideration of $24.3 million (of which $2.8 million was payable as at March 31, 2024). A total of 304,560 common shares that were repurchased had not been cancelled as at March 31, 2024 and were cancelled during April 2024.

Production costs are comprised of the following: 

(1)Includes $3.5 million of mine closure severances for the three months ended March 31, 2024 (2023 – $6.8 million).

(2)Includes net realizable value write-downs of $14.4 million for the three months ended March 31, 2024 (2023 – recoveries of $20.9 million) and were included in cost of sales.

(1)Includes $nil in mine closure severances for the three months ended March 31, 2024 (2023 - $5.9 million). Morococha was disposed of on September 22, 2023.

(2)Includes $0.2 million in mine closure severances for the three months ended March 31, 2024 (2023 - $nil).

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

Potentially dilutive securities excluded in the diluted earnings per share calculation were 513.2 thousand options for the three months ended March 31, 2024 (2023 – 278.0 thousand). Also excluded for the three months ended March 31, 2024 were CVRs potentially convertible into 15.6 million common shares (2023 – CVRs potentially convertible into 15.6 million common shares).

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

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.

From the Acquisition on March 31, 2023, the Company included the following mines: Jacobina, El Peñon and Minera Florida in the Gold Segment, Cerro Moro in the Silver Segment, and the MARA project (disposed on September 20, 2023) in the Other Segment. These mines and projects are included in the segmented disclosures below.

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

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

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

(2)Manantial Espejo was placed on care and maintenance in January 2023.

(1) Manantial Espejo was placed on care and maintenance in January 2023.