PAN AMERICAN SILVER CORP

Management Discussion and Analysis

For the years ended December 31, 2023 and 2022(tabular amounts are in millions of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted)

2023 OPERATING PERFORMANCE

Consolidated(1)(2)

(1)Please refer to the “Operating Metrics” and “Alternative Performance (Non-GAAP) Measures” sections of this MD&A for mine by mine operating and cost metrics.

(2)Acquired Mines data represent operating results from March 31, 2023 to December 31, 2023.

(3)Cash Costs and AISC are non-GAAP measures. Please refer to the “Alternative Performance (Non-GAAP) Measures” section of this MD&A for a detailed reconciliation of these measures to production costs.

Silver Production

Consolidated silver production for 2023 was 20.44 million ounces compared with 18.45 million ounces in 2022. The increase was driven by the Acquired Mines and higher silver production at San Vicente more than offsetting production declines from the placement of Manantial Espejo on care and maintenance in January 2023, and at La Colorada from the ventilation-driven constraints and temporary suspension of operations due to security concerns in October 2023.

Gold Production

Consolidated gold production for 2023 was 882.9 thousand ounces compared to 552.5 thousand ounces in 2022. The increase was driven by the Acquired Mines more than offsetting lower production from Manantial Espejo being placed on care and maintenance and Dolores mine sequencing into lower grade gold ore zones.

Base Metal Production

Zinc, lead and copper production in 2023 was 38.8 thousand tonnes, 18.7 thousand tonnes, and 5.0 thousand tonnes, respectively. Zinc and lead production were consistent with 2022 due to higher production at Huaron from mine sequencing into higher grade ore zones, and the acquisition of Minera Florida, which offset the decrease in production from Morococha entering care and maintenance, and lower production at La Colorada due to ventilation-driven constraints. Copper production decreased relative to 2022 due to Morococha entering care and maintenance.

Cash Costs

Silver Segment Cash Costs per ounce in 2023 of $13.07 were $0.35 higher than the $12.72 in 2022, reflecting: higher costs at La Colorada driven by higher operating costs per tonne, lower silver grades, and lower by-product credits from lower zinc and lead production, all related to ventilation constraints; and, lower by-product credits at Huaron related to lower zinc and copper prices. These increases were partially offset by higher gold by-product credits from the acquisition of Cerro Moro and the contribution from residual sales at Manantial Espejo as the mine entered care and maintenance.

Management Discussion and Analysis

For the years ended December 31, 2023 and 2022(tabular amounts are in millions of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted)

Gold Segment Cash Costs per ounce in 2023 were $1,113, comparable to 2022 Cash Costs of $1,113. This largely reflects reductions from the acquisition of lower cost production from Jacobina, as well as higher by-product credits at Dolores due to mine sequencing into higher grade silver ores, partially offset by: increased costs per ounce at La Arena due to higher mining costs which were capitalized as deferred stripping in the prior year; increased operating costs at Timmins due to workforce shortages resulting in higher contractor use and challenging ground conditions, which limited throughput; and, the acquisition of higher cost production from Minera Florida.

AISC

Silver Segment AISC for 2023 of $18.17 per ounce were $1.69 per ounce higher than in 2022, due to the previously described factors increasing Cash Costs, as well as higher sustaining capital at Huaron related to investments in mine development advances and ventilation projects and $3.8 million in cost-increasing NRV adjustments at La Colorada.

Gold Segment AISC for 2023 of $1,371 per ounce were $277 per ounce lower than in 2022. The decrease largely reflects $35.7 million in cost-decreasing NRV adjustments in the current period relative to $98.9 million in cost-increasing NRV adjustments in 2022 at Dolores, which led to a $234 per ounce decrease in Gold Segment AISC, as well as lower sustaining capital at La Arena related to waste dump preparation, heap leach pad expansions and lower waste tonnes mined from a decrease in the waste-to-ore ratio in the current phase of the mine plan.

Silver Segment Operations

La Colorada

At the La Colorada mine, 2023 silver production of 4.39 million ounces was 26% lower than 2022, primarily reflecting lower throughput and grades related to ventilation constraints in the high-grade, deep eastern Candelaria zone of the mine, as well as the temporary suspension of operating activities due to security concerns in October 2023. These factors also decreased zinc and lead production by 26% and 25%, respectively. The Company has completed the construction of a concrete-lined ventilation shaft, which reached a depth of 581 meters in December 2023. The installation of two exhaust fans on the surface of the shaft is on schedule to be completed by mid-2024, following which ventilation conditions in the mine are expected to improve significantly leading to accelerated development rates and higher throughput rates thereafter.

2023 Cash Costs of $22.82 per ounce were $11.26 per ounce higher than in 2022, primarily due to ventilation constraints driving higher mining costs, lower mine productivity, lower silver grades and lower by-product lead and zinc production. 2023 AISC of $28.13 per ounce were $11.35 per ounce higher than in 2022, primarily as a result of the same factors that affected Cash Costs, as well as $0.84 per ounce in cost-increasing NRV inventory adjustments, partially offset by lower sustaining capital investments. Lower sustaining capital investments in 2023 were related to a reduction in investments in raise bore ventilation infrastructure, mine deepening and other site infrastructure, partially offset by increased investments in tailings storage facility expansions.

During 2023, the Company invested $44.4 million on project capital to advance the La Colorada Skarn project, largely for exploration and the preliminary economic assessment ("PEA") which was announced on December 18, 2023, as well as on the excavation of the concrete-lined ventilation shaft. An updated technical report on the La Colorada property was filed on SEDAR+ on January 31, 2024, which included the PEA on the La Colorada Skarn project and details regarding the anticipated timing and costs to advance the La Colorada Skarn project.

Cerro Moro

Following completion of the Yamana Acquisition on March 31, 2023 to December 31, 2023, silver production was 3.55 million ounces, gold production was 84.6 thousand ounces, Cash Costs were $2.68 per ounce and AISC were $10.00 per ounce. The Company invested $25.4 million in sustaining capital during the same period, primarily on near-mine exploration, underground mine development and mine equipment replacements and refurbishments. Operating results were largely consistent with Management's expectations.

Management Discussion and Analysis

For the years ended December 31, 2023 and 2022(tabular amounts are in millions of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted)

Huaron

In 2023, silver production of 3.61 million ounces was comparable to silver production in 2022, as throughput, grades and recoveries were largely consistent year-over-year. Zinc and lead production were 13% and 10% higher, respectively, relative to 2022, due to mine sequencing into higher grade zinc and lead ore zones. 2023 Cash Costs of $9.95 per ounce were $3.80 per ounce higher than in 2022, primarily driven by lower by-product credits due to lower base metal prices and higher treatment and refining charges, partially offset by higher base metal production. AISC in 2023 increased by $5.78 per ounce, primarily as a result of the same factors that affected Cash Costs, as well as increased sustaining capital expenditures. Increased sustaining capital investments in 2023 were related to underground development advances to access the Horizonte zone, ventilation projects and near-mine exploration, partially offset by decreased investments in conventional tailings storage facility expansions. Additionally, in 2023, the Company invested $15.8 million on project capital related to the construction of the new dry-stack tailings storage facility.

San Vicente

In 2023, silver, zinc, lead and copper production were 18%, 2%, 15% and 24% higher than in 2022, respectively, largely attributed to higher throughput and silver and lead grade ore zones mined. Cash Costs in 2023 were $0.43 per ounce higher than in 2022, primarily due to higher royalties related to improved profitability, as well as higher treatment and refining charges due to increased zinc concentrate sold, offset by higher by-product credits per ounce. In 2023, AISC of $17.09 per ounce were $0.91 per ounce lower than in 2022, due to lower sustaining capital expenditures from reduced investments in tailings storage facility expansions, which partially offset the factors that increased Cash Costs year-over-year.

Manantial Espejo

The mine was placed on care and maintenance in January 2023, with residual processing resulting in 2023 silver production of 0.19 million ounces and gold production of 1.7 thousand ounces, after which the mill was also placed on care and maintenance.

Gold Segment Operations

Jacobina

Following completion of the Yamana Acquisition on March 31, 2023 to December 31, 2023, gold production was 147.8 thousand ounces, Cash Costs were $786 per ounce and AISC were $1,107 per ounce. The Company invested $46.1 million in sustaining capital during the same period, largely on near-mine exploration, lease payments related to ore haulage, tailings storage facility investments and mine equipment replacements. Additionally, the Company invested $23.8 million on project capital related to plant facility infrastructure upgrades and development advances to connect sections of the mine via underground. Operating results were largely consistent with Management's expectations.

El Peñon

Following completion of the Yamana Acquisition on March 31, 2023 to December 31, 2023, silver production was 2.91 million ounces, gold production was 95.7 thousand ounces, Cash Costs were $1,000 per ounce and AISC were $1,207 per ounce. The Company invested $18.6 million in sustaining capital during the same period, primarily on near-mine exploration and mine equipment lease payments, replacements and refurbishments. Operating results were not consistent with expectations due to lower than anticipated mined silver and gold grade ores resulting from ongoing revisions to the operating plans and negative grade reconciliations in certain sections of the mine. The shortfall was particularly impactful to gold production, which also negatively impacted Cash Costs and AISC relative to expectations. In 2024, we are focusing on infill drilling to confirm production grades going forward.

Timmins

At the Timmins mine, gold production of 132.9 thousand ounces in 2023 was consistent with 2022, reflecting lower throughput from challenging ground conditions at the Bell Creek mine being offset by higher gold grade ores

Management Discussion and Analysis

For the years ended December 31, 2023 and 2022(tabular amounts are in millions of U.S. dollars except number of shares, options, warrants, per share amounts, and per ounce amounts, unless otherwise noted)

mined and higher recoveries. The challenging ground conditions resulted in a temporary work-stoppage in a certain high-grade area of the mine that impacted production in the second and third quarters of 2023; however, following successful remediation, the work stoppage was fully lifted in the fourth quarter of 2023 ("Q4 2023"), resulting in higher gold production in Q4 2023. In 2023, the Company invested $7.7 million on project capital related to the development and construction of the Bell Creek paste backfill plant, which is advancing on schedule and is expected to be completed in the third quarter of 2024. 2023 Cash Costs of $1,503 per ounce were $129 per ounce higher than in 2022, primarily as a result of challenging ground conditions increasing costs per ounce and higher royalties due to higher tonnes mined on certain areas subject to higher royalty rates. 2023 AISC of $1,800 per ounce were $160 per ounce higher than in 2022, largely due to the same factors that impacted year-over-year Cash Costs, as well as increased investments on tailings storage facility expansions and near-mine exploration.

Shahuindo

At the Shahuindo mine, gold production of 140.1 thousand ounces was 7% lower than in 2022, primarily reflecting mine sequencing into lower gold grade ores and lower tonnes stacked, partially offset by an increase in the ratio of ounces recovered to ounces stacked from leach sequencing. 2023 Cash Costs of $963 per ounce were consistent with 2022, while 2023 AISC of $1,431 per ounce were $111 per ounce higher than in 2022 due to the higher sustaining capital expenditures. Increased sustaining capital investments in 2023 were largely related to heap leach pad expansions, mining zone site access preparation and water treatment plant construction, partially offset by lower investments in mine equipment replacements.

La Arena

At the La Arena mine, gold production of 97.1 thousand ounces in 2023 was comparable to 2022 as a result of lower grades due to mine sequencing, offset by higher tonnes stacked due to mine sequencing with a lower strip ratio resulting in lower waste tonnes mined in 2023. Cash Costs in 2023 of $1,237 were $199 per ounce higher than in 2022 due to lower gold grades and higher mining costs, which were capitalized as deferred stripping costs in the prior year given the mine sequencing. 2023 AISC of $1,520 per ounce were $31 per ounce lower than in 2022, as the total tonnes mined in both years were comparable irrespective of the accounting treatment of deferred waste mining, and lower sustaining capital investments in waste dump preparation and heap leach pad expansions.

Minera Florida

Following completion of the Yamana Acquisition on March 31, 2023 to December 31, 2023, gold production was 72.4 thousand ounces, Cash Costs were $1,472 per ounce and AISC were $1,809 per ounce. The Company invested $22.3 million in sustaining capital during the same period, primarily on near-mine exploration, mine equipment replacements and refurbishments and tailings storage facility expansions. Operating results were largely consistent with Management's expectations.

Dolores

At the Dolores mine, 2023 silver production of 2.19 million ounces and gold production of 107.1 thousand ounces were 2% and 22% lower than in 2022, respectively. The reduction in gold production is due to lower tonnes stacked, lower grade ores mined and lower ratio of ounces recovered to ounces stacked from leach sequencing. Cash Costs of $1,021 per ounce in 2023 were $49 per ounce lower than in 2022 due to higher by-product credits per ounce from the increase in silver price and the higher silver production relative to gold in the current year. 2023 AISC of $850 per ounce were $1,214 per ounce lower than in 2022, primarily due to NRV inventory adjustments, which resulted in $35.7 million in cost reductions in 2023 compared to $98.9 million in cost increases in 2022, representing a $1,025 per ounce decrease year-over-year. In addition, the reduction in AISC reflects lower sustaining capital given the wind-down of mining activities and lower Cash Costs.