Pan American Silver Corp.
) logged net earnings of $6.8 million (or 5 cents per share) on a
reported basis in the first quarter of 2014, lower than net
earnings of $20.1 million (or 13 cents a share) recorded in the
year-ago quarter. Lower metals prices and higher cost of sales
weighed on the bottom line.
The earnings in the reported quarter included a $2.3 million
negative adjustment on the value of inventories at the Dolores mine
and a $5.5 million foreign exchange loss.
Adjusted (excluding one-time items) earnings were $8.6 million
or 6 cents per share in the reported quarter compared with adjusted
earnings of $40 million or 26 cents earned in the year-ago quarter.
The results beat the Zacks Consensus Estimate of 2 cents per
Revenues decreased roughly 14% year over year to $209.7 million
in the reported quarter. The results, however, surpassed the Zacks
Consensus Estimate of $194 million. The decrease in the top line
was due to sharply lower prices for all metals produced by Pan
American, partly offset by higher quantities of silver and gold
sold during the quarter.
Realized silver and gold price declined 33.6% and 21.3% year
over year to $19.99 per ounce of silver and $1,283 per ounces of
gold, respectively, in the reported quarter.
Pan American produced 6.61 million ounces of silver in the
reported quarter, up 5% year over year. The increase was
attributable to production gains at Dolores, La Colorada and
Manantial Espejo, partly neutralized by small production declines
at Alamo Dorado.
Pan American produced a record 45,900 ounces of gold in the
first quarter, an increase of 43% year over year. The increase was
primarily due to improved production at Dolores and Manantial
Zinc production rose 18% to 11,400 tons, lead production rose
16% to 3,600 tons and copper production rose 55% to 1,700 tons in
the quarter due to higher throughput rates and grades at La
Colorada, Morococha, Huaron and San Vicente.
Production costs per ounce of silver declined 13.6% year over
year to $14.93 million from $17.29 million recorded in the year-ago
quarter. Consolidated cash costs per ounce declined 27.2% year over
year to $8.25 per ounce of silver (net of by-product credits).
All-in sustaining costs per silver ounce sold also declined 20.2%
year over year to $15.54 per ounce in the reported quarter.
Cash and short-term investments decreased 19.5% to $394.4
million as of Mar 31, 2014, from $490.1 million as of Mar 31, 2013.
Long-term debt stood at $40.3 million as of Mar 31, 2014.
During the first quarter, the La Colorada expansion project was
initiated and work progressed as planned with the project. Work on
phase two of Dolores' leach Pad 3 development advanced as planned
Pan American reiterated its 2014 production target of 25.75 million
to 26.75 million ounces of silver and 155,000 to 165,000 ounces of
gold. The company expects all-in sustaining costs per silver ounce
sold (AISCSOS) to be in the range of $17.00 to $18.00 and cash
costs of $11.70 to $12.70 per silver ounce, net of by-product
The company remains optimistic that it will achieve or surpass
its forecast for precious metals production (especially gold), as
well as be near to the low end of annual guidance for AISCSOS and
cash costs (provided metal prices remain near current levels).
Pan American also reaffirmed its outlook for annual
sustaining capital of $95.5 million and project investment capital
of $67 million for 2014.
Pan American currently carries a Zacks Rank #3 (Hold).
Other companies in the mining industry worth considering include
Gold Fields Ltd.
Lake Shore Gold Corp.
Alexco Resource Corporation
). All of them hold a Zacks Rank #2 (Buy).
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