Pan American Silver Corp.
) reported adjusted earnings (excluding non-recurring items) of 8
cents per share in third-quarter 2013, compared with earnings of
25 cents per share in the year-ago quarter. The results exceeded
the Zacks Consensus Estimate of 5 cents.
On a reported basis, Pan American logged a net profit of $14.2
million, or 9 cents per share in the reported quarter, a decrease
of roughly 37% from a net profit of $22.6 million or 15 cents per
share in the prior-year quarter. The decrease was due to
lower revenues, higher depreciation and amortization costs, and
higher losses on commodity and foreign currency contracts,
primarily related to the cancellation of gold and silver forward
contracts declared previously, partly offset by favorable
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Revenues decreased roughly 15% year over year to $213.6 million
in the third quarter from $251.8 million registered in the
year-ago quarter. The results were ahead of the Zacks Consensus
Estimate of $194 million. The decrease in the top line was due to
lower metals prices, partly offset by higher volumes of all
metals produced by the company.
Realized silver and gold price declined 30% and 19% year over
year to $20.52 per ounce of silver and $1,319 per ounces of gold,
Silver production increased 7% year over year to 6.7 million
ounces. The increase was attributable to considerable production
gains at Dolores, Huaron, Morococha and San Vicente, slightly
offset by small production declines at La Colorada and Manantial
Record gold production of 41,600 ounces represents an increase of
roughly 48% from 28,162 ounces recorded in the prior year
quarter. The year over year increase was primarily due to
improved production at Dolores and Manantial Espejo mines as a
result of improved grades and recoveries.
Production costs decreased 8% year over year to $130 million from
$142 million recorded in the last year quarter. Consolidated cash
costs declined 25% year over year to $10.40 per ounce of silver
(net of by-product credits) from $13.87 per ounce in the year ago
quarter. All-in sustaining costs per silver ounce sold also
declined 33% year over year to $16.26 per ounce in the reported
The decrease in the costs was due to the cost reduction measures
implemented earlier this year and to higher quantities of
by-product metals sold during the quarter, partly offset by lower
by-product credits on lower metals prices, with the exception of
Cash and short term investments decreased 23% to $421 million as
of Sep 30, 2013, from $548 million as of Sep 30, 2012. Cash flow
generated from operating activities was $40.7 million during the
Expansion study at the La Colorada mine has progressed
significantly and is expected to complete in near future. The
expansion study of the mine has led to an increase in proven and
probable mineral reserves to 65 million ounces of silver at the
start of 2013, from 18 million ounces of silver in 2009. It has
also extended a hosting shaft to increase mine capacity which
will result in the expansion of the sulphide floatation plant.
Pan American will be spending $3 million for an expansion study
at the Dolores mine and plans to install a new crushing, grinding
and pulp agglomeration plant that will increase silver and gold
recoveries of high grade ores and enhance overall processing
Pan American expects to achieve its 2013 production target of 25
million to 26 million ounces of silver and 125,000 to 135,000
ounces of gold at cash costs below the original forecast of
$11.50 to $12.80, net of by-product credits.
It further expects to produce 38,500 to 41,500 tons of zinc,
12,500 to 13,500 tons of lead and 4,500 to 5,000 tons of copper
Pan American currently carries a Zacks Rank #3 (Hold).
Other companies in the mining industry with a favorable Zacks
Silvercrest Mines Inc.
Pretium Resources Inc.
). All of them carry a Zacks Rank #1 (Strong Buy).