Silver lining for dark Pan American quarter
17th May 2012
VANCOUVER, May 15 – While predicting stronger full year 2012 production, Pan American Silver has had a costly latest March quarter with cash costs up and net earnings and operational cash flows down substantially, albeit on a 20% revenue rise.
On the production side, its eight operating central and South American mines produced 5.5Moz of silver, compared to 5.34Moz in Q1 2011; 19,496oz of gold (18,640oz), 11,032t of zinc (8,844t), 4,015t of lead (3,300t) and 980t of copper (1,246t). However, consolidated cash costs were up to $US10.49oz, net of by-product credits, from Q1 2011’s $7.83oz.
Updated production estimates for calendar 2012 are for a higher 24.25-25.5Moz of silver at cash costs of $11.50-$12.50oz, net of by-product credits. Gold production for the year is estimated at 124,000-133,000oz, including 49,000-53,000oz from the Dolores mine from April 1, part of the $1.3B Minefinders acquisition completed during the latest quarter.
On the balance sheet, Pan American’s latest net earnings of $50.2M were way down on Q1 2011’s $92.7M, with adjusted earnings down to $61.4M from the previous $65.2M on operating cash flow (before interest and income taxes) up to $118.6M from $US88.9M. This was on revenue of $228.8M, up 20% on the 1st quarter 2011, due to higher realised precious metals prices and more sold, with the exception of copper.
The $42.4M fall in net earnings was attributable to $13.8M in closing costs incurred by the Minefinders acquisition, $7.2M spent on exploration/development and a negative variance of $24.9M in non-cash gains on the company's outstanding warrants realised in Q1 2011..
The 37% drop in cash flow from operations to $37.4M, was primarily attributable to higher income tax.
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