Pan American Silver Q1 Earnings Helped By Higher Prices
Pan American Silver Corp. (Nasdaq, TSX: PAAS), one of the world’s second-largest primary silver producers, reported a jump in first-quarter profitability even though output of precious metals declined modestly from a year ago.
Revenues were boosted by higher metals prices, the company said.
Net earnings rose to $20 million, or 13 cents per share, from $1.9 million, or a penny, in the first quarter of 2016. Excluding special items, adjusted earnings were $9 million, or 6 cents per share, compared with $3.3 million, or 2 cents, a year ago.
Revenue of $198.7 million was 26% higher than the $158.3 million recorded during the same quarter of the previous year. Average realized silver prices averaged $17.44 per ounce in the first quarter, up approximately 17% year-on-year. Gold rose to $1,219 from $1,183.
Silver production of 6.2 million ounces was down from 6.42 million a year ago, primarily reflecting Alamo Dorado, where processing of stockpiled material was essentially completed in the first quarter, the company said. This mine has now transitioned to the reclamation phase. However, higher throughput rates from the expansion project at La Colorada drove a 19% increase in silver production at that mine, Pan American said.
Company-wide gold production was 37,700 ounces, down from 41,200 a year ago. The decline reflects lower ore grades, as expected, at Manantial Espejo, plus the situation at Alamo Dorado.
Pan American declared a quarterly cash dividend of $0.025 per common share, the same as in the prior quarter. This will be payable around June 5 to stockholders of record as of the close on May 23.
Pan American said operating results are largely on track to meet 2017 production guidance. Silver output is seen between 24.5 million and 26 million ounces, while gold output is listed at 155,000 to 165,000 ounces. The company also produces base metals as a by-product.
"The expansion of our Dolores mine is tracking well with commissioning of the pulp agglomeration plant expected by mid-year,” said Michael Steinmann, president and chief executive officer. “At our La Colorada mine, we are already realizing the benefit of higher throughput rates from the expansion, which is now substantially complete.”
The expansion of the Dolores mine is on track with the underground mine development scheduled for completion this year, the company added. Construction of the pulp agglomeration plant has reached 80% completion, and commissioning is expected to begin in mid-2017.