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Pan American Silver 2Q Earnings Rise; Cost Guidance Lowered

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(Kitco News) - Pan American Silver Corp. (Nasdaq, TSX: PAAS), one of the world’s largest primary silver producers, reported a rise in second-quarter earnings late Wednesday and also downwardly revised cost guidance for 2017.

Pan American said unaudited net earnings were $36 million, or 23 cents per share, up from $34.2 million, or 22 cents, in the second quarter of 2016. Excluding special items, adjusted earnings were $22.3 million, or 15 cents per share, up from $18 million, or 12 cents, in the year-ago period.

Silver production of 6.3 million ounces was roughly the same as 6.33 million a year ago. Gold production eased to 37,700 ounces from 48,400. Meanwhile, consolidated all-in sustaining costs per silver ounce sold fell to $10.73 from $11.31 in the year-ago quarter.

“Silver production is on pace to achieve our annual targeted range, while costs are tracking well below,” said Michael Steinmann, president and chief executive officer. “We have now reduced our estimate for cash costs and AISCSOS in 2017 by 14% and 10%, respectively, from the mid-point of our original guidance.”

First-half silver production of 12.5 million ounces was on track to achieve the company’s targeted range of 24.5 million to 26 million ounces for 2017. Gold production was 75,400 ounces in the first half of the year, and given higher anticipated production for the remainder of the year at Dolores, management reaffirmed annual gold output guidance of 155,000 to 165,000 ounces.

The company said it now projects cash costs per silver ounce of $5.50 to $6.50 an ounce, compared to $6.45 to $7.45 previously. All-in sustaining costs per silver ounce sold are now estimated at $10.50 to $11.50, down from $11.50 to $12.90 previously.

"The longer-term outlook for operations is also encouraging with excellent progress on our mine expansions in Mexico and our two new projects in Argentina,” said Steinmann. “Throughput at La Colorada achieved design rates of 1,800 tonnes per day in June, six months ahead of plan. At Dolores, commissioning of the new pulp agglomeration plant has begun and the underground mine has been delivering low-grade development muck to the heap. As we saw during Q2 with La Colorada, these expansions improve our operating margins through growth in low-cost production."

The board of directors approved a quarterly cash dividend of $0.025 per share. This will be payable around Sept. 1 to shareholders of record as of the close of business on Aug. 21.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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