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Pan American Silver Reports 3Q Loss On Inventory Adjustments

Kitco News

(Kitco News) - Pan American Silver Corp. (Nasdaq: PAAS, TSX: PAAS), the world’s second-largest primary silver producer, late Tuesday reported that it flipped to a loss in the third quarter, hurt by lower metals prices and their impact on “net realizable value” inventory adjustments.

The adjusted loss was listed at $4.7 million, or 3 cents per share, impacted by approximately $23.4 million in negative NRV inventory adjustments, Pan American said. In the same quarter a year ago, the company posted a net profit of $23.3 million, or 15 cents.

The net loss was $9.2 million, or 6 cents per share, compared to a profit of $17.8 million, or 11 cents, in the same quarter of 2017.

 "The depressed metal prices had a significant impact on both settlement adjustments on concentrate shipments and NRV inventory adjustments, which together reduced earnings in the quarter by approximately $33.2 million," said Michael Steinmann, president and chief executive officer.

Silver production was 6.3 million ounces, up from 5.9 million ounces. Gold output rose to 42,100 ounces from 40,800. Zinc, lead and copper production were 16,700 tonnes, 5,700 tonnes, and 2,600 tonnes, respectively, compared to 14,100 for zinc, 5,300 for lead and 3,700 for copper in the third quarter of 2017.

However, while production was up for all but copper, prices for all five metals declined from a year ago. The average realized silver price eased to $14.88 an ounce from $16.68, and the average gold price fell to $1,212 from $1,277.

Still, Steinmann said the company increased its cash and short-term investments to $252.7 million despite the lowest metals prices of the year.

“Operationally, our La Colorada asset is exceeding expectations,” he said. “The expansion is performing above design capacity, achieving record quarterly silver production of 2 million ounces in Q3 2018.”

The company maintained its full-year production guidance. The company projects 2018 silver output of 25 million to 26.5 million ounces, with gold output of 175,000 to 185,000.

Pan American’s board of directors approved a cash dividend of $0.035 per common share, same as after the second quarter, payable around Nov. 30 to shareholders of record as of the close on Nov. 19.

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