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Pan American Lists 4Q Adjusted Loss; Tahoe Merger Near Completion

Kitco News

(Kitco News) - Pan American Silver Corp. (Nasdaq, TSX: PAAS), the world’s second-largest primary silver producer, reported an adjusted loss in the fourth quarter as metals prices and sales fell. Meanwhile, officials said the planned merger with Tahoe Resources Inc. may close by the end of the week.

The company listed an adjusted loss of $2 million, or a penny per share, for the October-December period. This is a turnaround from an adjusted profit of $19.2 million, or 13 cents, a year ago.

Fourth-quarter revenue fell to $173.4 million from 226 million, which the company said reflected lower prices for all metals and lower quantities of silver, gold, and copper sold due to a build in inventories at San Vicente and La Colorada and lower production at Dolores.

The net loss in the fourth quarter was $63.6 million, or 42 cents per share, compared to a profit of $49.7 million, or 32 cents, a year ago. The October-December results included a number of special charges, including a $27.8 million impairment for the Manantial Espejo/COSE/Joaquin assets and $10.2 million for costs related to the pending acquisition of Tahoe Resources.

Fourth-quarter silver production fell to 6.1 million ounces from 6.6 million a year ago, while gold output fell to around 37,200 ounces from 43,700.

The board of directors approved a cash dividend of $0.035 per share payable around March to holders of record of Pan American shares as of the close on March 4.

Pan American announced an agreement to acquire Tahoe Resources in a stock-cash deal back in November. Officials said at the time that the merger would create the world’s largest publicly traded silver-mining company and will have the world’s largest silver reserve base and silver measured and indicated resource base.

In its fourth-quarter earnings statement, Pan American said that all required regulatory, shareholder and court approvals have been received for the deal. The merger is expected to be completed around Friday.

Meanwhile, for full-year 2018, Pan American reported adjusted earnings of $59.4 million, or 39 cents per share, down from $77.7 million, or 51 cents, in the same period a year earlier. Net earnings were $12 million, or 7 cents, down from $123.5 million, or 79 cents, in 2017.

Annual silver production totaled 24.8 million ounces, down from 25 million. Gold output rose in 2018 to around 178,900 ounces from 160,000. Pan American listed cash costs per payable ounce of silver, net of by-product credits, of $3.35 per ounce in 2018.

"Pan American's operations demonstrated solid performance in 2018, highlighted by the lowest cash costs on record since 2006,” said Michael Steinmann, president and chief executive officer.

There company made no revisions to the 2019 guidance that Pan American provided a month ago. Pan American looks for between 26.5 million and 27.5 million silver ounces and 162,500 to 172,500 gold ounces. Pan American also produces zinc, lead and copper.

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