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Pan American Silver reports 4Q profit, hikes dividend

Kitco News

(Kitco News) - Pan American Silver Corp. (NASDAQ, TSX: PAAS) late Wednesday reported a profit for the fourth quarter and announced an increase in its dividend.

Adjusted earnings during the fourth quarter were put at $68.9 million, or 33 cents per share, compared to a net loss of $2 million, or a penny, in the same quarter of 2018.

Net earnings in the October-January period were $51.7 million, or 25 cents a share,  a turnaround from a loss of $63.6 million, or 42 cents, a year earlier. Fourth-quarter net earnings included a $40.1 million impairment charge on the Manantial Espejo mine in Argentina due to the increase in export taxes and a “challenging” business environment in the country, Pan American said. This was partially offset by $33.7 million in investment income, mostly due to a 17% equity interest in New Pacific Metals Corp.

BMO Capital Markets reported that the adjusted earnings of 33 cents a share topped the market consensus of 25 cents, although the bank also said it doubts the consensus estimate included the New Pacific investment gains.

For full-year 2019, Pan American listed adjusted earnings of $158 million (78 cents) and net earnings of $111.2 million (55 cents).

"Strong, low-cost production generated operational cash flow of $282 million in 2019, which allowed Pan American to retire $60 million of debt, dividend approximately $29 million to shareholders, invest in new projects such as our La Colorada skarn discovery, and increase our cash position," said Michael Steinmann, president and chief executive officer. "In 2020, we are expecting silver and gold production growth of approximately 7% and 16%, respectively.”

As a result, he continued, the board of directors increased the quarterly dividend by 43%. More specifically, the cash dividend will rise from $0.035 to $0.05 per share, payable around March 12 to shareholders of record as of the close on March 2.

Net cash generated from operating activities in the fourth quarter totaled $129.5 million, the highest in the company's history, Pan American said.

Consolidated fourth-quarter silver and gold production were 6.6 million and 173,900 ounces, respectively, both higher than in the same period a year earlier. Pan American also produces zinc, lead and copper.

Annual silver and gold production was 25.9 million ounces and 559,200 ounces, as previously reported. Both were within guidance.

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