Pan American Silver Reports Higher 4Q Profit, Hikes Dividend
(Kitco News) - Pan American Silver Corp. (Nasdaq, TSX: PAAS), one of the world’s largest primary silver producers, lateTuesday announced a higher dividend and larger net profit in the fourth quarteras the company unwound an impairment charge.
Net earnings were $49.7 million, or 32 centsper share, more than double the $22.3 million, or 14 cents,in the fourth quarter of 2016. The October-December results include a $60.2 million reversal of the 2015 Morococha mineimpairment.
Excluding special items,adjusted earnings were $19.2 million, or 13 cents,compared with $19 million, or 12 cents, inthe year-ago period.
Fourth-quarterrevenue of $226 million rose 19% from a year ago, which the company said wasthe result of higher sales volumes for most metals and also higher prices forall but silver. While mainly a silver producer, the company also mines gold,zinc, lead and copper.
Thecompany reported a 40% increase in the quarterly cash dividend to 35 cents per share. This will be payable around March 16 to shareholders of record as of the closeon March 5.
"We generated $224.6 million in cash flow from operations in2017. La Colorada, Morococha, Huaronand Dolores had record annualoperating free cash flow," said MichaelSteinmann, president and chief executive officer, also reporting thatcash and short-term investments increased.
“Operations at Morocochahave been performing particularly well, which has led to a reversal of theimpairment we booked at that mine in 2015 and made a significant impact onearnings in Q4 2017."
Full-year net earnings roseto $123.5 million, or 79 cents per share, from$101.8 million, or 66 cents, in 2016. Adjusted 2017earnings were $77.7 million, or 51 cents,compared with $86.6 million, or 57 cents, in2016.
Pan American said silver production in the fourth quarterwas 6.58 million ounces, which was 4% higher year-on-year, primarily due to increasesat Dolores, La Colorada and Morococha. Annual production of 25million ounces was similar to the 25.4 million produced in 2016.
Goldoutput of 43,700 ounces in the October-December period was comparable to 43,900in the year-ago quarter. Annual gold production was 160,000 ounces, comparedwith 183,900 in 2016.
Consolidated all-in sustaining costs per silver ouncesold were $10.86 inthe fourth quarter, compared with $10.38 a year ago. Full-year AISCSOS of $10.79 was withinthe revised forecast of $10.50 to $11.50.
Productionguidance for 2018 was unchanged from the company’s early-January announcement.Pan American expects to mine between 25 million and 26.5 million silver ouncesthis year and 175,000 to 185,000 ounces of gold.
Meanwhile, Pan American saidend-of-2017 mineral reserves include 288 million ounces of silver and 1.9million ounces of gold, compared with 286 million silver ounces and 2 milliongold ounces as of the end of 2016. The company reported newly discovered mineral reserves at the Morococha and Huaron mines.
"We added about 33 million ounces of newsilver mineral reserves in 2017, more than replacing ounces depleted throughmining,” said Christopher Emerson, Pan American'svice president business development and geology. “The silver grade of themineral reserves increased by 13% to 94 grams per tonne, in part reflecting theadditions of the new high-grade properties in Argentina."
Pan American said it spentapproximately $18 million on explorationdrilling in 2017 and will up this to $19 million in 2018.
By Allen SykoraFor Kitco News
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