Pan American Silver Reports 46% Drop in Profits

on Jun 1, 2012
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Pan American Silver reported a profit drop of 46% for the first quarter of 2012, compared to Q1, 2011. The decrease is result of the charges accompanying the acquisition of Minefinders Corporation Ltd, including closing costs and exploration and development expenses, and a negative variance of $24.9 million in non-cash gains on the Company’s outstanding warrants realized in Q1 2011. Despite the serious fall, Pan American remains positive about the results, mainly because of the higher realized prices and sales in the first three months of 2012.

Canadian silver producer Pan American Silver released a quarterly report of its financial and operational results for Q1, 2012. The Vancouver based company said that its net earnings for the first three months were $50.2 million, or 47 cents a share, which compared with $92.7 million (86 cents a share) recorded for the same period the previous year, represents a 46% drop in profit. The results are viewed positively though, as the decrease is due to costs related to the acquisition of Minefinders Corporation Ltd. and some non-cash gains realized in the first quarter of 2011. The company has spent $13.8 million in closing costs incurred for the acquisition and $7.2 million in exploration and development activities. But with the acquisition finally completed, Geoff Burns, President and CEO of the Company, is optimistic about the future.

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“We will spend the rest of the year focusing on what we do best: operating and optimizing our mining assets to generate maximum cash flow and profits,” Mr. Burns said and added that “I can’t tell you how much our team is looking forward to applying this expertise to the long-life Dolores mine.”
He was very pleased about the current results, stating that Pan American has had a very strong start of 2012, delivering a very respectable first quarter. And some of the numbers in the report support such claims.!m[](/uploads/story/12/thumbs/silver_inline.png)

During the first quarter of 2012, the Company has recorded a significant 20% increase in revenue, compared to Q1, 2011. This is due to higher precious metals and higher sales realized. In production Pan American also reported increases for both silver and gold. The Company has produced 5.5 million ounces of silver for the first three months of the year – a 5% increase. The reason for the increase was increased production at San Vicente and Huaron mines.

The future plans of Pan American include development of the newly-acquired Dolores mine (previously the flagship of Minefinders), which is expected to contribute to the Company’s 2012 production with 2.75 to 3.0 million of ounces of silver, at cash costs of $5.00 to $6.00 per ounce. The mine, located in the state of Chihuahua, Mexico, has become the Company’s 8th operating mine.
The Navidad silver development project in Argentina also has an important role in Pan American’s plans, as the Company has invested $7.1 million there, during the first three months of 2012. The Company is focusing on finishing an updated Feasibility Study and also continues its efforts, supporting the local communities.

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