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Pan American Silver's Q2'19 net profit plummets as production costs climb YOY

Pan American Silver Corp.'s attributable net income in the second quarter dropped to US$18.4 million, or 9 US cents per share, from US$36.2 million, or 24 cents apiece, a year ago.

Revenue in the three months jumped to US$282.9 million from US$216.5 million, mainly because of higher gold sales from the Shahuindo and La Arena mines in Peru, partially offset by lower metal prices, the company said Aug. 7.

Mine operating earnings slipped to US$36.1 million from US$54.9 million, due to increased production costs and a higher depreciation and amortization charge.

The company's gold production in the quarter surged to 154,600 ounces from 53,400 ounces, on the back of mines acquired from Tahoe Resources Inc. in February. Silver production climbed to 6.5 million ounces, from 6.3 Moz.

Quarterly production of zinc, lead and copper increased to 17,400 tonnes, 6,800 tonnes, and 2,100 tonnes, respectively, from 14,900 tonnes, 5,100 tonnes and 2,000 tonnes a year ago.

All-in sustaining costs for all of the company's silver and gold operations averaged US$6.12 per silver ounce sold, from US$6.50/oz in the prior-year quarter.

Pan American lowered the full-year guidance for silver production to 25.3 Moz to 26.3 Moz and gold output guidance to 550,000 to 600,000 ounces, due to a three-month delay in commercial production from the COSE and Joaquin projects in Argentina after a worker died due to a fall-of-ground incident.

Full-year all-in sustaining costs are now estimated at between US$7.00/oz and US$9.00/oz on a consolidated silver basis.

The previous estimate in May stood at 26.6 Moz to 27.6 Moz of silver, and 570,000 ounces to 620,000 ounces of gold at all-in sustaining costs of US$7.75/oz to US$10.75/oz on a consolidated silver basis.

The guidance for project capital was increased to US$45 million, from US$40 million as a result of the delayed development of the COSE and Joaquin projects. The revision is not expected to have a significant adverse impact on full year financial results, the company noted.