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World News
North America
Pan American keeps full-year targets
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20th May 2011
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TORONTO ( – Vancouver-based Pan American Silver expects to catch up production over the remainder of 2011, and has left its output forecasts unchanged despite reporting lower-than-expected first-quarter numbers.

Pan American, which operates eight mines in Mexico, Peru, Argentina and Bolivia, expects to produce between 23-million and 24-million ounces of the precious metal this year.

First-quarter silver production was 5,3-million ounces, plus 18 640 oz of gold, after lower than expected grades and throughput – partly linked to social and political issues - at the company's mines in Bolivia, Peru and Argentina.

However, the company benefitted from record metals prices during the quarter, and increased net earnings by 254%, to a record $92,7.

Revenue rose 40% year-on-year, to $190,5-million.

CEO Geoff Burns said on a conference call on Thursday that the company is confident it has dealt with all the issues that affected production in the first quarter, and expects to easily make up the short fall before the end of the year.

Pan American's shares fell sharply last month, after reports that the government of Bolivia could rescind some mining contracts, and that the company's San Vicente operation could be affected.

Burns repeated on Thursday that the mine continues to operate normally, and that there is no indication that the concerns had any merit.

“My comment would be: a lot of press, but much ado about nothing,” he told analysts.

Pan American shares declined 0,88% on Thursday, to C$31,47 apiece by 16:00 in Toronto.

The company ended the first quarter with $397,2-million in cash and short-term investments and $492,8 million in working capital. The firm also has an undrawn $150-million credit facility.

The firm declared its latest quarterly dividend of 2,5 cents a share on Thursday, and analysts were interested in whether the firm was looking at raising dividends to reflect the higher metals price environment.

But CFO Rob Doyle commented that while it is “appropriate” to return some cash flow to shareholders, the company also needs to build up its treasury ahead of building new projects.


Edited by: Creamer Media Reporter


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