Pan American Silver Announces Net Earnings in Second Quarter

Pan American Silver (TSX:PAA) has reported its results for the second quarter ended June 30, 2016 with net earnings of $34.2 million compared with a net loss of $7.3 million recorded in the second quarter of 2015.
As quoted in the press release:

Highlights for Q2 2016:

• Silver production was 6.33 million ounces, down slightly from 6.65 million ounces produced in Q2 2015. The decrease reflects anticipated production declines from sequencing at the Dolores, Alamo Dorado, and Manantial Espejo mines, partially offset by increased production at all other operations. Silver production for the first half of 2016 totaled 12.75 million ounces, and is on pace to achieve our annual forecast of 24.0 to 25.0 million ounces.
• Gold production increased 9% in both the three and six-month periods ending June 30, 2016 to 48.4 thousand ounces and 89.6 thousand ounces, respectively, over the comparable periods of 2015. The increase in gold production was anticipated, as mine sequencing at Dolores resulted in higher grades.
• Consolidated cash costs declined to $5.57 per payable ounce of silver compared with $9.44 in Q2 2015. The 41% decrease in cash costs was achieved through lower operating costs at all mines and increased production of by-product metals. With cash costs in the first half of 2016 of $6.81 per ounce, Pan American is reducing its guidance for annual 2016 cash costs to a range of $6.50 to $7.50 per ounce.
• Consolidated All-In Sustaining Costs per Silver Ounce Sold (“AISCSOS”) were down 22% to $11.31, net of by-product credits, compared with Q2 2015. The decline resulted mainly from lower production costs, increased by-product credits and positive net realizable value adjustments at the Manantial Espejo and Dolores mines. With AISCSOS in the first half of 2016 of $12.21, Pan American is reducing its guidance for annual 2016 AISCSOS to range between $11.60 and $12.60 per ounce.
• Operating cash flow before changes in non-cash operating working capital was $53.5 million, a $35.6 million increase from Q2 2015, largely due to increased revenues and decreases in production costs and income taxes paid.
• Net earnings increased to $34.2 million ($0.22 per share) compared with a net loss of $7.3 million ($0.05 net loss per share) in Q2 2015. The increase in net earnings was primarily attributable to decreased cost of sales, increased revenues, and gains on the sale of interests in exploration properties related to the transaction with Votorantim Metais – Cajamarquilla S.A. (“Votorantim”), partially offset by higher income taxes.
• Adjusted earnings were $19.9 million ($0.13 per share) compared with a loss of $11.2 million ($0.07 per share loss) in Q2 2015. The most significant adjustment to earnings in Q2 2016 was removal of the gain related to the transaction with Votorantim.
• Liquidity position strengthened over Q2 2016 with a $26.6 million increase in cash and cash equivalents and short-term investment balances, and a $15.6 million increase in working capital. At June 30, 2016, cash and cash equivalents and short-term investment balances were $204.2 million, the working capital position was $399.3 million and total debt outstanding was $58.8 million.
• Capital investment totaled $52.8 million compared with $29.6 million in Q2 2015, largely reflecting the increase in project capital at the Dolores and La Colorada mines.
• The exploration budget for 2016 is increasing by 38% to $14.5 million, with the Company targeting diamond drilling at its operating mines and greenfield exploration activities at selected projects.
• A quarterly cash dividend of $0.0125 per common share, which will equate to approximately $1.9 million in aggregate cash dividends, has been approved by the Board of Directors. The dividend will be payable on or about Tuesday, September 6, 2016, to holders of record of Pan American’s common shares as of the close on Tuesday, August 23, 2016. Pan American’s dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada). As is standard practice, the amounts and specific distribution dates of any future dividends will be evaluated and determined by the Board of Directors on an ongoing basis.

Click here to read the full press release.