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Pan American Silver (PAAS) Q1 Earnings & Sales Beat Estimates
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Pan American Silver Corp. (PAAS - Free Report) reported adjusted earnings per share of 1 cent for first-quarter 2024 against the Zacks Consensus Estimate of a loss of 6 cents per share. The bottom line marked a 90% plunge from adjusted earnings per share of 10 cents in the year-ago quarter mainly due to higher production costs and royalty charges.
Including one-time items, Pan American Silver reported a loss of 8 cents per share, marking a sharp decline from the year-ago quarter’s earnings of 8 cents per share.
Pan American Silver’s revenues surged 54% year over year to $601 million. This surge was primarily fueled by a higher volume of metal sold, attributable to the contribution of newly acquired mines (Jacobina, El Peñon, Minera Florida, and Cerro Moro), obtained through the company's March 2023 acquisition of Yamana Gold Inc. The uptick in gold prices also aided revenue growth.
The top line surpassed the Zacks Consensus Estimate of $597 million. The average realized silver price dipped 0.6% year over year to $22.60 per ounce. The average realized gold price was up 9.7% to $2,078 per ounce.
Pan American Silver Corp. Price, Consensus and EPS Surprise
Silver production in the quarter was 5.01 million ounces, up 28.7% year over year. Gold production was 222.9 thousand ounces, reflecting a year-over-year surge of 81.7%. Contribution from the acquired mines led to higher production. The reported figures were in line with the company’s expectations.
The Silver segment’s cash costs were $12.70 per ounce, up 4% from the year-ago period. The segment’s all-in-sustaining costs (AISC) moved up 12.5% year over year to $15.90 per ounce.
The Gold segment’s cash costs were $1,207 per ounce, reflecting a 7.8% rise from the year-ago quarter. The segment’s AISC costs amounted to $1,580 per ounce, representing a year-over-year increase of 32%.
Pan American Silver reported mine-operating earnings of $71 million, which were down 8% from the $77.2 million reported in the first quarter of 2023. The decline was mainly attributed to an increase in production costs reflecting additional production costs from the acquired mines, partially offset by reduced costs from Manantial Espejo being put on care and maintenance in January 2023.
Cash & Debt Position
At the end of the first quarter, Pan American Silver had working capital of $693.5 million, which included cash and investments of $331.4 million and $750 million available under its revolving Sustainability-Linked Credit Facility. Total debt was $806.6 million, related to two senior notes, lease obligations, and construction and other loans.
Cash flow from operations before working capital changes was $133.2 million. PAAS returned $58 million of capital to shareholders through dividends and share repurchases.
La Arena Gold Mine Sale Finalized
The company, on May 1, announced that it has agreed to sell the La Arena gold mine as well as the La Arena II project in Peru, to Jinteng (Singapore) Mining Pte. Ltd., a subsidiary of Zijin Mining Group Co., Ltd.
The transaction is expected to be completed in the third quarter of 2024. PAAS will receive an upfront cash payment of $245 million on closing and a life-of-mine gold net smelter return royalty of 1.5% for the La Arena II project. Also, per the agreement, once the La Arena II project commences commercial production, Zijin will pay an additional $50 million in cash. This move is aligned with the company’s portfolio optimization initiatives.
Guidance for 2024
Pan American Silver reaffirmed its production guidance for 2024. Silver production is expected between 21 million and 23 million ounces. The projected range is higher than the 2023 silver production of 20.4 million ounces factoring in the contribution of a full-year production at El Peñon and higher silver production at La Colorada following the completion of the Guadalupe shaft project, which is expected to improve ventilation in the second half of 2024.
PAAS expects gold production between 880,000 ounces and 1000,000 ounces. This projects a higher output than the gold production of around 883,000 ounces in 2023. The anticipated increase is driven by the contribution of a full year of production from its acquired mines, partially offset by Dolores where mining and stacking activities are expected to be concluded in the third quarter of 2024.
The company stated that it will update its guidance for 2024 once the La Arena deal is closed. The gold production from the mine (which is included in PAAS’ total guidance) is estimated between 83,000 and 95,000 ounces at cash costs of $1,400 to $1,470 per ounce and AISC at $1,675 to $1,775 per ounce.
The Silver segment’s AISC per ounce is estimated between $16.00 and $18.50 the Gold segment’s AISC per ounce is forecast between $1,475 and $1,575.
Price Performance
Shares of Pan American Silver have gained 6.1% in the past year compared with the industry’s 14.3% growth.
Endeavour Silver (EXK - Free Report) reported break-even earnings per share in the first quarter compared with 2 cents reported in the first quarter of 2023. Revenues were up 15% year over year to $63.7 million aided by higher realized prices.
Endeavour Silver reported a 10% decline in silver production at 1.46 million ounces. Gold production increased 8% year over year to 10,133 ounces.
Hecla Mining (HL - Free Report) reported earnings per share of 1 cent in the first quarter, beating the Zacks Consensus Estimate of a loss of 2 cents per share. The bottom-line figure was in line with the year-ago quarter.
Hecla Mining witnessed a 5% decline in revenues to $189.5 million, which missed the consensus estimate of $190 million. Hecla Mining produced 4.2 million ounces of silver, higher than the 4 million produced in the first quarter of 2023.
First Majestic Silver (AG - Free Report) reported a loss of 6 cents per share in the first quarter compared with break-even earnings per share in the year-ago quarter. The Zacks Consensus Estimate was at a loss of 3 cents per share.
The company reported revenues of $106.0 million, which were down 32.5% from $157.0 million in the first quarter of 2023. The decrease in revenues is mainly driven by the temporary suspension of mining activities at the Jerritt Canyon Gold Mine in March 2023. First Majestic produced 5.2 million silver equivalent ounces, which consisted of 2.0 million silver ounces and 35,936 gold ounces.
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Pan American Silver (PAAS) Q1 Earnings & Sales Beat Estimates
Pan American Silver Corp. (PAAS - Free Report) reported adjusted earnings per share of 1 cent for first-quarter 2024 against the Zacks Consensus Estimate of a loss of 6 cents per share. The bottom line marked a 90% plunge from adjusted earnings per share of 10 cents in the year-ago quarter mainly due to higher production costs and royalty charges.
Including one-time items, Pan American Silver reported a loss of 8 cents per share, marking a sharp decline from the year-ago quarter’s earnings of 8 cents per share.
Pan American Silver’s revenues surged 54% year over year to $601 million. This surge was primarily fueled by a higher volume of metal sold, attributable to the contribution of newly acquired mines (Jacobina, El Peñon, Minera Florida, and Cerro Moro), obtained through the company's March 2023 acquisition of Yamana Gold Inc. The uptick in gold prices also aided revenue growth.
The top line surpassed the Zacks Consensus Estimate of $597 million. The average realized silver price dipped 0.6% year over year to $22.60 per ounce. The average realized gold price was up 9.7% to $2,078 per ounce.
Pan American Silver Corp. Price, Consensus and EPS Surprise
Pan American Silver Corp. price-consensus-eps-surprise-chart | Pan American Silver Corp. Quote
Operational Update
Silver production in the quarter was 5.01 million ounces, up 28.7% year over year. Gold production was 222.9 thousand ounces, reflecting a year-over-year surge of 81.7%. Contribution from the acquired mines led to higher production. The reported figures were in line with the company’s expectations.
The Silver segment’s cash costs were $12.70 per ounce, up 4% from the year-ago period. The segment’s all-in-sustaining costs (AISC) moved up 12.5% year over year to $15.90 per ounce.
The Gold segment’s cash costs were $1,207 per ounce, reflecting a 7.8% rise from the year-ago quarter. The segment’s AISC costs amounted to $1,580 per ounce, representing a year-over-year increase of 32%.
Pan American Silver reported mine-operating earnings of $71 million, which were down 8% from the $77.2 million reported in the first quarter of 2023. The decline was mainly attributed to an increase in production costs reflecting additional production costs from the acquired mines, partially offset by reduced costs from Manantial Espejo being put on care and maintenance in January 2023.
Cash & Debt Position
At the end of the first quarter, Pan American Silver had working capital of $693.5 million, which included cash and investments of $331.4 million and $750 million available under its revolving Sustainability-Linked Credit Facility. Total debt was $806.6 million, related to two senior notes, lease obligations, and construction and other loans.
Cash flow from operations before working capital changes was $133.2 million. PAAS returned $58 million of capital to shareholders through dividends and share repurchases.
La Arena Gold Mine Sale Finalized
The company, on May 1, announced that it has agreed to sell the La Arena gold mine as well as the La Arena II project in Peru, to Jinteng (Singapore) Mining Pte. Ltd., a subsidiary of Zijin Mining Group Co., Ltd.
The transaction is expected to be completed in the third quarter of 2024. PAAS will receive an upfront cash payment of $245 million on closing and a life-of-mine gold net smelter return royalty of 1.5% for the La Arena II project. Also, per the agreement, once the La Arena II project commences commercial production, Zijin will pay an additional $50 million in cash. This move is aligned with the company’s portfolio optimization initiatives.
Guidance for 2024
Pan American Silver reaffirmed its production guidance for 2024. Silver production is expected between 21 million and 23 million ounces. The projected range is higher than the 2023 silver production of 20.4 million ounces factoring in the contribution of a full-year production at El Peñon and higher silver production at La Colorada following the completion of the Guadalupe shaft project, which is expected to improve ventilation in the second half of 2024.
PAAS expects gold production between 880,000 ounces and 1000,000 ounces. This projects a higher output than the gold production of around 883,000 ounces in 2023. The anticipated increase is driven by the contribution of a full year of production from its acquired mines, partially offset by Dolores where mining and stacking activities are expected to be concluded in the third quarter of 2024.
The company stated that it will update its guidance for 2024 once the La Arena deal is closed. The gold production from the mine (which is included in PAAS’ total guidance) is estimated between 83,000 and 95,000 ounces at cash costs of $1,400 to $1,470 per ounce and AISC at $1,675 to $1,775 per ounce.
The Silver segment’s AISC per ounce is estimated between $16.00 and $18.50 the Gold segment’s AISC per ounce is forecast between $1,475 and $1,575.
Price Performance
Shares of Pan American Silver have gained 6.1% in the past year compared with the industry’s 14.3% growth.
Image Source: Zacks Investment Research
Zacks Rank
Pan American Silver currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Did PAAS’ Peers Fare in Q1?
Endeavour Silver (EXK - Free Report) reported break-even earnings per share in the first quarter compared with 2 cents reported in the first quarter of 2023. Revenues were up 15% year over year to $63.7 million aided by higher realized prices.
Endeavour Silver reported a 10% decline in silver production at 1.46 million ounces. Gold production increased 8% year over year to 10,133 ounces.
Hecla Mining (HL - Free Report) reported earnings per share of 1 cent in the first quarter, beating the Zacks Consensus Estimate of a loss of 2 cents per share. The bottom-line figure was in line with the year-ago quarter.
Hecla Mining witnessed a 5% decline in revenues to $189.5 million, which missed the consensus estimate of $190 million. Hecla Mining produced 4.2 million ounces of silver, higher than the 4 million produced in the first quarter of 2023.
First Majestic Silver (AG - Free Report) reported a loss of 6 cents per share in the first quarter compared with break-even earnings per share in the year-ago quarter. The Zacks Consensus Estimate was at a loss of 3 cents per share.
The company reported revenues of $106.0 million, which were down 32.5% from $157.0 million in the first quarter of 2023. The decrease in revenues is mainly driven by the temporary suspension of mining activities at the Jerritt Canyon Gold Mine in March 2023. First Majestic produced 5.2 million silver equivalent ounces, which consisted of 2.0 million silver ounces and 35,936 gold ounces.