Pan American Silver Corp. (NYSE:PAAS) has unveiled its financial report for the second quarter of 2023, showing adjusted earnings per share of 4 cents. This figure falls below the projected 8 cents as per the Zacks Consensus Estimate. It’s noteworthy that in the same period last year, PAAS reported an adjusted loss of 3 cents per share.
Taking into account one-time exceptional items, Pan American Silver disclosed a loss of 13 cents per share for the quarter. This is in contrast to the loss of 83 cents per share in the corresponding quarter of the previous year.
In terms of revenue, Pan American Silver saw a notable increase of 87.9% year over year, with quarterly revenues reaching $640 million. This growth is attributed to the expanded operating base after the Yamana transaction. Despite this growth, the company’s revenue fell short of the Zacks Consensus Estimate of $648 million. During the quarter, the average realized silver price saw a 2% year-over-year increase, reaching $23.45 per ounce. Additionally, the average realized gold price experienced a rise of 6.8% year over year, reaching $1,975 per ounce.
Operational Highlights
Silver production for the quarter stood at 6.02 million ounces, marking a 32.8% increase compared to the previous year. In terms of gold production, Pan American Silver achieved a record-breaking 248.2 thousand ounces during the reported quarter, indicating an impressive year-over-year surge of 93.5%.
In the Silver segment, cash costs amounted to $9.29 per ounce for the second quarter, showing a significant decline of 23.2% compared to the same period last year. The segment’s all-in-sustaining costs (AISC) dropped by 9.2% year over year to reach $15.70 per ounce in the quarter.
For the Gold segment, cash costs reached $1,045 per ounce, reflecting a decrease of 7.7% from the previous year’s quarter. However, AISC costs for this segment rose to $1,342 per ounce during the April-June period, indicating a year-over-year increase of 34.6%.
Pan American Silver’s mine-operating earnings for the quarter came in at $70.6 million, showcasing a significant improvement from the loss of $31.6 million reported during the second quarter of 2022.
Financial Position
As of the end of the second quarter in 2023, Pan American Silver held cash and short-term investments amounting to $409 million. Additionally, the company had access to $470 million through its revolving credit facility. The company’s total debt stood at $1,135 million, encompassing amounts drawn from the SL-Credit Facility, construction and other loans, leases, and senior notes from the Yamana transaction. In terms of operational cash flow, Pan American Silver generated $117 million during the second quarter, a significant increase compared to the $20.8 million generated during the same period the previous year.
Outlook
Pan American Silver reiterates its existing financial and production outlook for the current year. Silver production is projected to fall within the range of 21 million to 23 million ounces. Furthermore, the AISC for the Silver segment is anticipated to range between $14.00 and $16.00 per ounce for the entirety of the year.
For gold production, Pan American Silver expects to achieve between 870,000 and 970,000 ounces in 2023. The AISC for the Gold segment is forecasted to be within the range of $1,275 to $1,425 per ounce.
Price Performance In the past year, Pan American Silver’s shares have experienced a decline of 10.8%, whereas the industry as a whole witnessed a comparatively smaller drop of 1.9%.
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