Reduces Cost Guidance for the Second Time in 2019
VANCOUVER, Nov. 6, 2019 /CNW/ - Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) today reported unaudited results for the third quarter ended September 30, 2019 ("Q3 2019"). Pan American's unaudited condensed interim consolidated financial statements and notes ("financial statements"), as well as Pan American's management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2019, are available on Pan American's website at panamericansilver.com and on SEDAR at www.sedar.com.
"Our operations performed well in Q3, generating $81.9 million in operating cash flow," said Michael Steinmann, President and Chief Executive Officer. "We are reducing our cost guidance for the second time this year, and we remain on track to achieve the production guidance for 2019, as revised on August 7, 2019. Our priorities are asset optimization, debt reduction and brownfield exploration. Strong free cash flow has allowed us to repay $20 million on our credit facility and advance the skarn discovery at La Colorada, where we encountered exceptional drill intercepts in the quarter."
Consolidated Q3 2019 Highlights:
Effective Q3 2019, Timmins West and Bell Creek (together, "Timmins") are no longer classified as held for sale, and the net income generated by Timmins is now included in the Company's income statement in the normal course of business.
Revenue was $352.2 million; revenue in Q3 2019 excludes revenue associated with a build in metal inventory during Q3 2019, estimated at $17.8 million, which is expected to be realized in the fourth quarter of 2019.
Net income of $37.7 million ($0.18 basic earnings per share) reflects strong mine operating earnings and an increase in investment income. Net income was reduced by a one-time, non-cash $15.6 million adjustment for depletion and amortization expenses related to the reclassification of Timmins.
Adjusted earnings were $74.2 million ($0.35 basic adjusted income per share).
Net cash generated from operations was $81.9 million.
Silver production of 6.7 million ounces and gold production of 150.2 thousand ounces are on track to achieve management's guidance for 2019, as revised on August 7, 2019.
Silver Segment Cash Costs and All-in Sustaining Costs ("AISC") were $5.47 and $8.80 per silver ounce sold, respectively. Management has lowered its annual guidance for 2019 Silver Segment Cash Costs and AISC to between $6.00 and $7.00 and between $9.50 and $11.00 per silver ounce, respectively.
Gold Segment Cash Costs and AISC were $729 and $920 per gold ounce sold, respectively. Management has lowered its annual guidance for 2019 Gold Segment Cash Costs and AISC to between $725 and $775 and between $1,000 and $1,100 per gold ounce, respectively.
Consolidated Silver Basis Cash Costs and AISC were ($8.66) and $(0.11) per silver ounce sold, respectively. Management has lowered its annual guidance for 2019 Consolidated Silver Basis Cash Costs and AISC to between ($5.50) and ($3.80) per ounce and between $6.00 and $7.50 per ounce, respectively.
The Company is maintaining its annual guidance for 2019 capital expenditures issued on August 7, 2019, with sustaining capital estimated at $203 to $213 million and project capital estimated at $45 million.
At September 30, 2019, the Company had a cash and short-term investment balance of $177.0 million and working capital of $459.3 million. Total debt was $360.5 million (including $45.5 million of lease liabilities).
The Board of Directors has approved a cash dividend of $0.035 per common share, or approximately $7.3 million in aggregate cash dividends, payable on or about November 29, 2019, to holders of record of Pan American's common shares as of the close on November 18, 2019. 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.
Cash Costs, AISC, adjusted earnings, basic adjusted earnings per share, sustaining capital, project capital, working capital and total debt are not generally accepted accounting principle ("non-GAAP") financial measures. Please refer to the "Alternative Performance (non-GAAP) Measures" section of this news release for further information on these measures.
On October 30, 2019, Pan American released results from 14,300 metres of drilling completed during Q3 2019 on the La Colorada skarn discovery in Mexico. The drill results included some of the highest grade intercepts recorded to date, with widths up to 379 metres. Preliminary metallurgical testing of samples indicated high recoveries across all metals can be expected.
CONSOLIDATED FINANCIAL RESULTS
The following table provides management's guidance for 2019, as at November 6, 2019. Relative to the guidance provided on August 7, 2019, management has reduced its estimates for Cash Costs and AISC, based on actual Cash Costs and AISC for the nine months ended September 30, 2019 ("YTD 2019"), an increased gold price assumption and the expected results for the remainder of 2019.
The production estimates for 2019 reflect a full year of production for the Silver Segment mines and from February 22, 2019, to December 31, 2019, for the Gold Segment mines.
These estimates are forward-looking statements and information that are subject to the cautionary note associated with forward-looking statements and information at the end of this news release.
Third Quarter 2019 Unaudited Results Conference Call and Webcast
November 7, 2019
11:00 am ET (8:00 am PT)
1-800-319-4610 (toll-free in Canada and the U.S.)
+1-604-638-5340 (international participants)
Pan American Silver Corp. visit: https://news.panamericansilver.com/2019-11-06-Pan-American-Silver-Reports-Earnings-per-Share-of-0-18-for-the-Third-Quarter-of-2019
Pan America Silver Yesterday Vol. 437.700
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