Currently viewing Global edition

Pan American Silver hikes divvy 43% on strong free cash flow

Pan American Silver Corp has reported robust 2019 full-year and December-quarter financials, generating strong free cash flow that prompted the board to hike the quarterly dividend 43% to US5c per share.
Pan American Silver hikes divvy 43% on strong free cash flow Pan American Silver hikes divvy 43% on strong free cash flow Pan American Silver hikes divvy 43% on strong free cash flow Pan American Silver hikes divvy 43% on strong free cash flow Pan American Silver hikes divvy 43% on strong free cash flow

Pan American Silver’s Manantial Espejo operations in Argentina

The Vancouver-based company reported adjusted earnings for the December quarter of $68.9 million, or 33c per share, comfortably besting average Wall Street analyst forecasts for 22c per share, and the $2 million, or 1c loss in the same period a year earlier.

Net earnings swung back into the black at $51.7 million, or 25c a share, compared with a loss of $63.6 million, or 42c per share, a year earlier.

Pan American booked an impairment charge of $40.1 million on the Manantial Espejo mine, in Argentina, because of an increase in export taxes and what the company termed a "challenging" business environment in the country. It was partially offset by $33.7 million in investment income, mostly owing to a 17% equity interest in New Pacific Metals.

For the full year, Pan American reported adjusted earnings of $158 million, or 78c per share, and net earnings of $111.2 million, or 55c per share.

Quarterly and full-year revenues were $404.4 million and $1.35 billion, respectively.

"Strong, low-cost production generated operational cash flow of $282 million in 2019, which allowed Pan American to retire $60 million of debt, dividend approximately $29 million to shareholders, invest in new projects such as our La Colorada skarn discovery, and increase our cash position," said CEO Michael Steinmann.

Net cash generated from operating activities in the fourth quarter totaled $129.5 million, the highest in the company's history, Pan American said.

Consolidated fourth-quarter silver and gold production were 6.6 million and 173,900oz, respectively, both higher than in the same period a year earlier. Annual silver and gold production was 25.9Moz and 559,200oz, as previously reported. Both were within guidance.

BMO Capital Markets said it was suspect consensus estimates did not include the New Pacific investment gains of $34 million.

In 2020, Pan American is expecting silver and gold production growth of 7% and 16%, to 26.8-28.3Moz and 27-28.5Moz, respectively. AISC is expected to come in at $10.25-$11.75/oz silver and $1,090-$1,170/oz gold, for consolidated all-in silver cost of $4.50-$6.50/oz, compared to the 2019 consolidated all-in figure of $4.44/oz.

Shares (Nasdaq:PAAS) closed up 1.14% at $24.91 per share in New York on Thursday, capitalising the company at $5.2 billion.