The Investment Doctor • Wed, Jan. 21
Update: Pan American Silver Produces 26 Million Ounces Of Silver In 2014The Investment Doctor • Wed, Jan. 21
- Pan American continues to perform well in Q4, producing 6.75Moz silver and 44,000 oz gold.
- The production result is slightly worse than Q4 2013 but there isn't anything to worry about as the guidance is still positive.
- The investment thesis will be updated if Pan American will indeed be able to reach its AISC guidance.
Update: Pan American Silver Reports Flat Production, Flat Guidance
- Pan American Silver seems to be going nowhere with flat year over year production and flat guidance.
- This fits my expectations although I had hoped that the company would use its large cash hoard to expand production by now.
- The stock offers leverage to the silver price but little else, Navidad could be a hidden gem.
Pan American Silver: Founder Ross Beaty Buys 500k Shares, But Mining Costs Are Too High
- The founder and current Chairman bought 500k shares in late December.
- Only a couple other insiders have bought in the past six months.
- All-in sustaining and cash costs have not improved in the past year.
What To Expect From Pan American Silver's Fourth Quarter Earnings Report
- Pan American Silver is likely to release its fourth quarter in the coming weeks.
- The company is likely to see a drop in revenue due to the recent plunge in silver prices.
- One of the main challenges the company will face is to bring down its AISC.
Update: Pan American Silver Announces A Stock Buyback
- Pan American Silver just announced that it has received permission from the TSX to repurchase up to 7.6 million shares.
- This is a surprise as I had expected the company to use its cash to make an acquisition.
- The buyback appears to be well-timed, and the company can easily afford it making this a bullish development.
Pan American Silver Didn't Meet Expectations In The Third Quarter
- Pan American Silver’s LPS for the third quarter came short of market expectations.
- The company’s drop in revenue was due to lower production and falling precious metals prices.
- Pan American Silver recorded unfavorable NRV adjustment on inventories of $15.4 million.
Update: Pan American Silver Reports Higher Costs, No Growth
- Pan American Silver reported relatively disappointing Q3 earnings, as costs rose while production fell slightly.
- The rising costs were unexpected, although I argued that this isn't really a growth company to begin with.
- There are better options out there for silver bulls.
- Pan American reports a net loss and a negative free cash flow but has decided to pay a dividend anyway.
- No surprises here, as Pan American’s cash cost has always been relatively high.
- The investment thesis remains standing. Despite the high dividend yield (which is unsustainable in the long run), Pan American should be avoided.
- Pan American's cash position will allow it to survive low silver prices.
- This cash can be used to buy assets at fire-sale prices.
- Silver stocks are oversold and due for at least a short-term bounce.
Pan American Silver - What To Expect From Its Quarterly Earnings Report?
- Pan American Silver’s EPS for the third quarter is expected to reach 8 cents.
- The current low silver prices are below the company’s producing costs.
- If the company doesn’t meet its production goals, this could adversely impact its stock.
What It Really Costs To Mine Silver: The Pan American Silver Q2 Edition
- The company's core costs have continued to decline from FY2012 and FY2013 and are now consistently below $20 per ounce.
- On a sequential basis, the company's second quarter saw a rise in core non-tax costs per ounce as gold production dropped significantly from the first quarter.
- The company expects second half metal production to hit existing targets, and thus we do not expect costs to lower in the next few quarters.
- The company will continue to tread water at silver prices below $20 per ounce, but the juicy dividend should make it more attractive than other silver miners.
The Good And Bad In Pan American Silver's Q2 Earnings
- Pan American Silver’s EPS was only 1 cent – 5 cents below expectations.
- Higher production brought revenue up and offset the decline in silver prices.
- If the company doesn't bring down AISC, its profit margins will continue to dwindle.
Update: Pan American Silver's Q2 Earnings Disappoint As Costs Remain High
- Pan American Silver reported a slight net loss of $5.7 million, operating cash-flow of $48.7 million on revenue of $200.8 million.
- Tepid growth, high costs, and dormant assets continue to hold the stock back.
- As I argued last July, the stock will generate leverage to a rising silver price but it is dead money otherwise.
- A weak share price will hopefully incite management to make an acquisition using its large cash hoard, and I think the stock is interesting on weakness.
Pan American Silver: Hands-On Approach Management Wanted
- Pan American Silver is still struggling with a relatively high AISC of $17/oz.
- This means that all free cash flow will have to be used to fund the expansion plans at La Colorada and Dolores.
- Whilst the output at those two mines would increase and the costs decrease, this only partially tackles the problem of depleting mines.
- I expect Pan American Silver to do a strategic acquisition to fill its (empty) pipeline.
- Until more accretive projects are added, I'm on the sidelines.
- Goldcorp and Pan American Silver are the top "risk-adjusted" precious metals mining selections currently.
- NovaGold and Allied Nevada are the top resource development assets to consider in the summer of 2014.
- Not owning gold and silver today may prove a riskier strategy than owning them, if history is any guide.
- The above average Gold to Silver Ratio of 65 in June should decline going forward, adding an extra boost to silver investments.
Tue, Jan. 20, 9:49 AM
- Pan American Silver (PAAS +2.2%) says 2014 silver production hit a record 26.1M oz., up 1% Y/Y, and record gold production of 161.5K oz., up 8% Y/Y.
- PAAS says preliminary cash costs for the full year of $11.46 per payable oz. of silver finished well below its forecast.
- For Q4, silver production was 6.75M oz., less than 1% below year-ago output, while gold production of 43.9K oz. was down 5% Y/Y; preliminary cash costs were $11.92 per payable silver oz.
- Says it expects similar consolidated silver production, a "modest” rise in gold production and largely flat cash costs for 2015.
Mon, Jan. 5, 5:30 PM
- Early-year pain for stocks has meant gain for gold, as February gold rose 1.5% today to settle at $1,203.90/oz., its best level in three weeks, as concerns about political upheaval in Greece and falling crude prices sparked a flight from risky assets; silver added $0.46 to $16.23.
- Rising gold prices also lifted shares of miner stocks, sending the Market Vectors Gold Miners ETF (NYSEARCA:GDX) +2.6% while the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) +4.3%.
- Gainers included IAG +7.4%, HL +3.1%, GOLD +2.4%, KGC +1.7%, NG +8.4%, EGO +4.7%, EXK +4.8%, RGLD +2.4%, CDE +2.6%, FNV +5.3%, SLW +1%, PAAS +3.3%, AG +6.1%, SVM +2.9%.
- Of course, two days of gains in 2015 hardly make up for two years of declines, and Barron’s Michael Kahn is among observers suggesting that investors wait for clearer signs of progress before making a move.
Dec. 30, 2014, 4:18 PM
- With the dollar falling against the yen and pound and a minor flight to safety afoot - Treasurys are higher, stocks have closed moderately lower - COMEX gold is up 1.4% today to $1,197/oz., and COMEX silver is up 2.6% to $16.20/oz. The gains have provided a lift to the volatile/beaten-down shares of gold and silver miners.
- Notable gold gainers: IAG +11.7%. ABX +3.6%. AUY +5.2%. NEM +3.6%. GG +4.6%. AU +4.2%. SBGL +4.9%. KGC +4.1%. AGI +5%. AEM +5.1%.
- Notable silver gainers: AG +7.6%. SVM +7.1%. SSRI +6.2%. SVM +6.4%. PAAS +3.9%. SVLC +5.2%. EXK +6.9%.
- ETFs with 3%+ gains: NUGT +10.1%. GDXJ +5.1%. USLV +9.7%. UBG +5.4%. USV +3.8%. SIVR +3.4%. AGQ +6.3%. BAR +3.2%. DBS +3.2%.
- The group rallied on Friday after the PBOC relaxed lending rules for banks, but sold off on Monday.
Dec. 26, 2014, 3:34 PM
- Spurred by hopes China's efforts to relax lending rules are a sign that broader (inflation-boosting) stimulus efforts are on tap, gold and silver prices are rallying, and taking the shares of miners up with them. COMEX gold is up 1.8% to $1,194.50/oz., and COMEX silver is up 2.5% to $16.11/oz. GLD +1.7%. SLV +2.2%.
- Gold stocks: AUY +3%. GG +4.6%. AGI +4.1%. ABX +3.4%. KGC +3.7%. GFI +3.7%.
- Silver stocks: SLW +2.3%. SSRI +6.9%. PAAS +1.9%. AG +3.6%. CDE +4.1%. HL +4.2%. SVM +6.8%. EXK +5.4%. TAHO +5.3%.
- Like many other commodities names, the group was hit hard a month ago when crude prices plunged in response to OPEC's decision to leave oil production unchanged.
- ETFs: AGQ, IAU, USLV, SIVR, SGOL, ZSL, UGL, DGP, GLL, UGLD, DZZ, SLVO, GLDI, DSLV, OUNZ, DGL, DBS, DGZ, DGLD, AGOL, TBAR, USV, UBG, GLDE, BAR, GYEN, GEUR, BARS, GGBP
Nov. 28, 2014, 1:21 PM
- Already hit hard over the last two years by declining prices, gold and silver miners saw more pain today as commodity stocks in general got hammered thanks to OPEC's decision not to slash crude production.
- Decliners: ABX -8%. GG -6.1%. AUY -9.8%. KGC -8.2%. GFI -9.9%. SLW -7%. NEM -5.8%. AGI -6.9%. PAAS -9%. AG -15.4%. SSRI -11.6%. CDE -11.4%. HL -8.8%. TAHO -7.8%.
- Previous: Precious metals slide alongside oil; Swiss vote ahead
Nov. 14, 2014, 9:44 AM
- Pan American Silver (PAAS -2.9%) opens sharply lower after reporting Q3 earnings and revenues that fell short of analyst expectations.
- PAAS consolidated production YTD was 19.4M oz. of silver and 117.6K oz. of gold, within the company's forecast for the first three quarters; management believes PAAS will achieve its original FY 2014 production guidance of 25.75M-26.75M oz. of silver and 155K-165K oz. of gold.
- Raises its 2014 production guidance to 44K metric tons of zinc, 15K metric tons of lead and 8K metric tons of copper.
Nov. 14, 2014, 9:38 AM
Nov. 14, 2014, 12:46 AM| Comment!
Nov. 12, 2014, 5:35 PM
Oct. 6, 2014, 2:45 PM
- Gold prices bounce off 15-month lows to reclaim $1,200/oz. as the dollar rally pauses, helping strengthen shares of precious metals miners: AU +4.4%, GFI +3%, IAG +1.9%, BTG +3%, GG +2.2%, NGD +1.5%, KGC +1.6%, AGI +1.6%, RGLD +1%, SLW +2.1%.
- Sterne Agee analysts Michael Dudas and Satyadeep Jain foresee gold and silver prices trending higher, with gold averaging $1,400/oz. in 2015 and $1,450 in 2016 and silver averaging $19 next year and $21 in 2016, as “global demand remains firm, liquidity remains ample and the dollar appears overbought.”
- With investor sentiment still skeptical, Sterne thinks any supportive macro news flow could provide fuel for a rally; the firm rate Newmont Mining (NEM +1.5%), Agnico-Eagle Mines (AEM +2.4%), Coeur Mining (CDE +1.3%) and Gold Resource (GORO +0.2%) as Buys, with Barrick Gold (ABX +0.5%), Hecla Mining (HL +4.3%) and Pan American Silver (PAAS +1.5%) rated Neutral.
- ETFs: GLD, SLV, AGQ, IAU, USLV, SIVR, SGOL, ZSL, UGL, DGP, GLL, UGLD, DZZ, SLVO, GLDI, DSLV, DGL, DBS, DGZ, OUNZ, DGLD, AGOL, DBP, TBAR, USV, UBG, JJP, GLDE, BAR, GYEN, GEUR, RGRP, BARS, GGBP, BLNG
Aug. 14, 2014, 2:16 PM
- Silver Wheaton (SLW -5.3%) and Pan American Silver (PAAS -5.3%) are both sharply lower as low silver prices combined with still-high costs combine to weigh on Q2 results.
- SLW said its silver equiv. realized price fell from $23.05/oz. a year ago to $19.83 in this year's Q2; gold sales accounted for ~30% of sales, and SLW’s realized gold price of $1,295/oz. was included in a 14% drop in the silver equiv. price.
- In Q2 results for PAAS, the average realized price for silver was $19.58/oz., down from $22.68 in the year-ago quarter; gold, which accounts for ~25% of sales, also suffered, fetching $1,289/oz.vs. $1,423 a year ago.
- ETFs: AGQ, USLV, ZSL, DSLV, DBS, USV
Aug. 13, 2014, 11:48 PM| Comment!
Aug. 12, 2014, 5:35 PM
Jul. 21, 2014, 2:55 PM
- Pan American Silver (PAAS -1.6 %) says the strike at its San Vicente mine in Bolivia, which began on July 7, has been settled and production activities at the mine have resumed.
- PAAS says there is a "reasonable probability" that San Vicente will still be able to achieve its full-year production forecast of 3.9M-4M oz. of silver for 2014.
Jun. 24, 2014, 10:24 AM
- Pan American Silver (PAAS +1.2%) reports positive results of a preliminary economic assessment of expanding its Dolores mine in Mexico.
- PAAS says the ~$105M project has the potential to generate excellent after-tax economic returns using its current reserve metal prices of $22/oz. of silver and $1,300/oz. of gold, and project economics also remain robust at long term metal prices of $19/oz. of silver and $1,200/oz. of gold.
- The project will increase average annual silver production to ~5M oz. from 3.65M oz, while average annual gold production will rise to 148K oz. from 111K.
Jun. 19, 2014, 12:49 PM
- Despite Argentina's continuing economic struggles (I, II, III) and the possibility of a technical default on the country's loans after its recent loss in a U.S. Supreme Court case, CIBC analyst Arnold Van Graan sees positive change coming for Pan American Silver (PAAS +5.9%), which operates the Manantial Espejo mine and the more significant Navidad project that has been stalled since 2012.
- Van Graan points to recent deals such as Argentina approving $5B in compensation to Repsol for the YPF expropriation and a restructuring deal for $10B in Paris Club debt as evidence of improving trust among international investors.
- Both on the improved outlook, CIBC believes PAAS should be in a position to disclose to the market some revised operating parameters for the Navidad project that should still acknowledge the risk of operating in Argentina by aiming at a higher grade, lower capex option.
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