Pan American Silver profit falls on higher costs
(Reuters) - Pan American Silver Corp (PAA.TO) reported a drop in first-quarter earnings on Tuesday as the silver producer was hit by higher costs and a charge on the sale of certain gold assets.
The Vancouver-based miner said it is focused on cutting operating and capital costs, and improving productivity, as it looks to offset a sharp drop in the silver price, which is down more than 22 percent so far this year.
Shares rose slightly on Tuesday morning in Toronto, as the broader gold and silver mining group climbed on higher precious metal prices.
"Moving forward, we will be modestly adjusting our short-term plans over the balance of the year in response to the decline in the price of silver we witnessed in early April," Chief Executive Geoff Burns said in a statement.
Burns added that there will not be significant changes to capital spending in 2013, but that the company will be looking to trim operating, exploration and general spending.
With no major construction projects on the horizon, Pan American is eyeing production of some 25 million to 26 million silver ounces this year, relatively in line with its output of 25.1 million ounces in 2012.
Pan American also said it is looking for opportunities to strengthen its portfolio while asset valuations are depressed. The miner has working capital of $738.4 million and cash and short-term investments of $490.1 million.
Silver production climbed 14 percent to 6.2 million ounces in the first quarter, while gold output rose 65 percent to 32,100 ounces. Cash costs rose 8 percent to $11.33 per ounce, as gold and copper by-product prices fell.
The average realized silver price fell 8 percent to $30.11 an ounce in the quarter ended March 31. Spot silver plunged in early April and is now trading around $23.30 an ounce.
Net earnings were $20.1 million, or 13 cents a share, down from $50.2 million, or 47 cents a share, in the year-ago period.
Adjusted to remove a non-cash charge related to the sale of three gold assets, earnings were 26 cents a share. On that basis, analysts' average estimate was 25 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 6 percent to $243 million on an increase in precious metal sales.
Shares were up 0.16 percent at C$12.76 on Tuesday morning on the Toronto Stock Exchange.
(Reporting by Julie Gordon in Toronto; Editing by John Wallace and Nick Zieminski)
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