* Q2 profit drops 61 percent on lower metal prices
* Earnings miss analyst estimates
* Company slows development at Navidad in Argentina
* Shares retreat 3.55 percent to C$14.66
TORONTO, Aug 15 Shares of Pan American Silver
Corp fell more than 3 percent on Wednesday, the day
after the miner reported a 61 percent drop in quarterly earnings
on lower realized silver prices, missing analyst expectations.
Shares dropped 3.55 percent to C$14.66 on Wednesday morning
on the Toronto Stock Exchange as second-quarter net earnings
fell to $44 million, or 29 cents a share, compared with $113.5
million, or $1.04 a share, in the year-earlier period.
Adjusted to remove one-time items, earnings were $17.1
million, or 11 cents a share, in the quarter ended June 30. That
was well below the average analyst expectation of 32 cents a
share, according to Thompson Reuters I/B/E/S.
Pan American also said it slowing development efforts at its
massive Navidad silver mine in the Chubut province of Argentina
until a new provincial mining law is passed and the economic
impacts of the legislation can be measured.
While the legislation proposed in July would allow the
open-pit project to proceed, it boosts provincial royalties and
imposes government involvement in mining projects, making the
project uneconomical, the miner said.
"Without a clear potential for positive economic returns, it
is impossible to justify further investment in this world-class
silver development project," the company said in a statement.
While no firm decision has been made on Navidad, RBC Capital
Markets analyst Dan Rollins highlighted the growing uncertainty
around the project in a note to clients.
"The company has not written down the project yet, but we
highlight the risk that Pan American may write off a portion of
$560 million carrying value if the legislation is not amended,"
Pan American's revenue fell 13 percent to $200.6 million in
the quarter as its realized silver price dropped 23 percent to
$29.53 an ounce. Costs, meanwhile, rose 29 percent to $11.85 an
The Vancouver-based miner said it is boosting its quarterly
dividend by 33 percent to 5 cents a share.
Pan American, which owns projects in Mexico, Peru, Argentina
and Bolivia, produced 6.4 million ounces of silver and 32,244
ounces of gold in the quarter.