Pan American Silver Corp. (PAAS) reported adjusted earnings per share of 11 cents for the second quarter of 2024, missing the Zacks Consensus Estimate of 15 cents. This represents a slight improvement from the 8 cents per share earned in the same period last year. However, including one-time items, the company reported a loss of 6 cents per share in the quarter, compared to a loss of 9 cents in the year-ago quarter.
Despite the earnings miss, Pan American Silver’s revenues rose 7.3% year over year to $686 million in the quarter, exceeding the Zacks Consensus Estimate of $682 million. This revenue growth was driven by higher average realized prices for both silver and gold. The average realized silver price in the quarter increased 20% year over year to $28.14 per ounce, while the average realized gold price rose 18.3% year over year to $2,336 per ounce.
However, the company’s production performance lagged. Silver production in the quarter was 4.57 million ounces, a decrease of 24.2% year over year. Gold production also declined, reaching 220.4 thousand ounces, representing a year-over-year drop of 11.2%. These production declines were attributed to lower output at several of the company’s mines.
The company’s cash costs also increased. The Silver segment’s cash costs were $14.49 per ounce in the second quarter, up 56% from the year-ago period. The segment’s all-in sustaining costs (AISC) rose 21.5% year over year to $19.07 per ounce in the quarter. The Gold segment’s cash costs were $1,186 per ounce, reflecting a 13.5% increase from the year-ago quarter. The segment’s AISC costs amounted to $1,584 per ounce in the April-June period, representing a year-over-year rise of 18%.
Despite the challenges, Pan American Silver reported mine-operating earnings of $117 million in the quarter, up from $88 million in the prior-year quarter.
Pan American Silver had cash and short-term investment balances of $368.6 million at the end of the second quarter, with $750 million available in its revolving credit facility. Total debt amounted to $809.5 million. Net cash generated from operations was $163 million in the second quarter, an increase from $117 million in the prior-year period.
The company reaffirmed its production guidance for 2024. Silver production is expected between 21 million and 23 million ounces, while gold production is anticipated to be between 880,000 ounces and 1000,000 ounces. The Silver segment’s AISC per ounce is estimated between $16.00 and $18.50, while the Gold segment’s AISC per ounce is forecast between $1,475 and $1,575.
PAAS shares have gained 24.2% in the past year, slightly lagging the industry’s growth of 26.3%. Pan American Silver currently carries a Zacks Rank #3 (Hold).
The company’s performance in the second quarter was mixed, with revenue growth offset by lower production and higher costs. Investors will be watching closely to see how the company navigates these challenges in the coming quarters.
