Pan American Silver posts record Q4 cash flow

Escobal Mine in Guatemala. Source: Pan American Silver

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Pan American Silver Corp. [PAAS-TSX, NASDAQ] has reported record cash flow in the fourth quarter of 2019 and said it is raising its quarterly dividend by 43%.

The dividend increase and record cash flow were among the highlights of the company’s fourth quarter and 2019 year-end financial results, which were released after the close of trading on February 19, 2019.

Pan American shares advanced on the news, rising 0.30% or 10 cents to $32.68 on volume of 1.2 million. The shares are currently trading in a 52-week range of $13.83 and $32.91.

Pan American recently acquired Tahoe Resources Inc. in a US$1 billion transaction that created the world’s second largest primary silver producer. The company owns and operates mines in Mexico, Peru, Canada, Argentina and Bolivia. It also owns the Escobal Mine in Guatemala, which is not operating right now.

During the third quarter, 2019, the company said its Timmins West and Bell Creek (together Timmins) are no longer classified as held for sale, and net income generated by Timmins is now included in the company’s income statement in the normal course of business. Ore from both mines is processed at the Bell Creek mill.

Net cash generated from operating activities in the fourth quarter of 2019 of US$129.5 million was the highest in the company’s history. That brought net cash generated from operating activities in 2019 was US$282 million.

Net earnings in the fourth quarter of 2019 and full year 2019 were US$51.7 million (25 cents per share) and US$112 million (55 cents per share) respectively. Net earnings in the fourth quarter included a US$40.1 million impairment charge related to the Manantial Espejo Mine in Argentina due to the increase in export taxes and the challenging business conditions in Argentina, the company said.

This was partially offset by US$33.7 million in investment income, largely related to the company’s 17% equity interest in New Pacific Metals Corp. [NUAG-TSXV; NUPMF-OTCQX]. New Pacific Metals is a Canadian company engaged in the exploration and development of precious metal mining properties in Bolivia, Canada and China. The company’s flagship project is the Silver Sand property in the Potosi Department of Bolivia. Its largest shareholders are Silvercorp Metals [SVM-TSX, NYSE American] and Pan American.

Meanwhile, Pan American reported consolidated annual silver and gold production of 25.9 million ounces and 559,200 ounces respectively, as previously disclosed on January 15, 2020.

Silver segment cash costs and all-in-sustaining costs (AISC) in 2019 were US$6.39 and US$10.46 per silver ounce sold respectively.

Gold segment cash costs and AISC in 2019 were US$712 and US$948 per gold ounce sold respectively.

Pan American also said its board of directors has approved an increase in the cash dividend from $0.035 to $0.05 per common share, for approximately $10.5 million in aggregate cash dividends, payable on March 12, 2020 to holders of Pan American common shares at the close of trading on March 2, 2020.

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