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Pan American Silver (PAAS) Q1 Earnings & Revenues Beat Estimates

Pan American Silver Corp. PAAS reported adjusted earnings per share of 10 cents for first-quarter 2023, surpassing the Zacks Consensus Estimate of 5 cents for the quarter. Compared to the year-ago quarter’s earnings of 5 cents per share, earnings declined 33% owing to lower silver prices and higher costs.

Including one-time items, Pan American Silver reported earnings of 8 cents per share in the quarter, compared with the year-ago quarter’s earnings of 36 cents per share.

Pan American Silver’s revenues declined 11.3% year over year to $390 million in the quarter under review. The top line beat the Zacks Consensus Estimate of $354 million.

The average realized silver price in the quarter was $22.75 per ounce, down 5% from $24 per ounce in the prior-year quarter. The average realized gold price was up 0.8% year over year to $1,895 per ounce.

Pan American Silver Corp. Price, Consensus and EPS Surprise

Pan American Silver Corp. price-consensus-eps-surprise-chart | Pan American Silver Corp. Quote

Operational Update

Silver production in the quarter was 3.9 million ounces, down 16% year over year. Gold production was 122.7 thousand ounces in the reported quarter, reflecting a year-over-year decrease of 6%.

The Silver segment’s cash costs were $12.19 per ounce in the first quarter, up 19% from the year-ago period’s level. The segment’s all-in-sustaining costs (AISC) rose 5% year over year to $14.13 per ounce in the quarter.

The Gold segment’s cash costs were $1,020 per ounce, reflecting a 5% increase from the year-ago quarter. The segment’s AISC costs amounted to $1,196 per ounce in the January-March period, representing a year-over-year decrease of 20%.

Pan American Silver reported a mine-operating profit of $77 million in the quarter, compared with $67 million in the first quarter of 2022.

Financial Position

As of Mar 31, 2023, PAAS had cash and short-term investment balances of $513.1 million, working capital of $826.6 million and $425 million available under its $750 million revolving Sustainability-Linked Credit Facility. The total debt at $1,187 million was related to SL-Credit Facility, lease liabilities and construction loans in Peru and two senior notes that Pan American assumed through the Yamana transaction. Net cash flow from operations was $51 million in the quarter.

Update on Yamana Acquisition

Pan American Silver closed the acquisition of Yamana Gold Inc., adding four producing mines to Pan American's portfolio - the Jacobina mining complex in Brazil, the El Peñón and Minera Florida mines in Chile, and the Cerro Moro mine in Argentina. It also adds the MARA development project in Argentina. Following this acquisition, PAAS’ silver production is expected to increase 50%, whereas gold production will double. Considering these assets’ strong cash flow generating abilities, the deal will strengthen PAAS’ financial position.

Price Performance

Shares of Pan American Silver have lost 19.9% in the past year, compared with the industry’s 2.4% growth.

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Zacks Rank

Pan American Silver currently carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the basic materials space are Steel Dynamics, Inc. STLD, PPG Industries, Inc. PPG and Linde plc LIN. All these stocks carry a Zacks Rank #2 (Buy), at present.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for STLD's current-year earnings has been revised 24% upward in the past 60 days. Steel Dynamics’ earnings beat the consensus estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.7%, on average. STLD has gained around 26% in a year.

The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.7% upward in the past 60 days.

PPG Industries’ earnings beat the consensus estimate in three of the last four quarters while missing in one quarter. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 8% in a year.

The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.

Linde beat the consensus estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9%, on average. LIN’s shares have gained roughly 21% in the past year.

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