Pan American Silver Delivers Record Earnings and Operating Cash Flows for First Quarter 2008 (All amounts in US dollars unless otherwise stated and all production figures are approximate)
Tuesday May 13, 2008 20:28:28 EDT
VANCOUVER, BRITISH COLUMBIA, May 13, 2008 (Marketwire via COMTEX News Network) –Pan American Silver Corp. (TSX:PAA)(NASDAQ:PAAS) today reported unaudited financial and operating results for the first quarter ended March 31, 2008. The Company also provided an update on production, operations and an outlook for the balance of 2008 for all eight of its operating and development properties.
Geoff Burns, President and CEO commented: “We’ve had an outstanding start to 2008, building on the momentum we generated in the second half of last year. Record earnings, record cash flow from operating activities, record mine operating earnings and record sales; by all measures the first quarter of 2008 was the best quarter in the Company’s history. Lead by our Alamo Dorado mine in Mexico, Lead by our Alamo Dorado mine in Mexico, our key operations delivered outstanding results. We also made great strides in completing the construction of our Manantial Espejo project in Argentina which we intend to start up in the third quarter this year. Pan American is well positioned to realize our 14th consecutive year of production growth and, with good reason, I believe the best is still ahead.
Financial Results
Sales in the first quarter increased 126% from 2007 to a quarterly record of $108.8 million. Sales benefited from significant increases in silver produced and sold as well as much higher realized silver prices.
Cost of sales for the quarter was $50.5 million, up from $29.0 million in the first quarter of 2007. Most of this increase was directly attributable to the greater quantities of production sold relative to a year ago and, to a lesser degree, to the effects of industry-wide cost increases in labour, energy and consumables.
Mine operating earnings rose 225% to a new high of $48.4 million.
Consolidated net income for the three months ended March 31, 2008 was a record $30.2 million or $0.38 per share, a 47% increase over the $20.4 million or $0.27 per share in the same period in 2007.
Cash flow from operations before changes in working capital increased 231% to a new quarterly high of $45.4 million.
Capital expenditures for the quarter totaled $45.1 million, of which $33.0 million was dedicated to the construction of Manantial Espejo in Argentina. Pan American’s newest silver mine was approximately 78% complete at the end of the quarter and is scheduled for a third quarter start up.
In February the Company received over $43.9 million from the exercise of almost four million warrants that were issued when Pan American acquired Minera Corner Bay in 2003 (then owner of the Alamo Dorado project).
At March 31, 2008 Pan American’s working capital totaled $233.5 million, up from $186.3 million at December 31, 2007. The significant increase in working capital reflects the strong first quarter operating and financial performance coupled with the receipt of funds from the warrant exercise.
Production And Operations
Pan American produced 4.5 million ounces of silver, 36% more than in the first quarter of 2007. Alamo Dorado, Pan American’s largest silver mine, is now producing above feasibility levels and contributed over 1.42 million ounces of silver during the first quarter of 2008. La Colorada and Huaron also had a very solid first quarter and produced 1.0 million and 0.95 million ounces of silver respectively.
Consolidated cash cost of silver production was $3.70 per ounce. This was higher than the $2.98 per ounce realized in the same period last year; however, it was also significantly less than the $4.50 per ounce recorded in the fourth quarter of 2007 and well below the Company’s full year 2008 forecast of $4.27 per ounce. “Our cash costs, are still being pushed by industry-wide inflationary pressures, but I am pleased to see we were well below our full year cash cost forecast, as we benefited from increased by-product production, particularly gold, and higher than forecasted silver production.” said Mr. Burns.
Morococha was the Company’s lowest cost mine during the first quarter, with cash costs of $0.60 per ounce, while cash costs at Huaron and Quiruvilca were well below forecast at $3.50 and $3.62 per ounce respectively.
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