How to Make Invest With: Pan American Silver Corp. (NASDAQ: PAAS)

On 06 Jan 2020, Pan American Silver Corp. (NASDAQ: PAAS) spotted trading -3.58% off 52-week high price. On the other end, the stock has been noted 125.73% away from the low price over the last 52-weeks. The stock changed -1.36% to recent value of $23.16. The stock transacted 2709218 shares during most recent day however it has an average volume of 2840.82K shares. The company has 209.66M of outstanding shares and 205.77M shares were floated in the market.

Pan American Silver Corp. (PAAS) (PAAS) recently stated unaudited results for the third quarter ended September 30, 2019 (“Q3 2019”). Pan American’s unaudited condensed interim consolidated financial statements and notes (“financial statements”), as well as Pan American’s management’s discussion and analysis (“MD&A”) for the three and nine months ended September 30, 2019.

Consolidated Q3 2019 Highlights:

Effective Q3 2019, Timmins West and Bell Creek (together, “Timmins”) are no longer classified as held for sale, and the net income generated by Timmins is now included in the Company’s income statement in the normal course of business.

Revenue was $352.2M; revenue in Q3 2019 excludes revenue associated with a build in metal inventory during Q3 2019, estimated at $17.8M, which is predictable to be realized in the fourth quarter of 2019.

Net income of $37.7M ($0.18 basic earnings per share) reflects strong mine operating earnings and a raise in investment income. Net income was reduced by a one-time, non-cash $15.6M adjustment for depletion and amortization expenses related to the reclassification of Timmins.

Adjusted earnings were $74.2M ($0.35 basic adjusted income per share).

Net cash generated from operations was $81.9M.

Silver production of 6.7M ounces and gold production of 150.2 thousand ounces are on track to achieve management’s guidance for 2019, as revised on August 7, 2019.

Silver Section Cash Costs and All-in Sustaining Costs (“AISC”) were $5.47 and $8.80 per silver ounce sold, respectively. Management has lowered its yearly guidance for 2019 Silver Section Cash Costs and AISC to between $6.00 and $7.00 and between $9.50 and $11.00 per silver ounce, respectively.

Gold Section Cash Costs and AISC were $729 and $920 per gold ounce sold, respectively. Management has lowered its yearly guidance for 2019 Gold Section Cash Costs and AISC to between $725 and $775 and between $1,000 and $1,100 per gold ounce, respectively.

Consolidated Silver Basis Cash Costs and AISC were ($8.66) and $(0.11) per silver ounce sold, respectively. Management has lowered its yearly guidance for 2019 Consolidated Silver Basis Cash Costs and AISC to between ($5.50) and ($3.80) per ounce and between $6.00 and $7.50 per ounce, respectively.

The Company is maintaining its yearly guidance for 2019 capital expenditures issued on August 7, 2019, with sustaining capital estimated at $203 to $213M and project capital estimated at $45M.

At September 30, 2019, the Company had a cash and short-term investment balance of $177.0M and working capital of $459.3M. Total debt was $360.5M (including $45.5M of lease liabilities).

The Board of Directors has accepted a cash dividend of $0.035 per ordinary share, or about $7.3M in aggregate cash dividends, payable on or about November 29, 2019, to holders of record of Pan American’s ordinary shares as of the close on November 18, 2019. Pan American’s dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada). As is standard practice, the amounts and specific distribution dates of any future dividends will be evaluated and determined by the Board of Directors on an ongoing basis.

2019 GUIDANCE

The following table provides management’s guidance for 2019, as at November 6, 2019.  Relative to the guidance provided on August 7, 2019, management has reduced its estimates for Cash Costs and AISC, based on actual Cash Costs and AISC for the nine months ended September 30, 2019 (“YTD 2019”), a raised gold price assumption and the predictable results for the remainder of 2019.

The production estimates for 2019 reflect a full year of production for the Silver Section mines and from February 22, 2019, to December 31, 2019, for the Gold Section mines.

Capital Expenditures
The following table summarizes capital expenditures YTD 2019 contrast to guidance. Because of the delay in development of the COSE and Joaquin projects, on August 7, 2019, Management increased its estimate for project capital from $40M to $45M.

Its earnings per share (EPS) expected to touch remained -91.50% for this year while earning per share for the next 5-years is expected to reach at 57.33%. PAAS has a gross margin of 12.60% and an operating margin of 12.40% while its profit margin remained 12.30% for the last 12 months. According to the most recent quarter its current ratio was 2.8 that represents company’s ability to meet its current financial obligations. The price moved ahead of 5.72% from the mean of 20 days, 18.74% from mean of 50 days SMA and performed 48.37% from mean of 200 days price. Company’s performance for the week was 0.09%, 13.70% for month and YTD performance remained -2.24%.

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