Higher production, better prices pare loss at Pan American Silver

With its Huaron mine in Peru and its La Colorada mine in Mexico now in production, Pan American Silver (PAA-T) saw its annual revenues increase 25%, and posted a net loss for the year of US$8.1 million, much smaller than in 2000.

Pan American’s revenues grew to US$37.3 million in 2001 from US$29.9 million in 2000, as its silver production rose to 6.9 million oz. from 3.6 million oz. the year before. The new operation at Huaron, which went into production last April, contributed 2.9 million oz., and La Colorada, which was in limited production from January 2001 onward, added 783,000 oz.

The new production compensated for a slight decline in output at Pan American’s other Peruvian mine, Quiruvilca, which turned out 3.3 million oz. silver, down from 3.6 million a year before. Though Quiruvilca’s operating costs fell, its cash production costs increased to US$4.71 per oz., largely because of decreased byproduct credits from zinc. Total zinc production fell to 21,000 tonnes from 24,000, and zinc prices were lower in 2001.

The US$8.1 million loss (US22 per share) on US$37.3 million in revenue compares with a loss in 2001 of US$45.9 million (on revenues of US$29.9 million), when a writedown of US$47.2 million was made on the carrying value of a number of properties; the largest, US$37 million, was against the Dukat silver project in Siberian Russia.

At year-end, Pan American had cash of US$3.3 million and total current assets of US$21.1 million, with current liabilities of US$21.1 million.