Huaron powers Pan Am

Newfound production at the Huaron mine in Peru and La Colorada mine in Mexico enabled Pan American Silver (PAA-T) to boost revenue to US$10.2 million in the recent first quarter, compared with US$4.5 million in the corresponding period of 2001.

But despite the increase, the company reported a loss of US$1.3 million (or 3 per share), compared with a year-ago loss of US$1.5 million (4 per share). Cash flow from operations fell to US$1.2 million to US$1.6 million.

The recent quarter’s consolidated silver production amounted to 2.1 million oz., a 133% increase from the 886,183 oz. poured in the first three months of last year. Zinc metal production climbed 77% to 10,107 tonnes; lead production, 145% higher to 5,441 tonnes; and copper production, 119% to 669 tonnes.

Consolidated total cash costs (net of byproduct credits) totalled US$3.84 per oz. silver, up from US$3.66 per oz. in 2001. Total production costs climbed to US$4.63 from US$4.58 per oz.

During the recent quarter, the company realized an average of US$4.15 per oz. for its silver (compared with US$4.54 a year earlier), US36 per lb. for zinc (US46 per lb.), US22 per lb. for its lead (unchanged), and US62 per lb. for copper (US71 per lb.).

The Huaron mine, which entered commercial production in the second quarter of 2001, churned out 1.15 million oz. silver, its best effort since startup. Total cash costs were US$3.17 per oz. The mine also produced 5,121 tonnes zinc.

At the Quiruvilca mine in northern Peru, 135,148 tonnes of ore were treated to produce 728,619 oz. silver and 4,888 tonnes zinc, compared with 886,183 oz. silver and 5,659 tonnes of zinc a year earlier. Lower silver and zinc grades were the culprit. Total cash costs climbed to US$4.44 from US$3.66 per oz. as a result of the lower production levels.

Some of the company’s Quiruvilca claims are optioned to Barrick Gold (ABX-T); these lie 3-4 km from the major’s recent 3.5-million-oz. gold discovery at the Alto Chicama property. So far, Barrick has spent more than US$1 million exploring the ground and has paid Pan American Silver US$200,000 in cash. Pan American and New Oroperu Resources (nopuf-o) own the nearby 1.6-million-oz. Tres Cruces gold project and are looking at ways to revive it.

The La Colorada mine chipped in 190,575 oz. silver at US$5.64 per oz. The high costs are due to poor availability of some of the older leased mining equipment. New underground mining equipment will be placed into service during the second quarter.

At the end of March, Pan American had US$19.9 million in cash and equivalents. Total current assets were US$35.6 million; current liabilities, US$21.3 million.