Huaron powers Pan American’s quarter

Thanks to newfound production from its Huaron mine in Peru and La Colorada mine in Mexico, Pan American Silver (PAA-T) saw its revenue more than double to US$10.2 million from US$4.5 during the first three months of 2002.

Despite the increase, the company reported a first-quarter net loss of US$1.3 million (or 3 per share), better than the year-ago net loss of US$1.5 million (4 per share). Cash flow from operations sagged US$1.2 million to US$1.6 million.

The recent quarter’s consolidated silver production tallied to 2.07 million oz., a 133% percent increase from the previous year’s 886,183 oz. Zinc metal production climbed 77% to 10,107 tonnes, lead production was 5,441 tonnes, 145% higher than a year earlier, and copper production rose 119% to 669 tonnes.

Consolidated total cash cost, net of by-product credits, came in at US$3.84 per oz. of silver, up from US$3.66 per oz. in 2001. Total production costs climbed to US$4.63 per oz. from US$4.58 per oz.

During the recent quarter, the company realized an average of US$4.15 per oz. for its silver (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. of copper (US71 per lb.).

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

At Quiruvilca 135,148 tonnes of ore were treated to produce 728,619 oz. silver and 4,888 tonnes zinc, off last year’s 886,183 oz. silver and 5,659 tonnes of zinc. Lower silver and zinc grades were the culprit. Total cash cost climbed to US$4.44 per oz. from US$3.66 per oz. with the lower production levels.

Some of the company’s Quiruvilca claims optioned to Barrick Gold (ABX-T) lie about 3-4 km from Barrick’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 Am US$200,000 in cash. Pan Am and New Oroperu Resources own the nearby 1.6-million oz. Tres Cruces gold project, and are looking at ways to revive the project.

La Colorada chipped in 190,575 oz. of silver at US$5.64 per oz. The high cost are thanks 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 Am had US$19.9 million in cash and equivalents. Total current assets stood at US$35.6 million; current liabilities at US$21.3 million.