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Pan American posts wider Q4 loss, but production, costs impress

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Pan American Silver Corp. (NASDAQ:PAAS) (TSE:PAA) reported fourth quarter results that seemingly impressed investors Thursday, despite posting a wider net loss and lower revenues amid a challenging environment for precious metals miners.

For the three months that ended December 31, 2013, the gold and silver producer --- with seven operating mines in Mexico, Peru, Argentina and Bolivia --- reported a net loss of $293.1 million, or $1.94 per share, compared to a net loss of $31.5 million, or 18 cents per share, in the prior year period. 

The latest results included a non-cash impairment charge of $218.1 million, net of tax, on the carrying value of its Dolores mine, due to lower assumed long-term metal prices and increased taxes. The figures also included a deferred tax charge of $86 million prompted by the recent tax changes in Mexico.

Revenue declined 22% to $192.4 million as average realized prices for both gold and silver fell sharply. For silver, the price dropped to $20.28 an ounce from $33.41 an ounce, while gold prices shed to $1,285 an ounce from $1,729 an ounce in the fourth quarter of 2012.

The company still generated net cash flow from operating activities of $46.2 million,  or 30 cents per share, reflecting its "excellent fourth quarter production results and continued cost control efforts", Pan American said.

During the fourth quarter, the company produced 6.8 million ounces of silver and a record 46,200 ounces of gold. For the full year, Pan American achieved production records of 26 million ounces of silver and 149,800 ounces of gold, 4% and 33% more than in 2012, respectively.  

The company said the new silver production record was driven by production gains at La Colorada, Huaron, Morococha and San Vicente, partially offset by a decline in silver ounces produced at Alamo Dorado and Manantial Espejo due to lower grades and recoveries. 

Gold production jumped due to production improvements at Dolores and at Manantial Espejo.

All-in sustaining costs per silver ounce sold were $17.03 in the quarter, net of by-product credits, down 33% year-on-year. 

The company, which had cash and short term investments of $422.7 million at year-end, maintained its quarterly dividend of 12.5 cents per share.

In 2014, it said it expects to produce 25.75 to 26.75 million ounces of silver and 155,000 to 165,000 ounces of gold, with all-in sustaining costs of $17.00 to $18.00, net of by-product credits. 

Shares of Pan American were up 5.7% late Thursday afternoon, at C$16.45, stretching year-to-date gains to nearly 33%. 

Quick facts: Pan American Silver Corp.

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TSX:PAA
Market: TSX
Market Cap: £0.00
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