Pan American sinks deeper into the red

Vancouver — Weak metal prices continue to plague the bottom line of Pan American Silver (PAA-T).

In the quarter ended June 30, the company lost US$2.8 million, or 8 per share, compared with a loss of US$800,000, or 2 per share, in the same period last year. For the first six months of the year, Pan American lost US$4.4 million, or 13 per share, compared with a loss of US$1.5 million, or 4 per share, in 2000.

Driving the losses were weak silver-lead-zinc prices and delayed shipments of zinc concentrate. The company saw its average realized silver and zinc price fall 8% and 18%, respectively, during the latest quarter. Some 13,000 tonnes of zinc concentrate were shipped during the quarter, leaving 13,000 tonnes in inventory awaiting shipment.

Higher production pushed revenues to US$8.1 million in the second quarter, up from US$7 million in the corresponding period of 2000. Despite the increased production, revenues for the six-month period actually fell to US$12.6 million from US$14.3 million in 2000.

Silver output soared 93% during the quarter to 1.7 million oz., up from 895,115 oz. a year-earlier. Zinc production climbed to 7,197 tonnes from 6,122 tonnes in the second quarter of 2000. Lead and copper output posted similar gains, hitting 4,567 tonnes and 482 tonnes, respectively.

In Peru, the Quiruvilca mine contributed 808,699 oz. silver and 5,273 tonnes zinc, while the newly minted Huaron mine added 687,048 oz. silver, 1,882 tonnes zinc and 2,286 tonnes lead during the second quarter. Limited production from the La Colorada mine in Mexico made up the remaining ounces.

The poor pricing environment for miners has prompted the company to reduce production and eliminate jobs at the Quiruvilca mine and lay off administative staff in Lima.