Higher output pares loss at Pan American

With its Huaron mine in Peru and La Colorada mine in Mexico now in production, Pan American Silver (PAA-T) saw its annual revenue increase 25% in 2001. The company posted a net loss for the year of US$8.1 million, much smaller than in 2000.

Pan American’s revenue 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 in the previous year. Although 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 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 2000 loss of US$45.9 million on revenue of US$29.9 million. In 2000, 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; current liabilities stood at US$21.1 million.