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Thu Mar 1, 2001
Pan American Silver Corp. Reports Year End And Fourth Quarter Results
Pan American will host a conference call on Friday March 2nd from 9:00 a.m. until 10:00 a.m. Pacific time (12 noon until 1:00 p.m. Eastern time) to discuss year-end results and give updates on its projects. To listen to the call live, dial 1-416-695-5806. To listen to a playback of the call after it has ended, dial 1-416-695-5800 and enter the pass code 701810. This option will be available for 2 weeks after the call. The conference call will also be broadcast live and archived for later playback on the Internet at http://www.q1234.com.
Pan American Silver Corp. (NASDAQ: PAAS; TSE: PAA) reported today its financial results for the fourth quarter of 2000 and its financial results for the year. All amounts are expressed in U.S. dollars. Revenue for the fourth quarter was $8.6 million, up slightly from 1999. Revenue for the year 2000 was $29.9 million, 11.5 percent higher than for 1999 mainly due to record production of silver and zinc at the Company's Quiruvilca mine in Peru. Full year silver production increased to 3.61 million ounces, up 11.6 percent from 1999 and 44 percent higher than when Pan American acquired the mine in 1995; zinc production increased to 24,462 tonnes (1999 - 23,340 tonnes).
The Quiruvilca mine contributed $2.4 million in operating cash flow in 2000 (up from $0.4 million in 1999). In spite of low by-product metal prices, Quiruvilca's cash and total production costs per ounce of silver produced in 2000 were $3.20 and $4.02, respectively, compared with $3.55 and $4.39, respectively, in 1999. Mill production in 2000 was 615,382 tonnes of ore (1999 - 562,584 tonnes).
Pan American's capital spending totalled $18.9 million in 2000, including $7.3 million on new mine development at Huaron in Peru, $4.0 million advancing the La Colorada project in Mexico to the stage of mine construction financing, and $4.0 million in non-cash working capital changes primarily related to the Huaron acquisition. Exploration spending decreased from $2.4 million in 1999 to $0.8 million in 2000. General and administrative costs also decreased in 2000 to $2.2 million. The Company ended the year with $7.5 million in cash. Working capital was $1.8 million, including $7.3 million in current liabilities comprising bank loans due during 2001 that are being used to fund construction of the Huaron mine.
In the third quarter of 2000, Pan American announced its decision to take a $37 million write-off of its Dukat project in Russia. In light of the recent low silver prices, the Company has reviewed the carrying value of a number of its properties and taken fourth quarter write-downs of the book value for the following inactive properties: Lucita ($0.9 million), Valenciana ($0.1 million), Capoose ($0.05 million), Minandex ($0.06 million), and Waterloo ($3.3 million). The Company also expensed $1.1 million in historic costs at the San Vicente project in the fourth quarter, and will expense all future costs there until a decision to develop a new mine at the property is made. Excluding the write-offs, Pan American lost $0.8 million in the fourth quarter. Including the fourth quarter charges, the Company lost $6.4 million for the quarter. For the year, including the one-time write-offs, the Company lost $45.9 million ($1.35 per share). Excluding the write-offs, Pan American lost $3.1 million ($0.09 per share) in 2000, an improvement over 1999's loss of $5.8 million (0.20 per share).
Pan American's CEO, Ross Beaty, said, "In 2000 we achieved a great deal. We had record production from Quiruvilca, we acquired, financed and started construction on Huaron, which will soon open and more than double our silver output, and we arranged construction financing for the La Colorada mine. We have hedged none of our silver production. I believe that today's silver price of about $4.40 per ounce is unsustainably low and will soon trend higher. Since 1994, silver prices have averaged $5.20 per ounce. Silver demand and supply fundamentals remain robust in all sectors, particularly the photographic sector. Silver inventories continue to be depleted and zinc inventories are also very low. Today's weak metal prices are frustrating, but with our growth in low-cost silver production, we will be in an even better position to reward our shareholders when prices rebound."
At the Huaron project, acquired in March 2000, milestones during the year included completion of a positive feasibility study in May, completion of project financing in August via a $12 million loan from Standard Bank, and initiation of mine construction in September. Ore is now being mined and stockpiled at surface, and mill production is expected to begin in April. Projected annual production is 4.3 million ounces of silver and 18,000 tonnes of zinc at cash and total production costs (net of by-product credits) of $3.46 and $3.90 per ounce of silver, respectively.
At the La Colorada project, highlights in 2000 included discovery of a new high-grade silver zone in January, completion of a bankable feasibility study in June and conditional arrangement of $27 million in mine construction project loans in December with the International Finance Corporation, a member of the World Bank Group. Vein resources more than doubled to nearly 7 million tonnes, of which 3.7 million tonnes are measured and indicated. Early in 2001, limited silver production began at La Colorada in order to generate operating cash flow and keep in place the project operating team. Due to proposed requirements of the project lenders for hedging of silver in the existing low price market, Pan American is reviewing options in order to begin full-scale mine construction.
In September, the Company resolved the suspension of the Dukat project through an agreement with Russian company Polymetal to form a company held 20 percent by Pan American and 80 percent by Polymetal, with Polymetal being responsible for all future funding and management of the project. The new company has been established and project assets transferred to it. Polymetal indicates that it currently expects to have the Dukat mill operational in late 2001 and the Dukat mine reopened in mid-2002.
On other properties in 2000, the Company advanced the San Vicente project in Bolivia to the pre-feasibility stage after a positive mineral resource study. In addition, Barrick Gold Corporation optioned from Pan American an exploration project in Peru, and spent $580,000 in exploration, which returned encouraging initial results.
Pan American ended 2001 with silver reserves and resources totalling 611 million ounces, including proven and probable reserves of 162 million ounces. With the Huaron mine starting production in April and La Colorada expected to begin production in 2002, Pan American's low-cost, long-life silver production will increase to over 12 million ounces annually, making Pan American the purest of the large silver producers worldwide.
- End -
Ross J. Beaty, Chairman or
Rosie Moore, VP Corporate Relations
(604) 684-1175
The statements that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties that could cause actual results to vary materially from the targeted results. Such risks and uncertainties include those described in the Company's Form 40-F as amended. All amounts are expressed in U.S. dollars. Supporting disclosure to material resource and reserve numbers is included in previous filings. Norm Pitcher, P.Geo., Qualified Person, Chief Mining Geologist, Pan American Silver Corp. has verified material resource and reserve numbers.
Fourth Quarter and Full Year Highlights
Silver Reserves and Resources(1) January 1, 2001
1. Qualified Person: Norm Pitcher, P.Geo., Chief Mining Geologist, Pan American Silver Corp.
2. Other Resources includes 76% Measured and indicated Resources and 24% Inferred Resources.
To view Pan American's full 4th Quarter and Year End Results for 2000, please click on the following link:
Full 4th Quarter and Year End Results for 2000 (PDF Format) |
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