What Is Really Going On With Pan American Silver (NASDAQ:PAAS)?

715 0 0 0 0 0 (0)


Against the background of undisclosed social disturbances surrounding its Mexican Dolores mine, Pan American Silver (NASDAQ:PAAS) has reported 2018's first-quarter net earnings of $48.2 million, revenue of $207 million, absence of debt and updated level of cash and short-term investment balance of $224 million plus best cash costs in over a decade.

"Solid operating performance helped deliver our strong financial results, particularly at Dolores where silver production was up 25% compared with last year and gold production reached a record 34.3 thousand ounces," said Michael Steinmann, President and Chief Executive Officer of the Company. 

And yet, it was at the Dolores mine that in late May Pan American Silver (NASDAQ: PAAS) reported some troubling events along its mine access roads. The situation was serious enough for the company to slash the staff movements along those highways. Furthermore, the state and federal authorities were called in to assist with safe access to the mining lease.

What is Really Going On? 

Somehow, I find it hard to imagine that the officers of the law were merely there to redirect vehicular transport in favor of wild animal flocks. Rockfall? If that were the case, then neither people nor supplies would be getting through and there would be no shame in reporting that the local contractors got some overtime. That would have been a happy ending for all - singing miners, whizzing supply trucks and applauding flocks of wildlife.

But as it stands, the undisclosed nature of these road incidents indicates a "not-so-happy-people" trouble. At this stage, we only see the company news releases but what about the other side?

For example, if the access roads have been safe then what exactly caused them to become unsafe? Who caused them to be so unsecure? Clearly, there had to be a critical justification for the Mexican state and federal police to travel all that way and secure access to the mine's supply of diesel, cement, and other materials. Are they getting overtime?

How many of these incidents have there been? Was there only a single event, or has there been an escalation in intensity and number?

The Dolores (Spanish for "pain") raises many uncomfortable questions but there are no sensible answers, thus far.

"The IKN First Law of Mining News Releases: Considering that anything contained in a mining news release is presented in the best possible way for the company in question, any piece of information contained in an NR that comes across in any way negative means the real news and/or events behind it must be very, very bad indeed." 

The scant company disclosure suggests an opening of a FIFO program for its employees - "fly-in-fly-out". At least until the roads are safe for the local wildlife to cross. 

Its hard to know what the real situation was/is at Dolores. However, the Company does not expect any impact on its annual production guidance for 2018. Its consolidated cash cost per ounce of silver was $1.18 in the last quarter. Compare that with $3.18 in Q4 2017 and $6.66 in Q4 2016. I hope this does not come at the cost of disenfranchising local folk's idea of peaceful life.

Join the Conversation on Telegram

Disclosure:

I have received no additional compensation other than the Ethereum that Hade Technologies pays to produce Exclusive content

Comments (0)

Recent Updates

  •   
    Jan 19, 2019 9:38 AM

    Sanofi SA (ADR) - Consumer Healthcare Total Revenue

  •   
    Jan 19, 2019 9:38 AM

    Sanofi SA (ADR) - Consumer Helathcare Other of which Gold Bond Revenue

  •   
    Jan 19, 2019 9:38 AM

    Sanofi SA (ADR) - Vaccines Polio/Pertussis/Hib Vaccines (incl. Hexaxim/Hexyon, Pentacel, Pentaxim and Imovax) Revenue

  •   
    Jan 19, 2019 9:38 AM

    Sanofi SA (ADR) - Vaccines Influenza Vaccines (incl. Vaxigrip, Fluzone HD, Fluzone, Flublok) Revenue

  •   
    Jan 19, 2019 9:38 AM

    Sanofi SA (ADR) - Vaccines Meningitis/Pneumo Vaccines (incl. Menactra) Revenue

  •   
    Jan 19, 2019 9:38 AM

    Sanofi SA (ADR) - Vaccines Adult Booster Vaccines (incl. Adacel) Revenue