Top Primary Silver Miner Cost Of Production Now Breaking Even

One of the top primary silver mining companies is now breaking even producing silver. Here are the details…

by Steve St Angelo of SRSrocco Report

One of the top primary silver mining company’s is now breaking even producing silver.  Pan American Silver just released its Q1 2020 Report surprising analysts by posting a net loss of $77 million.  However, if we go by the company’s “Adjusted Earnings,” Pan American Silver reported a $7.6 million loss.  This is the figure I use for my calculations in determining the “Estimated Breakeven.”

I will be posting a new Youtube Video update on the details of the Silver Market and the Breakeven Analysis this weekend.

Here is a quick peek of Pan American Silver’s All-In Sustaining Cost (AISC) that jumped in the first quarter of 2020:

According to Pan American Silver’s calculation of its All-In-Sustaining Cost for silver, it jumped to $15.26 in Q1 2020.  The company stated the reason for the increase was mainly due to:

lower by-product credits, driven mainly by lower realized base metal prices; increased concentrate smelting and refining charges; and higher direct operating costs per ounce in part due to lower silver grades.

Because Pan American Silver produces so much copper, zinc, and lead, along with silver, these base metal prices impact the by-product credit amount in the analysis of the company’s All-In Sustaining Cost.  The base metals prices declined considerably during the first quarter of 2020, thus pushing up the All-In Sustaining Cost for silver.

So, with Pan American Silver’s All-In Sustaining Cost for Q1 2020 at $15.26, it is now very close to the current spot price of silver at $15.48.  However, with the lower oil price in April and May, this will likely lower the company’s production costs in Q2 2020.  But, if base metal prices continue to be weak or weaker in Q2 2020, Pan American Silver may not see much of a lower AISC when the results come out in July.

Interestingly, my Estimated Breakeven for Pan American Silver is much higher than the company’s AISC.  Again, I will provide the details in my newest video update.

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