Rua Gold Inc. (TSXV: RUA, OTC: NZAUF, WKN: H8E)
An Emerging Gold Explorer with Two Highly Prospective Land Packages in New Zealand’s historical gold fields.
Precious metals gold and silver prices are continuing to rise as the latest U.S. inflation data supports the possibility that the Federal Reserve could cut interest rates as early as September. On the Toronto Stock Exchange, shares of Pan American Silver (TSX:PAAS) jumped 6% to C$32.72 on Thursday (11 July), hitting a new high for the year. So, can investors still consider buying the stock now?
As we all know, silver is not only a precious metal, but also an industrial metal that is in high demand across a variety of industries, including electronics, solar and automotive. As a key component of photovoltaic cells and electrical contacts, silver plays a key role in the drive for green energy and the growing popularity of electric vehicles.
As such, silver can benefit from its dual role as an industrial metal and a safe-haven asset that can help hedge against economic uncertainty and inflationary pressures.
For the most recent quarter, Pan American Silver reported revenues of C$390.3 million, a slight decrease year-over-year, mainly due to lower real prices for silver and other metals. The company reported net income of C$21.5 million, or C$0.10 per share, down from C$37.7 million and $0.18 in the same period last year. The drop in net profit was attributed to lower metal prices and higher production costs.
Quarterly silver production was 4.6 million ounces and gold production was 147,000 ounces, both higher than the previous quarter but lower than the same period last year. In addition, all-in sustaining costs (AISC) per ounce of silver produced increased to $13.15 from $11.30, reflecting higher input costs such as labour, energy and materials, as well as higher ongoing capital investments.
Pan American Silver reported operating cash flow of C$65 million, down from C$88 million in the same period last year. Free cash flow fell to C$32 million from C$53 million a year ago. Nonetheless, the company’s balance sheet remains strong, with cash and cash equivalents of C$285 million and total debt of C$340 million, indicating a largely favourable liquidity position.
The silver stock currently pays a dividend yield of 1.8%. The company remains cautiously optimistic about the future, anticipating a recovery in silver prices driven by increased industrial demand and potential supply constraints. Management reiterated its focus on cost management and operational efficiencies to address current volatility and position the company for long-term growth.
Overall, the first quarter results reflect the impact of lower silver prices and higher costs on its financial performance. However, the company’s strong production capabilities, strategic initiatives and solid balance sheet set the stage for continued stock gains. Investors should weigh these factors, as well as the broader silver market outlook, when considering an investment in Pan American Silver.
