Silver Miners Struggle with Low Prices (SLW, HL, CDE, PAAS, SLV, SIL)

Commodities & Metals

Published: November 6, 2012 10:30 am

When Silver Wheaton Corp. (NYSE: SLW) reported third-quarter results yesterday, the silver miner noted that lower sales and lower prices hit both revenues and profits, down 13% and 11% respectively. A year-over-year drop of 14% in the price of silver got the blame.

Today, Hecla Mining Co. (NYSE: HL) and Coeur d’Alene Mines Corp. (NYSE: CDE) told a similar story. At Coeur d’Alene, prices were 23% lower than a year ago, and Hecla noted a drop of about 5.5%. Pan American Silver Corp. (NASDAQ: PAAS) is scheduled to release third-quarter results on Thursday, and the consensus estimate calls for earnings per share (EPS) of $0.33 on $269.9 million in revenues.

Hecla reported a break-even third quarter, while the consensus estimate had called for EPS of $0.04. The company posted a noncash mark-to-market loss of $9.1 million on its base-metal hedges and a $6.1 million charge for costs related to the suspension of operations at one of its mines.

The good news for investors is that the company’s production rose and, even though silver prices have fallen, the company’s average realized price was $35 per ounce, more than $5 per ounce above the London fix. That was enough to add a penny to the company’s quarterly dividend payment.

Coeur d’Alene reported a net loss of $0.18 per share, a major collapse from the third quarter 2011 EPS of $0.26. Sales fell 33%, along with the drop in prices. The stock is getting hammered today.

The iShares Silver Trust (NYSEMKT: SLV) is up less than 0.1% at $30.19 in a 52-week range of $25.34 to $36.44, and the Global X Silver Miners ETF (NYSEMKT: SIL) is down about 0.5% at $24.01 in a 52-week range of $16.54 to $26.62.

Coeur d’Alene shares are down more than 17% at $25.17 in a 52-week range of $15.15 to $31.97.

Hecla’s shares are down 1.3% at $6.25 in a 52-week range of $3.70 to $7.00.

Pan American’s shares are also down 1.3% at $21.11 in a 52-week range of $13.49 to $30.79.

Silver Wheaton’s shares are down 0.6 at $38.75 in a 52-week range of $22.94 to $41.30.

The Comex silver price today is $31.14 per ounce, up fractionally. In the past 12 months, silver has ranged from about $26 an ounce to $36 an ounce.

Paul Ausick

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