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Pan American Silver Corp. Message Board

  • shortssqueeze_expert_no1 shortssqueeze_expert_no1 Jan 12, 2013 8:40 AM Flag

    Write down / impairment change of at least $560M in next report

    I have been studying a little about Navidad...

    PAAS has to make this write down at the year end report . Minera Argenta is closed down long time ago after the governments decision. PAAS has official said, that no silver will be carried out from Navidad - that means it must be official in the report, too.

    BUT it´s not enough. They have to downgrade estimates for 2013 and the coming years, too. In an earlier report, they calculated about revenue from mining in Navidad first half of 2013. PAAS has estimated a nearly double of the total silver production - now it´s an illusion.

    I have been bearish to silver for quite a long time, but it´s up/down every day for a long time, so I don´t expect any break-out short term.
    I never short a stock. But in this case, I´ll feel quite safe and chase easy money.
    No bullish triggers here - just a huge write down and a lot of questions about new laws from Argentina and Bolivia, which will kill the profit..

    Sentiment: Strong Sell

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    • looking at some things like online dealers being "temporarily out of stock" on numerous silver coins & bars, kit co forum where people are complaining about high premiums & US Mint sales on pace to break the Jan 2011 sales record has me feeling anything but bearish on silver med. to longer term.
      Short term I think we will still be on a roller-coaster ride while the commercial banks try to cover some shorts, the price action of late looks to me to be engineered to shake out some of the weaker hands & I think we'll see silver below $30 one more time this month, after that I believe we go higher from there.JMO

    • It is all correct (re: Navidad write-off and market sentiment), but PAAS doesn’t make any meaningful profits from Argentina or Bolivia. It means that hit on earnings won’t happen.

      Certainly, management could think better before relying that much on Navidad for future expansion and now these expansion plans become very humble. However, by pure earning standpoint, PAAS situation is stable and stock doesn’t look expensive at the moment. It depends now on Dolores expansion and, possibly, on management using cash on hands for better expansion propositions (in better locations than Argentina).

      • 1 Reply to warmcamp
      • shortssqueeze_expert_no1 shortssqueeze_expert_no1 Jan 12, 2013 1:13 PM Flag

        Well, if the valuation is low or high, depends on the future - and silverprice. No one can tell if silverprice is 15, 30 or 45 in a year. I am not going to start this debate here. I have my opinion about the current silverprice.
        The problem in this case is, that PAAS does not hedge the silverprice.
        It is a logic strategy, when you have a golden egg ( Navidad ), where you can double the production, if silverprice fall.
        Now they lost this certain factor, and will not be able to increase the silverproduction 25% a year.
        That means business is now much much more risky. If silver goes down 20% - the company will lose money. They need new projects - it takes time.

        The silverproduction worldwide is similar to the shipping sector a few years ago. Too few ships for too much cargo. Now there are too many ships for less cargo. Remember - China has now its own increased silverproduction - but not the same demand. That means silver is getting more and more a currency - instead of a material.

        Back to PAAS... If you look at the quote, it´s obvious, that the market did not put any value in Navidad. Otherwise it has been much lower today. OR market will punish PAAS, when they get the fact black on white !?

        What´s the date of Q4 report ?

        Sentiment: Strong Sell

 
PAAS
11.82-0.32(-2.64%)Sep 22 4:00 PMEDT

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