UPDATE 1-Pan American focuses on dividend; shares jump

Thu Feb 21, 2013 4:05pm EST
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* Miner boosts quarterly dividend 150 pct to 12.5 cents

* Books $100 mln charge on value of Navidad project

* Shares up 6.11 percent at C$16.85 on TSX (Recasts, adds CEO comments)

By Julie Gordon

TORONTO, Feb 21 (Reuters) - Pan American Silver Corp, said on Thursday it plans to focus on funneling excess cash directly to shareholders, helping to drive its shares up more than 6 percent a day after it said it was more than doubling its quarterly dividend.

The increased dividend payout may have softened the fourth-quarter loss that Pan American reported late on Wednesday, reflecting an impairment charge to write down part of the value of its Navidad project in Argentina.

The silver miner shelved the project last year as business conditions in the country deteriorated. With its existing mines generating strong cash flows and no new projects to build right now, the company boosted its dividend by 150 percent to 12.5 cents, up from 5 cents.

The new dividend reflects a 3.2 percent yield on Pan American's Wednesday's closing share price and could prompt return-hungry investors to gravitate to the stock, BMO Capital Markets analyst Andrew Kaip said in a note to clients on Thursday.

"However, BMO Research believes the increased dividend policy, combined with impairment charge for Navidad, signals a stalled growth strategy and continued dependence on high-cost mines," he wrote.   Continued...