Aug 15 (Reuters) - Pan American Silver Corp reported a surprise quarterly loss on Thursday as weak precious metals prices weighed on its operating results, and it took a non-cash impairment charge.
The Vancouver-based miner said it has started to hedge part of its production to offset the risk of further price declines, entering into forward contracts of up to 12 months that cover up to 25 percent of its expected precious metal production.
This follows news last week that U.S. silver miner Hecla Mining Co has started to hedge after reporting its own surprise loss.
Pan American's average realized silver price fell 23 percent in the second quarter from a year earlier, to $22.68 an ounce, while realized gold prices fell 12 percent.
Spot silver dropped sharply in June, touching a low of $18.19, before rebounding somewhat in July and August. It was trading at $21.96 on Thursday.
Pan American said it now has 5.3 million ounces of silver under contract at an average price of $20.43 per ounce, and 24,000 ounces of gold under contract at an average price of $1,323 per ounce. The contracts settle each month from August 2013 to June 2014.
The company took a non-cash impairment charge of $185.2 million in the latest quarter related to its purchase of the Dolores mine in Mexico. It paid about C$1.5 billion for Minefinders Corp, which owned the Dolores mine, in the spring of 2012.
Net loss for the second quarter was $187.1 million, or $1.23 a share, compared with a profit of $37.0 million, or 24 cents a share, a year earlier.
Excluding the impairment charge and other special items, Pan American reported an adjusted loss of $9.9 million, or 7 cents a share. On that basis, analysts' average forecast was a profit of 4 cents a share, according to Thomson Reuters I/B/E/S.
Revenue fell 12 percent to $175.6 million, well below the $219.8 million expected by analysts.