Despite a bevy of cost-cutting moves and higher production yields, Central and South American silver and gold miner Pan American Silver (NASDAQ:PAAS) couldn't escape the reality of falling commodity prices -- a reduction in average realized silver and gold prices of 30% and 19% -- with its third-quarter earnings results that it reported today.

For the quarter Pan American delivered revenue of $213.6 million, a 15% decline from the previous year, while net income slipped 37% to $14.2 million, or $0.09 in net earnings. EPS was handily ahead of Wall Street's profit expectations of $0.03 per share, with Pan American achieving this through a combination of stringent cost-cutting as well as improved gold, silver, and by-product yields.

In terms of costs, Pan American was able to reduce its general and administrative expenses by 15% to $3.9 million while exploration and project development expenses were slashed by 68% year-over-year to just $2.6 million.

Overall production yield served as another bright spot, with silver and gold production soaring by 7% and 48% mainly due to higher ore grades in select mines. Its Dolores mine, for instance, produced 25% more silver and 60% more gold than in the previous year. The company also saw a substantial increase in zinc, lead, and copper production during the quarter, which helped offset its silver mining costs.

Pan American's all-in sustaining costs per silver ounce sold, or AISCSOS, is perhaps the most important margin measure for investors since it incorporates all development, mining, and maintenance costs into one figure. For the third quarter, the company's AISCSOS fell by an impressive 33% to $16.26/oz. As long as this figure remains below the average selling price for silver, Pan American should remain profitable on an operating basis.

Looking ahead, Pan American stuck by its original full-year production forecast which calls for 25 million to 26 million in silver output, but did note that it anticipates its full-year cash costs, which include by-product credits, could be below its original forecast of $11.50/oz. to $12.80/oz.

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