The North American silver miners’ first quarter earnings were a bit of a mixed bag, according to BMO Capital Markets analyst Jessica Fung.

Positively, companies consistently met or exceeded their guidance due to lower-than-expected operating costs. But on the other hand, she said free cash flow “remained elusive” because the miners continued to pour money into expansion projects. That is quite different from the senior gold companies, which reported strong free cash flow in Q1.

“Our silver universe remains ‘behind’ the senior gold sector in generating positive (free cash flow) after five years of cost cutting and optimization programs,” Fung said in a note.

Of the 10 silver companies she covers, she said only one (Silver Standard Resources Inc.) reported positive free cash flow in the first quarter.

However, she thinks 2017 should be better from a free cash flow perspective as capital spending programs in the sector wind down (and assuming silver prices, which are up more than 10 per cent since the start of April, don’t collapse). She said the companies that are investing heavily in their operations today will be in better shape next year compared to those that are under-investing in order to preserve cash.

“Most companies have cut sustaining capex year-on-year; we should question if these cuts might impact future production,” Fung said.