Macro Pyrite mineral

Pan American Silver

US: PAAS

Market Cap$3,535m

Last Close $16.79

Pan American Silver is one of the largest global primary silver producers and a sizeable gold miner with operations in North, Central and South America since 1994. The company owns eight producing operations, the currently suspended top-tier Escobal silver mine and a number of large-scale advanced exploration projects.

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Investment summary

PAAS reported mixed Q222 results that were heavily affected by one-off items stemming from the grade and production underperformance at Dolores. As a result, the company incurred US$155m in non-cash impairments and inventory revaluation charges. FY22 production is now guided towards the lower end of the original expectations and the gold segment cash costs at the top end. On a positive note, the annual mineral resources update revealed good resource replacement rates in the silver segment, and the company announced that Escobal is moving into the next stage of the ILO 169 consultation process. We have revised down our estimates, lowering our valuation to US$27.5/share.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2020A 1338.8 469.1 194.5 57.24 29.3 20.0
2021A 1632.8 593.2 274.0 60.10 27.9 35.8
2022E 1614.9 400.1 80.8 17.03 98.6 N/A
2023E 1581.1 509.5 198.9 60.70 27.7 27.4
Industry outlook

The shares are down c 25% ytd on the back of the lower commodity prices driven by the increased risks to global economic growth, spiralling inflation and faster-than-expected monetary tightening. Having fallen c 25% ytd, the silver price has recently gained some support at c $18–19/oz. The gold/silver ratio is now at an elevated level of c 91x, which is consistent with the current economic cycle and gold’s outperformance versus silver.

Last updated on 17/08/2022
Content on Pan American Silver
Pan American Silver – Mixed Q2 results, Escobal progress
Metals & mining | research Update | 18 August 2022
Silver miner with nugget
Pan American Silver – Positive drill results at La Colorada Skarn
Metals & mining | research Flash note | 25 July 2022
Silver miner with nugget
Pan American Silver – Q122 results – good cost control
Metals & mining | research Update | 18 May 2022
Silver miner with nugget
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Sector
Metals & mining
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Share price graph
Balance sheet
Forecast net cash (US$m) 210.7
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (8.1) (24.1) (34.0)
Relative* (16.9) (27.4) (31.3)
52-week high/low US$29.9/US$16.8
*% relative to local index
Key management
Guido Mastropietro Director, finance
Siren Fisekci VP, investor relations and corporate communic