Last close As at 05/08/2026
USD48.24
▲ 3.33 (7.41%)
Market capitalisation
USD20,120m
Research: Metals & Mining
Pan American Silver (PAAS) has released its FY23 financial results, which are in line with our estimates at the EBITDA level, an encouraging outcome given the operationally challenging year. While the bottom line was once again affected by non-cash one-offs, cash flow generation was robust, with FY23 operating cash flow of US$450m. We have slightly adjusted our FY24 estimates and rolled the model forward, resulting in a marginally updated valuation of US$22.2/share. The company’s decision to launch a buyback should partly compensate for the weak share price performance, which we believe does not reflect supportive gold market fundamentals and what is likely to be a year of more consistent operating performance.
Pan American Silver |
FY23 results: Follow the cash flow |
Results update |
Metals and mining |
27 February 2024 |
Share price performance
Business description
Next events
Analysts
Pan American Silver is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||||||||||||||||
Pan American Silver (PAAS) has released its FY23 financial results, which are in line with our estimates at the EBITDA level, an encouraging outcome given the operationally challenging year. While the bottom line was once again affected by non-cash one-offs, cash flow generation was robust, with FY23 operating cash flow of US$450m. We have slightly adjusted our FY24 estimates and rolled the model forward, resulting in a marginally updated valuation of US$22.2/share. The company’s decision to launch a buyback should partly compensate for the weak share price performance, which we believe does not reflect supportive gold market fundamentals and what is likely to be a year of more consistent operating performance.
Year end |
Revenue |
EBITDA |
EPS* |
DPS |
EV/EBITDA |
Yield |
12/21 |
1,632.8 |
593.2 |
0.75 |
0.34 |
8.4 |
2.6 |
12/22 |
1,494.7 |
272.0 |
(0.54) |
0.45 |
18.3 |
3.4 |
12/23 |
2,316.1 |
680.6 |
0.19 |
0.41 |
7.3 |
3.2 |
12/24e |
2,578.0 |
764.6 |
0.24 |
0.40 |
6.5 |
3. |
Note: *EPS is Edison normalised and excludes all exceptional items.
FY23: Strong cash flow generation
PAAS delivered FY23 EBITDA of US$681m (adjusted for PPA inventory revaluation), in line with our estimate of US$679m, with Q4 EBITDA of US$202m benefiting from the record gold sales reported earlier. While the bottom line was affected by one-offs to the tune of US$104m, resulting in a reported EPS loss of US$0.32, company adjusted EPS was US$0.12. More importantly, PAAS achieved an impressive operating cash flow of US$167m in Q4 and US$450m for the full year, with FY23 free cash flow of US$71m. As a result of strong cash flow generation, net debt reduced from US$423m in Q3 to US$361m in FY23. The company declared a quarterly dividend of US$0.1/share, with an FY23 dividend of US$0.41/share, yielding 3.2% at the current share price.
FY24: A year of two halves
As expected, the silver segment FY23 cash cost of US$13.1/oz (Q4: US$19.3/oz) was above earlier guidance, mainly due to the well-publicised ventilation issues at La Colorada, while the gold segment cash cost of US$1,113/oz (Q4: US$1,096/oz) was marginally above guidance. PAAS has also released its quarterly operational outlook for FY24, which suggests the current year production and especially cost performance will be visibly second half weighted, mainly due to the timing of the anticipated operational recovery at La Colorada. We have slightly updated our FY24 estimates, raising our EBITDA forecast by 4% to US$765m.
Valuation: Buyback to sweeten shareholder returns
Having tweaked our FY24 estimates and rolled the model forward, we have revised our valuation of PAAS from US$22.0 to US$22.2/share. We keep our commodity price assumptions unchanged. PAAS’s decision to launch a share buyback of up to 5% shares (up to c US$234m at current price) should at least partly compensate for the subdued share price performance and depressed relative valuations, which we believe neither reflect the prevailing favourable gold market fundamentals nor the anticipated gradual normalisation of operating performance in FY24.
Exhibit 1: Financial summary
$'m |
2020 |
2021 |
2022 |
2023 |
2024e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
1,338.8 |
1,632.8 |
1,494.7 |
2,316.1 |
2,578.0 |
Cash production costs |
(696.7) |
(925.5) |
(1,094.4) |
(1,479.2) |
(1,640.2) |
||
DD&A |
(254.5) |
(303.0) |
(316.0) |
(484.2) |
(496.2) |
||
Royalties |
(27.5) |
(36.4) |
(35.9) |
(55.9) |
(61.6) |
||
Gross Profit |
360.2 |
367.9 |
48.4 |
296.8 |
380.0 |
||
G&A |
(36.4) |
(34.9) |
(29.0) |
(61.4) |
(72.5) |
||
Other operating costs |
(109.2) |
(42.9) |
(63.5) |
(96.8) |
(39.0) |
||
Operating profit (before amort. and excepts.) |
|
|
214.6 |
290.2 |
(44.1) |
196.4 |
268.5 |
EBITDA |
|
|
469.1 |
593.2 |
272.0 |
680.6 |
764.6 |
Other operating expenses |
(5.5) |
30.7 |
(6.4) |
3.4 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
(211.8) |
(103.9) |
0.0 |
||
Reported operating profit |
209.1 |
320.9 |
(262.3) |
38.1 |
268.5 |
||
Net Interest and other finance related expense |
(20.1) |
(16.2) |
(22.5) |
(91.4) |
(94.0) |
||
Profit Before Tax (norm) |
|
|
189.0 |
304.7 |
(73.0) |
108.4 |
174.5 |
Investment income (loss) |
63.0 |
(59.7) |
(16.2) |
(5.5) |
0.0 |
||
Profit Before Tax (reported) |
|
|
252.0 |
245.0 |
(301.0) |
(58.8) |
174.5 |
Reported tax |
(75.6) |
(146.4) |
(39.1) |
(46.1) |
(87.2) |
||
Profit After Tax (norm) |
113.4 |
158.3 |
(112.1) |
62.3 |
87.2 |
||
Profit After Tax (reported) |
176.5 |
98.6 |
(340.1) |
(104.9) |
87.2 |
||
Minority interests |
(1.4) |
1.1 |
1.7 |
(1.2) |
0.8 |
||
Net income (normalised) |
114.9 |
157.2 |
(113.8) |
63.5 |
86.4 |
||
Net income (reported) |
177.9 |
97.4 |
(341.8) |
(103.7) |
86.4 |
||
Average Number of Shares Outstanding (m) |
210 |
210 |
211 |
327 |
365 |
||
EPS - basic normalised ($) |
|
|
0.55 |
0.75 |
(0.54) |
0.19 |
0.24 |
EPS - normalised fully diluted ($) |
|
|
0.55 |
0.75 |
(0.54) |
0.19 |
0.24 |
EPS - basic reported ($) |
|
|
0.85 |
0.46 |
(1.62) |
(0.32) |
0.24 |
Dividend ($) |
0.22 |
0.34 |
0.45 |
0.41 |
0.40 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
2,577.0 |
2,517.4 |
2,444.1 |
5,823.1 |
5,697.4 |
Tangible assets |
2,415.0 |
2,344.6 |
2,226.4 |
5,675.1 |
5,549.4 |
||
Investments |
71.6 |
78.7 |
121.2 |
0.0 |
0.0 |
||
Other |
90.4 |
94.2 |
96.6 |
148.0 |
148.0 |
||
Current Assets |
|
|
856.9 |
1,001.2 |
804.4 |
1,390.0 |
1,416.6 |
Inventories |
406.2 |
500.5 |
471.6 |
711.6 |
728.0 |
||
Receivables |
127.8 |
128.2 |
136.6 |
138.0 |
148.3 |
||
Cash |
167.1 |
283.6 |
107.0 |
399.6 |
399.5 |
||
ST investments |
111.9 |
51.7 |
35.3 |
41.3 |
41.3 |
||
Other |
43.9 |
37.3 |
53.8 |
99.5 |
99.5 |
||
Current Liabilities |
|
|
(361.8) |
(387.7) |
(380.8) |
(624.2) |
(597.3) |
Creditors |
(281.9) |
(306.1) |
(308.1) |
(498.0) |
(516.8) |
||
Short term borrowings and leases |
(12.8) |
(14.1) |
(27.3) |
(52.4) |
(6.7) |
||
Other |
(67.0) |
(67.5) |
(45.5) |
(73.8) |
(73.8) |
||
Long Term Liabilities |
|
|
(466.3) |
(494.9) |
(666.0) |
(1,816.4) |
(1,802.1) |
LT debt and leases |
(20.7) |
(31.8) |
(199.5) |
(749.2) |
(794.9) |
||
Other long term liabilities |
(445.5) |
(463.1) |
(466.5) |
(1,067.2) |
(1,007.2) |
||
Net Assets |
|
|
2,605.8 |
2,636.0 |
2,201.6 |
4,772.5 |
4,714.7 |
Minority interests |
(3.3) |
(4.5) |
(6.1) |
(11.8) |
(12.6) |
||
Shareholders' equity |
|
|
2,602.5 |
2,631.6 |
2,195.5 |
4,760.7 |
4,702.1 |
CASH FLOW |
|||||||
Operating Cash Flow |
176.5 |
98.6 |
(340.1) |
(104.9) |
87.2 |
||
D&A, exceptionals, other |
280.5 |
498.9 |
555.2 |
663.5 |
677.4 |
||
Working capital movement |
97.0 |
(71.1) |
(42.0) |
68.9 |
(7.9) |
||
Tax |
(81.6) |
(129.2) |
(137.8) |
(149.4) |
(137.2) |
||
Net Interest |
(10.0) |
(5.1) |
(3.4) |
(27.9) |
(55.5) |
||
Net operating cash flow |
|
|
462.3 |
392.1 |
31.9 |
450.2 |
564.0 |
Capex |
(178.6) |
(243.5) |
(274.7) |
(379.0) |
(372.5) |
||
Acquisitions/disposals |
22.5 |
45.8 |
8.7 |
759.3 |
0.0 |
||
Equity financing |
4.7 |
0.6 |
0.9 |
0.0 |
0.0 |
||
Dividends |
(46.2) |
(71.5) |
(94.7) |
(130.4) |
(145.9) |
||
Other |
59.1 |
(2.3) |
20.0 |
(15.3) |
(45.7) |
||
Net Cash Flow |
323.8 |
121.2 |
(307.9) |
684.8 |
(0.1) |
||
Opening net debt/(cash), including ST investments |
|
|
77.9 |
(245.5) |
(289.4) |
84.5 |
360.7 |
FX and other |
(0.5) |
(77.3) |
(66.0) |
(961.0) |
0.0 |
||
Closing net debt/(cash), including ST investments |
|
|
(245.5) |
(289.4) |
84.5 |
360.7 |
360.8 |
Closing net debt/(cash), excluding ST investments |
(133.5) |
(237.7) |
119.9 |
402.0 |
402.1 |
Source: Pan American Silver accounts, Edison Investment Research
|
|
Research: TMT
CLIQ Digital showed robust revenue and profit growth in FY23 despite a more challenging backdrop. Revenue was below management guidance and Edison estimates, but profits were in line. Margins dipped only slightly despite higher advertising bidding prices, ie customer acquisition costs. Management announced a share buyback programme of up to €13m in place of a dividend to generate returns for shareholders and also for tax efficiency reasons. We have adjusted out FY24 forecasts to reflect management’s updated guidance and introduce our FY25 forecasts.