Last close As at 05/08/2026
USD48.24
▲ 3.33 (7.41%)
Market capitalisation
USD20,120m
Research: Metals & Mining
Pan American Silver (PAAS) announced divestment of a number of non-core assets, including MARA and Morococha. The sale is in line with the company’s intention to optimise its project portfolio following the acquisition of Yamana’s Latin American assets earlier this year. It will generate combined cash proceeds of US$593m, plus net smelter return (NSR) royalties, resulting in a stronger balance sheet as well as a significant reduction in care and maintenance (C&M) costs. We will update our estimates and valuation following the release of the Q223 financial results scheduled for 9 August.
Pan American Silver |
Positive non-core assets divestment |
Asset sale update |
Metals and mining |
1 August 2023 |
Share price performance
Business description
Analysts
Pan American Silver is a research client of Edison Investment Research Limited |
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Pan American Silver (PAAS) announced divestment of a number of non-core assets, including MARA and Morococha. The sale is in line with the company’s intention to optimise its project portfolio following the acquisition of Yamana’s Latin American assets earlier this year. It will generate combined cash proceeds of US$593m, plus net smelter return (NSR) royalties, resulting in a stronger balance sheet as well as a significant reduction in care and maintenance (C&M) costs. We will update our estimates and valuation following the release of the Q223 financial results scheduled for 9 August.
Year end |
Revenue |
EBITDA |
EPS* |
DPS |
P/E |
Yield |
12/21 |
1,632.8 |
593.2 |
0.60 |
0.34 |
28.1 |
2.0 |
12/22 |
1,494.7 |
272.0 |
(0.51) |
0.45 |
N/A |
2.7 |
12/23e |
2,437.7 |
733.7 |
0.37 |
0.41 |
45.60 |
2.4 |
12/24e |
2,895.8 |
1,099.0 |
0.78 |
0.40 |
21.6 |
2.4 |
Note: *EPS is normalised, excluding exceptional items.
On 31 July PAAS announced the sale of the following assets:
■
A 56.25% interest in the MARA project to Glencore (which will now own 100%) for US$475m in cash and a life of mine transferrable copper NSR royalty of 0.75%. Completion is expected in Q323. We valued MARA at US$581m, excluding NSR and C&M costs, based on the Glencore’s earlier acquisition of Newmont’s 18.75% interest in the project, to which we added a 25% premium for control.
■
A 92.3% interest in Morococha, which was put on care and maintenance in early 2022, for US$25m to Alpayana, a Peruvian mining company. The transaction is expected to complete in Q323 subject to regulatory approvals. We valued Morococha at book value, which at Q123 was reported at US$78m. As a result, the company will incur an impairment charge of US$42.4m (pre-tax).
■
Other divestments include a 57.75% interest in the historical Jeronimo project in Chile, acquired as part of the Yamana transaction, to Rio Tinto for US$45.6m and certain NSR royalties; as well as a number of non-controlling equity interests for US$47.1m. The Jeronimo transaction is expected to close in Q323.
The overall cash proceeds from these transactions were reported at US$593m (c 10% of PAAS’s market cap), excluding royalties, and should further strengthen the company’s balance sheet. In addition, the divestment of MARA and Morococha will significantly reduce the company’s C&M costs, which amounted to US$11.5m in Q223 for MARA (c US$45m annualised) and US$13.2m in H123 for Morococha. We estimated the company’s FY23 C&M costs at US$90m prior to the divestment.
While the announced divestment of non-core assets is clearly positive for PAAS, we believe the next key catalyst for the stock could be the upcoming release of the consolidated Q223 financial results, which will include contributions from the assets acquired as part of the Yamana transaction. We will update our estimates and valuation following the release of the results.
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Research: TMT
XP Power reported year-on-year revenue growth of 30% in H123 as it made good progress shipping from its elevated backlog. As expected, orders declined year-on-year, but the c £250m backlog still provides at least nine months’ revenue visibility. The company continues to invest for the longer term in Malaysia (manufacturing) and the United States (R&D). With no change to management’s full year expectations, we maintain our normalised operating profit forecasts for FY23 and FY24 and nudge up our interest cost forecast for FY23.