Pan American Silver — 2024 production in line; record cash position

Pan American Silver (NYSE: PAAS)

Last close As at 17/01/2025

USD21.43

−0.02 (−0.09%)

Market capitalisation

USD7,780m

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Research: Metals & Mining

Pan American Silver — 2024 production in line; record cash position

Pan American Silver (PAAS) has released its preliminary FY24 production results, which show silver and gold output of 21.1Moz and 892koz respectively, both in line with guidance. Importantly, the company noted that it ended the year with a record cash position of US$863m, excluding US$25m in short-term investments. We maintain our valuation of US$26.0 per share and will update our estimates following the release of the full results on 19 February.

Written by

Andrew Keen

MD - Head of Content, Energy & Resources, Industrials

Metals and mining

FY24 production results

20 January 2025

Price $21.21
Market cap $7,913m

Net debt at Q324, including short-term investments of $31m

$345.0m

Shares in issue

363.0m
Free float 100.0%
Code PAAS
Primary exchange TSX
Secondary exchange NYSE
Price Performance

Business description

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. Following the acquisition of selected assets as part of the Yamana transaction, the company owns 10 producing operations, the suspended top-tier Escobal silver mine and several large-scale advanced exploration and development projects.

Analysts

Andrew Keen
+44 (0)20 3077 5700
Andrey Litvin
+44 (0)20 3077 5700

Pan American Silver is a research client of Edison Investment Research Limited

Note: EPS is on adjusted company basis.

Year end Revenue ($m) EBITDA ($m) EPS ($) DPS ($) Yield (%) EV/EBITDA (x)
12/22 1,494.7 272.0 0.09 0.45 2.1 27.8
12/23 2,316.1 680.6 0.12 0.41 1.9 11.1
12/24e 2,833.5 1,016.0 0.73 0.40 1.9 7.4
12/25e 2,927.7 1,243.2 1.11 0.40 1.9 6.1

PAAS reported FY24 silver production of 21.1Moz, meeting its earlier guidance (lower end of 21–23Moz), with Q4 output coming in at 6.0Moz. Both numbers are slightly above our estimates due to the stronger-than-expected performance at El Penon, which saw its Q4 silver production rising 18% q-o-q to 1.2Moz (Edison: 1.0Moz). Other silver operations performed in line with our expectations, including La Colorada, which achieved a 21% q-o-q increase in silver output to 1.61Moz (Edison: 1.61Moz). The company’s total gold production was 224koz in Q4 and 893koz in FY24 compared to our estimates of 227koz and 895koz, respectively. PAAS has not yet provided sales numbers. Our FY24 estimates are underpinned by the following sales assumptions: 20Moz (Q4: 6.0Moz) for silver and 898koz (Q4: 232koz) for gold. Given the inventory build in Q3 and the silver production beat in Q4, we would not be surprised if the company exceeded our sales estimates.

Separately, PAAS noted that it finished the year with an impressive cash position of US$863m, plus US$25m in short-term investments. The cash number includes a provisional US$62m in working capital proceeds from the sale of La Arena to Zijin. Adjusting for the latter, PAAS ended the year with US$826m in cash and short-term investments, which compares to our full-year estimate of US$842m and suggests that our FY24 forecasts look broadly realistic. Were the company to maintain the same levels of debt and leases as in Q324, it would end the year with a net cash position of c US$11m (Edison: US$26m) versus net debt of US$345m at Q324.

The company will release full financial and operating details, as well as FY25 guidance, when it reports its annual results on 19 February. We will update our estimates after the release. For now, we maintain our valuation of US$26.0 per share. Entering FY25, PAAS’s portfolio of operations is largely at a steady state with improved performance at La Colorada, the sale of La Arena and completion of mining at Dolores.

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