CIBCHave a US$35.00 target. GLTA
EQUITY RESEARCH
January 16, 2025 Flash Research
PAN AMERICAN SILVER CORP
2024 Production Guidance Achieved, Enters 2025 With Strong
Balance Sheet
In Conclusion: Pan American Silver reported 2024 annual silver production
of 21.1 million ounces and gold production of 892koz, achieving its annual
silver production guidance for the first time in three years. This should be
viewed positively, especially since there had been some market skepticism
ahead of this release. For the year, our 2024E silver production was 21
million ounces, with consensus at 20.7 million ounces, compared to the
company’s guidance of 21-23 million ounces. Pan American Silver had a
very strong Q4 producing ~6 million ounces of silver, or an increase of 10%
quarter-over-quarter, with strong results from La Colorada benefiting from the
new ventilation infrastructure completed in July 2024. On the gold front, the
Jacobina mine produced 197koz in Q4, the highest recorded production in
the mine’s history, and continues to show improvement since its acquisition
from Yamana Gold. With the completion of the sale of the La Arena asset in
Peru, Pan American Silver also exited the year with a very strong balance
sheet consisting of a record cash balance of $862.8 million, which
management has indicated will be used to execute on its strategic priorities.
In all, 2024 was a successful year for Pan American Silver with the company
achieving all of its production targets (silver/gold/base metals) while
monetizing non-core assets including MARA and La Arena. Key upcoming
catalysts in 2025 could include continuing progress at Escobal, as well as in
finalizing a partnership at La Colorada Skarn. PAAS shares remain our top
pick among the silver producers, and shares currently trade at 0.7x P/NAV
and 6.6x P/CF, at a discount to the peer group at 0.8x P/NAV and 7.4x P/CF.
2024 Production Guidance Achieved: In 2024, Pan American Silver
produced 21.1 million ounces of silver (vs. guidance of 21-23 million ounces),
892koz of gold (vs. guidance of 868k-988koz), 45kt of zinc (vs. guidance of
42-46kt), 21kt of lead (vs. 19-22kt), and 5kt of copper (vs. guidance of 4kt).
Silver Production (6.018 million ounces produced in Q4 vs. our
expectation of 5.976 million ounce): The La Colorado mine was a
standout, producing 1.6 million ounces of silver in the quarter, and we expect
this asset to continue to benefit from the completion of the new ventilation
infrastructure. When compared to our model, El Penon also demonstrated
positive variances with 1.17 million ounces of silver produced.
Gold Production (224.2koz produced in Q4 vs. our expectation of
227koz): Jacobina was a standout with 197koz produced, while December
production from the La Arena mine in Peru was excluded with the completion
of the sale on December 2, 2024.
Strong Balance Sheet: As at December 31, 2024, on an unaudited basis,
the company held $862.8M in cash and $24.5 million in short-term
investments, including the $245 million in cash consideration from its
divestment of La Arena after the transaction closed on December 2.
Combined with its undrawn revolving credit facility, the company reported a
total liquidity of $1,637.3 million.