Pan American Silver Corp. (PAAS, Financial) rose nearly 3% on the New York Stock Exchange Jan. 12 after achieving silver production of 25 million ounces, within target, and below-guidance consolidated cash costs of $4.55 per payable ounce of silver. The latter was also the lowest over the last 10 years thanks to higher productivity and by-product credits and lower concentrate treatment costs.
The stock is now trading at $16.66 with a market capitalization of $2.51 billion. According to the chart sourced from Yahoo Finance, Pan American Silver Corp. climbed 5.6% for the 52 weeks through Jan. 12 and outperformed the VanEck Vectors Gold Miners ETF by 10.2%.
Source: Yahoo Finance
Pan American Silver Corp. looks cheaper than its peers.
The last raise appreciated the stock’s book value to 1.73. But it is still below the industry median of 2.01.
Results on preliminary production also triggered an increase in the EV-to-Ebitda ratio to 8.96. The industry’s EV is 10.14 times its Ebitda.
Pan American Silver Corp.’s last market valuation is 28% below the 52-week high of $21.29 per share and 19% above the 52-week low of $13.99.
Michael Steinmann, Pan American Silver Corp.’s president and CEO, said that the ramping up they expect from long-life mines in Mexico will trigger an 8% annual compounded growth in silver production. This spark will bring, according to Steinmann, the silver output to a level of not less than 30.5 million ounces in 2020. It is easy to understand that this will be one of the catalysts to Pan American Silver Corp. over the next three years.
The company also produces and sells gold and base metals such as zinc, lead and copper. During 2017, Pan American Silver Corp. produced 160,000 ounces of gold, 55,300 tons of zinc, 21,500 tons of lead and 13,400 tons of copper. The production of gold was within guidance for 2017 but below the higher limit of 165,000 ounces.
The company runs six mines, and 2017 production is shared as follows: La Colorada (28.4% silver and 2.7% gold), Dolores (16.8% silver and 64.4% gold), Alamo Dorado (2.4% silver and 1.3% gold), Huaron (14.8% silver and 0.7% gold), Morococha (10.4% silver and 2.2% gold), San Vincente (14.4% silver and 0.3% gold) and Manantial Espejo (12.4% silver and 28.3% gold).
For 2018, the mining company expects to produce between 25 million and 26.5 million ounces of silver and between 175,000 and 185,000 ounces of gold. The cash cost is forecasted to average $4.1 per ounce of payable metal.
The company plans to use $152.5 million for expenditures in 2018. An amount of $50 million will be used to develop metallic projects, and the rest will keep operations running.
Disclosure: No positions in Pan American Silver Corp.
