BTG - Pan American Silver: A Higher Cost Year On Deck

2024-02-01 10:16:52 ET

Summary

• Pan American Silver Corp. missed its 2024 guidance midpoint on production, and silver production will remain lower near-term until the ventilation shaft at La Colorada is complete.
• Unfortunately, the LC Skarn PEA didn't do much to improve sentiment with a relatively low IRR, especially given that capex estimates look light with PEAs rarely being conservative enough.
• In this update, we'll dig into the Q4/FY2023 results, recent developments, and whether the stock is nearing a buy zone.

It's been a volatile year thus far for the precious metals sector, which has been especially disappointing given that January is typically the best month of the year from a seasonal standpoint (average return for the sector of ~2.6% in January over the past 30 years). The weakness can be attributed to disappointing Q4 results and cost guidance from some of the larger operators, underwhelming (albeit potentially conservative guidance) from some of the operators that have issued 2024 guidance, and of course the softness in metals prices. Unfortunately, Pan American Silver Corp. ( PAAS ) has been one of the names to miss FY2023 guidance and deliver underwhelming 2024 guidance, with production set to increase only marginally year-over-year with operating costs above my expectations.

In this update we'll dig into the Q4/FY2023 results, recent developments, and whether the stock is nearing a buy zone....

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