Pan American Silver - Q122 results – good cost control
Pan American Silver’s (PAAS’s) Q122 financial results were supported by strong gold and silver sales, while production was affected by the latest COVID-19 outbreak. The company maintained its guidance for FY22 and expects production to be second-half weighted. Costs were generally under control, with an impressive cost performance in the silver segment. Although PAAS is seeing increased cost pressures, its full-year cost expectations remained unchanged. We have updated our estimates to reflect the results and lower commodity prices, reducing our valuation from US$31.0/share to US$29.5/share. Following the recent weakness, the shares look attractive at an FY22e EV/EBITDA of 7.5x.Pan American Silver is engaged in the production and sale of silver, gold and other base metals including copper, lead and zinc as well as other related activities, including exploration, extraction, processing, refining and reclamation. Co.'s primary product (silver) is produced in Peru, Mexico, Argentina and Bolivia. Additionally, Co. has project development activities in Peru, Mexico and Argentina, and exploration activities throughout South America and Mexico.
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