Pan American Silver (NYSE:PAAS) Conference Transcript

Summary of Pan American Silver Conference Call (February 23, 2026) Company Overview - Company: Pan American Silver (NYSE: PAAS) - Industry: Silver Mining - Key Focus: World-leading silver producer with a diversified portfolio of assets, large reserves, and growing production [1] Core Points and Arguments Production and Assets - Current Operations: 10 producing assets across the Americas, primarily focused on silver production, with significant operations in Mexico and Peru [2][3] - Acquisition: Acquired MAG Silver last year, coinciding with a rise in silver prices, enhancing the company's asset portfolio [4] - Juanicipio Mine: Recognized as one of the best silver-producing assets globally, contributing to lower corporate-wide costs and significant production growth [6][10] - La Colorada Skarn Project: Expected to have a mine life of 40-50 years, projected to significantly increase silver production [5][6][21] Financial Performance - Free Cash Flow: Generated over $550 million in free cash flow in Q4 2025, with expectations for strong Q1 results due to high silver prices [11][9] - Cost Management: Noted a decline in silver production costs, attributed to the addition of the Juanicipio mine, despite some inflationary pressures [10][8] - Production Guidance: Seasonal production patterns due to weather in South America, with expectations for stronger performance in the latter half of 2026 [12][13] Cost Structure and Inflation - Cost Increases: Anticipated wage cost increases of about 8%, translating to a 3%-4.5% overall cost increase across operations [15][16] - By-product Credits: Costs are influenced by by-product metal prices and exchange rates, with a weaker dollar potentially increasing local currency costs but also raising metal prices [18][19] Capital Expenditure and Growth - CapEx Plans: Capital expenditures remain similar to the previous year, with a focus on sustaining capital and project capital for La Colorada skarn [20][21] - Project Development: La Colorada skarn is expected to produce 10,000-15,000 tons per day, significantly boosting silver output [24][25] Escobal Mine Update - ILO Convention 169 Process: Ongoing consultations with indigenous groups, with high metal prices potentially facilitating progress towards reopening the Escobal mine, which could produce 22 million ounces annually at low costs [31][33][34] Shareholder Returns - Dividend Increases: Increased dividend by 29% recently, with a commitment to return cash to shareholders through dividends and share buybacks [38][39] - Debt Management: Minimal debt with a focus on maintaining shareholder returns while investing in exploration and sustaining capital [38][40] Asset Portfolio Optimization - Jacobina Mine: Potential for increased production efficiency and capacity, with plans to enhance extraction methods and reduce operational costs [42][43] - Timmins Assets: Exploration of satellite deposits expected to add substantial value, with a focus on optimizing the existing asset portfolio [47] Additional Important Points - Market Conditions: The company is positioned to benefit from rising silver prices, with a strong focus on maintaining low production costs and maximizing margins [10][19] - Long-term Strategy: Emphasis on sustainable growth through exploration, efficient capital allocation, and maintaining a strong balance sheet [38][40]