Pan American Silver has reported a sharp lift in third quarter earnings, with net earnings of US$357 million on silver production of 6.07 million ounces, even as the company trimmed its gold output guidance and flagged repairs at a key Peruvian mill. The result adds to a run of Q3 updates from global producers, following First Majestic’s softer quarter and Fresnillo’s lower grades.
Margins do the heavy lifting
Pan American realised an average silver price of US$63.74 per ounce in the quarter, compared with US$39.08 a year earlier. Revenue rose to US$1.0 billion, adjusted earnings reached US$287 million, and silver segment all-in sustaining costs fell to US$11.21 per ounce from US$15.43. Attributable free cash flow was US$377 million, and the board declared a quarterly dividend of US$0.185 per share. Producers with this kind of cost position are capturing most of the benefit of higher prices, a theme tracked closely by the Silver Institute.
Guidance pressure points
Not everything went to plan. Silver production guidance of 25 to 27 million ounces is now expected at the low end, due to foundation repairs at the Huaron mill and a higher gold to silver ratio at Cerro Moro. Gold output guidance was cut to 660,000 to 680,000 ounces from 700,000 to 750,000, and gold segment costs were lifted to US$2,000 to US$2,150 per ounce. Remediation at Jacobina in Brazil and the lack of a restart date for Guatemala’s Escobal mine remain open issues. On the growth side, the La Colorada Skarn decline contractor has mobilised and Juanicipio’s conveyor is complete.
What it means for ASX investors
Few ASX names produce silver at this scale, so local exposure usually comes through developers and explorers. Projects such as Bowdens Silver and the drilling push at Investigator Silver’s Paris project are leveraged to the same price strength that is lifting Pan American’s margins. The quarter is also a reminder that operating setbacks, from mill repairs to regulatory inspections, can offset price gains. Investors can follow benchmark pricing through the London Bullion Market Association and browse more on our silver news hub.
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