Pan American Silver Corp. (PAAS:CA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed strong financial performance with record earnings and free cash flow, driven by asset performance and favorable metal prices. The raised guidance for silver production and lowered costs further support a positive outlook. The dividend increase also signals confidence in financial stability. Despite some regulatory risks and lack of detail in management responses, the overall sentiment is positive, expecting a stock price movement between 2% to 8%.
Key Financial Performance
Net earnings (Q4) $452 million, $1.07 per basic share, included $61 million of income from investment in Juanicipio. Record earnings due to strong asset performance and leverage to metal prices.
Net earnings (Full Year) $980 million, $2.56 per basic share. Record earnings due to strong asset performance and leverage to metal prices.
Adjusted earnings (Q4) $470 million, $1.11 per share. Reflects operating strength and leverage to metal prices.
Adjusted earnings (Full Year) $959 million, $2.54 per share. Reflects operating strength and leverage to metal prices.
Attributable free cash flow (Q4) $553 million. Record free cash flow due to strong asset performance and higher metal prices.
Attributable free cash flow (Full Year) $1.2 billion. Record free cash flow due to strong asset performance and higher metal prices.
Cash and short-term investments Increased by $408 million from Q3, totaling $1.3 billion at year-end or $1.4 billion including 44% interest in cash at Juanicipio. Increase due to strong cash flow generation.
Attributable silver production (2025) 22.8 million ounces. Exceeded guidance due to better-than-expected performance at Juanicipio.
Attributable gold production (2025) 742,200 ounces. Within guidance.
Silver segment all-in sustaining costs (Q4) $9.51 per ounce. Lower costs due to better-than-expected performance at Juanicipio.
Silver segment all-in sustaining costs (Full Year) $13.88 per ounce. Below decreased guidance due to better-than-expected performance at Juanicipio.
Gold segment all-in sustaining costs (Q4) $1,699 per ounce. Within guidance but impacted by higher royalties and worker participation expenditures due to increased metal prices.
Gold segment all-in sustaining costs (Full Year) $1,621 per ounce. Within guidance but impacted by higher royalties and worker participation expenditures due to increased metal prices.
Major project investments (2025) $94 million. In line with guidance, focused on advancing projects like La Colorada and Jacobina.
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Operating Highlights
La Colorada Skarn Project: Discovery of multiple high-grade silver zones and expansion of mineral resources led to reevaluation of development plans. A phased approach to development is being considered, focusing on higher grade, lower tonnage, and less capital-intensive initial stages. An updated technical report is expected in Q2 2026.
Jacobina: Investments in 2025 focused on operational reliability and long-term growth initiatives, including plant upgrades, tailings filtration, and paste backfill plant.
Metal Prices Impact: Higher metal prices drove record financial results, including net earnings of $980 million for 2025 and attributable free cash flow of $1.2 billion. The company remains unhedged on gold and silver, benefiting from favorable market conditions.
Silver Market Positioning: Silver production is expected to increase to 25-27 million ounces in 2026, partly due to full-year contributions from Juanicipio and higher silver grades at Cerro Moro.
Cost Management: Silver segment all-in sustaining costs were $13.88 per ounce for 2025, below guidance. Gold segment costs were $1,621 per ounce, within guidance. Costs were impacted by higher royalties and worker participation expenditures.
Operational Execution: Record attributable silver production of 22.8 million ounces and gold production of 742,200 ounces in 2025. Strong execution led to exceeding guidance for silver production.
Capital Allocation: Declared a dividend of $0.18 per share, marking the third consecutive increase. Sustaining capital for 2026 is expected to remain similar to 2025, with additional project capital for key initiatives.
Exploration and Growth: Expanded exploration program and internal growth projects planned for 2026, including updates to La Colorada Skarn and Jacobina optimization study.
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Risk or Challenges
Royalties and Worker Participation Expenditures: Higher royalties and worker participation expenditures due to increased metal prices are impacting costs in both the silver and gold segments. This includes additional royalties at La Colorada and profit-sharing with COMIBOL at San Vicente.
Escobal Mine Suspension: Operations at the Escobal mine remain suspended due to the ongoing ILO 169 consultation process in Guatemala. There is no timeline for completion of the consultation or a restart date, creating uncertainty for future operations.
La Colorada Skarn Project Development: The phased development approach for the La Colorada Skarn project introduces risks related to execution, integration with existing infrastructure, and potential delays in releasing the updated technical report.
Gold Segment Cost Pressures: Gold segment all-in sustaining costs are projected to increase in 2026, driven by higher royalties, worker participation payments, and increased smelting and refining costs due to price participation.
Supply Chain and Capital Allocation: Increased project capital is planned for La Colorada Skarn, Jacobina, and Timmins, which could strain resources and require careful capital allocation to avoid delays or cost overruns.
Regulatory and Compliance Risks: The inspection at Escobal confirmed compliance with the court order, but ongoing regulatory scrutiny and the lack of a timeline for consultation completion pose risks to operational stability.
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Guidance & Outlook
Silver Production Guidance for 2026: Attributable production of 25 million to 27 million ounces, reflecting a year-over-year increase due to the full year contribution from Juanicipio and higher silver grades at Cerro Moro.
Silver Segment All-In Sustaining Costs for 2026: Guidance set at $15.75 to $18.25 per ounce, reflecting higher metal price assumptions and associated costs such as royalties and smelting.
Gold Production Guidance for 2026: Attributable production of 700,000 to 750,000 ounces, with higher grades expected at Timmins and full year production from Juanicipio, offset by lower contributions from Dolores and El Penon.
Gold Segment All-In Sustaining Costs for 2026: Guidance set at $1,700 to $1,850 per ounce, influenced by higher metal price assumptions and related costs.
Sustaining Capital Expenditures for 2026: Expected to be similar to 2025, with additional capital for Juanicipio and increased project capital for La Colorada Skarn, Jacobina, and Timmins.
La Colorada Skarn Project Update: An updated preliminary economic assessment (PEA) is expected in Q2 2026, focusing on a phased development approach to integrate mine plans and infrastructure for higher risk-adjusted returns.
Jacobina Optimization Study: Advancing well, with findings and opportunities to be shared as engineering progresses.
Exploration and Growth Initiatives for 2026: Expanded exploration program and internal growth projects funded by strong free cash flow.
Market Outlook for 2026: Silver market expected to remain in deficit for the sixth consecutive year, with strong metal prices driven by central bank purchases, investor interest, and geopolitical factors.
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Shareholder Return Plan
Dividend Declaration: Declared a dividend of $0.18 per common share, marking the third consecutive dividend increase.
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Key Q&A
Q:How has the experience with the Juanicipio asset been so far, and what has exceeded expectations?
A:The experience with Juanicipio has been great so far, with strong results. The asset has shown strong silver production and low costs. Over the long term, silver grades are expected to reduce while base metal grades increase due to the geology of the deposit.
Q:What updates can be shared about the La Colorada Skarn project and its phased approach?
A:The phased approach has changed the project significantly. Phase 1 will focus on high-grade material with tonnage expected in the 10,000 to 15,000 tonnes range, higher grades, and less capital. This phase will last over a decade before transitioning to bulk minable, base metal-rich production.
Q:Is Cerro Moro a country or asset where more time and resources might be committed?
A:Yes, Cerro Moro is a focus for exploration, with increased capital assigned to exploration programs for 2026. Positive changes in Argentina and ongoing exploration efforts are expected to yield more results.
Q:Have discussions on a potential partner for La Colorada Skarn progressed, and what are the economic terms?
A:Discussions have progressed, but the phased approach has required changes in partnership terms. No specific details or economic terms were shared.
Q:What is the status of the consultation process for Escobal, and has it progressed?
A:Engagement with the Ministry of Energy and Mines continues, with meetings and updates ongoing. The process is progressing, but no significant changes in activity were reported.
Q:How often are Juanicipio dividends paid, and what is the current arrangement?
A:Dividends are paid out of tax-paid retained earnings. A payment of $44 million was made in Q4, and another, higher dividend is expected after Juanicipio files its tax return in Q1.
Q:Is there consideration to repay the senior notes maturing in 2027 early?
A:The company is open to considering early repayment if an opportunity arises, but the bonds are not very liquid. Capital allocation decisions will influence this consideration.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or sufficient details on the following: 1) Specific economic terms or timing for a partnership on La Colorada Skarn. 2) Detailed updates on the consultation process for Escobal. 3) Exact tonnage and cost/benefit analysis for La Colorada Skarn's phased approach.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
American President
American Silver
Communications today
Corporate Communications
End Results
Pan American
President Investor
Relations Corporate
Relations maam
Silver End
Vice President
conference Pan
conference Vice
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period website
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PAAS Transcript
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Pan American Silver Corp. (PAAS:CA) Q4 2025 Earnings Call Transcript
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The earnings call revealed strong financial performance with record earnings and free cash flow, driven by asset performance and favorable metal prices. The raised guidance for silver production and lowered costs further support a positive outlook. The dividend increase also signals confidence in financial stability. Despite some regulatory risks and lack of detail in management responses, the overall sentiment is positive, expecting a stock price movement between 2% to 8%.
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