PAAS Q2 Earnings Call Keeps Silver View, Flags Gold Pressure

PAAS Holds Silver Outlook as Gold Moves Lower

President and CEO Michael Steinmann said attributable silver production of 6.5 million ounces reached the high end of quarterly guidance. The 2026 silver outlook remains 25 million to 27 million ounces.

Gold production of 166,000 ounces missed the quarterly outlook. Steinmann expects full-year output at the low end of 700,000 to 750,000 ounces and Q3 output below the quarterly guidance floor.

First-half silver AISC of $12.64 per ounce was below H1 guidance, while gold AISC of $1,918 was within range. Full-year gold AISC is expected at the high end of $1,700 to $1,850.

Pan American Defends Jacobina's Long-Term Plan

President and CEO Michael Steinmann said Jacobina gold output should finish 10,000 ounces below the low end of its original range. The mine is leaving larger pillars and increasing development after reassessing seismic risk.

A BofA Securities analyst asked whether the changes could affect 2027. Steinmann called the impact short-term and said backfill could support future pillar recovery, and noted Jacobina's reserve life extends into the 2050s.

A TD Cowen analyst asked whether expansion potential remained intact. Steinmann said optimization is proceeding at full speed, including plant upgrades versus a new processing facility.

PAAS Rebalances El Peñón Toward Silver-Rich Ore

Michael Steinmann said El Peñón gold production should finish 10,000 ounces below the original guidance floor because some secondary structures showed weaker continuity. Silver guidance of 3.65 million to 3.95 million ounces remains unchanged.

A CIBC Capital Markets analyst asked why gold was more affected. Steinmann said replacement production shifted toward more silver-rich, less gold-rich areas while further drilling continues on the secondary structures.

Steinmann also said El Niño has mainly complicated access and shift changes in Chile. Current effects are built into the plan, though the company warned of further weather disruption this year.

Pan American Advances Three Growth Priorities

Michael Steinmann highlighted the first cut of the 588 decline at La Colorada Skarn in early August. Material-handling and ventilation recommendations are expected before year-end.

At Timmins, Pan American is advancing a $146 million first phase covering the Bell Creek shaft expansion and exploration drifts. Updated reserves and resources are planned for Q3, followed by a PEA in 2027's first half.

At Escobal, Steinmann said the ILO 169 consultation continues without a completion timeline or restart date. In Q&A, he cited water and blasting vibration among discussion topics.

PAAS Keeps Shareholder Returns on Track

Michael Steinmann said Pan American returned a record $300 million to shareholders in Q2 through dividends and buybacks, while attributable free cash flow reached $344 million. More than seven million shares had been repurchased this year.

A BofA Securities analyst asked about the return program. Steinmann said the framework to distribute about 35% to 40% of cash remains in place, with the exact amount partly dependent on repurchase prices.

CFO Ignacio Couturier said higher profitability and tax true-ups drove revised 2026 cash-tax guidance of $585 million to $635 million. He expects the full-year effective tax rate around the low-30% area.

Pan American Emphasizes Balance and Execution

Michael Steinmann closed by reiterating balance-sheet strength, investment in La Colorada, Jacobina and Timmins, and shareholder returns as priorities. Pan American reported about $3.2 billion of liquidity with the revolving credit facility undrawn.

The call paired confidence in silver and cash returns with tighter gold expectations. Management presented Jacobina's changes as precautionary and temporary while keeping attention on second-half execution.

What the Zacks Signal Says About PAAS

PAAS currently carries a Zacks Rank #4 (Sell), with a Value Score of C, Growth Score of A, Momentum Score of B and VGM Score of A.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks framework treats A and B Style Scores as stronger readings but gives priority to the Zacks Rank.

Accordingly, the favorable Growth, Momentum and VGM scores do not override the Zacks Rank #4 per the methodology. The rank can change as estimates are revised after the just-reported results, making current signal time-sensitive.

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