Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

Weaker commodity prices and unabating cost pressures continued to supress Pan American Silver’s (PAAS’s) performance in Q322. However, at the top line, these were largely offset by higher gold sales, while lower inventory adjustments and other operating costs resulted in a 90% q-o-q boost in EBITDA. That said, the Q3 results were clearly overshadowed by PAAS’s joint bid to acquire Yamana Gold for c US$4.8bn. Contingent on shareholder approvals, the deal will be transformational for PAAS, adding four large-scale and low-cost producing silver and gold projects in Latin America and more than doubling its annual EBITDA.

Weaker commodity prices and unabating cost pressures continued to supress Pan American Silver’s (PAAS’s) performance in Q322. However, at the top line, these were largely offset by higher gold sales, while lower inventory adjustments and other operating costs resulted in a 90% q-o-q boost in EBITDA. That said, the Q3 results were clearly overshadowed by PAAS’s joint bid to acquire Yamana Gold for c US$4.8bn. Contingent on shareholder approvals, the deal will be transformational for PAAS, adding four large-scale and low-cost producing silver and gold projects in Latin America and more than doubling its annual EBITDA. 

Pan American Silver - Yamana bid overshadows Q322 results

Pan American Silver (PAAS) has upgraded its total mineral resources estimate at the La Colorada Skarn project to 227Moz in contained Ag from 141Moz (albeit at a lower silver grade), promoting a significant part of the resource into the indicated category. Despite the slight net positive effect of the resource upgrade on the valuation, we maintain our combined value of PAAS at US$27.5/share against the current backdrop of heightened commodity price volatility. While the silver price appears well supported at the current levels, gold remains under pressure due to the current environment of aggressive interest rate hikes.

Pan American Silver (PAAS) has upgraded its total mineral resources estimate at the La Colorada Skarn project to 227Moz in contained Ag from 141Moz (albeit at a lower silver grade), promoting a significant part of the resource into the indicated category. Despite the slight net positive effect of the resource upgrade on the valuation, we maintain our combined value of PAAS at US$27.5/share against the current backdrop of heightened commodity price volatility. While the silver price appears well supported at the current levels, gold remains under pressure due to the current environment of aggressive interest rate hikes.

Pan American Silver - Significant resources upgrade at Skarn

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/great-panther-mining-ltd" target="_blank" data-smartkarma-citation="entities:27466:1" rel="noopener">Great Panther (GPL US)</a> is a deletion from the <a href="https://www.smartkarma.com/entities/vaneck-vectors-junior-gold-miners-etf" target="_blank" data-smartkarma-citation="entities:32845:1" rel="noopener">VanEck Vectors Junior Gold Miners ETF (GDXJ US)</a>. There are a lot of float changes that will result in passive flows.</li>
<li>One way turnover is estimated at 3.4% and will result in a one-way trade of US$106m at the September rebalance.</li>
<li>Most index constituents have traded poorly over the last few months and the stocks with passive inflows could outperform their peers in the short-term.</li>
</ul>



Great Panther (GPL US) is a deletion from the VanEck Vectors Junior Gold Miners ETF (GDXJ US). There are a lot of float changes that will result in passive flows.
One way turnover is estimated at 3.4% and will result in a one-way trade of US$106m at the September rebalance.
Most index constituents have traded poorly over the last few months and the stocks with passive inflows could outperform their peers in the short-term.


MVIS Global Junior Gold Miners Index Rebalance: One Delete & Plenty of Float Changes

PAAS reported mixed Q222 results that were heavily affected by one-off items stemming from the grade and production underperformance at Dolores. As a result, the company incurred US$155m in non-cash impairments and inventory revaluation charges. FY22 production is now guided towards the lower end of the original expectations and the gold segment cash costs at the top end. On a positive note, the annual mineral resources update revealed good resource replacement rates in the silver segment, and the company announced that Escobal is moving into the next stage of the ILO 169 consultation process. We have revised down our estimates, lowering our valuation to US$27.5/share.

PAAS reported mixed Q222 results that were heavily affected by one-off items stemming from the grade and production underperformance at Dolores. As a result, the company incurred US$155m in non-cash impairments and inventory revaluation charges. FY22 production is now guided towards the lower end of the original expectations and the gold segment cash costs at the top end. On a positive note, the annual mineral resources update revealed good resource replacement rates in the silver segment, and the company announced that Escobal is moving into the next stage of the ILO 169 consultation process. We have revised down our estimates, lowering our valuation to US$27.5/share. 

Pan American Silver - Mixed Q2 results, Escobal progress

Pan American Silver (PAAS) has announced the results of additional infill and exploration drilling at the La Colorada Skarn project. The latest data are based on 22 new drill holes totalling c 18,000m and contain a number of high-grade intercepts, providing a further indication of the project’s scale and potential. The company plans to release an update on the project’s mineral resource estimate in Q322.

Pan American Silver (PAAS) has announced the results of additional infill and exploration drilling at the La Colorada Skarn project. The latest data are based on 22 new drill holes totalling c 18,000m and contain a number of high-grade intercepts, providing a further indication of the project’s scale and potential. The company plans to release an update on the project’s mineral resource estimate in Q322.

Pan American Silver - Positive drill results at La Colorada Skarn

United States

Pan American Silver Corporation is a primary silver producer.   The Company has seven operating mines in Mexico,  Peru, Argentina and Bolivia and several development projects in USA,  Mexico, Peru and Argentina.

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Pan American Silver (PAAS US)

Pan American Silver - Yamana bid overshadows Q322 results

Weaker commodity prices and unabating cost pressures continued to supress Pan American Silver’s (PAAS’s) performance in Q322. However, at the top...

Edison Investment Research

Pan American Silver - Significant resources upgrade at Skarn

Pan American Silver (PAAS) has upgraded its total mineral resources estimate at the La Colorada Skarn project to 227Moz in contained Ag from 141Moz...

Edison Investment Research

MVIS Global Junior Gold Miners Index Rebalance: One Delete & Plenty of Float Changes

There is only one deletion but there are a lot of stocks with free float changes. Estimated one way turnover is 3.4% resulting in a one-way trade...

Brian Freitas

Pan American Silver - Mixed Q2 results, Escobal progress

PAAS reported mixed Q222 results that were heavily affected by one-off items stemming from the grade and production underperformance at Dolores. As...

Edison Investment Research

Pan American Silver - Positive drill results at La Colorada Skarn

Pan American Silver (PAAS) has announced the results of additional infill and exploration drilling at the La Colorada Skarn project. The latest...

Edison Investment Research

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