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

Following our short update on the La Colorada Skarn preliminary economic assessment (PEA), we are revising our valuation of Pan American Silver (PAAS) to incorporate the Skarn’s risked NPV. We have also reflected up-to-date commodity prices and lower WACC thanks to the reduction in bond yields. Overall, our valuation of PAAS increases from US$22.7 to US$23.5/share. While the stock has recently been propped up by the strong gold price, we see the upcoming publication of the FY24 outlook and FY23 results as potential additional catalysts for the shares.

Following our short update on the La Colorada Skarn preliminary economic assessment (PEA), we are revising our valuation of Pan American Silver (PAAS) to incorporate the Skarn’s risked NPV. We have also reflected up-to-date commodity prices and lower WACC thanks to the reduction in bond yields. Overall, our valuation of PAAS increases from US$22.7 to US$23.5/share. While the stock has recently been propped up by the strong gold price, we see the upcoming publication of the FY24 outlook and FY23 results as potential additional catalysts for the shares.

Pan American Silver - Adjusting valuation on Skarn

Pan American Silver (PAAS) released a preliminary economic assessment (PEA) of the La Colorada Skarn project, confirming its potential to become a large-scale operation producing an average 17.2Moz of silver per annum over the first 10 years of its 17-year mine life. At a base case throughput rate of 50ktpd, the company estimates the project’s post-tax NPV8 at US$1.1bn, with an IRR of 14% and a payback period of 4.3 years. We intend to update our valuation shortly to incorporate the PEA and the prevailing stronger than expected gold and silver prices.

Pan American Silver (PAAS) released a preliminary economic assessment (PEA) of the La Colorada Skarn project, confirming its potential to become a large-scale operation producing an average 17.2Moz of silver per annum over the first 10 years of its 17-year mine life. At a base case throughput rate of 50ktpd, the company estimates the project’s post-tax NPV8 at US$1.1bn, with an IRR of 14% and a payback period of 4.3 years. We intend to update our valuation shortly to incorporate the PEA and the prevailing stronger than expected gold and silver prices. 

Pan American Silver - Skarn PEA confirms its early potential

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>There are no constituent changes for 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> in December, but there are float and capping changes for some stocks.</li>
<li>Estimated one-way turnover is 2.8% and that leads to a one-way trade of US$122m.</li>
<li>There are 13 stocks with over US$5m to trade from passive trackers, though the impact is not very big on the stocks.</li>
</ul>


There are no constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December, but there are float and capping changes for some stocks.
Estimated one-way turnover is 2.8% and that leads to a one-way trade of US$122m.
There are 13 stocks with over US$5m to trade from passive trackers, though the impact is not very big on the stocks.


MVIS Global Junior Gold Miners Index Rebalance: Few Large Weight Changes

Pan American’s Q3 results did not bring any major surprises at the group level, with lower EBITDA of US$159m, down 22% q-o-q, mainly a result of the continuing underperformance of La Colorada and lower-than-expected gold grades at El Penon. Yet the company reported flat (quarter-on-quarter) net operating cash flow of US$115m and broadly reiterated its FY23 operating guidance. We have revised downwards our near-term earnings estimates on the back of the results. However, our valuation has increased from US$22.0/share to US$22.7 due to updated longer-term gold price expectations. Although the shares have reacted negatively to the results, we expect a stronger Q4, while the commodity prices remain supportive against the backdrop of higher geopolitical risks.

Pan American’s Q3 results did not bring any major surprises at the group level, with lower EBITDA of US$159m, down 22% q-o-q, mainly a result of the continuing underperformance of La Colorada and lower-than-expected gold grades at El Penon. Yet the company reported flat (quarter-on-quarter) net operating cash flow of US$115m and broadly reiterated its FY23 operating guidance. We have revised downwards our near-term earnings estimates on the back of the results. However, our valuation has increased from US$22.0/share to US$22.7 due to updated longer-term gold price expectations. Although the shares have reacted negatively to the results, we expect a stronger Q4, while the commodity prices remain supportive against the backdrop of higher geopolitical risks. 

Pan American Silver - Q323: La Colorada continues to underperform

Pan American Silver (PAAS) has announced that it will begin restarting operations at the La Colorada mine on 16 October. Operating activities at the project have temporarily been suspended since 5 October due to security concerns at the mine site following the concentrate robbery. The company does not expect any impact on the FY23 production and cost guidance from the suspension of production. We maintain our estimates and valuation.

Pan American Silver (PAAS) has announced that it will begin restarting operations at the La Colorada mine on 16 October. Operating activities at the project have temporarily been suspended since 5 October due to security concerns at the mine site following the concentrate robbery. The company does not expect any impact on the FY23 production and cost guidance from the suspension of production. We maintain our estimates and valuation.

Pan American Silver - La Colorada to restart after suspension

Canada

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 CN)

Pan American Silver - Adjusting valuation on Skarn

Following our short update on the La Colorada Skarn preliminary economic assessment (PEA), we are revising our valuation of Pan American Silver...

Edison Investment Research

Pan American Silver - Skarn PEA confirms its early potential

Pan American Silver (PAAS) released a preliminary economic assessment (PEA) of the La Colorada Skarn project, confirming its potential to become a...

Edison Investment Research

MVIS Global Junior Gold Miners Index Rebalance: Few Large Weight Changes

There are no constituent changes for the stocks, but there are a lot of float changes and capping changes. Estimated one-way turnover is 2.8% and...

Brian Freitas

Pan American Silver - Q323: La Colorada continues to underperform

Pan American’s Q3 results did not bring any major surprises at the group level, with lower EBITDA of US$159m, down 22% q-o-q, mainly a result of...

Edison Investment Research

Pan American Silver - La Colorada to restart after suspension

Pan American Silver (PAAS) has announced that it will begin restarting operations at the La Colorada mine on 16 October. Operating activities at...

Edison Investment Research

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