Pan American Silver — Another quarter of record cash flow generation

Pan American Silver’s (PAAS’s) Q2 production and AISC for both silver and gold were in line with quarterly guidance. Despite some sequential increase in costs and slightly lower sales, stronger commodity prices have led to a 10% increase in EBITDA and record operating cash flow, resulting in a higher net cash position and a 2c increase in its quarterly dividend. We have upgraded our estimates on higher commodity prices and raised our discounted cash flow (DCF)-based valuation to US$38.0/share. The MAG Silver acquisition has been approved by shareholders and is on track to complete in H2.