If silver reaches $100 per oz and gold reaches $3,000 per oz

Overview of Pan American Silver

Current Position:

• Revenue Sources: 65% from gold, 20% from silver, and the rest from base metals.
• Resources: Approximately 1 billion oz of silver and 26 million oz of gold.
• 2024 Production Forecast: 22 million oz of silver and 925,000 oz of gold.
• Debt: $800 million with $330 million in cash.

Key Projects:

• Escobal Mine (Guatemala): Potentially adds 20 million oz of annual silver production.
• Navidad Project (Argentina): Contains 600 million oz of silver, but permitting challenges remain.

Financial Projections at Higher Metal Prices

1. Free Cash Flow Projections:
   • At $100 silver and $3,000 gold:
     • Assumed Production:
       • Silver: 22 million oz + 20 million oz (Escobal) = 42 million oz
       • Gold: 925,000 oz
     • Revenue Calculation: Silver Revenue=42,000,000 oz×100 USD/oz=4,200,000,000 USD\text{Silver Revenue} = 42,000,000 \text{ oz} \times 100 \text{ USD/oz} = 4,200,000,000 \text{ USD}Silver Revenue=42,000,000 oz×100 USD/oz=4,200,000,000 USD Gold Revenue=925,000 oz×3,000 USD/oz=2,775,000,000 USD\text{Gold Revenue} = 925,000 \text{ oz} \times 3,000 \text{ USD/oz} = 2,775,000,000 \text{ USD}Gold Revenue=925,000 oz×3,000 USD/oz=2,775,000,000 USD Total Revenue=4,200,000,000+2,775,000,000=6,975,000,000 USD\text{Total Revenue} = 4,200,000,000 + 2,775,000,000 = 6,975,000,000 \text{ USD}Total Revenue=4,200,000,000+2,775,000,000=6,975,000,000 USD
2. Cost Projections:
   • Assumed AISC:
     • Let’s assume a lower all-in cost due to Escobal’s low cash costs. Let’s estimate AISC at around $18 per oz for silver and $1,700 per oz for gold due to operational efficiencies.
     Silver Costs=42,000,000 oz×18 USD/oz=756,000,000 USD\text{Silver Costs} = 42,000,000 \text{ oz} \times 18 \text{ USD/oz} = 756,000,000 \text{ USD}Silver Costs=42,000,000 oz×18 USD/oz=756,000,000 USD Gold Costs=925,000 oz×1,700 USD/oz=1,572,500,000 USD\text{Gold Costs} = 925,000 \text{ oz} \times 1,700 \text{ USD/oz} = 1,572,500,000 \text{ USD}Gold Costs=925,000 oz×1,700 USD/oz=1,572,500,000 USD Total Costs=756,000,000+1,572,500,000=2,328,500,000 USD\text{Total Costs} = 756,000,000 + 1,572,500,000 = 2,328,500,000 \text{ USD}Total Costs=756,000,000+1,572,500,000=2,328,500,000 USD
3. Free Cash Flow Calculation:Free Cash Flow=Total Revenue−Total Costs=6,975,000,000−2,328,500,000=4,646,500,000 USD\text{Free Cash Flow} = \text{Total Revenue} - \text{Total Costs} = 6,975,000,000 - 2,328,500,000 = 4,646,500,000 \text{ USD}Free Cash Flow=Total Revenue−Total Costs=6,975,000,000−2,328,500,000=4,646,500,000 USD
4. Market Cap Valuation:
   • Using a P/E or Cash Flow Multiple: Assuming a conservative multiple of 15.
   Market Cap=Free Cash Flow×Multiple=4,646,500,000×15=69,697,500,000 USD\text{Market Cap} = \text{Free Cash Flow} \times \text{Multiple} = 4,646,500,000 \times 15 = 69,697,500,000 \text{ USD}Market Cap=Free Cash Flow×Multiple=4,646,500,000×15=69,697,500,000 USD
5. Stock Price Calculation:
   • Assuming approximately 210 million shares outstanding (this may vary with any new issues).
   Stock Price=Market CapShares Outstanding=69,697,500,000210,000,000≈331.9 USD/share\text{Stock Price} = \frac{\text{Market Cap}}{\text{Shares Outstanding}} = \frac{69,697,500,000}{210,000,000} \approx 331.9 \text{ USD/share}Stock Price=Shares OutstandingMarket Cap​=210,000,00069,697,500,000​≈331.9 USD/share

Conclusion

If silver reaches $100 per oz and gold reaches $3,000 per oz, Pan American Silver could potentially see its stock price rise to around $331.90 per share. This projection reflects significant upside potential given the strong leverage to metal prices and the company’s existing production capacity, along with the future potential of the Escobal and Navidad projects.