Pan American Silver NYSE: PAAS reported second-quarter 2026 attributable free cash flow of $344 million and returned a record $300 million to shareholders through share repurchases and dividends, while maintaining its full-year operating outlook for silver and gold production and costs.
President and CEO Michael Steinmann said the company produced 6.5 million attributable ounces of silver during the quarter, at the high end of its quarterly guidance range, supported by performance at La Colorada and Juanicipio. The company reaffirmed its 2026 silver production guidance of 25 million to 27 million ounces.
Silver segment all-in sustaining costs were $17.80 per ounce in the second quarter. Steinmann attributed the cost level primarily to higher-cost ounces from an inventory drawdown at La Colorada, higher royalties associated with mining on an adjacent third-party concession, unfavorable currency movements and higher labor-related costs.
Gold outlook shifts toward lower end of guidance
Attributable gold production totaled about 166,000 ounces in the second quarter, below the company’s quarterly outlook. Pan American expects the quarter to be its weakest for gold output in 2026 and said production should be more heavily weighted toward the fourth quarter.
While the company reaffirmed its full-year gold guidance range of 700,000 to 750,000 ounces, it now expects to finish at the low end of that range. It also reduced its third-quarter gold outlook to approximately 3,000 to 6,000 ounces below the lower end of its previously issued quarterly range of 178,500 to 192,000 ounces.
The revised near-term outlook reflects lower-than-expected production at Jacobina and El Peñón. At Jacobina, Pan American now expects annual gold production to be about 10,000 ounces below the low end of its original guidance range of 181,000 to 191,000 ounces.
Steinmann said the company has responded to seismic activity at Jacobina by leaving larger pillars, reducing mining rates in some higher-grade areas and increasing development to open additional mining zones. He said the seismic events had not caused injuries or infrastructure damage, and characterized the production impact as a postponement rather than a loss of reserves.
The company is also evaluating alternative mining approaches, including Avoca-type methods with waste-rock and cemented backfill, as part of an optimization program at Jacobina. Process plant upgrades, including new carbon-in-pulp tanks and electrical control systems, are expected to be commissioned this year. Pan American is studying whether to upgrade existing processing circuits or construct a new processing facility for the long-life asset.
At El Peñón, silver production remains expected to fall within its original annual guidance range of 3.65 million to 3.95 million ounces. However, gold production is now expected to be about 10,000 ounces below the low end of the prior 104,000-to-111,000-ounce range. Steinmann said lower continuity in certain secondary structures led the company to replace planned material with ore from more silver-rich and less gold-rich areas.
Financial results and liquidity
Revenue was $1.1 billion in the second quarter, while attributable revenue including Pan American’s 44% interest in Juanicipio was $1.3 billion. Net earnings were $305 million, or $0.72 per share, including a $179 million tax expense. Adjusted earnings were $0.73 per share.
Cash flow from operations was $320 million after $205 million in income taxes paid and $17 million used for working capital. Attributable cash flow from operations, including Juanicipio, was $418 million.
The company raised its 2026 guidance for income taxes paid to between $585 million and $635 million, citing higher profitability from metal prices and the settlement of prior-year tax obligations. CFO Ignacio Couturier said Pan American expects its full-year effective tax rate to remain in the low-30% range, though quarterly rates may vary because of adjustments and true-ups.
Pan American ended the quarter with $1.8 billion in cash and short-term investments, including cash attributable to Juanicipio. In July, it renewed and amended its five-year senior unsecured revolving credit facility, doubling its size to $1.5 billion and adding a $750 million accordion feature. The facility was undrawn, bringing total available liquidity to about $3.2 billion.
Projects and shareholder returns
At La Colorada, Pan American reached the first cut of the 588 decline in early August, advancing access to the skarn deposit. Engineering work on the material-handling system and ventilation shaft is continuing, with a design, cost estimate, schedule and recommendation expected before year-end.
At Timmins, the company is advancing the first phase of its Timmins Camp project, including the Bell Creek shaft extension and exploration drifts targeting the Vogel and Samson deposits. Pan American expects to issue updated mineral resource and reserve estimates in September and a preliminary economic assessment for the Timmins Camp project in the first half of 2027.
The company said the ILO Convention 169 consultation process for Escobal remains underway, including government and Xinka representative meetings during the quarter. Steinmann said there is no timeline for completing the consultation and no restart date for the mine.
- Pan American repurchased more than 7 million shares under its normal course issuer bid through 2026 to date.
- The company declared a second-quarter dividend of $0.184 per common share.
- Steinmann said the company remains on track with its shareholder-return framework, which targets distributing approximately 35% to 40% of cash to shareholders through dividends and buybacks.
Pan American also said weather associated with El Niño had disrupted road access and personnel transportation in Chile and affected operations in Argentina, though Steinmann said the impacts had not been material to operations so far. The company said it is preparing sites for potential additional rainfall while prioritizing safety.
About Pan American Silver (NYSE:PAAS)
Pan American Silver Corp. NYSE: PAAS is a Vancouver-based mining company and one of the world’s largest primary silver producers. The company’s core activities encompass the exploration, development, extraction and processing of silver, with significant by-product production of gold, zinc and lead. Pan American Silver maintains a vertically integrated operating model, covering the full mining value chain from resource discovery through to refined metal production.
With a geographic footprint concentrated across the Americas, Pan American Silver operates multiple mines in Mexico, Peru, Argentina and Bolivia, and is advancing several development and exploration projects in Chile and Ecuador.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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