Why Pan American Silver Stocks Dipped Today

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What happened

The world’s second-largest primary silver mining company reported its first quarter results today, and the market didn’t deliver what it expected. Actions of Pan American money (NASDAQ: PAAS) fell nearly 12% early Thursday and remained down 10% as of 11:20 a.m. EDT.

So what

Pan American owns and operates silver and gold mines located in Mexico, Peru, Canada, Argentina and Bolivia. The company specifically highlighted the continued impacts of the pandemic in South America, as well as problems at its La Colorada mine in Mexico contributing to the decline in quarterly sales and production. Some of that will be recovered in subsequent quarters, but Pan American has also revised its annual silver production for 2021 to between 20.50 and 22 million ounces, from its previous estimate of 22.50 to 24. million ounces.

Pan-American silver mine La Colorada in Mexico. Image source: Pan American money.

Now what

Pan American said impacts from the pandemic, including protocols to protect worker health and safety, affected production at La Colorada in Mexico and its Manantial Espejo mining operation in Argentina. Speaking of the Mexico City site, Pan American President and CEO Michael Steinmann said in a statement: “We have experienced significant inventory build-ups and a stall on a ventilation project that has come to an end. produced during commissioning, which reduced sales and production in the first quarter. “

The company is working to overcome these problems, which it has attributed to “protracted negotiations with a transport supplier and changes in merger contracts.” He expects this inventory to be sold in the second and third quarters of 2021.

While the gold production forecast has not changed for 2021, investors appear to be focused on the damage to silver production and therefore backed away from the stock today.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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