Is La Colorada Mine Set to Become Major Growth Driver for PAAS?

Pan American Silver Corp. PAAS invested $94 million of project capital in 2025 to advance several major projects, among which the most notable is the La Colorada mine in Mexico. The company is reevaluating the development plans for the Skarn project since the discovery of high-grade silver zones and increased mineral resources at La Colorada.

Pan American Silver aims to combine the mine plans and infrastructure of the La Colorada vein mine with the Skarn project through a phased development approach. With this approach, the company can focus on high-grade, low-tonnage and less capital-intensive initial stages, while targeting lower-grade material in a future expansion.

The company is moving ahead with initial mine infrastructure early works mobilization at the Skarn project while simultaneously advancing drilling and underground development in Candelaria’s deep east sections. On Thursday, Pan American Silver reported continued exceptional results from exploration at La Colorada. Drilling results highlighted the discovery of at least four new high-grade veins in the southeastern Candelaria zone. Exploration activities revealed high-grade structures with 40% of drill holes exceeding 1,000 g/t silver, signaling a clear opportunity to expand the project’s total resource base.

Pan American Silver expects 2026 total silver production of 25-27 million ounces, with a stronger performance anticipated in the second half of the year. Increased contributions from La Colorada will be a primary driver of this growth.

Growth Projects of Pan American Silver’s Peers

Avino Silver & Gold Mines Ltd. ASM is benefiting from its strategy of advancing production, development and exploration projects in Mexico. Avino Silver’s La Preciosa project was reclassified from exploration to development in April 2025 after demonstrating technical feasibility and commercial viability. During 2025, La Preciosa contributed initial mill feed and drilling returned high-grade results.

Hecla Mining Company’s HL Polaris Exploration Project in Mineral County, NV, received approval to begin exploration activities in 2026. Early drilling at  Hecla Mining’s Midas Project in Nevada has delivered encouraging results. The company’s Lucky Friday and Keno Hill project also delivered an improved performance in 2025.

PAAS’ Price Performance, Valuation & Estimates

In a year, PAAS shares have skyrocketed 158.3% compared with the industry's 212.3% whopping growth. In comparison, the Basic Materials sector has risen 47.5%, whereas the S&P 500 has moved up 24.6%.

PAAS is currently trading at a forward 12-month price-to-earnings multiple of 14.88X compared with the industry average of 18.15X.

In comparison, Avino Silver and Hecla Mining are trading at a higher 27.78X and 35.34X, respectively. 

The consensus mark for 2026 earnings is pegged at $3.97 per share, indicating a year-over-year jump of 56.3%. The estimate for 2027 of $4.14 suggests an increase of 4.3%. The Zacks Consensus Estimate for Pan American Silver’s earnings for 2026 has moved up 8.2% over the past 60 days and the same for 2027 has risen 4%.

PAAS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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