Silver AISC at Multi-Year Low for PAAS: Can It Sustain These Levels?

Pan American Silver Corp. PAAS impressed with notable declines in costs for its silver segment in the first quarter of 2025. The segment’s All-in Sustaining Costs (AISC) per silver ounce came in at $13.94, 16% lower than the year-ago quarter and significantly below the company’s provided guidance of $21.00-$22.25. Notably, this marked the lowest AISC for PAAS’ silver segment since the first quarter of 2022, when it was reported at $13.41.

The year-over-year improvement was driven by cost reductions across key mines. At La Colorada, AISC fell 29% year over year to $19.72 per ounce. This was enabled by improved ventilation conditions, which lowered mining costs per ton and increased silver and by-product output.
 
The Cerro Moro mine’s AISC came in at a negative $4.40 per ounce against the positive $6.43 in the first quarter of 2024. This was due to higher gold by-product credits resulting from a higher ratio of gold to silver produced and increased gold prices. At the Huaron mine, AISC was down 6% to $13.09 per ounce on lower treatment and refining charges attributable to favorable commercial concentrate terms, as well as higher by-product credits from favorable zinc and lead grades from planned mine sequencing.

For 2025, PAAS expects the silver segment’s AISC at $16.25 – $18.25 per ounce, suggesting a solid improvement from the AISC of $18.98 per ounce in 2024. This outlook reflects continued cost benefits from the new ventilation infrastructure at La Colorada and higher gold by-product credits from Cerro Moro. 

Further cost reduction for the silver segment could be on the horizon, with PAAS’ planned acquisition of MAG Silver Corp. MAG. MAG Silver owns a 44% stake in the Juanicipio project, which is the world’s largest-scale, highest-grade and lowest-cost primary silver mine. Juanicipio AISC is forecasted to range between $6.00 and $8.00 per silver ounce in 2025. Considering that Pan American Silver expects to close the MAG Silver deal in the second half of 2025, it could lower its expected costs even further.  

PAAS’ peer, First Majestic Silver AG, reported an 11% year-over-year decline in AISC per silver equivalent ounce to $19.24 in the first quarter of 2025. The improvement was primarily driven by the acquisition of Cerro Los Gatos on Jan. 16, 2025, which added 2.3 million silver equivalent ounces (AgEq) of production. Cerro Los Gatos posted an AISC of $13.07 per AgEq ounce—the lowest among First Majestic’s four producing mines. 

Additionally, operational improvements and increased throughput at the San Dimas mine contributed to the company’s lower cost structure. An 11% rise in AgEq production at the site enhanced overall efficiency and helped reduce the consolidated AISC for First Majestic Silver during the quarter.

PAAS’ Price Performance, Valuation & Estimates

Year to date, PAAS shares have gained 41.8%, outpacing the industry's 31.3% growth. In comparison, the Basic Materials sector has risen 9%, while the S&P 500 has moved up 2.9%.

PAAS is currently trading at a forward 12-month price-to-earnings multiple of 17.10X compared with the industry average of 18.02X.

The consensus mark for 2025 earnings is pegged at $1.52 per share, indicating a year-over-year surge of 92.4%. The estimate for 2026 of $1.93 indicates an increase of 27.2%.

The Zacks Consensus Estimate for Pan American Silver’s earnings for 2025 has moved up 15.2% over the past 60 days. The same for 2026 has moved up 0.52%.

PAAS stock 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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