Pan American Silver (PAAS) Q3 2026 earnings review
Pan American Silver profits rise, but it cuts production plans
High metal prices and the acquired Juanicipio mine lifted Pan American Silver's cash flow while its older gold and silver mines fell short of plan. The silver and gold miner grew revenue 18% from a year ago to $1.01 billion, and profit per share excluding one-offs rose 44% to $0.69. However, both gold and silver production missed their third-quarter targets, and by our math the lowered full-year plans leave fourth-quarter output down roughly 16% from a year ago for both metals.
| Silver revenue from mines owned a year ago | +42% reported revenue $1,006M (+18% from a year ago) by our math |
|---|---|
| Profit per share, excluding one-offs | $0.69 +44% from a year ago (reported $0.86) |
| Attributable free cash flow | $377M +47% from a year ago; funded $300M of shareholder returns |
| Full-year gold and silver outlook | Cut gold cut to 660–680 koz; gold unit costs raised $300/oz; silver at low end |
⚖️ Verdict: 🔴 Bearish
The story got worse because operational shortfalls forced the company to abandon its fourth-quarter gold recovery and steer full-year silver output to the bottom of its range. Gold problems spread from Jacobina and El Peñon to Timmins and Shahuindo, pushing full-year gold unit cost targets up by $300 per ounce, while unplanned fourth-quarter downtime at Huaron hit silver. On the positive side, low-cost ounces from Juanicipio cut third-quarter silver unit costs to $11.21 per ounce and helped fund $300 million of dividends and buybacks.
The question now is whether the lower production rates and $2,000-plus gold unit costs are temporary sequencing setbacks or the new baseline for 2027. One view is that trapped gold in Shahuindo's leach pads and Huaron's downtime will reverse early next year, while the other is that Jacobina's seismic limits and Timmins grade dilution permanently cap output and keep unit costs high. The 2027 operating outlook in February will settle it.
🐂 Bull Case
Juanicipio Lifts Silver Profit and Lowers Costs
Pan American Silver bought a 44% stake in the Juanicipio mine in Mexico in September 2025 to add low-cost silver. This quarter included a full three months of the mine, compared with less than one month a year ago. Attributable silver revenue — which includes Pan American's 44% share of Juanicipio — rose 74% from a year ago to $482 million. Sales from silver mines it owned a year ago grew 42% by our math.
- Juanicipio attributable revenue: $134 million, vs $32 million in the short prior-year period
- Juanicipio share of silver segment mine operating profit: $92 million out of $220 million
- Silver Segment AISC (all-in sustaining costs per ounce, net of by-products): $11.21, down $4.22 from a year ago
The Mexican mine carries much lower production costs than the rest of the group, so its full inclusion pulled silver unit costs well below the $15.50–17.75 quarterly plan. That keeps the full-year silver cost target near the bottom of the $15.75–18.25 range even as older mines face higher expenses.
What to watch: fourth-quarter silver unit costs against the full-year range. Because Q4 laps the first full quarter of Juanicipio ownership a year ago, the acquisition tailwind will fade and expose underlying cost trends.
Metal Prices Fund $300M of Cash Returns
Higher gold and silver prices lifted revenue 18% from a year ago to $1,006 million, even as total gold ounces fell. Those prices carry a cost, because price-linked royalties rose by 0.9 percentage points of revenue to $40 million, and high profits keep cash tax bills heavy. Even so, attributable free cash flow — operating cash flow including the 44% Juanicipio share, minus sustaining capital — rose 47% to $377 million.
The Canadian miner returned $300 million to shareholders in the quarter, matching the second quarter's record pace. It spent $224 million to buy back 4.75 million shares at an average price of $47.12, and paid $76 million in dividends before raising the next quarterly payout to $0.185 per share. While the MAG Silver purchase raised diluted share count 9.5% from a year ago, buybacks have reduced period-end shares by 2.3% since December.
What to watch: fourth-quarter share buybacks if metal prices cool. Because the company ties buybacks to free cash flow, any dip in metal prices will test whether it keeps retiring shares at this pace.
🐻 Bear Case
Gold Output Falls and Costs Rise
Three months ago, management lowered its third-quarter gold target by 3,000 to 6,000 ounces, to 172.5–175.5 thousand ounces, and said full-year output would still reach the bottom of its 700–750 thousand ounce plan. Instead, third-quarter gold production fell 8.5% from a year ago to 167.9 thousand ounces, missing even the lowered target.
Pan American blamed the shortfall on "an increase in leach pad inventory at Shahuindo and grade underperformance and higher dilution at Timmins West". It then cut the full-year gold plan to 660–680 thousand ounces, "reflecting lower expected gold production for the remainder of the year at Jacobina, El Peñon, Shahuindo and Timmins". This abandons the fourth-quarter recovery that management had counted on.
- Q3 Gold Segment AISC: $2,281 per ounce, up $584 from a year ago and above the $1,725–1,875 plan
- Full-year Gold Segment AISC outlook: raised to $2,000–2,150 per ounce, from $1,700–1,850
- Contractor costs: 13.8% of reported revenue, up 1.8 percentage points from a year ago
Unit costs jumped "as a result of the lower estimated production and higher costs for development, labour and consumables", while general and administrative overhead fell 1.1 percentage points of revenue on lower share-based pay. What to watch: fourth-quarter gold output against the 167 thousand ounces implied by the new full-year midpoint. Another miss would show that geotechnical limits at Jacobina and grade issues at Timmins are worsening into 2027.
Silver Output Misses on Huaron Downtime
Silver production had been the reliable side of the business, beating quarterly plans in both the first and second quarters. In the third quarter, attributable silver output rose 11.2% from a year ago to 6.07 million ounces, "largely driven by the contribution of the full three months of production from the Juanicipio mine". However, that fell 10.1% short of the 6.50–7.00 million ounce quarterly outlook midpoint.
The miner said the third-quarter miss was "primarily due to mine sequencing at Juanicipio and Cerro Moro". It kept the 25.0–27.0 million ounce full-year range, but steered expectations to the bottom of that range "primarily due to unplanned downtime in Q4 2026 at Huaron, as well as from a higher ratio of gold-to-silver production at Cerro Moro". By our math, hitting 25.0 million ounces leaves 6.03 million ounces for Q4, down 17% from a year ago.
What to watch: fourth-quarter revenue and operating profit at the Huaron mine in Peru. It will show how much the unplanned downtime hurt output on top of the mine's existing accelerated-development cost pressures.
Risks this quarter didn't answer
Several standing operational, tax, weather and project risks were not settled in the third-quarter financial statements and highlights excerpt.
- High cash tax drain: income taxes paid reached $126 million in Q3 (up from $65 million a year ago) and $466 million over nine months, including $100 million of mining and withholding taxes on cash moved from mine sites; Q4 tax payments will test the $585–635 million annual forecast.
- Escobal restart in Guatemala: 313.9 million contingent value rights remain outstanding with no timeline for completing the government's consultation process; any formal date would move this concern.
- La Colorada Skarn in Mexico: design and cost estimates for the ventilation and materials-handling shafts are due by year-end, along with clarity on whether management still seeks a joint-venture partner.
- Jacobina 2027 capital and output in Brazil: after seismic events forced larger pillars and lower output this year, the 2027 outlook will show the cost of paste-backfill plants.
- El Nino weather and mine-level tables: Shahuindo built leach pad inventory in Q3, while mine-by-mine ounce tables and realized metal prices are not in the supplied MD&A excerpt; the full operating tables will show underlying silver volumes outside Juanicipio.
👓 Other Themes
Larder Sale Adds $25M One-Off Gain
On September 15, Pan American sold the Larder gold exploration project in Ontario — which it acquired in last year's MAG Silver deal — to Cadillac Mines for 15 million shares valued at $77 million. The sale created a $25 million pre-tax gain that lifted reported net earnings to $357 million ($0.86 per share). Excluding one-offs, profit was $287 million ($0.69 per share), up 59% from $180 million a year ago.
💲 Other KPIs
Total inventories rose 10.5% from $640 million in December 2025, up from $699 million last quarter. Heap leach and in-process inventory — ore stacked on pads waiting for metal recovery — drove the build, rising 15.4% since December to $278 million as gold sat in leach pads at Shahuindo, tying up $13 million of working capital in Q3.
Cash of $1,510 million plus $190 million of short-term investments held steady near last quarter's $1,705 million, up from $1,319 million at year-end. Total debt including leases stood at $844 million, while an July amendment doubled the undrawn revolving credit line to $1,500 million, giving the miner ample liquidity to self-fund its projects.
Spending on mineral properties, plant and equipment ($120 million) plus equipment lease payments ($14 million) rose 27.6% from $105 million a year ago, reaching 13.3% of reported revenue. Nine-month capital spending reached $366 million, up 41.9% from $258 million a year ago as work ramped up on the La Colorada Skarn access ramp and Timmins shaft.
🔮 Guidance
Cut. The new plan lowers full-year gold output by 30 thousand ounces at the bottom of the range, to a 9.7% decline from 2025 at the middle of the range. By our math, that leaves 167 thousand ounces for Q4, down 15.6% from a year ago and scrapping the previous plan for a ~191 thousand ounce fourth-quarter surge.
Cut (costs raised). The company raised its full-year gold unit cost forecast by $300 per ounce at both ends, pointing to a 28.0% cost increase over 2025 at the middle of the range. By our math, the new midpoint implies fourth-quarter costs of about $2,183 per ounce, down slightly from $2,281 in Q3 because of lower output and higher labour and development bills.
Cut to the low end. While the formal range is unchanged, steering to 25.0 million ounces lowers the effective target by 1.0 million ounces from the middle of the range, to 9.5% growth for the year. By our math, 25.0 million ounces leaves 6.03 million ounces for Q4, down 17.2% from last year's fourth quarter due to unplanned downtime at Huaron.
Raised (costs lowered to the low end). Management now expects full-year silver unit costs near the bottom of the $15.75–18.25 range after Q3 printed at $11.21 per ounce and H1 averaged $12.64. Reaching $15.75 for the full year would still allow fourth-quarter unit costs to rise above $20 per ounce on lower Cerro Moro silver volume.
Unchanged. The miner kept its full-year targets for zinc, lead and copper output as well as sustaining capital expenditures across its operating mines.
❓ Key Questions
What were Q3 silver ounces outside Juanicipio and realized prices?
The supplied MD&A excerpt stops at page 3, omitting the mine-by-mine production tables and realized metal prices. Those figures are needed to check whether silver volume at mines owned a year ago is still shrinking.
How long is the Q4 unplanned downtime at Huaron?
Unplanned fourth-quarter downtime at Huaron pushed the full-year silver target to the bottom of its range. Investors need to know the cause of the outage, how many ounces it removes, and whether it spills into 2027.
Do the Q3 gold issues change the 2027 production baseline?
Management cut 2026 gold output across four mines — Jacobina, El Peñon, Shahuindo and Timmins — and raised unit costs by $300 per ounce. The question for 2027 is whether grade dilution at Timmins West and seismic pillar limits at Jacobina reset annual gold output below 700 thousand ounces.
What is the shaft cost and partner plan for Skarn?
Engineering and cost estimates for the La Colorada Skarn materials-handling and ventilation shafts were scheduled for Board review in the second half of 2026, alongside any decision on bringing in a development partner.