Pan American Silver (PAAS): Low-Cost Ounces, Global Silver Upside

Silver at a Crossroads in 2025

Precious metals, especially gold, have historically held a special place in the monetary system, as the foundation of “softer” forms of money like non-precious metal coins, paper bills, and digital ledgers.

This role weakened with the end of dollar convertibility in 1971 and further with the emergence of credible alternatives, such as Bitcoin.

This has, however, not stopped gold from outperforming almost every other investment in the past few years, in response to the explosion of international tensions following the start of the war in Ukraine and ever-growing US debts.

Source: GoldPrice

A companion to gold as a “hard currency” has always been silver, with the grey metal equally used for coinage over time.

However, concerns about inflation, geopolitics, and monetary disorder are only part of the story with silver.

What was historically a metal mostly used in jewelry and coinage is today a crucial industrial metal, notably for electronics, and the cornerstone of the green energy revolution, with solar panel production now a major driver of silver demand.

Another part of the story is that production of fresh silver from mining is struggling to keep up with demand, depleting inventory over time.

Lastly, since the end of the direct monetary role of gold and silver in the global monetary system, the silver-to-gold ratio has fluctuated, with silver becoming less precious than gold over time. If silver is again used for investment purposes, this could change.

Source: Aberdeen Investments

While not as widely discussed or valuable as gold, silver may have as much, if not more, upside potential than the yellow metal.

Silver Demand Beyond Precious Metals

While a surge in demand for investment purposes is likely the cause of silver prices rising in 2025, it is also increasingly a crucial metal for industrial purposes as the world electrifies.

As silver is the best of all chemical elements in terms of thermal and electrical conductivity, it is a crucial material for solar panels, batteries, inverters, and other electrical devices, such as fuses and relays.

Electronics, corrosion-resistant soldering, medical bandages, and disinfectants make up the rest of the demand.

Source: Visual Capitalist

So even in the case of no re-monetization of silver ever happening, the investment case for this metal can be made most solely from growing demand from electrification & digitalization, while production stagnates and already fails to match the demand.

Source: Mining.com

How to Invest in Silver Miners (Risks & Upside)

Investors interested in betting on silver can look at silver mining companies. As silver miners make most of their money from the differential between production costs and spot price, sufficiently rising silver prices can double, triple, or more their operating margins.

As a result, silver miners have a “built-in leverage” included in their business model, creating both more risks and opportunities from increased volatility, without the usual trappings of leveraged bets, such as cash reserves and margin calls.

Silver deposits are unequally distributed on Earth, with the largest ore resource in Latin America, notably Mexico, Peru, and Chile. Production is also strong in China, Russia, Central Asia, Australia, and the USA.

Source: Mining Visuals

Some of the top-producing countries have more or less concentrated deposits, with notably Mexico having several mega-ore deposits, and 10 out of the top 20 largest silver mines in the world.

Source: Mining Visuals

This can make investing in silver miners tricky for investors, as too high a concentration in one country or one mine only can be disastrous, as demonstrated by the stock chart of First Quantum Minerals, when its main copper mine was closed by the Panamanian government in 2023, causing a precipitous fall in stock price.

Source: Google Finance

The same type of disaster can occur in the case of a geological problem or a mine collapse, independent of political risks.

So the best strategies to get exposure to the mining sector generally spread risk between many different stocks or use mining-related ETFs to do the same thing.

(You can read more about these strategies in our report “Investing In Silver: Diving Deeper into Demand, Deficits, and Risks”.)

Another option is to invest in larger mining companies, with dozens or more mines, and not any one country making too much of the overall business. And ideally, with exposure only to Western-friendly countries, as the world is reorganizing into geopolitical blocs.

One company would stand to benefit the most from a return in favor of silver, while still providing its shareholders with risk diversification: Pan American Silver Corp.

Pan American Silver (PAAS): Footprint & 2024 Output

Pan American Silver is one of the world’s largest silver miners, with some activity in gold mining as well, either from smaller gold mines or as a byproduct of silver mining (both metals are often intermingled in the Earth’s crust ores.

The company’s mines are all located in the Americas, with the majority of production coming from South America.

Source: Pan American Silver Corp

Not one country dominates the company’s mining activities, with the largest one (Chile) accounting for only a quarter of revenues, followed by Peru and Brazil, with Mexico accounting for only 13% of revenues.

Source: Pan American Silver Corp

The company produced 21.1 million ounces of silver and 892,000 ounces of gold in 2024.

The company’s mineral reserves include 452 million ounces of silver and 6.3 million ounces of gold, or, at the current production rate, at least 21 years of silver reserves and 7 years of gold.

PAAS Assets: Active, Idle & Optionality

Active Silver Mines

Overall, the silver segment of Pan American Silver had an AISC of $18.98 /  ounce in 2024, a number that should decrease after MAG’s acquisition (see below).

Among the main silver mines of the company can be mentioned a few:

• La Colorada, in Mexico, the company’s largest silver mine, with 90.7 million ounces in reserve, of which 52.7 million ounces were discovered recently.
• La Colorada Skarn, an adjacent deposit that could contain as much as ~265.4 Mt of mineralized material (not silver metal), and a PEA that outlines ~17.2 Moz of silver per year over the first decade at ~50,000 tpd, with a 17-year mine life.
• Huaron, in Peru, with 40.7 million ounces in reserves.
• Cerro Moro in Argentina & San Vicente in Bolivia with combined reserves of 16.4 million ounces.

Idle Projects: Escobal (Guatemala) & Navidad (Argentina)

• Escobal, described by the company as “One of the world’s best silver mines“, with 264 million ounces in reserve and a very low AISC ($8-$9 / ounce), but which stopped producing in 2016 due to suspension by the Guatemalan government over the rights of the local ethnic minority.
  • When in operation from 2014 to 2017, the mine produced approximately 20 million ounces of silver annually.
  • It was acquired from Tahoe Resources in 2019, making it a high-risk bet for Pan American Silver, but a potential opportunistic acquisition if it can be restarted.
  • Discussions of a restart are likely still going to be stalled by local opposition for now, making it a “dead” asset until something changes.
• Navidad,  in Chubut, Argentina, is one of the world’s largest undeveloped primary silver deposits, with up to 632 million ounces of silver.
  • The Province of Chubut passed a law in 2003 (“Law 5001”) that prohibits open-pit mining and the use of cyanide in mineral processing in the entire province, effectively preventing the development of Navidad. To date, this law remains in place.

Overall, investors should count only the existing mines, and value the stopped mines like Navidad and Escobal with a very steep discount, counting on these mines to be restarted only in conditions where silver prices and supply deficit are so high that local governments are more likely to revise their position and look to profit from a restart.

They do, however, represent a valuable optionality on the upside, especially Escobal, as this is a fully developed mine still kept in care and maintenance, which could be restarted very quickly if legally possible (Navidad would take a lot longer to develop).

Gold Mines

While not central to the company, gold production happens in many of its silver mines, as the extraction of silver from the ore also yields some gold as well.

Still, it has a few gold mines as well:

• Jacobina, in Brazil, with 3.1 million ounces of gold in reserve and 196,700 ounces produced in 2024, or 16 years of reserve life at current production levels.
• Shahuindo, in Peru, with 977,000 ounces of gold in reserve. Pan American Silver considers that exploration potential exists to increase the mine life, beyond the mere 7 years left at the current production rate. The very low AISC ($1,371 / ounce) makes keeping the mine running through more exploration interesting.
• Timmins, in Ontario, Canada, with 846,000 ounces in reserves, but with a high AISC ($2,023).
• El Peñon, in Chile, with 626,000 ounces of gold in reserve and has historically produced 3.9 million ounces of silver as well.
• Minera Florida in Chile & Dolores in Mexico, with a combined reserve of 289,300 ounces of gold.

Development, Royalties & Investments

Besides its main active mines, Pan American Silver also has a few royalty payments from other mines, meaning it gets a part of future production, generally in exchange for providing capital in the past for developing these mines.

It also has ownership in a few other projects:

• A 65% interest in Radius Gold’s high-grade Amalia Project located in the State of Chihuahua, Mexico. Pan American Silver may earn an additional 10% by advancing the project to pre-feasibility.
• A 6% undiluted interest in New Pacific Metals Corp.(NEWP +6.17%), providing it with exposure to the Silver Sand property, located in the Potosi department of Bolivia.
• La Bolsa (Sonora, Mexico) and Pico Machay (Huancavelica, Peru) at an advanced stage of development, for now held on “care and maintenance” (mining industry term for a mine that could be reactivated, but is for now inactive).

MAG Deal & Juanicipio: Low-Cost Ounces Added

Recently, Pan American Silver has jumped in the ranking of global silver miners, with the acquisition of Mag Silver for $2.1B. The deal involving shares and cash resulted in an ownership in Pan American of approximately 86% for previous Pan American shareholders and 14% for MAG shareholders.

The center of this deal is the Juanicipio mine in Mexico, owned at 44% by MAG, and 56% by the other large silver miner, Mexican Fresnillo (FNLPF).

Source: Pan American Silver Corp

The mine is one of the largest ever discovered silver deposits, with the world’s highest silver production for a primary silver mine (to distinguish from large silver production from copper mega-mines, for example).

Source: Pan American Silver Corp

This scale makes the mine remarkably cheap to operate. Its AISC (All-In Sustainable Cost), a measure of “real” costs of mining including capex costs, is among the lowest quartile of all silver mines in the world.

Source: Pan American Silver Corp

This reduces Pan American Silver’s overall AISC from the relatively high $17.25 / ounce of silver to $14.03 / ounce (silver has been trading >$40/ounce in September 2025).

Source: Bullion Vault

By adding 6.6 to 7.3 million ounces of silver production for 2025, the acquisition of MAG is firmly putting Pan American Silver in the #2 spot of global silver miners, and the #1 when it comes to internationally diversified silver miners.

Source: Pan American Silver Corp

Cash Flow & Capital Allocation Since 2010

The recent MAG acquisition has placed Pan American Silver in a category of its own when it comes to annual free cash flow, ahead of all other silver miners, except for Fresnillo. Combined with rising silver prices, it gives the company a radically different financial profile when compared to 2018

Source: Pan American Silver Corp

As mining is a very capital-intensive business, proper capital allocation is vital for the long-term profits of shareholders, something that can only be evaluated over time.

This must include adequately timed investment decisions in launching new mines, mine extensions, and acquisitions. But also not consuming all the company’s money on growth at all costs, a common issue in the mining industry, as incentive of management is often growth over shareholder returns.

Since 2010, the company has dedicated 32% of its capital allocation to dividends, 7% to share buybacks ($1.1B returned to shareholders), and 47% to growth, illustrating its commitment to long-term value creation.

Source: Pan American Silver Corp

Is PAAS a Buy? Where It Fits in a Portfolio

Investors interested in getting exposure to silver and precious metals in general likely do so for one of two reasons:

1. Portfolio diversification, looking to reduce risks from inflation
   • Interestingly, Morgan Stanley’s CIO started in September 2025 to promote a 60/20/20 portfolio (60% allocation to equities,  20% to bonds, 20% to gold), replacing half of the traditional bond allocation with gold, marking a drastic departure of decades where gold was considered a “barbarous relic”, according to John Maynard Keynes (the progenitor of modern macroeconomics coining the expression.
   • Potentially, a 60/20/15/5, with the gold allocation split between 15% gold and 5% silver, counting on silver likely having higher volatility and upside potential, could make sense as well.
2. A calculated bet on monetary devaluation or remonetization of gold & silver, in the context of a decline in dollar usage for international trade, the re-emergence of China as a Great Power, and increasing geopolitical tensions.

In both cases, a company like Pan American Silver is the closest to a diversified silver portfolio a single stock can provide, thanks to the combination of its massive scale (unmatched except by one company) and its extensive geographical diversification (above Fresnillo’s focus on Mexico alone).

In the case of concerns about the international and monetary order breaking down, direct exposure to the physical metal, either through miners like Pan American Silver (ownership of reserves and future production), or direct ownership, makes more sense than through more risky derivatives like futures and options.

Silver is certainly still today considered an unconventional investment, compared to stocks, bonds, or even gold & Bitcoin.

But as silver demand from electrification explodes and inflation stays a concern, a turn towards more cautious portfolio, like the 60/20/20 now advocated by Morgan Stanley, might be a new durable trend in the investment community, and would greatly benefit the very small silver spot market (only $87B of market size in 2024) and silver miners like Pan American Silver Corp (all top silver miners’ market capitalization combined was worth $185B in September 2025).

Latest Pan American Silver (PAAS) Stock News and Developments