Q126 results: Cash is king

Pan American Silver (PAAS) delivered strong Q126 results, with EBITDA more than doubling y-o-y to US$757m, silver segment costs well below quarterly guidance and attributable free cash flow of US$488m. This lifted cash and short-term investments to a record US$1.6bn, excluding US$199m attributable to Juanicipio, and underpinned a new shareholder distribution policy targeting returns of 35–40% of annual attributable free cash flow via increased dividends and share buybacks. We have upgraded our earnings estimates on stronger commodity prices and Q1 performance, raising our DCF-based valuation to US$65.0/share.