Strong Q125, MAG Silver acquisition

Pan American Silver (PAAS) delivered strong quarterly results, with higher commodity prices boosting revenues and lowering costs. Q125 EBITDA was US$330m, just 5% shy of the seasonally strongest Q4 number, as costs were markedly below and production was in line with quarterly guidance for both segments. The company maintained its FY25 operating outlook, which points to seasonally strong quarters ahead. PAAS also announced a proposed acquisition of MAG Silver (MAG), valuing the company at US$2.1bn. MAG owns 44% in a top-tier Juanicipio silver operation in Mexico. In this note, we provide an initial take on the transaction, while keeping our revised estimates and valuation of PAAS on a standalone basis.