Pan American Silver - Mixed Q2 results, Escobal progress

PAAS reported mixed Q222 results that were heavily affected by one-off items stemming from the grade and production underperformance at Dolores. As a result, the company incurred US$155m in non-cash impairments and inventory revaluation charges. FY22 production is now guided towards the lower end of the original expectations and the gold segment cash costs at the top end. On a positive note, the annual mineral resources update revealed good resource replacement rates in the silver segment, and the company announced that Escobal is moving into the next stage of the ILO 169 consultation process. We have revised down our estimates, lowering our valuation to US$27.5/share.