S&P gives BBB- to Pan American Silver

S&P said it assigned a BBB- issuer rating to Pan American Silver Corp., which just closed its acquisition of Yamana Gold Inc.

“As part of the transaction, Yamana transferred its interest in its Canadian assets to Agnico Eagle Mines Ltd. (for an additional consideration above $2.5 billion), while Pan American retained all of Yamana's mines and properties in Latin America, as well as any remaining assets and liabilities (including cash and debt). We believe Pan American will have a significant market position as an intermediate gold producer and one of the largest silver producers on a global scale,” S&P said in a press release.

The agency said it forecasts Pan American will produce 1.1 Moz of gold and 25 Moz of silver.

“We believe the company has further upside to its production from near- to medium-term opportunities currently underway, particularly Escobal, a large silver mine located in Guatemala. We assume the retrospective permitting process for Escobal will have a positive resolution and result in the mining permit being reinstated. We also assume the mine will begin ramping up production in 2024 and hit a full-year run rate in 2025, which would potentially increase silver production by 60%-70% from estimated 2023 levels,” S&P said.

The outlook is stable. The agency said it expects Pan American will deliver adjusted debt to EBITDA in the mid-1x area while posting positive FOCF over the next couple of years.

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