Pan American Silver (PAAS) – Record Earnings, Rising Production, and a Structural Silver Deficit
Pan American Silver (PAAS) trades around $62 and is setting up as one of the cleaner ways to gain exposure to the ongoing strength in silver prices. The stock is already up more than 30% this year and is approaching its 52-week high near $70, but the fundamental backdrop suggests the move may not be finished.
First, the company is coming off a record year. In 2025, revenue climbed 28% to $3.6 billion, while earnings per share surged 726% to $2.56. That kind of earnings acceleration was driven by both higher realized prices for silver and gold and increased silver production. Management has rewarded shareholders along the way, raising the dividend for three consecutive quarters. The current quarterly payout of $0.18 per share is 80% higher than it was in the first quarter of 2025.
Second, the macro setup for silver remains supportive. The silver market is entering its sixth consecutive year of structural deficit, with projected shortfalls ranging from 67 million to 245 million ounces. Industrial demand continues to expand, particularly from solar energy applications and data centers, while silver has also been added to the U.S. Critical Minerals list. Some analysts are calling $70 per ounce the new baseline, and J.P. Morgan forecasts silver to average $81 per ounce this year, nearly double its 2025 average. Silver is volatile, but the current supply-demand imbalance provides a tailwind that is difficult to ignore.
Third, Pan American’s own production profile is improving. The company expects silver production to rise 14% this year, largely due to higher output at the high-grade Juanicipio mine in Mexico, which it acquired last September in a $2.1 billion deal for MAG Silver. All-in sustaining costs are projected between $15.75 and $18.25 per ounce. If realized prices stay anywhere near current levels, potentially $50 per ounce or higher, margins expand meaningfully. Over the past three quarters, average AISC has fallen while realized prices have risen, a powerful combination for cash flow.
With record financial results, increasing production, falling unit costs, and a structural supply deficit in the underlying commodity, PAAS offers both operational leverage and commodity leverage at a time when silver is regaining investor attention. If silver prices remain firm, a breakout above the recent highs near $70 is well within reach.
