Pan American Silver (PAAS) Q2 2026: The Miss Was A Tax Bill

Pan American Silver Corp. (PAAS) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): revenue $1,124M, up 38.4%. Net earnings $305M. Basic adjusted EPS $0.73 vs an $0.84 bar. Attributable free cash flow $344M vs $488M in Q1. Stock -9.70% to $47.30 on 9.35M shares, 2.47x its 20-day norm. Pan American Silver earned 73 cents against an 84-cent bar and fell 9.70% to $47.30. Every headline calls this a silver miner missing estimates. Nine cents of the eleven-cent shortfall is the tax line, the operating shortfall is gold rather than silver, and realised silver fell 20.6% sequentially to $70.97. THE CALL: AVOID (3/5, PRICED FOR SILVER THE COMPANY WON'T UNDERWRITE) — base-case value ~$37.9 vs ~$47.3 today. KEY METRICS: - CALL: AVOID, 3/5. Fair value ~$37.90 vs the $47.30 Aug 13 close, 20% below. We anchor on REPORTED attributable free cash flow, not an AISC build-up - AISC already includes sustaining capital, so deducting it again double-counts. Q2 FCF of $344M annualises to $1,376M; +$210M cash tax, +$71M gold volume, less $248M project capital gives $1,409M. At 13x plus $959M net cash over 417.07M shares: Q2 deck $46.22, spot $43.82, management's deck $35.78, reversion $20.80. Even the BULL deck lands under the close. - THE MISS IS A TAX MISS: pre-tax earnings were $484M, down 24% from Q1's $641M, but the tax charge barely moved - $185M became $179M. The effective rate went 19.2% (Q2 2025) to 28.9% (Q1 2026) to 37.0%. Run this quarter at Q1's rate and net earnings are $344M, about $0.81 a share against the $0.84 bar - a 3% miss, not 13%. $0.09 of the $0.11 shortfall is tax alone. - IT IS A GOLD COMPANY: gold is 57.6% of attributable revenue ($730M), silver only 36.2% ($459M). Each metal's attributable production at its own realised price sums to $1,268M - the reported attributable revenue exactly. Silver production printed 6,469 koz, the HIGH end of guidance; gold printed 165.9 koz, BELOW it. FY gold guidance moved to the low end of 700-750 koz and gold AISC to the high end of $1,700-1,850. - SILVER FELL INTO THIS PRINT: realised silver was $89.43/oz in Q1 and $70.97/oz in Q2, down 20.6%. Silver Segment AISC went $6.63 to $17.80 as by-product credits collapsed. Per-ounce silver margin fell from $82.80 to $53.17, down 35.8%, on slightly higher production. Attributable free cash flow went $488M to $344M. Management's own stated H2 planning deck is $60 silver and $4,000 gold. - THE INVERSION: market cap $19,728M on the 417,074,000 shares the release counts (the feeds publish $19,930M and have not caught the buyback), less $959M net cash, is $18,769M of enterprise value - about 14x trailing earnings and 17x the free cash flow this business makes at management's own price deck. Hold gold at $4,000 and solve for the silver price that justifies $47.30 and you get about $73/oz sustained, 22% above management's own figure. What to watch: UP: silver sustained above $80/oz; Jacobina and El Penon stabilising in Q3; La Colorada Skarn ahead of schedule. DOWN: silver toward $45-55; a third straight quarter of falling attributable free cash flow; further gold guidance cuts. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.