Pan American Silver (TSX, NYSE: PAAS) returned a record $300 million to shareholders in the second quarter as surging silver production and metal prices lifted revenue, helping offset weaker-than-expected gold output and higher costs that weighed on earnings.The Canadian precious metals miner reported $1.1 billion in revenue, up 38% year-on-year, and adjusted earnings of $308 million, or $0.73 per share. The latter missed the $0.88 consensus and Jefferies’ $0.92 estimate as lower gold sales, higher production costs and taxes weighed on results.Silver production reached 6.5 million oz., at the upper end of quarterly guidance, driven by La Colorada and Juanicipio. Gold output of 165,900 oz. fell below expectations.The company now expects gold production to be at the low end of the annual 2026 guidance range, and gold segment AISC is expected to be at the high end,” Pan American said.The results, according to Jefferies, underscore a split in Pan American’s operations: silver is outperforming while weaker gold production increases pressure on the second half, particularly the fourth quarter, to meet annual targets.Gold lagsPan American maintained guidance for 25 million to 27 million oz. of silver at all-in sustaining costs (AISC) of $15.75 to $18.25 per oz. Gold guidance remains 700,000 to 750,000 oz. at AISC of $1,700 to $1,850 per oz.Analysts at Jefferies said the company’s gold production was tracking toward the low end of guidance because of weaker output at Jacobina and El Peñon. Gold AISC of $1,984 per oz. in the quarter also exceeded the $1,918 consensus estimate.Pan American’s largest silver mine just got biggerThe investment bank calculated free cash flow of $319 million, below the $339-million consensus, while Pan American ended June with $1.7 billion in cash and short-term investments, excluding its attributable cash at Juanicipio, and $841 million of debt.Cash returnsThe operational miss was counterbalanced by a sharp acceleration in shareholder returns. Pan American return to shareholders dincluded $224 million in share repurchases and $76 million in dividends, according to Jefferies. Buybacks increased nearly ninefold from $25 million in the first quarter.Jefferies said Pan American has returned about 48% of attributable free cash flow to shareholders so far this year, above its 35% to 40% target. As of Aug. 11, the miner had repurchased about 7.3 million shares for $358 million at an average $49.22 per share. It also declared a $0.184-per-share quarterly dividend payable Sept. 4.Pan American shares were down in New York more than 9% on Thursday to $47.57 and 8% in Toronto to C$$67.1 apiece, given the company a market capitalization of C$28.6 billion.
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