La Colorada Skarn Project (Expanded La Colorada Mine) PEA: $2.60B NPV, 17% IRR
Pan American Silver Corp.'s La Colorada Skarn Project (Expanded La Colorada Mine) in Zacatecas, Mexico has a Preliminary Economic Assessment (PEA) outlining an after-tax NPV of $2.60B, an after-tax IRR of 17%, and initial capital of $1.90B. The mine plan runs 37 years at about 19.1 Moz Ag (average annual over Initial Five Year Period) per year.
Pan American Silver Corp.'s La Colorada Skarn Project (Expanded La Colorada Mine) has reported Preliminary Economic Assessment (PEA) results for the silver project in Zacatecas, Mexico. The study headlines an after-tax net present value of $2.60B at a 5% discount rate. It reflects Pan American Silver Corp.'s (PAAS) latest disclosed economics for the asset.
Economics. The after-tax NPV is $2.60B using a 5% discount rate. After-tax IRR is 17%. Initial capital expenditure is estimated at $1.90B. All-in sustaining costs are pegged at -22.67 USD/oz payable silver. Economics are based on Base Case Prices: $45.00/oz silver, $2,800/t zinc, $2,000/t lead. Upside Price Scenario: $75.00/oz silver, $3,400/t zinc, $2,000/t lead..
Production and mine plan. The project envisions an underground (conventional long-hole open stoping) operation. Life of mine is 37 years. Average annual production is approximately 19.1 Moz Ag (average annual over Initial Five Year Period).
Resources and ownership. Mineral resources: La Colorada Skarn deposit hosts 308.7 Moz contained M&I and 58.6 Moz contained inferred mineral resources. The company holds a 100% interest in the project.
These figures are extracted from Pan American Silver Corp.'s technical disclosures and reflect the most recent PEA on file. Compare this project against other developers and producers in our project economics database, and always verify the numbers against the original technical report before making any investment decision.
Our Analysis
- IRR after-tax
- 17%
higher than 4% of 25 projects we track
- NPV after-tax
- $2.60B
higher than 93% of 28 projects we track
- Initial capex
- $1.90B
73% of NPV
costlier than 100% of 33 projects we track
- Mine life
- 37yrs
- Discount rate
- 5%
- Study price assumption
- Base Case Prices: $45.00/oz silver, $2,800/t zinc, $2,000/t lead. Upside Price Scenario: $75.00/oz silver, $3,400/t zinc, $2,000/t lead.
- Spot silver today
- $67.15/oz
On the numbers we track, this is a middle-of-the-pack silver development story with one genuinely distinctive feature. The $2.60B after-tax NPV ranks above 93% of the 28 silver projects in our database, yet the 17% after-tax IRR sits in the bottom quartile against the 25 projects we score on returns. That gap is the whole story: a large absolute prize spread over a very long life, earning a return that clears the roughly 15% project-finance threshold only narrowly. For an investor, the rank matters more than the headline. A developer that clears the hurdle by two points has little room for capex slippage, permitting delay or a softer silver price before the financing conversation gets difficult.
The constraint that decides this one is not capital intensity in the abstract. At $1.90B, initial capex is 73% of NPV and sits below every one of the 33 silver projects we compare it to, so on that measure it is among the more capital-hungry builds in the set. What rescues the funding picture is scale: the company carries a US$20.73B market cap and this is one of 17 projects in its portfolio, so a build of this size is small against its equity and can be funded without the dilution risk that defines single-asset developers. The NPV-to-market-cap ratio of about 0.1x cuts both ways: it may mean the asset is not yet reflected in the price, or that the market discounts a preliminary study, a long build and Mexican jurisdiction risk.
Two caveats deserve weight. This is a scoping-level PEA, potentially including inferred material, with a capital estimate that typically carries a plus or minus 50% band, so the 17% IRR is not yet a number to underwrite. And the base case assumes $45.00/oz silver against a live spot of $67.15/oz, with an upside scenario at $75.00/oz: the study is not leaning on an aggressive price, which is unusual and helpful here. The question that settles it: can a PEA-stage, 37-year Mexican silver project convert to a feasibility-grade 17% return without the capex band breaking the wrong way?
Our take, benchmarked against the project economics in the Mining Stocks database. Figures are estimates drawn from company technical reports — not investment advice; always verify against the source filing.