La Colorada Skarn Project PEA: $2.60B NPV, 17% IRR
Pan American Silver Corp.'s La Colorada Skarn Project 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 per year.
Pan American Silver Corp.'s La Colorada Skarn Project 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. Economics are based on Base Case: $45/oz Ag, $2,800/t Zn, $2,000/t Pb; Upside: $75/oz Ag, $3,400/t Zn, $2,000/t Pb.
Production and mine plan. The project envisions an underground (long-hole open stoping) operation. Life of mine is 37 years. Average annual production is approximately 19.1 Moz Ag.
Resources and ownership. 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 5% of 20 projects we track
- NPV after-tax
- $2.60B
- Initial capex
- $1.90B
73% of NPV
- Mine life
- 37yrs
- Discount rate
- 5%
- Study price assumption
- Base Case: $45/oz Ag, $2,800/t Zn, $2,000/t Pb; Upside: $75/oz Ag, $3,400/t Zn, $2,000/t Pb
- Spot silver today
- $65.50/oz
The 17% after-tax IRR lands in the bottom quartile of the 20 tracked silver projects and barely clears the ~15% financing hurdle for developers, falling well short of the 20%+ threshold typically required for a single-asset junior. The 5% discount rate is a low-end reporting convention that inflates the $2.60B NPV; a more standard rate would compress that figure materially. The NPV-to-market-cap gap (0.1x) is ambiguous—it could signal the market has not priced the asset, but more likely reflects skepticism about financing risk and jurisdiction.
Initial capex of $1.90B, at 73% of NPV, is moderately capital-intensive and represents a large funding burden relative to the company’s market cap, pointing to significant dilution risk. The base-case silver price of $45/oz sits well below the current spot of $65.50/oz, offering upside if prices hold, but the 37-year mine life exposes returns to long-term price volatility. The single most important risk is financing: a junior developer must raise nearly $2B for a project with a middling IRR in a capital-constrained market.
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.