Pan American Silver's revised La Colorada plan seen lowering risk: Jefferies
Pan American Silver Corp. (TSX:PAA, NASDAQ:PAAS)’s revised development plan for its La Colorada Skarn project represents a meaningful reduction in risk, while preserving the asset’s long-term scale, according to Jefferies analysts who reiterated a “Hold” rating and $66 price target. They have...
Pan American Silver Corp.(TSX:PAANASDAQ:PAAS) View Price & Profile Pan American Silver's revised La Colorada plan seen lowering risk: Jefferies
Published: 15:18 25 Mar 2026 EDT
Pan American Silver Corp. (TSX:PAA, NASDAQ:PAAS)’s revised development plan for its La Colorada Skarn project represents a meaningful reduction in risk, while preserving the asset’s long-term scale, according to Jefferies analysts who reiterated a “Hold” rating and $66 price target.
They have a price target of $66 on the stock, which traded up 3% at about $51 shortly before Wednesday’s closing bell.
The broker described the updated preliminary economic assessment (PEA) as “a meaningful de-risking step vs. the 2023 bulk caving concept, improving financeability and project credibility,” highlighting a shift toward a more phased and capital-efficient approach.
Pan American has moved away from the previously proposed large-scale bulk caving operation in favour of a development strategy that prioritizes higher-grade material and lowers upfront capital requirements. The company also plans to self-fund the project rather than seek a partner.
The revised plan integrates newly identified high-grade silver mineralization from the eastern Candelaria vein area with selective mining of higher-grade skarn zones. It will use conventional long-hole open stoping with paste backfill, which Jefferies believes should reduce geotechnical complexity and allow earlier access to higher-grade ore.
“The inclusion of select La Colorada vein resources further improves early cash flow visibility by shifting the project from a standalone skarn build to a more integrated, site-wide expansion,” the analysts wrote.
On an incremental basis, the revised PEA outlines an after-tax net present value (NPV) of $2.6 billion and an internal rate of return (IRR) of 17% at base-case commodity prices. Initial capital expenditure is estimated at $1.9 billion, with a four-year payback period and life-of-mine sustaining capital of $1.2 billion.
In the first five years following ramp-up, expected between 2034 and 2038, the project is forecast to produce approximately 15.8 million ounces of silver annually from the skarn alone. All-in sustaining costs are estimated at negative $22.67 per ounce, supported by by-product credits from zinc and lead.
At higher commodity price assumptions, Jefferies said the project’s NPV could increase to $5.2 billion, with IRR rising to 25%.
Despite the revised approach, La Colorada Skarn remains a large-scale, long-life asset, with a projected 37-year mine life. Plans include a 15,000 tonne-per-day processing plant capable of treating both skarn and vein material, supporting peak silver production of around 19 million ounces annually at the expanded operation.
The design incorporates a flotation facility producing lead and zinc concentrates, along with paste backfill and a staged tailings storage facility. Initial underground access via an existing ramp requires no new permitting, which could allow early development to begin ahead of major surface infrastructure.
Jefferies also noted that while bulk caving is no longer part of the base case, the revised plan retains optionality for a future expansion phase that could incorporate lower-grade material. Ongoing exploration, including significant drilling not yet included in the current resource estimate, provides additional upside potential.