CompanyGraph
Pan American Silver Corp.
PAAS · NYSE Arca · Canada
Digs silver and gold out of mines across seven Latin American countries, processes the ore on-site, and ships it to smelters for final refining.
Pan American Silver mines silver that is chemically bound to zinc, lead, and copper inside epithermal veins across seven Latin American countries, so the ore cannot simply be melted into bullion — it first has to pass through flotation circuits tuned to the specific sulfide ratios of each individual deposit, and the circuit at La Colorada in Mexico is calibrated differently from the one at Jacobina in Brazil. The concentrate those circuits produce then goes to third-party smelters, which have already spent months running assays to qualify the company's specific ore grades before agreeing to deduct treatment and refining charges and recognize revenue — meaning a new competitor cannot simply show up with similar ore and step into those smelter relationships. Because the smelter qualifications, the deposit-specific flotation configurations, and the community agreements and environmental permits that keep ore flowing to the circuits were all assembled across seven regulatory regimes over decades, the whole chain is difficult to replicate but also fragile at any single link: if a Latin American authority revokes the tailings-disposal or water-use permit tied to one major site, that flotation circuit stops, its smelter qualification becomes commercially worthless, and the ounce delivery schedule to London Bullion Market Association buyers breaks.
How does this company make money?
The company sells refined silver and gold at the spot market price per ounce. For silver concentrate specifically, it sells to smelters based on how much metal the concentrate actually contains, but the smelters deduct treatment and refining charges before paying out. Revenue is only recognized after the shipment arrives and the smelter confirms the assay — so money comes in at the end of a multi-step physical process, not when ore leaves the ground.
What makes this company hard to replace?
Silver concentrate buyers have already spent time and money qualifying the company's specific ore grades and delivery logistics — switching to a new supplier means repeating that qualification process from zero. The environmental permits at each site are tied to specific tailings facilities and water rights, so those cannot simply be transferred to another operator. And the multi-year community agreements with Indigenous groups at remote mine sites cannot be quickly handed off to someone else.
What limits this company?
At Jacobina in Brazil, mining below 500 meters underground requires ventilation and water management systems that can only move so much air and water at once. That physical ceiling limits how fast ore can be brought to the surface, capping gold output even when there is plenty of ore left in the ground.
What does this company depend on?
The company cannot run without flotation chemicals for silver-zinc-lead separation at La Colorada, cyanide heap leach solution for gold extraction at Jacobina, third-party smelters willing and qualified to process its specific concentrate grades, mining permits issued by seven separate Latin American regulatory authorities, and diesel fuel delivered to remote mine sites across the Americas portfolio.
Who depends on this company?
Silver bullion dealers rely on the company for consistent ounce deliveries that meet London Bullion Market Association good delivery standards — disruption would break their supply schedules. Jewelry manufacturers in Mexico and India depend on a steady flow of silver concentrate to keep production lines moving. Central banks building precious metals reserves count on refined gold that meets London Bullion Market Association standards.
How does this company scale?
Mill throughput capacity and processing techniques can be optimized and spread across similar polymetallic deposits in the portfolio without starting from scratch each time. What cannot scale quickly is the underground mining expertise and the relationships with Indigenous communities at remote Latin American sites — those take decade-long investment and site-specific geological knowledge that cannot be copied or rushed.
What external forces can significantly affect this company?
When Latin American currencies fall against the US dollar, the company's local operating costs effectively rise relative to the dollar-denominated prices it receives for silver and gold, squeezing margins. Indigenous land rights processes across multiple jurisdictions could restrict or delay access to mineral concessions the company depends on. Water scarcity regulations in Chile and Peru could limit how much water is available for tailings disposal and ore processing — directly threatening the flotation circuits that make the whole system work.
Where is this company structurally vulnerable?
If a government in Latin America revokes or seriously restricts the permits that allow a major site to dispose of tailings or use water, the flotation circuit at that site shuts down. Once the circuit stops, the smelter that was qualified for that specific ore grade has nothing to process, and the scheduled deliveries of silver ounces to London Bullion Market Association buyers fall apart — collapsing in one move the entire chain that took decades to build.