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Value Investors: 1 Sustainable Gold Stock to Own

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Pan American Silver (TSX:PAAS)(NASDAQ:PAAS) is principally engaged in the operation, development, and exploration of silver- and gold-producing properties. The company’s principal products are silver and gold, although the company also produces and sells zinc, lead, and copper. The company operates mines and develops mining projects in Mexico, Peru, Canada, Argentina, Bolivia, Guatemala, and the United States.

Strong production track record

Prior to 2020, the company’s production has increased almost every year since 1995. The company’s long-term growth has been accomplished through a combination of acquisition, exploration, development, and expansion efforts. In 2021, Pan American expects to produce between 22.5 and 24.0 million ounces of silver and between 605,000 and 655,100 ounces of gold from the company’s portfolio of assets.

Intelligent capital allocation

Historically, the company has achieved annual increases in mineral reserves and mineral resources through exploration and acquisitions. In addition to mineral reserves and resources added through acquisitions, Pan American has demonstrated a significant ability to invest in mine and near-mine exploration programs throughout the silver price cycle and to optimize the exploration potential of the company’s asset portfolio.

Hidden asset reserves

The company’s proven and probable silver and gold mineral reserves are approximately 550 million and 5.2 million ounces, respectively. The company’s measured and indicated mineral resources are approximately 800 million ounces of silver and 10 million ounces of gold.

Strategic acquisitions

The company actively investigates and evaluates strategic opportunities to acquire promising silver production, development, and exploration properties in those jurisdictions where the company is presently active as well as elsewhere throughout the world.

In February 2019, Pan American acquired all of the issued and outstanding shares of Tahoe. Among other assets, Tahoe owned two mines in each of Peru and Canada as well as the Escobal mine in Guatemala.

The company maintain a strong financial performance from mining operations. In an effort to ensure it continues to have a strong and prosperous business, the company monitors financial performance against targets for operating earnings and cash flow from operations, as well as against operating measures such as production and cash costs.

Pan American operates the business in accordance with the highest principles of sustainable development. It also places a high priority and particular emphasis on the health and safety of the company’s personnel. The company has operations in a number of countries and across diverse cultures that have the potential to impact nearby populations. Pan American minimizes the negative impacts and maximize the benefits garnered to local populations, while at the same time achieving success from a business perspective.

Focus on sustainability

Pan American has also adopted board-level corporate policies that formalize how it must conduct business and interact with stakeholders and others. The company has implemented Towards Sustainable Mining (TSM) protocols to enhance community engagement, drive industry-leading environmental practices, and reinforce the company’s commitment to surrounding communities.

By implementing TSM at the company’s operations within and outside Canada, Pan American has set out a consistently high performance standard across all operating jurisdictions. This focus on sustainability should drive higher shareholder returns and serve the company well.

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Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

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