Yes, PAAS is a great buy at these levels if you are patient and have the stomach for volatility. When PAAS increased its quarterly dividend by 150% in February, they also announced increased probable and proven silver mineral reserves totaling 317 million ounces. With a today’s market cap of $2B, a simple calculation yields a value of $6.31 per ounce of proven/probable reserves.
Historically, PAAS has been able to significantly exceed that net profit margin. On one had there is increased chance of resource nationalization and rising production costs. On the other hand, central banks around the world are printing money at unprecedented rates and spot silver prices are close to many companies’ costs of production; which inevitably leads to reduced supply and rising prices.
We could balance potential further write downs with potential increases in proven/probable reserves and favorable mergers/industry consolidation. Physical silver has a floor in the low 20’s, regardless of what the paper market does.
As the equity market becomes even more saturated with FED liquidity and people search for yield and value plays, PAAS is going to stand out.