Pan American posts record output (February 20, 2003)

Vancouver — Pan American Silver (PAA-T) produced a record 7.8 million oz of silver from its four mines in 2002.

This marks a 12% rise from the 2001 total . The company also managed to lower total cash costs for consolidated production to US$4.16 per oz, compared with US$4.36 in 2001. The production of by- product metals also hit a record in 2002, including 39,081 tonnes of zinc and 20,790 tonnes of lead.

The star performer was the Huaron mine in Peru, which yielded 4.5 million oz of silver at a total cash cost of US$3.66 per oz, net of by- product credits. At year-end, mill throughput was increased by 10% and silver production for 2003 is forecast to increase to 4.9 million ozs.

Also in Peru, the Quiruvilca mine struggled against a backdrop of low zinc prices. Silver production was scaled back to 2.5 million oz at a total cash cost of US$5.15 per oz of silver, net of by-product credits. Pan American is continuing to review its options for the money losing operation including a possible closure.

The carrying value of Quiruvilca was written down by US$15.13 million in the third quarter, and a reclamation accrual will be taken in the fourth quarter.

In Nov, Pan American acquired a small silver operation in central Peru and estimates production of about 540,000 oz per year at an average total cash cost of about US$1.65 per oz over a 10-year period. In 2002, this operation produced 101,459 ozs of silver at a cash cost of US$1.50 per oz.

Moving to Mexico, the La Colorada mine continued to operate at a small scale with production coming in at 626,035 ozs of silver. Production is expected to reach 3.8 million oz per year at an estimated total cash cost of US$2.65 per oz once the on going mine expansion is complete in July 2003.

On the development front, Pan American agreed to acquire Corner Bay Silver. Corner Bay’s main asset is the 100 million oz Alamo Dorado silver property in Mexico.

In Bolivia, Pan American’s San Vicente project produced about 1.1 million ozs of silver under a short-term toll-milling agreement with a Bolivian company. Pan American is considering advancing the property towards a feasibility study later in 2003.

In Russia, the Dukat mine reportedly began producing in Dec., but no silver sales have been made.

Pan American’s 50% owned Manantial Espejo project in Argentina contiued to return promisng high grade silver- gold results in a 6,000-metre program. Plans for 2003 are to progress the property towards a feasibility study through underground development and additional drilling.

For this year, Pan American expects silver production to hit 10.3 million ozs.