Pan American posts record output (March 03, 2003)

Vancouver — Thanks to its mainstay Huaron mine in Peru, Pan American Silver (PAA-T) produced a record 7.8 million oz. silver from its four mines in 2002, a 12% rise from the 2001 total.

The company 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 byproduct 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, which yielded 4.5 million oz. silver at a total cash cost of US$3.66 per oz. net of byproduct credits. At year-end, mill throughput was increased by 10%, and silver production for 2003 is forecast to increase to 4.9 million oz.

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. net of byproduct credits. Pan American is reviewing its options for the money-losing operation, one option being closure.

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

In November, Pan American acquired a small silver operation in central Peru, where production is estimated to be 540,000 oz. per year at an average total cash cost of US$1.65 per oz. over 10 years. In 2002, this operation produced 101,459 oz. 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 oz. 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 ongoing mine expansion is completed, in July 2003.

Meanwhile, Pan American is on the home stretch in its acquisition of Corner Bay Silver, which owns the 100-million-oz. Alamo Dorado property in Mexico.

In Bolivia, Pan American’s San Vicente project produced 1.1 million oz. silver under a short-term toll-milling agreement with a Bolivian company. Pan American is considering advancing the property toward the feasibility stage.

In Russia, the Dukat mine re portedly began producing in December 2002, though no silver sales have been reported yet.

Pan American’s 50%-owned Manantial Espejo project in Argentina continued to return promising high-grade silver-gold results in a 6,000-metre program. Plans for 2003 call for the property to be advanced to feasibility through underground development and additional drilling.

For the current year, Pan American expects to crank 10.3 million oz. silver.