What is the Cost Per Ounce?
Pan American, like many other precious metals producers, uses methods established by The Gold Institute (Production Cost Standards, Nov. 1999) to calculate costs per ounce of silver produced at mine operations. All of Pan American's operations are "primary" silver mines -- meaning that the majority of their value (revenue) comes from silver. The "cash cost per ounce" of silver for each mine is based on the ounces of silver for which we are paid, which excludes the ounces lost in smelting and refining. (more...)

What do you mean by the term "leverage to silver"?
The word "leverage" is used in the metals industry as a measure of a company's exposure to a metal. For instance, Pan American's Quiruvilca mine in Peru is a co-product silver producer; meaning that most of the economic value from the mine comes from two metals, silver and zinc. Because of silver's geologic mode of occurrence, there are very few, if any, pure silver mines, ones from which no economic value is gained from the production of other metals. With Pan American's development of the La Colorada and Huaron mines, our leverage to silver will be one of the highest in the industry at approximately 65 percent.

Silver prices have been elevated recently over those of the past several years and Pan American Silver holds investment projects (i.e. Hog Heaven, Waterloo) which are economic to produce at higher silver prices. When will Pan American initiate development and production on its investment properties?
Pan American is currently developing two mines, Alamo Dorado in Mexico and Manantial Espejo in Argentina. These two projects are expected to yield a more favorable margin of profitability than any of the investment properties. If silver prices reach sustained higher levels, and Pan American is looking for more production to bring on-stream, production decisions will be made for the investment projects.

Why are reserve figures for underground mines lower than those for open pit mines?
In general, reserves for open pit operations are defined completely for the life of the mine prior to initiating development or production. There are two reasons for this: 1) ultimate pit boundaries must be defined for economic and development plans, and 2) it is generally easier to fully define an open pit (lower grade, disseminated) deposit since most are near surface. In contrast, underground operations generally exploit high grade, vein deposits. The cost of drilling or underground tunneling to completely define an underground deposit is generally cost-prohibitive. Instead, a reserve figure sufficient for 5 or 10 years of production is usually considered adequate for initiation of production and further exploration is performed and reserve calculations are made as the underground mining advances. A prime example of this process is the Quiruvilca mine in Peru, where mining has taken place continuously since 1926, but mining reserves at any time have generally not exceeded 5 years of forward production.