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Tue Jan 16, 2001
Pan American Silver Begins Small-Scale Silver Production and Advances Project Financing at La Colorada Mine, Mexico
Pan American Silver Corp. (TSE: PAA; NASDAQ: PAAS) has begun limited silver production at its 100% owned La Colorada silver mine in Mexico. Ore is currently being sourced from surface stockpiles mined during exploration activities from 1998 to 2000. This small-scale operation will not affect the main mine development. Approximately 3500 tonnes of ore per month will be processed at the existing flotation mill, yielding silver-lead concentrates that will be treated at the Torreon smelter 300 km north of the mine. Monthly output should average 45,000 ounces of silver.
Pan American decided to begin silver production at La Colorada to generate operating cash flow and to save approximately $100,000 per month in care and maintenance costs while financing is being finalized to begin construction of the full-scale mine planned to produce 4.2 million ounces of silver per year. All site work necessary to begin construction of the full-scale mine and mill was completed in 2000.
Bank syndication and detailed loan documentation is in progress on a proposed $21 million syndicated senior loan and a $6 million subordinated loan for the main La Colorada mine development. The feasibility study, completed in June 2000, was based on 100% equity financing and estimated capital costs of $26 million. The total costs to complete the mine, including provisions for pre-production interest, additional working capital, bank fees and other charges is $30.5 million. Pan American will provide the remaining $3.5 million as well as a portion of an escrowed $3.6 to $4.0 million cost overrun account. Completion of the project financing is expected in early 2001.
The La Colorada mine will produce positive cash flow from the limited scale operation while loan documentation is being finalized. Construction of the full-scale mine remains targeted to begin in early 2001, resulting in full-scale production in early 2002 at 4.2 million ounces of silver per year. Combined with the 4.3 million ounces of annual production from the new Huaron mine in Peru and 3.5 million ounces from the Quiruvilca mine in Peru, the Company will produce 12 million ounces annually, making Pan American one of the world's principal silver producers.
Ross J. Beaty, Chairman or
Rosie Moore, VP Corporate Relations
(604) 684-1175
www.panamericansilver.com
The statements that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties that could cause actual results to vary materially from the targeted results. Such risks and uncertainties include those described in the Company's Form 40-F as amended. All amounts are expressed in U.S. dollars. |
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