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Mon Jan 28, 2002
Pan American Improves Development Plan For La Colorada Silver Mine And Updates Other Operations
Pan American Silver Corp. (NASDAQ: PAAS; TSE: PAA) is pleased to announce that consolidated production in 2001 was 6.9 million ounces of silver from its three wholly owned primary silver mines in Peru and Mexico, up 90 percent from 2000. By-product zinc production increased 26 percent to 30,870 tonnes, lead production increased 97 percent to 17,191 tonnes, and copper production increased 78 percent to 2,161 tonnes. These major increases were the result of Pan American opening two new mines last year. In April 2001 the Huaron mine in Peru began full-scale production and in January 2001 the La Colorada mine in Mexico started small-scale production.
Silver accounted for approximately 63 percent of Pan American's consolidated revenues in 2001, zinc 32 percent and lead 5 percent, thus establishing Pan American as one of the purest large silver producers globally. Pan American's forecast production for 2002 is 9.2 million ounces of silver, an additional 33 percent boost from 2001 levels, due to a full year of production from the Huaron mine and a slight increase in the small-scale production from La Colorada.
Pan American recently updated the bankable feasibility study on production from the La Colorada mine in Mexico. The updated study (Qualified Persons: John Wright, P.Eng., President and Chief Operating Officer of Pan American, and Norm Pitcher, P.Geol., Chief Geologist of Pan American) is based on the original operating plan's mineral reserves and resources, adjusted for 47,317 tonnes mined in 2001 at a grade of 598 g/t silver, and minor re-categorization of reserves and resources based on additional drilling and underground development in 2001. The original study called for capital costs of US$27.6 million to enable production of 1000 tonnes of ore per day for 4.2 million ounces of silver annually. The new study indicates that capital costs of US$18.2 million will expand the current operation to 800 tonnes of ore per day to yield approximately 3.8 million ounces of silver per year for a minimum 10 year mine life. Using a constant silver price of $4.50 per ounce and 100 percent equity financing, the revised development plan generates a 22 percent rate of return. Over 90 percent of project revenues will be from silver. Construction of the expanded operation will take about 10 months, once financing is secured. New construction will not interfere with the current operation, now producing 1.2 million ounces of silver annually. Pan American has also acquired an option to purchase the entire 5 percent net smelter return royalty covering the La Colorada project for US$3 million, payable in cash or shares by March 23, 2003.
Pan American's Chairman and CEO, Ross Beaty commented, "I am pleased at the success of our new silver mines at Huaron and La Colorada and, particularly, the new development plan for La Colorada. This new plan of adding a leach circuit to our existing concentrate production will yield 90 percent of the original plan's silver output for less than 65 percent of the original projected capital cost, and will give us a good return even at today's depressed silver price. Several options to finance the expansion of La Colorada are being discussed with parties interested in funding the project and I look forward to another year of strong expansion in our silver production."
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. |
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