FINANCIAL
(all amounts are expressed in US Dollars)
Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) reported a net loss for the second quarter of $1.25 million ($0.03 per share) compared to a net loss of $2.85 million ($0.08 per share) for the second quarter of 2001. The financial improvement during the quarter is due primarily to a strong performance from the Huaron mine in Peru, offset by a worse than expected performance from the Quiruvilca mine, also in Peru. Although the silver price increased during the quarter, by-product metal prices remained very weak. Consolidated revenue for the quarter was $11.62 million, 44 percent greater than revenue in the second quarter of 2001 due to higher metal sales volumes, offset by lower metal prices.

Consolidated silver production for the second quarter totaled 1,939,397 ounces, a 12 percent increase from the second quarter of 2001. Zinc metal production of 9,472 tonnes was 32 percent higher than in 2001. Lead production of 5,142 tonnes was 13 percent higher and copper production of 713 tonnes was 48 percent higher. The increases in metal production are because of better than planned production at Huaron, partially offset by lower than expected production at Quiruvilca.

For the six months ended June 30, 2002 consolidated silver production was 4,004,900 ounces, a 48 percent increase from the first six months of 2001. Zinc production of 19,579 tonnes was 52 percent greater than in 2001. Lead production of 10,583 tonnes was 55 percent higher and copper production of 1,382 tonnes was 75 percent higher.

During the second quarter, consolidated operations consumed $1.71 million in operating cash flow, principally due to a pay-down of accounts payable. The Huaron mine contributed $1.37 million. Lower than expected silver and ore production and higher depreciation and reclamation expenses caused a $1.73 million net loss at the Quiruvilca mine. At the La Colorada mine, operations were affected by preparations for the pending mine expansion and mining occurred during the quarter in a low-grade area resulting in temporary below-budget operating results.

Working capital at June 30, including cash of $21.03 million, was $17.48 million, an increase of $14.74 million from June 30, 2001. Net debt repayments during the quarter were $1.03 million. Capital spending totaled $1.36 million, which primarily consisted of $1.05 million for La Colorada's mine expansion project.

HUARON MINE, PERU
Huaron had another good quarter, producing 1.15 million ounces of silver at a total cash cost of $3.64 per ounce and 5,034 tonnes of zinc from 150,565 tonnes of ore milled. These better than expected results should continue through 2002. The improvement is due to cost efficiencies, and to a new zone discovered in late 2001 that is contributing to ore production. Operating profit in the second quarter was $0.86 million, up from a loss of $0.87 million last year when the mine began operations.

QUIRUVILCA MINE, PERU
The Quiruvilca mine treated 122,906 tonnes during the quarter (2001- 141,054 tonnes) and produced 610,444 ounces of silver and 4,344 tonnes of zinc (2001 -- 808,699 ounces of silver and 5,273 tonnes of zinc). The total cash cost per ounce of silver produced increased to $5.62 in the second quarter (2001 -- $4.29) due to lower than expected silver grades and ore production. Zinc grades were higher than expected. The very low present by-product zinc, lead and copper prices and the narrow veins at the mine make profitable operation today of the Quiruvilca mine very difficult. All alternatives to reduce operating losses are being examined at Quiruvilca.

On the positive front at Quiruvilca, Barrick Gold Corp. announced an increase in gold resources to 7.3 million ounces at its nearby Alto Chicama discovery. Barrick has informed Pan American that further drilling would be carried out in 2002 on Pan American's Los Angeles property, which forms part of Barrick's land package, and negotiations are in progress to sell a parcel of Company land for Barrick's infrastructure needs. In addition, Pan American optioned its 50 percent holding in the adjacent Tres Cruces property to its joint venture partner Oroperu Resources, and Barrick is now completing a farm-in agreement on this land, which will result in an aggressive exploration program at Tres Cruces later in 2002. Terms of Pan American's option to Oroperu and farm-in to Barrick are expected to have only minimal net impact relative to Pan American's prior direct interest, but will eliminate Pan American's need to fund all future exploration, development and mine construction costs.

LA COLORADA MINE, MEXICO
In June, an agreement was signed with International Finance Corporation, a member of the World Bank Group, for a $10 million loan for construction of the La Colorada mine expansion. The loan agreement does not require Pan American to hedge any silver production. Total capital costs for the mine expansion are projected at about $20 million and remaining funds will be derived from Pan American's cash on hand. The mine produced concentrates from about 200 tonnes per day of sulphide ore. The expansion will add a 600 tonne per day leach circuit to process oxide ore and will bring the mine's total production rate to 800 tonnes per day. Production from the expanded operation is expected to average 3.2 million ounces of silver per year at a total cash cost of less than $2.70 per ounce for a 13 year mine life.

In May, the existing 5 percent net smelter returns royalty at La Colorada was purchased for 390,117 shares and cancelled, which will increase future cash flow from the mine.

The existing small-scale mine at La Colorada processed 15,210 tonnes of ore and produced 183,198 ounces of silver during the quarter. Although total cash costs during the quarter were $5.01 per ounce of silver produced, this financial performance is not meaningful as operating costs include high fixed costs incurred in planning the imminent mine expansion. These costs will be capitalized as from July 1. In addition, during the quarter the mine plan accessed much lower grade ore than will be mined in the balance of 2002. Mill operations will be suspended for about six weeks during the third quarter to accommodate underground development needed for the mine expansion.

Construction activities have now begun at La Colorada for the mine expansion. A 600 tonne per day oxide mill has been purchased and moved to site and underground mining equipment ordered. Completion of construction is scheduled for the third quarter of 2003. Pan American also plans during August to drill an extension of the known La Colorada vein system to increase the mine's reserves.

EXPLORATION AND CORPORATE DEVELOPMENT
In May, Pan American announced plans to take over Corner Bay Silver, a Toronto exploration company that owns the Alamo Dorado silver deposit in Mexico. The Alamo Dorado deposit contains proven and probable reserves (calculated at $4.60 silver and $300 gold; Qualified Person -- Mintec, Inc.) of 35.5 million tonnes grading 67 grams of silver and 0.26 grams of gold per tonne, or 77 million ounces of silver and 297,000 ounces of gold. A bankable feasibility study by AMEC E&C Services, Inc was completed in July 2002 and recommends construction of a heap leach mine to produce an average of 6 million ounces of silver and 29,000 ounces of gold per year at total cash costs of $3.25 per ounce of silver equivalent over an eight year mine life and 11 year project life. Additional silver resources exist that could extend this life. Information concerning this acquisition was mailed to shareholders in early August and an extraordinary shareholders meeting will be held on September 5 to approve this transaction, which will see issuance of about 8.0 million shares and 4 million warrants to Corner Bay shareholders.

Elsewhere, Pan American is active in silver exploration at two locations in Mexico, one in Peru and one in Argentina. In Bolivia, limited scale mining operations continued at the San Vicente project, under the operatorship of EMUSA, a Bolivian mining company that is extracting ore from the mine under a lease agreement with Pan American.

SILVER MARKETS
Silver prices in the quarter continued to be volatile, reaching a high of $5.05 on June 5th and a low of $4.45 on April 17th. In May, the annual World Silver Survey by Gold Fields Mineral Services was published by the Silver Institute. It documents the sharp decline in silver demand in 2001, led by a dramatic fall in industrial demand, though investment demand increased for the first time in over a decade. The silver supply deficit of about 90 million ounces was filled almost entirely by sales from China's silver stockpile, though GFMS states that remaining Chinese stocks are insufficient to keep up this rate of sales for long. The prospect for 2002 is for a larger silver deficit caused by higher silver industrial demand and lower silver mine supply. New silver demand by investors seeking a refuge from the turmoil of financial markets will increase this deficit, which should result in a higher silver price. Finally, the US Mint announced that the enormous US government silver stockpile, which reached 2.2 billion ounces in the 1950's, would be completely consumed in 2002 requiring further US Mint silver needs to be sourced from the open market.

- End -

Ross J. Beaty, Chairman or
Rosie Moore, VP Corporate Relations
(604) 684-1175

To view Pan American's full Second Quarter filing, please visit http://www.panamericansilver.com/s/InvestorRelations.asp

www.panamericansilver.com

CAUTIONARY NOTE
Some of the statements in this news release are forward-looking statements, such as estimates of future production levels, expectations regarding mine production costs, expected trends in mineral prices and statements that describe Pan American's future plans, objectives or goals. Actual results and developments may differ materially from those contemplated by these statements depending on such factors as changes in general economic conditions and financial markets, changes in prices for silver and other metals , technological and operational hazards in Pan American's mining and mine development activities, uncertainties inherent in the calculation of mineral reserves, mineral resources and metal recoveries, the timing and availability of financing, governmental and other approvals, political unrest or instability in countries where Pan American is active, labor relations and other risk factors listed from time to time in Pan American's Form 40-F.

Full News Release and Second Quarter
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