November 21, 2004
PAN AMERICAN SILVER SELLS DUKAT INTEREST FOR UP TO $43 MILLION
(all amounts in $US unless otherwise stated)
Vancouver, Canada – Pan American Silver Corp. (PAAS: NASDAQ; PAA: TSX) announced today that it has sold its 20% interest in the Dukat silver mine in Magadan State, Russia to OAO MNPO Polimetall, the mine’s 80% owner and operator, for up to $43 million. Pan American has received $20.5 million in cash and is to receive up to $22.5 million in contingent future payments.
The future payments are to be made annually based on the yearly average silver price, and range from no payment at a silver price of less than $5.50/oz, to $8 million if the average silver price for the year exceeds $10/oz. The agreement also includes provisions for early payment of remaining future payments on the occurrence of certain events, such as a public share offering by Polimetall.
Pan American acquired the Dukat mining concessions in 1996 and embarked on the financing and construction of a new mine until a dispute over the property’s existing mill and infrastructure suspended the project in 2000. That same year, Pan American settled for a 20% carried interest in the project and wrote off its entire $37 million investment in Dukat.
According to Pan American Chairman, Ross Beaty: “Dukat was a difficult chapter in the Company’s evolution and we are happy to bring it to a positive conclusion. The $20.5 million we have already received will be used for the construction of Alamo Dorado and Manantial Espejo, two of our development projects, and of course we are always pursuing additional acquisitions.”
The Company will record a gain of $20.34 million on the sale, net of transaction costs, in the fourth quarter of 2004. Future payments will be recorded as income as they are realized.
The Company will host a conference call to discuss the Dukat transaction at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) on Monday, November 22. North American participants please call toll-free 1-800-247-9979. International participants please dial toll-free 1-973-321-1100. The conference may also be accessed live from the investor relations section of the Pan American website at www.panamericansilver.com. To listen to a playback for one week after the call, dial 1-877-519-4471 and enter the replay pin number 5435399.
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For Further Information Contact: Brenda Radies, VP Corporate Relations (604) 684-1175
www.panamericansilver.com
CAUTIONARY NOTE
Some of the statements in this news release are forward-looking statements and as such are based on an assumed set of economic conditions and courses of action. These include 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. There is a significant risk that actual results will vary, perhaps materially, from results projected 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
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