Mexico
La Colorada (100%)
La Colorada is Pan American Silver Corp.'s purest silver mine. It consists of six contiguous blocks of exploration permits and exploitation claims totalling approximately 2,230 hectares. The La Colorada property is located approximately midway between the cities of Zacatecas and Durango in the Chalchihuites district in Zacatecas State.
History
The production history of the Chalchihuites district began during pre-colonial times when natives produced silver and malachite. In 1929, the Dorado family operated mines at two locations on the La Colorada property and since then, mining operations have been conducted on the property by several mining companies. Pan American Silver Corp. acquired La Colorada in 1998.
Geology
La Colorada lies within a geologic belt known as the "faja de plata" (silver belt) that extends for approximately 800 kilometres along the Sierra Madre Occidental Mountains. It is defined by major silver deposits that make Mexico the largest silver producing country in the world. La Colorada contains mineralization styles of both the Fresnillo mine, the world's second largest primary silver mine, and the San Martin/Sabinas mine complex, also a significant silver and base metal producer.
There are four dominant styles of mineralization at La Colorada: (i) breccia pipes; (ii) vein-hosted mineralization; (iii) replacement mantos within limestone; and (iv) deeper seated transitional mineralization (transition zone). The current Mineral Resource and Reserve contains only vein hosted mineralization.
Mining
Two operating mines exist within La Colorada: Candelaria Mine and La Estrella Mine. The underground Candelaria Mine has various veins that are currently in production. There are two types of ore (sulphide and oxide ore) that are processed separately in the processing plant within the Candelaria Mine. Ore that is favourable to flotation produces a lead / silver and zinc concentrates. Other ore (mostly highly oxidized but includes transitional and sulphide ore) is processed through a separate cyanide leach plant (termed the oxide plant) and produces doré bars. The Estralla Mine has a single oxide vein that is also currently being mined and processed through the oxide plant.
A third mine, the Recompensa mine is currently the subject of an exploration project that includes surface and underground diamond drilling from a ramp to the surface.
The 2008 La Colorada mine plan is based on providing 540 tpd of ore to the oxide circuit (maximum capacity 650 tpd) that was commissioned in 2004 and a further 400 tonnes per day (“tpd”) of ore to the sulphide circuit, which was recently expanded from 100 tpd production. Of the 540 tpd of oxide ore that is planned to be produced during 2008, it is estimated that 390 tpd will be mined from the Candelaria Mine and 150 tpd from the Estrella Mine. The expansion to the sulphide plant was commissioned in June 2007 and the plant now has a maximum capacity of 450 tpd. All of the sulphide production is scheduled to be mined from the Candelaria Mine at a rate of 400 tpd. The mining method used in both mines is mechanized cut and fill using waste rock as backfill.
TopOperating Statistics
2007 |
2006 |
2005 |
||
| Tonnes Milled | 331,067 |
233,743 |
211,854 |
|
| Silver ounces | 3,964,000 |
3,493,995 |
3,094,301 |
|
| Zinc tonnes | 943 |
0 |
0 |
|
| Lead tonnes | 686 |
153 |
0 |
|
| Gold ounces | 3,877 |
3,501 |
3,375 |
|
| Cash cost per ounce | $6.88 |
$6.49 |
$5.63 |
Exploration
The bulk of Pan American Silver Corp.’s exploration of the La Colorada property has been conducted through surface and underground diamond drilling and underground drifting on veins and mineralized zones. Samples comprised drill core and underground channel samples.
From 1997 to September 2007, Pan American Silver Corp. drilled 145 surface holes and 208 underground holes. Surface drilling was done with NQ sized core and underground drilling used BQ sized core, except for the drilling done in the NCP Corridor in 2000, which was done with HQ sized core in an attempt to improve recovery.
Prior to Pan American Silver Corp.’s involvement at La Colorada, previous operators had drilled 131 holes for a total of 8,665 metres. These holes were not used in Pan American Silver Corp.’s reserve or resource calculation, with the exception of four holes where the original core was found and assayed by Pan American Silver Corp.. The holes generally range in length from 100 to 300 metres with dips of plus 45º to minus 90º.
Mineral Reserves1, 2, 3
| Class Reserve Category |
Tonnes |
Grams of Silver per tonne |
Grams of Gold per tonne |
% Lead |
% Zinc |
||
| Proven | 826,735 |
431 |
0.49 |
1.10 |
1.93 |
||
| Probable | 457,070 |
415 |
0.46 |
1.29 |
2.21 |
||
| Total | 1,319,805 |
426 |
0.48 |
1.17 |
2.03 |
1 Calculated as at December 31, 2007 using a price of $11 per ounce of silver, $625 per ounce of gold, $ 1,600 per tonne of lead and $2,100 per tonne of zinc.
2 Mineral reserves for La Colorada have been prepared under the supervision or were reviewed by Michael Steinmann, P. Geo., Senior Vice President Geology & Exploration, and Martin Wafforn, P. Eng., Vice-President of Mine Engineering, as Qualified Persons as that term is defined in NI 43-101.
3 The La Colorada mine applies incremental cutoff grades as the combined process plants currently have more capacity than the mines. See also information in the Annual Information Form under the heading “Mineral Reserve and Mineral Resource Estimate Information”.
Mineral Resources1, 2
| Class Reserve Category |
Tonnes |
Grams of Silver per tonne |
Grams of Gold per tonne |
% Lead |
% Zinc |
|
| Measured | 186,371 |
312 |
0.50 |
0.97 |
1.06 |
|
| Indicated | 928,327 |
313 |
0.68 |
1.22 |
1.87 |
|
| Inferred | 1,827,778 |
307 |
0.57 |
1.57 |
2.04 |
1 These resources are in addition to La Colorada mineral reserves. Calculated as at December 31, 2007 using a price of $11 per ounce of silver, $625 per ounce of gold, $ 1,600 per tonne of lead and $2,100 per tonne of zinc. See also information in this Annual Information Form under the heading “Mineral Reserve and Mineral Resource Estimate Information”.
2 Mineral resource estimates for La Colorada have been prepared under the supervision, or were reviewed by Michael Steinmann, P. Geo., Senior Vice President Geology & Exploration, and Martin Wafforn, P. Eng., Vice-President of Mine Engineering, as Qualified Persons, as that term is defined in NI 43-101.
TopAlamo Dorado (100%)
Alamo Dorado is Pan American Silver Corp.’s only open-pit mine. It is located in northern Mexico in the state of Sonora, approximately 200 miles from the state capital of Hermosillo.
History
In 1997 Corner Bay Silver, a Toronto-listed exploration company, began grassroots reconnaissance of the area. After receiving encouraging results, Corner Bay conducted the first phase of confirmation drilling in mid-1998 and in 1999 a preliminary resource was calculated. A scoping study prompted further infill drilling and metallurgical testing, and Pan American Silver Corp. acquired Corner Bay and the Alamo Dorado project in February 2003.
In 2004 Pan American Silver Corp. revised the geological model of the deposit and initiated an alternative development plan for the property. In February 2005 the Company announced a positive production decision on the project based on its strong economics at then current silver prices and their positive long-term outlook. Construction of the mine was completed in November 2006, and commercial production began in April 2007.
Geology
The Alamo Dorado project is located in the Sierra Madre Occidental Range, a late Cretaceous to Tertiary age volcanic province that extends for hundreds of kilometres through northwestern Mexico. The host rocks at the Alamo Dorado mine consist of a sequence of ductile deformed, steeply dipping, Mesozoic epiclastic marine rocks that contain minor intercalated siliceous exhalite and pillow basalt.
Mineralization and alteration at Alamo Dorado is controlled by an early cryptic structural zone that has since been transposed and kink folded by the regional ductile deformation events. The current shape of the orebody is controlled by a combination of the post-mineral ductile deformation events and the relatively late, north-west trending block faults, which compartmentalize different portions of the deposit. Silver and gold mineralization may have been associated with the emplacement of the diorite feldspar porphyry dyke and/or first phase granodiorite stock, both of which display hydrothermal alternation and contain silver mineralization.
Mining
Alamo Dorado is a conventional surface mine that utilizes a 7.5 cubic metre hydraulic shovel, a 6.5 cubic metre front end loader and six 53 tonne mechanical rock trucks for principal earthmoving. The mine is designed to deliver 4,000 tonnes of ore per day to the plant and remove waste rock to the waste dumps.
The mine is being developed in two phases. The first, to be complete by early 2009, is designed to develop the mine downward into deeper, higher grade reserves. A second phase, to be finished in 2013, aims to expand the pit to its final high-wall and depth.
Onsite processing facilities consist of a primary crushing circuit, SAG ball mill, conventional cyanide leach recovery circuit and a dry, stackable tailings system. The mine also employs a tailings treatment process called AVR that neutralizes mine waste, thus reducing the mine’s environmental impact and future reclamation costs.
The mine stockpiles low grade and mineralized waste category material. The high grade cut-over was selected to maximize return on investment while not compromising ore block integrity. The low grade material is above the incremental break even cut-off. The mineralized waste is stockpiled at mineral prices 10% above the current Mineral Reserve. After the completion of mining, processing of the low grade stockpiles will commence.
Alamo Dorado is expected to generate approximately 75 percent of its revenue from production of silver and the remainder from gold, further strengthening Pan American Silver Corp.'s status as the world’s premier primary silver producer.
Operating Highlights
2007 |
||
| Tonnes Milled | 1,140,000 |
|
| Silver ounces | 3,809,000 |
|
| Gold ounces | 13,335 |
|
| Cash cost per ounce | $4.41 |
Exploration
The Alamo Dorado project has been evaluated in five separate drilling campaigns from 1997 to 2004. Exploration crews drilled a total of 31,604 metres in 130 holes using both diamond drill core and reverse circulation techniques. Depths ranged from 90 to 390 metres, averaging 243 metres.
Mineral Reserves 1, 2
| Reserve Category |
Tonnes |
Grams of Silver per tonne |
Grams of Gold per tonne |
||
| Proven | 1,775,000 |
98 |
0.37 |
||
| Probable | 9,444,000 |
114 |
0.30 |
||
| Total | 11,219,000 |
111 |
0.31 |
1 Calculated as at December 31, 2007 using a price of $11 per ounce of silver and $625 per ounce of gold.
2 Mineral reserve estimates for Alamo Dorado were prepared under the supervision of, or were reviewed by, Michael Steinmann, P.Geo., Senior Vice President Geology & Exploration, and Martin G. Wafforn, P.Eng., Vice-President of Mine Engineering as Qualified Persons as that term is defined in NI 43-101. See also information in the Annual Information Form under the heading “Mineral Reserve and Mineral Resource Estimate Information”.
Mineral Resources 1, 2
| Resource Category |
Tonnes |
Grams of Silver per tonne |
Grams of Gold per tonne |
||
| Measured | 263,000 |
84 |
0.31 |
||
| Indicated | 3,610,000 |
71 |
0.23 |
||
| Inferred | 518,000 |
79 |
0.30 |
1 Calculated as at December 31, 2007 using a price of $11 per ounce of silver and $625 per ounce of gold.
2 Mineral resource estimates for Alamo Dorado were prepared under the supervision of, or were reviewed by, Michael Steinmann, P.Geo., Senior Vice President Geology & Exploration, and Martin G. Wafforn, P.Eng., Vice-President of Mine Engineering as Qualified Persons as that term is defined in NI 43-101. See also information in the Annual Information Form under the heading “Mineral Reserve and Mineral Resource Estimate Information”.
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