Mining, Developing & Exploring
Pan American Silver has a 95% interest in PASB, a Bolivian company that owns a 50% joint-venture interest in, and is the operator of, the San Vicente project. The remaining interest in the joint-venture project is held by Corporación Minera de Bolivia (COMIBOL), the Bolivian state mining company.
The San Vicente mine consists of 15 concessions totalling 8,159 hectares. PASB has continually complied with the joint-venture agreement and the project and the concessions are in good standing. All mining property concessions of the San Vicente mine are in the name of COMIBOL, and PASB is contractually responsible for paying the annual mining tenure tax, which is up to date.
The San Vicente silver-zinc mine is located at approximately 4,400 metres above sea level in the southern end of Bolivia in the Province of Sud-Chichas, Department of Potosí. The mine is 460 kilometres south of the city of Oruro and 300 kilometres west of Tarija. The property is accessible by dirt road 100 kilometres west of the town of Tupiza and 150 kilometres south of Uyuni. With the exception of the miners employed at the San Vicente Mine, there are very few other inhabitants in the area.
San Vicente is Pan American Silver's only mining interest in Bolivia.
There has been sporadic mining activity at San Vicente since colonial times, but first written records of mining activity there were made in 1820. In 1952 the Bolivian government nationalized the mine and placed it under the control of COMIBOL, the Bolivian state mining company.
Following the discovery of new silver and zinc veins in the sixties, COMIBOL constructed the 400 tonnes-per-day Vetillas concentrating plant in 1972. The mine was operated by COMIBOL until 1993, at which time mining was suspended pending the privatization of mining in Bolivia.
In 1995, the San Vicente mine was offered as part of a joint-venture contract by COMIBOL. On June 21, 1999, Pan American signed a joint-venture agreement with COMIBOL. In 2001, Pan American and COMIBOL entered into a two-year toll milling agreement with EMUSA, a well-established Bolivian mining company, to process up to 250 tonnes per day of San Vicente's ore at EMUSA's nearby Chilcobija mill. This arrangement generated sufficient revenue to offset the property's holding costs and generated valuable information on the mining and milling characteristics of San Vicente's ore. In 2006 Pan American signed a joint-venture agreement that granted EMUSA a 40% interest in the project. Later that year,, Pan American entered into another toll milling arrangement with EMUSA to continue processing at its mill.
In 2007, Pan American purchased EMUSA's 40% interest in the project, increasing the Company's share of ownership from 55% to the current 95%. The remaining 5% of PASB is owned by Trafigura Baheer B.V.
During 2008, the Company substantially advanced construction of a new 750 tonnes-per-day selective flotation plant and infrastructure as well as continued mining and toll treating ores under an agreement with COMIBOL. During 2009, the Company completed the construction of the flotation plant and the expansion of the mine and announced the commencement of commercial production in April. In 2010, San Vicente's first full year of production, the mine produced (on a 100% basis) 3,192,680 ounces of silver and 4,900 tonnes of zinc.
San Vicente is a polymetallic vein deposit, located 2.5 kilometres west of a prominent thrust fault. This north-south striking San Vicente fault forms the eastern limit of the intermountain Bolivian Altiplano Basin.
The lithology of the Project area includes the fanglomerate facies of the San Vicente formation, which are in contact with Ordovician shales along the San Vicente fault. The fanglomerate consists of poorly sorted conglomerate with clastic sub angular fragments of Palaeozoic sediments cross cut by quartz veins. The matrix is red in colour and consists of iron bearing sandstone.
Mineralization in the district is known to cover an area of 3 by 4 kilometres to a depth of 300 metres. It consists of vein mineralization in pre-existing faults, dissemination in brecciated conglomerates in the San Vicente fault and mineralization in dacitic dykes.
Mine infrastructure at San Vicente includes a flotation mill, tailings facility, power and water supplies and worker housing. The existing mine was designed and built to extract from steeply dipping narrow veins using conventional shrinkage stoping. The vertical Pelayo shaft extends from the surface above the 0 level down to the -110 level, which is currently the deepest level in the mine. The inclined Rampa shaft also extends down to the -110 level.
The discovery of the Litoral Ramal Dos vein has provided a wide and high-grade addition to the mine resource base. This vein is amenable to longhole mining, which may allow a reduction in mine operating costs and will permit a higher mining recovery of the wider ore zones than could be achieved through shrinkage mining.
An ambitious growth initiative, called the San Vicente Mine Expansion Project was announced in 2007. It included the construction of a new 750 tonne-per-day flotation process plant at the mine site. Implementation of the project required an increase in the mine's production capacity to match the production rate of the new mill. The mine intends to continue using shrinkage stoping in the narrow vein stopes and increase the conventional mining capacity by improving the Pelayo shaft and the haulage equipment. The remainder of the production will be extracted by longhole mining using mechanized equipment and will require the development of a new decline from surface for equipment access and for ore haulage using mine trucks.
Construction of the new processing facility was essentially complete at the end of 2008 and San Vicente began producing its first concentrates on March 25, 2009. The mine reached its expanded production capacity during the third quarter of 2009.
* Net of by-product credits
For purposes of estimating 2012′s cash costs, the Company assumed the following price levels for its by-product
production: Zn $ 1,900/tonne; Pb $2,000/tonne; Cu $7,300/tonne; Au $1,600/oz.
Exploration of San Vicente began in earnest in 1999 when Pan American Silver entered into the joint venture with COMIBOL. Since then a total of 109 diamond core holes have been drilled, with 2,575 vein intercepts sampled with lengths ranging from 0.2 metres to 7.14 metres. In addition to the diamond drilling, a sampling program executed jointly by Pan American Silver and COMIBOL has produced some 6,594 channel samples.
The data generated by these activities aim to broaden mineable reserves so that the scale of mining will increase to a level sufficient to feed the new processing facilities provided for under the San Vicente Mine Expansion Project.
1 Prices used to calculate Mineral Reserves for 2012 were Ag $25.00 per ounce, Au $1,350 per ounce, Pb $1,850 per tonne, Zn $1,750 per tonne and Cu $8,500
1 Mineral Reserves and Resources are as defined by Canadian Institute of Mining Guidelines.
2 Mineral Resources do not have demonstrated economic viability.
3 This table illustrates Pan American Silver Corp’s share of Mneral Reserves and Resources Propertiies in which Pan American Silver has less than 100% interes are noted next to the property name.