Silver-Rich Stockpiles
The Stockpiles are located in the Cerro de Pasco mining district of Peru. Volcan Compañía Minera, a Peruvian mining company, is the largest producer in this district. For many decades, Volcan's Cerro de Pasco mine accumulated large silver-rich pyrite stockpiles from which the silver could not be extracted by standard metallurgical processes. In November 2002, Pan American entered into two agreements to acquire these stockpiles.
The first agreement grants Pan American the right to mine and sell 600,000 tonnes of the highest grade silver stockpiles to a smelter, where the ore is used as process flux and Pan American is paid for the silver contained. Pursuant to this agreement, as of December 2004, Pan American is required to pay Volcan 33.3% of the net cash flow from Stockpiles sales, after taxes and costs. As a result of Volcan's interest, the higher the price of silver, the higher the cash cost per ounce at the operation.
A ten-year contract to process material from the Stockpiles was negotiated with Doe Run's La Oroya smelter.
Operating Statistics:
|
2007 |
2006 |
2005 |
Tonnes Sold |
52,547 |
58,016 |
61,499 |
Silver ounces |
454,000 |
566,383 |
692,381 |
Cash cost per ounce |
$3.24 |
$3.17 |
$1.08 |
Mineral Reserves:
|
Tonnes |
Silver Grade
(g/tonne) |
Contained Silver
(ounces) |
Probable |
242,000 |
297 |
2,309,000 |
Calculated as at December 31, 2007 using the silver price of US$11.00 /ounce.
Mineral reserve estimates for the Silver-Rich Stockpiles were prepared by, or under the supervision of Michael Steinmann, P.Geo., Sr. VP Geology & Exploration, and Martin Wafforn, P.Eng., VP of Mine Engineering, both Qualified Persons as that term is defined in NI 43-101.
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