PAN AMERICAN SILVER INCREASES PROVEN AND PROBABLE MINERAL RESERVES AFTER SUCCESSFUL 2011 EXPLORATION CAMPAIGN
(All amounts in US dollars unless otherwise stated and all production figures are approximate)
Vancouver, British Columbia February 22, 2012 Pan American Silver Corp. (PAAS: NASDAQ; PAA: TSX) (Pan American or the Company) today announced the results of its 2011 exploration activities, which more than replaced the Proven and Probable silver Mineral Reserves mined during 2011.
Last year, Pan American spent $25.1 million in direct exploration, completing over 190,000 meters of diamond drilling at its seven operating mines and selected greenfield projects. Through its successful 2011 exploration program, the Company discovered 29.3 million ounces of new Proven and Probable silver Mineral Reserves, which more than replaced the 24.7 million contained ounces of silver that were mined during 2011. At December 31, 2011, Pan American had Proven and Probable silver Mineral Reserves of 235.3 million contained ounces, an increase of 2% as compared to 2010s year-end Mineral Reserves.
The most notable exploration success was at the La Colorada mine, where exploration drilling added 10.6 million new ounces of silver. In 2011, La Coloradas Mineral Reserves grew by 15% from the prior year, to 44.1 million ounces of high-grade Proven and Probable silver Mineral Reserves at December 31, 2011. La Colorada now has the second-largest Mineral Reserve in the Companys portfolio of assets, behind the Huaron mine, which has 60.9 million ounces of silver in Proven and Probable Mineral Reserves. In the past three years, Pan American has discovered over 39 million ounces of new Proven and Probable silver Reserves at La Colorada, mainly in sulphide mineralization of the NC2 vein. The NC2 vein remains open at depth and to the east and will continue to be the focus of further exploration this year. The sulphide mineralization at La Colorada not only contains high silver grades, but also contains substantial base metal and gold grades.
At the Alamo Dorado mine, exploration activities included infill drilling, collection of new geotechnical data, cost analysis and revision of the Mineral Resource estimation methodology. This work added 4.3 million ounces to Proven and Probable silver Reserves, which will extend Alamo Dorados mine-life by approximately one more year. The Company plans to carry out additional work in 2012 to further optimize the mines design and to potentially include a Phase 3 pit extension.
Other highlights of the 2011 exploration campaign include the complete replacement of silver ounces mined during 2011 at Huaron, Quiruvilca and San Vicente; however, industry-wide cost pressures, particularly in Argentina and the deterioration of concentrate sales terms, specifically for silver-rich copper concentrates from the Companys Peruvian and Bolivian operations, impacted the exploration results at some of our operations.
The following table illustrates the changes in Pan Americans estimated Proven and Probable silver Mineral Reserves, year-over-year:
Proven & Probable silver Mineral Reserves as of December 31, 2010(1)
230.7 million ounces
Less mined ounces (contained) during 2011
(24.7) million ounces
Additions due to exploration during 2011
29.3 million ounces
Proven & Probable silver Mineral Reserves as of December 31, 2011(2)
235.3 million ounces
(1) Prices used to calculate Mineral Reserves for 2011 were Ag $18.00 per ounce, Au $1,100 per ounce, Pb $1,950 per tonne, Zn $1,950 per tonne and Cu $6,500
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(2) 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 $6,500
At 708.8 million ounces, Pan Americans Measured and Indicated silver Mineral Resources at December 31, 2011 remained similar to the previous years estimate, while Inferred silver Mineral Resources grew 26.5 million ounces to 271.7 million ounces. These additions do not include the Mineral Resource estimate update currently underway at the Navidad development project, where the company conducted an extensive infill and confirmation drilling campaign during 2011. These Mineral Resources will be updated when the Company issues the results of Navidads Feasibility Study later in 2012.
Commenting on this years exploration results, Michael Steinmann, Executive Vice President Geology and Exploration said, 2011 was another exceptional year for our brownfield exploration programs, which not only replaced the silver ounces we mined, but also increased our Proven and Probable silver Reserves. Since 2004, our continued focus on mine-site exploration has generated substantial new value by adding over 198 million ounces of Proven and Probable silver Mineral Reserves, more than replacing the 165 million ounces we mined during the same period.
In 2012 Pan American expects to invest $15.5 million to complete approximately 116,000 meters of diamond drilling at its seven operating mines. In addition, the Company also plans to spend $7.8 million on greenfield exploration activities at selected properties in Mexico, Peru and Argentina.
Complete Mineral Reserve and Resource information for all metals, including tonnage and grades is available at www.panamericansilver.com.
Complete silver and gold Mineral Reserve and Resource information at December 31, 2011 is as follows:
MINERAL RESERVES PROVEN AND
PROBABLE
Property
Location
Type
Classification
Tonnes
(Mt)
Ag
(g/t)
Con tained Ag
(Moz)
Au
(g/t)
Contained Au
(000s
oz)
Huaron
Peru
Vein
Proven
6.1
188
36.8
N/A
N/A
Vein
Probable
4.2
177
24.1
N/A
N/A
Morococha (92.2%)
Peru
Vein/Mantos
Proven
4.0
153
19.8
N/A
N/A
Vein /Mantos
Probable
3.1
177
17.4
N/A
N/A
La
Colorada
Mexico
Vein
Proven
1.8
399
22.5
0.44
24.6
Vein
Probable
1.8
383
21.6
0.41
23.4
Quiruvilca
Peru
Vein
Proven
0.6
138
2.5
0.82
14. 6
Vein
Probable
0.4
136
1.7
0.77
9.5
Alamo
Dorado
Mexico
Disseminated
Proven
7.0
88
19.7
0.28
63.8
Disseminated
P robable
2.1
89
6.01
0.52
35.0
Manantial
Espejo
Argentina
Vein
Proven
4.2
144
19.6
2.17
295.4
Vein
Probable
2. 2
135
9.6
2.13
151.2
San Vicente
(95%)
Bolivia
Vein
Proven
1.7
449
24.1
N/A
N/A
Vein
Probable
0.8
380
10.0
N/A
N/A
TOTAL (i)
Proven +
Probable
39.9
184
235.3
0.96
617.6
3
MINERAL RESOURCES MEASURED AND
INDICATED
Property
Location
Type
Classification
Tonnes
(Mt)
Ag
(g/t)
Co ntained Ag
(Moz)
Au
(g/t)
Contained Au
(000s
oz)
Huaron
Peru
Vein
Measured
1.0
157
4.8
N/A
N/A
Vein
Indicated
0.7
157
3.6
N/A
N/A
Morococha (92.2%)
Peru
Vein/Mantos
Measured
1.4
124
5.6
N/A
N/A
Vein /Mantos
Indicated
2.1
173
11.6
N/A
N/A
La
Colorada
Mexico
Vein
Measured
0.2
194
1.0
0.18
1.0
Vein
Indicated
1.0
370
12.3
0.39
12.9
Quiruvilca
Peru
Vein
Measured
0.3
121
1.0
0.44
3.5
Vein
Indicated
0.3
120
1.1
0.37
3.5
Silver Stockpiles
Peru
Flux Material
Measured
0.2
318
1.9
N/A
N/A
Alamo
Dorado
Mexico
Disseminated
Measured
1.0
49
1.7
0.22
7.4
Disseminated
I ndicated
2.1
82
5.5
0.35
23.5
Manantial
Espejo
Argentina
Vein
Measured
2.2
98
7.0
1.16
83.6
Vein
Indicated
3. 7
85
10.1
1.01
119.8
San Vicente
(95%)
Bolivia
Vein
Measured
0.4
120
1.7
N/A
N/A
Vein
Indicated
0.2
1 12
0.8
N/A
N/A
Navidad
Argentina
Mantos, Diss.
Measured
15.4
137
67.8
N/A
N/A
Mantos, Diss.
Indicated
139.8
126
564.5
N/A
N/A
Pico
Machay
Peru
Disseminated
Measured
4.7
N/A
N/A
0.91
137.5
Disseminated
Indicated
5.9
N/A
N/A
0.67
127.1
Calcatreu
Argentina
Vein
Indicated
8. 0
26
6.6
2.63
676.0
TOTAL (i)
Measured +
Indicated
190.6
122
708.8
1.26
1,195.8
MINERAL RESOURCES
INFERRED
Property
Location
Type
Classification
Tonnes
(Mt)
Ag
(g/t)
Con tained
Ag
(Moz)
Au
(g/t)
Contained Au (000s oz)
Huaron
Peru
Vein
Inferred
7.1
176
40.0
N/A
N/A
Morococha (92.2%)
Peru
Vein/Mantos
Inferred
7.5
159
38.2
N/A
N/A
La
Colorada
Mexico
Vein
Inferred
3.4
275
30.1
0.28
31.1
Quiruvilca
Peru
Vein
Inferred
1.4
109
4.7
0.59
25.7
Alamo Dorado
Mexico
Disseminated
Inferred
0.4
57
0.7
0.91
11.1
Manantial Espejo
Argentina
Vein
Inferred
1.6
89
4.6
1.07
54.7
San Vicente
(95%)
Bolivia
Vein
Inferred
2.8
353
32.2
N/A
N/A
Navidad
Argentina
Ma ntos, Diss.
Inferred
45.9
81
119.4
N/A
N/A
Pico
Machay
Peru
Disseminated
Inferred
23.9
N/A
NA
0.58
445.7
Calcatreu
Arg entina
Vein
Inferred
3.4
17
1.8
2.06
226.0
TOTAL (i)
Inferred
97.3
115
271.7
0.73
794.4
HISTORICAL ESTIMATES
Property
Location
Unclassified
Tonnes
(Mt)
Ag
(g/t)
Contained Ag (Moz)
Au
(g/t)
Contained Au (000s oz)
Hog Heaven (ii)
USA
Historical
2.7
167
14.6
0.62
53.9
Hog Heaven (ii)
USA
Historical
7.6
133
32.7
0.70
171.9
Waterloo (iii)
USA
Historical
33.8
93
100.9
N/A
N/A
TOTAL (i)
Historical
44.1
104
148.2
0.68
225.8
Notes: Mineral Reserves and Resources are as defined by Canadian Institute of Mining Guidelines.
Mineral Resources do not have demonstrated economic viability.
This table illustrates Pan American Silver Corps share of Mineral Reserves and Resources. Properties in which Pan American Silver has less than 100% interest are noted next to the property name.
4
Metal prices used for all Mines: Ag: $25/oz, Au: $1,350/oz, Pb: $1,850/tonne, Cu: $6,500/tonne, Zn $1,750/tonne.
Metal prices used for Navidad were Ag: $12.52/oz and Pb: $1,100/tonne.
Metal prices used for Calcatreu were Ag: $12.50/oz and Au: $650/oz.
(i) Totals may not add-up due to rounding.
(ii) The historical estimate for Hog Heaven was prepared by Gregory Hahn, Chief Geological Engineer for CoCa Mines Inc., a previous owner of the property, in a report titled Hog Heaven Project Optimization Study dated May 1989, prior to implementation of NI 43-101. The historical estimate was based on extensive diamond drilling, and was estimated using a silver price of $6.50 per ounce and a gold price of $400 per ounce (these were relevant prices at the time of the estimate). Michael Steinmann, P.Geo, has reviewed the available data, including drill sections, surface maps, and additional supporting information sources, and believes that the historic estimate was conducted in a professional and competent manner and is relevant for the purposes of the Company's decision to maintain its interest in this property. In the study, the historic estimate was sub-categorized as follows:
Category
Tons
oz/ton Ag
oz/ton Au
Proven Reserves
2,981,690
4.88
0.018
Probable & Possible Reserves
904,200
10.40
0.020
Heap leach ore
316,100
1.56
0.014
Possible Resources
4,500,000
2.41
0.020
Inferred Resources
2,700,000
4.44
0.022
However, the Company has not completed the work necessary to verify the historical estimate. Accordingly, the Company is not treating the historical estimate as NI 43-101-compliant categories of Mineral Resources based on information prepared by or under the supervision of a QP. These historical estimates should not be relied upon.
The Company believes that the historical estimate category of "Proven Reserves" for Hog Heaven most closely corresponds to 2,705,000 tonnes in the CIM definition category of "Indicated Mineral Resources".
The Company believes that the historical estimate categories of "Proven & Possible Reserves", "heap leach ore stockpile", "Possible Resources" and "Inferred Resources" most closely correspond to 7,639,000 tonnes in the CIM definition category of "Inferred Mineral Resources".
(iii) The historical estimate for Waterloo was initially prepared by Asarco Inc. in 1968. In September 1994 Robert J. Rodger, P.Eng., reviewed the Asarco reports and prepared a Technical Evaluation Report on the Waterloo property, prior to the implementation of NI 43-101. The Technical Evaluation Report confirmed that the historical estimate was based on reverse circulation drilling and underground sampling, and concluded the estimate was based on sound methodology. The historical estimate at Waterloo was prepared using a silver price of $5.00 per ounce (the relevant price at the time of the estimate). Michael Steinmann, P.Geo., has reviewed the Technical Evaluation Report and believes the historic estimate was conducted in a professional and competent manner and is relevant for purposes of the Company's decision to maintain its interest in the property. The Company believes that the historical estimate category of 37,235,000 tons (at 2.71 ounces per ton silver) of "Measured and Indicated Reserves" most closely corresponds to 33,758,000 tonnes in the CIM definition category of "Indicated Mineral Resource." However, the Company has not completed the work necessary to verify the historical estimate. Accordingly, the Company is not treating the historical estimate as NI 43-101 compliant categories of Mineral Resources based on information prepared by or under the supervision of a QP. These historical estimates should not be relied upon.
Mineral Resource and Reserve estimates for Huaron, Quiruvilca, San Vicente, La Colorada, Manantial Espejo, Alamo Dorado, Morococha, Pico Machay and Calcatreu were prepared under the supervision or were reviewed by Michael Steinmann, P. Geo., Executive Vice-President Geology & Exploration and Martin G. Wafforn, P. Eng., Vice-President Mine Engineering as Qualified Persons as that term is defined in National Instrument 43-101 (NI 43-101). Navidad Mineral Resource estimates were prepared by Pamela De Mark, P. Geo., Director, Resources, formerly Sr. Consultant of Snowden Mining Industry Consultants, also a Qualified Person as that term is defined in NI 43-101. Reserve/Resource estimates for Silver Stockpiles were prepared in previous years by other Qualified Persons. Mineral Resource estimates for Hog Heaven and Waterloo are based on historical third party estimates.
Michael Steinmann and Martin Wafforn, each of whom are Qualified Persons, as the term is defined in NI 43-101, have reviewed and approved the contents of this press release.
5
About Pan American Silver
Pan American Silver is the worlds second-largest primary silver producer. The Companys mission is to become the worlds largest low-cost primary Silver mining company by increasing its silver production and silver Mineral Reserves. The Company has seven mines in Mexico, Peru, Argentina and Bolivia. Pan American also owns the Navidad silver development project in Chubut, Argentina, the Calcatreu gold project in Rio Negro, Argentina and is the operator of the La Preciosa joint venture project in Durango, Mexico.
Information Contact
Kettina Cordero
Coordinator, Investor Relations
(604) 684-1175
info@panamericansilver.com
www.panamericansilver.com
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND FORWARD-LOOKING INFORMATION WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LEGISLATION. STATEMENTS CONTAINING FORWARD-LOOKING INFORMATION EXPRESS, AS AT THE DATE OF THIS NEWS RELEASE, THE COMPANYS PLANS, ESTIMATES, FORECASTS, PROJECTIONS, EXPECTATIONS, OR BELIEFS AS TO FUTURE EVENTS OR RESULTS AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION TO, UPDATE SUCH STATEMENTS CONTAINING THE FORWARD-LOOKING INFORMATION. SUCH FORWARD-LOOKING STATEMENTS AND INFORMATION INCLUDE, BUT ARE NOT LIMITED TO STATEMENTS AS TO: THE ACCURACY OF ESTIMATED MINERAL RESERVES AND RESOURCES, ANTICIPATED RESULTS OF FUTURE EXPLORATION, AND FORECAST FUTURE PRECIOUS METAL PRICES. AND EXPECTATIONS THAT ENVIRONMENTAL, PERMITTING, LEGAL, TITLE, TAXATION, SOCIO-ECONOMIC, POLITICAL, MARKETING OR OTHER ISSUES WILL NOT MATERIALLY AFFECT ESTIMATES OF MINERAL RESERVES.
THESE STATEMENTS REFLECT THE COMPANYS CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE NECESSARILY BASED UPON A NUMBER OF ASSUMPTIONS AND ESTIMATES THAT, WHILE CONSIDERED REASONABLE BY THE COMPANY, ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE, POLITICAL AND SOCIAL UNCERTAINTIES AND CONTINGENCIES. MANY FACTORS, BOTH KNOWN AND UNKNOWN, COULD CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM THE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT ARE OR MAY BE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS CONTAINED IN THIS NEWS RELEASE AND THE COMPANY HAS MADE ASSUMPTIONS AND ESTIMATES BASED ON OR RELATED TO MANY OF THESE FACTORS. SUCH FACTORS INCLUDE, WITHOUT LIMITATION: FLUCTUATIONS IN SPOT AND FORWARD MARKETS FOR SILVER, GOLD, BASE METALS AND CERTAIN OTHER COMMODITIES (SUCH AS NATURAL GAS, FUEL OIL AND ELECTRICITY); FLUCTUATIONS IN CURRENCY MARKETS (SUCH AS THE PERUVIAN SOL, MEXICAN PESO, ARGENTINE PESO AND BOLIVIAN BOLIVIANO VERSUS THE U.S. DOLLAR); RISKS RELATED TO THE TECHNOLOGICAL AND OPERATIONAL NATURE OF THE COMPANYS BUSINESS; CHANGES IN NATIONAL AND LOCAL GOVERNMENT, LEGISLATION, TAXATION, CONTROLS OR REGULATIONS AND POLITICAL OR ECONOMIC DEVELOPMENTS IN CANADA, THE UNITED STATES, MEXICO, PERU, ARGENTINA, BOLIVIA OR OTHER COUNTRIES WHERE THE COMPANY MAY CARRY ON BUSINESS IN THE FUTURE; RISKS AND HAZARDS ASSOCIATED WITH THE BUSINESS OF MINERAL EXPLORATION, DEVELOPMENT AND MINING (INCLUDING ENVIRONMENTAL HAZARDS, INDUSTRIAL ACCIDENTS, UNUSUAL OR UNEXPECTED GEOLOGICAL OR STRUCTURAL FORMATIONS, PRESSURES, CAVE-INS AND FLOODING); EMPLOYEE RELATIONS; RELATIONSHIPS WITH AND CLAIMS BY LOCAL COMMUNITIES AND INDIGENOUS POPULATIONS; AVAILABILITY AND INCREASING COSTS ASSOCIATED WITH MINING INPUTS AND LABOUR; THE SPECULATIVE NATURE OF MINERAL EXPLORATION AND DEVELOPMENT, INCLUDING THE RISKS OF OBTAINING NECESSARY LICENSES AND PERMITS AND THE PRESENCE OF LAWS AND REGULATIONS THAT MAY IMPOSE RESTRICTIONS ON MINING, INCLUDING THOSE CURRENTLY IN THE PROVINCE OF CHUBUT, ARGENTINA; DIMINISHING QUANTITIES OR GRADES OF MINERAL RESERVES AS PROPERTIES ARE MINED; GLOBAL FINANCIAL CONDITIONS; CHALLENGES TO, OR DIFFICULTY IN MAINTAINING, THE COMPANYS TITLE TO PROPERTIES AND CONTINUED OWNERSHIP THEREOF; THE ACTUAL RESULTS OF CURRENT EXPLORATION ACTIVITIES, CONCLUSIONS OF ECONOMIC EVALUATIONS, AND CHANGES IN PROJECT PARAMETERS TO DEAL WITH UNANTICIPATED ECONOMIC OR OTHER FACTORS; INCREASED COMPETITION IN THE MINING INDUSTRY FOR PROPERTIES, EQUIPMENT, QUALIFIED PERSONNEL, AND THEIR COSTS; AND THOSE FACTORS IDENTIFIED UNDER THE CAPTION RISKS RELATED TO PAN AMERICANS BUSINESS IN THE COMPANYS MOST RECENT FORM 40F AND ANNUAL INFORMATION FORM FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND CANADIAN PROVINCIAL SECURITIES REGULATORY AUTHORITIES. INVESTORS ARE CAUTIONED AGAINST ATTRIBUTING UNDUE CERTAINTY OR RELIANCE ON FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY HAS ATTEMPTED TO IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY, THERE MAY BE OTHER FACTORS THAT CAUSE RESULTS NOT TO BE AS ANTICIPATED, ESTIMATED, DESCRIBED OR INTENDED. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE THESE FORWARD-LOOKING STATEMENTS OR INFORMATION TO REFLECT CHANGES IN ASSUMPTIONS OR CHANGES IN CIRCUMSTANCES OR ANY OTHER EVENTS AFFECTING SUCH STATEMENTS OR INFORMATION, OTHER THAN AS REQUIRED BY APPLICABLE LAW.
CAUTIONARY NOTE TO US INVESTORS CONCERNING ESTIMATES OF MEASURED AND INDICATED RESOURCES
THIS NEWS RELEASE HAS BEEN PREPARED IN ACCORDANCE WITH THE REQUIREMENTS OF CANADIAN PROVINCIAL SECURITIES LAWS, WHICH DIFFER FROM THE REQUIREMENTS OF U.S. SECURITIES LAWS. UNLESS OTHERWISE INDICATED, ALL MINERAL RESERVE AND RESOURCE ESTIMATES INCLUDED IN THIS NEWS RELEASE HAVE BEEN PREPARED IN ACCORDANCE WITH CANADIAN NATIONAL INSTRUMENT 43-101 STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS (NI 43-101) AND THE CANADIAN INSTITUTE OF MINING,
