Pan American Silver to build Alamo Dorado Silver Mine in Mexico (all amounts in $US unless otherwise stated) VANCOUVER, Feb. 25 /PRNewswire-FirstCall/ -- Pan American Silver Corp. (PAAS: NASDAQ; PAA: TSX) is pleased to announce that it will immediately commence development of a new open pit silver mine at its Alamo Dorado silver project located 320 km south of Hermosillo in the state of Sonora, Mexico. Capital costs for the project will be $76.6 million, including working capital and a contingency allowance. Pan American will fund the project from its cash reserves. The mine has 44 million ounces of silver in proven and probable reserves and a further 9 million ounces in measured and indicated resources(x). Beginning in late 2006, Alamo Dorado will contribute 5 million ounces of silver annually to Pan American at a cash cost of less than $3.25/oz net of gold by-product credits, for a mine life of 8 years. Construction, which is expected to take 15-18 months, is scheduled to begin in the second quarter this year and will consist of a primary crushing circuit, SAG mill, ball mill grinding circuit, conventional cyanide leaching circuit and a dry, stackable tailings system. Recovery rates for both silver and gold are expected to be in excess of 90%. The mine will also employ a tailings treatment process that recovers virtually all of the sodium cyanide used and also neutralizes mill tailings, thus reducing the mine's environmental impact and reclamation costs. All permits necessary to build and operate the facility have been obtained. According to Pan American Chairman Ross Beaty: "Development of Alamo Dorado will increase our forecast silver production to more than 21 million ounces by late 2006, will add to our purity as a silver producer and will generate $147 million in operating cash flow over its life at today's silver price. Mexico is a great silver-mining country and we will continue looking for additional projects to take advantage of our expertise and growing production profile there." Pan American Silver Corp. will host a conference call on February 25, 2004 at 10:00 am Pacific Time to discuss the production decision as well as the 2004 year-end results. North American residents dial toll-free to 1-877-825-5811. International participants please dial 1-973-582-2767. The call may also be accessed from the home page of the Company's website at http://www.panamericansilver.com/. It will be available for replay for one week after the call by dialing 1-877-519-4471 and using replay pin number 5652616. For further information Contact: Brenda Radies, VP Corporate Relations (604) 684-1175 http://www.panamericansilver.com/ (x)Mineral Reserves and Resources as at December 31, 2004 ------------------------------------------------------------------------- Tonnes Grade Grade Silver (000s) (g/t Ag) (g/t Au) (ounces) ------------------------------------------------------------------------- Proven Mineral Reserves 1,019 136 0.43 4,456,000 Probable Mineral Reserves 10,591 116 0.33 39,499,000 Total 11,610 118 0.34 43,955,000 ------------------------------------------------------------------------- Measured Mineral Resources 263 84 0.37 710,000 Indicated Mineral Resources 3,610 71 0.26 8,951,000 Total 3,873 72 0.27 8,241,000 ------------------------------------------------------------------------- Inferred Mineral Resources 518 79 0.34 1,316,000 ------------------------------------------------------------------------- Michael Steinmann, P.Geo.,Vice-President Geology - Operations for Pan American Silver, has estimated the mineral resources and is the Qualified Person for the resources. Martin Wafforn, P.Eng, Director of Mine Engineering for Pan American Silver is the Qualified Person for the proven/probable mineral reserves. 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. DATASOURCE: Pan American Silver Corp. CONTACT: Brenda Radies, VP Corporate Relations, (604) 684-1175, http://www.panamericansilver.com/

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