Pan American to develop the Manatial Espejo silver project
March 23 2006 - 2:36PM
PR Newswire (US)
(all amounts in $US unless otherwise stated) VANCOUVER, March 23
/PRNewswire-FirstCall/ -- Pan American Silver Corp. (PAAS: NASDAQ;
PAA: TSX) is pleased to announce that it has received approval from
the Province of Santa Cruz Argentina for the Environmental Impact
Statement on its 100% owned Manantial Espejo silver project and
plans to immediately proceed with the development and construction
of the mine. The Company also signed an agreement with the Federal
Government of Argentina and the Province of Santa Cruz to bring
grid electrical power to the town of Gobernador Gregores with a
sub-connection to Manantial Espejo. The recently completed
feasibility study for Manantial Espejo estimates that the project
will produce on average 4.3 million ounces of silver and 62,000
ounces of gold annually over a mine life of 8.5 years, based on
current proven and probable reserves. Capital costs for the project
are expected to be $112.3 million including working capital and
normal construction contingencies, plus $18.1 million in Argentine
Value Added Tax which will be refundable once the mine is in
production. At the feasibility study price assumptions of US$6.75
per ounce for silver and US$475 per ounce for gold, the mine will
generate an undiscounted after tax net present value of $72.6
million, an internal rate of return of 12% and a capital payback of
3.5 years. Average life of mine cash costs will be $0.02 per ounce,
net of gold byproduct credits. At today's prices the undiscounted
after tax net present value of the project would be $169 million,
the internal rate of return increases to 25% and the capital
payback period would be approximately 2.3 years. Basic engineering
for the project has been initiated and construction is expected to
take 18-20 months. Existing mineral reserves are concentrated in
four zones: the Maria, Karina Union, Melissa and Concepcion
deposits which will be developed using both open pit and
underground mining methods. Silver and gold recovery will be by
conventional milling and leaching at a rate of 2,000 tonnes per
day. The feasibility study estimates that the recovery rates for
silver and gold will be 93% and 94%, respectively. Pan American is
currently exploring financing options for the project. According to
Pan American Chairman Ross Beaty; "Development of 100% of Manantial
Espejo secures Pan American's future as the world's number one
primary silver producer. Together with this project, the completion
of our new Alamo Dorado mine in the fourth quarter of this year and
the expansion of our San Vicente and Morococha mines, we expect to
double our current annual production to more than 25 million ounces
of silver by the end of 2008. We have received great cooperation
from the Argentine government at the federal and provincial levels,
and particularly from the local community of Gobernador Gregores. I
look forward to a successful mine development at Manantial Espejo
for the benefit of Argentina, the local community and of course our
shareholders." (x)Mineral Reserves and Resources as at December 31,
2005
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Tonnes Grade Grade Silver (000s) (g/t Ag) (g/t Au) (ounces)
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Proven Mineral Reserves 2,743 176 2.47 15,522,000 Probable Mineral
Reserves 2,848 211 3.18 19,271,000 Total 5,591 194 2.83 34,793,000
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Measured Mineral Resources 1,224 108 1.22 4,248,000 Indicated
Mineral Resources 1,670 118 1.22 6,332,000 Total 2,894 114 1.22
10,580,000
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Inferred Mineral Resources 1,042 133 1.20 4,468,000
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(x)Michael Steinmann, P.Geo., Senior Vice-President Geology and
Exploration 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. The proven and probable reserves were calculated using a
silver price of US $6.25 per ounce and a gold price of US $425 per
ounce. For further information Contact: Pan American Silver Corp
(604) 684-1175 or visit the Company's website at
http://www.panamericansilver.com/. 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: Pan American Silver Corp, (604) 684-1175 or visit the
Company's website at http://www.panamericansilver.com/
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