Pan American Silver Announces First Silver Poured at Manantial Espejo

VANCOUVER, BC - Pan American Silver Corp. reported that its new Manantial Espejo silver and gold mine in Argentina began pouring dore.
Construction at Manantial Espejo, the Company's eighth silver mine is substantially complete and the mill start-up activities, which began in late November, are in full swing, including achievement of the first production of silver and gold dore. Open pit and underground mining continue and previously stockpiled ore is currently being fed into the processing circuit.
As of December 31, 2008, approximately 10,000 ounces of silver and 230 ounces of gold had been poured. Another 65,000 ounces of silver and 1,200 ounces of gold remained in precipitate and will be poured into dore and shipped by mid-January. The initial commissioning and ramp-up of the plant is progressing well and management expects to reach design capacity of 2,000 tonnes per day by the end of the first quarter of 2009. At feasibility study levels, Manantial Espejo is expected to produce an average of 4 million ounces of silver and 60,000 ounces of gold annually and should be the Company's lowest cost mine.
Pan American achieved a new annual silver production record of 18.7 million ounces in 2008. This represents silver production growth of 9% as compared to 2007 and is within 1% of the Company's 2008 forecast. Cash costs for the year are estimated to be in the range of $5.75 to $6.10 per ounce of silver produced, net of by-product credits. During the fourth quarter of 2008, the Company produced approximately 4.6 million ounces of silver at an estimated cash cost in the range of $7.75 to $8.25 per ounce, net of by-product credits. Cash costs in the fourth quarter were adversely affected by significantly reduced by-product metal prices; costs escalation, particularly in connection with energy and labour; and severance and related employee redundancy costs. Pan American expects the trend in rising cash costs to begin to reverse commencing late in the first quarter of 2009 in response to actions the Company initiated in November of last year with respect to its mine operating plans and reduction in employment levels.
The Company's San Vicente expansion project in Bolivia is also nearing mechanical completion with the commissioning team in place. Efforts are now focused on finishing the installation of the SAG and ball mills, the electrical and instrumentation, and the main water supply pumping system. The tailings dam, the crushing plant, the flotation circuits, and the thickening and filtration circuits are essentially complete. Expansion of the underground mine is also progressing on schedule with the development of the new mechanized zone in the Litoral vein well advanced. Management expects commissioning activities to begin in late January 2009 with the first ore expected to be fed to the plant in February 2009. At feasibility study levels, San Vicente is expected to contribute an average of 2.9 million ounces of silver annually.
The company's address is 1500-625 Howe Street, Vancouver, BC V6C 2T6, (604) 684-1175, fax: (604) 684-0147, email: [email protected].