Pan American Silver's net income jumps 172%, announces record silver and gold production

Pan American Silver reported producing 17 million ounces of silver as of September 30th and a record 6.4 million ounces during the third quarter.

RENO, NV - 

Pan American Silver Tuesday reported a 172% increase in net income for the third quarter, along with record silver and gold production.

CEO Geoff Burns said, "The main drivers of our third quarter performance were a well executed startup of the San Vicente mine expansion, which has been producing silver beyond our expectations, and a solid quarter at Manantial Espejo. "

Vancouver-based Pan American produced a record of 6.4 million ounces of silver during the third quarter, a 31% increase over the 4.9 million ounces produced in the third-quarter 2008. The main reasons for the increase were the addition of silver production from Manantial Espejo which produced 1 million ounces of silver in the third quarter, and from increased silver production from San Vicente, which increased its production by an additional 600,000 ounces.

For the first nine months of this year, PanAm produced 17,050,812 ounces of silver compared to 14,068,379 ounces during the same period of 2008.

Gold production increased more than fourfold to 28,017 ounces during the third quarter, primarily as a result of commercial production beginning at Manantial Espejo, the processing of a small high grade gold zone at La Colorada and increased throughput at Alamo Dorado. For the first nine months of this year gold production increased from 20,078 ounces reported for the same period of 2008 to 74,080 ounces.

Gold is now PanAm's largest by-product, accounting for 18% of the total consolidated metal value of production during the third quarter.

Consolidated zinc and copper production during the third quarter increased, respectively, by 16% to 11,214 tonnes of zinc and by 22% to 1, 849 tonnes of copper. For the first nine months of the year zinc production was reported at 32,355 tonnes, up from 29,002 tonnes during the same period of 2009.

As of this date, Pan American reported that Doe Run Peru has not resolved its financing needs and the La Oroya smelter remains closed. Doe Run was the largest buyer of PanAm's copper concentrates.

For the first nine months of this year, Pan American Silver's copper production was reported at 4,865 tonnes, compared to 4,461 tonnes for the same period of 2008.

Total costs for the third quarter of this year were US$8.95 per ounce of silver, down from $9.53/oz during the third quarter of 2008. For the nine-month period ended September 30, 2009, total costs were $9.64/oz, up from $8.04/oz reported during the comparable period of 2008. The company said the achievement of commercial production at San Vicente "has resulted in a significant increase in the depreciation and amortization charged in the 2009 periods relative to the comparative periods of 2008."

Pan American officials said they are confident the company will "comfortably meet its forecast annual production target of 21.5 million ounces of silver and 85,000 ounces of gold for 2009, excluding production from Quiruvilca. Furthermore, the company now expects that its consolidated cash costs for the full year in 2009 will be below the previously announced guidance of approximately $6 per ounce of silver."

The Quiruvilca mine is being prepared for a period of care and maintenance although the company expects to continue mining through the balance of this year and into 2010/

FINANCIALS

Net income for the third quarter was US$17.4 million or 20-cents per share, a 172% increase over a year ago when net income was reported at $6.4 million or 8-cents/share. The improvement was attributed to higher gold prices and increased silver and gold production.

However, for the first nine months of this year, net income was $34.2 million or 40 cents per share, down from $58 million or 72-cents/sh reported during the first nine months of 2009.

During the third quarter Pan American made a friendly all-share C$626 million (US$596.5m) takeover bid to acquire Aquiline Resources, in particular the Navidad silver project in the Province of Chubut in Argentina.

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