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Pan American Silver Corporation: 21 million ozs this year!

PAAS Silver

Pan American Silver Corporation (NASDAQ: PAAS and TSX: PAA.) recently announced that they are on schedule to produce 21 million ozs of silver this year which is terrific news for the share holders of this stock. We are still of the opinion that silver will ultimately outperform gold before this bull run in precious metals comes to end.

Pan American has a 95% interest in the San Vicente mine, which is located in the Potosi department and is operated as a joint-venture with Bolivian state-owned COMIBOL. Over the past several years, mining operations at San Vicente were conducted on a limited basis, where ore was trucked to a small third party mill for processing. Given the discovery of the high grade Litoral vein system, Pan American decided in mid-2007 to invest in constructing its own processing facility and to increase the production rates.

Construction of a 750 tonne-per-day processing facility and expansion of the underground mine started in September of 2007. After 16 months of intense work, plant commissioning began in mid-January 2009 and is now close to completion. The Company expects San Vicente to reach design capacity within the next few months. The total investment to expand San Vicente and build the new processing facility is estimated to be $70 million.

Commenting on San Vicente’s expansion, Geoff Burns, President & CEO said: “This is another major accomplishment for Pan American’s construction and development team. Despite the challenges posed by an extremely remote location, and the intense competition for construction and mining supplies during much of the build, we have completed San Vicente’s expansion on schedule and within 10% of the original budget. With our own plant and expanded mining capacity, I am confident that we will now begin to realize the full value of the San Vicente ore deposit.”

Mr. Burns added: “Only two weeks ago we inaugurated the Manantial Espejo mine in Argentina. Now with San Vicente’s new processing plant in operation, we are right where we planned to be, setting ourselves up to produce 21.5 million ounces of silver this year.

This silver producer is making good progress and has recovered a little since trading as low as $8.39, PAAS closed yesterday at $18.09, however we believe that there is a lot to come.

Pan American Silver Corporation trades on the NASDAQ under the symbol of PAAS and on the Toronto Stock Exchange under the symbol of PAA. PAAS has a market capitalization of $1.58 billion, a P/E ratio of 59.07 with 80.77 million shares outstanding and an EPS of 0.31.

Have a sparkling day.

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Reader Comments (2)

This is fine except that JP Morgan is short 400 million ounces and the price of silver is falling. The question is not how much they can produce, but whether they can actually make money with the price of silver at these levels.

I'd feel more comfortable if they simply stopped selling their silver at bargain basement prices and forced the issue with the shorts.

April 2, 2009 | Unregistered CommenterJEV

personally wouldn't get involved in bolivia given pres morales' record and rhetoric. paas should imho come wih a govt health warning - literally.........

all the best

April 2, 2009 | Unregistered CommenterB

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