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LETMYSILVERGO
14th November 2008, 19:01
PanAm Silver says physical silver investment market remains strong


http://www.mineweb.net/mineweb/view/mineweb/en/page32?oid=73052&sn=Detail



Pan American Silver President and CEO Geoff Burns predicted that the common investors buying physical gold and silver during the current global financial crisis "will be handsomely rewarded for their foresight."
Author: Dorothy Kosich
Posted: Friday , 14 Nov 2008

RENO, NV -

Pan American Silver President and CEO Geoff Burns noted Thursday, that despite the global financial crisis, "the physical investment market remains very strong as common investors are accumulating physical silver and gold during turbulent times."

"I personally believe they will be handsomely rewarded for their foresight," he told analysts and investors during a conference call to discuss quarterly financial results.

Meanwhile, Burns said Pan American is "very aware of the companies in our sector who are in some difficult situations and we're going to look at those very carefully." However, he added, "We're not going to act irrationally or too quickly. I think it behooves us to again show some discipline, to look for potentially the best fits with Pan American."

Pan American was not immune from the sharp decline in base metal and silver prices that started in the middle of the third quarter and speeded up toward the end of September. "However, we increased our silver production, still generated net earnings for a 10th consecutive quarter, delivered a respectable $22.7 million in operating cash flow, maintained a healthy working capital position with no debt and now starting up our newest and lowest cost silver and gold mine," Burns said in the company's financial results news release.

Nevertheless, the company has reduced its overall workforce by 500 employees and contractors, as senior executives have taken a 10% pay cut. Mine ore grades have been increased across all operations while discretionary capital expenditures have been cancelled. Burns assured analysts that the cost-cutting measures will reduce costs without compromising the company's production objectives.

Burns said Pan American still has the resources to start up the new Manantial Espejo mine in the Santa Cruz Province of Argentina and expand the San Vicente underground silver-zinc mine in Bolivia. Commissioning has started at Manantial Espejo, which is expected to produce 4.1 million ounces of silver and 60,000 ounces of gold per year at a cash cost of 2-cents per ounce of silver produced. However, delay caused by slow equipment deliveries, lower contractor productivity, and extreme seasonal wind conditions, will increase total capital expenditures to be 20% to 24% over the previous estimate of $185.3 million.

The San Vicente mine expansion commissioning is anticipated during the first half of 2009.

Pan American has maintained its 2008 production guidance at 18.8 million ounces of silver, but has increased its consolidated cash cost to $5.70 per ounce of silver for the year.

"We will adapt our business to the current environment and we will thrive and grow," Burns declared. "We have the team with the skills and experience to do so."

FINANCIALS

The company reported net income of $58 million or 72 cents per share for the first nine months of this year, down from the net income of $62.8 million (82-cents/sh) reported during the same period of 2007.

For the third-quarter 2008, Pan American reported a net income of $6.4 million (8-cents/sh), down from $24 million (31-cents/sh) net income reported for the third quarter of 2007.

Although the silver price increased 18% during the third quarter of this year, this was offset by significantly lower base metals prices. Zinc prices were 45% lower than in the third quarter of last year while lead prices declined 39%.