Pan American Silver eyes Manantial Espejo (March 04, 2002)

Vancouver — The proposed Manantial Espejo silver-gold mine in Argentina has moved a step closer to reality following a deal that allows Pan American Silver (PAA-T) to earn a 50% interest.

In August 2001, Silver Standard Resources (SSO-V) acquired an initial 10% interest in the project from Barrick Gold (ABX-T) and has an option to earn 40% of Black Hawk Mining‘s (BHK-T) 90% interest. Silver Standard then agreed to buy the junior’s remaining 50% for US$2 million in cash or shares.

Now, Silver Standard has inked a deal to vend a half-interest to Pan American, provided the latter pay US$2 million in cash or shares, plus the first US$3 million of mine construction costs. Prior to a production decision, the two companies will share exploration costs equally.

Situated in Santa Cruz province and discovered in 1989, the project consists of eight concessions covering 225 sq. km. It is 160 km west of the tidewater port of Puerto San Julian and is accessible via an all-weather gravel road. Geologically, the property is underlain by Jurassic-aged andesitic flows and agglomerates covered by felsic tuffs and ignimbrites. Silver and gold mineralization is generally confined to continuous shoots in quartz veins, which form in northwest-striking fault zones.

At last report, measured and indicated resources at the Manantial Espejo deposit totalled 4.4 million tonnes grading 263.8 grams silver and 4.51 grams gold per tonne. The inferred resource stands at 1.6 million tonnes grading 258.2 grams silver and 3.65 grams gold. Measured and indicated resources represent 73% of the total resource.

Pan American produced 6.9 million oz. silver from its three wholly owned mines in Peru and Mexico during 2001. This marked a 90% jump from 2000. Byproduct zinc production increased by 26% to 30,870 tonnes, lead production soared 97% to 17,191 tonnes, and copper production increased 78% to 2,161 tonnes.

The dramatic increase was the result of two mine openings last year. In January, the La Colorada mine in Mexico started small-scale production, and in April, the Huaron mine in Peru began operating on a full scale.

The silver miner expects to pour 9.2 million oz. this year, or 33% more than in 2001.