Pan American Silver increases proven and probable mineral reserves after successful 2011 exploration campaign

Pan American Silver Corp. (TSX:PAA)(NASDAQ:PAAS) (“Pan American” or the “Company”) today announced the results of its 2011 exploration activities, which more than replaced the Proven and Probable silver Mineral Reserves mined during 2011.

Last year, Pan American spent $25.1 million in direct exploration, completing over 190,000 meters of diamond drilling at its seven operating mines and selected greenfield projects. Through its successful 2011 exploration program, the Company discovered 29.3 million ounces of new Proven and Probable silver Mineral Reserves, which more than replaced the 24.7 million contained ounces of silver that were mined during 2011. At December 31, 2011, Pan American had Proven and Probable silver Mineral Reserves of 235.3 million contained ounces, an increase of 2% as compared to 2010’s year-end Mineral Reserves.

The most notable exploration success was at the La Colorada mine, where exploration drilling added 10.6 million new ounces of silver. In 2011, La Colorada’s Mineral Reserves grew by 15% from the prior year, to 44.1 million ounces of high grade Proven and Probable silver Mineral Reserves at December 31, 2011. La Colorada now has the second-largest Mineral Reserve in the Company’s portfolio of assets, behind the Huaron mine, which has 60.9 million ounces of silver in Proven and Probable Mineral Reserves. In the past three years, Pan American has discovered over 39 million ounces of new Proven and Probable silver Reserves at La Colorada, mainly in sulphide mineralization of the NC2 vein. The NC2 vein remains open at depth and to the east and will continue to be the focus of further exploration this year. The sulphide mineralization at La Colorada not only contains higher silver grades, but also contains substantial base metal and gold grades.

At the Alamo Dorado mine, exploration activities included infill drilling, collection of new geotechnical data, cost analysis and revision of the Mineral Resource estimation methodology. This work added 4.3 million ounces to Proven and Probable silver Reserves, which will extend Alamo Dorado’s mine-life by approximately one more year. The Company plans to carry out additional work in 2012 to further optimize the mine’s design and to potentially include a Phase 3 pit extension.

Other highlights of the 2011 exploration campaign include the complete replacement of silver ounces mined during 2011 at Huaron, Quiruvilca and San Vicente; however, industry-wide cost pressures, particularly in Argentina and the deterioration of concentrate sales terms, specifically for silver-rich copper concentrates from the Company’s Peruvian and Bolivian operations, negatively impacted the exploration results at some of our operations.

Read the full news release here.