Name and Location
Dolores silver mine expansion project, Chihuahua, Mexico.

Client
Pan American Silver.

Project Description
The preliminary economic assessment (PEA) for the Dolores silver mine expansion project has indicated very attractive rates of return at Pan African’s reserve metal prices and at lower metal prices.

The PEA is based on a mineral inventory of about 80.3-million tonnes of oxide, sulphide and mixed oxide/sulphide material sourced from a combination of openpit and underground mining and treated at a rate of 20 000 t/d, including 14 400 t/d from the existing crusher and 5 600 t/d from the pulp agglomeration plant.

The expansion will involve increasing the current treatment rate from about 16 500 t/d to 20 000 t/d by processing the high-grade portion of the mined material through a pulp agglomeration treatment plant and conveying the agglomerated material with the crushed lower-grade portion of the mined material to the heap-leach pads for leaching.

The pulp agglomeration plant will comprise crushing, grinding, particle size classification, thickening, filtering, agglomeration and reagent facilities.

The pulp agglomeration process of liberating metals by grinding has the advantage of improved leaching kinetics and ultimate recovery of precious metals in the high-grade ore relative to the current heap-leach method.

A preliminary underground schedule based on the underground mine plan targets a production rate of about
1 500 t/d to feed the pulp agglomeration circuit in tandem with the high-grade portion of the material from the openpit mine. The PEA estimates a mine life of about 12 years, including construction time.

The PEA also considers cost savings in power generation with the installation of a substation and an estimated 110-km-long power line to connect the Dolores operation with the electrical grid in Chihuahua.

Value
The initial capital requirements for the project are estimated at $104.5-million, including $69.7-million for the pulp agglomeration plant and $34.8-million for the underground mine.

Duration
The expansion project could be completed over a period of 15 to 18 months.

Latest Developments
Pan American has decided to defer making a construction decision for the next 9 to 12 months, while it invests $3-million to $5-million in additional studies and continues the delineation of the underground accessible mineralisation to further derisk the project.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Pan American Silver investor relations manager Kettina Cordero, tel +1 604 684 1175 or
email ir@panamericansilver.com.