Pan American Silver Corp.
TSX : PAA
NASDAQ : PAAS

Pan American Silver Corp.

February 20, 2008 12:49 ET

Pan American Silver Increases Estimated Proven and Probable Silver Reserves to 228 Million Ounces

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 20, 2008) - Pan American Silver Corp. (TSX:PAA)(NASDAQ:PAAS) is pleased to announce the results of its 2007 year-end silver reserve and resource estimate.

In addition to replacing 100% of the 20.8 million ounces of contained silver that were mined during 2007, the Company added new proven and probable silver reserves of 14.5 million ounces and increased measured and indicated silver resources by another 4.9 million ounces.

"Once again, we have not only replaced what we mined, but have meaningfully added to our proven and probable silver reserves," said Geoff Burns, President and CEO. "In the last two years we have discovered, upgraded and added through acquisitions of joint venture interests over 86 million ounces of silver, before considering ore mined. In anyone's book, this represents significant value creation."

Reserve increases were driven by the Huaron, Morococha and San Vicente mines where net estimated proven and probable silver reserves rose 7.6 million ounces, 3.8 million ounces and 11.5 million ounces, respectively. At Morococha, proven and probable silver reserves have tripled since Pan American acquired the operation in mid-2004.

The following represents the changes in the Company's estimated silver reserves, year over year:



Proven and probable silver reserves,
as at January 1, 2007 213.3 million ounces
Less: mined ounces (contained) during 2007 (20.8)
Discovered or acquired ounces during 2007 35.3
------------------------------------------ -------
Proven and probable silver reserves,
as at January 1, 2008 227.8 million ounces


Pan American has focused much of its exploration efforts over the past two years on its portfolio of operating properties. In 2007, the Company drilled over 95,000 meters, almost exclusively at its existing mines. The full results of the Company's 2007 drilling programs have been incorporated into the year-end silver reserve and resource estimate.

In 2008, the Company plans another plus 90,000 meter exploration drilling program and while much of this effort will again be focused on increasing proven and probable reserves at operating mines, it will also include for the first time in many years testing of a number of newly acquired, highly prospective greenfield projects in Peru and Mexico. Mr. Burns commented: "I am very excited about our greenfield exploration plan in 2008 and hope we will be able to announce a significant new silver discovery by this time next year."

Complete reserve and resource information for all metals, including tonnage, grade and accompanying metal price assumptions is available at www.panamericansilver.com. Complete silver reserve and resource information are as follows:



SILVER RESERVES - PROVEN AND PROBABLE
Ag
Cont.
Tonnes Ag (000'
Location Type Classification (000's) (g/mt) ozs)
-------- ---- -------------- ------- ------ -------
Huaron Peru Vein Proven 5,604 189 34,038
Vein Probable 4,007 192 24,788
Morococha Peru Vein/Mantos Proven 4,131 148 19,693
(89.4%)
Vein/Mantos Probable 2,540 152 12,427
La Colorada Mexico Vein Proven 863 431 11,957
Vein Probable 457 415 6,103
Quiruvilca Peru Vein Proven 730 175 4,106
Vein Probable 702 149 3,366
Silver Peru Flux Probable 242 297 2,309
Stockpiles Material
Alamo Mexico Disseminated Proven 1,775 98 5,608
Dorado
Disseminated Probable 9,444 114 34,605
Manantial Argentina Vein Proven 3,489 151 16,940
Espejo
Vein Probable 3,701 181 21,538
San Vicente Bolivia Vein Proven 1,741 369 20,674
(95%)
Vein Probable 648 463 9,644
TOTALS Proven + 40,074 177 227,795
Probable



SILVER RESOURCES - MEASURED AND INDICATED

Ag
Cont.
Tonnes Ag (000'
Location Type Classification (000's) (g/mt) ozs)
-------- ---- -------------- ------- ------ -------
Huaron Peru Vein Measured 1,300 161 6,726
Vein Indicated 846 163 4,421
Morococha Peru Vein/Mantos Measured 1,154 162 5,999
(89.4%)
Vein/Mantos Indicated 1,385 237 10,552
La Colorada Mexico Vein Measured 186 312 1,871
Vein Indicated 928 313 9,337
Quiruvilca Peru Vein Measured 4,246 114 15,556
Vein Indicated 953 164 5,028
Alamo Mexico Disseminated Measured 263 84 710
Dorado
Disseminated Indicated 3,610 71 8,241
Manantial Argentina Vein Measured 1,807 87 5,054
Espejo
Vein Indicated 2,288 94 6,915
San Vicente Bolivia Vein Measured 509 93 1,520
(95%)
Vein Indicated 538 253 4,381
TOTALS Measured + 20,014 134 86,312
Indicated



SILVER RESOURCES - INFERRED
Ag
Cont.
Tonnes Ag (000'
Location Type Classification (000's) (g/mt) ozs)
-------- ---- -------------- ------- ------ -------
Huaron Peru Vein Inferred 3,939 177 22,467
Morococha Peru Vein/Mantos Inferred 6,342 151 30,788.344
(89.4%)
La Colorada Mexico Vein Inferred 1,828 307 18,052
Quiruvilca Peru Vein Inferred 2,472 135 10,761
Alamo Mexico Disseminated Inferred 518 79 1,316
Dorado
Manantial Argentina Vein Inferred 2,523 107 8,679
Espejo
San Vicente Bolivia Vein Inferred 690 326 7,225
(95%)
TOTALS Inferred 18,311 169 99,288



HISTORICAL ESTIMATES

Tonnes Ag Ag Cont.
Property Location Unclassified (000's) (g/mt) (000' ozs)
-------- -------- ------------ ------- ------ -----------
Hog Heaven(i) USA Historical(i)(ii) 2,705 167 14,550
Hog Heaven(i) USA Historical(ii) 7,639 133 32,730
Waterloo(iv) USA Historical 33,758 93 100,937
--------------------------
TOTAL Historical 44,102 104 148,217


Notes: The table illustrates Pan American's share of estimated silver reserves and resources for each property. Pan American's interest in properties which are not wholly-owned are noted next to the property name.

Silver resources are exclusive or silver reserves.

The silver reserve and resource estimates are prepared in accordance with the CIM Definition Standards On Mineral Resources and Mineral Reserves, adopted by CIM Council on November 14, 2004, and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines, adopted by CIM Council on November 23, 2003, using geostatistical and/or classical methods, plus economic and mining parameters appropriate to each project. You will find the definitions and guidelines at www.cim.org.

Silver resource and reserve estimates for Huaron, Quiruvilca, San Vicente, La Colorada, Manantial Espejo, Alamo Dorado and Morococha were prepared under the supervision of, or were reviewed by Michael Steinmann, P.Geo., Senior Vice President Geology & Exploration and Martin G. Wafforn, P.Eng., Vice President Mine Engineering as Qualified Persons ("QPs") as that term is defined in National Instrument 43-101 ("NI 43-101"). They have also reviewed and approved the contents of this press release. Silver reserve and resource estimates for Silver Stockpiles were prepared in previous years by other Qualified Persons, and are based on 2006 silver reserve and resource estimates adjusted for 2007 production where applicable. Estimates for Hog Heaven and Waterloo are based on historical third party estimates.

Metal Prices Used for all Mines (except Manantial Espejo) are: Ag: $11.00/oz, Au: $625/0z, Pb: $1,600/Tonne, Cu: $6,000/Tonne, Zn: $2,100/Tonne.

Metal Prices Used for Manantial Espejo are: Ag: $9.00/oz, Au: $525/0z, Pb: $1,000/Tonne, Cu: $5,000/Tonne, Zn: $2,100/Tonne.

Varying cut-off values have been used depending on the mine and type of ore contained in the silver reserves. Pan American's normal data verification procedures have been employed in connection with the calculations. Silver resources have been estimated using varying cut-off values, depending on both the type of mine or project, its maturity and ore types at each property.

There are no known environmental, permitting, legal, taxation, political or other relevant issues that would materially affect the estimates of the silver reserves and resources at any of Pan American's properties.

Silver resources do not have demonstrated economic viability.

(i) The historical estimate for Hog Heaven was calculated by Gregory Hahn, Chief Geological Engineer for CoCa Mines Inc., a previous owner of the property, in a report titled "Hog Heaven Project Optimization Study" dated May 1989, prior to implementation of NI 43-101. The historical estimate was based on extensive diamond drilling, and was calculated using a silver price of $6.50 per ounce and a gold price of $400 per ounce (these were relevant prices at the time of the calculation). Michael Steinmann, P.Geo., QP for the Company, has reviewed the available data, including drill sections, surface maps, and additional supporting information sources, and believes that the historic calculation was conducted in a professional and competent manner and is relevant for the purposes of the Company's decision to maintain its interest in this property. In the study, the historic estimate was sub-categorized as follows:


Historical Estimate
Category Tons oz/ton Ag
-------- ---- ---------
Proven reserves 2,981,690 4.88
Probable & possible 904,200 10.40
Heap leach ore 316,100 1.56
Possible resources 4,500,000 2.41
Inferred resources 2,700,000 4.44


However, the Company has not completed the work necessary to verify the historical estimate. Accordingly, the Company is not treating the historical estimate as NI 43-101 compliant categories of mineral resources based on information prepared by or under the supervision of a QP. These historical estimates should not be relied upon.

(ii) The Company believes that the historical estimate category of "proven reserves" for Hog Heaven most closely corresponds to 2,705,000 tonnes in the NI 43-101 category of "indicated resources".

(iii) The Company believes that the historical estimate categories of "proven & possible reserves", "heap leach ore stockpile", "possible resources" and "inferred resources" most closely correspond to 7,639,000 tonnes in the NI 43-101 category of "inferred resources."

(iv) The historical estimate for Waterloo was initially calculated by Asarco Inc. in 1968. In September 1994 Robert J. Rodger, P.Eng., reviewed the Asarco reports and prepared a Technical Evaluation Report on the Waterloo property, prior to the implementation of NI 43-101. The Technical Evaluation Report confirmed that the historical estimate was based on reverse circulation drilling and underground sampling, and concluded the estimate was based on sound methodology. The historical estimate at Waterloo was calculated using a silver price of $5.00 per ounce (the relevant price at the time of the calculation). Michael Steinmann, P.Geo., QP for the Company, has reviewed the Technical Evaluation Report and believes the historic calculation was conducted in a professional and competent manner and is relevant for purposes of the Company's decision to maintain its interest in the property. The Company believes that the historical estimate category of 37,235,000 tons (at 2.71 ounces per ton silver) of "measured and indicated reserves" most closely correspond to 33,758,000 tonnes in the NI 43-101 category of "indicated resource." However, the Company has not completed the work necessary to verify the historical estimate. Accordingly, the Company is not treating the historical estimate as NI 43-101 compliant categories of mineral resources based on information prepared by or under the supervision of a QP. These historical estimates should not be relied upon.

Pan American's estimated silver reserve and resources are forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws as they constitute a prediction based on certain estimates and assumptions as to the mineralization that would be encountered if a deposit is developed and mined. Material factors that could cause Pan American's actual results to differ materially from these estimates include: technological and operational challenges to Pan American's mines and mine development projects; changes in local legislation or taxation or the local political or economic environment; changes in mine or development project parameters to deal with unanticipated economic factors; future prices of silver; increased competition in the mining industry for equipment and qualified personnel, and their rising costs; unexpected work stoppage or labour disputes; fluctuations in the price for natural gas, fuel oil and other key supplies; and unpredictable risks and hazards relating to the operation and development of Pan American's mines. Material assumptions that were applied in estimating Pan American 's silver reserves and resources are set out in the notes to the table above.

There can be no assurance that any statements containing forward-looking information will prove to be accurate as actual results and future events could differ materially from those anticipated or assumed in such forward-looking information. Accordingly, readers should not place undue reliance on statements containing forward-looking information.

Pan American does not intend, and does not assume any obligation, to update these forward-looking statements to reflect changes in assumptions or changes in circumstances or any other events affecting such statements, other than as required by applicable law.

About Pan American Silver

Pan American Silver's mission is to be the world's largest and lowest cost primary silver mining company, and to achieve this by increasing its low cost silver production and its silver reserves. The Company has seven operating silver mines in Mexico, Peru and Bolivia. An eighth mine in Argentina is scheduled to commence operations late in the second quarter of 2008.

CAUTIONARY NOTE TO US INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES

This press release uses the terms "measured resources", "indicated resources" and "inferred resources". United States investors are advised that, while such terms are recognized and required by Canadian securities laws, the United States Securities and Exchange Commission (the "SEC") does not recognize them. Under United States standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Mineral resources that are not mineral reserves do not have demonstrated economic viability. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves.

Inferred resources are in addition to measured and indicated resources. Further, inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Therefore, United States investors are also cautioned not to assume that all or any part of the Company's inferred resources exist, or that hey can be mined legally or economically.

Disclosure of "contained ounces" is permitted disclosure under Canadian securities laws, however, the United States Securities and Exchange Commission ("SEC") normally only permits issuers to report "resources" as in place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization and resources contained in this release may not be comparable to information made public by United States companies subject to the reporting and disclosure requirements of the SEC.

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