September 15, 2010
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On June 14, 2010, Pan American announced that its majority-held subsidiary, Compania Minera Argentum S.A. ("Argentum"), had reached an agreement with Minera Chinalco Peru ("MCP"), on the long-term coexistence of the Toromocho project and the Morococha mine. The agreement, which focuses on the lands and concessions around the Morococha mine and MCP's Toromocho project, defines each party's long-term surface rights and provides certainty to Morococha's land situation.
Under the agreement, Morococha's core facilities, currently located in Toromocho's planned open pit mining area, will be relocated over a 5-year period. In exchange, Argentum will receive certain surface rights, easements and other rights, more than sufficient to relocate its facilities and to guarantee Morococha's uninterrupted operations. Argentum will also obtain rights to a number of prospective mineral concessions outside the planned Toromocho pit area, where high-grade silver veins have been identified. Additionally, Argentum will receive periodic cash payments from MPC totaling $40 million to offset some of the capital required for the relocation. At June 30, 2010, Argentum had received $2 million from MCP.
During the first half of 2010 Pan American produced 12.4 million ounces of silver at cash costs of $5.07 per ounce of silver, net of by-product credits. In addition, the Company's gold production for the six months ended June 30, 2010 was 49,029 ounces of gold. The Company remains confident that it will achieve its 2010 consolidated silver production forecast of 23.4 million ounces. Furthermore, Pan American expects to comfortably beat its 2010 cash cost forecast of $5.90 per ounce of silver, net of by-product credits.
Consistent with the new dividend policy announced on February 15th of this year, today the Board of Directors approved the second semi-annual cash dividend of 2010 in the amount of $0.025 per share. The dividend will be distributed on or about Tuesday, September 7, 2010 to holders of record of common shares as of the close of business on Monday, August 23, 2010. The dividend will be designated as an eligible dividend for the purposes of the Income Tax Act (Canada).
Specific dates and amounts of future dividends will be determined by the Board on an ongoing basis.
About Pan American Silver
Pan American Silver's mission is to be the world's largest and lowest cost primary silver mining company by increasing its low-cost silver production and silver reserves. The Company has seven operating mines in Mexico, Peru, Argentina and Bolivia and a stockpiles operation in Peru. Pan American also owns the Navidad project in Chubut, Argentina and is the operator of the La Preciosa project in Durango, Mexico.
Technical information contained in this news release has been reviewed by Michael Steinmann, P.Geo., Executive Vice President Geology & Exploration, and Martin Wafforn, P.Eng., Vice President Technical Services, who are the Company's Qualified Persons for the purposes of NI 43-101.
Pan American will host a conference call to discuss its second quarter financial and operating results on Thursday, August 12, 2010 at 11:00 am Pacific Time (02:00 pm Eastern Time). Participants can access the conference by dialing toll free 1-800-319-4610 (Canada & USA) or 1-604-638-5340 from outside North America. The call can also be accessed via live audio webcast at https://services.choruscall.com/links/pan100812.html or at www.panamericansilver.com.
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