Pan American Silver Announces Third Quarter Results

Silver Production Increases, Manantial Espejo Commissioning Underway

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 13, 2008) -

(All amounts in US dollars unless otherwise stated and all production figures are approximate)

Pan American Silver Corp. (TSX:PAA)(NASDAQ:PAAS) today reported unaudited financial and operating results for the quarter ended September 30, 2008. The Company also provided an update on its mining operations as well as its project development activities, which includes the startup of its new Manantial Espejo mine in Argentina and the expansion of its San Vicente mine in Bolivia.

This earnings release should be read in conjunction with the Company's MD&A, Financial Statements and Notes to Financial Statements for the corresponding period, which are available on the Company's website at www.panamericansilver.com, and have been posted on SEDAR at www.sedar.com.

Third Quarter 2008 Highlights(1)

- Quarterly silver production of 4.9 million ounces, up 9% from Q3 2007

- Cash costs(2) increased to $6.61 per payable ounce of silver

- Sales of $79.5 million

- Cash flow from operations of $22.7 million.

- Mine operating earnings(2) of $15.5 million.

- Net income of $6.4 million or $0.08 per share

- Adjusted net income(3) of $11.3 million or $0.14 per share

- Commissioning of Manantial Espejo mine in Argentina is underway, with first silver and gold production expected approximately 5 weeks from today

- Discovery of a significant new high grade silver zone at the Morococha mine in Peru

- Production forecast for 2008 maintained at 18.8 million ounces of silver

(1) Financial information in this news release is based on Canadian GAAP

(2) Mine operating earnings and cash costs are non-GAAP measures. For a detailed description of these measures please refer to page 3 and page 8 of the MD&A.

(3) Adjusted net income is equal to net income, excluding an unrealized loss of $2.9 million on currencies held in denominations other than US dollars and a loss of $2.0 million on re-pricing of previously recognized concentrate sales.

"There is no question that our financial results were negatively impacted by the sharp decline in base metal and silver prices that started in the middle of the third quarter and gathered speed towards the end of September" said Geoff Burns, President and CEO. "However, we increased our silver production, still generated net earnings for a 10th consecutive quarter, delivered a respectable $22.7 million in operating cash flow, maintained a healthy working capital position with no debt and are now starting up our newest and lowest cost silver and gold mine. In short, we are well positioned to continue to deliver growth, weather the difficult price environment we have just entered and at the same time take advantage of the strategic opportunities that are becoming more prevalent."

Financial Results

Pan American posted sales of $79.5 million during the third quarter of 2008, a 10% decline year over year. Although the realized silver price increased 19% relative to the same period last year, this was offset by significantly lower realized base metal prices. Zinc prices were 45% lower than in the third quarter of last year while lead prices declined 39% over the same period.

Mine operating earnings for the quarter decreased to $15.5 million from $29.1 million in the comparable period in 2007, while consolidated net income decreased to $6.4 million or $0.08 per share. Included in net income for the quarter was an unrealized $2.9 million loss on currencies held in denominations other than US dollars and $2.0 million in negative pricing adjustments on concentrates previously included in sales. Excluding these two items, adjusted net income was $11.3 million or $0.11 per share. The lower net income and lower mine operating earnings during the current quarter were primarily caused by the decline in base metal prices, largely zinc and higher cash production costs and depreciation charges.

During the quarter the Company generated $22.7 million in cash flow from operating activities, while investing $33.6 million in construction of the new Manantial Espejo mine and $14.2 million in the expansion of the San Vicente mine. The Company also incurred capital expenditures of $11.8 million at its other operations.

At September 30, 2008 Pan American's cash and short term investments totalled $90.9 million and the Company had in excess of $167 million in working capital. The Company remains debt-free and fully funded to complete its short term growth projects. Additionally, in October the Company secured a $70 million revolving credit facility, which is intended to fund general corporate purposes and strategic business development activities. To date, the Company has not drawn from this facility.

Production And Operations

Pan American produced 4.9 million ounces of silver during the third quarter of 2008, which was 9% higher than in the third quarter of 2007 and 0.2 million ounces more than during the second quarter of this year. Alamo Dorado was the Company's best producing operation, contributing 1.7 million ounces of silver during the quarter. The La Colorada and Huaron operations also had good production quarters, contributing 1.0 and 0.9 million ounces of silver respectively.

Consolidated cash costs for the quarter rose to $6.61 per ounce of silver from $3.32 in the third quarter of 2007. The increase was a direct result of lower base metal by-product credits, and increased energy and labour costs, mainly at the Company's Peruvian operations.

Exploration

In October, Pan American announced the discovery of the high grade Morro Solar vein at its Morococha mine in Peru. The Morro Solar vein was identified during surface exploration and has been mapped over a continuous distance of more than 2.5 km along strike.