Silver: Pan American Silver in Public Offering

Pan American Silver Announces Public Offering of Common Shares


Pan American Silver Corp. (TSX: PAA)(NASDAQ: PAAS) (the "Company") announced today that it has filed a preliminary prospectus supplement to its existing base shelf prospectus with the securities regulatory authorities in each of the provinces and territories of Canada and has made a similar filing with the SEC in connection with a public offering of its common shares to raise gross proceeds of US$90 million (the "Offering").

The Company will also grant to the underwriters of the Offering an option, exercisable for a period of 30 days following the filing of a final prospectus supplement, to purchase additional common shares for consideration of up to US$13.5 million.

The Company expects to use the net proceeds of this Offering to fund acquisitions, development programs on acquired mineral properties, working capital requirements and for other general corporate purposes.

Goldman Sachs Canada Inc. and CIBC World Markets Inc. will act as co-lead managers and joint book runners of the Offering.

A copy of the preliminary prospectus supplement and the base shelf prospectus may be obtained from your Goldman Sachs sales person or Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004 Attention: Prospectus Department (212-902-1171 or toll-free 866-471-2526, facsimile 212-902-9316) or by emailing prospectus-ny@ny.email.gs.com.

Copies of these documents may also be obtained from CIBC World Markets Corp., 425 Lexington Avenue, 5th Floor, New York, New York, 10017, by fax at 212-667-6303 or by email at useprospectus@us.cibc.com. You may also obtain a copy of these documents in Canada from CIBC World Markets Inc., by fax 416-594-7242 or request a copy by telephone at 416-594-7270.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy common shares nor shall there be any sale of such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

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 eight operating mines in Mexico, Peru, Bolivia and Argentina.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

THIS NEWS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND "FORWARD-LOOKING INFORMATION" WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LEGISLATION. SUCH FORWARD-LOOKING STATEMENTS AND INFORMATION INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS AS TO THE TERMS AND CONDITIONS OF THE OFFERING, THE PROSPECTS OF ITS COMPLETION AND THE USE OF PROCEEDS FROM SUCH OFFERING. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION TO, UPDATE SUCH FORWARD-LOOKING STATEMENTS OR INFORMATION, OTHER THAN AS REQUIRED BY APPLICABLE LAW.

FORWARD-LOOKING STATEMENTS OR INFORMATION INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, LEVEL OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS OF PAN AMERICAN AND ITS OPERATIONS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS: FLUCTUATIONS IN THE SPOT AND FORWARD PRICE OF SILVER, GOLD, BASE METALS OR CERTAIN OTHER COMMODITIES (SUCH AS NATURAL GAS, FUEL OIL AND ELECTRICITY); FLUCTUATIONS IN THE CURRENCY MARKETS (SUCH AS THE PERUVIAN SOLE, MEXICAN PESO ARGENTINE PESO AND BOLIVIAN BOLIVIANO VERSUS THE U.S. DOLLAR); CHANGES IN NATIONAL AND LOCAL GOVERNMENT, LEGISLATION, TAXATION, CONTROLS, REGULATIONS AND POLITICAL OR ECONOMIC DEVELOPMENTS IN CANADA, PERU, MEXICO, ARGENTINA, BOLIVIA, THE UNITED STATES OR OTHER COUNTRIES IN WHICH THE COMPANY MAY CARRY ON BUSINESS IN THE FUTURE; OPERATING OR TECHNICAL DIFFICULTIES IN CONNECTION WITH MINING OR DEVELOPMENT ACTIVITIES; RISKS AND HAZARDS ASSOCIATED WITH THE BUSINESS OF MINERAL EXPLORATION, DEVELOPMENT AND MINING (INCLUDING ENVIRONMENTAL HAZARDS, INDUSTRIAL ACCIDENTS, UNUSUAL OR UNEXPECTED GEOLOGICAL FORMATIONS, PRESSURES, CAVE-INS AND FLOODING); INADEQUATE INSURANCE, OR INABILITY TO OBTAIN INSURANCE, TO COVER THESE RISKS AND HAZARDS; EMPLOYEE RELATIONS; AVAILABILITY AND INCREASING COSTS ASSOCIATED WITH MINING INPUTS AND LABOR; THE SPECULATIVE NATURE OF MINERAL EXPLORATION AND DEVELOPMENT, INCLUDING THE RISKS OF OBTAINING NECESSARY LICENSES AND PERMITS; DIMINISHING QUANTITIES OR GRADES OF MINERAL RESERVES AS PROPERTIES ARE MINED; BUSINESS OPPORTUNITIES THAT MAY BE PRESENTED TO, OR PURSUED BY, THE COMPANY; THE COMPANY'S ABILITY TO SUCCESSFULLY INTEGRATE ACQUISITIONS; AND CHALLENGES TO THE COMPANY'S TITLE TO PROPERTIES; AS WELL AS THOSE FACTORS DESCRIBED IN THE SECTION "RISK RELATED TO PAN AMERICAN'S BUSINESS" CONTAINED IN THE COMPANY'S MOST RECENT FORM 40F/ANNUAL INFORMATION FORM FILED WITH THE SEC AND CANADIAN SECURITIES REGULATORY AUTHORITIES. ALTHOUGH THE COMPANY HAS ATTEMPTED TO IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN FORWARD-LOOKING STATEMENTS OR INFORMATION, THERE MAY BE OTHER FACTORS THAT CAUSE RESULTS TO BE MATERIALLY DIFFERENT FROM THOSE ANTICIPATED, DESCRIBED, ESTIMATED, ASSESSED OR INTENDED. THERE CAN BE NO ASSURANCE THAT ANY FORWARD-LOOKING STATEMENTS OR INFORMATION WILL PROVE TO BE ACCURATE AS ACTUAL RESULTS AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS OR INFORMATION. ACCORDINGLY, READERS SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS OR INFORMATION.

Contacts:
Pan American Silver Corp.
Kettina Cordero
Coordinator, Investor Relations
(604) 684-1175
Email: info@panamericansilver.com

Pan American Silver Corp. looks to raise as high as $103 million in the public offering.

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.

Pan American Silver President and CEO Geoff Burns Upbeat about Future Prospects

With no debt and an eighth mine about to be opened soon in Argentina, Pan American Silver president and CEO Geoff Burns is positive about the future of the company.

Burns acknowledges that profit margins have fallen as forced liquidity continues to pummel the commodity market, yet the company has positioned itself strongly in contrast to other debt-laden competitors.

In economic challenges like the one we're in, those companies with less debt and solid operations will far outperform those who will struggle just to survive, let alone thrive.

"We have no debt and have never had any significant quantity of debt. We make our investment decisions on our operating properties and in our new constructions activities based on fundamental rates of return," said Burns.

Once liquidity comes back into the overall market, the underlying fundamentals are the same as before the financial crisis, and consumers and investors will gravitate back toward the safety of gold and demand of silver.

Burns added the company will still be able to remain profitable at $11 silver and $850 gold.

While India and China are experiencing slower growth, they will still offset the contraction of Western countries, and maintain a demand for base metals, although a slower one.

Pan American Silver is looking to produce around 25 million ounces in 2009.

Shares in Silver Mining Companies Fall with Commodity Prices

The decrease in commodity prices Friday had a significant impact on silver mining company shares, as they mirrored the overall decline.

On the Comex division of the Nymex, silver dropped 87 cents to $17.83 an ounce in afternoon trading on Friday. The Dow Jones-AIG Silver Index was also down by 2.7 percent.

Some of the declines included Pan American Silver Corp. (nasdaq:PAAS) which fell $2.11, or 5.2 percent, to $38.42; Hecla Mining Co. (nyse:HL) fell 63 cents, or 4.9 percent, to $12.37; and Silver Wheaton Corp. (nyse:SLW) fell 74 cents, or 4.3 percent, to $16.49; Coeur d'Alene Mines Corp. 14 cents, or 3.7 percent, to $3.63 and Silver Standard Resources Inc. (nasdaq:SSRI) fell $1.31, or 4.3 percent, to $29.22.

Canaccord Adams analyst Steven Butler said that while the silver sell off followed the gold, the demand for silver keeps it different than gold as solely an inflation hedge.

Silver began the year on the spot market at $14.80 an ounce.

Silver Producers' Shares Plunge as U.S. Dollar Strengthens

The U.S. dollar continues to wreak havoc in the overall commodities market, as prices plunge in response to the greenback's recent strength.

Silver was no different, as it dropped to $16.63 an ounce on late morning Tuesday, down from Monday's close of $18.11. Shares of silver producers fell along with the silver prices.

Some silver producers falling were Coeur d'Alene Mines Corp. (NYSE: CDE), which fell by 28 cents, or 6.9 percent, to $3.76; Pan American Silver Corp. (Nasdaq:PAAS) dropped $1.97, or 5.1 percent, to $36.41; and Silver Wheaton Corp. (NYSE:SLW) fell 55 cents, or 3.5 percent, to $14.98.

The Dow Jones-AIG Silver Index dropped 4.2 percent.

Along with the stronger U.S. dollar, another factor is the slowing U.S. economy, which some believe will decrease the chances that inflation will rear its ugly head, making precious metals less valuable in the eyes of investors, who typically go there in inflationary times.

The manufacturing index of the Institute of Supply Management said it came in at 48.6 in March, The thinking is if it's below 50 there is a contraction going on in the economy, rather than expansion.

As usual, this is today's activity and response. When the dollar weakens again we could see all this change very quickly.