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Pan American silver output rises to record on Dolores mine acquisition

Pan American silver output rises to record on Dolores mine acquisition

Shares of Pan American Silver Corp. (NASDAQ: PAAS) (TSE: PAA) moved up by more than 3% on Tuesday, after the company said it produced a record amount of silver in the fourth quarter and forecasted growth in output for 2013, largely a result of the Dolores Mine acquisition last year.

Pan American bought Minefinders Corp, which owned the Dolores mine in Mexico, for about C$1.5 billion in 2012. 

The precious metals producer said today silver output in the latest period was 6.9 million ounces, 30% higher than a year ago, propelling the company to a new annual record of 25.1 million ounces of silver for the year. The yearly total is 15% more than the company produced in 2011.

It also said it produced a record 32,381 ounces of gold in the fourth quarter - an increase of 88% from a year ago - also lifting its gold output last year to an all-time high of 112,283 ounces. 

Total cash costs for the quarter were estimated at $11.75 per ounce of silver, net of by-product credits, and at $12.03 per ounce for the full year 2012. 

"2012 was an excellent production year for Pan American," said president and CEO Geoff Burns, in a statement Tuesday.

"We achieved our targets for silver production and cash costs during the fourth quarter and for the full year, and in the process we set new quarterly and annual production records for silver and gold.  

"In large part this was the result of the acquisition and integration of the Dolores mine.  However, we also saw both our La Colorada and San Vicente mines establish new annual silver production records."

Burns said further that the company expects 2013 to be "even better", as it is forecasting increases in both silver and gold production, while cash costs per ounce remain basically unchanged. 

Indeed, this year, Pan American expects to produce 25 to 26 million ounces of silver, an increase of up to one million ounces from 2012, while gold production is expected to climb to up to 34% to between 140,000 and 150,000 ounces.

Cash costs are forecast at $11.80 to $12.80 per ounce of silver for 2013, net of by-product credits.

Capital investments this year are expected to total $157 million, including around $68 million for its Dolores mine, where several major projects are planned, Pan American said. 

The silver producer has seven operating mines in Mexico, Peru, Argentina and Bolivia, including the recently acquired Dolores gold/silver mine in Chihuahua, Mexico.  

It also owns the La Virginia development project in Sonora, Mexico, the Waterloo silver project in California, USA as well as both the Navidad silver project and Calcatreu gold project in Argentina.

Shares in the company gained 56 cents to $18.92 in early afternoon trade in Toronto.

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