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<SEC-DOCUMENT>0001137171-04-000984.txt : 20040729
<SEC-HEADER>0001137171-04-000984.hdr.sgml : 20040729
<ACCEPTANCE-DATETIME>20040729124503
ACCESSION NUMBER:		0001137171-04-000984
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040728
FILED AS OF DATE:		20040729

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PAN AMERICAN SILVER CORP
		CENTRAL INDEX KEY:			0000771992
		STANDARD INDUSTRIAL CLASSIFICATION:	GOLD & SILVER ORES [1040]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-13727
		FILM NUMBER:		04938182

	BUSINESS ADDRESS:	
		STREET 1:		1500-625 HOWE STREET
		CITY:			VANCOUVER BC CANADA
		STATE:			A1
		ZIP:			V6C 2T6

	MAIL ADDRESS:	
		STREET 1:		1500 625 HOWE ST
		CITY:			VANCOUVER BC V6C 2T6
		STATE:			A1
		ZIP:			999999999

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PAN AMERICAN MINERALS CORP
		DATE OF NAME CHANGE:	19950608
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>quarterly.htm
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
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<HEAD>
<TITLE>Filed by Filing Services Canada Inc.&nbsp; 403-717-3898</TITLE>
<META NAME="author" CONTENT="gordon">
<META NAME="date" CONTENT="07/28/2004">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:32.65pt; line-height:16pt; font-family:Times New Roman; font-size:14pt" align=center><B>FORM 6-K<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B></P>
<P style="margin-top:0pt; margin-bottom:32.65pt; line-height:16pt; font-family:Times New Roman; font-size:14pt" align=center><B>Report of Foreign Private Issuer</B></P>
<P style="margin-top:0pt; margin-bottom:36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><B>Pursuant to Rule 13a-16 or 15d-16 <BR>
of the Securities Exchange Act of 1934</B></P>
<P style="margin-top:0pt; margin-bottom:24pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">For the month of
July, 2004</P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><U>Pan American Silver Corp</U></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>(Translation of registrant&#146;s name into English)</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><U>1500-625 HOWE STREET<BR>
VANCOUVER BC CANADA V6C 2T6</U></P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>(Address of principal executive offices)</P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.</P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>Form 20-F_<U>X</U>__ &nbsp;&nbsp;Form 40-F &nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;</U></P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.</P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>Yes ..... &nbsp;No ..X...</P>
<P style="margin-top:0pt; margin-bottom:12pt; font-family:Times New Roman; font-size:12pt">If &#147;Yes&#148; is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): &nbsp;82-________ </P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<hr>
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<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=right><img src="quarterly002.jpg" alt="[quarterly002.jpg]" align=middle height=45.733 width=254.067></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><img src="quarterly004.jpg" alt="[quarterly004.jpg]" align=middle height=40.933 width=39.867></P>
<P style="margin:0pt; font-family:Arial; font-size:11pt"><BR></P>
<P style="margin:0pt; line-height:13pt; font-family:Arial; font-size:11pt">July 28, 2004</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial; font-size:11pt" align=center><B>PAN AMERICAN SILVER REPORTS SHARPLY HIGHER PROFITS<BR>
ON RECORD SILVER PRODUCTION<BR>
</B>(all amounts in US dollars unless otherwise stated)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt"><B><U>SECOND QUARTER HIGHLIGHTS</U></B></P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<ul>
  <li>
    <p style="margin:0pt; padding-left:18pt; line-height:12.5pt; font-family:Symbol; font-size:10.5pt" align="justify"><FONT FACE="Arial">Net earnings of $1.3 million for the quarter versus a net loss of $1.2 million in the second quarter of 2003. Consolidated revenue increased 67% over the second quarter of 2003 to $20.9 million.</FONT></li>
  <li>
    <p style="margin:0pt; padding-left:18pt; line-height:12.5pt; font-family:Symbol; font-size:10.5pt" align="justify"><FONT FACE="Arial">Record quarterly silver production of 2.6 million ounces, an increase of 19% over the same period of 2003.</FONT></li>
  <li>
    <p style="margin:0pt; padding-left:18pt; line-height:12.5pt; font-family:Symbol; font-size:10.5pt" align="justify"><FONT FACE="Arial">Cash flow from operations, before changes to non-cash working capital, increased to $2.4 million, versus $0.24 million in 2003. Year-to-date, cash flow from operations before working capital changes increased to $5.3 million.</FONT></li>
  <li>
    <p style="margin:0pt; padding-left:18pt; line-height:12.5pt; font-family:Symbol; font-size:10.5pt" align="justify"><FONT FACE="Arial">Eliminated 99% of $86.25 million in convertible debt through conversion of outstanding debentures. Outstanding project loans also pre-paid in full, leaving Company virtually debt free.</FONT></li>
  <li>
    <p style="margin:0pt; padding-left:18pt; line-height:12.5pt; font-family:Symbol; font-size:10.5pt" align="justify"><FONT FACE="Arial">Package of non-core Peruvian properties near Quiruvilca sold to Barrick Gold Corp. for $3.65 million.</FONT></li>
</ul>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt"><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt"><B><U>FINANCIAL RESULTS </U></B></P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) reported consolidated revenue for the second quarter of $20.9 million, 67% greater than revenue in the second quarter of 2003 due to increased silver production, higher realized metal prices and the sale of accumulated concentrate inventory from the first quarter. Net earnings for the quarter were $1.3 million compared to a net loss of $1.2 million in 2003. &nbsp;A one-time gain of $3.65 million from the sale of Peruvian properties was partially offset by $1.3 million in debt settlement expense relating to the debenture conversion, $0.7 million in stock-based compensation expense and $1.1 million in increased exploration and development expenditures. Cash flow from operating activities before changes to non-cash working capital increased to $2.4 million.</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Consolidated silver production for the second quarter was 2,593,078 ounces, a 19% increase over the second quarter of 2003 and the greatest quarterly production in the Company&#146;s history. Better-than-expected production from Quiruvilca, Huaron and the pyrite stockpiles more than compensated for below-forecasted results from La Colorada. The Company remains on track to produce 11.5 million ounces of silver in 2004. Zinc production of 7,589 tonnes was 3% lower than in the second quarter of 2003 while lead production of 4,201 tonnes was 10% lower due to lower grades at Huaron. </P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Cash costs at Huaron, Quiruvilca, and the pyrite stockpiles averaged under $3.50/oz, however, lower-than-expected production at La Colorada pushed cash costs at that operation to $6.42/oz. &nbsp;As a result, consolidated cash costs for the quarter dropped only 8% from 2003, to $4.05/oz. Total production costs were $5.00/oz.</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>For the six months ended June 30, 2004, consolidated revenue totaled $36.1 million versus $20.4 million in the year-earlier period. Net earnings were $0.9 million versus a loss of $2.75 million in the first half of 2003. </P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
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<P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center><B>1500-625 HOWE STREET, VANCOUVER, &nbsp;BC CANADA V6C 2T6. TEL 604.684.1175 &nbsp;FAX 604.684.0147</B></P>
<P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center><FONT COLOR=#0000FF><B><U>www.panamericansilver.com</U></B></FONT><B></B></P>
<P style="margin:0pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
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<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Consolidated silver production in the first six months of 2004 was 5,009,191 ounces, a 16% increase over 2003. &nbsp;Zinc production of 14,828 tonnes was 14% lower than in 2003. &nbsp;Lead production was 23% lower at 8,095 tonnes and copper production of 1,291 tonnes was 28% lower. Cash production costs for the first six months declined 8% to $3.90/oz, while total production costs rose 3% to $4.88.</P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>&nbsp;</P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Working capital at June 30, 2004 including cash and short-term investments of $118.7 million, improved to $124.9 million, an increase of $43 million from December 31, 2003. The improvement in working capital resulted primarily from the issuance of 3.33 million shares in February 2004 for net proceeds of $54.8 million. The proceeds were used to prepay a $9.5 million loan incurred for the La Colorada expansion and to repay a $3.5 million loan relating to the Huaron mine. &nbsp;Up to an additional $37 million from the proceeds are expected to be used for the purchase of the Morococha mine in Peru, which is scheduled to close in August. During the second quarter, the Company converted 99% of its $86.25 million convertible debentures, incurring a one-time interest payment of $11.2 million. As of June 30, 2004 only $819,000 principal amount of the convertible debentures remain outstanding, and with the bank loans repaid, t
he Company is virtually debt free. Capital spending in the quarter was $2.6 million, down from $3.9 million a year earlier. Exploration spending increased from $492,000 in the first half of 2003 to $1.1 million in the first half of 2004 largely reflecting increased activity at Manantial Espejo where the Company continues to aggressively move the project towards completion of a feasibility study.</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:5.25pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Ross Beaty, Chairman of Pan American said, &#147;This was a record quarter for production and earnings and it marks a significant turning point for Pan American. We have strong cash flow, we are debt free with $119 million in cash, we have projects in the pipeline that will continue to deliver tremendous growth and we are profitable. Pan American marked its 10<SUP>th</SUP> anniversary this year and I am extremely pleased at our success in building the world&#146;s pre-eminent silver mining company during this period. Our challenge now is to build on these achievements and to deliver even better performance in the future.&#148; </P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt"><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify><B><U>OPERATIONS AND DEVELOPMENT HIGHLIGHTS</U></B></P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify><B>PERU</B></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>The <B>Quiruvilca mine</B> has dramatically improved its performance and in the second quarter produced 621,311 ounces of silver at cash and total production costs of $3.52/oz, down from cash costs of $5.80/oz and total costs of $5.83/oz in the year-earlier period. For the first half of the year, the mine produced 1,238,201 ounces of silver at a cash cost of $3.21/oz. Development drilling at Quiruvilca has identified a major new vein structure approximately 20 meters from existing underground infrastructure. Given the location of the new vein, development costs are expected to be low and will allow Quiruvilca to continue to mine profitably well into the future. </P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>As expected, silver production at the <B>Huaron mine</B> in the second quarter of 2004 returned to normal levels. &nbsp;The mine produced 1,100,510 ounces of silver at a cash cost of $3.77/oz. Year-to-date the mine has produced 2,064,595 ounces at a cash cost of $3.96/oz. &nbsp;During the quarter the Company replaced one of the two mining contractors with its own employees, which is expected to lead to decreased cash costs beginning in the third quarter. The recently completed $1 million exploration drilling program successfully intersected several ore-grade zones which could add significantly to mineable ore reserves. Further exploration drilling and development will be conducted this year as part of the expansion project at Huaron. </P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>The <B>Silver Stockpile Operation</B> continued to generate excellent cash flow, producing 261,746 ounces of silver at a cash cost of $2.72/oz during the most recent quarter. &nbsp;Year to date the Company has produced 548,311 ounces from the silver stockpiles at a cash cost of $2.81/oz. The increased cash costs in 2004 reflect a sliding-scale refining charge, which increases as the silver price rises.</P>
<P style="margin:0pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center"><BR>2</P>
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<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>The Company has initiated the final steps necessary to complete the <B>Morococha</B> <B>Mine</B> acquisition, which was announced in February 2004. &nbsp;Assuming the Morococha purchase closes in August as is expected currently, the mine should contribute 1.4 million ounces of silver to Pan American&#146;s production in 2004 at a cash cost of $3.25/oz. Over the longer term, Morococha is expected to add approximately 3.5 million ounces of annual silver production at a cash cost of less than $3/oz.</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify><B>MEXICO</B></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>While second-quarter production from the <B>La Colorada</B> mine increased to 415,828 ounces as compared to 229,557 ounces in 2003, production rates with cash costs of $6.42/oz for the quarter have been disappointing. &nbsp;Total silver production from La Colorada for 2004 is now expected to be 1.8 million ounces, approximately 40% lower than originally anticipated. Consequently, cash costs will also be significantly higher than predicted at $5.50/oz for the year. A combination of factors has contributed to the disappointing results: worse than expected ground conditions, which have slowed both development and mining; increased dewatering requirements; and areas of high clay content in the ore, which have negatively affected recoveries and mill throughput. A revised mining and processing plan has been developed and is now being implemented to address these issues. &nbsp;The primary component of the plan will see a sw
itch to more selective narrow-vein mining, which will decrease tonnage but will increase grade substantially. The Company still expects La Colorada to achieve an annualized production rate of 3.5 million ounces at cash costs of less than $3.50/oz, however, the timing will be determined by the speed of dewatering and execution of the new mine plan.</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>The feasibility study update on the <B>Alamo Dorado</B> project continues to progress with the completion of a new geological model, the advancement of critical permits and the start of testing to recover cyanide used in a conventional milling process. A production decision continues to be anticipated at the end of the year. </P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify><B>ARGENTINA</B></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>A 12,000 meter drilling program completed on the 50% owned <B>Manantial Espejo</B> silver-gold joint venture has been extremely successful and has been extended. Drilling continues to intersect new vein structures and to expand the two main systems on the property, the Maria and the Karina Union. Hatch Engineers have been retained to develop an operating and capital cost estimate for the project and the results of this study incorporating a completed resource estimate are expected to be available in September. The feasibility study remains on track for completion early in 2005.</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify><B>BOLIVIA</B></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>At the <B>San Vicente</B> property, a small-scale test mining program has produced 247,494 ounces of silver in the first half of the year to Pan American&#146;s account, at the same time as the Company has continued to move forward with a feasibility study. EMUSA, a Bolivian mining company, will continue to carry out the test mining program under a site services agreement. </P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify><B><U>SILVER MARKETS</U></B></P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Times New Roman; font-size:8pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Arial; font-size:11pt" align=justify><font size="2">The silver price opened the quarter at $7.94/oz, dropping to $5.49/oz before rebounding to close at $5.91/oz on June 30, 2004 for an average price of $6.25. &nbsp;The silver price remains very volatile, but has continued to gain ground in July and was up 10% over year-end 2003 as of mid-July. In May the 2004 World Silver Survey was released by the Silver Institute. A summary can be found on Pan American&#146;s website. Industrial use of silver increased 3% to 351 million ounces, jewelry and silverware grew 4% to 277 million ounces, photographic demand fell by 4.7% to 196 million ounces and coinage demand grew by 7.5% to 35 million ounces. Silver mine supply fell slightly to 596 million ounces. The silver deficit of 92 million ounces was mostly filled again by the 83 million ounces sold from government inventories &#150; primarily Chinese. These stockpiles are considered nearly depl
eted and the demand-supply fundamentals for silver remain strong.</font></P>
<P style="margin:0pt; font-family:Times New Roman">&nbsp;</P>
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<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">3<BR></P>
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<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Pan American will host a conference call to discuss the results on Wednesday, July 28, 2004 at 11:00 a.m. Pacific time (2:00 p.m. Eastern time). &nbsp;North American participants please call toll-free 1-877-825-5811. International participants please dial 1-973-582-2767. The conference may also be accessed live from the investor relations section of the Pan American website at <B>www.panamericansilver.com</B>. To listen to a playback for one week after the call, dial 1-877-519-4471 and enter the pass code 4983122.</P>
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<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>For More Information, please contact:</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>Brenda Radies, Vice-President Corporate Relations (604) 806-3158</P>
<P style="margin:0pt; font-family:Arial; font-size:10.5pt" align=justify><BR></P>
<P style="margin:0pt; line-height:12.5pt; font-family:Arial; font-size:10.5pt" align=justify>www.panamericansilver.com</P>
<P style="margin:0pt; line-height:13pt; font-family:Arial; font-size:11pt" align=center>- End - </P>
<P style="margin:0pt; font-family:Arial; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; line-height:10pt; font-family:Arial; font-size:8pt" align=justify>CAUTIONARY NOTE</P>
<P style="margin:0pt; line-height:10pt; font-family:Arial; font-size:8pt">Some of the statements in this news release are forward-looking statements, such as estimates of future production levels, expectations regarding mine production costs, expected trends in mineral prices and statements that describe Pan American's future plans, objectives or goals. &nbsp;Actual results and developments may differ materially from those contemplated by these statements depending on such factors as changes in general economic conditions and financial markets, changes in prices for silver and other metals , technological and operational hazards in Pan American's mining and mine development activities, uncertainties inherent in the calculation of mineral reserves, mineral resources and metal recoveries, the timing and availability of financing, governmental and other approvals, political unrest or instability in countries where Pan American is active, labor relations and other risk factors listed from time to time in Pan Ame
rican&#146;s Form 40-F</P>
<P style="margin:0pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center"><BR>4</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<TABLE style="border:0pt solid #000000" cellspacing=0 align=center><TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><B><font size="2">Financial &amp; Operating Highlights</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Three months ended</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Six months ended</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30,</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30,</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=632 colspan="4"><P style="margin:0pt; font-family:Arial"><B><font size="2">Consolidated Financial Highlights (in thousands of US dollars)</font></B><font size="2">&nbsp;</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Net income (loss) for the period</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$1,287</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(1,156)</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$921</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(2,747)</font></P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Loss per share</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(0.12)</font></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(0.02)</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(0.17)</font></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(0.05)</font></P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Cash flow from operations before working capital adjustments</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,375</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;243</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;5,298</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;42</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Capital spending</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,983</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,903</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;6,562</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;8,440</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Exploration expense</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,137</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;492</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,665</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;988</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Cash and short-term investments</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;118,736</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;11,151</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;118,736</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;11,151</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Working capital</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$124,947</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5,875</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$124,947</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5,875</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=779 colspan="6"><P style="margin:0pt; font-family:Arial"><B><font size="2">Consolidated Ore Milled &amp; Metals Recovered to Concentrate</font></B><font size="2">&nbsp;</font></P>
</TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Tonnes milled</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;315,425</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;294,826</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;613,292</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;589,039</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Silver metal - ounces</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,593,078</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,180,607</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;5,009,191</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,330,659</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Zinc metal - tonnes</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;7,589</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;7,838</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;14,828</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;17,181</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Lead metal - tonnes</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,201</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,692</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;8,095</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;10,504</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Copper metal - tonnes</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;673</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,017</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,291</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,784</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Net smelter return per tonne milled</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$58.30</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$36.74</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$60.41</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$38.56</font> </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Cost per tonne</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;45.19</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;37.95</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;43.59</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;38.18</font> </P>
</TD></TR>
<TR><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Margin (loss) per tonne</font></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$13.11</font> </P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(1.21)</font></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$16.82</font> </P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.39</font> </P>
</TD></TR>
<TR><TD valign=bottom width=779 colspan="6"><P style="margin:0pt; font-family:Arial">&nbsp;</P>
    <P style="margin:0pt; font-family:Arial"><B><font size="2">Consolidated Cost per Ounce of Silver (net of by-product credits)</font></B><font size="2">&nbsp;</font></P>
</TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Total cash cost per ounce</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.05</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.40</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.90</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.25</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Total production cost per ounce</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.00</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.87</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.88</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.75</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><B><font size="2">In thousands of US dollars</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Direct operating costs &amp; value of metals lost</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">in smelting and refining</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$15,728</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$11,974</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$30,760</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$24,146</font> </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">By-product credits</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(6,006)</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(3,387)</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(12,189)</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(7,558)</font></P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Cash operating costs</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;9,722</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;8,587</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;18,571</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;16,587</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373 style="border-bottom: 1 solid #000000"><P style="margin:0pt; font-family:Arial"><font size="2">Depreciation, amortization &amp; reclamation</font></P>
</TD><TD valign=bottom width=35.6 style="border-bottom: 1 solid #000000"><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,282</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;923</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,655</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,973</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Production costs</font></P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$12,004</font> </P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$9,510</font> </P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$23,225</font> </P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$18,561</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial">&nbsp;</P>
    <P style="margin:0pt; font-family:Arial"><font size="2">Ounces used in cost per ounce calculations</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,399,395</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,951,050</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,761,697</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,904,390</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><B><font size="2">Average Metal Prices</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Silver - London Fixing</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$6.25</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.59</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$6.47</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.63</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Zinc - LME Cash Settlement per pound</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.47</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.35</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.48</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.35</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Lead - LME Cash Settlement per pound</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.37</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.21</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.38</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.21</font> </P>
</TD></TR>
<TR><TD valign=bottom width=373><P style="margin:0pt; font-family:Arial"><font size="2">Copper - LME Cash Settlement per pound</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$1.26</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.74</font> </P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$1.25</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$0.75</font> </P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial; font-size:8pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align="center">5</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; font-family:Arial; font-size:8pt">&nbsp;</P>
<P style="margin:0pt; font-family:Arial; font-size:8pt">&nbsp;</P>
<P style="margin:0pt; font-family:Arial; font-size:8pt">&nbsp;</P>
<TABLE style="border: 0pt solid #000000" cellspacing=0 align=center height="1285"><TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">Mine Operations Highlights</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Three Months ended</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=222.133 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Six Months ended</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=222.133 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">Huaron Mine</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Tonnes milled</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;166,675</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;154,900</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;314,480</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;312,940</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Average silver grade - grams per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;233</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;258</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;231</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;261</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Average zinc grade - percent</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.29%</font></P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.68%</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.28%</font></P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.87%</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Silver - ounces</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,100,510</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,151,012</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,064,595</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,350,713</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Zinc - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,225</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,781</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;8,020</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;10,283</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Lead - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,178</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,614</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;5,851</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;8,030</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Copper - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;372</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;423</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;759</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;688</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Net smelter return per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$58.34</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$42.90</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$60.10</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$44.26</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Cost per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;43.35</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;41.06</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;44.96</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;40.80</font> </P>
</TD></TR>
<TR><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="22"><P style="margin:0pt; font-family:Arial"><font size="2">Margin (loss) per tonne</font></P>
</TD><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$14.99</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$1.84</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$15.14</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.46</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total cash cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.77</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.04</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.96</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.82</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total production cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.07</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.72</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.27</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4.49</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">In thousands of US dollars</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="36"><P style="margin:0pt; font-family:Arial"><font size="2">Direct operating costs &amp; value of metals lost</font></P>
</TD><TD valign=bottom width=35.6 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="36"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">in smelting and refining</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$7,821</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$6,776</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$15,324</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$13,542</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">By-product credits</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(3,668)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(2,126)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(7,151)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(4,558)</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Cash operating costs</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,153</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,650</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;8,172</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;8,985</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Depreciation, amortization and reclamation</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,421</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;779</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,714</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,574</font> </P>
</TD></TR>
<TR><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="22"><P style="margin:0pt; font-family:Arial"><font size="2">Production costs</font></P>
</TD><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5,575</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5,429</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$10,887</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$10,559</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Ounces for cost per ounce calculations</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,100,510</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,151,012</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,064,595</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,350,713</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">Quiruvilca Mine</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Tonnes milled</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;93,745</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;123,924</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;185,965</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;245,269</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Average silver grade - grams per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;237</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;180</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;236</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;181</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Average zinc grade - percent</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.53%</font></P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">2.82%</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.76%</font></P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.17%</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Silver - ounces</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;621,311</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;614,274</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,238,201</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,234,028</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Zinc - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,850</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,940</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;6,075</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;6,680</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Lead - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;977</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;983</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,108</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,286</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Copper - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;267</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;594</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;490</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,096</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Net smelter return per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$60.42</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$29.69</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$63.48</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$32.10</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">Cost per tonne</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;43.73</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;38.71</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;43.25</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;38.94</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Margin (loss) per tonne</font></P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$16.69</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(9.02)</font></P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$20.23</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(6.84)</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total cash cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.52</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.80</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.21</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.63</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total production cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.52</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.83</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.17</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.78</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">In thousands of US dollars</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="36"><P style="margin:0pt; font-family:Arial"><font size="2">Direct operating costs &amp; value of metals lost</font></P>
</TD><TD valign=bottom width=35.6 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="36"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">in smelting and refining</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4,403</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$4,822</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$8,704</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$9,949</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">By-product credits</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(2,216)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(1,261)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(4,728)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(3,001)</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Cash operating costs</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,188</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,561</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,977</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;6,948</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="35"><P style="margin:0pt; font-family:Arial"><font size="2">Capital spending expensed and carrying value adjustment</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="35"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="35"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;-</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="35"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;20</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="35"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="35"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(48)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=111.067 height="35"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;184</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Production costs</font></P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2,188</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3,582</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3,929</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$7,133</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Ounces for cost per ounce calculations</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;621,311</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;614,274</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,238,201</font> </P>
</TD><TD valign=bottom width=111.067 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,234,028</font> </P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial; font-size:8pt">&nbsp;</P>
<P style="margin:0pt; font-family:Arial; font-size:8pt">&nbsp;</P>
<P style="margin:0pt; font-family:Arial; font-size:8pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align="center">6</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; font-family:Arial; font-size:8pt"><BR></P>
<TABLE style="border: 0pt solid #000000" cellspacing=0 align=center height="1093"><TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Three Months ended</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Six Months ended</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2 height="21"><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">La Colorada Mine</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Tonnes milled</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;38,347</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;16,002</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;91,389</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;30,830</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Average silver grade - grams per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;480</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;489</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;437</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;500</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Silver - ounces</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;415,828</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;229,557</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;910,590</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;426,269</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Zinc - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;34</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;117</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;122</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;218</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Lead - tonnes</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;46</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;95</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;136</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;188</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Net smelter return per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$62.27</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$62.77</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">Cost per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;82.44</font> </P>
</TD><TD valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;60.73</font> </P>
</TD><TD valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="22"><P style="margin:0pt; font-family:Arial"><font size="2">Margin (loss) per tonne</font></P>
</TD><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(20.17)</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2.04</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total cash cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$6.42</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5.36</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total production cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$8.08</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$7.17</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">In thousands of US dollars</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="36"><P style="margin:0pt; font-family:Arial"><font size="2">Direct operating costs &amp; value of metals lost</font></P>
</TD><TD valign=bottom width=35.6 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="36"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">in smelting and refining</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2,792</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$5,194</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">By-product credits</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">(123)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">(311)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Cash operating costs</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,669</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,883</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Depreciation, amortization and reclamation</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;692</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,644</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="22"><P style="margin:0pt; font-family:Arial"><font size="2">Production costs</font></P>
</TD><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 1 solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3,361</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="22"><font size="2">&nbsp;</font></TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$6,528</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="22"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Ounces for cost per ounce calculations</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;415,828</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;910,590</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">Pyrite Stockpile Sales</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Tonnes sold</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;21,991</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;15,388</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;44,836</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;26,844</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Average silver grade - grams per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;370</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;375</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;380</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;370</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Silver ounces</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;261,746</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;185,764</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;548,311</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;319,649</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Net smelter return per tonne</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$42.04</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$31.51</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$44.99</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$31.22</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">Cost per tonne</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;0.42</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;0.55</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;0.47</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;0.63</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Margin (loss) per tonne</font></P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$41.62</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$30.96</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$44.52</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$30.59</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total cash cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2.72</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2.02</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2.81</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2.05</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Total production cost per ounce</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.36</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2.69</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$3.43</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$2.72</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><B><font size="2">In thousands of US dollars</font></B></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Value of metals lost in smelting and refining</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$712</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$375</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$1,538</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$654</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">By-product credits</font></P>
</TD><TD style="border-bottom: 1 solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 style="border-bottom: 1 solid #000000" height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112.4 style="border-bottom: 1 solid #000000" height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6 style="border-bottom: 1 solid #000000" height="20"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 style="border-bottom: 1 solid #000000" height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112.4 style="border-bottom: 1 solid #000000" height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Cash operating costs</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;712</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;375</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,538</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;654</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=371.6 height="20"><P style="margin:0pt; font-family:Arial"><font size="2">Depreciation, amortization and reclamation</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;169</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;123</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=35.6 height="20"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;344</font> </P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=112.4 height="20"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;215</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Production costs</font></P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$881</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$499</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$1,882</font> </P>
</TD><TD style="border-bottom: 1.5pt solid #000000" valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$869</font> </P>
</TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6 height="21"><P style="margin:0pt; font-family:Arial"><font size="2">Ounces for cost per ounce calculations</font></P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;261,746</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;185,764</font> </P>
</TD><TD valign=bottom width=35.6 height="21"><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;548,311</font> </P>
</TD><TD valign=bottom width=112.4 height="21"><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;319,649</font> </P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial; font-size:8pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align="center">7</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<TABLE style="border:0pt solid #000000" cellspacing=0 align=center><TR><TD valign=bottom width=371.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=223.467 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Three Months ended</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Six Months ended</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=223.467 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=224.8 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    June 30</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2004</font></B></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><B><font size="2">2003</font></B></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><P style="margin:0pt; font-family:Arial"><B><font size="2">San Vicente Mine*</font></B></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=371.6><P style="margin:0pt; font-family:Arial"><font size="2">Tonnes milled</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;16,658</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;21,458</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><P style="margin:0pt; font-family:Arial"><font size="2">Average silver grade - grams per tonne</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;424</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;422</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><P style="margin:0pt; font-family:Arial"><font size="2">Average zinc grade - percent</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.63%</font></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">3.65%</font></P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><P style="margin:0pt; font-family:Arial"><font size="2">Silver - ounces</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;193,683</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;247,494</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><P style="margin:0pt; font-family:Arial"><font size="2">Zinc - tonnes</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;480</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;611</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=371.6><P style="margin:0pt; font-family:Arial"><font size="2">Copper - tonnes</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=111.067><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;34</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=35.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;42</font> </P>
</TD><TD valign=bottom width=112.4><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align="center">8</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; line-height:16pt; font-family:Arial; font-size:14pt" align=center><font size="3"><B>PAN AMERICAN SILVER CORP.</B>&nbsp;</font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Consolidated Balance Sheets&nbsp;</font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">(in thousands of US dollars)</font></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<TABLE style="border:0pt solid #000000" cellspacing=0 align=center>
<TR><TD valign=bottom width=526.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">June 30</font></P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">December 31</font></P>
</TD></TR>
<TR><TD valign=bottom width=526.6 style="border-bottom: 1 solid #000000"><font size="2">&nbsp;</font></TD><TD style="border-bottom: 1 solid #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">2004</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">2003</font></P>
</TD></TR>
<TR><TD valign=bottom width=526.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><SUP><font size="2">(Unaudited)</font></SUP></P>
</TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><B><font size="2">ASSETS</font></B></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Current</font></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Cash and cash equivalents</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$53,979</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$14,191</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Short-term investments</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;64,757</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;74,938</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Accounts receivable, net of $nil provision for doubtful accounts</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;9,708</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;7,545</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Inventories</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;5,777</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;6,612</font> </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Prepaid expenses</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,319</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,289</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Total Current Assets</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;136,540</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;104,575</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Mineral property, plant and equipment - note 3</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;85,391</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;83,574</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Investment and non-producing properties - note 4</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;84,434</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;83,873</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Direct smelting ore</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,436</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,901</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Other assets</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,826</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,960</font> </P>
</TD></TR>
<TR><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Total Assets</font></P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$314,627</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$279,883</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><B><font size="2">LIABILITIES</font></B></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Current</font></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Accounts payable and accrued liabilities</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$8,521</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$10,525</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Advances for metal shipments</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,632</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,536</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Current portion of bank loans and capital lease - note 6</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;14</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,639</font> </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Current portion of non-current liabilities</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;426</font> </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,948</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Total Current Liabilities</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;11,593</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;22,648</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Deferred revenue</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;780</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;865</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Bank loans and capital lease - note 6</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;332</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;10,803</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Liability component of convertible debentures - note 5</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;187</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;19,116</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Provision of asset retirement obligation and reclamation</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;21,202</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;21,192</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Provision for future income tax</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;19,035</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;19,035</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Severance indemnities and commitments</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,158</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,126</font> </P>
</TD></TR>
<TR><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Total Liabilities</font></P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;56,287</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;95,785</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><font size="2">&nbsp;</font></TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><B><font size="2">SHAREHOLDERS' EQUITY</font></B></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Share capital</font></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Authorized: 100,000,000 common shares with no par value</font></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Issued:</font></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2003 - 53,009,851 common shares</font></P>
</TD><TD valign=bottom width=93.2><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;June 30, 2004 - 66,638,380 common shares</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;377,091</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;225,154</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Equity component of convertible debentures - note 5</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;690</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;66,735</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Additional paid in capital</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;11,858</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;12,752</font> </P>
</TD></TR>
<TR><TD valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Deficit</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(131,299)</font></P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(120,543)</font></P>
</TD></TR>
<TR><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Total Shareholders' Equity</font></P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;258,340</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;184,098</font> </P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=bottom width=526.6><P style="margin:0pt; font-family:Arial"><font size="2">Total Liabilities and Shareholders' Equity</font></P>
</TD><TD style="border-bottom:2pt double #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$314,627</font> </P>
</TD><TD style="border-bottom:2pt double #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$279,883</font> </P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align="center">9</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="line-height: 16pt; font-family: Arial; font-size: 14pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center>&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height: 16pt; font-family: Arial; font-size: 14pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center>&nbsp;</P>
<P style="line-height: 16pt; font-family: Arial; font-size: 14pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center>&nbsp;</P>
<P style="line-height: 16pt; font-family: Arial; font-size: 14pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="3"><B>PAN AMERICAN SILVER CORP.</B>&nbsp;</font></P>
<P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="2">Consolidated Statements of Operations</font></P>
<P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="2">(Unaudited - in thousands of US dollars)</font></P>
<p style="margin-top: 0; margin-bottom: 0"><font size="2">&nbsp;&nbsp;</font></p>
<TABLE style="border:0pt solid #000000" cellspacing=0 align=center>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD valign=bottom width=216.667 colspan=2><P style="margin:0pt; font-family:Arial" align=center><font size="2">Three months ended</font></P>
</TD><TD valign=bottom width=216.667 colspan=2><P style="margin:0pt; font-family:Arial" align=center><font size="2">Six months ended</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD valign=bottom width=216.667 colspan=2><P style="margin:0pt; font-family:Arial" align=center><font size="2">June 30,</font></P>
</TD><TD valign=bottom width=216.667 colspan=2><P style="margin:0pt; font-family:Arial" align=center><font size="2">June 30,</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">2004</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">2003</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">2004</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">2003</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><SUP><font size="2">(Note 2)</font></SUP></P>
</TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><SUP><font size="2">(Note 2)</font></SUP></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><B><font size="2">Revenue</font></B></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$20,950</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$12,553</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$36,101</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$20,375</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><B><font size="2">Expenses</font></B></P>
</TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Operating</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;16,531</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;11,333</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;27,699</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;18,762</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;General and administration</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,202</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;582</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,005</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;983</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Depreciation and amortization</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;2,008</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;462</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;4,153</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;933</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Stock-based compensation</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;684</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;714</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,124</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,201</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Reclamation</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;301</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;77</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;603</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;156</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Exploration and development</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,137</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;492</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;1,665</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;988</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Interest</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;289</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;178</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;757</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;337</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533 style="border-top: 1 solid #000000; border-bottom: 1 solid #000000"><font size="2">&nbsp;</font></TD><TD style="border-top: 1 solid #000000; border-bottom: 1 solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;22,152</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;13,838</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;38,006</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;23,360</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">Loss from operations</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(1,202)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(1,285)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(1,905)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(2,985)</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">Gain on sale of concessions (note 3)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,583</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;3,583</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">Debt settlement expenses</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(1,311)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;(1,311)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">Other income</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;217</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;129</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;554</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;238</font> </P>
</TD></TR>
<TR><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">Net income (loss) for the period</font></P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$1,287</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(1,156)</font></P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$921</font> </P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:2pt double #000000" valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(2,747)</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">Loss per share - note 8</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(0.12)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(0.02)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(0.17)</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;$(0.05)</font></P>
</TD></TR>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=367.533><P style="margin:0pt; font-family:Arial"><font size="2">Weighted average number of shares outstanding</font></P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;65,073,833</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;51,947,530</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;59,564,028</font> </P>
</TD><TD valign=bottom width=108.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">&nbsp;50,849,874</font> </P>
</TD></TR>
<TR><TD valign=bottom width=367.533><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=108.333><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=799 colspan="5"><font size="2">&nbsp;<font face="Arial">See accompanying notes to consolidated financial statements</font></font></TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman" align="center">10</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="line-height: 14pt; font-family: Arial; font-size: 12pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="3"><B>PAN AMERICAN SILVER CORP.</B>&nbsp;</font></P>
<P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="2">Consolidated Statements of Cash Flows&nbsp;</font></P>
<P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="2">(Unaudited - in thousands of US dollars)</font></P>
<P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center>&nbsp;</P>
<P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center>&nbsp;</P>
<TABLE width="100%" border=0 cellspacing=0 cellpadding=0>
<TR>
   <TD width="57%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="center" colspan=4 width="19%"><FONT size=2 face="sans-serif">Three months ended</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD colspan=4 width="19%">
    <p align="center"><FONT size=2 face="sans-serif">Six months ended</FONT></p>
   </TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="center" colspan=4 width="18%"><FONT size=2 face="sans-serif">June 30,</FONT>&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD colspan=4 width="18%">
    <p align="center"><FONT size=2 face="sans-serif">June 30,</FONT>&nbsp;</p>
   </TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="center" colspan=3 width="11%"><FONT size=2 face="sans-serif">2004</FONT></TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">2003</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%"><FONT size=2 face="sans-serif">2004</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">2003</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD colspan=3><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><B><FONT size=2 face="sans-serif">Operating activities</FONT></B></TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><FONT size=2 face="sans-serif">Net income (loss) for the period</FONT></TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">1,287</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(1,156)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">921</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(2,747)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><FONT size=2 face="sans-serif">Reclamation expenditures</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(230)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(592)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><FONT size=2 face="sans-serif">Gain on sale of concessions</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(3,583)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(3,583)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><FONT size=2 face="sans-serif">Items not involving cash</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Depreciation and amortization</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">2,008</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">462</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">4,153</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">933</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Interest accretion on convertible debentures</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">97</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">366</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Stock-based compensation</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">684</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">714</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">1,124</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">1,201</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Debt settlement expenses</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">1,208</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">1,208</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Compensation expense</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">245</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">245</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Asset retirement and reclamation accretion</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">301</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">77</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">603</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">156</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Operating cost provisions</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">358</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">146</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">853</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">499</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Changes in non-cash working capital items</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(1,880)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(3,389)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(5,196)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(2,840)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">495</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(3,146)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">102</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(2,798)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><B><FONT size=2 face="sans-serif">Financing activities</FONT></B></TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Shares issued for cash</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">943</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">1,975</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">61,005</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">2,698</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Shares issue costs</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(96)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(7)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(180)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(7)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Convertible debentures payments</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(11,213)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(13,520)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Capital lease repayment</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(75)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(75)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(75)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(75)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Proceeds from bank loans</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">4,000</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">8,000</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Repayment of bank loans</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(12,614)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(406)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(13,021)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(938)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(23,055)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">5,487</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">34,209</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">9,678</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><B><FONT size=2 face="sans-serif">Investing activities</FONT></B></TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Mineral property, plant and equipment exenditures</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(2,665)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(3,648)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(6,008)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(8,063)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Investment and non-producing property expenditures</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(318)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(255)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(554)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(377)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Acquisition of cash of subsidiary</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">2,393</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Proceeds from sale of concessions</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">3,583</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">3,583</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Proceeds from sale of marketable securities</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">10,434</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">10,456</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Other</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(2,000)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">139</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(2,000)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">120</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">9,034</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(3,764)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">5,477</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(5,927)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><B><FONT size=2 face="sans-serif">Increase (decrease) in cash and cash equivalents</FONT></B></TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><B><FONT size=2 face="sans-serif">during the period</FONT></B></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">(13,526)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">(1,423)</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">39,788</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">953</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><B><FONT size=2 face="sans-serif">Cash and cash equivalents, beginning of period</FONT></B></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">67,505</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">12,561</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">14,191</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">10,185</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD width="57%"><B><FONT size=2 face="sans-serif">Cash and cash equivalents, end of period</FONT></B></TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">53,979</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">11,138</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">53,979</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">11,138</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
   <TD><HR noshade size=1></TD>
   <TD><HR noshade size=1></TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
</TR>
<TR>
   <TD colspan=6 width="77%"><B><FONT size=2 face="sans-serif">Supplemental disclosure of non-cash financing and investing activities</FONT></B></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="9%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD width="7%">&nbsp;</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Shares issued for compensation</FONT></TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">245</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">245</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD align="center" width="1%"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Shares issued for acquisition of subsidiary</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%"><FONT size=2 face="sans-serif">64,228</FONT></TD>
   <TD width="2%">&nbsp;</TD>
</TR>
<TR>
   <TD width="57%">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Shares issued for conversion of convertible debentures</FONT></TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">88,848</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="9%"><FONT size=2 face="sans-serif">88,848</FONT></TD>
   <TD width="2%">&nbsp;</TD>
   <TD width="1%">&nbsp;</TD>
   <TD align="right" width="7%">-</TD>
   <TD width="2%">&nbsp;</TD>
</TR>
</TABLE><P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center>&nbsp;</P>
<P style="font-family: Arial; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center>&nbsp;</P>
<P style="margin:0pt; font-family:Arial" align=right>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman" align="center">11</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; font-family:Arial" align=right>&nbsp;</P>
<P style="line-height: 11pt; font-family: Arial; font-size: 9pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><B><font size="2">PAN AMERICAN SILVER CORP.</font></B></P>
<P style="line-height: 11pt; font-family: Arial; font-size: 9pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="2">Consolidated Statements of Shareholders' Equity&nbsp;</font></P>
<P style="line-height: 11pt; font-family: Arial; font-size: 9pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=center><font size="2">For the six months ended June 30, 2004</font></P>
<P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center><font size="2">(Unaudited - in thousands of US dollars, except for shares)</font></P>
<P style="margin:0pt; font-family:Arial" align=right>&nbsp;</P>
<TABLE style="border: 0pt solid #000000" cellspacing=0 align=center width="727">
<TR><TD valign=bottom width=249><font size="2">&nbsp;</font></TD><TD valign=bottom width=68><font size="2">&nbsp;</font></TD><TD valign=bottom width=75><font size="2">&nbsp;</font></TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=73><font size="2">&nbsp;</font></TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=76><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=249><font size="2">&nbsp;</font></TD><TD valign=bottom width=68><font size="2">&nbsp;</font></TD><TD valign=bottom width=75><font size="2">&nbsp;</font></TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Additional</font></P>
</TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=76><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=249><font size="2">&nbsp;</font></TD><TD valign=bottom width=147 colspan=2><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center><font size="2">Common shares</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center><font size="2">Convertible</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Paid in</font></P>
</TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=76><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=249><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=70><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Shares</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=77><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Amount</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Debentures</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Capital</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Deficit</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">Total</font></P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=251><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=70><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=77><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=80><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=75><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=80><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=78><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">Balance, December 31, 2002</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;43,883,454</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$161,108</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$1,327</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$(106,943)</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$55,492</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Stock-based compensation</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;2,871</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;2,871</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Exercise of stock options</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;1,385,502</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;9,312</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(1,471)</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;7,841</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Exercise of share purchase warrants</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;100,943</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;509</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;509</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Issued on acquisition of Corner</font></P>
</TD><TD valign=bottom width=68><font size="2">&nbsp;</font></TD><TD valign=bottom width=75><font size="2">&nbsp;</font></TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=73><font size="2">&nbsp;</font></TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=76><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Silver Inc.</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;7,636,659</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;54,203</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;54,203</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Fair value of stock options granted</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;1,136</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;1,136</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Fair value of share purchase warrants</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;8,889</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;8,889</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Issue of convertible debentures</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;63,201</font> </P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;63,201</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Accretion of convertible debentures</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;3,534</font> </P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(3,534)</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Convertible debenture issue costs</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(3,272)</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(3,272)</font></P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Issued as compensation</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;3,293</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;22</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;22</font> </P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=251><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Net loss for the year</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=70><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=77><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(6,794)</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(6,794)</font></P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">Balance, December 31, 2003</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;53,009,851</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;225,154</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;66,735</font> </P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;12,752</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(120,543)</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;184,098</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Stock-based compensation</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;1,124</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;1,124</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Exercise of stock options</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;603,695</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;6,106</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(2,018)</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;4,088</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Exercise of share purchase warrants</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;539,834</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;1,918</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;1,918</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Shares issued for cash</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;3,333,333</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;55,000</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;55,000</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Shares issue costs</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(180)</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(180)</font></P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Shares issued on conversion of</font> </P>
</TD><TD valign=bottom width=68><font size="2">&nbsp;</font></TD><TD valign=bottom width=75><font size="2">&nbsp;</font></TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=73><font size="2">&nbsp;</font></TD><TD valign=bottom width=78><font size="2">&nbsp;</font></TD><TD valign=bottom width=76><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;convertible debentures (note 5)</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;9,135,043</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;88,848</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(68,883)</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(8,464)</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;11,501</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Issued as compensation</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;16,624</font> </P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;245</font> </P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;245</font> </P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Accretion of convertible debentures</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;2,838</font> </P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;(2,838)</font></P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=249><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">&nbsp;&nbsp;Net income for the period</font></P>
</TD><TD valign=bottom width=68><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=73><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;921</font> </P>
</TD><TD valign=bottom width=76><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;921</font> </P>
</TD></TR>
<TR><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=251><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt"><font size="2">Balance, June 30, 2004</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=70><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;66,638,380</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=77><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$377,091</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=80><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$690</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=75><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$11,858</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=80><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$(130,924)</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=78><P style="margin:0pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right><font size="2">&nbsp;$258,715</font> </P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align="center">12</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><B>1.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><B>Basis of presentation</B></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>These unaudited interim consolidated financial statements are expressed in United<FONT FACE="Times New Roman"> </FONT>States dollars and are prepared in accordance with accounting principles generally accepted in Canada (&#147;Canadian GAAP&#148;), which are more fully described in the annual audited consolidated financial statements for the year ended December 31, 2003 which is included in the Company&#146;s 2003 Annual Report. &nbsp;These statements do not include all of the disclosures required by Canadian GAAP for annual financial statements. &nbsp;Certain comparative figures have been reclassified to conform to the current presentation. &nbsp;Significant differences from United States generally accepted accounting principles are described in note 10.</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>In management&#146;s opinion, all adjustments necessary for fair presentation have been included in these financial statements.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><B>2.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><B>Change in accounting policies</B></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:Arial" align=justify>a)</P>
<P style="margin:0pt; padding-left:72pt; font-family:Arial" align=justify>During the fourth quarter 2003 the Company changed its accounting policy, retroactive to January 1, 2002, in accordance with recommendation of CICA 3870, &#147;Stock-based Compensation and Other Stock-based Payments&#148;. &nbsp;As permitted by CICA 3870, the Company has applied this change retroactively for new awards granted on or after January 1, 2002. &nbsp;Stock-based compensation awards are calculated using the Black-Scholes option pricing model. &nbsp;Previously, the Company used the intrinsic value method for valuing stock-based compensation awards granted to employees and directors where compensation expense was recognized for the excess, if any, of the quoted market price of the Company&#146;s common shares over the common share exercise price on the day that options were granted.</P>
<P style="margin:0pt; padding-left:72pt; font-family:Arial" align=justify>&nbsp;</P>
<P style="margin:0pt; padding-left:72pt; font-family:Arial" align=justify>&nbsp;</P>
<P style="margin:0pt; padding-left:72pt; font-family:Arial" align=justify>Using the fair value method for stock-based compensation, the Company recorded an additional charge to earnings of $1,124,000 for the six months ended June 30, 2004 (six months ended June 30, 2003 - $1,201,000) for stock options granted to employees and directors. &nbsp;The fair value of the stock options granted during the six months ended June 30, 2004 was determined using an option pricing model assuming no dividends were paid, a weighted average volatility of the Company&#146;s share price of 58 per cent, weighted average expected life of 3.5 years and weighted average annual risk free rate of 4.03 per cent.</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:Arial" align=justify>b)</P>
<P style="margin:0pt; padding-left:72pt; font-family:Arial" align=justify>During the fourth quarter of 2003, the Company changed its accounting policy on a retroactive basis with respect to accounting and reporting for obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and the normal operation of long-lived assets. &nbsp;The Company adopted CICA 3110 &#147;Asset Retirement Obligations&#148; whereby the fair value of the liability is initially recorded and the carrying value of the related asset is increased by the corresponding amount. &nbsp;The liability is accreted to its present value and the capitalized cost is amortized over the useful life of the related asset. &nbsp;The change in accounting policy did not have a significant impact on reported results of operations in any period presented.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<p align="center">
<BR>
13
<BR>
<BR>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
<BR>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><B>3.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><B>Mineral property, plant and equipment</B></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial">Mineral property, plant and equipment consist of:</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<TABLE style="border: 0pt solid #000000" cellspacing=0 align=center width="682"><TR><TD valign=bottom width=191>&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=222 colspan=3><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>June 30, 2004</P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=8>&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=249 colspan=3><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>December 31, 2003</P>
</TD></TR>
<TR><TD valign=bottom width=191>&nbsp;</TD><TD valign=bottom width=53>&nbsp;</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Accumulated</P>
</TD><TD valign=bottom width=72>&nbsp;</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78>&nbsp;</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Accumulated</P>
</TD><TD valign=bottom width=71>&nbsp;</TD></TR>
<TR><TD valign=bottom width=191>&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=55><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Cost</P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=89><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Amortization</P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=74><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Net</P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=8>&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Cost</P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=92><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Amortization</P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=73><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=center>Net</P>
</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">Mineral properties</P>
</TD><TD valign=bottom width=53>&nbsp;</TD><TD valign=bottom width=87>&nbsp;</TD><TD valign=bottom width=72>&nbsp;</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78>&nbsp;</TD><TD valign=bottom width=90>&nbsp;</TD><TD valign=bottom width=71>&nbsp;</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;La Colorada mine, Mexico</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$4,153 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$4,153 </P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$4,153 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$4,153 </P>
</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;Huaron mine, Peru</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;1 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;1 </P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;1 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;1 </P>
</TD></TR>
<TR><TD valign=bottom width=191 style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD><TD style="border-top: 1 solid #000000; border-bottom: 1 solid #000000" valign=bottom width=55><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;4,154 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=89><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=74><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;4,154 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=8>&nbsp;</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;4,154 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=92><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=73><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;4,154 </P>
</TD></TR>
<TR><TD valign=bottom width=193>&nbsp;</TD><TD valign=bottom width=55>&nbsp;</TD><TD valign=bottom width=89>&nbsp;</TD><TD valign=bottom width=74>&nbsp;</TD><TD valign=bottom width=8>&nbsp;</TD><TD valign=bottom width=80>&nbsp;</TD><TD valign=bottom width=92>&nbsp;</TD><TD valign=bottom width=73>&nbsp;</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">Plant and equipment</P>
</TD><TD valign=bottom width=53>&nbsp;</TD><TD valign=bottom width=87>&nbsp;</TD><TD valign=bottom width=72>&nbsp;</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78>&nbsp;</TD><TD valign=bottom width=90>&nbsp;</TD><TD valign=bottom width=71>&nbsp;</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;La Colorada mine, Mexico</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;12,446 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(756)</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;11,690 </P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;10,332 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(360)</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;9,972 </P>
</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;Huaron mine, Peru</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;14,417 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(4,083)</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;10,334 </P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;14,417 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(3,426)</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;10,991 </P>
</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;Quiruvilca mine, Peru</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;15,410 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(15,410)</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;15,410 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(15,410)</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;Other</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;3,229 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(540)</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;2,689 </P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;3,161 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(503)</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;2,658 </P>
</TD></TR>
<TR><TD valign=bottom width=191 style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD><TD style="border-top: 1 solid #000000; border-bottom: 1 solid #000000" valign=bottom width=55><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;45,502 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=89><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(20,789)</P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=74><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;24,713 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=8>&nbsp;</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;43,320 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=92><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(19,699)</P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=73><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;23,621 </P>
</TD></TR>
<TR><TD valign=bottom width=193>&nbsp;</TD><TD valign=bottom width=55>&nbsp;</TD><TD valign=bottom width=89>&nbsp;</TD><TD valign=bottom width=74>&nbsp;</TD><TD valign=bottom width=8>&nbsp;</TD><TD valign=bottom width=80>&nbsp;</TD><TD valign=bottom width=92>&nbsp;</TD><TD valign=bottom width=73>&nbsp;</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">Mine development and others</P>
</TD><TD valign=bottom width=53>&nbsp;</TD><TD valign=bottom width=87>&nbsp;</TD><TD valign=bottom width=72>&nbsp;</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78>&nbsp;</TD><TD valign=bottom width=90>&nbsp;</TD><TD valign=bottom width=71>&nbsp;</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;La Colorada mine, Mexico</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;33,030 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(2,337)</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;30,693 </P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;31,892 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(1,113)</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;30,779 </P>
</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;Huaron mine, Peru</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;35,500 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(9,294)</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;26,206 </P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;32,820 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(7,800)</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;25,020 </P>
</TD></TR>
<TR><TD valign=bottom width=191><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt">&nbsp;&nbsp;Quiruvilca mine, Peru</P>
</TD><TD valign=bottom width=53><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;10,046 </P>
</TD><TD valign=bottom width=87><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(10,046)</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;10,046 </P>
</TD><TD valign=bottom width=90><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(10,046)</P>
</TD><TD valign=bottom width=71><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=193 style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD><TD style="border-top: 1 solid #000000; border-bottom: 1 solid #000000" valign=bottom width=55><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;78,576 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=89><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(21,677)</P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=74><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;56,899 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=8>&nbsp;</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=80><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;74,758 </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=92><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;(18,959)</P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 0.5pt solid #000000" valign=bottom width=73><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;55,799 </P>
</TD></TR>
<TR><TD valign=bottom width=191>&nbsp;</TD><TD valign=bottom width=53>&nbsp;</TD><TD valign=bottom width=87>&nbsp;</TD><TD valign=bottom width=72>&nbsp;</TD><TD valign=bottom width=6>&nbsp;</TD><TD valign=bottom width=78>&nbsp;</TD><TD valign=bottom width=90>&nbsp;</TD><TD valign=bottom width=71>&nbsp;</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=193>&nbsp;</TD><TD style="border-bottom: 2pt double #000000" valign=bottom width=55><P style="text-indent: 0; line-height: 11pt; font-family: Arial; font-size: 9pt; margin: 0pt" align=right>&nbsp;$128,232 </P>
</TD><TD style="border-bottom: 2pt double #000000" valign=bottom width=89><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$(42,466)</P>
</TD><TD style="border-bottom: 2pt double #000000" valign=bottom width=74><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$85,766 </P>
</TD><TD style="border-bottom: 2pt double #000000" valign=bottom width=8>&nbsp;</TD><TD style="border-bottom: 2pt double #000000" valign=bottom width=80><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$122,232 </P>
</TD><TD style="border-bottom: 2pt double #000000" valign=bottom width=92><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$(38,658)</P>
</TD><TD style="border-bottom: 2pt double #000000" valign=bottom width=73><P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Arial; font-size:9pt" align=right>&nbsp;$83,574 </P>
</TD></TR>
</TABLE>
<P style="margin:0pt; text-indent:9pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>On June 28, 2004 the Company completed the sale of certain surface properties and mineral concessions to Barrick Gold Corporation for $3,583,000. &nbsp;Due to the write-off of the Quiruvilca mine in 2002 these properties and concessions had a $nil carrying value and recognized a gain of $3,583,000.</P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><B>4.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><B>Investment and non-producing properties</B></P>
<P style="margin:0pt; line-height:9pt; font-family:Arial"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>Acquisition costs of mineral development properties together with costs directly related to mine development expenditures are deferred. &nbsp;Exploration expenditures on investment properties are charged to operations in the period they are incurred.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial" align=justify>Investment and non-producing properties consists of:</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<div align="center">
  <center>
<TABLE width="503" border=0 cellspacing=0 cellpadding=0>
<TR>
   <TD width="270">&nbsp;</TD>
   <TD width="52">&nbsp;</TD>
   <TD width="51">&nbsp;</TD>
   <TD width="8">&nbsp;</TD>
   <TD width="14">&nbsp;</TD>
   <TD width="82">&nbsp;</TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270">&nbsp;</TD>
   <TD width="52">&nbsp;</TD>
   <TD width="51"><FONT size=2 face="sans-serif">June 30</FONT></TD>
   <TD width="8">&nbsp;</TD>
   <TD colspan=2 width="98">
    <p align="right"><FONT size=2 face="sans-serif">December 31</FONT></p>
   </TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="52" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="51" style="border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">2004</FONT></TD>
   <TD width="8" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="14" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="82" style="border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">2003</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Investment properties</FONT></TD>
   <TD width="52">&nbsp;</TD>
   <TD width="51">&nbsp;</TD>
   <TD width="8">&nbsp;</TD>
   <TD width="14">&nbsp;</TD>
   <TD width="82">&nbsp;</TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Waterloo, USA</FONT></TD>
   <TD align="center" width="52"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="51"><FONT size=2 face="sans-serif">1,000</FONT></TD>
   <TD width="8">&nbsp;</TD>
   <TD align="center" width="14"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="82"><FONT size=2 face="sans-serif">1,000</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Tres Cruces, Hog Heaven and others</FONT></TD>
   <TD width="52">&nbsp;</TD>
   <TD align="right" width="51"><FONT size=2 face="sans-serif">785</FONT></TD>
   <TD width="8">&nbsp;</TD>
   <TD width="14">&nbsp;</TD>
   <TD align="right" width="82"><FONT size=2 face="sans-serif">785</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="52" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="51" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">1,785</FONT></TD>
   <TD width="8" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="14" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="82" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">1,785</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Non-producing properties</FONT></TD>
   <TD width="52">&nbsp;</TD>
   <TD width="51">&nbsp;</TD>
   <TD width="8">&nbsp;</TD>
   <TD width="14">&nbsp;</TD>
   <TD width="82">&nbsp;</TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Alamo Dorado, Mexico</FONT></TD>
   <TD width="52">&nbsp;</TD>
   <TD align="right" width="51"><FONT size=2 face="sans-serif">80,637</FONT></TD>
   <TD width="8">&nbsp;</TD>
   <TD width="14">&nbsp;</TD>
   <TD align="right" width="82"><FONT size=2 face="sans-serif">80,076</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Manantial Espejo, Argentina</FONT></TD>
   <TD width="52">&nbsp;</TD>
   <TD align="right" width="51"><FONT size=2 face="sans-serif">2,012</FONT></TD>
   <TD width="8">&nbsp;</TD>
   <TD width="14">&nbsp;</TD>
   <TD align="right" width="82"><FONT size=2 face="sans-serif">2,012</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270" style="border-top: 1 solid #000000">&nbsp;</TD>
   <TD width="52" style="border-top: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="51" style="border-top: 1 solid #000000"><FONT size=2 face="sans-serif">82,649</FONT></TD>
   <TD width="8" style="border-top: 1 solid #000000">&nbsp;</TD>
   <TD width="14" style="border-top: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="82" style="border-top: 1 solid #000000"><FONT size=2 face="sans-serif">82,088</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
<TR>
   <TD width="270" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="center" width="52" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="51" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">84,434</FONT></TD>
   <TD width="8" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="center" width="14" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="82" style="border-top: 1 solid #000000; border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">83,873</FONT></TD>
   <TD width="12">&nbsp;</TD>
</TR>
</TABLE></center>
</div>
<p align="center">
<BR>
<BR>
14
<BR>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial" align=justify><B>5.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial" align=justify><B>Convertible debentures</B></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>In 2003 the Company completed an offering of $86,250,000 convertible, unsecured senior subordinated debentures (the &#147;Debentures), which mature on July 31, 2009. &nbsp;The Debentures bear interest at a rate of 5.25 per cent per annum, payable semi-annually on January 31 and July 31 of each year, beginning on January 31, 2004. &nbsp;The Company has the option to discharge interest payments from the proceeds on the sale of common shares of the Company issued to a trustee for the purposes of converting such shares into cash.</P>
<P style="margin:0pt; padding-left:36pt; text-indent:-36pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>In March 2004 the Company announced the terms of an offer (the &#147;Offer&#148;), which was open between April 7, 2004 and May 21, 2004, to induce the holders of the Debentures to convert their holdings into 106.929 common shares of the Company plus cash of $131.25 for every $1,000 principal amount of the Debentures. &nbsp;Pursuant to this Offer the Company issued 9,135,043 common shares and made cash payments totaling $11,213,000 to the holders of $85,431,000 principal amount of the Debentures which accepted the Company&#146;s offer for conversion. &nbsp;Debt settlement expenses of $1,311,000 for interest, professional and other fees have been charged to earnings.</P>
<P style="margin:0pt; padding-left:36pt; text-indent:-36pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; font-family:Arial" align=justify><B>6.</B></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify><B>Bank loans</B></P>
<P style="margin:0pt; padding-left:36pt; text-indent:-36pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>During the second quarter of 2004, the Company repaid both its Huaron pre-production and La Colorada project loan facilities by making payments totaling $12,614,000.</P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>The La Colorada project loan with the International Financial Corporation stipulates that the Company will be required to make an additional payment on the May 15<SUP>th</SUP> of each year until 2009 if the average price of silver for the preceding calendar year exceeded $4.75 per ounce. &nbsp;Such payment would be equal to 20 per cent of the positive difference between the average price of silver for the year and $4.75 multiplied by the number of ounces of silver produced divided by $9,500,000 and multiplied by the scheduled loan balance at the end of the year. &nbsp;As at June 30, 2004, the Company has accrued $358,000 with respect to this additional payment. &nbsp;This additional payment is treated as a royalty for accounting purposes and had been recorded as a reduction against our metal sales.</P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><B>7.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><B>Share capital</B></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial" align=justify>During the six-month period ended June 30, 2004 the Company:</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-18pt; font-family:Arial" align=justify>i)</P>
<P style="margin-top:0pt; margin-bottom:5pt; padding-left:54pt; font-family:Arial" align=justify>issued 9,135,043 common shares at a value of $88,848,000 to the holders of $85,431,000 principal amount, senior subordinated convertible debentures to induced conversion of the convertible debentures;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-18pt; font-family:Arial" align=justify>ii)</P>
<P style="margin-top:0pt; margin-bottom:5pt; padding-left:54pt; font-family:Arial" align=justify>issued 3,333,333 common shares at $16.50 per share, for net proceeds of $54,820,000, after legal, accounting and other fees;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-18pt; font-family:Arial" align=justify>iii)</P>
<P style="margin-top:0pt; margin-bottom:5pt; padding-left:54pt; font-family:Arial" align=justify>issued 603,695 common shares for proceeds of $4,088,000 in connection with the exercise of employees and directors stock options; </P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-18pt; font-family:Arial" align=justify>iv)</P>
<P style="margin-top:0pt; margin-bottom:5pt; padding-left:54pt; font-family:Arial" align=justify>issued 539,834 common shares for proceeds of $1,918,000 in connection with the exercise of share purchase warrants; and</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-18pt; font-family:Arial" align=justify>v)</P>
<P style="margin-top:0pt; margin-bottom:5pt; padding-left:54pt; font-family:Arial" align=justify>issued 16,624 common shares at a value of $245,000 for compensation expense.</P>
<p align="center">
<BR>
<BR>
<BR>
15
<BR>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
<BR>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">The following table summarizes information concerning stock options outstanding as at June 30, 2004:</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<div align="center">
  <center>
<TABLE cellspacing=0><TR><TD valign=top width=116.533><font size="2">&nbsp;</font></TD><TD valign=top width=51.467><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" width=192 colspan=2><P style="margin:0pt; font-family:Arial" align=center><font size="2">Options Outstanding</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=192 colspan=2><P style="margin:0pt; font-family:Arial" align=center><font size="2">Options Exercisable</font></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">Range of Exercise Prices</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">Year of Expiry</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=108><P style="margin:0pt; font-family:Arial" align=center><font size="2">Number Outstanding as at June 30, 2004</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=84><P style="margin:0pt; font-family:Arial" align=center><font size="2">Weighted Average Remaining Contractual Life (months)</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=108><P style="margin:0pt; font-family:Arial" align=center><font size="2">Number Exercisable as at June 30, 2004</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=84><P style="margin:0pt; font-family:Arial" align=center><font size="2">Weighted Average Exercise Price</font></P>
</TD></TR>
<TR><TD valign=bottom width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">$3.39 - $6.90</font></P>
</TD><TD valign=bottom width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">2004</font></P>
</TD><TD valign=bottom width=108><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">5,036</font></P>
</TD><TD valign=bottom width=84><P style="margin:0pt; padding-right:11.2pt; text-indent:16.6pt; font-family:Arial" align=right><font size="2">1.70</font></P>
</TD><TD valign=bottom width=108><P style="margin:0pt; padding-right:17pt; font-family:Arial" align=right><font size="2">5,036</font></P>
</TD><TD valign=bottom width=84><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">$6.88</font></P>
</TD></TR>
<TR><TD valign=top width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">$8.95</font></P>
</TD><TD valign=top width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">2005</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">44,077</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:11.2pt; text-indent:16.6pt; font-family:Arial" align=right><font size="2">8.10</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:17pt; font-family:Arial" align=right><font size="2">44,077</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">$8.95</font></P>
</TD></TR>
<TR><TD valign=top width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">$3.73 - $7.27</font></P>
</TD><TD valign=top width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">2006</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">134,666</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:11.2pt; text-indent:11.6pt; font-family:Arial" align=right><font size="2">22.52</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:17pt; font-family:Arial" align=right><font size="2">98,000</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">$4.69</font></P>
</TD></TR>
<TR><TD valign=top width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">$7.21 - $7.53</font></P>
</TD><TD valign=top width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">2007</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">404,000</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:11.2pt; text-indent:11.6pt; font-family:Arial" align=right><font size="2">40.95</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:17pt; font-family:Arial" align=right><font size="2">370,000</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">$7.49</font></P>
</TD></TR>
<TR><TD valign=top width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">$6.64 - $10.76</font></P>
</TD><TD valign=top width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">2008</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">574,231</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:11.2pt; text-indent:11.6pt; font-family:Arial" align=right><font size="2">48.49</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:17pt; font-family:Arial" align=right><font size="2">69,231</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">$7.43</font></P>
</TD></TR>
<TR><TD valign=top width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">$12.31 - $16.79</font></P>
</TD><TD valign=top width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">2009</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">382,000</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:11.2pt; text-indent:11.6pt; font-family:Arial" align=right><font size="2">56.38</font></P>
</TD><TD valign=top width=108><P style="margin:0pt; padding-right:17pt; font-family:Arial" align=right><font size="2">142,000</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">&nbsp;
    $13.87</font></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=116.533><P style="margin:0pt; font-family:Arial" align=center><font size="2">$3.73</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=51.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">2010</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">222,000</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; padding-right:11.2pt; text-indent:11.6pt; font-family:Arial" align=right><font size="2">77.60</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="margin:0pt; padding-right:17pt; font-family:Arial" align=right><font size="2">222,000</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><font size="2">$3.73</font></P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=bottom width=116.533><font size="2">&nbsp;</font></TD><TD style="border-bottom:2pt double #000000" valign=bottom width=51.467><font size="2">&nbsp;</font></TD><TD style="border-bottom:2pt double #000000" valign=bottom width=108><P style="margin:0pt; font-family:Arial" align=center><font size="2">&nbsp;&nbsp;&nbsp;
    1,766,010</font></P>
</TD><TD style="border-bottom:2pt double #000000" valign=bottom width=84><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center><font size="2">&nbsp;&nbsp;&nbsp;
    49.01</font></P>
</TD><TD style="border-bottom:2pt double #000000" valign=bottom width=108><P style="margin:0pt; font-family:Arial" align=center><font size="2">&nbsp;&nbsp;&nbsp;
    950,344</font></P>
</TD><TD style="border-bottom:2pt double #000000" valign=bottom width=84><P style="margin:0pt; font-family:Arial" align=center><font size="2">&nbsp;&nbsp;&nbsp;
    $8.37</font></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>During the six months ended June 30, 2004, the Company recognized $1,124,000 of stock compensation expense consisting of $563,000 for options issued in 2004 and $561,000 for options issued in 2003.</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>As at June 30, 2004 there were warrants outstanding to allow the holders to purchase 3,814,662 common shares of the Company at Cdn$12.00 per share. &nbsp;These warrants expire on February 20, 2008.</P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial" align=justify><B>8.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial" align=justify><B>Loss per share</B></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>The following table presents the adjustments to net income (loss) to arrive at the net loss available to common shareholders in computing basic loss per share.</P>
<P style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; text-indent:269.35pt; font-family:Arial" align=justify>Three months</P>
<P style="margin:0pt; text-indent:391.35pt; font-family:Arial" align=justify>Six months</P>
<P style="margin-top:0pt; margin-bottom:-12pt; text-indent:285.05pt; font-family:Arial" align=justify>ended</P>
<P style="margin:0pt; text-indent:402.05pt; font-family:Arial" align=justify>ended</P>
<P style="margin-top:0pt; margin-bottom:-12pt; text-indent:280.35pt; font-family:Arial" align=justify><U>June 30,</U></P>
<U></U><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:397.35pt; font-family:Arial" align=justify><U>June 30,</U></P>
<P style="margin:0pt; text-indent:459pt; font-family:Arial" align=justify><U><BR></U></P>
<P style="margin-top:0pt; margin-bottom:-17pt; text-indent:259pt; line-height:17pt; font-family:Arial" align=justify><U>2004</U></P>
<P style="margin-top:0pt; margin-bottom:-17pt; text-indent:322pt; line-height:17pt; font-family:Arial" align=justify><U>2003</U></P>
<P style="margin-top:0pt; margin-bottom:-17pt; text-indent:385pt; line-height:17pt; font-family:Arial" align=justify><U>2004</U></P>
<P style="margin:0pt; text-indent:439pt; line-height:15pt; font-family:Arial" align=justify><U>2003</U></P>
<P style="margin-top:0pt; margin-bottom:-17pt; text-indent:308.35pt; line-height:17pt; font-family:Arial" align=justify><sup>&nbsp;&nbsp;
(Note 2)</sup></P>
<P style="margin:0pt; text-indent:425.35pt; line-height:15pt; font-family:Arial" align=justify><sup>&nbsp;&nbsp;
(Note 2)</sup></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; line-height:15pt; font-family:Arial" align=justify>Net income (loss) for the period</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:202pt; line-height:15pt; font-family:Arial" align=justify><B>$</B></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:220.5pt; line-height:15pt; font-family:Arial" align=justify><B></B>1,287</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:256pt; line-height:15pt; font-family:Arial" align=justify>$</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:276.8pt; line-height:15pt; font-family:Arial" align=justify>(1,156)</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:328pt; line-height:15pt; font-family:Arial" align=justify>$</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:354pt; line-height:15pt; font-family:Arial" align=justify>921</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:382pt; line-height:15pt; font-family:Arial" align=justify>$</P>
<P style="margin:0pt; padding-left:36pt; text-indent:393.8pt; line-height:13pt; font-family:Arial" align=justify>(2,747)</P>
<P style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Arial" align=justify>Adjustments:</P>
<P style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Arial" align=justify>Charges relating to conversion of</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; line-height:15pt; font-family:Arial" align=justify>&nbsp;&nbsp;convertible debentures</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:213.8pt; line-height:15pt; font-family:Arial" align=justify>(8,464)</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:302.65pt; line-height:15pt; font-family:Arial" align=justify>-</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:339.8pt; line-height:15pt; font-family:Arial" align=justify>(8,464)</P>
<P style="margin:0pt; padding-left:36pt; text-indent:419.65pt; line-height:13pt; font-family:Arial" align=justify>-</P>
<P style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Arial" align=justify>Accretion of convertible, unsecured senior</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; line-height:15pt; font-family:Arial" align=justify><U>&nbsp;&nbsp;subordinated debentures</U></P>
<U><P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:221.3pt; line-height:15pt; font-family:Arial" align=justify></U><B><U></U></B><U>(718)</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:302.65pt; line-height:15pt; font-family:Arial" align=justify>-</P>
<U><P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:339.8pt; line-height:15pt; font-family:Arial" align=justify>(2,838)</U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:419.65pt; line-height:13pt; font-family:Arial" align=justify>-</P>
<P style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Arial" align=justify>Adjusted net loss for purpose of </P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; line-height:15pt; font-family:Arial" align=justify><U>&nbsp;&nbsp;determining basic loss per share</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:202pt; line-height:15pt; font-family:Arial" align=justify><U>$</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:213.8pt; line-height:15pt; font-family:Arial" align=justify><B><U></U></B><U>(7,895)</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:256pt; line-height:15pt; font-family:Arial" align=justify><U>$</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:276.8pt; line-height:15pt; font-family:Arial" align=justify><U>(1,156)</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:328pt; line-height:15pt; font-family:Arial" align=justify><U>$</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:334.8pt; line-height:15pt; font-family:Arial" align=justify><B><U></U></B><U>(10,381)</U></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:382pt; line-height:15pt; font-family:Arial" align=justify><U>$</U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:393.8pt; line-height:13pt; font-family:Arial" align=justify><U>(2,747</U>)</P>
<P style="margin:0pt; padding-left:180pt; line-height:13pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; line-height:15pt; font-family:Arial" align=justify>Loss per share</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:202pt; line-height:15pt; font-family:Arial" align=justify>$&nbsp;&nbsp;&nbsp;
<B>(</B>0.12)</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:256pt; line-height:15pt; font-family:Arial" align=justify>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(0.02)</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:328pt; line-height:15pt; font-family:Arial" align=justify>$&nbsp;&nbsp;&nbsp;
(0.17)</P>
<P style="margin-top:0pt; margin-bottom:-15pt; padding-left:36pt; text-indent:382pt; line-height:15pt; font-family:Arial" align=justify>$&nbsp;&nbsp;&nbsp;
(0.05)</P>
<p align="center">
<BR>
<BR>
<BR>
16
<p align="center">&nbsp;</p>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
<P style="margin:0pt; padding-left:36pt; text-indent:-58.3pt; line-height:13pt; font-family:Arial; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Arial; font-size:12pt" align=justify><font size="2">For the six months ended June 30, 2004, potentially dilutive securities totaling 5,666,252 shares (2003 &#150; 6,723,475) have been excluded from the calculation, as their effect would be anti-dilutive.</font></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><B>9.</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><B>Segmented information</B></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>Substantially all of the Company&#146;s operations are within the mining sector, conducted through operations in six countries. &nbsp;Due to differences between mining and exploration activities, the Company has a separate budgeting process and measures the results of operations and exploration activities independently. &nbsp;The Corporate office provides support to the mining and exploration activities with respect to financial, human resources and technical support.</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial">Segmented disclosures and enterprise-wide information are as follows:</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<div align="center">
  <center>
<TABLE cellspacing=0><TR><TD valign=top width=216><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=367.067 colspan=4><P style="margin:0pt; font-family:Arial" align=center><font size="2">For the three months ended June 30, 2004</font></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=216><P style="margin:0pt; font-family:Arial"><font size="2"><BR></font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=94.067><P style="margin:0pt; font-family:Arial"><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Mining</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=center><font size="2">Corporate</font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Office</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=center><font size="2">Exploration &amp; Development</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=81><P style="margin:0pt; font-family:Arial" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Total</font></P>
</TD></TR>
<TR><TD width=216><P style="margin:0pt; font-family:Arial"><font size="2">Revenue from external customers</font></P>
</TD><TD width=94.067><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; font-family:Arial"><font size="2">20,950</font></P>
</TD><TD width=96><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD width=96><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD width=81><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:0.05pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:22.45pt; font-family:Arial"><font size="2">20,950</font></P>
</TD></TR>
<TR><TD valign=top width=216><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Net income (loss) for the period</font></P>
</TD><TD valign=top width=94.067><P style="margin:0pt; text-indent:35.1pt; line-height:15pt; font-family:Arial"><font size="2">5,736</font></P>
</TD><TD valign=top width=96><P style="margin:0pt; text-indent:28.4pt; line-height:15pt; font-family:Arial"><font size="2">(3,505)</font></P>
</TD><TD valign=top width=96><P style="margin:0pt; text-indent:35.9pt; line-height:15pt; font-family:Arial"><font size="2">(944)</font></P>
</TD><TD valign=top width=81><P style="margin:0pt; text-indent:27.55pt; line-height:15pt; font-family:Arial"><font size="2">1,287</font></P>
</TD></TR>
<TR><TD valign=top width=216><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Segmented assets</font></P>
</TD><TD valign=top width=94.067><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:26.9pt; line-height:15pt; font-family:Arial"><font size="2">114,688</font></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:26.9pt; line-height:15pt; font-family:Arial"><font size="2">111,444</font></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; line-height:15pt; font-family:Arial"><font size="2">89,484</font></P>
</TD><TD valign=top width=81><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:0.05pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:17.55pt; line-height:15pt; font-family:Arial"><font size="2">315,616</font></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<div align="center">
  <center>
<TABLE cellspacing=0><TR><TD valign=top width=216><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=367.467 colspan=4><P style="margin:0pt; font-family:Arial" align=center><font size="2">For the three months ended June 30, 2003</font></P>
<P style="margin:0pt; font-family:Arial" align=center><SUP><font size="2">(Note 2)</font></SUP></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=216><P style="margin:0pt; font-family:Arial"><font size="2"><BR></font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Mining</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=94.467><P style="margin:0pt; font-family:Arial" align=center><font size="2">Corporate</font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Office</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=93><P style="margin:0pt; font-family:Arial" align=center><font size="2">Exploration &amp; Development</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=84><P style="margin:0pt; font-family:Arial" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Total</font></P>
</TD></TR>
<TR><TD width=216><P style="margin:0pt; font-family:Arial"><font size="2">Revenue from external customers</font></P>
</TD><TD width=96><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; font-family:Arial"><font size="2">12,553</font></P>
</TD><TD width=94.467><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD width=93><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD width=84><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:1.15pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:25.6pt; font-family:Arial"><font size="2">12,553</font></P>
</TD></TR>
<TR><TD valign=top width=216><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Net income (loss) for the period</font></P>
</TD><TD valign=top width=96><P style="margin:0pt; text-indent:42.6pt; line-height:15pt; font-family:Arial"><font size="2">367</font></P>
</TD><TD valign=top width=94.467><P style="margin:0pt; text-indent:28.4pt; line-height:15pt; font-family:Arial"><font size="2">(1,260)</font></P>
</TD><TD valign=top width=93><P style="margin:0pt; text-indent:35.9pt; line-height:15pt; font-family:Arial"><font size="2">(263)</font></P>
</TD><TD valign=top width=84><P style="margin:0pt; text-indent:23.9pt; line-height:15pt; font-family:Arial"><font size="2">(1,156)</font></P>
</TD></TR>
<TR><TD valign=top width=216><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Segmented assets</font></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:31.9pt; line-height:15pt; font-family:Arial"><font size="2">93,409</font></P>
</TD><TD valign=top width=94.467><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:36.9pt; line-height:15pt; font-family:Arial"><font size="2">7,673</font></P>
</TD><TD valign=top width=93><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; line-height:15pt; font-family:Arial"><font size="2">86,290</font></P>
</TD><TD valign=top width=84><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:1.15pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:20.6pt; line-height:15pt; font-family:Arial"><font size="2">187,372</font></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<div align="center">
  <center>
<TABLE cellspacing=0><TR><TD valign=top width=216.2><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=372.733 colspan=4><P style="margin:0pt; font-family:Arial" align=center><font size="2">For the six months ended June 30, 2004</font></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=216.2><P style="margin:0pt; font-family:Arial"><font size="2"><BR></font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; font-family:Arial"><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Mining</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=center><font size="2">Corporate</font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Office</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=94.8><P style="margin:0pt; font-family:Arial" align=center><font size="2">Exploration &amp; Development</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=85.933><P style="margin:0pt; font-family:Arial" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Total</font></P>
</TD></TR>
<TR><TD width=216.2><P style="margin:0pt; font-family:Arial"><font size="2">Revenue from external customers</font></P>
</TD><TD width=96><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; font-family:Arial"><font size="2">36,101</font></P>
</TD><TD width=96><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD width=94.8><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:7.6pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD width=85.933><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:-0.65pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:25.6pt; font-family:Arial"><font size="2">36,101</font></P>
</TD></TR>
<TR><TD valign=top width=216.2><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Net income (loss) for the period</font></P>
</TD><TD valign=top width=96><P style="margin:0pt; text-indent:35.1pt; line-height:15pt; font-family:Arial"><font size="2">7,018</font></P>
</TD><TD valign=top width=96><P style="margin:0pt; text-indent:28.4pt; line-height:15pt; font-family:Arial"><font size="2">(4,649)</font></P>
</TD><TD valign=top width=94.8><P style="margin:0pt; text-indent:28.4pt; line-height:15pt; font-family:Arial"><font size="2">(1,448)</font></P>
</TD><TD valign=top width=85.933><P style="margin:0pt; text-indent:38.65pt; line-height:15pt; font-family:Arial"><font size="2">921</font></P>
</TD></TR>
<TR><TD valign=top width=216.2><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Segmented assets</font></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:24.25pt; line-height:15pt; font-family:Arial"><font size="2">114,688</font></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:26.9pt; line-height:15pt; font-family:Arial"><font size="2">111,444</font></P>
</TD><TD valign=top width=94.8><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; line-height:15pt; font-family:Arial"><font size="2">89,484</font></P>
</TD><TD valign=top width=85.933><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:-0.65pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:21.15pt; line-height:15pt; font-family:Arial"><font size="2">315,616</font></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0pt; font-family:Arial"><BR></P>
<p align="center">
<BR>
<BR>
17
<BR>
<BR>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
<BR>
<P style="margin:0pt; font-family:Arial"><BR></P>
<div align="center">
  <center>
<TABLE cellspacing=0><TR><TD valign=top width=224.867><font size="2">&nbsp;</font></TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=378.467 colspan=4><P style="margin:0pt; font-family:Arial" align=center><font size="2">For the six months ended June 30, 2003</font></P>
<P style="margin:0pt; font-family:Arial" align=center><SUP><font size="2">(Note 2)</font></SUP></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=224.867><P style="margin:0pt; font-family:Arial"><font size="2"><BR></font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Mining</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=94.8><P style="margin:0pt; font-family:Arial" align=center><font size="2">Corporate</font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Office</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=93><P style="margin:0pt; font-family:Arial" align=center><font size="2">Exploration &amp; Development</font></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=94.667><P style="margin:0pt; font-family:Arial" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:Arial" align=center><font size="2">Total</font></P>
</TD></TR>
<TR><TD valign=top width=224.867><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Revenue from external customers</font></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; line-height:15pt; font-family:Arial"><font size="2">20,375</font></P>
</TD><TD valign=top width=94.8><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; line-height:15pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD valign=top width=93><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:54.25pt; line-height:15pt; font-family:Arial"><font size="2">-</font></P>
</TD><TD valign=top width=94.667><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:31.9pt; line-height:15pt; font-family:Arial"><font size="2">20,375</font></P>
</TD></TR>
<TR><TD valign=top width=224.867><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Net loss for the period</font></P>
</TD><TD valign=top width=96><P style="margin:0pt; text-indent:40.9pt; line-height:15pt; font-family:Arial"><font size="2">(14)</font></P>
</TD><TD valign=top width=94.8><P style="margin:0pt; text-indent:28.4pt; line-height:15pt; font-family:Arial"><font size="2">(2,124)</font></P>
</TD><TD valign=top width=93><P style="margin:0pt; text-indent:35.9pt; line-height:15pt; font-family:Arial"><font size="2">(609)</font></P>
</TD><TD valign=top width=94.667><P style="margin:0pt; text-indent:30.2pt; line-height:15pt; font-family:Arial"><font size="2">(2,747)</font></P>
</TD></TR>
<TR><TD valign=top width=224.867><P style="margin:0pt; line-height:15pt; font-family:Arial"><font size="2">Segmented assets</font></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:29.25pt; line-height:15pt; font-family:Arial"><font size="2">93,409</font></P>
</TD><TD valign=top width=94.8><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:34.25pt; line-height:15pt; font-family:Arial"><font size="2">7,673</font></P>
</TD><TD valign=top width=93><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:30.1pt; line-height:15pt; font-family:Arial"><font size="2">86,290</font></P>
</TD><TD valign=top width=94.667><P style="margin-top:0pt; margin-bottom:-17pt; text-indent:7.6pt; line-height:17pt; font-family:Arial"><font size="2">$</font></P>
<P style="margin:0pt; text-indent:20.6pt; line-height:15pt; font-family:Arial"><font size="2">187,372</font></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; font-family:Arial"><B>10.</B></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial"><B>Differences between Canadian and United States Generally Accepted Accounting Principles</B></P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>These financial statements are prepared in accordance with accounting principles generally accepted in Canada (&#147;Canadian GAAP&#148;). The differences between Canadian GAAP and accounting principles generally accepted in the United States (&#147;US GAAP&#148;) as they relate to these financial statements are summarized below and discussed in Note 18 in the Company&#146;s 2003 Annual Report.</P>
<P style="margin-top:0pt; margin-bottom:5pt; font-family:Arial"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify><B>Consolidated Balance Sheets</B></P>
<B><P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:274.5pt; font-family:Arial" align=justify></B><U>June 30, 2004</U></P>
<U><P style="margin:0pt; padding-left:36pt; text-indent:414pt; font-family:Arial" align=justify><BR></U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:359.2pt; font-family:Arial">Shareholders&#146;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:202.2pt; font-family:Arial"><U>Total Assets</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:277.65pt; font-family:Arial"><U>Total Liabilities</U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:387.3pt; font-family:Arial"><U>Equity</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; font-family:Arial">Reported under Canadian GAAP</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:193pt; font-family:Arial">$</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:219.5pt; font-family:Arial">315,616</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:274pt; font-family:Arial">$</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:305.5pt; font-family:Arial">56,901</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:355pt; font-family:Arial">$</P>
<P style="margin:0pt; padding-left:36pt; text-indent:381.5pt; font-family:Arial">258,715</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; font-family:Arial">Deferred exploration (a)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:222.8pt; font-family:Arial">(1,993)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:329.65pt; font-family:Arial">-</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(1,993)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; font-family:Arial">Amortization of mineral property (a)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:222.8pt; font-family:Arial">(2,550)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:311.3pt; font-family:Arial">(895)</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(1,655)</P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">SFAS 150 adjustments </P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Reclassify convertible debentures</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:318pt; font-family:Arial">630</P>
<P style="margin:0pt; padding-left:36pt; text-indent:392.3pt; font-family:Arial">(630)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Deferred debt issue costs</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:229.5pt; font-family:Arial">3,272</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:329.65pt; font-family:Arial">-</P>
<P style="margin:0pt; padding-left:36pt; text-indent:391.5pt; font-family:Arial">3,272</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Amortization of debt issue costs</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:222.8pt; font-family:Arial">(3,241)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:329.65pt; font-family:Arial">-</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(3,241)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Interest accretion</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:311.3pt; font-family:Arial">(961)</P>
<P style="margin:0pt; padding-left:36pt; text-indent:399pt; font-family:Arial">961</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Interest expense</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:310.5pt; font-family:Arial">3,662</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(3,662)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Inducement expense</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:310.5pt; font-family:Arial">3,579</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(3,579)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial"><U>Accretion of convertible debentures</U></P>
<U><P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</U></P>
<U><P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:303.8pt; font-family:Arial">(6,312)</U></P>
<U><P style="margin:0pt; padding-left:36pt; text-indent:391.5pt; font-family:Arial">6,312</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; line-height:20pt; font-family:Arial"><U>Reported under US GAAP</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:193pt; line-height:20pt; font-family:Arial"><U>$</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:219.5pt; line-height:20pt; font-family:Arial"><U>311,104</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:274pt; line-height:20pt; font-family:Arial"><U>$</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:305.5pt; line-height:20pt; font-family:Arial"><U>56,604</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:355pt; line-height:20pt; font-family:Arial"><U>$</U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:381.5pt; line-height:18pt; font-family:Arial"><U>254,500</U></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial"><BR></P>
<B><P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:236.35pt; font-family:Arial"><U></U></B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>December 31, 2003</U></P>
<U><P style="margin:0pt; padding-left:36pt; text-indent:414pt; font-family:Arial"><BR></U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:359.2pt; font-family:Arial">Shareholders&#146;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:202.2pt; font-family:Arial"><U>Total Assets</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:277.65pt; font-family:Arial"><U>Total Liabilities</U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:387.3pt; font-family:Arial"><U>Equity</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; font-family:Arial">Reported under Canadian GAAP</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:193pt; font-family:Arial">$</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:219.5pt; font-family:Arial">279,883</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:274pt; font-family:Arial">$</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:305.5pt; font-family:Arial">95,785</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:355pt; font-family:Arial">$</P>
<P style="margin:0pt; padding-left:36pt; text-indent:381.5pt; font-family:Arial">184,098</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; font-family:Arial">Deferred exploration (a)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:222.8pt; font-family:Arial">(1,993)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:329.65pt; font-family:Arial">-</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(1,993)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; font-family:Arial">Amortization of mineral property (a)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:222.8pt; font-family:Arial">(1,700)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:311.3pt; font-family:Arial">(595)</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(1,105)</P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">SFAS 150 adjustments (b)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Reclassify convertible debentures</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:305.5pt; font-family:Arial">63,201</P>
<P style="margin:0pt; padding-left:36pt; text-indent:379.8pt; font-family:Arial">(63,201)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Deferred debt issue costs</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:229.5pt; font-family:Arial">3,272</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:329.65pt; font-family:Arial">-</P>
<P style="margin:0pt; padding-left:36pt; text-indent:391.5pt; font-family:Arial">3,272</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Interest accretion</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:311.3pt; font-family:Arial">(595)</P>
<P style="margin:0pt; padding-left:36pt; text-indent:399pt; font-family:Arial">595</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial">Interest expense</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:248.65pt; font-family:Arial">-</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:310.5pt; font-family:Arial">1,887</P>
<P style="margin:0pt; padding-left:36pt; text-indent:384.8pt; font-family:Arial">(1,887)</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:9pt; font-family:Arial"><U>Amortization of debt issue costs</U></P>
<U><P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:230.3pt; font-family:Arial">(453)</U></P>
<U><P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:329.65pt; font-family:Arial">-</U></P>
<U><P style="margin:0pt; padding-left:36pt; text-indent:392.3pt; font-family:Arial">(453</U>)</P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; line-height:20pt; font-family:Arial"><U>Reported under US GAAP</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:193pt; line-height:20pt; font-family:Arial"><U>$</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:219.5pt; line-height:20pt; font-family:Arial"><U>279,009</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:274pt; line-height:20pt; font-family:Arial"><U>$</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:300.5pt; line-height:20pt; font-family:Arial"><U>159,683</U></P>
<P style="margin-top:0pt; margin-bottom:-20pt; padding-left:36pt; text-indent:355pt; line-height:20pt; font-family:Arial"><U>$</U></P>
<P style="margin:0pt; padding-left:36pt; text-indent:381.5pt; line-height:18pt; font-family:Arial"><U>119,326</U></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><BR></P>
<p align="center">
<BR>
<BR>
18
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<BR>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><B>Consolidated Statements of Shareholders&#146; Equity</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<TABLE cellspacing=0 width="856"><TR><TD valign=top width=292><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=558 colspan=5><P style="font-family: Arial; text-indent: 0; margin: 0pt; padding-left: 36pt" align=center><font size="2">June 30, 2004</font></P>
</TD></TR>
<TR><TD valign=bottom width=294><font size="2">&nbsp;</font></TD><TD valign=bottom width=107><font size="2">&nbsp;</font></TD><TD valign=bottom width=114><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Additional</font></P>
</TD><TD valign=bottom width=113><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=292><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Common</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Convertible</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Paid in</font></P>
</TD><TD valign=bottom width=113><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=292><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Shares</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=114><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Debentures</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Capital</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=115><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Deficit</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Total</font></P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">Reported under Canadian GAAP</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$377,091</font> </P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$690</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$11,858</font> </P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$(130,924)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$258,715</font> </P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">Deferred exploration (a)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,993)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,993)</font></P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">Amortization of mineral property (a)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,655)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,655)</font></P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">SFAS 150 adjustments (b)</font></P>
</TD><TD valign=bottom width=105><font size="2">&nbsp;</font></TD><TD valign=bottom width=112><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><font size="2">&nbsp;</font></TD><TD valign=bottom width=113><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Reclassify convertible debentures</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(630)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(630)</font></P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Accretion of convertible debentures</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(60)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;6,372</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;6,312</font> </P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Deferred debt issue costs</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;3,272</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;3,272</font> </P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Amortization of debt issue costs</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(3,241)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(3,241)</font></P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Interest accretion</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;961</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;961</font> </P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Interest expense</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(3,662)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(3,662)</font></P>
</TD></TR>
<TR><TD valign=bottom width=292><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Inducement expense</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;127</font> </P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(3,706)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(3,579)</font></P>
</TD></TR>
<TR><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=294><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">Reported under US GAAP</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$377,218</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=114><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$11,858</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=115><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$(134,576)</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$254,500</font> </P>
</TD></TR>
</TABLE>
<A NAME="OLE_LINK1"></A><A NAME="OLE_LINK2"></A><TABLE cellspacing=0 width="910"><TR><TD valign=top width=301><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=603 colspan=5><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=center><font size="2">December 31, 2003</font></P>
</TD></TR>
<TR><TD valign=bottom width=303><font size="2">&nbsp;</font></TD><TD valign=bottom width=152><font size="2">&nbsp;</font></TD><TD valign=bottom width=114><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Additional</font></P>
</TD><TD valign=bottom width=113><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=301><font size="2">&nbsp;</font></TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Common</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Convertible</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Paid in</font></P>
</TD><TD valign=bottom width=113><font size="2">&nbsp;</font></TD><TD valign=bottom width=105><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=301><font size="2">&nbsp;</font></TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=152><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Shares</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=114><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Debentures</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Capital</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=115><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Deficit</font></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">Total</font></P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="font-family: Arial; text-indent: 0; margin: 0pt; padding-left: 36pt"><font size="2">Reported under Canadian GAAP</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$225,154</font> </P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$66,735</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$12,752</font> </P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$(120,543)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$184,098</font> </P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="font-family: Arial; text-indent: 0; margin: 0pt; padding-left: 36pt"><font size="2">Deferred exploration (a)</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,993)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,993)</font></P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">Amortization of mineral property (a)</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,105)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,105)</font></P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">SFAS 150 adjustments (b)</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Reclassify convertible debentures</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(63,201)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(63,201)</font></P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Accretion of convertible debentures</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(3,534)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;3,534</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Deferred debt issue costs</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;3,272</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;3,272</font> </P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Interest accretion</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;595</font> </P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;595</font> </P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Interest expense</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,887)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(1,887)</font></P>
</TD></TR>
<TR><TD valign=bottom width=301><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">&nbsp;&nbsp;Amortization of debt issue costs</font></P>
</TD><TD valign=bottom width=150><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=112><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;- &nbsp;&nbsp;</font></P>
</TD><TD valign=bottom width=113><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(453)</font></P>
</TD><TD valign=bottom width=105><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;(453)</font></P>
</TD></TR>
<TR><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=303><P style="margin:0pt; padding-left:36pt; font-family:Arial"><font size="2">Reported under US GAAP</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=152><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$225,154</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=114><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    - &nbsp;&nbsp;</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$12,752</font> </P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=115><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$(118,580)</font></P>
</TD><TD style="border-top: 0.5pt solid #000000; border-bottom: 2pt double #000000" valign=bottom width=107><P style="margin:0pt; padding-left:36pt; font-family:Arial" align=right><font size="2">&nbsp;$119,326</font> </P>
</TD></TR>
</TABLE>
<P style="margin:0pt; padding-left:36pt; font-family:Arial"><BR></P>
<p align="center">
<BR>
19
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<BR>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<TABLE width="100%" border=0 cellspacing=0 cellpadding=0 height="334">
<TR>
   <TD width="48%" height="21">&nbsp;</TD>
   <TD colspan=5 width="24%" height="21">
    <p align="center"><FONT size=2 face="sans-serif">Three months ended</FONT></p>
   </TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD colspan=4 width="23%" height="21">
    <p align="center"><FONT size=2 face="sans-serif">Six months ended</FONT></p>
   </TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD colspan=4 width="23%" height="21" style="border-bottom: 1 solid #000000">
    <p align="center"><FONT size=2 face="sans-serif">June 30,</FONT></p>
   </TD>
   <TD width="2%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD colspan=4 width="23%" height="21" style="border-bottom: 1 solid #000000">
    <p align="center"><FONT size=2 face="sans-serif">June 30,</FONT>&nbsp;</p>
   </TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" align="right" height="21"><FONT size=2 face="sans-serif">2004</FONT></TD>
   <TD width="2%" align="right" height="21">&nbsp;</TD>
   <TD width="1%" align="right" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">2003</FONT></TD>
   <TD width="2%" align="right" height="21">&nbsp;</TD>
   <TD width="1%" align="right" height="21">&nbsp;</TD>
   <TD width="10%" align="right" height="21"><FONT size=2 face="sans-serif">2004</FONT></TD>
   <TD width="2%" align="right" height="21">&nbsp;</TD>
   <TD width="1%" align="right" height="21">&nbsp;</TD>
   <TD width="10%" align="right" height="21"><FONT size=2 face="sans-serif">2003</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21">&nbsp;</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21">
    <p align="right"><FONT size=1 face="sans-serif">(Note 2)</FONT></p>
   </TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21">&nbsp;</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21">
    <p align="right"><FONT size=1 face="sans-serif">(Note 2)</FONT></p>
   </TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="19">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Net income (loss) under Canadian GAAP</FONT></TD>
   <TD align="center" width="1%" height="19"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="19"><FONT size=2 face="sans-serif">1,287</FONT></TD>
   <TD width="2%" height="19">&nbsp;</TD>
   <TD align="center" width="1%" height="19"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="19"><FONT size=2 face="sans-serif">(1,156)</FONT></TD>
   <TD width="2%" height="19">&nbsp;</TD>
   <TD align="center" width="1%" height="19"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="19"><FONT size=2 face="sans-serif">921</FONT></TD>
   <TD width="2%" height="19">&nbsp;</TD>
   <TD align="center" width="1%" height="19"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD width="10%" height="19" align="right"><FONT size=2 face="sans-serif">(2,747)</FONT></TD>
   <TD width="2%" height="19">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Deferred exploration (a)</FONT></TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21" align="right"><FONT size=2 face="sans-serif">(113)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Interest accretion</FONT></TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">96</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">366</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21" align="right">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Interest expense</FONT></TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(643)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(1,775)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21" align="right">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Inducement expense</FONT></TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(12,170)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(12,170)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21" align="right">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Amortization of mineral property costs</FONT></TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(275)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(550)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD width="1%" height="21">&nbsp;</TD>
   <TD width="10%" height="21" align="right">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Amortization of debt issue costs</FONT></TD>
   <TD width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="10%" height="21" style="border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">(2,515)</FONT></TD>
   <TD width="2%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="10%" height="21" style="border-bottom: 1 solid #000000">-</TD>
   <TD width="2%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD align="right" width="10%" height="21" style="border-bottom: 1 solid #000000"><FONT size=2 face="sans-serif">(2,788)</FONT></TD>
   <TD width="2%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</TD>
   <TD width="10%" height="21" align="right" style="border-bottom: 1 solid #000000">-</TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
<TR>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD align="right" height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21" align="right">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21" style="border-bottom: 2 double #000000">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Net loss under US GAAP</FONT></TD>
   <TD align="center" width="1%" height="21" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="21" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">(14,220)</FONT></TD>
   <TD width="2%" height="21" style="border-bottom: 2 double #000000">&nbsp;</TD>
   <TD align="center" width="1%" height="21" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="21" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">(1,156)</FONT></TD>
   <TD width="2%" height="21" style="border-bottom: 2 double #000000">&nbsp;</TD>
   <TD align="center" width="1%" height="21" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="21" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">(15,996)</FONT></TD>
   <TD width="2%" height="21" style="border-bottom: 2 double #000000">&nbsp;</TD>
   <TD align="center" width="1%" height="21" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD width="10%" height="21" align="right" style="border-bottom: 2 double #000000"><FONT size=2 face="sans-serif">(2,860)</FONT></TD>
   <TD width="2%" height="21" style="border-bottom: 2 double #000000">&nbsp;</TD>
</TR>
<TR>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD align="right" height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
   <TD height="21" align="right">&nbsp;</TD>
   <TD height="21">&nbsp;</TD>
</TR>
<TR>
   <TD width="48%" height="21">&nbsp;&nbsp;&nbsp;<FONT size=2 face="sans-serif">Loss per share</FONT></TD>
   <TD align="center" width="1%" height="21"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(0.22)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD align="center" width="1%" height="21"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(0.02)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD align="center" width="1%" height="21"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD align="right" width="10%" height="21"><FONT size=2 face="sans-serif">(0.27)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
   <TD align="center" width="1%" height="21"><FONT size=2 face="sans-serif">$</FONT></TD>
   <TD width="10%" height="21" align="right"><FONT size=2 face="sans-serif">(0.06)</FONT></TD>
   <TD width="2%" height="21">&nbsp;</TD>
</TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:54pt; font-family:Arial" align=justify>&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-18pt; font-family:Arial" align=justify><B>a)</B></P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial" align=justify><B>Mineral Property Expenditures</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="text-indent: 0; font-family: Arial; margin-top: 0pt; margin-bottom: 10pt; padding-left: 54pt" align=justify><U></U>Canadian GAAP allows exploration costs and costs of acquiring mineral rights to be capitalized during the search for a commercially mineable body of ore. &nbsp;Prior to 2002 the Company had incurred exploration expenses that were added to the carrying value of mineral properties as it was anticipated that there was a continuing benefit of such expenditures. &nbsp;Subsequent to 2001 the Company has expensed all exploration costs unless such activities expand the reserve base at one of the Company&#146;s operations. &nbsp;Under US GAAP, exploration expenditures can only be deferred subsequent to the establishment of reserves. &nbsp;For US GAAP purposes, the Company therefore expensed its pre-2002 exploration expenditures.</P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:54pt; font-family:Arial" align=justify>Furthermore, under US GAAP, the cost of acquisition of mineral property rights are generally classified as intangible assets and should be amortized over their useful life which, in the case of mineral rights, is the period to expiry of the rights. &nbsp;Under Canadian GAAP, costs of acquiring mineral rights may be considered as tangible property and would be amortized over the productive life of the asset. &nbsp;As a result, for US GAAP purposes, the Company is amortizing the cost of the mining rights acquired in the Corner Bay transaction on a straight line basis over the life of the mining rights, net of related income taxes.</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-18pt; font-family:Arial" align=justify><B>b)</B></P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial" align=justify><B>Convertible debentures</B></P>
<P style="margin:0pt; padding-left:54pt; text-indent:-54pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:54pt; font-family:Arial" align=justify>In May 2003, FASB Statement No. 150 (&#147;SFAS 150&#148;), &#147;Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity&#148; was issued. &nbsp;This Statement requires that three types of financial instruments be reported as liabilities by their issuers. &nbsp;Those types of instruments include: mandatorily redeemable instruments; forward purchase contracts, written put options and other financial instruments not in the form of shares that either obligate the issuer to repurchase its equity shares and settle its obligation for cash or by transferring other assets; and certain financial instruments that include an obligation that may be settled in a variable number of equity shares, has a fixed or benchmark tied value at inception that varies inversely with the fair value of the equity shares. &nbsp;SFAS 150 is effective for instruments entered into or modified after May
 31, 2003. &nbsp;Under Canadian GAAP the convertible debentures have been accounted for in accordance with CICA Handbook Section 3860. &nbsp;Application of this section results in the accounting as described in Note 11 in the Company&#146;s 2003 Annual Report, with the principle component of the debenture being treated </P>
<p align="center">
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20
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<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; line-height:14pt; font-family:Arial; font-size:12pt"><B>Pan American Silver Corp.</B></P>
<P style="margin:0pt; font-family:Arial">Notes to Unaudited Interim Consolidated Financial Statements</P>
<P style="margin:0pt; font-family:Arial">As at June 30, 2004 and 2003 and for the three months and six months then ended</P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000">(Tabular amounts are in thousands of US dollars, except for shares)</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
<BR>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:54pt; font-family:Arial" align=justify>as equity. &nbsp;In accordance with SFAS 150 the resulting change to the financial statements as at June 30, 2004 would be to increase liabilities by $598,000 (December 31, 2003 - $64,493,000) and decrease shareholders&#146; equity by a corresponding amount. &nbsp;Debt issue expenses of $3,272,000 would be reclassified from shareholders&#146; equity to assets and its proportionate share of the outstanding convertible debentures would be amortized over a three year period. &nbsp;Inducement and interest expense for the six months ended June 30, 2004 would be higher by $12,170,000 (2003 - $Nil) and $1,409,000 (2003 - $Nil), respectively.</P>
<P style="margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><B>c)</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:54pt; font-family:Times New Roman; font-size:12pt"><B><font face="Arial" size="2">Recent accounting pronouncement</font></B></P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial" align=justify>In December 2003, the FASB issued Interpretation No. 46-Revised (&#147;FIN 46-R&#148;), <I>Consolidation of Variable Interest Entities</I>, an interpretation of ARB 51 (revised December 2003), which replaces FIN 46. &nbsp;FIN 46-R incorporates certain modifications of FIN 46 adopted by the FASB subsequent to the issuance of FIN 46, including modifications to the scope of FIN 46. &nbsp;For all non-special purpose entities (&#147;SPE&#148;) created prior to February 1, 2003, public entities will be required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004. &nbsp;For all entities (regardless of whether the entity is an SPE) that were created subsequent to January 31, 2003, public entities are already required to apply the provisions of FIN 46, and should continue doing so unless they elect to adopt the provisions of FIN 46-R early as of the first interim or annual reporting period en
ding after December 15, 2003. &nbsp;If they do not elect to adopt FIN 46-R early, public entities would be required to apply FIN 46-R to those post-January 31, 2003 entities as of the end of the first interim or annual reporting period ending after March 15, 2004.</P>
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<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:54pt; text-indent:-36pt; font-family:Arial"><B>11.</B></P>
<P style="margin:0pt; padding-left:54pt; text-indent:-18pt; font-family:Arial"><B>Subsequent event</B></P>
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<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>As previously announced on February 9, 2004 the Company has launched its $36,700,000 cash offer, through the Peru Stock Exchange, to purchase the voting shares of Compania Minera Argentum S.A. (&#147;Argentum&#148;). &nbsp;Argentum&#146;s principal asset is the Morococha silver mine located in central Peru, 150 kilometres northeast of Lima. &nbsp;The Company has a lock-up agreement to acquire 92 per cent of Argentum&#146;s voting shares. &nbsp;The offer is expected to close in the third quarter 2004.</P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial" align=justify>In addition, the Company has acquired, for $1,500,000, 100 per cent of Compania Minera Natividad (&#147;Natividad&#148;), which holds numerous adjacent mineral concessions in proximity to the Morococha mine.</P>
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<P style="margin-top:16pt; margin-bottom:4pt; line-height:18pt; font-family:Arial; font-size:16pt" align=justify><B>Second Quarter 2004 Management&#146;s Discussion and Analysis</B></P>
<P style="margin:0pt; font-family:Arial; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>Management&#146;s discussion and analysis (&#147;MD&amp;A&#148;) focuses on significant factors that affected Pan American Silver Corp.&#146;s and its subsidiaries&#146; (&#147;Pan American&#148; or the &#147;Company&#148;) performance and such factors that may affect its future performance. &nbsp;The MD&amp;A should be read in conjunction with the unaudited consolidated financial statements for the three months ended June 30, 2004 and the related notes contained herein.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>The significant accounting policies are outlined within Note 2 to the Consolidated Financial Statements of the Company for the year ended December 31, 2003. These accounting policies have been applied consistently for the six months ended June 30, 2004.</P>
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<P style="margin:0pt; font-family:Arial" align=justify><B>Significant Events and Transactions of the Second Quarter</B></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>The Company made an offer to induce conversion by the holders of its 5.25 per cent convertible unsecured senior subordinated debentures (the &#147;Debentures&#148;) between April 7, 2004 and May 21, 2004. &nbsp;Approximately $85.4 million or 99 per cent of the Debenture holders elected to accept the Company&#146;s offer and received $131.25 in cash plus 106.929 common shares of the Company per $1,000 principal amount of the Debentures. &nbsp;The cash component of the offer represented the interest that the Company would have paid on the Debentures up until July 31, 2006, when the Company would, under certain circumstances, have the right to force conversion. &nbsp;In addition, the offer incorporated an additional 2.4358 shares per $1,000 principal amount of Debentures converted, equal to a 4 per cent premium. &nbsp;The Company issued 9,135,043 common shares and paid cash of $11.21 million pursuant to this offer.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>The Company prepaid the $9.5 million La Colorada construction loan on May 17, 2004 from the International Finance Corporation. &nbsp;Pan American also prepaid the Huaron project loan by making a $3.1 million payment of principal and accrued interest on April 16, 2004.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>The Company has initiated the final steps necessary to complete the Morococha Mine acquisition, which was announced in February 2004. &nbsp;The purchase is expected to close in August but the Company has already taken over effective control of the mining operations and accounting functions. &nbsp;Assuming the Morococha purchase closes in August as is expected currently, the mine should contribute 1.4 million ounces of silver to Pan American&#146;s production in 2004 at a cash cost of $3.25 per ounce. &nbsp;Over the longer term Morococha will add approximately 3.5 million ounces of annual silver production at a cash cost of less than $3.00 per ounce.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>The La Colorada mine in Mexico reached commercial production on January 1, 2004 after a $20 million expansion, which started in late 2002. &nbsp;As such, all revenue and expense items were recognized in the statement of operations in the first six months of 2004, which have previously been capitalized during this expansion period. This change in accounting treatment gives rise to several significant differences when comparing the consolidated statement of operations for the second quarter of 2004 with the corresponding period in 2003. &nbsp;</P>
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<P style="margin:0pt; font-family:Arial" align=justify>On June 23, 2004 the Peruvian congress approved a royalty on mining companies of between 1 and 3 per cent based on the value of annual concentrate sales. &nbsp;The Company anticipates that its operations in Peru will be subject to the royalty calculated at 1 per cent, which is expected to total between $0.5 million to $1.0 million per year for the Huaron, Quiruvilca and Morococha mines combined. &nbsp;While there is still some uncertainty as to how this law will be implemented, the Ministries of Energy &amp; Mines and Economy &amp; Finance are expected to publish regulations clarifying this law by the end of August 2004.</P>
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<P style="margin:0pt; font-family:Arial" align=justify><B>Results of Operations</B> </P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>For the three months ended June 30, 2004 the Company&#146;s net income was $1.29 million (a loss per share of $0.12 after adjusting for charges associated with the early conversion and accretion of the Debentures) compared to a net loss of $1.16 million ($0.02 per share) for the corresponding period in 2003. &nbsp;The Company generated net income of $0.92 million for the six-month period ended June 30, 2004 compared to a loss of $2.75 million for the corresponding period in 2003.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>The Company&#146;s improved results for the second quarter of 2004 relative to the same period in 2003 was due in part to a $3.58 million gain on the sale of surplus land at the Quiruvilca mine and to significantly improved operating margins, offset by a charge of $1.31 million relating to the conversion of the Debentures, higher depreciation and amortization, exploration and general and administrative charges. &nbsp;Revenue from metal sales was 67 per cent higher in the second quarter of 2004 and 77 percent higher in the first six months of 2004 compared to the corresponding periods in 2003. &nbsp;Excluding the increase in revenue as a result of the La Colorada mine reaching commercial production on January 1, 2004, metal sales still increased by almost 50 per cent for the three and six-month periods ended June 30, 2004 relative to the corresponding periods in 2003 due to higher realized metal prices and slightly more tonnes of concentrate sold. &nbsp;R
evenues for the second quarter of 2004 increased 38 per cent from the first quarter of 2004 due to the shipment of larger volumes of concentrates. &nbsp;Our customers largely control the timing of concentrate shipments, which are essential for revenue recognition purposes and as a result our revenue profile can vary significantly between quarters even when production has been relatively stable. &nbsp;The table below sets out select quarterly results for the past ten quarters, stated in thousands of US dollars, except per share amounts. &nbsp;</P>
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<TABLE cellspacing=0><TR><TD style="border:1.5pt solid #000000" valign=bottom width=97.333><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">Year</font></B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-right:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">Quarter (unaudited)</font></B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-right:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">Revenue</font></B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-right:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">Operating Profit (1)</font></B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-right:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">Net income (loss) for the period</font></B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-right:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=center><B><font size="2">Net loss per share</font></B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-right:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">2004</font></P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">June 30</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$20,950</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$4,419</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">$1,287</font> </P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.12)</font></P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial"><font size="2">(2)</font></P>
</TD></TR>
<TR><TD valign=bottom width=97.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">March 31</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$15,151</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$3,983</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($366)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.05)</font></P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial"><font size="2">(2)</font></P>
</TD></TR>
<TR><TD valign=bottom width=97.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">2003</font></P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">Dec. 31</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$12,857</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$2,041</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($4,858)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.15)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">Sept. 30</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$11,890</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$1,690</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($390)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.01)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">June 30</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$12,553</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$1,220</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($1,156)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.02)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">March 31</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$7,822</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$393</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($1,573)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.03)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><P style="margin:0pt; font-family:Arial" align=right><font size="2">2002</font></P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">Dec. 31</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$12,084</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$379</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($14,040)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.35)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">Sept. 30</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$11,195</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">($252)</font></P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($17,387)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.40)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">June 30</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$11,615</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$808</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($1,247)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.03)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333><font size="2">&nbsp;</font></TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial"><font size="2">March 31</font></P>
</TD><TD valign=bottom width=93.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">$10,199</font> </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Arial" align=right><font size="2">$997</font> </P>
</TD><TD valign=bottom width=127.533><P style="margin:0pt; font-family:Arial" align=right><font size="2">($1,303)</font></P>
</TD><TD valign=bottom width=104.2><P style="margin:0pt; font-family:Arial" align=right><font size="2">($0.03)</font></P>
</TD><TD valign=bottom width=96><font size="2">&nbsp;</font></TD></TR>
<TR><TD valign=bottom width=97.333>&nbsp;</TD><TD valign=bottom width=127.533>&nbsp;</TD><TD valign=bottom width=93.2>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=127.533>&nbsp;</TD><TD valign=bottom width=104.2>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD></TR>
<TR><TD valign=bottom width=740 colspan="7"><P style="margin:0pt; font-family:Arial"><font size="2">(1) Operating Profit/(Loss) is equal to total revenues less direct mine operating expenses&nbsp;</font></P>
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<TR><TD valign=bottom width=740 colspan="7"><P style="margin:0pt; font-family:Arial"><font size="2">(2) Includes charges associated with the early conversion and accretion of the Debentures&nbsp;</font></P>
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<P style="margin:0pt; font-family:Arial" align=justify>Operating costs for the three months ended June 30, 2004 were $16.53 million, significantly higher than the second quarter of 2003. &nbsp;La Colorada achieving commercial production is the principal reason for this increase, partially offset by the fact that Quiruvilca lowered its operating costs compared to the second quarter of 2003 due to closing the high cost North Zone in August of 2003.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>Pan American&#146;s gross margin ratio (the difference between revenue and operating costs divided by operating costs) improved to 27 per cent for the three months ended June 30, 2004 from 11 per cent for the comparable period last year. &nbsp;This improvement is due in large part to higher metals prices for all of the metals that the Company produces and to a lesser extent from a reduction in operating costs per ounce of silver produced. &nbsp;</P>
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<P style="margin:0pt; font-family:Arial" align=justify>Depreciation and amortization charges for the second quarter increased significantly to $2.0 million from $0.46 million a year before. &nbsp;Again, La Colorada achieving commercial production is the principal reason </P>
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<P style="margin:0pt; font-family:Arial" align=justify>for this increase but depreciation and amortization has also increased as a direct result of the Company&#146;s adoption of CICA Handbook Section 3110 &#150; &#147;Accounting for Asset Retirement Obligations&#148;, which required the Company to increase its asset carrying values by $7.9 million as at December 31, 2003. &nbsp;The amortization of these higher asset values on a unit of production basis has resulted in increased depreciation charges. &nbsp;</P>
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<P style="margin:0pt; font-family:Arial" align=justify>For the three and six-month periods ended June 30, 2004, general and administration costs have increased significantly from a year ago reflecting increased staffing costs to manage the Company&#146;s continued growth, a stronger Canadian dollar, legal expenses relating to the conversion offer to the debentures holders and increased travel costs. &nbsp;</P>
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<P style="margin:0pt; font-family:Arial" align=justify>The Company recognized $0.68 million stock-based compensation expense in the second quarter of 2004, as a result of adopting CICA Handbook Section 3870 &#150; &#147;Stock-Based Compensation&#148; in the fourth quarter of 2003. On a restated basis, the comparable expense recorded in the quarter ended June 30, 2003 was $0.71 million. &nbsp;</P>
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<P style="margin:0pt; font-family:Arial" align=justify>Reclamation expense of $0.3 million in the second quarter of 2004 relates to the accretion of the liability that the Company recognized by adopting CICA Handbook Section 3110 &#150; &#147;Accounting for Asset Retirement Obligations&#148; as at December 31, 2003. &nbsp;Pursuant to this section, the Company recognized the expected fair value of future site restoration costs as a liability, which is accreted to its anticipated future value with a corresponding charge to the statement of operations. There has been no change to the Company&#146;s expectations of future site restoration costs during the quarter.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>Exploration and development expenses for the second quarter and six-month period increased relative to 2003 reflecting the Company&#146;s active development program at Manatial Espejo and other costs.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>Other income represents primarily interest received from the cash balances the Company maintained during the quarter, which were substantially higher than a year ago from proceeds of the Debentures, together with the equity financing completed in March 2004.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify><B>Production </B></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>Pan American produced 2,399,395 ounces of silver in the second quarter of 2004, a 19 per cent increase from the corresponding period in 2003. &nbsp;Significant increases in silver production were achieved at La Colorada and the Pyrite Stockpile operation. &nbsp;Quiruvilca was able to produce the same quantity of silver in the second quarter of 2004 as it had a year before by processing 25 per cent fewer tonnes, but with higher silver grades after the closure of the high-cost North Zone in August 2003. &nbsp;The Huaron mine was able to overcome a challenging first quarter and recorded increased production and lower operating costs in the second quarter. &nbsp;We expect this trend to continue over the remainder of the year with Huaron producing 4.375 million ounces of silver in 2004 at cash costs around $3.75 per ounce. </P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>While second-quarter production from the La Colorada mine increased to 415,828 ounces as compared to 229,557 ounces in 2003, production rates and cash production costs have been disappointing. &nbsp;The Company now estimates that total silver production from La Colorada for 2004 will be 1.8 million ounces, approximately 40per cent lower than anticipated at the start of the year. &nbsp;As a consequence, cash costs will also be significantly higher than predicted at $5.50 per ounce for the year. &nbsp;A combination of events has contributed to the disappointing results: worse than expected ground conditions, which have slowed both development and mining; increased dewatering requirements; and areas of high clay refractory ore, which have negatively impacted recoveries and mill throughput. &nbsp;A revised mining and processing plan has been developed and is now being implemented to address all of these issues. &nbsp;The primary component of the plan will se
e a switch to a more selective narrow vein mining method, which will decrease tonnage but substantially increase grades. The Company still expects La Colorada to achieve an annualized production rate of 3.5 million ounces at cash costs of less than $3.50 per ounce, however, the timing will be determined by the speed of dewatering and execution of the new mine plan.</P>
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<P style="margin:0pt; font-family:Arial" align=justify>Consolidated cash costs for the second quarter of 2004 were $4.05 per ounce compared to $4.40 per ounce in the second quarter of 2003, due to higher silver production coupled with a larger by-product credit from base metal sales. &nbsp;Cash costs improved significantly at both Huaron and Quiruvilca, but were offset by higher than expected costs at La Colorada. &nbsp;The Company expects consolidated cash costs to continue to decrease with improvements at La Colorada and is still estimating consolidated silver production of approximately 11.5 million ounces at a cash cost of $3.65 per ounce for 2004.</P>
<P style="margin:0pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial"><B>Liquidity and Capital Resources</B></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>At June 30, 2004, cash and cash equivalents plus short-term investments were $118.74 million, a $24.06 million decrease from March 31, 2004. &nbsp;Cash flow from financing activities in the second quarter was a negative $23.06 million, primarily due to an $11.21 million cash payment equivalent to the interest that the Company would have paid to the Debenture holders up until July 31, 2006 and repayment of bank loans of $12.61 million. &nbsp;Operating activities generated $0.5 million after non-cash working capital movements absorbed $1.88 million due mostly to a reduction of accounts payable and repayment of advances for metal shipments. &nbsp;Investing activities yielded $9.03 million in cash and consisted primarily of liquidating $10.44 million of short-term investments, receiving $3.58 million on the sale of land at Quiruvilca offset by expenditures on property, plant and equipment of $2.49 million.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>Working capital at June 30, 2004 was $124.95 million, a reduction of $3.68 million from the March 31, 2004. &nbsp;The decrease is reflected largely in a $24.06 million decrease in cash and cash equivalents and a $21.27 million decrease in current liabilities following the repayment of debt and reduction of accounts payable. &nbsp;</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>Capital resources at June 30, 2004 amounted to shareholders&#146; equity of $258.72 million, capital leases of $0.47 million and deferred revenue of $0.78 million. &nbsp;At June 30, 2004, the Company there were 66,638,380 common shares issued and outstanding.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>Pan American mitigates the price risk associated with its base metal production by selling some of its forecasted base metal production under forward sales contracts, all of which are designated hedges for accounting purposes. &nbsp;The Company incurred base metal hedging losses in the second quarter of 2004 totaling $0.81 million (2003 &#150; gain of $0.14 million), which have been included in the revenue figure on the consolidated statement of operations. &nbsp;At June 30, 2004, the Company had sold forward 19,055 tonnes of zinc at a weighted average price of $1,044 per tonne ($0.474 per pound) and 9,970 tonnes of lead at a weighted average price of $731 per tonne ($0.332 per pound). The forward sales commitments for zinc represent approximately 55 per cent of the Company&#146;s forecast zinc production until June 2005. &nbsp;The lead forward sales commitments represent approximately 46 per cent of the Company&#146;s forecast lead production until June
 2005. At June 30, 2004, the cash offered prices for zinc and lead were $981 and $884 per tonne, respectively. The mark to market value at June 30, 2004 was a positive $0.1 million and at the date of this MD&amp;A was a negative $0.1 million.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>In June 2004, the Company fixed the price of 300,000 ounces of June&#146;s in-concentrate silver production, which is due to be priced in July and August. &nbsp;The price fixed for these ounces averaged $6.16 per ounce while the spot price of silver was $5.91 on June 30, 2004.</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify><B>Exploration and Development Activities</B></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>At Huaron, the recently completed $1 million exploration drilling program successfully intersected several ore grade zones which could add significantly to mineable ore reserves. &nbsp;A further $1.0 million will be spent on exploration drilling this year, which will form part of feasibility study to expand the mine&#146;s production. &nbsp;The costs of these programs are being capitalized. &nbsp;</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>In Argentina, infill drilling at the 50 per cent owned Manantial Espejo silver-gold project was completed and has confirmed continuity of gold and silver mineralization in the primary vein systems. &nbsp;Hatch Engineers is currently developing an operating and capital cost estimate for the project and the results of </P>
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<P style="margin:0pt; font-family:Arial" align=justify>this scoping study, which incorporates a completed resource estimate, are expected to be available in September. The feasibility study for the project is expected to be completed by early 2005. &nbsp;Pan American&#146;s share of the feasibility costs in 2004 is expected to be approximately $1.6 million, which are being expensed as incurred. </P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:5pt; font-family:Arial" align=justify>At Alamo Dorado in Mexico, Pan American has concluded that a milling operation as opposed to a heap leach processing facility, which was contemplated in the original feasibility, will yield the best economic return. &nbsp;Progress has been made towards securing water rights and towards the permitting required for explosive storage. &nbsp;AMEC Simons Mining &amp; Metals are in the process of completing a capacity optimization study incorporating optimal pit designs, which will culminate in the Company being in a position to complete a mill option feasibility study and take a production decision by the end of the year. &nbsp;The costs associated with ongoing permitting and related feasibility costs are being capitalized. &nbsp;</P>
<P style="margin-top:0pt; margin-bottom:5pt; font-family:Arial"><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>At the San Vicente property, a small-scale test mining program has produced 247,494 ounces of silver in the first half of the year to Pan American&#146;s account, at the same time as the Company has continued to move forward with a feasibility study. &nbsp;EMUSA, a Bolivian mining company, will continue to carry out the test mining program under a site services agreement. </P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify><B>Subsequent Event</B></P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>The Company has launched its $36.7 million cash offer, through the Peru Stock Exchange, for 100 per cent of the voting shares of Argentum, which is expected to close in August. &nbsp;On February 9, 2004 Pan American announced the signing of a binding agreement with a number of individuals to purchase 92 per cent of the voting shares of Argentum. &nbsp;</P>
<P style="margin:0pt; font-family:Arial" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify>Pan American has acquired 100 per cent of Compania Minera Natividad (&#147;Natividad&#148;) for $1.5 million, which holds numerous mineral concessions adjacent to the Morococha mine.</P>
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<P style="margin-top:0pt; margin-bottom:16.35pt; line-height:16pt; font-family:Times New Roman; font-size:14pt" align=center><B>Signatures</B></P>
<P style="margin-top:0pt; margin-bottom:24pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=right><U>Pan American Silver Corp</U></P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=right>(Registrant)</P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=right>By:<U>/s/ Ross Beaty</U></P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=right>(Signature)</P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=right>Ross Beaty, Chairman and CEO</P>
<P style="margin-top:0pt; margin-bottom:12pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Date:
July 28, 2004</P>
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<TABLE cellspacing=0><TR><TD valign=top width=241.2><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify><I><U>(signed) </U></I><U>Brenda
      Radies___________</U></P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Vice
President, Corporate Relations</P>
</TD></TR>
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end

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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