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<SEC-DOCUMENT>0001137171-06-000523.txt : 20060307
<SEC-HEADER>0001137171-06-000523.hdr.sgml : 20060307
<ACCEPTANCE-DATETIME>20060307093609
ACCESSION NUMBER:		0001137171-06-000523
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20050630
FILED AS OF DATE:		20060307
DATE AS OF CHANGE:		20060307

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:		06668831

	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>panamerican6k030606i.htm
<DESCRIPTION>6-K FILING FOR PAN AMERICAN SILVER
<TEXT>
<html>

<head>
<meta name="GENERATOR" content="Microsoft FrontPage 4.0">
<meta name="ProgId" content="FrontPage.Editor.Document">
<title> CC Filed by Filing Services Canada Inc. 403-717-3898</title>
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<body>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><strong>FORM
  6-K</strong></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><strong>SECURITIES
  AND EXCHANGE COMMISSION</strong></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><strong>Washington,
  D.C. 20549</strong></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><strong>Report
  of Foreign Private Issuer</strong></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><strong>Pursuant
  to Rule 13a-16 or 15d-16</strong></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><strong>of
  the Securities Exchange Act of 1934</strong></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">For
  the month of June</font><font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">,
  2005</font>
  <p><font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">Commission
  File Number: 000-13727</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><u>Pan
  American Silver Corp.</u></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">(Translation
  of registrant's name into English)</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <br>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><u>1500-625
  HOWE STREET</u></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><u>VANCOUVER
  BC CANADA V6C 2T6</u></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">(Address
  of principal executive offices)</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">Indicate
  by check mark whether the registrant files or will file annual reports under
  cover Form 20-F or Form 40-F.</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">Form
  20-F___ &nbsp;&nbsp;Form 40-F &nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;X&nbsp;&nbsp;</u></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;<p><font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">Indicate
  by check mark if the registrant is submitting the Form 6-K in paper as
  permitted by Regulation S-T Rule 101(b)(1):&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><p><font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">Indicate
  by check mark if the registrant is submitting the Form 6-K in paper as
  permitted by Regulation S-T Rule 101(b)(7):&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><p>&nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">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.</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">Yes
  ..... &nbsp;No ..X...</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">If
  &quot;Yes&quot; is marked, indicate below the file number assigned to the
  registrant in connection with Rule 12g3-2(b): &nbsp;82-________</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><strong>Signatures</strong></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">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.</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif"><u>Pan
  American Silver Corp.</u></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">(Registrant)</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">By:<u>/s/
  Ross Beaty&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">(Signature)</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">Ross
  Beaty, </font><font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">Chairman</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman, serif">Date:
  </font><font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">March
  6, 2006</font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
  &nbsp;
</div>
<div style="display: block; text-indent: 0pt; line-height: 1.25; width: 928; height: 19; margin-left: 0pt; margin-right: 0pt" align="left">
  <font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">Ross
  Beaty, Chairman </font>
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  &nbsp;
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
  <font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">Exhibit:
  </font>
  <p><font style="display: inline; font-size: 10pt; color: #000000; font-family: 'Times New Roman', serif">99.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="q22005mda.htm">Management's
  Discussion and Analysis for June 30th, 2005 (Restated March 2, 2006)</a>

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</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>q22005mda.htm
<DESCRIPTION>MDA FROM SECOND QUARTER 2005
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>CC Filed by Filing Services Canada Inc. 403-717-3898</TITLE>
<META NAME="author" CONTENT="Pan American Silver">
<META NAME="date" CONTENT="03/02/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="line-height:18pt; margin-top:11pt; margin-bottom:2.75pt; font-family:Arial; font-size:16pt; page-break-before:always" align=center><b>RESTATED</b></P>
<P style="line-height:18pt; margin-top:11pt; margin-bottom:2.75pt; font-family:Arial; font-size:16pt; page-break-before:always" align=justify>Second Quarter 2005 Management&#146;s Discussion and Analysis</P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify><B>July 27<SUP>th</SUP>, 2005</B></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Management's Discussion and Analysis (MD&amp;A) presented below reflects the effects of the restatement on the consolidated financial statements as at June 30, 2005 and December 31, 2004 and for the three and six month periods ended June 30, 2005 and 2004. See &quot;Restatement&quot; below for further discussion of this matter. &nbsp;Apart from revisions described under &#147;Restatement&#148; below, this MD&amp;A has not been revised for new events or developments.</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The &#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, 2005 and 2004 and the related notes contained herein.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:normal; margin:0pt; font-family:Arial; font-size:11pt" 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, 2004. These accounting policies have been applied consistently for the six months ended June 30, 2005 </P>
<P style="line-height:13pt; margin-top:11pt; margin-bottom:11pt; font-family:Arial; font-size:11pt"><B>Restatement</B></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>In 2004, Pan American implemented a hedge accounting policy for the accounting treatment of its base-metal forward contracts program. &nbsp;In the fourth quarter of 2005 it was concluded that the Company&#146;s accounting for its forward contracts for the sale of base metals (lead and zinc) ,its forward contracts for purchasing Mexican pesos with US dollars and its silver fixing contracts does not qualify for hedge accounting under AcG-13, Hedging Relationships. &nbsp;As a result, Pan American has restated its unaudited consolidated financial statements for each quarter &nbsp;from March 31, 2004 to September 30, 2005 and its audited 2004 consolidated financial statements.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Pan American is now required to recognize mark-to market valuations of its open forward contract positions through its income at the end of each period. &nbsp;In the past, Pan American had recognized gains, losses, revenues and expenses from its forward contracts in its income only in the period in which they settled. &nbsp;The effects of the change in accounting treatment are summarized in the tables below:</P>
<P style="margin:0pt" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=171.45></TD><TD width=14.7></TD><TD width=51.8></TD><TD width=11.2></TD><TD width=55.3></TD><TD width=13.3></TD><TD width=51.85></TD><TD width=13.95></TD><TD width=51.25></TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" width=177.333 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>As Previously Reported</B></P>
</TD><TD style="border-right:0.5pt solid #000000" width=173.8 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>As Restated</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify><B>Consolidated Balance Sheets</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=88.667 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>June 30</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=88.667 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>December 31</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=86.867 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>June 30</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=86.933 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>December 31</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=228.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=88.667 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=88.667 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2004</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=86.867 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=86.933 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2004</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6>&nbsp;</TD><TD valign=top width=19.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.067><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=14.933>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=73.733><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=17.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.133><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=18.6>&nbsp;</TD><TD valign=top width=68.333><P style="margin:0pt" align=justify><BR></P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Unrealized gain on commodity and foreign currency contracts</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:39.75pt; font-family:Arial; font-size:9pt">-</P>
</TD><TD valign=top width=14.933 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:46.2pt; font-family:Arial; font-size:9pt">-</P>
</TD><TD valign=top width=17.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:31.7pt; font-family:Arial; font-size:9pt">547</P>
</TD><TD valign=top width=18.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD valign=top width=68.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:28.45pt; font-family:Arial; font-size:9pt">480</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Unrealized loss on commodity and foreign currency contracts</P>
</TD><TD width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=69.067><P style="line-height:11pt; margin:0pt; text-indent:39.75pt; font-family:Arial; font-size:9pt">-</P>
</TD><TD width=14.933><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=73.733><P style="line-height:11pt; margin:0pt; text-indent:46.2pt; font-family:Arial; font-size:9pt">-</P>
</TD><TD width=17.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=69.133><P style="line-height:11pt; margin:0pt; text-indent:24.95pt; font-family:Arial; font-size:9pt">1,424</P>
</TD><TD width=18.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD width=68.333><P style="line-height:11pt; margin:0pt; text-indent:21.7pt; font-family:Arial; font-size:9pt">4,695</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Prepaid expenses</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:22.5pt; font-family:Arial; font-size:9pt" align=justify>2,584</P>
</TD><TD valign=top width=14.933 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:28.95pt; font-family:Arial; font-size:9pt" align=justify>1,684</P>
</TD><TD valign=top width=17.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:24.95pt; font-family:Arial; font-size:9pt" align=justify>2,222</P>
</TD><TD valign=top width=18.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD valign=top width=68.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:21.7pt; font-family:Arial; font-size:9pt" align=justify>1,211</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Investment and non-producing properties</P>
</TD><TD valign=top width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:13.5pt; font-family:Arial; font-size:9pt" align=justify>133,390</P>
</TD><TD valign=top width=14.933><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:19.95pt; font-family:Arial; font-size:9pt" align=justify>125,863</P>
</TD><TD valign=top width=17.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:15.95pt; font-family:Arial; font-size:9pt" align=justify>133,546</P>
</TD><TD valign=top width=18.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD valign=top width=68.333><P style="line-height:11pt; margin:0pt; text-indent:12.7pt; font-family:Arial; font-size:9pt" align=justify>125,863</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Accounts payable and accrued liabilities</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:18pt; font-family:Arial; font-size:9pt" align=justify>17,024</P>
</TD><TD valign=top width=14.933 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:24.45pt; font-family:Arial; font-size:9pt" align=justify>20,331</P>
</TD><TD valign=top width=17.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:20.45pt; font-family:Arial; font-size:9pt" align=justify>17,017</P>
</TD><TD valign=top width=18.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD valign=top width=68.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:17.2pt; font-family:Arial; font-size:9pt" align=justify>20,331</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Deficit</P>
</TD><TD valign=top width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:7.5pt; font-family:Arial; font-size:9pt" align=justify>(114,843)</P>
</TD><TD valign=top width=14.933><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:13.95pt; font-family:Arial; font-size:9pt" align=justify>(111,976)</P>
</TD><TD valign=top width=17.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:9.95pt; font-family:Arial; font-size:9pt" align=justify>(115,919)</P>
</TD><TD valign=top width=18.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>$</P>
</TD><TD valign=top width=68.333><P style="line-height:11pt; margin:0pt; text-indent:6.7pt; font-family:Arial; font-size:9pt" align=justify>(116,664)</P>
</TD></TR>
<TR><TD valign=top width=228.6>&nbsp;</TD><TD valign=top width=19.6>&nbsp;</TD><TD valign=top width=69.067><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=14.933>&nbsp;</TD><TD valign=top width=73.733><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=17.733>&nbsp;</TD><TD valign=top width=69.133><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=18.6>&nbsp;</TD><TD valign=top width=68.333><P style="margin:0pt" align=justify><BR></P>
</TD></TR>
</TABLE>
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<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="margin:0pt"><BR></P>
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<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; page-break-before:always" align=justify><BR>
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<BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=171.45></TD><TD width=14.7></TD><TD width=51.8></TD><TD width=11.2></TD><TD width=55.3></TD><TD width=13.3></TD><TD width=53.9></TD><TD width=11.9></TD><TD width=51.25></TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" width=177.333 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>As Previously Reported</B></P>
</TD><TD style="border-right:0.5pt solid #000000" width=173.8 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>As Restated</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify><B>Consolidated Statement of Operations</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=177.333 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>Three Month Ended June 30</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=173.8 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>Three Month Ended June 30</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=228.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=88.667 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=88.667 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2004</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=89.6 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=84.2 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2004</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6>&nbsp;</TD><TD valign=top width=19.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.067><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=14.933>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=73.733><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=17.733>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=71.867><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=15.867>&nbsp;</TD><TD valign=top width=68.333><P style="margin:0pt" align=justify><BR></P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Revenue</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:18pt; font-family:Arial; font-size:9pt">23,905</P>
</TD><TD valign=top width=14.933 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:24.45pt; font-family:Arial; font-size:9pt">20,950</P>
</TD><TD valign=top width=17.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=71.867><P style="line-height:11pt; margin:0pt; text-indent:20.45pt; font-family:Arial; font-size:9pt">25,358</P>
</TD><TD valign=top width=15.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:17.95pt; font-family:Arial; font-size:9pt">21,179</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Mine operating earnings</P>
</TD><TD width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=69.067><P style="line-height:11pt; margin:0pt; text-indent:22.5pt; font-family:Arial; font-size:9pt">3,073</P>
</TD><TD width=14.933><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=73.733><P style="line-height:11pt; margin:0pt; text-indent:28.95pt; font-family:Arial; font-size:9pt">2,411</P>
</TD><TD width=17.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=71.867><P style="line-height:11pt; margin:0pt; text-indent:24.95pt; font-family:Arial; font-size:9pt">4,526</P>
</TD><TD width=15.867><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD width=68.333><P style="line-height:11pt; margin:0pt; text-indent:22.45pt; font-family:Arial; font-size:9pt">2,640</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Gain on commodity and foreign currency contracts</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:39.75pt; font-family:Arial; font-size:9pt" align=justify>-</P>
</TD><TD valign=top width=14.933 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:46.2pt; font-family:Arial; font-size:9pt" align=justify>-</P>
</TD><TD valign=top width=17.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=71.867><P style="line-height:11pt; margin:0pt; text-indent:24.95pt; font-family:Arial; font-size:9pt" align=justify>3,491</P>
</TD><TD valign=top width=15.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:22.45pt; font-family:Arial; font-size:9pt" align=justify>1,836</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Net income for the period</P>
</TD><TD valign=top width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; text-indent:33.75pt; font-family:Arial; font-size:9pt" align=justify>24</P>
</TD><TD valign=top width=14.933><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=73.733><P style="line-height:11pt; margin:0pt; text-indent:28.95pt; font-family:Arial; font-size:9pt" align=justify>1,287</P>
</TD><TD valign=top width=17.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=71.867><P style="line-height:11pt; margin:0pt; text-indent:24.95pt; font-family:Arial; font-size:9pt" align=justify>4,971</P>
</TD><TD valign=top width=15.867><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.333><P style="line-height:11pt; margin:0pt; text-indent:22.45pt; font-family:Arial; font-size:9pt" align=justify>3,352</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Adjusted net income (loss) for the period attributable to common shareholders</P>
</TD><TD width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=69.067><P style="line-height:11pt; margin:0pt; text-indent:33.75pt; font-family:Arial; font-size:9pt">24</P>
</TD><TD width=14.933 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=73.733><P style="line-height:11pt; margin:0pt; text-indent:22.95pt; font-family:Arial; font-size:9pt">(7,895)</P>
</TD><TD width=17.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=71.867><P style="line-height:11pt; margin:0pt; text-indent:24.95pt; font-family:Arial; font-size:9pt">4,971</P>
</TD><TD width=15.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD width=68.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:16.45pt; font-family:Arial; font-size:9pt">(5,830)</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Basic income/(loss) per share</P>
</TD><TD valign=top width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; padding-right:5.6pt; font-family:Arial; font-size:9pt" align=right>0.00</P>
</TD><TD valign=top width=14.933><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=73.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>(0.12)</P>
</TD><TD valign=top width=17.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=71.867><P style="line-height:11pt; margin:0pt; padding-right:5.6pt; font-family:Arial; font-size:9pt" align=right>0.07</P>
</TD><TD valign=top width=15.867><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.333><P style="line-height:11pt; margin:0pt; padding-right:2.95pt; font-family:Arial; font-size:9pt" align=right>(0.09)</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Diluted income/(loss) per share</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.067><P style="line-height:11pt; margin:0pt; padding-right:5.6pt; font-family:Arial; font-size:9pt" align=right>0.00</P>
</TD><TD valign=top width=14.933 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=73.733><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>(0.12)</P>
</TD><TD valign=top width=17.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=71.867><P style="line-height:11pt; margin:0pt; padding-right:4.2pt; font-family:Arial; font-size:9pt" align=right>0.07</P>
</TD><TD valign=top width=15.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:2.95pt; font-family:Arial; font-size:9pt" align=right>(0.09)</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=171.5></TD><TD width=14.7></TD><TD width=51.4></TD><TD width=0.4></TD><TD width=11.2></TD><TD width=54.45></TD><TD width=14.1></TD><TD width=51.85></TD><TD width=13.95></TD><TD width=51.3></TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.667>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" width=176.2 colspan=5><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>As Previously Reported</B></P>
</TD><TD style="border-right:0.5pt solid #000000" width=174.933 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>As Restated</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify><B>Consolidated Statement of Operations</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=176.2 colspan=5><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>Six Month Ended June 30</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=174.933 colspan=4><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>Six Month Ended June 30</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=228.667>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=88.667 colspan=3><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=87.533 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2004</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=87.933 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=87 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=center><B>2004</B></P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.667>&nbsp;</TD><TD valign=top width=19.6>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=68.533><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=15.467 colspan=2>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=72.6><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=18.8>&nbsp;</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.133><P style="margin:0pt" align=justify><BR></P>
</TD><TD valign=top width=18.6>&nbsp;</TD><TD valign=top width=68.4><P style="margin:0pt" align=justify><BR></P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Revenue</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=68.533><P style="line-height:11pt; margin:0pt; text-indent:18pt; font-family:Arial; font-size:9pt">50,986</P>
</TD><TD valign=top width=15.467 colspan=2 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=72.6><P style="line-height:11pt; margin:0pt; text-indent:24.45pt; font-family:Arial; font-size:9pt">36,101</P>
</TD><TD valign=top width=18.8 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:20.45pt; font-family:Arial; font-size:9pt">54,444</P>
</TD><TD valign=top width=18.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.4 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:17.95pt; font-family:Arial; font-size:9pt">36,887</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Mine operating earnings</P>
</TD><TD width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=68.533><P style="line-height:11pt; margin:0pt; text-indent:22.5pt; font-family:Arial; font-size:9pt">4,556</P>
</TD><TD width=15.467 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=72.6><P style="line-height:11pt; margin:0pt; text-indent:28.95pt; font-family:Arial; font-size:9pt">4,249</P>
</TD><TD width=18.8><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=69.133><P style="line-height:11pt; margin:0pt; text-indent:24.95pt; font-family:Arial; font-size:9pt">8,014</P>
</TD><TD width=18.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD width=68.4><P style="line-height:11pt; margin:0pt; text-indent:22.45pt; font-family:Arial; font-size:9pt">5,035</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Gain/(Loss) on commodity and foreign currency contracts</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=68.533><P style="line-height:11pt; margin:0pt; text-indent:39.75pt; font-family:Arial; font-size:9pt" align=justify>-</P>
</TD><TD valign=top width=15.467 colspan=2 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=72.6><P style="line-height:11pt; margin:0pt; text-indent:46.2pt; font-family:Arial; font-size:9pt" align=justify>-</P>
</TD><TD valign=top width=18.8 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:31.7pt; font-family:Arial; font-size:9pt" align=justify>154</P>
</TD><TD valign=top width=18.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.4 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:23.2pt; font-family:Arial; font-size:9pt" align=justify>(378)</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Net income/(loss) for the period</P>
</TD><TD valign=top width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=68.533><P style="line-height:11pt; margin:0pt; text-indent:16.5pt; font-family:Arial; font-size:9pt" align=justify>(2,864)</P>
</TD><TD valign=top width=15.467 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=72.6><P style="line-height:11pt; margin:0pt; text-indent:35.7pt; font-family:Arial; font-size:9pt" align=justify>921</P>
</TD><TD valign=top width=18.8><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=69.133><P style="line-height:11pt; margin:0pt; text-indent:31.7pt; font-family:Arial; font-size:9pt" align=justify>748</P>
</TD><TD valign=top width=18.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD valign=top width=68.4><P style="line-height:11pt; margin:0pt; text-indent:22.45pt; font-family:Arial; font-size:9pt" align=justify>1,329</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; padding-left:14.2pt; text-indent:-14.2pt; font-family:Arial; font-size:9pt" align=justify>Adjusted net income (loss) for the period attributable to common shareholders</P>
</TD><TD width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=68.533><P style="line-height:11pt; margin:0pt; text-indent:16.5pt; font-family:Arial; font-size:9pt">(2,867)</P>
</TD><TD width=15.467 colspan=2 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=72.6><P style="line-height:11pt; margin:0pt; text-indent:18.45pt; font-family:Arial; font-size:9pt">(10,381)</P>
</TD><TD width=18.8 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=69.133><P style="line-height:11pt; margin:0pt; text-indent:31.7pt; font-family:Arial; font-size:9pt">745</P>
</TD><TD width=18.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD width=68.4 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; text-indent:16.45pt; font-family:Arial; font-size:9pt">(9,973)</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Basic income/(loss) per share</P>
</TD><TD valign=top width=19.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=68.533><P style="line-height:11pt; margin:0pt; padding-right:3.1pt; font-family:Arial; font-size:9pt" align=right>(0.04)</P>
</TD><TD valign=top width=15.467 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72.6><P style="line-height:11pt; margin:0pt; padding-right:0.9pt; font-family:Arial; font-size:9pt" align=right>(0.17)</P>
</TD><TD valign=top width=18.8><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="border-right:0.5pt solid #000000" width=69.133><P style="line-height:11pt; margin:0pt; padding-right:3.7pt; font-family:Arial; font-size:9pt" align=right>0.01</P>
</TD><TD valign=top width=18.6><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD width=68.4><P style="line-height:11pt; margin:0pt; padding-right:3pt; font-family:Arial; font-size:9pt" align=right>(0.17)</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=228.667><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=justify>Diluted income/(loss) per share</P>
</TD><TD valign=top width=19.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=top width=68.533><P style="line-height:11pt; margin:0pt; padding-right:3.1pt; font-family:Arial; font-size:9pt" align=right>(0.04)</P>
</TD><TD valign=top width=15.467 colspan=2 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72.6><P style="line-height:11pt; margin:0pt; text-indent:41.7pt; font-family:Arial; font-size:9pt" align=justify>(0.17)</P>
</TD><TD valign=top width=18.8 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" width=69.133><P style="line-height:11pt; margin:0pt; text-indent:40.7pt; font-family:Arial; font-size:9pt" align=justify>0.01</P>
</TD><TD valign=top width=18.6 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt" align=right>$</P>
</TD><TD width=68.4 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:3pt; font-family:Arial; font-size:9pt" align=right>(0.17)</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>This change in accounting treatment has no impact on our cash flows. &nbsp;The details of our commodity and foreign currency forward contracts, which we have previously disclosed, have not changed and Management believes that they continue to serve Pan American as a prudent risk management tool. &nbsp;Pan American does not hedge its future silver production.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify><B>Results of Operations</B> </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>For the three months ended June 30, 2005 the Company&#146;s net income was $5.0 million (earnings per share of $0.07) compared to net income of $3.4 million (loss of $0.09 per share, after adjusting for the accretion to the 5.25 per cent convertible unsecured senior subordinated debentures (the &#147;Debentures&#148;)) for the corresponding period in 2004. &nbsp;During the quarter the Company recorded a gain on commodity and foreign currency contracts of $3.5 million, primarily due to a lower negative mark-to-market on open contracts at the end of the second quarter relative to the mark-to-market valuation at the end of the first quarter. &nbsp;The Company had net income of $ 0.7 million for the six-month period ended June 30, 2005 compared to net income of $1.3 million for the corresponding period in 2004. During the second quarter of 2004, the Company recorded a $3.58 million gain on the sale of surplus land at the Qui
ruvilca mine, offset by a charge of $1.31 million relating to the early conversion of the Debentures.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Revenue from metal sales for the second quarter of 2005 was $25.4 million, a 20 per cent increase from the corresponding period in 2004. &nbsp;The Morococha mine, which was acquired with effect from July 1, 2004 generated revenue of $8.8 million in the second quarter of 2005 and was the main reason for the increase in revenue from a year ago. &nbsp;Revenue in the second quarter also benefited from higher realized metal prices than the </P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt; page-break-before:always" align=justify>previous year, offset partially by lower concentrate shipments from the Huaron and Quiruvilca operations as compared to the year-earlier period. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Operating costs for the three months ended June 30, 2005 were $18.4 million, a $1.9 million increase from the operating costs recorded in the same period of 2004. For the six-month period ended June 30, 2005, operating costs increased by $13.1 million over the operating costs for the comparable period of 2004. The Morococha mine incurred operating costs of $5.1 million and $10.9 million in the three-months and six-months ended June 30, 2005 respectively and was the main reason for the increase in operating costs from a year ago. Peruvian workers participation and a third party&#146;s one-third participation in the Pyrite Stockpile operation, which totaled $0.4 million during the second quarter (2004 - $nil) and $0.9 million in the first half of 2005 (2004 - $nil) also increased operating costs from last year. &nbsp;In addition, the Company has experienced the industry-wide escalations in major cost items, such as energy,
 freight and labour costs over the last year.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The Company generated mine operating earnings of $4.5 million in the second quarter of 2005 (2004 - $2.6 million). &nbsp;Mine operating earnings are equal to revenue less operating costs and depreciation and amortization expenses. &nbsp;As reflected in the following table, the second quarter of 2005 represents the ninth consecutive quarter that the Company has generated mine operating earnings. &nbsp;The table below sets out select quarterly results for the past ten quarters, which are stated in thousands of US dollars, except per share amounts. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=46.8></TD><TD width=63.45></TD><TD width=12.15></TD><TD width=50.4></TD><TD width=17.65></TD><TD width=63></TD><TD width=27></TD><TD width=54></TD><TD width=39.95></TD><TD width=54></TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=62.4><P style="margin:0pt; font-family:Arial" align=center>Year</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=84.6><P style="margin:0pt; font-family:Arial" align=center>Quarter</P>
<P style="margin:0pt; font-family:Arial" align=center>(unaudited)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=83.4 colspan=2><P style="margin:0pt; font-family:Arial" align=center>Revenue</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=107.533 colspan=2><P style="margin:0pt; font-family:Arial" align=center>Mine operating earnings/(loss)<SUP>(1)</SUP></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=108 colspan=2><P style="margin:0pt; font-family:Arial" align=center>Net income/(loss) for the period</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=125.267 colspan=2><P style="margin:0pt; font-family:Arial" align=center>Net income (loss) per share</P>
</TD></TR>
<TR><TD valign=bottom width=62.4 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>2005</P>
</TD><TD valign=bottom width=84.6 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=right>June 30</P>
</TD><TD valign=bottom width=16.2 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial">$</P>
</TD><TD valign=bottom width=67.2 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; text-indent:12.1pt; font-family:Arial">25,358</P>
</TD><TD valign=bottom width=23.533 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=bottom width=84 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; text-indent:17.1pt; font-family:Arial">4,526</P>
</TD><TD valign=bottom width=36 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; text-indent:21.05pt; font-family:Arial">4,971</P>
</TD><TD valign=bottom width=53.267 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=bottom width=72 style="background-color: #E6E9FF"><P style="margin-top:5pt; margin-bottom:0pt; text-indent:16.6pt; font-family:Arial">0.07</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=62.4>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=84.6><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=right>March 31</P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=16.2><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=center>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=67.2><P style="margin-top:5pt; margin-bottom:0pt; text-indent:12.1pt; font-family:Arial">29,086</P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=23.533><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=84><P style="margin-top:5pt; margin-bottom:0pt; text-indent:17.1pt; font-family:Arial">3,488</P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=36><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=center>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=72><P style="margin-top:5pt; margin-bottom:0pt; text-indent:14.35pt; font-family:Arial">(4,223)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=53.267><P style="margin-top:5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=72><P style="margin-top:5pt; margin-bottom:0pt; text-indent:13.25pt; font-family:Arial">(0.06)</P>
</TD></TR>
<TR><TD valign=top width=62.4 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>2004</P>
</TD><TD valign=top width=84.6 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>Dec. 31</P>
</TD><TD valign=top width=16.2 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=67.2 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:12.1pt; font-family:Arial">30,022</P>
</TD><TD valign=top width=23.533 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:17.1pt; font-family:Arial">3,402</P>
</TD><TD valign=top width=36 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:16.05pt; font-family:Arial">13,527</P>
</TD><TD valign=top width=53.267 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:16.6pt; font-family:Arial" align=justify>0.21</P>
</TD></TR>
<TR><TD valign=top width=62.4>&nbsp;</TD><TD valign=top width=84.6><P style="margin:0pt; font-family:Arial" align=right>Sept. 30</P>
</TD><TD valign=top width=16.2><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=67.2><P style="margin:0pt; text-indent:12.1pt; font-family:Arial">27,916</P>
</TD><TD valign=top width=23.533><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84><P style="margin:0pt; text-indent:17.1pt; font-family:Arial">6,357</P>
</TD><TD valign=top width=36><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:28.55pt; font-family:Arial">358</P>
</TD><TD valign=top width=53.267><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=72><P style="margin:0pt; text-indent:16.6pt; font-family:Arial" align=justify>0.01</P>
</TD></TR>
<TR><TD valign=top width=62.4 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=84.6 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>June 30</P>
</TD><TD valign=top width=16.2 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=67.2 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:12.1pt; font-family:Arial">21,179</P>
</TD><TD valign=top width=23.533 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:17.1pt; font-family:Arial">2,640</P>
</TD><TD valign=top width=36 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:21.05pt; font-family:Arial">3,352</P>
</TD><TD valign=top width=53.267 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:13.25pt; font-family:Arial" align=justify>(0.09)<SUP>(2)</SUP></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=62.4>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84.6><P style="margin:0pt; font-family:Arial" align=right>March 31</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.2><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=67.2><P style="margin:0pt; text-indent:12.1pt; font-family:Arial">15,708</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=23.533><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; text-indent:17.1pt; font-family:Arial">2,395</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=36><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:14.35pt; font-family:Arial">(2,023)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=53.267><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; text-indent:13.25pt; font-family:Arial" align=justify>(0.08)<SUP>(2)</SUP></P>
</TD></TR>
<TR><TD valign=top width=62.4 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>2003</P>
</TD><TD valign=top width=84.6 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>Dec.31</P>
</TD><TD valign=top width=16.2 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=67.2 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:12.1pt; font-family:Arial">12,857</P>
</TD><TD valign=top width=23.533 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:29.6pt; font-family:Arial">81</P>
</TD><TD valign=top width=36 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:14.35pt; font-family:Arial">(2,840)</P>
</TD><TD valign=top width=53.267 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:13.25pt; font-family:Arial" align=justify>(0.05)<SUP>(2)</SUP></P>
</TD></TR>
<TR><TD valign=top width=62.4>&nbsp;</TD><TD valign=top width=84.6><P style="margin:0pt; font-family:Arial" align=right>Sept. 30</P>
</TD><TD valign=top width=16.2><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=67.2><P style="margin:0pt; text-indent:12.1pt; font-family:Arial">11,890</P>
</TD><TD valign=top width=23.533><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84><P style="margin:0pt; text-indent:17.1pt; font-family:Arial">1,258</P>
</TD><TD valign=top width=36><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:14.35pt; font-family:Arial">(1,125)</P>
</TD><TD valign=top width=53.267><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=72><P style="margin:0pt; text-indent:13.25pt; font-family:Arial" align=justify>(0.10)<SUP>(2)</SUP></P>
</TD></TR>
<TR><TD valign=top width=62.4 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=84.6 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>June 30</P>
</TD><TD valign=top width=16.2 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=67.2 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:12.1pt; font-family:Arial">12,553</P>
</TD><TD valign=top width=23.533 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:24.6pt; font-family:Arial">758</P>
</TD><TD valign=top width=36 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:14.35pt; font-family:Arial">(1,156)</P>
</TD><TD valign=top width=53.267 style="background-color: #E6E9FF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=72 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:13.25pt; font-family:Arial" align=justify>(0.02)</P>
</TD></TR>
<TR><TD valign=top width=62.4>&nbsp;</TD><TD valign=top width=84.6><P style="margin:0pt; font-family:Arial" align=right>March 31</P>
</TD><TD valign=top width=16.2><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=67.2><P style="margin:0pt; text-indent:17.1pt; font-family:Arial">7,822</P>
</TD><TD valign=top width=23.533><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84><P style="margin:0pt; text-indent:22.9pt; font-family:Arial">(78)</P>
</TD><TD valign=top width=36><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD valign=bottom width=72><P style="margin:0pt; text-indent:14.35pt; font-family:Arial">(1,573)</P>
</TD><TD valign=top width=53.267><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=72><P style="margin:0pt; text-indent:13.25pt; font-family:Arial" align=justify>(0.03)</P>
</TD></TR>
</TABLE>
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</div>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:11pt; margin-top:0pt; margin-bottom:-11pt; padding-left:36.75pt; text-indent:-18.75pt; font-family:Arial; font-size:9pt" align=justify>(1)</P>
<P style="line-height:11pt; margin:0pt; padding-left:36.75pt; font-family:Arial; font-size:9pt" align=justify>Mine operating earnings/(loss) are equal to revenues less operating costs and depreciation and amortization</P>
<P style="line-height:11pt; margin-top:0pt; margin-bottom:-11pt; padding-left:36.75pt; text-indent:-18.75pt; font-family:Arial; font-size:9pt" align=justify>(2)</P>
<P style="line-height:11pt; margin:0pt; padding-left:36.75pt; font-family:Arial; font-size:9pt" align=justify>Includes charges associated with early conversion and accretion of the Debentures</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Depreciation and amortization charges for the second quarter of 2005 increased to $2.4 million from $2.0 million the year before. &nbsp;The principal reason for this increase was the depreciation charges related to the Morococha mine. </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>General and administration (&#147;G &amp; A&#148;) costs for the three-month period ended June 30, 2005, including stock-based compensation, were $1.8 million, down from $1.9 million recorded in the comparable quarter in 2004. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Exploration expenses for the quarter were $0.9 million, mostly expended on feasibility activity at the Company&#146;s 50 per cent owned Manantial Espejo property in Argentina. &nbsp;</P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt; page-break-before:always" align=justify>Exploration expenses for the comparable quarter of 2004 were $1.1 million, which included due diligence costs of $0.5 million spent on a business development opportunity. </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Reclamation expense of $0.9 million in the first half of 2005 (2004 - $0.6 million) related to the accretion of the liability that the Company previously recognized on all its mining operations by adopting CICA Handbook Section 3110 &#150; &#147;Accounting for Asset Retirement Obligations&#148; as at December 31, 2003. &nbsp;&nbsp;&nbsp;The Company&#146;s expectations for future site restoration costs at its mines did not change during the quarter.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Interest expenses have been reduced for the three and six-month periods ended on June 30, 2005 as a result of the Company successfully inducing the early conversion of 99 per cent of the Debentures and prepaying all bank debt in the second quarter of 2004. &nbsp;Interest expenses of $0.1 million were incurred in the second quarter of 2005 compared to $0.3 million during the same period in 2004.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Interest and other income for the second quarter of $0.9 million primarily represented net income received from cash balances the Company maintained during the quarter. In the second quarter of 2004, the Company recorded $0.5 million of interest income.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The Company incurred an income tax expense of $0.7 million and increased operating costs relating to government mandated worker&#146;s participation in annual mining profits of $0.3 million during the second quarter of 2005 (2004 - $nil). These expenses were a result of the Company generating taxable earnings at its Huaron and Morococha mines in Peru. </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify><B>Metal Production </B></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Pan American produced 3,088,667 ounces of silver in the second quarter of 2005, a 24 per cent increase from the corresponding period in 2004. &nbsp;In the first half of 2005, silver production has increased by 25 per cent as compared to 2004 production. This increase was achieved through the acquisition of Morococha , which produced 691,612 ounces at a cash cost of $2.78 per payable ounce in the second quarter, while production from the Company&#146;s other operations in total remained similar to production levels achieved a year ago. &nbsp;As shown in the following table, zinc and copper production were also significantly higher than last year&#146;s production due to the addition of Morococha. &nbsp;Lead production is trailing last year&#146;s production levels by 9 per cent over the first half of the year due to lower lead grades at both Huaron and Quiruvilca.</P>
<P style="margin:0pt" align=justify><BR></P>
<div align="center">
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=118.5></TD><TD width=54></TD><TD width=54></TD><TD width=45></TD><TD width=54></TD><TD width=54></TD><TD width=45></TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=158>&nbsp;</TD><TD valign=top width=144 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B>Three months ended</B></P>
</TD><TD style="border-right:0.5pt solid #000000" valign=top width=60>&nbsp;</TD><TD width=144 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B>Six months ended</B></P>
</TD><TD valign=top width=60>&nbsp;</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=top width=158>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=144 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B>June 30</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=60>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" width=144 colspan=2><P style="margin:0pt; font-family:Arial" align=center><B>June 30</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=60>&nbsp;</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=158>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=72><P style="margin:0pt; font-family:Arial" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=72><P style="margin:0pt; font-family:Arial" align=center><B>2004</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=60><P style="margin:0pt; font-family:Arial" align=center>% Change</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=72><P style="margin:0pt; font-family:Arial" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" width=72><P style="margin:0pt; font-family:Arial" align=center><B>2004</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=60><P style="margin:0pt; font-family:Arial" align=center>% Change</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=158><P style="margin:0pt; font-family:Arial">Silver metal - ounces</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:3.5pt; font-family:Arial">3,088,667</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:3.5pt; font-family:Arial">2,495,798</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=60><P style="margin:0pt; text-indent:15.5pt; font-family:Arial">24</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:3.5pt; font-family:Arial">6,084,369</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:11pt; font-family:Arial">4,884,636</P>
</TD><TD valign=top width=60 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:15.5pt; font-family:Arial">25</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=bottom width=158><P style="margin:0pt; font-family:Arial">Zinc metal - tonnes</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:21pt; font-family:Arial">9,246</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:21pt; font-family:Arial">7,349</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=60><P style="margin:0pt; text-indent:15.5pt; font-family:Arial">26</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:16pt; font-family:Arial">18,117</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:23.5pt; font-family:Arial">14,522</P>
</TD><TD valign=top width=60><P style="margin:0pt; text-indent:15.5pt; font-family:Arial">25</P>
</TD></TR>
<TR><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=158><P style="margin:0pt; font-family:Arial">Lead metal - tonnes</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:21pt; font-family:Arial">3,703</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:21pt; font-family:Arial">4,198</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=60><P style="margin:0pt; text-indent:8.8pt; font-family:Arial">(12)</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:21pt; font-family:Arial">7,378</P>
</TD><TD style="background-color: #E6E9FF; border-right: 0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:28.5pt; font-family:Arial">8,089</P>
</TD><TD valign=top width=60 style="background-color: #E6E9FF"><P style="margin:0pt; text-indent:13.8pt; font-family:Arial">(9)</P>
</TD></TR>
<TR><TD style="border-right:0.5pt solid #000000" valign=bottom width=158><P style="margin:0pt; font-family:Arial">Copper metal - tonnes</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:21pt; font-family:Arial">1,051</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:28.5pt; font-family:Arial">656</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=60><P style="margin:0pt; text-indent:15.5pt; font-family:Arial">60</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:21pt; font-family:Arial">1,978</P>
</TD><TD style="border-right:0.5pt solid #000000" valign=bottom width=72><P style="margin:0pt; text-indent:28.5pt; font-family:Arial">1,270</P>
</TD><TD valign=top width=60><P style="margin:0pt; text-indent:15.5pt; font-family:Arial">56</P>
</TD></TR>
</TABLE>
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<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The La Colorada mine production continued its improving trend during the second quarter with record silver production of 743,397 ounces at cash costs of $5.39 per payable ounce. For the first half of 2005, La Colorada has achieved a production </P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt; page-break-before:always" align=justify>increase of 57 per cent compared to the first half of 2004 by processing only 9 per cent more tonnes of ore, but at much higher grades and recoveries. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>In the second quarter of 2005 the Quiruvilca mine encountered lower grades than a year ago, resulting in silver production of 580,999 ounces, which was 6 per cent lower than the comparable period in 2004. &nbsp;However, silver production did increase 3 per cent over production in the first quarter of 2005. Cash costs per ounce of payable silver for the first half of 2005 at Quiruvilca were $4.34. &nbsp;Management expects that production levels at Quiruvilca will steadily improve during the second half of the year, with the installation in July of a conveyor system to transport both ore and waste from the key 340 level of the mine.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The Huaron mine experienced grades and recoveries which did not meet expectations during the second quarter of 2005. &nbsp;&nbsp;For the three-months ended June 30, 2005, Huaron produced 922,643 ounces of silver, which was 16 per cent behind silver production achieved in the second quarter of 2004; however it was a 4 per cent improvement over production in the first quarter of 2005. &nbsp;Cash costs per payable ounce for the first half of 2005 were $4.99, a 27 per cent increase over last year&#146;s costs per payable ounce. &nbsp;Contributing approximately $0.79 to the increase in costs per ounce for the second quarter of 2005 compared to the second quarter of 2004 was lower base metal production, which resulted in a reduction in the by-product credit. &nbsp;Zinc recoveries have declined due to a change in the ore type in the areas currently being mined. &nbsp;An intensive metallurgical test program has been initiated in
 an effort to return zinc recoveries to historical levels. &nbsp;In addition, management is confident that a combination of operating and capital initiatives implemented in the first half of the year will allow Huaron to steadily increase mining and processing rates over the remainder of 2005. &nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The Company&#146;s Pyrite Stockpile operation produced 150,016 ounces of silver during the quarter at a cash cost of $1.63 per payable ounce. Production from the Stockpiles for the first six months of 2005 was 35 per cent lower than the production in the comparable period of 2004. The production rates from the Stockpile operation are entirely dependent on the demand for this ore from the purchaser, Doe Run Peru, and as a consequence are not controlled by management. &nbsp;Costs per payable ounce are higher than last year due to the fact that Volcan Minera S.A. became entitled to a one-third participation in the Stockpile operation in December 2004, which is treated as a cost to the operation.</P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>&nbsp;</P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>At the San Vicente property in Bolivia, mining of ore recommenced in early July 2005 following six months of negotiations between the Company and Comibol, the Bolivian state owned mining company. &nbsp;As a consequence of these negotiations, the Company plans to stockpile ore while refurbishing the milling facility at the San Vicente mine over the course of the next six months, instead of processing ore on a toll basis at a nearby facility. The Company had expected to produce approximately 735,000 ounces from San Vicente in 2005 at a total cost of under $2.50 per ounce; however the protracted negotiations and decision to change milling arrangements will make it impossible for the Company to meet this production target. Instead, the Company now expects to be producing from its own mill at a rate of approximately 400 tonnes per day early in 2006, producing approximately 750,000 ounces per year. </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>With no production expected from San Vicente in 2005 and reduced production rates from the Stockpile operation, the Company now expects consolidated production for 2005 to be approximately 12.5 million ounces, down from 13.5 million ounces originally </P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt; page-break-before:always" align=justify>forecasted. The Company expects consolidated cash costs per payable ounce to decrease slightly in the second half of 2005 and is estimating consolidated cash cost per payable ounce of below $4.50 for 2005. &nbsp;The lack of production from the low-cost San Vicente mine and reduced production from the low-cost Pyrite Stockpiles are the main reasons for the increase in the estimated consolidated costs for 2005 from the $4.16 per payable ounce that was forecast by management at the start of the year.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify><B>Cash and Total Production Costs per Ounce for Payable Silver</B></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Consolidated cash costs per ounce for the three-month period ended June 30, 2005 were $4.48 per payable ounce of silver compared to $4.09 per payable ounce for the corresponding period of 2004. &nbsp;For the first half of 2005, consolidated cash costs per ounce were $4.50 per payable ounce compared to $3.94 per payable ounce in the first half of 2004. &nbsp;Industry-wide cost escalations in energy and consumables, Peruvian workers participation and a third party&#146;s one-third participation in the Pyrite Stockpile operation, which totaled $0.4 million during the second quarter (2004 - $nil) and $0.9 million in the first half of 2005 (2004 - $nil) were the primary reasons for the increase in cash costs from last year. In addition, the Company has experienced increases in labour costs as a direct effect of stronger Peruvian and Mexican local currencies relative to the US dollar over the last year.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The Company changed its method for calculating cash and total costs per ounce of silver, with effect from the first quarter of 2005. &nbsp;In the past, these calculations were based on produced ounces, as set out on page 11 of the Consolidated Financial Statements for the year ended December 31, 2004. &nbsp;The Company now calculates its cash and total costs per ounce based on the silver ounces for which the Company is paid, therefore eliminating the need to account for the cost of metals lost in smelting and refining. &nbsp;The second quarter and the first six months of 2004 costs per ounce have been recalculated on the same basis to ensure that the comparables are consistent with this new method.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The non-GAAP measures of cash and total cost per ounce of payable silver are used by the Company to manage and evaluate operating performance at each of the Company&#146;s mines and are widely reported in the silver mining industry as benchmarks for performance, but do not have standardized meaning. &nbsp;To facilitate a better understanding of this measure as calculated by the Company, we have provided a detailed reconciliation of this measure to our operating costs, as shown in our unaudited Consolidated Statement of Operations for the three and six-month periods ended June 30, 2005.</P>
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<P style="margin:0pt" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=2.3></TD><TD width=148.85></TD><TD width=51.2></TD><TD width=2.5></TD><TD width=17.6></TD><TD width=50.15></TD><TD width=10.85></TD><TD width=56.05></TD><TD width=14.45></TD><TD width=52.55></TD><TD width=17.75></TD><TD width=52.75></TD></TR>
<TR><TD valign=top width=269.8 colspan=3 rowspan=2>&nbsp;</TD><TD valign=top width=182.867 colspan=5 align="center"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>Three months ended June 30</B></P>
</TD><TD valign=top width=183.333 colspan=4 align="center"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>Six months ended June 30</B></P>
</TD></TR>
<TR><TD style="border-bottom:1pt solid #000000" valign=top width=93.667 colspan=3 align="center"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>2005</B></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=89.2 colspan=2 align="center"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>2004</B></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=89.333 colspan=2 align="center"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>2005</B></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=94 colspan=2 align="center"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>2004</B></P>
</TD></TR>
<TR><TD style="border-bottom:1pt solid #000000" valign=top width=3.067>&nbsp;</TD><TD width=270.067 colspan=3 style="background-color: #E6E9FF"><P style="line-height:11pt; margin-top:4.5pt; margin-bottom:4.5pt; font-family:Arial; font-size:9pt" align=justify><B>Operating Costs</B></P>
</TD><TD width=23.467 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.4pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD width=66.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:22.2pt; font-family:Arial; font-size:9pt">18,417</P>
</TD><TD width=14.467 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD width=74.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt">16,531</P>
</TD><TD width=19.267 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD width=70.067 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt">40,797</P>
</TD><TD width=23.667 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">$</P>
</TD><TD width=70.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt">27,699</P>
</TD></TR>
<TR><TD width=3.067>&nbsp;</TD><TD valign=top width=270.067 colspan=3><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Add/(Subtract)</P>
</TD><TD valign=top width=23.467>&nbsp;</TD><TD valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:42.75pt; font-family:Arial; font-size:9pt">&nbsp;</P>
</TD><TD valign=top width=14.467>&nbsp;</TD><TD valign=top width=74.733><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=19.267>&nbsp;</TD><TD valign=top width=70.067><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=23.667>&nbsp;</TD><TD valign=top width=70.333><P style="margin:0pt"><BR></P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=270.067 colspan=3 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Smelting, refining, and transportation charges</P>
</TD><TD valign=top width=23.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=66.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:24.75pt; font-family:Arial; font-size:9pt">9,061</P>
</TD><TD valign=top width=14.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=74.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:25.55pt; font-family:Arial; font-size:9pt">5,603</P>
</TD><TD valign=top width=19.267 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=70.067 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt">17,734</P>
</TD><TD valign=top width=23.667 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=70.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt">11,159</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=270.067 colspan=3><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">By-product credits</P>
</TD><TD valign=top width=23.467>&nbsp;</TD><TD valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:14.25pt; font-family:Arial; font-size:9pt">(18,219)</P>
</TD><TD valign=top width=14.467>&nbsp;</TD><TD valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:15.05pt; font-family:Arial; font-size:9pt">(11,277)</P>
</TD><TD valign=top width=19.267>&nbsp;</TD><TD valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:15.05pt; font-family:Arial; font-size:9pt">(35,616)</P>
</TD><TD valign=top width=23.667>&nbsp;</TD><TD valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:15.05pt; font-family:Arial; font-size:9pt">(22,678)</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=270.067 colspan=3 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Mining royalties</P>
</TD><TD valign=top width=23.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=66.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:36pt; font-family:Arial; font-size:9pt">62</P>
</TD><TD valign=top width=14.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=74.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:36.8pt; font-family:Arial; font-size:9pt">32</P>
</TD><TD valign=top width=19.267 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=70.067 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:32.3pt; font-family:Arial; font-size:9pt">255</P>
</TD><TD valign=top width=23.667 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=70.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:36.8pt; font-family:Arial; font-size:9pt">32</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=270.067 colspan=3><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Change in inventories</P>
</TD><TD valign=top width=23.467>&nbsp;</TD><TD valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:24.75pt; font-family:Arial; font-size:9pt">3,352</P>
</TD><TD valign=top width=14.467>&nbsp;</TD><TD valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:19.55pt; font-family:Arial; font-size:9pt">(2,035)</P>
</TD><TD valign=top width=19.267>&nbsp;</TD><TD valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:25.55pt; font-family:Arial; font-size:9pt">1,731</P>
</TD><TD valign=top width=23.667>&nbsp;</TD><TD valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:32.3pt; font-family:Arial; font-size:9pt">294</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=270.067 colspan=3 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Other</P>
</TD><TD valign=top width=23.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=66.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:31.5pt; font-family:Arial; font-size:9pt">271</P>
</TD><TD valign=top width=14.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=74.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:26.3pt; font-family:Arial; font-size:9pt">(100)</P>
</TD><TD valign=top width=19.267 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=70.067 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:32.3pt; font-family:Arial; font-size:9pt">657</P>
</TD><TD valign=top width=23.667 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=70.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:32.3pt; font-family:Arial; font-size:9pt">198</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD style="border-bottom:1pt solid #000000" valign=top width=270.067 colspan=3><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Minority interest adjustment</P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=23.467>&nbsp;</TD><TD style="border-bottom:1pt solid #000000" valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:25.5pt; font-family:Arial; font-size:9pt">(262)</P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=14.467>&nbsp;</TD><TD style="border-bottom:1pt solid #000000" valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:42.8pt; font-family:Arial; font-size:9pt">-</P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=19.267>&nbsp;</TD><TD style="border-bottom:1pt solid #000000" valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:26.3pt; font-family:Arial; font-size:9pt">(604)</P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=23.667>&nbsp;</TD><TD style="border-bottom:1pt solid #000000" valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:42.8pt; font-family:Arial; font-size:9pt">-</P>
</TD></TR>
<TR><TD style="border-bottom:1pt solid #000000" valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>Cash Operating Costs</B></P>
</TD><TD valign=top width=71.6 colspan=2 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>A</B></P>
</TD><TD valign=top width=23.467 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.4pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=66.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:20.25pt; font-family:Arial; font-size:9pt"><B>12,682</B></P>
</TD><TD valign=top width=14.467 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=74.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:25.55pt; font-family:Arial; font-size:9pt"><B>8,754</B></P>
</TD><TD valign=top width=19.267 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=70.067 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt"><B>24,954</B></P>
</TD><TD valign=top width=23.667 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=70.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt"><B>16,704</B></P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Add/(Subtract)</P>
</TD><TD valign=top width=71.6 colspan=2>&nbsp;</TD><TD valign=top width=23.467>&nbsp;</TD><TD valign=top width=66.867><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=14.467>&nbsp;</TD><TD valign=top width=74.733><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=19.267><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.067><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=23.667><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.333><P style="margin:0pt"><BR></P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Depreciation and amortization</P>
</TD><TD valign=top width=71.6 colspan=2 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=23.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=66.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:24.75pt; font-family:Arial; font-size:9pt">2,415</P>
</TD><TD valign=top width=14.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=74.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:25.55pt; font-family:Arial; font-size:9pt">2,008</P>
</TD><TD valign=top width=19.267 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.067 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:25.55pt; font-family:Arial; font-size:9pt">5,633</P>
</TD><TD valign=top width=23.667 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:25.55pt; font-family:Arial; font-size:9pt">4,153</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Asset retirement and reclamation</P>
</TD><TD valign=top width=71.6 colspan=2>&nbsp;</TD><TD valign=top width=23.467>&nbsp;</TD><TD valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:31.5pt; font-family:Arial; font-size:9pt">412</P>
</TD><TD valign=top width=14.467>&nbsp;</TD><TD valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:32.3pt; font-family:Arial; font-size:9pt">302</P>
</TD><TD valign=top width=19.267><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:32.3pt; font-family:Arial; font-size:9pt">939</P>
</TD><TD valign=top width=23.667><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:32.3pt; font-family:Arial; font-size:9pt">603</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Change in inventories</P>
</TD><TD valign=top width=71.6 colspan=2 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=23.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=66.867 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:24.75pt; font-family:Arial; font-size:9pt">1,061</P>
</TD><TD valign=top width=14.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=74.733 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:42.8pt; font-family:Arial; font-size:9pt">-</P>
</TD><TD valign=top width=19.267 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.067 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:25.55pt; font-family:Arial; font-size:9pt">1,061</P>
</TD><TD valign=top width=23.667 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.333 style="background-color: #E6E9FF"><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:42.8pt; font-family:Arial; font-size:9pt">-</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Other</P>
</TD><TD valign=top width=71.6 colspan=2>&nbsp;</TD><TD valign=top width=23.467>&nbsp;</TD><TD valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:36pt; font-family:Arial; font-size:9pt">95</P>
</TD><TD valign=top width=14.467>&nbsp;</TD><TD valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:30.8pt; font-family:Arial; font-size:9pt">(53)</P>
</TD><TD valign=top width=19.267><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:36.8pt; font-family:Arial; font-size:9pt">80</P>
</TD><TD valign=top width=23.667><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:30.8pt; font-family:Arial; font-size:9pt">(48)</P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt">Minority interest adjustment</P>
</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=71.6 colspan=2>&nbsp;</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=23.467>&nbsp;</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:25.5pt; font-family:Arial; font-size:9pt">(159)</P>
</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=14.467>&nbsp;</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:42.8pt; font-family:Arial; font-size:9pt">-</P>
</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=19.267><P style="margin:0pt"><BR></P>
</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:26.3pt; font-family:Arial; font-size:9pt">(321)</P>
</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=23.667><P style="margin:0pt"><BR></P>
</TD><TD style="background-color: #E6E9FF; border-bottom: 0.5pt solid #000000" valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:42.8pt; font-family:Arial; font-size:9pt">-</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>Production Costs</B></P>
</TD><TD valign=top width=71.6 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>B</B></P>
</TD><TD valign=top width=23.467><P style="line-height:11pt; margin:0pt; padding-left:-5.4pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:20.25pt; font-family:Arial; font-size:9pt"><B>16,504</B></P>
</TD><TD valign=top width=14.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt"><B>11,010</B></P>
</TD><TD valign=top width=19.267><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt"><B>32,344</B></P>
</TD><TD valign=top width=23.667><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:21.05pt; font-family:Arial; font-size:9pt"><B>21,412</B></P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=71.6 colspan=2 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=23.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=66.867 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=14.467 style="background-color: #E6E9FF">&nbsp;</TD><TD valign=top width=74.733 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=19.267 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.067 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=23.667 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD><TD valign=top width=70.333 style="background-color: #E6E9FF"><P style="margin:0pt"><BR></P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>Payable Ounces of Silver</B></P>
</TD><TD valign=top width=71.6 colspan=2><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>C</B></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=23.467>&nbsp;</TD><TD style="border-bottom:1pt solid #000000" valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:-62.85pt; text-indent:9pt; font-family:Arial; font-size:9pt"><B>2,831,511</B></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=14.467>&nbsp;</TD><TD style="border-bottom:1pt solid #000000" valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:-7.35pt; font-family:Arial; font-size:9pt"><B>2,142,515</B></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=19.267><P style="margin:0pt"><BR></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:9.8pt; font-family:Arial; font-size:9pt"><B>5,549,584</B></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=23.667><P style="margin:0pt"><BR></P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:-65.6pt; text-indent:9.8pt; font-family:Arial; font-size:9pt"><B>4,243,810</B></P>
</TD></TR>
<TR><TD style="border-bottom:1pt solid #000000" valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>Total Cash Cost per Ounce</B></P>
</TD><TD style="border-right:1pt solid #000000" valign=top width=71.6 colspan=2><P style="line-height:10.5pt; margin:0pt; font-family:Arial; font-size:8.5pt">(A*1000)/C</P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=23.467><P style="line-height:11pt; margin:0pt; padding-left:-5.4pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>4.48</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=14.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>4.09</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=19.267><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>4.50</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=23.667><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-right:1pt solid #000000; border-bottom:1pt solid #000000" valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>3.94</B></P>
</TD></TR>
<TR><TD valign=top width=3.067>&nbsp;</TD><TD valign=top width=198.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>Total Production Costs per Ounce</B></P>
</TD><TD style="border-right:1pt solid #000000" valign=top width=71.6 colspan=2><P style="line-height:10.5pt; margin:0pt; font-family:Arial; font-size:8.5pt">(B*1000)/C</P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=23.467><P style="line-height:11pt; margin:0pt; padding-left:-5.4pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=66.867><P style="line-height:11pt; margin:0pt; padding-left:-5.55pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>5.83</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=14.467><P style="line-height:11pt; margin:0pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=74.733><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>5.14</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=19.267><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=70.067><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>5.83</B></P>
</TD><TD style="background-color:#E0E0E0; border-bottom:1pt solid #000000" valign=top width=23.667><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt"><B>$</B></P>
</TD><TD style="background-color:#E0E0E0; border-right:1pt solid #000000; border-bottom:1pt solid #000000" valign=top width=70.333><P style="line-height:11pt; margin:0pt; padding-right:3.6pt; font-family:Arial; font-size:9pt" align=right><B>5.05</B></P>
</TD></TR>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>At June 30, 2005, cash and cash equivalents plus short-term investments were $78.9 million, a $12.9 million decrease from March 31, 2005. &nbsp;Investing activities for the three months ended June 30, 2005 generated $4.2 million and consisted primarily of the maturity of short-term investments of $18.5 million, which was partially used to fund expenditures on mineral property, plant and equipment of $14.2 million, mostly at Alamo Dorado. &nbsp;Cash flow provided by operating activities was $1.4 million for the quarter ended June 30, 2005, after changes in non-cash operating working capital items utilized $1.8 million. &nbsp;Financing activities in the second quarter offset each other with the exercise of stock options yielding $0.3 million and the repayment of short-term loans utilizing $0.3 million. &nbsp;</P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Working capital at June 30, 2005 was $95.4 million, a reduction of $4.9 million from March 31, 2005. &nbsp;The reduction is reflected largely in a $12.9 million decrease in cash and cash equivalents plus short-term investments, a $3.6 million decrease in accounts receivable partially offset by a $5.8 million decrease in current liabilities and increases in inventories and prepaid expenses of $4.5 million and $0.7 million respectively.</P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Capital resources at June 30, 2005 amounted to shareholders&#146; equity of $278.3 million. &nbsp;At June 30, 2005, the Company had 66,987,124 common shares issued and outstanding. &nbsp;</P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>During the second quarter, the Company agreed to issue 255,781 warrants to the International Finance Corporation (&#147;IFC&#148;) in exchange for the termination of past and </P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt; page-break-before:always" align=justify>future obligations relating to production from the La Colorada mine.&nbsp; Pan American was required to make payments to IFC by May 15th of each year if the average price of silver for the preceding calendar year exceeded $4.75 per ounce.&nbsp; Such payment was based on the positive difference between the average price per ounce of silver for a year and $4.75.&nbsp; The Company negotiated the settlement of this obligation at a fair value of $2.1 million, to be settled by the issue of warrants after the quarter end. At 30 June, 2005 the fair value was recorded as a current liability. &nbsp;Each warrant issued entitles the IFC to purchase one common share of Pan American at a price of US$ 16.91 over a five-year period. </P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Based on the Company&#146;s financial position at June 30, 2005 and the operating cash flows that are expected over the next twelve months, management believes that the Company&#146;s liquid assets are more than sufficient to fund planned operating and project development and sustaining capital expenditures and discharge liabilities as they come due. Other than as disclosed elsewhere in the unaudited consolidated financial statements for the three months ended June 30, 2005 and 2004 and the related notes, the Company did not have any known material contractual obligation or any off-balance sheet arrangements at the date of this MD&amp;A.</P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" 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. &nbsp;At June 30, 2005, the Company had sold forward 16,850 tonnes of zinc at a weighted average price of $1,144 per tonne ($0.519 per pound). These forward sales commitments represent approximately 45 per cent of the Company&#146;s forecast zinc production until March 2006. &nbsp;At June 30, 2005, the cash offered prices for zinc was $1,223 per tonne. The negative mark to market value at June 30, 2005 was $1.4 million. &nbsp;</P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>At the end of the second quarter of 2005, the Company had fixed the price of 650,000 ounces of silver produced during the second quarter and contained in concentrates, which are due to be priced in July and August of 2005 under the Company&#146;s concentrate contracts. &nbsp;The price fixed for these ounces averaged $7.19 per ounce while the spot price of silver was $7.10 per ounce on June 30, 2005.</P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>In anticipation of capital expenditures in Mexican pesos (&#147;MXN&#148;) relating to the construction of Alamo Dorado, the Company has purchased MXN 237 million settling between September 2005 and May 2006 to match anticipated spending at an average MXN/US$ exchange rate of 11.28.. &nbsp;At June 30, 2005, the spot exchange rate for MXN/US$ was 10.73 and the positive mark to market value of the Company&#146;s position was $0.5 million. &nbsp;</P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Following the positive construction decision in late February 2005, the Company has begun development at its Alamo Dorado project in Mexico and is confident that production will commence on schedule in late 2006. &nbsp;All critical lead time equipment has been secured and key members of the operations management team have been hired. The final water permit has been received for the project and an engineering, procurement and construction management (&#147;EPCM&#148;) agreement was signed with engineering firm M3. &nbsp;M3&#146;s engineering and design work, which began in March was approximately 40% complete at June 30, 2005. &nbsp;Construction activities have commenced at the site, including clearing work, the erection of a truck maintenance and </P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt; page-break-before:always" align=justify>warehouse facility, the pioneering of the main mine haulage road and the installation of temporary power lines. The Company spent $5.6 million on equipment and construction related activities for the quarter ended June 30, 2005. &nbsp;Over the remainder of the year, the Company anticipates spending an additional $33.5 million on the construction of Alamo Dorado, which will be funded out of the Company&#146;s treasury. &nbsp;The total capital costs for the project are still expected to be approximately $77 million, including working capital and a contingency allowance. </P>
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<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The Company progressed the feasibility study for the 50 per cent owned Manantial Espejo project in Argentina during the quarter. &nbsp;Pan American&#146;s share of the feasibility costs in the first and second quarters of 2005 were $1.2 million and $0.8 million respectively, which was expensed as incurred. &nbsp;Over the course of the next few months, the Company will develop and submit an environmental impact study to the Argentinean authorities along with proposals for the development of local infrastructure, supply of energy and tax incentive programs. The results of this work, together with ongoing metallurgical and geological interpretation will culminate in a completed feasibility study for the project by late 2005 at which time a construction decision will be taken. Pan American&#146;s share of costs to complete the feasibility study is expected to be approximately an additional $0.4 million.</P>
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