<SEC-DOCUMENT>0001341004-12-000997.txt : 20121101
<SEC-HEADER>0001341004-12-000997.hdr.sgml : 20121101
<ACCEPTANCE-DATETIME>20120725154932
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001341004-12-000997
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20120725

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:		CORRESP

	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>CORRESP
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">July 25, 2012</font></div>

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<div style="LINE-HEIGHT: 12pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">United States Securities and Exchange Commission</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt"><font style="FONT-STYLE: italic; DISPLAY: inline">Pan American Silver Corp.</font></font></div>
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<div align="left"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Form 40-F for the Fiscal Year Ended December 31, 2011</font></div>
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<div align="left"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">File No. 0-13727</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Dear Ms. Jenkins:</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Set forth below are the responses of Pan American Silver Corp., a corporation organized under the laws of Canada (the "Company"), to the comments of the staff (the "Staff") of the Securities and Exchange Commission (the &#8220;Commission&#8221;) contained in the letter dated July 12, 2012 (the "Comment Letter") with respect to the Annual Report on Form 40-F for the fiscal year ended December 31, 2011, filed with the Commission on March 22, 2012 via EDGAR.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">For the convenience of the Staff, we have numbered each of our responses to correspond to the numbered comments in the Comment Letter.&#160;&#160;Additionally, the text of each of the numbered comments in the Comment Letter has been duplicated in bold and italics type to precede each of the Company's responses.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit 1.3 &#8211; Audited Consolidated Financial Statements</font></font></div>

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<div align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">We note your disclosure that you cease capitalization of costs at the time a mine has reached commercial production.&#160;&#160;You further define commercial production on page 10 &#8220;as the date that a mine has achieved a sustainable level of production that provides a basis for a reasonable expectation of profitability along with various qualitative factors including but not limited to the achievement of mechanical completion, whether production levels are sufficient to be at least capable of generating sustainable positive cash flow, the working effectiveness of the site refinery, whether a refining contract for the product is in place and whether the product is of sufficient quality to be sold, whether there</font></div>
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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<br>
<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">is a sustainable level of production input available including power, water and diesel; whether the necessary permits are in place to allow continuous operations.&#8221;&#160;&#160;Please explain in greater detail how your accounting policy, which appears to rely in reaching certain levels of profitability, complies with paragraphs 17 (e), 20 and 21 of IAS 16.&#160;&#160;We note that IAS 16 appears to focus on the ability of the asset to function properly rather than for it to function at a level that meets managements profitably targets.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">As per paragraph 16 of IAS 16 &#8211; Property, plant and equipment &#8220;The cost of an item of property, plant and equipment comprises:</font></div>

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<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">(a)</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.</font></div>
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<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">(c)</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.&#8221;</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Directly attributable costs, including costs of testing whether the asset is functioning properly are capitalized to the cost of property, plant and equipment, in accordance with the Company&#8217;s accounting policy and paragraph 17(e) of IAS 16.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Development costs are typically capitalized until the asset is &#8216;available for use&#8217; (i.e., when commercial levels of production are capable of being achieved). However, as stated above, development costs can only be capitalized if they are directly attributable to bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management, in accordance with paragraph 20 of IAS 16.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The cut-off point between development activity and production activity is determined by whether the asset is &#8216;available for use&#8217;.&#160;&#160;For mining entities, the cut-off point is when certain pre-determined levels of production are achieved. The Company establishes a framework to determine when commercial levels of production have been achieved for each mine, such as:</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The percentage of design capacity for the mine and mill;</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Mineral recoveries at or near expected levels; and</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The achievement of continuous production or other output.</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The Company takes into consideration the above noted criteria and the passage of time when establishing a framework with respect to the determination of commercial production.&#160;&#160;The parameters benchmarked to each of the above noted criteria are mine specific.</font></div>

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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<br>
<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Although the above noted criteria may be an indication of a mine&#8217;s subsequent cash outflows as either producing positive cash flow, or being within a reasonable range of profitability, the profitability is not a criteria that is applied in the determination of commercial production.&#160;&#160;The Company proposes to change the language of its accounting policy in future filings as it relates to the commencement of commercial/operating level of production to read as follows:</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt"><font style="DISPLAY: inline">&#8220;</font>as the date that a mine has achieved a sustainable level of production <font style="DISPLAY: inline; TEXT-DECORATION: underline">based on</font> <font style="DISPLAY: inline; TEXT-DECORATION: line-through">that</font> <font style="DISPLAY: inline; TEXT-DECORATION: line-through">provides a basis for a reasonable expectation of profitability</font> <font style="DISPLAY: inline; TEXT-DECORATION: underline">a percentage of design capacity</font> along with various qualitative factors including but not limited to the achievement of mechanical completion, <font style="DISPLAY: inline; TEXT-DECORATION: line-through">whether production levels are sufficient to be at least capable of generating sustainable positive cash flow,</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">continuous nominated level of production</font>, the working effectiveness of the site refinery <font style="DISPLAY: inline; TEXT-DECORATION: underline">at or near expected levels</font>, <font style="DISPLAY: inline; TEXT-DECORATION: line-through">whether a refining contract for the product is in place and whether the product is of sufficient quality to be sold,</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>and whether there is a sustainable level of production input available including power, water and diesel; <font style="DISPLAY: inline; TEXT-DECORATION: line-through">whether the necessary permits are in place to allow continuous operations</font>.&#8221;</font></div>

<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">&#160;</font></div>

<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The Company considers whether any operations at a site could be considered incidental in accordance with paragraph 21 of IAS16.&#160;&#160;Incidental operations have not historically occurred and therefore have not been applicable to the Company&#8217;s financial statements.&#160;&#160;Income and expense that may arise in the future from incidental operations occurring before or during construction or development activities that are not necessary to bring an item to the location and condition for it to be capable of operating in the manner intended by management will be recognized in profit or loss in their respective classifications.</font></div>

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<div align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">We note your disclosure that cash includes cash on hand and cash in banks are &#8220;considered loans and receivables and therefore [are] stated at amortized cost, less any impairment.&#8221;&#160;&#160;Please explain why cash on hand and in banks are considered loans and receivables.&#160;&#160;Refer to paragraph 9 and 46 of IAS 39 in your response.</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">As per paragraph 9 of IAS 39 &#8211; Financial instruments: recognition and measurement, the following are the four categories of financial instruments:</font></div>

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<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">(a)</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Financial asset or financial liability at fair value through profit or loss;</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Held-to-maturity investments;</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Loans and receivables; and</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Available-for-sale financial assets.</font></div>
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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The Company views cash deposits with a bank or similar institution to represent the contractual right of the Company to obtain cash from the institution or to draw a cheque or similar instrument against the balance in favour of a creditor in payment of a financial liability.&#160;&#160;Essentially, cash balances represent a current amount receivable from the counterparty bank. The Company has given consideration to the four categories of financial instruments noted above and their definitions as detailed in paragraph 9 of IAS 39, and determined that cash is best classified as loans and receivables as it is a non-derivative financial asset (i.e. requires an initial investment) with fixed or determinable payments (i.e. the Company can obtain cash or draw against the balance at its discretion thus has the ability to fix/determine withdrawal dates) that are not quoted in an active market, which is consistent with the definition of loans and receivables. In addition, the Company does not intend to sell immediately or in the near term its cash or cash equivalent financial assets; and the Company intends to recover substantially all of its initial investment, other than because of credit deterioration.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">In accordance with paragraph 46 of IAS 39, cash and cash equivalents classified as loans and receivables as defined in paragraph 9, were measured at amortized cost using the effective interest method.</font></div>

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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold"><font style="FONT-STYLE: italic; DISPLAY: inline">We note your disclosure on page 18 that &#8220;Prior to acquiring such land or mineral rights the Company makes a preliminary evaluation to determine that the property has significant potential to develop an economic ore body.&#160;&#160;The time between initial acquisition and full evaluation of a property&#8217;s potential is dependent on many factors including: location relative to existing infrastructure, the property&#8217;s stage of development, geological controls and metal prices.&#160;&#160;If a mineable ore body is discovered, such costs are amortized when production begins.&#160;&#160;If no mineable ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value.&#8221;&#160;&#160;Please clarify whether or not your capitalize costs associated with the evaluation and exploration of land and mineral rights properties prior to the time that they are acquired by you.&#160;&#160;Please refer to paragraph 5(a) of IFRS 6.</font></font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response:</font></font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">In accordance with the Company&#8217;s accounting policies, which are consistent with paragraph 5(a) of IFRS 6, all costs incurred by the Company prior to the time that a property has been acquired and the legal rights to explore are obtained, have been expensed.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Units of Production Basis, page 18</font></font></div>

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<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">4.</font></div>
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<div align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">We note your disclosure on page 14 of Exhibit 1.3 of your 2010 Form 40-F that under Canadian GAAP you used proven and probable reserves to calculate depreciation under the units of production method.&#160;&#160;We note your disclosure here that under IFRS you use proven and probable reserves and, for some mines, other mineral resources where there is a high degree of confidence in its economic extraction.&#160;&#160;Provide us with a comprehensive analysis between Canadian GAAP and IFRS with respect to the use of other than proven and probable reserves to determine the useful life of some of your mines.&#160;&#160;Please also explain why proven and probable reserves were used for those mines under Canadian GAAP but not under IFRS.</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response:</font></font></div>

<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">&#160;</font></div>

<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">For clarification, the Company respectfully submits that the Company currently calculates its depreciation under the units of production method based on proven and probable reserves under Canadian GAAP and IFRS. <font style="DISPLAY: inline">The Company did not change the calculation of depreciation for any of its existing mines on adoption of IFRS.</font></font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The Company makes reference to paragraph 60 of IAS 16 &#8211; Property, Plant and Equipment &#8220;The depreciation method used shall reflect the pattern in which the asset's future economic</font></div>

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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">benefits are expected to be consumed by the entity&#8221;.&#160;&#160;The Company also makes reference to paragraph 31 of CICA S.3061 &#8220;Different methods of amortizing an item of property, plant and equipment result in different patterns of charges to income. The objective is to provide a rational and systematic basis for allocating the amortizable amount of an item of property, plant and equipment over its estimated life and useful life&#8221;.&#160;&#160;Based on the above noted guidance, the Company does not believe there is a difference between the requirements of Canadian GAAP and IFRS with respect to the use of other than proven and probable reserves to determine the depreciation denominator of the Company&#8217;s mines.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The Company recognizes that certain mining entities only include proven and probable reserves when calculating depreciation of mining assets using the units of production basis.&#160;&#160;Generally this means that all inferred resources are excluded, together with any measured and indicated resources that have yet to be demonstrated as economically recoverable by additional drilling and analysis.&#160;&#160;However, the inclusion of certain resources may be appropriate, when there is a high degree of confidence as to the conversion of resources to reserves and when proven and probable reserves do not provide a realistic indication of the remaining useful life of the mine and related assets. For example this may be the case when a mine is approaching the end of its economic life and the additional work to formally convert the remaining resources to reserves is delayed or not yet performed and the nature of the deposit and the producing history of the mine provide compelling evidence that a portion of the remaining resource will be produced economically.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">As part of the annual review of the depreciation method applied under Canadian GAAP, upon adoption of IFRS on January 1, 2010 or in the periods subsequent to adoption of IFRS, the Company did not identify any mining assets that should include resources to their depreciation calculation. As a result there is no difference between the financial performance or financial position under the previous Canadian GAAP policy or the expanded accounting policy definition under IFRS as it applies to the Company&#8217;s calculation of depreciation on its existing mining assets. In other words, the Company has continued to calculate depreciation using only proven and probable reserves for its existing producing mining operations in the period prior to and subsequent to adoption of IFRS. However, the description of the accounting policy under IFRS was adjusted in the event that in the future the Company encounters circumstances similar to the those described above where the balance of proven and probable reserves are not a fair reflection of a mine&#8217;s remaining useful life and whereby the inclusion of certain resources in the depreciation basis would more appropriately reflect the pattern under which economic benefit is being obtained from a specific mine.</font></div>

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<div align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">Additionally, we note your disclosure on page 17 that you use estimated economically recoverable reserves to depreciate mine production assets under IFRS.&#160;&#160;Please explain how these assets were depreciated under Canadian GAAP.&#160;&#160;To the extent that there is a difference between the metric used to determine the useful life of mine production assets under Canadian GAAP and IFRS, please provide us with a comprehensive analysis to</font></div>
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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">explain the basis for the difference in the determination of useful lives between Canadian GAAP and IFRS.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response:</font></font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">There is no difference between the metric used to determine the useful life of mine production assets under Canadian GAAP and IFRS.&#160;&#160;As noted in the response to comment 4 (see above), although the Company&#8217;s accounting policy was refined to allow for the inclusion of resources in the calculation of depreciation, no resources were required to be included in the calculation given the current pattern of production over the Company&#8217;s assets.</font></div>

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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note 23 &#8211; First Time Adoption of IFRS, page 47</font></font></div>

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<div align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt; FONT-WEIGHT: bold">We note that you do not address the mandatory exceptions, as set forth in paragraphs 14-17 and Appendix B of IFRS 1 that you applied upon adoption of IFRS.&#160;&#160;To the extent that your primary financial statements reflect the use of mandatory exceptions, please identify the items or class of items to which the exceptions were applied and describe the accounting principle that used and how it was applied.&#160;&#160;In addition and to the extent material, also qualitatively describe the impact on the financial condition, changes in financial condition and results operations that the treatment specified by IFRS would have had absent these mandatory exceptions. Refer to paragraph 23 of IFRS 1.</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Paragraphs 14-17 and Appendix B of IFRS 1 &#8211; First-time adoption of Internal Financial Reporting Standards, provide certain mandatory exceptions that are to be applied upon transition to IFRS.&#160;&#160;The following mandatory exceptions were considered as part of the Company&#8217;s transition to IFRS:</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Estimates - paragraph 14 to 17 of IFRS 1:</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">On adoption of IFRS, the Company reviewed its significant estimates that were made under Canadian GAAP.&#160;&#160;The Company did not identify any instances where the original estimates were in error or would have been materially different under IFRS in the absence of the exception. The significant estimates made under Canadian GAAP related to the following classes of items:</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Mineral property, plant and equipment, construction in progress and investments in non-producing property;</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Provision for reclamation and closure;</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Stock based compensation; and</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt"><font style="DISPLAY: inline">Accounting for derivative instruments.</font></font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The estimates applied to the above noted items were based on information and conditions that existed as of January 1, 2010, the IFRS transition date.&#160;&#160;As the application of changes in estimates is prospective, the absence of the mandatory exception would have had no impact on the Company&#8217;s financial statements for the year ended December 31, 2010 or 2011 other than in instances where the application of a different accounting policy under IFRS requires new estimates that had not previously been required. The effect of these new estimates including certain calculations required in the determination of deferred income taxes, decommissioning and site restoration provisions and the fair value the Company&#8217;s warrants has been disclosed as part of the quantitative reconciliation of the effects of adoption of IFRS in note 23 to the consolidated financial statements for the year ended December 31, 2011.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Non-controlling interests - paragraph B7 of IFRS 1:</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance;</font></div>
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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">accounting for changes in the parent's ownership interest in a subsidiary that do not result in a loss of control; and</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">accounting for a loss of control over a subsidiary, and the related requirements IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">The non-controlling interests balance of the Company as at January 1, 2010 represents the minority shareholders&#8217; interest in San Vicente Mine and Morococha Mine.&#160;&#160;The requirements of the above noted paragraphs and the related exception, had no impact on the Company&#8217;s December 31, 2010 and 2011 financial statements as the Company&#8217;s non-controlling interests did not have a deficit balance, and there were no changes in the Company&#8217;s ownership interest or loss of control over a subsidiary.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Hedge accounting, paragraph B4-B6 of IFRS 1:</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">As the Company did not have any existing hedge positions and did not apply hedge accounting under Canadian GAAP or IAS39 as at January 1, 2010, this exception was not applicable to the Company upon transition to IFRS.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Derecognition of financial assets and financial liabilities - paragraph B2-B4 of IFRS 1:</font></div>
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<div style="LINE-HEIGHT: 13.7pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">As the Company did not derecognize any financial assets or financial liabilities in accordance with Canadian GAAP, this exception was not applicable to the Company upon its transition to IFRS.</font></div>

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<div id="HDR_DIV" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Pan American Silver Corp.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">It is responsible for the adequacy and accuracy of the disclosure in its Form 40-F filing;</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the Company&#8217;s Form 40-F filing; and</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 12pt">It may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.</font></div>
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<font style="TEXT-DECORATION: underline"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 12pt">/s/ Robert Doyle</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font> </div>

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