Financial & Operating Highlights Three Months ended Years ended December 31 December 31 2003 2002 2003 2002 Consolidated Financial Highlights (Unaudited - in thousands of US dollars) Net income (loss) $ (4,837) $ (14,040) $ (6,773) $ (33,977) Earnings (loss) per share (0.15) (0.32) (0.20) (0.81) Net income (loss) before unusual items (4,837) (1,951) (6,773) (6,759) Earnings (loss) per share before unusual items (0.15) (0.05) (0.20) (0.16) Contribution from mining operations 2,040 379 5,343 1,932 Capital spending 6,286 5,005 18,859 10,938 Exploration expense 955 629 2,543 1,206 Cash 14,191 10,185 14,191 10,185 Working capital $ 81,961 $ 2,399 $ 81,961 $ 2,399 Consolidated Ore Milled & Metals Recovered to Concentrate Tonnes milled 293,523 297,949 1,212,253 1,174,332 Silver metal - ounces 2,123,747 2,009,787 8,641,914 7,765,154 Zinc metal - tonnes 7,038 9,555 31,797 39,081 Lead metal - tonnes 4,154 5,214 18,990 20,790 Copper metal - tonnes 518 742 3,143 2,847 Net smelter return per tonne milled $ 47.97 $ 40.13 $ 41.68 $ 40.23 Cost per tonne 39.69 42.78 38.38 40.44 ------------------------------------------------------------------------- Margin (loss) per tonne $ 8.28 $ (2.66) $ 3.30 $ (0.21) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Cost per Ounce of Silver (net of by-product credits) Total cash cost per ounce $ 4.01 $ 4.15 $ 4.09 $ 4.16 Total production cost per ounce $ 4.57 $ 4.74 $ 4.62 $ 4.94 In thousands of US dollars Direct operating costs & value of metals lost in smelting and refining 11,431 12,215 47,043 47,648 By-product credits (4,209) (4,694) (15,717) (17,984) ------------------------------------------------------------------------- Cash operating costs 7,222 7,521 31,326 29,664 Depreciation, amortization & reclamation 1,015 1,079 4,001 5,557 ------------------------------------------------------------------------- Production costs 8,237 8,600 35,327 35,221 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Ounces used in cost per ounce calculations 1,802,845 1,812,524 7,649,772 7,139,119 Average Metal Prices Silver - London Fixing $ 5.25 $ 4.51 $ 4.88 $ 4.60 Zinc - LME Cash Settlement per pound $ 0.42 $ 0.35 $ 0.38 $ 0.35 Lead - LME Cash Settlement per pound $ 0.29 $ 0.20 $ 0.23 $ 0.21 Copper - LME Cash Settlement per pound $ 0.93 $ 0.70 $ 0.81 $ 0.71 Average Prices Realized Silver - per ounce (note) $ 5.01 $ 4.20 $ 4.59 $ 4.26 Zinc - per pound $ 0.42 $ 0.35 $ 0.38 $ 0.35 Lead - per pound $ 0.29 $ 0.20 $ 0.23 $ 0.21 Copper - per pound (note) $ 0.85 $ 0.62 $ 0.71 $ 0.62 Note - Pan American pays a refining charge for silver and copper Mine Operations Highlights Three Months ended Years ended December 31 December 31 2003 2002 2003 2002 Huaron Mine Tonnes milled 144,220 156,305 605,790 606,300 Average silver grade - grams per tonne 235 254 251 261 Average zinc grade - percent 3.49% 4.08% 3.75% 4.08% Silver - ounces 966,732 1,134,902 4,365,061 4,527,971 Zinc - tonnes 3,974 5,456 18,855 20,896 Lead - tonnes 2,969 3,731 14,246 14,006 Copper - tonnes 282 406 1,332 1,740 Net smelter return per tonne $ 48.33 $ 45.19 $ 45.77 $ 44.61 Cost per tonne 44.30 40.35 41.87 38.71 ------------------------------------------------------------------------- Margin (loss) per tonne $ 4.03 $ 4.83 $ 3.90 $ 5.90 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total cash cost per ounce $ 4.33 $ 3.70 $ 3.92 $ 3.66 Total production cost per ounce $ 5.08 $ 4.22 $ 4.62 $ 4.12 In thousands of US dollars Direct operating costs & value of metals lost in smelting and refining $ 6,762 $ 6,927 $ 26,821 $ 25,992 By-product credits $ (2,575) $ (2,732) $ (9,692) $ (9,407) ------------------------------------------------------------------------- Cash operating costs 4,188 4,195 17,129 16,585 Depreciation, amortization and reclamation 725 596 3,047 2,061 ------------------------------------------------------------------------- Production costs $ 4,913 $ 4,791 $ 20,176 $ 18,646 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Ounces for cost per ounce calculations 966,732 1,134,902 4,365,061 4,527,971 Quiruvilca Mine Tonnes milled 89,894 119,098 442,093 508,352 Average silver grade - grams per tonne 241 171 201 176 Average zinc grade - percent 3.83% 3.82% 3.30% 3.95% Silver - ounces 618,133 576,163 2,493,908 2,509,689 Zinc - tonnes 2,984 3,998 12,509 17,852 Lead - tonnes 1,095 1,398 4,361 6,468 Copper - tonnes 236 336 1,811 1,107 Net smelter return per tonne $ 49.86 $ 32.72 $ 37.24 $ 34.39 Cost per tonne 40.30 41.58 39.20 40.01 ------------------------------------------------------------------------- Margin (loss) per tonne $ 9.56 $ (8.86) $ (1.96) $ (5.62) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total cash cost per ounce $ 4.11 $ 5.51 $ 5.01 $ 5.15 Total production cost per ounce $ 4.34 $ 6.24 $ 5.18 $ 6.52 In thousands of US dollars Direct operating costs & value of metals lost in smelting and refining $ 4,172 $ 5,135 $ 18,522 $ 21,503 By-product credits (1,634) (1,961) (6,025) (8,576) ------------------------------------------------------------------------- Cash operating costs 2,538 3,174 12,498 12,927 Capital spending expensed and reclamation 143 419 431 3,431 ------------------------------------------------------------------------- Production costs $ 2,681 $ 3,593 $ 12,928 $ 16,358 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Ounces for cost per ounce calculations 618,133 576,163 2,493,908 2,509,689 La Colorada Mine Tonnes milled 41,195 13,528 99,115 50,662 Average silver grade - grams per tonne 409 519 435 442 Silver - ounces 320,902 197,263 992,142 626,035 Zinc - tonnes 80 101 433 333 Lead - tonnes 90 85 383 316 Net smelter return per tonne $ - $ 52.84 $ - $ 48.09 Cost per tonne - 110.04 - 72.60 ------------------------------------------------------------------------- Margin (loss) per tonne $ - $ (57.20) $ - $ (24.51) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Pyrite Stockpile Sales Tonnes sold 18,214 9,018 65,255 9,018 Average silver grade - grams per tonne 372 350 377 350 Silver ounces 217,980 101,459 790,803 101,459 Net smelter return per tonne $ 35.78 $ 31.13 $ 33.84 $ 31.13 Cost per tonne 0.15 - 0.47 - ------------------------------------------------------------------------- Margin (loss) per tonne $ 35.63 $ 31.13 $ 33.37 $ 31.13 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total cash cost per ounce $ 2.28 $ 1.50 $ 2.15 $ 1.50 Total production cost per ounce $ 2.95 $ 2.13 $ 2.81 $ 2.13 In thousands of US dollars Value of metals lost in smelting and refining $ 496 $ 152 $ 1,700 $ 152 By-product credits - - - - ------------------------------------------------------------------------- Cash operating costs 496 152 1,700 152 Depreciation, amortization and reclamation 146 64 523 64 ------------------------------------------------------------------------- Production costs $ 643 $ 216 $ 2,223 $ 216 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Ounces for cost per ounce calculations 217,980 101,459 790,803 101,459 PAN AMERICAN SILVER CORP. Consolidated Balance Sheets (in thousands of U.S. dollars) (Unaudited) December 31 December 31 2003 2002 (Restated) ASSETS Current Cash and cash equivalents $ 14,191 $ 10,185 Short-term investments 74,938 13 Accounts receivable 7,497 4,598 Inventories 6,611 4,637 Prepaid expenses 1,550 3,197 ------------------------------------------------------------------------- Total Current Assets 104,787 22,630 Mineral property, plant and equipment, net 83,877 67,426 Investment and non-producing properties 83,873 4,193 Direct smelting ore 3,901 4,303 Other assets 3,748 4,393 ------------------------------------------------------------------------- Total Assets $ 280,186 $ 102,945 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES Current Operating line of credit $ - $ 125 Accounts payable and accrued liabilities 10,565 15,227 Advances for metal shipments 4,537 2,158 Current portion of bank loans and capital lease 2,639 1,638 Current portion of non-current liabilities 5,085 1,083 ------------------------------------------------------------------------- Total Current Liabilities 22,826 20,231 Deferred revenue 864 923 Bank loans and capital lease 10,803 3,942 Liability component of convertible debenture 19,116 - Provision for asset retirement obligation and reclamation 21,192 20,950 Provision for future income tax 19,035 - Severance indemnities and commitments 2,252 1,407 ------------------------------------------------------------------------- Total Liabilities $ 96,088 $ 47,453 ------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Share capital Authorized: 100,000,000 common shares of no par value Issued: December 31, 2002 - 43,883,454 common shares December 31, 2003 - 53,006,558 common shares 225,133 161,108 Equity component of convertible debentures 66,736 - Additional paid in capital 12,753 1,327 Deficit (120,524) (106,943) ------------------------------------------------------------------------- Total Shareholders' Equity 184,098 55,492 ------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $ 280,186 $ 102,945 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PAN AMERICAN SILVER CORP. Consolidated Statements of Operations (in thousands of U.S. dollars, except for shares and per share amounts) (Unaudited) Three months ended Twelve months ended December 31 December 31 2003 2002 2003 2002 ------------------------------------------------------------------------- (Restated) (Restated) Revenue $ 12,857 $ 12,084 $ 45,122 $ 45,093 Expenses Operating 10,817 11,705 39,779 43,161 General and administration 1,183 209 2,731 1,445 Stock-based compensation 2,871 572 2,871 572 Depreciation and amortization 1,961 692 3,326 4,872 Reclamation 72 215 303 860 Exploration 955 629 2,543 1,206 Interest and financing costs 142 223 1,157 988 Write-down of mineral properties - 12,089 - 27,218 ------------------------------------------------------------------------- 18,001 26,334 52,710 80,322 ------------------------------------------------------------------------- Net loss from operations (5,144) (14,250) (7,588) (35,229) Other income and expenses 307 210 815 1,252 ------------------------------------------------------------------------- Net loss for the period $ (4,837) $ (14,040) $ (6,773) $ (33,977) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic & fully diluted loss per share $ (0.15) $ (0.32) $ (0.20) $ (0.81) Weighted average shares outstanding 52,641,955 43,308,203 51,058,212 41,849,413 PAN AMERICAN SILVER CORP. Consolidated Statements of Cash Flows - Indirect Method For the twelve months ended December 31, 2003 and 2002 (in thousands of U.S. dollars) (Unaudited) Three months ended Twelve months ended December 31 December 31 2003 2002 2003 2002 ------------------------------------------------------------------------- (Restated) (Restated) Operating activities Net loss for the period $ (4,837) $ (14,040) $ (6,773) $ (33,977) Items not involving cash Depreciation and amortization 1,960 692 3,325 4,872 Reclamation 72 215 303 860 Operating cost provisions 477 (789) 1,326 (658) Gain on sale of marketable securities (153) - (318) - Stock-based compensation 2,871 572 2,871 572 Write-down of mineral properties - 12,089 - 27,218 Changes in non-cash operating working capital items (1,650) (566) (4,719) 371 ------------------------------------------------------------------------- (1,260) (1,827) (3,985) (742) ------------------------------------------------------------------------- Financing activities Shares issued for cash 2,713 113 8,351 22,759 Shares issue costs - (6) - (900) Proceeds from convertible debentures - - 86,250 - Convertible debenture issue costs (273) - (3,273) - Repayment of line of credit - (595) (125) (1,265) Proceeds from bank loans 1,500 - 9,500 - Repayment of bank loans and capital lease (270) (459) (1,639) (2,060) ------------------------------------------------------------------------- 3,670 (947) 99,064 18,534 ------------------------------------------------------------------------- Investing activities Mineral property, plant and equipment expenditures (5,207) (4,843) (16,851) (9,612) Investment and non-producing properties expenditures (514) (396) (1,383) (1,158) Acquisition of cash of subsidiary - - 2,393 - Purchases of marketable securities (74,772) - (74,607) - Other (565) 234 (625) (168) ------------------------------------------------------------------------- (81,058) (5,005) (91,073) (10,938) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents for the period (78,648) (7,779) 4,006 6,854 Cash and cash equivalents, beginning of period 92,839 17,964 10,185 3,331 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 14,191 $ 10,185 $ 14,191 $ 10,185 ------------------------------------------------------------------------- -------------------------------------------------------------------------