Financial and Operational Highlights Three months ended March 31 2002 2001 -------------------------------------------------------------------------------- Consolidated Financial Highlights (in thousands of US dollars) Net income (loss) ($1,303) ($1,541) Earnings (loss) per share (0.03) (0.04) Contribution from mining operations 997 (353) EBITDA (note 1) 392 (821) Capital spending 1,314 5,133 Exploration expense 83 152 Cash 19,921 3,531 Working capital $14,298 ($2,380) Note 1 - EBITDA is a non-GAAP performance measure, which is useful for evaluating current performance because it excludes the affect of past financing and investment decisions. It is calculated as net income (loss), plus interest expense plus depreciation and amortization. Consolidated Ore Milled & Metals Recovered to Concentrate Tonnes milled 299,871 153,038 Silver metal - ounces 2,065,503 886,183 Zinc metal - tonnes 10,107 5,659 Lead metal - tonnes 5,441 2,225 Copper metal - tonnes 669 306 Zinc concentrate produced - tonnes 18,593 9,737 Lead concentrate produced - tonnes 6,819 3,717 Copper concentrate produced - tonnes 2,800 1,580 Zinc concentrate sold - tonnes 18,990 9,259 Lead concentrate sold - tonnes 4,790 - Copper concentrate sold - tonnes 2,934 1,640 Net smelter return per tonne milled $41.33 $44.44 Cost per tonne 37.99 44.85 -------------------------------------------------------------------------------- Margin (loss) per tonne $ 3.34 $(0.41) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Consolidated Cost per Ounce of Silver (net of by-product credits) Total cash cost per ounce $3.84 $3.66 Total production cost per ounce $4.63 $4.58 Average Metal Prices Silver - LME Cash Settlement per ounce $4.49 $4.54 Zinc - LME Cash Settlement per pound $0.36 $0.46 Lead - LME Cash Settlement per pound $0.22 $0.22 Copper - LME Cash Settlement per pound $0.71 $0.80 Average Metal Prices Realized Silver - per ounce (note 2) $4.15 $4.16 Zinc - per pound $0.36 $0.46 Lead - per pound (note 3) $0.22 - Copper - per pound (note 2) $0.62 $0.71 Note 2 - Pan American pays a refining charge for silver and copper Note 3 - there were no lead sales during the first quarter of 2001. Mine Operations Highlights Quiruvilca Mine Three months ended March 31 2002 2001 Tonnes milled 135,148 153,038 Average silver grade - grams per tonne 191.5 201.8 Average zinc grade - percent 4.04% 4.11% Silver - ounces 728,619 886,183 Zinc - tonnes 4,888 5,659 Lead - tonnes 1,819 2,225 Copper - tonnes 288 306 Zinc concentrate produced - tonnes 8,404 9,737 Lead concentrate produced - tonnes 2,981 3,717 Copper concentrate produced - tonnes 1,273 1,580 Zinc concentrate sold - tonnes 6,997 9,259 Lead concentrate sold - tonnes (note 1) - - Copper concentrate sold - tonnes 1,365 1,640 Note 1 -- Quiruvilca did not sell any lead concentrate in these periods Net smelter return per tonne milled $36.93 $44.44 Cost per tonne 38.39 44.85 -------------------------------------------------------------------------------- Margin (loss) per tonne $(1.46) $(0.41) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total cash cost per ounce of silver produced $4.44 $3.66 Total production cost per ounce of silver produced $5.79 $4.58 Huaron Mine Three months ended March 31 2002 2001 Tonnes milled 149,100 - Average silver grade - grams per tonne 268.8 - Average zinc grade - percent 4.12% - Silver - ounces 1,146,309 - Zinc - tonnes 5,121 - Lead - tonnes 3,515 - Copper - tonnes 381 - Zinc concentrate produced - tonnes 9,997 - Lead concentrate produced - tonnes 6,496 - Copper concentrate produced - tonnes 1,527 - Zinc concentrate sold - tonnes 11,803 Lead concentrate sold - tonnes 4,467 Copper concentrate sold - tonnes 1,569 Net smelter return per tonne milled $44.82 - Cost per tonne 35.57 - -------------------------------------------------------------------------------- Margin (loss) per tonne $ 9.25 - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total cash cost per ounce of silver produced $3.17 - Total production cost per ounce of silver produced $3.61 - La Colorada Mine Three months ended March 31 2002 2001 Tonnes milled 15,623 - Average silver grade - grams per tonne 434.0 - Silver - ounces 190,575 - Zinc - tonnes 98 - Lead - tonnes 107 - Zinc concentrate produced - tonnes 192 - Lead concentrate produced - tonnes 323 - Zinc concentrate sold - tonnes 190 - Lead concentrate sold - tonnes 323 - Net smelter return per tonne milled $46.09 - Cost per tonne 57.59 - -------------------------------------------------------------------------------- Margin (loss) per tonne $(11.50) - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total cash cost per ounce of silver produced $5.64 - Total production cost per ounce of silver produced $6.30 - PAN AMERICAN SILVER CORP. Consolidated Balance Sheets (Unaudited - in thousands of U.S. dollars) March 31 December 31 2002 2001 ASSETS Current Cash and cash equivalents $ 19,921 $ 3,331 Short-term investments 513 513 Accounts receivable 3,387 6,037 Inventories 6,282 4,655 Prepaid expenses 5,474 6,534 -------------------------------------------------------------------------------- Total Current Assets 35,577 21,070 Property, plant and equipment, net 65,940 66,659 Mineral properties 3,778 1,785 Other assets 2,003 2,003 -------------------------------------------------------------------------------- Total Assets $ 107,298 $ 91,517 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LIABILITIES Current Operating line of credit $ 1,500 $ 1,390 Accounts payable and accrued liabilities 11,931 12,283 Advances for concentrate shipments 4,196 4,071 Current portion of bank loans 2,209 2,209 Current portion of severance indemnity and commitments 838 547 Current portion of deferred revenue 605 643 -------------------------------------------------------------------------------- Total Current Liabilities 21,279 21,143 Deferred revenue 1,850 1,850 Bank loans 4,752 5,010 Provision for reclamation 2,310 2,112 Severance indemnity and commitments 1,904 2,525 -------------------------------------------------------------------------------- Total Liabilities 32,095 32,640 -------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Share capital Authorized: 100,000,000 common shares of no par value Issued: December 31, 2001 - 37,628,234 common shares March 31, 2002 - 41,510,445 common shares 148,361 130,723 Additional paid in capital 1,111 1,120 Deficit (74,269) (72,966) -------------------------------------------------------------------------------- Total Shareholders' Equity 75,203 58,877 -------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $ 107,298 $ 91,517 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements PAN AMERICAN SILVER CORP. Consolidated Statements of Operations and Deficit For the three months ended March 31, 2002 and 2001 (Unaudited - in thousands of U.S. dollars, except for shares and per share amounts) 2002 2001 Revenue $ 10,199 $ 4,541 Expenses Operating 9,202 4,894 General and administration 359 505 Depreciation and amortization 1,429 708 Reclamation 198 115 Exploration 83 152 Interest expense 266 11 Other expenses (income) (35) (303) -------------------------------------------------------------------------------- 11,502 6,082 -------------------------------------------------------------------------------- Net loss from operations for the period (1,303) (1,541) Deficit, beginning of period (72,966) (64,889) -------------------------------------------------------------------------------- Deficit, end of period $ (74,269) $ (66,430) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Loss per share - Basic and Fully Diluted $ (0.03) $ (0.04) Weighted average shares outstanding 38,603,987 34,381,234 See accompanying notes to consolidated financial statements PAN AMERICAN SILVER CORP. Consolidated Statements of Cash Flows - Direct Method For the three months ended March 31, 2002 and 2001 (Unaudited - in thousands of U.S. dollars) 2002 2001 Operating activities Sales proceeds $ 12,380 $ 8,353 Hedging activities 313 22 Interest paid (266) (11) Other income and expenses 36 286 Products and services purchased (10,406) (5,189) Exploration (77) (157) General and administration (348) (451) -------------------------------------------------------------------------------- 1,632 2,853 -------------------------------------------------------------------------------- Financing activities Proceeds from (repayments of) bank loans (258) (1,729) Proceeds from (repayments of) operating line of credit 110 - Shares issued for cash 17,251 - Share issue costs (792) - -------------------------------------------------------------------------------- 16,311 (1,729) -------------------------------------------------------------------------------- Investing activities Property, plant and equipment expenditures (710) (47) Mineral property expenditures (604) (5,086) Short-term investments (purchases) sales - (3) Other (39) (1) -------------------------------------------------------------------------------- (1,353) (5,137) -------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents for the period 16,590 (4,013) Cash and cash equivalents, beginning of period 3,331 7,544 -------------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 19,921 $ 3,531 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Supplemental disclosure on non-cash transaction Shares issued for acquisition of mineral property $ 1,250 $ - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements PAN AMERICAN SILVER CORP. Consolidated Statements of Cash Flows - Indirect Method For the three months ended March 31, 2002 and 2001 (Unaudited - in thousands of U.S. dollars) 2002 2001 Operating activities Net loss for the period $ (1,303) $ (1,541) Items not involving cash Depreciation and amortization 1,429 708 Reclamation 198 115 Operating cost provisions (260) 187 -------------------------------------------------------------------------------- 64 (531) Changes in non-cash operating working capital items 1,568 3,384 -------------------------------------------------------------------------------- Cash provided (used in) by operations 1,632 2,853 -------------------------------------------------------------------------------- Financing activities Proceeds from (repayments of) bank loans (258) (1,729) Proceeds from (repayments of) operating line of credit 110 - Shares issued for cash 17,189 - Share issue costs (730) - -------------------------------------------------------------------------------- 16,311 (1,729) -------------------------------------------------------------------------------- Investing activities Property, plant and equipment (additions) disposals (710) 21 Mineral property expenditures (743) (3,645) Changes in non-cash working capital items 139 (1,509) Short-term investments (purchases) sales - (3) Other (39) (1) -------------------------------------------------------------------------------- (1,353) (5,137) -------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents for the period 16,590 (4,013) Cash and cash equivalents, beginning of period 3,331 7,544 -------------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 19,921 $ 3,531 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Supplemental disclosure on non-cash transaction Shares issued for acquisition of mineral property $ 1,250 $ - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements