La Colorada expansion set to come in under budget

A US$20mn project to expand the La Colorada silver mine in west-central Mexico is due to come in under budget and on time, a spokesperson for owner Vancouver-based Pan American Silver (TSX: PAA) told BNamericas. "We don't have the final budget numbers yet but we expect investment to come in closer to US$19mn," said the official, Pan American VP of corporate relations Brenda Radies. The expansion will be up and running in July and take a few months to hit its regular annualized rate, said Radies. The official opening ceremony is scheduled for October. Once complete, the mine is expected to produce 800t/d for average annual output of 3.8Moz silver over eight years. Construction work, begun in July last year, is already complete and the company is now fine-tuning the operation to make sure the ore goes through the mill correctly, Radies said. The La Colorada expansion project has involved adding a 600t/d oxide ore treatment circuit to the existing 200t/d sulfide mill. Pan American Silver has footed half of the project's capital costs while the World Bank's IFC arm has provided a loan to cover the remainder. In the first quarter of 2003, production from the small-scale sulfide operation at the mine was 200,000oz of silver. Last year output was 626,035oz of silver, 333t of zinc and 316t of lead from 50,662t of ore milled. Including the expansion, production for 2003 is estimated at 2.3Moz of silver, 518t of zinc and 595t of lead at projected total cash costs of US$3.03/oz silver. La Colorada has proven and probable reserves of 2.64Mt grading 455g/t silver, containing 38.6Moz of silver plus by-products. It has an additional resource of 1.71Mt grading 259g/t for 14.2Moz silver in the measured and indicated category. About three-quarters of the project's reserves are made up of oxidized ore, discovered by Pan American in late 1999.