EX-99.1 2 q22004financials.htm FINANCIAL STATEMENTS FROM SECOND QUARTER 2004 CC Filed by Filing Services Canada Inc. 403-717-3898

 

RESTATED

 

PAN AMERICAN SILVER CORP.

Consolidated Balance Sheets

(in thousands of US dollars)

 

 June 30

 December 31

 

 2004

 2003

(Restated - note 3)

 

ASSETS

 (Unaudited)

(Audited)

Current

  

  Cash and cash equivalents

 $        53,979

 $        14,191

  Short-term investments

           64,757

           74,938

  Accounts receivable, net of $nil provision for doubtful accounts

           10,322

             7,545

  Inventories

             5,777

             6,612

  Deferred loss and unrealized gain on commodity contracts

               408

 -

  Prepaid expenses

             2,319

             1,289

Total Current Assets

         137,562

         104,575

Mineral property, plant and equipment - note 4

           85,766

           83,574

Investment and non-producing properties - note 5

           84,434

           83,873

Direct smelting ore

             3,436

             3,901

Other assets

             4,826

             3,960

Total Assets

 $      316,024

 $       279,883

 

 

 

LIABILITIES

 

 

Current

 

 

  Accounts payable and accrued liabilities

 $          9,135

 $        10,525

  Advances for metal shipments

             2,632

             4,536

  Current portion of bank loans and capital lease - note 7

                 14

             2,639

  Current portion of other non-current liabilities

               426

             4,948

Total Current Liabilities

           12,207

           22,648

Deferred revenue

               780

                865

Bank loans and capital lease - note 7

               332

           10,803

Liability component of convertible debentures - note 6

               187

           19,116

Provision for asset retirement obligation and reclamation

           21,202

           21,192

Provision for future income tax

           19,035

           19,035

Severance indemnities and commitments

             3,158

             2,126

Total Liabilities

           56,901

           95,785

 

 

 

SHAREHOLDERS' EQUITY

 

 

Share capital

 

 

  Authorized: 100,000,000 common shares with no par value

 

 

  Issued:

 

 

     December 31, 2003 - 53,009,851 common shares

 

 

     June 30, 2004 - 66,638,380 common shares

         377,091

         225,154

Equity component of convertible debentures - note 6

               690

           66,735

Additional paid in capital

           11,858

           12,752

Deficit

        (130,516)

        (120,543)

Total Shareholders' Equity

         259,123

         184,098

Total Liabilities and Shareholders' Equity

 $      316,024

 $       279,883

   

See accompanying notes to consolidated financial statements






PAN AMERICAN SILVER CORP.

Consolidated Statements of Operations

(Unaudited - in thousands of US dollars)

     
 

Three months ended

Six months ended

 

June 30,

June 30,

 

2004

2003

2004

2003

(Restated - note 3)

(Note 2)

(Restated - note 3)

(Note 2)

Revenue

 $        21,179

 $       12,553

 $        36,887

 $        20,375

Expenses

 

 

 

 

  Operating

           16,531

          11,333

           27,699

            18,762

  General and administration

             1,202

               582

             2,005

                983

  Depreciation and amortization

             2,008

               462

             4,153

                933

  Stock-based compensation

                684

               714

             1,124

             1,201

  Reclamation

                301

                77

                603

                156

  Exploration and development

             1,137

               492

             1,665

                988

  Interest

                289

               178

                757

                337

 

           22,152

          13,838

           38,006

            23,360

 

 

 

 

 

Loss from operations

              (973)

          (1,285)

           (1,119)

            (2,985)

Gain on sale of concessions (note 4)

             3,583

                 -   

             3,583

                  -   

Debt settlement expenses

           (1,311)

                 -   

           (1,311)

                  -   

Gain (loss) on commodity contracts

             1,836

-

              (378)

-

Other income

                217

               129

                554

                238

Net income (loss) for the period

 $          3,352

 $       (1,156)

 $          1,329

 $          (2,747)

 

 

 

 

 

Loss per share - note 8

 $          (0.09)

 $         (0.02)

 $          (0.17)

 $           (0.05)

 

 

 

 

 

Weighted average number of shares outstanding

    65,073,833

   51,947,530

    59,564,028

     50,849,874

     

 See accompanying notes to consolidated financial statements







 

PAN AMERICAN SILVER CORP..

 

Consolidated Statements of Cash Flows

 

(Unaudited - in thousands of US dollars)

     
 

Three months ended

Six months ended

 

June 30,

June 30,

 

2004

2003

2004

2003

Operating activities

(Restated - note 3)

 

(Restated - note 3)

 

Net income (loss) for the period

 $       3,352

 $  (1,156)

 $     1,329

 $   (2,747)

Reclamation expenditures

          (230)

           -   

         (592)

             -   

Gain on sale of concessions

       (3,583)

            -   

      (3,583)

             -   

Items not involving cash

 

 

 

 

  Depreciation and amortization

         2,008

         462

        4,153

           933

  Interest accretion on convertible debentures

              97

            -   

          366

             -   

  Stock-based compensation

            684

         714

        1,124

        1,201

  Debt settlement expenses

         1,208

            -   

        1,208

             -   

  Compensation expense

            245

            -   

          245

             -   

  Asset retirement and reclamation accretion

            301

           77

          603

           156

  Unrealized loss on commodity contracts

       (2,065)

-

         (408)

-

  Operating cost provisions

            358

         146

          853

           499

  Changes in non-cash working capital items

       (1,880)

     (3,389)

      (5,196)

      (2,840)

 

            495

     (3,146)

          102

      (2,798)

 

 

 

 

 

Financing activities

 

 

 

 

  Shares issued for cash

            943

       1,975

      61,005

        2,698

  Shares issue costs

            (96)

            (7)

         (180)

             (7)

  Convertible debentures payments

     (11,213)

            -   

    (13,520)

             -   

  Capital lease repayment

            (75)

          (75)

           (75)

           (75)

  Proceeds from bank loans

              -   

       4,000

             -   

        8,000

  Repayment of bank loans

     (12,614)

        (406)

    (13,021)

         (938)

 

     (23,055)

       5,487

      34,209

        9,678

 

 

 

 

 

Investing activities

 

 

 

 

  Mineral property, plant and equipment expenditures

       (2,665)

     (3,648)

      (6,008)

      (8,063)

  Investment and non-producing property expenditures

          (318)

        (255)

         (554)

         (377)

  Acquisition of cash of subsidiary

              -   

            -   

             -   

        2,393

  Proceeds from sale of concessions

        3,583

            -   

        3,583

             -   

  Proceeds from sale of marketable securities

      10,434

            -   

      10,456

             -   

  Other

      (2,000)

        139

       (2,000)

           120

 

        9,034

   (3,764)

        5,477

       (5,927)

 

 

 

 

 

(Decrease) increase in cash and cash equivalents during the period

    (13,526)

   (1,423)

      39,788

           953

Cash and cash equivalents, beginning of period

      67,505

   12,561

      14,191

      10,185

Cash and cash equivalents, end of period

 $   53,979

 $11,138

 $   53,979

 $   11,138

 

 

 

 

 

Supplemental disclosure of non-cash financing and investing activities

 

 

  Shares issued for compensation

 $        245

 $         -   

 $        245

 $          -   

  Shares issued for acquisition of subsidiary

              -   

            -   

             -   

      64,228

  Shares issued for conversion of convertible debentures

        88,848

            -   

      88,848

             -   

See accompanying notes to consolidated financial statements







PAN AMERICAN SILVER CORP.

Consolidated Statements of Shareholders' Equity

For the six months ended June 30, 2004

(Unaudited - in thousands of US dollars, except for shares)

       
    

Additional

  
 

Common shares

Convertible

 Paid in

  

 

 Shares

 Amount

Debentures

 Capital

 Deficit

 Total

       

Balance, December 31, 2002

43,883,454

 $   161,108

 $                -   

$       1,327

$  (106,943)

 $      55,492

  Stock-based compensation

                   -   

              -   

                -   

       2,871

                 -   

     2,871

  Exercise of stock options

    1,385,502

           9,312

                   -   

        (1,471)

                   -   

            7,841

  Exercise of share purchase warrants

        100,943

              509

                   -   

                 -   

                   -   

               509

  Issued on acquisition of Corner Bay

      

     Silver Inc.

    7,636,659

        54,203

                   -   

                 -   

                   -   

          54,203

  Fair value of stock options granted

                   -   

                  -   

                   -   

          1,136

                   -   

            1,136

  Fair value of share purchase warrants

                   -   

                  -   

                   -   

          8,889

                   -   

            8,889

  Issue of convertible debentures

                   -   

                  -   

          63,201

                 -   

                   -   

          63,201

  Accretion of convertible debentures

                   -   

                  -   

            3,534

                 -   

          (3,534)

                   -   

  Convertible debenture issue costs

                   -   

                  -   

                   -   

                 -   

          (3,272)

          (3,272)

  Issued as compensation

            3,293

                22

                   -   

                 -   

                   -   

                  22

  Net loss for the year

                   -   

                  -   

                   -   

                 -   

          (6,794)

          (6,794)

Balance, December 31, 2003

  53,009,851

      225,154

          66,735

        12,752

     (120,543)

       184,098

  Stock-based compensation

                   -   

                  -   

                   -   

          1,124

                   -   

            1,124

  Exercise of stock options

        603,695

           6,106

                   -   

        (2,018)

                   -   

            4,088

  Exercise of share purchase warrants

        539,834

           1,918

                   -   

                 -   

                   -   

            1,918

  Shares issued for cash

    3,333,333

        55,000

                   -   

                 -   

                   -   

          55,000

  Shares issue costs

                   -   

            (180)

                   -   

                 -   

                   -   

              (180)

  Shares issued on conversion of

     

                   -   

      convertible debentures (note 6)

    9,135,043

        88,848

        (68,883)

                 -   

          (8,464)

          11,501

  Issued as compensation

          16,624

              245

                   -   

                 -   

                   -   

               245

  Accretion of convertible debentures

                   -   

                  -   

            2,838

                 -   

          (2,838)

                   -   

  Net income for the period (Restated)

                   -   

                  -   

                   -   

                 -   

            1,329

            1,329

Balance, June 30, 2004

  66,638,380

 $   377,091

$            690

 $    11,858

$  (130,516)

 $    259,123

       

See accompanying notes to consolidated financial statements



Pan American Silver Corp.

Notes to Unaudited Interim Consolidated Financial Statements

As at June 30, 2004 and 2003 and for the three months and six months then ended

(Tabular amounts are in thousands of US dollars, except for shares)



1.

Basis of presentation


These unaudited interim consolidated financial statements are expressed in United States dollars and are prepared in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”), which are more fully described in the annual audited consolidated financial statements for the year ended December 31, 2003 which is included in the Company’s 2003 Annual Report.  These statements do not include all of the disclosures required by Canadian GAAP for annual financial statements.  Certain comparative figures have been reclassified to conform to the current presentation.  Significant differences from United States generally accepted accounting principles are described in note 10.


In management’s opinion, all adjustments necessary for fair presentation have been included in these financial statements.


2.

Change in accounting policies (Restated)


a)

During the fourth quarter 2003 the Company changed its accounting policy, retroactive to January 1, 2002, in accordance with recommendation of CICA 3870, “Stock-based Compensation and Other Stock-based Payments”.  As permitted by CICA 3870, the Company has applied this change retroactively for new awards granted on or after January 1, 2002.  Stock-based compensation awards are calculated using the Black-Scholes option pricing model.  Previously, the Company used the intrinsic value method for valuing stock-based compensation awards granted to employees and directors where compensation expense was recognized for the excess, if any, of the quoted market price of the Company’s common shares over the common share exercise price on the day that options were granted.


Using the fair value method for stock-based compensation, the Company recorded an additional charge to earnings of $1,124,000 for the six months ended June 30, 2004 (six months ended June 30, 2003 - $1,201,000) for stock options granted to employees and directors.  The fair value of the stock options granted during the six months ended June 30, 2004 was determined using an option pricing model assuming no dividends were paid, a weighted average volatility of the Company’s share price of 58 per cent, weighted average expected life of 3.5 years and weighted average annual risk free rate of 4.03 per cent.


b)

During the fourth quarter of 2003, the Company changed its accounting policy on a retroactive basis with respect to accounting and reporting for obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and the normal operation of long-lived assets.  The Company adopted CICA 3110 “Asset Retirement Obligations” whereby the fair value of the liability is initially recorded and the carrying value of the related asset is increased by the corresponding amount.  The liability is accreted to its present value and the capitalized cost is amortized over the useful life of the related asset.  The change in accounting policy did not have a significant impact on reported results of operations in any period presented.


c)

Effective January 1, 2004, the Company adopted the CICA Accounting Guideline 13, Hedging Relationships ("AcG-13").  AcG-13 specifies the conditions under which hedge accounting is appropriate and includes requirements for the identification, documentation and designation of hedging relationships, sets standards for determining hedge effectiveness, and establishes criteria for the discontinuance of hedge accounting.  The adoption of AcG-13 had the effect of increasing unrealized loss on commodity contracts and deferred loss on commodity contracts by $1.5 million, as of January 1, 2004.





Pan American Silver Corp.

Notes to Unaudited Interim Consolidated Financial Statements

As at June 30, 2004 and 2003 and for the three months and six months then ended

(Tabular amounts are in thousands of US dollars, except for shares)



3.

Restatement


In 2004, Pan American implemented a hedge accounting policy for the accounting treatment of its base-metal forward contracts program.  In the fourth quarter of 2005 it was concluded that the Company’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 do not qualify for hedge accounting under AcG-13, Hedging Relationships.  As a result, Pan American has restated its unaudited consolidated financial statements for each quarter from March 31, 2004 to September 30, 2005.


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.  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.  The effects of the change in accounting treatment are summarized in the tables below:


 

 As Previously Reported

 As Restated

 

June 30

June 30

 

2004

2004

Consolidated Balance Sheets

  
   

Deferred loss and unrealized gain on commodity contracts

$

-

$

408

Deficit

$

(130,924)

$

(130,516)



 

As Previously Reported

As Restated

Consolidated Statement of Operations

Three Month Ended

Three Month Ended

 

June 30, 2004

June 30, 2004

  


 


Revenue

$

20,950

$

21,179

Mine operating earnings

$

2,411

$

2,640

Gain on commodity contracts

$

-

$

1,836

Net income for the period

$

1,287

$

3,352

Adjusted net loss for the period attributable to common shareholders

$

(7,895)

$

(5,830)

Basic and diluted loss per share

$

(0.12)

$

(0.09)



 

As Previously Reported

As Restated

Consolidated Statement of Operations

Six Month Ended

Six Month Ended

 

June 30, 2004

June 30, 2004

Revenue

$

36,101

$

36,887

Mine operating earnings

$

4,249

$

5,035

Loss on commodity contracts

$

-

$

(378)

Net income for the period

$

921

$

1,329

Adjusted net loss for the period attributable to common shareholders

$

(10,381)

$

(9,973)

Basic and diluted loss per share

$

(0.17)

$

(0.17)






Pan American Silver Corp.

Notes to Unaudited Interim Consolidated Financial Statements

As at June 30, 2004 and 2003 and for the three months and six months then ended

(Tabular amounts are in thousands of US dollars, except for shares)



4.

Mineral property, plant and equipment


Mineral property, plant and equipment consist of:


 

June 30, 2004

 

December 31, 2003

  

Accumulated

   

Accumulated

 
 

Cost

Amortization

Net

 

Cost

Amortization

Net

Mineral properties

  La Colorada mine, Mexico

 $4,153 

 $-   

 $4,153 

 

 $4,153 

 $-   

 $4,153 

  Huaron mine, Peru

 1 

 -   

 1 

 

 1 

 -   

 1 

 

 4,154 

 -   

 4,154 

 

 4,154 

 -   

 4,154 

        

Plant and equipment

  La Colorada mine, Mexico

 12,446 

 (756)

 11,690 

 

 10,332 

 (360)

 9,972 

  Huaron mine, Peru

 14,417 

 (4,083)

 10,334 

 

 14,417 

 (3,426)

 10,991 

  Quiruvilca mine, Peru

 15,410 

 (15,410)

 -   

 

 15,410 

 (15,410)

 -   

  Other

 3,229 

 (540)

 2,689 

 

 3,161 

 (503)

 2,658 

 

 45,502 

 (20,789)

 24,713 

 

 43,320 

 (19,699)

 23,621 

        

Mine development and others

  La Colorada mine, Mexico

 33,030 

 (2,337)

 30,693 

 

 31,892 

 (1,113)

 30,779 

  Huaron mine, Peru

 35,500 

 (9,294)

 26,206 

 

 32,820 

 (7,800)

 25,020 

  Quiruvilca mine, Peru

 10,046 

 (10,046)

 -   

 

 10,046 

 (10,046)

 -   

 

 78,576 

 (21,677)

 56,899 

 

 74,758 

 (18,959)

 55,799 

        
 

 $128,232 

 $(42,466)

 $85,766 

 

 $122,232 

 $(38,658)

 $83,574 



On June 28, 2004 the Company completed the sale of certain surface properties and mineral concessions to Barrick Gold Corporation for $3,583,000.  Due to the write-off of the Quiruvilca mine in 2002 these properties and concessions had a $nil carrying value and recognized a gain of $3,583,000.


5.

Investment and non-producing properties


Acquisition costs of mineral development properties together with costs directly related to mine development expenditures are deferred.  Exploration expenditures on investment properties are charged to operations in the period they are incurred.


Investment and non-producing properties consists of:


June 30

 December 31

  

2004

2003

Investment properties

  Waterloo, USA

 $1,000 

 $1,000 

  Tres Cruces, Hog Heaven and others

 785 

 785 

  

 1,785 

 1,785 

Non-producing properties

  Alamo Dorado, Mexico

 80,637 

 80,076 

  Manantial Espejo, Argentina

 2,012 

 2,012 

  

 82,649 

 82,088 

  

 $84,434 

 $83,873 



Pan American Silver Corp.

Notes to Unaudited Interim Consolidated Financial Statements

As at June 30, 2004 and 2003 and for the three months and six months then ended

(Tabular amounts are in thousands of US dollars, except for shares)



6.

Convertible debentures


In 2003 the Company completed an offering of $86,250,000 convertible, unsecured senior subordinated debentures (the “Debentures), which mature on July 31, 2009.  The Debentures bear interest at a rate of 5.25 per cent per annum, payable semi-annually on January 31 and July 31 of each year, beginning on January 31, 2004.  The Company has the option to discharge interest payments from the proceeds on the sale of common shares of the Company issued to a trustee for the purposes of converting such shares into cash.


In March 2004 the Company announced the terms of an offer (the “Offer”), which was open between April 7, 2004 and May 21, 2004, to induce the holders of the Debentures to convert their holdings into 106.929 common shares of the Company plus cash of $131.25 for every $1,000 principal amount of the Debentures.  Pursuant to this Offer the Company issued 9,135,043 common shares and made cash payments totaling $11,213,000 to the holders of $85,431,000 principal amount of the Debentures which accepted the Company’s offer for conversion.  Debt settlement expenses of $1,311,000 for interest, professional and other fees have been charged to earnings.


7.

Bank loans


During the second quarter of 2004, the Company repaid both its Huaron pre-production and La Colorada project loan facilities by making payments totaling $12,614,000.


The La Colorada project loan with the International Financial Corporation stipulates that the Company will be required to make an additional payment on the May 15th of each year until 2009 if the average price of silver for the preceding calendar year exceeded $4.75 per ounce.  Such payment would be equal to 20 per cent of the positive difference between the average price of silver for the year and $4.75 multiplied by the number of ounces of silver produced divided by $9,500,000 and multiplied by the scheduled loan balance at the end of the year.  As at June 30, 2004, the Company has accrued $358,000 with respect to this additional payment.  This additional payment is treated as a royalty for accounting purposes and had been recorded as a reduction against our metal sales.


8.

Share capital


During the six-month period ended June 30, 2004 the Company:


i)

issued 9,135,043 common shares at a value of $88,848,000 to the holders of $85,431,000 principal amount, senior subordinated convertible debentures to induced conversion of the convertible debentures;

ii)

issued 3,333,333 common shares at $16.50 per share, for net proceeds of $54,820,000, after legal, accounting and other fees;

iii)

issued 603,695 common shares for proceeds of $4,088,000 in connection with the exercise of employees and directors stock options;

iv)

issued 539,834 common shares for proceeds of $1,918,000 in connection with the exercise of share purchase warrants; and

v)

issued 16,624 common shares at a value of $245,000 for compensation expense.



Pan American Silver Corp.

Notes to Unaudited Interim Consolidated Financial Statements

As at June 30, 2004 and 2003 and for the three months and six months then ended

(Tabular amounts are in thousands of US dollars, except for shares)



The following table summarizes information concerning stock options outstanding as at June 30, 2004:


  

Options Outstanding

Options Exercisable

Range of Exercise Prices

Year of Expiry

Number Outstanding as at June 30, 2004

Weighted Average Remaining Contractual Life (months)

Number Exercisable as at June 30, 2004

Weighted Average Exercise Price

$3.39 - $6.90

2004

5,036

 1.70

5,036

$6.88

$8.95

2005

44,077

 8.10

44,077

$8.95

$3.73 - $7.27

2006

134,666

 22.52

98,000

$4.69

$7.21 - $7.53

2007

404,000

 40.95

370,000

$7.49

$6.64 - $10.76

2008

574,231

 48.49

69,231

$7.43

$12.31 - $16.79

2009

382,000

 56.38

142,000

$13.87

$3.73

2010

222,000

 77.60

222,000

$3.73

  

1,766,010

49.01

950,344

$8.37


During the six months ended June 30, 2004, the Company recognized $1,124,000 of stock compensation expense consisting of $563,000 for options issued in 2004 and $561,000 for options issued in 2003.


As at June 30, 2004 there were warrants outstanding to allow the holders to purchase 3,814,662 common shares of the Company at Cdn$12.00 per share.  These warrants expire on February 20, 2008.


9.

Loss per share (Restated)


The following table presents the adjustments to net income (loss) to arrive at the net loss available to common shareholders in computing basic loss per share.


    Three months 

Six months 
      ended   

ended  
    June 30, 

June 30, 
   

 2004 

   2003    2004    2003 
        (Note 2)        (Note 2) 
Net income (loss) for the period  $  3,352  $  (1,156)  $  1,329  $  (2,747) 
Adjustments:                 
Charges relating to conversion of                 
 convertible debentures    (8,464)    -    (8,464)    - 
Accretion of convertible, unsecured senior                 
 subordinated debentures    (718)    -    (2,838)    - 
Adjusted net loss for purpose of                 
 determining basic loss per share  $  (5,830)  $  (1,156)  $  (9,973)  $  (2,747) 
Loss per share  $  (0.09)  $  (0.02)  $  (0.17)  $  (0.05) 

 

 

For the six months ended June 30, 2004, potentially dilutive securities totaling 5,666,252 shares (2003 – 6,723,475) have been excluded from the calculation, as their effect would be anti-dilutive.


Pan American Silver Corp.

Notes to Unaudited Interim Consolidated Financial Statements

As at June 30, 2004 and 2003 and for the three months and six months then ended

(Tabular amounts are in thousands of US dollars, except for shares)


 

 

 

10.

Segmented information (Restated)


Substantially all of the Company’s operations are within the mining sector, conducted through operations in six countries.  Due to differences between mining and exploration activities, the Company has a separate budgeting process and measures the results of operations and exploration activities independently.  The Corporate office provides support to the mining and exploration activities with respect to financial, human resources and technical support.


Segmented disclosures and enterprise-wide information are as follows:



 

For the three months ended June 30, 2004



Mining

Corporate

Office

Exploration & Development


Total

Revenue from external customers

$

21,757

$

(578)

$

-

$

21,179

Net income (loss) for the period

5,736

(1,440)

(944)

3,352

Segmented assets

$

114,688

$

111,852

$

89,484

$

316,024



 

For the three months ended June 30, 2003

(Note 2)



Mining

Corporate

Office

Exploration & Development


Total

Revenue from external customers

$

12,553

$

-

$

-

$

12,553

Net income (loss) for the period

367

(1,260)

(263)

(1,156)

Segmented assets

$

93,409

$

7,673

$

86,290

$

187,372



 

For the six months ended June 30, 2004



Mining

Corporate

Office

Exploration & Development


Total

Revenue from external customers

$

38,152

$

(1,265)

$

-

$

36,887

Net income (loss) for the period

7,018

(4,241)

(1,448)

1,329

Segmented assets

$

114,688

$

111,852

$

89,484

$

316,024



 

For the six months ended June 30, 2003

(Note 2)



Mining

Corporate

Office

Exploration & Development


Total

Revenue from external customers

$

20,375

$

-

$

-

$

20,375

Net loss for the period

(14)

(2,124)

(609)

(2,747)

Segmented assets

$

93,409

$

7,673

$

86,290

$

187,372





Pan American Silver Corp.

Notes to Unaudited Interim Consolidated Financial Statements

As at June 30, 2004 and 2003 and for the three months and six months then ended

(Tabular amounts are in thousands of US dollars, except for shares)



11.

Subsequent event


As previously announced on February 9, 2004 the Company has launched its $36,700,000 cash offer, through the Peru Stock Exchange, to purchase the voting shares of Compania Minera Argentum S.A. (“Argentum”).  Argentum’s principal asset is the Morococha silver mine located in central Peru, 150 kilometres northeast of Lima.  The Company has a lock-up agreement to acquire 92 per cent of Argentum’s voting shares.  The offer is expected to close in the third quarter 2004.


In addition, the Company has acquired, for $1,500,000, 100 per cent of Compania Minera Natividad (“Natividad”), which holds numerous adjacent mineral concessions in proximity to the Morococha mine.  The Company intends to combine Natividad with Argentum, which will give the Company an 81 per cent interest in the Morococha silver mine.