FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1

Name and Address of Company

Pan American Silver Corp. (“Pan American”)

1500 - 625 Howe Street
Vancouver, British Columbia
V6C 2T6

Item 2

Date of Material Change

February 16, 2006

Item 3

News Release

A press release was issued by Pan American on February 17, 2006 at Vancouver, British Columbia.

Item 4

Summary of Material Change

Pan American announced that it will restate its financial statements for the first three quarters of 2005 and the 2004 financial year.

Pan American announced that as of December 31, 2005 its proven and probable reserves of silver have increased by 21% in 2005.

Item 5

Full Description of Material Change

Pan American announced that it will restate its financial statements for the first three quarters of 2005 and the 2004 financial year.  The expected effect of these changes is a non-cash earnings increase of $2.0 million after tax for the nine months ended September 30, 2005 and an non-cash earnings decrease of $4.7 million after tax for 2004.  This restatement became necessary when Pan American concluded that its accounting treatment of its forward contracts for the sale of base metals (lead and zinc) and its forward contracts for purchasing Mexican pesos with US dollars do not technically qualify for hedge accounting under AcG-13, Hedging Relationships.

In 2003, Pan American implemented a hedge accounting policy for the accounting treatment of its base-metal forward contracts program.  Its external auditors, Deloitte and Touch LLP, reviewed the initial implementation and concurred with the hedge accounting treatment as reported since 2003.

This restatement represents a change in accounting treatment and has no economic impact on Pan American and its cash flows.  The details of Pan American’s base-metal forward contracts, which we have previously disclosed, have not changed and they

continue to serve Pan American as a prudent risk management tool. Pan American has not and will not hedge any of its silver production.

Pan American is now required to recognize mark-to-market valuations on 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. At December 31, 2005, Pan American had sold forward 13,400 tonnes of zinc at a weighted average price of $1,551 per tonne ($0.704 per pound).  These forward sales commitments for zinc represent approximately 37 per cent of Pan American’s forecast 2006 payable zinc production.  At December 31, 2005 mark-to-market value of the Pan American’s zinc forward contracts was a negative $4.3 million.

Pan American also mitigates the risk of strengthening local currencies relative to the US dollar.  As of December 31, 2005, Pan American had purchased 203 million Mexican pesos settling between January 2006 and June 2006 to match anticipated spending on the construction of Alamo Dorado at an average MXN/USD exchange rate of 11.26.  At December 31, 2005, the positive mark-to-market value of the Pan American’s position was $0.9 million. 

Pan American has completed its annual review of its silver reserves and resources. As of December 31, 2005 proven and probable reserves totaled 178 million ounces; measured and indicated resources totaled 185.3 million ounces; and inferred resources totaled 273.4 million ounces. Due to reserve increases at Pan American’s other properties, most notably at the Morococha mine in Peru, Pan American’s proven and probable reserves increased by 21% in 2005 or 30.5 million ounces, even after accounting for the La Colorada losses and reserve depletion of 15.2 million ounces due to 2005 mining activities.

The following table sets out the mineral reserves and resources of Pan American as of December 31, 2005.

Pan American will release its 2005 fourth quarter and year end financial and operating results, along with its restated financial statements, before market opening on February 23, 2006.

Item 6

Reliance on subsection 7.1(2) or (3) of National Instrument 51-102

Not Applicable.

Item 7

Omitted Information

No significant facts have been omitted from this report.

Item 8

Executive Officer

For further information, please contact:

Name:

Robert Pirooz

Office:

General Counsel

Telephone:

(604) 687-0333

Item 9

Date of Report

Dated at Vancouver, British Columbia this 17^th day of February, 2006.

"Signed"

Robert P. Pirooz
General Counsel