ex99_1.htm

Fourth Quarter 2008 Highlights (unaudited)1
· · · · · ·	4.6 million ounces of silver produced Cash costs of $8.242 per payable ounce of silver Net loss of $33.3 million or $0.41 per share, including $35.4 million in atypical charges for the write down of the Quiruvilca mine, pricing adjustments, severance costs and currency losses Cash flow used by operations was $(4.9) million Adjusted cash flow from operations3 was positive $4.2 million Manantial Espejo commenced silver-gold dore production December 29, 2008 San Vicente expansion 92% complete at year end
2008 Year-End Highlights (unaudited)1
· · · · · · ·	Record annual silver production of 18.7 million ounces, 13th consecutive year of growth Cash costs of $5.962 per payable ounce of silver Net earnings of $24.6 million or $0.31 per share Record cash flows generated by operating activities of $93.0 million Adjusted cash flow from operations3 of $95.6 million Record sales of $338.6 million Proven and probable reserves of 223.7 million ounces of silver and 701,000 ounces of gold at year end
2009 Outlook
· · · · ·	Silver production to increase by 15% to 21.5 million ounces Gold output to more than double to 85,000 ounces Manantial Espejo to reach commercial production during the first quarter San Vicente expansion to be commissioned and ramp up to full capacity by end of the 2nd quarter $103.5 million raised in February through 6.4 million equity share financing

2 Cash costs per payable ounce of silver is a non GAAP measure. The Company believes that, in addition to cost of sales, cash costs per ounce is a useful and complementary benchmark for performance and is well understood and widely reported in the silver mining industry. However, cash costs per ounce does not have a standardized meaning prescribed by Canadian GAAP. Investors are cautioned that cash costs per ounce should not be construed as an alternative to cost of sales determined in accordance with Canadian GAAP as an indicator of performance. The Company’s method of calculating cash costs per ounce may differ from the methods used by other entities and, accordingly, the Company’s cash costs per ounce may not be comparable to similarly titled measures used by other entities. See “Financial and Operating Highlights” below for a reconciliation of this measure to the Company’s cost of sales.

3 Adjusted cash flow from operations is a non-GAAP measure. The Company believes that, in addition to cash flow, adjusted cash flow is a useful and complementary performance measure. However, adjusted cash flow does not have a standardized meaning prescribed by Canadian GAAP. Investors are cautioned that adjusted cash flow should not be construed as an alternative to cash flow determined in accordance with Canadian GAAP as an indicator of performance. The Company’s method of calculating adjusted cash flow may differ from the methods used by other entities and, accordingly, the Company’s adjusted cash flow may not be comparable to similarly titled measures used by other entities. See “Financial and Operating Highlights” below for a reconciliation of this measure to the Company’s cash flow (used in) generated by operating activities.

Commenting on today’s announcement, Geoff Burns, President and CEO said: “As announced in early January, the fourth quarter of 2008 was a very challenging period for the mining industry and for Pan American. We found ourselves on the wrong side of a strengthening US dollar, base metal prices fell precipitously and consequently operating costs reached all-time highs. However, we responded accordingly and made some difficult decisions with respect to our assets and our people and we are already starting to see the benefits of these actions. I’m happy to be able to report that in January of this year we produced 1.7 million ounces of silver at a cash cost of $5.97 per ounce. That’s a 28% improvement over our fourth quarter’s cash costs and in line with what we are expecting in 2009.”

During the fourth quarter of 2008, Pan American reported a consolidated net loss of ($33.3) million or ($0.41) per share. As previously announced, a number of atypical charges registered during the quarter negatively affected the Company’s financial results. These include (i) a one-time non-cash charge of $15.1 million for the write down of the Quiruvilca mine, (ii) an $8.8 million charge for final price adjustments of concentrate shipments made during the third quarter, but where final pricing was settled during the fourth quarter, (iii) a $5.8 million loss on currency positions, partially offset by gains in zinc and lead contracts, (iv) a $4.7 million charge for severance and other expenses of a non-recurring nature and (v) a $1.0 million foreign exchange loss.

Sales during the quarter were $46.3 million, a 46% decline compared to the fourth quarter of 2007. Sales were negatively affected by lower quantities sold and shipped, the deterioration of silver and base metals prices and an $8.8 million negative pricing adjustment described above. At the end of October silver reached its lowest price since late 2005, while average zinc and lead prices were also significantly down at 55% and 62%, respectively, compared to a year ago. Despite lower sales during the fourth quarter, the Company posted annual record sales of $338.6 million, a 12% increase year over year.

Cash flow used by operating activities for the quarter ended December 31, 2008 were $(4.9) million. However, adjusted cash flow from operations(3) remained positive at $4.2 million. During the fourth quarter the Company invested $60.2 million in capital expenditures, of which $28.5 million were invested in the final stages of construction and commissioning of Manantial Espejo and $22.1 million in San Vicente’s expansion. During the full year 2008, the Company generated $93.0 million in cash flow from operating activities, a 37% increase year over year.

At December 31, 2008 Pan American had $30.1 million in cash and short term investments and $95.1 million in working capital. The Company remains debt-free and has not drawn on the $70 million revolving facility announced in October 2008. With Manantial Espejo now in production and San Vicente’s expansion nearing commissioning, the Company remains fully funded to complete its current short term growth strategy.

Pan American’s operations produced 4.6 million ounces of silver during the fourth quarter of 2008. Alamo Dorado and La Colorada had good quarters, contributing 1.4 million and 0.9 million ounces of silver, respectively. In Perú, Huaron milling was slowed by mechanical problems, now rectified, which reduced quarterly production to 0.8 million ounces of silver, while Morococha and Quiruvilca produced 0.6 million and 0.3 million ounces of silver, respectively.

The Company expects its cash costs to decline going into 2009, as a consequence of the proactive measures implemented in November of 2008, the addition of lower cost production from Manantial Espejo, the weakening of local currencies and clear indications that last year’s cost escalations are beginning to reverse. In fact, during January 2009, the Company produced 1.7 million ounces of silver at a cash cost of $5.97 per ounce, a 28% reduction as compared to the fourth quarter of 2008

Consolidated cash costs for 2009 are expected to increase modestly to $6.28 per payable ounce of silver net of by-product credits, compared to the $5.96 per ounce posted in 2008. Higher costs are expected during the first half of the year reflecting the ramp up of both Manantial Espejo and San Vicente and should decrease as 2009 progresses. To calculate the by-product credits included in the 2009 projected cash costs, the Company has assumed average zinc and gold prices of US$ 1,150 per tonne and US$ 725 per ounce, respectively.

On February 12, 2009, Pan American closed a public offering of 6,371,000 common shares to raise gross proceeds of approximately $103.5 million. As indicated in the final prospectus supplement, the Company expects to use the net proceeds of the offering for potential acquisitions, development of acquired mineral properties, working capital and other general corporate purposes. Including the public offering, the Company now has approximately $125 million in cash and short term investments and in excess of $195 million in working capital.

Commenting on the quarterly results and 2009’s outlook, Geoff Burns added: “As difficult as the fourth quarter was, I could not be more optimistic about our future. We took some tough steps and the results are already staring to show. Our newest and lowest cost mine is ramping up better than expected. Our increased exposure to silver and now gold could not be more timely, as the price of both precious metals has increased significantly in response to an economic crisis of global proportions. Silver is again above US$ 14.00 per ounce and gold is closing in on US$ 1,000 per ounce. I think there is ample reason to believe they will push higher in 2009 and Pan American is again, well positioned to reap the benefits”.

Pan American will host a conference call to discuss financial and operating results on Thursday, February 19, 2009 at 11:00 am ET (08:00 am PT). North American and International participants dial 1-480-629-9572. The call will also be broadcast live on the Internet at http://www.investorcalendar.com/IC/CEPage.asp?ID=141069. Listeners may also gain access by logging on at www.panamericansilver.com. The call will be available for replay for one week after the call by dialing 1-303-590-3030 (for North American and International callers) and entering replay pin number 3984271.

THIS NEWS RELEASE CONTAINS “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND “FORWARD-LOOKING INFORMATION” WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LEGISLATION. SUCH FORWARD-LOOKING STATEMENTS AND INFORMATION INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS AS TO SILVER, GOLD AND BASE METALS PRODUCTION IN 2009, TIMING AND EXPENDITURES TO REACH COMMERCIAL PRODUCTION AT MANANTIAL ESPEJO AND TO COMMISSION THE EXPANSION OF, AND RAMP UP CAPACITY AT, SAN VICENTE, SILVER GRADES AT HUARON, TRANSITION FROM THE PHASE ONE PIT TO THE PHASE TWO PIT AT ALAMO DORADO, ZINC GRADES AT HUARON AND MOROCOCHA, CASH COSTS PER OUNCE IN 2009, BY-PRODUCT CREDITS IN 2009, BASE METALS PRICES IN 2009, CAPITAL EXPENDITURES AND SUSTAINING CAPITAL IN 2009 AND THE USE OF PROCEEDS FROM THE COMPANY’S RECENT PUBLIC OFFERING. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION TO, UPDATE SUCH FORWARD-LOOKING STATEMENTS OR INFORMATION, OTHER THAN AS REQUIRED BY APPLICABLE LAW.

FORWARD-LOOKING STATEMENTS OR INFORMATION INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, LEVEL OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS OF PAN AMERICAN AND ITS OPERATIONS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS: FLUCTUATIONS IN THE SPOT AND FORWARD PRICE OF SILVER, GOLD, BASE METALS OR CERTAIN OTHER COMMODITIES (SUCH AS NATURAL GAS, FUEL OIL AND ELECTRICITY); FLUCTUATIONS IN THE CURRENCY MARKETS (SUCH AS THE PERUVIAN SOLE, MEXICAN PESO ARGENTINE PESO AND BOLIVIAN BOLIVIANO VERSUS THE U.S. DOLLAR); CHANGES IN NATIONAL AND LOCAL GOVERNMENT, LEGISLATION, TAXATION, CONTROLS, REGULATIONS AND POLITICAL OR ECONOMIC DEVELOPMENTS IN CANADA, PERU, MEXICO, ARGENTINA, BOLIVIA, THE UNITED STATES OR OTHER COUNTRIES IN WHICH THE COMPANY MAY CARRY ON BUSINESS IN THE FUTURE; OPERATING OR TECHNICAL DIFFICULTIES IN CONNECTION WITH MINING OR DEVELOPMENT ACTIVITIES; RISKS AND HAZARDS ASSOCIATED WITH THE BUSINESS OF MINERAL EXPLORATION, DEVELOPMENT AND MINING (INCLUDING ENVIRONMENTAL HAZARDS, INDUSTRIAL ACCIDENTS, UNUSUAL OR UNEXPECTED GEOLOGICAL FORMATIONS, PRESSURES, CAVE-INS AND FLOODING);

INADEQUATE INSURANCE, OR INABILITY TO OBTAIN INSURANCE, TO COVER THESE RISKS AND HAZARDS; EMPLOYEE RELATIONS; AVAILABILITY AND INCREASING COSTS ASSOCIATED WITH MINING INPUTS AND LABOR; THE SPECULATIVE NATURE OF MINERAL EXPLORATION AND DEVELOPMENT, INCLUDING THE RISKS OF OBTAINING NECESSARY LICENSES AND PERMITS; DIMINISHING QUANTITIES OR GRADES OF MINERAL RESERVES AS PROPERTIES ARE MINED; BUSINESS OPPORTUNITIES THAT MAY BE PRESENTED TO, OR PURSUED BY, THE COMPANY; THE COMPANY’S ABILITY TO SUCCESSFULLY INTEGRATE ACQUISITIONS; AND CHALLENGES TO THE COMPANY’S TITLE TO PROPERTIES; AS WELL AS THOSE FACTORS DESCRIBED IN THE SECTION “RISK RELATED TO PAN AMERICAN’S BUSINESS” CONTAINED IN THE COMPANY’S MOST RECENT FORM 40F/ANNUAL INFORMATION FORM FILED WITH THE SEC AND CANADIAN SECURITIES REGULATORY AUTHORITIES. ALTHOUGH THE COMPANY HAS ATTEMPTED TO IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN FORWARD-LOOKING STATEMENTS OR INFORMATION, THERE MAY BE OTHER FACTORS THAT CAUSE RESULTS TO BE MATERIALLY DIFFERENT FROM THOSE ANTICIPATED, DESCRIBED, ESTIMATED, ASSESSED OR INTENDED. THERE CAN BE NO ASSURANCE THAT ANY FORWARD-LOOKING STATEMENTS OR INFORMATION WILL PROVE TO BE ACCURATE AS ACTUAL RESULTS AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS OR INFORMATION. ACCORDINGLY, READERS SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS OR INFORMATION.

	Three months ended						Twelve months ended
	December 31,						December 31,
	2008			2007			2008		2007

Consolidated Financial Highlights (in thousands of US dollars)
(Unaudited)

Net (loss) income for the period	$	(33,316	)		$	26,062	$	24,602	$	88,860
Basic (loss) income per share	$	(0.41	)		$	0.34	$	0.31	$	1.16
Mine operating (losses) earnings	$	(9,884	)		$	28,859	$	93,219	$	104,275
Cash (used in) generated by operations	$	(4,895	)		$	26,708	$	92,985	$	67,361
Adjusted cash flow from operations(3)	$	4,191			$	26,944	$	95,646	$	66,377
Capital spending and purchase of mineral interests	$	60,167			$	34,545	$	243,800	$	123,415
Cash and short-term investments	$	30,139			$	107,315	$	30,139	$	107,315
Net working capital	$	95,082			$	186,337	$	95,082	$	186,337



Tonnes milled		850,371				983,688		3,630,200		3,276,301
Silver – ounces		4,604,560				5,128,959		18,672,939		17,113,027
Gold – ounces		5,068				7,824		25,146		23,580
Zinc – tonnes		10,809				9,373		39,811		39,075
Lead – tonnes		3,732				4,376		15,974		16,284
Copper – tonnes		1,608				1,538		6,069		5,650

Consolidated Cost per Ounce of Silver (net of by-product credits)

Total cash cost per ounce(2)	$	8.24			$	4.54	$	5.96	$	3.42
Total production cost per ounce(2)	$	10.95			$	7.11	$	8.76	$	5.69

Payable ounces of silver		4,327,214				4,819,255		17,542,831		15,911,734

Average Metal Prices
Silver – London Fixing per ounce	$	10.21			$	14.21	$	14.99	$	13.38
Zinc – LME Cash Settlement per tonne	$	1,189			$	2,646	$	1,870	$	3,250
Lead – LME Cash Settlement per tonne	$	1,251			$	3,262	$	2,085	$	2,595
Copper – LME Cash Settlement per tonne	$	3,940			$	7,126	$	6,952	$	7,239
Gold – London Fixing per ounce	$	795			$	786	$	872	$	695

	Three months ended						Twelve months ended
	December 31,						December 31,
	2008			2007			2008			2007

Huaron Mine

Tonnes milled		159,066			191,867			732,146			750,799
Average silver grade – grams per tonne		206			198			194			196
Average zinc grade		2.52	%		2.31	%		2.31	%		2.54	%
Silver – ounces		832,556			999,738			3,628,490			3,827,105
Zinc – tonnes		2,591			2,785			11,047			12,064
Lead – tonnes		1,254			1,838			5,903			6,985
Copper – tonnes		472			479			1,707			1,658
Gold – ounces		287			819			1,552			3,496

Total cash cost per ounce (2)	$	10.73		$	4.20		$	8.06		$	2.78
Total production cost per ounce (2)	$	12.00		$	5.35		$	9.38		$	3.97

Payable ounces of silver		754,718			908,221			3,280,053			3,453,409

Morococha Mine*

Tonnes milled		148,867			165,285			599,174			609,540
Average silver grade – grams per tonne		153			175			153			172
Average zinc grade		3.84	%		3.01	%		3.34	%		3.36	%
Silver – ounces		605,245			806,493			2,475,516			2,870,379
Zinc – tonnes		4,749			4,142			16,677			17,133
Lead – tonnes		1,365			1,720			6,266			6,085
Copper – tonnes		576			500			2,026			2,088
Gold – ounces		248			649			1,191			1,306

Total cash cost per ounce (2)	$	8.17		$	2.74		$	2.84		$	(2.16	)
Total production cost per ounce (2)	$	10.37		$	4.38		$	4.98		$	(0.44	)

Payable ounces of silver		539,108			725,013			2,214,316			2,580,837

*Production and cost figures are for Pan American’s share only. Pan American’s ownership changed from 89.4% to 92.2% in December 2008.

Quiruvilca Mine

Tonnes milled		82,707			93,063			349,022			362,141
Average silver grade – grams per tonne		148			141			145			162
Average zinc grade		3.25	%		2.34	%		2.84	%		2.46	%
Silver – ounces		339,172			349,544			1,382,990			1,569,351
Zinc – tonnes		2,307			1,750			8,263			7,234
Lead – tonnes		815			609			2,793			2,528
Copper – tonnes		512			543			2,185			1,805
Gold – ounces		384			374			1,807			1,566

Total cash cost per ounce (2)	$	13.88		$	5.15		$	6.61		$	2.43
Total production cost per ounce (2)	$	16.30		$	6.91		$	9.05		$	3.97

Payable ounces of silver		309,476			320,697			1,267,679			1,445,185

	Three months ended							Twelve months ended
	December 31,							December 31,
	2008			2007				2008				2007

Pyrite Stockpiles

Tonnes sold		9,353				12,006				38,712				52,547
Average silver grade – grams per tonne		210				258				228				269
Silver – ounces		63,226				99,745				284,194				454,202

Total cash cost per ounce (2)	$	3.03			$	3.52			$	4.41			$	3.24
Total production cost per ounce (2)	$	3.03			$	3.52			$	4.41			$	3.24

Payable ounces of silver		31,977				53,128				146,982				243,998

Alamo Dorado Mine*

Tonnes milled		339,236				420,336				1,478,423				1,139,899
Average silver grade – grams per tonne		149				122				149				127
Silver – ounces		1,441,797				1,689,648				6,115,836				3,809,003
Gold – ounces		3,180				5,032				16,822				13,335

Total cash cost per ounce (2)		6.18				3.62				4.38				4.41
Total production cost per ounce (2)		10.80				7.98				9.02				8.96
														,
Payable ounces of silver		1,438,193				1,685,424				6,100,546				3,799,480

*Commercial production commenced on April 1, 2007.

La Colorada Mine

Tonnes milled		93,518				95,778				377,844				331,067
Average silver grade – grams per tonne		370				407				371				437
Silver – ounces		961,720				1,077,901				3,910,830				3,964,074
Zinc – tonnes		586				371				1,835				943
Lead – tonnes		299				209				1,012				686
Gold – ounces		969				950				3,773				3,877

Total cash cost per ounce (2)	$	8.50			$	6.97			$	8.06			$	6.88
Total production cost per ounce (2)	$	10.54			$	8.89			$	10.09			$	8.68

Payable ounces of silver		923,422				1,032,071				3,742,934				3,834,685

San Vicente Mine*

Tonnes milled		26,977				17,359				93,591				82,855
Average silver grade – grams per tonne		472				279				348				296
Average zinc grade		2.74	%			2.77	%			2.72	%			2.82	%
Silver – ounces		360,846				105,890				875,083				618,913
Zinc – tonnes		576				325				1,989				1,701
Copper – tonnes		48				16				152				99

Total cash cost per ounce (2)	$	6.10			$	10.12			$	7.57			$	5.41
Total production cost per ounce (2)	$	6.99			$	12.56			$	8.75			$	7.47

Payable ounces of silver		330,319				94,701				790,320				554,140

*The production statistics represent Pan American’s interest in the mine. Pan American’s ownership was approximately 55% through May 22, 2007 and increased to 95% subsequently.

Cash Costs per Ounce of Payable Silver
			Three months ended December 31,					Twelve months ended December 31,
			2008		2007					2008	2007
Cost of sales			$	43,613		$	48,803		$	199,032		$	167,797
Add/(Subtract)
Smelting, refining, and transportation charges				12,096			21,088			58,378			87,019
By-product credits				(25,564)			(52,607)			(160,276)			(210,701)
Mining royalties				671			1,537			4,843			5,761
Workers participation and voluntary payments				1,660			(1,256)			(1,700)			(6,304)
Change in inventories				1,113			4,635			1,419			8,595
Other				2,681			(54)			3,980			(579)
Minority interest adjustment				(611)			(265)			(1,043)			172
Alamo Dorado Commissioning Costs				-			-			-			2,719
Cash Operating Costs		A	$	35,659			21,882		$	104,663			54,478
Add/(Subtract)
Depreciation and amortization				12,550			8,227			46,349			28,992
Asset retirement and reclamation				672			674			2,687			2,860
Change in inventories				(1,270)			3,719			839			4,081
Other				(98)			(48)			(232)			(175)
Minority interest adjustment				(146)			(192)			(605)			(933)
Alamo Dorado Commissioning Costs				-			-			-			1,304
Production Costs		B	$	47,367		$	34,262		$	153,671		$	90,607

Payable Ounces of Silver	C			4,327,214			4,819,255			17,542,831			15,911,734
Total Cash Cost per Ounce	A/C		$	8.24		$	4.54		$	5.96		$	3.42
Total Production Costs per Ounce	B/C		$	10.95		$	7.11		$	8.76		$	5.69

Adjusted cash flow from operations
		Three months ended December 31,				Twelve months ended December 31,
		2008	2007				2008		2007
Cash flow (used by)/from operating activities	$	(4,895)		$	26,708		$	92,985		$	67,361
Add/(Subtract)
Realized losses/(gains) on foreign exchange CAD	$	7,050		$	(631)		$	8,916		$	(928)
Realized losses/(gains) on commodity and foreign currency contracts	$	997		$	867		$	(7,294)		$	(56)
Reductions in Force	$	1,039		$	-		$	1,039		$	-

Adjusted cash flow from operations	$	4,191		$	26,944		$	95,646		$	66,377

Pan American Silver Corp.
Consolidated Balance Sheets
As at December 31, 2008
(In thousands of U.S. dollars)
	2008			2007
Assets
Current
Cash	$	26,789		$	51,915
Short-term investments		3,350			55,400
Accounts receivable		51,067			68,600
Inventories		72,650			51,737
Unrealized gain on commodity contracts		10,829			5,502
Future income taxes		5,602			8,388
Prepaid expenses		4,076			3,376
Total Current Assets		174,363			244,918

Mineral property, plant and equipment, net		697,061			500,284
Other assets		1,959			17,701
Total Assets	$	873,383		$	762,903

Liabilities
Current
Accounts payable and accrued liabilities	$	49,208		$	53,736
Taxes payable		9,892			1,771
Unrealized loss on foreign currency contracts		14,267			27
Other current liabilities		5,914			3,047
Total Current Liabilities		79,281			58,581

Provision for asset retirement obligation and reclamation		57,323			50,370
Future income taxes		45,392			48,698
Other liabilities and provisions		-			151
Total Liabilities		181,996			157,800

Non-controlling interests		5,746			5,486

Shareholders’ Equity
Share capital (authorized: 200,000,000 common shares of no par value)		655,517			592,402
Contributed surplus		4,122			14,233
Accumulated other comprehensive loss		(232	)		(8,650	)
Retained earnings		26,234			1,632

Total Shareholders’ Equity		685,641			599,617
Total Liabilities, non-controlling interests and Shareholders’ Equity	$	873,383		$	762,903

	Three months ended						Twelve months ended
	December 31,						December 31,
	2008			2007			2008			2007

Sales	$	46,278		$	85,889		$	338,600		$	301,064
Cost of sales		43,613			48,803			199,032			167,797
Depreciation and amortization		12,549			8,227			46,349			28,992
Mine operating (losses) earnings		(9,884	)		28,859			93,219			104,275

General and administrative		2,783			3,120			10,435			9,522
Exploration and project development		2,265			1,992			5,494			3,362
Accretion of asset retirement obligation		672			674			2,687			2,860
Write-down of mining assets		15,117			-			15,117			-
Operating (losses) earnings		(30,721	)		23,073			59,486			88,531
Interest and financing expenses		(168	)		(246	)		(951	)		(660	)
Investment and other income		306			131			2,704			5,371
Foreign exchange gains (losses)		(1,045	)		631			(6,147	)		928
Other expenses		(4,702	)		(370	)		(4,674	)		(370	)
Net (losses) gains on commodity and foreign currency contracts		(5,814	)		4,005			(1,619	)		5,345
(Losses) Gains on sale of assets		(6	)		(75	)		998			12,425
(Loss) Income before taxes and non-controlling interest		(42,150	)		27,149			49,797			111,570
Income tax recovery (provision)		8,506			(599	)		(24,430	)		(19,605	)
Non-controlling interest		328			(488	)		(765	)		(3,105	)
Net (loss) income for the period	$	(33,316	)	$	26,062		$	24,602		$	88,860

(Loss) Earnings per share:

Basic (loss) income per share	$	(0.41	)	$	0.34		$	0.31		$	1.16
Diluted (loss) income per share	$	(0.41	)	$	0.33		$	0.30		$	1.12

Weighted average number of shares outstanding
(in thousands)
Basic		80,786			76,521			80,236			76,453
Diluted		80,786			79,434			80,773			79,174

	Three months ended						Twelve months ended
	December 31,						December 31,
	2008			2007			2008			2007

Operating activities
Net (loss) income for the period	$	(33,316	)	$	26,062		$	24,602		$	88,860
Reclamation expenditures		-			(54	)		(167	)		(767	)
Items not affecting cash:
Depreciation and amortization		12,549			8,227			46,349			28,992
Write-down of mineral property		15,117			-			15,117			-
Asset retirement and reclamation accretion		672			674			2,687			2,860
Losses (gains) on sale of assets		6			75			(998	)		(12,425	)
Future income taxes		(5,828	)		(3,994	)		3,210			(1,448	)
Unrealized losses (gains) on foreign exchange		(6,005	)		-			(2,769	)		-
Non-controlling interests		(328	)		488			765			3,105
Unrealized losses (gains) on commodity and foreign currency contracts		4,818			(4,863	)		8,913			(5,290	)
Stock-based compensation		747			702			2,223			2,052
Changes in non-cash operating working capital		6,673			(609	)		(6,947	)		(38,578	)
Cash (used in) generated by operating activities		(4,895	)		26,708			92,985			67,361

Investing activities
Mining property, plant and equipment expenditures (net		(60,167	)		(34,545	)		(243,800	)		(117,170	)
of accruals)
Purchase of additional 40 percent interest in San Vicente (net of cash acquired of $1.9 million)		-			-			-			(6,245	)
Proceeds from sale of short-term investments		23,298			(2,031	)		62,779			24,931
Proceeds from sale of assets		2,589			17			12,199			10,267
Purchase of other assets		-			(3,590	)		-			(11,272	)
Cash (used in) investing activities		(34,280	)		(40,149	)		(168,822	)		(99,489	)

Financing activities
Proceeds from issuance of common shares		-			1,810			50,843			5,164
Dividends paid by subsidiaries to non controlling interests		-			-			(2,626	)		(2,347	)
Contributions received / receipts (payments) of debt		1,539			(2,294	)		2,494			879
Cash generated by (used in) financing activities		1,539			(484	)		50,711			3,696

(Decrease) in cash during the period		(37,636	)		(13,925	)		(25,126	)		(28,432	)
Cash, beginning of period		64,425			65,840			51,915			80,347
Cash, end of period	$	26,789		$	51,915		$	26,789		$	51,915

	Silver Production Million ounces	Cash Costs Per Ounce US$
Huaron	4.2	8.14
Morococha	2.7	7.82
Silver Stockpiles	0.2	2.93
San Vicente	1.9	6.98
La Colorada	3.4	8.01
Alamo Dorado	4.8	6.32
Manantial Espejo	4.3	2.25
TOTAL	21.5	6.28