Good afternoon, ladies and gentlemen. My name is Sandra, and I will be your conference facilitator today. At this time, I would like to welcome everyone to your Pan American Silver Corporation Fourth Quarter 2005 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. If you would like to ask a question during this time, please press "*" then the number "1" on your telephone keypad. If you would like to withdraw your question, press the "#" key. Thank you. It is now my pleasure to turn the floor over to your host, Mr. Ross Beaty, Chairman and Chief Executive Officer. Sir, you may begin your conference.

Thank you very much, operator. Good morning and good afternoon ladies and gentlemen and welcome to the Pan American 2005 results conference call. With me in Vancouver are Geoff Burns, who actually is Pan American's Chief Executive Officer, and Geoff will review our operations and projects with you after I have some preliminary comments. We also have our Vice President of Operations, Andy Pooler, our Vice President of Projects, Steve Busby, and our Chief Financial Officer, Rob Doyle, as well as Brenda Radies, our Vice President of Corporate Relations. Starting with our financial and operating results, our Q4 results and annual results do not really reflect our good operating picture today. They are heavily skewed by one-time non-cash charges in Q4 of 2005, and our one-time gain in Q4 of 2004 resulting from our sale of the Dukat mine. I have to begin by saying that I am frustrated by our need to restate our 2004 and 2005 earnings, due to a mistake in interpretation in hedge accounting by our auditors. We have hedged for reasonable production for years, and all our accounting for this was reviewed quarterly and received the blessing of our auditors. This year, and we were only informed of this 10 days ago, our auditors told us they felt we had changed how we accounted for this hedge production, resulting in our need to restate the last 7 quarters and use a new method to account for our hedges. Now I'm not an accountant, but I know we are hedging our lead and zinc production through our forward sales program. So it is pretty strange to me to be told we can't use hedge accounting. In any event, this is a non-cash restatement and we have made the changes that have resulted in a $6.2 million…

Thanks, Ross. As it has been mentioned, our consolidated silver production grew by 12% to 12.5 million ounces in 2005, our eleventh consecutive year of production growth. Let's do a tour of our mining operation for 2005, and I'll make some comments on what to expect in 2006. Starting in Peru, our Morococha mine was our most profitable operation in 2005, generating $10.4 million in mine operating earnings on silver production of 2.7 million ounces. Cash costs at Morococha were $2.61 for the year of 2005, down almost $2 from 2004 as our byproduct zinc production continued to decline and our silver recoveries improved. As we envisioned, we have been investing in Morococha since we acquired the mine last year, almost 9 million in the last 18 months. We have been pushing our underground development to access some of the new veins and mantles that we have discovered. We have been systematically upgrading most of our basic infrastructure, and we have invested in our mill facility to increase throughput. These investments are going to allow us to increase our throughput to 50,000 tons a month in 2006, up from approximately 45,000 tons a month in 2005, which should see us produce close to 2.9 million ounces of silver through our account in this year at similar cash costs. Longer-term, we have initiated the basic engineering work designed to increase our production further and take Morococha to the next level. I am confident we will see a doubling of the mine's production over the next 3 years. Our Quiruvilca operation continued its solid, predictable performance. We produced 2.2 million ounces of silver at Quiruvilca in 2005 at a cost of $4.11 per ounce. We will continue to follow the main vein systems deeper in 2006 developing below the 340 level. And…

Great. Thanks, Geoff. Okay, to finish off, I'll just add a few words about our reserves, resources, our exploration and expansion, and some views on the silver markets. First, I was very pleased that we increased our proven and probable reserves in 2005 by 23%, even after accounting for the reserve writedown at La Colorada and the 15 million ounces we mined in 2005 that came off the reserves. Reserves were increased at nearly all our operations led by Morococha, where we added 18 million ounces, an increase of 60% from just a year ago. In fact, since July 2004, when we acquired Morococha, we have increased reserves there by over 100% even after accounting for 2 years of depletion by mining, a very happy story that will continue in 2006, since we have just received drill results confirming the discovery of a new, very wide zone. By wide, I'm talking a width of 20 to 30 meters that will definitely add significant new ounces in 2006. Morococha is indeed, a star asset of ours that will contribute to our future for decades. Company-wide, we plan on drilling over 60,000 meters this year, and we have about 20 drills active at our mines and projects. This is the best way to create shareholder value, and I already know we will have some great results from this work as we did in 2005. One of the things I think that separates Pan American Silver, in fact, from many of our competitors, is that we have such strong organic growth potential, from our projects that are going into production, and also from our existing operations, where we have such good expiration potential around them. Many of our shareholders have actually contacted us and said, why aren't we making acquisitions this year, why…

Thank you. At this time, if you wish to ask a question, please press "*" “1” on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Once again, ladies and gentlemen, that's "*" "1" to ask a question. Your first question is coming from John Doody of Gold Stock Analyst.

Good afternoon, and congratulations on your good year, despite all the one-time events. As I add up your forecast production for 2006, I get to, from the existing mines, I get 13.3 million ounces. So that implies 800,000 ounces at Alamo.

We have got approximately 500,000 coming from Alamo, John, and the other 3 or 400, I don't know where.

San Vicente.

It could be sent to San Vicente as well.

Okay, I plugged in San Vicente at 300,000. Okay, but as long as you're carrying 500 at Alamo, I'll figure out the rest. Thank you.

Yes, 5 or 6. There could be some rounding errors, as well. Was that your question, John?

That was it.

Thank you. Once again, ladies and gentlemen, that's "*" "1" to ask a question. Your next question is coming from Haytham Hodaly of Salman Partners.

Good morning gentlemen. Ross, I have to say after all these years, your silver price prediction is finally coming true.

I consider that as a compliment.

It is definitely. You're just ahead of your time. Just a couple of questions, actually, just a quick note or a quick question on reserves. You did indicate that there was a significant increase, and yes, we did see that. Was there change in silver price assumption used? And if so, what was the difference, the change, what would the change or increase in reserves have been without the change in silver price assumption?

I'm going to use that question as a bit of an entry to a soapbox that I'm going to get on. Let's put it this way. This year, our reserves and resources are the best we’ve ever had. We went through every single one of our operations, and while we increased the price we used for our reserves very modestly, we went from 550 the year before, to 625, and I forget what exactly our zinc, our zinc number was about the same sort of increase. So it was a fairly modest increase. We are using 625 for our silver reserves. We did gain a little bit from that. More importantly, we actually went through every one of our major veins at our different mines, and we adjusted our reserves to reflect metallurgical recoveries. So we actually got to a value per ton for each of the main veins and we used that in our, we have quite a complicated picture, of course, because our veins are polymetallic, they're silver, lead, zinc, and often silver-gold. So it's a fairly complex equation. And we have adopted, as I said, the most sophisticated and I think, accurate statement of reserves we have ever had. The other thing, of course, with reserves is we can only really go forward at our operating mines, that was an underground a few years, because of the nature of value of block reserves at underground mines versus open pit operations. And that gives us a much lower, because most of our operations are underground, a much lower reserve picture than, for example, an open pit operation, where you have your reserves blocked out for the life of the mine. Our mines are, today, have reserve lives of maybe 5 years or 6 years, depending on which one we have. But these are mines that have actually been operating for 60 to 70 years each. And we expect they're going to continue to operate for 60 or 70 years, as long as metal prices are favorable. Accordingly, it's very inaccurate for analysts to value Pan American simply on the basis of our proven and probable reserves, and even for that matter on our resources, because we just don't have the deep information on these veins that you would have if you had a surface operation. It's a pet peeve of mine. And there it is. I hope I answered your question.

I'm sure it's in there somewhere. Maybe I could just ask another question. Just with regards to the longer-term profile, you say you want to get to 25 million ounces. Based on the projects you have, and based on some of the mine plans that have been released in the past, I could see 19. Where is the difference? Where do you think the difference will come from longer-term?

Right. It will come in 2 places. It will come from continuing expansion at Morococha. That's the one operation which we are very confident we are going to be able to double our production from at least. And then development of the Manantial Espejo project. And I guess, as an add-on, we will expand San Vicente, and I think that's about it. Those are the existing ones we have got.

Perfect, thank you very much.

Thank you. Once again, ladies and gentlemen, that's "*" "1" to ask a question. Your next question is coming from Ivan Sacks of Institutional Equity.

Good afternoon. I believe it was a good result, even though there were a lot of one-time charges. Please, if you wouldn't mind I'm fairly new to this area of silver. Could you please give me the global demand picture for silver? I know many people speak about photography having been a big factor. But there's meant to be many other factors that create the demand. If you could just speak to that for a moment please?

Absolutely. Ivan, I can speak for a long, long time, but I'm not going to. First of all, I would say you should listen to the latter part of my presentation here today. I'm not going to repeat that. I did speak about the silver markets in summary form. The bottom line is that you have a very robust picture on the demand side for continuing demand growth in all sectors of silver demand, in all major sectors, meaning industrial, jewelry, and silverware, and investment demand, which account now for over about 80% of total world silver demand. The 20% factor photography is shrinking. And it is more than – the losses that are more than made up for by the gains in the other sectors. So that net silver demand last year, we estimate went up about 4%, which is a very robust growth notwithstanding the decline in photography. On the supply side, supply was relatively flat. In fact, it was flat to down from the year before, because mine supply was flat. There was no growth in that. Mine supply was flat, and the other 2 major components of supply, which are scrap and government sales, both declined significantly. Scrap declined in large part, because there was less photographic waste coming into the market because there was less photographic silver being used. So the photographic decline in demand is very much offset by a decline in supply, and has really very little to do with the net silver equation at the end of the day. So the demand forces were strong on what I call the fundamental areas. The real kicker was the importance of investment demand to the silver equation. Investment demand was really, I think what has driven silver prices from 5.50 up to $9 an ounce. I mean, that's been the really significant new marginal demand that's really kicked the price up, in the absence of any significant silver supply coming on to meet that. That's the reflection of the fact there aren't very much in the way of silver inventories, silver supply sites, very hard to change quickly, and that's why you've seen the silver price go up, and stay up.

Right. Excuse my ignorance, again, one more time. Thank you for that. That was very helpful, and I'm sorry I didn't hear your earlier comments, and I will go back to the transcript. But what is the situation with. How does Pan American Silver stack up versus, let's say, any of the other silver companies in terms of size? Sorry, it's just be a brief answer, if you wouldn't mind just speaking to that, just in terms of where you fit in the silver company picture?

Right. I think I'll duck that question. You'll have to get that from analysts in the sector. I will just say that Pan American is one of the leading silver producers in the world, with one of the largest silver reserve and resource positions in the world. We are, I think, the, if not one of the, if not the most focused, dedicated silver producing mining companies in the world, with the absolute corporate mission to become the No. 1 world silver-producing mining company. And we are going to get there in the next year or two if we are not there already.

Thank you.

Thank you. Once again, ladies and gentlemen, as a final reminder that's "*" "1" on your telephone keypad. Your next question is coming from Adrian Day of Adrian Day Asset Management.

Yeah. Good afternoon. Let me ask you a question on hedging if I may, Ross. Do you expect to continue hedging the zinc, you know, continue further out? And then do you have, without talking specifically about Manantial Espejo, what is your general view on hedging, hedging gold?

Yes, Adrian. This is Geoff Burns. I'm going to jump in and take your question. At the moment, we are not active in the zinc market. Certainly, I think we can have all followed the prices much higher in the last few months, and at the moment we see continuing declines in inventory, almost on a daily basis. And so we are not pre-disposed at this time to jump back into that market. Having said that, we are not opposed to hedging our zinc at some point in the future. It is a byproduct credit for us. And locking in these higher, this higher price or higher it gives us a very favorable cost position to provide silver to the market.

And furthermore, it also increases our period to silver and early of this result.

Absolutely, thanks, Ross. And now, in terms of hedging gold, that certainly is going to be a question we are going to tackle and look at very carefully with respect to Manantial. Our mission is to deliver unhedged silver production to the market. That's what we are after. Given this, the high gold prices right now, we would be remiss in not looking carefully at the opportunities that that could provide for Manantial.

Okay. Okay. No, I appreciate that. Thank you.

Thank you. At this time, there appear to be no further questions.

Good. Well, I invite any other listeners to not hesitate to call Brenda Radies here, and she'll answer your questions the best she can, or direct them to Geoff or myself, or any of the other people in the room here. And on that note, the 30 minutes are up. Thank you very much for listening everybody, and good day.

Thank you. This does conclude today's teleconference. You may now disconnect. And have a wonderful day.