|
·
|
obtaining
or maintaining necessary permits, licences and approvals from government
authorities;
|
|
|
|
|
·
|
forecast
non-operating spending;
|
|
|
|
|
·
|
future
sales of the metals, concentrates or other products produced by Pan
American;
|
|
|
|
|
·
|
continued
access to necessary infrastructure, including, without limitation, access
to power, land, water and roads to carry on activities as planned;
and
|
|
|
|
|
·
|
Pan
American’s plans and expectations for its properties and for its fourth
quarter financial results as a result of the acquisition of Aquiline
Resources Inc. (“Aquiline”) and as described under “Recent
Developments”.
|
|
|
|
These
statements reflect the Company’s current views with respect to future events and
are necessarily based upon a number of assumptions and estimates that, while
considered reasonable by the Company, are inherently subject to significant
business, economic, competitive, political and social uncertainties and
contingencies. Many factors, both known and unknown, could cause
actual results, performance or achievements to be materially different from the
results, performance or achievements that are or may be expressed or implied by
such forward-looking statements or information and the Company has made
assumptions and estimates based on or related to many of these
factors. Such factors include, without limitation: 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 Canadian dollar, Peruvian sole, Argentina peso, Bolivian
boliviano and Mexican peso 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 Pan American 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 formations, pressures, cave-ins and
flooding); risks relating to the credit worthiness or financial condition of
suppliers, refiners and other parties with whom Pan American does business;
inadequate insurance, or inability to obtain insurance, to cover these risks and
hazards and the presence of laws and regulations that may impose restrictions on
mining, including those currently enacted in the Province of Chubut, Argentina;
employee relations; relationships with and claims by local communities and
indigenous populations 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, permits and approvals from
government authorities; diminishing quantities or grades of mineral reserves as
properties are mined; business opportunities that may be presented to, or
pursued by, Pan American; Pan American’s ability to successfully integrate
acquisitions; challenges to, or difficulty in maintaining, Pan American’s title
to properties; and the factors identified under the caption “Risk Factors” in
this Prospectus, in the Company’s Annual Information Form, dated March 31, 2009,
under the caption “Risks Relating to Pan American’s Business” and in the
management’s discussion and analysis of financial condition and results of
operations for the years ended December 31, 2008 and 2007 under the caption
“Risks and Uncertainty”. Investors are cautioned against attributing
undue certainty to forward-looking statements or
information. Although the Company has attempted to identify important
factors that could cause actual results to differ materially, there may be other
factors that cause results not to be anticipated, estimated or
intended. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements or information to reflect
changes in assumptions or changes in circumstances or any other events affecting
such statements or information, other than as required by applicable
law.
CAUTIONARY
NOTE TO UNITED STATES INVESTORS CONCERNING
ESTIMATES
OF MEASURED, INDICATED AND INFERRED RESOURCES
This
Prospectus has been prepared in accordance with the requirements of Canadian
provincial securities laws, which differ from the requirements of U.S.
securities laws. Unless otherwise indicated, all reserve and
resource
estimates
included or incorporated by reference in this Prospectus have been prepared in
accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral
Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy
and Petroleum classification system. NI 43-101 is an instrument developed by the
Canadian Securities Administrators that establishes standards for all public
disclosure an issuer makes of scientific and technical information concerning
mineral projects.
Canadian
standards, including NI 43-101, differ significantly from the requirements of
the SEC, and reserve and resource information contained in or incorporated by
reference into this Prospectus may not be comparable to similar information
disclosed by U.S. companies. In particular, and without limiting the generality
of the foregoing, these documents use the terms “measured resources”, “indicated
resources” and “inferred resources”. U.S. investors are advised that, while such
terms are recognized and required by Canadian securities laws, the SEC does not
recognize them. Under U.S. standards, mineralization may not be classified as a
“reserve” unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve
determination is made. U.S. investors are cautioned not to assume that any part
of a “measured resource” or “indicated resource” will ever be converted into a
“reserve”. U.S. investors should also understand that “inferred resources” have
a great amount of uncertainty as to their existence and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all or any part
of “inferred resources” exist, are economically or legally mineable or will ever
be upgraded to a higher category. Under Canadian securities laws, estimated
“inferred resources” may not form the basis of feasibility or pre-feasibility
studies except in rare cases. Disclosure of “contained ounces” in a mineral
resource is permitted disclosure under Canadian securities
laws. However, the SEC normally only permits issuers to report
mineralization that does not constitute “reserves” by SEC standards as in place
tonnage and grade, without reference to unit measures. The requirements of NI
43-101 for identification of “reserves” are also not the same as those of the
SEC, and reserves reported by the Company in compliance with NI 43-101 may not
qualify as “reserves” under SEC standards. Accordingly, information concerning
mineral deposits set forth herein may not be comparable with information made
public by companies that report in accordance with U.S. standards.
CERTAIN
AVAILABLE INFORMATION
The
Company has filed with the SEC a registration statement on Form F-10 (the
“Registration Statement”) under the U.S. Securities Act, with respect to the
Shares. This Prospectus, which constitutes a part of that
Registration Statement, does not contain all of the information set forth in
such Registration Statement and its exhibits, to which reference is made for
further information. See “Documents Filed as Part of the U.S.
Registration Statement”.
The
Company is subject to the informational reporting requirements of the U.S.
Exchange Act, and in accordance therewith files reports and other information
with the SEC. Under MJDS, the Company is permitted to prepare such reports and
other information in accordance with the disclosure requirements of Canada,
which are different from those of the United States. As a foreign
private issuer, the Company is exempt from the rules under the U.S. Exchange Act
prescribing the furnishing and content of proxy statements, and its officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery rules contained in Section 16 of the U.S. Exchange
Act. Under the U.S. Exchange Act, the Company is not required to
publish financial statements as frequently or as promptly as U.S.
companies.
The
Company files annual reports with the SEC on Form 40-F, which
includes:
|
·
|
the
Company’s Annual Information Form;
|
|
|
|
|
·
|
the
Company’s management’s discussion and analysis of financial condition and
results of operations;
|
|
|
|
|
·
|
the
Company’s consolidated financial statements, which have been prepared in
accordance with Canadian GAAP and reconciled to generally accepted
accounting principles in the United States (“U.S. GAAP”);
and
|
|
|
|
|
·
|
other
information specified by the Form 40-F.
|
|
|
|
The
Company also furnishes the following types of information to the SEC under cover
of Form 6-K:
|
·
|
material
information the Company otherwise makes publicly available in reports that
it files with securities regulatory authorities in
Canada;
|
|
|
|
|
·
|
material
information that the Company files with, and which is made public by, the
TSX; and
|
|
|
|
|
·
|
material
information that the Company distributes to its shareholders in
Canada.
|
|
|
|
Investors
may read and, by paying a fee, copy any document the Company files with, or
furnishes to, the SEC at the SEC’s public reference room at Station Place, 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. Certain of the Company’s filings are also electronically
available from the SEC’s Electronic Document Gathering and Retrieval System,
which is common known by the acronym EDGAR, and which may be accessed at
www.sec.gov, as well as from commercial document retrieval
services.
PRESENTATION
OF FINANCIAL INFORMATION AND EXCHANGE RATE DATA
The
Company presents its consolidated financial statements in United States
dollars. All references in this Prospectus to “dollars”, “$” or “US$”
are to United States dollars and all references to “Cdn$” are to Canadian
dollars, unless otherwise noted. Except as otherwise indicated, all
financial statements and financial data contained in, or incorporated by
reference into, this Prospectus have been prepared in accordance with Canadian
GAAP, which differ in certain significant respects from U.S.
GAAP. For a description of the material differences between Canadian
GAAP and U.S. GAAP as they relate to the Company’s financial statements, see
note 22 to the Company’s audited consolidated financial statements for the
years ended December 31, 2008 and 2007 and the supplemental financial
information relating to the reconciliation of the Company’s audited annual
financial statements for the years ended December 31, 2008 and 2007 and
unaudited interim financial statements for the three and nine months ended
September 30, 2009 and 2008, which is incorporated by reference into this
Prospectus.
The
following table sets forth, for each period indicated, the exchange rates of the
Canadian dollar to the U.S. dollar for the end of each period indicated and the
high, low and average (based on the exchange rate on the last day of each month
during such period) exchange rates for each of such periods (such rates, which
are expressed in Canadian dollars are based on the noon buying rates for U.S.
dollars as reported by the Bank of Canada).
|
|
Nine
Months Ended September 30,
|
|
|
Nine
Months Ended September 30,
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Cdn
$1.3000
|
|
|
Cdn$1.0796
|
|
|
Cdn$1.3000
|
|
|
Cdn$1.2969
|
|
|
Cdn$1.1853
|
|
Low
|
|
|
1.0613 |
|
|
|
0.9719 |
|
|
|
1.0292 |
|
|
|
0.9719 |
|
|
|
0.9170 |
|
Average
|
|
|
1.1701 |
|
|
|
1.0184 |
|
|
|
1.1420 |
|
|
|
1.0660 |
|
|
|
1.0748 |
|
End
of Period
|
|
|
1.0722 |
|
|
|
1.0599 |
|
|
|
1.0466 |
|
|
|
1.2246 |
|
|
|
0.9981 |
|
On
March 5, 2010, the noon buying rate as reported by the Bank of Canada was
US$1.00 = Cdn$1.0286.
THE
COMPANY
The
Company is a corporation existing under the Business Corporations Act
(British Columbia). The Company’s head office is located at 1500 -
625 Howe Street, Vancouver, British Columbia, V6C 2T6 and its registered
and records office is located at 900 Waterfront Centre, 200 Burrard Street,
Vancouver, British Columbia, V7X 1T2.
BUSINESS
OF THE COMPANY
Pan
American is principally engaged in the exploration for, and the acquisition,
development and operation of, silver producing properties and
assets. Pan American’s principal product is silver, although copper,
zinc, lead and gold are also produced and sold. At present, Pan
American carries on mining operations in Mexico, Peru, Argentina and Bolivia,
and has control over non-producing silver resources in those countries as well
as in the United States. Exploration work is carried out in all of
the aforementioned countries, as well as elsewhere throughout the
world.
RECENT
DEVELOPMENTS
Mineral
Reserve and Mineral Resource Update
On
February 11, 2010, the Company announced that, in 2009, successful exploration
programs added 36.8 million contained ounces of proven and probable silver
mineral reserves at Pan American’s operating mines. The new mineral
reserves were more than sufficient to replace the 26.6 million contained silver
ounces mined during the year. As a result, Pan American increased its
proven and probable silver mineral reserves by approximately 5% to 234 million
ounces as at December 31, 2009.
The
Company’s acquisition of Aquiline, with its Navidad Property (as defined below)
in Argentina, had an enormous positive impact on the Pan American’s mineral
resources. See “Recent Developments – Acquisition of Aquiline Resources
Inc.” below. Pan American’s aggregate measured and indicated silver
mineral resources increased to 711 million ounces, from the 82 million ounces
Pan American carried at the end of 2008, while inferred silver mineral resources
more than doubled to 229 million ounces. These resource numbers do not
include Pan American’s La Preciosa joint venture project.
Complete
silver and gold reserves and resource information at December 31, 2009 is as
follows:
Mineral Reserves – Proven and
Probable 3,4,5
|
Location
|
Type
|
Classification
|
Tonnes
(000’s)
|
Silver
(grams/
tonne)
|
Silver
Contained
(000’s
ounces)
|
Gold
(grams/
tonne)
|
Gold
Contained
(ounces)
|
Huaron
|
Peru
|
Vein
|
Proven
|
6,471
|
185
|
38,385
|
N/A
|
N/A
|
|
|
Vein
|
Probable
|
4,371
|
184
|
25,845
|
N/A
|
N/A
|
Morococha
(92.2%)
|
Peru
|
Vein/Mantos
|
Proven
|
4,079
|
166
|
21,709
|
N/A
|
N/A
|
|
|
Vein
/Mantos
|
Probable
|
2,707
|
187
|
16,267
|
N/A
|
N/A
|
La
Colorada
|
Mexico
|
Vein
|
Proven
|
1,106
|
400
|
14,236
|
0.55
|
19,496
|
|
|
Vein
|
Probable
|
1,176
|
429
|
16,199
|
0.47
|
17,935
|
Quiruvilca
|
Peru
|
Vein
|
Proven
|
407
|
168
|
2,201
|
0.77
|
10,103
|
|
|
Vein
|
Probable
|
363
|
148
|
1,725
|
0.56
|
6,503
|
Silver
Stockpiles
|
Peru
|
Flux
Material
|
Proven
|
189
|
318
|
1,935
|
N/A
|
N/A
|
Alamo
Dorado
|
Mexico
|
Disseminated
|
Proven
|
6,468
|
100
|
20,779
|
0.34
|
70,491
|
|
|
Disseminated
|
Probable
|
3,678
|
86
|
10,116
|
0.31
|
36,656
|
Manantial
Espejo
|
Argentina
|
Vein
|
Proven
|
4,308
|
163
|
22,631
|
2.33
|
322,749
|
|
|
Vein
|
Probable
|
3,033
|
138
|
13,501
|
2.00
|
195,032
|
San
Vicente (95%)
|
Bolivia
|
Vein
|
Proven
|
1,548
|
423
|
21,059
|
N/A
|
N/A
|
|
|
Vein
|
Probable
|
706
|
323
|
7,329
|
N/A
|
N/A
|
TOTALS
|
|
|
Proven
+
Probable
|
40,609
|
179
|
233,916
|
--
|
678,966
|
Mineral Resources – Measured and
Indicated 1,2,3,4,5,6,7
|
Location
|
Type
|
Classification
|
Tonnes
(000’s)
|
Silver
(grams/
tonne)
|
Silver
Contained
(000’s
ounces)
|
Gold
(grams/
tonne)
|
Gold
Contained
(ounces)
|
Huaron
|
Peru
|
Vein
|
Measured
|
819
|
159
|
4,179
|
N/A
|
N/A
|
|
|
Vein
|
Indicated
|
521
|
157
|
2,638
|
N/A
|
N/A
|
Morococha
(92.2%)
|
Peru
|
Vein/Mantos
|
Measured
|
1,091
|
145
|
5,098
|
N/A
|
N/A
|
|
|
Vein
/Mantos
|
Indicated
|
1,409
|
213
|
9,667
|
N/A
|
N/A
|
La
Colorada
|
Mexico
|
Vein
|
Measured
|
129
|
232
|
960
|
0.26
|
1,088
|
|
|
Vein
|
Indicated
|
1,259
|
215
|
8,700
|
0.19
|
7,839
|
Quiruvilca
|
Peru
|
Vein
|
Measured
|
2,386
|
135
|
10,392
|
0.76
|
58,163
|
|
|
Vein
|
Indicated
|
986
|
124
|
3,923
|
0.80
|
25,381
|
Alamo
Dorado
|
Mexico
|
Disseminated
|
Measured
|
1,468
|
73
|
3,466
|
0.36
|
17,138
|
|
|
Disseminated
|
Indicated
|
2,229
|
59
|
4,203
|
0.52
|
37,550
|
Manantial
Espejo
|
Argentina
|
Vein
|
Measured
|
815
|
100
|
2,618
|
1.02
|
26,723
|
|
|
Vein
|
Indicated
|
2,154
|
103
|
7,099
|
0.98
|
67,866
|
San
Vicente (95%)
|
Bolivia
|
Vein
|
Measured
|
1,048
|
156
|
5,256
|
N/A
|
N/A
|
|
|
Vein
|
Indicated
|
569
|
187
|
3,422
|
N/A
|
N/A
|
Navidad6
|
Argentina
|
Mantos,
Diss.
|
Measured
|
15,400
|
137
|
67,832
|
N/A
|
N/A
|
|
|
Mantos,
Diss.
|
Indicated
|
139,800
|
126
|
564,531
|
N/A
|
N/A
|
Pico
Machay
|
Peru
|
Disseminated
|
Measured
|
4,700
|
N/A
|
N/A
|
0.91
|
137,509
|
|
|
Disseminated
|
Indicated
|
5,900
|
N/A
|
N/A
|
0.67
|
127,092
|
Calcatreu7
|
Argentina
|
Vein
|
Indicated
|
7,995
|
26
|
6,606
|
2.63
|
676,028
|
TOTALS
|
|
|
Measured
+
Indicated
|
190,678
|
116
|
710,590
|
--
|
1,182,377
|
Mineral Resources – Inferred
1,2,3,4,5,6,7
|
Location
|
Type
|
Classification
|
Tonnes
(000’s)
|
Silver
(grams/
tonne)
|
Silver
Contained (000’s
ounces)
|
Gold
(grams/
tonne)
|
Gold
Contained (ounces)
|
Huaron
|
Peru
|
Vein
|
Inferred
|
5,416
|
177
|
30,754
|
N/A
|
N/A
|
Morococha
(92.2%)
|
Peru
|
Vein/Mantos
|
Inferred
|
6,260
|
177
|
35,621
|
N/A
|
N/A
|
La
Colorada
|
Mexico
|
Vein
|
Inferred
|
2,750
|
308
|
27,245
|
0.35
|
31,113
|
Quiruvilca
|
Peru
|
Vein
|
Inferred
|
923
|
113
|
3,368
|
0.44
|
12,951
|
Alamo
Dorado
|
Mexico
|
Disseminated
|
Inferred
|
1,146
|
44
|
1,622
|
0.59
|
21,885
|
Manantial
Espejo
|
Argentina
|
Vein
|
Inferred
|
1,410
|
103
|
4,685
|
1.09
|
49,419
|
San
Vicente (95%)
|
Bolivia
|
Vein
|
Inferred
|
513
|
302
|
4,977
|
N/A
|
N/A
|
Navidad6
|
Argentina
|
Mantos,
Diss.
|
Inferred
|
45,900
|
81
|
119,386
|
N/A
|
N/A
|
Pico
Machay
|
Peru
|
Disseminated
|
Inferred
|
23,900
|
N/A
|
NA
|
0.58
|
445,673
|
Calcatreu7
|
Argentina
|
Vein
|
Inferred
|
3,413
|
17
|
1,822
|
2.06
|
226,045
|
TOTALS
|
|
|
Inferred
|
91,631
|
78
|
229,479
|
--
|
787,086
|
Notes:
(1)
|
Mineral
resources are in addition to mineral reserves. Mineral reserves and
mineral resources are as defined by the CIM Definiton Standards on Mineral
Resources and Mineral Reserves. See “Cautionary Note to United States
Investors Concerning Estimates of Measured, Indicated and Inferred
Resources”.
|
(2)
|
Mineral
resources do not have demonstrated economic
viability.
|
(3)
|
These
tables illustrate Pan American’s share of mineral reserves and mineral
resources. Properties in which Pan American has less than 100% interest
are noted next to the property
name.
|
(4)
|
Environmental,
permitting, legal, title, taxation, socio-economic, political, marketing
or other issues are not expected to materially affect the above estimates
of mineral reserves.
|
(5)
|
Prices
used to calculate December 31, 2009 mineral reserves and mineral resources
for all mines were Silver: $13.00 per ounce, Gold: $875 per ounce, Lead:
$1,600 per tonne, Copper: $5,000 per tonne, Zinc: $1,600 per
tonne.
|
(6)
|
Prices
used to calculate December 31, 2009 mineral resources for Navidad were
Silver: $12.52 per ounce and Lead: $1,100 per
tonne.
|
(7) Prices
used to calculate December 31, 2009 mineral resources for Calcatreu were Silver:
$12.50 per ounce and Gold: $650 per ounce.
Mineral
reserve and mineral resource estimates for Huaron, Quiruvilca, San Vicente, La
Colorada, Manantial Espejo, Alamo Dorado and Morococha were prepared under the
supervision of Michael Steinmann, P. Geo., Executive Vice-President Geology
& Exploration and Martin G. Wafforn, P. Eng., Vice-President Technical
Services as Qualified Persons as that term is defined in NI 43-101.
Navidad resource estimates were prepared under the supervision of John J.
Chulick, P. Geo., an independent Qualified Person as that term is defined in NI
43-101.
Acquisition
of Aquiline Resources Inc.
The
Offers
On
October 14, 2009, the Company announced its intention to make a friendly offer
to acquire all of the outstanding common shares (“Aquiline Shares”), common
share purchase warrants and the convertible debenture (the “Convertible
Debenture”) of
Aquiline by way of separate take-over bids. The take-over bids were
formally launched on October 30, 2009 with the mailing of an offer and
circular (the “Offer and Circular”) to securityholders of
Aquiline. Specifically, the Company offered to purchase:
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(a)
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all
of the issued and outstanding Aquiline Shares, including any Aquiline
Shares that may become issued and outstanding after the date of the Offers
(as defined below) but prior to the expiry time of the Offers upon the
exchange, conversion or exercise of any securities of Aquiline that are
convertible into or exchangeable or exercisable for Aquiline Shares, but
excluding Aquiline Shares owned by the Company or its affiliates, for
consideration consisting of 0.2495 of a Common Share and 0.1 of a
Consideration Warrant for each Aquiline Share (the “Share Offer”). Each
whole Consideration Warrant entitles the holder thereof to purchase one
Common Share at the price of Cdn.$35.00 per Common Share until December 7,
2014;
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(b)
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any
and all of the outstanding common share purchase warrants of Aquiline,
comprised of Aquiline’s February 2008 series of common share purchase
warrants (the “February 2008 Warrants”), Aquiline’s May 2008 series of
common share purchase warrants (the “May 2008 Warrants”), Aquiline’s
October 2008 series of common share purchase warrants (the “October 2008
Warrants”), Aquiline’s November 2008 series of common share purchase
warrants (the “November 2008 Warrants” and, collectively with the February
2008 Warrants, May 2008 Warrants and October 2008 Warrants, the “Aquiline
Warrants”), but excluding Aquiline Warrants owned by the Company or its
affiliates, as follows:
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(i)
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each
of the outstanding February 2008 Warrants for consideration consisting of
0.2495 of a common share purchase warrant of the Company (a “February 2008
Replacement Warrant”), with each whole February 2008 Replacement Warrant
exercisable to purchase from the Company one Common Share at an exercise
price of Cdn.$52.10 per Common Share (the “February Warrant
Offer”);
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(ii)
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each
of the outstanding May 2008 Warrants for consideration consisting of
0.2495 of a common share purchase warrant of the Company (a “May 2008
Replacement Warrant”), with each whole May 2008 Replacement Warrant
exercisable to purchase from the Company one Common Share at an exercise
price of Cdn.$40.08 per Common Share (the “May Warrant
Offer”);
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(iii)
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each
of the outstanding October 2008 Warrants for consideration consisting of
0.2495 of an October 2008 Replacement Warrant, with each whole October
2008 Replacement Warrant exercisable to purchase from the Company one
Common Share at an exercise price of Cdn.$10.02 per Common Share (the
“October Warrant Offer”); and
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(iv)
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each
of the outstanding November 2008 Warrants for consideration consisting of
0.2495 of a common share purchase warrant of the Company (a “November 2008
Replacement Warrant”), with each whole November 2008 Replacement Warrant
exercisable to purchase from the Company one Common Share at an exercise
price of Cdn.$10.02 per Common Share (the “November Warrant
Offer”),
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(collectively,
the “Warrant Offers”); and
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(c)
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the
outstanding Convertible Debenture for consideration consisting of a
debenture of the Company (the “Replacement Debenture”), which may be
converted into either:
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(i)
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363,854
Common Shares at a conversion price of Cdn.$48.10 per Common Share;
or
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(ii)
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a
contract granting the holder of the Replacement Debenture the right to
purchase 12.5% of the life of the mine payable silver from the Loma de La
Plata deposit of the Navidad Property (as defined
below),
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(the
“Debenture Offer” and, together with the Share Offer and the Warrant Offers, the
“Offers”), upon the terms and subject to the conditions set out in the Offer and
Circular.
Only
the Common Shares issuable upon the exercise of the Consideration Warrants and
the October 2008 Replacement Warrants are qualified by this
Prospectus.
Nature
of Business Acquired
Aquiline
Resources Inc. (“Aquiline”) is an exploration and
development company advancing one of the world’s largest undeveloped silver
deposits, the Navidad property in Argentina (the “Navidad Property”), as well
as other gold and silver deposits in Argentina and Peru, including the Calcatreu
and Pico Machay properties. See “Recent Developments – Navidad
Property” below.
Date
of Acquisition
On
December 7, 2009, the Company acquired ownership and control of 67,216,956
Aquiline Shares, representing aproximately 81.8% of the issued and outstanding
Aquiline Shares, assuming no other convertible securities of Aquiline are
exercised, and 1,925,000 October 2008 Warrants. Following the take-up
of these securities on December 7, 2009, and taking into account the securities
of Aquiline owned by the Company prior to this take-up, the Company owned
72,291,956 Aquiline Shares (assuming the exercise by the Company of all of the
convertible securities of Aquiline owned by it or taken up by it to date under
the Offers), representing approximately 88.0% of the Aquiline Shares based on
the total number of Aquiline Shares outstanding as of December 7,
2009.
By
way of a notice of extension and variation dated December 9, 2009, the Company
extended the Share Offer, May Warrant Offer and February Warrant Offer until
December 22, 2009.
On
December 22, 2009, the Company acquired ownership and control of an additional
5,403,461 Aquiline Shares, representing aproximately 6.96% of the issued and
outstanding Aquiline Shares, assuming no other convertible securities of
Aquiline are exercised, and an additional 206,366 February 2008
Warrants. Following the take-up of these securities on December 22,
2009, and taking into account the securities of Aquiline owned by the Company
prior to this take-up, the Company owned 77,901,783 Aquiline Shares (assuming
the exercise by Pan American of all of the convertible securities of Aquiline
owned by it or taken up by it to date under the Offers), representing
approximately 92.7% of the Aquiline Shares based on the total number of Aquiline
Shares outstanding as of December 22, 2009.
On
December 23, 2009, the Company announced its intention to acquire the remaining
Aquiline Shares by exercising its statutory right of compulsory
acquisition. On January 22, 2010, the Company completed its
compulsory acquisition of the remaining Aquiline Shares and is now the holder of
100% of the outstanding Aquiline Shares.
As
a result, a total of 7,873,618 Consideration Warrants and 480,287 October 2008
Replacement Warrants were issued in connection with the Offers and the
subsequent compulsory acquisition.
The
31,134 February 2008 Warrants which were not deposited to the Warrant Offers or
exercised in advance of the completion of the compulsory acquisition will remain
outstanding in accordance with their respective terms.
Consideration
Pursuant
to the Offers and the Compulsory Acquisition, the Company issued an aggregate of
19,644,669 Common Shares, 7,873,618 Consideration Warrants, 480,287 October 2008
Replacement Warrants, 51,488 February 2008 Replacement Warrants and the
Replacement Debenture.
Navidad
Property
As
a result of the Company’s acquisition of Aquiline, Pan American obtained the
rights to the Navidad Property. Certain statements in the following
summary of the Navidad Property are based on and, in some cases, extracted
directly from the technical report entitled “Pan American Silver Corp: Navidad
Project, Chubut Province, Argentina” dated February, 2010 and prepared by Pamela
De Mark, P. Geo., BAppSc (App Geo, Hons), MAusIMM, John J. Chulick, Licensed
Professional Geologist, Dean K. Williams, B.Sc, LPG, MBA, Damian Spring, B.E.
(Mining), MAusIMM and John A. Wells, B.Sc (Hons), MBA, MCIMM,
FSAIMM.
Property
Description and Location
The
Navidad Property is located in Gastre Department in the Province of Chubut,
southern Argentina, at approximately 42°24′54″S and
68°49′12″W.
The
Navidad Property is flanked by the communities of Gastre to the northwest, Gan
Gan to the east and Blancuntre and Lagunita Salada to the southwest. Blancuntre
is the closest recognised indigenous community to the Navidad Property, with
approximately 50 indigenous families living within the town and surrounding
area.
Land
tenure
The
Navidad Property is divided into four property claims (registration numbers
14340/04, 14341/04, 14902/06, and 14903/06), each of which is an MD (as defined
below) 2,500 hectares in area. Approximately 120,000 hectares of additional
mineral rights are held or have been applied for in the name of Minera Argenta
S. A. and Minera Aquiline Argentina S.A. in the Province for exploration in
connection with the Navidad Property.
In
Argentina, exploration concessions are not physically surveyed or staked in the
field, but are electronically filed using the Gauss Kruger coordinate system,
zone (faja) 2, relative to the WGS 84 datum. There are three levels of mineral
rights (which do not include surface rights):
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Cateo
– an exploration permit granting any mineral discoveries on the cateo to
the applicant. Cateos are measured in units of 500 hectares, with a
minimum of one unit (500 hectares) and
a
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maximum
of 20 units (10,000 hectares) granted to any holder. Cateo units must be
reduced over time relative to the number of units held; the maximum
duration for any granted cateo is three years. The holder may conduct
prospecting, mapping, sampling, geophysical surveys, drilling and
trenching after notifying the mining office of the exploration
plan.
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Manifestacion
de Discumbrimiento (“MD”) – once mineralisation is discovered on a cateo,
the cateo lease expires and the permit is upgraded to an MD. The maximum
area of an MD is 7,000 hectares. A basic environmental impact assessment,
a physical survey, and boundary markers are required at this
stage.
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Pertenencia
– a lease allowing mining. A physical survey and boundary markers are
required.
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Pan
American’s tenements are subject to Argentinean law and policy, which may in the
future result in surrender of certain of its tenements outright and/or the
reduction in area of its holdings.
Agreements
and encumbrances
Silver
Wheaton Corp., through its subsidiary, Silverstone Resources (Barbados) Corp.,
has rights to 12.5% of the eventual silver produced at the Loma de La Plata
deposit under a “silver stream” agreement. The Navidad Property is not subject
to any other royalties, back-in rights, payments, encumbrances or similar
agreements.
Environmental
liabilities
The
Province holds the Navidad Property administrator responsible for any potential
environmental damage liabilities that may arise.
Environmental
and social baseline studies are in the process of being completed for the
Navidad Property. The bulk of baseline work done to date has been contracted to
local Argentine consultants working under the supervision of international firms
including Water Management Consultants (WMC)/Schlumberger Water Services, Ground
Water International, On Common Ground Consultants Inc., and Klohn Crippen Berger
Ltd. An international consultant that will finalise the baseline work
and prepare the future Environmental Impact Assessment (“EIA”) for the Navidad
Property is currently being selected.
Permits
Drilling
at the Navidad Property requires a separate permit for each affected tenement
valid for one year, subject to the approval of an Environmental Impact Statement
(“EIS”). An EIS is required to be submitted which covers the impacts and
mitigation/monitoring procedures for the exploration activities, in order to
obtain environmental permits. The level of the exploration activity dictates the
level of study required.
The
Navidad Property is in an advanced exploration stage involving drilling and
trenching activities. The most recent EIS update was submitted in 2008 and was
approved in January 2010. Until this EIS update was approved, the Navidad
Property operated under the existing valid permit which was modified in 2008. As
a result of the EIS approval, a new drilling permit was issued for a one year
period and this new permit allows for the operation of up to eight drill
rigs. Rehabilitation of the drilling platforms and impacted areas is
carried out throughout the year.
Water
rights are treated separately from environmental permits. Two extraction wells
have been permitted for use in exploration activities.
Depending
on overall timing of the development of the Navidad Property, an Environmental
and Social Impact Assessment report for the Navidad Property is expected to be
completed and presented to the provincial Chubut government in 2010. While the
government has publicly indicated its support for the Navidad Property
proceeding, the status of a provincial law banning open pit mining would need to
be clarified before permits for mining can be obtained.
Accessibility,
Climate, Local Resources, Infrastructure and Physiography
Accessibility
The
nearest towns to the Navidad Property are Gastre, with a population of about
500, 40 kilometres to the northwest, and Gan Gan, with a population of about
600, about 40 kilometres to the east. Both towns are located on Provincial Route
4, a gravel highway that passes just north of the Navidad Property. Offices,
accommodation, and facilities for core storage and logging have been established
in Gastre and to a lesser degree in Gan Gan. The Navidad Property is accessible
year round except in very wet conditions.
Daily
scheduled flights are available to the city of San Carlos de Bariloche, a
tourism centre with a population of approximately 100,000, located about 355
kilometres by road to the northwest. Daily flights are also available to Trelew,
located about 390 kilometres by road to the southeast near the coast, with a
population of approximately 90,000. The nearest airport, which has regularly
scheduled flights, is located in Esquel, about four hours drive to the southwest
by gravel road. The provincial capital of Rawson, located 20 kilometres east of
Trelew, has a population of approximately 23,000. An office has been established
from which to advance the technical studies of the Navidad Property in Puerto
Madryn, a city with a population of approximately 70,000, located 60 kilometres
north of Rawson. There are at least three scheduled flights per week between
Puerto Madryn and Buenos Aires. Offices are also maintained in Buenos Aires and
in the regional centre of Ingeniero Jacobacci, which has a population of
approximately 8,000, located two hour’s drive to the north of
Gastre.
Climate
The
climate is semi-arid with average annual temperatures ranging from 1°C to 20°C.
High winds frequently occur from October through December, but may also occur
throughout the year. Annual precipitation averages between five millimetres to
ten millimetres per month, but during the winter months from May to August,
higher accumulations ranging from 15 millimetres to 20 millimetres may occur as
either rain or snow. Field activities run throughout the year and are not
curtailed by weather conditions.
Infrastructure
and local resources
The
base of operation for the Navidad Property is in Gastre. Facilities include
offices, modular living facilities, and core-storage warehouses. Communications
are provided by land line telephone service, national mobile phone operator, and
a satellite internet dish. The modular living facilities provide lodging and
meals for up to 20 people. The warehouses include three drill core storage
sheds, a logging and sampling shed, metal shop, vehicle workshop, and a regional
exploration office. In the logging shed there are four diamond saws used to cut
drill core.
In
Gan Gan, two core storage facilities have been built as well as an office on
land purchased on the western edge of town in 2007. The office serves as a base
of operation for social and community relations personnel, while the warehouses
contain older drill core from the Navidad Property.
On
the Navidad Property, a small camp facility has been installed with electrical
power provided by several small generators. Communication is provided by a
satellite internet uplink. Other infrastructure on site includes storage areas
for drill supplies. There are two water bores authorised by the Chubut Province
Hydrology Department to pump water for use with diamond drilling. Water pumping
is accomplished by one of two company owned water pumps. To provide access for
drilling, a total of 26 kilometres of access roads have been constructed on the
Navidad Property.
During
2008, the drilling contractor, Boart Longyear, installed a transportable
60-person camp in the Yanquetru Valley, on owned land to the south of the
Navidad Property. A water tank and sewerage facilities have been installed in
support of the camp.
Land
Access
Access
to land for drilling and other exploration activities is allowed through
outright surface ownership as well as through a series of easement contracts
with the remaining surface owners. Land acquisition activities continue in order
to facilitate unimpeded land access to the Navidad Property through land swap
deals and direct land purchases.
Physiography
The
Property is located in the Patagonian Plateau region with steppe vegetation
characterised by low and compact bushes of grass and by stocky shrubs of less
than a metre high. Elevation ranges from 1,060 metres to 1,460 metres with
gentle topographic relief interrupted by local structurally controlled
ridges.
History
The
first exploration programme that included the Navidad Property area consisted of
a preliminary regional geochemical sampling programme conducted by Normandy
Argentina (“Normandy”) in mid 2000 to locate additional deposits to supplement
those known at its Calcatreu property, a gold and silver deposit located
approximately 80 kilometres from the Navidad Property. The programme consisted
of 1,200 bulk leach extractable gold (“BLEG”) stream sediment samples taken from
drainage systems overlying Jurassic volcanic rocks in Chubut Province in the
general vicinity of Calcatreu, Mina Angela, Gastre, Lagunita Salada, Gan Gan,
and other areas. This programme took place on what was then considered open
exploration ground, and resulted in the identification by Normandy of various
anomalies, including the Flamingo Prospect and Sacanana, which is today known as
the Navidad Property.
In
January and February 2002, Newmont Mining Inc. (“Newmont”) purchased Normandy’s
worldwide mining interests, and in March 2002, Newmont decided to sell all of
its interests in Argentina. In September 2002, IMA Exploration Inc. (“IMA”)
signed a confidentiality agreement (“Confidentiality Agreement”) in order to
obtain an information brochure and technical data related to Newmont's
Argentinean interests, which included its Calcatreu property. In December 2002,
IMA applied for a cateo over the area formerly known as Sacanana and now known
as the Navidad Property, utilising and relying upon the Normandy BLEG data
(known as BLEG A), and began undertaking a regional exploration programme over
the Navidad Property, including regional mapping and sampling. From December
2002 to July 2006, IMA conducted diamond drilling, geochemical sampling,
geophysical exploration, and mineral resource estimates at the Navidad
Property.
In
January 2003, Aquiline entered into an agreement with Newmont, which was
completed in July 2003, to purchase all of the shares of Normandy and Newmont’s
100% interest in Calcatreu, and acquired all of Newmont’s assets including the
BLEG A data. In May 2003, Aquiline reviewed the BLEG A data and found that the
ground covered by the BLEG A data had already been claimed by IMA. After failure
to receive a credible response from IMA as to how they could otherwise have made
a legitimate discovery at the Navidad Property without having breached the terms
of the Confidentiality Agreement, Aquiline went on to file suit in the Supreme
Court of British Columbia in March 2004.
The
Supreme Court of British Columbia awarded ownership of the Navidad Property to
Aquiline on July 14, 2006 following a court case where IMA was found to have
breached the Confidentiality Agreement. IMA subsequently appealed to the Court
of Appeal for British Columbia, but lost the appeal by unanimous decision in
June 2007. An Application for Leave to Appeal to the Supreme Court of Canada was
filed by IMA in September 2007. Sole ownership rights were granted to Aquiline
by the Supreme Court of Canada on December 20, 2007, subject to
Aquiline making payment to IMA in reimbursement for its accrued exploration
expenditures up to the July 2006 court decision. Aquiline’s final payment to IMA
was made on February 8, 2008, giving Aquiline full ownership of the Navidad
Property.
Since
October 2006, Aquiline has undertaken diamond drilling, geophysical and
geochemical exploration, metallurgical test work, resource estimates and a
preliminary economic assessment for the Loma de La Plata deposit.
Geological
Setting
Regional
geology
The
Navidad Property is located on the southwest edge of the Northern Patagonia
Massif in southern Argentina. This boundary of the massif is coincident with the
“Gastre Fault System”, which was originally interpreted as a large-scale dextral
shear zone. This mega-structural feature is now believed to be the result of
continental-scale northeast to southwest extension that produced through
down-faulting a series of northwest to southeast trending half grabens and
tectonic basins.
Granitoid
rocks of the basement in northern Chubut Province belong to the Palaeozoic age
Mamil Choique and Lipetren formations. Locally these rocks are exposed at
surface in windows through the overlying Mesozoic age volcanic and sedimentary
rocks. At the Navidad Property, the Mesozoic sequence consists of the Lonco
Trapial Formation and overlying Cañadón Asfalto Formation. The latter of these
formations hosts the Navidad mineralisation.
The
Province was tectonically active during the Jurassic with abundant evidence of
syn-sedimentary faulting observed in the Cañadón Asfalto Formation. Continued
post-sediment tectonic activity resulted in the faulting, tilting, and local
folding of the Lonco Trapial and Cañadón Asfalto formation stratigraphies. This
resulted in the formation of a series of northwest trending half and full horsts
and grabens.
Overlying
these tilted Jurassic age volcanics and sediments are the generally flat lying
sediments and pyroclastic rocks of the Cretaceous age Chubut Group Formation. To
the east and south these are covered by Tertiary age plateau
basalts.
Local
and property geology
The
oldest rocks are the crystalline basement rocks of the Mamil Choique Formation
located in the southwest corner of the Navidad Property area. These basement
rocks are overlain by a sequence of pyroclastics, volcanic agglomerates and
lavas of the Lonco Trapial Formation. These rocks are exposed along a northwest
to southeast trending strip in the southwest quadrant of the Navidad Property
area and in the valley northeast of the Sauzal Fault along the Navidad trend.
They are also exposed on the southeast Navidad Property section of the Esperanza
trend at the Fold Zone.
The
welded pyroclastics of the Lonco Trapial Formation exposed to the southwest of
the Navidad Property area are also found directly north of Calcite Hill and in
deep drilling along the Navidad trend below the Sauzal Fault. Here they are
interbedded with juvenile volcaniclastics derived from the same flows. A drill
hole northeast of Navidad Hill crossed in excess of 500 metres of this
volcaniclastic/pyroclastic sequence without encountering the underlying
agglomerates or basement rocks. This thick sequence of rock is generally
oxidised as denoted by its characteristic red colour.
Stratigraphically
above the Lonco Trapial volcanic sequence and forming the base of the Cañadón
Asfalto Formation are coarse clastic sediments of arkosic composition. Basal
conglomerates of the arkoses may contain boulders up to two metres in diameter.
They are composed almost exclusively of angular grains of quartz and feldspar
derived from the Mamil Choique Formation. Locally the arkoses contain horizons
of limestone, some with stromatolites. Coarser beds include pebble to cobble
size clasts of granite and metamorphic rocks. These beds may locally exhibit
cross-bedding sedimentary textures. These sediments extend from the valley floor
southwest of the Argenta trend to the Esperanza trend. Intersections from
drillholes southeast of Loma de La Plata and further south on the Argenta trend
indicate the arkoses are interbedded with thick sequences of argillaceous
shales. At surface the coarser arkoses horizons are resistive and form extensive
exposures. The shales are erosionally recessive and are rarely if ever exposed
at surface.
At
Loma de La Plata and between the Esperanza and Navidad trends there are no
arkose sediments. In their place intercalated with the argillaceous black shales
are mature greywackes of intermediate volcanic composition.
These
are deposited in rhythmic sequences consisting of pebble conglomerates that
grade normally into coarse muddy sandstones. The greywackes locally contain thin
carbonaceous horizons.
Above
the greywackes from Loma de La Plata to Sector Z and between Esperanza and
Navidad trends southeast of Calcite NW are argillaceous black shales. These
sediments contain limestone horizons and zones with intercalations of coarser
grained muddy sediments. They are rich in organic carbon and locally may contain
thin coal seams. In the northwest to central portions of the Esperanza Valley
the shales may also contain horizons of pyroclastics with varying degrees of
re-working with thicknesses that range from one metre up to ten metres. At
Galena Hill the shales host massive sulphide replacement bodies at their lower
contact with the latite lavas. At several of the Navidad Property deposits these
shales contain lead and zinc mineralisation distal to the higher grade silver
zones.
Contemporaneous
with the deposition of the sediments within the Navidad Property area, there
were a minimum of three distinct extrusive lava and multiple pyroclastic
volcanic events. The oldest of the lavas are fine-grained and of intermediate to
mafic composition. These are referred to at the Navidad Property as andesite.
These rocks are believed to been extruded sub-aerially as the auto-brecciated
tops of the flows show the effects of thermal oxidation. These lavas were either
simultaneously deposited within two separate basins, one dominated by arkoses
and the other by black argillaceous shales, or there were multiple andesite
eruptive events. On the Argenta trend the andesites are inter-bedded with
arkoses and on the southern end of the Navidad trend they are inter-bedded with
black shales. At the northwestern end of the Navidad trend and north of
Provincial Route No. 4 they are overlain by pyroclastics and other latite lava
flows with no intervening sediments. The andesite lavas are generally not
mineralised; however, locally they can host silver-copper mineralisation. The
best known mineralisation hosted in andesite is located at the southern limit of
the Connector Zone. Here the tectonically brecciated and hydrothermally altered
andesite returns grades of up to 11 kilograms per tonne of silver in surface
rock chip samples. There are also mineralised showings in andesites south of the
Loma de La Plata deposit on the Argenta trend and at the Fold Zone at the
southeast end of the Esperanza trend.
The
next extrusive lava event produced what is referred to on the Navidad Property
as the Lower Latite unit. It is actually a hybrid consisting of a trachyandesite
contaminated by quartz, which appears as rounded one millimetre to three
millimetres quartz phenocrysts with reaction rings in quantities ranging from 1%
to 5%. The Lower Latite also contains cognate clasts 0.5 centimetres to three
centimetres in size of fine-grained material of the same composition without
quartz phenocrysts. On the Navidad Property these are referred to as
“xenoliths”. The Lower Latite was preceded by a pyroclastic eruption that
produced pumice bearing ash tuff. At Navidad Hill and Galena Hill the exposed
volcanic sequence is andesite, pumice tuff followed by the Lower Latite with no
intercalated sediments. The Lower Latite lava is restricted in distribution to
the northern end of the Argenta trend and the northern half of the Esperanza and
Navidad trends. These lavas host high grade mineralisation at Calcite Hill,
where the Upper Latite lavas are believed to have been removed by erosion prior
to the deposition of the black shales. The Lower Latites also host
mineralisation together with the Upper Latites at Galena Hill.
The
last extrusive volcanic event produced the Upper Latite lava flows. These rocks
are macroscopically identical to the Lower Latite except they do not contain
cognate clasts. Potentially, these autoclasts were completely reabsorbed by the
magma before their extrusion. It is believed the initial eruption of the Upper
Latite encountered sufficient ground water to create a maar – diatreme complex
located at Calcite NW. Evidence supporting this hypothesis is a two kilometres
wide zone of milled matrix breccia containing rounded clasts of the welded
pyroclastic flows and Lower Latite lavas. Horizons of reworked pyroclastics
observed within the sediment sequences at the northern end of the Navidad trend
may represent surge deposits. Continued eruption of the Upper Latite lavas led
to its distribution over an area minimally 60 kilometres squared in size
including the entire length of the Argenta, Esperanza and Navidad trends and
north of the Provincial Route No. 4. At the southeast end of the trend the
groundmass of the lava is glassy and has devitrified to form spherulites. At the
northwest end of the Argenta trend and on the Esperanza and Navidad trends the
lava is interbedded with greywackes and shales. The Upper Latite lava hosts
practically all of the silver-sopper mineralisation at the Loma de La Plata and
Esperanza Valley deposits and a larger portion of the mineralisation at the
Navidad Hill and Galena Hill deposits.
Collectively
the individual mineralised deposits along the Navidad trend exhibit a strong
northwest to southeast lineation. A few observed small mineralised veins and
breccia dikes located along the trend also exhibit northwest to southeast to
north-northwest to south-southeast orientations. No large potential feeder
structure
common
to all the deposits has yet been discovered. If such a structure exists, it is
likely that post-mineral movement on the Sauzal Fault laterally displaced it
from beneath the known mineralised bodies.
At
the individual deposit scale the mineralisation is clearly controlled by zones
of primary or secondary porosity. Examples of this are the upper latite lavas at
Esperanza Valley and Loma de La Plata and volcaniclastic horizons at the
Connector Zone and Calcite NW. These zones are often capped by impermeable
horizons. These aquitards effectively capped the ascending hydrothermal fluids
and forced lateral migration outward from the plumes. The result was the
formation of mineralised bodies with strataform geometries.
Almost
all the Navidad Property mineralised deposits are contained within structural
blocks separated from each other by three major structures. These structures are
believed to be pre-mineralisation in some cases and are definitely
post-mineralisation in others as evidenced by these structures truncating
mineralisation. The most influential of these post-mineral structures are the
Sauzal, Esperanza and Arco Iris faults. The Sauzal Fault is located along the
northeast side of the Navidad trend and dips shallowly to the southwest. This
structure truncates the mineralisation at depth on the Galena Hill, Connector
Zone, Navidad Hill and Calcite Hill deposits. The Esperanza Fault located along
the Esperanza trend has resulted in the drag folding of the host lithologies of
the Valle Esperanza deposit. The Arco Iris Fault is located in the northern end
of the Argenta trend. This steeply northeast dipping fault limits the Loma de La
Plata mineralised deposit to the southwest where it juxtaposes it against
unmineralised andesite. The Barite Hill deposit is also interpreted to be
affected by post-mineral low angle faulting, potentially analogous to the
interpreted movement on the nearby and similarly orientated Sauzal
Fault.
Exploration
Exploration
efforts were focused on identifying new exploration targets with diamond
drilling, with delineation and infill drilling at the Loma de La Plata deposit,
and with minor infill drilling of other previously identified mineralised zones.
Exploration for additional deposits through the use of fence drilling across
prospective covered areas is feasible, since as is so far known, the occurrence
of the latite unit hosting mineralisation is generally of relatively large areal
extent that can be measured in units of tens of hectares. Mineralisation is
frequently stratiform with relatively shallow dips, and most of the known
deposits occur as large roughly tabular bodies.
Geophysical
and geochemical methods have proved useful in mapping the distribution of the
latite unit and potassic-style alteration, in detecting Galena Hill style
sulphide-rich mineralisation, and in interpreting the Navidad Property-scale
structural regime. The characteristics of the host rock and wall rock units are
favourable for diamond drilling, and extensive areas can be rapidly explored by
drilling at relatively low cost. As was demonstrated during the 2007 diamond
drilling programme, additional mineral resources can be delineated by extension
drilling laterally away from known deposit areas.
Aquiline
completed 583 diamond drillholes from November 2006 to March 2009, for 127,960
metres drilled.
Mineralization
In
all of the deposits and mineral showings the gangue minerals are principally
calcite with or without barite and a much lower proportion of silica. Visibly
recognisable ore minerals are native silver, grains and clots of black sulphides
containing argentite\acanthite and discrete grains of sphalerite, galena,
chalcopyrite, cuprite, bornite, native copper and copper carbonates. Distinct
styles of mineralisation are reflected in the differences in ore minerals and
proportion of gangue between the deposits. Various pulses of mineralisation are
observed, principally at Galena Hill. With the exception of the latter, pyrite
and sulphides in general are relatively scarce.
The
principal mineral association of interest is silver-lead. Other associations of
interest are silver-lead-copper and copper-silver or more rarely silver-zinc.
Occasionally there is silver only, or copper-lead-zinc or simply isolated
occurrences of these base metals. This further suggests that deposition occurred
through successive pulses of mineralisation. So far as it is known to date, gold
is totally absent from the system.
Mineralisation
is preferentially hosted in lavas with the upper latite containing the dominant
proportion, followed by the lower latite and then rarely by the andesite.
Deposits with the dominate portion of mineralisation within lavas include Loma
de La Plata, Valle Esperanza, Calcite Hill, and Galena Hill. Sedimentary rocks
and volcaniclastics can also contain significant mineralisation. Deposits where
the mineralisation is dominantly hosted by these rock types include Calcite NW,
Navidad Hill, Barite Hill, and the Connector Zone.
To
date the general Navidad Property is comprised of eight individual mineral
deposits in three separate mineralised trends referred to as the Navidad trend,
the Esperanza trend, and the Argenta trend. The six deposits in the Navidad
trend are essentially contiguous and include, in a 5.8 kilometres alignment from
northwest to southeast, Calcite NW, Calcite Hill, Navidad Hill, Connector Zone,
Galena Hill, and Barite Hill. The Valle Esperanza deposit occurs on the east
flank of the Esperanza trend and is found approximately 370 metres to the
south-southwest of Galena Hill. The Loma de La Plata deposit occurs along the
northern portion of the Argenta trend and lies approximately 2.2 kilometres
southwest from the centre of Calcite Hill.
Calcite
NW
Calcite
NW is located stratigraphically in the upper sedimentary package found directly
above the latite unit. This package is comprised of mudstone, sandy volcanic
tuffs, tuffaceous sandstones, lapilli tuffs, and volcaniclastic intervals. In
general the layers with a significant tuffaceous component exhibit a strong
argillic alteration.
Mineralisation
occurs disseminated in the sediments where it is observed as galena with
occasional scarce chalcopyrite. Facies with high permeability, such as the
tuffaceous sandstones and volcanic tuffs, are preferentially mineralised.
Towards the northwest the mineralisation is characterised by lead with low
silver and is hosted mainly by tuffs and pyroclastic units. In the central to
southwest area of Calcite NW, silver and lead mineralisation with low grade
copper and occasional zinc mineralisation are hosted by sandy mudstones and
tuffaceous sandstones.
Mineralisation
at Calcite NW takes the form of three long and tabular to slightly synformal
bodies. The main body lies from the surface to a depth of 130 metres below
surface and has an average overburden thickness of approximately 60 metres. It
has a strike length of 1,825 metres towards the northwest, a width between 350
metres to 500 metres, and a thickness between ten metres and 80 metres. The
mineralised body plunges gently to the northeast with a dip between 1º to 5º.
The base of the main body is normally identified by the Galena
Marker.
Towards
the south-eastern end of the deposit, a smaller lens lies close to the surface
parallel to the main body and about 80 metres above it. It has a regular shape
275 metres long, up to 250 metres wide and between 20 metres and 40 metres
thick.
Another
elongated lens of mineralisation lies between 15 metres to 50 metres below and
parallel to the northern end of the main body. The body is 1,000 metres long,
between 200 metres and 350 metres wide, and ranges between ten metres and 30
metres in thickness.
Calcite
Hill
The
mineralisation is hosted principally in the latite with xenoliths unit (lower
latite) and occurs upwards for a few metres above the contact with the overlying
upper sedimentary or pyroclastic package depending on the sequence. The style of
mineralisation is typically banded epithermal vein filling and stockworks in
breccias developed in the brittle massive portions of the flow. Where present in
the upper sedimentary package, mineralisation occurs as disseminations infilling
the primary porosity as well as micro-veinlets that are comprised of
argentiferous lead and zinc sulphides along with interstratified
galena.
Gangue
mineralisation is comprised of calcite, minor silica, and barite either white in
colour or as a caramel-coloured variety that occurs almost exclusively at
Calcite Hill although it has been occasionally identified on nearby Navidad
Hill. High grade mineralisation is comprised of galena, black sulphides, native
silver, and occasional chalcopyrite. The overlying geochemical signature is
silver-lead with minor copper.
Azonation
of the mineralisation hosted in the latite unit is exhibited in the sequence of
the three principal zones which in descending depth order are:
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·
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An
upper zone with principally lead mineralisation with minor silver, and
minor to absent copper;
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·
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An
intermediate zone with high grade silver mineralisation and proportionally
less lead and moderate copper; and
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·
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A
lower zone with primarily silica fracture filling, low in sulphides and
silver mineralisation.
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On
the north flank of Calcite Hill, the mineralisation is hosted in volcaniclastic
rocks, in the lower portion of the overlying calcareous mudstone unit and in the
contact between the same volcaniclastic unit with the lower latite with
xenoliths. The entire sequence exhibits structural disturbance. This is
attributed to a possible low-angle fault at the base of the sequence which has
underlying it the reddish-coloured volcaniclastic basal unit.
Mineralisation
at Calcite Hill forms an irregular body with a narrow upper portion outcropping
towards the western end of Calcite Hill, which merges with a larger mineralised
lens. Mineralisation outcrops and extends to a depth of around 250 metres below
surface. It forms a relatively flat surface 600 metres long, ranging from 270
metres to 600 metres in width. The lower portion of the body has an irregular
shape resulting from two nearly separate lenses that merge into one lens having
a variable thickness between 150 metres to 20 metres. The body plunges to the
southwest with a -5º dip.
Navidad
Hill
The
Navidad Hill deposit exhibits two different types of mineralisation and control.
The first of these outcrops along the crest of the hill where mineralisation
related to structural control is most evidently displayed compared to elsewhere
on the Navidad Property. Here outcropping vein structures exhibit breccias
comprised of finely banded crystalline calcite gangue, barite, and finely
crystalline to chalcedonic silica. Visually identifiable ore grade minerals
include galena, black sulphides, copper and manganese oxides, and lesser
quantities of pyrite, chalcopyrite, and rare native copper and
silver.
The
high grade brecciated vein structures occur in a belt approximately 100 metres
in width with discontinuous sub-vertical extensions, striking generally at an
oblique angle to the main Navidad trend in the range of 310º to 345º. Vein
thicknesses are one metres or less with silver values in the 1,000 grams per
tonne to 10,000 grams per tonne range. Vein development discontinuity is also
evidenced by “rosario” outcrops along strike and by changes in mineralogical
composition along strike as well as at depth. The latite wall rock adjacent to
the breccia veins is also found mineralised with the development of veinlets,
stockworks, and breccia zones. As indicated so far by drilling, the outcropping
breccia veins do not extend to a depth exceeding 80 metres where the vein
integrity tends to break down into a zone of veinlets comprised principally of
chalcedonic silica that increases at depth. To date the base of the latite has
not been encountered by drilling at Navidad Hill which leaves open the
possibility of a dome structure in this area.
Mineralisation
at Navidad Hill trends for 520 metres towards the northwest and forms an
irregular globular shape ranging from 270 metres to 470 metres wide and ten
metres to 175 metres thick. The mineralised zone has a shallow dip to the
southwest and lies at the subsurface along the ridge crest to around 50 metres
depth along the southern flank.
Connector
Zone
The
mineralisation occurs as disseminations and replacement of the matrix in the
volcaniclastic rocks. Locally the volcaniclastic rock is crackle brecciated with
a matrix of hydrothermal minerals, sulphides and rare native silver. The
volcaniclastic rock can exhibit a wide range of textures ranging from
conglomeratic horizons to thinly bedded strata. The volcaniclastic unit contains
sub-rounded to very angular clasts of latite derived from the uplift and erosion
of the latite lavas. Lesser, and generally lower grade mineralisation can also
be hosted in the underlying greywacke and the overlaying mudstones.
The
mineralisation at Connector forms two intersecting, but distinct bodies, which
combined, are 670 metres in strike length, and between 240 metres and 590 metres
wide. The mineralisation lies from the surface to a depth of 330 metres. The
deposits are hosted in a sedimentary sequence comprised of sandstones and fine
conglomerates with minor mudstones, interbedded with volcaniclastic layers which
are mostly formed by sub- rounded to angular latite fragments derived from the
erosion of the latite lavas. Locally the host rocks exhibit micro-veinlets up to
one centimetre thick and poorly developed stockwork texture. The intensity of
the brecciation is weak to moderate and the gangue infilling is comprised of
calcite and silica. Alteration is weak and is manifested by a moderate bleaching
of the rock due to the presence of low-temperature illitic-smectitic
clays.
Galena
Hill
Mineralisation
at Galena Hill is hosted in a variety of distinct fragmental rock types. These
include hyaloclastites at the margins and ends of lava flows and crackle
breccias within the massive cores of the flows. Also present are dikes and pipes
of hydrothermal breccia. The predominant style of mineralisation is the
selective replacement of breccia matrix, or as open space filling. Locally the
mineralisation pervasively replaces the matrix of the host lithologies including
the mudstones. Where the mudstones are mineralised, they can form massive
sulphide-rich stratiform lenses containing galena and marcasite.
The
lithology that hosts mineralisation varies within the different portions of the
deposit. At the far northwest end of the deposit the mineralisation is primarily
hosted within the lower latite with minor mineralisation in the overlaying
mudstones and underlying volcaniclastics. Towards the southeast end of the
deposit the mineralisation is hosted in both the lower latite unit and the upper
latite unit and locally in the overlaying mudstones. To the far southeast end of
the deposit all of the mineralisation is contained within the upper latite with
only trace mineralisation contained in the overlaying mudstones.
The
extent of mineralisation is long and wide with a strike length of roughly 900
metres and a width of between 250 metres and 700 metres. In section views
orientated at 030° to 210°, the mineralised body forms a roughly strataform body
with a slight dip to the southwest. This body resembles an inverted shield with
a flat top and a thicker central portion that thins to the margins. On nearly
every section the mineralisation is affected by post-mineralisation movement on
the northwest to southeast trending block faults resulting is displacements of
roughly ten metres to 50 metres. Those portions of the mineralisation located
above the horst are partly eroded whilst those portions to either side are
preserved in their entirety. The mineralised zone ranges from a few metres thick
at the extreme margins to over 200 metres thick in the central portions of the
deposit.
Mineralisation
outcrops in several locations including the upper northwest flank and within the
window through the mudstones in the area of the structural horst. The top of
mineralisation ranges from surface to 200 metres below surface with an average
depth less than 40 metres.
There
are 12 drill holes in the Galena Hill sector of the Navidad Property that are
being monitored on a regular basis for determining the level of the water table.
Across the area the top of the water table is at approximately 1,137 metres
elevation. The majority of the mineral resource at Galena Hill lies beneath this
level.
Barite
Hill
At
Barite Hill two styles of mineralisation are present in distinct stratigraphic
units. The first occurrence from surface to depth is a relatively weak
silver-lead mineralisation with minor copper and zinc hosted in calcite and
lesser barite gangue filling veinlets and breccia matrix within the upper latite
unit.
The
second style of mineralisation is found in two clastic units below the upper
latite flow that is normally found mineralised at the Navidad Property. The
units are a sedimentary unit comprised of sandstone and mudstone, and a
volcaniclastic unit derived from latite. Mineralisation is interpreted to have
been emplaced through the migration of hydrothermal fluids across zones of
primary permeability in the sandstones or through zones of secondary
permeability through fracturing. This lithology package is bounded on top by a
greywacke unit and underneath by fine-grained clastic sediments (mudstones),
both of which are interpreted to have relatively low permeability.
Observed
mineralisation occurs as a matrix gangue filling of calcite, barite and clays
that contains sparse chalcopyrite, black sulphides, and native silver. It is
deposited in fine fractures, stockworks and breccias in the mudstones and
volcaniclastic rocks, and occurs as disseminations of black sulphides in the
sandstones. In areas reporting high silver assay values, native silver is very
common and occurs as pure veinlet fillings up to five millimetres in thickness.
The principal geochemical association is silver with low copper; in general lead
is scarce.
Mineralisation
at Barite Hill forms three lenses. The northern lens is about 230 metres long
along strike, between 170 metres and 430 metres wide in the dip direction and
between five metres and 30 metres thick. The southwest dip varies between 3°
where the body outcrops in the north to 25° in the southwest where the body lies
approximately 120 metres below surface. The second lens is found towards the
southern end of Barite Hill. Its dimensions are approximately 300 metres long by
350 metres wide with thicknesses ranging from 4 metres to 32 metres. It occurs
at the subsurface on the crest of the ridge and plunges to the
southwest.
The
third mineralised body, characterised by high silver values, forms an
irregularly shaped mass around 350 metres long, between 100 metres and 400
metres wide, and between seven metres to 100 metres thick. It lies between 50
metres and 200 metres below the second lens in southern Barite Hill and has a
dip of 30° to the west-southwest.
Loma
de La Plata
At
the Loma de La Plata deposit the stratigraphy consists of basal andesites
overlain by greywackes and sandy conglomerates that change laterally to
mudstones and arkoses. Autoclastic breccias lay between the lower sedimentary
sequence and the volcanic flow units comprised by the two latite units, with and
without xenoliths, which are separated by an interbedded sedimentary layer. The
sequence is completed by mudstones and fine to very fine sandstones that vary to
limestones laterally to the east.
In
the west to southwest the sedimentary units are thin or missing due to erosion
and the lithology is typically comprised by the latites with and without
xenoliths that overlay the andesites. Towards the east the sequence is complete
due to down–dropped blocks that are the product of normal faulting with an
approximate north-south strike presumably resulting from northwest to southeast
orientated compression.
The
entire sequence has a 325º strike and dips -20° to -30° to the northeast; the
dip tends to flatten somewhat along strike to the northwest.
Mineralisation
is hosted primarily in the upper latite unit which outcrops in the southwest
part of the deposit area and dips towards the northeast where it has been
intercepted up to 300 metres below the surface. Drilling in 2008 demonstrated
that the mineralisation tends to be enriched in breccia zones associated with
north-south normal faults that have a spacing on the order of 70 metres to 90
metres.
The
style of mineralisation is characterised by hydrothermal veinlets up to three
centimetres thick and tectonic and crackle breccias developed in the brittle
massive portions of the lava flow. Gangue mineralisation is comprised of
calcite, laumontite, barite and silica present as a white quartz and occasional
amethyst. Textures are massive to crustiform and occasionally botryoidal; bladed
calcite replacement textures have been observed.
Mineralisation
is comprised of acanthite, native silver, argentite, stromeyerite, silver
sulphosalts, galena, chalcopyrite and bornite disseminated in the matrix of the
breccias and as rims in veinlets. Chalcopyrite is the only mineral that is also
disseminated in the host rock. The acanthite and lesser stromeyerite are the
principal silver-bearing sulphide minerals that contain approximately 80% of the
reported silver. QEMSCAN analyses performed by Xstrata Process Support report an
average silver grain size in the range of six micrometres to 20
micrometres.
Two
distinct mineralised bodies are present at Loma de La Plata. The main deposit is
850 metres long with a north-south strike, between 600 metres to 1,200 metres
wide and 40 metres to 50 metres thick. It covers a surface area of 74 hectares.
The second body is considerably lower in grade and is located approximately 60
metres beneath the main deposit. It has approximately the same surface area as
the upper main body but with an average thickness of only five
metres.
The
area with the highest grade mineralisation is located in the central and western
side of the upper Loma de La Plata deposit; overburden thickness varies from
zero metres to 50 metres. The dimensions of the high grade zone are 500 metres
north-south by 170 metres east-west.
To
the southeast of the deposit the latite lava flow continues towards the Bajo del
Plomo area but with greatly diminished silver and relatively high lead values.
To the east the deposit was expanded by some 400 metres where the mineralised
portion of the latite becomes progressively thinner with diminishing silver
values and higher lead. Towards the northeast drilling has confirmed that the
deposit is cut off by the Esperanza Fault. Towards the north the 2007 perimeter
was expanded 200 metres where generally no further significant silver
mineralisation has been encountered despite the presence of the host
unit.
In
summary, the total mineralised footprint has been increased by 100% with respect
to the area defined in 2007. The deposit still has limited potential to expand
towards the northwest where the latite as well as the mineralisation continues
to Valle La Plata sector, and there remain some restricted possibilities for
expansion to the east- southeast.
Valle
Esperanza
At
Valle Esperanza the main mineralised deposit is emplaced in the upper latite
volcanic unit without xenoliths immediately below the contact with the upper
carbon-rich sedimentary package comprised of mudstone, sandstone, and greywacke.
The latite varies from massive to autobrecciated in the flow top depending on
the number of lava flows. The unit is brecciated with a matrix of calcite, with
minor laumontite, barite and silica that are present as massive in-filling,
sometimes as banded textures. In the brittle massive portions of the flows, the
breccias occur as tectonic or crackle breccias that were hydrothermally
in-filled. In the autobrecciated zones with abundant amygdaloids, the
hydrothermal fluids used the primary porosity in the contacts between fragments
to generate the breccia. The intensity of brecciation is moderate and at least
two events of brecciation are recognised.
Of
less importance, a lower grade mineralisation is hosted in the underlying lower
latite with xenoliths that is below the upper latite and overlain by another
sedimentary package comprised of mudstones, greywacke and volcaniclastic
rocks.
Alteration
is weak to locally strongly argillic in breccias. In general alteration is
limited to a gentle bleaching of the host volcanic rock in close proximity to
the mineralisation.
The
predominate style of mineralisation is the disseminated occurrence of black
sulphides, native silver, chalcopyrite, malachite, pyrite and galena in the
breccia matrix and in veinlets up to one centimetres thick. Locally the
mineralisation of chalcopyrite and galena pervasively replaces both the matrix
and the host lithologies. The silver shows a very good correlation with copper
and low correlation with lead.
Drillhole
intersections have traced the two mineralised zones from surface to
approximately 400 metres below surface. The upper body is about 1,100 metres
long and between 130 metres and 700 metres wide. The lower body lies
approximately 50 metres below the upper deposit, and is 800 metres long and
between 140 metres and 500 metres wide. Both bodies range in thickness between
five metres to 30 metres.
The
mineralised horizon strikes approximately to 290° with a variable northeast dip
between -70° to -10°. The dip appears to flatten towards the
northeast.
The
Valle Esperanza deposit is not fully defined as yet and future work will include
drilling along strike to the north-west and south-east and down dip to the north
of the presently defined deposit.
Drilling
All
diamond drilling on the Navidad Property since the first drillhole in November
2003 has been completed by Boart Longyear Connors Argentina S.A. of Mendoza,
Argentina (subsequently taken over by Boart Longyear in 2007). One rig is
employed on a discontinuous basis and is capable of drilling deeper than 400
metres
with
HQ sized rods. Nearly all holes have been drilled at HQ3 diameter (61
millimetres) with three metre long rods, except for rare instances where the
drillhole was collared at HQ size diameter and subsequently reduced to NQ
diameter down the drillhole. No liners or split-tube core barrels have been used
in the drilling process. Frequently used drilling additives include Polyplus,
Platinum Lube, and G-Stop. Common rod grease may be used for exceptionally deep
holes. Drilling conditions are very good with drilling rates of approximately
120 metres per day per machine. During 2008, up to three additional drill rigs
operated on the Navidad Property: one continued with exploration drilling; the
other two rigs were dedicated to a programme of in-fill and extensional drilling
and orientated-core drilling in support of a geotechnical study of the Loma de
La Plata deposit. One of the Loma de La Plata drill rigs was swapped for a
period of time with a rig capable of drilling PQ3 diameter (83 millimetres)
drill core for metallurgical sampling. The holes for metallurgical sampling
doubled as in-fill drillholes. Split-tube core barrels were used during the
orientated core drilling of Loma de La Plata for geotechnical
analysis.
Staff
geologists set up drill collars in the field by locating the planned collar
coordinates with a GPS unit or occasionally by tape measure from a nearby
drillhole. The geologist aligns the azimuth of the rig by setting out a row of
stakes oriented on the desired azimuth, frequently 030°, with a Brunton compass.
The edge of the drill rig, such as the Nodwell track or the outer wall of the
mounted housing unit, is aligned with the stakes. Drillhole inclination is set
by placing the inclinometer of the Brunton compass directly on the drill
rod.
After
drilling the hole, collar coordinates are periodically surveyed by a
professional contract surveyor using total station methods or more recently with
a differential GPS. The survey point of reference is a federal government
geocentric reference frame (POSGAR) point. Coordinates are expressed in the
Gauss Kruger Zone II system, relative to the Campo Inchauspe datum. Drillhole
azimuths at the Navidad Property have historically used a magnetic declination
correction of 08°E, but beginning in 2009 drillholes from number NV-949 onwards
will use an updated correction of 06.5°E.
A
number of different instruments have been employed at the Navidad Property to
define the drillhole trace down the hole. Aquiline previously used a system of
taking downhole surveys either halfway downhole, or every third of the hole, or
every quarter of the hole, depending on hole length. In October 2008, Aquiline
implemented a system of standardising downhole surveys every 50 metres, and
beginning in 2009, in deposits where resources have previously been estimated,
downhole readings are now taken at 30 metre intervals. Currently no downhole
survey of the bearing and dip is taken at the collar, but the first measurement
is now taken not lower than ten metres below the drill collar. No surveys are
taken of vertical holes. Snowden Mining Consultants Inc. (“Snowden”) recommends
that all drillholes be surveyed regardless of their orientation with the first
measurement taken at the collar of the hole.
The
average distance between downhole surveys is 84 metres between surveys, with a
maximum distance of 232 metres. Beginning with drillhole 616, survey
measurements have averaged 52 metres between readings. No serious drillhole
deviation problems have been encountered in the drilling to date. Azimuth swing
between downhole surveys ranges between 0° and 10°, with lifts of between 0° and
3°.
Sampling
and Analysis
Sampling
The
sampling method at the Navidad Property has followed similar protocols for the
life of the Navidad Property.
The
same sampling methodology for diamond drill core sampling at the Navidad
Property has been followed since the acquisition of the Navidad Property from
IMA, with a few refinements. Approximately five staff geologists are responsible
for logging drill core, which takes place in Gastre. Drill core from NV07-459
onwards are stored in Gastre, along with core selected as representative of each
deposit (NV05-241 to NV05- 245, NV06-278, NV06-324, NV06-343, NV06-363,
NV06-372, NV06-379, NV06-403, NV07-442, and NV07-449). Drill core up to NV07-458
is stored in Gan Gan, except the representative drillholes stored in
Gastre.
Drill
core is stored and well maintained in wooden core boxes with a nominal capacity
of approximately three metres. The drillhole number, box number, and downhole
interval are marked in felt tip marker on the side of
the
box. Wooden downhole core depth markers are placed in the core box by the
driller indicating the drillhole number and end of run depth.
Staff
geologists log the drill core in detail using standardised logging sheets on
handheld computers for: lithology; alteration type, style, and intensity;
mineralisation type, style, and intensity; and structural information. The
entire drillhole is photographed prior to cutting. Geotechnical information
including drill core recovery, rock quality designation, weathering, texture,
fracture frequency, type, roughness, infill, shape and angle, hardness, and
other notes are recorded on a drill-run basis.
Samples
are taken continuously downhole within the prospective lithologies, along
geological boundaries rather than by a pre-determined length, which represents
best practice. Samples within geological similar units are selected at three
metre intervals. Samples are marked for cutting by indicating the sample
interval with a yellow paint marker and stapling a waterproof sample number tag
on the core box. The drill core is cut in half with a diamond bladed core saw,
using recycled water decanted from a settling tank. There is evidence that core
samples are not always cleaned subsequent to cutting. Wherever the drill core is
too broken for cutting, samples are selected by hand or with a spatula, and very
rarely a mechanical splitter is used for core intervals too small for cutting
with the saw.
Samples
are collected by staff, placed into a previously numbered plastic bag along with
a waterproof sample number tag indicating the sample depth interval and the
sample number corresponding to the tag stapled to the core box. The plastic
sample bag and tag are then sealed with a tamper-proof plastic tie embossed with
the sample number.
Several
sample bags are then placed into larger poly-woven plastic bags, weighed, and
transported to the Alex Stewart Mendoza sample preparation facility by drivers
from the Gastre community or by staff.
The
remaining drill core is stored under cover at the core storage facilities in
Gastre and Gan Gan.
Density
determinations are made on a box by box basis for the entire drillhole.
Technicians record the downhole interval marked on the box and the length of the
sample contained within the box to obtain the recovery percentage. The volume of
the sample is calculated by multiplying the core diameter (6.1 centimetres) by
the recovered core length. The density is then calculated by weighing the core
box, subtracting the weight of the wooden core box (previously set at 3,580
grams, but now set at the average weight of each new shipment of boxes), and
dividing by the volume of the recovered sample. Boxes with more than 15% core
loss are excluded from the database.
There
are a number of potential sources of error when determining density values using
this method, including the accuracy of the scale in use, the accuracy of the
drill core recovery estimation, using a set weight for a wooden core box, and
the crossing of lithological and/or mineralisation boundaries within the core
box.
Since
October 2008, drillholes numbered NV08-876 and above have had their density
determined using the water displacement method, in addition to the box method.
Older drillholes under examination have also had density determinations made
using the water displacement method. An approximately 20 centimetres long piece
of competent core is selected, quartered with a saw, washed, and dried on a hot
plate for between five and ten minutes. The weight of the dry sample is
recorded, and the sample is suspended on a length of string and completely
submerged into a 1,000 milliliters capacity cylinder containing 600 milliliters
of water. The displaced water volume is recorded, and the density is calculated
by dividing the volume of the displaced water by the weight of the dry
sample.
Analysis
All
diamond drill core samples at the Navidad Property have been analysed by Alex
Stewart Assayers Argentina S.A. (“Alex Stewart”) of Mendoza, Argentina. Alex
Stewart is ISO 9001:2000 accredited for the preparation and chemical analysis of
mining exploration samples. On two separate occasions in 2003 and
2007,
Smee
and Associates conducted a laboratory inspection and considered the laboratory
to conform to industry best practice methods for analysis.
Upon
receipt of the sample submission, each sample bag is weighed and the entire
sample is removed from the bag and placed in a drying pan. Samples are dried at
70°C for up to 40 hours.
After
drying, the entire sample is removed from the drying pan and jaw crushed to #10
mesh to reduce its fragment size so that 95% of the sample is less than two
millimetres in size (which is monitored by subsequent screen tests). The entire
sample is passed through a riffle splitter several times before a final split of
1.2 kilograms is collected.
At
this point a 1.2 kilograms duplicate of the course reject is collected randomly
from each analytical batch. This coarse reject duplicate is subsequently
re-numbered as the original sample number with the suffix “DC” and then treated
as a normal sample. The residual coarse reject is stored.
The
sample is then pulverised ensuring that at least 80% of the material is less
than 75 micrometres in size (80% passing through #200 mesh, also monitored by
screen tests). A representative 250 gram split of the sample pulp is taken as
the sample and pulp duplicates are routinely collected by the laboratory and
assayed as part of their analytical quality control measures. The remaining pulp
reject (approximately 950 grams) is stored for future reference.
The
crusher and pulveriser are cleaned with barren quartz between each
sample.
All
drill core samples at the Navidad Property have been analysed by fire assay for
silver with gravimetric finish and gold for AAS finish and ICP-ES for 19
elements using the ICP ORE technique.
For
silver fire assay, a 30 gram charge is fused with 230 grams of flux in a furnace
with temperature control at 1,050°C to produce lead buttons with a weight of at
least 30 grams. The lead buttons are weighted and any sample with a
button less than 30 grams is repeated. The cupellation of the lead
buttons occurs in a furnace with temperature control at 950°C. Two
standards of pure metallic silver are included in each cupellation batch to
quantify the silver loss during the process. The prills are weighted
in a microbalance and silver dissolved with nitric acid and gold with Aqua
Regia.
Gold
content is determined by AAS and the silver value is calculated as the
difference between the weight of the AAS gold and silver. The final
silver value considers silver lost by cupellation and adds silver based on the
two metallic silver standards. Silver detection limits are two grams
per tonne silver and occasionally one grams per tonne silver.
QAQC
The
QC protocol employed by Alex Stewart consists in batches of 50 samples for fire
assay and up to 100 samples for ICP. Fire assay batches include one preparation
blank, one analytical blank, one coarse duplicate, four pulp duplicates, one
international certified standard for base metal and silver, one uncertified
in-house standard, and two standards made from pure silver to calibrate losses
in cupellation. ICP batches include two blanks, four standards, and 10%
duplicates.
Certified
standards, blanks, and field duplicates are routinely inserted with sample
submissions as part of their sample assay quality assurance/quality control
(“QAQC”) programme, and provided Snowden with the data for review. Analysis of
QAQC data is made to assess the reliability of sample assay data and the
confidence in the data used for the resource estimation.
Certified
standard samples are used to measure the accuracy of analytical processes and
are composed of material that has been thoroughly analysed to accurately
determine its grade within known error limits. A standard is considered to have
failed if the assay result is above or below three standard deviations of the
mean certified
standard
value defined by the standard manufacturer. If a standard has failed then it may
be necessary to re-analyse the sample batch associated with the
standard.
A
total of 3,734 standard samples have been submitted at a frequency of one in
every 21 samples. Standards for silver and lead are comprised of material
collected from site and prepared by Acme laboratories in Santiago, Chile, ALS
Chemex in La Serena, Chile, ALS Chemex in Vancouver, Canada, and Assayers Canada
in Vancouver.
By
late 2008 these standards had been depleted, and Aquiline purchased three new
standards certified for silver, lead, copper, and zinc, prepared and packaged by
CDN Labs of Delta, British Columbia. The standards have been certified by seven
laboratories including Alex Stewart of Mendoza, ALS Chemex of Vancouver, Acme of
Vancouver, Acme of Santiago, SGS of Lima, ALS Chemex of La Serena, and G&T
Metallurgical of Kamloops.
Snowden
considered the results of the standard, blank, and field duplicate samples
submitted for the Navidad Property to be of industry standard and do not
indicate any significant source of bias, cross contamination, or
inaccuracy.
Security
of Samples
Samples
are transported from the drill rig to the storage facilities in Gastre by staff,
where a staff geologist logs and photographs the drill core. Drill core is cut
and sampled by a staff technician, placed in a plastic bag and sealed with a
numbered tamper-proof tag corresponding to the sample number. Five to six
samples are placed in a large nylon-woven sack which is then also sealed with a
tamper-proof nylon tie. The sack, generally containing about 50 kilograms of
samples, is weighed by a staff technician and transported by an employee or a
member of the local community to the Alex Stewart sample preparation facilities
in Mendoza, where each individual sample is maintained under the control of Alex
Stewart. After sample preparation and analyses are complete, all pulps and
coarse rejects are shipped by Alex Stewart to a covered warehouse facility
rented in Mendoza, where the samples are stored permanently.
Mineral
Resources and Mineral Reserve Estimates
Mineral
resources that are not mineral reserves do not have demonstrated economic
viability. The Navidad Property does not currently have any mineral
reserves. See “Cautionary Note to United States Investors Concerning
Estimates of Measured Indicated and Inferred Resources”.
The
estimated mineral resources at the Navidad Property are:
Classification
|
Tonnes
(Mt)
|
Grams
of silver per tonne
|
lead%
|
copper%
|
Contained
silver
(Moz)
|
Contained
lead
(Mlb)
|
Contained
copper
(Mlb)
|
Measured
|
15.4
|
137
|
1.44
|
-
|
67
|
489
|
-
|
Indicated
|
139.8
|
126
|
0.79
|
0.05
|
565
|
2,425
|
33
|
Meas.
+ Ind.
|
155.2
|
127
|
0.85
|
0.05
|
632
|
2,914
|
33
|
Inferred
|
45.9
|
81
|
0.57
|
0.05
|
119
|
580
|
1
|
Notes:
(1)
The most likely cut-off grade for these deposits is not known at this time and
must be confirmed by the appropriate economic studies.
(2)
The estimated metal content does not include any consideration of mining,
mineral processing, or metallurgical recoveries.
(3)
Tonnes, ounces, and pounds have been rounded and this may have resulted in minor
discrepancies in the totals.
The
estimate of mineral resources may be materially affected by environmental,
permitting, legal, title, taxation, socio-political, marketing, or other
relevant issues. Additional studies will be required to determine
technical, economic, legal, environmental, socio-economic, and governmental
factors.
Mineral
resource estimates are reported for the Calcite NW, Calcite Hill, Navidad Hill,
Connector Zone, Galena Hill, Barite Hill, Loma de La Plata, and Valle Esperanza
deposits at the Navidad Property. To date, no analysis has been made to
determine the economic cut-off grade that will ultimately be applied to the
Navidad Property.
Known
issues that materially affect the Mineral Resources
In
2006 the government of Chubut Province decreed a three year moratorium on all
mining activities, including exploration, in the western part of the Province.
The government asserts this is to enable the completion of a province-wide map
of the mineral potential. The Navidad Property lies outside of and to the east
of these “no- mining” zones. The government of Chubut Province has also decreed
a Province-wide ban on the use of cyanide for mining purposes and the
development of open pit mines. The law states that the government of Chubut
Province will accept and review mining proposals, including open pit and cyanide
based mining operations, on a case by case basis and determine at that point
whether permits may be issued.
Assumptions,
methods and parameters
Mineral
resource estimates were prepared in the following steps:
|
·
|
Data
validation was undertaken by Aquiline and reviewed by
Snowden.
|
|
·
|
Data
preparation, including importation to various software
packages.
|
|
·
|
Analysis
of the QAQC data.
|
|
·
|
Geological
interpretation and modelling of lithological and mineralisation domains
was by Snowden based on interpretations provided by
Aquiline.
|
|
·
|
Coding
of drillhole data within mineralised grade estimation
domains.
|
|
·
|
Samples
were composited to three metres lengths.
|
|
·
|
Exploratory
data analysis of silver and lead grades based on mineralised domains, and
also of copper at Loma de La Plata.
|
|
·
|
Indicator
variogram analysis and modelling.
|
|
·
|
Derivation
of kriging plan and boundary conditions.
|
|
·
|
Creation
of block models and application of density values by
domain.
|
|
·
|
Grade
estimation of silver and lead (and copper at Loma de La Plata) into blocks
using multiple indicator kriging (“MIK”).
|
|
·
|
Grade
estimation of silver and lead (and copper at Loma de La Plata) into blocks
using ordinary kriging (“OK”) and nearest neighbour (“NN”) for MIK
estimation validation.
|
|
·
|
Validation
of estimated block grades against input sample composite
grades.
|
|
·
|
Confidence
classification of estimates with respect to CIM
guidelines.
|
|
·
|
Resource
tabulation and Resource reporting.
|
Estimation
parameters
A
kriging neighbourhood analysis (“KNA”) was performed to determine the optimum
kriging parameters. KNA is the process of undertaking multiple ordinary kriged
estimates using a variety of block sizes and search neighbourhood parameters
(such as minimum and maximum sample numbers) and comparing the slope of
regression, kriging efficiency, and kriging variance values produced from the
estimates. Kriging parameters were selected through examination of the results
of the estimates in terms of slope of regression, kriging efficiency, kriging
variance, and Snowden’s experience with similar deposits.
Block
sizes were selected according to the average drillhole spacing, the results of
the KNA and the dimensions of the mineralised envelopes. Snowden created block
models with dimensions of 12.5 metres Easting, 12.5 metres Northing, and five
metres Elevation, except at Barite Hill, where the block models had blocks with
dimensions of 25 metres Easting, 25 metres Northing, and five metres Elevation,
based on the wider spacing of drillholes at Barite Hill.
Exploration
and Development
Approximately
US$500,000 was expended per month in Argentina on the exploration programme and
related activities for the Navidad Property in 2009. Pan American will
continue exploration drilling on several open or new targets along the
mineralised trends. Infill drilling is planned for Loma de la Plata, Valle
Esperanza, Barite Hill, and Galena Hill during 2010. These drillholes will
also provide new samples for metallurgical analysis. Additional
condemnation and geotechnical drilling is planned for potential future
infrastructure sites.
USE
OF PROCEEDS
The
Company will realize proceeds from the exercise of the Consideration Warrants
and October 2008 Replacement Warrants only if and to the extent any of the
Consideration Warrants or October 2008 Replacement Warrants are
exercised. If all the Consideration Warrants and October 2008
Replacement Warrants are exercised, the Company will realize gross proceeds in
the amount of Cdn$280,389,105.74 based on an exercise price for the
Consideration Warrants of Cdn$35.00 per Share and an exercise price for the
October 2008 Replacement Warrants of Cdn$10.02 per Share. The
proceeds from any exercise of the Consideration Warrants or the October 2008
Replacement Warrants will be used for working capital and general corporate
purposes.
DESCRIPTION
OF COMMON SHARES
The
Company is authorized to issue 200,000,000 Common Shares, without par value, of
which 106,896,682 are issued and
outstanding as at the date of this Prospectus. There are options
outstanding to purchase up to 1,751,047 Common Shares at prices ranging from
Cdn$5.00 to Cdn$48.10. There are common share purchase warrants
outstanding, including Consideration Warrants and October 2008 Replacement
Warrants, to purchase up to 8,405,393 Common Shares at prices ranging from
Cdn$10.02 to Cdn$52.10. Holders of Common Shares are entitled to one
vote per common share at all meetings of shareholders, to receive dividends as
and when declared by the directors of the Company and to receive a pro rata
share of the assets of the Company available for distribution to the
shareholders in the event of the liquidation, dissolution or winding-up of the
Company. There are no pre-emptive, conversion or redemption rights
attached to the Common Shares.
PRICE
RANGE AND TRADING VOLUME
The
Company’s common shares are listed for trading on the Nasdaq under the trading
symbol “PAAS” and on the TSX under the trading symbol “PAA”. The
following tables set out the market price range and trading volumes of the
Company’s common shares on the Nasdaq and TSX for the periods
indicated.
Nasdaq
Stock Market
2010 |
|
March
1 - 5
|
23.00 |
|
21.24 |
|
5,169,095 |
|
|
February
|
23.35
|
|
20.00
|
|
27,411,989
|
|
|
January
|
26.44
|
|
21.12
|
|
26,126,617
|
2009
|
|
December
|
27.31
|
|
22.91
|
|
33,439,891
|
|
|
November
|
26.26
|
|
20.50
|
|
37,388,904
|
|
|
October
|
26.70
|
|
20.28
|
|
44,307,441
|
|
|
Third
Quarter
|
24.81
|
|
16.64
|
|
89,569,189
|
|
|
Second
Quarter
|
24.32
|
|
15.02
|
|
85,305,630
|
|
|
First
Quarter
|
19.08
|
|
12.62
|
|
113,482,764
|
2008
|
|
Fourth
Quarter
|
22.99
|
|
8.93
|
|
116,670,125
|
|
|
Third
Quarter
|
37.16
|
|
18.14
|
|
93,265,944
|
|
|
Second
Quarter
|
40.95
|
|
29.41
|
|
63,436,358
|
|
|
First
Quarter
|
44.10
|
|
32.05
|
|
97,588,873
|
On
March 5, 2010, the closing price of the Common Shares on Nasdaq was US$22.80 per
Common Share.
Toronto
Stock Exchange
|
|
|
|
|
|
|
|
2010 |
|
March
1 - 5 |
23.61 |
|
22.28 |
|
751,000 |
|
|
February
|
24.39
|
|
21.35
|
|
5,712,900
|
|
|
January
|
27.28
|
|
22.57
|
|
5,872,100
|
2009
|
|
December
|
28.73
|
|
24.32
|
|
6,572,600
|
|
|
November
|
27.58
|
|
22.17
|
|
6,863,900
|
|
|
October
|
27.42
|
|
21.96
|
|
6,626,300
|
|
|
Third
Quarter
|
23.00
|
|
19.45
|
|
12,624,700
|
|
|
Second
Quarter
|
26.67
|
|
18.58
|
|
11,194,700
|
|
|
First
Quarter
|
23.47
|
|
16.19
|
|
14,106,600
|
2008
|
|
Fourth
Quarter
|
24.38
|
|
11.12
|
|
17,371,400
|
|
|
Third
Quarter
|
37.15
|
|
19.57
|
|
19,497,800
|
|
|
Second
Quarter
|
41.28
|
|
30.16
|
|
9,746,800
|
|
|
First
Quarter
|
43.66
|
|
33.11
|
|
20,579,900
|
On
March 5, 2010, the closing price of the Common Shares on the TSX was Cdn.$23.46
per Common Share.
DESCRIPTION
OF CONSIDERATION WARRANTS
The
Consideration Warrants were issued in registered form under, and are governed by
the Warrant Indenture. The Company has appointed the principal
offices of the Trustee in Vancouver and Toronto as the locations at which
Consideration Warrants, each represented by a certificate (a “Consideration
Warrant Certificate”), may be surrendered for exercise or transfer. The
following summary of certain provisions of the Warrant Indenture does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the Warrant Indenture. A copy of the Warrant Indenture is
available on www.sedar.com.
Each
whole Consideration Warrant will entitle the holder to purchase one Share at an
exercise price of Cdn.$35.00 per Share. The exercise price per Share and the
number of Shares issuable upon exercise are both subject to adjustment in
certain circumstances as more fully described below. Consideration Warrants will
be exercisable at any time prior to 4:30 p.m. (Eastern time) on December 7,
2014, after which the Consideration Warrants will expire and become null and
void. Under the Warrant Indenture, the Company is entitled to purchase in the
market, by private contract or otherwise, all or any of the Consideration
Warrants then outstanding, and any Consideration Warrants so purchased will be
cancelled.
Upon
receipt of the required payment and the Consideration Warrant Certificate
representing the Consideration Warrants held by such holder that are to be
exercised, together with a duly completed and executed exercise form in the form
attached as an appendix to the Consideration Warrant Certificate, at either of
the principal offices of the Trustee in Vancouver or Toronto, the Company will
issue and deliver the Shares purchasable upon such exercise. If fewer than all
of the Consideration Warrants represented by the Consideration Warrant
Certificate are exercised, then the Company will issue a new Consideration
Warrant Certificate for the remaining amount of Consideration Warrants. If at
any time of exercise of the Consideration Warrants, there remain restrictions on
resale under applicable securities laws on the Shares acquired, the Corporation
may on the advice of counsel endorse the certificates representing the Shares
and Consideration Warrants.
The
Warrant Indenture provides for adjustment in the number of Shares issuable upon
the exercise of the Consideration Warrants and adjustment in the exercise price
of the Consideration Warrants in certain circumstances, including:
|
(a)
|
the
issuance of Common Shares or securities exchangeable for or convertible
into Common Shares to all or substantially all the holders of the Common
Shares as a stock dividend or other distribution other than: (i) the issue
of Common Shares or convertible securities by way of a
stock
|
|
|
dividend
to shareholders who elect to receive Common Shares or convertible
securities in lieu of cash dividends in the ordinary course or pursuant to
a dividend reinvestment plan; or (ii) as dividends paid in the ordinary
course;
|
|
|
|
|
(b)
|
the
subdivision, redivision or change of the Common Shares into a greater
number of shares;
|
|
|
|
|
(c)
|
the
combination, consolidation or reduction of the Common Shares into a
smaller number of shares;
|
|
|
|
|
(d)
|
the
issuance to all or substantially all of the holders of the Common Shares
of rights, options or warrants under which such holders are entitled,
during a period expiring not more than 45 days after the record date for
such issuance, to subscribe for or purchase Common Shares, or securities
exchangeable for or convertible into Common Shares, at a price per share
to the holder (or at an exchange or conversion price per share) of less
than 95% of the ‘‘current market price’’, as defined in the Warrant
Indenture, for the Common Shares on such record date;
and
|
|
|
|
|
(e)
|
the
issuance or distribution to all or substantially all of the holders of the
Common Shares of:
|
|
|
|
|
|
(i)
|
shares
of any class other than the Common Shares;
|
|
|
|
|
|
|
(ii)
|
rights,
options or warrants to acquire Common Shares or convertible securities
other than rights, options, warrants exercisable within 45 days from the
date of issuance thereof at a price, or at a conversion price, of at least
95% of the ‘‘current market price’’, as defined in the Warrant Indenture
at the record date for such distribution;
|
|
|
|
|
|
|
(iii)
|
evidences
of indebtedness; or
|
|
|
|
|
|
|
(iv)
|
any
other cash, securities or other property or other
assets.
|
The
Warrant Indenture provides for adjustment in the class and/or number of
securities issuable upon the exercise of the Consideration Warrants in the event
of the following additional events:
|
(1)
|
reorganization
of the Company not otherwise provided for in paragraphs (a), (b) or (c)
above;
|
|
|
|
|
(2)
|
consolidations,
mergers, plans of arrangement or amalgamations of the Company by, with or
into another body corporate, trust, partnership or other entity;
or
|
|
|
|
|
(3)
|
a
transaction whereby all or substantially all of the Company’s undertakings
and assets become the property of any other body corporate, trust,
partnership or other entity through sale, lease, exchange or
otherwise.
|
If
any adjustment is made to the number of Shares issuable upon the exercise of the
Consideration Warrants, then the exercise price shall under certain
circumstances be simultaneously adjusted accordingly.
No
adjustment in the number of Shares purchasable upon the exercise of the
Consideration Warrants or adjustment in the exercise price of the Consideration
Warrants will be required to be made unless the cumulative effect of such
adjustment or adjustments would change the number of Shares purchasable upon the
exercise of the Consideration Warrants or change the exercise price of the
Consideration Warrants by at least 2%, provided, however, that any adjustments
(except for the provisions of paragraph (d) above) would otherwise have been
required to be made, are carried forward and taken into account in any
subsequent adjustment.
The
Company covenants in the Warrant Indenture that, during the period in which the
Consideration Warrants are exercisable, it will give notice to the holders of
Consideration Warrants of certain stated events, including events that would
result in an adjustment to the number of Shares issuable upon exercise of the
Consideration Warrants or an adjustment to the exercise price of the
Consideration Warrants.
No
fractional Shares will be issuable upon the exercise of any Consideration
Warrants, and no cash or other consideration will be paid in lieu of fractional
shares. Holders of Consideration Warrants will not have any voting or
pre-emptive rights or any other rights which a holder of Common Shares would
have.
No
adjustments to the number of Shares issuable upon the exercise of the
Consideration Warrants shall be made in respect of the issuance of Shares,
rights, options or warrants pursuant to the Warrant Indenture, the granting or
exercise of options or the granting of bonus shares under the Company’s stock
option and bonus plan, the exercise of special rights to acquire Common Shares
of the Company issued to employees of a subsidiary of the Company as part of the
acquisition by the Company of options to acquire securities of such subsidiary
held by such employees, the exercise of Consideration Warrants, February 2008
Replacement Warrants or October 2008 Replacement Warrants and the issuance of
Common Shares pursuant to agreements in place as of the date of the Warrant
Indenture.
From
time to time, the Company and the Trustee, without the consent of the holders of
Consideration Warrants, may amend or supplement the Warrant Indenture for
certain purposes, including curing defects or inconsistencies or making any
change that does not adversely affect the rights of any holder of Consideration
Warrants. Any amendment or supplement to the Warrant Indenture that adversely
affects the interests of the holders of the Consideration Warrants may only be
made by “extraordinary resolution”, which is defined in the Warrant Indenture as
a resolution either: (1) passed at a meeting of the holders of Consideration
Warrants at which there are one or more holders of Consideration Warrants
present in person or represented by proxy representing at least 51% of all the
then outstanding Consideration Warrants and passed by the affirmative vote of
holders of Consideration Warrants entitled to acquire not less than 66 ⅔% of all
the then outstanding Consideration Warrants represented at the meeting and which
voted on the poll upon the resolution; or (2) instruments in writing signed by
the holders of Consideration Warrants representing not less than 66 ⅔% of all
the then outstanding Consideration Warrants.
The
Consideration Warrants are not and will not be listed on any stock
exchange.
DESCRIPTION
OF OCTOBER 2008 REPLACEMENT WARRANTS
The
October 2008 Replacement Warrants are governed by the October 2008 Replacement
Warrant Certificates. October 2008 Replacement Warrants may be
surrendered for exercise or transfer only at the principal office of the Company
in Vancouver. The following summary of certain provisions of the October 2008
Replacement Warrants does not purport to be complete and is qualified in its
entirety by reference to the provisions of the respective October 2008
Replacement Warrant Certificates.
Each
October 2008 Replacement Warrant is exercisable at any time prior to 5:00 p.m.
(Eastern time) on October 22, 2011, after which the October 2008 Replacement
Warrants will expire and become null and void, to purchase from the Company one
Share at an exercise price of Cdn.$10.02 per Share, subject to adjustment in
certain circumstances described below.
Upon
receipt of the required payment and the October 2008 Replacement Warrant
Certificate properly completed and duly executed at the principal office of the
Company in Vancouver, the Company will issue and deliver the Shares purchasable
upon such exercise. If fewer than all of the October 2008 Replacement Warrants
represented by an October 2008 Replacement Warrant Certificate are exercised,
then the Company will issue a new October 2008 Replacement Warrant Certificate
for the remaining amount of October 2008 Replacement Warrants.
No
fractional Shares will be issuable upon the exercise of any October 2008
Replacement Warrants, and no cash or other consideration will be paid in lieu of
fractional Shares. Holders of October 2008 Replacement Warrants will not have
any voting or pre-emptive rights or any other rights which a holder of Common
Shares would have.
The
October 2008 Replacement Warrant Certificates provide for adjustment in the
number of Shares and in the exercise price per Share issuable upon the exercise
of the October 2008 Replacement Warrants in certain circumstances,
including:
|
(a)
|
the
subdivision, redivision or change of the Common Shares into a greater
number of shares;
|
|
(b)
|
the
reduction, combination or consolidation of the Common Shares into a lesser
number of shares;
|
|
|
|
|
(c)
|
the
issuance of Common Shares or securities exchangeable for or convertible
into Common Shares to all or substantially all the Common Shareholders as
a stock dividend or other distribution; and
|
|
|
|
|
(d)
|
the
issuance to all or substantially all of the holders of Common Shares of
rights, options or warrants under which such holders are entitled, during
a period expiring not more than 45 days after the record date for such
issuance, to subscribe for or purchase Common Shares, or securities
convertible, exercisable or exchangeable into Common Shares, at a price
per Common Share to the holder (or at an exchange or conversion price per
share) of less than 95% of the “current market price”, as defined in the
respective October 2008 Replacement Warrant Certificate, for the Common
Shares on such record date.
|
The
October 2008 Replacement Warrant Certificates also provide for adjustment in the
class and/or number of Shares issuable upon the exercise of the October 2008
Replacement Warrants and/or exercise price per security in the event of the
following additional events: (1) the issuance or distribution to all or
substantially all of the shareholders of Common Shares or rights, options or
warrants or other securities warrants (other than those described above in
(a)-(d)), evidences of indebtedness or property (excluding cash dividends paid
in the ordinary course); or (2) certain corporate reorganizations involving the
Company.
No
adjustment in the exercise price per Share purchasable upon the exercise of the
October 2008 Replacement Warrants will be required to be made unless the
cumulative effect of such adjustment or adjustments would change the exercise
price per Share purchasable upon the exercise of the October 2008 Replacement
Warrants by at least 1%; provided, however, that any adjustment which was not
made on this account will be carried forward and taken into account in any
subsequent adjustment.
The
Company also covenants to the holders of the October 2008 Replacement Warrants
that, during the period in which the October 2008 Replacement Warrants are
exercisable and forthwith after making an adjustment to the exercise price or
the number of Shares purchasable pursuant to the October 2008 Replacement
Warrants, it will provide to the holders of October 2008 Replacement Warrants a
certificate of an officer of the Company as to the amount of such adjustment
and, in reasonable detail, describing the event requiring and the manner of
computing or determining such adjustment.
None
of the October 2008 Replacement Warrants are or will be listed on any stock
exchange.
PLAN
OF DISTRIBUTION
The
Company will issue the Shares from time to time upon exercise of the
Consideration Warrants and October 2008 Replacement Warrants. The
Company will receive from the holders of the Consideration Warrants and October
2008 Replacement Warrants the exercise price of the Consideration Warrants and
October 2008 Replacement Warrants upon exercise. See “Use of
Proceeds.”
No
underwriter has been involved in the preparation of, or has performed any review
of, this Prospectus.
This
Prospectus is being filed with the British Columbia Securities Commission and as
part of a registration statement filed with the SEC pursuant to the MJDS solely
for the purpose of registering the issuance and sale, from time to time, of the
Shares under the U.S. Securities Act. This Prospectus has not been
filed in respect of, and will not qualify, any distribution of the Shares in
British Columbia or in any other province or territory of Canada. No
supplements to this Prospectus will be filed in relation to the
Shares.
This Prospectus is being filed pursuant to a contractural
obligation of the Company to file with the SEC a registration statement
registering the issuance, offer and sale of the Shares under the support
agreement between the Company and Aquiline dated October 14, 2009.
The
Toronto Stock Exchange has approved the listing of the Shares.
CHANGES
TO CONSOLIDATED CAPITALIZATION
The
following table outlines the consolidated capitalization of the Company:
(i) as at September 30, 2009 before giving effect to the Offers and
(ii) as at September 30, 2009 after giving effect to the
Offers. Pursuant to the Offers and the Compulsory Acquisition, the
Company issued an aggregate of 19,644,669 Common Shares, which issuances and
their effects are reflected in the table below. This table should be read
in conjunction with the Company’s unaudited consolidated interim financial
statements for the three and nine month periods ended September 30, 2009,
together with the notes thereto, prepared in accordance with Canadian GAAP, and
management’s discussion and analysis of financial condition and results of
operations for the three and nine month periods ended September 30, 2009,
as well as the Company’s audited comparative consolidated annual financial
statements for the years ended December 31, 2008 and December 31,
2007, together with the notes thereto, prepared in accordance with Canadian
GAAP, and management’s discussion and analysis of financial condition and
results of operations for the years ended December 31, 2008 and
December 31, 2007, each incorporated by reference in this
Prospectus.
|
Outstanding
as at September 30, 2009 before giving effect to the Offers and Compulsory
Acquisition
|
|
Outstanding
as at September 30, 2009 after giving effect to the Offers and Compulsory
Acquisition
|
|
(in thousands of $, except share
amounts) |
Debt
|
|
|
|
Current
liabilities
|
¾
|
|
¾
|
Long
term liabilities
|
¾
|
|
$20,788
|
Total
Debt
|
¾
|
|
$20,788
|
Shareholders’
equity
|
|
|
|
Common
Shares
|
$754,536
|
|
$1,238,882
|
(outstanding)
|
87,225,673
|
|
106,870,342
|
Contributed
surplus
|
$4,987
|
|
$62,428
|
Retained
Earnings
|
$60,427
|
|
$64,066
|
Accumulated
Comprehensive Income
|
$4,500
|
|
$448
|
Total
shareholders’ equity
|
$824,450
|
|
$1,365,824
|
Total
capitalization
|
$824,450
|
|
$1,386,612
|
Notes:
(1)
|
The
number of outstanding Common Shares does not include the Common Shares
issuable upon the exercise of any Consideration Warrants, October 2008
Replacement Warrants, February 2008 Replacement Warrants or the
Replacement Debenture.
|
RISK
FACTORS
Investing
in the Shares involves a high degree of risk. Prospective investors
of Shares should carefully consider the following risks, as well as the other
information contained in this Prospectus and the documents incorporated by
reference herein before investing in the Shares. If any of the
following risks actually occurs, the Company’s business could be materially
harmed. The risks and uncertainties described below are not the only
ones the Company faces. Additional risks and uncertainties, including
those of which the Company is currently unaware or that the Company deems
immaterial, may also adversely affect the Company’s business.
Risks
Relating to the Company’s Business
Metal
Price Fluctuations
The
majority of Pan American’s revenue is derived from the sale of silver, zinc,
and, to a lesser degree, copper, lead and gold, and therefore fluctuations in
the price of these commodities represents one of the most significant factors
affecting Pan American’s operations and profitability. The price of
silver and other metals are affected by numerous factors beyond Pan American’s
control, including:
|
·
|
levels
of supply and demand;
|
|
·
|
global
or regional consumptive patterns;
|
|
·
|
sales
by government holders;
|
|
·
|
metal
stock levels maintained by producers and
others;
|
|
·
|
increased
production due to new mine developments and improved mining and production
methods;
|
|
·
|
speculative
activities;
|
|
·
|
inventory
carrying costs;
|
|
·
|
availability
and costs of metal substitutes;
|
|
·
|
international
economic and political conditions;
|
Declining
market prices for these metals could materially adversely affect Pan American’s
operations and profitability.
Foreign
Operations
The
majority of the Company’s current operations are conducted by its subsidiaries
in, and all of the Company’s current production and revenue is derived from its
operations in, Peru, Mexico, Argentina and Bolivia. As Pan American’s
business is carried on in a number of foreign countries, it is exposed to a
number of risks and uncertainties, including:
|
·
|
terrorism
and hostage taking;
|
|
·
|
expropriation
or nationalization without adequate
compensation;
|
|
·
|
difficulties
enforcing judgments obtained in Canadian or United States courts against
assets located outside of those
jurisdictions;
|
|
·
|
high
rates of inflation;
|
|
·
|
changes
to royalty and tax regimes;
|
|
·
|
extreme
fluctuations in currency exchange
rates;
|
|
·
|
volatile
local political and economic
developments;
|
|
·
|
difficulty
with understanding and complying with the regulatory and legal framework
respecting the ownership and maintenance of mineral properties, mines and
mining operations; and
|
|
·
|
difficulty
obtaining key equipment and components for
equipment.
|
Local
opposition to mine development projects has arisen in Peru in the past, and such
opposition has at times been violent. In particular, in November
2004, approximately 200 farmers attacked and damaged the La Zanja exploration
camp located in Santa Cruz province, Peru, which was owned by Compania de Minas
Buenaventura and Newmont Mining Corporation. One person was killed
and three injured during the protest. There can be no assurance that
such local opposition will not arise in the future with respect to Pan
American’s foreign operations. If Pan American were to experience resistance or
unrest in connection with its foreign operations, it could have a material
adverse effect on Pan American’s operations or profitability.
In
late 2005, a national election in Bolivia resulted in the emergence of a
left-wing government. This has caused some concerns amongst foreign companies
doing business in Bolivia due to the government’s policy objective of
nationalizing the oil and gas industries. There is no certainty the
government of Bolivia will not take steps to implement such measures targeting
the mining industry. Risks of doing business in Bolivia include being subject to
higher taxes and mining royalties, some of which have already been proposed or
threatened, revision of
contracts
and threatened expropriation of assets, all of which could have a material
adverse impact on the Company’s operations or profitability.
Governmental
Regulation
Pan
American’s operations, exploration and development activities are subject to
extensive Canadian, United States, Peruvian, Mexican, Argentinean, Bolivian and
other foreign federal, state, provincial, territorial and local laws and
regulations governing various matters, including:
|
·
|
environmental
protection;
|
|
·
|
management
and use of toxic substances and
explosives;
|
|
·
|
management
of natural resources;
|
|
·
|
exploration,
development, production, and post-closure reclamation of
mines;
|
|
·
|
labour
standards and occupational health and safety, including mine safety;
and
|
|
·
|
historic
and cultural preservation.
|
The
costs associated with compliance with these laws and regulations are substantial
and possible future laws and regulations, changes to existing laws and
regulations (including the imposition of higher taxes and mining royalties which
have been implemented or threatened in the countries in which Pan American does
business) or more stringent enforcement of current laws and regulations by
governmental authorities, could cause additional expense, capital expenditures,
restrictions on or suspensions of Pan American’s operations and delays in the
development of its properties. Moreover, these laws and regulations
may allow governmental authorities and private parties to bring lawsuits based
upon damages to property and injury to persons resulting from the environmental,
health and safety impacts of Pan American’s past and current operations, or
possibly even those actions of parties from whom Pan American acquired its mines
or properties, and could lead to the imposition of substantial fines, penalties
or other civil or criminal sanctions. It is difficult to strictly
comply with all regulations imposed on Pan American. Pan American
retains competent and well trained individuals and consultants in jurisdictions
in which it does business, however, even with the application of considerable
skill Pan American may inadvertently fail to comply with certain laws, including
the laws in the Province of Chubut, Argentina which, among other things,
currently prohibit open pit mining and the use of cyanide in mining and which,
as currently enacted, would likely render any future construction and
development of the Navidad Project uneconomic or not possible at
all. Such events can lead to financial restatements, fines,
penalties, loss, reduction or expropriation of entitlements, the imposition of
additional local or foreign parties as joint venture partners with carried or
other interests and other material negative impacts on Pan
American.
Obtaining
and Renewing of Permits
In
the ordinary course of business, Pan American is required to obtain and renew
governmental permits for the operation and expansion of existing operations or
for the development, construction and commencement of new
operations. Obtaining or renewing the necessary governmental permits
is a complex and time-consuming process involving numerous jurisdictions and
often involving public hearings and costly undertakings on Pan American’s
part. The duration and success of Pan American’s efforts to obtain
and renew permits are contingent upon many variables not within its control
including the interpretation of applicable requirements implemented by the
permitting authority. Pan American may not be able to obtain or renew
permits that are necessary to its operations, or the cost to obtain or renew
permits may exceed what Pan American believes it can recover from a given
property once in production. Any unexpected delays or costs
associated with the permitting process could delay the development or impede the
operation of a mine, which could adversely impact Pan American’s operations and
profitability.
Ownership
and Operating Hazards and Risks
The
ownership, operation and development of a mine or mineral property involves many
risks which even a combination of experience, knowledge and careful evaluation
may not be able to overcome. These risks include:
|
·
|
industrial
accidents, explosions and third party
accidents;
|
|
·
|
the
encountering of unusual or unexpected geological
formations;
|
|
·
|
ground
falls and cave-ins;
|
|
·
|
periodic
interruptions due to inclement or hazardous weather
conditions.
|
These
occurrences could result in:
|
·
|
environmental
damage and liabilities;
|
|
·
|
work
stoppages, delayed production and resultant
losses;
|
|
·
|
increased
production costs;
|
|
·
|
damage
to, or destruction of, mineral properties or production facilities and
resultant losses;
|
|
·
|
personal
injury or death and resultant
losses;
|
|
·
|
claims
for compensation of loss of life and/or damages by third parties in
connection with accidents (for loss of life and/or damages and related
pain and suffering) that occur on company property, and punitive awards in
connection with those claims; and
|
Liabilities
that Pan American incurs may exceed the policy limits of its insurance coverage
or may not be insurable, in which event Pan American could incur significant
costs that could adversely impact its business, operations, profitability or
value.
Exploration
and Development Risks
The
long-term operation of Pan American’s business and its profitability is
dependent, in part, on the cost and success of its exploration and development
programs. Mineral exploration and development involves a high degree of risk and
few properties that are explored are ultimately developed into producing mines.
There is no assurance that Pan American’s mineral exploration and development
programs will result in any discoveries of bodies of commercial mineralization.
There is also no assurance that even if commercial quantities of mineralization
are discovered that a mineral property will be brought into commercial
production. Development of Pan American’s
mineral
properties will follow only upon obtaining satisfactory exploration results.
Discovery of mineral deposits is dependent upon a number of factors, not the
least of which is the technical skill of the exploration personnel involved. The
commercial viability of a mineral deposit once discovered is also dependent upon
a number of factors, some of which are the particular attributes of the deposit
(such as size, grade and proximity to infrastructure), metal prices and
government regulations, including regulations relating to royalties, allowable
production, importing and exporting of minerals and environmental protection.
Most of the above factors are beyond the control of Pan American. As a result,
there can be no assurance that Pan American’s acquisition, exploration and
development programs will yield new reserves to replace or expand current
reserves. Unsuccessful exploration or development programs could have a material
adverse impact on Pan American’s operations and profitability.
Replacement
of Reserves
The
Quiruvilca, Huaron, Morococha, La Colorada, Alamo Dorado, Manantial Espejo and
San Vicente mines are Pan American’s current sources of metals
production. In 2009, procedures were initiated at the Quiruvilca mine
to suspend operations. Current life-of-mine plans provide for a
defined production life for mining at the remainder of Pan American’s
mines. If Pan American’s mineral reserves are not replaced either by
the development or discovery of additional reserves and/or extension of the
life-of-mine at its current operating mines or through the acquisition or
development of an additional producing mine, this could have an adverse impact
on Pan American’s future cash flows, earnings, results of operations and
financial condition, including as a result of requirements to expend funds for
reclamation and decommissioning.
Imprecision
in Mineral Reserve and Resource Estimates
There
is a degree of uncertainty attributable to the calculation of mineral reserves
and mineral resources. Until mineral reserves or mineral resources are actually
mined and processed, the quantity of mineral and reserve grades must be
considered as estimates only and no assurances can be given that the indicated
levels of metals will be produced or that Pan American will receive the price
assumed in determining its reserves. These estimates are expressions
of judgment based on knowledge, mining experience, analysis of drilling results
and industry practices. Valid estimates made at a given time may
significantly change when new information becomes available. While
Pan American believes that the reserve and resource estimates included are well
established and reflect management’s best estimates, by their nature reserve and
resource estimates are imprecise and depend, to a certain extent, upon analysis
of drilling results and statistical inferences that may ultimately prove
unreliable.
Furthermore,
fluctuations in the market price of metals, as well as increased capital or
production costs or reduced recovery rates may render ore reserves uneconomic
and may ultimately result in a reduction of reserves. The extent to
which resources may ultimately be reclassified as proven or probable reserves is
dependent upon the demonstration of their profitable recovery. The
evaluation of reserves or resources is always influenced by economic and
technological factors, which may change over time. No assurances can
be given that any resource estimate will ultimately be reclassified as proven or
probable reserves. If Pan American’s reserve or resource figures are
inaccurate or are reduced in the future, this could have an adverse impact on
Pan American’s future cash flows, earnings, results of operations and financial
condition.
Inaccuracies
in Production and Cost Estimates
Pan
American prepares estimates of future production and future production costs for
particular operations. No assurance can be given that production and
cost estimates will be achieved. These production and cost estimates
are based on, among other things, the following factors: the accuracy of reserve
estimates; the accuracy of assumptions regarding ground conditions and physical
characteristics of ores, such as hardness and presence or absence of particular
metallurgical characteristics; equipment and mechanical availability; labour
availability; access to the mine; facilities and infrastructure; sufficient
materials and supplies on hand; and the accuracy of estimated rates and costs of
mining and processing, including the cost of human and physical resources
required to carry out Pan American’s activities. Failure to achieve
production or cost estimates, or increases in costs, could have an adverse
impact on Pan American’s future cash flows, earnings, results of operations and
financial condition.
Actual
production and costs may vary from estimates for a variety of reasons, including
actual ore mined varying from estimates of grade, tonnage, dilution and
metallurgical and other characteristics; short-term operating factors relating
to the ore reserves, such as the need for sequential development of orebodies
and the processing of new or different ore grades; risks and hazards associated
with mining described above under “-Ownership and Operating Hazards and
Risks”. In addition, there can be no assurance that silver recoveries
or other metal recoveries in small scale laboratory tests will be duplicated in
larger scale tests under on-site conditions or during production, or that the
existing known and experienced recoveries will continue. Costs of
production may also be affected by a variety of factors, including: changing
stripping ratios, ore grade metallurgy, labour costs, costs of supplies and
services (such as, for example, fuel and power), general inflationary pressures
and currency exchange rates. Failure to achieve production estimates
could have an adverse impact on the Pan American’s future cash flows, earnings,
results of operations and financial condition.
Infrastructure
Mining,
processing, development and exploration activities depend, to one degree or
another, on adequate infrastructure. Reliable roads, bridges, power
sources and water supply are important determinants, which affect capital and
operating costs. The lack of availability on acceptable terms or the delay in
the availability of any one or more of these items could prevent or delay
exploitation or development of Pan American’s projects. If adequate
infrastructure is not available in a timely manner, there can be no assurance
that the exploitation or development of Pan American’s projects will be
commenced or completed on a timely basis, if at all; the resulting operations
will achieve the anticipated production volume, or the construction costs and
ongoing operating costs associated with the exploitation and/or development of
Pan American’s advanced projects will not be higher than
anticipated. In addition, unusual or infrequent weather phenomena,
sabotage, government or other interference in the maintenance or provision of
such infrastructure could adversely affect Pan American’s operations and
profitability.
The
equipment on site at the Morococha property, particularly the Amistad plant, is
old and may require higher capital investment than Pan American has
estimated.
Smelter
Supply Arrangements
The
zinc, lead and copper concentrates produced by Pan American are sold through
long-term supply arrangements to metal traders or integrated mining and smelting
companies. Should any of these counterparties not honour supply arrangements, or
should any of them become insolvent, Pan American may incur losses for products
already shipped and be forced to sell its concentrates in the spot market or it
may not have a market for its concentrates and therefore its future operating
results may be materially adversely impacted. Further, there can be
no assurance that Pan American will be able to renew agreements to sell
concentrates when the existing agreements expire, or that Pan American’s
concentrates will meet the qualitative requirements of existing or future
concentrate agreements or the requirements of buyers.
For
example, the Doe Run Peru smelter, a significant buyer of Pan American’s
production in Peru, experienced financial difficulties in the first quarter of
2009 and closed. Pan American continued to sell copper concentrates
to other buyers but on inferior terms. The Doe Run Peru smelter
remains closed and Pan American is owed approximately $8.8 million under the
terms of its contract with Doe Run Peru.
Environmental
Hazards
All
phases of Pan American’s operations are subject to environmental regulation in
the various jurisdictions in which it operates. Environmental legislation in all
of the jurisdictions in which Pan American operates is evolving in a manner
which will require stricter standards and will be subject to increased
enforcement, fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of
responsibility for companies and their officers, directors and employees.
Changes in environmental regulation, if any, may adversely impact Pan American’s
operations and profitability. In addition, environmental hazards may exist on
Pan American’s properties which are currently unknown to Pan
American. Pan American may be liable for losses associated with such
hazards, or may be forced to undertake extensive remedial cleanup action or to
pay for governmental remedial cleanup actions, even in cases where such hazards
have been caused by previous or existing owners or operators of the property, or
by the past or present owners of adjacent properties or natural conditions. The
costs of such cleanup actions may have a material adverse impact on Pan
American’s operations and profitability.
Responsibility
for construction of a water treatment plant for the Kingsmill Tunnel and
tailings mitigation program at Huascacocha Lake, near the Morococha mine, has
been apportioned by Water Management Consultants Inc. in environmental studies
among the Morococha mine and mining companies operating neighbouring projects.
The proposed development of the Toromocho Project by Peru Copper Inc. (“Peru Copper”) may
alleviate some of Pan American’s funding requirements. There can be
no guarantee, however, that Pan American’s proportionate share of the costs of
such environmental projects will not change and this may affect cash flow from
Morococha operations.
Reclamation
Obligations
Reclamation
requirements vary depending on the location of the property and the managing
governmental agency, but they are similar in that they aim to minimize long-term
effects of mining exploitation and exploration disturbance by requiring the
operating company to control possible deleterious effluents and to re-establish
to some degree pre-disturbance land forms and vegetation. Pan
American is actively providing for or has carried out any required reclamation
activities on its properties. Any significant environmental issues
that may arise, however, could lead to increased reclamation expenditures and
have a material adverse impact on Pan American’s financial
resources.
In
accordance with an August 15, 2005 Supreme Decree of the Peruvian Government,
Pan American has submitted closure plans to the Peruvian Ministry of Mines for
three of its Peruvian mines. Review comments have been received from
the Ministry for each of the three mine closure plans submitted. Pan
American is currently reviewing and addressing these comments.
Trading
Activities
Approximately
one-third of Pan American’s operating and capital expenditures are denominated
in local currencies other than the U.S. dollar. These expenditures
are exposed to fluctuations in U.S. dollar exchange rates relative to the local
currencies. From time to time, Pan American mitigates part of this
currency exposure by entering into contracts designed to fix or limit Pan
American’s exposure to changes in the value of local currencies relative to U.S.
dollars.
In
addition, Pan American may experience losses if a counterparty fails to purchase
under a contract when the contract price exceeds the spot price of a
commodity. Pan American’s current policy is to not hedge the price of
silver and therefore it is fully exposed to fluctuations in the price of
silver.
From
time to time, Pan American may invest in equity securities of other
companies. Just as investing in the Company is inherent with risks
such as those set out in this Prospectus, by investing in other companies Pan
American will be exposed to the risks associated with owning equity securities
and those risks inherent in the investee companies.
Employee
Recruitment, Retention and Human Error
Recruiting
and retaining qualified personnel is critical to Pan American’s success. Pan
American is dependent on the services of key executives including the Company’s
President and Chief Executive Officer and other highly skilled and experienced
executives and personnel focused on managing Pan American’s
interests. The number of persons skilled in acquisition, exploration
and development of mining properties is limited and competition for such persons
is intense. As Pan American’s business activity grows, Pan American
will require additional key financial, administrative and mining personnel as
well as additional operations staff. There can be no assurance that Pan American
will be successful in attracting, training and retaining qualified personnel as
competition for persons with these skill sets increases. If Pan
American is not successful in attracting, training and retaining qualified
personnel, the efficiency of its operations could be impaired, which could have
an adverse impact on Pan American’s future cash flows, earnings, results of
operations and financial condition.
Despite
efforts to attract and retain qualified personnel, as well as the retention of
qualified consultants, to manage Pan American’s interests, even when those
efforts are successful, people are fallible and human error could result in
significant uninsured losses to Pan American. These could include
loss or forfeiture of mineral claims or other assets for non-payment of fees or
taxes, significant tax liabilities in connection with any tax planning effort
Pan American might undertake and legal claims for errors or mistakes by Pan
American personnel.
Employee
Relations
Certain
of Pan American’s employees and the employees of Peruvian mining contractors
indirectly employed by Pan American are represented by unions. Pan
American has experienced labour strikes and work stoppages in the
past. There can be no assurance that Pan American will not experience
future labour strikes or work stoppages.
Title
to Assets
The
validity of mining or exploration titles or claims or rights, which constitute
most of Pan American’s property holdings, can be uncertain and may be contested.
Pan American has used its reasonable commercial efforts to investigate its title
or claims to its various properties and, to its knowledge, except where Pan
American has otherwise identified, those titles or claims to material properties
are in good standing. However, no assurance can be given that applicable
governments will not revoke or significantly alter the conditions of the
applicable exploration and mining titles or claims and that such exploration and
mining titles or claims will not be challenged or impugned by third parties. Pan
American operates in countries with developing mining laws and changes in such
laws could materially impact Pan American’s rights to its various properties or
interests therein.
Although
Pan American has received title opinions for those material properties in which
it has an material interest (or if it has not been able to obtain such opinions,
has made a determination, which Pan American believes is reasonable in the
circumstances, to accept the risks associated with the subject property which
determination Pan American believes is reasonable in the circumstances), there
is no guarantee that title to such properties will not be challenged or
impugned. Pan American has not conducted surveys of all the claims in which it
holds direct or indirect interests and therefore, the precise area and location
of such claims may be in doubt. Pan American’s properties may be subject to
prior unregistered liens, agreements or transfers, native land claims or
undetected title defects.
In
many jurisdictions in which Pan American operates, legal rights applicable to
mining concessions are different and separate from legal rights applicable to
surface lands; accordingly, title holders of mining concessions in many
jurisdictions must agree with surface land owners on compensation in respect of
mining activities conducted on such land.
Pan
American does not hold ownership title to most of the surface lands in the areas
that overlie its mining concessions comprising the Morococha property, nor in
the areas where administration and operations are taking place therein. Most of
these rights were previously held by Centromin S.A. (“Centromin”). In May 2003,
Centromin granted an Easement, Usufruct and Superficiary Rights Agreement in
favour of Empresa Minera Natividad S.A.
(which
merged with the Company’s subsidiary, Compania Minera Argentum S.A.
(“Argentum”), in 2005) in respect of these surface lands.
In
May 2008, Peru Copper (promoter of the Toromocho disseminated copper system)
acquired certain surface rights from Centromin covering the main Morococha area
that had been reserved for the Toromocho project by the Government of
Peru. In addition, Peru Copper acquired rights including surface
lands in the Morococha area where the Morococha mine administration and
operations are taking place, as well as certain underground areas. Certain of
the underground areas acquired by Peru Copper would also provide Pan American
with easier and less costly underground access to some areas of the Morococha
concessions.
Since
2005, Pan American, with the opposition of Centromin (currently, Activos Mineros
S.A.), has engaged in administrative and judicial proceedings to obtain legal
title to surface lands and underground access that may comprise part of the
rights recently acquired by Peru Copper from Centromin. These actions have not
been definitively resolved.
Peru
Copper may begin development of the Toromocho project and there is no assurance
that Peru Copper will not take action and seek to extinguish the rights granted
under the May 2003 Easement, Usufruct and Superficiary Rights Agreement, thereby
impeding use of these surface lands and underground rights at the Morococha
property. In said circumstances, or if the parties are able to resolve their
disputes amicably, Pan American may need to incur potentially significant costs
and expenses in order to acquire and/or obtain surface and underground rights at
the Morococha property and to relocate some or all of its facilities and
infrastructures, and could ultimately be required to cease certain operations at
the Morococha property altogether if such surface lands and underground rights
cannot be obtained for reasonable consideration or if relocation costs become
too burdensome.
Pan
American acquired its interest in the Manantial Espejo project on the
understanding that while strict compliance with the mining law had not occurred,
prior owners had reached an agreement with the mining authorities to bring the
property, to the extent possible under existing law, into compliance. With
respect to the required minimum expenditure threshold originally applicable to
Barrick Gold Corp.’s operations at Manantial Espejo, Pan American was able to
secure a different expenditure threshold with the Argentine government. Until
recently, although Pan American had always complied with the terms of this
agreement, it could never be certain that the original non-compliance of
previous owners would not impair title to the properties. On March 23, 2006 the
Argentine government approved the Environmental Impact Statement submitted to it
by Pan American, effectively authorizing construction of the mine. While
management of Pan American believes that this approval waives a significant
amount of uncertainty and confirms that the government recognizes and will abide
by Pan American’s title to the properties, there can be no
guarantee.
Acquisitions
An
element of Pan American’s business strategy is to make selected
acquisitions. For example, Pan American completed the acquisition of
Corner Bay Silver Inc. in February 2003, the acquisition of Argentum and the
Morococha mine in August 2004, the acquisition from Silver Standard Resources
Inc. in 2006 of a 50% interest in the Manantial Espejo project, in May 2007 a
40% interest in the San Vicente mine, and the acquisition of Aquiline in January
2010. See “Recent Developments – Acquisition of Aquiline Resources
Inc.”. Pan American expects to continue to evaluate acquisition
opportunities on a regular basis and intends to pursue those opportunities that
it believes are in its long-term best interests. The success of Pan
American’s acquisitions will depend upon Pan American’s ability to effectively
manage the operations of entities it acquires and to realize other anticipated
benefits. The process of managing acquired businesses may involve
unforeseen difficulties and may require a disproportionate amount of management
resources. There can be no assurance that Pan American will be able
to successfully manage the operations of businesses it acquires or that the
anticipated benefits of its acquisitions will be realized.
Competition
for New Properties
Mines
have limited lives and, as a result, Pan American continually seeks to replace
and expand reserves through the acquisition of new properties. In
addition, there is a limited supply of desirable mineral lands
available
in
areas where the Company would consider conducting exploration and/or production
activities. Because the Company faces strong competition for new
properties from other mining companies, some of which have greater financial
resources than it does, the Company may be unable to acquire attractive new
mining properties on terms that it considers acceptable. Competition in the
mining business for limited sources of capital could adversely impact the
Company’s ability to acquire and develop suitable silver mines, silver
developmental projects, silver producing companies or properties having
significant exploration potential. As a result, there can be no
assurance that the Company’s acquisition and exploration programs will yield new
mineral reserves to replace or expand current mineral reserves.
Shortages
of Critical Parts, Equipment and Skilled Labour
Pan
American’s ability to acquire critical resources such as input commodities,
drilling equipment, tires and skilled labour due to increased worldwide demand,
may cause unanticipated cost increases and delays in delivery times, thereby
impacting operating costs, capital expenditures and production
schedules.
Foreign
Exchange Rate Fluctuations
Fluctuations
in currency exchange rates, particularly the weakening or strengthening of the
U.S. dollar (being the currency in which Pan American’s products are sold)
against the Canadian dollar (used to pay corporate head office costs), the
Peruvian sol, the Mexican peso, the Argentinean peso and the Bolivian boliviano
(being the currencies in which a significant portion of Pan American’s capital
and operating costs are incurred), could have a significant effect on Pan
American’s results of operations. From time to time, Pan American engages in
trading activities in connection with foreign currency requirements in order to
minimize the effect of strengthening of foreign currencies on Pan American’s
operating results.
Developments
regarding Aboriginal and Indigenous Peoples
Pan
American operates in areas inhabited by aboriginal and indigenous
people. Developing laws and movements respecting the acquisition of
lands and other rights from such people and communities may alter decades old
arrangements made by prior owners of Pan American’s mines and properties or even
those made by Pan American in more recent years. Pan American has
used commercially reasonable efforts in its dealing with all aboriginal and
indigenous people to ensure all agreements are entered into in accordance with
the laws governing aboriginal and indigenous peoples and their communities but
there is no guarantee that future laws and actions will not have a material
adverse effect on Pan American’s financial position, cash flow and results of
operations.
Community
Action
In
recent years communities and non-governmental organizations (“NGO’s”) have
become more vocal and active with respect to mining activities at or near their
communities. These communities and NGO’s have taken such actions as
road closures, work stoppages, and law suits for damages. These
actions relate not only to current activities but often in respect of decades
old mining activities by prior owners of mining properties. Such
actions by communities and NGO’s may have a material adverse effect on Pan
American’s financial position, cash flow and results of operations.
Internal
Control over Financial Reporting
The
Company documented and tested during its most recent fiscal year its internal
control procedures in order to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act (“SOX”). SOX requires an annual assessment by management and
an independent assessment by the Company’s independent auditors of the
effectiveness of the Company’s internal control over financial reporting. The
Company may fail to achieve and maintain the adequacy of its internal control
over financial reporting as such standards are modified, supplemented, or
amended from time to time, and the Company may not be able to ensure that it can
conclude on an ongoing basis that it has effective internal controls over
financial reporting in accordance with Section 404 of SOX. The Company’s failure
to satisfy the requirements of Section 404 of SOX on an ongoing, timely basis
could result in the
loss
of investor confidence in the reliability of its financial statements, which in
turn could harm the Company’s business and negatively impact the trading price
of its common shares or market value of its other securities. In addition, any
failure to implement required new or improved controls, or difficulties
encountered in their implementation, could harm the Company’s operating results
or cause it to fail to meet its reporting obligations. There can be
no assurance that the Company will be able to remediate material weaknesses, if
any, identified in future periods, or maintain all of the controls necessary for
continued compliance, and there can be no assurance that the Company will be
able to retain sufficient skilled finance and accounting personnel, especially
in light of the increased demand for such personnel among publicly traded
companies. Future acquisitions of companies may provide the Company with
challenges in implementing the required processes, procedures and controls in
its acquired operations. Acquired companies may not have disclosure controls and
procedures or internal control over financial reporting that are as thorough or
effective as those required by securities laws currently applicable to the
Company.
No
evaluation can provide complete assurance that the Company’s internal control
over financial reporting will detect or uncover all failures of persons within
the Company to disclose material information otherwise required to be reported.
The effectiveness of the Company’s control and procedures could also be limited
by simple errors or faulty judgments. In addition, as the Company continues to
expand, the challenges involved in implementing appropriate internal controls
over financial reporting will increase and will require that the Company
continue to improve its internal controls over financial reporting. Although the
Company intends to devote substantial time and incur costs, as necessary, to
ensure ongoing compliance, the Company cannot be certain that it will be
successful in complying with Section 404 of SOX.
Claims
and Legal Proceedings
Pan
American is subject to various claims and legal proceedings covering a wide
range of matters that arise in the ordinary course of business activities,
including claims relating to ex-employees. Each of these matters is
subject to various uncertainties and it is possible that some of these matters
may be resolved unfavourably to Pan American. Pan American carries
liability insurance coverage and establishes provisions for matters that are
probable and can be reasonably estimated. In addition, Pan American
may be involved in disputes with other parties in the future that may result in
litigation, which may result in a material adverse impact on Pan American’s
financial position, cash flow and results of operations.
Risks
Relating to Securities Offerings
Enforcing
Civil Liabilities in the United States
The
Company is organized under the laws of the Province of British Columbia, and its
principal executive office is located in British Columbia. Many of
the Company’s directors, officers and the experts named in this Prospectus are
residents of Canada and a substantial portion of their assets and a majority of
the Company’s assets are located outside the United States. As a
result, it may be difficult for United States investors to effect service of
process within the United States upon the directors, officers and the experts
who are not residents of the United States or to enforce against them judgments
of United States courts based upon civil liability under the federal securities
laws of the United States. There is doubt as to the enforceability in
Canada against the Company or against any of its directors, officers or experts
who are not residents of the United States, of original actions or actions for
enforcement of judgments of United States courts of liabilities based solely
upon the federal securities laws of the United States.
AUDITORS,
TRANSFER AGENT AND REGISTRAR
The
auditor of the Company is Deloitte & Touche LLP, Four Bentall Centre, 2800 -
1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1P4.
The
transfer agent and registrar for the Common Shares of the Company is
Computershare Investor Services Inc. at its principal offices in Vancouver and
Toronto.
EXPERTS
Information
relating to Pan American’s mineral properties in this Prospectus and the
documents incorporated by reference herein has been derived from reports
prepared by Pamela De Mark, John J. Chulick, Dean K. Williams, Damian Spring,
John A. Wells, Michael Steinmann and Martin Wafforn, and has been included in
reliance on such persons’ expertise. Each of Pamela De Mark, John J. Chulick,
Dean K. Williams, Damian Spring, John A. Wells, Michael Steinmann and Martin
Wafforn is a qualified person as such term is defined in NI 43-101.
None
of Pamela De Mark, John J. Chulick, Dean K. Williams, Damian Spring, John A.
Wells, Michael Steinmann or Martin Wafforn, each being persons who have prepared
or supervised the preparation of reports relating to Pan American’s mineral
properties, or any director, officer, employee or partner thereof, as
applicable, received or has received a direct or indirect interest in the
property of the Company or of any associate or affiliate of the Company. As at
the date hereof, the aforementioned persons and persons at the companies
specified above who participated in the preparation of such reports, as a group,
beneficially own, directly or indirectly, less than 1% of the Company’s
outstanding common shares.
The
auditor of the Company is Deloitte & Touche LLP, Chartered Accountants, of
Vancouver, British Columbia. Deloitte & Touche LLP, Chartered Accountants,
report that it is independent of the Company in accordance with the Rules of
Professional Conduct of the Institute of Chartered Accountants of British
Columbia and in accordance with the applicable rules and regulations of the SEC.
Deloitte & Touche LLP is registered with the Public Company Accounting
Oversight Board. The audited consolidated financial statements of the Company as
at December 31, 2008 and 2007 have been audited by Deloitte & Touche LLP and
are incorporated by reference herein.
The
auditor of Aquiline is MSCM LLP, Chartered Accountants, of Toronto, Ontario.
MSCM LLP, Chartered Accountants, report that it is independent of the Company in
accordance with the Rules of Professional Conduct of the Institute of Chartered
Accountants of Ontario and in accordance with the applicable rules and
regulations of the SEC. MSCM LLP is registered with the Public Company
Accounting Oversight Board. The audited consolidated financial statements of
Aquiline as at December 31, 2008 and 2007 have been audited by MSCM LLP and are
included in the business acquisition report of the Company dated February 22,
2010, which is incorporated by reference herein.
LEGAL
MATTERS
Certain
legal matters related to the Shares offered by this Prospectus will be passed
upon on the Company’s behalf by Borden Ladner Gervais LLP, with respect to
matters of Canadian law, and Skadden, Arps, Slate, Meagher & Flom LLP, with
respect to matters of United States law.
DOCUMENTS
FILED AS PART OF THE U.S. REGISTRATION STATEMENT
The
following documents have been filed with the SEC as part of the Registration
Statement of which this Prospectus forms a part: (1) the documents referred
to under the heading “Documents Incorporated by Reference”, (2) the consent
of Deloitte & Touche LLP, (3) the consent of MCSM LLP, (4) powers
of attorney from certain directors and officers of the Company (included on the
signature pages of the registration statement), and (5) the consents of
certain “qualified persons” under NI 43-101, being Pamela De Mark, John J.
Chulick, Dean K. Williams, Damian Spring, John A. Wells, Michael Steinmann and
Martin Wafforn.
PART
II
INFORMATION
NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
Indemnification.
Section 160 of the Business
Corporations Act (British Columbia) (the "BCBCA") authorizes a company to
indemnify past and present directors and officers of the company and past and
present directors and officers of a corporation of which the company is or was a
shareholder, against liabilities incurred in connection with the provision of
their services as such if the director or officer acted honestly and in good
faith with a view to the best interests of the company and, in the case of a
criminal or administrative proceeding, if he or she had reasonable grounds for
believing that his or her conduct was lawful. Section 165 of the
BCBCA provides that a company may purchase and maintain liability insurance for
the benefit of such directors and officers.
In
accordance with the BCBCA, the Articles of the Registrant provide that the
Registrant will indemnify its directors, former directors, Secretary or
Assistant Secretary, and may indemnify its officers, employees or agents and
those of its subsidiaries, and directors and former directors of its
subsidiaries, and each of their respective heirs and representatives, against
all losses, charges and expenses howsoever incurred by them as a result of their
actions in such capacities. The Registrant has entered into
agreements with each of its directors confirming this indemnity. The
failure of a director or officer of the Registrant to comply with the provisions
of the BCBCA or the Registrant's Memorandum or Articles, however, will
invalidate any indemnity which he or she is entitled to.
A
policy of directors' and officers' liability insurance is maintained by the
Registrant which insures directors and officers for losses as a result of claims
against the directors and officers of the Registrant in the indemnity provisions
under the Articles and the BCBCA.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
"Securities Act") may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the U.S. Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Exhibits
The
following exhibits have been filed as part of the Registration
Statement:
Exhibit
No.
|
|
Description
|
|
|
|
4.1
|
|
Annual
information form of the Registrant for the fiscal year ended December 31,
2008, dated March 31, 2009 (incorporated by reference to the Registrant's
Annual Report on Form 40-F for the fiscal year ended December 31, 2008,
filed with the Commission on March 31, 2009).
|
4.2
|
|
Audited
comparative consolidated financial statements of the Registrant and the
notes thereto for the financial year ended December 31, 2008, together
with the report of the auditors thereon (incorporated by reference to the
Registrant's Annual Report on Form 40-F for the fiscal year ended December
31, 2008, filed with the Commission on March 31, 2009).
|
4.3
|
|
Management's
discussion and analysis of the financial condition and results of
operations of the Registrant for the fiscal year ended December 31, 2008
(incorporated by reference to the Registrant's Annual Report on Form 40-F
for the fiscal year ended December 31, 2008, filed with the Commission on
March 31, 2009).
|
4.4
|
|
Management
information circular of the Registrant dated April 7, 2009, prepared in
connection with the annual meeting of shareholders of the Registrant held
on May 12, 2009 (incorporated by reference to the Registrant's Report on
Form 6-K furnished to the Commission on April 14,
2009).
|
4.5
|
|
Unaudited
comparative financial statements of the Registrant and the notes thereto
for the three and nine months ended September 30, 2009 (incorporated by
reference to the Registrant's Report on Form 6-K, furnished to the
Commission on November 12, 2009).
|
4.6
|
|
Supplemental
financial information relating to the reconciliation of the Company’s
unaudited interim consolidated financial statements for the three and nine
months ended September 30, 2009 and 2008 to U.S. GAAP in accordance with
Item 18 of Form 20-F (incorporated by reference to the Registrant's Report
on Form 6-K, furnished to the Commission on February 5,
2010).
|
4.7
|
|
Management's
discussion and analysis of the financial condition and results of
operations of the Registrant for the three and nine months ended September
30, 2009 (incorporated by reference to the Registrant's Report on Form
6-K, furnished to the Commission on November 12, 2009).
|
4.8*
|
|
Material
change report, dated February 6, 2009, relating to the announcement
of the Registrant’s intention to make a public offering of 5,540,000
common shares and the filing of preliminary shelf prospectus supplement in
connection therewith.
|
4.9
|
|
Material
change report, dated October 22, 2009, relating to the Registrant’s
announcement that it had signed a support agreement with Aquiline
Resources Inc. (incorporated by reference to the Registrant's Report on
Form 6-K, furnished to the Commission on October 22,
2009).
|
4.10*
|
|
Material
change report, dated December 9, 2009, relating to the announcement of the
initial results of securities deposited pursuant to the offers for the
Aquiline securities and the extension of certain of the
offers.
|
4.11 |
|
Press
release, dated February 15, 2010, relating to the announcement of the
Registrant’s earnings
results for the fiscal year ended December 31, 2009 (incorporated by
reference to the Registrant’s Report on
Form 6-K, furnished to the Commission on February 16,
2010). |
4.12 |
|
Business
acquisition report, dated February 22, 2010, relating to the
Registrant’s
acquisition of Aquiline Resources Inc. (incorporated by reference to the
Registrant’s Report on
Form 6-K, furnished to the Commission on March 5,
2010). |
5.1
|
|
Consent
of Deloitte & Touche LLP, Independent Registered Chartered
Accountants.
|
5.2
|
|
Consent
of MCSM LLP.
|
5.3*
|
|
Consent
of Pamela De Mark.
|
5.4
|
|
Consent
of John J. Chulick.
|
5.5*
|
|
Consent
of Dean K. Williams.
|
5.6*
|
|
Consent
of Damian Spring.
|
5.7*
|
|
Consent
of John A. Wells.
|
5.8
|
|
Consent
of Michael Steinmann.
|
5.9
|
|
Consent
of Martin Wafforn.
|
6.1*
|
|
Powers
of Attorney.
|
|
|
|
|
|
|
* Previously
Filed.
UNDERTAKING
AND CONSENT TO SERVICE OF PROCESS
The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to the securities registered pursuant to Form F-10 or to
transactions in such securities.
Item
2.
|
Consent
to Service of Process.
|
|
(a) The
Registrant has previously filed with the Commission a
written irrevocable consent and power of attorney on Form
F-X.
|
|
|
|
(b) Any
change to the name or address of the Registrant's agent for service
of process shall be communicated promptly to the Commission by an
Amendment to Form F-X referencing the file number of this Registration
Statement.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form F-10 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Vancouver,
British Columbia, Canada on March 8, 2010.
|
PAN
AMERICAN SILVER CORP.
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Robert P.
Pirooz
|
|
|
|
Robert
P. Pirooz
|
|
|
|
General
Counsel, Director
|
|
|
|
|
|
Pursuant to the requirements of the
Securities Act, this Registration Statement has been signed below by or on
behalf of the following persons in the capacities indicated, on March 8,
2010.
Signature
|
|
Title
|
|
|
|
*
|
|
Geoffrey
A. Burns
|
|
|
President
and Chief Executive Officer, Director
|
|
|
(Principal
Executive Officer)
|
|
|
|
*
|
|
A.
Robert Doyle
|
|
|
Chief
Financial Officer
|
|
|
(Principal
Financial Officer)
|
|
|
|
|
|
Ross
J. Beaty
|
|
|
Chairman
of the Board of Directors
|
|
|
|
|
|
William
A. Fleckenstein
|
|
|
Director
|
|
|
|
|
|
Michael
Larson
|
|
|
Director
|
|
|
|
|
|
Michael
J.J. Maloney
|
|
|
Director
|
|
|
|
|
|
Robert
P. Pirooz
|
|
|
General
Counsel, Director
|
|
|
|
|
|
David
C. Press
|
|
|
Director
|
|
|
|
|
|
Walter
T. Segsworth
|
|
|
Director
|
|
|
|
|
|
Paul
B. Sweeney
|
|
|
Director
|
|
|
|
By:
|
|
|
|
|
|
|
Attorney-in-fact
|
|
|
March
8, 2010 |
|
AUTHORIZED
REPRESENTATIVE
Pursuant to the requirements of Section
6(a) of the Securities Act of 1933, the Authorized Representative has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, solely in its capacity as the duly authorized representative of the
Registrant in the United States, in the City of Vancouver, British Columbia,
Canada on March 8, 2010.
|
PAN
AMERICAN MINERALS INC.
|
|
|
(Authorized
Representative)
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
Authorized
Signatory
|
|
EXHIBIT INDEX
Exhibit
No.
|
|
Description
|
|
|
|
4.1
|
|
Annual
information form of the Registrant for the fiscal year ended December 31,
2008, dated March 31, 2009 (incorporated by reference to the Registrant's
Annual Report on Form 40-F for the fiscal year ended December 31, 2008,
filed with the Commission on March 31, 2009).
|
4.2
|
|
Audited
comparative consolidated financial statements of the Registrant and the
notes thereto for the financial year ended December 31, 2008, together
with the report of the auditors thereon (incorporated by reference to the
Registrant's Annual Report on Form 40-F for the fiscal year ended December
31, 2008, filed with the Commission on March 31, 2009).
|
4.3
|
|
Management's
discussion and analysis of the financial condition and results of
operations of the Registrant for the fiscal year ended December 31, 2008
(incorporated by reference to the Registrant's Annual Report on Form 40-F
for the fiscal year ended December 31, 2008, filed with the Commission on
March 31, 2009).
|
4.4
|
|
Management
information circular of the Registrant dated April 7, 2009, prepared in
connection with the annual meeting of shareholders of the Registrant held
on May 12, 2009 (incorporated by reference to the Registrant's Report on
Form 6-K furnished to the Commission on April 14,
2009).
|
4.5
|
|
Unaudited
comparative financial statements of the Registrant and the notes thereto
for the three and nine months ended September 30, 2009 (incorporated by
reference to the Registrant's Report on Form 6-K, furnished to the
Commission on November 12, 2009).
|
4.6
|
|
Supplemental
financial information relating to the reconciliation of the Company’s
unaudited interim consolidated financial statements for the three and nine
months ended September 30, 2009 and 2008 to U.S. GAAP in accordance with
Item 18 of Form 20-F (incorporated by reference to the Registrant's Report
on Form 6-K, furnished to the Commission on February 5,
2010).
|
4.7
|
|
Management's
discussion and analysis of the financial condition and results of
operations of the Registrant for the three and nine months ended September
30, 2009 (incorporated by reference to the Registrant's Report on Form
6-K, furnished to the Commission on November 12, 2009).
|
4.8*
|
|
Material
change report, dated February 6, 2009, relating to the announcement
of the Registrant’s intention to make a public offering of 5,540,000
common shares and the filing of preliminary shelf prospectus supplement in
connection therewith.
|
4.9
|
|
Material
change report, dated October 22, 2009, relating to the Registrant’s
announcement that it had signed a support agreement with Aquiline
Resources Inc. (incorporated by reference to the Registrant's Report on
Form 6-K, furnished to the Commission on October 22,
2009).
|
4.10*
|
|
Material
change report, dated December 9, 2009, relating to the announcement of the
initial results of securities deposited pursuant to the offers for the
Aquiline securities and the extension of certain of the
offers.
|
4.11 |
|
Press
release, dated February 15, 2010, relating to the announcement of the
Registrant’s earnings
results for the fiscal year ended December 31, 2009 (incorporated by
reference to the Registrant’s Report on
Form 6-K, furnished to the Commission on February 16,
2010). |
4.12 |
|
Business
acquisition report, dated February 22, 2010, relating to the
Registrant’s
acquisition of Aquiline Resources Inc. (incorporated by reference to the
Registrant’s Report on
Form 6-K, furnished to the Commission on March 5,
2010). |
5.1
|
|
Consent
of Deloitte & Touche LLP, Independent Registered Chartered
Accountants.
|
5.2
|
|
Consent
of MCSM LLP.
|
5.3*
|
|
Consent
of Pamela De Mark.
|
5.4
|
|
Consent
of John J. Chulick.
|
5.5*
|
|
Consent
of Dean K. Williams.
|
5.6*
|
|
Consent
of Damian Spring.
|
5.7*
|
|
Consent
of John A. Wells.
|
5.8
|
|
Consent
of Michael Steinmann.
|
5.9
|
|
Consent
of Martin Wafforn.
|
6.1*
|
|
Powers
of Attorney.
|
|
|
|
|
|
|
* Previously
Filed.
III-4