These shares have enjoyed a strong move this month. I expect that with continued strength in the silver commodity price, the stock will soon set an all-time high of over $28, and will reach my 12-month price objective of $31.

By 2008, the company plans to have annual silver production of 25 million ounces from eight operations.

Corporate Profile:

Pan American Silver Corp. was founded in 1994 upon a single mission: to be the best vehicle for equity investors wanting real exposure to higher silver prices. In 2005 the Company produced more than 12.5 million ounces of silver from 6 producing mines in 3 countries, and is on track to produce approximately 14 million ounces in 2006. Two additional mines are currently under construction, one in Mexico that will be operational by Q4 2006 and one in Argentina that is expected to commence production in early 2008. Pan American Silver expects to become the largest primary silver producer in the world with annual silver production growing to 25 million ounces per year by 2009.

Pan American Silver began as a silver company in early 1994, starting with no assets or liabilities and a share price of ten cents, Pan American Silver began by acquiring a number of projects with known silver resources. These properties contained over 250 million ounces of silver but required higher silver prices to be produced economically.

In September of 1995 Pan American purchased the producing Quiruvilca silver-zinc mine located north of Lima in Peru. Pan American acquired three new projects from 1997 through the present.

In September 1997 Pan American signed an option to acquire a 100 percent interest in the La Colorada silver mine in Zacatecas State, Mexico. La Colorada is located in the largest silver-producing region in the world, with over 2 billion ounces of historic silver production. Pan American completed the purchase of La Colorada in March 1998, completed feasibility in 2000, began small-scale production in 2001 and in 2003 completed an expansion of the mine that increased production to an average 3 million ounces of silver annually in 2005.

In March 2000, Pan American acquired a majority interest in the Huaron mine, located northeast of Lima in the Cerro de Pasco district, one of the most important mining regions in Peru. Pan American fast-tracked the project through feasibility, financing and construction to begin full-scale production in April 2001. In 2002, Huaron became Pan American's largest operation and currently produces 3.6 million ounces of silver annually.

Also in Peru, in 2002 Pan American acquired rights to silver-rich stockpiles in the Cerro de Pasco district. The stockpiles contain an aggregate of nearly 110 million ounces of contained silver -- the largest aboveground inventory of silver ore in the world. Pan American has a 10-year agreement to sell some of the stockpiled ore to a nearby smelter and is paid for the silver contained. The operation currently yields an average 900,000 ounces of silver per year.

2002 was also the year in which the San Vicente property was optioned and began small-scale mining. In 2003 Pan American optioned 50% of the property to a Bolivian mining company, EMUSA, in order to operate more effectively in Bolivia. In 2005 Pan American increased its interest to 55% and initiated a feasibility study to expand production to 3 million ounces per year. A mining plan is expected in the second quarter of 2006.

In Argentina in 2002, Pan American acquired 50% of the Manantial Espejo silver/gold project. A feasibility study was completed at the end of 2005 and the remaining 50% was purchased in April 2006. The mine is currently under construction.

In February 2003 Pan American acquired Corner Bay Silver and its primary asset, the Alamo Dorado silver deposit in Sonora state, Mexico. The project is currently under construction with production expected to average 5 million ounces annually at a cash cost of less than $3.25/oz. beginning at the end of 2006.

In 2004, Pan American marked its tenth anniversary with its tenth consecutive year of growth in silver production and saw additional future growth objectives become real with construction and development projects at Alamo Dorado (México) and Manatial Espejo (Argentina). In August 2004 Pan American acquired an 88% interest in the Morococha silver mine in Peru, which immediately added 1.2 million ounces of silver production to the Company, bringing 2005 production to 12.5 million ounces.

Wall Street analysts' notes :

Pan American's strategy is to grow silver reserves and resources through exploration and acquisitions, to boost its silver output, to maintain a strong financial position and to maximize leverage to the silver price. The objective is to become the world's leading primary silver producer. For 2006, the company expects to produce 14 million ozs of silver at a cash cost below $2.00/oz. With several new projects coming on stream in the next few years, silver output is forecast to rise to 25 million ozs of silver by 2008. The Alamo Dorado mine in Mexico is on schedule for a late 4Q/06 startup, with annual production of 5 million ozs of silver. The Manantial Espejo mine in Argentina is forecast to commence production in early 2008, yielding an estimated 4.3 million ozs of silver annually.

Pan American Silver
Our one year price objective has been set at $27.50 per share. Our price objective is based on a target multiple of 2.75x. This is a modest discount to the peak value of 3 times we attribute to growth oriented precious metal companies, due to political risk. Risks of this price objective not being achieved are unforeseen operating risks, political risks, acquisition risk and/or risk of commodity price weakness.

Pan American's third quarter results are expected to be modestly better than Q2, as sulphide operations at La Colorada come on line, and production from San Vicente re-starts. In addition, we expect Pan American will report lower cash costs as the company's operations continue to benefit from elevated base metal prices that result in higher by-product credits. We note the average zinc, lead, and copper prices in Q3 were 2.2%, 8.7%, and 6% higher, respectively, than the average in Q2. For Q3 we forecast EPS of $0.21, better than $0.20 reported in Q2 but below current consensus of $0.24. The La Colorada sulphide operations will continue to ramp up and are expected to have a greater impact on fourth quarter results. As well in the fourth quarter Pan American expects to commission their new Alamo Dorado mine in Mexico. The company is hosting an analyst tour of these operations on November 2nd-5th.

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Pan American Silver website
Pan American Silver - DGF2006
Pan American Silver - DGF2005
Pan American Silver - DGF2004