Good morning. My name is Jeanie and I will be your conference operator today. At this time, I would like to welcome everyone to the Pan American Silver Corporation second quarter 2007 earnings conference call. (Operator Instructions) It is now with great pleasure to turn the floor over to your host, Mr. Geoff Burns, President and CEO. Sir, you may begin your conference.

Thank you, Operator. Good morning, ladies and gentlemen and welcome to the Pan American Silver second quarter 2007 earnings release conference call. Joining me today here in Vancouver are Steve Busby, our Senior Vice President of Project Development; Wayne Vincent, our Controller; and Alexis Stewart, our Director of Investor Relations. I am planning on keeping today’s call fairly brief. I will try to provide some color to our earnings release, which we issued last night, and I am going to ask Steve Busby to update our construction activities in Argentina and Bolivia. From an operating perspective, if you’ll pardon the expression, we had a rock solid quarter. It was void of any amazing accomplishments and similarly without any significant issues. Don’t get me wrong -- there was and always is a plethora of issues to deal with in our operating mines but that’s normal operating and we worked extremely hard to deliver good second quarter results. As I am sure you can imagine, I travel quite frequently, given the location of our assets, and I can recall being asked on numerous occasions what makes for a good flight and a good airline. For me, it’s pretty simple -- it’s one where the plane takes off when the schedule says it is supposed to and arrives when it is supposed to arrive without incident. Our second quarter falls pretty much into that category. We told you at the start of this year what we are expecting to achieve, we updated you on our schedule at the end of the first quarter with respect to Alamo Dorado, and this quarter we have done almost exactly what we expected to do without incident. We produced just over 4.2 million ounces of silver in the second quarter, 27% higher than in the second quarter…

Thank you, Geoff. We are well underway preparing for the construction of the expansion project at San Vicente and enjoy a lead start with significant advance already in detailed engineering and procurement activities. Total project expenditures to the end of June were $5.9 million and total commitments were $14 million. We have successfully staffed some of the key positions, including our country president, our operations manager, and our project manager position. The San Vicente expansion project is defined as building a new 750-ton per day floatation plant at the mine site, expanding production at the mine to feed the new plant, building a new tailings facility, and upgrade the local infrastructure to support the larger mining operation. Once completed, the expanded operation will be capable of producing approximately 2.8 million ounces of silver annually on a 100% basis at a unit cash operating cost of $2 per ounce net of by-product credits for the first five years. As Geoff said earlier, this is an increase of 2 million ounces of silver per year over today’s production rates. This production will be contained in two marketable products, a copper silver concentrate and a zinc silver concentrate. The expansion project includes replacement of the existing mine hoist and headframe to provide safe access for miners and materials, as well as enhanced production from the existing developed areas of the mine. It also includes development of an approximately 2300 meter underground decline ramp to provide access for rubber tire underground mining gear, allowing for bulk mining methods on our larger and richer [literale] vein deposits. We have awarded a contract with an established mining contractor named [Eyisa] to initiate the ramp construction beginning next month and to train our miners in mechanized mining methods. We’ve engaged Lintech Incorporated to provide engineering procurement and…

Thanks, Steve. As you can tell, we are extremely active executing our growth plans. With Manantial Espejo scheduled to come on stream at the end of May next year and San Vicente by December, we are clearly poised to see production growth at Pan American in 2008, 2009 and well into 2010. With one exception, our record production in the second quarter translated into some record financial results. Cash flow from operations before working capital adjustments was the highest in the company’s history at $31.5 million. Revenues from metal sales were up 26% as compared to the corresponding period in 2006 to $79.2 million, and were the second-highest we’ve ever recorded. Cash costs were good at $2.61 per ounce of silver produced and with increased profitability comes increased taxes, as we recorded our highest tax provision ever at just over $10 million. Finally, we had our second-highest quarterly net income ever at $18.5 million, or $0.24 per share. This was 23% higher than a year ago. Net income for this quarter was second only to income recorded in the first quarter of this year when we included a $10 million gain from the sale of our interest in the Dukat Mine. Excluding that gain, the second quarter was our strongest quarter yet in terms of earnings. I realize that some of you are expecting even more from our bottom line. However, not unlike the first quarter, our earnings would have been stronger still had we been able to recognize into income all of our production. In our first quarter conference call, I noted that only 74% of our concentrate produced in Peru was shipped and recognized into sales, with the remaining left in inventory. And I was hoping that we would see some of this inventory sold down during the…

(Operator Instructions) There appear to be no questions at this time and I would like to turn it back to Geoff Burns for any closing comments. Actually, we do have a question come from Haytham Hodaly of Salman Partners. Please go ahead.

Hey, Geoff. I couldn’t let you get away without any questions. Just one quick question, just with regard to costs. Obviously the costs in the second quarter were probably -- they were higher than the same quarter of last year, even though I think if you take a look back, the by-product credits were probably better now than they are then. What were some of the costs? I mean, La Colorada costs were higher than expected, or higher than you would like, put it that way. What are some of the things you can do here in the next little while to bring some of those costs down?

Well, first of all, La Colorada, yes, we were $7.20 an ounce and as I said, we had a one-time distribution of profit sharing that I don’t expect to see again this year, so we are going to be back in the $6.50 to $6.80 range, which is pretty much normal for La Colorada and what I would expect going forward. On a consolidated basis, our costs were higher than they were last year. The biggest influence is Alamo Dorado. If you look, Alamo Dorado during the quarter was just over $4 an ounce. And now that it’s a real contributor that is essentially cost averaging us higher than where we were a year ago. I do expect Alamo’s costs to come down as we see production ramping up further, you know, up to the 400,000 ounce per month range, just slightly over, which is getting near capacity and I see that coming down, so that should have a somewhat positive impact over the balance of the year. But in general, our costs are going to be somewhat higher with Alamo Dorado in there. You are correct, Haytham. The by-product credits have been better this year. That’s really reflected at Morococha where we saw minus $5 and $5.23 an ounce. In general, as I think you are probably aware, costs have -- actual dollar expenditures to produce a ton of material have continued to go up. We’ve seen probably in the first part of this year another 6% to 8% in those costs. That is stabilizing right now and frankly I don’t see much we can do to combat that. We’ve really maximized what we can do on a productivity side. It’s just the inputs across the board are higher. I think what you are seeing right now, $2.60, I expect to be lower than that over the rest of the year -- $2.30, $2.25, but that’s where I think we are going to be.

Okay, $2.30, $2.35 as a consolidated for the whole, you mean?

Yes, that’s correct.

Let me ask a couple other questions since there weren’t that many questions out there. On the Alamo Dorado, you said run-rate of potentially 400,000 ounces. That’s contained metal a month. We’re talking 4.8 million roughly for a year once up and running. Did you say 3.6 this year, is that the number you threw out?

Yes, 3.6 this year.

And so is 4.8 a reasonable number for next year then?

Yes, 4.8 to 5 is where I think we are going to be. I think we should get over 400,000 ounces but it is not going to be 500. It will be 410, 420, right around 400 so 4.8 million to 5 million is a pretty reasonable number.

Okay, and for San Vicente, we said the expansion will get it to as much as 2 million ounces, is that correct?

Two-point-eight.

Was that on a 100% basis or what was that?

Yes, that’s 100%. We’ve got 95% of it now.

Okay, and how long before you actually get that 2.8? How long does the expansion until it is effectively done?

It will be -- December 2008 is our plan for construction completion. You can anticipate four to six months of start-up, and so I would say mid-2009 you will start to see full production rates.

So at an annual run-rate at that point by about 2.8 million ounces?

You betcha.

Okay, so this year, what are you expecting from San Vicente?

On a 100% basis, we are expecting about 650,000 ounces. For the first quarter, we had 55% of that. Starting in June, we had 95% of that, so -- I think you are going to need to do a little bit of math there to work the number.

No problem. Just with regard to one last thing on Quiruvilca, what is happening with the mine life there? How many more, realistically, years do we have at these prices right now?

At these prices?

At these prices -- or even let’s say you know, on what you think is fair, maybe $9, $10 long-term silver?

Right now I think our P&P sitting out in front of us is right on five to six years today. There certainly is additional inferred resource. At these prices, that resource is clearly going to be economic and once we have it drilled out, so at these levels, we are sort of looking at plus 10 years.

At Quiruvilca?

At Quiruvilca, that’s correct.

Okay, so that’s a huge change from where you were a couple of years ago when you were looking at closure.

Oh, a 180-degree change. As you’ll recall, in June of 2004 we were planning on shutting it down.

Right, I remember that, yes. Well, that’s perfect. Thank you, Geoff.

(Operator Instructions) Thank you. Your next question is coming from Kurt Bueller, private investor. Please go ahead.

Yes, what is your expected production and sale of concentrate for 2008?

This year we are looking at producing almost 130,000 tons of concentrate and next year, that will ramp up slightly with San Vicente to bout 135,000 to 140,000 tons of concentrate. Our expectation every year is that we will sell during the course of the entire year all of the concentrate we produce. That’s the same this year. We fully expect that the inventories that we built up in the first and second quarters will be sold in the third and fourth.

Thank you.

Thank you. Your next question is coming from Craig West of GMP Securities. Please go ahead.

Sorry, I might have missed the very first few minutes of the call there so forgive me if you’ve covered this. I was just wondering if you could touch a bit on exploration activities and in particular exploration at Morococha.

Actually, I didn’t make any comments this call on exploration. Now that you’ve asked the question, I will. As you know, we are planning overall in the company planning on drilling almost 100,000 meters of diamond drilling this year, primarily at -- well, almost exclusively at our operating properties, of which almost half of that is targeted at Morococha. I can tell you that right now we have seven drill rigs turning. I can tell you that our program is on schedule. I can tell you that we’ve had some exceptional results, not dissimilar to last year, but I also can’t give you the details of those results because at this point we have not done the full update to our reserve and resource statement, and we are not planning to do that. We are thinking about doing it about mid-year, but just given where we are at in the program, we’ve decided to defer that to make it an annual event, much the same as last year. But I can say things are going very well in terms of our exploration efforts.

And what about the drift that is going down at Morococha? I mean, there was some talk previously about it going through some ground that was maybe prospective but previously unexplored. Any updates on that at all?

Yes, that is the Manto Italia Sierra Nevada ramp. We’ve done there now -- I’m just trying to search my mind for a moment. I think we’ve gone through about 600 meters so far of that development. We did hit some pretty ratty ground early or late in the first quarter and through much of the second quarter, so our development rates were down to about a meter a day because we were putting in full-on ground support with steel arches and concrete, et cetera. We’ve gone through most of that ground now and we expect the production rate there to get back up to about three meters to four meters a day, which is normal. So it’s been a very slow progress. We are just getting through that ground and should be over the next four to five months hitting, as you describe very clearly, some very prospective areas of our claim group, areas that have subsequently never been explored nor drilled and areas where we fully expect to intersect veins. But just because of the slowness of some of the ground conditions we ran into, we haven’t quite got where we thought we were going to be. That program, as you know, is still a two-year program and really is going to be the lifeblood of that asset once it is complete, accessing the north as well as the west and southern areas of our claim blocks. As you probably know, Craig, the west, in particular the southwest corner of our claim group is where our highest grades are in the Yacumina area, running 400 and 500 grams per ton. So that’s moving ahead. It’s a little behind where we thought it would be but I see it picking up now that we are back in some good ground and I do fully still expect to run into mineralization that we haven’t seen before.

Great. Thanks a lot.

Thank you. Your next question is come from Alexander Emery of Bloomberg News. Please go ahead.

Yes, good morning, Mr. Burns. You mentioned that you didn’t like the political risk in Bolivia. I was just interested to see how much a concern there is with the government of Mr. Morales in the wake of what happened with Glencore’s tin smelter, and also the fact that apparently congress is preparing to raise taxes on mining company profits to 37.5% next month. I was wondering how much of a concern those two issues are.

I’ll deal with the second issue first. We’ve anticipated that tax increase and have actually, from a planning perspective, have built it into our cash flow and project economic models, so the economics that I gave earlier in the presentation indeed reflect that tax increase that has been proposed. I might add that that tax increase has yet to go to congress. I don’t know how many drafts there have been and there’s been a lot of different discussion, the numbers here reflecting are the latest draft but Evo has yet to take it for approval. On the second comment, I am really not concerned. Glencore and their assets were a very unique situation in Bolivia. Glencore had purchased the assets, the mining assets of the previous President, [Goni] who unfortunately or fortunately, I guess, ended up leaving the country for political reasons and so those assets were very much a target of Mr. Morales. I don’t feel exposed at all in the same way. In fact, a partner of ours in this project is COMIBOL and we just met with COMIBOL literally two weeks ago, who gave their blessing to our expansion plan. The board members from COMIBOL will be out visiting our site. They are actually genuinely excited about the investment we are making in Bolivia, so in terms of nationalization, I just don’t have a real fear of that. Bolivia is a tough place to do business, though, make no mistake. If I could move assets around, I would perhaps gladly pick it up and move it to a different country but while it is not the most comforting location, I am comfortable with our project.

Thank you. Just one last question, if I may; with that said, have you had personal reassurance then from the Bolivian Government that your investment will be respected?

Well, other than the assurance that we are getting from COMIBOL, which is the state mining company, no. Do we have a written piece of paper that says our asset will never be touched? No, and frankly I would be surprised if anyone had a piece of paper that said something like that.

Thank you very much.

Thank you. Your final question is coming from Mr. Rob [Pravanti] of Turner Investment Partners. Please go ahead.

Hi, this is Mark Bianchi for Rob. We jumped on a little bit late and might have missed some prepared remarks on the inventory build and associated non-shipping of concentrate. I heard you comment that you expect to ship that for the second half of the year and there’s associated earnings with that, but can you just comment a little bit more on what the reasoning for the delay in the shipping is? Is that something to expect again next year? Is there a seasonality aspect to it?

Quarter to quarter, our concentrate movements can vary quite dramatically. Our production levels are pretty consistent but we sell to traders and we sell directly to smelters and they control the shipment schedule because they put together economic quantities to ship. A ship, for example, each hold will hold either 5,000 or 10,000 tons of concentrate and they are not going to load the ship until they have a full hold because they are going to pay for that hold whether they put one ton in it or 10,000 tons in it. So we are a little bit at I am going to say their mercy with respect to the absolute shipping dates. In terms of the shipping quantity throughout the year, yes, they are committed to take our entire production between all the different traders and concentrate, our smelters that we deal with. So is there a seasonality to it? Not particularly, It really comes down to a number of factors not in our control of where they are purchasing their concentrates from, when they have a ship coming in, where our material is in the production cycle. For example, in December of last year, we shipped about 30% more concentrate than we actually produced in one month. But I can’t give you that month is going to happen again. I can’t tell you that. What I can reiterate is our expectation is that in any given year, that over the fullness of the year, we will ship all the concentrate that we produce.

Are the clients on a take or pay contract for this concentrate?

Well, they are committed to taking it and we have provisions that if they don’t take it by a certain date, that they have to provide us with provisional payments, so I guess that is close to a take or pay.

Okay. Thank you.

Mark, just to end, I’m just not concerned. It’s not a concerning factor, as I said, over the balance of the year. We are going to ship all that concentrate. It is just a timing issue that’s hit us in the first and second quarter and it is going to reverse. It is going to reverse. That is a normal cycle for our business.

Great, thanks.

Thank you. I would now like to turn the call back to Mr. Geoff Burns for any closing comments. Please go ahead, sir.

Thanks, Operator. Just one more time, I want to thank everyone for joining us here this morning, and to reiterate that I believe we had a very, very good second quarter and we delivered on the forecast that we had put forward and I very much look forward to updating each and every one of you at the end of the third quarter. Thank you.

Thank you. This concludes today’s Pan American Silver Corporation second quarter 2007 earnings conference call. You may now disconnect your lines at this time and have a wonderful afternoon.