Pan American Declares Course of Action for Dukat.

VANCOUVER, British Columbia--(BUSINESS WIRE)--Dec. 9, 1999--

Pan Amer Silver(NASDAQ:PAAS) (TSE:PAA.)

Pan American Silver Corp. (TSE: PAA; NASDAQ: PAAS) announces it has begun to aggressively defend its rights to develop the Dukat silver mine, Magadan, Russia. On November 30th Pan American announced that a Moscow-based company submitted the highest bid of $12 million at an auction for certain Dukat assets, including the mill building, which Pan American intends to use in its re-opening of the Dukat silver mine. The assets have little or no value to a third party without the mining license for Dukat and the presidential decree to export the Dukat concentrates, both of which Serebro Dukat already holds. According to Russian law, the highest bidder must pay the full bid amount by December 30th.

Pan American's subsidiary, ZAO Serebro Dukat (Serebro Dukat), has leased the assets since May under an agreement with the creditors of the bankrupt operating company. The agreement entitles Serebro Dukat to lease the assets for $100,000 per month, is renewable indefinitely, and provides that the lease will remain in force through any transfer of ownership of the assets.

Serebro Dukat is asserting its rights under the lease agreement. The lease may be challenged in Russian courts and there is no certainty it will be upheld. If the lease was overturned and the assets lawfully purchased by the winning bidder, Serebro Dukat could still proceed with the mine re-opening under its existing mining license without the use of the assets. Serebro Dukat's mining licence has a 20-year renewable term, requires commencement of production by the end of 2001 with full-scale production in 2002, and contains a clause that allows for delays. A detailed evaluation of this option is underway and would include building an alternative mill.

Pan American continues to enjoy the strong support of the Magadan and Moscow governmental authorities and the World Bank-syndicated project lenders. A further update will be issued in early January, or as the situation requires.

The statements that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties that could cause actual results to vary materially from the targeted results. Such risks and uncertainties include those described in the Company's Form 40-F as amended. All amounts are expressed in U.S. dollars.