Update on Pirquitas Mine

The company began open pit pre-stripping in July 2008 as well as developing mill and support teams in preparation for continuous operations. This mining activity exposed oxide and transitional ore during the first quarter of 2009 and the ore continued to be stockpiled while the historical jig tailings were fed through the silver circuit during the third quarter. A total of 13.6 million tonnes of waste and 499,600 tonnes of oxide and transitional ore have been mined as at September 30, 2009.

The silver circuit operated during the third quarter, and in September operating time averaged 93% over 22 consecutive days prior to a scheduled four-day shutdown as the plant proved its mechanical and electrical reliability. The plant feed to the end of the quarter was comprised of 139,000 tonnes of historical jig tailings ranging in grade from 90 grams/tonne to 465 grams/tonne for an average grade of 166 grams/tonne.

As envisioned in the feasibility study, the historical jig tailings were to provide material to prove the operation of the facility.The metallurgical performance from the jig tailings has been disappointing as a result of the variation in head grade and oxidation precipitates within the jig tailings. This has resulted in inconsistent silver recovery ranging from 30% to 60% and concentrate grades ranging from 900 grams of silver/tonne to in excess of 5 kilograms of silver/tonne. The company shipped 56,388 ounces of silver in concentrates during the third quarter.

Pirquitas is now feeding oxide ore from the open pit into the mill and expects to achieve silver recoveries of approximately 30% from this mill feed. The mill will continue to operate on oxide and transitional ore until the first quarter of 2010 when sulphide ore from the open pit will be introduced as mill feed.

As a consequence, Pirquitas is now expected to produce approximately 1 to 1.5 million ounces of silver in 2009 depending on the consistency of the oxide and transitional ore silver recoveries. Test work on the open pit sulphide ore has confirmed the feasibility study results, and the company plans to provide estimated silver production for 2010 later in the year as production schedules are finalized for the coming year.

During the quarter, approximately $22.0 million was incurred on construction and mining equipment at the Pirquitas project in Argentina. To September 30, 2009, $239 million has been expended for the construction of the plant facilities and equipment compared to the previous estimate of $233 million. The $239 million includes an additional $5 million expended during ramp-up for enhancements made to the original plant design to optimize the silver flotation circuit.With the continuing construction and commissioning of the plant, the company incurred $48.7 million in pre-operating costs for the nine months ended September 30, 2009, of which $18.7 million were incurred during the third quarter.