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UPDATE 1-Shares of Coeur, Pan American regain some ground
April 15, 2011 / 8:47 PM / 6 years ago

UPDATE 1-Shares of Coeur, Pan American regain some ground

* Shares of Coeur, Pan American close slightly higher

* Pan American facing hurdles outside of Bolivia too (Adds background, share price moves)

TORONTO, April 15 (Reuters) - Shares of silver miner Coeur d‘Alene CDM.TO (CDE.N) regained some lost ground on Friday, after the Bolivian government assured the company its San Bartolome mine is not subject to any proposed nationalization plans.

Shares of Coeur and rival Pan American Silver PAA.TO fell sharply on Thursday, after Bolivia’s mining minister indicated that the Andean country’s leftist government may rescind concessions on four mines run by affiliates of Swiss trading house Glencore [GLEN.UL] and Pan American. [ID:nN14168662].

Coeur, the largest U.S. primary silver miner, maintains that it merely operates the San Bartolome mine in Bolivia, but the title already rests with the country.

Shares of Coeur, which had fallen as much as 9.9 percent on Thursday, closed up 0.8 percent at C$30.05 on the Toronto Stock Exchange on Friday. In New York the shares closed up 0.7 percent at $31.30.

Shares of Canada’s Pan American also rose slightly after analysts noted that Thursday’s selloff had been overdone. The stock, which fell more than 11 percent on Thursday, closed up 1.9 percent at C$36.56.

Vancouver-based Pan American owns the San Vincente silver mine in Bolivia. The asset, located in the center of the silver-rich Potosi region, produced 3.0 million ounces of silver and 4,661 tonnes of zinc concentrates in 2010.

The price of spot silver XAG= is up nearly 40 percent year-to-date and the precious metal is currently at a 31-year high of $42.79 an ounce.

The spike in the price of silver and other metals has led governments across the globe to raise taxes, royalties and in some instances even seize assets, as they endeavor to balance budgets and boost income. [ID:nN03106303] [ID:nLDE72M0KK]

Pan American operates the San Vincente mine, in which Bolivian state mining company COMIBOL also owns an interest. The mine accounts for about 12 percent of Pan American’s current annual output.

Mining Minister Jose Pimentel said on Thursday that COMIBOL would assume control of the mines if the concessions were rescinded -- a move that is expected to occur before May 1.

Bolivian President Evo Morales has already rattled foreign investors since coming to power in 2005 with a number of nationalizations in oil, gas, mining, communications and other sectors.

Analysts said Bolivia’s move would be a blow to Pan American as the company already faces hurdles in respect to its operations in Peru and the development of its Navidad silver-lead project in Argentina.

The province of Chubut in Argentina, where the Navidad project is located, has prohibited open-pit mining and the use of cyanide in mineral processing. If this law is not altered it could make the project uneconomic.

Pan American also has three operating mines in Peru, where a presidential vote in June could lead to the election of Ollanta Humala a left-wing nationalist. Both Humala and his opponent Keiko Fujimori have indicated they favor imposing higher taxes on miners to fund social programs. [ID:nN14293865]

The silver miner has said it has reached out to authorities in Bolivia, but has received no official word so far about the proposed move to rescind concessions.

$1=$0.96 Canadian Reporting by Euan Rocha; editing by Rob Wilson

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