TORONTO (miningweekly.com) – The Navidad silver project, in Argentina's Chubut province, has the potential to nearly double Pan American Silver's annual production, executive vice-president of geology and exploration Michael Steinmann said on Tuesday.

Vancouver-based Pan American bought the project when it acquired Aquiline Resources last year, and will likely complete a prefeasibility study for the asset in April 2011, he said in a presentation at the Denver Gold Forum.

The company, which already operates eight mines in Mexico, Peru, Argentina and Bolivia, plans to complete a preliminary economic assessment on Navidad before the end of this year, Steinmann said.

Openpit mining is currently banned in Chubut, but the provincial government has indicated it will change the legislation to define zones where openpit operations are permitted.

The province of Chubut is “well aware” of Pan American's project schedule, and how much money it is investing in the asset, Steinmann said.

“We remain very confident that the change will happen, allowing us to mine this exciting project,” he said.

The mine is expected to start production in the first half of 2013.

“I obviously can't share all the numbers yet because we are not ready with the PEA, but for sure, Navidad has the potential to close to double our production in the future,” Steinmann said.

Pan American expects to produce 23,4-million ounces of silver this year, plus 95 000 oz of gold, 7 300 t of copper, 46 000 t of zinc and 15 800 t of lead.

The company also expects that a scoping study for the La Preciosa project, in Mexico, will be completed in the fourth quarter of 2010.

Pan American has agreed to fund the construction of the project, which is owned in a joint venture with Orko Silver, in exchange for a 55% interest in the asset.