The skarn deposit hosts an inferred resource of 72.5 million tonnes grading 44 grams per tonne silver, 0.17% copper, 2.02% lead and 4.4% zinc for 3.2 million tonnes zinc, 1.5Mt lead and 121,000t copper, using a cut-off value of US$60/t after smelting, refining and transportation costs.
The defined resource is east of the La Colorada mine between 600-1,700m below surface, with most of the mineralisation contained within a larger polymetallic mineralised skarn covering an area about 500m by 600m.
"This initial resource estimate is a very exciting development for Pan American Silver and our La Colorada operation," said CEO Michael Steinmann. "The substantial size and grades point to a world-class deposit, discovered with our near-site exploration programme."
The company relied on 54,000m of drilling in 65 diamond holes underpinning the initial resource statement.
The company said bench-scale metallurgical testing in the laboratory on core composite samples had indicated "encouraging" selective polymetallic flotation recoveries producing high-quality silver-rich copper, lead and zinc concentrates.
In 2020, Pan American has budgeted $10 million to drill 44,000m focusing on infill and exploration drilling to further define, expand and add confidence to the resource.
La Colorada is expected to produce 8-8.2Moz silver and 4,100-4,800oz gold in 2019.
The company's Toronto-listed shares (TSX:PAAS) have gained nearly 50% in the past 12 months to C$27.31, with the intraday high of $27.34 flirting with the 12-month high of $27.56. Pan American has a market cap of $5.7 billion.