VANCOUVER, July 23, 2012 /PRNewswire/ - Pan American Goldfields Ltd. (OTCQB: MXOM) (the "Company") is pleased to announce mineral production and revenues received from pilot production at its Cieneguita Project located in Chihuahua, Mexico for the quarter ending May 31st, 2012.
In the Company's first quarter 2012 (the three months ended May 31, 2012), its joint venture with Minera Rio Tinto (MRT), a private Mexican company, generated net cash flow from pilot operations of approximately $2,960,000, of which $592,000 is attributable to Pan American under the joint venture agreement. Pan American's percentage interest in the cash flow from the pilot operation, which was financed entirely by MRT, is 20% in the shallow ores mined (up to 15 meters) and 80% below that level.
The pilot mining is focused on a higher-grade zone of mineralization in pit 3. The most recent month's pilot production (June 2012) reached a record 1,624 oz/Au eq. compared to 1,280 0z/Au eq. in May. Production during the first quarter averaged 471 tons per day with an average Au recovery of 89.5% and an average Ag recovery of 90%. The average head grade was 1.42 grams/ton Au and 83.6 grams/ton Ag.
The addition of a second water source improved water recycling and more recently adequate precipitation has resulted in the MRT facilities operating at near design capacity.
The pilot production is being conducted by MRT, and under the current contract, production is to end December 31, 2012. After December 31st, 2012, MRT can maintain its 20% interest in the project by contributing to the project's development on a pro-rata basis as it is developed according to the results of an ongoing preliminary economic assessment (PEA) which is progressing under the guidance of M3 Engineering & Technology of Tucson, Arizona.
The Company is in talks with MRT regarding revising the agreement to allow MRT to profitably mine certain ores below 15 meters and to allow the continuation of this pilot operation until December, 2013 in return for an increase in the Company's portion of the net cash flow from the pilot operation. Mining during this period, if it occurs, is expected to focus on the higher-grade zone currently being mined in pit 3. At its current 500 TPD rate of production the Company estimates that extending mining through the end of 2013 would impact less than 1% of the current resource.
Cieneguita Mineral Production and Revenue 2012
June 1 to 30
May 1 to 31
|(April 1 to 30)||(March 1 to 31)||(Feb. 1 to 29)||(Jan. 2 to 31)||Year to Date|
|Head Grades (Au)||1.3||1.38||1.48||1.42||1.53||1.64||1.45|
|Head Grades (Ag)||112||93||76||82||91||84||90|
|Recovery % (Au)||89.4||90.4||89.2||89||89.6||89.5||89.52|
|Recovery % (Ag)||92.3||88.8||91||90.4||90.2||89.8||90.43|
|Ounces Gold Produced||608||593||517||629||651||673||3,670|
|Ounces Silver Produced||54,163||36,633||28,497||36,517||37,819||35,071||228,700|
The Company has also completed a $2.1 million private placement offering where it issued 17.5 million shares of its common stock at a subscription price of $0.12 per share. Of the aggregate $2.1 million, $1,050,000 was paid as cash and $1,050,000 was paid through the transfer of real property in Argentina valued at $1,050,000.
The Company is in the process of selling the $1,050,000 worth of what it considers to be highly marketable properties, which are located in San Carlos de Bariloche, Argentina. The proceeds from their sale are intended to be used to fund a planned winter 2012-2013 drilling campaign at the company's Cerro Delta, Argentina project.
Of the $1,050,000 cash portion, part is to provide funding to allow for the timely completion of the ongoing PEA for a larger mining operation at the company's Cieneguita Project.
Metallurgical testing for the PEA is currently nearing completion, as is an updated geologic model of the deposit and associated mineralization. Preliminary site layout work has been completed and is awaiting confirmation of ongoing geotechnical work related to mine waste rock dumps and sulfide flotation tailings.
The Cieneguita deposit contains a NI 43-101 compliant resource of 1.1 million Measured and Indicated gold equivalent ounces. This resource contains 20,087,000 Measured and Indicated tonnes grading 0.74 g/t gold and 51.8 g/t silver and 453,000 Inferred tonnes grading 0.99 g/t gold and 34.2 g/t silver.
About Pan American Goldfields
Pan American Goldfields is a precious metals mining and exploration company with projects in Mexico's booming Sierra Madre gold-silver belt and the Maricunga Gold Belt straddling the border between Argentina and Chile. The Company's most advanced development is its now producing Cieneguita gold-silver mine, where a preliminary economic assessment for the expansion of the operation is underway. In addition, the Company holds the Cerro Delta project in Argentina, where it is preparing to drill-test a series of large porphyry-style copper-gold occurrences - which are on structure and 12 miles east of Barrick's 23.2 million oz/Au Cerro Casale in the Maricunga gold belt. The Company continues to assess other high-impact acquisitions in Colombia, Argentina and Mongolia.
On behalf of the Board of Directors,
Neil Maedel, Chairman
Safe Harbor Disclosure
The information in this press release contains forward-looking statements regarding future events or the future financial performance of the Company. Please note that any statements that may be considered forward-looking are based on projections; that any projections involve judgment, and that individual judgments may vary. Moreover, these projections are based only on limited information available to us now, which is subject to change. Although those projections and the factors influencing them will likely change, we are under no obligation to inform you if they do. Actual results may differ substantially from any such forward looking statements as a result of various factors, many of which are beyond our control, including, among others, the timing and outcome of our feasibility study on our Cieneguita Project; the costs and results of our initial production activities on our Cieneguita Project; the future financial and operating performances of our projects; the estimation of mineral resources and the realization of mineral reserves, if any, on our existing and any future projects; the timing of exploration, development, and production activities and estimated future production, if any; estimates related to costs of production, capital, operating and exploration expenditures; requirements for additional capital and our ability to raise additional capital on a timely basis and on acceptable terms; government regulation of mining operations, environmental risks, reclamation and rehabilitation expenses; title disputes or claims against our existing and any future projects; and the future price of gold, silver, or other minerals. These and other factors can be found in our filings with the SEC. The Company undertakes no obligation to release publicly the results of any revision to these forward-looking statements to reflect events or circumstances following the date of this release.
SOURCE Pan American Goldfields Ltd.