Cieneguita Pilot Operation Third Quarter Production and Revenue and Fourth Quarter Production

Mar 21, 2012, 13:40 ET from Pan American Goldfields Ltd

VANCOUVER, March 21, 2012 /PRNewswire/ --

Pan American Goldfields Ltd. (OTCQB: MXOM) (the "Company") is pleased to announce the mineral production and revenues received from its Cieneguita Project located in Chihuahua, Mexico for the third quarter ending November 30th, 2011.

The Cieneguita Project is currently being operated at a limited or pilot scale under an agreement with Minera Rio Tinto ("MRT").  Under this agreement MRT has the right to mine the first 15 meters depth of the deposit from which the Company receives 20% of net profits and 80% of any net profits from material mined deeper than 15 meters. After December 31st, 2012, 100% of the project reverts back to the Company and MRT has the right to earn a 20% interest by contributing on a pro-rata basis to the costs of the development of a planned larger operation.  This larger operation is the subject of a preliminary economic assessment ("PEA") being prepared by M3 Engineering & Technology of Tucson, Arizona with an expected completion date of early third quarter 2012.

The Cieneguita Project hosts a NI43-101 compliant resource estimate above a 0.8 gram per tonne gold equivalent cut-off grade (using prices of $950/oz gold and $14.50/oz silver) of 20.1 million tonnes (measured + indicated) containing 474,900 ounces of gold and 33.5 million ounces of silver as defined in the company's technical report filed on SEDAR on October 22, 2010.  It is estimated that no more than two percent of this resource will be mined under the current operating agreement with MRT.

At the MRT operation, mineralized material from a small open pit is crushed and ground in a ball mill of approximately 500-600 tonnes per day capacity, and then fed to a bank of flotation cells to produce a bulk sulfide concentrate.  This concentrate is then shipped to an MRT owned facility in Choix, Sinaloa where it is reground and a saleable lead sulfide concentrate is produced which contains the valuable gold and silver.  This lead concentrate is then sold to Trafigura who makes a provisional payment to MRT equaling 85% of the value of the concentrate with the balance paid within 10 days of the date of closing of the lot in Manzanillo. Based on the payments from Trafigura to MRT, MRT then subtracts the cost of mining, processing, royalties and general administration costs to calculate the net profits generated by the operation.  The Company is then paid 20% of this amount.

Production at the Cieneguita site was negatively impacted by a drought which persisted through much of 2011, but the impact was lessened in the second half of the year through the construction of two water collection and storage facilities and improved water recycling efforts.  These measures have helped to stabilize production at the rate of about 500 tonnes per day since July 2011.  The Company is optimistic that this level of production can be maintained through the remainder of 2012.

Production in the Company's fiscal third quarter (September-November) averaged 496 tonnes per day through the ball mill, with average feed grades of 1.48 grams per tonne ("g/t") gold and 86 g/t silver, and recoveries of 89% and 90%, respectively. A total of 4,162 tonnes of bulk concentrate was produced during the quarter, containing a total of 1,843 ounces of gold and 109,486 ounces of silver.  The Company has received payments for its share of net profits from third quarter production which total $399,281 for an average of $133,093 per month.  All production through the third quarter is from the first 15 meters of the Cieneguita resource.

Production during the fourth quarter (December-February) averaged 466 tonnes per day through the ball mill, with average feed grades of 1.66 g/t gold and 81 g/t silver and recoveries of 89% and 90%, respectively.  A total of 3,857 tonnes of bulk concentrate was produced during the quarter containing a total of 1,933 ounces of gold and 96,856 ounces of silver.  Production during December 2011 was negatively impacted by repairs and maintenance to the ball mill and holiday closures. The Company is still waiting for the complete payments for its share of net profits from the fourth quarter of operation, but they should total at least the amount received for the third quarter.

The Company is currently in discussions with MRT regarding mining at depths greater than 15 meters which may result in a future increase in net profits attributable to the Company for all material processed in the current pilot operation.

Tables showing the Cieneguita production statistics for the third and fourth quarters of 2011 are shown below.

Average Sale Price of Metal in Q3 2011

       Gold           Siver         Lead
    (per ounce)    (per ounce)   (per tonne)

    USD$ 1,630.85  USD$ 31.20    USD$ 1,963.47

Mineralized Materials Processed - 3rd Quarter of FY 2011

                    Average   Feed
                   processing Grade Feed Grade Recovery Recovery
        MONTH      rate (tpd) (g/t)   (g/t)      (%)      (%)
                     (TPD)     Au       Ag        Au       Ag

    September 2011    517     1.45      81        89       90.6
    October 2011      489     1.35     103        88.8     89.7
    November 2011     481     1.64      74        89.5     90.3
          Q3          496     1.48      86.16     89.09    90.20

                                  Bulk                        equivalent
                   Monthly Ore Concentrate   Gold    Silver    produced
        MONTH       Processed   produced   produced produced ($1,600/$30)
                    (tonnes)    (tonnes)   (ounces) (ounces)   (ounces)

    September 2011   15,006        1459       621     35,316     1,271
    October2011      14,664        1410       565     41,502     1,387
    November2011     13,947        1293       657     32,668     1,222
          Q3         43,617       4,162     1,843    109,486     3,880

Mineralized Materials Processed - 4th Quarter of FY 2011

                  processing Feed Grade Feed Grade Recovery Recovery
        MONTH     rate (tpd)   (g/t)      (g/t)      (%)      (%)
                    (TPD)        Au         Ag        Au       Ag

    December 2011    400        1.84      66         89       90.1
    January 2012     492        1.64      84         89.5     89.8
    February 2012    509        1.53      91         89.6     91
         Q4          466        1.66      81.41      89.39    90.32

                                 Bulk                        equivalent
                  Monthly Ore Concentrate   Gold    Silver    produced
        MONTH      Processed   produced   produced produced ($1,600/$30)
                   (tonnes)    (tonnes)   (ounces) (ounces)   (ounces)

    December2011    11,568       1,090       609     23,966     1,058
    January 2012    14,255       1,395       673     35,071     1,331
    February 2012   14,756       1,372       651     37,819     1,360
         Q4         40,579       3,857     1,933     96,856     3,749

The technical information in this release has been reviewed by Gary A. Parkison, CPG, a Director of the Company and a Qualified Person as defined by NI43-101.

About Pan American Goldfields

Pan American Goldfields is a precious metal producer and exploration company. It is a specialist in exploration, mine development and production in Mexico's booming Sierra Madre Gold-Silver Belt. The company's most advanced project is its now producing Cieneguita gold-silver mine where a preliminary economic assessment is underway. In addition, it holds the Cerro Delta project in Argentina, where it is exploring for large gold and copper-gold mineralization in the Maricunga Gold Belt in Argentina, across from a number of world-class projects in Chile. The Company continues to assess other high impact opportunities.

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.

For further information:
Tel: +1-604-340-8678


SOURCE Pan American Goldfields Ltd