VANCOUVER, British Columbia, March 14, 2013 /PRNewswire/ --
Pan American Goldfields Ltd. (OTCQB: "MXOM") (the "Company") is pleased to report the results of a comprehensive metallurgical testing program performed on samples from its 80% owned Cieneguita project, Chihuahua, Mexico. In addition, the Company also wishes to report the results of an updated mineral resource estimate incorporating the results of the metallurgical testing along with estimated mine and plant operating costs. The Cieneguita project is currently being operated on a pilot basis under an agreement between the Company and Minera Rio Tinto ("MRT"), a private Mexican company, with the Company receiving 35% of net cash flows until December 31st 2013. Further pilot production is contemplated into 2014 concurrent with the preparation of a planned definitive feasibility study examining a full scale commercial operation.
A total of approximately 1,850 kgs. of metallurgical samples were collected from the Cieneguita site from 22 separate core holes. The holes and intervals selected all come from the predominant mineralized host rock type (altered diatreme breccia) and covered the extent of the deposit both in area and at depth. All samples were un-oxidized and contained about 4% total sulfur. The samples were composited into three samples based on gold and silver grades (Low Grade, Medium Grade and High Grade) with each composite weighing about 600 kgs. All of the metallurgical testing has been performed at Resource Development Inc. ("RDi") of Wheat Ridge, Colorado under the supervision of Dr. Deepak Malhotra.
Head assays of the three composite samples are as follows:
High Grade Low Grade ("LG") Comp. Medium Grade ("MG") Comp. ("HG") Comp. Au g/t 0.226 0.535 2.798 Ag g/t 34.6 47.1 72.8 Pb % 0.37 0.24 0.38 Zn % 0.63 0.36 0.44
The primary metals of economic interest are gold and silver, and the metallurgical testing program was focused on maximizing the recovery of these two precious metals. Testing was performed on all three composites to understand how the metallurgical results might change with varying grades.
The samples were subjected to an extensive testing program that included mineralogy, grinding tests, bulk and sequential/differential flotation at different particle sizes, cyanidation (whole ore and concentrates) at different particle sizes, gravity concentration, and roasting and pressure oxidation of concentrates. In all there has been some 104 flotation tests performed to date at RDi, along with 24 cyanide leach tests and 10 gravity tests. The testing program at RDi is on-going but has been advanced sufficiently to allow for a metallurgical processing flow sheet to be defined for use in the Preliminary Economic Assessment ("PEA") study currently in preparation. Additional work may result in improved recoveries and/or lower costs associated with this PEA case or alternative processing flow sheets.
The mineralogy of the samples was investigated using QEMSCAN techniques and confirmed that the minerals in the host rocks consist predominantly of feldspar, quartz and muscovite/sericite with lesser amounts of the sulfide minerals pyrite, sphalerite and galena. Gold is present mostly as very small particles of electrum within pyrite grains while silver is generally associated with galena and copper- and telluride-bearing sulfides. The mineral associations of the gold and silver drove the definition of the test work program and the preferred flow sheet options. Emphasis was placed on maximizing the recovery of gold and silver over the base metals lead and zinc as they contribute little to the overall value of the mineralized material.
The extensive metallurgical test program conducted at RDi determined that the basic processing flow sheet as currently employed at the pilot plant operation of MRT with some modifications was appropriate for inclusion as the base case for the PEA. Modifications included making a marketable gold and silver bearing lead concentrate via differential flotation directly from the ground ore as opposed to making a bulk sulfide concentrate followed by a lead concentration step as practiced by MRT. Testing determined that an acceptable lead concentrate can be produced at an initial fairly coarse grind of about 200 microns with an intermediate regrinding step to 100 microns. In addition, the PEA flow sheet will add the production of a pyrite concentrate which will be finely ground to less than 30 microns along with the lead concentrate cleaner tailings which are then leached with cyanide to recover gold and silver as doré using Merrill Crowe methods. The addition of the cyanide leach circuit is particularly important to improve the overall gold recoveries associated with the pyritic and lower grade mineralization. Further testing will focus on increasing the overall gold recoveries. This processing flow sheet as adopted for the PEA is technically feasible, economically viable and relatively straightforward and is well supported by the metallurgical results available.
As extrapolated from the metallurgical testing the final lead concentrate is assumed to represent about 1% of the weight of the original feed material while about 10% by weight is processed through the fine grinding and cyanide leach circuit. Marketable products from this flow sheet will include the low grade lead (26% lead) concentrate and the gold-silver doré. The estimated overall metal recoveries are shown in the following table along with the recoveries attributable to each of the process steps/components. About half of the recovered metal values are contained in the lead concentrate with the balance in the doré. These weight adjusted recoveries as shown may be subject to change as additional information is developed during the preparation of the PEA.
Rec. % to Lead Rec. % Cyanide Rec % Cyanide Comp. Concentrate Leach Pyrite Leach Lead Tails Overall Recovery % Au Ag Au Ag Au Ag Au Ag LG 17 56 29 28 2 14 48 98 MG 24 52 31 29 3 13 58 94 HG 44 55 28 27 8 13 80 95
MINERAL RESOURCE ESTIMATE
The metal recovery information described above was combined with operating cost information generated by M3 Engineering and Technology ("M3") and Independent Mining Consultants ("IMC") along with assumed metal prices to derive an indicative minimum or cut-off net smelter return ("NSR") dollar value of $14.10 per tonne of material processed. Only the revenue from gold and silver were used to define the cut-off NSR. Assumed metal prices are $1,500 per ounce gold and $30.00 per ounce silver.
The mineral resource estimate reported below was prepared by IMC and updates an earlier reported mineral resource estimate prepared by P&E Mining Consultants, Inc., as contained in a revised technical report dated October, 8, 2010, which used an effective NSR cut-off of $24.50 per tonne.
Gold Gold Silver Silver Lead Lead Zinc Zinc Resource Class Ktonnes (g/t) (koz) (g/t) (koz) (%) (klbs) (%) (klbs) Measured Mineral Resource 4,429 0.497 70.8 37.44 5,331 0.179 17,478 0.277 27,047 Indicated Mineral Resource 30,614 0.446 439.0 32.77 32,255 0.152 102,587 0.244 164,680 Measured/Indicated Resource 35,043 0.452 509.8 33.36 37,586 0.155 120,065 0.248 191,726 Inferred Mineral Resource 22,920 0.478 352.2 28.55 21,039 0.133 67,204 0.220 111,165
The measured and indicated mineral resource is 35.0 million tonnes at 0.45 g/t gold, 33.4 g/t silver, 0.16% lead, and 0.25% zinc. In terms of contained metal this amounts to 509,800 ounces of gold and 37.6 million ounces of silver. The inferred mineral resource is an additional 22.9 million tonnes at 0.48 g/t gold, 28.6 g/t silver, 0.13% lead, and 0.22% zinc. This amounts to 352,200 contained gold ounces and 21.0 million contained silver ounces. The resources are contained within a floating cone pit shell and are compliant with the "reasonable prospects for economic extraction" clauses of the Canadian NI 43-101 regulations. Measured, indicated, and inferred resources were allowed to contribute to the economics for the cone shell. Total material in the cone shell is 114.3 million tonnes and is based on 42o overall slope angles for an overall waste ratio of 0.97. This estimate reflects the material mined by MRT effective to December 31, 2012. There is no guarantee that any of the mineral resource will be converted to mineral reserves. There is also no guarantee that any of the inferred mineral resource will be upgraded to measured or indicated mineral resource.
The IMC resource estimate is based on a total of 20,374 meters drilled in 103 core holes completed during the period 2008-2009 by Sunburst Mining de Mexico, S.A. de C.V., a subsidiary of Pan American Goldfields, Ltd. A total of 13,594 assay intervals from this drilling were subject to grade capping at 10 g/t gold and 700 g/t silver prior to being composited into a total of 4,065 five meter bench composites. The bench composite grades for gold, silver, zinc and lead were all estimated into the 5 by 5 by 5 meter blocks using inverse distance cubed methods with a maximum of 150 meter search radius along the major axis of mineralization (north 85 degrees east). Resources were classified to measured, indicated or inferred by assigning a class designation to each block based on distance from the closest holes and number of holes used in grade estimation.
Mr. Gary Parkison, CPG, Director of Pan American Goldfields Ltd., is the qualified person who supervised the preparation of the technical information in this release. Dr. Deepak Malhotra, SME Registered Member, President of RDi, and Mike Hester, FAusIMM, Vice President of IMC have also reviewed and approved the data contained in this release.
About Pan American Goldfields Ltd.
Pan American Goldfields is a precious metals mining and exploration company. Its focus is the production of gold and silver and the development and expansion of its Cieneguita mine in Mexico's booming Sierra Madre gold-silver belt. M3 Engineering & Technology of Tucson is the lead consultant responsible for preparing the PEA study, the results of which are expected to be available during April 2013. A feasibility study is planned to commence immediately following the completion of the PEA.
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.
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SOURCE Pan American Goldfields Ltd.