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Cieneguita pilot operation third quarter production and revenue and fourth quarter production

March 21, 2012

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) |
    |______________|__________________|_______________|
    |$     1,630.85|$            31.20|$      1,963.47|
    |______________|__________________|_______________|

 

Mineralized Materials Processed – 3(rd) Quarter of FY 2011

     ____________________________________________________________
    |              | Average  |Feed |Feed Grade|Recovery|Recovery|
    |      MONTH   |processing|Grade|  (g/t)   |  (%)   |  (%)   |
    |              |rate (tpd)|(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    |        |        |    Gold    |
    |      MONTH   |Monthly Ore|Concentrate|  Gold  | Silver | equivalent |
    |              | Processed | produced  |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 – 4(th) Quarter of FY 2011

     ________________________________________________________________
    |             | Average  |Feed Grade|Feed Grade|Recovery|Recovery|
    |      MONTH  |processing|  (g/t)   |  (g/t)   |  (%)   |  (%)   |
    |             |rate (tpd)|          |          |        |        |
    |_____________|__________|__________|__________|________|________|
    |             |   (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    |        |        |    Gold    |
    |      MONTH  |Monthly Ore|Concentrate|  Gold  | Silver | equivalent |
    |             | Processed | produced  |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.

 

SOURCE Pan American Goldfields Ltd.


Source: PR Newswire