Pan American Goldfields Ltd. (MXOM: OTCQB) | Pan American Goldfields Ltd. Reports on Results of Metallurgical Testing and Updated Mineral Resource, Cieneguita Project, Mexico

VANCOUVER, March 13, 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

Head assays of the three composite samples are as follows:

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

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.


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 PE
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.

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.


SOURCE Pan American Goldfields Ltd.

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