Robust Cash Flow and Accelerating Growth

Pan American Goldfields is developing the Cieneguita silver and gold project in Mexico's Sierra Madres, one of the world's largest epithermal precious metals regions.

Cieneguita Mine Development

Pilot silver and gold production has been underway since November 2010 and reached a new monthly production record of 758 ounces of gold and 75,330 ounces of silver during the month of November 2012. Work is underway to further increase the production capacity from the current 600 tons per day to approximately 800 tons per day, as a concurrent Preliminary Economic Assessment (PEA) for a 15,000 ton per day operation nears completion. The PEA is expected to be completed by M3 Engineering and Technology Corporation of Tucson, Arizona in May 2013.

Under a new joint venture agreement completed in September, 2012 with partner Minera Rio Tinto (MRT), Pan American receives 35% of the net profits from mining in pit 3 through 2013. MRT has a 20% working interest. It is expected that no more than 2% of the deposit's silver-gold resource will be mined under this agreement. Following the expiry of the agreement Pan American's interest in the mine increases to 80%.

Cieneguita Mineral Resource

Pan American's Cieneguita discovery consists of a 43-101 compliant measured and indicated mineral resource of 35.0 million tonnes grading at 0.45 g/t gold, 33.4 g/t silver, 0.16% lead, and 0.25% zinc. 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.

A new gold zone which has the potential to add to the project's resource has been outlined at the Piedras Blancas approximately 1.5 miles south of the Cieneguita deposit. The evaluation of the economic potential of this new gold zone is currently underway.