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Pan American Goldfields Completes New Installations at Cieneguita Project Mill

Pan American Goldfields Ltd (OTCBB:"MXOM") has announced that the installation of the ball mill and additional flotation capacity has been completed at the Cieneguita project mill in Chihuahua, Mexico by the Company's partner, Minera Rio Tinto.

These improvements at the mill are expected to increase the daily production rate of ore through the mill as well as the recovery of gold, silver and other metals from the processing operations underway at the mill.

Both the ball mill and the new flotation cells are currently undergoing commissioning and start-up and full operational integration with the existing mill facilities should be achieved in the next few weeks. Once fully commissioned, the Company expects that the production capacity of the mill will be approximately 700 tonnes per day with an appropriate grind size to achieve the maximum recovery rate of gold, silver and other metals consistent with the mineralogy of the ore and the standards in the industry.

Earlier this year mill operations experienced intermittent issues with availability owing to a lack of water and interruptions in electrical power supply which have now been remedied. MRT and the Company determined that the addition of a ball mill and related flotation cells would improve overall mill availability and production as well as improve metal recoveries. The ball mill has a nominal capacity of 750 tonnes per day, however due to the overall softness of the Cieneguita gold ore, higher throughput may be achieved from time to time. To match the flotation capacity with the increased grinding/ball mill capacity, an additional bank of 10 Agitair cells of 48 cubic foot size have been added to the previously installed bank of 10 WEMCO flotation cells (2 at 100 cubic foot capacity, 8 at 50 cubic foot capacity).

The Cieneguita mill makes a bulk sulfide flotation concentrate that is sent to the MRT owned mill at Choix where it is then reground and separate lead and zinc concentrates produced. These concentrates are then shipped to the port at Manzanillo where they are sold under contract to the trading company Trafigura. Most of the gold and silver report to the lead concentrate. The anticipated increase in the production capacity at Cieneguita will not require any modifications to the plant at Choix. Over the last quarter (July-September) during the start-up phase of operations, approximately 30,000 tonnes of material was mined from the pit and 2,000 tonnes of bulk concentrate shipped to Choix with the following average grades as follows:

Au g/t Ag g/t Cu% Pb% Zn% Mined head from pit 1.20 90 0.04 0.35 0.65 Bulk concentrate 15.0 900 0.40 3.5 4.0

Pan American currently has a joint venture agreement with MRT under which MRT can earn 60% of the project by successfully initiating production on a small scale, followed by the funding of an additional $4 million toward the completion of a bankable feasibility study. With the completion of the construction start-up phase at Cieneguita, the focus will now be the acceleration of the feasibility study. This study will evaluate a full-scale operation which will target a production rate of about 5,000 tonnes of material processed per day along with saleable metal production directly from the Cieneguita site.

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


Pan American Goldfields Ltd.

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