VANCOUVER, Dec. 20, 2012 /PRNewswire/ - Pan American Goldfields Ltd. (OTCQB: "MXOM") (the "Company") is pleased to announce new record production results for the month of November, 2012 at its 80% owned Cieneguita project, Chihuahua, Mexico.
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. The following production is as reported to the Company by MRT and is still subject to final reconciliation and some adjustments with particular respect to tonnes and grades produced and shipped from the facility at Choix. As part of the Company's joint venture agreement with MRT, the Company receives 29% of net cash flow until December 31, 2012. The Company's share of net cash flow increases to 35% as of January 1, 2013 and remains at this level through the remainder of the year at which time the 600 tonne per day pilot operation is slated to cease production. The Company maintains an 80% ownership interest in the project for which a Preliminary Economic Assessment ("PEA") is near completion evaluating a possible 6,000 -7000 tonne per day operation. A feasibility study is planned to commence in early 2013 following completion of the PEA.
Gold and silver production levels have increased during November from the previously reported record levels in October with average daily production of ore processed during the month at about 580 tonnes per day. The addition of a conditioner, disc filter and an additional flotation cell and a conventional thickener are expected to be result in a further increase to about 800 tonnes per day. Higher mined gold grades during the month resulted in gold production reporting to the sulfide concentrate increasing to 758 ounces compared to the 506 ounces produced in October. Silver production also increased to 75,330 ounces compared to 68,758 ounces in October. It should be noted that production has steadily increased during 2012 from the low levels reached in March 2012 when production at Cieneguita was only 629 ounces gold and 6,517 ounces silver.
Mining continues in an area of higher silver and gold grades which appear to increase with depth. This area is contiguous with, but located to the northeast of where MRT has been mining in the past. MRT has given guidance that it expects this area currently being mined to be sufficient to supply the pilot operation for the duration of 2013 based on an average processing rate of 20,000 tonnes per month.
The anticipated production capacity of 800 tonnes per day, if maintained for the entire year, would result in approximately 280,000 tonnes being mined from the 20,087,0000 tonne deposit during 2013. The higher silver and gold grades being mined, an increase in metal recoveries over prior months, and the higher daily production levels (currently 580 tonnes per day) have resulted in significantly higher amounts of contained ounces of silver and gold being shipped to Trafigura.
The increased silver and gold production at Cieneguita will result in a significantly higher level of payments to the Company under our agreement with MRT. The terms of the agreement call for the Company to receive its interest in the net cash flow on a quarterly basis when all costs are deducted from revenues are received from sales to Trafigura. The Company does, however, receive an advance payment every month of US $150,000. This amount is then deducted from the money owed to the Company by MRT at the end of the three month period and the reconciled amount then paid.
Source: Pan American Goldfields Ltd.