VANCOUVER, Nov. 19, 2012 /CNW/ - Pan American Goldfields Ltd.(OTCQB: "MXOM") ("The company") is pleased to announce the production results for the last two months of operation 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 terms of the agreement were recently re-negotiated as discussed in
The Company's release on September 12th -2012. The Cieneguita project as operated by MRT produces a bulk sulfide flotation concentrate or pre-concentrate at the Cieneguita plant. This concentrate is then shipped to Choix where it is treated to produce a lead concentrate that contains the majority of the valuable metals gold and silver. This lead concentrate is then sold under contract to rafigura who then ships the concentrate to various smelters for final metal recovery.
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. Production levels have increased to record levels in October with an average daily production of ore processed at about 600 tonnes per day. A conditioner, disc filter and an additional flotation cell has been installed at the Cieneguita while a conventional thickener is expected to be installed by the beginning of December after which production is planned to be increased to 800 tonnes per day.
Mining is currently underway in an area of higher silver grades and somewhat lower gold grades that is contiguous with, but located to the northeast of where MRT has been mining in the past. These higher silver grades, a significant increase in metal recoveries over prior months, and the higher daily production levels have resulted in a significant increase in the contained ounces of silver being shipped to Trafigura since March 1st 2012, the beginning of the Company's 2012 financial year. Silver production increased from the 36,517 ounces Ag for the month of March 2012, to 68,758 ounces in October. Gold production has averaged 524 ounces per month during the eight month period, though it decreased
to 506 ounces in October. The increased silver production will result in a
significantly higher level of payments to the Company under our agreement with MRT. In September and October eight truckloads containing a total of 280 tonnes of Pb-Au-Ag concentrate were shipped to Trafigura. It is expected that in response to the increased October production, shipments will be increased to eight truckloads in November.
In the Company's first eight months of its 2012 financial year which began March 1st, the Cieneguita pilot operation generated net cash flow of approximately $5,952,000, of which $1,727,000 is attributable to Pan American under the joint venture agreement. Pan American's percentage interest in the cash flow from the pilot operation, which was financed entirely by MRT, increased from 20% to 29% retroactive to March 1, 2012 through December 31, 2012, as per the Second Amended and Restated Development Agreement with MRT. The Company's percentage interest in the cash flow from the pilot operation is to increase to 35%
beginning January 1st 2013 according to the same agreement.
SOURCE Pan American Goldfields Ltd.