VANCOUVER, Sept. 29, 2011 /PRNewswire/ - Pan American Goldfields Ltd (OTCQB:"MXOM") (the "Company") is pleased to report that is has executed the definitive agreement with Minero Rio Tinto (MRT), a private Mexican company, for the restructure of its Cieneguita joint venture, as well as another significant increase in gold and silver production at the Cieneguita project. Under the restructured joint venture agreement the Company receives 20% of the net operating profits after royalties for material processed through a small-scale pilot operation and mined from the first 15 meters depth of the Cieneguita deposit until December 31 st 2012. For all other material processed from the property, the Company's interest is 80% and MRT is reduced to a 20% working interest, subject to certain dilution provisions.
A bulk sulfide concentrate is currently produced at the pilot operation at the Cieneguita project which is shipped for further processing to MRT's mill at Choix, Mexico, where a lead concentrate containing the gold and silver is produced. This concentrate is shipped to the port of Manzanillo, Mexico where it is sold under contract to TrafiguraBeheer BV, a leading concentrate purchaser. Production highlights for August and the first part of September include the following:
- production reached design capacity of 500 tons per day in August and has remained stable at that level;
- August production totaled 544.2 oz gold and 36,304 oz silver
- 11,915 metric tonnes were processed in the first 24 days of September;
- average recoveries were 86 - 89% for gold and 90-91% for silver (from flotation - bulk concentrate);
- 514.65 oz gold and 29,151 oz silver were produced in the first 24 days of September.
These production numbers represent an increase over the July production of 450 oz gold and 27,454 oz silver. It is anticipated that the previously estimated cash costs of $850 per ounce of gold equivalent should decrease at these higher production rates. MRT is preparing an account of the revenue and costs arising from the increased concentrate sales to Trafigura, in addition to estimates of production and sales for the fourth quarter.
The Cieneguita project hosts a NI43-101 compliant resource estimate above a 0.8 gram per tonne gold equivalent cut off grade (using prices of $950/oz gold and $14.50/oz silver) of 20.1 million tonnes (measured + indicated) containing 474,900 ounces gold and 33.5 million ounces silver as defined in the company's technical report as filed on SEDAR October 8, 2010.The Company has entered into an agreement with M3 Engineering and Technology Corporation for the execution and completion of a NI43-101 compliant Preliminary Economic Assessment (PEA) for a commercial scale milling operation at the project. The overall scope of the work for the PEA is to consist of metallurgical investigations, an updated resource estimate and mine schedule, process plant design, site facilities, power supply and distribution, project execution plan, capital and operating cost estimates, an economic model, and preparation of the overall report.
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