Sector Spotlight

Q

Most mines are now large enterprises, requiring large amounts of capital,

while the exploration sector tends to be made up of individuals and small mineral resource companies dependent on venture capital. How do you ensure you have the funding in place?

Pan American has a producing mine whose production and cash flow should more than cover the next phase of our development.

Q

Has this altered much during the last four years since the beginning of the

financial crisis? If so, how?

The financial crisis created the environment that made it possible for us to take over the predecessor company and its Cieneguita Mine. At the same time the available pool of risk capital has shrunk dramatically. This is something we have always been concerned about and is why we chose to take over Pan American. We took it over principally because it had what we viewed as a developable gold and silver deposit which could produce cash flow relatively quickly and provide funding for its expansion and the acquisition and advancement of other high impact projects. Because of this we would not need to rely on the capital markets for the company’s growth as we generate it our selves. This was a very clear priority – to have the capability to self-finance. We didn’t expect it to get this bad, though we were correct in expecting the gold bullion bull market to continue. The increase in production and capital costs for many gold companies as larger, lower grade deposits are mined and costs like energy continue to increase, combined with a lack of new major discoveries, has led to the sector’s underperformance verses metals prices.

Q

How would you increase shareholder value?

This is the key attribute to the Pan American story:

it is a gold and silver mining company which is producing what is likely to be enough revenues to finance its growth though its feasibility study for an operation nearly 10 times its current size. We are very confident regarding this growth strategy and we certainly have assembled an executive that is capable of executing.

Q

What makes your company standout from others?

The fact that Pan American does not depend on the capital markets for funds but instead has its own cash flow. This means that the extremely dilutive financings that many other juniors are forced to complete are not an issue for Pan American. At the same time we can point to a very high growth potential from our Cieneguita Mine.

Q

Pan American Goldfields Ltd. entered into a Second Amended and Restated

Development Agreement at the beginning of September, for mineral exploration, production and development of the Cieneguita Project with its partner Minera Rio Tinto SA. Can you discuss this further?

This is key to the company’s development as it gives us better control over the pilot operations while increasing our share of net cash flow from 20% to 35%. This gives us considerable income of about $1 million per quarter next year and considerably more if we can expand pilot production as we think is possible. It is important to note that Pan American retains 80% of the planned commercial operation and our projection of more than $80 million annually reflects this 80%.

Q

It is reported that your company continues to assess other high-impact

acquisitions in Colombia, Argentina and Mongolia. Do you have any acquisitions on the horizon?

Our executive has considerable expertise in Central Asia and this combined with our relationship with the geology department of Novosibirsk in Russia gives us very clear abilities

when it comes to finding and acquiring major projects in that part of the world. We hope to have finalized at least one major acquisition by early 2013.

Q

Is there anything else you would like to add?

During the 1990s I published the Minicap Analyst and it become very well known for recommending many resource company shares which subsequently became spectacular winners for investors. Argentina Gold and Arequipa Resources were among the more noteworthy. Arequipa rose about 3,500 percent in only 18 months. In our takeover and restructuring of Pan American we have sought to incorporate the many critical elements that we think made these previous successes possible. Take our executive, George Young has founded and co-founded two big success stories: MAG Silver and International Royalty Corp. which was bought by Royal Gold for $750 million. Andrey Koniuhov has discovered more gold than probably any other explorationist – 40 million ounces and counting. Gary Parkison is among North America’s top mine development experts. The Cieneguita gives us considerable growth potential and should provide the extra cash flow to acquire and develop other high impact projects. Pan American now has the three key ingredients: the people, the project pipeline and the money. I think from here it is now just a matter of the time required to execute.

For General Inquiries, Contact: Pan American Goldfields Ltd. Suite 906,

595 Howe Street Vancouver, B.C. V6C 2T5

Tel: 604.681.1163 Fax: 484.723.7071

Email: info@panamgoldfields.com