American Goldfields Announces Agreement to Acquire Interest in Historic Gold Producer.

VANCOUVER, British Columbia -- American Goldfields Inc. (OTCBB:AGFL) announced that it has entered into a formal agreement to acquire a 100% interest in a historic Nevada gold producing property, currently controlled by MinQuest Inc., a natural resource exploration company. Mr. Richard Kern, who joined the Board of Directors of the Company on May 26, 2004, is the President of MinQuest. Additional details concerning the nature of the transaction are provided in this news release, and in the Company's EDGAR filings.

The Hercules ("Hercules") project is located in southern Lyon County, Nevada, approximately 40 kilometers southwest of Reno, and 11 kilometers outside of Dayton. Hercules is 16 kilometers from the Comstock Lode and 24 kilometers from the Talapoosa Mine. The property consists of 40 mineral claims at the northern end of the Pine Nut Mountains in west-central Nevada.

Regionally, the Hercules is located within the Walker Lane, a structural belt extending more than 700 kilometers through western Nevada and into California, which hosts several important gold and precious metals deposits such as Comstock, Rawhide, Aurora, Paradise Peak, Bullfrog, Goldfield, and Tonopah. The Goldfield District has produced nearly 5 million ounces, a large portion of which came from two claims comprising approximately 40 acres of ground. Exploration conducted to date by others has led management of American Goldfields to conclude that the Hercules contains significant concentrations of gold.

The Hercules was first discovered in 1860 by pioneers during the "Washoe Rush". Production from high-grade veins is believed to have started as early as 1870 and occurred as late as 1956. Quartz veins at the Hercules have been exploited by at least one adit that accesses several underground workings. The Hercules Mine, located on the property, is estimated to have produced 5,000 ounces of gold and 20,000 ounces of silver, historically (source: Pioneer Mining Corp, 1992). In more recent years, modern exploration has been conducted on the property by companies such as Pioneer Mining Corporation, Phelps Dodge Corporation, and Horizon Gold. With more than $2 million USD in exploration expenditures and 176 drill holes totaling more than 33,000 feet, the majority of the drilling to date has been focused on shallow open-pit heap-leachable gold mineralization. Management believes there is potential for a thicker sequence of mineralized veins deeper within the epithermal envelope. No systematic exploration of the high-grade vein targets has been done.

According to reserves studies done by Pioneer Mining Corporation and Horizon Gold, the Hercules contains a resource of approximately 217,000 ounces of gold and 1,571,000 ounces of silver. All of the resources remain open along strike and at depth. In his annual compilation of major precious-metals deposits of Nevada, Tingley (2000) quotes a resource for the Hercules of 259,329 ounces of gold and 1,956,511 ounces silver. The accuracy or validity of these estimates has not been reviewed by American Goldfields.

Management considers the Hercules to be an epithermal gold-silver mineralized system with direct analogies to the historic Comstock Lode deposit. The historic Comstock Lode deposits of Virginia City consist of a series of fault controlled vein systems which, between the 1860's and 1880's, produced a significant quantity of rich gold-silver ore. Although some mining occurred near-surface, the bulk of the gold and silver mined at Comstock occurred below 1,200 feet. The Comstock bonanza-grade mineralization averaged 2.0 ounces per ton gold and 50 ounces per ton silver.

Several significant gold targets are present at the Hercules, and the company is in the process of initiating a drill program. Management of American Goldfields believes the Hercules property contains one of the most significant untested Comstock-type vein systems in the Western United States.

"The Hercules is an exciting mineral exploration property, in an area which we believe to be one of the highest-profile mineral regions in Nevada," said Donald Neal, President and CEO. "We believe that the Hercules, together with the Imperial Mine and the highly-prospective Gilman project, comprise a significant foothold in what has historically been one of the most valuable and concentrated gold districts in the world."

Simultaneous with the execution and delivery of the Property Option Agreement, and in order to earn a 100% interest in the property, the Company agreed to pay (in US dollars) MinQuest $20,000, and incur expenditures relating to mining operations in accordance with the following schedule: (i) on or before November 25th, 2005, $20,000 to MinQuest and incur $150,000 in expenditures incidental to the mining

operations; (ii) on or before November 25th, 2006, $20,000 to MinQuest and an additional $200,000 in expenditures; (iii) on or before November 25th, 2007, $20,000 to MinQuest and an additional $300,000 in expenditures; (iv) on or before November 25th, 2008, $20,000 to MinQuest and an additional $400,000 in expenditures; (v) on or before November 25th, 2009, $20,000 to MinQuest and an additional $500,000 in expenditures; (vi) on or before November 25th, 2010, $20,000 to MinQuest and an additional $500,000 in expenditures; (vii) on or before November 25th, 2011, $20,000 to MinQuest and an additional $500,000 in expenditures; (viii) on or before November 25th, 2012, $20,000 to MinQuest and an additional $500,000 in expenditures; (ix) on or before November 25th, 2013, $20,000 to MinQuest and an additional $500,000 in expenditures; and (x) on or before November 25th, 2014, $20,000 to MinQuest and incur an additional $500,000 in expenditures. Since the Company's payment obligations are non-refundable, if the Company does not make any payments, it will lose any payments made and all of its rights to the properties. If all said payments are made, then the Company will acquire all mining interests in the property. MinQuest is entitled to retain a 3% royalty of the aggregate proceeds received by the Company from any smelter or other purchaser of any ores, concentrates, metals or other material of commercial value produced from the property, minus the cost of transportation of the ores, concentrates or metals, including related insurance, and smelting and refining charges, including penalties. Such royalty is payable quarterly within 30 days after the end of each calendar quarter during which the Company receives proceeds with respect to ores, concentrates, metals or other material of commercial value. The Company agreed to use MinQuest for on-site management at rates reasonably acceptable. In addition, any mineral interests staked, located, granted or acquired by either the Company or MinQuest which is located within 1 mile of the property will be included in the option granted to the Company.

Disclaimer: This announcement may contain forward-looking statements which involve risks and uncertainties that include, among others, limited operating history, limited access to operating capital, factors detailed in the accuracy of geological and geophysical results including drilling and assay reports; the ability to close the acquisition of mineral exploration properties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. More information is included in the company's filings with the Securities and Exchange Commission, and may be accessed through the SEC's web site at www.sec.gov.