Pan American Options Mexican Silver Property, Adds New Director and Announces US $500,000 Private Placement.

VANCOUVER, B.C. -- Pan American Gold Corporation (OTCBB:PNAMF) is pleased to announce that is has entered into a letter of intent with Aztec Copper Inc. of Arizona, to option Aztec's La Reforma property in southwest Chihuahua State, Mexico.

SUMMARY OF TERMS

Pan American will have 45 days to conduct due diligence and will not be required to make any of the following payments until the conclusion of the due diligence process.

The terms of the option are as follows:

Amount      Shares      Exploration
                                                         Commitment
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45 days from signing             $250,000    150,000
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1st Anniversary                  $250,000    350,000         $250,000
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2nd Anniversary                  $300,000    500,000         $750,000
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3rd Anniversary                  $300,000    750,000       $1,000,000
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4th Anniversary                  $300,000    750,000       $1,500,000
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5th Anniversary                                            $2,100,000
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                               $1,400,000  2,500,000       $5,600,000
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The Company will earn a 70% interest in the property after completion of the above noted payments, share issuances and exploration expenditures. Pan American will have a further option to acquire the remaining 30% 90 days after the 5th anniversary by fully assuming all exploration and property obligations relating to the property, by completing and delivering an industry standard feasibility study that demonstrates positive feasibility on a deposit size that is equal to or greater than what was mined in the past.

PROPERTY DESCRIPTION

The property lies close to the town of Choix, Sinaloa and has ready access to paved highway and rail transportation. The northern border of the property is served by the mainline Chihuahua al Pacifico railway that connects to the Port of Topolobampo, 150 km west.

La Reforma is a 7,038 hectare (approximate) mineral tenure located over the historic La Reforma mine. Historical production of Pb, Zn, Ag, and Cu from the La Reforma mine was done by a direct subsidiary of Industrias Penoles - Compania Minera La Campana, S.A., during the period between 1968 and 1980. Penoles historical production records show that 1,800,000 tonnes at a grade of 91.62 g/t Ag, 1.90% Pb, 7.44% Zn, and 0.63% Cu was mined during that period. Some additional resources lie within the mine workings, but have not been examined or verified by the Company's geologists.

The geological setting of the La Reforma Mine is complex and consists of Mesozoic age, carbonate rich, meta-sedimentary and meta-volcanic rocks which are intruded by several phases of intrusive rocks from Cretaceous to Miocene time. In addition there are Tertiary-aged volcanic rocks including voluminous rhyolitic ignimbrites and andesite.

The mineralization in the La Reforma Mine is massive to semi-massive sulphide composed mainly of sphalerite, galena and chalcopyrite. The sulphide is contained in irregular bodies of skarn, developed in marble and calcareous sediments near their contact with a porphyritic, aplitic intrusive. This intrusive may represent a peripheral portion of a granodiorite or granite pluton.

There is an excellent potential for additional deposits of Pb-Zn-Ag-Cu sulphides near the present workings of the La Reforma Mine. Underground workings extend into several areas that warrant additional drill testing. Two known Pb-Zn-Ag-Cu and Cu mineralized skarn zones occur within a kilometer of the La Reforma mine - El Chapote and Chapote Sur. These have been drilled and are at least partially developed by underground workings. In addition there appears to be exploration potential to the north-northeast of the mine in the contact area between intrusive and older meta-volcanic and meta-sedimentary rocks.

Several prospects and mineralized showings occur in the area around the La Reforma Mine. These consist of moderate to high-grade polymetallic, metasomatic contact-type deposits, and polymetallic to precious metal-rich veins. Mineralization types reported to date are interpreted to be similar to those found in the upper portions of porphyry-Cu environments, where intrusive rocks have altered and mineralized the host country rock. Therefore the area around La Reforma is potentially prospective for the discovery of Cu-porphyry-style mineralization and epithermal Au-Ag mineralization as well.

A large exploration project is active on the Bahuerachi property of Tyler Resources Inc. that abuts La Reforma property on the east, and exploration is planned for the large Santo Tomas Cu-porphyry deposit of Aztec Copper Inc. (previously owned by ASARCO) that abuts the southern property boundary.

PRIVATE PLACEMENT

The Company is also pleased to announce that it has arranged a private placement of up to 1 million units at US$0.50 per unit. Each unit will be comprised of one share and one warrant with each warrant entitling the holder to acquire an additional share at an exercise price of US$0.80 per share for a period of 1 year from the date of issuance. Gross proceeds of the placement will be US$500,000.

NEW DIRECTOR

The Company further announced that Steve Bajic has been appointed as a director and Interim President. He replaces Greg Burnett who is resigning as Vice President and a director to focus on other business opportunities. The Board wishes to thank Mr Burnett for his efforts.

Notice Regarding Forward-Looking Statements

This news release contains "forward-looking statements", as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this press release which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, statements regarding potential mineralization and reserves, exploration results, development or production programs, and future plans and objectives of Pan American Gold Corporation. Actual results relating to, among other things, reserves, results of exploration, capital costs, drilling programs and mine production costs could differ materially from those currently anticipated in such forward-looking statements. Factors affecting forward-looking statements include: the speculative nature of mining exploration and development activities; changes in ore reserve estimates; the productivity of Pan American Gold Corporation's mining properties; changes in the operating costs; changes in economic conditions and conditions in the precious metals, foreign exchange and other financial markets; changes in the prices for precious metals or other minerals Pan American Gold Corporation develops or produces; changes in investment and exploration expenditure levels; litigation; legislation; environmental, judicial, regulatory, political and competitive developments in areas in which Pan American Gold Corporation operates; technological, mechanical and operational difficulties encountered in connection with Pan American Gold Corporation's mining activities; and labor relation matters and costs. You should refer to the risk disclosures set out in our annual report on Form 20-F and other disclosure documents filed from time to time with the United States Securities and Exchange Commission and other regulatory authorities.