UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2013

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission file number 000-23561

PAN AMERICAN GOLDFIELDS LTD.
(Exact name of small business issuer as specified in its charter)

Delaware	84-1431797
(State or other jurisdiction of	(IRS Employer Identification Number)
incorporation)

1000 – 36 Toronto Street
Toronto, ON	M5C 2C5
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (416) 848-7744

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]

Non-accelerated filer [ ]

Accelerated filer [ ]

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of January 17, 2014, the registrant had 100,340,026 shares of common stock issued and outstanding.

INDEX

PART I — FINANCIAL INFORMATION

Item 1.	Condensed Unaudited Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	30

Item 4.	Controls and Procedures	30

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits.	31

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PAN AMERICAN GOLDFIELDS LTD.
(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in U.S. Dollars)

NOVEMBER 30, 2013

PAN AMERICAN GOLDFIELDS LTD.
(An Exploration Stage Company)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)

	November 30		February 28
	2013		2013
	(Unaudited)		(Audited)
	$		$
Assets

Current
Cash and cash equivalents	62,471		176,538
Accounts receivable	646,520		189,149
Prepaid expenses	4,800		25,663
Real estate held for sale	640,000		640,000
	1,353,791		1,031,350

Equipment (note 4)	19,046		25,033

Total assets	1,372,837		1,056,383

Liabilities

Current
Accounts payable and accrued liabilities	1,824,933		976,934
Loans payable (note 7)	-		10,867

Total liabilities	1,824,933		987,801

Stockholders’ equity (deficiency)
Capital stock
Preferred stock Authorized: 20,000,000 shares, $0.01 par value (note 8) Issued: nil Common stock Authorized: 200,000,000 shares, $0.01 par value Issued: 100,340,026 (February 28, 2013 – 94,507,801) (note 9)	1,003,400		945,078
Additional paid-in capital	52,953,180		52,567,111
Stock subscriptions	299,904		299,904
Accumulated deficit from prior operations	(2,003,427	)	(2,003,427	)
Accumulated deficit during the exploration stage	(52,918,471	)	(51,962,796	)
Accumulated other comprehensive income	213,318		222,712
Total stockholders’ equity (deficiency)	(452,096	)	68,582

Total liabilities and stockholders’ equity (deficiency)	1,372,837		1,056,383


Going-concern (note 3)
Commitments (notes 6 and 11)

The accompanying notes are an integral part of these consolidated financial statements.

PAN AMERICAN GOLDFIELDS LTD.
(An Exploration Stage Company)
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in U.S. Dollars)
(Unaudited)

														Period From
														March 1, 2004
														(Inception of
														Exploration
														Stage) to
		Three Months Ended November 30						Nine Months Ended November 30						November 30
		2013			2012			2013			2012			2013
Net sales	$	1,029,706		$	878,023		$	4,258,152		$	3,889,753		$	12,902,447
Cost of goods sold		499,884			334,178			2,202,889			1,259,416			5,769,479
Gross margin		529,822			543,845			2,055,263			2,630,337			7,132,968

Expenses
General and administrative		1,029,312			696,795			2,584,278			2,377,089			29,313,915
Mineral exploration (note 6)		62,431			316,528			567,307			1,326,403			12,317,558
Impairment of mineral property costs		90,000			90,000			270,000			400,000			19,020,059

Operating loss		(651,921	)		(559,478	)		(1,366,322	)		(1,473,155	)		(53,518,564	)

Other income (expenses)
Deposit on equipment written off		-			-			-			-			(25,300	)
Real estate impairment		-			-			-			-			(60,000	)
Foreign exchange (loss)		(2,553	)		7,661			(13,804	)		3,713			(605,774	)
Interest		(360	)		(1,732	)		(7,789	)		(9,046	)		(5,375,735	)
Other income		108,528			150,123			428,436			419,095			1,369,433
Gain on disposal of assets		-			-			-			-			15,130
Gain on sale of assets		-			-			-			31,691			4,400,065
Gain (loss) on settlement of debt		43,872			166,656			3,804			(42,080	)		882,274

Net loss		(502,434	)		(236,770	)		(955,675	)		(1,069,782	)		(52,918,471	)

Other comprehensive income (loss)
Foreign exchange translation adjustment	$	5,492		$	17,550		$	(9,394	)	$	(6,966	)	$	213,318
Total comprehensive loss	$	(496,942	)	$	(219,220	)	$	(965,069	)	$	(1,076,748	)	$	(52,705,153	)

Total loss per share – basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

Weighted average number of shares of common stock – basic and diluted		100,340,026			93,555,420			98,322,676			82,017,733

The accompanying notes are an integral part of these consolidated financial statements.

PAN AMERICAN GOLDFIELDS LTD.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
(Unaudited)

								Period from
								March 1, 2004
								(Inception of
								Exploration Stage)
		Nine Months Ended November 30						to November 30
		2013			2012			2013
Operating activities
Net loss	$	(955,675	)	$	(1,069,782	)	$	(52,918,471	)
Adjustments to reconcile net (loss) to net cash flows:
Write off of note receivable		-			-			57,500
Impairment of mineral property costs		-			-			14,421,668
Real estate impairment		-			-			60,000
Issuance of shares for consulting services		-			-			510,590
Issuance of shares for interest costs		-			-			82,500
Discount on convertible debenture		-			-			569,549
Deposit on equipment written off		-			-			25,300
Gain on disposal of assets		-			-			(15,130	)
Gain (loss) on sale of assets		-			31,952			(4,357,748	)
Non-cash component of loss (gain) on settlement of debt		(3,804	)		42,080			(924,089	)
Beneficial conversion feature		-			-			4,081,091
Stock-based compensation		143,860			540,000			13,080,446
Amortization		5,660			10,803			364,698
Net change in operating assets and liabilities:
Prepaid expense		20,862			13,343			(6,192	)
Accounts receivable		(473,389	)		(587,939	)		(458,048	)
Inventory		-			64,202			64,202
Customer deposits		-			-			(194,809	)
Notes payable		-			-			109,337
Accounts payable and accrued liabilities		913,613			49,872			8,083,421
Cash used in operating activities		(348,873	)		(905,469	)		(17,364,185	)
Investing activities
Sale of equipment		-			49,650			82,966
Purchase of property and equipment		-			(584	)		(604,201	)
Cash provided by (used in) investing activities		-			49,066			(521,235	)
Financing activities
Proceeds from loans payable		-			32,250			348,867
Proceeds from notes payable		-			-			3,162,196
Proceeds from convertible debentures		-			-			7,462,500
Proceeds from exercise of options		-			-			78,000
Proceeds from exercise of warrants		-			-			3,144,377
Repayment of loans payable		(10,867	)		(19,890	)		(341,986	)
Repayment of notes payable		-			-			(586,620	)
Repayment of convertible debentures		-			-			(2,051,047	)
Stock subscriptions (net)		240,000			1,008,600			3,896,862
Issuance of common stock (net)		-			-			2,756,994
Cash provided by financing activities		229,133			1,020,960			17,870,143
Net change in cash		(119,740	)		164,557			(15,277	)
Effect of foreign currency translation on cash		5,673			(18,471	)		55,671
Cash and cash equivalents, beginning		176,538			117,892			22,077
Cash and cash equivalents, ending	$	62,471		$	263,978		$	62,471
Supplemental cash flow information (note 13)

The accompanying notes are an integral part of these consolidated financial statements.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

1.	BASIS OF PRESENTATION

	Pan American Goldfields Ltd. (formerly Mexoro Minerals, Ltd and Sunburst Acquisitions IV, Inc.) ("Panam" or the “Company”) was incorporated in the state of Delaware on March 23, 2010 and on July 2, 2010 changed its name to Pan American Goldfields Ltd. pursuant to an agreement and plan of merger between the Company and Mexoro Minerals Ltd. The Company was formed to seek out and acquire business opportunities. Between 1997 and 2003, the Company was engaged in two business acquisitions and one business opportunity, none of which generated a significant profit or created sustainable business. All were sold or discontinued. The Company had previously been pursuing various business opportunities and, effective March 1, 2004, the Company changed its operations to mineral exploration. Currently, the main focus of the Company’s operations is in Mexico.

	On May 25, 2004, the Company completed a “Share Exchange Agreement” with Sierra Minerals and Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which caused Sierra Minerals to become a wholly-owned subsidiary of the Company. Sierra Minerals held certain rights to properties in Mexico that the Company now owns or has an option to acquire. Through Sierra Minerals, the Company entered into a joint venture agreement with Minera Rio Tinto, S.A. de C.V. (“MRT”), a private company duly incorporated pursuant to the laws of Mexico. In August 2005, the Company cancelled the joint venture agreement in order to directly pursue mineral exploration opportunities through a wholly- owned Mexican subsidiary, Sunburst Mining de Mexico S.A. de C.V. (“Sunburst de Mexico”). On August 25, 2005, the Company, Sunburst de Mexico and MRT entered into agreements providing Sunburst de Mexico the right to explore and exploit certain properties in Mexico. In December 2005, the Company and Sunburst de Mexico entered into a new agreement with MRT (the “New Agreement”) (note 6). On January 20, 2006, Sierra Minerals was dissolved.

	On February 12, 2009, the Company entered into a joint venture through a definitive agreement for development of its Cieneguita project with MRT. The purpose of the joint venture is to put the Cieneguita property into production. Pursuant to the agreement, MRT was to provide the necessary working capital to begin and maintain mining operations at Cieneguita, which are estimated to be $3,000,000. MRT planned to spend 100% of the money to earn 74% of the net cash flow from production (notes 5 and 6). The Company was expected to receive 20% of the net cash flows from production.

	In September 2011, the Company executed an amended and restated development agreement for the restructure of its Cieneguita joint venture related to the Cieneguita project. Under the restructured joint venture agreement the Company was to receive 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, 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 (note 6).

	In September, 2012, the Company entered into a second amended and restated development agreement (“Second Amended and Restated Development Agreement”) with MRT related to the mineral exploration, production and development of the Company’s Cieneguita project. Under the Second Amended and Restated Development Agreement, the Company’s share of net cash flow from the pilot project operated by MRT on the Cieneguita project increases from 20% to 29% beginning retroactive to March 1, 2012 through December 31, 2012. Beginning January 1, 2013 through December 31, 2013, the Company’s share of net cash flow from the pilot project increases to 35%. At all times, the Company retains its 80% ownership interest in the entire Cieneguita project. This agreement eliminates the additional fees previously payable by MRT for minerals mined below the first 15 meters.

	The Second Amended and Restated Development Agreement extended the date of the pilot project from December 31, 2012 to December 31, 2013. MRT may terminate the pilot project by providing the Company with 90 days advanced written notice, and the Company may terminate the pilot project upon, inter alia, an uncured breach of the Second Amended and Restated Development Agreement by MRT. Effective December 23, 2013, the Company and MRT signed an extension to this agreement extending it under the same terms to December 31, 2014.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

2.	SIGNIFICANT ACCOUNTING POLICIES

(a)	Recent accounting pronouncements

	(i)	On June 16, 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-05, which revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU does not change the items that must be reported in other comprehensive income. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not expect the provisions of ASU 2011-05 to have a material effect on the financial position, results of operations or cash flows of the Company, as the Company currently presents a continuous statement of operations and comprehensive income (loss).

	(ii)	On May 12, 2011, the FASB issued ASU 2011-04. The ASU is the result of joint efforts by the FASB and IASB to develop a single, converged fair value framework. Thus, there are few differences between the ASU and its international counterpart, IFRS 13. This ASU is largely consistent with existing fair value measurement principles in U.S. GAAP; however it expands ASC 820’s existing disclosure requirements for fair value measurements and makes other amendments. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company does not expect the provisions of ASU 2011-05 to have a material effect on the financial position, results of operations or cash flows of the Company.

	(iii)	In May 2010, the FASB issued ASU 2010-19, Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The amendments in this update are effective as of the announcement date of March 18, 2010. Implementation of ASU 2010-19 did not have a material effect on the financial position, results of operations or cash flows of the Company.

	(iv)	In April 2010, the FASB issued ASU 2010-17, Revenue Recognition-Milestone Method (Topic 605): Milestone Method of Revenue Recognition. The amendments in this update are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity should apply the amendments retrospectively from the beginning of the year of adoption. Implementation of ASU 2010-17 did not have a material effect on the financial position, results of operations or cash flows of the Company.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

3.	GOING CONCERN

	The accompanying financial statements have been prepared on a going concern basis. The Company has a history of operating losses and will need to raise additional capital to fund its planned operations. As at November 30, 2013, the Company had a cumulative loss, during its exploration period, of $52,918,471 (February 28, 2013 - $51,962,796). These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

	The Company intends to reduce its cumulative loss through the attainment of profitable operations from its investment in Mexican mining venture (note 6). In addition, the Company has conducted private placements of common stock and convertible debt (note 9), which have generated a portion of the initial cash requirements for its planned mining ventures (note 6).

	In April 2013, the Company’s Canadian bank accounts were frozen due to a garnishing order for a judgement against the Company by a vendor in the amount of $120,000 plus interest. The Company has accrued the amounts due to this vendor at November 30, 2013.

	In March 2013, the Company completed a private placement of 2,400,000 shares at $0.12 per share for total gross proceeds of $240,000 in cash (note 6).

	In July 2012, the Company completed a private placement of 17,500,000 shares at $0.12 per share for total gross proceeds of $1,050,000 in cash and an additional $1,050,000 of real property in Argentina.

	In May 2012, the Company converted subscription proceeds of $45,000 and issued 300,000 shares of common stock in a private placement. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.20 of subscription proceeds. Each unit consists of one share of the Company’s common stock and one warrant each exercisable at $0.30, which expires in two years.

	In February 2012, the Company completed a private placement of 4,500,000 units at $0.20 per unit for total gross proceeds of $900,000. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock, each exercisable at $0.30, expiring in two years from the closing date.

	In June 2011, the Company completed a private placement of 1,500,000 units at $0.20 per unit, for total proceeds of $300,000. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock, each exercisable at $0.30, expiring in two years from the closing date.

	In March 2011, the Company completed a private placement of 6,560,000 units at $0.20 per unit, for total proceeds of $1,312,000. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock. Each warrant is exercisable for one share of common stock at an exercise price of $0.30 per share for a period of two years from the closing date.

	In July 2009, the Company signed a definitive agreement to sell its Guazapares project located in southwest Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount Gold and Silver Corp. (“Paramount”) for a total consideration of up to $5,300,000. The purchase price was to be paid in two stages. The first payment of $3,700,000 was released from escrow in February 2010, as the transfer of the 12 claims to Paramount was completed. An additional payment of $1,600,000 would have been due if, within 36 months following execution of the letter of agreement (July 10, 2009), either (i) Paramount Gold de Mexico SA de C.V. had been sold by Paramount, either through a stock sale or a sale of substantially all of its assets, or (ii) Paramount’s San Miguel project would have been put into commercial production. As of July 10, 2012, none of these two events occurred.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

4.	EQUIPMENT

	November 30, 2013		February 28
				2013
	Cost	Accumulated	Net Book	Net Book
		Depreciation	Value	Value
	$	$	$	$

Software	7,782	2,622	5,160	5,557
Machinery	14,371	8,259	6,112	7,329
Vehicles	75,971	73,964	2,007	4,676
Computers	13,722	12,780	942	1,318
Office equipment	16,149	11,324	4,825	6,153
	127,995	108,949	19,046	25,033

5.	JOINT VENTURE WITH MRT

	On February 12, 2009, the Company entered into a joint venture through a definitive agreement for development of its Cieneguita project with MRT. The purpose of the joint venture was to put Cieneguita property into production. As per the agreement, MRT was to provide the necessary working capital to begin and maintain mining operations estimated to be $3,000,000. MRT was to spend 100% of the funds in exchange for a 75% interest in the net cash flow from production. The agreement was amended in December 2009 for MRT to earn a 74% interest in the net cash flow from production (note 6).

	In September 2011, the Company executed an amended and restated development agreement for the restructure of its Cieneguita joint venture related to the Cieneguita project. Under the restructured joint venture agreement the Company was to receive 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, 2012. For all other material processed from the property, the Company's interest was 80% and MRT was reduced to a 20% working interest, subject to certain dilution provisions (note 6).

	The agreement limited the mining of the mineralized material that is available from the surface to a depth of 15 meters or approximately 10% of the mineralized material found as of the date of the definitive agreement. The Company incurs no obligations to the joint venture’s creditors as the operations and working capital requirements are controlled by MRT and as such, the Company has concluded that it is not the primary beneficiary of the joint venture. Accordingly, the Company’s share of income and expenses are reflected in these financial statements under the proportionate consolidation method.

	In September, 2012, the Company entered into a Second Amended and Restated Development Agreement with MRT related to the mineral exploration, production and development of the Company’s Cieneguita Project. Under the Second Amended and Restated Development Agreement, the Company’s share of net cash flow from the pilot project operated by MRT on the Cieneguita project increases from 20% to 29% beginning retroactive to March 1, 2012 through December 31, 2012. Beginning January 1, 2013 through December 31, 2013, the Company’s share of net cash flow from the pilot project increases to 35%. At all times, the Company retains its 80% ownership interest in the entire Cieneguita project. This agreement eliminates the additional fees previously payable by MRT for minerals mined below the first 15 meters.

	The Second Amended and Restated Development Agreement extended the date of the pilot project from December 31, 2012 to December 31, 2013. MRT may terminate the pilot project by providing the Company with 90 days advanced written notice, and the Company may terminate the pilot project upon, inter alia, an uncured breach of the Second Amended and Restated Development Agreement by MRT. Effective December 23, 2013, the Company and MRT signed an extension to this agreement extending it under the same terms to December 31, 2014.

	The Company’s proportionate share of revenues was $4,258,152 and proportionate share of the net profit was $1,505,802 for the nine months ended November 30, 2013. The Company’s proportionate share of accounts receivable of the joint venture was $540,368, at November 30, 2013. The joint venture did not have any other assets or liabilities at November 30, 2013.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

6.	MINERAL PROPERTIES

	The Company incurred exploration expenses as follows in the nine months ended November 30, 2013:

	Cieneguita	Total
	$	$


Geological, geochemical, geophysics	2,006	2,006
Land use permits	6,241	6,241
Travel	18,014	18,014
Consulting	376,145	376,145
Equipment	159,420	159,420
General	5,481	5,481
	567,307	567,307

The Company incurred exploration expenses as follows in the nine months ended November 30, 2012:

	Cieneguita	Cerro Delta	New Projects	Total
	$	$	$	$


Drilling and sampling	3,592	13,910	3,854	21,356
Field work preparations	-	369,204	-	369,204
Salaries	86,340	-	-	86,340
Land use permits	8,675	-	-	8,675
Travel	18,441	-	-	18,441
Consulting	594,147	7,265	-	601,412
Equipment	159,539	-	-	159,539
General	9,885	892	50,659	61,436
	880,619	391,271	54,513	1,326,403

Since May 2004, the Company has held interests in gold exploration properties in Mexico.

In August 2005, the Company formed its wholly owned subsidiary, Sunburst de Mexico, which allowed the Company to take title to the properties in the name of Sunburst de Mexico. On August 25, 2005, the Company entered into property agreements with MRT, which provided Sunburst de Mexico options to purchase the mineral concessions of the Cieneguita and Guazapares properties and the right of refusal on three Encino Gordo properties. The Company also entered into a development and sale agreement, in October 2006, with Minera Emilio S.A. de C.V. for the mineral concessions of the Sahuayacan property.

In August 2005, the parties also entered into an operator’s agreement, that gave MRT the sole and exclusive right and authority to manage the Cieneguita property, and a share option agreement which granted MRT the exclusive option to acquire up to 100% of all outstanding shares of Sunburst de Mexico if the Company did not comply with the terms of the property agreements. The operator’s agreement and share option agreement were subsequently cancelled when the Company and Sunburst de Mexico entered into a new contract with MRT as described below under “Encino Gordo”.

In February 2009, the Company entered into an exploration agreement with MRT, which was amended in December 2009, then in September 2011 and finally in September 2012.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

6.	MINERAL PROPERTIES (continued)

	The material provisions of the property agreements are as follows:

Cieneguita

MRT assigned to Sunburst de Mexico, with the permission of the Cieneguita property’s owner, Corporativo Minero, S.A. de C.V. (“Corporativo Minero”), all of MRT’s rights and obligations acquired under a previous agreement (the Cieneguita option agreement), including the exclusive option to acquire the Cieneguita property for a price of $2,000,000. Prior to assigning the Cieneguita property to the Company, MRT had paid $350,000 to Corporativo Minero. As the Cieneguita property was not in production by May 6, 2006, Sunburst de Mexico was required to pay $120,000 to Corporativo Minero to extend the contract. Corporativo Minero agreed to reduce the obligation to $60,000, of which $10,000 was paid in April 2006 and the balance paid on May 6, 2006. The Company made this payment to Corporativo Minero and the contract was extended.

The Company had the obligation to pay a further $120,000 per year for the next 13 years and the balance of the payments in the 14th year, until the total amount of $2,000,000 was paid. The Company renegotiated the payment due May 6, 2007, to $60,000 payable on November 6, 2007, which was paid, and the balance of $60,000 was paid on December 20, 2007. The Company paid $60,000 on May 12, 2008, of the $120,000 due on May 6, 2008, and the balance was paid in June 2008. The Company paid $30,000 each for a total of $120,000 on May 22, 2009, June 26, 2009, September 4, 2009 and November 20, 2009. In 2010, the Cieneguita project was put into production under the development agreement as described above and the payment terms were changed based on the following formula: The Company must pay the Cieneguita owners $20 per ounce of gold produced from the Cieneguita property to the total of $2,000,000 due. In the event that the price of gold is above $400 per ounce, the property payments payable to the Cieneguita owners from production will be increased by $0.10 for each dollar increment over $400 per ounce. The total payment of $2,000,000 does not change with fluctuations in the price of gold. Non-payment of any portion of the $2,000,000 total payment will constitute a default. In such case, the Cieneguita owners will retain ownership of the concessions, but the Company will not incur any additional default penalty.

In September 2011, the Company, MRT and Corporativo Minero entered into a new agreement, where Corporativo Minero was entitled to a monthly payment of $30,000, to be paid from the net cash flows from production at Cieneguita until the completion of the first 15 meters of production or December 31, 2012, whichever occurs first.

In September 2012, the Company entered into a Second Amended and Restated Development Agreement with MRT whereby the Company’s share of net cash flow from the pilot project operated by MRT increases from 20% to 29% beginning retroactively from March 1, 2012 to December 31, 2012. From January 1, 2013 to December 31, 2013, this amount increases to 35%. Effective December 23, 2013, the Company and MRT signed an extension to this agreement extending it under the same terms to December 31, 2014.

Based on production at Cieneguita, the joint venture paid $270,000 during the nine months ended November 30, 2013 (February 28, 2013 - $330,000) to the Cieneguita owners. As of November 30, 2013, Corporativo Minero has been paid a total of $1,777,241 for the Cieneguita property. The Company is not in default on its payments for the Cieneguita property.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

6.	MINERAL PROPERTIES (continued)

	On February 12, 2009, the Company entered into a definitive agreement for development of the Cieneguita project with MRT. The definitive agreement covered project financing of up to $9,000,000. The major points of the agreement were as follows:

	(i)	MRT and/or its investors will subscribe for $1,000,000 of a secured convertible debenture at 8% interest (payable in stock or cash). The debenture was convertible into units at $0.60 per unit. Each unit comprised two common shares and one warrant. Each warrant is exercisable at $0.50 per share for a period of three years. The placement will be used for continued development of the Company’s properties and general working capital.

	(ii)	MRT is to provide the necessary working capital to begin and maintain mining operations estimated to be $3,000,000 used for the purpose of putting the Cieneguita property into production. MRT will spend 100% of the money to earn 75% of the net cash flow from production. The agreement will limit the mining to the mineralized material that is available from surface to a depth of 15 meters or approximately 10% of the mineralized material found to date.

	(iii)	MRT will spend up to $5,000,000 to take the Cieneguita property through the feasibility stage. In doing so, MRT will earn a 60% interest in the Company’s rights to the property. After the expenditure of the $5,000,000 all costs will be shared on a ratio of 60% to MRT and 40% to the Company. If the Company elects not to pay its portion of costs after the $5,000,000 has been spent, the Company’s position shall revert to a 25% carried interest on the property.

To generate funding for the Company’s continued operations, the Company issued $1,500,000 of convertible debentures in March 2009, of which an aggregate of $880,000 was issued to Mario Ayub, a former director of the Company, and his affiliated entity, MRT. Pursuant to the terms of the convertible debentures, the holders irrevocably converted the debentures into a 10% ownership interest in the Cieneguita project and a 10% interest in the net cash flow from First Phase Production.

In December 2009, Mario Ayub and MRT agreed to resell an aggregate 4% ownership interest in the Cieneguita project back to the Company, along with 4% of the net cash flow from First Phase Production, in return for $550,000. In a private transaction not involving the Company, the other holders contributed their remaining 6% ownership interest in the Cieneguita project to a newly formed entity, Marje Minerals SA (“Marje Minerals”).

In December 2009, the Company amended the development agreement and its agreements with the debenture holders. According to the amended development agreement, the ownership interest in the Cieneguita project and the net cash flows from the First Phase Production were held by the Company, MRT and Marje Minerals as follows:

Holder	Ownership	Net Cash Flow	Net Cash Flow
	Percentage	Interest From	Interest Following
		First Phase	First Phase
		Production	Production
MRT	54% ⁽¹⁾	74%	54% ⁽¹⁾
Marje Minerals	6%	6%	6%
Panam	40%	20%	40%

(1) Was to be earned by MRT by spending $4,000,000 to take the Cieneguita project through the feasibility stage.

Any additional costs for the First Phase Production and the feasibility study for the Cieneguita project, after MRT invested $8,000,000, would have been shared by the Company, MRT and Marje Minerals on a pro-rata basis based on their respective ownership percentages in the Cieneguita project.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

6.	MINERAL PROPERTIES (continued)

	The major terms of the amended development agreement with MRT and Marje Minerals were as follows:

	(i)	MRT purchased $1,000,000 of secured convertible debentures at 8% interest (payable in stock or cash). The proceeds from this investment were used for continued development and exploration of the Cieneguita project and general working capital. On November 5, 2009, MRT exercised its conversion rights on the debenture and MRT was issued 3,333,333 common shares and a warrant to purchase 1,666,667 shares of common stock at an exercise price of $0.50 per share.

	(ii)	MRT agreed to provide the necessary working capital to begin and maintain mining operations, estimated to be $3,000,000, to put the first phase of the Cieneguita project into production. In exchange for these funds, the Company assigned MRT an interest to 74% of the net cash flow from First Phase Production. The agreement limits the mining during First Phase Production to the mineralized material that is available from the surface to a depth of 15 meters.

	(iii)	MRT committed to spend up to $4,000,000 to take the Cieneguita project through the feasibility stage. In doing so, the Company assigned MRT a 54% interest in its rights to the Cieneguita project. After the expenditure of the $4,000,000, all costs will be shared on a pro rata ownership basis (i.e. 54% to MRT, 40% to the Company and 6% to Marje Minerals). If any party cannot pay its portion of the costs after the $4,000,000 has been spent, then their ownership position in the Cieneguita project will be reduced by 1% for every $100,000 invested by the other owners. The Company’s ownership interest in the Cieneguita project, however, cannot be reduced below 25%. In addition, the Company has the right to cover Marje Minerals’ pro rata portion of costs if they cannot pay their portion of the costs. In return, the Company will receive 1% of Marje Minerals’ ownership position in the Cieneguita project for every $100,000 the Company invests on their behalf.

	(iv)	The MRT agreement was contingent on the Company repaying its debenture to Paramount. In March 2009, the Company repaid $1,000,000, or approximately two-thirds of the debt, and Paramount released a security interest it had on the Cieneguita project. In October 2009, the Company repaid the remaining amount of the debt and Paramount released its security interests on the Sahuayacan, Guazapares and Encino Gordo properties.

In September 2011, the Company executed a new amended and restated development agreement with MRT and Marje Minerals, for the restructure of its Cieneguita joint venture. 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, 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. The Company also bought back 6% interest in Cieneguita from Marje Minerals in exchange for 3,333,333 common shares of the Company.

Under the agreement, the parties agreed to restructure their respective ownership interests in the Cieneguita project as follows:

Holder	Ownership	Net Cash Flow	Net Cash Flow
	Percentage	Interest From	Interest Following
		First Phase	First Phase
		Production	Production
MRT	20%	74%	20%
Marje Minerals	0%	6%	0%
Panam	80%	20%	80%

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

6.	MINERAL PROPERTIES (continued)

	The Company and MRT shall be responsible for the cost of a feasibility study on a pro rata basis based on their respective amended ownership percentages of the Cieneguita project.

	Marje Minerals will also assume approximately $490,000 in debt of the Company in consideration for receiving half of all monthly net cash flows that the Company is entitled from operations on the first 15 meters, if any, until the sooner of December 31, 2012 or until Marje Minerals receives $490,000 from these cash flows.

	In September, 2012, the Company entered into a Second Amended and Restated Development Agreement with MRT related to the mineral exploration, production and development of the Company’s Cieneguita Project. Under the Second Amended and Restated Development Agreement, the Company’s share of net cash flow from the pilot project operated by MRT on the Cieneguita project increases from 20% to 29% beginning retroactive to March 1, 2012 through December 31, 2012. Beginning January 1, 2013 through December 31, 2013, the Company’s share of net cash flow from the pilot project increases to 35%. At all times, the Company retains its 80% ownership interest in the entire Cieneguita project. This agreement eliminates the additional fees previously payable by MRT for minerals mined below the first 15 meters.

	The Second Amended and Restated Development Agreement extended the date of the pilot project from December 31, 2012 to December 31, 2013. MRT may terminate the pilot project by providing the Company with 90 days advanced written notice, and the Company may terminate the pilot project upon, inter alia, an uncured breach of the Second Amended and Restated Development Agreement by MRT. Effective December 23, 2013, the Company and MRT signed an extension to this agreement extending it under the same terms to December 31, 2014.

	In connection with the revised development agreement, MRT also purchased 2,000,000 shares of the Company’s common stock at a price of $0.12 per share for net proceeds of $240,000 pursuant to the Company’s private placement subscription agreement. The Company will issue the shares to MRT in reliance on exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.

Encino Gordo

On December 8, 2005, the Company and Sunburst de Mexico entered into a “New Agreement” with MRT to exercise their option under the sale and purchase of the mining concessions agreement, dated August 18, 2005, to obtain two mining concessions in the Encino Gordo region. The New Agreement also provided the Company the option to obtain three additional concessions in the Encino Gordo region.

The following were additional material terms of the New Agreement:

	(a)	The share option agreement with MRT was cancelled;

	(b)	The Company granted MRT the option to buy all of the outstanding shares of Sunburst de Mexico for $100 if the Company failed to transfer $1,500,000 to Sunburst de Mexico by April 30, 2006. On April 6, 2006, MRT agreed to waive its option to purchase the shares of Sunburst de Mexico and also waived the Company’s obligation to transfer $1,500,000 to Sunburst de Mexico. The property agreements were modified to change the NSR to a maximum of 2.5% for all properties covered by the agreements. The property agreements contained NSRs ranging from 0.5% to 7%;

	(c)	The Company agreed to issue 2,000,000 shares of the Company’s common stock to MRT within four months of the date of signing of the New Agreement. These shares were issued to MRT and its assignee at the market value of $1.05 per share on February 23, 2006, and $2,100,000 was charged to operations for the year ended February 28, 2006. This issuance fulfilled the Company’s payment obligations under the previous property agreements;

	(d)	The Company agreed to issue 1,000,000 additional shares of the Company’s common stock to MRT if and when the Cieneguita property is put into production and reaches 85% of production capacity over a 90-day period, as defined in the New Agreement; and

	(e)	The operator’s agreement with MRT was cancelled.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

6.	MINERAL PROPERTIES (continued)

	Sunburst de Mexico purchased two of the Encino Gordo concessions from MRT for a price of 1,000 pesos (approximately US$100), and MRT assigned to Sunburst de Mexico a first right of refusal to acquire three additional Encino Gordo concessions. The total payments to acquire 100% of these three additional concessions were as follows: $10,000 on June 30, 2006 (paid); $25,000 on December 31, 2006 (paid), $50,000 on December 31, 2007 ($20,000 of this payment was made on January 3, 2008 and the balance was paid on February 29, 2008) and $75,000 on December 31, 2008 (the payment was not made and the Company was in default). In August 2009, the Company decided to surrender the Encino Gordo 2 mining concession eliminating any future concession payments on these properties.

	In May 2012, the Company transferred its interest in concessions at the Encino Gordo project located in the Barranca region of Chihuahua State in Mexico, which included two concessions owned by the Company and two additional concessions the Company had the option to acquire, to MRT. In connection with the transfer, MRT paid $100,000 cash, waived $200,000 in payments the Company owed to MRT in connection with the Encino Gordo Project and agreed to assume all of the Company’s obligations related to the transferred concessions.

Cerro Delta

In February 2011, the Company management entered into an agreement with Compania Minera Alto Rio Salado S.A., a private Argentine entity, for the acquisition of the 15,000-hectare Cerro Delta project in northwest La Rioja Province, Argentina. Under the terms of the agreement, the Company must pay $150,000 upon signing (paid), and $200,000 on the first anniversary (paid), $500,000 on the second anniversary, $750,000 on the third anniversary, $1.2 million on the fourth anniversary, and $2.2 million on the fifth anniversary of the signing, with a final option payment of $5 million to purchase a 100% interest in the project payable on the sixth anniversary of the signing. The vendor was to retain a 1% NSR.

In December 2012, due to the significantly deteriorating political and working environment in Argentina and the difficulty to fund Maricunga belt projects, the Company froze all spending in Argentina. In January 2013, the Company cancelled the contract with Compania Minera Alto Rio Salado S.A. to acquire the Cerro Delta project.

7.	LOANS PAYABLE

	As at November 30, 2013, there were loans payable in the amount of $nil (February 28, 2013 - $10,867), which are all current. The loans were repayable in monthly instalments of $nil (February 28, 2013 – $3,702), including interest of 7.50% per annum.

8.	PREFERRED STOCK

	The Company is authorized to issue 20,000,000 shares of preferred stock. The Company’s board of directors is authorized to divide the preferred stock into series, and with respect to each series, to determine the preferences and rights and qualifications, limitations or restrictions thereof, including the dividend rights, conversion rights, voting rights, redemption rights and terms, liquidation preferences, sinking fund provisions, and the number of shares constituting the series and the designations of such series. The board of directors could, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting rights of the holders of common stock, which issuance could have certain anti-takeover effects. There were no shares of preferred stock issued or outstanding at November 30, 2013 or November 30, 2012.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

9.	COMMON STOCK

	In June 2013, the Company converted $60,533 of debt owed to certain directors for directors’ fee into 289,775 common shares.

	In June 2013, the Company issued 3,500,000 common shares in exchange for 10,000,000 warrants to certain directors and an officer under a settlement agreement.

	In June 2013, the Company issued 42,450 common shares to a consultant pursuant to a consulting agreement.

	In March 2013, the Company completed a $240,000 private placement offering, whereby the Company issued 2,000,000 shares of its common stock at a subscription price of $0.12 per share.

	In January 2013, the Company issued 500,000 common shares to a consultant pursuant to a consulting agreement. The shares were valued at the time of issuance at $0.13 per share.

	In November 2012, the Company issued 250,000 common shares to a consultant pursuant to a consulting agreement. The shares were valued at the time of issuance at $0.12 per share.

	In September 2012, the Company issued 500,000 common shares to a consultant pursuant to a consulting agreement. The shares were valued at the time of issuance at $0.13 per share.

	In September 2012, the Company issued the remaining 2,166,666 common shares relating to the acquisition of 6% of ownership interest in the Cieneguita project.

	In November 2012, the Company issued 250,000 common shares to a consultant pursuant to a consulting agreement. The shares were valued at the time of issuance at $0.12 per share.

	In July 2012, the Company converted outstanding fees in the amount of $71,900 owed to the Company’s directors into shares of the Company’s common stock, at a conversion price of $0.10 per share.

	In July 2012, the Company completed a $2.1 million private placement offering, whereby the Company issued 17,500,000 shares of its common stock at a subscription price of $0.12 per share. Of the aggregate purchase price, $1,050,000 was paid in cash and $1,050,000 was paid through the transfer of real property in Argentina. The Company intends to liquidate this property as soon as practical. In conjunction with the offering, the Company paid a finder’s fee of $84,000 and 700,000 shares of common stock.

	In June 2012, the Company issued 194,444 common shares pursuant to a debt settlement agreement to settle $20,000 of debt. The shares were valued at the time of issuance at $0.10 per share.

	In May 2012, the Company converted subscription proceeds of $45,000 and issued 300,000 shares of common stock in a private placement. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.20 of subscription proceeds. Each unit consists of one share of the Company’s common stock and two warrants each exercisable at $0.20 and $0.30, which expire in two years. In July 2012, the Company paid a finder’s fee of $2,400 related to the private placement.

	In April 2012, the Company issued 235,294 common shares pursuant to a debt settlement agreement to settle $40,000 of debt. The shares were valued at the time of issuance at $0.17 per share.

	In April 2012, the Company issued 250,000 common shares to a consultant pursuant to a consulting agreement. The shares were valued at the time of issuance at $0.18 per share.

10.	STOCK COMPENSATION PROGRAM

	On March 18, 2009, the board of directors approved the granting of stock options according to the 2009 Nonqualified Stock Option Plan (“2009 Option Plan”) whereby the board is authorized to grant to employees and other related persons stock options to purchase an aggregate of up to 6,000,000 shares of the Company's common stock. Subject to the adoption of the 2009 Option Plan, the options were granted and vest, pursuant to the terms of the 2009 Option Plan, in six equal instalments, with the first instalment vesting at the date of grant, and the balance vesting over 2.5 years, every six months.

	In the nine months ended November 30, 2013, the Company awarded nil options to purchase common shares (November 30, 2012 – nil) and recorded stock-based compensation expense for the vesting options of $143,860 (November 30, 2012- $153,300). The following weighted average assumptions were used for the Black-Scholes option-pricing model to value stock options granted in 2013 and 2012:

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

10.

STOCK COMPENSATION PROGRAM (continued)

	2013	2012
Expected volatility	-	-
Weighted-average volatility	-	-
Expected dividend rate	-	-
Expected life of options in years	-	-
Risk-free rate	-	-

There were no capitalized stock-based compensation costs at November 30, 2013 or November 30, 2012.

The summary of option activity under the 2009 Option Plan as of November 30, 2013, and changes during the period then ended, is presented below:

	Weighted	Number of		Weighted-	Aggregate
	Average	Shares		Average	Intrinsic
	Exercise			Remaining	Value
	Price			Contractual
Options	$			Term

Balance at March 1, 2013	0.29	4,961,669
Options granted	-	-
Options exercised	-	-
Options cancelled/forfeited	0.26	(2,166,669	)

Balance at November 30, 2013	0.31	2,795,000		5.94	-

Exercisable at November 30, 2013	0.31	2,795,000		5.94	-

The weighted-average grant-date fair value of options granted during the nine months ended November 30, 2013 and November 30, 2012 is $nil and $nil, respectively.

A summary of the status of the Company’s non-vested options as of November 30, 2013, and changes during the nine months ended November 30, 2013, is presented below:

			Weighted-average
			Grant-Date
Non-vested options	Shares		Fair Value
			$

Non-vested at February 28, 2013	533,332		0.25
Granted	-		-
Vested	(366,664	)	0.27
Cancelled/forfeited	(166,668	)	0.26
Non-vested at November 30, 2013	-		-

As of November 30, 2013, there was $nil of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2009 nonqualified stock option plan.

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

11.	WARRANTS

	As at November 30, 2013, the Company had a total of 7,900,000 warrants (February 28, 2013 – 29,160,000) outstanding to purchase common stock. Each warrant entitles the holder to purchase one share of the Company’s common stock. The Company has reserved 7,900,000 shares of common stock in the event that these warrants are exercised.

	During the nine months ended November 30, 2013, the Company received $nil from warrants exercised.

	The following table summarizes the continuity of the Company’s share purchase warrants:

	Number of			Weighted Average
	Warrants			Exercise Price

Balance, February 29, 2012	32,011,733		$	0.35

Issued	2,100,000			0.26
Cancelled/expired	(4,951,733	)		0.68
Exercised	-			-

Balance, February 28, 2013	29,160,000		$	0.29

Issued	300,000			0.30
Cancelled/expired	(21,560,000	)		0.29
Exercised	-			-

November 30, 2013	7,900,000		$	0.30

As at November 30, 2013, the following share purchase warrants were outstanding:

Number of
Warrants	Exercise Price	Expiry Date
	$

600,000	0.20	May 15, 2014
300,000	0.30	March 13, 2015
4,400,000	0.30	December 30, 2013
1,000,000	0.30	December 29, 2016
500,000	0.30	February 20, 2014
100,000	0.30	February 28, 2014
500,000	0.30	August 28, 2014
500,000	0.30	December 31, 2015
7,900,000

PAN AMERICAN GOLDFIELDS LTD.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited) (Expressed in U.S. Dollars)

Nine Months Ended November 30, 2013

12.	RELATED PARTY TRANSACTIONS

	For the nine months ended November 30, 2013, the Company paid or accrued management and directors’ fee of $147,966 (November 30, 2012 - $371,600) to certain officers and directors.

	The Company also paid or accrued consulting fees of $35,989 (November 30, 2012 - $29,250) to a director of the Company and legal fees of $136,000 (November 30, 2012 - $nil) to a firm where a director is a Partner.

	As at November 30, 2013, accounts payable of $125,000 (November 30, 2012 - $129,414) was owing to directors and officers of the Company, $nil (November 30, 2012 - $13,545) was owing to a company controlled by a director, $125,000 was owing to a firm where a director is a Partner (November 30, 2012 - $nil) and $9,088 (November 30, 2012 - $nil) was owing to companies associated with an officer.

	All related party transactions are in the normal course of business at the exchange amount agreed to by each party.

13.	SUPPLEMENTAL CASH FLOW INFORMATION

	Nine months	Nine months	Period From
	ended	ended	Inception of
	November 30,	November 30,	Exploration
	2013	2012	Stage (March 1,
			2004) to
			November 30, 2013

	$	$	$

Interest paid	-	-	310,053
Common stock issued on conversion of debt	60,533	131,900	4,514,084
Common stock issued on settlement of notes payable	-	-	3,908,812
Common stock issued for interest costs	-	-	82,500
Common stock issued for financing costs	-	84,000	229,000
Common stock issued for mineral property costs	-	407,334	1,206,667
Common stock issued for bonuses	-	-	512,750
Shares issued for services	7,726	138,250	1,087,816

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Form 10-Q, including statements in the following discussion which are not statements of historical fact, constitute "forward-looking statements". These statements, which may be identified by words such as “plans”, “intends”, "anticipates", “hopes”, “seeks”, “will”, "believes", "estimates", "should", "expects" and similar expressions include our expectations and objectives regarding our present and future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in such forward-looking statements. Numerous factors and future events could cause us to change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits. Such risks and uncertainties include those set forth under this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-Q and in our Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). These forward-looking statements represent beliefs and assumptions only as of the date of this report. We undertake no obligation to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results. We advise you to carefully review the reports and documents we file from time to time with the SEC, particularly our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. As used in this management’s discussion and analysis, the terms “Pan American”, the “Company”, “we”, “us”, and “our” mean Pan American Goldfields Ltd.

Overview

We are an exploration stage company focused on mineral exploration activities in Mexico through our wholly owned Mexican subsidiary, Sunburst Mining de Mexico, S.A. de C.V., (“Sunburst”). We are currently engaged in the exploration and development of one gold and silver project, named the Cieneguita Project, which is made up of several mining concessions. The Cieneguita Project is located in the Sierra Madre region of the State of Chihuahua, Mexico.

To help support our exploration activities, in February 2009 we entered into a joint venture agreement with Minera Rio Tinto, S.A. de C.V. (“MRT”), a mining operator in Chihuahua, Mexico (the “Joint Venture Agreement”). Under the Joint Venture Agreement, we authorized MRT to commence a small scale milling operation at our Cieneguita Project (the “pilot project” or “pilot operation”). MRT commenced the pilot operation in March 2010 after the construction of systems and initial plant facilities for crushing and gravity and flotation circuits were complete and adequate water supplies established. Operations have since been expanded from one to two 12-hour shifts per day with a processing rate up to 750 tonnes per day. The terms of the Joint Venture Agreement (as amended) with MRT are discussed in detail below.

Our financial condition has improved substantially since late 2009. At the time, the Company’s working capital deficiency was approximately $4.7 million and the Company received no revenues from its operations. Because of lack of capital, the Company faced having its interests in the Cieneguita Project reduced from 40% to 25%.

Since then, the Company’s position has improved dramatically. The Company now receives 35% of net cash flow from pilot operations at the Cieneguita Project, which were 100% financed by MRT under the Joint Venture Agreement, and it retains at all times an 80% ownership interest in the Cieneguita Project. In addition, the Company has substantially reduced the nearly $5 million in debt it had incurred as of 2009, and has achieved positive working capital.

In September 2011, because MRT experienced delays in achieving a steady state of production at the pilot project and was unable to complete a feasibility study for the Cieneguita Project within the prescribed time by the initial terms of the Joint Venture Agreement, we were able to renegotiate the terms of the Joint Venture Agreement to increase the Company’s cash flow from the pilot project and its percentage ownership of the overall Cieneguita Project. We assumed the responsibility to complete a preliminary economic assessment for the Cieneguita Project, and the parties agreed to fund the future feasibility study for the Cieneguita Project on a pro-rata basis according to their respective ownership percentages.

In September 2012, the Company negotiated a second amendment to the Joint Venture Agreement with MRT, as discussed in more detail below. In the second amendment to the Joint Venture Agreement, we were further able to increase cash flow to the Company from the pilot project at the Cieneguita Project, on a retroactive basis to March 2012. The second amendment to the Joint Venture Agreement also increased our ownership interests in the Cieneguita Project, as well as removed the depth limitations for the pilot project, giving MRT more incentive to implement project efficiencies and increase the production rate of the pilot project. Now, due to the second amendment of the Joint Venture Agreement, we are not wholly dependent on the equity markets for funding the Company’s development, a strategy that has turned out to be prescient given the current market conditions.

As a result of our efforts and strategy, the Company has received revenues from MRT on a regular monthly basis to support the Company's activities since late 2011.

Recent Developments

Change in Management

Effective July 3, 2013, Mr. Emilio Alvarez was appointed to serve as Chief Executive Officer of the Company. Effective September 20, 2013, Mr. Daniel Crandall was appointed to serve as the Chief Financial Officer of the Company.

Change in Board of Directors

As previously disclosed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on June 21, 2013, pursuant to an Order Setting Meeting Date and Quorum Rule, which the Delaware Court of Chancery entered on March 1, 2013 (the “Order”), the Company held its annual meeting of stockholders on June 17, 2013 (the “Annual Meeting”). On March 19, 2013, Emilio Alvarez, a stockholder associated with Vortex Capital Ltd. (“Vortex”), subsequently submitted a Stockholder Notice (the “Notice”) of his intention to nominate five individuals (the “Vortex Nominees”) at the Annual Meeting. Mr. Alvarez and Vortex solicited proxies on behalf of the Vortex Nominees in advance of the Annual Meeting. At the Annual Meeting, the Company questioned the Notice’s compliance with one of the Company’s Bylaw requirements for stockholder nominations and took the position at the meeting that the Notice did not comply with such Bylaw requirement and that the Vortex Nominees were excluded from consideration at the Annual Meeting. Vortex disputed the Company’s position and took the position that Mr. Alvarez submitted a valid Notice and asserted the nomination of the Vortex Nominees was valid and sufficient.

Following the Annual Meeting, the Company and Vortex entered into discussions to resolve the dispute and avoid litigation and, as a result, entered into a settlement agreement (the “Settlement Agreement”), which was to become effective following formal approval by the Board of Directors. Among other things, the Settlement Agreement provided that the following persons, all of whom are Vortex Nominees, would serve as directors and hold office for the terms designated, (i) Laurent Deydier to hold office until the 2014 Annual Meeting, (ii) Balbir Bindra and William R. Majcher to hold office until the 2015 Annual Meeting, and (iii) Emilio Alvarez and Bruno Le Barber to hold office until the 2016 Annual Meeting. In addition, pursuant to the terms of the Settlement Agreement, Ricardo Ernesto Marcos Touche has been appointed to hold office until the 2014 Annual Meeting. Accordingly, there is one vacancy in the class of directors holding office until the 2015 Annual Meeting. The Settlement Agreement additionally provides for mutual releases by the Company, Vortex, the Vortex Nominees and the departing members of the Board.

Additionally, pursuant to the terms of the Settlement Agreement, Messrs. Neil Maedel, Hernan Celorrio, George Young, Randy Buchamer and Gary Parkison agreed that they were no longer members of the Board of Directors of the Company (the “Board”) and each of Messrs. Maedel, Celorrio, Young, Buchamer and Parkison entered into an option and warrant exchange and share issuance agreement (the “Share Issuance Agreements”), pursuant to which they exchanged warrants issued in connection with Board service for shares of the Company’s common stock. Pursuant to each of their respective Share Issuance Agreements, Mr. Maedel exchanged warrants to purchase 6,000,000 shares of the Company’s common stock for the issuance of 2,100,000 shares of the Company’s common stock and Messrs. Celorrio, Young, Buchamer and Parkison each exchanged a warrant to purchase 1,000,000 shares of common stock for the issuance of 350,000 shares of the Company’s common stock. The shares issued in exchange for the warrants, were issued pursuant to Section 3(a)(9) and Section 4(2) of the Securities Act of 1933, as amended. Mr. Maedel also entered into a consulting agreement with the Company for a consulting fee of $5,000 per month for a term ending December 31, 2013, to provide transition services as requested by the Company.

Project Developments Joint Venture Agreement

In September 2011, because MRT experienced delays in achieving a steady state of production at the pilot project and was unable to complete a feasibility study for the Cieneguita Project within the prescribed time by the initial terms of the Joint Venture Agreement, we were able to renegotiate the terms of the Joint Venture Agreement to increase the Company’s cash flow from the pilot project and its percentage ownership of the overall Cieneguita Project. We assumed responsibility to complete a preliminary economic assessment for the Cieneguita Project, and the parties agreed to fund the future feasibility study for the Cieneguita Project on a pro-rata basis according to their respective ownership percentages.

In September 2012, we entered into the second amendment of the Joint Venture Agreement with MRT. The parties agreed to the following provisions pursuant to the second amendment of the Joint Venture Agreement:

Our share of net cash flow from the pilot project operated by MRT on the Cieneguita Project increased from 20% to 29% beginning retroactive to March 1, 2012 through December 31, 2012. Beginning January 1, 2013 through December 31, 2013 (extended to December 31, 2014), our share of net cash flow from the project increases to 35%. After December 31, 2014, we receive 80% of the net cash flow. At all times, the Company retains its 80% ownership interest in the entire Cieneguita project.

Additional fees previously payable by MRT for minerals processed below the first 15 meters have been eliminated.
MRT, which is the exclusive operator, must provide us financial information related to the calculation of net cash flow within 30 days of the end of each month and will pay a minimum US $150,000 to us within the first 10 days of each month as a good faith advance against the previous month’s net cash flow. The balance of monies owed (if any) to us for the previous quarter is to be paid within 45 days from the end of each fiscal quarter.
MRT must provide us with quarterly reports summarizing exploration, development and operations and all related technical results from activities on the Cieneguita Project. All of the books and records and the operations of MRT are subject to audit by us.
MRT must, at its cost, provide, a quarterly audit within thirty (30) days of the end of each fiscal quarter regarding compliance with environmental laws and steps required to effect remediation or other required actions (if any) to maintain and/or bring the project operations into compliance with all applicable environmental laws. The audit is to be performed by an independent expert environmental consulting firm selected by us and MRT. MRT is solely responsible for any costs of effecting any remediation recommended by the audit.
The date of the pilot production was extended from December 31, 2012 to December 31, 2013. MRT may terminate the project by providing us with ninety (90) days advanced written notice, and we may terminate the project upon an uncured breach of the Joint Venture Agreement by MRT.
At all times, we retain our 80% ownership interest in the entire Cieneguita Project.

The map below shows the location of the Cieneguita Project in the Sierra Madre Sierra region of the State of Chihuahua, Mexico.

Other Projects

In February 2011, we had entered into an agreement with Compañia Minera Alto Rio Salado S.A., a private Argentine entity, for the acquisition of the 15,000 hectares Cerro Delta Project in northwest La Rioja Province, Argentina. Under the terms of the agreement, we were required to pay $150,000 upon signing the agreement, $200,000 on the first anniversary, $500,000 on the second anniversary, $750,000 on the third anniversary, $1.2 million on the fourth anniversary, and $2.2 million on the fifth anniversary of the signing, with a final option payment of $5 million to purchase a 100% interest in the Cerro Delta Project payable on the sixth anniversary of the signing. However, due to poor results from a field reconnaissance program, a worsening business environment in the country and the approach of an option payment in the amount of $500,000, we elected to terminate the project in January 2013 in order to focus our resources on the development of the Cieneguita project. Additionally, we sold our Encino Gordo Project in Mexico in May 2012 for a total consideration of $300,000.

In July 2011, we entered into an agreement with M3 Engineering and Technology Corporation (“M3 Engineering”) for the execution and completion of a NI 43-101 compliant PEA for the Cieneguita Project. In June 2013, we finalized and released the PEA which can be found on our website, www.panamgoldfields.com, with additional information summarized under the “Recent News” section, June 12, 2013 and March 13, 2013. We believe the data supports a decision to proceed with the completion of a full feasibility study to show the potential of the Cieneguita Project. The PEA confirms that the Cieneguita project represents an exceptional opportunity to develop a highly economic, relatively low-cost mine in the prolific Sierra Madre gold and silver belt in Mexico.

Financings

In connection with the Second Amended Agreement, MRT purchased 2,000,000 shares of our common stock at a price of $0.12 per share for net proceeds of $240,000 pursuant to the our private placement Subscription Agreement. We issued the shares to MRT in reliance on exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.

On July 13, 2012 we entered into a $2.1 million private placement offering. In the offering, we issued 17,500,000 shares of our common stock at a subscription price of $0.12 per share. Of the aggregate purchase price, $1,050,000 was paid in cash and $1,050,000 was paid through the transfer of real property in Argentina valued at $1,050,000. The shares were acquired by an accredited investor (as defined under Rule 501(a) of Regulation D promulgated under the Securities Act). The Company intends to liquidate the real property it acquired as soon as practical and has so far sold one unit for total proceeds of $330,000. We have used the net proceeds we received from the offering for working capital and general corporate purposes, including supporting the PEA for the Cieneguita Project.

Revenue and Production

Pursuant to the amended Joint Venture Agreement, the parties agreed to restructure cash flows payments and ownership of the Cieneguita Project as follows:

Holder	Ownership Percentage	Net Cash Flow Interest (March 1, 2012 until December 31, 2012)	Net Cash Flow Interest (January 1, 2013 until December 31, 2013) ⁽¹⁾	Net Cash Flow Interest (After December 31, 2013) ⁽¹⁾
MRT	20%	65%	65%	20%
Marje Minerals	0%	6%	0%	0%
Pan American	80%	29%	35%	80%

(1) Effective December 23, 2013, the Company and MRT signed an extension to this agreement extending it under the same terms to December 31, 2014.

For the nine months ended November 30, 2013, the joint venture with MRT generated net cash flows to the Company of $1,506,000.

We expect that certain capital improvements, including an improved water collection system and the construction of a small water reservoir adjacent to the Cieneguita mill, along with the addition of a conditioner, a disc filter, additional flotation cell capacity and a conventional thickener, should result in increased production to approximately 800 tons per day from the current rate of 715 tons per day rate at the end of fiscal 2013.

Gross revenue derived from the pilot project pursuant to the Joint Venture Agreement for the nine months ended November 30, 2013 was $12,166,000 compared to $13,413,000 for the nine months ended November 30, 2012. Net of operating costs, the Company’s net cash flow from pilot project, was $1,506,000 for the nine months ended November 30, 2013 compared to $2,021,000 in the nine months ended November 30, 2012, a decrease of 25%. The decrease was primarily due to a decrease in the price of gold. This was offset due to the efforts of the Company in renegotiating the Joint Venture Agreement with MRT and obtaining the improved business terms discussed above.

Financing Needs

The term of the pilot project ends in December 31, 2013 (extended to December 31, 2014). We may extend the term of the Joint Venture Agreement with the goal of reducing our future equity financing needs to support our future development of the Cieneguita Project.

After the term of the pilot project ends, the Company will earn 80% and MRT will earn 20% of the net cash flow interest earned from the extraction and processing of mineralized material from the Cieneguita Project, if any, whether by extension of the pilot operation thereafter operated by the Company, or from the development of a much larger, commercial operation. The final results of the PEA can be found on SEDAR at www.sedar.com. We believe the data supports a decision to proceed with the completion of a full feasibility study to show the potential of the Cieneguita Project.

For the fiscal year ending February 28, 2014, our current operating budget is based on receiving a minimum of $1,200,000 from the pilot project. We believe we will receive more than $1,200,000 from the operations of the pilot project, but we have prepared a conservative operating budget to allow for unexpected operating issues at the pilot project. In the event we do not receive the projected amount from our pilot project, we will have to raise additional capital through the sale of securities or other methods of financings to meet our projected working capital requirements. We will also need capital to pay our outstanding accounts payable or to pursue a feasibility study for the Cieneguita Project.

We will also need to raise additional capital to prepare a feasibility study and put the Cieneguita Project into production, or, alternatively, pursue the possibility of selling the property.

In the event that we should find a mineable reserve at the Cieneguita Project, it is management’s intention to contract the mining and milling of any mineralized reserves out to third parties. We do not have any known reserves at this time at the Cieneguita Project.

Exploration Projects – Current Status

Our exploration activities in 2012 focused on the Cieneguita Project. A small reconnaissance drill program was completed in the Piedras Blancas area, approximately 500 meters south of the Cieneguita deposit. The best intercept was hole SM-06 with 39 meters averaging approximately 0.84 g/t Au eq. The next phase of drilling is to focus on the Cieneguita deposit and will consist of infill drilling and defining the southeastern boundaries of the Cieneguita deposit.

In December 2011, we hired Dr. Fedor Zhimulev, MSc., PhD Honors as our chief geologist. He was a former senior researcher at the Sobolev Institute of Geology and Mineralogy and has extensive experience conducting fieldwork. From 2009 to 2011, he was appointed as leader of the Sobolev Institute’s Junior Scientists Community, and last year was awarded the Academican Sobolev prize for junior scientists from the Siberian Branch of the Academy of Sciences. Dr. Zhimulev will work with Alexander Becker PhD, who retains actual management of our exploration programs.

We have conducted a series of exploration programs at Cieneguita since March 2007. The drilling exploration program commenced in December 2007 with one drill rig and a second rig was added in July 2008. The drilling was completed in December 2008. The figure below shows the location of the 103 diamond drill holes on the Cieneguita Project:

The figure below shows the main mineralization zones our drilling work identified at the Cieneguita Project. Areas in red on the figure represent zones exhibiting mineralization areas where grades are>1.5 g/t Au.

Cieneguita Preliminary Economic Assessment (PEA)

We commenced work on the Cieneguita PEA compliant with Canadian National Instrument 43-101 in October 2011. We retained M3 Engineering, Tucson, Arizona, based on the firm’s extensive recent and relevant experience with mining projects in Mexico.

In June 2013 and as amended in November 2013, we finalized and released the PEA which can be found on SEDAR at www.sedar.com. We believe the data supports a decision to proceed with the completion of a full feasibility study to show the potential of the Cieneguita Project. The PEA confirms that the Cieneguita project represents an exceptional opportunity to develop a highly economic, relatively low-cost mine in the prolific Sierra Madre gold and silver belt in Mexico. A summary of the key findings of the PEA include:

The PEA considers an open pit mining operation using an operator owned mining fleet which feeds mineralized material to an adjacent flotation plant and cyanide leach facility with dry stack tailings disposal. A processing rate of 15,000 tonnes per day (“tpd”) provides for an 11 year mine life while processing a total of 56.7 million tonnes of material from an open pit with a low overall stripping ratio of 1.2 to 1.
Forecast life of mine (“LOM”) production is 509,000 ounces gold and 55.5 million ounces silver, or 1.50 million ounces of gold equivalent.
The average annual LOM production is forecast to be 46,300 ounces of gold and 5.05 million ounces of silver, or 136,500 ounces of gold equivalent.
Average annual production in the first three years of operation is forecast to be 64,000 ounces gold and 6.84 million ounces silver, or 186,200 ounces gold equivalent, or about 36% percent higher than the average LOM annual production, through mining of a shallow, higher-grade core of the deposit in the early years of the operation.
Estimated cash operating costs are estimated to average $518 per ounce gold equivalent for the first three years of operation and $701 for the life of the mine, with LOM average annual pre-tax net operating income of $97.1 million and $1.07 billion LOM, using base case metal prices.
Initial start-up capital costs including working capital and owner’s costs are estimated to be $484 million, including a 25% contingency ($81.6 million). Sustaining LOM capital costs are estimated at $20.5 million.
Using base case metal prices the PEA indicates the Cieneguita project has a pre-tax Internal Rate of Return (“IRR”) of 22.4%, a payback of 3.0 years and a Net Present Value at an 8% discount rate (“NPV8”) of $248 million. The project is leveraged to higher metal prices with the pre-tax IRR rising to 32.6%, and the NPV8 increasing to $462 million using recent metals prices of $1,600 per ounce gold and $30 per ounce silver, while the payback decreases to 2.4 years.

RESULTS OF OPERATIONS

Three and nine months ended November 30, 2013 compared to the three and nine months ended November 30, 2012.

In this discussion of the Company’s results of operations and financial condition, amounts, other than per-share amounts, have been rounded to the nearest thousand dollars.

Revenues

The pilot project generated approximately $4,258,000 in revenues allocable to us for the nine months ended November 30, 2013 as compared to approximately $3,890,000 for the nine months ended November 30, 2012, an increase of 9%. MRT sold concentrate from the pilot project and pursuant to the terms of the Joint Venture Agreement, we receive a portion of the net cash flows.

Gross Margin

Our gross margin was approximately $2,055,000 for the nine months ended November 30, 2013 as compared to approximately $2,630,000 for the nine months ended November 30, 2012, a decrease of 22%. The decrease was primarily attributed to lower net cash received from the pilot project.

General and Administrative Expenses

The following table shows general and administrative expenses by operating segment during the nine months ended November 30, 2013:

		Mexico		Corporate		Sub total		Cieneguita		Total
								Operations

Selling expenses	$	-	$	-	$	-	$	135,650	$	135,650
Camp costs		-		-		-		178,178		178,178
Strip mining		-		-		-		-		-
Depreciation		5,660		-		5,660		-		5,660
Consulting fees		-		59,488		59,488		-		59,488
Directors' fee		-		41,665		41,665		-		41,665
Investor relations		-		138,311		138,311		-		138,311
Public company costs		-		48,456		48,456		-		48,456
Management fees		-		100,300		100,300		-		100,300
Office and miscellaneous		110,350		234,672		345,022		235,632		580,654
Advertising and promotion		-		86,389		86,389		-		86,389
Accounting and legal fees		11,161		937,672		948,833		-		948,833
Rent & utilities		13,336		9,500		22,836		-		22,836
Auto expense		2,266		-		2,266		-		2,266
Travel and promotion		2,247		89,485		91,732		-		91,732
Stock-based compensation		-		143,860		143,860		-		143,860
Total general and administration expenses	$	145,020	$	1,889,798	$	2,034,818	$	549,460	$	2,584,278

Our general and administrative expenses for the nine months ended November 30, 2013 for all segments were $2,034,818 not including expenses incurred by MRT but proportionately allocated to us under the Joint Venture Agreement. These expenses, as set forth in the table above under “Cieneguita operations”, included selling expenses, camp costs, and office and miscellaneous expenses, all of which were directly attributable to the pilot project operations being conducted at our Cieneguita Project, and amounted to $549,460. These expenses are deducted by MRT prior to our receipt of the net cash flows from the pilot project. Thus, our net cash flow of $1,506,000 we received from the operations of the pilot project for the nine months ended November 30, 2013 is equal to our gross margin of $2,055,000, less the general and administrative expenses for the operations of the pilot project of $549,000, less certain royalty payments.

In the three and nine months ended November 30, 2013, our general and administrative expenses were $1,029,000 and $2,584,000 compared to $697,000 and $2,377,000 for the three and nine months ended November 30, 2012, an increase of 48% and 9%. The increase was primarily due to a general decrease in corporate costs partially offset by a higher legal fee relating to annual general meeting matters and higher administrative costs in Cieneguita operations. Management fees decreased to $14,000 and $100,000 in the three and nine months ended November 30, 2013 compared to $16,000 and $255,000 in the three and nine months ended November 30, 2012. Office and administration fees increased to $208,000 and $581,000 in the three and nine months ended November 30, 2013 compared to $152,000 and $445,000 in the three and nine months ended November 30, 2012. Stock-based compensation decreased to $49,000 and $144,000 in the three and nine months ended November 30, 2013 compared to $192,000 and $540,000 in the comparative periods. During fiscal 2014, we don’t expect to incur any further general and administrative expenses for other mining properties, as we focus our efforts on developing the Cieneguita Project.

Mineral and Exploration Costs

Mineral exploration expenses were approximately $62,000 and $567,000 in the three months and nine months ended November 30, 2013 compared to approximately $317,000 and $1,326,000 for the three and nine months ended November 30, 2012, a decrease of 80% and 57%, respectively. The decrease was due to absence of expenses relating to the Cerro Delta Project in the current period.

In the nine months ended November 30, 2013, we incurred $270,000 in mineral property costs as payments for our Mexican properties. At November 30, 2013, we tested the carrying amounts of all our Mexican properties for recoverability. Based on our tests, we concluded that the sum of undiscounted cash flows expected to result from the use and eventual disposition of all such properties was $nil as the properties have no known reserves. If we are able to raise additional funds to continue with our business plan, we anticipate that exploration expenditures will increase in fiscal 2014 as a result of anticipated exploration activities on our Mexican mineral properties.

Operating Loss

Our operating loss increased to $652,000 for three months ended November 30, 2013 compared to $559,000 for three months ended November 30, 2012. The operating loss decreased to $1,366,000 for the nine months ended November 30, 2013 compared to $1,473,000 for the nine months ended November 30, 2012. The increase in the three months is primarily due to increased legal costs. The decrease in the nine month is primarily attributable to lower mineral exploration expenses offset by lower net cash received from the pilot project and higher legal fees.

Interest Expense

Our interest expense was consistent at $nil and $8,000 for three and nine months ended November 30, 2013 compared to $2,000 and $9,000 for three and nine months ended November 30, 2012. The interest expense pertains to loans payable and other charges.

Other Income

Other income was consistent at $109,000 and $428,000 for three and nine months ended November 30, 2013 compared to $150,000 and $419,000 for three and nine months ended November 30, 2012, an increase of 27% and 2%.

Net Loss

Our net loss increased to $502,000 for the three months ended November 30, 2013 compared to $237,000 for the three months ended November 30, 2012 and decreased to $956,000 for the nine months ended November 30, 2013 compared to $1,070,000 for the nine months ended November 30, 2012. The increase in the three and decrease in the nine month loss is primarily attributable to lower mineral exploration expenses offset by lower net cash received from the pilot project and higher legal costs. The non-cash component of stock-based compensation costs was $49,000 and $144,000 in the three and nine months ended November 30, 2013 compared to $192,000 and $540,000 for three and nine months ended November 30, 2012.

We anticipate that we will continue to incur net losses until such time that we can develop reserves and achieve significant revenues from sale of minerals recovered from our Cieneguita Project in a commercial operation, if ever. There is no assurance that we will commence significant commercial operations at our Cieneguita Project or achieve significant commercial revenues.

LIQUIDITY AND CAPITAL RESOURCES

We are in the exploration stage, and have incurred significant operating losses since inception. The total deficit accumulated during since our inception in 2006 is $52,918,000.

Cash and Working Capital

As of November 30, 2013, we had total current assets of $1,354,000 and total current liabilities of $1,825,000. This includes $109,000 we have accrued for contingent liabilities in Argentina and a further $220,000 which is the debt remaining from the Company’s operations in 2007 and 2008.

During the first nine months of fiscal 2014, we were in the final phase of completing the PEA and continued to incur corporate administrative expenses to support our operations. Our accounts payable, accrued liabilities and current loans payable increased from $988,000 as at February 28, 2013 to $1,825,000 in the first nine months of fiscal 2014. A percentage of the payables are being carried forward from the Company’s operations prior to 2009. The Company intends to further reduce its outstanding accounts payable by continuing to pursue negotiated settlements.

For the fiscal year ending February 28, 2014, our current operating budget is based on receiving a minimum of $1,200,000 from the Cieneguita pilot project. We believe we will receive more than $1,200,000 from the operations of the pilot project, but we have prepared a conservative operating budget to allow for unexpected operating issues at the pilot project.

We may need to raise additional working capital through the sale of equity or debt to pay our outstanding accounts payable or to pursue a feasibility study for the Cieneguita Project. Other than our Joint Venture Agreement with MRT, we do not have any other sources to raise additional capital for us at this time and no assurance may be given that we will be able to find sources to raise additional capital. If we are unable to obtain additional financing when sought, we will be required to curtail or delay our business plan.

Cash Used in Operating Activities

Cash used in operating activities amounted to $349,000 for the nine months ended November 30, 2013 compared to $905,000 used for operating activities in the nine months ended November 30, 2012. The cash was used for general and administrative costs and for the exploration programs on the properties.

Investing Activities

Cash provided by investing activities amounted to $nil for the nine months ended November 30, 2013 compared to cash of $49,000 for the nine months ended November 30, 2012 provided from sale of equipment.

Financing Activities

Cash provided by financing activities amounted to $229,000 for the nine months ended November 30, 2013 compared to $1,021,000 for the nine months ended November 30, 2012. Cash provided by financing activities was used to fund our operating and development activities.

We anticipate continuing to rely on equity sales of our common stock or issuance of debt in order to continue to fund our future development of our Cieneguita Project. Issuances of additional shares will be dilutive to our existing stockholders.

Going Concern

Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/ or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

We have a history of operating losses and will need to raise additional capital to fund our planned operations. As at November 30, 2013, we had a working capital deficiency of $471,000 (February 28, 2013 – working capital of $44,000) and an accumulated deficit during the exploration stage of $52,918,000 (February 28, 2013 – $51,963,000). These conditions raise substantial doubt about our ability to continue as a going concern.

There is no assurance that our operations will be profitable. We have conducted private placements of convertible debt and common stock, which have generated funds to support our operations and development efforts. Our plans for future development of our Cieneguita Project depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements which have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of the end of the period covered by this report (this “Report”)., we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to the Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based on the management’s assessment and review of our financial statements and results for the quarter ended November 30, 2013 we have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Neither our Company nor our properties are the subject of any material pending legal proceedings.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

As disclosed under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, we are an exploration stage company focused on mineral exploration activities in Mexico through our wholly owned Mexican subsidiary, Sunburst. To help support our exploration activities, in February 2009 we entered into a joint venture agreement with MRT, a mining operator in Chihuahua, Mexico (the “Joint Venture Agreement”). Pursuant to the terms of the Joint Venture Agreement, MRT is our exclusive operator and we do not have any information to disclose pursuant to Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K, which require certain safety related disclosures by companies which operate mines regulated under the Federal Mine Safety and Health Act of 1977.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed in reference:

Exhibit
Number	Description

31.1	Certification of Chief Executive Officer of Pan American Goldfields Ltd. pursuant to Rule 13a-14(a) and 15d- 14(a)*

31.2	Certification of Chief Financial Officer of Pan American Goldfields Ltd. pursuant to Rule 13a-14(a)/15d-14(a)*

32.1	Certification of Chief Executive Officer of Pan American Goldfields Ltd. pursuant to 18 U.S.C. Section 1350*

32.2	Certification of Chief Financial Officer of Pan American Goldfields Ltd. pursuant to 18 U.S.C. Section 1350*

101.INS+	XBRL Instance Document
101.SCH+	XBRL Taxonomy Extension Schema
101.CAL+	XBRL Taxonomy Extension Calculation Linkbase
101.DEF+	XBRL Taxonomy Extension Definition Linkbase
101.LAB+	XBRL Taxonomy Extension Label Linkbase
101.FRE+	XBRL Taxonomy Extension Presentation Linkbase

*	filed herewith
+	XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: January 21, 2014

		Pan American Goldfields Ltd.

		/s/ Emilio Alvarez
		Name: Emilio Alvarez
		Title: Chief Executive Officer
		(Principal Executive Officer)

PAN AMERICAN GOLDFIELDS LTD 10-Q