PAN AMERICAN GOLDFIELDS LTD. DEBT ASSUMPTION AND RELEASE AGREEMENT

(a)

The Transferor hereby irrevocably sells and assigns to the Transferee, effective as of the Assignment Date, all of its liabilities, obligations and commitments with respect to the Outstanding Debt.  On and after the Assignment Date, the Transferee shall have the same rights, duties and obligations as the Transferor had, as a borrower, and the Transferor shall be irrevocably released from its obligations, liabilities and responsibilities with respect to the Outstanding Debt.  All payments of interest, fees and other amounts or past due monies owed by Transferor (including but not limited to legal expenses incurred by Transferor) in respect of the Outstanding Debt shall be paid to the Releasing Parties by Transferee.  

(b)

Transferor does not make any representation or warranty of any kind to the Releasing Parties  and, in particular, the financial condition or creditworthiness of the Transferee o Transferor.

2.

Assumption and Agreement to be Bound.  Transferee hereby accepts, effective as of the Assignment Date, the assignment of all of Transferor’s liabilities, obligations and commitments with respect to the Outstanding Debt, and assumes and agrees to perform fully all of the obligations of the Transferor with respect to the Outstanding Debt.

3.

(a)

The Transferee hereby represents and warrants to the Transferor that as of the Assignment Date:

(i)

The Transferee is duly authorized and qualified to purchase and accept the assignment of the Outstanding Debt and assume the duties and obligations with respect to the Outstanding Debt.

(ii)

This Agreement is valid and binding on the Transferee and enforceable against the Transferee in accordance with its terms.

(b)

The Releasing Parties each hereby represent and warrant to the Transferor that, as of the Assignment Date, the Outstanding Debt constitutes all of the liabilities owed to them by the Transferor immediately prior to the execution of this Agreement.

4.

5.

Conditions.  This Agreement is conditioned and contingent upon Transferor and Transferee entering into the Purchase Agreement.

6.

Release by Releasing Parties.  Execution of this Agreement will automatically, by operation of this Agreement and without any further action on the part of the parties hereto, effect a release and discharge by the Releasing Parties and their affiliates and past, present and future officers, directors, shareholders, employees, agents, successors and assigns from all manner of action, cause and causes of action, suits, debts, sums of money, accounts, covenants, controversies, agreements, promises, damages, judgments, executions, costs, expenses, rights, claims or demands whatsoever, at law or in equity, existing at the date thereof, at any time before the date thereof, or thereafter arising, both anticipated and unanticipated, known and unknown, contingent and non-contingent, liquidated and non-liquidated, that Releasing Parties have had, now has, then has or may have against the Transferor or its affiliates or past, present or future officers, directors, shareholders, employees, agents, successors or assigns by reason of any cause or thing, arising or to arise, out of the Outstanding Debt and any and all agreements, purchase orders, invoices or other arrangements, written or oral, with respect to the relationship between the Transferor and the Releasing Parties and concerning the Outstanding Debt.  For purposes herein, “Releasing Parties” shall be deemed to include any affiliate of the Releasing Parties.

7.

Waiver.  The Releasing Parties hereby irrevocably waive their rights under any applicable statute, rule, regulation, legal principle or legal doctrine that provides that a general release does not extend to claims which a releasing party does not know or suspect to exist in its favor at the time of executing such release, which if known by the releasing party would have materially affected its settlement with the released party.

8.