SETTLEMENT AGREEMENT

SETTLEMENT AGREEMENT

THIS AGREEMENT is entered into as of the 20th day of January, 2006.

BETWEEN:

PAN AMERICAN GOLD CORPORATION, a company incorporated pursuant to the laws of the Province
 of Ontario, of 000-000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx

(the “Company”)

AND:

XXXXXXX XXXXXXX, of 0000 Xxxxxxxxxxx Xxxxxx, Xxxx, Xxxxxx 00000

(“Xxxxxxx”)

WHEREAS:

X. Xxxxxxx has agreed to resign as a director and officer of the Company in consideration of the following:

(a)	payment to Xxxxxxx by the Company of $60,000 in settlement of all outstanding amounts payable by the Company to Xxxxxxx (or his companies) pursuant to a management agreement with the Company (the “Management Agreement”);
(b)	release of any and all claims that Xxxxxxx may have now or in the future against the Company;
(c)	cancellation of all outstanding stock options to acquire shares of common stock of the Company, including the stock options granted on May 7, 2004; and
(d)	agreeing to deposit 166,666 common shares (the “Shares”) of the Company in escrow to be released as follows:
	(i)	55,555 shares 61 days after the date of execution of this Agreement;
	(ii)	55,555 shares 91 days after the date of execution of this Agreement; and
	(iii)	55,556 shares 121 days after the date of execution of this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the payment of the sums set forth above and other good and valuable consideration, the receipt and sufficiency

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of which is hereby acknowledged, and in further consideration of the other mutual covenants and promises herein contained, the parties hereto, agree as follows:

1. Upon execution of this Agreement, Xxxxxxx will:

(a)	deliver to the Company a written resignation (the “Resignation”) whereby he resigns as a director and officer of the Company effective immediately;
(b)	deliver an executed copy of an Escrow Agreement (the “Escrow Agreement”), to be entered into among Xxxxxxx, the Company and Xxxxx Xxxxxx LLP, as escrow agent (the “Escrow Agent”);
(c)	deliver to the Escrow Agent three share certificates representing the Shares with two certificates representing 55,555 of the Shares and one certificate representing 55,556 of the Shares.

2. Xxxxxxx acknowledges and agrees that, upon completion of all the deliveries by the Company as contemplated by this Agreement, all stock options granted to Xxxxxxx will immediately terminate and be of no force and effect.

3. As full and final payment of all amounts due under the Management Agreement, the Company will pay to Xxxxxxx the amount of $60,000, and Xxxxxxx will accept such amount as full and final payment of all amounts due under the Management Agreement. Xxxxxxx hereby agrees that upon payment of the $60,000 by the Company in accordance with the provisions of this Agreement, any amounts outstanding under the Management Agreement or otherwise will be fully satisfied and extinguished, and Xxxxxxx will remise, release and forever discharge the Company and its respective directors, officers, employees, successors, solicitors, agents and assigns from any and all obligations under the Management Agreement or otherwise.

4. Upon receipt of the Resignation, the Company will:

(a)	pay Xxxxxxx the sum of $60,000 to be delivered as agreed to by Xxxxxxx and the Company in settlement of all outstanding amounts payable by the Company to Xxxxxxx pursuant to the Management Agreement; and
(b)	deliver an executed copy of the Escrow Agreement.

5. Upon release of each of the certificates representing the Shares from escrow pursuant to the Escrow Agreement, the Company hereby agrees and covenants to use its best efforts to assist Xxxxxxx in removing the restrictive legend on the certificates representing the Shares such that Xxxxxxx can sell the Shares under Rule 144 of the Securities Act of 1933, provided that Xxxxxxx provides all necessary documentation, correctly completed and executed, required for a sale under Rule 144.

6. Xxxxxxx, on behalf of himself and also on behalf of his respective heirs, executors, administrators, assigns and all persons or legal entities entitled to make any claims on his behalf or in his name (all of whom are hereinafter collectively referred to as "the Releasors"), for and in consideration of the sums referred to above and other good and valuable consideration

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(the receipt and sufficiency of which is hereby acknowledged) do hereby remise, release, forever discharge, hold harmless and indemnify the Company, and all of its respective past or present heirs, executors, administrators, employees, officers, directors, servants, solicitors, agents, successors and assigns (all of whom are hereinafter collectively referred to as "the Releasees"), of and from any and all manner of actions, cause and causes of action, suits, debts, sums of money, dues, expenses, general damages, special damages, costs, claims and demands of any and every kind and nature at law or in equity, or under any statute, which the Releasors ever had, now have or which they hereafter may have, for or by reason of any matter, cause or thing whatsoever, against the Releasees.

7. The Releasees for and in consideration of the good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged) do hereby remise, release, forever discharge, hold harmless and indemnify the Releasors of and from any and all manner of actions, cause and causes of action, suits, debts, sums of money, dues, expenses, general damages, special damages, costs, claims and demands of any and every kind and nature at law or in equity, or under any statute, which the Releasees ever had, now have or which they hereafter may have, for or by reason of any matter, cause or thing whatsoever, against the Releasors.

8. The Releasors each acknowledge and agree that they shall not commence any claim or proceeding which may result in a claim or proceeding being brought against the Releasees. If any of the Releasors take any steps by way of any claim or proceeding that results in a subsequent claim or proceedings against the Releasees then the Releasors shall indemnify and save harmless the Releasees and each of them from any and all resulting liabilities, obligations, legal fees, costs and disbursements.

9. The Releasees each acknowledge and agree that they shall not commence any claim or proceeding which may result in a claim or proceeding being brought against the Releasors. If any of the Releasees take any steps by way of any claim or proceeding that results in a subsequent claim or proceedings against the Releasors then the Releasees shall indemnify and save harmless the Releasors and each of them from any and all resulting liabilities, obligations, legal fees, costs and disbursements.

10. The parties hereby acknowledge that in making this Agreement they have obtained independent legal counsel, they have exercised their own independent judgment The Parties further declare that they have carefully read this Agreement, the terms of which are contractual and not a mere recital, that the entire contents hereof are fully understood by them and that the same is being executed as their own free act and without any pressure or duress of any description.

11. Any notice required or permitted to be made or given hereunder shall be mailed or delivered personally to the addresses set forth below, or as changed from time to time by written notice to the other:

The Company:	Pan American Gold Corporation
	000-000 Xxxx Xxxxxx
	Xxxxxxxxx, XX
	Attention: Xxxx Xxxxxxx

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With a copy to:	Xxxxx Xxxxxx LLP
	Barristers and Solicitors
	Suite 800 – 000 Xxxx Xxxxxxx Xxxxxx
	Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
	Attention: Xxxxxx Xxxx
The Optionee:	Xxxxxxx Xxxxxxx
	0000 Xxxxxxxxxxx Xxxxxx
	Xxxx, Xxxxxx 00000

12. This Agreement may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument.

13. Unless otherwise provided, all dollar amounts referred to in this Agreement are in lawful money of the United States of America.

14. Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date first above written.

15. This Agreement will be governed by and construed in accordance with the law of the province of British Columbia.

IN WITNESS WHEREOF the parties have duly executed and delivered this Agreement as of the date first above written.

PAN AMERICAN GOLD CORPORATION

Per:	/s/ Xxxx Xxxxxxx
	Authorized Signatory
SIGNED, SEALED and DELIVERED by		)
XXXXXXX XXXXXXX in the presence of:		)
		)
/s/ Xxxxx Xxxx		)
Signature		)
Xxxxx Xxxx		)
Print Name		)	/s/ Xxxxxxx Xxxxxxx
00000 X. XxXxxxxx Xx. #000		)	XXXXXXX XXXXXXX
Address		)
Xxxx, XX 00000		)
Notary Public		)
Occupation		)

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