Pan American Fertilizer (CNSX: PAF) Completion of Shares for Debt Settlement

Source: http://bit.ly/TFLkTV

VANCOUVER, BRITISH COLUMBIA, December 4, 2012 - Pan American Fertilizer Corp., (CNSX: PAF) (“Pan American” or the “Company”) announces that it has entered into a debt settlement agreement on November 30, 2012 (the “Debt Settlement Agreement”) with Randy Wright (“Wright”), the CEO and President of the Company, pursuant to which the Company settled $500,000 of debt owed to Wright by the issuance of 2,000,000 common shares of the Company at a deemed price of $0.25 per share. In addition, the Company has entered into a loan agreement (the “Loan Agreement”) with Wright to extend the term of a loan provided by Wright in the amount of $341,219 for 24 months, payable on December 1, 2014. The Company determined to satisfy its outstanding indebtedness with shares and extension of terms in order to preserve its cash for operations.

The foregoing transactions are “related party transactions”, as such term is defined under Multi-Lateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Pursuant to section 5.5(b) of MI 61-101, the Company is not required to obtain a formal valuation in connection with the transactions as the Company’s common shares are listed for trading on the Canadian National Stock Exchange and none of the Company’s securities are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada. Pursuant to section 5.7(a) of MI 61-101, the Company is not required to obtain minority shareholder approval of the transactions as the fair market value of the transactions does not exceed 25% of the Company’s “market capitalization”, as such term is defined under MI 61-101, based on the following:

The aggregate fair market value of the Loan Agreement and the Debt Settlement Agreement is $841,219; and

The current “market capitalization” of the Company, as at October 31, 2012, was $9,441,772, as determined in accordance with section 1.3 of the Ontario Securities Commission Rule 62-504.

The common shares issued to Wright are subject to a hold period in British Columbia expiring on March 31, 2014.

Wright, a director of the Company, declared his interest in the Loan Agreement and the Debt Settlement Agreement to the board of directors of the Company and abstained from voting with respect to the approval of the Loan Agreement and the Debt Settlement Agreement. Upon completion of the transactions, Wright will own 8,262,705 common shares of the Company representing 18.71% of the total number of issued and outstanding common shares of the Company as at the date of this news release.