Patagonia Gold plc provided a progress update for its Lomada de Leiva and Cap-Oeste projects in Santa Cruz Province, Argentina. Highlights includes: Construction of the first stage of the fully permitted Lomada heap leach project is well advanced and is on target for commencement of leaching in second quarter of 2013. To accelerate gold production, the company has elected to expand the existing trial pad to 315,000 tones capacity, preparation for which is also well advanced.

Mining and loading of ore onto the pad has already commenced with irrigation set to start next month. The trial has so far recovered approximately 4,045 ounces of gold, representing over 66% of contained gold and continues to leach. Processing and smelting is on-going.

An expanded geophysical IP study has been completed over the Cap-Oeste/COSE structure and surrounds. Preliminary results have revealed two new large IP anomalies parallel to and similar in intensity to Cap-Oeste/COSE. Drilling will re-commence next month on the Cap-Oeste/COSE structure to further explore the highly prospective zone identified in drilling last season.

On receipt of the full geophysical report, an exploratory drilling campaign will be carried out. The Lomada de Leiva project is located approximately 40 kilometers south-east of the town of Perito Moreno in the Province of Santa Cruz, and is within the Company's La Paloma property block, covering over 44 square kilometers. Construction of the first stage of the fully permitted Lomada main heap leach project is well advanced and is on target for commencement of operations in second quarter of 2013.

The total pad area has been stripped of topsoil, which is being stacked for later rehabilitation purposes. Earthworks for infrastructure, holding and containment dams are under way. The El Tranquilo property block, covering approximately 80,000 hectares, contains Patagonia Gold's project, the Cap-Oeste deposit, together with the COSE bonanza gold and silver deposit and numerous other prospects including Monte Leon.

Quantec Geoscience of Santiago, Chile, has recently completed an expanded IP study over the CapOeste/COSE structure and NW El Tranquilo block. Approximately 50% of the work area has been covered with closer spaced lines completed specifically over the Cap-Oeste/COSE area and surrounds. Preliminary results have revealed two completely new large IP anomalies striking in the same direction as the Cap- Oeste/COSE anomaly and offset by approximately 700 meters.

The anomalies are significant in that their intensity and size are very similar to the existing anomalies over Cap-Oeste/COSE and also Don Pancho, both areas with significant areas of known mineralization. The construction of the underground access decline for the COSE project is now planned for the second half of 2013 so that all available effort and funds can be focused towards bringing the Lomada heap leach project into full production.