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News Release

Paramount Gold And Silver Releases New Resource Estimates On A Portion Of Its San Miguel Project

Winnemucca, Nevada -December 28, 2011 -Paramount Gold and Silver Corp. (NYSE/TSX:PZG) (Frankfurt: WKN: A0HGKQ) ("Paramount") announced today it has completed NI 43-101-compliant resource re-modeling for San Antonio and La Union, two of the seven deposits on its 100%-owned San Miguel Project in northern Mexico.

All seven of San Miguel`s deposits have now been re-estimated using rigorous three dimensional geological models as required for mine planning in the project`s upcoming Preliminary Economic Assessment (PEA). These new estimates, prepared by Mine Development Associates (MDA) of Reno, Nevada, represent a significant improvement in reliability from previous reporting, with higher indicated resources and lower inferred resources as expected.

The new model for the La Union deposit estimates 807,000 ounces of silver and 8,800 ounces of gold in the Indicated category at a 25 gram per tonne silver-equivalent cut-off. In the Inferred category, La Union is estimated to contain 9.03 million ounces of silver and 147,000 ounces of gold at the same cut-off. These estimates do not include 2011 drill results which will be incorporated into a new resource estimate scheduled for the second quarter of 2012. La Union includes the San Jose, San Luis and La Union zones, which were previously reported separately but are now recognized as a single deposit.

The near surface San Antonio silver deposit is estimated to contain 7.02 million ounces of silver and 3,000 ounces of gold in the Indicated category using a 25 gram per tonne silver-equivalent cut-off. Estimated inferred resources for San Antonio are 12.42 million ounces of silver and 7,700 ounces of gold at the same cut-off. Recent drill results have not been included in these estimates and drilling is ongoing.

Earlier this year, Paramount announced re-modeled resource estimates by MDA for the other five known deposits at San Miguel including the San Miguel Vein, San Francisco, Monte de Cristo-Sangre de Cristo, La Veronica and Don Ese deposits (see news release of April 11, 2011). This estimate included all 2010 drilling results. Resources for all of San Miguel`s deposits will be re-estimated in the second quarter of 2012 to incorporate 2011 and early 2012 drilling. The resulting updated estimate will be used in the PEA.

Details of the new resource estimates (shown as of December, 2011) and the most recent estimates for the other deposits are:

Deposits Cut-off Tonnes Au g/t Au Ounces Ag g/t Ag Ounces Update
San Miguel Vein 25 g/t AgEq 3,916,000 0.68 86,000 56 7,005,000 MDA, April 2011
La Veroncia 25 g/t AgEq 476,000 0.08 1,000 61 930,000 MDA, April 2011
Monte Cristo-Sangre De Cristo MDA, April 2011
Don Ese MDA, April 2011
San Francisco MDA, April 2011
Total MDA April 2011 4,392,000 0.61 87,000 57 7,935,000 MDA, April 2011
La Union 25g/t AgEq 564,000 0.48 8,800 45 807,000 MDA, Dec 2011
San Antonio 25g/t AgEq 3,049,000 0.03 3,000 72 7,017,000 MDA, Dec 2011
Total MDA December 2011 3,613,000 0.10 11,800 68 7,824,000 MDA, Dec 2011
Total San Miguel 8,005,000 0.38 98,800 62 15,759,000
Area cut-off Tonnes Au g/t Au Ounces Ag g/t Ag Ounces Update
San Miguel Vein 25 g/t AgEq 10,300,000 0.57 188,000 30 9,809,000 MDA, April 2011
La Veroncia 25 g/t AgEq 3,104,000 0.09 9,000 47 4,658,000 MDA, April 2011
Monte Cristo-Sangre de Cristo 25 g/t AgEq 3,520,000 0.13 14,000 40 4,503,000 MDA, April 2011
Don Ese 90 g/t AgEq 1,844,000 2.87 170,000 145 8,587,000 MDA, April 2011
San Francisco 25 g/t AgEq 15,312,000 0.69 342,000 16 7,842,000 MDA, April 2011
Total MDA April 2011 34,080,000 0.66 723,000 32 35,399,000 MDA, April 2011
La Union 25 g/t AgEq 6,270,000 0.73 147,000 45 9,030,000 MDA, Dec 2011
San Antonio 25 g/t AgEq 5,540,000 0.04 7,700 70 12,419,000 MDA, Dec 2011
Total MDA December 2011 11,810,000 0.41 154,700 57 21,449,000 MDA, Dec 2011
Total San Miguel 45,890,000 0.60 877,700 38 56,848,000

1 All resources except Don Ese reported using a 25 g/t AgEq, which captures mineralization potentially available to open-pit extraction.
2 Don Ese resources reported using a cutoff of 90 g/t AgEq, which captures mineralization potentially mineable by underground methods.
3 Ag equivalent grade = Ag grade + Au grade * 60.
4 Rounding may cause apparent discrepancies.

MDA utilized specific geologic criteria in combination with drill sample population distributions and geologic sectional, interpretations provided by Paramount with support from MDA to define three-dimensional mineral domains for both gold and silver individually, which were then used to code the drill holes assays.  The coded assays were examined statistically to identify potential high-grade outliers, some or all of which were capped after evaluating their spatial relationships with surrounding drill samples.  The capped assays were composited to two-meter down-hole lengths and used to interpolate grades into 5 x 5 x 5 meter blocks that were coded to the mineral domains.  Results from variography studies were used in combination with drill-hole spacing and known geologic controls to determine search distances and search ellipses.  Gold and silver grades were estimated using inverse distance to the third power. Paramount`s view is that MDA has consistently employed conservative assumptions and methodologies in its estimates which should prove valuable at the PEA and a Preliminary Feasibility Study stages of the San Miguel Project.

Exploration is now completely concentrated on increasing resources. An intensive drilling program will continue into 2012 with three core rigs focused on the San Miguel Vein and San Francisco deposits as well as promising but untested strike extensions of the San Antonio, La Union and Don Ese deposits.  After the completion of the next resource update efforts will shift to upgrading new inferred resources to measured and indicated throughout the San Miguel Project. Paramount is also undertaking metallurgical testing and reviewing potential process and mining options for the PEA.

Exploration activities at San Miguel are being conducted by Paramount Gold de Mexico S.A de C.V personnel under the supervision of Glen van Treek, Exploration Vice President of the Company and Bill Threlkeld, a Qualified Person as defined by National Instrument 43-101, who have both reviewed and approved this news release. Michael Gustin of MDA, a Qualified Person responsible for resource estimation, has also reviewed and approved the portions of this news release that relate to the San Miguel resources. An ongoing quality control/quality assurance protocol is being employed for the program including blank, duplicate and reference standards in every batch of assays. Cross-check analyses are being conducted at a second external laboratory on 10% of the samples. Samples are being assayed at ALS Chemex, Vancouver, B.C., using fire assay atomic absorption methods for gold and aqua regia digestion ICP methods for other elements.

About Paramount Gold
Paramount Gold is a U.S. based exploration and development company with multi-million ounce advanced stage precious metals projects in Nevada (Sleeper) and northern Mexico (San Miguel).  Fully funded exploration programs are now in progress at these two core projects expected to generate substantial additional value for our shareholders. Engineering studies are also scheduled for completion in 2012 to define a development path and economic valuation for each project.
The San Miguel Project consists of 150,000 hectares in the Palmarejo District of northwest Mexico, making Paramount the largest claim holder in this rapidly growing precious metals mining camp.  The current work program at San Miguel is consistent with Paramount's strategy of expanding and upgrading known, large-scale precious metal occurrences in established mining camps, defining their economic potential and then partnering them with nearby producers. The San Miguel Project is ideally situated near established, low cost production where the infrastructure already exists for early, cost-effective exploitation.
Paramount also owns 100% of the Sleeper Gold Project which is emerging as one of Nevada’s largest new undeveloped gold resources, containing an in situ measured and indicated resource of 2.6 million ounces of gold and 25.3 million ounces of silver and an additional inferred resource of 1.1 million ounces of gold and 8.2 million ounces of silver (see table at

Cautionary Note to U.S. Investors Concerning Estimates of Indicated and Inferred Resources

This news release uses the terms "measured and indicated resources" and "inferred resources". We advise U.S. investors that while these terms are defined in, and permitted by, Canadian regulations, these terms are not defined terms under SEC Industry Guide 7 and not normally permitted to be used in reports and registration statements filed with the SEC.  "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility studies, except in rare cases.  The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant "reserves", as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in this category will ever be converted into reserves. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally minable

Safe Harbor for Forward-Looking Statements:

This release and related documents may include "forward-looking statements" including, but not limited to, statements related to the interpretation of drilling results and potential mineralization, future exploration work at the San Miguel Project and the expected results of this work. Forward-looking statements are statements that are not historical fact and are subject to a variety of risks and uncertainties which could cause actual events to differ materially from those reflected in the forward-looking statements including fluctuations in the price of gold, inability to complete drill programs on time and on budget, and future financing ability. Paramount’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Words such as "believes," "plans," "anticipates," "expects," "estimates" and similar expressions should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to: uncertainties involving interpretation of drilling results, environmental matters, lack of ability to obtain required permitting, equipment breakdown or disruptions, and the other factors described in Paramount’s Annual Report on Form 10-K for the year ended June 30, 2011 and its most recent quarterly reports filed with the SEC.

Except as required by applicable law, Paramount disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document.

Paramount Gold and Silver Corp.
Glen Van Treek, VP Exploration

Chris Theodossiou, Investor Relations