Paramount Gold and Silver Begins Drilling to Find a Second Sleeper Mine in Nevada

920 Claims Staked to Cover Newly Defined Geophysical Targets Adjacent to Original Sleeper Deposit

Marketwired

WINNEMUCCA, NEVADA--(Marketwire -07/09/12)- Paramount Gold and Silver Corp. (PZG)(PZG)(PZG.TO)(P6G.F)(WKN:A0HGKQ) ("Paramount") announced today that it has completed staking and filing 920 new lode mining claims adjacent to the west, and immediately south, of the Company's 100%-owned Sleeper Gold Project. The new Mimi claims, totaling 18,400 acres, cover exciting new geophysical targets developed by Paramount in consultation with Jim Wright, a well-known geophysicist with more than 35 years of successful work on Nevada gold projects. Drilling on the new claims has begun.

The Sleeper Gold Project is located off a main highway about 25 miles from the town of Winnemucca. Acquired by Paramount in 2010, the project area includes the original Sleeper high-grade open pit mine operated by Amax Gold from 1986 to 1996 as well as staked and purchased lands now totaling 2,570 claims and covering about 47,500 acres which stretch south down trend to Newmont's Sandman project. This acquisition is consistent with the Company's strategy of district-scale exploration near infrastructure in established mining camps.

Paramount acquired Sleeper to pursue two opportunities:

(1) Potential to define and exploit previously unrecognized resources in the vicinity of the original mine. Paramount expects to release results of an NI 43-101-compliant Preliminary Economic Assessment (PEA) for this opportunity in July, 2012.

(2) Potential to find other high grade deposits similar to Sleeper using the mine's extensive data base. Paramount's exploration emphasis has now shifted to this opportunity.

The Sleeper Gold Project sits on the margin of a large fault system known as a Range Front Fault. This major crustal break placed metamorphic Paleozoic basement rocks (which are exposed in the adjacent mountain range) in contact with Tertiary volcanic rocks that are buried in the basin along the margin of the mountain range. The Range Front Fault served as a conduit through the basement rocks into the Tertiary volcanic rocks for acidic gold-bearing solutions which produced extensive alteration as well as concentrations of gold in zones where structural preparation had occurred. It has been well demonstrated that the fault structures critical to mineral deposition can be traced using gravity and other geophysical tools.

The new Mimi claims were staked following an intensive review of data assembled from AMAX Mining and Placer Dome sources, Paramount's predecessor at Sleeper (X-Cal Resources) and ICN Resources from whom Paramount purchased the Dunes properties in 2011. Structural and lithological interpretations were made based on a detailed understanding of Sleeper geology, its structural setting and ore controls. Following the staking, Paramount completed a detailed gravity survey to locate favorable rocks, define their approximate depth and identify key structural information. Highly prospective geophysical targets were found along a 17 km. (10 mile) long corridor south of the Sleeper Mine towards the Sandman deposit (see map: http://media3.marketwire.com/docs/paramap0709.pdf). Preliminary surface sampling has found anomalous gold values corresponding to the gravity anomalies. Paramount believes this corridor represents a favorable structural setting with excellent potential for finding a new deposit.

Paramount's CEO Christopher Crupi commented that "the Sleeper stands out as one of the very few Nevada producers to mine out its original reserve without adding to it. We believe that a major opportunity was missed to use the wealth of data from Sleeper and established technologies to find similar deposits in the area. We are very excited to begin drilling the targets on the Mimi claims. We have also started to follow up last year's success around the Sleeper pit where we plan to drill the Bedrock Casino, recently-discovered PAD zone, South Sleeper and other new targets. Our initial program is for 7,000 meters (23,000 feet) using two rigs." The Sleeper is re-emerging as one of Nevada's largest new undeveloped gold projects, 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 below and Paramount news release of September 13, 2011). An updated resource will be released in July, 2012 as part of the scheduled PEA.

Sleeper Resource Table

 

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MEASURED AND INDICATED
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Material Cut-off Au g/T Tonnes Au g/T Ag g/T Au Oz Ag Oz
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Oxide 0.20 42,789,940 0.37 4.20 511,872 5,781,121
Sulfide 0.25 129,973,513 0.51 4.68 2,113,527 19,556,454
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Total 172,763,453 0.47 4.56 2,625,399 25,337,575
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INFERRED
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Material Cut-off Au g/T Tonnes Au g/T Ag g/T Au Oz Ag Oz
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Alluvial 0.20 151,675 2.03 - 9,890 -
Oxide 0.20 13,191,635 0.32 3.42 136,145 1,450,516
Sulfide 0.25 68,410,857 0.44 3.07 974,376 6,752,446
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Total 81,754,167 0.43 3.12 1,120,410 8,202,962
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Exploration activities at Sleeper are being conducted by Paramount 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, both of whom have reviewed and approved this press release. An ongoing quality control/quality assurance protocol is being employed during the program including blank, duplicate and reference standards in every batch of assays. Samples are being assayed at ALS Chemex, Reno, Nevada while multi-element analysis is being performed in Vancouver, Canada. External check samples are also being conducted at Inspectorate Lab in Reno, Nevada.

Paramount also owns 100% of the San Miguel Project which consists of 188,000 hectares (465,000 acres) in the Palmarejo District of northwest Mexico, making Paramount the largest claim holder in this rapidly growing precious metals mining camp. Drilling continues at San Miguel with the aim of upgrading and expanding its multi-million ounce gold and silver resource in the coming months to be followed by completion of a PEA in 2012.

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 geophysical targets, drilling results and potential mineralization, future exploration work at the Sleeper Gold 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.

Contact:

Paramount Gold and Silver Corp.
Glen Van Treek, VP Exploration
866-481-2233
Paramount Gold and Silver Corp.
Chris Theodossiou, Investor Relations
866-481-2233

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