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New Drilling at Paramount Gold and Silver's Sleeper Project Likely to Improve PEA Economics

WINNEMUCCA, NEVADA--(Marketwire - Sep 25, 2012) - Paramount Gold and Silver Corp. (NYSE MKT:PZG)(NYSE Amex:PZG)(PZG.TO)(P6G.F)(WKN:A0HGKQ) ("Paramount") announced today that new core drilling on its 100%-owned Sleeper Gold Project in Nevada is expanding the size of the PAD zone discovered last year. This drilling is part of a new program to enhance the already robust economics of the project''s recently completed Preliminary Economic Assessment (PEA) released on September 13, 2012. The PEA predicts a 17 year operation with estimated average annual gold production of 172,000 ounces, a pre-tax NPV of US$695 million at a 5% discount rate and an IRR of 26.8%, all at a $1384 gold price (see news release).

Shallow drilling in the northeast portion of the Sleeper mine site under the original heap leach pad returned near-surface intercepts of 26.06 meters grading 0.59 Au g/T and 41.15 meters grading 0.61Au g/T, well above the PEA cut-off grade. This material is within easy reach of the PEA''s pit design at a low strip ratio. The PAD zone is now thought to connect to the Facility zone to the south. The PEA recommends that a portion of the old heap leach pad be moved to extract mineralized material from the Facility zone, opening up the PAD zone for exploitation without substantial additional capital costs.

Additional drilling of the south extension of the Sleeper mine site also returned mineralized intercepts with high silver values of up to 73 g/T.

Paramount''s CEO Christopher Crupi commented: "With the successful completion of the Sleeper PEA, we are now working to optimize the project''s economics by adding close-in resources at a higher average grade. One core rig is focused on targets in the vicinity of the original Sleeper mine site to find satellite deposits. We also have a reverse circulation rig drilling the recently acquired MIMI claims, located south of Sleeper towards Newmont''s Sandman project, where our geologists have defined several priority targets with the potential to discover a high grade deposit similar to the original Sleeper mine." (see map below).

Results from the five new holes are as follow:

Hole ID Zone   From
PGC-12-016 PAD Zone   18.14 44.20 26.06 0.592 0.4
  51.82 92.96 41.15 0.607 0.4
Incl. 76.20 92.96 16.76 1.029 0.4
  307.85 320.50 12.65 0.597 3.7
PGC-12-017 PAD Zone   30.48 35.05 4.57 0.289 2.3
  77.72 80.77 3.05 0.368 0.5
  88.39 92.96 4.57 0.276 0.3
PGC-12-018 South Sleeper   0.00 7.62 7.62 0.258 3.0
  143.26 175.26 32.00 0.137 2.2
  185.93 192.02 6.10 0.112 8.0
  213.36 217.93 4.57 0.381 9.6
  245.36 254.51 9.14 0.188 2.5
  265.18 291.08 25.91 0.245 1.3
  313.94 371.86 57.91 0.187 4.5
Incl. 316.99 329.18 12.19 0.253 2.1
Incl. 362.71 368.81 6.10 0.318 9.4
  391.67 406.91 15.24 0.162 3.9
PGC-12-019 Desert Valley no significant intercepts
PGC-12-20 South Sleeper   141.73 163.07 21.34 0.188 2.0
  175.26 178.31 3.05 0.223 73.6
  318.52 342.9 24.38 0.267 14.9
  406.91 411.48 4.57 0.483 4.7

These holes were drilled to intercept the mineralized zones at right angles and Paramount believes that reported intercepts approximate true widths.

To view the Exploration target map, please visit the following link: http://media3.marketwire.com/docs/Explorationmap0924.pdf

NI 43-101 Disclosure

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.

About Paramount 

Paramount 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 and engineering programs are now in progress at these two core projects which are expected to generate substantial additional value for our shareholders.

The Sleeper Gold Project is located off a main highway about 25 miles from the town of Winnemucca. In 2010, Paramount acquired a 100% interest in the project including 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.

The San Miguel Project consists of 142,000 hectares (353,000 acres) in the Palmarejo District of northwest Mexico, making Paramount the largest claim holder in this rapidly growing precious metals mining camp. The San Miguel Project is ideally situated near established, low cost production where the infrastructure already exists for early, cost-effective exploitation. A PEA for San Miguel is now in progress.


PROJECT Tonnes Au g/T Au Ounces Ag g/T Ag Ounces
San Miguel 23,918,000 0.83 639,000 70.0 53,559,000
Sleeper 326,963,000 0.33 3,479,000 3.86 40,606,000
Total     4,118,000   94,165,000
PROJECT Tonnes Au g/T Au Ounces Ag g/T Ag Ounces
San Miguel 37,470,000 0.69 830,000 38.00 46,243,000
Sleeper 223,624,000 0.27 1,972,000 2.84 20,450,000
Total     2,802,000   60,693,000

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

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 Sleeper Gold Project and the MIMI claims and the expected results of this work; and the accuracy and reliability of projections contained in mineral resource estimates and Preliminary Economic Assessments. 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, 2012 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.