WINNEMUCCA, NEVADA--(Marketwire - Jan 7, 2013) - 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 continues to expand both the PAD Zone discovered in 2011 and the prospective South Sleeper area. This drilling is part of an ongoing 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 gold price of $1,384/oz.
The PAD and South Sleeper drill results are outside the current resource as defined in the PEA and are expected to expand the Sleeper Gold Project''s in-pit resource. Shallow drilling in the northeast portion of the Sleeper mine site under the original heap leach pad (the PAD zone) returned multiple near-surface intercepts well above the PEA cut-off grade including 48.8 meters grading 0.453 g/T gold, 9.1 meters of 0.82 g/T gold and 7.8 g/T silver and 6.7 meters of 0.83 g/T gold. This material is located within the PEA`s pit design which should expand the mineral inventory and reduce the waste in the pit. The PAD Zone has now been connected to the Facility Area, creating a large, shallow deposit up dip from the historical Sleeper Mine with a strike length of more than one kilometer and widths ranging from 100 to 550 meters. This oxide deposit is exposed at surface and, to date has been traced to a depth of at least 300 meters.
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 associated PAD Zone for exploitation without substantial additional capital costs. In turn, exploitation of the Facility/PAD mineralization provides the economic grade needed to fund re-entering the vein in the historical Sleeper Pit which is immediately adjacent to the west(see map of Sleeper Expansion Targets).
South Sleeper is hosted in intensely-altered acid and intermediate volcanic rocks with mineralization in stockwork veins, breccias and disseminated in the surrounding rock. These new drill results extend the zone 500 meters beyond the PEA pit limits, and from the alluvial contact down dip more than 200 meters. The zone varies in width from 50 to 140 meters and is typified by long intersections of gold and silver.
Additional drilling in 2013 will define the limits of both of these promising areas and incorporate the data into a new resource estimate. Details of the intercepts from these new drill holes are as follows:
|Hole #||Area||From (m)||To (m)||Width (m)||Au g/T||Ag g/T|
|PGC-12-21 Southwest Sleeper||Anomalous gold at the bottom|
|PGC-12-022 Pad Zone||20.42||22.86||2.44||0.184||0.5|
|PGC-12-23 Southwest Sleeper||No significant Au or Ag intercepts.|
|PGC-12-024, South Sleeper||143.26||169.16||25.91||0.309||2.8|
|PGC-12- 025 South sleeper||99.06||103.63||4.57||0.228||0.3|
|PGC-12-026 South sleeper||384.05||411.48||27.43||0.174||1.4|
These holes were drilled to intercept the mineralized zones at right angles and Paramount believes that reported intercepts approximate true widths.
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. The Sleeper project is a surprisingly robust project given its low grade, primarily because of its high volumes and low capital costs. As we grow the resource and improve its grade, the economics will only improve."
NI 43-101 Disclosure
Exploration activities at Sleeper are being conducted by Paramount Gold 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.
The Preliminary Economic Assessment led by Scott E. Wilson Consulting Inc. and originally released on July 30, 2012, specifies a development scenario for Sleeper consisting of a large-scale open pit mining operation with a heap leach processing plant handling both oxide and sulphide material, producing a gold-silver dore. The base case scenario incorporates an 81,000 tonnes per day operation (approximately 30 million tonnes per year throughput), resulting in a projected 17 year operation with average annual production of 172,000 ounces of gold and 263,000 ounces of silver. Projected life-of-mine average cash operating costs are US$767 per ounce of equivalent gold recovered. Start-up capital costs for this project scenario are estimated at US$346 million. Sustaining capital costs over the project''s life are estimated at an additional $278 million. Total capital cost contingencies over the project life are estimated at an additional $64 million, bringing the total life of mine capital costs to $688 million. The total cost of equivalent gold production (including cash operating costs and total capital and contingency costs over the life of the mine) is estimated at US$996 per ounce.
At a gold price of US$1,384 per ounce and a silver price of $26.33 per ounce (the 3 year trailing average of gold and silver prices as at July 3, 2012), the base case has a US$1.2 billion pre-tax net cash flow, a US$695 million net present value at a 5% discount rate and an internal rate of return (IRR) of 26.8%. At US$1,618 gold (the spot price on July 3, 2012), the total pre-tax net cash flow increases by 160% over the base case to US$1.9 billion, the net present value at a 5% discount rate almost doubles to US$1.2 billion and the internal rate of return improves to a robust 40%.
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.
SUMMARY OF ALL PZG RESOURCES
|MEASURED AND INDICATED RESOURCES|
|PROJECT||Tonnes||Au g/T||Au Ounces||Ag g/T||Ag Ounces|
|PROJECT||Tonnes||Au g/T||Au Ounces||Ag g/T||Ag Ounces|
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.