Paramount Gold Announces New Resource Estimation for New Drilling at San Miguel Project
WINNEMUCCA, NEVADA -- (Marketwire) -- 04/11/11 -- Paramount Gold (NYSE Amex: PZG)(TSX: PZG)(FRANKFURT: P6G)(WKN: A0HGKQ) ('Paramount') announces new NI 43-101 compliant resource estimates for its 100% owned San Miguel project in Mexico. The new estimates, prepared by Mine Development Associates (MDA) of Reno, Nevada, cover the five areas where new drilling took place in 2010, including the two most recent discoveries of San Francisco and Don Ese.
The MDA estimates represent a significant increase in both gold and silver resources for the project. The estimates also include a meaningful indicated resource for the first time. Updating geological models are also in progress for the remaining four areas at San Miguel, where additional metallurgical work and a small amount of additional drilling are needed to enable these resources to be stated to the same standard as the new estimates.
MDA used geology, mineralogy and statistical analyses to create three-dimensional gold and silver domains and construct, estimate and classify block grade models for each of the deposits. These domains were interpreted and projected vertically and along strike based on mineralogical and geological continuity, using different parameters specific to each domain and each zone. Interpolation was used to assign grades to all blocks within these domains.
This new methodology provides a significant increase in confidence compared to Paramount`s previous NI 43-101 estimates completed in 2009, which employed a two dimensional polygonal model for their estimates. The new methodology will enable Paramount's exploration team to better define drilling to expand the recent discoveries, upgrade inferred resources and categorize mineral types for further metallurgical testing required for a Preliminary Economic Assessment (PEA).
The new estimates restrict the high grade zones within the mineralizing structures, but incorporate the lower grade zones surrounding them. This method better reflects the distribution of precious metals and captures more mineralization than previous methods. Preliminary metallurgical testing has shown positive results for direct cyanide extraction which should facilitate recovery from the lower grade zones.
Commenting on the results, Paramount President and CEO Chris Crupi noted that 'the main benefit of these early resource estimates is to direct further drilling to expand these deposits and prepare them for the PEA we expect to complete on San Miguel in 2012. These targets will now be drilled aggressively to build on these positive results and the knowledge we have gained from these resource models.'
The MDA resource estimates are as follows:
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Indicated
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Tonnes Au Grade g/t Ag Grade g/t Au Ounces Ag Ounces
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4,392,000 0.61 57 87,000 7,935,000
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Inferred
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Tonnes Au Grade g/t Ag Grade g/t Au Ounces Ag Ounces
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34,080,000 0.66 32 723,000 35,399,000
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Although for cut-off purposes, MDA used a three year moving average gold and silver prices (approximated to Au : Ag= 1:60) to convert gold to silver equivalent. This estimate equates to 285,375 indicated gold equivalent ounces and 1,607,975 inferred gold equivalent ounces, using a gold to silver ratio of 1 to 40, based on last March average metal prices.
The breakdown of resources by target area at San Miguel is:
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Area Indicated 1,2,3
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Tonnes Au Grade g/t Ag Grade g/t Au Ounces Ag Ounces
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San Miguel 3,916,000 0.68 56 86,000 7,005,000
San Francisco - - - - -
Monte Cristo-
Sangre de
Cristo - - - - -
La Veronica 476,000 0.08 61 1,000 930,000
Don Ese - - - - -
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Total 4,392,000 0.61 57 87,000 7,935,000
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Area Inferred 1,2,3
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Tonnes Au Grade g/t Ag Grade g/t Au Ounces Ag Ounces
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San Miguel 10,300,000 0.57 30 188,000 9,809,000
San Francisco 15,312,000 0.69 16 342,000 7,842,000
Monte Cristo-
Sangre de
Cristo 3,520,000 0.13 40 14,000 4,503,000
La Veronica 3,104,000 0.09 47 9,000 4,658,000
Don Ese 1,844,000 2.87 145 170,000 8,587,000
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Total 34,080,000 0.66 32 723,000 35,399,000
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1 Resources reported using a 25 g/t Ag equivalent cutoff except Don Ese,
which is reported using a 90 g/t Ag equivalent cutoff.
2 Ag equivalent grade = Ag grade Au grade (i) 60.
3 Rounding may cause apparent discrepancies
Re-estimations of the remaining four San Miguel deposits are expected in September, 2011. Paramount also expects to release a new NI 43-101 resource estimate for its Sleeper, Nevada project early in the third quarter of 2011.
The San Miguel project 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. 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, a senior officer of Paramount, and Bill Threlkeld, a Qualified Person as defined by NI 43-101. Resource estimation work was conducted by MDA under the direction of Michael Gustin, also a Qualified Person under NI 43-101. Both Mr. Threlkeld and Mr. Gustin have reviewed and approved this news release.
An ongoing and rigorous quality control/quality assurance protocol is being employed at the San Miguel project including blanks, duplicates 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 assayed at ALS Chemex, Vancouver, B.C., using fire assay atomic absorption methods for gold and aqua regia digestion ICP methods for other elements. In addition, high gold and silver grades are re-analyzed by Fire assay-gravimetric method and four acid digestion and atomic absorption method, respectively.
Cautionary Note to U.S. Investors Concerning Estimates of Indicated and Inferred Resources:
This news release uses the terms '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 are normally not 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, 2010 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.
Contacts:
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