Paramount Defines Multi-Million Oz Resource at Sleeper, Nevada

Paramount Gold and Silver Corp. has released the results of a new NI 43-101-compliant resource estimate on its 100-per-cent-owned Sleeper gold project prepared by SRK Consulting, a well-recognized mining consulting firm. The Sleeper gold project is located off a main highway about 25 miles from the town of Winnemucca, Nev. Acquired by Paramount in 2010, the 45-square-mile project area includes the original Sleeper high-grade open-pit mine operated by Amax Gold from 1986 to 1996 as well as newly purchased claims (Paramount press release of Aug. 23, 2011) stretching south, downtrend to Newmont’s Sandman project.

 

The SRK resource estimate includes oxide and sulphide materials as well as a small amount of in-place mineralization described as alluvial. SRK estimates 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 using a cut-off grade of 0.20 gram of gold per tonne (g/t) for oxide and alluvial material, and 0.25 gram per tonne (g/t) for sulphide material. These cut-off grades were determined using a gold price of $1,100 per ounce, and recoveries of 85 per cent for sulphides and 70 per cent for oxides. An attached table summarizes SRK’s resource estimate.

 

                              SLEEPER RESOURCES                          

                                              Measured
Material         Cut-off
                  Au g/t      Tonnes  Au g/t  Ag g/t       Au oz       Ag oz

Oxide               0.20  31,960,502    0.39    4.23     397,669   4,346,620
Sulphide            0.25  91,074,631    0.54    5.06   1,569,495  14,816,501
Total                    123,035,133    0.50    4.84   1,967,164  19,163,121

                                              Indicated
Material      Cut-off Au
                    g/t       Tonnes  Au g/t  Ag g/t       Au oz       Ag oz

Oxide               0.20  10,829,438    0.33    4.12     114,203   1,434,501
Sulphide            0.25  38,898,882    0.44    3.79     544,032   4,739,953
Total                     49,728,320    0.41    3.86     658,235   6,174,454

                                       Measured and indicated
Material      Cut-off Au
                    g/t       Tonnes  Au g/t  Ag g/t       Au oz       Ag oz

Oxide               0.20  42,789,940    0.37    4.20     511,872   5,781,121
Sulphide            0.25 129,973,513    0.51    4.68   2,113,527  19,556,454
Total                    172,763,453    0.47    4.56   2,625,399  25,337,575

                                              Inferred
Material      Cut-off Au
                    g/t       Tonnes  Au g/t  Ag g/t       Au oz       Ag oz

Alluvial            0.20     151,675    2.03       -       9,890           -
Oxide               0.20  13,191,635    0.32    3.42     136,145   1,450,516
Sulphide            0.25  68,410,857    0.44    3.07     974,376   6,752,446
Total                     81,754,167    0.43    3.12   1,120,410   8,202,962

 

The resources are located in the West Wood, Facilities, Wood, Office and Sleeper zones encompassing a mineralized area over 2.0 kilometres long by 1.3 kilometres wide. The resource calculation does not incorporate potential above-ground inventory including mill tailings, waste dumps and leached ore which are the subject of continuing analysis. Also excluded are the results from drilling conducted after February, 2011. An updated resource estimate for Sleeper is scheduled for next year to incorporate data on the surface inventory and more recent drilling results.

 

Tetra Tech, a leading international mining consulting firm, has been engaged to prepare an NI 43-101-compliant preliminary economic assessment (PEA) of the Sleeper gold project for completion in early 2012. The current work program at Sleeper 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. As a former high-grade gold producer, Sleeper is ideally located near established, low-cost production in Nevada, where the infrastructure already exists for early, cost-effective exploitation.

 

The Sleeper database used for SRK’s resource estimate includes more than 4,000 reverse circulation and core drill holes, as well as historical surface mapping and interpretations, to create a comprehensive lithological and structural model over the entire deposit. Additionally, data from more than 378,000 blast holes, collected while the project was in operation, were utilized to define trends, orientations and inclinations for the principal mineral zones. SRK employed Vulcan Software to vary the block sizes to as small as 2.5 by 2.5 by 2.5 metres to better control the limits of high-grade zones and avoid overestimation. Multiple search distances and orientation parameters were used for various grades and previously defined zones. Higher-grade zones were estimated using ordinary kriging (OK) with maximum search distances of 10 metres with an average of seven metres. Medium- and low-grade zones were also estimated with ordinary kriging using average maximum search distances of 48 metres for all domains, with the result that most of the resource falls within the measured and indicated category. Longer search distances were used for inferred material.

 

Christopher Crupi, chief executive officer of Paramount Gold, commented: “Sleeper is emerging as one of Nevada’s largest undeveloped gold resources. Its location, size and style of mineralization suggest that Sleeper could sustain a low-cost mining operation. Our next step is to complete a PEA within the first quarter of 2012 to establish the economic parameters for a mining operation. If the PEA is successful, we will move immediately toward a preliminary feasibility study which will enable us to report reserves. At the same time as we push ahead with the existing resource, we will focus on a series of promising new exploration targets which have emerged from the data.”

 

              SRK RESOURCE ESTIMATE AT VARYING CUT-OFF GRADES

Measured oxide material
Cut-off Au g/t                           Measured
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.1               51,140,096         0.3        3.69     493,265   6,067,162
0.2               31,960,502       0.387        4.23     397,669   4,346,620
0.25              23,364,479       0.447         4.5     335,785   3,380,386
0.3               16,930,538       0.513        4.82     279,245   2,623,708
0.4                9,427,511       0.648        5.22     196,413   1,582,214

Indicated oxide material
Cut-off Au g/t                           Indicated
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.1               21,251,557       0.242        3.69     165,350   2,521,244
0.2               10,829,438       0.328        4.12     114,203   1,434,501
0.25               6,704,861       0.393         4.4      84,719     948,506
0.3                4,274,272       0.461        4.59      63,352     630,772
0.4                1,884,221        0.61        4.89      36,954     296,236

Measured and indicated oxide material
Cut-off Au g/t                              M&I
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.1               72,391,653        0.28        3.69     658,615   8,588,406
0.2               42,789,940        0.37        4.20     511,872   5,781,121
0.25              30,069,340        0.43        4.48     420,504   4,328,893
0.3               21,204,810        0.50        4.77     342,597   3,254,480
0.4               11,311,732        0.64        5.17     233,367   1,878,451

Measured sulphide material
Cut-off Au g/t                           Measured
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.2              115,476,605        0.47        4.77   1,744,977  17,709,655
0.25              91,074,631       0.536        5.06   1,569,495  14,816,501
0.3               71,695,288       0.606        5.34   1,396,886  12,309,193
0.4               45,695,936       0.755         5.7   1,109,232   8,374,332
0.5               30,760,064       0.905        5.97     895,022   5,904,176
0.6               21,703,611       1.055        6.22     736,177   4,340,304

Indicated sulphide material
Cut-off Au g/t                           Indicated
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.2               53,645,467       0.377        3.65     650,238   6,295,404
0.25              38,898,882       0.435        3.79     544,032   4,739,953
0.3               27,505,079       0.502        3.84     443,930   3,395,798
0.4               15,044,512       0.633        3.72     306,182   1,799,363
0.5                8,907,105       0.762        3.47     218,217     993,719
0.6                5,473,666       0.898         3.4     158,035     598,349

Measured and indicated sulphide material
Cut-off Au g/t                              M&I
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.2              169,122,072        0.44        4.41   2,395,214  24,005,059
0.25             129,973,513        0.51        4.68   2,113,527  19,556,454
0.3               99,200,367        0.58        4.92   1,840,816  15,704,991
0.4               60,740,448        0.72        5.21   1,415,414  10,173,694
0.5               39,667,169        0.87        5.41   1,113,239   6,897,895
0.6               27,177,277        1.02        5.65     894,212   4,938,653

Inferred oxide material
Cut-off Au g/t                           Inferred
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.1               29,635,200       0.225        3.18     214,382   3,029,931
0.2               13,191,635       0.321        3.42     136,145   1,450,516
0.25               8,053,980       0.384        3.71      99,435     960,688
0.3                4,724,427       0.466        4.06      70,784     616,699
0.4                2,049,919       0.631        3.41      41,588     224,744

Inferred sulphide material
Cut-off Au g/t                           Inferred
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.2               94,874,313       0.382        3.05   1,165,225   9,303,497
0.25              68,410,857       0.443        3.07     974,376   6,752,446
0.3               49,260,219       0.509         3.1     806,143   4,909,709
0.4               26,265,629       0.652        2.81     550,596   2,372,968
0.5               15,105,865       0.806        2.75     391,452   1,335,599
0.6                9,467,172       0.962        2.79     292,815     849,224

Inferred alluvial material
Cut-off Au g/t                           Inferred
                      Tonnes      Au g/t      Ag g/t       Au oz       Ag oz

0.1                  156,140       1.975                   9,915
0.2                  151,675        2.03                   9,890
0.25                 150,281       2.045                   9,881
0.3                  148,215        2.07                   9,864
0.4                  134,889        2.24                   9,715

 

Exploration activities at Sleeper were 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, who have reviewed and approved this press release. This release was also reviewed and approved by SRK’s George Even, a qualified person responsible for the resource estimation. A continuing quality control/quality assurance protocol was employed during the program including blank, duplicate and reference standards in every batch of assays. Samples were assayed at ALS Chemex, Reno, Nev., using fire-assay atomic absorption methods for gold and aqua regia digestion ICP methods at ALS Chemex Vancouver, Canada, for other elements.

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