Three new holes intersected shallow oxide mineralization in areas with limited or no previous drilling. Two other recently reported holes also intersected wide zones of oxide precious metal mineralization close to surface in the San Francisco deposit. Together, these five holes are expected to increase the size of the San Francisco resource and pit configuration contained in the San Miguel Preliminary Economic Assessment (PEA) released.

The San Miguel PEA proposed adding a heap leaching operation to what had previously been a mill-only development scenario for San Miguel, based on successful heap leach metallurgical tests. Adding a heap leach operation to the front end of the production scenario brought down initial capital costs while helping to fund underground mining and related mill construction from cash flow. The new PEA also featured a very substantial increase in resources compared to the 2013 PEA by including relatively lower grade material from bulk minable deposits like San Francisco.

The PEA and its resource estimate established a 9 g/T silver equivalent cut-off grade for the open pit heap leach scenario at San Francisco (a 0.15 g/T gold equivalent grade). The current drilling is intersecting good widths of material grading at least three times this cut-off grade in areas outside the PEA pit design. This drilling should enable an increase of the resource and connect several smaller open pits into a single, larger pit with better mining economics.

A definitive true width estimate requires additional drilling but is expected to be approximately
90% of the reported intercept.

The current drill program at San Miguel has four objectives:

  • Test new, recently identified targets like the Dana discovery.
  • Convert inferred resources within the proposed underground mine plan to measured and indicated. About 18% of the underground minable material in our PEA is inferred. The aim is to have 100% of the resource as measured and indicated so that it will qualify as reserves in a Preliminary Feasibility Study.
  • Acquire material for further metallurgical testing and geotechnical studies.
  • Increase resources

Paramount is continuing its drill program with four core rigs on San Francisco, the new discovery on Dana and Don Ese.

NI 43-101 Disclosure
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, Exploration Vice President of the Company and Bill Threlkeld, a Qualified Person as defined by National Instrument 43-101, who have both reviewed and approved this press release. An ongoing quality control/quality assurance protocol is being employed for the program including blank, duplicate 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 being assayed at ALS Chemex and Acme Laboratories, Vancouver, B.C., using fire assay atomic absorption methods for gold and aqua regia digestion ICP methods for other elements.