PEA Filed for Paramount Gold and Silver's San Miguel Project in Mexico

PEA Filed for Paramount Gold and Silver's San Miguel Project in Mexico 
WINNEMUCCA, NEVADA -- (Marketwired) -- 04/15/13 -- Paramount Gold and
Silver Corp. (NYSE MKT:PZG)(TSX:PZG)(FRANKFURT:P6G)(WKN:A0HGKQ)
("Paramount") announced today that the Preliminary Economic
Assessment ("PEA") for its 100%-owned San Miguel gold and silver
project located in Chihuahua State, Mexico has been filed on SEDAR.
The PEA was prepared by Metal Mining Consultants ("MMC") of Denver
(http://www.metalminingconsultants.com), formerly Scott E. Wilson
Consulting Inc., a respected engineering team with experience in
mid-size projects like San Miguel. 
The PEA resource model was developed by Mine Development Associates
("MDA") of Reno, Nevada. The PEA confirms that the San Miguel project
represents an unusually robust economic opportunity to develop a low
cost mine in the prolific Sierra Madre belt in Mexico. 
Highlights of the PEA include:  


 
--  Low Initial Capital of $232 Million 
--  Estimated Average Annual Production of 57,300 ozs. Gold and 3.1 Million
    ozs. Silver for 14 Years 
--  Estimated Base Case Pre-Tax NPV of US$707 Million at a 5% Discount Rate
    and IRR of 33.2% 
--  Study confirms outstanding potential to continue adding to resources 

 
MMC concludes that: "Considering the robust economics, coupled with
relatively low start- up capital, significant exploration upside and
a jurisdiction that is favorable for mining, San Miguel represents a
project that has the potential to become a very successful mine." 
In their analysis, MMC proposed a 4,000 tonnes per day mill fed by
open pits and underground mines, resulting in a projected 14 year
operation with a total metal production of 803,000 ounces of gold and
43.2 million ounces of silver (1,637,000 ounces of gold equivalent at
the base case gold-to-silver price ratio of 51.7 to 1). Start-up
capital costs including working capital are estimated at $243
million. Sustaining capital costs over the project's life are
projected to be an additional $227 million. With $70.3 million in
contingencies, total life-of-mine capital costs are estimated at $540
million. Projected life-of-mine average cash operating costs are $512
per ounce of equivalent gold recovered. The total cost of production
(including cash operating costs and total capital and contingency
costs over the life of the mine) is estimated at US$842 per ounce of
gold equivalent MMC notes these costs are "well below those being
experienced by senior, intermediate and junior gold producers in the
current market environment."  
At a gold price of $1500 per ounce and a silver price of $29 per
ounce (the 3 year trailing average of gold and silver prices at end
of January 2013), San Miguel has an estimated $1.1 billion pre-tax
net cash flow, a $707 million pre-tax net present value ("NPV") at a
5% discount rate and a highly accretive internal rate of return of
33.2%. At recent spot prices of $1600 gold and $33 silver, San
Miguel's projected economics improve to $1.3 billion in pre-tax net
cash flow, $893 million of net present value at a 5% discount rate
and a 39.3% IRR. At recent metal price highs of $1,900 per ounce of
gold and $36 for silver, the estimated NPV rises to $1.2 billion with
a 48.3% IRR. 
Mineral Resources 
In September 2012, MDA completed a National Instrument 43-101
compliant global resource estimate for the San Miguel project (see
news release dated September 5, 2012). The San Miguel database used
for MDA's resource estimate includes 511 core and reverse circulation
drill holes totaling over 128,000 meters.  
MMC has determined that the most suitable mining scenario for the
project is an underground operation for the high grade Don Ese, a
combination of open pit and underground mining for La Union and San
Miguel and open pit extraction for San Antonio and San Francisco.  
A PEA provides a basis to estimate project operating and capital
costs and establish a projection of the potential mineable resource
including measured, indicated and inferred categories as permitted
under National Instrument 43-101. The total exploitable mineral
resources from the MDA model used by MMC to estimate open pit and
underground mining are as follows(i):  


 
----------------------------------------------------------------------------
                  Measured and Indicated Open Pit Resources                 
----------------------------------------------------------------------------
              Class         Tonnes    Ag g/T      Ag Oz.   Au g/tT    Au Oz.
----------------------------------------------------------------------------
San Miguel    Measured      91,000       221     644,000       1.6     5,000
San Miguel    Indicated  1,698,000       132   7,223,000       0.8    44,000
San Antonio   Measured     286,000       103     947,000                   -
San Antonio   Indicated  2,117,000       118   8,029,000      0.02     2,000
La Union      Indicated    541,000       102   1,768,000       0.6    10,000
La Veronica   Indicated    113,000       104     377,000       0.2     1,000
----------------------------------------------------------------------------
Total         M&I        4,846,000       122  18,988,000      0.39    61,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                         Inferred Open Pit Resource                         
----------------------------------------------------------------------------
              Class         Tonnes    Ag g/T      Ag Oz.    Au g/T    Au Oz.
----------------------------------------------------------------------------
San Miguel    Inferred     993,000        63   2,015,000       0.7    21,000
San Francisco Inferred   1,055,000        54   1,816,000       0.7    25,000
La Veronica   Inferred     673,000        95   2,059,000         0     2,000
San Antonio   Inferred     757,000       129   3,136,000      0.10     1,000
La Union      Inferred     623,000        93   1,866,000       0.3     6,000
Monte Cristo  Inferred     690,000        70   1,544,000       0.1     2,000
----------------------------------------------------------------------------
Total         Inferred   4,792,000        81  12,436,000      0.37    57,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                Measured and Indicated Underground Resources                
----------------------------------------------------------------------------
              Class         Tonnes    Ag g/T      Ag Oz.   Au g/tT    Au Oz.
----------------------------------------------------------------------------
Don Ese       Indicated  2,277,000       172  12,609,000       2.6   191,000
San Miguel    Measured     398,000       102   1,309,000       1.7    22,000
San Miguel    Indicated  1,293,000        75   3,122,000       1.9    79,000
La Union      Measured     200,000      16.5     106,000       3.7    24,000
La Union      Indicated    768,000      25.5     630,000       3.9    96,000
----------------------------------------------------------------------------
Total                    4,936,000       112  17,776,000      2.60   412,000
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                       Inferred Underground Resources                       
----------------------------------------------------------------------------
              Class         Tonnes    Ag g/T      Ag Oz.   Au g/tT    Au Oz.
----------------------------------------------------------------------------
Don Ese       Inferred   2,179,000       149  10,462,000       2.5   176,000
San Miguel    Inferred     797,000        66   1,695,000       1.8    47,000
La Union      Inferred     942,000      23.5     711,000       3.5   106,000
----------------------------------------------------------------------------
Total         Inferred   3,918,000       102  12,868,000      2.61   329,000
----------------------------------------------------------------------------
(i) rounding may cause discrepancies                                        

 
Note: Mineral resources that are not mineral reserves do not have
demonstrated economic viability. The PEA also incorporates inferred
mineral resources which are considered to be too geologically
speculative to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves and, as such,
do not have demonstrated economic viability. There can be no
certainty that the estimates contained in the PEA will be realized. 
Metallurgy & Processing 
MMC concluded that test work performed at McClelland Laboratories
Inc. in Sparks, Nevada, has provided a reliable basis for deriving
gold and silver recoveries for each of the deposits included in this
PEA. MMC used gold and silver recoveries specific to each of the
deposits. Overall, gold recoveries exceeded 90 percent and silver
recoveries averaged above 70 percent in cyanide leach bottle roll
tests at a grind of 74 microns. Estimates of cyanide and lime
consumptions have also been obtained from the test work and were used
to develop the processing methodology. The economic scenario defined
by MMC incorporated a conventional 4,000 tonne per day mill facility
followed by agitated cyanide leach in tanks with a Merrill Crowe
recovery circuit which would produce a dore bar. 
Mine Planning 
The PEA recommends combined conventional open pit and underground
mining operations. The recommended open pit mining method is
conventional drilling and blasting with mineralized material and
overburden loaded into rigid frame haul trucks. Mechanized
underground mining would be from sublevel open stoping with delayed
backfilling. A vertical mining sequence was assumed based on panels
defined by local bottom elevations from which vertical overhand
mining would proceed. Where required, the panel bottom was assumed to
be filled with cemented rockfill, to create intermediate sills to
allow underlying panels to be developed later in the production
schedule as mining advanced vertically downward. The majority of
stope backfilling would use uncemented development waste
(unmineralized material) or open pit waste backhauled from the
surface. These mining methodologies are in common use in this region
of Mexico.  
Key production statistics are as follows: 


 
----------------------------------------------------------------------------
                                                    Open Pit     Underground
----------------------------------------------------------------------------
Mined Mineralization (000 tonnes)                      9,637           8,855
----------------------------------------------------------------------------
Mined Resource Classification:                                              
  Measured (% of tonnes mined)                             4               7
  Indicated (% of tonnes mined)                           46              49
  Inferred (% of tonnes mined)                            50              44
----------------------------------------------------------------------------
Contained Ag (000 ounces)                             31,423          30,643
Contained Au (000 ounces)                              118.3           741.1
----------------------------------------------------------------------------
Strip ratio (waste:ore) or UG                           7.69            2.54
Unmineralized:Mineralized                                                   
Material ratio                                                              
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Annual Gold Production (oz)                                           57,300
----------------------------------------------------------------------------
Process Gold Recovery (average)                                          93%
----------------------------------------------------------------------------
Annual Silver Production (oz)                                      3,082,500
----------------------------------------------------------------------------
Process Silver Recovery (average)                                        70%
----------------------------------------------------------------------------

 
Capital Costs  
Capital costs were developed based on scaling costs from similar
facilities with comparable production rates and from design basis
assumptions. The costs are collected in three separate categories;
(1) Initial capital (construction costs to initiate mining operations
including EPCM, pre-stripping and start-up working capital), (2)
Sustaining capital (costs due to delayed construction of the
underground mines below open pit, plus additions to the mobile mining
equipment fleet and equipment rebuilds, and (3) Contingency
estimates. The estimated capital costs are as follows:  


 
----------------------------------------------------------------------------
Capital Category                                                    Millions
----------------------------------------------------------------------------
Initial Capital                                                       $243.1
----------------------------------------------------------------------------
Sustaining Capital                                                    $227.3
----------------------------------------------------------------------------
Contingency                                                            $70.3
----------------------------------------------------------------------------
Total Capital Expenditures                                            $540.7
----------------------------------------------------------------------------

 
Operating Costs  
Operating costs are based on similar mining operations in the
immediate area of San Miguel and on information from other mining
operations in North America using similar mining methods. Operating
cost estimates are as follows: 


 
----------------------------------------------------------------------------
                                                                     $/Tonne
----------------------------------------------------------------------------
Open Pit Waste Mining                                                  $1.59
----------------------------------------------------------------------------
Open Pit Ore Mining                                                    $1.59
----------------------------------------------------------------------------
Open Pit Mining per tonne processed                                   $14.16
----------------------------------------------------------------------------
Underground Drifting                                                  $39.00
----------------------------------------------------------------------------
Underground Drop Raise                                                $27.75
----------------------------------------------------------------------------
Underground Stoping                                                   $27.75
----------------------------------------------------------------------------
Underground Mining per tonne processed                                $37.41
----------------------------------------------------------------------------
Mill Processing                                                       $13.75
----------------------------------------------------------------------------
Administration                                                         $5.00
----------------------------------------------------------------------------
Reclamation per tonne/processed                                        $1.62
----------------------------------------------------------------------------
Total Operating Cost per tonne/processed                              $45.31
----------------------------------------------------------------------------

 
Economic Analysis 
The base case economic evaluation used historical three-year trailing
averages for gold and silver prices This approach is consistent with
the guidance of the United States Securities and Exchange Commission,
is accepted by the Ontario Securities Commission and is industry
standard. A second case was prepared using recent spot prices for
gold and silver. The pre-tax results for the base case and spot case
are as follows: 


 
----------------------------------------------------------------------------
                                                   Base Case       Spot Case
----------------------------------------------------------------------------
Gold Price Per Ounce                                  $1,500          $1,600
Silver Price Per Ounce                                   $29             $33
----------------------------------------------------------------------------
Net Cash Flow                                   $1.1 billion    $1.3 billion
----------------------------------------------------------------------------
NPV @ 5% Discount Rate                          $707 million    $893 million
----------------------------------------------------------------------------
Internal Rate of Return                                33.2%           39.3%
----------------------------------------------------------------------------
Operating Costs Per Ounce of Gold                                           
Equivalent Produced (life of mine)                      $512            $495
----------------------------------------------------------------------------
Total Costs Per Ounce of Gold                                               
Equivalent Produced (includes amortized                                     
 capital costs)                                         $842            $814
----------------------------------------------------------------------------

 
Infrastructure 
The development of mining and processing infrastructure was defined
in a conceptual plan that was based on a central processing facility
with an associated tailings storage facility. Individual open pit
mines would be developed as satellite production operations with
mineralized material transported to the process site by haul truck. A
main electrical power line and power center would be developed at the
process facility, with individual power lines going to the
underground mining operations at Don Ese, San Miguel and La Union.
Each underground mining operation would have separate infrastructure
including offices, warehouse, equipment shop, change house, shotcrete
plant, cemented fill plant, explosive storage and fuel storage.
Underground mines would have separate ventilation and dewatering
systems because of their location remote from each other. Access/haul
roads would be developed to each mining operation. It is assumed that
personnel for the mining operation would live in the local
communities or the Town of Temoris and that no camp facility would be
constructed. 
Please click here to see a map of the proposed milling site and zone
locations. 
National Instrument 43-101 Disclosure 
The PEA for the San Miguel project was prepared by Metal Mining
Consultants of Denver, Colorado and incorporates the work of its
professional Geologists, Metallurgist and Mining Engineers who are
Qualified Persons in their areas of expertise as defined under
National Instrument 43-101. Resource estimates and block models were
developed by Michael Gustin of MDA Reno who is also a Qualified
Person. Patricia Aguayo from Hermosillo, Mexico has advised on
environmental planning and regulations in Mexico. All persons
involved are independent of Paramount. Each of these consultants has
reviewed and approved this news release.  
About Paramount Gold  
Paramount Gold 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 programs are now in progress at these two core projects
which are expected to generate substantial additional value for our
shareholders.  
The 100% owned San Miguel Project consists of over 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 current work program at San Miguel is part of
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. The San Miguel Project is ideally situated near
established, low cost production where the infrastructure already
exists for early, cost-effective exploitation. Paramount also owns
100% of the Sleeper Gold Project which is emerging as one of Nevada's
largest new undeveloped gold resources. 
Cautionary Note to U.S. Investors Concerning Estimates of Indicated
and Inferred Resources 
All resource estimates reported by the Corporation were calculated in
accordance with the Canadian National Instrument 43-101 and the
Canadian Institute of Mining and Metallurgy Classification system.
These standards differ significantly from the requirements of the
U.S. Securities and Exchange Commission. Mineral resources which are
not mineral reserves do not have demonstrated economic viability. In
particular, Paramount notes that the San Miguel Preliminary Economic
Assessment referred to above incorporates inferred mineral resources
which are considered to be too geologically speculative to have
economic considerations applied to them that would enable them to be
categorized as mineral reserves. Therefore, Paramount advises that
there can be no certainty that the estimates contained in the San
Miguel PEA will be realized.  
Safe Harbor for Forward-Looking Statements 
This document contains "forward-looking information" within the
meaning of Canadian securities legislation and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. This information and these
statements, referred to herein as "forward-looking statements", are
made as of the date of this document. Forward-looking statements
concerning the expected design, economic viability or performance of
the San Miguel project as set out in the PEA, the completion of goals
or objectives, or the completion of work programs, relate to future
events or future performance and reflect current estimates,
predictions, expectations or beliefs regarding future events and
include, but are not limited to, statements with respect to: (i) the
amount and category of mineral resources; (ii) the amount of future
production over any period; (iii) cumulative pre-tax net cash flow of
the proposed mining operation; (iv) capital costs; (v) operating
costs; (vi) mining rates; (vii) mine life; and (vii) planned
expenditures. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as "expects", "anticipates",
"plans", "projects", "estimates", "envisages", "assumes", "intends",
"strategy", "goals", "objectives" or variations thereof or stating
that certain actions, events or results "may", "could", "would",
"might" or "will" be taken, occur or be achieved, or the negative of
any of these terms and similar expressions) are not statements of
historical fact and may be forward-looking statements.  
All forward-looking statements are based on Paramount's or its
independent consultants' current beliefs as well as various
assumptions made by them and information available to them on the
date the statements are made. These assumptions include: (i) the
presence of and continuity of metals at the Project at modeled
grades; (ii) the capacities of various machinery and equipment; (iii)
the availability of personnel, machinery and equipment at estimated
prices; (iv) metals sales prices; (v) appropriate discount rates;
(vi) tax rates and royalty rates applicable to the proposed mining
operation; (vii) financing structure and costs; (viii) anticipated
mining losses and dilution; (ix) metals recovery rates; (x)
reasonable contingency requirements; and (xi) receipt of regulatory
approvals on acceptable terms. Although management considers these
assumptions to be reasonable based on information currently available
to it, they may prove to be incorrect. Many forward-looking
statements are made assuming the correctness of other forward-looking
statements, such as statements of cumulative pre-tax net cash flow,
which are based on other forward-looking statements and assumptions.
The cost information is also prepared using earlier values, but the
time for incurring the costs will be in the future and it is assumed
costs will remain stable over the relevant period. 
By their very nature, forward-looking statements involve inherent
risks and uncertainties, both general and specific, and risks exist
that estimates, forecasts, projections and other forward-looking
statements will not be achieved or that assumptions do not reflect
future experience. We caution readers not to place undue reliance on
these forward-looking statements as a number of important factors
could cause the actual outcomes to differ materially from the
beliefs, plans, objectives, expectations, anticipations, estimates,
assumptions and intentions expressed in such forward-looking
statements. These risk factors may be generally stated as the risk
that the assumptions and estimates expressed above do not occur, but
specifically include, without limitation, risks relating to
variations in the mineral content within the material identified as
mineral reserves from that predicted; variations in rates of recovery
and extraction; developments in world metals markets;, increases in
the estimated capital and operating costs or unanticipated costs;
difficulties attracting the necessary work force; increases in
financing costs or adverse changes to the terms of available
financing, if any; tax rates or royalties being greater than assumed;
changes in development or mining plans due to changes in logistical,
technical or other factors; changes in project parameters as plans
continue to be refined; risks relating to receipt of regulatory
approvals; the effects of competition in the markets in which
Paramount operates; operational and infrastructure risks; and the
additional risks including those described in Paramount's most recent
Annual Report Form 10-K filed with the U.S. Securities and Exchange
Commission on EDGAR (available at www.sec.gov/edgar.shtml) and SEDAR
in Canada (available at www.sedar.com). Paramount cautions that the
foregoing list of factors that may affect future results is not
exhaustive.  
When relying on our forward-looking statements to make decisions with
respect to Paramount, investors and others should carefully consider
the foregoing factors and other uncertainties and potential events.
Paramount does not undertake to update any forward-looking statement,
whether written or oral, that may be made from time to time by
Paramount or on our behalf, except as required by law.
Contacts:
Paramount Gold and Silver Corp.
Christopher Crupi
CEO
866-481-2233 
Paramount Gold and Silver Corp.
Glen Van Treek
VP Exploration & COO
866-481-2233 
Paramount Gold and Silver Corp.
Chris Theodossiou
Investor Relations
866-481-2233
 
 
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