Paramount Gold & Silver Mobilizes Four Rigs to its San Miguel Project for Resource Expansion and Pre-Feasibility Study (PFS)

WINNEMUCCA, NEVADA--(Marketwired - Sept. 2, 2014) - Paramount Gold and Silver Corp.(NYSE MKT:PZG)(TSX:PZG)(FRANKFURT:P6G)(WKN:A0HGKQ)("Paramount") announced today that it is mobilizing four core rigs to its 100%-owned San Miguel project in northern Mexico as part of a program to increase and upgrade resources and advance the gold-silver project to the pre-feasibility stage.

Paramount CEO Christopher Crupi commented "we have decided to continue the process of moving San Miguel towards a production decision. This work will further de-risk our project and add substantial value during a period when we also expect gold and silver prices to be on the rise. The low initial capital cost estimates for a combined heap leach and milling scenario in our new PEA have encouraged us to proceed to the next step".

Last month's new PEA estimated an Initial Capital requirement of $69 million and low operating costs, resulting in exceptional economics including payback of Initial Capital in the third year of production. The PEA estimated average annual production of 55,000 ounces of gold and 2.8 million ounces of silver for 17 years. Base Case Pre-Tax NPV was estimated at US$472.6 million with an IRR of 23.2% at a 5% Discount Rate and current metal prices. The PEA, released on August 25, 2014, was prepared by Metal Mining Consultants Inc. ("MMC") of Denver, Colorado incorporating a resource model developed by Mine Development Associates ("MDA") of Reno, Nevada (see news release). Note that the PEA 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.

"San Miguel is the right size of project for Paramount to take further. Our personnel have the necessary experience, the projected costs for a PFS are relatively low and we see some juicy opportunities to further improve economics," Crupi noted.

The main objectives in the current program are:

• Test a newly identified structure named Dana which runs parallel to Paramount's Don Ese deposit, some 800 meters northeast of Coeur d'Alene's Guadalupe Mine. The one kilometer long Dana appears to be similar to the Don Ese which is considered to be the most valuable deposit at San Miguel due to its high gold grade and continuity along strike and at depth. Drilling will also continue to explore La Bavisa which returned good metal values in the 2013 program (see map at:http://media3.marketwire.com/docs/965781mapE.pdf).
• Expand and infill the lower grade San Francisco deposit, reflecting the new PEA's successful inclusion of a heap leach scenario for this material. The obvious expansion potential for San Francisco had been discounted in the previous mill-only scenario.
• Convert inferred mineralized tonnes within the proposed underground mine plan to measured and indicated. About 18% of the underground minable material in the PEA was inferred; the aim is to have 100% categorized as measured and indicated which could then convert to reserves in a PFS.
• Acquire material for metallurgical and geotechnical testing.
• Commence base line environmental studies. Paramount has contracted for hydrogeological studies to characterize the project's hydrological setting, water quality and chemistry according to the SERMANAT requirements for an Environmental Impact Manifestation (MIA); environmental risk assessments and technical studies related to the use of surface land for mining operations; and community surveys needed to complete a database of surface land users and community expectations.

Paramount expects to complete the majority of this work during the current year within an estimated budget of $5 million to be financed from cash on hand.