Paramount cuts high-grade gold and silver at San Miguel in Chihuahua

High-grade results keep rolling in at Paramount Gold and Silver’s (PZG-T, PZG-N) fully owned San Miguel silver-gold property in the Guazapares mining district in the southwest of Chihuahua State, Mexico. 

A resource estimate at the end 2011 outlined resource of 8 million indicated tonnes grading 0.38 gram gold per tonne and 62 grams silver per tonne for 98,800 contained oz. gold and 15.8 million conained oz. silver. Inferred resources rose to 45.9 million tonnes at 0.6 gram gold and 38 grams silver, or 877,700 contained oz. gold and 56.8 million contained oz. silver. Aggregate indicated and inferred resources were measured with a 25-gram, silver-equivalent cut-off. 

Starting in late January Paramount began releasing assays from its fourth-quarter 2011 drill program, including high-grade results on 10 core holes collared at the San Miguel vein. The drilling was part of a 34-hole infill program designed to increase the vein’s measured and indicated resources. Highlights included 5 metres grading 6.5 grams gold and 1,286 grams silver, starting from 189 metres; 14 metres of 2.6 grams gold and 513.8 grams silver, from 187 metres; and 11 metres of 1.44 grams gold from 276 metres. 

The San Miguel vein carries an inferred resource of 10.3 million tonnes grading 0.57 gram gold and 30 grams silver, or 188,000 contained oz. gold and 9 million contained oz. silver at a 25-gram, silver-equivalent cut-off.

Results from holes collared at the Don Ese and La Union targets were released in late January. Don Ese strikes northwest towards Coeur d’Alene Mines’ (CDM-T, CDE-N) Palmarejo silver-gold mine. 

Paramount aims to incorporate inferred resources from the two targets into the measured and indicated category for an updated resource estimate expected next quarter.

Three new core holes drilled at Don Ese returned highlight intercepts of 6 metres grading 6.89 grams gold and 363.6 grams silver starting from 410 metres, and 18 metres of 2.75 grams gold and 166.8 grams silver from 403 metres. A single hole drilled at La Union returned intercepts that include 19 metres of 2.07 grams gold and 3.97 grams silver starting from 116 metres, and 4 metres of 1.08 grams gold and 3.97 grams silver from 106 metres. 

Don Ese has an inferred resource of 1.8 million tonnes averaging 2.87 grams gold and 145 grams silver, while La Union hosts inferred resources of 6.3 million tonnes carrying 0.73 gram gold and 45 grams silver.

In mid-February Paramount announced the discovery of the high-grade Clavo gold zone, located on the southern edge of La Union, and extending into the untested gap towards the Santa Clara deposit. According to Paramount CEO Christopher Crupi, the discovery marks a major step towards proving that the 7-km-long Veronica-Santa Clara corridor is a continuously mineralized structure.

Clavo was discovered in holes 12-026 and 12-027. Highlights include 9 metres carrying 13.02 grams gold starting from 161 metres, and 6 metres of 21.82 grams gold from 118 metres.

Hole 12-025 — collared in the centre of the La Union deposit — includes 8 metres grading 29.51 grams gold and 19.11 grams silver  from 145 metres, and 1 metre of 156.83 grams gold. 

A week later Paramount reported more high-grade in-fill silver results from drilling focused on expanding the fast-growing San Antonio target. Highlights of the expansion program include 2 metres of 1896 grams silver and 11 metres of 418.2 grams silver starting from 76 metres, and 21 metres of 201.9 grams silver from 129 metres. According to Crupi, the results confirm the potential for low-cost open-pit mining at San Miguel, which could offer cash flow during development of deeper, underground gold deposits.

Paramount enjoyed a 28% share-price boost during the first seven weeks of 2012. Company shares jumped from $2.16 at the end of December to $2.68 at presstime.

 The results from continued infill programs have apparently been having less and less of a market impact as Paramount fleshes out and defines the nature of the San Miguel resource, and investors wait for the second-quarter resource estimate, and prefeasibility and economic assessment reports.