Paramount set to redo San Miguel estimate with host of new results

VANCOUVER — Paramount Gold and Silver’s (PZG-T, PZG-X) San Miguel project has produced an impressive set of drill results over the last year, boosted in large part by the results out of the newly discovered Clavo 99 zone, part of the San Miguel vein.

Even though the vein is the project’s namesake, Paramount had been working the project, in Mexico, for more than a year before sending drills to test San Miguel. The vein is home to several shallow old mine workings that, according to local miners, delivered high precious metal grades.

The first four holes into San Miguel returned strong gold and silver grades. Hole 1 cored 30 metres grading 0.32 gram gold per tonne and 113 grams silver from 42 metres down-hole, followed directly by 14 metres of 2.99 grams gold and 149 grams silver. Hole 3 cut 13.6 metres grading 0.48 gram gold and 410 grams silver.

The next set of drill results made Paramount geologists think the structure was likely a clavo: a mineralized body within a vein with small dimensions but high grades. As such they named a new, high-grade zone within the vein Clavo 99. The zone returned strong results: hole 13 hit 1.6 metres grading 6.39 grams gold and 172 grams silver from 122 metres depth, hole 15 cut 1.9 metres of 3.3 grams gold and 503 grams silver followed by 6.7 metres of 4.32 grams gold and 572 grams silver, and hole 18 hit 5.7 metres grading 0.1 gram gold and 292 grams silver followed by 12.6 metres of 1.53 grams gold and 41 grams silver.

Subsequent results have been similar. Hole 20 cored 3.7 metres grading 1.23 grams gold and 834 grams silver from 118 metres down-hole. Hole 34 returned a longer interval: 38.2 metres grading 0.66 gram gold and 18.58 grams silver. And in early May, hole 35 returned 28.3 metres grading 1.84 grams gold and 75.95 grams silver from 145 metres, including 10 metres of 4.09 grams gold and 106 grams silver.

The San Miguel project is in the Guazapares mining district of southwestern Chihuahua, part of Mexico’s silver-rich Sierra Madre Occidental belt. As is typical of the belt, mineralization at San Miguel consists of multi-phase epithermal, low-sulphidation, silver-gold vein and hydrothermal breccia deposits. At San Miguel, mineralization occurs within a northwest-trending, steeply dipping complex fault zone with an 8-km strike length.

Mining is not new to the Guazapares district or to San Miguel. Workings date as far back as 1620, though the main phase of historical mining took place between 1860 and 1900. The area had not seen any modern exploration until Paramount began its mapping, trenching, and drilling programs in early 2006.

Paramount initially focused on the southern half of the fault complex, drilling 53 holes in a year on the San Jose, San Luis, San Antonio, and El Carman zones. A resource estimate early last year calculated those areas held 4 million inferred tonnes grading 272.2 grams silver.

In 2007, Paramount wanted to upgrade and expand that resource while also drill-testing other targets on the property. The company was successful on both fronts.

Drilling in the San Antonio-El Carmen central portion of the main fault zone returned numerous high-grade intercepts. Hole 19 cored 61.9 metres grading 184 grams silver, 0.16% lead and 0.25% zinc from 25 metres depth, the bottom 11 metres of which ran 572 grams silver, 0.18% lead and 0.33% zinc. Hole 20 cut 36 metres from surface grading 113 grams silver, 0.06% lead and 0.14% zinc, and hole 25 returned 10.2 metres of 468 grams silver, 0.36% lead and 0.45% zinc from 40 metres down-hole.

While drill results lengthened the defined strikes of the mineralized zones in the southern half of the fault complex, Paramount also started exploring north, along the complex and to the northwest. Some 1.5 km north of San Antonio, in an area home to old mine workings and attractive surface geochemistry, trenching followed by diamond drilling defined a new zone called La Veronica, home to a narrow, high-grade vein.

Drilling at La Veronica outlined a 700-metre strike length and followed mineralization to a depth of 70 metres (and still open). Hole 13 returned 13 metres grading 0.05 gram gold and 65 grams silver, hole 14 cut 4.3 metres grading 0.08 gram gold and 165 grams silver, and hole 11 cored 0.9 metre of 0.71 gram gold and 114 grams silver.

North of La Veronica, Paramount uncovered the Montecristo zone, part of a rhyodacite dome complex hosting gold and silver as veinlets and disseminations. The first 11 diamond-drill holes into Montecristo intercepted eight veins averaging 1 metre in width and cut five silicified breccias averaging 28 metres in width. For example, hole 2 hit both: a 29.7-metre intercept from 15 metres down-hole assayed 0.05 gram gold and 61.78 grams silver, and a 1-metre intercept at 93 metres depth returned 0.43 gram gold and 326 grams silver.

West of Montecristo, still within the rhyodacite dome, Paramount also started defining the Guadalupe de Los Reyes area, where higher precious metal grades are associated with northeast and northwest-trending fault zones. The best surface samples returned 6.64 grams gold and 10 grams silver over 5.4 metres; underground sampling from accessible portions of an old, small-scale mine returned 18.5 grams gold and 64 grams silver over 1 metre.

Paramount listed on the TSX in late August, having previously traded on the OTC Bulletin Board, the Frankfurt Stock Exchange, and the American Stock Exchange. Since listing, its share price has ranged from $1.15-2.90; it currently sits around $1.70.

Trading in the company was halted for much of April because the U. S. Securities and Exchange Commission (SEC) determined Paramount was one of 26 companies trading under Cusip numbers that were invalid, having they had “usurped the identity of a defunct or inactive publicly traded corporation.”

Paramount’s board determined that the reincorporation of the company had been erroneously reported in an SEC filing and corrected the mistake.