Paramount Gold and Silver Reports Exceptional Intercept From Wood Zone at Sleeper Gold Project in Nevada

10.7m of 6.01 g/T gold and 95.3 g/T silver within 161.5m of 1.04 g/T gold and 13 g/T silver points to potential for substantial economic upside

Paramount Gold and Silver Corp. (NYSE MKT:PZG)(PZG.TO)(P6G.F)(WKN:A0HGKQ) ("Paramount") announced today that new core drilling on its 100%-owned Sleeper Gold Project in Nevada has intercepted exceptional gold and silver grades below the Wood Pit in the southwestern portion of the original Sleeper mining concession.

A recently completed Preliminary Economic Assessment (PEA) for Sleeper confirmed the potential for a highly profitable producer mining high volumes of low grade material.

To improve economics further, Paramount has been searching for higher grade material close to the planned pit. New drill hole PGC-12-027 cut an outstanding interval of 161.5 meters grading 1.04 g/T of gold and 13.1g/T of silver. Within this long intercept, the hole returned 10.7 meters averaging 6.01 g/T of gold and 95.3 g/T of silver. These grades are well above the cut-off grade used in the July 30, 2012 PEA and greater than the block model prediction (see image below).

The higher grade Wood Zone resource is adjacent and connected to the high grade West Wood Zone which was not included in the PEA because its metallurgy may require a different recovery process from the rest of the Sleeper resource. Paramount is now engaged in large diameter (PQ:8.6 cm) core drilling of both the Wood and West Wood zones to obtain samples for metallurgical testing of recovery methods which should enable the valuable resources from these zones to be included into an updated PEA. The planned metallurgical test program is will be led by McClelland Laboratories of Reno, Nevada (http://www.mettest.com/mliindex.htm) using a split sample for metal analysis prepared by ALS Chemex.

Paramount is planning to complete an updated resource model for the Sleeper Gold Project in 2013 which will incorporate an additional 26 core holes totaling 8,800 meters drilled since the last resource model was completed by SRK Consulting (www.srk.com) in 2011. Resource additions are considered highly likely from the Facilities Zone, the recently discovered PAD Zone and extensions of the South Sleeper Zone. Drilling at these zones is continuing for resource additions and upgrades as well as metallurgical testing.

Paramount CEO, Christopher Crupi commented that "our team is working diligently to optimize the Sleeper PEA we completed last year. One important value of a PEA is that it identifies the most cost-effective improvements which can be made to the project''s economics. For Sleeper, that means incorporating the Wood and West Wood areas, improving silver recoveries and adding resources close-in to the planned pit. Sleeper''s economics are already unusually robust but we believe we can make them substantially better."

Results from the Wood Zone hole are:

The Wood Zone consists of stockworks and breccias; these intercepts are therefore thought to represent approximate true thicknesses of the mineralized zone as a whole, as it''s shown on the image available at the following link: http://media3.marketwire.com/docs/pzg_map0312.jpg.  

Crupi also noted that Paramount is continuing to explore for another Sleeper deposit similar to the high grade one originally mined in the 1980s and 1990s. "In late 2012, we completed a preliminary 18 hole reverse circulation campaign on the newly acquired claims south of Sleeper. Although we have no discoveries to report as of yet, we are encouraged by what we are seeing. The favorable geological context which produced the original Sleeper continues to the south. Our claims total about 80 square kilometers and we have only drilled 3,487 meters to date."

NI 43-101 Disclosure

Exploration activities at Sleeper are being conducted by Paramount Gold 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, both of whom have reviewed and approved this press release. An ongoing quality control/quality assurance protocol is being employed during the program including blank, duplicate and reference standards in every batch of assays. Samples are being assayed at ALS Chemex, Reno, Nevada while multi-element analysis is being performed in Vancouver, Canada. External check samples are also being conducted at an Inspectorate Lab in Reno, Nevada.

Sleeper PEA

The PEA prepared by Metal Mining Consultants of Denver, Colorado (formerly Scott E. Wilson Consulting Inc.), was released on July 30, 2012. The PEA specifies a development scenario for Sleeper consisting of a large-scale open pit mining operation with a heap leach processing plant handling both oxide and sulphide material, producing a gold-silver dore. The base case scenario incorporates an 81,000 tonnes per day operation (approximately 30 million tonnes per year throughput), resulting in a projected 17 year operation with average annual production of 172,000 ounces of gold and 263,000 ounces of silver. Projected life-of-mine average cash operating costs are US$767 per ounce of equivalent gold recovered. Start-up capital costs for this project scenario are estimated at US$346 million. Sustaining capital costs over the project''s life are estimated at an additional $278 million. Total capital cost contingencies over the project life are estimated at an additional $64 million, bringing the total life of mine capital costs to $688 million. The total cost of equivalent gold production (including cash operating costs and total capital and contingency costs over the life of the mine) is estimated at US$996 per ounce.

At a gold price of US$1,384 per ounce and a silver price of $26.33 per ounce (the 3 year trailing average of gold and silver prices as at July 3, 2012), the Sleeper base case has a US$1.2 billion pre-tax net cash flow, a US$695 million net present value at a 5% discount rate and an internal rate of return (IRR) of 26.8%. At US$1,618 gold (the spot price on July 3, 2012), the total pre-tax net cash flow increases by 160% over the base case to US$1.9 billion, the net present value at a 5% discount rate almost doubles to US$1.2 billion and the internal rate of return improves to a robust 40%.

About Paramount

Paramount 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 and engineering programs are now in progress at these two core projects which are expected to generate substantial additional value for our shareholders.

The Sleeper Gold Project is located off a main highway about 25 miles from the town of Winnemucca. In 2010, Paramount acquired a 100% interest in the project including the original Sleeper high-grade open pit mine operated by Amax Gold from 1986 to 1996 as well as staked and purchased lands now totaling 2,570 claims and covering about 47,500 acres which stretch south down trend to Newmont`s Sandman project. This acquisition is consistent with the Company''s strategy of district-scale exploration near infrastructure in established mining camps.

The San Miguel Project consists of 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 San Miguel Project is ideally situated near established, low cost production where the infrastructure already exists for early, cost-effective exploitation. A PEA for San Miguel results was released on February 28, 2013. With low initial capital costs of $232 million and low operating costs, San Miguel is estimated to produce an average of 57,300 ounces of gold and 3.1 million ounces of silver per year over its 14 year mine life, generating an estimated pre-tax NPV of US$707 million at a 5% discount rate and IRR of 33.2% at a gold price of $1500 and a silver price of $29.

SUMMARY OF ALL PZG RESOURCES

Cautionary Note to U.S. Investors Concerning Estimates of Indicated and Inferred Resources

This news release uses the terms "measured and indicated resources" and "inferred resources". We advise U.S. investors that while these terms are defined in, and permitted by, Canadian regulations, these terms are not defined terms under SEC Industry Guide 7 and not normally permitted to be used in reports and registration statements filed with the SEC. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility studies, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant "reserves", as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in this category will ever be converted into reserves. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally minable.

Safe Harbor for Forward-Looking Statements

This release and related documents may include "forward-looking statements" including, but not limited to: statements related to the interpretation of drilling results and potential mineralization; future exploration work at the Sleeper Gold Project and the MIMI claims and the expected results of this work; and the accuracy and reliability of projections contained in mineral resource estimates and Preliminary Economic Assessments for both the Sleeper and San Miguel projects. Forward-looking statements are statements that are not historical fact and are subject to a variety of risks and uncertainties which could cause actual events to differ materially from those reflected in the forward-looking statements including fluctuations in the price of gold, inability to complete drill programs on time and on budget, and future financing ability. Paramount''s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Words such as "believes" "plans" "anticipates" "expects" "estimates" and similar expressions should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to: uncertainties involving interpretation of drilling results, environmental matters, lack of ability to obtain required permitting, equipment breakdown or disruptions, and the other factors described in Paramount''s Annual Report on Form 10-K for the year ended June 30, 2012 and its most recent quarterly reports filed with the SEC. Except as required by applicable law, Paramount disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document.

Paramount Gold and Silver Corp.
Glen Van Treek, VP Exploration
Chris Theodossiou, Investor Relations
866-481-2233