Paramount Reports Initial Assays from San Miguel Zone Drill Program

Paramount Gold and Silver (AMEX: PZG) announced the results of initial assays from only four of 25 completed drill holes at the San Miguel Zone at its San Miguel project near Chihuahua, Mexico (Figure 1). Paramount controls 70% of the San Miguel project. The drill program is following up on channel samples and reports from old mine workings to test mineralization along a strike length of more than one kilometer. We initiated coverage on Paramount on January 18, 2008.

Figure 1—Initial Four Drill Holes at San Miguel Zone, San Miguel Project

Source: Paramount

The current drill program is primarily targeting mineralization approximately 70 meters from surface. About four of the holes in the drill program with results pending are targeting potential deeper mineralization. Should these deeper drill holes encounter similar grades to the initial assays, the comparison of the San Miguel Zone to Coeur D’Alene Mines Corp.’s (NYSE: CDE) nearby Palmarejo project may hold up.

We were impressed with the initial assays. These initial assays from four drill holes encountered mineralization at intervals of up to 44 meters in hole SM-01. In addition, management was pleased with high grades of gold and silver. Hole SM-02 encountered an interval of 11.15 meters with 0.47 g/t (grams/ton) gold and 220.00 g/t silver which included an interval of 0.31 meters with 2.93 g/t gold and 3,160.00 g/t silver. Clearly, assays from only four of the 25 drill hole program provides only an early indication of mineralization, but assays met our expectations.

It would appear the assays supported management’s expectations confirming gold and silver mineralization to 70 meters. Larry Segerstrom, COO of Paramount Gold and Silver Corp., commented the “grades and thicknesses are consistent with and may represent the discovery of a high-grade ore shoot similar to those at nearby Palmarejo.” They have also commented that this position is consistent with geologists they consider familiar with Palmarejo. We will be looking forward to assay results from these deeper holes.

The author has no position in any stocks mentioned in this report. An affiliate of the author's employer may provide corporate advisory services to PZG.