Name and Location
San Miguel gold and silver project, Chihuahua, Mexico.

Client
Paramount Gold and Silver Corp.

Project Description
The new preliminary economic assessment (PEA) on the San Miguel project has confirmed that the project represents a potentially robust economic opportunity to develop a low-cost mine in the prolific Sierra Madre belt in Mexico.

The new PEA adds an efficient, inexpensive openpit, heap-leach operation to the front-end of the production scenario, which helps fund underground mining and related mill construction from cash flow. The new PEA also features a very substantial increase in measured, indicated and inferred resources, compared with the 2013 PEA.

The PEA proposes a 4 000 t/d mill with a heap-leaching facility fed by openpits and underground mines, resulting in a projected 17-year operation, with a total metal production of 933 000 oz of gold and 47.1-million ounces of silver.

The PEA has determined that the most suitable mining scenario for the project is an underground operation for the high-grade Don Ese deposit, a combination of openpit and underground mining for the La Union and San Miguel deposits, and openpit extraction for the San Antonio, La Veronica, Monte Cristo and San Francisco deposits.

The recommended openpit mining method is conventional drilling and blasting with mineralised material and overburden loaded into rigid-frame haul trucks. Mechanised underground mining will be from sublevel open stoping with delayed backfilling.

The development of mining and processing infrastructure has been defined in a conceptual plan, based on a central process facility with a tailings storage facility and a heap-leaching facility. Individual openpit mines will be developed as satellite production operations, with haul trucks transporting the mineralised material to the process site by haul truck.

A main electrical power line and power centre will be developed at the process facility, with individual power lines linked to the underground mining operations at Don Ese, San Miguel and La Union. Don Ese’s distance from the main mining and processing facilities will require it to have its own facilities and infrastructure, whereas San Miguel and La Union will be able to use shared facilities and most of their infrastructure.

The underground mines will have separate ventilation and dewatering systems because of their remote locations from each other. Access/haul roads to each mining operation will be developed.

It is assumed that personnel for the mining operation will live in the local communities of Temoris and that no camp facility will be built.

Net Present Value/Internal Rate of Return
The project has an estimated base case pretax net present value of $472.6-million at a 5% discount rate and an internal rate of return of 23.2%, with a quick payback of initial capital in the third year of production.

Value
Total capital expenditure is estimated at $439.5-million.

Duration
Not stated.

Latest Developments
In December 2014, Paramount announced results from three additional core holes drilled at the high-grade Don Ese deposit, located on the San Miguel project site. Exceptional grades and widths from these infill holes are likely to upgrade resources to the measured and indicated categories and potentially increase the resource size and grade.
Paramount is drilling the Don Ese and Dana structures using three core rigs as part of its programme to move the San Miguel project towards a prefeasibility study.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Paramount Gold and Silver Corp investor relations, Chris Theodossiou, tel +1 866 481 2233.