Paramount Gold and Silver Corp. (NYSE MKT:PZG) (TSX:PZG) (FRANKFURT:P6G) (WKN:A0HGKQ) today announced that new metallurgical tests on its 100%-owned San Miguel Project by the McClelland metallurgical laboratory in Reno, Nevada confirm the potential for an economic recovery of precious metals at two of San Miguel’s open pit deposits using inexpensive heap leach technologies.

In a Preliminary Economic Assessment completed earlier this year, Metal Mining Consultants of Denver, Colorado determined that the most efficient recovery process for the abundant high-grade gold and silver material at San Miguel is a mill circuit followed by whole rock cyanide leach and a Merrill Crowe gold and silver recovery plant. A 200 mesh particle size (mill scenario) optimizes recoveries for the high-grade compared to a 3/4 inch crush size/heap leach scenario. However, the higher cost milling scenario requires a higher cut-off grade which excludes mid-to-lower-grade open pit material which can be mined inexpensively. As a result, the PEA does not include a significant portion of the project’s global resource, particularly from the bulk-mineable San Francisco and San Antonio deposits.

To address this issue of the mid-to-lower-grade, open pit material, Paramount commissioned McClelland to conduct additional met tests on different crush sizes–3/4, 1/2 and 1/4 inch and 1.7 mm– to evaluate the heap leach potential for material from the San Miguel Vein, San Francisco, San Antonio and La Union deposits. A total of 24 cyanide leach bottle roll tests were conducted on six composited samples from near-surface oxide and mixed material that are amenable to be extracted by open pit mining. Gold recoveries up to 83.8 % were achieved from 1/4 inch crush after 96 hours of cyanide leach time for San Francisco, a gold deposit with lower silver grades. Silver recoveries up to 50.4% were achieved from 1/4 inch crush after 96 hours of leach time for San Antonio, a silver-rich deposit. Both deposits are to be mined by open pit method only according to the PEA. These results support the potential for an economic heap leach scenario. Even higher recoveries were achieved for the 1.7 mm crush size.

A viable heap leach process for San Francisco and San Antonio would increase mineable material significantly, reduce the ore-to-waste and strip ratios and substantially increase total contained ounces within the mine plan. The current PEA mine plan includes a total of 18.5 million tonnes containing 859,000 ounces of gold and 62 million ounces of silver as follows:

----------------------------------------------------------------------------

Total Production             Grade                Contained metal

           Tonnes   Au g/T  Ag g/T    AuEq      Au Oz       Ag Oz    AuEq Oz

----------------------------------------------------------------------------

Open

 pit    9,637,358     0.38     101    2.07    118,259  31,423,370    641,982

Under

 ground 8,855,054      2.6     108     4.4    741,063  30,643,380  1,251,786

Total  18,492,412     1.45     104    3.19    859,322  62,066,750  1,893,768

----------------------------------------------------------------------------

Current resource within the PEA Mine Plan

In the PEA, the San Francisco and San Antonio open pits contribute just 4.2 million tonnes to the mine plan, containing 27,570 ounces of gold and 13.9 million ounces of silver. Resources estimated by Mine Development Associates (“MDA”) of Reno, Nevada indicate that at a lower cut-off grade, which could be expected in a heap leach scenario, contributed tonnes from San Francisco and San Antonio could increase almost ten times to nearly 42 million tonnes or about 396,000 ounces of gold and 32 million ounces of silver, as follows.

------------------------------------------------

------------------------------------------------

                             Cut Off      Tonnes

                   Ag Eq       Au Eq

Deposit              g/T         g/T

------------------------------------------------

San

 Francisco            10        0.17           -

San Antonio           25        0.42   7,389,000

------------------------------------------------

Total                                  7,389,000

------------------------------------------------

----------------------------------------------------------------------------

                                       Measured & Indicated

----------------------------------------------------------------------------

                     Grade                                   Contained metal

Deposit        Au g/T   Ag g/T      AuEq       Au Oz       Ag Oz     AuEq Oz

----------------------------------------------------------------------------

San

 Francisco          -        -         -           -           -           -

San Antonio      0.02       70      1.19       5,000  16,533,000     280,550

----------------------------------------------------------------------------

Total            0.02       70      1.18       5,000  16,533,000     280,550

----------------------------------------------------------------------------

----------------------------------------------------------

----------------------------------------------------------

                                    Cut Off         Tonnes

Deposit            Ag Eq g/T       AuEq g/T

----------------------------------------------------------

San Francisco             10           0.17     32,033,000

San Antonio               25           0.42      2,110,000

----------------------------------------------------------

Total                                           34,143,000

----------------------------------------------------------

----------------------------------------------------------------------------

                                        Inferred

----------------------------------------------------------------------------

                       Grade                                 Contained metal

Deposit          Au g/T    Ag g/T     AuEq      Au Oz       Ag Oz    AuEq Oz

----------------------------------------------------------------------------

San Francisco      0.38        10     0.55    386,000  10,277,000    557,283

San Antonio        0.08        73     1.30      5,000   4,978,000     87,967

----------------------------------------------------------------------------

Total              0.36        14     0.59    391,000  15,255,000    645,250

----------------------------------------------------------------------------

MDA resource estimate at lower cut off for the two open pit only deposits.

Note: the PEA and related estimates of resources included in the PEA mine plan incorporate inferred mineral resources which are considered to be too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and, as such, do not have demonstrated economic viability. There can be no certainty that the estimates contained in the PEA will be realized.

Paramount will now start selecting a larger set of representative samples for a more comprehensive test of the 1/4 inch crush size to confirm the viability of a heap leach scenario and then update the current PEA.

Paramount CEO Christopher Crupi commented: “Step by step, we are making major improvements to the economics of San Miguel, a project that is already robust at current metal prices. I am very proud of the cost-effective way in which our technical team has developed San Miguel into such an outstanding opportunity. We are rapidly approaching the point at which we can expect to realize value from our investment in San Miguel, given better precious metal prices. Fortunately, we are in no need of funds and we can continue to improve the project while we wait for markets to improve.”

NI 43-101 Disclosure

Exploration activities at San Miguel are being conducted by Paramount Gold de Mexico S.A de C.V personnel under the supervision of Glen van Treek, Exploration Vice President of the Company and Bill Threlkeld, a QP as defined by National Instrument 43-101, who have both reviewed and approved this news release. Michael Gustin of MDA, a Qualified Person responsible for resource estimation, has also reviewed and approved the portions of this news release that relate to the San Miguel resource estimate. An ongoing quality control/quality assurance protocol is being employed for the program including blank, duplicate and reference standards in every batch of assays. Cross-check analyses are being conducted at a second external laboratory on 10% of the samples. Samples are being assayed at ALS Chemex, Vancouver, B.C., using fire assay atomic absorption methods for gold and aqua regia digestion ICP methods for other elements.

About Paramount Gold

Paramount Gold 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 programs are now in progress at these two core projects which are expected to generate substantial additional value for our shareholders. Engineering studies are scheduled for completion in 2012 to define a development path and economic valuation for each project.

The 100% owned San Miguel Project consists of over 140,000 hectares (approximately 350,000 acres) in the Palmarejo District of northwest Mexico, making Paramount the largest claim holder in this rapidly growing precious metals mining camp. The current work program at San Miguel is part of Paramount’s strategy of expanding and upgrading known, large-scale precious metal occurrences in established mining camps, defining their economic potential and then partnering them with nearby producers. The San Miguel Project is ideally situated near established, low cost production where the infrastructure already exists for early, cost-effective exploitation. Paramount also owns 100% of the Sleeper Gold Project which is emerging as one of Nevada’s largest new undeveloped gold resources.

SUMMARY OF ALL PZG NI 43-101 COMPLIANT RESOURCE ESTIMATES

MEASURED AND INDICATED RESOURCES

----------------------------------------------------------------------------

PROJECT                  Tonnes    Au g/T  Au Ounces     Ag g/T    Ag Ounces

----------------------------------------------------------------------------

San Miguel           23,918,000      0.83    639,000       70.0   53,559,000

----------------------------------------------------------------------------

Sleeper             326,963,000      0.33  3,479,000       3.86   40,606,000

----------------------------------------------------------------------------

Total                                      4,118,000              94,165,000

----------------------------------------------------------------------------

INFERRED RESOURCES

----------------------------------------------------------------------------

PROJECT                  Tonnes    Au g/T  Au Ounces     Ag g/T    Ag Ounces

----------------------------------------------------------------------------

San Miguel           37,470,000      0.69    830,000      38.00   46,243,000

----------------------------------------------------------------------------

Sleeper             223,624,000      0.27  1,972,000       2.84   20,450,000

----------------------------------------------------------------------------

Total                                      2,802,000              60,693,000

—————————————————————————-