WINNEMUCCA, NEVADA--(Marketwire - Sept. 5, 2012) - Paramount Gold and Silver Corp. (NYSE MKT:PZG)(NYSE Amex:PZG)(News - Market indicators)(FRANKFURT:P6G)(WKN:A0HGKQ) ("Paramount") today released results from an updated NI 43-101- compliant resource estimate for its 100%-owned San Miguel Project in Mexico. The updated estimate was prepared by Mine Development Associates (MDA, www.mda.com) of Reno, Nevada and includes data from 139 new core drill holes totaling 37,925 meters completed during 2011 and the first half of 2012. Previous resource estimates used in this press release for comparison purposes were also prepared by MDA.

The new estimate reports 639,000 ounces of gold in the indicated category and another 830,000 ounces of gold classified as inferred. For silver, indicated resources are now estimated at 53.6 million ounces plus an additional 46.2 million ounces of inferred. Based on the long term gold-to-silver price ratio used by MDA of 1-to-60, the San Miguel estimated resource now equates to 1.53 million indicated gold equivalent (AuEq) ounces and 1.60 million inferred gold equivalent ounce (see table below for details).

Recognizing that portions of the resources are silver-dominant and use a silver cut-off grade, it is also useful to assess the estimated resource on a silver-equivalent basis. Using the same 1-to-60 ratio, the San Miguel estimated resource now stands at 91.90 million indicated silver equivalent ounces and 96.04 million inferred silver equivalent ounces.

Paramount's CEO Christopher Crupi commented: "This new estimate demonstrates the strength and quality of the San Miguel Project. We are delighted to see that infill drilling not only significantly increased the tonnage of the indicated resource but also increased its grade. Meanwhile, exploration drilling has continued to generate new discoveries. We are highly confident that inferred resources will continue to convert to indicated and that the overall resource will also continue to grow. We believe this resource estimate will support a robust PEA which is being led by Scott E. Wilson Consulting and is scheduled for completion by the end of this year."

"The success we have had over the past two years at San Miguel is attributable to a first rate team of geologists and a patient, conservative approach of building on what we know. The nearest equivalent property from a geological perspective is the Palmarejo Mine right next door which is owned by Coeur d'Alene Mines. It is worth noting that when the decision was made to capitalize that mine, its resources looked very similar to the San Miguel of today," Crupi said.

Paramount continues to explore San Miguel, following up its recent discovery at La Bavisa as well as promising targets at Don Ese Sur, El Ojito, Barranca Blanca and other new priority targets. La Bavisa, Don Ese Sur, El Ojito and Barranca Blanca targets are all within the Don Ese Zone (see map).

Modeling

Paramount remodeled geology on all of the areas where new drilling resulted in a re-estimation of resources (Don Ese, San Miguel, La Union, San Francisco, and San Antonio). MDA used the Paramount geological models and its own statistical analyses to create mineralized envelopes for low, mid and high-grade mineralization for gold and silver individually. These envelopes were interpreted by hand on vertical cross sections and then adjusted on 5-meter level plans or benches throughout each of the deposits. Ordinary Kriging, inverse distance and nearest neighbor estimation procedures were performed on all resource areas. Inverse distance was thought to be the most representative of the drill data and therefore it was selected for reporting the resources. Gold and silver grades were estimated into 5x5x5 meter blocks for the three sets of mineralized envelopes for both gold and silver in each of the resource areas except Don Ese where, to better model mining dilution that might be experienced in an underground operation, blocks were sized at 2.5x2.5x5 meters.

Conversion from Inferred to Indicated

During 2011, Paramount and MDA worked jointly to define drilling parameters needed to enable a resource block to be categorized as indicated. Paramount then designed a drill program to upgrade existing inferred resources to indicated in the main deposit areas. As a result of this infill drilling, indicated ounces increased by a total of 540,200 ounces of gold and 37.8 million ounces of silver. Moreover, the new estimate's indicated resources are significantly higher in grade than the previously reported inferred resources, using identical cut-offs. Average grades of the previously estimated inferred resources were 0.60 Au g/T and 39 Ag g/T, while grades of the current indicated resources average 0.83 Au g/T and 70 Ag g/T. On a gold equivalent basis, previous inferred grade was 1.25 g/T AuEq and current indicated grade is 2.00 AuEq g/T.

The silver and gold resource ounces have substantially increased relative to those previously reported without commensurate increases in resource tonnes. This is due to the success of the infill drilling programs, which have demonstrated continuity of the higher-grade mineralization that was not assumed in the inferred resources of the previously reported models.

The increase in the indicated resource was partly at the expense of inferred resources. However, Paramount's exploration program was extremely successful at bringing in new resource ounces to the project.

Paramount has demonstrated that the high quality of its model and MDA's estimates can be expected to result in a continuing high rate of conversion of inferred resources to indicated; in our view it is only a matter of drilling and time. Paramount's resource estimates can also serve as a reliable base for Preliminary Economic Assessments (PEA) and Preliminary Feasibility Studies.

Cut-off grades reflect likely mining scenarios

MDA has estimated resources at various cut-off grades consistent with previous estimates. As the San Miguel Project consists of gold-silver deposits, a silver equivalent (AgEq) cut-off of 25 g/T, or 0.42 AuEq g/T, was used for all resource areas except Don Ese. This cutoff was chosen to reflect resources potentially amenable to open-pit mining methods. A silver equivalent cut-off of 90 g/T, or 1.5 AuEq g/T, was used at Don Ese because underground mining methods would likely be needed for the potential exploitation of this resource. A PEA, now in progress, will better define these economic parameters and determine open pit vs. underground mine plans.

Estimated resources at a higher cut-off

Paramount is sensitive to the fact that some potential partners in San Miguel may not have confidence in high precious metal prices or may want to focus on high-grade scenarios for other reasons. In this regard, Paramount is very pleased to report that, at substantially higher cut-off grades, the project contains a significant resource with high gold and silver grades.

For example, at a 90 g/T AgEq cut-off grade (or 1.5 AuEq g/T) for all deposits, indicated gold and silver grades increase 123% and 95% respectively to 1.86 Au g/T and 137 Ag g/T, but indicated contained metal is only reduced by 19% for gold and 29% for silver. Likewise, on a gold equivalent basis with a cut off of 1.5 AuEq g/T (or 90 AgEq g/T), the average grade of indicated resources increases 107 % to 4.13 AuEq g/T and indicated contained gold equivalent ounces drop by only 25% to 1.155 million gold equivalent ounces.

Similar performance is seen for the inferred resource where, at the 90 g/T AgEq cut-off grade (or 1.5 AuEq g/T), the average gold grade increases 183% to 1.95 Au g/T while the silver grade rises 174% to 104 Ag g/T. On a gold equivalent basis with the same higher cut-off, the average grade rises 179% to 3.68 AuEq g/T and contained gold equivalent ounces decrease by only 43% to 906,000 gold equivalent ounces. Estimated resources at the higher cut-off are as follows:

MDA resource estimates at a 90 g/T AgEq cut-off (or 1.5 g/T AuEq).

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

The San Miguel Project consists of 188,000 hectares (465,000 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 consistent with 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.

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 San Miguel Project and the expected results of this work. 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, 2011 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.