Paramount Gold and Silver reports significant intercepts on Don Ese and La Union deposits on its San Miguel project including 17.6 meters grading 2.75 g/t gold and 166.8 g/t silver

WINNEMUCCA, NEVADA–(Marketwire – Jan. 31, 2012) – Paramount Gold and Silver Corp. (NYSE Amex:PZG)(TSX:PZG)(FRANKFURT:P6G)(WKN:A0HGKQ) ("Paramount") today reported new assay results from ongoing core drilling at its 100%-owned San Miguel Project in Mexico. The reported drill holes come from the high-grade gold and silver deposits of Don Ese North and La Union.

Three new core holes drilled at Don Ese North have intersected widths of up to 17.6 meters of strong gold and silver values including 6.0 meters grading 6.89 g/T of gold and 363.62 g/T of silver. This drilling, together with previously reported results, continues to confirm the persistent strength of this wholly-owned high-grade zone first discovered by Paramount just over one year ago (see news release ofDecember 9, 2010).

The Don Ese North vein strikes north-northwest directly towards the nearby Palmarejo Mine owned by Couer d`Alene and appears to be an extension of the structure which hosts this highly successful gold-silver producer. True width of the Don Ese vein is typically in the range of 10 meters but is locally up to 19 meters wide. Don Ese is a massive quartz vein with textures characteristic of low sulfidation, epithermal deposits consistent with other vein deposits in the district such as the Palmarejo. To date, the mineralized vein has been traced by core drilling for nearly 1,000 meters along strike and the feature remains open down dip. Paramount is also expecting to receive permits shortly to expand drilling along strike on to its wholly-owned Don Ese South target area.

To date, a total of 20 drill holes totaling 10,050 meters have been completed into Don Ese North of which only seven holes were incorporated into the current NI 43-101 resource estimate prepared by Mine Development Associates (MDA, www.mda.com) of Reno, Nevada and released on April 11, 2011 (see news release). Another four drill holes are planned prior to starting geological modeling and updating the resource. Measured and indicated resources for this deposit are expected to increase significantly.

Assays from another core hole into the central portion of La Union provide further evidence that the high grade in this deposit remains open to the north as well as to the south and at depth. La Union is part of what is now believed to be a continuous mega structure which strikes for at least seven kilometers from La Veronica in the north to Santa Clara (see January 11th, 2012 news release for details). Paramount will shortly begin drilling the 2.5 kilometers of this mega structure which have not yet been tested.

To view long sections with drill hole locations of both the La Union and Don Ese zones, go tohttp://paramountgold.com/Projects/SanMiguel_Maps.asp.

Assays from the four most recent San Miguel drill holes are as follows:

Hole # Area Total
Length (m)
From (m) To (m) Width (m) Au g/T Ag g/T
DS-11-021 DON ESE 557.95 523.85 526.85 3.00 0.39 48.72
DS-11-023 DON ESE 527.45 478.05 487.20 9.15 1.76 128.24
including 481.70 484.20 2.50 4.62 293.40
489.70 492.20 2.50 0.26 46.03
DS-11-024 DON ESE 475.50 403.10 420.70 17.60 2.75 166.83
including 410.65 416.65 6.00 6.89 363.62
LU-12-023 LA UNION 155.50 106.35 110.15 3.80 1.08 27.36
116.10 135.30 19.20 2.07 3.97
including 97.70 98.40 0.70 4.18 15.60

The orientation of these drill holes was designed to intercept the structural features at right angles so as to provide a close approximation to true width. However, deep intercepts may have intersected the structures at less than right angles due to normal deviation encountered in drilling.

Christopher Crupi, Paramount`s CEO, commented that "the Don Ese increasingly resembles the neighboring Guadalupe deposit on Coeur`s Palmarejo's Project. The Guadalupe, which is now being prepared for production later this year, is just one km to the west of Don Ese and contains measured and indicated resources of 0.45 million ounces of gold and 37.3 million ounces of silver (as of January, 2010). Ore from the Guadalupe deposit will be moved by road to the Palmarejo mill which has the effect of improving access to Don Ese. Meanwhile, every hole we drill in the La Veronica-Santa Clara mega structure takes us closer to the possibility that this is one continuous precious metal occurrence with major economic consequences. We are very excited to begin filling in the gaps in this corridor."

During the last two quarters of 2011, Paramount`s drill program was focused on infilling and expanding known deposits on the San Miguel Project to improve the quality of resources from inferred to measured and indicated for the Preliminary Economic Assessment (PEA) expected in 2012. Drilling is now being shifted to exploring for new resources in the gaps of the mega structure and other untested targets.

A new resource estimate by MDA is expected during the second quarter of 2012 for the entire San Miguel Project which will include 2011 and early 2012 drill results. This new estimate will be incorporated into the PEA planned for later this year which will evaluate mining scenarios, mining rates and process alternatives and define a path to a Preliminary Feasibility Study which would report reserves.

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 Qualified Person as defined by National Instrument 43-101, who have both reviewed and approved this press release. 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 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 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. (See global resource table below).

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 8,005,000 0.38 98,800 62.00 15,759,000
Sleeper 172,763,453 0.47 2,625,399 4.56 25,337,575
Total 2,724,199 41,096,575

INFERRED RESOURCES

PROJECT Tonnes Au g/T Au Ounces Ag g/T Ag Ounces
San Miguel 45,890,000 0.60 877,700 38.00 56,848,000
Sleeper 81,754,167 0.43 1,120,410 3.12 8,202,962
Total 1,998,110 65,050,962

For a detailed report on these resource estimates, their QPs and methodologies please see the following news releases: April 11, 2011 (San Miguel); September 13, 2011 (Sleeper); and December 28, 2011 (San Miguel).

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.