Paramount Gold and Silver (PZG-T, PZG-X) has bulked-up its Mexican resources in a serious way. The company released an updated resource estimate for its wholly owned San Miguel project in the country, boosting indicated gold resources by 547%, and silver resources by 240%.
The new estimate outlines an indicated resource of 23.9 million tonnes grading 0.83 gram gold and 70 grams silver per tonne for 639,000 oz. gold and 53.6 million oz. silver. Inferred resources of 37.5 million tonnes grade 0.69 gram gold and 38 grams silver for 830,000 oz. gold and 46.2 million oz. silver.
Using a gold-to-silver price ratio of 1 to 60, San Miguel has 1.53 million equivalent oz. gold in the indicated category and another 1.6 million equivalent oz. gold in the inferred.
The update was based on data from 139 new core drill holes totalling 37,925 metres, completed during 2011 and the first half of this year.
The resource estimate holds seven different zones: Don Ese, San Miguel, Union, San Francisco, San Antonio, La Veronica and Monte Cristo-Sangre de Cristo.
Paramount increased ounces without a parallel increase in tonnage largely because infill drilling programs hit continuity and higher-grade mineralization. Paramount hadn’t assumed continuity in its previous inferred resources.
As for comparables, Paramount says investors shouldn’t look far, and that the nearest equivalent property from a geological perspective is the Palmarejo mine “next door,” which is owned by Coeur d’Alene Mines (CDM-T, CDE-N).
Paramount is exploring San Miguel, following up its discovery in May of the La Bavisa target on the property. San Miguel covers 188 sq. km in the Palmarejo district of Mexico’s Chihuahua state, making Paramount the largest claim holder in the camp.
Two days after the update’s release on Sept. 5, Paramount shares climbed 14% to $2.72. At press time shares traded for $2.51 each, within a 52-week range of $1.98 to $3.20.
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