Paramount Gold and Silver (NYSE:PZG,TSX:PZG) will mobilize four drill rigs to its wholly owned San Miguel Project in northern Mexico. The planned drilling is part of a program to upgrade the resource at San Miguel and advance the project to pre-feasibility.
As quoted in the press release:
The main objectives in the current program are:
- Test a newly identified structure named Dana which runs parallel to Paramount’s Don Ese deposit, some 800 meters northeast of Coeur d’Alene’s Guadalupe Mine. The one kilometer long Dana appears to be similar to the Don Ese which is considered to be the most valuable deposit at San Miguel due to its high gold grade and continuity along strike and at depth. Drilling will also continue to explore La Bavisa which returned good metal values in the 2013 program (see map below).
- Expand and infill the lower grade San Francisco deposit, reflecting the new PEA’s successful inclusion of a heap leach scenario for this material. The obvious expansion potential for San Francisco had been discounted in the previous mill-only scenario.
- Convert inferred mineralized tonnes within the proposed underground mine plan to measured and indicated. About 18% of the underground minable material in the PEA was inferred; the aim is to have 100% categorized as measured and indicated which could then convert to reserves in a PFS.
- Acquire material for metallurgical and geotechnical testing.
- Commence base line environmental studies. Paramount has contracted for hydrogeological studies to characterize the project’s hydrological setting, water quality and chemistry according to the SERMANAT requirements for an Environmental Impact Manifestation (MIA); environmental risk assessments and technical studies related to the use of surface land for mining operations; and community surveys needed to complete a database of surface land users and community expectations.
Paramount expects to complete the majority of this work during the current year within an estimated budget of $5 million to be financed from cash on hand.
Paramount CEO, Christopher Crupi, said:
we have decided to continue the process of moving San Miguel towards a production decision. This work will further de-risk our project and add substantial value during a period when we also expect gold and silver prices to be on the rise. The low initial capital cost estimates for a combined heap leach and milling scenario in our new PEA have encouraged us to proceed to the next step.