Paramount Gold and Silver has reported high grade mineral at its 100%-owned San Miguel project in northern Mexico, during the first phase of an on-going core drilling programme.

The San Miguel project consists of 40 concessions covering more than 140,000ha, which surrounds the Coeur D’Alene Mines` operating Palmarejo mine complex.

Paramount has undertaken drilling operations in the Don Ese area, adjacent to Coeur d’Alene’s Guadalupe mine, and intends to secure measured and indicated resources from inferred and obtain material for metallurgical tests.

All six drilled holes at Don Ese intersected positive high grades such as 36.5m of 3.66 grams per tonne (g/t) of gold and 222g/t silver (7.7g/t gold equivalent) and up to 56g/t gold and 4.8kg/t silver (141 opt).

The company said the results confirm that the resource model is profound and it is due to attain drill spacing to upgrade resources.

Paramount stated that the drill programme is designed to advance the San Miguel project towards an updated preliminary economic assessment (PEA), which could incorporate a heap leach scenario for mid-to-low grade material.

A previous PEA had confirmed that the San Miguel project would offer a robust economic opportunity to develop a low-cost mine in the prolific Sierra Madre belt in Mexico.

The company noted that the objectives for the current work programme include adding resources at two new high priority exploration targets, acquiring material for further metallurgical testing of heap leach processing, and upgrading inferred resources to measured and indicated.

Paramount CEO Christopher Crupi said the Don Ese deposit continues to improve every time we work on it.

"We expect these outstanding new intercepts to increase both the size and grade of the Don Ese resource as well as moving more of it into the indicated category," Crupi said.