The first two holes have intersected wide zones of high silver values very close to surface.

The San Miguel Preliminary Economic Assessment (PEA) released on August 25, 2014 proposed adding a heap leaching operation to what had previously been a mill-only development scenario, based on successful heap leach metallurgical tests. Adding a heap leach operation to the front end of the production scenario brought down initial capital costs while helping to fund underground mining and related mill construction from cash flow. The new PEA also featured a very substantial increase in resources compared to the 2013 PEA by including relatively lower grade material from bulk minable deposits like San Francisco.

Paramount therefore initiated new drilling at San Francisco to add resources which would likely not have been economic previously. Holes SF-14-057 and 058 were drilled into the eastern portion of the San Francisco area to see if discontinuous mineralized zones found in limited drilling in 2011 could be connected into a larger body which could be mined more efficiently. SF-14-057 intersected better than expected silver grades of up to 749 g/T (24 opt silver) and 0.57 g/T of gold within an outstanding intercept of 89.95 meters grading 66.8 g/T of silver (2 opt of silver) and 0.08 g/T of gold (a gold equivalent grade of 1.2 g/T) starting less than 12 meters below surface (see table below). SF-14-058 intercepted grades up to 814 g/T Ag (26 opt of silver) with 1.8 g/T of gold within a large intercept of 40 meters grading 56 g/T of silver and 0.084 g/T of gold. Significant assays and a drill hole location map are found below.

These holes were drilled to intersect the mineralized zones at right angles. Additional drilling is required to model and confirm true width of mineralized zones.

The current drill program at San Miguel has three objectives (see news release of September 2, 2014):

Test new, recently identified targets like Dana.
Convert inferred resources within the proposed underground mine plan to measured and indicated. About 18% of the underground minable material in our PEA is inferred. The aim is to have 100% of the resource as measured and indicated so that it will qualify as reserves in a Preliminary Feasibility Study.
Acquire material for metallurgical testing and geotechnical studies.
Paramount is continuing its drill program with four core rigs on San Francisco, the new discovery on Dana (see news release of October 15, 2014) and the Don Ese deposit.