Paramount Gold reports new high grade drill intercepts at its San Miguel project in Mexico

Six holes drilled on the San Antonio Target generated multiple near surface intercepts grading more than 100 g/T of silver. These results demonstrate the potential for a shallow, bulk minable silver deposit with a minimal strip ratio and low operating costs. The San Antonio Target continues to expand with numerous new silver zones intercepted in step out drilling.

Ongoing drilling at the San Miguel Project is designed to: (1) upgrade inferred resources to the measured and indicated categories for inclusion in a Preliminary Economic Assessment (PEA) scheduled for 2012; (2) increase resources; and (3) explore new targets. Drilling is currently focused on the San Miguel Vein, San Antonio, Don Ese and San Francisco targets with another 15,000 meters to be completed this year (see map for zone locations at http://www.paramountgold.com/_gui/SanMiguel_RegionalMap.jpg). Additional drilling equipment is being contracted to expedite the program.

Paramount Gold has commissioned Mine Development Associates (MDA, www.mda.com) of Reno, Nevada to begin updating resources for all target areas on the project. MDA is currently working on the targets that are not scheduled for further drilling this year — San Luis, San Jose, La Union, Santa Clara and San Antonio. These areas were not included in the preliminary resource estimate prepared by MDA released in April, 2011. Estimates for these targets are expected later this year. An updated resource estimation of the entire project including all 2011 drilling is anticipated in the second quarter of 2012.

Christopher Crupi, Paramount`s CEO, commented that “we believe we are moving towards a considerably larger and better defined resource at San Miguel compared to the preliminary estimates released last April. At that time, we announced MDA`s first estimate for five deposits–the San Miguel Vein, San Francisco, Monte Cristo/Sangre de Cristo, La Veronica and Don Ese–using more stringent standards of estimation suitable for a PEA. These estimates were then used as a guide for further drilling to expand and upgrade this preliminary resource. Since that time, we have undertaken considerable additional work on these five targets, as well as on San Antonio, with notable success. We also expect to add resources from the other deposits which were not estimated by MDA in April.”

In general, PZG geologists design drill holes to intercept structural features at right angles so as to provide results which are a close approximation to true width. However, due to access, topography and property boundaries, some of the deeper drill holes on the San Miguel Vein Target have intersected the structure at less than optimal angles.

The 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 consistent with 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. Located in the heart of the Palmarejo District, San Miguel 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, containing an in situ measured and indicated resource of 2.6 million ounces of gold and 25.3 million ounces of silver and an additional inferred resource of 1.1 million ounces of gold and 8.2 million ounces of silver (see table at http://www.paramountgold.com/Resources/Index.asp).

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 this press release. An ongoing quality control/quality assurance protocol is being employed during 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.

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.