Palmarejo Silver and Gold Corporation
TSX VENTURE : PJO

Palmarejo Silver and Gold Corporation

January 16, 2007 09:17 ET

Palmarejo Announces Initial Resource Statement for the La Patria Project

LONGUEUIL, QUEBEC--(CCNMatthews - Jan. 16, 2007) - Palmarejo Silver and Gold Corporation (TSX VENTURE:PJO) is pleased to announce the results of the first inferred resource estimate undertaken by Mine Development Associates ('MDA') of Reno, Nevada, USA for the La Patria-La Virginia-Maclovia section of Todos Santos to Maclovia mineralized corridor ("La Patria") located in the Trogan tenements in Chihuahua State, Mexico.

La Patria's initial inferred resource is estimated to be 171,000 ounces of gold and 4.03 million ounces of silver, or 244,300 ounces gold equivalent at a gold to silver price ratio of 1:55 (see table below).

This estimate is based on results from drill holes LPDH001 to LPDH061D (excluding LPDH060D) and does not include the balance of holes drilled in 2006, LPDH060D and LPDH062D to LPDH074, for which results were not available for inclusion in this estimate. Results of these additional drill holes will be available shortly and included in the next resource update.

The La Patria structure is a 1.7 kilometre section of the 4 kilometre long Todos Santos to Maclovia mineralized corridor located 6.5 kilometres south-southeast of the Palmarejo project and 4 kilometres southwest of the Guadalupe project in the Company's highly prospective Trogan tenements, some 265 kilometres southwest of Chihuahua in the Chinipas/Temoris district.

The Trogan tenements, including the La Patria-La Virginia-Maclovia project, are held by the Company's 100% owned subsidiary, Planet Gold SA de CV.



LA PATRIA INFERRED RESOURCES STATEMENT
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Cut-off Tonnes Au Au Ag Ag
(g/t AuEq) (g/t) (Oz) (g/t) (Oz)
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0.8 3,600,000 1.49 171,000 35 4,030,000
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1.0 2,600,000 1.81 152,000 43 3,600,000
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1.5 1,700,000 2.34 126,000 57 3,050,000
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2.0 1,200,000 2.73 109,000 67 2,660,000
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2.5 830,000 3.29 88,000 82 2,190,000
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3.0 530,000 4.05 69,000 104 1,770,000
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4.0 340,000 4.98 55,000 130 1,430,000
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5.0 260,000 5.54 46,000 149 1,250,000
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7.0 130,000 6.78 29,000 202 870,000
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10.0 70,000 8.06 19,000 242 560,000
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Notes:

A 0.8 g/t AuEq cut-off has been applied to the La Patria resource estimate. Only those blocks with higher interpolated grade than this cut-off have been included in the resource statement above. Gold equivalent grades and ounces are calculated using a gold to silver ratio of 1:55 based on recent gold to silver ratios and projected metallurgical recoveries.

The resources include all mineralization between present day topography and an identical surface created 200 metres lower, as an approximation of material potentially available for open pit extraction, as required by the Australian JORC and Canadian NI 43-101 Codes.

Approximately 10,000 ounces AuEq in the model remain below the reported resources in this estimate.

A map of the Palmarejo Trogan - Project is available at the following link: http://www.ccnmatthews.com/docs/pjo0116.gif

Resource Estimate Methodology

Gold and silver resources at La Patria were modelled and estimated by:

- Evaluating the drill data statistically.

- Constructing geologic and mineral domains on cross sections at 25 metre intervals throughout the extent of the structures comprising the mineralization included in this La Patria resource estimate.

- Estimating gold and silver grades into a three-dimensional block model.

- All modelling of the resource was performed using Surpac.

- Grade interpolation was by inverse distance cubed into constrained mineral domains.

- Modelled low grade domains had bottom cut-offs of approximately 0.15 g/t Au and 10 g/t Ag and top caps of 25.0 g/t Au and 950 g/t Ag.

Similarly to the previously reported Guadalupe inferred resource estimate, no 5 metre level plan interpretations were used. A validated void model was developed for the La Patria mine but no such model for the La Virginia mine has been developed to date.

QA/QC Program

The Company has put in place a rigorous QA/QC program and using best industry practice. A manual outlining the QA/QC procedures for the Palmarejo Project has been compiled and reviewed by Keith Blair of Applied Geoscience LLC and Michael M. Gustin of MDA. Quality control on sampling in the Trogan tenements has been independently reviewed on three occasions since the commencement of drilling in November 2003 and found to be of an acceptable standard.

Qualified Person

The information in this release that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Michael M Gustin of Mine Development Associates, Reno, Nevada who is a Registered Geologist in the States of Utah and Washington and a Qualified Person by Canadian NI 43-101 standards and by Kenneth M Phillips, geologist of VOP Mining Services Pty Ltd and a Director of the Company and of Bolnisi Gold NL (the Company's majority shareholder). Mr. Phillips is a Member of the Australasian Institute of Mining and Metallurgy and a Qualified Person by Canadian 43-101 standards. Mr. Gustin and Mr. Phillips have reviewed this release and have consented to the inclusion in this release of the matters based on their information in the form and context in which it appears.

Forward Looking Statement

Some of the statements contained in this press release are forward-looking statements. Forward-looking statements are not historical facts and are subject to a number of risks and uncertainties beyond the Company's control, including statements regarding resource estimate, potential mineralization, exploration results, completion of work program and studies, and future plans and objectives of the Company. Resource exploration, development and operations are highly speculative, characterized by a number of significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate, including, among other things, unprofitable efforts resulting not only from the failure to discover mineral resources but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. There can be no assurance that such statements will prove to be accurate and actual results could differ materially from those suggested by these forward-looking statements for various reasons discussed throughout the Company's Annual Information Form dated October 12, 2006 and particularly in the section entitled "Risk Factors".

Additional information is available on SEDAR (www.sedar.com) and on the Company's website (www.palmarejogold.com).

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • PALMAREJO SILVER AND GOLD CORPORATION
    James Crombie
    President & CEO
    450-677-2253
    450-677-2601 (FAX)
    jcrombie@pjogold.com
    or
    PALMAREJO SILVER AND GOLD CORPORATION
    Gerri Paxton
    Manager, Investor Relations
    450-677-2054
    450-677-2601 (FAX)
    gpaxton@pjogold.com