Palmarejo Silver and Gold Corporation
TSX VENTURE : PJO

Palmarejo Silver and Gold Corporation

January 18, 2007 09:40 ET

Palmarejo Announces Progress and New Drill Results From the Guadalupe Project

LONGUEUIL, QUEBEC--(CCNMatthews - Jan. 18, 2006) - Palmarejo Silver and Gold Corporation (TSX VENTURE:PJO) is pleased to announce results from the diamond drill program at the Guadalupe Project in the Temoris District, Chihuahua, Mexico. The project is held by the Company's 100% owned subsidiary, Planet Gold SA de CV.

The Guadalupe project consists of a series of northeast dipping quartz veins that have been traced for more than 1500 m along strike. There are three main prospects located along the Guadalupe structure known from north to south as Guadalupe Norte, Guadalupe and Las Animas.

Over the last several months reverse circulation (RC) and diamond core drilling has concentrated on delimiting the depth and strike extent of the clavos at the Guadalupe and Guadalupe Norte prospects. Some of the more impressive assay results from this program are reported below and include the following intervals which are reported here as down hole intercepts.



- 10.67 metres @ 0.61 g/t Au and 108 g/t Ag (2.4 g/t AuEq) and
3.05 metres @ 0.40 g/t Au and 191 g/t Ag (3.6 g/t AuEq) TGDH094
- 18.29 metres @ 0.50 g/t Au and 77 g/t Ag (1.8 g/t AuEq) and
10.67 metres @ 1.28 g/t Au and 28 g/t Ag (1.8 g/t AuEq) and
10.67 metres @ 0.98 g/t Au and 17 g/t Ag (1.3 g/t AuEq) TGDH095
- 29.00 metres @ 0.87 g/t Au and 87 g/t Ag (2.3 g/t AuEq) including
8.00 metres @ 1.97 g/t Au and 142 g/t Ag (4.4 g/t AuEq) and
11.95 metres @ 0.52 g/t Au and 30 g/t Ag (1.0 g/t AuEq) TGDH097D
- 9.14 metres @ 0.52 g/t Au and 92 g/t Ag (2.1 g/t AuEq) TGDH099
- 17.00 metres @ 0.42 g/t Au and 68 g/t Ag (1.6 g/t AuEq) and
8.00 metres @ 2.05 g/t Au and 77 g/t Ag (3.3 g/t AuEq) and
26.00 metres @ 9.50 g/t Au and 259 g/t Ag (13.8 g/t AuEq) including
7.00 metres @ 31.02 g/t Au and 830 g/t Ag (44.9 g/t AuEq) and
13.00 metres @ 3.58 g/t Au and 10 g/t Ag (3.8 g/t AuEq) TGDH100D
- 13.72 metres @0.73 g/t Au and 136 g/t Ag (3.0 g/t AuEq) TGDH101
- 4.57 metres @ 0.96 g/t Au and 165 g/t Ag (3.7 g/t AuEq) and
15.24 metres @ 1.13 g/t Au and 132 g/t Ag (3.3 g/t AuEq) TGDH104
- 12.19 metres @ 0.64 g/t Au and 110 g/t Ag (2.5 g/t AuEq) TGDH106


Details of the drill hole locations are available at the following address: http://www.ccnmatthews.com/docs/Table_drillhole.pdf

Assay Results

Assay results for these drill holes not previously reported follow. Intercepts are generally perpendicular to the mineralized structures and therefore represent true widths. Calculated true widths are indicated where intercepts are oblique to structures.

A Table of the Assay Results is available at the following address: http://www.ccnmatthews.com/docs/Assay_Results.pdf

Notes:

- Assays have been calculated using a 1.0 g/t AuEq cut off, no top cut and a gold to silver price ratio of 1:60.

- Metallurgical recoveries and smelter returns are assumed to be 100%.

- QVBX equals quartz vein breccia.

- # equals previously reported and included here for completeness.

- Bulked intercepts are calculated by weight averaging the grades between the given depths and incorporating a maximum dilution of 2 metres internal waste at less than the 1.0 g/t AuEq cut off.

- Results are awaited for drill holes TGDH102D, TGDH103D, TGDH105D and TGDH107D to TGDH109D.

Slow road building in areas of difficult topography had previously denied access to a 200 metre long gap on the structure between Guadalupe and Guadalupe Norte. Recent RC drilling in this area, including holes TGDH099, TDGH101, TGDH104 and TGDH106, has intersected wide zones of well mineralized quartz and confirms structural continuity between the two prospects.

Deep diamond drilling at the Guadalupe and Guadalupe Norte prospects has continued to demonstrate the down-dip continuity of the wide zones of high grade mineralization first intersected in holes TGDH055D (12.00 metres @ 29.9 g/t AuEq and 3.0 metres @ 5.7 g/t AuEq), TGDH91D (10.72 metres @ 2.9 g/t AuEq and 4.56 metres @ 56.1 g/t AuEq) and TGDH96D (32.36 metres @ 4.5 g/t AuEq). These emerging clavos have now been encountered at depths below 1,150 metres elevation suggesting that they have a vertical extent on the structure of at least 200 metres. Additional deep drilling is planned at both prospects to further evaluate the depth potential of these clavos.

The LY44 and UDR200 diamond core rigs recently resumed drilling at Guadalupe following a three week break over the Christmas and New Year period. A track-mounted, deep-penetration Major 50 diamond core rig is scheduled to arrive at Guadalupe late January/early February. The arrival date is contingent on completion of a ramp at the train station in Temoris to unload the rig which will arrive by train from Los Mochis, Sinaloa. This rig is programmed to drill deep targets that are beyond the depth range of the LY44 and UDR200.

The accompanying long section of the Guadalupe structure demonstrates continuity of silver and gold mineralization between the Guadalupe and Guadalupe Norte prospects. The clavo boundaries are defined by the 20 gram metre AuEq accumulation contours (using a gold to silver price of 1:60). Assays and hole numbers are only shown for drill holes greater than 50 gram metres AuEq accumulation.

A Map of the Guadalupe Longitudinal Section is available at the following address: http://www.ccnmatthews.com/docs/Guadalupe.pdf

Quality Assurance

Palmarejo Silver and Gold Corporation has put in place a rigorous QA/QC program consistent with Canadian Securities Administrators National Instrument 43-101 ("NI 43-101") and using best industry practice. The QA/QC program is independently supervised by Keith Blair, Msc, PGeo of Applied Geoscience of Reno, Nevada.

Elements of the program include chain of custody of samples, standard and blank samples submitted to ALS Chemex, with each batch of samples, and a check assay program on a proportion of sample pulps with a second laboratory. Results from the QA/QC program have to date been satisfactory.

Qualified Person

The technical information contained in this release was compiled in accordance with the Listing Rules of the Australian Stock Exchange Limited, by a competent person who is a corporate member of the Australasian Institute of Mining and Metallurgy and who has consented to the inclusion of such technical information in the form in which it appears in this release. The competent person is Kenneth M. Phillips, geologist of VOP Mining Services Pty Ltd who is also a director of Bolnisi Gold NL, the Company's majority shareholder. Mr. Phillips is a qualified person under NI 43-101.

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".

For more information about the Company and its projects, please refer to the NI 43-101 Technical Report dated October 1, 2006 and other documents available on SEDAR (www.sedar.com) or via the Company's website at (www.palmarejogold.com).

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

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