Palmarejo Silver and Gold Corporation

Palmarejo Silver and Gold Corporation

August 25, 2006 11:13 ET

Palmarejo Announces Progress Results From La Patria-La Virginia-Maclovia Project

LONGUEUIL, QUEBEC--(CCNMatthews - Aug. 25, 2006) - Palmarejo Silver and Gold Corporation (TSX VENTURE:PJO) is pleased to announce the latest drill results from La Patria-La Virginia-Maclovia in the Trogan tenements, located in the Temoris District, Chihuahua, Mexico.

Regional geological and alteration mapping have identified numerous mineralized veins and associated hydrothermal alteration systems in these Trogan tenements. These epithermal precious metals systems occur along four northwest to southeast trending structural corridors south of the Company's Palmarejo silver-gold project. As shown in the attached map, these corridors are:

- the Guadalupe-Las Animas trend;
- the Los Hundidos trend;
- Todos Santos-La Patria-Maclovia; and
- the Guerra al Tirano trend.

La Patria is located 6.5 kilometres south-southeast of the Palmarejo project and incorporates the La Patria, La Virginia and Maclovia prospects.

La Patria

La Patria is located along the greater than4 kilometre Todos Santos to Maclovia structural trend, 6.5 kilometres south-southeast of the Palmarejo project. Reverse circulation ('RC') and diamond core drilling in the first half of the year focused on delimiting the extent of high grade mineralization at the La Patria prospect.

A second small RC rig drilling 1 kilometre south at Maclovia has yielded highly encouraging gold-rich (relative to silver) results from shallow depths. RC drilling commenced recently on the newly acquired 12 hectare La Virginia claim situated between La Patria and Maclovia. Forty eight holes have been drilled since the beginning of 2006 for a total of 7,722 metres.

An LY38 diamond core rig has been added to the program and the hole currently being drilled (LPDH52D) is reported to have intersected an incomplete downhole 25 metres of QVBX at depth near the old Virginia mine workings.

Some of the more significant results from the drill holes reported in
full below include:

- 3.05 metres @ 1.71 g/t Au and 28 g/t Ag (2.2 g/t AuEq) LPDH036
- 7.62 metres @ 1.12 g/t Au and 34 g/t Ag (1.7 g/t AuEq) LPDH037
- 9.14 metres @ 3.69 g/t Au and 74 g/t Ag (4.9 g/t AuEq) LPDH038
- 10.67 metres @ 0.86 g/t Au and 12 g/t Ag (1.1 g/t AuEq) LPDH039
- 3.05 metres @ 1.25 g/t Au and 49 g/t Ag (2.1 g/t AuEq) LPDH042
- 3.05 metres @ 1.14 g/t Au and 26 g/t Ag (1.6 g/t AuEq) LPDH043
- 3.05 metres @ 4.46 g/t Au and 109 g/t Ag (6.3 g/t AuEq) LPDH044
- 6.10 metres @ 4.71 g/t Au and 135 g/t Ag (7.0 g/t AuEq) LPDH046
- 13.72 metres @ 5.05 g/t Au and 113 g/t Ag (6.9 g/t AuEq) LPDH046
- 10.67 metres @ 3.10 g/t Au and 52 g/t Ag (4.0 g/t AuEq) LPDH047
- 9.14 metres @4.19 g/t Au and 93 g/t Ag (5.7 g/t AuEq) LPDH048

See map at the following link:

"Details of the reported drill hole locations" and "Assay results" can be viewed at the following link:

A strongly mineralized quartz breccia-filled fault zone (QVBX) has been traced 1,600 metres along a segment of the trend between La Patria and Maclovia. The high grade QVBX intervals in hole LPDH046 indicate that the structure is wide and remains open south of Maclovia. Average silver to gold ratios are generally lower than those encountered at Palmarejo and Guadalupe. In part this may reflect some near surface depletion of silver by surface oxidation processes, however, the higher gold values relative to silver more likely reflects exposure of the gold-rich part of the epithermal system.

The bulk of well mineralized QVBX intersections between La Patria and Maclovia occur at shallow levels typically within 120 metres (vertical) of surface (eg LPDH038, LPDH044, LPDH046 and LPDH047). Further drilling at La Virginia is designed to follow up strong results in LPDH047 and LPDH048 and evaluate continuity of shallow, high grade mineralization along a 1 kilometre segment of the structure between La Patria and Maclovia. Step-out drilling along strike and at depth will test extensions of the mineralzed system south beyond LPDH046 at Maclovia. Currently, there is one RC rig and one diamond core rig drilling at the La Patria project.

Quality Assurance

Palmarejo Silver and Gold Corporation has put in place a rigorous QA/AC program consistent with National Instrument 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 Canadian Securities Administrators National Instrument 43-101 ("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 completion of work program and studies, potential mineralization, exploration results 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 May 25, 2006, and particularly in the section entitled "Risk Factors".

The Palmarejo Project and Trogan licence area is held by the Company's 100% owned Mexican subsidiary company, Planet Gold SA de CV. For more information about the Company's projects, please refer to the NI 43-101 Technical Report dated May 1, 2006 available on SEDAR ( or via the Company's website at (

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

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