Palmarejo Silver and Gold Corporation
TSX VENTURE : PJO

Palmarejo Silver and Gold Corporation

May 30, 2005 19:35 ET

Palmarejo Gold Corporation Announces its Results for the Third Quarter Ended March 31, 2005

LONGUEUIL, QUEBEC--(CCNMatthews - May 30, 2005) - Palmarejo Gold Corporation (TSX VENTURE:PJO)(the "Company" or "Palmarejo") is pleased to report its results for the third quarter ended March 31, 2005. The unaudited interim financial statements and management's discussion and analysis for the quarter ended March 31, 2005 are available through CCN Matthews website at http://www2.ccnmatthews.com/database/fax/2000/palm0530.pdf . They are also available on Palmarejo's website (www.palmarejogold.com) and on the Sedar's website (www.sedar.com).

Financial Results

For the third quarter ended March 31, 2005, the Company incurred a loss of $3,876,000 or $0.22 per share, and a loss for the year to date of $3,913,000 or $0.49 per share. High loss per share are the result of a low basic and diluted weighted average number of common shares outstanding, a large majority of the shares and warrants having been issued 10 days prior to the end of the period.

Interest income related to the average cash equivalent available to the Company for the quarter amounted to $53,000 and to $54,000 for the year to date.

For the quarter, the Company incurred administrative expenses of $21,000 and $24,000 for the year to date and consist mainly office, travel and investors relation expenses.

Common Shares issue expenses amounted to $1,716,000, net of $233,000 paid in cash and recorded in consolidated deficit.

Stock based compensation related to options granted to purchase common shares of the Company (see note 5c to the March 31, 2005 Financial Statements) amounted to $2,260,000 for the quarter and $2,295,000 for the year to date. The contributed surplus was increased by the same amount.

Gain on foreign exchange for the period and for the year to date amounted to $68,000 and resulted mostly from timing differences between the date where investments denominated in AU dollars were made and the exchange rate as at March 31, 2005, and from differences in rates from March 21, to March 31, 2005 for monetary items also denominated in AU dollars.

Consolidated Cash Flows

Operating Activities

After making adjustments for non-cash items in respect of share based compensation, common shares issue expenses and gain on foreign exchange, cash used in operations totalled $495,000 for the quarter and $498,000 for the nine-month period. After changes in working capital items, cash flows used in operating activities amounted to $478,000 and $483,000 for the quarter and the nine-month period respectively.

Investing Activities

For the quarter ending March 31, 2005, the participation of the Company in exploration expenditures on the property has amounted to $7,808,000, of which $29,000 for geology, $176,000 in drilling and assaying costs and $7,521,000 for acquisition of the Palmarejo project. These costs were covered by the issue of common shares and an account payable to a company under common control, resulting in no outlay of cash for the period. The amount owed to the company under common control was disbursed on April 13, 2005.

Investments on the property are summarized in the "Consolidated Expenditures on Exploration Projects" statement.

Financing Activities

On March 21, 2005, the Company issued 8,500,000 common shares at $1.00 each upon release of an amount of $8,500,000 from escrow. The additional amounts of $55,000 for the quarter and $367,000 for the year to date were for shares issued to former shareholders of Bonita capital Corporation.

Balance Sheet

At March 31, 2005, the Company's assets stood at $16,121,000 and included $8,150,000 in cash and cash equivalents, and $7,808,000 in exploration projects.

At March 31, 2005, working capital stood at $3,406,000, net of current liabilities amounting to $4,907,000.

As at March 31, 2005, the capital stock amounts to $11,296,000. The contributed surplus related to warrants and stock base compensation amounts to $4,064,000 and the deficit totals $4,147,000.

Outlook

The Company has liquidity of $8,150,000 as at March 31, 2005 and believes that, together with its controlling shareholder, it will be able to meet its commitments for 2005.

The Company is undertaking development and exploration activities, the main objective of which is to expand its Inferred Mineral Resources and to upgrade a significant portion of the resources to Indicated and Measured Resources and bring the Palmarejo Project through the pre-feasibility and feasibility study stages in the Palmarejo area, with additional work in the Trogan area. It is currently expected that the pre-feasibility study will be completed within 12 months and that the feasibility study will be completed within 12 months of the completion of the pre-feasibility study. The Company may also stake or acquire other lands or mineral properties as such opportunities arise.

Exploration and development work at the Palmarejo Project will focus on the Palmarejo area, and will include infill drilling, metallurgical testing and engineering, mining, geotechnical, and environmental studies, aimed at providing feasibility-level data for the Palmarejo area. The geotechnical work in the Palmarejo area will include the drilling of core holes. Subject to the results of the above, this work could then be used in the calculation of mineral reserves and the completion of a feasibility study (there can be no guarantee that mineral reserves will be defined at the Palmarejo Project).

Bolnisi has expressed the intent to exercise warrants when required.

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 filing statement dated March 14, 2005, 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).

Contact Information