Palmarejo Silver and Gold Corporation
TSX VENTURE : PJO

Palmarejo Silver and Gold Corporation

September 20, 2005 08:59 ET

Palmarejo Gold/Silver Project September 2005 Resource Statement and Updated Drill Results

LONGUEUIL, QUEBEC--(CCNMatthews - Sept. 20, 2005) - Palmarejo Gold Corporation (TSX VENTURE:PJO) is pleased to announce that an updated resource estimate has been completed by Mine Development Associates (MDA) of Reno, Nevada for the Company's Palmarejo Gold/Silver Project in Chihuahua State, Mexico.

Since the previous resource statement, drilling at Palmarejo has concentrated on infill and extensional drilling to increase the level of confidence in resources and further progress towards project development. Drill results up to and including PMDH 314 completed in June 2005 are included in the estimate. Assays from reverse circulation ("RC") holes since PMDH314 and six diamond core holes from PMDH 124D to PMDH298D as tabulated below, will be incorporated in the next resource update.

In summary, 48% of the resource tonnage containing 51% of the gold and silver is now classified in the Measured and Indicated resource categories, whereas the entire resource previously published was in the lesser Inferred category.

With further resource drilling already completed since the June 2005 cut-off date for this estimate and continuing with seven drill rigs, the percentage and tonnes of mineralisation in the Measured and Indicated categories can be anticipated to increase when the next resource estimates are completed.

The economically mineable part of the Measured and Indicated resources will be converted to Ore Reserves after appropriate assessments and studies have been carried out, including assumed mining, metallurgical, economic, marketing, legal, environmental, social and government factors. The majority of these studies have been in progress by the Company for some time.



Palmarejo Project Resource Statement at September 2005
(1.0 g/t gold equivalent (AuEq) cutoff)
---------------------------------------------------------------------
Resource Tonnes Au Ag AuEq Au Ag AuEq
Category (Millions) (g/t) (g/t) (g/t) (Oz) (Moz) (Moz)
---------------------------------------------------------------------
---------------------------------------------------------------------
Measured 4.4 1.63 218 4.98 230,000 30.84 0.70
---------------------------------------------------------------------
Indicated 5.4 1.52 225 4.98 265,000 39.31 0.87
---------------------------------------------------------------------
Total 9.8 495,000 70.15 1.57
---------------------------------------------------------------------

---------------------------------------------------------------------
Resource Tonnes Au Ag AuEq Au Ag AuEq
Category (Millions) (g/t) (g/t) (g/t) (Oz) (Moz) (Moz)
---------------------------------------------------------------------
Inferred 10.6 1.40 196 4.42 477,000 66.47 1.50
---------------------------------------------------------------------


Notes:
- A 1g/t gold equivalent lower cut (controlled by AuEq 1:65 price
ratio) applied. The equivalency ratio was based on a gold price
of US$375 per ounce and a silver price of US$5.77 per ounce.
- Only those blocks with higher than this interpolated grade are
applied above.


Methodology

Gold and silver resources at Palmarejo 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 mineralisation included in this Palmarejo resource estimate, refining the mineral domain interpretations on level plans constructed at 5 metre intervals from the highest point on the property to the base of known mineralisation in this Palmarejo resource estimate, carrying out geostatistical analysis to establish estimation parameters and estimating gold and silver grades into a three-dimensional block model.

A total of 406 sections and plans were individually interpreted.

All modelling of the resource was performed using Surpac®. Grade interpolation was by inverse distance cubed into constrained mineral domains. Modelled grade ranges had bottom cut-offs of 0.3 g/t Au and 35 g/t Ag and caps of 85.0 g/t Au and 6,000 g/t Ag.

A void model representing old underground workings which, where accessible, have been checked by underground surveying, was incorporated into the resource equation and is excluded from the Resource Statement above. The total tonnage previously mined underground is estimated at 490,000 tonnes, or 2.4% of the current in situ resource tonnage. That 490,000 tonne estimate is additional to the 20.4 million tonnes in situ resource tonnage.

Quality control on sampling has been independently reviewed on two occasions since the commencement of drilling in November 2003 and found to be of an acceptable standard.

Post Resource Cutoff Date Drilling Results

Drilling has continued since the June 2005 cut-off date for this resource estimate with the last hole incorporated being PMDH 314. The most recent hole being drilled is PMDH 369.

Full details of results since PMDH314 are listed below as an Appendix. However the following drill hole results and intercepts received since the resource cut-off date are expected to be incremental to the resource boundaries of known clavos (mineralized shoots) and add to the next resource update.



Diamond Core Results
---------------------------------------------------------------------
Hole From To Interval Au Ag AuEq Comments
(m) (m) (m) (g/t) (g/t) (g/t)
---------------------------------------------------------------------
PMDH124D 156.8 166.4 9.5 6.2 241 9.9 La Blanca QVBX
177.7 189.2 12.1 4.4 206 7.5 Shallow updip
extension 108
Clavo
---------------------------------------------------------------------
PMDH235D 266.1 285.56 0.75 2.32 282 6.7 La Blanca QVBX
267.25 268.80 1.55 1.94 346 7.3 La Blanca QVBX
270.30 271.35 1.05 0.55 79 1.8 La Blanca stwk
266.85 286.15 0.59 11.2 1095 28.1 La Blanca stwk
Extension Hole
by 50m Rosario
Clavo
---------------------------------------------------------------------
PMDH237D 225.3 234.5 9.3 1.3 265 5.4 La Blanca stwk
236 242 6.0 5.7 1016 21.3 La Blanca QVBX
246.5 247.5 1.0 0.9 123 2.8 La Blanca stwk
273.5 274.5 1.0 0.1 72 1.2 La Blanca stwk
Extension Hole
by 50m Rosario
Clavo
---------------------------------------------------------------------
PMDH240D 180.56 181.99 1.43 4.81 312 9.6 La Blanca
hwstwk
188.30 189.21 0.91 5.4 184 8.2 La Blanca stwk
189.71 190.21 0.50 5.72 60 6.6 La Blanca stwk
190.71 191.21 1.00 2.8 64 3.8 La Blanca stwk
192.21 192.71 0.50 1.01 23 1.4 La Blanca stwk
196.81 197.81 1.00 1.4 52 2.2 La Blanca stwk
235.82 236.32 0.5 2.96 11 3.1 La Blanca stwk
and QVBX
236.82 237.32 0.5 0.85 33 1.4 La Blanca QVBX
Extension Hole
by 40m 108
Clavo
---------------------------------------------------------------------
PMDH285D 153.62 155.58 1.96 0.87 25 1.3 La Blanca
hwstwk
158.50 160.50 2.00 3.23 179 6.0 La Blanca
hwstwk
161.47 162.44 0.97 1.49 66 2.5 La Blanca
hwstwk
164.70 165.22 0.52 1.52 71 2.6 La Blanca
hwstwk
167.93 171.31 3.38 4.46 227 7.9 La Blanca
hwstwk
174.90 175.79 0.89 19.4 946 33.9 La Blanca
hwstwk
183.40 183.94 0.54 0.68 30 1.1 La Blanca
hwstwk
184.57 185.07 0.50 0.88 43 1.5 La Blanca
QVBX
191.20 192.00 0.80 1.76 less 1.8 La Blanca
than 5 fwstwk
195.00 195.90 0.90 1.40 less 1.4 La Blanca
than 5 fwstwk
Increased width
intercept from
Infill hole
/ 108 Clavo
---------------------------------------------------------------------
PMDH298D 209.8 212.8 3 8.9 903 22.8 La Victoria
QVBX
Hole abandoned
in La Prieta
QVBX
High Grade
La Victoria
Clavo in between
La Blanca and
La Prieta
---------------------------------------------------------------------


RC Results
---------------------------------------------------------------------
Hole From To Interval Au Ag AuEq Comments
(m) (m) (m) (g/t) (g/t) (g/t)
---------------------------------------------------------------------
PMDH337 196.6 202.7 6.1 8.3 345 13.6 La Blanca
footwall
stockwork
108 Clavo
Extension hole
by 40m
---------------------------------------------------------------------
PMDH338 118.87 121.92 3.1 0.76 116 2.5 La Blanca QVBX
& stwk
123.44 124.97 1.5 0.47 66 1.5 La Blanca stwk
126.49 128.02 1.5 0.37 45 1.1 La Blanca stwk
131.06 132.59 1.5 0.51 54 1.3 La Blanca stwk
146.3 155.45 9.1 5.77 996 21.1 La Blanca stwk
and QVBX
Rosario
Extension by
30m
---------------------------------------------------------------------
PMDH341 123.44 124.97 1.53 0.72 166 3.3 La Blanca
hwstwk
131.06 134.11 3.05 4.11 478 11.5 La Blanca QVBX
135.64 137.16 1.52 3.44 309 8.2 La Blanca stwk
140.21 141.73 1.52 0.74 73 1.9 La Blanca stwk
146.30 153.92 7.62 2.64 396 8.7 La Blanca QVBX
076 Clavo
Shallow
Extension
---------------------------------------------------------------------
PMDH342 126.5 143.2 16.7 2.3 258 6.3 La Blanca
QVBX
076 Clavo
Shallow
Extension
---------------------------------------------------------------------
PMDH343 216.4 221.1 4.6 2.8 132 4.8 La Blanca
QVBX
236.2 237.7 1.5 2.3 51 3.1 La Blanca
footwall
stockwork
076 Clavo
Shallow
Extension
---------------------------------------------------------------------
PMDH349 143.2 144.7 1.5 1.4 less 1.4 La Blanca
than 5 hwstwk
147.83 149.35 1.5 1.5 less 1.4 La Blanca
than 5 hwstwk
166.12 196.6 30.5 6.1 139 8.3 La Blanca QVBX
199.64 201.17 1.5 2.6 less 2.6 La Blanca
than 5 fwstwk
213.36 214.88 1.5 12.9 less 12.9 La Blanca
than 5 fwstwk
Extension
Hole by 40m
108 Clavo
---------------------------------------------------------------------
PMDH362 144.8 149.3 4.6 0.7 86 2.0 La Blanca QVBX
150.8 161.5 10.7 1.0 116 2.8 La Blanca QVBX
Rosario
extension hole
towards 076
Clavo
---------------------------------------------------------------------
PMDH363 149.3 161.5 12.2 5.5 537 13.8 Shallow 076
Clavo Hole will
increase ounces
closer to
surface
---------------------------------------------------------------------


Notes:
- "Extension hole by 40m 108 clavo" means the hole was drilled to
intercept the 108 clavo 40m down plunge from the last sectional
intercept previously recorded.
- Assays have been calculated using a 1.0 g/t AuEq cut off, no top
cut and a gold to silver price ratio of 1:65.
- The internal voids are historic underground workings and have
been excluded from the mineralised intervals reported above.
- Results are awaited from PMDH361 and PMDH365
- In addition to these reported results, a number of geotechnical
and metallurgical drill holes have been completed.
- Clavo equals mineralized shoot.
- QVBX equals quartz vein breccia.
- stwk equals stockwork
- hwstwk equals hanging wall stockwork
- fwstwk equals foot wall stockwork
- # equals previously reported and included here for completeness.


QA/QC Program

The Company has put in place a rigorous QA/QC program consistent with NI 43-101 and using best industry practice. A manual outlining the QA/QC procedures for the Palmarejo Project was recently compiled. A draft of the QA/QC program plan will be reviewed by Michael M. Gustin of MDA. Details about the QA/QC program will be outlined in the NI 43-101 Technical Report.

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 NI 43-101 standards and by Kenneth M. Phillips, geologist of VOP Mining Services Pty Ltd and a Director of Bolnisi Gold NL (the Company's majority shareholder), who is a Member of the Australasian Institute of Mining and Metallurgy and a Qualified Person by NI 43-101 standards and by Jason M.Beckton, geologist who is a consultant to Bolnisi Gold NL and a Member of the Australian Institute of Geoscientists. Mr. Gustin, Mr. Phillips and Mr. Beckton 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 potential mineralization, exploration results, calculation of resources, 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 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).

Tables of drilling results are available on CCNMatthews' website at the following address:

http://www.ccnmatthews.com/docs/palm0920.pdf

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