Palmarejo Silver and Gold Corporation
TSX VENTURE : PJO

Palmarejo Silver and Gold Corporation

December 13, 2006 12:18 ET

Palmarejo Silver and Gold Corporation Announces the Signing of a Power Generation Agreement with Caterpillar

LONGUEUIL, QUEBEC--(CCNMatthews - Dec. 13, 2006) - Palmarejo Silver and Gold Corporation (TSX VENTURE:PJO) is pleased to announce that Planet Gold SA de CV ("Planet Gold"), its 100% owned Mexican subsidiary, has reached an agreement with Caterpillar Arrendadora Financiera, SA de CV ("Caterpillar"), a Mexican subsidiary of the Caterpillar Group, which provides for the supply, installation and lease financing of diesel generators and high voltage equipment having the capacity to provide the full power requirements for the Palmarejo Project processing facility which is currently under construction, on a turn-key basis.

The power station consists of 8 generators, being 2 x 3 megawatt generators and 6 x 2 megawatt generators, a transformer, switching and control/synchronisation equipment allowing fully automated interfacing with the mains power supply from the Mexican electricity grid.

Caterpillar has agreed to provide 80% of the US$6.9 million power station value by way of a 2 year lease financing.

The Palmarejo Project is located in the Temoris District, Chihuahua, Mexico and is held by Planet Gold. For more information about the Company's projects, please refer to the Company's documents filed on SEDAR (www.sedar.com) and 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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