Palmarejo Silver and Gold Corporation
TSX VENTURE : PJO

Palmarejo Silver and Gold Corporation

October 24, 2006 17:11 ET

Palmarejo Silver-Gold Project Updated Resource Statement and Initial Guadalupe Resource Statement October 2006

LONGUEUIL, QUEBEC--(CCNMatthews - Oct. 24, 2006) - Palmarejo Silver and 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 Project in Chihuahua State, Mexico and a first inferred resource estimate for the Guadalupe/Animas mineralization.

These resources do not include the promising La Patria/Virginia/Maclovia (mostly near surface) deposits, from which an initial resource estimate is currently in progress. Drilling continues with two rigs on this 1.7 km structure which is part of the greater than 4 km long Todos Santos-Maclovia structural trend.

PALMAREJO

The updated resource estimate for the Palmarejo Project has a Measured and Indicated mineral resource of 0.97 M oz (million ounces) of gold and 89.26 M oz of silver (see details in table below). Of the total resource tonnes at Palmarejo, 78.4% are now in the Measured and Indicated categories.

The inferred mineral resource at Palmarejo contains 169,000 oz of gold and 17.93 M oz of silver. The Guadalupe project contains a further 155,000 oz of gold and 19.57 M oz of silver thus totalling 324,000 oz of gold and 37.5 M oz of silver.

The Rosario Deeps deposit has so far contributed only 1,600 measured, 13,000 indicated and 11,000 inferred resource gold equivalent ounces to the Palmarejo resource from holes PMDH 522D and 573D the pierce points of which are well separated from the nearest Rosario main body resource blocks. The resource potential of this feeder zone will be pursued by closer spaced drilling when blasting and construction of access road and pad sites are completed in 2007 and the drill rig designated for this work and currently being rebuilt in Hermosillo is complete and returned to site.



PALMAREJO RESOURCE STATEMENT OCTOBER 2006
(0.8 g/t gold equivalent (AuEq) cutoff)
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Tonnes Au Ag AuEq Au Ag AuEq
Resource Category (Millions) (g/t) (g/t) (g/t) (oz) (Moz) (Moz)
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Measured 5.4 2.22 200 5.86 384,000 34.6 1.01
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Indicated 9.1 2.00 186 5.38 587,000 54.66 1.58
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Total Measured
and Indicated 14.5 2.08 191 5.55 971,000 89.26 2.59
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Inferred 4.0 1.31 138 3.82 169,000 17.93 0.50
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A 0.8 g/t AuEq cutoff has been applied to Palmarejo -- only those blocks with higher interpolated grade than these cutoffs have been included in the resource statement above. Gold equivalent grades and ounces are calculated using a gold to silver ratio of 1:55 based on recent gold to silver ratios and projected metallurgical recoveries.

Tables of the Palmarejo measured resources, Palmarejo indicated resources and Palmarejo inferred resources are available at the following address: http://www.ccnmatthews.com/docs/PJO_3_tables.pdf

GUADALUPE

The Guadalupe resource is only in the early stages of definition with the bulk of the resource so far relating to the upper silver rich epithermal zone comparable in grade and silver-gold ratio to the top one-third of the Palmarejo profile. Only half a dozen holes so far are influencing the gold grade (such as 65D and 55D) but even these are still high in the epithermal profile. Drilling deeper into the profile has commenced with 3 holes drilled, 2 waiting for results and 2 holes in progress. A 3 g/t AuEq cutoff has been applied to Guadalupe below 1300 m elevation to reflect the probable necessity for underground access to mineralization below that level. All Guadalupe workings removed from the model are above this elevation. The 1300 m elevation occurs above the base level of old workings in Guadalupe Norte. Above that elevation a 0.8 g/t AuEq cutoff has been employed.

The Company continues to hold high expectations for this property and further clay blooms which occur several hundred metres to the north of Guadalupe Norte beneath which mineralized quartz veins may occur. These clay blooms have not yet been drilled.



GUADALUPE RESOURCE STATEMENT OCTOBER 2006
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Tonnes Au Ag AuEq Au Ag AuEq
Resource Category (Millions) (g/t) (g/t) (g/t) (oz) (Moz) (Moz)
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Inferred 5.7 0.83 106 2.76 155,000 19.57 0.51
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A 0.8 g/t AuEq cutoff has been applied to Guadalupe above 1300 m elevation. A 3 g/t AuEq cutoff has been applied to Guadalupe below 1300 m elevation. Only those blocks with higher interpolated grade than this cutoff have been included in the resource statement above. Gold equivalent grades and ounces are calculated using a gold to silver ratio of 1:55 based on recent gold to silver ratios and projected metallurgical recoveries.

A table of the Guadalupe inferred resources is available at the following address: http://www.ccnmatthews.com/docs/PJO_guada.pdf

Background Comment

The Palmarejo and Guadalupe projects are located in the highly prospective Sierra Madre silver-gold belt between the small towns of Temoris and Chinipas some 265 km SW of Chihuahua, the capital of Chihuahua State. The projects are held by Planet Gold SA de CV ("Planet Gold"), the Company's 100% indirectly owned subsidiary.

Since the previous resource estimate of September 2005, drilling at Palmarejo has been concentrated on infilling the drilling pattern to elevate the resources into measured and indicated categories under the standards and requirements of NI 43-101 and further progress towards project development.

This drilling has resulted in an increase of 34% in resource tonnage in the Measured and Indicated categories at a gold-equivalent cutoff of 1.0 g/t over the resources previously reported in September 2005. Drill results up to and including PMDH632, completed in June 2006, are included in this estimate. No further drilling has been completed at Palmarejo since PMDH632.

The majority of assessments and studies required in connection with the Company's work toward completion of a feasibility study for the Palmarejo Project have been completed, including assumed mining, metallurgical, economic, marketing, legal, environmental, social and government factors. A mining plan and schedule is being undertaken by MDA of Reno, Nevada as part of a feasibility study for the Palmarejo Project.

Resource Estimates 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 mineralization 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 mineralization 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 341 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; interpolation results were checked by ordinary krige and nearest-neighbour methods.

- Modelled grade ranges had bottom cutoffs of roughly 0.4 g/t Au and 30 g/t Ag and maximum caps of 90.0 g/t Au and 10,000 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 within mineralized zones modelled by MDA is estimated at 308,000 tonnes, or 1.7% of the current in situ resource tonnage. That 308,000 tonne estimate is additional to the 18.5 million tonnes in situ resource tonnage.

The Guadalupe resources were estimated in a similar manner to Palmarejo, with the exception that level plan interpretations were not used and no void model has been developed to date.

QA/QC Program

The Company has put in place a rigorous QA/QC program using best industry practices. A manual outlining the QA/QC procedures for the Palmarejo Project has been compiled and reviewed by Keith Blair, Msc, PGeo, of Applied Geoscience of Reno, Nevada. Mr. Blair is a qualified person under NI 43-101. Details about the QA/QC program will be outlined in the NI 43-101 Technical Report to be prepared in connection with this October 2006 resource estimate. Quality control on sampling has been independently reviewed on three occasions since the commencement of drilling in November 2003 and found to be of an acceptable standard.

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 Canadian NI 43-101 standards and by Kenneth M Phillips, geologist of VOP Mining Services Pty Ltd and a Director of the Company and of Bolnisi Gold NL (the Company's majority shareholder). Mr. Phillips is a Member of the Australasian Institute of Mining and Metallurgy and a Qualified Person by Canadian 43-101 standards. Mr. Gustin and Mr. Phillips 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 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 May 1, 2006 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).

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

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