WINNEMUCCA, NEVADA — (Marketwire) — 10/03/12 — Paramount Gold and Silver Corp. (NYSE MKT:PZG)(NYSE Amex:PZG)(TSX:PZG)(FRANKFURT:P6G)(WKN:A0HGKQ) (“Paramount”) today reported outstanding new drill results from extensions to the La Union deposit which sits within the 7.5 km. long Guazapares Megastructure at its 100% owned San Miguel Project in northern Mexico. Of 13 new core holes drilled, 10 intersected significant gold and silver values which are expected to improve the size and grade of San Miguel’s estimated resources.

Paramount has been continuously drilling its San Miguel Project with mounting success for two years. Recently, Paramount reported a significant increase in the project’s resource estimates prepared by Mine Development Associates (MDA, www.mda.com) of Reno, Nevada (see September 5, 2012 news release). These estimates are being used by Scott E. Wilson Consulting to complete a Preliminary Economic Assessment (PEA) scheduled for the end of this year. The new results from La Union were received after modeling of the deposit had been completed and therefore were not incorporated into the resource update.

Commenting on the results, Paramount CEO Christopher Crupi stated: “Drilling the Guazapares Megastructure consistently generates good results, demonstrating an unusual continuity of mineralization along this very large precious metals corridor. We continue to explore the potential of our large San Miguel property in pursuit of additional resource expansion while the PEA is in progress. Numerous untested targets are being prioritized for drilling as well as extensions of known deposits, many of which remain open.”

The current resource estimate encompasses 639,000 ounces of gold in the indicated category and another 830,000 ounces of gold classified as inferred. For silver, indicated resources are now estimated at 53.6 million ounces plus an additional 46.2 million ounces of inferred. Infill drilling has been very successful at upgrading inferred resources to higher categories. Based on the long term gold-to-silver price ratio used by MDA of 1-to-60, the San Miguel estimated resource now equates to 1.53 million indicated gold equivalent (AuEq) ounces and 1.60 million inferred gold equivalent ounces (see resource table below).

The assay results from the most recent 13 holes are as follows:

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Hole #      Area      Total Length  From m      To m Width m  Au g/T  Ag g/T

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LU-12-065   LA UNION        213.35   85.40     89.45    4.05   0.030   40.97

 103.35 114.25 10.90 1.950 22.01

including 110.40 111.25 0.85 10.350 3.90

160.75 162.30 1.55 1.220 0.60

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LU-12-066 LA UNION 304.85 111.15 117.15 6.00 0.860 15.97
 128.00 132.35 4.35 3.160 8.24

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LU-12-067 LA UNION 231.65 61.15 72.95 11.80 0.260 94.23
 including 63.70 64.90 1.20 0.530 652.00

137.55 138.10 0.55 4.450 8.50

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LU-12-068 LA UNION 320.10 100.00 101.60 1.60 0.590 31.21

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LU-12-069 LA UNION No significant

158.45 intervals

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LU-12-070 LA UNION No significant

344.45 intervals

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LU-12-071 LA UNION 368.90 94.20 96.25 2.05 0.190 13.09

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LU-12-072 LA UNION 332.20 308.05 311.95 3.90 0.200 5.98

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LU-12-073 LA UNION 387.20 220.30 223.20 2.90 0.380 53.32
 245.05 250.60 5.55 1.320 28.90

275.55 290.00 14.45 3.940 4.27

including 278.15 278.90 0.75 59.400 59.20

294.00 303.25 9.25 0.480 0.53

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LU-12-074 LA UNION 325.70 319.60 324.00 4.40 0.970 0.46

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LU-12-075 LA UNION 399.40 105.95 113.85 7.90 0.720 361.64
 including 109.10 110.75 1.65 3.310 1665.82

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LU-12-076 LA UNION No significant

237.75 intervals

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LU-12-077 LA UNION 322.85 129.65 135.05 5.40 0.730 0.46
 150.05 152.45 2.40 2.220 3.53

154.90 160.35 5.45 1.960 2.21

including 154.90 156.60 1.70 5.120 1.70

242.15 244.00 1.85 0.260 18.37

278.80 281.50 2.70 0.290 0.59

287.35 294.75 7.40 1.000 2.21

309.85 312.45 2.60 0.560 1.62

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These holes were drilled to intercept the structure at right angles and the reported intercepts are therefore believed to approximate true width. Deeper holes may have experienced some normal deviation but Paramount estimates that, in these cases, true widths are not less than 85% of intercepts reported above.

Paramount expects to file its final NI-43-101-compliant resource update report shortly, the results of which were released in September.

Exploration activities at San Miguel are being conducted by Paramount Gold de Mexico S.A de C.V personnel under the supervision of Glen van Treek, Exploration Vice President of the Company and Bill Threlkeld, a Qualified Person as defined by National Instrument 43-101, who have both reviewed and approved this press release. An ongoing quality control/quality assurance protocol is being employed for the program including blank, duplicate and reference standards in every batch of assays. Cross-check analyses are being conducted at a second external laboratory on 10% of the samples. Samples are being assayed at ALS Chemex, Vancouver, B.C., using fire assay atomic absorption methods for gold and aqua regia digestion ICP methods for other elements.

About Paramount Gold

Paramount Gold is a U.S. based exploration and development company with multi-million ounce advanced stage precious metals projects in Nevada (Sleeper) and northern Mexico (San Miguel). Fully funded exploration programs are now in progress at these two core projects which are expected to generate substantial additional value for our shareholders. Engineering studies are scheduled for completion in 2012 to define a development path and economic valuation for each project.

The 100% owned San Miguel Project consists of 150,160 hectares (371,053 acres) in the Palmarejo District of northwest Mexico, making Paramount the largest claim holder in this rapidly growing precious metals mining camp. The current work program at San Miguel is part of Paramount’s strategy of expanding and upgrading known, large-scale precious metal occurrences in established mining camps, defining their economic potential and then partnering them with nearby producers. The San Miguel Project is ideally situated near established, low cost production where the infrastructure already exists for early, cost-effective exploitation. Paramount also owns 100% of the Sleeper Gold Project which is emerging as one of Nevada’s largest new undeveloped gold resources.

SUMMARY OF ALL PZG NI 43-101 COMPLIANT RESOURCE ESTIMATES

MEASURED AND INDICATED RESOURCES

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PROJECT               Tonnes    Au g/T     Au Ounces    Ag g/T     Ag Ounces

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San Miguel        23,918,000      0.83       639,000      70.0    53,559,000

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Sleeper          326,963,000      0.33     3,479,000      3.86    40,606,000

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Total                                      4,118,000              94,165,000

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INFERRED RESOURCES

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PROJECT               Tonnes    Au g/T     Au Ounces    Ag g/T     Ag Ounces

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San Miguel        37,470,000      0.69       830,000     38.00    46,243,000

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Sleeper          223,624,000      0.27     1,972,000      2.84    20,450,000

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Total                                      2,802,000              60,693,000

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Cautionary Note to U.S. Investors Concerning Estimates of Indicated and Inferred Resources

This news release uses the terms “measured and indicated resources” and “inferred resources”. We advise U.S. investors that while these terms are defined in, and permitted by, Canadian regulations, these terms are not defined terms under SEC Industry Guide 7 and not normally permitted to be used in reports and registration statements filed with the SEC. “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility studies, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves”, as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in this category will ever be converted into reserves. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally minable.

Safe Harbor for Forward-Looking Statements:

This release and related documents may include “forward-looking statements” including, but not limited to, statements related to the interpretation of drilling results and potential mineralization, future exploration work at the San Miguel Project and the expected results of this work, estimates of resources including expected volumes and grades and the anticipated completion of a PEA. Forward-looking statements are statements that are not historical fact and are subject to a variety of risks and uncertainties which could cause actual events to differ materially from those reflected in the forward-looking statements including fluctuations in the price of gold, inability to complete drill programs on time and on budget, and future financing ability. Paramount’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Words such as “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to: uncertainties involving interpretation of drilling results, environmental matters, lack of ability to obtain required permitting, equipment breakdown or disruptions, and the other factors described in Paramount’s Annual Report on Form 10-K for the year ended June 30, 2012 and its most recent quarterly reports filed with the SEC.

Except as required by applicable law, Paramount disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document.