Paramount Gold Announces Plans to Advance Sleeper Project

Program Designed to Expand/Upgrade Resources and Define Economics

WINNEMUCCA, NEVADA--(Marketwire - Sept. 13, 2010) - Paramount Gold (NYSE:PZG)(TSX: PZG) (Frankfurt:PG6)(WKN:A0HGKQ) ("Paramount") announced today a $3 million exploration program designed to expand and upgrade resources at our 100% owned Sleeper Gold Mine Project in Nevada. Paramount is also commencing a study to determine the feasibility for near-term exploitation of the property`s large surface mineral inventory of gold in tailings and heaps. The Sleeper Project was acquired in the recently completed takeover of X-Cal Resources. [See our news release announcing the closing of the acquisition dated August 23, 2010 (http://www.paramountgold.com/news/press_release.asp?ID=100194)].

The exploration program has three main objectives: [1] definition drilling to up-grade resources at the West Wood deposit and prepare it for a Preliminary Assessment ['PA'] of its economic potential; [2] delineation drilling to expand and evaluate resources at the Facilities deposit for possible inclusion in the PA; and [3] drill evaluation of up to six new priority targets on the property identified by Paramount's geological team. [See Property Map for targets (http://www.paramountgold.com/_docs/SleeperTargetMap0913.pdf)]

Paramount CEO Christopher Crupi noted, "The exploration program will focus on expanding and upgrading in-situ resources on two known gold deposits using core and reverse circulation drilling. We will also begin the process of evaluating the wealth of less explored targets where new deposits could be found. This program has been greatly facilitated by the professional work and the high quality data base contributed by X-Cal management." This first phase of exploration is expected to run until March 2011.

Paramount is also proceeding with a study of the economic potential of the independently estimated 50.3 million tonnes of gold-bearing heaps and tailings on the Sleeper property grading 0.44 grams per tonne (g/t) of gold, containing an estimated 714,000 ounces of indicated gold resources. Detailed sampling and metallurgical testing are being initiated to estimate the value of this resource with the aim of upgrading it to reserves and joint-venturing it with a producer.

"We believe Sleeper's surface mineral inventory could represent an early cash flow opportunity for Paramount," Crupi said.

West Wood Vein Target

The West Wood target is on the southwest corner of the Sleeper Pit and has been extensively drilled to reveal a high grade core zone surrounded by lower grade gold concentrations. With characteristics similar to the original Sleeper deposit, this target has NI 43-101 compliant estimated resources of:

• Indicated Resources of 16.96 million tonnes grading 0.98g/t of gold and 4.6g/t of silver containing 530,000 ounces of gold and 2.5 million ounces of silver at a 0.4g/t Au cutoff;
• Inferred Resources of 390,000 tonnes grading 0.56g/t of gold and 2.3g/t of silver containing 10,000 ounces of gold and 30,000 ounces of silver at a 0.4g/t Au cutoff.

An eight hole core program of about 3,200 meters is planned for the West Wood target. This work will concentrate on obtaining sample material for metallurgical testing and collecting geotechnical information for conceptual pit planning. In addition, work is planned to determine the north and south limits for the West Wood target and to upgrade resources. Results are not expected to add significantly to resources but should increase confidence in resource classification and provide fresh material for basic processing and engineering studies required for a PA.

Facilities Target Area

The Facilities Target is on the eastern side of the Sleeper pit and is a broad area of continuous lower grade gold-bearing material. Several drill holes encountered bonanza grade intersections. At present, however, the drill spacing is too wide to define the extent and distribution of the higher grade material. It is anticipated that defining the limits of the higher grade intervals in the Facilities Target should have a positive effect on the grade of this resource. The current NI 43-101 resource estimate is the following:

• Indicated Resources of 10 million tonnes grading 0.69g/t of gold and 7.8g/t of silver containing 220,000 ounces of gold and 2.5 million ounces of silver at a 0.4g/t Au cutoff;
• Inferred Resources of 19.6 million tonnes grading 0.60g/t of gold and 6.7 g/t of silver containing 370,000 ounces of gold and 4.2 million ounces of silver at a 0.4g/t Au cutoff.

A program of 20 reverse circulation drill holes totaling approximately 5,000 meters is planned on the Facilities Target. These holes will be closely spaced horizontal and vertical off-sets to existing bonanza-grade intersections.

New Targets

Approximately 1,250 meters will be drilled to test priority exploration concepts and refine exploration drill strategies. Results from this program are expected to lead to definition of up to six targets for developing additional resources on the project.

This news release has been reviewed by Larry G. Martin, CPG, a Qualified Person pursuant to National Instrument 43-101. Although Paramount Gold is a U.S. domiciled corporation and a full SEC registrant, Paramount reports its mineral resources according to the Canadian standard known as National Instrument 43-101 to facilitate comparison with other similar companies that trade on the TSX.

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

This news release uses the terms "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 are normally not 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 Sleeper Gold Mine Project and the expected results of this work. 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, 2009 and its most recent quarterly reports filed with the SEC available on www.sec.gov and applicable Canadian securities regulators available on www.sedar.com and X-Cal's filings with the applicable Canadian securities regulators available on www.sedar.com.

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.

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