Paramount Gold and Silver (TSE:PZG) (AMEX:PZG) said Thursday it has discovered a new high-grade gold zone, or ‘Clavo’, on the southern edge of the La Union deposit at its wholly-owned, 150,000-hectare San Miguel project in northern Mexico.

Assay results were received for three holes that explored a previously undrilled 1.3-kilometre gap in the Veronica-Santa Clara mega structure at the San Miguel property, where three drill rigs remain active.

Hole LU-12-027, drilled in the central part of the La Union deposit area, intersected 13.02 grams per tonne (g/t) gold and 19.27 g/t silver over 8.65 metres. This intersection was discovered within a wider 79.35-metre mineralized interval, grading 3.7 g/t gold and 17.34 g/t gold.

Additionally, hole LU-12-025, which was also drilled in the La Union area, intersected 29.51 g/t gold and 19.11 g/t silver over 7.75 metres, including 1.35 metres grading 156.83 g/t gold and 77.82 g/t silver.

Paramount said hole LU-12-025, in particular, is expected to increase the size of the high-grade core of the La Union deposit, which may prove to be the highest-grade deposit in the Palmarejo district.

“These are some of the best drill results encountered in the entire district,” said Paramount CEO, Christopher Crupi.

“The new Clavo discovery could prove to be a game-changer for the San Miguel project for three reasons.

“First, we have taken another major step towards proving that the seven km long Veronica-Santa Clara corridor is a continuously-mineralized structure connecting the known deposits within it. The 2.8 km of undrilled gaps within this corridor become more exciting with each hole we drill.

“Second, the greater widths evident in hole 27 could support open pit mining which would have major economic benefits. Finally, we are discovering gold-rich zones at depth below previously-identified silver mineralization as we had hoped.

“Each of these developments could greatly enhance the value of the San Miguel Project.”

Other notable results include 3.0 metres grading 12.79 g/t gold and 15.35 g/t silver, and 2.15 metres at 5.94 g/t gold and 3.77 g/t silver, each intersected in hole LU-12-026.

Paramount said it has retained Mine Development Associates, of Reno, Nevada, which is currently working on a new resource estimate for the entire San Miguel project.

The new estimate is expected for completion during the second quarter of 2012, and will be incorporated into a preliminary economic assessment, planned for later this year.

In addition to the San Miguel property, the company is also exploring and developing its wholly-owned Sleeper gold project, as well as its Mill Creek, Spring Creek, and Reese River properties, all in Nevada.

Currently, Paramount has a total measured and indicated resource estimate of over 2.7 million ounces of gold and 41.1 million ounces of silver, including 98,800 ounces of gold from the San Miguel property and 2.6 million ounces of gold from the Sleeper property, and 15.8 million ounces of silver at San Miguel and 25.3 million ounces of silver at Sleeper.

In the inferred category, Paramount’s properties hold a total of 2.0 million ounces of gold and 65.1 million ounces of silver, including 877,700 ounces of gold at San Miguel and 1.1 million ounces of gold at Sleeper, and 56.8 million ounces of silver at San Miguel and 8.2 million ounces of silver at Sleeper.

In New York, shares of the Winnemucca, Nevada-based company rose 5.17 percent to $2.55, as of 3:40 pm EDT.