Paramount Gold and Silver Corp. (TSX:PZG)(NYSE:PZG) (FRANKFURT:P6G)(WKN:A0HGKQ) ("Paramount") has filed a statement of claim in the Supreme Court of British Columbia, Canada (the "Statement of Claim") naming Klondex Mines Ltd. ("Klondex") as the defendant in connection with the termination by Klondex of the binding Letter Agreement (the "Agreement") dated July 20, 2009 between Paramount and Klondex whereby Klondex had agreed to be acquired by Paramount on the basis of 1.45 shares of Paramount common stock for each common share of Klondex (the "Transaction").
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In the face of a hostile take over bid launched by Silvercorp Metals Inc. in July 2009 (the "Silvercorp Bid"), Klondex sought out preferable, alternate options to such bid and approached Paramount as a white knight to determine the prospect of an alternative arrangement with Paramount. Paramount negotiated and entered into the Agreement and proceeded in good faith towards closing the Transaction. The Statement of Claim states that in contrast, Klondex never had any intention to close the Transaction and, after using Paramount to thwart the Silvercorp Bid, Klondex sought any way out of the Agreement and terminated the Agreement on September 24, 2009.The Statement of Claim alleges that Klondex acted in bad faith and in breach of the Agreement and, as a result, that Paramount is entitled to the break fee of US$2.85 million as set out in the Agreement along with damages for breach of contract and, in addition, damages for malicious falsehood and defamation. Paramount is currently conducting an extensive exploration program at the San Miguel project in the Guazapares Mining District, part of the Sierra Madre gold-silver belt in Chihuahua, Mexico. Paramount holds a 100% interest in the project and has completed 47,560 meters of drilling at San Miguel since the summer of 2006. As part of its district exploration program, Paramount has recently acquired key mining concessions in its District consolidation strategy from Mexoro Minerals, which adds Mexoro's Encino Gordo and Guazapares areas to Paramount's "Clavo 99" discovery area to produce a land package in excess of 1,000 hectares. In addition Paramount has recently acquired Garibaldi Resources Temoris Project in the surrounding area. Paramount's land package now includes most of the ground to the surrounding Coeur d'Alene's Palmarejo - Trogan project.
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