Paragon Minerals Corporation : Paragon Reports Initial Resource Estimate on Lemarchant VMS Deposit

Paragon Minerals Corporation (TSX-V: PGR; "Paragon) is pleased to report the first National Instrument 43-101-compliant Mineral Resource Estimate for the Lemarchant volcanogenic massive sulphide ("VMS) deposit on its 100%-controlled South Tally Pond project in central Newfoundland. The Lemarchant Deposit is located 20 kilometres southwest of the producing Duck Pond Cu-Zn Mine/Mill complex operated by Teck Resources Limited.

Gary Giroux, P. Eng. of Giroux Consultants Limited, Vancouver, BC, Canada, an Independent Qualified Person and consultant to Paragon, has prepared and authorized the release of the Mineral Resource Estimate.  Highlights include:

• Indicated Mineral Resource of 1.24 million tonnes grading 5.38% zinc, 0.58% copper, 1.19% lead, 1.01 g/t gold and 59.17 g/t silver (15.40% ZnEQ) using a 7.5% zinc equivalent grade cut-off.

• Inferred Mineral Resource of 1.34 million tonnes grading 3.70% zinc, 0.41% copper, 0.86% lead, 1.00 g/t gold and 50.41 g/t silver (11.97% ZnEQ) using a 7.5% zinc equivalent grade cut-off.

• The deposit is defined to a vertical depth of 210 metres and remains open to depth and along strike.

• Preliminary metallurgical results indicate positive metal recoveries.

Michael Vande Guchte, President  & CEO of Paragon stated "We are very pleased with this initial mineral resource estimate which compares very well against other VMS exploration and mining projects. The Lemarchant Deposit is a new precious metal-rich copper-lead-zinc massive sulphide resource with excellent potential for further expansion. The deposit is located in an area of excellent infrastructure with Teck Resources existing Duck Pond Mine located nearby. Paragon believes the Lemarchant Deposit warrants aggressive follow-up in 2012.

The indicated and inferred mineral resource estimates for the Lemarchant Deposit are ­­­tabulated below for a range of zinc equivalent (ZnEQ) cut-off values.  The effective date of the resource estimate is January 16, 2011.

Indicated Category
Cut-off (ZnEQ%)	Tonnes > Cut-Off (tonnes)	ZnEQ (%)	Zn (%)	Cu (%)	Pb (%)	Au (g/t)	Ag (g/t)
5.50	1,520,000	13.74	4.87	0.52	1.07	0.92	51.01
6.50	1,390,000	14.49	5.11	0.54	1.12	0.96	54.62
7.50	1,240,000	15.40	5.38	0.58	1.19	1.01	59.17
8.50	1,110,000	16.21	5.64	0.61	1.25	1.06	63.15
9.50	1,020,000	16.91	5.84	0.64	1.30	1.10	66.73
Inferred Category
Cut-off (ZnEQ%)	Tonnes > Cut-Off (tonnes)	ZnEQ (%)	Zn (%)	Cu (%)	Pb (%)	Au (g/t)	Ag (g/t)
5.50	2,270,000	9.72	3.18	0.36	0.74	0.77	36.53
6.50	1,810,000	10.67	3.40	0.38	0.80	0.87	41.85
7.50	1,340,000	11.97	3.70	0.41	0.86	1.00	50.41
8.50	1,060,000	13.07	4.02	0.44	0.94	1.06	57.08
9.50	820,000	14.23	4.34	0.47	1.03	1.13	64.23

1. CIM definitions were followed for the estimation of mineral resources and include drillholes up to September 2011.
2. Mineral resources are estimated at a ZnEQ cut-off where ZnEQ% = ((Zn% * 22.05 * Zn Recovery * Zn Price) + (Cu% *22.05 * Cu Recovery * Cu Price) + (Pb%*22.05*Pb Recovery*Pb Price) + (Au * Au Recovery * Au Price / 31.1035) + (Ag *Ag Recovery * Ag Price/31.1035)) / (22.05*Zn Recovery*Zn Price).
3. Metal price assumptions are US$0.88/lb Zn, US$3.15/lb Cu, US$0.91/lb Pb, US$1350/oz Au and US$26.57/oz Ag.
4. Metal recovery assumptions are based on preliminary metallurgical results of 68.4% Zn, 83.4% Cu, 92.9% Pb, 75.6% Au and 86.9% Ag.
5. Zinc, Copper, Lead, Gold and Silver assays were capped at 46.0% Zn, 5.5% Cu, 12.5% Pb, 14.0g/t Au and 800g/t Ag.
6. Specific gravity (SG) measurements were taken on most of the samples, where actual measurements were not available either stoichiometric values were calculated or average SG values were used.
7.  No economic evaluation has been undertaken.  A ZnEQ cut-off grade of 7.5% was selected as a reasonable cut-off grade for underground development.

Contained Metal using 7.5% ZnEQ cut-off
Category	Zn (lbs)	Cu (lbs)	Pb (lbs)	Au (oz)	Ag (oz)
Indicated	147,074,810	15,855,649	32,531,417	40,266	2,358,924
Inferred	109,305,208	12,112,199	25,406,075	43,082	2,171,762

Resource Model

The independent mineral resource estimate prepared by Giroux Consultants Limited ("Giroux) is reported in accordance with Canadian Securities Administrators' NI 43-101 and conforms to the generally accepted Canadian Institute of Mining "Estimation of Mineral Resources and Mineral Reserves Best Practices" guidelines. The mineral resource estimate is on the Lemarchant Main Zone and is based on drillholes completed up to September, 2011.  Seventy-four diamond drillholes were used in generating the geological model for the Main Zone, with 31 of the drillholes (10,000 metres) included in the resource estimate. Outlier assays were capped and all assays within the mineralized zones composited to 2.5 metres lengths. All gaps in the assay record were assigned 5 ppm for Cu, Pb, Zn, 0.001 g/t for Au and 0.01 g/t for Ag grades.

Metal grades were estimated using ordinary kriging into a 3D block model with block dimensions of 10 x 10 x 5 metres.  Three dimensional geologic solids were constructed by QP Dean Fraser, an independent consultant to Paragon.  The geological solids were provided to Giroux for review and utilized for the mineral resource estimate. In general, the solids were limited to material grading > 2% Zn that could be demonstrated to be correlative with definable stratabound zones.   As a general rule, solids were extended no more than 50 meters up-dip, down-dip and along strike from a drillhole.  One mineralized solid was constructed for the mineral resource estimate and extends to a vertical depth of 210 metres.  Blocks were classified as Indicated or Inferred based on the blocks proximity to data.

Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Additional technical disclosure regarding data verification, exploration including drilling, quality assurance and quality control measures, geological information, analytical and testing procedures and true widths may be found in previous news releases and on the Paragon website. The NI 43-101 Technical Report on the Lemarchant Deposit will be filed on SEDAR within 45 days following the date of this news release.

The South Tally Pond VMS project is located within a proven mining district in central Newfoundland.  The Province of Newfoundland & Labrador enjoys a competitive tax regime and stable, predictable permitting and regulatory environment.  There are no known environmental, permitting, legal, titles, taxation, socio-political or other relevant issues that materially impact this resource estimate.

Metallurgical Test Results

Preliminary metallurgical test work has been undertaken by SGS Mineral Services of Lakefield, Ontario, Canada ("SGS) on a composite sample of quartered drill core from the Lemarchant Deposit that included representative samples from massive sulphides, semi-massive sulphides, felsic volcanic breccia and massive barite. The program included head characterization, mineralogical analysis (QEMSCAN), grind establishment and metallurgical testing including gravity and flotation tests. Highlights of the test work include:

Mineralogical analyses (QEMSCAN) indicate:

• Zinc concentrates of over 57% should be achievable at zinc recoveries above 90%;
• Copper concentrates over 30% should be achievable at copper recoveries above 90%; and
• Lead concentrates over 80% should be achievable at lead recoveries above 90%

Preliminary flotation tests on the composite sample indicate: 

• a copper-lead concentrate grade of 48.4% (11.6% Cu, 36.8% Pb) containing 6.96 g/t gold and 1,695 g/t silver can be produced with 83.4% Cu, 92.9% Pb, 75.6% Au and 86.9% Ag metal recoveries; and
• a zinc concentrate grade of 60.8% Zn can be produced with a 68.4% Zn metal recovery.

Based on conclusions reported by SGS it is anticipated that the concentrate grades and metal recoveries will improve once the flowsheet is optimized for regrinding and reagents. Additional metallurgical test work is warranted and will be undertaken at a later date. The initial mineral resource estimate for the Lemarchant Deposit utilizes these preliminary metallurgical test studies. 

About Paragon Minerals Corporation

Paragon Minerals Corporation is a Canadian-based mineral exploration company focused on gold and base-metal exploration in Newfoundland and northwest Ontario. Paragon's flagship project is the 100%-controlled South Tally Pond VMS project where it is advancing a significant precious metal-rich massive sulphide discovery located in a producing base metal mining district in central Newfoundland.  Paragon is also exploring an exceptional portfolio of gold properties through partner and company-funded exploration programs. For more information, please visit the company website at www.paragonminerals.com or contact Michael Vande Guchte at [phone].

PARAGON MINERALS CORPORATION

"Michael Vande Guchte

_______________________________
President & CEO

Qualified Person:  David A. Copeland, M.Sc., P.Geo., Exploration Manager for Paragon Minerals Corporation is a Qualified Person as defined by NI43-101 and supervises the exploration and quality assurance/quality control programs for Paragon.  Dean Fraser, P.Geo. of RDF Consulting Ltd. is an Independent Qualified Person as defined by NI 43-101 and completed a comprehensive review of the project data and drill core and prepared the three dimensional geological solids for the resource estimate.   Gary Giroux, P.Eng. of Giroux Consultants Limited is the Independent Qualified Person as defined by NI 43-101 for the resource estimate discussed above.They have all reviewed and approved the contents of this release.

The metallurgical test work was completed on previously drilled quartered NQ-diameter drill core from drillholes LM11-61and 62. A total of 43 individual samples of drill core from the two drillholes were sent to SGS Mineral Services and then composited to form one sample weighing 51.25 kilograms.  The composite sample was crushed to -6 mesh then blended and split into individual charges for the various metallurgical tests.  The head sample was assayed for Au and Ag via metallic screen with fire assay finish and Cu, Pb and Zn via XRF, in addition to analysis of other elements. 

Forward-looking Statements: This news release contains certain statements that may be deemed "forward-looking statements.  All statements in this release, other than statements of historical fact, that address events or developments that Paragon expects to occur, are forward looking statements.  Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects, "plans, "anticipates, "believes, "intends, "estimates, "projects, "potential and similar expressions, or that events or conditions "will, "would, "may, "could or "should occur.  Forward-looking statements in this document include statements regarding current and future exploration programs, activities and results.   Although Paragon believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements.  Factors that could cause the actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration success, continued availability of capital and financing, inability to obtain required regulatory or governmental approvals and general economic, market or business conditions.  Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Forward-looking statements are based on the beliefs, estimates and opinions of Paragon's management on the date the statements are made. Except as required by securities laws, Paragon undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change. These statements are based on a number of assumptions, including, among others, assumptions regarding general business and economic conditions, the timing of the receipt of regulatory and governmental approvals for the transactions described herein, the ability of Paragon and other relevant parties to satisfy stock exchange and other regulatory requirements in a timely manner, the availability of financing for Paragon's proposed transactions and exploration and development programs on reasonable terms and the ability of third-party service providers to deliver services in a timely manner. The foregoing list of assumptions is not exhaustive.  Events or circumstances could cause results to differ materially.

Information concerning Estimates of Indicated and Inferred Resources: This news release uses the terms "indicated resources" and "inferred resources". Paragon advises investors that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and 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 feasibility or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101.  Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.