posted
Here is a must read article from Ron Struthers.
This junior is performing exactly like I thought it would. My confidence in Paramount is based largely on what the other companies in the area are doing. This article by Ron confirms my feelings and the stock is starting to reflect that.
There were some charts in the article which I could not post here.
PO Box 1020 Owen Sound, Ontario, Canada N4K 6H6 resource*bmts.com Yearly subscription $125 cdn/year or US$99
Web Site "http://www.playstocks.net" Phone-519-374-9332 Gold Market and Paramount Paramount Gold .......... OTCPinks:PGDP, Frankfurt:P6G .................. Recent Price US$1.48 Entry Price $1.00 ......................................................... Opinion - strong buy
There was big volume and a strong move in the stock on Wednesday and strong volume again today. I believe this is still early days and Paramount is just starting to be known as the next major exploration play in the Mexican Sierra Madre Occidental gold belt.
Having a JV with the world's largest gold producer, Barrick in Peru does not hurt neither. I can now say the world's largest because Placer Gold has now accepted Barrick's takeover offer.
Gold Market 2005 was up and down and a spotty market for gold stocks. The year started out not bad with a rally that peaked in March, but gold stocks then seen a continuation of big correction that got started in November of 2004 until the bottom was in, May of this year.
We seen a steady rally from the May bottom to around September and then a small correction until we finally got the breakout in the last two months. However, this rally for the most part was limited to the gold producers. The junior exploration stocks did not participate in the rally until the last two months of this year, and even then it has been spotty, with many good juniors still down in price. We did manage to pick up some of the best performing stocks near or at the bottom in the summer. I am referring to Desert Sun Mining (+80%) and Lake Shore Gold (+220%). We later bought Sydney and Paramount that are both up about +40% now and then recently added another producer and what I think is a good takeover target IamGold and it is up over +10%.
But back to Paramount and the reason I mention these. I also followed two other stocks closely, because they are the two major exploration plays near Paramount, that is Gammon Lake and Palmarejo.
These two stocks were among the best performing gold stocks in 2005. They basically just ignored what was happening with gold and the other gold stocks and just kept climbing steadily higher all year long. If we look at their stock charts it is easy to identify this. Gammon Lake - GAM moved from around $6.00 to a new high last week of $14.25, a 142% gain and Palmarejo - PJO was the new kid on the block, with a name and symbol change in April, it began trading as PJO around $1.75. Palmarejo also climbed steadily and hit a new high last week of $5.25, for a gain of 200%.
GAM is making a large discovery about 40 miles North of Paramount with about a 10 million ounce gold equivalent resource outlined so far. GAM now has a market cap over $1 billion.
I consider Palmarejo - PJO to be a better comparison to Paramount. PJO has outlined a $3 million ounce gold equivalent resource so far and has a market cap of approx. $425 million. PJO is right next door to Paramount and I consider them to be about one year ahead of Paramount in their development.
As most of you know, I like to pick stocks early, when they are cheap and before they see the big gains. This is why I have gone with Paramount, because a lot of the strong move is over with GAM and PJO.
At $1.50, Paramount only has a market cap of US$42 million or Cdn $48 million, so the stock could still go up about 10 times in price or to around US$15.00, just to catch up with PJO.
The question is, can Paramount make a similar discovery to Palmarejo?
The drills will start turning in about a months time and we will get the first bit of proof soon after, but by then the stock could be much higher.
I believe the odds are very high, that the answer to the question is YES!
We already know about the zone and potential of Paramount's San Luis. A sample on the 300 level ran 85.2 grams/tonne gold and 339 grams /tonne silver across 15 meters. I have also seen the old drill logs from the Alaska-Juneau Mining Company that tested the next deeper levels and there is still bonanza gold and silver grades a depth. In fact one assay ran 3 kilos of silver. I will remind you that this is old drill data and we should not rely on it, but I am convinced that Paramount will find quite a bit of gold and silver at San Luis.
Then there is the zone at San Jose. Work in the 1970s identified quite a large chunk of silver in this zone and now Paramount has confirmed the validity of this claim with some spectacular surface sample results. The sample program confirmed the San Jose zone over a width of 50 meters and a strike length of 250 meters, with an average grade of 225 g/t Ag, and is open in both directions to the NNW and SSE.
Then there is the San Antonia zone. Old mining workings are distributed in an area of 900 meters long by 60 meters wide, outcrops are scarce, but some of the samples in the mine workings collected by Paramount ran 367.2 gpt Ag across 6.8 meters and 1,720 gpt Ag across 1.1 meters. There is not much info to know if there is continuity in this zone yet, but I have done some more digging and am really excited about another zone on the property, San Miguel itself.
San Miguel and Empalme claims These two claims are separated by an old open pit ( Elyca pit), that was mined up to the border of the San Miguel and Empalme claims. Gold and silver mineralization is present in a 10 to 20 meter wide fault breccia zone and Paramount has traced this for more than two kilometers of strike length [ N20 – 25W, dipping 60 – 70 SW] on their two claims and it varies in width between 8 and 20 meters.
The Elyca concession, that lies between the San Miguel and Empalme concessions, was the site of both open pit and underground mining in the early 1990’s by local miners who direct shipped the ore recovered to the Asarco smelter in El Paso. The Elyca pit reportedly reached a depth of 80 meters and was mined up to the border of the San Miguel concession. John Simons told me the silver ran about 7 ounces/ton and in Joh Lehmann's 43-101 report it stated the average ore grade reported (Brown, 1993) was 3-4 g/t Au and 800 g/t Ag. That is about 25 opt silver with gold.
Also reported in Jon Lehmann's October 2005, 43-101 report was a 12 metre chip/channel sample across the face of the workings that border on the North end of the San Miguel concession and this assayed 1.09 g/t Au and 330 g/t Ag. A grab sample from the Elyca dump assayed 1.54 g/t Au and 502 g/t Ag.
I would have to say that odds are high of finding a lot of silver and gold in this zone over a 2 km strike length.
When you add, the San Miguel, San Jose and San Luis together, I think numbers will start to add up and this does not consider other targets and know zones on the property.
I for one, am pretty convinced that Paramount will make a major discovery on this property and in a few months when drill results are coming in, this $1.50 price will be remembered as pretty cheap.
PGDP chart We are just a few months into the trading on PGDP, but you can see on the chart at this time, that we are right at a resistance level, about $1.50. A break above this and we could see a sharp and strong move up. With the stock trading a million and more shares a day recently, I think this breakout is imminent
All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author's control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment advisor to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Struther's Resource Stock Report is not a registered financial advisory. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
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