Jeb Handwerger | Sep 26, 2012 02:45PM ET
In 2010, we predicted the acquisition of Fronteer Gold by Newmont Mining (NEM) for $2.3 billion dollars. a few weeks ago and already it has made a powerful move. The primary reasons we believe the majors are looking at Paramount is that they have known advanced NI 43-101 resources of over 100 million ounces of silver and 4 million ounces of gold at their two properties in mining friendly Nevada and the historic Sierra Madre Trend Mexico.
This is a company with a major resource base in the two most exciting mining areas in the world.The Sleeper Project in mining friendly Nevada was a past producer and their San Miguel Project surrounds Coeur D’alene’s (CDE) highly successful Palmarejo Mine in the world renowned Sierra Madre Gold-Silver Belt.
Earlier this year, Pan American Silver (PAAS) acquired Minefinders for access to their Dolores Gold and Silver Mine for $1.5 billion. In 2010, Newmont bought out Fronteer for $2.3 billion. Fronteer’s Sandman Mine, now controlled by Newmont is very close to Paramount’s Sleeper Project. We believe this takeout trend will continue with Paramount possibly being one of the next targets.
Paramount’s CEO Christopher Crupi commented: “With the successful completion of the Sleeper PEA, we are now working to optimize the project`s economics by adding close-in resources at a higher average grade. One core rig is focused on targets in the vicinity of the original Sleeper mine site to find satellite deposits. We also have a reverse circulation rig drilling the recently acquired MIMI claims, located south of Sleeper towards Newmont’s Sandman project, where our geologists have defined several priority targets with the potential to discover a high grade deposit similar to the original Sleeper mine.”
In addition to their exciting Nevada project, their San Miguel Project located in the Sierra Madre’s is an exciting area for the majors and Coeur has recently shown that they are looking for resource growth especially around Palmarejo as this mine is the biggest contributor of cash flow out of all their operations. San Miguel seems an obvious target looking at their land position, especially as we see jurisdictions such as Bolivia, Argentina and Peru dealing with increased resource nationalism.
See my video interview from a few weeks ago with Paramount CEO Chris Crupi as we discuss the progress in Nevada and Mexico and why Paramount is in a strong financial position to explore and expand their already large resource base.
Disclosure: Long PZG and Paramount is a featured company on GST’s Free Website.
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