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  • Paramount Gold And Silver Corp. (PZG) Sells Reese River Gold Project In Deal Valued At $7.62M, Focuses On Core Assets 0 comments
    Nov 5, 2012 5:41 PM | about stocks: PZG

    Paramount Gold and Silver, the domestic precious metals E&D with a sizeable core footprint in Nevada (47.5k-acre Sleeper Gold Project just outside Winnemucca) and northern Mexico (353k-acre San Miguel Project, Palmarejo District), reported closing the sale today on its Reese River Gold Project (148 unpatented lode mining claims in 2,960 acres with a 2% NSR to Barrick Gold), which runs along the prolific Battle Mountain-Cortez-Eureka Mineral Belt in Nevada, to Valor Gold Corp.

    The sale takes place amid a larger strategic possibility of selling off the company's other two non-core Nevada gold assets, Mill Creek (Lander County) and West Rochester (Pershing County), acquired along with Reese River and Sleeper (primary acquisition objective) via the X-Cal transaction back in 2010 ($31.8M). CEO of PZG, Christopher Crupi, characterized the projects as being able to fetch an exceptional price in the current market given the ideal locations and the kind of strong sediment-hosted (Carlin-type), as well as volcanic hosted gold mineralization encountered at Reese River (2006, X-Cal, NI 43-101).

    With a reported payment of $21k in cash and some $7.6M (6M shares based on closing price as of November 1st) in restricted shares of Valor Gold (VGLD) common stock, this deal places PZG in an 8.3% ownership position of VGLD and the company now has the right to seat a Director on the VGLD Board within the next 90 days. Valor Gold, of which Pershing Gold Corp. (NASDAQ:PGLC), the Pershing County-focused gold E&D, is another major shareholder, has put together a district-scale strategy much like PGLC. The deal will allow PZG the opportunity to focus more on the core Sleeper Project while still enjoying participation in the exciting early stage exploration potential at Reese River via VGLD, which is primed to execute on the acreage as part of its own comprehensive Battle Mountain Trend regional strategy.

    A great value for shareholders in this deal and the obvious opportunity to sell off the remaining non-core assets so the company can concentrate on the Exploration Plan for their advanced-stage Sleeper Project, as well as the massive San Miguel Project down in Mexico, is perfectly in line with PZG's business model. The company has done a great job growing the resources at Sleeper through exploration work and has had the Preliminary Economic Assessment (PEA) in hand since June. The most recent core drilling at Sleeper successfully expanded the PAD zone, which is now thought to link to the Facility zone in the south and drilling of the southern extension also showed some exceptional silver returns in the 73 g/t range. The increasingly sweet economics detailed by the PEA, which projects a baseline of 17 years of operation at 172k oz/year ($695M pre-tax NPV at $1,384/oz on a 5% discount rate and 26.8% IRR), give ample cause for investors to agree with management's strategy and interested parties should look for further moves by PZG on the non-core assets soon.

    This deal comes just days after the confirmation that CONAGUA, a division of Mexico's Environmental and Natural Resources Ministry (SERMANAT), okayed permanent rights to 995k cubic meters of water per year (31.6 liters per second) for the company's San Miguel Project. This key element of the San Miguel Project will allow for a highly economical milling/flotation or milling/cyanide leach system capable of handling around 5.5k tonnes of ore each day.

    Paramount is trimming the fat here in a way that has tremendous upside moving forward and shareholders will want to stay tuned as developments on the core assets progress.

    For more information on Paramount Gold and Silver Corp., visit www.ParamountGold.com

    Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html

    Stocks: PZG
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