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Sabina Silver (TSX: V.SBB; $3.60)
www.sabinasilver.com

Initial Report: Oct 16/06 $1.19 - up 202%
Second Report: Dec 18/06 $1.88 - up 91%

Friday Sabina moved to a new 52 week high and pushed short term gains from our initial reports to substantial levels. However, with ALL small and microcap stocks, it's important to lock in profits at stages along the way as they help offset inevitable losses on other speculations.

The fuel driving this run is news that Agnico Eagle is buying Cumberland Resources for $710 million. Agnico is basically paying for the Meadowbank gold project in Canada's remote north and this has made Sabina's Hackett River project seem much less "remote". In the past a major discount was applied to Sabina because of the location of Hackett. Too early to speculate that Sabina will be a takeover target in 2007.

Also helping Sabina was the $3.90 offer for Wolfden from Zinifex. Sabina owns 4 million shares of Wolfden so if this closes, it will add a nice chunk to the treasury.


Paramount Gold (PGDP / OTC $2.36)
www.paramountgold.com

As we lead up to the PDAC in Toronto (north america's largest mining show), this may be a good time to take a hard look at Paramount. The stock ran to $4.35 following the resource sector boom in Q1/06. At the time the stock was heavily promoted but saw irrational buying out of Germany that pushed the share price way ahead of the underlying fundamentals. Several investor websites in that country took contracts from every Canadian resource firm that approached them and as losses piled up through 2006, it severely damaged the credibility of those German advisories.

PGDP was fortunate to tag along on that ride, but then spent the past 8 months in a narrow range just above $2. Fundamentally it has been developing very well, but that irrational exhuberance in Q1/06 was way ahead of itself. Our paid newsletter started coverage of Paramount in late 2005 in the $0.70's and $0.80's so our readers were fortunate to profit from that rally. Once it was clear the share price was way ahead of underlying fundamentals, we dropped coverage. This will be our first visit back since that time.

For the past eight months the company has done an excellent job proving up reserves on their San Miguel property in Mexico and we're now hearing that exploration potential is looking better than ever. This area of Mexico has seen tremendous gold/silver discoveries over the past couple years. Emphasis can now be placed on the mining side, vs. the promotional (and irrational exhuberance) side that originated from an over-heated sector a year ago.

Significant announcements are often made by junior miners at the PDAC (www.pdac.ca) as the show is the perfect venue for reaching resource sector investors. On Friday, PGDP saw its first breakout in a long time and we hear March/April will be an exciting time for the company. Numerous analysts and even a few from the hedge fund crowd have visited the property recently and are kicking the tires on this company. With the proper funding to build a large drill program in 2007, the potential is signficant.

Paramount has 33 million shares out for a market cap of approx. $76 million U.S. - Nearby Palmarajo (PJO.V $9.45) has found a 3.1 million ounce gold equivalent resource or about 180 million ounces of silver and with 91M shares out has a market cap of C$860 million.

Paramount has so far found a 43-101 defined silver resource at just US$0.07 cents per ounce - 38 million ounces defined with only 6 months of drilling in 39 drill holes, at a cost thus far of US$2.5 million. Should Paramount prove up 200M ounces in 2007/08 and dilute with another 8 million shares to 41 million, a similar $865M market cap as Palmarejo would equate to $21 a share for Paramount. That is nothing more than blue sky speculation at this stage, but you can see where the share price can grow into the fundamentals on these junior miners.

Paramount Gold has a very strong technical team in Latin America and that was demonstrated when Teck Cominco teamed up with them in South America to form an exploration partnership (May/06 Andean Gold Alliance).

Paramount's technical team includes Bill Reed, former chief geologist for Hecla Mining and Echo Bay Mines, focusing in Mexico. Larry Segerstrom, recently Geology Manager for Freeport-McMoRan and before that with Newmont, Phelps Dodge and Noranda. President, CFO is Chris Crupi, former VP with PricewaterhouseCoopers. John Carden director was former Director of U.S. Exploration for Echo Bay. Senior Advisors are Jean Depati, longest serving director of Glamis Gold and John Simons discovered/developed the La Caridad copper- molybdenum deposit, now the largest mining and smelting operation in Mexico, with 4,000 employees.




Danny Deadlock
Microcap.com

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