Interview with Chris Crupi, CEO of Paramount Gold and Silver
Quote:
Struthers - Hello Chris, the last time we met was at the PDAC in
Toronto, a lot has happened since then.
Crupi - Yes, there has been a lot of interest in the company since we
substantially expanded the Clavo 99 discovery at San Miguel and of course
the SEC issue.
Struthers - As you know, I have been quite fond of Paramount's San
Miguel discovery, but right now shareholders are concerned with the
trading halt.
Crupi - of course, it has really consumed a lot of our time here at
the office.
Struthers - It is really quite strange, I had never heard of such a
situation and would like to ask you a number of questions about it.
Crupi - no problem.
Struthers - did the SEC raise any concerns with the company just prior
to the trading halt on March 13th, say the previous 6 months?
Crupi - no, as you know we listed on the AMEX and TSX in 2007 and both
exchanges conducted extensive due diligence prior to listing and so
this was a very big surprise.
Struthers - Before the halt - did the SEC request any additional
information or questions on recent filings?
Crupi - no, however, during the 10 day suspension we had a dialogue
with the SEC and AMEX and as you recall were up and trading on day
11.
Struthers - So you had no idea the stock would be halted?
Crupi - No, as you know the company is three years old and we
moved the listing from the Pink Sheets to the Bulletin Board, then
to AMEX and TSX with no problems.
Struthers - strange - I understand the alleged corporate hijacking
actually occurred before Paramount was incorporated.
Crupi - yes, Paramount was a newly created corporation, and a was later
brought to trade on the OTC Pink Sheets.
Struthers - Without mention of names, I understand you engaged a
Canadian legal firm to incorporate Paramount who in turn engaged a US
securities lawyer to get Paramount listed on the OTC. Were, these
lawyers experienced in such matters?
Crupi - yes, the Canadian legal firm in Vancouver was one of the
recommendations I received because they had previously done several
new public listings on the US OTC and they were in good standing and
had a good track record. I was not aware of who if any other lawyers
were engaged by the Vancouver legal firm.
Struthers - I have been digging into this myself and I did speak with
the Vancouver lawyer and asked him about the US lawyer involved. He
told me the US firm was out of Texas and had a lot of experience with
OTC listing. I heard this lawyer was the former head of the SEC, so I
did some research and found out the US lawyer previously worked for
the SEC and was quite high on the ladder there. I did not confirm if
he was at the top or not.
Crupi - yes, I heard the same thing.
Struthers - One comment he made has really stuck with me, when he said
"does one lawyer hire another lawyer to do due dilgence on another
lawyer"? I understand the problem lies with the US lawyer, is the
SEC still investigating Paramount or this matter?
Crupi - to the best of my knowledge the SEC has moved the Paramount
file back into the regular stream corporate finance. Any other
investigations into individuals involved are unknown.
Struthers - after the SEC allowed trading to resume, why would the DTC
halt it again, especially since they knew of this problem since March
13th?
Crupi - the DTC machinery did not turn the switch on after day 10,
notwithstanding requests by the AMEX.
Struthers - Did the DTC contact Paramount at anytime about these
matters?
Crupi - No, but after almost 3 weeks we heard back from the DTC today and
they have basically requested the same info we provided the SEC and
AMEX.
Struthers - from what I understand, the DTC is simply a clearing house
that settles the daily trading transactions, what business would they
have in Paramount affairs?
Crupi, you are correct, but I think what happened is this issue
prompted their attention and they realized they did not have a lot of
information in their file regarding Paramount, and this is the type of
info they have requested and we are acting on now.
Struthers - are you expecting this to be resolved soon?
Crupi - yes, it is simply a matter of time now
Struthers - as a result of all this, does Paramount require a new
CUSIP number?
Crupi - no, the shares are still DTC eligible and all stock
issued under the current CUSIP is fine so no new CUSIP needed.
Struthers - it looks to me that everything is fine here, something
that happened 3 years ago, just before Paramount came into existence
and it has just been a matter of some more information required from
Bureaucrats that are known not to necessarily work in a timely matter.
Crupi - that is exactly it, all this should be settled once and for all
in the near future.
Struthers - Glad to hear that, in the meantime I know things have not
stopped progressing on the ground, have these SEC/DTC issues resulted
in any less interest in the project from the major mining companies?
Crupi - No - not at all, they really are not too concerned about that.
Struthers - Great, how many majors have expressed an interest in the
project?
Crupi - it is amazing - it seems pretty much all of them, I can't say
who or an exact number, but I can tell you we have signed several
confidentiality agreements with interested parties.
Struthers - Wow! that looks to me that this must be a project that is
up near the top of the majors priority list - what about current drill
program on the project, how is that progressing? how many drills are
working now?
Crupi - We have 3 drills on site with a fourth water well drill rig.
The two core rigs are drilling at the San Miguel Clavo 99 to expand
that significant resource. The RC rig is drilling at Montecristo and
doing wildcat until the core rig can be moved over. The water well
rig will be used to set up new water wells so we can finally dewater
the San Luis Mine and move the 2nd core rig over to drill in the
bonanza gold zone. We expect San Luis to produce some great numbers.
We hope it is our second Clavo discovery in the project.
Struthers - So can we expect some more drill results soon?
Crupi - yes, we have some assays in the lab which will be back in the
next few weeks. The core looks good.
Struthers - I have also heard that a new 43-101 resource estimate is on
its way?
Crupi - yes, we hired a consultant by the name of Danny Sims, Ph.D in
geology. Danny worked for Freeport McMoRan for 11 years at the
world's largest gold mine known, at the Grasberg district in Indonesia.
Danny is heading up the Paramount side of the estimation process. We
expect the report to be complete in June 2008.
Struthers - what is your expectation for this resource estimate?
Crupi - For now I will only comment with a ball park figure of one
million ounce gold equivalent on the low side and two million ounce gold
equivalent to the upside with a majority of that in silver.
Struthers - OK, so we are talking about a two to four times increase
over that last 43-101 estimate. The share price is beaten down because
of these SEC/DTC issues, do you think that would mean a cheaper buy
out price down the road?
Crupi - Ron, you also need to consider the Subprime and ABCP market
blowup in the USA which has greatly impacted liquidity. This has
affected many junior stock prices as investors flee these type
of markets for safer ground. I suggest that these investors will
be back to buy the good deals particularly with significant proven
assets and minable deposits that can be put into production in
the near term.
Furthermore, the indication I have been getting from the majors that
have visited the property is - they don't mind paying what the
project is worth , regardless of what the stock price is - Secondly
with so much interest form many companies, I think if someone tried a
low ball bid, another company would soon up that bid. And third,
remember we have a very strong and sophisticated shareholder base with
many institutional holders, I doubt they would tender their shares to
an inferior offer.
Struthers - I agree with that and thanks Chris for your time to
answer my questions. Hope to see you again and I am looking forward
to the new 43-101 resource estimate.
