Paramount Gold and Silver Corp (PZG)

[Picassa]

TGR: Very interesting. Any other names you'd like to mention?

JS: For those who are willing to look at pure exploration companies, we think Paramount Gold and Silver Corp. (TSX:PZG; NYSE.A:PZG) is attractive. Last year, the company bought X-Cal Resources, which brought it the historic Sleeper Gold Project in Nevada. Its other asset is the San Miguel Project, in about 465,697 acres in the Sierra Madre Occidental Gold and Silver Belt in Mexico. San Miguel has a resource of about 2.6 Moz. of gold. Coeur d'Alene Mines Corp. (TSX:CDM; NYSE:CDE) is developing a contiguous property with 3 Moz.

We think the Sleeper Project has a lot of blue-sky potential and has the potential to hit real bonanza grades. An interesting little tidbit is that the Sleeper Project owns the water rights to Fronteer Gold Inc.'s (TSX:FRG; NYSE.A:FRG) Sandman Project, which Newmont Mining Corp. (NYSE:NEM) just bought. When you look at the total combined resource of nearly 5 Moz., we think Paramount will make a nice takeout candidate for Newmont, Coeur d'Alene or another company down the road.

TGR: So, Paramount has the geographic tie-in. . .

JS: Right. It's in the mining-friendly districts of Nevada and the San Miguel district of Mexico. The properties are contiguous to two large companies that we think would consider the company an attractive acquisition. We're seeing that big companies like Newmont need to feed their mills. They have to do acquisitions to keep their mills active. It's a big operating cost to have a mill that's not running at full capacity. That is one of the reasons we think Newmont bought Fronteer's Sandman Project. Paramount is a little more speculative, but we think it has a lot of potential as an exploration-upside takeout candidate.

TGR: Why do you consider Paramount more speculative?

JS: Paramount will need another financing round, at some point. It's a pure exploration company, and exploration companies have a habit of spending cash and needing more.