2 NEW PLANETARY PROSPECTS
- Idaho & Montana: Positive on Premium Ex. (PEM)
- Peramivir: The H1N1 Solution
- China: Positive on Inter-Citic (ICI)
Ticker Trax™:A Stockhouse Exclusive
LEWISTON, Idaho – Still in Idaho, kicking tires and rocks at Premium Exploration’s shear zone just a river-hop from Elk City.
As of immediately, we are naming Premium (TSX: V.PEM) a Planetary Prospect, our 10th. Pronto. I expect the company to raise several million dollars in the next three to five days and continue fortifying a 500,000-ounce gold resource along a partially controlled Orogrande Shear Zone in these Doug-fir woods and gentle hills. Naturally, such a non-brokered financing will dilute current shareholders by as much as 20 percent (before warrant exercise).
Yet at a current market cap of $10 million, the shares, as founder Del Steiner tells me, could use a bit more float. Overseas investors, in particular those bold Aussies, prefer Canada miners with 100 million or more shares in the mix, Mr. Steiner insists.
Besides, 
if all goes well, the buyers of a looming private placement, says Mr. Steiner, a 65-year-old environmentalist Idaho lawyer and gold aficionado, almost surely will participate in future fund raisings as tiny Premium “proves up” what could become massive mineralized sulfides at its Friday-Petsite and Deadwood concessions.
In the Premium people patch: new CEO Wilford Struck, who is not so new, having worked this Friday property, and neighboring Buffalo Gulch, back to 1979 with Kinross, Bema and other entities. Wilf Struck, age 50, is a geologist and engineer trained in British Columbia and living in Montana. In these parts, and at the old Stillwater platinum property in Montana many moons ago, he is responsible for having staked thousands of claims with GPS positioning and some of the most detailed cross-sectioning on maps I ever have witnessed.
Mr. Struck and a consultant, Butch Ostenson, have blended historic and brand-new data streams for the properties. The information, much of which Mr. Struck compiled over the past three decades for other owners, combine geophysical and geochemical footprints, along with typography, resistivity and induced polarization readings and some old plus a bunch of brand-new drill holes.
“Smoking,” as Wilf likes to say. “These are some smoking holes.” And so they are. A seven-hole drill program this spring revealed and confirmed spectacular stretches of gold, 13 grams per metric ton over 5 meters, for instance. Or 29 grams over 19 meters.
“Jesus Murphy,” he says as we trek the Friday property, part of almost 7,000 Idaho total acres controlled by Premium Exploration. “Murphy me, I am either a claim staking demon or a claim staking fool.”
Ticker Trax subscribers, I do not have the time to tell this entire story right now. But I have it down pat. There are visible gold particles in existing core samples – from the June 2009 drilling. The mineralized rock has pyrite and lollingite, some arsenopyrite. At the most promising resource, Friday-Petsite, those seven new holes run across 853 masterfully plotted meters. Another 192, more than a few of which Mr. Struck directed for other employers those many Idaho moons ago, tally almost 20,000 meters.
Mr. Steiner, the president and legal beagle, says he hopes to distinguish his tiny exploration company by appealing to Australian, New Zealand and other (Asia) investors who intend to stick with the shares – “as long as we keep delivering.” Del Steiner is a director for SNS Silver and the fellow who developed Premium’s predecessor, Consolidated Mines Corp., a $3 million stock that rose to $80 million.
Premium Exploration (TSX: V.PEM) went public in 2006. Mr. Struck came aboard in March. The company also owns property in Mexico and in Montana, near the Stillwater Mine.
When I asked Mr. Steiner whether Premium’s ongoing strategy of rolling out an open-pit heap leach at Buffalo Gulch in less than two years’ time is a distraction, he said he did not think so. A non-compliant resource estimate shows at least 100,000 ounces of oxidized ore that easily is extracted over four years.
Most of the local, state and even federal permitting already is in place, thanks in large part to Mr. Struck, who resembles a spectacled Mr. Magoo and is on a first-name basis with everyone in a 250-mile radius of Elk City. That includes an Elk City logger who hauls away sick and dying fir from the Friday property in return for bartered Premium services and vice-versa. Wilf Struck was one of the first to engage the services of an Elk City business incubator with carpentry services and storage services for core samples.
Buffalo Gulch is some 13 miles north of the Friday resource. Mr. Struck was stooping over rock and collecting hundreds of soil samples at the property as far back as 1985.
Wilf Struck, by the way, developed the open-pit heap leach for Bema’s Champagne gold and silver mine in Idaho. That’s no tipple. Like many engineers and geologists, he says he always has frothed at his Mr. Magoo mouth at the prospect of defining and exploiting an intensely high-grade shear zone in these 4,500-foot-high hills.
“It’s just that, you know, companies do not always cooperate. All due respect to Kinross and Bema and the others. But I tell you, Jesus, everyone makes mistakes. Gold prices don’t always cooperate. And the technology and the positioning software we have now are intense.”
Premium Exploration is not alone in trying to warp-speed future-ize historic and on-hand data with fresh technology and local smarts. But it has, as both principals point out to me over an el-cheapo dinner back in Lewiston, Idaho, it has a lot of hot colors on those gorgeous custom-crafted maps.
The Crooked River region already has given prospectors more than 1 million ounces of placered gold from various rivers and streams. The terrain here, with mounds of 100-year-old tailings every 10 nor 20 feet from multi-bucket dredges used to scoop up the dirt from the riverbeds, reminds me of water-sluicing done along Highway 49’s Yuba River in California. That was 160 years ago in California and 120 or so years ago here in Crooked country.
Time to get serious about this? I think so.
Premium Exploration is now Planetary Prospect No. 10. The 47 million-or-so share float should allow subscribers a decent shot at purchasing shares at 21 or 22 Canadian cents. As with Planetary Prospects, we here at home do not yet own the shares and will wait at least until early next week to start purchasing Premium Exploration.
Mr. Struck, as we suck carrots overlooking the intensely placered Crooked River, says this (Thursday): “We think we can show what might be a relatively shallow deposit with serious rock, not just at Friday, but up along the entire shear zone. I think this small gulch here, and that one up the road, are the gateways to a long and quite continuous structure, like the Carlin in Nevada.”
Come on, Wilford. The Carlin Trend? I mean, I just flew over those massive super-pits courtesy of Great Basin Gold’s Ferdi Dippenaar and Michael Curlook. They are the size of small European nations, those Barrick and Midas and Barrick pits.
“Holy smokes, I know that sounds less than credible. But it is entirely logical, given what has come out of these rivers and topsoil these past hundred or so years. This is no Virginia City, where the sulfide got tapped out. No way. ”
SO, as stated here the other day from God’s Gold Country, something amazing is about to happen. Once the new cash hits the books, Wilford Struck and Del Steiner already have their Phase II drill program in place. The shares sell right now in Canada for 21 cents. And c’est dengue, Wilford, stop that squinting. (That’s French for ‘dang it,’ or something, the kids tell me.)
This Premium-Ex paragraph (or three) content is from the other day, in case you missed it:
“Here is a funny picture of the road at Friday that the loggers (at one of the northeastern Idaho properties -- photo up yonder) built using rock from the side of the shear zone. It is worth around a $1 million bucks in gold,” Jamie Hyland tells me. Jamie is a shareholder and an investment relations professional Vancouver-styling and has no link to Premium except his shares.
China Cheap
Inter-Citic Minerals: The ticker is ICI. I have met the principals, and I will be seeing them again next week. I am taking the unusual step of naming this China gold company Planetary Prospect No. 11 – immediately. The shares already are running after our article and report earlier this week.
In addition, Inter-Citic (ICI) at 0.35 percent of NAV is probably one of the cheapest looming mid-tier gold producers on Planet Earth. Our good friend, David Banister at Active Trading Partners, today (Friday) named the shares an instant purchase based on information David and I have gathered from the company’s James Moore, CEO. The shares in Canada sell for 84 cents each, more than they did at our first take from New Orleans earlier this week.
Maybe the Chinese cat is out of the bag? Or maybe Inter-Citic’s Mr. Moore and Mr. Lou Pasubio, who spends a lot of time in China, are having some success on their current road trip across New York City, Toronto and Boston. I think there be a heck of a lot of asset managers these days who do not want to be left holding an empty cat-bag were the gold price to go another 10 percent higher in the next two weeks.
Inter-Citic Minerals’ James Moore and his team have a China property that is pure gold and nothing else. The Chinese investors who support the company from Macau say xie-xie for that.
Inter-Citic shares are selling for a fraction of NAV that its peers fetch. I have the investment bank graphs on all that for subs who express interest. In the meantime, just why are these darn ICI shares so darn Chinese cheap?
I asked Jim Moore, a former college football star, about the bio-leach process the company hopes to use on its metal ON THE HIGH PLAINS OF EASTERN CHINA. The project is called Dachang, and I hope to visit the high-altitude site soon.
For definition purposes: Bio-leaching essentially introduces live enzymes into ore for the purposes of heating the heaps quickly and allowing more oxygen so cyanide and other agents can perform their chemical magic.
Mr. Moore told me, “The bio-leach process mostly speaks for itself. The flowsheet is virtually identical to that of Sino-Gold's Jinfeng project. That project is now owned by Eldorado. Further testing will no doubt help the doubting Thomases … but frankly there is no secret sauce here. The technology is already in use.” (Please note that Jim, who will be at our Money Show workshop in Toronto next week, did not say Doubting Thoms.)
On the news front, Mr. Moore told us today, “We should soon be able to update the market on drilling as well as trenching news. Naturally we cannot say when news is coming but suffice to say that in the normal course we should have results to publish given that we've been drilling for a while.”
On financing of the development for a working plant: “No firm arrangements are in place yet. This is normal for all companies at our stage of development. Secondly, we believe that the project should easily command a 2:1 debt to equity ratio. This places the equity portion at roughly 35MM.
Finally, on country risk: “China is perhaps one of the best markets to arrange this type of funding. The country is high in liquidity and in need of quality projects that show a very compelling 2-year payback for 100 percent of capital. Not a lot of gold projects around with that characteristic.”
How about whether a financing for more drilling and/or a working plant would degrade net present value or internal rates of return? “The answer is that it lowers it,” the very large and very articulate Mr. Moore tells us. “However, two things should be remembered. Our NPV and IRR are calculated the same as our peers who are in pre-development. Given this fact the impact to ICI's value is in fact less than our peers insofar as we have a very low cap-ex requirement to build relative to our peers. In this same light I would like to make one last point. ICI is currently drilling and our goal is to convert the balance of the inferred resource as well as make new discoveries. This is important for the market and I expect that results if positive will help investor confidence.”
The Big Moore adds, “More importantly, the Independent Scoping Study published in August 2009 assumed only 1.5 million oz. of total production of the roughly 2.8 million ‘in resource.’ The most accretive thing we could do is to show more production in our mine plan. Our new mining engineer, Malcolm Swallow, is tasked with this very job as his top priority.”
What else can I say before a site visit to cold and windswept Dachang? Why so cheap, comrades?
Why not let Mr. Moore do the heavy lifting?
“My personal opinion is that like all things it isn't one issue but a few. However, I think that the primary reason is that the market was waiting for our scoping study, which did not get published until the end of August. As a result we missed the March ‘til June run that a number of our competitors enjoyed,” the big man at Inter-
Citic says.
“New Orleans is the first real investor audience where we've been able to present our results and new goals … and the result is thus far positive. We have a number of initiatives geared to communicate with the institutional and retail market in the weeks ahead. With 20,000 meters of drilling and trench news combined with explaining our scoping study results, we believe that we can get the valuation to something more in line with our peers.”
Ticker Trax subscribers, excuse this elliptical issue. Not the usual flow. A few missing components. And with Inter-Citic, my not being on site puts me in the xie-xie catbird seat. Yet I am on record. As with Planetary Prospects of this service, we here will be waiting to purchase shares at least until next week sometime.
To: Guyana Next week
From: Moi
Sandspring Resources: Toroparu in the Republic of (English-speaking) Guyana is on my fancy list. The correct ticker of this producing mine, when it begins trading at the end of October, is SSP.P. I just met a general manager for the Sandspring Resources (ETK now) project, Wes Adams, at the New Orleans show. The stock is likely to start trading at approximately 40 cents Canadian, but no guarantees there. This is one of those holding companies for purchasing a new asset that gets enveloped into the new security.
Sandspring is producingabout 5,000 ounces of gold a year right now at the 100 percent-owned concession, all of it alluvial (basically panning for gold). A slew of new diamond-drill holes are showing a resource of 2.3 million ounces of gold and 260 million pounds of copper (Initial NI 43-101 Resource Estimate as defined by Canada securities rules). The property itself is called the Toroparu Gold-Copper Prospect, and it is in the Upper Puruni River Area, Guyana. The nation, the land of many waters, is South America’s only English-speaking one. (Here is the official government web site.) I will visit the property next week via a flight to Georgetown, Guyana from Toronto.
That is about it. I am still committed to BioCryst Pharmaceuticals (NASDAQ: BCRX, Stock Forum), which is a Planetary Prospect of this service and has been since $1.70 a share. We here at home are adding to our BioCryst stake, ahead of what almost surely will be an Emergency Use Authorization for intravenous peramivir to treat hospitalized H1N1 flu patients in the USA. We now own 63,000-odd shares of the NASDAQ-traded stock. I see peramivir as a necessary intravenous treatment for hospitalized influenza patients worldwide.
Thanks again to stocks trader and consultant David A. Banister and his https://www.activetradingpartners.com. I receive no compensation from him nor he from me. Not even free sugar-free lollipops.
TORONTO: I’ll be presenting a workshop on “Moly, Mexico Silver and Ghana Gold … and the H1N1 Truth” at the World Money Show in Toronto next Tuesday. It is at 4 p.m. at the convention center.
Questions about our Planetary Prospects? Feel free to call or ping me: thom.calandra at stockhouse.com. (Most photos by Thom Calandra)
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