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Paramount Gold Nevada Corp. Message Board

  • stock.tides stock.tides Mar 28, 2013 5:44 PM Flag

    PZG IR -- Peter Krauth's Comments

    Peter Krauth's Comments:
    "My favorite development-stage play is Paramount Gold and Silver Corp. The company recently released a PEA on its San Miguel project in Mexico. The numbers look very attractive. Its initial capital requirements of $232M are pretty reasonable. The mine would actually produce about 57 Koz gold and more than 3 Moz silver annually for 14 years. If you were to convert the forecast silver production to gold, it would be more than 115 Koz Au eq produced annually. With the 5% discount rate that the company used to evaluate the project, the net present value (NPV) exceeds $707M, with an IRR around 32%. This single project at a $707M NPV is more than double the company's current market cap of $290M. On that basis alone, the stock should be twice its current $2.16/share trading price. Shares barely budged on the news of the San Miguel PEA. That is a ridiculous reaction, and a clear sign that sentiment is coloring everything gold-related. . .you buy Paramount for both San Miguel and Sleeper and get a lot for free.

    "Paramount released PEA results on Sleeper in July 2012. The startup costs would be about $340M; production would be 172 Koz gold and 263 Koz silver annually. The average operating cost was $767/oz Au eq and the IRR was about 26%, at $1,384/oz gold price. If you were to bump up the gold price to $1,615/oz, the IRR shoots up to 40%. This makes Sleeper very attractive at the current gold price. Paramount prudently used lower gold and silver prices in its estimates. . .Paramount just had some warrants exercised, so it is cashed up to $18M. That should carry it through 18 to 24 months. I believe it will keep moving both projects forward. Both are attractive and could draw the interest of a major."

    Sentiment: Strong Buy

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    • who is going to pay for this double buildout with a low grade sleeper and silver /gold deposit miquel-now cde has both nevada mine and is right next door but just bought orko,first majestic doesn't do gold,exk doesn't build-in todays enviornment don't see you getting near the prices demanded unless you split these--who are the buyers and why as a package and at your numbers-am i missing something

    • More Peter Krauth's comments: Get on board while you can at a steal...

      TGR: Might Paramount sell one project to develop the other?
      PK: I could see that as a possibility, however, given its advantageous cash balance compared to the rest of the industry, I doubt Paramount will be pushed into that situation anytime soon. It could probably even raise cash to tide it over without being overly dilutive to its shareholders.
      Both projects are in great jurisdictions and have great infrastructure. With each project worth about $700M, that is close to $1.4 billion ($1.4B) in value, and the market values Paramount at less than $300M. Realistically, the shares could be 4.5 times what they are trading at now.

    • Stock.tides ...... yep, this is what the long timers on this board have bee sayin all along. Nice find and thanks for sharing!

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