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Resource/Tech Report - V12 #7.1, - Special Report- Mexico Trip - June 11, 2006
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My trip into the Sierra Madre Gold Belt near Palmarejo, Temoris (Paramount) and Morelos (Garibaldi)
was a great success and a real eye opener.
As you know, Gammon Lake's Ocampo and the Palmerajo discovery have been the latest huge successes in
this belt. I have been following Paramount and Garibaldi as the two with the next best chance of
success. Garibaldi has a large land holding around Ocampo and they also recently picked up a large
land package that surrounds Palmerajo and Paramount's San Miguel project. Then further down the belt
towards Glamis Gold's El Sausal mine is Paramount's large Andrea holding and beyond that is
Garibaldi's Morelos project.
Company Symbol Hi Price Recent Price Market Cap
Gammon Lake GAM C$21.48 $13.40 1.052 billion
Palmarejo PJO C$10.45 $8.50 697 million
Paramount PGDP US$4.40 US$3,C$3.31 102 million
Garibaldi GGI C$0.89 $0.58 14.6 million
I see Paramount as roughly one year behind Palmarejo and one year ahead of Garabaldi. Paramount has
just begun the drill phase at San Miguel, while Garibaldi will probably be another year or so before they
advance to the drill stage.
Tara Gold TRGD US$0.62 US$0.41, C$0.45 34.2 million
Tara Gold is another player here, as they are partnered with Paramount at San Miguel, Paramount can earn 70% in San Miguel from Tara by making continued payments and expenditures over the next 2 years.
It takes considerable time to make this trip because there is no real easy and fast access from a
major center or airport. The infrastructure is good and you can drive by road to these properties but
the drive is long. From the city of Chihuahua a major airport, you can drive to Paramount's property
on a paved road about half way and secondary gravel roads the other half. The roads are winding and
slow and it would take about 9 hours to drive from Chihuahua to Temoris. Paramount has a distinct
advantage being near Temoris, because the Train runs right through Temoris from Chihuahua to the
coast daily. The train ride is a relaxing and scenic with a few stops and about the same time, 9
hours. There is an airstrip at Temoris where a small aircraft (20 seater) could land.
Temoris
Temoris (above) is the biggest town in this area and has decent hotels, restaurants and services
for mining exploration. Anything can easily be brought in by train. Hydro power was brought into the town about 2 years ago and hydro is just now being brought into Guazapares (below), a smaller town about 10 kms away but just 3 kms from Paramount's San Miguel project. Paramount works out of Temoris and Guazapares is where they have drill core storage
Guazapares
Paramount's San Miguel (Core Shack)
It took a good two days to see all of Paramount's San Miguel project. I first visited the core
shack (above) and examined the split core for drill holes 1 and 2 and the whole core for
hole #3 before it was split. These holes were drilled in the Monte Cristo II zone, which is a new
discovery that Paramount made while preparing drill roads. Hole #1 (picture below) looks pretty
good and hole #3 looked even better with assays expected in about 2 to 3 weeks.
The drill program is testing a brecca zone, identified by three structures on surface, a wide 33 metre zone that showed 0.54 gpt Au and 26 gpt Ag on surface, a narrower 7 metre zone that averaged 259 g/t Ag with 0.21 gpt Au and the other had 2 surface showings of 224 g/t silver over a width of 14 meters, and 163 g/t silver and 0.10 g/t gold over a width of 7.4 meters.
Monte Cristo hole #3
The driller had finished Monte Cristo hole #3 (above) while I was there, down to about 300
metres. They were removing what is called a down hole camera which verifys the hole is drilled straight and on the proper angle (degree). Paramount has constructed a number of other drill pads on Monte Cristo II but plans on awaiting assays before continuing to drill this target. The drill was then moved to the La Blanca zone, just next to Monte Cristo II and was progressing well on hole #4 (below). Note the level terrain at La Blanca, the whole zone is like this so will be easy to drill.
We next went to the San Luis mine (below). This is an awesome gold&silver drill
target. As you know there was a 13 metre sample of 85.2 g gold and 339 g silver at the 300 foot level and Paramount has taken several samples on the surface that ran up to 5 grams gold.
There is about 10 to 12 drill pads (San Luis drill pad - below) already prepared, so it looks to me that Paramount is planning an aggressive program on this target. I am expecting to see good long intersects and some very high grade.
Another important aspect, water is kind of scarce in this region, during the dry season, but
Paramount has secured water rights at San Luis, one of the best sources in the region. While I was there, I heard Palmerajo was having trouble getting enough water and the small town of Palmerajo had run out of potable water.
San Jose North zone
Next from San Luis, I visited the San Jose North zone (above) that runs just to the
south of San Luis. This is an awesome silver target. Like most everywhere on the property, the land is mostly gentle rolling hills and easy to access. You can drive to any of the mineraliazed zones on the property with a 2 wheel drive vehicle. Getting out of the trucks, we walked a short distance to examine four trenches (Trench 2 below). These trenches are each about 75 metres long and down to a depth of about 7 or 8 feet. Samples were then taken across the freshly exposed bed rock with some assay results starting to come back and more pending. These trenches are about 40 metres apart and are across the San Jose zone that averaged 225 g/t Ag on surface in an 100M X 250M area.
The was also numerous old workings (below) that could easily be seen throughout San Jose zone and the same as you continue to the south onto the La Union zone. It is obvious that the San Jose zone could easily be mined as a long open pit from surface, basically just scooping out the hill.
We continued farther to the south to the La Union zone (1.24 g/t gold and 203 g/t silver across 16M) and observed some of the old workings and the old Spanish Dam (below). There is a lot of over burden in places but one can easily speculate that the La Union is a continuation of the San Jose zone, which means this zone could be 3 to 4 kms in length. The rock and structures look the same and Paramount has obtained several high grade silver assay on surface at La Union.
Next was a visit to the El Carmen zone on the North end (below). Paramount has done little work here, other than some sampling of some out crops, but these have come back with some very high grades such as:
1.1 metres of 1,730 g/t Ag
1.4 metres of 1,674 g/t Ag and
6.8 metres of 367 g/t Ag
We walked along the structure for a few hundred metres and the potential here is quite obvious with intensive alteration.
El Carmen zone, North
From El Carmen, we went to Monte Cristo II where I observed drill hole #3 just finishing and the drill sites of hole #1 and 2. Monte Cristo II is a new discovery where Paramount found the zone while constructing a drill road from La Blanca. The drilling is testing a hydrothermal brecca zone 150m wide and 300m long and is open in both directions. It is a contact between the dacite intrusion and rhyolitic volcanics. The brecca is cut by stock works and quartz veins with pyrite.
La Curita
The next day, was a visit to the La Curita Mill (above). The mill was not running but I did
see the ore hoppers, conveyors, two ball mills and several flotation tables. There was a couple
diesel generators on site and everything looked in reasonable shape but I expect about $200,000 in upgrades and repairs are needed to bring the mill up to good working order. Palmerajo has a core storage facility (green building, top left) on the property and you can see Palmerajo's property in the background. The road to La Curita was in pretty good shape but would require some upgrade and repairs for haulage trucks to use on a steady basis. Hydro electric lines are now just 2 to 3 kms away and there is plenty of power to run a small mill like La Curita and power to upgrade the mill several fold.
San Miguel and Empalme
Next was over to Paramount's San Miguel and Empalme concessions. These cover what looks to be like at least 3 kms of strike down a well mineralized structure. Some of the easy high grade material was been mined out in the early 1980s and in this picture across the face of Elica, (above) myself and Bill Reed are observing the zone where a sample across 12 metres ran 1.09 g/t gold and 330 g/t silver. We hiked further down the San Miguel zone and up about 75 metres higher to observe a trench that Paramount assayed 1.67 g/t gold and 388 g/t silver across 10 metres (below, red mark near stake) This is a good indication that this zone continues for some distance. I also observed several old workings that further support the extent of this structure.
We then headed back to check out the La Blanca zone where the drill rig was just starting hole #4.This is right off the road, which is just the other side of the Bull Dozer. The ground is quite flat
and easy to drill.(see 6th picture from the top)
Summary
I have visited many exploration properties in my day and beyond a doubt, this is the best I have
ever seen. There are several factors that make this an awesome exploration target and in my opinion, surely a big discovery and a new mine. Paramount has an ample water supply that can be an issue in this region and they are located fairly close to one of the larger towns in the area. Hydro power has just come into the region and there is railway nearby and easy access to the property by road. The topography and access to the mineralized zones is excellent, as I said you can access any of the zones with a two wheel drive vehicle.
Infrastructure and access is very good, which means lower exploration and mine development costs.
Another very important aspect that stands out, all of the zones appear to start from surface and run on surface for several hundred metres and probably kilometres in many instances. This means that stripping ratios would be low and make for a very attractive and profitable mine.
Huge potential at depth.
Grades are very good on surface, especially silver, but not a lot is know at depth, but the first
four drill holes indicate very good targets at depth. It looks like higher gold grades at depth and this is also indicated at the San Luis mine. There is no sign of base metals, which typically show up deeper in a mineralized system. This means that the San Miguel discovery near surface is very high in the mineralized system, or in other words, the best part of this system is most likely to be found at depth.
I also had the opportunity to discuss a fair bit about Palmerajo and how it compares to San Miguel with one of the exploration staff working at Palmerajo and the conclusion was that San Miguel appears to be higher in the system and the access and strip ratios would be far easier.
From what I could gather, it looks like the potential at San Miguel could be much better than Palmerajo. Certainly stripping ratios and mining costs would be much lower at San Miguel.
Paramount has so many targets to drill it is in some ways hard to grasp the large potential. They
are preparing for a very aggressive drill program and already have about 20 drill pads set up ahead of the drill. I expect there will soon be news of another drill being added to the program.
Currently the drill is on the 3rd hole at La Blanca (hole #6), so we should be just 2 to 3 weeks away from the first news on drill results. I am awaiting eagerly. Despite the correction in the gold market, exploration stocks are responding well and gapping to higher prices on good drill results and I expect the same thing will happen with PGDP.
The current low stock price, below $3 is an excellent buying opportunity. The stock appears to be at a support level, around $2.50, tested twice in February.
I also shot a good video from a helicopter of the San Miguel concessions, Palmerajo and Garibaldi. I will work on getting this into a format to view on the web site
(c) Copyright 2006, Struther's Resource/Tech Report
All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author's control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment advisor to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Struther's Resource Stock Report is not a registered financial advisory. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
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