Paramount Gold and Silver Corp (PZG.T) is continuing to drill high grade holes at the Don Ese zone, which is part of the San Miguel project in Northern Mexico. The news today caught my attention as there was an article out last week speculating on a takeover possibility from neighbour Coeur Mining.
The Don Ese zone is only 800 meters away from Coeur Mining Inc.'s Guadalupe deposit on its flagship Palmarejo project. The Palmarejo mine produced 1.53 million ounces of silver and 22,514 ounces of gold in the third quarter.
Three drill rigs are currently turning at the Don Ese zone as part of the program to move the project to a pre-feasibility study.
The current resource at Don Ese is small, totalling 55,000 ounces in the measured category at 2.88 grams per tonne gold. An additional 253,000 ounces are in the indicated category grading 2.81 grams per tonne.
The holes released today were infill holes and will be used in converting inferred resources to the measured and indicated category with the possibility of increasing the resource size and grade.
Overall the San Miguel project hosts 251,000 ounces of 1.51 g/t gold in the measured category and 872,000 ounces of 0.74 g/t in the indicated category.
Highlights include:
- Drill hole DS-049 intersected the Don Ese vein and assayed 15.6 metres grading 2.59 grams per tonne gold and 366 grams per tonne silver.
- Drill hole DS-050 intersected multiple mineralized zones with the main vein grading 1.34 g/t Au and 216 g/t Ag over 6.95 m, including 1.1 m grading 6.38 g/t Au and 1,050 g/t Ag.
Paramount CEO Christopher Crupi noted that the company plans to continue its program through the winter. "This is an ideal time to explore given the significant drop in costs due to the current environment and thus ensuring that when the precious metals market turns, we have added substantial value to our projects."
The rumoured takeover makes sense as Couer would easily be able to incorporate the San Miguel project into its mining plans. According to people with knowledge of the deal it will be a shared based transaction.
Speculation is that Paramount will keep its Sleeper project in Nevada with Coeur holding a 4.9% position in the new company.
Investors will have to wait to see if an official takeover offer comes from Coeur. If it doesn't materialize PZG has two excellent development projects that are extremely leveraged to the gold price.
Symbol: PZG.T
Share price: $0.90
Shares outstanding: 162.03 M
Market cap: $147.4 M
Read: Paramount Gold and Silver continues to Intersect High Gold and Silver Grades at Don Ese Eeposit in Mexico or Coeur Mining in talks to acquire Paramount Gold, sources say
I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.