What Happened to Paramount Gold & Silver?

As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Paramount Gold & Silver (AMEX: PZG  ) . The mining exploration company doesn't have any current production, which often leads many analysts to miscalculate the value of its assets. That challenge, along with a generally volatile year for precious metals, has pushed the stock up and down throughout 2011. Below, I'll take a closer look at the events that moved Paramount's shares this year.

Stats on Paramount Gold & Silver

Year-to-Date Stock Return (42.3%)
Market Cap $315 million
Net Loss, Trailing 12 Months ($23.7 million)
Cash / Debt $10.7 million / $0
CAPS Rating (out of 5) ***

Sources: S&P Capital IQ, Motley Fool CAPS.

How did Paramount Gold & Silver do this year?
At the beginning of 2011, Paramount was riding high, having just made a huge discovery at its San Miguel project in Mexico. With a world-class mine owned by Coeur d'Alene (NYSE: CDE  ) just next door, it shouldn't have been a big surprise to make a find in the same general geological area.

Yet San Miguel isn't the company's only prospect. After paying a pittance to acquire its Sleeper project in Nevada, Paramount now believes the mine has a measured and indicated resource of 2.6 million ounces of gold and 25.3 million ounces of silver.

Perhaps the most exciting thing about Paramount is that it continues to explore for new resources. Although Great Panther Silver (AMEX: GPL  ) , Primero Mining (NYSE: PPP  ) , and Brigus Gold (AMEX: BRD  ) all have plenty of assets left to explore and tap, they have current revenue from production. Paramount, on the other hand, will rely on the interest of big companies like Newmont Mining (NYSE: NEM  ) and Barrick Gold (NYSE: ABX  ) to execute on its business strategy of focusing on exploration and then finding nearby partners to help do the actual mining.

With gold and silver prices having declined in the past week, Paramount looks poised to close out 2011 on a sour note. But if precious metals rebound, Paramount should jump with them.

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Click here to add Paramount Gold & Silver to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of Primero Mining. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


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  • Report this Comment On December 19, 2011, at 6:09 PM, EllenBrandtPhD wrote:

    Dan,

    If you understand why the (very corrupt) Market Makers are playing this stock this way, please tell me!

    Everyone knows the Founders hold way too much equity and have to share it with some key institutions before PZG gains the sponsorship it needs to move up.

    But said Founders have demonstrated in spades that they will not let any shares leave their hands under 3.75. That has been their floor for more sales forever.

    As far as I can tell, there are no institutional holders in trouble on the Long side. In fact, there are a few iffy ones on the Short side! And any Retail in the stock is Gold sector veteran Retail, which are holding PZG long-term as a wager it will get a takeout bid sometime in the next 1-2 years. This Strong, not Weak, Retail group of shareholders tends to buy more when the stock is taken down in Silly Season fashion, not the opposite.

    So you tell me if the Market Makers have any remote idea why they are "managing" this stock in such an idiotic fashion.

    That being said, the Founders need to somehow convey to the market their plans for a regular program of sales of their too-big equity portion.

    Use what Floyd Wilson did at HK as a standard of perfectly managed share sales of the Founder's portion, and everybody will be happy.

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