Pacific Minerals from Gold newsletter

[Scorpio]

Pacific Minerals has enjoyed a nice rebound in price and trading volume. The advance has been largely driven by progress on the company's current projects (including work on a mine development study a the 217 Gold project) and new opportunities (particularly a new 480-square kilometer gold project in Liaoning Province).

PMZ was the first of our major China plays, and it has performed very well for us. But the company's management has been exceedingly slow in addressing the issue of its deal with Ivanhoe Mines. While the deal with Ivanhoe came at a crucial time for Pacific, and provided much needed exploration funds, it has seriously diluted PMZ's upside potential and essentially put it under the larger companies control.

Pacific's management was supposedly in discussions with Ivanhoe about a new deal that would restore much of the potential embodied in its outstanding projects. But as the months have rolled by without a peep in regard to a rearrangement, it seems that this is not a high priority for either company. We'll give it some more time, especially considering the recent rally that appears to indicate some development is on the horizon. But it won't be long before we'll have to move on, so you might want to begin looking for opportunities to ease out.

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This was reproduced from Gold Newsletter by Brian Lundien. I have been a subscriber of his for quite some time, and he typically has pretty good judgement, albeit early many times.

As for Pacific, I agree that there is a development on the horizon. After the management shake up last year, the price was sent to the dustbin. Once the realization set in that this was actually positive for the company going forward, the price started to rise again. Currently, I think the market is pricing in or hedging the price on this company to account for some very good news. The market does not want to be caught at 80 cent if the news supports $3-4.00.
So for now, the market will be content with chopping around here, making gains as it can, and when an announcement comes, the price will be rerated up or down again.

For now, it is a hold, as a part of a very strong prospect is better than none at all, especially considering the current level. It does not cost much to 'call'.

S