Siamese Parrot has referred to last year's pre feasibility study...

Siamese Parrot has referred to last year's pre feasibility study which demonstrated excellent project economics based on a much lower gold price in an environment where costs would have been substantially higher.

The almost $300 increase in the gold price since the pre-feasibility study was published, more or less reports exclusively to the company's bottom line. Based on the 600,000 ounces of initial mine life, the higher gold price alone represents additional earnings of nearly 50 cents per share. And by the time mining commences the gold price could be a lot higher still.

In any case there is every chance that the company's almost 2 million ounces of gold reserves will contribute a much longer mine life than the initial 5 years planned. There are something like 10 additional pit optimizations yet to be factored into the existing mining resource, and higher prices will now enhance the economics of their inclusion.

There is potentially a lot of exploration upside as well. Numerous regional targets await further investigation, and as it happens, exploration is Chris Cairn's forte. With him at the helm, the company has a tremendous amount of blue sky sitting on top of very solid fundamentals.

More definitive news is set to flow in the coming months as the company progresses toward mining, and with gold fever now starting to become evident in the markets, (at long last), the timing for the company looks impeccable.

Showman has mentioned that "the upside of this stock is huge in the near term", and I suspect that he could be right if there is any substance in the current takeover speculation. Certainly, for anyone looking to gain a strategic postion in the company, NOW is the perfect time to act.

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As for You Ain't seen Nothing Yet there is an excellent article over on kitco.com by Chuck Cohen that likens the upcoming gold boom to the old internet bubble, only it will be the junior gold explorers that will provide all of the excitement this time round. I couldn't agree more with him!

LINK:
http://www.kitco.com/ind/akerman/may212009.html

Some Excerpts:

A Big Move Is Developing Thrust

At this moment, a once-in-history rise is revving up. It is coming in gold, specifically in the gold mining shares. The fundamentals are in place for the rise:

Unlimited creation of paper currencies out of every central bank in the world,

the exploding claims upon the U.S. dollar,

declining mining gold production,

a dearth of large discoveries in recent years,

a virtual cessation of central bank selling, and

a world-wide manipulation of the metal, particularly over the past eight years, that has produced an incalculable naked short position in the metal.

Why am I so confident, when probably no one you know owns gold, let alone the mining shares? It can be seen in the following charts of the Nasdaq from the early 1980s until 2000, and in gold from 1971 until 1980. Click Here

The Secret of Major Cycles: Parabolic Power

Little-known in an era obsessed with short-term trading is that most major stock market cycles tend to move parabolically.

The cycle begins unnoticed by most people. Corrections are sharp and violent, and they scare those who might be drawn in. But then, the slope of the rise moves up gradually until it reaches a certain point where it then begins to accelerate. This happens because, as the price rises, it draws in more and more people who excitedly chase it. By the time a top is reached, fundamentals are completely disregarded; then, as we saw both for gold in 1980, and dot-com stocks in 2000, the reversal arrives and a bear market ensues. The key is to recognize that such a trend is in effect and to be prepared to take advantage of it.

Why do I bring this up? Because at this very moment, we are in the relatively early stages of a massive bull market in gold, with very few recognizing it or positioned for the move. If you think I am exaggerating, then I must ask you, who do you know on CNBC or Bloomberg who is strongly advocating the gold market? Which quoted economists? See what I mean?

Stocks, Gold Trade Opposite

Gold is now in its second cycle. In the first, from 1971-1980, gold rose from $37 to over $800. Then for the next 20 years, gold hibernated while the stock market took over in its parabolic cycle. This was not a coincidence, since gold and stocks are basically in opposition to each other. That explains why stocks have performed so poorly since the 2000 top while gold has moved from about $250 to $900.

And what about now? All we hear about gold are the people who are cashing in by selling their old jewelry while the price appears to be so high. But isn't it strange that if we are in a bubble as many believe, we haven't see ads everywhere telling people to buy gold, not to sell it? Remember again how it was in 2000, when brokerage-house ads were everywhere on TV.

I believe that the impending move in gold, and even more so in the gold mining shares, will be the greatest and most speculative cycle in the history of markets. As I mentioned above, the fundamentals are firmly in place. Over the past couple of years the world has undergone a radical shift. Many nations have turned from holding paper currency and debt and have turned more and more to gold. It is happening in nations such as China, Russia, India and those in the Middle East. In the midst of increasing uncertainty, the price of the metal is now resting on the launching pad, and the shares of the junior exploration companies are sitting awaiting for lift off.

The Coming Explosion in Gold and Gold Mining Shares

How do you play this historic move to maximize the move here? Obviously, the physical metal is the safest way to own gold, but in this article I want to point out the way that has the greatest potential for you. It is the equivalent of owning some of those high tech companies that went up 100 to 1000 times in the 1990s. These are the junior or exploration companies. Right now there is a deficit of gold being mined while the world-wide bailouts have infused many trillions of dollars, with very likely much, much more on the way. As the price of bullion shoots up here, because of their market capitalization relative to its reserves and because their cost structure is declining sharply, many of these companies will have unbelievable runs.

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Comment:

- The contrary set up is incredibly good for gold. Bull Markets usually emerge with only a few believers on board, and that is precisely the situation we have at the moment.

- Let's hope Chris Cairns has got a good strategy worked out to defend/avoid a premature take over. I wouldn't mind being part of a sensational gold boom. And it doesn't have to start on Monday. I'm relaxed and patient with this one!

Cheers
Nev