At the same time, Premium (http://www.premiumexploration.com/) is also developing a compelling portfolio of grass-roots to medium-stage silver-gold projects in mineral-rich Mexico. More on this later.

 

In short, Premium offers investors a finely-calibrated risk/reward profile. Its key appeal is its adherence to a policy of strength through diversification via the advancement of its various precious metals projects, matched with a commitment to developing a prospectively world-class, “company maker” platinum group metals opportunity in Montana.  

 

All of which may soon be underpinned by a solid foundation of modest gold production as early as 2010. 

 

In the Company of the World’s Two Richest Platinum Group Metals (PGM) Mines

Premium’s joint ventured Chrome Mountain Property is located within the only producing Platinum Group Metals (PGM) intrusive complex in the United States. This PGM-rich mineralized corridor stretches over 41 kilometers and is up to 8 kilometers wide. It already hosts the richest PGM deposit in the world, the “J-M Reef,” which has led to the emergence of two lucrative operations, namely the East Boulder and Stillwater mines.

 

The extremely high-grade “J-M Reef” PGM deposit “strikes” (the direction of the mineralization) to the northwest-southeast along 11 parallel layers of (north-south) chromite layers, known as the “A” and “B” Chromitites, which is the focus of Premium’s quest for comparable mineral riches.  

 

Premium’s jointly-held large land holdings covers an area of 970 hectares along the southern margin of the Stillwater Complex and spans at least seven kilometres of prospective strike length within Stillwater’s lower layers. In fact, the boundary of the Chrome Mountain Property is within 750 metres of the JM Reef deposit. 

 

Specifically, Premium’s Chrome Mountain PGM property is located just under one mile from the East Boulder mine and about 4.5 miles from the Stillwater mine. The latter has been the more prolific of the two in recent times, producing over 400,000 ounces of platinum and palladium per year since 1998. It also stands out for being the world's highest-grade and third largest PGM producing operation.

 

World-Class Opportunities?

Not only is the under-developed JM Reef the richest known palladium and platinum deposit in the world, but it is also thought to model the prolific Merenksy Reef of the Bushveld Intrusive Complex (BIC) in South Africa.

 

The Merensky reef is one of the three very different ore bodies of the Bushveld Complex which collectively produce 34% and 72% of annual global production of palladium and platinum, respectively. BIC It is the main supplier of PGM’s in the world. It it possible that the Stillwater Complex (including the Chrome Mountain property) could be comparable of the Bushveld Complex, according to Premium’s management.   

 

Among the proponents of this point of view is Dr. Reid Keays, PhD., of Monash University, a globally recognized researcher of PGM and nickel deposits. Already noting the existence of one of the three BIC types of mineralization, he suggests that:

 

“The mineralization identified at Chrome Mountain appears to have characteristics similar to Platreef and UG2 styles of mineralization in South Africa.  It appears that the processes by which these important world class deposits formed in the Bushveld Complex were also operating in the Stillwater Complex, and indeed may have overlapped to form a combined style of mineralization at Chrome Mountain."

 

However, there is one very profound difference between the Bushveld and Stillwater complexes, and that is in the quality of the overall grades, with the latter winning out in with eye-popping numbers. For instance, the Bushveld averages mined grades of around 4 grams per tonne (g/t) to 6 g/t, whereas the JM Reef deposit yields grades ranging from 15 g/t to 21 g/t, along with additional value-added credits for copper and nickel.

 

Premium Generates Lustrous Drill Results

In keeping with a prudent but ambitious business plan, Premium has joined forces with an exploration partner at Chrome Mountain in order to defray exploration risks and to preserve investment capital. Beartooth Platinum Corp. is currently earning a 50% interest in the property by spending a minimum of US $3 million over three years.

 

Thus far, it has been a very fruitful relationship for both companies thanks to very encouraging 2007 drill results, with all drilling financed by Beartooth.

 

All told, a 10-hole drill program returned average intercepts of 118 metres grading 0.66 g/t of PGM. Highlights include Hole CM2007-04, which returned 1.0 g/t combined gold/platinum/palladium over 116.7 meters with five high-grade intercepts of up to 11.9 g/t PGM, as well as gold values over widths of up to 1.2 meters. Equally impressive is Hole CM2007-02, which returned 1.5 g/t PGM plus gold over 50 meters with high-grade intervals of up to 7.9 g/t.

 

Such positive developments have led to the decision to embark upon a Phase II drill program this summer, involving around 10-15 shallow holes (300-700 feet) and spanning about 10,000 feet. The program is designed to test what the Company believes to be a potential "feeder zone" for the previously unknown style of PGM mineralization, discovered at the property in 2008.

 

Drill holes will concentrate on untested high-grade sections of the geochemical (mineral-in-soil) anomaly and on the goal of locating the northern boundry. The high-priority geochemical target measures no less than 2,300 by 1,000 metres in area and has assayed an average of 1 g/t of combined PGMs.

 

The Sweetener in the Geological Cake – Chromitite

The Stillwater Complex is also a very geologically fertile region for chromitite resources, with four known deposits already defined by way of plenty of exploration by past operators, including extensive drilling.

 

For instance, the Chrome Corporation of America conducted an extensive feasibility study on one project area in 1986-87, where the company planned the construction of a 132,000-ton per year, high-carbon ferrochrome operation. However, this venture was later abandoned due to the lack of financing and low commodity prices prevalent at the time.

 

Prior to the advent of an era of deflated metals prices, the Chrome Corporation of America found the Stillwater Complex to be a far more lucrative proposition. Between 1952 and 1962, it yielded 920,000 tons of concentrate averaging 38.5% chromitite from 2.1 million tons of mined ore.

 

The production came from the Mouat mine area located east of Premium's property. Notably, there has been no historic exploration of the Chrome Mountain chromites beyond historic reconnaissance. That is -- until the arrival of Premium.

 

Not lost on Premium’s management is the fact that the Stillwater complex includes 80% of the identified chromitite resources in the United States, averaging at least 21%. Some of this high-grade material has been found on Premium’s joint-ventured property from outcrops and historic trench sampling.

 

Furthermore, chromitite’s value has increased in price from just over $0.20 in 2003 to over $2.20 in April of 2008. This phenomenal rise is largely due to a huge surge in stainless steel production and use, especially in China.

 

Similarly, platinum and palladium prices have also been strong performers in recent years. The former has steadily risen from lows of around $640 a mere five years ago to a high of around $2,250 at current prices, while palladium has similarly more than tripled in value during the same time frame. And a deficit in the supply of both metals (480,000 ounces in 2007), is expected to continue to propel prices higher. The scenario is also very much the same for rhodium, which is currently trading at $9,850 an ounce. 

 

Ideal Infrastructure Makes Project Economics All the More Robust

The Chrome Mountain property is located approximately 110 kilometers west of the city of Billings, the major shopping and industrial supply center for eastern Montana, North Dakota and Wyoming.

 

Though located in a relatively remote location, accessibility to the Chrome Mountain project area is excellent. Indeed, a significant amount of infrastructure is already in place to service the Stillwater and East Boulder mines. It includes a power grid, ample water supplies and a network of back roads that connect the Stillwater Complex properties to a major highway. 

 

Advancing Golden Opportunities in Mexico

Premium’s wholly-owned 17,950-hectare Nueva Galicia gold-silver project in Nayarit State, Mexico represents the Company’s flagship exploration project in Mexico at this time. Notably, it spans an epithermal vein system that has been intermittently mined by way of rudimentary, near surface operations since colonial times.  

 

In other words, no systematic, sophisticated exploration has been conducted at Nueva Galicia until the arrival of Premium. Yet, the Company’s geologists have certainly taken impressive strides to capitalize on this untapped opportunity in a short time span. To date, they have identified at least six parallel vein structures over the property’s strike length of at least 10 kilometers.

 

In addition to high-grade ore shoots and veins, disseminated mineralization within stockworks (veinlets) and breccias have also been identified, thereby attesting to the property’s potential for underground and open-pittable (cost effective) bulk tonnage mining.

 

The Company is aggressively advancing this project with two drill rigs now gearing up for Phase II spring/summer drilling. This comes on the heals of an initial round of drilling late last year which produced impressive high-grade results over mineable widths, beginning at shallow depths and located in the vicinity of historic workings.

 

They include 10.2 g/t of gold and 309.8 g/t of silver over 2.8 metres in Hole NG-07-012. Similarly, 8.79 g/t of gold and 1309.7 g/t of silver were encountered over 1.52 metres in Hole NG-07-013.

 

Phase II drilling will involve approximately 40 – 60 additional shallow holes over five kilometers of strike length within the parallel vein structures. Once this drilling has been completed, the Company’s intends to complete an initial resource estimate for the project area by year’s end.

 

The Company is targeting up to 150,000 of gold equivalent from each of up to ten known high-grade silver-gold shoots (richly mineralized fissures). Some of which were the focus of extensive historic workings, including one where a documented 150,000 of gold equivalent ounces, averaging a very impressive 12 g/t, were extracted from shallow depths in colonial times.  

 

By way of recognizing the need for strength through diversification, Premium also has four other wholly-owned, early-stage gold-silver exploration projects elsewhere in Mexico. Collectively, they increase the odds in favour of Premium building a meaningful gold and silver inventory over the next few years.

 

Other key properties include the Bonanza project in Guanajuato State where the Company believes there exists the potential for a 50-million tonne resource, averaging up to 0.8 g/t of gold and up to 40 g/t of silver. Then there’s also the La Lupe gold-silver-lead-zinc prospect in Durango State, where underground tunnel sampling has returned bonanza grades as high as 5,337 g/t of silver and 8 g/t of gold.

 

Understanding the Value of Solid Infrastructure

Premium is typically sourcing out and developing properties that not only have excellent geological merit but also have the benefit of key logistical infrastructure. For instance, the Nueva Galicia property is located 29 kilometers southeast of Tepic, the capital of Nayarit – where there exists a ready supply of labour and heavy equipment. For comparable strategic reasons, Premium’s field office is also located a mere four kilometers from the project site in the nearby town is Compostela (population 17,000).

 

Furthermore, paved highways and an operating railway line lead to within a kilometer of the property and two-lane gravel roads provide access to center of the property, where many of the old mines are located. Additionally, a ready supply of water and power are available year-round.

 

Why Mexico?

Mexico has long been a politically stable, mining-friendly nation with a favourable tax structure in place to attract foreign investors, particularly mining companies. Importantly, it is also a member of both NAFTA and the World Trade Organization.

 

Mining has been integral to Mexico’s economy for over five centuries. During this time, it has become the world’s largest silver producer and is also now a major gold producer, too.

 

Excellent infrastructure and a warm climate also allow intrepid North American gold and silver explorers like Premium to keep exploration costs low and explore year-round. In spite of these key competitive advantages, Mexico remains under-explored.

 

That’s why a number of major discoveries have been made over the last few years thanks to the application of modern geological sleuthing techniques and technologies, along with an infusion of significant investment capital.

 

Hence, there is every expectation that exploration will continue to reveal important new deposits. Especially ones that are high grade and amenable to low-cost underground and surface mining.

 

Producing U.S. Gold as Early as 2010
Premium’s flagship U.S. gold project involves the Buffalo Gulch deposit in Idaho, which is already in the process of being permitted for production as early as 2010. The initial resource calculation from Bema, estimated just over 100,000 ounces of gold Premium is currently recalculating the resource with a view to making it NI 43-101 compliant.

Meanwhile, the current permitting is designed to fit the original Bema footprint and the original permitting is being fast-tracked for production by the Bureau of Land Management, based on the density of drilling.

This gold target was permitted by Bema Gold Corp.'s subsidiary (Idaho Gold Corp.) in 1991 as an open-pit gold mine, but was placed on care and maintenance by Bema just prior to mine construction due to low gold prices.

By way of a reference point, the Buffalo Gulch property is in the same geological environment on the Orogrande shear system as the Company’s adjacent Friday/Petsite property, which hosts a 531,000-ounce inferred gold resource.

The Buffalo Gulch target is located at the northern end of the Orogrande shear zone while Friday/Petsite is near the southern end of this golden corridor. Of special note, this 40-kilometre long shear zone has historically produced over four million ounces of gold.  

Core drilling on the Friday/Petsite property has returned grades averaging 9 g/t of gold over a drill intercept of 21.3 metres, including “bonanza” intercepts of 1.5 metres of 67.89 g/t of gold (in excess of two troy ounces per ton).

Furthermore, Buffalo Gulch is “open” (mineralization is continuous) along strike to the north and south, as well as at depth, offering plenty of scope to expand the known parameters of this emerging gold deposit.

In the near-term, Premium is planning deeper drilling below known mineralized zones to test two large geophysical anomalies, which are interpreted to represent mineralization similar to that found at the proximal Friday/Petsite project.

Proving up Premium’s Next Proposed U.S. Gold Producer

As previously mentioned, the Friday/Petsite project already benefits from the filing earlier this year of a NI 43-101 compliant resource calculation of 531,890 ounces of gold. This is based on no less than 192 historic, close-spaced drill holes that outlined both high vein grade veins and disseminated, bulk tonnage gold zones, alike.

 

This development represents a key milestone for an advanced-stage property that has been extensively developed in recent years. This includes over $3.25 million that has been spent by such industry-renowned former Friday/Pepsite project operators as Kinross Gold and Bema Gold. In both instances, these projects wound-down well ahead of a production decision due to depressed gold markets.

 

Yet, this still under-developed deposit remains open for further expansion both along strike and at depth. Hence, Premium’s first drill program should go a long way towards testing its potential for the outlining of additional high-grade gold zones, while also upgrading the deposit’s inferred resource up to a mineral reserve (the first major step towards an initial blueprint for a mine, commonly known as a pre-feasibility study).

 

Investment Summary

On a corporate note, SmallCapMedia believes that strong management is always the greatest value driver behind up-and-coming exploration juniors. To this end, Premium’s shareholders are being well served by a dynamic President and CEO, Del Steiner, who has an impressive track record for developing important discoveries – ones that made for very happy shareholders.

 

His skills are complimented in the field by a technically strong geological team with decades of collective experience, and with particular expertise in advancing projects in the U.S. and Mexico.

From a technical perspective, Premium has approximately 35.79 million shares outstanding (approximately 43.47 million fully diluted). Such a relatively tight share structure, matched with positive news flow, typically acts as a potent catalyst to high share price valuations.

Such an eventuality appears to be likely in the coming months due to the advent of plenty of drill results from Premium’s gold projects in Mexico and the U.S. Similarly, continued drilling success for platinum, palladium, rhodium and gold at Montana’s Chrome Mountain project should also help to re-establish an upwards trajectory for the Company’s over-sold share price.

 

Already, Premium’s stock is showing early indications of a technical rebound from a recent across-the-board correction in the share prices of junior resource stocks. This minor slump is expected to be short-lived, particularly for a company that is targeting gold production as early as 2010.

 

Such an eventuality promises to provide Premium with a scalable, cash-flow driven business model that will allow for expedited growth without the need to seriously dilute its attractive share structure.

 

Accordingly, SmallCapMedia believes that Premium Exploration remains an undervalued diamond-in-the-rough that will prove itself to be a strong performer during the balance of 2008 and beyond. And once again we cannot overstate the considerable potential for Premium’s jointly-held, prospectively world-class PGM discovery to provide patient investors with an exceptional “home run” win.