Stock Alert for Portage Resources Inc. (POTG)
  • Pink Sheet Review; Portage Resources at a Glance
  • Stock Alert for Portage Resources Inc. (POTG)
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    Portage Resources soars on Aggressive Acquisition Campaign

    Portage Resources soars on Aggressive Acquisition Campaign

    Shares of Portage Resources Inc. (OTC PK: POTG) inched 3% higher this morning, tailing a 17% surge yesterday after the company reported that it acquired the Cordillera Negra Mining Concessions, located approximately 13 km from the great Antamina Mine, in the Ancash Region of Peru. According to management, concessions are comprised of 1200 hectares of rich polymetalic formations in a region with proven mining operations and reserves in excess of 745 million metric tons. The region attracted total investment that amount to $3.4 billion and is the home to one of the ten largest mines in the world in terms of operating volume.

    Portage is focused on the exploration and production of precious and base metals in Peru, a country with rich mining tradition and opportunities. Peru holds about 16% of the world’s known mineral reserves and is also known to have the largest silver reserves in the world. Many reserves have been exploited intensively in the past, however to date only about 12% of Peru’s mineral resources have been worked. Accordingly, the country has the capacity to double the current levels of minerals output.

    Portage’s shares commenced trading on pinksheets last month, rallying from $0.15 on June 13 to an all time high on $1.04 on July 11 on acquisition news.  The company progress has been rapid and was highlighted by the recruitment of a new president, board members and acquisition of several new properties.

    In addition to Cordillera Negra concessions, Portage acquired two other projects last month: Wukakuy and Lideros#4 properties in Peru, which expose the company to a significant resource of silver and gold as well as to the escalating gold and silver prices. Silver is the best-performing precious metal so far this year, with prices up 26%, while gold gained 14%.

    The Wukakuy Property, totaling 600 hectares, was acquired in exchange for 20 million shares of Portage from Airon Peru S.A.C. The project has estimated potential reserves in excess of 58 million oz of silver. Based on today’s silver prices of nearly $35 per oz, the reserve estimates have a potential value in excess of $2 billion. Given these estimates, the project provides an immense opportunity for the company to start an extensive drill program and establish mining operations in Peru.

    The second project, Linderos #4 property was acquired in exchange of 10 million shares of Portage from Nilam Resources S.A. Based on data from Peruvian government, there are approximately 500,000  proven ounces of gold in the area of Linderos Project. Moreover, several independent studies evaluated that the project’s area could contain more than 1 million oz of gold immediately near surface and the further drilling could significantly lift these estimates.

    Portage has also signed letter of intents to acquire the Linderos #5 property located in the north part of Peru in close proximity to the border with Ecuador. The Linderos #5 property consists of 300 hectares, located in a fertile and proven mining zone. Portage reported similar agreements for two other properties: San Martin mining concessions in Peru and Holly Gold Properties in Pershing County, Nevada. Portage plans to review all the reports on these projects and decide on eventual acquisition in the first days of August.

    The uncertain economic environment has spurted the investment demand for silver and gold, pushing prices to record levels in 2011. Silver reached an all time record of $49.51/oz on April 28, and is currently trading around $39/oz, compared to approximately $19/oz one year ago. A number of analysts expect silver prices to range above $50/oz in the next few years.

    Gold prices have also ascended to record levels in 2011, hitting a record high of $1,601/oz on July 19. Next day gold drifted back below $1,600/oz and closed the trading at around $1,586/oz, compared to $1,244/oz one year ago. Analysts covering the market expect the prices for gold to continue growing to reach $1,700 by the end of 2011.

    As the economy recovers, silver companies could further benefit from the rebirth of silver industrial demand, thanks to the emergence and growth of a number of new applications in computer and consumer electronics. According to the Silver Institute, the silver supply increased modestly by 2% per year over the last decade to approximate 710 million oz in 2010, which is not enough to cover the burgeoning fabrication demand. The research company estimated that silver demand could outstrip supply already in 2011.

    Portage is poised to benefit from strong industry fundamentals; however, the fact that it is in the early stage of exploration and require significant external financing to fund acquisitions and commence operations could limit the appreciation potential.

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