A reason behind El Paraiso’s movements

I rely on The Northern Miner to tell me why stocks have jumped up rapidly. I have a number of shares of El Paraiso Resources, a junior penny stock that has steadily moved up from 14 cents this year. Your April 6/87 issue in the Vancouver Stock Exchange column shows El Paraiso traded 1,198,900 shares and rose 32 cents in price in the past week as the second leading trader. You mentioned why several heavy traders moved up but never mentioned why this stock moved up. The daily paper stock quotations tell how many shares and at what price El Paraiso traded. I expect The Miner to find out and tell why it moved up. V.L.V., Wasaga Beach, Ont

You are absolutely right. We do try in our stock market reports, be it the Vancouver, Montreal, Alberta, Toronto or the coats, to shed light on why stocks have won or lost. Did xyz Corp. pull fantastic drill holes or has it merged with company abc? Or are the drill results so embarrassingly bad they would make you blush? Any takeovers — rumored or otherwise — courtroom drama, pending exploration programs or just a plain shift in the wind? You name it and we make an effort to track it down and put it in black and white for you to read. And we think we do a pretty darn good job of it, by and large.

But on occasion we goof. For a myriad of reasons, usually having to do with a tight deadline and space allotment, we sometimes can’t dig as deeply as we would like into the reasons for a stock movement, be it up or down. And obviously, as with El Paraiso Resources, not as deeply as you would like.

Please allow us to rectify the situation now and, may we add, in far greater detail than our stock market reports allow us to do.

Early this January El Paraiso was trading at the 15 cents level. It shot up to a high of $1.55 in early spring and around presstime it was trading at the $1.15 area.

The reason for this activity may have to do with events of late March. At that time, the company signed a letter of agreement with Vancouver-listed Black Swan Gold Mines, whereby Black Swan granted El Paraiso an option to earn a 35% working interest in the Brovinia property, and authority to prospect application 15/86, Eidsvold Warden’s district, state of Queenland, Australia.

Black Swan acquired a 50% interest in the property under an agreement with Dominion Gold Operation P.T.Y of Queenlsand Australia and will retain a 15% interest in the property after El Paraiso earns its 35% interest.

El Paraiso paid Black Swan $50,000 on execution of the agreement, and agreed to pay Black Swan an additional:

* $50,000 prior to Sept 30, 1987;

* $150,000 prior to June 30, 1988;

* $250,000 prior to June 30, 1989.

All of these funds will be expended by Black Swan on the property. Upon payment of the total of $500,000, El Paraiso will have earned its 35% working interest.

El Paraiso has the right to accelerate any or all of the payments.

Immediately upon earning its interest, El Paraiso, Dominion and Black Swan will enter into a formal joint venture agreement pursuant to which further costs on the property shall be borne by the participants in proportion to their respective interests. Black Swan will be the operator of the property.

You are probably now wondering about the property itself. It is described by President James Mawhinney as an old golf field located in south central Queensland, Australia. There are currently prospectors working on the property but modern exploration programs have not been carried out, he says.

Mr Mawhinney says the property is considered a good prospect for epithermal gold mineralization similar to the style of mineralization found in Battle Mountain’s gold discovery at Pajingo in the Drummond Basin area, also in Queensland.

An initial drilling program is expected to be started by Black Swan in the next month to test gold mineralization associated with the old workings on the property, he says.

El Paraiso also announces that it has arranged a financing by way of statement of material facts with Continental Carlisle Douglas pursuant to which Continental will act as agent to sell 500,000 common shares of the company to the public at a price to be fixed in accordance with the policies of the vse.

Continental will receive broker’s warrants in consideration for agreeing to buy any shares not sold on the offering day. The funds derived from the sale of the shares will be used to fund the payments to Black Swan as required by the option agreement.

As well, the statement of material facts also qualifies for sale to the public a total of 400,000 flow- through shares. These shares will have an attached warrant. The proceeds received will be spent on the company’s Barkerville property in the Caribou district of B.C. This gold-silver prospect saw some linecutting, vlf-em surveys, mapping and diamond drilling of two holes back in 1984.