Yesterday was actually Northern Miner article about PEM, really great article that describes everything about this company:

http://www.northernminer.com/issuesV2/VerifyLogin.aspx

By: Matthew Allan
2011-09-07

Elk City, Idaho - Most know it as the Potato State, but Idaho also has a lesser-known nickname, the Gem State, which dates back to its territorial days.

As the story goes, in the early 1860s a peculiar politician proposed the name Idaho for the sparsely populated territory sandwiched between Oregon and Wyoming. He claimed it was derived from the local Indian word "Ee-da-how," meaning "Gem of the Mountains," though he eventually admitted to making up the name himself.

The name Idaho nevertheless stuck, and as it turns out, is more fitting than most would have ever guessed.

The land is littered with precious and semi-precious stones alike, offering to gem collectors an abundance of white plume agate, cherry-coloured fire opals, fine pink garnets and deep blue sapphires, among countless others.

A large placer gold rush there in the 1860s may have put Idaho on the map, but it was the discovery decades later by Noah Kellogg of silver, lead and zinc that made the state what it is today.

Vast, rich mine complexes in Idaho continue to produce a wealth of silver and base metals under companies like Hecla Mining (hl-n), which has been operating its Lucky Friday silver mine since 1942; U.S. Silver (usa-t), which owns the Galena silver-copper-lead mine, currently the second-largest primary silver producer in the United States; Thompson Creek Metals (tcm-t, tn-n), the operator since 1983 of the Thompson Creek open-pit mine, the fourth-largest primary molybdenum mine in the world; and Coeur d'Alene Mines (cdm-t, cdm-n), which although it no longer has any active mines in Idaho is based there, and is currently the largest U.S.-based primary silver producer.

While antimony, chromium, cobalt, tungsten and most recently phosphate have all been a boon for Idaho miners at one time or another, production of arguably the world's most closely followed metal, gold, has been somewhat lacklustre over the ages in Idaho.

Today, the better part of a dozen publicly traded exploration companies are out to change this.

As the price of gold continues to spiral ever upward, and the hunt for new deposits is pushed into riskier or lesser-known jurisdictions, Idaho's prospective mineralogy has had success in luring mining companies back to the dredged creeks and past-producing mines well documented in the area.

Most of the explorers are relative newcomers. Midas Gold (max-t) completed a $40-million initial public offering in mid-July after consolidating several historic gold projects in central Idaho; collectively, the properties host over 5 million oz. gold in various resource categories. Otis Gold (ooo-v) acquired its main Kilgore epithermal gold project in eastern Idaho in 2008. It has since delineated an approximate 500,000-oz. gold resource and is now drilling with two rigs to expand the deposit. In northeastern Idaho, Marathon Gold (moz-t) even completed a small amount of underground mining a few years ago at its historic Golden Chest gold project, where it is now drilling 10,000 metres to establish the parameters of a potential open pit.

Only a few of the explorers, however, have been involved in Idaho's fledgling gold mining industry as long as Del Steiner, an Idaho lawyer and president of Premium Exploration (pem-v).

Steiner has been trying to develop gold claims in and around north-central Idaho's Orogrande shear zone since the mid-1980s. He got close in 1992 when he helped permit the historic Buffalo Gulch mine in north-central Idaho as an open-pit heap leach operation for Bema Gold, but that quickly fell by the wayside when the price of gold fell below US$400 an oz. He returned a few years later as president of Idaho Consolidated Minerals, optioning and exploring nearby lands before turning them over to a joint venture with Kinross Gold (k-t, kgc-n) in 1999. That plan would also fall through amid a second collapse of metals prices in the late 1990s and early 2000s, and that was when Steiner started taking things into his own hands.

As he explained to The Northern Miner on a recent site visit, Steiner decided to buy back Kinross's claims privately with a view to consolidate the district and explore its full potential.

"I've always had the faith that the resource was there, because of the intense amount of prospecting and work we had done on it. The only downside I'd ever thought of was that the grade was going to be fairly low and it was going to take US$600-700-per-oz. gold to make it work. At the time I bought those claims back, I think gold was below US$300. And since gold started breaking through those prices in 2005/2006, I've never had a moment's doubt."

He took Premium public in 2006 and later vended in an impressive 172-sq.-km land package spanning 30 km of the Orogrande shear zone, a significant regional structure with numerous cross-cutting structures. The right combination of shear zone and cross-cuts has created several zones of structurally controlled gold mineralization, including six found to date, which together comprise Premium's Idaho gold project.

Steiner admits Idaho has seen "hit or miss exploration for some time now." However, "It hasn't been because there isn't gold here, it's been because of the economics and the things that basically plagued our industry [the mining industry] from the mid-1990s on.

"Considering where we are now [with the price of gold], I think there's going to be a huge resurgence in Idaho. In fact, I call it the New Yukon. I think we're going to have as much play over the next few years as you're seeing up in the Yukon right now. I suspect there's another six or eight juniors in Idaho as we speak either staking claims or buying projects for exploration, and there must be eight or nine operating now."

But Premium is as much of an exploration story as it is about a resurgence of gold mining in Idaho.

1.1 million oz. and counting

Airborne geophysical surveys have identified a roughly 30-km-long regional structure trending north-south within Premium's Idaho project, coinciding with more than 16 km of gold-in-soil anomalies and 20 km of historic placer mining along strike. There are also over 20 historic mine workings within the property boundaries as well as three established gold deposits, all of which remain open in all directions and account for over 1.1 million oz. of contained gold over various resource categories.

Now, Premium is out to test the size potential of the three deposits. It began a phase-four exploration program at the Idaho project in March, comprising 25,000 metres of drilling using three rigs - one drill to focus on infill drilling and step-outs in order to add ounces to the resource estimate, and two to explore new targets along the 30-km-long belt.

The program got off to a rocky start, however, when the United States Bureau of Land Management temporarily suspended drilling in May because of heavy rain and snow in the area, reasoning the rigs and drilling equipment were tearing up access roads. Premium resumed drilling around June, and as of late August the company had completed around 9,000 metres of drilling, of which 3,512 metres have been reported to date.

So far those results have shown the company has extended the strike length of the main zone at Friday-Petsite to 1,220 metres from 800 metres by drilling step-out holes that closely follow the main Friday fault line. According to Mike Ostenson, Premium's vice-president of exploration, "Nine of the 10 step-out holes drilled to date have encountered near-surface, bulk-tonnage gold mineralization... demonstrating the multimillion-ounce potential of the Friday-Petsite deposit."

The most recently reported step-out hole, PFR-2011-10, intercepted 117.4 metres grading 1.0 gram gold per tonne starting from a depth of 64 metres. It extended the main zone along strike another 155 metres to the north, following up on hole PFR-2011-08 (85 metres to the south), which returned a near identical intersection of 117.7 metres grading 1.0 gram gold. Based on the results, Premium says mineralization between the North zone and the Main zone is now interpreted to be continuous.

"Our plan is to continue stepping out to determine how large the zone really is," says Ostenson. After that, the company can come back and carry out infill drilling to potentially increase the resource. Depending on exploration success, this may take some time, however; geophysics have defined a 5-km-long structural target running through Friday-Petsite, and almost every time the company has tested the structure, gold assays have come back positive.

"At the end of the day, we will have doubled the primary 800-metre footprint," says Steiner of this year's drilling program at the Friday zone. Though assays have yet to come back from the lab, he concluded visual observations of core from the step-out holes show Premium will likely add about 400 metres along strike of the deposit both north and south. "Our intent is to double the footprint and double the gold ounces, at least on the back of the envelope. We won't get all the infill drilling done to make it NI 43-101-compliant, but that's where we want to be after this next set of holes."

Meanwhile, two drills are also turning at the Deadwood zone, roughly 10 km to the north, focused on making new discoveries.

"The geophysics and the geochemistry that we've had success with at Friday are intense through a lot of the Deadwood zone, and it has more than 14 km of strike at this point," Steiner says. "Looking at shear zone geophysics, there's a lot of cross-cutting structures that tend to indicate Friday-like structures. We have [drill tested] at least 3 of those, but as we're still waiting for assays to come back, we're kind of shooting in the dark. We've got a pretty good idea though because of the way the material looks, and we always can tell when we hit one of those bounding faults."

Steiner is nevertheless careful to add a tiny dash of caution before any Deadwood assays are released. "These are mainly geotech kinds of holes we're drilling, because we've stepped out from Friday as much as 10 km. The material looks good though, and the stuff coming out of the drill that's now in the lab is going to have some joy in it, it's just is a matter of figuring out how much. There could be as many as two Fridays in that Deadwood zone, or even more. And then of course we'll get around to Buffalo Gulch."

The historic Buffalo Gulch deposit that Bema Gold once permitted for a small heap leach operation is located about 5 km north of Deadwood and 17 km north of Friday. It hosts a historic, non-National Instrument 43-101-compliant indicated resource of 111,000 oz. gold contained in 4.8 million tonnes grading 0.8 gram gold per tonne. Deadwood, meanwhile, contains roughly 60,000 oz. of gold at similar grades according to historical, non-NI 43-101-compliant resource estimates. As for the main Friday-Petsite deposit, it boasts an NI 43-101-compliant indicated resource totalling 343,000 oz. gold contained in 11.8 million tonnes grading 0.9 gram gold, as well as another 879,000 oz. gold inferred contained in 26.4 million tonnes grading 1.04 grams gold.

Not Montana

As far as Idaho is concerned, mine permitting is top of mind for many prospective investors. Decades worth of poor historical mining practices have left parts of Idaho with considerable environmental damage: poisoned streams, dredged creeks, major Superfund sites and tailings piles. According to one report by the Idaho Conservation League, any combination of six federal agencies and three state agencies now share regulatory or oversight responsibility for permitting, monitoring and the clean-up of mine sites, depending on the mine's location in the state.

Steiner wants to make it clear, however, that Idaho is no Montana, its neighbour to the north, which banned the use of cyanide for new heap-leach mines back in the 1990s. "The long and short of it is, having practiced law in Idaho as long as I did, I found permitting to be no more difficult in Idaho as it was in Nevada or anywhere else. It takes knowing and understanding the bureaucratic processes, and staying away from sensitive areas that you know from the kick-off you're not going to get permitted, like the Sun Valley area for instance, or some of the Frank Church area on the Snake River.

"But these areas that have been past-producing mining areas like the central Idaho area we're in... we just haven't had any real trouble getting permitting so far. It's not going to be easy - because it's the U.S., you're going to have to go through the processes and jump through the hoops - but remember, Bema had Buffalo Gulch completely permitted and started construction in 1992."

Roughly speaking, two-thirds of Premium's Idaho project is located on U.S. Forest Service land, mostly in the Nez Perce National Forest, while about 1/3 consists of privately held mining claims and land held under control of the U.S. Department of the Interior's Bureau of Land Management (BLM). Much of the project is also on the traditional land of the Nez Perce Indian band.

Mining companies active in the state got some encouragement in 2009, when Formation Metals (fco-t) received the necessary approvals from U.S. government agencies to build a cobalt mine in a different national forest of Idaho. The process proved long and cumbersome for Formation, however; it started applying for the permits in 2001.

Shares of Premium closed at 43¢ on Sept. 6 on 235,000 shares traded. The company has 130.2 million shares outstanding (157.5 million if fully diluted), approximately $6 million in its treasury and a 52-week share price range of 35¢-83¢. Most of its large shareholders are major financial institutions, which collectively own about 50% of the stock.

Other Idaho gold explorers not mentioned above include Elissa Resources (eli-v), Terraco Gold (ten-v), Atlanta Gold (atg-v) and Western Pacific Resources (wrp-v).

Btw today already some bids for PEM, could be interesting day with very strong Gold price.

GLTA