Source: Brian Sylvester of The Gold Report  (5/24/13)

Do you follow your own advice? Ivan Lo, editor and founder of Equedia.com and The Equedia Weekly Letter, does. Lo doesn’t just follow companies in the gold and silver space, he actually paused this interview with The Gold Report to receive a shipment of silver bars. Following the notion that “knowledge is power,” Lo also explains the philosophies that guide his publications, the reasons why educated investors have nothing to fear and why some companies remain good bets in the out-of-favor mining sector.

The Gold Report: Some recent headlines from The Equedia Weekly Letter include “A Scary Prediction,” “Prepare for a Crisis,” “A Nuclear Threat” and “A Shockwave Is Coming.” Should investors be fearful, or does fear help sell your newsletter?

Ivan Lo: Fear helps sell the newsletter but not necessarily in the way you’ve worded it. Where there’s fear and concern people go looking for answers, and we try to provide them. There’s a lot of fear and concern right now—war with Syria in western Asia, nuclear threats from Korea, tensions between Japan and China, tension with China invading India’s territory. These situations affect our safety and our financial well-being.

I think investors should be educated. If people are educated they are more prepared and don’t feel the need to be fearful. Too many people in North America live inside of a small little box and have no idea what’s going on around them, let alone in the world.

TGR: In a recent newsletter you wrote, “When you consider that we’re in the middle of a currency crisis and a currency war, gold really is your only last form of liquid protectant.” What would you say to the doubters who believe that money printing is already built into the gold price?

IL: A very fine line needs to be drawn between gold as a safe haven and gold as an investment. Stocks and real estate are investments. Gold is a currency that’s held as value; it has had real value since the beginning of time. It doesn’t suffer from inflation. There is a downside to gold, which may be what the doubters are talking about: It doesn’t generate interest.

People get it wrong when they talk about gold as an inflation hedge and that they don’t want it because the inflation numbers aren’t there. The price of gold is less affected by the rate of inflation and more by the level of real interest rates. The real interest rates drive the appeal of holding gold relative to other currencies. In the end, I’m not telling my readers to go and buy gold to make money. I say you own gold so you won’t lose money. Don’t trade it. Own it.

TGR: But that doesn’t mean gold equities will necessarily perform. Make the case for gold equities.

IL: Some incredible deals are out there if you know what to look for. People should start looking at gold plays as more of a real estate–style investment, where the idea is to get your hands on the rarest real estate project at the lowest possible price.

Natural Resource Holdings conducted a study last year and identified about 439 gold deposits in the world with over a million ounces. That’s not a lot. Of that 439, about 189 are already producing mines. That leaves us with about 250 undeveloped deposits of over a million ounces. Consider that the majority of them are uneconomic, and you’re left with 100 at the most. Right now, economic gold projects are not only ultra rare but cheap. Rare is good, but cheap is even better. That’s my case for select gold equities.

TGR: What are some select gold equities at the production stage?

IL: Timmins Gold Corp. (TMM:TSX; TGD:NYSE.MKT) is a favorite. The company continues to increase revenues, cut costs and expand its mine life with funds paid from production. It just had another record-breaking quarter. Its profit from operations grew 40%; earnings are up 155%; cash flow is up 50% or 51%, and it sold 30% to 35% more gold than it did last year. This is all at a cash cost per ounce on a byproduct basis of $703. That’s an all-in cost. Even if prices fall to $1,000/ounce ($1,000/oz), Timmins is still making money. In the gold space that’s rare.

TGR: Have investors missed the boat on that stock, or is it still undervalued?

IL: It’s still undervalued compared to its peers, such as Argonaut Gold Inc. (AR:TSX). Timmins isn’t even close to being fairly valued. Some of the analysts have price targets double where Timmins is currently trading.

TGR: Do you think Timmins will use its cash flow to purchase other assets, or will it stick to its knitting?

IL: That’s a tough discussion to have. If Timmins announced it was going to acquire other properties, people will start hammering the market expecting something to happen. If it doesn’t happen, they’ll penalize Timmins for it. I don’t see these gold equities moving anywhere in the near future, so Timmins has time on its side.

TGR: What’s another producer?

“Investors should be educated. Too many people live inside a small little box and have no idea what’s going on around them.”

IL: I love the silver space. The Equedia Weekly Letter has never introduced a silver company that didn’t show our readers great returns. Aurcana Corporation (AUN:TSX.V; AUNFF:OTCQX) has great exploration upside at two of its mines―La Negra in Mexico, and Shafter in Texas. I believe the two projects are on the same belt line. Once Aurcana’s new mine, Shafter, is operating at full capacity, it should become the largest pure silver mine in the U.S. and one of the largest primary silver mines in North America.

TGR: Shafter has had quite a few production issues. Why do you think Aurcana will get it on track?

IL: They’re just operational issues. That happens when you try to put a mine back into production. Maybe one of the crushers isn’t working and the company needs to get a new one. Everybody always penalizes companies for that, and that’s why I don’t like to set the expectations too far into the future. Now may actually be one of the better times to own the company because people are penalizing it.

TGR: Does Aurcana’s strong institutional coverage provide you with an extra measure of confidence in talking about the stock?

IL: It does, but I don’t necessarily count on the institution and the coverage it provides. A lot of that relies on “If you scratch my back, I’ll scratch yours” funding. That’s the space we’re in, and that’s how analysts cover certain companies.

TGR: What are some other equity stories in the exploration and development stage?

“Rare is good, but cheap is even better. That’s my case for select gold equities.”

IL: My favorite undeveloped project in the silver space is MAG Silver Corp.’s (MAG:TSX; MVG:NYSE) Juanicipio project. It has 146 million ounces (146 Moz) with an average grade of about 728 grams per ton (728 g/t) silver and 1.9 g/t gold and an Inferred resource of 85 Moz silver with an average grade of 373 g/t silver and 1.6 g/t gold. That’s high grade. And it just drilled more holes at Juanicipio. It hasn’t announced it, but it has an agreement with its partner, Fresnillo Plc (FRES:LSE), to do that.

MAG Silver owns 100% of Cinco de Mayo, which is a monster of a discovery. It’s going through some property issues in Mexico right now, but I believe those will be resolved because Juanicipio went through the same thing. Then it will be off to the races.

TGR: Do you think that MAG Silver is being valued solely on Juanicipio and investors get Cinco de Mayo for free?

IL: Absolutely. Even without Cinco de Mayo, I think Juanicipio is undervalued right now. People are penalizing the company because it has to wait for Fresnillo to get this thing going. I believe it’s going to break ground very soon, maybe even in the next month or two.

TGR: When would it enter production?

IL: A few years because it has the mine development phase. Brian, can you hang on for a second?

TGR: Sure.

IL: Sorry about that Brian. I just received silver bars that I ordered.

TGR: Really? Where did you buy them?

IL: I ordered them out of the U.S. I was supposed to pick them up, but they shipped them right to my door. It goes to show you that I actually act on what I say.

TGR: That’s funny. What are some other development stage equities you’re fond of?

IL: Balmoral Resources Ltd. (BAR:TSX.V; BAMLF:OTCQX) and Corvus Gold Inc. (KOR:TSX) are both excellent exploration plays. They’re undeveloped projects. Corvus is closer to the production stage, so it’s ahead of Balmoral, but Balmoral has the advantage of being next to Detour Lake, one of Canada’s next biggest gold mines.

Balmoral is a high-grade story, while Corvus is a low-grade, near-term production story. However, Corvus might be on to a high-grade feeder zone that can dramatically change the outcome and economics of its near-term production project. It just raised more than $7 million ($7M) without warrants in this crummy market environment, so it must be doing something right. Balmoral, Corvus and MAG Silver all have tons of cash, so they can weather any storm in this market. That gives me comfort.

TGR: What’s your impression of the Martiniere deposit? Balmoral has had some promising drill results there.

IL: I wouldn’t call it a deposit yet, but it has massive potential. Balmoral has encountered good high-grade gold zones in practically every hole it has drilled. Detour Gold Corp. (DGC:TSX) is also on the same trend. Some of Balmoral’s numbers are ridiculous.

TGR: Does that story get lost in a market that doesn’t reward good drill results?

“There’s always a positive if you know and prepare for the negative.”

IL: It gets lost for the investors but not for the companies that might take over Balmoral. If Detour Gold looks at those drill results, it could see what’s happening. You can bet those guys are looking at every news release that comes out.

TGR: Tocqueville Asset Management and AngloGold Ashanti (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) have invested in Corvus. The company is building the North Bullfrog gold project in Nevada. Is the plan to be in production in the third quarter of 2014 realistic?

IL: It’s realistic if it keeps going at the same pace. I believe it has strong enough partners to raise the money to finance it, but timing can be affected by a number of different factors, such as market environment, drill progress, etc.

TGR: Would you be as bullish on this story if it didn’t have such strong institutional ownership?

IL: Yes, because I look at management. Corvus CEO Jeff Pontius has a knack for finding gold where no one else wants to find it. Not just a little bit of gold, tons of gold. He has found five different multimillion-ounce deposits, leading the discoveries of nearly 40 Moz of gold. Most geologists live their whole lives without ever finding one. I believe in management’s ability.

TGR: Could you share some of your readers’ success stories from the The Equedia Weekly Letter?

IL: I would say that all companies I mentioned are success stories. On a trading note, when everybody was screaming doom and gloom last year, we predicted that the S&P 500 would go past 1,500 and the Dow would go past 14,000. We said to buy in late 2008, when everyone was telling people to sell. We told our readers that Japanese stocks would hit an all-time high while the yen would fall, and we told our readers how to benefit from that with exchange-traded funds. We’re very fortunate to have had success when everybody else has failed.

TGR: The S&P 500 is past 1,600 now, and the Dow Jones is above 15,000. Should investors approach equities with caution given those levels?

IL: I am extremely cautious at these levels, but I do think the market has room to climb, especially given all the liquidity injections and the record amount of money sitting on the sidelines. Interest rates keep dropping, which leads to lower worldwide bond yields, which in turn should change how investors value equities relative to the fixed income market. Long-term bond yields can’t keep up with inflation and are losing value. Fixed-income investors have to eventually rebalance their asset mix toward equities just to maintain their current allocation.

I tweeted last week—I just started using Twitter because a lot of my subscribers asked for it—that global yields on $20 trillion worth of government securities now yield even less than 1%. By incentivizing these fund flows into the equity market, stocks are going to rise. This isn’t a fundamental market. It’s one filled with euphoria. Just remember that the bigger they are, the harder they fall.

TGR: That’s a good cliché right now. How does an investor focus on the positive when there’s so much negative news?

IL: I’ll keep this short. There’s always a positive if you know and prepare for the negative.

Ivan Lo is the editor and founder of Equedia.com and The Equedia Weekly Letter, an online publication focused on investing in mining and resource stocks. With over 65,000 subscribers of high net worth investors, brokers, analysts and fund managers, The Equedia Weekly Letter has become one of Canada’s most trusted investment newsletters, providing information on stocks that have earned returns of over 100%. As a result of his performance, Lo now works closely with brokers, money managers and industry reporters to bring them new ideas and insights on the market.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:
1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: Timmins Gold Corp., Argonaut Gold Inc., MAG Silver Corp., Balmoral Resources Ltd. and Detour Gold Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Ivan Lo: I or my family own shares of the following companies mentioned in this interview: MAG Silver Corp., Balmoral Resources Ltd., Corvus Gold Inc. and Timmins Gold Corp. I personally am or my family is paid by the following companies mentioned in this interview: MAG Silver Corp., Balmoral Resources Ltd., Corvus Gold Inc. and Timmins Gold Corp. My company has a financial relationship with the following companies mentioned in this interview: MAG Silver Corp., Balmoral Resources Ltd., Corvus Gold Inc. and Timmins Gold Corp. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

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Golden Reign Resources Ltd.

The Company initially proposed the issuance of up to 10,000,000 units at a price of $0.15 per unit via a non-brokered private placement to raise gross proceeds of up to $1,500,000. Each unit will be comprised of one common share and one share purchase warrant. Each share purchase warrant will entitle the holder thereof to purchase an additional common share at a price of $0.25 for a period of two years. Finders’ fees may be paid in connection with this offering. The offering is subject to regulatory approval.

Proceeds of the placement will be applied to costs related to the San Albino-Murra Gold Property in Nicaragua and for general working capital.

On behalf of the Board,

“Kim Evans”
Kim Evans, CGA
Director & CFO

For additional information please visit our website at www.goldenreign.com and SEDAR www.sedar.com.

Forward-Looking Statements: Some of the statements contained herein may be forward-looking statements which involve known and unknown risks and uncertainties. Such forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to political risks involving the Company’s exploration and development of mineral properties interests, the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, the inability or failure to obtain adequate financing on a timely basis and other risks and uncertainties. Such information contained herein represents management’s best judgment as of the date hereof, based on information currently available.

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----------------------------------------------------------------------------
                                          Cash                   Expenditure
Date                                   Payment  Share Issuance   Requirement
----------------------------------------------------------------------------
On the Effective Date               $   25,000             Nil           Nil
----------------------------------------------------------------------------
On Exchange approval of the Option                   2,000,000              
 Agreement                          $   75,000   common shares           Nil
----------------------------------------------------------------------------
On or before the date which is one                   1,000,000              
 year from the Effective Date       $  200,000   common shares $     250,000
----------------------------------------------------------------------------
On or before the date which is two                   1,000,000              
 years from the Effective Date      $  200,000   common shares $     750,000
----------------------------------------------------------------------------
On or before the date which is                                              
 three years from the Effective                                             
 Date                                      Nil             Nil $   1,500,000
----------------------------------------------------------------------------
Total                               $  500,000       4,000,000 $   2,500,000
----------------------------------------------------------------------------

The 1,394 hectare (3,446 acre) Property is located in the Iskut area of northwestern British Columbia, Canada, and is contiguous with Colorado Resources Ltd.’s (“Colorado”) North Rok copper-gold property (the “North Rok Property”). Colorado’s recent North Rok Property discovery hole intersected 242 metres grading 0.63% copper and 0.85 g/t gold. More complete details can be found in Colorado’s news release dated April 25, 2013. The Summit B property is also 20 kilometres northwest of Imperial Metals Red Chris Copper-Gold project.

In 2010 Pistol Bay carried out preliminary surface geological mapping and geochemical sampling which outlined a gold-bearing horizon on the Summit B property. Previous programs had focused on copper exploration, outlining a trend of roughly 100 metres of strongly anomalous copper values from rock sampling. Although copper was the main focus, rock sampling also returned several high gold values, including 4.95 g/t gold, along a parallel zone roughly 30 metres southwest of the main trend.

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Greg Stewart, CEO of UMS and President of Stewart Contracting says “Stewart Contracting is very pleased to be awarded a new contract to provide remediation services to DEQ. Over the last decade we have remediated hundreds of properties in the Coeur d’Alene Basin utilizing similar multi-year contracts with the DEQ. We look forward to continuing our long standing working relationship with DEQ by providing our services and expertise to the State of Idaho”.

ABOUT UNITED SILVER CORP.

USC is a vertically integrated Canadian mining company with operations in Idaho, USA. It has an 80% interest in the Crescent Silver Mine project in the Silver Valley’s prolific Silver Belt – directly between two of the district’s historically largest silver producing properties, the Sunshine and Bunker Hill mines. USC also offers a full suite of mining services including contract mining and providing a complete fabrication shop and service for building and repairing mining equipment to silver miners in the district. USC’s common shares trade on the Toronto Stock Exchange under the symbol “USC”. For more information about USC, please visit: www.unitedsilvercorp.com.

ON BEHALF OF UNITED SILVER CORP.

“Graham Clark”
Chairman and CEO

Investor Relations
Tel. (855) 238-0202

FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements, which address future events and conditions, which are subject to various risks and uncertainties. Forward looking statements in this press release include that we can bring the Crescent Mine to commercial production with a reasonable investment, and that SRK will complete a PEA and technical report on the Crescent Mine within 5 weeks. The Company’s actual results and financial position could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, some of which may be beyond the Company’s control. These factors include: results of exploration and development activities, mis-estimation of mineral reserves and resources, fluctuations in the marketplace for the sale of minerals, the inability to implement corporate strategies, the inability to obtain sufficient financing to pay our obligations or carry our plans, labor shortages, possible delays in completing the mill, the inability to keep key employees, currency fluctuations, general market and industry conditions and other risks disclosed in the Company’s filings with Canadian Securities Regulators.

Forward-looking statements are based on the expectations and opinions of the Company’s management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.

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In August 1956, the Calder Hall Power Plant in Seascale, England began generating electricity and earned the distinction of being the world’s first commercial nuclear power plant. It was a humble beginning for nuclear power; the plant only had a 50-megawatt (MW) output capacity, whereas the smallest US plant today has a 478 MW capacity. Nonetheless, Calder Hall represented the launch of a new era in energy that promised to bring electricity too cheap to meter.

But early on, the promising power source had its detractors. They objected to the high initial cost of constructing nuclear plants, the problems of radioactive waste disposal, and the risks of nuclear accidents and nuclear proliferation.

The detractors had an impact. The heavy regulation they pushed for and the litigation they initiated extended construction times and drove up construction costs. But despite their efforts, over 100 reactors had been placed in service in the United States by 1974.

Then came 1979 and a landmark event – the nuclear accident at Three Mile Island. In the aftermath, public opinion turned solidly in favor of the anti-nuclear movement, several construction projects were canceled, and no new US building permits for nuclear power plants were issued for the next 33 years.

Though the US abandoned nuclear expansion in the 1980s, other countries forged ahead. Worldwide startups peaked in 1984 and 1985, as over 30 plants were brought online in each of those years. However, escalating regulatory and litigation costs and pressure groups were not unique to the US. By the 1980s, it was becoming difficult to cost-justify new projects. On top of all that, the Chernobyl accident occurred in 1986, and the world had its own Three Mile Island moment.

In the 1990s, global startups fell to an annual average of less than six per year; in the first decade of the new century, average annual startups were just over three per year. In fact, since 1990 there have barely been enough startups to offset shutdowns.

The recent flurry of closures was caused to a great extent by yet another accident. After the earthquake and tsunami in Japan on March 11, 2011 and the ensuing catastrophe at the Fukushima Nuclear Power Plant, several countries began to rethink their nuclear energy policies. In May 2011, Germany announced that it would abandon nuclear energy entirely, shutting down all 17 of its plants by 2022. In June 2011, Italian citizens voted overwhelmingly in favor of a referendum to cancel plans for new reactors. The Japanese Cabinet, though unclear about a specific plan, has issued a white paper calling for less reliance on nuclear power.

So is nuclear on its last legs? It would appear so… but before we make the funeral arrangements, let’s take a closer look.
A Nuclear Renaissance

In the wake of the Fukushima disaster, much of the attention in the Western world has been on the nuclear power debate, plant shutdowns, and project cancelations. Meanwhile, those in developing countries recognize the harsh reality that something has to be done to produce more power. Driven by population growth and increasing standards of living, future demand for energy in those countries will be strong, if not overwhelming.

The International Energy Agency forecasts that global demand for electricity will grow by a staggering 70% between 2012 and 2035. The increase will come predominantly from developing countries – over half is expected from China and India alone.

Serious pollution problems mean that those developing countries cannot produce all that electricity by burning coal. Amir Adnani, Uranium Energy Corporation’s CEO, says, “The plans to develop nuclear power in China and other countries are very much driven by a set of realities that is very different and very acute. People are dying every year in China, literally choking to death, because of all the toxins that are being put into the environment by burning coal.”

This explains why China, India, and the Russian Federation are quietly forging ahead with nuclear energy expansion while the West and Japan fret over it. As you can see in the table below, those developing countries are dominant leaders in the construction of nuclear facilities.

It typically takes about six years to complete a plant once it is under construction, so the 67 facilities shown above should be producing electricity soon. In addition, over 100 reactors are at various stages of planning and permitting.

So it looks like the needs of developing countries will be more than enough to revitalize and sustain the nuclear-power industry. As for the developed countries, many still heavily rely on nuclear energy, and that won’t change anytime soon. In fact, the reliance may only increase in the coming years.

Though many developed countries have been cool at best and hostile at worst toward nuclear energy expansion, a more conciliatory approach may be required in the future. That’s because many of the same people who are concerned about the risks and costs of nuclear power are even more concerned about global warming. That means fossil fuels and the carbon dioxide they emit must be limited.

But what will be used other than fossil fuels? The hope was wind and solar, but the inefficiencies, high costs, and intermittent nature of these two energy sources make them unlikely candidates for widespread use. What’s left is nuclear.

On February 9, 2012, the US Nuclear Regulatory Commission approved a license for two new nuclear reactors in Georgia, the first in over 30 years. This could be a sign of more approvals to come. But what could eventually really ignite a nuclear expansion are the promising technology advancements that are being developed.
Nuclear Technological Developments

Small Modular Reactors:

You’ve heard of the mini-brewery and the mini-steel mill; now meet the mini-nuclear reactor. Commonly known as “small modular reactors” or SMRs, these reactors are tiny compared to conventional ones. However, with capacities reaching up to 300 MW (power sufficient to supply 45,000 homes) they pack plenty of punch to have practical commercial application. Here are some advantages that SMRs offer:

They are cheaper to construct and operate than conventional reactors.
They can be standardized and factory built, a much more efficient process than on-site construction.
They can be set up in groups to provide however much power an area needs. Grouping would allow for a unit to be taken offline for repairs, maintenance, or replacement without an interruption of service. On the flip side, more units can be easily added if an area’s power needs increase.
They can basically run themselves with little on-site supervision.
They can be stored underground, which enhances security.

Most important, because they are small and use less fuel, they are easier to cool, which greatly reduces the risk of a meltdown.

Some SMRs can even run on what was once considered nuclear waste. For example, a Bill Gates-backed company, TerraPower, is developing a reactor that burns depleted uranium. Depleted uranium burns very slowly, so TerraPower’s reactor could theoretically run for decades without the need for a fill-up. This is an exciting development. Unfortunately, the TerraPower reactor only exists as a prototype on a PC. This means that it will take several years before it could possibly make its debut on the power grid.

In fact, most SMRs are still in the very early stages of development, with many challenges to be met and many questions to be answered. However, the concept has enough promise to induce the US government to invest in its pursuit. If it proves to be viable, this technology could really shake up the energy scene.

Thorium Reactors:

Imagine a cheap, plentiful atomic fuel that could provide safe, emissions-free power for hundreds of years without refueling and without any risk of nuclear proliferation. That fuel is thorium, and proponents claim it eludes many of the pitfalls of today’s nuclear energy.

Robert Rapier, chief technology officer and executive vice president at Merica International, says:

“Longer term, commercialization of thorium reactors would dramatically reduce (although not totally eliminate) the risk of nuclear-weapon proliferation. Thorium is abundant relative to uranium, and thorium does not have to undergo the enrichment process that uranium requires. Further, thorium reactors have little risk of melting down because climbing temperatures will decrease the power output, eliminating the runaway reaction possibility present in a uranium-fueled reactor. Thus, these reactors would naturally tend toward the fail-safe state. The primary disadvantage is that thorium reactors are still mainly at the experimental stage, and therefore commercial viability has not yet been clearly demonstrated.”

Pebble-Bed Reactors:

The pebble-bed reactor concept was first introduced way back in the 1940s. The US, Germany, and South Africa have experimented with the technology over the years, but it is the Chinese who have persisted in the experiment and plan to implement the technology in two reactors near the Yellow Sea.

Under the pebble-bed design, uranium fuel rods are replaced with tennis-ball-sized graphite spheres that contain tiny beads of uranium, and helium (instead of water) is used as a coolant. A New York Times piece provides a simple explanation of how the technology works:

“Rather than using conventional fuel rod assemblies…(pebble-bed reactors) use hundreds of thousands of billiard-ball-size fuel elements, each cloaked in its own protective layer of graphite.

“The coating moderates the pace of nuclear reactions and is meant to ensure that if the plant had to be shut down in an emergency, the reaction would slowly stop on its own and not lead to a meltdown.

“The reactors (are) cooled by non-explosive helium gas instead of depending on a steady source of water – a critical problem with the damaged reactors at Japan’s Fukushima Daiichi power plant. And unlike those reactors, (pebble-bed) reactors are designed to gradually dissipate heat on their own, even if the coolant is lost.”

Challenges remain for pebble-bed reactors, and some environmentalists oppose the technology. They point to the fact that the volume of radioactive waste increases under the pebble-bed design, but do concede that pebble-bed waste is far less radioactive per ton than spent uranium fuel rods.

These technological developments in the nuclear-reactor space are promising and certainly worth keeping an eye on… but it’s unlikely that anything disruptive will hit the mainstream anytime soon.

So from an investment standpoint, this means that the best and most immediate way to play the nuclear trend is not the companies that make the reactors, but the companies that mine the fuel for the reactors.

The Coming Uranium Bull Market

There are a number of supply and demand circumstances that appear to be forming a perfect storm for bullish uranium prices. From the demand side, the 67 new reactors that we discussed earlier will be coming online in the near future.

On the supply side, there isn’t enough uranium being mined to meet current reactor requirements, let alone new facility requirements. According to the World Nuclear Association, there was a 40-million-pound uranium production gap in 2011. It is unlikely that that gap will be closed at current prices; miners claim that their production costs average $85 per pound. With spot prices at about $40 per pound, miners have no incentive to bring new capacity online.

Another factor affecting the supply side is the coming end of the Megatons to Megawatts program. Under this arrangement, the US and Russia agreed to convert high-enriched uranium from Russia’s dismantled weapons arsenal into low-enriched uranium for use in power plants. This secondary source provides about 15% of the US’s annual supply of uranium. However, the program will expire later this year and when it does, the production gap will widen. Guess what will happen to uranium prices. That’s right: they’ll skyrocket.

Intrigued yet? Want some more specific investment advice? Help is on the way. Marin Katusa and the Casey Research Energy Team are on top of the emerging opportunity in uranium and have assembled a panel of world-renowned energy experts to discuss it in further depth in an upcoming webinar titled The Myth of American Energy Independence: Is Nuclear the Ultimate Contrarian Investment? The webinar premiers at 2:00 p.m. Eastern on Tuesday May 21, 2013 and is free of charge. In addition, all attendees will receive a free copy of our new Global Resource Intelligence Report on uranium (a $29 value). I urge you to reserve your seat today.

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NR13-003 was a -80 degree hole at a 040° azimuth collared at the same location as Drillhole NR13-001 and was terminated at a depth of 594 metres. NR13-004 was a -45 degree hole at 040° azimuth collared 100 metres to the southeast of NR13-001 and was terminated at a depth of 404 metres. Samples are currently being processed and will be sent to the laboratory shortly. The assay results of all drillholes will be released once analyses have been received and are subject to QA-QC review.

While awaiting assay results the Company has commenced surface geological, geophysical and archeological surveys in order to facilitate the placement of additional drillholes. The archeologists are onsite completing an initial Archeological Impact Assessment survey that is required to allow for the expansion of the drill program.

Once the geological, geophysical and archeological programs are completed, the data will be interpreted and compiled with the results from the recently completed drill holes and a plan will be formatted to design and re-commence an expanded diamond drill program.

The Company as part of its exploration program recently acquired 3 additional mineral claims through staking expanding its North ROK Property area from 3,449 hectares to 5,188 hectares.

Qualified Person

Greg Dawson, P.Geo. is the Qualified Person as defined by National Instrument 43-101 who supervised the work program and preparation of the technical data in this news release.

About Colorado

Colorado is engaged in the business of mineral exploration for the purpose of acquiring and advancing mineral properties located in British Columbia and the Yukon and is also aggressively seeking quality properties in the US southwest and Latin America. Colorado’s current exploration focus is on the Red Chris area.

ON BEHALF OF THE BOARD OF DIRECTORS OF
COLORADO RESOURCES LTD.

“Adam Travis”

Adam Travis
President and Chief Executive Officer

For more information, please contact:

Colorado Resources Ltd.
Adam Travis, President and Chief Executive Officer or
Terese Gieselman, Chief Financial Officer and Secretary
T: (250) 768-1511
F: (250) 768-0020
TF (855) 768-8511
W: www.coloradoresources.com
NR 13-06

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding proposed exploration activities. Although the Company believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking information provided by the Company is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors, including, but not limited to, the state of the financial markets for the Company’s equity securities, the state of the market for gold or other minerals that may be produced generally, recent market volatility; variations in the nature, quality and quantity of any mineral deposits that may be located, the Company’s ability to obtain any necessary permits, consents or authorizations required for its activities, to raise the necessary capital or to be fully able to implement its business strategies and other risks associated with the exploration and development of mineral properties.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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The results from the new holes are summarized in the table below:
Hole_ID From (m) To (m) Interval (m) Gold_g/t Uncut Copper_% Gold_g/t 50 g/t top cut-off
LTP-132 136.00 266.00 130.00 1.22 0.24 1.22
Including
185.03 202.04 17.01 6.21 0.90 6.21
LTP-133 281.43 318.00 36.57 0.38 0.12 0.38
LTP-135 442.80 449.58 6.78 4.62 0.01 4.62
LTP-136 526.00 538.00 12.00 0.63 0.07 0.63
LTP-137 250.87 310.22 59.35 0.53 0.06 0.53
And
380.00 502.72 122.72 0.92 0.24 0.92
Including
400.83 466.00 65.17 1.30 0.31 1.30

*Note: All the results and sub intervals summarized in the table above have a bottom cut-off of 0.15 g/t of gold. An arbitrary top cut of 50 g/t gold was used until sufficient data is available to define an appropriate top cut for the project. The intervals may not represent true mineralization widths and the exact orientation of the mineralization at this stage of the drilling is not yet known, although the host volcanic lithologies are sub-horizontal in orientation.
The individual two metre assay intervals from all holes drilled on the Las Tres Palmas trend are available online (see Las Tres Palmas Assays), in addition the collar location, hole azimuth and dips for Las Tres Palmas holes are also available (see UTMS Table).
Drill rigs are now being mobilized to the Company’s new Induced Polarization (“IP”) geophysical discovery at Guama to test mineralization approximately three kilometers west of the Romero Discovery. The Guama IP trend is over three kilometres in length and up to two kilometres in width, and remains open to the north and south (see exploration map). The trend includes three high chargeability occurrences within a broad chargeability high. The central zone was previously reported on March 27th, 2013 and will be drilled first with a minimum of 6 holes. The northern target is open to the north, is coincident with float samples up to 34% native copper, and seems to display a circular form, with a less chargeable, higher magnetic central area, surrounded by a higher chargeability ring anomaly.
The Company will continue to release new drill hole results in batches as their analysis is completed. The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
As part of the Company’s Quality Assurance and Quality Control procedures (QA/QC), most of the high grade intervals are re-assayed and the Company is awaiting these check samples. In addition, systematic re-assaying of intervals is in progress, to confirm compliance of blanks and duplicates checks. The Company also reviews results from Certified Standard Reference materials (CRSM or Standards), which are inserted at a rate of 5 per 100 samples. Within the results disclosed herein there were no samples that had results outside the recommended tolerance. The company did observe large variations of the gold and copper grades in two core duplicate samples taken from drill hole LTP-137. The duplicates were taken in an area of high gold and copper mineralization and higher variation is expected in higher grades. In both cases the original samples which were used for this release had lower gold grades. As a check the company will re-assay the coarse rejects and pulps.
In GoldQuest’s drill programs, composite intervals were chosen using a combination of geological criteria and mineralization, averaging around 2 metres core length. The drill core is cut in half with one half of the core sample shipped to ACME Labs by GoldQuest technicians. The remaining half of the core is kept at the company core shack for future assay verification, or any other further investigation. Assays within intervals below the 0.005 g/t detection limit for Au were given a zero value. All drill samples were prepared and screened by ACME Labs (Santo Domingo); metallic fire assay and multi-element ICP-MS were assayed by ACME Analytical Laboratories (Chile). Gold values are determined by standard fire assay with an AA finish, or, if over 10.0 g/t Au, were re-assayed and completed with a gravimetric finish. QA/QC included the insertion and continual monitoring of numerous standards, blanks and duplicates into the sample stream, at random intervals within each batch. The comprehensive GoldQuest Quality Assurance and Quality Control protocols can be viewed on GoldQuest’s Website (see Corporate Governance).
The information in this press release has been reviewed and approved by Mr. Jeremy Niemi, P.Geo., the Director, Technical Services of GoldQuest and a Qualified Person for the technical information in this press release under NI 43-101 standards.
About GoldQuest
GoldQuest is a Canadian based mineral exploration company with projects in the Dominican Republic traded on the TSX-V under the symbol GQC.V and in Frankfurt/Berlin with symbol M1W, with 143,980,044 shares outstanding (157,481,568 on a fully diluted basis).
Forward-looking statements:
This news release contains certain statements that may be deemed “forward-looking statements”, including statements regarding the Company’s expectations and plans for its mineral projects, including its drilling programs and the IP program. All statements in this release, other than statements of historical fact, that address events or developments that GoldQuest expects to occur, are forward-looking statements.
Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. Although GoldQuest believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include exploitation and exploration success, differing results from re-assays or other analytical procedures with respect to the drill results, continued availability of capital, financing and required resources (such as human resources, equipment and/or other capital resources) and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Forward-looking statements are based on the beliefs, estimates and opinions of GoldQuest’s management on the date the statements are made. GoldQuest undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
GoldQuest Mining Corp.
Julio Espaillat
President & Chief Executive Officer
+1-829-919-8701
jespaillat@goldquestcorp.com

GoldQuest Mining Corp.
Sebastian de Kloet
Corporate Communications – Toronto
+1-416-214-9151
investorrelations@goldquestcorp.com
www.goldquestcorp.com

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Casey Research
May 15, 2013 12:18pm

The last time Vladimir Putin was president, he laid the foundation to pull Mother Russia from the wreck of economic chaos to a world power once again. This time, he’s ready to extend that influence to counter the West. His tools: Russia’s abundant resources of energy, including uranium.

There’s a new war developing on the continent, and the weapons this time will be oil wells, gas fields, and uranium mines, pipelines and ports, processing facilities, and supply deals.

Led by Russia’s vast resource wealth and China’s massive bank account, the countries of Asia and those along the Eurasian divide are realizing they do not want or need help from the West to achieve their goals. They are settling their differences, negotiating closer relations, and advancing their plans without as much as a phone call to Washington or Brussels.

After years of Western dominance in world affairs, they’ve had enough. And with Vladimir Putin back in as Russia’s president, this emerging bloc has its leader.

Vladimir Vladimirovich is a man of remarkable intelligence, determination, and ruthlessness. In many Russian eyes, that last attribute is far from a fault – they see him as a man’s man who restored their country’s pride, economy, and position of influence after a humiliating period they’d rather forget. If that has required trampling some citizen rights along with much of the country’s new capitalist class… well, nothing comes for free.

From the chaos of financial collapse and political turmoil in 1998, Putin increased GDP by an average 7% annually, cut in half the number of Russians living below the poverty line, grew industry by 75%, and doubled real incomes.

He’s achieved these accomplishments largely though development of energy resources. Under his guidance, Russia became a global energy superpower. Today, with a much-strengthened country under his feet, Putin will use his control over natural resources to pull leverage away from the United States and Europe.

It’s no secret that Putin disdains America’s self-appointed role as global policeman and holds Europe in equal contempt for generally supporting US foreign policy. The NATO campaign in Libya was perhaps a final straw: After Russia vetoed a UN motion to intervene in the civil war there, the US and its European allies turned to their military club NATO to further the regime change they desired. To Russia, at least, it was a snub intended to suggest that Russian opinion still doesn’t matter.

Now Putin’s primary goal is to prove that view wrong.

And he has the tools to do so. Among other things, he’s working to corner the uranium market – his country already controls 40% of global uranium enrichment capacity, the lion’s share of the world’s downblending facilities, and a fair chunk of the world’s uranium resources.

On top of that, the country’s nuclear power giant, Rosatom, builds more nuclear power plants than any other company in the world, with deals for 21 international reactors currently on the books.

The era of Putinization is about to begin, and we investors need to understand where it’s coming from and what it means. What’s on the table are investment trends and profits along with the balance of world influence.
Russia: Key Player in the Uranium Market

Russia is bestowed with immense resource wealth, in large part because Mother Russia is simply the biggest country in the world. The nation covers 17 million square kilometers, upwards of twice the size of the next largest country, Canada. Even if its lands and waters were only moderately imbued with resources, Russia would have a lot of natural wealth.

Russia was the sixth-largest uranium producer in the world in 2010, behind Kazakhstan, Canada, Australia, Namibia, and Niger. But that ranking only includes uranium produced from mining operations. When we include production from the downblending of its decommissioned nuclear weapons, Russia jumps to second.

It’s hard to overstate Russia’s dominance of the world’s capacity to process uranium. Australia, Kazakhstan, and Canada rely on Russia to enrich the uranium they mine, while for the last 18 years the United States has relied on Russia’s downblending capability. The Megatons-to-Megawatts agreement provides fully half of the uranium fueling America’s nuclear reactors, or 10% of its electricity.

The agreement is scheduled to end in December 2013, at the same time as global demand for uranium is rising. The US will have to go on the hunt for new uranium suppliers just as the race to secure those supplies heats up… and Putin knows it.

Not only will he not renew Megatons, he will encourage the world’s uranium-needy nations – China, India, the US, France, South Korea, and Japan – to outbid each other for the opportunity to secure stable supplies of Russian uranium.

We’ve said it before: Putin is working to corner the global uranium market. He already has a strong grip over Europe’s gas needs and holds considerable sway over the continent’s oil supply. Why wouldn’t he want to also control the world’s supply of nuclear reactor fuel?
Uranium – a Hot Commodity

Today there are no fewer than 60 nuclear plants under construction in 14 countries, with another 163 planned and 329 proposed.

Many countries without nuclear power are on the cusp of building their first reactors, including Vietnam, Turkey, Indonesia, Egypt, Kazakhstan, and several among the Gulf emirates. And while many countries with nuclear reactors took a moment to pause and reassess safety standards in light of the Fukushima disaster, almost all have reasserted their support for nuclear power as a major component of their energy strategies.

Uranium is simply the only fuel right now that can reliably produce large amounts of electricity without the release of greenhouse gases and other hydrocarbon pollutants.

Demand is clearly ramping up, and the world is already short on uranium. In 2011, world industry consumed 165 million pounds of U3O8 but produced only 143 million pounds.

Indeed, the world hasn’t produced enough uranium to meet demand for some two decades.

Secondary supplies have been filling the gap to date. For example, since 1993 the Megatons-to-Megawatts agreement between Russia and the United States has been working toward the goal to recycle 500 tonnes of highly enriched uranium (HEU) from Russian nuclear weapons into the LEU that reactors use to produce electricity. But remember, that deal is set to end next year.

The end of Megatons-to-Megawatts will eliminate 24 million pounds of uranium supply just as demand starts surging. The World Nuclear Association predicted global uranium demand will have increased 33% by 2020, and will then climb almost that much again in the next 10 years.

Those are huge increases. In 2011, the world consumed about 70,000 tonnes of uranium. By 2024, we are expected to need 100,000 tonnes. Can production keep up? Not likely.

If every potential uranium mine on the horizon were approved, built, and commissioned on schedule, supplies might just keep up with demand. But current uranium prices are rendering many potential mines uneconomic, and global economic uncertainty is making it very difficult for uranium companies to obtain the cash they need to build mines. It all adds up to one conclusion: a supply gap is looming.

A Near-Monopoly on Downblending

The global race to secure uranium resources is on. Russia already produces a fair bit of uranium; on top of that, Putin carries a lot of clout in neighboring Kazakhstan, the world’s top primary uranium producer. So Russia already controls a lot of primary production.

But that’s just the start. Since primary production won’t be able to meet demand, secondary sources will become extra important. And there is only one significant secondary source: downblended Russian warheads.

One American company, WesDyne International, has facilities in the US to downblend HEU, but its capacity is limited to roughly 8 tonnes a year. Russia can churn through 30 tonnes annually. It means the US has little choice but to send its old warheads to Russia for downblending.

So Russia has that secondary production well in hand, too.

And Russia isn’t just the world leader in downblending – the country also operates 40% of the world’s enrichment capacity, giving the Russian leader another avenue of control over the nuclear fuel market.

Control over so much LEU production capacity gives Putin the ability to ink supply deals with countries desperate to secure nuclear fuel for the future. For example, a new bilateral agreement between Russia and Japan is about to take effect, paving the way for Japanese utilities to secure uranium enrichment services from Russia.

Putin also finds long-term uranium customers in the countries that have asked Russia’s state nuclear utility, Rosatom, to build their reactors.

Rosatom is an absolute giant in the global nuclear sector. The company builds more nuclear power plants worldwide than anyone else, with builds currently underway in China, Vietnam, India, Iran, and Turkey. The 21 new builds in Rosatom’s order book are worth US$50 billion.

And how handy is it that many of those new builds include a lifetime fuel supply contract, such as the contract Rosatom signed with Bangladesh to build and fuel that country’s first nuclear reactor.

Rosatom is also the conduit through which Russia exports uranium, a trade currently valued at US$3 billion per year. One-fifth of those exports go to the Asia-Pacific region, a market growing so quickly that Rosatom is building a new Vostok complex for uranium-products transportation and logistics to better serve the region.

Nuclear power has been the world’s fastest-growing major source of energy every decade since 1960. That’s not going to change. Putin is acutely aware that uranium will be one of the most closely contested battlegrounds in the global race for resources.

Unfortunately for everyone else, he’s given Russia a significant head start.

The coming uranium supply crunch will lead to a bull market for the history books… with spectacular profit potential for early investors. To discuss uranium’s future, and the investment implications, some of the world’s foremost energy experts – among them a former US secretary of energy and the chairman emeritus of the UK Atomic Energy Authority – will gather for an unparalleled Webinar on May 21, 2013. Registration is free – click here to learn more.

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The new program will be distributed amongst remaining areas of Target D (PZE South) other than the portion of the target where the resource calculation is currently being carried out. An additional six areas with very similar geological context and known mineralized zones are also programmed to be explored which include Target D (PZE North), Target D (MSZ), Target D (PZW), Target A (Amaury), Target G (Kalunga) and Target F (Adepasa). These seven targets to be drilled are located within a 15km radius and the Company’s focus will be aimed towards defining high-grade (> 15% P2O5) and lower grade (5%-15% P2O5) zones that collectively will represent the overall resource at Bomfim.

Target D “Bomfim Hill”
(PZE South)- Large occurrences of outcropping high-grade phosphate were discovered as a result of detailed mapping (1:10,000). A geophysical survey consisting of 17 kilometres has also been concluded with results indicating the potential for a sizeable mineralized package and has been an instrumental tool in assisting with drilling in preparation for the resource calculation. To date, drilling has completed a total of 100 holes and material has already been shipped for lab analysis. Hand held XRF recognition is also systematically being performed on all drill holes as they become available.

(PZE North)- Detailed mapping (1:10,000) revealed an area in which the high-grade phosphorite outcrops over a significant portion of the target area. Follow-up work included opening six pits distributed along the northern portion of the target. All pits intersected good phosphate mineralization and remain open at depth along a continuous trend of at least 300 metres. Drilling on a 100 x 100 meter grid is scheduled to further quantify resources at PZE North.

(MSZ)- A target of high priority, MSZ is considered by Eagle Star’s technical team to be the source of the high-grade phosphorite which was re-deposited in alluvial and/or colluvial channels in the other Targets at Bomfim Hill (PZE- North, South and West). Eagle Star has identified by way of detailed mapping (1:10,000) a silicified phosphate cover estimated to be 5-8 metres in thickness at the top of the hill. To date, due to the hard nature of the silicified cap, exploration work by way of manual pit digging has been unsuccessful in passing through this material. Dr. Campos, Eagle Star’s expert on phosphate and Chief Operating Officer believes that the silicified phosphate will preserve the phosphorite most likely to be found beneath.

(PZW)- This target resides in the same geological setting as PZE North & PZE South and shares much of the same favourable technical characteristics for hosting high-grade phosphate. Detailed mapping (1:25,000) has already revealed the presence of outcropping phosphorite at the western base of the Bomfim Hill which is an important indicator to additional phosphate mineralization to be found in the area.

Target A (Amaury)- Detailed mapping (1:10,000) at this area has revealed outcrops of high-grade phosphorite. As part of a scout drilling program, two holes BRF-03 & BRF-15 were executed in strike and were previously reported (news release dated 12th Nov 2012) to return good intersections of up to 16 meters consisting of significant zones including grades up to 13.65% P2O5 over 2.40m. A geophysical line survey of 2.5 kilometers performed on top of both drill holes indicated a strong correlation between geophysical and drill results providing valuable insight between drill holes. The geophysical survey also indicated that mineralization should extend to the south and closer to surface. Two pits were opened to confirm this and they returned preliminary indications of high-grade phosphate values of up to 15.37% over 2.0 metres by handheld XRF, further extending the strike to 570 meters. The preliminary interpretation of this zone suggests a tabular form of mineralization that may extend laterally over 1.5 kilometers. (see news release dated 28th Feb 2013.)

Target G (Kalunga)- The regional exploration program conducted to the north of Target A identified a prospective area of outcropping phosphorite where hand held XRF results of chip samples returned significant values including a high-grade sample with 16% P2O5. Further geological mapping at a 1:50,000 scale showed favourable geological context very similar to other targets where high-grade phosphate has been discovered. These areas of interest are currently being followed up with more detailed mapping and test pits prior to drilling. One geophysics line (1,400 metres) was surveyed (passing by the targets selected to carry out pit testing) and has returned a very favourable profile that justifies further exploration by way of drilling.
Target F (Adepasa)- Follow up work and interpretation of the results from the scout drilling program lead the team to identify this promising area. The prospective interpretation is based on the presence of a silexite hill where the typical rock textures of the phosphorite are preserved through the silicification process. The plateau surrounding the hill also displays the same type of soil that occurs at Target D. One geophysics line (700m) has already been surveyed and revealed the presence of a thick profile from dolomite bedrock to surface.

John Harrop PGeo, FGS, of Coast Mountain Geological Ltd, a qualified person under NI 43-101, reviewed and approved the technical disclosures of this press release on behalf of the Company.

To view map of targets please click on the following link: http://media3.marketwire.com/docs/EGE0514.pdf
CONCLUSIONS
“We believe that collectively within the targets mentioned above, we are sitting on multiple phosphate bodies, hence why we have decided to extend this drill program. The NI 43-101 Technical Report on the way is the first milestone as part of the overall plan to quantify and qualify the total phosphate resource at Bomfim. We plan to continuously update that report as we move the drilling from one target to another,” commented Eran Friedlander Eagle Star President & CEO.

ABOUT THE COMPANY
Eagle Star Minerals Corp is a publicly listed company focused on the acquisition, exploration and development of agro-mineral properties in Brazil. Over the past two years, Eagle Star Minerals has strategically grown its’ presence in Brazil and continues to focus on maximizing shareholder value by acquiring assets located in geological areas known for proven phosphate mineralization, coupled with good logistics in close proximity to agriculture.
The Company’s shares are publicly traded on the TSX Venture Exchange under the symbol EGE, on the OTC Pink Sheets under the symbol ELGSF and on Frankfurt Stock Exchange under the symbol E6R.
On behalf of the Board of Directors

EAGLE STAR MINERALS CORP.
Eran Friedlander, President
Contact:
Eagle Star Minerals Corp.

Patrick Brandreth
Senior Manager, Corporate Development
1-604-282-7157
patrick@eaglestarminerals.com
www.eaglestarminerals.com

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Mandalay also announced an annual dividend policy pursuant to which the Company intends to pay quarterly dividends in an aggregate amount equal to 6% of the trailing quarter’s gross revenue, defined as revenue before royalty payments. In accordance with this new policy Mandalay’s Board of Directors declared a quarterly dividend of CDN Cents 0.769 per share, payable on May 31, 2013 , to shareholders of record as of May 24, 2013 .

Brad Mills , Chief Executive Officer of Mandalay, commented, “We are pleased with the overall doubling of our revenue from the same quarter last year, to $41.6 million , and more than doubling of our EBITDA to $19.8 million . This demonstrates our success in growing low cost and high margin metal volumes, which helps us generate strong operating margins. This quarter was defined by a strong operating and financial performance at our Costerfield mine. At Costerfield, net operating income for the quarter was $3.4 million , significantly better than the comparable quarter in the prior year. This was the result of a number of factors including, the success of the mobile crusher in enabling increased plant throughput at high flotation recoveries, the mine delivering grades above prior quarters with the introduction of N lode ore as a significant contributor and the continued success of our CRF stoping method.

As expected, Cerro Bayo’s production and sales were down in the quarter versus the prior quarter due to our previously announced planned plant curtailment taken in order to implement a significant mill automation and recovery improvement program. Results since the restart in April have shown significant improvements and we fully expect to recover lost production before year end.
In order to closely align shareholder returns with the actual business performance in a sustainable way as metal prices and operational results fluctuate, Mandalay’s board has taken a decision to adopt a dividend policy that aligns with these variations by tying dividends to actual revenue generated. Mandalay’s low cost operations ensure that this is a sustainable approach to delivering shareholder returns and allows us to better plan for future capital and operational needs.”

First Quarter 2013 Financial Highlights

The following table summarizes the Company’s financial results for the first quarter of 2013 and 2012:

Quarter ended Quarter ended
March 31,2013 March 31,2012
$ $

Revenue 41,624,688 20,719,516
EBITDA 19,838,082 6,126,008
Income from mine operations 15,628,668 3,334,190
Net income/(loss) 10,904,114 (8,920,644)
Total assets 196,590,632 136,631,567
Total liabilities 44,324,175 46,072,087
Earnings/(loss) per share 0,03 (0.03)
Dividends declared per share (CDN Cents ) 0.769 Nil

In the first quarter of 2013 the Company delivered revenue, EBITDA and net income of $41.6 million , $19.8 million and $10.9 million ( $0.03 per share), respectively. This represents twice the revenue and three times the EBITDA of the corresponding 2012 quarter. The higher EBITDA was mainly due to greater metal volumes produced and shipped from both operations with lower than proportional increases in cost of sales.

Net income is inclusive of non-cash, non-operating expenses of $169,470 related to mark-to-market adjustments of financing warrants and cash election options and deferred tax recovery of $60,701 . Excluding these items, profit after tax from underlying operations for the first quarter was $11,012,883 ( $0.03 per share). By comparison, in the first quarter of 2012 the Company’s net loss of $8,920,644 (loss of $0.03 per share) was inclusive of $11,278,163 related to mark-to-market adjustment of silver and gold put options and the silver note payable to Coeur d’Alene Mines Corporation, plus deferred tax recovery of $1,518,592 . Excluding these items, profit from underlying operations in the first quarter of 2012 was $838,927 ( $0.00 per share).
On March 14, 2013 , Mandalay paid its second quarterly dividend of CDN$0.01 per share. Cash and cash equivalents of the Company were $26.64 million as of March 31, 2013 compared to $10.6 million as of March 31, 2012 .

First Quarter 2013 Operational Highlights

Costerfield gold-antimony mine, Victoria, Australia

In the first quarter of 2013, Costerfield produced saleable 6,203 ounces (“oz”) gold and 766 tonnes (“t”) antimony, versus 3,690 oz gold and 489 t antimony in the first quarter of 2012. Higher gold and antimony production in the current quarter versus the comparable quarter in the prior year was due to operational improvements in the mine and plant in the previous quarters plus excellent mine and mill grades achieved during the quarter.

In the first quarter of 2013, the Costerfield mine achieved higher ore delivery, producing 25,865 t, versus 19,093 t in 2012. At the same time, ore grades were also higher in the first quarter of 2013, 9.08 grams per tonne (“g/t”) Au and 4.80% Sb, as compared 8.45 g/t Au and 4.39% Sb in the first quarter of 2012.

The greater metal production in the first quarter of 2013, combined with good cost control, led to a reduction in cost per gold equivalent ounce produced to $967 /oz as compared to $1,301 /oz in the corresponding quarter of 2012.

Cerro Bayo silver-gold mine, Patagonia, Chile

During the first quarter of 2013, the Cerro Bayo mine produced 611,441 oz of saleable silver, versus 396,624 oz silver in the first quarter of 2012. Cerro Bayo also produced 4,432 oz gold in the first quarter of 2013, versus 2,190 oz gold in the first quarter of 2012. The increase in gold and silver production at Cerro Bayo in the first quarter of 2013 relative to the comparable quarter of 2012 was a result of the successful completion of the mine tonnage ramp-up plan in the fourth quarter of 2012. Cerro Bayo delivered lower production in the current quarter than in the prior quarter because plant operating time was restricted due to the installation and commissioning of flotation automation equipment that is designed to improve recoveries of both gold and silver.

Cash cost per silver ounce produced net of gold by-product was $8.96 /oz during the first quarter, significantly lower than $11.45 /oz in the first quarter of 2012, mainly due to higher production as the ramp-up proceeded.

Production guidance for the full year remains unchanged.

About Mandalay Resources Corporation:

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and producing and exploration projects in Chile . The Company is focused on executing a roll-up strategy, creating critical mass by aggregating advanced or in-production gold, copper, silver and antimony projects in Australia and the Americas to generate near-term cash flow and shareholder value.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of applicable securities laws, including statements regarding the Company’s anticipated production of gold, silver and antimony for the 2013 fiscal year and production, cost and capital expenditure guidance for 2013. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, changes in commodity prices and general market and economic conditions. The factors identified above are not intended to represent a complete list of the factors that could affect Mandalay. A description of additional risks that could result in actual results and developments differing from those contemplated by forward-looking statements in this news release can be found under the heading “Risk Factors” in Mandalay’s annual information form dated March 27, 2013 , a copy of which is available under Mandalay’s profile at www.sedar.com. In addition, there can be no assurance that any inferred resources that are discovered as a result of additional drilling will ever be upgraded to proven or probable reserves. Although Mandalay has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Non-IFRS Measures

This news release contains references to EBITDA, cash cost per ounce silver produced net of gold byproducts, and cash cost per gold equivalent ounce, all of which are non-IFRS measures and do not have standardized meanings under IFRS. Therefore, these measures may not be comparable to similar measures presented by other issuers.

The Company defines EBITDA as earnings before interest, taxes and non-cash charges. EBITDA is presented as the Company believes it is a useful indicator of relative operating performance. EBITDA should not be considered by an investor as an alternative to net income or cash flows as determined in accordance with IFRS. For a detailed reconciliation of net income to EBITDA, please refer to page 9 of Management’s Discussion and Analysis of the Company’s financial statements for the first quarter of 2013.

Cash cost per ounce of gold equivalent produced and cash costs per saleable ounce of silver produced net of gold credits, are presented because these statistics are key performance measures under control of the operations that management uses to monitor performance, to assess how the Company’s mines are performing, and to plan and assess the overall effectiveness and efficiency of mining operations. These performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS. Equivalent gold ounces produced or sold is calculated by adding to saleable gold ounces produced or sold, the saleable antimony tonnes produced or sold times the antimony realized price divided by the gold realized price. The total cash operating cost associated with the production or sale of these equivalent ounces in the period is then divided by the equivalent gold ounces produced or sold to yield the cash cost per equivalent ounce produced or sold. The cash cost per ounce of silver produced net of gold credit is calculated by deducting gold revenue from the cash operating costs in the period and dividing the resultant number by the silver ounces produced in the period.

SOURCE: Mandalay Resources Corporation

Contact:

Bradford Mills
Chief Executive Officer

Greg DiTomaso
Investor Relations

Contact:
647.260.1566

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St. Paul, Minnesota, May 13, 2013 – PolyMet Mining Corp. (TSX: POM; NYSE MKT: PLM) (“PolyMet” or the “Company”) has been notified by the Minnesota Department of Natural Resources (“MDNR”) that ERM, the independent EIS Contractor, has completed drafting the preliminary supplemental draft Environmental Impact Statement (“EIS”) analyzing PolyMet’s 100%-owned copper-nickel-precious metals NorthMet project located in the established mining district of the Mesabi Iron Range in northeastern Minnesota.

The NorthMet preliminary supplemental draft EIS will be reviewed by the Co-Lead Agencies (MDNR, the US Army Corps of Engineers, and the US Forest Service) and the Cooperating Agencies (the U.S. Environmental Protection Agency and the Bois Forte, Fond du Lac, and Grand Portage Tribal Governments) prior to publication of the supplemental draft EIS for public review later this summer.

“This is a very important step toward completion of the environmental review and issuance of the permits we need to build and operate the NorthMet Project,” stated Jon Cherry, President and CEO of PolyMet. “The Agencies and their EIS Contractor have been engaged in very detailed review of the project design, which includes several project modifications in response to public and regulatory comments. The project modifications and improvements, such as the addition of a Reverse Osmosis water treatment plant, demonstrate our commitment to construct and operate NorthMet in a way that protects the environment.”

About PolyMet

PolyMet Mining Corp. (www.polymetmining.com) is a publicly-traded mine development company that owns 100% of Poly Met Mining, Inc., a Minnesota corporation that controls 100% of the NorthMet copper-nickel-precious metals ore body through a long-term lease and owns 100% of the Erie Plant, a large processing facility located approximately six miles from the ore body in the established mining district of the Mesabi Range in northeastern Minnesota. Poly Met Mining, Inc. has completed its Definitive Feasibility Study and is seeking environmental and operating permits to enable it to commence production. The NorthMet project is expected to require approximately two million hours of construction labor, creating approximately 360 long-term jobs, a level of activity that will have a significant multiplier effect in the local economy.

PolyMet Mining Corp

Per: “Jon Cherry”
_______________________
Jon Cherry, CEO

For further information, please contact:

Corporate
Douglas Newby
Chief Financial Officer
Tel: +1 (651) 389-4105
dnewby@polymetmining.com

Media
LaTisha Gietzen
VP Public, Gov’t & Environmental Affairs
Tel: +1 (218) 471-2150
lgietzen@polymetmining.com

Investors
PolyMet
Jenny Knudson
VP – Investor Relations
Tel: +1 (651) 389-4110
jknudson@polymetmining.com

MZ North America
Pascal Nigen
Senior Vice-President
Tel: +1 (212) 301-7149
pnigen@mzgroup.us
www.mzgroup.us

This news release contains certain forward-looking statements concerning anticipated developments in PolyMet’s operations in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” “projects,” “plans,” and similar expressions, or statements that events, conditions or results “will,” “may,” “could,” or “should” occur or be achieved or their negatives or other comparable words. These forward-looking statements may include statements regarding our beliefs related to the ability to receive environmental and operating permits, job creation, or other statements that are not a statement of fact. Forward-looking statements address future events and conditions and therefore involve inherent known and unknown risks and uncertainties. Actual results may differ materially from those in the forward-looking statements due to risks facing PolyMet or due to actual facts differing from the assumptions underlying its predictions.

PolyMet’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and PolyMet does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations and opinions should change.

Specific reference is made to PolyMet’s most recent Annual Report on Form 20-F for the fiscal year ended January 31, 2013 and in our other filings with Canadian securities authorities and the U.S. Securities and Exchange Commission for a discussion of some of the risk factors and other considerations underlying forward-looking statements.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

PolyMet has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission, for the offering to which this communication relates. Before investing, prospective investors should read the prospectus in that registration statement and other documents the issuer has filed with the U.S. Securities and Exchange Commission, for more complete information about PolyMet and this offering. The documents are available free of charge by visiting EDGAR on the U.S. Securities and Exchange Commission website at www.sec.gov. Alternatively, PolyMet will arrange to send you the prospectus if you request it by calling 1-416-915-4149.

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Technical Review

On May 2, 2013, Barkerville submitted a comprehensive response letter and an updated technical report on its Cariboo Gold Project (the “Updated Technical Report”) to the BCSC for its review in connection with the CTO. The Updated Technical Report Draft, co-authored by Peter T. George, P. Geo., of Geoex Limited (“Geoex”), Ivor W.O. Jones, FAusIMM(CP), of Snowden Mining Industry Consultants Inc. (“Snowden”), and Michael B. Dufresne, M.Sc., P. Geol, of Apex Geosciences Ltd. (“Apex”), was intended to replace the technical report filed by the Company in August 2012, and to address the disclosure issues raised by the BCSC. Snowden and Apex are independent mining and geological consulting firms that have not previously reported on the Cariboo Gold Project.

On May 9, 2013, the BCSC issued a further comment letter to the Company on the Updated Technical Report. The Company, Snowden, Geoex and Apex are currently working to address the BCSC’s comments.

J. Frank Callaghan
President and CEO

About Barkerville Gold Mines Ltd.

Since the mid-1990s the Company has focused on exploration and development of gold projects in the Cariboo Mining District in central B.C. The Company’s mineral tenures cover 1,164 km2 along a strike length of 60 km and approximate width of 20 km, encompassing seven past producing hard rock mines and three NI 43-101 gold deposits, including the QR Mine & Mill. The QR Property was acquired in February 2010 and includes a 900 tonne/day gold milling facility and a permitted gold mine located approximately 110 kilometers by highway and all-weather road from the Barkerville Gold Camp. The Company began pouring doré gold in September 2010, continued until December 2011, and resumed in January 2013. In November 2010, the Company acquired a second permitted mill currently on care and maintenance in Revelstoke, B.C. In November 2010, the Company and the Lhtako Dene First Nation also signed a Project Agreement in relation to its Bonanza Ledge and Cariboo Gold Projects. The Company has completed significant drilling and exploration programs and, together with the historical data, is compiling all information to determine the geologic models and updated technical reports to continue with exploration and development of the Cariboo Gold projects. This news release has been prepared on behalf of the Board of Directors of the Company which takes full responsibility for its contents.

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information in this news release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among other things, information with respect to the Company’s beliefs, plans, expectations, anticipations, estimates and intentions, including the listing and trading of the Company’s common shares on the TSX Venture Exchange. The words “may”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “target” and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes the Company’s expectations as of the date of this news release.

The results or events anticipated or predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from such forward- looking information include, among others, the Company’s ability to engage and retain qualified key personnel, employees and affiliates, to obtain capital and credit and to protect its property rights.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company’s forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Under the terms of the Agreement, Gold Fields can earn a 51% interest in the Property (the “51% Option”) by making aggregate option payments consisting of $600,000 and incurring minimum exploration expenditures of $7,500,000 and up to $9,000,000 to complete 10,000 meters of drilling over a three year period.

Gold Fields can earn an additional 19% interest (the “19% Option”) by making aggregate option payments of $900,000 and incurring exploration expenditures of $11,000,000 over the following two years.

Gold Fields shall be the operator during the option period and, upon exercise of the 19% Option (or after exercise of the 51% Option and when the 19% Option is not taken up, terminated or not satisfied), the Company and Gold Fields will form a joint venture on the terms set out in the Agreement.

The Company and the original vendors (the “Vendors”) of the Oro Property have agreed to amend the terms of the underlying option agreement (the “Underlying Option”). Key amendments to the Underlying Option (“Amended Underlying Option”) include:

• Cash payments of $1,100,000 over a four year period will be amended to $600,000 over a three year period (cash payments received under the 51% Option of the Agreement from Gold Fields will be paid to the Vendors);
• Share issuances of 1,300,000 shares over a 4 year period will be amended to instead be over a 3 year period as follows:
  • 200,000 common shares within 5 business days of TSX Venture Exchange (“Exchange”) approval;
  • 300,000 common shares on or before January 15, 2014;
  • 400,000 common shares on or before January 15, 2015; and
  • 400,000 common shares on or before January 15, 2016.

Under its Agreement with Gold Fields, Colorado shall remain obligated for all share issuances as described above. The Amending Underlying Option is subject to TSX Venture Exchange approval.

All amounts expressed are in Canadian dollars unless otherwise noted

Adam Travis, President and CEO, stated “Over the past two exploration seasons, we have succeeded in identifying a zone extending over several kilometres containing multi-element geochemical anomalies in rock formations typically associated with Carlin style deposits. Given the large number of anomalies worthy of follow up exploration and drilling, we believe that the Oro Property would be best advanced by involving a major company and we are pleased to have entered into the Agreement with Gold Fields.”

Qualified Person

Greg Dawson, P.Geo. is the Qualified Person as defined by National Instrument 43-101 who supervised the technical data in this news release

About Colorado

Colorado is engaged in the business of mineral exploration for the purpose of acquiring and advancing mineral properties located in British Columbia and the Yukon and is also aggressively seeking quality properties in the US Southwest and Latin America. Colorado’s exploration focus is gold and copper-gold properties and it is currently drilling two copper-gold properties located in the Red Chris area of northwestern BC.

ON BEHALF OF THE BOARD OF DIRECTORS OF

COLORADO RESOURCES LTD.

“Adam Travis”

Adam Travis
President and Chief Executive Officer

For more information, please contact:

Colorado Resources Ltd.
Adam Travis, President and Chief Executive Officer or
Terese Gieselman, Chief Financial Officer and Secretary
T: (250) 768-1511
F: (250) 768-0020
TF (855) 768-8511
W: www.coloradoresources.com
NR 13-05

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding proposed exploration activities. Although the Company believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking information provided by the Company is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors, including, but not limited to, the state of the financial markets for the Company’s equity securities, the state of the market for gold or other minerals that may be produced generally, recent market volatility; variations in the nature, quality and quantity of any mineral deposits that may be located, the Company’s ability to obtain any necessary permits, consents or authorizations required for its activities, to raise the necessary capital or to be fully able to implement its business strategies and other risks associated with the exploration and development of mineral properties.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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[Ed. note: This article originally appeared as a guest contribution in the "Midweek Matters" Casey Daily Dispatch.]

A couple of days after the Fed announced Ben Bernanke would not attend the Jackson Hole summit, for the first time in twenty five years, the New York Times (on the first page, no less) ran an in-depth profile of Janet Yellen, the heir apparent to run the Fed. Beneath her profile there were three other candidates “being discussed”: Roger Ferguson, Tim Geithner, and Larry Summers.

We at QB Asset Management normally do not spend time handicapping presidential appointments. In this case, however, we think the choice for next Fed Chair may have profound economic implications, and that it would not require expertise in econometric modeling, credit policy management, and maintaining the public perception of economic stability. We think the next Fed Chairman will oversee a conversion of the global monetary regime. A thick skin, diplomatic skills, and strong relationships with global banks and monetary policy makers will be the skill set most needed. We think Tim Geithner (with Bill Dudley as an alternative) will take over the Fed when Ben Bernanke steps down next January, and it seems by all indications that the table is already being set.

We attended a small dinner party a few years ago at which an iconic financier (and major Obama supporter) let it slip that he questioned one of Obama’s most senior aides just prior to the 2008 Democratic convention about taking over the economy when it was imploding. The aide waived it off and exclaimed, “Oh, don’t worry, Bobby has it covered!” Most of the table was relieved that Bob Rubin still had their backs and that banks would keep priority. Such was, and remains, US economic policy.

Neither growth nor austerity nor gloom of night will stay these currencies from their appointed devaluations. Bank balance sheets must be preserved; ergo sufficient inflation must be manufactured. We think the dull but persistent economic malaise amid increasingly aggressive monetary intervention policies will soon engender fear among the not-so-great washed – net savers. This happier band of brothers cannot maintain an edge when the real economy contracts and interest rates are already at zero. Base money is already being manufactured in the form of bank reserves, and the total money stock is not growing because there is very little natural economic incentive among the rest of us to consume (much) or take risk. Something and someone new is needed.

Ben Bernanke seems like a brilliant political economist and a decent guy, the top of his field in terms of comportment, academic credentials, and specific competence in understanding historical monetary policies during a countercyclical (i.e., deleveraging) period. Perhaps Janet Yellen is too? But such qualities are not what we think will be preferred by the powers that be now that global resource producers are openly questioning US, British, Euro, and Japanese monetary policies, and reserve holders are realizing their stash is being methodically turned to trash.

Meanwhile, aggregate leverage is growing and real economies are withering. Does anyone believe that Ben or any other monetary authority has been proactive, or that any fiscal authority has enacted legislation that promises to help achieve “escape velocity?” Can’t we all agree that the rationale for economic policy may be boiled down to the counterfactual: “Yes, but imagine if they withdrew liquidity or enforced true austerity – it would be worse!”? Is there a serious analyst who still believes economies can grow their ways out of being overlevered without leveraging further?

Whether or not contraction has to come a-knocking prior to a monetary reset is anyone’s guess, but it would be difficult to imagine monetary system change without a generally recognized economic tragedy that precedes it. This implies disappointing GDP prints, declining corporate revenues, and maybe even a swoon in stock and real estate markets. We have already begun to experience the first two. Now that we read global central banks have begun buying equities, perhaps equity prices may be controlled too (as are the level of interest rates via large scale asset purchases like QE and relative currency exchange rates via timed interventions)? Negative output growth and asset price busts would certainly open the door for our hero to enter.

The role of a central banker in the late stages of deleveraging seems to be volume triage, as they say in intelligence circles – reacting to an increasing barrage of events as they occur, wherever they may occur. In economics as in policing, the bad guys always get to take the first shot. From the central banker’s perspective, the bad guy in the current regime is the real economy. If it continues to shrink, as we think it must, then TPTB must change the way they do business.

We think the box we drew in our last write-up, contrasting inflation/deflation with leveraging/deleveraging (they are not the same thing), is the key metric in understanding the forces behind economic growth and market pricing. An inflationary leveraging perpetuates imbalances, while deflationary deleveraging threatens the survival of the banking system at large. Hopes for organic credit growth, which would promote the former, are now fleeting. This, in turn, engenders the threat of the latter. Continued ZIRP, increasing asset purchases, and a steep decline in the universal efficacy of it all suggests the time to press the reset button is quickly approaching. May to December 2013 may turn out to be the darkness before the dawn: a time we look back upon and choose to forget.

All in all, we think the most efficient Fed Chair in advance of a reset would be Paul Krugman. He seems willing to destroy the current global monetary system with swift dispatch, without consultation, declaration (or second drafts). Alas, capitalist economies in liberal democracies require level-headed responses to market forces. There is no place for rogue pro-actionists. Institutions like the Fed are meant to appear as first responders working on behalf of the societies their banks serve.

And so we think that circa 2070, our children will write and read (140-word) biographies about how Timothy Geithner saved the world from economic darkness. Geithner will save the day and bring glory to the Obama presidency by reducing the burden of debt repayment while maintaining the nominal integrity of debt covenants and bank balance sheets. The only way to accomplish this would be by destroying the currencies in which those debts are owed. Net debtors will rejoice and net savers (all 1% of them?) will suffer, finally realizing their unreserved currencies and levered financial assets were never sustainable wealth in the first place.

Our little narrative could certainly turn out to be wrong, but we discuss it here (against all political wisdom) because we cannot find another one that better fits current macro and market pricing trends. If we are wrong about Mr. Geithner, we think it would imply that TPTB (raise your hand if you think the Fed’s shareholders do not choose/approve the Fed Chairman) believe a clear-headed and decent academic political economist can figure out what all past ones could not: how to support asset prices beyond ZIRP and central bank asset purchases. (Ben is gone, long reign Janet!) That is not our projection.

When and if it becomes clear that Tim Geithner will ascend the steps at Eccles, we think it would already be too late to buy physical gold and resources. The only play remaining for financial asset investors looking to get full value after the reset would be shares in precious-metal miners and natural resource producers holding reserves in nature’s vault. Properly held bullion and shares in precious-metal miners would act as the most efficient store of purchasing power over the course of the devaluation and conversion. (Worst to first? Get ‘em while they’re cold!) Futures, ETFs, unallocated bullion holdings, and other fractionally reserved claims on physical reserves easily replaced with cash would not participate.

If our scenario comes to pass, then bank, government, and consumer balance sheets would be quite healthy following the reset and would be ready to expand. We would think consumable commodities and shares in their producers would lead equity markets higher and that interest rates would remain low, as further inflation would be mitigated by the discipline of a full or partial peg to precious metals. We think all should question whether we are 100% wrong. If not, then prudence dictates some allocation to properly held precious metals. (Presently, it is less than 1% of all global pensions.)

Paul Brodsky is a founding member of QB Asset Management Company, a New York investment manager.

Owning precious metals is a must in these troubled times, but you should also consider buying exceptional junior exploration companies – even the best-of-the-best juniors are down 50% or more over the last year. This situation is providing contrarian investors with a rare opportunity to literally make fortunes. To help you take advantage of this historic profit opportunity, Casey Research is offering a free viewing of Downturn Millionaires. This must-see online video features legendary resource speculators  and Rick Rule, who reveal their personal strategies for creating life-changing wealth from troubled markets. You’ll also discover actionable investment advice from Casey Research Chief Metals and Mining Investment Strategist Louis James. To learn more about Downturn Millionaires, click here now.

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VANCOUVER, May 1, 2013 - Novo Resources Corp. (the “Company”) (CNSX: NVO; OTCQX: NSRPF) is pleased to announce the first ever National Instrument (NI) 43-101 compliant resource estimate for its Beatons Creek Gold Project, Western Australia. This resource estimate is based on 16,107 meters of reverse circulation (RC) drilling and 478 meters of diamond core drilling completed in 2011-12. The effective date of this resource estimate is April 30, 2013.

Highlights:

-Inferred resource of 421,000 troy ounces gold contained in 8.9 million tonnes at a grade of 1.47 grams gold per tonne.

-This inferred resource was defined by 16,107 meters of vertical RC drilling. Specific gravity measurements were taken from core samples from eight recently completed diamond drill holes totaling 478 meters. Costs related to drilling total approximately $2.5 million making the cost of discovery about $6/troy ounce gold.

-Most of this resource is contained within two shallow, sub-horizontal gold-bearing conglomerate horizons (reefs) displaying strong lateral continuity.

-Mineralization remains open to the north, west and south into the basin. There is a good potential for expanding this resource through further drilling given the strong sub-surface continuity of these reefs as demonstrated by drilling coupled with the Company’s recent success in tracing their surface expression along the northern and northwestern perimeter of the basin (see news release dated January 24, 2013).

-This inferred resource enables undertaking of a preliminary economic assessment planned for later this year. It is expected that upgrading this resource to the indicated category can be accomplished by drilling approximately 3,710 meters more infill RC holes. Doing so would enable advancement toward a prefeasibility study.

“We are very proud that in a few short months, and for a modest budget, we have advanced Beatons Creek from a conceptual target to a sizeable inferred gold resource,” commented Dr. Quinton Hennigh, President, CEO and Director of Novo Resources. “We are off to a strong start, and from here, we see a straightforward path toward upgrading and expanding this resource as well as commencing a preliminary economic assessment.”

Beatons Creek NI 43-101 resource estimate is summarized below:

 -------------------------------------------------------------
 |Classification|Au Cut-off|Tonnage |Au Grade  |Contained Au |
 |              |(grams per|(million|(grams per|(troy ounces)|
 |              |tonne)    |metric  |tonne)    |             |
 |              |          |tonnes) |          |             |
 |-----------------------------------------------------------|
 |Inferred      |0.20      |9.2     |1.44      |424,000      |
 |              |--------------------------------------------|
 |              |0.30      |9.2     |1.44      |424,000      |
 |              |--------------------------------------------|
 |              |0.50      |8.9     |1.47      |421,000      |
 |              |--------------------------------------------|
 |              |0.60      |8.6     |1.5       |415,000      |
 |              |--------------------------------------------|
 |              |0.80      |7.1     |1.67      |381,000      |
 |              |--------------------------------------------|
 |              |1.00      |5.5     |1.89      |334,000      |
 |              |--------------------------------------------|
 |              |1.50      |3.0     |2.43      |236,000      |
 |              |--------------------------------------------|
 |              |2.00      |1.6     |3.02      |160,000      |
 |              |--------------------------------------------|
 |              |2.50      |0.9     |3.71      |106,000      |
 |              |--------------------------------------------|
 |              |3.00      |0.6     |4.22      |78,000       |
 -------------------------------------------------------------

1 troy ounce = 31.1035 grams

Resource Modeling

Mineral resources were estimated by Ordinary Kriging (OK), Inverse Distance Squared (ID2) and Nearest Neighbor (NN) methods. The OK estimation was selected as the preferred method and a cut-off grade of 0.5 g/t Au was applied. Mineralization is currently defined in 3 domains containing 23 individual mineralised bodies, all of which are considered to be primary in origin, despite the shallow weathering profile.

The majority of assays used for the estimate were determined using LeachWELL(R) methodology, which was statistically determined to be the most reliable method for the nuggety gold distribution in this deposit. Acceptable statistical verification and comparisons of LeachWELL(R) assays with equivalent Screen Fire Assays and Fire Assays supported this assessment. Assays were not capped but higher values were given a restricted search range. All resource blocks in the block model were estimated in one pass with any blocks that were estimated flagged as Inferred Resources, based on the variography and Quantitative Kriging Neighborhood Analyses.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues. The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category. The mineral resources in this news release were estimated using current Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards, definitions and guidelines.

Patrick Huxtable of Tetra Tech, Perth, Australia, has prepared the Mineral Resource Estimate for the Beatons Creek Gold Project, and is independent of Novo Resources Corporation for purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101″). Mr. Huxtable (RPGeo MAIG) is a Qualified Person as defined by NI 43-101.

Mr. Huxtable is preparing a NI 43-101 compliant technical report in respect of the resource estimate discussed in this news release, which the Company is obligated under NI 43-101 to file on SEDAR within 45 days of the date this news release was disseminated.

Quinton Hennigh (Ph.D., P.Geo.) is the Qualified Person pursuant to National Instrument 43-101 responsible for, and having reviewed and approved, the technical information contained in this news release. Dr. Hennigh is President, CEO and Director of Novo Resources Corporation.

About Beatons Creek

The Beatons Creek Tenements cover extensive exposures of the Beatons Creek conglomerates, a series of Archaean age pyritic conglomerates hosting gold mineralization similar to that of the Witwatersrand Basin in the Republic of South Africa. Shallow gold reefs were first identified and mined in this area beginning in the late 1800′s. Novo Resources’ current drill program is the first modern, systematic exploration on the property. Tenements comprising the Beatons Creek Gold project include three mining leases in which Novo Resources is earning a 70% interest from Millennium Minerals Ltd., 560 square kilometers of prospecting and exploration tenements in which Novo Resources is earning a 70% interest from the Creasy Group Pty. Ltd. and three prospecting tenements in which Novo Resources holds a 100% interest.

About Novo Resources Corp.

Novo’s focus is to evaluate, acquire and explore gold properties. The Company presently has joint ventures earning a 70% interest two exploration properties, Beatons Creek and Marble Bar, situated in Western Australia. For more information, please contact Leo Karabelas at (416) 543-3120 or e-mail leo@novoresources.com

Forward-looking information

Some statements in this news release contain forward-looking information (within the meaning of Canadian securities legislation), including without limitation statements as to the potential, through further drilling, to expand and upgrade to the indicated category the inferred resource described in this news release, and that a preliminary economic assessment will be undertaken later this year. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, without limitation, the ability to complete the drilling program as currently contemplated, the receipt of successful results as drilling proceeds, customary risks of the mineral resource exploration industry as well as Novo Resources having sufficient cash to fund the planned drilling and other activities.

Cautionary Note to U.S. Readers Regarding Estimates of Inferred Resources

This news release uses the term “inferred resources.” We advise U.S. investors that while this term is recognized and required by Canadian regulations, it is not recognized by the U.S. Securities and Exchange Commission. “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimates of “inferred mineral resources” may not form the basis of a feasibility study or prefeasibility studies. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally mineable.

On Behalf of the Board of Directors,

Novo Resources Corp.

“Quinton Hennigh”

Quinton Hennigh

CEO and President

The Canadian National Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.

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Individual assay results reported in the Company’s news release of April 24, 2013 from Drillhole NR13-001 can now be found on the Company’s website www.coloradoresources.com under the headings BC Projects/North ROK/AssayResults.

The first drill rig will remain at the Company’s 75% optioned Eldorado Property to complete the 1500 metres program as announced in its news release of April 17, 2013.

About Colorado
Colorado is engaged in the business of mineral exploration for the purpose of acquiring and advancing mineral properties located in British Columbia and the Yukon and is also aggressively seeking quality properties in the US southwest and Latin America. Colorado’s current exploration focus is on the Red Chris area.

ON BEHALF OF THE BOARD OF DIRECTORS OF

COLORADO RESOURCES LTD.

“Adam Travis”

Adam Travis
President and Chief Executive Officer

For more information, please contact:

Colorado Resources Ltd.
Adam Travis, President and Chief Executive Officer or
Terese Gieselman, Chief Financial Officer and Secretary
T: (250) 768-1511
F: (250) 768-0020
TF (855) 768-8511
W: www.coloradoresources.com
NR 13-04

Cautionary Note Regarding Forward-Looking Statements

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Orestone Prepares Gold Drill Targets on Captain for Field Season

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“There’s no doubt that 2012 was a tough year for a lot of companies,” stated David Hottman, President & CEO of BC-based Orestone Mining  (TSX.V: ORS), whose presence at the event brought much-needed optimism. “It has been a volatile ride for many, but for juniors with solid properties and good finances it’s just business as usual.”

Putting the gloom that has permeated the junior market aside, Hottman’s positive outlook offers a refreshing glimpse at a market that is still far from out. As a recent article in the Vancouver Sun highlights, British Columbia’s mineral exploration and development industry is “leading the way when it comes to attracting investment and building partnerships.” Highlighted in the article are huge mining assets such as New Gold’s Blackwater project, set to begin production in 2017 (pending federal and provincial environmental approval), and Thomson Creek Metals’ nearby Mount Milligan copper/gold mine, which is located northwest of Prince George and is set for production in late 2013.

The provincial attitude towards mining operations has also improved significantly in the last decade and is now seen as a force that will work with both the mining companies and the local communities. The government is committed to providing the infrastructure to support mining projects in this part of the province, such as a new BC Hydro powerline and additional roadways like the Omineca extension.

With two significant projects going into production within a short distance of each other and other major miners such as Xstrata, Goldfields and Teck working on similar porphyry projects in the immediate area, money is flowing into this region of BC and with it more attention towards exploration activity. This is, simply put, one of the few great spots for a junior exploration company to be.

Located just 41 km northeast of Fort St. James and 30 km south of the Mt. Milligan Mine, Orestone Mining’s 100% owned Captain Property has been building steam in recent months. Of the company’s four British Columbia projects, which span a total of more than 700 square kilometres, the Captain has become the focus for 2013.

The Captain project hosts a large gold-copper porphyry system that measures 7 by 14 km. The project has alteration and geochemical signatures consistent with Afton, Mt. Milligan, Galore Creek, Ridgeway and other alkalic porphyry systems. Featuring overall flat terrain, moderate tree cover and an extensive network of forest service roads, the Captain is open for exploration year-round. And being only a quick drive from the Mt. Milligan deposit, which has a proven and probable reserve of 532 Mt grading 0.20% copper and 0.38 g/t gold, the Captain holds a serious amount of potential.

“It’s simple, really—the Captain is right next to what will soon be a large producing mine and, so far, we have discovered some very promising drill results, “claims Hottman.

Management is vital to any junior’s success and Orestone’s is made up of proven mine finders, who have a long history of successfully exploring and developing large projects. Hottman was a founder of Eldorado Gold and Nevada Pacific Gold, which was acquired by McEwen Mining. Geologist Gary Nordin, also a founding member of Eldorado, has a long track record of identifying significant resource projects including Bema Gold which was bought by Kinross. Bob Wasylyshyn, most recently President and COO of Gold-Ore Resources, has over 30 years of industry experience, from grass-roots discoveries to the successful startup and operation of Sweden’s Bjorkdal gold mine.

Orestone drilling next to the road – The Captain Project

Orestone’s recent news releases undoubtedly started the year off right, reporting a significant gold mineralization discovery from the 912 metre diamond drill program on the Captain project.

Of the seven holes completed on the property, the most significant is vertical hole C12-05, which was drilled to a depth of 550.2 metres. Assay results show that the entire hole is mineralized from the bedrock contact at 63 metres to the bottom of the hole at 550 metres—giving an impressive 487 metres of gold mineralization.

As the table below shows, hole C12-05 returned two significant intervals of strong gold mineralization in intrusive rock: the upper zone, grading 0.65 g/t gold and 0.06% copper over 118.8 metres, including 9.1 metres grading 6.46 g/t gold and 0.27% copper; and the lower zone, grading 0.41 g/t gold and 0.07% copper over 164.6 metres, including 6.1 metres grading 4.45 g/t gold and 0.51% copper. The mineralization remains open to depth.

*High Gold Values Cut to 1.6 g/t

Approximately 500 metres east of C12-05, hole C12-03 hit 70 metres of intrusive with gold grades of 0.13 g/t gold and 0.05% copper. This could indicate another mineralized porphyry system to the east.

States Hottman, “We are very pleased with intersecting long intervals of gold and copper mineralization and, in fact, although intervals of the hole are low-grade, the entire hole is mineralized from the bedrock contact at 63 metres to the bottom of the hole at 550 metres. With higher grade sections of two to ten grams per tonne gold, we have demonstrated the gold-enriched nature of this large porphyry system and have learned a great deal about how to follow it.”

With the optimism of the recent drill program now under their belt, Orestone has a lot to look forward to in 2013. “This year will bring more exploration as we work to understand the significance of the recent discovery and uncover more systems,” says Hottman.

“We have just completed a detailed high resolution magnetic survey of the property before the next drilling phase. Two significant magnetic highs have been detailed in the survey.  One of the magnetic highs is associated with the alteration and monzonite dykes in drill hole C12-05 and measures 100-300 meters in width and has been traced along a 1500 meter east-west strike. The much larger second anomaly is located 600 meters north of drill hole C12-05 and has a width of 500-1000 meters; it has been traced along an east-west strike of 1500 meters and has not been drill-tested. This detailed magnetic survey has greatly aided interpretation of the strong mineralization intersected in hole C12-05, which showed us a clear correlation between gold/copper mineralization and specific magnetic responses. This relationship has been recognized at the nearby Mt. Milligan Deposit (Thompson Creek Metals) as well as at the Woodjam Deposit (Goldfields Ltd.).”

“This survey data will enable us to explore much more efficiently and expedite our follow-up drilling.  The large magnetic target located north of C12-5 will be the focus of our next drilling campaign. This will allow us to outline the alteration and associated gold mineralization.”

Gold associated with magnetite alteration, which Orestone has uncovered, increases the effectiveness of magnetic surveys as an exploration tool. Thus, utilizing a well-planned magnetic survey prior to drilling will give the Company the best chance of success when drilling the next phase of holes. If Orestone hits similar mineralization again, this will further delineate the discovery and prove up more resources.

“Like I said, I feel good about 2013,” states Hottman. “With a healthy financial position, this recent discovery, our close proximity to Mt. Milligan and our ability to drill year-round on easily accessible terrain, we stand a great chance of delivering more shareholder value.”

With permits in place to facilitate the next several phases of exploration, which include 30 line kilometres of geophysics and 38 sites approved for drilling, Orestone certainly isn’t short of options. But for 2013 it’s all about focus, which is on the Captain project.

As Orestone’s exploration plans unfold in the coming months and Mt. Milligan ramps up towards production, expect this area to get a lot of buzz from the investing community. The Company has already got the attention of some major and mid-tier producers who like what they see; in this safe and leading mineral exploration area of BC, serious eyes are now on Orestone. And if Orestone continues to deliver like it has with the recent news releases, expect a junior that rewards those who chose a promising company in a challenging market.

——-

Prospecting Journal

www.ProspectingJournal.com

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http://www.theaureport.com/pub/na/15010

The risk-reward profile of resource companies resemble those of healthcare and biotech companies, according to Brian Post, an analyst at ROTH Capital Partners, an investment bank dedicated to the small-cap public market. Part of Post’s mission is to educate his institutional clients about the value to be found in the resource sector. The value to be found in Mexico as a mining jurisdiction is one of the first lessons he offers. In his first interview with The Gold Report, Post focuses on Mexican silver names and ventures to both North and South America to talk copper.

The Gold Report: Brian, you started out as an analyst in the industrial sector. What brought you to ROTH and into the resource space?

Brian Post: ROTH saw an opportunity in the resource space, but lacked exposure to it. Once I familiarized myself with the technical aspects, I felt my previous experience was transferable. I now cover precious metals and some base metal assets, and in the last two years we have brought on an additional analyst who looks at resources from a cleantech perspective, which includes rare earths, other industrial metals and renewable energy, including uranium. We plan to build on this platform.

TGR: When you speak to clients in Southern California, are they receptive to investing in resource stocks?

BP: Looking solely at Southern California, investors are sparse. However, my contacts and outreach are global, including accounts in Europe, and we are gaining traction in investment hubs like New York, Toronto and San Francisco.

ROTH is a small-cap, growth boutique bank. Our strategic direction in the resource space has been to educate our existing institutional investor base—those who are comfortable with growth stories—about the value of investing in mining stocks. They are familiar with the risk-reward profile of healthcare and biotech companies, which are relatively similar to resource companies.

TGR: Looking at your coverage list, I see a lot of precious metals in Mexico, including several silver names. What is your rationale for investing in Mexico as a jurisdiction?

BP: Given the geopolitical risk around the world, I made a conscious effort to look at companies operating in Mexico. It is one of the countries most friendly to mining development in today’s environment.

From a U.S. point of view, there is concern about some social aspects in Mexico. However, global investors are much more comfortable and there is plenty of opportunity. The Mexican economy is growing, the resources are there and the government appears to have a pragmatic approach to balancing environmental and social protection needs with the economic impact of opening up mining projects. We believe Mexico is the place to be right now.

TGR: Mexico is a premier address for silver, isn’t it?

BP: That is a function of the geology; Mexico hosts both silver and gold. My coverage universe has evolved to include a lot of silver names at the present time.

Given the amount of investment and the activity from larger silver players in the region, we are comfortable with the infrastructure and the skill level of the labor force in Mexico. All the ingredients are there for continued development and exploitation of what nature has given the country.

TGR: Would you call yourself a goldbug? A silver bull?

BP: First and foremost, we are price takers. I have a positive bias on both gold and silver and have a stable to favorable outlook on both metals. We are not in the business of predicting price. We are, however, comfortable looking at projects and analyzing cash flows that assume metal prices, costs and cash margins sufficient to support the projects.

TGR: In essence, you believe in the viability of a price that might not appreciate greatly, but will be stable.

BP: That is a fair assessment.

TGR: I would like to talk about the companies you cover that you believe have a growth profile in the next 12 months, starting with the producers.

BP: Sure. SilverCrest Mines Inc. (SVL:TSX.V; SVLC:NYSE.MKT) is a growing producer with an exploration element to the story. It opened and is operating a straightforward, open-pit, heap-leach mine. However, the company is now making the move to underground development, where the grades on both silver and gold improve. It also is constructing a full-on mill to process and recover some of the metal left behind from the heap-leach operations, and to better exploit the higher grades it is encountering at depth.

The picture for SilverCrest is getting better, with drill results showing even higher grades than anticipated. We expect a feasibility study in the next two to three months to provide some visibility into the value it is building underground.

TGR: SilverCrest just announced a new vice president of corporate development.

BP: That is part of the company’s maturation. There is always the prospect of consolidation among companies like SilverCrest that have one or two institutional-class portfolio assets. We may start to see some merger and acquisition activity in the junior resource space as a whole, which is something investors have been clamoring for. SilverCrest may be in a position to participate, potentially as either a target or as an acquirer.

TGR: One would think that a good, low-cost producer like SilverCrest might interest a large silver player like Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ), First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE) or even Fresnillo Plc (FRES:LSE).

BP: I agree that there are synergies from the production and geographic standpoints. But I think SilverCrest is focused on ensuring its operations as now configured are productive, proving out some of the incremental value that comes with going underground, and derisking its exploration asset.

Speaking of SilverCrest’s exploration activity, the size and composition of La Joya, its exploration asset to the south, is growing. The company is just beginning to define the polymetallic opportunity there: gold, silver, copper, molybdenum and tungsten. There is a lot of potential in the shift from pure exploration and definition to defining an economic case for development.

TGR: SilverCrest is trading around $2.50/share. Do you have a target price on it?

BP: Our target price is $5.

TGR: What other producers have silver assets in Mexico?

BP: Aurcana Corporation (AUN:TSX.V; AUNFF:OTCQX) has assets in both Mexico and the U.S. It has been running its main operating mine, La Negra, a silver-base metal mine in Mexico, for a couple of years. It recently opened the Shafter project, a primary silver mine, about two hours outside of El Paso, on the Texas-Mexico border. That is a growth story, in that Shafter’s production is expected to ramp up.

Aurcana ran into a few roadblocks getting the mine to commercial production. It underestimated the challenges of bringing mining labor back into that region, which really has not seen any mining for decades. I speak with Aurcana’s management frequently, and the team has mechanisms in place to address these challenges and get the mine closer to its full potential.

The Shafter mine should be up and running by the end of 2013, dispelling any concern about its viability. Shafter’s ramped-up production profile, paired with the growing operation at La Negra, should give Aurcana an attractive production profile. Its cash flow and financial metrics will move along in turn.

TGR: Who else is active in Mexico?

BP: Esperanza Resources Corp. (EPZ:TSX.V) has been taken over by a new management group from Minefinders Corp., which was itself acquired by Pan American Silver. Esperanza is still relatively unknown, but we expect that to change quickly. Management is key to revitalizing the project. The project—originally called Cerro Jumil—has been around for a while but it is now on a fast track.

The production-versus-capital expense (capex) profile here is attractive. It is shaping up to be a simple, open-pit, heap-leach operation capable of producing nearly 100,000 ounces (100 Koz) gold equivalent annually. The company is sitting on a treasury of about $40 million ($40M) in cash. We estimate up-front capital costs to be less than $100M.

When you see a junior mining company with something this strong in the predevelopment stage, blended with a strong cash position relative to cost, the dilution profile down the line is significantly less than other projects. With the combination of a potent mine, low capex, good management and a good location, it is pretty easy to get excited about Esperanza.

TGR: Does Esperanza also have silver credits?

BP: There is a relatively small silver component. The geology is somewhat heterogeneous, but there is enough silver to provide a bump in ounces from the equivalent standpoint. Also, the silver provides the potential for streaming out that secondary production to bridge the equity after development. The silver adds incremental flexibility to the development plan, another important factor in getting projects like this going.

TGR: With financing so difficult right now, it is good to have options.

BP: Right. If you run the cash versus cost-to-develop numbers—even assuming a conservative 50% debt financing—we think there is less than a $20M equity gap to get this up and running. Compared to Esperanza’s market cap, that is impressive.

TGR: Where is the company in the development process?

BP: Esperanza has submitted its plan and is working on permitting from the local jurisdictions and federal environmental perspectives. The Secretaría de Medio Ambiente y Recursos Naturales is reviewing the plan. Based on the statutory timelines and even baking in some conservatism about delays, we think it can get all the necessary permits by the end of Q3/13.

TGR: Are there any other companies in Mexico you would like to talk about?

BP: We like Vista Gold Corp. (VGZ:TSX;VGZ:NYSE.MKT). It has Mexican assets, but its flagship Mt. Todd project is in Australia. Mt. Todd posed challenges to its previous owner during a tough gold price environment in the mid-1990s. Vista Gold has invested time and money to better understand the root causes of these difficulties and we believe the project will become a mine again. Vista’s new approach involves using high-pressure grinding roll (HPGR) technology, which was not around in the 1990s, to handle the very hard rock on site. It has also figured out the rock chemistry, specifically how to handle the presence of copper in the deposit, which negatively impacted the past owner’s operations.

Mt. Todd has more than 4 million ounces (4 Moz) of established reserves. We expect that could go above 5 Moz, with the release of a feasibility study in H1/13. If this were a greenfield development, I would be less excited about it, especially given its capital cost profile. However, because it has been previously mined, infrastructure is in place and there is some flexibility and scalability in how the company can develop the project, we don’t shy away from a project.

TGR: Let’s move back to North America. Are there other names that you like in this part of the world?

BP: In addition to precious metals, we like a handful of copper opportunities.

TGR: We hear talk of a global economic recovery, which would be positive for the price of copper. Do you like copper based on the prospect of a global economic recovery, or do you just like the metrics and valuations of specific companies in the copper space?

BP: It is a blend of both. I am not ready to say I expect a very robust global recovery. But, given the growth in China and other emerging markets, demand for products that use copper remains at a healthy level. Pair that with the fact that some large mining projects around the world have been scaled back or delayed, and I am comfortable assuming the copper price will remain stable enough to give some copper projects a feasible environment. We feel comfortable with copper above $2.75–3/pound to support development of some of these projects.

TGR: Given that backdrop, which copper names do you like?

BP: One that I cover in the U.S. is an early- to midstage exploration company called Redhawk Resources Inc. (RDK:TSX; QF7:FSE; RHWKF:OTCQX), based in Arizona. It has been defining the Copper Creek project near Tucson as a viable, relatively large-scale, emerging copper project in the shadow of other big operations nearby.

TGR: Have you visited?

BP: I have visited and spent time with management. Redhawk has transitioned the development plan, which started out targeting the higher-grade breccias scattered throughout the site, to incorporate a porphyry system that sits underneath the breccias. The porphyry portion exhibits favorable geology that compares to some of the bigger projects in the U.S. and South America. It is still early days, and the company will need deep pockets to realize the grand plan. But as far as scope, geology and location go, it is a good mix.

TGR: The copper business in Arizona appears to be alive, well and moving forward. Augusta Resource Corp. (AZC:TSX; AZC:NYSE.MKT) just received a key permit there.

BP: We do not cover Augusta and its Rosemont project, but we keep close track. It is a good, but not perfect, proxy for permitting.

Rosemont is in Pima County. The Copper Creek project is in Pinal County. I know it may sound like minutiae, but which county you are in influences the permitting process. Given some of the other major operations are located in Pinal, it is even friendlier than Pima County.

TGR: Are there other copper assets you like?

BP: One that we cover as a firm and that has always been on my radar is Amerigo Resources Ltd. (ARG:TSX). It is based very close to Corporación Nacional del Cobre de Chile’s (CODELCO’s) operation, El Teniente, in Chile.

People overlook Amerigo because of a misconception about what the company does. It processes copper using fresh, lower-grade tailings from CODELCO’s operations as feedstock. The company also has contractual access to reprocess some of the historic tailings from El Teniente dating back to the 1970s and 1980s. Today’s technology and operations are so much more efficient that you can recover higher portions of copper, even from tailings.

In 2012, Amerigo’s production profile eclipsed 50 million pounds (50 Mlb) copper. It also got about 1 Mlb in molybdenum production from its operations. It may be better suited to look at it as an industrial processing company and production story.

TGR: Does Amerigo process its own tailings as well?

BP: No, it has two feedstocks. Roughly two-thirds of the material coming into its plant are direct, fresh tailings from a channel out of the mouth of El Teniente. This fresh feedstock is processed with modern equipment and is low grade.

The older feedstock comes from El Teniente’s old tailing dumps. The older feedstock is much richer in copper. Aside from the unique material, Amerigo looks like a typical copper production. There are ball mills there, flotation, thickening ponds.

TGR: What is the agreement between Amerigo and CODELCO?

BP: Amerigo pays a per-pound royalty to CODELCO.

TGR: Where is Amerigo headquartered?

BP: In Vancouver, however, the operations are all on site just outside of Santiago, Chile.

TGR: Amerigo is a very lightly traded stock, with around a $120M market cap, showing some share price appreciation in recent weeks.

BP: It has had a good year to date. Underlying the story itself is a dramatic shift in the company’s cost structure, effective Jan. 1.

A bit of background: Under the terms of its original power contract, Amerigo’s cost of power was dictated by the marginal costs of production of power in Chile, which are quite high. Years ago, Jan. 1, 2013, was chosen as a date for an automatic reset to another pricing equation. This equated to a 40–50% decrease in Amerigo’s electricity costs, or roughly 25% of the company’s overall per-pound cost.

Looking at the whole story, you have a growing and improving production profile paired with a decreasing cost profile. This makes the financial metrics very attractive. And to sweeten the story, Amerigo pays a semiannual dividend at a run rate of about $0.04/share per year.

TGR: That is rare in a company with this kind of market cap.

BP: Correct. In addition, Amerigo is negotiating with CODELCO to potentially increase production by gaining access to even richer tailings. Right now, Amerigo’s infrastructure and contract rates limit it to roughly a 50 Mlb/year run rate in copper. Increasing production would require some infrastructure investment, but CODELCO may be willing to help with project financing. There are a lot of interesting elements to this story; a lot of positive tailwinds.

TGR: Where does it stand from a treasury perspective?

BP: It has not yet reported its full-year balance sheet. It ended Q3/12 with $35.6M in cash.

TGR: Brian, thanks for introducing our readers to ROTH and for sharing your insights.

Brian Post is a research analyst covering the Resources & Industrials sector. Post rejoined ROTH Capital Partners in March 2010. Prior to ROTH, Post was an acquisitions analyst at Cascade Affordable Housing, a $100M+ private equity fund focused on commercial real estate investments throughout the U.S. Prior to Cascade, he held a variety of positions in the investment industry including fixed income management, equity research and investment banking. Post is a CFA charterholder, a member of the CFA Institute and the CFA Society of Seattle. He received his Bachelor of Science degree in finance and business economics from the University of Idaho.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) Sally Lowder of The Gold Report conducted this interview. She personally and/or her family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: SilverCrest Mines Inc. Streetwise Reports does not accept stock in exchange for services. Interviews are edited for clarity.

3) Brian Post: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview.

4) ROTH Capital Partners Disclosures:

–Within the last 12 months, ROTH has received compensation for investment banking services from SilverCrest Mines Inc.

–ROTH makes a market in shares of SilverCrest Mines Inc. and as such, buys and sells from customers on a principal basis.

–Shares of SilverCrest Mines Inc. may be subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.

–Within the last 12 months, ROTH has managed or co-managed a public offering for SilverCrest Mines Inc.

–Shares of SilverCrest Mines Inc. may not be eligible for sale in one or more states.

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Two significant magnetic highs have been detailed in the survey. One of the magnetic high is associated with the alteration and monzonite dykes in drill hole C12-05 and measures 100-300 meters in width and has been traced along a 1500 meter east-west strike. The much larger second anomaly is located 600 meters north of drill hole C12-05 and has a width of 500-1000 meters and has been traced along an east-west strike of 1500 meters and has not been drill tested.

Gary Nordin, Vice President-Exploration of Orestone commented “This detailed magnetic survey has greatly aided interpretation of the strong mineralization intersected in hole C12-05, which showed us a clear correlation between gold/copper mineralization and specific magnetic responses. This relationship has been recognized at the nearby Mt. Milligan Deposit (Thompson Creek Metals), as well as, the Woodjam Deposit (Goldfields Ltd.). This survey data will enable us to explore much more efficiently and expedite our follow up drilling. The large magnetic target located north of C12-5 will be the focus of our next drilling campaign.”

A further, more detailed magnetic survey will be underway shortly with closer spaced lines at 100 meter spacing on the Admiral Target. Additionally a survey will be conducted on the West Mag Target area at 200 meter spaced lines; combined these new surveys will cover 60 line kilometers. Both areas have small magnetic high zones with coincident moderate IP chargeability highs peripheral to the central Main Magnetic High Intrusive. A magnetic map of the target areas accompanies this release and may be found on the Company website at: www.orestone.ca.

The Captain Project hosts a large gold-copper porphyry system measuring seven by fourteen kilometers located 41 kilometers north of Fort St. James, British Columbia and approximately 30 kilometers south of the Mt. Milligan gold-copper deposit. The Mt. Milligan deposit has proven and probable reserves of 532 Mt grading 0.20% copper and 0.38 g/t gold (Thompson Creek Metals website) and is currently under construction by Thompson Creek Metals Company Inc. as a large open pit mine and processing facility. The Captain Project features relatively flat terrain, moderate tree cover and an extensive network of logging and Forest Service roads suitable for exploration year around. The Company has all permits in place to facilitate the next several phases of exploration; 30 line kilometers of geophysics and 38 sites approved for drilling by the B.C. Ministry of Energy and Mines.

Orestone Mining Corp. owns 100% of the Captain gold and copper project near Fort St. James, B.C. and is well financed to pursue further exploration during 2013. The Company also holds a 51% interest in the 50 square kilometers Todd Creek Property within the increasingly important Stewart Mining Camp, B.C. For additional information including, drill hole plans, cross sections and geophysical maps, please visit www.orestone.ca

ON BEHALF OF ORESTONE MINING CORP.

David Hottman
President and CEO

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this News Release. This news release has been prepared by management and no regulatory authority has approved or disapproved the information contained herein.

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