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Gold is powering higher this morning, crossing above the technically and psychologically important $1,400 barrier…as of 6:40 am Pacific, bullion is up $18 an ounce at $1,410 after climbing as high as $1,418 during the last hour…a close above $1,400, looking increasingly possible, would put the bears on the defensive over the near-term…Silver is 51 cents higher at $22.97…Copper is flat at $3.29…Crude Oil is $1.02 lower at $92.11 while the U.S. Dollar Index is off one-third of a point to 83.20…the greenback has hit its lowest level against the yen in 3 weeks which contributed to the sell-off overnight in the Nikkei…

The Venture is up 3 points in early trading to 957 and a June rally could be in the works, especially with Gold looking much healthier…technically, the Venture is also looking much more positive and the key resistance level to watch is 970…

Iskut River “Colorado Area Play” Map

This was pointed out to us last night – an enterprising individual, it appears, has launched a web site (www.ColoradoAreaPlay.com) featuring companies with land packages near Colorado Resources‘ (CXO, TSX-V) North ROK discovery in the Iskut River area of northwestern British Columbia…of course we’ve been following this story closely, and next week we’ll be posting a special piece reviewing the “Contenders” and “Pretenders”…

Holding claims in this area is one thing; actually doing something with them this summer is quite another…that’s why our interest is mostly restricted to the companies that will actually be drilling in the coming weeks and months…on that note, Victory Ventures (VVN, TSX-V) is clearly the early favorite next to CXO for potential price appreciation and a discovery…Victory is no Johnny-come-lately to the area, having put in nearly 2 years of work on its Copau Property to advance it to the drill-ready stage…through our own research of the area, we’ve also learned that the fault setting at Copau bears remarkable similarities to the fault setting at North ROK – a fact confirmed by an independent geologist we consulted with…

Victory is expected to begin drilling Copau as early as next week…

Below is the map from www.ColoradoAreaPlay.com…

A picture tells a thousand words, so the above map is certainly helpful…but the map that really jumped out at us is the one below from the B.C. Geological Survey that shows fault zones (thick lines) in the Iskut River area…note how the Copau Property, which we’ve circled, actually lies at the intersection of 2 major regional fault zones in a fault setting similar to that of North ROK immediately to the west…as we indicated Monday morning, this may have cooked up a very special recipe at Copau that Victory will soon be drilling into…the property has never been previously drilled, so in its first few holes a “victory” for VVN will be to locate a trail of mineralization and acquire a better understanding of the geological structures at Copau…mag and IP work produced very encouraging results…the interpretation is that there is increasing sulphide content within a southwest-dipping body of syenite rock, possibly related to hydrothermal processes within the syenite body…so this is not moose pasture that Victory will be poking holes into; they have a bona fide series of targets and a very good chance of early success…the B.C. Geological Survey made the initial discovery of surface mineralization at Copau in 1994…the property is about 10 km north of Imperial Metals‘ (III, TSX) massive Red Chris Copper-Gold porphyry deposit that is expected to go into production next year…

Victory was first listed on the Venture nearly 2 years ago as a 15-cent IPO…the company has had one of the lowest overhead costs in the industry and will be commencing its drill program with a small float (17 million O/S prior to this month’s financings) and nearly $1 million in its treasury…the driving force behind Victory has been Howard Milne, a respected entrepreneur whose most recent success was International Wex Technologies, a biotech deal that soared to $8 a share under Milne’s 6-year stewardship…he helped raise over $100 million for the company, and many of those investors followed him into Victory in 2011…

Zenyatta Ventures Ltd. (ZEN, TSX-V)

John’s ZEN chart the other day anticipated some bullishness in the stock, and indeed ZEN zoomed 20 cents higher yesterday to close at $2.42…intra-day, it came within 6 cents of its early March all-time high of $2.50…yesterday’s breakout above the horizontal trend channel needs to be confirmed, so that’s what to watch for today…

GoldQuest Mining Corp. (GQC, TSX-V)

One of the best exploration stories anywhere in our view remains in the Dominican Republic where GoldQuest Mining (GQC, TSX-V) has already discovered 2 deposits on its Las Tres Palmas trend, and is now hunting for a third immediately to the west of that area…GoldQuest has tied up all the land in this region, so in effect they could generate their own “area play” if additional discoveries are made…and why won’t they?…this is a very prolific area, and logic dictates that somewhere buried in the ground is the “heat engine” or the feeder system that’s driving the mobilization of Copper and Gold as found at Romero and Escandalosa…at the moment, GQC is drilling along the Guama trend in search of that heat engine…below is a map for our readers’ reference, taken from the GoldQuest web site, followed by our recent interview with GQC Executive Chairman Bill Fisher in text format…

BMR: Bill, thank you for joining us today.  First off, paint a picture if you could please of what’s generally happening on the ground right now for GoldQuest in the Dominican Republic.

Fisher: Thank you.  Of course about a year ago at this time we made a discovery at Romero, some of the best drilling in the world with the first holes.  We raised over $20 million and still have over $14.5 million in our pockets.  We’ve been drilling with up to 4 rigs in the area.  Some of those 200-metre intersections at Romero graded up to 10 g/t AuEq, so we had some really excellent results.  Right now we’re doing some infill drilling and some speculative drilling.  The speculative drilling will not stop.  The infill drilling at Romero and Escandalosa will hopefully produce a NI-43-101 compliant resource estimate (in the case of Escandalosa, an updated resource) during the 3rd quarter of this year.  The Guama trend just came into focus the last couple of months – we have some great hopes there.

BMR: Over the past year what is the one thing you would say you’ve learned the most that will help you in current and future exploration and drilling?

Fisher: We’ve identified what the system is and how it works.  What we didn’t know when we first made this discovery at Romero was the geometry of the system.  It’s a hydrothermal system in a volcanic package, a large-scale system, 200 metres top to bottom is very large and it’s almost a kilometre across at Romero.  So we have a large mineralized system, what we don’t know exactly is how much is iron-bearing fluids and Copper and Gold bearing, so we’re learning a lot about that.  Also, IP, which looks for buried sulphides, has been a really good technique in developing targets.  We’ve learned how the system works and the best techniques to use.  Very little of this comes to surface, there’s generally no surface expression, so it’s a real tribute to our geologists and geophysicists to find this stuff.

BMR: What’s the footprint of this system at the moment at Romero and how much potential to you see for continued expansion?  I know it’s not quite as big as the market was anticipating or hoping for early on.

Fisher: Nothing is certain until we’ve done a formal resource that is put together by our consultants, and we’re in the process of that.  Romero is a hydrothermal system, probably in the thickest part of it over 230 metres thick.  And it heads off toward the southwest, 50 to 100 metres thick.  So it’s very large in terms of vertical extent.  It’s probably 600 or 700 metres across and a few hundred metres linear from the northeast to the southwest.  Still open to the north and the south a bit, but not a great amount.  It’s still a large coherent body, though probably an underground operation I would suspect because of the geometry of it.  The highest grade material is 300 metres down.  We’re also trying to find out the relationship between Romero and Escandalosa which is our previous resource just 2 km to the south of Romero.

BMR: What has puzzled you the most about Romero to this point?

Fisher: We’re seeing that some of these anomalies which are very strong are actually iron sulphides, iron pyrite, but they give a very similar geophysical signature to the Copper sulphides, so not all the anomalies are necessarily of economic interest, no matter how strong they are.  Apart from that, the more we find and the more that we drill, the more we can start differentiating between iron and Copper-Gold mineralization.

BMR: Some more drill results from Romero came out in your May 16th news release.  Hole #135 was terminated in strong Gold mineralization at a depth of about 450 metres.  The drill crew encountered poor drilling conditions within a fault breccia.  What are the plans to follow up on that, do you need a different rig?

Fisher: Yes, we were using hand portable rigs to drill so we don’t have to build roads everywhere.  We’re going to get a deeper rig in there and still have stronger portable rigs to follow up in this particular area.  We like this a lot as it’s about 700 metres south of Romero and 700 metres north of Escandalosa, and there’s a very strong anomaly at depth linking the two.  Hopefully this deep Gold area will give us a chance to extend both our known mineralizations.  It’s a very good place to be, between two systems.  This is the first time we’ve drilled to this depth along this trend in the central area.  We’re very excited, but it could be just a mineralized fault zone which is the one that held the drill up.  We rather hope we’re hitting the top of a Romero-type system.  We will do follow-up drilling over the next few weeks and months as the geophysicists continue to understand what the drill core tells us in the context of the deep geophysics.

BMR: What are the plans for Escandalosa through the remainder of the year?

Fisher: We’ve just done some more infill holes.  I expect Escandalosa may be a little larger but not much larger than we have right now.  But because it has open-pit potential it could be a good place to start when you’re looking at mining options in the future.  We’re going to put Escandalosa and Romero together in our resource estimate for later in the year, we believe that will give good guidance to the investor.  Although they’re 2 separate mineralizations today, let’s hope they link up.

BMR: You’ve got a very interesting situation at the moment with your newly-identified Guama trend to the west of Romero.  Mineralization is outcropping at Guama, and you’ve also had some very good IP results.  What’s your take on Guama?

Fisher: If we had the information a year ago that we have today, we would definitely had started drilling Guama first.  It’s a series of these quartz veins that are carrying a lot of Copper and that generally means there’s a system where the Copper is being picked up and taken to surface.  You can see the native Copper.  There’s about 35 grab samples of over 2% Copper in the Guama trend.  You don’t see that kind of Copper mineralization at surface at Romero.  This is directly overlying the brand new IP that’s being generated as we speak.  We like it a lot.  We’re drilling into it.  We don’t know what’s there yet, we hope of course it’ll be mineralization.  If it’s Copper, it will also be associated with Gold as that seems to be a feature of this region.

BMR: Bill, you’ve got a deposit at Escandalosa, another one of undetermined size at Romero, but you haven’t yet found the source or the heat engine of this mineralization.  Investors are always impatient, but this can be like finding a needle in a haystack.  The big picture that I see is a very large and prospective area where it makes sense that with enough drilling eventually you’re going to find something very massive.

Fisher: We don’t believe there’s a big heat engine that actually outcrops, so therefore it’s probably going to be buried.  We will need to use geophysical methods to find it.  We have a very big anomaly in the north end of the Guama trend that has yet to be drilled, and there’s also another one in the southwest corner of the Guama trend.  Once again, these could be large intrusive bodies, creating the heat and the pressure to mobilize Copper and Gold.  If that’s the case, then Romero would just be a side branch to this, and would be related to the porphyry.  What we’re thinking is to find out what we have at Romero and Escandalosa, and look at it from a regional basis to see if we’re actually developing a mining camp here or whether Romero and Escandalosa are kind of one-off events.  We hope it’s an area play – we got all the land tied up in the area.

BMR: Financially, you’re in good shape at the moment as you said with $14.5 million in the treasury.  Is there a dollar figure you don’t want to drop below given the current market environment for junior resource stocks?

Fisher: We must continue to explore.  We were drilling on a grid basis across Romero and now we seem to be coming to the limits of it.  We’ve slowed that down so we’re just doing very selective drilling at Romero.  We’ve been doing some infill drilling at Escandalosa and now we’ve just started drilling targets at Guama.  Our burn rate is currently $600,000 per month.  At that rate we can keep going for at least a couple of years or more (without having to raise more money).  Obviously we’d like to maintain our budget as high as possible, and our treasury as high as possible, but if we find something, it would be a waste of money for us to sit on the cash.  We’re in a much more fortunate position than most with $14.5 million in our pockets and some excellent targets to go after.  We’ll be very careful.  At Guama our plan is to do one hole at a time rather than grid drilling, a prudent move at this time.

BMR: Bill, political risk is a bigger factor than ever when making investment decisions these days.  The recent dispute between Barrick and the DR government seems to have smoothed over a little bit, but it’s still not very comforting seeing that sort of thing.  You’ve got a lot of experience in the DR dealing with political and business leaders.  What’s your perspective on how the government is viewing the mining industry right now?  Is there anything we should be concerned about?

Fisher: I don’t feel so myself.  There was a disagreement being blown up both from a political perspective from the government of the Dominican Republic in February, but also I think the response was somewhat inflexible as far as the public perception was concerned.  Since then, both the government and Barrick seemed to have put their differences aside.   I think the differences were pretty much manufactured in the media.  Both parties knew what they were doing, so I’m not really concerned.  The issue for Barrick of course was they just finished their $4 billion investment into the country, so it was a very bad time for them to have a wobble.  On the other hand, from the Dominican’s point of view, the nature of the original contract was such that there was no money coming to the government for many years.  So both their issues have been solved I think, and both parties need to move forward.  I’ve been in the Dominican Republic since 2000.  We built a mine in another company called GlobeStar, we built it on time and under budget in 2008, under the Mining Act.  We sold GlobeStar to an Australian group and that operation has been going well ever since of course.  So you can build mines in that country, I don’t have a problem with that.  The CEO of our company is a Dominican national and is a very senior man in Dominican exploration and mining circles.  So I think that if we act correctly, and we always do, whatever we find we will be able to exploit.  The issues of course are going to be like everywhere in the world, water, the fear of cyanide and other such items, and environmental damage.  We have all these things under monitoring right now.  We are looking to go on environmental baseline studies and we’re engaging with the communities. There is precedence for very large scale stuff in the Dominican and let’s hope that we’ve got another one here.

BMR: Bill, thank you very much, and continued success with your drilling.

Fisher: Thank you.

Probe Mines Ltd. (PRB, TSX-V)

Probe Mines (PRB, TSX-V) announced the closing of its $15 million bought deal the other day at $2 per share (flow-through), but new information is that Agnico Eagle Mines (AEM, TSX) was the strategic investor and now has a 9.9% stake in Probe…this is certainly a vote of confidence in the quality of Probe’s Borden Lake Project…

Technically, Probe is now above its 50-day moving average (SMA) for the first time since February and one can argue an important low was put in at $1.10 in late April…the key now for this stock is how it handles resistance between $1.50 and $1.55, and this will also give us some insight into the current trend strength of Gold and the Venture…it could take a few more weeks for PRB to potentially overcome this resistance, we’ll see what happens…regardless, the fundamentals look very good for an exploration situation – the Borden Lake deposit continues to grow and new high grade zones are being discovered – and the company is sitting on more than $40 million in cash with Agnico Eagle as a major new shareholder…

Timmins Gold Corp. (TMM, TSX)

A producer we like a lot that’s churning out great bottom line results is Timmins Gold Corp. (TMM, TSX) as we’ve been mentioning in recent weeks…like PRB, Timmins is also up against important near-term resistance and will be interesting to watch in the days ahead…it closed yesterday at $2.46…below is an updated 2.5-year weekly chart from John…

Today’s Markets

North American markets are positive in early trading…as of 6:40 am Pacific, the Dow is up 15 points…U.S. weekly jobless claims unexpectedly gained 10,000 last week to a seasonally adjusted 354,000, according to the Labor Department this morning…economists surveyed by Reuters expected a reading of 340,000…but a Labor Department analyst said claims for 5 states, including Virginia, Minnesota and Oregon, were estimated since state offices had less time to prepare data because of the Memorial Day holiday on Monday…meanwhile, the U.S. economy grew at a 2.4% annual rate in the first 3 months of the year, according to revised numbers from the Commerce Department, falling slightly short of estimates for a 2.5% gain…the TSXis 6 points higher while the Venture, as we mentioned, has added 3 points so far this morning…European shares are up slightly in late trading overseas…

Japan’s Nikkei average took another hit overnight, falling 737 points or 5.15% to close at 13589…at this point, this appears to be no more than a normal correction to unwind heavily overbought conditions that had become very evident…it could decline further but there is support at 13500, and the RSI(14) on John’s 6-month daily chart is also now at support…

Despite heavy losses in Japan, China’s Shanghai Composite held steady as it lost just 6 points to close at 2318…

Note: John and Jon both hold share positions in VVN.  Jon also holds a share position in GQC.