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Iskut, British Columbia – 4:45 am Pacific

Greetings from the village of Iskut, British Columbia, literally “buzzing” with activity as one of Canada’s most exciting exploration stories continues to unfold…when Colorado Resources (CXO, TSX-V) stated last week that it’s planning an “expanded drill program to commence shortly on the North ROK Property,” they meant it…Colorado is firing on all cylinders, and there’s every indication that the company’s next round of drilling will start imminently given intense activity on the ground and in the air…

“I’ve never seen or heard anything quite like this around here before,” stated the owner of a lodge we’re staying at, once visited by former Canadian Prime Minister Pierre Trudeau, and just a few kilometres from North ROK…he pointed to his very busy facility and the hockey rink under construction in the village as just two examples of the positive economic benefits that increased exploration and mining are bringing to the area…

Yes, it’s not just what you see but what you hear around Iskut – the almost constant buzzing of helicopters delivering supplies, or in some cases carrying out geophysical surveys…the area already has one Copper-Gold mine – the Red Chris – ready to go into production as soon as the Northwest Transmission Line is completed next year, and the possibility of more major discoveries has to be considered very real…”Historically, this whole region has been poorly mapped and under-explored,” one geologist told us yesterday…”That leaves open a lot of possibilities”…

Colorado is clearly the leader of the pack on the exploration front around Iskut but more than a dozen other companies, from juniors to majors, are “in the game” as well and preparing for a busy summer…  just last week, Victory Ventures (VVN, TSX-V) launched a drill program at its Copau Property in between North ROK and Red Chris…the fault setting at Copau is similar to that at North ROK, one of several reasons the Victory crew is excited and cautiously optimistic…with a market cap of less than $3 million, VVN is a tantalizing speculation – especially since they’re the first company besides Colorado to have launched a drill program in the immediate area…

North ROK is being guarded like Fort Knox at the moment (a positive sign), while Victory is also keeping its cards close to its chest at Copau though we were given 30-minute supervised access to that property – we’ll be posting some pictures in tomorrow’s report…

Nailing down a porphyry deposit is never an easy task…hundreds of more holes could end up being drilled at North ROK, so with results out on just 4 holes this is really only the beginning…so far, grades are very comparable to those at Red Chris…the geophysical footprint is also huge and 95% of it has yet to be drill-tested…the “big picture” is highly encouraging and the upcoming round of drilling will reveal much more about the geometry, size and grade of North ROK…

Iskut River:  “Contenders & Pretenders”

Getting to this area is not difficult – a quick flight (1 hour) from Vancouver to Terrace, and about a 6-hour drive north along famous Highway 37 straight to Iskut…our two-day excursion is for research and due diligence purposes as we continue to work on our “Contenders & Pretenders” piece, and it’s also an opportunity to lay the foundation for a longer visit this summer…yes, North ROK is for real – you can get that answer from anyone around here – and so are some other situations in the immediate area and all the way out to Telegraph Creek to the northwest…we fully expect that this “play” is going to heat up significantly over the summer…elsewhere in northern B.C., Stewart as always is worth watching closely…

Northern British Columbia Ready To Flex Its Mining Muscles

According to the Conference Board of Canada and its January, 2013, document, “The Future of Mining In Canada’s North”, northern British Columbia is expected to see the fastest expansion of mining output out of all the northern regions in Canada through 2020…northern British Columbia’s mining output will increase by an impressive 300% between 2011 and 2020, with a compound annual growth rate of 17%…the number of jobs in the mining sector in northern B.C. is expected to nearly triple by 2020…all of this will generate wealth, development, and even more exploration…last month’s provincial election result, with the anti-development NDP badly losing a race that many seasoned observers assumed they would win easily, has given investors and companies a much-needed boost of confidence…

Victory Drills At Copau

Much remains to be learned about the geology immediately north of the massive Red Chris deposit, a fact that was stated in a 2012 Imperial Metals‘ (III, TSX) technical report, which makes Victory’s drilling of the Copau Property even more interesting…Copau lies at the intersection of two major regional faults and has never been previously drilled, so this has the ingredients for a potential surprise – especially when one considers the large and strong anomalies identified at the property…the B.C. Geological Survey made the initial discovery at Copau (Copper at surface) during a mapping program in 1994…work has been performed since then but no drilling has occurred until now, thanks in large part to last year’s geophysics which created a sense of urgency…what we also like about Copau is its accessibility – a logging road, immediately off Highway 37, cuts right through it, so the initial drill set-up for Victory was easy…there are never any guarantees in the risky exploration business, but Victory has a great opportunity to generate a big “POW” out of Copau…more on that in tomorrow’s report from Iskut including, as we mentioned, some exclusive pictures…

After hitting a 3-week low yesterday, Gold has traded in a narrow range so far today…as of 4:45 am Pacific, the yellow metal is down $1 an ounce at $1,377…Silver is up 6 pennies at $21.74…Copper has added 2 cents to $3.21…Crude Oil is flat at $95.35 while the U.S. Dollar Index has gained nearly one-fifth of a point to 81.28…

Gold coin and bar sales have cooled at two of the world’s largest mints, the Perth Mint and the U.S. Mint, as the buying seen during April’s breakneck pace eases…however, sales are still substantially higher than they were at this time last year…total Gold ounces sold at the Perth Mint, which includes coins and bars, were 86,983.54 ounces in May, compared to a record 111,505.06 in April…total Silver ounces sold at the Perth Mint were 587,454.82 compared to 1.1 million in April…even though May Gold sales slipped from April, last month’s sales were nearly triple the pace of May, 2012…the U.S. Mint’s May sales also softened versus April, and the pace of sales for early June is also slowing…in May, the U.S. Mint sold a total of 70,000 ounces in Gold coins, down from the 209,500 ounces sold in April…for silver, May sales at the U.S. Mint were 3.46 million ounces, down from April’s 4.09 million ounces…despite the slowdown in Gold and Silver coin sales, a robust first half means the U.S. Mint is likely to outpace last year’s sales figures…so far this year, they sold 594,000 ounces of Gold coins and 23.2 million ounces of Silver coins…for full-year 2012, the Mint sold a total of 753,000 ounces of Gold coins and 33.7 million ounces of Silver…

Today’s Markets

Japan’s Nikkei average was down as much as 2% overnight but rebounded to close down just 28 points at 13289…European markets are up modestly while stock index futures in New York are pointing toward a positive open on Wall Street after yesterday’s sell-off…

TSX Chart Update

The TSX has fallen in 7 out of the last 8 sessions, shedding 523 points or 4.1% during that short stretch (the Venture has performed slightly better, falling 2.6% over the last 8 sessions)…technically, it’s important to note that the TSX has strong support at an ascending triangle just 200 points below where it closed yesterday…below is a 3-year weekly chart from John…

Pacific Potash (PP, TSX-V) Updated Chart

As expected, Pacific Potash (PP, TSX-V) has broken out to a new 52-week high…the stock jumped 3 more pennies yesterday to close at 21 cents on total volume (all exchanges) of 2.4 million shares…PP has climbed 4 days in a row and the next major resistance is at 26 cents as shown in this 2.5-year weekly chart…

Encanto Potash (EPO, TSX-V)

Another potash play with an encouraging chart pattern is Encanto Potash (EPO, TSX-V) which inched up a penny-and-half yesterday to close at 26.5 cents on volume of nearly 1 million shares…EPO’s Muskowekwan project’s proven and probable reserves, combined with its measured and indicated resources, could support a mine life in excess of 70 years, assuming an annual production of 2.8 million tonnes per year, according to management…:The merit of putting this project into production keeps getting stronger with each milestone,” stated Encanto CEO and President Jim Walchuck in the company’s June 3 resource update…below is a 6-month daily EPO chart from John…there has been a major change in sell pressure/buy pressure since the end of May, while the ADX trend indicator has turned bullish…

Note: John, Jon and Terry do not hold positions in PP and EPO.  Jon and John hold share positions in VVN while Jon also holds a share position in CXO.