Humala was back in the news this past Sunday when, yet again, he won the first round of Peru’s elections with 31.7 % of the vote. This sets the stage for another runoff which is scheduled for June 5th, this time against Keiko Fujimori, the daughter of incarcerated former President Alberto Fujimori. On 7 April 2009, Alberto Fujimori was convicted of human rights violations and sentenced to 25 years in prison for his role in killings and kidnappings by the Grupo Colina death squad during his government’s battle against leftist guerrillas in the 1990s.

Peruvian Nobel literature laureate Mario Vargas Llosa went as far as to call the Humala-Fujimori runoff option “a choice between AIDS and terminal cancer,” given their perceived anti-democratic tendencies. Vargas Llosa was defeated by Alberto Fujimori in Peru’s 1990 elections.

The Peru election results caught the financial markets off guard.  The cost of insuring Peru’s debt against default has jumped to a five-year high relative to neighboring Colombia, on concern that Ollanta Humala may win the presidential vote and expand government control over the economy. Marjorie Hernandez, a currency strategist at HSBC Holdings Plc in New York stated, “While everyone had expected this to be a non-event election, we were proven wrong. The market was not positioned that way. Everyone was long Peru everything.” Since Peru is ranked #5 on the world’s mining exploration list, the political instability is spilling over to the mining sector.

Compañía de Minas Buenaventura S.A. (NYSE: BVN), Peru’s largest publicly-traded mining company, with seven operating mines in the country, is being hit hard this week down $4.50 to $39.00 (10.3%).

Some Canadian listed Peruvian precious and base metal juniors have also been affected by the news. Candente Copper (TSX: DNT) is down $0.24 to $1.56 (13.3%), Tinka Resources (TSX-V: TK) is down $0.04 currently trading at $0.60 (6.3%); while Duran Ventures (TSX-V: DRV) has managed to buck the trend and is up half a cent.

Peru is the world’s largest silver producer, second in zinc, and sixth in gold production. Peruvian silver production totaled 135.8 million ounces in 2009. Meanwhile, zinc and gold production totaled 1.50 million tons and 6.42 million ounces, respectively. So when Humala talks about renegotiating mining contracts with foreign companies, investors naturally take note.

But Eduardo Suarez, a strategist at RBC Capital Markets in Toronto thinks the market may be overreacting.  In a report on March 29th, he estimates Humala’s chance of becoming president at about 20 percent, and believes recent declines in asset prices are overdone. Suarez says “the current sell-off should be seen as a buying opportunity, but timing is key.”

With the TSX composite index down almost 500 points in two trading days investors are back on the fence waiting for, what some say, could be a long overdue correction in the global equity markets. Before the correction, the TSX was up 7.5% since the start of the year. Thomas Lee, a U.S. equity strategist at J.P. Morgan recently stated the pullback should begin soon enough, “Our view continues to be that we see a pullback in equities taking root sometime in late-March (or) April.”

In February, James Dailey, portfolio manager of TEAM Asset Strategy Funds in Harrisburg, Pennsylvania may have summarized the markets best when he said, “Are we due for a pullback? Yes. When? That’s the big question. Money just keeps flowing into equities.”

Now, in the midst of a swift correction, some investors may think that with a strong start to 2011 and impressive finish last year the table may be set for a nasty pullback in 2011. The TSX rose 19 per cent in the last half of 2010. UBS strategist George Vasic notes whenever the TSX composite has had a gain of greater than 10 per cent in the second half of a year, its performance the following year has been substantially better. “While tactical fears can be justified, the bottom line is that we believe the trend is your friend in the current circumstances,” said Vasic.

Having just hit $1,477.65 an ounce yesterday morning gold has also experienced a selloff over the past two trading sessions. Gold is currently $1,450 down $27.65 since the high. But some don’t expect gold to top out any time soon. According to a new analyst report from UK based Standard Chartered Bank the price of gold will likely reach $2,100 an ounce within three years. The report added: “The bull run in gold is likely to continue for some time, but prices should peak around 2014 as supply finally catches up with demand and US real rates turn positive.”

With both equity markets and gold taking it on the chin it appears investors, for the moment, are content to take profits and sit on the sidelines. While the markets take a breather, we look at a few junior gold companies that are flying high in 2011 having made some noteworthy announcements from drill programs this year.

On April 4^th, 2011 Trelawney Mining and Exploration (TSX: TRR) released additional drill results from the Cote Lake deposit on the Chester project located halfway between Timmins and Sudbury in Northern Ontario. As part of the company’s expansion drill program Treleway announced the results from three holes: (Hole E11-48) 285.80 metres of 1.18 grams per tonne gold; (Hole E11-49) 275.00 metres of 1.26 grams per tonne gold; and (Hole E11-53) 304.00 metres of 1.65 grams per tonne gold. Greg Gibson, Trelawney’s president and chief executive officer, commented: “We are very pleased with the results of this initial step-out drilling. These drill results confirm our belief that our initial resource estimate can be expanded significantly, along with potential increases in grade as these results are above the average grade reported in our initial resource.”

Trelawney also announced similar results on January 5^th, January 25^th and February 8^th of this year marking an impressive start to 2011. The company’s shares have responded accordingly, moving from just under $3.00 per share at the end of 2010 to around $5.00 per share today.

Another strong performer in 2011 has been Gold Canyon (TSXV: GCU), which recently announced on March 29^th, 2011 assays from six new holes from its winter 2011 drill program at its Springpole gold project, near Red Lake in Ontario, Canada. Results include 150 metres at 2.56 grams per tonne gold. Dr. Quinton Hennigh, a technical adviser to and a director of Gold Canyon stated, “…we can now confidently say that mineralization starts at surface down the entire length of the Portage zone.” And, “…all six holes bottom in mineralization, suggesting there is more going on at depth.” Similar to Treleway, Gold Canyon has announced numerous results thus far in 2011 including 100.5 metres at 7.23 grams per tonne gold on March 15^th, 2011. Gold Canyon shares started the year trading at $2.25 and are currently being exchanged for $3.46.

Also delivering some interesting results in 2011 is Continental Gold (TSX: CNL). Continental has been releasing results from its Buritica project in Antioquia, Colombia since August 2010 and, on March 22^nd, 2011, announced 10.8 meters intersecting 43.97 grams per tonne gold. Continental Gold is a top pick of Sentry Investments portfolio manager Andrew McCreath who stated on BNN Market Call Tonight on March 30^th, 2011 that he expects the company will continue to deliver in 2011. This time last year Continental’s shares were trading at $2.50, and despite the recent correction in the equity markets, the company’s shares are trading at $8.30.

For more than two years, the rise of Romarco Minerals (TSX:R) has been nothing less than remarkable. As late as October, 2008 shares of the Toronto based company could be had for a dime. The promise of the company’s pending Haile gold project in South Carolina, however, has meant a steady rise to recent highs near the three dollar mark, and helped the junior graduate to the TSX last November.

The Haile gold mine is a historic property in Lancaster County, South Carolina, that was actually one of the first operating gold mines in the United States, dating its history back to 1827. Over the centuries, the mine has been in and out of production. It was actually once a target of General Sherman in the Civil War, and was used to mine pyrite during World War One. The rise and fall of the Haile Mines’ profitability reads like a history of modern mining methods. The golden age of the mine actually began seven decades after its discovery, when German engineer Adolph Thies developed a process called the “Thies Barrel Chlorination Process” to extract gold from low-grade ore.

Recently, Romarco minerals learned that modern mining techniques may determine whether or not the colorful history of the Haile mine has a future. Romarco suffered its first real setback since taking on the project when, in a March 25th letter the US Environmental Protection Agency recommended that federal regulators deny a wetlands permit required to move the project forward. Romarco is currently waiting on two permits; a state mining permit and the federal 404 wetlands permit which is overseen by the U.S. Army Corps of Engineers (USACE), an agency of more 36,000 civilian and military personnel that is charged with coastal protection in the US. While the state mining permit closed its comments in February with what the company described as “few comments received” the wetlands permits is another matter entirely.

In his letter to the USACE, James Giattina, a regional water protection division chief with the EPA say the Romarco revival of Haile “has the potential to have a significant level of direct impacts to a wide variety of natural and human resources.” The EPA did leave the door somewhat open, noting that a formal environmental assessment could satisfy its concerns.

Romarco Chief Operating Officer Jim Arnold says that concerns based on past mining operations can’t be applied to Romarco because the company uses safer and more modern technology to ensure little environmental impact. The company says that diluted cyanide solution will be contained in steel tanks with the appropriate secondary containment designed to contain, at a minimum 110% of the largest tank. It will then encapsulate the project by placing a lining under and over any potentially acid generating waste stockpiles. Romarco will also install seepage collection and detection systems to treat drain down. Arnold told The State that Romarco’s Haile mine “is going to be the showcase mine in South Carolina and the world.”

And Keith Tunnel, an official with the Lancaster County Economic Development, says the mining won’t occur on pristine wetlands, but on property that “has been mined at least five times since the 1830s.”

While USACE spokesperson Sara Corbett says there is no timetable to grant the wetlands permit, investors bullish on Romarco no doubt believe the potential reward for waiting is great. In February, an independent feasibility study estimated that Haile will be one of the “lowest operating cost and highest-grade open-pit gold mines in the industry” and that Haile contains two million ounces of gold. The report went on to say, “Significant upside potential exists within and surrounding the Haile mineralized system, which continues to remain open in all directions and at depth.”

At press time, shares of Romarco were $1.85 up a penny on volume of more than 6.1 million shares.

These days, mining companies worldwide are getting hit by soaring costs. The price of raw materials, energy and labour have all experienced steep and recent increases. Barrick Gold (TSX: ABX), the world’s largest gold miner, recently increased capital expenditure estimates for two of its projects in the Dominican Republic and Chile by between 10% and 20%. Last month, TD Newcrest analyst Greg Barnes said, “cost inflation appears to have returned to the mining industry with a vengeance.”

All this should come as no surprise to Barrick shareholders. Some may have seen the writing was on the wall in 2009 when Barrick announced a bought deal public offering for gross proceeds of approximately $3.0 billion ($36.95 per share). At the time, Barrick said it intended to use $1.9 billion of the net proceeds to eliminate all of its fixed priced gold contracts (gold hedges) and another $1.0 billion to eliminate a portion of its spot price gold contracts (floating contracts). Barrick cited an increasingly positive outlook on price of gold and the risk of higher inflation. A $5.6 billion charge to earnings then hit the books.

In February, Barrick reported an excellent fourth quarter. The company earned $.95 cents a share and declared a $0.12 cent dividend while posting $2.95 billion in revenue. And although cash costs are expected to be about 10% higher next year, Barrick’s total costs when factoring in all the company’s expenses, not just those associated with production, are estimated at $750-$800 for 2011.

The key question for Barrick shareholders, and for all investors in gold equities, is “Can the price of gold outpace inflation?” Perhaps the answers lie in defining whether gold is more of an asset than a commodity.

A commodity, any economics professor will tell you, is a good that is purchased in order to be permanently removed from the market. An asset, on the other hand, is a good that is purchased in order to be held.  Because people hold on to and accumulate assets the demand exceeds the annual production volume, sometimes by a large margin. In the case of gold, the ratio of the world’s “above ground gold” to annual mine supply is about 100:1. For most other commodities that ratio is less than 1:1. In other words, there is less than one year’s total production in storage reserves for most commodities because everything that is produced is sold and everything that is purchased is consumed within the year.

For gold, the size of existing stockpiles and the large daily trading volume in bullion makes annual mine supply (est. 2,500 tonnes) more or less a non-factor in determining its price.  To quantify the impact of mine supply on the market consider the trading volume on the London Bullion Market Association (LBMA) on any given day. The LBMA can actually absorb the world’s annual mine output in about six trading days. And the LBMA is just one of several bullion markets worldwide. In fact, an entire year’s worth of global mine production turns over in the physical market in just a few days. Because gold is an asset, the real demand for gold each year is equal to the total world supply of gold,  which is about 150 million tonnes.

Over the past decade the price of gold has fared well against inflation, and gold miners have done especially well. Economic uncertainty, global crisis of various lengths and geographic origin, and an increasing money supply have served investors well who look at the shiny metal as a stable store of wealth.

Is it possible, however, that what we have experienced in the last couple of years is merely the beginning of global inflation? Some feel that the US Federal Reserve will ultimately have to work much harder than they have to date to ward off inflation. The Obama administration, over the past three years, has injected billions of dollars in stimulus into the US economy. And immediately after the devastation of the Sendai earthquake and tsunami the Bank of Japan injected $184 billion into money markets and eased monetary policy to support the economy. So the question remains, if costs of production continue to rise will the price of gold outpace inflation?

Emma Simon, in a recent editorial for the UK’s Telegraph about inflation in that part of the world, said that with “inflation now running at twice the Government’s target it is not surprising that gold hasn’t lost its lustre.” Adding “given our current economic situation, it’s not hard to see why there is increasing demand for an asset that appears to offer inflation-proofed returns.” With the removal of its hedges, investors bullish on Barrick think the company might be the equity issue set to benefit most from an increase in government spending, worldwide.

Did you enjoy this article? Check out MiningFeeds.com’s feature story 10 Gold Stocks to Watch in 2011.

Colombia may not be as well known for mining as some of its more established neighbors in South America such as Chile and Peru, but recently, two TSX listed gold miners, Greystar Resources (TSX:GSL) and Ventana Gold (TSX:VEN) have done their best to bridge the historical gap.

Greystar has been trying, largely in vain, to gain support from local residents and officials for its Angostura gold project near Bucaramanga, in the Colombian province of North Soto. But on March 4th, during a public hearing on the project held by the Ministry of Environment, Housing, and Territorial Development, confrontations resulted in the early cancellation of the hearing after only 28 of the inscribed 470 statements had been heard.

Steve Kesler, Greystar’s President and CEO said “The spirit of respectful dialogue necessary to understand concerns so that they can be addressed was missing at this hearing. Clearly there are divisions within communities and within authorities on this project. Greystar will only develop a project with the support of both.”

Meanwhile, at the Prospectors & Developers Association of Canada (PDAC) conference in Toronto that wrapped up yesterday, Colombian mining minister Carlos Rodado Noriega told reporters the environmental study on the Angostura gold project is not acceptable and Greystar may be required to rethink the project design. Greystar had proposed developing Angostura as an open-pit mine using a heap-leach process, in which a cyanide solution is used to extract the ore.

Shares of Greystar fell from $3.97 on March 1st to a low of $2.55 yesterday, before gaining back $.31 cents to close at $2.86 today.

The news from Colombia has been better for shareholders of Ventana Gold. On November 17, 2010 Brazilian conglomerate EBX Group announced an all-cash offer to acquire all of the issued and outstanding common shares of the company at a price of $12.63. EBX Group is controlled by billionaire Eike Batista, currently ranked as the 8th richest man in the world by Forbes Magazine.

Ventana’s board was clearly hoping another suitor would emerge when they rejected a $1.2-billion hostile takeover and hired Goldman Sachs and TD Securities to dig up other options. When no other buyers immediately stepped up the company caved and, in February, began negotiating a friendly takeover.

At the time, Loewen Ondaatje McCutcheon analyst Michael Fowler commented, “I think it’s a low bid, but it’s obvious that they haven’t got anyone else at the moment.”

With no other bids on the horizon, Ventana seemed to be negotiating from a position of weakness. But the board managed to add a small premium to the initial offer, receiving a $13.06 per share offer, from AUX Canada Acquisition, one of Batista’s companies. Shares of Ventana were as low as $6.44 last summer.

According to Ventana Chairman Richard Warke, Batista is intent on building a gold company focused on Latin America. Ventana’s La Bodega project lies next to Greystar’s Angostura project in Colombia. While some may speculate the potential for a consolidation in the region is now higher with one of the world’s richest men entering the scene that feeling is clearly being tempered by the difficulties faced by Greystar.

When Century Mining, (TSXV: CMM) early last April, announced a final release agreement to eliminate royalties and future payments associated with their Lamaque gold mine with Teck Resources, it looked like the company was moving in the right direction.

On April 28^th, 2010, just a few weeks later, Century then reported its mill facility at the Lamaque project located in Val d’Or, Quebec was fully operational and processing 900 tonnes to 1,100 tonnes per day of ore from current production and existing stockpiles. The company stated they were “fully financed and on budget for the ramping up of the company’s Lamaque gold project, and is preparing for its first gold pour within the next week, nearly one month ahead of schedule.”

Investors responded to the company’s decisions and reported progress. Shares of Century moved from $0.41 on the day of the Teck announcement to $0.73 in late April. But the winds of change were beginning to blow through the historical mine shafts of the Lamaque mine where mining had first started in 1937. Just two weeks in, the British Columbia Securities Commission issued a cease trade order against Century Mining for failing to file audited financial statements and MD&A on time which, in hindsight, may have cast a prognostic cloud over the Lamaque project.

As 2010 progressed it was becoming evident that Century was experiencing both production and profitability setbacks. The company was forced to complete a number of private placements as stop gap measures. Today, the company issued a news release that summarized the delays and the need for additional financings.

The losses in mill throughput resulting from a crusher failure in February, 2011 had an adverse impact upon the company’s cash flow and available finances. This severe constraint on finance availability forced management to halt the operations and put all other capital projects on hold. Shares of Century Mining are currently trading at $0.57 down $0.13 on the day.

Clearly, this is crunch time for Century Mining. Operations at the mill are suspended and management is scrambling to, as they say in today’s release “meet obligations associated with debt repayment and continuing working capital payments”.

There is no good time to have the kind of problems Century is having, but early March may be more favorable than any other time. The company’s management is at Toronto’s Prospectors and Developers Association Conference, or PDAC, the largest gathering of mining industry financiers and professionals in Canada. The conference is known for creating opportunities -and financings- in bunches following the show. Investors bullish on Century are betting the company can pull an iron from the fire and get things rolling again in Quebec. Company management believes that existing proven and probable reserves and measured and indicated resources at Lamaque exceed 2.4 million ounces of gold.

Canadian listed gold mining and exploration companies are enjoying an unprecedented funding environment. Investors, consequently, are anticipating that a number of discoveries will hit the street in 2011 as exploration and mining companies deliver results from substantial drill programs.

A booming market also offers challenges; many companies are now managing the consequences of their past achievements and dealing with a bevy of complications spawned from what has undoubtedly been the biggest gold rush in recent history. The MiningFeeds.com examines, in no particular order, ten Canadian listed gold stocks that are poised to have very interesting years in 2011.

1. Gold Reserve Inc. (TSX: GRZ)

Political risk. Investors in Gold Reserve knew what they were getting into in Venezuela, or they should have. Gold Reserve’s Brisas deposit is directly adjacent to Crystallex’s Las Cristinas deposit, which, after suffering through years of stonewalling, had its mines operating contract “officially canceled” by the Venezuelan government. Crystallex now claims it is owed $3.8 billion and is appealing to the World Bank’s International Settlement of Investment Disputes (ICSID). Shares of Crystallex were near $6 in 2006, but have plummeted to pennies as many investors determined that doing business with Venezuela’s socialist leader Hugo Chavez, who recently called foreign miners “crazy people”, was no business they wanted to be in. Gold Reserve’s story may be less well know to investors in the area, but the company is no neophyte in Venezuela. Gold Reserve began developing the site in 1992 and has invested close to $300 million in the gold and copper project, which is located in the historic Km 88 mining district of the State of Bolivar in the southeastern part of the country.

Gold Reserve, at this point, may be a play better suited to those with legal backgrounds as opposed to geology, but the reward for either could be staggering. When the Bolivarian Republic of Venezuela arbitrarily and, almost predictably, revoked their previous authorization to proceed with construction of the Brisas Project, Gold Reserve filed a claim against the country, valuing its damages at a minimum in the amount of $1.92-billion, equivalent to approximately $30 a share. The Company’s market cap, as of February 25, 2011, was a less than $100 million. The stock has been exchanging hands of late on the TSX for around $1.75.

The Brisas deposit, which is one of the largest undeveloped gold/copper deposits in the world, contains proven and probable ore reserves of 10.2 million ounces of gold and 1.4 billion pounds of copper.

So is Gold Reserve doomed to suffer the same fate as Crystallex? Maybe not. There is increasing economic pressure on Venezuala spearheaded from multinationals like Exxon to cooperate on a worldwide scale. The Venezuelan government has previously settled a number of ICSID claims against them with various oil companies from Norway, France and Italy by voluntarily paying compensation in the billions of dollars.

All this adds up to an interesting year for Gold Reserve – written submissions on the Brisas case are scheduled to be made throughout 2011 and the Tribunal has currently scheduled the Merits Hearing for February 6^th, 2012.

2. Osisko Mining Corp. (TSX: OSK)

Perhaps one of the most interesting mining stories from 2010 was the man who literally lived on top of a gold mine and refused to leave. Ken Massé was the lone holdout from a relocation project that saw Osisko buyout 204 of 205 homeowners in his neighbourhood, which happened to sit right on top of Osisko’s Malarctic mine in Quebec. Massé reportedly turned down a $350,000 offer from Osisko for his house, which was valued at $14,000. According to court documents, the family had been seeking $1 million from the mining company when a judge awarded Osisko possession of Massé’s home after the company requested an emergency court decision. As for compensation, Massé received market-level value for the old house, as determined by a provincial tribunal, and moving costs.

Displacing residents may have been the most exciting aspect of Osisko’s 2010 from the media’s perspective but the company delivered much more compelling news for shareholders including the acquisition of Brett Resources, solid drill results for the company’s Duparquet project and great results from the drill program targeting the Barnat extension from the company’s Malartic property.

Chris Beer, a fund manager with RBC sees value in Osisko. He notes that while the company is only trading at “about 10 times cash flow “, the company will see its Canadian Malarctic gold project come on stream by mid-2011. A time when Beer believes the Malarctic project is “going to hit the sweet spot at these high gold prices”. He says the company also has another project called Hammond Reef in Ontario that the market is not currently pricing in.

For 5 Gold Stocks to Watch in 2011 – Part 2: Click Here

3. Centamin Egypt Ltd. (TSX: CEE)

When the world changes, the market changes. While financial concerns naturally take a backseat to those concerning human rights, the uprising in Egypt and subsequent demonstrations throughout Northern Africa illustrate that the two are inextricably linked. When the civil unrest that ultimately led to the unseating of President Hosni Mubarak began in Egypt the price of gold began to rise. It then continued to rally for five straight weeks.

Taken in isolation, this would have been good news from Centamin Egypt, a mining and exploration company founded in Australia in 1970 that subsequently listed on the London AIM and the TSX. But there was no way to isolate the rise in the price of gold from unnerving investors, who were no doubt concerned that the unrest in Egypt would disrupt operations at the company’s Sukari Gold Project, which is located in South Eastern part of the country. In a press release on February 24th, the company quelled at least some of these fears, noting that the project experienced “mild disruptions with port authorities and supply lines which led to some inventory levels being drawn down”.

While the the ousting of Mubarak does not guarantee complete political stability, it looks like a transition that may have been extremely disruptive did not result in the worst case scenario. Shares of Centamin Egypt are, for now, on the rebound as investors can once again focus on the potential of the Sukari project, which the company says will produce 6.2 million ounces of gold over a 15 year period annual cost of production will average US$425 per ounce.

4. European Goldfields Ltd. (TSX: EGU)

Part of the appeal of European Goldfields, a Whitehorse based miner that now counts London, England as its home, has always been political safety. Halfway through 2010, the company’s shares had already begun to percolate off 2008 lows, but when European Goldfields submitted the final Environmental Impact Study (EIS) for its project in Halkidiki in North-Eastern Greece, it shares began a rise that saw its stretch to an all time high of over $17 earlier this month. In a world of increasing geopolitical uncertainty, investors clearly like the fact that the company boasts 10 million ounces of gold reserves within the European Union.

Early in February however, shareholders of European Goldfields found out that bureaucracy is bureaucracy and sometimes mining regulations anywhere can seem like they are written in Greek – literally in this case. On February 24th, a Reuters report regarding the status of the company’s Greek permit rattled the nerves of some investors. Before European Goldfields could respond its stock had traded 4.5 million shares on the TSX and and shed $3.22 to close at closed at $11.18 on the day. When The Company halted its stock and issued a press release stating that the company had “not been officially notified by the Greek authorities that there is any issue regarding the permitting process or the timing of such” and that the “the final Environmental Impact Statement (“EIS”) conformed with all technical requirements under Greek and EU environmental legislation”. It appeared to be enough to calm the nerves of shaky investors. By March 1st the company shares had seemed to resume their upward trajectory, closing at $13.18. Perhaps investors had shaken off the permit scare to focus on the merits of the company, which has been winning environmental approvals in other parts of Europe.

5. Oceanagold Corporation (TSX: OGC)

On the surface, 2010 appeared to be a pretty good year for Oceanagold, a TSX listed Australian gold producer. The company reported record gold sales of $305.6-million, which was a 29-per-cent increase over 2009 and produced 268,602 ounces of gold at the average cash cost of $570 per ounce. The year also saw the company secure $115-million in equity financing for the development of the Didipio gold-copper project in the Philippines. Scratch the surface just a bit, however, and you’ll find that 2010 was a challenging year for Oceanagold.

Oceana’s experience at Didipio, located 250 km north of Manila, has been nothing short of a PR nightmare. As the company prepares construction of the project they have faced stiff opposition from international human rights groups, such as Oxfam Australia who say that local indigenous peoples are being forced off their land for the project. The opposition actually began in June, 2008 when local residents filed a complaint with the Phillipino Commission on Human Rights (CHR), accusing Oceana Gold Philippines of setting on fire and bulldozing off cliffs 187 houses in the village without a court order. Despite the affair, OceanaGold posted a record 2010 that saw the company earn $44.43 million, mostly from established mines in New Zealand, where the company has no such legal troubles. With shares of the company trading near historical highs, investors are clearly believing the company’s claims that it is moving forward with the project, despite an apparently leaked report from the CHR calling for the cancellation of its mining permit and affirmation from the press.

For 5 Gold Stocks to Watch in 2011 – Part 1: Click Here

How do you go from zero to sixty in record time? Whether you’re a Nascar driver or a gold miner the answer is the same – experience. Balmoral Resources, a fledgling Canadian gold miner, got a good head start because of who they had behind the wheel.

Balmoral President & CEO Darin Wagner spent his first ten years as a project generator and exploration geologist with two of Canada’s largest exploration and mining companies Noranda (now Xstrata) and Cominco (now Teck). More recently, he served as President and CEO of West Timmins Mining through the discovery of a high-grade gold zone in Timmins, Ontario to the acquisition of West Timmins by Lake Shore Gold in an all share deal valued at $424 million that was completed in November of 2009. As a result, Darin was able to attract a raft of notable industry professionals that a normal mining start-up could only dream of, including Canaccord founder Peter Brown and Haywood boss John Tognetti.

Today, Balmoral is putting their money to work and they are currently drilling the Fenelon and Martiniere properties in central Quebec. We sat down with Balmoral’s President & CEO to find out more about the genesis of Balmoral Resources and the company’s future plans.

Darin thanks for joining us, could you tell us a little more about how Balmoral Resources was founded?

Coming off the heels of the sale of West Timmins our team was looking for a scalable opportunity in the precious metal space to found our next venture around. Through one of our current directors – Gordon Neal – we had been introduced to Henk Van Alphen and his team at the Cardero Group and agreed to join forces on this new venture with them. Having assembled a veteran and market savvy team, with a number of successful ventures to their credit including West Timmins, MAG Silver, International Tower Hill and Cardero Resources, and having located a vehicle which we could acquire and finance readily we set out to locate a prospective package of assets for Balmoral which would allow us to quickly gain market traction and asset value for our shareholders.

How many different projects did you look at before you decided on the package of 5 properties?

Lots! In total I think we reviewed well over 100 individual opportunities and examined prospects in no fewer than 8 countries. We were looking for the right mix of advanced assets with clear upside, a resource base to provide a basis for market valuation and earlier stage projects with exploration upside. It was important to us that these assets be located in favourable – read safe, mining friendly and financeable – jurisdictions and that the package or property be drill ready so there would be no lengthy delays getting the projects up and running quickly.

Why did you elect to pursue two different property acquisitions in two separate areas?

Balmoral’s assets came to together in two transactions, both announced and completed in conjunction with each other in order to assemble a district scale opportunity along the Detour Lake trend in central Quebec. One of the transaction, a purchase of non-core assets from a copper-gold developer American Bonanza, allowed us to acquire the high-grade Fenelon and Martiniere gold projects along the Detour trend, the N2 project in Quebec and the Northshore Property in Ontario. Collectively these assets host over 935,000 ounces in historic gold resources (non 43-101 compliant as the resources were drilled out prior to the implementation of NI43-101) which we purchased for roughly $6.3 million in cash and shares, our roughly $7.0 per in-situ ounce. We combined this purchase with an option to earn a 60% interest in the large Detour East project in Quebec to assemble our asset base giving us the dominant land position along the Detour Trend in Quebec, a good resource base for a start up and massive exploration upside.

Can you share with us your exploration program for 2011?

We launched our first drill program with two drills, one on each of our Martiniere and Fenelon projects, on January 20th, 2011, just over two months from the date we came public with the asset package. To date we have completed 21 holes and another 35 are planned in this phase 1 program which we hope to complete by early April. This is the first phase of the program which will see drilling on at least 4 or our five projects in 2011 and, everything according to plan, resource updates on at least three fronts over the next 12-14 months. The current market in gold is very strong and we believe that when conditions like these exist explorers need to be as aggressive as possible in driving their assets forward. Our 2011 exploration budget is $7.5 million and that may expand as warranted by results.

Is the company looking at additional projects within Canada or outside of Canada?

In this business you are always on the lookout for opportunities. In the case of Balmoral we continue to look for additional acquisition or corporate opportunities and would consider opportunities in any of the major North American gold districts if they fit with our growth plans and drill focused exploration model. Our most recent hire, Exploration Manager Richard Mann, has spent several years with a major Canadian based gold producer and in that role has had the opportunity to review and examine a number of prospective gold projects worldwide. We will certainly draw on that experience and our own industry contacts and experience in trying to identify the next valuable piece of the Balmoral puzzle.

Technology. According to Vancouver’s Dorato Resources new technology, specifically modern geophysical techniques could be the “game-changer” for the company actively exploring in Peru. The area the company is focused on is the Cordillera del Condor Gold District. Adjacent to the Ecuadorian border, a number of world class gold and copper deposits have been discovered in the region including Kinross Gold’s Fruta del Norte gold deposit. Fruta del Norte is a 13.7 million ounce gold deposit which was acquired by Kinross in July, 2008 via the acquisition of Aurelian Resources.

While the Ecuadorian side has been a source of gold since Incan times, and has therefore had centuries to be discovered through on the ground exploration, the area that Dorato is exploring in Peru is less developed and absolutely massive (1,050 square kilometers) and therefore needed a faster and more cost effective approach. Enter advanced airborne geophysical survey, geological mapping, and geochemical sampling and exit 13 new targets that the company just identified for exploration. We recently connected with Keith Henderson the Company’s President & CEO for an exclusive interview on Dorato’s progress.

By all accounts the Cordillera del Condor Gold, Copper District along the Ecuador border in Peru is a huge area to explore, does the company have a strategy in place to expedite exploration?

Yes, this is a large land position and efficient exploration required an efficient approach. Systematic on-the-ground exploration could take decades and was quickly ruled out! Airborne geophysics is the approach that has been taken and it has been fast, cost-effective and successful. If readers are interested in the details of the technique, Dorato has provided an explanation of techniques on the Company website. In short, a helicopter makes a series of low-flying passes over the block, collecting data on magnetic, electromagnetic and radiometric properties of the rocks. Geologists and geophysical experts then review the data and identify a series of targets based on anomalies. These targets are approximately 2 km by 2 km in size and are small enough to allow systematic on-the-ground evaluation. This is done by collecting geochemical data on ground and by geological mapping and sampling. By collecting this data, the geologists can continually re-prioritize the targets as data is received from the lab. The process of re-prioritizing means that you are always drill testing your best targets first, increasing the chances of an early success. Geophysical data cannot directly detect gold mineralization, but the data does point to certain physical properties of the rocks at surface – it gets you into the right area fast.

The company released some very encouraging trenching results (188 metres of 2.08 grams per tonne) from the Lucero target and the shares of Dorato essentially doubled from $0.70 to $1.40 – how are things progressing at Lucero?

Minera Afrodita’s exploration at Lucero is progressing extremely well. The initial discovery of surface mineralization was in a completely virgin area and was achieved after interpretation of airborne geophysical data. This is important as it bodes well for screening of additional geophysical targets through the remainder of 2011. In the case of Lucero, the geologists who initially checked the anomalies on the ground were able to quickly find gold mineralization and massive magnetite and sulphides associated with skarn mineralization. If the other geophysical anomalies can be relied upon in this way, the geologists will have a great chance of finding a significant deposit in the near to medium term.

The drilling intersected thick mineralization and results have been received for the first 12 drillholes. Three types of mineralization have been intersected to date: skarn mineralization, sediment hosted mineralization and porphyry mineralization. The drilling intersected up to 150 metres of skarn mineralization on the edge of the anomaly – interpretation of the data points to potentially higher-grade gold mineralization to the west and drilling is currently testing this interpretation. The real prize at Lucero though, is the potential for a large copper-gold porphyry at depth. Drillhole 19 is currently testing this target for the first time and results are pending.

What’s the next target at Cordillera del Condor and when do you begin work?

A final decision on the next target to be tested will be made in the coming weeks, but it is likely to be Cobrecon, where geologists have identified a gold skarn target and two large porphyry targets. These targets are located just a few kilometres from Santa Barbara and El Hito in Ecuador – two existing porphyry deposits in Ecuador. Each of the porphyry targets is greater than 1km across and therefore have potential to host sufficient tonnes.

There is a lot of mineralization in the area but the geologists are not focused on drilling a series of small, high-grade gold intersections. This might look good in a news release, but it would not bring the Company any closer to a potential acquisition. Real size potential is an important criteria in prioritizing targets and the focus is very much on discovery of a 3 to 5 million ounce (or equivalent) deposit. It is important for investors to know that this is the focus of the program.