TGR: Do they have anything else going on?

VG: Kent's been making a lot of news lately about what they've been doing in New Zealand and Australia. And those projects I find quite significant and interesting too. At the Reefton mining camp in New Zealand, they acquired the Alexander River property, with 643,000 ounces of gold on it. It is reasonably high grade; the American conversion is about 0.2 ounces a ton. They have a bit of an inferred resource that they can start working with. This is already a mature mining camp. To date there's been more than 100 mines in the area—10 million ounces of placer gold has been mined, plus two million ounces of hard rock gold. By the looks of it, there's plenty more to go; this is like a Val d'Or, so there's no telling how much gold is going to come out of there. They won't be done anytime soon. That's what Kent has been making a ruckus about. At this point; I don't think the market's really digested exactly how significant this can be.

TGR: You mentioned Australia also.

VG: Yes. Kent has also been talking about the Gnaweeda project they've got an option agreement on with Teck Australia. That one is a little more grassroots than the property in New Zealand, but it's very interesting. The area has produced 3.5 million ounces of gold already; it's hard rock and not too deep. It's in a greenstone belt. It has all the right makings for a significant discovery, and that's what they're gearing for.

The fact that Teck selected Kent for this is quite significant. Teck historically hasn't taken just any junior on as a partner; you've got to be pretty savvy and a really good company. It is incredible that Kent has a $2.9 million market cap for, let's say, 650,000 ounces of gold on one project, a potential $1 million annual cash flow on another project, and less than 30 million shares outstanding. It just doesn't make sense to be trading at 9 cents or 10 cents per share. It's screaming at me that it's worth a definite look. I recommended it as far back as 3 cents and 3.5 cents, and it's gone up as high as 17 cents. There definitely have been some good days so far, but I think it's in the infancy of its whole potential.

TGR: Are there other companies where the market hasn't quite priced in the gold in the ground?

VG: It's not gold in the ground per se, but the incredible potential of what they have going. Take Midland Exploration Inc. (TSX.V:MD), for example. Its claim to fame recently, which I think is very significant, is their 50-50 deal with Osisko Mining Corp. (TSX:OSK) on Midland's Dunn gold property. The really cool part is that for every percent more Osisko wants to increase its interest, up to 65%, they have to pay $1 million or incur that amount in terms of exploration. So Midland essentially gets most of this project paid for. This year, Osisko already announced a $540,000 work program on this property.

And if you consider the "big fish/small fish" effect, Goldcorp (coincidentally enough) has taken a 13% interest in Osisko. So now there's the big cap, the mid-tier and the small company all in one bed, if you will, which I think will be quite beneficial to Midland. Midland has a lot of other projects which we could spend all day talking about. Agnico-Eagle Mines (TSX:AEM) is spending about $1 million, a good chunk of change, on Midland's Maritime Cadillac Property. That looks quite interesting in terms of some of the intersections they've received.

TGR: That's quite a story.

VG: Yes—and there's more. Midland hasn't done any financing since going public a couple of years ago. They still have $3.5 million in the till and 21 million shares out. With their burn rate, they won't need to raise another dime anytime soon. Others are going to pay for all the discoveries Midland makes; they get basically a carried interest in everything for just finding the projects, getting them to drill-ready state, and moving it forward. As a result, Midland shareholders get to see some very significant potential. Even during the market meltdown, the stock price only got cut in half whereas most other companies' dropped 80% or 90%.

That just goes to show that the market believes that this company has what it takes to have some significant discoveries. That being said, I don't think it's fully valued. With a market cap of $16 million, if you extrapolate the $3.5 million of cash, you're basically saying that their projects—primarily these two ventures—are worth only $12 million. Not in my books they're not.

TGR: Earlier you indicated that you expect certain specialty metals to do well. Haven't you just recently come back from a site visit to the Commerce Resources Corp. (TSX.V:CCE) (PK SHEETS:CMRZF) tantalum and niobium project?

VG: I did. It was quite fascinating. Blue River, British Columbia, is a beautiful town and a prime candidate for a company like Commerce, which will be in a position to give a lot of people jobs when they get into development. First of all, Dave Hodge (Commerce President) identified the tantalum markets well before anyone knew what tantalum was and really saw the potential. We've seen a huge demand increase for tantalum for things like Blackberrys and electronics in general. I think we can expect even more demand for tantalum in green applications, because it can be used to reduce heat in capacitors or generators that are used in windmills and so on. So I'd say Commerce definitely has the wind at its back with regards to the metal.

Some people say that the fact that the economy has slowed can't be very good for the tantalum market. That's a valid statement in terms of the demand side, but the supply side has changed quite a bit, too. A couple of major tantalum mines have shut down, including one in Australia that provided 30% of the market. That will have a huge impact, plus there's the unethical mining going on in the Congo, which is basically slave and child labor being used to mine a lot of high-grade stuff, which is reportedly going to run out fairly soon. Considering the slowed-down economy and probably a 50% reduction in supply, you're going to come out with a net increase in the demand for the metal. That bodes well for the price of the metal, and for Commerce.

Also working in Commerce's favor is Dave Hodge's ability to build teams. That's his strength. For instance, he brought on Axel Hoppe, previously a high-ranking executive with H.C. Starck, one of the world's leading tantalum buyers. When you bring a person like that to your exploration company, there's a very large synergy that people would probably kill for. So Commerce now has direct, open access to a vast number of end users, and they may be able to capitalize on that. This is part of the beauty about Commerce, and why I assign such a high value to the enterprise because they have this ability of foresight that I haven't seen in a lot of companies.

And of course, metallurgically speaking, the project is fantastic. The resource is great. It's half the grade of typical tantalum mines, but don't let that fool you, because it's twice the recoverability. Most mines can recover only 45% of the tantalum or so, versus 95% or 98% for Commerce. They've gone gangbusters drilling. They spent $13 million last year, putting down a lot more drill holes. On the enterprise side of things, they've built a phenomenal team. As far as the environment is concerned, you can't really tell they're there in terms of on the project, and the community will want to keep this area very environmentally sound. So this is just a prime opportunity from just about every angle.

TGR: It sounds like they've got everything!

VG: There's tons more, but I'll cap it there. I'm quite enthusiastic about this.

TGR: What a nice, upbeat end to our conversation. Thank you, Victor.

VG: My pleasure.

Courtesy: The Gold Report