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Rouyn-Noranda, Quebec

Markets are quiet and Gold is down slightly in advance of an important Fed statement expected at 2:15 pm Eastern…as of 11:15 am Eastern, the yellow metal is off $8 an ounce at $1,797…Silver is up 60 cents at $40.34, Copper is up a penny at $3.77, Crude Oil is flat at  $86.89 while the U.S. Dollar Index has jumped one-fifth of a point to 77.16…all eyes are on Ben Bernanke again today as he’s expected to launch the 2011 version of an early 1960’s join Fed-Treasury action to push down long-term interest rates, “Operation Twist”…in a rare move, the Republican Congressional leadership yesterday sent a letter to Bernanke telling him that further Fed action could harm the economy and erode the dollar…the letter was signed by House Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (R-Va.), Senate Minority leader Mitch McConnel (R-Ky.) and Senator Jon Kyl (R-Ariz.)…they also wrote that Bernanke should resist further intervention and there’s no evidence additional monetary stimulus will create jobs or help the economy…the fact that members of Congress are taking aim at the Fed, rightly or wrongly, is another example of how politically and ideologically divided the U.S. is at the moment…

Greece is being blackmailed by the markets and Europe is not managing the crisis as quickly and as decisively as it should, Greek Finance Minister Evangelos Venizelos stated today…the Greek government, a victim of its own financial mismanagement and incompetence, will make announcements later today on austerity measures it’s discussing with its international lenders to save the country from bankruptcy, a government spokesman said…the writing in our view, however, appears to be on the wall…sooner or later, Greece will fall into bankruptcy…

One of the biggest challenges investors face in the junior resource market is knowing whether or not they can actually trust a company to do what it says it’s going to do…an excellent case in point is GoldQuest Mining (GQC, TSX-V) which we have followed closely at BMR for the past year or so…GoldQuest unquestionably has a high quality land package in the Dominican Republic where it has been exploring for a decade…it also holds a promising lead-zinc-Silver deposit in Spain with a significant 43-101 compliant resource…in February, we interviewed GQC Chairman Bill Fisher – highly respected in the industry – and he clearly laid out for us and our readers the GoldQuest game plan for the balance of 2011 which involved drilling of three different properties and steady news flow…as it turned out, drilling only took place at La Escandalosa…another phase of drilling was proposed for that property during the second half of the year, according to an April 19 news release from new President and CEO Julio Espaillat…needless to say, investors were really caught off guard Monday when GoldQuest announced a proposed merger with Takara Resources (TKK, TSX-V)…ultimately, the merger could work out well but valued GoldQuest at just under 14 cents (in our view, a very low-ball valuation for GQC) based on last Friday’s closing prices for GQC and TKK (16.5 cents and 8.5 cents, respectively)…GoldQuest closed at 15 cents yesterday while Takara finished at half that price, 7.5 cents…a GQC shareholder will receive 1.63 shares in TKK for each share of GQC…furthermore, Fisher brought up the possibility in Monday’s news release of a 1-for-4 rollback once the merger is approved, and a private placement financing of $6 million prior to the commencement of any drilling…while it may work out in the long run, this is indeed a bizarre turn of events for GoldQuest and certainly the last thing we had anticipated given what Fisher told us (and our readers) in the February interview…we’re disappointed with the ratio and we envision a situation where institutions will be lining up at the trough for a cheap $6 million financing, paper that they will later want to unload on retail investors…yes, sorry to say, but the retail investor is getting screwed here…GoldQuest shareholders are speaking quite loudly through the market this morning as GQC has dipped as low as 13 cents on CDNX volume of 350,000 shares…this is certainly not the only example of a company not carrying out what it stated it would do – this problem is widespread – which means investors must be especially careful and discerning…a good practice is to review several years of company news releases and look for consistency and follow-through…

The CDNX is sitting near important support…it’s off 7 points at 1721 as of 11:15 am Eastern…John’s updated CDNX chart shows critical support at 1700 and 1675…

We do have more interviews and stories to post over the next couple of days from Rouyn-Noranda…Richmont Mines (RIC, TSX) hit a new all-time high yesterday of $13.29…it’s currently up 3 cents at $12.98 after dipping as low as $12.73 this morning…Visible Gold Mines (VGD, TSX-V), exploring a very attractive land package in the immediate vicinity of the growing Wasamac deposit, is off half a penny at 37.5 cents…

Seafield Resources (SFF, TSX-V) has released positive results for the initial scoping level metallurgical testwork on its Miraflores property in the Quinchia District of Colombia…testwork was performed on 14 samples taken from five drill cores from the Miraflores deposit…the samples consisted of the Gold-bearing white breccia and rock flour breccia rock types associated with the Miraflores breccia pipe…the samples were combined into a single composite sample, with a weight of approximately 10 kilograms, to form a bulk sample for metallurgical testing….the testwork returned gravity recoveries as high as 94.3% for Gold and 62.3% for Silver…testing continues…a preliminary economic assessment for Miraflores is expected to be completed during the first quarter of next year…Seafield also reported this morning it expects to release more drill results from Dos Quebradas within the next four weeks…new President and CEO Carlos Lopez is doing an excellent job with this company…Seafield is up half a penny at 22 cents…

A regular reader brought to our attention a company yesterday by the name of Argex Mining (RGX, TSX-V)…the stock looks interesting simply from a technical point of view…we caution we have not had time to perform any significant due diligence on the company’s fundamentals…Argex claims it has adopted a simple and low-risk strategy for the scale-up of its proprietary process that allows it to produce high purity TiO2 directly from its 100% owned deposit, the La Blache Fe-Ti-V property located in the Manicouagan region here in Quebec – approximately 120 km northwest of the Baie-Comeau on the north shore of the St. Lawrence River…on May 18, RGX released a 43-101 resource estimate for La Blanche…the company stated, “It (the resource estimate) demonstrates that the La Blache Property is a significant titanium and vanadium resource and a high-grade iron resource. Importantly, the titanium dioxide ore grade is high compared with most major titanium ores currently being mined around the world, and the vanadium grades are higher than what was expected and that the homogeneity of the mineralization at East Hervieux and West Hervieux shows that orebody has great consistency that should work well with the process flow sheet for the hydrometallurgical plant developed by Process Research Ortech”…RGX has 89 million shares outstanding and reported working capital of $4 million as of June 30…below are two charts from John on RGX that are definitely interesting but we encourage our readers, as always, to perform their own due diligence…