JK: Well, the one that I've been following since it hit $0.60 last year is ATAC Resources Ltd. (TSX.V:ATC). This is a classic toiling-geologist company, which had flatlined in the $0.15-–$0.30 range for years. ATAC specialized in generating projects in the Yukon, farming them out and never getting lucky. But then its Rau Project started to click a couple of years ago. This is a property that's been expanded to cover more than 100 km. of carbonate rocks that bear a striking similarity to the host rocks in Nevada's Carlin Trend.

The company found several zones of gold mineralization that it had treated as a sediment-hosted gold system. This year, at the far end of the belt, it made the Osiris discovery through old-fashioned prospecting and systematic exploration. Here ATAC has a geological setting that is a dead ringer for the host of the Carlin-style mineralization; it's even gone from calling this a sediment-hosted gold system to a Carlin-style hosted gold system. The company has published just one drill hole so far, but the footprint is enormous. The stock has gone to from $0.60–$6; ATAC now has a rather extraordinary market cap of $600M. There are no ounces in the ground yet, but this is the type of story that could be a real home run. If it discovered a Carlin-style system in the Yukon with the same sort of 50–100 Moz. gold endowment, a stock like that, pardon the expression, could go to the moon. Now, because the company has 100 million shares out, it's not like the old days where the moon was really high. But a stock like this could go to $30 or even $50 if drilling confirms that Osiris is a multimillion-ounce discovery and that the entire belt is prospective for similar gold hot spots.

What the junior market has lacked for the last 10 years is this sort of 'holy-mackerel' score where old-fashioned exploration leads to a jaw-dropping discovery and everybody who bet on it makes an enormous amount of money. Aurelian Resources Inc. (TSX:ARU) came the closest to doing that, but it chewed through $19M in exploration funding and, basically, scored with a Hail Mary pass. Then the Ecuadorian government decided to re-jig its mining law, and Aurelian was taken out for just $1 billion. Retail investors really never had a chance to participate in that. We have been in a skeptical market for gold exploration, but the attitude is changing, helped in part by record-high nominal gold prices and successes in the field. As this glass switches from half empty to half full, retail investors will flood back into the resource exploration sector.

Interest in exploration is making a broad comeback because the ounces-in-the-ground number crunchers are good at figuring out the upside limit based on their gold price of choice. But with a new discovery like ATAC's Osiris, where do you put the limit? Until they've done all the exploration work, you don't know what's not there. On existing deposits a lot of the work has already been done and you know what's not there, so the speculative upside is muted.

As gold grinds higher, these ounces-in-the-ground companies get absorbed, cash enters the system and then you add in a 'holy mackerel'-style gold discovery and you wind up with an all-out crazy bull market similar to what we had in the mid-1990s. What happened in the mid-1990s was far more exciting than in the last decade, when more than $60 billion worth of takeover bids was handed to the junior sector. There was all this money but none of the absolute excitement that characterized Dia Met Minerals Ltd.'s (now owned by BHP Billiton Ltd. (NYSE:BHP; OTCPK:BHPLF)) discovery, which became the Ekati Diamond Mine in the Northwest Territories; Aber Diamond Corp.'s discovery, which became the Diavik Diamond Mine; Diamond Fields International Ltd.'s (TSX:DFI) discovery, which became the Voisey's Bay nickel mine in Labrador in the 1990s and Arequipa Resources, whose Pierina gold discovery in Peru was bought by Barrick for $1 billion. I think we're heading back to something like those heady days.

http://www.theaureport.com/pub/na/7575