http://www.theaureport.com/pub/na/10175

TGR: Are there any other companies that you're interested in right now?

EH: Yes, I like Victoria Gold Corp. (TSX.V:VIT). It's tremendously undervalued and is almost a screaming buy at this moment. The stock recently trading at around $0.60. Victoria increased its resource base significantly this year and is sitting on more than 7 million ounces (Moz.) of gold. But it is not reflected in the share price.

Victoria had a bit of bad luck last year when it had to report an error in the resource estimate of its Cove Project. The stock was punished unfairly. I think the stock is about sold out and we can look forward now to lots of drilling news coming out from the Dublin Gulch property in the Yukon.

TGR: Dublin Gulch has a prefeasibility study underway. Do you think that will act as a catalyst for the stock once it's published?

EH: The prefeasibility study on the Eagle gold deposit has already been done. It's a bankable feasibility study, which will be coming out in the fourth quarter this year. That could give the company another boost because the new feasibility study could demonstrate a significant increase in Victoria's resource base at Eagle. Part of the 2011 Eagle exploration drilling results will be incorporated into a revised resource estimation.

More importantly, the proven reserves, which are standing at 1.7 Moz, will be increased in a significant way. That's not just hope; it's simple math since the 1.7 Moz. reserves estimate is based on a $900/oz. gold price. At $1,500/oz. gold, a big chunk of Eagle's 4.8 Moz. of indicated resources could be upgraded to proven reserves. Fueled by rising gold prices and growing resources and reserves, the Net Asset Value of Eagle's gold project could jump toward the $1B mark. Victoria's current market cap is just about $170M, it's really so tremendously undervalued.

TGR: The board at the company is good, too. I know Leendert Krol a little bit. He sold Brazauro Resources toEldorado Gold Corp. (TSX:ELD; NYSE:EGO) a couple years ago. The board certainly has some significant experience. Where do you think the share price could go by the time Victoria puts out that new feasibility study?

EH: Several things are working in favor of Victoria toward year end. First of all, I see a sector bounce for the entire junior sector. Second, Victoria just needs a few weeks of rising share prices to generate a new buy signal from a technical perspective. Previous buy signals triggered Victoria's stock to double within two months. Third, I expect higher gold prices by year end. But the most important thing is the bankable feasibility study, which could show a significant increase in resources and reserves.

While Victoria has all these things working in its favor, I think the share price is difficult to predict because we don't know if they will do a financing that could impact its share price. But I expect it will be a multiple of its current value.

TGR: When is Dublin Gulch expected to go into production?

EH: It's expected to go into production by 2014. That's what is scaring off some shareholders. They fear dilution since it takes a huge amount of money to build a mine. But on the other hand, look at how producers are being valued versus explorers. Most junior producers are valued at an average of about $300/oz. in the ground versus explorers, many of which are valued at less than $50/oz. Victoria is going to be a producer, but investors have to be patient for another three years. At that point, Victoria could very well be a $1B–$2B company.

TGR: Rising gold prices are an important part of your thesis for Victoria Gold, but there's gold in Endeavour's mines as well. Where do you forecast the gold price to be by the end of 2011?

EH: It could be as high as $1,850/oz.

TGR: That's a dramatic increase! That's about 20% between now and the end of the year.

EH: Exactly. Once fear of sovereign defaults kicks in again, we could see a dramatic increase in the price of gold. The period toward the end of the year is usually a gold-friendly period.

TGR: Well, when you talked to us in October 2009, your predictions proved remarkably correct. At that time, you said gold would hit $1,300/oz. by the middle of 2010, and sure enough, that's exactly what happened. So, I guess investors can look forward to some dramatic numbers.