Some ten-plus months of exploration work, negotiations and due diligence came to successful conclusion on Tuesday, Nov. 6 as ValGold Resources (TSX:VAL) announced that it had closed on its Honnold Corp. acquisition. As a result, ValGold now indirectly owns 21 exploration concessions covering approximately 900 square kilometers in Venezuela's Bolivar state, considered one of the few remaining relatively unexplored and untapped regions of bonanza scale gold, precious, industrial and base metals prospects in the world.



The closing of the Honnold acquisition cements ValGold's commitment to aggressively explore highly prospective targets spread across three regional sections?the Increible, Chicanan and Vuelvan?and illustrates the strength of ValGold's business plan, according to Jeff Stuart, ValGold's business development officer.

?These are some of the largest, most prospective gold properties I have seen in an area that has not been explored?Things are just getting started,? Stuart told Resourcex. These include Mochilla, where ValGold on Nov. 1 reported the completion of 1,100 of a planned 4,000 meters of an initial drilling program. Assay results are expected in the next few weeks.

The Honnold Acquisition

Honnold's concessions are located in a region that represents ?probably the best geology in the entire world [for prospective gold deposits]. The entire region is underlain by the 2.5 billion year-old rocks of the Guiana Shield?There are tons of structures just about everywhere you look,? Stuart told Resourcex.

ValGold acquired Honnold Corp., a British Virgin Island registered company, having initially concluded a purchase option agreement last December with three private companies for a cash advance of US$500,000 and the issuance of 5 million ValGold common shares valued at US$ 0.20 per share for the purposes of the Agreement.

On Oct. 26 ValGold exercised the option and paid the Vendors an additional US$ 1.5 million and 15,014, 443 common shares valued at US$ 5 million. The Vendors will retain a 10% free-carried interest in the properties until the completion of a bankable feasibility study on the properties or any portion thereof. They are obligated to provide their prorate share of funding should they elect to maintain their interest in any subsequent project development work. They also retain a 2% net smelter returns royalty interest in the exploration licenses.

ValGold is in the midst or raising equity capital in order to fund exploration work at Mochilla and other prospective targets. The company is about three-quarters of the way through a C$ 3.5 million equity financing, the bulk of which has already been sold to institutional brokers and investors, according to Stuart. Each of the non-brokered private placement's 10 million units consists of one common share and one-half common share purchase warrant with a C$ 0.60 exercise price and two-year term to expiry.

Roughly 40% of the capital will be invested in exploration and drilling programs at initial target zones within the Honnold properties in Venezuela, Stuart added. Another thirty percent will be similarly used to explore initial target prospects in neighboring Guyana, where the other half of ValGold's mining rights is located. The remainder will be used for general corporate purposes.

El Callao, Chicanan & Mochilla

A previous NI 43-101* compliant report of the properties within the Honnold concession area stated that it holds the potential for several new world-class gold finds, Stuart related. Gold Fields Ltd. (NYSE:GFI) did some good initial exploration work more than a decade ago but dropped the project due to low gold prices, he recounted. The three private vendors then acquired the properties and placed them in Honnold Corp.

ValGold started exploring the Honnold concession area late last year. It can be divided roughly into two distinct sections, Stuart explained. The northern El Callao Mining District is an area of arid desert and savanna-like country where the Choco 10 gold mine is located. Gold Fields sold Choco 10 as part of a US$ 520 million deal to sell all of its Venezuelan assets to Rusoro Mining Ltd. (TSX.V:RML). Choco 10 has been in production since 2006 and is expected to produce some 150,000 ounces of gold per annum though it has been plagued by disputes with labor and the surrounding community.

Though El Callao is considered the weakest of the concession group in terms of prospects, ValGold has nonetheless identified several targets. The first to be explored has resulted in what management believes may well turn out to be an economically viable discovery called Los Patos.

Management is more upbeat about the concession area's southern Chicanan section, which is around 40 kilometers away from Crystallex's Las Cristinas and Gold Reserve's Las Brisas gold projects. Chicanan West includes the El Clarito gold zone and ValGold's primary gold target, the Mochilla Lineament where the company has begun its 5,000 meter initial drilling program.

El Clarito and other artisinal workings in the Mochilla project area are underlain by layered intrusive mafic to ultramafic rocks of the Mochilla Layered Intrusion and which in turn has been intruded by a variety of felsic to intermediate porphyritic rocks, according to ValGold information.

Drilling is focused along a shear zone that cuts the layered intrusion known as the Mochilla Lineament and on specific gabbro contacts.

Though access to infrastructure, material, equipment and skilled labor poses problems in so remote and unexplored a region, ValGold is finding Venezuela to be extremely conducive to mining, and the company is conducting all its activities according to the same environmental standards it would employ in the US or Canada, Stuart said. Mining is the largest employer in the country, diesel and labor are relatively cheap and there are no royalties, he noted.

*NI 43-101: National Instrument 43-101 (NI 43-101) is a rule developed by the Canadian Securities Administrators (CSA) and administered by the provincial securities commissions that govern how issuers disclose scientific and technical information about their mineral projects to the public. It covers oral statements as well as written documents and websites. It requires that all disclosure be based on advice by a "qualified person" and in some circumstances that the person be independent of the issuer and the property.

This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.