By Christina de Wit
ResourcexInvestor.com
Sept. 25, 2007

There's an old Venezuelan proverb that says "Join with good men and you will be one of them." ValGold Resources' (TSX.V:VAL) management team appears to have taken this piece of wisdom to heart as the company embarks on an ambitious drill program at the Chicanan West Complex located approximately 50km northwest of the Kilometre 88 gold camp in Bolivar State, Venezuela.

This latest phase of development represents an expansion of the company's presence in Venezuela. ValGold has completed the first stage of drilling of its program at the Los Patos gold occurrence within the Lo Increible 3 Concession, also located in Bolivar State, Venezuela. Lo Increible 3 is 20km northeast of the town of El Callao and 4.5km northeast of Crystallex's La Tomi gold mine. ValGold's other projects include properties in Guyana and northwestern Ontario.

The Chicanan West Complex consists of 11 mining concessions comprising a sizeable land holding of 522 km2. This area is located within the Guiana Shield, which hosts a greenstone belt that is known to be highly prospective for gold. The Complex is characterized by an island-arc sequence with intermittent periods of volcanism and sedimentation with ancillary quartz-porphyry dikes - an environment considered by many geoscientists to be favorable for mineral discoveries.

The program's primary target is the Mochila (Spanish for ‘knapsack') gold occurrence, represented by Proterozoic-age mafic to intermediate intrusive to metavolcanic rocks in an area covering about 10km2. Gold occurs as enrichments along the contacts of specific layers or units with the Mochila Layered Complex and along a north-trending lineament. Proterozoic-age rocks are the major source of mineralization in the world. Well-known examples of major, defined deposits with very similar geology in the area include Crystallex's Las Cristinas and Gold Reserve's Brisas discoveries.

Several gold occurrences (as well as base and precious metal occurrences), have been identified on the property, with two types of gold mineralization. The first, hosted by the Mochila Layered Complex, is found along a regional fault. This is an example of axial plane foliation, in which hot waters carrying metal ions are forced into cracks created by folding and faulting. The second type of gold mineralization is found within the sericitized Chicanan Shear Zone.

The major area of interest is the upper contact of the middle gabbro unit of the layered complex. According to the company's 43-101 report (p.60), the "Mochila Lineament contains numerous artisanal workings covering a surface area of more than 14km by 3km. Within this area, several world-class deposits could be developed. Three target areas have been identified in a selected area of the lineament and are ready for drill testing." A minimum of 5000m of coring in 15-20 holes is planned at this stage.

Venezuela has had a long history of successful gold exploration. Presently, several companies have operating mines in the Venezuela's Guiana shield: Crystallex, Hecla, Gold Fields (JSE:GFI), Gold Reserve (GRZ), and Rusoro (RML). Chicanan West is located in the same belt as two major deposits: Las Cristinas (Crystallex), and the Brisas (Gold Reserve), which reportedly host a combined estimated gold resource of 31 million ounces. These success stories plus the current run on gold underscore the potential for well-placed junior explorers to achieve a comparable level of growth.

There are several advantages to investing in Venezuela. It should be emphasized that there has never been an expropriation in the country's history. Labour costs are low, and diesel is only 15¢ a litre. The government also does not demand a royalty on production, instead preferring a streamlined corporate taxation structure.

Despite negative American press coverage of Hugo Chavez's governance, explorers and operators in Venezuela have largely enjoyed a progressive work environment. The Chavez administration has not deterred serious investors and players from working and profiting in Venezuela. According to Jeff Stuart, ValGold's head of Investor Relations, the current government has made considerable efforts to create a hospitable mining investment climate. "The government [has] actually been really, really good to us," he said. Bureaucratic red tape is not an issue, as "we got permits in six days". They have provided the company with government assistance and who have facilitated its work program, and have helped ValGold to avoid conflicts with artisanal Brazilian miners working in the area.

The company's management has a lifetime history of dealing with properties of merit. Its chairman, Andrew Milligan, is a former president of Glamis Gold Ltd., Tom Pollock, the company's vice president of exploration, was the China Country Manager for BHP during his 20-year career with them, and ValGold's president, Stephen Wilkinson, is past president of Northern Orion (currently trading around $6.50 per share). Pedro "Peter" Tinoco, one of the company's directors, was the president of the Venezuelan Chamber of Mines for two consecutive terms, as well as the president of the Latin American Mining Organization from 1996-2006. Since 1989, he has been the vice president of the mining division of the Venezuela-based Cisneros Group of Companies, one of the largest privately held media, entertainment, telecommunications and consumer products conglomerates in the world. Through Mr. Tinoco, ValGold has strong ties to some of the most influential people in South American mining - a few good men and women indeed.

ValGold is uniquely well-placed for success in Venezuela, as several key factors make it a wise buy-and-hold investment in this rising gold market: Seasoned management with a stellar Latin American track record, projects at drilling stage, large holdings close to major producers in a still-underexplored region, a solid relationship with a mining-friendly government, and a roaring gold market. This is particularly auspicious timing for investors, as drill results from La Mochila are expected to roll in over the next 8 to 10 weeks.

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.