To look at Golden Reign’s (TSXV: GRR) stock chart, the company looks like either a bargain or a wash out: It was trading at $0.40 at the end of 2006. Since that time, shares in GRR have taken a hammering down to $0.15 per share. To me, this usually indicates a company mismanaged, but occasionally it indicates something much juicier – an overlooked, value-priced junior. After some thorough due diligence, including speaking to the company officers and reading two NI43-101 reports on the company’s two 50% JV deals, I bought in on a respectable position.

Why? It’s a bit of a no brainer, to me. The company is trading at $0.15 with two properties, both of which have proven widely disseminated gold mineralization in an area with resources of over 120 million ounces gold, nearby infrastructure, with excellent roads and transportation and the protection of an operator on the project that is a prominent Russian bank – Status LLC. What else do you want from a value-priced junior? It’s going no place but up.

Let’s go over the details. First, why has the company been sinking on the TSX Venture? Simply put, they were shafted by local politics. After pouring $300,000 into exploration last year, the government sniffed gold on the property and handed it to a local company in the next land auction.

The temporal aspect of the land auction process in Russia ensures mineral properties are actually explored, which is a good thing. There are two types of permit available at auction: A 5-year exploration license and a comprehensive 20-year mining license. Golden Reign had the former, which left it vulnerable because, when it came time to auction off the 20-year mining permit for the property, Golden Reign’s application to take part was rejected.

This time around, they have a solid high-level partner and a 20-year mining permit already in place.

I spoke with both CFO Kim Evans and Larry Myles, who runs the corporate communications department for Golden Reign. They were exuberant that the company’s slide down the TSX charts now poses a value opportunity for investors – I obviously agree.

"It’s entirely different this time," Myles told me. "When we started in Russia, we were going from the ground up. In Russia, if you’re working with a bank or a governmental agency, you’re working from the roof down. You’re protected."

Golden Reign’s partner, Status LLC, is the mining division of CentroCredit Joint Stock Commercial Bank, which is headquartered in Moscow, with another branch office in London. CentroCredit is a member of the Association of Russian Banks, the Moscow Banking Union and National Stock Association participating in the Russian Trading System (RTS), the Moscow Stock Exchange (MSE) and the Saint-Petersburg Stock Exchange. As of January, 2006, it was ranked the 38th largest in equity capital amongst the top Russian banks. In other words, it is the real deal.

To earn its 50% of the new company, simply called Gold Mining Company LLC (GMC), Golden Reign must pay $6 million in expenditures over the next three years – the company raised $4 million last year in its IPO, so another small private placement (PP) or debt financing is in the offing.

Both of the two properties Gold Mining Company has in its portfolio have favourable NI43-101 reports; and both are posted on Golden Reign’s website: Goldenreignresources.com.

The Dorozhni property covers 8.8 square kilometers in the centre of Magadan Province. The property lies along an all-weather road approximately 17 kilometres west of the community of Susuman – the nearest service centre.

According to the 43-101 technical report, previous exploration work and mining of the Dorozhni gold deposit was focused on shallow dipping sub parallel gold-bearing quartz veins. The veins have been traced for lengths of 450 metres along strike and 380 metres down dip with veins ranging from 0.4 metres to 2.4 metres in width, occasionally expanding up to 17 metres (such as the Burovoya vein).

To date, gold mineralization has been reported in five separate quartz veins. Historical reports state that placer mines from Dorozhni Creek produced approximately 95,000 oz of gold.

In spite of the placer mining and high-grade vein hunting in the area, the qualified person and author of the technical report believes that the Dorozhni property contains features suggesting the potential for large tonnage gold deposit. "The high gold numbers in the quartz veins suggests that average grade for this mineralization could be much higher than the norm for other large tonnage, low-grade deposits, developed in remote northern regions, such as Alaska," he wrote.

"The deposit type envisioned for this project is intrusive hosted gold mineralization similar to many intrusive hosted deposits located in North America, particularly the Fort Knox deposit in Alaska. A series of sub parallel veins and veinlets carry high grade gold mineralization."

Since much of the gold found at Dorozhni is alluvial in nature, grains are often easily found on the property’s streams and riverbeds. "Grains range in size from 0.5-3 mm although, along vein selvages, gold grains occasionally grow up to few centimeters in size. One such grain weighed 800 grams," the report states. "The distribution of gold mineralization is extremely irregular, with a highest reported grade of 6,322.2 g/t gold."

The situation is similar at the Butarni Licence, which covers 9.3 square kilometres, approximately 310 kilometres north of Magadan (the capital). While major veins are between 0.1 and 1.5 metres in width, the author of the Butarni technical report believes that "the broad extent of the mineralized zones and the proximity to surface provides the opportunity for the development of a large tonnage, open pittable deposit. This style of mineralization, consisting of sheeted quartz veins and veinlets, and minor wall rock alteration in a granite host rock, is similar to known intrusive hosted gold mineralization in North America, particularly the Fort Knox gold deposit in Alaska."

Historical grab and channel sampling returned values from 1 g/t to 334.4 g/t, with an average grade of 21.3 g/t gold from 45 samples and 29.6 g/t gold from 22 channel samples. As well, there are number of placer gold operations within 20 kilometres of Butarni, including placer tailings within four kilometres of the project site.

Magadan Region is known as Russia's most important gold mining territory. The region boasts some of the largest gold and silver reserves in Russia. Also, there are nearly 2000 placer gold deposits, 100 gold ore deposits, and 48 silver ore deposits in the territory. Total probable gold reserves in Magadan Region are estimated at 128 million ounces.

So, in Golden Reign, we’ve got a rosy picture for a junior trading at $0.15 with only 26 million shares on the market:

• two properties with extensive trenching and drilling carried out

• located in Russia’s most prolific gold mining region

• the potential for large tonnage, open pit gold mines

• a well-funded, respected JV partner

• a 20-year mining license

And did I mention she was trading at $0.15?

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