SOURCE: [Metal Investment News]

On August 16, 1896, “Skookum Jim” of the Tagish Nation discovered a large nugget of gold in Bonanza Creek, Yukon. Over the next three years 100,000 prospectors flocked to the Yukon in search of gold.

So much gold flowed through Dawson City in the late 1800s that some janitors reportedly got rich sweeping gold dust off the saloon floors.

Image: http://www.metalinvestmentnews.com/wp-content/uploads/2012/02/Skookum-Jim-VOL-MIN2.jpg

By 1903, the party was over. The gold deposits were sporadic, the winters were deadly, and the Klondike prospectors migrated to the easier pickings of Nome, Alaska where the gold was lying on the beaches.

Since Skookum Jim's discovery, a total of 18 million ounces of gold have been produced in the Yukon – about $30 billion at today's prices.

Despite this, Canada's Yukon Territory remains largely unexplored. The region is permeated with veins of gold, churned to the surface by volcanic action and then worn away by the rivers, leaving chunky gold particles called “Placer Gold”. As the spot price of gold has surged 600% in the last decade, gold explorers have flooded back to the Yukon.

Image: http://www.metalinvestmentnews.com/wp-content/uploads/2012/02/Yukon-Mining-VOL-MIN2.jpg

Much of the Yukon is un-glaciated which makes soil samples a significant predictor for the discovery of underlying structures. In fact, the Yukon is one of the few places in the world were soils samples are an effective tool for locating rich “lode deposits”.

Volcanic Metals (VOL-TSX.V) is one grassroots Yukon explorer that has discovered interesting gold soil anomalies. With a share price of .08 and a market cap of $2.4 million, Volcanic has significant upside.

Image: http://www.metalinvestmentnews.com/wp-content/uploads/2012/02/VOL-Area-MIN3.jpg

In fact Volcanic is in the same district, in the same phase of the development, as Yukon gold explorer Underworld Resources (UW-TSX.V) was in 2009. In 2010, Underworld was bought out by Kinross (K-TSX) for $137 million. While there are no guarantees Volcanic will follow the same path, a potential 5,700% gain is worth a look.

Volcanic's core property is the 41,800 hectare Walhalla Project - acquired in September 2011 - in the White Gold District.

Company Highlights:

· Experienced, Yukon-based geological lead

· Solid Corporate Structure; ~$2 market cap

· Favourable mining district with extensive infrastructure and stable politics

· Excellent tax/investment benefits

· Leveraged for upside with regional White Gold activity

· 3.41 gram/tonne soil anomaly

· Potential drill target in 2012

Walhalla is immediately east of and contiguous to Pacific Ridge's Mariposa Project. VOL holds a 25% interest in Walhalla and has entered into an option agreement to acquire the remaining 75% interest.

Phase I Sampling and Prospecting:

The Phase I program, which covered less than a third of the property, identified strong anomalous gold zones as well as pathfinder elements such as arsenic and barium. Ridge and spur samples revealed significant gold-in-soil anomalies.

Of particular interest was a gold-in-soil anomaly that returned a value of 3.41 g/t Au - one of the top ten historically in the entire White Gold District. This sample was taken from the C horizon at 90cm depth using a manual deep auger, in sample spacing of 50-100m.

Airborne Geophysical:

In November, 2011 Volcanic completed a 4,500 line-kilometer helicopter aeromagnetic survey over the property. Results from this survey are being used in conjunction with assay results to identify targets for follow-up work such as grid soil-sampling, trenching and drilling.

Image: http://www.metalinvestmentnews.com/wp-content/uploads/2012/02/VOL-Airborne-MIN4.jpg

2012 Program:

· March Field Program - 200+ power auger soil samples near 3.41 g/t gold sample

· Airborne geophysical survey continued analysis (current)

· Phase I/II soil, grid, trenching program (June start) $750,000 field program.

Last year in the Yukon, over 110,000 new quartz claims were staked, exceeding the previous total of 83,161 claims in 2010. 2011 exploration spending is estimated at $300 million, nearly double the previous record of $157 million. Over 50 projects spent $1 million or more in 2011, with four spending at least $20 million.

The Yukon is hot. Volcanic Metals has a big land package in the heart of Yukon gold country. With veteran geological management and an aggressive assaying program, the company is poised for growth.