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The acquisition by Adventure Gold (AGE, TSX-V) of 200 hectares at Granada, announced Monday, was a cunning move that forced us to take a close look at this three year-old pure Gold exploration and development company.  As we’ve already explained we envision a strong Gold market and a powerful move by the CDNX over the next six months, and Adventure Gold is the type of company that has the potential to perform exceedingly well in this environment.   We are impressed by its strong portfolio of properties (19 in six strategic areas in Quebec and Ontario) including its recently announced partnership with Agnico-Eagle (AEM, TSX) at Dubuisson.  It also has a partnership with Lake Shore Gold (LSG, TSX) at Timmins West.  Adventure Gold has slightly over $2 million in cash and approximately $3.5 million in cash and stock (includes 15,000 shares of Agnico-Eagle).  With 47 million shares outstanding, AGE has a market cap of only $11.75 million based on yesterday’s 25-cent close.  It also has a very bullish chart.

Adventure Gold’s foray into Granada caught everyone by surprise and why these claims did not fall into the hands of Gold Bullion Development (GBB, TSX-V) we’re not exactly sure (Gold Bullion has done an excellent job tying up land around Granada).  Designating claims in Quebec can sometimes be a tricky and, in some people’s view, even an “unfair” process.  Fundamentally, Gold Bullion’s quest for a multi-million ounce deposit at Granada has not been impeded – it’s business as usual as they continue to explore north, east and south of their Preliminary Block Model – and if anything, this aggressive move by Adventure Gold underscores the argument BMR and others have put forward that there is potentially a massive amount of Gold to go after at Granada (Gold Bullion’s land package totals 50 square kilometres).  But things have changed fundamentally in our view for Adventure Gold.

The President and CEO of Adventure Gold is Marc Gagnon who we spoke to this morning.  He’s very upbeat about the Granada acquisition and he’s also quite familiar with the property as he was on it some years ago in his capacity with Inmet Mining (IMN, TSX).

Most of the property picked up at Granada by Adventure Gold is to the west of Gold Bullion’s Preliminary Block Model and doesn’t get us too excited at this point in time.  They’ve picked up some land immediately south of the Preliminary Block Model and historical Pits #2 West and #2 East, and we believe they have an area (approximately 800 metres in length and 100 to 200 metres in width) underlain by Timiskaming sediments (much more favorable than the Pontiac sediments immediately south) that is quite prospective based on Willoughby’s 1994 report on Granada that we have referred to numerous times here before.

The potential home run, however, for Adventure Gold is a small claim block that the company was astutely able to designate with the Quebec Ministry of Natural Resources over the summer that gives the term “area play” a whole new meaning.  The most important portion of this claim block is a section underlain by Timiskaming sediments measuring approximately 360 metres north-south and 200 to 300 metres in width.  It is approximately:

• 250 metres southeast of GBB’s Phase 1 Discovery Hole #17
• 200 metres east of Phase 2 Hole #86
• 90 metres south of Hole #78
• 85 metres southeast of Hole #73
• 44 metres east of Hole #93
• 40 metres east of Hole #68
• 20 metres south of Hole # 83
• 16 metres east of Hole #91

Earlier this month Gold Bullion reported a possible significant discovery of near-surface mineralization in the southernmost hole drilled to date in the Eastern Extension, #86.  Additional holes have recently been drilled in that area (Sept. 15 GBB News release).    Just 200 metres to the east of #86 is Adventure Gold’s claim block, so a good result from #86 and/or nearby holes will not only drive Gold Bullion significantly higher but is also likely to trigger a tsunami of buying into AGE.

Further to the north, GBB’s hole #73 was one of the holes that GENIVAR stated confirmed the extension of the LONG Bars Zone geological structure to the east of Phase 1 discovery hole #17.  Hole #73, by our calculation, is only 85 metres northwest of the northern edge of Adventure Gold’s Eastern Extension claim area.

Adventure Gold stated in its Monday news release:  “Our interpretation of the information released by Gold Bullion and those from the Quebec Sigeom database suggest that the LONG Bars Zone probably extends onto our new property and these extensions had never been drilled.  A prospecting program is slated to start this week.”

Based on all that we have studied on Granada – an exhaustive amount of material – there is little doubt in our mind that the overall LONG Bars Zone Granada Deposit extends right through this section now controlled by Adventure Gold.  How AGE decides to handle this is going to be very interesting.  No less than 66% of this company’s exploration budget last year was spent on drilling.  From what we’ve learned the last couple of days, there are some smart operators at Adventure Gold and they’re going to be as opportunistic as possible.  So it wouldn’t surprise us if they soon mobilize a drill rig and stir up some considerable excitement.  First, of course, they’ll need to bring in a surveyor to determine the precise property boundaries. Their aim obviously is to take advantage of Gold Bullion’s success and achieve some success themselves on the ground before possibly selling their land package or optioning it out to Gold Bullion.

Adventure Gold has scored a major coup – this company has a strong geological team and they’re also smart capitalists who understand how to drive share value.  In the mining business even a tiny sliver of land in the right location can prove to be extremely valuable.

We had never heard about Adventure Gold until it came out with its news release Monday.  But they certainly have our attention now.  We suggest investors do their due diligence on this company – we found AGE’s web site extremely informative, and part of our due diligence yesterday included a conversation with former Adventure Gold Chairman Andre Audet who runs Everton Resources (EVR, TSX-V), another company we like that we initially brought to BMR readers’ attention several months ago.  As a matter of disclosure, this writer purchased 100,000 shares of Adventure Gold yesterday as AGE’s new Granada holdings, combined with its existing portfolio, gives this company a very dynamic mix of opportunities and some serious home run potential.