Gold Bullion Development (GBB, TSX-V) has been trading this week almost exactly as we expected it to and has retreated into the “sweet zone” – Thursday’s 24.5 cent close puts it firmly in a very strong area of support from which the next big run, taking it to fresh highs, is likely to begin. This is “textbook” trading, so we hope those who have been following this exciting story have been accumulating positions the past few days. Gold Bullion has been in “consolidation mode” this week with overbought RSI levels correcting back to where they were just prior to the March 2 blast-off.
Osisko’s (OSK, TSX) $372 million all-stock friendly takeover offer for Brett Resources (BBR, TSX-V) underscores in many ways how potentially valuable Gold Bullion’s Granada Gold Property is. Gold Bullion has a current market cap of just $20 million and, at the very least, has every chance in our view to soon define a deposit that equals or exceeds Brett’s Hammond Reef. Granada is also surrounded by excellent infrastructure in the heart of the “Golden Highway”, 40 miles west of Osisko’s Canadian Malartic Deposit (Gold Bullion, by the way, now controls 4,900 hectares at Granada, nearly identical in size to Osisko’s package at Malartic).
As stated in its March 10 news release, Gold Bullion will soon be releasing a preliminary resource block model on the LONG Bars Zone which includes historical drilling in addition to GBB’s 25-hole program in December and January that resulted in a significant discovery in the northeastern part of the property. Mineralization is at shallow depths (typically near surface to 200 metres) and is open in all directions at Granada. We’ve walked the LONG Bars Zone, we’ve seen it for our own eyes. And the next few months are going to be fun as Gold Bullion drills hole after hole – north, south, east and west. We can’t wait to see what their preliminary 43-101 is going to look like by year-end. The company was drilling for structure in December and January and came up with some fantastic holes. What happens when they actually start drilling for grade?
Brett’s Hammond Reef has an inferred resource of 259.4 million tonnes grading 0.8 g/t Au at a cut-off grade of 0.30 (6.7 million ounces). The deposit remains open along strike and at depth. Over 97% of the resource is within 300 metres of surface. The inferred resource estimate was based on 85 historical holes (18,000 metres) and 138 holes drilled by Brett (39,000 metres).
GENIVAR, Gold Bullion’s geological consultant, is producing a preliminary resource block model for Granada based on 29,000 metres of total drilling (26,000 historical, nearly 3,000 by Gold Bullion), underground workings, and three test open-pit bulk samples. Gold Bullion’s large 30,000 tonne bulk sample in 2007 graded 1.62 g/t Au and even showed some minor silver, nickel and copper credits. The company has already demonstrated there are no metallurgical issues at Granada, recoveries are very high and strip ratios are low. The economics of a large open-pit mining operation at this property could potentially be quite robust.
An interesting experience during our recent Granada site visit was walking on the 400,000 tonne waste pile, adjacent to the old #1 pit. In the past, people used to sneak into this area and hunt for gold. The fact that Gold Bullion sampled its waste pile and got a stunning average grade of 1.75 g/t speaks volumes about the potential of this property. Underneath this waste pile, though, could be another significant zone of mineralization as geologists believe a fault runs right through here (holes 1, 2 and 3 were drilled at the very western tip of the waste pile and returned significant results). Drilling through this waste rock should not be a problem.
Below is a view from on top of the waste pile with Granada Mine Manager Karol Mikulash on the left and GENIVAR’s Nathan Jourdain on the right:
A view of part of the Granada waste pile...like walking on the moon. What's underneath the waste pile has geologists curious.
Gold Bullion has been a fascinating story to cover and we have every reason to believe it’s going to get even more interesting in the days, weeks and months ahead. We’re still working on a comprehensive report on Gold Bullion from our recent visit.
