BullMarketRun.com has another HUGE winner on its hands with Gold Bullion Development Corporation (GBB, TSX-V) which we first uncovered for our readers a few weeks ago when this company was showing the first real signs of coming out of dormancy. The stock is up 53% since we initiated coverage and everyone wants to know, where is this headed?
Our specialty is finding undiscovered gems in the junior resource market that can produce triple digit gains (Seafield Resources, for example, is now up 300%). So a 53% gain is nice, but Gold Bullion has much, much further to go in our view. A major geological story is unfolding here, we believe, as we are taking the position that this company has a tremendous chance of making a very significant discovery at its Granada Gold Mine near Rouyn-Noranda along the famous “Cadillac Fault”.
Gold Bullion hit a new 52-week high yesterday of 12 cents on big volume of nearly 1.4 million shares. The volume surge and accumulation in this stock over the past month has been incredible. Investors have seen what Gold Bullion neighbor Yorbeau Resources (YRB.A, TSX) has done in the last few months (Yorbeau’s market cap has rocketed to $42 million from $13 million since the beginning of September) and are coming to the realization that the Granada Gold Property holds the same potential as Yorbeau’s Rouyn Property.
We have stated this before: The best place to find a new mine is near an old mine. Just ask Aurizon Resources (ARZ, TSX) which very recently released a NI-43-101 Pre-Feasibility Study of its Husco Deposit (two million ounces measured, indicated and inferred) at its Joanna project just 20 kilometres to the east of Granada. Husco had even more humble beginnings than the Granada Mine. In 1948 and 1949, 45,872 tonnes of ore grading 6.58 g/t was mined at Husco in a 100-tonne-per-day operation, yielding 9,000 ounces. In 1973, ore reserves at Husco were estimated to be 955,000 tonnes grading 5.4 g/t. Not much happened with that property until Aurizon took it over in 2006. After drilling nearly 500 holes they had a two million ounce deposit on their hands.
The Granada Gold Mine was first brought into production in 1930. A mill with a capacity of 180 tonnes per day processed 51,476 ounces from 181,744 tonnes of ore averaging 9.7 g/t gold and 1.5 g/t silver up until a fire destroyed the surface structure in 1935. Some significant exploration took place during the 1980’s and 1990’s leading to an A.C.A. Howe Limited all-category estimate (non-compliant) in 1994 of 2.38 million tonnes grading 4.08 g/t gold. Gold Bullion acquired the Granada Mine in 2006 and now for the first time they are drilling it and some of the surrounding area. They have an extensive historical drilling data base to work with and a land package that has increased from under 100 hectares to 2,300 hectares (2 km by 7 km). Approximately 95% of that land package is unexplored, and it’s all in the heart of a prolific gold belt – “The Golden Highway”, as Gold Bullion President/CEO Frank Basa called it in our interview with him last week.
And of course we all know what Osisko (OSK, TSX) has accomplished over the last few years with its discovery of the the Canadian Malartic Deposit (10+ million ounces) 40 miles to the east and on trend with Granada.
“If you’re organized, if you have a good exploration team, you’ll hit it and you’ll develop good resources,” Basa explained to us. “That’s what Osisko did. They took an expired, exhausted mine and took a fresh approach to it. We know that deposit very well. People at Osisko did a phenomenal job tying up a ‘worthless’ property with huge environmental liabilities. I feel even the ounces they’ve reported are a little low. Once they get into production they’ll have more gold. It’s the nature of the Cadillac trend.”
The news that Gold Bullion released December 29 suggests to us that the first round of drilling at Granada went very well. An expanded second round has started, and speculation regarding assays from last month’s drilling is building.
With a strong overall market and an excellent property that we believe is going to deliver in a big way, Gold Bullion has all the makings of a huge success story. And it’s one we’re going to keep following extensively. Its current market cap of only $9.2 million (only 20% of Yorbeau’s) gives Gold Bullion an extremely attractive risk-reward ratio.
