The BMR Portfolio (Week In Review Part 2 of 3)
Gold Bullion Development (GBB, TSX-V)
It was a hugely interesting week for Gold Bullion as the company first announced it had launched a Baseline Environmental Study for the Granada Gold Property, then two days later (Thursday after the close) it gave a detailed exploration update on the LONG Bars Zone in addition to some new drill results. Between the CDNX and the Alpha Market, GBB traded 5.7 million shares Friday and closed the week at a support level of 64 cents, a loss of 3 cents on the week.
Technically the stock continues to look very strong. The knee-jerk “sell-on-news” reaction Friday by some investors took the stock to an intraday low of 60 cents, just above its rising 20-day SMA, before bargain hunters stepped in and stock moved from weak hands into strong hands. An important technical development this past week was a confirmed reversal in GBB’s 50-day moving average (now rising at 56 cents). This bodes well moving forward.
Fundamentally, Gold Bullion’s 20,000 metre Phase 2 drill program, which is now drawing to a close, has revealed some highly significant geological information. In fact, the very definition of the Granada deposit has evolved substantially as Gold Bullion stated in its news release: “Granada is a sediment-hosted, structurally controlled vein-type deposit (quartz veins, veinlets, stockworks, breccias) that has been intruded by a series of syenite feldspar porphyry sills and dykes mineralized with finely disseminated pyrite and/or arsenopyrite.” This is a different and expanded definition from earlier and, combined with additional information, it’s not hard to draw the conclusion that Granada is now starting to show the characteristics of a porphyry-style deposit which has major implications for potential tonnage. Gold Bullion has a high grade starter pit at Granada but this deposit, we believe, is going to be all about volume – and lots of it.
The release also stated: “The fact that feldspar porphyry is hosting gold is an interesting development historically for Granada as a 2006 Technical Report on the Property stated that all economic mineralization at Granada was related to quartz veining.”
Additional drill results were released – some hit and some didn’t – but all the signs are very encouraging here. It appears that none of the holes with the best “visuals” have been reported yet. Why that is we don’t know, but it seems the drillers didn’t start hitting the really good stuff in the Eastern Extension until July (drilling started in the East in early June). So those holes are in the assay pipeline and investors need to be prepared for that – the chances of some spectacular results out of the East in the very near future clearly exist.
GENIVAR has reported very encouraging showings east, north and south of Phase 1 discovery hole #17. What we find really interesting – and it was buried near the end of GBB’s news release – was that the most southern hole in the Eastern Extension – #86 – appears to have been a successful 250-metre step-out to the east-southeast from the Preliminary Block Model and Vein #2. Strong alteration zones in #86 as well as visible gold at two different depths – in a quartz vein and also in porphyry. This is a major development as now it’s not just areas east and north of the Preliminary Block Model that hold excellent potential, but the south has possibly really opened up as well. This is a bit of a surprise and it’s going to be a lot of fun to watch. A core photo of #86 on the Gold Bullion web site shows really nice mineralization including visible gold in porphyry. This hole could be absolutely stellar.
GR-10-53 (inside the Preliminary Block Model) is Gold Bullion’s best drill result so far at Granada. Three things we love about this hole – near-surface (3.5 to 114 metres), nice grade (1.34 g/t Au over 110.5 metres), and it was drilled perpendicular to Vein #2 (believed to closely approximate true width).
We also see that things are developing over the northern half of the Preliminary Block Model. In fact, as incredible as this may seem, it appears the knuckleheads who previously worked on this property and extracted some gold also dumped massive amounts of waste material right on top of an orebody (Gold Bullion of course had part of this “waste” material sampled and got a grade of 1.75 g/t Au). GENIVAR confirms that “large porphyry intrusions cover much of the northern part of the waste pile. Northeasterly trending fault structures are also interpreted to run through the waste pile.”
Rock from the 34,000 metre waste pile is being removed, allowing for drilling of targets in this promising area. Also, just east of the waste pile in the northeastern quarter of the Preliminary Block Model, hole #47 intersected 28 metres grading 1.68 g/t Au. A total of 14 other holes have been drilled in this section and assays are pending.
The very important Cadillac Fault runs through the northern portion of Granada, going down approximately one kilometre deep, and many secondary faults (“spatially related” to the Cadillac Fault) throughout the Granada Property have become features of major interest for GENIVAR. The theory, it seems, is that some high grade gold has formed in areas close to these northeasterly trending faults.
The Preliminary Block Model is holding up extremely well and despite the 500 or so historical holes drilled within this area, a good part of it (the northern half east of Pit #1) has received only limited historical attention. It has also not been tested at depth. Willoughby’s 1994 report on Granada suggests major potential at depth: “A large circular feature interpreted from air photos encloses most of the Granada Mine Property and suggests an intrusive stock at depth, perhaps the feeder for the numerous sills and dykes mapped at surface.”
“Infill drilling” is taking place within the Preliminary Block Model but there also appears to be a lot of exploratory drilling right now and “drilling for structure” as Frank Basa calls it. This is all necessary, of course, to develop a major resource (2.4 to 2.6 million potential non-compliant ounces have already been outlined for the Preliminary Block Model). What’s important to keep in mind is that Gold Bullion’s 2007 large bulk sample has given us the best indication of the grade we can expect within this defined area – better than 1 g/t Au.
All in all, it was a superb week in our view for Gold Bullion. The stock hit a new 52-week high and is very strongly supported around current levels. Everyone’s understanding of Granada, geologically, has improved significantly. The potential of the LONG Bars Zone becoming the next major gold deposit in northwestern Quebec is very real and undeniable, especially after what we know now.
