BMR's viewNovember 9, 2010
10:00 pm Pacific
Frank Basa, Gold Bullion Development (GBB, TSX-V) President and CEO, is a hydrometallurgical engineer who knows how to effectively extract and mine Gold. And how to find it, too. Which is why GBB is so well positioned to take full advantage of the incredible bull market in Gold and junior mining stocks that is likely to accelerate in the coming months. A company such as Gold Bullionwith $10 million in cash, an advanced property with a growing depositand the strong potential for major new discoveries, is going to be aleader in this bull market that is about to enter, in our view, anexplosive new phase.
Today’s news from Gold Bullion was an importantfresh step in the direction of Basa’s ultimate goal, a multi-millionounce near-surface open-pit deposit at the Granada Gold Property. TheLONG Bars Zone geological structure extends to the east of Phase 1Discovery Hole #17, as confirmed by GENIVAR in a GBBJuly news release, and now it also extends to the north as demonstratedby today’s stellar results from Phase 2 Hole #55 (these results wereactually even significantly better than #17). To the south, severalhundred metres from #55, a potential new discovery is on the horizon inHole #86 given the very encouraging visuals reported on #86 a couple ofmonths ago. This Eastern Extension (500 metres north-south, 500 metreswest-east), it’s important to remember, is outside the Preliminary Block Model where Gold Bullion has already outlined a potential 2.4 to 2.6 million ounces (non-compliant) based on historical drilling, underground workings, bulk sampling, and Phase 1 drilling.
Gold Bullion is aggressively drilling the LONG BarsZone (a Phase 3 50,000 metre program is now underway) and that’s thesecret to riches for GBB shareholders. Granada isgoing to be all about volume – potential massive tonnage over a verywide area with LONG Bars Zone “2? (still to be explored) starting nearly2,000 metres east of #55.
Hole #55 returned the highest grades to date in the Eastern Extension including 4.05 g/t Au over 40.5 metres(from a shallow 86.6 to 127.1 metres). The 153-metre section from 86.6to 239.5 metres grading 1.36 g/t Au is even more impressive than the123.5 metre interval of 1.07 g/t Au in #17 that started all theexcitement at Granada last March.
Hole #17, it has been proven now, was not a one-hole wonder in the Eastern Extension. A lot more #17's, we believe, are on the way. And keep this in mind: BMRhas made three site visits to the LONG Bars Zone over the last eightmonths. We know the ground well. We’ve done exhaustive research.We’ve spoken to geologists. We identified this company when it wastrading at just 7 cents last December and predicted a strong chance of amajor discovery. This is the time to be really excited about just how big this could develop in the coming months.
A few things are very important to note about today’s results whichalso included four holes of lesser interest south and southeast of #55and #17. First, Gold Bullion is still drilling for“structure” throughout the Eastern Extension and even in the PreliminaryBlock Model. GENIVAR, for example, is trying to get a better handle onthe location of faults and their orientation. The NQ drilling, with asmall diameter core, gives GENIVAR’S geologists a good understanding ofrock alteration which is critical but such a small core size will oftenmiss some of the particle Gold and therefore understate the Gold content in the assays. That’s why Gold Bullion’sbulk sample in 2007 was so important, and why they’ll probably have todo another one or some different type of drilling to quantify grade. Atthe moment GBB is still drilling for structure. When they get serious about drilling for grade, look out.
In terms of Hole #55, the 356.6 metre intersection of 0.60 g/t Au isoutstanding. The vertical depth on the hole was 175 metres, nicelywithin the 200 metres Gold Bullion is looking at for an open-pit operation.
Can a grade such as 0.60 g/t Au be mined profitably? Absolutely.One of many examples of that is Kinross’ very successful Fort Knoxopen-pit mine near Fairbanks, Alaska, where Goldequivalent production last year was 263,000 ounces at a cost of $546 anounce. At the beginning of this year Fort Knox had proven and probablereserves of 3.7 million ounces at an average grade of 0.45 g/t Au.
At BMR, our faith in the Granada Gold Property is unshakeable. Today’s news from Gold Bullion was delivered in a very matter-of-fact way with a strong degree of confidence. GBB is right on track and uniquely positioned to ride the huge Gold Mania Wave that we see coming.
Below is an excerpt from a BMR article last August on GBB – we believe it’s timely for readers to examine one more time:
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The Cadillac Fault, a regional structure that traverses through the northern edge of Gold Bullion’sclaims, has indeed been the driving force, geologically, at Granada.The Fault runs one kilometre deep and is spatially related to numerousmulti-million ounce deposits including of course Osisko’smassive Canadian Malartic Deposit 65 kilometres to the east. I’m not ageologist, but I’ve studied Granada intensely beginning more than amonth before BMR first introduced Gold Bullionto its readers when the stock was sitting at just 7 cents lastDecember. I’ve spoken to numerous geologists regarding Granada and the“Cadillac Trend” in general. Gold Bullion is searching for gold in one of the most highly prospective areas there is anywhere.
There is no denying that the LONG Bars Zone has the potential todevelop into a multi-million ounce open-pit deposit. Much deeper down,given the nature of the Cadillac Trend, this property also haspotential as a high grade underground operation. We’ve stated thisbefore and it’s worth stating again – the best place to find a new mineis often near an old mine. Granada produced 50,000 ounces of gold inthe 1930’s and 80 years later Gold Bullion’s fresh approach to this former mine, and the nearly 5,000 hectare land package surrounding it, is starting to pay big dividends.
North of the Cadillac Fault, where one sees much more VMS-stylemineralization, are volcanic rocks. Sedimentary rocks are found southof the Fault where there tends to be considerably more faulting,increasing the chances of Gold mineralization (manysecondary faults have developed from the Cadillac Fault). Based onhistorical information and what has been reported so far by Gold Bullion,there is intense faulting and alteration throughout Granada. One ofthe keys for GENIVAR, in our view, is identifying the location, dip anddepth of these faults and chances are they have had success in doingthat based on the highly encouraging news Gold Bullion issued July 13 and July 29.
Infill drilling continues within the Preliminary Block Model where Gold Bullionoutlined a potential non-compliant 2.4 to 2.6 million ounces in lateApril. Holes 33 and 41, released July 29, show the Block Model is ontrack but tighter spacing and much more drilling are still ahead.Additional potential exists at depth. Keep in mind, also, that thisand other areas at Granada are renowned for particle Goldthat in many cases won’t show up in drill results but will be processedin the mining procedure – the so-called “upgrading” effect that hascertainly been seen elsewhere. That’s why Gold Bullion’s large 2007 bulk sample (grading 1.62 g/t Au) was so important.
East of the Preliminary Block Model is where things get reallyinteresting as this huge area has blue sky potential written all overit. Historically, the Granada Eastern Extension has been under-exploredbut there is enough information – historical and current – to suggestthere could be widespread, near-surface mineralization in this areathrough, in part at least, quartz veining and Gold thatis carried in disseminated sulphides in feldspar porphyry. A verylarge low grade “halo” effect could also exist here – in terms of itstotal mineralized surface area, the Eastern Extension could eventuallydwarf the size of the current Preliminary Block Model. If a lot of niceintersections of around a gram or better start coming in from the east,it will be “mission accomplished” for Phase 2. And it wouldn’t besurprising to see a few spectacular holes based on the visuals.
As Gold Bullion reported July 29, “Each and everyhole (north, south, east and west of GR-10-17)” has intersected“significant zones of altered feldspar porphyry (favorable for Gold mineralization) with quartz veining. Visible Gold has also been observed in many of these holes.
Gold Bullion appears to be encountering much morealtered feldspar porphyry in the Eastern Extension. Upcoming drillresults from the east and extensive analysis by GENIVAR should give us abetter understanding of what is really going on in this part of theLONG Bars Zone. An interesting observation is made on page 88 ofWilloughby’s 1994 report (“Geology, Structure and Gold Mineralization on the Granada Extension Property”) that we obtained through the Quebec Ministry of Mines a couple of months ago. “Sulphides (mainly pyrite) are abundant in porphyry on East Granada, in the area of the Aukeko Shaft.” Are they abundant in porphyry elsewhere as well?
Willoughby made numerous important observations regarding Granada in general in his 1994 report:
“A large circular feature interpreted from air photos encloses mostof the Granada Mine Property and suggests an intrusive stock at depth,perhaps the feeder for the numerous sills and dykes mapped at surface.”
“The role of major northeasterly fault structures in the localizationof high-grade zones as steeply dipping, northeast plunging ore bodiesis considered significant.”
“The area of shearing and alteration covering the gold veins/structures on the Granada Mine Property (what Gold Bullionis currently drilling) comprise a relatively distinct zone measuringsome 450 metres wide and 2 km long. Previously designated the MineSequence…regional consideration and 1994 mapping results show the zonecontinues both east and west, attaining truly regional dimension.”
“The ongoing mapping and drilling of the Granada Mine and GranadaExtension properties indicate an 8 km long zone of shearing, deformationand gold mineralization along the southern part of the Granada Segment,and in conjunction with other mineralization features apparent withinthe segment, is considered to be a regional feature.”
Oh, and we certainly shouldn’t forget about Big Bert in LONG BarsZone 2. As exciting as our visit was today, the golden highway hasn’tquite been completed out to that area yet so unfortunately we weren’table to pay a visit. Of course we’re referring to the Bert Vein nearthe old Aukeko shaft. The average assay of three bulk samples (reportedin 1938 by Hosking, according to Willoughby’s report) was 7 ounces Auper tonne. Gold Bullion plans to visit Big Bert later this year as exploration moves further east at Granada.
With a strong team on the ground as we saw today at Granada, working a highly prospective and big project, there’s no question Gold Bullion Development has a golden opportunity on its hands.