April 26, 2010
Gold Bullion Developments Cranks Up Drilling On The Multi-Million Ounce Granada Gold Property In Quebec

By Alastair Ford

There aren’t many mining addresses more attractive than the Cadillac Trend in Quebec, part of the wide Abitibi greenstone belt that stretches right across the region. Cadillac boasts an established reserve of 15 million ounces of gold, and hosts Canada’s largest gold mine, the 5.3 million ounce La Ronde mine owned by Agnico-Eagle which should produce around 180,000 ounces of gold this year. And Cadillac boasts a prolific history, too, having produced around 12 million ounces of gold to date, across a time span that stretches back over 80 years. The first gold discovery came in 1924 on the O’Brien property. Pandora, Central Cadillac and Wood Cadillac followed, among others, as did Granada, a property that’s currently being reactivated by Canadian-listed Gold Bullion Development Corporation.

Many of these mines didn’t survive the 1930s, though, and although there were flickers of subsequent interest, it wasn’t until the late 1980s that the momentum really started to build once more. That was the time when Agnico-Eagle started stepping up its exploration at La Ronde and opened up the new zone that lies at the core of the current 7,200 tonnes per day operation. And it was also the time that new exploration started around the old Granada mine, exploration that, through two subsequent changes of owners, would eventually lead to the current conceptual resource of between 2.4 million and 2.6 million ounces, as just announced by Gold Bullion Developments.

The company cautions that its resource numbers aren’t, yet, up to the standards required of Canada’s national instrument 43-101, which provides clear parameters for the reporting of gold resources. But that’s not really the point. The point is that Gold Bullion, and specifically its chief Frank Basa, has outlined a realistic exploration target for Granada, and the Canadian markets are clearly very taken with it. The company’s shares have risen fourfold since the start of the year.

Gold Bullion has been on the ground at Granada since 2006, and it’s not been idle. In 2007 the company conducted a 30,000 tonne bulk sample, and has been steadily adding to the original land package ever since. By late 2009 it was ready to undertake its first drill programme at Granada, and this duly delivered the results which are at the core of the new projections for the 2.4 million to 2.6 million ounce resource. It was a relatively small programme, consisting only of 2,817 metres, but it was enough to confirm the structure and dimensions of what the company has called the LONG Bars zone, and to allow for valid extrapolation to be made from the results of 26,000 metres of drilling undertaken by previous owners during the 1990s. The plan now is to drill between 10,000 and 15,000 metres to deliver a full 43-101 compliant resource to market by the end of the year.

Gold Bullion director Roger Thomas has high hopes for that programme, but is also keeping a close watch on events in the wider region. He notes the prevailing market rumour that Osisko Mining, a prominent near neighbour on the Abitibi greenstone belt, might soon be the subject of a takeover offer from Goldcorp. Osisko now boasts more than six million reserve ounces to its name on its Malartic gold property, and has a share price to match. From a lowly C
.20 five years ago, when it was just getting to work on the Malartic property, Osisko shares now trade at a fairly juicy C$9.70, and they’ve been even higher.

Whether Gold Bullion Developments will be able to follow where Osisko has lead remains to be seen. But the early signs are good. The initial block resource estimate shows that there’s plenty to shoot for as the rigs get turning this summer. With C$4 million in cash, and another C$2 million likely to come in from well in the money warrants, the company won’t be short of cash for a while yet. And if the share price keeps on its current trajectory, raising new funds ought not to be too much of a heavy lift. In the meantime, there’s also the prospect of adding additional ounces from an area outside that from which the initial resource estimate was generated. Drilling in the north-east section of the LONG Bars has shown up some additional promising intersections, including one that ran 65.5 metres of 1.21 grams per tonne, almost from surface. Other holes near to that one have confirmed the continuity of strike. The key issue for Gold Bullion now is to get those drill rigs turning, and to start cranking out those results. It’s enough to whet the appetites of even the most faint-hearted of gold bugs.