With gold prices at or near record highs investors love gold juniors, especially those that can rapidly discover gold, grow a good grade resource, then make it to production with a reasonably low CapEx, ideally in a safe jurisdiction.
One junior gold miner that is making significant moves along this pathway is Granada Gold Mine Inc. (TSXV: GGM).
Granada Gold is focused on exploration and development of their Granada Gold Project situated in the heart of the famous Abitibi Greenstone Belt and along the prolific ‘Cadillac Break Trend’ in Quebec, Canada. The Cadillac Break Trend has produced >75 million ounces of gold over the past 100 years, and the immediate area has produced over 140 million ounces of gold.
The Granada Gold Property is located in a famous gold producing region (Abitibi Greenstone Belt) and along the prolific ‘Cadillac Break Trend’
The Granada Gold Property
The Granada Gold Property includes the former Granada Gold Mine which produced more than 50,000 ounces of gold in the 1930’s before a fire destroyed the surface buildings. Historic underground production between 1930 and 1935 from 2 shafts in the area had an average grade of 9.7 g/t gold and 1.5 g/t silver.
Approximately 120,000 meters of drilling has been completed to date on the Property, focused mainly on the extended LONG Bars zone which trends 2 kilometers east west over a potential 5.5 kilometers mineralized structure. 80% of the potential 5.5 km east-west strike length remains unexplored, which means there remains very significant potential exploration upside.
In February 2019, the Company filed a technical report compliant with National Instrument 43-101 announcing an updated pit constrained resource estimate of 762,000 ounces of gold @1.06g/t Au in the Measured and Indicated categories, plus 455,000 ounces of gold @2.04g/t Au in the Inferred category.
Then in January 2020 Granada Gold announced a very exciting high grade gold drill result that resulted in a 62.5% stock price rise. Here is a summary:
“Granada Gold Mine intersects 11.45 G/T gold over 33 meters, supports continuity of high-grade structures. Unexpected near-surface, high-grade mineralization has been discovered within the recently explored two-kilometer LONG Bars Zone of the five and half kilometer Granada Shear zone.”
Note that the core length reported is estimated to have intersected only 15-20% of the entire thickness of the zone.
Granada Gold CEO and President Frank Basa stated:
“Recent drill results are in line with historic production grades of 8 to 10 g/t gold when Granada was mined in the 1930s. These drill results are not included in the current in-pit resource estimate for the property……The current drill program has unlocked the high-grade, near-surface potential and shows that the Granada gold deposit resource may have been underestimated.”
“Underestimated” is certainly an understatement, but time will tell. Anything over 5g/t is considered high grade gold, which is especially nice with the gold price (US$1,808/oz) near a record high. Granada Gold announced last month that they have begun further exploration with a summer drilling campaign aimed to identify further high grade gold and a 30-50 tonnes mineralized material bulk testing program.
Understandably Granada Gold now wishes to focus on further exploring their Granada Gold Project. In recent news Canada Silver Cobalt Works Inc. (TSXV: CCW) (OTC: CCWOF) announced that they have now effectively acquired five mining leases at Castle East (part of the Castle mine property near Gowganda, Ontario). This means that Granada Gold can now focus on their Abitibi Greenstone Belt Gold Project; but still potentially benefit in silver via the consideration from the deal. Noting that Canada Silver Cobalt Works will issue 2,941,000 common shares to Granada Gold at a deemed price of $0.51 per share, for total deemed consideration of approximately $1,500,000. Each of the shares will be accompanied by one common share purchase warrant at a $0.55 exercise price for a period of five years.
The chart below clearly highlights that Granda Gold Mine Inc. has a much lower market cap relative to peers in the region. The reason for the lower market cap is the early stage and the existing M&I resource estimate is only at 1.06g/t grade. Clearly further high grade gold discoveries and inclusion of recent discoveries into the resource estimate can significantly boost the grade. Should this occur then certainly the “undervaluation” would become very clear.
Granada Gold Mine Inc. on a market cap of C$21 million is much lower than peers in the region
Source: Granada Gold July 2020 Company presentation
Next steps for Granada Gold include the summer drilling (June, July, August 2020) and bulk sampling campaign which is already underway and should soon start to release results. Beyond that the Company hopes to start production. Permits are already in place for an open-pit mine of 550 t/day and to ship to a local mill for processing, although the Company now considers an onsite Mill maybe a better solution. Previous engineering work is to be updated towards building a mill producing 80,000 to 100,000 oz Au per year.
Granada Gold Mine Inc. certainly ticks many boxes. The Company is in a safe and also prolific gold location in Canada, has an established resource (M& I 762,000 ozs of gold @1.06g/t, plus Inferred 455,000 ozs of gold @2.04g/t), massive exploration upside already finding high grade gold (11.45 g/t gold over 33 meters etc), good infrastructure, and still trades on a relatively low market cap.
So yes Granada Gold Mine Inc. is “underestimated” and quite possibly “undervalued” right now, especially if they were to strike more high grade gold. With more drill results and a bulk sample result expected very soon in the area where recent high grade gold was found, it may well be a good time to take a position in Granada Gold.