With multiple acquisitions recently completed in Quebec, is Granada Gold Mine (TSX.V: GGM) the next possible takeover target?
Junior mining companies are on the move, as gold trades at $1,798 per-ounce. Investors looking for higher returns and assets trading at a discount often play in the junior mining space. These companies are usually growth-oriented – exploring and developing assets by conducting drill programs to identify resources and potentially get to a definitive feasibility stage, and into production.
Granada Gold Mine (TSX.V: GGM) is a developing the Granada gold property, located just south of Rouyn-Noranda, Quebec, along the highly prolific Cadillac Break, the source of 75 million ounces of gold production in the past century. This is an excellent opportunity to have a gold deposit within Quebec because the larger gold producers are looking for ore to feed their mills (6 out of 10 mills in the area are shut or operating below capacity because of a lack of ore). Two explorers in the area were recently acquired for their gold resources at takeover prices many times higher than Granada’s (TSX.V: GGM) current approx. $20 million market cap (more on this later).
Approximately 120,000 metres of drilling have been completed to date on the Granada Gold property, focused mainly on the extended Long Bars zone, which trends 2Km east-west over a potential 5.5Km of mineralized structure. Another drill program of 120,000 meters is underway (12,000 meters already completed) with drill results already released and more to come. The company on January 29, 2021 published a resource update showing a much higher-grade pit than previously indicated and an underground resource – with the combined pit-underground resource totaling 715,000 ounces Au.
CEO Frank Basa stated “the current drill program has the potential to grow this gold resource to 2.5 to 3 million ounces within 24 months and allow for mining to begin in the open pit and then move underground from the bottom of the pit.”
Here is where the current resource stands at this time:
The untapped exploration potential stands out most with Granada, with a focus on underground high-grade mineralization:
- Excellent expansion potential beyond current resource estimate
- Numerous targets identified via magnetic survey and where past drilling intersected high-grade gold zones
- In-fill drilling near and below current pit
- Genesis target area to the northwest of the pit
- Deep drilling targets in the north towards the Cadillac Break
- Aukeko and Austin Rouyn to the east (trenching and sampling so far)
- 80% of potential 5.5 km east-west strike length remains unexplored
The current resources allows for a production case of:
- Permits in place to open-pit mine 550 t/day (“Rolling Start”) and ship to a local mill
- A number of mills within trucking distance shut down or operating below capacity
- Previous engineering work to be updated towards building a mill producing 80,000 to 100,000 oz gold per year
The recently completed 2020 Near-Surface Drill Results outlined:
- Drill results from the 100-series near-surface drill program targeting Vein 1
- Holes drilled to intersect veins uncovered by stripping and to follow high-grade corridor
- 3.66 g/t gold over 26.5m in hole GR-20-110 including 13.49 g/t over 4m and 29.8 g/t over 1.5m
- 7.72 g/t gold over 4.5m in hole GR-20-112
- 7.29 g/t gold over 5.02m in hole GR-20-117
“The short-hole drill program, with its 3 objectives, has succeeded in defining further extension of the high-grade zones eastward near surface….The more we drill, the more we find gold….We are pleased to have intersected high-grade structures in GR-20-117 where it has intersected the continuity of the very high-grade bulk zone at Granada – evidenced by the presence of visible gold..” Frank Basa, President and CEO
Similar assets within Quebec are being acquired at much higher valuations:
Monarch Gold Corp. (TSX: MQR) has completed a definitive agreement with Yamana Gold Inc. (TSX: YRI) pursuant to which Yamana acquired the Wasamac property (15 km west of Rouyn-Noranda with 1.8 million oz @ 2.56 g/t Au) and the Camflo property and mill (near Val d’Or) through the acquisition of all of the outstanding shares of Monarch (TSX: MQR) for total consideration of approximately $152-million, or at $100 dollar per-ounce.
Under the plan of arrangement, Monarch completed a spinout to its shareholders, through a newly formed company – Monarch Mining Corp. (TSX: GBAR) that is now developing projects in the Val d’Or area which is 100 km to the east of Granada’s property. The company recently reported 588,482 ounces of combined measured and indicated gold resources and 329,393 ounces of combined inferred resources (information based of Monarch Mining website: https://www.monarchmining.com/). Monarch Mining (TSX: GBAR) has 66.12M shares outstanding, and is currently trading at $0.85, giving it a market cap of $56M, more than triple that of Granada’s which has almost the same number of resources.
In addition, Eldorado Gold (TSX: ELD) recently agreed to acquire QMX Gold (TSX.V: QMX) which operates in the Val d’Or-area along the Cadillac Break for $132 million (deal announced Jan. 21 hasn’t closed yet). The company’s presentation on its website says its resources are 397,000 Indicated and 290,000 Inferred – again not much different than Granada’s current resource.
Granada Gold Mine (TSX.V: GGM) has 105.63M shares outstanding, and is currently trading at $0.20, giving it a market cap of $21M. As mentioned, Granada intends to grow its resource to the 2.5 to 3 million oz Au range over 24 months, which should make a major impact on its valuation and perhaps generate takeover interest. One GGM advantage is that it currently has permits to mine open pit and ship to a local mill, which adds to its attractiveness.
Granada Gold Mine (TSX.V: GGM) is run by a team of highly experienced mining executives, supplemented with the geological expertise of Claude Duplessis, P. Eng., of Goldminds Geoservices Inc., a geological, environmental and mining consultant.
FRANK J. BASA, Director, President and CEO
Mr. Basa has been a Director of Granada Gold Mine Inc. since 2004. Mr. Basa has over 38 years’ global experience in gold mining and development as a professional hydrometallurgical engineer with expertise in milling, gravity concentration, flotation, leaching and refining of precious and base metals. He is a member of the Professional Engineers of Ontario and a graduate of McGill University.
JACQUES F. MONETTE, Director
Mr. Monette has been a Granada Gold Mine Director since 2008. Mr. Monette is a career miner who has been engaged in every facet of underground mining for more than 40 years. His previous positions included Shaft Project Coordinator with Cementation Canada Inc., Vice President of Operations/Mining Division for Wabi Development Corp., Vice President of Development for CMAC Mining Group, Operations Manager for Moran Mining and Tunneling, as well as Area Manager for J.S. Redpath Group.
DIANNE TOOKENAY, Director
Ms. Tookenay holds a Certificate in Mining Law from the Osgoode Hall Law School, York University, a Joint Masters of Public Administration from the University of Manitoba, a Bachelor of Administration from Lakehead University and Native Band Management and Indian Economic Development Diplomas from Confederation College Applied Arts and Technology. Ms. Tookenay's experience, knowledge and deep roots within the First Nation communities will add significant value to Granada's development now and in the coming years.
ROBERT SETTER, Director
Mr. Setter was the Senior Financial Editor for Report on Mining and a Director for a publicly traded Company. Mr. Setter has also been a consultant for several public resource companies since 2010 and has been a board member with Canada Cobalt Works Inc. since January 2016. He brings two plus decades of business, marketing and communications experience to the Company and holds a degree in Economics from UBC.
With such a technical team, and an untapped resource potential, Granada Gold Mine (TSX.V: GGM) shareholders are in for an exciting next 12 months. As more stimulus is announced globally, assets that are a hedge against inflation will perform extremely well. The top inflation hedge is the yellow brick - gold, which is currently trading at $1,798 per-ounce. Leading North American investment banking firms are calling a significant rally in gold prices, with the average price target for 2021 of $2,100 per-ounce
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