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July 16, 2010

Hopeful Sign: 2010 CDNX Chart Looks Like Repeat Of 2004

It’s not hard to find some pundits right now who are predicting the sky is about to fall and markets are going to crash across the board – Clive Maund is one of many who are very bearish at the moment.

At BMR, we’re seeing things quite a bit differently.  In fact, we’re expecting markets will be quite robust beginning later this summer and continuing through the remainder of the year.

The last 2-and-a-half months have not been pretty.  The CDNX is off 17% since the beginning of May.  The Nasdaq is down 11.5%, the Dow has declined 8% and the TSX has fallen 5.2%.

As far as the CDNX is concerned, our contention is that the weakness we’ve seen since early May is merely a correction within an ongoing bull market.  Rising 200 and 300-day moving averages support this view.  If we were on the verge of a major crash in all markets, as witnessed in 2008, the CDNX would be leading the way on the downside in very serious fashion as it did in  July and August of ’08.  The CDNX has simply not broken down from its primary trend and has proven to be a very reliable leading indicator of the direction of the major markets and even the economy.

Today’s action was very encouraging.  Despite major weakness in Gold and commodites, and large declines in both New York and Toronto, the CDNX fell just 7 points to 1380.  This shows resiliency and perhaps also demonstrates the CDNX decline since early May has now largely exhausted itself.

Historically, there is a very interesting and perhaps significant comparison between the CDNX 2010 chart and the 2004 market.  We believe a repeat of 2004 is very possible which means now is the time to be a buyer and embrace this current weakness in advance of what could be a very strong move to the upside beginning in earnest within a month or two.  John, BMR’s technical analyst, takes a detailed look at the similarities between 2004 and 2010 in his very astute analysis below the two charts we’ve posted.

In each year the 50 and 100-day SMA’s (simple moving averages) both started to decline in the month of May.  In late July of 2004, the CDNX bottomed at about 6% below its rising 300-day SMA.  Its 100-day SMA reversed to the upside in late September and the market finished the year above 1800 for a 26% move from the July bottom.

Moving ahead to where we’re at now, one cannot rule out the possibility of one final plunge or shakeout in the CDNX, perhaps to about 1300, though it’s equally possible the recent low of 1343 will hold.  The main point to understand is that now is more than likely a good time to be accumulating quality junior resource stocks – ones with excellent projects, strong balance sheets and superior management.  Don’t forget also that Gold is approaching a seasonally strong period and could really begin to take off come late summer/early fall.  Given that U.S. mid-term elections are coming up, Obama and the Democrats can be expected to try everything they can to grease the wheels of the U.S. economy to maintain their control in Congress.  China growth has slowed but is still robust.  Corporate earnings are showing strength and that should help to underpin the market.

Below, John examines the comparison between the CDNX in 2004 and the CDNX so far in 2010 – the similarities are incredible:

CDNX chart for 2004 (left) beside CDNX chart for 2010 (right):

John: The whole basis of technical analysis is that chart patterns are repetitive.  Time and time again we have seen if the required criteria are met, the patterns will produce the same results most of the time.  Nothing works 100% of the time.

Today we are going to look at not only chart patterns but we are going to integrate them with seasonal effects with respect to the CDNX Index.  We are going to compare the CDNX chart for 2004 with that of 2010 to perhaps get an insight into what we may expect for the remainder of the year.

Now in order to get a meaningful comparison we have to eliminate the daily and weekly trading “noise” and look at the charts in terms of horizontal and sloping trend channels.

First, let us compare the charts for the period January through April.  We see that both charts have 2 horizontal channels at different levels with the Index peaks occuring in March for 2004 and April for 2010.

Each one then has a downsloping channel (downtrend) from the latter part of April to around the middle of May.  Both charts then have the Index in a horizontal channel from sometime in May to July at which point the Index drops into a lower horizontal channel.  That is where we are now.

Thus, we can see that the Index behavior this year is very similar to that of 2004.

Looking at the indicators, we see that for both charts at this time the RSI is low at 25%.  The Slow Stochastics has bottomed out at an extremely low value and the Directional Movement Indicator shows the -DI (blue line) is very high – between 50 and 60 and this peak in 2004 was the Index’s low point for the year.  We probably have seen the low for this year, too.

The outlook for the CDNX for the remainder of this year is very bullish.  I fully expect that within the July/mid-August period we will see the start of a bullish move to the upside in a similar manner to that of 2004.

BMR Morning Market Musings…

Gold is off sharply this morning in the wake of the latest U.S. consumer price index report and has traded in a range of $1,185 to $1,210…Gold needs to hold important support at $1,185 or a further drop to the $1,160 area is possible…regardless, the “big picture” in Gold is still very bullish and within a month or so we’ll be entering a seasonally strong period…as of 8:50 am Pacific time, Gold is down $20 an ounce to $1,189…the CDNX is holding up quite well in the face of weaker commodity prices across the board as well as triple digit losses in New York and Toronto…the CDNX is off 6 points to 1381 while the Dow is off nearly 200 and the TSX is 150 points lower…Gold Bullion Development (GBB, TSX-V) is lower again this morning but is finding support right around its rising 50-day moving average…GBB’s 20-day moving average is in decline for the first time since March which is putting some pressure on the stock, but other bullish factors (technical and fundamental) should offset that…GBB is off its low of the day (47.5 cents) and as of 8:50 am Pacific time is trading at 48.5 cents, down 2.5 cents…Seafield Resources (SFF, TSX-V) is hovering between 17 and 18 cents this morning…the outlook for Seafield is very positive as we outlined in our article last night after our interview with company President/CEO Tony Roodenburg which we posted yesterday…as Seafield adds ounces to its balance sheet the share price will strengthen considerably…the company’s improving fundamentals are going to be its main driver of value….North Arrow Minerals (NAR, TSX-V) came out with news this morning regarding its Las de Gras diamond property…preparations are well underway to commence a 1,500 metre drill program starting in about 6 weeks…the company is well funded and has lined up a dozen or so outstanding targets for drilling…Sidon International (SD, TSX-V) is up half a penny to 9 cents…we expect Sidon to consolidate for a short period which is also healthy from a technical point of view as the stock got considerably overbought on its run up to 11.5 cents early this week…

July 15, 2010

Seafield Resources: Technically Driven To Fundamentally Driven

We encourage our readers to take the time to listen to the 24-minute interview we did today with Seafield Resources’ (SFF, TSX-V) President/CEO Tony Roodenburg that was posted after the markets closed this afternoon.  It’s very informative and also a great illustration of the development of a speculative junior resource company.  At this time last year, Seafield was trading at only a nickel with just enough money in the bank to keep its doors open.  It had potential though, for various reasons, which is why BullMarketRun began following Seafield and made it part of the BMR Portfolio.

From late last summer through the end of February, Seafield was very much a “momentum play” driven by a strong chart and a lot of speculation regarding its foray into Colombia.   The stock got as high as 35.5 cents when we warned it was getting a little frothy.  We didn’t expect the price would drop in half but that’s exactly what happened.  The funny thing is, though, the fundamentals regarding Seafield now are better than ever.  Investors know much, much more about the company’s Colombian properties and what the goals and possibilities are over the next six months and beyond.

You don’t make the big money in the junior resource market by chasing the “flavor of the month”.  That’s usually the quickest way to lose money, actually.  How you make huge profits is finding a company like Seafield with a very modest market cap, excellent projects, the right people on the ground and in the front office, money in the bank, promotional ability to bring attention and liquidity to the stock, and an exploration story that makes sense and provides major upside potential (Gold Bullion Development and others in our portfolio also fit that profile of course).  You also need to be patient and understand that your investment may not double overnight or within a week, that it actually may take at least a few months to deliver the huge gains you’re looking for.

In the case of Seafield, the upside potential of this stock at the moment far exceeds the downside risk.  It’s not hard to do the math on this one (Roodenburg walks us through it in the interview):  Seafield has nearly 800,000 43-101 inferred ounces at Miraflores and expects the current drill program to increase that resource by at least 25%.  At Dos Quebradas, Anglo came up with a non-compliant in-house estimate of 800,000 ounces.  This target has a lot of blue sky potential and the thinking is that the upcoming drill program at Dos Quebradas could more definitively determine the potential for at least a million ounces by year-end (and maybe another million or more by sometime in 2011).  At Chuscal, Seafield has a great opportunity to complete a “triple play” and turn that property into another significant deposit (>1 million ounces) within a year.

By the end of 2010 – just 5-and-a-half months away – Seafield very realistically could be sitting on 2 million ounces at Quinchia.  In that case you’re likely looking at a minimum market cap of $50 million.  Seafield’s current market cap is $17 million.

With 68 square kilometres, Seafield is the largest landholder in the Quinchia District which is part of the prolific Mid Cauca Porphyry Belt.  Medoro’s (MRS, TSX-V) 9.5 million ounce Marmato Deposit is only about 10 kilometres to the north of where Seafield is.  The individuals who assembled Medoro’s land package (Ian Park and Stewart Redwood) are the same individuals running Seafield’s Colombian operations.  Park and Redwood know exactly what they’re doing and we have complete confidence that they are going to pull together a multi-million ounce resource for Seafield.

The fact Seafield’s share price has been languishing for a few months doesn’t bother us in the least – the fundamentals are going to take over in the near future.  This is a good company with a terrific land package and a whole lot more going for it.  Those who don’t see that right now will be the ones chasing this stock at much higher levels down the road or kicking themselves for not taking a position at favorable prices when the opportunity was there.

To listen to the Roodenburg interview, go to our story posted earlier today (“Seafield Resources: President/CEO Interview) and click on the link near the bottom of that story.

Independent Research and Analysis of Emerging Junior Resource Companies: Speculative, Undervalued, Home Run Opportunities in Today’s Markets

Disclaimer/Disclosure:

BullMarketRun.com is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinin or other advice is being rendered on any stock or company.  We strongly recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions.  The stocks we cover, by definition, are highly speculative and potentially very volatile.  Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisors. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.  It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

Seafield Resources: President/CEO Interview

2:00 pm Pacific time

BMR conducted a very interesting interview with Seafield Resources (SFF, TSX-V) President and CEO Tony Roodenburg earlier today.  The interview was 24 minutes long (click on the link at the bottom) and covered a wide range of issues mainly pertaining to the company’s exploration efforts in the Quinchia District of Colombia.  We’ll be commenting on the interview in a separate written piece on Seafield that we’ll be posting tomorrow.  The stock closed today at 17.5 cents on light volume.

Seafield has a very real chance to build up a resource of 2 million ounces by year-end and 4-5 million ounces further down the road as a combined total from its three major properties – Miraflores, Dos Quebradas and Chuscal.  With a current market cap of only $17 million, it doesn’t take a rocket scientist to figure out that the upside potential in SFF from here far exceeds the downside risk.  We like this play a lot given the geological dynamics of Quinchia and the people involved who are developing this large project.

To listen to the interview, simply click on the link below:
BMR Interview with Tony Roodenburg

As a reminder, BMR (or any of its writers/contributors) accepts no compensation of any sort for the independent coverage we provide of junior resource companies on this site – Seafield did not solicit this interview nor was there any compensation for it.

BMR Morning Market Musings…

Gold has bounced around this morning in a range of $1,203 to $1,218…as of 9:30 am Pacific time, Gold is essentially unchanged from yesterday at $1,209…crude oil is down over a dollar per barrel to $75.83 while the CDNX is unchanged at 1385…BMR has completed an audio interview with Seafield Resources (SFF, TSX-V) President and CEO Tony Roodenburg which we’ll be posting by tomorrow morning…Roodenburg is upbeat on the prospects for Seafield and is hopeful the company can define 2 million ounces at Quinchia by year-end with the ultimate goal of 4-5 million ounces combined at Miraflores, Dos Quebradas and Chuscal…the company is now the largest landholder in the Mid Cauca Porphyry Belt of Colombia with 68 square kilometres…Seafield is up a penny on light volume to 18 cents…Gold Bullion Development (GBB, TSX-V) is steady at 55 cents…based on Tuesday’s news release, drilling appears to be going very well at Granada with strong potential for expansion of the east-northeast mineralized area discovered in Phase 1 drilling early this year…Sidon International (SD, TSX-V) is active again today, trading nearly 3 million shares…it’s currently off  a penny to 8.5 cents…we’re very bullish on Sidon’s Morogoro East Gold Property in Tanzania but as we indicated yesterday the stock has reached overbought levels on a technical basis and likely needs to consolidate for at least a short period…we first uncovered Sidon when it was sitting at just a nickel in March…Morogoro East is a very compelling target and Sidon has a great opportunity to do extremely well with this project…North Arrow Minerals (NAR, TSX-V) came out with good drill results yesterday from its Beaverdam lithium project in North Carolina…7 holes were drilled and highlights included 1.14 Li2O over 9.95 metres, 1.09 Li2O over 11.3 metres, and 1.43 Li2O over 10.97 metres…the drilling confirmed the presence of spodument pegmatite at depth in the eastern and central portions of the property…Beaverdam clearly has potential and it’ll be interesting to see what North Arrow’s next steps are with this property…as promising as Beaverdam is, what excites us the most about North Arrow is its Lac de Gras diamond property where drilling begins later this summer…NAR is a very smart play for patient investors with a medium term time horizon (6 months)…the upside potential far exceeds the downside risk and the company is led by mining legend Gren Thomas who is one of the very best there is at grassroots exploration…we see big things on the horizon for North Arrow over the balance of the year…

July 14, 2010

BMR Morning Market Musings…

Gold has been trading in a range so far today between $1,205 and $1,216 after yesterday’s big jump…as of 7:55 am Pacific time, Gold is off $3 an ounce to $1,208…the CDNX is down two points to 1382…Gold Bullion Development (GBB, TSX-V) appears to be on the verge of more significant discoveries in the LONG Bars Zone east-northeast extension area based on yesterday’s news from GBB…drilling is intersecting multiple zones of altered feldspar porphyry with some quartz veining in all directions surrounding Phase 1 discovery hole GR-10-17…yesterday’s Gold Bullion news release had a very bullish and aggressive tone, suggesting the company is confident its 20,000 metre Phase 2 drill program is going to deliver good results and expand the overall mineralized system at Granada…a LONG Bars Zone 2 is now also in play, 1800 metres east of GR-10-17 where some spectacular high grade historical gold showings have been reported…Gold Bullion is up a penny to 56 cents on strong volume of nearly 800,000 shares…speaking of volume, Sidon International (another BMR Portfolio gem), is the volume leader on the CDNX so far this morning with an incredible 10 million+ shares changing hands through the first hour-and-a-half of trading…the stock is ahead 3 cents to 11 cents…the reason for the move and the volume is that the CDNX finally approved the company’s private placement and option agreement to purchase the highly prospective Morogoro East Gold Property in eastern Tanzania…we added Sidon to the BMR Portfolio in March when the stock was sitting at just a nickel…we’ll have more on Sidon later today, but we are very bullish on Morogoro East which is located approximately 60 miles south of Canaco’s (CAN, TSX-V) Handeni Gold Project…Handeni of course is delivering world class results…Morogoro East is a flat-lying sedimentary-type horizon, and local miners have been pulling out some very high grades…technically, Sidon is now in overbought territory so short-term traders should keep that in mind…fundamentally, we expect Sidon to do extremely well over the long haul as it begins to explore Morogoro East…BMR will soon be posting an interview with Seafield Resources (SFF, TSX-V) President and CEO Tony Roodenburg…Seafield is up a penny this morning to 18 cents and we believe the company is in its best position ever as it develops its Colombian gold properties…

A LONG Home Run On The Way At Granada?

To use a baseball analogy, Gold Bullion Development (GBB, TSX-V) had a great day at the plate yesterday with a double high off the wall down the right field line and a triple into deep right centre field.    A LONG home run could come very soon.

Gold Bullion’s news release yesterday was highly significant.  It showed a strong degree of confidence from the company in how the 20,000 metre Phase 2 drill program is progressing at the Granada Gold Property in northwestern Quebec.    Its tone was bullish and aggressive, suggesting GBB is expecting good results.   Smart and experienced junior resource investors who understand something about geology and can “read between the lines” gobbled up Gold Bullion stock all the way to 57 cents yesterday with GBB closing up a nickel on 1.8 million shares.  The news didn’t come out until about an hour-and-a-half after the opening bell, so today’s volume – especially now that investors have had a chance to digest this important release – is likely going to be even higher.

So what was so significant about Gold Bullion’s news release?  The “triple” I  referred to in the opening paragraph was GBB intersecting multiple zones of altered feldspar porphyry and some quartz veining throughout the Phase 1 east-northeast discovery area (plus some visible gold).   This is big, as I’ll explain, and it takes Gold Bullion very close to home plate and in an excellent position to score.

The “double” I referred to down the right field line is the identification of a second LONG Bars Zone (LONG Bars Zone 2) 1.5 kilometres to the east.  This now gives Gold Bullion three distinct and highly prospective targets for exploration and development:

1. The LONG Bars Zone east-northeast discovery area where we now know, based on yesterday’s news, that GR-10-17 was no fluke – Gold Bullion is hitting multiple favorable zones and mineralization could be widespread here;

2. A promising new area 1800 metres east of GR-10-17 that Gold Bullion has chosen to call “LONG Bars Zone 2”;

3. The LONG Bars Zone Preliminary Block Model which has a potential (non-compliant) resource of 2.4 to 2.6 million ounces of gold with the possibility of additional discoveries at depth.

Let’s now examine each of the above three targets in further detail based on the new information investors have received from Gold Bullion:

1LONG Bars Zone East-Northeast Discovery Area

Phase 2 drilling has so far totaled 4,000 metres (17 holes) in this area which historically has  been under-explored with only limited drilling.  GENIVAR is attempting to confirm the extent of mineralization in this area after all five shallow Phase 1 holes returned encouraging results, especially GR-10-17 which intersected 1.21 g/t Au over 65.5 metres.  What is highly significant in our view is the second sentence in paragraph two of GBB’s release:

“Drilling in this promising area…is consistently intersecting multiple zones of altered feldspar porphyry, favorable for gold mineralization, along with some quartz veining in all directions surrounding discovery hole GR-10-17.  Visible gold has been observed in a few of the holes.” (emphasis is ours).

GENIVAR and Gold Bullion must be elated with this – they are consistently intersecting multiple zones of altered feldspar porphyry in every direction surrounding GR-10-17.  Altered feldspar porphyry doesn’t always contain gold mineralization but often it does.  It’s exactly the type of rock or zone, in this geological setting, that Gold Bullion wants to hit.  And the fact they are consistently finding these zones so quickly in Phase 2 drilling is hugely important and strongly suggests that at least some of the holes in this area could turn out to be exceptionally good.  As always, though, nothing is certain until the assays are in.  But things are looking very encouraging.

In paragraph three, the news is equally interesting.  Gold Bullion’s deepest hole yet (365 metres vertical depth) is about to be drilled (starting today or tomorrow) 176 metres east-southeast of GR-10-17.  This target was chosen because of altered zones that were intersected in a hole 75 metres to the northwest of the planned deep hole, and in another hole 75 metres to the southwest.  These three holes form a triangle with GR-10-17 nearly 180 metres to the west-northwest.  If the deep hole hits significant mineralization, along with the other two, look out.  Gold Bullion will light up like a Christmas tree as investors will begin to calculate some tonnage possibilities in this area with over 5,000 metres having been drilled (Phase 1 and Phase 2).

It will be interesting as well to see what kind of grades Gold Bullion can pull from 150 to 350 or more vertical metres depth in this area as none of the Phase 1 holes, as far as we know, went deeper than 150 metres vertical.  On the one hand, mineralization in the east-northeast area and throughout the LONG Bars Zone appears to be widespread, near surface and low grade (conservatively, 1 to 1.2 g/t Au) – perfect for an open-pit operation.  On the other hand, the nature of the Cadillac Trend is for grade to improve with depth.  So what we’re saying is, there could be some surprises below 150 metres which can still be mined as an open-pit (very deep down, of course, there could be underground potential if grades are high enough).

It’s probably safe to assume based on the general thrust of the news release as well as the metres and number of holes drilled that GENIVAR has been “filling in the blanks” with its east-northeast drill plan so far.  This means they’ve likely been drilling in a fairly concentrated area perhaps extending as much as 200 or 300 metres east of GR-10-17 and a few hundred metres south of the discovery hole.   There’s not much room to the west before reaching the Preliminary Block Model (approximately 150 metres), and to the north they’ve obviously drilled some holes.  Our best guess is that this drilled area now measures about 300 metres east-west and maybe as much as 400 metres north-south.  There’s much more room, obviously, going east and that’s also where the strike of the rock will take the drilling.  With at least 5,000 more metres left in Phase 2 for the east-northeast area, GENIVAR should be able to push out at least 200 more metres to the east which could make this area about the same size as the Preliminary Block Model which has a strike length of 600 metres.

2. LONG Bars Zone 2

Gold Bullion introduced a new and highly prospective geological target yesterday – LONG Bars Zone 2 which is 1800 metres east of GR-10-17 and features the 1 kilometre long Auk Shear Zone.  GENIVAR continues to compile information on this area which, the news release states, received considerable historical attention but was not viewed in the context of the new geological interpretation of Granada as a potential near-surface, bulk tonnage deposit amenable to open-pit mining…with similar geological characteristics to the original and current LONG Bars Zone, LONG Bars Zone 2 is a high priority exploration target for Gold Bullion and has the potential of significantly impacting both the scale and geometry of the overall mineralized system at Granada.

Early last month BMR obtained a lengthy report from the Quebec Ministry of Mines (“Geology, Structure and Gold Mineralization, Granada Extension Property, 1994”) which was prepared for former Granada operator KWG Resources which was exploring the property in the 1980’s and 1990’s for individual, high grade quartz veins that could support underground mining.  This report clearly outlines the significant potential of the “Aukeko Prospect” which Gold Bullion has decided to re-name LONG Bars Zone 2.

The 1994 report states that an east-west trending zone of shearing, alteration and quartz veining (with intrusions of syenitic feldspar porphyry) extends almost directly east of GR-10-17 to Aukeko (LONG Bars Zone 2) which was historically tested by a 12-metre shaft, stripping, trenching and some limited diamond drilling with encouraging results.  Sample assays in the 1930’s returned grades as high as 19 g/t Au while KWG got grab sample values as high as 13 g/t Au during some ground work in the summer of 1993.  At the eastern end of this area, an historic showing known as the Bert Vein returned grades in excess of 200 g/t Au – “the average assay of three bulk samples was 7.00 oz Au/T (page 11 of the report).”

Gold Bullion’s release states,Several northeasterly fault zones cross the shear zone and are considered prime targets for possible economic gold concentrations.  Numerous vein zones, hosted by both Granada Formation conglomerate and feldspar porphyry, have been delineated historically in LONG Bars Zone 2 through trenching with considerable visible gold noted.  The auriferous veins reportedly widen with depth and occur in an east-west trending zone measuring at least 1200 metres in length and 200 metres in width.

LONG Bars Zone 2 really helps to underscore the blue sky potential of Gold BullionThe same geological features and structures observed so far within the Preliminary Block Model and the east-northeast discovery area carry on for at least 3,000 metres east of GR-10-17. To put things in perspective, the distance from Pit #1, at the western edge of the Preliminary Block Model, to GR-10-17 is 600 metres.  GENIVAR and Gold Bullion are potentially looking at an absolutely massive amount of drilling going east – well in excess of 100,000 metres.  By then, how big may this deposit be?

3. Preliminary Block Model

Infill drilling at 30-metre spacing continues within the Preliminary Block Model which has a potential (non-compliant) resource of 2.4 to 2.6 million ounces. This figure represents a defined area with a strike length of 600 metres, a width of 500 metres at an angle of 50 degrees from horizontal, and an average true thickness of 70 metres. The potential resource is derived from an average of 55 million tonnes (using a 40 to 100 metre true thickness gives 30 to 80 million tonnes respectively) of potential gold mineralization at a specific gravity of 2.65 tonnes per cubic metre grading 1.38 g/t Au to 1.46 g/t Au (a 15% dilution factor was applied to the bulk sample grade of 1.62 g/t Au and a weighted bulk sample/waste pile grade of 1.72 g/t Au).

Infill and definition drilling within the Preliminary Block Model will eventually lead to a 43-101 compliant resource, but yesterday’s release  stated that exploratory drilling is also taking place.    It’s very important to point out that almost all the drilling historically in this area, as well as just recently and currently by Gold Bullion, has been very shallow (less than 100 metres vertical depth).  The Preliminary Block Model resource potential that has been outlined is based on nearly 500 drill holes, underground workings and Gold Bullion’s 30,000 tonne 2007 surface bulk sample.  The possibilities at depth are very significant and could considerably expand the estimated potential resource of 2.4 to 2.6 million ounces.

Conclusion

Investors got the first real indication of the blue sky potential of Granada March 1 when Gold Bullion issued a series of drill results that included GR-10-17, and also stated that a prominent zone of deformation, hyrdothermal alteration and quartz veining extends for at least five kilometres around the old mine workings. That blue sky potential is so far being proven out as we now know there are likely more good results coming from the east-northeast discovery area.  And the company now has a second LONG Bars Zone to explore that has a very similar geological signature to the first LONG Bars Zone.  Granada is a different type of creature than Osisko’s massive Canadian Malartic Deposit 65 kilometres to the east that contains 10+ million ounces, but there’s no reason Granada could not potentially challenge Canadian Malartic in terms of size.  Both companies, Gold Bullion and Osisko, have taken a fresh and successful approach to former producing properties in one of the world’s most prolific mining areas.

In just seven months (Gold Bullion was sitting at just seven cents last December when we brought it to the attention of BMR readers) Granada has developed into a fascinating geological story.  How this story unfolds over the next seven months should be incredible to watch.

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