Gold Bullion Development Corporation (GBB, TSX-V) is up 33% since we initiated coverage December 9. That may sound impressive but when we find an undervalued, unappreciated little gem like Gold Bullion and report on it with the urgency we have to our readers, we aren’t introducing you to a stock that’s going to stop at just a 33% gain. That’s a nice and satisfying profit for some but clearly not a home run, which is what this site is all about. We think big and we find the opportunities that have all the potential and ingredients to deliver big.
We discovered Seafield Resources (SFF, TSX-V) at six cents and it jumped as much as 300% from where we initiated coverage (currently, it’s ahead 250% and still a hold). The possibilities are identical with Gold Bullion.
A nice little Christmas gift arrived for Gold Bullion shareholders soon after the market closed December 24 – news regarding the closing of a nearly $1 million private placement with Exchange approval as well on that seven cent financing (this comes just a few weeks after a financing that raised $518,000). The company is now cashed up and in the best position it has been in for several years. In addition, Gold Bullion announced in its Christmas Eve release that it has hired an investor relations group – a very welcome development. By all accounts, Gold Bullion President and CEO Frank Basa is a terrific geologist. Getting an IR firm involved now will help Basa immensely in terms of allowing him to focus his energies on his real strength – utilizing his geological genius to sniff out a very significant gold deposit, or series of deposits, along one of the world’s most prolific mining belts.
There’s an old saying – the best place to find a new mine is next to an old mine. What excites us about the former-producing Granada Gold Mine in northwestern Quebec is not really the near-term potential of actual new gold production (A.C.A. Howe Ltd. gave a non-compliant estimate in 1994 of 280,000 ounces in all categories at Granada), but the possibility of a massive, low cost, open pit, bulk tonnage deposit in the immediate area. The “Cadillac Fault”, a major focus of gold mineralization in western Quebec and eastern Ontario, runs right thru the northern boundary of the Granada property, which exhibits some of the same geological characteristics as Osisko’s huge Malartic Deposit just 40 miles to the east (Malartic contains a 43-101 all-category resource of 10+ million ounces).
For the first time since completing the Granada Mine acquisition in 2006, Gold Bullion is in a position to explore and drill extensively over a wide area of the Granada land package which interestingly continues to grow. And right next to Granada, Yorbeau Resources (YRB.A, TSX-V) is making increasingly significant discoveries at its Rouyn Property which is less than a mile from the northern edge of Gold Bullion’s landholdings. Yorbeau’s market capitalization has rocketed from approximately $14 million to $45 million over the last three months and they are currently in the process of finalizing a $4 million financing. On September 23 Yorbeau reported a 10.35 metre intersection grading 74.67 g/t of gold at its Cinderella zone. We suspect there has been and continues to be some intense staking around this entire area. We know that Gold Bullion has been picking up additional claims but they’re not making a lot of noise about it just yet – that’s the way the game is played.
A few very important sentences were buried in Gold Bullion’s November 18 news release: “Gold Bullion’s present contiguous land holdings are two kilometres wide and seven kilometres long. The exploration reported here (the 471 hole Granada Mine database from 26,000 metres of drilling) represents only seven per cent of its current land package. The defined structures are open at depth and along strike. Gold Bullion has been adding to the land package in the area and expects to develop the property as a large, open pit mine.”
So we have a company that is busy but quietly staking new claims in the Granada Mine area and gearing up for a major exploration effort that will serve two purposes: 1) the creation of a 43-101 resource estimate for the Granada Mine, with new in-fill drilling that could confirm and build on the A.C.A. Howe estimate; and 2) the discovery, possibly, through step-out drilling, of a much larger resource in promising areas around the old mine site (again, keep in mind, over 90% of the area Gold Bullion now controls around the Granada Mine has yet to be explored).
With the market roaring ahead and gold ready to begin a new upleg, we have every reason to believe that Gold Bullion could make a spectacular run early in the New Year as it aggressively tackles the Granada Property and drills it, for lack of a better description, like Swiss cheese. All the factors we look for that can drive a stock price are present right now with Gold Bullion:
1) Financings are closed and approved and the company is cashed up;
2) Major exploration and drilling campaign underway;
3) Neighbor is enjoying exploration success and drilling simultaneously;
3) Excellent geological potential and on trend with a 10+ million ounce deposit just 40 miles to the east;
4) IR has been hired which will bring more focus and many more eyes to this play;
5) Stock technical strength – GBB has as bullish a chart as you could ask for with all moving averages in alignment, neutral stochastics (not overbought), and recent huge volume suggesting massive accumulation;
6) Company President/CEO is heavily invested himself;
7) Strong overall market, so the wind is at Gold Bullion’s back.
Gold Bullion closed at a new 52-week high last Thursday of 10 cents, giving it a current market capitalization of $8 million. After pushing through .10, the next major area of resistance on the charts is 18 cents.
This company has a lot of momentum behind it right now which is one reason we are so attracted to this investment. What’s driving that momentum is a quality gold property with considerable blue sky potential, not to mention proven ounces already in the ground which could be brought to production on a small scale fairly quickly to generate cash flow and keep share further share dilution to a minimum. Stay long on this one, folks, as it likely has a quite some distance to go yet, especially as the market continues to heat up.
