Block Model Proves The Enormous Potential Of The LONG Bars Zone

The first drill rig, likely followed by more in the coming weeks and months, is scheduled to arrive at the Granada Gold Property in northwestern Quebec in just six days. Much was learned from Gold Bullion Development’s (GBB, TSX-V) first round of shallow “drilling for structure” at the LONG Bars Zone over the winter and now it’s time, as President & CEO Frank Basa stated, to extensively drill this highly prospective property for grade and tonnage. Yes, things are really going to start to get interesting now at Granada with a whopping 20,000 metres of drilling about to commence.

Gold Bullion took a very conservative approach, we believe, in arriving at its estimate of a potential 2.4 to 2.6 million ounces within a defined area of the LONG Bars Zone as outlined in its Preliminary Block Model released Thursday. The current strike length of the LONG Bars Zone is 1,100 metres, as proven by Gold Bullion’s recent 25-hole drill program, but the Block Model has taken into account only 55% of that – 600 metres. So outside the Block Model – particularly east, west and north – there is massive potential as demonstrated by GR-10-17 as well as the two following statements in recent Gold Bullion news releases (March 1 and April 22, respectively):

1. “A prominent zone of deformation, hydrothermal alteration and quartz-veining extends for at least five kilometres around the old mine workings.”

2. “Gold Bullion’s exploration to date in the northeast area, along with historical work that included detailed ground geophysics and geological mapping, has outlined a number of significant auriferous structures contained within a wide, east-west trending zone of shearing, alteration and quartz veining north and east of the Block Model.”

In the southwest corner of the LONG Bars Zone, GR-10-21 returned a very nice intersection of 65.50 metres grading 0.72 g/t Au. That hole is 50 metres outside the western boundary of the Block Model.

And in the northwest corner of the LONG Bars Zone, approximately 150 metres outside the Block Model and directly to the west of Pit #1, BMR has discovered through technical reports that two holes drilled by KWG in the early 1990’s returned 4.7 g/t Au over 3.4 metres and 6.3 g/t Au over 2.35 metres, respectively. That area holds considerable promise as well.

In short, the strike length of the Granada Gold Property could be huge. The Block Model takes into account a section of land that represents only a tiny fraction – less than one per cent – of Gold Bullion’s current total land package of 5,000 hectares.

But within the Block Model itself, there is also enormous potential as it is open at depth. The underground workings at Granada went to about 300 metres vertical depth which the Block Model has taken into account as best as possible (underground workings don’t reveal everything). But the deepest vertical hole drilled by Gold Bullion in its December/January program was only 140 metres while almost all the holes drilled by previous operators were even shallower (less than 100 metres). There could be some pleasant surprises as Gold Bullion soon drills to expected depths of 300 to 500 metres within the Block Model.

The nature of the Cadillac Trend is such that grade can often improve as drilling goes deeper. An excellent example of this at Granada is one deeper hole (>200 metres vertical) that KWG did drill in 1990 along the No. 5 Vein in the northern section of the Block Model – it returned 12.34 g/t Au over three feet. Deeper down is also where Gold Bullion may find the source of the silver and curious base metal mineralization that they’ve seen evidence of close to surface through their 2007 bulk sample and in each of the four holes they tested for non-gold content from their winter program. Even low grade copper, silver and nickel – we have no idea why evidence of nickel would be showing up in this area – might be economical to recover and add to the bottom line, further enhancing the potential of the current Block Model which does not take into account any silver or base metal mineralization.

Gold Bullion will be removing the large amount of rock (400,000 tonnes) from the waste pile within the Block Model (they will use it apparently for road construction, meaning even the roads will be golden at Granada) and will start extensively drilling this area where limited historical exploration has taken place. Geologists we spoke to during our site visit last month were excited about the possibilities of this area which is about 200 metres by 150 metres. Holes GR-09-01 and GR-09-03, drilled at the very western edge of the waste pile, delivered good results.

So Gold Bullion has an excellent opportunity to substantially increase possible resources just within the Block Model. We expect they’ll have a second drill rig arrive on the property sometime next month, and the sensible strategy it seems would be to put one rig within the Block Model and the other outside the Block Model to cover areas to the east and north. Additional drill rigs will likely arrive on the scene later as we believe Gold Bullion is going to get very aggressive at Granada which may ultimately mean 100,000 metres or more of drilling. An updated Block Model is expected by the Fall and a preliminary 43-101 by year-end.

The Block Model diagram that Gold Bullion released Thursday is very simple and clean, likely by design so as not to confuse the average investor. We don’t see any cross sections and not even probably half the vein structures. No doubt GENIVAR, Gold Bullion’s geological consultant and one of the best in the business, has an incredible array of detailed material on Granada including computer-generated 3D geological modeling. For competitive reasons we’re certain that Gold Bullion is holding some of its cards close to its chest. Basa and his geological team are also quite conservative, preferring to release information only when they know for sure they have confirmation and all the facts.

Through speaking with geologists, visiting the property, reviewing results and studying numerous technical reports, it’s BMR’s conclusion that Granada ultimately has the potential to host not just five million ounces of gold but perhaps even 10 million ounces. We caution it’s still early in the game, so throwing around a figure like 10 million, we admit, is highly speculative and premature. But the possibility certainly exists as Gold Bullion already appears to be a quarter of the way to double digits with so much blue sky potential remaining. We’ll have a much better idea in six months, but for what it’s worth our “intuition” tells us this is going to end up being a world class bulk tonnage, giant open-pit deposit surrounded by all the necessary infrastructure in the best mining jurisdiction in the world.

A fact that cannot be underestimated in its importance is Gold Bullion’s 30,000 tonne bulk sample three years ago. That’s a large sample and clearly shows that this company is on the right track in its approach at Granada. The bulk sample helps determine grade, recovery and costs. “For us the bulk sample was like the turning point,” Basa told us in our Thursday interview with him. Recoveries have consistently proven to be high at Granada (90% or better) and mining costs should be low. The estimated grade within the Block Model is 1.38 g/t Au to 1.46 g/t Au, numbers Basa can have a high degree of confidence in due to the bulk sample.

Much more is going to be understood about what’s driving the mineralization at Granada in the coming months. Quite simply, as best we can tell from technical reports and speaking with geologists, the rocks at Granada are characterized by intense sericitic alteration with disseminated pyrite and arsenopyrite and carry quartz veins and stringers. Interestingly, there appears to be a significant pyritic alteration “halo” effect in the LONG Bars Zone – the veins appear to be located within a very wide, low-grade halo that can be economically mined. The 2006 Technical Report on Granada alluded to this halo effect, which also exists at Aurizon Mines’ (ARZ, TSX) Joanna Project 20 kilometres to the east-northeast, and Gold Bullion’s drilling and bulk sampling seems to confirm it.

Gold mineralization at Granada is running between the quartz veins, carried we believe in disseminated sulphides with pyrite being the dominant sulphide. The wall rock – the material between the veins – was considered as waste by previous Granada operators and thrown away. After completing its large bulk sample as well as testing the waste pile, Gold Bullion discovered this material in some cases ran even higher in gold content than the veins themselves because of free gold in the stringers.

Results from Gold Bullion’s winter drill program demonstrate that mineralization is carrying through the length of each hole at Granada, a very encouraging sign.

Geologically, there’s a lot going on here and much, much more is going to be learned from the 20,000 metres of new drilling that is almost set to begin.

The prolific Cadillac Fault runs through the northern edge of the Granada Property and has obviously had a major influence on the geological dynamics of the LONG Bars Zone.

With hard work, a fresh and insightful new approach to this historic producing property, and a little bit of luck, Gold Bullion Development is well on its way to becoming a major new player along the Cadillac Trend with the makings of a multi-million ounce deposit.