Granada Gold

Building a High-Grade Mine on Quebec’s Cadillac Trend

This Granada Gold Mine Inc. profile is part of a paid investor education campaign.*

Overview

Granada Gold Mine Inc. (TSXV:GGM,OTC Pink:GBBFF,FWB:B6D) is a junior resource company currently advancing its high-grade Granada gold deposit in Quebec towards production.

The past-producing mine is located on the Cadillac trend near other mines in an area where over 75 million ounces of gold have already been produced.

The company is in a unique and potentially advantageous position. Not only does it have a well-defined open-pit with gold resources in the order of 1 million ounces, but it has already successfully gone through a lengthy permitting process and is the only non-producing mine on the Cadillac trend that has mining permits allowing it to open-pit mine and ship to a local mill.

In addition, recent drill results showing wide high-grade areas near the surface (11.45 g/t gold over 33 metres) are being interpreted as presenting a much different mining scenario at Granada over the coming years – starting with open-pit mining at much higher grades than indicated by the reported resource calculations – and then moving to underground mining – in the range of 8-10 g/t which is how it was mined in the 1930s.

granada gold veins
Gold veins visible in drill core at Granada

The possibility of open-pit mining at high grades for several years is supported by a 2014 PFS which identified selected pit areas totaling 600,000 tonnes averaging 4.24 g/t that could be readily mined and shipped to a local mill.

The eventual underground mining in the 8-10 g/t range is supported not only by the past mining experience at Granada but also by the company’s numerous drill intercepts showing very high grades along the downward sloping vein structure, as indicated in the cross-section of the deposit shown below. These high-grade intercepts occur below the defined pit, with the deposit open at depth and to the north and east.

granada gold deposit cross section
Granada Gold deposit cross section

The latest 43-101 resource calculation (published in a technical report in February 2019) estimates a pit-constrained measured and indicated resource of 22.2 million tonnes grading 1.06 g/t containing 762,000 ounces and an inferred resource of 6.9 million tonnes grading 2.04 g/t containing 455,000 ounces. These resource numbers are for the surface pit only and do not include the high-grade drill results recently reported for the many drill intercepts (shown in the above map) that are outside the pit area.

Recent activity at Granada includes:

  • High-grade drill results near the surface from fan drilling (a recent change in drill patterns) including 11.45 g/t gold over 33 meters and 7.67 g/t gold over 15 meters.
  • Currently examining the potential to develop the deposit into a high-grade gold open pit with mining then moving underground where past mining averaged 8-10 g/t gold.
  • New discoveries from successful drilling at underground targets such as the Genesis target (8.39 g/t gold over 6 meters including 12.41 g/t gold over 4 meters).
  • Exploration in other areas along strike indicates the potential to find more high-grade gold on the property since only 20% of the strike length has been explored so far.
  • Bulk sampling program of up to 500 tonnes in the first half of 2020 to evaluate the native gold component in the mineralized structures (primarily Veins 1 and 2).
  • Pre-concentration testing for the conversion of low-grade material below 1 g/t gold into much higher grades (a range of 5 – 10 g/t gold range likely best to maximize recovery) for shipping to local mills or eventually an on-site mill (current permits allow shipping 550 t/d (approx. 200,000 tonnes per year) to local mills with discussions continuing to secure a milling contract).

Granada Gold boasts an experienced management team with noted expertise in all aspects of mining. Heading the team is President and CEO Frank Basa P.Eng., a metallurgical engineer and milling expert, who also heads Canada Cobalt Works Inc. (TSXV:CCW).

granada gold frank basa examining sample
CEO Frank Basa examining mineralized rock at Granada

Granada Gold previously announced that it is planning to pay a dividend equivalent to a three percent NSR to its shareholders once the company begins production at the Granada deposit.

Granada Gold’s Company Highlights

  • Granada Gold’s high-grade past-producing project is located in the mining-friendly jurisdiction of Quebec on the Cadillac trend.
  • The Granada project is located in proximity to 10 gold mines and can easily access the established mining infrastructure in the area.
  • The Granada project is a production-ready property with open-pit mining permits already in place.
  • Only 20 percent of the LONG Bars zone strike length has been explored to date, offering the company expansion potential.
  • Granada Gold has plans for further exploration and resource expansion.
  • Metallurgical test work is underway to lower capital and operating costs, provide processing options and de-risk the Granada project.
  • Three percent NSR to be paid as dividends once production begins at the Granada project.
  • An experienced management team leads Granada Gold and has years of experience in metallurgy, mining, geology and exploration.

Granada Gold Project

The Granada gold project is located seven kilometers south of the mining-friendly community of Rouyn-Noranda in Quebec, Canada. The property sits in the heart of the Abitibi Greenstone belt, which has produced 160 million ounces of gold since the start of the 20th century. The property is also located on the prolific Cadillac trend, which has highly-prospective geology and is host to many mining communities.

The Granada property is easily accessible by highways and roads and supported by the appropriate infrastructure for a large open-pit, bulk tonnage gold deposit. The property is also supported by a power line that provides up to 1,200 horsepower, a natural gas pipeline and water supply from nearby lakes.

Granada Gold has been conducting a community engagement initiative where representatives from the company engage with local residents, members of the nearby First Nations communities, elected officials and other relevant public servants.

granada gold property on map
Granada Gold Property – Located seven kilometers south of the mining-friendly community of Rouyn-Noranda in Quebec, Canada.

History

Rouyn-Noranda has a rich mining history that began in the 1920s with the discovery of the Horne copper-gold deposit. Following that, 15 other deposits were discovered in the region, including Granada, which was originally staked in 1922 and brought to production in 1930. Five veins were found on the property, and an on-site mill processed 51,476 ounces of gold from 181,744 tonnes of ore with an average grade of 9.7 g/t gold and 1.5 g/t silver. In 1935, the surface structures of the mine were destroyed by a fire, stopping production entirely.

In the 1980s, Kewagama Gold conducted a series of exploration activities that continued until the mid-1990s. Their initiatives included detailed ground geophysics and geological mapping. Kewagama Gold sold the mine to Mousseau Tremblay Inc. in 1998, and the new proprietors mined a total of 2,200 ounces of gold from one of the veins. Granada Gold acquired the property in 2006.

granada gold historical photo

Resources

Since its acquisition, Granada Gold has conducted several exploration activities on the property, including an initial drill program in late 2009 which resulted in the discovery of mineralization in previously undrilled land more than 500 meters away from the past-producing shaft. Drilling continued on the property and by 2012 the company had a defined resource in the LONG Bars zone.

The company conducted additional drilling programs in 2016 and 2017 which produced notable results. Highlights include 14.5 g/t gold over four meters, including 55.9 g/t gold over one meter at 881 meters and 7.3 g/t gold over one meter at 710 meters.

granada gold project map zones

Located adjacent to the prolific Cadillac Break shear zone, hosted in Pontiac metasedimentary rocks and granitic sills along the Granada Shear Zone (“LONG Bars”) Zone

To date, only 20 percent of the LONG Bars zone has been explored. While Granada Gold prepares the project for production, it is also working on plans for expanding the existing gold resource by exploring additional target areas.

In November 2017, the company was granted exploration permits for the former Aukeko mine site, which resides two kilometers east of the LONG Bars zone. Work conducted in 2018 on the LONG Bars zone included trenching and drilling in an area where three bulk samples were reported to have been taken in 1938 from a trench approximately 50 meters to 150 meters east of the Aukeko shaft that had an average grade of 240 g/t gold.

granada gold whittle pit map and resources
Granada Gold Whittle Pit and Current Resources

Granada Gold commenced its 2018 drill program in October to drill the magnetic targets at the LONG Bars zone, extend underground gold mineralization towards the Cadillac trend to the north and to test for silver and base metals. Drill highlights include 11 meters grading 5.07 g/t gold and 1.5 meters grading 12.21 g/t gold, including 0.5 meters grading 37.3 g/t gold.

The 2018 drill results culminated in the development of an updated pit-constrained resource for the property. The pit-constrained resources at the LONG Bars zone represent a total measured and indicated resource of 22.267 million tonnes grading 1.06 g/t gold for 762,000 ounces and an inferred resource of 6.93 million tonnes grading 2.04 g/t gold for 455,000 ounces.

CATEGORY TONNAGE AU G/T AU OZ
Measured 12,637,000  1.02 413,000
Indicated 9,630,000 1.13 349,000
Total M+I 22,267,000 1.06 762,000
 Inferred 6,930,500 2.04 455,000

“These robust numbers confirm our longstanding belief in the merits of this property, and they form the backbone for our next efforts. We intend to see how we can turn Granada into a bulk-tonnage mine, and we believe the improving mining markets position us well for this effort,” said Basa.

Following the release of the updated resource estimate for the project, Granada Gold announced its intent to add to the resource for the property through drilling concentrated on target areas next to the pit-constrained resource area to expand the resources at shallow depths. The company also plans on evaluating the economic and engineering aspects of the current resource.

granada gold resource map whittle pit
Longitudinal Section Looking South Shallow-level drilling aimed at increasing resources

In August 2019, Granada Gold commenced its 2019 drill program on three surface-outcropping mineralized structures. Highlights from the 2019 exploration program include 33 meters grading 11.45 g/t gold, 15 meters grading 7.67 g/t gold, six meters grading 3.41 g/t gold and two meters grading 12.32 g/t gold, including 0.50 meters grading 48.80 g/t gold. These results extended the LONG Bars zone and spoke to the potential for near-surface, high-grade mineralization that can be found on the property.

The Path to Production

Due to the property’s opportunities for both open-pit and underground mining, Granada Gold has entertained a variety of options for how to initiate production and achieve the goal of producing 100,000 ounces of gold per year. One variable consideration for the company has been the lack of an operating mill on the property, which has encouraged discussions with nearby operators for the use of their mills.

In 2012, the company conducted a preliminary economic assessment (PEA) for a combined open-pit and underground mine that had an operating mill on the property. Results of the PEA outlined production of 100,000 ounces per year for 11 years, mining 7,500 tonnes a day with a CAPEX of C$259 million. Soon after the report was published, lowering gold prices and funding challenges made this option not economically feasible.

As an alternative, Granada Gold conducted a PFS in 2014 for a “rolling start” plan. This plan suggested the launch of an initial phase of reduced-scale production in the form of open-pit, selective high-grade mining. The PFS outlined a three-year-long production phase of 25,000 ounces per year, mining 550 tonnes a day at an average grade of 4.24 g/t gold. The CAPEX for this initiative was reported at C$6.7 million and assumes a partnership with a nearby mine for mill use.

granada gold resources map

2014 Proposed Rolling Start Pits (Yellow)
2019 Pit Constrained Resources (Blue)

Since publishing the 2014 PFS, Granada Gold has obtained all the necessary permits for open-pit mining and entered into the appropriate First Nations agreements for launching the ‘rolling start’ phase of production, making the property production-ready. However, discussions with the local mills at that time showed that they were not willing to engage in a longer-term agreement to process the sizeable amount of ore that would come from the Granada property.

Additional discussions have been initiated more recently with local mills. Also,  Granada Gold intends to conduct a fully bankable feasibility study (FS) for the company to have its own mill on the property, producing 80,000 to 100,000 ounces of gold a year. Gold prices have improved since 2012, making this approach more economically viable.

While this work is being done, Granada Gold is also conducting a PFS for the construction of a mill at Canada Cobalt Works’ property in northern Ontario. This follows Granada Gold’s September 2017 announcement that the company had signed an MOU with Canada Cobalt Works for the consideration of processing 579,000 tonnes of ore over three years.

As part of the company’s project optimization work, Granada Gold has been conducting metallurgical testing with material from the resource areas with the hope of increasing the resources. The company also plans to demonstrate the advantages of pre-concentrating lower-grade gold-bearing rock from the Granada gold project. Higher grades could have an impact on future mill feeds, the size of the gold deposit and the costs associated with future mine production.

“These metallurgical results can further de-risk the project and provide additional processing options for the company. They potentially expand the existing resource by lowering the average gold grade that could be mined and processed using pre-concentration by gravity separation,” said Basa.

In March 2019, the company announced that a 260-kilogram sample assaying 0.6 g/t gold was sent to Gekko Systems Inc. in Australia for testing. Gekko Systems’ innovative pre-concentration system increases recovery values, improves feed rates and reduces ore mass, weight, water use and power requirements, all of which have the potential to lower capital and operating costs.

Gekko Systems was able to upgrade the grade from 0.6 g/t gold to 6.0 g/t gold with an overall recovery of 60 percent. The sample was crushed through different size fractions, homogenized and split before conducting gravity tests. A grade of 21.0 g/t gold was achieved from the coarse size fraction with a recovery of 40 percent.

Subsequently, Granada Gold also began a testing program at Canada Cobalt Works’ pilot plant. A 120-kilogram sample of low-grade mineralized rock was processed by screening the material into three screen sizes followed by gravity separation. The concentrates were then analyzed for gold, silver, cobalt, nickel and copper. The two-stage gravity concentration program was able to upgrade the low-grade gold mineralization of 1.01 g/t gold to 67.99 g/t gold.

In July 2019, Granada Gold sent a low-grade mineralized waste pile sample to SGS Lakefield for process optimization to increase the gold grade and to explore cobalt and nickel recovery rates as well. The results are pending.

Granada Gold’s Management Team

Frank J. Basa, P.Eng. — President, CEO and Director

Frank Basa has been a Director of Granada Gold Mine Inc. since 2004. He has over 30 years of 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

Jacques Monette has been a Granada Gold Mine Director since 2008. He is a career miner who has been engaged in every facet of underground mining for over 40 years. His previous positions included Shaft Project Coordinator with Cementation Canada Inc., Vice President of Operations and the 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.

Thomas P. Devlin — CFO

Thomas Devlin became Granada Gold Mine’s CFO in January 2009. He brings over 40 years of accounting and management experience in the investment and junior resource industries to the company.

Dianne Tookenay, M.P.A, B.Admin. — Director

Dianne Tookenay holds a Certificate in Mining Law from Osgoode Hall Law School at 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 of Applied Arts and Technology. Her experience, knowledge and deep roots within the First Nation communities adds significant value to Granada’s development now and in the coming years.

Robert Setter, B.A. (Econ) — Director

Robert Setter was the Senior Financial Editor for Report on Mining and a Director for a publicly-traded company. He 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 over two decades of business, marketing and communications experience to the company and holds a degree in Economics from UBC.

Tina Whyte — Corporate Secretary

Tina Whyte brings over 20 years of experience in the corporate and securities industry. Her expertise spans to areas of corporate governance, continuous disclosure, financing transactions, regulatory filings and compliance. She holds corporate secretary positions with other publicly-listed companies.


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The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Granada Gold Mine Inc. and seek advice from a qualified investment advisor.