Angela Harmantas | April 11, 2018 | SmallCapPower: It has been a busy year for Granada Gold Mine Inc. (TSXV:GGM) leading into PDAC 2018. After undergoing a rebranding in early 2017, the Company put drills in the ground at the Granada gold project in Quebec to further define the resource. In January 2018, Granada Gold Mine raised over $2 million in an oversubscribed placement for use towards a trenching & drilling program, as well as to advance a bankable Feasibility Study. In addition, shareholders are being rewarded with a dividend payment. Perhaps most significantly, the Company signed a provisional agreement with Canada Cobalt Works Inc. (TSXV:CCW) to build a mill to process 579,000 tonnes, with an option for up to two million tonnes of ore, over a three-year period. Yet, Frank Basa, CEO of Granada Gold Mine, wants to do more.
"We are severely undervalued," he said. "If you look at any other company that has put a mine into production in the 80,000 to 100,000 ounce a year range, they all have a market capitalization of over $200 million."
Today, Granada Gold Mine trades at $0.25, with a market capitalization of just over $15 million. On an EV/total ounce basis, GGM trades at US$5/oz, a discount to peers, which trade at a mean and median of US$29/oz and $19/oz, respectively.
The Company's key asset is the Granada gold project near Rouyn-Noranda in the Abitibi region of Quebec, a region that hosts world-class gold mines such as Agnico Eagle's LaRonde and Malartic, a 50/50 joint venture with Agnico and Yamana. Granada's current Measured & Indicated Mineral Resource Estimate shows 807,700 in-pit constrained ounces of gold at a grade of 1.16 grams per tonne. In addition, there remains another 1.5 million ounces of underground Inferred Mineral Resource with grades of 4.56 grams per tonne. Management believes this number will increase due to the amount of native gold on the property - up to 70%.
Granada Gold Mine already has permits in place to operate a small operation, but the main obstacle was finding a mill capable of handling the tonnage. That obstacle was overcome in September 2017, when GGM signed an agreement with Canada Cobalt Works (TSXV:CCW), located just across the provincial border in Gowganda, Ontario. CCW will build a small mill on their property capable of handling two million tonnes over three years.
With the agreement in place, Granada Gold Mine plans to commit a small drill program on a deposit, known as Aukeko, on the Granada property. A former-producing mine that produced about 300 tonnes bulk sampled at about five ounces per tonne, GGM's goal is find the extension of those high-grade zones. At the same time, the Company is planning a deeper drill program on the rest of the property to convert Inferred ounces into Measured & Indicated. The next milestone is a bankable Feasibility Study, expected to be released by the end of 2018.
In the meantime, GGM's shareholders are already being rewarded with a small dividend thanks to the spinout of CCW in 2016. When Granada Gold Mine goes into production, the next dividend shareholders will be getting will be a based on a 3% net smelter return payable for the life of mine." Even if another company tries to acquire Granada, only the shareholders will be entitled to that dividend, not the company," explained Mr. Basa. "The royalty is set up the same way - right now, if you calculate it, a five-million-ounce deposit is worth almost $2.60 and we're trading around $0.30."
Longer term, the Company's plan is to develop the Granada project and create value in the ground for investors. "We raised a couple of million dollars and will have plenty of money to spend even after our Feasibility," said Mr. Basa. "There's a lot for investors to consider: The dividend, the Feasibility Study coming out, and the potential for another two million underground high-grade ounces at 4-6 grams per tonne. We're just getting going here."
To find out more about Granada Gold Mine, please visit the company's Investor Hub.
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