Granada Gold (GGM) Trading “at a significant discount to peers”, says Ubika Research in its Guide to U.S./Can.Junior Resource Companies

Granada Gold Mine Inc. (TSXV:GGM) Searching For The Right Mill Company

Description Granada Gold Mine Inc. (TSXV:GGM; “GGM”) is a developer advancing its ~2,500 Ha Granada gold property located in Quebec. The Company hosts a solid mineral resource base, good exploration upside, and the permits to operate a small startup scenario, but had issues finding a mill to process its ore. However, developments of late have shed light onto the project, revitalizing it once again as a near-term producer.

Investment Highlights

 • Near-term production could be a possibility. On September 8, 2017, Granada signed a Memorandum of Understanding (MOU) with Castle Silver Resources (TSXV:CSR), a non-arm’s length sister company, for the consideration of processing 579Kt grading 4.24 g/t Au for ~75,000 oz (assuming 95% recovery). This includes an option to process an additional 2Mt of material over the next three years. Included in the MOU, is the agreement for CSR to install a 600tpd gravity flotation plant at one of its northern Ontario assets. Castle Silver is expected to release a follow-up study in Q4/17. Recall, a PFS, assuming a similar startup scenario, was released in 2014 outlining a potential “Rolling Start” at Granada utilizing a custom milling agreement at a rate of 550 tpd with IAMGOLD, which did not come to light, due primarily to delays in the Quebec permitting process. The 2014 PFS estimated ~25K oz/year for three years with an allin sustaining cost (AISC) of US$797/oz, with a post-tax NPV6% of $20M, an IRR of 139%, with capex of $6.7M. In our view, this is an important development; if Granada successfully pursues an agreement without the need for additional equity/debt to build a mill, it would be a solid starting point to achieve near-term cash flow. This would bode well to advance the project organically through further exploration/development expansion with minimal dilution.

• Mine life should not be problem. On May 16, 2017, Granada released an updated mineral resource estimate, hosting 21.6Mt in-pit M&I grading 1.16 g/t Au for 808K oz Au, with another 10.4Mt underground Inferred mineral resource grading 4.56 g/t for 1.5M oz Au. The Inferred underground ounces are located up to 1km north of the open-pit resource and are outlined from surface to 1km at depth. The Company is already permitted for an initial open-pit operation (stockpiled material on site).

 • Untested potential. The LONG Bars zone included in the 2017 resource hosts 17.1M t grading 1.14 g/t Au for 625K oz. However, note that 80% of the LONG Bars area outside of the open-pit resource shell has not been explored yet, and remains open in all directions and at depth.

 • Trades significantly lower than its peers. At US$6/oz, Granada trades at a significant discount to peers at a mean of US$30/oz and a median of US$21/oz. In our opinion, the stock is trading as if the option for the near-term “rolling start” were free. Should Granada execute its MOU with Castle Silver or another mill option, near-term cash flow would de-risk the story immensely, and this gap in valuation to peers would likely close.

Upcoming Catalysts

• Results from Genesis. The next main target for the Company, as shown on Figure 12, is the undrilled Genesis target, known as the “heat engine” for Granada mineralization.

 • Updated PFS. Using the newly-released resource estimate, GGM plans to update its 2014 PFS, which is expected to include changes to the mining scenario.