Saw this on another board.... thought it was a good piece.

- Justice

Updated GNH.CA Rating – Reiterate Strong Buy

I initiated coverage of Golden Hope Mines in the early summer. Since then there has been a great deal of evolution on the projects. The focus of the reiteration of this Strong Buy is uniquely on the Timmins Gold System. The other assets deserve a buy rating on their own and are subject to an entirely devoted rating.

For the optimal comprehension of this rating, I suggest it be read in conjunction with the mineralization map I have attached hereto.

Regional Location

The Timmins Gold System in the Bellechasse Township in Southern Quebec. The closest city is Quebec City which is roughly an hour drive away. The asset is situated in a location with good logistical resources which will facilitate future mining. Also noteworthy is the political climate – Quebec is consistently voted one of the most mining friendly jurisdictions worldwide

Scientific Thesis for the Deposit

The thesis behind this deposit is very logical and an interesting historical story in and of itself. There has been alluvial gold mining in the region since the 1800’s. The Chaudière River has had been the site of one of the first gold rushes in North American History. Links on that subject are at the bottom of this rating.

However, as we all know, gold it doesn’t just fall from the sky and into a river bed for people to pan out. There is a source, a geological anomaly, that is the point of origination from which the gold is eroded. Until now, no one has really looked for the source of the Chaudière Gold. GNH believes that they have found that anomaly.


The Company

GNH has been around for many years, but was never well capitalized or managed properly. Last year, a new management team came in after the financing and took over the company based on the quality of the assets. With a proper budget the assets could be explored properly and thoroughly. The company motto is efficiency – if it isn’t there move on, if it is there take the time and effort necessary to define it in its entirety.

In the past year, GNH has gone from zero to 8 geologists on staff who are all motivated to uncover the beast which they believe to have in their presence. The approach is to let the geology guide them, not their egos. They have operated on the basis that they are attempting to prove that there is no economic deposit there – they have not been able to do that and so they keep on going.


The Timmins Project

The Timmins Gold System is a coarse gold deposit which implies that GNH is looking at recovering and assaying for nugget gold. This type of mineralization is challenging to assay because the conventional diamond drill holes are inefficient and not representative of statistical distribution of the gold.

Here is the idea: Take a bag, put 45 white beans and 5 black beans in it. If you take a scoop of 10 beans you might get one or even two black beans in it, but you might not get any at all. Regardless of what your scope yields, you know there is 10% of the bag that is black beans. You would have to empty the whole bag to get the appropriate representation though.

Therefore, with a coarse gold body, bulk sampling (trenching, blasting, down hole hammer drill) is the greatest indicator of grades, not diamond drilling as it may or may not actually hit a nugget and will produce erratic results. When bulk sampling is done, the grades yielded are about as close to the grades which will be mined as you can get. The major advantage here is that once defined, the resource estimates are extremely reliable.

Consequently the pits are of great significance because they do not present erratic samples as would diamond drill holes. There has been diamond drilling done on the Timmins property, but not for grading, rather for geometry and orientation of the ore body in order to guide the rest of the exploration program. In fact these holes were instrumental in uncovering Timmins 2. In October 2007, the diamond drill cores from the summer program were sent to assay because they looked interesting. They came back positive as was reported in the December 3 2007 NR describes - they confirm that there is indeed Au on the system.

The December 3 2007 NR also includes numbers for some significant historical pits on Timmins 1. These pits included:

43.26 short tons 18.12 g/t
21.7 tonnes 3.53 g/t of gold.
32.7 tonnes of 0.96 g/t of gold

The geology indicates that there was a hard nut intrusive which produced the Timmins 1. Through shearing of the system, it was hypothesized that there was necessarily an “evil twin” to Timmins 1. The Twin was found, Timmins 2, and appears to be even larger than Timmins 1. The Fall 2007 program was focused on trenching and blasting Timmins 2 in order to yield appropriate bulk samples which would represent the deposit.

There is also the Ascot zone which has undergone the same treatment and is going to start a Downhole Hammer Drill soon. In all there is a great quantity (1500+) samples at the lab which are going to come out through winter.

Timmins is also a free gold system, that is to say which once ground and pulverized, the gold separates from the host and gravity takes care of the rest. This process of grinding and pulverization, minus the separation of the gold, is used for the samples sent for fire assay. Consequently, it is also the same process that would be used for actual mining. This process is cheap to mine and environmentally friendly.


Analysis

Grades and tonnage are there as can be seen on the map. If you do the math there is a considerable amount of Au in the system, although, as of yet an undefined quantity. Currently GNH is working efficiently to define that.

Here is a conservative calculation based on the info from the Dec.3.07 NR and the map attached hereto. Only taking Timmins 1 into account:

100m (length) x 80m (width) x 1000m (depth) x 2.6 (density)
= 20,800,000 tons x 3 (ballpark average grade of 3g/t)
= 62,400,000 grams = 2,080,000 oz of gold

2 million ounces, that’s just half of Timmins.
Consider that the last gold asset to be sold in Quebec (Virginia Mines) was valued at $125/oz, this represents at least $200 million to the market cap, plus Timmins 2, plus Ascot
… It adds up quickly and there is a lot of it.


Blue Sky

GNH also has a few other targets in the same immediate area:

CouCou appears to be a VMS type deposit. It is at least 800m in strike and 200m wide. There have been several holes put down which have been sent to lab. Technical staff is enthusiastic as mineralization has appeared in outcroppings and on cores. Results pending.

Serpentinites: These are little understood anomalies which resemble the Bou Azzer mine in Morocco which is the only pure Cobalt mine in the world. They host Au and PGM’s in the wall rock (usually 5-8m wide, 50-80m long) and Ni-Cu-Cobalt in the core. The Eastern Metals deposit at the tip of the GNH land claims is a proven serpentinite that was never mined. GNH has staked 10+ targets on the northern boarder of their claims. These will be drilled next season.

More goodies

There is roughly 25% of the stock held by insiders and friendlies.
Another 25% is held by institutions, one of which has just under 10%

There are no proxy companies in the region, so this is it!

It is far to cheap for many institutions to even look at.

For ALL these reasons GNH.CA is a Strong Buy especially at these prices.
It is my personal opinion that the stock is highly undervalued at the current time. With the amount of work done and news in the pipe, I believe that this is a great opportunity.

*Disclosure* I am invested in GNH.CA

Links:

History of gold mining in the region from the GNH site
http://www.goldenhopemines.com/belle...

Pictures of the gold fields:
http://www.mccord-museum.qc.ca/scrip...

Brief history of gold mining in Canada
http://www.thecanadianencyclopedia.c...