$0.30 to $3 and Counting with GBR.V - How I Knew to Invest
Great Bear Resources is the hottest gold exploration stock on the market right now. The junior has a tiger by the tail – drilling at Dixie Lake has hit into incredibly high-grade gold in multiple zones, all near surface and with lots of reason to believe there is much more to come.
The flashiest results came in August when drills returned 7 metres of 69 g/t gold just below 16 metres of 26 g/t gold. Numbers like that are really rare. The market saw the results for what they are - strong evidence that Great Bear is onto a major discovery in a prolific gold district - and sent GBR shares skyward. The stock has gained 400% since then and famed gold investor and Red Lake expert Rob McEwen has joined as a major investor.
I saw the potential in GBR nine months earlier. I bought in then and recommended her subscribers do the same. And I continued to recommend the stock all through 2018, as evidence of a big discovery built.
How did I know?
Investing in junior resource stocks is tough. You have to understand geology and metal cycles and low-liquidity trading issues and jurisdictional risk and the difference between slick promotion and the real goods. You have to know who in the industry is doing what and where, and backed by who. You have to fit share structure and access to capital into a science experiment that could lead to riches.
It takes experience, connections, and time. That is precisely what I have – and what I share and explain in The Maven Letter.
I learned about Great Bear last December, when folks I knew suggested I talk to Chris Taylor. Chris is a geologist and junior executive who was just starting to tell the market what he and partner Bob Singh had been working on for two years.
That work was Dixie Lake, a project in Red Lake with great gold potential that had flown under the radar for years because of divided ownership and poor record keeping. Chris and Bob did the hard work to consolidate the property and sort through the old data. They did ground work of their own to confirm what they read. They restructured a public company to make it a strong vehicle for a strong project.
When I met with Chris last December, the story he told was one of the best exploration opportunities I had ever heard.
I could spend the next four pages explaining why the geology was so enticing, but the short version is that gold in the Red Lake area of Ontario generally happens along geologic contacts – where one particular kind of rock contacts another kind of rock. A contact isn’t enough though – you need the right kind of contact, you need deep structures that can act as highways for gold-bearing fluids to intersect the contact, and you often need the contact to have been bended and folded to create openings wherein the gold can deposit.
Dixie Lake has all of that, in spades. The right kind of contact not only exists but runs for several kilometres. At its southeast end it fully bends back on itself. It is gold bearing at surface, which means the fluid structures are also there.
And between scattered historic work and Great Bear’s work to date, the structure carries gold very consistently…and in places at very high grades.
I’ve been excited about the growing potential at Dixie Lake for almost a year but the market sat up and took notice in August, when Great Bear pulled two phenomenal intercepts from the Hinge zone. That’s the southeast end, where the structure doubles back on itself.
The hits came in at 26.9 g/t gold over 16 metres in one hole and 69 g/t gold over 7 metres from a second hole 15 metres deeper. GBR had pulled good gold from the Hinge previously, but not of this caliber.
That drill intercept is phenomenal. Red Lake can produce these kinds of hits, but not very often – and when they do happen, the discovery usually becomes something very significant.
I’m keeping the geology short because rocks are only one factor in the complicated equation required to value a junior resource stock. Just as important as good geology are:
- Money: can the company raise funds to advance the project?
- Clear planning: if they have money, how exactly will use it to add value to the project?
- Jurisdiction: is the project in a functional location? A bonus to functional is easy and inexpensive.
- Share structure: how many shares does the company have out? If a discovery adds $30 million in market cap value, shareholders benefit way more if there are only 30 million shares out versus 300 million.
- People: does management have what it takes? This should perhaps be the first question – good management will ensure all of the above are managed.
Great Bear passes all of those tests with ease. The company had money in the bank when I met them in December. Since then I’ve watched them close three financings – two small ones, just enough to fund phase 2 drilling while limiting dilution, and then an oversubscribed $10-million raise that brought famed gold entrepreneur Rob McEwen in as a major investor after they hit big and the share price soared.
Great Bear can clearly raise money. Now, after those financings, the company still has only 35 million shares outstanding, a very tight count that sets the share price up for big gains on success.
And success is already well underway. I remember the words Chris used when he told me the news: “We hit the motherlode!” And it’s not an overstatement. To get almost an ounce of gold over 16 metres in a shallow hit in a zone that has seen hardly any drilling is truly a remarkable discovery. The fact that it’s in Red Lake makes it all the more exciting: Red Lake has produced this kind of intercept before…from what became known as the High Grade zone at Goldcorp’s mine. That zone made Goldcorp the major company that it is today.
Rob McEwen was in charge at Goldcorp when they discovered the High Grade zone. On hearing Great Bear’s news, he immediately invested in a big way, putting $4.8 million of his own money into the company. No one knows high grade gold in Red Lake like Rob McEwen and that was his response to Great Bear’s discovery.
But I digress. Great Bear can raise money. They have a very clear plan for how to build value, including backup plans for their backup plans (not that they have needed any yet!). They are exploring in Tim Hortons country – you can drive to coffee within 15 minutes from the drill rig – so drilling is inexpensive.
The company’s share structure is very tight and management is among the best I have come to know, from how they conduct exploration to how they spend money, tell their story, and structure their moves.
I saw potential for all of this almost immediately last December, when I met Chris. I wrote about Great Bear in my Maven Letter, explaining why I was investing in the $0.32 stock. I secured an allocation in the small financing and offered it to my Premium subscribers; those who participated alongside me got into GBR at $0.30 and hold warrants at $0.42.
Great Bear shares are trading at $3.20.
For a stock to gain ten-fold in nine months is exactly why investors play the junior exploration game. But far more stocks slide than multiply. Singling out the winners takes expertise, connections, and dedication.
Junior exploration is my world. I have the expertise, connections, and dedication to find winners like Great Bear. And I write the Maven Letter to share that information.