Despite gold pulling back sharply since mid-February 2019 to be trading at around US$1,287 per ounce, there are signs that the metal is due to rally yet again. This provides investors with the opportunity to boost their exposure to gold by acquiring development-stage miner Great Bear Resources (TSX:GBR). Even after gaining 38% since the start of 2019 compared to gold’s modest 1% increase, the miner appears poised to rally further, particularly once the yellow metal firms to over US$1,300 per ounce. This has created an opportunity for those risk-tolerant investors seeking access to outsized returns.
Flagship asset possesses considerable potential
Great Bear’s flagship asset is its 9,140-hectare Dixie gold property located in Red Lake, Ontario. Red Lake is one of the world’s most prolific gold-producing regions and Great Bear has been reporting some stellar drilling results, making several gold discoveries.
The company has reported that its gold discoveries at Dixie have ore grades ranging between around two grams of gold per tonne of ore (g/t) to over a very impressive 1,600 g/t. Great Bear has also identified a +20-kilometre-long gold-bearing mineralized structure at its Dixie property. Those discoveries and their characteristics underscore the considerable potential exploration upside held by the property.
Great Bear recently announced that it has a fully funded drilling program in place for 2019, which is targeting the completion of 12,000 metres to be completed by July 2019 and then an extended program will continue for the remainder of the year. That expanded plan will see the miner focused on completing 30,000 metres of drilling, which has a budget of $5.6 million.
At the end of March 2019, Great Bear had $12 million in cash and in-the-money warrants with a value of $20 million on a partially diluted cash basis. That means the miner is well positioned to not only continue funding its all-important drilling program but to significantly expand that plan.
In 2017, Great Bear entered an agreement to acquire 100% ownership of the West Madsen gold project in the Red lake Gold District. That purchase is being paid over four years and the property covers 3,860 hectares. Neighbouring gold projects and historical mines attest to the considerable potential that the acreage is thought to hold. The next steps for West Madsen are for Great Bear to appraise the property, map the asset, and establish drilling targets.
Is it time to buy Great Bear?
An investment in Great Bear is speculative in nature because it is an exploration-stage miner that has yet to complete a resource estimate or preliminary economic assessment for its flagship Dixie asset. That property holds considerable potential, which is illustrated by the notable drilling results announced by Great Bear, including some especially impressive ore grades for its March drilling results, which ranged from almost 12 g/t to 130 g/t. This considerable potential combined with the quality of the gold discoveries made by Great Bear makes the miner an interesting but speculative play on higher gold.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Matt Smith has no position in any of the stocks mentioned.