Great Bear Resources (TSXV:GBR): Why the Stock Is up 300%

Great Bear Resources (TSXV:GBR) stock is up by more than 300% over the past year. Can this gold junior exploration company sustain this price momentum?

Gold bullion on a chart

Image source: Getty Images.

The junior mining industry is one that is highly volatile. However, now that gold has regained its lustre, several in the industry are marching towards record highs. Earlier this week we looked at Wallbridge Mining’s strong performance. Today, we’ll take a look at a junior exploration company that is sitting on one-year returns of 313%: Great Bear Resources (TSXV:GBR). 

The company is currently sitting on 300 square kilometres of property in the prolific Red Lake gold district. Currently, the majority of efforts are focused on the flagship Dixie project.

In 2020, the Great Bear Resources stock price is up by 86%. What is driving the price? And, more importantly, is the uptrend sustainable? Let’s take a look. 

The price of gold

First and foremost, the entire gold industry is currently being driven by strong gold prices. As the saying goes, “a rising tide lifts all boats.” In the investment world, there is perhaps no better correlation. Whether it be explorers, producers or streamers, everyone in the industry benefits from rising gold prices. 

Year to date, the price of gold is up by approximately 15%. The good news? The price of gold is likely to maintain the current bull run. There still exists considerable uncertainty, and in such an environment, gold shines. It has long been a safe haven in times of volatility, and it has been no different in 2020. 

Furthermore, Federal governments around the world are pumping a significant amount of liquidity in the markets. This has the net effect of devaluing fiat currency and should underpin the price of gold over the short to medium term. 

Given this, the price of gold is likely to be a tailwind for Great Bear Resources for the foreseeable future.  

Strong drilling program

The Dixie project is one of the largest active drilling programs in Canada. By the end of 2020, Great Bear Resources expects to drill +300 holes. The expectation is that by June 2021, it will have collected sufficient data to support a NI 43-101 maiden resource estimate.

According to the company, the drill program is supporting the classification of Dixie as a large, high-grade, and near-surface project. Since the drilling program began in 2018, it is delivering consistent high-grade gold intersections. 

According to Chris Taylor, CEO & president, Great Bear Resources is “making significant new gold discoveries in the near-surface in what is turning out to be a very large gold system, with many high-grade gold results.” 

This year’s drilling program will cost $21 million. The company recently raised $33 million in an upsized bought deal private placement offering. The influx in capital should be sufficient to see the company through the end of year. 

Now that the funding is secured, all eyes will be on drill results moving forward. So far, results have been strong, and all signs point to a successful drilling program. 

Is Great Bear Resources a buy today?

This junior gold stock currently sports a market cap of approximately $824 million. In my opinion, this is a little expensive considering analysts are expecting the maiden resource estimate from Dixie to come in at approximately three million ounces (at the mid-range).

Using fellow junior explorer Wallbridge Mining as a comparative — it has a market cap of $766 million on expectations for 3.5 million ounces of proven reserves. 

On the bright side, Great Bear Resources is sitting on property in a very prolific district. Given this, it is highly possible that the maiden resource estimate will come in higher than expected if drilling results continue to impress. 

At today’s prices, the quick money has been made. I’d expect the share price to move along with gold and will only move in a big way on a significant discovery. Outside of that, the next catalyst is likely to be the initial resources estimate.

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 Mat Litalien has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Stocks for Beginners

Cameco Stock and More: 3 TSX Commodity Titans to Watch in 2024

Cameco stock and these others will provide you with growth that goes beyond just a year or two, with all…

Read more »

Handwriting text writing Are You Ready For Tomorrow question. Concept meaning Preparation to the future Motivation Stand blackboard with white words behind blurry blue paper lobs woody floor.
Stocks for Beginners

3 Reasons to Buy Lundin Stock Like There’s No Tomorrow

Lundin stock (TSX:LUN) has been killing its production of copper and plans on blowing its records out of the water…

Read more »

Gold bars
Stocks for Beginners

TSX Materials in March 2024: The Best Stock to Buy Right Now

Materials have been quite volatile, though the price of gold has surged to all-time highs. That makes this stock a…

Read more »

Gold bars
Metals and Mining Stocks

Will Gold Stocks Rally in 2024?

Down almost 30% from all-time highs, Franco-Nevada is a gold mining stock trading at a discount to consensus price target…

Read more »

A miner down a mine shaft
Stocks for Beginners

Canadian Mining Stocks: Buy, Sell or Hold?

Canadian mining stocks have seemed like such a strong investment, but with shares down significantly this year, what should we…

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Stocks for Beginners

Great News for Gold Stock Investors!

Gold has hit an all-time high! Which is good news for some gold stocks, and really good news for others.

Read more »