Gold hunter Great Bear hits another home run
By Marc Davis
Geologist Rick Greenwood amongst core boxes in yard at the core shack.
It is the standout star performer in Canada’s mining investment sector over the past two years. Not only has Great Bear Resources (TSX.V: GBR, OTCQX:G GTBDF) outshined other mining stocks by a quantum leap; it has also outperformed all the major US and Canadian indices by margins north of 1,500 per cent.
But what exactly is generating all the excitement? What kind of enigmatic treasure trove is Great Bear unearthing? Is it really as analogous to the fabled Hemlo discovery that gave rise to the aptly named Golden Giant Mine — as is now being suggested? After all, this has been a topic of considerable speculation lately, with investors only now beginning to see how the jigsaw pieces are starting to fit together to gradually reveal a bedazzling picture.
Indeed, such misconceptions have fuelled some volatility in the company’s share price. So now is a very fitting time to offer investors some clarity on this developing story, according to Great Bear’s CEO Chris Taylor.
“The most recent discoveries along the LP Fault have flipped Great Bear’s story on its head. This is a real game-changer,” he enthuses.
What he’s referring to is the latest batch of drill results from the LP Fault gold structure, which were announced late last month, and which have provided a tantalizing twist in Great Bear’s rags to riches story.
To recap, it has been a flurry of high-grade drilling results from the 2017 and 2018 discoveries at the Hinge and Dixie Limb discovery zones that set the company’s share price alight over the past two years. But it now seems that these discoveries will ultimately become a sideshow to 2019’s expansive LP Fault gold find, which is where a richly-mineralized, major deposit appears to be emerging.
This reality will likely come as a big surprise to many investors and market commentators alike, who have mistakenly assumed that Great Bear’s clear shot at glory is entirely dependant on continued drilling success at Hinge and Dixie Limb.
Aerial view of part of the Dixie Project in Red Lake, Ontario. SUPPLIED
A tantalizing twist in the tale
Company president Chris Taylor is happy to inform investors that these richly concentrated, near-surface vein systems merely represent the so-called icing on an expansive, prolifically-mineralized geological cake that runs many layers deep.
In fact, he compares the emerging LP Fault discovery to a rich chocolate layer cake laid on its side that measures up to 300 metres wide and at least 500 metres deep (though geological modelling suggests it has the potential to run to many times that depth). In this analogy, the chocolate icing layers represent high-grade vertical slabs or layers of gold concentrations plunging from near-surface to unknown depths. Surrounding each of these layers are wide sections of moderate to low-grade gold that can be analogous to the sponge cake in between the really good stuff.
By way of geological modelling, the linear, multi-kilometre LP Fault Zone is demonstrated to be a structurally-controlled fissure in the earth’s crust into which very large amounts of gold have migrated from considerable depths.
Taylor explains: “Recent drill results speak to a large footprint of near-surface gold, much of which involves very high-grade gold over wide intervals, surrounded by a wide envelope of moderate to low-grade disseminated gold. For instance, we’re encountering such jaw-dropping intercepts as 10 grams of gold per tonne over 18 metres, and a little over 16 grams per tonne over 6 metres in vertical slabs of the high-grade mineralization.
“To put these high-grade results in a better perspective, most of the mines in Red Lake that have become very profitable have mined gold seams that are generally less than 3 metres wide, averaging approximately 10 grams per tonne at the modern operations. So we’re frequently bettering these numbers by multiples.
“Of equal importance, the surrounding disseminated gold is yielding results as extraordinary as 5.28 grams per tonne of gold over 42 metres, or 1.08 grams per tonne gold over 125 metres. This medium to low-grade mineralization, alone, has great potential for bulk tonnage mining, including quarry-like surface mining and underground block-caving methods.
“Although still wide-open along strike, we’re already looking at a near-surface mineralized zone that measures at least 4 kilometres long. For context, the multi-billion-dollar Malartic mine is the biggest open-pit mine currently in operation in Canada, and is about the same length.”
To date, only about 20 per cent of an 18-kilometre-long LP Fault mineralized footprint has been drill tested for its gold endowment. Hence, the overall size of the emerging discovery is wide open to expansion.
The fact that the high-grade Hinge and Dixie Limb discovery zones have become a sideshow – both figuratively and literally – does not diminish their considerable potential. To this point, both of these high-grade discoveries are barely hidden from view by a relatively shallow covering of earth and gravel, suggesting that their upper levels could also be amenable to the prospect of low-cost, quarry-like surface mining.
Of equal significance, these consistently mineralized gold systems run deep. Hence, they offer the prospect of prolific tonnage and the types of long, lucrative mine lives that the Red Lake gold camp is known for. But it cannot be overstated that their size potential is likely to be eclipsed by the massive LP Fault Zone mineralized system.
Geologist Crystal McCullough checking out core at the drill site. SUPPLIED
Measuring up to Canada’s biggest and best gold mines
Collectively, these new discoveries have many of the attributes of such famous Canadian mines as the proximal ones in Red Lake, as well as Canada’s biggest gold mine, Malartic, and the most famous gold discovery of the early 1980s – the Hemlo deposits.
So let’s look at the economic metrics that make these mines so special. First of all, the significance of Great Bear’s twin discoveries is underscored by their close proximity to what in the early 2000’s was one of the most profitable high-grade gold mines in the world – the famous Red Lake mines. The two key mines in this region, Campbell and Red Lake, both have historic ore grades averaging 22 g/tonne.
They have accounted for the lion’s share of the approximately 30 million ounces of gold produced in Red Lake to date. Notably, much of this gold is being mined at depths of around 2.5 kilometres, whereas Great Bear’s gold can be encountered at depths starting only a few metres below surface.
The Malartic mine, which is located in northwestern Quebec, is a huge low-grade open-pit mine that is also one of the lowest-cost producers in the world. It boasts an output of over 600,000 ounces per annum, and with a mine life expected to last through 2031.
Of particular note, it was bought from Osisko Mining in a deal worth CDN $3.3 billion in 2014 by Agnico Eagle Mines (NYSE:AEM, TSX:AEM) and Yamana Gold (TSX:YRI, NYSE:AUY). It bears repeating that the LP Fault zone discovery already has an apparent length similar to Malartic’s massive open-pit mine.
Action in the Red Lake mining district is beginning to heat up again, thanks in part to resurgent gold prices. It’s also due to the need for big cash-challenged mining companies to play it safe by developing high-margin gold assets while also doing everything possible to mitigate risk.
To this point, Australian gold-mining heavyweight Evolution Mining announced last month that it will pay US $375 million up-front to Newmont Goldcorp Corp. to buy into the Red Lake gold complex, which it refers to as being “undercapitalized”. To this point, Evolution is also paying US $100 million to expand existing mining operations, and has committed a further US $50 million over three years to explore for new gold finds. All of this speaks to the fact that Great Bear appears to be in the right place, and at the right time.
In a final tantalizing development, geologists and market commentators have recently begun to note that there are strong similarities between Great Bear’s LP Fault gold discoveries and the famous Hemlo gold find. Currently owned by the mining giant Barrick, Hemlo has a storied history, where mining promotion legend Murray Pezim raised the drilling capital to test geologist David Bell’s out-of-the-box idea. Bell’s theory was that a major gold deposit was lurking underneath the Trans-Canada Highway between Thunder Bay and Sault Saint Marie, Ontario.
The style of disseminated high-grade gold that has been drilled by Great Bear in the LP Fault is very similar to that reported from the Hemlo deposit because of the presence of the felsic volcanic rocks that host this gold, as well as the presence of large zones of gold mineralization near large flexures in deep-seated faults.
Taylor notes: “It’s hard to put a current value on the over 22-million ounces of gold produced so far at Hemlo. But all past and present gold mining along the Hemlo’s big fault zone spans a distance that is approximately the same as the 4-kilometre strike length of similar mineralization drilled by Great Bear to date along the LP Fault.”
After drawing these comparisons, Taylor envisions that the LP Fault and nearby Hinge discoveries –—located less than one kilometre apart — will eventually turn out to be a hybrid deposit, offering similarities to the famous Red Lake, Malartic and Hemlo deposits.
He suggests: “As the Great Bear story goes from strength to strength and it unfolds into what may well prove to be a world-class deposit, it’s becoming very apparent that the company has a proverbial tiger by the tail. Investors embarking on the next leg of this exciting journey look like they’re in for an exhilarating ride.”