The World Game

Disclosure: I hold this stock and this is for research purposes only.

One of the main things I notice, day in and day out, is that investors mainly look at companies that are listed on their countries stock exchanges. For example, Australians mainly look and invest in ASX listed stocks and Canadians mainly look and invest in TSX listed stocks. Major mining discoveries don’t care where they are listed, one might be on the ASX and the next on the TSX. If you are an investor you NEED to have a global view on exchanges. If you are Australian, like me, it does some time and effort to be able to trade on international exchanges, but most brokers offer the service.

The reason why I want to make people aware to not have a domestic view on companies but to have an international view is plain and simple: the fact is that most people will miss out on life-changing opportunities. I have experienced this first hand with Great Bear Resources. I missed investing in this company when they drilled their first discovery hole and released their amazing results because I was only looking and researching ASX listed stocks when Great Bear is listed on the TSX.  

Some background information on Great Bear. The company owns 100% of the Dixie project which is located in the Red Lake district in Southern Canada. The Red Lake district is famously known for the ‘Red Lake Mine’. This mine is one of the largest gold mines in the world with estimated gold reserves of 3.23 million oz. The Red Lake Mining District has produced over 30 million ounces of gold, worth over $US 40 billion. The company acquired the property around 3 and a half years ago and has been aggressively drilling for the past 12 months.

Source: Great Bear

In August 2018, the company drilled an amazing discovery hole with the results from those holes shown below.

Drill Hole From (m)To (m)Width (m)Gold (g/t)
DHZ-003 118.3141.1522.85*19.33
including124.8141.1516.3526.91
including124.8137.1012.3034.00
including132.05137.105.0551.39
including127.10128.101.00112.63
DHZ-004 124.50131.507.0044.47
including124.50128.303.8081.09
including124.50126.502.00143.25
including125.50126.501.00224.03

With these results, the price went from $0.60 to $2.24 over the next 3 weeks.

Due to these amazing results, in August 2018, Great Bear was one of the best performing mining companies for 2018 – returning a 1300% rise in the share price. Currently, the companies share price is $3.88, $150M Market Cap with $15M cash in the bank. Great Bear has 3 drill rigs with a plan of drilling 90 000 meters.

The 4 Reasons Why I invested in GBR:

  1. Share structure
  2. Stakeholders
  3. Grades
  4. Location

Share Structure

Great Bear currently has only 48 million shares fully diluted (for a junior mining company to have anything under 80 million shares fully diluted is almost unheard of). From recent interviews I have listened to with Great Bears CEO Chris Taylor, this is something he is very proud of and keeping the shares on issue as long as he can to achieve the maximum return for shareholders is one of his main drivers.

As there are not many shares on issue, the downside is it will take time to gain a sizeable position in Great Bear. However, once you have a sizeable position and news flows, the share price will explode, as it has in the past.

Shareholders

Once again this is a major driver for me when investing in a company. I always want to know that management are buying shares on the market and in capital raises alongside fellow shareholders. When management doesn’t have skin in the game, it sends up big red flags because they aren’t sharing in the trials and tribulations that they should be with their shareholders. They appear to not back themselves – so why should we?

Below shows a break down of the share register. You will notice Rob McEwen owns 14%. It is worth noting the day that the company released their discovery hole, Rod McEwen spent an hour on the phone to them. After that phone call, he invested $6 million. If anyone is unfamiliar with Rob, he started Goldcorp which owns and operates the Red Lake Mine which is 20 minutes drive from The Dixie project. In a phone interview between the CEO of Great Bear and Rob, Rob said the grades on Dixie remind him of the first drill results of the Red Lake mine (which turned Gold Corp into a multi-billion dollar company).

Source: Great Bear

Grades

The grades of the Dixie project is what I think makes Great Bear one of the best exploration companies over the past few years. If we set the baseline at anything over 5 g/tonne is considered high grade, the rest of what is detailed will blow your mind.

A big thing to keep in mind is that Gold Corps Red Lake Mine up to 2000m deep with similar grades, Great bears ore is starting from only 50m deep.

Source Great Bear

Source: Great Bear

Location

The location of the Dixie project is a big tick for the company. The project is located in a major mining jurisdiction with many other mines located within a 30-minute drive. The property is located right off the Red Lake highway and has high voltage power running over the site. This will significantly reduce CAPEX and OPEX cost compared to peers in the area. See below images of the project location in relation to the Red Lake area and other world-class mines that are close by.

Source: Great Bear

Looking forward, Great Bear will drill 90 000 meters in the next 12 months. They have the cash in the bank to do it so no additional credit raises are needed. The company has only explored around 5% of their 20km long property so there will be plenty of upside with more drill results due every 2 – 4 weeks. Dixie WILL be mined and that’s why I think there is a minimal downside and a very big upside.

Finally, I want to end this post by showing a graph that I think is one of the most important things to consider when investing in commodities in 2019. The image below shows that commodities compared to the S&P 500 are at the lowest they have been in 50 years. Cycles normally work in 7 – 10 year periods. We are currently at generational lows, with not much downside and a lot of upsides we will hopefully see a bull run in commodities over the next few years.