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Small Cap Gold Expert is Bullish on Great Bear

06/04/2019 5:00 am EST

Focus: COMMODITIES

Brien Lundin

Executive Editor, Gold Newsletter

Apathy is the word of the day in the gold and mining stock market, as we’ve stumbled headlong into the summer doldrums. Being an optimist, I’m already looking forward to late July when, generally, the market tends to bottom, explains Brien Lundin, editor of Gold Newsletter.

Of course, regardless of what gold may do, exploration stocks can chart their own path (upward or downward) based upon their own success, or lack thereof. Thankfully, one of our favorite exploration stocks has reversed its recent trend with a major announcement that has sent its share price leaping higher.

That company is Great Bear Resources (Vancouver: GBR.V), which yesterday announced the discovery of a new high-grade zone in step-out drilling on its Dixie project in Red Lake, Ontario.

Briefly, the company reported one drill hole, DNW-11, that cut two important, high-grade intervals: 2.00 meters of 194.21 g/t gold (including 0.50 meter of 759.38 g/t gold) beginning at 58 meters in depth, and 14.00 meters of 12.33 g/t gold (including 4.60 meters of 30.90 g/t gold).

Those are great grades, but what has taken the company’s share price up about 25% since the announcement yesterday afternoon is the fact that this drill hole discovered an entirely new zone, with distinct geology, located well away from the previous focus of the drilling.

The new zone, dubbed the Bear-Rimini Zone, lies 2.5 kilometers to the northwest of the Hinge Zone, which had provided the lion’s share of market-moving, high-grade results so far.

There are a number of important aspects of this new discovery:

•  It is associated with a newly-understood geological feature, the “LP Fault” which, in combination with the parallel “North Fault” about a kilometer to the north, extends for at least 18 kilometers across Great Bear’s Dixie property.

•  Great Bear’s geologists believe the area between these two faults is a major gold mineralization control, and this “structural dilation” zone could have been a pathway for mineralizing fluids that deposited gold. If true, the potential size of the prospective area would expand dramatically.

•  A Canadian government seismic survey under its Lithoprobe program indicates that the LP Fault projects to a depth of 14 kilometers, or essentially to the bottom of the continental crust, providing access to the upper mantle. 

•  Thus, it’s natural to assume that the LP functioned as a pathway for mineralizing fluids. Supporting this idea is the fact that a similar fault located about 30 kilometers to the north is associated with the Red Lake Mine and other discoveries amounting to over 30 million ounces of high-grade gold.

There are still a lot of “ifs” to this...but there’s simply no other gold-exploration project out there today that offers this kind of potential. It will take a lot of drilling to build a sizeable resource, but the good news here is that Great Bear has lots of money and sufficient drills to accomplish this goal.

I would caution, however, that expectations are tremendously high for Great Bear right now; disappointing results in the follow-up drilling would lead to a quick and steep sell-off, while success would catapult the share price higher.

As much as I like this story — especially as an early buyer who still holds all his shares — and as much as I think it’s headed higher, I have to consider the fact that we’re in this stock at far lower prices. So I’m keeping Great Bear as a hold for now.

Personally, I’m playing this for a big win and keeping all of my shares but, once again, I would recommend that others at least make sure their risk capital is off the table.

All this said, I think Great Bear is onto something truly extraordinary here. There are interesting days ahead for its shareholders, and I expect them to be quite rewarding.

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