Boring, Then Not Boring: What Happens When A Junior Gold Miner Gets It Right
Back in June Jay Taylor's Gold, Energy & Tech Stocks newsletter published a nice write-up on a junior gold miner called Great Bear Resources, which included the following:
What struck me initially about Great Bear was not only the high-grade gold drill intercepts but also the consistency of economic grade intercepts in the Red Lake Gold camp known for its elephant-sized gold deposits. They have hit gold mineralization on every hole along a very predictable structure. To the extent the system is continuously mineralized over much or all of the 10-km structural strike confirmed so far, this could be a really big story.
Sounds promising, right? Certainly worth adding such a junior gold miner to a watch list and maybe nibbling at its extremely cheap ($0.40 per share at the time of the above report) shares.
Then, on August 22, came the announcement that Great Bear's ongoing drilling program had hit proverbial pay dirt:
Great Bear Resources (TSXV: GBR) (the “Company” or “Great Bear”) today reported a significant new high-grade gold discovery in the Hinge Zone at its Dixie Project in the Red Lake District of Ontario. Drill results are provided in Table 1 and include:
For readers new to mining stats, the key column is on the far right — "Gold (g/t)" — which shows how many grams of gold a given drill sample contains per ton of rock. Anything over one gram is good enough to mine in otherwise favorable conditions, so these multi-gram numbers are immense. This looks like a highly valuable resource.
Great Bear's stock, after putting its investors to sleep in the first seven months of 2018, reacted like the lottery ticket that junior miners frequently are by tripling in a week:
A few days later, Jay Taylor published an update in which - among many other things - he said:
While investing in junior exploration stocks is extremely risky, one offsetting factor is that even in a bad or lackluster gold market like the one we are in, some good drill intercepts can send a stock's price doubling in a hurry, particularly when the share structure is so tight. It was the news release of Wednesday, August 22 from Great Bear that rocketed its share price dramatically higher.
The headline number from the company's flagship Dixie Project was 16.35 meters grading 26.91 g/t gold and 7 meters grading 44.47 g/t gold. This company is on the heels of one of the most consistently positive drill programs I can recall in all the years of writing this letter. And what makes it even more exciting is that the project is located in the prolific Red Lake District of Ontario. This looks like a significant new high-grade gold discovery in the Hinge Zone at the Dixie Project…The bottom line for me is that it looks like Great Bear could be the biggest discovery winner covered in this letter during 2018.
The lesson? If you play in this sector you'll lose most of the time, since the majority of junior gold miners don't succeed. It’s not an exaggeration to say that for every junior gold miner price chart like the one above, there are five with a similarly steep arc in the opposite direction.
But every once in a while that hole in the ground in the middle of nowhere will turn out to contain riches, and a long period of boredom will be punctuated by an epic, adrenalin-fueled stretch of near-vertical increases in your net worth. Once you experience a few of these it's hard not to crave the next one. And if gold does what it ought to in coming years, there will be many more Great Bears to keep us entertained.