Stifel GMP has lifted its target price on Great Bear Resources Ltd. (TSX-V:GBR) following a site tour of its flagship Dixie gold project in the Red Lake district of Ontario.
The broker introduced a ‘Speculative Buy’ rating on Great Bear and raised its target price to C$27, up from C$22 previously. Stifel said it is also moving to a discounted cash flow (DCF) valuation for Great Bear after gaining a stronger grasp of the project’s development potential.
“Overall, we think Dixie is a gold project that will be built, has too many positive attributes to ignore for the serious, committed companies in the industry, and if Great Bear isn’t the ultimate owner, a third-party bidder for the company and project will eventually emerge,” Stifel's analysts said in a note to clients.
"As we have previously stated, we believe Dixie’s grade, tonnage (size), location and, importantly, development and operating flexibility, create valuable options for any gold miner looking to generate high margins and a quick payback. For these reasons, we believe Dixie has attractive attributes that most other projects simply don’t have,” they added.
READ: Great Bear Resources says ongoing drill program ‘significantly extends gold mineralization’
Great Bear released results from its ongoing fully funded $45 million 2021 exploration program at Dixie on October 4, 2021. The program includes seven new drill holes which are representative of deeper LP Fault mineralization across a broad area of 1.4 kilometres (km) of strike length between approximately 450 and 750 meters (m) downhole depth.
Going forward, deeper drilling will continue along an additional 2.6 km of strike length during the ongoing Phase 2 program.
Great Bear has now reported 446 LP Fault drill holes for 300,000 meters of drilling at the Dixie property. The company plans to continue ahead with Phase II expansion drilling in hopes of significantly expanding the drill confirmed extent of gold mineralization at the LP Fault by late 2022.
The Stifel analysts noted that grade, size, location, long-life and development and operating optionality combine to create the potential for a cornerstone asset, with strong margins, in a coveted jurisdiction.
They said they ‘strongly’ expect Dixie to be a 10-plus million ounce (Moz) deposit. With a 4 km-plus strike length, drilling down to 400m-plus regularly hitting the expected and predictable mineralization, high-grade and consistent domains within a much larger, lower grade mineralized envelope, and gold bearing mineralization known to extend to greater depth, the analysts said they foresee a 10-plus Moz deposit, with good potential for 20-plus Moz to eventually be defined.
The maiden resource for Dixie is expected by the first quarter of 2022 and is likely to include the LP Fault only, with Dixie Limb and Hinge Zone resources at a later date.
Stifel's analysts said they based their valuation estimates on a potentially conservative mineable inventory of 12 Moz at an average grade of 1.22 grams per ton.
“Great Bear’s Dixie gold project isn’t unrealistic, or fantasy, as the 'Whistling Dixie' saying goes,” the Stifel analysts concluded. “We think Dixie has not only what it takes to become a mine, but become a coveted asset in any gold producer’s portfolio.”
Contact the author at stephen.gunnion@proactiveinvestors.com