Great Bear Resources (TSX-V: GBR) – A Company Update (Transcript)

Interview with Chris Taylor, CEO of Great Bear Resources (TSX-V: GBR).

Click here to watch the interview.


Matthew Gordon: Hi Chris. How are you?

Chris Taylor: Great. How’s it going Matt? Matthew. Sorry.

Matthew Gordon: Very good. So we spoke Wow, what six weeks ago, seven weeks ago in London.

Chris Taylor: I would imagine.

Matthew Gordon: You’d been all around the world. We’ve seen you on all sorts of interviews. Telling the story which is great. But we wanted to get some update on what’s been going on, so can we just start with like a two minute helicopter view, and then we’re gonna kick off with some questions.

Chris Taylor: Yeah no problem. So since we met the last time, I believe I was in London, meeting with some groups that had wanted to meet with Great Bear. So we’ve effectively begun our drill program again. We’ve upscale that to about 60,000m, I believe we’re talking with that before. I think we had about a two week hiatus when we were waiting for snow to thaw out and everything. Now we’re back drilling again. And we have several drill holes that are completed since that time. I believe in terms of results that are public. We had some very nice intercepts that we hit by drilling deeper into our main targets. That was really nice for us to see. Because Red Lake the area that we’re working is well known for having these deep seated high grade Gold deposits. So we seem to be seeing the same characteristics which bodes really well for us over the long term.

Matthew Gordon: Because you were talking like 800m drilling before. When you say deep, you mean deeper than that?

Chris Taylor: We keep initially we step out, sort of further along strike to make the zones broader. And then we go down in the new areas and that’s what we’ve done is effectively, the areas that we already knew about, we’ve gone down deeper. We have some 30m, 100m step downs and we’ve made them longer as well. So they’re growing in both directions right.

Matthew Gordon: Okay. So I would like to get into the kind of robust strategy that you’ve employed here, because it’s different from a lot of the companies we talk to. But let’s start off nice generic one. What’s happening with the Gold market?

Chris Taylor: Oh God this is the question I dread getting all the time. I don’t have a crystal ball I hate having to prophecy over Gold prices. It’s basically… I think these days there’s a bit of a boost off of Trump’s latest tweets or policy maneuvers vis a vis China. If you ask me how that’s going to turn out over the long term, I’m a geologist I find the Gold in the ground. I don’t dictate the market pricing for the material.

Matthew Gordon: This is a typical question. Everyone is struggling with because all the norms that conventional norms as to what dictates goals. Saving because we  need safe haven and all of that, doesn’t seem to be working anywhere. The old rules don’t seem to be applying. But even with regards to what’s going on with regard to … I mean your shares the trading it’s been… since we’ve seen you it’s come off a bit, it’s come back a bit. The retail guys speculating heavily about what’s going on, what’s not going on. Of course of course some of them would claim to be great technically, and others great financially, but they’re the guys that affect the movement in the share price. Right. So how do you get the balance between focusing on what is a very strong institutional, high net worth investor base and the retail guys? How do you manage that dynamic?

Chris Taylor: That’s a it’s actually a really good question. It’s something we have to think about obviously, as the company doing this work. So our primary growth strategy is to drill off our zones in a way that the larger more sophisticated investors want to see. So effectively, if we were like many of our peers. We would hit the highest-grade material and then drill a dense pattern around it, and try to duplicate those numbers as much as possible. There’s various deposits I’m aware of, that are effectively cloning drill holes. Our strategy is to show the scope and size of what we’re dealing with, and that’s the strategy that will yield the long-term benefits. And that’s what we’re doing. So if you look at our long sections, our cross sections, our drill patterns, it’s all to show size, scope, regional significance, and ultimately, if we’re successful, we’re going to show that the Dixie project can be a world class deposit. It’s an early discovery. We’re not there yet but every drill hole that goes in shows that kind of potential. That’s really our long term strategy. And we’re quite different from many other companies out there with its strategy, frankly.

Matthew Gordon: For sure and I want to come onto that because I, when you first told me about it it made perfect sense to me, but on a certain type of investor. Okay. So I want to talk to  you, I want to get into this because you know you tell your technical story extremely well to lots of people, but I want to focus on this aspect which is institutional investors. They are presumably slightly better informed, better trained in terms their ability to interpret what you’re doing than retail, who perhaps don’t have access to information, or the necessary ability to interpret technically. So what what are your institutional shareholders ringing up and talk to you about? Because you’ve got a great relationship with them? So they know your strategy, but what are their concerns when you get on that monthly phone call?

Chris Taylor: Well there’s a series of checkboxes that we continue to check off. Right. So they all have a similar viewpoint, from that perspective. They’re looking for continuity of grade, high-grade. What ultimately deposit grade will be. And then they’re looking for size and when they see all of these things continually verified with the ongoing drilling. It’s very easy for new companies to make a discovery where they generate good intercepts. That happens frequently, not all the time, but frequently. Most of those deposits don’t go anywhere because they just lack the size and scale. I know I’ve used this number before, but it’s something like about well over 90% of all global Gold deposits are under 2Moz of Gold. What we want to be able to show these people is that we have potential for significant size and that means systematic drilling systematic growth. And it’s very different in terms of strategy than what we would do if we were feeding a market per say, a retail base with assys. Ultimately there is compatibility, there is overlap. I mean when I was in school we looked at something called a Venn diagram. A Venn diagram is two big circles that overlap each other. And the intervening space you can do a mathematical equation that show us how much they overlap. There is overlap between the retail and institutional base, but it’s not 100% right. So we focused on the big scale potential, showing companies, showing funds that we may have the big size goods.

Matthew Gordon: Right. So this I guess this comes back to… I guess we want to talk about strategy here. So you are kind of famous, certainly in terms of companies I’ve looked at, for not wanting to put out a Resource yet. Okay I get it. The institutional guys get. The retail guys. Some do, some don’t. How are you managing that dialogue. I just wonder how you talk this audience, because it’s less sophisticated. But no less passionate about your company and what you’re doing. But it seems to me you keep having to tell the story and explain and justify it. How do you do that?

Chris Taylor: With some. I mean what I would say this is my frank answer is Chris right. This is Chris who has made and lost a lot of money in the markets over the years. Who has also been involved with putting three mines into production with my former employer, Imperial Metals. So I would say to everybody that is in a rush. When you start to see us get a Resource out in the public space. We are starting to have an idea about the size of certain parts of the system. The longer it takes us to get to that point, the bigger it is. This is it. I mean we’re not in a rush, because if you’re on a big system.. we’re looking at Gold over many kilometers. So we see strike extent of many kilometers along the project. We have roughly a 20km long primary target and a number of secondary targets which are several kilometers long each of which we’ve only drilled a few of these so far. So when we come to market with a Resource eventually, it will be under the understanding that it’s characterizing a portion of the project and it’ll be in the context of what the global scope of that is. So the retail investors that are in a rush, in a way by us taking longer. It’s a very good sign. It’s like we get this also just to speak to a similar point. It comes down to getting assay results. And in our case, a lot of the time when we take a while to get assays to market, it’s because we’ve got, in our case, high-grade Gold. And what that means is, what we saw in our early news releases during discovery for instance we had one piece of rock. I remember looking at this and drill core and I’m digressing a little bit I’m sorry to take a walk here.

Matthew Gordon: I appreciate that great insight.

Chris Taylor: But what we saw was we saw a chunk of drill core that had the most Gold of any sample on the property and visually, so we looked at it. We thought this is really an exceptional sample. This was actually part of our Hinge Zone discovery. When it came back from the lab from assay. It was 1.5g/t per ton. It was one of the lowest grade samples that we’ve done. So what it turned out and we’ve now fixed this process with the labs. But there was so much Gold in the sample it just wasn’t able to go into the assay machine, because Gold is very malleable and ductile so when you try to grind up the rock you end up with a ball of Gold that doesn’t make it into the machine and you don’t get any of the Gold reporting into the assay result. We fix that. We now do gravimetric metric assays. We do metallic screens. Sometimes when it takes us longer than we expect to get assays back, it’s because we’re dealing with very high-grade numbers. And frankly this happened in our last news release. We had a sample that came back 200g/t per ton. Right, that we published. These are bonanza grade Gold results. The initial assays, when they come back from the lab, were very much lower. So we have procedures in place that catch underreported Gold, and we make sure that that doesn’t happen. But when when you have to assay something three times, that’s a delay. So it’s one of these things in terms of publishing Resource or getting assys out to market. I often get the question from the retail investors, ‘oh drill must have missed, you must not hit anything’. I can almost guarantee you with this project, it’s almost the 180 degree opposite. So that’s just the way it is. It’s big. There’s lots of Gold.

Matthew Gordon: Well yeah exactly, you talk about being in the right postcode. You’re in the right postcode as you’re going to hit a significant amount of times I’m sure of that. So I see what I’m hearing there is the message to retail, and I know our views are retail, high net worth and family offices. So we’re trying to help educate them and people like yourself and get an understanding of the process, so they feel more comfortable investing in projects like this. OK so what I’m hearing is. We can calm down a bit. No need to worry. It’s actually good news that if results are a little slower coming back. It’s probably a good thing because of the type of project which you’ve got, the process that you are doing, the strategy that have engaged.

Chris Taylor: Yeah. It can be. Typically. Yep. We’ve been drilling constantly. Right. We’re now well over 100 drill holes into this project, but it’s very early days. I would just remind everybody that in August of last year, the company was sitting at about a $10M market cap or somewhere in that range. And it was because we’re very early in the drilling process. We’ve now been drilling constantly over that intervening 9mth period. Well over 100 holes on the project so far. We’re increasing the number of drill rigs. It should help get assays to market every two weeks to every four weeks. It’ll be sometime in that in that framework. But you know, as we drill more zones. As we drill deeper holes, deeper holes take longer to drill and they take longer to ASIC. So bringing an extra drill rigs, like we’ve announced. We’re tripling the number of drill rigs from last year up to three. So that will definitely help. I would just encourage people that real discoveries if there’s just only so fast we can drill it. This is a real discovery. We’re drilling it as fast as aggressively as possible and it keeps expanding so if if you’re interested in our progress Preet please follow it that way. The value comes in on these things. Once the boxes are checked off with the large companies and with the large funds. Right. And that’s the process that we’re going through right now.

Matthew Gordon: Yes. So I think that’s a great point to make actually Chris, because there are companies which are pumping the share price, in the different ways that they can pump the share price, and it’s kind of… it can be short-termism. You are building this thing out to be attractive, to be either taken out or get into production. You give me that answer right now. You’re definitely going into production. Bill it that way. You don’t want that discount if you tell people you’re going to be selling. I like the rigour that you put into the process and the decision not to get distracted with Resource numbers, or worrying about the price on the day to day basis. It does though mean that you attract different sorts of investors, as I say a longer hold investor. Because you’re saying to people, we’re building for the future. Would you agree with us? Would you say that’s the kind of audience that you might attract. Shareholder you might attract.

Chris Taylor: Yeah I would say that is very much a focus. And I know we’ve talked about this before but great bear it’s like a decade old project for me. I got involved in 2010. We’re long term, we are long term shareholders. We are the ultimate long term shareholders. We like to see like-minded participation because value comes in some cases with patience. And if you had sold out of Great Bear last year, we went from I believe it was about $0.10 at the beginning of the year to $0.60 mid-year. If you had just settled on the triple that you would have got at that point, you would have missed out on a subsequent run. Likewise right now, if we continue to be successful and you lose track of the progress and the growth in the company right now, you would not be exposed to any of the potential upside for all the next stages of the project. You know once we’re further than nine months into the discovery. So how many more discoveries are there to be made on the project. This is something we don’t know yet, but we keep finding more Gold. We keep expanding the system. I think it’s very early days in this story. And we want to keep the share structure tight. And this speaks to your point of long-term shareholders. There’s only 38 million shares out in the company. The lower that number is the better the multiple on each share basis for everybody going forward.

Matthew Gordon: Well let’s quickly segue on that. OK. So I think it’s 50M, fully diluted Is that right 38M before adding…

Chris Taylor: 48M fully diluted.

Matthew Gordon: Yeah. Sorry. But you’ve got to you’ve got a whole bunch of warrants coming through.

Chris Taylor: Yeah. That’s largely dried up. The only remaining warrants that I know of. Our Rob McEwan, our biggest shareholder, and management effectively. Everything else has already been exercise that I had a warrant exercised come in the other day for 200 shares. Never seen that in my life. I believe we have largely gone through the warrant overhang.

Matthew Gordon: It all counts. It all counts.

Chris Taylor: We have the buys some pencils.

Matthew Gordon: Yeah. Okay. So. So I just wanted to quickly deal with that and get out of the way. Okay then it’s coming coming back to that. So if you’re saying you’ve got some long term institutional guys and  obviously Rob. Other high net worth and you’re attracting the longer-haul retail type of guys, because the story you’re telling is, you know we’re still creating value here. There’s more money to be had down the line probably possibly. You couldn’t possibly say that, but I could. Companies do experience movement in share because of liquidity and trading and volumes on a daily basis. So retail, short-term retail trading, not necessarily day trading is still important to an organization. You’re $100M at the moment right. You know as you kind of move up through the value curve those guys will still be important to you. So how in the context of what we talk about how are you going to manage that messaging to them? You know you got to say ‘we got some great catalysts’, the phrase everyone likes to use, coming up this year. We’re building this thing out for the future. But if you want to come in now, get some some value created, and then opt out, sell out then that fine by us. We don’t mind. You’ve got to have that… this is what I mean this kind of message needs to get out there. Are you talking to people. What are you saying to the market, apart from the long-term message, what are you saying to other retail investors?

Chris Taylor: Well there is a retail… there is a component of the retail base… which does trade in and out of the stock. So we probably have our estimate is about half of our shareholder base is in retail hands. And then as recently is a good example, the past few weeks we went down, and then we went back slingshotting back up. A lot of this is based on short-term market fluctuations. The movement in Gold prices… there was a big takeover that was announced a few days ago, Atlantic Gold for $800M. So another Canadian project, that’s being purchased by Australian company. So you get M&A activity that tends to be conducive to more liquid trading. It’s basically a combination of factors of macro-market factors. Gold price movements and our own drill results. So our drill results, they’ve continuously been steady. So I think there’s an element of fear which has been removed from the shareholder base. People are typically used to seeing like ‘well they had good results this time but next time I’m really hesitant. So there they have their finger on the sell trigger’. I think we’ve got past that to a large extent, because all of our news releases over the last several months have been very positive. All of that growth all about expansion. And so there’s ultimately no I can’t dictate if somebody decides that they want to sell their Great Bear and they think that they’re going to make x10 their money tomorrow by investing in a cannabis story or something else like that, they’re going to do it. Typically though what we see is, I talk to shareholders retail shareholders daily, it’s a daily daily enterprise. So I’ll see that they sell a bit of their position. So they keep a core position, and trade in and out of the rest of it. That’s typical. And some retail shareholders that I know, these are smart people. I mean your comment early on about the institutional investment being more sophisticated. I have a retail level shareholders that worked in the industry, that have accumulated between 1 million and 2 million shares of Great Bear over the last year. So these are technically retail people, but they are highly sophisticated. And I think on on a rough basis, I know we’re about 7 or 8 million shares of the company sit in the hands of a few retail type people, that have accumulated large positions. And it’s again it’s so it’s a bit of a loaded question you’re asking me. So the story is with these people you can trade off of Gold. There always is some liquidity in the stock you can trade in and out of a position or you can trade based on our fundamentals or a combination of both. That’s entirely up to you as a shareholder. I just encourage anybody that is a shareholder to just watch what we’re doing, and let the guys in the field, the experts do their thing. They’ve been very successful with it so far. If we think for whatever reason, we’ve been lucky enough to hit the only Gold on the project by randomly going in and testing these new areas, We probably tested. My guess is about 5% of the area of the property so far. I mean I’d be astonished if we had been smart enough to target the best zones, or the only zones so early on in the exploration process. So as a geologist, a structural geologist, somebody with a mining background, I think there’s a long way to go. That’s the story that you can tell people that are interested in, just the possibility that at any given time there might be another transformative event in the company. It could happen. These areas these districts are known for it. Otherwise the long term steady growth. The other component of our project which is expanding the areas that we already know about, that generates and fuels that steady growth. The exploration component where we continually test new areas that’s that possibility to have that additional blue sky. And both messages are appealing to the retail investor base or even the more sophisticated institutional.

Matthew Gordon: Okay. I’ll buy that. So just to finish off on a slightly about the asset. I didn’t I didn’t necessary want to asset today.

Chris Taylor: Yeah.

Matthew Gordon: But it is in the context of your strategy. So we’ve interviewed a couple of Canadian global players with large Resource number, of 5Moz – 7Moz. You can work out who that might be. Youk know they are sitting on a bit of cash. They’ve got some optionality in terms of how they play this out the cycle. They continue to drill. You know at some point your investors are going to want you to kind of put a red flag in the sand, and say ‘right now’s the time we’re going to come up with a number’. The time we’re going to say to the market here’s what I think we’ve got’, because remember… the drilling is like I get it. It’s a great strategy. I think it’s a great strategy. But at some point you’re gonna have to pull the ripcord. What’s your sense of timing on it. You’ve been on it 9yrs. You think there’s a long term project. How far would you go with the current strategy?

Chris Taylor: I guess with Dixie we acquired this project 3.5yrs ago. We started drilling it 2yrs ago and we began drilling constantly. About a year ago. Right. So we’re 1yr into that process. So I’ve been with it for a long time in terms of the company, but this project is fairly new to us. And it is a new kind of discovery. Comparing us to companies that have large Resource numbers, that are already public. I mean you have to compare apples to apples. They have an incentive, if they have…. Canada is a huge country. You’re talking to our peers. Some of these projects are very remote right. Some of them are very expensive to drill. We’re looking at a situation with what we have, where you have… with the merger of Goldcorp and Newmont in our area right. They just made the combination this just finalized like weeks ago. So this is a very new event. Those management teams are figuring out what they’re doing with Canadian assets right now. All of the Canadian assets. Goldcorp are being evaluated by Newmont for either advancement or disposition. And what we’re looking at here in my opinion… Remember this is just my opinion. But we’re looking at a very-high grade discovery, just off the side of the highway, right by the power line, about a 20 minute drive from the main Red Lake Gold mine. I think that if we drill very aggressively, and we keep expanding that level of aggressive drilling at Dixie, and show the size potential, we want to make ourselves as big and appealing as possible in the next several months. This is not years. This is not a multi-year process. We want to show that when decisions are being made in this district, somebody will end up owning or consolidating all of Red Lake. It’s such a big high-grade historical mining camp. We want to make sure that we’re a bit of a magnet that other decisions go on themselves around. And that’s really another component of Great Bear strategy, is to make sure that in the timeframe of months, not years. It’s obvious that we are an instrumental or critical component of anybody’s decision making process. So I think that gives you a little bit more colour on our thinking.

Matthew Gordon: I guess look like I’ve enjoyed this conversation and I was keen to get to talk to you again. It’s one of our favourite stories out there. People who go on CruxInvestor.com, you actually number one ranking system. So it says a lot.

Chris Taylor: Thank you.

Matthew Gordon: You’ve done the hard work. So you know I do encourage people to come and look at this story. We always like hearing what you’re getting up to. I don’t think the strategy just stands for front from the crowd. And I think is the right thing to do. So. Thanks again for your time Chris. Appreciate that and hopefully we’ll see you next time you come through London.

Chris Taylor: Matthew thanks very much. Thanks for having this conversation with me again today. We’ll have more news out in the near future. If you are interested, I’d be very interested in following up with you afterwards, after the next news releases, So please just contact me at your convenience.

Matthew Gordon: Perfect. Chris lovely to talk to you. Enjoy the rest of the day.

Chris Taylor: Thanks very much.


Company page: https://www.greatbearresources.ca

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