These are sobering times. Though strained credit and equities markets have long indicated to us an environment ripe for correction, the Russia-Saudi oil dispute and the development of the COVID-19 pandemic took the world by surprise– catalyzing a wanton downturn affecting nearly all asset classes. The unforeseen emergence of these events have in turn lent them unprecedented effect: between late February and mid-March we saw the quickest reversal in history from a bull to bear market, with the VIX hitting 82.69 on March 16th, a hair higher than its 2008 peak. As of today, the VIX has since retreated from its reflexive extremes to lower (albeit still elevated) levels in tandem with a tentative recovery in equities on optimistic COVID-19 news and incoming government stimulus programs.

Normally, one would expect a negative relationship between spot gold and equities – or at least a reflexive bounce in gold on the break of alarming news. Indeed, this safe-haven logic was preserved in the Yen and Swiss Franc that bounced up on the week of February 24th. That’s why we were surprised to see a nearly simultaneous sell-off in both gold and equities in the initial phase of the downturn, as illustrated by the chart below:

We also saw something similar happen in 2008:

The chart above shows gold (in blue and back) and the S&P (in red) turning down together through the GFC before rallying into the years ahead, propped up by stimulus injections and expansionary monetary policy. The key takeaways here are that 1) correlations between gold and equities can turn positive as investors scramble for dollars en masse 2) gold and gold equities historically tend to rally on remedial stimuli and monetary policy. With all this mind, what we see now is a bullish set-up for gold marked by incoming stimulus i.e. the CARES Act, ‘unlimited’ quantitative easing in the context of already near-zero global yields, all under the backdrop of legion COVID-19 uncertainties (read: fear) looming over multitude industries. It’s worth nothing that, whereas in 2008 it took Congress months to enact its stimulus programs, they were able to reach consensus this time in less than a month. All things held equal, we believe this will translate into a faster recovery in gold equities relative to what we saw after 2008, which also narrows the window of opportunity to capitalize.

In this report we have identified assets for our clients that are timely buying opportunities where we recognize a divergence between the trading price of an asset compared to its intrinsic value (Figure 1). These companies are well positioned to ride out the impact of the COVID-19 storm while offering high torque to a positive gold tape. We suggest re-allocating into companies with; strong management teams that have a proven track record, have top tier assets, robust balance sheets, and are specializing in the right commodity which in our view is gold and silver presently. We feel these names offer upside at current prices however if we see any sort of pull-back as we did a couple of weeks ago again consider it game on!

Please note that we are recommending these names in an opportunistic sense given the remarkable discounts to intrinsic value on the market. We see these companies as vehicles to gain a measured exposure to gold while still maintaining a decent hedge against uncertainty. However, juniors play a role in our longer term bullish thesis as well. As expected, juniors have been hit even harder than the seniors and, given their tendency to lag their more established peers in price action, we see their attractive entry points to persist into the medium term. Indeed, it is through juniors that we gain exposure to the highest-torque opportunities in rising gold markets, and we will expand on these opportunities as the focus of our next report.

Table 1: Year to date and one-month market performance showing value dislocation between market value and intrinsic value. Prices from April 8, 2020 closing.

As we see a rebound in markets currently, another liquidity event may be on the horizon due to the economic damage yet to be felt due to the corona virus, low interest rates, and oil pricing wars. These unprecedented debt levels and low interest rates have sent investors towards quality names. For the precious metals sector, we highlight companies with low debt, strong treasuries and a leverage to gold and silver (Figure 2).

We focus on precious metals producers (mid-tier/junior) and developers offering primary exposure to gold. The producers presented provide a re-rating opportunity marked by strong revenue growth, value-accretive acquisitions, and strong balance sheets.

We also recognize that most producers (senior/mid-tier) lack a significant growth pipeline and the developers we highlight screen well for potential acquisition candidates. We concentrate on identifying high-grade, multi-million ounce gold deposits in safe jurisdictions that have a strong treasury and offer a near-term timeline to production.

Table 2: Capital structure and geological merit of profiled companies. Note SIL resource is AgEq.

B2Gold Corp: Underpinned by Profits, Growth and Financial Stability

Au: West Africa & Philippines | Market Cap $5,043 M | Mid-tier Producer

Why You Should Own B2Gold Corp

BTO is poised to become a +1Moz producer this year translating into a potential re-rate from a mid-tier to a senior gold producer with additional upside to shareholders through a solid free cash flow outlook and potential dividend increase in the second half of H220. We believe BTO is well positioned for the next phase of growth; mill expansion at Fekola, upside through advancement of pipeline projects, a strong cash position and leverage to the gold price.

About the Company

B2Gold Corp (BTO) is a multi-asset intermediate gold producer and developer with projects in multiple jurisdictions but with a focus on Mali (Fekola Mine), Namibia (Otjiloto Mine), and the Philippines (Masbate). BTO recently released strong Q419 results including reporting a record annual consolidated gold production of 969.5 koz for FY19 but more importantly a cash position of US$146M and a reduction of debt from US$396 at the beginning of FY19 to US$200M (leaving US$400M). BTO has also guided that they intend to pay the balance of the outstanding debt on the revolving credit facility by the end of 2020. B2Gold remains in a strong financial position and is in the process of increasing production at their flagship Fekola project to 590-620K oz Au in 2020 by Q320. We expect 2020 to be a very profitable year with a guidance aimed at delivering an astounding 1Moz of Au at an AISC of $820/oz which will in turn allow them to reduce debt and strengthen the balance sheet further.

Key Aspects

After a strong FY19, B2Gold is poised for a strong year ahead despite potential challenges other producers maybe facing due to temporary closures. BTO is guiding for a 5% Au production increase from 2019 while focusing on strengthening the balance sheet and lowering AISC by ~7% (figure 1).

Pipeline: BTO recently announced Gramalote (JV 48.3% with AngloGold Ashanti) PEA results indicating an after-tax NPV5% of US$928M and IRR of 21.9% at $1,500/oz gold price. We note that management has substantial experience in building mines and a favourable feasibility study (Q420) could translate into a swift construction decision.

Exploration upside at Fekola (updated OP resource = 5.87Moz indicated at 1.72 gpt Au and increase by 79% from previous estimate). BTO has done a great job in exploration which has been transformative for the company taking Fekola from a 2Moz deposit to what it is now.

BTO is financially sound with ~141M in cash and a goal to completely reduce their debt. BTO has a revolving line of credit and substantial free cash flow which would allow them to build projects (Gramalote) with little to no dilution.

Another key aspect is BTO’s CSR and ESG initiatives building solar plants in Namibia and currently building one of the largest hybrid solar and HFO (heavy fuel oil) plant in the world at Fekola.

Updates

BTO has resumed mining operations at its Masbate Mine after a temporary shutdown due to COVID-19 precautions. Mining and milling operations have continued at the Fekola Mine in Mali and Otjikoto Mine in Namibia.

BTO recently reported a consolidated production beat for Q120 of 250,632 oz, 7% above guidance of 250,000 oz mainly due to higher than expected grades at Fekola. The Fekola expansion remains on track for completion by the end of Q320.

Catalysts:

Q320	Fekola Expansion (Arrival of additional mining fleet and mill expansion to 7.56Mtpa)
Q320	Fekola Solar Power Plant Completion
Late Q420	Gramalote Feasibility Study

Figure 1: The chart shows managements discipling in reducing costs and a focus on organic growth in production over time.

Equinox Gold Corp: Diversified Americas Focused Gold Producer

Au: North & South America | Market Cap $2,102 M | Mid-tier Producer

Why You Should Own Equinox Gold Corp

We believe EQX is well positioned for a re-rate now that the Leagold merger is complete and as the Company realizes the near-term growth potential as additional projects come online. EQX is well capitalized with ~$300M in cash, and a recently completed $670M financing package underpinned by a new $130M convertible debenture (Mubadala), and $500M in underwritten commitments from the banking syndicate. Ross Beaty (9% ownership) subscribed for $40M of the private placement ($8.15/share) to complete the financing package. Equinox Gold started with no production and a goal to become big quick and in just over two years is set to deliver on that promise in the face of a rising gold bull market.

About the Company

Equinox Gold Corp (EQX) is an emerging premier gold producer focused on the Americas underpinned by a diversified asset base and robust growth profile. The recent at market merger between EQX and Leagold Mining (LMC) gives the newly merged company (EQX) a clear line of site to become a +1Moz producer by ~2021 with a strong peer leading growth profile.

Key Aspects

With the expansion of Los Filos (Bermejal underground, Guadalupe open pit, CIL plant), the restart of Santa Luz, and the start-up then subsequent expansion of Castle Mountain, we forecast meaningful cash flow per share growth over the coming years.

After the merger was announced the market took notice and we saw a share price increase of ~65% over 2.5 mos and now due to the pandemic we see a value dislocation bringing EQX near pre-merger levels representing an opportunity for investors to capitalize on this dislocation.

In addition to the discounted value being ascribed to EQX, we like the operational diversification and reduction of risk through six existing operating mines in established jurisdictions with a significant gold reserve and resource base. EQX is chaired and backstopped by the serially successful Ross Beaty who has turned all his focus on this company in order to make it a success by personally investing (9%) and loaning ~$20M.

Updates

EQX recently provide guidance for 2020 estimating 600,000 ounces of gold production at AISC of $1,000 to $1,060 per oz has emerged as a solid mid-tier multi-asset producer on route to graduating to become a senior producer. Castle Mountain is expected to come online in Q420 and is expected to add 200,000 oz per year once the phase 2 expansion is complete in H221.

Catalysts

H120	Resource update on the Tatajuba target at Aurizona
H120	Tabling of PEA on underground potential at Aurizona
Q320	Castle Mountain Gold project completion of construction and first gold pour
H220	Tabling of Castle Mountain phase 2 feasibility study
H121	Los Filos Gold Mine expansion (enlarging current OP & developing a 2nd UG mine & new CIL plant). 200koz expanding to 400koz (end of 2021)

Figure 2: Overview of Equinox gold producing assets and development sites after Leagold merger and path to one million ounce production by 2021.

Table 3: This table highlights the capital structure and 2020 production guidance of selected mid-to-junior producers

Victoria Gold (VGCX) – Canada’s Newest Gold Mine

Au: Yukon | Market Cap $396 M | Mid-tier Producer

Why You Should Own Victoria Gold Corp

Victoria Gold is set to achieve commercial production this quarter setting the stage to become a meaningful ~220,000koz gold producer at low quartile AISC’s of ~US$800/oz over the expected 11 life of mine. With gold currently at all-time highs (in Canadian dollars) and 70% of costs in CAD, VGCX has high operating leverage (US$577 cash costs) offering high torque to increasing gold price. We see ample upside at VGCX as commercial production is achieved and through the impressive exploration upside from the Raven target.

About the Company

Victoria Gold completed construction at their 100% owned heap leach Eagle gold project in Yukon in July of 2019 and poured first gold shortly after in September. At the end of November VGCX had produced over 10,000oz Au and stacked >2.2Mt of ore on the heap leach pad (~estimating 60koz Au recovery to date). Stacking of ore on the heap leach was curtailed in mid-December due to weather conditions, however ramp-up is now currently underway.

Key Aspects

An updated feasibility study published in December outlined a 22% increase in reserves from 2.7Moz to 3.3Moz Au at AISC of US$774/oz and an after-tax NPV(5%) of $1.034B.

As mentioned, commercial production at Eagle is expected imminently and results so far have indicated excellent grade reconciliation as mining proceeds as planned. The grade mined has been in line with the model indicating excellent continuity of mineralization (grade mined is 0.79 gpt Au +3% of expected grades and within 10% of expected tonnage).

As VGCX progresses to become a 220,000oz/yr Au producer, we also note the potential for optimization through year-round stacking similar to other northern operations. We estimate this could add at least an additional 1-1.5Mt of ore a year (20,000 – 30,000 ozs).

Looking beyond Eagle, the exploration upside on the Dublin Gulch property is highlighted by trenching and drill results from the Raven target (15 kms to NE) last year which appears geologically similar to the Eagle deposit. Trenching results in 2018 returned 3.5 gpt Au over 124 m, followed up by results of 0.57 gpt Au over 101.5 m and 2019 drilling highlighted by 2.35 gpt Au over 15.9 m. The 2020 exploration budget is $10.3M focused on identifying nearby mineralization that could be game-changing considering an operating mine next door.

Updates

The Eagle Mine continues to operate at this time however under strict prevention measures to mitigate the risk of exposure to COVID-19.

Catalysts

Q220	Expected commercial production
Late Q220	Commencement of $10.3M exploration program

Figure 3: Trenching and drilling highlights from the Raven Target which could be a game-changer by potentially adding low cost near-mine ounces.

K92 Mining Inc: Top Tier Junior Producer Backstopped by Near-Term Expansion

Au: Papua New Guinea | Market Cap $667 M | Single Asset Junior Producer

Why You Should Own K92 Mining

K92 controls what we consider to be one of the premier high-grade gold projects in its peer group underpinned by low AISC costs. KNT is also poised to significantly increase the existing resource through successful exploration which in turn will allow it to increase production to 120koz (at AISC of $780/oz), positioning it as a top tier junior producer. We anticipate strong growth potential through resource and production expansion offering a potential re-rating opportunity.

About the Company

K92 Mining Inc. is a Vancouver based precious metals producer, with a ~120kozAuEq production outlook for 2020 with its 100% owned flagship asset Kainantu located in Papua New Guinea. KNT has seen intermittent production since 2016 however, after the discovery of Kora North in 2018, the company has transformed into a top tier junior producer.

Key Aspects

K92 is transitioning from a new producer status to a top producer through compelling exploration results set to deliver a substantial resource increase. Overall see near term resource expansion of ~1-1.25Moz AuEq at ~10 gpt AuEq based on the high success rate of the drilling Kora Gap has shown similar grade and mineralization tenure as Kora and Kora North. Drilling has also stepped out along strike and down dip from the main K1 and K2 veins indicating impressive continuity.

We point out that near mine discoveries, as we have seen with the Kora Gap and along strike of current mineralized zones, can be game changers by adding ounces at substantially low costs where infrastructure is already in place.

Stage 2 expansion is underway increase to 400Ktpa production and twin incline development in progress as well allowing for future capacity of 2Mtpa. K92 is guiding at a current production estimate of 120kozpa and through ongoing expansions a goal of 300-400koz in the future.

Updates

Recent Q4 financial results do not include 4,167 oz of gold held in inventory which was delayed due to longer concentrate drying times so expect a strong Q120 as well. FY2019 production was ~82koz Au at US&680/oz AISC. Strong cash position with ~US$18M in cash and no debt. Currently operations have not been impacted by COVID-19 and continue to operate while taking the necessary precautionary measures.

Catalysts

Q220	Tabling of updated resource
Late Q220	PEA guiding at 400ktpa for first 4 years (145koz AuEq) and 120koz AuEqpa LOM (13 yrs)

Figure 4: Long section showing the Kora North K1 and K2 veins and addtional exploration potential between Kora, Eutompi, and Kora North. We would also like to point out exploration success to date along strike of Kora North.

Silvercrest Metals: Highest Grade Silver Development Projects in the World – Imminent Takeover Candidate

Ag & Au: Mexico | $667 M Market Cap | Developer

Why You Should Own Silvercrest Metals

SIL has readily proven to be a top tier development asset by consistently delivering some of the highest-grade silver-gold mineralization in the world at its 100% owned Las Chispas project. SIL is a must own for silver specialists however, we’d like to point out that although it’s a silver name half of the estimated revenue will be generated from gold. Management has done an excellent job of minimizing dilution and carries a strong balance sheet (~$C120M cash) with enough funds to carry them through to completion of a feasibility study.

About the Company

Silvercrest Metals is focused on developing its 100% owned Las Chispas low-sulphidation Ag-Au epithermal project in Sonora State, Mexico. SIL is led by a proven management team that has extensive experience in the jurisdiction, discovering, developing, and selling their previous company Silvercrest Mines (Santa Elena project) to First Majestic in 2015. Eric Fier (CEO) and his team are poised to repeat their success with Las Chispas which we believe is an even better asset than Santa Elena. Management owns ~12%.

Key Takeaways

SIL tabled a PEA in 2019 outlining a very robust permitted silver development project with after-tax NPV(5%) of US$406M and IRR of 78% at (US$16.7/oz Ag and US$1,269/oz Au) with an estimated seven month payback period. A feasibility study is set to be tabled by Q320 which will include the most recent drill results (ie Babi Vista Vein results of up to 2. 1m of 12,740 gpt AgEq). The current construction cost is estimated at $110M which we see being financed through debt and a relatively small portion through equity.

We anticipate significant resource growth compared to the current (February 2019) indicated resource of 39.7M AgEq oz at a grade of 1,234 gpt AqEq and inferred resource of 49.0M AgEq oz at a grade of 835 gpt AqEq based on a number of new discoveries and high-grade intercepts.

SIL has done an excellent job of de-risking by stockpiling high-grade material to allow for potential variations in grade common in high grade deposits. Current production is estimated at 1,250 tonnes per day and SIL has already +200,000 tonnes in stockpile allowing for six months of operations.

Updates

Silvercrest has temporarily suspended operations (exploration and underground development) until April 30, 2020 in compliance with Mexican authorities’ requests and to protect the local communities from the risk of exposure. No cases have been recorded amongst SIL staff.

Catalysts

Terminated/Potential Legal Action	Closing of C$75M bought deal with NBF announced on March 11 at a price C$8.25 (SIL currently trading at a significant discount to bought deal)
Q220	Ongoing drill results from $16M budgeted for 2020 exploration – drilling will focus on infill drilling and then switch to exploration drilling for remainder of year
Q320	Tabling of updated resource and feasibility study
Q420	Construction decision and production within 14 months (late Q421 or early Q122) after financing in place.

Figure 5: Plan map showing the existing veins and newest discovery “Area 200” 125 m below the portal entry. This figure represents a small portion of the actual exploration potential yet to be exploited on the property.

Skeena Resources: In-line to Become Canada’s Next HG Gold Mine

Au: Golden Triangle, BC | Market Cap $108 M | Developer

Why You Should Own Skeena Resources

Skeena Resources has catapulted from an exploration company to near term development project and potential acquisition target on the back of an economically compelling PEA (Nov 2019) re-envisioning the historic Eskay Creek project as a high-grade open pit project. We feel SKE has the potential to become one of the highest grade and largest gold producing mines in Canada as the project progresses toward feasibility.

About the Company

Skeena Resources is advancing two high-grade past producing assets in the prolific Golden Triangle, the Eskay Creek mine and the Snip Mine – both projects optioned from Barrick with a 100% earn-in right. Eskay is subject to a 3x expenditure back-in right by Barrick and we estimate ~$20M spent to date at Eskay by Skeena with additional expenditures to be incurred this year. The Snip mine has been optioned to Hochschild Mining who can earn up to 60% interest by incurring 2x SKE’s expenditures since acquiring the property from Barrick.

Key Takeaways

The PEA (base case $1,325 Au price) tabled in Nov 2019 outlines an economically compelling high grade (4.17 gpt AuEq) OP operating scenario averaging ~300,000 oz of AuEq production/yr at life of mine (8yrs) AISC of US$757/oz AuEq with a 7.2:1 strip ratio. The after-tax NPV(5%) is estimated at $638M (US$491M) and a 51% IRR with a 1.2 year payback period. The initial capital expenditures are relatively low cost at $303M (US$233M) underpinned by the excellent access to power and nearby infrastructure. We note the high mercury and arsenic levels in the area around the contact mudstone however, we would like to point out that these deleterious elements are not ubiquitous and anticipate penalties in the first 3 years mainly.

The PEA is backstopped by a pit constrained indicated resource (Feb 2019) of 2.34 Moz AuEq at a grade of 5.8 gpt AuEq and inferred resource of 1.34 Moz AuEq at a grade of 2.9 gpt AuEq. A resource update is expected late H120 which we expect will boost the indicated category substantially based on the positive reconciliation of infill drill results released to date.

Skeena’s secondary focus is advancing its high-grade past producing Snip Mine. Recent drilling was focused on delineating the 200-footwall corridor following up on a historic intercept of 26.83 gpt Au over 3.4 m. Results have discovered a new zone of mineralization grading up to 1,131.91 gpt Au over 1.5 m (including 3,390 gpt Au over 0.5 m). 2020 drilling will focus on delineation of this new zone.

SKE is well-funded to advance the project the next stage. Management has been successful in monetizing non-core assets by selling the GJ property to Newcrest for $7.5M in addition to closing the first tranche ($15M) of a $30M private placement flow through offering. We would also like to point out the strong First Nations support for the project through the BC Regional Mining Alliance focusing on responsible resource development.

Updates

Skeena continues to add value through the drill bit. Recent drilling returned world class high-grade drill results including 22.59 gpt AuEq over 14.33 m and 14.82 gpt AuEq over 31.3 m at Eskay Creek. The BC government has deemed mineral exploration an essential service and thus we do not anticipate any major delays to the upcoming drill program.

Catalysts

Q2-Q320	Commencement of surface drilling at Eskay Creek and UG drilling at Snip
H120	Tabling of updated resource estimate at Eskay Creek
H220	Ongoing drill results from Snip testing the continuity of the 200 Footwall zone
H220	Maiden resource estimate for Snip

Figure 6: Proposed mine site at Eskay Creek showing the existing TSF with ample capacity remaining, access road and powerline, and favourable topography for stripping.

Figure 7: Comparison of near-term development projects. Figure shows the significant high-grade resource potential compared to peers. Note BSR, SBB(OP/UG), BTR and AOT are proposed to be UG operations whereas SKE is OP highlighting the HG nature.

Liberty Gold Corp: High Conviction Oxide-Gold Take-out Target

Au: Idaho | Market Cap $217 M | Exploration

Why You Should Own Liberty Gold

Liberty Gold’s management team has a track record of success and have once again proven that with their discovery at Black Pine which has the potential to host a multi-million ounce (+2-4Moz) oxide gold deposit. In 2019 LGD’s focus was on the mineralization discovered at discovery zones 1&2 (~1km2 area) however, the focus will now shift to defining mineralization over a 3km2 area along a host carbonate horizon that can be up to 250 m in thickness. We believe Black Pine is a likely M&A candidate based on the shallow, open-pittable mineralization with simple metallurgy defined to date located in a safe jurisdiction with mulit-million ounce potential – key criteria for any gold producer looking for a high quality development project.

About the Company

Liberty Gold Corp was spun out of Fronteer Gold which was sold to Newmont Mining in 2011 for $2.3B after the discovery of 2.2Moz at 2.2 gpt oxide gold at Long Canyon. The non-core assets were put in to LGD with a focus on the Goldstrike (Utah) project early on which has a PEA estimating $130M NPV and 30% IRR. Black Pine has come to the forefront after initial drilling intersected high-grade mineralization below historic pits.

Key Takeaways

LGD boosts a serially successful management team with access to capital in the midst of developing an emerging asset high on the list of companies looking for high margin low cost assets.

The Black Pine asset is a data rich brown fields site with 10 priority targets. Drilling in 2019 (20,000 m) confirmed two new discoveries retuning exceptional grades and widths of oxide gold mineralization including 4.39 gpt Au over 53.3 m and 3.4 gpt Au over 62.5 m. Nine additional targets have been identified over an area of 6 km2 (half of the mineralized footprint) that is yet to be thoroughly tested.

Mark O’Dea, Chairman: took control of Fronteer when it was just a shell with $1M in cash and built value through exploration success in Turkey and Nevada to eventually sell it to Newmont for $2.1B. Moira Smith, VP Exploration: Discovered Long Canyon and has applied the same methods at Black Pine to further this discovery and is considered one of the best carlin-type geologists in the world. Cal Everett, CEO: has been able to constantly raise the capital with over $50M raised.

The company is cashed up ~$ 21.5M cash and additional funds coming in down the line through asset sales. LGD has a strong shareholder base with 27 institutional shareholders (43.6%) (Newmont ~6%) and management (7%).

Updates

LGD has commenced drilling utilizing a local crew. Idaho has issued mining as an essential infrastructure service allowing LGD to commence their 2020 +21,000 m drill program aimed at infilling the discovery zones.

Catalysts

Q120	Permitting Amendment (additional sites for 50 hectares to test between known mineralization
Q220	On-going drill program results from 45,000 m RC and Core drilling
Q320	Metallurgical results from Black Pine
Q320	Black Pine Resource Update
Q420	Tabling of maiden PEA at Black Pine

Figure 8: Long sections displaying the high-grade tenor and continuity of newly discovered oxide mineralization below and adjacent to historical pits representing a small sample size of the remaining potential at the property.

Great Bear Resources: Transformative New Discovery

Au: Red Lake, Ontario | Market Cap $271 M | Exploration

Why You Should Own Great Bear Resources

There was no doubt that Great Bear was a good project with a high-grade gold discovery at the Hinge Zone, but the LP Fault has become a transformative new discovery catapulting GBR to the next level – district scale high grade potential.

About the Company

Great Bear is a junior exploration company headquartered in Vancouver with a strong management team backed by John Robins Discovery Group. The projected is located in a mature and mining friendly jurisdiction with excellent infrastructure (located ~20 km SE of the Town of Red Lake); all season road access, and access to grid power (transmission line cuts across property).

Key Takeaways

GBR has all the required hall marks that acquirers consider relevant therefore placing it on our list as a top candidate for near-term takeout potential. We need to remember that GBR commenced their first drill program in 2017 and has since made two major discoveries, Dixie Limb) (10.4 m of 16.84 gpt Au) followed by 0.70 m of 1,602.7 gpt Au in the Hinge Zone and the latest game-changing discovery along the LP fault zone including 2.0 m of 194.21 gpt Au. The LP fault, because of its sheer size (+5 km strike) and grade potential, has become the main target.

GBR is well funded with $27M in cash and a $21M 110,000 m drill program underway (in addition to the 90,000m commenced in 2019). The drilling is focused on the LP Fault, Hinge Zone, Dixie Limb, and North Fault. The LP Fault is structurally and lithologically controlled and hosted in felsic units unlike typical orogenic gold deposits as seen at the Hinge Zone. Both targets offer high-grade gold mineralization and potential for significant depth extension.

We view GBR as a prime take-out candidate as they continue to step-out along the LP Fault to show the district scale potential in a safe jurisdiction with great infrastructure – key criteria for any major.

Updates

GBR recently announced a proposal to spin-out a 2% net smelter royalty for $1.5M (equity + cash) into a new royalty company. The shares will be distributed to existing GBR shareholders on a basis of 1 share of the royalty company for each four common shares held of GBR. GBR also announced that exploration continues on site and new operational procedures have been implemented in the light of the current situation.

Catalysts

Q220	Ongoing results from 110,000 m drill program aimed at defining 11 km LP fault footprint  10,000 m drilled since last news release
Q220	Decision on spin-out of Great Bear Royalties (April 23)
Q320	Results from metallurgical test work
Q121	Tabling of maiden resource encompassing ~200,000 m of drilling by GBR

Figure 8: Dixie project long section showing the newly discovered 4.8 km prospective mineralization along the LP fault including drilling highlights of 10.58 gpt Au over 21.1 m (including 195 gpt Au over 0.50m).

 

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