Great Bear raising $5.5 million for Red Lake drilling

Exploring Great Bear’s Dixie Lake gold project in northwestern Ontario. Source: Great Bear Resources Ltd.

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Great Bear Resources Ltd. [GBR-TSXV] said Wednesday it is raising $5.5 million via a bought deal private placement of flow-through common shares and will expand its ongoing Red Lake drilling program to 90,000 metres.

The company said Cormark Securities Inc. will lead an underwriting syndicate which has committed to buying one million Great Bear common shares that qualify as flow-through shares for the purposes of the Income Tax Act (Canada) a $5.45 per share. Great Bear has also granted the underwriters an option to sell up to an additional 150,000 flow-through common shares at the offering price up until the closing date, likely July 3, 2019.

On Wednesday, Great Bear shares eased 5.05% or 21 cents to $3.95. The shares are trading in a 52-week range of 48 cents and $4.24.

Proceeds from the offering will be used to incur “Canadian exploration expenses” related to Great Bear projects in northwestern Ontario.

News of the financing follows on the heels of a significant new high-grade gold discovery at Great Bear’s 100%-owned Dixie Lake project near Red Lake, Ont.

Highlight assay results from drilling in shallow zones on the Bear-Rimini target area include 12.33 g/t gold over 14 metres, including 30.90 g/t gold over 4.60 metres;  and 194.21 g/t gold over 2.00 metres, including 759.38 g/t gold over 0.50 metres.

The Bear-Rimini Zone is located 2.5 kilometres northwest of the Hinge Zone discovery, which last year ignited investor interest from major players including Bay Street gold bug Rob McEwen and his company McEwen Mining Inc. [MUX-TSX]. Together, they now hold 18.83% of Great Bear, which has a market cap of $134.4 million, based on 38.2 million shares outstanding.

Covering 9,140 hectares the Dixie Lake project Dixie is a typical Archean mesothermal gold vein system located 20-25 kilometres from significant mines that share the same geological and metallogenic characteristics.

They include Newmont Goldcorp.’s [NGT-TSX, NYSE-NEM] Red Lake Gold Mine, which has been in production since the late 1940s, and was expected to produce 235,000 ounces of gold this year at an all-in-sustaining cost of $1,000 an ounce.

Great Bear President and CEO Chris Taylor said this type of geology has been the “bread and butter of gold production in the Red Lake district for nearly a century.

The company is currently engaged in a 30,000-metre, approximately 150-drill-hole program at the Dixie Lake property, which is expected to continue through 2018 and 2019.

“By raising an additional $5.5 million, we will have over $15 million in cash on hand and will have funded the expansion of our ongoing drill program by an additional 30,000 metres, for a new total of 90,000 metres of drilling,” Taylor said in a press release, Wednesday.

“Coupled with the potential for an additional $7.8 million from warrant exercise, Great Bear will remain very well funded with the flexibility to significantly expand and extend our drilling as required,’’ he said. “We are strongly positioned to benefit from one of our industry’s most significant exploration drill campaigns through 2019 and 2020.”

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