MINING May 11, 2020 Great Bear Resources...

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Stefan Ioannou, PhD, (416) 943-4222, [email protected]

Yakun Liu , MSc – Associate , (416) 943-6729, [email protected]

M IN IN G – B A S E M E T A L S

May 11, 2020 ◆Great Bear Resources Ltd.

Swinging For The Fences

Unless otherwise denoted, all figures shown in C$ We are utilizing a US$0.69 conversion rate

Recommendation: Buy (S)

Target Price: $16.50

Company Statistics:

Stock Symbol: GBR - TSXV

Price: $11.05

Shares Outstanding:

Basic: 48.0 MM

Fully Diluted: 54.6 MM

Management: 4.8 MM

Market Cap: $530.8 MM

Cash: $23.0 MM

Long-term Debt: Nil

Trading Volume (100-day ave.): 191,855

High – Low (52-Week): $12.10 - $2.20

Company Description:

Great Bear is a well-financed gold explorer focused on the prolific Red Lake district in northwest Ontario, where the company controls over 300 km2 of highly prospective ground across four projects including the flagship 100% owned Dixie Project. The neighbouring world-class Red Lake camp, which to date has produced over 25 MMoz of gold from 29 mines, speaks to the geological potential of the region.

◆ During the past twelve months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities for Great Bear Resources Ltd.

• Great Bear’s LP Fault discovery appears to represent a significant large

scale (potentially open pitable) opportunity. We would argue that said

recently recognized ‘Hemlo’ potential stands to unlock shareholder

value—upside echoed by a fully funded $21 MM (~300 hole) 2020 drill

program designed to delineate the LP Fault over ~5 km of strike length

(to a depth of ~500 m), noting the system has already been interpreted

to extend over ~18 km of strike length—on the company’s property.

• Exposure to the LP Fault’s potential arguably comes at a price, noting

Great Bear’s $531 MM market cap well ahead of a maiden NI 43-101

compliant resource expected in mid-2021—investment is not for the faint

of heart. That said, drilling continues to demonstrate

continuity/predictability. Skeptics have/will question the LP Fault’s grade

distribution—which is precisely the question Great Bear is now working

to answer through the aforementioned comprehensive drill campaign.

• Our $16.50 target price is based on the delineation of a 10.0 MMoz LP

Fault gold inventory and the conceptual large scale open pit opportunity

it could offer—a ‘what if’ scenario entailing significant investment risk that

stands to be rewarded by said world class discovery potential.

FYE December 31 2025E 2026E 2027E 2028E 2029E

Gold Price, US$/oz $1,600 $1,600 $1,600 $1,600 $1,600 Gold Production, koz 1,115 1,115 1,115 336 336

Total Cash Cost, US$/oz $350 $350 $350 $1,150 $1,150

Disclosure statements located on pages 47 – 48 of this report

EPS, US$ $6.19 $6.29 $6.38 $(0.64) $(0.55)

CFPS, US$ $8.38 $8.31 $8.09 $0.97 $0.97

Price/CFPS 0.9x 0.9x 0.9x 7.8x 7.8x

mailto:[email protected]

MAY 11, 2020 STEFAN IOANNOU 416·943·4222; YAKUN LIU – ASSOCIATE 416·943·6729

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Investment Highlights

Great Bear is a well-financed gold explorer focused on the prolific Red Lake district in

northwest Ontario, where the company controls over 300 km2 of highly prospective

ground across 4 projects including the flagship 100% owned Dixie Project. The

neighbouring world-class Red Lake camp, which to date has produced over 25 MMoz of

gold from 29 mines, speaks to the geological potential of the region.

Great Bear’s seasoned team has made and or significantly advanced multiple high-grade

discoveries on the Dixie Project over the last two years—namely the Dixie Limb, Hinge,

and LP Fault—the last of which comprises 6 previously unrecognized areas that have

now been demonstrated to be continuous, in part comprising an 18 km long near-surface

target that remains open in multiple directions. Key points with regard to the flagship

project include:

Thinking outside the box yields new ‘flagship’ discovery – While the Dixie Limb and

Hinge discoveries are associated with the same style of high-grade gold mineralization

that typically underpins the neighbouring Red Lake district—namely discrete high-grade

gold in quartz-carbonate veins and silica-sulphide replacement zones, Great Bear’s recent

LP Fault discovery appears to represent a significantly larger scale (potentially open

pitable) opportunity that is geologically similar to Hemlo style gold mineralization. We

would argue that it is this recently recognized ‘Hemlo’ potential that stands to

unlock shareholder value—upside echoed by a fully funded $21 MM (~300

hole/~110,000 m) 2020 drill program designed to delineate the LP Fault over ~5 km

of strike length (to a depth of ~500 m), again noting the system has already been

interpreted to extend over ~18 km of prospective strike length—on the company’s

property. For comparison, we note the world-class ~23 MMoz Hemlo deposit in Ontario

spans ~3.0 km of strike length (see below).

High potential exploration not for the faint of heart – Given exploration success to date,

exposure to the LP Fault’s potential arguably comes at a price, noting Great Bear’s

current $531 MM market capitalization—investment requires a ‘world-class’ discovery

thesis, noting said market valuation already seemingly implies a ~7 MMoz gold

discovery as per current peer-group ‘in-situ’ metrics (namely an average US$50/oz ‘in

the ground valuation), well ahead of a maiden National Instrument 43-101 compliant

resource estimate expected in mid-2021. That said, drilling to date continues to

demonstrate three-dimensional continuity/predictability of both a greater ‘lower

grade’ envelope and higher grade (multi gram plus) domains within—along 4.2 km

of open ended strike (see below). Skeptics will continue to question the LP Fault

discovery’s grade distribution—which is precisely the question Great Bear is now

working to answer through the aforementioned comprehensive 2020 drill campaign

designed to refine the current ‘pixelated’ understanding of the system. Bottomline, we

look to this year’s ‘major-sized’ drill program as a pivotal effort underpinning the

Great Bear story—which stands to garner additional large scale project potential

recognition.

Swinging for the fences – Our Buy (S) recommendation and $16.50 target price is

based on the delineation of a 10.0 MMoz LP Fault gold inventory and the

conceptual large scale open pit opportunity it could offer—a ‘what if’ scenario

entailing significant investment risk that stands to be rewarded by said world class

discovery potential. Said thesis also requires patience, in part reiterating the LP Fault’s

maiden resource estimate is not expected until mid-2021. That said, Great Bear’s drills

continue to turn despite COVID uncertainty and the company currently has


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~10,000 m of drill core submitted for assay. Needless to say, we anticipate a steady flow

of (potentially high grade) news flow well past YE/20.

Evolving shareholder base considerations – Cognizant Great Bear’s current shareholder

registry is largely (+65%) comprised of ‘retail’ investors, we suspect recent exploration

success stands to garner institutional interest given the LP Fault’s ‘major’ size potential.

Figure 1 Price Chart

Source: BigCharts.com (May 8, 2020)

Figure 2 Project Location Map

Source: Great Bear Resources Ltd.


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Valuation

Conceptual Large-Scale Open Pit Mine Plan Underpins Compelling Base Case Valuation

Great Bear’s flagship Dixie Project currently has no National Instrument 43-101

compliant resource. However, current exploration is focused on delineating the LP Fault,

where recent efforts have demonstrated three-dimensional continuity of both a greater

‘lower grade’ envelope and higher grade (multi gram plus) domains within—along 4.2

km of strike (see below). The ‘Hemlo style’ system, which is interpreted to extend over

~18 km of prospective strike length and remains open at depth (currently tested to a depth

of ~400 m), arguably represents one of the largest gold discoveries in Canada. Hence,

our base case model (formal valuation) is based on a conceptual large-scale open pit

mine plan centered on the LP Fault, envisioning a 50 ktpd operation mining 10.0

MMoz of ‘in-situ’ gold over a 22-year period—an arguably realistic target given the

open-ended nature of said gold mineralization (see below). Production from higher

grade domains (modelled at 2.0 g/t; versus a life-of-mine average grade of 0.8 g/t)

during the mine’s first 3 years of operation drives ~1,115 koz of upfront annual

production at an AISC of US$425/oz (versus average life-of-mine output of 432 koz

at US$1,000/oz; see below). As final development plans could differ materially, we look

to refine our model with the release of the project’s maiden resource and other technical

update(s) through mid-2021.

Our $16.50 target price (Buy (S) recommendation) is based on a 1.0x multiple to

Great Bear’s risk-adjusted, fully financed after-tax corporate NAV7% of US$1,358

MM or $16.45 per fully diluted share (2020 forward basis with production start-up

modelled in 2025)—versus Cormark’s standard practice of using a 5% discount rate

for precious metal projects with compliant resource and/or mine plans (noting peers

trade up to ~1.0x NAV). Said valuation is underpinned by Cormark’s formal commodity

price forecast, which includes a long-term gold price of US$1,600/oz. We note that at a

5% discount rate, Great Bear’s fully financed after-tax corporate NAV increases to

US$1,614 MM or $19.54 (+19%) per fully diluted share in our model.

While the LP Fault is the focal point of our Great Bear Valuation, we remain cognizant

that classic ‘Red Lake style’ high-grade mineralization hosted in the neighbouring

(smaller scale) Dixie Limb and Hinge zones stands to add development optionality to the

project (see below)—namely in the form of supplemental high grade ‘satellite’ feed.

Building on our base case (open pit) mine plan, we note (for illustrative purposes) that a

concurrent (2,500 tpd) underground operation (2028 start-up) exploiting a 2.0 MMoz of

‘in-situ’ gold inventory grading 4.0 g/t stands to boost the Dixie Project’s production

profile to ~500 koz per annum in our conceptual model (see below), and increase Great

Bear’s fully financed after-tax corporate NAV7% to US$1,688 MM or $20.45 per fully

diluted share.


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Figure 3 NAV Breakdown and Sensitivity

Gold Price Forecast, US$/oz Cormark $1,000 $1,200 $1,400 $1,600 $1,800 Spot

C$/US$ FX Rate Model $1.55 $1.50 $1.45 $1.40 $1.35

Fully Financed FD Shares, MM 120 120 120 120 120 120 120

Corporate Adjustments

Corporate Adjustments, US$ MM $58 - $58 $58 $58 $58 $58

Corporate Adjustments, C$ per FD Share $0.70 - $0.73 $0.70 $0.68 $0.65 $0.67

Projects

Dixie After-Tax Project NAV7%, US$ MM $1,250 - $125 $663 $1,179 $1,632 $1,442

Dixie After-Tax Project NAV7%, C$ per FD Share $15.14 - $1.57 $8.03 $13.79 $18.40 $16.74

Total After-Tax Projects NAV7%, US$ MM $1,250 - $125 $663 $1,179 $1,632 $1,442

Total After-Tax Projects NAV7%, C$ per FD Share $15.14 - $1.57 $8.03 $13.79 $18.40 $16.74

Subtotal Valuation (Corporate Adjustments + Projects)

Subtotal After-Tax Corporate NAV(7%), US$ MM $1,308 - $183 $721 $1,237 $1,690 $1,500

Subtotal After-Tax Corporate NAV(7%), C$ per FD Share $15.84 - $2.30 $8.73 $14.46 $19.05 $17.41

Resource + Regional Exploration Upside Credit

Regional Exploration Upside Credit, US$ MM $50 - $50 $50 $50 $50 $50

Regional Exploration Upside Credit, C$ per FD Share $0.61 - $0.63 $0.61 $0.58 $0.56 $0.58

Total Valuation

Total After-Tax Corporate NAV7%, US$ MM $1,358 - $233 $771 $1,287 $1,740 $1,550

Total After-Tax Corporate NAV7%, C$ per FD share $16.45 - $2.92 $9.34 $15.05 $19.62 $17.99

Implied Target Price @ 1.0x After-Tax Corp. NAV7%, C$ $16.50 - $3.00 $9.50 $15.50 $20.00 $18.00

2025E Model CFPS, US$ $8.38 $4.54 $5.80 $7.11 $8.47 $9.87 $9.17

2026E Model CFPS, US$ $8.31 $4.48 $5.74 $7.04 $8.40 $9.73 $9.10 Cormark model NAV7% is calculated on a January 1, 2020 forward basis with production start-up in 2025. Cormark model is based on a long-term gold price of US$1,600/oz. Cormark model is based on a forecast C$/US$ FX rate of 1.45. Spot price scenario is based on a gold price of US$1,705/oz and a C$/US$ FX rate of 1.39. Source: Cormark Securities Inc.


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Figure 4 Corporate NAV Sensitivity to Gold Price and Discovery Size (US$ MM)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

6.0 - $283 $745 $1,197 $1,638 $2,079

7.0 - $442 $947 $1,444 $1,924 $2,359

8.0 - $560 $1,104 $1,631 $2,101 $2,571

9.0 $77 $672 $1,257 $1,767 $2,268 $2,768

10.0 $150 $771 $1,358 $1,887 $2,414 $2,941

11.0 $207 $860 $1,440 $1,992 $2,543 $3,093

12.0 $258 $939 $1,513 $2,085 $2,656 $3,227 D

isc

ov

ery

Siz

e

(MM

oz)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025). Based on a 0.8 g/t life-of-mine average gold grade and a 50 ktpd (mill) open pit mine plan. Source: Cormark Securities Inc.

Figure 5 Corporate NAV Sensitivity to Gold Price and Discovery Size (C$ per share)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

6.0 - $3.42 $9.02 $14.50 $19.84 $25.18

7.0 - $5.35 $11.47 $17.49 $23.30 $28.57

8.0 - $6.78 $13.37 $19.75 $25.45 $31.14

9.0 $0.93 $8.13 $15.22 $21.40 $27.47 $33.52

10.0 $1.81 $9.34 $16.45 $22.85 $29.24 $35.62

11.0 $2.50 $10.41 $17.44 $24.13 $30.80 $37.46

12.0 $3.13 $11.37 $18.32 $25.26 $32.17 $39.08

Dis

co

ve

ry S

ize

(MM

oz)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025). Based on a 0.8 g/t life-of-mine average gold grade and a 50 ktpd (mill) open pit mine plan. Source: Cormark Securities Inc.

Figure 6 Corporate NAV Sensitivity to Gold Price and LOM Head Grade (US$ MM)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

0.50 - - - $550 $1,104 $1,629

0.60 - - $537 $1,108 $1,669 $2,169

0.70 - $396 $991 $1,563 $2,070 $2,577

0.80 $150 $771 $1,358 $1,887 $2,414 $2,941

0.90 $472 $1,090 $1,636 $2,182 $2,727 $3,271

1.00 $744 $1,312 $1,873 $2,434 $2,994 $3,553

1.10 $948 $1,522 $2,097 $2,671 $3,244 $3,816

1.20 $1,119 $1,705 $2,291 $2,877 $3,462 $4,046 LO

M G

old

He

ad

Gra

de

(g/t

)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery and a 50 ktpd (mill) open pit mine plan. Source: Cormark Securities Inc.


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Figure 7 Corporate NAV Sensitivity to Gold Price and LOM Head Grade (C$ per share)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

0.50 - - - $6.67 $13.37 $19.73

0.60 - - $6.51 $13.42 $20.21 $26.27

0.70 - $4.80 $12.00 $18.93 $25.07 $31.21

0.80 $1.81 $9.34 $16.45 $22.85 $29.24 $35.62

0.90 $5.72 $13.20 $19.82 $26.43 $33.03 $39.62

1.00 $9.02 $15.89 $22.69 $29.48 $36.26 $43.03

1.10 $11.48 $18.44 $25.40 $32.35 $39.29 $46.22

1.20 $13.56 $20.65 $27.75 $34.85 $41.93 $49.00 LO

M G

old

He

ad

Gra

de

(g/t

)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery and a 50 ktpd (mill) open pit mine plan. Source: Cormark Securities Inc.

Figure 8 Corporate NAV Sensitivity to Gold Price and Discount Rate (US$ MM)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

0% - $1,214 $2,622 $3,851 $5,080 $6,309

3% - $1,000 $1,939 $2,771 $3,601 $4,431

5% $95 $878 $1,614 $2,271 $2,927 $3,582

7% $150 $771 $1,358 $1,887 $2,414 $2,941

10% $183 $637 $1,067 $1,460 $1,851 $2,241 Dis

co

un

t R

ate

(%)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery averaging 0.8 g/t—mined over a 22-year open pit mine life. Source: Cormark Securities Inc.

Figure 9 Corporate NAV Sensitivity to Gold Price and Discount Rate (C$ per share)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

0% - $14.70 $31.75 $46.64 $61.52 $76.41

3% - $12.11 $23.49 $33.56 $43.62 $53.67

5% $1.16 $10.63 $19.54 $27.50 $35.45 $43.39

7% $1.81 $9.34 $16.45 $22.85 $29.24 $35.62

10% $2.22 $7.71 $12.92 $17.68 $22.41 $27.14 Dis

co

un

t R

ate

(%)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery averaging 0.8 g/t—mined over a 22-year open pit mine life. Source: Cormark Securities Inc.


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Dixie Project Overview

Location, Infrastructure, And Ownership

The Dixie Project consists of 9,140 ha of contiguous claims that extend over 22 km of

prospective strike length, and is well located ~25 km southeast of the town of Red Lake

(15 minute drive; i.e., proximity to established mining infrastructure and labour pool).

The project is accessible year-round via a paved highway (which runs the length of the

northern claim boundary) and a network of well-maintained logging roads. Natural gas

and power lines also run across the project area. Bottomline, proximity to an

established world class mining camp within a favourable mining jurisdiction

provides Great Bear with a significant ‘leg up’ over many other gold explorers (and

developers).

Great Bear acquired a majority interest in the then bankrupt Dixie Project in 2015. During

July 2017, the company entered into a purchase agreement with Newmont to acquire the

major’s 33% stake in the portion of the Dixie Project area the company didn’t already

control for $80,000 in total cash payments over four years (noting accelerated completion

of said royalty-free transaction in November 2018). In September 2017, Great Bear

acquired an additional 26 mineral claims, which now form part of the 494 claim package

comprising the Dixie Project (said 9,140 ha).

Figure 10 Dixie Project Location Map



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Work History Historically, given overburden considerations and a general lack of outcrop, most

exploration targets were developed through geophysical and geochemical surveys

focused on lode gold and volcanogenic massive sulphide (VMS) deposits in the context

of the region’s greenstone geology. Initial gold discovery on the Dixie property dates

back to the early 1940s by Belgold Mines. Four gold occurrences were subject to

trenching and limited drilling programs.

Sporadic exploration followed in the ~1970s. However, a ‘significant’ new discovery did

not ensue until 1988, when Consolidated Silver Standard Mines identified another gold

occurrence on the property, the 88-04 zone, which is characterized by a 700-m long

northwest-southeast trending linear magnetic high with coincident MAXMIN, VLF, and

IP geophysical anomalies. Discovery drill hole (DL-88-4) targeting the feature intersected

significant gold mineralization in silicified and sulphidized argillaceous interflow

sediments within a sequence of mafic volcanics, along the northwest trending limb of the

F2 fold structure—namely 4.2 m grading 4.97 g/t gold starting at a downhole dept of 57.6

m. The discovery prompted subsequent drill campaigns by Teck (1989-1990), Alberta

Star/Fronteer (2003-2004 JV), and Grandview (2006-2009) focused, the last of which

proceeded to discover the neighbouring NS zone characterized by sulphide poor quartz-

vein hosted mineralization—namely a 2.0 m intersection grading 15.05 g/t gold in

discovery hole DC-10-07. Note the historically identified 88-04 and NS zones now

correspond to Great Bear’s Dixie Limb and Hinge zones respectively.

During 1989, Teck tabled a pre NI 43-101 ‘drill-indicated’ 417 kt resource grading 0.126

oz/t gold for the 88-4 zone. The company subsequently reported a revised estimate, which

included results from a 1990 drill campaign—namely a 1.1 MMt (short) ‘optimistic

possible tonnage’ grading 0.10 oz/t gold.

Using oriented drill core, a JV between Alberta Star and Fronteer identified a northwest-

plunging shoot/structural correlation pertaining to enhanced (visible) gold mineralization

within the 88-04 zone. However, due to poorly understood distribution of the

mineralization and the apparent geometrical complexity of the high-grade mineralization,

the JV was discontinued. In 2006, Grandview completed 2,765 m of diamond drilling in

16 holes targeting strike extensions to the 88-04 zone and Mobile Metal Ion (MMI)

survey anomalies. Enhanced gold mineralization was found both within the 88-04 zone

and parallel to it. Significant intercepts included composite intervals with grades of 5.9

g/t Au over 4.5 m and 3.5 g/t over 5.2 m. Drill-truthed MMI anomalies (e.g., 1.9 m

grading 3.2 /t gold) garnered attention towards the greater property’s potential.


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Recent Work – LP Fault Discovery Sheds New Light On Dixie Project Potential

Prior to Great Bear, Dixie Project exploration, dating back to 1944, included 76 diamond

drill holes totalling 32,609 m. Since 2017, the company has advanced the project’s

historically identified targets and uncovered new zones of mineralization—underpinned

by 85,673 m of drilling in 245 diamond holes through 2019. Considerable progress has

been made in delineating the Hinge zone, with high-grade mineralization now traced to a

depth of ~300 m, and along strike for ~100 m—underpinned by a calculated grade-

thickness profile of 25.82 g/t gold over 1.51 m. Drilling along the ~600 m long

northwest-southeast trending Dixie Limb (grade-width: 6.86g/t gold over 2.21 m)

remains centered on identifying/delineating higher-grade subzones. The results of recent

drilling highlight interpreted east-west cross structures, hosting later-stage gold bearing

quartz-carbonate veins, as the primary potential grade control. While arguably currently

the most advanced assets in Great Bear’s portfolio, we ultimately look to the Dixie Limb

and Hinge zones as potential ramp-accessible high-grade satellite ‘sweeteners’ to a much

larger operation centred on LP Fault open pit development (see below).

Great Bear’s recent focus has shifted to the Bear-Rimini (BR) zone, now referred to

as the LP Fault—a new near-surface, high-grade discovery, marked by intercepts of

194.21 g/t gold over 2.0 m (starting at a downhole of 53 m depth) and 30.90 g/t gold

over 4.60 m (starting at a downhole depth of 71m depth) in hole DNW-011. The

discovery is unique in that disseminated gold mineralization is hosted within

silicified metasedimentary and felsic volcanic rocks, versus the more typical quartz-

carbonate vein mineralization hosted in basalts characteristic of the Dixie Limb and

Hinge zones (see below).

Great Bear’s latest drilling has continued to return significant (high grade) near-surface

gold mineralization along the LP Fault target. Recent results include intersections from

the previously undrilled ‘Gap’ zone, which now ‘confirms’ the apparent continuity of

mineralization over a +4 km ‘core’ strike length. However, drill testing on widely spaced

centres has traced the target across ~11 km of strike length (noting the system is

interpreted to extend for ~18 km on Great Bear’s property; see below). An airborne

SkyTEM electromagnetic survey completed in 2019 provides a good basis for ‘regional’

LP Fault exploration. Recent highlights (released this quarter) include:

• Drill hole BR-089, located on section 21100 (i.e., near the current ‘heart’ of the LP

Fault) returned 11.03 g/t gold over 6.95 m starting at a downhole depth of 172.55 m

(including 112.00 g/t gold over 0.50 m) and 18.06 g/t gold over 4.75 m

(including 156.00 g/t gold over 0.50 m), the latter of which occurs within a

broader 51.25 m interval grading 1.93 g/t starting at a downhole depth of 242.00

m.

• Drill hole BR-088, located on section 22000 (900 m to the northwest of hole BR-

089), intersected 0.71 g/t gold over 100.95 m.

• Drill hole BR-101 intersected multiple shallow mineralized intervals along 110 m of

core length. Assays include 42.70 g/t gold over 3.00 m, including 118.00 g/t gold

over 0.50 m, within a broader interval of 4.24 g/t gold over 52.15 m.

• Drill hole BR-102 intersected the on-strike continuation of the same shallow

mineralization and is collared 143 m to the southeast of BR-101. Assays

include 23.17 g/t gold over 3.50 m, within a broader interval of 3.10 g/t gold over

48.00 m.


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• Previously reported drill hole BR-020 (September 3, 2019), which assayed 10.65 g/t

gold over 17.25, within a broader interval of 5.28 g/t gold over 42.0 m, is

the continuation of the same shallow mineralization and is collared 84 m south of

BR-101. The high-grade gold mineralization intersected in BR-020, BR-101 and

BR-102 is apparently continuous and projects to within metres of the

surface, below shallow gravel cover. Mineralization remains open to extension in

all directions.

• BR-118, which infilled a ~150 m sectional ‘gap’ in the central ‘core’ of the LP Fault,

returned an upper 56.95 m intersection grading 3.18 g/t gold starting at the bedrock

surface (i.e., from a 30.20 m downhole depth; including 6.80 m grading 10.17 g/t),

and a lower 104.20 thick interval grading 2.67 g/t gold starting at a downhole

depth of 127.15 m (including 13.00 m grading 18.57 g/t)—representing one of the

longest high-grade intersections drilled to date. Said (very) high grade hits, which

now ‘define’ section 20650, appear to correlate well with previously drilled higher-

grade intervals on neighbouring sections 20600 (BR-037, which returned 16.60 g/t

gold over 6.0 m, and 5.60 g/t gold over 25.25 m; October 2019) and 20750 (BR-068,

which returned 10.58 g/t gold over 21.10 m; February 2020).

• A series of nine drill holes were completed within a previously undrilled gap in the

LP Fault system (formerly, the Gap zone). Highlights include drill hole BR-

120 which intersected 9.35 g/t gold over 6.50 m, including 97.50 g/t gold over 0.50

m, within a broader interval of 1.66 g/t gold over 46.10 m.

• Drill hole BR-121, completed on the same section as BR-120, intersected 4.91 g/t

gold over 6.40 m, including 18.10 g/t gold over 1.00 m, within a broader interval

of 1.07 g/t gold over 73.85 m.

• BR-120 and 121 transect the same gold zone 130 and 240 vertical metres below

previously disclosed drill hole BR-075 (December 16, 2019), which assayed 16.80

g/t gold over 4.15 m, within a broader interval of 1.25 g/t gold over 45.50 m. Results

show apparent continuity of gold mineralization over approximately 400 vertical

m from surface in this area, which remains open to extension in all directions.

While drilling to date has already traced a large open-ended envelope containing multiple

high grade intersections, skeptics have/will continue to question the LP Fault discovery’s

grade distribution—which is precisely the question Great Bear is now working to answer

through a comprehensive 2020 drill campaign designed to refine the current ‘pixelated’

understanding of the system (see below). To date the company has completed 99 holes of

a fully funded $21 MM / ~300 hole (~110,000 m) drill program focused on LP Fault

target delineation through December (the second largest drill campaign underway in

Canada after ◆Osisko Mining’s Windfall efforts). Drilling continues with 3 of 5 rigs

currently turning amid COVID-19 considerations (noting ‘mining’ [including

exploration] has been deemed ‘essential’ in Ontario). The campaign is designed to test

the LP fault over ~5 km of strike length and to a depth of ~500 m in support of an initial

inferred resource estimate in mid-2021—on 75 m centres over the greater target area,

with tighter spacing (<50 m) along key higher grade sections (which will also underpin a

higher-grade [potential starter pit?] subset estimate within the resource’s greater

envelope). We note that ‘in fill’ lateral and vertical drill spacing down to ~25 m centres

has now confirmed apparent continuity of gold mineralization on multiple drill sections

(see above; for comparison, delineation of Hemlo’s initial [inferred] resource required

drilling on <55 m centres).

◆ During the past twelve months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities for Osisko Mining Inc.


12

A walk through the current data set in Leapfrog demonstrates that, while mineralization

pinches and swells along strike, drilling to date exhibits three-dimensional continuity of

both the greater ‘lower grade’ envelope and the higher grade (multi gram +) domains

within (the best developed high grade zone appears to correspond to the LP Fault contact

itself [within 50-100 m of it])—along the LP Fault’s ~4.2 km ‘core’ strike length (tested

to a depth of ~400 m; remains open). Bottomline, drilling to date is demonstrating

(higher) grade predictability.

Great Bear currently has ~10,000 m of drill core submitted for assay, noting turnaround

time had increased to 2-5 weeks [from ~1 week] on the back of COVID staffing

reductions at the lab. However, said timing has recently improved to < 10 days. We

anticipate the company will continue to regularly release LP Fault drill results on a

‘sectional’ basis (i.e., in batches of 2-3 ‘scissor holes’) through the remainder of 2020.

The company also plans to further drill test the Dixie Limb and Hinge zones later this

year.

Delineation of the LP Fault’s grade distribution will require significant drilling.

That said, it represents a large scale open pitable target, geologically analogous to

the world class Hemlo deposit, which spans ~3.0 km of strike length (to a depth of

~1,500 m) and has produced ~23 MMoz of gold from 3 mines (Williams Lake, and

David Bell, and Golden Giant)—i.e., a potential ‘game changer’ for Great Bear

relative to the company’s neighbouring Dixie Limb and Hinge Zone targets (smaller

underground narrow-vein mining potential; albeit [locally] underpinned by

bonanza grade). Bottomline, we look to this year’s ‘major-sized’ $21 MM LP Fault

focused drill program as a pivotal effort underpinning the Great Bear story—which

stands to garner additional large-scale project potential recognition.

Figure 11 Dixie Project Drill Hole Map



13

Figure 12 LP Fault Long Section


Figure 13 LP Fault Section 20600 / 20650 Drill Hole Map



14

Dixie Project Model

Modelling ‘What If’ Large Scale World Class Potential

Conceptually, we anticipate the Dixie Project’s LP Fault is developed around a 50 ktpd

conventional open pit mining operation, averaging ~432 koz of payable gold production

per annum over a 22-year mine life starting in 2025 (strip ratio modelled at 2.0:1

[constant]). Said profile would require the delineation of a ~10.0 MMoz ‘mineable’ gold

inventory averaging 0.8 g/t (implying a 389 MMt ‘mineable’ resource)—in our opinion a

realistic, albeit (very) large scale, target given the open-ended nature of gold

mineralization drilled to date, which already spans +4 km in strike length and remains

open at depth (see above). We acknowledge that our conceptual mine plan is highly

sensitive/leveraged to modelled gold grade—a key parameter Great Bear is working

to ascertain through an aforementioned $21 MM 2020 drill campaign (see above).

For contextual reference, our modelled 10.0 MMoz modelled mine plan would require

delineation of an open pitable deposit spanning ~3.0 km in strike length, by ~150 m in

‘width, to a depth of ~300 m—dimensions already (more than) demonstrated by drilling

to date (see above). We also remain cognizant that LP Fault production could/would

eventually transition to an underground operation as mining progressed to depth.

However, for simplicity, our formal (conceptual) base case valuation excludes

underground development consideration.

Our model includes a 95% average life-of-mine gold recovery rate—as per preliminary

results from recent metallurgical testing, noting the LP Fault’s mineralization includes

free gold (locally coarse grained [visible]; albeit more test work is required [currently

underway]). Furthermore, our conceptual base case mine plan assumes production

during the first 3 years will target higher grade domains within the LP Fault,

averaging 2.0 g/t gold to optimize project economics (implying a ‘residual’ average

grade of 0.6 g/t gold over the mine’s remaining 19-year life; see below). As such,

gold production during this period stands to average 1,115 koz per annum (i.e.,

158% higher than the modelled life-of-mine average figure noted above).

Our model assumes an initial capital cost of US$1.5 B and arguably conservative onsite

operating cost assumptions (mining, processing, and administrative), which totals $35/t

milled (life-of-mine average). This operating cost profile translates into a life-of-mine

average total (C1) gold cash cost of US$850/oz (including US$350/oz during the

conceptual mine plan’s first 3 years of higher grade throughput; see above), and a

life-of-mine average AISC of US$1,000/oz (including US$425/oz during the first 3

years of production; assuming sustaining capital expenditures average ~US$50 MM

per annum over said modelled life)—including royalties (see below). We note

comparable large-scale gold operations in Canada are underpinned by similar capital and

operating cost profiles. In particular, a June 2018 technical report pertaining to the Detour

mine in northern Ontario pegs the +60 ktpd operation’s remining life-of-mine average

onsite operating cost at ~$23/t milled (including a unit mining cost of ~$3/t mined). The

large scale open pit mine was recently acquired by Kirkland Lake in a premium $4.9 B

(all-share) transaction (refer to November 26, 2019, Cormark Morning Note). In Quebec,

Agnico Eagle/Yamana’s +55 ktpd Canadian Malartic mine reported a similar onsite

operating cost of ~$26/t in 2019.

http://dashboard.cormark.com/servlet/display.pdf?repid=RGray%40cormark%2Ecom_20191125214933409&userid=0


15

Our model, underpinned by Cormark’s formal commodity price forecast, which

includes a long-term gold price of US$1,600/oz, generates an after-tax project

NAV7% of US$1,250 MM (38% IRR; 2020 forward basis with production start-up

in 2025). The Dixie Project will likely require a number of drill campaigns, (beyond this

year’s +110,000 m effort detailed above) to fully delineate the LP Fault ahead of a

construction decision—questioning the ‘conservatism’ of our modelled 2025 production

start-up timing, which we acknowledge is in part an arbitrary figure designed to avoid

NAV ‘obliteration’ in the context of a risk-adjusted 7% discount rate. Further to this

point, note our conceptual model generates a US$1,531 MM after-tax project NAV7% on

a 2023 basis (i.e., on a ‘construction year 1’ forward basis).

Figure 14 Dixie Project NAV Sensitivity to Gold Price and Discovery Size (US$ MM)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

6.0 - $138 $600 $1,053 $1,494 $1,934

7.0 - $307 $813 $1,309 $1,789 $2,224

8.0 - $439 $983 $1,510 $1,981 $2,450

9.0 - $558 $1,143 $1,653 $2,154 $2,654

10.0 $42 $663 $1,250 $1,779 $2,306 $2,833

11.0 $104 $757 $1,337 $1,890 $2,440 $2,990

12.0 $160 $841 $1,414 $1,987 $2,558 $3,128

Dis

co

ve

ry S

ize

(MM

oz)

After-tax project NAV7% (2020 forward basis with production start-up in 2025). Based on a 0.8 g/t life-of-mine average gold grade and a 50 ktpd (mill) LP Fault-only open pit mine plan. Source: Cormark Securities Inc.

Figure 15 Corporate NAV Sensitivity to Gold Price and Discovery Size (C$ per share)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

6.0 - $3.42 $9.02 $14.50 $19.84 $25.18

7.0 - $5.35 $11.47 $17.49 $23.30 $28.57

8.0 - $6.78 $13.37 $19.75 $25.45 $31.14

9.0 $0.93 $8.13 $15.22 $21.40 $27.47 $33.52

10.0 $1.81 $9.34 $16.45 $22.85 $29.24 $35.62

11.0 $2.50 $10.41 $17.44 $24.13 $30.80 $37.46

12.0 $3.13 $11.37 $18.32 $25.26 $32.17 $39.08

Dis

co

ve

ry S

ize

(MM

oz)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025; 120 MM fully

financed FD share count). Based on a 0.8 g/t life-of-mine average gold grade and a 50 ktpd (mill) LP Fault-only open pit mine plan. Source: Cormark Securities Inc.

Figure 16 Dixie Project NAV Sensitivity to Gold Price and LOM Head Grade (US$ MM)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

0.50 - - - $466 $1,020 $1,545

0.60 - - $445 $1,015 $1,576 $2,077

0.70 - $296 $890 $1,462 $1,970 $2,476

0.80 $42 $663 $1,250 $1,779 $2,306 $2,833

0.90 $354 $972 $1,518 $2,064 $2,609 $3,153

1.00 $624 $1,191 $1,752 $2,313 $2,873 $3,432

1.10 $819 $1,393 $1,967 $2,542 $3,114 $3,687

1.20 $986 $1,572 $2,158 $2,744 $3,328 $3,912 LO

M G

old

He

ad

Gra

de

(g/t

)

After-tax project NAV7% (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery and a 50 ktpd (mill) LP Fault-only open pit mine plan. Source: Cormark Securities Inc.


16

Figure 17 Corporate NAV Sensitivity to Gold Price and LOM Head Grade (C$ per share)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

0.50 - - - $6.67 $13.37 $19.73

0.60 - - $6.51 $13.42 $20.21 $26.27

0.70 - $4.80 $12.00 $18.93 $25.07 $31.21

0.80 $1.81 $9.34 $16.45 $22.85 $29.24 $35.62

0.90 $5.72 $13.20 $19.82 $26.43 $33.03 $39.62

1.00 $9.02 $15.89 $22.69 $29.48 $36.26 $43.03

1.10 $11.48 $18.44 $25.40 $32.35 $39.29 $46.22

1.20 $13.56 $20.65 $27.75 $34.85 $41.93 $49.00 LO

M G

old

He

ad

Gra

de

(g/t

)

Fully financed after-tax corporate NAV7% (2020 forward basis with production start-up in 2025; 120 MM fully

financed FD share count). Based on a 10 MMoz ‘in-situ’ gold discovery and a 50 ktpd (mill) LP Fault-only open pit mine plan. Source: Cormark Securities Inc.

Figure 18 Dixie Project NAV Sensitivity to LOM and Initial Head Grade (US$ MM)

LOM Head Grade (g/t)

0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20

1.00 - - $364 $706 $1,013 $1,279 $1,523 $1,739

1.25 - $107 $520 $849 $1,145 $1,404 $1,640 $1,849

1.50 - $224 $667 $985 $1,272 $1,522 $1,752 $1,955

1.75 - $338 $793 $1,117 $1,395 $1,637 $1,859 $2,056

2.00 - $445 $890 $1,250 $1,518 $1,752 $1,967 $2,158

2.25 $29 $541 $987 $1,367 $1,641 $1,867 $2,075 $2,259

2.50 $145 $635 $1,081 $1,448 $1,763 $1,981 $2,182 $2,359

2.75 $261 $729 $1,156 $1,528 $1,848 $2,093 $2,287 $2,459

3.00 $377 $822 $1,231 $1,602 $1,916 $2,182 $2,393 $2,558

Residual Grade

< 0.30 g/t

0.30-0.50 g/t

0.50-0.70 g/t

0.70-0.90 g/t

0.90-1.10 g/t

> 1.10 g/t

Init

ial H

ea

d G

rad

e (

g/t

)

After-tax project NAV7% at US$1,600/oz gold (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery and a 50 ktpd (mill) LP Fault-only open pit mine plan. Initial head grade pertains to feed during the first 3 years of modelled mine life. Residual head grade pertains to feed during year 4+ of modelled mine life. Source: Cormark Securities Inc.


17

Figure 19 Corporate NAV Sensitivity to LOM and Initial Grade (C$ per share)

LOM Head Grade (g/t)

0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20

1.00 - $0.41 $5.62 $9.86 $13.70 $16.96 $20.02 $22.68

1.25 - $2.42 $7.52 $11.59 $15.30 $18.46 $21.43 $24.01

1.50 - $3.84 $9.29 $13.24 $16.83 $19.90 $22.78 $25.29

1.75 - $5.22 $10.82 $14.84 $18.33 $21.29 $24.09 $26.52

2.00 - $6.51 $12.00 $16.45 $19.82 $22.69 $25.40 $27.75

2.25 $1.37 $7.67 $13.17 $17.86 $21.31 $24.08 $26.70 $28.98

2.50 $2.78 $8.81 $14.31 $18.84 $22.78 $25.45 $27.99 $30.19

2.75 $4.18 $9.95 $15.22 $19.81 $23.82 $26.82 $29.27 $31.40

3.00 $5.59 $11.08 $16.12 $20.71 $24.63 $27.89 $30.55 $32.60

Residual Grade

< 0.30 g/t

0.30-0.50 g/t

0.50-0.70 g/t

0.70-0.90 g/t

0.90-1.10 g/t

> 1.10 g/t

Init

ial H

ea

d G

rad

e (

g/t

)

Fully financed after-tax corporate NAV7% at US$1,600/oz gold (2020 forward basis with production start-up in 2025; 120 MM fully financed FD share count). Based on a 10 MMoz ‘in-situ’ gold discovery and a 50 ktpd (mill) LP Fault-only open pit mine plan. Initial head grade pertains to feed during the first 3 years of modelled mine life. Residual head grade pertains to feed during year 4+ of modelled mine life. Source: Cormark Securities Inc.

Figure 20 Dixie Project NAV Sensitivity to OPEX and CAPEX (US$ MM)

Opex (C$/t milled)

$50 $45 $40 $35 $30 $25

$2,250 - $26 $452 $877 $1,237 $1,578

$2,000 - $162 $588 $1,013 $1,355 $1,696

$1,750 - $298 $723 $1,132 $1,473 $1,814

$1,500 - $434 $859 $1,250 $1,591 $1,932

$1,250 $114 $569 $995 $1,368 $1,709 $2,049

$1,000 $249 $702 $1,128 $1,482 $1,823 $2,164

Init

ial C

ap

ex

(US

$ M

M)

After-tax project NAV7% at US$1,600/oz gold (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery grading 0.8 g/t—mined over a 22-year LP Fault-only open pit mine life. Source: Cormark Securities Inc.

Figure 21 Dixie Project NAV Sensitivity to Mill Size and CAPEX (US$ MM)

Mill Size (tpd)

35,000 40,000 45,000 50,000 55,000 60,000

$2,250 $387 $578 $747 $877 $987 $1,082

$2,000 $512 $702 $868 $1,013 $1,122 $1,217

$1,750 $638 $824 $988 $1,132 $1,257 $1,351

$1,500 $762 $945 $1,107 $1,250 $1,378 $1,486

$1,250 $885 $1,066 $1,226 $1,368 $1,493 $1,608

$1,000 $1,008 $1,186 $1,344 $1,482 $1,607 $1,720

Init

ial C

ap

ex

(US

$ M

M)

After-tax project NAV7% at US$1,600/oz gold (2020 forward basis with production start-up in 2025). Based on a 10 MMoz ‘in-situ’ gold discovery grading 0.8 g/t (LP Fault-only open pit mine plan). For simplicity, sensitivity holds average life-of-mine onsite opex constant at $35/t milled. Source: Cormark Securities Inc.


18

Figure 22 Dixie Project Conceptual Production Profile (Cormark base case model)

$0

$300

$600

$900

$1,200

$1,500

$1,800

0

200

400

600

800

1,000

1,200

2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046

Go

ld C

as

h C

os

t(i

nc

lud

ing

ro

ya

ltie

s;

US

$/o

z)

Pa

ya

ble

Pro

du

cti

on

(ko

z)

Gold Production Total (C1) Gold Cash Cost AISC

Source: Cormark Securities Inc.

Figure 23 Dixie Project DCF Growth As Per The Time Value of Money (US$ MM)

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2020E 2022E 2024E 2026E 2028E 2030E 2032E 2034E 2036E 2038E 2040E 2042E 2044E 2046E

Aft

er-

Ta

x P

roje

ct

NA

V7

%(U

S$

MM

)



19

Figure 24 Dixie Project Comparables

Project Dixie Hemlo Detour Lake Côté Phoenix Windfall Lake Kemess UG

Status Exploration Operation Operation FS PEA PEA FS

Study Date Cormark Model April 2017 June 2018 Nov. 2018 Aug. 2019 July 2018 Feb. 2016

Owner/Operator Great Bear Barrick Kirkland Lake Iamgold Rubicon Osisko Mining Centerra

P&P Reserve (100% basis)

P&P Reserve, MMt - 11 477 233 - - 107

P&P Reserve Gold Grade, g/t - 3.90 0.97 0.97 - - 0.54

P&P Reserve Gold, MMoz - 1.3 14.8 7.3 - - 1.9

P&P Reserve AuEq Grade, g/t - 3.90 0.97 0.97 - - 0.91

P&P Reserve AuEq, MMoz - 1.3 14.8 7.3 - - 3.1

M&I Resource (100% basis; excl. of reserve)

M&I Resource, MMt - 32 115 122 4 4 139.0

M&I Reserve Gold Grade, g/t - 1.73 1.19 0.68 6.45 9.10 0.33

M&I Reserve Gold, MMoz - 1.8 4.4 2.7 0.8 1.2 1.5

M&I Reserve AuEq Grade, g/t - 1.73 1.19 0.68 6.45 9.10 0.79

M&I Reserve AuEq, MMoz - 1.8 4.4 2.7 0.8 1.2 3.5

Inferred Resource (100% basis)

Inferred Resource, MMt - 9 44 113 2 15 22

Inferred Resource Gold Grade, g/t - 3.50 0.91 0.67 6.97 8.40 0.40

Inferred Resource Gold, MMoz - 1.0 1.3 2.4 0.5 3.9 0.3

Inferred Resource AuEq Grade, g/t - 3.50 0.91 0.67 6.97 8.40 0.70

Inferred Resource AuEq, MMoz - 1.0 1.3 2.4 0.5 3.9 0.5

Timing

Production Start-Up (milling), year 2025 In Production In Production - - - -

Mine Life, years 22 +8 +20 16 8 8 13

Mine / Mill Type Open Pit / OP + UG / Open Pit / Open Pit / Underground / Underground/ Underground/

Gravity + CIP Gravity + CIP Gravity + CIP Gravity + CIP Gravity + CIL Gravity + CIL Froth Flotation

Production (100% basis)

Total Mineable, MMt 388.8 15.8 446.6 203.0 3.0 8.9 107.4

Strip Ratio (excl. pre strip) 2.0 - 3.3 2.4 - - -

Mineable Gold Head Grade, g/t 0.80 1.69 0.97 0.98 5.31 6.68 0.54

Mineable Gold Inventory, MMoz 10.0 0.9 14.8 6.4 0.5 1.9 1.9

Mineable AuEq Head Grade, g/t 0.80 1.69 0.97 0.98 5.31 6.71 0.91

Mineable AuEq Inventory, MMoz 10.0 0.9 14.8 6.4 0.5 1.9 3.1

Nameplate Mill Throughput, tpd 50,000 ~9,500 +60,000 36,000 1,800 3,200 25,000

LOM Ave. Metallurgical Gold Recovery, % 95% 93% 93% 92% 95% 92% 72%

LOM Ave. Annual Payable Gold Production, koz 432 ~100 ~660 367 80 218 106

LOM Total Payable Gold Production, MMoz 9.5 0.8 13.7 5.9 0.5 1.8 1.4

LOM Ave. Annual Payable AuEq Production, koz 432 ~100 ~660 367 80 219 196

LOM Total Payable AuEq Gold Production, MMoz 9.5 0.8 13.7 5.9 0.5 1.8 2.5

Operating Costs

LOM Ave. Site G&A Cost, C$/t milled $5 $8 $3 $2 $8 $18 $3

LOM Ave. Undergr. Min. Cost, C$/t mined - $71 - - $88 $64 $6

LOM Ave. Open Pit Min. Cost, C$/t mined $5 $5 $3 $3 - - -

LOM Ave. Milling Cost, C$/t milled $15 $13 $9 $8 $33 $27 $6

LOM Ave. Other Cost, C$/t milled $2 - - - - $18 $1

LOM Ave. Onsite Op. Cost, C$/t milled $35 $55 $23 $19 $129 $126 $17

LOM Ave. Total (C1) Gold Cost, US$/oz NoC $850 $800-$850 $646 $594 $624 $522 $94

LOM Ave. Gold AISC, US$/oz NoC $1,000 $1,200-$1,250 $843 $694 $881 $704 $244

Capital Costs (100% basis)

Initial Capital Cost, C$ MM $2,175 - - $1,666 $101 $397 $524

LOM Capital Cost, C$ MM $3,770 - $3,344 $2,230 $255 $809 $867

Project Valuation (100% basis)

Long-term Forecast Gold Price, US$/oz $1,600 - $1,300 $1,250 $1,325 $1,300 $1,250

After-Tax Cumulative Cash Flow, C$ MM $4,254 - $6,508 $2,095 $191 $613 $746

Project NAV Discount Rate, % 7% - - 5% 5% 5% 5%

After-Tax Project NAV, C$ MM $1,812 - - $1,025 $135 $413 $289

After-Tax Project IRR, % 37.5% - - 14.5% 40.2% 32.7% 12.6%

Payback Period, years ~1.5 - - 4.5 3.9 3.7 3.9

Source: Company reports and Cormark Securities Inc.


20

Grade Is King …But First You Have To Figure Out What It Is

The LP Fault has garnered significant market attention on the back of a series of high grade

(multi-gram) gold intersections (see above). That said, our conceptual model looks to exploit

the larger scale open pitable potential of the near (at) surface discovery. While drilling

continues to refine Great Bear’s understanding of the LP Fault’s grade distribution, including

apparent higher-grade continuity across neighbouring sections, we remain cognizant that a

larger scale open pit envelope will inevitably entail the extraction of lower grade

mineralization. Hence, an estimate of grade distribution is key to assessing large scale

potential, which in turn is a key objective the company’s 300 hole / 110,000 m 2020E

drill campaign (see above). The Dixie Project’s (LP Fault) maiden National Instrument 43-

101 compliant resource estimate expected in mid-2021 stands to provide the first formal

assessment of grade.

In the meantime, we note that publicly disclosed raw drill data spanning 118 LP Fault drill

holes entail an average intercept thickness and weighted average gold grade of ~18.7 m and

~1.2 g/t respectively (uncapped)—cognizant said database also includes 10 LP Fault drill

holes that not return any significant values. On closer (albeit simplistic ‘expanded’) inspection

of the data, we also note that a significant number of samples (~12%) are underpinned by

higher gold grades (> 10.0 g/t).

In lieu of a formal resource model, we acknowledge our formal valuation is particularly

sensitive to grade assumptions. For illustrative purposes, a 0.25 g/t change in assumed ‘up

front’ gold grade (maintaining a life-of-mine average grade of 0.80 g/t) impacts our modelled

after-tax project NAV7% by ~US$125 MM (~10%)—in turn impacting our modelled fully

financed after-tax corporate NAV7% by ~$1.50 per share. Similarly, a 0.10 g/t change in

assumed life-of-mine gold grade (maintaining an ‘up front’ ‘grade at 2.0 g/t) impacts our

modelled after-tax project NAV7% and fully financed after-tax corporate NAV7% by

~US$315 MM (~25%) and ~$3.90 per share respectively (see above).

Figure 25 LP Fault Grade Distribution – Raw Data Histograms

Grade Uncapped

0

50

100

150

200

250

0-5

5-1

0

10-1

5

15-2

0

20-2

5

25-3

0

30-3

5

35-4

0

40-4

5

45-5

0

>5

0

Co

un

ts

Grade x Width (g/t x m)

Condensed Dataset

0

50

100

150

200

250

0-5

5-1

0

10-1

5

15-2

0

20-2

5

25-3

0

30-3

5

35-4

0

40-4

5

45-5

0

>5

0

Co

un

ts


Expanded Dataset

Grade Capped @ 100g/t

0

50

100

150

200

250

0-5

5-1

0

10-1

5

15-2

0

20-2

5

25-3

0

30-3

5

35-4

0

40-4

5

45-5

0

>5

0

Co

un

ts


Expanded Dataset

Source: Cormark Securities Inc. (after public disclosed dataset provide d by Great Bear Resources Ltd.)

0

50

100

150

200

250

0-5

5-1

0

10-1

5

15-2

0

20-2

5

25-3

0

30-3

5

35-4

0

40-4

5

45-5

0

>5

0

Co

un

ts


Condensed Dataset

Drill Holes 108

Samples 267

Max (g/t x m) 423.43

Min (g/t x m) 0.08

Median (g/t x m) 7.63

Mean (g/t x m) 22.62

STD (g/t x m) 46.31

CV (g/t x m) 2.0

Drill Holes 108

Samples 465

Max (g/t x m) 290.26

Min (g/t x m) 0.06



STD (g/t x m) 22.06

CV (g/t x m) 1.7

Drill Holes 108

Samples 267

Max (g/t x m) 423.43

Min (g/t x m) 0.08



STD (g/t x m) 46.31

CV (g/t x m) 2.0

Drill Holes 108

Samples 465

Max (g/t x m) 150.00

Min (g/t x m) 0.06



STD (g/t x m) 17.85

CV (g/t x m) 1.4


21

Figure 26 LP Fault Grade Distribution – Raw Data Summary

Condensed Expanded Condensed Expanded

Total # of LP Fault drill holes in database 118 118 118 118

Total # of LP Fault drill holes with reported values 108 108 108 108

Total # of LP Fault intercepts used in the analysis 267 465 267 465

Max intercept width (m) 149.20 106.10 149.20 106.10

Min intercept width (m) 0.40 0.40 0.40 0.40

Average intercept width (m) 18.68 10.72 18.68 10.72

Max intercept gold grade (g/t) 48.67 241.88 48.67 100.00

Min intercept gold grade (g/t) 0.12 0.06 0.12 0.06

Average un-weighted intercept gold grade (g/t) 2.14 6.88 2.14 6.09

Max intercept gold grade x width (g/t x m) 423.4 290.3 423.4 150.0

Min intercept gold grade x width (g/t x m) 0.1 0.1 0.1 0.1

Average intercept gold grade x width (g/t x m) 22.6 13.0 22.6 12.4

Average weighted 'envelope' gold grade g/t 1.21 1.21 1.21 1.15

Grade Uncapped Grade Capped At 100 g/t

Source: Cormark Securities Inc. (after publicly disclosed dataset provided by Great Bear Resources Ltd.)


22

Dixie Limb And Hinge Zones Offer High-Grade Satellite Potential To Our Conceptual Large Scale Mine Plan

Compelling base case valuation aside, we remain cognizant that the higher grade (albeit

smaller scale) Dixie Limb and Hinge zones neighbouring the LP Fault stand to enhance

our modelled Dixie Project production profile—namely in the form of supplemental

higher grade ‘satellite’ feed. For illustrative purposes, the integration of a (concurrent)

2,500 tpd underground operation (2028 start-up), exploiting a 2.0 MMoz ‘in-situ’ gold

inventory grading 4.0 g/t would boost the Dixie Project’s life-of-mine average production

profile to ~500 koz per annum in our conceptual model (16% higher than the open pit

only construct) and decrease the project’s life-of-mine average total (C1) gold cash cost

and AISC to US$800/oz and US$950/oz respectively (including royalties). Said

parameters would in turn increase our modelled after-tax project NAV7% and fully

financed after-tax corporate NAV7% by ~US$332 MM (~27%) and $4.00 per share

(~24%) respectively.

Figure 27 Dixie Limb and Hinge Zones Cross Section



23

Royalty Spinco Adds Another Story Dimension

Potentially Valuable Royalty Warrants Attention

In late January, Great Bear announced a 2.0% net smelter return (NSR) royalty

agreement pertaining to the Dixie Project with a newly incorporated wholly-owned

subsidiary named Great Bear Royalties Corp. Following shareholder approval in April,

Great Bear transferred the royalty, ~$1 MM in marketable securities, and $0.5 MM in

cash into Great Bear Royalties, which together comprise the initial assets for the new

royalty company—allowing shareholders at the time to diversify long-term value

exposure through the royalty interest. As per the Plan of Arrangement, Great Bear

shareholders received one share of Great Bear Royalties for every four shares of Great

Bear held on the Record Date (May 5, 2020; warrants and options also adjusted as per the

arrangement). Great Bear Royalties has not (initially) been listed on a public stock

exchange but will operate as a reporting issuer—evaluating other strategic opportunities

to enhance value for the company’s shareholders. Bottomline, the royalty spinco

provides exposure to the Dixie Project’s future production upside, even if Great

Bear is not the eventual developer—a ‘practical’ consideration given the potential

‘major’ scale of the LP Fault discovery (see below).

Despite the royalty spinout, Great Bear’s share price actually traded up ~2% on May 5th

(arguably on the back of positive drill results reported the day before [e.g., drill hole BR-

118; see above] and gold price momentum), suggesting the equity’s 45% increase during

the preceding 2 weeks did not directly reflect buying interest focused (exclusively) on

gaining Great Bear Royalties exposure. Said share price movement (or relative lack

thereof on May 5th) implies the market ascribed little (no) value to Great Bear Royalties.

However, we note the underlying 2.0% NSR royalty stream generates a US$127 MM

pre-tax NAV7% in our base case model (2020 forward basis; see above), which is

predicated in part on the delineation of a 10.0 MMoz mineable inventory at the LP Fault

gold and US$1,600/oz gold. Again, we acknowledge our model is conceptual in nature

and the ‘actual’ value of said royalty stream would ultimately depend on a myriad of

factors that include deposit size, throughput scale, grade profile (higher grade years and

life-of-mine average), gold price, etc. Nevertheless, as a ‘bookend’ exercise, we would

argue a 6.0-12.0 MMoz mineable inventory would stand to generate ~US$178-355 MM

in (pre-tax) life-of-mine cumulative cash flow—estimates that would entail a ‘maximum’

~US$83-147 MM royalty purchase price for a potential acquiror looking to ‘bank’ a

~10% return (IRR; again, a dynamic estimate given the various input assumptions noted

above—assumptions that will take time to refine in the form of a maiden resource

estimate, PEA, PFS, and/or FS work).

That said, one could argue an ‘in-situ’ valuation is more appropriate in the context of the

LP Fault’s current ‘green field’ status, noting the market currently values peer group

explorers at ~US$50/oz ‘in the ground’, which implies a significantly lower

(risk/uncertainty ’adjusted’ [handicapped]) valuation for the LP Fault discovery and the

2.0% NSR royalty underpinning the Dixie Project.


24

Figure 28 Cumulative LOM Pre-Tax Royalty (2.0% NSR) Cash Flow Sensitivity (US$ MM)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

6.0 $132 $155 $178 $200 $223 $246

7.0 $154 $181 $207 $234 $260 $287

8.0 $176 $206 $237 $267 $298 $328

9.0 $198 $232 $266 $301 $335 $369

10.0 $220 $258 $296 $334 $372 $410

11.0 $242 $284 $326 $367 $409 $451

12.0 $264 $310 $355 $401 $446 $492

Dis

co

ve

ry S

ize

(MM

oz)

Based on a 0.8 g/t life-of-mine average gold grade (including 2.0 g/t during year 1 to 3) and a 50 ktpd (mill) open pit mine plan. Source: Cormark Securities Inc.

Figure 29 Maximum Royalty Price For An Acquirer To Generate A 10% IRR (US$ MM)

Gold Price (US$/oz)

$1,200 $1,400 $1,600 $1,800 $2,000 $2,200

6.0 $62 $72 $83 $93 $104 $114

7.0 $67 $78 $90 $101 $112 $124

8.0 $71 $83 $95 $107 $120 $132

9.0 $74 $87 $100 $113 $125 $138

10.0 $77 $91 $104 $117 $130 $144

11.0 $90 $106 $122 $137 $153 $168

12.0 $109 $128 $147 $166 $184 $203

Dis

co

ve

ry S

ize

(MM

oz)

Sensitivity assumes said ‘hypothetical’ royalty acquisition is made in 2020 followed by production start-up in 2025. Based on a 0.8 g/t life-of-mine average gold grade (including 2.0 g/t during year 1 to 3) and a 50 ktpd (mill) open pit mine plan. Source: Cormark Securities Inc.

Figure 30 Maximum Royalty Acquisition Price – Discovery Size Versus Target IRR (US$ MM)

IRR

15.0% 12.5% 10.0% 7.5% 5.0%

6.0 $60 $70 $83 $99 $119

7.0 $63 $75 $90 $108 $132

8.0 $66 $79 $95 $117 $145

9.0 $68 $82 $100 $124 $156

10.0 $70 $85 $104 $130 $166

11.0 $87 $102 $122 $149 $187

12.0 $111 $126 $147 $174 $213

Dis

co

ve

ry S

ize

(MM

oz)

Sensitivity assumes said ‘hypothetical’ royalty acquisition is made in 2020 followed by production start-up in 2025. Based on a 0.8 g/t life-of-mine average gold grade (including 2.0 g/t during year 1 to 3) and a 50 ktpd (mill) open pit mine plan. Based on a gold price of US$1,600/oz. Source: Cormark Securities Inc.


25

LP Fault Comparables – Or Lack Thereof(?)

Benchmarking Large Scale World Class Potential

There is arguably no comparison to the LP Fault’s scale potential (even relative to other

large/‘world class’ examples), noting:

• The LP Fault’s envelope in long section (~4.2 km ‘core’ strike length tested to ~400

m depth) is comparable to that of Yamana/Agnico’s Malartic open pit (~12 MMoz at

~1 g/t; the largest open pit gold mine in Canada, which remains open at depth).

• Geologically speaking, the LP Fault’s best analog is the world class Hemlo deposit in

Ontario, which spans ~3.0 km of strike length (to a depth of ~1,500 m) and has

produced ~23 MMoz of gold form 3 mines (Williams Lake, and David Bell, and

Golden Giant)—i.e., the LP Fault is a potential ‘game changer’ for Great Bear

(noting the system has already been interpreted to extend over ~18 km of

prospective strike length on the company’s property and remains open at depth)

relative to its neighbouring Dixie Limb and Hinge Zone targets (smaller underground

narrow-vein mining potential; albeit [locally] underpinned by bonanza grade that

remains open in multiple directions).


26

Figure 31 Benchmarking The LP Fault’s Potential – Canadian Malartic Summary

Source: Great Bear Resources Ltd. (modified after Agnico Eagle Mines Ltd.)

Figure 32 Benchmarking The LP Fault’s Potential – Canadian Malartic Comparison

Deposit sections shown at similar (not identical) scales. Source: Great Bear Resources Ltd. (modified after Agnico Eagle Mines Ltd.)


27

Figure 33 Benchmarking The LP Fault’s Potential – Hemlo Summary

Source: Great Bear Resources Ltd. (modified after Barrick Gold Corp.)

Figure 34 Benchmarking The LP Fault’s Potential – Hemlo Comparison

Deposit sections shown at similar (not identical) scales. Source: Great Bear Resources Ltd. (modified after Barrick Gold Corp.)


28

Project Financing Considerations

Large Scale Development Potential Comes At A Price

Great Bear’s current ~$23 MM cash balance stands to (more than) fund the company’s

comprehensive $21 MM 2020 exploration program detailed above. Said balance includes

a ~$10 MM hard dollar position and ~$13 MM in flow through funding. An additional

~$4 MM is expected via the exercise of in-the-money warrants that are set to expire this

year—largely held by Great Bear’s management and one of the company’s larger

shareholders (Rob McEwan). However, the company will have to source additional

funding to advance the Dixie project (LP Fault). To this extent, our model includes two

sequential US$20 MM ‘interim’ financings priced at $10.50 and $12.50 per share to fund

additional drilling, technical (through FS), and permitting work in support of a

construction decision over the coming ~3 years. Our model also assumes development of

a large scale (US$1.5 B initial capex) open pit operation centred on the LP Fault (see

above) is funded through a 60:40 debt:equity structure, with the equity component priced

at $14.50 per share (resulting in a ‘pro forma’ fully diluted share count of 120 MM;

119% dilution relative to Great Bear’s current capital structure).

Figure 35 Great Bear Capital Structure

Strike Value Expiry

(C$) (C$ MM) Date

Total Shares OS 48,032,628

Warrants 2,239,230 $1.65 $3.7 2020

Options 4,367,500 $3.06 $13.4 2021-2025

Total Shares FD 54,639,358

Number (MM) % Number (MM) %

(basic) (basic) (FD) (FD)

1832 Asset Management 6.0 12% 6.0 11%

Robert McEwen 2.7 6% 2.7 5%

Van Eck Associates 1.6 3% 1.6 3%

Earth Resource Investment 0.7 1% 0.7 1%

Craton Capital 0.2 0% 0.2 0%

Management & Directors 4.8 10% 9.2 17%

Total Major Shareholders 16.0 33.2% 20.3 37.2%

Recent Equity Financings

Major Shareholders

Number

Nov. 2019 - C$16.7 MM bought deal PP (2.0 MM flow-through shares @ C$8.35/share).

Sept. 2018 - C$10.1 MM PP (6.9 MM units @ C$1.45/unit; incl. 1/2 warrant @ C$1.75 strike for 2 years).

July 2019 - C$10.9 MM bought deal PP (2.0 MM flow-through shares @ C$5.45/share).

Nov. 2018 - C$3.5 MM PP (1.0 MM flow-through shares @ C$3.50/share).



29

Figure 36 Great Bear Fully Financed Capital Structure (Cormark model)

Amount Price Shares

Year Quarter (US$ MM) (C$/sh) (MM)

Current OS Share Capital 48

Current FD Share Capital 55

Modelled Interim Equity Financing 1 2021 Q1 $20 $10.50 3

Modelled Interim Equity Financing 2 2022 Q1 $20 $12.50 2

Modelled Dixie Equity Financing 2023 Q1 $600 $14.50 60

Modelled Fully Financed FD Share Capital 120


Figure 37 Implied Target Sensitivity to LP Fault Equity Financing Price

Issue Shares Fully Financed Fully Financed AT Corp. Implied Target

Price Issued FD Shares NAV7% per FD Share Price per Share

(C$) (MM) (MM) (C$) (C$)

$16.50 53 112 $17.51 $18.00

$15.50 56 116 $17.00 $17.00

$14.50 60 120 $16.45 $16.50

$13.50 64 124 $15.86 $16.00

$12.50 70 129 $15.23 $15.50

Implied target price is based on a 1.0x multiple to after-tax corporate NAV7%. Source: Cormark Securities Inc.

Given the Dixie Project’s (LP Fault) exploration status, we have not included any

provision for potential strategic partnership(s) or project/stream monetization despite the

‘major’ scale of our conceptual model. However, we would not be surprised to see the

asset garner ‘corporate attention’ as exploration drilling, permitting, and development

progress.


30

Financial Forecast

Figure 38 Financial Forecast (Cormark model)

2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Commodity Prices

Gold Price, US$/oz $1,595 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600

C$/US$ FX Rate 1.42 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45

Average Shares O/S, MM 48 50 53 106 113 113 113 113 113 113 113

Metal Sales

Gold, koz - - - - - 1,115 1,115 1,115 336 336 336

Total Gold (C1) Cash Cost (IR), US$/oz - - - - - $350 $350 $350 $1,150 $1,150 $1,150

Year End Balance Sheet

Cash, US$ MM $11 $28 $46 $793 $41 $746 $1,455 $2,150 $2,050 $1,961 $1,883

Working Capital, US$ MM $9 $27 $44 $792 $39 $745 $1,454 $2,149 $2,049 $1,960 $1,881

Long-term Debt, US$ MM - - - $900 $900 $810 $720 $630 $540 $450 $360

Financials

Net Revenue, US$ MM - - - - - $1,784 $1,784 $1,784 $538 $538 $538

Operating Costs, US$ MM - - - - - $(414) $(414) $(414) $(389) $(389) $(389)

Depreciation, US$ MM - - - - - $(113) $(113) $(113) $(113) $(113) $(113)

Corporate G&A, US$ MM $(3) $(3) $(3) $(3) $(3) $(20) $(20) $(20) $(20) $(20) $(20)

Exploration, US$ MM - - - - - - - - - - -

Earnings, US$ MM $(3) $(3) $(3) $(3) $(3) $701 $711 $722 $(73) $(62) $(51)

EPS, US$ $(0.05) $(0.05) $(0.05) $(0.02) $(0.02) $6.19 $6.29 $6.38 $(0.64) $(0.55) $(0.46)

Current Price / EPS - - - - - 1.2x 1.2x 1.2x - - -

Target Price / EPS - - - - - 1.8x 1.8x 1.8x - - -

OCF Before WC Changes, US$ MM $(3) $(3) $(3) $(3) $(3) $948 $940 $916 $110 $110 $110

CFPS, US$ $(0.05) $(0.05) $(0.05) $(0.02) $(0.02) $8.38 $8.31 $8.09 $0.97 $0.97 $0.97

Current Price / CFPS - - - - - 0.9x 0.9x 0.9x 7.8x 7.8x 7.8x

Target Price / CFPS - - - - - 1.4x 1.4x 1.4x 11.7x 11.7x 11.7x

CAPEX, US$ MM - - - $(750) $(750) $(50) $(50) $(50) $(50) $(50) $(50)

Investing Cash Flow, US$ MM - - - $(750) $(750) $(50) $(50) $(50) $(50) $(50) $(50)

Proceeds From Equity, US$ MM - $20 $20 $600 - - - - - - -

Proceeds From Debt, US$ MM - - - $900 - - - - - - -

Debt Interest Payment, US$ MM - - - - - $(102) $(91) $(81) $(70) $(59) $(48)

Debt Principal Repayment, US$ MM - - - - - $(90) $(90) $(90) $(90) $(90) $(90)

Financing Cash Flow, US$ MM - $20 $20 $1,500 - $(192) $(181) $(171) $(160) $(149) $(138)

Free Cash Flow, US$ MM $(3) $18 $18 $748 $(753) $706 $709 $695 $(100) $(89) $(78)

FCFPS, US$ $(0.05) $0.35 $0.33 $7.08 $(6.65) $6.24 $6.26 $6.14 $(0.88) $(0.79) $(0.69)



31

Figure 39 Corresponding Dixie Project (LP Fault) Production Profile (100% basis)

Dixie (100% owned) LOM 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Open Pit Ore Mined, MMt 389 - - - - 18 18 18 18 18 18

Open Pit Waste Mined, MMt 758 - - 25 25 36 36 36 36 36 36

Open Pit Strip Rat. (ex. pre strip) 2.0 - - - - 2.0 2.0 2.0 2.0 2.0 2.0

Underground Ore Mined, MMt - - - - - - - - - - -

Total Ore Mined, MMt 389 - - - - 18 18 18 18 18 18

Ore Milled, MMt 389 - - - - 18 18 18 18 18 18

Average Gold Head Grade, g/t 0.8 - - - - 2.0 2.0 2.0 0.6 0.6 0.6

Average Gold Recovery, % 95% - - - - 95% 95% 95% 95% 95% 95%

Payable Gold Production, koz 9,500 - - - - 1,115 1,115 1,115 336 336 336

Onsite Opex, C$/t milled $35 - - - - $35 $35 $35 $35 $35 $35

Total (C1) Gold Cash Cost, US$/oz (IR) $850 - - - - $350 $350 $350 $1,150 $1,150 $1,150

AISC, US$/oz $1,000 - - - - $425 $425 $425 $1,325 $1,325 $1,325

Total Capex, US$ MM $2,600 - - $750 $750 $50 $50 $50 $50 $50 $50



32

Dixie Project Geology

The Dixie property lies within a poorly explored/understood ‘outlier’ of the Red Lake

Greenstone Belt, which forms part of the Canadian Shield’s Archean Superior Province.

The belt has a 300 Ma history of tectono-magmatic deformation with episodes of

magmatism, sedimentation, and intense hydrothermal activity. Said greenstones are

interpreted to have evolved by eruption and deposition of volcanic sedimentary sequences

along an active continental margin (3.0 to 2.7 Ga). Continental collision with the

Winnipeg River Terrain at ~2.7 Ga (Kenoran Orogeny) led to subsequent crustal

thickening and metamorphism—a period of protracted deformation, which played a

significant role in subsequent regional epigenetic gold deposition (namely high strain

ductile D2 structure facilitating the development of shear-zone hosted vein type deposits

characteristic of the Red Lake gold camp, which has produced +25 MMoz to date). Later

brittle and semi-brittle structures occurring at micro- to macro-scales and have both

localized and offset gold mineralization.

Figure 40 Dixie Project Regional Geology Map



33

The Dixie Project hosts two principle styles of gold mineralization:

High-grade gold in quartz-carbonate veins and silica-sulphide replacement zones

(Dixie Limb and Hinge zones) typical of the neighbouring Red Lake Camp – Hosted by

mafic volcanic rocks and localized near regional-scale D2 fold axes along deformation

zones/structures that extend to depth—namely in the form of high-grade sub vertical

veins and lenses aided by contacts between rheologically distinct units (greenshist facies

metamorphism). Said geometry typically lends itself best to underground mine

development.

Figure 41 Dixie Project Regional Geophysics Map – Comparable Red Lake Structure


Figure 42 Dixie Limb and Hinge Zones Geology Map



34

Figure 43 Visible Coarse-Grained Quartz-Vein Hosted Native Gold In Dixie Limb Drill Core


High-grade disseminated gold within broad moderate to lower grade envelopes (LP

Fault) – The LP Fault exhibits a style of mineralization not observed in other parts of the

Red Lake Greenstone Belt—associated with a high degree of deformation and

widespread alteration (alteration halo extending up to 500 m; amphibolite facies

metamorphism). The fault, seismically imaged to extend to 14 km depth (see below), has

been interpreted by Great Bear to span up to 18 km of strike length on the Dixie property

(drilling, geophysics, and marker horizon mapping). High-grade gold, controlled by

structural and geological contacts, is flanked by moderate to lower-grade disseminated

mineralization that appears to have ‘bled’ into the host metasedimentary and felsic

volcanic package (defining a ‘greater envelope’ grading +0.1-0.2 g/t gold).

On closer inspection, the high strain zone, which is up to 500 m wide, is slightly oblique

to stratigraphy, intersecting multiple metasedimentary and felsic volcanic lithologies.

Drilling to date has demonstrated that nearly all high grade gold intersections (> 10 g/t)

occur within 100 m of the LP Fault ‘proper’ (80% within 50 m [i.e., fault proximity is

important]; namely within the highly deformed/fragmental ‘marker horizon’, which likely

acted as a mechanical trap/ore protolith; enhanced along said oblique fault/lithology

contacts).

Native gold is locally (very) coarse grained—in some cases ‘visible’. Gangue

mineralization is variable across the zone and locally ranges from 0% to any amount of

the following: 1-15% disseminated pyrite, 1-10% arsenopyrite (blebby and matted), 1-5%

red and yellow sphalerite, 1-5% pyrrhotite, 1-5% chalcopyrite, 1-5% galena, and 1-3%

scheelite.


35

Figure 44 Visible Coarse-Grained Disseminated Native Gold In Drill Hole BR-118 (LP Fault)


The northwest striking LP Fault, first identified by the federal government’s Lithoprobe

project, is thought to represent a re-activated deep crustal fault/hydrothermal fluid

plumbing system (similar to the neighbouring Lithoprobe-imaged deep-seated structure

thought to have fed the Red Lake camp), which remained active throughout D2 (and

subsequent) deformation events—the effects of which appear to have been more

drastically taken up by adjacent metasedimentary and felsic volcanic rocks noted above

(highly strained; e.g., mylonitic textures; folding obliterated; brittle/ductile transition)

compared to neighbouring mafic volcanic terrain more typical of the Red Lake

Greenstone Belt (and host to the Dixie Limb and Hinge zones; lower strain environment /

‘simply’ folded). In fact, it is this lithological contrast that likely led to development

of the high strain deformation ‘corridor’, flanked by the LP Fault to the southwest

and (lesser) ‘North Fault’ to the northeast. In turn, this corridor became a

favourable site for disseminated gold deposition (within said metasedimentary and

volcanic rocks) more akin to Hemlo style mineralization (see below).


36

Figure 45 LP Fault – Deep Seated Lithoprobe Signature

Source: Great Bear Resources Ltd. (after Zeng and Calvert, 2006)


37

Figure 46 LP Fault High Strain Deformation Corridor


Figure 47 LP Fault High-Strain Deformation Section



38

Other Properties

Secondary Assets Add To The Overall Story

Great Bear’s portfolio also includes the Pakwash (earning a 100% interest), Dedee

(earning a 100% interest), and Sobel (earning a 100% interest) properties also located

near Red Lake, Ontario—all of which are accessible year-round through existing roads.

• The 15,300 ha Dedee property covers the western strike extension of the D2 axial

plane, which could control the new high-grade gold discoveries at the Dixie Project,

and hosts two folded greenstone belts that mimic the geometry of the Dixie folded

greenstones. Historical drill reports note the presence of sulfides similar to those

found at the Dixie Limb that were never tested for gold. Conductive trends similar to

the Dixie Limb have also been identified in historical geophysical surveys.

• The 3,100 ha Pakwash property is located southeast of the Dixie Project and covers

portions of a regional fault structure, for which historical work has identified

coincident gold in lake sediment and gold in soil anomalies that warrant follow-up

work.

• The 3,200 ha Sobel property is located along the strike extension of the main D2 fold

axial plane, which could be a control for gold mineralization at Evolution’s Red Lake

gold mine.

While market attention (and our formal valuation) is undoubtedly focused on the Dixie

Project (LP Fault), Great Bear also plans to conduct mapping and prospecting on all three

‘secondary’ properties this year.

Figure 48 Other Properties Location Map



39

Appendix 1 – Management & Directors

Chris Taylor, M.Sc., P.Geo. - Director; President and CEO — Mr. Taylor is a structural

and economic geologist and mining entrepreneur with over 20 years of experience with

both producers and exploration companies. He has been President and Director of Great

Bear Resources Ltd since December 2010, and is currently Chairman of TSX.V listed

Kodiak Copper. Formerly a geologist with Imperial Metals (2004-2009), Mr. Taylor

graduated with a Bachelor of Science honors degree in Earth Sciences in 2000, and a

Master of Science degree in Structural Geology from Carleton University in 2003.

Bob Singh, B.Sc., P.Geo. - Director; VP Exploration — Mr. Singh has been associated

with the mineral exploration industry for 25 years and brings a strong technical

background in evaluating and exploring gold and base metal systems to the Great Bear

team. He is founder of North Face Software and serves as its President. Mr. Singh has

worked for both junior and major mining companies, and has developed new

technologies for recording and analyzing geological data. He has managed several

exploration programs in the Red Lake Gold district since 2003 and was a key member of

an exploration team exploring for sediment hosted gold deposits in British Columbia.

Calum Morrison, CFA, CPA, CA - VP Corporate Development — Mr. Morrison has

over 15 years of experience in the mining industry, having worked both in corporate

development and investment banking roles. He has managed and led negotiations on

numerous transactions with aggregate value in excess of $5 B; including acquisitions,

divestments, joint ventures, and other strategic initiatives. Most recently Mr. Morrison

was a senior member of Teck Resources’ Corporate Development team that oversaw the

origination, negotiation, and execution of numerous transactions. He is a Chartered

Financial Analyst (CFA) Charter Holder, a Chartered Professional Accountant (CPA,

CA), and holds a Bachelor of Environmental Science honours degree from Dalhousie

University.

Rob Scott, CPA, CA, CFA - Chief Financial Officer — Mr. Scott brings more than 20

years of professional experience in accounting, corporate finance, and merchant and

commercial banking and has served on the management teams and boards of a number of

Canadian publicly traded companies. He is a founder and president of Corex

Management Inc., a private company providing accounting, administration, and corporate

compliance services to privately held and publicly traded companies. Mr. Scott currently

holds senior management and board positions with a number of TSX Venture Exchange

Issuers.

Rita Bennett, B Comm. - VP Corporate Communications — Ms. Bennett brings 20

years of professional and entrepreneurial experience in marketing, communications and

business administration. She has recently held positions as Director and VP Marketing

for digital marketing agencies and mining exploration companies, and specializes in

content production and marketing. Ms. Bennett has been overseeing Great Bear’s

communications since 2017.

David Terry, Ph.D., P.Geo. - Director — Dr. Terry is a professional economic geologist,

senior executive, and corporate director with more than 25 years of international

experience in the mineral resources sector. He has held executive positions with a number

of mineral resource companies—currently serving as a director of Golden Arrow

Resources. He has also worked with a number of senior mining companies including

Boliden, Westmin, Hemlo Gold, Cominco, and Gold Fields.


40

Doug Ramshaw, B.Sc. (A.R.S.M.) - Director — For more than two decades Mr.

Ramshaw has been a senior executive (including President, CEO, and VP Business

Development) and a director of several globally active exploration companies. He

continues to spend time on field programs in the Yukon and Mexico. Earlier in his career,

Mr. Ramshaw was a mining analyst for an independent brokerage firm in London.

Tony Ricci, CPA, CA - Director — Mr. Ricci is a Chartered Professional Accountant

with 25+ years of experience serving Canadian and US listed public companies. He is a

former Director and CFO of mining companies with a combined market capitalization

near $2 B including Norsemont, Keegan (currently Asanko), Petaquilla Minerals, and

Petaquilla Copper. Mr. Ricci was formerly with KPMG and AMEC Engineering.

Advisory Board

John Robins, P.Geo. — Mr. Robins is a professional geologist with over 30 years of

experience as an independent exploration geologist and entrepreneur. Most recently he

was the founder and Chairman of Kaminak Gold which was purchased for $520 MM by

Goldcorp in 2016. Mr. Robins also founded Hunter Exploration, one of Canada’s most

successful private exploration companies. In 2008, Mr. Robins was recognized for his

achievements in mining exploration by the Association for Mineral Exploration British

Columbia with the H.H. “Spud” Huestis Award—regarded as one of the highest awards

given for mineral exploration. He has also been active in starting several successful

public exploration and development companies culminating in 2005 with his co-founding

of the Discovery Group, which includes ◆Bluestone Resources, Fireweed Zinc, and

Northern Empire (sold to Coeur in 2018) among others. Mr. Robins also sits on the Board

of several successful publicly traded exploration companies.

Jim Paterson — Mr. Paterson has 19 years of corporate experience with several North

American publicly traded companies, participating in acquisitions, joint-ventures, spin-

outs, reverse transactions, and IPOs. He is CEO and a director of ◆ValOre Metals and

served as director of Kaminak Gold from 2010 to 2016, when Goldcorp acquired

Kaminak for $520 MM. Since January 2010, Mr. Paterson has been involved as an

executive or as an active director of companies which have raised in excess of $175 MM

in equity financings.

◆ During the past twelve months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial advice regarding the stock market

insight and financial analysis regarding potential transactions for these companies


41

Appendix 2 – Hemlo Primer

LP Fault Deposit Geology 101

Hemlo spans ~3.0 km of strike length (to a depth of ~1,500 m) and has produced ~23

MMoz of gold from 3 mines (Williams Lake, and David Bell, and Golden Giant.

Numerous genetic models have been proposed for the world class deposit including

epithermal and syngenetic models, shear zone models, porphyry models, and late

replacement skarn models. The historic debate over genesis stemmed from a lack of age-

relationship understanding and uncertainty pertaining to the protoliths of the lithologic

units spatially closely associated with ore.

However, more recent work better constrains Hemlo’s genetic model—centred on

epigenetic gold mineralization in the form of stratabound replacement—either

before or during early folding (Lin, 2001). In both scenarios, geologic contacts, in

particular that of a permeable fragmental unit (arguably akin to the LP Fault’s

‘marker horizon’ directly adjacent to the fault ‘proper’ contact; see above) act as an

important ‘mechanical’ trap for upward moving gold-molybdenum bearing

magmatic fluids (complimented by neigbouring barite unit ‘chemical’ traps)—with

preferential ‘bleeding’ of said deep seated fluids into the fragmental (i.e.,

permeable) lithologies prompting disseminated gold deposition. The LP fault’s lack

of molybdenum suggests the ore fluid was of lesser magmatic affinity, in part noting the

Hemlo deposit is spatially associated with the Moose Lake porphyry—for which there is

no direct analog at the Dixie Project. Hence the LP Fault’s ‘contact’ arguably represents a

(the) key spatial vector towards additional gold (versus Hemlo’s midcrustal ‘heat source’

influenced plunge).

Figure 49 Hemlo Age Relationships

Source: Economic Geology (Lin, 2001)


42

Figure 50 Schematic Hemlo Model (not to scale)

Source: Economic Geology (Lin, 2001)


43

Appendix 3: Risks To Target

Geopolitical Risk This risk deals with policies such as permitting and tax laws that are managed by

governments and the perceived stability and investment environment. These policies can

greatly affect mining companies, and in some cases prevent mining from occurring. In

general, developing countries are perceived to present greater risk given the potential for

sudden changes in political power that can drastically change policies. Developed

countries can also present geopolitical risk issues, including indigenous opposition

and/or powerful environmental lobbies. That said, Ontario is a well-established mining

jurisdiction. According to the Fraser Institute’s 2019 survey, the province is ranked 16th

out of 76 international jurisdictions on the Investment Attractiveness Index—comparable

to a 2018 ranking of 20th out of 83.

Financing Risk Mining and exploration companies may require external capital, particularly when

building new mines. In order to finance these endeavors, equity or project dilution may

be taken in order to (partially) fund said development costs. Although our valuation

accounts for potential ‘interim’ equity dilution, it is pro forma in nature. Shareholders

may also be subordinated by lenders in order to finance a mining project.

Great Bear may have to seek additional equity and/or debt to finance the Dixie Project’s

initial capital cost requirements. Said ‘cost of capital’ in the form of equity dilution and

debt consideration is included in our formal valuation (see above). Our model also

includes interim equity financings to further advance the Dixie Project towards

construction-ready status (see above).

Exploration Risk In some cases, the market may build in expectations for exploration success before the

actual exploration work has taken place. In the event that results do not meet the

market’s expectation, the company’s shares may be negatively affected.

Our formal valuation (target price derivation) is predicated on the delineation of a 10.0

MMoz LP Fault gold inventory, which in turn underpins a conceptual large-scale open

pit mine plan—all of which is currently in lieu of a maiden National Instrument 43-101

resource estimate (expected in mid-2021; see below). Further to this point, we

acknowledge said valuation is highly sensitive/leveraged to modelled gold grade—a key

parameter Great Bear is working to ascertain through an aforementioned $21 MM 2020

drill campaign (see above). In the meantime, our formal ‘what if’ valuation (target price)

is speculative in nature, and therefore entails a high degree of exploration/technical risk.

Technical Risk Mining operations are subject to unforeseen risks such as geotechnical issues, equipment

failure, and labor strikes—all of which may negatively affect a company’s performance.

Ore reserve and resource risk is another technical risk that is derived from the subjective

nature of geological interpretation. Competent, qualified personnel calculate ore reserves

and resources, which in most cases have high accuracy. However, significant deviation

from said estimates can drastically impact a company’s operations and the value of its

shares.

As noted above, Great Bear is an exploration stage company that has yet to table a

maiden National Instrument 43-101 compliant resource estimate, which is required to

support a formal mine plan (e.g., PEA) detailing technical parameters pertaining to

project scope (throughput size, metallurgy, operating costs, capital costs, etc.). Hence,

our formal ‘conceptual/what if’ valuation (target price) is speculative in nature, and

therefore entails a high degree of exploration/technical risk.


44

Commodity Price Risk Our commodity price assumptions are based on detailed research, and viewed to be

reasonable based on current information. However, the timing and magnitude of

commodity price fluctuations are always a significant risk that, in most cases, strongly

affects the value of mining and mineral exploration/development companies focused on

a specific commodity. Near-term metal price volatility stands to be exasperated by

Coronavirus pandemic uncertainty. The primary (only) metal exposure for Great Bear is

gold, which we currently formally model at US$1,600/oz (flat; refer to April 20, 2020,

Cormark Gold Report).

Cost Risk Both capital and operating costs may be affected by changes in input prices (fuel/power,

steel, chemicals, etc.) and by relative currency changes. The company may be at risk of

unexpected cost escalation as a result of these potential considerations.

As noted above, Great Bear is an exploration stage company active that has yet to table a

formal mine plan. Hence, our formal ‘what if’ valuation (target price), based in part on

conceptual cost estimates (albeit benchmarked to peer group comparables) is speculative

in nature, and therefore entails a high degree of risk. The Dixie Project’s Canadian

address also entails C$/US$ FX rate exposure (relating to labour and other

company/project considerations; versus targeted top line gold revenue, which would

most likely be US$ denominated).

http://dashboard.cormark.com/servlet/display.pdf?repid=RGray%40cormark%2Ecom_20200420122036529&userid=0


45

Figure 51 Great Bear Resources Ltd. – Summary

Target Price, C$ $16.50 Shares OS, MM

Current Price, C$ $11.05 Shares FD, MM

Return, % 49% Market Cap, US$ MM

52-Week High / Low, C$ $12.10 / $2.20 Company CEO

Volume (100-day average) 191,855 Web Site

Balance Sheet and Capitalization Share Capital Dilution

US$ MM US$/Sh. C$MM C$/Sh. Price

Market Capitalization $366 $7.62 $531 $11.05 Warrants C$1.65

Current Cash $16 $0.33 $23 $0.48 Options C$3.06

FD Cash Adds $12 $0.24 $17 $0.36 Total Dilution C$2.58

Working Capital $12 $0.25 $18 $0.37

Long-term Debt - - - - Recent Financings

Book Value $21 $0.44 $31 $0.64

Enterprise Value (EV) $354 $7.37 $513 $10.68

EV = Market Capitalization - Working Capital + Long-term Debt

Financial Forecast

2025 2026 2027 Major Shareholders

$1,600 $1,600 $1,600 Basic (%) FD (%)

1.45 1.45 1.45 12.4% 10.9%

113 113 113 5.6% 4.9%

$746 $1,455 $2,150 3.3% 2.9%

$745 $1,454 $2,149 1.4% 1.2%

$810 $720 $630 0.5% 0.4%

$1,784 $1,784 $1,784 10.0% 16.8%

$(414) $(414) $(414) 33.2% 37.2%

$(113) $(113) $(113)

$(20) $(20) $(20) Corporate NAV Summary and Sensitivity

- - - Cormark Spot

$701 $711 $722 $1,600 $1,200 $1,400 $1,600 $1,800 $1,705

$6.19 $6.29 $6.38 1.45 1.50 1.45 1.40 1.35 1.39

$948 $940 $916 $1,250 $125 $663 $1,179 $1,632 $1,442

$8.38 $8.31 $8.09 $58 $58 $58 $58 $58 $58

0.9x 0.9x 0.9x $50 $50 $50 $50 $50 $50

1.4x 1.4x 1.4x $1,358 $233 $771 $1,287 $1,740 $1,550

0.4x 0.4x 0.4x $16.45 $2.92 $9.34 $15.05 $19.62 $17.99

1.6x 1.6x 1.7x 0.7x 3.8x 1.2x 0.7x 0.6x 0.6x

$(50) $(50) $(50) 1.0x 5.6x 1.8x 1.1x 0.8x 0.9x

$(50) $(50) $(50) $8.38 $5.80 $7.11 $8.47 $9.87 $9.17

$(102) $(91) $(81) $8.31 $5.74 $7.04 $8.40 $9.73 $9.10

$(90) $(90) $(90) Model FD Shares (fully financed): 120MM

$(192) $(181) $(171)

$706 $709 $695 Metal Inventory (100% owned)

$6.24 $6.26 $6.14 Tonnes EV/oz Au

(MM) (US$/oz)

Dixie Production Forecast (100% owned) 389 -

2025 2026 LOM - -

18 18 389 389 $35

2.0 2.0 2.0 - $-

18 18 389 - -

2.0 2.0 0.8 - -

95% 95% 95% - -

1,115 1,115 9,500

$35 $35 $35 Great Bear Zinc Ltd. Consensus Estimate Summary (Thompson Reuters)

C$ Analysts Buys Holds Sells Mean TP High / Low CSI vs. Cons.

Corporate Sales Forecast Consensus Valuation 3 3 - - $11.87 $14.00 / $9.60 39%

2025 2026 LOM

1,115 1,115 9,500

$350 $350 $850

$425 $425 $1,000

Ttl Gold (C1) Cash Cost, US$/oz sold

AISC Cash Cost, US$/oz sold

Payable Gold Production, koz

Gold Sales, koz

Gold Head Grade, g/t

Additional Exploration Credit, US$ MM

EPS, US$

Corporate NAV, C$/FD Share

Current Price / Corporate NAV

Target Price / Corporate NAV

2025E Model CFPS, US$

2026E Model CFPS, US$

Debt Repayment, US$ MM

Financing CF, US$ MM

Current EV / OCF

Target Implied EV / OCF Multiple

Interest Payment, US$ MM

Unit Operating Cost, C$/t milled

Ore Mined, MMt

Current Price / CFPS

Investing CF, US$ MM

Target Price / CFPS

CAPEX, US$ MM

CFPS, US$

Operating CF, US$ MM

Corporate NAV, US$ MM

Working Capital, US$ MM

Earnings, US$ MM

Corporate Adjustments, US$ MM

Craton Capital

Gold Price, US$/oz

Dixie AT Project NAV7%, US$ MM

C$/US$ FX Rate

Cash, US$ MM

Net Revenue, US$ MM

Average Shares OS, MM

Long-term Debt, US$ MM

Operating Costs, US$ MM

Depreciation, US$ MM

Corporate G&A, US$ MM

Exploration, US$ MM

Earth Resource Investment

9.2

54.6

Management & Directors

Robert McEwen

Basic (MM)

2.7

4.8

Van Eck Associates 1.6 1.6

Total

6.0

48.0

0.7 0.7

0.2 0.2

2.7

6.0

C$17 MM

Number

2.2 MM

4.4 MM

6.6 MM

FD (MM)

July 2019 - C$10.9 MM bought deal PP (2.0 MM flow-through shares @ C$5.45/share).

Sept. 2018 - C$10.1 MM PP (6.9 MM units @ C$1.45/unit; incl. 1/2 w arrant @ C$1.75 strike for 2 years).

48.0

54.6

$366

C$13 MM 2021-2025

C$4 MM 2020

www.greatbearresources.ca

Proceeds Expiry

Chris Taylor

Great Bear Resources Ltd. (GBR-V)

Metric: 1.0x fully financed after-tax corporate NAV7%

Total Reserve & Resource

Free Cash Flow, US$ MM

FCFPS, US$

Strip Ratio

Ore Milled, MMt

Dixie UG Mineable

Dixie OP Mineable

Total Model Mineable

Total M&I Resource

Total Inferred Resource

Gold Recovery, %

Target Price: C$16.50

Rating: BUY (S)

C$/US$ FX Rate

Gold Price, US$/oz

Nov. 2019 - C$16.7 MM bought deal PP (2.0 MM flow-through shares @ C$8.35/share).

Nov. 2018 - C$3.5 MM PP (1.0 MM flow-through shares @ C$3.50/share).

1832 Asset Management

-

-

Gold

(koz)

10,000

-

10,000

-

-

-

Total Reserve - -

Gold

(g/t)

0.8

0.8

-

-



46

Recommendation Terminology

Cormark’s recommendation terminology is as follows:

Top Pick our best investment ideas, the greatest potential value appreciation

Buy expected to outperform its peer group

Market Perform expected to perform with its peer group

Reduce expected to underperform its peer group

Tender clients are advised to tender their shares to a takeover bid

Not Rated currently restricted from publishing, or our recommendation is under review

Our ratings may be followed by "(S)" which denotes that the investment is speculative

and has a higher degree of risk associated with it.

Additionally, our target prices are based on a 12-month investment horizon.

Disclosure Statements and Dissemination Policies

A full list of our disclosure statements as well as our research dissemination policies and

procedures can be found on our web-site at: www.cormark.com

Analyst Certification We, Stefan Ioannou and Yakun Liu, hereby certify that the views expressed in this

research report accurately reflect our personal views about the subject company(ies) and

it’s (their) securities. We also certify that we have not been, and will not be receiving

direct or indirect compensation in exchange for expressing the specific

recommendation(s) in this report.

http://www.cormark.com/


47

Figure 52 Great Bear Resources Ltd. – Disclosure Chart


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The information and any statistical data contained herein have been obtained from sources believed to be reliable as of the date of publication, but the accuracy or completeness of the information is not guaranteed, nor in providing it does CSI or CUSA assume any responsibility or liability. All opinions expressed and data provided herein are subject to change without notice. The inventories of CSI or CUSA, its affiliated companies and the holdings of their respective directors, officers and companies with which they are associated may have a long or short position or deal as principal in the securities discussed herein. A CSI or CUSA company may have acted as underwriter or initial purchaser or placement agent for a private placement of any of the securities of any company mentioned in this report, may from time to time solicit from or perform financial advisory, or other services for such company. The securities mentioned in this report may not be suitable for all types of investors; their prices, value and/or the income they produce may fluctuate and/or be adversely affected by exchange rates.

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