Gold Junior a Top Takeover Target?

Analyst believes the acquisition value of Great Bear Resources Ltd. (TSXV:GBR) could exceed $30 per share

Capital Ideas Media | December 2, 2020 | SmallCapPower: While there’s no such thing as a sure thing in the stock market, we would be shocked if Great Bear Resources Ltd. (TSXV:GBR) doesn’t receive a takeover offer sometime during the next year.

(Originally published on Capital Ideas Media on September 29, 2020)

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After all, GBR has reported multiple, high-grade gold drill results during the past couple of years, the latest being 8.08 gram per tonne (g/t) gold over 37.70 metres announced on September 9, 2020, at its 100% owned Dixie Project located in the Red Lake district of Ontario.

[Editor’s Note: Shares of Great Bear Resources have jumped more than 13% since Capital Ideas wrote about the company two months ago.]

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Great Bear Resources currently has $45 million in cash, which the Company says will keep its drills turning into 2022. And, GBR has just 57 million fully-diluted shares outstanding.

In fact, Great Bear has gone so far as to compare its Dixie Project to Barrick Gold’s Hemlo mine, which has produced more than 21 million ounces of gold during its more than 30 years of continuous operations.

A nearly 10% correction in the gold price since early August has weighed on shares of Great Bear Resources (its stock price is down more than 23% from its all-time high and is now trading at $15.20 per share). This could represent an attractive entry point for would-be investors, especially if you believe the Bank of America forecast of a US$3000 per ounce gold price by late 2021.

CIBC World Markets analyst Alex Hunchak initiated coverage of GBR stock recently with an “Outperform” rating and a $22.75 per share target price, calling the Dixie Project “one of the industry’s most exciting new gold discoveries.”

“With the potential to host nearly 10Moz in the Red Lake area, we expect the company’s Dixie project will command significant interest as an M&A target and could drive a takeout valuation of more than $30 per share. We expect the 110-kilometre drill program planned for 2020 will generate positive news flow through exploration and infill drilling, and move the project towards a maiden resource at Dixie in 2021,” the analyst wrote.

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