News Releases

Annual Letter to Shareholders

January 6, 2020

To Our Shareholders:

It was a very good year for our company! Here are some of our main achievements of 2019:

  • The LP Fault discovery includes six new gold zones drilled along four kilometres, and apparent continuity of gold mineralization in all areas where drilled to-date (May – December), within an 18 kilometre long target
  • Very high grade gold mineralization was drilled in the Hinge zone (1,600 g/t gold over 0.70 metres - January) and LP Fault zone (759 g/t gold over 0.50 metres – May)
  • $27.6 million was raised through private placements ($10.9 million in June at $5.45, and $16.7 million in November at $8.35)
  • The stock price and market cap increased from $2.31 and approximately $90 million on January 2, 2019 to $8.80 and approximately $380 million by December 31st.

Entering 2019, we were actively drilling the Dixie Limb zone, and had recently discovered the Hinge zone during the preceding summer. Our drill program was planned to be 30,000 metres. Some market commentators acknowledged our success through 2017 and 2018, and lamented that they’d “missed the boat” with Great Bear. Little did they know that the knowledge our technical team had gained through its first year of drilling was about to blow the doors wide open at the Dixie project.

2019 evolved into a relentless campaign of discovery that led to our drill program being expanded to 90,000 metres, and then to 200,000 metres, and a concurrent quadrupling of the market value of our company. During this process we discovered what may be one of the largest coherent mineralized structures in the Red Lake district, the LP Fault. In rapid succession, drilling along the first 4 kilometres of the 18 kilometre LP Fault target discovered the Bear-Rimini, Yuma, Auro, Yauro, Viggo and Gap zones. Gold was even intersected in a newly interpreted parallel structure, the North Fault.

Great Bear also finished the year in a strong financial position, with approximately $30 million in cash. We successfully raised approximately $28 million through two private placements at successively higher share prices. During the year we also saw the exercise of approximately 5 million warrants for approximately $5 million in proceeds.

Moving into 2020, the discovery process is poised to see its most significant year to-date. With a $21 million exploration budget, and plans to have five drill rigs deployed across the property simultaneously expanding our existing zones and testing brand new targets, management believes this will be another dramatic year of growth for Great Bear. We can’t wait to see the results start coming in again, and should have more news flow than ever before.

As President and CEO, I make continuous efforts to reach out to shareholders and communicate management’s views on what each round of results means, and the ultimate potential of our company and its flagship Dixie project. We’ve hosted a number of interactive webinars, and will continue to do so. Bob Singh, our VP Exploration and Director, and I have spoken at several conferences including AMEBC’s Roundup in Vancouver and the PDAC conference in Toronto. Shareholders can expect to see a continuation of these efforts, and we invite everyone to come see either Bob or I speak at the conferences referenced above.

The real question now for Great Bear is: What could 2020 bring? Before I answer that, I’ll look back at the year that was. Here are my favorite five photos, charts and figures from 2019.

Favourite #1: GBR Share Chart

The TSX-V share price chart for 2019 is below, showing we delivered roughly a four times return over the course of the year as our geologists made a series of exciting new gold discoveries. In the share chart below, discoveries are marked by red stars, while financings are marked by yellow stars.

Headlines for each of these highlighted releases is as follows:

  • Great Bear Drills 1,600 g/t Gold over 0.70 m at 150 m Depth in Hinge Zone, Dixie Project (51.29 ounces per tonne over 2.30 feet)
  • Great Bear Drills New High-Grade Gold Discovery at Dixie: 12.33 g/t Gold Over 14.00 m Including 30.90 g/t Gold Over 4.60 m; 194.21 g/t Gold Over 2.00 m Including 759.38 g/t Gold Over 0.50 m Multiple Shallow Gold Zones at New “Bear-Rimini” Target
  • Great Bear Closes Million Over-Subscribed Bought Deal Private Placement
  • Great Bear Discovers New High-Grade “Yuma” Zone at 1.4 km Step-Out Along LP Fault from the Bear-Rimini Zone in Unassayed Historical Drill Core: Follow-Up Drill Results Pending
  • Great Bear Drills Multiple Gold Discoveries Along 3.2 km of the LP Fault at Dixie: Drilling at New “Auro” Zone, a 2.6 km Step-Out from Bear-Rimini, Intersects 101.71 g/t Gold Over 1.50 m Within 42.00 m of 5.28 g/t Gold at 80 m Depth
  • Great Bear Drills New Near-Surface High-Grade “Yauro Zone” Discovery at Dixie: 10.32 g/t Gold Over 18.20 m; 5.60 g/t Gold Over 25.25 m; and 16.60 g/t Gold Over 6.00 m
  • Great Bear Closes C$16.7 Million Over-Subscribed Bought Deal Private Placement
  • Great Bear Drills New “Gap” Zone: 16.80 g/t Gold Over 4.15 m and 1.25 g/t Gold Over 45.50 m; Auro Zone Drilling Intersects 241.88 g/t Gold Over 1.20 m Within 48.67 g/t Gold Over 8.70 m

Favourite #2: Our Field Crew

This is a photo taken in December outside one of our core logging facilities in Red Lake. These are the people whose hard work is the fundamental basis of our success. Our dedicated team of professionals keep the drills turning, the drill core logged, cut and catalogued for assay, and work tirelessly to interpret and target where the gold at the Dixie property can be found. These people put the “Great” in Great Bear!

Special thanks go out to Great Bear’s geological team, led by Bob Singh and Andrea Diakow, and to Rimini Exploration and Consulting Ltd., including Crystal McCullough and Rick Greenwood for their ongoing contributions toward the project. Chibougamau Diamond Drilling Ltd. is also thanked for provided exemplary drilling services.

Favourite #3: Gold!

All of these photos are from core that we drilled in 2019. Clockwise from the top left: 1) Coarse disseminated high-grade gold from the LP Fault, 2) Fine disseminated gold from the Viggo zone of the LP Fault, 3) More coarse disseminated high-grade gold from the LP Fault, 4) Fine disseminated gold from the LP Fault, 5) Coarse dendritic gold from the Hinge zone, and 6) Coarse disseminated gold from the LP Fault.

Favourite #4: Top 15 drill holes from the Dixie property to-date

These numbers pretty much speak for themselves!

Ranking

Drill Hole

 

From (m)

To (m)

Width*
(m)

Gold
(g/t)

Zone

1

DHZ-014

 

180.70

186.60

5.90

190.78

Hinge

1

DHZ-014

including

181.80

185.10

3.30

340.90

Hinge

1

DHZ-014

and including

183.90

185.10

1.20

935.64

Hinge

1

DHZ-014

and including

184.40

185.10

0.70

1602.73

Hinge

2

DHZ-004

 

124.50

131.50

7.00

68.76

Hinge

2

DHZ-004

including

124.50

128.30

3.80

125.84

Hinge

2

DHZ-004

and including

124.50

126.50

2.00

228.27

Hinge

2

DHZ-004

and including

125.50

126.50

1.00

302.48

Hinge

3

DHZ-003

 

118.30

141.15

22.85

19.33

Hinge

3

DHZ-003

including

124.80

141.15

16.35

26.91

Hinge

3

DHZ-003

and including

124.80

137.10

12.30

34.00

Hinge

3

DHZ-003

and including

127.10

128.10

1.00

112.63

Hinge

3

DHZ-003

and including

132.05

137.10

5.05

51.39

Hinge

4

BR-065

and

251.60

260.30

8.70

48.67

LP

4

BR-065

including

252.55

256.90

4.35

97.00

LP

4

BR-065

and including

252.55

256.30

3.75

112.15

LP

4

BR-065

and including

253.60

254.80

1.20

241.88

LP

5

DNW-011

 

58.00

60.00

2.00

194.21

LP

5

DNW-011

including

58.00

58.50

0.50

759.38

LP

5

DNW-011

 

72.50

93.00

20.50

8.48

LP

5

DNW-011

including

75.00

89.00

14.00

12.33

LP

5

DNW-011

and including

75.95

80.55

4.60

19.33

LP

5

DNW-011

and including

78.45

80.55

2.10

60.27

LP

5

DNW-011

and including

78.45

79.55

1.10

98.78

LP

5

DNW-011

and including

78.95

79.55

0.60

130.97

LP

5

DNW-011

and

98.00

169.60

71.60

0.60

LP

5

DNW-011

including

119.00

169.60

50.60

0.74

LP

6

BR-020

 

81.00

134.70

53.70

4.20

LP

6

BR-020

including

90.00

132.00

42.00

5.28

LP

6

BR-020

and including

90.75

108.00

17.25

10.65

LP

6

BR-020

and including

90.75

94.00

3.25

48.08

LP

6

BR-020

and including

90.75

92.25

1.50

101.71

LP

7

DHZ-031

 

136.50

143.75

7.25

30.15

Hinge

7

DHZ-031

including

136.50

141.00

4.50

48.47

Hinge

7

DHZ-031

and including

136.50

139.75

3.25

66.62

Hinge

7

DHZ-031

 

136.50

138.50

2.00

99.73

Hinge

7

DHZ-031

and including

137.00

138.50

1.50

130.49

Hinge

7

DHZ-031

and

198.00

209.50

11.50

4.36

Hinge

7

DHZ-031

including

205.50

209.50

4.00

11.72

Hinge

8

BR-036

 

55.60

93.00

37.40

5.14

LP

8

BR-036

including

58.80

77.00

18.20

10.32

LP

8

BR-036

and including

63.30

66.60

3.30

21.33

LP

8

BR-036

and including

71.85

76.00

4.15

22.74

LP

8

BR-036

and including

71.85

76.00

2.65

32.00

LP

9

DSL-004

 

90.15

100.50

10.35

18.23

Hinge

9

DSL-004

including

90.15

91.90

1.75

101.05

Hinge

9

DSL-004

and including

90.15

90.65

0.50

346.79

Hinge

10

DL-005

 

162.60

173.00

10.40

16.84

Limb

10

DL-005

including

164.60

172.45

7.85

21.53

Limb

10

DL-005

and including

170.75

172.45

1.70

82.54

Limb

10

DL-005

and including

171.40

172.45

1.05

130.10

Limb

11

BR-043

 

310.50

459.70

0.95

149.20

LP

11

BR-043

OR

318.50

443.90

1.08

125.40

LP

11

BR-043

including

348.00

437.80

1.31

89.80

LP

12

BR-037

 

68.50

74.50

6.00

16.60

LP

12

BR-037

including

68.50

70.80

2.30

28.61

LP

12

BR-037

and

86.00

152.20

66.20

2.01

LP

12

BR-037

including

89.97

91.70

1.73

35.96

LP

12

BR-037

and including

89.97

90.47

0.50

111.84

LP

12

BR-037

and

189.00

214.25

25.25

5.60

LP

12

BR-037

and including

206.15

214.25

8.10

13.73

LP

12

BR-037

and including

206.65

210.10

3.45

30.66

LP

12

BR-037

and including

206.65

208.25

1.60

59.05

LP

13

DHZ-023

 

185.10

188.50

3.40

31.60

Hinge

13

DHZ-023

including

185.10

186.85

1.75

61.05

Hinge

13

DHZ-023

including

185.70

186.85

1.15

86.02

Hinge

13

DHZ-023

including

185.70

186.35

0.65

128.14

Hinge

14

DHZ-039

 

272.70

276.40

3.70

28.37

Hinge

14

DHZ-039

including

274.40

276.40

2.00

50.78

Hinge

14

DHZ-039

and including

274.90

275.40

0.50

200.25

Hinge

15

DHZ-012

 

215.40

219.05

3.65

27.36

Hinge

15

DHZ-012

including

216.40

218.55

2.15

46.28

Hinge

15

DHZ-012

and including

216.40

218.05

1.65

58.25

Hinge

15

DHZ-012

and including

217.55

218.05

0.50

153.73

Hinge

*Widths are drill indicated core length, as insufficient drilling has been undertaken to determine true widths at this time. Average grades are calculated with un-capped gold assays, as insufficient drilling has been completed to determine capping levels for higher grade gold intercepts. Average widths are calculated using a 0.10 g/t gold cut-off grade with < 3 m of internal dilution of zero grade.

Figure 5: Best geological figure from a news release or presentation

This is my favourite figure, presented in two parts. The first is from an investor presentation, while the second is from a cross section prepared by Bob Singh for a news release. I think together these speak to a big part of the project’s gold potential. In plain English: Red Lake style high-grade gold bearing vein systems (Hinge, Limb and North Fault) flank a much larger disseminated high-grade system with large moderate to lower grade halos (more of a “Hemlo type” system) along the LP Fault. So far, we’ve drilled the LP Fault for more than 4 kilometres, and hit gold in every drill hole. 4 kilometres so far…but potentially 14 more to go!

Looking forward through 2020

So what might 2020 bring for our shareholders? The answer is three-fold: 1) Shares in a net smelter royalty-based spinout, details of which will be announced later this month, 2) More gold drill results, stemming from our $21 million 2020 drill program, and 3) A sector that’s heating up on the gold price and M&A fronts.

Royalty-based spinout

In our industry, most major projects have been through many owners prior to their being placed into production. As projects change hands, vendors often place a royalty on the project as a form of insurance protecting their exposure to some of the future value of the project. In many cases, 2 or 3 percent royalties are common, and 5 to 7 percent royalties are not unheard of depending on project size and history. The Canadian Malartic deposit is an example of a project where the royalty due over most of the producing mine is 5 percent or higher.

We, as Great Bear’s management, decided even prior to beginning drilling back in 2017 that if we were eventually successful at Dixie, we wanted as many options available to us as possible in order to maximize project value to our shareholders. This included buying out the existing NSR on the project when we signed the original acquisition deal. In hindsight, after the many gold discoveries we’ve made even at this early stage, that was an excellent decision. We believe that by placing a 2 percent royalty on the project that we are bringing the project’s royalty situation from the “basement” as compared to most of Great Bear’s peers, up to the “ground floor”. The project’s royalty structure will still compare favourably to the majority of major gold projects around the world.

Another major consideration was that we, as shareholders, wanted to be the ones who would benefit from this royalty. As prosaic as it sounds, none of us have a crystal ball. While we sincerely want the time to drill off and prove up a number of major deposits at Dixie, it’s always possible that our results will be compelling enough at any point to trigger a larger company to make an acquisitive offer for the company before we’ve had a chance to grow Great Bear to its full size. In that case, it would the shareholders of that larger company getting 100 percent of the value of the eventual production related cash flows. As the discoverers of all of this gold mineralization at Dixie, we want to guarantee our shareholders exposure to those future benefits, and hence we’re committed to making the royalty-based spinout occur at an earlier stage.

Some of the largest companies by market capitalization in our industry are the royalty companies: Franco Nevada (US$19 billion market cap) and Wheaton Precious Metals (US$13 billion market cap) with others such as Osisko Gold Royalties (US$1.5 billion; beneficiary of a 5 percent NSR from the Canadian Malartic Mine, operated by Agnico Eagle), and Sandstorm Royalties (US$1.3 billion market cap) showing steady growth. Most of these companies were founded from the cash flow streams originating from producing world-class projects.

Should the Dixie project prove itself to be the world class, future producing asset we all hope it becomes, the planned royalty spinout could be a cornerstone assets for just such a royalty company. Alternatively, the entity holding the royalty might be a saleable asset to one of these companies, which could generate a significant dividend to its shareholders if eventually sold. At the risk of repeating myself, we want our Great Bear shareholders to benefit from this future potential.

More drill results, more drill rigs

With a $21 million exploration program planned for 2020, and over 80% of our gold targets still to be explored, this should be the most exciting year for Great Bear shareholders yet.

I commented in a recent interview that much of the growth of our company was accomplished with one drill. In a sense, our original 3,000 metre drill program, announced in 2017, has continued to be extended and expanded until now it sits at 200,000 metres, with cash on hand to significantly expand beyond this as results dictate. When we added a second drill rig in December of 2018, the pace of discovery accelerated substantially, with significant extensions to the Dixie Limb and Hinge zones, and discovery of the LP Fault gold system only 500 metres away, now extending along kilometres of strike length. With the addition of a third drill rig in June of 2019, the discoveries of the Gap, Yauro and Viggo zones joined the Bear-Rimini, Yuma and Auro zones along the LP Fault to define what appears to be a continuous zone of gold mineralization extending for at least 4 kilometres.

In January 2020, we plan to bring in additional drill rigs, so that 2020 will see 5 active rigs exploring across more than 12 kilometres of our more than 20 kilometre property. Given our many successes to date, management is very much looking forward to what this may bring in terms of shareholder benefit.

Merger and Acquisition Activity in the Gold Sector

In 2019, our industry saw over US$23 billion in M&A activity, with the overwhelming theme being critical mass (Newmont-Goldcorp, Barrick-Randgold, Equinox-Leagold), and portfolio optimization as these combined entities divested non-core assets (Red Lake Mine, Kalgoorlie Mine). With the price of gold increasing over the course of 2019 from approximately US$1,300 to US$1,500 per ounce, and most gold mining companies generating strong cash flows, it appears likely that these companies will turn their focus to growth and replacing reserves, which would benefit exploration and development companies like Great Bear.

Two notable Canadian acquisitions, Detour Gold (US$3.7 billion) and Atlantic Gold (US$560 million) are both large low grade (0.90 – 1.00 g/t gold) gold systems with surface access that makes them amenable to bulk tonnage mining. In short, these resemble the LP Fault target at Dixie, except in the case of the LP Fault, there is also a significant from-surface high-grade gold endowment that these recently purchased projects generally lack.

Some of the main reasons these deposits are appealing to large producers is that they can contain large gold reserves (15.4 million ounces of proven reserves for Detour, 1.9 million ounces of proven reserves for Atlantic) that can support decade-plus mine lives and associated cash flows. These types of deposits can also act as leverage against gold price profits can expand dramatically in a rising gold price environment.

One of our goals with the Dixie project is to define what the industry refers to as a “Tier 1” asset. This is usually defined as a deposit that can produce over 500,000 ounces of gold per year, for at least 10 years.

We can already see that the spatial footprint of gold mineralization along the LP Fault is similar, based on drilling to-date (approximately 4 kilometres) to the large Canadian Malartic deposit (3.5 kilometre long open pit), and the Detour Lake deposit (approximately 5 kilometres total open pit development in three planned pits). As our exploration work continues to expand the known zones, and, we hope, continues to find new gold zones, the prospect of the Dixie property hosting a coveted “Tier 1” asset increases steadily.

Finally, let me once again convey my heartfelt best wishes for a safe, healthy and prosperous 2020 to all of you. We are always available by phone at 604-646-8362 should you have any questions, or by email at info@greatbearresources.ca.

Sincerely,

Chris Taylor

President and CEO

Great Bear Resources Ltd.

ABOUT THE DIXIE PROJECT

The Dixie Project is 100% owned, and consists of 9,140 hectares of contiguous claims that extend over 22 kilometres, and is located approximately 25 kilometres southeast of the town of Red Lake (15minute drive), Ontario. 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.

The Dixie property hosts two principle styles of gold mineralization:

  • High-grade gold in quartz veins and silica-sulphide replacement zones (Dixie Limb and Hinge). Hosted by mafic volcanic rocks, and localized near regional-scale D2 fold axes. These mineralization styles are also typical of the significant mined deposits of the Red Lake district.

  • High-grade disseminated gold with broad moderate to lower grade envelopes (LP Fault). Interpreted to traverse the Dixie property for approximately 18 kilometres of strike length and currently drilled along 4 kilometres of strike length. High-grade gold mineralization is controlled by structural and geological contacts, and moderate to lower-grade disseminated gold surrounds and flanks the high-grade intervals. The dominant gold-hosting stratigraphy consists of felsic sediments and volcanic units.

About Great Bear

Great Bear Resources Ltd. is a well-financed gold exploration company managed by a team with a track record of success in mineral exploration. Great Bear is focused in the prolific Red Lake gold district in northwest Ontario, where the company controls over 300 km2 of highly prospective tenure across 4 projects: the flagship Dixie Project (100% owned), and the Pakwash Property (earning a 100% interest), the Dedee Property (earning a 100% interest), and the Sobel Property (earning a 100% interest), all of which are accessible year-round through existing roads.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This new release may contain forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed in the management discussion and analysis section of our interim and most recent annual financial statement or other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulations. We do not assume any obligation to update any forward-looking statements.

We seek safe harbor