Some of the thrilling gold exploration tales lately has been Nice Bear Sources and its Dixie gold challenge close to Pink Lake, Ont. The corporate was acquired by Kinross Gold (TSX: Ok; NYSE: KGC) in February — even earlier than it had an opportunity to compile an preliminary useful resource for the high-grade, large-scale challenge. In September, Royal Gold (NASDAQ: RGLD) purchased Nice Bear Sources — a spinout of Nice Bear whose solely asset was a 2% internet smelter return royalty on Dixie — for $200 million, bringing the whole worth of Nice Bear’s property to $2 billion.
Nice Bear Sources’ former president and CEO Chris Taylor joined The Northern Miner’s Q3 International Mining Symposium on Sept. 29 to debate the corporate’s success, and what different exploration corporations can study from it. Taylor was beforehand named The Northern Miner‘s 2021 Particular person of the 12 months.
Be ready for private sacrifice
Nice Bear’s story is a traditional story of an exploration discovery, entailing years of onerous work and private sacrifice to get to the prize. Taylor, a structural and financial geologist, financed the challenge personally within the early days when buyers had been skeptical and it was troublesome to lift cash. He racked up $300,000 price of non-public debt on his line of credit score, as a result of he believed within the challenge.
“When you have a narrative you actually imagine in, you’ve gotten to have the ability to stick along with your weapons,” he stated. For him and his household, that meant a few years of “paying extra into the corporate than you ever take out of it.”
Whereas the slumps within the business are troublesome, they’re nice instances to choose up initiatives, he famous.
“The Dixie acquisition, now the Nice Bear challenge, was a few $200,000 complete acquisition that ended up with a $2 billion complete valuation solely seven years later. That is the type of factor that may occur in a nasty market. So keep it up… (and) search for these alternatives.”
Alternatively, Taylor suggested that geologists ought to by no means fall in love with their initiatives, or they danger plowing an excessive amount of time, cash and energy right into a challenge that may by no means work due to its location or different elements.
Comply with the information
Whereas Pink Lake is a historic gold mining camp, Nice Bear’s discovery was in an space that wasn’t regarded as potential and in host rocks that weren’t supposed to hold gold.
“Within the Pink Lake camp, you’re not going to be in search of a serious gold system within the space that we had been, and also you weren’t going to be in search of it within the felsic rocks that we had been discovering all this gold in. So initially, there was a whole lot of skepticism available in the market,” Taylor recalled.
Nevertheless, the challenge got here with knowledge generated by previous operators that confirmed the geology had been beforehand misinterpreted.
It was Taylor’s companion in Nice Bear, Bob Singh, who was the corporate’s VP exploration and chief geologist that first flagged the challenge’s potential.
“Bob had been working within the Pink Lake space and seen drill core from this challenge going again about 10 years in the past now,” Taylor stated, including that not solely was it potential, nevertheless it was in an space with stable infrastructure and group assist for mining.
Bob Singh and Chris Taylor on the Dixie gold challenge in Pink Lake. Credit score: Nice Bear Sources.
“This was a type of uncommon alternatives the place we had a set of over 150 drill holes, and Bob had recognized the prospectivity on the system.”
Being caught in a sure mind-set a few camp or area restricted earlier explorers from discovering the massive deposit, which finally grew to become clear to the Nice Bear workforce as they sorted by way of the information.
“Some of the attention-grabbing issues about being a geologist is when you’ve gotten a challenge that’s wealthy in knowledge, you’ve gotten the flexibility to undergo and filter that knowledge and consider it with contemporary eyes. And what you’ll see if totally different generations of operators on a challenge will usually have very totally different interpretations of the rocks,” he stated.
Taylor, who’s intensely taken with fixing puzzles and in technique video games, likened the method to fixing a puzzle — the side of mineral exploration that drew him into the sector within the first place.
“Geology, particularly exploration geology, is one among these fields the place for those who can suppose creatively suppose exterior the field. Mom nature has offered you these monumental puzzles that you could unravel, you all the time have incomplete data, you’re all the time utilizing your science coaching and your instinct to strive to determine what could lie out of view within the floor,” he stated.
“The mineral exploration enterprise is admittedly that science factor and the puzzle fixing, after which these extremely advanced variables of the market. So how are you going to inform a narrative? How are you going to lift the cash that retains folks and compelled to maintain investing along with your firm as a substitute of someone else, and also you’re mixing collectively these elements with the puzzle fixing side of determining what’s within the floor earlier than you truly know, after which testing it. There aren’t very many careers like this on the planet.”
With sufficient knowledge to reevaluate the challenge, Nice Bear was capable of see past what it was supposed to seek out within the storied Pink Lake camp.
“What we discovered… is one thing that was utterly new to that district.”
As a substitute of discontinuous high-grade, vein-hosted gold mineralization typical of Pink Lake, Nice Bear discovered steady sheet-like mineralization with high-grade gold occurring inside a lower-grade mineralized halo.
Drilling has proven continuity over 4.2 km of the ten.8-km LP Fault on the Nice Bear challenge to date. Whereas Kinross is on the brink of launch a primary useful resource for the challenge earlier than the top of the 12 months, Taylor stated that he believes “it’s solely going to be a illustration of the near-surface portion of that mineralized system.”
The 44-year previous, who in contrast the challenge to the long-lived Hemlo gold mine added: “I don’t suppose you’ll know the way a lot gold is within the floor there, even in the midst of the remainder of my lifetime. I’m very optimistic, when this factor will get into manufacturing, that it’ll have a multi decade life and there’ll be exploration occurring for a lot of, a few years.”
Don’t ignore retail shareholders
“A number of the time, cash is tough to seek out, and also you’ll type of take it from whoever you may get it from,” Taylor acknowledged. “However for those who could be extra discriminating on who turns into a shareholder, you possibly can have a really loyal shareholder base that follows your story with an excessive amount of curiosity.”
Whereas Taylor admitted that the eye he paid to retail shareholders — which included returning telephone calls in any respect hours — wasn’t conducive to work-life stability, he stated that it was properly definitely worth the effort.
“Retail units the value available in the market a whole lot of the time,” he stated. “Establishments are a bit extra passive — I imply, in the event that they’re going to purchase, they’re going to purchase, and in the event that they’re going to promote they’re gonna promote. However it’s the retail man who’s following your story and engaged in it, who will choose up a little bit of inventory right here and there and hold that hold that worth set available in the market. So don’t neglect it,” he suggested.
“I perceive that it’s extra work… However on the similar time, these relationships are going to construct dividends over time. And there’s no strategy to shortcut that type of course of.”
Nice Bear’s geological workforce orients analysts at one of many few outcrops on the LP Fault at Dixie. Picture by Henry Lazenby.
The affect has been that it wasn’t solely institutional buyers who made cash from Nice Bear’s discovery. A few half dozen particular person shareholders made tens of millions (as much as $30 million) from their funding in Nice Bear, he stated.
“We’ve had folks with their Nice Bear winnings established charities, we’ve had folks put their youngsters by way of college, we’ve had folks simply have completely life altering outcomes from this — together with our First Nations companions. I imply, these are going to be large initiatives which might be going to have very optimistic impacts on these communities, too.”
Construct worth over time
Taylor put simply as a lot effort and time into Nice Bear’s communication technique as the corporate put into its technical work. He took investor displays to a different degree, infusing a transparent story into PowerPoint displays and bringing the story to life on webinars the place he’d draw on the display for example his level, partaking buyers in a manner that the majority juniors don’t.
He additionally intentionally averted getting the market too enthusiastic about drill outcomes earlier than the workforce knew what they meant.
“One of many traps that corporations fall into is… they’ll put out footage of the drill core, they’ll present all of the gold in it, and so they’ll inform you to attend for assays,” Taylor stated. “It’s like getting an viewers that’s simply in search of an adrenaline hit or a drug hit… it’s not the easiest way to construct the corporate over time.”
One of the best ways, Taylor stated, is to construct a story over time, like writing a novel.
Regardless of that, Taylor stated he understands being tempted by the “Darkish Facet of the Power” to take the quick minimize and showcase the “great-looking gold intercepts,” particularly when it’s onerous to lift cash.
“I all the time had Bob Singh sitting there on my proper shoulder, as that type of angel, saying, ‘Don’t do it, Chris, don’t put up footage of the gold earlier than we get the assays,’” Taylor stated. “Working with good folks retains you on the straight and slim.”
