investor15
11 years ago
Takeover Target Could Offer 35.7% Upside Very Soon: Probe Mines Limited
Sep 17 2013,
The Critical Investor
1.Introduction
The TSX Venture is near a 4 year low, gold is barely recovering from a 3 year low, and only one large and undervalued gold deposit is left in Ontario after some consolidations, making the controlling junior mining company which owns it a very interesting takeover target: Probe Mines Limited (PROBF.K, or on the TSX Venture where it is much more liquid: PRB.V).
As of September 16, 2013 Probe Mines has a share price of $2.07 and a market cap of $156.49M, with 75.6M shares outstanding (fully diluted 88.5M), and made a big run in the last four months already as is shown on this chart:
(click to enlarge)
Share price over 1 year period
Nevertheless I will try to explain why this stock could go up even considerably higher. Another respected SA author already showed some of the potential of Probe Mines by describing it as a long term investment. My intention is to show in-depth how much potential this could be, and highlight Probe Mines more as a takeover target and explain why this could be the case in my opinion.
2.Executive summary
Probe Mines (PROBF.PK) is a junior mining company which fully owns two very interesting projects, namely their flagship 4.3M oz @ 1.03g/t Au Borden Lake gold project, and the 3.82M t Black Creek chromite project, both located in mining friendly Ontario.
The Borden Lake project is the last multi-million ounce gold project in Ontario which isn't already owned by a mid-tier or senior producer. This project also has additional upside exploration potential and proximity to existing infrastructure. Probe Mines has plenty of working capital (about $40M) to complete an extensive drill program and a PEA. It could even release a Feasibility Study on Borden Lake as well without further equity dilution.
The Black Creek chromite project is one of very few large chromite projects located in the Western hemisphere. It has an average grade of 37,5% so the ore can be shipped directly as the limit for this is 37%. This saves a lot of processing costs (for example milling and upgrading). It is located in between two chromite projects of the mining giant Cliffs Natural Resources (CLF).
There are several catalysts for the Probe Mines share price, I will describe them in a time-sequential order. The first but negative catalyst is about Agnico-Eagle Mines (AEM), which already purchased a 9.94% stake in this company on May 28, 2013, clearly seeing value in Probe Mines' Borden Lake gold project. The holding period for shares and warrants ends at September 29, 2013.
Next and positive catalyst for Probe Mines will be an updated NI43-101 resource estimate, to be released by the end of this year. If Probe Mines can surprise the mining community with more ounces and a higher average grade compared to the current estimate, chances are this will create a serious uptick in the share price.
The final and most important positive catalyst as far as I am concerned is the upcoming PEA, planned for Q1 in 2014. A positive PEA indicates Borden Lake directly as a premier takeover target for producers.
Another positive catalyst came very recently, by Larry Summers pulling out of the race for the FED presidency. He was rather critical regarding the very loose monetary politics (QE and low interest rates). Accelerated tapering would have caused serious downside pressure on the price of gold, therefore having a negative impact on the business case of Probe Mines. The development of a physical gold market could be supportive as well, providing a possible foundation of solid demand, to a certain extent neutralizing volatility caused by the trading in gold related securities like GLD (GLD).
As always, risks often mirror the catalysts, and for Probe the biggest risks are a lower than expected resource estimate, and especially a negative PEA. The resource estimate doesn't seem to be a great risk because of recent, very encouraging drill results. Another risk preventing a takeover is the gold price. When it does decrease (which I highly doubt) below $1000 levels as several analysts forecast notwithstanding FED continuing its loose monetary politics, it is very likely this project will not be very profitable anymore, and therefore Probe Mines will lose most of its current attraction as takeover target.
To determine the value of the company, calculations were performed on three different ratio's. These ratio's were market capitalization to net present value for Borden Lake, take over price to resources, comparing this project with other relevant takeovers, and the enterprise value to resources compared to peers, on a base case scenario with a close to current gold price of $1300/oz. Taking into account a current share price of $2.07 (9/16/2013), based on 88.5M shares fully diluted (at $2.00 or higher all options and warrants are in the money) we get a target share price of $2.81, for a profit of 35.7%.
3. Company
Probe Mines is a junior mining company which fully owns two very interesting projects, namely its flagship 4.3M oz @ 1.03g/t Au Borden Lake gold project, and the 10M t Black Creek chromite project, both located in mining friendly Ontario.
Probe Mines' Borden Lake project is the last 4M+ oz gold deposit in Ontario which isn't already owned or about to be bought by a mid-tier or senior producer. This project also has additional upside exploration potential and its main advantage is its proximity to existing infrastructure.
The company is currently completing a large drill program in order to release an updated resource estimate in Q4 and a PEA in Q1 2014. There is sufficient working capital (about $40M estimated after the last cap raise of $14.5M at May 28,2013) available to achieve these milestones without further dilution.
Agnico Eagle Mines was the senior producer which bought all of the shares in this capital raise, resulting in Agnico holding a 9.94% interest in the company. This obviously implies Agnico is very interested in Probe Mines, but there are more big parties, looking around these days for relatively cheap assets in mining friendly districts, especially solid deposits near good infrastructure.
4. Projects
A. The Borden Lake Gold Project
The Borden Lake Gold Project is located near the town of Chapleau, about 1km away from existing infrastructure, and in between two large, recently acquired gold deposits (Magino and Cote Lake, more on this later on):
(click to enlarge)
Location of Borden Lake
Resource estimate
Probe Mines released a NI43-compliant resource estimate on the Borden Lake project in January, outlining an in-pit resource estimate of 4.3M oz @ 1.03 g/t gold in the indicated and inferred resource categories. The company is continuing exploration efforts on the property to upgrade the current indicated category towards measured resources and maybe even proven and probable reserves. Another target of the company is to expand the high grade part of the resources as much as possible. The last drill results bode well for this, as shown by recent results like 51m @ 10.3g/t found in the South East section of the property:
(click to enlarge)
Because the company also continues to find near surface high-grade intercepts such as 44 meters at 4g/t gold and 41 meters at 5.1g/t gold in its infill drill program, there's a good chance Probe Mines will be able to start its mining operations at the high-grade zone to achieve a faster payback of the initial capex.
(click to enlarge)
Resource estimate, January 2013
According to this estimate Probe has a resource estimate of 2.34M oz Au @ 1.7g/t (average grade) M&I using a different cutoff-grade of 1 g/t. As the gold grade is much higher, the project seems to be more robust when compared to the 4.3M oz @ 1.03 g/t (average grade) M&I resource. Higher average grade deposits require a smaller capex to be brought into production.
At this moment, the company has completed almost 150,000 meters of drilling in almost 500 drill holes. The mineralization is still open along strike and although it continues under the lake, there's a good chance these resources could be recovered as well through an underground operation.
(click to enlarge)
Map of drill hole locations at Borden Lake
(click to enlarge)
High grade intercepts at the left, open along strike
Probe Mines recently expanded its land holdings to the northeast of the Borden Gold Project. The company now controls the majority of the eastern extent of the Borden Gold Belt with the acquisition of the East Limb Property's contiguous claim group. Now totaling 2.157 claim units, the project is over 41 kilometers long and covers over 350 square kilometers. These claims are believed to cover the same horizons that host the Borden Gold deposit.
Historical grab samples from outcrops on the East Limb Property have yielded of up to 3 g/t Au and hold high potential for new discoveries:
(click to enlarge)
East Limb Property
B. The Black Creek Chromite Project
Probe Mines also owns the Black Creek Chromite project, which is strategically located in the McFauld's Lake area of the James Bay Lowlands in Ontario, otherwise known as the "Ring of Fire", in between Cliffs Natural Resources' Big Daddy and Black Thor deposits:
Big red star locating Probe Mines' Black Creek project
The project currently has a resource estimate of 10.2 million tonnes at a relatively low average grade of 37.5% Cr, but which would just make it suitable for direct shipping ore (which usually has a content of in excess of 37% Cr) without any milling required. This would obviously reduce the capex and enhance the economics of this project.
Resource Estimate Black Creek project. Source: Company documents
Black Creek block model
Chromite is one of the most important and strategic minerals there is, as it has unique characteristics and almost no substitutes. It is mainly used in the production of stainless steel, but the US Department of Defense has a strategic stockpile of chromite as well.
Three countries (South Africa, India and Kazachstan) produce about 80% of global output, and these countries can't really be interpreted as reliable and stable long-term export partners, as they aren't ranked very high on the Frasers' List (ranking the mining policies of most countries). As production in Western countries is limited, I consider every economically viable chromite deposit in the Western hemisphere to be of strategic importance for Western hemisphere companies and governments. For example the nearby large Ring of Fire chromite projects owned by mining giant Cliffs Natural Resources could play an important role when Cliffs' manages to overcome current setbacks.
As Probe Mines is now completely focusing on the Borden Lake gold project, I think it's very likely it would like to sell the Black Creek project to raise cash to fund a part of the initial Borden Lake capex when the company doesn't get bought out.
5. Valuation
As Probe Mines owns two different, large projects with one of them approaching PEA status, it is appropriate to estimate the value of the company based on several ratios. The ratios I am going to calculate are:
A. market cap vs. NPV
B. EV/oz vs. peers
C. in situ value/oz vs. peer takeovers
Based on these ratios I will estimate a target share price composed out of a weighted average, combined with other assumptions.
A. Market cap vs. NPV
In order to calculate the Border Lake gold project I use my own regularly updated database which contains most TSX- and TSX-V mining companies, in order to derive certain ratios. I found this more reliable than ratios used by mainstream sell side analysts. I always have had a more conservative approach than analysts because their modus operandi just doesn't work out most of the time, probably caused by doing their job as a sell side analyst of course.
For this project I would like to calculate 2 different scenarios, one with the 4.3M oz gold @ 1.03g/t deposit and the other with the 2.34M oz gold @ 1.7g/t scenario. The 2.34M scenario (#2) is a relatively more underground operation than the 4.3M scenario (#1) because it has a smaller open pittable part, so therefore the initial capex is relatively more expensive, as is sustaining capital. I used a slightly better recovery grade for scenario #2 as it has higher average grade.
I am introducing my own ratio to determine the capex, based on data of most juniors having released an economic study, which parameters are all entered in my database. Therefore I can generate a lot of averages, which I can use to estimate certain ratio's. The capex ratio is based on the ratio between capex and daily mill throughput, and I have it calculated for two types of mine: underground and open pit. For a combination of these two types like the Border Lake project I had to average the two capex ratios, assuming a certain part is underground and another open pit.
Part one of the calculation of capex and cash cost:
Sce nario
Res. MM oz
Mine able MM oz
Av grade g/t
Minetype
LOM y
oz pa
Rec.
Product. T pa
Tpd
1
4.3
3.6
1.03
OP/UND
18
200000
90%
6911111
19746
2
2.34
1.9
1.7
OP/UND
18
105556
93%
3529869
10085
Part two of the calculation of capex and cash cost:
Scenario
Capex ratio $M/tpd
Capex $MM
Sustaining $MM
G&A etc $MM
Cash cost $/oz
Cash cost all in sustaining $/oz
1
35
564
250
50
650
733
2
25
403
200
30
500
621
After I have estimated the capex and all in sustaining cash cost, I continue by calculating the NPV in different scenarios for the gold price.
I assume for corporate taxes in Ontario 31%, it is always a bit confusing with this mixture of local and federal taxes in Canada to get to the right percentage. As mining companies can deduct expenses like exploration, environmental assessments, permits etc, I estimate this accumulated deficit for Probe at about $70M, based for the largest part on exploration costs, resulting for scenario #1 in a tax free first three years, for #2 in a tax free first four years. Discount for NPV is 5%.
My base case scenario's have a gold price of $1300/oz:
As a bigger capex is no problem for a large company and the smaller scenario #2 isn't much more profitable relatively speaking, I assume in case of a take over a valuation based on scenario #1: NPV@5% of $406M @ gold $1300/oz.
In case Probe doesn't get bought out soon, it is more likely it continues as a stand alone company with scenario #2, as it requires less initial capex and sustaining capital.
Nowadays, for an advanced explorer like Probe, located in a very miningfriendly and M&A active region with very good infrastructure, an NPV is conservatively multiplied with 0.6 in order to derive a hypothetical market cap. This generates a potential market cap just based on Borden Lake of $406 x 0.6 = $243.6M, or a fully diluted target share price of $2.75.
Chromite
As the Black Creek chromite project isn't going into production anytime soon as mentioned, it doesn't make any sense to calculate future cash flows for this project. Instead I would like to make an estimation of the project based on an in-situ valuation with different chromite prices and different percentages of the in-situ value.
B. EV/oz vs. peers
The enterprise value (EV) of Probe Mines, just based on the Borden Lake is calculated as followed:
EV = market cap - cash + debt (estimated liabilities without project debt)
EV = $143.65M - $40M + $5M
EV = $103.65M
As the Borden Lake deposit has 4.3M oz Au, the corresponding ratio EV/oz is:
EV/oz = 24.1
The Black Creek chromite project is by far a secondary object in a takeover, but still represents a certain value. This deposit is 10M t chromite and using a price of $220/t, resulting in a gross metal value of $2.2B. The gross metal value of the Borden Lake gold deposit is 4.3M x $1315 = $5.65B, so globally three times larger, generating a hypothetical AuEq resource of 6.0M oz. Because of ongoing issues on nearby chromite projects, I value the Black Creek project at just 0.2M oz gold-equivalent, combining both projects to a hypothetical AuEq resource of 4.5M oz.
The ratio EV/oz results in: $103.65 / 4.5 = 23.0
As the EV/oz ratio according to my database is on average 21 for gold exploration companies in the same stage as Probe, it could be concluded on this ratio this company is slightly overvalued compared to his peers. When the EV/oz ratio for Probes' Borden Lake would be 21, the corresponding share price would be: $129.5 / 75.6 = $1.71.
However, the recently acquired claims adjacent to Borden Lake called the East Limb property, are very promising according to management, and offer considerable upside exploration potential. Maybe some kind of expectation has already been priced in by the markets as well.
C. In situ value/oz vs. peer takeovers
In order to estimate a takeover indication for Probe based on the Borden Lake gold project, I compared three cases in Ontario: Rainy River, Prodigy Gold and Trelawney Mining.
1. Acquisition of Rainy River by New Gold
New Gold is paying $364.3M for Rainy River. Its Rainy River flagship project holds a mostly M&I defined resource of 8.85M oz AuEq @1.21g/t. This results in an average value for this deposit of $41.16/oz. The Rainy River project is designed as a combination of underground and open pit, just like the Borden Lake project. Just 3.65M oz Au was a pit constrained resource, Probes resources however are mostly pit constrained, so I consider them relatively more valuable, and would estimate a comparable average value of $55/oz just for the pit constrained resource of Rainy River.
Gold price at the time of acquisition (8/9/2013): $1314/oz
2. Acquisition of Prodigy Gold by Argonaut Gold
Argonaut paid $341M for Prodigy. Its flagship project Magino contains 6.25M oz Au @ 1.06g/t, of which half was in the M&I categories. This results in an average value for this deposit of $55/oz. Just 2.75M oz Au was a pit constrained resource, and would estimate a comparable average value of $75/oz just for the pit constrained resource of Magino.
Gold price at the time of acquisition (10/15/2012): $1754/oz
3. Acquisition of Trelawney Mining by IAMGOLD
IAMGOLD paid $505M for Trelawney. Its flagship project Cote Lake holds a mostly inferred resource of 6.9M oz Au@ 0.89g/t. This results in an average value for this deposit of $73/oz. An economic study for Cote Lake was never released. Therefore I value Probe's resource more valuable as this is an M&I and pit constrained resource. I would like to estimate a comparable average value of $100/oz for Cote Lake.
Gold price at the time of acquisition (6/21/2012): $1594/oz
Cote Lake project
Considering the average value of these three recently acquired deposits, and considering the current gold price at $1325/oz, I would like to assume an average in situ value of $60/oz for the Borden Lake project.
This would mean a takeover price for Probe Mines based on Borden Lake of 4.3M oz x $60/oz = $258M, which generates a corresponding share price of:
$258 / 88.5M shares F/D = $2.92.
Chromite
As the Black Creek chromite project isn't going into production anytime soon, it doesn't make much sense to calculate future cash flows for this project. There are also no peer take over projects to compare. Instead of this I would like to make an estimation of the project based on an in-situ valuation with different chromite prices and different percentages of the in-situ value. Most of the resource is measured and indicated (M&I), 8,65M tonnes, and 1,6M tonnes is inferred. Frequently applied in-situ valuation methods use 1% in situ value for inferred resources, 2% for M&I resources and 3-5% for proven and probable (P&P)resources.
The Black Creek project consists out of relatively low average grade lumpy chromite (FeCr) direct shippable ore (DSO) at 37,5% chrome. Prices for comparable 40% FeCr DSO are:
(click to enlarge)
Calculations in situ value (ISV) for chromite prices between $200-240/t:
I would like to apply the current chromite price of $220/t, and like to add a small discount for the slightly lower average grade, resulting in an in situ value of $40M.
This would mean a value of $40M / 88.5M shares F/D = $0.45 per share.
Update as of September 15, 2013: Cliffs' Ring of Fire chromite projects have to endure considerable setbacks lately. The only way out for Cliffs' seems to buy out KWG (KWGBF.PK), a much smaller rival miner, which seems to have a better but far more expensive transportation proposal in the same area for the same purpose, unfortunately not without problems either. However, Cliffs is facing headwinds in the iron ore business with cost of production rising in face of low prices, and its balance sheet is stretched. Therefore, an acquisition may be the last thing on the management's mind at the moment. Besides this, an increase in the initial capex of the Ring of Fire chromite project is very likely because of the more expensive transportation proposal. Last but certainly not least there are Cliffs' ongoing long term problems with the environment assessment process, land surface rights, and negotiations with the Province of Ontario.
(click to enlarge)
Cliffs' Black Thor project
As I consider Cliffs the most important candidate to buy Black Creek as it is the primary chromite player in the region, but having all kinds of trouble now related to this very same region, chances are other competitors are not very keen on intertwining in these kind of problems either as Black Creek most likely will face some of the same issues as well when developed towards production. Therefore I prefer to value the Black Creek considerably lower at $10M, or $0.11 per share fully diluted.
This results in an estimated total valuation for both projects based on resources of:
$2.92 + $0.11 = $3.03.
Valuating the company
Three ratio's have been calculated, now it's time to compose a combined target share price based on these ratio's. The more a ratio tells about the company, the more valuable it is and therefore the more weight it deserves.
A. market cap vs. NPV: A NPV is a good way to value a project as it takes into account most parameters. As Probe isn't very close to production, the discount on the NPV is considerable with 40% (near term producers get 0-10% discount on NPV), and could be subject to many changes over the years as well. The businesscase and NPV could change a lot in 3-4 years time, therefore I would like to weight the estimated NPV based share price by 30%
B. EV/oz vs. peers: EV/oz is a very limited valuation, and doesn't tell much about the future cash flow potential of the deposit. Therefore it is more of an indicator of share price sentiment for the moment. Because of this I would like to weight this ratio by 10%.
C. in situ value/oz vs. peer takeovers: This is the most important ratio as it shows how much the company could actually be worth as takeover target, compared to several peers who recently got acquired. Especially the Rainy River take over presents very accurate information as it is located in Ontario, has the same underground/open pit mine plan and most of its resources are M&I just like Borden Lake. Therefore I would like to weight this ratio by 60%.
This results in the following components of the target share price:
A: market cap vs. NPV: $2.75 x 30% = $0.82
B: Ev/oz vs peers: $1.71 x 10% = $0.17
C: In situ value/oz vs. peer takeovers: $3.03 x 60% = $1.82
Adding these three components results in a conservative target share price of $2.81. Taking into account a current share price of $2.07 (9/16/2013), this means a profit of 35.7%.
6. Catalysts & Risks
There are several catalysts for the Probe Mines share price, I will describe them in a time-sequential order. The first catalyst is about Agnico-Eagle Mines , which already purchased a 9.94% stake in this company on May 28, 2013, clearly seeing value in Probe Mines' Borden Lake gold project. The holding period for shares and warrants ends at September 29, 2013. As AEM is holding a considerable amount of warrants at $2.00, exercising them could cause downside pressure on the share price directly after this date. Usually big parties wait until the expiry date, so I don't expect serious price action.
Next catalyst for Probe Mines will be an updated NI43-101 resource estimate, to be released by the end of this year. If Probe Mines can surprise the mining community with more ounces and a higher average grade compared to the current estimate, chances are this will create a serious uptick in the share price.
The final and most important catalyst as far as I am concerned is the upcoming PEA, planned for Q1 in 2014. A positive PEA indicates Borden Lake directly as a premier takeover target for producers. If precise modeling results in a NPV exceeding $400M, my guess is the investing community will be pleasantly surprised, sending my NPV/market cap component of the target share price even higher.
Another positive catalyst came very recently, by Larry Summers pulling out of the race for the FED presidency. He was rather critical regarding the very loose monetary politics (QE and low interest rates). Accelerated tapering would have caused serious downside pressure on the price of gold, therefore having a negative impact on the business case of Probe Mines. With Summers out, Janet Yellen became the top candidate, who is one of the architects of the loose monetary politics, and very supportive of it. This could very well create some kind of foundation underneath the price of gold, preventing it to go lower than $1200-1300/oz for quite some time.
Besides this, another positive development which could be supportive for the price of gold is the development of a large physical gold market as I wrote about in another article, preventing the price of gold to decrease to $1000/oz levels because of current massive demand for physical gold. This may not send the price of gold much higher in the near future, but it could to a certain extent neutralize possible selling pressure caused by gold related securities like GLD.
As always, risks often mirror the catalysts, and for Probe the biggest risks are a lower than expected resource estimate, and especially a negative PEA. The resource estimate doesn't seem to be a great risk because of recent, very encouraging drill results, therefore I don't expect a lot of risks for the PEA either, especially since Summers pulled out, which caused support for the gold price. When it does decrease below $1000 levels as several analysts forecast, it is of course very likely this project will not be very profitable anymore, and therefore Probe Mines will lose most of its current attraction as takeover target.
Another thing that could prevent a fast buy out at high prices are, as already mentioned, the setbacks Cliffs' Natural Resources goes through at the moment on their own nearby chromite projects. Cliffs' is the only big chromite player in this region, and most likely the only party interested in the Black Creek deposit. As an asset almost impossible to sell, Black Creek could shed some shadows on Probe as a whole, therefore lowering expectations on a takeover target share price. However I dismissed Black Creeks' value almost entirely in my valuation, so I don't expect much downside risk on this subject.
7. Conclusion
Probe Mines is the last junior company with a resource estimate over 4M oz Au in a region which saw considerable M&A over the past year and a half, as other nearby gold explorers Trelawney, Prodigy Gold and Rainy River were acquired by producers.
The company is working towards an updated resource estimate and the release of a PEA soon after, which will in my opinion very likely prove the value of Borden Lake. Although the market already recognizes the potential of Probe Mines, I consider this company for several reasons as an attractive takeover target which still has an upside potential of at least 35.7% for a conservative target share price of $2.81, and it might be up to Agnico-Eagle Mines or perhaps Barrick (ABX) or Osisko (OSKFF.PK) to prove my thesis soon.
http://seekingalpha.com/article/1699442-takeover-target-could-offer-35-7-upside-very-soon-probe-mines-limited?source=email_rt_article_readmore
investor15
11 years ago
Probe Mines Continues to Intersect High-Grade Gold on Its Borden Gold Project, Ontario
TORONTO, ONTARIO--(Marketwired - June 18, 2013) - Probe Mines Limited (TSX VENTURE:PRB) ("Probe" or the "Company") is pleased to announce that it has received further assays from its ongoing drilling program at the Company's Borden Gold project near Chapleau, Ontario. Results for 25 diamond drill holes, BL12-385 to BL13-409, were received and were successful in identifying high-grade gold mineralization up to 700 metres along strike from the initial high-grade discovery on Section 1200m SE; continued high-grade intercepts in the southeast High-Grade Zone, including very high-grade intercepts on the new step-out section 1250m SE; and expansion of the near surface mineralization to the northwest. Results include the remaining five holes from the winter ice drilling program on Borden Lake, which have extended the high-grade gold zone an additional 200 metres in strike length. Infill drilling also returned some important results confirming the continuity of strong, near-surface mineralization in the northwest on sections 900m and 950m NW.
The deposit still remains open in both directions along strike.
Results continue to confirm that, in addition to a dramatic improvement in gold grades in the southeast extension of the deposit, the high-grade zone also appears to extend over a significant strike length with the potential for continued expansion. Owing to the new scope of the mineralization, the Company is now re-classifying the deposit as a more traditional high-grade, Archean lode gold system, amenable to underground recovery, which is also bounded by significant ancillary lower-grade mineralization, the latter ideally suited to potential open pit mining techniques.
High-Grade Zone
Results from the high-grade gold zone continue to show thick intersections of high-grade gold mineralization in both infill and expansion drilling. The zone has now been identified over a potential strike length of 700 metres and is still open to the southeast.
Winter Drilling Program:
The five remaining drill holes from the Winter drill program have successfully extended the high-grade mineralization an additional 200 metres to the southeast on Sections 1800m and 1900m SE. Results from the two new sections, 1800m SE and 1900m SE, show strong mineralized intercepts that are thicker and higher grade than those previously reported from Section 1700m SE, indicating a robust system with the potential to continue well to the southeast.
Intercepts include 27.1 metres grading 6.4 g/t Au, including 9.2 metres averaging 11.1 g/t Au in Hole BL13-402 on Section 1800m SE; and 39 metres grading 5.0 g/t Au, including 13.0 metres averaging 11.2 g/t Au in Hole BL13-403 on Section 1900m SE. Drilling is now focused on better delineating the high-grade gold zone in this area in order to bring the mineralization into an upcoming NI 43-101-compliant Resource Update.
The following table shows selected results from the expansion drilling of the high-grade gold zone, with all intervals approximating true width. Depths of the mineralized zones are between 255 and 431 metres vertical depth. Updated plan and section maps for all holes are available on the Company's website at
http://www.probemines.com/s/Borden_Lake.asp?
ReportID=585318&_Type=Borden-Gold:
High-Grade Zone Expansion Drill Results
DDH Section From(m) To(m) Width(m) Au(g/t)
BL13-390 1700m SE 332.5 336.9 4.4 1.3
BL13-394 1800m SE 341 352 11.0 1.4
BL13-394 1800m SE 378 388.7 10.7 4.7
BL13-397 1900m SE 281 282.5 1.5 6.8
BL13-397 1900m SE 372 396.2 24.2 1.2
BL13-402 1800m SE 396 423.1 27.1 6.4
including 401.9 411.1 9.2 11.1
BL13-403 1900m SE 297.1 299.6 2.5 1.8
BL13-403 1900m SE 394 433 39.0 5.0
including 396 409 13.0 11.2
including 402.1 409 6.9 15.7
High Grade Infill:
Drill results are also available for the first step-out holes made from the initial high-grade discovery on Section 1200m SE. As expected, Section 1250m SE returned significant intervals of high-grade gold mineralization including an impressive 26.1 metres grading 8.5 g/t Au, including 17.7 metres averaging 12.0 g/t Au in Hole BL13-399; and 20.4 metres of 6.7 g/t Au, including 6.1 metres averaging 17.5 g/t Au within a broader interval of 36.3m averaging 4.2 g/t Au in Hole BL13-401. These first step-out holes confirm the continuity of the high-grade zone, and in conjunction with the expansion holes, indicate that the high-grade mineralization is extensive and is quickly becoming a dominant feature of the deposit.
The following table shows selected results from the infill drilling of the high-grade zone on Section 1250m SE, with all intervals approximating true width. Depths of the mineralized zones are between 252 and 343 metres vertical depth:
High-Grade Zone Infill Drill Results
DDH Section From
(m) To
(m) Width
(m) Au
(g/t)
BL13-399 1250m SE 307.1 333.2 26.1 8.5
including 313.5 331.2 17.7 12.0
BL13-401 1250m SE 312 348.3 36.3 4.2
including 327.9 348.3 20.4 6.7
including 342.2 348.3 6.1 17.5
BL13-407 1250m SE 291 315.9 24.9 2.1
including 307 315.9 8.9 3.5
Infill Drilling
Infill drilling between Sections 950m NW and 1200m SE was successful in further delineating the gold deposit, particularly for the shallow (less than 200 metre vertical depth) mineralization. Results for Sections 900m NW and 950m NW confirmed the continuity of the gold zone between previous sections 1100m NW (winter program) and 800m NW, and returned impressive intersections at shallow depths. Hole BL13-409 (Section 950m NW) returned a 49-metre intersection averaging 1.8 g/t Au, including 6.7 metres of 5.3 g/t Au, starting at a vertical depth of 120 metres, while Hole BL13-400 (Section 900m NW) returned a 10 metre wide intercept of 1.5 g/t Au starting at only 74 metres vertical depth. These results indicate that the deposit continues to show robust shallow mineralization at its northwest end in the area of the potential open pit operations. Gold mineralization still remains open in the northwest direction.
The following table shows selected results from the infill drilling, with all intervals approximating true width. Depths of the mineralized zones are between 60 and 413 metres vertical depth:
Infill Drill Results
DDH Section From
(m) To
(m) Width
(m) Au
(g/t)
BL13-385 900m NW 85 95 10.0 0.9
BL13-385 900m NW 159 162 3.0 1.2
BL13-386 1150m SE 214.8 220 5.2 1.3
BL13-387 850m SE 314.4 328.5 14.1 1.1
BL13-387 850m SE 331.5 339.1 7.6 1.0
BL13-387 850m SE 371 392.7 21.7 1.1
including 371 375 4.0 2.9
BL13-388 600m NW 86 90 4.0 1.2
BL13-389 650m NW NSA
BL13-391 850m SE 341.6 347.5 5.9 2.8
BL13-391 850m SE 380.5 395.6 15.1 1.2
including 380.5 386.5 6.0 1.8
BL13-392 1050m SE 93.3 98.5 5.2 1.2
BL13-392 1050m SE 186 195.6 9.6 1.2
BL13-393 1050m SE 216 225 9.0 1.1
BL13-393 1050m SE 232 235.9 3.9 1.7
BL13-395 900m SE 319.6 328 8.4 2.4
BL13-395 900m SE 348 365 17.0 1.4
BL13-396 950m SE 185 190.6 5.6 1.7
BL13-396 950m SE 221 222.1 1.1 8.7
BL13-398 950m SE 196 235.7 39.7 1.1
including 218 224.5 6.5 2.0
BL13-400 900m NW 85 95 10.0 1.5
BL13-404 900m NW 146 155 9.0 0.9
BL13-404 900m NW 161 169 8.0 0.9
BL13-405 950m NW 87 103.4 16.4 1.4
BL13-406 1200m SE 404.8 415 10.2 1.1
BL13-408 950m NW 117.5 124 6.5 1.1
BL13-409 950m NW 122 171 49.0 1.8
including 122 129.6 7.6 2.6
also including 162 168.7 6.7 5.3
Dr. David Palmer, President and CEO of Probe, states, "Once again the new drill results highlight the improving quality of the Borden Gold deposit. Owing to these encouraging results our focus has now shifted entirely to the high-grade gold zone, with all four drills mobilized to the southeast to begin work on expansion and infill drilling. Our goal is to include as much of the new high-grade gold mineralization into an updated NI 43-101 Resource Estimate later this year. The evolution of this deposit has been remarkable, going from a grass-roots discovery to a continuous gold horizon over three kilometers in strike length, in under 3 years, and we see much more potential ahead as we continue our technical program."
Probe has instituted a strict quality assurance and quality control ("QA-QC") program for the Borden Gold drill core sampling, with each fire assay furnace batch of 40 samples including two certified reference materials (standards), one blank sample and one core duplicate sample. Quality control guidelines and ongoing QAQC monitoring are being carried out by Probe personnel.
About Probe Mines:
Probe Mines Limited is a Canadian precious metals exploration company whose key asset is the Borden Gold Zone in Ontario, Canada. As of January 31, 2013, the Company had approximately $32 million in treasury and a portfolio of highly prospective mineral properties. In May 2013, the Company closed a private placement of $15 million. As a result of the financing, Agnico Eagle Mines Limited now owns 9.9% of the Company on a non-diluted basis. The Company is actively exploring a significant new gold resource on its Borden Gold Zone near Chapleau, Ontario and has 100% interest in the Black Creek chromite deposit located in Northern Ontario. The Company's shares trade on the TSX Venture Exchange under the symbol PRB.
David Palmer, Ph.D., P.Geo., is the qualified person for all technical information in this release. To find out more about Probe Mines Limited, visit our website at www.probemines.com.
On behalf of Probe Mines Limited,
Dr. David Palmer, President & Chief Executive Officer
Forward-Looking Statements
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 News Release includes certain "forward-looking statements". These statements are based on information currently available to the Company and the Company provides no assurance that actual results will meet management's expectations. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among other things, results of exploration, project development, reclamation and capital costs of the Company's mineral properties, and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company; and other matters discussed in this news release. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.
Contact:
Probe Mines Limited
Karen Willoughby
Director of Corporate Communications
(866) 936-6766
info@probemines.com
Probe Mines Limited
Patrick Langlois
Vice President, Corporate Development
(416) 777-6703
patrick@probemines.com
www.probemines.com
http://finance.yahoo.com/news/probe-mines-continues-intersect-high-100000432.html
investor15
11 years ago
Probe Mines Announces Closing of $15.0 Million Bought Deal Brokered Private Placement and Strategic Investment by Agnico Eagle Mines Limited
Press Release: FINANCING AGREEMENTS – Tue, May 28, 2013 10:16 AM
TORONTO, ONTARIO--(Marketwired - May 28, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.
Probe Mines Limited (TSX VENTURE:PRB) ("Probe" or the "Company") is pleased to announce, further to its press releases dated May 10, 2013 and May 23, 2013, that it has completed its previously announced bought deal private placement consisting of the sale and issue of 7,500,000 units of the Company ("FT Units") at a price of $2.00 per FT Unit for aggregate gross proceeds of $15,000,000 (the "Offering"). Each FT Unit consisted of one common share, issued on a flow-through basis, and three-quarters of one common share purchase warrant (each whole such warrant, a "Warrant"). Each Warrant entitles the holder to purchase one additional common share of the Company at a price of $2.10 until May 28, 2015.
The Offering was completed by a syndicate of underwriters (the "Underwriters") co-led by Cormark Securities Inc. ("Cormark") and BMO Nesbitt Burns Inc., who also acted as joint bookrunners. A cash commission of $600,000 was paid to the Underwriters in connection with the Offering.
In the event that all Warrants are exercised, the Company will raise an additional $11,812,500. All securities issued pursuant to the Offering are subject to a hold period ending on September 29, 2013.
The gross proceeds from the sale of the FT Units will be used for "Canadian exploration expenses" (within the meaning of the Income Tax Act (Canada)) ("CEE") on the Company's exploration properties, and the Company will ensure that such CEE qualifies as "flow-through mining expenditures", for purposes of the Income Tax Act (Canada). The Company will renounce such CEE with an effective date of no later than December 31, 2013.
The Company is also pleased to announce that following completion of the Offering, Agnico Eagle Mines Limited ("Agnico Eagle") purchased from Cormark 7,500,000 units of the Company (the "Units") at a price of $1.50 per Unit, each such Unit consisting of one common share and three-quarters of one Warrant. Agnico Eagle now owns approximately 9.94% of Probe's issued and outstanding common shares on a non-diluted basis. The common shares and Warrants purchased by Agnico Eagle are subject to a hold period ending on September 29, 2013. Agnico Eagle has the right to participate in any future equity offerings by Probe in order to maintain its pro rata investment in the Company.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. person (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
About Probe Mines:
Probe Mines Limited is a Canadian precious metals exploration company whose key asset is the Borden Gold Zone in Ontario, Canada. As of January 31, 2013, the Company had approximately $32 million in treasury and a portfolio of highly prospective mineral properties. The Company is actively exploring a significant new gold resource on its Borden Gold Zone near Chapleau, Ontario and has a 100% interest in the Black Creek chromite deposit located in Northern Ontario. The Company's shares trade on the TSX Venture Exchange under the symbol PRB.
David Palmer, Ph.D., P.Geo., is the qualified person for all technical information in this release. To find out more about Probe Mines Limited, visit our website at www.probemines.com.
On behalf of Probe Mines Limited,
Dr. David Palmer, President & Chief Executive Officer
Forward-Looking Statements
These statements are based on information currently available to the Company and the Company provides no assurance that actual results will meet management's expectations. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among other things, results of exploration, project development, reclamation and capital costs of the Company's mineral properties, and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company; and other matters discussed in this news release. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.
Shares Issued: 75,433,127
Contact:
Probe Mines Limited
Karen Willoughby
Director of Corporate Communications
(866) 936-6766
info@probemines.com
Probe Mines Limited
Patrick Langlois
Vice President, Corporate Development
(416) 777-6703
patrick@probemines.com
www.probemines.com
http://finance.yahoo.com/news/probe-mines-announces-closing-15-141600017.html
investor15
11 years ago
Buy Probe Mines Limited The Best Gold Value Today
May 30th, 2013 | By Larry Cyna
CymorStockPicks
Cymor Fund
...(Section from article)
The Demand for Gold is Fairly Constant, but the Supply is Shrinking. The big resource companies have bought up most large gold deposits known today, and these deposits are being slowly mined out. Remaining known deposits around the world are smaller, with lower grades, and in ever more difficult jurisdictions. Have a look at Barrick’s difficulties in Chile which is getting ever more expensive and difficult.
All of which brings us to our current stock pick. There is a rich gold deposit that is dramatically expanding as drilling continues, and it is in a very safe jurisdiction (Ontario), in a existing gold producing belt, and is the largest independent deposit known today that also has remarkable expansion potential. That deposit is owned by Probe Mines, a junior company listed on the TSXV and trading at $1.40 -$1.50.
Probe Mines Ltd is A Target of the Big Guys
Our investment newsletter stock pick is one of the largest remaining known deposits of gold in a safe jurisdiction, and the majors are drooling over the prospect of grabbing this company. One of the majors just put $11,250,000 in Probe Mines, with the right to put another $11,812,500 in to exercise warrants. The press release follows:
Agnico Eagle Mines Limited (“Agnico Eagle”) has agreed to purchase ……. 7,500,000 units of the Company (the “Units”) at a price of $1.50 per Unit, each such Unit to consist of one common share and three-quarters of one Warrant following completion of the Offering. On closing of the Investment, Agnico Eagle will own approximately 9.94% of Probe’s issued and outstanding common shares on a non-diluted basis. ….., Agnico Eagle will have the right to participate in any future equity offerings by Probe in order to maintain its pro rata investment in the Company Closing of the Offering is expected to occur on or about May 28, 2013 n the event that all Warrants are exercised, the Company will raise an additional $11,812,500.
If the major gold companies are investing large sums in this down market, you had better pay attention.
Will the Price of Gold Rise Again?
There are some encouraging signs for the price of gold, primarily the support offered by physical buyers. The ETF’s and the Hedge Funds are selling paper gold to raise cash to meet the demand from investors who wish to sell their units. The opposite is happening for physical possession of gold. The US Mint has just again started selling gold coins (there was a lack of supply to meet the demand), India has been importing 50% more gold this year than last, China is buying record amounts of gold, and the Banks worldwide are buying and adding to their holdings.
May 28/13 As UBS says, “Headlines this week reveal continued appetite from central banks in April… Buying from these central banks highlights the trend for increasing gold reserves, especially among EM central banks, which we expect to remain in place this year. While news of central bank buying does not have an impact on price, it does help overall sentiment on the margins.”
Gold & Silver Physical demand reached the point last week where it was overwhelming the New York markets slowly but surely. In summary, the gold market is seeing sales from the SPDR gold ETF which have persisted for nearly three months now. The total held in the SPDR fund is expected to fall below 1,000 tonnes this week if the sales continue as before. We do believe there is a core of holders keeping their gold for the very long term, such as Paulson’s funds. What proportion of the fund these comprise is not certain, but we must be getting close to the point where the selling stops. When it does the robust demand, particularly from China, will quickly absorb all available gold. The timing of that event is impossible to say.
Probe Mines Ltd TSXV-PRB
The company’s projects are near Chapleau Ontario, and include two major multi-million ounce gold deposits, with over 4.3 million ozs/Au and growing. What is more exciting is that recent drilling has revealed ever increasing grades of gold with the company being optimistic of a larger and richer deposit, as drilling is showing the deposit still open in both directions along strike.
Probe now has a rich cash balance which is allowing it to explore further and to be secure against market conditions. There are 75 million shares outstanding, (fully diluted 88 million), with a $104 million market cap. The average target price for 1 year is $3.66 in Yahoo Finance, which is a bit less than many local brokerages have projected.
Investment Letter Stock Pick
Buy Probe Mines Ltd (PRB-TSXV $1.47)
http://cymorfund.com/2013/05/gold-stock-investment-letter-stock-picks-probe-mines-limited-best-gold-value/
We may or may not have positions in securities we name. In making an investment decision consider numerous factors such as portfolio balancing, timing, cash and capital reserves, asset allocation and other. Do your own research. Matters discussed contain forward-looking statements that are subject to risks and uncertainties and actual results may differ materially from any future results, performance or achievements expressed or implied.
Views expressed are opinions and not investment advice. You should retain a licensed professional to guide you and not rely on the opinions expressed herein. This report is neither a solicitation nor a recommendation to buy or sell securities. We are not a registered investment advisor nor a broker-dealer. The information contained herein is based on sources which we believe reliable but is not guaranteed as being accurate or a complete statement or summary of the available data.
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