Canadian Mining Journal


GOLD: Probe Metals has potential to attract ‘acquisition interest’, BMO says

TORONTO – BMO Capital Markets has initiated coverage of Probe Metals with an outperform rating and a $2.00 target price – double its current share price of $0.98.

The junior explorer’s 100% owned Val d’Or East project “is one of the higher quality Canadian gold exploration properties with good prospectivity for resource growth and the potential to transition towards a development stage project,” BMO mining analyst Andre Mikitchook noted in an April 23 research report.

“Val d’Or East has the prospectivity, jurisdiction and management team to potentially attract acquisition interest as it is advanced,” he continued. “The geological success and property consolidation is reminiscent of other successful names, including Osisko, Integra, Marathon, Atlantic Gold and Gold Standard Ventures.”

Probe released assays at the end of March from its 24,000-metre winter drill program at Val d’Or East property, where its geologists have focused on an area around the former Beliveau, Bussiere, and Monique gold mines.

The work program discovered a new parallel gold trend on the Courvan property, a largely unexplored area about 1.5 km west of the New Beliveau deposit. Results from the Courvan area drill program included drill hole CO-73 that intersected 3.9 g/t gold over 30 metres starting 144 metres downhole in the Southwest zone. Drill hole CO-78 in Courvan’s Creek zone returned a 4.0-metre intercept grading 16.7 g/t gold from 113 metres downhole, including 57.8 g/t over 1.0 metre.

Probe expects to fold the results of its winter drill program into an updated resource scheduled for release in the early fall of 2019.

According to its February 2018 estimate, Val d’Or East contains indicated resources for open pit and underground of 9.04 million tonnes grading 2.35 g/t gold for 682,400 oz. of gold and inferred of 9.30 million tonnes averaging 2.41 g/t gold for 722,100 oz. of gold.

“The current resource stands at 1.4 million oz. and the resource update in H2/19 will expand the resource and reflect the discovery of a second mineralized trend,” Mikitchook writes in his report. “For our valuation, we assume a further 0.75 million oz. is defined to show visibility on 2-3+ million ounces with development potential.”
Mikitchook also points to Probe’s other advantages: a proven management team and a strong treasury.

“Probe has a track record of shareholder value creation, having attracted a takeover of Probe Mines in 2015,” he comments. “This management track record is reflected in their ability to attract financing with our estimate of the treasury at $25 million, which is sufficient for two years of exploration.”

The Courvan property is largely unexplored, the company says. The land package includes the historic Bussiere mine, which produced 42,000 oz. of gold at an average grade of 5.8 g/t gold up until 1942, when it was destroyed by forest fires.

Over the last year Probe’s shares have traded in a range of $0.91 and $1.49. The junior has about 94 million common shares outstanding for a market cap of $92 million.

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