Guest post: Probe Mines signals surge in market confidence

The folks over at London-based Global Mining Observer featured Probe Mines in their latest newsletter, and were kind enough to allow World of Mining to re-publish the piece. If you haven’t heard of Global Mining Observer, head on over to their website for archived articles and sign up for their free newsletter for the most up-to-date material. I’ve found the research and writing to be high-quality.

For those in Toronto, Probe Mines is at PDAC this week at Booth 2847. Do your research, stop by, ask questions. Looks like CEO David Palmer is also scheduled to present at 11:20 a.m. this morning (Monday, March 3). I own shares in the company, which I wrote about here and here. Fun fact: Probe’s head office is located at 56 Temperance Street in Toronto, where Rob Ford is mayor.

by Alexander Williams, Global Mining Observer

“We hit hole-256,” says Dr. David Palmer, president of Probe Mines, “and the deposit we’d been drilling for 2km over 2 years, always the same, all of a sudden changed.”

Since its discovery in 2010, Probe’s Borden gold property in Ontario’s lumberjack territory had been envisaged as a bulk tonnage gold mine, hosting 4.2m ounces at 1.1 grams per tonne.

“At the time, it was all about how many ounces, how thick a section you could build,” Palmer explains, “and so for 2 years we happily drilled this thing out. We were getting incredibly thick 100m-plus intersections of one-gram-type material, which was what the bulk tonnage deposits were all aiming for.”

Then in late 2012, hole-256 hit 51m at over 10 gold grams per tonne. “We realised we’d actually been drilling the alteration halo around this high grade system.” Less than 6 months later, the gold price collapsed, heightening market attention to grade and a deposit’s sensitivity to the spot price, knocking bulk tonnage out of favour. “It’s almost like it anticipated what the market was going to do,” Palmer observes. “It’s phenomenal the timing we’ve had.”

In pursuit of its highest grade zone, Probe is now extending the deposit as far as possible to the southeast, with 4 rigs currently turning on the winter ice of Borden Lake. Grades keep increasing, with results in recent weeks of 32 grams per tonne over 19m.

At the PDAC conference in Toronto this time last year, Palmer was widely quoted as saying juniors were being priced as liquidity events and nothing more. The market’s response to Probe’s latest drill results shows how that has changed, sending shares to an all-time high, up 74 per cent in 12 months.

Probe has been the standout performer of 5 companies that gold major Agnico-Eagle Mines bought shares in last year, subscribing to 9.9 per cent of the stock for proceeds of $15m. Already cashed-up from a royalty transaction with Agnico in November 2012, Probe now has cash of c.$30m, with a burn-rate of roughly $1m per month.

Drilling as other juniors battle to meet listing fees, Probe, Palmer says, has enjoyed a 20 to 30 per cent drop in its drilling and assay costs since 2011. “Everything’s available and everything is cheaper than it was,” he says. “Gold isn’t our best resource, our treasury is right now.”

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