Results of an initial scoping study on metallurgy at the Borden Lake gold project near Chapleau, Ont., are encouraging for Probe Mines (PRB-V).
Test work on two composite samples – one higher grade and one lower grade – from drill core through the discovery section of Borden Lake yielded recoveries of up to 92.6% and 90.4%, respectively, using standard gravity, flotation and leach methods. Average grades of the two samples were 4.2 grams gold per tonne and 1.6 grams gold.
The initial metallurgical work suggests that Probe can get good recoveries with standard, cost-effective methods, David Palmer, the company’s president and chief executive, said in a statement.
Calling the initial recoveries “encouraging,” Dale Mah of Mackie Research said in a note that “it is also encouraging that twenty-percent to forty-three-percent recovery was achieved by simple gravity concentration.” Mah has a “buy” rating on the stock with a 12-month target price of $4 per share. At presstime Probe traded at $2.32 per share within a 52-week range of $1.01-2.57, with 62.87 million shares outstanding.
More metallurgical work is underway, including optimizing grind size, reagent consumption and grade-recovery variability.
Probe is expecting results for silver recoveries, environmental testing of tailings and mineralogical studies, and believes it can complete an updated resource estimate in early 2012.
Borden Lake has indicated resources of 11.61 million tonnes averaging 0.8 gram gold per tonne for 305,000 contained oz. gold, with inferred resources adding 169.32 million tonnes averaging 0.69 gram gold for 3.76 million contained oz. gold. The deposit also contains 323,000 oz. silver in the indicated category and 5.02 million oz. silver in the inferred, both at an average grade of 0.9 gram silver per tonne. The initial resource estimate was based on a cut-off grade of 0.3 gram per tonne and 78 diamond drill holes. It excluded three satellite gold zones.
RBC Capital Markets is the latest brokerage house to initiate coverage of Probe, joining Mackie Research, Jennings Capital and Northern Securities. On Nov. 24, RBC associate analyst Sam Crittenden initiated coverage with an outperform speculative risk rating and a $4 price target.
Kwong-Mun Achong Low of Northern Securities has a buy on the stock with a 12-month target price of $5 per share. “Probe Mines continues to ramp up exploration at its Borden Lake property, which we believe has significant exploration upside,” Low said in a Nov. 1 research note. “Based on the current resource, Probe is trading at thirty-five dollars per ounce [under a half-gram per ton cut-off resource], compared to the peer median of eighty-five dollars per ounce . . . we [think that] Probe should be trading at a premium.”
On Oct. 18, Jennings Capital initiated coverage of Probe with a speculative buy rating and a $4.75 per share price target. “The company has quickly taken this project from an initial reconnaissance drilling program to a full National Instrument 43-101 resource of three to four million ounces of gold [depending on the cut-off grade],” analysts Peter Campbell and Spencer Langley said in a note. “Of particular interest to us is the expansion potential of the Borden Lake discovery and the exceptional exploration potential on the company’s land package.”
The analysts at Jennings note that not only does the deposit remain open along strike and at depth, but “perhaps more importantly” airborne and ground geophysics “in the stratigraphic horizon that hosts the Borden Lake deposit have identified look-alike geophysical targets in a highly prospective fold hinge.”
Borden Lake is 1 km south of Highway 101 and 9 km east of Chapleau, Ont. Four gold mines are within a 150-km radius of the property. Trelawney Mining and Exploration‘s (TRR-V) Côté Lake deposit is 10 km to the southeast, Barrick Gold‘s (ABX-T, ABX-N) past-producing Renabie mine is 70 km to the northwest, Prodigy Gold‘s (PDG-V) Magino mine is 100 km to the northwest, and Lake Shore Gold‘s (LSG-T) Timmins mine is 140 km to the northeast.
Probe’s deposit lies within a folded belt of Timiskaming-age, 2.6-billion-year-old metasediments in the Kapuskasing structural zone. The company believes Borden Lake has excellent potential to host a near-surface, low-grade, bulk-tonnage deposit.
In addition to Borden Lake, Probe owns 875 claims covering 140 sq. km in the McFaulds Lake area, including a 100% stake in the Black Creek chromite deposit.
The company is also exploring its Cree Lake gold project in Ontario’s Swayze belt, which is under option from Mantis Mineral.
Probe has a 45% interest in a joint-venture property with Lake Shore Gold, which surrounds Lake Shore’s Timmins project.
At presstime Probe had $35 million in its treasury.