Probe Metals (TSXV: PRB; US-OTC: PROBF) has released an updated resource estimate for its Val-d’Or East project in Quebec, 25 km east of Val-d’Or and 1.5 km west of the company’s New Beliveau deposit.
Resources in all categories total 3.2 million oz., up from 1.4 million oz. in the 2018 estimate.
“It is a very pivotal resource,” says David Palmer, Probe Metals’ president and CEO. “This resource has crossed a threshold.”
With a critical mass of gold assets, Palmer says, the company can look at Val-d’Or East as a potential mining project.
The project consists of three wholly owned properties — Pascalis, Courvan and Lapaska — along with two option properties, Monique and Cadillac Break East’s Sleepy deposit, where Probe Metals is close to completing 60% earn-ins for each from Monarch Gold (TSX: MQR) and O3 Mining (TSXV: OIII).
Measured and indicated resources for the three wholly owned properties stand at 14.57 million tonnes grading 1.85 grams gold per tonne for 866,300 contained oz. gold. Inferred resources add 28.74 million tonnes averaging 1.87 grams gold for 1.73 million contained oz. gold.
Monique and Cadillac Break East’s Sleepy deposit have inferred resources on a 100% basis of 9.1 million tonnes grading 2.25 grams gold per tonne for 661,400 contained oz. gold, and 1.9 million tonnes grading 4.7 grams gold for 279,800 contained oz. gold.
Mineral resources showed improvement over the previous resource estimate, after the discovery of the Courvan trend, which includes the Bussiere, Creek, Senore, Southwest and Southeast deposits. Probe Metals’ acquisition of the Courvan property in 2017 unlocked exploration potential west of the New Beliveau deposit and led to the identification of a mineralized gold trend parallel to Pascalis.
“We have actually added new discoveries, new zones,” Palmer says.
The number of deposits in the updated resource estimate increased from four in the previous estimate to 10, including five within the Courvan trend, which hosts 773,400 contained oz. gold at 1.8 grams gold per tonne.
Most of the increase was in pit-constrained ounces, as the focus of the 2018–2019 program was on shallow drilling.
Of the total measured and indicated resources contained in the latest estimate, 84.6% are pit constrained. The deposits are all open below the conceptual pit shells and “still have potential for substantial growth at depth,” Palmer says.
The company will continue drilling through 2019.
“Within our resource areas, we have new targets that we think are related to the current mineralization, but could exist in new zones,” Palmer says.
Regional drilling on a district scale and “looking at targets outside the current resource areas that may be part of new systems, and, ultimately, new discoveries within the project,” is also part of the plan, he adds.
The company has drilled 200,000 metres since 2016. “We still have a lot of exploration upside, and that will always be a part of the project,” Palmer notes.
Probe Metals also plans to conduct metallurgical work, as well as engineering and environmental studies to de-risk the project. “There are a number of areas [where we] need to build information in order to continue advancing it as a mining project,” Palmer says.
Newmont Goldcorp (TSX: NGT; NYSE: NEM) owns 13.7% of Probe Metals.
At press time, Probe Metals’ shares were trading at $1.25 in a 52-week trading range of 91¢ to $1.53. The company has 111 million common shares outstanding for a $138-million market capitalization.
After the resource update, analyst Andrew Mikitchook of BMO Capital Markets increased his target price on the stock from $2 to $2.25. “We continue to see further resource upside at Probe,” he writes in a research note.
The resource update also marks the first contribution from the Courvan trend, located 1.5 km west of the Pascalis trend, which was first drilled by Probe Metals in late 2018, he notes. “With the continuing exploration success across the property, the lightly explored ground between Pascalis and Courvan remains a key exploration target for new discoveries,” Mikitchook says.
IA Securities maintains its “buy” rating and $2.40 price target. “The company is on track to get serious attention from mid-tier or senior producers,” analyst George Topping says in a research note. “Management’s strategy of building economic resources in a camp domiciled by several senior producers will pay off within a couple of years.”
Since 2016, Probe Metals has pursued land consolidation in the Val-d’Or district. The total Val-d’Or East land position stands at 334 sq. km, and represents one of the largest landholdings in the Val-d’Or mining camp.