Positive initial metallurgy for Probe Mines

Results of an initial scoping study on the metallurgy at the Borden Lake project near Chapleau, Ontario 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 about 4.2 grams gold per tonne and 1.6 grams gold per tonne.

The initial metallurgical work suggests that Probe can get good recoveries with standard, cost-effective methods, the company’s president and chief executive, David Palmer, said in a statement.

Calling the initial recoveries “encouraging,” Dale Mah of Mackie Research said in a note that “it is also encouraging that 20% to 43% recovery was achieved by simple gravity concentration.” Mah has a buy on the stock with a 12-month target price of $4.00 per share. At presstime Probe was trading 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 expects results for silver recoveries, environmental testing of tailings, and mineralogical studies shortly and believes it can complete an updated resource estimate in early 2012.

Currently Borden Lake has indicated resources of 11.61 million tonnes averaging 0.8 gram gold per tonne for 305,000 oz. contained gold, with inferred resources adding 169.32 million tonnes averaging 0.69 gram gold for 3.76 million oz. contained 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 0.3-gram-per-tonne cut-off grade and 78 diamond drill holes. It excluded three satellite gold zones.

RBC Capital Markets is the latest brokerage to initiate coverage of Probe, joining Mackie, Jennings, and Northern Securities. On Nov. 24 RBC associate analyst Sam Crittenden initiated coverage with an Outperform, Speculative Risk rating and a $4.00 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 wrote in a Nov. 1 research note. “Based on the current resource, Probe is trading at $35/oz (0.5 g/t cut-off resource) compared to the peer median of $85/oz to which we view 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 NI 43-101 resource of 3 to 4 million ounces of gold (depending on cut-off grade),” analysts Peter Campbell and Spencer Langley wrote in a note. “Of particular interest to us are 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 just 9 km east of Chapleau, Ontario and four gold mines are within a 150-km radius of the property. Trelawney Mining and Exploration‘s (TRR-V) Cote 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 meta-sediments 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 about 14,000 hectares in the McFauld’s Lake area, including a 100% stake in the Black Creek chromite deposit.

The company is also exploring its Cree Lake gold project in the Swayze belt of Ontario, which is under option from Mantis Mineral Corporation

Probe also has a 45% interest in a joint-venture property with Lake Shore Gold, which surrounds Lake Shore’s Timmins mine project.  

At presstime Probe had about $35 million in its treasury.