Stonecap Securities - Infill Drilling Highlights Continuity Across The High Grade Zone
Probe Mines Ltd. (Probe) released assay results from 29 diamond drill holes for its Borden Gold Project located in Ontario.
Highlights include:
Higher Grade Mineralization Continuous Across All Section – Probe released 10 drill holes assay results (Figure 1) from its “High Grade Zone” (HGZ). Assay results continues to highlight the continuity of the HGZ across all section including the new infill sections 1500 m SE and 1600 m SE, which both ended in thick and high grade mineralization. Notable intercepts include: 44 m grading 4.0 g/t gold, which included 14.3 m grading 11.1 g/t gold on Section 1500 m SE and on Section 1600 m SE the company intercepted 41 m grading 5.1 g/t gold including 11.6 m grading 15.1 g/t gold.
Infill Drilling – Majority of the infill drilling for the Northwest end of the deposit (Section 450 m NW – 1000 m SE) showed intercepts higher than the global resource grade and the presence of a much higher grade narrow zone within the potential bulk tonnage deposit. Highlights include: 50 m averaging 1.4 g/t gold and 19 m grading 2.2 g/t gold (Section 150 m NW) as well as 6 m of 3.3 g/t gold (Section 200 m NW). The weighted average intercept had an average length of 12.7 m grading 1.51 g/t gold. These results can be viewed in Figure 2.
Valuation
Our adjusted net asset value for Probe is based on our DCF analysis of Borden Gold with a 0.45x multiple and corporate adjustments to get to our rounded target price of $3.50. Probe currently trades at a discounted 0.6x our target price of $3.50.
Conclusion
We reiterate our Outperform rating based on the resource expansion potential at Borden Gold Project with drilling to date showing encouraging results and adding an additional 950 m of high grade mineralization along strike to the deposit. We continue to favor Probe for its cash rich treasury, major catalyst underway in the form of a resource update expected in Q4/13 and an asset located in the premium jurisdiction of Ontario, which has been a hub of acquisition activity.
