Probe Mines Wins Ontario Prospector Award

And the award goes to… Probe Mines. 

Probe Mines (TSXV:PRB) was in the spotlight last week when the company cliched the 2013 Ontario Prospector Award for its Borden gold discovery, located near the town of Chapleau, Ontario and 160 kilometers southwest of Timmins. 

Discovered in 2010, the property is estimated to contain, according to an updated resource estimate released in January, an indicated resource of 3.6 million ounces averaging 1.02 grams per tonne, and an inferred resource of 625,000 ounces with average grades of 1.08 g/t — a 26 percent increase from previous estimates.

“We are honoured to receive this award from the Ontario Prospectors Association for the Borden Gold Project,” David Palmer, President and CEO of Probe Mines, said in a prepared statement. “It is a validation of the dedication and excellent work that the Probe team has done in advancing the Borden Gold Project into one of the premier new gold projects in Ontario.”

Palmer credited prospectors Jack Robert and Mike Tremblay for discovering the initial outcrop and the rest of his field team including geologists Craig Yuill and Breanne Beh.

According to the Ontario Prospectors Association, the discovery is unique in that it lies within the Kapuskasing Structural Zone, an area previously thought to be too high in metamorphic grade to contain significant gold mineralization. However, the geologists persisted.

“Undaunted by dogma, Jack and Mike obtained an Ontario Prospector Assistance Program (OPAP) grant way back in the old days to fund their innovative and bold prospecting initiative. That work led to the discovery of minor anomalous gold mineralization at Borden Lake, approximately 15 km east of Chapleau. Lack of interest in the area meant the project was shelved for a good many years before Mike and Jack returned to the area in 2008 and did some follow-up prospecting and acquired more encouraging results,” the association said on its website by way of background.

“To his credit, David Palmer, President and CEO of Probe Mines took the chance of acquiring the property in an area largely considered to be un-prospective. The first diamond drilling campaign of 8 holes, Probe Mines encountered widespread gold mineralization that has ultimately developed into the current gold deposit and turned the once shunned area into one of the hottest exploration plays in the Province. Indeed the Borden Gold Project is shaping up to be perhaps the most important new gold discovery in Ontario since Hemlo.”

Hemlo refers to Ontario’s fourth largest mining camp discovered in 1981 by prospectors John Larch, Don McKinnon and Richard Hughes along with famed stock promoter Murray Pezim. A CBC documentary said that Hemlo “[started] a staking rush not seen in Canada since the Klondike gold rush of the late 19th century,” with two companies, Golden Sceptre and Goliath Resources, securing rights to a large land package. A legal battle then ensued over the ownership of the three mines, which was resolved by the Supreme Court of Ontario by awarding the property to Teck-Cominco (now Teck Resources (NYSE:TCK, TSX:TCK.B)) and Corona Gold (TSX:CRG). In 2009 Barrick Gold (NYSE:ABX, TSX:ABX) bought out Teck-Cominco’s 50 percent stake in Hemlo for US$65 million, folding it into its production portfolio. In the first half of this year Hemlo produced 95,000 gold ounces, according to Barrick.

Among the expert comments published on Probe Mines by The Gold Report is that of Kerry Smith, a research analyst at Haywood Securities.  Smith pointed out that the original plan at Borden was to develop a large, low-grade open-pit deposit, but with the diminished gold price and high capital expenditures associated with such operations, the strategy has shifted to an underground operation.

“The advantage that CEO David Palmer has with the Borden project is its high-grade core, which is pretty continuous and well defined. It’s going to be an underground operation, which would be significantly smaller than an open pit, so the capex will be lower. The grade Probe is targeting will be in the 5–6 grams per tonne (5–6 g/t) range. If it can come up to 1.5–2 Moz, 5–6 g/t material that it can mine underground, it would be a lot more interesting,” Smith said in an October interview with The Gold Report.

He also noted that the underground option is part of the reason why Agnico-Eagle Mines (NYSE:AEM, TSX:AEM) decided to become a strategic shareholder in Probe, considering Agnico-Eagle’s expertise in mining 5-6 g/t underground gold deposits in Ontario.

Mining investment newsletter writer John Kaiser said he likes the fact that Probe has discovered a higher grade zone of 5 to 10 g/t beyond the earlier low-grade finds. Kaiser told The Gold Report he’s predicting a resource estimate in early 2014 to come up with around 1 million to 1.5 million gold ounces graded roughly 5 g/t.

“This finding is a surprise that has the company and many investors wondering, are we dealing with something a lot bigger? That’s the kind of blue sky that you want exposure to in this sort of market that we have now,” said Kaiser.

So far this year the market has rewarded Probe with a 23.3 percent gain, with most of those gains coming in the last 6 months, during which the stock appreciated by 70.7 percent. Probe Mines closed up 2 cents on Tuesday at $2.22 a share.

Securities Disclosure: I, Andrew Topf, hold no investment interest in any of the companies mentioned.