In a Sept. 3 research note, iA Securities analyst George Topping reported that the size, potential and location of Probe Metals Inc.'s (PRB:TSX.V) Val d'Or projects in Quebec put the company on "producers' mergers and acquisitions screen."
"Probe has the largest Val d'Or land package and now the largest resource in the camp, which elevates it to a premium takeover candidate," the analyst added.
That just released resource estimate totals 2.6 million ounces at an average grade of 1.9 grams per ton (1.9 g/t) gold. About 70%, as opposed of the previous 56%, of the resource is open pit at a grade of 1.5 g/t.
The grade for the open pit Measured and Indicated resource is 1.7 grams per ton and for the inferred resource, 1.4 g/t. Yet, iA Securities expects the Inferred grade will increase with further infill drilling, noted Topping. Whereas the grades of the Inferred open-pit resources were "slightly lower than expected," they were offset by the total ounces.
Further, adding the 565,000 ounces located on Probe's optioned properties, Monique and Sleep, takes Val d'Or's total resource estimate to 3.1 Moz, Topping pointed out. Plus, "recent parallel trends to the New Beliveau deposit should continue to grow."
iA Securities expects that Probe will be acquired in one to two years, perhaps by Agnico Eagle or any of a number of midtier or senior producers, particularly those in the area. The management team has done it before, selling its Borden mine to Goldcorp. "The longer it runs, the higher the eventual takeout price," Topping commented. Probe, with $23 million in cash, does not need financing any time soon.
IA Securities has a Buy rating and a CA$2.40 per share target price on Probe Metals, whose stock is currently trading at around CA$1.50 per share.
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Disclosures from iA Securities, Probe Metals Inc., Research Update, September 3, 2019
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Company Related Disclosures:
Probe Metals Inc.: In the past 12 months, Industrial Alliance Securities Inc. has managed or co-managed a public offering of securities for the issuer.
The analyst has visited the issuer’s operations. No payment or reimbursement was received from the issuer for the associated travel costs.
