I didn't personally see this article, however, it was forwarded to me......

Maureen

October 13, 2011

Probe Mines Ltd (PRB-V: $1.95)

Is Probe's Borden Lake gold discovery the encore to Osisko's takeout of Brett's Hammond Reef?

Synopsis:

What did emerge from McFauld's Lake was the recognition that the 30%-40% chromite horizon discovered by Mac Watson's Freewest and its partners Spider and KWG was much more than an inferior cousin to the richer chromite seams mined in South Africa, something that only iron pellet and coking coal producer target="Blank">see Cliff's Chromite {rpject September 2011 Update. Although Probe failed to parlay its nearby claims into extensions of the Eagle One deposit, it did discover that one of its claims covered a rich portion of the chromite horizon between Black Thor and Big Daddy, upon which Cliffs plans to build an access road and water pipeline.

The M+I+I 43-101 resource of 8,440,000 tonnes averaging 40% Cr2O3 has an in situ value of about $1.2 billion, which makes it worthless on a standalone development basis, but its location certainly creates incentive for Cliffs to cut a deal which consolidates this missing piece into its development plan and eliminates the risk of future litigation related to infrastructure positioning that stymies Probe's opportunity to exploit its asset.

While the Black Creek chromite fragment two years ago represented the basis for Probe's ongoing viability as a junior, making the junior a difficult negotiating adversary for Cliffs, David Palmer's decision in 2010 to acquire and aggressively explore the grassroots Borden Lake gold project as a bulk tonnage disseminated gold play has created a brand new focus that impressed BMO so much last April that it raised $25 million for Probe at $1.35 for a project that did not deliver an I+I 43-101 resource until late August consisting of 4 million ounces gold and 5.2 million ounces silver at an average grade of 0.7 g/t gold and 0.9 g/t silver at a cutoff grade of 0.3 gpt gold.

Unlike the Cote Lake gold project of

Borden Lake does stand out through the absence of mesothermal quartz veins that usually bring high grade gold joy, and it is generally characterized by mineralization occurring as disseminated and fracture controlled gold within a metasediment host rock lacking obvious lithological and structural controls, though a higher grade core does exist along strike and down dip within the heart of the mineralized envelope defined by the 0.3 g/t cutoff grade.

What Borden Lake lacks in the form of spectacular narrow high grade intervals that drag up the average grade of intervening waste rock, the sort that elicits instinctual howls of protest quickly silenced by the hammer of vested street agenda, it makes up with consistent humdrum gold mineralization above the cutoff grade in a style reminiscent of Hammond Reef, whose inferred resource of 6.7 million ounces of 0.8 g/t gold at a 0.3 g/t cutoff Osisko acquired in August 2010 through a friendly takeover bid that valued Brett Resources Inc at $547 million.

Without question Borden Lake is lower grade than Hammond Reef, but today gold is trading within a range of $1,500-$1,700 per oz, has been above $1,900, and is sustainable in the $1,500-$2,000 range according to my analysis articulated in my recent

Conclusion: I am issuing a Good Relative Spec Value Buy at $1.95 with a $3 target during the next couple months, and at least $4 during Q1 of 2012. This recommendation hinges on the assumption that the global economy has merely slowed, will not plunge into a depression, and will show signs of an upturn during 2012, which would be supportive of my analysis as to why gold in the $1,500-$2,000 range represents a sustainable new price reality rather than the peak of a bubble. But it also acknowledges that Borden Lake is a significant new grassroots gold discovery in a region west of the Abitibi Greenstone Belt and as such it offers speculators surprise potential on the upside in terms of the size and scale of this new discovery. Spec Value Value Hunters can thus contemplate a modest 50%-100% increase in the short run without any major improvements in the expected fundamentals of Borden Lake, and they can also entertain optimism that Borden Lake could become a much bigger story than a 3-5 million ounce low grade open pit mining scenario.