Probe Mines Ltd. has one of the gold sector’s most promising new discoveries at its Borden project in Ontario, and analysts have been eager to see an updated resource estimate for the deposit’s high-grade zone.

The estimate was released Tuesday evening and the response was positive, with analysts saying the indicated resource of 1.6 million ounces at a grade of 5.39 grams per tonne was better than they anticipated.

“The resource update supports our view that a viable underground mining operation can be developed that could have relatively low initial capital costs given the proximity to surface,” RBC Capital Markets analyst Sam Crittenden said in a note.

However, Probe shares dropped in early trading on Wednesday as some investors were less pleased with what they saw.

Andrew Kaip at BMO Capital Markets called the resource a “constructive step,” noting that it highlights a “shift in the centre of gravity” at Borden towards the underground potential of the project. Probe shifted its focus from a large open-pit mine to a high-grade underground mine when gold prices plunged last year and it found more gold in the high-grade zone.

There is also still upside potential. Drilling in the high-grade zone continues, and Jennings Capital analyst Peter Campbell said that should increase the size and/or grade of the discovery.

Mr. Kaip said he sees potential for Borden to produce 275,000 ounces of gold a year at cash costs of US$640, which would be highly profitable even in a weak gold price environment. Those figures will firm up later this year, when Probe releases a preliminary economic assessment for the project.