In an April 23 research note, analyst Andrew Mikitchook reported that BMO Capital Markets initiated coverage on Probe Metals Inc. (PRB:TSX.V) with an Outperform rating "to reflect expected upside" and a CA$2 per share target price. The company's stock is currently trading at around CA$0.94 per share.
Mikitchook reviewed Probe Metals' advantages.
Its flagship project, Val d'Or East, located in Quebec's Abitibi gold mining district, is "one of the higher-quality Canadian gold exploration properties with prospectivity for resource growth and the potential to transition toward a development-stage project," he described. The project's current mineral resource is 1.4 million ounces (1.4 Moz).
Probe Metals has a strong management team, Mikitchook highlighted, with a "notable track record" of exploration success and shareholder value creation along with decades of experience. For one, the team garnered $25 million in financing for the company, which should cover it through 2020.
Also, the people on Probe Metals' management and exploration teams are the same ones who navigated Probe Mines through two major mineral discoveries and the sale of the company to Goldcorp in 2015 for CA$526 million. During the takeover, Probe Metals was spun out, and Newmont Goldcorp today holds a 14% interest in it.
Val d'Or East has exploration upside, for one, in the parallel trends to the west of Pascalis, like the Courvan Trend where encountered intercepts were comparable to those of Pascalis, Mikitchook pointed out. Pascalis and Courvan remain open along strike and show potential to the north and south. Also, another mineralized trend could exist between Pascalis and Courvan, in the underexplored New Beliveau area. "We are including 0.75 Moz of potential upside in our valuation," he added.
Catalysts throughout 2019 will be results from drilling the new Courvan Trend, including the Southwest and Creek zones, and drilling New Beliveau, seeking new parallel trends, indicated Mikitchook. The major catalyst expected this year, though, is a Val d'Or East resource update in H2/19, which will include expansion of the Pascalis resources and the new Courvan Trend discoveries.
"Probe's Val d'Or East project is on a trajectory to be the next exploration success in the Val d'Or area," Mikitchook concluded. In addition, it has the "prospectivity, jurisdiction and management team to potentially attract acquisition interest as it is advanced."[NLINSERT]
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Disclosures from BMO Capital Markets, Probe Metals, April 23, 2019
I, Andrew Mikitchook, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Company Specific Disclosures
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Probe Metals within the past 12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to Probe Metals within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Probe Metals within the past 12 months.
Disclosure 6A: Probe Metals is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 18: A redacted draft of this report was previously shown to Probe Metals (for fact checking purposes) and changes were made to the report before publication.
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