Probe Gold Inc. (PROBF)

[investor15]

Buy Probe Mines Limited The Best Gold Value Today

May 30th, 2013 | By Larry Cyna
CymorStockPicks
Cymor Fund

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The Demand for Gold is Fairly Constant, but the Supply is Shrinking. The big resource companies have bought up most large gold deposits known today, and these deposits are being slowly mined out. Remaining known deposits around the world are smaller, with lower grades, and in ever more difficult jurisdictions. Have a look at Barrick’s difficulties in Chile which is getting ever more expensive and difficult.

All of which brings us to our current stock pick. There is a rich gold deposit that is dramatically expanding as drilling continues, and it is in a very safe jurisdiction (Ontario), in a existing gold producing belt, and is the largest independent deposit known today that also has remarkable expansion potential. That deposit is owned by Probe Mines, a junior company listed on the TSXV and trading at $1.40 -$1.50.

Probe Mines Ltd is A Target of the Big Guys
Our investment newsletter stock pick is one of the largest remaining known deposits of gold in a safe jurisdiction, and the majors are drooling over the prospect of grabbing this company. One of the majors just put $11,250,000 in Probe Mines, with the right to put another $11,812,500 in to exercise warrants. The press release follows:

Agnico Eagle Mines Limited (“Agnico Eagle”) has agreed to purchase ……. 7,500,000 units of the Company (the “Units”) at a price of $1.50 per Unit, each such Unit to consist of one common share and three-quarters of one Warrant following completion of the Offering. On closing of the Investment, Agnico Eagle will own approximately 9.94% of Probe’s issued and outstanding common shares on a non-diluted basis. ….., Agnico Eagle will have the right to participate in any future equity offerings by Probe in order to maintain its pro rata investment in the Company Closing of the Offering is expected to occur on or about May 28, 2013 n the event that all Warrants are exercised, the Company will raise an additional $11,812,500.

If the major gold companies are investing large sums in this down market, you had better pay attention.

Will the Price of Gold Rise Again?
There are some encouraging signs for the price of gold, primarily the support offered by physical buyers. The ETF’s and the Hedge Funds are selling paper gold to raise cash to meet the demand from investors who wish to sell their units. The opposite is happening for physical possession of gold. The US Mint has just again started selling gold coins (there was a lack of supply to meet the demand), India has been importing 50% more gold this year than last, China is buying record amounts of gold, and the Banks worldwide are buying and adding to their holdings.

May 28/13 As UBS says, “Headlines this week reveal continued appetite from central banks in April… Buying from these central banks highlights the trend for increasing gold reserves, especially among EM central banks, which we expect to remain in place this year. While news of central bank buying does not have an impact on price, it does help overall sentiment on the margins.”

Gold & Silver Physical demand reached the point last week where it was overwhelming the New York markets slowly but surely. In summary, the gold market is seeing sales from the SPDR gold ETF which have persisted for nearly three months now. The total held in the SPDR fund is expected to fall below 1,000 tonnes this week if the sales continue as before. We do believe there is a core of holders keeping their gold for the very long term, such as Paulson’s funds. What proportion of the fund these comprise is not certain, but we must be getting close to the point where the selling stops. When it does the robust demand, particularly from China, will quickly absorb all available gold. The timing of that event is impossible to say.

Probe Mines Ltd TSXV-PRB
The company’s projects are near Chapleau Ontario, and include two major multi-million ounce gold deposits, with over 4.3 million ozs/Au and growing. What is more exciting is that recent drilling has revealed ever increasing grades of gold with the company being optimistic of a larger and richer deposit, as drilling is showing the deposit still open in both directions along strike.

Probe now has a rich cash balance which is allowing it to explore further and to be secure against market conditions. There are 75 million shares outstanding, (fully diluted 88 million), with a $104 million market cap. The average target price for 1 year is $3.66 in Yahoo Finance, which is a bit less than many local brokerages have projected.

Investment Letter Stock Pick
Buy Probe Mines Ltd (PRB-TSXV $1.47)

http://cymorfund.com/2013/05/gold-stock-investment-letter-stock-picks-probe-mines-limited-best-gold-value/

We may or may not have positions in securities we name. In making an investment decision consider numerous factors such as portfolio balancing, timing, cash and capital reserves, asset allocation and other. Do your own research. Matters discussed contain forward-looking statements that are subject to risks and uncertainties and actual results may differ materially from any future results, performance or achievements expressed or implied.

Views expressed are opinions and not investment advice. You should retain a licensed professional to guide you and not rely on the opinions expressed herein. This report is neither a solicitation nor a recommendation to buy or sell securities. We are not a registered investment advisor nor a broker-dealer. The information contained herein is based on sources which we believe reliable but is not guaranteed as being accurate or a complete statement or summary of the available data.