Probe at $2.18
How to value Probe? Today the market Values Probes Assets; the 5.8 Moz Total Resource at Borden, plus $40M Cash and BC at $141.7M on O/S ($178.76M F/D)
The Borden Resource could be valued 3 different ways, less Balance Sheet Cash
- Total Resource 5.8 Moz (0.7 g/t) $17.58/oz O/S and/or $24 F/D;
- Pit Constrained 3.4 Moz (1.0 g/t) $30/oz O/S and/or $41 F/D; and
- High Grade 1.8 Moz (1.44 g/t) $56/oz O/S and/or $77 F/D
On the eve for the 3rd Resource Estimate, my estimate increases the Total Resource by 38% to 8.0 Moz, using new data from 124 new drill holes (77 holes will increase resource with 47 Infill upgrading quality reserves)
One could argue that SP alone should increase by 38% too, if Resource increases 38% to 8.0 Moz, which would now represent $3.00/share, from todays $2.18 market price. (at 9.0 Moz the corresponding SP should be $3.38)
-38% increase scenario, Total Resource 8.0 Moz (0.7 g/t) $12.75/oz O/S at $2.18 sp;
- Pit Constrained 5.09 Moz (1.0 g/t) $20.00/oz; and
- High Grade 2.48 Moz (1.44 g/t) $41.00/oz
IMO this $3.00 target is the Undervalued Probe Scenario based on the Borden Gold Value on our 5.8 Moz Total Resource of only $17.50/oz on O/S shares and/or $24/oz F/D for Total Resources.
The Real Value of Probe at 8.0 Moz, using a similar valuation as per the Trelawney Buy-out using $75/oz would be $600M + $40M cash = $640M, on 65M O/s, nearing $10.00 per share. (82M F/D shares at $7.80)
It’s a wide range, todays undervalued Probe Target Price at $3.00/sh based on 8 Moz, to the near $10.00/sh for similar Buy-out prices (Trelawney) based on $75/oz.
Black Creek Value??? Let’s hope for a Spin-out Newco with a Deal only for Borden!
A newly valued Probe will emerge throughout 2013, as I also see the POG heading to new Highs this year!