CymorFund – Sell Probe Mines Limited – 120% Profit

March 9, 2014 

Profit Is a Wonderful Thing – Sell Probe Mines @ $3.24

On May 30, 2013, CymorFund recommended buying Probe Mines @ $1.47.  Probe has done wonderful for us. Currently it trades at $3.24.

This is a 120% GAIN in 9 months.  This is a double and more. Actually a 2.2 double.

This is a 45% GAIN in 2014.

There is an old adage – You can’t lose money by taking a profit.

 

The Upside

Some say  Probe can reach $7.00 a share. It is really possible, but the market cap right now is approaching $1/4 billion. It currently stands at $247,000,000.  That is a lot of money.

Regardless of how many additional gold reserves are proven by further drilling, the price tag is growing and the majors have been badly hurt by overpaying for gold exploration companies in 2012 & 2013. To make an acquisition of this size, a major gold mining company must also take into consideration how much it will cost to build a mill and processing facility.

 

The Moving Average

Stocks have a funny habit of retreating to their MA (moving average). When good news comes, a stock will jump up, and sometimes have a gap. Look at the PRB chart below.

Probe Mines
Probe Mines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There may be an opportunity to again buy this stock. If history prevails, the price will retreat to the MA, and perhaps we will again recommend purchasing.

Meanwhile, a Profit is a Profit. Sell @ $3.24

 

 While this website and the author’s opinions, are intended to be as accurate as possible, 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. We assume no responsibility for errors, omissions, or contrary interpretation of the subject matter herein. Any perceived slights, omissions, or mis-statements of specific persons, peoples, or organizations other published materials are unintentional.

This information is not intended for use as a source of legal, business, accounting or financial advice. All readers are advised to seek services of competent professionals in the respective fields. No representation is made or implied that the reader will do as well from using the suggested techniques, strategies, methods, systems, or ideas; rather it is presented for news value only. We do not assume any responsibility or liability whatsoever for what you choose to do with this information. Use your own judgment. There are no guarantees.

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. Any perceived remark, comment or use of organizations, people mentioned and any resemblance to characters living, dead or otherwise, real or fictitious, is purely unintentional and used as examples only.

 

 CymorFund’s Original Recommendation Follows

 CymorFund Stock Picks – Probe Mines Limited

May 30, 2013

Has the Gold Bubble Burst?

We have a new Cymor gold stock pick for our investment newsletter.

 There has been a lot of noise lately that the price of gold is repeating the pattern of the 1980’s, when the gold price rose dramatically from $250 to over $800, and then collapsed back down to $250. In the current cycle the price of an ounce of gold rose from $300 to $1,900, and has fallen back for the last 1 1/2 years to $1,350+. Not quite as dramatic yet as the that 1980 cycle, but still somewhat dramatic – so far.

5 year Gold Chart KITCO

 

 This is not the first time there has been a correction in gold and it won’t be the last.

Our Amazingly Accurate Gold Forecast
Cymor Stock Picks cautioned against the euphoria in gold in its interview with SmallCapPower of October 17, 2011, and in our commentary of September 2011. OUR PREDICTIONS WERE SPOT ON, as they have been every time we projected the path of gold.

What Are the Experts Doing?
While the pundits bemoan the falling price of gold, the industry insiders and experts are quietly putting their money into this sector as gold company shares are very cheap now. Insider buying is accelerating. Have a look at Insider Trading in any stock. The results might surprise you.

In 1980, it cost little to mine gold with rich gold deposits mined, while physical gold sold for $300 per ounce  providing a decent profit, especially when the gold deposits were much richer than the ones we know about today. This month a study comparing the cost of mining gold and producing gold from every gold mine around the world was published. The average cash cost of producing an ounce of gold, ranged from a low of $550, to $1,200. That is just the cost of production and doesn’t include the cost of replacing the deposits that are being depleted today, nor the Capex, nor the operating expenses. The cost of finding and producing an ounce of gold, is pretty close to the market price of gold these days, and at the current price, there is little room for profit or contingencies.

If you can’t produce more gold to meet the ever increasing demand for gold, the always present law of supply and demand will kick in. Gold will retain its value. The dramatic fall in gold recently was prompted by specific market actions  (see our article explaining this of April 17 ), but gold has not continued its fall. It’s fall has currently stalled and even regained some ground. Technically there seems to have been a double bottom around $1,350, with a small rebound.

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)

 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.

By Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele. He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section. He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm. Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.