Weekly Trends: July 6, 2013

Probe Mines, Palladium Resiliancy, & Market Commentary

Commodity Talk

Precious metals digested this week as expected. Gold hovered in a lower channel between $1200 and $1270, silver stayed near $19 and platinum around $1350. From a technical perspective, palladium has shown the most resiliency as it remains well above the 2012 low of $555. Upside momentum stalled out at the 200-day moving average at $699 and the 50-day moving average at $714 also remains an upside resistance point. If global economies continue to improve there should be an increase in autocatalyst demand, which would be very positive for palladium.

Palladium price showing resistance

Palladium price showing resistance


The TSX Venture new highs – new lows indicator recovered from -88 to -19 this week, somewhat par for the course so far this year. Positive U.S. employment data released on Friday hurt the gold market as expectations for QE tapering increased. Multiple re-pricing and extending of warrants by mining companies coupled with small financings added to pessimism this week. Miners will be squeezed from both sides with rising oil prices increasing costs of production and metal values remaining depressed.

Digestion week for the TSX-V


Probe Mines LimitedShares outstanding: 75,433,127
Closing price: $1.60
Market Cap: 128,991,000
Resource: 4.3 million ounces

This week we take a look at Probe Mines (PRB.V), a gold exploration company in Ontario. The Borden gold project contains 4.3 million ounces of gold at 1.03 g/t. Probe is in a strong financial position with over $32 million in cash (as of Jan. 1, 2013) and an additional $15 million raised in May through Agnico Eagle’s purchase of 7.5 million shares at $2.

The resource continues to grow at Probe and the exciting part of the story is they are now finding high-grade intercepts. Probe has an excellent chance of being a takeover candidate down the road as big (+2 million ounces) deposits are becoming rare and are attractive to majors. Rainy River and Prodigy are two companies similar to Probe that were recently taken over.

Update: Northern Shield Resources (NRN.V), last week’s “Stock of the Week”, was up a few pennies and led the TSX-V in volume on Tuesday (July 2, 2013) trading over 2 million shares. No news release was issued.

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