Magino holds promise for Prodigy Gold

Results from infill and resource expansion drilling at Prodigy Gold‘s (PDG-V) Magino gold project in Ontario sent the junior’s shares up 10.34% to close at 64¢ yesterday. At presstime in Toronto Prodigy was trading at 59¢ per share within a 52-week range of 19¢-81¢.

The drilling focused on two parts of its 100%-owned Magino gold deposit-the southwest corner of the proposed open pit and the central area.

Drill hole MA11-105 in the southwest portion of the deposit intercepted 161.1 metres of 1.35 grams gold per tonne; MA11-102 in the central area returned 36.3 metres of 2.64 grams gold per tonne; and MA11-098 to the northeast of MA11-102 cut 129 metres grading 1.01 grams gold.

Prodigy says these and previous drill results will expand the project’s gold resources and cut the strip ratio within the proposed open pit.

The results will be incorporated into an updated resource estimate in late September followed by a revised preliminary economic assessment.

“The nearly completed in-fill drilling program, combined with additional metallurgical studies and the recently reported geotechnical data allowing for steeper pit walls should significantly improve project economics,” Brian Maher, Prodigy’s chief executive, said in a statement.

The  property includes the past producing Magino underground gold mine 40 km northeast of Wawa, Ontario, about 14 km southeast of the town of Dubreuilville.

The Magino gold mine was in production from 1988 until the summer of 1992 during which time it produced 697,190 tonnes or ore at a recovered grade of 4.70 grams gold per tonne, yielding 105,543 ounces of gold. All production was from underground operations using shrinkage and long-hole stoping.

Today Prodigy is evaluating Magino as an open-pit mining opportunity with the potential for deeper, higher grade gold production. 

In February Prodigy updated its resource estimate for Magino, reporting indicated resources within a conceptual pit shell of 51.6 million tonnes grading 1.16 grams gold for contained gold of 1.92 million ounces.

Using the same cut-off grade of 0.35 gram gold per tonne, inferred resources were calculated to be 18.3 million tonnes grading 1.04 grams gold for 587,100 ounces of contained gold.

Prodigy released its initial preliminary economic assessment in April. The study showed that at a base case of US$1,000 per oz. gold, the operation would yield a pre-tax net present value of $351 million at a 5% discount rate generating an internal rate of return of 49% with a payback period of 1.8 years. 

Pre-tax cash flow from operations over the proposed life of mine was estimated to be $796 million, with net cash projected to be $520 million over the life of the mine.

Start-up capital costs were estimated to be $242 million with an additional $34 million in sustaining capital.

Average annual production was estimated to be 166,500 ounces of gold a year over a nine-year operating life, producing 1.5 million ounces of gold.

And average life-of-mine cash operating costs (excluding sustaining capital) were pegged at US$496 per oz.

The life-of-mine average strip ratio was estimated to be less than 2.8 to 1.

The PEA also contemplated using a conventional carbon-in-leach processing facility operating at 15,000 tonnes per day.