Prodigy Gold soars after PEA results from Magino indicate 49% IRR

April 4 1:58 pm by Deborah Sterescu

Prodigy Gold's (CVE:PDG) shares rose as high as 19% on Monday after the company announced an estimated 49% internal rate of return from its Magino gold project in northern Ontario, with cash costs of just US$496 per ounce.

Following the release of the comany's preliminary economic assessment (PEA) on the Magino mine today, its shares soared to $0.50 as of 11:46am EST - up nearly 15%.

The NI 43-101 compliant report, led by CWA Engineers, also estimated that using a US$1,000 per ounce gold price, the open pit gold project would generate a pre-tax net present value of $351 million at a 5% discount rate.

Average annual gold production for Magino is projected at 166,500 ounces per year over a nine-year operating life, for 1.50 million total ounces of recovered gold. The recovery rate is estimated at a whopping 95%, with the average grade processed during the first two years of operations expected to be 1.6 g/t gold.

Prodigy said that start up capital costs were calculated at $242 million, with an additional $34 million in sustaining capital, and a payback period of 1.8 years.

"With a projected mine life of nine years, cash costs of US$496 (Cdn$521) per ounce and rapid payback of capital, Magino is developing into one of the leading undeveloped gold projects in eastern Canada," said president and CEO Brian Maher.

"The on-going in-fill drilling program, which is targeting gold mineralization within the proposed open pit, may enhance project economics as we convert internal waste into resources, simultaneously increasing contained ounces and lowering costs."

The company said it plans on updating the preliminary economic report once this drilling is completed. Based on the pit design and production schedule used for the study, Magino has total mineable resources of 41.8 million tonnes, grading 1.18 g/t gold.

A full feasibility study for the proposed open pit mining project is scheduled for early 2012.