Prodigy eyes bigger, more profitable gold mine in Ontario

Building on a previous scoping study Prodigy Gold sketched out a more attractive gold mining scenario that generated a flood of interest in its stock.

Author: Kip Keen
Posted: Friday , 23 Dec 2011

HALIFAX, NS -

Prodigy Gold (TSX: PDG) improved key aspects of its Magino gold project 40 kilometres northeast of Wawa, Ontario, in an updated scoping study that included: more gold production, a longer mine life and cheaper operating costs.

Underlying the update is a larger resource base that has grown to 2.2 million ounces gold @ 1 g/t in the indicated category with an additional 1.7 million ounces gold at 0.99 g/t in the inferred.

Prodigy Gold would now open-pit mine Magino at 20,000 tonnes per day instead of 15,000 tonnes per day, producing 249,319 ounces gold a year over an 11 year minelife as opposed to 116,500 ounces gold a year over a nine year minelife.

While it would cost considerably more to build - projected capital costs weighed in at C$405.6 million versus C$242 million - beefier output made up for pricier start-up costs by, on paper at least, churning out substantially more cash.

In its last scoping study Prodigy estimated it would reap a C$484 million net present value at $1,200 gold (pre-tax and discounted at 7.5 percent). Using the same parameters in the new study, however, net present value surged to C$743 million.

Prodigy Gold also forecasted operating costs to drop slightly, from C$512 per ounce gold to C$496 per ounce gold. Meanwhile, though tonnage increased Prodigy Gold held gold grades near steady at 1.15 g/t, down slightly from 1.18 g/t gold. It also reduced the modelled waste to ore strip ratio from 2.76:1 to 2.05:1.

On news of the updated scoping study, trading volume in Prodigy Gold stock spiked while its shareprice climbed close to C$1 early in the trading day before settling down about 10 cents. As of presstime it was up five percent to C
.90.

http://www.mineweb.com/mineweb/view/mineweb/en/page66?oid=142184&sn=Detail&pid=102055

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