FSC / Press Release
Prodigy Gold Options Hardrock East to Goldstream Exploration Ltd.
Vancouver, British Columbia CANADA, October 19, 2011 /FSC/ - Prodigy Gold Inc. (PDG - TSX Venture, KX3 - FWB)("Prodigy" or "Prodigy Gold") is pleased to announce that it has entered into an agreement (the "agreement") with Goldstream Exploration Ltd. ("Goldstream"). Goldstream is a private Ontario corporation founded by the principals of Bayfront Capital Partners ("Bayfront"). Goldstream is focused on the exploration and development of the Hardrock East gold project in the Beardmore-Geraldton gold camp of northern Ontario. Under the agreement, Goldstream has the option to acquire 100% of Prodigy's interest in a group of properties, collectively referred to as the Hardrock East project. Goldstream can exercise the option to acquire 100% of the Hardrock East project by: 1) completing an equity financing of Goldstream by October 31, 2011 of at least $3,000,000 (the "financing"), 2) issuing Prodigy shares representing 30% of the outstanding voting shares of Goldstream on a fully diluted basis after giving effect to the financing, and 3) incurring exploration expenditures of $1,000,000 by December 31, 2012 and a further $1,000,000 in exploration expenditures by December 31, 2013 at the Hardrock East Project or completing an initial public offering or other transaction which results in the shares of Goldstream or shares of another issuer being publicly traded by December 31, 2013.
Goldstream has further advised Prodigy that the financing has been completed and that in accordance with the agreement, Goldstream has also issued 10,764,458 common shares to Prodigy Gold, representing 30% of the outstanding voting shares of Goldstream on a fully diluted basis after giving effect to the financing. Prodigy will be represented on Goldstream's five member Board of Directors by two Prodigy appointees and also on Goldstream's Management Committee, which oversees all exploration activities.
The Hardrock East project consists of a land package totaling over 350 square kilometres in the eastern portion of the Beardmore-Geraldton gold camp. Hardrock East encompasses claims previously staked by Prodigy as well as Prodigy's Milestone, Adel, Solarus and Pagwachuan Lake projects. Brian J. Maher, President and CEO of Prodigy Gold commented: "The agreement with Goldstream and the involvement of our partners at Bayfront enables Prodigy to participate in the upside exploration potential of the Hardrock East gold project while minimizing our monetary and personnel commitment enabling Prodigy to concentrate on the development of the Magino Mine gold project. Our equity interest in Goldstream captures tangible value for our shareholders by leveraging our expenditures in the Hardrock East area and potentially adding significant value through additional drilling".
About Prodigy Gold: Prodigy Gold Inc. (PDG: TSX.V) is currently evaluating the development of the Magino mine gold project in Ontario as an open-pit mining opportunity with the potential for deeper, higher grade gold production. The Magino project contains Indicated gold resources of 1,924,200 ounces grading 1.16 gpt gold (51.6 million tonnes), and 587,100 ounces of Inferred gold resources grading 1.04 gpt gold (17.5 million tonnes). A Preliminary Economic Assessment (PEA) of the project shows a pre-tax NPV of $351million and an IRR of 49% using a 5% discount rate (available on SEDAR or Prodigy's web site). The proposed operation would have an average annual gold output of over 166,000 ounces a year during a nine year project life. Total gold production is estimated to be 1.50 million ounces at cash costs of approximately US$496 (Cdn$521) per ounce. Please note: mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA is preliminary in nature and includes Inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary assessment will be realized.
A full feasibility study for the proposed open pit mining project at Magino is scheduled for completion in mid 2012. Bringing the Magino mine project through the feasibility process and towards production, coupled with the exploration potential of our Beardmore-Geraldton exploration properties, are the catalysts to growing Prodigy Gold and building substantial value for Prodigy shareholders: Today's Discovery, Tomorrow's Future.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws, or unless an exemption from such registration is available.
All scientific and technical information for the Hardrock East and Magino Mine projects has been reviewed and approved by Tom Pollock, P.Geo., Prodigy Gold's Vice President - Exploration, who is a qualified person under the definitions established by National Instrument 43-101.
On behalf of the Board of Directors
Brian J. Maher
President and Chief Executive Officer
FOR FURTHER INFORMATION, PLEASE CONTACT:
Prodigy Gold Incorporated
Email: ir@prodigygold.com
Website: www.prodigygold.com
tel.: 1-604-688-9006
Fax: 1-604-688-9029