Expert AnalysisExpert Analysis
Jon Case, Paradigm Capital (5/19/11) "At a 0.5 g/t cutoff, Magino hosts a resource of 2.4 Moz. grading 1.2 g/t (Feb. 2011); on April 4, the company released a preliminary assessment that outlined a robust project with a mineable resource of 1.57 Moz. at 1.18 g/t based on a $1,000/oz. gold price. In our estimates, the Magino gold project is capable of producing 222 Koz./year at costs of $522/oz over the first three years of mine life, with production of 165 Koz./year at costs of $577/oz. over the LOM. . .the project is robust, with an IRR of 40% (spot prices) and a capital payback of less than two years—an attractive project in an ideal location. . .we initiate coverage with a Speculative Buy recommendation and a CAD$1 target price."
Brian Szeto, Byron Capital Markets (4/27/11) "Nice Simple Story with Plenty of Upside: Prodigy Gold's low-risk, past-producing flagship, Magino, features solid project economics with room for growth. We believe the company will be able to further create value through: 1.) Extending the project's mine life through continued exploration; 2.) Improving operating cash costs; and 3.) Considering an option for underground mining after the open-pit resources have been exhausted. . . we are initiating coverage of Prodigy Gold with a $1.25 target price and a SPECULATIVE BUY recommendation."
Brian Christie, Desjardins Securities (4/20/11) "[Results from] three holes [at Magino mine] in total were released and these continue to expand the known zone of gold mineralization within the proposed open pit, which was modeled in the recent PEA. Highlights include 143m of 1.54g/t (including 67m of 2.12g/t); 38m of 2.11g/t (including 25m of 3.13g/t); and 23m of 2.34g/t . The company has 18 holes over 6,901 meters as part of the current 20,000-meter program."
Wendell Zerb, Canaccord Genuity (4/6/11) "Prodigy has released a PEA for its 100%-owned Magino project outlining a 15,000-tpd open-pit, conventional CIL operation with average annual production estimated at 166,500 oz. Au at average LOM cash operating costs of US$496/oz. Au over a nine-year operating life (1.50 Moz. total). The company is currently executing on a 20,000-meter infill-drilling program at the project (1,836m completed to date), with the aim of expanding known mineral resources within the limits of the current conceptual open-pit shell. . .recent drill results have included: 261.0m grading 1.13 g/t Au, 103.0m grading 1.07 g/t Au, 53.5m at 1.04 g/t Au, 63.8m at 1.02 g/t Au and 138.0m at 0.75 g/t Au; an updated resource estimate is expected later in 2011."
Jamie Spratt, Clarus Securities (4/5/11) "Prodigy reported positive results from the PEA on its flagship Magino project; overall results were positive demonstrating the potential of the Magino project. . .we note in particular a production profile of about 170 Koz./year over nine years at an LOM head grade of 1.18 g/t—10% above our expected 150 Koz./year profile. Economics are strengthened by a high-grade starter zone resulting in an average head grade of 1.6 g/t and estimated production of 500 Koz. in the first two years of mine life. . .we highlight strong project economics with an unfinanced pre-tax NPV5% in the PEA of $350M at a $1,000 gold price, which nearly doubles to $690M at a $1,300 gold price [and] We expect to see near-term upside of 20%–30% to the mineable-ounce profile based on growth in the current 2.5 Moz. resource profile at Magino, which would further enhance project economics."