Prodigy reports potential increase to recoverable resources at Magino mine

Prodigy Gold (CVE:PDG) announced Thursday it received the results of a geotechnical assessment that should increase the amount of resources it can recover from its Magino property in Ontario, and decrease the strip ratio.
In its report to Prodigy, Golder Associates concluded that the inter-ramp bench angles of the mine can be increased to between 48 degrees and 54 degrees, from the original 45 degrees used in the preliminary economic assessment (PEA) in April, when no geotechnical analysis was available.
Making the slopes of the proposed open pit steeper will reduce the waste to ore strip ratio, increasing the recoverable resources and allowing for the mineralization from lower mine sections to be accessed and incorporated into the mine's design.
"Prodigy is excited about the results of this study. The steeper walls should increase the recoverable resource and decrease the strip ratio with attendant mining cost reduction," said president and CEO, Brian J. Maher.
"These combined factors should positively impact the Net Present Value (NPV) analysis and valuation of the project."
Prodigy said it is continuing work on the property. Ongoing in-fill drilling will be incorporated into a revised resource estimate in late September, it said, followed by a preliminary economic assessment update in November.
Results from the metallurgical testing are expected within the next few weeks, while a full feasibility study for the pit at Magino is scheduled for early 2012.
The company is also planning to continue with additional geotechnical work, which will include drilling holes into the slope walls to test for rock mass quantities.
Currently, the Magino project contains indicated gold resources of 51.6 million tonnes grading 1.16 grams per tonne (g/t) gold for 1.9 million contained ounces of the precious metal, and 17.5 million inferred tonnes grading 1.04 g/t gold, for 587,100 contained ounces.
The current PEA shows a pre-tax net present value of about $351 million, using a 5% discount rate, and an internal rate of return (IRR) of 49%.
The proposed operation is estimated to have a nine year mine life and an average gold output of over 166,000 ounces per year. Total gold production is estimated at 1.5 million ounces, at a cash cost of approximately US$496 per ounce.
Prodigy's stock on the TSX-Venture Exchange rose 2% as of 2:04 pm EDT, to trade at $0.51 per share.