Prodigy Gold increases resources at Magino, with 2.18 million ounces of indicated gold

Prodigy Gold (CVE:PDG)  late Wednesday said it has boosted the NI 43-101 compliant resources at its flagship Magino mine gold project in northern Ontario by more than double during 2011, prompting the release of an updated resource report.
Using a 0.35 grams per tonne (g/t) of gold cutoff, the Magino deposit is now estimated to hold indicated gold resources of 2.18 million ounces from 67.6 million tonnes grading 1.00 g/t gold, and inferred gold resources of 1.72 million ounces from 54.2 million tonnes grading 0.99 g/t gold.
This compares with a previous estimate in February of 1.92 million indicated ounces grading 1.16 g/t gold (51.6 million tonnes) using the same cut off grade, and 587,100 ounces of inferred gold resources grading 1.04 g/t gold (17.5 million tonnes).
The newest resource estimate was completed by Snowden Mining of Vancouver, British Columbia and is constrained by geologic domains and a conceptual pit shell, the company said.
The results include assays from almost 38,000 metres of core drilling completed at the project since January of this year, as well as 155,800 metres of previous core drilling.
Indeed, the updated estimate was delayed until this month to incorporate significant expansion drilling results from Magino, announced in late September, which included 47 metres grading 3.05 g/t gold within 147 metres grading 1.24 g/t gold in hole MA11-125, drilled in the northeast area of the deposit.
Using a slightly higher cut off grade of 0.50 g/t gold, Magino now holds an indicated resource of 1.94 million ounces grading 1.21 g/t gold (50.1 million tonnes), and an inferred resource of 1.54 million ounces grading 1.18 g/t gold (40.5 million tonnes), suggesting that optimizing the grade of the proposed open pit may produce a higher-grade operation with a larger production profile than that projected in the previous preliminary economic assessment, Prodigy said.
The preliminary economic assessment based on the February resource estimate shows a pre-tax net present value of $351 million, and a 49 percent internal rate of return, using a five percent discount rate. 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 Magino, at cash costs of approximately US$496 (C$521) per ounce.
Prodigy said the economic report will be updated using the results of the latest resource estimate in the coming weeks in anticipation of a larger production operation. A full feasibility study for Magino is due out in mid 2012.
"The increase in gold resources will enable Prodigy to evaluate an expansion of the proposed open-pit mining project modeled in the previous PEA. An expected increase in gold production may have an important positive impact on the project's economics," the company said in a statement.
In addition, the company said that inspection of the Magino gold resource block model identified multiple areas where additional drilling could further increase gold resources, including under the north-central portion of the conceptual open pit, and a southwest extension of gold mineralization where potentially significant resources lie under the southwest high wall of the conceptual pit.
Moreover, drilling in the Lovell Lake area, which is located 400 metres west of the Magino deposit and not included in the latest resource estimate, intercepted a zone of gold mineralization similar in grade and geology to the main deposit. Prodigy said that this area can further boost resources for the project.
The database used by Snowden for the revised resource contains 550 surface diamond drill holes and 484 underground historic diamond drill holes.
A drill program to convert mineral resources into reserves will be initiated as part of the full feasibility study, the company said.
Vancouver-based Prodigy was created from the combination of Canadian exploration companies Kodiak Exploration and Golden Goose Resources. Shares of the gold explorer closed Wednesday at 64 cents.