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Prodigy Gold Live @ Cambridge House
By Resource Intelligence · June 20, 2011 · 11:44 am · 2 Comments
Resource Intelligence speaks with Prodigy Gold’s Brian Maher and Kimberly Ann
RI: I’m Doug Hadfield and you’re watching Live @ Cambridge House, resource investment conference. My guests are Kimberly Ann and Brian Maher from Prodigy Gold. Prodigy has done an amazing job in the last year, taking the Magino Mine to the preliminary economic assessment phase, as well as increasing the resource by over one-million ounces. Thanks for being here.
PG: Good to be here; thanks for having us.
RI: What did the PEA for the Magino Mine bring to the table for investors?
PG: The PEA is a very important step for any company as it establishes the economic parameters for what the potential mining operation could be. In our case, we’ve established that for a 15,000-tonne-per-day open-pit mining operation we have a NPV over a nine-year mine life of over $350 million. The internal rate of return is 49 per cent and a very rapid payback period of only 1.8 years. With those numbers in hand, investors could see that this is truly a project that has merit and they could see also how those dollar figures could affect share price.
RI: One of the things that really changed the whole dynamic for the Magino Mine project is that you went from being an underground type of project to an open pit project. Let’s talk about how you made that decision?
PG: It was simply a case of our geologic team. When they began looking at the data for the project and recognizing that around these high-grade chutes there was in fact very large volumes of lower grade material. Seeing that in the data, they came to management and said we like this project but not as an underground opportunity but as an open pit opportunity that will probably have much more favourable economics.
RI: You just finished a very outstanding private placement, let’s talk about the terms and the amounts.
PG: That was very fortuitous for us. We’ve been very active marketing the company and telling our story but we felt that since we were a company that was advancing rapidly that it would be a non-traditional financing. We did it at market price and there was no warrant involved. The original amount was for $20 million with an overlap that would push it up to $25 million . We are seeing it being completely subscribed and we will have the full $25 million in hand. We are doing it in a manner that is minimally dilutive to the company but giving us the financial ability to take the project all the way through to feasibility by the end of Q1 2012.
RI: Let’s talk about that feasibility study, what are your targets?
PG: What we would like to see is a 2-million ounce mineable deposit as a minimal size. That can generate a throughput rate of about 200,000 ounces per year and when you get to those types of thresholds you’re starting to talk about a major mining operation. When we get to two-million ounces and 200,000 ounces per-year production rate, that becomes a significant mining operation that gets investor attention and other companies’ attention. It really establishes us as one of the up-and-coming gold producers in Ontario and Quebec.
RI: You’re talking about two-million ounces, right now the life of mine would be 1.5 million?
PG: That’s correct. The important part of the feasibility study is what we are targeting there. We believe through the infill drilling program we will be able to have a two-million ounce mineable deposit which on an annual basis will be putting out 200,000 ounces a year. The current PEA envisions 160,000 ounces and that gets to why that infill drilling program is so important. We’re taking rocks that are currently modelled as waste and turning them into mineable resource. That lowers costs and increases the number of ounces in the system. The infill program is very important and that should be a major catalyst for the company through the summer months and into the end of the summer.
RI: The things I really like about the company and the project so far is the pace. In one year you have accomplished so much. What are the upcoming goals to work toward to see that is going to continue?
PG: Infill drilling needs to be completed by the end of August and we currently have four drill rigs out there. We are trying to get out our 43-101 estimate update at the end of that project, by September, and then update our PEA to show those numbers. We’ve been talking about that all summer long and we really believe that hitting those marks is the most important thing that we can do for our shareholders to gain their trust.
RI: You’ve got some really great backing, one is from a banking syndicate that has done your financing for you and the other is from analysts that you have watching you. What was the banking syndicate made up of?
PG: The financing that we just announced was led by Casimir Capital but I think if you look at the depth of the syndicate it really shows the strength that we’re seeing in the marketplace. We also had Paradigm participating and Byron Capital Markets as well as Macquarie and National Bank Financial as well. It is probably one of the stronger syndicates you’ve seen in recent financings. That puts $25 million into our treasury gives us $30 million in the bank. It’s those kind of dollars that give us a very effective tool to use in case there is acquisition opportunity. We are actively looking for acquisitions to have a marriage with another project that is similar to the one that we’re working on.
RI: What about a prefeasibility for feasibility study, is that and the cards?
PG: Our goal is by September or October to have a fully updated PEA and it will probably be a very strong detailed document but realistically, because of the advanced nature of this project and how much we already understand about it, we expect to be able to springboard that right to full feasibility study that we expect in Q1 2012.
RI: Lets talk a bit about the recent drill results. These lengths are huge, over 200 meters in many instances with grades of one gram per tonne?
PG: Yes, these numbers are all coming from the infill drilling program we’ve been talking about. I think that is the key going forward through the summer months. When you’re seeing 100 to 400 meters of solid gold mineralization in the system, it’s demonstrating that we can grow the resources and also demonstrate the continuity in the deposit. These are all things that from a technical side are very important resources and for the PEA but for investors each one of these press releases is a clear benchmark documenting progress along that path.
RI : Where else are you seeing growth in the future for Prodigy?
PG: Everything we’ve been talking though, the PEA, the pit and the infill program it’s all focused on a very small part of this mineralized system. The fact is that we have drilled holes going down to a 600-metre depth which opens up that whole area for resource expansion. Below 600 metres, we haven’t even seen a drill intercept yet. We know these systems can extend thousands of meters. We look at the Magino open pit that we’re talking about today as just the beginning of the story with a tremendous amount of exploration potential associated with the rest of the project.
RI: Your stripping ratio is very low in comparison to others and it keeps costs down?
PG: Absolutely. It is 2.8 projected life of mine and we expect to see that coming down to two as we complete our infill drilling program.
RI: I want to talk about the value proposition. In your corporate presentation Prodigy has $57 evaluation per ounce which is quite low compared to the industry standard, what does that mean?
PG: Our peer group is about $180 per ounce and we’re down at $57 per ounce but we are continually putting out news flow which documents our progress towards production and in that way the market will start recognizing that we should be valued more similar to our peer group and I believe that will be the big share price driver in the coming months.
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