Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Prodigy Gold says drilling opens up Magino deposit for expansion

Prodigy Gold (CVE:PDG) reported Wednesday additional drill results from its Magino gold project in Ontario, intersecting previously unidentified mineralization along the margins of the deposit.

The results form part of the infill and resource expansion drilling program.

From infill drilling, the company said that assaying of previously unsampled portions of drill hole S-88-007 showed a wide 207 metre intercept grading 1.24 g/t gold. This hole is located at the northeastern end of the property, expanding and upgrading this portion.

In addition, the company said that at the southwest edge of Magino, expansion drilling returned  hole MA11-014, with 107 metres grading 1.04 g/t gold, and hole MA11-016, with 57 metres grading 0.73 g/t gold, confirmed significant widths of gold mineralization at the margins of the deposit.

This means that the holes have opened up large areas for resource expansion southwest of the current proposed open pit. 

Meanwhile, drill holes MA11-007, -008, -009, and -012 cut thick intervals of gold mineralization with up to 417 metres grading 0.71 g/t gold in hole MA11-008. According to Prodigy, these drill holes have identified stockpile material that can be blended with higher grade gold mineralization, producing a consistent head grade for the mill later in the proposed life of the mine.

The holes also lower the stripping ratio for deposit, decreasing overall mining costs.

Lastly, drill holes MA11-012, -015, -017 and -021 all started in very shallow gold mineralization and have intercepted previously undrilled gold mineralization along the southern edge of Magino, said Prodigy.

The Magino project contains indicated gold resources of 51.6 million tonnes, and inferred gold resources of 17.5 million tonnes. A preliminary economic report estimated a pre-tax net present value of $351 million, and a 49% internal rate of return, using a 5% discount rate.

The proposed operation is expected to 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 a cash cost of approximately US$496 per ounce.

A full feasibility study for the proposed project is scheduled for early 2012.