The latest NI 43-101 report contains an indicated resource of 5.8 million ounces of gold, from 203 million tonnes grading 0.89 grams per tonne (g/t), and an inferred resource of 300,164 ounces of gold from 10.3 million tonnes at 0.91 g/t gold. Both resource categories had a cut off grade of 0.35 g/t gold.
The company said the new estimate expands the project's gold resource by more than 55 per cent. In addition, 95 per cent of the resource now resides in the measured and indicated category, versus 56 per cent previously.
The size and scope of the project is now likely to change, noted Stonecap Securities analyst Brian Szeto, who this morning raised the target price on the company to $1.50 from $1.30 previously.
"With the significant increase in the size of the resource, we believe the company will now revisit the production rate at the project where it currently stands at 20,000 tpd.
"It is likely that the company will begin looking at expanding capacity to 30,000 tpd, which would increase production to more than 350,000 oz/yr."
This is compared to forecast production of 250,000 ounces per year currently.
The new resource also contains a large proportion of gold resources above a grade of 0.50 g/t gold, which the company believes will provide a focus for mill head-grade optimization studies.
Prodigy said the higher grade material will likely support a mine plan that maximizes mill head grade, potentially lowering cash costs per ounce and improving project net present value.
The emphasis, the company said, will be on studies meant to examine how to utilize mill capacity for higher-grade resources while still recovering the maximum amount of gold and avoiding significant project capital costs increases or higher production costs.
The resource estimate, which includes the results from almost 68,000 metres of core drilling completed since mid-September last year, was completed by Tetra Tech Wardrop and is constrained by geologic domains and a conceptual pit shell.
A complete technical report will be filed on SEDAR within 45 days, the company said.
Prodigy said the latest report used more "conservative" cost and gold price parameters than the prior resource estimate in November 2011, and closely mirrors the costs reported in the preliminary economic assessment from last year.
The new resource will be included in a pre-feasibility study for Magino, expected early in 2013. Additional drilling is being planned to finalize the resource block model as part of the the study.
"The company has once again surpassed our expectations. We were only expecting an increase in the resource to 5.0-5.5Moz," Stonecap said in its note.
"The company made a habit of exceeding our explorations with each one of its key milestones in 2011 and is once again doing it here in 2012. With a war chest of over $50 million, we believe the company is financially sound and will continue to aggressively push forward the Magino project."
The project is located 40 kilometres northeast of Wawa, Ontario, in Finan Township, approximately 14 kilometres southeast of the town of Dubreuilville.
The property comprises seven patented mining claims, four leased mining claims and 63 unpatented mining claims totaling 1,910 hectares.