This article is a sponsored feature from Mining.com.au partner Prodigy Gold Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Fresh from launching a capital raising just days ago, Prodigy Gold (ASX:PRX) is positioning itself to focus on exploration in the Tanami and Lake Mackay regions, including the Suplejack shear zone for the next prospective major discovery within the well-endowed Tanami Gold Province.
Over the short term, Prodigy intends to centre its energy and capital on this zone, which contains the Hyperion mineral resource, as well as the historic Tregony resource which the company is seeking to re-estimate this year.
On 7 September, Prodigy Gold announced it was raising up to $11.653 million in a rights issue to arm the company with enough capital to undertake its planned exploration work.
In a sign of support for its strategy, major shareholder APAC Resources Capital, which has a 19.8% stake in Prodigy, committed to sub-underwrite the offer to the tune of about $9.71 million (including its entitlement).
Supportive shareholders
As Prodigy Managing Director Mark Edwards explains, the market conditions for a junior explorer to raise capital is “currently a little tough” as there are many companies looking to access funding in the same market. The endorsement by APAC Resources to underwrite the raise is not only an injection of confidence in the company itself but it’s a seal of approval of Prodigy’s interest in the Tanami Region of the Northern Territory.
“It is great to have the committed support of a major shareholder like APAC. In the junior explorer space, there is lots of competition for capital so having a supportive major shareholder gives us confidence in a raise like this.
“It also gives us confidence to develop the Suplejack shear zone, which is a regional scale structure that is a potential conduit for mineralisation in the Northern Tanami region. Our tenements along this regional structure host the Hyperion mineral resource and the Tregony historic resource, plus many other identified prospects that require additional work to test their potential.
“It also gives us confidence to develop the Suplejack shear zone, which is a regional scale structure that is a potential conduit for mineralisation in the Northern Tanami region”
We’re looking at the Suplejack shear zone as one of our main focus areas due to the known endowment of the area (Central Tanami’s joint venture Groundrush to the south and Crusade to the north) plus we have our own deposits along the trend. The close proximity to the Central Tanami Operation may open opportunities yet to be explored.
The Hyperion project area has potential for future discovery. History shows that looking along strike of known deposits is a great place to look for new ones.”
The case for another Callie
Edwards adds that for Prodigy, while the ultimate target is to find “another Callie deposit”, finding a Groundrush look-a-like would also be a great outcome. The trend has shown 100,000-plus ounce gold scale deposits from the Groundrush deposit in the south to Crusade in the north and includes Hyperion.
Newmont Mining’s (NYSE:NEM) Callie underground gold mine in southern Northern Territory, is a multi-million-ounce deposit discovered in the early 1900s which had mining activity increase considerably from the late 1980s as the gold price rose. Prodigy’s tenements are located around this mining area, which broadly has produced more than 10Moz of gold since 1986.
Once the equity has been raised, which is expected by the end of September 2022, Prodigy will be well-capitalised to try and discover another Callie or even a Groundrush look-a-like.
As it stands, Edwards is cautiously confident in this shear zone of the Tanami Gold Province as it ticks a lot of the boxes that junior exploration companies assess when putting money into the ground.
For one, this area is within trucking distance of the CTJV processing plant that is on care and maintenance. Also, it has an obvious gold endowment which Prodigy is looking to test with drilling, geochemical surface sampling, and a review of the available geophysics.
“The costs to establish a new plant plus the process of gaining all the approvals means having a plant close by opens the possibility to find synergies and common ground with other operators in the area.
“The Prodigy tenement area also has around 15 recorded gold mineral occurrences ranging from the scale of Hyperion (+300K ounces) to Tregony (+100K ounces historic) and also holds greenfields targets like Boco North.”
Major player in the NT
Edwards explains that as Prodigy controls one of the largest tenement packages in the Northern Territory, it needs to be active in exploration but it also needs to be focused on how capital is spent.
“Therefore, the plan is to focus on the Tanami and Lake Mackay areas of our land package.
“the plan is to focus on the Tanami and Lake Mackay areas of our land package”
The Tanami has shown success with one of Australia’s most productive mines in the Granites area including the Callie underground deposit. This mining district has produced more than 10 million ounces of gold since operations commenced. It is a remote region with vast areas of limited exploration which opens up the potential for a significant discovery.”
The region has attracted some majors over the years including IGO (ASX:IGO), which has an 8.5% shareholding in Prodigy, the world’s largest gold producer Newmont (NYSE:NEM), and the JV between Northern Star Resources (ASX:NST) and Tanami Gold (ASX:TAM). Other companies exploring nearby include Black Cat Syndicate (ASX:BC8).
Northern Star and Tanami Gold are in a JV which includes the Central Tanami processing plant, while Black Cat now controls the Coyote mill in the Tanami region just over the Western Australian border.
The MD notes: “We are looking to work together with our peers and joint venture partners in the area as much as we can. Working in a very remote part of the country collaboration is essential at times.”
Parallel exploration programs
Running in parallel to the aforementioned exploration strategy, Prodigy’s other areas of focus include the Lake Mackay region. In August, the company released the results from work completed on this area, which needs further drilling. The next program will entail additional diamond holes to complete commitments under the terms of the restructured JV with IGO.
The MD said the next stage at Lake Mackay will be to follow up on the gold exploration works, as the company intends to continue following up the gold targets on its 70% tenure.
Prodigy is also keen to drill at the Boco North prospect, which is co-funded by the NT Government. Edwards notes that for Prodigy it is “very important” to have government funding for this program “as we know there is significant cover over the potential mineralisation, this adds costs to the program so having co-funding allows us to do this soon”.
The company is looking to kick off drilling at the Boco North prospect during this FY.
“We are keen to drill at the Boco North prospect, a significant area on a known mineralised trend that had no previous drilling due to the significant cap of overlying unmineralised rocks.
This is a greenfield target so we’re hopeful of good results however, as there is no previous drilling, it could come back without any significant mineralisation. Whilst this is the nature of this type of drilling, it also makes the process an exciting one to be involved with.”
The final focus area Prodigy is looking at working on with the funds being raised is around the Buccaneer mineral resource. The company is part way through understanding how this deposit will perform in a heap leach style operation. This is something it will continue through the coming year with a study aimed at identifying a potential pathway towards increasing and mining the resource.
“A lot of work is still required to understand this potential but it is something we need to answer. The deposit is located within trucking distance of two processing plants in care and maintenance. The company will look at identifying different processing pathway, comparing the results of the heap leach study (to be completed) to determine the most feasible way to establish a new mining centre in the Tanami.”
Prodigy will use a portion of the equity raised to run the ruler over its non-core assets to see what options are available to monetise these
Meanwhile, Prodigy will use a portion of the equity raised to run the ruler over its non-core assets to see what options are available to monetise these, and repay its $2.5 million loan facility.
“As we have shown with the current sales process around the Old Pirate project, we are open to working with other parties on projects we deem as non-core to our current portfolio of titles.
With a very large land package we need to ensure we are focused on our core projects. We are happy to look at all options from sales to JV for other projects that are not core to our short to medium term goals. This will be an important process for us in the coming 12 months as we look to be active on our core tenements and active in determining what we do with the non-core projects.”
With more than $11.65 million expected to be raised by the end of the month, as well as the potential proceeds generated from any non-core divestitures, Prodigy appears primed to execute its contemporary exploration plan in the Suplejack shear zone of the historic Tanami Gold Province.
Write to Adam Orlando at Mining.com.au
Images: Prodigy Gold Ltd & iStock
