TICKERS: PGLC

Streamlining of U.S. Environmental Permits Could Benefit Nevada Mine Developer

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As this company moves closer to bringing a mine into production, a U.S. Department of the Interior decision could help derisk the project.

Pershing Gold's Relief Canyon Mine

Pershing Gold Corp. (PGLC:NASDAQ; PGLC:TSX) continues to develop the Relief Canyon Mine in Nevada. In June, the company released the Preliminary Feasibility Study (PFS) on the property. The PFS estimated a pre-tax net present value of $144.6 million, an 89% internal rate of return and net cash flow of $192.7 million using $1,250 per ounce gold, $16.75 per ounce silver and a 5% discount rate. The All-in Sustaining Costs are $802 per ounce gold.

"The PFS is a major milestone for Pershing Gold. We announced an upgraded mineral resource that includes proven and probable reserves of approximately 635,000 ounces of gold and 1.6 million ounces of silver," stated Stephen D. Alfers, Pershing Gold's Chairman and CEO, when the PFS was released. "The PFS is based on a mine plan and financial model with an annual average production of over 90,000 ounces of gold per year." Alfers explained.

Nevada was ranked the fourth most attractive jurisdiction worldwide for mining investment in the Fraser Institute's 2016 survey of mining companies.

The PFS indicated an initial capex of $23.6 million and working capital of $11.1 million. According to Jack Perkins, Pershing's Vice President of Investor Relations, the company is now weighing options to fund the capital needs, including "debt, royalty or streaming options, strategic investment, offtake agreements and equity, or a combination of these, to bring the mine to production."

Once the funding is set, Perkins said, "production could begin Q3/18."

"The project is open in three directions," Perkins told Streetwise Reports. "Pershing's priority is to get Relief Canyon to production, and then fund exploration from cash flow."

Pegasus Gold operated the Relief Canyon Mine in the 1980s and Pershing has all the state and federal permits in hand to begin mining and heap-leach processing."

Cantor Fitzgerald analyst Rob Chang, in the firm's Oct. 26 Quarterly Commodity Outlook, reiterated that the firm maintains a Buy rating on Pershing and has a target price of US$4.25. Shares are currently trading at around US$2.81.

In mid-September, Chang noted, the U.S. Secretary of the Interior issued Secretarial Order 3355. "This very positive Secretarial Order significantly streamlines the Environmental Impact Statement ("EIS") process by imposing limits of a year to complete. This order has across the board positive impacts for several mining projects including Pershing Gold's Relief Canyon project, which expects to submit its Plan of Operations for the Phase 2 portion of its project early next year," Chang noted.

According to Chang, "the most notable portion of this order is the requirement for each bureau to complete a Final EIS within 1 year from the issuance of a Notice of Intent to prepare an EIS." The analyst explained that "with a Plan of Operations for Phase 2 expected to be submitted early next year, this Secretarial Order de-risks the time risk for Pershing by providing an expectation of about a year for the approval of the EIS, which is a very significant development."

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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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