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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Disclosures from Cantor Fitzgerald, Quarterly Commodity Outlook, Oct. 26, 2017
The opinions, estimates and projections contained in this report are those of Cantor Fitzgerald Canada Corporation (“CFCC”) as of the date hereof and are subject to change without notice. Cantor makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; however, CFCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein and accepts no liability whatsoever for any loss arising from any use of or reliance on this report or its contents. Information may be available to Cantor that is not herein.
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Disclosures as of October 26, 2017
CFCC has provided investment banking services or received investment banking related compensation from Pershing Gold within the past 12 months.
The analysts responsible for this research report do not have, either directly or indirectly, a long or short position in the shares or options of Pershing Gold.
The analysts responsible for this report has visited the material operations of Pershing Gold. No payment or reimbursement was received for the related travel costs.
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