Cygnus acquired the project on January 1 via a merger with Canada’s Doré Copper and has completed 17,183m of drilling since then.

This week, Cygnus reported a 78% increase in the measured and indicated resource to 6.4 million tonnes at 3% copper equivalent for 193,000t of contained CuEq.

The project also has an inferred resource of 8.5Mt at 3.5% CuEq for 295,000t CuEq.

Total contained metal stands at 331,000t of copper, 621,000 ounces of gold and 3.8 million ounces of silver. This equates to 2.2Moz of gold-equivalent (AuEq) at 4.5gpt.

Gold sweetener

This week’s resource update included an initial resource for the Golden Eye deposit, comprising an indicated 500,000t at 4.3 grams per tonne gold, or 5.6g/t Au-Eq, and an inferred 1.2Mt at 3.4g/t gold, or 4.6g/t AuEq.

Contained metal stands at 273,000oz of AuEq.

Canaccord Genuity analyst Paul Howard said the maiden resource exceeded his scale expectation of 1.5Mt.

“Cygnus sees further opportunity to grow the Golden Eye component of the resource which remains open at depth below 400m and in multiple directions,” he said.

“Exploration is ongoing with two diamond drill rigs on site.”

Cygnus executive chairman David Southam was particularly excited about the potential of Golden Eye when speaking at the Precious Metals Summit in Beaver Creek, Colorado, last week.

The deposit hadn’t been drilled since the 1990s when the gold price was US$350 an ounce.

Cygnus’ first hole returned 3.3m at 6.6g/t gold, including 2.3m at 9.1g/t gold, while the best hit since then was 2.9m at 10.2g/t AuEq, including 0.4m at 60.8g/t AuEq.

“I think we can all agree 60.8g/t is a pretty reasonable grade,” Southam said. “If you don’t get fizzed up by those sorts of intersects, you’re probably not a real geologist.”

Studies underway

The resource update will feed into a scoping study/preliminary economic assessment to be completed early next year.

A 2022 PEA outlined the economic viability of a 10.5-year hub-and-spoke operation to produce 492 million pounds of copper and 142,000oz of gold at all-in sustaining costs of US$2.24 per pound of copper.

At metal prices of US$3.75/lb of copper and US$1820 an ounce of gold, the project had a post-tax net present value of C$193 million and a 22.1% internal rate of return.

Pre-tax cumulative cashflow was forecast at C$747 million.

Copper is currently sitting at around US$4.50/lb, while the gold price touched a record of more than US$3700/oz this week.

“You change any of those metrics to consensus pricing and you’ll probably see somewhere around double the cashflow,” Southam said.

The study also factored in treatment and refining charges of US$80 per tonne, well above recent levels, which has at times slipped into negative territory.

Metallurgical test work has returned recoveries of up to 98.2%, producing a clean copper concentrate of up to 29.6%.

Chibougamau is a brownfields site and produced as recently as 2008, with 16 mines across the district delivering around 945,000t of copper and 3.5Moz of gold.

The project includes a 900,000t per annum processing plant, which has an estimated replacement value of C$150 million.

It is the only milling infrastructure within a 250km radius.

Southam said the previous PEA only used half of the plant capacity, though there were consolidation opportunities in the area within trucking distance of the processing facility.

“There’s plenty going on in this region,” he said.

Cygnus still sees plenty of opportunities on its own ground and is generating a pipeline of exploration targets using its in-house artificial intelligence-driven solution for the compilation of historical drill logs and maps.

“The best place to discover orebodies is where there’s a rich history of mining,” Southam said.

Well-funded

Cygnus, which is also listed in Toronto, is well-funded to carry out its planned work, with A$23 million in the bank.

Former Doré boss Ernest Mast is Cygnus’ president and managing director, based in Canada.

Cygnus is a member of the stable of companies which includes FireFly Metals and Andean Silver.

Bellevue Gold and FireFly chairman Kevin Tomlinson sits on the Cygnus board, as does former Bellevue and FireFly chairman Ray Shorrocks.

“Part of the DNA of our group is our ability to bring in capital,” Southam said.

Despite having one of the highest-grade copper resources on the ASX, Cygnus is yet to re-rate.

The company had a market capitalisation of A$111 million this week, based on a share price of A11c.

Canaccord’s Howard this week reiterated his speculative buy rating and A30c price target.