Canadian Mining Journal

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Prophecy Platinum reports half-mile of continuous mineralization

Picture seven football fields in a row of continuous mineralization and that's the width of platinum group metal mineralization intercepted in a single drill hole at Prophecy Platinum's (TSXV: NKL; US-OTC: PNIKF) Wellgreen PGM-nickel-copper...



Picture seven football fields in a row of continuous mineralization and that’s the width of platinum group metal mineralization intercepted in a single drill hole at Prophecy Platinum‘s (TSXV: NKL; US-OTC: PNIKF) Wellgreen PGM-nickel-copper project in the Yukon, president and chief executive Greg Johnson says.

“It is one of the best holes in my career,” says Johnson, whose 25 years of experience in developing larges scale projects includes the corner office at South American Silver (TSX: SAC; US-OTC: SOHAF) and being part of the discovery team at the Donlin gold project in Alaska, now a 40-million-oz gold deposit jointly owned by NovaGold Resources (TSX: NG; NYSE-Arca: NG) and Barrick Gold (TSX: ABX; NYSE: ABX).

Hole 215 drilled into the Far East zone at Wellgreen returned 756 metres of continuous mineralization grading 1.92 g/t PtEq, or 0.46% NiEq. Within that zone there was a higher grade portion that included a 65.6-metre-wide zone grading 4.19 g/t PtEq, or 1% Ni.

“Regardless of what metal you’re looking at, a drill hole that has 756 metres of mineralization that is close to 2 grams is just a phenomenal intercept,” Johnson continues. “It is as good or better than some of the very best holes we drilled at the Donlin gold deposit in Alaska when I was with NovaGold … In my mind it just demonstrates how large the system is, and that it is world class.”

Johnson adds that he is unaware of any other ultramafic PGM-containing deposits anywhere in the world with continuous mineralization over comparable widths and argues that while platinum mines in South Africa struggle because “they typically mine mineralized seams just a few metres at great depths underground,” the mineralization at Wellgreen “is typically several hundred metres wide and begins at surface, making it amenable to open pit mining.”

And unlike South Africa, Zimbabwe and Russia, which together account for about 92% of the world’s platinum supply and about 84% of its palladium, and where political risk is high, Canada’s Yukon Territory has been ranked by the Fraser Institute as being one of the world’s top mining jurisdictions.

Wellgreen is just off the Alaska Highway along a 15 km all-season road, and can be worked all year-round. The sea ports of Haines and Skagway are about 410 km and 485 km to the south.

Based on a preliminary economic assessment of the deposit last year, nickel is the project’s single largest contributor of value at current metal prices using anticipated metallurgical recoveries for separate nickel and copper concentrates. But the company anticipates that the net economic contribution will be largest for the platinum, palladium and gold, followed by nickel, and then by copper and cobalt.

Hudbay Minerals (TSX: HBM; NYSE: HBM) discovered the project in the 1950s and put it into production in the 1970s, but Hudbay only operated the mine for a few years before falling metal prices and challenging ground conditions forced the company to shut it down. Since then the property has been through a series of different hands and Prophecy Platinum picked it up in 2011.

In July 2012 Wellgreen completed a preliminary economic assessment that was based on bulk concentrate produced through conventional sulphide flotation, and in August of the same year metallurgical test results showed that separate nickel and copper sulphide concentrates can be produced.

This year Prophecy completed 4,735 metres of new drilling in 29 holes and assayed another 8,136 metres of core from about 21,784 metres of historical drill core that previously had only been selectively sampled.

Johnson says the company will take all the drill information, along with new metallurgical test work, and put out an updated PEA in the second quarter of 2014 and also hopes to kick off a prefeasibility study in the second half of next year.

The company is also looking at the potential value of rhodium, iridium, osmium and ruthenium that is present within the deposit. (The initial PEA did not include these metals.)

In June the company raised $5.9 million and has no debt. Management and insiders hold about 8% of the company’s shares, with institutions holding 21%, large private investors 25% and retail investors 46%.

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