Prophecy Platinum sees promising signs at Wellgreen

VANCOUVER — Things keep rolling along for Vancouver-based exploration outfit Prophecy Platinum at its flagship Wellgreen platinum group metals (PGM) and nickel project in the Yukon Territories. The company released a flurry of news to end...

VANCOUVER — Things keep rolling along for Vancouver-based exploration outfit Prophecy Platinum at its flagship Wellgreen platinum group metals (PGM) and nickel project in the Yukon Territories. The company released a flurry of news to end May, including: a maiden full spectrum analysis on its PGM content, preliminary metallurgical test results, and assays from the initial seven holes in its 2012 drill program.

Prophecy is in the midst of a 9,000-metre, in-fill drill program at Wellgreen, targeting areas around its existing inferred resource in an attempt to extend its strike southward and expand a potential pit model for a preliminary economic assessment (PEA) expected this summer.

Highlights from the company's first round of assays include: 21.3 metres grading 0.9 g/t Pt-Pd-Au, 0.39% Ni, and 0.25% Cu at 50 metres depth in hole 12-526; 21.6 metres carrying 0.98 g/t Pt-Pd-Au, 0.35% Ni, and 0.30% Cu from 28 metres in hole 12-527; and 15.2 metres of 1.12 g/t Pt-Pd-Au, 023% Ni, and 0.68% Cu from zero metres in hole 12-531.

Holes 12-524 and 12-527 were collared at the Central East zone approximately 140 metres from the adit portal entry, while hole 12-531 was collared 270 metres westward along strike near the Central East zone of the Wellgreen resource. All holes were underground and drilled “on and off section” to provide an improved picture of the mineralized structure.

According to chairman and CEO John Lee, Prophecy has completed 15 holes and roughly 3,000 metres of its program thus far.

“[The project] is gaining recognition as a premier Canadian nickel-copper-PGM project for its location, size, and grades,” he commented. “We expect a very busy June with analyst site visits, continued infill and priority target exploration drilling, and the delivery of the first-ever Wellgreen preliminary economic assessment.”

Prophecy will start a parallel surface drill program in early June — expected to total 6,000 metres — to augment its underground exploration. The company is targeting a series of geophysical and geochemical data that indicates the host intrusion to the Wellgreen resource may extend eastward for up to 9 km.

Casimir Capital analyst Steven Willis initiated coverage on Prophecy in early May with a “speculative buy” rating and a $7 price target, based substantially on a valuation of Wellgreen.

“The current resource covers a strike length of 2.6 km, and directly to the east, a 2.3-km magnetic anomaly suggests potential for resource expansion,” Willis commented in May 14 research report. “If the deposit holds together, the additional strike length implies the resource could increase by nearly 90%.”

Wellgreen’s current indicated resource totals 14 million tonnes carrying 2.25 g/t Pt-Pd-Au, 0.69% Ni, and 0.62% Cu for 220 million lb of nickel, 200 million lb of copper, 16 million lb of cobalt and 1.04 million g/t Pt-Pd-Au combined.

Prophecy released first phase metallurgical test results focusing on bulk concentrate production in early May. The company found that a concentrate grading over 10% could be produced using conventional floatation methods, with recoveries clocking in at 68% Ni, 88% Cu, 46% Pt, 73% Pd, and 59% Au.

“In our opinion, the market has unfairly punished [Prophecy] for what are only preliminary results, and for the most part positive,” Willis wrote. “The only negatives we note are lower than expected platinum recoveries and slightly lower concentrate grade.”

Prophecy conducted a separate study wherein it experimented with a nickel-copper concentrate that could provide “additional downstream marketability.” The company continues to tweak its metallurgical testing ahead of its upcoming PEA, with further results expected in the coming weeks.

Prophecy followed up with results from a full spectrum, 6E-metals (platinum, palladium, rhodium, ruthenium, osmium, and iridium) test in late May. The test used samples from hole 11-188, and revealed the presence of all six metals. When taken with existing platinum and palladium content, the results boosted the project’s average 6E metals content by 28%.

The company is aiming to improve Wellgreen’s economic conditions via the recovery of the auxiliary 6E credits, which could bring processing costs down and improve operating margins. When taken together, the updates could foreshadow a larger resource, improving metallurgy, and a potential decline in production costs for Prophecy’s upcoming PEA.

“We expect the study to demonstrate strong economics based on the current resource and through production of a single bulk concentrate,” Willis noted. “We assume Wellgreen goes into production in 2017.”

Prophecy has 55.4 million shares outstanding at press time, with 1.2 million warrants at an average exercise price of $1 and 7.2 million options at an average exercise price of $1.45. The company held roughly US$2 million in cash and equivalents to end January plus US$4 million in marketable securities, with a market capitalisation of $112.4 million.

Prophecy’s shares jumped as much as 10% or 20¢ on the back of the Wellgreen drill results, but momentum sputtered around midday leading to a close of $2.03 for a 5¢ gain.

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