Mr. John Lee reports
PROPHECY OUTLINES COMPANY OBJECTIVE, PLANS DEFINITION DRILLING AT PULACAYO AND PACA
Prophecy Development Corp. has released its priority objective at the Pulacayo silver-zinc-lead district project located in southern Bolivia, and close to major silver mining projects operated by Coeur Mining Inc. (San Bartolome), Pan American Silver Corp. (San Vicente) and Sumitomo Corp. (San Cristobal). All necessary permits have been obtained in 2013 to mine up to 560 tonnes of ore per day.
The objective is twofold:
-
Study the possibility of commissioning Pulacayo and/or Paca to production at current metal prices, part of which includes definition drilling;
-
Apply modern exploration techniques to the Pulacayo district to test mineralization found during reconnaissance exploration.
In light of this objective, the company is pleased to report the following activity: 1,500 metres of definition drilling.
The program, scheduled to commence in the third quarter of 2016, aims to increase the confidence level and size of certain resource blocks already identified in the respective Pulacayo and Paca resource estimates disclosed according to National Instrument 43-101, standards of disclosure for mineral projects.
These resource blocks are characterized by elevated grades and relatively easy access, which make them potentially suitable to be mined first should a decision be made to start mining.
Paca deposit
Target resource block OP1 is a horizontal planar near-surface block measuring approximately 60 metres by 30 metres by 25 metres (width, length and thickness), and the block starts approximately 10 metres below the surface.
SUMMARY OF SIGNIFICANT DRILL HOLE INTERVALS FOR OP1
Hole ID From (m) To (m) Drilled thickness (m) True width (m) Ag (g/t) Zn (%) Pb (%)
PND 062 10 52 42.0 29.7 405.6 0.10 0.82
Including 25 52 27.0 19.1 574.3 0.09 1.15
Drill holes are planned to intersect and improve the drill density of block OP1.
Target resource block OP2 is a near-surface block measuring approximately 90 metres by 40 metres by 35 metres (width, length and thickness), and the block starts approximately 30 metres below the surface.
SUMMARY OF SIGNIFICANT DRILL HOLE INTERVALS FOR OP2
Hole ID From (m) To (m) Drilled thickness (m) True width (m) Ag (g/t) Zn (%) Pb (%)
PND 023 125 171 46.0 37.7 323.6 1.37 1.59
Including 125 152 27.0 22.2 481.4 0.64 1.88
PND 093 107 141 34.0 22.1 323.5 1.71 1.31
Including 116 126 10.0 4.5 630.6 1.39 1.71
Drill holes are planned to intersect and improve the drill density of block OP2.
Target resource block OP3 is a near-surface block measuring approximately 40 metres by 30 metres by 30 metres (width, length and thickness), and the block starts approximately 20 metres below surface.
SUMMARY OF SIGNIFICANT DRILL HOLE INTERVALS FOR OP3
Hole ID From (m) To (m) Drilled thickness (m) True width (m) Ag (g/t) Zn (%) Pb (%)
PND 092 27 59 32.0 22.6 321.8 0.25 0.83
Including 42 51 9.0 6.4 646.3 0.08 0.72
Drill holes are planned to intersect and improve the drill density of block OP3.
Target resource block OP4 is a near-surface block measuring approximately 20 metres by 60 metres by 10 metres (width, length and thickness), and the block starts approximately five metres below surface.
SUMMARY OF SIGNIFICANT DRILL HOLE INTERVALS FOR OP4
Hole ID From (m) To (m) Drilled thickness (m) True width (m) Ag (g/t) Zn (%) Pb (%)
PND 029 12 22.25 10.3 7.3 436.1 0.03 0.04
Including 12 16 4.0 2.8 1,029.0 0.02 0.06
Drill holes are planned to intersect and improve the drill density of block OP4.
Pulacayo deposit
Target resource block is an underground block thatr starts 50 metres beneath the San Leon tunnel level, approximately 500 metres east from the central shaft, measuring approximately 50 metres by 60 metres by 85 metres (width, height and thickness).
SUMMARY OF SIGNIFICANT DRILL HOLE INTERVALS FOR UG1
Hole ID From (m) To (m) Drilled thickness (m) True width (m) Ag (g/t) Zn (%) Pb (%)
PUD 109 243 310 67.0 49.8 413.4 2 1.21
Including 282 307 25.0 18.6 1,030.9 1.67 2.02
PUD 069 276 306 30.0 20.5 413.9 3.59 1.2
PUD 045 277 315 38.0 23.9 402.9 3.58 0.86
Including 283 292 9.0 5.7 647.0 6.77 1.26
Drill holes are planned to intersect and improve the drill density of block UG1.
Target resource block UG2 is an underground block that starts 90 metres beneath the San Leon tunnel level, approximately 125 metres east from the central shaft, measuring approximately 50 metres by 40 metres by 30 metres (width, height and thickness).
SUMMARY OF SIGNIFICANT DRILL HOLE INTERVALS FOR UG2
Hole ID From (m) To (m) Drilled thickness (m) True width (m) Ag (g/t) Zn (%) Pb (%)
PUD 118 158 190.6 32.6 27.6 445.4 1.32 0.82
Including 174 175 1.0 0.9 10,000.0 15.55 4.55
PUD 138 142.1 157 14.9 12.3 352.1 2.82 1.29
Including 156 157 1.0 0.8 2,030.0 5.68 1.06
Drill holes are planned to intersect and improve the drill density of block UG2.
Target resource block UG3 is an underground block that starts 90 metres beneath the San Leon tunnel, approximately 350 metres east from the central shaft, measuring approximately 70 metres by 60 metres by 15 metres (width, height and thickness).
SUMMARY OF SIGNIFICANT DRILL HOLE INTERVALS FOR UG3
Hole ID From (m) To (m) Drilled thickness (m) True width (m) Ag (g/t) Zn (%) Pb (%)
PUD 051 326 341 15.0 12.6 543.2 1.58 1.35
PUD 092 285.6 297.7 12.1 10.5 355.4 2.29 0.98
PUD 046 289 298 9.0 7.5 485.0 2.93 3.17
Drill holes are planned to intersect and improve the drill density of block UG3.
The definition drilling program lowers project risk by improving confidence level in the resources, and may reassure concentrate off-takers and financiers of the reliability of their internally prepared production and revenue forecasts.
Proposed drill hole location maps (both plain and cross-section for Paca surface drilling and Pulacayo underground drilling) are available on the company's website.
District-wide 3-D induced polarization (IP) program
Concurrent with the definition drilling, the company is initiating a district-wide close-spaced 3-D IP geophysical survey program that will use a pole-dipole configuration. Data interpretation will take advantage of the functionality offered by 3-D inversion techniques (resistivity and chargeability) that have been successfully used at Pulacayo before. The results are expected in approximately three months.
The 3-D IP surveys will be carried out in the high-priority areas of Paca North, Pero and Pacamayo, where surface mapping and sampling have identified significant surface anomalies.
SUMMARIZED HIGHLIGHTS OF TARGET 3-D IP SURVEY AREAS
Target Number of Anomalies Sampling Sampling program highlights Surface area
area samples identified method Sample Ag (g/t) Zn (%) Pb (%) Cu (%) Sb (%) of sampling
Paca 21 Ag, Pb Chip PC-002, 226, 0.08, 2.16, - - 100 m by
North channel PC-011 833 0.03 0.03 - - 30 m
sampling,
surface
Pero 165 Ag, Pb, Sb Chip PR-163, 27, 0.04, 3.65, - 0.65, 200 m by
channel PR-067 118 0.08 2.13 - 0.22 100 m
sampling,
surface
Pacamayo 125 Ag, Zn, Pb, Chip MPU-77, >1,500, 6.96, 17.56, 3.10, 2.49, 150 m by
Cu, Sb channel MPU-69 >1,500 2.4 2.29 1.97 1.79 10 m
sampling, underground,
76 200 m by
underground 200 m
samples, surface
49 surface
samples
DESCRIPTIVE STATISTICS OF THE SAMPLES SUBMITTED TO THE LABORATORY
Paca North Ag (g/t) Zn (%) Pb (%) Cu (%) Sb (%) AgEq (g/t) SbEq (%)
Number of samples submitted to the lab 14
Mean 203.3 0.05 0.86 - - 234.6 -
Max 833 0.10 2.22 - - 835.3 -
Min 45.8 0.02 0.03 - - 53.5 -
Pero
Number of samples submitted to the lab 25
Mean 26.3 1.23 0.01 - 0.26 106.5 0.76
Max 118.0 4.32 0.08 - 0.65 251.0 1.79
Min 4.5 0.28 0 - 0.01 41.9 0.30
Pacamayo
Number of samples submitted to the lab 9
Mean 678.5 1.40 2.39 1.16 1.12 1,083.6 -
Max 1,501.0 6.96 17.56 3.10 2.49 3,014.7 -
Min 18.2 0.02 0.01 0.01 0.01 31.1 -
Many areas of the Pulacayo project are now found to contain important concentrations of silver, zinc, lead, gold, copper, antimony and indium at surface outcrops.
PLANNED IP PROGRAM DETAILS
Exploration area Total length (km) Number of IP lines Line spacing (m)
Paca North 7 7 100
Pero 7 7 100
Pacamayo 6 6 100
A wide-spaced IP program was performed at Pulacayo by Apogee Minerals Ltd. in 2008. Twelve lines were laid out at a 400-metre interval (total -- 29 kilometres) in the Paca, Pero and Pacamayo areas located in the north and east of the Tajo vein system found in the Pulacayo district.
A detailed presentation about the exploration and maps showing prior sample location and assay results, and proposed IP line locations are available on Prophecy's website.
The results from the detailed 3-D IP surveys, the assay results of recent surface and underground sampling, and the prior IP results will be used to identify the most prospective drilling targets. The objective of the 3-D IP surveys followed by drilling is to assess the potential of the Pulacayo district for near-surface mineralization.
Update on other work
As reported in the news release dated June 16, 2016, Prophecy continued its discussions with concentrate off-takers based on the results of the 2013 Pulacayo trial mining and has received updated concentrate off-take term sheets, possibly reflecting the potential tightening of future zinc-silver and lead-silver concentrate supplies. Some off-takers have prepared their own production and revenue forecasts related to the Pulacayo project based on geological, technical and economic information provided by Prophecy. Prophecy has also received an improved term sheet from a custom milling and processing facility in Potosi, approximately 180 kilometres from the Pulacayo project and that is connected by a recently paved highway which is in excellent condition.
The company continues its study of optimal mining production and processing scenarios, and intends to announce a production decision at the conclusion of the study in conjunction with a financing plan should a positive production decision be reached. A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so would carry increased uncertainty and the risk of failure as to the mining method and profitability.
Qualified persons
The technical content of this news release and the presentation and maps referred to in this news release were reviewed and approved by Christopher M. Kravits, CPG, LPG, who is a qualified person within the meaning of NI 43-101. Mr. Kravits is a consultant to the company, and serves as its qualified person and general mining manager.
PACA MINERAL RESOURCE STATEMENT -- EFFECTIVE SEPT. 9, 2015
AgEq cut-off (g/t) Category Tonnes (1) Ag (g/t) Zn (%) Pb (%) AgEq (g/t)
200 Inferred 2,540,000 256 1.10 1.03 342
300 (2) Inferred 1,260,000 363 0.98 1.02 444
400 Inferred 650,000 462 0.90 1.00 538
500 Inferred 330,000 558 0.79 1.04 631
(1) Tonnes are rounded to nearest 10,000.
(2) Base-case resources are those reported at the 300-gram-per-tonne AgEq cut-off,
Inferred resources do not have demonstrated economic viability, are speculative and are not to be relied upon.
The mineral resource estimate was prepared by Mercator Geological Services Ltd. under the supervision of Michael Cullen, PGeo, who is an independent qualified person as set out in NI 43-101. The Paca mineralization starts from surface, with approximately 95 per cent of the resource existing at the cut-off value of 300 grams per tonne silver equivalent occurring within 100 metres of surface (refer to the company's news release dated Sept. 21, 2015).
PULACAYO MINERAL RESOURCE STATEMENT -- EFFECTIVE JUNE 16, 2015
AgEq cut-off (g/t) Category Tonnes (1) Ag (g/t) Zn (%) Pb (%) AgEq (g/t)
400 Indicated 2,080,000 455 2.18 3.19 594
Inferred 480,000 406 2.08 3.93 572
500*** Indicated 1,270,000 530 2.51 3.63 688
Inferred 350,000 419 2.47 4.58 620
600 Indicated 750,000 608 2.91 4.02 785
Inferred 170,000 394 3.49 6.75 710
(1) Tonnes are rounded to the nearest 10,000.
(2) Base case resources are those reported at the 500-gram-per-tonne AgEq cut-off.
The mineral resource estimate was prepared by Mercator under the supervision of Michael Cullen, PGeo, who is an independent qualified person as set out in NI 43-101 (refer to the company's news release dated June 18, 2015).
About Prophecy
Prophecy Development is a Canadian public company engaged in developing mining and energy projects in Mongolia, Bolivia and Canada.
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