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Prophecy Development Corp (2)
Symbol PCY
Shares Issued 95,816,127
Close 2019-08-19 C$ 0.21
Recent Sedar Documents

Prophecy Development forms units for potential spinoffs

2019-08-19 09:10 ET - News Release

Mr. Michael Doolin reports

PROPHECY INCORPORATES SILVER ELEPHANT MINING CORP AND ASIA MINING INC, PREPARES FOR SILVER SPINOFFS

Prophecy Development Corp. has formed two wholly owned Canadian British Columbia subsidiaries, Silver Elephant Mining Corp. and Asia Mining Inc., in order to facilitate potential future spinoffs of the company's wholly owned Bolivian silver operation and Mongolian coal operation.

John Lee, Prophecy's chairman, states that: "We foresee a strong upward performance in silver prices. Silver Elephant is structured and intended to be a premier pure silver play, which may go public in the near term."

The Gibellini vanadium project is firmly on track to formally start the 12-month streamlined environmental impact assessment by early 2020. Prophecy aims to be the single-purpose vehicle that offers vanadium investment exposure in Nevada.

Gibellini vanadium, Pulacayo silver and Ulaan Ovoo coal projects had received over $100-million (U.S.) in investment since 2005. Through this reorganization, to be completed by end of August, Prophecy will be the parent company to the following direct subsidiaries.

Silver Elephant (British Columbia, Canada)

Through its Bolivian subsidiaries, Silver Elephant will focus on the Pulacayo-Paca silver mining project in Bolivia. Pulacayo-Paca received over $25-million (U.S.) in investments which included over 98,000 metres of drilling since 2005. Prophecy is in the final stage of obtaining the Pulacayo-Paca mining production contract from the Bolivian government, enabling Silver Elephant to explore and mine Pulacayo for up to 40 years. Prophecy intends to perform infill and exploration drilling at Paca in the fall of 2019.

On Oct. 20, 2017, Mercator Geological Services Ltd. published a National Instrument 43-101-compliant Pulacayo technical report (available on SEDAR), which outlined 30 million ounces of silver in the indicated category, grading 455 grams per tonne (g/t), and a further 21 million ounces of silver in the inferred category, grading 256 g/t.

The company's research has shown relatively few silver underground deposits grading at over 400 g/t silver and open-pit silver projects grading at over 200 g/t silver.

      HIGHLIGHTS FROM HISTORIC UNDERGROUND DIAMOND DRILL RESULTS
                    (2005 TO 2015) AT PULACAYO

Hole No.    From -- to  Interval   Silver    Lead    Zinc   Dist from adit
                    (m)       (m)    (g/t)     (%)     (%)              (m)
                                                                           
PUD005   96.2 to 108.0      11.9      689     1.9     1.4            -67.5             
PUD007    70.0 to 96.8      26.8      517     2.3     4.2            -44.5             
PUD057  374.0 to 378.0         4    1,184     0.8     2.3           -137.5            
PUD069  281.0 to 294.0        13      624     2.1     4.2              -46               
PUD109  293.6 to 298.4       4.8    3,607     3.8     4.1            -30.4             
PUD118  174.0 to 184.0        10    1,248     1.7     2.6            -93.9             
PUD134  128.2 to 151.5      23.3      514     1.3     1.9            -55.7             
PUD150  290.0 to 302.0      11.2      882     0.4     0.6            -75.2             
PUD159  343.0 to 354.0        11      790     0.6     0.6           -116.6            
PUD170  237.0 to 239.0         2    3,163     0.1     0.9            -32.5             

HIGHLIGHTS FROM HISTORIC SURFACE DIAMOND DRILL RESULTS (2005 TO 2015) AT PACA

Hole No.    From -- to  Interval   Silver    Lead    Zinc   Dist from surface
                    (m)       (m)    (g/t)     (%)     (%)                 (m)
                                                                              
PND003    11.0 to 28.0        17      260     0.9     0.1                -7.8                 
PND008    18.0 to 33.5      15.5      314       1     0.4               -12.7                
PND029    12.0 to 22.3      10.3      436       0       0                -8.5                 
PND031     0.0 to 37.0        37      217     0.9     0.3                   0                    
PND062    10.0 to 52.0        42      406     0.8     0.1                -7.1                 
ESM2       0.0 to 38.0        38      411     1.4     1.2                   0                    

With access to water, power and a paved road to toll milling facilities, Pulacayo-Paca can be commissioned on a trial mining basis with minimal lead time and start-up costs. Over 20 million ounces of silver was produced by Sumitomo, Pan American Silver and Manquiri (previously owned by Coeur Mining) in 2018 in Bolivia's Potosi department, where Pulacayo-Paca is located.

Bolivian constitutional court recently cleared the company's historic tax liability related to the company's Bolivian operation in 2005. Silver Elephant will have no government tax or bank debt.

Nevada Vanadium Mining Corp. (British Columbia, Canada)

Through Prophecy's United States subsidiary, Nevada Vanadium will be developing its 100-per-cent-owned Gibellini and Louie Hill vanadium mining projects in Eureka county, Nevada. This open-pit heap leach vanadium project is scheduled to start a 12-month environmental impact statement starting in Q1 2020, with construction in 2021 and production by end of 2022. The recent preliminary economic assessment published by AMEC (available on SEDAR) stated annual vanadium pentoxide (V2O5) production of 9.7 million pounds a year for 14 years at cash cost of a $4.77 (U.S.) per pound and capital expenditure of $117-million (U.S.) (see company's press release dated May 28, 2018). Gibellini and Louie Hill vanadium projects received over $20-million (U.S.) investment since mid-2000 that included drilling, metallurgy, feasibility and environmental baseline studies.

Nevada Vanadium offers leverage on vanadium prices and is the only United States vanadium mine poised to go to production by 2022. Nevada Vanadium will have no bank debt.

Asia Mining Inc. (British Columbia, Canada)

Through its Mongolian subsidiaries, Asia Mining will operate the 100-per-cent-owned Ulaan Ovoo and Chandgana coal mines under existing 20-year mining licences that can be extended for another 20 years.

Ulaan Ovoo is located in northern Mongolia, 17 kilometres from the border to Russia and 120 kilometres by road from Mongolia's Sukhbaatar railway station (which connects to the Trans-Siberian railway network).

Ulaan Ovoo had received over $50-million (U.S.) investment since 2010 and features an average strip ratio of 1.8. The coal mine yielded 5,000 kilocalories per kilogram gross calorific value (GCV), less than 1 per cent sulphur and low ash (8 to 11 per cent), which is well-suited for power plants, cement plants and boiler heat applications. Wardrop Engineering (Tetra Tech) estimated 174 million tonnes of measured and 34 million tonnes of indicated coal resources in an NI 43-101-compliant report dated Dec. 13, 2010 (available on SEDAR).

Ulaan Ovoo is being operated by a lessee since March, 2019, and achieved a record production of 37,800 tonnes in June, 2019. The lessee has reportedly secured close to 400,000 tonnes of orders through to April, 2020. Asia Mining stands to earn $2 per tonne of Ulaan Ovoo coal sold.

Chandgana is a lignite coal project with mining licences and contains an estimated NI 43-101-compliant resource of 509 million tonnes of coal in measured and further 539 million tonnes of coal in indicated categories.

Asia Mining will be a premier thermal coal play and expects to be cash flow positive in 2019. Asia mining will have no bank debt.

Prophecy is led by chief executive officer Mike Doolin, previously chief operating officer of Klondex Mines Ltd., which was acquired by Hecla in 2018. Mr. Doolin has over 30 years of experience in permitting, commissioning and operating both open-pit and underground mines. Prophecy's board comprises experienced multinational executives, specializing in mine engineering and financing.

Mr. Doolin comments: "Our team has been examining various production scenarios at Pulacayo-Paca, which may be implemented as soon as the mining production contract is granted to take advantage of rising silver prices. We believe there is strong potential to increase the silver resources at Pulacayo-Paca through modern exploration and drilling methods in this prolific silver district." The company further announces that pursuant to the terms of the company's share-based compensation plan as approved at its annual general meeting of shareholders held on June 2, 2016, and amended on June 13, 2017, it has granted, in aggregate, 1,685,000 incentive stock options to certain directors, officers, employees and consultants of the company. The options are exercisable at a price of 20 cents per common share for a term of five years expiring on July 29, 2024, and vest at 12.5 per cent per quarter for the first two years following the date of grant. As part of its continuous review, the company cancelled a total of 1,356,000 stock options with various exercise prices.

Qualified person

The technical content of this news release has been prepared under the supervision of Danniel Oosterman, vice-president of exploration. Mr. Oosterman is not independent of the company in that he is employed as a consultant to the company and most of his income is derived from the company.

About Prophecy Development Corp.

Prophecy is developing the Gibellini project -- the only large-scale, open-pit, heap-leach vanadium project of its kind in North America. Located in Nevada, Gibellini is currently undergoing EPCM and permit preparation. Prophecy also has mining projects in Mongolia and Bolivia.

We seek Safe Harbor.

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