Prophecy Platinum Corp. ("Prophecy Platinum" or the "Company") (TSX
VENTURE:NKL)(OTCQX:PNIKF) is pleased to report the release of its
annual audited consolidated financial statements for the twelve
month period ended March 31, 2013 (the "2013 Financial Statements")
and the related annual Management's Discussion and Analysis (the
"2013 MD&A"). The Company is also pleased to provide an update
on its Wellgreen PGM-Nickel-Copper project in the Yukon Territory
and its Shakespeare PGM-Nickel-Copper project in Ontario, Canada.
Further information about the Company, including the 2013 Financial
Statements, 2013 MD&A and technical information on each of the
Company's projects, are available on the Company's website at
www.prophecyplatinum.com and on SEDAR at www.sedar.com.
President's Message
The past year has been a transformative one for Prophecy
Platinum. Just over a year ago, we released the results of a
Preliminary Economic Assessment ("PEA") on our Wellgreen project
that showed robust project economics. We also added the Shakespeare
property to our portfolio of projects through our acquisition of
Ursa Major Minerals Inc. Since then, a completely new management
team has been put into place with a track record of success in
large-scale project development, operations and project financing.
The new management team's experience includes projects in the Yukon
Territory and Sudbury District, including projects with Platinum
Group Metals ("PGMs").
Prophecy Platinum has built a strong internal technical team and
retained leading technical and environmental consultants over the
past year. We are very pleased with the progress our technical team
has made in increasing our understanding of the Wellgreen deposit,
and the 2013 field program will further add to our appreciation of
the true nature and scale of the project. All historical data
available on the project dating back to the 1950s was standardized,
digitized and compiled in a geologic model that provides us with a
reliable foundation from which to further explore and develop
Wellgreen and, specifically, to identify new zones of higher grade
mineralization and areas previously designated as waste in the open
pit model that have a high probability of being mineralized.
During our most recently completed financial year, the Company
raised approximately $11.5 million in equity financing. In
addition, in June 2013 after our most recently completed financial
year, we were able to close a $5.9 million equity financing at a
premium to the market, despite extremely challenging conditions for
junior mining stocks. The financing will allow us to continue to
advance our Wellgreen and Shakespeare projects to the next phase of
development. Members of management participated to a significant
degree in the June 2013 financing, thereby increasing insider
holdings and further aligning management and shareholder
interests.
On July 17, 2013, we announced that our 2013 field program had
commenced at Wellgreen with the primary objectives being to upgrade
Inferred category resources to Measured and Indicated and test
priority expansion targets that have potential to add near surface
higher grade material to the life of mine plan. In addition to
drilling, we are currently re-sampling up to 12,000 metres of
historic Wellgreen drill core. This historic core was previously
only selectively sampled for very high grade massive sulphide
material. These historic holes are now being assessed from a bulk
mineability perspective and the results will be incorporated in the
next mineral resource update and PEA. In essence, this re-sampling
program is equivalent to a greater than 10,000 metre drill program
across the Wellgreen property without the expense, in terms of time
and money, associated with new drilling.
Our ongoing metallurgical test work will focus on optimizing
metal recoveries of disseminated mineralization, particularly in
the PGMs, enhancing concentrate grades and determining the economic
contribution of the rare PGMs that are present in the Wellgreen
deposit. The program will test optimization of the flotation
recovery of the metals using variations of grind size, flotation
methods, magnetic separation and other techniques to enhance
overall recovery of PGMs.
Engineering studies are also underway that will evaluate a
staged development approach with an initial smaller scale start-up
operation at Wellgreen. Staging production will require less
initial CAPEX, currently targeted at between $300 and 400 million,
and allow for an accelerated timeline to production. Over time,
production could be expanded to match the very large resource size
out of operating cash flow.
At our fully permitted Shakespeare PGM-Nickel-Copper project in
the Sudbury mining district of Ontario, we continue to conduct a
comprehensive review of metal prices and costs required to allow a
sustainable, profitable restart to operations. This includes
participation with the Sagamok Anishnawbek First Nation in
accordance with our Impact Benefit Agreement. In operation, we
expect the Shakespeare project to produce 25,000 ounces of PGM+Au,
8 million pounds of nickel and 10 million pounds of copper on an
annual basis.
We anticipate providing regular news updates over coming
quarters as we undertake exploration programs and complete resource
and engineering updates that should deliver meaningful milestones
for increasing shareholder value.
Current Market and Economic Conditions
The junior mining sector has been under severe selling pressure
throughout 2013 with the S&P TSX Venture Composite Index down
24% year-to-date and the Market Vectors Junior Gold Miners Index
down 45% year-to-date. In contrast, the S&P 500 is up 18%
year-to-date and hitting record highs. Market conditions remain
challenging for resource companies, but commodity prices and mining
company share prices have shown improvements recently and prices
are well off the lows reached at the end of June. We are cautiously
optimistic that after more than two years of consolidation those
lows may have been the bottom of the market.
Globally, there are indications that the US economy is on the
mend and that the European Union has stabilized. However, concerns
remain about economic data from China signaling a slowdown in
growth in that nation. China is a major driver of demand growth for
commodities, so concerns about China's economic growth are
continuing to weigh on commodity prices and sentiment towards
resource stocks.
In the long run, global economic policies continue to have an
expansionary and inflationary bias that should be positive for
commodity prices and resource stocks. The bear market in resource
stocks has resulted in the cancellation of billions of dollars of
new mines and mine expansions. As existing mines are depleted and
grades decline over time, the lack of new development will result
in declining annual production in future years. As the global
economy continues to recover from the 2008 financial crisis and
commodity demand grows, the stage is being set for commodity supply
deficits in the future and, therefore, higher prices.
Fundamentals for PGMs remain steadfastly bullish and PGM prices
have held up better than other metals in 2013. Palladium prices are
actually up 5% year-to-date, making it the best performer of all of
the precious metals. Platinum prices have declined 5% year-to-date,
but gold prices have declined 20% over that same period. As a
result, platinum is once again trading at a premium to gold, with
the premium currently at 9%. Based on the relative fundamentals, we
expect the platinum premium could continue to expand.
PGM supply is heavily concentrated in South Africa, Russia and
Zimbabwe. Collectively, these countries account for 92% of platinum
production and 84% of palladium production, but primary production
has been declining since the mid-2000s. According to the CPM Group,
PGM cash costs have increased at a compounded annual growth rate of
12.1% since 2000. The rising cost environment has eroded
profitability in the sector and an estimated 70% of PGM producers
are failing to recoup their all-in-costs at current PGM prices. The
situation is most dire in South Africa, which accounts for 73% of
global platinum supply and 36% of global palladium supply. South
African PGM mining cash costs increased fivefold from 2000 to 2012,
according to the CPM Group, and costs are expected to continue to
increase at a rapid pace.
Most South African platinum mines are deep underground mines
with thin seams of mineralization that are typically between 0.5
and 2.0 metres thick. The narrow widths associated the typical
Bushveld reef formations, such as the UG2 and Merensky, make it
nearly impossible to use automated mining equipment. Mining is done
predominantly using manual labour under challenging working
conditions that add to costs. Labour costs are estimated to account
for 50% of the cash costs of South African platinum miners.
In the past year there have been violent clashes between the two
main South African unions and demands for substantial wage
increases from producers. The large platinum mining companies have
announced closures and large layoffs in the face of rising costs,
so labour unrest and violence will likely continue. The rising cost
environment has also led to the closure of some mining shafts and
an attempt to identify PGM deposits that are less labour
intensive.
Several mining companies are presently focusing on developing
PGM deposits in South Africa that have mineralization widths of up
to 25-50 metres in width, making these deposits amenable to bulk
mining methods and automation. These underground deposits have 3E
(3E = platinum + palladium +gold) grade thicknesses of up to 100
grams per tonne x metres ("g/t-m"). In comparison, our Wellgreen
deposit is amenable to large scale open pit and bulk underground
mining and has platinum equivalent grade thicknesses of 100 to 300
g/t-m, with some zones running over 1,000 g/t-m.
Investor interest in the PGM sector continues to increase as the
market gains a better understanding of the supply risks. We believe
that consumers of PGMs will need to look for alternate sources of
supply in geopolitically stable and predictable environments. This
may present a positive dynamic for PGM equities in the junior
mining sector and particularly companies like Prophecy Platinum
with large resources in politically stable, mining friendly
jurisdictions like Canada.
While Prophecy Platinum's primary focus is on developing its PGM
resources, the Company also has significant exposure to nickel and
copper. Both base metals have seen their prices decline in 2013 due
to concerns that the Chinese economy is slowing and the pervasive
negative sentiment towards commodities. Copper prices have declined
about 10% in 2013 due to rising supply from new mines and mine
expansions, while demand growth has slowed. Nickel prices have been
especially weak due to the market being flooded by low cost nickel
pig iron. However, growing stainless steel demand is expected to
return the nickel market to a relatively balanced position in the
latter half of this year. Longer term, the lack of new sulphide
mine development is expected to result in nickel mine supply
contracting starting in 2015-2017 and we believe smelters will be
eager to source future nickel sulphide supply from projects like
Wellgreen in the next one to two years.
Looking Forward
The period ahead includes a number of important milestones for
Prophecy Platinum. The commencement of the 2013 field program at
Wellgreen will facilitate an updated resource and economic
assessment in the first half of 2014 and the studies at Shakespeare
will enable an assessment of restart of mining operations.
Wellgreen project activities for the remainder of 2013
include:
-- Re-logging / sampling and bulk mineability assessment of up to 12,000
metres of historic drill holes.
-- Definition drilling of higher-grade mineralization for scheduling in the
first 5-10 years of operations to enhance existing positive economics.
-- Step-out drilling to offset higher grade mineralized zones and bring
currently unclassified blocks that are within the previous pit model
into the mineral resource.
-- Conversion of a significant portion of the mineral resource from
Inferred to the Measured and Indicated category to increase overall
confidence in the mineral resource model.
-- Testing of high priority, road-accessible targets adjacent to the main
Wellgreen deposit for the existence of new higher grade, bulk mineable
mineralization.
-- Metallurgical optimization test work to increase metal recovery of
disseminated mineralization as well as grind size and flotation process
improvements.
-- Engineering and Mine Plan Optimization studies to look at a staged
development approach with an initial smaller scale start-up operation at
reduced CAPEX and with increased project internal rates of return.
Shakespeare project activities for the remainder of 2013
include:
-- Studies on the reduction of operating costs for toll milling/smelting
costs, transport costs, refinement of the mine plan/site operations and
materials handling costs for direct ore shipping operations.
-- Updated studies to look at the possible construction of an on-site mill
and concentrator.
With the scarcity of large PGM projects outside of southern
Africa and Russia we believe that the scale of Prophecy Platinum's
projected North American PGM production will become of interest to
potential investors in the sector. Our business strategy is to
demonstrate the full potential of the Wellgreen project and to
de-risk the project through the next steps of engineering toward
feasibility, which should support higher valuations in the market
and expand our investor base. We look forward to reporting on the
exciting developments ahead for Prophecy Platinum and its projects
as we remain focused on delivering increased shareholder value.
Greg Johnson
President & CEO
About Prophecy Platinum
Prophecy Platinum Corp. is a growth-focused PGM exploration
company with projects in the Yukon Territory, Ontario and Manitoba,
Canada. The Company's 100% owned Wellgreen PGM-Ni-Cu project,
located in the Yukon, is one of the world's largest undeveloped PGM
deposits and one of few significant PGM deposits outside of
southern Africa or Russia. The Company's Shakespeare PGM-Ni-Cu
project is a fully-permitted, production-ready mine located in the
Sudbury mining district of Ontario, and its Lynn Lake project is a
former operating mine located in Manitoba, Canada. The Company's
experienced senior management team has a track record of
successful, large-scale project discovery, development, operations
and financing combined with an entrepreneurial approach to
sustainability and collaboration with First Nations and
communities. The Company's shares are listed on the TSX Venture
Exchange under the symbol "NKL" and on the US OTC-QX market under
the symbol "PNIKF".
Further information about the Company and its projects can be
found at www.prophecyplatinum.com.
Quality Assurance: The technical information in this news
release has been prepared in accordance with Canadian regulatory
requirements set out in National Instrument 43-101 Standards of
Disclosure for Mineral Projects of the Canadian Securities
Administrators ("NI 43-101"). The Wellgreen Project geological
technical information is supervised and reviewed by Neil Froc, P.
Eng., Prophecy Platinum's Wellgreen Project Manager, a "Qualified
Person" as defined in NI 43-101 and the person who oversees
exploration activities on the Wellgreen Project. All other
technical information is supervised and reviewed by John Sagman,
P.Eng., Prophecy Platinum's Senior Vice President and Chief
Operating Officer and a "Qualified Person" as defined in NI 43-101.
In addition, Mr. Sagman has reviewed and approved the geological
technical information contained in this news release.
Forward Looking Information: This news release includes certain
information that may be deemed "forward-looking information". All
information in this release, other than information of historical
facts, including, without limitation, information regarding the
2013 field program with respect to resampling, drilling,
metallurgical optimization, engineering and mine planning, the
timing and success of exploration activities generally, the timing
of future technical reports and general future plans and objectives
for the Wellgreen and Shakespeare projects are forward-looking
information that involve various risks and uncertainties. Although
the Company believes that the expectations expressed in such
forward-looking information are based on reasonable assumptions,
such expectations are not guarantees of future performance and
actual results or developments may differ materially from those in
the forward-looking information. Forward-looking information is
based on a number of material factors and assumptions. Factors that
could cause actual results to differ materially from the
forward-looking information include unsuccessful exploration
results, changes in project parameters as plans continue to be
refined, results of future resource estimates, future metal prices,
availability of capital and financing on acceptable terms, general
economic, market or business conditions, uninsured risks,
regulatory changes, defects in title, availability of personnel,
materials and equipment on a timely basis, accidents or equipment
breakdowns, delays in receiving government approvals, the Company's
ability to maintain the support of stakeholders necessary to
develop the Wellgreen project, unanticipated environmental impacts
on operations and costs to remedy same, and other exploration or
other risks detailed herein and from time to time in the filings
made by the Company with securities regulatory authorities in
Canada. Readers are cautioned that mineral resources that are not
mineral reserves do not have demonstrated economic viability.
Mineral exploration and development of mines is an inherently risky
business. Accordingly, actual events may differ materially from
those projected in the forward-looking information. For more
information on the Company and the risks and challenges of our
business, investors should review our annual filings which are
available at www.sedar.com. The Company does not undertake to
update any forward looking information, except in accordance with
applicable securities laws.
Cautionary Note to United States Investors: This news release
has been prepared in accordance with the requirements of the
securities laws in effect in Canada, which differ from the
requirements of U.S. securities laws. Unless otherwise indicated,
all resource and reserve estimates included in this news release
have been prepared in accordance with NI 43-101 and the Canadian
Institute of Mining, Metallurgy, and Petroleum Definition Standards
on Mineral Resources and Mineral Reserves. NI 43-101 is a rule
developed by the Canadian Securities Administrators which
establishes standards for all public disclosure an issuer makes of
scientific and technical information concerning mineral projects.
Canadian standards, including NI 43-101, differ significantly from
the requirements of the United States Securities and Exchange
Commission ("SEC"), and resource and reserve information contained
herein may not be comparable to similar information disclosed by
U.S. companies. In particular, and without limiting the generality
of the foregoing, the term "resource" does not equate to the term
"reserves". Under U.S. standards, mineralization may not be
classified as a "reserve" unless the determination has been made
that the mineralization could be economically and legally produced
or extracted at the time the reserve determination is made. The
SEC's disclosure standards normally do not permit the inclusion of
information concerning "measured mineral resources", "indicated
mineral resources" or "inferred mineral resources" or other
descriptions of the amount of mineralization in mineral deposits
that do not constitute "reserves" by U.S. standards in documents
filed with the SEC. Investors are cautioned not to assume that any
part or all of mineral deposits in these categories will ever be
converted into reserves. U.S. investors should also understand that
"inferred mineral resources" have a great amount of uncertainty as
to their existence and great uncertainty as to their economic and
legal feasibility.
It cannot be assumed that all or any part of an "inferred
mineral resource" will ever be upgraded to a higher category. Under
Canadian rules, estimated "inferred mineral resources" may not form
the basis of feasibility or pre-feasibility studies except in very
rare cases. Investors are cautioned not to assume that all or any
part of an "inferred mineral resource" exists or is economically or
legally mineable. Disclosure of "contained ounces" in a resource is
permitted disclosure under Canadian regulations; however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC standards as in-place tonnage and
grade without reference to unit measures. The requirements of NI
43-101 for identification of "reserves" are also not the same as
those of the SEC, and reserves reported by the Company in
compliance with NI 43-101 may not qualify as "reserves" under SEC
standards. Accordingly, information concerning mineral deposits set
forth herein may not be comparable with information made public by
companies that report in accordance with U.S. standards.
"Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release."
Contacts: Prophecy Platinum Corp. Greg Johnson President &
CEO 1-800-459-5583 Prophecy Platinum Corp. Chris Ackerman Senior
Manager, Investor Relations +1.604.569.3690 +1.604.569.3617
(FAX)cackerman@prophecyplatinum.com www.prophecyplatinum.com
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