Prophecy Development Corp.
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Prophecy Development Corp.

April 02, 2015 13:34 ET

Prophecy Engages Mercator Geological Services Limited to Prepare Technical Reports for Pulacayo, Paca and Tailings Piles

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 2, 2015) - Prophecy Development Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to announce that it has completed a review of prior technical studies on the Pulacayo and Paca deposits. In light of investors' focus on mine profitability in lieu of production quantity, the Company announces that it has engaged Mercator Geological Services Limited ("Mercator") to:

1) complete an updated mineral resource estimate in accordance with National Instrument 43-101 ("NI 43-101") for the Pulacayo deposit by the end of April 2015 based on a silver equivalency cut off value of 500g/t Ag eq;

2) work with Prophecy engineering staff to develop a new mine plan for the Pulacayo deposit with a production rate of 500 tonnes per day, downsized from the 1,000 tonne per day rate in the prior feasibility study mine plan;

3) complete a mineral resource estimate in accordance with NI 43-101 for the Paca open pit deposit based on a silver equivalency cut off value of 200g/t Ag eq;

4) work with Prophecy engineering staff to develop a mine plan for the Paca open pit deposit with a proposed production rate of 500 tonnes per day;

5) examine the Pulacayo tailings deposits and associated technical data and prepare a mineral resource estimate in accordance with NI 43-101 for these deposits, or a portion thereof; and

6) develop a future exploration plan for the Pulacayo deposit, Paca deposit, and other satellite target anomalies on the properties with the objective of establishing additional high grade mineral resources.

In September 2012, Mercator authored a mineral resource estimate* for the Pulacayo deposit in accordance with NI 43-101 based on 67,000 meters of drilling. The estimate was completed for Apogee Silver Ltd. ("Apogee"), not Prophecy, and thus is considered historic in nature, as defined under NI 43-101. Indicated resources included in the September 2012 estimate are tabulated below in Table 1. Selected core drilling highlights that were previously disclosed by Apogee are presented in Table 2.

Table 1: Apogee

Resource Class ^Tonnes Ag
(g/t)
Pb % Zn % Ag (Oz) Pb
(Mlbs)
Zn
(Mlbs)
Underground Indicated 6,197,000 213.6 0.86 1.74 42,547,000 117.49 237.72

^Rounded

Table 2

hole Nº from - to (m) int (m) Ag (g/t) Pb (%) Zn % Vertical distance from shaft (m)
PUD005 96.2 - 108.0 11.9 689 1.9 1.4 -67.5
PUD007 70.0 - 96.8 26.8 517 2.3 4.2 -44.5
PUD057 374.0 - 378.0 4.0 1,184 0.8 2.3 -137.5
PUD069 281.0 - 294.0 13.0 624 2.1 4.2 -46.0
PUD109 293.6 - 298.4 4.8 3,607 3.8 4.1 -30.4
PUD118 174.0 - 184.0 10.0 1,248 1.7 2.6 -93.9
PUD134 128.2 - 151.5 23.3 514 1.3 1.9 -55.7
PUD150 290.0 - 302.0 11.2 882 0.4 0.6 -75.2
PUD159 343.0 - 354.0 11.0 790 0.6 0.6 -116.6
PUD170 237.0 - 239.0 2.0 3,163 0.1 0.9 -32.5
Total 137 holes: 29 holes (21%) with Ag 1,000 to 10,000 g/t, 67 holes (49%) with Pb or Zn >5%

In January 2007, Micon International Limited ("Micon") published an inferred mineral resource estimate** (Table 3) in accordance with NI 43-101 for the Paca open-pit deposit based on 13,631.2 meters of drilling in 76 diamond drill holes. This was completed for Apogee Minerals Ltd., not Prophecy, and thus is now considered historic in nature, as defined under NI 43-101. Resources occur within a pit shell having a waste to ore stripping ratio (waste tonnes/ore tonnes) of 3.1:1. Selected core drilling highlights for the Paca deposit that were previously disclosed by Apogee are presented in Table 4.

Table 3

Resource Class *Tonnes Ag
(g/t)
Pb % Zn % Ag (Oz) Pb
(Mlbs)
Zn
(Mlbs)
Open Pit Inferred 18,416,100 43.04 0.68 1.16 25,484,000 276.08 470.96

*Rounded

Table 4

hole Nº from - to (m) int (m) Ag (g/t) Pb (%) Zn % Vertical distance from surface (m)
PND003 11.0 - 28.0 17.0 260 0.9 0.1 -7.8
PND008 18.0 - 33.5 15.5 314 1.0 0.4 -12.7
PND029 12.0 - 22.3 10.3 436 0.04 0.03 -8.5
PND031 0.0 - 37.0 37.0 217 0.9 0.3 0.0
PND062 10.0 - 52.0 42.0 406 0.8 0.1 -7.1
ESM-2 0.0 - 37.0 37.0 433 1.4 1.2 0.0

On February 2, 2015, Prophecy published assay results from ALS Minerals Ltda. for samples obtained during the reconnaissance sampling program of tailings piles materials. The tailings piles are the remaining materials from processing ore extracted from the Pulacayo mining district between approximately 1850 and 1950. The ore was processed by a mill on site which has since been dismantled. A total of 299 samples from 12 tailings piles were obtained.

Table 5: Tailings sampling results reported on February 2, 2015 by Prophecy

Tailings Pile WxLxH (m) Average
Ag g/t
Average
Au g/t
Average
In g/t
Average
Pb %
Average
Zn %
Number of Samples
Pulacayo 2 70x100x30 112 1.2 7.1 0.21 0.23 105
Pero 1 90x30x12 302 0.2 3.4 1.00 0.31 36
Pero 2 65x60x7 219 0.2 18.1 1.01 0.51 4
Pulacayo 3 65x45x3 380 1.0 69.4 1.76 1.30 5

Refer to Prophecy's news release dated Feb 2, 2015 for additional information

Summary and Project Progress:

Mineral resource estimates and mining studies for the Pulacayo and Paca bedrock deposits and the Pulacayo tailings deposits are being prepared in accordance with NI 43-101 to support subsequent assessment of potential future mining and milling scenarios that incorporate mill feed from multiple sources.

Since acquiring Pulacayo and Paca in January 2015, Prophecy has been in discussion with several local vendors with respect to purchasing a 500 tonne per day mineral processing (grinding and flotation) plant. This planned throughput level is half of that previously planned by Apogee and complies with the approved Environmental Impact Assessment (the "EIA") currently in place for the Pulacayo site. If implemented, it is expected to result in reduced front-end capital expenditures given the lower cost of locally sourced processing equipment and limited requirement for infrastructure upgrades. The Company is also studying the viability of transporting necessary mining equipment from its Mongolia operations to support future operations in the Pulacayo and Paca areas (equipment list at www.prophecydev.com/equipment).

Given the high grade nature of Pulacayo flotation concentrates obtained from over 18 months of trial mining and toll milling by Apogee and the site's 20km distance by paved road to rail services at Uyuni connecting to Antofagasta port, the Company is optimistic with respect to potential for securing future concentrate off take agreements at commercially competitive terms. Potential for future project financing from this business sector is also being investigated.

Background on Pulacayo and Paca Deposit Areas

The Pulacayo project comprises approximately 22,850 hectares of contiguous mining concessions centered on the historical Pulacayo mine and town site. Prophecy gained 100% control of the Pulacayo and Paca deposits in January 2015 when Prophecy acquired all of the issued and outstanding shares of ASC Bolivia LDC Sucursal Bolivia, an indirectly held subsidiary of Apogee.

In December 2012, the EIA for the Pulacayo deposit was submitted to Bolivia's Ministry of Environment and Water and it was approved in October of 2013. The submission was the result of over 30 months of technical studies and consultations, including a comprehensive water management plan, the feasibility study, archeological studies, flora and fauna studies, mine closure planning, social baseline studies, and two years of public consultations with local communities. The approval of the EIA allows for mine and concentrator construction with a targeted production rate of up to 560tpd at the Pulacayo project.

The discovery of silver mineralization at Pulacayo dates back to the Spanish Colonial period (c. 1545). Although production details during this period are unknown, remnants of colonial town sites suggest a sizeable workforce was employed. The Pulacayo deposit was rediscovered in 1833 by Mariano Ramirez, and by 1857 the Huanchaca Mining Company of Bolivia was formed with the support of French investors. Revenue from the mine funded the first railway line in Bolivia which connected the town of Pulacayo to the port of Antofagasta, Chile in 1888. By 1891, annual silver production reached 5.7 million ounces and the mining operations at Pulacayo had become the second largest in Bolivia, exceeded only by those at nearby Cerro Rico de Potosi, which is arguably the largest known silver deposit in the world.

Historic Pulacayo production was predominantly from the Tajo vein system which extends over a strike length of 2.5 km or more and to a depth of 1000 meters or more. By 1923, much of the active mining levels had become flooded, facilitating the subsequent purchase of the mine by Mauricio Hochschild in 1927. The workings were dewatered and the Cuarto vein system was developed and exploited. It was during this period that the 2.8 km San Leon Tunnel was developed to facilitate ore haulage and the first recorded exploration efforts in the area were undertaken. The mines were nationalized by the Bolivian Government in 1952 with operations turned over to COMIBOL, the newly established Bolivian National Mining Enterprise. Mining operations by COMIBOL were suspended in 1959 and total production from the Pulacayo mine during this period is estimated by the National Geological and Mineral Service of Bolivia (SERGEOTECHMIN) to be 678 million ounces of silver, 200,000 tons (181,400 tonnes) of zinc and 200,000 tons (181,400 tonnes) of lead (SERGEOTECHMIN Bulletin No. 30, 2002). In 1962, the Cooperativa Minera Pulacayo was founded and leased the mine from COMIBOL. The cooperative continues to conduct small scale mining to the present day, exploiting narrow, very high grade silver veins in the upper part of the Pulacayo mine, above the San Leon Tunnel level. A Pulacayo project location map, geological map and underground mine workings map are available for review at www.prophecydev.com.

2013 Pulacayo Mineral Resource Estimate by Mercator

The historic Pulacayo mineral resource estimate by Mercator that was prepared for Apogee has an effective date of September 28, 2012. The same estimate and associated model were subsequently used as the resource base of the Pulacayo project feasibility study prepared by TWP Sudamerica Ltd., with an effective date of January 17, 2013. Results of both projects were disclosed previously by Apogee in accordance with NI 43-101 and are now historic in nature#. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources. The issuer is not treating the historical estimate as current mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Table 6 below presents the full resource estimate tabulation developed by Mercator and used in the Apogee feasibility study.

Table 6

Resource Class Type Tonnes Ag (g/t) Pb % Zn % Ag (Oz) Pb (Mlbs) Zn (Mlbs)
Combined Open Pit and Underground Resources including Oxide and Sulphide Zones
Open Pit Resources (Base case 42° Average Pit Wall Slope Angle)
Open Pit Indicated Oxide 1,500,000 95.9 0.96 0.13 4,626,000 ` `
Open Pit Inferred Oxide 248,000 71.2 0.55 0.31 569,000 ` `
Open Pit Indicated Sulphide 9,283,000 44.1 0.66 1.32 13,168,000 135.90 269.54
Open Pit Inferred Sulphide 2,572,000 33.4 0.92 1.36 2,765,000 51.99 76.88
Waste Rock 71,679,000 ` ` ` Strip Ratio 5.3 : 1
Underground Resources (all blocks below 4159 m ASL with NSR = $US 58)
Underground Indicated Sulphide 6,197,000 213.6 0.86 1.74 42,547,000 117.49 237.72
Underground Inferred Sulphide 943,000 193.1 0.43 1.61 5,853,000 8.94 43.47
TOTAL Indicated Oxide + 16,980,000 110.5 0.76 1.37 60,341,000 253.39 507.26
TOTAL Inferred Oxide + 3,763,000 75.9 0.77 1.35 9,187,000 60.93 120.35

2007 Paca Mineral Resource Estimate by Micon

The historic Paca deposit mineral resource estimate by Micon was prepared for Apogee and has an effective date of January 16, 2007. The estimate was disclosed previously by Apogee in accordance with NI 43-101 and is now historic in nature##. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources. The issuer is not treating the historical estimate as current mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Table 7 below presents the full resource estimate tabulation developed by Micon.

Table 7

Resource Class *Tonnes Ag
(g/t)
Pb % Zn % Ag (Oz) Pb
(Mlbs)
Zn
(Mlbs)
Open Pit Inferred 18,416,100 43.04 0.68 1.16 25,484,000 276.08 470.96

Notes: *Rounded; strip ratio 3.1:1 for constraining pit shell; mineral resources that are not mineral reserves do not have demonstrated economic viability.

# The historical estimate is considered relevant and reliable because it is only two and a half years old and prepared using currently accepted methods and assumptions. The historical estimate assumed a 42º pit wall slope for the open pit resources. The key parameters included an NSR cut-off of $13.20 USD for open pit sulfide resources and $23.10 USD for open pit oxide resources, and $58.00 USD for underground resources below 4159 m ASL, metal prices of $25.00 USD/oz silver, $0.89 USD/lb lead, and $1.00 USD/lb zinc where lead and zinc do not contribute to revenue in the oxide zone, and contributing 1.0 meter assay composites were capped at 1500 g/t Ag, 15% Pb, and 15% Zn. The key methods included use of inverse distance squared algorithm to estimate grade, variography to assess grade distribution, and use of a proprietary NSR calculator. The historical estimate uses the same resource categories described in Sections 1.2 and 1.3 of the Instrument. The historical estimate does not include any more recent estimates or data available to the issuer. The work needed to upgrade the historical estimate as current mineral resources is to use current metal prices in the NSR calculation.

## The historical estimate is considered relevant and reliable because though it is eight years old it was prepared using currently accepted methods and assumptions. The historical estimate assumed the up-dip and down-dip limits of the mineralization domains were defined as the lesser of half of the distance to the next barren drill hole or 25 meters, not to cap grade values, and a 45º pit wall slope for the open pit resources. The key parameters included a gross metal value cut-off of $ 20.00 USD for mineralized areas and metal prices of $10.43 USD/oz silver, $0.55 USD/lb lead, and $1.30 USD/lb zinc. The key methods included use of inverse distance squared algorithm to estimate grade, variography to assess grade distribution, and use of length weighted composite calculation. The historical estimate uses the same resource categories described in Sections 1.2 and 1.3 of the Instrument. The historical estimate does not include any more recent estimates or data available to the issuer. The work needed to upgrade the historical estimate as current mineral resources is to use current metal prices and calculation of NSR.

Qualified Person

The technical content of this news release was reviewed and approved by Christopher M. Kravits, P.Geo., who is a Qualified Person within the meaning of NI 43-101. Mr. Kravits has reviewed and approved the scientific and technical aspects of this news release.

About Prophecy

Prophecy Development Corp. is a Canadian public company listed on the Toronto Stock Exchange that is engaged in developing mining and energy projects in Mongolia, Bolivia and Canada. Further information on Prophecy can be found at www.prophecydev.com.

About Mercator

Mercator Geological Services Limited is a Canadian consulting firm founded in 1997 that offers a broad range of professional project management services including technical reporting to NI 43-101 standards, exploration program management, and professional staffing for both small and large mineral exploration projects. Mercator has completed mineral exploration and resource estimation programs both domestically and internationally and prepared two Pulacayo deposit mineral resource estimations for Apogee during the 2011 to 2013 period.

PROPHECY DEVELOPMENT CORP.

ON BEHALF OF THE BOARD

JOHN LEE

Executive Chairman

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this news release, including statements which may contain words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", or similar expressions, and statements related to matters which are not historical facts, are forward-looking information within the meaning of applicable securities laws. Such forward-looking statements, which reflect management's expectations regarding Prophecy's future growth, results of operations, performance, business prospects and opportunities, are based on certain factors and assumptions and involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. These estimates and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies, many of which, with respect to future events, are subject to change and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by Prophecy. In making forward-looking statements as may be included in this news release, Prophecy has made several assumptions that it believes are appropriate, including, but not limited to assumptions that: there being no significant disruptions affecting operations, such as due to labour disruptions; currency exchange rates being approximately consistent with current levels; certain price assumptions for coal, prices for and availability of fuel, parts and equipment and other key supplies remain consistent with current levels; production forecasts meeting expectations; the accuracy of Prophecy's current mineral resource estimates; labour and materials costs increasing on a basis consistent with Prophecy's current expectations; and that any additional required financing will be available on reasonable terms. Prophecy cannot assure you that any of these assumptions will prove to be correct.

Numerous factors could cause Prophecy's actual results to differ materially from those expressed or implied in the forward-looking statements, including the following risks and uncertainties, which are discussed in greater detail under the heading "Risk Factors" in Prophecy's most recent Management Discussion and Analysis and Annual Information Form as filed on SEDAR and posted on Prophecy's website: Prophecy's history of net losses and lack of foreseeable cash flow; exploration, development and production risks, including risks related to the development of Prophecy's mineral properties; Prophecy not having a history of profitable mineral production; the uncertainty of mineral resource and mineral reserve estimates; the capital and operating costs required to bring Prophecy's projects into production and the resulting economic returns from its projects; foreign operations and political conditions, including the legal and political risks of operating in Bolivia, which is a developing jurisdiction; amendments to local Bolivian laws which may have an adverse impact on the Company's operations; title to Prophecy's mineral properties; environmental risks; the competitive nature of the mining business; lack of infrastructure; Prophecy's reliance on key personnel; uninsured risks; commodity price fluctuations; reliance on contractors; Prophecy's need for substantial additional funding and the risk of not securing such funding on reasonable terms or at all; foreign exchange risks; anti-corruption legislation; recent global financial conditions; the payment of dividends; and conflicts of interest.

These factors should be considered carefully, and readers should not place undue reliance on Prophecy's forward-looking statements. Prophecy believes that the expectations reflected in the forward-looking statements contained in this news release and the documents incorporated by reference herein are reasonable, but no assurance can be given that these expectations will prove to be correct. In addition, although Prophecy has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Prophecy undertakes no obligation to release publicly any future revisions to forward-looking statements to reflect events or circumstances after the date of this news or to reflect the occurrence of unanticipated events, except as expressly required by law.

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