Prophecy Platinum Corp. (CVE:NKL)(OTCQX:PNIKF) unveiled Monday results from an NI 43-101 preliminary economic assessment (PEA) of its flagship Wellgreen project in the Yukon, including a whopping $3.0 billion net present value.
Shares of the company rallied more than 10 per cent early Monday morning, to $2.54 as of 9:37am ET.
The economic report, prepared by Tetra Tech,
evaluated a base case open pit mine at an 111,500 tonne per day mining
rate, and an onsite concentrator at a 32,000 tonne per day milling rate.
The project is expected to produce 1.959 billion pounds of
nickel in concentrate, 2.058 billion pounds of copper and 7.119 million
ounces of platinum plus palladium plus gold over a 37-year mine life,
with an average strip ratio of 2.57.
The company said the
Wellgreen economics yield a 38 per cent internal rate of return (IRR),
pre tax, as well as a $3.0 billion net present value at an 8 per cent
discount rate, with a payback period of just over three and a half
Initial capital costs were pegged at $863 million,
including 25 per cent contingency. Total operating costs are estimated
to be $29.74 per tonne of mill feed over the life of mine, based on a
diesel power rate of $0.28 per kWh.
"We are pleased with the PEA results," said Prophecy chairman John Lee.
"The numbers indicate Wellgreen as one of most exciting mineral projects in Yukon.
company is currently drilling to both upgrade and expand the resource
base. The infrastructure is excellent as the project is merely 1,400
meters in altitude and 14 km from the paved Alaska Highway that leads to
Haines deep seaport."
Lee further noted that discussions are underway regarding permitting and logistics, with support from local stakeholders.
base case scenario used in the preliminary report was based on the
Energy & Metals Consensus Forecast, a consensus forecast of
long-term energy and metals pricing among 20 top international financial
The copper price used was $3.11 per pound, while
nickel was pegged at $10.82 per pound, and platinum at $2,043.50 an
ounce. The gold price used was US$1,347.40 an ounce.
said that if prices were increased by 10 per cent, pre-tax IRR would
jump to 43 per cent, while net present value would soar to $3.7 billion
at the same 8 per cent discount rate, with a pay back period of 2.9
The PEA report recommends the development of the Wellgreen deposit as a conventional, diesel truck-shovel open pit mine.
deposit will be processed using a conventional concentrator to produce
bulk nickel-copper-platinum group element (PGE) concentrate.
feed grades include 0.32% nickel, 0.26% copper, 0.411 grams per tonne
(g/t) platinum, 0.347 g/t palladium, 0.177 g/t gold and 0.02% cobalt.
annual pre-tax cash flow was estimated at $367 million over the life of
the mine, and $189 milliom from years one to six.
said permits to start construction are anticipated to be obtained in
2016, with the production of concentrated expected to begin in 2019.
a 0.22% nickel equivalent cut-off, the Wellgreen project is estimated
to contain an indicated resource of 14.4 million tonnes at 0.68% nickel,
0.62% copper, and 2.23 g/t platinum plus palladium plus gold.
the inferred category, the project holds 446.6 million tonnes at 0.31%
nickel, 0.25% copper, and 0.87 g/t platinum plus palladium plus gold.
company said the PEA report did not take into account opportunities for
improvement such as the inclusion of revenue from rhodium, ruthenium
and iridium recovery, increasing the overall resource, and the use of
liquid natural gas to lower power costs.
Split stream copper and
nickel concentrates to reduce smelting charges were also not included
as well as further improvement on metal recovery rates.
The past-producing Wellgreen mine was originally operated in the
1970s as a nickel-copper mine, when prices for platinum group metals
The Wellgreen property is located around 35 kilometres northwest of
the airstrip at Burwash Landing, and just 15 km from the Alaska Highway
and 402 km from Alaska's Haines deep sea port.
Recent results from the current 20,000 metre program – the largest in
the project’s history - included hole WU12-533, which returned 10.4
metres of 0.98% copper, 1.18 grams per tonne (g/t) platinum + palladium +
gold, and 0.24% nickel, or 2.54% copper equivalent.
In addition to Wellgreen, Prophecy also holds Manitoba’s Lynn Lake
nickel-copper property, which has over 262 million pounds of nickel and
138 million pounds of copper in the measured and indicated categories.