Prophecy Platinum (CVE:NKL)(OTCQX:PNIKF) Thursday updated investors with progress at the company's flagship Wellgreen project, which is rich in platinum group metals (PGM) as well as nickel and copper.
In a webcast event, Prophecy Platinum's chairman and CEO John Lee went over the company's progress over the past year and highlighted features that showed Wellgreen's potential as a deposit that ranks amongst the world's top five undeveloped nickel sulphide projects.
Wellgreen is located in the south west of Canada's mining-friendly Yukon Territory, approximately 35 kilometres northwest of the airstrip at Burwash Landing, just 15 km from the Alaska Highway and 402 km from the deep sea port of Haines in Alaska.
A July 2011, NI 43 101-compliant report provides a resource estimate of 289 million tonnes in the inferred category with grades of 0.38% nickel, 0.35% copper, 1.18 grams per tonne (g/t) PGM and gold, and 14 million tonnes in the indicated category at 0.69% nickel, 0.62% copper, 2.25 g/t PGM and gold.
"The Wellgreen project is large and has attractive economical and strategic value in PGMs and will represent up to 20 per cent of North American platinum output once in production," Prophecy Platinum's Lee told investors, analysts and shareholders listening in on the webcast.
"This is a brownfield exploration story with a significant history."
Lee said that a preliminary economic assessment (PEA) from earlier this year showed "good economics" with cash costs in the second quartile.
In June, Prophecy Platinum released the PEA which showed Wellgreen had a net present value of $3.0 billion.
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.
This is a third of the production of Stillwater, one of the largest independent PGM producers in North America, Lee said.
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, with a payback period of just over three and a half years. Initial capital costs were pegged at $863 million, including 25 per cent contingency.
Lee said that the Wellgreen deposit was open in both directions and was linked to infrastructure literally at its doorstep, with an all-weather road next to the entrance of the underground mine workings that joins the Alaska Highway, and which sweeps to the south to connect to the deep sea port of Haines.
He also said that Wellgreen compared favourably with First Quantum's (TSE:FM) Kevitsa project in Finland.
Prophecy Platinum aims to upgrade the resource estimate next year and then complete a pre-feasibility study on Wellgreen by 2014, which will be a "comprehensive study" that will look to put the project into production.
The company said it has drilled 10,000 metres since February 2012 with work still ongoing.
"Wellgreen still has plenty of exploration potential," Lee said.
Copper and nickel concentrates are industrial grade, he remarked, and was "very confident" of its product being marketable.
Turning to the recently-acquired Shakespeare nickel mine near Sudbury, Ontario, Lee said that Shakespeare provides a medium-to long-term production strategy for the company.
The mine was the primary asset of URSA Major Minerals, which was acquired earlier this year.
"We like Shakespeare, it is an open pit, has good infrastructure and is permitted, all of which carry a very big premium in the market today. It has the potential to be a significant profit and revenue driver."
During the twelve months of operation ending January 31, 2012, the mine produced 151,910 tonnes of ore and generated gross revenue of $11.2 million.
Prophecy Platinum's Lee said the company's immediate focus is Wellgreen and will look to update the resource at Shakespeare in 2013.
In terms of an outlook, Lee said that he was "very bullish" on nickel, which has had a volatile price since 2007.
Over the past year, the miner said it has raised $20 million, inked a co-operation deal with the Kluane First Nations, completed the first stage of metallurgical studies, kept its budget in check, and has hit mineralization in all drilled holes except one.
The company has also attracted a lot of investor attention of late.
"Over 10 investment banks have toured Wellgreen and want to do business with us. We probably met with 100 funds all over the world and have been overwhelmed by all the attention we have received."